Trelleborg AB (publ)

Ladies and gentlemen, welcome to the Trierborg Audiocast Q1 2022. Today I'm pleased to present Peter Nilsson, CEO, and Fredrik Nilsson, CFO. For the first part of this call, all participants will be in a listen-only mode, and afterwards there will be a question and answer session. Speakers, please begin.

Thank you. Yeah, Peter speaking, Peter Nilsson speaking, CEO, and also joined here on the call by Fredrik Nilsson, our group CFO. here to discuss and present our interim report for the first quarter of 2022 and as usual we are using a deck of slides which has been on our homepage for some time and we'll follow that of course throughout the call so starting there quickly on page number two agenda our usual agenda for our calls starting with some highlights and the business area some comments on the business areas commented by me and then frederick will support by giving some further guidance on our financials and then somewhere at the end and then finishing off with an outlook and some comments on the outlook for the running quarter and then also because ending the call as usual with a q a session So then quickly moving to page number three, headlines for the quarter, strong growth and profitability. All in all, a very good quarter for us when we look at the figures delivered in the quarter. Sales ending up a little bit north of $7 billion, which is an increase of 22%. Also maybe before, sorry, just to clarify this, this is of course figures related to continuing operations, which we're going to comment a little bit further on. As we know, following this agreement of design of wheel systems, it's a new set of figures, a new set of new new set of uh compared comps here as well but i'll get back to that and i trust all of you is aware of this but but just to clarify and to avoid any kind of early misunderstandings so once again the sales in the quarter a little bit north of seven billion an increase of 22 organic sales up by 30 percent and then currency supporting by seven and a smaller m a impact as well providing a support of plus two percent ebit is up by 25 percent to a little bit north of 1.2 billion corresponding to a margin of 17.3 and all in all this is then the best quarter in terms of sales as well as EBIT as well as EBIT margin. Items affecting comparability ending up at minus 25 which is a mix of some pluses and minuses which is further elaborated on in the report. Cash flow a little bit weak in the quarter but nevertheless let's say firmly positive. Cash flow impacted by this substantially higher sales of course but also on top of that we have also let's say on purpose building inventory in order to address this increasing uncertainty throughout the quarter. also as i already commented on i mean we also during the quarter we signed an agreement to divest wheel systems the oklahoma rubber company and therefore it's reported in this set of figures as as itself for sale but nevertheless of course i'll get back and comment on it and also to note yesterday we signed an acquisition a smaller acquisition but nevertheless strategically very interesting for us and and then adding some new capabilities and, of course, new sales into ceiling solutions, medical and healthcare segments. This company, AirMed, once again, where a press release on that one was sent yesterday. Then looking, moving to page four, commenting on organic sales. As already stated, strong organic sales basically everywhere. Europe strong at plus 12, America's very strong as plus 21, supported them by very strong sales primarily in North America. And then Asia and other markets also a solid plus eight, although where we have Asia impacted by the clear softening in China, linked to these new restrictions and measures connected to this continued outbreaks of COVID-19. But nevertheless, all in all, a very solid quarter where organic sales in total for continuing operations is up by 13 percent. Maybe also commenting on this slide, I know Fredrik gets back to it, but a few comments on organic sales, which is the question we already received there in between our report and the presentation, is roughly two-thirds of the organic sales coming from volume and one-third coming from pricing. Of course, we have some differences between different segments, but that is kind of the overall split that we see from the organic sales. Turning to page five and the next agenda point, business areas. Moving then quickly to page six to comment on industrial solutions. Very strong growth and record profitability in the quarter organic sales up by 21%. Very strong organic growth on the backing of this solid order book that we've been building at the end of 21. Sales up significantly in all geographical areas, fairly evenly split. And also, I mean, we must say also sales to all market segments increased, which then includes also automotive actually for us, where we have been building or improving our market share since in this business area due to that we have a good representation on new platforms being launched in the quarter or growing in the quarter. So all of the segments growing, all of geographical areas growing. And then also we have, as everybody else, we've been hit with fairly strong cost increases. coming both from raw materials and freight and energy. But overall, we have shown that we have a very good pricing power and we've been able to offset more or less everything or everything in the quarter isolated. And then as a result of all of this, EBIT and EBIT margin increase to new records for Trelleborg Industrial Solutions. Moving to page seven. Commenting on Trello box ceiling solutions, organic sales, 8%, where we have good growth in America and Europe, but a little bit lower in the sales in Asia than as a result already commented in this area due to new restrictions and measures in China linked to COVID-19, so a little bit of a mix here between geographies. We see sales, general industry, healthcare, medical and aerospace increase significantly and supporting this good growth figure. Deliveries automotive also in this area actually grown a little bit more but there this is due to the fact that we have more exposure here to the aftermarket for certain products and we've been able to offset sales, lower sales OE with higher sales to to the aftermarket and thereby actually overall been able to grow the automotive even due this segment being somewhat challenged in the quarter. EBIT and margin improved to higher volumes and price adjustments generally well managed and also showing that we are having a good pricing power and we are able in a quick way to manage this let's say inflationary pressures hitting us more or less all over. All in all, a very good quarter for ceiling solutions and delivering a very solid 24% on the back of a solid organic growth. Moving to page 8, and now just to clarify, I mean, this has been not any news, of course, for those of you following us, but nevertheless, it's the first report where we comment, let's say, where we're reporting wheel systems as an asset held for sale. Then turning to page 9, just a quick refresh here. I mean, we are doing this divestment since we feel that the divestment of wheel systems will deliver a more profitable, less cyclical and also with a substantially improved sustainability profile for the remaining of Trelleborg. We're also getting more coherency in the portfolio, market exposure and drivers for the remaining Trelleborg and of course also providing us quite a lot of strength to continue to accelerate growth in selected segments and of course on top of this also we wouldn't have done that this deal unless we believed it was an attractive valuation for Trelleborg. So during the page 10 just also on the same Same topic, buyer Yokohama, it's a good add-on for Yokohama, so I understand their interest fully in wheel systems, in supplementing their offering and also creating a more balanced profile for Trolleyborg, so a good fit for Yokohama. And we feel also that this valuation that we're getting here is showing that this is a good asset, which is then good for us and good for Yokohama. Purchase price, 2.1 billion, with a smaller part of that linked to the performance in 2022. And when this is kind of concluded at the end of 2022, that is our, let's say, best guess today, then that will also result in a capital gain of some 6 billion for Trelleborg. So this is about the deal. And then moving over to page 11 to comment on the performance of wheel systems, very strong growth. in the quarter organic sales up by 33%. And I mean, just a quick comment on that. I mean, they've just said for the other part of Trelleborg for kind of the continuing operations in Trelleborg, we say that two thirds is linked to volume and one third linked to pricing. Here is roughly the opposite where two thirds is linked to pricing and one third is linked to volume. That is what we see. Strong demand basically for all segments and for all geographies actually especially americas we've seen now that the increasing demand for special agricultural tires in america is is supporting us strongly costs has been increasing a lot for raw materials energy and transportation but we believe also that these figures shows that we actually have also in this segment the good pricing power and good models in place to to compensate ourselves for this increasing input costs uh of course on top of this but besides the pricing we have also been running the factories within wheel systems at high efficiency and thereby also making some positives coming also from these higher volumes of course so that was kind of my comments on the business areas and Trelleborg wheel systems and page 12 then an agenda point moving to financials and leaving to Fredrik to start on page 13 then

