Ladies and gentlemen, welcome to the NIBE Q1 report. Throughout the call, all participants will be in a listen-only mode. Afterwards, there will be a question-and-answer session. Today, I'm pleased to present Gerterik Lindquist, CEO, and Hans Backman, CFO. Please begin your meeting. Good morning, everyone. Good morning. Erik speaking here and Hans, of course. Yeah, I'm right here. Good morning. We're gonna pursue, you know, the usual path when we comment ourselves upon the report, and then we allow for some questions, which we will try to answer as expediently as possible. Of course, we have to go for other issues here no later than 12. We don't like to be impolite, but that's the time schedule we have today. We think that it's been a fairly strong start to the year, as we say. Most of the segments or the market segments that we deal with have shown a good growth. We're also seeing some improvements in the supply chain, which is very pleasing. Not necessarily all the way, but every week that's better than the previous one is, of course, pleasing to us. Again, it's primarily driven by the sustainability profile of our company and the three business areas we have. Of course, energy prices going up and down, that's also a worry to customers, and also becoming more independent or totally independent of the gas and oil supply from the east that we all talk about. Of course, everything is around investments here now that we are into trying to cope with the growth that's at hand. The result is also coming around in a good way. It's overall a healthy margin. The acquisitions so far this year haven't been extraordinary. We've only had one acquisition that's in Canada, and that happens to be in the same province where we have two other entities of legal nature. From a practical point of view, it's very good to have them concentrated in one province when we travel there. If we just have a quick look at the figures that you have in front of you, of course, the growth has been, like, 33%. The gross margin has recovered, and I think Hans is gonna come back to that, which is very pleasing, of course. There are a number of factors behind that. It's sales, naturally, where you always get a slightly better margin and then of increased productivity. Also they were better in better balance when it comes to our own prices and the prices we are paying to our sub-suppliers. The operating margin has taken a great leap from those 10.8%- 15.1%. In all fairness, like we also point out, last year, we took a hit when the invasion or the Russian aggression on Ukraine was a fact. We said, "Okay, let's write off everything as far as values are concerned over there." That meant SEK 140 million were written off or written down. That means that the margin operationally last year was 12.1%. It's still quite a bit of a jump, but it's more like a three percentage units rather than the five indicated. The same thing with the net profit margin goes from 12... SEK 10.4-SEK 14.2, in all fairness, it should have been from SEK 11.7- SEK 14.2 if we compare apples to apples. Then we have the graph or the graphs that are coming here indicating that we are on a pattern that we know since before. We still have some seasonality, but it's more a growth pattern, lesser seasonal than it was in the past. We also see that the past 12 months, we are now approaching SEK 44 billion in sales. Nothing really to comment more about that. Also on the profit after financial items, it's the same thing. The boards are following the usual pattern. Of course, the past 12 months have a healthy direction when it comes to the profit after interest. If we just have a quick look at the pie charts that we typically look at, the climate solutions, typically around 65%, so it hasn't changed that much. Elements are in the quarter, and stoves, like, 10%. Because of the margin, of course, the climate solutions, they represent some 75%, and the other two, 16% and 9% respectively. Geographically, of course, Europe has had a strong growth due to primarily the heat pump growth. In North America, it's now around 27%. In Europe, of course, we include the Nordic countries also in Europe, but outside the Nordic countries, like 46%, and the Nordics themselves, 23%. Outside North America and Europe, it's 4%. That's mainly Element, of course, that's represented there. If you just dive very quickly into Climate Solutions, it's strong growth and, of course, it's like before, a lot of people would like to get away from gas and oil as quickly as possible. We also have new attractive products that we have been able to present to the market. There are also clear improvements in our supply chain, but not to the level where we would like it to be. We hope from the promises we've been given and from our work with alternative supply routes, we believe that during the second part of the year we'll have a, if we can call it a more normal situation. Investments, of course, are ongoing to be able to cope with the coming growth. The growth right now we are able to cope with, but the growth we anticipate to continue, so we feel that we are well in line with the market growth when the new facility is gonna kick in. The operating margin, of course, on Climate Solution has also increased due to the volume naturally or the sales volume. We also have been prepared or we've been able to have a better productivity since raw material and components are coming in at a better flow, not satisfactory, but still a bit better. That has increased productivity and also the price situation is more in balance. We can see that it's a healthy growth, some 38%, and the operating margin is up naturally from 11% to 17.5%. In all fairness, again, there we have to add back the SEK 114 to compare it operationally, and then it would have been like SEK 13 last year. Still it's a substantial step in margin. On the stove side, it's particularly the wood burning side that is expanding. For same reason as on the Climate Solution, of course, people are not so willing to invest in gas-burning stoves, and there's a shortage of wood pellets. That's a hindrance on the other main category of stoves. We continue to spend quite a bit on the R&D side when it comes to