Ladies and gentlemen, welcome to the Nibe Q3 2022 results presentation. Throughout the call, all participants will be in a listen-only mode, and afterwards there will be a Q&A session. Today, I'm pleased to present Gerteric Lindquist, CEO, and Hans Backman, CFO. Please begin your meeting. Good morning, everyone. It's Gerteric here. Hans as well. The old couple, as we call them. At least one is old. Anyway, thank you very much for calling in. We're gonna go through a number of slides as we typically do regarding the business environment and what we see in the market and of course how we behave ourselves. The headline is, of course, that it's a continuous strong demand within most market segments. Perhaps the most positive thing is that we see signs of improvement in the supply chain. We've been waiting for that for a long time. It doesn't mean that everything is peachy keen, but there's certainly some positive signs, and we also dare to pronounce that quite clearly. Of course, as before, the demand is driven predominantly by, of course, the sustainability idea and to get rid of gas and oil as before, but that's even more pronounced now with the Russian invasion of of Ukraine. We of course increasing our capacity as well, but that should not be viewed as we are running short of capacity in the short term. We have a good capacity right now and for the coming 24 months. Of course when you start investment, then you need a perspective of at least some 24, 30 months. That's how that should be viewed. Then of course, as you know, we had some one-time effects when we closed Russia. We had a negative of some SEK 114 million, and then we sold the majority of Schulthess, which meant that we got a positive gain of some SEK 230 million or 232 million, and then the one-off net is SEK 118 million. The growth we say is good. I mean, it's still hindered by, of course, the shortage of components, but we see some very substantial signs of improvement there. We have acquired a few companies during the year, predominantly the three ones we've done. There have been some smaller add-ons as well, but Argoclima in Italy on the climate solution side, where we feel we now have a good platform for heat pump expansion and Pacific Energy, another one up in the Pacific Northwest of Canada. We have ELMESS-Klöpper in Germany, which we think is an important platform for Element on the industrial side in Germany, where we haven't been, as a matter of fact, positioned before. Of course, there are other negotiations ongoing, and now we're almost back to normal again. We can't blame the COVID for not traveling anymore. That's a release in itself. If we just take a quick look at the figures. There's some SEK 28 billion out there, and the rolling one is approaching SEK 37 billion, which is substantial growth. Of course, it's a mixture of acquired, and here we have some figures hidden as well, of course, that we divested Schulthess. Hans gonna come back to the figures there, how much dilution we have there. The operating margin is 14% compared to 14.7%. If we would exclude the one-off effect, it would rather be that 13.6%. There we see that we are still lagging on the operating margin side. Of course, we like to come up to at least last year's, but it's also important to remember that our history prior to the COVID was rather below 13%. We've taken a step upwards since 2020 we can say. The quote itself, it's coming close to the SEK 10 billion. We just missed with a SEK 1 million, which is almost ironically. The quote as such continues to grow, of course. We're close to 27%-28%. The operating margin is now at 14.7%, still lagging compared to last year, and that's where we're eagerly trying to improve the coming months and quarters naturally. If we look at the graphs that we typically illustrate with, it's a steady growth and there is no decline, but rather an uptick when it comes to sales. Of course we have the currency and we have the price increases there. We just, you know, have to follow suit in a way. If we are hit by higher prices, of course, we have to try to compensate ourselves for that. If we look at the graphs for the profit, then we see that there was a little bit of a downturn, 2021 at the end there when we first started to struggle with the price increases hitting us and not being able to fully compensate ourselves. Now we are back on the right track again. If you look at the climate solutions, of course, that is very, very strong demand, and we have not been able to deliver, you know, satisfactorily in the past. We see now the possibility of coming back due to improved deliveries from our subcontractors. We saw that during the last part of the quarter three, and we hope now that we will be able to see that continue to see that improvement. I mean, it won't be cured over one month, but we see it's a steady improvement. There, of course, again, investments in capacity, not for the immediate future, but for the longer run, where we see a market that's gonna grow since we're gonna change from oil and gas. It's a change that's gonna last for a long time due to our judgments. Due to a better leverage on prices and also now that we will be able to deliver better as the months and quarters are coming, we feel that the operating margin should improve, or we should close the gap to the previous period. There again, we see the results of the climate solution. The first three quarters, so there is a gap as we see. It's healthy growth, and that's the gap in operating margin we would like to close as soon as possible. Looking quickly at stoves, it's a tremendous demand, and that's of course a reflection of not only our assortment, but also the energy prices and the shortages of other fuel at reasonable