Systemair AB

STO:SYSR

Earnings Call Transcript 2020-Q4

[Operator]

Welcome to Systemair Interim report Q4 2019-2020 call. [Operator Instructions] Just to remind you, this conference call is being recorded. Today, I am pleased to present Roland Kasper, CEO; and Anders Ulff, CFO. Please begin your meeting.

[Anders Ulff, CFO & Secretary to the Board]

Good morning, everyone. Anders Ulff here from Systemair. I welcome you to the Systemair Q4 report. You can find our presentation on our website. And I'll leave the word to Roland, who will kick off here in the presentation.

[Roland Kasper, Group CEO & President]

Good morning, ladies and gentlemen. Roland Kasper, CEO of Systemair here.So let's jump directly into the presentation, and I'm switching thereby directly to what you call the picture #2, which is the map of Systemair. Systemair, founded in 1974, our last fiscal year that we now will report here turned up with a total turnover EUR 890 million. We are listed on the stock exchange market, NASDAQ, since October 2007. We operate our own sales companies in 51 countries. And we have currently around about 6,200 people employed in Systemair Group. And all in all, we export to more than 100 countries all around the world. Switching to Slide #3. Looking at our concluded year '19/'20, our financial year that ended in last of April. We had, all in all, in our Eastern Europe and the CIS countries, a market share of our total share of 17%, coming from 15%, so an increase of 2%. North and South America represent 10%, coming from 9%, increase of 1%. Nordic region decreased slightly from 22% to 20% and Western Europe also slightly decreased from 43% to 42%. The other markets here represents a stable 11%. Going to Slide #4. Direct jump into our quarter 4 report and the quarter 4 results. The total net sales in quarter 4 came in at SEK 2.031 billion compared to SEK 2.143 billion the quarter the year before. This represents a negative growth of 5.3%, whereof organic minus 6.8%. By that, we are breaking our almost 10-year streak of organic growth just in this quarter. Going into next slide, Slide #5. So looking into the growth and making a small analyze of that. The good organic growth, we still had in North America and Eastern Europe and mainly by that, Asia and Western Europe have affected us negatively. Acquisitions. We had a positive effect here of the acquisitions of Pacific Ventilation in Australia, Systemair Maroc, Poly-Rek in Croatia and Frico in Denmark, 1.4% positive. And then actually, the currency is only a minor impact here of 0.1%, so all in all, from minus 6.8% to minus 5.3% organic growth. Looking then at the operating profit in the next slide, Slide #6. Actually, our gross margin increased to 34.6% compared to 32.8% in the quarter mainly due to all the profit improvement actions and programs that we have implemented and that have an impact in most subsidiaries. The sales and admin expenses for the quarter decreased with 0.8% for comparable units. And during the quarter, we actually made an impairment of goodwill related to the acquisitions of Airwell in Italy and also Viking in South Africa, which resulted in a write-down of SEK 37.8 million. The operating profit for the fourth quarter thereby amounted to SEK 56.3 million compared to SEK 114.1 million. But adjusted for the impairment, the EBIT amounts to SEK 94.1 million or 4.6%. Switching to the next slide, Slide #7. Profit after tax in quarter 4. The net financial items ended for the fourth quarter at minus SEK 46.6 million compared to minus SEK 17.7 million negatively. The effects of the foreign exchange on the long-term receivables, loans and bank balances are calculated today at SEK 38.3 million negative compared to SEK 8.6 million year before. The interest expense for the quarter totaled SEK 9.5 million versus SEK 10.1 million negatively. And adjusted for the IFRS 16 effects, the interest expense actually totaled at SEK 7.6 million negatively. The estimated tax for the quarter amounts to SEK 11.6 million versus SEK 18.3 million the year before, so all in all, negatively SEK 12 million in the quarter 4. Jumping to the next slide, Slide #8. The cash flow analysis in quarter 4. The cash flow actually from the operating activities in quarter 4 '19/'20 amounted to SEK 94.2 million compared to SEK 142.1 million in the quarter the year before and the change in working capital, thereby negatively of SEK 54 million versus SEK 106.5 million the year before. And here, the change in the working capital mainly due to increased inventories, which is the main effect of in March and April, a lot of customers actually refusing to receive goods that were sent by order, and we had to take them back in some of the warehouses in Europe, which is quite an impact for us. Now they have been shipped. The net investments, excluding acquisitions, negatively SEK 34.9 million versus SEK 52.4 million last year. And here, it's mainly in machineries in Spain, Sweden and Germany. And thereby, the free cash flow amounted to SEK 5.3 million positively versus negatively SEK 16.9 million last year. Our net indebtedness actually decreased to SEK 1.98 billion versus SEK 2.08 billion last year. I'll have a separate PowerPoint on the cash flow from the operating activities and because we think it's worth to show how we have been working with it, and I switch data to Slide #9. And here, you see a development on our work from the cash flow for operating activities, where you can see in this tables the cash flow from the operating activities quarterly and you see then also the trend line from the operating activities rolling 12. So what you see is that almost all the last historical years, our quarter 4 has been negatively in cash flow. But we have been working hard with it, and we have turning this. Even in this year's quarter report, quarter 4, it is still positive even though the extraordinary challenging times that we're having. So we see that we can really benefit from the work that we have been doing internally. Switching and going on to Slide #10 and moving into the different markets, starting with the Nordics. Sales in the Nordic countries decreased by 5% in the first quarter compared to the previous year. Adjusted for the foreign exchange effects and acquisitions, actually, the sales decreased by 2%. So here, mainly the Danish market showed good growth still during the quarter, while sales in Finland and Norway decreased. Sweden, actually, sales is on a par with previous year. Next slide, Slide #11, Western Europe. Sales in the Western Europe market is 9% below the corresponding period last year. And adjusted here for foreign exchange effects and acquisitions, actually, sales fell by 11%. Glad we hear the German market showed growth during this period while other major markets in the region declined, of course, of corona effects partly here, including mainly France, Italy, Portugal and U.K. Slide #12, Eastern Europe and CIS countries. Sales in Eastern