Trelleborg AB (publ)

Welcome to the Trelleborg Q1 2023 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing star 5 on their telephone keypad. Now I will hand the conference over to CEO Peter Nilsson and CFO Frederick Nilsson. Please go ahead.

Thank you. Welcome to all of you to this presentation of the Trelleborg Interim Report for the first quarter of 2023. Peter Nilsson speaking, President and CEO of Trelleborg and also joining me on the call here is Fredrik Nilsson, CFO and also on the call in case we need his skills, Kristoffer Sjögren, Head of Investor Relations at Trelleborg. and so turning them to page two the agenda for the call as usual for us we start off with some highlights and where i do some comments on that and also commenting on our business areas and then i hand over to frederick to guide us through the financials and then we sum up the call with some summary and some comments on the outlook for the running quarter and then finishing off the call with the q a session Moving to page three, starting with overall head, let's say, comments for the quarter. Heading on the call and also quarterly report, a good start to the year. We feel that the start of 2023 has started in a good way for us. Sales is up by 23%, roughly equally split on organic sales, currency, and M&A. um ebit uh growing slightly less 15 percent up to um a little bit north of 1.4 billion corresponding to a margin of 16.2 and this then due for for the continuing operations the highest quarterly sales and the highest ebit to date we have some some items affecting comparability in link to ongoing restructuring of some 50 million swedish kronors strong cash flow in the quarter to be a first quarter for us. I mean, we always have a, or usually we have a very good ending of the year and actually a capital build up, let's say working capital build up in the first quarter. So it's naturally that the cash flow for the first quarter is slightly lower. But I mean, this is strong cash flow for us for a first quarter in comparison to normally. also in the quarter of course very important step for us we we did get the final merger clearances for disposal of wheel systems then we were waiting long for this but in the quarter we got this from the uk authorities and also from eu so we are getting ready to to close this deal we also know a minor acquisition for us in u.s focus in aerospace although small but a very Nice add-on to us for aerospace components and coming into Sealing Solutions, which is a company based out in Washington State, very close to the headquarters of Boeing, which is then creating opportunities for us to sell more based on the long-term connections into Boeing in Seattle for us. and headlights and then turning over to page four a little bit comments on the organic sales i mean still solid organic growth in in europe although lower than last year also solid organic sales in america but also there lower than last year then we know that in asia we have been hurt in the quarter by low sales especially in in china for well-known reasons um all the comment on that we see a strong ending of the quarter and we do expect that to pick up substantially throughout the year now as China is up and running again. Overall, already commented on that in the beginning, overall organic sales, 7%, majority being price, but also smallish volume in the quarter, slightly as a downtick compared to last year, but still a solid growth in the quarter. Turning to the agenda slide again, and moving on to the business areas. Page six, to comment on industrial solutions. Good development continues. We had a very solid development in industrial solutions for quite some time, and it continues in this quarter. No step changes, but a solid uptick again. Organic sales strong at 8%, especially strong then on LNG and marine solutions to niches, which is Well, we have good global market positions, and we are, let's say, growing with a very strong underlying market. We also note in some areas, aerospace especially continuing very strong, which also later on we'll comment on seeding solutions. Automotive also kind of well-known for everybody. It's also picking up in the quarter, where we note especially in Europe doing good. And we also have in the quarter good railway sales. This is a little bit bumpy. sales as is project related but we note in the quarter that we have a strong ordering taken as well as good sales in in this railway segment slightly weaker also well known commenting before european residential construction where we are hurt by this down turn in this industry and we also want to highlight certain industrial segments and i mean just to comment further on that The industrial segments which is being hurt here is mainly the industrial segments where we do not sell directly, where we sell through distributors or dealers, where we note that this is down. And this is probably, or we know, is a kind of a W, but slightly weakened outlook for those guys, which means that they're also cutting down inventory, which is then hitting us in kind of a double way for these segments. A minor part of industrial solutions, but nevertheless, noticeable in the quarter this development overall although it was a good development and as i said the sales is up in reported currencies which is grown as by 16 and we see profit is up by 20 which means then a slight uptick also in margin running at 30 per day which we are satisfied with and we also know that in the quarter inflation is well upset by pricing and efficiency and we don't see anything that we are not behind in any way to compensate ourselves for this slide in costing. And we know that it's going to continue throughout the year. We still see, valid for all of Trelleborg, we still see some inflation kicking in for certain raw materials. And we're also, of course, watching carefully what is happening with the salary inflation. But overall, we continue to feel confident that we're going to be able to continuously uh act against this when it's hitting us so that is for industrial solutions and then moving to page six and ceiling solutions um heading higher sales and ebit today although margin is easily down but we still for known reasons and i'm going back and comment on that one but nevertheless we know that sales is the highest so far and also ebit is the highest so far for ceiling solutions organic sales up by five mna by 17 which is then of course Majority of that linked to Minnesota rubber and