Inwido AB (publ)

STO:INWI

Earnings Call Transcript 2020-Q3

[Operator]

Ladies and gentlemen, welcome to Inwido Q3 Teleconference 2020. Today, I am pleased to present CEO, Henrik Hjalmarsson; and CFO, Peter Welin. [Operator Instructions] Speakers, please begin your meeting.

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

Thank you very much. Good morning, everybody, and welcome to this presentation of Inwido's third quarter results 2020. I am Henrik Hjalmarsson, President and CEO; and with me, I have Peter Welin, CFO and Deputy CEO. Next page, please, Page 2. For the coming 25 minutes or so, we'll take you through just a brief introduction to Inwido, for those of you who are new, go through some of the details around our Q3 performance as well as the performance to date, a brief look into our updated sustainability compass. Then going into an update on the market outlook, our views on that as well as some of our key short term priorities. Peter will then go through the numbers in a bit more detail. I will wrap up with a summary, and there will, as usual, be plenty of time for questions at the end. Next page, please, Page 3. So for those of you are new to us, Inwido is the largest window group in Europe and a leading door manufacturer. We're a clear market leader in the Nordic region with a strong presence in the U.K. and Ireland. And I would say, an emerging position in -- amongst others, Germany and Poland. We have LTM Q3 2020 net sales of SEK 6.7 billion with an operating EBITA margin of 10.6%. And we have approximately 4,200 employees across 12 countries, predominantly in Northern Europe. And we market and sell all the fantastic brands that you see on the bottom part of this slide. Next page, please, Page 4. So summary, quarter 3 for Inwido then. I'm really happy to say that quarter 3 was the best quarter-to-date for the Inwido group in terms of results. We showed healthy organic growth and the sixth consecutive quarter with strengthened margins. Continued strong cash flows in the quarter, and I'll come back to that. Increased order intake as well as increased order backlog at the end of the quarter compared to the same period last year. Overall, in the quarter, we've seen positive consumer markets. However, the industry markets in general and particularly in Business Area North, remain a bit more cautious, and I'll come back a bit to that as well. In e-commerce, we saw a strong organic growth of 42%, really showing that the long-term investments for growth we've been making, coupled with a strong local management is really paying off. And e-commerce was 13% of group sales in the quarter. Next page, please, Page 4 -- sorry, Page 5. Looking in a bit more of the details in the quarter. Sales grew organically by 4% to SEK 1.716 billion. Operating EBITA grew considerably to SEK 247 million, up from SEK 203 million last year, which means that the operating EBITA margin came in at 14.4%, 2.2 percentage points up from the same quarter last year. Order intake was healthy, 7% up year-over-year, which means that the order backlog at the end of the quarter was up 18%. Our operating cash flow continued to be good at SEK 358 million, up SEK 39 million from last year. And altogether, this means that the net debt versus operating EBITA, excluding IFRS 16, was 1.2, which is considerably down then from the 2.5 at the same point in time last year.Next page, please, Page 6. In terms of COVID-19, we've actually seen, from a group perspective, relatively limited operational and financial impact in total in the quarter. The number of confirmed infected employees still stay at relatively low levels. We have, however, seen some operational disturbances, particularly in Business Area North, and that's been linked to higher-than-normal sick leave that has impacted our efficiency negatively than predominantly in production. The U.K. and Irish units, following the shutdown early in Q2, has continued to successfully ramp up, but are not yet fully at the pre-COVID activity levels, although moving in that direction. We've seen robust consumer markets overall and likely actually a positive COVID demand impact on, particularly e-commerce with more people staying at home. However, in summary, the long-term effects of COVID-19 still remain hard to predict. We stay very close to the situation on a business unit by business unit level and are ready with actions if and when needed. Next page, please, Page 7. If we look then into the business areas, starting with Business Area South, we saw strong profitable growth in the quarter. If we look at the ring charts on the right-hand side, you can see that the Business Area South has the vast majority of sales targeting the consumer segment, which we capitalized well on in the quarter. E-commerce, as I mentioned, grew considerably organically, 42%, also with a strong order intake, up 26% and a strong order backlog at the end of the quarter, 13% up. We saw a continued strong delivery in the larger Danish units, really capitalizing well on a robust consumer market. As I mentioned, the U.K. and Irish business units continue to open up towards pre-COVID-19 activity levels. Reported sales increased by 9% or organically 10% up to SEK 790 million, and the operating EBITA margin strengthened considerably by 6 percentage points to 24.7% in the quarter. And the order backlog at the end of the quarter was plus 36%.Next page, please, Page 8. If we look then into Business Area North, we saw a slight recovery in the consumer markets in the quarter. If we