Thank you, Peter. Let's then move to page 13 to talk about the sales development. Organic sales increased in the quarter by 13%, and total sales growth by 22%. And we have 2% impact from acquisitions, and we have 7% impact from currency translation. Let's move on to page 14. As you can see on the Paige, this was another good, solid quarter with strong organic growth in historical context. And as you also can see on the graph, this was the fifth quarter in a row where we were on par or above our growth target. Moving on to page 15, showing the sales development on the rolling 12-month basis for the continuing operations. And as you can see here, we're also on the highest level, so a new all-time high. Moving on to page 16, looking at the EBIT that increased by 25% in the quarter from 982 million to 1,230,000,000. And also margin went up from 16.9 to 17.3. We have a positive translation impact foreign subsidiaries by 55 million in the quarter, comparing to the corresponding quarter last year. And looking, as Peter mentioned, in the business areas, we saw solid margin improvements in both industrial solutions and in trailer board ceiling solutions. Moving on to page 17, as you can see, the positive trend continues with increased EBIT and higher margins. Moving on to page 18, some further details in the profit and loss statement. Peter mentioned that we have items affecting comparability of minus 25 million in the quarter. It comprises of restructuring cost of 75 million in the quarter. We have made some capital gains of sale of some assets of 140 million. And then we have also made a provision of 90 million attributable to the group's capital employed exposure in the Russian market. So that sums up to the minus 25. You can also see that we have a slightly higher financial net in the quarter. We are seeing increased interest rates, but we also have some impact from preparing capital structure because we are now selling, as you know, the printing blanket business and trolleyboy wheel systems. The tax rate in the quarter was just below 26%, which is in line with our earlier communicated guidance. And you can also see on this profit and loss statement that the net profit from this continued operation shows strong improvement due to the profit growth in Wills Systems. Moving on to page 19, earnings per share for continued operations, excluding items of fixed comparability. It went up with 21% from 2.68 to 3.25. And if we look at the group as total, we were up 18% in the quarter. Moving on to page 20, looking at the operating cash flow amounted to 328 million in the quarter, 484 last year. As you can see here, we have a positive impact from the higher earnings generations in the quarter. And then we have a little bit of a higher working capital in the quarter linked to the increased sales, which ties up more accounts receivables. And as Peter earlier mentioned, we also have built a little bit of a strategic inventory to secure stable supply to our customers and then we are also back to a more normal capex level in 2022 cash flow conversion 76 on the rolling 12 months basis on page 21. moving on to page 22 looking at the gearing and leverage development as you can see the net depth equity ratio 23% in the quarter, so very low, very solid balance sheet. And then also looking at the net debt of EBITDA, we are now down to 1.1. Moving on to the next page, looking at return on capital employed, up to 15.7, which is the highest year for a long time. And that is of course linked to the strong profit generation. Moving on then to page 24, I will finish off with some financial guidelines for the full year of 2022. And this is for the total group, including assets held for sale. CapEx unchanged to 1.4 billion. Restruction costs also unchanged to 300 million. Amortization of intangible assets is reduced from 375 to 300 million. And that is because we are, according to IFRS, obliged to stop amortization of assets when you put them as assets held for sale. Underlying tax rate, 25% for the group. As earlier communicated, it will be 26% for continuing operations.