price levels. Here, it's more comes in as it's more than a secondary source of heating or in some instances, even the first source of heating. Here as well, where we have also issues being able to deliver. The shortages of components and material has been less pronounced both on stoves and when it come to elements. That's why they are a little bit of ahead, although we haven't met the margin fully yet, but we are a little bit further ahead when it comes to closing that gap. There's also an ambitious investment program here to cater for the demand to come in the longer perspective. Here we see what I just mentioned, that the operating margin is like 12.1% versus the 12.6% previous period last year. Which is an indication that they have had relatively seen lesser issues lately delivering. But of course, the delivery shortages are not over, but we're seeing a steady improvement from that side. Elements, there we continue to see strong demand. Of course, that some sectors have softened demand now, like the white goods, for instance. On the other hand, there are other sectors that are growing phenomenally, like HVAC and like, the semiconductor part. Here as well, we are investing quite heavily. The operating margin, which is very pleasing to see that, the good sales development. Here we also, of course, notice the improvement in supply. Good price discipline and good cost control has taken us up to an operating margin that's better than last year. I guess that's an illustration of, as I just said, discipline, but also the potential we have once we can deliver without any major hindrances, as far as supply chain is concerned. Just a few pie charts before we hand over the horns. Nothing dramatic has happened here really. Climate is representing some 63% in sales, and Element 27, and Stoves respectively, 10%. When we come to the operating profit, due to the higher margin, of course, Climate Solutions is up there around the 70%, where we've been for several years now. The distribution of sales, it's pretty much what we've seen before. Europe and the Nordics, of course, relatively seen, have taken a slightly bigger chunk compared to some years back. Other than that, the Nordics are stable and Europe is growing quite considerably now, as we all know. North America is also picking up. That's a pretty healthy distribution, we believe, of course. Others could be larger than 6%, meaning predominantly Asia, and there is only Element that's active, we can say, to any great degree. I guess that's pretty much what I like to mention as a start. I'm sure there are gonna be several questions, and we'd like to answer those. I'd just like to mention that we have an interview here with a magazine and with a TV channel around 12:00 P.M. We'd like to finish this interview around 11:55 A.M. or 11:57 A.M. at latest. Okay. Please, Hans Backman, go ahead. All right. Thank you, Eric. I got the message. I'll be quick. Some repetition, but also a little bit more granularity here on the individual business areas, and then a few comments on the balance sheet. I mean, looking now into Climate Solutions again, obviously demand has been very strong, and increasingly also in North America, which is quite pleasing to see. Our challenge has really been on the supply chain side, as Eric mentioned. I mean, we have the capacity, we have the people, we have the factories, we have the product ranges. It's been a matter of getting the components on board to deliver even more. Nevertheless, sales grew by almost 25% or some SEK 3.6 billion. In that portion, we do have a divestment, as Gerteric indicated, and that's the portion of Schulthess that left the group, which is some 2%. The underlying growth there and organic growth has been very healthy. Of course, helped by currency, as for all Swedish companies these days, I would say, and also price increases that have kicked in. It's the organic growth that has driven the performance. It's on the gross margin where you see that we're not yet back on track. It's at 32.9% as opposed to 35.8% of last year. That's where the challenges really end up in the efficiency of the factories and, of course, getting products on board to a reasonable price. Nevertheless, operating profit came in at SEK 2.8 billion, up by, you know, some SEK 450 million. If we take out the one-off effect, it's plus over SEK 300 million, and we landed in then a margin of 15.5% or just below 15% if we exclude the one-off effects. It's a solid result. This also goes for the quarter as such, where growth was about the same, 23%, 23.4%. The divested portion was a little bit larger, around 5.5% following the divestment of the 26% of Schulthess. An underlying good growth there. A gross margin that closed in a little bit on the previous year coming above 33%, but where we still have homework to do, so to speak. An operating profit up with some 115 million landing in just about 16%. Looking at the geographical distribution of sales, it's North America that has picked up slightly now being at 21% as opposed to 18% of last year, taking shares, so to speak, both from the Nordic countries and Europe. A picture that is very similar to the previous years. It's nice to see North America growing again. Moving into stoves. As Gerteric mentioned, we've seen a very good demand ever since February 24, when Russia invaded Ukraine. Following that, people are not just looking for a stove for decorative purposes, you can say, but also as a mean to save energy if they have access to wood, and also safety equipment, something that always works offline, so to speak. For the first nine months, we grew with 29%, up by some SEK 625 million. Of course, there is some currency in there, and a portion of price increases, although