Inwido AB (publ)

STO:INWI

Earnings Call Transcript 2019-Q2

[Operator]

Ladies and gentlemen, welcome to the Inwido Q2 Report 2019. Today, I am pleased to present CEO, Henrik Hjalmarsson; and CFO, Peter Welin. [Operator Instructions] I will now hand you over to Henrik Hjalmarsson. Please begin.

[Henrik Hjalmarsson, President & CEO]

Thank you. Good morning, everybody, and welcome to the presentation of Inwido's quarter 2 and first half year results 2019. I'm Henrik Hjalmarsson, President and CEO; and with me, I have Peter Welin, CFO and Deputy CEO. I'm going to walk you through some market highlights, a few words about the overall performance, some words about the outlook for the market and then a few key priorities for us for the near future. Then I'm going to hand over to Peter, who's going to go through a bit more detail on the financials. And as usual, there'll be plenty of time for questions at the end.Next page please, Page 2. In terms of the market development in quarter 2, I'd say it's very much in line with our expectations and what we outlined at the quarter 1 report. The industrial market, particularly in geographies in Sweden and Finland, has continued to soften and has obviously impacted the larger units there. I'll come back a little bit to how that's been handled by us. And as an example of that, we've seen that the total window market in Sweden has actually decreased 4 consecutive quarters. However, as we also believe, the consumer market has been more healthy and robust, and particularly that's manifested itself in a better demand situation in Denmark and Norway. And as you'll see in a bit, we also capitalized quite? Well on that. e-Commerce continues to grow in all our geographies, and with our position that creates an opportunity for us obviously. The U.K., given the Brexit uncertainty, continues to be challenging. And we do continue to see some consolidation within the builders merchants market across the Nordics. I'd say that the exact impact of that and the extent of that impact is yet to be seen though.Next page please, Page 3. If we look at the performance for the quarter, sales was down 1% and organically minus 4%. Obviously, that's, to a large extent, the result of the softening industrial market in Sweden and Finland. The operating EBITA, however, strengthened slightly from SEK 184 million last year to SEK 187 million this year, with strengthened margins then, obviously, as a result. In terms of the unit development, the Danish units continue to develop well with good progression in terms of profit and growth. The Norwegian units continue to progress positively and is now in profitable growth, performing well. The U.K. units have done a good job in what's been a challenging U.K. market, defending positions well. And I'll come back a bit to the structural activities that are ongoing there. And then, obviously, the weaker industrial market in Sweden and Finland has impacted the results of particularly in the larger units there negatively.Order intake is down 2% in the quarter and the backlog at the end -- order backlog at the end of the quarter is 4% down. Again, obviously, the softening industrial market in the Swedish and Finnish geography has impacted that negatively. We made good progress on cash flow again in the quarter, strengthening from SEK 126 million last year to SEK 163 million this quarter. This is very much in line with the focus we have on strengthening our balance sheet that we've communicated before, and I'll come back a bit more to that later. That means that the net debt-to-EBITDA ratio has improved from 3.2 in the same period last year to 2.8. So we continue to approach our targets, and Peter will come back to this more a little bit later. And we actually estimate that we'll continue to take market share in the Nordics, which is a good continuing development.Next page please, Page 4. If we then look at the development for the first 6 months, it's a very similar picture. Looking at the financials, they are very close to last year's numbers actually. Sales increasing 1% to SEK 3.153 billion. Operating EBITA is SEK 232 million, just SEK 8 million below last year. And hence, a slightly softened EBITA margin of 7.3% versus 7.7% last year. Again, nice progress on cash flow at SEK 213 million, improving SEK 219 million year-over-year. And as I said before, it's the positive result from the continued focus we have on strengthening the balance sheet. Consumer markets, as also in the quarter, more healthy levels. But as I've said, the industrial markets in Sweden and Finland softer and mainly then due to the lower newbuild activity, creating a tougher market competition situation in those geographies. Our new structure and strategy, Simplify, that we've talked a lot about before, is now implemented throughout the organization. But I'd say that the full impact that we expect from this is not yet in place, so we'll continue to see more impact from the new ways of working in the coming quarters. And as I said before, the U.K. and Norwegian units continue their respective turnarounds. We're making nice progress and they're contributing nicely to profits.Next page please, Page 5. If we look at the development by business area, business area South. And actually, if we look on the right-hand side of this charts -- sorry, this chart, you see a ring chart showing the segment sales split. And as we can see here, we have a very healthy consumer segment exposure of 94%. We've actually done a good job of capitalizing on that in a stable consumer market, as you can see on