Good day, and thank you for standing by. Welcome to the Concentric presentation of the results for Q4 2023 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one, one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one, one again. Please be advised that today's conference is being recorded. I will now like to hand the conference over to your speaker today, Martin Kunz, President and CEO. Please go ahead. Yeah, thank you very much, and good morning, everybody. Very warm welcome to all participants in the Q4 presentation, both here in Stockholm, in person, as well as out there connected via phone. This is our Q4 results presentation. I'm here with Marcus Whitehouse, our CFO, and so let's kick off. Q4 has been a challenging quarter for the business. We have seen a combination of significant destocking activities with a weaker market, which led to, for the business, an underlying sales growth of -9%. So our net sales have actually ended up significantly below expectations at the end of the third quarter at 945 MSEK. However, the sales of our electric products have remained strong in the quarter, which is always a good indication for the execution of our, of our electrification strategy. On our electric sales, with the 24% in the fourth quarter, we have also reached 20% for the full year, which was our original 25% target. That means we have reached our 25% target two years ahead of our original plan. The book-to-bill ratio in the quarter was 89%. Also here, electric products stood out with a book-to-bill ratio of a 100%. So with the sharp drop in sales, our operating margin went down to 115 MSEK in the quarter, which corresponds to an underlying margin of 12.1%. Marcus will walk you later in the financials through the details. The quarter has been very strong in terms of cash flow, so cash flow from operations was 227 MSEK, well above the same period last year. And at the same time, we also had very good progress, ongoing progress in the execution of our strategy in terms of electrification and new markets. So when we look into the market for the fourth quarter, the published market indices suggest that basically on the production rates that were published, the market has been broadly flat. The engines market was slightly up, while the hydraulic market has continued to contract at -10%, this quarter. However, when you look at the demand from our customers versus the market indices, there has been a significant gap, which is partially because this is a quarter, we have to look at the full year, but also, as I mentioned before, the significant destocking activities that happened during the quarter, from our customers. So, Europe has remained a challenging market, more challenging than North America. And when we look at the picture from 2022, 2023, going into 2024, it's clear that we're seeing a weaker market in 2024 than what we have experienced in 2023. So with that, I'll move on to a strategy update. When we look at how we accelerate our electrification, there has been, I think, a very important event happening in the quarter. We won our first business nomination for a data center liquid cooling application. That is a market that we have been working on, but that has been the first breakthrough with a global OEM that will launch production with our pumps in it already in the first quarter of 2025, so not so far out. And this is in particular interesting because it fits very well into our strategy. Data center cooling is a fast-growing market, so when we look at the growth rates for that market, in particular, the liquid cooling within a market that has traditionally been air-cooled is an area of significant growth that we can participate on. The second element of it, it's obviously done with an existing product, so it has not been a new. It doesn't require any new product development. So that was clearly a highlight in the quarter. And we also have entered in another new market, which probably those of you who have been reading the press release in the last days is trailer electrification. And that's a complete new market, so trailer is completely different from truck. The trailer electrification basically means that the trailer itself is powered, so it has actually its own power system that allows the trailer to be moved at the yard, at the dock, or even give additional power to the truck when it's on the highway. In this interesting application, we have both our electric fan as well as our coolant pump in a combined system. The interesting aspect of the trailer electrification market is it's completely up for development, and it also offers the possibility in the future that even existing trailers can be basically retrofit with that technology, and it's absolutely technology agnostic. So it supports both traditional internal combustion engine trucks, but also fuel cell trucks or battery electric trucks. So whatever technology the truck uses, the powering of the trailer contributes to emission reduction and obviously the overall climate targets that we're all pursuing. So very interesting application and very interesting customer. I have to say that both of them are completely new customers for Concentric. So when we look into and I think it's worth with those two business wins, to look back in how we have been doing in entering new markets. So when we remember a year ago, we were here, and we spoke about new markets, and then we continued in the Capital Markets Day in May. We only had one new market that was outside our traditional commercial vehicles, which was energy storage, that you all know we have been supplying into that market for a few years. Now, if we look into where we are in February 2024, we are already basically active in four new markets. So in addition to energy storage, we