By that, I would like to hand back the microphone to you, Peter. Thank you, Fredrik. So, page 25, the next agenda point summary, and some comments on the outlook for the running quarter. Page 26, as already commented, a strong quarter for us in in most comparisons sales up by 22 percent supported by a strong organic sales organic sales once again on this level roughly two-thirds of volume and one-third of price currency supporting by seven percent and a smaller portion of m a as well um both for uh which is then supporting both ceiling solutions and and industrial solutions with a small percentage ebitda by 25 and the margin 70.3 record high sales record high ebit and record high margin in the quarter items affecting comparability at minus 25 where frederick also commented and shared a little bit further further information on how that is um different items getting to this minus 25. Cash flow slightly lower than last year impacted by higher working capital linked to the higher sales and also less of a higher capex activity in the quarter compared to a year ago. Also in the quarter, of course, very important and a new kind of trailer board being developed as we have signed an agreement to divest trailer board wheel systems in Yokohama. And also, let's say, of course, a lot smaller, but nevertheless also important, an acquisition of AirMed with base in U.S. outside of Minneapolis, which is then adding some capabilities to our medical and healthcare segments within Sydney Solutions. So this is the quarter. Once again, strong quarter with good growth and good profitability. And looking then at the running quarter, we estimate, we believe, that demand is to be remain on the same high level uh slightly less price impact on on pricing impact in this quarter compared to the the previous quarter but nevertheless on a volume impact we expected to stay on the same high level as we've seen in q1 and then supported by by very strong order books and also very continued very high demand from our customers although of course this very sad development that we've seen in Ukraine is of course creating new uncertainties for us and we don't know exactly what that will if that will create some further impact but of course it creates some higher degree of uncertainty and we have to note that but once again Even including that, we believe and firmly believe that, let's say, the demand in the running quarter will remain on the same high level as in Q1 for us. So with that, I think we are moving to the next agenda point again on page 28, Q&A, and then quickly turning to page 29 and opening it up for questions. So please go ahead. Thank you.