we're lagging a little bit more behind here, so that is still to come. A very good underlying growth. Also here, a little bit of a struggle with the supply chain leading to a gross margin that has not really or quite met the level of last year. An operating profit, again, landing in at SEK 335 million, up from 270, and an operating margin, just about, 12%. The individual quarter was even stronger. It was a phenomenal increase, you can say, of almost 40%, some SEK 300 million compared to last year. A portion is, of course, acquired coming in through the latest acquisition we made, but really a strong demand there. People really keen on getting wood burning stoves on board, you can say. A gross margin, not quite at the last year's level for the reason I just mentioned, but just below 36%. Then an operating margin that we improved by some 34%, landing in at 13.2%. In terms of the geographical distribution of sales for stoves, it's exactly the same as last year, actually. Moving on to Element. Element has continued to develop quite favorably, especially on the HVAC side, semiconductor side. As you know, we're very well represented throughout the world here through a number of segments. It's mainly the white goods side that has slowed down. The automotive is still a little bit at crossroads. We were able, all in all, to grow sales with some 28.7% or close to SEK 1.8 billion, actually. Of course, there is a currency impact here as well, slightly more than in the other areas due to the exposure to North America, but it's still the underlying organic growth that has driven the business here, also with some price increases on top. Also here we've seen some supply chain issues having led to a slightly lower margin, although the negative effect has not been as high as in Climate Solutions. We landed that in at 22.7% as opposed to 23.2%. The operating profit came in at some SEK 220 million above last year, and an operating margin of 10.9%, meaning that we've also been able to hold our admin costs very well under control. The quarter was quite good as well, thanks to a good organic growth. We increased it by some 33.7% or up SEK 700 million compared to last year. Here we've been able to close in the gap a little bit on the gross margin. It's only at 0.3% as a difference. With the good cost control, the operating profit increased by 52%, landing in an operating margin at 11.4%. In terms of geographical sales, as most of you know, this is our most global business area. There have been some movements here. North America also here picking up, making up a slightly larger portion of the cake, Europe being the same, and Nordic being slightly smaller than before. Quick look at the balance sheet. The total assets and total turnovers is now at SEK 52 billion. There are not so many movements here, really. What might be sticking out, and which we will come back to slightly, is that the financial current assets are down by SEK 1 million, and that's very much a result of us having built inventory, especially raw material inventory or component inventory, to meet the demand that is out there. We've been forced, in a way, to source whatever we can get hold of, and that, of course, reduces then the cash position. Due to the performance of the group, I mean, equity has increased up by some SEK 6.5 billion. Of course, the liabilities have also increased, which means that we've been able to get some compensation through our suppliers, if you like, on that side. If we take a look at the cash flow analysis, that's where you see the effect of us building inventory. I mean, we have generated more cash flow from the operating activities, but with the change in working capital of some SEK -2.3 billion, of course, money is being tied up in there. We're also in the midst of our investment programs to meet the future demands, which also then has an effect. The net operating cash flow from the operations after change in working capital and after the investments landed at some SEK 220 million, compared to SEK 1.7 billion of last year. But we know where the money is, so to speak. Looking at some key figures before we open up for Q&A as well. We're still solid, if you like. I mean, we have a good portion of cash. The 4.4 that you see there on the page, down by a billion or, yeah, SEK 1 billion Swedish, which is the result of the inventory buildup. But interest-bearing liabilities in relation to equity has improved. Net debt is stable around one and of course, a very solid equity assets ratio now above 50%. It is the working capital that I have mentioned now several times that sticks out where we are now at a level of 23%, excluding cash, up from the 16%. Sixteen is really our historical level, you can say, where we usually are. Being this solid in a way and not yet having been able to put that money into work, it brings down our return on capital employed slightly. We have a similar effect on the return on equity given the equity assets ratio we have. All in all, I would say a solid balance sheet for further growth and further expansions. I don't know if you want to add anything, Gerteric, before we open up? After that, it wouldn't be possible to add anything. Try to leave some room here now for questions so that we can finish on time. Please do go ahead with questions now. Thank you. Ladies and gentlemen, if you do have a question for the speakers, please press zero one on your telephone keypad. Once again, that is zero one on your telephone keypad to register for any questions. Our first question comes from the line of Carl Deijenberg from Carnegie. Please go ahead. Your line is now open. Thank you, operator. Good morning, yet again, Hans, the iconic duo here. A couple of questions from my