Welcome to the conference call regarding Rockwool International's Results for the Full Year of 2020. My name is Thomas Harder. I'm Director of Group Treasury and Investor Relations of Rockwool International. I'm here together with CEO, Jens Birgersson, and CFO, Kim Junge Andersen. Jens Birgersson will go through our presentation and give you an update on the results for the full year and fourth quarter of 2020. Afterwards, we'll be ready to answer all your good questions. Before I hand over the words 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. We can go to the next slide, which is slide number three. Jens Birgersson, I will now hand over the words to you. Let me just see that slide. Okay. Good morning, everyone. While we look at the numbers for the year, I'm just going to try to frame how we entered the crisis, where we are now, and how I look at the year. We start with the top line for the year. We saw COVID-19 start to impact us at the end of Q1 in 2020. We landed on a 1% growth in Q1, and then in the second quarter, we were at like-for-like currencies -16%, in Q3, -2%, and then with the announcement that we did yesterday in Q4, we came in at about 2% growth like-for-like. We saw from somewhere around end of Q2, Q3 that the dollar started to weaken and also the ruble, and we had a bigger difference between reported currency and like-for-like. In like-for-like, the kind of worst hit was in Q2. Moving through the year, we took the approach with, we paid an all-time high dividend. We did a share buyback. We also did a normal salary increase to our people, and we took an approach of not panicking, but to adapt capacities. Obviously, we reduced travel. We did some restructuring because we saw a crisis that impacted the markets very differently. We only had some factory shutdowns basically in Q2, and after that, there were pretty much realized that we could keep the building industry and the construction projects going. I'm very happy with how our focus on keeping the employees safe, adapting capacity to the demand, and at all times delivering to our customers was honored. We honored that. I could also see that during the years when we did a customer survey that our NPS score increased again for the sixth or fifth year in a row. That's all good. In the business, we had some ups and downs, big variance, but I guess the biggest highlight was the system division, the system segment, where it kept improving during the year and the last quarter, we were up almost 50% on EBIT. If you then look at the balance sheet, we went into the year net debt-free, and we came out to it in spite of all that what we did during the year, also net debt-free. We have shown, I think, both resilience and agility. If you then go back, was there something positive in the crisis? There have been a number of positive things. We obviously had to shift people to home office. That in some respect, I'm convinced it reduces productivity. It makes collaboration and creativity less. It reduces that. We could use the time to do things. For example, we did a lot of investment in preparing e-commerce and rolling that out. We have upped our percentage of e-commerce business. The PIM system, Product Information Management system, we have really done a lot of work, and we have, for example, provided a lot of customer training during the year. All of that were things that maybe normally we wouldn't have time to devote to all. From a sales perspective, we did okay because we had already prepared inside sales. We had the functionality in the business, and that has helped us a lot in terms of selling and answering to quotations. At no times in any business did we focus on government subsidies. Even if there was a remote chance that the customer needed an order, we didn't shut down to go after subsidies. There were some cases, for example, in the U.K., where we saw business drop with 98%, and one would have thought it's a good thing to go after subsidy and shut down the factory. We didn't do that, and the week after, we had quite good business, and we kept delivering, kept quoting. We never went into furlough. That's the way we approached it. If you look at the wider macro perspective, I had said, or I have said several times that a financial crisis or a crash or something like that could be good for us because it might increase the focus on the need to change something in the world to deliver on the climate goals, for example, the Paris climate goals. I, of course, never envisioned that it would be a virus pandemic. Instead of a financial crisis or adjustment, we got the situation where before COVID-19, we have been preaching energy efficiency is a necessity to deliver on the Paris goal and any below one and a half or two degrees C scenario. That's kind of proven. When we now look where we stand after the crisis and towards the end of it's not over yet, is that the awareness. The EU has put, and let’s talk mostly about the EU, one or two trillion in green restart or stimulus or call it what you want, but unheard of numbers, one to two trillion. I think the number is 1.8. The awareness now that you need to go after energy renovation, there is a backlog of energy renovation that is needed, and it is also something that generates the highest number of local jobs per EUR spent. That insight and the amount of press, and messaging, and understanding of that has certainly increased. When we look into going forward, obviously, that is a positive thing. Even though we would have loved not to have the year as we had, very happy with the way we operate, keeping people safe, not rocking the boat too much. I think the crisis has, and is helping to reinforce what we believe very much in, energy efficiency, renovation, using less is an absolute necessity to deliver on the climate goals. If we move on to the quarter, nothing much to comment on it. If you just look at, we ended up with a growth, which we are very pleased with. Obviously, the Systems division pulling most of that. Insulation didn't grow. From a profitability perspective, both EBIT margin and EBITDA margin increased. On the cash side, we were very active on reducing inventories, never sit on extra inventories. That cost a little bit of EBIT at the beginning of the year where we took the inventory down, but it paid back on cash. We have also seen that we have been very good at paying sub-suppliers throughout, really been strict on that. I should also say that our customers have paid us, and we haven't seen an increase in defaults or anything like that. Good sound business without panic. Let's move on to the sales. If we look at the sales, I guess the highlight is the System business. There