Inwido AB (publ)

STO:INWI

Earnings Call Transcript 2021-Q4

[Operator]

Ladies and gentlemen, welcome to the Inwido audiocast with teleconference Q4 2021. Today, I'm pleased to present CEO, Henrik Hjalmarsson; and CFO, Peter Welin. [Operator Instructions] Speakers, please begin your meeting.

[Henrik Hjalmarsson, President & CEO]

Thank you very much. Good morning, everybody, and welcome to this presentation of Inwido's fourth quarter and full year 2021 results. My name is Henrik Hjalmarsson, I am the President and CEO. And with me, I have Peter Welin, CFO and Deputy CEO. Next page, please, Page 2. We will spend the coming half hour or so going through a brief introduction to Inwido, for those of you who are new to us, an update on the Q4 performance as well as the full year, a quick look into the M&A status, a few words on the market outlook as well as our short-term priorities. Peter will then go through the detailed financials. I will come back with a short summary, after which there will be plenty of time for questions. Next page, please, Page 3. So a brief summary. For those of you who are new to us, Inwido is a leading window group in Europe. We are a clear market leader in the Nordic region with a strong presence in the U.K. and Ireland as well as emerging positions in Poland as well as Germany. We had net sales in 2021 of SEK 7.7 billion with a return on operating capital of 16.9% and roughly 4,600 employees in the geographies you see marked in dark blue on the map on the right-hand side. And we market and sell all the fantastic brands that you can see on the bottom of this slide in the geographies highlighted on the map. Next page, please, Page 4. As a group, we have a clear and proven value creation model, which is a defined way for our approach to drive sustainable shareholder value. There are 5 elements that are the basis of its value creation model. They ensure that we deliver long-term and cost-efficient customer as well as employee value in a sustainable way and hence drive shareholder value over time. It's based on our ability to improve businesses to drive profit. And as we acquire businesses, we plug them in, obviously, then being sensitive to their start point, both to protect the base of the business, but also to maximize the incremental value that we can drive out. And those 5 elements are: to drive efficiency synergies from particularly sourcing and technology; to run a decentralized accountability with a strong business and customer focus, clear local leadership and drive with strong accountability for the results; a clear performance management methodology and a strong KPI structure to drive the right behaviors as well as to be focused on the results generated all the time; we are focused on capital efficiency and allocation; and we do this to give room for value-creating M&A as well as investing for growth. And the umbrella over all of this is a clear belief in an ambition to drive a sustainable business for a sustainable future.Next page, please, Page 5. So looking then briefly at the fourth quarter, which was a strong growth quarter for Inwido. We saw favorable markets in general, both on the consumer and the industry side, and continued good order intake overall for the group. A record high growth rate of 21% and the seventh consecutive quarter with organic growth. We continue to strengthen our positions on our core markets and continued considerable investments in M&A resources and efforts to deliver on our ambitious growth journey. We did see, in the quarter, some margin pressure, particularly in Business Area North, which I'll come back to, due to continued cost increases on input materials and transportation, which we then naturally continuously compensate with price increases, but with some time lag. Next page, please, Page 6. Looking at the numbers for the fourth quarter. Sales grew 21% or 19% organic to SEK 2.175 billion. Operating EBITA strengthened SEK 13 million to SEK 244 million, which means a slight decrease in the operating EBITDA margin to 11.2%. Order intake up 7% or 5% adjusted for acquisitions, which means that the order backlog is still very strong at the end of the quarter, up 62% year-over-year or 56% adjusted for acquisition. This also means that the net debt versus operating EBITDA decreased to 0.6x, down from 1.1x last year or 0.3x if we exclude IFRS 16 impact. Next page, please, Page 7. If we look then at Business Area South. As you -- most of you remember and as you can see in the ring chart on the right-hand side, in South, we have a strong exposure to the consumer market. And that pleasingly helps us drive strong growth and improved margins in the quarter. The larger Danish units continued to grow sales as well as margins in an overall favorable consumer market climates. We saw a strong market for renovation as well as new construction in both Ireland and Poland with recovering market activity. And we've done a good job capitalizing on that in those geographies in the quarter. E-commerce grew sales by 4% organically against very strong comparables from Q4 2020. And closed with an order backlog up 20% year-over-year despite also here very strong comparables from last year. Reported sales grew 16%, or 17% organically, to SEK 889 million, and the operating EBITA margin strengthened by 0.9 percentage points to 19.7%. The order backlog at the end of the quarter, up 29% year-over-year. Next page, please, Page 8. Looking at Business Area North then. We saw strong growth and good order backlog at the end of the quarter. Sales grew fueled by strengthened positions on both positive consumer and industry markets in North. As you can see on the right-hand side in the ring chart, we have considerably larger exposure to the industry markets in Business Area North, where we know that we have longer price commitments, which also then impacts our ability to counter input material inflation in a quick way. This, together with a relatively seen larger impact from a COVID-related absence, impacting particularly the larger units in North efficiencies negatively has impacted our margin then in the quarter. Reported sales grew 25%, organically strong growth of 21% to SEK 1.242 billion. The operating EBITA margin is slightly down to 6.1% and the order backlog at the end of the quarter, very strong, up 92% year-over-year. Next page, please, Page 9. Looking then at the full