Q3 2023 Rockwool AS Earnings Call

Okay.

Kim Andersen: Hello to everybody, and welcome to the Rockwool A/S conference call regarding the first nine months of 2023. My name is Kim Andersen. I'm the CFO of Rockwool A/S. Today, I'm pleased to present CEO Jens Birgersson. For the first part of this call, all participants will be in a listen-only mode. As a reminder, this conference call is being recorded. First, Jens Birgersson will go through our presentation and give an update on the results for the first nine months and Q3 of 2023. Afterwards, we'll be ready to answer all your questions. Before I hand over the word to Jens Birgersson, I must ask you to notice slide number 2, which is the forward-looking statement. Please be aware that this presentation contains uncertainties. Now we can go to slide 3, which is the next slide.

Speaker 1: Hello to everybody and welcome to the Oracle AS conference call regarding the first nine months of 2023. My name is Kimi Vanerssen. I'm the CFO of Oracle AS. Today I'm pleased to present CEO Inns Bewers.

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 and speak with them.

Speaker 1: For the first part of this call, all participants will be in a listen-only mode. As a reminder, this conference is being recorded.

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, the interviewers 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...

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 Ian Spewerson, I must ask you to notice slide number 2, which is the forward-looking statement. Please beware that this presentation contains uncertainties. Now we can go to slide 3, which is...

Before I hand over the word to each viewers and I must ask you to notice site and number two which is the forward looking statement. Please be aware that this presentation contains uncertainties now we can go to slide three which.

Kim Andersen: Jens Birgersson, I will now hand over the word to you.

Is the next infusion I will now hand over to you. Thank you Kim Thank you Kim.

Jens Birgersson: Thank you, Kim. Let's skip the year-to-date slide and move to slide four and focus on the quarter. Good morning, everyone. Looking at this quarter, we had quite challenging market conditions, especially in Europe, in particular a few big markets. The quarter came in quite well. If you start with the top line, EUR 903 million, down 4%. That slight reduction of the top line versus last year, which of course wasn't a super difficult comparable, but nevertheless, it also includes a 5-week strike that we had. We had a longer strike, but 5 weeks of it was in Q3. That has also impacted some of our sales in North America. I'm quite happy with the top line.

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 quite a challenging market conditions.

And especially in Europe, a particular.

Particular few few big markets.

But the quarter came in quite treads.

Start with the top line.

Speaker 2: 903 million, down 4%.

903 million down 4% and.

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.

Super difficult comparable but.

Nevertheless, it's also includes a five week strike that we had in the <unk>.

The longest strike, but five weeks. So it was in Q3 that.

Tussle also impacted some of RSA its in North America, So I'm quite happy with the top line on compared to the gap to the previous year Q2 and Q3.

Jens Birgersson: Compared to the gap to the previous year, Q2 and Q3, certainly it was more leveled and not so dramatically down. Moving down to the EBIT. Last year we had the energy crisis and the extreme high energy prices, and also slowdown in the business, and that together put us down in single-digit margin. It's good to see that we have doubled the EBIT this year, and we have re-established a healthy Q3 margin. Going down to free cash flow. Here, the highlight is that 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.

Speaker 2: Certainly it was more levelled and not so dramatically down.

Secondly, it draws more level than 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.

And indeed 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 slow down into business summed up together puts us down very single digit margin and it's good to see that we have.

<unk> built a bit to CRM behalf reestablish a help to.

The Q3 margin.

Going down to free cash flow.

Here the highlight is.

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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.

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.

Jens Birgersson: At the same time, we have drawn down inventory. So I'm happy to see that the cash flow and the net working capital has come out as fine as it did in the quarter. Let's move to slide 6. From a growth perspective, we don't need to say much about this slide. Roughly 4% decline in both the system business and installation business. Slightly lower growth in systems, and that is primarily due to the Grodan business had 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 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 and the networking capital has come out as fine as it did.

Speaker 2: and the Networking Capital has come out as fine as it did in the quarter. Let's move to slide...

In the quarter.

Let's move to slide.

Six.

From a from a growth perspective, we don't need to say much about this slide roughly 4% decline in both system.

Speaker 2: From a growth perspective, we don't need to say much about this slide, roughly 4% decline in both system business and installation business.

The system business and installation business.

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.

Slightly grow lower growth in systems.

And that is primarily due to that to grow the business have been delayed or decide to this ERP we haven't.

A big order intake and deliver big deliveries to be down in Q4, and Thats a little bit later than normal apart from that both businesses have grown bid are roughly the same rate.

Jens Birgersson: Slide seven, the regional sales development, starting with Western Europe, down 9%. If we start with the highlights, because not everything was down. Spain and UK, double-digit up, so quite healthy business, have recovered well. France, flattish, a little bit positive. We have a lot of markets in Western Europe that are down quite a lot. Starting in the Nordics, Denmark, Sweden, Finland, Norway too, a little bit better, but big declines. You see a massive drop in building permits and housing starts. Moving south, Germany down some 30, 40% on building starts and permits. If we go east into Poland, that's also quite negative. Germany, the Nordics, and the other countries, a little bit up and down.

Speaker 2: Slide seven, the regional sales development, starting with Western Europe , down to the

Slide seven the regional sales development start to readdress breast in Europe.

Down 9%.

Speaker 2: Here, if we start with the highlights, because not everything was down. Spain.

Here you go.

If you start with the highlights because not everything will stone.

Pain.

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,

And U K are double digit op, so quite healthy business hybrid copper drill.

<unk> flattish.

A little bit positive and then we have a lot of markets.

Rest of Europe are down quite a lot so starting in the Nordics Denmark.

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 nor are our two a little bit better about big declines you see a massive drop in building.

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, Donaldson's, 3rd% to 40% on building starts some permits.

Then if we go east into Poland, That's also quite quite negative.

So, Germany, the Nordics and the other countries that had been top and Dol and.

Speaker 2: Germany, the Nordics, and the other countries a little bit up and down.

Jens Birgersson: There are also some highlights in Eastern Europe, scattered. In aggregate, if you look at Eastern Europe, some markets are down quite a lot, like Poland, while on average, it works out to flattish business. You could say the steep decline on average has stopped a little bit, but it's very scattered. Croatia growing, Romania has recovered, Hungary has stopped to shrink so fast. Very scattered picture. Moving on to North America and Asia, there I would say there are a lot of positive signs. China stable declining, but looking into, say, Thailand, Malaysia, India, good solid growth. North America, Canada, and the US both growing.

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 to peers look 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.

While on the Irish and 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 and Croatia growing Romania has recovered Hungary has stopped to shrink so fast so.

Various got the picture.

Moving on to North America and Asia.

Speaker 2: That would set a lot of positive signs. China's stable declining, but looking into, say, 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 in it.

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 altogether would have been double-digits, so the business is...

Jens Birgersson: It should be said that if we wouldn't have had the strike in Canada in one of our factories, North America and Asia altogether would have been double digits, so. The business is back and is looking quite good going forward also. Some of the strike will impact Q4 too. It's over now, but it will have a limited impact on Q4. We move on to slide eight. 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.

It should be said that.

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 will 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 reached...

When we look at that big improvement.

The doubling of the a bit on the big improvement of Abu Dhabi, we need to remember that this is an easy comparable.

Across Q3 of us really about quarter last year with the energy crisis.

Jens Birgersson: That said, the margin we have achieved now is quite healthy, and it's actually among our highest margin we have had if we look historically. It's not the highest margin, but it's a high margin. How could we achieve that in a market that is shrinking still? A couple of aspects. First of all, we have not done any stupid energy hedges, and the 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. Energy impact, we still see an underlying inflation. On the prices, we have outside Europe, we have continued to raise prices.

That said the margin rehab Ritchie achieved though is is quite healthy and especially among our highest margin hot if you look historically, it's not the highest margin, but to say, it's a high margin and.

Speaker 2: is 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 it's a high margin and

Speaker 2: How could we achieve that in a market that's a shrink instead?

How could we achieved 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 favourable than before.

A couple of aspects first of all we have not done.

And as stupid entity had yes under any of the prices are down. We have also made a couple of do you just saw in electricity in France, Norway, Spain, Romania, maybe I kind of got to an energy data sets are much more favorable done before.

Yeah.

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.

So any impact we still see an underlying inflation done on the prices rehab outs.

Outside Europe.

We have continued to raise prices and in Europe, we have basically violence prices with market share and cost position and.

Jens Birgersson: In Europe, we have basically balanced prices with market share and cost position and do manage to kind of keep them relatively stable. There are segments where we have lowered prices in certain market, but there are also segments where prices have been maintained or slightly increased. Depends a little bit what you compare with average last year or year end, et cetera. It has a lot of dynamics. We have really worked a lot on price and volume and engaging with our customers. You can also see if you go into the P&L that the cost control is not perfect.

Speaker 2: prices with market share and cost position and

Speaker 2: 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, etc. It has a lot of dynamics, but we really, really work a lot on price and volume and engaging with our customers.

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 process have been maintained or slightly increased dependents sit a little bit what you're comparing average last year or year round et cetera has a lot of dynamics there.

Really really worked a lot on.

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.

Yeah.

Speaker 2: The cost control is not perfect, we have not gone...

Cost control is not perfect.

Jens Birgersson: We have not gone super dramatic in terms of cost reduction in relation to the volume reduction, but we have been on top of costs, and a lot of the capacity reductions we have reduced almost 800 jobs, and it's not all permanent employees, but almost 800 jobs that we did in the manufacturing last autumn. We acted early, and we have the flexibility in the system. That has been done, that has helped. We have generally been quite restrictive on costs, and we haven't gone extreme. We haven't 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.

We have not gone super dramatic in terms of cost reduction in relation to the volume reduction, but we had been.

Speaker 2: super dramatic in terms of cost reduction in relation to the volume reduction, but we have been

Speaker 2: on top of costs, and a lot of the capacity reductions we have reduced almost.

Yeah 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 employees, 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 but then we have.

Speaker 2: generally been quite restrictive on cost and we haven't gone extreme, we haven't 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 havent 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 up.

Off the dock.

Jens Birgersson: 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, investments. We did invest in the quarter EUR 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. And some of the impact why that CapEx is not higher is that we haven't really started the French project. If you would have had the French project, that number should have been a little bit bigger, but still maintained.

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.

It's a bit of paper.

The business segment.

Nothing really different there both the systems and installation has recovered compared to last year and 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 is a new paint line for a rock panel business. That's in the landscape we are commissioning that now.

Speaker 2: And some of the impact why that capex is not higher is that we haven't really started the...

And some of the impact why that Capex is not higher so if you haven't read it started 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: French projects. 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

Jens Birgersson: We haven't taken 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. Of course, there could be some capacity expansions now in Europe that we can delay a little bit. That said, the factory in France that has been delayed due to delayed approvals, slide 11, we have had some good progress on that. We have now had a court order that lifted the suspension on the work, the building permit. We still wait for a final ruling. We have an okay to start building, but it's on our own risk. We will wait until Q1 when we have the final ruling.

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 green Capex Sunday capacity expansion on the maintenance capex on a sensible level, but of course, there could be some capacity expansions in Europe that we can do like a little bit that said the factory in France, the tough spin.

Speaker 2: The factory in France that has been delayed due to delayed approvals, slide 11, we have had some good progress on that.

The delay due to delayed approvals slide 11 slide 11.

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, and we still

We have had a court order that lifted the suspension on the work the building permit.

And we still 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 may have to final ruling, but we have stopped us on lighter construction worker side, putting up a fence I'm just doing the basic.

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

Jens Birgersson: 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 will be executed in Q1. There is a challenge with the French legal system that deadlines are not so clear and not so defined, response times are not so defined. Anyhow, when you have this suspension, this temporary suspension that you can 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 the color of the buildings, the height of one building that is still lower than the highest building, and also counting the number of trees on the site.

<unk>.

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 pure one there is a challenge with the French legal system that deadlines are not so clear or not so defined response times. So not so defined but anyhow. When you have this suspension. This temporary suspension that you can't start day that they're normally only give that trend.

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...

I feel very very sure that a final ruling would be the same.

And.

When we look at the type of issues that are left now or.

Small things like the color of the buildings the height of one building and got to stay lower than the highest building.

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

And also that.

Counted the number of trees on the site and we have enough trees, but.

Jens Birgersson: We have enough trees, but there were some errors in the drawing. Smaller things, we are optimistic that should be sorted out now during Q1, so we really can start. If we move to slide 12, the cash flow, you see, almost a tripling of the cash flow. If you look at that EUR 120 million improvement, that is there, basically EUR 80 million of that comes from improved profits, improved earnings, and the rest come from working capital reduction, and almost all of it is from lower inventories. I'm happy about that because when we drew down capacity, we have been very quick at making sure that we don't sit on too much stock.

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 kind of stock.

If we move to slide 12.

In.

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 220 million improvement that to sell basically $80 million of that comes from improved profits improve the earnings and the rest come from birth networking capital reduction and almost all of it is.

From a longer inbound tourists, so I'm happy about that because when we 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.

Jens Birgersson: That's the way we like to do it when we reduce output. Going on to slide 14 and outlook, we have changed that a little bit now. The sales for the full year, we have two months plus to December. I want to remind you that December is a wetter month, and it's also a month we don't know if it's gonna snow or not. We have done a median forecast compared to previous Decembers, in our outlook. If you look at that year-to-date, sales is lower than this number. You also see that we actually forecast that we're gonna grow in Q4, which is a good news. On the EBIT, we have now guided at 14%.

Stock. So that's that's the way we like to do it when we reduce output.

Speaker 2: Going on to slide 14 and outlook.

Going on to slide 14 on 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 out a little bit now the sales are.

