Q3 2023 Rockwool AS Earnings Call
Okay.
Speaker 1: Hello to everybody and welcome to the Orkut.AS conference call regarding the first nine months of 2023. My name is Kimi Warnersen. I'm the CFO of Orkut.AS. Today I'm pleased to present CEO Jens Buersheim.
Hello, everybody and welcome to the Ocwen a S conference call regarding the first nine months of 2023.
My name is Cumulus and I'm, the CFO of awkwardness today I'm pleased to present CEO <unk> <unk>.
Speaker 1: For the first part of this call, all participants will be in a listen-only mode. As a reminder, this conference...
So the first part of this call all participants will be in a listen only mode.
As a reminder, this conference call is being recorded.
Speaker 1: First, Jens Bjergsen will go through our presentation and give an update on the results for the first nine months and the third quarter of 2023. Afterwards, we will be ready to answer any questions.
First introduced them to go through our presentation and give you an update on the results for the first nine months and the third quarter of 2023.
After which we will be ready to answer all your questions.
Speaker 1: Before I hand over the word to Jens Bjergsen, I must ask you to notice slide number two, which is the forward-looking statement. Please beware that this presentation contains uncertainties. Now we can go to slide three, which...
Before I hand over the word to you its viewers and.
I must ask you to notice site number two which is the forward looking statement. Please be aware that this presentation contains uncertainties.
Now we can go to slide three which.
Is the next time infusion I will now hand over to you. Thank you Kim Thank you Kim.
Speaker 2: Thank you, Kim. Thank you, Kim. Let's skip the year-to-date slide and move to slide four and focus on the quarter. So, good morning, everyone. Looking at this quarter, we had quite challenging market conditions, especially in Europe , particularly a few big markets. But the quarter came in quite well. So, if you start with the top line.
That's good to hear to that slide and move to slide four.
Focus on the quarter.
So good morning.
Everyone.
Looking at this quarter, we had.
Challenging market conditions.
And especially in Europe.
Particular few few big markets.
But the quarter came in quite threat. So it starts with the top line.
Speaker 2: 903 million down 4% and that
903 million down 4% and <unk>.
That.
Speaker 2: slight reduction of the top-line versus last year, which of course wasn't a
Slight reduction of the top line versus last year, which of course Watson to.
Speaker 2: is super difficult comparable but nevertheless it also includes a five week strike that we had in, we had a longer strike but five weeks of it was in Q3 that has also impacted some of our sales in North America so I'm quite happy with the top line and compared to the gap to the previous year Q2 and Q3.
It's super difficult comparable but nevertheless, it's also includes a five week strike that we had in the added along a strike, but five weeks. So it was in Q3 that.
<unk> also impacted some of RSA its in North America, So I'm quite happy with the topline on compared to the gap to the previous year Q2 and Q3.
Secondly, it draws more level than not so dramatically down.
Speaker 2: Certainly it was more leveled and not so dramatically down.
Moving down to <unk>.
Speaker 2: to the EBIT. Last year we had the energy crisis and the extreme high energy prices.
Two a bit.
Last year, we had.
The energy crisis and extreme high.
Energy prices.
Speaker 2: and also slow down in the business and that together put us down in a single digit margin and it's good to see that we have doubled the EBIT this year and we have re-established a healthy Q3 margin.
And also slowed down in the business and that together put us down very single digit margin and it's good to see that we have doubled our bit to CRM behalf reestablish.
The Q3 margin.
Going down to free cash flow.
Here the highlight is that.
Speaker 2: We, in spite of pulling down capacity, we did that during last autumn. I will come back to that a little bit more. I mentioned it already, but we reduced capacity quite quickly during last autumn in anticipation on this new level of business. And at the same time, we have drawn down inventory.
We in spite of pulling down capacity, we did that.
During last autumn I would come back to that a little bit more I mentioned, it already but we reduced our capacity quite.
Quickly during last autumn in anticipation of this new level of business and at the same time, we have drawn down inventory.
Speaker 2: So I'm happy to see that the cash flow...
So I'm happy to see the debt to cash flow on the networking capital that's come out as fine as it did in the quarter.
Speaker 2: and the networking capital has come out as fine as it did in the quarter.
Let's move to slide <unk>.
Six.
Speaker 2: From a growth perspective, we don't need to say much about this slide, roughly 4% decline in both the system business and the installation business.
From from a growth perspective, we don't need to say much about this slide roughly 4% decline in both system.
The system business and installation business and slightly grow lower growth in systems.
Speaker 2: and slightly grow, lower growth in systems. And that is primarily due to that the growth on business have a delayed order cycle this year. We have a big order intake and delivery, big deliveries to be done in Q4. And that's a little bit later than normal. Apart from that, both businesses have grown with roughly the same rate.
And that is primarily due to that are to grow the business have been delayed or decide to this ERP we haven't.
A big order intake and deliver a big deliveries to be done in Q4, and Thats a little bit later than normal apart from that both businesses have grown bid are roughly the same rate.
Speaker 2: Slide 7, the regional sales development, starting with Western Europe , down now.
Slide seven the regional sales development start to readdress breast in Europe.
Down 9%.
Speaker 2: Here we, if we start with the highlights, because not everything was down. Spain.
Here.
If you start with the highlights because not everything will stone in Spain.
Speaker 2: and UK, double-digit up, so quite healthy business, have recovered well. France, flattish, a little bit positive. And then we have a lot of markets in Western Europe that are down quite a lot. So starting in the Nordics, Denmark,
U K, a double digit top so quite healthy business hybrid copper drill.
France flattish.
A little bit positive and they may have.
Lotto markets in rest of Europe, but they're down quite a lot so starting in the nordics.
Mark.
Denmark, Sweden and Finland.
Speaker 2: some respect Norway too, a little bit better, but big declines, you see a massive drop in building permits and housing starts.
Some respect all of our two a little bit better about big declines, you'll see a massive drop in building permits.
Permits and housing starts.
Moving south.
Speaker 2: Germany, down some 30-40% on building starts and permits, and then if we go east into Poland that's also quite negative.
Germany down from 34, 2% on building starts some permits.
And then if we go east into Poland, That's also quite quite negative.
Speaker 2: Germany, the Nordics, and the other countries a little bit up and down.
So, Germany, the Nordics and the other countries a bit up and down and.
Speaker 2: There are also some highlights in Eastern Europe , but in aggregate, if you look at Eastern Europe , some markets are down quite a lot, like Poland.
There are also some highlights in eastern Europe stepped in bottom on.
In aggregate deferred work at Eastern Europe.
Some markets are down quite a lot like Poland.
Speaker 2: while, on average, it works out to a flattish business. So you could say this steep decline, on average, has stopped a little bit, but it's very, very scattered. Croatia growing, Romania has recovered, Hungary has stopped to shrink so fast. So very scattered picture. Then moving on to North America and Asia.
