Hello, and welcome to the HANZA Audio Conference with Teleconference Q4 2021. Throughout the call, all participants will be on listen-only mode, and afterwards, there'll be a question and answer session. Today, I am pleased to present CEO Erik Stenfors and CFO Lars Åkerblom. Please begin your meeting. Thank you, operator. Good morning, everyone, and a warm welcome to HANZA's year-end report 2021, which we released this morning. I'm Erik Stenfors, the CEO of HANZA, and I will do this presentation together with our CFO, Lars Åkerblom. We do have some exciting development of our company right now, and I think we should get right to it and move to page 2. The agenda, first, a short introduction to HANZA. Then we will talk about the highlights last year. I will pass you on to Lars, who will give you the financial development. Then finally, we will have a few words about the future. Of course, also we will end with a Q&A session. We move to page 3. We offer complete manufacturing services. That is, we have a unique combination between offering parts production and parts assembly, as is illustrated to the right on this slide. We are proud to have customers from industry leaders such as the defense company, Saab, the mining company Sandvik, energy company ABB, metal company Gjesting, recycling company, Tomra, to name a few. We are up now to an annual sales of EUR 250 million. I have about 2,000 colleagues distributed in six geographic areas, as you can see on this map, areas which we call manufacturing clusters. Move on to page number 4. This graph shows the exceptional growth we have had since we started HANZA. We've been running about 70% in annual growth rate. The reason for this quick growth has been the four building blocks of our business model. I'd like just to quickly walk you through these. First of all, we don't have our own products. We are a contract manufacturer, meaning that the success of our customer is the success of HANZA. That's why we have been focusing on customer value and also why we have created this cluster concept that helps to lower costs for our customers and also increase flexibility and give a number of other advantages. We have mainly grown organically in this way, but we also add acquisitions. Number two, selected acquisitions. We don't buy a company to be bigger, but to be better. We choose companies that are strong in technology, geography, maybe capacity. As we then constantly are recruiting people to HANZA, and also we add colleagues through these acquisitions, the corporate culture is really important. We spend a lot of energy on that. We've also created an organization which is modular, that is, it's scalable, which makes it more easier then to grow. Number 4, we have kept a long-term perspective. If you want to keep your balance, you need to keep your eyes on the horizon. We have tried to make long-term decisions. It helps us a lot. The example is the pandemic. We saw during 2020 how some of our customers, their sales plummeting, and we had to discuss whether we should maybe lower the expansion rate, maybe we should postpone some investments. Our decision was to accelerate. That was just because we do have the long-term perspective. We realized that, of course, the pandemic will end one day, but also that this has shown the weaknesses of the global supply chain, and that will drive sales to HANZA. That's why we instead launched the largest expansion program that we have had in HANZA since we started the company. We turn to page five. Here you see some of the highlights from last year. We've done a total upgrade of our operations. In Sweden, we did a number of investments. We opened up a new area for coating of electronics. In Finland also, we did some good investments, and we acquired a contract manufacturer of mechanics. In China, we decided to move into new and larger premises, and we also added technology. In Estonia, we have been building a new plant for complex assembly, which will open just next month in March this year. In Germany, when the restrictions were lifted last summer, we could continue with our expansion plan, and we acquired a new company, a contract manufacturer of electronics. The last move of this from our 2021 was actually last month, when we decided to expand also our Central Europe cluster. We are increasing our existing building, but we have also bought an adjacent building. In total, it's a 2,000 sq m expansion in Central Europe. Of course, all this gives a very strong and good platform for the future. Before I come back and talk about the future, I will pass you on to Lars and the financial development on page 6. Thank you, Erik. I will present the solid growth and profitability and a strong and good balance sheet that the short Short part. Looking into the P&L, we have still a reduction of both sales and earnings due to the material shortage that we see in the market. The Roadmap 2021 that Erik just told you about gives us a really good platform for 2022 to continue to have increased sales and good profitability. What we see in sales side is that we have quite good growth in both quarter four and in 2021 as whole. The organic growth in 2021 is approximately 12% and increasing during the year. In quarter four we have an organic growth of 30%. The earnings is also a lot higher compared to last year. We are running in 2021 of approximately 5.7% or 5.8%, depending if you include or exclude the one-time cost. In quarter four, we are on 6% including one-time costs and 5.5% excluding the one-time cost. The one-time cost is a repayment of APA insurance, and also the integration in transaction costs for our latest acquisition, Beyers in Germany. At the time for the acquisition, we actually expected this to be EUR 1 million, and the main part to be taken in quarter four. Fortunately, we see an increased demand in Germany. We see that this cost will be instead of coming in quarter four, 2021, we see that it will be hit to P&L in 2022. It might also be lower than the SEK 1 million that we estimated