Nobia AB

STO:NOBI

Earnings Call Transcript 2021-Q1

[Operator]

Hello and welcome to the Nobia Q1 report 2021. [Operator Instructions]Today, I'm pleased to present Head of IR, Tobias Norrby. Please go ahead with your meeting.

[Tobias Norrby, Head of Investor Relations]

Thank you, and good afternoon, everyone, and thank you for calling in to this Nobia Q1 results presentation. Today, we will start with an overview by our President and CEO, Mr. Jon Sintorn; and then our CFO, Mr. Kristoffer Ljungfelt will dig into all of the financial details.And with that, I hand over to you, Jon.

[Jon Sintorn, President & CEO]

Good afternoon, everybody, and again, welcome to this call. Some highlights from this first quarter, and starting off, I must say that this is quite a good quarter. I think this provides a really good start to the year. And we are, in that sense, I think in a good place to continue prepare the company for the rest of the year.So we had growth and good results, specifically in the Nordics, a little shy of 9% up, and then the Central Europe region at 20% up. That was good solid growth from the Nordics and from Central Europe. The U.K. was impacted by the retail lockdowns, having specifically an impact on the important winter sales -- the winter sales campaign. And the project market remains in recovery, rendering a minus 8% growth for this first quarter. But as you know, since then the U.K. has opened up the 12th of April.All in all, that rendered a 3% organic growth for the group and an EBIT of SEK 196 million compared to SEK 134 million of last year. Operating cash flow minus SEK 69 million compared to SEK 212 million, and the net debt decreased to SEK 293 million.Apart from doing a lot of business, running our factories, selling [ knight ] kitchens and all of that, we also had a Capital Markets Day the first quarter, which we and the management team really enjoyed. We were not only excited. Well, we were excited and glad to share with not least you guys listening into this call about our plans for the future. We also discussed or highlighted the financial targets. We were talking about the Tomorrow Together Strategy with its headlines growth, structural efficiencies, people engagement with sustainability and design at the heart.If we look at the kitchen market development last quarter, we see in the Nordics a consumer demand benefiting from the stay-at-home trend, higher house prices and better consumer confidence, and the business-to-business was supported by a high level of new build projects, except for in Finland. In short, where we are able to operate and be almost open, I would say, and not so restricted, we are benefiting from the stay-at-home trend. We have products in the way that really cover that area, that growth area really well.In the U.K., the project market is still in recovery and total housing maintenance are delayed due to the pandemic. But the underlying consumer demand is good, however, negatively impacted from the retail lockdown that was until 2 weeks ago, April 12. We've seen the consumer demand through our digital channels and web connections that we have with customers. But again, stating that the first quarter was impacted by the winter sales -- lockdown during winter sales period in time, and we're looking forward to have more open stores to really meet our customers.Central Europe. Consumer sales really supported by pent-up demand following the lockdowns. And here again, the stay-at-home trend. Housing demand in the Netherlands supports new construction and project sales. All-in-all, Central Europe had a really good growth of 20% and doing well. Specifically in Austria, we've had a higher demand than we've seen before, which is good also showing the management team doing a really good job in Central Europe as well.So that was a little bit about the market. Going into some comments on the Tomorrow Together Strategy and the priorities. Looking at growth, we can now clearly see inroads in the trade segment in the U.K. We are growing there, which is good, and the trade segment has not been as impacted as the retail segment has been in the U.K., and that's also something we can see and track.In terms of revitalized consumer retail, I think it's also clear that the refurbishment that we've done in Denmark, the upgrading of stores, have had a positive impact on our sales. And another positive example is that [indiscernible] campaign that we've had for Marbodal where both the sales campaign and the product assortment really hit the hearts of the consumer, where we see good growth, which is also encouraging to continuing in developing products and concepts in this area.Moving to the structural efficiency. We are working on the product platform alignment, which we call K2020 in having a dimensional and platform that will streamline our product assortment, moving well according to plan. And the same goes then for the manufacturing footprint transformation where the big thing there is what eternally we call the A2 project, which is the new factory in Jonkoping. It moves -- that project is progressing according to plan. We've reached the phase now for the second and the third quarter of this year, we're going to start purchasing machinery, but also purchasing the building. So it's moving along well in that area.In terms of people engagement, we have put an effort in to further create value in the Nobia -- let's call it, the Nobia brand. We are not operating in the market at Nobia and meeting customers under the name of Nobia, but we do it in employee branding and those sorts of things, but also internal pride and have everybody working for the company of Nobia, which will be an asset and important when we are to execute and make progress in all these big, important strategic initiatives that we have. We have worked on things like core values and purpose and those sorts of things, which have been very well received and appreciated.And in terms of ensuring and winning capabilities, we've taken in some new competencies as well. And we are filling up our management teams, which is reflecting the organization that we put in place for the strategy execution. So all-in-all, we're now well-positioned and have good people sitting around the table in the various management teams.At the heart, we talked about sustainability and design leadership. Already in the previous call, we talked about that we have sites and targets approved now, which is really great in the dimension of looking into the new factory in Jonkoping. We are not only scrutinizing, but we are making sure and are keen to make really good choices in terms of with the sustainability perspective in mind.And then on the design leadership ambition, I think we can really see the first bigger things coming out of that ambition. I was just mentioning the [indiscernible] campaign that we've been running in the course of this year. We just now or very recently launched something called [indiscernible], which is also well received by consumers. And there will be a lot more exciting stuff coming out here, new concepts like something we call Nordic Nature. So coming to a store near you soon, and go and have a look at it. It's going to be very beautiful.I think it's really nice to see how both the sustainability dimension to further work on that one, but also the design and concept dimension is now coming across in the company in a more material and distinct way. A lot of hard work for a long time is starting to -- surely is starting to pay off, but also much more to come. That was a few things to mention with regards to our Tomorrow Together Strategy and our priorities.So all-in-all, then concluding on the group level for the first quarter, we did have 9% growth in the Nordics, 20% in Central Europe, an 8% decline in the U.K., rendering an organic net sales increase of 3%. That means that our net sales went -- rendered up to be SEK 3.373 billion.We had a gross margin of 38%, a slight increase, and an EBIT of SEK 196 million and an improvement driven by the Nordics and Central Europe and rendering in 5.8% margin. We're in a strong financial position, meaning a net cash position, excluding the IFRS 16. So all-in-all, also a solid and strong balance sheet.So with that highlight for the first quarter, I hand over to Kristoffer that will take you through more of the nice stuff in the financials.

