Q4 2023 Rockwool AS Earnings Call

February 9, 2024

I am pleased to present CEO in speed or something.

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 interview question would go through a presentation and give you an update on the results for the full year and fourth quarter of 2023 afterwards, we'd be ready to answer all your questions.

Before I hand over the word to inspiration I must ask you to notice type two which is the forward looking statement. Please be aware that this presentation contains uncertainties.

Now we can go to the next slide which is slide three inspiration I will now handle the word to you.

Good morning.

<unk>.

I would just say a few words to this slide before we move on to the quarter. So remember.

When we went into this year be burned a little bit more pessimistic about the outlook. There was a lot of macroeconomic factors some quite big uncertainties restart.

We started off with guiding at a decline of up to 10% on the top line in.

Margins around 10% to 12% in us we have progressed through the years.

We have kind of improved the quarters versus the previous year and this last quarter boss.

Yes.

The strongest quarter of the year compared to the previous year I'll be ended up then on minus 4% top line for the whole year.

And.

Around 14% to 14, 3% EBIT margin for the full year. So we are we are satisfied with this.

Look into the next slide queues Q4.

Going through the number of serious to first.

First quarter of 'twenty to 'twenty, four, but we actually had a bit of growth like for like yeah.

Currencies.

We were up 2% we have quite a few.

Negative currency effects, but.

And and the happy to see that every month of the quarter had growth both.

Both are in volumes.

I'll say, it's so that's nice.

Comparing brad to diverse some sort.

Brad the differences in different regions. So in some places rather might've played into December.

But if you look at the overall temperature and read the chart.

Aggregated it was pretty much the same weather.

2022, and 23 at the end of the year.

Yeah.

The EBIT margin in Q4 landed at 14, 4%. So it's obviously significantly up from the previous year, but we still have that the race between raising prices.

The energy shock that started in Q3 last year or the previous years 'twenty to 'twenty two.

That said considering that we had quite a quite a big one off in Q4 the factory the biggest one being the factory close closer of the factory, we acquired a few spike in Sweden.

The profitability was good in Q4.

Looking at net profit that that is all the only you know basically flat.

<unk> greatly impact to buy by the unrealized.

Change rate losses, but underlying lay on the EBITA lab, but a bit to such rights is solid growth.

Kim can answer more questions on that later.

Let's move on to I think the skip slide five full year on the go to slide six.

Looking at the quarter, we have had a 2% growth and.

Basically both businesses more or less the same so marginal difference at 4% exchange rate difference.

The growth in systems.

Came in.

Slightly lower than installation.

And the reason for that the best way to main contributing factors to warm this rock core North America Baby.

<unk> done quite well on installation in North America that continuous.

But on the rock phone aside we have soft a little bit on north Todd how they read a good top line quarter and then overall rock panel has some tied to a great quarter.

Kim Junge Andersen: 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 listening only mode. As a reminder, this conference call is being recorded. First, Jens Birgersson will go through our presentation and give you an update on the results for the full year and Q4 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 two, which is the forward-looking statement. Please be aware that this presentation contains uncertainties. Now we can go to the next slide, which is slide three. Jens Birgersson, I will now hand over the word to you.

[music].

The topline it hasn't been anything until some market share or anything like that it's more than their segments are.

Suffering from the current downturn in the residential on their type of projects. So it's it's just up there a little bit more exposed both of them.

Experience don't they are significant businesses.

More than double digit declines in Q4.

If you look into the regions.

Western Europe minus 4%.

Yeah, there you have some contraceptive doing well, Spain, Norway U K.

Jens Birgersson: Good morning. I will just say a few words to this slide before we move on to the quarter. When we went into this year, we were a little bit more pessimistic about the outlook. There was a lot of macroeconomic factors and quite big uncertainties. We started off with guiding at a decline of up to 10% on the top line and margins around 10% to 12%. As we have progressed through the years, we have kind of improved the quarters versus the previous year. This last quarter was the strongest quarter of the year compared to the previous year, and we ended up then on -4% top line for the whole year and around 14% or 14.3% EBIT margin for the full year.

But obviously countries like.

Germany, the whole of Nordics, Denmark, Sweden, Finland down quite a lot.

So generally breast in Europe did and didn't do rather a few pure exceptionals or there are on the other hand, there wasn't anything surprising when we looked at the quarter before the quarter.

Pretty much what we expected to happen or a little bit better played out so.

No surprises in that.

In eastern Europe, a whole lot of countries.

<unk> quite well and Q4 part of that is that it was a very very challenging quarter last year, where you had destocking slowdown in a market energy prices and so part of that just because of the comparable.

Jens Birgersson: We are satisfied with that. Let's look into the next slide, Q4. Going through the numbers here is Q1 2024, where we actually had a bit of growth. Like for like currencies, we were up 2%. We have quite a few negative currency effects, but happy to see that every month of the quarter had growth, both in volumes and on sales. That's nice. Comparing weather, there were some weather differences in different regions, so in some places weather might have played into December. But if you look at the overall temperature and weather chart, aggregated, it was pretty much the same weather, 2022 and 2023 at the end of the year.

Some of these markets have different a different win win to pattern compared to last year, but but anyhow eastern Europe positive up 22%.

North America, and Asia summed up.

China also normal to say small, but China is not doing well and if you read the.

Financial press, we see that China is still a bit of trouble is so small it for us it doesn't really matter.

Asia overall healthy.

Healthy double digit development.

D P M.

It looks fine and then in North America, we had a quite equaled Canada U S growth.

But we have a capacity constraint off after district, we have been a bit of a back on the back foot backlog, we need to work through.

And we could do we could not deliver as much as we want it and so it wasn't a market constraint at Wassa.

Jens Birgersson: The EBIT margin in Q4 landed at 14.4%, so it's obviously significantly up from the previous year, where we still had that race between raising prices and the energy shock that started in Q3 last year or the previous year, 2022. That said, considering that we had quite a big one-off in Q4, the biggest one being the factory closure of that factory we acquired a few years back in Sweden, the profitability was good in Q4. Looking at net profit, that is only, you know, basically flat. That's greatly impacted by the unrealized exchange rate losses. Underlyingly on the EBITDA, EBIT, et cetera, it's all good. Kim can answer more questions on that later. Let's move on to...

Labor, a constraint, but kept up single digit.

Slide eight profitability.

Yeah, we.

We experienced a quarter, where compared to Q3 energy prices remain stable there are some differences.

Some of that in Utah, and it talks about talk a little bit somewhat down but in aggregate. They they were stable.

And then on pricing.

For Q3.

Pricing was stable and we didnt shift pricing up not down roughly stable and then we do with them.

Stable cost positions on them.

Made.

Improve the profitability the comparable to last year. If you go back to Q3 'twenty two in Q4 'twenty to dull smoggiest, especially in Q3, that's where the energy energy shock kicked in on the bar incorrectly price to deal with that no chance to adopt so quickly and that would be.

Jens Birgersson: I think we skip slide 5, full year, and we go to slide 6. Looking at the quarter, we have had 2% growth and basically in both businesses, more or less the same. Marginal difference of 4% exchange rate difference. The growth in Systems came in at slightly lower than Insulation. The reason for that are basically two main contributing factors. The one is Rockfon North America, where we have done quite well on insulation in North America. That continues, but on the Rockfon side, we have softened a little bit and not had a really good top-line quarter. Overall, Rockpanel hasn't had a great quarter in terms of top line. It hasn't been anything in terms of market share or anything like that.

Start to get to drive it.

In Q4 last year still on the lower level and then throughout the year rehab and got a better balance between cost and price although.

Pricing this year, you could say our margin on the off or flattish.

Slide nine.

Yeah.

And nothing really to comment there except for that we have the 60 million euro.

And our system division of one offs.

And as you know, we very seldom talk about one offs, but when it's this magnitude would need two.

Two.

To kind of make it visible to you. So it's not that the business has deteriorated apart from that it is a one off.

We also see that in our.

New small business segments. For example, we have two incubation business. There's one that's prefab houses and the other is a rain water systems when when times are tough.

Jens Birgersson: It's more that their segments are suffering from the current downturn in residential and their type of projects. It's just that they are a little bit more exposed. Both of them experienced on their significant businesses more than double-digit declines in Q4. If you look into the regions, Western Europe, minus 4%. There you have some countries that are doing well, Spain, Norway, UK. Obviously countries like Germany, the whole of Nordics, Denmark, Sweden, Finland, down quite a lot. Generally, Western Europe didn't do well with a few exceptions. On the other hand, there wasn't anything surprising when we looked at the quarter. Before the quarter, pretty much what we expected to happen or a little bit better played out. No surprises in that.

Especially the proof of houses that goes mainly into residential.

That software, so a little bit extra extra marching about time so.

[music].

We see that we lose a little bit of margin by having those businesses. It doesn't mean, they're going to be going to stop doing them and we keep working but it does impact the margins a little bit.

Slide 10.

Investment activities. If you just keep going no no real changes or no project. So you don't recognize the main wellness the flaw in Rockwall and then also in France, where we now have the Tam.

Tamper lifting all the legal blockages Saab.

The building permit.

It'll be crude on the paper proceeds fully but we have opted not to do that we do some light construction work put top defense.

Pulled in electricity under side for the construction cubicles. So the construction hearts and we leave it at that and then we are right now during Q3 to tidy up those final.

Jens Birgersson: In Eastern Europe, a whole lot of countries were doing quite well in Q4. Part of that is that it was a very, very challenging quarter last year where you had destocking, slowdown in the market, energy prices, and so part of that is because of the comparable. Also some of these markets have different winter pattern compared to last year. Anyhow, Eastern Europe positive, up 22%. North America and Asia summed up, China, as normal to say, is small, but China is not doing well. And if you read the financial press, we see that China is still in a bit of trouble. It's so small, for us, it doesn't really matter. Asia overall healthy, double-digit development and, you know, GDP and it looks fine.

Q1, sorry, sorry, thanks, Kim so in Q1, but then foresee that the legal system will work through this and make that.

The format of Icl's decisions that we predict will happen. So at this stage, we see we see a lower risk for that that would not be cleared up but I should also say differentially ecosystem duston tab.

Clearly defined a.

Time timelines for when things should come up in court, we have some estimates today, but.

Our our our assessment at this moment is thought it would be done in Q1.

Slide 11 cash flow.

Nothing much to say about that it's fundamentally more EBITDA.

Fine.

Such as factor in networking capital management, so that contributes to the cash flow and I think now criminals to precise number 239, mainly on your own negative depths will come out of.

Jens Birgersson: In North America, we had quite equal Canada, US growth, but we were capacity constrained. After the strike, we have been a bit on the back foot. We have a backlog we need to work through, and we could not deliver as much as we wanted. It wasn't a market constraint, it was a delivery constraint that kept that single-digit. Slide 8, profitability. We experienced a quarter where compared to Q3, energy prices remained stable. There were some differences, you know, some of the energy types went up a little bit, some went down, but in aggregate they were stable. On pricing compared to Q3, pricing was stable. We didn't shift pricing up, not down, roughly stable.

Of that we had the little depth for a while but not be are net cash positive.

And.

Felt in light of that but the dividend.

Share back program, especially the share buyback program also not logical logical things so on the next slide.

Well, you'll see the share back program, we have put.

Put out to start getting that announcement on that but.

With my mathematics, if you add those two up you end up at about 5% total deeds onto share.

Is better than the normal 2% I don't want to keep.

Move on to the next slide.

A little bit of feedback on the sustainability.

Jens Birgersson: With the stable cost position and then made improve the profitability. The comparable to last year, if you go back to Q3 2022 and Q4 2022, those margins, especially in Q3, that's where the energy shock kicked in, and we were incorrectly priced to deal with that. No chance to adapt so quickly. We started to get it right in Q4 last year, still on a lower level, and then throughout the year we have then got a better balance between cost and price. Although pricing this year, you could say are marginally up or flattish. Slide nine. Nothing really to comment there except for that we have the EUR 60 million in Systems division of one-offs. As you know, we very seldom talk about one-offs.

And we have issued a sustainability report second yeah, we do that in February.

Together with the annual report.

Europe.

One could say house, maybe lost a little bit of pace on the snob. It all the macroeconomic and political geopolitical turbulence rehab and close focus on this we have kept going.

And if you look at the gold as you see here are two sets of goals. We did one set of goals back in 2016 for 2030, Davor STG related goals and they had to meet point target level of 20 to 22 between 10 to 15 I'm trying to.

<unk> gave you put milestone admitted we ahead on everything there and is progressing well.

Walter will be important here with scope, one and two sue to emission reductions will be the the market kind of supports us b b b can sell products and that there is an appreciation for product. So Todd lowers you too intensive as we tried to put.

Jens Birgersson: When it's this magnitude, we need to kind of make it visible to you. It's not that the business has deteriorated apart from that. It is a one-off. We also see that in our new small business segments, for example, we have two incubation businesses. One is prefab houses and the other is our rainwater systems. When times are tough, especially the prefab houses that go mainly into residential, that suffers a little bit extra much in bad times. We see that we lose a little bit of margin by having those businesses. It doesn't mean we're gonna stop doing them. We keep working, but it does impact the margins a little bit. Slide 10. Investment activities, we just keep going.

Those investments maybe you see the market is more.

But come into it.

And then below baseline year 2019 debt there you see the science based targets and that's that's also progressing in that.

That target is challenging because it's an absolute values when we grow organically, we kind of make.

Make it worse for ourselves if we acquire companies, we can add it to the target and the baseline, but not not for their organic growth I must be primarily grow organically that's.

So a little bit of a challenge but rehab.

The means to achieve this on the one hand, we are working on energy efficiency and production.

And we also work on the technology innovation, where we had gotten very far on the <unk>.

Trickle melting technologies and also gas melting biogas.

Jens Birgersson: No real changes and no projects you don't recognize. The main one is the Flumroc one and also in France, where we now have the temporary lifting of the legal blockages of the building permit. We could on paper proceed fully, but we have opted not to do that. We do some lighter construction work, put up the fence, we pulled in electricity on the side for the construction cubicles or the construction huts, and we leave it at that. We are waiting now during Q3 to tidy up those final Q1, sorry. Thanks, Kim. In Q1, we then foresee that the legal system will work through this and make that formalize those decisions that we predict will happen.

[music].

An intermediate step so that's the conversion thing where youll see B now gonna do the commercials in Switzerland for the rock business.

Also now launched quite a big program in the Netherlands launch it but we also have other innovations we need to work on for example, the binder, we are putting in more.

Say natural binders, which would reduce emissions and reduce C. O two under greenhouse gases and then obviously circularity plays a role.

All in all so we are driving our circularity agenda sought to improve the situation overall at this stage, we are committed to spend about a 100 million 100 million.

100 million Euro year on the Green part letter on it might be Morris, we grow about 100 million would be keep keep going on that and then we have also added one new commitment next slide and that this is a net Sierra.

Jens Birgersson: At this stage we see a lower risk that will not be cleared up. I should also say the French legal system doesn't have clearly defined timelines for when things should come up in court. We have some estimates today, but our assessment at this moment is that it will be done in Q1. Slide 11, cash flow. Nothing much to say about that. It's fundamentally more EBITDA and fine, and satisfactory working capital management. That contributes to the cash flow. I think now Kim knows the precise number, EUR 239 million negative debt. We have come out of that. We had a little debt for a while, but now we are net cash positive.

Green House gas goal by 2050, how that works is that you take scope one two and three.

And in our case the baseline the areas 2019, and that basically we need to reduce that with nine 2% and the rest we can deal with offsetting that sure. So the industrial that called means.

We haven't committed to that before.

And the reason we didn't commit whilst we did not understand.

What the definition was and now we've seen that if you get to 90% and then you can do some offset to immerse yourself talk.

As engineers and our engineers can see a way through it.

And and therefore, we commit to we didn't want to commit before the definition, where clear should be say said, though that even.

Jens Birgersson: We felt in light of that the dividend and the share buyback program, especially the share buy program, was a logical thing. On the next slide, twelve, you see the share buy program. We have put out a stock announcement on that. But with my mathematics, if you add those two up, you end up at about 5% total yield on the share. It's better than the normal 2% we normally keep. Move on to the next slide. A little bit of feedback on sustainability. We have issued the sustainability report second year. We do that in February, together with the annual report. Europe, one could say, has maybe lost a little bit of pace on this now with all the macroeconomic and geopolitical turbulence. We haven't lost focus on this.

Even more important that that commitment is that we deliver on our trends are to enter into 'twenty.

34 goals are not leave leave all the work to the next management to take care of so so we are working hard on that then you may also have seen that the U S. Now talked about the Trenton Fort to gold.

Personally to move to trying to 50 goal to trend to 40.

Doesn't change much I think it's more important to put the goal that is really in the mandate period of the people taking the decisions. So one would have hoped maybe that they put tougher goals into next four or five or six years, and then that we progressed towards them.

Let's go to the outlook.

Okay.

Good day to everyone and welcome to Aqua <unk> conference call regarding the results for full year 2023 my.

Yeah.

Next slide.

To start with the top line what is that we are seeing we have said at this stage. Obviously, we don't have any backlog for the second half of the year, we don't have any.

My name is cumulative.

CFO hopefully is today I'm pleased to present CEO in speed awesome.