improving the emissions. We like to get rid of all the particles to have a totally clean combustion. We feel that we are now coming to or we are not launching anything on as far as products are concerned, but we are launching our concepts now, as you saw in the report. We feel we are getting closer to the actual product launch. Also here, of course, we are in a very ambitious investment program, opening up a new factory in Britain in a month's time, for instance. Of course, we're also an ongoing investment here in Markaryd. Here, for the same reason on the Climate Solution, better sales volume, we've been able to also increase productivity and it's a better price leverage than some 12 months ago. Has given us a healthy growth, but also an operating margin that is like a considerable improvement from 11.5%- 13.2%. If we just dive into Element very quickly, we can say that here we have a market, some market segments that are not, of course, so prosperous, particularly when you talk about consumer goods segments, whereas on the sustainability side, there we have the opposite. There we have sort of two worlds. The semiconductor industry, as we explained in the fourth quarter, took an unexpected dive in the fourth quarter due to restrictions from U.S. to China. We assume that will pick up because everyone is striving now to build factories in America and even in Europe. Of course, we also invest quite ambitiously in this area. Due to the product mix, the margin has, you know, somewhat, went south from 10.1%- 9.3%. I think that's very quickly, you know, the headline for the first quarter. Of course, I forgot to mention that this is a very special day here in Markaryd. We have our annual shareholders meeting, and we're gonna have that meeting in one of our factories that has been erected for producing heat pumps. We're just in the process of moving in equipment there. We kept one sort of, yeah, room we can call it or area, we kept that open for this particular event. It's a, it's like a real Nobel Prize dinner, or that's wonderfully set, we can say. Weather isn't so cooperative here today. It's a little bit grayish, but we just pray that around 5th or 17:00 today, everything gonna be, you know, very, very, sunny again. Thank you for that. I hand over the words or the microphone to you, Hans, please. Okay. Well, thank you, Erik. More than 1,000 shareholders will be visiting us. Yes ... this afternoon as well. That's quite pleasing- Mm-hmm ... being able to show also what we're building all around here before they head into the factory. Let me just take you through the business areas here quickly on a slightly more detailed level, open up for the questions. Climate Solutions has continued its very strong growth, you can say, from previous quarters, driven by the sustainability and also cost awareness amongst customers wanting to shift away from oil and gas. With improvements in our supply chain, although we're not fully through there, this has had a good impact on the numbers. As Erik mentioned, growth has been close to 39%. A portion of that, a small one you can say, is acquired. What's a little bit hidden in the numbers there is the divestment portion of the Schulthess part. In the growth figure there is like 5.5% of that portion of business leaving us, so to speak. With such a good increase in sales, that has a good impact on the profitability as well. Gross margin has taken a jump there from 32.5% up to 36.2%, coming then from sales, improved productivity, and of course a portion of price as well. The operating margin has then landed in at the 17.5% from the 13% adjusted for the write-off we made last year. It's of course almost a doubling in absolute terms. On top of that, we have also continuously been investing in both increasing our manufacturing capacity, but also in R&D facilities and a new marketing center. In terms of geography, split or geographical split of sales, the picture has slightly moved in favor of North America, you can say. Last year, at this point in time, they made up some 19% of the, of the chart and are now up to 22%. The Americas there, and North America in particular of course, has shown a nice increase compared to last year. The sustainability message is coming across also over there. If we head into stoves, NIBE Stoves has, you know, shown a very strong Q1. Those of you who have followed us for some time know that Q1 and Q2 typically have been the weaker quarters. Now, since some time back, wanting to shift away from oil and gas, the picture has changed, where the stove product has moved from being a decorative item, so to speak, to a security product. Sales have increased there quite substantially as well, up some 39%. Of course, a good portion of that is the acquisition that Erik mentioned. Even if you take out that, we have an organic growth, including a small portion of currency of some 17% or 17.5% even. Sales have gone up from SEK 900- SEK 1,250. Also here, we've seen a good improvement in the gross margin, moving from 34.5% up to 38.3%, which then has had a good impact on the operating profit as well, taking a jump of almost 62%. It's always pleasing to see, of course, when the growth in the profit exceeds that of the growth in sales. It means that we're doing something right, at least. Also here, just like in Climate Solutions, we have an ambitious investment program that's being carried out, both in the forms of increasing capacity, but also in R&D of developing new and even better products. We then move to the pie chart for the geographical distribution of sales, we also here have a strong increase in the North Americas, of course. This is where the pie chart has really changed. It's up from 19% up to 29% following the acquisition, meaning that we have a more even spread of sales per geography than before between the Nordics, mainland Europe, and North America, making the whole business area more balanced, you can say. Heading into NIBE Element. NIBE Element has, during Q1, seen a somewhat varying demand, you could say. I mean, clearly the segments with a sustainability profile have continued to develop quite nicely and driven the whole business area. Whereas those with more consumer-oriented focus