Q1 2024 Rockwool AS Earnings Call

Okay.

Kim Junge Andersen: Good day to everyone and welcome to Rockwool A.S.'s conference call regarding the results for the first quarter of 2024. My name is Kim Jong Andersen, I'm the CFO of Rockwool A.S., and today I'm pleased to present CEO Jens Birgersson.

Speaker Change: Good day to everyone and welcome to Ocwen a S conference call regarding the result for the first quarter of 2024.

Speaker Change: My name is keeping that Hudson I'm, the CFO of properties today I'm pleased to present CEO interview with him.

Kim Junge Andersen: For the first part of this call, all participants will be in a listen-only mode. As a reminder, this conference call is being recorded. First, Jens Birgersson will go through our presentation and give an update on the results of the first quarter of 2024. Afterwards, we'll be ready to answer all your questions. Before I hand over the work to Jens Birgersson, I must ask you to notice slide number 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'll hand over the word to you. Good day.

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

Speaker Change: First it's if he wasn't will go through our presentation and give you an update on the results the first quarter 2024.

Speaker Change: After which it will be weighted to answer all your good questions.

Speaker Change: Before I hand to what the what your interviews and I must ask you to notice slide number two which is the forward looking statement. Please be aware that this presentation contains uncertainties.

Speaker Change: Now we can go to next slide which is slide three infusion I'll handle that one to you.

Speaker Change: Good day.

Jens Birgersson: with the microphone on this time. Good day. Good morning, everyone. Looking at the numbers for this quarter, we started off in January with maybe the first two weeks a little bit, a little bit slow. You never know what happens in January, but as the quarter progressed, business picked up. And Transcribed by https://otter.ai, we have trimmed a bit of cost, but not too much.

Speaker Change: We had the microphone on this time good day good morning, everyone.

Speaker Change: Looking at the numbers for this quarter, we started offering genre you read maybe the first two weeks a little bit little.

Speaker Change: A little bit slow you never know what happens in January but a step quarter progressed.

Speaker Change: Business picked off and.

Speaker Change: Turned quite strong there was quite a big mix shift.

Speaker Change: We have very little residential business, we see very little activity still on the residential side, but on the heavy density. This did nonresidential Linda avatar flat roofs, a sandwich panel basically everything going in the industrial segment that has started to grow.

Speaker Change: And I'm very happy with our top line and considering that last year, we kind of held back on resources, we have trimmed a bit of cost, but not too much.

Jens Birgersson: When that growth came, that together with a price level that was stable, that turned into a nice and profitable quarter. In terms of volume, due to the shift from comparing with the relatively easy comparable move to slide take slide four, please higher growth in [inaudible] But that's picking up. We believe that systems will get back into growth territory from now onwards. So it's looking better. Rockfawn had a very slow start of the year, but it's looking better now. Go to slide five.

Speaker Change: That growth came.

Speaker Change: That together at the bid.

Speaker Change: But at a price level that will stay but that turned into a nice and profitable quarter.

Speaker Change: In terms of volume due to the shift from.

Speaker Change: Uh huh over overweight on the heavy densities, we actually to have a double digit volume growth in there compared to last year again.

Speaker Change: Comparing read they're relatively easy comparable.

Speaker Change: Move to slide take slide four please.

Speaker Change: Okay.

Speaker Change:

Speaker Change: Higher growth in.

Speaker Change: The insulation business, so we have a 9% again.

Speaker Change: Again bearing or what.

Speaker Change: I end up there was quite a hefty winter in some areas, especially eastern Europe last year Q1.

Speaker Change: On this system the business.

Speaker Change: Business site side.

Speaker Change: We see a decline.

But that's picking up.

Speaker Change: B, we believe that our system.

Speaker Change: Get back into growth territory from now onwards, so, it's looking better, especially rock fall and how the.

Speaker Change: Very slow start of the year, but it's looking better now.

Speaker Change: Go to slide five.

Jens Birgersson: Regional Sales Development, solid business, and possibly a trend of improvement in some of the Western European market. Eastern Europe then There is broad-based growth, volume, and top line. And, To sum it up, I think there is only one country where we didn't grow; all the others grew. And a lot of countries that grew double digits. So that's, that's, that's good. I think that fits with this.

Speaker Change: Regional sales development.

Speaker Change: Everything pretty slow invest in Europe, there should be settled Germany had quite good growth.

Speaker Change: A.

Speaker Change: It has recovered a little bit still on a low level, but it's not the double digit growth, but it start to grow on but it was sore extremely law for us last year, so, but thats a positive all the other countries are round to see at all.

Speaker Change: No particular, good news anywhere, but there is a solid business.

Speaker Change: Possibly a trend of.

Speaker Change: The improvement in some of the rest of the European market Eastern Europe then.

Speaker Change: There is a broad based growth volume and top line.

Speaker Change:

Speaker Change: To sum it up I think there's only one country, where we didn't grow all day I'll just grow and a lot of countries such grow double digits. So that's that's that's good I think that fits for this.

Jens Birgersson: We try to understand why is that happening? It's heavy densities, it's industrial buildings, it's non-residential segments. And I think it has to do with people that invest in factories and those type of buildings. They now see the end of the downturn, and they've started to invest again, near-shoring possibly impacting this, and planning to be ready by the time it Yves Bromehead, Brijesh Siya, Kim Andersen, Yassine Touahri, George Speak, Yassine Touah I was there in Q1.

Speaker Change: Try to understand why is that happening is heavy densities is industrial buildings as nonresidential segments and I think it has to do read that people that invest in factories.

Speaker Change: And those type of buildings. They now see the end of the downturn.

Speaker Change: And they are starting to invest again.

Speaker Change: Nearshoring, possibly impact this and planning to be ready by the time by the time, it's turned the business cycle is improving so so that's what drives the business in North America, and Asia rehab, the double digit growth in both places.

Jeff: Yes, Jeff.

Speaker Change: Japan, but we made the acquisition I will say airing in Q1.

Jens Birgersson: It's still a very small business, but we had very significant growth, and we're starting to get some volumes into our factory, so that's nice. It's still a small business, but it's encouraging to see the growth numbers we see. Slide 6, Profitability. We had slightly lower prices compared to the end of last year and just slightly below Q1 last year. We're talking, basically, stable prices. We see logistics, radius, and in terms of provisions, you know, we declare provisions most of the time, we don't talk about it, but the quarter last year and quarter this year were roughly neutral, so it's a margin improvement without the impact of any provision taking or restructuring or anything like that. [inaudible] Normal Margin.

Speaker Change: It's instead of every small business buttery, how the various significant growth I'm, just starting to get some volumes into our factories. So that's nice is still a small business, but it's encouraging to growth numbers, we see.

Speaker Change: As slide six.

Speaker Change: Profitability.

Speaker Change: We had slightly.

Speaker Change: Lower prices compared.

Speaker Change: Compared to end of last year, and just slightly below Q1 last year.

Speaker Change: Talk to you so basically stable prices.

Speaker Change: We see logistics radius.

Speaker Change: Increased slightly the mix impact our profitability a little bit negative.

Speaker Change: Materials are lower in energy are lower so profitability Sop, a plaster volume growth the big volume growth that also adds to the profit and you didn't need to add in there.

Speaker Change: Much resources to produce that.

Speaker Change: Growth, so dot dot dot goes through nicely to the bottom line.

Speaker Change: In terms of provisions Sunobe declare provisions are most of the time, they don't talk about it but quarter last year in court did this years is it's roughly neutral. So Suez is a margin improvement without the impact of any provision, taking a restructure and things like that.

Speaker Change: Slide seven.

Speaker Change: Nice development in profitability on insulation.

Speaker Change: You'll see the Martinez has improved from the bit about 10% to a more than 15% nice under Australia them by by the business I mentioned and on the system Division. We also had to have to development last year of about 10 point for on and off for 2.2 of which is some more more.

Speaker Change: Normal.

Jens Birgersson: So we're happy about that. Q4'23, I just want to remind you that we had a 60 million restructuring project that we booked in that quarter. So that's not representative, but the system division has improved also, which is nice. Slide 8, Investment Activities. We just keep investing. There are a couple of things that have happened.

Speaker Change: Normal margins, so real happy about that Q4, 'twenty three I just want to remind you that we had 60, maybe on restructuring projects booked in that quarter. So that's not representative but the system Division has improved also which is nice.

Speaker Change: Slide eight.

Speaker Change: Investment activities.

Jens Birgersson: One is that we have started up the Flumrock plant. That was probably the main investment there. We also commissioned a new paint line for a rock panel, and we keep doing that so that has... business, but also a general increase in technical installation demand. We have also invested in Boerum with increased capacity, and that business is growing nicely. Moving on to slide nine, the electrical melter in Flumrock. Okay, not everyone would know that, but it's in Switzerland and it's in Flums.

Speaker Change: We just keep keep investing.

Speaker Change: There are couple of things to happen one one is sucked a rehab started off the floor rock plant the pulse appropriately the main investment that would be also.

<unk>: <unk> commissioned a new paint line for rock panel.

<unk>: And keep doing that so that to us.

<unk>: Continue are done and we.

<unk>: We haven't had any.

Nothing, especially notable in this we just keep doing executing on the plan number haven't drawn back.

<unk>: We did also.

<unk>: We see an increase a couple of factors our technical insulation business.

