NCAB Group AB (publ)

STO:NCAB

Earnings Call Transcript 2020-Q1

[Operator]

Ladies and gentlemen, welcome to the NCAB Group Quarter 1 Report 2020. Today, I'm pleased to present CEO, Hans Ståhl; and CFO, Anders Forsén. [Operator Instructions] Speaker, please begin.

[Hans Ståhl, Director]

Yes. Good morning, everybody. We're sitting here in Stockholm, where there is a lot of sunshine, finally. I'm sitting here together with Anders Forsén and Gunilla Öhman. And we're going to talk about the Q1 result for NCAB. So you can see on the first picture with the agenda, so we're going to talk a little bit short about NCAB and the Q1, in short, Q1 financials and then we're going to make a summary. And then there is, as we've said, the space for questions and answers. So NCAB, we are 17 companies around the world and we are delivering our products to 45 markets, and we have 452 specialists or employees, but we like to call ourselves specialists, and we are working with 23 factories. And also, we have a mission, where we say that we are selling printer circuit board for demanding customer and that's extremely important. And of course, on time, zero defects and the lowest total cost. And our vision is to be #1 PCB producer wherever we are. So if we enter a new market, we're going to be the biggest there. So next page. So what is a printer circuit boards? It's actually the board, it's -- one could say that it's connecting all components. There's a lot of cables, but it's in the board and you've probably seen it all. It's a green plate. And the beauty with the circuit board is it's a rather inexpensive product. But if something goes wrong at the end product, it's extremely costly to make a recall from the market. So we make the -- only the printer circuit board, custom assembly the boards. We are working in a high mix, low-volume niche, meaning that we don't supply the high-volume board because there is no margin in those.And next page, we're describing our journey. So the company was founded back in 1993 by 3 gentlemen. They all have been producing circuit boards. And we have been growing basically every year except 2009, where we see some similarities for what's happening right now in the market. In 2009, we handled very well. We also had a healthy profit in 2009. And we are actually having the same strategy now. We are putting a lot of effort into growing, even if we are seeing a down-going trend. You can see also we start a lot of companies during this voyage. And we also have made a couple of acquisitions. So the first one was 2012, where we entered the American market, North American market, where we made 2 acquisitions. And then we made 1 in Sweden; and then 1 in Denmark last year, Multiprint; and another one in the U.S., Altus. And then recently, we have made 2 acquisitions in Flatfield in Holland and BBG in the U.S.A. On the next page, you can see the quarter in numbers. So we have grown plus 8% on the net sales in Swedish crowns. And measured in U.S. dollars is plus 3% and EBITA is plus 8%, which we are very proud of. So the highlights of the quarter is, of course, the acquisitions of Flatfield in the Netherlands, which we made the 1st of March. We also -- we have found a replacement for me, Peter Kruk, that has been recruited and is -- preliminary, he will start in 1 October at the latest. And also the Board withdrew the suggested dividend, and we published also preliminary Q1 result. And then we made an acquisition of BBG, Florida, effective from the 1st of May. And we also made a direct share issue conducted at market price with trusted institutional investors. And then also, I would like we all talk about today what -- how does the coronavirus affect our operations. And first, I mean, the virus has struck the Chinese factories, but they are now back in production. So we are saying they're running about 80% of the capacity, all our factories. But then, of course, the virus spread to Europe. So in Europe and U.S.A., they have basically been closed down from end of March. However, a lot of factories, our customers are located outside the big cities, so I would say maybe 70% of the factories still working, customers. And deliveries have actually worked well, despite a difficult logistics situation with less air traffic. And we do get a lot of orders. During the Q1, we had a good order income. And of course, customers placed some of the orders are for this fall. And the factories are very busy in China, producing 5G equipment for the Chinese market. So of course, activities, it's a little bit different. We are building customer relationships now via telephone, WebEx, webinars, et cetera, which is a little bit different, but it has been very successful and we can have -- one webinar we arranged in Holland was visited by a customer from Germany, France, et cetera. So actually, we have seen a new way of marketing. And of course, we are having a dialogue to secure the deliveries to customers, in fact, it's with the customers every day. And our team in China also consists of almost 90 people working with the factories on a daily basis. And of course, we have also actively seek support from each state in all different countries. And we also, of course, we are focused on reducing our costs as much as possible. And the impact, of course, this will impact the coming quarters 2020. So a little bit about the acquisitions. First of all, we made in -- acquired Flatfield company in the Netherlands, and they were the biggest supplier in the Benelux area. And also, they have a lot of sales in Germany. They have a turnaround of about SEK 300 million. The profit was some SEK 25 million, with 50 employees mainly in Netherlands and Germany, but also 15 located in China, whom -- and they have all been incorporated with our operation. The purchase price was SEK 182 million with an approximate multiple of 7. And we have consolidated into NCAB as of March 1. And then we -- just a couple of weeks ago, we made an acquisition of BBG in Florida in Largo. They are a leading supplier in the U.S. market, also selling to Canada. They have a little bit different setup because they buy about 70%, 75% from Taiwan, which then means that we don't need to pay any import tariffs when they import in to U.S. The revenue was about SEK 280 million in 2019, and with a profit lever of SEK 18 million and 30 employees, whereof 10 in Taiwan. And the purchase price was SEK 125 million, which is also a multiple of 7. They will be consolidated into the -- as of 1st of May. Anders?