you saw some segments, obviously, in Rockwool, for example, office renovations of acoustic ceilings maybe didn't go up, but then hospitals and schools increased. The growth on Business have been doing good. Automotive started to come back towards the end of the year for Lapinus. Generally, we have seen good developments, and we have also seen some growth in some of our innovations in the System division. That was quite pleasing. On the Insulation, there isn't anything that has surprised us what has happened. We come back a little bit to the regions and the countries later in this presentation. Move to the next. In Q4, obviously the growth in Systems continued, and the recovery of Insulation was maybe a little bit slower than we expected. When we run down the country list, and I don't want to go into too many countries, it's clear that, for example, France started off after Q2, and then Q4, the market stumbled a little bit. The white certificate process didn't seem to have real momentum. It didn't really come up as quick as we expected. Poland also, which recovered, was still in negative territory, and Germany also to give a few examples. Just a little bit slower to restart maybe than we expected. Parafon in Sweden, we've done the integration is complete. It has gone really, really well. It's not a huge one, but it's a very good addition to our footprint in the Nordics, and we are super happy to have this very competent group of people in the group. Move to the next slide. Highlights here would be that Russia, after a bit of initial COVID-19 challenges, recovered quickly, and we have had a really good year there. North America. All-time high. In the U.S., we see a residential segment that is booming. flat roof, facade installation, the non-Amazon and logistics center business. Sure, we don't see a lot happening there. That might change, the residential side of things is going really well. We'll say South Asia has been suppressed and haven't really gotten out of it, and China's jumped a little bit up and down, and now I think they are more on the up. They came out of it, started to grow, then they went south during the year and then up again. Now I suspect China is now in the growth territory all the time. If we could move on to slide eight. The profitability. Here nothing much has happened. I think it's worth to note that the EBITDA margin has held up absolutely well. On the EBIT, if you look at the full year in 2019, we had the legal settlement in the U.S. If you add that back, we have actually almost the same EBIT margin as everywhere. In Q4, with the growth of 3.7%, we increased EBIT with 6%. It was a very good quarter. Like for like currencies, I actually don't think we ever had a bigger quarter than Q4, and that's not normal for us that we have a Q4 that is among the biggest quarters in the year. Our Q4 this year was really strong. Profit was probably the biggest one we recorded in the quarter, and the top line in like-for-like currency is also really big, if not the best. Move on to slide nine. Considering if we go into systems, almost 50% profit improvement, nice mix, growth, productivity, costs down. It all plays together. We also price is up there a little bit. Not dramatic, but could help the price increases. On insulation, when you look at the EBIT considering the top-line development, and moving there from 11.5% to 11% EBIT margin is we are happy with that. We have managed to reduce cost. When you look over the year, our operational efficiency improvement, in spite of taking out shifts, adding shifts, and doing all these reductions during the year, we have delivered on our plan on operational efficiency and cost savings improvements in spite of lower volumes. That's good work by our operational teams. Slide 10. Quite frankly, it has been quite difficult to execute on some of these projects. In Norway, we started up the Oslo, the Moss smelter, new technology, probably the biggest electrical smelter for stone wool in the world. We started that up towards the end of December, and we had people in quarantine from across Europe sitting several weeks in small hotels with a special governmental approval. Then we got it up and running, and it is already running full steam. A lot of extra procedures. It cost a bit more to do it, but I am super happy and super proud of what our teams achieved there between Christmas and New Year's and how that plant runs. On North America, Neuburg we have kept going. We have a lot of other investments, but fundamentally, in North America, even though site activities never stopped, we lost a bit of time in North America on the project. Now the start-up is in around mid-year. It cost us more, and that means some of the CapEx we wanted to spend this year in North America went over to, or we wanted to spend in 2020, it has gone over to 2021. Should say also the new factory that we really wanted to start because we are under supply constraints now in the U.S. because it's a phenomenal market. Slide 11. Nothing really to comment. You can read what it says. Careful net working capital management, but at no time have we taken out too much inventory. We have always focused on deliveries. During Q2, we didn't want to sit on too much cash. On the share buyback program, we did that during the year. We completed it, and it worked out nice. The return on it by closure was something like 46%. We kept buying straight through COVID. I've heard that we were the only company that did the share buyback, and I think it was good timing, that share buyback program. It was also very well-executed. We never hesitated to go through with the whole thing. We then go to the outlook, start with the sales. We have had said now 3% to 5% growth. The reason there, I mentioned the +1, -16, -2, and +2% is just by quarter. We have obviously a bit of a tough winter now, but underlying demand is good. For H1, the first half year, with the visibility we have, even though we have more COVID probably in this period and also more cases of COVID in this period than we had last year, the world has gotten more used to it. We are optimistic that we would get out of the year with H1 that is growing because Q2 will not be a repeat of what it was last year. For the second half year, we have not speculated on whether more countries would manage to do what the Italians have done, that put the scheme in place, that the world class, that just absolutely created a boom in the business and got similar money on the ground, created a tremendous buoyant market. We are not counting on that anyone else will manage to do that, but that could be something that happens. We haven't tried to speculate by what time