at the time for the acquisition. We move to page 7. To the right on the map you see how we split HANZA into Main Markets and Other Markets. We still see this temporary imbalance between the profitability in the Main Markets and in Other Markets. The main reasons for this imbalance is a combination of the fact that we are moving into new premises, also going back to what Erik said in the Roadmap 2021. That has a temporary negative impact on both sales and earnings, but also the fact that we have a very strong organic growth in Other Markets, and that together in combination with the material shortage gives temporary a lower margin in Other Markets. What you see is that in Other markets, we are running at the margin of 3.6%. In Main markets, we are on 8.3% in 2021, and actually on over 10% in quarter four. We can move to slide 8. In quarter three, we had a temporary slowdown of the cash flow. HANZA has during the years had a quite strong cash flow. In quarter three, we saw a downturn in the cash flow, but we're glad to see that the cash flow has increased in quarter four. We are on SEK 60 million in operating cash flow and SEK 126 million for the full year. The net debt is increasing during the year. That is mainly due to the new building in Estonia, but also the fact that we have made two acquisitions. The total increase of the net debt due to acquisition is approximately SEK 180 million, and SEK 100 million in quarter four. If we compare the net debt to the EBITDA, we are more or less on the same level. We are approximately on 2x the EBITDA, and a year ago we were on 1.9. That is still quite okay net debt if you compare to the EBITDA. Also positive when we have increased the profitability and the net result is the earnings per share. That has increased a lot, and we are now in the full year on SEK 2.25, and in quarter four at 0.70 in the EPS. In the press release in the quarter we seen that the board of directors they will propose to the AGM dividends of SEK 0.5, and that is the double amount in per share compared to last year, and that will lead to dividends based on today's number of shares of almost SEK 18 million. We move to page 9. HANZA have today approximately a market share of SEK 1.7 billion. Among the owners we have board members the CEO and other the top management, and they own approximately 3.7% of HANZA. You can see down to the left that the last year has been extremely good development of the share price in HANZA. Otherwise, the main shareholders are more or less the same as they've been for quite a while. The main owner is Gerald Engström, also Member of the Board, and the Chairman of the Board, Francesco Franzé, and Håkan Halén also is a Board Member, is among the main owners. By that, I leave back to Erik on page ten and the future, the outlook for 2022. Thank you, Lars. Yes, a few words about the future. First of all, we can see that the trend is our friend. Our analysis a year ago that this pandemic would actually drive sales in our direction is correct. We have a number of customers trying to relocate their manufacturing. We see a backsourcing trend from Asia to Europe, which is really helping our sales. In addition, now we have finally started to explore a new customer market, Germany, after the restrictions were lifted. We already have sales to Finland, Estonia, and China from Germany. That is really positive. Also, as I explained, we have done a total upgrade of all our six clusters. Lars also mentioned that we have a solid financial situation. All this together gives that our assessment is that 2022 will be another successful year with profitable growth. At the end, maybe a cliffhanger, but an important reminder. We have developed HANZA in steps. We call them phases. Now we are in the end of phase number 3, and the aim of that phase was to establish HANZA in Germany. That is done now, and it means that eventually we will open the phase number 4. These special phases, these activities are done in order to further accelerate the development of HANZA. That will be announced eventually. I will come back to that. Now we end this part of the presentation, and we open up for any questions on page number 11. Our first question comes from the line of Adrian Gilani of ABG. Please go ahead. Your line is open. Hi, it's Adrian here at ABG. I'd like to start off asking a question on the Q1 effects of. Well, you mentioned you've seen high sick leave and Omicron cases. I was just wondering, is this primarily, would you expect higher personnel expenses, or have there been instances where you've also lost sales due to sort of not having enough staff present in your facilities? Will you start, Lars? I can start. You asked about the personnel cost. It can be that we see some slight increase of personnel costs, but that is not the main issue. The main issue is temporarily the sales. It's not like we are losing any sales. It's a delay of sales due to capacity reasons. That is the main effect we see on the pandemic, that we have absence in the factory leads to lower sales temporarily, but we're not losing any sales. Okay. I can add to that also. Yes. Hi, Adrian. Thank you for calling in. Yes, actually, we never lost a customer since we started HANZA. That's part of our concept, that we are more married to our customers. What we have seen here are the waves of the pandemic where we can have 40, 50 people away from the factory, which lower our capacity, and the same thing with the components. But we have had heroic effort from our colleagues, so we've been able to solve our customers' challenges. Sometimes it has been extra costs involved with that, but the main thing is to get the delivery to our customer. This is also a transient. This will end not so far from now. Okay. Is it fair to assume if you've had some delays here and there that the sort of irregular capacity utilization might pressure margins a bit in Q1? Yes, that's what I'm trying to describe with other words, that we have to do extra efforts in order to secure the deliveries