year summary for 2021. Well, it's really pleasing to see that we achieved the best year so far in the Inwido history with some margin actually. We clearly exceeded our new long-term targets with a sales growth of 16% to a bit more than SEK 7.7 billion, a return on operating capital of 16.9% and, also very pleasingly, some good progress on the sustainability front, not the least with a considerably improved alignment with the Taxonomy screening criteria, up to 61% from 45% last year. Our operating EBITA grew to SEK 907 million with an operating EBITA margin then growing by 0.8 percentage points to 11.7%. Overall, good capitalization on the consumer and industry markets, and in summary, this means that the Board proposes a dividend to the Annual General Meeting of SEK 6.15 per share for 2021. Next page, please, Page 10. As I mentioned, I'm very happy with some continued progress on our sustainability work in 2021, not the least that we were able to decrease our carbon dioxide emissions per unit considerably to -- with 39.1% decrease. We decreased our waste generation with 2.8%, our hazardous waste generation with 20.7%, while increasing the amount of wood from sustainable sources to 97%. We also, in 2021, committed ourselves, which I'm very happy about personally, to the Science Based Targets initiative. And, as I mentioned, grew considerably the amount of sales that meet the EU Taxonomy screening criteria to 61%.Next page, please, Page 11. As many of you know, value-creating M&A is a key growth driver for us. So we are working hard to accelerate our M&A activities to deliver materially acquired growth for the group on an annual basis. We continue to strive for a positive multiple arbitrage and in case of stand-alone business acquisitions, also leveraging a 2-step acquisition process. The picture that you see on the right-hand part of this chart are the 8 sort of key criterias that we used to assess and close on transactions where we focus on windows and doors, profitable businesses with strong positions preferably in the renovation segment. We look for good management, synergy opportunities, either on the operational sourcing or commercial side with our existing businesses in the European territory and also interested to add incremental capabilities to the set of capabilities that we already have within the group. And as I said earlier, we are continuing to increase our efforts in this area to help this drive our ambitious growth journey. Next page, please, Page 12. We also recently launched new long-term targets for Inwido, focusing on driving sustainable value through sustainable business. These are 6 key targets in our -- for our long-term ambition where we strive to achieve a revenue of SEK 20 billion by 2030, while returning above 15% on operating capital and maintaining a net debt in relation to operating EBITDA of less than 2.5x. We also strive to pay out approximately 50% of our net profit to our shareholders as a dividend. Also, we want to continue to raise the bar in terms of sustainable development by striving to meet ambitious 2030 Science Based Targets for the reduction of greenhouse gas emissions and striving to achieve above 75% alignment with the EU Taxonomy screening criteria for our window and door sales.Next page, please, Page 13. To further facilitate this and to drive for this ambitious growth journey, we have then launched a new structure as well as organization from the 1st of January going from 2 business areas, North and South, to 4 business areas. This allows us to have a stronger focus on growth and sustainable development. Myself, as President and CEO, will oversee the new business area, Western Europe, Antti Vuonokari, the Executive Vice President for Eastern Europe will oversee the businesses in Finland and Eastern Europe. Mads Storgaard Mehlsen, who will join the 1st of April as Executive Vice President of Scandinavia will oversee the new business area, Scandinavia. And Bo Overgaard Christensen, previously Managing Director for the e-commerce business will take a role in group management as we now report our e-commerce business as a separate business area, and Bo will oversee that.Meanwhile, Jonna Opitz, in addition to heading up communications, will also look after and drive synergies out of our premium businesses across the territories. Peter Welin, in addition to his role as CFO, will also oversee the internal supply businesses; and Lena Wessner, as Executive Vice President, Human Resources, Organization and Sustainability will support the development and growth of the businesses across all of those different segments. I'm really happy to have a strong management team by my side and also to see that we're increasing the granularity and transparency of reporting while more clearly highlighting areas for growth for the future. Next page, please, Page 14. In terms of the outlook, well, we obviously entered 2022 with a strong order backlog and strengthened positions in our core geographies. We see a near-term healthy activity levels on both the consumer and the industry markets. But in the medium term, for 2022, it is hard to protect -- predict how input material inflation, transportation costs, global material bottlenecks as well as lifted COVID restrictions across the societies will impact demand. We continuously increase our activity levels on M&A to drive our growth. And we remain very optimistic in terms of long-term increasing demand for energy-efficient windows and doors as the desire to invest in a good and sustainable lifestyle indoors increases.Next page, please, Page 15. So in terms of our short-term priorities then. Well, we aim to continue to maintain a very close eye on input material inflation for swift and resolute price adjustments, where they are needed. We will maintain a customer focus and strong execution in what remains a very dynamic overall environment. We continue to increase our M&A efforts. We drive value-generating investments in growth initiatives across the group to achieve organic growth. And we will continue to increase efforts in our sustainability agenda.Next page, please, Page 16. And with this, I'm going to hand over to Peter, who's going to take you through the details of the numbers. I know that Peter has been a bit ill, so he still has a lingering cough, so not to worry if you hear Peter cough a bit during the presentation. Peter, please?