Thank you. Ladies and gentlemen, if you would like to ask a question, it's 01 on your telephone keypad to register. Once again, it's 01 on your telephone keypad to register for a question. And our first question comes from the line of Hampus Engelo from Annalis Bank, and please go ahead. Your line is open.

Hi, Hampus.

If your phone is on mute, could you just unmute your line?

Yes, I am. Do you hear me now?

Yeah, now we hear you. Okay, sorry. Yes, yes. No, no, no.

I thought of where you ended, Peter, in the outlook. With orders being on record level for Q1, to me the outlook sounds a bit soft for us. for Q2 if you look at the underlying demand. Maybe you could add what kind of worries you have for that. And the second question is more related to pricing. We're just now being out of the box and you're focusing on industrial and feeling. I guess the pricing power has improved. If maybe you could elaborate a bit on the time lag versus cost increase and how If there's a faster pace here in increasing pricing when you see material costs moving. So some of the questions. Thanks.

Yeah, I mean, they're relating. I mean, if we would kind of be in a normal quarter in that way and looking at the order book and looking at the sales, I mean, the normal, we talk about order book conversion in the, let's say, coming quarter. Then, I mean, our... Our normal estimate would be a growth in sales, a growth in demand. But we need to take an insight. We mentioned here Ukraine. We have also commented on the China situation, which is also a little bit troubling and what we need to look at. So all in all, we end up with this kind of overall assumption. Very good order book. All-time high order book. But still, we need to consider also these uncertainties coming from China, Ukraine, and also, of course, the growing inflation will have an impact. But overall, we feel that the order book is supporting us into Q2, let's say, in a very good way. And then to try to speculate about the second part of the year, that is something we kind of delay a little bit. Of course, we're looking... on all kinds of signals, all kinds of KPIs on potential changes in the second part of the year. But honestly, we don't see anything at the moment, but we need to be open, keep our eyes open and be aware of this growing uncertainty in a multiple of dimensions. So that is kind of why we end up with this, if you say careful estimate, but we don't feel it in that way. I mean, considering all the uncertainties, which is fitting us from all directions. About the pricing power, I mean we have always felt that we have a good pricing power also including wheel systems, it's simply that the delay in wheel systems is likely longer since you have to push that pricing through a distributor level and also with this pre-selling of tractors. So that is more the pricing model in wheel systems while it's a more direct pricing on the other businesses. I mean in most of the businesses that we at the outset of wheel systems, we are kind of single sourced. And as long as we are fair with our customers, which of course we always are, and we have open conversation with them, support them in various ways, we believe they are also, let's say, open to us and supportive to us. So we feel that this is, yeah, the way it's going to be going forward. There will be less of a pricing impact in Q2, of course, since there will be continued inflationary pressure kicking in. But we believe, let's say, year-on-year comparison, the biggest pricing impact as it looks today will be in Q1 when we talk about kind of organic sales development.

And in the quarter are you compensated fully for the cost in the pricing case or is there also maybe some built-in margin in the pricing case?

No, we are fully compensated, as you say. I mean, there's always some mix and some overcompensation in certain areas, but we also have some undercompensation, especially like energy. I think we are more or less, I don't know, Fred, fully compensated in all aspects for the raw materials, but there's still some delay in the energy cost increases. But I mean, this is overall, we feel that we are... fully compensated. I mean, we don't not kind of any meaningful difference on that one, even though we may be some overcompensation on some raw materials and some small undercompensation in some of the energy related across the areas. But overall, we feel we don't have any kind of remaining price increases to be implemented. Of course, we work always working on it, always adjusting, but we don't feel that we are kind of behind in any way at the moment.

All right. Thank you.

Our next question comes from the line of Eric Gorang from SEB. Please go ahead. Your line is open.

Thank you. I have three questions. The first one returning to pricing and what you're saying on price impact year-on-year being lower ahead compared to Q1. But if we think of the balance between cost and pricing ahead, was there a larger increase at the start of the year on prices to sort of cover for Cost coming up a bit further out on the curve, meaning that the balance between cost and pricing is particularly favorable here in Q1. That's the first question. And the second on M&A, I mean, you've been a bit put off the past few years by high valuation levels. Are you already now seeing perhaps some more deals that are within reach or is it too soon? And then third one, on this strategic build-up of inventories, could you put the number on that? How much are you increasing inventories to sales for strategic reasons? Thank you.

