Welcome to the HEXPOL presentation of the Q3 results. It's Georg Brunstam and myself, Peter Rosén here. We've had some issues with the communication suppliers, so the quarterly report has not been published yet, but it's expected to be so within a couple of minutes. We will hold this call, we'll take this call as planned, but we will wait until we can see that the report has been published and is available to everybody else, so we don't make any formal mistakes in this. If I can just ask you to hold on, and we expect it to be done within some 10 minutes, and then we will come back. Thanks. [Break] Welcome to the HEXPOL audiocast and teleconference Q3 2021. Throughout the call, all participants will be in listen-only mode, and afterwards, there'll be a question and answer session. Today, I am pleased to present CEO Georg Brunstam and CFO Peter Rosén. Please begin your meeting. Thank you. Daryl. Welcome to the presentation of the Q3 report for this year. We do apologize for both that you had to wait for the call to start, but also that the report was late. That was not due to anything that we did, but there were some technical issues on the side of the communications partner, which led to the report being late. It has now been published, and the presentation for the quarterly results has also been uploaded, so you should have access to both the report and the presentation. The agenda for today is the same as before. We'll start with a business update, then go through the financials and the focus areas for the year, and then we'll finish with the Q&A session. With that being said, I hand over to Georg, who will take you through the first part of the agenda of today. Thanks a lot, Peter. Sorry about the 10-minute late starting. It's not within our control. If I start with page four, strong sales in a challenging market situation. We actually think we had a very good quarter and a good result given the circumstances. I'm sure you're all aware of the circumstances in automotive. They are extremely turbulent and tough and unpredictable right now. For us, the quarter has been very strong in all segments except for the automotive, where it's been very turbulent. I am actually pretty proud how our organization has handled the very tricky circumstances in the quarter. We are delivering quite a strong result, not as strong as we would have done if the automotive supply chain has been in the normal mode. We are, of course, hurt by the frequent start and stop and mainly stop of production of light vehicles in the quarter. That is, of course, affecting us both from an efficiency point of view and a volume point of view. We also have in the quarter continued price increases on raw materials. We also have major global supply issues on our side. Of course, you know that the light vehicle OEMs have major supply chain issues, and I think they are the biggest in the semiconductor sector. We are increasing our sales by 23%, of which 90% is organic sales growth, which is a strong and solid sales increase. The result is actually extremely good if we take in the extraordinary income from the insurance settlement. Excluding that, we increased our operating profit with 14% to SEK 677. We are losing a bit on the gross margin. We're absolutely keeping our costs in the right range. It's pressure on the gross margin from increased raw materials. We have a business model where we do pass on the increases to our customer, at least euro cent by euro cent or SEK by SEK. That is, of course, mathematically hurting the gross margin percentage. We also have some major issues on raw materials, which means that we have to change planning and we have to run sometimes with a second-best or third-best recipe. On top of that, we have done two good acquisitions, which in the quarter are not up to pace yet. They have a less sufficient price adjusting model than we have. That will take some time, but not hugely long to get the pricing model in place there. Right now it's affecting our group EBIT in the quarter by 0.6%. I think we have been at the 17.1% operating margin without that dilution. They are, of course, having a lower margin than us to start with, but you know that from earlier communication. Of course, as I said, the cost side is continued tight, and we do keep the lower cost base. If you turn page, we are strongly executing on our updated strategy with the increased customer focus. We see it in both business areas and then strong sales in all segments except for the automotive, where we have disturbances, as I said, on the export component side. On the HEXPOL Engineered side, we actually are very strong in both sales growth and EBIT growth. Good volume growth on top of a lower cost base. Here, of course, we are not exposed to the automotive segment in any big way, actually in a very small way. On the M&A, continued high focus and where we see, hopefully, that we have more opportunities going forward than we have had in the past. In the past, we've done two good and major acquisitions in our core business area, and then we just have to do some integration work on that. If you turn to page six, this is a slide you have seen before. I just want to remind that we have a very strong culture of delivering, and in these very turbulent circumstances, that is a huge asset. We have experienced people. We are a decentralized organization, and people have been in these difficult planning situations and pricing situations before. Maybe not always as severe as today. People are handling it in a very good way. I'm actually confident that we are improving our market positions in a good way in these turbulent times. If we then turn to page seven and look at the sales development in some more detail, we can see that despite the challenges with automotive parts closing production during the latter part of the quarter, we delivered strong organic sales