side. You have a continued positive message on the supply chain, and looking from Q2, it seems to be improving. Could you elaborate whether we're seeing specific components easing on specific components, or is there also a general improvement in the capacity to deliver on all components? I mean the capacity to deliver, that's 100%. One of the reasons for the lower gross margin is, of course, that we have an overcapacity staff-wise. If you get the products in, then you have to be able to assemble and produce as quickly as possible. That's one, of course, obstacle in the past. We don't like to name any specific sub-suppliers that we've had difficulties with. We can just say that the one overall difficulty has been, of course, the semiconductor, you know, availability. Because not only ourselves in our control boards, but in many of our suppliers' components, there are semi-crucial semiconductor components. We see that is improving. Of course, the reason for that, or the reasons for that, we can only assume that there are some sectors that are, you know, not as prosperous as before, let's say the white goods sector, for instance. That is, of course, a possibility for other sectors to grow. Also the production capacity from several of our, you know, sub-suppliers, they had increased. They did not expect the quick growth that we forecasted, or they thought that they would be able to meet it quicker. Now, of course, we can say that the last five or six quarters we've been suggesting that they should invest and they should increase the capacity, and we see that. I think that that's as specific as we can be. Okay, perfect. Thank you very much for the color there. Just following up on the improving supply chain situation, you were mentioning lead times of up to 2 and 3 quarters previously. With the improvement in the supply chain that you're seeing now, is it too early to speak of improved delivery times or will that happen soon as well as supply chain constraints ease? Well, I don't think we're gonna see, you know, like as of December first, as of January twenty-second, everything gonna be very happy or totally improved. I think that we see a continuous improvement. As I said, when we saw that during the latter course of quarter three, and we continue to see, that doesn't mean that we are totally satisfied. I think it's appropriate to send a signal to you as analysts and to the market that it's not as bleak as it was before. We suggest also in the report that they're gonna take some time to restore everything back to the ordinary course. I don't think that we're gonna stick our neck, say, well, that's at that particular date, everything will be back in good order. I think that we foresee a strong demand for several years here, and that means that our sub-suppliers, they just have to continue to grow production-wise and capacity-wise as we grow. When we now see improvements, they also have to prove that is for the longevity. Okay? Perfect. A final question on demand. I mean, you're seeing still strong deliveries from Elements and Stoves. Yeah. You see positive comments on the market within CS. You mentioned a record high order intake level still. Are we seeing sequential improvements here in the overall business? Well, I how should we answer that? I think that on the stove side, just to mention one thing there is, of course, you know, the typical stove demand would have a very cyclical profile. Due to the energy situation in Europe and due to the price level, I think that the demand has been reinforced quite considerably. Of course, the HVAC growth is that is driving not only climate solution, but that's also driving elements. So I guess those two very specific ones are very obvious. Of course, if we go back many years, we didn't have semiconductor deliveries to any magnitude. Now, that's important part of the element, you know, business as such. That's, of course, also something that is growing gradually over time here. I don't know whether I answered your question, but there was an attempt anyway. Okay. Thank you very much. Those are all questions from my side. All right. Sure. Thank you. Our next question comes from the line of Carl Ragnerstam from Nordea. Please go ahead, your line is open. Hi, it's Carl here from Nordea. Firstly, is it possible to sort of try to at least quantify the organic growth split between sort of Europe and the US for climate solutions? No, it's, I mean, relatively seen, it's growing quicker in Europe, if you just compare them. I think that it's quite recent, you know, that those new arrangements in North America have kicked in. That was a quarter ago or four months ago. Whereas in Europe, we've been talking about this, and we have a war going on, making everything very realistic in a sad way. America is or North America is certainly picking up. I guess that's relatively seen the picture we can give you. Okay. Very good. Also when you say that margins will gradually come back, yeah, I mean, looking at climate solutions, is it possible to come back to the sort of full year 2021 margin level? Or is it tough given I guess you have the capacity coming in maybe somewhat higher cost than you had in 2021, or is it a good baseline to reach again? Well, I mean, that's our best forecast. In some ways you might play hide and seek by not answering, you know, precisely our market share and stuff like that. When it comes to this, of course, we've had, we think we were late, you know, increasing our own prices and not that we didn't want to, but we were hit very hard, as we said so many times previously, when the price increases came to us, and we've been trying to increase our own. Of course, we see that the gap's gonna be closed as the months go by. Also