Indutrade AB

STO:INDT

Earnings Call Transcript 2021-Q1

[Operator]

Hello, everyone, and welcome to the Indutrade AB Q1 Report 2021. [Operator Instructions] Today, I am pleased to present CEO, Bo Annvik; and CFO, Patrik Johnson. Please go ahead.

[Bo Annvik, CEO, President & Director]

Good morning, and welcome on our behalf as well. We are, obviously, pleased with quarter 1. And if we start with some highlights of the quarter, we can say that when we thought about this quarter, we knew that we had a fairly difficult benchmark from quarter 1 a year ago. And now we can summarize and see that we basically beat that quarter on all relevant points, which is comforting and positive.As I've said before, we have worked with some key priorities since the pandemic outbreak, its involving, obviously, the employee health and safety dimension and then safeguard our profitability and capture business opportunities. And I think we are living up and delivering on these 3 points in a good way.If we then summarize the quarter very briefly, and we will go into more detail on all these points. But improved general demand, positive, more broad-based. And the organic order intake was plus 5% and plus 3% in terms of net sales organically.We still see continued variations between companies, segments and countries, but more of a broad-based improvement. We had a record high EBITA margin for quarter 1. We saw a very strong cash flow, and we also saw improved working capital efficiency, which is something we are prioritizing and working with.And despite the pandemic, we were able to finalize 5 acquisitions, and we are still positive and optimistic about further acquisitions down the line.So then if we more focused on in detail on the order intake. In quarter 4 last year, we had a good organic order intake of 7% and in total, also 7%. And as I said before, quarter 1 in 2020 was also strong. There was also an organic order intake of plus 7%. And now we are more or less at the same level, slightly lower at organically plus 5%.So it's been good for quite a while, and it is continuing in a good way despite difficult benchmark, I would say. And it's more broad-based now, but it's driven by the MedTech and pharma segments. And within that segment, I would say that it's only to a smaller part connected to the pandemic.In order to single out some other positive segments, I would say that the infrastructure segment is good, certain parts of the process industry and also the wind power segments. And if we should single out something which is a bit weaker, I would say, aerospace and marine segments are weaker.In the Marine segment, we hear and read about more sort of orders for new ships being built. And, I guess, eventually, they will need equipment and components that some of our companies are working with. So there is light at the end of the tunnel, I would say. Aerospace, we also see some positive signals, but perhaps that's even a step behind the marine segment.Some of you know that we have a large company working with high-pressure valves for the power generation industry and I would say that their order intake was in line with the last 2 quarters, but a bit lower than the quarter 1, 2020, which for them was a very strong quarter.If we talk about business areas standing out then was the Measurement & Sensor area and also Fluids & Mechanical Solutions. And within those areas, I would say, it was a fairly broad-based improvement. And the weakest was in the U.K. and in Flow Technology.Flow Technology was still good numbers, I would say, but had a very difficult benchmark due to great order intake a year ago. And the U.K. is something, I would say, a bit from the pandemic, obviously, and a lot of shutdowns and also, to some extent, the Brexit effects. We saw at the end of the quarter in the U.K., basically in March, a strong sort of improvement. So, hopefully, quarter 2 will be starting to become better there.Positive book-to-bill, order intake was 12% higher than sales. And if we as sort of take the numbers in detail here, so total order intake growth, plus 6%; organic growth, plus 5%; acquisition effects, plus 6%; and divestments, minus 1%. And then we had a fairly strong currency headwind, which was minus 4% in the quarter.Within the MedTech area, we have an area where we focus on single-use components, basically assembled in clean room environments, and we have establishments in the Netherlands, in Germany, on the Ireland or in Ireland. We are now extending capacity in this area. So it's growing, and it's a great, I would say, organic initiative, which is delivering profitable growth.Then we can talk a bit about sales. The organic sales improvement was a little bit lower than the order intake. Sales was plus 3% versus last year. Acquisitions contributed with 5%. Again, divestments, minus 1%; and the currency impact was minus 4%.And if we analyze sort of invoicing days in this quarter versus a year ago, I think it was 1 less day and that can equate to approximately 1.5% impact give or take. I mean, some companies -- for some companies that's very important, and for some, it doesn't matter so much.And we are basically 3%. We are at the same level as in quarter 1 last year and also sequentially from quarter 4. So, organically, we are growing sales several quarters here now with around 3%, which is a good level.If we look at markets in a geographical perspective, strongest development in Denmark. Denmark has a good MedTech industry and pharma industry, also partly driven by that. But we also have some other measurements related companies, which are also sort of developing well.Otherwise, I would say, Scandinavia, Norway, Sweden, but also Germany and the Netherlands, were positive versus last year. And weaker countries would be U.K., Finland and Switzerland. U.K., I already mentioned. And Finland is very much base industry, process industry, CapEx driven and suffering from the pandemic. We cannot really be out visiting these process industries. And also, a fairly harsh winter has also had impact in Finland.During the quarter, a lot of our companies experienced longer lead times from suppliers, impacting deliveries and invoicing. But in this quarter, our