plastics. We note the satisfactory sales growth in Europe and America. Some already commented on Asia is weaker on specifically on lower China sales, but also Asia. There is a minor part there also linked to semiconductors, which is also noticeable down in the quarter. And this is just to comment on that in China sales as well as semiconductor sales. So semiconductor seals that we sell into the semiconductor industry is influencing also the margin because it's creating a negative mix so we have a few tens of the soin tens of percentage points that is kind of hitting us due to this kind of change mix in in lower sales in in china and lower sales linked to the semiconductors and we note also that the sales to aerospace and healthcare and medical is notably up substantially stronger in organic sales compared to the overall average And we also note that automotive developed favorably, which is also kind of here in this area, we note also satisfactory sales also in North America, as well as in Europe. We have some industrial demand where we are a little bit uncertain. I mean, it's not any kind of strange things and there's no drama in this, but we do know that there's a little bit flattish in a few industrial segments, especially linked to construction equipment. but also in some areas, which is still a strong order book for us. But nevertheless, we do know that there is some kind of carefulness kicking in in a few areas. Also, margin is impacted. Well known as well that we had the MRP acquisition kicking in, which is a major PPA effect as well. So that's, of course, explaining kind of half the EBIT change compared to last year. And then we also note that last year was a very good quarter with 24%. So we do note that there is a slight kind of downtick also in ceiling solutions overall, which is then soft China sales, but also commenting on this kind of mix effects, which is also hitting us somewhat. But overall satisfactory developments in the quarter. Turning to page eight, let's say, hopefully or likely, very likely the last comment for us on on wheel systems which is reported as an asset to say it is a solid quarter for wheel systems organic sales flattish but the favorable sales in especially north america and also globally on the original equipment agricultural tire business while we know that europe is impacted let's say sizably by a lower off the market sales And EBIT is although up, although margin is slightly down, but we are keeping this in a good way, although we have kind of a negative gross margin mix, seeing to always say it's growing and off the market say it's going down, but nevertheless well managed by our colleagues in wheel systems in the quarter. Then turning to page 10 to comment a little bit further on the divestments. I mean, as you know, we have two pending divestments, Trelleborg Wheel Systems, but also this Trelleborg Printing Solutions, which is a business unit that we have been kind of signed an agreement to sell to Continental. To comment on this, we are, as I already commented, the final merger clearances for wheel systems. happening in the quarter and there's nothing now left really to solve. There's more to some formalities that need to get in place and we do expect closing of the wheel systems to happen in Q2. And the same actually applies also to printing solutions where we also have the final outstanding points agreed and we're also in the fine-tuning of these acquisitions. We do expect that also to close here in the next month or two. And also, in commenting earlier, I mean, these two divestments will create a cash inflow for us that will make a solid into a net cash position for the group here in quarter two. Also, just to confirm earlier comments, capital gain from the divestment will amount to approximately six billion. And that will also be expected to be reported as a non-recurring income in quarter two. And we will get back, of course, when these two deals finally are closed, we will get back with more comments on that and we will send out the press release for each of them to give you detailed figures for this. Okay, turning to page 11. some comments on sustainability. We're focusing basically on two areas, carbon emissions, and then a little bit more electricity supply and those work cases. I mean, you know that we are kind of in continuous operation, kind of flattish compared to a year ago in absolute terms. But that's, of course, also linked that we have acquired companies here. So if you look at the tons intensity, then we have actually improved 28 percent year on year quarter and quarter here of course you need to compare quarter and quarter since the temperatures are different and you cannot really compare quarter on quarter so we have to do an uh it's an annual comparison so this is kind of well managed and they continue to to run in a good way down 28 percent year on year turning to page 12 and the next page we talk about share of renewable and fossil free electricity and lost work cases on this one you note that there's 44 percent the Only, if I may say, only increasing the share of renewable and fossil fuel electricity by two percentage points. But also here, we need to note that Minnesota rubber coming in with virtually no renewable electricity in their portfolio. And that is, of course, something that we, let's say, expect to improve considerably going forward. We do expect that also to go up. And you know that we have a long-term target here of getting above 80 percent and we feel very comfortable that we're going to get there in the kind of foreseeable future put it like that so we are not that far away from from that goal even though it looks like that at the moment a lot of work cases with another important task for us to keep our employees safe and you see also we are let's say all-time quarterly low here on 27 is still not good enough and we're going to improve that as well but nevertheless we also do see a positive movement in this area. So we are quite satisfied overall with the development of this sustainability. Of course there is several other KPIs also in this area but we have decided to highlight this in a quarterly report and then we're going to get back and look into this and of course we're going to continue to focus on this area and also improve both in terms of performance as well as in terms of reporting. Turning to page 13, again and again, financials, and then quickly turning over to Fredrik, starting at page 14. Please, Fredrik.

