Electrolux Professional AB (publ)

Good morning and welcome to Electrax Professional Group and our Q4 and full year result presentation. My name is Jakob Ruba. I'm Head of Investor Relations and Corporate Communication. With me, as always, I have Alberto Zanatta, the CEO, and Fabio Sarpolon, the CFO. I leave the floor for you, Alberto, to start. Please go ahead.

Thank you, Iapo. Good morning to everybody. And before moving to the comments of the queue for results, let me spend a few minutes about the year that we just closed. 2023 was a solid year for a letterless professional. where we have been step by step building a stronger company. And that is the meaning of that sentence is that in 2023, we delivered the historical high net sales, the historical high EBITDA value above 1.3 billion SEC and the historical high cash flow. So we have been growing the company, profitably growing the company, and it is something that happened all across the different business and geographies. We have been growing customer care, that is a strategic priority, more than double than the product sales. It is a quarter where we have been reaching, anticipating the achievement of the 50% reduction of the CO2 emission, scope 1 and 2, of two years. So instead of doing this in 2025, as it was planned, we deliver such a result in 2023. And last but not least, we have been also growing inorganically the company, signing the acquisition of Tosei, the Japanese company, laundry and food company, in December and closing it in January. So a year with a lot of things happening that have been making this company stronger than what it was before. moving to the quarter q4 q4 despite being a solid quarter it is still a quarter where we've been declining a trend in sales so what happened in q3 in some in some way happened also in q4 with with a slower pace and that is important because The sign of recovery that we were expecting in Q3, they materialized in Q4. Indeed, the order intake in Q4 is higher than the one we had the year before. And I can also anticipate that in January, this trend of order intake improving compared to last year continued. It is a quarter where... where the decline of the margin was impacted by the lower volume. We understand that you have to consider the comparison with laundry as we had to do in Q3. And as in Q3, it has been impacted negatively by the currency transaction effect. it is a quarter where we further improve the cash flow so also in Q4 we deliver more than 100% cash conversion and thanks to this one we've been able to further reduce the ratio between NEMTEPTH and EBITDA now it is below 1% obviously before the acquisition of TOSEI With all these things together, we also convene to propose the dividend of SEC 0.8, so improving it, growing it roughly 20% compared to the previous year, as it is in our financial target. Moving on to the market dynamics. So if you compare this picture with the one we presented three months ago after the Q3, you see that the different arrows are trending differently in the meaning that they were all down. Now we still see Europe flattening. We see APMEA, I don't mean flattening, but surely not the deep decline. And also the decline in the United States is less deep than what it was. This is what we see and it is confirmed also by the order intake that is improving compared to last year. We are still sitting on a good order stock. We have two months a little bit more than two months of orders in house that is giving confidence of what is in front of us talking about the two segments so if we start from food and beverage food and beverage has been affected again by the decline of the sales in the united states is mainly united states decline that is less deep than what it was in q3 The reasons of the decline are still the same. So it is the tale of the, let me say, readjustment of the market demand that was very strong during the first half of the year. So the two speed in some way. related to what was happening the year before with the missing components, a missing product, the customer afraid not to get the product and stocking the product and then readjusting their stock, readjusting their demand because the supply chain stabilized and the performance of the manufacturer were improving. postponement also related to the uncertainty related connected to the interest rate to the inflation things are getting better some of the tests that we were running with the American chains ended they have been converted in order they will not materialize in Q1 or if they will do it they will do it at the end of the quarter it will be mainly during the second quarter of the year What is really important is the margin improvement that we reported in food and beverage. The margin was a target to defend the margin and the margin improved thanks to the price contribution, thanks to the material contribution. So it is a good sign also this one. If we move to laundry, the decline also in laundry here is a consequence also of the comparison with the previous year performances. I repeat what I said in Q3. In 2022, we had a bunch of orders, 220 million orders. of order that had been moved from the first part of the year to the second one because we had no component. We pre-produced the product, they were unfinished, we finished them and delivered to customers during the second part of the year. Third in Q3 to third in Q4. So the comparison was even tougher than in Q3 and Q4. So, this is the reason why I'm confident that we are continuing to grow the business of laundry. It's a resilient business. Also, the drop in margin is related to the fact that the sales of this product that have been moved from the first to the second part of the year was very high because they were we produced them earlier so the operating cost that we had in Q4 they were the ones where we had on top these sales and in addition to that one we had also the currency the currency transaction factor that was negative in Q3 and it is negative and it was negative also in Q4 also for laundry we are reporting a positive order intake So with this said, I will let Fabio comment or comment a little bit more on the financial aspects.