And while all navigation works out to flattish business. So you could say this steep decline on average has stopped a little bit, but it's very very Scott <unk> growing Romania has recovered Hungary has stopped to shrink so fast.
So bit various gotten picture.
Then moving on to North America and Asia.
Speaker 2: That would set a lot of positive signs. China's stable declining, but looking into Thailand, Malaysia, India, good solid growth.
That would set a lot of positive signs.
China stable declining.
But looking into say, Thailand, Malaysia, India, Good solid growth North America, Canada, and the U S. Both growing and it should be said that.
Speaker 2: North America, Canada and the U.S. both growing, and it should be said that if we wouldn't have had the strike in Canada in one of our factories, North America and Asia all together would have been double digits, so the business is...
If we wouldn't have had to strike in Canada, and one of our factories.
North America, and Asia altogether would have been double digits all the businesses.
Speaker 2: back and is looking quite good going forward also.
Back and is looking quite good going forward also.
Speaker 2: Some of the strike will impact Q4-2. It's over now. It's over now, but it will have a limited impact on Q4. We move on to slide...
And some of the strike really impact Q4, two it's over now so we're not but to be to have a limited impact on Q4.
If we move on to slide eight.
Speaker 2: When we look at that big improvement, the doubling of the EBIT and the big improvement of EBITDA, we need to remember that it's an easy comparable because Q3 was really a bad quarter last year with the energy crisis. That said, the margin we have achieved now is quite healthy, and it's actually among our highest margin we have had, if you look historically. It's not the highest margin, but it's a high margin.
When we look at that big improvement the doubling of the a bit on the big improvement of EBITA B, we need to remember that this is an easy comparable.
Across Q3 of us really about quarter last yea everyday energy crisis.
And that said.
The margin, where you have rich achieved though.
Is is quite healthy and especially among our highest margin. We have had if you look historically, it's not the highest margin, but this is a high margin.
Speaker 2: How could we achieve that in a market that's a shrinking state?
How could we achieve opt in a market that is shrinking stead.
Speaker 2: A couple of aspects. First of all, we have not done any stupid energy hedges and energy prices are down. We have also made a couple of deals on electricity, France, Norway, Spain, Romania, where we have kind of gotten energy deals that are much more favorable than before.
A couple of aspects first of all we have not done.
And as stupid entity had yes under ended the prices are down we have also made a couple of.
Do you just some electricity in France, Norway, Spain, Romania, maybe I kind of got to an energy data sets are much more favorable done before.
Speaker 2: So energy impact, we still see an underlying inflation. Then on the prices, we have outside Europe , we have continued to raise prices. And in Europe , we have basically balanced.
Yeah.
So any impact we still see an underlying inflation done on the prices rehab.
Outside Europe a bit.
Have continued to raise prices and in Europe, we have basically violence.
Speaker 2: prices with market share and cost position and don't manage to kind of keep them relatively stable. There are segments where we have lowered prices in certain markets, but there are also segments where prices have been maintained or slightly increased. It depends a little bit what you compare with average last year or year-end, et cetera. It has a lot of dynamics, but we have really, really worked a lot on...
Prices with market share and cost position.
Don managed to kind of keep them relative to stay but the segments, where we have lowered prices and softer market, but there are also segments, where prices have been maintained or slightly increased dependency a little bit what youre, comparing average last year or year round et cetera. It has a lot of Dino.
In Mexico, we had really really worked a lot on.
Speaker 2: price and volume and engaging with our customers.
Price and volume and engaging with our customers.
Speaker 2: And then you can also see if you go into the PNL that.
And then.
You can also see if you go into the P&L.
Speaker 2: The cost control is not perfect, we have not gone...
The cost control is not perfect we have not gone.
Speaker 2: It's not super dramatic in terms of cost reduction in relation to the volume reduction, but we have been
Super dramatic in terms of cost reduction in relation to the volume reduction, but we had been.
Speaker 2: on top of costs, and a lot of the capacity reductions we have reduced almost.
On top of Cros, and a lot of the capacity reductions we have reduced almost.
Speaker 2: And it's not all permanent employees, but almost 800 jobs that we did in the manufacturing last autumn. So we acted early and we have the flexibility in the system, so that has been done, that has helped.
And it's not all permanent temporaries, but almost 800 jobs that we did in the manufacturing and last autumn. So we reacted early.
And we have the flexibility in the system, so that test to be done that to us, but then we have.
Speaker 2: generally being quite restrictive on cost and uh... we haven't gone extreme we haven't uh... reduced into the muscle of the company our strategy is to control cost keep them as low as we can not go overboard and then try to navigate through also next year and then hopefully the market will be back up after that
Generally being quite restrictive on cost.
They haven't gone extreme be haven't reduced.
It reduced into the muscle of the company our strategy is to control cost keep the most law suite can not go overboard and then tried to navigate through also next year and then hopefully the market will be back drop.
Off the dock.
Speaker 2: If you continue to slide 9, profitability per business segment, nothing really different there. Both systems and installation has recovered compared to last year and the explanation is the same in both businesses, so I've already explained the reasons for that. Let's flip to slide 10.
And if you continue to slide nine profit debated PREPA or.
Business segment.
Nothing really different there both the systems and installation has recovered compared to last year.
The explanation is it's the same in both businesses. So I've already explained the reasons for that.
Let's flip to slide 10.
Investments.
Speaker 2: We did invest in the quarter 90 million. The biggest one in the quarter in terms of money is the new paint line for our rock panel business that's in the Netherlands, we are commissioning that now.
We did invest in and end up in the quarter 990 million.
The biggest one in the quarter in terms of money raised new paint line for our rock panel business. That's in the landscape we are commissioning that now.
Speaker 2: And some of the impact why that cap is not higher is that we haven't really started.
Yeah.
Some of the impact why that Capex is not higher so if you haven't read it started.
Speaker 2: French project. So, if you would have had the French project, that number should have been a little bit bigger, but still maintained. And we haven't done
French projects. So if you would have had the French project that number should have been a little bit bigger, but still maintain and we haven't done.
Speaker 2: taking a lot of action, consciously stopping CAPEX, we continue with the green CAPEX and the capacity expansion and the maintenance CAPEX on a sensible level. But of course there could be some capacity expansions now in Europe that we can delay a little bit.
<unk> taken a lot of action consciously stopping capex. We continue we had the green Capex Sunday capacity expansion and the maintenance capex on a sensible level, but of course, there could be some capacity expansions in Europe that we can do that it isn't bad.
That said the factory in France, the tough spin a delay due to delayed approvals slide 11.
Speaker 2: The factory in France that has been delayed due to delayed approvals, slide 11, we have had some good progress on that.
Kevin.