<unk>: Part of it due to a competitors exit from from the Marine business, but also a general increase in technical installation demand. We have also invested them in bore him in a in an increased capacity in that business is growing nicely.

Jens Birgersson: That's a 100 million euro investment. We made this acquisition. And in the business plan we made several years ago, it has been tremendously successful, but we made a commitment to secure this beautiful project. The CO2 reductions will be something like 75% with that, and we will have green energy driving that. So that's a really good project. It will also improve our ability to take back old products and do circularity, or up-cycle them. We were almost neighboring countries. In Switzerland, that is a little bit more difficult due to the nature of the products they prefer in that country.

<unk>: Moving on to the slide <unk> nine.

<unk>: Nine.

Speaker Change: Electrical melter in flow Mark, Okay, not everyone would no doubt, but this in Switzerland and its influence.

Speaker Change: That's a 100 million Euro investment we made this acquisition and in the business plan. We made several years back. It's just been tremendous successful, but we made a commitment to secure this dislocation in Switzerland.

Speaker Change: These factories in Switzerland for Switzerland, which is quite unusual in our sector B B. We have now completed the investment of 100 million Euro.

Speaker Change: And it started up on the day.

It's the largest electrical melter antiworld on there also another couple of extra send that plant that we have never tried before the tussle worked out on that it just been a beautiful project.

Speaker Change: C O two reductions would be something like 75% with that are on that we will have a green energy driving that so that's that's a really good project. It should also.

Speaker Change: Prove our ability to take back old old products and do a circle area.

Speaker Change: T O upcycle them.

Speaker Change: M B b there almost.

Speaker Change: And at the limit of what we could handle both of them.

Speaker Change: Non guardian products. That's good duster gave you a little bit of a feeling for this project. The total shutdown I mean be prepared everything and then we did the total shut.

Speaker Change: Shutdown or five weeks to get through that dose weeks of supply to customers. You know in many markets. We can take them products from neighboring countries, Switzerland up just a little bit more difficult due to the nature of the products say they prefer and that.

Jens Birgersson: And we had built up a strategic stock of 100,000 pallets, and it worked out really well, and we kept the customers supplied. Slide 10, the buyback program is progressing as planned, and maybe we are, I wouldn't say we are surprised but the net, we don't have debt again, so 200, more than 200 million surplus again, net debt free, so a very healthy balance sheet position. Over to the Outlook, slide 12. We had already pre-announced the Outlook.

Speaker Change: Country, and we had we had built up a strategic stock of 112, some pilots and.

Speaker Change: It's worked out really well under call it would be kept our customers supplied.

Speaker Change: Slide 10.

Speaker Change: And the free cash flow grew.

Speaker Change: Good as usual networking capital is not a big issue for us its on a healthy level.

Speaker Change: Some of the reduction is also caused by the increase in the delivery of some that we now have relatively low stocks. We are ramping up capacity. So I'm not I'm not worried about being able to deliver good growth in Q2.

Speaker Change: We are ahead of the carb on them, we should be able to grow more to share by buyback program is progressing us.

Speaker Change: As planned.

Speaker Change: And may be.

Speaker Change: I won't say, we are surprised but the net net net we don't have depth against the 200 more than 200 million surplus again net debt free so very healthy balance sheet position.

Speaker Change: Over to the outlook.

Speaker Change: Slide 12.

Jens Birgersson: We didn't change that now, so mid-single-digit growth, 50% margin, and we just maintained the CapEx forecast. So that's the outlook, and you had factored that in already in your estimates, I think, when we did the profit warning a few weeks ago. Now, questions.

Speaker Change: We had already pre announced daas look we didn't change shop now so mid mid mid single digit growth.

Speaker Change: 50% margin.

Speaker Change: Yeah.

Speaker Change: We just maintained our capex forecast. So that's the outlook you had factored that in already in your estimates. So I think when we did the profit warning or a few weeks back.

Speaker Change: Over to questions.

Speaker Change: Yeah.

Operator: We will now begin the question and answer session. To ask a question, you may press star and one or your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star and 2. At this time, we will pause momentarily to assemble our host. Our first question comes from Casper Blom with Tansky Bank. Please go ahead.

Speaker Change: We will now begin the question and answer session.

Speaker Change: Last quick question, you May press Star and one on your telephone keypad.

Speaker Change: Using a speakerphone please pick up your Hudson before basically the key.

Speaker Change: We still get a question please press star two.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Casper Blom: Thank you very much. I have two questions, please. The first goes to pricing. You've successfully maintained pricing throughout 2023 and here in Q1, while we see that competitors like Kingsman and Zakopane have been lowering prices. Can you talk a little bit about the pricing dynamics in the market and any kind of feedback that you are getting from customers on this topic? And secondly, with margins now at a higher level than we have seen historically, do you believe that there could be a situation where this could trend even higher if and when volumes bounce back to the level seen a year or two ago? Thank you. Okay, thank you, Casper. So, let's start with the pricing.

Speaker Change: Our first question comes from Casper Blom with Keybanc. Please go ahead.

Speaker Change: Thank you very much.

Casper Blom: Two questions. Please.

Casper Blom: The first goes to two pricing and you've successfully more or less maintain pricing throughout 'twenty three and here in Q1.

Casper Blom: While we see that.

Speaker Change: Competitors like King span and cycle. Thanks.

Speaker Change: Lowering pricing can you talk a little bit to the pricing dynamics into market and any kind of feedback.

Speaker Change: Feedback that youre getting from customers on this topic.

Speaker Change: Secondly.

Speaker Change: With margins now at a higher level than we have seen historically.

Speaker Change: Do you believe that that could be a situation, where this could trend even higher if it's in volumes bounce back to the level seen a year or two ago. Thank you.

Jens Birgersson: Okay, thank you, Casper. So let's start with the pricing. We did, we did. First of all, the overall price number is the combination, obviously, of all regions. And we see different things in different regions, and we see different developments in different segments. But underlying, I would like to say inflation is still there. Yes.

Casper Blom: Okay. Thank to Casper, so let's start with the pricing. We did we did first of all the overall price numbers to a combination obviously of all regions are.

Casper Blom: And we see different things in different regions and we see different.

Speaker Change: <unk> is in different segments, but.

Speaker Change: Underlying I would like to say.

Speaker Change: Inflation is still there, yes energy prices has come down to more normal levels on this on that but we still have inflation in North America, we have it in Europe I'd be happy to.

Jens Birgersson: Energy prices have come down to more normal levels and this and that, but we still have inflation in North America, we have it in Europe, and we have it, Unknown Speaker, Unknown Attendee, Arnaud Lehmann, George Speak, Yassine Touahri, George moved. It started to move through the backlog, get back to proper delivery times, and we have also launched a relatively, [inaudible And then you have some markets where you have cost increases.

Speaker Change: Because the inflation has not disappeared.

Speaker Change: Net obviously, we have different pricing climate. So in North America, we have been quite careful on pricing onto now and the reason was that we got completely overwhelmed in orders and ended up with a very long delivery times, so nabil how ramped up.

Speaker Change: Capacity M B a rehab.

Speaker Change: Move.

Nabil: They start to move through the backlog get back to proper delivery times.

Speaker Change: And and and we have also launched a relatively.

Nabil: The substantial price increase.

Nabil: In North America again, because we don't feel we should raise prices on have allows losses service to our customers saw U S habit positive pricing climate, but also high high inflation on a high demand saw that goes outweigh a shy a little bit spotty, but again in the big scheme of things doesn't impact overall.

Nabil: Numbers, yet and in five years I'm sure a Chevrolet impact the hour numbers, but now it is not a big deal.

Nabil: When we look at Europe.

Nabil: The tricky segment would be.

The rest of the Dan Shull General building insulation, Barbie kind of walking a tightrope, but we are not we are not dropping a lot but to be the kind of adjust pricing a bit but.

Nabil: There is very competitive and then you have some markets where you have them.

Nabil: Projects like mid sized projects, where we offer Stonewall and there is a complete carnage on the EPS side with very low pricing and we lose a bit of projects and we'd go down a bit so but the overall under heavy dance of discern.

Nabil: The demand coming now and regaining ground than we.

Nabil: We increased prices. So the net of that data set I I see stable pricing, but there's a lot of work into different segments. Your you look at for example, technical installation into oil and gas into marine.

Nabil: Healthy had two demand and an M b pass on the cost increases.

Jens Birgersson: So that's the way we approach it. And our goal was always to kind of get through here. And we have always told our customers that we don't see inflation go away. So we haven't, we haven't, and it's not going away very quickly.

Nabil: So so so that that's the way we approach it and our goal of US all of us to kind of get through here and we have always told our customers that we don't see the inflation go away. So we haven't we haven't.

It's not going away very quickly and therefore, I see continued small price increases.

Jens Birgersson: And therefore, I see continued small price increases. Then on the margins, Kim and I, we have this old 10%, about 10%. And we have never had a problem with being, you know, 16 or 7%.

Nabil: And then on the margins.

Nabil: Kim and I will have this old 10% above 10% and we have never had the problem. We had we had being <unk>.

Jens Birgersson: Because when we look at the CapEx and the massive investments and the price of the plants with inflation, I would fundamentally say that we should have a higher margin in the business. But again, a higher margin is a bit of a dangerous concept, because if we end up building, say, two jumbo lines, and we switch them on, it's several margin points in depreciation. So I think, again, in future calls, I said that last time, we should talk a bit on the margin.