[Anders Forsén, Chief Financial Officer]

Okay. Anders Forsén here. We're back to the next slide on a little bit about revenue and EBITA for first quarter. We managed to see a growth in all segments, except east. And the east was, of course, affected very much by the COVID-19 or the corona situation, especially in China, where all our customers were closed for 3, 4 weeks. Even if you can see a growth number, they are very much connected to acquisitions. Nordic, we made this Multiprint acquisition in March 2019. And the main reason why we still made a small growth was due to that. Also Europe, we showed a 16% growth and the biggest part of that is coming from the acquisition of Flatfield. And in North America, we also -- percent of growth, main part coming from the acquisition of Altus in November. And also that from 2020 reported the tariffs as net sales. So we have changed a little bit in the reported section more to follow the recommendations from IFRS. Going back to the EBITA margin, we still see a very stable and good margin for Nordic. They were a little bit down in Q4, but we are back to almost 17%, which we are very proud of. Europe continues on a rather stable level of 6%, and North America have been doing very well the last couple of -- last year, you could say, we've seen a positive trend since second quarter '19. So they are now up to a very decent level. East margin is down 2,000 in this quarter. And the reason is, of course, that we have the low revenue in China and also that we had some negative impact from the weakening ruble versus U.S. dollar in Russia, so we got a onetime hit when we recalculate the trade receivables and trade liabilities, mainly. So we don't see this as a new trend. Going back to next page, you can see that we still continue to show growth. We reached, the last 12 months, we got about SEK 1.8 billion. And we continue to have a stable gross margin, which, of course, is very important. And we don't see any trend that the margin would go differently due to the corona situation. Going back to the next page then. As we said, we see, yes, we are growing, but we are growing due to acquisitions, so the organic growth is a little bit slower. But we are anyway happy to present that result due to the situation. I mean, when we saw -- we can believe that the production stop in China would affect the revenue rather much. And of course, it is affected, so it's good to see that we managed to keep the revenue stable. What is more important is to see that we still have a very strong order intake, 27% increase in first quarter. Of course, we have to bear in mind that part of it is from Flatfield. And also we see a trend that the customers are placing order for a longer lead time. And that's, of course, they were worried about the situation in China. So to be able to secure the deliveries in second and third quarter, they placed orders with longer lead times. So that's part of the reason why we can see the strong order intake in first quarter. But anyway, it's good to see that we are still working good with customers and getting lots of orders.Next page, if you go down to the EBITA, excluding the costs for -- the transaction cost for the Flatfield acquisition, we managed to increase the EBITA to SEK 43.7 million, which is 9%, which is very much closer to last year, where we have 9.1%. We're also happy to see that earnings per share increased compared to last year. And the main reason for the positive effect there is that we also have some positive currency effect from the result. So even if we reported 7.8% EBITA margin in the quarter, we have to remember that part of it is due to onetime cost for the Flatfield. So still, we are running on a stable EBITA margin of about 9%. Going to the segments. Nordic, as I said, small growth. Main reason for the growth is, of course, that we now calculate Multiprint acquisition a full quarter. It was only 1 quarter last year. And I think Nordic was the segment most affected by the corona situation, except for East. And the reason is that they are very much timed to delivery customers in Nordic. We don't have so much inventory. So of course, when the deliveries didn't come from China, we had a lot of delays, which impacted the revenue negatively. Anyway, we managed to keep a stable gross margin and we also kept a very healthy EBITA margin. So EBITA increased from SEK 21 million to SEK 22 million. And also here, we can see very positive growth in order intake, 37% for Nordic. But of course, here as well, it is that it's longer lead times, so the orders are sort of spread out over a longer time. Going to Europe, we saw