the top right-hand side on the sales chart, where we've grown nicely in the quarter. And as you can see in the bottom right-hand chart with operating EBITA, that's also translated nicely into profit growth. In terms of the units, the Danish units continued to deliver very well with strong progress, improving with growth and margin improvements. e-Commerce continue its nice organic growth trajectory, growing 7% organically in the quarter and contributing also nicely to the performance improvement. The restructuring measures that we've taken in the U.K. and in the Polish units are contributing nicely to the profit improvement despite a softer U.K. market. And all in all, that means that the sales in the quarter is up 6% to SEK 690 million, and the operating EBITA margin has strengthened by 1.5 percentage points from 15.2% last year to 16.7% this year. And the order backlog at the end of the quarter is 19% higher than the corresponding period last year.I'd say, overall, a very positive development, capitalizing nicely on the consumer market and having good progress in the restructuring activities contributing positively to profit improvements.Next page please, Page 6. If we look at the business area North, it's a slightly different picture. Again, if you look at the ring chart on the right-hand side, you can see that in business area North, we have a quite substantial exposure to the industrial market. And the softening of that market as a consequence of the reduction in newbuild activity has done -- obviously impacted our sales development, as you can see in the top right-hand corner. And that has also consequentially impacted our profitability, as you can see in the bottom right-hand side. So in terms of the unit development, the larger units in Swedish and Finnish geographies are impacted negatively by the negative development in the industrial market. We're obviously taking efficiency measures to mitigate that to protect the margin. That hasn't fully compensated. But obviously, we have more activities ongoing and I'll come back a little bit to that.On a very positive note, the Norwegian business, as I said before, continues to improve. And we see an increased profitability in the quarter and the units being in profitable growth in what's a stable market at the moment. All in all, sales in the quarter down 6% to SEK 973 million. The EBITA margin at 7.8%, down from 9.6% last year. And the order backlog at the end of the quarter, 14% down.So in summary, the industrial -- the 2 key markets where we have any industrial exposure of size, which is Finland and Sweden, are unfortunately both been impacted by a reduction in newbuild activity, which is impacting -- have a short-term negative impact on our performance.Next page please, Page 7. If we look at the outlook, it's very much a scatter outlook. Consumer demand is still on healthy level. It's propped up by, in most of our core geographies, strong household financials. We have low interest rates. And we clearly see that we have a high and actually growing interest in investments into the home. There are some potential uncertainties, particularly around the political landscape. We have some global factors around the potential trade wars and the similar instances that might impact. But in a couple of our key geographies, we also have new governments which could impact demand depending on policies taken. And obviously, in the longer term, we have changing consumer habits that we have to continuously adopt our offering to. But all in all, consumer demand is still on a healthy level. Industry markets, in our view, then in Sweden and Finland where we're impacted, we don't see an increase or improvement in those markets in the near term, so those will continue to be soft and remain soft for the close future. All in all, the outlook for Denmark and Norway looks robust given the more robust consumer outlook. And we expect the continuation of the e-Commerce momentum, which, obviously with our position in the segment, creates a good opportunity for us. And all in all, we also think that the organization is better equipped to manage a mix development following Simplify and the new more decentralized structure and strategy.Next page please, Page 8. Looking at our focus in the short term, to some extent, remains the same. Grouped, you could say, in 2 groups, the first 3 points here being about managing a more scattered development better; and then the last 2, more of a continuing to build for long-term organic growth. So to manage this more scattered market situation better, we need to leverage Simplify, having each unit being focused on responding to their customers and market's need, adapting capacities and costs to the local market situation to maintain as high profitability as possible in their segment. Obviously, we need to manage the overall cost levels in Sweden and Finland given the softening industrial markets to protect our margins. And we're going to continue to strengthen our balance sheet to create more resilience but also allow for acquisitions if and when the time is right and we see -- if and when we see more attractive valuations. And then to continue to build for long-term growth, we continue our investments in initiatives across key markets on consumer and renovation to drive our consumer share and drive up our average profitability. And we will continue to invest in IT and digitalization, including automation of both the supply chain side but also the customer interaction side.Next page please. So with that, I'll hand over the words to Peter.

