Indutrade AB (publ)

Good morning and welcome on our behalf as well. We are obviously happy to present the new strong quarterly report from Indutrade. And as usually, let's start with some of the overall highlights. It's satisfying that we continue to grow in order intake, sales and profits with a new record high EBITDA margin. And this thanks obviously to the great performance from our companies and employees. We saw a continued solid demand situation during the third quarter in most business areas, similar to what we saw in Q2. There was, however, some variations between different customer segments, companies, and geographical areas, which is partly due to the strong references from the same period last year. Order intake grew in total with 20%, of which 8% was organic growth. net sales grow a total of 27 which is very high and also one of the reasons for why the book to bill ratio is below 100 organic sales growth was also high at 14 there are still some supply chain disturbances which are challenging for many of our companies but the situation has improved somewhat for some of our companies during the quarter, and I would say that that's primarily linked now that delivery accuracy is becoming better and better. For the second quarter in a row, EBITDA exceeded 1 billion SEK and up 28% from the same period last year. And the strong organic sales development, positive effects from acquisitions, also had a positive effect on the EBITDA margin, which was at 15.4%, a new record level for Infrared. On the acquisition side, we had a good pace in quarter three with five completed acquisitions. And yesterday, we also signed a larger acquisition with a Danish company, Bramming Plast Industry. In total, we have now completed 13 acquisitions so far this year, adding some 1.4 billion SEC in annual revenues to the group. If we turn to order intake, I would say that the demand was continued solid in the quarter, and orders grow, as I said, organically 8% versus strong references last year, and was slightly up also sequentially from quarter two. There is, as you know, a seasonal downturn in the quarter due to summer holidays, and it's therefore difficult to analyze underlying demand changes. But our daily order analysis show a stable demand development through the whole quarter. The majority of our companies continue to show organic order growth in the quarter. Actually, a few more grow in quarter three than in quarter two. all customer segments continue to grow on aggregated level but there is a variation between companies as we have talked about earlier the process industry continued to stand positively with a good development for almost all companies and geographies in for instance infrastructure and construction and in parts of the medtech and pharma customer segments we see bigger variation and slightly more companies declining somewhat Partly this is due to very strong references last year, and one obvious explanation is less COVID-19 vaccine-related businesses. Borders grew organically in seven out of eight business areas during the quarter. The strongest developments were in business area Dax and Finland. The weakest development was in business area UK. mostly connected to a few companies supplying to the infrastructure and construction and marine customer segments. The total growth in the quarter was plus 20% order intake wise and as I said 8% organically. Acquisition effects was plus 8% and currencies plus 4%. If we then turn to our net sales situation, The sales growth rate increased significantly during the quarter. Total net sales development was plus 27% versus last year. And the organic development increased to plus 14%. Acquisitions contributed with 8% and currencies with 5%. the increased sales growth contributed to a slightly slight order backlog reduction in five out of eight business areas and in two business area business areas it was unchanged and the backlog continued to increase in one business area sales was on aggregate three percent higher than orders in the quarter Again, the book to build below 100 is more driven by very high sales rather than a weak order intake, which wasn't the case. The supply chain issues with long lead time from suppliers and component and product shortages continue during the quarter, but some companies experienced a slightly better situation. The worst impact is still within business area measurement and sensor technology, connected to supply of electronics. Price is obviously a large component of the growth we see now. With our diverse structure, it is extremely difficult to get a consolidated view of the balance between price and volume, but we have estimated pricing effects to be around seven to eight percent in the quarter versus last year, meaning that sales growth in volume was around six to seven percent. We also have a slide of the sales growth in different geographical markets, and it's basically positive in all major countries and regions. Standing out most is Denmark, with the medtech and pharma customer segments. In Germany, it is, for instance, the energy sector and the chemical segment, and in Asia, also the energy sector. Slightly weaker aggregate sales growth in the Netherlands, mainly connected to the infrastructure and construction segment. As I've talked about before, a high priority for us is to engage with our companies and support them to grow organically. It's, I would say, the prioritized strategic objective since some time back now. and organic sustainable profitable profitable growth is a verification that you have a competitive offering appreciated by the customers and it is a good value generator obviously we have now had eight consecutive quarters with organic sales growth despite challenging references and all the supply chain issues obviously a good support from a global strong demand situation

and high price effects, but the foundation, we believe, is our well-positioned and competitive companies. The growth rate increased during the quarter, both versus Q3 2021, but also sequentially.