[Peter Welin, Deputy CEO & CFO]

Thank you so much, Henrik. And then let's go to Page #17. And as Henrik said, I have a little bit problem with my coughing. I would try not to cough directly into the microphone, so I will then unmute. So if it's suddenly silent, it doesn't mean I have disappeared. It means I just unmuted to be able to cough. So we start with Page #17 then, please. On this page, we can see the income statement for Q4 to the left for 2021 as well as 2020. And to the right, we can see the full year impact. If we start with the quarter. Sales was plus 21% compared to last year, organically plus 19%. Gross margin was down by 0.7% units from 26.8% down to 25.9%, mainly due to material inflation. We have higher material costs in the quarter compared to last year. And we had also supply chain issues as well as higher sick leaves, especially end of the quarter. However, we have some positive impact in the quarter, that is the higher volume. The higher volume has improved efficiency and has also improved the capacity utilization. But then in the quarter, we also have a negative mix impact, I will come back later to the negative mix impact. The overhead cost was up in the quarter, mainly due to higher volume, but also due to investments in marketing and IT for future growth. So the operating EBITA ended at SEK 244 million compared to SEK 231 million last year, an improvement by 6%. It is the highest operating EBITA ever for a Q4 of Inwido, the SEK 244 million. The margin was down due to lower gross margin due to the material inflation. So the margin ended at 11.2% compared to 12.9% last year. EBITA is higher than operating EBITA due to positive one-offs. We had a one-off payment of surpluses within the AGS quality health care insurance plan. That gave us SEK 21 million in the quarter, which was also reported in the Q3 report. And they were booked as nonrecurring positive item and thereby not included in operating EBITA, but included in EBITA. So EBITA was improved by 14% compared to last year. Then we have also some positive currency impact on financial items. So profit after tax and earnings per share was up by 23% compared to last year. Earnings per share ended at SEK 3.72 compared to SEK 3.02 last year.Looking at the full year. Sales was plus 16%. The gross margin was slightly above last year, 2020, thanks to the higher gross margin at the beginning of the year before the material inflation started. And then the gross margin has been lower in the second half of 2021 compared to 2020. But the full year, we had a positive development of the gross margin.Operating EBITA, SEK 907 million, first time ever Inwido is above the SEK 900 million mark. So we had a positive result of SEK 907 million, an improvement by 25% compared to 2020. The margin ended at 11.7%, and EBITA was also up by 30% compared to 2020. And then further down the income statement, we can see that earnings per share ended at SEK 12.29, highest ever for Inwido, an improvement by 42% compared to 2020. So the results for the full year is the best result ever for Inwido. If we then turn page, we go to Page #18, we can see the margin development. On this page, we can see operating EBITA and operating EBITA margin of the quarter to the left and the full year to the right. We can see the development for 2019, 2020 as well as 2021. The margin in Q4 declined from 12.9% to 11.2% due to material inflation mainly due to material inflation and also the problems with sourcing and higher sick leaves. Then we have increased the sales prices in the quarter to mitigate the inflation. However, as you all know, our backlog has been very long during the second half of this year. We have a quite much higher backlog and longer backlog normally. And this means it just takes time for us to implement our sales price increases. And then the material prices have also continued to increase in the second half of 2021. We also have a negative mix, meaning that we have higher growth in North compared to South and we have better margin in the South compared to North. So when the North is growing more than South, it has a negative margin impact for the group. Looking at the full year, we have improved our margin from 9.7% in 2019 to 10.9% in 2020, and then to 11.7% in 2021. If we then turn page, we go to Page #19. We launched new financial targets at the Capital Markets Day end of 2021, and we have 4 targets where 2 is new. And the revenue target is new. We have a target to reach SEK 20 billion in sales in 2030. This year or last year 2021, we increased sales by 16% and we ended at SEK 7.725 billion. We have a new profitability target. We used to have an operating EBITA margin target, but that has been changed to return on operating capital, it should be above 15%, and the outcome was 16.9%. I will come back later more to return on operating capital. The capital target is still the same. It should be the net debt in relation to EBITDA, operating EBITDA should be below 2.5, and the outcome was 0.6. And then the dividend. We have a dividend target paying out about 50% of net profit. And as Henrik said, the proposal