We have had some good progress on that this would be up now.
Speaker 2: We had a court order that lifted the suspension on the work, the building permit.
We have had a court order that lifted the suspension on the work the building permit.
And we still.
Speaker 2: wait for a final ruling. We have an okay to start building, but it's on our own risk. So we will wait until Q1 when we have the final ruling, but we have started some lighter construction work on site, putting up fence and just doing the basic preparations. We at the moment feel quite confident that the final ruling
Wait for a final ruling we have an okay to start building, but its on our own risk. So we will wait until Q1, but it may have to final ruling, but we have start to sunlight or construction worker side, putting a fence I'm just doing the basic preparations.
We at the moment feel quite confident that the final ruling.
Speaker 2: will be executed in Q1. There is a challenge with the French legal system that
The X secured to date pier one.
There is a challenge with the French legal system that.
Speaker 2: deadlines are not so clear and not so defined, response times are not so defined, but anyhow, when you have this suspension, this temporary suspension that you can't start, they normally only give that when they feel very, very sure that the final ruling will be the same. And when we look at the type of issues that are left now are smaller things like
Deadlines are not so clear are not sold defined response time, so not sold defined but anyhow. When you have this suspension. This temporary suspension that you can't start day that they're normally only give that when they fit very very sure that a final ruling would be the same.
And when we look at the type of issues that are left are.
Small or things like that color of the buildings the height of one building and got to stay lower than the highest building and also that.
Speaker 2: the color of the buildings, the height of one building that is still lower than the highest building, and also that counting the number of trees on the site, and we have enough trees but
Counted the number of trees on the site and we have enough trees, but.
Speaker 2: there were some errors in the drawing.
There were some errors in in a drawing so.
Speaker 2: Smaller things, we are optimistic that that should be sorted out now during Q1 so we really can start.
Smaller things, we'd be optimistic that that should be sorted out during Q1, So we really can start.
If we move to slide 12.
In the.
Speaker 2: The cash flow, you see almost a tripling of the cash flow.
The cash flow you see almost a tripling of the cash flow.
Speaker 2: And so if you look at that 120 million improvement that is there, basically 80 million of that comes from improved profits, improved earnings, and the rest come from networking capital reduction, and almost all of it is from lower inventories. And I'm happy about that, because when we drew down capacity, we have been...
And so if you look at that <unk> 20 million improvement that to sell basically a $2 million of that comes from improved profits improve the earnings and the rest come from networking capital reduction and almost all of it is.
From a number of inbound tourists so I'm happy about that because <unk> be drew down capacity, we have been very quick.
Speaker 2: very quick at making sure that we don't sit on too much stock. So that's the way we like to do it when we reduce output.
Making sure that we don't sit on too much.
The stock so that's that's the rate we like to do it when we reduce output.
Speaker 2: Going on to slide 14 and outlook.
Going onto slide 14, and the outlook.
Speaker 2: We have changed that a little bit now, the sales for the full year, I mean we have two months plus to December . I want to remind you that December is...
And we have changed that a little bit now the sales are for the full year, maybe up two months plus to December.
Want to remind you that December is.
A random month and it's also a months, we don't know if it's going to snow or not so we are very we have done the media on medium forecast compared to previous decembers.
In our outlook, but if you look at that year to date say it says.
Speaker 2: lower than this number, you also see that we actually forecast that we're going to grow in Q4, which is the good news. On the EBIT, we have now guided at $14,000.
Nor the.
Lower than this number you'll also see that we actually forecast that we're going to grow in Q4, which is a good news.
They're a bit.
We have now.
Guided at 14%.
Speaker 2: I would like to say that that guidance, with the assumptions we have, is that we believe...
I would like to say that that guidance with the assumption should be a hobbyist surgery, we built.
Speaker 2: our best guess at the moment is, or our forecast is, we're going to hit 14%. But then there are risks. We are at year-to-day 14.3%, but we have the December in this quarter plus that Q4 normally is a lower profit month than Q3, that is very high season. So with the December and two good months before that, we should land on 14%. And what could...
Our best guess at the moment is or our forecast so they're going to hit 14%. But then they are risks we are a tier today 14, 3%, but we have to December in this quarter plus up Q4 normally is the lower profit month than Q3, but just very high season. So.
All right.
Read the December on two good months before that we should land on 14, and what could make it bigger than 14, and what could make it smaller and unfortunate basically its the normal plus minus heavy snowfall that would shut down building sites in December and the low discern.
Speaker 2: make it bigger than 14 and what could make it smaller than 14. Basically, it's the normal plus minus heavy snowfall that would shut down building sites in December , in the low December . The other risky aspect we always see when we have this in a slow market environment, there could be countries that
The alder.
No.
Risk aspect, we always see when we have this in a slower market environment that could be countries.
Speaker 2: completely shut down construction for two or three
Completely shut down construction for two or three.
Speaker 2: or even four weeks in December , and depending if that happens, we have seen it back in 2014 in Germany, you always use that example, and then everything comes to a stop. So those factors will then determine whether we are a little bit above 14, a spot on 14, or a little bit below.
Or even four weeks into sandbox and dependent.
If that happens we have seen at <unk> back in 2014 in Germany. How you always use such example, and then everything comes to a stop but so that those factors were done to determine whether we are a little bit about 14 spot on 2014 are a little bit below but the forecast is 14, so I almost called this a for a customer.
Speaker 2: The forecast is 14, so I almost call this a forecast now. And then the investment, no comment to that. With that, I would like to hand over to questions.
And then the investment no.
I'll comment to that.
With that I would like to hand over to questions.
Yeah.
Speaker 3: Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by 1 on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove your staff from the...
Ladies and gentlemen at this time, we will begin the question and answer session.
Anyone who wish to ask a question press star followed by one on their Touchtone telephone.
You will hear a tone took a fair that should enter the queue.
If you wish to remove yourself from the question queue.
Speaker 3: You may press star and two. Questioners on the phone are requested to use only headsets while asking a question.
You May press Star two.
<unk> on the phone a request to use on the handsets wide asking a question.
Speaker 3: Anyone who has a question may press star and 1 at this time. The first question comes from the line of BGS SIA with HSBC, please go ahead.
Anyone who has a question May press star one at this time.
First question comes from the line of Furby, Jess <unk> with HSBC. Please go ahead.
Hi, good morning, I have two questions.
The first one is on volume.
I guess, it's two parts.
Application.
You talked about volume being sequenced.
And the last two quarters in Q T as being the highest.
See the absolute.
It's down, but Ken I'll just explain that.
So I think like mix impact and the second one.
Scott you mentioned that when you say that before I get into that kind of.
When you talk about.
So should we assume.
At this point in time it looks like.
Overall demand in Europe will be down next year and the <unk>.
Second question is on pricing.