Thank you, Peter. Strong sales increase in the first quarter of 23%, 7% organic growth in the quarter, with organic growth of both industrial solutions and ceiling solutions in the quarter. We have acquisition adding 9% to the sales, And then currency added another 7%. And then it totaled up to the 23% improvement year over year. Moving to page 15, looking at the strong sales trend. That continues. I mean, we had a strong first quarter again. And we have now nine quarter in a row where we have been on or above our sales growth target. Moving on to page 16. Showing the quarterly sales on a rolling 12 months for continuing operations. We have 8,711,000,000 sales was the highest to date for a quarter. And then if you look at the rolling 12 months, we reached 31.7 billion stick. Moving to page 17. EBIT, it was the highest to date with 1,411,000,000. a 15% increase with profit growth in both industrial solution and ceiling solution. I would also like to highlight that in the result, there was a translation of foreign subsidiaries that has a positive impact in the result of 67 million compared to the corresponding quarter last year. EBIT margin reached 16.2, which was impacted with acquisition with lower margin. And we also have the PPA amortization that Peter mentioned earlier. Moving on to page 18, looking at EBIT and EBIT modern role in 12 months. The positive trend with increased EBIT continued while the margin declined in a quarter impacted by the recent acquisitions. If we look at role in 12 months, EBIT amounted to a little bit more than 5.2 billion with a margin of 16.5. Moving on to page 19, looking at some further details in the income statement. We have items affecting comparability of minus 49 million in the quarter, which was entirely related to restructuring costs. Financial net increased from 45 to 165 million in the quarter, and it was impacted by higher interest expenses linked to acquisition of Minnesota rubber and plastic. We have in general higher interest rates, and we have also continued to buy back own shares in the quarter. Tax rate for the quarter amounted to 25%. The underlying tax rate still remains at 26% for the full year. So the earlier guidance is still the same, despite we have one percentage point lower in the first quarter. Net profit for these continued operations improved due to the continued profit growth for wheels systems. Moving on, page 20. Earnings per share for continuing operations up 13%. And if we look at the total group, earnings per share increased by 11% in the quarter. Moving on, page 21. We have a strong cash flow improvement compared to first quarter last year. Good improvement from EBITDA of 308 million in the quarter. And then you can see slightly higher capex compared to prior year. Moving on, page 22, cash flow conversion. We have a cash flow conversion ratio of 75% during the first quarter of 23 versus 76 last year. Moving on to page 23. Looking at the debt equity ratio, we have 56% end of the quarter, and the increase was entirely related to the Minnesota acquisition that we closed during the fourth quarter last year. Net debt was also impacted by the ongoing share buyback program, and we have bought back shares for 654 million during the first quarter. So net debt in relation to EBITDA ended at 2.4, which is unchanged versus year end. Moving on to page 24, looking at return of capital employed at 14.9 end of the quarter versus 15.7 end of first quarter 2022. The capital employed has been impacted by higher working capital as a consequence of the higher sales and also the acquisitions that we have made during last year. And also there is an FX impact linked to the return of capital employed. I will finish off this section by some guidelines for 2023. They are unchanged compared to what we presented a quarter ago. So CAPEX, we estimate to be around 1.5 billion for the year. Restruction costs around 250 million. Amortization intangibles, we expect to amount to around 500 million for the full year and underlying tax rate to 26%. By that, I would like to hand back the microphone to Peter.