[Kristoffer Ljungfelt, Chief Financial Officer]

Thank you, Jon. Thank you. So first, let's look at the breakdown of sales per market. If we double-click on U.K., it represents now 35% of sales. We have retail at 43%, trade at 34% and project at 23%. In retail, it has been a weak start of the year, with sales decline of about 15% on the back of the closed store network. Order intake in the very same period was down 20%. So it does prove that it takes a little bit longer to build up the order books again. And we believe that it will take yet another quarter before we're back and exceed the 2019 sales levels when it comes to the retail segment.Having said that, trade, which represents 1/3 of the U.K. business is compensating that, to some extent, with actually much improved order intake. And with that pattern continuing, we will see growing order books also for the second quarter of this year.The project market, as Jon was alluding to, has been very soft, especially in the social housing market and in the London property development market. And we do not expect any major changes in this segment until the second half of the year. As you remember, we closed all the manufacturing sites in Q2 2020. And for that reason, we will, of course, have a very high growth number when we enter Q2. However, we don't expect, as of Q2, to reach the same sales levels as we have had back in 2019 as of yet.Then looking at the Nordics. All-in-all, representing 54% of Nobia sales. Here we had a strong retail performance in the quarter, double-digit growth in retail in both Denmark and Sweden on the back of the product launches that Jon was mentioning. We had single-digit growth in retail in Finland and Norway, which we are also quite pleased with, especially given that in Norway we have had a store network that was closed for a period of time in Oslo and surrounding areas.Again, we believe the concepts have contributed a lot to the growth in Sweden and Denmark. And for that very reason, we also believe that we take market shares now in retail. Of course, the retail market was helped by the strong home refurbishment trends.Product sales was flattish across Sweden and Norway. However, growing in Denmark and contracting in Finland as has been the pattern in the last couple of quarters.Looking at Central Europe, we had another strong quarter there in Central Europe. Austria especially had a strong year-on-year growth due to last year's temporary closure of the factory and also a strong underlying market, which is, we believe, quite similar to the Nordic pattern when it comes to the market characteristics as of now.Also the Netherlands continue to perform well on the back of the improved private development market, whereas the social housing market in Holland is somewhat soft. And Central Europe together now is 11% of group sales.Then just to give some further highlights on the Nordics, the growth rate came in at 9%, driven then foremost by the retail across the entire region, but also project sales in Denmark. Again, good performance from the new product concepts, which also helps in operational leverage and increasing our gross margins. As you can see, we have grown margins by 1 percentage point roughly.Solid performance also in supply chain, although we have some capacity constraints in areas like customized painting, we have talked about that before, and that trend continues. In Q2 and Q3, we will do investments in this area in some of our major factories in order to cater for the higher demand and especially then of customized products, which in a way is a good trend for our business.Currency also contributed positively this quarter by SEK 20 million, mainly on the back of a stronger Swedish crown again compared to the euro. All-in-all, an EBIT of SEK 249 million, with an EBIT margin of 13.6%, which we consider to be a good operating performance as well.Then if we turn the page to U.K., and sorry for repeating a little bit here, but the negative 8% is a result of the retail network that has been closed throughout the majority of the period, compensating to some extent by trade, but again, a very soft project market. Due to the volume decline, we have lost some gross margin. We also have our factory, which manufacture to the social housing market standing not completely still, but very little to do. And which has burdened our gross margin by roughly 1 percentage point.In terms of EBIT, negative SEK 47 million with a negative EBIT