the level of vaccination will be so high that we can all step out of our cages and behave normally again. We don't speculate on that. We have done a forecast where we think 3%-5% that's really the most realistic with what we know today, and then we'll move through the year. On that level, though, we of course have healthy productivities, a much easier situation to manage than having one quarter down by 16%. On the EBIT margin, we have 11% as the guidance, and I've seen a lot of comments on that. How we reason here is that on the fundamental contribution margin and cash generation margin, we have one one-off. We see business will continue to grow. We don't see massive changes. Yes, we have some segments with higher price pressure, but we have other segments where we are increasing prices. We have a situation that is roughly stable. What we have factored in is that with the new jumbo line in Norberg and also with now the last half year of the Ranson factory completion, that we hire all the people, we obviously don't produce anything in it. We add all the cost, these lines will not be full, we'll be running on very low output this year. Especially Ranson, which starts mid-year, testing of products, getting them in the market. You have a lot of cost, you have manning. That gives about half a percentage margin impact on a run rate basis for the full year, the calendar year. That again, if you take EBITDA margin ±0.3% or down half a%, it's marginal. It's just part of building two big factories. When we move down to EBIT, you see this with 1.5%. We have the 0.5% that I just explained. We have another percentage point of revenue, that is purely non-cash depreciation. It's depreciation of assets we build or have built. Moss is in there, obviously Ranson we started going on, the plant in Southern Germany is in there. It's there, that's a percentage point. The underlying cash generation of the business is roughly where it was. We're talking half a percentage point diff. We get into the investments. How do we reason about the investments? If we look at that, what that covers, we are building due to the development in Rockfon, that has been planned. We are planning for a relatively large investment in Rockfon this year. I think in the last three years, we haven't had any investment of that magnitude in Rockfon. We need that because we need more capacity, and we need to invest now. We also see that the forecast for the CapEx this year, around EUR 400 million, we landed on EUR 360 million. There is about a EUR 40 million CapEx that kind of goes into next year because we simply were not able to execute. U.S. is the main factory there, but some products we just had to drop. That's why we got down to EUR 360 million. We never set an ambition because of COVID to reduce the EUR 400 million. Nothing of the assumptions of those investments that we had in that forecast have changed due to COVID. This is just a move. We have another aspect on the EUR 370 million CapEx, and that is in China, we have a government grant to move our factory. We will build a new factory, but it is a big grant of almost EUR 40 million. Most of the CapEx that we are going to spend on that factory will fall into 2021, but then it is mismatched with the grant because we get more than 50% of the grant the year after, and that also inflates a little bit the CapEx. That is the story on CapEx. We have had some increases in CapEx due to COVID. It was more expensive to build some of these things because we did not want to stop during COVID. The market now comes back, we will need this capacity, especially in the U.S., where our delivery times at the moment are longer than we want them to be. Okay? With that, I hand over for questions. Our first question comes from Christian Johansen from Danske Bank. Please go ahead. Yeah. Thank you. A couple of questions from me. First, on systems where your Q4 results is pretty amazing. First of all, is there any one-offs in these results? If not, is there then any reason why we shouldn't expect similar margin levels to continue in the coming quarters? I think it's not one-off in terms of making a gain or anything like that. We don't have that, so it's no legal case or windfall. I would say the margin is a bit artificially high. It's all sound business that is in there. After COVID, it just happened in Q4 that all the high-margin business, when they kickstart, they all came at the same time. The most profitable part of the portfolio in almost every type of system division, that business came. It was a mix shift with just a rich mix in several of the system division units. We have a new manager coming in running this business there from maybe second quarter. I'm still involved in that for a bit, but I don't want to set the expectation that you're going to be up on that Q4 EBIT margin. That's not what I see. I don't see those businesses go away, but the business was not quite there, and then it just flooded in the same quarter and we delivered it. Okay, is this based on what you can see in the beginning of Q1 that the margin is normalized? No, I haven't sat and looked. I don't sit in the annual review. We looked at the overall business, so I don't make a prediction, but as I say, Q4 was 50% jump in profitability. That doesn't happen every quarter. Fair enough. Not that way. We had low travel, we had high level of productivity because we had restructured a little bit. We had also hired some new salespeople and built up some things that gave volumes at that time. We hired them before. There were many things that played together, and we had a rich mix. I think we can explain where it goes. There are no surprises, but I don't predict that rich mix in every quarter. No, I don't. Understood. Second question is on these startup costs on your new factories. Can you just maybe remind us how much did you have in startup cost in 2020? Just to clarify, when you say that it dilutes margin by half a percentage point, that is the net difference of having higher startup cost in 2021 versus 2020? Yeah. Hi, Christian. Kim here. We had startup cost in 2020 as well from the German factory. Not as much as we expect in 2021 with the German and the U.S. factory combined. The net difference is the half% we're talking about. Understood. My last question, you state that you saw low positive price increases in Q4 in most markets and businesses. What was the average then? I guess there are also markets and businesses where prices are not going up. What's the overall impact from prices in Q4, and where is it that you see this pricing? We saw a very small effect of prices. It depends what you compare with, whether Q4 against Q4, or Q4 against