look at the ring charts again on the right-hand side of the slide, we see a substantially bigger exposure to the industrial markets in Business Area North, which also impacted the quarter. We saw a strong performance by the more consumer-oriented business units in Sweden, really capitalizing on the -- some of the recovery in their targeted segments. The industry markets overall, however, particularly in Finland, do remain cautious, and we're also yet to see full recovery on the in-home consumer sales segment in Finland. We did pleasingly, however, see margin improvement in Norway despite the quite considerable currency headwinds with the Norwegian kroner weakening.And as I mentioned previously, we have had some operational disturbances from high sick leave, particularly then in Sweden. Reported sales shrunk slightly by 1%, but organically, a slight growth to SEK 894 million. The operating EBITA margin strengthened by 0.2 percentage points to 8.2%, and the order backlog at the end of the quarter was 7% up versus the same time last year.Page 9, please. Looking then at Inwido's development the first 9 months. I think we can summarize that in 3 bullets. We've seen strong e-commerce performance, capitalizing on a strong underlying trend with good profit development. We've capitalized well on robust consumer markets overall, particularly in Denmark. And we've shown good cost management through this turbulent period, really bolstering our margins throughout the period coming up till today. Sales has grown organically by 2% to SEK 4.882 billion, and the operating EBITA has strengthened to SEK 498 million versus SEK 435 million last year, which means we have increased the operating EBITA margin by 1.2 percentage points to 10.2%. And operating cash flow has been good in the first 9 months, up to SEK 872 million versus SEK 532 million in the same period last year.Next page, please, Page 10. So just to give you an update on our updated sustainability compass. In terms of sustainability, that's really at the heart of what we do at Inwido, given that a large part of our business is actually about replacing older, less energy-efficient windows with newer, more energy-efficient ones, thus contributing to better energy efficiency in homes and offices and reducing energy consumption and consequentially then climate impact. Our motto is quite simple. We give more than we take, and we do that because sustainable business drives sustainable value. Our updated compass has 3 pillars to it, where the first is to be an environmental friend because we need natural resources to do responsible business.This is, obviously, to a large extent, about reducing our climate impact, but it's also about making sure that we use raw materials from renewable sources, reducing our air emissions, and, for example, also making sure that we reduce waste in our factories. Our second pillar is to be a good place to work because empowered colleagues make a difference. Here, it's also, obviously, to a large extent, about ensuring a safe and healthy workplace for our employees to come to every day. But for example, we also invest in leadership to make sure that our leaders as well as our employee -- the rest of our employees are the best people they can every day at work. And the third pillar is to be a responsible business because aligning with society and society's expectations creates more opportunities. Part of this is obviously about making sure that we're compliant and that we continue to do business in a responsible way. But as an example, we also invest in our local communities to make sure that our local businesses can thrive in their surroundings for a long time to come.Next page, please, Page 11. Looking then at our view on the market outlook. We entered quarter 3 in the winter season, which normally has lower seasonal demand, particularly consumer activity, but we do so with a stronger order backlog than at the same time last year. We see, in the near term, overall positive consumer demand fueled partially by rising house prices, but also changes in behavior, and we see pockets of potential government stimuli in some of our geographies. We see an industry market in the near-term in Sweden and Finland that is still a question mark and a bit uncertain in terms of development. We do see underlying demand potential in Ireland and the U.K., creating some market potential, but obviously, dependent on the COVID-19 development as well as the Brexit negotiations and the outcome of those.And last, but not least, we see a strong underlying growth potential in e-commerce with new customer behavior starting to cement.Next page, please, Page 12. If we look then at our short term priorities, they remain largely the same, focusing and managing our way through COVID-19, while building for growth. So we will continue to strengthen our positions in our key geographies in these quite dynamic market conditions under COVID times. We will continue our investments for e-commerce growth. We will continue with the proactive cost management in the face of changing demand and challenging markets if and where we see them. We will make sure to have an ongoing screening of and in dialogue with select acquisition targets to also put some more efforts into our inorganic growth journey, and we will continue our actions to drive growth and capitalize on market opportunities where we see them.Next page, please, Page 13. And with that, I hand over to Peter, who's going to take you through a bit more of the numbers. Please, Peter?