You said that the underlying inflation is still dead. So what's the kind of magnitude of inflation you are seeing at this point in time.
And it relates to that.
You have been announcing price increases starting first with you.
Paul.
Thank you.
What was that last a bit pretty ash after inflation.
I was asking whether you haven't announced any price increases starting first of January.
Okay.
So let's start.
Reed.
The inflation question, sorry, we basically see the main driver for inflation as the core inflation is still there.
And.
I think we have.
And there is still an inflation in all our geographies. Although I ended the process of Dom but on a high level of what I expect we will see during the spring.
The salary the salary inflation as the main one because you still have this reach.
Yeah.
Right Scott that does happen.
In North America U S and part of the reason why we have that strike in one of our factories in the U S. While sought the auto workers rent for a very big ask and ran.
One of our factories saw that they went for the same almost the same big ask rich, we simply cannot afford into business. So it took a while to two to agree on a level that we could live with it and the business side I think the inflection of it stayed a bit there and I don't think of it going away.
Although you'll see maybe a slightly lower.
At the beginning of the year Europe, and then a big catch speed when the salaries start to kick in in the March April may whatever the cycle is the company's dental than on the volume I'm not sure. If you look at nominal numbers. So how do you look at the budget numbers, because we are down 4%.
A little bit more down in volume, but actually the volumes are stabilizing on roughly a similar level between the quarters.
So that's what we will see but then of course, we have this and when then grow Don jumps into Q4, they are all different volumes for revenue but.
On average in debates since you can see that we have had two relatively stable quarter of it.
Improved volumes and slight growth in <unk>.
In Europe, and several markets saw volumes are improving.
But I, it's mud and of course in them and in North America and Asia. It's it is a trend.
Doesn't look to be interrupted but here in Europe I think it's too early to conclude I'd I still think at this stage. Thus my assumption, but again, we're going to get to February before if you're going to guide for next year with what's going on in Germany, I still believe.
There is.
More factor so speaks for Europe worsening than improving so we could see a volume drop into next year, but I'm, just saying that this one pessimistic scenario because I I have no proof that we have turned the quarter, although volumes in the last two months.
<unk> are a little bit promising okay.
Okay.
Just on the pricing.
Could you clarify that.
Thank you.
We.
B, we have done a price.
Price increases announced price increases in several markets, where we have growth.
So, but then generally we havent gone out bid.
You know there are some countries in Europe, but we are in a small price increases, but generally we haven't.
Done that yet and then obviously in North America, Canada, a show you have a different different dynamics, so not not not much announced yet but for sure. There are several businesses that have announced.
But not so much in Europe.
Okay. Thank you.
I should say.
Chaos for example announced price increases to give one example, but we've done it.
The next question comes from the line of Christian <unk> with Seb. Please go ahead.
Yes. Thank you a couple of questions for me.
Two of them one by one so christi to you guys.
Got it.
Q4 guidance.
Take the growth rates the decline of close to 5% and then I I apply the same question.
In Q4, we estimate that we just recorded spoke Q3.
Get to a significantly higher EBIT margin than the 40% Youre guiding for.
Sorry, I think correctly assume that you are.
Including a lower gross margin.
A higher fixed cost base in Euro Chipotle Smith.
Hence why.
Chris on your your logic is perfect for October and November and then December is small.
As of March months, Youre, not maybe see everything in between a breakeven or not but if that happens every year. So youre logica such holds for two months and then we have December which is just a total different month in our business.
Yes.
When you say totally differently potentially much lower gross margin.
Yes, yes, yes, we can see it bid some some yes with two weeks without production.
So, but when you stop the business because we will not depending on our inventory outlook, you know, making event or it doesn't really.
Help us that much but it makes a difference ready to be shut down the factories.
We feel we have to see some no stock or where to be around that.
And that decision.
But you always need to navigate that some years you can have the market go down so the crudes shot to two weeks, but we still round because we wanted to round up some stock.
And this is just highly erratic and we need to really look at it to make the decisions in December when we see that wrapped around a market a doctor can all the rest.
Yes.
Yes.
Understood.
And then just specifically on the U K, so you sort of highlighted double digit growth and looking at the overall construction market.
The increasing by geographies.
On the contrary so can you just elaborate I guess.
UK and how sustainable they are.
I am.
I think.
It would be very bit taken by surprise, we drew down our capacity in the U K and then.
Brand in the market jumped back up because the UK is not as bad as in general as Germany, and Poland and some other markets. So when we then realize up to market was coming back or stabilizing much quicker than the others. We had a bit of a backlog so we needed to ramp up to <unk>.
<unk>.
That took us some time so that left.
A bit of backlog on to say so we had to work work back in bringing down the deliberate times and we're not quite through that yet so that that's meant rehab unit base.
Basic to as much as we produce we could sell.
But generally in the U K.
I mean U K is a big market now there are certain segments, but people clearly want a non combustible product that is replacement projects the high building as hospitals schools, but we see.
Noncombustible being the way to go and also in some segments, where people say better safe than sorry, I mean, the price differences small use another material. So we see it.
A shift in sentiment that has really happened I seem now to be more in ground. So I would say Stonewall has gained in appreciation versus certain other products than the combustible. Once this all segment and as I see it didn't now looks to be permanent.
Yeah.
Okay.
And then my last question you haven't really talked about renovation so just thoughts.
With the renovation.
Any more optimistic or paid in Mexico that also going to 24 months ago.
At this early date performance building directive that.
We believe it's not watered down without.
Largely the compulsory element some of them have not been handed over in Europe.
You're empowering the local countries instead, which means it's not the same thing. So I think in Indonesia, We received what really comes out of that but what I see across Europe, I mean, I read somewhere that the EU is missing to C. O two reduction goal by <unk>.
We had what 50% so instead of reducing its increasing so what what I and maybe I'm too pessimistic, but what I see with this war going on and all the geopolitical tension for me it pretty much looks at that very few politicians at the moment that worried about this and therefore, yes.
We see good progress in some countries, but overall it seems such as moved lower down on the agenda now everyone is gearing up to go to Cop 28, again, an empty yard so nothing will happen, so I'm, a little bit skeptical about the whole push.
Pushing conviction from political level to to to put some serious money into that to make it happen that said there are exceptions received from starting to move Germany have a scheme or several schemes.
Read it just maybe conclude it looks a bit complicated place if I wanted to renovate my house I wouldn't know what to do with that so I am pessimistic I think green has slipped.
Uh huh.
And that we need to wait a bit more before V. C summer really wake up on degree and at the end again and that's why I don't believe at the moment, we see.
Our broad base green push renovation.
That said if the economy goes even worse.
Then it would be quite smart by some of those governments to grab hold of it and get it started Italy showed how it's done.
It can be done, but they need to do something and not just ignore it.