a growth of 16%. Main part is, of course, from the Flatfield acquisition, which we made start from 1st of March. You can see that Europe is very different in different regions. We have a very strong development in Germany and we also see from the revenue that the Flatfield operation in Germany is also going very well. On the other hand, we see very weak situation in Southern Europe, where both Italy and Spain have been more or less closed down. We also see that U.K. operation we have are rather dependent on automotive, and they also suffered a lot during the first quarter. So we see very different trends. So you can say that the southern part is going down, while Germany is increasing a lot. But anyway, the number shows a small growth for the whole segment. Also here, we managed to keep a stable EBITA level. And if you look historically at what Flatfield has been doing, they have been doing a little bit more than 6%. So I think we should continue to have just around on a stable EBITA level for Europe. Order intake increased 21%, so we're also proud of that. That's good. Going into North America, where you know we have been struggling for a while, but we saw a positive trend from end of 2019 and you can see that continue, which is good. We saw an increase of net sales of 19%. A big part is, of course, from the Altus acquisition we made in November. And also the rest, you can say, is connected to that change of reported structure, where we have the tariffs at net sales. On the tariff side, we can see that there have been some easing up. We have taken away the tariffs for 2- and 4-layer boards, the more simple boards. Of course, maybe it's not that much volume for us or money at least, but anyway, it's a sign that something might happen, which is positive. The acquisition of Altus-PCB we did in November has gone rather well, 100% integrated into NCAB, and we see a good development of the margin. We can also see that the profit level have been increasing, thanks to the acquisition of Altus. So we are running about close to 10% EBITA margin in U.S., and we have improved that a lot during the last 3, 4 quarters. Even here, you can see very strong order intake, 40% higher than last year. But also here, we have to bear in mind that it's still a much longer lead time. Going down to East. We were suffering on revenue side in China. First of all, we had the Chinese New Year and then the factory for the customers were closed for about 3 weeks. So of course, revenue were hit rather badly in February. On the other hand, we saw a growth in March, which was positive. Russia continued to do rather well in the first quarter. Results in the EBITA, of course, we were suffering from the weaker revenue with China. And even if we had a good revenue in Russia, we saw a -- had a big hit on the exchange rate when the ruble went down dramatically, especially in March, but that is a onetime impact. Order intake for East was a positive 20% increase and mainly in the Chinese operation. Next slide, we also made a directed share issue sponsored. We did that in connection with the Bare Board Group acquisition. So we got 1.850 million new shares and it was a very positive process and had a book building process, where we actually got a lot of new good investors and some new investors and also a lot of old ones that continue to buy more shares in NCAB. And we're also proud that the price actually was SEK 155, the same as the closing price for the Friday, when we did a share increase. And of course, this gives us a lot of financial flexibility that gives us opportunity to hopefully continue to do acquisitions at this time, and also to secure other activities in the company. So we are very, very financially stable, which is good. Then next slide, some balance sheet KPIs. Return on equity, a little bit lower than last December, but it's mainly due to that we have increased equity. And of course, we have a little bit higher net debt since we have taken new loans for the acquisition on Flatfield. Equity still rather good. Net working capital, still below 10% of last 12-month revenue. I mean, we do not have very much in our stock on inventory, et cetera. So we are very cash lean. Flatfield, on the other hand, had a little bit different structure. They had more inventory business, stock business. So they have a bit higher working capital than NCAB had to work with before. And of course, due to this new stock share issue we did in April, so after April, we actually have disposable cash of about SEK 500 million. So that is very, very safe and very strong and we have good possibilities to act in the future. Hans?