[Peter Welin, Deputy CEO & CFO]

Thank you so much, Henrik. Then I go to Page #14, please. On this page, we can see the income statement for the group. To the left, we can see Q3 2020 as well as 2019. Then in the middle, we can see year-to-date. And then further to right, we can see rolling 12 months as well as 2019. If we start at the quarter, sales was plus 3%. Organically, it was plus 4%. The adjustments then is only within the currency. Gross margin was improved this quarter from 26.6% to 27.6%. And in combination with higher sales and also with higher gross margin, and also lower overhead costs, operating EBITA was improved by 22% from SEK 203 million to SEK 247 million. In the quarter, Inwido had restructuring costs of SEK 7 million, mainly related to close down of central project as well as cost connected to COVID-19. So EBITA ended at SEK 240 million compared to SEK 203 million last year.Further down the income statement, we can see that earnings per share was up 19% compared to last year from SEK 2.56 to SEK 3.05. If we then look at the year-to-date figures, sales is plus 1%. Organically, it's plus 2%, then only adjusted for currency. Operating EBITA, plus 14% from SEK 435 million to SEK 495 million. And earnings per share is up 8% from SEK 5.2 to SEK 5.61. That gives a rolling 12-month sales of SEK 6.695 billion and an operating EBITA minus 10.6%. Inwido has now, the latest 6 quarters, been able to improve operating EBITA and thereby, we are up to 10.6% in operating EBITA margin. If we then turn page, we go to Page #15. This page is showing sales for the quarter to the left and the order intake for the quarter to the right, 2020, 2019 and 2018. We, again, see that sales was plus 3% in the quarter. Once again, organically was plus 4%. North had the same organic sales more or less on a level as last year, where South had a growth of 10%, where e-commerce was plus 42%. We have e-commerce in Denmark, Sweden, Norway and Germany, mainly.The other brands in Denmark had also positive growth in the quarter, where sales in U.K. and Ireland had declined in the quarter. In total, we had higher sales within consumer sales, which is also positive for the margins. If we look at the order intake, the order intake was plus 7%. Here, North had a growth of 3%, and South had a growth a 13% where e-commerce was plus 26%. But also the other Danish units had a growth when it comes to order take and also in Ireland, we had a positive growth when it comes to order intake.If we then turn page, we go to Page #16. This page is showing the backlog end of each quarter from Q3 2015 until Q3 2020. Inwido started this quarter, Q3 2020, with a higher backlog compared to last year. Then in the quarter, order intake was plus 7% and sales was only plus 3%, thus, has the backlog continued to grow and was end of the quarter plus 18% compared to last year, equal to SEK 1.380 billion, meaning SEK 201 million higher backlog compared to last year. And this is the highest backlog ever for Inwido. North was plus 7% in the quarter and -- end of the quarter, and South is plus 36% end of the quarter compared to last year.If we then turn page, we go to Page #17. This page shows operating EBITA and operating EBITA margin for the quarter to the left and year-to-date to the right for 2018, 2019 as well as 2020. We cannot say that the margin has been improved in the quarter, 14.4% compared to 12.2% last year. And in 2018, it was 12%. And looking at the year-to-date, it has been improved from 9% last year to 10.2% this year. And in 2018, we had 9.2%.The improvement comes from higher sales. We are in the quarter, plus 4% organically. Year-to-date, plus 2%. We have higher gross margin, 1% higher present unit in the quarter, and we have also lower overhead costs. And a combination of that then improved the margin to 14.4% in the quarter. Looking at the year-to-date and an operating EBITA of SEK 498 million is the highest to date for Inwido for the period January to September. We then turn page. We go to Page #18, please. This page is showing the net debt end of each quarter as well as a net debt versus EBITA. and these figures are excluding -- or are excluding IFRS 16. Net debt has decreased in the quarter and was end of the quarter, SEK 1.017 billion, excluding IFRS 16, a reduction of SEK 993 million compared to last year. Net debt-to-EBITDA has been reduced from 2.5 last year to 1.2. And in September 2018, the net debt-to-EBITDA was 3.0. Inwido has deferred of taxes and the fees of SEK 54 million in Q3 related to COVID-19. If these would have been paid in Q3, the net debt-to-EBITDA would instead have been 1.3 and not 1.2. Including IFRS 16, the net debt would have increased by SEK 361 million, and the net debt-to-EBITDA would instead have been 1.3 instead of 1.2. The cash flow has been approved also in Q3. You can see to the right, the cash flow from operating activities year-to-date for '17, '18, '19 and '20. Please notice that '17 and '18 are excluding IFRS 16, whereas '19 and '20 are including IFRS 16.The operating cash flow has been improved in 2020, thanks to higher results, less tax payments and improved working capital. For working capital, the main driver has been increase in operating liabilities. This includes the deferral of taxes and fees of SEK 54 million, which are related to COVID-19, which will be paid in Q4.I now hand over back to Henrik.