Jens Birgersson: We have kept going. If you look at the goals, you see here are two sets of goals. We did one set of goals back in 2016 for 2030. They were SDG-related goals, and we had the midpoint target level of 2022. Between 2015 and 2030, we put milestone in the middle. We are ahead on everything there, and that's progressing well. What will be important here with Scope 1 and 2 CO2 emission reductions will be that the market kind of supports us so that we can sell products and that there is an appreciation for products that have lower CO2 intensity. We try to put those investments where we see the market is more welcoming to it.

For the first part of this call all participants will be in a decent only mode.

At the reports of market development that you have.

As a reminder, this conference call is being recorded.

Have continued.

First in speakers I will go through our presentation and give you an update on the results for the full year and fourth quarter of 2023 afterwards, we'd be ready to answer all your questions.

It took on macroeconomic what tabular turbo down so we cannot foresee that so things can happen along the way, but basically receipt to two effects on the top line we see.

Before I hand over the word to distribution I must ask you to notice type two which is the forward looking statement.

Industry.

Hospitals education Lasher offices.

Please be aware that this presentation contains uncertainties.

We also see age fact based snakes precede heavy density facade business, we see that business kind of picking up and I think that is because there have been investments that have been frozen.

Now we can go to the next slide which is slide three interviews and I will now handle the way to you.

Good morning.

I would just say a few words to this slide before we move on to the quarter. So.

And now some of the businesses on onshoring of Nearshoring. They see that's okay, if you're going to have a recession or a continual slow slow down by the time, we now have built whatever you're going to build and we get into 'twenty to 'twenty five and on the situation will improve or not.

We went into this year it would be burned a little bit more pessimistic about the outlook. There was a lot of macroeconomic factors some quite big on Occupancies.

Jens Birgersson: Below baseline year 2019, there you see the Science Based Targets, and that's also progressing. That target is challenging because it's an absolute value. When we grow organically, we kind of make it worse for ourselves. If we acquire companies, we can add it to the target and the baseline, but not for the organic growth. As we primarily grow organically, that's a little bit of a challenge. We have the means to achieve this. On the one hand, we are working on energy efficiency and production. We also work on the technology innovation, where we've gotten very far on the electrical melting technologies and also gas melting, biogas, as an intermediate step.

It started off with guiding at a decline of up to 10%.

Also think that people have stopped worrying about that the interest will increase so now they can calculate with an interest rate and then this along the way.

The top line in.

Margins around 10% to 12% in us we have progressed through the years.

We have a kind of improve the quarters versus the previous year and this last quarter boss.

<unk> interest rate would be the same or lower them.

Probably lower than that means.

Was the strongest quarter of the year compared to the previous year I'll be ended up then on minus 4% top line for the whole year.

Some of that backlog of stock projects have started to move a bit on the other side on the residential side both the newbuild.

Uh huh.

And on the renovation side, we see almost the opposite trend, especially on the new bit Debbie are at very low backlog levels there.

Around 14% or 14, 3% EBIT margin for the full year. So we are we are satisfied with that lets look into the next slide queues Q4.

<unk>.

Financing of new bid projects.

Going through the number of serious to first the first quarter of 'twenty to 'twenty, four, but we actually had a bit of growth.

Jens Birgersson: That's the conversion thing where you see we now gonna do the conversions in Switzerland for the Flumroc business. We also now launched quite a big program in the Netherlands. We also have other innovations we need to work on. For example, the binder, where we are putting in more, I would say, natural binders that will reduce emissions and reduce the CO2 and the greenhouse gases. Then obviously circularity plays a role. All in all, we are driving our circularity agenda so it improves the situation. Overall, at this stage, we have committed to spend about EUR 100 million a year on the green part. Later on, it might be more as we grow, but EUR 100 million, and we keep going on that.

And energy efficiency money, we see in Germany for example, 16 or 17 billion uncommitted.

So like for like Oh.

Somebody just started to take effect so those two.

<unk> the Beaver up 2%, we have quite a few.

Facts.

Playing out so we have said, we cant exactly decide which one will win and we had NMDA renovation came around so we just put our forecast straight in the middle There and then we monitor that as we move at all on the profitability mix change a little bit of a heavier mix in our outlook due to.

Negative currency effects spot.

And happy to see that every month of the quarter or how to growth both in volumes and Oh well sites. So that's nice.

Comparing Brad the diverse song.

Some red the differences in different regions. So in some cases, rather might've played into December.

Those factors I described therefore be put up on around 13% and again as we move through the year to see how that mix swings we haven't assumed.

But if you look at the overall temperature and read the chart.

Aggregated it was pretty much the same weather.

Any significant price increase as we said, we're going to basically manage our <unk>.

Trying to trying to 223 at the end of the year.

Managed price and cost and at this stage, we see relatively stable across but again. There is this aspect of the salary pressures in Europe it sector.

The EBIT margin in Q4 landed at 14, 4%. So it's obviously significantly up from the previous see ever we still have that.

Jens Birgersson: Then we have also added one new commitment. Next slide. That is this, net zero, greenhouse gas goal by 2050. How that works is that you take Scope 1, 2, and 3, and in our case, the baseline year is 2019. Basically we need to reduce that with 90%, and the rest we can deal with offsetting measures. That's what that goal means, and we haven't committed to that before. The reason we didn't commit was that we did not understand what the definition was. Now we've been seeing that if you get to 90%, and then you can do some offsetting measures on top, we as engineers and our engineers can see a way through, and therefore we committed. We didn't want to commit before the definition were clear.

Race between raising prices.

That will land us without before five 6% three <unk> percent that should become increasingly clear during the spring at the moment I guess, a fair assumption as say four 5%.

And it just shocked that started in Q3 last year or the previous year trend to trend to two.

That said crossing the rain that we had quite a quite a big one off in Q4.

Our salary increases in personnel expense increases with some some regions doing much more if you look at North America has been under severe sadler refresher under job that are now in the U S is again very very.

Factory the biggest one being the factory close closure of the factory, we acquired a few spike in Sweden.

The profitability was good in Q4.

Yeah, So a lot of job creation and its tight to get people to work.

Looking up net profit that that is all the only you know basically flat thus greatly impacted by by the unrealized exchange rate losses, but underlying lay on the EBITA lab, but a bit to such rights.

So that would probably speak for even higher salaries in the U S on the other hand.

We don't see much of a challenge in passing that through.

Jens Birgersson: should be said though that even more important than that commitment is that we deliver on our 2030 and 2024 goals and not leave all the work to the next management to take care of. We are working hard on that. You may also have seen that the EU has now talked about the 2040 goal. Personally, to move the 2050 goal to 2040 doesn't change much. I think it's more important to put the goal that is within the mandate period of the people taking the decisions. One would have hoped maybe that they put tougher goals in the next four, five, and six years, and then that we progress towards them. Let's go to the outlook. Next slide. We'll start with the top line. What is it we are seeing?

On price Soar.

We can balance it out so it's nothing we are concerned about.

Good.

It came kind of answer more questions on that later, let's move on to I think the skip to slide five for the around the go to slide six.

With that I would like to hand over for questions.

We will now begin the question answer session.

I'm looking at the quarter, we have had a 2% growth and.

Ask a question with one of your telephone keypad.

Using a speakerphone please pick up your handset before pressing the Keith.

Basically both business is more or less the same some marginal difference at 4% exchange rate difference.

You bet anytime Youre question is being addressed and you would like to withdraw your question. Please press Star then two.

The growth in systems.

The first question comes from the line of Alexander <unk> with Capex Sugar. Please go ahead.

Came in at.

The slightly lower than the installation.

Hi, good morning.

And the reason for that that basically Q2 main contributing factors to one this rock core North America Barbie.

Congratulations on the nice set of results.

Wanted to confirm do you hear me correctly.

Yeah, I hear Ya, Yes, we hear you.

<unk> done quite well on installation in North America that continuous.

Okay. So the first question would be on the call.

The utilization rate.

But on the rock phone aside we have suffered a little bit and not tied to how they rate a good top line quarter and then overall rock panel has some tied to a great quarter, and Kurt and trustful topline it hasn't been anything until some market share or anything like that it's more than their segments.

I know you don't typically state those.

Of course, according to our calculations that the capacity utilization rate should be around 75%.

Jens Birgersson: We have said at this stage, obviously, we don't have any backlog for H2. We don't have any better reports of market development than you have. We have continued political, macroeconomic, what have you, turbulence. We cannot foresee that. Things can happen along the way. Basically, we see two effects on the top line. We see industry, hospitals, education, leisure, offices. We also see HVAC business. We see the heavy density facade business.

Despite these low utilization rates margins came in really high which was a bit of an outlier. So I wonder. If this can be explained by some capacity out of the market from markets like Russia.

<unk>.

Suffering from the current downturn in the residential on their type of project. So it's it is just up there a little bit more exposed both of them have experienced on that significant businesses.

Inaccessible or the maintenance and Jim plants.

Just wondering how we can square it is and how you how you see the capacity utilization going into 2024.

More than double digit declines in Q4.

And then the second question would be if you could maybe give an update on your pricing strategy versus competition.

If you look into the regions.

Western Europe minus 4%.

<unk> into 'twenty, two and four because we read them.

Yeah.

Jens Birgersson: We see that business kind of picking up, and I think that is because there have been investments that have been frozen, and now some of the businesses onshoring and nearshoring, they see that, okay, if you're gonna have a recession or a continued slowdown, by the time we now have built whatever we're gonna build, and we get into 2025 and on, the situation will improve. I also think that people have stopped worrying about that the interest will increase. Now they can calculate with an interest rate, and then they say along the way, probably the interest rate will be the same or lower, probably lower. That means that some of that backlog of stock product have started to move a bit.

That phone players are increasing their prices with 8% to 10% and Europe Western Europe, whereas we Keystone players like yourselves, maybe increasing prices with two 4% is that correct and weather.

You have some.

Congress also doing round, Spain, Norway U K.

But obviously countries like.

Germany.

The whole of Nordics, Denmark, Sweden fin dumbed down quite a lot.

And how should we see them.

But at this placing of real cool in the market. Thank you for that.

So generally breast in Europe did and didn't do right, but if you do your exceptionals or there are on the other hand, there wasn't anything surprising when we looked at the quarter before the quarter.

So.

We protect the capacity thanks for the for the good questions and as you know I'm, a little bit constrained in answering that but I can say like this.

Pretty much what should we expect it to happen are a little bit better play dogs, so no surprises and not in eastern Europe, a whole lot of countries.

Loading or capacity utilization in North America, and Asia is high Okay and in our Asia business is small so you'll have a situation that we really need more capacity.

We're doing quite well in Q4 part of that is that they are also very very challenging quarter last year, where you had destocking slowdown in a market energy prices and so saw part of that just because of the comparable.

It doesn't mean, we don't have a.

Jens Birgersson: On the other side, on the residential side, both the new build and on the renovation side, we see almost the opposite trend, especially on the new build. There we are at very low backlog levels, very little financing of new build projects, and energy efficiency money we see in Germany, for example, EUR 16 or 17 billion committed hasn't really started to take effect. Those two effects are playing out. We have said we can't exactly decide which one will win, and whether the energy renovation comes around, so we just put our forecast straight in the middle there, and then we monitor that as we move it on. On the profitability mix change, little bit of a heavier mix in our outlook due to those factors I described, and therefore we put that on around 13%.

Capacity in the U S. It's just that the way our business works is it doesn't matter. If we are in full capacity.

The high season, if we have wasted their capacity during the low season, then the capacities gone. So we have some more capacity brought to be are running on a very high utilization at the moment to catch up on delivery times and all the rest so bad you don't tab absorption issues.

Also some of these markets have been different a different win to bring to pattern compared to last year, but but anyhow eastern Europe positive up 22%.

North America, and Asia summed up the China also normal to say, it's small but China.

Then you look in Europe, what we did and that we did already 2022 in the autumn we did it.

It's not doing well and if you read.

The financial press supersede that China is still a bit of trouble is so small it for us it doesn't really matter as.

<unk> deep cut.

Cut of capacity down so be basically pulled it down and then I won't say if it's.

Asia overall healthy double digit development.

70, 865, whatever they say, but we took a deep cut up on capacity and we have also taken.

You don't need a P M.

That's fine and then in North America, we had a quite equaled Canada U S growth.

The all blind, we're not producing we use short time work in Germany, and we do all of this mash ups, but this is something we have practiced.

But we have a capacity constraint off after district, we have been a bit of a back on the back foot fab backlog, we need to work through an M. B could do we could not deliver as much as we want to have done so at wassa to market constraint. It was a deliberate constraint.

Jens Birgersson: Again, as we move through the year, we see how that mix swings. We haven't assumed any significant price increases. We say we're gonna basically manage price and cost. At this stage we see relatively stable cost, but again, there is this aspect of the salary pressures in Europe exactly where that will land. Will that be 4, 5, 6%, 3.5%? That will become increasingly clear during the spring. At the moment, I guess a fair assumption is, say, 4 or 5% salary increases and personnel expense increases, with some regions doing much more. If you look at North America has been under severe salary pressure, and the job data now in the US is again very.

Quite a lot.

So that.

It should be pretty much set the business for this volume level.

It's not.

It's not perfectly optimize because we don't Wanna, especially on the white collar side.

Kept up saying that they did.

Slide eight profitability.

A lot more done than than we have done if we can avoid it because as you see the profitability is fine and if you go back to say 2014.

Yeah.

We experienced a quarter, where compared to Q3 energy prices remain stable there are some differences.

Riyadh.

11, and a half Towson dropped out some people and that's what we have today too. So we have had a big productivity improvement across the company. During the last nine years, so be take a little bit of beating on productivity consciously, but we have learnt a lot about how to.

Some of that in Utah, and it talks about talk a little bit somewhat down but in aggregate. They they were stable.

And then on pricing.

Pat for Q3.

Pricing was stable, we didn't shift pricing up not down roughly stable and then we do with the.

Make a lot of the cost variable and also to operate the factories efficiently. When you go down and shaped so maybe one to produce Monday to Friday, seven by 24 or some factor is even less so.

Jens Birgersson: Yeah, it's a lot of job creation, and it's tight to get people to work. That would probably speak for even higher salaries in the US. On the other hand, we don't see much of a challenge in passing that through on price. We can balance that out, so it's nothing we are too concerned about. With that, I would like to hand over for questions.

Stable cost position on them.

Made.

Improve the profitability the comparable to last year. If you go back to Q3 'twenty two in Q4 'twenty to dull smoggiest, especially in Q3, that's where the energy energy shocked kicked in be bar incorrectly price. So did without no chance to adapt so quickly and that would be stock.

So we have learnt a lot about how to do that without getting into massive under absorption.

On the pricing then I would say the following.

To get to drive it.

In Q4 last year still on the lower level and then throughout the year rehab that and got a better balance between cost and price. Although the price in D. C are you could say on margin or the off or flattish.

It's a little bit of a wait and see obviously in North America Asia different story.

Operator: We now begin the question and answer session. To ask a question, press star one on your telephone keypad. If you're using a speakerphone, please pick up the handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star two. The first question comes from the line of Alexander Craeymeersch with Kepler Cheuvreux. Please go ahead.

Normal markets, we have to do it should be said there'll be a very good business in North America, but we did deliver.

Issues, we have our priority is to make sure we can deliver to customers.

Slide nine.

Okay.

So maybe.

And nothing really to comment there except for the rehab. This 60 million Euro system Division of one offs and I soon I'll be very seldom talk about one offs, but when it's this magnitude we need to.

Maybe a little bit more careful in the pricing strategy to do that.

Alexander Craeymeersch: Hi. Good morning. Congratulations on the nice set of results. Just wanted to confirm you hear me correctly?

In Europe, I would say.

The fundamental view would be with the current inflation outlook that the drumbeat pricing, 1% to 3% will be in place, but it varies.

Jens Birgersson: Yeah, I hear you. It was a bit-

Mirella Vitale: Yes, we hear you. Yeah.

Alexander Craeymeersch: Fantastic. Okay. The first question would be on the capacity utilization rate. I know you don't typically state those, but according to our calculations, that capacity utilization rate should be around 75%. Despite this low utilization rate, your margins came in really high, which was a bit of an outlier. I wonder if this can be explained by some capacity out of the markets from markets like Russia that are inaccessible or the maintenance in German plants. I was just wondering how we can square this and how you see the capacity utilization going into 2024.

Uh huh.

To kind of make it visible to us so it's not that the business has deteriorated apart from that it is a one off.

Between the segments you know on the residential side, depending on what class will dos.

We have to adapt because we don't want them Lewis masses amount of market share. So that's a bit determined by how they do but.

And we also see that in our new small business segments. For example, rehab to incubation basically says walnuts prefab houses and the other is a rain water systems when when times are tough.

Occupancy prices May go down there in some markets, but overall, we would like to say small price increases single digit this year, but again being conscious about bread inflation goes and where competition goals. So I've always said my best outlook at the moment would be.

Especially the prefab houses that goal mainly interested Dan shull.

That software, so a little bit extra extra March in bad times. So.

A couple of percentage point up for the whole group, but at the moment with what we did in Q4.

We see that we lose a little bit to margin by having those businesses. It doesn't mean, you're going to be going to stop doing them and we keep working but it does impact the margins a little bit.

Alexander Craeymeersch: The second question would be if you could maybe give an update on your pricing strategy versus competition, I mean, into 2024, because we read that foam players are increasing their prices with 8% to 10% in Europe, in Western Europe, whereas we see stone players just like yourself maybe increasing prices with 3% to 4%. Is that correct? Whether and how should we see then the competitive placing of Rockwool in the market? Thank you for that.