All business areas grew organically also in this quarter, and a clear majority of the companies develops positively. We have an uncertain market environment, but the high backlog, however, gives us a good base to deliver further organic growth also the coming quarter. EBITDA increased during the quarter with plus 28%. As I said, it exceeded one billion SEC and increased to an all-time high margin of 15.4%. versus 15.3 last year. In the same way as last year, we had some one-offs during the quarter relating to smaller revaluations of earnouts and goodwill write-downs. In total, this had a positive effect of 16 million SEC. Excluding these one-offs, the EBITDA margin was 15.2%, and the comparable number last year was 15.0%. The organic EBITDA margin was stable. The strong growth development was basically offset by slightly lower gross margins and higher activity and expense levels in many companies. The newly acquired companies continue to show good margin levels and contributed also this quarter to the improved group margin. All in all, EBITDA increased organically with 14%, acquisitions added nine, and currencies four. all business areas grew organically in the quarter and seven out of eight grew double digit we saw the strongest growth in business areas flow technology supported by a broad positive development medtech and pharma and process industry customer segments stand out positively the medtech and pharma customer segments was also one of the key drivers in the growth for business areas benelux dash fluid and mechanical solutions and also industrial components the growth in business area Finland was broad-based with the process industry being a strong contributor the most positive customer segments in the quarter for business area measurement and sensor technology belong to energy HVAC and also professional communication The majority of our companies in business area UK grew organically in the quarter, but the aggregated growth was slightly lower than the other business areas. This was primarily because of a few companies in the infrastructure and construction segments.

The EBITDA margin for the quarter, as I said, was all-time high, 15.4%. Record-level margin was also reached by the business areas Dax and Finland. Most companies improved their profitability, and the key driver in both business areas was a positive gross margin development. The most positive EBITDA margin improvement was achieved by business area Benelux. Also here, we saw margin improvements in most companies. Standing out in a positive way were companies in the medtech and pharma sector, along with valves for power generation. In this area, float technology, industrial components, and fluid and mechanical solutions maintain their margins on good levels. but declined slightly versus last year, mainly due to somewhat lower gross margins. In fluid and mechanical solutions, the stock business to Russia and Belarus also had a negative impact. Business area measurement and central technology continue to deliver a high margin

but the development was held back slightly by higher expenses connected to innovation and growth initiatives.

The EBITDA modern business area UK continued to be a bit lower than the other business areas. The main reason is somewhat lower growth in combination with the higher expense and activity levels.

The weaker growth is, as I mentioned before, partly connected to a relatively larger exposure to the infrastructure and construction segments, but also a challenging macro development in the UK. Acquisitions. 2022 has been intense, I would say, when it comes to acquisitions, and we have welcomed 13 great companies to the group so far this year. Of the five acquisitions we made during Q3, three companies are based in the Netherlands, one in Sweden, and one in Germany. This week, we also signed an agreement to acquire the leading Danish company, Branding Plast Industry, or BPI, with an annual sales of about 500 million SEK. BPI develops and sells customer-specific engineered phone solutions. such as vibration and noise dampening materials and also isolation materials to different industrial players in, for example, the HVAC segment, wind power, but also infrastructure and construction companies. BPI has also come a long way in terms of sustainability and they have an ambitious program in place using sustainable material and circularity concepts as key parts of their customer solutions. We also continue to strengthen our acquisition capabilities both in the business areas and at the central team in order to be able to manage more acquisitions in total. I would say that our pipeline remains strong and we are working on several interesting projects in different stages.