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

Next page, please, Page 19. So if we summarize quarter 3 then, we saw overall good consumer activity with, again, a strong e-commerce performance. We had healthy organic growth and a sixth consecutive quarter of strength in margins, leading then to the best operating EBITA result to date for the Inwido Group. We saw continued good cash flows throughout the quarter, building on strong cash flow performance earlier quarters, which has now enabled and intensified M&A activities. COVID-19 impact in the quarter was limited, although, as I mentioned before, it has held back activity and also impacted efficiency negatively in pockets in the group. We entered the fourth quarter with a stronger order backlog than at the same time last year. And a relatively stable consumer market outlook. But as I said before, the long-term COVID-19 consequences are still difficult to predict.Next page, please, Page 20. And before I open up for questions, I'm just going to remind you that we have a Virtual Capital Markets Day on November 5, between 10 and 12 CET. You're very welcome to register, and you'll find the link on our website, inwido.com. With that, I will leave room for questions, and I'll hand over to the operator. Operator, please.

[Operator]

[Operator Instructions] Our first question comes from the line of Adela Dashian from Handelsbanken.

[Adela Dashian, Analyst]

My first question relates to the consumer market. Could you please give us some insight in what's going on in the specific countries that you operate in? And especially as it relates to Business Area North. You mentioned that consumer-oriented business units in Sweden are holding up quite nicely while consumers in Norway and Finland are acting more cautiously. And overall, I noticed that sales within consumer was -- within this area declined by 2% year-over-year, but at the same time, your order backlog increased by 7% for this business area. So how much of that is driven by the consumer market? And what are your expectations as it relates to demand for Norway and Finland going forward?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

So to try -- thanks, Adela, Henrik here. To try to answer that as succinctly as I can. A couple of dimensions to take into consideration. The first one is the development of the consumer market has been a bit disparate for the different segments. So what we typically call small works, which is smaller window orders in the range of, let's say, ordering 2 to 5 windows, doing smaller repairs and refurbishments on your home, that segment has been quite strong overall, and that's what we refer to as a robust consumer market overall. And we've seen some of that, hence, also where we mentioned a slight positive COVID impact on e-commerce sales, partly due to that.However, the larger projects on the consumer side, big renovations and big additions, that market in general and particularly in Business Area North, has been a little bit softer, and potentially, as consumers have been a bit more hesitant to take on 2 big projects given the uncertainty of the economic outlook. And the situation is such that in the -- let's say, in the Danish geography, typically, we are stronger positioned against small works whereas our sort of position in Finland is quite general across the segments. And in Sweden, if anything, we're probably more targeting in our businesses the bit larger project side. However, another factor to factor in is the fact that the in-home consumer sales segment in Finland, which is a quite large part of the Finnish market, has still not quite recovered from the limitations put by governments and authorities following COVID-19. So to do in-home sales and particularly proactive in-home sales, which is a reasonable part of our sales there, has been more difficult. And if we -- to answer your other question about predictions going forward, it's very difficult, obviously, because there is a lot of uncertainty due to COVID-19. But our short-term impression is that the consumer market looks to be quite stable for the coming period. Obviously, we always have a seasonal impact in the winter season. But look from a -- if we look at it from a seasonal perspective, quite stable, at least in the near term. In the long term, I would say there's a lot of factors playing in. So I'd say a bit more difficult to predict.