Pricing is always a little bit stronger in Q1. I mean, even though you shouldn't have it, but you still have this calendar year pricing. So, of course, it's a higher impact generally in Q1. But, I mean, if I understood you correctly, we don't see any kind of there is price increase have been kicking in throughout Q1. But as we see it today, we're not going to be hit by kind of higher cost increases. We still believe, let's say we look at the gross profit, which of course we're following, we believe that we're going to continue with the same gross profit going into Q2 as we had in Q1. So we don't see really any pricing once again. I mean, we don't see overall, of course, there is always individual differences between the different businesses. We don't really feel that we have any pricing. We, of course, keep doing pricing actions, but we feel that we are well aligned with also cost increases going forward. But then, of course, we need to monitor, and there is still quite a lot of volatility, and we are, of course, still standing on our toes to be ready to do further adjustments. But at the moment, we feel we are well balanced. M&A, I mean, we... early signs of a little bit more carefulness for some of the sellers. I mean, I shouldn't say the big sellers. They are a little bit waiting. But, I mean, we also have fairly large number of smaller deals, more kind of family selling, private owner selling. And they, of course, getting a little bit concerned about this uncertainty related to Ukraine, Russia, or not call it uncertainty, disaster in Ukraine and Russia. and also this China situation. So we do feel there is a little bit softening on a few of the smaller deals, even though the bigger deals is still kind of waiting to see what is happening. So we do expect that we will be able to conclude a few more deals here in the next quarters, but in kind of the smaller dimension. But that is something also we monitor, of course. We have daily, I mean, I trust you're aware, and since we announced this, of wheel systems we've been approached. So we have plenty of discussions ongoing and we have to do the best of them and make sure that the deals we do are actually creating value for Trelleborg. Of course, we're not going to use this money to overpay. And that is, I mean, for sure, this development we've seen lately has not increased valuations. If any, it has decreased the valuations. So that is the clear direction. I don't know, on the inventory, what do you want to say? What would you say on that, Fredrik?

I mean, it's difficult to say a given exact number. Of course, there's also, if you look from an inventory point of view, there is also quite significant value increase in inventory. So if I should give you some kind of indication, I would say around maybe one third or something like that is linked to this strategic inventory built up. And then the big part of it is linked to higher costs for buying in raw materials.

So it's not a lot on that one. There is, I don't know, we can give some figures, Fredrik. I don't know what you can say. I mean, what you talk about millions of sex.

I mean, we are talking about a total outflow from inventory from a cash flow point of view of 289 million in the quarter.

Yeah, so maybe 100 or something is that. It's a strategic inventory, something like that. I don't know. I don't have the detailed figures in front of me, but that is kind of our estimate.

Okay, thank you.

Thank you. Our next question comes from the line of Agnieszka Vilela from Nordea. Please go ahead, your line is open.

Thank you. I also have three questions and I will ask them one by one. Starting with the lockdowns in China, you said that it affected the growth in ceiling solutions and I wonder if you could quantify what the impact was and also if you could just tell us what happened with your operations in China with your factory in Shanghai. That's my first question.

I don't know if you can say, looking at Fredrik, I don't have the figures here in front of me, but I mean, it's not really any big figures we're talking about here. I know we're looking at Kristoffer as well, sitting here. What we can say is that we have growth in all other countries, but China in Asia, basically. But also for industrial solutions, it was actually growing in China as well, but that is linked to project sales and linked to other things. So on total for us, But once again, I mean, we will dig through the papers here and maybe give you a figure later on, Agnieszka, but I mean, it's not really any meaningful impact. And we talk about, we of course, we have one factory based in Minhang, Minhang district in Shanghai, and that has been closed for a few weeks. And we also have one factory actually in, not continuing in the, printing blanket business, which is now, let's say, also, we were concluding that, which has also been closed in the Pudong area. But our bushi factory has been up and running. Our Qingdao factory has been up and running. So it's been mixed, and it's been a little bit up and down. But, I mean, we are monitoring this, and we don't really see... It will continue to hurt us, but, I mean, all in the total scheme of things, it's not really a big thing.

Okay, understood. Then on the bottlenecks, Peter, you write in the report that you see some bottlenecks stemming from raw materials in the workforce. And I just wonder if you could tell us if the situation is getting worse. Is it improving? What are your expectations there?