growth of 19% compared to last year. The acquisitions of IQON and UNICA added another 6% of sales. Excluding negative FX effects, we saw growth of 25% compared to last year, and it also represents an organic growth compared to the previous quarter this year. The sales growth was then partly offset by negative FX effect of SEK 55 million, resulting in the reported sales of SEK 4.1 billion. The negative FX effects were, as also earlier during the year, primarily related to the U.S. dollar. Looking at the regional development, we saw strong sales growth in all regions. lthough highest in Europe, followed by the Americas and Asia. We still see that Europe is coming back somewhat faster than the Americas. If we then turn to page nine and look at the financial overview, as Georg mentioned, we delivered an operating profit of SEK 1.1 billion, including the insurance settlement related to the fire that we had in Jonesboro in the U.S. in the beginning of this year. Excluding the one-time items in the quarter, we delivered an adjusted operating profit of SEK 677 million, which corresponds to an increase of 14% compared to the year before. The margin came in at 16.5%, negatively affected by the acquisitions that Georg mentioned, that currently run with a lower margin level than the other HEXPOL companies, and also the challenges related to raw material shortages and the price increases that we see continue. Our OPEX remained low at some SEK 182 million in the quarter, and the equity asset ratio remains very strong at 60%. If we then turn to page 10 and look at the highlights, we see that all in all, we saw an increase of sales to SEK 4.1 billion with an increase of 23%, while the operating profit increased with 14% to SEK 677, while we saw a margin decrease down to 16.5% explained by the acquisitions and the raw material challenges that we've seen during the quarter. A different view on the similar topic, looking at the drivers on page 11. Look at the drivers of the increased profit level of 14%. We see the increased sales and the lower OPEX, partly offset by the lower gross margin. As mentioned, lower gross margin is driven partly by the acquisitions and also the raw material challenges that we've seen during the quarter. If we hand over to looking at the two segments. Georg? Yes. I will try to comment the quarter in the two business areas. On HEXPOL Compounding, it's very much as I said before, that strong organic sales growth and good sales to all segments except for the automotive segment, and increase in operating profit and some dilution of the margin from the acquisitions and the raw material challenges. All in all, a strong quarter in the business area Compounding. If you turn to page 13, a very strong quarter in HEXPOL Engineered Products with a big sales increase and a huge performance in EBIT. We are getting volume growth on top of a lowered cost base. That gives a very good leverage. A very good quarter for Engineered Products. If we then move over, look on the balance sheet side and working capital on page 14, we do see an increase year-over-year, both in absolute terms and relative terms. This is primarily driven by the increase of inventory that we also saw in the previous quarter. It's due to that the raw material shortages and risk thereof, we've decided to purchase what we can in order to secure all orders that we receive from customers. Once we come back to more normal raw material situation, this will quickly go down and come back to historic levels. We don't see any changes in the underlying payment terms when it comes to suppliers or customers. We do expect to see working capital coming down quickly once the raw material situation comes back to more normal levels. If we then turn and look at page 15 and we look at the cash flow, we see that the strong EBIT is offset by temporarily higher working capital, i.e., the inventory level. The level of investment is still below depreciation. The accrual that we've done for the insurance settlement of SEK 544 million, that was paid in October as planned. The cash has been received here by HEXPOL after the quarter closed. If we move over to page 16 and look at the net debt situation, it continues to improve despite the Llymphoma unit acquisitions this year and the somewhat lower cash flow here in the quarter. The net debt to EBITDA also continues to improve, both compared to last year and previous quarter, and now it's at 0.69. We continue to strengthen an already strong financial position also after this quarter. I sum up the quarter, I would like to say once again that it's a good quarter for us. Very good sales development and a good result, although a little bit hampered on the margin by the raw materials impact mathematically. We are having a pricing and a business model where we do compensate, so there is no change in that. The quarter is of course fantastic with the insurance settlement money, and of course the properties is dramatically good, and that is of course helping an even earlier strong balance sheet. We are seeing a turbulent situation in the quarter from the automotive sector. If we then turn page to going forward and focus for 2021, of course it's the continued health and safety focus, and we are for sure on our toes, and we are flexible in the HEXPOL organization to manage the volatility in demand. That is especially with a focus on handling the volatility in the light vehicle production and also the disturbances in global supply chains and raw material prices. We have high flexibility, and we have a proven business model to handle that. We also continue to evaluate our future manufacturing footprint. Of course, our M&A focus is intact and strong, and now with an even further stronger balance sheet, we have even more possibilities. With that, I think we leave it open for Q&A. Thank you. If you wish to ask a question, please dial