have experienced, you know, a varying demand and weaker in some spots as well. On top of that, the ban from the U.S. on exporting semiconductors has continuously had an impact, although we think that is more of a one-time effect in the sense that capacity will be needed to be built elsewhere. It will of course take some time to achieve that. All in all, the growth for NIBE Element was close to 22%, with only a small portion being acquired. This is our most global business area with a larger exposure also to North Americas. Here, the currency impact has helped us slightly more than in the other business areas, the majority of the growth comes from a pure organic growth. Due to the product mix change, you can say, with semiconductor being reduced slightly, we've seen a small shift in operating margin here, going down then to 9.3 from the 10.1 in previous years. Also here we're investing and keeping up a quite ambitious investment program. This has been and continuously is our most global business area, you can say, and there have been no large shifts in the pie chart here. Nordics, some 17%, Mainland Europe, 38%, North America being basically just as big, with a portion of some 9% over in Asia. Just quickly move on to the balance sheet. There is nothing that really sticks out here. It's stable and sound. The one part that perhaps sticks out a little bit is the non-financial current assets. We will come back to that. It's our inventory that has continued to increase, which then also has had an impact, of course, on the cash flow a little. Whereas we during the post-pandemic period were increasing our inventory for the reason of getting hold of components, it's now more a matter of building finished goods inventory, which has traditionally been done by us during Q1 and Q2 for the sales coming after the summer break. If we look at the cash flow analysis, we've actually generated quite a healthy amount of cash, some SEK 1.4 billion compared to SEK 900 million last year. The change in working capital for the reason I just mentioned has, of course, consumed a portion of that, and then the ongoing investment programs that I also have mentioned. There is a slight negative change in the operating cash flow, but we know where the money is, so to speak, and we are generating good cash from the underlying business. This results, of course, in a number of key financial figures, and we don't need to go through each and every one of them. If we look at some of them, I mean, we continuously keep a good portion of cash on the balance sheets, like SEK 4.5 billion. The interest-bearing liabilities have continuously decreased. The net debt to EBITDA is below one, and we have an equity assets ratio of well above 50. I think we're ticking many of the boxes here for being in a position for further good growth. I think the next picture shows the working capital that I just mentioned. It's of course, high and higher than where we want it to be, but it's now much more a matter of building finished goods for the sales that we need to perform both now and after the summer. On the last piece of paper or picture here, the return on capital is coming closer to the 20%, which we have, and the return on equity, to the 20% target that we have, up from 14.2 and 15.6, respectively. It's a good development. The net profit per share has basically been doubled since last year. Again, I think we're very well-positioned for further growth organically and through acquisitions. Although there are, of course, always rooms for improvement, and I'm sure there are going to be questions around this now. Mm-hmm. Things we have not told you about- Yeah. To speak. Yeah. Would you like to add something, Erik? No, I think it's, I think it's fine. We are ready for questions, so please shoot. Thank you. Ladies and gentlemen, if you do have a question for our speakers, please press star one one on your telephone keypad today. Once again, that is star 11 to register for any questions. One moment, please, whilst we take the first question. Our first question comes from the line of Rashi Wadhwa from HSBC. Your line is now open. Please go ahead. Hi. Good morning, gents. I have two questions. The first one is on the growth. If I understood correctly in the NIBE Climate Solutions business, I think a 5.5% divestment. If I do the math, the organic growth is around 40%. Previously, I think you said prices are up somewhere between 20%. Would it be fair to assume that the volume growth is close to 20% or above in NIBE Climate Solutions? sorry, it was quite difficult to hear you through the system. It was sort of echoing. Could you please repeat that question if you're closer to your microphone or something? Sure. Sure. I'll try to be sure if that's helpful. It was around the Climate Solutions business. Could you please tell us what was the growth number in Q1 excluding the price effect? Was it close to plus 20%? Well, I mean, we don't necessarily disclose that. As Hans mentioned, you know, the organic growth has been or the growth, if you deduct. You don't have to be so, should I say, analytical to know that currency, if you take the Swedish crown versus any other currency and put them in a bag, is like a difference of some SEK 0.05 that we have gained. Then, of course, we've lost the sales of Schulthess. Then saying that the growth has been like on a 40% or 39% level organically, even if you take away the price instrument, you know, it's a phenomenal growth. Considering also that not everything is heat pumps in the Climate Solutions business. Of course, the heat pump sales is well above the 40% organically. Of course, we have water heaters, and we have other products in there that are not growing at the same rate. I don't think that we can be more detailed than that since, we also have our competitors listening in here, and we have to have some secrets for ourselves. No, that's clear, Erik. Thank you very much. The second one is on the heat pump development pipeline. You talked about R290-based heat pumps, which you launched last year has been quite successful. If you could give a little more flavor of how the development pipeline looking like and how is the R290 kind of adoption being, what's