margin then. The retail lockdown has ended as of April 12. And, of course, we will see a completely different pattern now going forward for the U.K. business, and we should definitely be coming back to black numbers in from Q2 and onwards.Central Europe then. The growth, 20%, has led also to a good volume performance, of course, and productivity improvements, which has supported a strong gross margin of almost 32%, which is historically very good for this region, and an EBIT of SEK 37 million with 10.8% EBIT margin.If we then look at the financial position, operating cash flow of negative roughly SEK 70 million, quite a bit below last year. This is mainly related to timing of accounts payables given the very peculiar situation we were facing in March last year. So we don't see that as anything else than the timing issue. There has been some postponed VAT and tax payments, which we have conducted now in Q1. Apart from that, it looks like a solid cash flow as well.And you can see from the financial net debt, which means our borrowings, net pension and interest bearing assets, which is SEK 300 million. And if you back out also the pensions on that, we're actually cash positive, which is great given the good initiatives we have now going forward. So a leverage of about 6% only.Then next slide, please. So we added a slide that some of you might remember from our Capital Markets Day, where we tried to shed some light on our direct material purchases. And that's because of the last -- a lot of communication and questions on this topic concerning the direct -- the inflationary pressure on direct material prices. Basically, we have a total direct material spend in the group of SEK 5 billion, of which sheet material, where we have the highest inflationary pressure, represents 17%. There is also price impact on the appliances business.However, the appliances is an instant price going out to our customers and consumers, whilst the sheet material go into our production. But as we have stated before, it's very important that we carry on this own cost that we will see in sheet materials to our consumers via the franchisees and dealer and construction company networks that we have. So that is what we expect from this. We can, as of yet, not give any details on the eventual price increases that we will see in sheet material, but we will have to come back on that topic in the Q2 report when we know a little bit more. But it's clearly so that there will be upward pressure on that one.And with those words, I hand over to you again, Jon, on the financial targets.

[Jon Sintorn, President & CEO]

Yes, as we described and presented at the Capital Markets Day, we did some changes on the financial targets to even better reflect our way going forward. In terms of growth, average organic growth target to be 3% to 5% per year, more emphasizing on the organic growth. Profitability, operating margin to be greater than 10% over the business cycle. It's unchanged. The capital structure in terms of having leverage instead, defined as net debt over EBITDA and that shall be below or beneath 2.5x before we have net debt to equity. And then the dividend policy, that the dividend shall comprise at least 40% or a minimum of 40% of net profit after tax and before we had acceleratory ratio. So those are the financial targets.Then moving in then to a brief summary here at the end of our presentation for this call before the Q&A. As I started out and I think you could hear also from Kristoffer outlining the sales and the financial performance, I think this is a solid start to the year. Markets free from the direct corona restrictions following the reopening, so to speak, or open doors of the U.K., April 12, which is good. But with that said, as everybody understands, living in the pandemic situation, there is still a high degree of uncertainty.As Kristoffer just mentioned, there is a direct material inflation and there is a direct material pressure on us. We are working on to mitigate that by having higher average order values. There is a potential direct material availability risk because of the high activity in the furniture and industry also on the back of the stay-at-home trend.We have indicators that tells us that the Nordics and Central Europe point towards a continued good underlying demand in these circumstances. And also U.K. market continues its recovery.So with that summary, thank you very much for listening and I hand over to Tobias.