on the productivity side, you know, having an overstaffed production, suggesting that once the components come in, you know, you have to produce both for the immediate demand but also for the demand that you haven't fulfilled previously. If the, as we suggest and as we hope, delivery performances from our sub-supplier are gonna be better, our overstaffing relatively seen gonna be less and productivity gonna be improve. Those are the two major factors that we try to, you know, convey to you as investors, and we don't specifically say we're gonna come back to that and that level. As you, as you know, the Climate Solutions margin, if you just look at it, historically, I'm sure you have that, picture somewhere. We are now on a different level than we were just, some years ago. I think that should also be a reflection of we have larger volumes and, we also have a greater, should I say, better platform in sales. It's, it's more stable as the quarters are rolling on. The whole Europe is waking up when it comes to replacing oil and gas. Previously we had perhaps a more limited market, but that's nothing stopping us really from having decent margins as we as you go along here. We feel that we are well-equipped to have high productivity and decent margins as we roll along. We don't foresee that we're gonna all of a sudden be hit by sudden, you know, expenses. We've demonstrated that we can increase prices. We know that our productivity, given proper supply chain, is among the best ones that we've seen. We are fairly positive about the future. Okay, very good. Final one from my side is a bit on coming back to the component shortages. I mean, of course, some might see improving, but of course you have many critical components in a heat pump or, I mean, taking ebm-papst, for instance, to just name one supplier. Do you think it's possible for you to reach a normalized situation in 2023 when you have so many competitors competing for sort of the same components in the industry, or what's your thinking there? Will you get as much component as you want in 2023? Is that possible? Well, you know, if I had a complete answer to that, I think I should have another job, because then I would be in sort of a minister or connection with higher mountains and skies. I think that the promises and the contracts we have signed, they indicate that we will get our deliveries. That also means that we need to broaden, of course, our number of suppliers. That's no secret. We would be very surprised if we wouldn't get our chunk out of our sub-supplies as agreed. We believe that it's gonna be tougher for the smaller ones coming about. We've seen that in the past, not only this particular outcome, but of course, we've seen heat pump upticks, you know, in Sweden, where we've had some 50 producers in the past. It seems like the larger ones or well-established ones, they have, you know, a stronger arm, stronger negotiating arm when you negotiate with them. We are fairly confident, but how can I underline I would be 100% certain? That would be, you know, too far to go. We feel that we will not be abused by any means. Of course, the answer is that larger volumes from existing ones and sub-suppliers and also complementary sub-suppliers. Okay, very good. Thank you. You're welcome. Thank you. Our next question comes from the line of Douglas Lindahl from DNB Markets. Please go ahead. Your line is open. Hello, Gerteric and Hans. Thanks for taking my questions. My first question is on the negative factors that you commented already. You mentioned a bit about this, Gerteric, talking about overstaffing and so on, but more specifically on the price cost lag. Do you have any sort of view on when you should be able to sort of catch up on that? That would be my first question. Well, you know, again, of course, we are trying to guide you as good as we possibly can. We believe that no manufacturer will, in the long run or even in the shorter run, absorb all the costs without doing anything about it. We believe that we are able to cater for that, you know, but we've been a little bit taken by surprise, and it's taken us some time. We will be able to cater for the price increases that we have been hit by. To give you a very precise answer, that'll be November thirtieth, I mean, that's impossible. I think we've. How much stronger can we be in our signal to you analysts when we say we're gonna be able to close the gap? It would be, you know, asinine to suggest, well, they're gonna be like in 2025. We understand that you talk and you reason within the coming quarter or the coming quarters, which means that of course we don't talk about unrealistic times. I guess perhaps that's not the answer you wanted to hear, but I think that's. No, it's. I understand it's a difficult question to give a firm timing on. I understand that. But on the sort of profitability improvements on Argoclima, are there any opportunities to lift profitability for that business specifically? Yeah. That's what we certainly hope, because that's, you know, as we say, a new company coming on board, we give them typically 24-30 months, and then they should be up and running above the 10% EBIT line again. That sticks with this company as well, as they've been on board now for a quarter. They're gonna take a little bit to lift it up. That's a matter of making their business more aligned, but also of course, being able to sell products already available from the other companies in the group. That's the first time we really had a stronghold in Italy on the residential side. Yeah. Okay. Erik, you already touched on this with regards to elements. You'd mentioned that it's. It used to be a highly cyclical business, and these days it's more correlated to HVAC