average. In both cases, a very minor effect. Understood. On the second part, where does the price dilution come from? Yeah. What you can see is that it depends what part of it, but if you look to North America, for example, very shortage of product, good price development. Then the system division, normal drum beat pricing, most of the installation business, normal drum beat pricing. The project businesses, flat roof, ETICS, sandwich panels, more price pressure. Those projects, it's not the type of business that have been growing now. That business is under the industrial segment on that side. I would say ETICS has gone quite well. The market seems to be developing now, starting up due to, I guess, energy efficiency or delayed projects. That is the area. That's the same as we said at the last call, exactly the same area. Okay. On top of that, if you look at the raw material side of things, we have seen raw materials go down, and therefore, when we have done a price increase, we have done a price increase in 2020. We felt during COVID that to go with the second increase, rather cover our market shares, do the sensible small increase in the business that motivates it, and not increase a lot when we see the raw materials were down. Okay. If I just may follow up, it sounds like you're seeing a demand-driven pressure on prices in sort of the commercial and industrial segments. What's your sense on how much this is driven by companies holding back on investments due to COVID-19 uncertainty? Obviously, if COVID-19 hopefully goes away, should we expect this to ease then? It's supply and demand driven pricing. You could have competitors that shut down and suddenly starts up, and then they want to have projects, and they go over after projects. You have demand where obviously, the Tesla factory that's going ahead, Amazon and such things. I don't know if you noticed, but when you order now e-commerce over the web, at least where I live, the delivery is now near instant. I mean, the whole of it. I think there are investment there. I think public buildings, schools, hospitals, we see good, but then on the office side and in other industrial side, it's quite hard to see where it's going. I would predict offices will continue to be slow for a while. It's very hard to see a clear pattern other than the common sense view that other businesses other than the one I mentioned, they don't really invest now. Understood. Thank you so much. That was helpful. Thanks, Christian. Our next question comes from Yves Bromehead from Exane. Please go ahead. Hi. Good morning, gentlemen. A few questions on my side. Just reading through your annual report, you provide some nice information on 2021. As far as I can sort of come to my conclusions, it seems that you're confident on Russia, the U.K., and the U.S., probably also on growth and some new development in the systems. Add a bit of pricing, it does seem that maybe for Western Europe and Eastern Europe, you're a bit more cautious. If you could just provide a bit of color on that would be great. I'll jump to my next questions one by one, if that's okay with you. I think that's exactly it. While we see Italy come up very quickly, we mention in the deck France, Germany, Poland as a little bit slower in the start. Fundamentally, for example, in France, the demand is really good, but the white certificate scheme after the shutdown has kind of not come up fully. I think it's exactly that we still need to see a full recovery in those markets in insulation. The Nordics, as you know, U.K., it's all good. It can be very different. I won't tell you what, in Benelux, we are seeing the countries jump around and one country doing really, really well and another country in the Benelux battling. You see a bit. In those big countries, France, Germany, and Poland, still think we have a bit before it really is back up again. Okay. Any news in Europe? Huh? Sorry. Sorry, I'm with you. It was a bad connection there. It's a mixed picture. I mean, some of the markets we are absolutely sold out, and others you see decline. I don't want to go through, but for example, Romania, we're doing really, really well with the new factory. It's like every second country. There you see a mixed picture. Maybe just jumping on to my second question regarding competitive dynamics. I think the last time you spoke to the market, there was a bit of a change in the strategy from trying to always go after price increases to maybe covering your market share and protecting those market shares. Have you seen anything different? What is your sense as you start 2021? How do you think about the competitive dynamics in Europe playing out for Rockwool? Would be really interesting to understand. I think the story still fits. It's going to be dependent. Fundamentally, I think that the capacity increases, it's a 3% CAGR in insulation. I think that's needed for the market. It's a matter of the quickness of the restart. I think we can count on competitive dynamics that is similar to what we saw. I wouldn't say it has been dramatic in any way, but certainly in the project business segments where you have that mix of industrial buildings that might not invest the number of projects. There we have seen some segments like ETICS, where business has been running really, really well because somehow in the energy efficiency order, but that started off a flat roof, has been more up and down. It's same story, and I think we need to see what happens in France, Germany, and the other markets, how that progresses, how the markets recover. My final question. Thanks again. Just last one on the insulation industry dynamics. When we look at what the governments are saying, although I understand that we don't have the industrial scale for now, it does look like wood insulation, hemp insulation, cotton, and whatever is really making a strong story with a lot of governments trying to push industrials to invest in this sphere. A lot of your competitors are actually doubling capacity, for example, in wood insulation. Do you fear that the overall insulation market is going to become more competitive in the next few years, and the market shares will change? I think, if you look at what we have great appreciation from, we are just working on circularity. We are the only ones being able to offer that. I think fire resilience is really there. Maybe wood insulation is another type of insulation that might take some share from the plastic foams. You still have this longevity and the chemicals in it to keep it long-term, and the moisture, and pro and cons. I think you will see a drift from plastic foam, because as soon as you take Scope 3 emissions, end of