Thank you, Alberto, and good morning to everybody. As anticipated by Alberto, Q4 was a solid quarter with an EBITDA over 10% or 300 million in the quarter. All along 2023, if you look at the trend quarter by quarter, we were stable over 10% EBITDA generated quarter by quarter. Despite declining sales, primarily in the US as anticipated by Alberto, and let me say material impact from currency transactions, we have been able to maintain the profitability also in quarter four despite the declining volume. positive contribution came consistently along the year from price, more than compensating deflational items like the labor cost. And then since the summer of last year, we see positive contribution from material and reduction of logistic cost. Our focus on growing customer care is definitely paying off. Alberto mentioned the faster growth of customer care on total sales compared to total sales, and clearly you understand this as a positive mix-up on the margin development. Then a few words about currency. Currency was an element highlighted already during the last quarter 3 presentation. During 2023 SEC, our reported currency, weakened against our major trading currencies that are Euro, US Dollar and Thai Baht. If we look into the two ingredients of the currency, currency translation, currency transaction, let me start giving a view about the currency translation first. Currency translation positive contributed for approximately 500 million second sales in the top line. and 55 million in EBITDA, therefore with no material impact for what concerns the margin development. At the same time, currency transactions, due to the weakening of the SEC, had a small positive impact on the net sales, on the top line, an impact that is below 50 million SEC on a full year base, but quite a negative impact for what concerns the EBITDA. Let me say, when I look into the impact on the currency transaction and full year base, the negative impact was around 100 million SEC. Let me say, majority of it equally impacting quarter 3 and quarter 4 performance and margin. What are the reasons behind this currency transaction impact and what are the actions that we are putting in place? During last call, I was mentioning about the business Laundry, where we have a large production facility here in Sweden, and several raw materials that we buy for production are Euro-based. The weakening of SEC versus Euro clearly creates an increase of the purchasing cost of raw materials. In Thailand, we have a large operation producing laundry and beverage products. The strengthening of the Thai baht against our major sales currency of this product, that is sec, that is euro, that is dollar, clearly increases the sourcing cost of this product. What are we doing? What did we already do? Considering this increase of the sourcing cost, we act selectively and we adjust price. We increase price, we expect benefit already to start positively contributing quarter one with a full effect in quarter two of this year. Thank you, Waltz, on the finance net. Happy to report that despite the increase of the interest rate that we faced in the market in 2023, thanks to the reduction of the debt, we have been able to reduce the finance net to 24 million sex, significantly lower than the same quarter of last year. Here we see the development of cash flow. Let me say, Electros Professional is back to historical good performance. You see that also quarter four, we generate a strong cash flow and we are back to a normalized cash flow generation. Overall, in 2023, we deliver, as about anticipated, record operating cash flow generation and it was over 1.4 billion sec here is about operating working capital let me say during 2022 and 2023 we have increased operating working capital on sales Last 12 months reported data at the end of December show an index that is at 18.1%, higher than last year, but started to see somehow an improvement compared to September that was 18.2%. it is a rolling 12 months index but when we look into the quarterly performance the picture is definitely better and it is proved by the fact that we are actually reducing year over year, the operating working capital. In December, it was 1.8 billion SEC, 4% below last year at the same currency. So activities of operating working capital reduction are starting to pay off. And here, I would like to spend a few words about one major offender in 2022 and 2023, that was the inventory development. With improved situation, the supply chain and the dedicated program we put in place, we deliver a significant, remarkable improvement for what concerns the inventory. And at the end of December, inventory was roughly $400 million. SEC lower than we pick, we reach in the middle of this year and 13% in value below December last year. And the action we have put in place and the stabilization of the supply chain are really creating the condition that this improvement is going to stay. Overall, as anticipated by Alberto, our financial position is pretty solid. We have a ratio net debt on EBITDA below 1, 0.9, and we have a cash availability at the end of December close to 1 billion SEC. When it comes to the reason of the reduction of the ratio net debt on EBITDA, Clearly, it has been influenced positively by the improved EBITDA generation, combined with a reduction of the net debt close to 1 billion SEC compared to December last year. And this remarkable improvement that you see from the graph has been consistent delivered in the last five quarters. has been done after having paid a dividend for 220 million SEC. In December we announced the acquisition of TOSEI. We closed the acquisition in January. Acquisition that has been initially now financed with a bridge finance, but we are evaluating the fact that we are going to finance it more term with let me say, long-term solution with access to the capital market. So overall, I would conclude here that electric professionals also from a balance sheet perspective And a cash flow generation capability is confirmed as definitely a solid group with the means to further support the profitable business growth. And with that, I give the word back to you, Alberto.