from the Board is to pay out SEK 16.15 (sic) [ SEK 6.15 ] equal to 50% of the earnings per share in 2021. If we then turn page, we go to Page #21. On this page, we can see the sales development. The full year sales was plus 16% for 2021. In the quarter, sales growth was 21%, organically plus 19%. North had a sales growth of 25% in the quarter, organically plus 21% and South had a sales growth of 16% in the quarter, organically 17%. So higher growth in North compared to South, and that has a negative margin impact for the group in the quarter. So order intake was plus 7% in total. If we exclude the latest acquisition, Metallityö Välimäki, which we did in 2021, the order intake was plus 5% in the quarter. North plus 16% and South minus 5% compared to 2020. However, when we are looking at South, it is minus, but we should also remember that the order intake of South in 2020 was quite much higher compared to '19. It was plus 18% in 2020 compared to 2019. So when comparing the order intake for Q4 2021 compared to 2019, we still have a growth. We also have a negative impact in order intake of South due to longer lead times or delivery times. We had a high backlog in the beginning of the quarter of South and thereby we were not able to have the year open and take new orders for deliveries in Q4 as we have normally in previous years due to the longer lead -- longer delivery times. And that has impacted the order intake negative in the quarter. But the backlog end of the quarter is plus 29% for South. So if you then turn page to Page #21. On this page, we can see the backlog end of each quarter from Q4 2017 up until Q4 2021. And as you can see, the backlog has been improved. The backlog end of December is plus 62% compared to end of December 2020. If we take away the acquisition of Metallityö Välimäki, the backlog is still plus 56% compared to last year. South, plus 29%, as I said, and North is plus 92% compared to logic. And that is, of course, an indication of a better start beginning of 2022 compared to 2021 when it comes to sales. If we then turn page, we go to Page #22. This page is showing the development of the new KPI, the new profitability KPI, return on operating capital. Return on operating capital is defined as EBITA, rolling 12 months, in relation to average working capital where average is calculated at the average latest 4 quarters. So EBITA, not operating EBITA. So we look 1 step further down in the income statement when we look at this KPI. Operating capital is defined as total assets less cash and equivalents, less other interest-bearing assets and less noninterest-bearing provisions and liabilities, including taxes, or as I normally say, net debt plus equity. Looking at development, we can see an improvement this year from 12.6% end of 2020 to 16.9% end of 2021. It has been improved thanks to: one, improved results; and two, thanks to lower operating capital or actually lower working capital compared to previous year. If we look at average operating capital end of this year comparing to the peak, the highest level in Q1 2020, we have reduced operating capital by SEK 600 million, more than SEK 600 million, thanks to our work when it comes to working capital. Looking at this year's performance from 12.6% to 16.9%, an improvement by 4.3% units, whereof 0.5% unit comes from the lower operating capital or improved working capital. And then we also have this repayment of the health care insurance plan in Q4 2021. This one-off positive income of SEK 21 million, that has improved this KPI by 0.4% units. Without this one-off, the KPI should be 16.5% instead of 16.9%. So improved results and lower operating capital from lower working capital has improved the KPI.If we then turn page, we go to Page #23, please. And this page is showing the net debt in SEK and the net debt in relation to operating EBITDA, both including as well as excluding IFRS 16. Including IFRS 16, the net debt versus operating EBITDA has been improved from 1.1 to 0.6. Excluding IFRS 16, it's improvement from 0.9 to 0.3. Inwido has an IFRS 16 debt of SEK 348 million. So we are below the target of 2.5, the maximum should be 2.5. And we are today on this 0.6 including IFRS 16. Happily proved thanks to improved results and then also thanks to the improved cash flows and thereby a lower net debt. If we then turn page, we go to Page #24, please. On this page, we can see the development of our performance since IPO. Inwido made the IPO in September 2014. At that time, we had a sales of SEK 4.916 billion and an EBITA -- operating EBITA margin of 10.2%. Since the IPO -- since the year of the IPO, sales has been growing by 7% annually, so total sales growth of 57% and operating EBITA has been improved by 81%, and the margin has gone from 10.2% to 11.7%. And the results of this year in SEK of operating EBITA as well as earnings per share was the highest ever for Inwido. However, the margin was slightly below the margin level of 2016 due to the material price inflation that we've seen in the second half of this year. Thank you so much. And I hand over back to Henrik. So Henrik thank you.