For the full year, maybe up two months plus to December.

I want to remind you that December is.

Speaker 2: a wetter month and it's also a month we don't know if it's going to snow or not so we are very we have done a medium forecast compared to previous Decembers in our outlook but if you look at that year-to-date sales is

A random month on this also amounts 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 good news. On the EBIT, we have now guided at $4.2 billion.

The lower 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.

On the a bit.

Rehab now.

Guided at 14%.

Jens Birgersson: I would like to say that guidance with the assumptions we have is that our best guess at the moment is, or our forecast is, that we're gonna hit 14%. There are risks. We are at year-to-date 14.3%, but we have the December and this quarter plus Q4 normally is a lower profit month than Q3. That is very high season. With the December and two good months before that, we should land on 14%. What could make it bigger than 14% and what could make it smaller than 14%? Basically, it's the normal ± heavy snowfall that would shut down building sites in December, in late December.

Speaker 2: I would like to say that that guidance, with the assumptions we have, is that we...

I would like to say that that guidance with the assumptions. We have is a tree 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 today, 14.3%, but we have the December in this quarter, plus 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 there are risks we are a tier today, a 14, 3%, but we have to December in this quarter plus up Q4 normally is a 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 in the low <unk>.

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

Jens Birgersson: The other risky aspect we always see when we have this, in a slow market environment, there could be countries that completely shut down construction for two or three or even four weeks in December. 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. Those factors will then determine whether we are a little bit above 14, spot on 14 or a little bit below. The forecast is 14. I almost call this a forecast now. The investment, no, I've no comment to that. With that, I would like to hand over to questions.

<unk> D alder.

No.

Risk aspect, we all received 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, spot on 14, or a little bit below.

Or even four weeks into sandbox and depending.

If that happens we have seen it back in 2014 in Germany are you always use such example, and then everything comes to a stop but so that those factors with undetermined rather be a little bit about 14 spot on 14 or 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.

Yeah.

Operator: 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 one on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Brijesh Siya with HSBC. Please go ahead.

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.

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. Question is on the phone or request to use only headsets while asking a question.

You May press Star two.

<unk> on the phone a request to use on the handsets by 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 Ida for me, Jeff <unk> with HSBC. Please go ahead.

Brijesh Siya: Hi, gents. Good morning. I have two questions. The first one is on volume. Just, it's two parts. The first is a little clarification. You talked about volume being sequentially up in the last two quarters and Q3 has been the highest. When I see the absolute revenue, it's down versus Q2. Can you just explain whether it's the what you call mix impact? The second one or the supplement to it, that when you say that the volumes are kind of, in your raw statement, you talk about Europe remains weak. Should we assume or think that at this point in time it looks like overall demand in Europe will be down next year? The second question is on pricing.

Speaker 4: Hi Jens, good morning. I have two questions. The first one is on volume.

Hi, good morning, I have two questions.

The first one is on volume.

Speaker 4: It's two parts. The first is a little clarification. You talked about volume being sequentially up in the last two quarters and Q3 being the highest. But when I see the absolute revenue, it's down.

Okay.

It's two parts.

Defecation.

You talked about Portland.

Anthony.

Last two quarters in Q T. The highest.

See the absolute.

It's down versus Q, Ken just explain if related to that.

Speaker 4: can just explain whether it's what you call mixed impact. And the second one, or the supplement to it, that when you say that the volumes are kind of, in your raw statement, you talk about Europe remains weak. So should we assume or think that at this point in time, it looks like overall demand in Europe will be down next year? Then the second question is on pricing.

If I could call it makes them back and the second one.

Thank you Julie.

You said that the volumes 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.

Second question is on pricing.

Brijesh Siya: You said that the underlying inflation is still there. What's the kind of magnitude of inflation you are seeing at this point in time? In relation to that, whether you have announced any price increases starting 1 January 2024. Thank you.

Speaker 4: You said that the underlying inflation is still there, so what's the kind of magnitude of inflation you are seeing at this point in time, and in relation to that, whether you have announced any price increases starting 1st of January 2024?

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.

In the late to that Okay. There you have been announcing price increases starting first of April.

Paul.

Jens Birgersson: What was that last bit, Brijesh, after inflation?

Speaker 2: What was that last bit, Priyesh, after inflation?

Thank you, but what was that last bit pretty yes after inflation.

Brijesh Siya: Was asking whether you have announced any price increases starting 1 January.

I was asking whether you have you announced any price increases starting first of January.

Speaker 4: I was asking whether you have announced any price increases starting 1st of January .

Jens Birgersson: Okay. So let's start with the inflation question. We basically see the main driver for inflation is the core inflation is still there. I think we have. There is still an inflation in all our geographies, although energy prices are down, but on a high level. What I expect we will see during the spring is the salary inflation as the main one, because you still have this real wage gap that has happened in North America and US. Part of the reason why we had that strike in one of our factories in the US was that the auto workers went for a very big ask.

Speaker 2: Okay, so let's start with the inflation question. So we basically see the main driver for inflation is, the core inflation is still there.

Okay.

So let's start.

Reed.

With the inflation question sorry.

Basically see the main driver for inflation as the core inflation is still there.

Speaker 2: and I think we have, and there is still an inflation in all our geographies, although energy prices are down but on a high level. But what I expect we will see during the spring is the salary, the salary inflation as the main one, because you still have this rich, real

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.

Speaker 2: wage gap that has happened in North America and US and part of the reason why we had that

Rage gap that has happened.

In North America, and U S and part of the reason why we have that strike in one of our factories in the U S. While sought thereafter workers rent for a very big ask and ran the one of our factories saw that they went for the same almost the same big ask rich.

Speaker 2: strike in one of our factories in the US was that the autoworkers went for a very big ask and when one of our factories saw that, they went for the same, almost the same big ask which we simply cannot afford in the business. So it took a while to...

Jens Birgersson: When one of our factories saw that, they went for almost the same big ask, which we simply cannot afford in the business. It took a while to agree on a level that we could live with in the business. I think the inflation will still be there, and I don't think it will come away, although you see maybe slightly lower in the beginning of the year in Europe, and then it will catch speed when the salaries start to kick in March, April, May, whatever the cycle is in the companies. On the volume, I'm not sure now if you look at nominal numbers or whether you look at the budget numbers, because we are down 4%. We are a little bit more down in volume.

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 right there and I don't think of it come away, although you'll see maybe a slightly lower than the end.

Speaker 2: to agree on the level that we could live within the business side i think inflation will still be there and i don't think it will come away although you see it may be slightly lower

Speaker 2: in the beginning of the year in Europe , and then it will catch speed when the salaries start to kick in in March, April , May, whatever the cycle is in the companies. Then on the volume, I'm not sure now if you look at nominal numbers or whether you look at the budget numbers, because we are down 4%.

The beginning of the year Europe, and then a big catch speed when the salaries start to kick in in March April may whatever decide conveys the company's dental than on the volume I'm not sure. If you look at nominal numbers, whether you looked at the budget numbers, because we are down 4%.

Speaker 2: be a little bit more down in volume, but actually the volumes are stabilizing on roughly similar levels between the quarters. So that's what we see, but then of course we

Little bit more down in volume, but I should add the volumes are stabilizing on roughly similar levels between the quarters.

Jens Birgersson: Actually, the volumes are stabilizing on roughly similar levels between the quarters. That's what we see. Then, of course, we have this, when Grodan jumps into Q4, they are all different volumes per revenue. On average in the business, you can see that we have had two relatively stable quarters with improved volumes and slight growth in Europe in several markets. Volumes are improving. Of course, in North America and Asia, it's a trend. It doesn't look to be interrupted. Here in Europe, I think it's too early to conclude. I'd still think at this stage, that's my assumption, but again, we're gonna get to February before we're gonna guide for next year.

So that's what we see but then of course, we have this.

Speaker 2: When Grodon jumps into Q4, they are all different volumes per revenue, but on average in the business, you can see that we have had two relatively stable quarters.

When then grow a don jumps into Q4, they are all different volumes for revenue but on.

On average and debased since you can see that we have had two relatively stable quarter bid.

Speaker 2: improved volumes and a slight

Improved volumes and slight growth in <unk> and <unk>.

Speaker 2: growth in Europe in several markets, so volumes are improving, and of course in North American Asia it's a trend, it doesn't look to be interrupted, but here in Europe .

In Europe, and several markets saw volumes are improving.

But I, it's not of course, and then in North America and Asia. It's it's.

It is a trend it doesn't look to be interrupted but here in Europe I think it's too early to conclude I'd.

Speaker 2: I think it's too early to conclude. I still think at this stage, that's my assumption, but again, we're going to get to February before we're going to guide for next year. With what's going on in Germany, I still believe.

I still think.

This stage, thus my assumption, but again, we're going to get to February before we're going to guide for next year.

Jens Birgersson: With what's going on in Germany, I still believe there are more factors that speak for Europe worsening than improving. We could see a volume drop into next year. I'm just saying that as one pessimistic scenario, because I have no proof that we have turned a quarter, although volumes in the last two months are a little bit promising. Okay?

What's going on in Germany, I still believe.

There is.

Speaker 2: more factors as speaks for Europe worsening than improving. So we could see a volume drop into next year. But I'm just saying that as one pessimistic scenario, because I have no proof that we have turned a quarter, although volumes in the last two months are a little bit promising.

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 have no proof that we have turned the quarter, although volumes in the last two months.

<unk> are a little bit promising okay.

Okay.

Brijesh Siya: Just on the pricing, could you clarify whether you have announced any price increases?

Speaker 2: Just on the pricing, would you clarify that, whether you have announced any price increases? We have done price increases, announced price increases in several markets where we have growth.

Just on the pricing.

Clarify that we haven't announced it.

Jens Birgersson: We have announced price increases in several markets where we have growth. Generally we haven't gone out with, you know, there are some countries in Europe where we have announced small price increases, but generally we haven't done that yet. Obviously in North America, Canada, Asia, you have a different dynamic. Not much announced yet, but for sure there are several businesses that have announced, but not so much in Europe.

We.

We have done a price.

Price increases announced price increases in several markets, where we have growth.

Speaker 2: So, but then generally we haven't gone out with, you know, there are some countries in Europe where we have announced more price increases, but generally we haven't.

So, but then generally we havent gone out bid.

There are some countries in Europe, but we are in a small price increases, but generally we haven't.

Speaker 2: done that yet. And then obviously in North America, Canada, Asia, you have a different dynamic. So not much announced yet, but for sure there are several businesses that have announced, but not so much in Europe .

Done that yet and then obviously in North America, Canada Asia, 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.

Brijesh Siya: Okay. Thank you.

Okay. Thank you.

Jens Birgersson: Yeah, I should say that UK has, for example, announced price increases to give one example where we've done it.

Speaker 2: Yeah, I should say that UK has, for example, announced price increases, to give one example.

I should say.

U K House for example announced price increases to give one example, but we've done it.

Operator: The next question comes from the line of Kristian Tornøe Johansen with SEB. Please go ahead.

Speaker 3: The next question comes from the line of Christian Turner with SEB, please go ahead.

The next question comes from the line of Christian <unk> with Seb. Please go ahead.

Kristian Tornøe Johansen: Yes, thank you. A couple of questions for me. I will do them one by one. Firstly, to your guidance, the implicit Q4 guidance. If I take the growth range, the decline of 45%, and then I apply the same gross margin and fixed cost level in Q4 estimates as you just recorded for Q3, I get to a significantly higher EBIT margin than the 14% you're guiding for. Is it correctly assumed that you are including a lower gross margin and/or a higher fixed cost base in your Q4 estimates? And in that case, why?

Speaker 5: Yes, thank you. A couple of questions for me. I will do them one by one. So firstly, to your guidance, sort of the implicit Q4 guidance.

Yes. Thank you a couple of questions for me.

Do them one by one so christi to you guys.

Got it.

Q4 guidance.

Speaker 5: So if I take the growth range, the decline of 45%, and then I apply the same Gross Margin Fixed Cost Level in Q4 estimates as we just recorded for Q3.

Take the growth rates the decline of close to 5% and then.

I am proud of the same question.

In Q4, we estimate that we just recorded full Q3.

Speaker 5: I get to a significantly higher EBIT margin than the 14% you're guiding for. So is it correctly assumed that you are including a lower gross margin and or a higher fixed cost base in your Q4 estimates in that case, why?

Get to a significantly higher EBIT margin than the.

The 40% Youre guiding for.

Sure.

Currently assume that you are.

Including a lower gross margin.

Fixed cost base and your choice to make.

Jens Birgersson: Kristian, your logic is perfect for October and November, and then December is a month, you know, where we see everything between a breakeven and up, and that happens every year. Your logic as such holds for two months, and then we have December, which is just a total different month in our business.

Hence why.

Speaker 2: Christian, your logic is perfect for October and November , and then December is a month, you know, where we see everything between a break even and up, and that happens every year. So your logic as such holds for two months, and then we have December , which is just a total different month in our business.

Christian your your logic is perfect for October and November and then December is.

It's a mall months youre not BBC everything in between a breakeven or not but that happens every year. So your logic is such holds for two months and then we have discern beverages, just a total different month in our business.

Yes.

Kristian Tornøe Johansen: When you say totally different, it means potentially much lower gross margin in December.

Speaker 2: And when you say totally different, it means potentially much lower cross-margin in December . Yeah, yeah, yeah. We can sit with some years with two weeks without production, you know, so when you stop the business, because we will not, depending on our inventory outlook, you know, making inventory doesn't really...

And when you say totally differently it means potentially much lower gross margin.