Europe and CIS rose by 5% during the quarter. And here, the currency effects and acquisitions had actually no significant impact on the sales during the quarter. Sales in Russia today is largely unchanged compared to previous period, calculating Swedish kronor though. The Russian market represents today 29% of the sales in this region, Eastern Europe and CIS. Major markets in the region that show growth during the period is still continuing Czech Republic, Estonia and Hungary. So growth, 5%; organic, 5%. Moving to next slide, North and South America. Sales in North and South America region increased actually by 8% during the quarter compared to the same period last year. And here, adjusted for currency effects and acquisitions, sales increased by 5%. The Canadian market here was especially developing very well in this quarter, also to mention that we had a good development in South America, especially in Brazil. Next slide, Slide #14, Middle East, Asia, Australia and Africa. Sales in this region decreased by 18% compared to the same period last year. And here, adjusted for currency effects and acquisitions, actually, sales decreased by 24%. Here, countries such as India, Malaysia, South Africa have been severely affected by the closures that were given by government close down decrees and -- as a result of the corona. However, though, Turkey in this region has performed really well during this quarter. By that, I will jump into our figures and results for our full year and moving over to our Slide #15. Sales for full year amounted then at the end to SEK 8.95 billion (sic) [ SEK 8.915 billion ] versus SEK 8.3 billion the year before. This is actually then a growth of 7.1%, whereof organic 1.2%. Looking at the growth in the next slide, Slide #16, for full year, the analysis. Organic, we had good development in Eastern Europe and North America contributed by acquisitions. Here, Koolair in Spain; Pacific in Australia; Systemair Maroc; Greentek in Canada; Poly-Rek in Croatia; and Frico in Denmark, all contributed to 3.3% growth. And here, you have an effect of the strengthened euro and currency of 2.6%, which in total gives us a growth of 7.1%. So next slide, Slide #17, the operating profit for the full year. The operating profit for the financial year May 2019 to April 2020 for us amounted to SEK 625.7 million compared to SEK 528.1 million the year before. The operating margin concluded to 7% compared to 6.3% the year before. Though adjusted for impairment of the goodwill in Italy and South Africa in quarter 4, the operating margin actually is 7.4% for the full year. Sales and admin expenses for the year increased by SEK 117.9 million or 5.3% for comparable units. And those selling expenses have been charged with SEK 26.2 million for estimated customer losses, which is a decrease from SEK 34.6 million the year before, so all in all, SEK 626 million operating profit for the full year. It's for us very important area to talk about, Slide #18, sustainability, as energy saving is a central theme in our product development. In Europe, we see the development is being driven by the EU directives underlying, and that includes requirements on the energy-smart products but as well also on energy-efficient buildings. Mentioned this because of what we see now coming ahead with the incentive programs. This is what is very, very close to our core. The trend is global and in other regions of the world are inspired actually by the European development when it comes to energy saving and energy efficiency. And it is in this area where Systemair can make the biggest difference from a sustainability perspective going ahead. So we are working continuously to reduce the energy usage also in our systems and the products that contribute to this. For us, our ventilation units that we just only sell in Europe during 1 year contributed to reduce carbon dioxide emission corresponding to the emissions from last year's sales, 140,000 cars. It's quite an impressive impact that we can do. Just to give you 2 project highlights that occurred during the last quarter report here. We were awarded to the supplier to the world's largest vaccine manufacturer that choose our air handling units because of the hygiene applications. So this customer here is the Serum India, which is the world's largest vaccine manufacturer and is leading in producing highly specialized life-saving biological vaccines. And this biotech company shows trust in our expertise and that choose us again for -- to deliver our air handling units for their modern laboratories. And this order is, for us, valued more than EUR 0.5 million and deliveries are ongoing starting in September 2020. Another highlight also showing what we're doing in these challenging times and where we see that our applications fit perfectly is switching to Slide #20. We also got awarded a huge order in Turkey, where we delivered air handling units to 2 emergency hospitals in Istanbul. The Turkish government decided to build 2 emergency hospitals in the Istanbul region. And the hospitals are multipurpose hospital, and they will have services normal -- specialized areas hospitals in normal times. But in these challenging times, they will have great capacities for intensive care and palliative care. We actually delivered here an order for 150 standard FL NG units, air handling units, hygiene with automation, more than 100 fans and 180 indoor and 280 outdoor units to a total amount of EUR 3 million. Here, the biggest challenge actually is that the Turkish government decided that these hospitals should be built and delivered and going into operation within 45 days. And we could deliver and supply all these units in shorter than that time to be installed and commissioned. So we are successful to deliver all these AHUs and corresponding VRF units on time for these projects. And this is, I think, something that is showing our capabilities and the applications where we can make a difference, especially when it comes to hygiene. Then moving to Slide #21. As a summary, looking at an organic growth, negatively 6.8% for the quarter. The growth would though have been positive without the corona effects. The adjusted EBIT margin was 4.6% in the quarter versus 5.3% in quarter 4 the year before and 7.4% for the full '19/'20 adjusted versus 6.3% the year before. We consider this is a step in the right direction despite the COVID-19 effects. So going forward, we hold back on investments and adjust our cost base, of course. And nevertheless, we also realize that this has been a record year in sales and profit-wise. And we still see a lot of markets that the outlook is still a little bit unclear. But on the long term, we need to point out that we see that the effects and the awareness of the need of indoor air quality and of healthy clean air has been rising, of course, and will be a benefit for us in future. By that, I close the presentation and ask the moderator to open up for questions. Thank you.