and the customer first. Sometimes, yeah, we have to walk the extra mile. Again, this is a very, very special situation we have. We're both growing, having component shortages, expanding, and then having also COVID cases in the factories. It will not be for so much longer now. Okay. That clarifies it. Regarding Beyers, we saw in the notes that the acquisition contributed negatively to Q4 earnings, which was expected. Do you expect Beyers to be profitable from Q1 already, or will it take more time for this? Now you're asking something that we cannot answer, I think. Of course we have not given that forecast, correct, Lars? No, we have not given any details on when we expect Beyers to be profitable. Also, Beyers as individual company or site is not of the highest importance. It is the cluster in Germany that we are focusing on and developing the offering to the German market and increasing both the sales and the profitability in that cluster. That is the main reason for the acquisition. Yeah. I also like to add to that it could even be an advantage that the profitability was low because that reveals that there is extra capacity. Like Lars Åkerblom was also mentioned, we were clear when we bought this company that we do it in order to get more competence in electronics, but also more capacity. Meaning that most likely we will increase the sales, and with sales then comes profitability. Okay. Moving on to the Main markets segment. I mean, you had over 10% operating margin already, but if we make sort of a rough adjustments for Beyers and SLP, I calculate that the remaining segment has almost 13% operating margin. Would you say that the rest of the segment, including the new acquisitions, is currently at sort of mature profitability, or is there even room to expand margins in the remaining segment as well, excluding the acquisitions? I can give you the mysterious answer. Sure. We have been clear that the mature clusters have a much higher margin than the one we are building. Eventually we expect all the clusters to reach some similar margin. We have to add the next step, and that's what we talked about the next phase. Of course, there'll be a fourth phase and then we expect to be even more profitable and maybe even grow faster. It should be that in this phase, we are with this Roadmap 2021 bringing up the other clusters up to speed, and then comes next step. I think that we have a plan for continuous growth and profitable growth. Okay. In the Other markets segment, you talk a bit about the expansion programs currently running and how that affected profitability. Is it possible to quantify this effect? What would sort of a normalized margin be here, if you hadn't had the expansion programs running? You ask delicate questions, Adrian. I don't know if Lars would like to comment on that. If you could give a rough, obviously, you can't say the exact figure, but if you could give an indication, that would be great. I can give some range. We have talked about the Swedish cluster, which was the first one. We're well above 10%. That cluster saw the quickest drops during the pandemic. We had a huge drop in sales, and then we announced that we were down to 6%. So maybe this is some scope or margin for mature clusters. Lars, would you help me to clarify this further? No. What we have said is that a cluster is based in what we call Other markets or in the Main market should not have that big of an effect in the long-term profitability. We know our financial goal is 6% in the group as total on the EBIT level. Meaning that that is what the combination should be able to achieve at least. I think if that gives you any sort of information. That we really don't see that in the long term, that the Other markets should be less profitable than the Main market. This EBIT margin of 6% is inclusive of all the activities we do. We have the Business development segment also. We should fall down, let's say, to 6% EBIT, meaning that the customer side higher margin, of course. Yeah. Okay. That clears it up. I think I'm happy with my questions, and thank you for providing answers. Thank you. You're welcome. Thank you. Our next question comes from the line of Fredrik Nilsson of Redeye. Please go ahead. Your line is open. Hello, everyone. Regarding the strong organic sales growth in the quarter, could you give us some rough estimations about how much do you believe is related to a pick up from the depressed levels in Q4 in 2020 due to COVID, and how much is related to underlying increase in demand due to backsourcing and such things as you mentioned? Yes. Hi, Fredrik. Thank you for being on the call. I don't know, Lars, would you like to dig into that, or should we? Again, we will not be able to give numbers, more words about this. I can fill in later on. Again, the politician answer is the combination. We do see a strong growth of our existing customers. We do see a very strong order intake from new customers, and on top of that, we have a backlog we are fighting with, where we, as said, have the challenges both with COVID and the material shortages. It is that combination. If you can apply the long-term perspective, it is clear that maybe even we were a bit ahead of our time with our business concept. We created HANZA in order to have an alternative to a contract manufacturer where there are a number of advantages to have a complete manufacturing close to the market. Then we were mainly thinking about them. There is a cost reduction and the flexibility increase and helping the environment with less and shorter transports. Now the pandemic added a new argument, and that is on how fragile the complex supply chains are. I think we'll see a new landscape, and HANZA will be an important part of that. Okay. Also the organic growth was strong in both segments. However, the shortages are negatively affecting the margin in Other Markets, but not in Main Markets. I know you mentioned the expansions as a reason as well, but could you tell us why there's a difference between Other Markets and