For raw materials, it's improving. I mean, this is a little bit Russia situation. We're finding new sources and new volumes coming into the market. So that is kind of in that respect is softening, but there's still certain let's say raw materials with using like ptfe pdm some silicones but the steel is very tight but but we don't really see losing any orders on that one because i mean if anything i think no not to to be bragging but i think we're doing better than others and i mean in the quarter we'll actually been gaining some sales uh linked to the the fact that some of our competitors have even had higher bigger challenges that we had. So we feel we're managing in a good way and we're not losing any sales, even though we probably would have been able to sell one or two percent more if we would have had, let's say, access to everything. And with labor, it's the same thing. We are managing it, but we are short in certain areas in the U.S. We are short in the Czech Republic. We are short in certain areas in Sweden, actually. So we are running a little bit short on labor, but there as well, we shouldn't exaggerate this kind of impact. We were talking in total about this, I don't know, Fredrik, we said 1-2% of sales or something like that, but it's not that we're losing the sales. If anything, actually, we've been gaining sales. I mean, that is something to take out the motive sales in Sealy Solutions, especially. There, actually, we've been doing a lot better than our competitors. We've been gaining market share due to the fact that we've been able to supply and our competitors have not been able to supply. So, therefore, it's a mixed bag. when you look at it. But nevertheless, we want to highlight there is still bottlenecks in certain raw materials, certain supply. Freight has also been an issue in certain areas that we've not been able to find trucks to deliver goods. So there is running very tight in the multiple of dimensions.

Perfect, thank you. And then lastly from me, I wonder if you could quantify in any way the order book that you have in terms of sales, how much does it cover or timing to deliver, this kind of things.

Let's put it like that. It is tens of percents higher than last year. I mean, because also if we get into that Agnieszka, then it gets very complicated to explain because it's also the length of the order book and all of that. But we're talking about a substantially higher order book, but it's also, but it's not that much longer. It's more that we get, instead of having, so the order safety, if you put it like that, for the next quarter looks very solid. But I mean, sorry i cannot really give you because if i give you a figure then i also have to explain exactly what quarters and what segments and then it gets fairly complicated so we have decided not to to comment on it for for time being and i mean of course we noticed other industrial companies giving order books but i mean if you look at the order book you need also to look at the length of the order book you cannot simply uh look at the size of it and therefore we for at least for time being we decided not to Not to elaborate on that further, the order book is the strongest as ever, and it's creating a great comfort for our sales in the running quarter, and in a way also for the Q3, if you look at that and have a kind of a normal development out of sales out of the order book is also, but also with that said, I already highlighted there is a kind of growing number of uncertainties that could potentially impact this.

Thank you. Thank you.

Our next question comes from the line of Douglas Lindahl from DMV Markets. Please go ahead, your line is open.

Yes, hello gentlemen. Thanks for taking my question. I have one. I was wondering a bit on the industrial solutions for organic growth, if it's possible. I realize it's difficult, but to give any sort of clarification on how much of the strong organic growth we saw in the quarter that's coming from more sort of a project-driven business and how much is more sort of spread and butter business, just to try to understand the strength that's coming from the underlying market and how much is driven by sort of legacy projects. That's my question.

I'm going to say we have a strong growth from product business, but we also have a strong growth from the kind of the standard business, so it's fairly spread. have of course a substantially lower i mean it is uh automotive part how much is automotive ceiling eight percent that is a slower growth that is let's say very shy into positive territory but which we are kind of happy with but otherwise the other business is fairly fairly good performing we have been evenly spread but but there is impacts from good order good let's say product orders but it's also a good construction business in general. I mean, if we highlight something, construction is running very well, both normal kind of house construction, if I may say, where we have the seals for windows and stuff like that running very well, but also seals for infrastructure have been very well. We have also good sales for harbor construction, but we also have good sales in terms of distributor levels for industrial houses. So it's been a very, let's say, evenly spread sales growth we with the kind of the only thing which is kind of um sticks out a little bit with the lower uh lower sales for for lower sales growth for automotive but once again that is less than 10 of sales so that is not really but that is kind of the only thing which sticks out as a negative compared to the others and then highlight as well that also pricing has an impact so we still have some one third of it called pricing and two thirds coming roughly from volume