We see it are quite good level reasonable level in relation to the inflation.

Slide 10.

Okay.

Investment activities, you just keep going no no real changes in oil projects. So you don't recognize the main wall Neste a flaw in Rockwall and then also in France, where we now have the.

Okay. Thank you for that.

To my colleagues.

The next question is from <unk> <unk> with Jpmorgan. Please go ahead.

Good morning. Thank you for taking my questions. Just two for me I was hoping you could provide the latest developments with regards to your hedging strategy.

Tamper lifting all the legal blockages Saab.

Jens Birgersson: Thanks for the good questions. As you know, I'm a little bit constrained in answering them, but I can say like this, loading or capacity utilization in North America and Asia is high, okay? Our Asian business is small. You have a situation there where we will need more capacity. It doesn't mean we don't have capacity in the US. It's just that the way our business works is it doesn't matter if we are on full capacity during the high season. If we have wasted the capacity during the low season, then the capacity is gone.

The building permit.

If we could on the paper proceed full live but we have opted not to do that with just some light construction work put top defense.

And then secondly, you kind of mentioned the shift full flat recent inflation that traditionally have lower margin and was just curious to know how materially lower these margins all that is kind of the other products. Thank you.

They pulled in electricity under side for the construction, Cuba called soldier construction Hearts and believe it adapt them that'd be a rating out during Q3 two.

I hand that question over to Kim because the hedging here.

Doing that thank you very much.

I doubt those final.

<unk>.

We have behalf and entered it to sort of midterm contracts, one in France, and one in Norway faller consumption of electricity and they continued throughout 2020 full as well and even into 2025. So those are sort of at a major sort of.

Q1, sorry, sorry, thanks Kim.

In Q1, but then foresee that the legal system and work through this and make that.

The format of Icl's decisions up to be predictive with Hopkins. So at this stage, we see we see a lower risk for the Dutch would not be cleared up but I should also say the French legal system Duston tab clear.

Jens Birgersson: We have some more capacity, but we are running on a very high utilization at the moment to catch up on delivery times and all the rest, so there you don't have absorption issues, yeah. You look in Europe, what we did, and that we did already 2022 in the autumn, we did a very deep cut of capacity then. We basically pulled it down, and then I won't say if it's, you know, 70, 80, 65, whatever it is. But we took a deep cut on capacity, and we have also taken, you know, the odd line we are not producing. We use short-term work in Germany. We do all of these measures, but this is something we have practiced quite a lot. We pretty much set the business for this volume level.

Go stay at both electrical plants sites on the gas and short term hedging for electricity, we have covered quarter, one and we had we had started taking a view that we do this quarter by quarter.

Clearly defined time timelines for when things should come up in court, we have some estimates today, but.

So that's where we stand right now.

<unk> B is still not decided.

Our our our assessment at this moment as such it would be done in Q1.

To fully color into quarter two yet so we're just monitoring it was just that Theres no big drama on the on the year on the.

On slide 11 cash flow.

The energy side right now so so we just take it.

Nothing much to say about that it's fundamentally more EBITDA.

At a time.

And find it.

Okay.

Such as factor in networking capital management.

And then on the margins.

<unk> contributes to the cash flow and I think now came in Ulster precise number two under 39, mainly on your own negative depths will be up come out dog.

But you've got a bit of growth.

On the flatter side, the Netflix or just right also the lowest priced product per unit inputs. So to say so the graph gross margin.

All dollar tree had the little depth for a while but not be are net cash positive.

Jens Birgersson: It's not perfectly optimized because we don't wanna, especially on the white collar side, cut more than we have done if we can avoid it, because as you see, the profitability is fine. If you go back to, say, 2014, we had 11,500, 12,000 people, and that's what we have today too. We have had a big productivity improvement across the company during the last 9 years. We take a little bit of beating on productivity consciously. We have learned a lot about how to make a lot of the cost variable, and also to operate the factories efficiently when you go down in shifts. Maybe only produce Monday to Friday, 7x24, or some factories even less.

It's lower power.

And we felt in light of that but the dividend.

The per unit to produce on the other hand the projects are more.

The share buyback program, especially the share back program also not logical logical thing so on the next slide.

More they're bigger.

And you tend to run longer so you have different setup costs and some of those projects. You can also produce to stock instead of produced water. So.

Well, you'll see the share back program and rehab.

Put out to stock or not announcement on that but read my mathematics, if you add those two opt you end up at about 5% total deeds onto shack.

There is a difference, but but what determines that says if you have a bit of volume growth and do they have a density than we do a pretty okay Cross dot volume growth, we will earn less but be talking a couple of percentage points, but again it depends on country. There's some that so it is very hard to say sometimes to dip.

It's better than the normal 2% to keep.

Move on to the next slide.

A little bit of feedback on the sustainability.

And we have issued a sustainability report secondly, yeah, we do that in February.

France.

Between.

<unk>.

The two segments in one country it could be outweighed by a contribute to higher price on a flat roof.

Together with our new report.

Europe, one could say house, maybe lost a little bit to pay Sunday snob. It all the macroeconomic and political geopolitical turbulence rehab and close focus on this we have kept going.

Gross instead, so there's all sorts of mixes, but generally said.

Jens Birgersson: We have learned a lot about how to do that without getting into massive under absorption. On the pricing then, I would say the following. It's a little bit of a wait and see. Obviously North America, Asia, different story. Normal markets, you know, we have to do it. It should be said, though, we have a good business in North America, but with the delivery issues we have, our priority is to make sure we can deliver to customers. Maybe we are a little bit more careful in the pricing strategy there. In Europe, I would say, the fundamental view would be with the current inflation outlook that the drumbeat pricing 1% to 3% would be in place, but it varies between the segments.

A slight negative mix.

But if you get volume growth you can make up for it.

And if you look at the gold as you see here are to set some goals. We did one set of goals back in 2016 for 2030.

Hey, thanks for taking the questions.

The next question comes from the line of Noncritical with UBS. Please go ahead.

Dave or STG related goals and they had to meet point target level trend to trend to two between 10 to 15 and I'm trying to third give you put milestone and admittedly a head on everything there and that's progressing well.

Good morning, Thanks for taking my questions.

Just on pricing I think you previously mentioned.

Here are a bit more sensitive to price them quite yet, but just wonder if you could update us.

Just thoughts there.

And then on the energy performance Directive I just wondered if you will.

Walter it'd be important to a reduced scope one and two so two emission reductions will be the the market kind of supports out so that would be the big concern probably some but there is some appreciation for products on top of lower suite to intensive as we tried to put.

So to get them to that.

And then in terms of the plant to convert from coal how many if you've actually done to date.

Yeah.

Two.

Two questions Richard wants to wants me to tag markers.

All of them are high.

Jens Birgersson: You know, on the residential side, depending on what glass wool does, we have to adapt because we don't wanna lose massive amount of market share. That's a bit determined by how they do, but I could see prices maybe go down there in some markets. But overall, we would like to say small price increases, single digit this year, but again, being conscious about where the inflation goes and where competition goes, yeah. I would say my best outlook at the moment would be a couple of percentage point up for the whole group. But at the moment with what we did in Q4, we sit at a quite good level, reasonable level in relation to the inflation.

Those investments, where we see the markets is more rather come into it.

Okay. So we start with what was the first one.

Okay.

Project pricing I would say the situation pretty much continues so we have been very successful on the big ones.

And then below baseline yet to touch the 19 day Youll see the science based targets and that's that's also progressing them that that target is challenging because it's an absolute value of Savannah, we grow organically.

And we put quite a big focus to get to know about what we have seen now lately as such.

The project backlog has you know.

Okay.

Make it worse for ourselves if we acquire companies, we can add it to the target under baseline, but not not further organic growth and I'll speak primarily grow organically that's.

There are more out there to quote on their more reality assertion and the competition is tougher on the smaller smaller projects than the big Gabon, and we also have more.

So a little bit of a challenge but rehab.

More competition from P M for depending on the type of factory or box building their building. So I wouldn't say anything has changed but obviously.

The means to achieve this on the one hand, we are working on energy efficiency and production.

And we also work on the technology innovation, where we had gotten very far on that.

If.

There will be.

A higher number of projects released depress should ease a little bit. So I don't think it will get worse it might ease a little bit but the most likely is subject will continue are roughly as you added last year.

Operator: Okay, thank you for that. I'll leave the floor to my colleagues. The next question is from Zaim Beekawa with J.P. Morgan. Please go ahead.

After call melting technologies, and also gas melting biogas or.

That's an intermediate step so that's the conversion thing where you see b now gonna do their commercials in Switzerland for the well.

Zaim Beekawa: Morning. Thank you for taking my questions. Just two for me. I was hoping you could provide the latest developments with regards to your hedging strategy. Secondly, you kinda mentioned the shift for flat roofs and facade insulation that traditionally have lower margins. I was just curious to know how materially lower these margins are versus kind of the other products. Thank you.

Rock business I'll be also now launched quite a big program in the Netherlands launch it but we also have other innovations we need to work on for example, the binder, but about putting in more.

On the energy performance.

The building directive.

There are two aspects to it one is all of this.

Renovation targets and all the rest and the other is are the goals on the.

I would just say natural binder, so trade reduce emissions and reduce C O two under greenhouse gases.

The solar PV installations on older of some new roofs.

Jens Birgersson: I hand that question over to Kim, because the hedging, he is doing that.

And then obviously circularity plays a role.

And.

Both of those in his current forms are.

Kim Junge Andersen: Thank you very much. Hi, Zaim. We have entered two sort of midterm contracts, one in France and one in Norway, for our consumption of electricity, and they continue throughout 2024 as well, and even into 2025. Those are sort of a major sort of hedging because they are both electrical plant sites. On the gas and short-term hedging for electricity, we have covered Q1, and we are sort of taking a view that we do this quarter by quarter. That's where we stand right now. We are still not decided to fully cover into Q2 yet. We are just monitoring it.

All in all so we are driving our circularity IDM does start to improve the situation overall at this stage, we have committed to spend about 100 med down 100 million.

Very positive very positive so nabil predict that the parliament would decide on that when this umbrella Google.

It is.

No.

Wondered maybe on your year on the Green part letter on it might be Morris, we grow about 100 million would be keep keep going on that and then we have also added one new commitment next slide and that this is a net zero greenhouse gas goal by 2050, how would that work.

The member states has to get around to do it.

Yeah. So we we we need to see how the member states. So our focus now is to work locally on those and see what they actually do about it.

For example, in Germany energy efficiencies, they averaged $6 70 billion, but we need to see what the what they actually decide and the member States and then ran beyond the start out better if you're going to redo our calculation of how much business that gives us and my my prediction.

Is that your tag scope, one two and three and in our case the baseline. The August 2019, and then basically we need to reduce that with 90% and the rest we can deal with offsetting masher. So the that's what that means and we haven't committed to that before.

Kim Junge Andersen: As I said, there's no big drama on the energy side right now, so we just take it a quarter at a time.

Though is that we will find that the calculation with Gabe.

And the reason we didn't commit whilst we did not understand.

A tremendous business projection.

Jens Birgersson: On the margins, when you get a bit of growth on the flat roof side, the net effect is right, also the lowest priced products per unit input, so to say. The gross margin is lower per unit you produce. On the other hand, the projects are more, they're bigger and you tend to run longer, so you have different setup costs. Some of those projects you can also produce to stock instead of produce to order. There is a difference, what determines is if you have a bit of volume growth and do the heavy density, then we do pretty okay. Constant volume growth, we will earn less, but we're talking a couple of percentage point. Again, it depends on country, this and that.

What the definition was and I've ever seen that if you get to 90% and then you can do some offset to immerse yourself talk.

And then we get back to the normal constraint of rare or the people to do the work.

And quite frankly, I don't think is a good situation now where.

We as engineers and our engineers can see a way through and and therefore, we commit to do we didn't Wanna comment before the definition, where clear should be say it said, though that the even more important that that commitment is that we deliver on our trends are to enter into 'twenty.

Where.

You have such a super low energy renovation and new boot dress Sudan shall happening that actually construction workers, leaving the industry.

And this is a very bad timing, so I hope governments would do something to take care of the 930000 construction workers in Germany and make sure no one leaves because when.

34 goals and not leave leave all the work to the next management to take care of so so we are working hard on that then you may also have seen that the U S. Now talked about the 24th to gold.

When that starts to hit the ground youre going to need more of them. So I think the constraint would be there. So we do both ways, we're going to calculate.

What golar stood a country is set and done we try to estimate what do the actual I believe going to happen. So I think we have reason to be.

Personally to move to trend to 50 goal to trend to 40.

Doesn't change much I think it's more important to put to go on that is really in the mandate period of the people taking the decisions. So one would have hoped maybe that they put tougher goals into next four or five or six years, and then that we progressed towards them.

Very optimistic about that but again the timing we haven't factored in a step up this year, that's not what's in our outlook. So maybe we can see something next year, maybe some countries started already this year than on the PV.

Jens Birgersson: It's very hard to say. Sometimes the difference between the two segments in one country could be outweighed by a country with a higher price on a flat roof growth instead. There's all sorts of mixes. Generally said, a slight negative mix, but if you get volume growth, you can make up for it.

The solar panel part of that.

Dan.

We definitely see something happening in our market and they are just won that.

Let's go to the outlook.

Yeah.

Next slide.

<unk> clarified that the EU doesn't put requirements on safety for that they don't say what should be.

To start with the top line what disappear seem we have said at this stage. Obviously, we don't have any backlog for the second half of the year, we don't have any.

Under the solar PV, but we definitely see a market coming our way because when you put a big PV installation on our concrete buildings steel building whatever building. It makes a lot of sense. If you are or insurance company or you own the building.

Marcus Cole: Okay, thanks. Thanks for taking the questions.

Zaim Beekawa: Okay, thanks. Thanks for taking the questions.

Better reports of market development that you have and we have continued.

Mirella Vitale: The next question comes from the line of Marcus Cole with UBS. Please go ahead.

Operator: The next question comes from the line of Marcus Cole with UBS. Please go ahead.

Political and macroeconomic what tabular turbo down so we cannot foresee that so things can happen along the way, but basically receipt to two effects on the top client B C.

Marcus Cole: Morning. Thanks for taking my questions. Just on pricing, I think you previously mentioned you're a bit more sensitive to pricing in project work. I just wonder if you could update us on your latest thoughts there. On the Energy Performance Directive, I just wondered if we could have your thoughts again on that. In terms of the plants you're converting from coal, how many have you actually done to date? Thank you.

Yeah to put Stonewall underneath to make sure you don't tab.

Industry.

Fire spreading in into solar plants sort to say between the patents have been run.

Hospitals education Lasher offices.

Some of them short circuit. So we see we see already quite a significant impact in those segments. So I think it's fair to say now is getting quite exciting quite exciting to see when this volume to start to hit.

We also see age fact based snakes precede heavy density facade business, we see that business kind of picking up and I think that is because there have been investments that have been frozen.

Jens Birgersson: Two questions. Which ones do you want me to take, Marcus?

Marcus Cole: All of them, I hope.

And now some of the business us on onshoring of near shoring, they see that their K, if you're going to have a recession or a continuous slow slow down by the time. We now have built what type of if you're going to build them.

Again, I haven't factored that in for this year.

Jens Birgersson: Okay. We start with what was the first one now?

Yeah.

Mirella Vitale: Project pricing.

Jens Birgersson: Project pricing. I would say the situation pretty much continues. We have been very successful on the big ones, and we put quite a big focus to get in them. What we have seen now lately is that the project backlog has, you know, there are more out there to quote on, there are more realization, and the competition is tougher on the smaller projects than the bigger one, and we also have more competition from peers, depending on the type of factory or box building they are building. I won't say anything has changed, but obviously if there will be a higher number of projects released, the pressure will ease a little bit. I don't think it will get worse.

A question on conversion I mean from my memory from my memory.

We have done we did.

Get into trend to trend to five and on the situation will improve and I also think that people have stopped worrying about the interest real increase so now they can calculate read on interest rate and then decide along the way.

Denmark Homebuyer Gus.

We did.

Germany U S to gas, we have done Paul unwanted to gas.

So damn mark Paul onto a melter rehab dawn electrical in Norway.

Probably the interest rates would be the same or lower proper.

Probably lower and that's being stopped.

Some of that backlog of stock projects have started to move a bit on the other side on the residential side, both the new build.

Now we are doing on an switch Saddam rehab one in Germany.

And then we have approved another set of projects we will do.

Two in Netherlands in the coming year somebody would do.

And on the renovation side, we see almost the opposite trend, especially on the new event that would be our ups very low backlog levels very little financing them new bid projects.

And we will continue to Francois will be.

The electrical electrical mounted or so so basically basically what we have to keep doing at the pace. We have done and then we need to decide where we actually do them.

Energy efficiency Monday have you seen in Germany for example, 16 or 17 billion uncommitted.

Jens Birgersson: It might ease a little bit, but the most likely is that it will continue roughly as we had it last year. On the Energy Performance of Buildings Directive, there are two aspects to it. One is all of these renovation targets and all the rest, and the other are the goals on solar PV installations on old roofs and new roofs. Both of those in its current forms are very positive. Now we predict that the parliament would decide on that. When is that, Mirella? Cuba?

Okay. Thanks very much.