[Tobias Norrby, Head of Investor Relations]

Thank you. And operator, please open up for questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Victor Hansen from Nordea.

[Victor Hansen, Research Analyst]

My first question, could you please add some flavor on what you are seeing in the U.K. now in April? Are you able to convert digital bookings into sales?

[Jon Sintorn, President & CEO]

Yes. We are.

[Victor Hansen, Research Analyst]

Okay. Sure.

[Kristoffer Ljungfelt, Chief Financial Officer]

Just to add to Jon's comment there. It's been only 2 weeks into the reopening. It's a little bit too early to say. But to Jon's point, we can convert as we expected. But again, we need some more time to fully validate the situation over there.

[Victor Hansen, Research Analyst]

Okay. Understood. And thanks for the extra flavor. How has your sales volumes been affected by the lockdowns in Denmark and Norway? Do you expect there to be any pent-up demand here perhaps?

[Jon Sintorn, President & CEO]

Some effect, I'm sure, on -- let's call it, on the margin as such and in some segment. But all-in-all, we don't expect the super kind of now rush to have more kitchens. I think we've had a solid underlying demand that also have been translated into a solid order book.

[Kristoffer Ljungfelt, Chief Financial Officer]

Yes. Our belief is that the lockdown has been a little bit more strict in Norway. So the Danes have been able to operate not normally, but --

[Jon Sintorn, President & CEO]

More normal.

[Kristoffer Ljungfelt, Chief Financial Officer]

Close to normal.

[Jon Sintorn, President & CEO]

Yes. Now to your point, no, we don't expect a big rush in new demand because of that. But we have a good demand.

[Victor Hansen, Research Analyst]

Okay. Fair enough. And could you please tell us how you managed to mitigate the sales decline to just 8% in the U.K. in spite of the heavy lockdowns, which impacted several of your segments? How much did your U.K. trade segment grow, for instance?

[Kristoffer Ljungfelt, Chief Financial Officer]

We don't want to shed light exactly on the trade segment, but it's clearly so that the efforts that we have done in that segment is bearing fruit, so to say. But it's also a more positive underlying market. You have to remember also that the Click & Collect setup was possible to run over this period of time. So it was just the retail stores that were fully closed. You could still use the trade back door. Now we only have trade back doors in 3; it's about 25% of our store network. So those were still able to operate, again on a Click & Collect basis.

[Victor Hansen, Research Analyst]

Okay. Understood. And a final question, please. Could you shed some light on how much of your organic growth can be explained by volume and price increases respectively, please?

[Kristoffer Ljungfelt, Chief Financial Officer]

No, we don't want to go into details on that. But there's both components in it.

[Operator]

Our next question comes from the line of Adela Dashian from Handelsbanken.

[Adela Dashian, Analyst]

I want to firstly just congratulate you on a very solid report despite challenges in the U.K., impressive. And then onto my questions. Firstly, actually it relates to trading in the U.K. and at least I'm convinced that there's a lot of pent-up demand from the first and second wave, and then also increased demand due to underlying market conditions even in this market. So how do you view the production capacity in the coming quarters? Is it sufficient enough to deliver on the demand and cater to all your customers?

[Jon Sintorn, President & CEO]

To start with, I think that we will have capacity to cater for the demand. It's also if we take -- the doors were open 12 of April, but it wasn't that everybody was just bashing, running into the kitchen stores and converting all the digital experiences we've had into concrete orders. What we see is an increase -- week-by-week increase in footfall and people coming into stores and converting as such. But it's not going to be like 2 weeks from now, we're going to have full factories by no means. So it's going to be a gradual increase of deliveries in the course of Q2 and running into the Q3 for the business that we have ongoing in various stages in the sales funnel. That's going to be a gradual -- more of a gradual ramp-up than a big feat. So we deem the capacity as we look at it positively. I'm sure we're going to have lots to do, but we don't see that as biggest risk. It's more, we mentioned, the pressure on direct material and availability rather than the capacity in the factories.

[Adela Dashian, Analyst]

Okay. But are you seeing the same underlying market trends in the U.K. that you are seeing in Central Europe and in the Nordic region, just with the consumers that you're having discussions with on the digital side?