Jens Birgersson: Yeah. We can sit with some years with two weeks without production, you know. When you stop the business depending on our inventory outlook, you know, making inventory doesn't really help us that much, but it makes a difference whether we shut down the factories because we feel we have the seasonal stock or whether we run it. That decision, you know, we always need to navigate that. Some years you can have the market go down, so we could shut two weeks, but we still run because we want to run up some stock. This is just highly erratic, and we need to really look at it and make the decisions in December when we see the weather, the market, the outlook, and all the rest.

Yes, yes, yes.

You 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 youre, not making event or it doesn't really.

Speaker 2: help us that much. But it makes a difference whether we shut down the factories because we feel we have the seasonal stock or whether we run it. And that decision...

Help us that much but it makes a difference ready to be shut down the factories, because we feel we have to see some no stock or whether it be around that and that decision.

Speaker 2: You know, we always need to navigate that. Some years you can have the market go down, so we could shut two weeks, but we still run because we want to run up some stock. And this is just highly erratic and we need to really look at it and make the decisions in December when we see the weather and the market and the outlook and all the rest.

We all just need to navigate that some yes, you can have the market go down so the crudes.

Two two weeks, but we still run because we run that run 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 the rather than the market a doctor can all the rest.

Kristian Tornøe Johansen: Understood. Just specifically on the UK, so you're sort of highlighting double-digit growth, looking at the overall construction market. That's certainly not increasing by double digits. Quite on the contrary. Can you just elaborate a bit on your success in the UK and how sustainable?

Okay.

Speaker 5: Understood. And then just specifically on the UK, so you were sort of highlighting WTG growth, looking at the overall construction market, that's certainly not increasing by WTG, quite on the contrary. So can you just elaborate a bit on your success in the UK and how sustainable? Yeah, I...

Mr.

And then just specifically on the U K So U.

You sort of highlighted double digit growth looking at the overall construction market.

Increasing quite on.

On the contrary so can you just elaborate yes.

UK and help sustain.

Jens Birgersson: Yeah. I think we were a bit taken by surprise. We drew down capacity in the UK, and then when the market jumped back up because the UK is not as bad in general as Germany and Poland and some other markets. When we realized that the market was coming back or stabilizing much quicker than the others, we had a bit of a backlog, so we needed to ramp up the shifts, and that took us some time. That left a bit of backlog on the sales. We had to work back and bring down the delivery times, and we are not quite through that yet. That has meant we have, you know, basically as much as we produce we could sell.

I am.

Speaker 2: I think we were a bit taken by surprise. We drew down capacity in the UK and then...

I think.

It would be very bit taken by surprise.

Drew down.

Capacity in the U K and then.

Speaker 2: when then 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 realized that the market was coming back or stabilizing much quicker than the others, we had a bit of a backlog, so we needed to ramp up the shifts.

Brand in the market jumped back up because the U K, it's 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 shape.

Yes.

Speaker 2: And that took us some time, so that left a bit of backlog on the sales. We had to work, work back and bring down the delivery times. And we are not quite through that yet. So that has meant we have, you know, basically as much as we produce, we could sell. But generally in the UK.

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 has meant we have you know basically to as much as we produce we could sell but generally in the U K.

Jens Birgersson: Generally in the UK, I mean, UK is a big market, and now there are certain segments where people clearly want a non-combustible product. There are these replacement projects, there's the high buildings, hospitals, and the school, where we see non-combustible being the way to go. Also in some segments where people say, "Better safe than sorry." I mean, the price difference is small to use another material. We see a shift in sentiment that has really happened and seem now to be more ingrained. I would say Stonewall has gained in appreciation versus certain other products, than the combustible ones in some segments. As I see it now looks to be permanent.

Speaker 2: I mean UK is a big market and now there are certain segments where people clearly want a non-combustible product.

I mean U K is a big market now there are certain segments, but people clearly want a non combustible product.

Speaker 2: There are these replacement projects, there's the high buildings, hospitals, the school, but we see.

This replacement projects the high building as hospitals schools, but we see now.

Speaker 2: non-combustible being the way to go. And also in some segments where people say better safe than sorry, I mean the price difference is small to use another material, so we see a shift.

Non combustible 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.

<unk> and <unk>.

Speaker 2: sentiment that has really happened and seem now to be more ingrained. So I will say...

Sentiment that has really happened I seem now to be more in Grand 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 now looks to be permanent.

Speaker 2: Stonewall has gained in appreciation versus certain other products, the combustible ones in some segments, and as I see it, it now looks to be permanent.

Kristian Tornøe Johansen: Okay. Quite interesting. Then my last question, you haven't really talked about renovation. Just your thoughts on demand within the renovation segment and whether you are any more optimistic or pessimistic for that outlook into 2024 compared to a few months ago?

Speaker 2: Okay, interesting. And then my last question, you haven't really talked about renovation. So just your thoughts on demand within the renovation segment and whether you are any more optimistic or optimistic for that outlook into 2024 compared to a few months ago? Yeah, we look at this energy performance building directive that we believe is not...

Okay.

Quite interesting.

And then my last question you haven't really talked about renovation.

Demand within the renovation.

Any more optimistic or paid in Mexico that also going to 24 months ago. We look at this or any of the performance building directive that.

Jens Birgersson: Yeah, we look at this Energy Performance of Buildings Directive that we believe is now watered down without largely the compulsory elements. Some of them have now been handed over, and you are empowering the local countries instead, which means it's not the same thing. I think in the new year, we will see what really comes out of that. What I see across Europe, I mean, I read somewhere that the EU is missing the CO2 reduction goal by 2030 with 50%. Instead of reducing, it's increasing. Maybe I'm too pessimistic, but what I see with these wars going on and all the geopolitical tension, for me, it pretty much looks that there are very few politicians at the moment that worry about this.

We believe it's not watered down without.

Speaker 2: largely the compulsory elements, some of them have not been handed over.

Largely the compulsory element some of them have not been handed over in Europe.

Speaker 2: you are empowering the local countries instead, which means it's not the same thing. So I think in the new year, we will see what really comes out of that. But what I see across Europe , I mean, I read somewhere that the EU is missing the CO2 reduction goal.

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>.

Speaker 2: by 2030 with what, 50%? So instead of reducing, it's increasing. So what I and maybe I'm too pessimistic, but what I see with this wars going on and all the geopolitical tension, for me, pretty much looks at the very few politicians at the moment that worry about this.

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 worry about this and therefore, yes.

Jens Birgersson: Therefore, yes, we see good progress in some countries, but overall it seems that it's moved lower down on the agenda. Now everyone is gearing up to go to COP28 again, and empty words, so nothing will happen. I'm a little bit skeptical about the whole push and conviction from political level to put some serious money into that to make it happen. That said, there are exceptions. We see France starting to move. Germany have a scheme or several schemes, but when we read it, we just maybe conclude it looks a bit complicated. At least if I wanted to renovate my house, I wouldn't know what to do with that. I'm pessimistic.

Speaker 2: and therefore, yes, we see good progress in some countries, but overall it seems that it's moved lower down on the agenda. Now everyone is gearing up to go to COP28 again and

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 pushing.

Speaker 2: empty words so nothing will happen so I'm a little bit skeptical about the whole

Speaker 2: push and conviction from political level to put some serious money into that to make it happen. That said, there are exceptions. We see France starting to move. Germany have a scheme, or several schemes, but when we read it, we just...

Bush and conviction from political level to to to put some serious money into that to make it happen that said there are exceptions receive from starting to move Germany have his scheme or several schemes.

Read it just maybe conclude it looks a bit complicated at least if I wanted to renovate my house I wouldn't know what to do with that so.

Speaker 2: maybe conclude, it looks a bit complicated. At least if I wanted to renovate my house, I wouldn't know what to do with that. So, I'm pessimistic. I think green has slipped. And...

Jens Birgersson: I think green has slipped and that we need to wait a bit more before we see someone really wake up on the green agenda again. That's why I don't believe at the moment we see a broad-based green push on 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, and it can be done, but they need to do something and not just ignore it.

Pessimistic I think green has slipped.

Uh huh.

Speaker 2: and that we need to wait a bit more before we see someone really wake up.

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.

Speaker 2: on the green agenda again. And that's why I don't believe at the moment we see.

Speaker 2: broad-based green push renovation.

A broad base green push renovation.

Speaker 2: That said, if the economy goes even worse...

That said if the economy goes even worse.

Speaker 2: then it would be quite smart by some of those governments to grab hold of it and get it started. Italino showed how it's done, and it can be done, but they need to do something and not just ignore it.

Then it would be quite smart by some of those governments to grab hold of it and get it started it showed how it's done.

It can be done, but they need to do something and not just ignore it.

Okay.

Yeah.

Kristian Tornøe Johansen: Understood. Thank you so much.

Okay understood. Thank you so much.

Jens Birgersson: Thanks.

Yeah.

Operator: The next question comes from the line of George Speak with BNP Paribas. Please go ahead.

Speaker 3: The next question comes from the line of George Speake with BNP Paribas-Xan, please go ahead. Hi, gentlemen.

The next question comes from the line of George speak with BNP Paribas. Please go ahead.

George Speak: Hi, gentlemen. Thanks for taking my questions. I'll just take two. We talked a bit about hedging of gas and electricity, but my understanding is you're still about 50% of your energy exposure is to coke and coal, which has risen sharply since Q2. Could you just give us a bit of an indication on how that's impacting your margins and pricing strategy into Q4 and into 2024? And then my second question was just trying to understand your comments on Eastern Europe. Your opening remarks, you sounded quite cautious or quite bearish on the region. You know, top line growth in local currency has been only -2%. Can you just help us square that up?

Hi, gentlemen, thanks for taking my question.

Speaker 6: I'll just take two. So we talked a bit about hedging of gas and electricity, but my understanding is just still about 50% of your energy exposure is to coke and coal, which has risen sharply in Q2. So could you just, or since Q2, so could you just give us a bit of an indication on how that's impacting your margins and pricing strategy into Q4 and into 2024?

Just take take.

So we talked a bit about hedging.

Got that.

But my understanding is you're still about 50%.

Coking coal, which has been sharply in Q T. So could you just since Q T. So could you just give us a.

A bit of an indication on how that's impacting your margins and pricing strategy into Q4 and into 2024.

Speaker 6: And then my second question was just trying to understand your comments on Eastern Europe , your opening remarks. You sounded quite cautious or quite bearish on the region, but top-line growth in local currency is only minus 2%.

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 our top line growth in local currencies was only minus 2%.

Speaker 6: So can you just help us square that up, what's offsetting the weakness that you talked about in Poland? A bit more colour there would be helpful.

Can you just help us square up what's what's offsetting the weakness that you talked about in Poland.

George Speak: What's offsetting the weakness that you talked about in Poland? A bit more color there would be helpful.

Ill color that would be helpful.

Jens Birgersson: Okay. I'm gonna give the hedging on that to Kim, but I can take the other question first. If you go into Poland and Eastern Europe, I'm just gonna look at my sheet. Basically small countries doing better than big countries in Eastern Europe. That's the pattern we see. Looking into Poland, it's very typical with Poland. When you have a decline, we have seen it several times before. When you have a decline in the market sentiments, it totally stops the workout inventory and all the rest, they are overstocked. I think we are actually already through that. Then we have quarters that jump a little bit up and down.

Speaker 2: OK, I'm going to give the hedging and that to Kim, but I can take the other question first.

Okay.

I'm going to give.

The hedging in that too came but I can take the other.

Question first so.

Tim.

Speaker 2: If you go into Poland and Eastern Europe .

If you go into Poland in Eastern Europe.

My my cheat.

Speaker 2: Basically, small countries doing better than big countries in Eastern Europe , that's the pattern we see, and lurking into...

Basically small countries doing back to the big countries in Eastern Europe.

The pattern we see.

And.

Lurking too.

Speaker 2: Poland, it's very typical with Poland, when you have a decline, first you have a...

Paul.

It's very typical with Poland.

When you have a decline first you have there.

Speaker 2: But at least we have seen it several times before, when you have a decline in the market sentiments, it totally stops the workout inventory and all the rest, they are overstocked.

But at least we have seen it several times before when you have a decline in the market sentiments totally stops the workout inventor and all the rest are they're overstocked.

Speaker 2: I think we are actually already through that and then we have quarters that jump a little bit.

I think we are.

Oh actually already through that and then we have quarters of jump a little bit.

Speaker 2: up up up and down and but now we have seen Poland for a while be down on housing starts and and also in the commercial

Up up and down and but now we have seen Portland for a while beat down on housing starts.

Jens Birgersson: But now we have seen Poland for a while be down on housing starts, and also in the commercial sector. Maybe the commercial sector with the logistics center, the manufacturing and all that, some of those projects have just been delayed. My assumption at the moment is that that will continue for a while. Yes, Romania are back, they insulating again. Hungary are around the zero, up and down, jumping a little bit between quarters. But Poland, to me, it looks like those investments going into Poland are not there at the moment and the building starts are not there. The raw material prices also impact the demand. Therefore, I think for now my assumption is we stay on this lower capacity utilization and wait to see an improvement.

And.

Also in the commercial sector may be.

Speaker 2: The commercial sector with the logistics center, the manufacturing and all that, some of those projects have just been delayed.

The commercial sector, but the logistics center, the manufacturing and all that some of those projects.

I've just been delayed.

Speaker 2: And I, my assumption at the moment is that that would continue for a while. Then, yes, Romania are back, they're insulating again, Hungary are around the zero.

And and I 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.

Speaker 2: 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 and the building starts are not there and the raw material prices also impacted the demand and therefore I I think for now my assumption is we stay on this

Yeah.

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 also impacted demand in FY.