Nabil: <unk>, 7%, because when we look at the Capex and the.

Speaker Change: Massive investments and the price of the plants read the inflation.

Speaker Change: I would fundamentally say that we should have a higher margin in the business.

Again higher margin is a bit of a dangerous concept because if we end up building say to Jamba line somebody switched them on a several margin points in depreciation so I think again.

Speaker Change: Two calls I've said that last time, we should talk EBIDTA margin, but I I I think we need.

Speaker Change: At a higher margin and we should try to maintain a higher margin because we had all these investments that are needed in this business you're up to on the one side. The green if occasionally to C. O to take up that I've mentioned 100 hundred a million in Switzerland.

Jens Birgersson: But I think we need a higher margin. And we should try to maintain a higher margin because with all these investments that are needed in this business, you have on the one side, the greenification with the CO2 take-up, I've mentioned 100 million in Switzerland, we need to charge for that. We cannot end up with businesses that don't cover themselves. So, I think we need an underlying higher profit margin.

Speaker Change: Need to charge for that.

Speaker Change: We cannot end up in businesses that don't cover themselves. So so I think we need a underlying higher profit margin. Then we also have now the entity perform on some buildings directive that was decided on.

Jens Birgersson: Then we also have the energy performance of buildings directive that was decided to have some guidance on fire safety hazards because when you install more electrification, heat pumps, PVs, batteries, recharging infrastructure, you need to be more fire safe. And then you have all these buildings that are going to be renovated. So with that, we also see that if we start to realize that we need to invest more, and therefore, I would like margins to be higher. So there is nothing against maintaining the margins to make sure that we have a sustainable business. I hope that I have answered all your questions, Casper.

Speaker Change: Trial from April into U b, very ambitious targets son, and I don't see an impact in 'twenty to 'twenty four but you'll have not goals for 2030, you have golar Fortran deducted five you have aspects in there on it.

Speaker Change: Solar energy installations, which is a sweet spot for us because of Danone Combustibility Youre, even have some guide us in their own fire safety of house, so to speak because when you install more.

Speaker Change: Electrification heat pumps PV battery recharging infrastructure, you need to be more fire safe and then you have all these buildings are going to be renovated so.

Speaker Change: Read that to you also see that.

Speaker Change: B E. If thats start to realize we need to invest more and therefore I will like margins to be higher okay. So so nothing against maintain into margins to make sure that we have a sustainable business.

Speaker Change: I hope that all of the answer to your question on customer.

Jens Birgersson: Yeah, I suppose if I could sneak in one follow-up, it would be if there was a marginal level where you would say, okay, now it's pretty comfortable, let's try and go for more volume instead of further increasing the margin.

Speaker Change: Yeah, I suppose just do it if I if I could sneak in one follow up would be if that would be a margin level way you would say, okay now its pretty comfortable let's let's try and go for more volume.

State of further increasing the margin.

Jens Birgersson: Yeah, I think we go for volume, but, you know, volume is super important. But if the ball gets restricted by capacity, it's not smart to sell out your volume at too low a margins, right? So we need to build factories to cover the volume. I mean, we definitely want to grow the volumes, but now we have just come out of a period where it was just to maintain market shares and keep profitability of the business, but we have been seeing falling volumes. So now we come to growing volumes. So we have a different scenario, but for sure, for sure, we want the volumes to grow.

Speaker Change: I think I think we go for volume but.

Speaker Change: You know volume is.

Speaker Change: It's super important, but if the ball if the volume gets restricted by capacity, it's it's not smart to sell out your volume.

Speaker Change: I too low margins right.

Speaker Change: So so be we need to build factories to cover the volume.

Speaker Change: We definitely want to grow the volume of spot now.

Speaker Change: Just come out of a period, where it was just to navigate maintaining market shares and keep profitability of debased news, but we have been seeing falling volumes. So novel come into growing volumes. So we have a different scenario, but for sure for sure we want the volumes to grow.

Speaker Change: Okay.

Casper Blom: Thanks a lot. Thanks a lot, Jens.

Speaker Change: Thanks, a lot Dave Thanks, a lot.

Alexander Craeymeersch: Our next question comes from Alexander Craeymeersch with Tetris Raw. Please go ahead.

Speaker Change: Our next question comes from my next hundred greatness with perpetual World. Please go ahead.

Alexander Craeymeersch: Hi, hello, good morning. This is Alexander from Capra speaking here.

Speaker Change: Hi, Hello, Good morning, Alexander from Kepler speaking here.

Alexander Craeymeersch: Congratulations on the nice set of results. Yeah, I was just wondering about the capacity because you were already touching on that. In H2 2022, you did some capacity reversal with unfortunate layoffs. I think one specific item you mentioned there was deep maintenance in the plant in Germany. Now that you mentioned that volumes are increasing and the demand in Eastern Europe and Germany is increasing, have you already made some plans to increase capacity again, or to restaff? Or are you comfortable with the current capacity? Thank you.

Speaker Change: Gratulation on the on the nice results.

Speaker Change: Yes, I was just wondering.

Speaker Change: On the capacity thing because you were only touching on that and H two 'twenty 'twenty. Two you did some the best reversal Lee, which unfortunately offs and I think one specific item you mentioned there was a deep maintenance in the plant of Germany now that you mentioned that volumes are.

Speaker Change: Creasing and the demand in eastern Europe, and Germany is increasing have you already made some plans to increase capacity again re staffing.

Speaker Change: Or are you comfortable with your current capacity. Thank you yeah, I mean, the installed capacity is there and.

Jens Birgersson: Yeah, I mean, the installed capacity is there, but that's so we struck early and then we set the volume level for the downturn, and that pretty much worked out. And also, I assume you are based in Germany, or not? OK, a lot, of course. I buy it and all the other schemes.

Speaker Change: We are.

In the U S. We added several shifts.

Speaker Change: And B R. B R are ramping up now and in line with the capacity increase and as I said, when we did that big most of 'twenty to 'twenty two.

Speaker Change: Turning to 'twenty two into autumn, we did to be relatively big capacity to take up but but.

Speaker Change: That's.

Speaker Change: So it'd be restructure early on then receptor volume level for the downturn and that pretty much worked out.

Speaker Change: Also I assume you are arguing based in Germany or no.

Speaker Change: Brussels, Oh, Okay, a lot of courts I buy it on all day I'll just schemes now obviously for example in southern Germany, and Nordberg read to growth that is back from a low level, it's not healthy in Germany is nowhere near where it should be.

Alexander Craeymeersch: Now we see, for example, in southern Germany and in Nuremberg, with the growth that is back from a low level; it's not healthy in Germany. It's nowhere near where it should be. Nuremberg, for example, in southern Germany, is back up and running again on all lines, so we are putting in more capacity. But again, it's not at the level we are talking about. It's not a big, big problem, and we are planning that we should be able to grow.

Speaker Change: <unk> for example in southern Germany is back up and running again on an all lines. So.

Speaker Change: So we are putting in more capacity, but again its not from the leverage we are talking about it's not it's not a big big problem and we are planning that we should be able to grow.

Alexander Craeymeersch: Okay, thank you. And then, going on with capacity, my second question would be if you could maybe give just an update in terms of budget capacity and timing of the plans in France, Romania, and now also the US. Thank you.

Speaker Change: Okay. Thank you and then.

Speaker Change: Going on in the capacity and my second question would be if you could maybe give just an update in terms of budget capacity and timing of the plants in France, Romania and now also the U S. Thank you.

Kim Junge Andersen: I will hand that over to Kim.

Speaker Change: I hand that over to Kim.

Kim Junge Andersen: Yeah, thank you very much. We still have a plan to go ahead and construct the factories in France and Romania to be online in the second half of 2026. Cross fingers. And then, of course, the factory in Washington State in the U.S. has just been approved by the board here lately, and we are in the planning stage there. We have a piece of land. We're doing due diligence on that, but it will only come online in 2027.

Speaker Change: Yes. Thank you very much and we still we still have a plan to go ahead to construct the factories in France and Romania.

Kim: To be online in the second half of 2026 Cross fingers and then of course.

Speaker Change: The factory in Washington State and U S has just been approved by the board here lately.

Speaker Change: Today, we are in the planning data, we have a piece of land, we doing debates on that but that would only come online in 2027.

Kim Junge Andersen: So that's the plan, right? So for us, the next new capacity will be most likely France and Romania here in Europe, and then in 27 in Washington State, and then India. And then India is also approved, and there will also be a three-year period, so... Yeah, maybe, yeah, it's because it's a, yeah, but let's say late 26 into 27 in India.

Speaker Change: So that's the pain right by social for US the next new capacity would it be most IP fronts in Romania.

Speaker Change: In Europe, and then in 2007 in Washington State and then India.

Speaker Change: And then India, social approved and and Dave will also be a three year period. So.

Speaker Change: Maybe it's because they say, yes, but it's a late 'twenty six into 'twenty seven in India.

Alexander Craeymeersch: Okay, thank you very much. Jens and Kim, you may hand this over to my colleagues. Bye.

Speaker Change: Okay. Thank you very much Jensen can you hear me.

Mike: Over to my colleague Mike.

Arnaud Lehmann: Our next question comes from Arnaud Lehmann with Bank of America.