Somebody just started to take effect so those two effects.

The next question is from either pulled ahead.

Playing out so we have said, we cant exactly decide which one will win.

Please go ahead.

Hi, Good morning. Thank you for taking my question. The first one is on the margin guidance of 13%.

And indeed renovation came around so we just put dollar forecast straight in the middle there that'd be monitor that as we move at all on the profitability mix change a little bit of a heavier mix in our outlook due to those factors I described therefore be put up around 13%.

I mean, clearly you were talking about price.

In 2024.

The margin improvement from what you've been saying over the last few months.

On your voting that Luc I appreciate it's too early in the year, but it looks like it's at least flat and then your cost curve is declining.

Again, as we move through the year to see how that mix swings we haven't assumed.

And it quite fast pace now into the first two months of the year. So.

Mirella Vitale: No, it is, it's in effect now, but the member states now have to-

Any significant price increase as we said we're going to basically manage.

Just making a rough math on the 13% looks very conservative. So I guess I'm wondering what is it today that makes you a bit more worried as we go into the second half of the year, which is presumably where you don't have much visibility at this point.

Jens Birgersson: The member states has to get around to do it. We need to see how the member states do it. Our focus now is to work locally on those and see what they actually do about it. For example, in Germany, energy efficiency is worth EUR 60 to 70 billion, but we need to see what they actually decide in the member states. Then when we understand that better, we're gonna redo our calculation of how much business that gives us. My prediction, though, is that we will find that the calculation will give a tremendous business projection, and then we get back to the normal constraint of where are the people to do the work.

Manish price and cost and at this stage, we see relatively stable across but again. There is this aspect of decidedly refreshes in your optic sector, where.

My second question is on capacity.

That land is without before a five 6%, 3.5% that should become increasingly clear during the spring at the moment I guess, a fair assumption as say four 5%.

You are obviously, adding a.

A new plant in France, and you've got some projects in Romania.

Keep on talking about how fast the U S is growing and appreciate also in the U K has been phenomenally strong for Rockwell over the last five years and premium to be in the next five years or so what's the situation there and can this timeline of adding capacity in the U K and the U S. Thank you.

Salary increases in personnel expense increases with some some regions doing much more if you look at North America spend under severe sadler refresher under job that are now in the U S is again very very yeah. So a lot of job creation and it's tied to get.

Yeah very good a very good question on soup.

So I think you.

Jens Birgersson: Quite frankly, I don't think it's a good situation now where you have such a super low energy renovation and new build residential happening that there are actually construction workers leaving the industry, and this is a very bad timing. I hope governments will do something to take care of the 930,000 construction workers in Germany and make sure no one leaves, because when that starts to hit the ground, you're gonna need more of them. I think the constraint will be there. We do both ways. We're gonna calculate what goals do the country set, and then we try to estimate what do we actually believe gonna happen. I think we have reason to be very optimistic about that. Again, the timing, we haven't factored in a step up this year. That's not what's in our outlook.

You explained the outlook quite well, but I wouldn't say, it's conservative, but you have logistics road tax C. O. Two attacks you have salaries those costs are going up.

People to work.

So that would probably speak for even higher salaries in the U S on the other hand.

We don't see much of a challenge in passing that through.

I have a competitive environment also saw there are also some negative factors and you are right and coal for example is not going down it's actually going up. So we have some costs going up sadler of being one of them and then no visibility in the second half of the year I mean in terms of backlog or back to Rick.

On price saw.

We can balance it off so it's nothing we are concerned about.

With that I would like to hand over for questions.

We now begin to question and answer session to ask a question on <unk> and one of your telephone keypad.

Cannot makes real Germany worsen even more.

Using a speakerphone please pick up your handset before pressing to Keith.

The real real Debbie how much of a residential worse you know so so that's pretty much. It. So so 13% feels like a reasonable forecast I wouldn't call. It a cross sell but I'd just say with what we know and then you do simulations up and down Fat Fair Fair assumption.

Anytime you question has been addressed and you would like to we told your question. Please press Star then two.

The first question comes from the line of Alexander <unk> with <unk>.

Please go ahead.

Hi, good morning.

Jens Birgersson: Maybe we can see something next year. Maybe some countries start already this year. On the PV, the solar panel part of that, there we definitely see something happening in our market. There, I just wanna clarify that the EU doesn't put requirements on safety for that. They don't say what should be under the solar PV, but we definitely see a market coming our way because when you put a big PV installation on a concrete building, steel building, whatever building, it makes a lot of sense if you're an insurance company or you own the building, to put stone wool underneath to make sure you don't have fire spreading in the solar plant, so to say, between the panels, when some of them short-circuit. We see already quite a significant impact in those segments.

Congratulations on the nice set of results and just wanted to confirm do you hear me correctly.

Then Dan you're right on the U K.

Yeah, I hear you yes.

And U S.

Yes, we hear you.

Okay. So the first question would be on there.

You know we are.

Yeah in terms of the U S as I said before.

Utilization rate.

Red load that we have the high appreciation for our product we have positioned it well and we have a very good and growing business. So youre right, we need we need to build something and we Havent said, what we want is just a question of getting the last piece pieces in place and then <unk>.

I know you don't typically state dose, but of course, according to our calculations.

Capacity utilization rates should be around 75% and despite these low utilization rates margins came in really high which was a bit of an outlier. So I wonder if this can be explained by some.

I can announce that in due course, so we are working on that yes.

Although the markets from markets like Russia.

We are securing all of the pieces saw.

First bill or the maintenance and Jim plants I was just wondering how we can square it is and how you how you see the capacity utilization going into 2024.

So so you.

You are right you can see a little bit further out we have we have three lines in the U K.

And then the second question would be if you could maybe give an update on your pricing strategy versus competition I mean into 'twenty, two and four because we read in that phone players are increasing their prices with 8% to 10%.

We still have some capacity, but again the market is good and in U K for U K. It's a very good throughout today I think the biggest challenge to the.

Jens Birgersson: I think it's fair to say now it's getting quite exciting to see when this volume will start to hit. Again, I haven't factored that in for this year. Yeah. Question on conversion. I mean, from my memory, we did Denmark on biogas. We did Germany, US to gas. We have done Poland, one to gas. Denmark, Poland, two melters. We have done electrical in Norway, China. We are doing one in Switzerland. We have one in Germany. And then we have approved another set of projects. We will do two in Netherlands in the coming years, and we will continue. The France one will be electrical melter also.

We're expanding into U K.

Is is probably to find land that we always keep a lookout for land.

In Europe in Western Europe, whereas we see still in place and it's just like yourself, maybe increasing prices with two 4% is that correct and whether any other or and how should we see then the comps.

But youre right, if we keep growing like this in the U K, we would need more capacity and I is a big market saw.

But at this place.

Si.

Leasing of real cool in the market. Thank you for that.

I agree.

With all of what you say, so it's more a matter of US now coming around two to announcing a couple of things should be said that we have ample capacity in mainland Europe.

So.

We protect the capacity, but thanks for the for the good questions and I see no I'm, a little bit constrained and author it now, but I can say like base.

Loading or capacity utilization in North America, and Asia is high Okay and in our Asia business is small so you'll have a situation that we will need more capacity and it doesn't mean, we don't have.

They still need more capacity in France on that project you know the same in Romania, keep keep expanding into that corner of Europe, you're going to continue that so that.

That's basically the summary says up to me and came to come back with some investments, but it's not today.

The capacity in the U S. It's just not the way our business works as it doesn't matter. If we are in full capacity during the high season, if we have wasted their capacity during the low season than the <unk>.

Okay. Thank you guys.

The next question is from Adam I'm sorry.

With Bank of America. Please go ahead.

Pass it has gone so we have some more capacity brought to be are running on a very high utilization at the moment to catch up on deliberate times and all the rest so bad you don't tab absorption issues.

Thank you very much good morning, gentlemen.

Jens Birgersson: Basically what we have, we keep doing at the pace we have done, and then we need to decide where we actually do them. Yeah.

Three quick questions if that's okay.

Just I mean, if we look back at 2023 on pricing right and mounting trends, obviously very February ball, you talk about lower input cost.

Then you look in Europe, what we did and that we did already a trend the trend to two in the autumn we did it.

Yves Bromehead: Okay. Thank you very much.

Marcus Cole: Okay. Thank you very much.

Operator: The next question is from Yves Bromehead with Société Générale. Please go ahead.

Cable pricing to which extent do you think that is sustainable into 2024, when we shift from.

<unk> deep cut.

Scott of capacity and so we basically pulled it down and then I won't say if it's.

Yves Bromehead: Hi. Good morning. Thank you for taking my question. The first one is on margin guidance of 13%. I mean, clearly you're talking about price up in 2024, which is a marginal improvement from what you've been saying over the last few months. On your volume outlook, appreciate it's too early in the year, but it looks like it's at least flat, and then your cost curve is declining at a quite fast pace now into the first two months of the year. You know, just making a rough math on the 13% looks very conservative. I guess I'm wondering what is it today that sort of makes you a bit more worried as we go into the H2 of the year, which is presumably where you don't have much visibility at this point?

<unk> cost fixed cost inflation, so you'll basketball.

78 D 65 Watt every day to say, but we took a deep cop on capacity and we have also taken.

All in costs right now.

It looks like they're going to be reasonably low but in the meantime, you'll have fixed cost inflation that you mentioned the logistics of salaried et cetera, how does that work.

All blind, we're not producing we use short time work and draw them and if we do all of this mash ups, but this is something to be our practice.

We view our.

Our customer base and then the competitive environment in terms of the <unk>.

Quite a lot.

And what kind of price adjustment.

So that.

So we pretty much set the business for this volume level.

My first question. My second question is on the Capex the 375.

It's not.

A good guide.

It is not perfectly optimized because we don't Wanna, especially on the white collar side.

That is a steady state or do you have some catch up effect in there I think you mentioned you couldn't spend as much as you have your client in 23 <unk>.

Comped more than than than we have done if we can have I avoided because that's you see the profitability is fine.

Yves Bromehead: My second question is on capacity. You're obviously adding a new plant in France, and you've got some projects in Romania, but you keep on talking about how fast the US is growing. I appreciate also that the UK has been phenomenally strong for Rockwool over the last five years and presumably in the next five years. What's the situation there in terms of timeline of adding capacity in the UK and the US? Thank you.

<unk> hundred 70, fives, or I'd say evolve towards the medium term or do you think that could come down a bit and lets see if you could just remind us of your end market exposure.

You go back to say 2014.

Riyadh 11, and a half Towson dropped off some people and that's what we have today too. So we have had a big productivity improvement across the company. During the last nine years, so be take a little bit of beating on productivity consciously.

No. It's 50 50 between Raytheon non risky.

Just wondering is that still broadly valid. Thank you could you just recap the last questions I Couldnt hear that one.

Yes.

Market exposure is it still 50 50 between residential and nonresidential.

We have learnt a lot about how to make a lot of the cost of bearable and also to operate their factories efficiently.

Jens Birgersson: Yeah, very good, very good question, Yves Bromehead. I think you explained the outlook quite well, but I wouldn't say it's conservative. You know, you have logistics, road tax, CO2 tax, you have salaries. Those costs are going up, and you have a competitive environment also. There are also some negative factors. You are right, and coke, for example, is not going down. It's actually going up. We have some costs going up, salary being one of them, and then no visibility in H2, I mean, in terms of backlog, macroeconomics. Will Germany worsen even more? How much will residential worsen? You know, that's pretty much it. Thirteen percent feels like a reasonable forecast. I wouldn't call it conservative.

Ah Okay. So I'll start thanks for the questions.

So on the price.

Our.

When you go down in shape, so maybe one to produce Monday to Friday seven by 24 are some factors even less so so we have learnt a lot about how to do that without getting into a massive under absorption.

We generally have never applied surcharge pricing there could be some exceptions would be fundamentally see it does we need a sustainable EBIT margin. So we can do all this.

<unk> shows we can keep investing in the business and supply the market. So.

On the pricing then I would say the following.

There is a market minus pricing approach. So we don't say that because the salary and not to coke or the energy on this and that there are sometimes easier to argue but fundamentally we want to keep a healthy margin margin and add.

It's a little bit of a wait and see obviously in North America Asia different story.

Normal markets and all we have to do it should be said there'll be a very good business in North America, but read the deliberate.

What's the sustainable level Esa one can discuss but our ambition is.

Issues, we have our priority is to make sure we can deliver to customers.

So.

Two.

Maybe a little bit more careful in the pricing strive to do that.

Regardless of the sustainable level of business for us to prove it.

Jens Birgersson: I'll just say with what we know, and then you do simulations up and down, fair assumption. You're right on the UK and US. You know, we are in terms of the US, as I said before, we are well loaded. We have high appreciation for our product. We are positioned well. We have a very good and growing business. So you're right. We need to build something, and we haven't said that we won't. It's just a question of getting the last pieces in place, and then we come back and announce that in due course. So we are working on that, and we are securing all the pieces. So you are right. UK is a little bit further out.

In Europe, I would say.

So that's on the pricing and then bad debt cost come from as long as we are productive competitive and all the rest.

Yeah.

The fundamental view would be with the current inflation outlook that the drumbeat pricing, 1% to 3% would be in place, but it varies.

In my mind doesn't make such a big difference then we come under Capex in India Capex. Another 375, you are right. If we don't start to new product, we don't get it.

Between the segments you know on the residential side, depending on what class for Das.

We have to adapt because we don't want to lose.

Project Greenfield or brownfield it will on top of and so we have factored in here.

<unk> masses amount of market share so that's a bit determined by how they do about.

Obviously, the France.

Occupancy prices May go down there and in some markets, but overall, we would like to say small price increases single digit this year, but again being conscious about brand inflation goes and where competition goes so I've always said my best outlook at the moment would be.

Is the project that we get clearance or it can start to work on that obviously not all the capex come in one ear spread over three years and then B also factored into our factor in there we need just to decide whether it is in.

Jens Birgersson: We have three lines in the UK. We still have some capacity, but again, the market is good. In the UK, for the UK, it's a very good strategy. I think the biggest challenge to expanding in the UK is probably to find land, and we always keep a lookout for land. You are right. If we keep growing like this in the UK, we will need more capacity. It is a big market. I agree with all of what you say. It's more a matter of us now coming around to announcing a couple of things. Should be said, though, we have ample capacity in mainland Europe. We still need more capacity in France on that product, you know. The same in Romania.

Another greenfield starting up somewhere and.

A couple of percentage point up for the whole group, but at the moment to beat what we did in Q4.

And Romania is also moving into a heavier phase. So it's a mix of those through Romania is getting into the higher capex spend portion of the project, France, hopefully get the green light not.

We see it are quite good level reasonable level in relation to the inflation.

To really get going and then.

Okay.

Okay. Thank you for that.

In the year here, we plan to start up and other projects that we haven't announced them that came in I would just need to.

So to my colleagues.

The next question is from Dave.

To decide where ever do that.

Decal Wang with Jpmorgan. Please go ahead.

And I've been called back or not so that's that's fundamentally it then again estimation so.

Good morning, Thank you for taking my questions just two for me.

You could provide the latest developments with regards to your hedging strategy and and then secondly, you kind of mentioned the shift full salaries and facade insulation that traditionally have lower margin and was just curious to know how materially lower these margins at best is kind of the other products. Thank you.

Yes.

And then the end to end market at 50, 50 quite honestly I I don't look at it in that way. So I I don't have that number in the same way as we don't have a central sales manager for the company. We look at each market. So it will vary by market. So I I to be honest you know if its four to five.

Jens Birgersson: Keep expanding into that corner of Europe. We wanna continue that. That's basically the summary. It's up to me and Kim to come back with some investments, but it's not today.

I hand that question over to Kim because the hedging here it is.

Oh 60.

Doing that thanks very much.

This aim.

In the market, we can discuss that we won't go into those details, but the decent that range back and forth and if the global average is 50 50.

We have behalf and enter it to sort of midterm contracts, one in France, and one in Norway fallout.

Yves Bromehead: Okay. Thank you, guys.

Thompson of electricity and they continued throughout 2020 full as well and even into 2025. So those have sort of had a major sort of hedging because they have both electrical plants and sites.

Operator: The next question is from Arnaud Pinatel with Bank of America. Please go ahead.

It depends also by you put renovation of residential renovation multi unit a single or a house, we are very different in those two segments. So I can't icon.

Yves Bromehead: Thank you very much. Good morning, gentlemen. Three quick questions if that's okay. Just, I mean, if we look back at 2023 on pricing, right, and margin trends, obviously very favorable. You talk about lower input costs and stable pricing. To which extent do you think that is sustainable into 2024?

Arnaud Pinatel: Thank you very much. Good morning, gentlemen. Three quick questions if that's okay. Just, I mean, if we look back at 2023 on pricing, right, and margin trends, obviously very favorable. You talk about lower input costs and stable pricing. To which extent do you think that is sustainable into 2024?

On the gas and short term hedging for electricity, we have call it quarter, one and we had we had started taking a view that we do this quarter by quarter.

I can't say anything but clear is the.

The residential portion is lower now.

In our business, because new build and renovation and that segment is lore historically, it's very low now okay.

So that's where we stand right now and we are still not decided.

To fully called range, a quarter or two yet. So we are just monitoring it does is it there's no big drama on the on the on the energy side right now so and so we just take it a quarter at a time.