I think for now my assumption is to stay on this lower capacity utilization rate.

Speaker 2: lower capacity utilization and wait to see an improvement.

Jens Birgersson: If that takes one quarter or five quarters, I just cannot tell. The steep decline from the current level though seems to have stopped at the moment, that I should say. Over to Kim on that.

To see an improvement and if that takes.

Speaker 2: one quarter or five quarters, I just cannot.

One quarter or five quarter aside us I just cannot tap.

Speaker 2: The steep decline from the current level, though, seems to have stopped at the moment.

The steep decline from the current level, though seems to have stopped at the moment, but I should say.

Speaker 1: over to Kim on that. Yep, thank you. For the hedging part, as Jens said, this year we have entered into some of these direct operator contracts that has helped us quite a lot in France, Norway, Spain and Romania on electricity. For the other countries we have

Over two came on that yet.

Kim Andersen: Yep. Thank you. For the hedging part, as you said, this year we have entered into some of these direct operator contracts that has helped us quite a lot in France, Norway, Spain, and Romania on electricity. For the other countries we've done more or less 50% hedging for the H2. That includes Q4 for both electricity and gas. There we are covered about half, and then we go to the market for 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.

And thank you for the hedging part is sensitive to.

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.

Speaker 1: done more or less a 50% hedging for the second half of the year, that includes Q4, for both electricity and gas.

<unk> done more or less a 50% and hedging for the second half of the year that includes Q4.

Both electricity and gas.

Speaker 1: So there we are covered about half and then we go to the market for the remaining part.

So we have we had called out about half I didn't go to the market followed the remaining part.

Speaker 1: 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.

On the Coke, which is still our primary energy source.

We have seen during the year small declining cost even though now.

Kim Andersen: These coke prices are typically agreed each quarter, but we have long-term supply agreements in place. These long-term supply agreements, in fact, it was time to renegotiate those here in the H2 of this year. We have renegotiated this, and including those renegotiation, we have already fixed the Q1 cost for coke next year at a lower cost than what we have seen in today's market. For Q1 next year, we have still these long-term, not two or three years long-term contract in France and Norway. We have hedged 50% of the electricity in other countries and 50% of the gas, and now we have a fixed price for our foundry coke for Q1. That's as long as we have gone.

Coke prices are coming up a bit we did do.

Speaker 1: You know, these Coke prices are typically agreed each quarter, but we have long-term supply agreements in place. But these long-term supply agreements, in fact, it was time to renegotiate those here in the second half of this year. And we have renegotiated this, and including those renegotiations, we have already fixed the Q1 cost for Coke next year at a lower cost than what we have seen in today's market. So for Q1 next year, we will have a lower cost than what we have seen in today's market.

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 V. Negotiate those here 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.

Speaker 7: We have...

Speaker 1: still these two or three years long-term contract in France and Norway. We have hedged 50% of the electricity in other countries and 50% of the gas, and now we have a fixed price for our foundry code for Q1. That's as long as we have gone. We haven't decided yet what to do for the remaining part of the year on the general consumption of gas and electricity.

Still these are long.

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 the general.

Kim Andersen: We haven't decided yet what to do for the remaining part of the year on the general consumption of gas and electricity.

Consumption of gasoline <unk>.

Yeah.

George Speak: Great. Thank you.

Alright, thank you.

Operator: The next question comes from the line of Yuri Serov with Redburn Atlantic. Please go ahead.

Speaker 8: The next question comes from the line of Yuri Serov with Redburn Atlantic. Please go ahead.

The next question comes from the line of <unk> with Redburn Atlantic. Please go ahead.

Yuri Serov: Yes, good morning. Two questions, if I may. I'll ask them one by one. The first one is the same that I asked you last time on the conference call at Q2. We are going through a recession year, big volume declines, and you are achieving a margin of 14% now, rather than 13% that you got in last time. Your long-term aspiration, as stated, is 13%. Surely, the results that we're seeing this year suggest that you should adjust it upwards. Don't you think?

Yes, good morning.

Two questions if I may I'll ask them one by one.

Speaker 3: So the first one is the same that I asked you last time on the conference call at Q2.

So the first one is the same that I asked you last time on the conference call at Q2.

<unk>.

We are going through a recession year big volume declines and you are achieving a margin of 14% now.

Speaker 3: We are going through a recession year, big volume declines, and you are achieving a margin of 14% now, rather than 13% that you got in last time. Your long-term aspiration, as stated, is 13%.

Bryan Keane that you got in last time.

Long term aspiration.

13%.

Speaker 9: Surely the results that we're seeing this year suggest that you should adjust it upwards, don't you think?

Currently the results that we're seeing this year suggest that.

Just the top horse.

Thanks.

Jens Birgersson: It's a good question, Yuri. Of course, we would like considering how expensive new factories are to build, it would not be bad to have a higher margin, but it's so many aspects going forward. Whenever we have a massive change in a quarter or in a year, where we need to adjust capacity big up or down or something happening with energy prices, then margins will be impacted because we can't do it in zero time and at zero cost. The other aspect is that what will be important for next year and going forward is that we are on a volume level now where we certainly have reduced our capacity to match our market share.

Yeah.

Speaker 2: It's a good question, Yuri, and of course we would like, considering how expensive new factories are to build.

I am.

Good question Gary.

Dan.

Of course, we would like considering how expensive new factories or to build.

Speaker 2: It would not be bad to have a higher margin, but it's so many aspects going forward and whenever we have a massive change in a quarter or in a year where we need to adjust capacity big up or down or something happening with energy prices.

It will not be bad to have a higher margin, but it's so many asked.

Aspects going forward on whenever we have a massive change in in a quarter or in a gay or a need to adjust capacity big up or down or something happening with energy prices.

Speaker 2: then margins will be impacted because we can't do it in zero time and at zero cost. The other aspect is that what will be important for next year and going forward is that we are on a volume level now where we certainly have reduced our capacity to match our market share. If the volume now continues down, it's always hard to predict what the competitive environment

Dun Dun.

Margins will be impacted because we cant do it in Sierra time and of course, the other aspect is that.

What will be important for next year and going forward is we are in the volume lever novel B.

We certainly have reduced our capacity too.

Match, our market share if the volume not continue down its always hard to predict what.

Jens Birgersson: If the volume now continues down, it's always hard to predict what the competitive environment will be. We need to balance these things. I cannot... I mean, yes, this quarter comes out nice, but we came into it without having to restructure, change capacity, and we have done the price work. It's too early for me to guide and say this is a new level. We have recovered from last year's horror quarter, but we knew why it was a horror quarter. We had all this energy costs. I'm not able at this stage to say what the normal level is. We stick to our old kind of ambition levels, and then, of course, we try to improve on that. We haven't guided or committed to deliver on that level. Second question?

What the competitive environment would be.

Speaker 2: And we need to balance these things. So I cannot.

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 in capacity and we have done the price work. So too early for me to guide and said this is a new level.

Speaker 2: I mean, yes, this quarter comes out nice, but we came into it without having to restructure or change capacity, and we have done the price work.

Speaker 2: too early for me to guide and say this is a new level. We have recovered from last year's horror quarter, but we knew why it was a horror quarter. We had all this energy cost. So I'm not able at this stage to say what the normal level is. We stick to our old kind of ambition levels and then of course we try to improve on that.

We have recovered from last year's horror quarter, but be new VI at Wassa, how our 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.

Speaker 2: but we haven't guided or committed to deliver on that level.

But but we havent guided or committed to deliver on that level.

Yuri Serov: Okay. Well, listen, I suppose I'll come back to this in the future because we're talking about long-term, and long-term this industry is going to be delivering growth, and competitive situation is a question mark, obviously. But, you know, I'm not asking about specifically next year or the year after. It's more-

Second question.

Speaker 2: Well, listen, I suppose I'll come back to this in the future because we're talking about long term and long term, this industry is going to be delivering growth and competitive situation is a question mark, obviously, but you know, I'm not asking about specifically next year or the year after, it's more ongoing, but I can understand where you're coming from. And Yuri, you have a good point, I mean, if the green agenda gets going and you get a bit of a pull in the market.

Alright.

Ill come back to this in the future because we're talking about long term and long term. This industry is going to be delivering growth competitive situation is a question Mark obviously, but.

Not asking about specifically next year or the year after is more.

Jens Birgersson: Yeah.

Yuri Serov: -ongoing. I can understand where you're coming from.

Yes.

I can understand why.

Jens Birgersson: Yeah. Yuri, you have a good point. I mean, if the green agenda gets going and you get a bit of a pull in the market so that you know that the next 10 years we're gonna do all this renovation, it's less than 1% or whatever, and you need to do 3% or whatever now the EU goal will be for CO2, but it needs to triple or something like that. If that happens, of course, and we are reasonably good in that segment, then it's of course much easier to take actions and optimize and do the rest when you have an underlying pull in the market. Because traditionally, if you look over the last 8 or 9 years, we have been quite good at raising productivity in the business. We haven't really increased headcount.

Thanks.

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, we're going to do all this renovation.

Speaker 2: you know that the next 10 years, we're going to do all this renovation, it's less than 1% or whatever, and you need to do three, or whatever now the goal will be for CO2, but it needs to triple or something like that. If that happens, of course, and we are reasonably good in

Less than 1% or whatever you need to do three or whatever now that youre going to be placebo too, but it needs to triple or something like that if that happens of course on <unk>.

Reasonably good in that segment.

Speaker 2: Then it's, of course, much easier to take actions and optimize and do the rest when you have an underlying pull in the market, because traditionally, if you look over the last eight, nine years, we have been.

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.

Speaker 2: Quite good at raising productivity in the business, we haven't really increased headcount, we have, we are working on automating our factories, we work on a number of technologies that will.

Yeah quite good the tracing productivity in the business, we haven't really increased head count we have.

Jens Birgersson: We are working on automating our factories. We work on a number of technologies that will, if we get a bit of growth into the system, we should be able to raise productivity. Because not all of margin improvements in our world comes from price, it needs to come also from us becoming more competitive. It's so much easier to do that if we don't have these margins jumping up and down 15-20%, business markets jumping up 15-20%, and we need to optimize the network all the time. A bit of peace and quiet and a calm growth in the business would make that a lot easier to firm in on a margin target.

Working on automating our factories, we broke a number of technologies such real.

Speaker 2: If we get a bit of growth into the system, we should be able to raise productivity, because not all of margin improvements in our world comes from price. It needs to come also from us becoming more competitive, but it's so much easier to do that if we don't have these margins jumping up and down 15-20%, business markets jumping up 15-20%, and we need to optimize the network all the time.

If we get 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 broad 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 this margins jumping up and down 15 20.

Business Mark is jumping up 15, 20% I mean, it or optimize the network all the time.

Speaker 2: So a bit of peace and quiet and a calm growth in the business would make that a lot easier to firm in on a margin.

So some a bit of peace and quiet in the comm growth in the business would make that a lot easier for them in on a margin target.

Yuri Serov: Okay. Sounds good. The second question is about volumes and specifically about the UK and the US. You already talked about the UK. What I'm curious to hear from you is if you can give us your assessment as to by how much you are outperforming the overall market performance in installation in these two countries in percentage points. In the UK, you said that you have a growth of double digits. I mean, I suppose that, and you said that you are outperforming the market, but I'm just curious by how much, and similar in the US.

Okay.

Speaker 9: OK, sounds good. The second question is about volumes and specifically about the UK and the US. You already talked about the UK.

Okay sounds good.

Second question is about volumes and specifically about the UK and the U S.

About the U K.

Speaker 9: What I'm curious to hear from you is if you can give us your assessment.

What I'm curious to hear from you is if you kind of give us your assessment.

Speaker 9: as to by how much you are outperforming the overall market performance in installation in these two countries.

Two by how much you are outperforming the overall market performance and installation in these two countries.

Speaker 9: in percentage points. In the UK, you said that you have a growth of double digits. I mean, I suppose that you said that you are outperforming the market, but I'm just curious by how much and similar in the US. I mean, I'm...

Percentage points in the UK and the U K you said that you have a growth of double digits as far as the Mark you said that you are outperforming the market, but I'm just curious by how much and similar in the U S.

Jens Birgersson: I mean, I don't wanna comment on details there, and I don't even bring the details, but obviously. If you look in North America, in Canada, we more or less have the market, so our growth is just in line with the market, and it's not really growing as a proportion of the whole market, so it follows the market. Then in the US, we have now another factory that we are ramping up. We are not on full capacity yet. We still have capacity in the US, but Stonewall share is a couple percent of the total insulation market. There, there's gonna be a conversion so that we eat into it. We're talking in relation to the overall market that is huge.

I mean.

I don't want to.

Speaker 2: comment on details there, and I don't even bring the details, but obviously, but if you look in North America, in Canada,

Comment on deep dive, Sir and I don't even bringing the deep does but obviously, but if you look if you look in North America and in Canada.

Speaker 2: we more or less have the market. So we grow this just in line with the market and it's not really growing as a proportion of the whole market. So it follows the market. And then in the US.

The more or less half the market.

Growth this just in line with the market.

And it's not really growing as a proportion of the whole market. So so it follows the market and then in the U S rehab.

Speaker 2: We have now another factory that we are ramping up. We are not on full capacity yet. We still have capacity in the US, but.

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.

Speaker 2: Stonewall share is a couple of percentage of the total insulation market, and there

Stonewall share is couple of percentage of the total installation market in there.

Speaker 2: they're gonna be a conversion so that we eat into it. But we're talking in relation to the overall market that is huge. When we move from two to two and a half to three to three and a half to four, it's very, very little of the total market. And since the market is growing.

They're going to be.

Conversions, so that we eat into it but we're 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. The since the market is growing.