[Peter Welin, Deputy CEO & CFO]

Thank you so much, Henrik. And then we turn to Page #10, please.On this page, Page #10, we can see the income statement for Q2 as well as the income statement for January to June 2019 as well as 2018. And for 2019, we have 2 rows, one with IFRS 16 and one without IFRS 16 just for comparison. You can see in Q2 this year that sales was -- were declined by 1% compared to last year. And we've -- if we also adjust for the currency as well as for acquisition, sales declined by 4% compared to last year. Operating EBITA as well as EBITA was ahead of last year, SEK 187 million compared to SEK 184 million. And if we take away the IFRS 16 impact, it was also SEK 184 million. So better margin compared to lower -- compared to last year despite lower volume in the quarter, mainly driven by the mix impact.If we look further down in the income statement, we can see that profit after tax was 12% behind last year. And the main reason why we have lower profit after tax, even though the EBITA was in the same level or it was better last year, is the currency impact in financial net. We can see the financial net had a cost of SEK 29 million this year in Q2 compared to SEK 14 million last year, driven by the currency from -- the currency change from our -- on our debt.If we look on the interest rates, cost was slightly below last year due to lower debt in Q2 compared to last year. So adjusted for the currency, the rates was more or less in the same level as last year, you're looking at profit after tax or earnings per share.If we go to the right on this page, we can see the development January to June. We can see sales of plus 1%. And if we then also adjust here for the currency as well as for acquisition, sales was minus 4% compared to last year. Operating EBITA and operating EBITA margin was slightly behind last year, driven by lower performance in Q1, whereas EBITA is above last year due to restructuring costs. Last year, we had restructuring costs in the first half of the year of about SEK 20 million, and this year, we had 0 net restructuring costs in January to June. And also here in January to June, we had a negative impact of the currency looking at financial net, and thereby, we have lower profit after tax and also lower earnings per share. The earnings per share for the first 6 months is SEK 2.63 compared to SEK 2.85 last year. And rolling 12 months, we have earnings per share of SEK 7.25.If we then turn the page, we turn the page to Page #11. This page is more or less the same page we showed also at the Q1. And the reason why we showed this page is just to show the difference of IFRS 16 and how IFRS 16 have impacted the reporting of Inwido. And as you can see, we have an impact which is a not-so-material impact, and we can see that net debt was increased by SEK 374 million. EBITDA was improved this quarter by SEK 22 million. And if we take a full year impact of EBITDA, there's an improvement of about SEK 87 million. This means that net debt versus EBITDA has increased due to IFRS 16 from 2.8 without IFRS 16 to 3.0 with IFRS 16. So a marginal impact from IFRS 16, we'd like to say.If we then turn the page and we go to Page #12. This page is showing sales developments in the quarter for Q2. You can see to the left, we can see sales for 2017, 2018 and 2019. And to the right, you can see the order intake for Q2 in '17, '18 and '19. And if we'd start on the left, we start with sales. Sales was down by 1%, the reported sales reporting. And if we take then away the currency impact and take away the acquisition, sales declined by 4%. We had a growth in South. South was plus 6% in total reported; and organically, it was plus 4%, where the e-Commerce grew by 7% in the quarter in the South. Whereas North has declined by 6% and organically was minus 9%. And in North, Sweden and Finland was then impacted by the lower newbuild markets in the quarter. If we take the order intake and go to the right, we can see that the order intake was minus 2% compared to last year; and adjusted for acquisitions, the order intake was minus 4%. Also here, we had a growth in South and decline in North. And we also have a calendar effect in the quarter when comparing to last year. We have fewer days in this year compared to Q2 last year.If we then turn the page, we go to Page #13. On this page, we can see order backlog from 2014 until Q2 2019. As you can see, we have seasonality when it comes to our order backlog. The backlog is always at lowest in Q4 and then it's a bit higher in Q1. And we are normally on the highest level in Q2 and/or Q3. And if we take Q2 this year when comparing to Q2 last year, we can see we had decline of 4%. So we are 4% behind last year on order backlog Q2 this year compared to last year. North had 14% lower backlog this year compared to last year, whereas South has 19% higher this year compared to last year. When it comes to this order backlog, we can normally say that we have order backlog for about -- a little bit more than 6 weeks to produce. And when it comes to the backlog, we have a shorter backlog when it comes to consumer sales and we have a longer backlog when it comes to the industry sales.If we then turn the page and we go to Page #14. And this page is showing operating EBITA and operating EBITA margin for Q2 for '17, '18 and '19. As you know, the sales declined by 1% in the quarter compared to last year, 4% organically. So we had lower volume in the quarter. However, margin was improved this year compared to last year, 10.9% compared to 10.6%. A better mix was one of the reasons behind the higher or improved profitability. And the e-Commerce business and also the Danish and the Irish businesses are operating in -- their operation is continuing in a good development. And we also have the cost savings initiative in Norway and also in the U.K., which has then given an impact in the quarter. And both U.K. and Norway are today positive -- have today positive results, when last year we had some losses in those markets. So the margin ended at 10.9% compared to 10.6% last year.And then we turn the page and we go to Page #15. And this is the final page before we open up for questions. If we -- to the left, we can see the net debt and also the net debt versus EBITDA, and to the right, we can see working capital. I'll come back later to working capital. So we start with a net debt and the net debt versus EBITDA. We can see that -- and once again, these figures are excluding IFRS 16, just for comparing to the history. We can see that net debt has decreased compared to last year by SEK 161 million. Net debt versus EBITDA have also decreased from 3.2 to 2.8. The target is 2.5. And as we stated before, we are working when it comes to our balance sheet and we are working with our working capital. And to the right, you can see that the working capital, here defined as inventory, trade receivables and minus trade payables, has been reduced by about SEK 100 million Q2 this year compared to Q2 last year. And if you take the working capital in percentage of sales last 12 months, we can see an improvement of 2% compared to last year.And as stated before, we have seasonality within the business. And those of you who have not been following Inwido before, I'd like to inform you that we have always an increased net debt in Q1. Normally, it also goes up a little bit in Q2, stable in Q3 and then the full cash flow comes in Q4 due to seasonality, mainly driven by the consumer sales.Okay. That was the presentation. And we'll now open up for questions.