[Hans Ståhl, Director]

Yes. So the summary of Q1 is that we are extremely happy that we have been able to make 2 acquisitions, important acquisitions. And also the order income is very strong. And of course, part of it is that customers are ordering for a longer time. And -- but I also think that we do take market shares. And gross margin, EBITA is -- remains very strong. Factories are very busy in China as they are building 5G network in China. And the directed share issue has given -- will give us a lot of opportunities because there will be a lot of opportunities during these times for the coming year. And of course, the corona pandemia will be negative in the coming quarters. So that was the summary. Looking at our strategic plan going forward. We have kind of made 4 squares. We have 4 strategies and, of course, increased market share in Europe, U.S.A. and East. We still have an extremely low market share in these countries, so there is so much more to do. And part of this is, of course, the acquisitions we have done. And also to deepen the relationship with existing customers is a huge potential because there are many of them where we just maybe deliver 2%, 3% of their total need. And of course, expand geographically, not only meaning that we expand to all different countries. We also expand within the countries, like Germany, we're setting up more offices, same in the U.S., also setting up more offices in different areas. And also to consolidate the market, we see a huge potential, which we have shown here also by these 2 acquisitions. But the thing is that the Chinese factories, they are consolidating, becoming bigger and bigger. And the smaller kind of traders, they will struggle. The smaller customers also today buying directly, they will struggle because they get too small in these big factories. So we have an extremely positive view on the future. And then we have the financial targets on Page 24, which is what we are delivering on. And if you see the growth is where we are not really making them, but that should be seen over a couple of years is 8%. Gunilla?

[Gunilla Öhman, Head of Investor Relations]

So thank you very much, Hans and Anders. And I just would like to remind everyone that our next quarterly report, Q2, is on July 24. And now we're open for questions.

[Operator]

[Operator Instructions] And we have our first questions from Robert Redin from Carnegie.

[Robert Redin, Research Analyst]

Yes. I have 2 sort of groups of questions, please. So one is on the order intake and the outlook into Q2. So order intake were positive in Q1, but you say it's sort of a longer order book than normal. Could you say anything about -- something about the sales development or the trends in April or quarter-to-date? How should we think about that strong order intake on the other hand, the uncertainty into Q2?

[Hans Ståhl, Director]

As Anders said, it's a little bit different depending on where we are in the world. I mean, the southern part of Europe, yes, is weak. In general, yes, it's weakened, one could say. But Germany, it's still -- if we talk about countries, it's still pushing hard, so it's amazing to see how this country or how we are doing in Germany.

[Anders Forsén, Chief Financial Officer]

Or Hans, I can say that April was still rather stable, but we saw a negative trend in the order intake after Easter. So the second half of April was a little bit weaker if you measure day-to-day, so to say. So there was a trend shift after Easter, but April still looks pretty okay.

[Robert Redin, Research Analyst]

Okay. So no dramatic drop in April but a weakening trend?

[Hans Ståhl, Director]

Weakened, exactly. Yes. And then it is, as I said before, it's different, different markets. Of course, there have been low activity in Spain and Italy mainly and also partly in France.

[Robert Redin, Research Analyst]

Right, of course. Okay. And then on that margin in the U.S.A., it was strong in quarter 1, and of course, Altus is a part of that margin improvement. But can you say something about how the margin developed excluding the impact of Altus?