Thank you, Fabio. And let's reconnect to what Fabio just said, the acquisition of Tosei. Tosei, a Japanese company, the leader in Japan, in London. The leader in Japan in the category vacuum packaging machine, that is an important category. It's not obviously as large as cooking or refrigeration of this ocean, but it's a key category in a trendy way of cooking that is the sous vide. You have a vacuum packaging, or every time you have a combi oven, you have normally a vacuum packaging machine close to it. I believe in every kitchen today, modern kitchen, you have vacuum packaging machine. So it is an important product, and this company is the leading player in this field in Japan. So very happy to have this company on board. It is acquisition or inorganic growth was one of the reasons to separate the Alatlas Professional from the group we are delivering about that. It is a sizable acquisition. It is an acquisition that is growing roughly 8% at the top line equivalently today. the bottom line, but in particular is an acquisition that I value so positively because we believe that we can create a lot of value with this company. We believe that this acquisition, as soon as we are able to materialize all the ideas that we have to create value with Tosei, part of the group, will generate an EBITDA margin above our target of 15%. We already started to work. I personally was there already in January and also our colleague leading laundry and the regional food sales in the APA CAMEA, they were there meeting with people. We found the people in Tosei very engaged coming here proactively with idea how to create value easy things if you think about that are related that obviously to organization the product but the most important one is to make use of of the product as i said to say is the leading company laundry, in particular in the laundrettes or coin-op segment. And to lead this segment in Japan, you need to have the so-called combo machine. It's the machine that you see in the picture. It is a washer and dryer, a combined washer and dryer, a product that we do not have in our portfolio. It is mainly, if not only, sold in Japan. Currently, we are buying this product. This is the leader in that segment, and this is the leading product in that segment. You can already imagine the opportunity that is offering such an acquisition. The other category that I already mentioned is the vacuum packaging machine. Here you see the tabletop model. There is a complete range including the big machine for central kitchen for mass production. But, for instance, with this product, the tabletop, that is the one commonly used in every kitchen, in every restaurant, we are already buying hundreds and hundreds and hundreds of this product, selling them inside of our portfolio, mainly in Europe, under the Electrolux Professional brand. For the reason that I mentioned earlier, because it is part of the system that you have to deliver when you sell combi oven, when you sell re-thermalizer, when you sell sewing cabinet. So it is a core product. I personally had a look at the product that this company is producing and they are pretty much advanced with the features that can be used also in our market and create even a technological gap. So very happy also to have this product, not only the organization, not only the network, not only the service, not only the showroom and the presence in Japan, but also the product that can be surely used not only in Japan, but outside of that market. Now let's move. If the acquisition of Tosei was an important move for our inorganic growth, let me go back to this one. I believe you already know that it is one of the things that make me proud of working in the Electrolux