estimate is that the impact was limited. Will probably be more of a challenge in quarter 2, but I'm also optimistic that our companies are used to this, and they usually handle this situation in a positive way.If we then turn to EBITA, had a great development. And as I said, all-time high in terms of EBITA margin for quarter 1 at 13.9% versus 12.4% last year and a growth of 16%. Organically, EBITDA increased 12%; acquisitions added 9%; and currency was minus 5%.The majority of the short term -- short time work programs are discontinued now. And the financial impact from governmental support was very low this quarter, so rather insignificant. And on top of the longer lead times, I spoke about, we and our companies are noticing price increases for raw materials and some components, also for freight. But, again, minor impact this quarter, potentially higher impact next quarter. But also, as I said, I think, we are used to handling this in a good way.If we then turn to the sales situation for the different business areas. And as I mentioned earlier, you can see also on the graph here, that there is quite a lot of variation between company segments and countries. The positive development in Benelux was mainly driven by the MedTech and pharma segments, but also, general engineering sector improvement.And as I said, valves for power generation. But actually, I comment on order intake before sales was quite good for valves for power generation. But the reference for quarter 1, '20 was also a little bit weaker.In business area DACH, we see -- we saw, and gladly so, good improvement in the German engineering sector. But some of our Swiss companies had lower sales this quarter. I don't think that's due to a weak Swiss industry in general, more -- some particulars in these companies, and hopefully, this will develop better going forward.Business area Finland, noted the largest decline. And as I said, base industry, CapEx driven, add up so many sort of new projects started, and also, obviously, impact from the pandemic and a cold winter.If we then turn to business area Flow, was good during the quarter, but was slightly lower than the high levels in the beginning of last year. But that area is developing well. The companies have clear strategic plans, and I have good comfort in business area Flow.Fluids & Mechanical Solutions, good improvement broad-based, I would say, perhaps a bit driven by some of the companies we have focusing on the automotive aftermarket. Some companies held back in the infrastructure segment due to the cold winter. So we'll see better developments there.Really standing out is business area, Industrial Components, very strong sales, and it's primarily related to MedTech. And here, we saw some COVID-19, sort of, positive effects because they have one company with a large order and also delivering the quarter for ventilators. But, also they experienced a more broad-based improvement in the general industry, I would say.And business area, U.K. had, for the most part of the quarter, challenging conditions. But as I said, a clear improvement in March, and hopefully, now we'll see U.K. progressing step-by-step in a better way.If we then turn to the profitability for the business areas, it's comforting and positive to see that 7 out of 8 areas improved their EBITA margin. The strongest improvement was in business area Industrial Components. And as Indutrade as a group, they also had an all-time high quarter 1 margin of 16.1%. And, again, thanks to many companies in the area, but particularly to the MedTech segment and some positive COVID-19 impact there.High increases more than a percentage point was also delivered by the business area Benelux, Fluid & Mechanical Solutions, the Measurement area. And on back of their organic sales growth, you can say that they also have good cost control and delivering a good retail margin.In general, I think we have good cost management. And as I said, low governmental support this quarter and considerably lower short time work. Also comforting and positive that the newly acquired companies are supporting EBITA margin in a good way, and I will comment on them a little bit later in the presentation.And the lower -- the only business area with lower EBITA margin was the U.K., and it's basically driven by unfavorable product mix and more difficult business conditions, as I have elaborated on already.Then we have 5 new companies into the Indutrade Group. One Finnish company called Pistesarjat, working with advanced cable systems to basically prevent frost issues, and they work with heating linked to the construction industry. Predominantly in Finland, very established company, well-known brand, and we see a positive development also potentially outside Finland due to their sort of market position and offering.As many of you know, we have had Germany as a strategic priority in terms of acquisitions, and we were very happy when we concluded the acquisition of Tecno Plast. It's a big building block in this MedTech priority, I would say, and they have single-use modules and they have a couple of clean rooms and the order book is full. And yes, really very positive outlook and also sort of positive synergies with other companies in the group.And then actually, 3 companies in the Netherlands, Fire Proof, working with passive safety systems, equipment components, and also having a great development. And Typhoon, they are working with mixing equipment systems both for MedTech/pharma, but also food tech and other segments. And Efcon, also a company in a great segment, which we like, wastewater and sampling systems for this area. So almost SEK 500 million in additional turnover.And, as I think I said before, the pipeline of new acquisitions is good. And, yes, I think the COVID-19 is making it difficult for us to travel, visit companies, spend time with companies, but we now have local resources with full capability to manage this. And we -- some of us can, at least in the neighboring countries, visit when we need to. So I think it's going to continue well in terms of acquisitions going forward here.Then I leave the word over to you, Patrik, to comment more on the financials in detail.