and semis. Is that the correct interpretation and the white goods exposure is not so relevant anymore when we look at growth for elements or how should we look at that piece? No. white goods, that is, that continues to be cyclical. Yeah. Obviously. We've seen that already. Whereas in the past, you know, that we took a hit when we saw that and when we experienced that, we are so broadly exposed now, and there are other sectors that are more important for us, and that of course very healthy. We also spread in a different way than we were in the past. That's why we are quite positive about the future that other sectors will compensate, and we won't see that cyclical, or we won't see that much cyclical as we were in the past on the element side due to these new segments that are growing so well. Okay? Okay. No, that's. Yeah, that's clear. Yeah. My final question is, we touched a bit on competition. Are you able to comment a bit? I mean, we see now a lot of projects coming on stream with regards to heat pump investments in Europe over the next few years. Do you agree with the picture that competition is heating up, and how do you sort of plan to address this? I guess it's a broad question. Well, no, I mean, we see that, and we just understand and we know that's how the market works. You know, if someone is predicting that the market's gonna grow from a level that we were of heat pumps, and they're gonna, you know, quadruple or gonna be four or five times as big in eight, ten years, well, any managing director of any company being in this sector would be crazy to tell the board, "I'm gonna stay out of it. I think it's too difficult." On the contrary, if you've been established there for forty years, I don't understand why it should be more difficult for us to sustain the growth. Why should NIBE all of a sudden be the suffering part when the market's gonna be five times as big as it was in the past? I don't understand that question at all. We are very, very, very positive. Three times underline that. We are known for being very sincere and serious in the market. We are well-established. Of course, the competition is there, but that's also natural. It would be unreal if Nibe would be the only company out there selling across the sea, well, Nibe is going to take the whole market. I don't understand that. You know, in all the newspapers, as soon as someone starts, a comment that now we're gonna be a threat to Nibe. Oh, come on. I mean, what kind of a reasoning is that? I apologize for dwelling a little bit, but. No, I mean, I understand it's a difficult question to answer in a short answer. I think it's an easier question to answer. On the contrary, I don't think it's a difficult question at all. I think, typically, companies well-established, they benefit from the market growth. They don't have a disadvantage. That's what I'm saying. Yeah. I mean. Right There is a risk if there's overcapacity, obviously, then that's not positive, but. No, no. Of course, that. Well, yeah, you can turn it around and, you know, that's on the other side, of course. If we all sit there with empty factories, that, of course, would be a tremendous, you know, backlash. I guess we're quite far from that scenario right now, at least. Yeah, I don't think that's gonna be the issue the next coming quarters. No. No. Okay. Thank you so much. All right. Thank you. Thank you. Our next question comes from the line of Uma Samlin from Bank of America. Please go ahead. Your line is now open. Hi. Good morning, Erik and Hans. Thank you so much for taking my question. First question is, I was wondering if you could give us an update on your capacity expansion plan. I know that in the report you have the doubling of capacity in the short term, and another doubling of capacity in the longer term. Could you please give us a bit more detail, such as the timeframe of both of the short-term and long-term plan, and, you know, what are the expected ramp-up period post the completion of the factories? That'll be really helpful. Thank you. Do you also expect us to give you the name of the Nobel Prize winner in 2029, or did I miss that? I'm sorry. No, seriously, I can guarantee you one thing. That we also see the figures in the forecast at EU and all others are forecasting. We will have the capacity for that expansion without any doubt. We're gonna have a short term, mid term, and long term. It won't be any issue for us when it comes to capacity. The only one issue, and that is that our sub-supply is gonna be there. On the engineering side, on the production side, on the capital supply side, it's 100% solid. You don't have to worry about that. We won't release any figures precisely, of course, on our capacity. But that's. I think that's the answer that caters for your question. All right. Thank you very much. I guess my next question's on the pricing. I guess, you know, the market anticipate the raw material prices would potentially normalize into next year. How should we think about how that would affect you? I mean, do you expect to give back some of the price increases you have achieved this year if we are to see lower raw material prices? I mean, I appreciate that you have said that you have not sort of increased the prices much enough to compensate the cost you have seen. If that reverses, how should we think about pricing? Well, I think it, you know, when it comes to prices, we do not negotiate prices over a video conference like this, as you well understand. I think that prices, just like capacity, it is just like water down the mountain. It always finds its way. The same thing here. You know, now raw material prices might go down, but then other, you know, costs might go up. As we all know, labor costs are going