Yeah.
Okay understood. Thank you so much.
Thanks.
The next question comes from the line of George speak with BNP Paribas. Please go ahead.
Hi, gentlemen, thanks for taking my question.
Just take take.
We talked a bit about hedging.
Gas and electricity, but my understanding is you're still about 50%.
Coking coal, which has been choppy in Q2.
Could you just since Q T. So could you just give us a bit.
You have an indication on how that's impacting your margins and pricing strategy into Q4 and into 2024.
And then my second question with just trying to understand your comments on Eastern Europe opening remarks, you sounded quite cautious so quite bearish in the region.
Yes top line current CCAR Ethan.
So it's top line growth in local currency has been at minus 2%.
Can you just help us square that up.
What's offsetting the weakness that you talked about in Poland.
Color that would be helpful.
Okay.
I was going to give.
The hedging in that too came but I can take the other.
Question first so.
<unk>.
If you go into Poland in Eastern Europe.
My my cheat.
Basically small countries doing back to the big countries in Eastern Europe.
The pattern we see.
And.
<unk> two.
Paul.
It's very typical with Poland.
When you have a decline first you have there.
Well at least we have seen it several times before when you have a decline in the market sentiments totally stops the workout and then three and all the rest are overstocked.
I think we are.
Oh actually already through that and then we have quarters of jump a little bit.
Up up and down and but now we have seen Portland for a while beat down on housing starts.
And.
Also in the commercial sector may be.
The commercial sector, but the logistics center, the manufacturing and all that some of those projects.
I've just been delayed.
And.
My assumption at the moment is that that could continue for a while then yes, Romania Baxter insulate insulating again, Hungary are around the CLO.
Up and down jumping a little bit between the court, but Poland to me it looks like those investments going into Poland are not there at the moment on the building starts are not there and raw material prices will impact the demand in FY <unk>.
I think for now my assumption is we stay on this lower capacity utilization rate.
To see an improvement and if that takes.
One quarter or five quarter aside us.
Just cannot tap.
The steep decline from the current level, though seems to have stopped at the moment, but I should say.
Over two came on that yet.
And thank you for the hedging part as Ian said, we had.
This year, we have entered into some of these and Diavik operator contracts and that has helped us quite a lot in France, Norway, Spain, and Romania on electricity and for the other countries we have.
<unk> done more or less a 50% hedging for the second half of the year that includes Q4.
Both electricity and gas.
So we have we had called out about half I didn't go to the market followed the remaining part.
On the Coke, which is still our primary energy source.
We have seen during the year small declining cost even though now.
Coke prices are coming up a bit we did do.
These.
These coal price activity and agreed each quarter, but we have long long term supply agreements in place, but these are long term supply agreements fabulous time to renegotiate those here in the us in the second half of this year and we have been negotiated and including those negotiation we have already fixed the.
Q1 cost for next year at a lower cost than what we have seen in today's market. So far Q1 next year, we have been.
Still these.
Long term.
Two or three years long term contract in France in Norway, we have hedged 50% of the invitation to other countries and 50% of the gas and now we have a fixed price all foundry Coke for Q1, that's as long as we have we have gone we haven't decided yet what to do for the remaining part of the year on <unk>.
Consumption of gasoline.
Okay.
Alright, thank you.
The next question comes from the line of Judy said of with Redburn Atlantic. Please go ahead.
Yes, good morning.
Two questions if I may I'll ask them one by one.
So the first one is the same that I asked you last time on the conference call. It Q2.
We are going through a recession year big volume declines and you are achieving a margin of 14% now.
13 that you guided last time.
Your long term aspiration.
13%.
Currently the results that we're seeing this year suggest that you adjust that upwards.
Thanks.
I am.
It's a good question Julien.
Of course, we would like considering how expensive new factories or to build.
It will not be bad to have a higher margin but.
It has so many.
Aspects going forward on whenever we have a massive change in in a quarter or in a year or a need to adjust capacity big up or down or something happening with energy prices.
Dun Dun.
Margins will be impacted because we cant do it in Sierra time and of course, the other aspect is.
What will be important for next year and going forward is we are in the volume lever novel B Reassert can do you have reduced our capacity too.
We match our market share.
If the volume not continue down its always hard to predict what the competitive environment would be.
We are and we need to balance these things so I I cannot I mean, yes. This quarter comes out nice, but we came into it without having to restructure our change capacity.
We have done the price work so.
Too early for me to guide and I said this is a new level.
We have recovered from last years hot or quarter, but be new VI at wassa or a quarter. We had all this energy cost side.
I I'm not able at this stage to say what the normal level, if we stick to our old kind of ambition levels and then of course, we try to improve on that.
But but we havent guided or committed to deliver on that level.
Second question.
I suppose I'll come back to this in the future because we're talking about long term and long term.
Industry is going to be delivering growth in competitive situations.
Mark, obviously, but im not asking about specifically next year or the year after is more.
But I can understand where you're coming from.
You all have a good point I mean, if if the green agenda gets going and you'll get a bit of a pull in the market. So that you know that the next 10 years, you're going to do all of this renovation is.
Less than 1% of whatever you need to do three or whatever now the gold would be placebo too, but it needs to triple or something like that if that happens of course on <unk>.
Reasonably good in that segment Dennis of course, much easier to take actions and optimize and do the rest when you have the underlying in Poland. The market because traditionally if you look over the last eight nine years, we have been.
Yeah quite good the tracing productivity in the business, we haven't really increased head count.
Have.
We are working on automating our factories, we broke a number of technologies such real.
If we get to a bit of growth into the system, we should be able to raise productivity and because not all of all of margin improvements in our rod comes from price it needs to come also from us becoming more competitive but it's so much easier to do that they've had on top of this margins jumping up and down 15%.
Business, Marcus jumping up 15, 20% I mean, it or optimize the network all the time.
So some a bit of peace and quiet in the comm growth into business would make that a lot easier for them in on a margin target.
Okay.
Okay sounds good.
The second question is about volumes and specifically about the UK and the U S. You already talked about the UK.
What I'm curious to hear from you is if you kind of give us your assessment.
As to by how much you are outperforming the overall market performance and installation in these two countries.
At this point.
Can the U K, you said that you have a growth of double digits as far as the market and you said that you are outperforming the market, but I'm just curious by how much.
In the U S.
I don't want to.
Comment on deep dive, Sir and I don't even bring deep does but obviously, but if you look if you look in North America and in Canada.
Yeah.
The more or less have the markets.
Growth this just in line with the market and.
And it's not really growing as a proportion of the whole market. So it follows the market and then in the U S rehab.
We have now another factor is that we are ramping up we are not at full capacity yet we still have capacity in the U S. But.
Stonewall share is a couple of percentage of the total installation market in there.
They're going to be.