Good. Page 26, agenda. We're finishing off with the summary and some comments on the running quarter and then finishing off with the Q&A. So, page 27. Good start to the year. Safe increase of 23 with organic up by a solid 7. Currency supporting us with 7% and an M&A adding another almost 10%. Ebitda by 15, margin 16.2, slightly down compared to a year ago, but that is linked to primarily to an effect from this acquisition of Minnesota. And then, nevertheless, giving us the highest quarterly sales and highest EBIT today. Some normally as well, 50 million on items affected comparatively, solid cash flow in the quarter. and important of course for us also emerging clearances for the disposal of travel wheel systems has been received and we are now we're kind of wrapping up that to to finally execute the sale and get the money on on our accounts and also note in the quarter continue to do smaller bolt-ons strategically important but nevertheless not not sizable in that way but i mean important for us to grow our sales and our get closer in this case especially to one of our key customers boeing That is, let's say, the overall summary of the quarter. Turning to page 28 to comment a little bit on the running quarter. Our statement here is that we expected to be in line or somewhat lower than in the first quarter. Still solid demand overall, but it is a kind of a mixed bag where we have a smaller part of the group where we see a downturn. I mean, we comment on residential construction in a way in Europe impacting us, but also in North America somewhat slow. And we also note that a few other businesses, which is linked specifically to distributed dealer sales, small part of Trelleborg. But nevertheless, that is also where we see a downturn. And then we have, let's say, also a chunk of the business where we feel a little bit uncertain where it's heading. It's still solid order intake, but we see some increased uncertainty. And then we have also some major parts of the group where we continue to see a solid demand, a solid growth with aerospace, automotive still looking good. and also especially LNG, oil and gas, and big kind of infrastructure constructions, also a major part of the group, still expect solid growth. But overall, a little bit cautious, maybe, but I mean, that is something, the way we look at it, we do expect this running quarter to be in line with this quarter, or maybe somewhat lower in certain areas. And of course, as usual, there is this add-on for us, as for everybody else, we still see geopolitical situation being uncertain that there could be things impacting us a quarter but if it we continue to stay very close to the operations and we continue to adjust and we continue to improve trelleborg whatever happens um so that was kind of finishing off and also before handing in the q a just adding on on page 29 just a reminder we have a captain market state coming up here uh where of course all of you are invited running may 23rd in stockholm and if you do intend to participate which we definitely want you to to participate then please register no later than this date here let's say may 10th and please note also if you you know we move these dates so if you have let's say registered for the previous cmd you have to re-register here to make sure that you are you are attending this time as well and it's a link on these sliders also where you want to want to do that so if you have any questions on that christopher is here to support you so make contact with christopher if you have any questions or or want some support to be able to join us on on this event and so it is turning to pay 30 q a and then quickly to page 31 and opening up for um questions so please go ahead

If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Carl Bockwist from ABG Sundal Collier. Please go ahead.