[Anders Forsén, Chief Financial Officer]

I mean, we have been working for a long time to improve margin in the U.S.A., and that kind of had paid off in the long term. And one could also say that we are kind of -- as you remember, we have shifted from high volume to more high-tech stuff. And that the high tech has a much higher gross margin, which gives then a higher margin on the bottom line, so and finally, the pace of all the efforts we have put into the U.S.

[Hans Ståhl, Director]

And we could also see from the Altus business that when we start to use our price agreements, that we had a little bit better pricing. So the -- and that has been seen maybe in the end of the quarter, but there have been some effect on the gross margin on the growth of Altus business as well, which is positive. And as we said, I mean we have been working with the cost structure for a long time in U.S.A., and that starts to pay off last autumn, and we can see the trend continues. So that is good.

[Robert Redin, Research Analyst]

Okay. So good traction on the margins then, also underlying. Final question is on acquisitions. So you've done 2 pretty large acquisitions now, but you've also taken in a fair amount of new money. So should we interpret that as the M&A pipeline remaining sort of strong or is it a precautionary measure? Or how should we think about the M&A pipeline going forward?

[Hans Ståhl, Director]

Of course, this is to give us the opportunity, at least. And I mean, it's -- we still have a pipeline of potential acquisitions. But we also know it takes some time. I mean, both for Flatfield and BBG, we started with the discussions in autumn '19. So this will take some time. But there are opportunities in the market. We do have a pipeline. And of course, I think this corona situation would create some more and trouble for some smaller actors. So of course, there will be opportunities. And by having this new cash, we at least can act quickly if we have the right opportunity.

[Operator]

Our next question is from Anders Rudolfsson from DNB Markets.

[Unknown]

Congratulations to a great report. I have 2 of them. The first one is regarding your 2 new acquisitions. They're rather big, adds almost 30% to your top line and they have pretty much the same margins, EBITA margins that you have today in the running business. How do you see them? Is there a possibility to raise that level? Or are they, so to speak, already running on the level that, so to speak, is the normal?

[Anders Forsén, Chief Financial Officer]

I think it might be a little bit different. We think -- I mean, first of all, these 2 are rather big acquisitions, meaning that they still have rather good purchase prices. So I don't think we can expect the same impact on margin as we have seen on the Danish and Multiprint and Altus. But of course, there are some areas where we can improve. I think for the Flatfield one, we can -- we have noticed that we have a much stronger quality focus. We are using it a bit different factories in China. And I think also, we have a stronger follow-up. So we are quite sure that we can improve the quality work to the customers of the Flatfield customers. And that will, hopefully, pay off at some time, maybe in higher margin or at least lower return costs. And for the U.S. one, they source a lot in Taiwan. And of course, that is really interesting for us and get the better sourcing in Taiwan or U.S.A., because we don't have the tariffs and also from some political risks, that is good to have sourcing outside China. Taiwan pricing is much higher than China, so there is a difference there. But the gross margin in the BBG acquisition is far lower than NCAB. So over time, at least, there should be some potential in increasing that one, but it's difficult to say right now.

[Unknown]

I think I just come into the figures, so to speak. The other question is regarding the perhaps longer-term view, talking to some other companies, they're talking about trying perhaps to -- I mean, there's a long lead time to change where you're producing. And -- but regarding China, there are some thoughts that, that might be -- will hurt them in the longer term, having so much production in companies in China. How do you see the long-term view regarding production of different circuit boards, for example? And would you see that, that you need to move to other countries to not be so dependent on China?

[Hans Ståhl, Director]

Yes, of course, that would be excellent if one could do that. But it's -- as China is acting right now, they are building new factories. They are putting a lot of resources in building new factories. And the fact that they build a really state-of-the-art, fully automized, et cetera, et cetera. So it's from kind of being able to offer the best product to customers, one have to go to China today and at least within 10 years' time. But still, we think this -- with the Taiwan is a good option we have if something will happen with China. But I think that China will dominate completely within at least a minimum 10 years going forward. And so that's where we have to be, whether we like it or not. But personally, I do like to make business with the Chinese. I think they are a perfect partner for us.