Jens Birgersson: When we move from 2 to 2.5, to 3, to 3.5, to 4, it's very, very little of the total market. Since the market is growing, it doesn't translate into less volume for the other materials. It's just that our share of the growth is proportionally a little bit bigger. That keeps going on, and that means that we will need more capacity in the US because I see we have the fundamentals in play. Now, we have capacity, but this will go on, and we will need to invest. In the UK, I can't really give a number on it, but I think the last 2, 3 years has been quite dramatic because there has been a complete shift in certain segments.

Speaker 2: it doesn't translate into less volume for the other materials. It's just that our share of the growth is proportionally a little bit bigger. So, that keeps going on, and that means that we will need more capacity in the U.S., because I see we have the fundamentals in play. Now we have capacity, but this will go on, and we will need to invest in. In the U.K.

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.

Yeah.

Speaker 2: I can't really give a number on it, but it has been, I think the last 2-3 years has been quite dramatic because

Our country to give a number on it but it has been I think the last two or three years, it's been quite.

Quite dramatic because.

Speaker 2: There has been a complete shift in certain segments, and when you can move in a segment, high-rises, semi-high-rises, school, etc.

There has been a complete shift in certain segments and when you can move in the segment high rises semi high rises school et cetera.

Jens Birgersson: When UK move in high-rises, semi-high-rises, schools, et cetera, then of course we see quite a few tons of business. That's going on, and I think there is still refurb products, quite a few of them, where we are the only product. This is not either a normal market. It's something that happens now because you're fixing past mistakes. It's very hard to say in the market what, how much we are growing. I wouldn't expect at the end that UK would be any different to our other markets. You know, maybe 40% to 50% of the market will be Stonewall, and we will get there. Now it's in a transition into that state. Slight gains, I would call it, but not super dramatic.

Speaker 2: then of course we see quite a few tons of business. So that's going on and I think there is still...

Then of course, we see quite a few times so business.

So that's going on and I think there is still.

Speaker 2: refer products, quite a few of them, but we are the only product, so this.

The refurb projects quite a few of them, but we are the only products. So this.

Its not either normal market as something that would happen 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 different all of our other markets, maybe 40 or 50% of the market where stonewall but.

Speaker 2: either a normal market is something that happens now because you're fixing past mistakes. It's very hard to say in the market how much we are growing, but I wouldn't expect at the end that the UK would be any different to our other markets. Maybe 14-15% of the market will be stonewalled and we will get there, but now it's a transition into that.

To get there, but no sudden transition into that state.

Speaker 2: So slight gains, I would call it, but not super dramatic.

So slight gain subtle to call it but not super dramatic.

Yuri Serov: Thank you.

Thank you.

Operator: The next question comes from the line of Yves Bromhead with Société Générale. Please go ahead.

Speaker 3: The next question comes from the line of Yves Bromhead with Societe Generale, please go ahead.

The next question comes from the line of ease Brohm head with Societe Generale. Please go ahead.

Yves Bromhead: Hi. Good morning, everyone. Thanks for taking my question. Just the first one. I'm really sorry, but I did not understand what you said in the US. You talked about five weeks of what? Was it maintenance CapEx, where you were down for five weeks? Is that what you said?

Speaker 2: Hi, good morning, everyone. Thanks for taking my question. Just the first one. I'm really sorry, but I did not understand what you said in the US. 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. No, no, we had when that autoworker strike started in Detroit.

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.

Jens Birgersson: Yeah. Good morning, Yves. No, no, we had. When that autoworker strike started in, was it Detroit? We had a factory, one of our factories, in Canada, where a similar demand was made, and we cannot afford that. We had altogether seven weeks, right? Five weeks of that hit the quarter. If it wouldn't have been for that, we would have had a double-digit growth in the whole rest of the world segment. We lost. We couldn't deliver. Now our challenge in North America is that we need to work down delivery times because we lost capacity on that. That was not five weeks production in the whole business. It was one factory and one of the smaller ones. That is what happened. It wasn't maintenance at all.

Speaker 2: We had a factory, one of our factories in Canada where...

We had the factory one of our factories.

No doubt there.

Speaker 2: a similar demand was made and and we we cannot afford that so we had altogether seven weeks right

Similar demand bus made them, we cannot afford it so we had altogether a seven week strike.

Speaker 2: and five weeks of that hit the quarter. So if it wouldn't have been for that, we would have had a double-digit growth in the whole rest of the world segment. So we lost, we couldn't deliver. So now our challenge in North America is that we need to work down delivery times because we lost capacity on that.

And five five weeks of that hit the quarter. So if it wasn't a beam for that.

B, we would've had a double digit growth in the whole rest of our segments. So we lost 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 to net trust not five weeks production into whole business bus one factory in one of the smaller.

Speaker 2: not five weeks production in the whole business, it was one factory and one of the smaller ones. So that's what happened. So it wasn't maintenance at all, it was a strike.

So that's what happened so it wasn't maintenance.

Jens Birgersson: It was a strike.

That's all it was a strike.

Yves Bromhead: Okay. Maybe just going back on the hedging. Just so I understand correctly, this year you had only hedges in H2 for about 50%, but in H1 you were not hedged in 2023. Is that correct?

Speaker 10: Okay, and maybe just going back on the hedging. So just so I understand correctly, this year, you had only hedges in H2 for about 50%, but in H1, you were not hedged of 2023. Is that correct?

Okay, and maybe just going back on the hedging so just so I understand correctly. This year you had only.

Only hedges in edge two for about 50%, but in each one you were not hedged in 2023 is that correct.

Jens Birgersson: Yves, we had these direct operator contracts from France, Norway, and the other countries running from the beginning of the year. That was on electricity. In other markets, we didn't hedge on electricity for H1. We only did for H2. On gas, we had a hedge approximately also 50% running in H1. We did a renewal of that in the middle of the year for H2.

Speaker 1: We had these direct operator contracts from France and Norway and the other countries running from the beginning of the year. So that was on electricity. And then in other markets we didn't hedge on electricity for the first half, we only did for the second half, but on gas we had a hedge approximately also 50% running also in H1.

We had these.

Operator contracts from France, and Norway and other countries.

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.

Speaker 1: But we did a renewal of that in the middle of the year for H2.

But we did we did have the newness that in the middle of the year for <unk>.

Yves Bromhead: Okay. Just to confirm for next year on gas specifically, I understand what you said on coking coal. On gas and coking coal, it's until Q1, not Q2.

Okay, and just to confirm for next year on gas.

Speaker 10: Okay, and just to confirm for next year on gas.

Speaker 10: I understand what you said on cooking call, but on gas and cooking call, it's until Q1, not Q2. Until Q1 only.

I understand what you said on the call.

I'm guessing cooking call it until Q1, not Q2 until Q1 only.

Jens Birgersson: Until Q1 only.

Yves Bromhead: Okay. Are you looking to roll out your hedging strategy that you've put in place for almost the first time in 2023 for 2024? Or are you considering being spot for 2024?

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.

Speaker 1: Okay, and are you looking to roll out your hedging strategy that you've put in place for almost the first time in 2023 for 2024, or are you considering it being spot 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 decide that almost, you know, quarter by quarter what to do.

Doing it being spots for 2024.

Jens Birgersson: We are evaluating that on a regular basis. We don't have a fixed formula, but we simply sit down and take a look at the market dynamics in the energy market. Then we decide that almost, you know, quarter by quarter what to do. Okay. Last one on cost. On the coking coal, obviously as it was said previously, this is increasing now, but the shipping costs are also increasing quite fast at the minute on the Baltic Dry Index. How relevant are those logistic costs in terms of what you buy forward one quarter on foundry coke?

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.

Speaker 10: OK, and last one on cost, on the cooking coal.

Okay.

Last one on the on cost.

Yeah.

The cooking coal.

Speaker 1: obviously, as it was said previously, this is increasing now, but the shipping costs are also increasing quite fast at the minute on certain Baltic dry indexes. How relevant are those logistic costs in the terms of what you buy forward one quarter on FoundryCook? They are not significant. All of our FoundryCook suppliers in Europe are European-based and many of them. We have five major suppliers, so they are quite

Yeah.

As previously this is increasing now but.

Shipping costs are also increasing quite fast that the minutes.

Certain Baltic dry index.

Relevant are those logistic costs in terms of what you buy forward one quarter on on foundry coke than not they are not significant at all.

Kim Andersen: They are not significant. All of our foundry coke suppliers in Europe are European based, and many of them, we have five major sort of suppliers, so they're quite regionally spread out. Logistics cost is not normally a big issue.

All of our foundry Coke suppliers in Europe at a.

European based and many of them we have five major set of suppliers. So they are quite regionally spread out. So some logistic cost is not normally a big issue.

Speaker 1: region is spread out, so logistic cost is not normally a big issue.

Jens Birgersson: Your suppliers import from Australia, no?

Yeah.

Speaker 1: But your suppliers import from Australia? No. No, no. They have quarries in Europe .

But your suppliers imports from Australia.

Kim Andersen: No, no, they have quarries in Europe.

No no they have clavis in Europe okay.

Jens Birgersson: Okay.

Kim Andersen: Yeah.

Jens Birgersson: Interesting. Thank you.

Interesting. Thank you.

Operator: The next question comes from the line of Claus Almer Nielsen with Nordea. Please go ahead.

Speaker 3: The next question comes from the line of Klaus Allmer with Nordea, please go ahead.

The next question comes from the line of clouds on there with Nordea. Please go ahead.

Claus Almer Nielsen: Thank you. Yeah, also a few questions from my side. I will do them one by one. Kim, sorry about coming back to this energy cost, but is it a little bit difficult to figure out what is the net effect, both for Q4 and let's say 2024, given what you see at the moment? Will energy costs in Q4 be up or down? And the same question goes for next year. That'll be the first.

Speaker 11: Thank you. We have also a few questions from my side. I will do them one by one. So Kim, sorry about coming back to this energy cost, but is it a little bit difficult to figure out what is the net effect, both for Q4 and let's say 2024, given what you see at the moment? So will energy costs in Q4 be up or down? And the same question goes for next year. That will be the first.

Thank you Yeah also a few question from my side I'll take them one by one.

So 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, so with energy costs in Q4 be up or down.

And the same question goes for for next year.

Kim Andersen: Our energy spend for Q4 will more or less be unchanged at the price level as Q3.

The first.

Speaker 1: Our energy spend for Q4 will more or less be unchanged at the price level as Q3.

Our <unk> spend for Q4 will always be unchanged.

David last Q3.

Claus Almer Nielsen: Okay. You know, based on sourcing and your contracts next year, how does that look like?

Speaker 1: Okay, and then based on sourcing and your contracts next year, how does that look like? And Q1 will be quite similar to Q3.

Okay and then.

Just on sourcing.

Youre contracts next year, how does that look like in Q1 with similar be quite similar to Q3.

Kim Andersen: Q1 will similarly be quite similar to Q3. So there hasn't been a lot of dramatic move in the forward buying cost the last few quarters. If you go-

Speaker 1: So there hasn't been a lot of dramatic move in the forward buying cost the last few quarters.

So.

There hasnt been a lot of it.

A dramatic move in the in the forward buying cost the last few quarters.

Claus Almer Nielsen: Sorry.

Speaker 1: But if you go much further than just a quarter ahead, then the premium starts to become a bit more expensive. And that's why we do not...

But so does it go 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's why we do not.

Kim Andersen: If you go much further than just a quarter ahead, then the premium starts to become a bit more expensive. That's why we do not entertain that. Yeah.

Dana.

Claus Almer Nielsen: Oh, that's to do if you're going to hedge.

Yes.

Speaker 1: But that's if you're going to hit, so you're just meaning if you don't hit and just do the spot, then next year looks to be a flattish year over year, is that the way to think about it? That I do not know. I cannot foresee how the energy costs develop. I'm just telling you that we have only covered Q1 and then we just have to, you know, maneuver that quarter by quarter.

If you're going to hit.

Kim Andersen: Yeah.

Claus Almer Nielsen: if you don't hedge and just do the spot

If you just if you don't hit just doing this path.

Kim Andersen: Yeah.

Claus Almer Nielsen: Next year looks to be a flattish year-over-year. Is that the way to think about it?

Next year looks to be a flattish year over year.

Kim Andersen: That I do not know. I cannot foresee how the energy costs develop. I'm just telling you that we have only covered Q1, and then we just have to, you know, maneuver that quarter by quarter.

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 the only call. It Q1, and then we just have to you know.

<unk> quarter by quarter.

Claus Almer Nielsen: Oh, yeah, sorry. Because, I mean, if things are unchanged as is today, rest of 2024. Throughout 2024, we will see the same levels as we see today.

Speaker 11: Oh yeah sorry, because I mean if things are unchanged as it is today, rest of 2024, so throughout 2024 we will see the same levels as we see today, will there then be any impact?

Oh, yes, sorry.

If things.

<unk> as it is today.

Rest of 'twenty four so throughout 'twenty four we will see the same levels as we see today.

Kim Andersen: Yeah.

Claus Almer Nielsen: Will there then be any impact?

<unk> be any impact.

Kim Andersen: Yeah. Because the energy costs have gone down slightly this year. Of course, if it continues at the present level, at least at the beginning of the year, there will be a small benefit.

Yes.

Because the energy cost has gone down slightly this year. So of course, if it continues at the present level.

At the beginning of the year, there will be a small benefit.