[Patrik Johnson, Chief Financial Officer]

Thank you, Bo, and hello, everyone. So let's dive into the financials a little bit more. As we -- as you noted earlier, the total growth for orders was plus 6% in the quarter and plus 3% for net sales. And the order intake was 12% above invoicing, so a good book-to-bill, and it's connected to good demand development in several segments. So it's not only attributable to the MedTech and pharma segments.Gross margin is slightly higher than last year the quarter, and there's actually several factors contributing to this. I -- for instance, lower manufacturing expenses, good price management from our companies and favorable product mix. EBITA grew 16% in the quarter, and the margin improved to the Q1 record, 13.9% versus 12.4% last year. And only -- as Bo said, the only limited marginal positive contribution from the governmental support in the quarter.Finance net is lower than last year, driven by the lower debt levels we have compared to last year. Tax cost in the quarter corresponds to tax rates of around 22% (sic) [ 23% ], and that's basically in line with what we had last year. Earnings per share, up 19%.On the return side, return on capital employed increased to 20%, which, as you know -- most of you, is in line with our growth targets. Cash flow was strong and improved with 16% during the quarter to SEK 489 million, and I'll come back to that a little bit more in detail soon. And lastly, then the net debt to EBITDA are maintained on a relatively low level, 1.5x versus 2.2x million last year.And if we then go over to the next slide and look at the cash flow more in detail. And it is, as you can see also from the slide, seasonally low normally in quarter 1, but it improved then with 16% to SEK 489 million for the quarter.Working capital efficiency is increasing, and that's really comforting, encouraging to see, mainly thanks then to inventories decreasing somewhat in the quarter versus year-end. So that's really good to see. And if you look at the cash flow improvement versus last year, I would say, then that improvement is mainly driven by the higher results.And talking about the capital efficiency going further, we are still working with it and aiming to improve it even further. But the longer lead times, Bo spoke about from suppliers are, of course, a slight headwind for some of our companies. And some of them are forced now to increase inventories slightly then to safeguard customer service levels. So little bit of a headwind in that area, even though our aim to improve efficiency further is still there, of course.Moving on, and looking at the earnings per share. And as I said earlier, increased with 19% to SEK 1.27 versus the SEK 1.07 last year. And that growth mainly comes from the strong EBITA, of course, but supported by the slightly lower finance net. And if you look at the earnings per share in a slightly sort of longer trend perspective, and look at the average annual growth the last 3 and 5 years, we -- the numbers are plus 14% and 13%, respectively.Net debt increased somewhat compared to year-end due to the, as you noted a slightly seasonally lower cash flows and a good pace in acquisitions. But compared to last year, it's a big decrease. And the reason for that is the underlying really strong cash flow and also that we did not pay any dividend last year.Net debt/equity ratio decreased to 56% compared to the 85% last year. That's a low level from a historical perspective. And especially, if you consider that IFRS 16, the leasing regulation has actually increased the ratio with around 12 percentage points.So in summary then, our financial position is strong and debt ratios are relatively low. And at the end of the quarter, our short term funding was SEK 1.5 billion, and we had long term guaranteed unutilized credit facilities of around SEK 4.3 billion, so ample headroom.And, finally then, I'd like to -- I like to say then that we obtained actually credit rating during the quarter from Standard & Poor's Global Ratings. And as many of you know, we have been active for several years on the capital markets as an issuer of -- on both commercial papers and bonds.And as you also know, I guess, is that many investors actually have guidelines only to invest in publicly rated companies. So it is -- it has been fairly natural for us to go in this direction and apply for a credit rating to be able to further broaden our investor base on the credit markets. So BBB- with a stable outlook, which corresponds then to an investment-grade rating. And I think that confirms our stable business model and our strong financial position. And we're, of course, committed to maintain this investment-grade rating going forward.So thank you. And by that, I leave back over to you, Bo.