As I've said before, ambition-wise, We aim at two to three acquisitions per business area per year, which would then total up to 16 to 24 acquisitions on group level per year. Then I leave the word over to Patrick to comment on the financials. Thanks, Bo, and hello, everyone. Total growth for orders and sales was plus 20 and plus 27, respectively, in the quarter. Accumulated orders 20% and sales 24. Orders are slightly lower than sales. in the quarter as Bo commented on already and to repeat that this is mainly driven by the increased sales level in the quarter. Gross margin for the quarter is 34.2 which is a good level but slightly lower than last year. The client primarily comes from more expensive components bought earlier that is filtering through the inventory, I would say, into the result. Our pricing power is still good, I think. Our companies continue to forward cost increases in a good way to customers. So pricing power is still maintained good Gross margin year-to-date is 34.6 compared to 34.7 last year. Beta grew 28% both in the quarter and accumulated a quarter in a row above 1 billion. And the beta margin 15.4 versus 16.3 last year, an all-time high for the group. And here today, we are at 15.2 compared to 14.8 last year. As Bo also mentioned, we had a few one-offs relating to earnouts and goodwill. And if you exclude those, the quarterly EBITDA margin was 15.2 compared to 15.0 last year. Moving down further into the P&L, finance net increased in the quarterly substantially, but from a very low level. The increase was driven by increased interest rates and higher borrowing. Tax cost increased in the quarter with 23% and 26% accumulated, and this is basically in line with profit increase, which means a stable stable tax rate and the tax rates and accumulated is around 22 percent in line with last year earnings per share up 26 percent in the quarter and 27 percent here today return on capital employees improved to 23 percent versus 22 last year's given mainly by the higher operational result operational cash flow improved versus the first and second quarter but declined somewhat versus last year and I will elaborate a little bit more on the next slide around that. And finally then net debt EBITDA is maintained on a historically relatively low level 1.6 versus 1.3 last year and important to note that if you exclude earn out liabilities it would be lower around 1.4 so moving on to slide on cash flow then regional cash flow was 624 in the quarter decline of seven percent versus last year and the decline is related to inventory increases in many companies due to the continued continued constraints in the supply chains long lead times and other disturbances And of course, as you know, the price increases is also, of course, a big part of the equation. Working capital efficiency, if you measure working capital in relation to sales, It's still better than the levels we had a few years back, but has declined somewhat since last year. Also disconnected from the inventory increases. Earnings per share. grew in Q3 with 26% from 151 to 1.9%, which is an increase almost in line with the improvement in Vita. And the dampening elitism is the increased finance net I talked about. If you look at the longer term, the three- and five-year increase in the four-quarter rolling ETFs, it is then plus 20% per year and plus 18% per year respectively. And lastly, looking at the debt situation. Interest-bearing debt, net debt, end of the quarter amounts to around 7.3 billion, which is a slight increase versus quarter two. And the increase is mainly connected to continued high acquisition pace in combination with the slightly lower or dampened cash flow I talked about. But the net debt ratios are relatively stable since last quarter, and in a historical perspective, I would say low. And net debt equity was 61, net debt EBITDA 1.6. And if you exclude, then the liabilities is 1.4, as I mentioned earlier. But to conclude, our financial position remains stable and strong. Stable debt ratios and also good headroom between the short-term debt we have and the guaranteed loans. So by that, I end and then back to you.

Thank you. Those who have followed us in some time knows how much we value decentralization, as we firmly believe the best decisions are made by those closest to the customers. During the years, we have seen the strength of our model reflected in how our company successfully manages business cycles, changes, as well as challenges like, for example, the supply chain disruptions or rising inflation, etc. Another strength of our group is the characteristics of the companies we own. Our portfolio consists partly of technical trading companies with no own production facilities, and the manufacturing companies we own are in general more assembly-oriented. All in all, this leads up to a fairly captive light business group we also appreciate companies with products that have a recurring sales pattern products that our customers need both in good times and in weaker cycles and they are often linked to maintenance and repairs rather than capex although some of the products often can be seen as not too complex at a first glance they all have high technical content and play an important role in a larger production system our customers tend to rely on our technical advice in terms of what model to use in a specific application and situation which is also why we have a good pricing power for our products we have around 200 companies targeting over 14 broader customers segments

and also have a strong exposure to growth segments such as medtech and pharma energy and water and wastewater to mention a few and they have strong underlying market drivers with our strong business model based on decentralization and balanced diversification Together with our driven entrepreneurs and dedicated employees, we are well positioned for continued value creation independently of where we are in the cycle.

We also want to talk a bit about our sustainability agenda.

And in particular, decarbonization, which is a key priority for us. We have an ambitious strategy and ambitious targets.

And it is the groups and our companies' shared commitment to continuously improve ourselves in a sustainable and responsible way. Through a combination of group initiatives and company-specific activities, we work intensively to accelerate our efforts to lower our own and our customers' carbon footprint.