[Jon Sintorn, President & CEO]

I think there's 2 trends. One is that we're doing a better job today in trade than we did historically, so to speak, which we benefit from that. And then we have had good interactions with customers in the digital space since some time, and that's going to gradually convert into business in a positive fashion, but not from one day to the next, massive.

[Kristoffer Ljungfelt, Chief Financial Officer]

And to reiterate what Jon said, with only having 2 weeks open, even though we love our products and our business. But that's not the first thing that came top of mind for some of the customers. So we see the gradual increase now coming in. So it's really too early to say.

[Jon Sintorn, President & CEO]

It's too early to say to what magnitude that would be, yes.

[Kristoffer Ljungfelt, Chief Financial Officer]

I think it's fair to also add to that. I mean, we've been saying all along that the underlying or the early indicators are all speaking positively to our business and to our products because there is high web traffic, et cetera, and that continues.

[Jon Sintorn, President & CEO]

I think the stay-at-home trend positive effect is similar in northern markets where we operate. And then it kind of materializes in a slightly different fashion depending on which country we're talking of. But the underlying macro trend stay as whole. It's pretty much the same.

[Adela Dashian, Analyst]

All right. Makes sense. And then on the inflationary pressures that you're seeing on direct material prices, do you expect there will -- obviously, there probably will be a lag until you're able to pass those costs over to the end customer. So do you expect to see some negative effects on the margins in the coming quarters due to this?

[Jon Sintorn, President & CEO]

As of now, we don't expect that. We think we will be able to cater for the inflationary cost.

[Adela Dashian, Analyst]

Okay. And maybe a follow-up on that. Historically, when these type of things have happened, how fast have you been able to pass the cost over to end customer?

[Jon Sintorn, President & CEO]

I think historically, we've been quite good at it. So there's some lag, absolutely, in certain areas, but historically we've been good at passing it on and --

[Operator]

Our next question comes from the line of Mattias Holmberg from DNB.

[Mattias Holmberg, Analyst]

You mentioned briefly making some investments in your factories in the Nordics I think. Could you elaborate a bit on this and what that will mean in terms of cash outflow for the rest of the year?

[Jon Sintorn, President & CEO]

Yes, it won't nudge the CapEx budget, the underlying CapEx budget that we have anyhow. I mean, the big-ticket item you will see come in later on in the year is the investment in Jonkoping. This is rather to put the flavor on the fact that we are investing in some of these capabilities that we need right now, which is painting, which is customized type of products. And again, investing in an area where we believe already that we are quite good compared to the rest of the market. So it won't be a big change in the underlying CapEx structure so to say.

[Mattias Holmberg, Analyst]

Great. And I heard your comment there that you don't believe Q2 sales in the U.K. to be able to reach 2019 levels. And I think that sounds reasonable. I'm just curious if you feel differently about the second half of the year, if that's a possible outcome? Or if that's still sort of far out of reach?

[Kristoffer Ljungfelt, Chief Financial Officer]

A possible outcome to reach '19? Was that the question?

[Mattias Holmberg, Analyst]

Yes.

[Kristoffer Ljungfelt, Chief Financial Officer]

For the second half?

[Mattias Holmberg, Analyst]

For H2. Yes.

[Kristoffer Ljungfelt, Chief Financial Officer]

I think that would -- I don't think I'm too bashful to say that that's probable.

[Operator]

Our next question comes from the line of Fredrik Moregard from Pareto Securities.

[Fredrik Moregard, Analyst]

First off just a follow-up on the previous questions on raw materials just briefly. Do I understand it correctly that you have been seeing some inflation already in Q1 that you've already now started offsetting that with prices, obviously a net negative impact in the Q1 numbers from cost inflation?

[Jon Sintorn, President & CEO]

We will see -- we have seen some impact in Q1, but quite little. It will mainly be from now onwards or end of Q1, beginning of Q2 and onwards.

[Fredrik Moregard, Analyst]

Okay. That's helpful. Then when it comes to discretionary spend, and clearly you're investing in the new product concepts and so on. But at the same time, I guess you made some significant reductions when it comes to discretionary spending last year. Could you just tell us something about where you think you're running at? Is this the current cost level in terms of discretionary spending, marketing and so on, sort of normalized? Or do you still think you have some catch-up to do from the 2020 cuts?