life, then plastic foam is not a good thing. While wood insulation, you could say, is embedded captured carbon in it that you put into a wall, but you still need that insulation to last for a long time. I don't see dramatic shifts, but I think you can expect cellulose and wood insulation to be a material because at face value, when you listen to the story, it sounds very credible and a good thing, but I think really the main winner here is stone. Would you ever consider investing in wood wool if it became a bigger topic? I say it like this, I never say never, so don't write now that we are looking at acquisitions. We, of course, study and look at this. I can tell you one thing, I would never, ever invest in plastic foam insulation. That I guarantee you. Wood wool, we still need to learn more about it and understand how it works and the long-term effects. At the moment, we are very busy with our stone wool. Thank you so much for responding to my questions. Thanks. Thank you. Can I please ask all participants to limit themselves to two questions per person? As a reminder, it is zero one for your testing keypad if you wish to ask an audio question. Our next question comes from Brijesh Siya from HSBC. Please go ahead. Thank you. Good morning, gentlemen. I have two as well. The first one is on your guidance. You helpfully provided that you have a little more visibility for H1 compared to H2. Can you please help us split that 3%-5% like-for-like sales into how you're looking for H1 and what it implies for H2? Within that, if you can give us what's your price expectation for this year? Okay. Brijesh Siya, I'll take that. I don't want to go into quarterly guidance. It's very hard. As you know, we don't sit with a backlog, but I'm just, maybe with our guidance, I just want to signal that I don't see a Q2 that is -16%. I think the world has learned. That was a shock reaction to the COVID-19, so that's gone. My visibility is such that I believe that we get into a good business down to the summer with COVID still there. I see no reason to quantify a COVID-free and what the implication is of all the factors for the autumn. Kim and I have reflected that in putting like a 3%-5% growth perspective. When you run your spreadsheets, Q1 is often a smaller quarter of our four quarters. Almost whatever you put there, and then you neutralize or do something with Q2, you end up in a range where 3%-5%, depending whether some growth is coming back in the second half year. That's what we try to reflect based on what we know. It could be better, but I think it's a very realistic forecast we are putting out. On the price expectations, we have a bit of inflation coming, so we definitely want to have a price increase to cover inflation, and we have many segments where the price increases are out, and then we have a question mark on those segments where we apply them. We have been moderate about our price expectations and the outlook we have this year. We have risk and inflation, and we haven't put a big price in, but I should say we have launched price increases in the majority of the business already. The percentage, what we land on, I would predict a slight price increases here, depending on how quick the market develops. Okay. Thank you. Thank you. My second question is Sorry, I thought I lost the second question as well. Yes. Is it still Brijesh? Okay, your third question then, Dries. Okay. Apologies. It's okay. We give you one extra today. Okay? Thank you very much. I appreciate it. The second one is on the U.K. market. We have seen quite a bit news flow around it. Obviously, the Grenfell Tower inquiry is going on, so there's lot more noise about cladding which has been put in the historical buildings. The government is in the process of putting a system in place. You have historically talked about a real shift and a significant rise in your products. Have you seen any further change in that trend in the last couple of months, probably when the Grenfell Tower inquiry started? Have you seen people? I mean. Yeah. Yeah. I think we have had a very good business. We had a month where the furlough and all the rest. We had a really good year in the U.K. again. The debate and the discussion and this whole liability perspective between people that have apartments that you can't even insure and who pays the bill and does it go back to. That whole discussion reinforces the trend. You have quite a bit of work, I predict, to replace plastic foam insulation in high-rises. The question is who pays it? You have all sorts of punishment being discussed. The way we see it, we think that our growth for non-combustible, that will continue. I doubt that the market can cope with much more growth than you have. We see the continued growth, but the extra measures and the discussion is adding at the end of it, so we can see it for a long time because I think just a matter of executing more, the growth and the pace that is being done now is pretty good pace, and we are quite happy with it. I don't expect in the year that then suddenly the growth doubles because I suspect that there are labor constraints and installation constraints and also to figure out who pays. We have seen it in the mid and high-rises now, even mid-rises and multi-unit housing, that for lack of certainty, people go the non-combustible route. If there is a doubt, they say, okay, let's go safe because it's a couple of% higher cost maybe to go Rockwool, and they do. Is that okay answered, Brijesh Yeah, that's great. Thank you very much. Okay. Thank you. Our next question comes from Claus Almer from Nordea. Please go ahead. Thank you. Sorry about going back to this pricing or demand supply situation, Jens, Kim. We have talked in past calls regarding this added capacity from Knauf and others. How do you see their behavior in the current market situation? That will be the first question. Yeah. Claus, Kim here. Their behavior hasn't really changed. I think their ability to deliver to the market has maybe not been as fast as expected. We still do not see any meaningful volume coming out of Knauf's factory in France. Of course, they will eventually get a better situation there, and we do expect that in 2021, they will be more active in seeking volume into their new factory. We thought also that the autumn period would have been affected by this additional capacity by Knauf, but it wasn't really. Again, we expect every high season. Now we have the next, it's the spring season, and we expect them to be ready for the spring season. Okay. The second question, I really couldn't hear what you said about Q1, but my question goes to, if you look at the inventory end of 2020, I guess that's around