[Adela Dashian, Analyst]

That makes total sense. If I could also move on to the industry market then. Why then it's declining growth in Business Area North but pretty solid developments in Business Area South, so what is driving this development? Is it related to specific region or market or something else, I think growth was up about 44% within industry in Business Area South.

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

If you look at that, obviously, the base for industrial sales in Business Area South is relatively small. So any changes in mix and some more project sales in some of the key business units that will have an impact. So that's probably more the explanation of that. If you look at Business Area North where we have bigger industrial market exposure, the market has been quite hesitant, and it was also, to some extent, I think, in terms of pace of work impacted by COVID-19. And we've seen that probably more in -- more so in Finland even than in Sweden. But overall, it has been impacted negatively, I'd say. So the market -- the industrial market has been a bit softer. Whether -- how much of that is a temporary COVID-19 impact, and how much of that is an impact on building starts is a bit too early for us to say really, but we have seen some of that impact in the quarter.

[Adela Dashian, Analyst]

Got it. And then finally, on the U.K. and Ireland, you mentioned that operations have reopened, but not running at the same capacity as prepandemic levels. Could you give us some details on what capacity levels you're currently running at? And how customers within these markets are acting given all that certainty that's going around?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

Yes. So I think at the moment, obviously, if we start with the first part of that question, if we look at that, we are -- we see that customers are a bit hesitant for 2 reasons. One is obviously COVID-19 and the reopening following that. But there is also the second aspect of the Brexit negotiations, which is entering some sort of critical phase, which is partially impacting that. If you look at the quarter in total, I would say that we ran on average at maybe 75% of the pre-COVID capacity level, something like that, 70%, 75%, and maybe even a little bit more of that towards the end. But it's still not at full capacity. And part of it is actually just the timing and resource allocation issue. It takes some time to recover from the full shutdown that we were then -- us and the rest of the industry were forced to do early in Q2.

[Operator]

Our next question comes from the line of Victor Hansen from Nordea.

[Victor Hansen, Research Analyst]

Peter, this is Victor from Nordea. So I'll start off with is the better Danish and Swedish performance, in particular, due to the market growth? Or is it good performance specifically for Inwido, possibly due to your e-commerce or sort?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

I think there are 2 things, Henrik here, 3 things to keep in mind there. So number one, we've made some conscious investments to capitalize on the type of market that -- the type of market development that we're seeing now. So from that respect, I think that there's probably a slight advantage for us versus competition, given those. The second one to keep in mind is that from a mix perspective and how we're positioned with the strong e-commerce position that we've had and that we've consciously built up over time, obviously, we're benefiting from it. I would say that, in totality, there is a bit of a mix. But to your question, and I think we are -- and this is a bit speculative actually because we don't really have full market share data, but I would expect us to do slightly better than competition in some of those pockets. But definitely, there is a good underlying demand. And as I alluded to in the presentation, we have seen some positive COVID impact, particularly for e-commerce that we're able to capitalize on, but it's also, obviously, impacting competition positively.

[Victor Hansen, Research Analyst]

Very interesting. And for the second question, you talked a lot about upcoming M&A. Can we expect something already this year? And could you possibly elaborate on the characteristic of the acquisition, if it will be within e-commerce, new technology, which -- a new geography or maybe something related to your green profile, for instance?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

We have -- so in terms of timing, I wish I could shed more light on that, but it's very difficult, partially because, obviously, doing these processes at the moment is a bit complex with limitations in travel. But secondly, also because it takes two to tango, and we're going to make sure that the price, the targets and the integration plan is right before we do anything. so we have a number of ongoing dialogues. We're looking at targets actually at the moment across both Business Area North and Business Area South. And I would say that, in general, we are interested in continuing to strengthen the positions that we have in the stock segment, including in e-commerce. We're interesting in further expanding our portfolio to take biggest chunk of our customer sales where we are strong. And we're also interested over time to strengthen the, let's say, the overall sustainability aspect of our offering and to make that further stronger. So not able to shed much more light than that other than to confirm that there are -- discussions are ongoing and timing will, unfortunately, have to be when timing will be.