[Unknown]

All right. And finally, perhaps one more question as regarding -- now a lot of countries opening up here rather slowly, of course. Can you see -- or is it possible to see how that will affect you? I mean, you're saying that it'll be probably a slower quarter, #2 quarter here. But if you look into -- is it possible that you could be surprised at how quickly it can come back or so?

[Hans Ståhl, Director]

Hopefully, yes, let's hope for it. But I think we all think it's going to take a while, because it's a rather complex supply chain for -- I mean, we just look at the cars, it takes a long time to start up a factory because they are coming products from all over the world. So we believe it's going to take a while.

[Operator]

Our next question is from John Heiner from [ ensa ] Founder.

[Unknown Analyst]

First, all my questions are about the acquisitions. If we start with the BBG acquisition, where you have suppliers or you get access to factories in Taiwan, if I understand it correctly. Does this work similarly for BBG as it does for you, that you have a big chunk of customers and then you get access and better prices at the factories, but in this case, in Taiwan instead of China?

[Anders Forsén, Chief Financial Officer]

Yes, probably. So -- but we are at this stage, we don't know how much kind of more Taiwan or more kind of jobs we can put out of the Taiwan suppliers. But of course, that is the aim to negotiate with them also, but to lower the prices and get better conditions.

[Hans Ståhl, Director]

But it's the same principle that they consolidate orders from many customers and place them to the -- a few number of factories in Taiwan. So of course, it is the same way as we are working with our Chinese operations. We also have this team of 10 people working in Taiwan, securing quality lead time, et cetera. So in that way, we're working in the same way, but from 2 sourcing countries. And BBG have maybe 25% sourcing in China, the rest in Taiwan.

[Unknown Analyst]

And will you be able to get better access to these factories from your other subsidiaries that you have in the U.S., for example, when you work together and then come with even bigger purchasing power and get access to perhaps more factories in Taiwan?

[Hans Ståhl, Director]

Absolutely, absolutely. I think they today have about 6 -- 5, 6 different factories. Maybe that will shrink that number. That is the focus on getting more power -- purchasing power in some of them. But of course, the whole group will actually get access to this Taiwanese factories. So there is an opportunity for these factories to expand.

[Anders Forsén, Chief Financial Officer]

And also, we opened up 1 factory in Taiwan when the tariffs was initiated last year. But still, the pricing was difficult and the logistics was expensive if you had the low volume. And of course, together with the volumes from BBG, we will have better logistic pricing, et cetera, so that could open up some new more possibilities.

[Unknown Analyst]

And what capacity does Taiwan in total have on a big number of factories that we don't work with today, but if you would grow bigger and source more from Taiwan, you could double or triple the amount of factories you work with there to get big volumes from Taiwan to the U.S., for example, instead of from China?

[Anders Forsén, Chief Financial Officer]

Yes, of course. But we don't see that we're going to get more factories, but probably we're going to place more orders with these factories that the BBG have. So that's the way we like to work, if they can meet up to our demands. We have pretty tough demands quality-wise on the factories. So that has to be seen.

[Unknown Analyst]

Okay. And you also mentioned that prices are much higher in Taiwan versus in China. So I guess you speak of PCBs of the same quality. And when you buy them from the factory, they are much more expensive in Taiwan than from China. How much more expensive?

[Anders Forsén, Chief Financial Officer]

I would say, in average, with the 15% roughly, a little bit depending on what sort of product. If we're talking about it by higher volume, yes, they are much more advanced. But if you look at the prototyping, quick turnaround, high tech, it's not that a big difference.

[Unknown Analyst]

So your key market of low-volume difficulties or high-quality PCBs, then the price difference, Taiwan versus China, isn't that big, is that what you're saying?