[Bo Annvik, CEO, President & Director]

Thank you, Patrik. Let's talk a bit about COVID-19 and the pandemic impact on Indutrade. As you see on the slide here that we have summarized the key points. And all in all, I would say it's fairly limited in the quarter. And obviously, we see light at the end of the tunnel linked to further vaccinations, very positive.The first point talks about disturbances and disruptions in the supply chain. We have talked about that, that's a reality and a problem, but also in this quarter, fairly limited. And as I said, can be a little bit more next quarter. But seems to still be manageable for us.Short time work declined further, limited use among the companies and the majority of the furloughs were in business area U.K. When we had most of the furloughs in December last year, I think, it was -- we had more than 8 -- or in Q2, it was obviously, more than 800 employees at furlough, and now we are down well below 100. So we see a clear trend going down there, and it will further decline in the next quarter.In terms of governmental support, it was marginal, I think, around SEK 6 million all in all for the company and the group. And we still have some local restrictions and lockdowns, obviously, but they're still manageable. The biggest issue, I would say, for us, on group level is in the acquisition perspective and difficulty to travel.And we have had some companies with positive COVID-19 business effect, but still quite a few. And to be more specific, we have one company selling ventilators with a good business impact in Industrial Components, quarter 1 here. And in the single-use business, I've spoken about, some of that is also having sort of a positive impact from vaccine development and manufacturing. But, again, lower part of that total business.Sustainability is important, and we have an ambitious sustainability agenda according to ourselves, which we launched in November last year, and it's obviously in line with the Paris Climate Agreement, and we are really focusing to drive our business to be sound economically, environmentally and socially.And we have these 3 main long term objectives for 2030 within the people area, within the environmental area, and within profitable growth. The last area might seem a little bit odd perhaps in a sustainability perspective, but we are convinced that if you have a profitable company and a growing company, it's also much more sustainable than if you wouldn't have that.And now we have defined what, we call, enablers and measurable KPIs sort of below these headings, which you can see on the slide there, and we will now, obviously, measure this and follow up on this, at least on a yearly basis, and some of them a bit more frequently. And if you have interest -- maybe the best is that you read a bit about this in our recently published sustainability report, which you'll find on our website.Then if we then summarize the quarter, improved demand situation in several segments, a very positive. And, again, then variations between company segments and countries. Record high Q1 EBITA margin, 13.9%. And gradual demand improvement expected, but COVID-19 restrictions and supply chain constraints create some uncertainty.I would say I'm quite optimistic in terms of Q2 now. There is an underlying demand improvement more broadly, and we have some clear segments which are very positive for us. So there is much more upside than downside in a demand perspective as the year develops here, I think. And we are, as a group, I think, capable of managing revenue and cost levels in a good way.So cost will probably stepwise go up when activity levels increase, linked to, sort of, to travel and things like that. But so will revenues. So we will continue to manage margins in a good way.We have a good acquisition pipeline, as I said before. So started with 5 acquisitions this quarter now, and I'm optimistic that we will continue in a good way also going forward. And all in all, we are a diversified business group, agile and flexible companies working very closely with customers, and this has worked for a bit more than 40 years. And I think it's going to work for quite some years also going forward in a positive way.So by that, we say thank you in terms of the more formal presentation, and we ask the operator to start the Q&A session.

[Operator]

[Operator Instructions] Let's see, the first question we have is from Carl Ragnerstam from Nordea.

[Carl Ragnerstam, Analyst]

It's Carl from Nordea. A few questions from my side. First, a question on the ventilator orders, which you received in Q4. Would you say that they were fully delivered in Q1? Or should we expect some deliveries in Q2 as well?

[Bo Annvik, CEO, President & Director]

I would say they are basically delivered fully in Q1.

[Carl Ragnerstam, Analyst]

Okay. And also with the global component shortages in many industries application areas and so on, would you say that there could be an inventory buildup effect from some of your customers in order to secure inventories?

[Bo Annvik, CEO, President & Director]

That's probably likely and it's extremely difficult to assess how large that is. But, I would say, that that's likely that there is some prebuy or buildup, yes. But, again, it's very difficult to say -- give you a number linked to that unfortunately.