Speaker Change: Our next question comes from Martino, Cleveland with Bank of America. Please go ahead.

Arnaud Lehmann: margin. Is there any reason why you are a bit less optimistic about the margin in the second half?

Martino: Thank you very much my first could I have two questions. Please my first question is on the margin.

Speaker Change: Is there any reason why you are a bit less optimistic frozen melting in the second half or you just.

Arnaud Lehmann: Are you just being a bit cautious maybe on pricing? Or is it possible that your 17, 16, 17% margin in the first quarter might be sustainable into Q2 and H2? That's my first question.

Speaker Change: Being a bit.

Speaker Change: A brief question maybe on pricing or is it.

Speaker Change: Placebo. That's your 17 16, 17% margin in the first quarter might be sustainable.

Speaker Change: Q2 and H.

Speaker Change: That's my first question.

Jens Birgersson: And staying on the residential and non-residential diverging trends, clearly quite positive trends in non-residential demand. Could you be a bit more specific about which countries and which verticals where you are seeing this strong demand? Thank you very much.

Speaker Change: Staying on the <unk>.

Speaker Change: And normally the diverging trends.

Kenny quite positive trends in nonresidential demand could you be a bit more specific about which countries.

Speaker Change: <unk>, what you are seeing this strong demand.

Jens Birgersson: Okay, thanks Arnaud. So on the margin, when we did the outlook, we don't have a backlog. So we kind of, Kim and I, what we do, we factor in what we see into the next quarter, and then we see how the sales forecast build. But we don't have a long backlog. And therefore we think that the margin in that period would be a bit lower, normally it is. On the other hand, you have September that is normally a super strong month, so sometimes that way it's harder.

Speaker Change: Okay. Thanks, Thanks Arnaud.

Speaker Change: So on the margin when we did the outlook.

Speaker Change: We don't have backlog.

Speaker Change: So it should be.

Speaker Change: We.

Speaker Change: Kim and I want to redo of your factory and what we're seeing for the next quarter and then we see how the size for cross Bill, but we don't have a long backlog and therefore, we.

Speaker Change: We traditionally do.

Speaker Change: Get this question off to them ever do a forecast because we'd be refractory and what receipt.

Speaker Change: I guess, you know a couple of months out for the rest.

Speaker Change: Taken assumptions, so that we don't come back and disappoint and don't deliver on it.

Speaker Change: <unk>.

Speaker Change: Some are we have August for example by Frost has stopped and then we have some other things at the margin.

Speaker Change: In that period would be a bit lower normal. This on the other hand, you a September that normally supersaur months, sometimes such rates are down, but I will say the following rather than try and.

Jens Birgersson: But I will say the following rather than try, and I don't see that there would be a dramatic difference in pricing. I haven't factored in anything like that. My intention is to keep prices and keep working them and do price increases where we can and defend market share where we should. So I'm not too worried about that. So I wouldn't put more into it other than to say that we don't have quantitative visibility into those quarters yet, but we are getting deeper and deeper into it. But we know, for example

Speaker Change: And I don't see that that would be.

Speaker Change: Dramatic staying on pricing I havent factored in entertained like that my intention is to keep keep pricing.

Speaker Change: Keep working it under our price increases.

Wherever we can and defend market share, but where we should.

Speaker Change: So so I'm not too worried about that side will then put more inventory in.

Speaker Change: Other than to say that bid on tab.

Speaker Change: Quantitative visibility into those quarters, yet we are getting deeper and deeper into it but we know for example in Q2, we know pretty much. The business continues its growing is looking good.

Jens Birgersson: Then we come to that, those segments, I would say. Overall, the business is driven by the heavy business, for example, solar PV is pretty broad, broad based is broad based. And then you have, for example, North America, it's all types of business, residential, non-residential. And there we have, I will say less over.

Then become on that are those segments.

Speaker Change: I would say.

Speaker Change: Overall, the business is driven by the heavy business for example, solar PV.

Speaker Change: Yes.

Speaker Change: Pretty broad based it's broad based and then you have the first half, but North America is all types of business residential nonresidential and there we have I would say less of a.

Speaker Change: So for example, the flat roof business in North America saltwater big for US. So there you have a broad based uptick.

Speaker Change: Eastern Europe is is exactly what you would expect your manufacturing and logistics data centers.

Speaker Change: All all tie back to re factor is you name it some electric vehicles factories.

Jens Birgersson: So for example, the flat roof business in North America is not very big for us, so there you have a broad-based uptake Eastern Europe is exactly what you would expect, you know, manufacturing, logistics, data centers, all types of battery factories, you name it. Some electric vehicle factories, It's all those. Nearshoring or just an expansion of the industrial base. That drives it, and that happens in the whole of Eastern Europe. And then, in Western Europe, I would say there is a bit of that coming, but I would say the fastest growing segment is solar, PV, and flat roof.

Speaker Change: It's all Dulce near shoring or just expansion the industrial base that drive system that happens into all of Eastern Europe, and then in Western Europe, I will say, there is a bit of that coming but.

Speaker Change: I've also had the fastest growing segment is a.

Speaker Change: Solar PV flat roofs.

Arnaud Lehmann: That's very helpful; thank you very much.

Speaker Change: That's very helpful. Thank you very much.

Brijesh Kumar: Our next question comes from Brijesh Kumar with HSBC. Please go ahead.

Speaker Change: Our next question comes company, Yes Kumar with HSBC. Please go ahead.

Speaker Change: Okay.

Brijesh Kumar: Hi. Hi Jens. Hello Kim.

Speaker Change: Alright.

Speaker Change: Hello again.

Speaker Change: Starting with the first one is on the.

Speaker Change:

Speaker Change: Sorry, I lost you Buddy I'd start with across London on Gulfstream.

Speaker Change: How do you kind of thought it seemed in pounds.

So the dynamics.

Speaker Change: So what do you peg and pet Coke in terms of pricing versus Q2 with Q1.

Speaker Change: You can see the company will catch you hedged for Q1 <unk>.

Speaker Change: Thanks, Thanks, again, because people are taking more.

Speaker Change: Okay.

Speaker Change: And then second question is on the margin I guess, many questions have already been asked but.

Speaker Change: You're quite correct.

Speaker Change: From history, you make a very good margin in Europe.

Speaker Change: Business was flat.

Speaker Change: Given the mix.

Speaker Change: Flat through Q1.

Speaker Change: It's pretty good number.

Speaker Change: Yes, the dental business.

Speaker Change: Could you say that.

Thanks, Mike.

Speaker Change: Next to go off.

Speaker Change: I was at Disney.

Okay.

Brijesh Kumar: I have two as well. So, starting with the first one on the... Sorry, I lost it.

Speaker Change: Thanks Paresh.

Speaker Change: Before I start.

Speaker Change: Do you remember that question you asked about to sue to intensity in the last call.

Brijesh Kumar: But yeah, I'll start with the cost one then. On the cost side, what are you kind of seeing in terms of the dynamics? I mean, if you could just give us what you have hedged in Petco in terms of pricing versus Q2 versus Q1. And I guess previously we were talking about cash you hedged for Q1 as well as electricity to an extent. So if you can just give us a little more update about where we are, and then the second question is on the margin. I guess many questions have already been asked about it.

Speaker Change: Alright, great.

I checked that.

Speaker Change: Check that.

Speaker Change: But I just wanted to look back and comment because we didn't answer rich when you answered it so.

Speaker Change: Basically about.

Speaker Change: What happened is what we did.

Speaker Change: Improve the intensity, but what Walter you had not done none that false information, we should link that dock.

Speaker Change: They've agreed factors changing in Germany, and France those were the main contributors so.

Speaker Change: And also China.

Speaker Change #100: Bear where we did we put in electric art melting we did all the work.

Speaker Change #100: But then we.

Speaker Change #100: We have not linked op.

Speaker Change #100: The rack, so those countries, especially France, or Germany had a worsening grid factor mathematically that made to see you too.

Speaker Change #100: Look look wires, but when we go back and calculated it again.

Speaker Change #100: It redirects actually we did improve so.

Speaker Change #101: We will not definitely not happen this year.

Speaker Change #101: It was a mistake from our side because we did not predict that Germany would move so much too to call us a date.

Speaker Change #102: And it was a bit of an oversight with China, where we did do the investment and the conversion but didn't secure.

Speaker Change #102: So for example, China, we put in on an electrical Mazda and then Denver didn't through their conversion to green energy and that actually made it worse, but in effect, we dropped to <unk> emissions with 70% or something so.

Speaker Change #102: That would be corrected.

Brijesh Kumar: But if I recollect from history, you make a very good margin in your normal residential business versus flat roof. Given the mix that shifted to flat roof in Q1 versus historical numbers, when the residential business picks up, would you say that that margin has legs to go up as the mix improves positively?

Speaker Change #102: And then if you go back to your questions we haven't seen.

Speaker Change #102: Residential come up, but I guess theoretically if you keep it.

Speaker Change #102: If you keep the margin on on the auto business under volume and Theres more residential scope margin would go up.

Speaker Change #102: Mix and the mix effect.

Speaker Change #102: It is relatively significant.

Speaker Change #103: So that's that's a point I will hand over to came as soon on entity about if you look when I look at it generally receive a better material linked cross the input side, but there are some cutter is scoring in op, thus logistics as wages and there are certain IND.