[Jon Sintorn, President & CEO]

Well, it's clearly so that to cater for the growth that we have in the Nordics, we had to take back some of the resources that we had back in 2020 before the corona crisis hit. So that is coming back. But meanwhile, we have also made some cost adjustments in all parts of the group. And on a run rate basis, I think we're net better off as of now. But again, it is a little bit tricky to cater for the growth here as well. So we will need to increase it in certain areas. And for example, the Nordics, in Denmark sales and possibly also in U.K. eventually in trade.

[Fredrik Moregard, Analyst]

Okay. And that's related also to marketing and product development and so on and not just the sort of --?

[Jon Sintorn, President & CEO]

Yes, we don't see with all these great initiatives we do in design, sustainability, et cetera. I mean that is resources that we are -- or that is initiatives that we are prioritizing. We're not adding. So there are some other things that we'll have to give and that we start to reallocate to this area. So we don't expect our cost to increase on the back of those on that agenda. It'll be more the market, market and sales related in that sense if there's any cost increases.

[Fredrik Moregard, Analyst]

Yes. And a final question. You mentioned that you're seeing indicators in the Nordics and Central, you're pointing towards again good underlying demand. Just curious if you could elaborate on what those indicators are and how you view them?

[Jon Sintorn, President & CEO]

Yes. And it's -- we see the early indicators in terms of web traffic, the digital design appointment, footfall, where we have had the chance to keep open and other things as well. So I think just to mention those 3.

[Kristoffer Ljungfelt, Chief Financial Officer]

And clearly, coming back to that again. I mean, our customers are much more active today. There are much more digital interaction with our customers today than 2 years ago.

[Operator]

[Operator Instructions] Our next question comes from the line of Sindre Sorbye from Arctic Asset Management.

[Sindre Sørbye, Portfolio Manager & Partner]

Yes. Thanks for taking my questions. I think I got answered in the market question. 2 other things. First, were there any furlough payments in the first quarter of this year?

[Jon Sintorn, President & CEO]

Any what?

[Kristoffer Ljungfelt, Chief Financial Officer]

Can you repeat?

[Sindre Sørbye, Portfolio Manager & Partner]

Furlough?

[Kristoffer Ljungfelt, Chief Financial Officer]

Furlough, okay. Very little. Very little in U.K. social housing.

[Sindre Sørbye, Portfolio Manager & Partner]

Okay. Good. Thanks. And then are you being hit by delays in the value chain and more specifically within white goods, as I hear there are a lot of people telling that it's a lot of delays and problems with that.

[Jon Sintorn, President & CEO]

It has -- in all fairness, the players in the white goods area have had big demand and have had difficulty in supply. So we have faced challenges as well in this area to get on the white goods side.

[Kristoffer Ljungfelt, Chief Financial Officer]

And basically, we are still selling the product and retrofitting whenever we are able to get the machines with the support of the supplier, I should add.

[Jon Sintorn, President & CEO]

Yes. In agreement.

[Sindre Sørbye, Portfolio Manager & Partner]

Yes. So it means that you paid some additional costs, but that a quite good supplier takes most of that cost?

[Jon Sintorn, President & CEO]

Yes.

[Kristoffer Ljungfelt, Chief Financial Officer]

Yes.

[Sindre Sørbye, Portfolio Manager & Partner]

Okay. And that situation, is it getting worse or better?

[Jon Sintorn, President & CEO]

In our particular case, we had one supplier that was very difficult. That has improved. The other supplier now has worsened a little bit, but we are in a better situation now than we were some months back.

[Operator]

Our next question comes from the line of Julius Rapeli from SEB.

[Julius Rapeli, Analyst]

Just one follow-up on the raw material prices. And historically, you've been quite good in passing on the raw material prices in the retail affair. My question relates to the project markets and how dynamic are you with pricing in the project markets when you sell to large construction companies and likes of those?

[Jon Sintorn, President & CEO]

Yes. And we can't really go into details with the contractual arrangements and so on, on that. But it's clearly so that retail is easier from this perspective or I should say faster from that perspective. And there could be a little bit of lag when it comes to the construction companies or larger customers. But again, historically, and they also know it. I mean, they buy these materials themselves in other for housing buildings, et cetera. So they know the underlying pressure as well, so. And they're committed as well to pass it on to the consumer at the end of the day. That's how it goes.

[Operator]

Thank you. We have no more questions from the line. I will hand it back to our speakers.

[Jon Sintorn, President & CEO]

Okay. Well, then that's it from our side. Thank you, everyone, for calling and welcome back on the 19th of July for the half year numbers. Thank you.