the mentioned data center application gets us into a very interesting market. We have launched in July last year, an application for actually a fuel cell power generator, where we sell our high voltage fans, so power generation to replace the diesel generators out there. Fuel cell is one of the most suitable technologies, so we have a customer where we have developed an application with that. And last but not least, the trailer electrification that I just mentioned. So pretty interesting progress, growing into new markets as a part of our overall electrification growth strategy. To close off the strategy update, we had another good quarter in bringing prototypes for our products to our customers, and that is basically confirming two trends. First of all, our products, our electrified products, continue to enjoy a high level of interest from customers around the globe, but there's also a second confirmation of a trend. We are leading in high voltage, and the fact that our high voltage products are in high demand for prototypes, also means that high voltage itself is an ongoing, growing market trend in the electrification market. And some of the prototypes, as I explain every quarter, are actually not just prototypes. They are also pre-serious or small serious, manufacturing components, and once the customer has actually the economies of scale, they turn into production orders. I'm happy to take questions later on in the Q&A session, and for the moment, I hand over to Marcus, who will walk us through the financials. Marcus, please. Sure, thank you, Martin. Good morning, everybody. Let's move on and talk about the financial results for the fourth quarter and full year. First things we'll start with, and Martin has already touched upon this, which is what's happening within the market. The market has continued to be two very distinct parts of the year, the first half and the second half. Second half, heavily influenced by destocking and a general weaker market. And we first saw that in the third quarter. It has continued on and probably progressed a little, meaning the sales that we are reporting today are a little weaker than we were expecting in that fourth quarter, and that is entirely due to rescheduling of orders within our main customers and a generally weaker market in which we are operating. So overall, we are reporting our sales for the fourth quarter at 945 MSEK, down 9% year-over-year, and no exchange movements. We're seeing the same sort of trend on our two divisions, engines and hydraulics. Engines was down 5%, underlying in quarter three, and 5% in the fourth quarter, year-on-year. So engines is continuing to be weaker, but hydraulics has really been impacted in the second half of the year. We were down year-on-year, 12% in the third quarter. We're down 15% in the fourth quarter. And the graphic below shows you how that 9% splits across our two divisions, pretty much evenly. Four percent of the nine is due to engines, and five of the nine is due to hydraulics. Now, clearly, that drop in sales is going to have an impact on our operating income and our margins. We have reported today that our operating income before items affecting comparability is MSEK 115, with an underlying, comparable operating margin of 12.1%. Now, clearly, that is not where we would want to be, and therefore, much of the activity that we have had ongoing in the fourth quarter has been about a cost down program. Now, that cost down program has been sort of implemented late within the quarter, so the financial benefits of that program won't influence the fourth quarter, but the majority of that program will start to influence the first quarter of the new year. As you can see as well from the graphic, the drop in the operating income from last year, 172, down to this year, the 115, again, is pretty much evenly across those two reporting divisions, 31 MSEK in engines and 26 MSEK in hydraulics. Now, for those of you that look a little bit further down the P&L than just the operating margin, and there will be some, you will have noticed that the corporation tax charge in the fourth quarter was low. It came in at 4 MSEK, 4% of effective tax rate. And that low charge in the fourth quarter is all due to one thing and one thing alone, and that's a tax rebate that we've managed to secure in North America, covering tax years or covering financial years 2022 and 2023. Had that not been achieved, our underlying effective tax rate in the fourth quarter would have been 23.6%, 24.2% for the full year, representing the tax jurisdictions in which we operate around the globe. For a little bit of good news for those followers of the EPS. Moving into our two divisions. Now, we always start with engines. We'll continue to start with engines, and I'll just guide you to the top graphic and the bar chart. The bar chart, those sort of bars that we've got within 2023, and you can see what we've been experiencing during 2023, a slowdown of each and every one of those quarters over the year. As we talked about earlier, we've seen a 5% drop in underlying sales in both the third and the fourth quarter. The interesting thing to be looking at in this slide is the Book-to-Bill Ratio. We saw the Book-to-Bill Ratio at around about 196, 107 in the first half of the year, so still holding strong. Then we've seen it start to weaken in the third, down to 93%, and this quarter we are 85. Strangely enough, a number that we reported for the first two quarters of hydraulics. But it should also be noted within that 85, with engines having the majority of our e-products, and our e-products remaining strong, we've got a weaker position within that market on our base mechanical pumps into to engines, suggesting that the engines market is slowing at a later rate than what we had within hydraulics, and perhaps suggesting we haven't quite found the bottom yet within the engines division. The impact of those lower sales has obviously impacted the operating income, and we've reported that at MSEK 87, and an underlying operating margin at 13.2% in that quarter. One thing to note is just really to draw out the impact that Alfdex can have on the engines division. And Alfdex overall has had a pretty much similar year, 2022 to 2023. However, 2023 has been more consistent. 