[Carl Ragnerstam, Analyst]

Of course, I can understand that. And would you say that the effect would be more significant in Q1 compared to what you experienced so far in Q2 or in the later part of Q1 at least?

[Bo Annvik, CEO, President & Director]

But I think it's going to continue, and I think the disturbances will continue in quarter 2, maybe also in quarter 3 in certain component areas. And there might be -- the prebuy is -- or buildup will probably continue little bit in Q2 as well, if there is possibility for it.

[Carl Ragnerstam, Analyst]

Okay. And in terms of component shortage, as you said, there are some companies experiencing longer lead times and so on. Have you seen gradual increasing problems with component shortages during the quarter? And also here into Q2, you see -- maybe you mentioned it and which product areas or segments are the most impacted by it?

[Bo Annvik, CEO, President & Director]

Yes. We -- the impact in the numbers is fairly low in quarter 1. So the impact will be higher with the full quarter 2, sort of. And it's in business area Measurement & Sensor Technology, they buy more electronic components than perhaps some of the other areas. So they experience, perhaps, most of the difficulties. But there is also difficulties in other areas.But, we -- many of our companies is, as you know, smaller, midsized companies, and we are not high-volume producers. So it's more manageable for us than the automotive industry in a direct material perspective, obviously.

[Carl Ragnerstam, Analyst]

Okay. And another, maybe this one would be quite challenging. But in terms of your EBITDA margin, of course, very high levels and very nice. So -- I mean, it's up 150 basis points. You mentioned gross margin, it's only up 30 basis points in the quarter, meaning that it is SG&A driven.Looking at sales up to SEK 200 million, selling costs down, together with development costs SEK 45 million, it's quite unusual development, right? So how should we look at that going forward? Could you please just try to elaborate on it?

[Bo Annvik, CEO, President & Director]

Yes. We will see, as I -- as we have said stepwise a higher cost level and we are -- and our companies are usually good at balancing cost and top line. But as you alluded to, it's probably not going to have that full margin sort of effect as it has now in quarter 1, later on in the year. But the new sort of situation post COVID-19 will also, hopefully, be a new normal. So I really hope, and our plan is that we will be more efficient, but maybe not up to the level where we are right now. So, before the pandemic we were at a certain margin level, after the pandemic, I hope, the margin there will be -- will be better than that, but maybe not at this level.But that will be a gradual -- it's not going to be all happening from one quarter to another. It's going to have more of a gradual effect, I think, and counteracting that in a positive sense. But we are buying -- we successfully acquired companies with high profitability and good gross margins. And we are also continuously working with trying to improve profitability.So we'll see where all this ends up. It's definitely going to be better than pre-pandemic. But, yes, maybe not exactly at 14%, I don't know. I don't know, Patrik, if you want to say something about this.

[Patrik Johnson, Chief Financial Officer]

I'm not sure if I can add much. I think the cost will increase gradually, but also compared to last year, we will have a better sales development. And our commitment is trying to safeguard and continuously improve margins. But, I think, another -- further steps from where we are now, its difficult short term, of course. So, sort of, a flattening out of the margin sequentially is more of, I think, what you should expect.

[Bo Annvik, CEO, President & Director]

Thank you.

[Operator]

Next question is from Johan Dahl from Danske Bank.

[Johan Dahl, Analyst]

I have 2 questions. And continuing on this margin guidance, and I think it just seems that you've taken quite a bit different approach compared to when we talked to you 3 months ago on the margins. I'm just curious to know what's actually new behind that sort of margin view that you will be able to manage well compared to previously talking about lower margins.And I also want to know where are you sort of steering the company in terms of margins? It sounds a bit like you'll see here what's going to happen going forward. What are the objectives set and where do you want to take this in terms of margins?The second question is on acquisitions. So I see that you've done nothing in Sweden so far this year. Is there any particular reason behind that? And just talk about why this all seem to be happening outside the Nordics? Though, I think, yes, there was one acquisition in Finland, but seems to be mostly outside of Nordics.