Thank you. Good afternoon. A question there on the demand outlook or the comments where you say that you see a bit of a more normalized demand scenario. You highlight some areas that are weak. I was just wondering if you've seen any areas that were previously quite strong where you see that they are leveling off when it comes to this normalization comments?

No, not really. I mean, the normalization is because if you go a year back, there was kind of a lack of components. That was a lack of input material, lack of capacity in certain areas. And I mean, we see, and that is where I honestly call to be, as usual, be very open. I mean, the length of the border book is shrinking because people are not pre-ordering that much as I did a year ago and that is where the reading of the order intake for us is somewhat difficult in certain areas and it's primarily linked to this kind of hydraulic pneumatic segment which is a very wide segment in terms of application and end markets but that is where we see some uncertainty and I mean we have to be open we are analyzing it we're reading it we see I mean overall the order book is shrinking but it's not really shrinking short term it's more shrinking long term which is was kind of very strong or too strong a year ago and that is where we have a kind of little bit difficulty analyzing it so we don't really see a big difference in between quarter four and quarter one in that respect but we do see let's say a shortening of the order book continues in a way and I mean once again that is normalized where we are kind of running a very high percentage of of kind of orders for the next quarter but I mean still in the current situation we are kind of running higher than we did a few years ago like that so it is kind of a challenging to read into it but nothing really specific I mean the only highlighting is two segments where we feel it's down and that is kind of residential construction which there is a few construction equipment going into that segment also where we see a kind of a downturn and then we Also, these small states of Trelleborg, we still sell to dealers and distributors where we see that that is where those customers are being more careful. So if you say, I mean, we still have, I don't know, round it up. We're not using it against it in the future, but we say 40% of the group is still very good and solid, 20% is a little bit weak, and 40% where we see some kind of uncertainty. So that is kind of the way we look at it.

Understood. And then on sealing and the comments regarding weaker Asia, is that related to the entire sealing business or was it mainly related to Minnesota?

No, no, that is linked to both. Minnesota is dependent on it and also sealing in total. I mean, China for sealing is an important market and it's also good margins in China. So it's a positive add-on for the margin point. So all of China, I trust you're aware that we had this... closed down still in running in the quarter and that impacted us so the sales was a little bit lower in the quarter but we want to also highlight that we do expect that to pick up for the remainder of the year so we don't see an overall bad demand in China but we do see it as the worst challenges in getting the deliveries out of the door in this quarter and that has been impacting us in certain areas. mass majority of China.

Understood. And my final one is a technical one to you, Fredrik. The 6 billion items affecting comparability expected to be reported in Q2. I guess since you have the profit contribution already in the discontinued line, the item affecting comparability, will that also be below the net profit line then and therefore not affect EBIT?

That's correct. It will be one of in discontinued operations. Okay, so it's really below the line. Yeah.

One comment here because Christopher hit me on the side. Just to clarify on the order book, the order book is actually up in the quarter. But let's say order intake is somewhat shrinking. So we still have a very good order book compared to a year ago. But the order intake is shrinking compared to a year ago. Just to clarify that.

Understood. That's all for me. Thanks.

The next question comes from Hampus Engelhau from Handelsbanken. Please go ahead.

Thank you very much. Two questions for me. I wonder if you could maybe talk a little bit about dynamics on pricing here. How should we look at prices in January compared to average prices last year, and when do you start to see your comps getting tougher? from new discussions with new contracts from the price levels we've seen today, are they still seeing some momentum in raising prices further, or are customers more aware of energy cost and supply chain cost, et cetera, coming down, or how should you think about that?