up, and energy prices are, you know, very difficult to predict. Even if steel is going down now, you cannot select one item in a product calculation. It's the whole picture. We follow the market, just like we've done now in the past 24 or 30 months. We would not, of course, never indicate over, you know, a conference like this, what we're gonna do with the prices if the steel prices would fall. I hope you appreciate that. All right. Thank you very much. That's very helpful. That's all from me. Thank you. Our next question comes from the line of Pam Liu from Morgan Stanley. Please go ahead. Your line is open. Thank you. Thank you very much. I have three questions, please. First, I'd like to understand more about your expectation of a gradually improving group margin from here. While I appreciate that an improving supply chain and a more sustainable input cost will help, I can also see a number of headwinds from here. For example, first of all, your customers have already seen quite substantial price increase over the last year. Surely that, you know, they would be more price sensitive now in their discussion with you than before. Second of all, you are investing ambitiously in capacity and workforce growth across all your divisions, so that is cost. Third, in Element, you did say that in most of the industry end market in this division, you are actually seeing demand decline. Could you please help me understand more about the specific plans and actions you have in mind in order to drive the margin growth in this backdrop? My second question is in Climate Solutions for Q3, if I take away the acquired impact, the very positive effects, if I add back the washing machine impact, I think the Q3 organic local currency growth would be around 15% also, and most of which I expect to be pricing. Now, Q3 last year was not a particularly strong quarter anyway because you already started to experience supply challenge. Could you help me understand why Climate Solutions volume growth has been weak in Q3 relative to the very strong demand you see in the market and an improving supply chain? Do you think you might have lost some market share in air to water in Europe specifically? My final question is, in Element, you mentioned a declining demand in commercial and auto. I think it's reasonable to assume that your customers have also built up quite a lot of inventory during the past 12 months. How should we think about Element's growth and margin into 2023 in light of the demand and customer inventory backdrop, please? If I could, I think if I'm correct, your semiconductor exposure in Element is mostly acquired, so it's probably about 10%-15% of Element's end market. Surely, you know, it's probably not enough to offset the more cyclical sector. Thank you. Yeah. We would need another hour or two on those questions. I understand that you have difficulties believing in our future. I also read that you're always negative on your report, so I won't be able to change that attitude. That's fine. You can continue to be negative to us. I have no intention changing that. What you read in the report, that's exactly what we believe in. Of course, if we have not been able to deliver, as we have not been able to deliver in all sectors, that is, of course, possible that some might have taken a few heat pumps or stoves or elements out of our hands. That's not because the customers would have liked that. That's been because of shortages that we're gonna compensate for now. The signals you are getting from us in reports, I mean, all the 100 questions you bombarded us with just recently here now, I don't think we have time to answer those. You've read reports and you've heard the answers that we've given to the other analysts. I think that has been catering for all your questions. Okay. Thank you. Thank you. Our next question comes from Viktor Trollsten from Danske Bank. Please go ahead. Your line is open. Yes. Thank you, operator. Hi, Gerteric and Hans. Greetings from Finland. All right. You have been rather explicit in your previous answers. I'm going to try to push you a bit more on your own ability to grow into next year. I mean, you have a record order book. You now say that supply chain is, you know, sort of easing. You're overstaffed. I guess in that context, you know, you have an annual growth target of 20%. I guess you would be able to lift volumes by 20% into next year. Is that how we should, you know, think about your current capacity structure? Well, that's an interesting analysis. I mean, I don't think we're gonna change our targets. You know, we've been living by the same targets now for some 30 years, at least since we got launched on the stock exchange. That's what's realistic to believe that when the market is going in the direction that we see right now, of course, the 10% organic growth would be perhaps on the more cautious side. Again, I mean, we won't give you any more precise organic growth figures. When the market is growing, of course, as we said it all along, when the market is soft, then, of course, we have to rely more on acquisitions. As you see now, the acquisition part has been lesser, and then we still grow quite healthy. We continue to anticipate a strong organic growth for the coming order, at least what we can see now, you know, the future to come in 2023. We cannot see that year, unless another war breaks out or something really crazy that comes on. We believe that gonna be a healthy market for us. Yeah. No, but I think that's clear. Maybe just one question on your order book. Just, you know, interesting to hear whether you have seen any cancellations. I mean, you know, lead times are significant. You know, how steady is your order book? Have you seen any