down by something like 10% year-over-year. Does that reflect your thoughts about Q1, or is more a stronger Q4? How should we think about the trend in the inventory? Remember last year with the inventory, there was a couple of special effects. The year before, 2019, we had the extra storage building. We did away with that, and we have worked a bit on our replenishment flow to be able to run with a bit less inventory. Those are taken away, some of them. In North America, quite low. In North America, we sold it. Now we need a new factory, and in the meantime, we need to keep selling what we have. You have the effect of Norway, where we had two or three football fields of inventory to cover the shutdown where we did the transition to the new electrical melter. That's what took us through to year-end. You saw that inventory disappear by truckloads every hour. That also impacts. I would say with the exception of that, we look forward to get a new factory in North America, inventory levels are okay everywhere. Okay? Sure. Okay. About the CapEx. I understand what you're saying about the CapEx for 2021, and I know you're not giving guidance for 2022, but should we expect guidance to normalize, if you can use that word, beyond 2021, or should we expect this, let's call it high level, also to continue after 2021? There is no guidance for beyond 2021. The thing is, if you look at the split between maintenance and capacity investments this year, you will see there is still quite a high level of capacity investment. Of course, that will continue in 2021 with the factory in Ranson. After that, until we announce something differently, then that will reduce quite significantly. Okay, thanks. Thank you. Our next question comes from Andreas Kypriou from ABG. Please go ahead. Super. Thank you very much. Maybe a question here on the prices again. In your outlook for 2021 on page 15, you report, you say that higher input costs, which you expect to go through, can be compensated by operational efficiency and cost saving. At the same time, you mentioned in Q4, low positive sales price impact in Q4. Are you saying here that prices are a little bit more difficult to get through in these current markets? Yeah, [Lauri], it's exactly that. System division, many of the segments, the distribution businesses, all of that's going, Russia. You have many normal markets. I would say, yeah, the vast majority of the markets are normal. As I said, with the project business into the industrial segment, there we have said that we're going to put priority on market share preservation, and we have not projected in our outlook. We are ready to preserve our market share, there you're talking flat roof, ETICS, and it's a limited geography. That's in our thinking, and it's the same story that we've talked about last. There's no change to that. Okay. The answer is, for the majority of the business, there is actually no change if you look at the top line. There are segments where we going to be on high alert for, until we see that the market has recovered. Another thing to follow, that's also what we put here, these. The Operation Excellence Program. We have talked about these cost-saving programs that we've been running, and we did see last year some good benefit, as Jens Birgersson said earlier, despite the disruption in manufacturing. We also expect this year to have good cost-saving programs. These improvements are big numbers that we don't disclose them, but we have been very successful with that. That means that as a business, we are successful in becoming more competitive. That's very clear. My second question, I think it's particular to you, Jens. It's in regards to how you weight the new capacity and your sustainable CapEx. You once again say in your report that there's 100 times CO2 multiple benefit in using stone wool versus the CO2 in producing it. The EU targets these 3% renovation rates by 2030, currently at 0.3%, and maintaining that to 2050. That requires a lot of capacity. Wouldn't you say instead of using your CapEx within sustainable issues, Scope 1 and Scope 2, wouldn't it be much better to, let's say, for the world's CO2 reduction, for you actually to produce as much volume as possible until 2030? There are two sides of the story. Our footprint on how much CO2 we emit when we produce a ton, and we're talking big CO2 emissions and then a fantastic payback. In the way the world has developed, we can't just be a fossil fuel-based business and say we save the world so we can behave in any way. We have announced our SBTs, and we are one of the early companies that committed on Science-Based Targets, where we say that our Scope 1 and 2 would go down with 38%, and then we said 20 on Scope 3. That means a third of our absolute emissions. You could imagine if you take a third of our absolute emissions in 2019, we're going to take away. That means that we need to take out a lot more emissions because we have growth also. These are absolute targets. We are growing the business. One would say, okay, as a short-term capitalist, the best would be to just build new factories, capacity investment, don't care about that, because the factor of one to 100, who cares? We have validated our targets. We have committed them. If you look into my RSU, my five-year RSU, we even put in the CO2 target there to just show that we are serious about it. We need to balance this. What we do now, we did the biogas. We were already the only company in the world that could melt stone with gas. Now we do it with biogas in Denmark. We started up the melter in Norway. It's the biggest electrical melter for stone in the world, and it works great. There are two things. On the one hand, we need to have the new technologies, and there are other areas you can act on in a plant, so that when we build a new plant, it can be clean from the beginning. I mean, with a lower CO2. You can never be perfectly clean because we are melting stone. On the one hand, we need to have the technologies ready and work on that. We see it as a risk for the business if we don't make a long-term commitment to put some serious money into making this transition. Yes, in the short term, if you look at the year, we could have kept doing business in Norway with the plant we had. We dropped our CO2 emissions with more than 80%. The combination of Norway, we're talking Doense, Vamdrup, and Moss, we have lowered our CO2. We have improved our EPD for our product in the Nordic region. We dropped it in more than 70% CO2 across the Nordic region. We also see it as our duty as the leader in the industry to lead the way on that. We think we can balance this with really good returns and the growth