2022 was very lumpy, influenced by China. This quarter has got Alfdex—comparing Alfdex's strongest performance, Q4 2022, to Alfdex's weakest performance in 2023. We have got a little bit of margin movement in there by mix of that joint venture with Alfa Laval. As we move on to hydraulics, and as we touched on earlier, hydraulics felt the slowdown a little earlier. The underlying sales in the fourth quarter are 15%, as we touched on, 13% in quarter three. However, again, looking at the book-to-bill ratio, it was weaker, 85% for the first two quarters of the year, and it has steadily progressed in quarter three and quarter four. This quarter, 99%, again, perhaps suggesting that the hydraulics business may have found the base in the cycle. May. Operating income and operating margin have really been impacted heavily, though, during these last two quarters, with those fairly substantial drop in sales. And again, a big part of what has been done there is therefore to restructure the cost base for the hydraulics business to get that margin back to a more acceptable level of profitability, for the, the coming quarters. Save the best for last. The cash flow, working capital, and gearing. If you look at the top, left graphic, the bars are the cash flow per share. And again, the shape of how we generate our cash, 2022, 2023 is fairly consistent. Fourth quarter is typically the strongest. This quarter, we've had a really great cash flow, 227 MSEK that's been delivered, 280-ish% profit to cash conversion, 140% for the year, and that 140% has then benefited from some working capital improvements and inflows that we've had, of which a bit of that has been destocking. The more comforting bit within all that is the line that we've got on that top left graph, which is effectively our working capital as a percentage of sales, which has steadily and progressively lowered over the last couple of years, helping us to generate the cash. Strong cash flows and working capital management have therefore allowed us to continue to pay down the debt. So our net debt now is 617 MSEK compared to 925 MSEK this time last year. Our gearing ratio is reduced. We're now down at 28%, fairly low level of gearing, compared to 45% this time last year. I've just introduced the net debt to EBITDA ratio. It's something we touched on in the Capital Markets Day, just to reassure investors about where we're at on the level of risk, and we have plenty of debt capacity still within, It is now at 0.8, compared to just over one the same period last year. We also have continued to do the own share buyback program under the Safe Harbor Rules. We bought back about 34 MSEK of shares in the third quarter. We've continued to buy back in the fourth, 66 MSEK. So 100 MSEK has been purchased, over the second half of 2023. And even though we've done the own share buyback, our cash and cash equivalents remain strong. We finished the year at 724 MSEK, up 100 MSEK year-over-year. Our balance sheet remains in a really good position, both from working capital, where we end the year, in terms of our gearing and our EBITDA to net debt ratios, and the amount of liquidity that we have for the business ensures that we've got the firepower to do acquisitions as and when they present themselves, and we have plenty of liquidity, should an economic cycle throw any more challenges at us in 2024. With that, I will hand you back to Martin to conclude with the outlook for Q1. Yeah. Thank you very much, Marcus, for the details. So Q4 is behind us, going into 2024. What does it mean? What are we seeing in terms of market and outlook? So, first of all, the uncertainty in the business remains. Don't have to go into the detail. Everybody's familiar with high interest rates, basically impact, for example, the sales of all capital goods, et cetera, et cetera. Based on the information we have today, we estimate that our end markets will be weaker in 2024, and we also expect that the sales in the first quarter will be slightly lower than the sales we have achieved in the fourth quarter. So, in the fourth quarter, Marcus mentioned already, the restructuring program. We have aligned our cost base with reduced demands from our customers, that will enable us to return to improved levels of profitability. And if the market basically goes further down, we will take additional immediate actions, to further adjust the cost base if necessary. The demand for our e-products, we have mentioned that already, strong fourth quarter for e-product, strong year 2023 for e-product, ongoing good book-to-bill. So demand for e-product expected to remain strong, and, the wins that we have materialized, during the entire year 2023, bear a potential to accelerate, the growth in our electric sales through the development of either existing as well as new markets. And that concludes our presentation. With that, I'll open up the floor for questions, as usual here first in the room in Stockholm, and then we move on out to the conference call. Okay, thank you very much. Thank you. Julia Utbult with SEB, and my first question is if you could clarify there what the book-to-bill in engines and hydraulics tells you. You mentioned that we might not seen the bottom yet in engines, while you are more positive