During the quarter, we, for example, launched a new climate guide with the purpose to give our companies concrete guidance on how they can address their most important greenhouse gas emission sources throughout the value chain and how to create their own climate roadmap to reduce them. We are convinced that the strengthened climate action with proven progress toward climate goals will lead to significant positive advantages for us as a group. and business opportunities for our companies. If we then summarize, our companies are continuing to do a fantastic job, showing good flexibility and working closely with their customers and suppliers, which is also reflected in the numbers for the third quarter. The demand situation is still on a solid level, although we see some indications of lower activity in a few segments, as well as increased business risks going forward. We do, however, have a strong order backlog that is still at record high levels.

which provides confidence in our ability to provide good invoicing and profit development in the short term. We are strengthening our acquisition capabilities, and I'm almost happy. I'm also happy that we have welcomed 13 great new companies to the group so far this year. It is also satisfying that we have completed our first Q4 acquisition with a larger company, BPI. All in all, Indutrade continues to demonstrate its strength through both balanced diversification and diversified decision-making, which offers our companies flexibility and the ability to effectively handle changed circumstances. We thus have a stable platform with good prerequisites for continued long-term sustainable and profitable growth. At last, our Capital Markets Day is approaching, November 8th. So if you are in Stockholm and want to participate, you are obviously more than welcome. For those of you who cannot attend the physical event, you can always join the live webcast. By that, we say thank you for listening and the formal presentation.

So should we start the flow for Q&A? So should we start the flow for questions and answers?

Yes, please. Yes.

Thank you very much. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed, and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our rosters. The first question comes from Carl Ragnostam from Nadia. Please proceed.

Hi, good morning. It's Carl here from Nordea. So, first here, you mentioned that you saw lower activity in some segments around the markets. Could you yet again elaborate a bit on what proportion of group sales they represent, and also to what extent you see lower activity. Have you seen an acceleration of sort of softness in those segments during the quarter? Are we talking about sort of those single-digit volume drops, or is it flat? Yes, we'll start there. Thank you.

It's a quite broad question, in a sense. If we try to give some light on this, Dan, one area which is clearly down, significantly down, is COVID-related vaccine issues. sort of related businesses for a handful of our companies. But anyway, large volumes for them. And another segment with more clear downturn in several geographical areas is the construction-related segment. Perhaps more home improvement up until now, but I assume also step by step it's going to be new built in terms of houses and so on. Other than that, there are no clear sort of negative... I would say it's rather stable and still strong growth in several areas, not least driven by the sustainability transformation in society at large on the energy side.

We still see a lot of investments in renewable energies. There are projects starting up now in terms of nuclear energy. We want to get rid of the dependency on Russian gas, so a lot of LNG terminals and other types of investments related to that. Electrification is driving a lot of investments in battery production facilities. but also at all kinds of vehicle manufacturers who transform their facilities from combustion engine assemblies to handle electric drive trains. So you see from offshoring to onshoring, so the automation trend is strong and increasing, I would say. And then you have segments like pharmaceutical manufacturing food related manufacturing which are which are less sort of cyclical so so a lot of still positive areas to work with for a broad number of our companies and as i said before most of our businesses are traditionally oriented to to maintaining technical components in a large production system so

if you take a process industry which are running fairly you know in harsh environments usually there you need to to change flow technology components like pumps and valves frequently you need to change filters and seals and so on and so forth and that's the bread and butter business for most industry companies and then it obviously helps with the investment and capital related projects and there we can refer to the sustainability oriented transformational areas which are a strong base so I think it's still a I'm still quite optimistic that there are business opportunities. And one last, this is a long answer now, but one last comment would be that we have small to mid-sized companies. And if you're a company with 10 million euros in sales you can always find business opportunities versus a company which are 500 euros or 500 million euros in sales and 5,000 employees, much more difficult. So being small and being business-oriented, entrepreneurial, there is always room to either grow with the market or gain market share if you are entrepreneurial. Okay, sounds definitely promising.

Coming back a bit to construction again, infrastructure and construction is your biggest market, 20% of group sales. What portion of construction infrastructure is where you actually see a sluggish market currently? Is it the big part or is it the smaller part of it?

smaller part. If we relate to Q3, it's a smaller part and it's more home improvement related up until now. So obviously the construction companies haven't really stopped projects, but there will be potentially fewer starts of new projects in Q1, Q2 2023 versus Q1 and Q2 2022. So up until now, not too much yet.