Speaker Change #103: <unk> materials that creep up but on average it's going down maybe Kim you can throw some light on that.

Kim: I think I have told you before that we had this favorable deal on the Coke for the first quarter and that for sure is one of the energy cost that is going up I think.

Speaker Change #104: Gas prices electricity prices, we can be more stable.

Speaker Change #104: For the remaining part of the year, but coke prices for us at least compared to Q1 is going up and then you have also oil related prices like bind us in plastic wrappings and now expect it to go up in price.

Speaker Change #105: Nvidia and social statistics and wages.

Speaker Change #105: Okay.

Speaker Change #105: Okay.

Jens Birgersson: Thanks Brijesh. Before I start, do you remember that question you asked about the CO2 intensity on the last call? I checked that a little bit, and I just want to look back and comment because we didn't answer it when you answered it. So basically, what happened is that we did improve the intensity, but what we had not done, and that was an omission, we should have linked that up. There were grid factors changing in Germany and France, those were the main contributors, calculated it again, and we matched it with the RECs. Actually, we did improve. So we will not, that will not happen this year. It was a mistake from our side because we did not predict that Germany would move so much to coal as it did.

Speaker Change #106: Fair enough. Thanks, thanks, Thanks for asking.

Speaker Change #107: That question.

Speaker Change #107: Okay. Thanks.

Jens Birgersson: And it was a bit of an oversight with China, where we did make the investment in the conversion but didn't secure the RECs. So we did. So for example, China put in an electrical melter, and then we didn't do the conversion to green energy. And that actually made it worse. But in effect, we dropped the CO2 emissions by 70% or something. So that would be corrected. And then if we go back to your questions, you know, we haven't seen residential come yet.

Speaker Change #108: Our next question comes from claimed the color with Jpmorgan. Please go ahead.

Jens Birgersson: If you keep the margin on the other business and the volume and there's more residential scope, the margin would go up, the mix, and the mix effect..., and I think there'd be

Andrew: Good morning, Andrew.

Jpmorgan: Thanks for taking my question.

Two for me. Please just one on the strength of the balance sheet and can you speak about kind of the intention in the midterm between two of Capex growing the business and buybacks do you think buybacks could be a norm going forward and then secondly, just to dive in a little bit on France.

Jpmorgan: What was kind of driving the decline there and do you see that trained we remaining for the full year. Thank you very much.

Jpmorgan: Yeah.

Speaker Change #111: In France.

Speaker Change #111: France.

Speaker Change #112: Take trial on Sunday, and I hand over balance sheet to Kim.

Speaker Change #113: So in products, we talked we've talked to very very small.

Speaker Change #113: Oh single digit small decline, so I would say, France or Spain.

Speaker Change #113: Quite resilient and done much better than Germany.

Speaker Change #114: I think there could be some of the schemes for energy renovation there could be individual project, but it's nothing dramatic we are.

Jens Birgersson: I have told you before, Brijesh, that we had this favorable deal on Coke for the first quarter. And that, for sure, is one of the energy costs that is going up. I think gas prices and electricity prices will be more stable for the remaining part of the year. But Coke prices, for us at least, compared to Q1, are going up. And then you also have oil-related prices like binders and plastic wrap. Plastic wrap is also expected to go up in price.

Speaker Change #114: Slightly slightly down so I would I would give it another quarter or two to see how the quarter is coming out.

Speaker Change #114: Now and.

Speaker Change #115: My prediction would be when been promised Rev. Sop that youre going to have growth in France also coming a little bit like we saw in our system Division, where you had to.

Speaker Change #115: A gradual a bit of a decline in Q1, but we see that coming back to growth. So so that would be my prediction sidled justified that one more quarter out, let's say if it was a bit of a blip.

Speaker Change #115: Okay.

Speaker Change #116: Yes. Thank you and <unk> also had eight funds with did the price increase in Q4.

Speaker Change #116: So I think there was a little bit of pre buying into anyway, and the balance sheet.

Speaker Change #117: Board has decided this year to two.

Speaker Change #118: This $160 million of ULA and <unk>.

Speaker Change #119: Is share buyback and day did that 50.

Speaker Change #119: Looking at our own investment needs.

Speaker Change #120: And it's not something they will do on a regular basis, but it's for sure that now is the second time this.

Speaker Change #121: The board is doing it in an ocean our time, so it's definitely something that we will propose going forward in case that we can see that as excess cash in the business to do this mixed of a continued sort of stable progressive dividend then supplement that with.

Speaker Change #122: One offs share buybacks.

Speaker Change #122: Yeah.

Speaker Change #123: Thanks, Dave.

Brijesh Kumar: Fair enough. Thanks. Thanks, Jens, for asking, remembering to answer that question. Okay. Thanks. Our next question comes from Zaim Beekawa with JP Morgan. Please go ahead. Morning Jens and Kim, thank you for taking my question. Two for me, please, just one on the strength of the balance sheet. Can you speak about kind of the intention in the mid.

Speaker Change #124: Our next question comes from Christian <unk> with Seb. Please go ahead.

Speaker Change #123: Yeah.

Zaim Beekawa: Our next question comes from Zaim Beekawa of JP Morgan.

Christian: Yes. Thank you two questions from me firstly.

Jens Birgersson: Yeah. France, I take France and then I hand over the balance sheet to Kim. So, in France, we're talking about a very small, single-digit, small decline. So, I would say France has been quite resilient and done much better than Germany. So, I think there could be some of the schemes for energy renovation, there could be individual projects, but it's nothing dramatic. [inaudible] Yeah, thank you for the interview.

Christian: On the price.

Speaker Change #126: Announcement, when you upgrade your guidance, you're sort of reflect that neutral patients you will take price actions you've already mentioned.

Speaker Change #126: You've raised prices in North America. So just wanted to check where else you have recently done.

Kim Junge Andersen: Yeah, thank you. And Jens, we also had in France; we did a price increase in Q4. So I think there was a little bit of pre-buying into, anyway, on the balance sheet, the board decided this year to propose this 160 million euro share buyback. And they did that, obviously, looking at our own investment needs. And it's not something they will do on a regular basis, but it's for sure that now is the second time the board has done it, and also in our time.

Kim Junge Andersen: So it's definitely something that we will propose going forward in the case that we can see there is excess cash in the business to do this mixed of a continued sort of stable progressive dividend and then supplement that with one-off share buybacks.

Speaker Change #126: Price increases.

Kristian Torne Johansen: Our next question comes from Kristian Tornow with SAB. Please go ahead.

Speaker Change #127: Yeah, Thanks, Kristen so rehab.

Speaker Change #128: Segments also in some countries you know if you take technical insulation assignments panel.

Kristian Torne Johansen: Yes, thank you. I have two questions. Firstly, just on price action. So in the announcement, when you upgraded your guidance, you sort of reflect that due to inflation, you will take price action. You've already mentioned that you've raised prices in North America. So just want to check where else you have recently done price increases.

Speaker Change #129: They have raised prices, but if you. In addition to the countries you mentioned in the Nordics under U K for example, we have launched price increases.

Jens Birgersson: Yeah, thanks, Kristian. So we have their segments in some countries, too, you know, if you take technical insulation, and sandwich panels, there we have raised prices. But if you in addition to the countries you mentioned, in the Nordics and the UK, for example, we have launched price increases. And then we have... been a little bit careful in some other markets, and so, but it depends a little bit on how it develops now with volumes and what happens with inflation, but our I'm not talking about big price increases in Europe; we're talking inflationary a couple of percent or one percent and, That Price Effect this year, basically.

Speaker Change #130: And then do you have.

Speaker Change #130: A little bit careful in some other markets. So.

Speaker Change #130: But it depends a little bit how how it developed snob it volumes and what happens with inflation.

Speaker Change #130: I'm not talking big price increases in Europe, you're talking inflationary a couple of percent 1%.

Speaker Change #130: Yeah.

Speaker Change #131: What's the outlook.

Speaker Change #132: But also segment's revenue to defend our market share and therefore, the net at this stage, we don't factor in AR.

Speaker Change #132: Price effect this year basically.

Kristian Torne Johansen: And then my second question relates to this investment in Flumerock, which you are highlighting. So, obviously, 100 million euros is quite a large investment. Can you just speak a bit about the financial return? So how much can you then lift the predicted earnings in the Flumerock business as a consequence of this?

Great understood.

Speaker Change #133: And then my second question goes to this investment in which Youre, highlighting obviously 100 million.

Speaker Change #134: It's quite a notch investment can you just speak a bit about the financial returns. So how much can you then lift.

Predicted earnings in the <unk> business as a consequence of this.

Jens Birgersson: Yeah, without going into numbers. So, first of all, we, you know, to keep it going as a concern, and you look how long we have run it without a lot of investments, you know, you, you can, you need to look at it as an industrialist. And it's a profitable business. And yes, we will improve margins. But the case we have for that is that we make something like an eight-year payback on that investment. And we are a little bit, you know, we accept a longer period for Sustainability Investment and therefore the ATF.

Speaker Change #134: Yeah.

Speaker Change #135: Without going into numbers, so first of all.

Speaker Change #136: To keep it to going concern and you look Hello, Andrea Braun it bid out lots of investments.

Speaker Change #136: You need to look at it as an industrial list and this is a profitable business and yes, we will improve our margins, but the case, where you have for that is we make something like.