in hydraulics. Did I get you correctly there? That's about right. But we have to separate engines between our mechanical products and the electric products, where, as we said, we're seeing an ongoing strong book-to-bill for electric products. So we have a mixed bag between the two parts of the business and engines. But yes, on balance, we still think there's a little bit of downside, and hence why we're guiding that the first quarter will be a slightly weaker. We still think there's a little way to go on engines. Hydraulics may, and I say may, because it's still quite uncertain, but it's starting to feel like it's hit its bottom. The current cost reductions are already having this into calculation then? Okay, perfect. Thank you. From the margins there, could you give us more clear on why the margin is declining quarter on quarter? I mean, the answer lies in the fixed cost. It's purely. Yeah. Yeah. I'll, I'll pick it up, Martin. It's purely. If we look back at our group as we have, at, at our contribution margins that we, we have got, both our direct and our labor, the two biggest cost drivers that we have, they are pretty much static, right the way across 8 reporting quarters that we, we have. Our challenge that we have now, and again, over those 8 reporting quarters, 6 of those quarters, our margins have pretty much been 16%. So, so the influence that we have got is the fact that our capacity costs are just higher in Q3, in Q4, relative to the sales that we are enjoying, and that's why we've got to address that cost base to restore the margins, back to a, an acceptable level. Perfect. Thank you. And then, you mentioned the new end markets that you are entering, which were not announced or so much focused on during the CMD, and there you forecasted for 14% CAGR in the market growth for electric products. Does those new end markets change anything in that guidance since those end markets have a higher growth rate? Not necessarily. I think it was, b y the way, it was 15%, what we said, CAGR, in the Capital Markets Day for the next five year in electric growth. We had already factored a part of that growth from new markets, but we were still looking at what are the most suitable new markets. So that has been part of the game plan. Perfect. And then one final question for me. Can you give us more, a clear number or anything, guiding us on the potential savings from the cost reductions and what pace and, how you are coming back to higher margins, both in Q1 but also 2024? Yeah, that's the difficult question, Julia, to answer. We won't give guidance on what the cost savings are likely to be. We are expecting our margins, and again, we're not going to give a number, but we are expecting our margins to improve on the first quarter, despite the fact we're likely to have lower sales. But we won't give guidance quite yet on what that is likely to be. But we are expecting a quarter on quarter margin improvement in Q1, despite us having lower sales Thank you very much. Okay. More questions in the room? Yeah, hi, Mats Liss, a couple of follow-ups, I guess. In these new segments, I see a lot of opportunities, of course, and you mentioned the electrification, and you also saw this new segment coming up in the quarter data center. Could you say something about sort of how the growth cycle progress going forward? Is it sort of something that we'll feel more about in 2025 when maybe end user segments in the more traditional markets are stabilizing and returning to growth? Yeah, yeah, good question, Mats. So when you speak about the traditional segments, are you referring to electrification or to, basically, all products? I mean, the engine and hydraulics in the more sort of traditional powertrain applications. Yeah, I mean, the market indices for 2024 suggests the weaker market. When does the market recover? I mean, that's a good question. I think we have to see, really, as Marcus has said before, we believe that on the hydraulic side, we feel that we have reached the bottom. Yeah, but we're not yet certain about it, yeah. On the engine side, there might be still a bit of movement, which, that's why we're guiding also to, towards a bit of lower sales in the first quarter. So we have to see how the market recovers. However, when you look back at press releases we have issued, over the past 24 months, there are, in general, new business opportunities that are coming in, that are ramping up, that have dates behind. Some of them comes in in 2024, but there's a lot of new stuff coming in 2025. So, we have to see how the market performs, but we continue to drive our growth agenda, both on the mechanical side as well as on the electric side. Well, could you remind us maybe on the sort of potential impact on margin there? I mean, there will be a mix change towards electrification, and I guess it's early days for that segment, but should we expect the margin to be in line with what you... Absolutely. Absolutely. There's no change to that statement. I mean, even if we go into new markets, the ones that we mentioned, they're all about the same margins that we are enjoying today, at group level in the average. So there's no margin dilution coming, going into those new markets. And then about, yeah, you mentioned that you see a margin improvement in the first quarter here, due to the cost measures you have implemented, and I guess that's good. But could you give some flavor in absolute terms? How, if I remember right, you had some cost of SEK 10 million extra in the fourth quarter. How much did it reduce the cost base? That's actually, I refer that to, to Marcus. We have to stay with the same answer here. Yeah, we're not guiding on the amount of cost. Again, the only thing we're guiding on is the margin is gonna improve