[Operator]

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

[Carl Ragnerstam, Analyst]

It's Carl Ragnerstam from Nordea. I have few questions. First of all, you keep a quite cautious view on the Nordic, new construction market. Do you -- when do you expect it to hit bottom?

[Henrik Hjalmarsson, President & CEO]

Carl, Henrik here. I think it's really -- we try to take a not too hard a view on the exact timing of that. We want to make sure that we take the actions we need to take to respond to what's going on. We see no reason to deviate from the consensus forecast, but it's probably going to take another -- at least another 12 months for that to bottom out and turn around. But as I said, the key focus from our side is to, one, as I've talked about, increase the focus on driving consumer sales with focus on the renovation segment to partly compensate for that, but as you know also an increase in margins; and then secondly, where we need to adopt our cost base to a lower volume based on that newbuild segment.

[Carl Ragnerstam, Analyst]

Okay, because it was actually my second question. Given the soft Nordic outlook and the backlog which is down 14%, I mean, you need to probably to take actions to adjust SG&A to the current market demand. What's your plan regarding that?

[Henrik Hjalmarsson, President & CEO]

I guess you could say with the structure we have, in essence, we have with 28 different units, 28 different cost plans. But obviously, as I also said, with the development in the -- particularly then in Sweden and Finland where we have exposure to the industrial market and the newbuild segment, we have to adapt our cost base to respond to the lower overall volume. That work has potentially -- I'm sorry, has already started and it's part of defending the margins that we did in the quarter. But obviously, there's more to be done. And those activities, I would say, are ongoing.

[Carl Ragnerstam, Analyst]

What levels do you plan to reduce SG&A? And when do you expect them to be fully materialized or fully ramped?

[Henrik Hjalmarsson, President & CEO]

Yes. We've -- we're not setting a fixed target in terms of -- and communicating a fixed target around that. It's an ongoing work to adapt to the situation. So it's actually continuously ongoing as we speak. We have seen some of that in the -- also materialized already in the quarter, as I said, and we'll see more materializing over the quarters to come.

[Carl Ragnerstam, Analyst]

It's split by Sweden and Finland, I guess. Or just in Sweden or...