[Operator]

[Operator Instructions] Our first question is from Carl Ragnerstam from Nordea.

[Carl Ragnerstam, Analyst]

It's Carl from Nordea. I have a few questions. First of all, if you could give us any idea of what May and the first week of June looks like in the different markets if you, for instance, compare it to April levels.

[Roland Kasper, Group CEO & President]

You -- sorry, I didn't catch everything 100%. You mean how June and going forward is compared to April?

[Anders Ulff, CFO & Secretary to the Board]

Yes, May and June.

[Carl Ragnerstam, Analyst]

It's -- how -- May levels and sales for order intake levels and also in the first week of June, if you compare that to what you saw in April.

[Anders Ulff, CFO & Secretary to the Board]

I think if I can respond to that, Roland.

[Roland Kasper, Group CEO & President]

Yes.

[Anders Ulff, CFO & Secretary to the Board]

I think we see the same -- more same -- more or less the same order intake levels in May as we saw in April. That would be similar. June is still too early to say something about. We don't have that information yet for -- on the global picture, really.

[Carl Ragnerstam, Analyst]

Okay. Perfect. And also, you mentioned a lower back -- order backlog in the Nordics. Is it possible to try to quantify that? And also, on that note, have you seen improvement in Norway and Finland, which you pointed out as the weakest markets in the Nordics?

[Roland Kasper, Group CEO & President]

Going ahead, what we see is that -- or what you expect is stabilized Finnish and Norwegian market actually. They have been historically -- I think I pointed out several times earlier in other reports, they have been really, really fast in adopting the new circumstances in the market. So I would not be totally afraid of going ahead in those 2 countries. It is more about the common building industry development on other Nordic markets where we need to be a little bit aware in looking ahead.

[Carl Ragnerstam, Analyst]

Okay. Perfect. And I have a few more if I may. I mean looking at the gross margin in the quarter, it looks fairly decent actually. Could you just give some flavors what's behind that?