[Anders Forsén, Chief Financial Officer]

Correct, correct. So it's a good add-on for our -- to our factory pallets.

[Unknown Analyst]

So then -- and there's no tariff to Taiwan to U.S?

[Anders Forsén, Chief Financial Officer]

Correct.

[Unknown Analyst]

So that would mean then the 25% price benefit for U.S. customers?

[Anders Forsén, Chief Financial Officer]

Yes.

[Unknown Analyst]

Sorry for so many questions, but I'm thinking about the U.S. market, everyone and Anders mentioned this before, but everyone is talking about the big in-sourcing trend that will happen. It already started with the tariff war between China and the U.S. and now with corona, perhaps everyone will try to move home factories instead of outsourcing. If you -- U.S. still has a lot of production of PCBs, I think. What's the price difference or the cost difference of producing in the U.S.? Is there a risk of this type of production going from China to other developed countries instead? And what would you do if that happens?

[Hans Ståhl, Director]

I mean, the cost difference is huge. And the factories today in U.S. is predominantly high-target business. I mean, they are selling to the military, U.S. military, and also the high-tech board. So I mean, the low-tech boards, they will never ever be able to produce in the U.S. So that has to come from Asia. And for us, it could be the in-sourcing could actually be good, because what they first in-source, that is actually the production of PCB-A, so that the assembly of the components on our boards, that may be being brought back to the U.S. So we don't see an effect that we're going to build factories in the U.S. for low-tech board. We don't think that will happen.

[Unknown Analyst]

So they need to have the low-tech boards produced also to be even to produce your segment of more low volume?

[Hans Ståhl, Director]

Absolutely, absolutely. And also as a proof of this is that they have actually taken away the tariffs on the kind of more low-tech boards, because you say we'll go bust if they don't can produce the low-tech boards to that price level.

[Unknown Analyst]

Okay. And the reason for the Chinese being much more -- having lower costs, is it mainly personnel? Or is it that they have invested in highly efficient production?

[Hans Ståhl, Director]

That's an interesting -- it's both, actually. If you go like 20 years ago, it was always that was lower cost, lower salaries, but sales has gone up. So now it's the excess of money to build the factories because today, they afford -- they can build factories that it is automized, et cetera, et cetera. So therefore, they have a cost benefit, and they don't need to pay so much for the money.

[Unknown Analyst]

Okay. Final question and a completely different one. If you look at electronics in general, I mean, computers, laptops, et cetera, I mean it's been pretty high demand during this corona period. I don't really know the end customer exposures for your PCBs, but I know they're going to low-volume, high-demand in products, but that's not it. Do you have a -- can you say anything about the end customer, how they've been effective during this corona period? Is it products, that if it's a locked down, they are not being bought? Or is it the opposite that these products are being bought by our customers, the end customers anyhow?

[Hans Ståhl, Director]

It's a big variation, I would say. I mean, we have some customers in the automotive transport sector that has kind of gone down a lot. And then we have some medical customers also. I mean, we are delivering board for ventilators. That's a huge demand. And there are a number of products in the industry that is -- what we have seen has not been affected. And also, we do get a lot of orders for the kind of braking systems now for the high-speed trains in China because they are -- China is pushing hard now to recover from their kind of slump in China. So there, it varies a lot.

[Anders Forsén, Chief Financial Officer]

I think in general, we don't focus very much on consumer goods. So I don't think you can see a trend. If the consumers buy more PCs or whatever, that will not have an impact on us in that way, but there might be some other areas in same consumer or technical areas. And as Hans said, especially in the med tech right now, that has been increasing a lot.

[Operator]

There are no further questions at this time. Please go ahead, speakers.

[Hans Ståhl, Director]

Okay. Thank you very much for listening to us and hope to see you or hear from you next time we report the Q2 results. Thank you.

[Anders Forsén, Chief Financial Officer]

Thank you.

[Gunilla Öhman, Head of Investor Relations]

Thank you.

[Operator]

Thank you. This now concludes our conference call. You may now disconnect.