Claus Almer Nielsen: Okay, thanks. Then my second question goes to the margins. You know, Jens, you mentioned that you told, I guess, the unions in Canada you could not afford a price hike in the hourly rates. But at the same time, you're running at, you know, the best EBIT margin since 2007. So it seems like you could afford a slightly higher hourly rate. If I just may add, then second, last year when you were discussing with your customers when you're introducing price hikes, then an important argument was that they could see Rockwool also facing a lot of headwinds. I guess looking at your numbers, that's not the case anymore.

Okay. Thanks, and then my.

Speaker 11: OK. Thanks. And then my second question goes to the margins.

My second question goes to the margin.

Speaker 11: Jens, you mentioned that you told, I guess, the unions in Canada you could not afford a price hike in hourly rates, but at the same time you're running at the best EBIT margin since 2007.

I know you mentioned that you took.

I guess the unions in Canada, you could not afford a price.

Hi.

Right.

But at the same time you are running at.

<unk> EBIT margin since 2007.

So it seems like you could afford it.

Slightly higher hourly rate and just and then just 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.

Claus Almer Nielsen: More about both on the salary, but also on your negotiations with your customers, how much under pressure are you to pass through some of these margins?

Salary, but also on your negotiations with your customers.

How much under pressure are you to pass through some of these margins.

Jens Birgersson: I think, let's take the US case. I mean, the ask from our employees in this factory in Canada was inspired by the auto workers, and that was a massive number. I mean, that would have been a big problem for the factory. We have made an agreement that increases the salaries over three years. That is what we see in the US. We see US becoming, compared to the rest of the world, a very expensive place to manufacture, but okay, it's local for local, needs to be translated into pricing. That happened. The first ask was so big that we couldn't take it in the business in that factory.

I think let's.

I said to U S case, I mean the ask.

The ask.

From our employees in this factory and in Canada also inspired by the auto workers and that was a massive massive massive number I mean that would have been a big problem for the factory.

So we have made an agreement.

Increases to salaries over three years.

And.

Speaker 2: That is, that's what we see in the U.S. We see U.S. becoming, compared to the rest of the world, a very expensive place to manufacture. But okay, it's local for local, needs to be translated into pricing. So that happened, but the first ask was so big that we couldn't take it in the business in that factory. It would have been non-competitive even.

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.

But the first ask was so big.

We couldnt take it in the business and that factory, where there've been erode a bit noncompetitive even.

Jens Birgersson: It would've been, we would've been non-competitive even with an increased price level. That was the case there, and we reached a settlement. You look at where does the EBIT come from? What the story doesn't say is that, for example, last year we've been extremely challenged in North America. We started up a factory. It cost us a lot of money. We have had an ongoing big challenge to get our Mississippi factory up and running in the south. It hasn't performed. We have been losing money on it. A lot of the improvements here that you see, for example, in North America, is a big improvement, but a lot of that is because we've run the operations better and gotten our arms around production.

Speaker 2: with an increased price level. So that was the case there and there is a settlement. Then you look at where does the EBIT come from.

With an increased price levels. So that most of the case are and there is a settlement then you look at rentals to Abbott to come from.

Speaker 2: But what the story doesn't say is that, for example, last year we were extremely challenged in North America. We started up a factory.

But the story doesn't say a soft first half of last year.

To 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.

Speaker 2: cost us a lot of money. We have had an ongoing big challenge to get our Mississippi factory up and running in the South. It hasn't performed. We have been losing money on it. So a lot of the improvements here that you see, for example, in North America, is a big, big improvement.

That you see for something in North America is a big big improvement, but a lot of that just because we had run the operations better and gotten our arms around production, we have managed to shift over some business to the new factory adopt wellness rounding and we're making money in all factories and that's not just a pricing.

Speaker 2: A lot of that is because we've run the operations better and gotten our arms around production. We have 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 the pricing. So this way that we have better margin is now is, for example, that we've never been so successful in the U.S.

Jens Birgersson: We have 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 the pricing. This bit that we have better margin is now, for example, that we never been so successful in the US. When we then look at salary increase and this and that, yes, if we improve the business, almost double the profitability in the US because we don't lose money in a factory that doesn't run, that has nothing to do with the price and the cost here. If you then look at the discussion with customers here, there are different segments.

So this spirit that we have better Martinez now is for example that we never been so successful in the U S.

Speaker 2: And so when we then look at salary increase and these, yes, if we improve the business almost double the profitability in the U.S. because we don't lose money in a factory that doesn't run, that has nothing to do with the price and the cost here. If we then look at the discussion with customers here.

And so.

So M. B I remember then look at salary increase.

Yes, if you improve the business almost double the profitability in the U S. Because we don't lose money in a factory that doesn't run that test nothing to do with the price and the cost here. If you then look at that.

The discussion with customers here.

Speaker 2: There are different segments. There are distributors that don't mind that prices go up 1, 2, 3 percent. And there are others, of course, at the end level that have house construction.

Jens Birgersson: There are distributors that don't mind that prices go up 1% to 3%, so they are there, of course, at the end level that are house construction companies that are under a lot of pressure because they sit between a contract, and there's probably also from building material impact on demand. There we just need to have a mature dialogue with them and discuss it, and it is the normal discussion where we But it's not that what we earn more in the US impact how we price in Europe. That's not how we link it. It's not the cost to cost. Yes, we have lowered a lot of prices where we have to.

There are different segments of our distributors don't.

Don't mind, the prices dropped 1% to 3% Sunday order of course to end level.

Our house construction companies sought.

Speaker 2: are under a lot of pressure because they sit between a contract and there is probably also from building material impact on demand. And there we just need to have a mature dialogue with them and discuss it and it is.

Our under lot of pressure because of sit between the contract and there is probably also from billion 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.

Speaker 2: the normal discussion where we, but it's not that what we earn more in the U.S. impact how we price in Europe , that's not how we link it, and it's not the cost to cost, and yes we have lowered.

However link it then it's not a cost to cost and yes, we have lowered.

Speaker 2: a lot of prices where we have to, for example, we got the big order now, the Northvolt project in Germany, 300,000.

A lot of prices that we have to for example, if we got the big order now.

Jens Birgersson: For example, we got the big order now, the Northvolt project in Germany, 300,000 square meter roof and 80,000 square meters of walls. That project we got, and it was quite a tough competition to get it, and we got it. We get it at a higher price than competition because we have just-in-time deliveries. It's we can execute that well. You know, they are also tough pricing discussions, but that's just normal in the business and happens all the time. The inflation is there, and the energy price level is still high compared to what it was a few years. The good margin in Q3 is not only because of Europe. There's very good performance in Asia and North America.

The north fault.

Project in Germany 300000.

Scramble to roof, and 800000 square meters of walls.

Speaker 2: square metre roof and 80,000 square metres of walls. That project we got, it was quite a tough competition to get it, and we got it, we get it at a higher price and competition because we have just-in-time deliveries, we can execute that well, but you know, there are also tough pricing discussions, but that's just normal in the business and happens all the time.

That project be gotten there was quite a tough competition to get it and we got it to get it up to higher price and competition because we have just in time day labor is.

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.

Speaker 2: The inflation is there and the energy price level is still high compared to what it was a few years ago. But the good margin in Q3 is not only because of Europe .

The inflation is there on the energy price level is still high compared to what it was also a few yes, but the good margin in Q3 is not only because of Europe.

Speaker 2: There's very good performance in Asia and North America.

That's very good performance in Asia, and North America.

Claus Almer Nielsen: Okay. That makes sense. If you just make a follow-up on a comment, Jens, you made earlier on who knows what competitors will do if volumes will continue to decline. I'm just curious, do you think that you have, you know, certain number of competitors where volumes are starting to get to a more, you know, let's call it critical point or level in their factories? So if it continues to decline, then it will really, you know, hurt the profitability and efficiency of the factories. Or is it more general comment?

Yeah.

Speaker 11: Okay, that makes sense. If you just make a follow-up on a comment that you made earlier on who knows what competitors will do if volumes will continue to decline. Just curious, do you think that you have, you know, a certain number of competitors where volumes are starting

Okay that makes sense. If you just follow up on the comment you made earlier on who knows what competitors will do if volumes continue to decline.

Curious does do you think that you will have a certain number of competitors where volumes are starting to get to a more let's call it critical point or level in their factories. So it.

Speaker 11: get to a more, let's call it a critical point or level in their factories. So if it continues to decline, then it will really hurt the profitability and efficiency of the factories.

Continues to decline then.

It will really hurt the profitability and efficiency of the factories.

Speaker 2: I mean, with the type of declines we have seen in...

It was just more general comments, yeah, I mean, we do we did.

Jens Birgersson: Yeah. I mean, with the type of declines we have seen in Germany, we're 30, 40% down on new building starts, and they're running out of backlog in the housing sector. We are used to always having some competitors that miss a project because the smaller you are, the less stability you have because of the law of large numbers. You're either overfull or empty, a project can determine. A lot of our competitors are only active in the heavy segment. We also have the light, more distribution business. We do both distribution and projects, and our project portion is probably smaller than many of the smaller ones.

Type of declines we have seen in.

Speaker 2: in Germany were 30-40% down on new building starts and they're running out of backlog in the housing sector. We are used to always having some competitors.

In Germany by a 3rd% to 40% down on new building starts on the running out to backlog.

And in the housing sector.

We are used to always having some competitors.

Speaker 2: miss a project, because the smaller you are, the less stability you have because of the law of large numbers. You are either overfull or empty, a project can determine, and a lot of our competitors are only active in the heavy segment. We also have the light, more distribution business, so we do both distribution and projects, and our project portion.

Mesa project because the smaller you are the less stability because of the law of large numbers. Your Ida Overfull IMT project can determine then.

A lot of our competitors are only active in in the heavy segment. We also have the life more distribution.

So we do both distribution on projects in our project portion.

Speaker 2: It's probably smaller than many of the smaller ones. So we see this all the time, but they're also.

It's probably smaller than many of the smaller ones. So we see this all the time, but.

Jens Birgersson: We see this all the time, but there are also. I think when you look at some of these big projects we have secured, we have gotten several projects this year around 300,000 square meters. That also matters, you know, you can't show the product to a supplier. It's not to a builder. It's not credible because they also need to trust that you're gonna be there and deliver all of that. We see the whole spectrum. This of course, if the market from this level takes another 5 to 10% dip next year, then we get into a very serious situation for European construction. I just haven't lived through that in this industry. I saw what happened 2007, 2008. The volume drop this year has been the same magnitude, right?

There also.

Speaker 2: I think when you look at some of these big projects we have secured, we have gotten several projects this year around 300,000 square meters. That also matters that you...

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.

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.

Speaker 2: you know, you can't throw the product after a supplier, it's not after a builder, it's 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 5-10% dip next year, then we get to me into a very serious situation for European construction.

We see the whole spectra, but this of course, if the market from this level takes another 510% deep next year, the NV get to me into a very serious situation for European construction.

Speaker 2: And I just haven't lived through that in this industry. I saw what happened 2007, 2008.

I just haven't.

Through that in in this industry as all of our tap in 2007 2008.

Speaker 2: The volume drop this year has been the same magnitude, right? And we have managed it, but what happens if there is another drop of 10%?

The volume dropped this year has been same magnitude to drive and be a man.

Jens Birgersson: We have managed it, but what happens if there is another drop of 10%? You know, we do our best in that situation, and let's hope it doesn't happen, but I never lived it, so we need to navigate that and take it on. Our spirit would be in an inflationary environment that when it's on this level, you cannot stay sustainable, trying to fight for extreme volumes and solve the problem. The fundamental issue is that there is inflation still there.

Managed it but what happens if there is another drop of 10%.

Speaker 2: You know, we'll do our best in that situation and let's hope it doesn't happen. But I never lived it. So I need to kind of.

We'll do our best in that situation and let's hope it doesn't happen, but nevertheless did so I need to kind of.

Speaker 2: We need to navigate that and take it on, but our spirit would be in an inflationary environment that...

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.

Speaker 2: When it's on this level, you cannot stay sustainable trying to fight for extreme volumes and solve the problem. And the fundamental issue is that there is inflation still there.

Trying to fight for extreme volumes and solve the problem on the fundamental issue.

There is inflation still there.

Okay.

Claus Almer Nielsen: Okay. That makes a lot of sense. Thank you so much, Jens. Yeah, well done so far in a very difficult year.

Speaker 11: That makes a lot of sense. Thank you so much, Jens. Well done so far in a very difficult year. Thank you.

Okay that makes a lot of sense. Thank you so much hinson, yes, well done so far and in a very difficult.

Jens Birgersson: Thank you. Thank you.

Thank you. Thank you.

Operator: The next question comes from the line of Yassine Touahri with On Field Investment Research. Please go ahead.

Speaker 3: The next question comes from the line of Yassine Touari with One Field Research. Please go ahead.

The next question comes from the line of <unk> with one field research. Please go ahead.

Yassine Touahri: Yes. Good morning. A few questions. First, on the pricing dynamics and the competition, when you look at what happened in 2009, 2010, we saw some pricing pressure. As you said, the volume decline is similar today, but pricing is holding. What has changed? Is it because there is more consolidation? Is it because you've got Saint-Gobain and Knauf attacking now from above that are a big part of the market? Is it a realization that you need to really focus on pricing? That would be my first question.

Speaker 12: Yes, good morning. A few questions. Firstly, on the pricing dynamics and the competition.

Yes, good morning, a few question.

Firstly on the on the pricing dynamics in the competition.

Speaker 12: When you look at what happened in 2009-2010, we saw some pricing pressure.

Yeah.

When you look at what's happening in 2009 2010.

We saw some pricing pressure.

Speaker 12: As you said, the volume decline is similar today, but pricing is holding. What has changed? Is it because there is more consolidation? Is it because you've got Saint-Gobain, Wens, Corning, Attec, Knopf and yourself that are a big part of the market? Is it a realization that you need to really focus on pricing? That would be my first question. The second question is, we see a lot of your competitors focusing on solutions.