Arnaud Pinatel: When we shift from, let's say, variable cost to fixed cost inflation, so your variable costs, your energy, looks like they're gonna be reasonably low, but in the meantime, you have fixed cost inflation that you mentioned, the logistics, the salaries, et cetera. How does that work with your customer base and then the competitive environment in terms of the pricing outlook and the price adjustment? That's my first question. My second question is on the CapEx, the EUR 375. Is it a good guide like as a steady state, or do you have some catch-up effect in there? I think you mentioned you couldn't spend as much as you planned in 2023. Is EUR 375 the right level for the medium term, or you think that could come down a bit?

Very good thank you so much.

The next question is from Josh speak with BNP Paribas. Please go ahead.

Hi, gentlemen, thanks for taking my question and.

Or does it take to actually can you remind us what the lag is between declines in construction permits and great volumes.

And then on the margins.

But you've got a bit of growth.

I, just thought that would've been more volume come given.

On the flatter side doesn't haptics such as Wright also the lowest priced product per unit input so to say so the graph gross margin.

Given the 20% drop off in European glass.

That's my first question.

And then on pricing sorry to keep coming back on this but I guess last yet.

It's lower par.

Uh huh.

The per unit to produce on the other hand the projects are more.

A lot of us expected pricing to come under pressure given volumes were at very depressed levels, but that didn't really happen.

More they're bigger.

So I was just wondering whether that's actually more risk on pricing guidance.

And you tend to run longer so you'll have different setup cost.

Now the end market is improving and you are competing for a share of the volume recovery.

Arnaud Pinatel: Lastly, if you could just remind us of your end market exposure. I have in my notes 50/50 between resi and non-resi. I was just wondering if that's still broadly valid. Thank you.

Some of those projects you can also produce to stock instead of produced water. So.

Just color on pricing.

Yeah.

There is a difference, but but what determines that says if you have a bit of volume growths on do they have a density of them. We do a pretty okay cross the volume growth that we will earn less but be talking a couple of percentage points, but again it depends on country. There's some that so it is very hard to say sometimes to dip.

The did lag on permits to constructions.

Jens Birgersson: Could you just recap the last question, so I couldn't hear that one?

Aye.

There might be a pattern there, but it's very hard to figure it out because if you look at the low volume in 'twenty to 'twenty three.

Arnaud Pinatel: Yeah. Your end market exposure, is it still 50/50 between residential and non-residential?

Jens Birgersson: Thanks for the questions, Arnaud. So on the price, you know, we generally have never applied the surcharge pricing. There could be some exceptions, but we fundamentally see it as we need a sustainable EBIT margin so we can do all these conversions, we can keep investing in the business and supply the market. There is a market minus pricing approach. So we don't say that because the salary and not the coke or the energy and this and that, they're sometimes easier to argue, but fundamentally wanna keep a healthy margin. What the sustainable level is, one can discuss, but our ambition is to regard this as a sustainable level, and then it's for us to prove it. Yeah? That's on the pricing.

Never a huge amount of permits around the Germany, but then everyone stops novel Duffs anything so I.

France between.

The two segments in one country it could be outweighed by a contribute to higher price on a flat roof.

<unk>.

It doesn't work that way to see it.

So instead, so there's all sorts of mixes but.

If the macroeconomic changes they stopped the project, even though they have the permit.

Generally said.

A slight negative mix, but.

But if you get volume growth you can make up for it.

Well I would maybe think that the number of apartments will have an effect and where theres a lag effect is residential building permits now and some countries that are on the lower level and they're simply not there. So there isn't a.

Hey, thanks for taking the questions.

The next question comes from the line of Noncritical with UBS. Please go ahead.

Permit backlog to execute on so there is a lag in that would indicate that that market doesn't turnaround thus far us I dare to say on that of course for every market. We have we follow with whatever data.

Good morning, Thanks for taking my questions just.

Just on pricing I think you previously mentioned here.

Here are a bit more sensitive to pricing.

Wonder if you could update us.

Just thoughts there.

And then on the energy performance Directive I, just wonder if type deal.

Yeah.

Frequency there is in the country number apartments number of built in we do all of that but quite frankly, when the market change you can't say much but one thing's for sure. If there are no apartments into marketed one jumpstart immediately I'm bill.

So to get them to that and then in terms of the plant to convert from coal how many if you have actually done to date. Thank you.

Jens Birgersson: Where the costs come from, as long as we are productive, competitive, and all the rest, in my mind doesn't make such a big difference. We come on the CapEx. In the CapEx, now the EUR 375, you are right. If we don't start a new product, we don't get a project, a greenfield or brownfield, it won't happen. We have factored in here, obviously the France is the project that we get clearance, so we can start to work on that. Obviously, not all the CapEx come in one year, spread over 3 years. We also factored into our forecast, and there we need just to decide whether it is another greenfield starting up somewhere. Romania is also moving into a heavier phase. It's a mix of those two.

Two.

Two questions Richard wants to wants me to tag markers.

And then on the price.

All of them are high.

You know we tried to be extremely disciplined last year, we are monitored market share.

Our cash so that we start with what was the first one.

Probably this project probably see I would say the situation pretty much continues so we have been very successful on the big ones.

We have avoided to overreact.

And when you have that type of cost position, we need to get back on debit Martin So that's pretty much how we navigate.

And we put quite a big focus to get it done, but what we have seen now lately as such.

Navigate to the year end and I'm I'm sure there would be some segments this year, where.

The project backlog has you know there are more out there to quote on their more reality station and the competition is tougher on the smaller smaller projects than the big Gabon, and we also have more competition from P. M for depending on the type of factory or box build in there.

You might have a bit of a toss it in a market down there but.

I don't see from our perspective that we.

Should behave any differently there theyre there if you could navigate last year.

My basic assumption is that we should be able to navigate this year too.

Jens Birgersson: Romania is getting into the higher CapEx spend portion of the project. France hopefully get the green light now to really get going. In the year here, we plan to start up another project that we haven't announced and that Kim and I would just need to decide where we do that, and then we come back on that. That's fundamentally it, and again, estimations, yeah.

So that because we have done it not so many years and we have pulled it off and.

Building, so I wouldn't say anything I've changed but obviously.

If.

Extra ordinary difficult year like awesome trend to trend to and also in 'twenty to 'twenty three so so I'm I'm optimistic that we'd get through also this year.

There will be.

A higher number of projects released depressed should ease a little bit. So I don't think it will get worse it might ease a little bit but the most likely is subject will continue are roughly as we added last year.

Okay. Thank you.

Yeah.

Mirella Vitale: The balance we need to look at.

On the energy performance.

The next question is from <unk>.

Jens Birgersson: Yeah. Then the end-to-end market at the 50/50, quite honestly, I don't look at it in that way. I don't have that number in the same way as we don't have a central sales manager for the company. We look at each market, so it will vary by market. To be honest, you know, if it's 40, 50, or 60 in the market, we can discuss that. We won't go into those details, but it is in that range back and forth. If the global average is 50/50, it depends also where you put renovation. You know, residential renovation, multi-unit or single house, we are very different in those two segments.

The building directive.

So we don't see an investment research. Please go ahead.

There's two aspects to it one is all of this renovation.

Renovation targets and all the rest and the other is are the goals on the solar PV installations on older of some new roofs.

Yes, good morning, I would have three questions.

My first question would be on the on the water in terms of volume on crises in 2023.

And.

I think you mentioned that the organic growth you don't help us sense.

Both of those in this current forms are.

Is it fair to assume that you had.

A very positive very positive so nabil predict up to parliament.

<unk>.

Let's say mid single digit 5% with an IND.

Created at the beginning of the App.

And then tell me all the time.

Decided on that right now.

Please take note in the first quarter that would be my first question.

Now, but the member states.

Between alumina prices in 2023.

The member States has to get around to do it. So we we we need to see how the member states. So our focus now is to work locally owned also and see what they actually do about it and for example in Germany energy efficiency is the average sixth and seventh debate, but we need to.

Then my second question.

Would it be on the.

Jens Birgersson: I can't say anything, but clear is that the residential portion is lower now in our business because new build and renovation in that segment is lower. Historically, it's very low now. Okay?

Outlook for 2024.

You mentioned stable stable.

Health.

Three out of it.

So you could be down could.

Could you give us a bit more.

When do you seen from countries do you see growth in eastern Europe growth in the U S and maybe a bit of a decline in Germany and then Alex.

See what the what they actually did decide in the member States and then.

And beyond the start off better if you're going to redo our calculation of how much business. It gives us.

Arnaud Pinatel: Very good. Thank you so much.

That would be my second question.

And then I felt the question would be on the <unk>.

Operator: The next question is from George Speak with BNP Paribas. Please go ahead.

To investing could you give us a bit more color on the hotel.

And my my predictions always thought we'd find that the calculation with Gabe.

George Speak: Hi, gentlemen. Thanks for taking my question. I'll just take two, actually. Can you remind us what the lag is between declines in construction permits and group volumes? I just thought there would have been more volume pain to come given the 20% drop-off in European permits last year. That's my first question. On pricing, sorry to keep coming back on this, but I guess last year, a lot of us expected pricing to come under pressure given volumes were at very depressed levels, but that didn't really happen. I'm just wondering whether there's actually more risk on pricing going into this year now that end markets are improving and you're competing for a share of the volume recovery. Maybe just a bit of color on pricing risk this year versus last year.

On capital improvement that you expect to generate on that.

Tremendous business projection.

Got it.

And you called out that you couldn't even the cost of a new plant on the amount of sales that you generate would be we'd be very very helpful.

Then we get back to the normal constraint of rare or the people to do the work and quite frankly, I don't think it's a good situation now where.

We're.

You have such a super low and you do renovation and new bed dresser, Dan shull happening, but actually construction workers, leaving the industry.

Kim we'll take the first question I'll take that.

First again, just it tends to be minded to it to everybody on the call. We try to make this as efficient as possible. So it doesn't take too long to conduct so please limit yourself to two questions.

And this is a very bad timing. So I hope governments will do something to take care of the 930000 construction workers in Germany and make sure no. One leaves because when that starts to hit the ground youre going to need more of them. So I think the constraint would be there. So we do both ways, if you're going to calculate.

On the is on the 2023 price and volume development, Eric and we normally do not go into that level of details, but there was a positive pricing.

High single digit in 'twenty, three and then obviously, we have both a volume impact and also.

Jens Birgersson: The lag on permits to constructions. There might be a pattern there, but it's very hard to figure it out because if you look at the low volume in 2023, there were a huge amount of permits around in Germany, but then everyone stops and no one does anything. It doesn't work that way to see it. You know, if the macroeconomic changes, they stop the project even though they have the permit. Where I would maybe think that the number of permits will have an effect and where there's a lag effect is residential building permits now in some countries that are on a low level, and they're simply not there, so there isn't a permit backlog to execute on.

What golar stood a country's set and definitely tried to estimate what do they actually believe going to happen. So I think we have reason to be.

Mixed both countries and product mix, so there will be a negative.

Very optimistic about that but again the timing, we haven't factor D and a step up this year, that's not what's in our outlook. So maybe we can see something next year, maybe some countries start to read out this year than on the PV.

Volume.

Impact for 2023, but I think that's as much as we can we can say so a high single digit pricing and the negative volume impact in.

For 'twenty three I believe 24 to <unk> incident.

The solar panel part of that.

So trying to trend to four.

We definitely see something happening in our market and they are just won that.

Youre right that there is a mix.

<unk> clarified that the EU doesn't put requirements on safety for that they don't say about should be.

Mix aspect, but so we would we would probably at this stage to assume that with the mix. We have a process and that you have basically fast flat volume or slightly volume op.

Under the solar PV, but we definitely see a market coming our way because when you put a big PV installation on our concrete buildings steel building whatever building. It makes a lot of sense, if you're an insurance company or you own the building.

So that's.

That's how I see it so moderately up or flat thus.

Jens Birgersson: There is a lag, and that would indicate that that market doesn't turn around. That's as far as I dare to say on that. Of course, for every market we have, we follow with whatever data frequency there is in the country, number of permits, number of built, and we do all of that. Quite frankly, when the market change, you can't say much. One thing is for sure, if there are no permits in the market, it won't jumpstart immediately and build. On the price, you know, we tried to be extremely disciplined last year. We have monitored market share. We have avoided to overreact. And when you have that type of cost position, we needed to get back on the EBIT margin. That's pretty much how we have navigated the year.

Hi, I hope to come out of the year, but saying that on the light side and our general building insulation and nothing happened there you'll see a decline and this can vary massively between countries North America, so completely different trend and also in Asia and then on the heavy solar projects.

To put the Stonewall underneath to make sure you don't Todd.

Fire spreading in into solar plants sort to say between the patents run some of them are short circuit. So we see we see already quite a significant impact in those segments. So I think it's fair to say now is getting quite exciting.

It takes facade.

Normal in India renovation that that seems to be coming factory buildings.

Quite exciting to see when this volume to start to hit.

Dulce investment in that that are also a lot of volume.

Again, I haven't factored that in for this year.

So I would say slightly up demand.

Up there.

Yeah.

And then regionally I've covered with you, but you are right, France, Germany is.

A question on conversion I mean from my memory from my memory.

You know we had a good development in eastern Europe compared to a very bad comparable in Q4, but I think youre right, France, France is probably a little bit more under pressure. This yes, we see it a snowball and big distributor is doing quite quite a lot of personnel reductions, maybe not forced but they're drawing down on.

We have done we did.

Denmark Homebuyer gas bid did.

Jens Birgersson: I'm sure there will be some segments this year where you might have a bit of a tussle in the market here and there, but I don't see from our perspective that we should behave any differently. If you could navigate last year, my basic assumption is that we should be able to navigate this year too. Because we have done it now so many years, and we have pulled it off in an extraordinary difficult year, like autumn 2022 and also in 2023. I'm optimistic that we get through also this year.

Germany U S. Two gas, we havent done Poland wanted to gas.

So Denmark, Paul onto a master's rehab dawn electrical in Norway, China, we are doing on the switch Saddam rehab one in Germany.

People thought I think France, and Germany generally at the moment doesn't look great, but again, we have seen France before when that happens they take action on the managed to get maybe energy efficiency.

That'd be have approved another set of projects, we will do a two in Netherlands into coming years somebody would do.

Initiatives in place quicker than animal Nat so they're.

And we really continue to Francois will be electrical electrical.

The main market at the moment certainly it doesn't look.

They look more like a further decline then we go into the U K.

Electrical master or so so basically basically what we have we keep doing at the pace. We have done and then we need to decide where we actually do them.

There are experienced at that.

Yassine Touahri: Okay. Thank you.

George Speak: Okay. Thank you.

It matters.

Not so much of what the market does because we have this underlying growth and are in the Noncombustible segment.

Okay. Thank you very much.

Operator: The next question is from Yassine Touahri with On Field Investment Research. Please go ahead.

The next question is from the EBIT from Manhattan.

In terms of plants.

Please go ahead.

Yassine Touahri: Yes. Good morning. I would ask three questions. My first question would be on what happened in terms of volume on prices in 2023. I think you mentioned that the organic growth is down 4%. Is it fair to assume that you had prices up, let's say, mid-single digits, 5%, with an increase at the beginning of the year, and then turning relatively stable in Q1? That would be my first question, the split between volume and prices in 2023. Then my second question would be on the outlook for 2024. You're mentioning stable sales with prices up a little bit. This suggests that volume could be down.

You know when you invest in a plant.

Hi, Good morning. Thank you for taking my question. The first one is on the margin guidance of 13%.

Look at return on.

On our invested capital the capital employed I mean, our threshold this summer on our purchase 15%.

Clearly you were talking about price.

In 2024.

The margin improvement from what <unk> been saying over the last few months.

And and that we would like to meet on this plants, but.

On your voting that look I appreciate it's too early in the year, but it looks like it's at least flat and then your cost curve is declining.

With all the depreciation.

Even though our plant would be good that generating cash we want to plant that is not.

And it quite fast base now into the first two months of the year. So.

To accretive at the beginning because we need we need to fill it over two or three or four or five years, otherwise we built the two small ones. So generally the return on capital employed is you know if we can get 15% or more.

My second question is on capacity.

Yassine Touahri: Could you give us a bit more color on what do you see in different countries? Do you see growth in Eastern Europe, growth in the US and maybe a bit of decline in France, Germany, and the Nordics? That would be my second question. My third question would be on your plan to invest. Could you give us a bit more color on the return on capital employed that you expect to generate on your new plants? And any color that you could give on the cost of a new plant, on the amount of sales that it generates would be very, very helpful.

And then we keep running our old plants really well that the average works works out fine.

You are obviously, adding.

A new plant in <unk>.

And you've got some projects in Romania.

Thank you very much.

Keep on talking about how fast the U S is growing and appreciate also in the UK has been phenomenally strong for Rockwell over the last five years and premium would be in the next five years or so what is the situation.

Uh huh.

Okay.

The next question is from him, but he Josh Kumar with HSBC. Please go ahead.

Hi, Good afternoon, I have two questions. The first one is on Europe.

Situation Darrington this timeline of adding capacity in the U K and the U S. Thank you.

Yeah very good a very good question on soup.

Okay excellent and so given that youre guiding for 375.

So I.

I think you explained outlook quite well, but I wouldn't say, it's conservative, but you have logistics rolled taxi or two tax do you have salaries those costs are going up.

Don't see that demand pick up in Europe.

You said that you will have more cash.