Main Markets regarding the shortages, despite both having very strong organic sales growth? I don't think we highlighted shortages specifically for the Other Markets. What we have said is that they are later out in this our program, Roadmap 2021, and we have some capacity issues. That's why we are also doing this. Next month we will open a new production hall in Estonia and all these other activities I talked about, new hall in China and additional space in Central Europe. All that is needed in order to keep up the organic growth. I think we haven't really pointed out where the component shortages is a more general problem, but it's not a problem; it's the Other Markets were later into our development program than the Main Markets. That's. They're in the midst of that right now, and that's why we've not been able to in full do all deliveries. Okay. Could you give us any rough number regarding when you expect the expansions in Other Markets to be finished? Are we talking like one year or two years, or any rough number? I think we've been clear on that on the press releases that we are talking the first half year this year. Central Europe we said would be Q2 this year. Baltics we said it will come soon, as even next month we'll have a ceremony for that. All in all, this should be done probably in the beginning of this year. Okay. Yeah, I understand that the expansions in itself are finished at that point, but I suppose there also might be some time before you can go at full production run rate in those expanded factories. Am I right there or would you see that quite immediately? Yes, you're right. Of course, there is always some initial challenges that you need to handle. We called it Roadmap 2021, and now we did the last part in January 2022 with the one with Central Europe expansion. All in all, we are about one year delayed with phase number 3. Actually, we were supposed to launch phase number 4 in 2022, but we couldn't because of the pandemic. Of course there will be activities all year regarding this, but the majority will happen in the beginning of this year. Okay. I see. One last question from me. Could you comment on the shortages on materials and components? Is it getting worse or do you see any improvement? I can talk for hours about this, Fredrik. It's now you see the components, now you don't. It's we expect constantly that it would improve, but then there is some setback. That's out of our scope really to tell how this will be handled in the future. I don't know, Lars, do we have anything more to say about that? No. I think that is. Yeah, no. Okay. I see. That was all from me. Thank you. Thank you. Thank you. As we have one further question in the queue, just to remind participants, if you do wish to ask a question, please dial zero one on your telephone keypads now. That next question is from the line of Niklas Elmhammer of Carlsquare. Please go ahead. Your line is open. Hi. Good morning, and thank you. Most of my questions have been answered I guess, but I was wondering a little bit about the impressive growth, organic growth in the quarter. Do you see Germany back on track, sort of in the restored operations? Or is there still room to improve? There's a lot of room to improve, and I think we stated that. Yes, we stated that in the report that in the beginning, when we did the acquisition in Germany, we had a provision to do the restructuring, and then we realized that it will be more over time. It will not be one time cost in the Q4, but rather something that will go when we go forward. I think that Germany has a huge market. There are so many opportunities there. We've just scratched the surface, and our aim now is to substantially increase the capacity in Germany for Germany, but also in our other sites. It's good that we have this capacity increase because, as I said also earlier, we already see orders to several clusters from Germany. To answer your question, yes, Germany, there will be much happening this year, and we expect it to be a positive development. Okay. Thank you. Maybe if you, I don't know if you have mentioned before, but what kind of capacity expansion are you seeing from the expansions in Other markets? If you have any sort of ballpark guidance? Lars, can you help me with that? No, I mean. No. What we see is that we see a continuously strong market in both Other Markets and in the Main Markets. As we say, we expect to continue to grow and with good or strong profitability. We sort of don't put out Other Markets specifically or Main Markets specifically. We are quite okay with the market development right now, and the order backlog is, and the order status is looking good. Okay. Just a question regarding the gross margins. They are down compared to last year. Maybe it's difficult to judge just from a single quarter, but is it more challenging to transfer material costs to customers, do you think? No, I think that's the part of our business model is that, our customers pay for the material and the components. Could be lagging behind a bit sometimes in both directions. Over time, it's clear that material should be paid by our customers, no more, no less. Lars Åkerblom, would you comment on this? No, I think you are clear enough on that. What we see is that the material prices has increased, and then that has led to slightly higher sales and higher value in inventories. Otherwise, we are buying for the customers and just sort of pushing that out on the customers. Temporarily it can have a positive or negative effect. In the long term, it's not no big thing. Okay. Thank you. That's a, it's a good clarification. Thank you. Thank you, Niklas. Thank you. As there are no further questions in the queue at this time, I'll hand back to our speakers for the closing comments. Okay. Thank you all for listening to this call, and I hope you will keep following our company. We do have, as I said in the beginning, a quite exciting future. Many more things to happen. Do follow us, and we will talk to you soon. Thank you and bye.