[Bo Annvik, CEO, President & Director]

Well, if I take the last question first, no particular reason why we haven't made an acquisition in Sweden so far this year. So Sweden is still an interesting important market for us and would be very unlikely if we wouldn't make an acquisition here in the future, sort of, so no strategic change in terms of that.In terms of the margin, if we exclude COVID-19 and the pandemic for a while, my ambition with Indutrade has been to deliver growth beyond this 10% level, at least on a yearly basis and then try to improve margin on top of that, but not dramatically. And I've spoken, I think, that sometimes about 0.5% EBITA margin in a 24-month perspective to just give some sort of notion of the -- of what might be possible.And now we have a situation in terms of the pandemic, where we have lowered costs significantly. And, obviously, we will try to manage this in the best way possible and there is margin targets on all companies along with growth targets. So don't get me wrong, I'm very sort of ambitious and driven in terms of building step-by-step a better margin situation.But I'm also cautious in the sense that we are at the cost level, which is unlikely to be able to defend when we all can travel freely. So, I think, some of our businesses will -- they have a business model to visit customers, walk around with customers in pulp and paper mills, steel mills, process industries and basically detect areas for improvement in terms of efficiency, quality, productivity, and that's part of their sales model. So -- and that costs we are -- we have lived sort of without successful now for some time, but I think it will come when the pandemic is behind us.So it's -- I think it's extremely difficult to forecast for us, because we have so many different companies and many companies. But for every quarter, we obviously want to defend the level where we are now. But -- and if you take quarter 2, obviously, there will be restrictions in travel and so on, so nothing much will happen in quarter 2. I don't know, in quarter 3, 4, quarter 1 next year, if that's more the timing where markets will open up for travel and visits and so on. So nothing will happen.

[Johan Dahl, Analyst]

Bo, do you sense in the organization, there is a need to make a step-up in terms of recruitment and employees. I mean, you're flat on employees year-over-year despite orders up double digits?

[Bo Annvik, CEO, President & Director]

Yes, there are -- we have some businesses where we are increasing capacity, both people wise, equipment wise. But it's not going to go extremely quickly and distort the ratios we have right now very significantly. So we have a lot of trading companies and those are in and out product -- in and out from an inventory, and it's not sort of direct labor intense in that sense than we have perhaps some other general engineering production-related companies or automotive companies and so on. Not so people impacted when we grow.

[Operator]

And the next question is from the line of Robert Redin from Carnegie.

[Robert Redin, Research Analyst]

Couple of questions, if I may. So, on that order intake in Q1, and of course, 12% above sales. Is there a trend that those orders are for delivery further out in time? Is it a longer or much stretched out order book or should we say that's a positive for Q2 sales, strong order intake in Q1?

[Bo Annvik, CEO, President & Director]

No, it's quite normal, but with some caution on the component raw material lead time issue. So in that sense, maybe slightly more stretched out and delivery issue than normally. But, otherwise, the normal -- the order book is sort of rather normal in that sense.

[Robert Redin, Research Analyst]

Okay. And you wrote something about supply chain problems hampering delivery and invoicing in Q1. How much of an impact was that? Or could you say how much more would you have sold without those supply chain problems?

[Bo Annvik, CEO, President & Director]

Can you comment on that, Patrik?

[Patrik Johnson, Chief Financial Officer]

I think the aggregated impact so far is limited. I can't give you numbers -- number actually. But it doesn't -- no, it doesn't impact the overall numbers at all, I would say, in Q1. Slight bigger risk, of course, in Q2, but our companies, as Bo said, they are also agile and working with sort of alternative measures, both on the cost side and on sales side, I would say. So slight big risk for Q2, but marginal or insignificant in Q1.

[Robert Redin, Research Analyst]

So at this time, this headwind with regards to supply chain, it's more of a problem than anything else. Is there anything positive long term? Could customers be seeing these supply chain problems and be more interested in working closer with your trading companies in the coming years? Could there be a trend like that?

[Bo Annvik, CEO, President & Director]

That's a very good question, Robert, and absolutely something we have as a strategic priority. I think, one effect of the pandemic is probably the globalization in a supply chain perspective will be impacted to -- in favor of regionalization and localization. So where some of our customers have bought components in low-cost countries in Asia, for example, we see great opportunities to challenge that setup and offer them high-quality products at a higher price point. But in a bigger -- broader perspective, it's a win-win situation with them, when we calculate risks and other things. So, yes, definitely it's something we are working with as a priority and are optimistic about it. Thank you.

[Operator]

[Operator Instructions] And there are no further questions in the queue, so I'll hand the call back to the speakers. Please go ahead.

[Bo Annvik, CEO, President & Director]

Then we say thank you for participating, listening, and wish you all a good day. Thank you from us.

[Operator]

And this now concludes the conference call. Thank you all for attending. You may now disconnect your lines.