zero one on your telephone keypads, now, to enter the queue, once your name has been announced, you can ask a question. If you find it's answered before it's your turn speak. You can dial zero two to cancel. Our first question comes from the line of Douglas Lindahl of Kepler Cheuvreux. Please go ahead. Your line is open. Hello, gentlemen. Hopefully you can hear me. Yes. Yeah. Thanks for taking my questions. I understand it's a difficult market environment for you right now, and it seems as if you are building inventory. Is that part of how you're handling the situation right now? My first question. Absolutely correct. It's coming up to Peter and my desk, of course, we are supporting the organization in securing whatever we can secure for the future and then for coming orders. I mean, we are keen to service the customers, and we have a balance sheet to support that. We think it's temporarily a very good action to take. Just on the market situation, how would you say that things have evolved throughout the quarter? I understand it's been sort of a stop and go, but is there any sort of trend you can extrapolate throughout the quarter? It's very difficult. First of all, it's a little bit of a vacation quarter in Europe. In July in the north and in August in the south of Europe. Overall, we see more disturbances and stop and go, and stop towards the end of the quarter. And that's fair in North America as well, I guess? Yes, that's valid in the north. That also, I think, it goes in line with the announcement you and we all read about the OEM's stoppages. Yeah. In the other segments, we don't see that. Yeah. The report came out a bit late, but just briefly looking at it seems like your cost base is still at very impressive levels, I would say. Is there a risk that this is as good as it can get, and now with your recent acquisitions and sort of post-COVID world costs will increase going forward? I think we can come back to what we said also previous quarter, that both Q2 and Q3, we worked very hard to push the costs down. Partly also because we've seen these challenges, and we feel the need to compensate. Going forward, as mentioned before, I think one can expect us to come up a bit because it's difficult to keep that kind of cost pressure in the long run. Again, I think before we mentioned that around or just below SEK 200 for a quarter is a fully reasonable level. We don't see any reason to change that picture. Okay. Do you have one final question for me then? You already touched upon it, but your recent acquisitions, is it possible to give a bit more comment on how the integration work has been progressing with those and any sort of sight of increased profitability levels for them already? Any comments on that would be good. Yeah. The integration work is going as planned, although we acquired the latter one, UNICA, in the middle of the holiday. Of course, August is closed in Spain, so that month hasn't been the best for the integration work, of course. The integration work, I'm not worried about that. I mean, we know the company, we know the products, we know the people, and the synergies are there. They will come. It takes a little bit longer, and it's counteracted by a little bit of a less efficient pricing model than we have, which takes a little bit time to correct or adjust. Of course, the automotive exposure is reasonably high as well with OEM stoppages affecting them. The acquisitions are good. There's nothing coming up which we don't like and didn't know, except for a little bit slower pricing adjustment model. So I guess in this market environment where pricing adjustment has been crucial, they are potentially underperforming relative to where they should be on a normalized basis. Is that? You are 100% right in that. We are correcting that, but it will take some time. Yeah. Okay. Thank you very much. Thank you. Our next question comes from the line of Johan Dahl of Danske Bank. Please go ahead, your line is open. Yeah. Hi, Georg and Peter. Just a few questions. Firstly, on volumes, I was wondering if you could just help me get my arms around the volumes that you're actually achieving in this quarter. It seems as if organic volume growth, if we strip out the raw material inflation, is it high or low single digit positive, would you say? And I was wondering— It's mid to low single digit. Mid to low. Got you. That's very interesting. I wonder, you know, what's your visibility on these volumes? We had the light vehicle production was down 20, I think, in the quarter. It just seems fairly substantial. In your judgment, what is the opportunity to actually keep these volumes if you look one, two years out? Oh, I'm not sure I catch you 100%. Please comment if I'm answering wrong. If I got you right, we are very confident that the volumes are there, and we haven't lost any volumes. We are gaining volumes in light vehicle. Do you think, Georg, it is sticky volumes, this new contract that you signed? You seem to be taking share. Do you think you will actually— Yeah. I think, yes. Absolutely. Yeah. I'm confident in that. To what extent do you think this is volumes, insourced volumes that are returning to the market, i.e., which would impact everyone positively? To what extent is it your share gains? No, I think that one is constant. There's no change in those behaviors. Okay. On the, you know, you talked a bit about your working capital and inventory buildup. At the same time, you know, you talk about the pressure on margins from having to substitute materials, et cetera. I was wondering, do you manage to profit from building inventories in this rising raw material cost market, which is offset by the complexity in switching supplies, et cetera? I'm basically looking at those two gross numbers or is it— 100% correct. Okay. It's positives and negatives in the same thing. Okay. You are correct. I got you right