professional. It's our commitment to make this world a better place to live. And we have been doing... executing the plan, executing the plan as fast as we can. And the proof of that one is that our target to reduce by 50% the CO2 emission, scope 1 and 2, by 2025 has been reached already in 2023. So two years ahead of time. It's not only that one. You know pretty well that our target, SBTI target, has been approved. So now we are starting to measure also the CO2 emission for scope 3. Their ambition, we know that is important, that area, because it's majority of the scope 2 emission that we can influence. And we will work on this. But for the time being, at least let's celebrate this achievement that has to be only inspirational to make sure that we will get the CO2 zero emission earlier than what is planned in 2030. With this said, I would go for the conclusion. Just to sum up, again, a solid year where we have been, when we delivered historical high. And when I mean historical, I mean also when we were part as a sector of the group, historical high, net sales, historical high. EBITDA value, cash flow. We have to improve the margin for sure, even if step by step, year after year, we have been improving the EBITDA margin. We grew, we expanded organically but also inorganically with the acquisition of Tosei. Sales declined in Q4 as they did in Q3 but a lower space and in particular in the United States we are seeing a good sign, the one that we were expecting with an order intake that is growing and some of the tests that we have been running along the year, converting them in approval of our product and orders. That will provide benefit most probably in the second quarter of the year. The EBIT margin declined, mainly in relation to the volume, but also the currency transaction, as Fabio explained. Cash was at a very high level. That is to be considered in some way the standard performance of this business. But it's the one that is giving us the possibility to continue to reduce the ratio between death and ABTDA. And as a consequence of the, let me say, the power, the possibility to invest, to invest organically and inorganically to grow this one. With all this said, we are proposing, not we, but because the board is proposing the dividend, improving and increasing the dividend from 0.7% to 0.8% per share. And I repeat what we said, we are expecting, as we delivered in 2023, a step-by-step process to make this company a stronger company than what it was in the past. We expect to continue to see this step-by-step improvement. Also because the microeconomical environment, I don't mean they are different, I don't mean that the uncertainty is over, but there are some signs related to the interest rate or the inflation that are making us look at the coming quarter in a positive way. Jacopo, back to you and the questions. Oh, sorry. Before that, I believe we have been talking about OSEI. I've been talking about OSEI, but OSEI is a big subject, is an important subject, and this is the reason why I'm pleased to announce that middle of March, March 13th, here in Stockholm, we are organizing a the investor day and the investor day will be focused on the tozai salvage of course we will give you an update about the overall company performance and trends but in particular we will be focused on the tozai acquisition as we did for unify brand more than a year ago we will have we will have Paolo Schira, who is the President of the Business Area Laundry, and Richard Flint, who is the President of the Business Area Food, the APAC Mayor, attending the call and addressing you with all the hopefully possible information about this important acquisition. With this said, Jacopo, back to you.