Okay, very good. And also maybe a question for Patrick here. I mean, you reported 27 million in revalidation of earnouts positive. Is it a specific company that's performed worse than you probably expected in your earnout structure? Or is it maybe a function of change in discount rates? I'm not sure how you value these companies. Yeah.

No, it's a handful of companies, but given that we have around 1 billion in earn-out liabilities in total, it's a very small amount. I think most of our companies reach their earn-out, which is good, of course, because then they reach their sales targets. But some companies have really ambitious sales and EBIT targets, and then they miss them slightly. So I think it's...

it's a few and it's a relatively low amount i would say okay very good and also you you announced your largest acquisition in in a while uh yesterday bombing there um but what would you say that the margin level is uh trying to look at it i mean danish companies it is quite tough to to find good financials but it looks quite margin dilutive is it correct or it's incorrect it's uh

It's, I would say, on a stable to higher level than we are on average EBITDA-wise now. Okay.

Very good. All for me. Thank you.

Thanks. Thank you. The next question comes from Carl Bockwist from ABG. Please proceed.

Thank you and good morning Bo and Patrik.

Just a first more technical one to get that out of the way. The burnout adjustment is that booked in the kind of corporate line or central line because it seems like the corporate cost is a bit lower than what it has been in the past quarters. Yeah, that is correct. We take all the earn-out adjustments and also potential good build right down from central level to keep the business area clean. Understood. And then, if possible, you did shed some light on it here during your presentation, but Is there any chance you could talk a bit about how you view demand here in early October and how we should think about Q4 given what you say about the backlog? Yes, sales-wise we are quite confident that Q4 will be good. A bit more unsure exactly how order intake will develop, but as I said, there are quite a lot of positive areas to work with for a majority of our companies. So it's not super negative in any way. Q4 has started, I think, fairly well in many companies. So I don't want to give you sort of a number. It would be premature to do that. But not very pessimistic. more positive. Understood. And then just on profitability here, we see that gross margins are down and you attribute some parts within OPEX to higher activity levels and so on. But do you feel there's been any changes in your subsidiaries' ability to offset cost inflation with price or some unforeseen cost spikes in certain companies here? They have been extremely good at early, they've been early out to increase price for raw material and components and freight and things like that.

And they could obviously argue for those price increases early on. Now, when some raw material prices are being reduced and we don't see the same sort of increase there, they need to relate to, as you say, energy costs or other type of inflationary cost increases. And it becomes a little bit more and more difficult. in general our companies are extremely good at this and and they are always trying to to be protecting or or working with the gross margins in in a positive way so i'm still confident that we will continue to be good at managing this but compared to a year ago it's slightly more difficult to to argue for price increases yes understood just the final one if i may here very strong growth in flow technology and not all of this trickles through to to earnings due to some of the factors that you mentioned but this relationship here should do you think this will continue for for the coming quarters where you might still see good demand and good deliveries but maybe a bit of you know subdued drop fruit earnings Yeah, probably a bit subdued due to these inflationary increases, but hopefully not worse than the ratio we have seen in Q3, rather the opposite. Understood. That's all for me. Thank you.

Thanks.

Thank you. The next question comes from Robert Redden from Carnegie. Please proceed.

Hi. So, yeah, on that question of demand in the quarter, we're going to take this down a bit, Q over Q. I looked into seasonality historically, and it says that there is this seasonality. Could you say something about that this day? I would say it's just a seasonal pattern we have with a lot of industrial activity in terms of new projects and so on happening in the springtime and then activity level go down a bit in July, August and pop up again probably in September. So no other sort of drama into that than that. And if I sort of elaborate a little bit further, we normally have that organic development is normally lower in Q3 for, you know, logical sort of seasonal development. effect so i think when you look at underlying underlying daily rates and try to compensate or adjust for for seasonal factors that orders are stable i would say sequentially all right very good very good and we talked about um price like and, you know, raw materials are down and so on, but you're still rolling out high-size ideas because there's still cost inflation through the system.

Yes.

Yes. So, would you say that they were... The companies work continuously with their pricing situation and obviously manage their gross margins in the best way possible and I would say that they are all usually very successful and capable and They don't sell on price.

They are more technology-oriented companies where the customers really need high-quality products and competence capabilities in an application perspective and help to choose product A, B, or C. So they have ability to increase price when needed.