Conversions, so that we eat into it but we are talking in relation to the overall market, but this huge when we moved from two to two and a half to three to three and a half to four it's it's very very little of the of the total market since the market is growing.
It doesn't translate into less volume for the other material. This is just a dollar share of the growth is proportionally a little bit bigger so.
That keeps going on and that means up b, we need more capacity in the U S. Because I see we have the fundamentals in play now behalf capacity, but this will go on we really need to investing in the UK.
Our country to give a number on it but it has been I think the last two or three years has been quite.
Quite dramatic because.
That's been a complete shift in certain segments and when you can move in the segment high rises semi high rises school et cetera.
Then of course, we see quite a few times so business.
So that's going on and I think there is still.
The refurb projects quite a few of them, but we are the only products. So this is not either normal market just something that's happening snob, because youre fixing past mistakes is very hard to say in the market what how much we are growing but I wouldn't expect that to end that your cable to be any dip.
To all of our other markets, maybe 40 or 50% of the market would be stonewall and be able to get there, but no sudden transition into that state.
So slight gain subtle to call it but not super dramatic.
Thank you.
The next question comes from the line of ease Brohm had with Societe Generale. Please go ahead.
Hi, good morning, everyone and thanks for taking my question.
Just the first one.
Sorry, but I did not understand what you said in the U S. You talked about five weeks of what was it maintenance Capex, where you were down for five weeks is that what you said yeah. Good morning. It no nobody had when that all to worker strike started in Detroit.
We had the factory one of our factories.
No doubt there.
Similar demand bus made them, we cannot afford it so we had altogether a seven week strike.
And five five weeks of that hit the quarter. So if it wouldn't have been for that.
B, we would've had a double digit growth in the whole rest of one of our segments. So we lost it we couldn't deliver so now now are challenged in North America as such we need to work down delivery times, because we bid lost capacity on that and that trust.
Five weeks production into whole business, if Oswald factory I'm, one of the smaller ones salt.
That's what happened so it wasn't maintenance.
While it was a strike.
Okay, and maybe just going back on the hedging so just so I understand correctly. This year you had.
Only hedges and edge two for about 50%, but in each one you were not hedged in 2023 is that correct.
We had these operator contracts from France, and Norway in your country.
Running from the beginning of the year. So that does on electricity and then in other markets. We didn't hedge on electricity for the first half we only paid for the second half, but on gas we had a hitch approximate yosef 50% running also in an H one.
But we did we did have been you'll have that in the middle of the year for each two.
Okay, and just to confirm for next year on gas.
Okay I understand what you said on the call.
On gas and cooking coal until Q1, not Q2 until Q1 only.
Okay and are you looking to rollout your hedging strategy that you've put in place for almost the first time in 2023 for 2024 or are you.
Hearing being spots for 2024.
We are evaluating that on a regular basis. So we don't have a fixed formula but we simply.
Sit down and take a look at the market dynamics in the energy market and then we decided that almost quarter by quarter what to do.
Okay, and then last one on the.
On cost.
On the cooking coal.
Uh huh.
Obviously his previously this is increasing now but.
Shipping costs are also increasing quite fast that the minutes on uncertain Baltic dry index.
How relevant are those logistic costs in terms of what you buy forward one quarter on on foundry Coke, Dan Dan not significant.
All of our foundry coke suppliers in Europe.
European based and many of them, we have five major sort of suppliers. So they are quite regionally spread out. So some logistic cost is not normally a big issue.
Okay.
But your suppliers important from Australia.
No no they have clavis in Europe okay.
Interesting. Thank you.
The next question comes from the line of cloud honor with Nordea. Please go ahead.
Thank you Yeah also a few question from my side I'll take them one by one.
It keeps sorry about coming back to this energy cost but.
Is it little bit difficult to figure out what is the net effect both for Q4.
Let's say 2024, given what you see at the moment.
Energy costs in Q4 be up or down.
And the same question goes for next year.
That will be the first.
And our any discipline for Q4 will always be unchanged the price David last Q3.
Okay, and then based on sourcing and your.
Youre contracts next year, how does that look like in Q1 with similar be quite similar to Q3.
So.
There hasnt been a lot of it.
Dramatic move in the in the forward buying cost the last few quarters.
But ultimately I'm sorry, Matt if you go much further than just a quarter ahead than the premium starts to become a bit more expensive and that side, we do not.
Dana.
But if you're going to hit.
If you just if you don't hit and just do the spot.
Next year looks to be a flattish year over year.
The way to think about that I do not know I cannot foresee how the entity Continental I'm just telling you that we have only called out Q1, and then we just have to.
Maneuver that quarter by quarter.
Yes, so I mean, if things.
Chase has is to de risk.
Rest of 'twenty four so throughout 'twenty four we will see the same levels as we see today yeah.
There'd be any impact.
Yes.
Because the energy cost has gone down slightly this year. So of course, if it continues at the present level.
These are the beginning of the year, there will be a small benefit.
Okay. Thanks, and then my.
My second question goes to the margins.
You mentioned that you're towards the unions in Canada, you could not afford a price.
Hi Ali.
Right.
But at the same time you are running at the best.
<unk> EBIT margin since 2007.
So it seems like you could afford it.
Slightly higher hourly rate.
And then second last year.
You were discussing with your customers.
When you when you were introducing price hikes.
Important argument was that they could.
We're also facing a lot of headwinds.
But I guess looking at your numbers, that's not the case anymore to more about both on salary, but also on your negotiations with your customers.
How much of the pressure <unk> to pass through some of these margins.
I think that's.
Let's say to use case I mean the ask.
Ask.
From our employees in this factory and in Canada.
I was inspired by the auto workers and that for us.
The massive massive massive number I mean that.
That would have been a big problem for the factory.
So we have made an agreement that increases to salaries over three years.
And.
This desktop we see into your SBC U S, becoming compared to the rest of the world a very expensive place to manufacture, but their cage local for local needs to be translated into pricing so that the.
That happened.
Happen, but the first ask was so big.
We couldnt take it into business in that factory, where there've been erode a bit noncompetitive even.
With an increased price levels. So that most of the case, there and there is a settlement there.
When you look at where those to Abbott to come from.
But the story doesn't say a soft first half of last year.
Screamed are challenged in North America, we started up the factory it cost us a lot of money. We have had ongoing big challenge forget our Mississippi factory up and running into Salt Hasnt performed we have been losing money on it so a lot of the improvements here.
That you see for something in North America is a big big improvement but.
A lot of that just because we had brown the operations better and gotten our arms around production via managed to shift over some business to the new factory that one is running and we're making money in all factories and that's not just a pricing. So dispute that we have better Martinez now is for example that we never been so successful in.
The U S.
And so.
So a M b.
And remember then look at salary increase.