and improving the footprint. That's the balance, and that's the art of what we are doing going forward. We're still working on some quite heavy R&D. We haven't reduced on our R&D person here. We are increasing our R&D efforts. Not dramatically, but we keep working because we believe that's the future of stone wool. It needs to be a circular product. We offer that scheme already in Europe, and it needs to have an even better CO2 footprint, Scope 1, two, and three. We balance this. You're right. The short term, if you just were in stone wool business for three years, even in 2034, if you make the forecast for the CO2 price, let's assume today it's EUR 30-EUR 40. Let's assume it's EUR 90. Compare that to fuel transition project. That's peanuts. Yes, it improves the payback to not pay that. We are talking quite big investment. Building a new smelter with all the hardware around it is expensive, and we need to balance these two dimensions. I'm convinced that we, as the leader in the industry, need to have the best emission footprint in the industry. That's our goal. Super. Let's follow up on that conversation the other day. Have a great day, and congratulations on your results. Thank you. Thank you. Okay. Thank you very much. Our next question. Thanks. Our next question comes from Jing Gu from Onfield. Please go ahead. Apologies. It appears that Jing Gu's disconnected. Can I please confirm? Our next question is from Manish Beria from Société Générale. Please go ahead. Yes. Good morning. I'm very sorry to ask you again on the pricing side, but can you just quantify what is the pricing pressure that you have seen in some of your project business? Is it low single-digit, mid single-digit, or sort of double-digit decline in pricing that you expect there? I will take one by one, maybe. Yeah. Manish, as all the other players in mineral wool that we compete with are not disclosing any of this. We see it as competitive information, and therefore, we are very poor at quantifying it. Very poor. Our goal is still, and we still have it, with the services and the products and the quality we have, we still have a premium in those segments. We are not talking about Rockwool being cheaper than the other stone wool competitors. We have a premium product and a premium offering. Sometimes we need to adjust it so that we are not quite as much more. If you look at the building side, when you start up a site, for example, if a customer wants to have many small deliveries of the right product at the right hour when they start the building site, we are very happy to do that. We are very happy to do it with 17 products instead of just one. Even though the bid is made on a project in some of these segments, it's the project bidding we are talking about, not so much the distribution segment, the diffuse segment. We do that so that it's not a matter of us undercutting a lot of people, but it's reducing the gap a bit and making sure we defend our market share. I don't want to sit and say it's double-digit there. We don't look at the business that way, but we see certain projects, and we have an ambition to absolutely maintain market share. Okay. Just to confirm, like you said, okay, project business, there is some pressure. You want to protect market share, in the other part of the business, the pricing is up. I heard in the call that you expect 2021 pricing should be still slightly up, right? I got it right, correct? My point is that normally we do a couple of percentage here. I'm not a believer in five and 10% price increases. I believe in drum beat pricing. I still do that, and I say that we are going for something very low. Then in the project business, our priority is the market share, yet we want a premium for our product. That's as much, Manish, as I can say. Mm-hmm. On the margin, Manish, one more thing. On the margin, we have actually given quite a bit of information because we have said that underlying the net of all these effects, we have two factors, half a percent and 1%. We have, in a way, we believe with all the tools we have, that the underlying profitability of the business is preserved. Mm-hmm. Yeah. That's good. Also on the CapEx side, you have laid out why the CapEx is increasing in 2021, but you haven't talked yet, I think, about, because you've talked in quite a bit of detail on the CO2 reduction, the long-term target, but you haven't talked about the CapEx associated with that. If you can quantify in 2021 how much is also due to sustainability, maybe. We- Yeah We have never guided for CapEx multiple years. It’s an aspect we need to take with us, Kim and I, because I see you ask us all the time, and we need to think about that. At the moment, we don’t guide. We have given some guidance on to cover a certain growth, how much do you need to invest per year? There is, I don’t know if you have read it, I think in the 2019-. Report 2018 report, there were some percentages of revenues. There were some links to growth. How much sustainable CapEx you need? 11%-12% of the revenue. With that, you can fuel a certain amount of growth. On top, you have an increased portion of sustainability investment, where most, strictly speaking, we didn't need it for that reason, but we needed it because we didn't feel right about that old smelter, and we needed a new technology. We have given some clues, but I see your request for the CapEx guidance, and maybe in a couple of years when we have figured out this transition in more detail, we could provide some better information there. At the moment, we have decided not to do that. Okay. If I can add just one more. You are now back to 11% in 2021, but by timing. I'm not saying- Yeah, around 11%. Yeah. I'm not saying that. I'm not saying that because this was a long cycle average, we're talking sustainability investments, we're talking a changing world. Of course, when you have DKK 1 trillion - DKK 2 trillion going into maybe energy efficiency, plants come in big investments. It's not like we can expand capacity in very simple, small incremental steps. Therefore, a year for a CapEx project that takes three years or two years to build is just not the right window. It's very hard to say how much it is. Today, what we do is that we keep investing, and we keep adding capacity and doing sustainability investment, and we haven't reduced engineering resources. We balance the resources between CapEx project and R&D, and we kind of sit steady of the engineers because we are, as I said many times, a tech company. Some of the work goes into CapEx, some goes into R&D. We don't have a more accurate forecast on that at this stage for you. Obviously, we have one ourselves. I have just one more on