Perfect, and so if price hikes have been a theme gradually all through the year, I guess it's reasonable to assume price will be a positive in an organic growth in 2023? We hear you a little bit bad, Robert. Okay, yeah, maybe I should speak up. With price hikes being a thing, gradually price hikes have been rolled out during all of 2022, and we're nearing the end of the year, so is it reasonable to assume that price will be a positive due to organic growth in 2023? Yeah, I would say so, yeah. Yes.

Perfect.

And on your comment on M&A, you said something about building up the capability at the central and BA levels. Are you looking to accelerate the pace of the inorganic growth now in this uh market space with your strong balance sheet or is it just what you have to do to keep the pace of values no we have since since a while had the ambition to improve and increase our acquisition capability and increase the acquisition sort of growth rate in absolute terms so this is not something we started now very recently we've been on this for for quite a while and in in many business areas we have now recruited additional specialists on acquisitions and and we have also strengthened with the person here at the center of the team so it's It's going in accordance with the plan, I would say. And it's also so that acquisition growth is very important. We try to scale up, but even more important, I would say, is to work with our organic growth. capabilities so we put a lot of work into into dealing with that as well all right thank you so much sounds good thanks thank you the next question is from the line of Herman Eriksson from Danske Bank. Please proceed.

Thank you and good morning everyone. I just had one more question regarding the inventory levels. They continue to increase in relation to sales. So just wondering, are you satisfied with the current levels and if not, what are you doing to decrease the levels?

What you see now, I think, is quite a lot of inflationary effects. So it's not that a lot of companies want to volume-wise increase their inventory. And since the supply chain situation is improving a little bit, at least in terms of accuracy, There is a high inventory level now, and a lot of companies have built some safety stocks, but still missed, in assemblies, maybe one component out of ten, and hence cannot... ship to to to their customers and this is mostly true in terms of electronics but obviously we we don't we don't want we want to improve our capital efficiency we want to take inventory down and and we just need to ride with

with inflation a bit and the supply chain situation as it is, but there is full attention, full focus, strong ambition to turn this trend downwards.

Okay, good. Thank you.

Thanks.

Thank you. The next question comes from Gustav Lindskog from Pentechnik and Advisors. Please proceed.

hello everyone and thank you for taking my question i would like to dwell a bit on inventories um i believe inventories to sales reached a new high north of 20 percent in the quarter and obviously this is inflated by inflation by acquisitions but it also looks like there's been an underlying increase in volume terms so could you explain you know how you look upon the absolute size of inventories and what can be done to kind of mitigate that growing going forward?

Yeah this question was a little bit similar to Johan's question I think and we have seen now if we take a step back inventories has mostly increased in volume because quite a lot of our companies have built safety stock when the supply chain has been strained and difficult and now we also see more

inflationary effects on the inventories and why that's more recent, why the values are increasing, I would say. And I think the supply chain situation hopefully will improve next year. We see that supply chain accuracy is improving right now, meaning that company now get a date or a week or some more defined time when they will receive goods, which they really haven't in the last six months. But lead times are still quite long in a lot of cases, not least in terms of electronics. But we are extremely focused to drive inventory down again. And I think step by step next year, that's going to happen. And hopefully we have seen most of the inflationary effects of the inventory by Q3. There will probably be some in Q4 as well, but then that will taper off and we can work with volume reductions in terms of the inventories as they invoice and deliver on the order book now. Could I ask for a bit more clarification?

I mean, if it's mostly work in progress as opposed to finished product, does that mean that you will not have to reduce production and hence trigger under absorption?

And if it is mostly components of work in progress, is that marked on a higher... cost level on the back of inflation within this year that it may have an impact on cost of goods sold in the year ahead? If I chip in a little bit, as you probably know, We have production companies, but most of our companies are relatively more, I would say, assembly-oriented, so we don't have that many companies. We call it heavy production, and we don't normally have big sort of absorption swings in our gross margins, I would say. So I wouldn't be that that the freight about when we're taking down inventory it wouldn't be that material for us on the other question will will we have sort of as we saw this quarter we saw a bit of sort of a negative gross margin effect from more more expensive components filtering through the inventory I think we've seen the most of that when it comes to sort of gross margin development. So I think we are now more on a sort of stable level, I would say.

Okay. Thank you very much.

Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Bo Anvik for closing remarks.

Yeah, then we thank everybody for listening in and asking relevant and good questions. So thank you for us from today and hope you can join us at the Capital Markets Day.