[Henrik Hjalmarsson, President & CEO]

It's mainly those -- I mean we obviously try to improve efficiency all across the group. But the key challenges are there, so that's -- it's split across those 2 geographies, yes.

[Carl Ragnerstam, Analyst]

Okay. As a final one for me probably. Did -- I mean in terms of working capital and strengthening balance sheet, do you still have any sort of low-hanging fruits in terms of optimizing working capital to strengthen the balance sheet? Or...

[Henrik Hjalmarsson, President & CEO]

I mean I wouldn't necessarily -- low-hanging fruit, you say, is a very subjective phrase. But we continue to work with improving our working capital and it will continue to be a priority for us. And obviously, given that -- we hope that we will make some more progress in the area for the coming quarters.

[Operator]

Our next question comes from the line of Johan Dahl from Danske Bank.

[Johan Dahl, Analyst]

A couple of questions, please. Firstly, could you talk a little bit about cost inflation/deflation and sort of pricing in the market right now? I mean it's been a material issue for you in the past couple of quarters and not much mentioning of it in this report. But just to hear your view on that, please.

[Peter Welin, Deputy CEO & CFO]

If we start with the cost development, we can say that we had some increase in 2018, especially the second half of 2018. And now we'd like to say it's more stable, the costs. So we don't have so much cost inflation more than we have it in our books from 2018. But going for the future, it's more stable when it comes to the cost, the prediction as of today. If we take the prices, the prices is a little bit down if when we're looking at the different markets then especially the Sweden -- the Swedish market and the Finnish market. So it's more or less the same picture that we had with latest 2 quarters.

[Johan Dahl, Analyst]

Stable cost, stable prices, is that basically the message?

[Peter Welin, Deputy CEO & CFO]

Yes. It's a stable cost, yes, going to the future, and the prices has been down in Sweden and Finland and -- where the other markets have been more stable.

[Johan Dahl, Analyst]

Second question just on Sweden and Finland, I mean lots of moving parts here. You talk about the changing sort of retail environment, a weak market. But can you just pinpoint exactly if you look particularly on Elitfönster, Benelux, how you sort of assess the situation? You say that the group is gaining market share, I presume that is not the situation for these 2 units. And also if you could be a bit more specific on actions going forward for these units.

[Henrik Hjalmarsson, President & CEO]

Yes. So a broad question, I'll try to give you a short answer. Yes, in terms of market actually, particularly obviously one that we track given our biggest unit the [ East France ] is quite stable in market shares actually. So it's reflected -- let's say the reduction in revenues is reflecting the overall reduction of the market if I phrase it like that. And if you look at the situation of the markets, it’s -- particularly in those 2 geographies, it is a tougher market at the moment. And so it's a bit difficult from that respect to answer your question in a succinct way. But what we need to do is make sure that we prioritize continuing to drive the initiatives that improve our proposition to the renovation in the consumer sector to increase our overall share of that. So the overall market share on the consumer side is actually more important for us then. And secondly, obviously as the newbuild segment continues down, the industrial volumes go down, at least in the short term also increases competitiveness a bit in the market then, obviously, to address the cost base associated with that. Then as we talked about before, there were also some longer-term changes in consumer behavior. Hence why, for example, we invest a lot behind growing the e-Commerce -- our e-Commerce business, and that share of group sales is increasing. But that obviously isn't limited to the e-Commerce business unit, but also initiatives within the different units. And one of the key, just to mention that -- also coming back to what I mentioned before, investments in IT and digitalization and providing automation not only in relation to consumer e-Commerce but also business-to-business e-Commerce and more efficient transactions to drive out cost is a key driver. But the fundamental sort of short-term challenge for us is, obviously, the reduction in newbuild and the short-term increasing competitiveness in the market that we see as a result of that.

[Johan Dahl, Analyst]

But did the landscape, in fact, and the -- I mean, it has gone on for some time now.

[Henrik Hjalmarsson, President & CEO]

Yes. To be quite honest, it's the -- let's say, the short-term consolidation pressure that we've seen increase in the past quarters, I guess our view is that, that is yet to see -- be seen actually from an overall market perspective exactly what's what that's going to do to it. The more structural change that we've seen in the retail landscape, and that's been particularly in Sweden where there's been more of a move towards the professional customer and a different view of, let's say, their growth projections in terms of how to tailor their proposition more it to, as I said, to their professional customer, that's been -- that's quite mature, I would say, at the moment. There was more changes in that area a few quarters and a few years back. So that's more stable at the moment, I would say.