[Henrik Hjalmarsson, President & CEO]

Thank you very much, Peter. So let's turn to next page, please, Page 25. So in summary, 2021, well, we established a stable base with improved margins and a solid balance sheet as well as good growth as a platform for continued future growth. We've obviously launched accelerated growth ambitions, both organic and through acquisitions, and we see a considerable consolidation opportunity on the European market. We've set new long-term targets at the end of the year, highlighting a stronger focus on growth as well as sustainable development and strongly believe with the new reporting structure and organization that's aligned with the strategy, increasing transparency and also supporting the delivery of our strategy and our long-term targets. Next page, please, Page 26. So with that, we thank you very much, and we hand over to the operator for questions.

[Operator]

[Operator Instructions] We have a first question. It's from Victor Hansen, Nordea.

[Victor Hansen, Research Analyst]

Victor from Nordea here. So my first question, how much of your order book within North, where you have most of the industry orders, are to be delivered in H1 '22? Because that's where I see the most cost pressure that could still hurt you.

[Henrik Hjalmarsson, President & CEO]

So look, I mean, the structure of the business is such that the vast majority of the order backlog that you see for North at the end of '21 will be delivered in H1. There will be some orders likely slipping into the second half of the year, but that's a very limited and that would be single-digit percentages of that most likely. That's an approximation as I don't have an exact number to give you, but it's a very low share, that's for delivery in the second half of the year.

[Victor Hansen, Research Analyst]

All right. And to follow up on this, I guess. So when do you expect the cost inflations up until this moment to be mitigated by your ongoing price hikes?

[Henrik Hjalmarsson, President & CEO]

Yes, good question, Victor. Thanks. So the cost increases up to this point will be mitigated with some lag, and it depends a little bit on geography and segment. That lag is typically ranging from a couple of months maybe up to worst case 5 or 6 months, depending on the -- with the industry sales and the longer commitments being the worst. So if we were to see an absolute stable situation on the price -- input material prices going forward from now, that ought to be fully mitigated, let's say, within the coming half year or so. Obviously, the situation is a bit more dynamic at the moment. And I think anybody's guess in terms of, for example, the development of energy prices and transportation for the year to come is as good as anything else.

[Victor Hansen, Research Analyst]

Great. And then on the margin in North. Do you think it's reasonable to return above 7% on a full year basis for the margin in the medium term, seeing as Finland is now coming back?

[Henrik Hjalmarsson, President & CEO]

So for the medium term, most definitely. I mean, obviously, our long-term ambition is higher than that, to be very clear. And in the medium term, yes, I definitely see that there is an opportunity to return above that level.

[Victor Hansen, Research Analyst]

All right. And then on M&A. You alluded to this earlier, but perhaps you could share some info on your current M&A pipeline, how many ongoing dialogues you have or how you want to phrase it.