from where we were in the fourth quarter. That's as far as we're going on guidance at the moment. Okay. And finally, just about cash flow. I mean, you mentioned you've been good with reducing working capital, and is it sort of finalized for your, for the time being or the more to be done? There's probably a little bit more on stock, but not probably a whole lot more, in terms of what we got. We had good progress in the fourth quarter, so I'm not expecting, you know, huge working capital movements over the course of the year. Yeah. But we continue, in particular in inventory months. We shouldn't forget we're coming out of the 2.5-year global supply chain crisis with extended lead times. Everybody was holding a higher level of stocks to basically keep the business running. So lead times are getting shorter as we see it, but it doesn't happen overnight. So I think inventory remains on the agenda for 2024. And finally, just about, I mean, your gearing come down quite nicely, and I guess markets are slowing. Do you see opportunities to move ahead with more acquisitions, given I mean, EMP was a huge one, but. Yeah. I mean, we're permanently looking at acquisitions. You know, the criteria that we are applying, what makes a company attractive to be an acquisition target for Concentric. And we're permanently looking at good acquisition target that support basically our growth agenda. And as Marcus has said, the balance sheet is very supportive of that. Okay, thank you. Thanks, Mats. Any more questions in the room? Julia. Thank you. Julia Utbult with SEB again. So you had a strong development in the electric products in the quarter. Could you tell us more about what end markets drive this, this top line growth? Yeah, I mean, the end markets are largely the same that we are targeting. So, in particular, energy storage is one that we have to call out, which is helping us as the first new market. Then our traditional truck and bus market in North America, EMP traditionally has held a very strong market position in the market for transit buses in the U.S., both fully electric as well as hybrid. And then we are going into new applications with all sorts of new vehicles. Yeah. So it's really across the board. It's a broad range of customers and applications that we are targeting. And that is also what is giving us this ongoing growth. And I always refer back to the prototype statistics, right? It's always difficult to say you have a market here, yeah, and you have existing sales there. How do you bridge between? There are a few indicators that tell us that we're on the right way, and that is the demand for our prototypes, going into new applications that then have to be tested, have to be validated, and finally, after most likely two or two and a half years, or even three years, end up in a production order. So it's to your question, I know, long answer to a short question. It's a broad range of customers and end markets that we continue to target, plus the new markets, as Matt has said, that obviously come into the mix and provide additional opportunities. How large part came from fully electric vehicles? This is a number we cannot say because many customers actually use the same product on a fully electric platform, as well as on a hybrid platform, or it might be even a partially electrified application on an ICE vehicle. So we, we cannot even say where the products end up exactly in which application. It's difficult to find out. Thank you. And then you mentioned that you are doing facility investments to meet the demand in those new end markets. Can you give us some guidance or any flavor on what facility investments you expect? Yeah, I mean, we have mentioned it a few times also since the Capital Markets Day. One of our big investment right now is in North America, in the previous EMP site, on the new high voltage manufacturing lines. Basically, when you go back to the numbers that you see on prototypes, those turn, not all, but many of them turn into production. So the biggest investment right now is actually in the high voltage manufacturing equipment in North America. But we also continue to invest in other areas, both in the traditional mechanical business as well as in other parts of the electric business. Thank you very much. You're welcome. Thanks, Julie. I think if we have no further questions in the room, Emma, I suggest that we open up the floor for the participants that are out there in the conference call. Thank you. As a reminder, to ask a question, please press star one, one on your telephone and wait for your name to be announced. To withdraw your question, please press star one, one again. Please stand by, we will compile a Q&A roster. We will now take the first question from the line of Björn Enarson from Danske Bank. Please go ahead. Yes, hello. You have a very high drop-through on EBIT on the 5% decline. Can you give some comment on your production? How much did that decrease? I mean, OEM for destocking, and you are yourself selling out of inventories, I guess, but so production is, I guess, a better leading indicator on why EBIT fell so much. Yeah. Hey, Björn, it's Mark. Yeah, look, we've got some challenges within that fourth quarter result that you're picking up on. So, yeah, production rate dropping. There's some inefficiencies on some of the labor and some of the variable overheads. The primary thing, though, and the thing we're going towards is we just have too much capacity cost. That is the essence to all of it. And that's the major focus of what we've been doing during the fourth quarter, is to rightsize that cost base to get the margin back. So, yeah, as sales drop, inefficiencies creep in, but it really is right sizing the capacity cost is the focus area, and where we've put