Jens Birgersson: Kim will take the first question, I'll take the.

So to expect that the buybacks of 20 credit piece without getting into near term at least.

Kim Junge Andersen: First, again, just a general reminder to everybody on the call. We try to make this as efficient as possible, so it doesn't take too long to conduct. Please limit yourself to two questions. On the 2023 price and volume development, and again, we normally do not go into level of details, but there was a positive pricing, you know, high single digit in 2023. Then obviously we have both a volume impact and also mix both countries and product mix. There will be a negative volume impact for 2023. I think that's as much as we can say. High single digit pricing and a negative volume impact for 2023. I will leave 2024 to you, Jens.

I have a competitive environment also saw there are also some negative factors. So you are right and coal for example is not going down it's actually going up. So we have some costs going up salary being one of them and then no visibility in the second half of the year I mean, it took us a backlog or back to Rick.

Given the market scenario.

Yeah.

Thank you might show you at the same time.

Yes.

My first one.

One is on the <unk>.

Todd.

Installation on the roof fall, especially if it's taller panel you talked about is there something you can do kind of.

Cannot makes.

Germany worsen even more.

You're kind of looking at it the lighting.

Real real Debbie how much of a residential worse you know so so that's pretty much a so so 13% feels like a reasonable forecast I wouldn't call. It a cross sell but I'd just say what do we know that you do simulations up and down Fat Fair fair assumption.

Okay.

Nobody.

Now I just don't know.

Is that something.

This is Mike I think golf ball expanding given that so much.

<unk>.

Okay.

Yes, hi, two very clever question Sidney good good questions and on the Capex on the buyback I mean, we have it we have a very good cash flow and even if we keep investing like us we have money in our equity ratio is high but again, we cannot sit here and promise.

Then Dan you are right on the U K.

Jens Birgersson: Yeah. 2024, you're right that there is a mix aspect, but we would probably, at this stage, assume that with the mix we have, prices and that you have basically flat volume or slightly volume up. That's how I see it. Moderately up or flat, that's how I hope to come out of the year. Saying that on the light side in the general building insulation and nothing happened there, you see a decline. This can vary massively between countries. North America has a completely different trend, and also in Asia. Then on the heavy solar projects, aesthetics, facade, normal energy renovation, that seems to be coming, factory buildings, those investments, and that draws a lot of volume.

And U S.

Yeah in terms of the U S as I said before.

I read load that'd be a yeah, hi appreciation for our product we are positioned well and we have it.

Top of next year. This this goes year by year and it depends on how much we invest in our board's view on uncertainties in the market and all the rest, but we definitely felt that it was a very good time now to do a share buyback, but came on I cannot commit to that we do that every year okay.

Very good and growing business. So youre right, we need we need to build something and but you haven't sat dog you want. It's just the question I've got in the last piece pieces in place and then.

Can we come back and announce opt in due course, so we are working on that.

We are securing all of the pieces salt.

Then on the installation of roof.

So youre right U K, it's a little bit further out we have we have three lines in the U K.

A couple of things we can do on that I mean, we have not onto knob. We have never said, we will do a membrane so anything ads, but certainly what we have started to do we have developed some new products. For example in Germany, we have a product called solar rock that is.

We still have some capacity, but again the market is good and in U K for U K. It's a very good throughout today I think the biggest challenge to expand.

We're expanding in the U K.

Incredibly hard and good so it's a it's a product with a hard hard shell on it that fits and it is a very interesting.

This is probably to find land that we always keep a lookout for land.

Jens Birgersson: I would say slightly up there. Then regionally I've covered with you, but you are right. France, Germany is. You know, we had a good development in Eastern Europe compared to a very bad comparable in Q4. I think you're right. France is probably a little bit more under pressure this year as we see it. I saw one big distributor is doing quite a lot of personnel reductions, maybe not forced, but they're drawing down on people. I think France and Germany generally at the moment doesn't look great. Again, we have seen France before when that happens, that they take action and they manage to get maybe any deficiency initiatives in place quicker than anyone else. The main market at the moment certainly doesn't look, they look more like a further decline.

But youre right, if we keep growing like this in the U K, we would need more capacity and I I is a big market. So so so so I.

Top people say should be then.

De lever more on a flat true, but I'm sorry to disappoint you. So far we haven't made a decision to do that but it's a very interesting question that is worth thinking about do you see a trend in the NDA.

I I agree.

We had all of what you say so it's more a matter of a snow coming around to two announcing a couple of things should be said, though we have ample capacity in mainland Europe.

And the market for the sum.

Companies are trying to get into that business and we observe it we see how they do it and and we certainly look at it but we have not decided to do that okay.

They still need more capacity in France on that project, you know say meant Romania keep keep expanding into that corner of Europe, you're going to continue that so that.

Yeah.

That's basically the summary says up to me and came to come back with some investments, but it's not today.

Okay understood. Thank you.

The next question is from Casper Blom Danske Bank. Please go ahead.

Okay. Thank you guys.

Thank you very much and I have two questions also first of all I was hoping you could elaborate a little bit on the Polish acquisition that you are now.

The next question is from Andrew I'm sorry.

We think of America. Please go ahead.

Thank you very much good morning, gentlemen.

Just before Christmas.

Jens Birgersson: We go into the UK. There, our experience is that it matters probably not so much what the market does because we have this underlying growth in the non-combustible segment. In terms of plants, it, you know, when you invest in a plant and then you look at return on invested capital or capital employed, I mean, our threshold is somewhere on our page is 15%. And that we would like to meet on these plants. With all the depreciation, even though a plant will be good at generating cash, we want a plant that is not too creative at the beginning because we need to fill it over 2, 3, 4, 5 years, otherwise we built a too small one.

This is expected to close what impact do you see on your revenue from this end.

Three quick questions if that's okay.

Just I mean if.

If we look back at 2023 on pricing right and mounting trends, obviously very February ball, you talk about lower input cost and stable pricing to which extent Q think that is sustainable into 2024, when we shift from its a valuable cost fixed cost inflation. So you'll.

What's the price of it and also impact from this acquisition.

It's part of the revenue guidance.

Yeah flattish guidance on in local currencies and then my second question is regarding what.

Initiation of a buyback program today and has there been any statement regarding what position the Rockwell Foundation and your other main catalysts will take in connection with that buyback.

But I think it won't cost right now.

It looks like theyre going to be reasonably low.

In time, you'll have fixed cost inflation that you mentioned the logistics of salaried et cetera.

Does that work.

Dissipating pro rata. Thank you.

We view our.

Customer base, and then the competitive environment in terms of the <unk>.

Okay. So I leave the second question for Cam I'll take your first question. Thank your customer so.

<unk> broken the price adjustment.

The Polish acquisition just to outline the space.

My first question. My second question is on the Capex the 375.

There was a law made in Poland under the previous government.

A good guide.

As a steady state or do you have some catch up effect in there I think you mentioned, we couldn't spend as much as you.

Jens Birgersson: Generally, the return on capital employed is, you know, if we can get 15% or more, and then we keep running our old plants really well, the average works out fine.

That.

Jens Birgersson: Generally, the return on capital employed is, you know, if we can get 15% or more, and then we keep running our old plants really well, the average works out fine.

The sanction there.

The owners of this factor in Poland.

And in 23 <unk>.

And in that law, our read is so there are two ways.

<unk> hundred 70 fives, the wrench, they've all towards the medium term or do you think that that could come down a bit and lets see if you could just remind us of your end market exposure.

To buy it because it has been decided by the Polish government, but this should be solved.

Brijesh Kumar: Thank you very much for the results.

Yassine Touahri: Thank you very much for the results.

No. It's 50 50 between Raytheon non risky.

The two ways. The one way is to buy make an agreement by the shares.

Just wondering is that still broadly valid thank.

Operator: The next question is from Brijesh Kumar with HSBC. Please go ahead.

Could you just recap the last question, so I couldn't hear that one.

From the owners.

Yes, and Mark.

<unk>.

Get exposure is it still 50 50 between residential and nonresidential.

But the money you pay will go into an escrow controlled by the Polish government.

Brijesh Kumar: Hi. Good afternoon, gents. I have two questions. The first one is on your CapEx one. Given that you are guiding for EUR 375 million, and you don't see that the demand is recovering in Europe, would you say that you will have more cash and the shareholders should expect the buybacks of 2023 to continue in the near term, at least, given the market scenario and your utilization is low, so you can pretty much use the same plant capacity to run for 3-4 years? That's my first one. The second one is on the insulation on the roof, especially with solar panel you talked about. Is there something Rockwool can do, kind of, to...

Ah Okay. So I'll start thanks for the questions.

And the other way is the Polish government under an administrator does not control the webpage to factor it cetera, I'm not sure if they are producing.

So on the price.

Our.

We generally have never applied surcharge pricing that could be some exceptions would be fundamentally see it does need a sustainable EBIT margin is what we can do all this.

Sells assets.

And.

At two two sawmill in a bid around and that's just the main path of this thing.

Our shows we can keep investing in the business and supply the market. So there is some market minus pricing approach. So we don't say that because the salary and not to coke or the energy and there's something that there's sometimes they use their target, but fundamentally we want to keep out tomorrow.

These two owners have not they're not on a sanction list okay.

Turning to the EU or the U S.

Polish sanction this our view on this boss.

Yeah.

If you go over the first method.

Brijesh Kumar: Are you kind of looking at it, providing roofing solutions, maybe PV enabled stone wool roofing system? Is that something in management's mind to think of expanding, given that you're stressing so much and what we could see in future be a PV enabled roofing system everywhere?

Again margin and.

If you make an agreement.

What's the sustainable level Esa won't come to discuss but our ambition is.

Do you agree or price I would not read the price now.

And then the Polish Gaba and all of this is subject to the tax authority proving and after the tax authority a whole lot of other.

Two.

Regardless of the sustainable level of business for us to prove it.

Polish.

Oh authorities. So I think there are four that needs to approve and it starts with the first one and antitrust approval is one of them, but that's in a way.

So that's on the pricing and then bad debt cost come from as long as we are productive competitive and all the rest.

Jens Birgersson: Brijesh Kumar, hi. Two very clever questions. You know, good questions. On the CapEx and the buyback, I mean, we have a very good cash flow. Even if we keep investing like this, we have money and our equity ratio is high. We cannot sit here and promise what happens next year. This goes year by year, and it depends on how much we invest and our board's view on uncertainties in the market and all the rest. We definitely felt that it was a very good time now to do a share buyback. Kim Junge Andersen and I cannot commit to that we do that every year, okay? On the insulation on roof, there are a couple of things we can do on that.

In my mind doesn't make such a big difference then we come on to Capex in into Capex not the 375, you are right. If we don't start to new product, we don't get to.

In a very later because nothing would happen on any of that before the Polish government has decided to do so how I see this acquisition is from our side.

We don't like to be involved in legal problems. So we bought b will not participate in.

Project Greenfield or brownfield it will on top of it so we have factored in here.

And auction of assets, where the ownership of the assets are unclear.

Obviously, the France.

Is the project that we get clearance or it can start to work on that.

So we don't want to participate in that attitude thing because we are not quite sure that is sufficient that someone into previous Polish government says they have a law that can do this so that's that's one therefore, we opted for the first version.

Obviously, not all the capex come in one ear spread over three years, and then B also factored into our factor than they ever need just to decide whether it is and not another.

Jens Birgersson: I mean, we have not until now, we have never said we will do membranes or anything else. There are certainly what we have started to do, we have developed some new products. For example, in Germany, we have a product called Solarrock that is incredibly hard and good. It's a product with a hard shell on it that fits. It is a very interesting topic to say, should we then deliver more on a flat roof? I'm sorry to disappoint you. So far, we haven't made a decision to do that. It's a very interesting question that is worth thinking about. You see a trend in the market for that, some companies are trying to get into that business.

And now the green field, starting up somewhere and.

And Romania is also moving into a heavier face. So it's it makes up those through Romania is getting into the higher capex spend portion of the project, France, hopefully get the green light not.

And the first version is something that is fully politically determined and that means that the Polish new government and it's mixed up with the old Gaba Mount on the different parties as I see this sort of an acquisition that is fully determined by.

To really get going and then.

In the year ahead, we plan to start up and other projects that we haven't announced them that came in Agua dulce need too.

Politics in Poland.

And politics in Poland or in any other country is probably not.

To decide where ever do without and haven't come back or not so that's that's fundamentally it.

Our that's not our expertise so we have taken the approach for this debt.

Again estimation so.

Yeah.

And then the end to end market. The 50 50 quite honestly I I don't look at it turned out Trey So I I don't have that number in the same way as we don't have a central sales manager for the company. We look at each market. So it will vary by market. So I.

Things like this can go either way, it's politics, and we haven't factored anything into our forecast nothing. It is just one of these things that we saw it come up.

Jens Birgersson: We observe it, we see how they do it, and we certainly look at it, but we have not decided to do that. Okay?

We felt we don't want to be involved in 10 years lawsuits along the line.

The second so we tried to first part of the process and that we see what happens. So that's that's that's my view on that I hope that explains a bit.

To be honest you know if it's 40 to 50 or 60 in the market. We can discuss that we won't go into those details, but the decent that range back and forth and if the global average is 50 50.

Brijesh Kumar: Okay, understood. Yeah. Thank you.

Operator: The next question is from Casper Blom with Danske Bank. Please go ahead.

And again the end result of the two ways of doing it.

Brijesh Kumar: Thank you very much. I have two questions also. First of all, I was hoping if you could elaborate a little bit on the Polish acquisition that you announced just before Christmas. When is this expected to close? What impact do you see on your revenue from this? What was the price of it? And also, if the impact from this acquisition is part of the revenue guidance, yeah, flattish guidance in local currencies. Then my second question is regarding your initiation of a buyback program today. Has there been any statement regarding what position the Rockwool Foundation and your other main shareholders will take in connection with that buyback? Will they be participating pro rata? Thank you.

Casper Blom: Thank you very much. I have two questions also. First of all, I was hoping if you could elaborate a little bit on the Polish acquisition that you announced just before Christmas. When is this expected to close? What impact do you see on your revenue from this? What was the price of it? And also, if the impact from this acquisition is part of the revenue guidance, yeah, flattish guidance in local currencies. Then my second question is regarding your initiation of a buyback program today. Has there been any statement regarding what position the Rockwool Foundation and your other main shareholders will take in connection with that buyback? Will they be participating pro rata? Thank you.

It's all of us the Polish government deciding where the money goes I also want to make that very clear. There is no difference between this as we understand it okay over to Kim.

The pass also by you put renovation of residential renovation multi unit dosing in house, we have very different in those two segments. So I I can't I can't say anything but clear is.

And then the last one.

In connection with the share buyback program not had any interaction with the foundation of all of the main shareholders and sure.

The residential portion is lower now.

In our business, because new build and renovation in the ups segment is door historically, if I read the old now okay.

At this point do not know whether they want to participate compared to last time in 2020, when Theyre Aqua Foundation participated with a pro rata sort of the sale of shares. We have now also the option for them to do a conversion of acos to BCS, but as I said, we have no not yet any indication that of course will be just be part of the.

Very good thank you so much.

The next question is from Josh speak with BNP Paribas. Please go ahead.

Hi, gentlemen, thanks for taking my question.

Weekly.

Update on <unk> announcement, if if.

How does it take to actually can you remind us what the lag is between declines in construction permit.

There will be a participation.

Yeah.

Okay. Okay. Thanks, a lot.

Jens Birgersson: Okay, I leave the second question to Kim. I take your first question. Thank you, Casper. The Polish acquisition, just to outline the case. There was a law made in Poland under the previous government, that sanction the owners of this factory in Poland. In that law, it reads that there are two ways to buy it, because it has been decided by the Polish government that this should be sold. There are two ways. The one way is to buy, make an agreement, buy the shares from the owners, but the money you pay will go into an escrow controlled by the Polish government.

I, just thought that would've been more volume paint to come given the 20% drop off in European glass, Yeah. That's my first question.

Okay. So we haven't released any three people wanting to ask questions and we are over time, but we will do it but please limit to two questions and we tried to to work. These are three through.

And then on pricing sorry to keep coming back on this but I guess last yet.

A lot of us expected pricing to come under pressure given volumes were at very depressed levels, but that didn't really happen. So I was just wondering whether that's actually more risk on pricing guidance.

Okay. The next question is from Christian <unk> with <unk>.

Seb. Please go ahead.

Thank you I will actually get to one question.

Now the end market is improving and you are competing for a share of the volume recovery.

And then it's about that market instead of the breach from <unk>.

To achieve our guidance so in 'twenty three year reported 14 feet.

Just color on pricing.

Not yet.

And but you've also had some.

It did lag on permits to construct shows.

Nonrecurring costs.

7 million for the Ukrainian retail fund.

Aye.

That might be a pattern there, but it's very hard.

In Q3, you had some some coupon right.

Around 12.

To figure it out because if you look at the low volume and trend to trend to three.

And then you have these 16 million in restructuring.

Jens Birgersson: The other way is that the Polish government, under an administrator that now control the webpage, the factory, et cetera, I'm not sure if they are producing, sells the assets and to someone, a bidder. That is the main path of this thing. These two owners are not on a sanction list according to the EU or the US. It's a Polish sanction list. Our view on this was, if you go with the first method, you make an agreement, and you agree a price. I will not reveal the price now. All of this is subject to the tax authority approving, and after the tax authority, a whole lot of other Polish authorities.