[Henrik Hjalmarsson, President & CEO]

Yes. No. No. And obviously, I can be quite transparent and honest to say that I had hoped that we would close at least one transaction in the fourth quarter in addition to the one we did in the second quarter. But as I've said before, these processes are a bit difficult to predict timing wise, given that we deal in many cases with family-owned businesses. I'm relatively happy with where we stand in terms of ongoing dialogue and both the discussions that we have as well as the short list. And without exactly quantifying that, I'm really hoping and think that we can make some considerable progress here over the coming couple of quarters in terms of the M&A agenda.

[Victor Hansen, Research Analyst]

Excellent. And then just a final question from my side. Have you considered broadening your scope for what type of companies you could acquire? So I'm basically talking vertical integration here and for instance, more installation or distribution or input components.

[Henrik Hjalmarsson, President & CEO]

Yes. Thanks, Victor. I think at the moment, we're looking at areas that are, I would say, 100% within or very close to the business that we operate. But the world of windows and doors is a bit broad in its nature. As an example, the acquisition that we made in April last year in Finland within steel and aluminum doors, windows, but also for [ sub ] solutions is a slight step sort of outside of the traditional core. So I think where there are synergies for the existing businesses, one way or the other, be it on sourcing side, commercial side, whatever it is, where -- and where we strongly believe that our value creation model will drive value out of an acquisition, we are interested to look and to pursue. That's going to mean that what we look at is going to be very close to what we do, but it can be elements of things that I would consider to be neighboring categories. That's the way I would phrase it at the moment.

[Operator]

The next question is by Adela Dashian, Handelsbanken.

[Adela Dashian, Analyst]

Yes. First of all, congratulations on a great quarter. I am very pleased to see the figures. My question just related a little bit more about the margin compression in Q4 and when do you expect, according to your forecast, that the price adjustments will be fully offsetting the increased cost when it comes to input materials and also transportation?

[Henrik Hjalmarsson, President & CEO]

Adela, thanks. It is a little bit hard to say exactly because it depends so much on when we believe that the market will stop moving on the input material side. But as I alluded to before, with the current base in mind where we stand at the moment, we see that, let's say, gradually over the first half of the year, we should catch up in terms of the inflation that we've seen so far. However, obviously, if there is considerable inflation to come in the future that will require us to take more action, which in itself, we don't shy from and we're very prepared, and also I think have demonstrated historically that we can do. But if the current situation would be a stable base for the year, it would happen gradually over the first half of the year where the last pieces of the puzzle would be then the industry sales to come through in the latter part of the first half. But to be quite honest, a fair chunk would also come through quite early in the first half of the year.

[Adela Dashian, Analyst]

Okay. That makes sense. And then a follow-up on the M&A discussions. We've talked previously that you've had some issues during the pandemic in traveling and really talking through the discussions with the prospective targets. Are those challenges still persisting now? Or are you able to have more fluid discussions with the potential targets today?

[Henrik Hjalmarsson, President & CEO]

Yes. It's a very relevant question. That has been a bit of a moving target. We were thinking that we were out of harm's way more or less in November and then came the Omicron wave and sort of turned things upside down a little bit again. My definite assessment is that as of very, very recently, so the past weeks, that has improved considerably again. So looking at where we stand at the moment, I don't see that as an obstacle for us to progress the discussions that we need to have.

[Adela Dashian, Analyst]

And then maybe also just on the pricing environment currently. What are you seeing or observing in the market currently?

[Henrik Hjalmarsson, President & CEO]

I think what's -- I mean it is very dynamic in the market at the moment. For us, as I think for many others, the biggest question mark at the moment is where energy prices will move in the short to medium term as that is a key driver behind several of the commodity-based input materials that we're looking at. And to be quite honest, I think, as I said before, exactly where the natural gas, but also oil-based prices will go in the coming 6 months is anybody's guess at the moment. We stand prepared to take more action on pricing if we have to, and we obviously monitor it in a very close way and mitigate it in terms of how we manage agreements with our suppliers to make sure that it also gives us some time to take action.

[Operator]

[Operator Instructions]

[Peter Welin, Deputy CEO & CFO]

Operator, I have received some questions over the e-mail. So I can ask those questions now. So everyone can hear the questions and we can answer those questions. And the first question I received, Henrik, is from [indiscernible] from [indiscernible] Capital. He's asking about the e-commerce sales. We are saying in the report that the e-commerce sales account for 11% of the sales for the full year, which is below what we had before. He has calculated that means that the e-commerce that was 7.5% for sales in Q4, actually a little bit higher of 7.5%. But nevertheless, it's lower than level before. So the question is, why has it decreased compared to past periods? Are we seeing any weak demand from the consumer segment on -- due to sales?