Yes, if we improve the business almost doubled the profitability in the U S. Because we don't lose money in a factory that does something wrong that personal thing to do with the price and the cost here.
Then look at the discussion with customers here.
Different segments are distributors up.
Don't mind, the prices dropped 123% Sunday order of course to end level.
Our house construction company as such.
Our under lot of pressure because of sit between the contract and there is probably also from building much of an impact on demand.
They just need to have a mature dialogue with them and discuss it.
And.
It is the normal discussion Barbie, but that's not what we earn more in the U S impact how reprice in Europe.
However link it then it's not a cost to cost and yes, we have lowered.
A lot of prices that we have to for example, if we got the big order now.
The north fault.
Project in Germany 300000.
Scramble to roof, and 800000 square meters of walls.
That project be gotten there was quite a tough competition to get it and we got it to be get it up to higher price and competition because we have just in time deliveries.
We can execute that well, but you know they are also tough tough pricing discussions, but thats just normal in the business and happens all the time, but.
The inflation is there on the energy price level is still high compared to what the loss of a few years, but the good margin in Q3 is not only because of Europe.
That's very good performance in Asia, and North America.
Yeah.
Okay that makes sense if you just follow.
Follow up on the comment you made earlier on who knows what competitors will do.
Volumes will continue to decline.
Just curious does do you think that you will have a certain number of competitors where volumes are starting to get to a more.
Critical point or level.
So if it continues to decline.
It will really hurt the profitability and efficiency of the factories.
Yes.
Joe will comment yeah, I mean, we the type of declines we have seen in.
In Germany by a 3rd% to 40% down on new building starts on the running out to backlog.
And.
The housing sector.
We are used to always having some competitors.
Mesa project because the smaller you are the less stability because of the law of large numbers your Ida Overfull IMT project can determine.
A lot of our competitors are only active in in the heavy segment, but you also have the life more distribution.
So we do both distribution on projects in our project portion.
It's probably smaller than many of the smaller ones. So we see this all the time, but.
There also.
I think when you look at some of these big projects. We have secured we have got to several projects. This year around 300000 square meters that also matters to you.
That you know do you control the product after our suppliers not after a builder is not credible because they also need to trust that you're going to be there and deliver all of that so.
We see the whole spectra, but this of course, if the market from this level takes another 510% dip next year, the NV get to me into a very serious situation for European construction.
And I just haven't lived through that in in this industry as all of our tap in 2007 2008.
The volume dropped this year have spin same magnitude right and we have managed it but what happens if there is another drop of 10%.
We'll do our best in that situation and let's hope it doesn't happen, but nevertheless, good so I need to kind of.
We need to to navigate that and take it all but our spirit would be in an inflationary environment.
Renaissance. This level you cannot you cannot stay sustainable.
Trying to fight for extreme volumes and solve the problem on the fundamental issue is.
There is inflation still there.
Okay that makes a lot of sense. Thank so much hinson, yes, well done so far and in a very difficult.
Thank you.
The next question comes from the line of <unk> with one field research. Please go ahead.
Yes, good morning.
Question.
Firstly on the on the pricing dynamics in the competition.
When you look at what's happening in 2009 2010.
We saw some pricing pressure.
Did you say the volume decline is coming out today, but pricing is.
Holding.
What has changed is it because there is more consolidation on it because you got to talk about wins coming in.
On your side of that that would be part of the market.
Realization.
Do you need to really focus on pricing that would be.
My first question.
The second question is we hear a lot of your competitor focusing.
On the solution.
Not only is hitting me now.
But selling.
Insulation, but selling installation on the combined.
Accessories integration combined with breast onboard.
Roofing membrane.
And to shift away from the discussion about the commodity and traditionally if you look at the sitting in our system and sort of in the public Amazon with their clients.
Whether you spend on that whether you see <unk> moving into the next five to 10 years could.
Could you add some other accessories.
Complementary products.
And then.
So the question.
Is on the nominal sort of activity. So what we've seen this year is we've seen a big drop in housing.
But nonetheless, it I'm sure you're holding a little bit better but.
Do you feel or is that not only that I'm sure it would be a bit more.
She goes next year. Thanks.
Some of the project.
Well build this year are not renewed.
Okay.
I'll see you remind me of your question I have Dara on the price we have the solution and then you have non residential right.
Yeah Yeah.
Yeah, so on the pricing.
2009, 2010 awesome payer.
I've worked in distribution in other industries.
I.
I cannot say, what we did in this company and when I came here.
That wasn't pricing structures that wasn't.
Reising drumbeat.
Aren't clear rules, the burn clear gaps between the biggest customer on the smaller.
So.
It's from day, one we started to work through and have a structured approach to pricing and we are very very disciplined today and how we do pricing.
And and how often we do have price changes on how the contracts looks to bonus schemes and all the rest so.
I can.
At least say and I don't know what has changed for the other companies spot.
In our company between 2009 2010, there was a belief that you had to choose between.
Price and volume.
That foster charged you a hard and I.
I don't believe in that and I don't believe the.
Stonewall is a commodity I don't believe that I think you can have a high.
Quality product.
And that you can have a premier most of the market data and the other thing compared to 2009 2010 this up.
If you look from 2014 to <unk> trend to trend to the lost semi normal the error fully are now 23, it's not done yet.
We are more or less grown the company from one to two.
$2 2 billion to now 3637 bit more loss yeah.
Vidal added head count we have lift productivity improve competitiveness. So it's not.
All the improvement in margin comes from prizes.
Big effort in cost reduction and productivity improvements and we need to continue that so not only price people.
Some customer sites all the price, but when you look at the productivity, we do have 40 or 50% more per employee today than it did eight nine yes back. So that is a factor that may go into solutions.
And I have in previous businesses Sunesis, many yes, all because I've been here a long time.
But I've been in solutions I've been in Pearl Darts soybean as services. So I've been in software I've been in this different business of Sun.
I I think solutions is so broad that people use in a very sloppy way.
Because no one ever bothers to define it does say solution our solution sounds complicate this will be our own money.
My observation is if you want to do solutions, where you take a system guarantee and you coordinate a lot of things you end up with a performance guarantee for the combination.
And the work to put the different pieces together.
Thank you need to be incredibly skilled to earn money consistently it's one thing to earn money while no two years, but if you look the bigger the projects under <unk> skirt. If you have a system guarantee.
The more the risk that you blow the whole equity in one year or one solution doesn't work. So when it comes to solution Nob, we stay very close to the core of the Stonewall volcano specialized in that that's been our strategy.
But I think solutions can be good thing if you have a collection of products that fit together I'd like to redo our first severe HVAC in Germany have the hangar stick slip spirit, that's fine yeah.
But we win as a company and not be Super keen.