[Operator]

Our next question comes from the line of Kenneth Toll Johansson from Carnegie.

[Kenneth Toll Johansson, Financial Analyst]

Yes. So just on this increased competition that we discussed in Sweden and Norway, I understand that there are more sort of free capacity to produce on the newbuild side. But are you seeing players that are usually strong on the newbuild side also trying to expand in the renovation markets? Do you face tougher competition there as well?

[Henrik Hjalmarsson, President & CEO]

Not really, no. As I -- just to be -- you said increased competition in Sweden and Norway, I just want to be clear, it's mainly Sweden and Finland that we see at the moment. But no, not really. To answer your question, it's -- what we do see is some of the more mature, stable players, I would say, that are -- that have strong presences in both segments that might shift some resources around. But the more pure-play industrial players don't really actually have a capability to go after the renovation segment, so we're not really seeing that at the moment. We -- in a scenario with decreasing industry volumes, the competitiveness is really mostly in the industrial segment where you see the bigger impact of it, less spilling over to the consumer segment, in our view.

[Kenneth Toll Johansson, Financial Analyst]

Okay. And you talked about the e-Commerce still growing in healthy levels and so on. You talked in the past about the opportunity to open up new markets and entering new countries, so to say. Are there any plans for such actions in the next quarter or 2?

[Henrik Hjalmarsson, President & CEO]

We are actually in the, let's say, in the early phase of entry into at least one Central European market in Germany. We've opened up a presence there, and obviously it's growing a lot but from very small levels. But we also do this in a very conscious way because we want to -- we want the market sort of to earn its own right and not to overinvest too heavily to risk any of the underlying organic profit with that we have in the other geographies. So at the moment, Germany is the one where we make -- established a presence. It's growing a lot and we are continuously adjusting and improving our proposition to that market given that, as you know, all the markets have different types of windows and different solutions.

[Kenneth Toll Johansson, Financial Analyst]

Also a question on the markets where you have been for some time on the e-Commerce, like Denmark and so on, where does the growth come from? Is it just the existing assortment that sells more? Or are you also able to expand and change the offering that you have and grow sales into more niche products and so on? Or can you tell a little bit about the growth drivers, please, in the existing markets?

[Henrik Hjalmarsson, President & CEO]

Yes. It's a little bit of a combination of the 2 because there is a different maturity in the different markets. So of the markets where we're active, Denmark is actually the most mature e-Commerce market. And there, it's actually more, to some extent, about expanding the assortment and the proposition and being smarter in terms of driving higher-value products to drive growth, et cetera -- I mean, profit growth. Whereas in some of the other markets where we have substantial growth like, for example, the rest of Scandinavia, actually there's so much untapped potential in a way that it's very much focused on the core of that -- those brand's proposition and there is -- that's driving more than double-digit growth from just executing on that. And then we will see, as that matures more, we expect that we will broaden and create a wider value proposition from that as well. So slightly different depending on the maturity of the market.

[Kenneth Toll Johansson, Financial Analyst]

Okay. And then in general for the renovation market, you don't see any big changes in trends for demand when it comes to the major markets during the quarter, that it has sort of picked up significantly or been reduced significantly in any market.

[Henrik Hjalmarsson, President & CEO]

No, not really. I mean the short-term perspective is that is it relatively stable actually. So no major surprises positively or negatively to be -- that's our view at the moment.

[Operator]

[Operator Instructions] Our next question comes from the line of Marcela Klang from Handelsbanken.

[Marcela Klang, Analyst]

I have a couple of questions regarding the initiative that you mentioned focusing on the consumer renovation market. Can you talk a little bit about them? Are these more long-term initiatives? Or do you expect some effect also in the near term?

[Henrik Hjalmarsson, President & CEO]

I would say it's -- that's a bit of a mixed bag, partly depending on which unit and which geography is this. But we obviously expect some level of short-term impact from some of the initiatives we take. I mean we've launched a few initiatives. We launched in Sweden, for example, at the back end of last year a new convenience proposition. We want to see that continue to pay off well this year. But the major impact of these longer-term initiatives -- we have to fund them now, we have to take the initiatives now, but it obviously takes time before you get the full impact. So yes, we expect some short-term impact, but the majority of it obviously takes a bit longer to fully come through.