[Henrik Hjalmarsson, President & CEO]

Yes. So e-commerce sales amounted to 9% of sales in the fourth quarter, slightly below from where it was earlier in the year. That's a combination of 2 things, actually. It's a combination of the fact that whereas we still see organic growth in the e-commerce segment, it is from very, very high levels from the year before. And I think that's one side of that coin. The other side is actually that we've been able to strengthen our positions and have a very strong development in terms of industry sales, particularly in Business Area North, which also then drives the very strong growth that we've seen in North in the quarter, and that obviously dilutes the overall e-commerce share of sales. So we have not yet seen diminishing. We don't see the same growth that we saw in 2020 on the consumer activity side. We're yet to see any diminishing activity, but obviously, it's coming from very high levels. So I think that's a fair summary.

[Peter Welin, Deputy CEO & CFO]

Then I received e-mail questions from Rolf Helbling in Switzerland. He has 3 questions. I'll start with the first one. How much inflations do we see on input prices, material, logistics and labor? Second question is price increases. How much have we increased the sales prices, and then time lag versus input prices. And then the third question, structural measures necessary because of the changing environment?

[Henrik Hjalmarsson, President & CEO]

Okay. Thanks. So if we look at how much inflation we've seen, obviously, it depends a lot on the category you're looking at. So far, labor inflation, particularly in the Nordics, which is our biggest geography, has been limited and not the driver of inflation at the moment. We know that labor rate increases are higher in parts of Eastern Europe for us and for everyone else. And I don't think that's a new pattern. But if we look at the total inflation pressure, it depends a lot on the category as well as actually, to some extent, geography. But overall, we are obviously on a total level way into double-digit increases on -- and beyond that on material inflation. If we look at price increases, fundamentally, we are continuously working to protect our profit level and taking those prices. There is some time lag as alluded to in the question. And I think I partly answered that before saying that the exact length of that time lag depends a bit on the geography as well as the channel to somewhere between a couple of months up to 6 months, or, in worst cases, even slightly beyond that in some specific industry agreement. So it depends a little bit. And in terms of structural measures, I think we continuously evaluate and take action with regards to how we do the business. I think we've taken actually some quite considerable structural measures, which we launched at the Capital Markets Day in December in terms of a new structure, particularly so to drive growth, actually, which we think is the most important thing that we can do, a sustainable strong growth, obviously, with a good profitability development to drive shareholder value. But if we need to do anything beyond that, I think we've proven before that we don't hesitate to take action, for example, if we need to adjust cost internally to meet changing demand in the market.

[Peter Welin, Deputy CEO & CFO]

Okay. Thank you. And then I have a final e-mail from Carl [indiscernible]. He has 2 questions. The first question is, which you all had been discussing, but I can still ask you, so you can do it one more time, is that it comes to acquisitions. We said at the Capital Markets Day that we see acquisitions in the short term, but not -- no acquisition has yet been announced. So -- the question is, is it a result of a specific acquisition process being canceled or any other reason? And then question number two, what type of size of acquisitions can be expected?

[Henrik Hjalmarsson, President & CEO]

Okay. So if we look at the first part of the question, it's -- the reason -- and I think I probably answered it before, I would have hoped that we've told something in quarter 4. We didn't and the reason is that we had -- I had specific processes in mind that for one reason or the other has taken a little bit longer than we had expected. In terms of size of acquisition, I can actually see here that the question Carl had was, is there a chance that this will have a material impact on our pro forma net sales of more than 10%. And I think it is reasonable to expect that we could make acquisitions in. I'm not saying that we will because obviously it depends on the processes and how we progress with the, in many cases, families and private owners that we're talking to. But it's absolutely reasonable for us to achieve that probably not with an in-year impact of 10% increase, but with a full year impact. That's absolutely a reasonable expectation in my mind. And that's something that we're striving for and working towards.

[Peter Welin, Deputy CEO & CFO]

Okay. Thank you. So operator, we'll hand it back to you if there are some -- any more questions from the audience.

[Operator]

At the moment, we don't have any further questions. So I hand back to you.

[Henrik Hjalmarsson, President & CEO]

Okay. So with no further questions via e-mail or on the call, I want to thank everybody for your time and attention and also for following Inwido's journey. I encourage you to follow us on LinkedIn and our other channels. Thanks very much for your time, and see you all soon. Thank you very much. Bye-bye.