i guess maybe not a question from my side but maybe just a remark is obviously now you have 90 or almost 90 percent of your industrial exposure within industrial solutions coming from what you call general industry but i realize you comment on the construction industry in the marine industry it would be super useful in the future maybe to get a further breakdown of your industrial exposure as possible yeah but but there is a reason for not giving that because we get into a lot of details so i think you could get them further on that

in in another another forum absolutely okay thanks thank you our next question comes from the line of carl buckfish from abg sundar collier please go ahead your line is open yes thank you and good afternoon uh more of a follow-up to the dog last question uh on industrial solutions uh the not only the growth was very strong but also margin development so i'm just a bit curious here if if there were any things in particular that sort of aligned in a good way in this particular quarter that might not repeat itself for the rest of the year. Otherwise, you know, the second follow-up question then, do you feel comfortable with the divestments made, focus on more profitable areas, that this kind of 13 plus level is something we might be now seeing going forward?

We have said that, I mean, within... Within industrial solutions, we're focusing on improving the margin. And now, of course, in this quarter, it's both impact from earlier restructuring is kicking in and improving. And then, of course, the volume is assisting also creating efficiency. So if the volume keeps up, I mean, this should be, let's say, kind of the margin level. And then there is still some positives coming from some projects and deliveries. kicking in end of the quarter or beginning of next or something like that but I mean this is the level if we should let's say increase the margin from where we were before then of course we need to go in this direction but then whether it's exactly ends up at 13.3 or what was it 13.3 that we had in this quarter in next quarter I don't know honestly I don't know but of course we feel that we're moving in the right direction and once again if the volumes continues we should keep ourselves at least on this level

All right, thank you. And then most of my questions have been answered. So just two technical ones. You highlighted the amortization of 300. Maybe I misheard you there or didn't fully catch the comment, but 300 for this year and then that number should come down quite a bit for the next few years or given that the parts of the amortization is related to wheels or how should we think about it?

Yeah, you should think about that the reduction from 375 to 300 is linked to the wind systems. So you have the new underlying run rate with the 300.

Okay, perfect. And then finally, the share buyback mandate and program that will likely be renewed after the annual general meeting. Do you expect this just to

keep on going or will there be any kind of temporary pause or just you know this is the buyback rate we should there is actually there is actually a press release sent out now call an hour ago or something like that we're continuing so so so that is something which came out of the day yeah this morning i probably missed it because i know that you were busy with other stuff so we will continue uh and there's been a press release on that one an hour ago or whatever it was so we can continue from tomorrow all right thank you for that

Thank you. And as we have no more questions registered, I'll hand back to our speakers.

Okay, great. Thanks to all of you for interest in our Q1 here 2022. A very strong quarter for us. Good sales growth and generally good drop through and good management of this fairly sizable inflationary pressure that we've been, let's say, hit. And we feel confident going forward. We have a strong order book. We know that uncertainty is increasing, both linked to this disaster happening in Ukraine, but also linked to further measures and restrictions related to COVID in China. But nevertheless, we feel with this backing of the stronger board, we can continue in a good way. And we continue kind of sideways here in terms of volume growth. into a running quarter and of course we will also feel confident that we will be able also to manage the continued inflationary pressure and on top of that also of course we're working hard also to conclude the wheel systems deal but also in that just as i like before we still estimate that it's going to take the the remainder of this year to get this closed working hard on merger filing in a lot of territories but it's a kind of process that takes time so our best estimate today that we're going to hopefully conclude it within this calendar year and also a smaller comment which we don't really talk a lot about on this one is also printing solutions where we have a deal with continental to sell that filing is also in the final stages if i may say we don't have all the approvals and our best Estimate at the moment is that that's going to be closed here by the end of this quarter or beginning of quarter three I mean that is the best estimate it could change depending on Feedback that we're getting from from different countries different kind of Different let's say different countries basically and but we're managing in a good way and we feel that that's getting concluded but then it's still a We have to wait for the formal approval before that can close. So best estimate on that one, end of Q2 or beginning of Q3. That is what we see at the moment, which relates to printing solutions. So with that, thanks a lot. And, I mean, if there are any follow-ups, then, of course, Christopher is the first point of contact. But, of course, Fredrik and myself will also be available for follow-up. questions and discussions if you want so do take care and have a nice nice evening thank you bye this now concludes our conference thank you all for attending you may now disconnect your lines