the margins maybe. Basically, you are back to 11% margin in 2021. Just wanted to see because no plant has not yet started, so all the competition is not yet coming, I mean. Maybe 2022 could also be a tough year for you in terms of margin, like the competition continues maybe in 2022. Yeah. Yeah. Manish, just to let me I don't see the 11% as a tough year. I don't want the 1% depreciation to not be there. I want the North American plant to start up so that I can sell more. The EBITDA margin is impacted by 0.5% for the start-up. Let's work on that during the year, let's do the best of that. That's because we invested. The depreciation, because we added capacity in Central Western Europe and North America, that's a good thing. Mm-hmm. Yeah. I agree that. Yeah. It's growth. We need to take care of growth. It's not small additions we do when we build one of those plants. It's an addition that should take three, four years to fill. Yes. Thank you. Thank you so much. Okay. Thank you, Manish. I hope that helped. Our next question comes from Jing Gu from Onfield. Please go ahead. Hello. Hi. Can you hear me? Hello? Yes, we can hear you. Great. Thank you for taking my question. I have one concerning the input cost. You said that you expect underlying profitability to be relatively stable for 2021. Appreciate the comment. If we look at the coking coal prices, I am just wondering what level of coking coal prices you factor in for your underlying profitability comment? Because the market seems to think that it can go up by another 20% to around DKK 170- DKK 180, or even higher if the Chinese demand comes back later this year. I am just wondering, what are your assumptions and scenario there to achieve the stable underlying profitability comment? We do expect that there will be inflation, and we have that in our guidance as well. We are not sourcing from Australia as such. I think we explained many time, Jing, that we do make price agreements a quarter in advance. We have already fixed prices for Q1 from our regular suppliers, and that is supporting our view on the assumption that we have in the outlook. Of course, we just have to wait for the negotiation for the second quarter to see whether this situation between China and Australia has normalized a bit. There is abundant supply of coking coal in the world. It is just hopefully a matter of the imbalance between China's decision to import and then Australia's ability to deliver that put prices up in a short time. Like we saw back in 2016, it was a spike that lasted not too long. Okay. I see. Great. That's helpful. Let's say if in Q2 you see another, say, 20, 30% coking coal price increase, you're still confident that you can pass it through via pricing negotiations in Q2? We will not go into those assumptions. We have our own sourcing assumption, and that will include inflation, but it's not anything you can correlate to the spike in prices between Australia and China. I see. Okay, great. That's helpful. Another thing is the cost-saving project that you've been doing, I think, starting from 2015, 2016, because it's been a couple of years. I'm just wondering for this year or even going forward, how much more cost savings can you still do? Can you maintain a relatively stable pace, or you can actually accelerate or decelerate because you've been doing that for years? The cost-saving and Operational Excellence Program we talked about was initiated two years ago only. We did do a special, you can say, restructuring project back in 2015, that was targeted at the indirect workers. The Operational Excellence Program has been running for two, three years only, that's the benefit we are seeing now from that. We have not quantified it as such. It is quite significant. The level of cost savings should be sustainable for the next, say, one or two years? Yes. Okay, great. Yes. That is true. Thank you. That's very helpful. Thank you. Thank you very much. Our next question comes from Mikael Petersen from SEB. Please go ahead. Hi, thank you for taking my question. This is regarding the systems division. You mentioned the rich mix previously. Can you maybe try to specify what type of product is this and maybe what the underlying trend is for these type of products? Yeah. We saw it. We have growth on this well. We saw Rockpanel going well. We saw the right portions of the friction business, understanding we have been able to shift the mix up what's in Rockfon. It's basically those. Okay, thank you. Then maybe a second question regarding your capacity expansion. In Sweden, you currently have a property there that you're able to invest in going forward. Is that something that's in the near horizon? The Nordics have performed quite well the recent years. I would argue that the production cost is higher in both Norway and Denmark, where you currently supply Sweden from. Is it within the next year or two you'll announce your factory in Sweden, or when can we expect that? I can't say, because the way we operate it is we bought the land, and we are proceeding with permits and all the rest, and that's kind of our new philosophy, how to do it. Then we push the buttons on investments when we feel the timing is right, and that's a big reason. We wait until we feel it's the right time, but I can confirm that we are progressing with permit applications and all the rest, but we have not taken a final decision now we start to shovel. That has not been done, because we have this with the CapEx, that there are several places in Europe and the rest of the world where one would think we need more capacity, but we need also to be a bit careful. If we would have had an assembly business, we might have been building three or four factories, or maybe if you could ship between. Our product is local, and that makes it very tricky when you decide in a market to go with it. When you start building a plant, it's also limit where you can build another plant because we don't have infinite construction resources. No timeline that I want to announce on that at this stage. We are doing permits, we are doing permits in France. That's the way we approach things. Okay. Very helpful. Thank you very much. Okay. I think you have a question. That's the last questions for today. We are a little bit late now. Operator, could you please pass through Yves? Otherwise, Yves, you can give us a call afterwards. Yeah. Okay. We lost Yves apparently. It's listed here. Anyhow, you take over. Please be informed that on 19 March, Rockwool will hold the next investor conference call dedicated to these two topics. Thank you for joining today's session, and thank you for your good questions as well. Thank you. Thank you. Bye. Bye.