[Victor Hansen, Research Analyst]

Very interesting. And one further question on M&A. Will the acquisition be a bolt-on or possibly an additional business unit? And can we expect margins in line with the group or maybe it's starting to become...

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

I mean, we've said normally that we look at acquisitions in 3 levels of tiers, really. So the first one being what's typically then a little bit smaller acquisitions, which would be bolt-ons to be used either to strengthen the geographic footprint or to add something on to that portfolio. We're looking at what we call business area bolt-ons, which is actually with an existing geography, for example. We would acquire something that's big enough to be a stand-alone business unit, but which would add some sort of dimension or proposition or customer segment to that geography. And the third level then being something bigger that will be more transformational in new geographies or whatever. And I would say, at the moment, we're looking predominantly at those 2 first ones and both of those. So it could be something that would be a new business units or it could be a bolt-on to an existing business unit. In terms of how margin accretive it will be, it's very difficult to say because the -- both the level of integration synergies and the absolute margin level of the businesses we're looking at is quite disparate. So I can't really give a real -- rule of thumb in that respect.

[Victor Hansen, Research Analyst]

Okay. I understand. Business Area South, the EBITA margin were 6 percentage points better than last year. Could you please shed some light on how much of the improvement came from lower discretionary spending? And how much were from e-commerce or other accretive actions?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

I can't give you an exact number, but they were -- I wouldn't say that there were 3 clear elements to it. Number one is mix. So good performance in the segments and the business units where we have stronger margins. Two, was actually a sheer volume impact. As you see, we've had good organic and absolute growth. And obviously, that growth has then helped us prop up margins because we get better variable contribution with new volumes. And the last one is, obviously, we've done a clearly good job despite the volume growth and with cost control overall, both in Business Area North and Business Area South, but it's supporting margins positively in South.

[Victor Hansen, Research Analyst]

Yes. Okay. And 2 more questions, if I may? Did you repay any government postponed tax in Q3 that you got from Q2?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

I'll let Peter answer that one.

[Peter Welin, Deputy CEO & CFO]

Yes. Somewhat prepaid. We have taxes and VAT, especially in Denmark, that were paid in Q3 that were related to Q2. And then we have another payment of SEK 54 million who are related to Q3 that will be paid in Q4.

[Victor Hansen, Research Analyst]

Got it. Last question. How are you preparing for a second virus wave?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

So I think overall, we've been quite I would almost say, relentless and ultra disciplined. So we've been very clear and have actually done quite a lot of work already coming back after the seasonal holidays in the industry to not let down the guard in this respect. So to most respects the precautionary measures and the activities that we've taken are in effect. I think the key area, which is -- so in terms of protecting our employees and doing our part to limiting the spread, which have been 2 very important priorities for us, we have good experiences from this spring, and we are keeping the pressure high. I think the area, which is more unpredictable and in some respect, perhaps, more difficult is if we see any substantial impact on demand as a consequence of a, call it, second wave or whatever you will. And they think -- in that respect, we stay very close to the situation on a business unit by business unit. We continue to be very cautious with costs and particularly not to accelerate cost now because we've had a, what we'll have to say is a good quarter, but actually to stay very tight on cost and also be prepared to do more in that respect if we have to.

[Operator]

[Operator Instructions] Our next question comes from the line of Kenneth Toll from Carnegie.

[Kenneth Toll Johansson, Financial Analyst]

Yes. So I have one question on the overall cost. I mean the demand has in some areas have been improved by the COVID-19-related effects on how we live our lives and so on. But also, I was interested on the overhead costs, like SG&A costs and so on, do you feel that your sales force is up traveling again and that the cost side have normalized after the COVID-19 in both North and South?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

Yes. I mean -- Kenneth, on a relative level, I would say that we are -- there are probably pockets of lagging COVID pickup left, but from a group perspective, almost not on a material level. So particularly at the back end of the quarter, I would say that we're up to more normal levels from an SG&A and overhead perspective. We have, obviously, been quite good at holding back general activities. And if you look at -- if we take away sort of business-based travel, so as to go see customers and sell, et cetera, so conferences and things like that, in general, is obviously still being held back. So whether that's the new normal or not, I guess, it remains to be seen, but there, the cost levels are still a bit lower. But on a general level, yes, we are basically up to sort of overall pre-COVID activity levels, probably with some exceptions. And that has obviously ramped up continuously in the quarter. So at the start of the quarter, it started a bit softer, but activity levels more and more regained over the quarter.