You said the volume decline is coming out today, but pricing is.

Holding.

What has changed is it because there is more consolidation on is it because you've got to talk about <unk>.

You said that that would be part of the market.

Realization.

We need to really focus on pricing that would be my first question.

Jens Birgersson: Mm.

Yassine Touahri: The second question is, we see a lot of your competitors focusing on solution, like not only selling mineral wool, but selling insulation combined with accessories, insulation combined with plaster board or with roofing membrane, and to shift away from the discussion about commodity insulation and to look at selling a system and solving the problems of the clients.

The second question is we hear a lot of your competitor focusing.

On the solution.

Speaker 12: like not only selling mineral wool, but selling or insulation, but selling insulation combined with accessories, insulation combined with plasterboard or with wolfing membrane, and to shift away from the discussion about commodity insulation and to look at selling a system and solving the problems of their clients. Where do you stand on that? Where do you see Rockwool moving in the next five to ten years? Could you add some other accessories, some other complementary products?

Not only is hitting me now.

But selling.

Tradition, but selling installation on the combined.

Accessories integration combined with plasterboard.

Roofing membrane.

And to shift away from the discussion about the commodity and tradition to look at the sitting in our system and sort of in the public Amazon with their clients.

Jens Birgersson: Mm.

Yassine Touahri: Where do you stand on that? Where do you see Rockwool moving in the next 5 to 10 years?

Whether you spend on that whether you see <unk> moving into the next five to 10 years could.

Jens Birgersson: Mm.

Yassine Touahri: Could you add some other accessories, some other, complementary products? My third question is on the non-residential activity. What we've seen this year is a big drop in housing. Non-residential is holding a little bit better. Do you feel a risk? Do you see a risk that non-residential could be a bit more difficult next year in a context where some of the projects that were built this year are not renewed?

Could you add some other accessories and most of our complementary products.

Speaker 12: And then my third question is on the non-residential activities. So what we've seen this year is we've seen a big drop in housing.

And then.

My third question.

Is on the normalized productivity. So what we've seen this year is we've seen a big drop you know housing.

Speaker 12: But non-residentially, we're holding a little bit better.

But I'm sure you're holding a little bit better but.

Speaker 12: Do you feel a risk, do you see a risk that non-residential could be a bit more difficult next year in a context where some of the projects that were built this year are...

Do you feel or do you see or is that not only that I'm sure it would be a bit more.

He goes next year next well.

Some of the project.

Well build this year are not renewed.

Jens Birgersson: Okay. See, you remind me of the questions. I have the area on the price, we have the solution, and then you have non-residential, right? I see now. Yeah. Yeah. On the pricing, 2009, 2010, you know, I wasn't here. I worked in distribution in other industries. I can only say what we did in this company. When I came here, there wasn't pricing structures, there wasn't pricing drum beat, there weren't clear rules, there weren't clear gaps between the biggest customer and the smaller.

Speaker 2: Okay, I see. You remind me of the questions. I have the area on the price, we have the solution, and then you have non-residential, right?

Okay.

I'll see you remind me of the questions I have data on the price we have the solution and then you have non residential right.

Yeah, Yeah yeah.

Speaker 2: Yeah, so on the pricing, 2009-2010, you know I wasn't here. I worked in distribution in other industries.

So on the pricing.

2009, 2010, you know I wasn't here.

I've worked in distribution in other industries.

Speaker 2: I can only say what we did in this company, when I came here.

I.

Kind of on the same what we did in this company when I came here.

That wasn't pricing structures there wasn't a.

Speaker 2: There wasn't pricing structures. There wasn't pricing drumbeat. There weren't clear rules. There weren't clear gaps between the biggest customer and the smaller.

Pricing drumbeat.

Weren't clear rules, the burn clear gaps between the biggest customer on the smaller.

Jens Birgersson: From day one, we started to work through and have a structured approach to pricing, and we are very, very disciplined today in how we do pricing, and how often we do price changes, and how the contracts looks, the bonus schemes, and all the rest. I can at least say, and I don't know what has changed with the other companies, but in our company between 2009 and 2010, there was a belief that you had to choose between price and volume, and that was the choice you had. I don't believe in that, and I don't believe that stone wool is a commodity. I don't believe that. I think you can have a high quality product, and that you can have a premium as the market leader.

So.

Speaker 2: From day one, we started to work through and have a structured approach to pricing, and we are very, very disciplined today in how we do pricing, and how often we do price changes, and how the contracts look, the bonus schemes, and all the rest. So I can at least say, and I don't know what has changed with the other companies, but

It's from day, one we started to work through on 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.

Speaker 2: In our company, between 2009 and 2010, there was a belief that you had to choose between.

In our company between 2009 2010, there was a belief that you had to choose between <unk>.

Speaker 2: price and volume and that was the choice you had and I don't believe in that and I don't believe that.

Price and volume.

That foster choice, you had and I.

I don't believe in that and I don't believe that the.

Speaker 2: Stonewall is a commodity. I don't believe that. I think you can have a high-quality product and that you can have a premium as the market leader. And the other thing, compared to 2009, 2010, is that

Stonewall is a commodity I don't believe that I think you can have a high.

Quality product.

And that you can have a premium on the market data and the other thing compared to 2009 2010 this up.

Jens Birgersson: The other thing, compared to 2009, 2010, is that if you look from 2014 to, say, 2022, the last semi-normal year, full year, now 2023 is not done yet. We have more or less grown the company from 2.2.2 billion to now EUR 3.6, EUR 3.7, bit more or less the year. Without added headcount, we have lift productivity, improve competitiveness. It's not that all the improvement in margin comes from price. It's big effort in cost reduction and productivity improvements, and we need to continue that. It's not only price. People, you know some customers say it's only price, but when you look at the productivity, we do 40, 50% more per employee today than we did eight, nine years back.

Speaker 2: If you look from 2014 to say 2022, the last semi-normal year, full year, now 23 is not done yet, we have more or less grown the company from what, 2.2

If you look from 2014 to <unk> 22 to last semi normal the error fully now 23, it's not done yet.

We are more or less growing the company.

<unk> was $2 two.

Speaker 2: 1.2 billion to now 3.6, 3.7, a bit more last year.

$2 2 billion to now 3637 bit more loss yeah.

Speaker 2: Without added headcount, we uplift productivity and improve competitiveness, so it's not that...

Without added head count we have lift productivity improved competitiveness. So it's not.

Speaker 2: All the improvement in margin comes from prices.

All the improvement in margin comes from prizes.

Big effort in cost reduction and productivity improvement. So we need to continue that so not only price people.

Speaker 2: You know, some customers say it's only price, but when you look at the product here, we do 40, 50% more per employee today than we did eight, nine years back. So that is a factor. Then we go into solutions. And I have, in previous businesses, and this many years now, because I've been here a long time, but I've been in solutions, I've been in products, I've been in services, I've been in software, I've been in these different businesses. Then...

Some customer sites all the price, but when you look at the productivity, we do have 40 or 50% more per employee today, Adam It did eight nine yes back so that is a factor that may go into solutions.

Jens Birgersson: That is a factor. We go into solutions, and I have in previous businesses, and it's many years now because I've been here a long time, but I've been in solutions, I've been in products, I've been in services, I've been in software, I've been in these different businesses. I think solutions is a word that people use in a very sloppy way, because no one ever bothers to define it. They say solution, and solution sounds complicated, so we earn money. My observation is if you wanna do solutions where you take a system guarantee and you coordinate a lot of things, and you end up with a performance guarantee for the combination of, and the work to put the different pieces together, I think you need to be incredibly skilled to earn money consistently.

And I have in previous businesses on this many yes, Saba, Chris I've been here, a long time, but.

<unk> solutions I've been in Pearl Darts soybean as services. So I've been in software I've been in this different businesses Sun.

Speaker 2: I think solutions is a word that people use in a very sloppy way.

I I think solutions is so broad that people use in a very sloppy way.

Speaker 2: because no one ever bothers to define it. They say solution and solution sounds complicated so we earn money. My observation is if you want to do.

Because no one ever bothers to dip.

Fine It does say solution, our solution sounds complicated severe and 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.

Speaker 2: solutions where you take a system guarantee and you coordinate a lot of things and you end up with a performance guarantee for the combination of, and the work to put the different pieces together, I think you need to be incredibly skilled to earn money consistently. It's one thing to earn money one or two years, but if you look, you know, the bigger the projects and the solutions get, if you have a system guarantee,

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.

Jens Birgersson: It's one thing to earn money one or two years, but if you look, you know, the bigger the projects and the solutions get, 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. When it comes to solution, now we stay very close to the core of the stone world, volcano, and we specialize in that. That has been our strategy. I think solutions can be a good thing if you have a collection of products that fit together, like we do for some HVAC in Germany, we have the hangers, the clips. That's fine.

Speaker 2: 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, now we stay very close to the core of the Stonewall Volcano and we specialize in that. That has been our strategy.

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 there, but <unk> is specialized in that that has been our strategy.

Speaker 2: But I think solutions can be a good thing if you have a collection of products that fit together, like we do for HVAC in Germany. We have the hangers, the clips. That's fine, but we will, as a company, not be super keen.

But I think solutions can be good thing if you have a collection of products that fit together like redo of first of all big HVAC in Germany have the hangar stick slip spirit, that's fine yeah.

Jens Birgersson: We will, as a company, not be super keen to believe that we can be super good at doing kind of more turnkey or system guarantee products where we combine everything and that will help. We'd rather stay very close to have all the small products really productify, but yes, they can fit into the same application. That's where I stand on that. On non-residential, I think that there are some sectors, like in the US, we see the nearshoring manufacturing, the manufacturing sector, I mean, big boxes to put factories or whatever, growing with 20%. We might have seen some of that in Europe, but I think you're gonna see more project delays if the recession deepens.

But we win as a company and not be Super keen.

Speaker 2: to believe that we can be super good at doing kind of more turnkey or system guarantee products where we combine everything and that that will help. Then we'd rather stay very close to have all the small products really productified, but yes, they can fit into the same application.

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.

Speaker 2: So that's where I stand on that. Then on non-residential, I think that there are some sectors, like in the US we see the near-shore manufacturing, the manufacturing sector, I mean big boxes to put factories or whatever, growing with 20%. We might see some of that in Europe , but I think you're gonna see more product delays if the recession deepens. So it's back to that.

So that's where I stand on that then.

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 trend to percent.

We might see 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.

Jens Birgersson: It's back to that. It may be not fair to put all of that on Germany, but it's more the underlying economic cycle. If Germany goes into deep recession and the others follow, then I think the non-residential segment will be more threatened because I see more nearshoring going on in the US than I see here in Europe. Okay.

Speaker 2: And it may be not fair to put all of that on Germany, but it's more the underlying the economic cycle. If Germany goes into deep recession and the others follow, then I think the non-residential segment will be more threatened. Because I see more nearshoring going on in the US than I see here in Europe .

And it may be not fair to put all of that in Germany, but it's more the underlying the economic cycle, if Germany goes into a deep recession and they all just followed then I think the non residential.

<unk> segment would be more threat, then because I see more near shoring going on in the U S and I see here in Europe.

Yassine Touahri: I think my question on non-residential was more about the length of the project. Usually, it takes like 18 months to build a factory or offices. My concern is that maybe in 2023, you were working on non-residential projects that were started before the jump in interest costs and the jump in construction costs. Is there a risk that we see a big number of slowdown because there is no new order in activity because interest rates are too high and construction costs are too high, and that we could see the bulk of the decline in non-residential next year? That's my question.

Okay.

Speaker 12: I think my question on non-residential was more about the length of the project. Usually it takes like 18 months to build a factory or offices.

And I think my question was more about the length of the project usually it takes like 18 months to build a factory.

Speaker 12: And my concern is that maybe in 2023, you were working on non-residential projects that were started before the jump in interest costs and the drop in construction costs. Is there a risk that we see an abrupt slowdown because there is no new order in activity because interest rates are too high and construction costs are too high and that we could see the bulk of the decline in non-residential next year? That's my question.

Yes.

Michael family. That's maybe in 2023, you were working on Nonetheless, you don't try to project that.

We have started.

Before.

The jump in interest costs from the drop in consumption.

Because we see a big perhaps throw down because there is no new order.

Activity because interest rates are too high and construction costs are too high and that we could see the bulk of the decline in not only the Montreal next year.

Jens Birgersson: Yeah, I my pessimistic without doing an outlook is that I think maybe the market next year has the potential to get worse, but that's not what I've seen now. You know, and I stay on the pessimistic side, but you know, in theory, we need to do a deeper analysis of the project. Remember, not all of our business is project business. That's one portion of it. You know, if renovation were to start a little bit, that would quickly override that business. Yeah, I cannot comment whether that would be up or down. The potential is there for sure. We are running out of time, right? We have two more. We will. I understand that some people have to leave, but we have two more people with questions. We will take those.

That's my question.

I R.

Speaker 2: My pessimistic without doing an outlook is that I think

My pessimistic without doing outlook is soft I think maybe the market next year has the potential to get worse, but that's not what I'm seeing now, but you know on a stay on the pessimistic side, but.

Speaker 2: Maybe the market next year has the potential to get worse, but that's not what I've seen now. But, you know, and I stay on the pessimistic side, but, you know, in theory, we need to do a deeper analysis of the product. But remember, not all of our business is project business. That's one portion of it. So, you know, if renovation were to start a little bit, that would quickly override that business. So, yeah, I cannot comment whether that would be up or down, but the potential is there for sure.