With that, we open up for questions. Please go ahead, Operator.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and 1 at this time. The first question is from Gustav Hagels, SEB. Please go ahead.

Thanks, operator. Thanks for taking my questions. Good morning, Alberto, Fabio, Jacob. If I might start with the comment here that you have order intake growing year over year as of, I guess it's December 23 versus 22. Looking at the US market specifically, do you see underlying order momentum in the US as well? And a second part to that, if you could elaborate a bit on, you also have a comment that the US is starting to look better, but I guess the destocking that occurred happened in March last year. So naturally the comps will get better in Q2. But to what extent that comment relates to easier comps or that you actually see an improvement in the market would also be helpful to understand. Thanks.

Okay. So yes, the order intake, the improvement of the order intake relates to US too. Absolutely yes. It was in December and also in January. So also in January we continue to see the same trend. the stocking at least for what concerns Electrolux professional business is basically over so in the meaning that it is a limited portion of our business that the stocking still there are some dealers and some customers with the product in house but i would say that is something that is really the tale of what happened in 2023 You rightly said that most probably we will see this happening and having a benefit in Q2 more than in Q1. The other element, still talking about US, because I understand that the focus is about the US business, all the things that we have been discussing in Q3, so let me say that the things that affected our business, so the integration of the IT system, the redesign of the RAP organization outside, all these things are in some way over. The organization is stabilized, the IT system is in place, we have all the RAP in place, we have the showroom at the RAP office, organization they have been trained they are doing demonstrations and the other important thing is that some of the tests with the chains have been turned into orders so it seems that the own old feeling or at least mood that they had summer Q3 and also the last part of Q4 is starting to get better that is what I'm saying

So in that sense, if we're lucky then in Q2, you will have the double effect of easier comps relating to destocking no longer being a factor and a little bit better mood within the chains in the US. Is that sort of your hopes for Q2? Is that how I should interpret it?

The hope is something, obviously. But again, we should have a relatively positive effect, yes. If these things, the things that we have been seeing in Q2, last part of December and in January, continue to provide the result that we see happening, we should have a positive effect. And I would say What we see at least, because you asked me also about the market, so not necessarily what we see, but if I look at the market, it seems that the market or the indication that we are getting from the customer or other operators is that in particular the second part of the year will be the one where we should see something happening. Positive.

And then turning to APEC then in Asia, which was a bit slower, I guess, than everybody anticipated in its recovery. Do you see any signs that that trajectory is more positive going into 2024 in terms of demand?

Yeah. Okay. I believe we should split Asia between China and all the rest of Asia. Asia and Middle East. Let me put together Asia and Middle East. If I look at that one, you have two completely dynamic countries. So Southeast Asia, Australia even, if you want to put it Oceania in the equation, and the Middle East and Africa are performing well. If I isolate those areas, we should be very happy. In Middle East and Africa, we had historical high sales over there. So it is a very positive picture over there with the project in particular in Africa happening. It seems that what is happening in the region... It is not significantly affecting the business. Obviously not Israel because in Israel we don't do anything or the country over there. But if I look at the rest, it doesn't seem affecting our business so much. China is a different story. There are signs of recovery. Also in this case, a couple of chains, IDLO, that is a Chinese hotpot chain that didn't buy anything for one and a half years. It was our customers that restarted buying products from our facility. We have also KFC that restarted to evaluate the project. So it seems that there could be some movement, but still China is low. And China is very important for us. Now we are getting also into Japan and China. And also Japan has a similar dynamics of the one we saw in Europe, in some way Europe and United States. So a softening of the market during the second part of the year, like in the United States. Again, we don't have all the insight that we have in this market because in particular our kitchen business is basically non-existent or it was, sorry, non-existent in Japan. But also in that one, we are expecting that during the second part of 2024, a restart of the business. So Asia is a big, big geography with quite different dynamics. Japan, similar to Europe and United States. China, still challenging, but with something moving. And the rest of Asia, Middle East and African Oceania, in reality performing, I would say, quite well.

Perfect. And then if I can sneak one last in regarding sort of MA opportunities versus your leverage, I guess you report 0.9 times in leverage here, but I guess adding to say to that would get it closer to two, I would assume, but still below your target 2.5 then, but... Firstly, do you see, given what the comments from Fabio on working cap and so forth, but then again you have a new structure with the new companies in the company, do you expect the old cash conversion metric to still be relevant for this year around 100% or how do you cash for the 2024 and when do you expect leverage to come down to a level where you can look at material targets again in terms of M&A?