the energy in the fourth quarter to help the first quarter's results. Okay, got it. And you touched upon it, but I was thinking about your end markets, and when these destocking is done. But you as you're thinking that maybe hydraulics are at bottom or at trough levels, maybe, so I guess that is also reflects that destocking may be gone for that division? Yeah, well, that's what we're hoping and feeling. The book-to-bill ratio- Yeah is guiding us towards that. You never can say it's done. That's the thing we can't say, but with the book-to-bill ratio starting to recover to sort of 99% of sales in that quarter, it's starting to feel like hydraulics has perhaps found its bottom. What we do know, and what you can see with that book-to-bill ratio for engines, as it started to weaken over the last couple of quarters, it's suggesting that there is a little bit more ground to go within that division. Again- Yeah we'll feel that as we get into this first quarter, but that's what the data is starting to indicate. Looking at the outlook from some of your end markets, I mean, they are quite negative, and I guess primarily that will hit the OEMs in the second half, with good production rates first half... But you guys all have a little bit of a different cycle. Can you help us to go through that? If the scenario would be that major OEMs will decrease production quite significantly in the second half, but hold up production first half, how would you play out in such a scenario? Yeah, Björn, hey, this is Martin. Hi. Hi. I think we have to go into the end markets and look at them end market by end market. When you look at hydraulics, our largest markets for hydraulics are actually construction and agriculture. Obviously we think that those markets are now reflecting where we are. When you go into truck and you're referring to probably the first half versus a weaker second half, that's what right now the truck market indexes suggest, more or less a slightly lower first half of the year, but then probably a further decline in the second half of the year. That's too early to tell whether it happens or not, but it's clearly a difference here between the different end markets and how they turn out in 2024. Yeah, I understand. But I mean, if we would see that scenario as you described on engines, how would that impact you guys? Because there is also I mean, you're also already seeing the weakness as the OEMs are also destocking. So the underlying demand is higher and where you are, so maybe it does not mean that your production will decrease even further, or it will decrease further, but I mean, not to the same extent, maybe. Yeah, that's a good question. Yeah, but I mean, Björn, I mean, we don't guide beyond that first quarter. Oh. So, trying to predict what we think is gonna happen in the second half of this year is gonna be a challenge for us. We absolutely get what you're saying. Yes, trucks are talking about it, but it's always difficult for us to work out what's happening now in terms of that sort of bullwhip effect that comes through with the OEMs that are adjusting stocks and having the impact on us, and then where it ultimately settles out. And that's really difficult for us to make a call on at the moment as to what's really happening within it. So we'll have to reserve guidance for the latter half of the year until later, once we- Yeah We see where we are. Our first big test now is just seeing whether we found bottoms within that first quarter and get a better feel for the market. As Martin said, there's still an awful lot of uncertainty that's out within that marketplace. And we're just trying to feel our way through it. But so yeah, second half, bit of an unknown for us at the moment. Very much focusing on getting this right for Q1 and Q2 of next year. Got it. And when you're talking about restoring profitability, you said that you expect higher margins sequentially, despite weaker sales. Yeah. That's very good. Yeah. Is restocking also, I mean, I mean, is that flat this year-over-year, or what should we think about in Q1? Well, it's a recovery, so I don't think we're gonna get back to minimum targets. But it's certainly an improvement over where we were in the fourth quarter. I won't give an absolute number to it, as much as I can see everybody's looking at me saying the number. I won't give an absolute number, but we are looking for an improvement in profitability with the cost out program, despite weaker sales in the first quarter, sequentially from four to one. If I may add that, Björn, the cost out program is largely executed to give us the confidence that we're achieving higher profitability despite slightly lower sales. Thank you. And last question, or maybe you said this already, but these four new markets that you have been presenting now and since the CMD. Size-wise, are there any color on that that you can help us with? How big would these market be, or First of all, the markets that we have selected all have attractive growth rates. The criteria why we selected them is, first of all, they have to have attractive growth rates, and second, we must be able to serve them with existing products. And the markets we are calling out right now, Björn, are the ones where we have solid information that are in development. I stay for a moment with the data center market, which is a very interesting one. It's a huge market, and if you read the newspapers every day, the new processor generations for ChatGPT and AI are enormously powerful. They can't be cooled anymore with the traditional air-cooled solution, so it has to be liquid cooling. But it's a market that is in development. The first applications are coming out now, but there is very, very good growth to be expected for the next five to six