In Q4.

There are a huge amount of permits around the Germany, but then everyone stops novel Duffs anything so I.

So when I add that up that's.

Roughly $55 million.

Non recurring items. So you should adjust for that you Mark you would actually have been $15 H.

Oh boy.

It doesn't work that way to see it.

So when you are guiding for 13% and an unchanged.

Guiding the demand being down almost three percentage points or.

If the macroeconomic changes they stopped the project, even though they have the permit.

100 million euros.

So you said I mean 100 million users.

Well I would maybe think that the number of apartments will have an effect remember theres a lag effect is residential building permits now and some countries that are on the lower level and they're simply not there. So there isn't a permit backlog to execute them. So there is a lag in that would indicate that.

She level you are expecting.

He came can go through some more one off sales so I hand over to him.

We have also have some one off costs in the year somebody have also done some impairments into business.

Other things but.

Market doesn't turn around that as far as I dare to say on that of course for every market rehab be follow with whatever data.

And new things can happen, but I hand over to Kim.

Now I will not go into too many details. It is true that there has been some of these.

Yeah.

One off costs during 2023.

Frequency there isn't a concrete number apartments number of bands do all of that but quite frankly, when the market change you can't say much but one thing is for sure. If there are no apartments into markets that want jumpstart immediately I'm Ben.

We will also in 2024 make a donation to the Ukraine reconstruction funds.

Jens Birgersson: I think there are four that needs to approve, and it starts with the first one. An antitrust approval is one of them, but that's in a way later because nothing will happen on any of that before the Polish government has decided to do. How I see this acquisition is from our side, we don't like to be involved in legal problems, so we would not participate in an auction of asset where the ownership of the assets are unclear. We don't wanna participate in that asset deal thing because we are not quite sure that it's sufficient that someone in the previous Polish government says that they have a law that can do this. That's one. Therefore, we opted for the first version, and the first version is something that is fully politically determined.

Yeah. So so that that is the.

That is included in our forecasting.

And then on the price.

Where are we going to have more one offs. During 2024, we do not know, but it says you can sit there has been both positive one offs, but as it would've been a negative one offs. So.

You know we tried to be extremely disciplined last year, we are monitored market share.

We have avoided to overreact.

We don't sort of specify it out because I don't think it has a.

And when you have that type of cost position, we need to get back with Abbott tomorrow. So that's pretty much how we.

And meaningful impact on the result.

Okay. So just to clarify in your guidance have you assumed another 27 million donation then.

Navigate to the year end and I'm I'm sure there would be some segments this year where you.

No we have assumed a donation.

You might have a bit of a toss it in a market down there but I.

But it's up to the board to announce that they are at the AGM.

I don't see from our perspective that we.

Should behave any differently there that the if you could navigate last year.

You don't want to quantify how much of it.

At the AGM, you will get a you'll get the number.

My basic assumption is that we should be able to navigate this year too.

So that's a board decision, but we have included.

A donation in 'twenty four.

So that because we have done it not so many years and we have pulled it off and.

Jens Birgersson: That means that the Polish new government, and it's mixed up with the old government, and there are different participants. I see this as an acquisition that is fully determined by politics in Poland. Politics in Poland or in any other country is probably not our, you know, that's not our expertise. We have taken the approach with this that a thing like this can go either way, it's politics, and we haven't factored anything into our forecast. Nothing. It is just one of these things that we saw it come up. We felt we don't wanna be involved in 10 years lawsuits along the line with the second. We try the first part of the process, and then we see what happens. That's my view on that. I hope that explains a bit.

Yeah.

Understood. Thank you.

Uh huh.

Extra ordinary difficult yeah, like awesome trend to trend to two and also in 'twenty to 'twenty three saw so I'm I'm optimistic that as we get through.

The next question is from cloud side or at least not there. Please go ahead.

Thank you.

Coming back to Chris's question about this donation to Ukraine, I think is kind of important to understand your guidance. What did you say round numbers that could be so you can't help us.

Also this year.

Okay. Thank you.

Okay.

The next question is from Jessica <unk>, we don't see an investment research. Please go ahead.

You know, it's a better understanding on what it could be.

That'll be the first one.

I think you just have to be patient until April close at the ATM because again this is a shareholder decision support.

Yes, good morning, I would ask three questions.

My first question would be on the what I thought in terms of volume on crises in 2023.

The recommendation to the to the shareholders that will be approved at the AGM.

I think you mentioned that the organic growth is down 12%.

Okay and then the second question is if you go one quarter back in.

I assume that you had.

Let's say mid single digit 5%.

Thinking.

Thinking about your Mark if you at that point.

Jens Birgersson: Again, the end result of the two ways of doing it's always the Polish government deciding where the money goes. I also want to make that very clear. There's no difference between these as we understand it, okay? Over to Kim.

An increase at the beginning of the App.

Inc. For Brookfield that the outlook has improved getting worse or more or less the same and they both talk about pricing environment and the volume outlook.

Well it can be stable in the first quarter that would be my first question the spread between volume and prices in 2023.

And then my second question.

Aye.

Would it be on the outlook for 2024.

It's a good question what's changed I mean in Q3.

Kim Junge Andersen: Thank you. The last one, we have in connection with the share buyback program not had any interaction with the foundation or other main shareholders. So I do at this point do not know whether they wanna participate. Compared to last time in 2020 when the Rockwool Foundation participated with the pro rata sort of sale of shares, we have now also the option for them to do a conversion of A shares to B shares. But as I said, we have not yet any indication. That, of course, will just be part of the weekly update or weekly announcement if there will be a participation. Thank you.

You mentioned being stable.

We borrowed about the construction markets in residential.

Health with prices up a little bit.

That volume could be down could.

And.

Could you give us a bit more.

And and also the renovation, but we don't see I mean, it was frozen tomorrow is a new node the market in Denmark.

When do you seen from countries do you see growth in eastern Europe growth in the U S and maybe a bit of a decline in France, Germany, and then Alex.

How bad it is singing pharma analysis and all the rest so.

That would be my second question and then I thought the question would be on your plan to invest could you give us a bit more color on the uncapped.

I think.

What has happened since is that we didn't hold for that that will turn around we didn't predict it but I would say the gotham bars on the other hand, when it gets worse. It also becomes more urgent for government to do something and it is.

Capital employed that you expect to generate on the new plant.

And you put out that you could give on the cost of a new plant on the amount of sales that you generate would be it would be very very helpful.

Christian Thorup: Very clear. Thanks a lot both of you.

Casper Blom: Very clear. Thanks a lot both of you.

Jens Birgersson: Okay, we have three-

And all you had this 18000 names in Sweden, but under them into government construction workers as said, we don't type jobs, you need to do something.

Kim Junge Andersen: Next question is from

Operator: Next question is from

Jens Birgersson: Three people who wanna ask questions, and we are over time, but we will do it. Please limit to two questions, and we try to work this three through.

Kim we'll take the first question I'll take that.

First again, just it tends to be minded to it to everybody on the call. We try to make this as efficient as possible. So it doesn't take too long to conduct so please limit yourself to two questions.

So I think that on the residential had gotten worse, but the fact that you do get worse also would encourage people to <unk>.

Operator: Okay, the next question is from Christian Thorup with SEB. Please go ahead.

Countries to do something on energy efficiency, not only because they need to.

Christian Thorup: Thank you. I will actually just do one question, and it's about the margins and sort of the bridge from your 2023 results to your guidance. In 2023, you reported 14.3%, but you've also had some non-recurring costs. You had the EUR 27 million for the Ukrainian rebuild fund. In Q3 you had some goodwill write-down. I think it was around EUR 12 million. Then you have these EUR 16 million in restructuring for Rockfon here in Q4. When I add that up, that's roughly EUR 55 million of non-recurring items. If you adjust for that, your margin would actually have been 15.8%.

Kristian Tornøe: Thank you. I will actually just do one question, and it's about the margins and sort of the bridge from your 2023 results to your guidance. In 2023, you reported 14.3%, but you've also had some non-recurring costs. You had the EUR 27 million for the Ukrainian rebuild fund. In Q3 you had some goodwill write-down. I think it was around EUR 12 million. Then you have these EUR 16 million in restructuring for Rockfon here in Q4. When I add that up, that's roughly EUR 55 million of non-recurring items. If you adjust for that, your margin would actually have been 15.8%.

On the yes on the 2023 at price and volume developing that again, we normally do not go into the details, but there was a positive pricing.

To brain to sue to emission storm, but they need to secure jobs, because it's not a good idea to lose as fewer billing workers fab.

So and then and the change from.

No high single digit in 'twenty, three and then obviously, we have both a volume impact and also.

Well last time, we spoke clause on the outlook I think that be predicted that the interest rate would probably max out and start to decline and that inflation would improve on that central banks in Europe will start to discuss when they lowered the interest rate.

Mixed both countries and product mix, so they will be a negative.

Volume.

Impact for 2023, but I think that's as much as we can we can say so I think continued pricing and the negative volume impact in.

For 'twenty three I believe twentyfold to you incident.

I think what's more positive on that front too.

Backlog of projects that were not started.

Yeah, so tend to trend before the euro.

Christian Thorup: Hence when you are guiding for 13% on an unchanged top line, you're guiding the margin down almost 3 percentage points or roughly EUR 100 million. Is that, I mean, EUR 100 million, is that really the inflation level you are expecting?

Kristian Tornøe: Hence when you are guiding for 13% on an unchanged top line, you're guiding the margin down almost 3 percentage points or roughly EUR 100 million. Is that, I mean, EUR 100 million, is that really the inflation level you are expecting?

We know I predict that is better now because with this.

Right that there is a mix.

Anticipated recession, the most anticipate the recession or downturn whatever I think there is.

Mix of spec, but so rebuild we were probably at this stage to assume that with the mix. We have a process and that you have basically flat volume or slightly volume op.

It's slightly bigger belief in Europe never mind U S. North America and Asia, but is is I think there is a bigger hole businesses up it's time defined the downturn and therefore, I think it's a little bit better and I think we have seen that in our volumes here in.

Jens Birgersson: Kim can go through some more one-offs there. I hand over to him. We also have some one-off costs in the years, and we have also done some impairments in the business and other things. New things can happen. I hand over to Kim.

So that's.

That's how I see it so moderately up or flat, that's how I hope to come out of the year, but saying that on the light side and our general building insulation and nothing happened there you'll see a decline and this can vary massively between countries North America completely different.

Month, one two and three of the fourth quarter and I think we have a good opportunity to see that in the coming months on the on on heavy density more industrial applications.

Kim Junge Andersen: No, I will not, Christian, go into too many details. It is true that there has been some of these one-off costs during 2023. We will also in 2024 make a donation to the Ukraine Reconstruction Fund.

And then also in Asia, and then on the heavy solar projects ethics facade, the normal in India renovation, but that that seems to be coming factory buildings.

And if that continues later on in the year, that's too that's too early to judge its too early to judge, but definitely I think it looks a little bit better short term.

Christian Thorup: Probably.

Kristian Tornøe: Probably.

Kim Junge Andersen: Probably, yeah. That is included in the forecasting. Whether we're gonna have more one-offs during 2024, we do not know. As Jens said, there has been both positive one-offs, but there's also been a negative one-off. We don't sort of spell it out because I don't think it has a meaningful impact on the result.

Adults investments on that that are also a lot of volume.

On the industrial side.

So I would say slightly.

Oh up there.

Okay.

That makes a lot of center. Thank you so much for that color. That's all for me.

Then regionally I've covered with you about Youre right, France, Germany is.

Okay.

Nobody had a good development in eastern Europe, compared to a very bad comparable in Q4, but.

The last question will come from the line of Canada. Okay.

Christian Thorup: Okay. Just to clarify, in your guidance, have you assumed another EUR 27 million donation then?

Kristian Tornøe: Okay. Just to clarify, in your guidance, have you assumed another EUR 27 million donation then?

Goldman Sachs. Please go ahead.

Thank you arrived France, France is probably a little bit more under pressure. This yes, we see it a snowball and big distributor is doing quite quite a lot of personnel reductions maybe not force, but they're drawing down on people. So I think France, and Germany generally at the moment it doesn't look great, but again we have.

Thank you and sorry for running over question would be on the competitive landscape and I mean, you've been very successful to varvara.

Kim Junge Andersen: No. We have assumed a donation, but it's up to the board to announce that, at the AGM.

Two of our Ebitdas yieldco space in recent years.

I was wondering how you're seeing your competitors have adjusted to the current environment.

Christian Thorup: you don't wanna quantify how much you assumed?

Kristian Tornøe: you don't wanna quantify how much you assumed?

Kim Junge Andersen: At the AGM, you will get the number. That's a board decision, but we have included a donation in 2024.

A number of lines being.

Kim Junge Andersen: At the AGM, you will get the number. That's a board decision, but we have included a donation in 2024.

Shut down as well and what do you mean that the military market shares and just wondering you know if some of these lines.

In France before when the top picks up they take action on the Manish to get may be energy efficiency.

If they want to come back when when would that be in your view.

First question and second question quickly can you remind us your energy be it.

Christian Thorup: Understood. Thank you.

Kristian Tornøe: Understood. Thank you.

<unk> in place quicker than animal now so the main the main market at the moment certainly it doesn't work.

All sort of energy exposure as of 2023. Thank you.

Kim Junge Andersen: The next question is from Claus Almer with Nordea. Please go ahead.

Operator: The next question is from Claus Almer with Nordea. Please go ahead.

The entity I gave it took him because he is the custodian of how much we share on that I have the numbers in front of me, but.

They look more like a further decline then we go into the U K there are experienced at.

Claus Almer: Thank you. Yeah, coming back to Christian's question about this donation to Ukraine. I think it's kind of important to understand your guidance. Did you say round numbers that could be? So you can't help us, you know, get a better understanding of what it could be? That would be the first one.

Yeah. So so the trends on the entity we have already covered.

It matters a lot.

And I I can only answer for myself on the capacity.

Probably not so much what the market does because we have this underlying growth and are in the noncombustible segment in terms of plants.

Bid, what's coming up in the market.

In energy efficiency was actually needed in Europe.

Kim Junge Andersen: I think you just have to be patient until April, Claus Almer, at the AGM because again, this is a shareholder decision. It's a board recommendation to the shareholders that will be approved at the AGM.

I I I don't see on the storm well under glass wall. If this energy efficiency drive comps that theyre going to be enough.

You know when you invest in a plant.

Look at return on.

On our invested capital the capital employed I mean, our threshold. This summer on our Apache is 15%.

The capacity will be used.

So I think as a matter of being very disciplined now and I can only speak for myself, we've been super disciplined on.

Claus Almer: Okay. The second question, if you go one quarter back and think about your market view at that point, do you think for Rockwool that the outlook has improved, getting worse, or is more or less the same? I'll talk about both the pricing environment and the volume outlook.

And and that people would like to meet him this plants, but.

We'd all depreciation.

On monitoring our market share yes.

Even though our plant would be good that generating cash we want to plant, but it's not.

Yes in some segments, we lose a little bit of share or we are fine with that because it's impossible to keep everything perfect everywhere, but we are super disciplined on it and we cut capacity Army does try to navigate that because we know one thing with our business.

To accretive at the beginning because we need we need to fill it over two or three or four or five years, otherwise we built the two small ones. So generally.

Jens Birgersson: It's a good question. What has changed? I mean, in Q3, we worried about the construction markets in residential and also the renovation that we don't see. I mean, it was frozen more or less. You know the market here in Denmark, how bad it is on single family houses and all the rest. I think what has happened since is that we didn't hope for that would turn around. We didn't predict it, but I would say that it gotten worse. On the other hand, when it gets worse, it also becomes more urgent for government to do something. It is, you know, you had this 18,000 names in Sweden where they handed them into government. Construction workers have said, "We don't have jobs, you know.

The return on capital employed is you know if we can get 15% or more and then we keep running our old plants really well the average works works out fine.

We cannot.

We don't want to reposition Stonewall before an op upmarket, where you don't get a sustainable business. So that we can keep investing in these plants not just going to cost more and more to build in and the environment there.

Thank you very much.

Yeah.

The next question is from them.

So saw so that's how we do it and how they are there Stuart I cannot swear about US you saw last year net in net there has at least be haven't seen big market share moves around over many many countries. That's my observation, but of course, we look at our own situation and that's what we manage.

<unk> Kumar.

Please go ahead.

Hi, Good afternoon, I have two questions. The first one is on yours.

Okay. Thanks, Juan so given that Youre guiding between 75 million that you don't see that demand pick up in Europe would you say that you will have more cash.

And can you precise how much kept Steve I just had actually.

Et cetera.

Yeah.

Jens Birgersson: You need to do something." I think that on the residential, it gotten worse, but the fact that it do get worse also would encourage people to, countries to do something on energy efficiency, not only because they need to bring the CO2 emissions down, but they need to secure jobs because it's not a good idea to lose these few building workers we have. The change from what last time we spoke, Claus, on the outlook, I think that we predicted that the interest rate would probably max out and start to decline, and that inflation would improve, and that central banks in Europe would start to discuss when they lower the interest rate.

The buyback subsequently credit piece will continue in the near term at least.

Gave a number and it's not an absolute but just just to give an example, the 'twenty to 'twenty two.

The market scenario.

Utilizing its north thank you might show up at the same time.

In the auto and we have done other things since that but at.

Capacity until Q4.