I think, I would say the answer is yes, in the meaning that we see that cash conversion being above 100% in 2024. And we see that we should be in the somewhat higher 1%, not 1%, one time, one ratio towards the end of the year. So, yes.

I don't know, Fabio, if you want to comment about that, but I believe this is... Yes, this is somehow the situation. As you correctly said, Gustav, consolidating to say we will have a ratio net debt on EBITDA below two times. Yes. With initiative we put in place on the operating working capital, we are going to secure a positive cash conversion and solid net cash generation along 2024 year. Also in terms of means to finance possible acquisition, we have activated in September the CP program to finance short-term needs, but also we have in place revolving credit facilities for 200 million euros fully unutilized. So I would say that from... A solidity ratio, ratio of debt on EBITDA with the prospective cash generation and the means activated with our relationship bank, we have the means, I would say, somehow already in 2024 to... take opportunities that may come our way. And as you know, also in terms of finance guidance, we have also the target to stay below 2.5 times the ratio net debt on EBITDA, but we also say that in case we have many opportunities, we can go beyond that ratio, provided that we have a clear plan to come back to EBITDA. solid situation as I believe our performance since last year show that we have the capabilities and the capacity to do it.

Appreciate all those answers. Thanks guys.

Question from Henrik Kristiansson from the web. It's about the TOSE acquisition. You talk about EBITDA margin being well in line with the target. Could you give some financial color on the EBITDA margin today of the acquired business or CapEx to sales? Will it be accretive or dilutive to your EBITDA margins from start?

Okay, I can take it. Let me put first of all in the context. Here we talk about a company that generated just short of 1 billion SEC in sales in 2023. 140 million was the sales of the company last year. Historically, Tosei had a higher margin than Tosei. our group, but somehow related in particular to a weaker performance in quarter four with some of the declining market and sales, Tosei ending up there around roughly our profitability, meaning the 11% in terms of EBITDA margin. For what concerns CAPEX requirement, the company is in line with the overall guidance that we gave you for the overall electric profession, meaning the couple of points CAPEX requirement on sales. This said, clearly, Alberto anticipated already some area of potential synergies and we expect that what emerged during the due diligence and what is somehow confirming now after the closing with the dialogue we have with management. We have a really interesting and attractive opportunity of synergies that we expect to start materializing from next year onwards. To be said also that As anticipated when we announced the acquisition, we are going to have also some acquisition slash integration cost in area of 40 to 60 million that will be partly affecting this year, but I will say mainly next year. So overall, let me say, a company that will be a strategic important add-on to our group with the synergies opportunity can bring the company profitably in line with our target of profitability of 15%. Please, operator.

The next question from Johan Eliasson, Kepler Chevro. Please go ahead.

Good morning to you all. I was just wondering, it's good that you shed some light on orders being up year over year, but how does it sort of relate to sales? Are the order levels you saw in the fourth quarter sort of above sales? Is there sort of a pattern for orders that differs from your revenues that you should bear in mind?

I think they are more or less in line. And indeed, we see the order stock, the book stock, that is, I would say that now is stable on the two months level, meaning that we have order to cover two months. Obviously, it's not that we invoice whatever we have in the next two months, but we have two months of orders in-house. And this is... I'm just recalling now, but it's more or less the same situation that we are having since September, so after the fall. So this means that basically what we get, we also invoice.

Good and then I was just wondering a little bit about the interest rates here going forward. You will increase your debt obviously on the back of the to say acquisition and I guess you have started negotiation there. How should we think about interest rates assumptions going forward?