Speaker Change #137: ATR payback on that investment.

Speaker Change #137: And we are little bit more.

Speaker Change #138: We accept a longer period for <unk>.

Speaker Change #138: For for our sustainability investments and therefore, the eight years.

Jens Birgersson: Okay, and just for my understanding, how are you then improving profitability? Is it lower cost? Or can you charge a premium for the product?

Okay.

Speaker Change #139: Just for my understanding so so how are you then improving profitability is at lower cost, but can you catch up premium for the product.

Jens Birgersson: It's all of that. We can take more non-virgin material back in, which gives us an advantage with price. We get more capacity out of this, we can sell more than we could before. And we also get lower costs; actually, the variable production cost goes down with the

Speaker Change #140: It's all of that we can take more.

Speaker Change #140: The non Virgin material back game, which gives us an advantage reprice as we get more capacity out today. So we can sell more than we could before.

Speaker Change #140: And and you also get lower cost actually the variable production cost goes down with the setup.

Jens Birgersson: And maybe a final point, the maintenance cost, of course, on the new plant is less also. Our next question comes from Yassine Touahri with Onfield Investment Research. Please go ahead.

Speaker Change #140: Okay.

Speaker Change #140: Okay.

Speaker Change #140: Excellent.

Speaker Change #140: Maybe a final point the maintenance cost of course on the new plant is less also.

Speaker Change #141: Our next question comes from <unk> with <unk> investment Research. Please go ahead.

Yassine Touahri: Yes, good morning. I have three questions. My first question is for you, Jens.

Speaker Change #142: Yes, good morning, I would have three questions.

Speaker Change #143: My first question is.

You again see like over the past 10 years <unk> has done quite well actually.

Yassine Touahri: Over the past 10 years, Rockwool has done quite well. You nearly doubled the margin. The revenue has doubled. I can imagine that the culture has changed. Could you give us a bit of an overview of what you think has changed most over the past decade under your leadership? And what were the key challenges?

Speaker Change #144: Nearly double the margin.

Speaker Change #145: Uh huh.

Speaker Change #145: <unk>.

I can't imagine that the critics show us.

Speaker Change #146: Could you give us.

Speaker Change #146: Peter.

Peter: Our view of what do you think thats changed most although the past decade.

Speaker Change #148: Your leadership.

Peter: I mean, what were the key challenges.

Jens Birgersson: So when I came in, you actually had a business that grew a little bit, but the costs were increasing faster than the top line. If you look at the headcount today, we have roughly the same headcount, and we are 65-70% bigger, with a 6% CAGR. So getting that fundamental industrialization of the whole business with these massive productivity improvements is one. And then on the margin, you know, when I came, it was 7%; now we are clock in at 16.5% or 15%, so that's more than twice.

Speaker Change #149: Yeah Okay.

Speaker Change #150: Yeah. So when I came in and you actually had a business that grew a little bit better.

Speaker Change #150: But the costs are increasing faster than the top line.

Speaker Change #151: If you look at the head count today, we have roughly the same head count and we are 65, 70% bigger of a 6% CAGR. So.

Tim: Tim that fundamentally industrial ization of the whole business for this massive productivity improvements.

Tim: That's that's that's one and then on the margin you know.

Tim: And I came at four 7% now we are clocking 610, and a half or 15. So that's more than twice I think the profitability was.

Jens Birgersson: I think the profitability was too low to sustain the business. We also, you know, the whole US was a loss maker, small, or North America. We But, but I think the most, most important thing, and maybe we felt that, but culturally, we are We are a hands-on organization. A very ideal organization, and we have a winning team. You know, I'm not so important anymore. The culture now is a team that wins. You know, it's not a low-risk investment we did there and take a shutdown where you're the only supplier in the market.

Speaker Change #153: I was too low.

Speaker Change #153: To sustain the business.

Speaker Change #153: We are also there.

Speaker Change #153: The whole U S.

Speaker Change #154: U S was a lossmaker small or North America breakeven and now it's a very substantial value driver that kind of wrong.

Speaker Change #154: Culturally and technical I think on the technology, we now have an edge on almost every aspect of Oh stonewalled, making.

Speaker Change #155: But but I think the most.

Important thing and maybe be felt but culturally we are.

Speaker Change #155: There are a handful of an organization.

Speaker Change #155: A very agile organization.

Speaker Change #156: And we have a winning team you know I'm not so important.

Speaker Change #156: The culture noise.

Speaker Change #157: The team that wins.

Speaker Change #158: Believe that can do things and that will carry this forward and.

Speaker Change #159: It is really nice to see that for example, this project in Florida.

Speaker Change #159: <unk>.

Speaker Change #160: It's not a low risk.

Speaker Change #160: The investment we did there and take the shutdown where you are the oldest supplier in the market.

Jens Birgersson: And you take a five-week shot plan, and you do a number of new technologies that we have never done before. And we pull it off, you know, that confidence is really nice on the tech side. So I think those are the main ones. And going forward, I think that they can achieve a lot, that's really fantastic.

Speaker Change #160: And you take your five week shut plants down and you do a number of new technologies that we have never done before and we pulled it off that confidence as read and ice on the tech side. So.

Speaker Change #161: I think it also domain was and going forward I think.

Speaker Change #161: Productivity, we work a lot on a machine learning.

Speaker Change #162: Now the productivity improvement will have to come from automation and AI. In this thing somebody you already have a number of technologists develop onvia rolling out the program there.

Speaker Change #163: Have significant productivity improvements coming so I think thats, winning winning culture in the company and I believe that really we are a tech company that can achieve a lot the those three to fantastic.

Yassine Touahri: And then there is a second question on the strategy. We see a lot of your peers and competitors like Saint-Gobain, Atex, Kingspan, or Knopf focusing on the building of a log and adding a lot of different products to satisfy the needs of their customers. And even Kingspan, I think, is investing in Stonewall. How do you see the strategy of Rockwool? Do you think this is something that could make sense for you in the medium term? And how would you feel that those companies could have an edge in the future if they are able to provide a wider array of solutions and more cool features?

Speaker Change #164: And then the second question on the on the strategy, we see a lot of your.

Speaker Change #165: Your competitor like a.

Speaker Change #166: So I'll go by tax.

Speaker Change #167: Being spun.

Speaker Change #167: Okay.

Focusing on the building envelope.

Speaker Change #168: Lots of the product to satisfy the needs of the customer on the spend I think in the thing.

Speaker Change #169: How do you see.

Speaker Change #170: This past year, what quarter do you think this is something that could make sense for you in the medium term how.

Speaker Change #171: Would you do you feel that those companies.

Mitch.

Speaker Change #171: In the future.

Speaker Change #172: I'd like to provide a way to sort.

Speaker Change #173: Solutions in the market.

Jens Birgersson: Yeah, so just a correction, five weeks shut down, five months shut down in Flomrock, that's why we needed 100,000 pallets; we don't sell 100,000 pallets in five weeks. Yeah, the building, the building envelope, you know, we have ventilated facades, we have played with... Add-On Products. But I think it's absolutely a very valid point for Rockwool to look into that. We have had so much work to do. If I were to run Rockwool for another 10 years, it definitely would be an area that I would look at very, very carefully.

Speaker Change #174: Yeah. So just a correction on five week shutdown five months' shutdown inflow rock that's why we needed 100000 pilots, we don't sell 100000 pallets in five weeks just to correct that.

The building the building envelope.

Speaker Change #174: Ventilator facade rehab played with.

Speaker Change #175: Kind of.

Speaker Change #176: Add on products.

Speaker Change #177: It takes them.

Speaker Change #177: And so.

Speaker Change #178: So we have been an extreme pure play I think it I think that consolidation of the market and having.

Speaker Change #178: Recall, our solutions, but several different product technologies to <unk>.

Speaker Change #178: Solve the facade challenge.

Speaker Change #179: Think that this is a sound strategy I'm not going to be here now, but I think it's absolutely a very valid point for rock wall to look into that we have had so much work to do.

Speaker Change #179: If I were to round rock fall another 10 years.

Speaker Change #179: What would be an area that I would look at very very carefully and we all look at it in different forms but it is an important trend you point out and I think it is a.

Yassine Touahri: And we look at it in different forms. But it is an important trend you point out, and I think it is a profitable one and a good one to hook up with.

Speaker Change #179: Profitable trend on a good trend to hook onto it.

Yassine Touahri: And the last question, you're commenting on those CapEx. I think a new plant is maybe like 100 million, 150 million euros. What kind of revenue can you generate when you're investing 100 million euros? I have in mind that it's approximately that when you're investing 100 million euros, you can generate 100 million sales. But maybe I'm mistaken. If you can give us a bit of color on that, it would be very helpful. Let's come again soon.

Speaker Change #179: And the last question.

Youll come on King on the Capex. So I think it was.

Speaker Change #179: New plan season may be that come out and hung on media and 160 million Euro.

Speaker Change #180: What kind of revenue can you generate when you're investing 100 million euro.

That is approximately.

Speaker Change #181: When you wanted to say $100 million.

Speaker Change #181: You can generate a homebuilding himself.

Speaker Change #182: But maybe I'm wrong, maybe im mistaken if you can give us a bit of color on that.

Speaker Change #182: Davidson.

Speaker Change #183: <unk>. So you wonder about the Capex for plant drive.