[Kenneth Toll Johansson, Financial Analyst]

So the majority of the improved margins comes from this business mix that you have more consumers in your business and the growth there rather than costs being very low at the moment?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

That's correct. Yes. The biggest proportion comes from the business unit and the customer segment mix.

[Kenneth Toll Johansson, Financial Analyst]

Excellent. And then and again, surprised a little about the growth in e-commerce being very strong. And could you do -- can you talk a little bit about that? I'm interested in the drivers. Do you see cannibalization in other businesses you have due to this? And when will you run into capacity problems to produce this?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

Yes. I mean, if we start with the drivers, I think we're quite proud actually, of the work that we have done. And obviously, all the credit should go to -- well, a lot of the credit actually goes to the leaders in the business. And we've also made some quite conscious growth investments but obviously, acquisitions here in the last 6, 7 years to build their business. Looking at the drivers, I think the drivers are quite similar to the overall drivers of e-commerce behavior in the industry. We have -- and so it's about transparency and, to some extent, actually about convenience. And not to forget here also, we still have quite a broad proposition. What I think that we've done really well as an industrial player entering this is that we've built a very strong integrated supply chain. So we control the manufacturing of the product, the shipping of the product, the pricing of the product, the configuration of the product. So we talk about this. This is an e-commerce business, but it's still very much a window business at heart, which I think is a strength for us in this respect. If we look at the capacity perspective, fortunately, we've made some investments in 2018 into expansions in our Estonian plant that supports the e-commerce business. We've also acquired, in 2018, when we acquired a business, we also got through that acquisition a plant in Romania that supports the growth. And I think we've done a really good job here in the period capitalizing on this. And we will likely -- we have high expectations and plans for this business going forward. So we would likely have to continue with some decent investment levels into these supply chains to continue to support the growth.

[Kenneth Toll Johansson, Financial Analyst]

Okay. But it's more expanding the capacity in the existing plants rather than building a large new plant somewhere?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

That's correct. Yes, and I think if we were to increase our capacity in dimension, we look at either synergies with our other production sites, obviously, alternatively, as we look at acquisitions, in general, going forward, there is, obviously, -- this is one dimension to take into consideration that we've got an opportunity here to drive volume in an e-commerce business that could help us fill factories depending on what type of acquisitions we make.

[Operator]

Our next question comes from the line of Roland Könen from Value Holdings.

[Roland Könen, Fund Advisor]

Congrats to the results, very strong. Just one question is left. It's a housekeeping question, question concerning the tax line. You had considerable lower tax rate in...[Technical Difficulty]

[Operator]

Unfortunately, the line broke for Roland. So maybe he will dial back in again. In the meantime, we have a question from Julius Rapeli from SEB.

[Julius Rapeli, Analyst]

Congrats on an impressive report. Only one question from my side regarding the competitive situation within the different markets and especially regarding pricing. Could you just comment a bit on the pricing situation in different markets at the moment, and what you're seeing and how this COVID crisis is impacting the situation?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

Yes. Julius, I mean, in general, normally -- it's a bit standardized almost the answer, but it's quite disparate as these are our businesses and the channel structure in a different geography. We have probably pockets in the very strong consumer performance. I mean particularly in e-commerce, probably, I would say. There might -- there's -- in that type of growth situation, obviously, a lot less price pressure because capacity becomes almost a constraint. Whereas in other geographies, and if we look, for example, at the industrial markets in Business Area North, probably a bit more price pressure in general. So it varies a little bit across the different geographies. I want to say, overall, I think in the quarter -- in the last quarters, we've done a good job trying to turn our mix to the more favorable pricing developments and try to capitalize where there is opportunity. And obviously, we will try to continue that work going forward. But it's hard to do any sort of real predictions on the development going forward is also difficult as the situation is, if anything, unusually dynamic.