[Roland Kasper, Group CEO & President]

Yes...

[Anders Ulff, CFO & Secretary to the Board]

Just fairly instances beyond this day, I think it was an excellent gross margin for the quarter, really. And I think this is -- as Roland said, the long work we have done in order to focus on the -- to improve the gross margin. And there is several factors behind that, really, I would say. I mean to mention some is -- I mean, of course, the pricing that we have focused on and also the efficiency in our factories really and the work we have spent on the restructuring cases as well. Do you have anything to add to that to Roland or...

[Roland Kasper, Group CEO & President]

No, I can only comply to what you say. I mean this is really effect also what we also presented in our Capital Markets Day. I mean we have really been working with the underlying factors in driving really the improvements on the contribution margin. So I would just see it as a confirmation that we're doing the right things here.

[Carl Ragnerstam, Analyst]

Okay. Perfect. And also on that note, since you -- despite the COVID-19 outbreak, do you think that you are able to implement more or less all of the measures you talked about on the Capital Markets Day, including pricing [ Geniox ] laid out, et cetera, despite the outbreak?

[Roland Kasper, Group CEO & President]

Carl, yes, absolutely. We will, of course, continue that route. I think the only thing that was, how to say, unplanned for the Capital Markets Day is, of course, the -- now is a bit affecting the time line. There is, as I said, the -- for us, the uncertain factor is the development in the building market now in the construction part. But we -- the things that we have been working on in the background when it comes to, as Anders also mentioned, pricing when it comes to how we work with our processes, when it comes to what projects we approach not going for the big and beautiful but maybe going for those that fit our strategies a little bit more. That has given effect and just having the -- now this pandemic doesn't mean that we would go in different way out of that. We will follow that path. And I think that's the most logical way to continue.

[Operator]

And our next question is from Douglas Lindahl from Kepler Cheuvreux.

[Douglas Lindahl, Analyst]

I wanted to follow up on the previous questions there on the underlying margin improvement. During the CMD, you showed a great chart there, how to get to your 10% EBIT margin. And I wanted to -- you mentioned pricing there, Roland, and how much. But is it mainly pricing? And what are the main levers ahead sort of to reach that 10% EBIT? Would you say that the pricing, which was 0.8 percentage points is now fully sort of reflected in the margin? And are you now more focusing on Menerga and a few factories and so on? Or what main levers would you say are to be expected going forward? Maybe the easier question is, is pricing fully now reflected? Is the pricing sort of lever fully done now? And would you say -- was there more?

[Roland Kasper, Group CEO & President]

I think going forward here, it's hard to utilize the pricing tool a lot more really. When a lot of competitors in the market has factories that are not really fully occupied as it is currently due to corona, it will be hard really to continue to increase prices as it is right now for the moment. I mean it cannot be...

[Douglas Lindahl, Analyst]

For the longer term -- midterm, you would expect...

[Roland Kasper, Group CEO & President]

Yes.

[Anders Ulff, CFO & Secretary to the Board]

Yes. Midterm, I mean this is still part of our strategy. But right now, under these circumstances, it's really hard really to use that tool as it is right now. And it needs...

[Douglas Lindahl, Analyst]

I understand, in the midterm...

[Roland Kasper, Group CEO & President]

But I -- but you also need to understand that this is pricing. I mean under the tagline pricing, you have many different activities. It's like a costing model. It's the pricing process. It's really to make a market pricing according to customer value. I mean this maintaining price list is updating. It is the distribution of prices. It's hard to work with the different systems towards distributors and end customers. So there's so many different levers into that. We will continue working with it. But you need to be more careful today when it comes to the right competition because some of them out there might be a little bit on a desperate mode. But all the initiatives we strengthened, of course.

[Douglas Lindahl, Analyst]

And if we look at, for example, the IT transformation that you've been talking about, where are you in that process?

[Roland Kasper, Group CEO & President]

There, we actually are according to plan. So I can say, even in those countries where we had to make some adjustments on personnel or personnel staying at home on forced leave and all that, we actually made everything possible to keep our R&D and IT people onboard because we have continued our product development and IT development to stay on track and on time. So that has not been [ interrupted ] actually. That was a -- how to say, we took that decision okay. We will adjust, but we will keep some certain strategic outlines, we will keep no matter what and to drive them ahead.