Yassine Touahri: So you wonder about the CapEx for a plant, right? When you're investing 100 million in a new plant, what kind of revenue can you generate? Is it one-to-one, or is it different?

Speaker Change #184: When you issue everything Honeywell, new plans, what kind of revenue can you generate is it one to one.

Speaker Change #185: Oh is it different.

Jens Birgersson: Kim Andersen, Yves Bromehead, Brijesh Siya, Yassine Touahri, George Speak, Yassine Touahri

Speaker Change #185: Kim.

Speaker Change #186: With the current price business, and we are getting a bit more than 100 million Euro ILD say closer to 150 million.

Speaker Change #187: For 100 million Euro investment.

Speaker Change #187: Okay.

Speaker Change #188: Thank you so much.

Speaker Change #188: Yeah.

Speaker Change #188: Okay.

Marcus Cole: Our next question comes from Marcus Cole with UBS. Please go ahead.

Marcus Cole: That's very helpful. Thank you so much. Our next question comes from Marcus Cole with UBS. Please go ahead. Good morning, guys.

Speaker Change #189: Our next question comes from Mark was cold with UBS. Please go ahead.

Speaker Change #190: Hi morning, guys. Thanks for taking my questions.

Marcus Cole: The first one is just to be clear what level of incremental price increases do you think you'll need to hold Q1 margins for the rest of the year and.

Marcus Cole: And the second one is just on safety.

Speaker Change #192: Much do you think youre gaining safety regulations.

Speaker Change #192: Yeah.

Jens Birgersson: Yeah, so on the price, you know, we don't forecast the price, right? We always said that.

Yeah. So on on the on the price you know, we don't forecast the price right.

Speaker Change #193: <unk> said that.

Jens Birgersson: With the current outlook, we need to do price increases to maintain the margin. If costs go down, we need less, but so we don't. But I've said we need to, you know, one two percent or something this year, but the cost situation can develop differently, so and then also the volume, of course, if we keep growing like this, and that will help us also. So I don't give any more.

Speaker Change #194: With the current outlook.

Speaker Change #194: So the price increases to maintain.

Speaker Change #195: Maintain the margin.

Speaker Change #195: If costs go down.

Speaker Change #195: We need less.

Speaker Change #196: But the so.

Speaker Change #197: But I've said, we've been able to.

Speaker Change #197: One, 2% or something this year.

Speaker Change #197: But the cost situation kind of developed differently. So and then also the volume of course.

Speaker Change #197: We keep growing like this that would have also saw.

Speaker Change #198: I don't give any anymore.

Jens Birgersson: On fire regulations. Our observation is that it keeps changing. You have the Valencia fire now, you remember the Grenfell one. We see now that it's kind of increasingly coming in more and more. The whole PV segment, for example, shifted quite quickly in our favor, and I think we're going to see more and more regulation, but then to say how much of that is... is [inaudible] will gain share overall. You also had Fire 9 Poland in the shopping mall.

Speaker Change #199: On the fire regulation.

Our observation is such it keeps you had the Valencia fire now you'll remember the grandfathered one.

Speaker Change #199: We see now that is kind of increasingly coming in more and more that the that the.

Speaker Change #199: The whole PV segment for example.

Speaker Change #199: It shifted quite quickly in our favor and I think we're going to see more and more regulation, but then to say how much of that is.

Speaker Change #199: Is.

Speaker Change #200: Quantitatively, how much is stonewall going to gain share in the overall picture I think it is like this I think stonewall.

Speaker Change #201: Gray gained share overall, you had also the fire and I in Poland in the shopping mall.

Jens Birgersson: Stonewall will keep gaining share due to that safety issue, and the threat for that if the market keeps growing is that there won't be enough capacity for Stonewall because Stonewall is probably one of the most difficult products to add capacity. That's how I see it, but it keeps increasing the regulation in almost every market we are in. Can I sneak in a supplementary on that?

Speaker Change #202: Stockholder to keep gaining share due to the safety issue.

Speaker Change #202: The threat for that if the market keeps growing.

Speaker Change #202: Is that the recent capacity for Soma, because Stonewall is probably one of the most difficult product to add capacity.

Speaker Change #202: So I would say it but did you keep seeing increasing deregulation enormous every market rerating.

Marcus Cole: I just wonder what that does to pricing power. It seems your pricing has been very strong relative to other insulation types. Do you think that's largely driven by fire safety regulation? Yeah, I think it's two different markets. You know, if you are in a market where it has to be Stonewall, we are up against Stonewall competition, and we need to win it because we are competitive and we provide the best service.

Speaker Change #203: Can I sneak in our supplementary.

Speaker Change #203: What that does to pricing power. It seems your pricing has been very strong relative to other insulation types do you think that's largely driven by solid safety regulations.

Speaker Change #204: Yeah, Yeah, I think it's two different markets.

Speaker Change #205: You know if if you're in a market where it has to be storm will be off I guess stonewall competition and bring it to win it because we are competitive and we provide the best service. So if you take the Tesla factor, where you want it because of a speed give us logistical service. It was also the nature of the product saw B b.

Marcus Cole: So if you take the Tesla factory, we won it because it was big, it was logistics, it was service, it was also the nature of the product. So we have, of course, a premium over other Stonewall players, but regulation when we compete with other Stonewall suppliers, they also have fire safe products. And then when you have these borderline products, it could help because immediately the... And their cost level is such that they also need to price high, and we have a premium. So, it doesn't play directly, super clearly in our hands, but it definitely helps with more fire regulation for our pricing power.

Speaker Change #206: Of course, a premium to other Stonewall players, but regulation, where we compete with other solar supplier. They also have fire safe products and then when you have this borderline products it could help because immediately.

Speaker Change #207: The plastic film.

Speaker Change #208: Not involved it goes into a more.

Speaker Change #208: Stonewall pricing segment, where we compete but this is a different type of competition and they also have high cost level and.

Speaker Change #209: We are we are competitive as a company we have very high productivity severe b.

Speaker Change #209: Their cost level as such that they also need to price high in behalf of premium. So it doesn't play directly super clearly in our hands, but it definitely helped read more fire regulation flower pricing power.

Speaker Change #210: Okay. Thank you very much.

Pieter Sechstedt: Our next question comes from Pieter Sechstedt with ABG. Please go ahead.

Peter <unk>: Our next question comes from Peter <unk> with <unk>. Please go ahead.

Peter <unk>: Okay.

Pieter Sechstedt: Yes, thank you for taking my questions, and pardon my voice here. I have two, if I may, maybe three.

Speaker Change #212: Yes. Thank you for taking my questions and pardon my voice here.

Speaker Change #212: If I may maybe.

Pieter Sechstedt: On the margin side, I think that historically you needed a 13% margin in order to sort of keep the business model going and keep sort of, you know, depth out of the picture. The 16% that you are now aiming for, which you justify in terms of growth ambitions, is that due mainly to a higher need for capacity or that the cost of building has increased? This 100 million for 100 million tons has been around for quite some time, but we also know that some of the building costs in the US have gone up pretty dramatically. So that's the first question. Thank you.

Speaker Change #212: And.

Speaker Change #213: On the margin side I think that historically.

Good.

Amy: Margin in order to sort of keep the business model going and keep sort of you know that out of the picture. The 16% that you are now Amy.

Speaker Change #215: We can justify in terms of growth and patients is that due to mainly.

Speaker Change #216: Need for capacity.

Speaker Change #217: All of that.

Speaker Change #218: Cost of living has increased this 100 million for 100 million tons has been around for quite some time, but we also know that some.

Speaker Change #219: Some of the building cost in the U S have gone up pretty dramatically. So that's the first question. Thank you.

Jens Birgersson: We, I don't think we ever said that 13%. My view on it is that you should have.

Speaker Change #220: I don't think we ever said that 10%.

Speaker Change #220: My view on that data set.

Speaker Change #221: You should have.

Speaker Change #221: Help them argument you build the expensive plants, we have in and this hundred malian for 100 capacity that that metric hasnt been in place for many years, because we see b.

Speaker Change #221: Obviously degradation to revenue is different because of the inflation, but to the tonnes that metric across many many years back you cannot match that then in the U S. You had nowhere near it.

Speaker Change #222: With the construction inflation on your iPad.

Jens Birgersson: So, I think one should be careful with saying, yeah, because we are building those many plants, we need that price. I think this type of product business, with this type of growth, we need to be up here. And, and the more inflation you have, and the more inflation you have on plants, the more we need, but we don't sit and calculate the one against the other; we want to be on the healthy side of that, so that there is some room also for things going against us.

Speaker Change #222: So.

Speaker Change #223: I think one should be careful with saying, yes, because we are building those spending plans with <unk> price.

Speaker Change #224: I think this type of product business with this type of growth, we need to be up here and under more pressure you have and the more inflationary Ivo implants to more of a need but we don't see it and calculated one than they ought to be willing to be on the help decide do that so that there is some room also for Thanksgiving against us and on top.

Speaker Change #225: Another argument and that's what we tell customers is set.

Jens Birgersson: And on top of that, another argument, and that's what we tell customers is that this whole greenification and offering this low CO2, in many places now, we now have we mentioned a case in flume work, where we get more capacity. But in many cases, we just replace the melting point, we put filters, we do all sorts of things to make a greener product. And that needs to be covered with pricing. So yes, we need higher margins, but we don't calculate it; it's not a cost plus approach.