I mean, it's not up to me to speculate how the interest rate will evolve this year. But let me say, we are paying attention market rate, considering in particular that we have a solid balance sheet, so I would say we are well positioned in terms of keeping the cost of funding relatively low. What we are doing, and I was anticipating earlier, is that our intention is to move from The short-term financing that we have in place with the bridge of finance to more medium-term sourcing in order to preserve liquidity along 2024 and 2025. But I would say that our main scope and area to reduce interest rate is to pay fast the debt. And I mean, what we have proven, you saw the graph for 2021. And we expect to continue in 2024 with a quarter-on-quarter cash generation to consistently reduce the net debt and therefore the interest, whatever will happen in terms of interest in the market. For sure, and with this level of funding, if central banks reduce the interest rate, we can only be happy. But this we will perform regardless.

So you mainly are looking for floating rates and just translating into what you're paying eventually?

I mean, this is tactics that we are not going to disclose. The guidance that I want to give to you is that we are paying market rates, considering that we have a very solid balance sheet and a proven cash flow generation. And along the year, from the starting point we expect to see a decreased weight of interest compared to the starting point performed with acquisitions thanks to the cash generation. Excellent.

Okay, thank you very much.

The next question from Kari Rinta, SHB. Please go ahead.

Yes, thank you, Kari Andersbanken. I have a few. Food and beverage US. Can you remind us how much of your total sales comes from this category? And if you can give us a rough growth rate in that you saw for this category in 2023.

So one second that I'm giving you the exact number. So Here you have food and beverage in America is 2.4 billion out of 7.6 in the full year.

May I add, Jakob, this figure that Abad is presenting is now in our quarterly report on page number 18. So it's a new split that we have not disclosed before. So you will see the segments per geography presented there. So there you have all the figures.

All right, perfect. Sorry, I had missed that. Then the order intake patterns. around the year and given that you typically raise prices in early part of the year so does that typically affect the order intake at the end of the year either by that customers have some money over or that they want to make orders before your order intake and so i guess the question is that do you typically see your order stock

declining sequentially in the first quarter let's say it happened and it was a really a spike effect in but we are talking about now more than two years ago when we had the the The increase of price in the range of 9, 10, even 11 in some countries, I believe it was beginning of 2022 when we increased the price so significantly. And obviously we have to announce this three months before implementing it. So in that case, during the Q4, we had a spike of order, and that one, let me say, inflated the book order, the order stock, in an incredible way. I would say that... Other than that, normally this is not happening because the price increase that we already applied from January 1st in all the countries, then specifically, I don't know, for laundry a little bit more in Sweden, a little bit more in Sweden because of the weakening of the SEC or other things like that, they normally don't move so much the order stock so the book order so the order intake i would say in this case is not inflated by the fact that we are increasing price okay that's helpful then the the gross margin was down a bit from third quarter besides currency transaction was there anything else that was uh

explaining this decline?

I would say that currency was the major offender and somehow also the fact that somehow in quarter four we have decreased also production following the development of the market demand. Somehow what are the expectations also going forward? You see that first year over year gross margin was up. was up thanks to the combination of price increase and reduction of direct material and transportation cost and this has been more than compensated the volumes impact and the currency. Going forward, looking into 2024, difficult to judge what is happening on the currency side. but I expect that the price combined with the direct material will continue to positively contribute on the development.

Great, that's very helpful. Those were all my questions. Thank you.

The next question from Hannah Lindbo, DNB. Please go ahead.

Hi, good morning, everyone. I only have one question. So you have talked a bit about the margin of to say, but I was wondering if you can comment how it impacts the margins in each division.

Okay, overall, as I mentioned, TOSEI concluded 2013 with an EBITDA margin around 11%. The two businesses, the two major businesses, laundry compared to the vacuum, one represented two-thirds, the laundry one-third margin. Let me say in terms of margin, at this stage, we are not planning to disclose, even if we can anticipate that somehow today the vacuum business is somehow higher, was somehow higher in 2023 compared to laundry.

All right. That's clear. That was everything for me. Thank you.

As a reminder, if you wish to register for questions, please press star and one.

If there are no further questions, I think we would say thank you for today and hope to see you in Stockholm on March 13 on our Investor Day. Thank you and have a good day. Goodbye.