[Douglas Lindahl, Analyst]

Okay. That's clear. And I obviously understand that it's difficult to comment on future order intake. I would have expected you to have sort of a vague outlook as well, which -- yes, it's always natural. But on -- based on your current backlog, what can you say about growth, organic growth in the coming quarters? Was this the worst quarter for you? Are you expecting worse to come sort of -- what is your base case in terms of organic growth going forward, would you say?

[Roland Kasper, Group CEO & President]

I would say it's very hard to give you a solid figure. But I would say that the worst in terms of how it affects us was when we, by government decree, got 8 factories stopped. So I would say, can it get worse than it was? I don't think so. The -- what we most probably will see are in areas of the world, we'll see lower volumes, maybe a slower pace offset by all these incentive programs that we are getting announced, but we will see when they are coming into force, when they get into effects. I think that's the most interesting part going ahead. But I think the darkest hours in terms of shutting down the factories we have is behind us.

[Douglas Lindahl, Analyst]

Yes. Okay. So that late cyclical comment should not be sort of exaggerated in your outlook. And on the goodwill impairments, what are future risks there? Is that something you could comment on I guess. Maybe not -- maybe that's -- maybe not possible.

[Anders Ulff, CFO & Secretary to the Board]

What we did know that we wrote down the entire goodwill related to our AC factory in Italy. So that's completely written off. So there's no risk left there. We also had a review of the goodwill values in South Africa. And now as you might know, I mean, the situation is rather dark in Africa due to corona and the lockdown has been very substantive. So we did a 50% write-down of the goodwill there. So there's still an amount left there. But I mean if you look overall on our goodwill values, you will find that we have a rather small goodwill amount compared to other companies in our industry and also compared to our equity in [indiscernible]. But I would say that the risk for goodwill impairments, okay, it's still there, but it's not substantive.

[Douglas Lindahl, Analyst]

And a final comment -- final question on M&A. Does the current market environment open up for opportunities? Or how do you view that?

[Roland Kasper, Group CEO & President]

Yes, here, Douglas. Yes, it does open up. There are, of course, some candidates. The only restraint I would say today is that we normally, in our M&A process, we love to visit those companies and to have a, say, face-to-face dialogue, which is a little bit restricted today. That is the challenge, I would say. But I also have to mention, of course, we are quite positive on the future as the incentive programs that are launched and what we have heard so far, they will -- most of them will be directed to renovation, energy upgrades and energy initiatives, which is totally -- are early. Also as I also mentioned earlier, with now the raised awareness of how important is with having clean air indoors and outdoors -- I mean so we really look quite positive on the mid- and long-term developments. It's just very hard for us to predict how fast and how intense the next weeks and months will be affected or pushed or incentivized and how this will actually come into force and how fast and where locally. So that's just to give that.

[Anders Ulff, CFO & Secretary to the Board]

Yes. Also from a financial point of view, we have the resources to continue to do acquisitions. Also, our financial situation is still very good also.

[Douglas Lindahl, Analyst]

Yes. Just one more if I may on Germany, which you said showed growth in the quarter. Is that sort of normal -- is it a continuation of the previous trend? Or is it -- do you see Germany becoming stronger because there we've seen obviously the climate package and regulation moving in your favor, so to say?

[Roland Kasper, Group CEO & President]

We -- I think Germany had a rather strong race ongoing with energy upgrades before corona hit and they continued. And we also see that everything that we can be today, they will continue. And also the incentive program that now has been launched is on energy upgrades. So we also saw in the month and the weeks going and also the order intake. I think it's going in the right direction. And Germany seems to be pretty stable actually. Also for the Menerga entity, the order intake during these weeks have been pretty okay.

[Operator]

[Operator Instructions] Our next question is from Marcela Klang from Handelsbanken.

[Marcela Klang, Analyst]

I have a question. The Turkish hospital, do you have more projects like that? And when will this one be booked? When will we see the margins in your figures?

[Roland Kasper, Group CEO & President]

Yes, we have other projects like that. They will come in August, September. We had some projects, order intake that are actually to be delivered during the next couple of weeks in South America, especially Brazil. But here in Europe, we're still working on some major ones, but it's not booked yet. So we don't know if they're coming. It could, of course, also be someone else. But it's a good development and we like that.

[Marcela Klang, Analyst]

Yes. When there is more focus on delivery times than prices, we like that, too. Can you talk about the capacity utilization in your factories right now since all of them are open and are coming towards the normal level?