years. And we believe that this growth will happen very fast because the new processor generations are already out there. But we have to go in the details of every market. But the markets we're targeting right now are all attractive regarding their expected growth rates. Perfect. Sounds interesting. Thank you. That's all. Thank you. We will now take the next question. One moment, please. The next question comes from the line of Hampus Engellau from Handelsbanken. Please go ahead. Thank you very much. Can we stay at the, the electrical side here and these data centers, could you maybe mention some on competition are here for you guys? I mean, we will say that the data center market, that's, I mean, very big. But from your kind of product offering, I'm sure you've bridged this in your numbers and made an estimate on what type of potential this could do for you guys. Could it be possible to maybe not just talk about the growth number, because of course, it's gonna be high, given that you're coming from very low levels, but in absolute numbers, it would be interesting to just get a sense how you view this going forward. That's my first question. Yeah, Hampus, this is Martin. Good morning. Interesting questions, but I, I think we're not yet there. These are new markets where we have to get a better feeling about. I mean, we know which products we can sell into those markets and in which systems by the customer they end up. But, if that, let me call it that growth, that you look at the data center the data center cooling market in general, has a huge growth. And the other component that is the interesting one for us is by the year 2030, 30% of the solutions will be liquid cooled versus literally zero liquid cooling today. So that's the data we have. But then we have to go further into applications and customers to see how that materializes. I can't give you more information right now other than that it looks like an attractive market for us and our products. Fair enough. I think you added some there. And then generally on the group level, you achieved your 20% target, 24% in the quarter. And from your like, when you look at your backlog going into this year, is it reasonable just to assume that you will reach 25%, or is that too conservative number for you guys? Yeah, we don't guide on the exact number, but we have a strategic plan that basically says by the year 2028, which is the last year of our strategic five-year plan, we want to be at 30%. So, there will be steps in between from basically 20%-30%, yeah. But, we don't guide on where we want to be each year because the growth is likely to be exponential rather than linear. Fair enough. It seems to me, it seems like you're running a little bit ahead of your targets here. Maybe more housekeeping question on, in the quarter, if you look at your price compensation and material cost, can you maybe talk about how you were there and looking at this year, what type of a spillover price should we assume? And also, if you put that into perspective with like material costs coming down somewhat, but also wages being up. Yeah, I think, when we look in general, as Marcus has said before, our direct material and labor from sales are pretty consistent over the past two years, which basically means that, all cost increases have been successfully passed on to our customers. We are seeing a bit of labor inflation, obviously, going into 2024, which is a carryover from the general inflation we have seen in 2023. But in 2024, as a few exceptions might be there, but in general, we feel that, the material inflation has basically come down. We don't see a lot of price increases there. So, and the labor inflation actually will be passed on or compensated through efficiency actions. We don't think that 2024 will be a year where we have to have a high level of pricing activities, simply because the underlying cost base is more likely to be stable. Fair enough. And just maybe a detailed question on that. In terms of your price compensation, has that been retroactive, or have you been managed just like you're raising the prices on the component to the supplier? Because sometimes the OEMs just want the supplier to present his increasing cost year on year, and then he compensates for that in, like, one chunk, and that is typically lagging. So how is it for you guys? Yeah. There isn't a one-size-fits-all answer to that question. So in general, when you look at our numbers, we have been passing on cost increases to customers. There are always a bit of a lag. Basically, it might take you a quarter or so. In some cases, you might also get a retroactive price increase, but it really depends on customer by customer. There isn't one answer to all customers. To give you a level of materiality, the majority of our price increases are passed through in part through to end customer, and the more rare is for us to get a retro back onto it. So I don't want you to think that there's influence within large retros that are coming in, skewing the margins. We get the odd bit, but it's not material overall for the group. Fair enough. Thank you very much, guys. Thank you. Thanks, Hampus. Thank you. There are no further questions on the phone. I would like to hand back over to the speakers. Okay, thank you very much. So I think we covered all the questions here in the room on the phone. If there are no further questions, I'd like to thank all of you for both your participation as well as the good questions and the high level of interest in Concentric performance and, and strategy. And I would like to close off the session, and thank you very much, and see you soon. [audio distortion] Thanks all. Bye-bye. Bye. This concludes today's conference call. Thank you for participating. You may now disconnect.