[Marcela Klang, Analyst]

And I guess a little bit of [ Simplify ] is one of these. Could you just give us a couple of examples which are the most significant initiatives focused on the consumer market?

[Henrik Hjalmarsson, President & CEO]

Yes, I think that's one good example. We have a few other ones that are -- that's been important to us. We had one initiative that we've taken across a number of our units, which is about speedy delivery. So actually, in a sense, we're building our value chain a little bit to be able to deliver much faster to the customers that have -- or the consumers that have short-term needs. And we've actually seen that project planning in house renovations can sometimes be a challenge. So you're rewarded for quick deliveries. That's one example. We've done that in several Danish units, for example. Digitalizing the channel as well, so giving particularly the carpenters tools to support the consumer in terms of window replacement planning is something that we've done in a few geographies as well. That's something that proves it helps our businesses make sure that the carpenters actually sell Inwido's company's products rather than someone else's windows. So that's also supportive. And then as a third one, in addition then to [ Simplify ] focusing on installers, so pure-play window it installers. We've done work on that in a couple of geographies as well. That's an area where as convenient as one macro driver for consumer behavior, as that increases, we see that segment is actually growing across most of our markets. We're capitalized really well on it on some of our markets already, and the areas where we haven't fully done so we have initiatives to make sure that we do. So that's just another example.

[Marcela Klang, Analyst]

You also mentioned Germany. Are you producing in -- for Germany in your Austrian factory? And how is the situation looking at capacity utilization in that factory now that you used to have some problems before?

[Henrik Hjalmarsson, President & CEO]

Yes. Actually, we don't -- the Austrian unit was actually a greenfield sales unit, so there is no plant in Austria. The volumes for Germany comes partly out of our plant in Poland and partly actually third-party product, so it's a mix.

[Marcela Klang, Analyst]

And then could you -- in your estimate, in your view, how big was the calendar effect this quarter?

[Henrik Hjalmarsson, President & CEO]

To be quite honest, we actually haven't quantified at that level because it's really difficult and it varies a bit. This is -- quarter 2 is one of those quarters where across the Nordics you have different holiday patterns in all the different geographies, not the least because several of them have national days in that quarter. So we've just noted that we have a minor calendar impact, but we actually haven't qualified it. But I mean it's definitely in the single percentages.

[Operator]

Our next question is a follow-up from Johan Dahl from Danske Bank.

[Johan Dahl, Analyst]

Just a quick follow-up. You talked about acquisitions. I mean I appreciate the balance -- that it is what it is and your ambition is short term here, but you also talked about high valuations. Are we correct in sensing some sort of shift in attitude towards acquisitions right now? Is that sort of postponed for the last -- this half-year year?

[Henrik Hjalmarsson, President & CEO]

No, at least we've tried to be very clear. That we are an acquisition-driven business and our strategy will continue to be that. But in the very short term, we're going to focus on strengthening the balance sheet to get back to our target levels in terms of net debt-to-EBITDA. We're continuously working on scouting targets and obviously looking at valuations. But -- and we will get back to that. But step #1 is to get the net debt-to-EBITDA back to our target level and then we'll come back to those.

[Johan Dahl, Analyst]

And is it also a reflection of sort of less-optimistic market outlook for you guys?

[Peter Welin, Deputy CEO & CFO]

No. I mean if I -- that wasn't my intent to phrase it like that. What I mentioned in terms of valuation, what I meant was more actually on a positive note. Saying that in -- and to be quite honest, it's varies a lot across the different geographies because the situation is actually very scattered across our footprint and even more so if you look Europe. So in some areas where we've seen valuations that might've been, in our view, on the high side that's coming more to realistic levels, and in other areas, it might still be a bit -- but it varies a lot depending on the geography and depending on the situation there. So it was -- that was not the -- it wasn't the intent to send a pessimistic market outlook in the context of that acquisition -- the acquisition plans.

[Operator]

Thank you. And as there are no more further questions registered at the moment, I will hand the word back to Henrik and Peter for any closing comments. Please go ahead.

[Henrik Hjalmarsson, President & CEO]

No. We thank you very much for your attention, and we close the call now. Thank you very much.

[Operator]

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