To believe that we can be super good at doing kind of more turnkey or system guarantee projects, where we combine everything and that Red hat, then we'd rather stay very close to have all the small products really productive five but yes. It can fit into the same application.
So that's where I stand on that.
And then on nonresidential.
I think that there are some sectors like in the U S. We see the near shoring a manufacturer in the manufacturing sector, I mean, big boxes to put factories or whatever growing 20%.
<unk> seen some of that in Europe, but I think you're going to see more project delays, if if the recession deep and so it's back to that.
And it may be not fair to put all of that in Germany, but it's more.
Underlying the economic cycle, if Germany goes into a deep recession and they all just followed then I think the non residential.
<unk> segment, we'd be more threat, then because I see more near shoring going on in the U S and I see here in Europe.
Okay.
And I think my question was more about the length of the project usually it takes like 18 months to build a factory.
And Michael family. That's maybe in 2023, you were working on nonresidential projects that were started.
Before.
The jump in interest costs in the clinical section because he is because that we see a big perhaps throw them because there is no new although.
Activity because interest rates are too high in consumption or is that too high and that we could see the bulk of the decline in nonresidential next year.
That's my question.
I R. Mike.
My pessimistic without doing outlook is soft I think maybe the market next year has the potential to get worse, but thats not what I've seen now but you.
You know on a stay on the pessimistic side, but.
In theory, we need to do a deeper analysis of the project, but remember not all of our business is project business. So that's one portion of it so that.
Innovation, where to start a little bit that would quickly override that business. So I cannot comment rather that would be up or down but the potential is there for sure.
We are running out of time right, we have two more vivid.
I understand that some people have to leave but we have two more people with questions. We'd been take those so tried to keep it a bit brief and I tried to be a bit quicker.
Okay.
The next question comes from the line of Casper Blom with Danske Bank. Please go ahead.
Thanks, a lot yeah of course, a lot of questions have been raised already but again I was just hoping if you can give an update to your position on your Russian business.
Two ago, you were you will put on this at this list being called a wall sponsor and I don't want to go into a discussion of whether or not that's right or wrong, but and.
Mainly if you could elaborate a little bit on potential commercial impact that could have had on your business.
I noticed on one of the slides you highlighted Ukraine actually is a good market for you here in Q3 is there a risk of this having a commercial impact on you. Thank you yeah. So so so far we have.
Haven't had the commercial impact on our near there so and if you go back to the Russian situation there have been some examples in Denmark, where.
You know, leaving or staying.
The alternative doesn't really exist of leaving anymore, so, but three have been clear protect the IP.
Keep control of our factories, even as a passive ownership.
And receive our normal dividends, rather than leaving four to five times more behind so that's strategy stays.
Hope you are.
<unk> realized such we are quite convinced that.
We are willing to take quite a lot there Chris criticism.
Doing what we believe is the right thing to do rather than taking a nice a decision and do what we believe is the wrong thing to hand, overall assets and leave more money and our IP and know how in all of the expertise. We have built up you know all of this very good factories in Russia. So we are very committed to.
That then would take it then if you look into that situation I saw now that just today another big building materials company.
It came on the list today.
A list and a lot of places in this one.
And yes, we are growing we are growing and we have a humanitarian effort. There we would like to continue that into a crane.
This list doesn't have a legal implication, but something could happen in <unk>.
So we have asked those questions to that.
And ACP.
<unk> there. So we have asked two questions, but obviously, it's all fresh and we need to see what happens whether we are will be allowed to continue with them in a minute turnaround effort. We have been told that the business can continue but again, we need to check it we haven't seen any signs, but I should say that so far.
We have not.
And an impact and then.
A lot of this discussion has been.
The Danish mall it does spin hand, Denmark, we haven't seen anything outside Denmark, so at the moment.
I don't want to sound Overconfident I also said that.
We do the best of the situation and Thats, where we are but we haven't seen an impact.
And I think the quarter again, maybe underlines.
The business is running quite well.
Okay. Thanks for that update my my second question is just maybe if you could elaborate a little bit on the on the European situation right now we see that market is a tough in northern and eastern Europe in general and better in southern Europe or at least more resilient.
Do you see a risk of the issues in the most rating towards the south.
Yes.
Thank you Johan talked about.
France, Great Britain, Spain, and then if your movies, Romania, Croatia doing quite well.
And then the Nordics and Germany, and then eastward to big.
Eastern European countries to arrest, so I think it comes down to this.
Very negative sentiment with the PMI around 14, Germany, where there are old rule and I don't know if it's true, but you know if you read the economist David say, if Germany stops Europe and stop eventually is is that the case that says as much intelligence I have to that leave.
It out there as a risk.
And you are right Southern Europe Eh.
It's doing better the med just doing better that's what we see it further north you come to our suggests the further east you come.
On average it's getting worse okay.
Okay, Thanks, a lot and gesture.
To repeat cloud well done so far are quite impressive.
Thanks.
Last question next question for today comes from.
Comes from the line of <unk> Huang with Jpmorgan. Please go ahead.
Good morning, and thanks for taking my question just coming back to pricing you mentioned safeguarding market share in our press release.
And in order for you to think about price decreases and then secondly, I appreciate you're more pessimistic view on your next year can you talk a bit more about your early expectations on North America. Please thank you.
Oh, sorry, sorry, I went offline here.
So assignment, we have reduced prices in some segments and we have increased them in all the segments. So it's a whole collection, we have many many applications.
And so it's a mix of things so I would say.
The net you see the total that is.
Being relatively stable, but there are quite a few few segments one of the prices down a bit and there are some sovereign segment up. So it is an active price management across the different application and countries. So for example, if you look at that Big order I mentioned the price level of adapt order is lower.
Net loss if people would have tried to take that.
Two years back, but we have a different situations. So so there has been some of that price system projects in Poland are are down okay. The Dol.
In a flat roof business has lower pricing of the segments not so it's a mix.
And then we go to them.
Sentiments for Europe recovered for the U S and Canada at the moment.
The only.
Everyone have in the U S. At the moment is.
Yeah.
This whole deck story, something happens to hold places crash.
And that's it but we haven't seen any of that we saw the dip that took out and then three and then we have had a very good business. Our challenge now is actually to work back to backlog the deliberate time because due to the strike we are too long delivery times. So we see the opposite so at the moment our outlook.
For next Crs is a single digit growth in North America.
Or something like that and that's the base assumption and we don't see anything apart from some macro story come in again in and change it overnight and that could happen, but it's not in our plan.
Okay.
Okay. Thank you okay. Thank you Simon.
Ladies and gentlemen, this concludes the Q&A session.
Back to the host for any closing comments.
Thank you very much and thank you very much for everybody for for the very good and interesting questions. I know that a few of you who are still on the question is of course, you're welcome to give me a call afterwards.
And with this we close the session for today and Alicia at present date.
Yeah.