At the time I mentioned it in rough numbers, but we took out over six months shift and we have this it doesn't fit with the head count it doesn't fit with the head count you see because we have set up the lines with a lot of temporary workers and contractors don't show up in <unk>, but in the autumn trend to trend.

Yes.

That's my first one and the second one is on the <unk>.

The installation on the roof fall, especially if its solar panel you talked about.

Is there something you can do kind of volatility.

How do you kind of looking at it the lighting.

Maybe <unk> antibody.

To be pulled down like 800 manufacturing jobs and around.

Now I just don't know.

System is that something.

Vince Mike I think golf ball, expanding given that yes, I think so much and why.

And in that capacity, we took out.

<unk> and then the roofing system.

And exactly what we were talking 10% to 20% capacity takeout.

Yes, hi, two very clever question on Citadel, good good questions and on the Capex on the buyback I mean, we have it we have a very good cash flow and even if we keep investing like das rehab montney and our equity ratio is high but again, we cannot sit here and promise for.

It is fair to say thanks a lot.

Jens Birgersson: I think what's more positive on that front is that the backlog of projects that were not started. We now, I predict, that it's better now because with this anticipated recession, the most anticipated recession or downturn, whatever, I think there is a slightly bigger belief in Europe. Never mind US, North America, and Asia. That is as it is. I think there is a bigger hope in businesses that it's time to find the downturn, and therefore I think it's a little bit better. I think we have seen that in our volumes here in month one, two, and three of Q4. I think we have a good opportunity to see that in the coming months on heavy density, more industrial applications. If that continues later on in the year, that's too early to judge.

Super.

This concludes our question and answer session.

Like to turn the conference back over to deal for any closing remarks.

Yes, sorry about the last one.

Top of next year. This this goes yeah by year and it depends on how much we invest in our board's view on uncertainties into market and all the rest, but we definitely felt that they are also very good time now to do a share buyback, but came on I cannot commit to that we do that every year okay.

Maybe just Andy Andy any deep ability.

Do not of course disclose exactly what is the proportion, but but coke is still our largest entity.

Cost.

And then I would say normally we'd be gave us some sort of debt.

That entity combined with raw material is about half of our input costs. So it is quite a significant one.

Then on the installation of roof.

A couple of things we can do on that I mean, we have not onto knob. We have never said, we will do a membrane or anything else, but they're certainly what we have started to do it we have developed some new products. For example in Germany, we have a product called solar rock thought this.

So with that.

I'd like to thank you for today's call.

And for all the good questions it took a bit longer than usual. So please remind yourself to keep it for two questions Youre always welcome to give me a call or send me a questions afterwards.

Incredibly.

Jens Birgersson: That's too early to judge. Definitely I think it looks a little bit better short term, on the industrial side.

And then at the very latest I want to inform you that on March the eighth we have a E.

Hard and good so it's a it's a product with a hard hard shell on it that fits in.

<unk> investor call that we always have mirrored vitale.

It is a very interesting.

Talk people say should be then.

Sending the awful sustainability report for 2023.

Claus Almer: That makes a lot of sense. Thank you so much for that color. That was all for me.

De lever more on a flop true, but I'm sorry to disappoint, just so far we haven't made the decision to do that but it's a very interesting question that you sort of thinking about do you see a trend in the NDA.

Thank you very much and have a very nice day.

Kim Junge Andersen: The last question comes from the line of Pierre de Fraguier, Goldman Sachs. Please go ahead.

Operator: The last question comes from the line of Pierre de Fraguier, Goldman Sachs. Please go ahead.

Speaker 14: Thank you, and sorry for running over. Question would be on the competitive landscape. I mean, you've been very successful to variabilize your cost base in recent years. Was wondering how do you think your competitors have adjusted to the current environment? Have you seen a number of lines being shut down as well? What it means in terms of your market shares, and just wondering, you know, if some of these lines, you know, if they were to come back, when would that be in your view? The first question, and second question quickly, can you remind us your energy bill, or sort of energy exposure as of 2023? Thank you.

Pierre de Fraguier: Thank you, and sorry for running over. Question would be on the competitive landscape. I mean, you've been very successful to variabilize your cost base in recent years. Was wondering how do you think your competitors have adjusted to the current environment? Have you seen a number of lines being shut down as well? What it means in terms of your market shares, and just wondering, you know, if some of these lines, you know, if they were to come back, when would that be in your view? The first question, and second question quickly, can you remind us your energy bill, or sort of energy exposure as of 2023? Thank you.

And the market for the sum.

Companies are trying to get into that business and we observe it we'll see how they do it and and we certainly look at it but we have not decided to do that okay.

Yeah.

Okay understood. Thank you.

The next question is from Casper Blom Danske Bank. Please go ahead.

Thank you very much and I have two questions also first of all I was hoping you could elaborate a little bit on the Polish acquisition that you announced just before Christmas.

Jens Birgersson: The energy I give to Kim because he's the custodian of how much we share on that. I have the numbers in front of me, but the trends on the energy we have already covered. I can only answer for myself on the capacity, with what's coming up in the market, in energy efficiency, what's actually needed in Europe. I don't see on the stone wool and the glass wool, if this energy efficiency drive comes that they're gonna be enough or the capacity will be used, right? I think it's a matter of being very disciplined now, and I can only speak for myself. We've been super disciplined on monitoring our market share. Yes, in some segment we lose a little bit of share.

This is expected to close what impact do you see on your revenue from this one.

What the price of it and also impact from this acquisition.

As part of the revenue guidance.

Yeah flattish guidance on in local currencies and then my second question is regarding what.

Initiation of a buyback program to date and has there been any statement regarding what position the Rockwell Foundation and your other main catalysts will take in connection with that buyback will be participating pro rata. Thank you.

Okay. So I leave the second question for Cam I take your first question on the tanker customer so the Polish acquisition just to outline the space.

Jens Birgersson: We are fine with that because it's impossible to keep everything perfect everywhere. We are super disciplined on it, and we cut capacity, and we just try to navigate that because we know one thing with our business, we cannot, we don't want to reposition stone wool before an up market where we don't get a sustainable business so that we can keep investing in these plants that just gonna cost more and more to build in the environment here. Yeah. That's how we do it and how the others do it I cannot say, but as you saw last year, net to net, there hasn't, at least we haven't seen big market share moves around in very many countries. That's my observation. Of course, we look at our own situation and that's what we manage.

There was a law made in Poland on the previous government.

The sanction.

Owners of this factor in Poland.

And in that law, our read is sort of two ways.

To buy it because it has been decided by the Polish government, but this should be solved.

That two ways, one way is to buy make an agreement by the shares.

From the old nurse.

<unk>.

But the money you pay really go into an escrow controlled by the Polish government.

And the other way is.

The Polish government under an administrator does not control the webpage to factor it cetera, I'm not sure if they are producing.

Speaker 14: Can you specify how much capacity you've adjusted actually?

Pierre de Fraguier: Can you specify how much capacity you've adjusted actually?

Sell assets.

Jens Birgersson: I gave a number and it's not an absolute, but just to give an example, the 2022 in the autumn, and we have done other things since that, but at the time I mentioned it in rough numbers, but we took out over six months shift, and it doesn't fit with the headcount. It doesn't fit with the headcount you see because we have set up the lines with a lot of temporary workers and contractors that don't show up. In the autumn of 2022, we pulled down like 800 manufacturing jobs in around, and that capacity takeout, exactly, but we're talking 10% to 20% capacity takeout, fair to say.

Uh huh.

At two two sawmill no bid around on that just the main part of this thing.

These two owners have not they're not on a sanction list according to the EU or the U S.

Polish sanction this our view on this was.

Yeah.

If you go over the first method.

You might can agreement.

You agree a price I would not read the price now.

And then the Polish government and all of this is subject to the tax authority proving and after the tax suits arent a whole lot of other.

Polish.

Oh, it's hard to so I think that for lots needs to approve and this starts with the first one and antitrust approval is one of them, but that's in a way.

Speaker 14: Thanks a lot.

Pierre de Fraguier: Thanks a lot.

Jens Birgersson: Yeah.

Speaker 14: Yeah. Super.

In a very later because nothing would happen on any of that before the Polish government has decided to do so how I see this acquisition is from our side.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Jens Birgersson for any closing remarks.

We don't like to be involved in legal problems. So we bought b will not participate in.

Jens Birgersson: Yeah, sorry about the last one.

Speaker 14: Maybe take-

Kim Junge Andersen: Maybe take-

Jens Birgersson: Just on the energy intensity. We do not of course disclose exactly what is the proportion, but coke is still our largest energy cost. I would say normally we give a sort of that energy combined with raw material is about half of our input cost. It is quite a significant one. With that, I would like to thank you for today's call and for all the good questions. It took a bit longer than usual, so please remind yourself to keep it to two questions. You're always welcome to give me a call or send me questions afterwards.

And auction of asset where the ownership of the assets are unclear.

So we don't want to participate in the acetyl thing because we are not quite sure that is sufficient that someone into previous Polish government says.

They have a law that can do this so that's that's one therefore, we opted for the first version.

And the first version is something that is fully politically determined and that means that the Polish new government and it's mixed up with the old Gaba amount on the different parties as I see this sort of an acquisition that is.

Jens Birgersson: At the very latest, I want to inform you that on 8 March, we have an ESG investor call, where we also have Mirella Vitale presenting the Rockwool sustainability report for 2023. Thank you very much and have a very nice day.

Fully determined by politics in Poland.

Politics in Poland or in any other country is probably not our.

It's not our expertise so we have taken the approach for this.

<unk>.

It seems like this can go either way it's politics.

Haven't factored anything into our forecast nothing it is just one of these things that we saw it come up.

We felt we don't want to be involved in 10 years lawsuits along the line.

The second so we tried to first part of the process and let me see what happens. So that's that's that's my view on that I hope that explains a bit and again. The end result of the two ways of doing it.

It's all of us the Polish government deciding where the money goes I also want to make that clear there's no difference between these as we understand it okay over to Kim.

And then the last one.

In connection with the share buyback program not had any interaction with the foundation of all of the main shareholders and so I do at this point do not know whether they wanted to participate compared to last time in 2020, when they're hungry Foundation participated with a pro rata sort of the sale of shares. We have now also the option for them to do.

Our conversion of Acs to BCS, but as I said, we have no not yet any indication that of course will be just be part of the weekly and update our VP announcement, if if there will be participation.

Thank you.

Okay.

Okay. Thanks, a lot.

Okay. So we haven't faced any through three people waiting to ask questions and we are over time, but we will do it but please limit to two questions and we tried to to work. These are three through.

Okay. The next question is from Christian <unk> with Seb. Please go ahead.

Thank you I will actually gets to one question.

And then it's about that market instead of the bridge from Q2 guidance.

In 2003, you reported 14, 3%, but you've also had some.

Nonrecurring costs.

27 million for the Ukrainian retail fund.

Q3, you had some some quickly right.

Around $12 million and then you have the $16 million in restructuring.

So rough claim here in Q4.

So when I add that up.

Roughly 55 million of nonrecurring items. So you should adjust for the axiom Mark you would actually have been 15 eight.

So when you are guiding for 13% on an unchanged.

You're guiding the market is down almost three percentage point.

100 million euros.

So you said I mean 100 million users.

Placement level you are expecting.

He can go through some more one off sales so I hand over to him.

We have also have some one off costs in the year somebody have also done some impairments into business and other things, but yeah and.

And new things can happen, but I hand over to Kim.

Now I will not go into too many details. It is true that there has been some of these.

One off costs during 2023.

We will also in 2020 full make a donation to the Ukraine Reconstruction fund.

Probably yes, so so that debt that is debt that is included in our forecasting.

Are we going to have more one offs. During 2020 fall, we do not know, but as Ian said there has been both positive one offs, but as it would have been a negative one offs. So I.

We don't sort of specify it out because I don't think it has a meaningful.

A meaningful impact on the result.

Okay.

Clarify in your guidance have you assumed another 27 million donation then.

No we have assumed a donation, but he's up to the board to announce that the at the AGM.

You don't want to quantify how much of it.

At the AGM, you will get a you'll get the number so that's a board decision, but we have included.

A donation in 'twenty four.

Okay.

Understood. Thank you.

Uh huh.

The next question is from cloud side of the <unk> not there. Please go ahead.

Thank you.

Coming back to Chris's question about these two nations to Ukraine, I think is kind of important to understand your guidance. What did you say round numbers that could be so you can't help us.

You know, it's a bit of understanding on what it could be.

That'll be the first one.

I think you just have to be patient until April Klaus at the ATM. Because again. This is a shareholder decision support a recommendation to the to the shareholders that could be approved at the at the ATM.

Okay and then the second question is if you go one quarter back in and think.

Think about your market view at that point.

So Brookfield does that your outlook has improved getting worse or it was more or less the same.

And they are both talk about pricing environment and the volume outlook.

It is it's a good question what does change I mean in Q3.

We borrowed about the construction markets in residential.

And.

And and also the renovation, but we don't see I mean, it goes for all some Argos.

The market in Denmark.

How bad it is sitting in pharma analysis and all the rest so.

I think.

What has happened since is such we didn't hold for that.

We'll turn around we didn't predict it but I would say the Gotham bars on the other hand.

When it gets worse. It also becomes more urgent for government to do something and it is.

This 18000 names in Sweden by the hundreds I mean to government construction work as I said, we don't type jobs, so you'll need to do.

Do something.

And.

So I think that on the residential had gotten worse, but the fact that you do get worse also would encourage people to countries to do something on energy efficiency, not only because I need.

To bring them to C O two emissions storm, but they need to secure jobs, because it's not a good idea to lose as fewer billing workers fab.

So and then and the change from.

Well last time, we spoke clause on the outlook I think that we predicted that the interest rate would probably max out and start to decline and that inflation would improve on Dutch central banks in Europe will start to discuss when they lowered the interest rate.

I think what's more positive on that front too.

Backlog of projects that were not started.

We know I predict that it's better now because with this.

Anticipated recession, most anticipate the recession or downturn, whatever I think there is.

It's slightly bigger belief in Europe never mind U S North America and Asia.

As such this is I think there is a bigger hole businesses, it's time defined the downturn.

Therefore, I think it's a little bit better and I think we have seen that in our volumes here in month, one two on three of the fourth quarter and I think we have a good opportunity to see that in the coming months on on on heavy density more industrial applications.

If that continues later on in the year, that's too that's too early to judge its too early to judge, but definitely I think it looks a little bit better short com.

On the industrial side.

Okay.

That makes a lot of center. Thank you so much for that color. That's all for me.

The last question will come from the line of gathered this funky Goldman Sachs. Please go ahead.

Thank you and sorry for running over question would be on the competitive landscape and I mean, you've been very successful too far to figure but is your cost base in recent years.

I was wondering how do you see your competitors have adjusted to the current environment I've, just seen a number of lines being shut.

Shut down as well and which means that most of your market shares and just wondering you know if some of these lines.

If they want to come back when when would that be in your view.

First question and second question quickly can you remind us your energy Bill.

All sort of energy exposure as of 2023. Thank you.

The entity I gave it took him because he is the custodian now how much we share on that I have the numbers in front of me, but.

Yeah. So so the trend is on the entity we have already covered.

I I can only answer for myself from the capacity.

But what's coming up in the market.

In energy efficiency was actually needed in Europe.

I I I don't see on the storm Ola under glass wall. If this energy efficiency drive comps that they're going to be enough.

The capacity will be used science, so I think as a matter of being very disciplined now and I can only speak for myself, we've been super disciplined on.

<unk> monitoring our market share yes.

Yes in some segment, we'll lose a little bit of share Oh, we.

We are fine.

Read that because it's impossible to keep everything perfect everywhere, but we are super disciplined on that and we cut capacity I mean does try to navigate that because we know one thing with our business we cannot.

Stuart I cannot swear about US you saw last year net to net the house at least be I haven't seen big market share moves around the bedroom. Many many countries. Thus my observation, but of course, we look at our own situation and that's what we manage.

And can you precise how much kept Steve I just had actually.

I gave a number and there's not an absolute but just just to give an example, the 2022.

At Oh, we have.

Done other things since that but at.

At the time I mentioned it in rough numbers, but.

Cook out over six months shift and we have this it doesn't fit with the head count it doesn't fit with the head count you see because we have set up the lines with a lot of temporary workers and contractors don't show up in <unk>, but in the autumn trying to trying to to be pulled down like 800 manufacturing.

Jobs and around.

And in that capacity, we took out.

And exactly what you're talking 10% to 20% capacity takeout.

It is fair to say thanks a lot.

Super.

This concludes our question and answer session.

I'd like to turn the conference back over to deal for any closing remarks.

Yes, sorry about the last one.

Maybe just on the on the any deep ability.

We do not of course disclose exactly what is the proportion but the.

Coke is still our largest entity.

And then I would say normally we would.

He gave us some sort of.

That <unk> combined with raw materials is about half of our input costs. So it is a quite a significant one.

So with that.

I'd like to thank you for today's call.

And for all the good questions it took a bit longer than usual. So please remind yourself to keep it for two questions Youre always welcome to give me a call or send me a questions afterwards.

And then at the very latest I want to inform you that on marks the eighth we have a <unk>.

<unk> Investor call. There you also have mirrored that of Italian.

Presenting the awful sustainability people for 2023.

Thank you very much and have a very nice day.

Q4 2023 Rockwool AS Earnings Call

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