We feel that overall we are balanced, Hampus. I mean, we think we are in line, and if anything slightly positive, not any major things but but we are not behind if we are something we are slightly ahead and we continue to adjust pricing we continue to see some raw materials going up we have freight for instance you know long long long distance freight is is down but we still have challenges in short distance freight let's say in europe and of america getting trucks and all of that so there is still where we see price increases and and we don't really have a problem getting fair adjustments we're going to continue to stay close and we are very quick in in kind of adjusting pricing we don't see any kind of it's always a fight and it always takes time to agree but we do believe that our customers recognize this and they are kind of as long as we are fair they will accept the price increases and then also if you look at Trelleborg you need to also be aware that the vast majority of our sales is kind of single source, let's say specific applications. So it's not that we're going to be kicked out because the switching cost is very high. So as long as we are fair in our price increases, which we would like to be and get compensated for our cost increases, we are not in any way, not in any way that we are not concerned about that development. So we feel that it's going to continue to be price adjustments and it continues to be to be firm in getting them implemented. So we don't see that as an issue, if I want to be blunt on that one.

And on these speedboat areas, is it fair to assume that it's a better pricing pile for you guys in those segments, or is it just simply that those end markets are just growing faster?

I think they're growing faster. I don't think we are kind of having a better position in that respect in a way and that maybe also i didn't comment on that that is also partly the explanation also in tss that even adding on seeding solution we've been adding some costs and we talked about the billion euros or something but nevertheless there is a million euro in extra costs in in the quarter for for this kind of efforts but uh but but it's not really any difference in the kind of business logics in in that areas compared to to the overall business it's simply that speed boats is more higher growth areas.

Thank you.

The next question comes from Claes Berglind from Citi. Please go ahead.

Thank you. Hi, Peter and Fredrik. So my first one is on the China impact coming back there to seeding solutions. You talked about semi, but then you also said the overall China business is a higher margin. That business is now coming back, as you alluded to, in March, and we heard that from others. What was the impact, Peter, in terms of the margin? Where would the underlying margin, if China would have been flat? And then I'm curious about Minnesota. Did you say what the dilution impact was, and also including PPA? Thank you.

I mean, in China, we talk a few tens of percentage points in the margin overall. So we don't really, I don't want to comment more on that class, but it's not that it's one percentage point. It's less than one percentage point. It's a few tens of a percentage point impact on the overall margin. So that is, I mean, that's, I guess, what we can see about that.

And the second question was about the MRP impact and dilution. And for a ceiling solution, it's around 2% impact if you include both underlying business and the PPA amortization. For not only Minnesota. Not only Minnesota, of course, there are some other small acquisitions as well.

And PPA, how much was it? Sorry, I was late on the call. It's been a busy day.

We have increased PPA in the quarter in total by 66 million dollars.

I don't know what that means.

That I can work out myself. All good.

Compared to a year ago, where we didn't have these Aermed and Minnesota, but if you compare to the Q4, it's slightly higher simply because it's been consolidated for one month longer than we had it in But that's in the report.

The detailed figures are in the report.

We have 118 million SEC in PPA amortization in the quarter. And the 66 was the increase versus a year ago.

My second one is, I'm sure you're going to touch on this during the C&D, but I'm just still a little curious on the speedboat segment, Peter, and how these And markets are geared to decarbonization. Of course, you have wind in there. You also have semi, obviously, on the digitalization side. But is there any content story? Do we need more seals? Do we need more hoses and so forth? I'm curious in the mix impact, because that obviously can be material to both the growth and to the margin.

That is a very... Comprehensive question varies between the different segments. Of course, as we are approaching aerospace, we are approaching healthcare and medical, we're growing into robotization or electrical equipment. There is, of course, some gaps in our portfolio and that is something that we would like to either acquire or potentially work together with somebody. We are lacking, I shouldn't say, we need to address and get more complete so i'm not saying that how should i say that we are yeah it's going to be more solution selling but that's kind of also a general comment but but i mean so that has always been a way for us like in ceiling solutions that we manufacture 75 percent of ourselves we trade in 20 percent in order to get the complete solution but of course since now we are addressing a few segments more focused these areas are being more also focused to solve in these areas. But that is a difficult question to do in a situation like this. But for sure, it will be part of our story when we meet at the capital market day.