[Operator]

There are no further questions registered, so I hand back to the speakers for any closing remarks.

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

Yes. Okay. So we have a couple of questions via e-mail as well.

[Peter Welin, Deputy CEO & CFO]

So for the first question that's come from [indiscernible]. He is asking regarding government support programs in the quarter. It has been used of costs in COGS or in overhead costs.And the answer is, yes. We have received SEK 2 million in the quarter, and we have booked that at reduced costs in the quarter, SEK 2 million is the answer.Then we received some questions from [indiscernible]. The first question is related to U.K. How would a Brexit without a trade deal affect Inwido?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

Yes. And I think in general, it's obviously as for everybody a complicated question to answer. We -- I think, in general, we're in a situation -- quite a good situation to manage even a hard Brexit deal mainly as our U.K. units have the majority of their supply locally and, in general, quite local supply chains. Then obviously, if there is a hard Brexit deal to get a full view on the end-to-end supply chain further steps back from yourself is very difficult. But at least in the short term, we're in a relatively good position. Secondly, the U.K. is -- I mean, from our perspective, a relatively limited part of our overall revenue. And the -- well, I guess one of the challenges we have would be then transportation, particularly into our Irish businesses, but I think we have that a relatively good plan for us as well. So it would definitely, as for everybody, be a bit of a challenge, but I think we stand relatively well prepared to manage that compared to other industries and other competitors.

[Peter Welin, Deputy CEO & CFO]

The second question from [indiscernible] is regarding backlog. The sales order backlog is huge. The margin will be a lot higher in the future. Is that a correct assumption?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

I mean, we don't forecast margins on any level, but the facts are that the -- we have a strong order backlog for Business Area South, and we have shown over time a good operating EBITA margin development for Business Area South.

[Peter Welin, Deputy CEO & CFO]

Then now we see the question from [ Harald Haven ]. He's asking regarding that we said -- we mentioned pockets of potential government stimulus. Could you please elaborate on this market or Inwido market?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

Yes. I think it's -- actually, it's quite hard to give a summary by market because the situation is a bit different in different geographies. But there have been and are some ongoing discussions to expand partially existing programs or to do new ones. We have seen some in the U.K. on the renovation -- supporting renovations. We have seen some discussions in Denmark. The exact status of that I actually am not fully up-to-date on, but we have an ongoing dialogue about that. And we have seen some discussions in Finland, predominantly. Those are the 3 main ones regarding this. So we wouldn't be -- we are not banking any of these in terms of our outlook, but we wouldn't be surprised either if we see in at least one geography, some sort of stimuli program. But as I said, it's a bit too early to say exactly what it's going to be and what it's going to mean for us.

[Peter Welin, Deputy CEO & CFO]

Then we hand over back to the operator, because I think Roland, the person who was disconnected is back online again, so he can ask his question.

[Operator]

Yes, indeed. The next question comes from the line of Roland Könen from Value-Holdings.

[Roland Könen, Fund Advisor]

Yes. Sorry for the technical issues, I was disconnected. It's just a housekeeping question concerning the tax line. You had a really low tax rate in 2020. What are the reasons for that? And is this tax rate sustainable for the next years?

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

If we look at year-to-date, the tax is 19% of -- that is for taxes. And then last year, we were 20%. So it's a difference of 1%. And that is more related to the mix. And also that we have some unused losses, taxes going -- unused tax losses that were not used in some countries, especially in Norway, that we now can utilize. Meaning when we now make profit in Norway, we don't have to pay taxes because we have that on the balance sheet. Going for the future, I think it's the normal realization is around 20%.

[Operator]

We have no further questions registered. So I hand back to the speakers.

[Henrik Hjalmarsson, President, CEO & Executive VP of North]

We actually had one last question then also, which was what kind of acquisitions do we aim at? More regular brick-and-mortar or some kind of specialist company, but I think we've already answered that question in terms of our M&A plans going forward.So with that, we thank you very much for your attention. And we close the call there. Thank you very much. Bye-bye, everybody.