cancellations? It's always difficult to analyze order book, but we have not seen that. That could possibly take place. I mean, we wouldn't exclude that, but had we seen that so far, I think that we wouldn't have as bold as we are in our forecast for the future. I'm sure that, you know, any plumber or any stove, potential stove owner would say, "Well, if I can get it there, I might put an order there." Might be that they have placed an order two different places. We can't really control that, but we have not seen that so far. Okay. No, that's clear. That's all from me. Thank you very much. Thank you. Thank you. Our next question comes from Karl Bokvist from ABG Sundal Collier. Your line is now open. Thank you. Perhaps good day to you both. I have only two questions. The first one is just on, I believe you mentioned Sweden in particular, but it still seems like the Nordics is growing very, very well for you in climate solutions, for example. Just out of interest, do you think that there might be, you know, product mix differences that you continue to perform very well in the higher categories or something like that when we just compare to the publicly available market comments? That would be my first one, so I'll start there. Once again, I got a little bit disturbed here by Anders. How we perform compared to- Yeah, oh, yeah, sorry. It just seems like you perform still very well in the Nordics. If we look at, for example, Sweden, the market is not growing as fast. I was just a bit interested in hearing if you believe that you're maybe some of the more higher price premium segments or you've been able to deliver quite significantly better this quarter. I think that the Nordics, as you know, being a small country, we have to rely on the Nordics as our home market. That is where we have those 25 million people. That is certainly our home market. That's where we always have to serve. We have to be very obedient. We have to be obedient in any market. I think all companies have their home turf. Our home turf, that is certainly, you know, the Nordics. We try to do our utmost to serve customers there. I mean, we are not perfect by any means. Of course, there have been people waiting for heat pumps and stove for a long time. We count on their loyalty. The fact that we're coming out with new products very frequently means that we've stirred interest, and people are, in most instances, willing to wait for our products. We can say that there aren't any exceptions. Of course, there might be exceptions to that. We feel that we have a very strong position in our those four home markets, Finland, Norway, Sweden and Denmark. Yeah. Understood. Yeah, thanks. It may be difficult to get a quick answer on this one, but I'll try anyway. Could you give us an update on the transition towards more friendly refrigerants and where you feel you are in terms of your own timeline and, considering the kind of recent proposals with more stringent F-Gas restrictions and so on? No, I think that we've been talking about that. That's not, you know, a secret where we have been heading. We've been heading towards the natural refrigerants ever since the first signs came out, particularly 2018, that they were giving recommendations that we were going towards, you know, the GWP issue down to single digits. Then when we started to work in that direction, then of course, EU, for some reasons, were sort of convinced by manufacturers outside Europe that they were going to use other refrigerants, you know, that's totally a detriment to the target. That's been, of course, a debate that with refrigerants having a GWP factor of 600, 700, 800 would be sufficient. We never believed that. That's why we never altered our direction. That's why we see the products coming out now. We will be in there with our natural refrigerants, you know. If it's now 2025, when we have to fulfill that, then we're gonna be there. You see our models on the market already. We never gave up the natural refrigerants on our, for say, exhaust air heat pumps. We've been there since 1997. It's our 25th anniversary now. We have very good experiences with that. We find it very, very peculiar that manufacturers from outside Europe have convinced Europeans to use other refrigerants. It's a very sad story. We embrace the legislation that's coming. All right? Understood. That's all for me. Thank you. Thank you. Thank you. Our next question comes from the line of Anders Roslund from Pareto Securities. Please go ahead. Your line is open. Hello? Anders, your line is now open. If you are on mute, can you please take yourself off mute? Okay, since we are not getting a response. Hello? Once again, it's your- Hello? Anders, can you hear us? Yes. Yes, we can hear. Okay, excellent. Sorry. Please go ahead with your question. Yep. I had a question regarding the order book. I assume that the order book increased in the third quarter over the second quarter, and I wonder if the order gap for the last 12 months should be quite substantial looking into 2023. I guess that order gap, order intake minus sales, is part of your sort of bullish view on that you will grow organically, maybe above your target level of 10%. Well. That's my question. Yeah. Well, we have a good order book, but that's not the reason why we have a bullish outlook. That's the reason for that is that we see the true demand to continue to increase. Okay. Excellent. Thank you. Thank you. I think that we now have to rush to the next session. We apologize for cutting it short, but we've been trying to be as open as transparent as possible, not at the same time being able to answer all questions. Yeah. Thank you, everyone. Thank you very much. This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.