[Roland Kasper, Group CEO & President]

We have -- of course, we have some of the factories -- sorry, some of the factories have slightly lower capacity utilization, like in average in Nordics and Southern Europe and in Asia. In Southern Europe and Asia, it's because they are opening up the economies in different paces and stages. And also, as I mentioned during the call, also in South Africa, they have this 4-step plans and number 4 first and 3, then 2, then 1, and we are now in stage 3. So we are open and we are delivering but at the capacity of around about 60% in South Africa, and in Malaysia, it's around 80% as well as in India. So it's a little bit lower than normal, not 100% but much, much better than lockdown. So we're quite happy with that.

[Marcela Klang, Analyst]

Clearly. And the final question, the increased inventories during the quarter when the customers refused to receive orders, what is the situation now with your inventory level?

[Roland Kasper, Group CEO & President]

People are coming back. And the good thing for us when the economies are starting up again is, of course, the people are returning to work. So we have, as I also -- I think I mentioned it shortly, I hope so, that we have been starting to deliver those goods again because they were delivered, and on building sites, there were no one to sign off to take the products. So they came back, some of them, especially actually in France and other communities. But that is now on a decrease again. So we're going -- and we are shipping out those products. So that's the benefit of opening up again.

[Operator]

[Operator Instructions] And our next question is from Henrik Alveskog from Redeye.

[Henrik Alveskog, Equity Analyst]

Okay. Well, could you just briefly update us on the Panasonic partnership and if there are any changes now due to the current situation?

[Roland Kasper, Group CEO & President]

Yes. Henrik, on Panasonic, the ongoing sales with the already launched unit eco IV has been a little bit on halt just volume-wise because they -- of course, they are having their head office in Germany and the sales entities in Spain. So they were affected just by the staying-at-home order for that units. But as I also mentioned in a prior question here, the R&D work, the development work that we had on -- as we have explained earlier, we have 4 main projects. The first one is this eco IV already launched project. The other 3 that were under development are proceeding according to plan because we took the decision that even though we closed down, but we continued to keep all the R&D resources onboard. They had to be either from home, but they'll all be networked and working. So we are following the other projects on pace. And we are actually about to launch during fall here, the next stage, which is the project #2 and 3. So that is developing fine.The only restriction that we have is the physical meetings that normally are being held every month. They are either on hold or they are very digital with a lot of people involved. So that's the only thing that those meetings are much longer today. That's the only practical thing.

[Henrik Alveskog, Equity Analyst]

Yes. All right. And also, maybe if you could tell us -- and you cancel -- or the Board is proposing 0 dividends this year due to the uncertain situation. And you also mentioned that you're holding back on some new investments and adjusting costs due to this. Could you give us an idea of the magnitude of these measures?

[Roland Kasper, Group CEO & President]

Anders?

[Henrik Alveskog, Equity Analyst]

Just to give us a view for how uncertain you are or...

[Anders Ulff, CFO & Secretary to the Board]

We are not that uncertain, I would say. I mean we believe -- I mean there's a life after the corona, of course. And I mean looking at, for example, the investment and our forecast for the coming year is around SEK 300 million in CapEx. And the major things there are investments in the factory in Russia and also in Czech Republic that we have communicated. And we are still behind those decisions, and we think it's needed for the future. And in some cases, some of the investments could -- also when it comes to machinery and so on, could be of good timing when the volumes are lower and we have a better chance really to implement this machine. When it comes to the cost base, then I wouldn't say it's hard really to magnitude. I mean we are holding back, and we are asking from our companies to keep the profit levels really and adjust cost base in all possible ways really. And in some cases, we have to do it on a more extreme note where we try to renegotiate lease contracts, lower salaries and so on. And in other case, we are utilizing the government and support programs also as we're doing in, for example in Sweden. In other countries, there are a lot of possibilities to [ having support ] they -- I mean the ability to [indiscernible] they stay at home and [indiscernible] they need to work late to -- it's a liability for them [ for the future ]. But it's strongly different when it comes to different markets. I mean that's -- the problem here is really to give an overall description that fits all markets.

[Operator]

Okay. And as there are no further questions, I will hand the word back to the speakers for any final comments.

[Roland Kasper, Group CEO & President]

Okay. Ladies and gentlemen, thank you very much for your interest. As a final comment, I'll just say that we're looking forward to our next quarter report, and would be very nice to see you soon again physically in other meetings. Yes -- by that, Anders?

[Anders Ulff, CFO & Secretary to the Board]

Yes. Thank you very much. It will be very interesting quarters moving ahead here really, and hope to see you all soon here in some kind of event. Thank you very much.

[Roland Kasper, Group CEO & President]

Thank you. Bye-bye.