that the net you think is negative or? The net of that, the net must be positive. We haven't calculated in that way, but I've been thinking about it. The net must be positive. We are getting the orders out, we're getting the product made. Yeah. The thing that is never shown in the financials is, of course, if we were not able to deliver on orders, what would that cost be? One of the main drivers of actually buying as much raw material is to make sure that we can deliver on the orders. That is one of the reasons why we believe we're taking market share in the markets, because we can deliver. Now, I was thinking more in an apples-to-apples scenario on flat volume. If you boosted profitability by your ability to build inventory, and you also have cost, obviously, for the complexity in switching? If volumes are equal, then it's negative. Okay, got you. Yeah. We are doing it in order to avoid volume drop. For sure. Thanks. We are very business oriented here, and we have a balance sheet to support it, and it's a short term. Peter and I, business people are coming to us with it, and then it's a 20-second answer. Of course, we support the business, and we are long term, of course. Thank you. Once again, if there are any further questions, please dial zero one on your telephone keypads now. And we have a third question from Karl Bokvist of ABG Sundal Collier. Please go ahead. Your line is open. Yes. Thank you. Hello, gentlemen. The first question is on, we're talking a lot about the automotive side and the issues within that space for many participants. Just be curious on the other end markets and perhaps if you could give some comments on, let's just say, the other top four end markets for you, what you're seeing there, and both in terms of demand, but also if you've encountered similar challenges in those areas. In all other sectors, good demand and good volume for us, and that's where we are, of course, taking share when we can get raw materials. There's good demand. Customers are calling often and wanting volumes from us. Good situation in all the other segments. All right. Without any exceptions. Particularly good in wire and cable, actually. Okay. Is it strictly related to automotive for you when it comes to production disturbances and difficulties in mixing and uneven production rates and everything like that? From the raw material situation, it's of course all over. That is affecting the other segment as well, but the volume drop and the frequent change of planning is from automotive. Understood. What's the customer feedback that you hear from your customers and from the OEMs when it comes to price acceptance and the OEMs' otherwise regular tendency to adjust prices downwards sort of every year? I mean, c ould we see an exception also next year because of the rapid increases in input costs? We see and we hear and we feel strong resistance on our pricing increases. That doesn't change our pricing model. For us, it's a must. We have our pricing model. We always had it, and we are sticking to it. We are firm. We are humble. We are correct, but at the end of the day, we are firm. It's of course very tricky for the supply chain with these rapid changes. Just my final one is you've mentioned on several occasions now how you've been able to gain market share, is your belief. Also now in recent quarters, and especially when it's a bit challenging again, what have you seen in terms of customers going towards or from single sourcing, either choosing you as a single supplier or choosing to have you as a dual source on top of their existing one, or you in turn seeing competition from another participant who dual sources? Yeah. What we see is that, and that's the reason we believe we have taken share, we see that we are servicing our existing core customers, and we do help with some extra volumes as well. Also, we are occasionally helping some others as well. Although the priority is the present customers. All right. Thank you. Well, thank you. Thank you. We have a follow-up from Johan Dahl of Danske Bank. Please go ahead. Your line is open. Thanks. Can you just update us on energy prices, how that impacted in the quarter, and, you know, where we were at the end of the quarter compared to the beginning of the quarter, and if that's a relevant factor at all for you guys looking into next year? Well, that's a very good question. It's a moving target, isn't it? It actually only moves in one direction, of course. It's upwards. I mean, we are a global company. We have operations in so many countries, and the situation is different from country to country, and we also have different contracts from country to country. The impact is there already. Of course, the big energy increases are not everywhere for us and not in every country, and we have contractual situations in some countries. There's only one direction the energy costs are increasing. There's no huge impact in the quarter from it. I guess this affects all suppliers in your industry, I guess. Oh, absolutely. Do you think, difficult to say, of course, but I was just wondering whether that's already up for discussions in your price negotiations or? Oh, absolutely. I think we are including that in our pricing model for sure. Where would you— Either as a price or an energy surcharge. Got you. Where do you think you've been most successful in gaining market share? What customer segments do you think, primarily? No, I think it's really the same customer distribution as we had because we've been supporting the present customers in the biggest way we can. That's where I think we have gained because we have been better in servicing them than the second-best supplier. Okay, thanks. Yeah. All right. We are coming to the end, I guess. Yeah. Currently, we have no further questions in the queue. Thanks a lot. Thanks a lot, everybody, and keep in touch. Thank you very much.