In theory, we need to do a deeper analysis of the project, but remember not all of our business is project business. That's one portion of it so that.

Renovation, where to start a little bit that would quickly override that business. So I cannot comment whether that be up or down but the potential is there for sure.

Speaker 2: We are running out of time, right? We have two more. I understand that some people have to leave, but we have two more people with questions. We will take those. So try to keep it a bit brief, and I try to be a bit quick.

We're 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 would take those so tried to keep it a bit brief and I tried to be a bit quicker.

Jens Birgersson: Try to keep it a bit brief, and I try to be a bit quicker.

Okay.

Operator: The next question comes from the line of Casper Bloom with Danske Bank. Please go ahead.

Speaker 3: The next question comes to the line of Kasper Blom with Danske Bank. Please go ahead.

The next question comes from the line of Casper Blom with Danske Bank. Please go ahead.

Casper Bloom: Thanks a lot. Yeah, of course, a lot of questions have been raised already. Jens, I was just hoping if you can give an update to your position on your Russian business. A week or two ago, you were put on this list, being called a war sponsor. I don't wanna go into a discussion of whether or not that's right or wrong, but merely if you could elaborate a little bit on, you know, potential commercial impact that could have had on your business. I noticed on one of the slides you highlighted Ukraine actually as a good market for you here in Q3. Is there a risk of this having a commercial impact on you? Thank you.

Speaker 13: 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 your Russian business a week or two ago, you were you were put on this this list being called a war sponsor. And I don't want to go into a discussion of whether or not that's that's right or wrong. But merely if you could elaborate a little bit on on, you know, potential commercial impact that could have had on your business.

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.

Week or 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.

If you could elaborate a little bit on potential commercial impact that could have had on your business.

Speaker 10: and I noticed on one of the slides you highlighted Ukraine actually as a good market for you here in Q3. Is there a risk of this having a commercial impact on you? Thank you.

I noticed that 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.

Jens Birgersson: Yeah. So far, we haven't had the commercial impact on any of this. If you go back to the Russian situation, there have been some examples here in Denmark where, you know, leaving or staying, the alternative doesn't really exist of leaving anymore. We 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. That strategy stays.

Speaker 2: we haven't had a commercial impact on any of this. And if you go back to the Russian situation, there have been some examples here in Denmark where, you know,

We 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 here in Denmark, where.

You know, leaving or staying.

Speaker 2: the alternative doesn't really exist of living anymore. So, but we have been clear, protect the IP, keep control of our factories, even as a passive ownership, and receive our normal dividends rather than living four to five times more behind. So that strategy stays, and I hope you realize that we are quite convinced that

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.

Jens Birgersson: I hope you realize that we are quite convinced that we are willing to take quite a lot of criticism doing what we believe is the right thing to do rather than taking an easy decision and do what we believe is the wrong thing to hand over all assets and leave more money and our IP and know-how and all the expertise we have built up, you know, of these very good factories in Russia. We are very committed to that, and we take it. If we look into that situation, I saw now that just today, another big building material company came on the list today. They are listed in a lot of places. This one, Ukraine, yes, we are growing, and we have a humanitarian effort there.

Thus strategy stays and I hope you are.

Realize that we are quite convinced that.

Speaker 2: We are willing to take quite a lot of criticism.

We are willing to take quite a lot there Chris criticism.

Speaker 2: doing what we believe is the right thing to do, rather than taking an easy decision and do what we believe is the wrong thing, to hand over all assets and leave more money and our IP and know-how and all the expertise we have built up, you know, of this.

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 in our IP and know how in all of the expertise we have built up and all of this.

Speaker 2: very good factories in Russia. So we are very committed to that and we take it. Then, if we look into that situation, I saw now that just today another big building material company came on the list today. They are listed in a lot of places.

Have a good factor risks in Russia. So we are very committed to that and we would take it then if we look into that situation I saw now that just today another big building materials company.

It came on the list today.

For our list and a lot of places in this one.

Speaker 2: Ukraine, yes, we are growing. We are growing and we have a humanitarian effort there. We would like to continue that in Ukraine. This list doesn't have a legal implication, but something could happen in Ukraine. So we have asked those questions, so that...

<unk> growing we are growing and we have a humanitarian effort. There we would like to continue that into a crane.

Jens Birgersson: We would like to continue that in Ukraine. This list doesn't have a legal implication, but something could happen in Ukraine. We have asked those questions to that NACP department there, but obviously it's all fresh. We need to see what happens, whether we'll be allowed to continue with the humanitarian effort. We have been told that the business can continue, but again, we need to check it. We haven't seen any signs. I should say that so far we have not seen an impact. A lot of this discussion has been a Danish one. It has been here in Denmark. We haven't seen anything outside Denmark. At the moment, you know, I don't wanna sound overconfident.

This list doesn't have a legal implication, but something could happen in <unk>.

We have asked those questions to that.

Speaker 2: the NACP department there, so we have asked the questions, but obviously it's all fresh and we need to see what happens, whether we will be allowed to continue with the humanitarian 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...

And ACP.

Hartman there. So so we have asked two questions, but obviously, it's all fresh 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 but I haven't seen any signs, but I should say that so far.

Sure.

We have not.

Speaker 2: seen an impact and then a lot of this discussion has been a Danish one. It has been here in Denmark. We haven't seen anything outside Denmark. So at the moment, you know, I don't want to sound overconfident. I also said that

Seeing an impact and then a lot of this discussion has been.

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.

Jens Birgersson: I also said that, you know, we do the best of the situation and that's where we are, but we haven't seen an impact. I think the quarter again maybe underlines that the business is running quite well.

Speaker 2: You know, we do the best of the situation and that's where we are, but we haven't seen an impact.

We do the best of the situation and Thats, where we are but we haven't seen an impact.

Speaker 2: And I think the quarter, again, maybe underlines that the business is running quite well.

And I think the quarter again, maybe underlines.

The business is running quite well.

Casper Bloom: Okay. Thanks for that update. My second question is just maybe if you could elaborate a little bit on the European situation. Right now we see that markets are 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 North spreading towards the South?

Speaker 13: Okay, thanks for that update. My second question is just maybe if you could elaborate a little bit on the European situation. Right now, we see that markets are 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 North spreading towards the South?

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 markets are tough in northern and eastern Europe in general and better in southern Europe or at least more resilient.

Do you see a risk of issues most rating towards the south.

Jens Birgersson: Yeah, I think you heard that I talked about France, Great Britain, Spain, and then if you move east, Romania, Croatia are doing quite well, and then the Nordics and Germany and then eastward, the big eastern European countries to the west. I think it comes down to this general, very negative sentiment with the PMI around 40 in Germany. I don't know if it's true, but you know, if you read The Economist, they will say, "If Germany stops, Europe will stop eventually." Is that the case? That's as much intelligence I have to that. Leave it out there as a risk, and you are right, Southern Europe is doing better. The Med is doing better. That's what we see. The further north you come, the worse it is.

Speaker 2: I think you heard that I talked about France, Great Britain, Spain, and then if you move east, Romania, Croatia are doing quite well, and then the Nordics and Germany, and then eastward, the big eastern European countries to the west. So I think it comes down to this.

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 address so I think it comes down to this.

Speaker 2: general very negative sentiment with the PMI around 40 in Germany, whether our old rule, and I don't know if it's true, but you know, if you read Economist, they will say if Germany stops, Europe will stop eventually. Is that the case? That's as much intelligence I have to that, leave it out there as a risk.

Very negative sentiment committed 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 European stop eventually.

Is that the case, that's us as much intelligence I have to that.

Leave it out there as a risk.

Speaker 2: And you are right. Southern Europe is doing better. The Med is doing better. That's what we see. The further north you come, the worse it is. The further east you come, on average, it's getting worse.

And Youre right Southern Europe.

It's doing better than that just doing better that's what we see at the further north you come to our suggests the further east you come.

Jens Birgersson: The further east you come, on average, it's getting worse. Okay.

On average it's getting worse okay.

Casper Bloom: Okay. Thanks a lot. Just to repeat, Claus, well done so far. Quite impressive.

Speaker 8: Thanks a lot. And just to repeat Klaus, well done so far. Quite impressive. Thanks a lot. Thanks.

Okay. Thanks, a lot and just two were to repeat cloud well done so far quite impressive.

Jens Birgersson: Thanks a lot. Thanks.

Thanks.

Jens Birgersson: Last question.

Operator: The last question for today comes from the line of Simon Bikawa with JP Morgan. Please go ahead.

Last question just a question for today comes from.

Speaker 3: Comes from the line of Zion Bikawa with J.P. Morgan. Please go ahead.

Comes from the line of <unk> with J P. Morgan. Please go ahead.

Simon Bikawa: Good morning, Jens. Thanks for taking my question. Just coming back to pricing, you mentioned, you know, safeguarding market share in the press release. What needs to happen in order for you to think about price decreases? And then secondly, I appreciate the more pessimistic view on Europe for next year. Can you talk a bit more about your early expectations on North America, please? Thank you.

Speaker 14: Mon, thanks for taking my question. Just coming back to pricing, you mentioned, you know, safeguarding market share in the press release. What needs to happen in order for you to think about price decreases? And then secondly, I appreciate the more pessimistic view on Europe for next year. Can you talk a bit more about your early expectations on North America, please? Thank you.

Good morning, and thanks for taking my question just coming back to pricing you mentioned.

<unk> market share in our press release.

And in order for you to think about price decreases and then secondly, I appreciate the more pessimistic view on your next year can you talk a bit more about your early expectations on North America. Please thank you.

Jens Birgersson: Oh, sorry, I went offline here. Simon, we have reduced prices in some segments, and we have increased them in other segments. It's a whole collection. We have many applications, and it's a mix of things. I would say, you see the total that has been relatively stable, but there are quite a few segments where the price is down a bit, and there are some segments up. It's an active price management across the different applications and countries. For example, if you look at that big order I mentioned, the price level of that order is lower than it was if we would have tried to take that, you know, two years back, you know. We have a different situation. There has been some of that.

Speaker 2: Oh, sorry. Sorry, I went offline here. So, Simon, we have reduced prices in some segments, and we have increased them in other segments. So it's a whole collection. We have many, many applications.

Oh, sorry, sorry, I went offline here.

So assignment, we have reduced prices in some segments and we have increased them in other segments. So it's a whole collection, we have many many applications.

Speaker 2: and so it's a mix of things. I would say the net, you see the total that this has been relatively stable, but there are quite a few segments where the price is down a bit and there are some segments up. So it's an active price management across the different applications and countries. So, for example, if you look at that big order I mentioned,

So it's a mix of things so I would say.

Next 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.

For example, if you look at that Big order I mention the price level of that order is lower than it was if you're bored.

Speaker 2: The price level of that order is lower than it was if we would have tried to take that

Tried to take that.

Speaker 2: know, two years back, you know, but we have a different situation. So there has been some of that. Prices on products in Poland are down, okay, they're down. In flat-roof businesses, lower pricing, other segments not. So it's a mix.

Two years back, but we have a different situations. So there has been some of that.

Jens Birgersson: Prices on products in Poland are down. Okay? They're down. In the flat roof business is lower pricing, other segments not. It's a mix. We go to the sentiments for Europe. We covered that. For the US and Canada at the moment, the only fear we would have in the US at the moment is this whole debt story, something happens, the whole places crash, and that's it. We haven't seen any of that. We saw that dip. They took out inventory, and then we have had a very good business. Our challenge now is actually to work back the backlog, the delivery time, because due to the strike, we have too long delivery time. We see the opposite.

<unk> system projects in Poland are are down okay. The Dol.

No.

In a flat roof business has lower pricing of the segments not so it's a mix and then we go to them.

Speaker 2: And then we go to the sentiments for Europe , we covered that for the U.S. and Canada at the moment.

Intimates for Europe recovered for the U S and Canada at the moment.

Speaker 2: The only fear we would have in the U.S. at the moment is.

The only.

In February we would have in the U S. At the moment is.

This whole deck story, something happens to hold prices crash.

Speaker 2: this whole debt story, something happens, the whole place is crash.

Speaker 2: And that's it. But we haven't seen any of that. We saw that deep.

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.

Speaker 2: They took out inventory and then we have had a very good business. Our challenge now is actually to work back to back the delivery time because due to the strike, we have too long delivery time. So we see the opposite. So at the moment, our outlook for next year is.

Jens Birgersson: At the moment, our outlook for next year is a single-digit growth in North America, or something like that. That's the base assumption. We don't see anything apart from if some macro story come in again and change it overnight. That could happen, but it's not in our plan.

For next Crs is a single digit growth in North America or.

Speaker 2: It's 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 and change it overnight. And that could happen, but it's not in our plan.

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.

Simon Bikawa: Okay. Thank you.

Jens Birgersson: Okay. Thank you, Simon.

Okay. Thank you okay. Thank you Simon.

Operator: Ladies and gentlemen, this concludes the Q&A session. I'll now hand back to the host for any closing comments.

Speaker 3: Ladies and gentlemen, this concludes the Q&A session. I'll hand back to the host for any closing comments.

Ladies and gentlemen, this concludes the Q&A session.

Back to the host for any closing comments.

Kim Andersen: Thank you very much. Thank you very much for everybody for the very good and interesting questions. I know that there were a few of you who are still on the question list. Of course, you're welcome to give me a call afterwards. With this, we close the session for today and wish you a pleasant day.

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.

Speaker 1: Thank you very much and thank you very much for everybody for the very good and interesting questions. I know that there were a few of you who were still on the question list. Of course, you're welcome to give me a call afterwards. And with this, we close the session for today and wish you a pleasant day.

And with this we close the session for today and Alicia at present date.

Yeah.