Speaker Change #226: This whole green, if occasion and offering this law C O two.

Speaker Change #227: Many places Navi Navi had dimension of case in Florida, where we get more capacity, but in many cases be just replace the Madden team you put filters, we do all sorts of things it doesn't give us more capacity and it's just pure cost to meet.

Speaker Change #228: Make a green product and that needs to be covered with pricing. So yes, we need higher margins, but we don't calculate is not a cost plus approach we want to know it came in <unk> that we have a very healthy business model. So that also if we get into a high per investment phase the debt that we know that we have to fire empower.

Jens Birgersson: We want to know Kim and I that we have a very healthy business model so that also if we get into a hyper-investment phase, we know that we have the firepower to do it.

Speaker Change #228: To do it.

Pieter Sechstedt: Okay, thank you. It was also just to get a sense of whether your planned capacity for the next five years would be higher than what you've seen for the previous five years. But we can take that another time. And my second question is on: He's had a density product. Give a figure for how much, what percentage does a stone wall comprise of the total building cost for a typical, whatever, factory or... You mean, for a normal building? How much is the stone wall?

Speaker Change #229: Okay. Thanks.

Speaker Change #230: So just to get a sense of whether your planned capacity for the next five years.

Speaker Change #231: The higher then we can see for the previous five years, but we can take that another time and my second question is on.

Speaker Change #232: Hey, guys a few products.

Speaker Change #233: Give a figure for how much what percentage.

Speaker Change #233: <unk> comprised.

Speaker Change #234: Comprise of the total building cost for a typical whatever.

Speaker Change #235: It will be important normal building how much just the stonewall.

Yes exactly.

Pieter Sechstedt: Yeah, exactly. Yeah. Like near, almost invisible. I mean, you're talking...

Speaker Change #236: Like near almost invisible I mean, you're talking.

Jens Birgersson: 1% plus minus, you know, very little.

Speaker Change #237: 1% plus minus very little.

Pieter Sechstedt: I guess that also helps in terms of price.

Speaker Change #238: I guess that also helps in terms of price.

Speaker Change #238: Increases et cetera that is sort of a relatively small part of the overall building cost yeah, but again I wouldn't mind, if it was 10% of the cost but it's not this is small portion I mean, all all the rest of the house costs more on the labor and all the rest of them, but around the percent maybe fraction of Bob.

Jens Birgersson: Yeah, but again, I wouldn't mind if it was 10% of the cost, but it's not. It's a small portion. I mean, all the rest of the house costs more, and the labor, and all the rest. But around a percent, maybe a fraction above.

Jens Birgersson: And then you made a decision to invest in the West Coast of the U.S., and last time we spoke, I think we had a discussion about the East and West. So is that sort of the strategy that we've gone for here? A less populated area but the potential to have a larger market share as a potential first mover?

Speaker Change #239: Okay. Thank you and then you made a decision to invest on the West Coast. So last time, we spoke I think Ed. Please go ahead.

Ed: So is that sort of the strategy going forward here less populated area potential to have a larger market share has that potential.

Jens Birgersson: Now, I will say it like this. When we sat down, you know, we had the Toronto factories. I like that footprint. On the Canadian side, we already have a West Coast factory, and Washington state is a huge economy with a lot of growth. So yes, the factory is in a non-urban area. Yeah, but Seattle and Vancouver and down, there's a lot of economic activity, enough over time to fill that factory. But from there, it's much cheaper to ship south than to ship north, a percentage of all installation share for Stonewall.

Speaker Change #241: And now I.

Speaker Change #242: I will say it like this when we sat b.

Speaker Change #243: The Toronto factories supplying south obviously up in Canada to supplying South to New York, then we had the factory into South Mississippi.

Speaker Change #243: There was a hole on the eastern seaboard, So I I I didn't enjoy this at all to sit with such a.

Speaker Change #244: Sweet spot open I'd like to have overlap between the factories. So if we sell out on one the optimal we can still put in product from another one so I liked that footprint.

Speaker Change #244: On the Canadian side.

We already have a west coast factory in Washington State is is is it.

Speaker Change #244: It's a huge economy with a lot of growth. So is yes, the factories in a non urban area.

Speaker Change #245: But Seattle.

Speaker Change #246: Vancouver, and there's a lot of economic activity enough over time to fill that factory.

Speaker Change #247: But from there it's much cheaper to ship south the shipping North there's still return freights of all to go to scoring to Canada. So actually.

Speaker Change #248: It's quite logistically clever to put the factor there also to work into California, and then later on one could question should be ample to one further salt to cover, California, but California is not super big market for us yet we need to develop it to remember we are down on this one 2% that.

Jens Birgersson: So it's a bit of work to do, but my thinking is to always create overlapping service areas between factories. It's a bit like the elevator model. Certain times, you know, the elevator companies don't earn as much money on the elevator itself, but they need to have density so they have excellent service, and that sustains the business, and that's how I like to see it. We love working, you know, with quick delivery times and having the capacity in the zone so that we are really, really easy to work with. One, I think that answered your question, Peter, or not?

Speaker Change #249: Of all the installation share for Stonewall, so theres a bit to work to do but my thinking is all of those create overlapping service areas between factor is it's a bit like.

Speaker Change #250: Like can elevate to model.

Speaker Change #251: Certain times they know the elevator companies don't earn some money on the much money on the elevators cell, but they need to have a density. So they have excellent service and that sustains to business and that's how I like to see it.

Speaker Change #251: We loved working here and I'll be quick delivery times, and having the capacity in the psalms. So that we are ready to release or to work with.

Speaker Change #251: Yes.

Speaker Change #251: Yeah.

Speaker Change #251: Yeah.

Speaker Change #252: One I think that answered your question Peter or.

Okay.

Speaker Change #253: Mr. <unk> your line is open.

Pieter Sechstedt: Can you hear me? Yeah, we can. Is that Manish, or not?

Speaker Change #254: Can you hear me.

Speaker Change #255: Every kind of is that manish.

Peter <unk>: This is Peter.

Pieter Sechstedt: No, I just confirmed. Thank you for that. You answered my questions. I am. I'm okay. Thank you. Thank you, Peter. Bye.

Speaker Change #256: Well I'll just confirm thank you for taking my questions.

Speaker Change #257: Okay. Thank you. Thank you Peter.

Manisperia: We have one more question from the line of Manisperia.

Speaker Change #257: We have one more question from the line of Manish Beria with Bernstein. Please go ahead.

Manisperia: Q. You have mentioned that the capital expenditure to build a plant has gone up. So I think in my model, I had to build a 100,000 ton plant. It cost like 130, 120 million euros previously. So going forward, because of inflation, how much does it cost to build a 100,000 ton plant today? So how much more, like 20%, 30%, 50% more? I would love to answer it, but I don't want to fiddle with Kim's spreadsheet, and we have never answered it.

Manish Beria: Oh, Yes, hi.

Speaker Change #259: So you have mentioned that that capex.

Manish Beria: The plant has gone up.

Speaker Change #260: So I think in my model I had to build 100000 ton plant cost like one <unk> 120 million euros previously.

Speaker Change #261: Going forward because of the inflation how much does it cost to build a 100000 client two days, so how much more like 20% 30%.

Speaker Change #261: Sure.

Speaker Change #262: One question.

Speaker Change #263: Is this super good question and I would.

Speaker Change #264: Love to answer it, but I don't want to pedal and came a spreadsheet and we have never answer that so I hand over that to Kim Kim what do you offer them.

Jens Birgersson: Yeah, thank you. Days, days of cold. The cost of building a megafactory, and I see it ranges depending on where in the world you build it, between... Maybe a more updated figure for humanists to work with.

Speaker Change #263: Yes.

Speaker Change #265: Days days of course.

Jens Birgersson: [inaudible]

Speaker Change #266: The cost of building, a mega factory and I see it ranges depending on when the world you build it between now.

Speaker Change #267: Maybe a more updated figure for human issue to deal with it.

So basically it's fair to say like in U S. It will be the higher side and Europe moving maybe on the lower side of the range that you provided right Eastern Europe will be in the lower side now and then of course, the more western Europe, you'll get a social higher.

Jens Birgersson: Eastern Europe will be on the lower side now, you know, and then, of course, the more Western Europe you get, it's also higher. And, for sure, the U.S. is the highest.

Speaker Change #268: And for sure the U S is the highest.

Manisperia: Okay, thank you. Thank you so much.

Speaker Change #269: Okay. Thank you. Thank you so much.

Operator: Ladies and gentlemen, this was our last question. Now, back over to the management for any closing remarks.

Speaker Change #270: Thank you ladies and gentlemen, this was our last question.

Speaker Change #271: I'll cover to the management for any closing remarks.

Kim Junge Andersen: Thank you very much, Jens and I. Thank you very much for the call today and all your questions, and we appreciate your interest in Rockwool. If you have further questions, you are, of course, always welcome to reach out to the top professional investor relationship department we have; that is, me. Have a very nice day.

Speaker Change #272: Thank you very much the intent and I. Thank you very much for the call today and all your questions.

Speaker Change #273: We appreciate your interest in an awkward if you have further questions you of course always welcome to reach out to the edge.

Speaker Change #274: The top professional investor relationship of hip hop and we have that is me.

Speaker Change #275: <unk> had a very nice day.

Speaker Change #275: Yes.