Looking forward to it. Thank you.

The next question comes from Agnieszka Wajlela from Nordia. Please go ahead. Thank you and hi guys.

My first question is on the weakness that you start to see more in some of the industrial segments. Peter, if you could comment more about that. Where do you see it? What's driving that? Also I think you mentioned the industrial distribution. Is it due to the fact that the distributors need to take down the stock? And what's your opinion about the stock level today?

I mean, the final question, we don't expect the stock levels to be high. I mean, rather on the opposite, we still see the majority of our customers being rather lean in this one. So we believe, let's say, on the distribution, we've seen that, especially now we're exiting, I mean, we see it even more, which we didn't comment on, on the agricultural aftermarket sales. But there is this kind of a combination, a slightly weaker demand, speculation from the distributors. This distributor always want to speculate on being if they do expect pricing to go down a little bit, that they don't want to buy too much and they want to be, and that the supply is loosening up, it's getting a little bit easier to supply. So the distributor sales is like that. There's always going to be a little bit more ups and downs because there is more drivers than the kind of end demand. And it's kind of difficult for us to read into that situation, especially let's say exactly, but we do know that there's more impact than the underlying demand. And if they do believe that the small, If there is a small, let's say, demand downtick and I see on top of that speculating with lower raw material costs and more availability, it's natural because one of the key drivers for them is, of course, to keep the working capital low and to get returns on that. So we are not too concerned about it, to be honest, but we know that sales into that segment is likely lower. on the other kind of industrial market is very wide and I mean it's more a feeling that we know that our order intake is shrinking order book is still on a very solid level on historical comparisons but we do we wanted to comment on that we do see that the order intake is somewhat down I don't really want to pinpoint that I'm looking at Frederik I don't want to pinpoint any specific segments in that way it is kind of more a general feeling maybe a little bit cautious, but I mean we always want to be transparent. We want to be very open and we say that I mean those areas we have already started to adjust.

Exactly and then Peter if I read you correctly from the report you do allude to some proactive probably cost measures. So how should we read that?

but that is i mean in this kind of residential construction site we have already adjusted because you know we are kind of for instance a global leader in the seals for windows and doors and in that segment we have already immediately kind of adjusted because that we saw coming and we've done that we also did use this occasion of course also to do on this uh kind of industrial house sales for instance we're also addressing that and bringing down so what we want to say that we are not waiting we are acting And we're acting up and down. And then we're still lacking people in a few areas. So it's also a little bit balanced. But with that comment, I wanted to say that we are kind of addressing this and we are ready. And we have already started to adjust in the areas where we do see, let's say, several 10 percentage points down or whatever it is. So make sure that we continue to adjust to keep the model up.

Perfect. Thank you.

As a reminder, if you wish to ask a question, please dial star 5 on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you and thanks to all of you for listening in and especially thank you also we know this is a very busy day for all of you and we appreciate that you continue to show interest in Trelleborg and we hope also that we're going to see you at our Cup of the Market day here end of May where I promise you that we're going to be telling you a little bit more about Trelleborg and also not telling stories but we're going to tell you about the future of Trelleborg and what we're aiming for here. I mean we have a few exciting months ahead of us where we're going to get a lot of money and of course this is a new Trelleborg in in development and it's creating a lot of opportunities for us which of course we're going to manage these opportunities in a good way in order to continue to create share to create shareholder value for for all of us so thanks again and if any follow-up questions of course as usual christopher is available so don't hesitate to give him a call If you feel that you have any specific questions that did not get the answer on this call. So thanks again and speak to you and see several of you soon as well. Thank you.