the state of sales that is overall to the heat pump sales? How we are developing in the heat pump, portfolio with R290. No. Okay. I mean, that's totally clear that all our exhaust air heat pumps and air to water heat pumps, they're already there with the, with the R290. We are in the process of also launching the, water to water ground source ones or geothermal ones. We are, you know, very comfortable with that deadline as it looks now, as of December 25 or 2025. We of course, we demonstrated that during the show in Germany like two months ago. That's no secret where we are there. That doesn't mean that all the present models gonna leave instantly. We're just gonna phase those out as the other products are being, you know, introduced on every market. I guess that's, an attempt to answer your question. Yeah, that's helpful. Thank you very much. Thank you. Thank you. Thank you. One moment please while we take our next question. Our next question comes from the line of Karl Bokvist from ABG Sundal Collier. Please go ahead. Your line is open. Thank you. Good day. My first one is just on a comment that you made there, Hans, regarding the working capital situation. I mean, just receivables against payables, that's nothing major. It's a kind of net negative, so main driver being inventories. On the comment you said there about finished products or semi-finished, how should we think about this? How do you kind of plan for it ahead of this year, given perhaps what you hear from suppliers in terms of demand, et cetera? Is it that? Are you waiting for like one or two critical components and then they can be shipped out? When you're saying finished products, how just how finished are they, so to say? No. I mean, I gotta avoid to say it was a good question. I should say we understand your question. All questions are relevant. When it comes to the issues we have with suppliers, I dare to say that a year ago we had at least 150 suppliers that were sort of uncertain or being viewed very negatively. Today we have less than 10, which is a tremendous achievement. Nevertheless, there are some crucial components, and we don't like gonna name anyone because of, you know, being a little bit discreet here. The promises we've been given are of course, that they will be, and we'll be right, towards or during the second half of this year, they're gonna be up at speed to deliver at the rate which we think we should be delivering at. To build up inventory, there are, of course, there are some products that are not totally finished yet, that are missing one or two crucial parts. That's one of the things. We also have ready finished goods, which we haven't had in the past. We, you know, it's been totally empty. To be able to service a customer or two or five that are absolutely in desperate need for a heat pump or five or eight, we have to have some service inventory. We understand you're in a very desperate need of it, we can help you. The third part being still being, you know, fairly fat, if I may use the word, on the components still. When those crucial components will arrive, of course, we have a number of people already waiting here to start to assemble. It might be too late to ask all the other suppliers to say, "Well, now we finally got that crucial component. Could you possibly help us now?" It doesn't work like that. We have to have an oversupply also of components and staff to be able to cater for those products coming in at some date. Not necessarily knowing exactly date, also producing those or making those ready-made products. It's a three-fold really explanation. I hope you got that. Yes, that's clear. My second question, I realize you don't disclose it per se, but is it possible for you to give any kind of comments on orders and what you hear from distributors, installers, etc., based on kind of the demand right now? I would guess that you're still working through a very strong backlog based on already placed orders. Yeah. I mean, the only thing we hear is in some countries, they are waiting for further information as far as subsidies and things like that. Whereas where the market has been, you know, living without or there's no change in the subsidy programs, I mean, it's full speed as before. Of course, as you know, a year ago, there might have been, or there's always a little bit of air in the backlog when you can't deliver. We all like that. You know, we all remember how it was when people started to buy toilet paper when the pandemic came. Not necessarily did we need all that toilet paper, but there was like a human phenomena. To your question, we do not see any slackening in the, in the demand for heat pumps. Of course, on the consumer side, on the element side, we see that people are concerned, that we don't think that furnish is doing a great thing. We don't think that the white good sector where we are involved. Of course, we see that people avoid buying new fridges and stuff like that unless they are broken down. New construction is going down means that also white good sector gonna take a downturn along with that. On the other side, the sustainability growth seems to sustain the weakness in the other sectors. I see. My final one is just on North America Climate Solutions. Mm-hmm. Still, you know, very strong growth there. Is it from any kind of particular segment? No, we see both on the residential and on the commercial side. Of course, they come from a very, should I say, weak market or a small segment of the market for heat pumps. With this program, with this strange abbreviation, IRA, we feel that the entrepreneurs have been given a very clear signal. This is gonna be in now for a number of years, you can go. That has really come across well as we can interpret that. People are very interested in this. Of course, it's not to the point where we are in Europe because they have still a lot of gas, and North America has a lot of gas and oil on their own. It's less dramatic. The, the awareness of climate change, if you like to call it, or the need to get rid of or reduce the CO2, it's also there, but not so dramatically, of course, as it is in Europe, where the whole continent, you know, is asked now to change by the authorities in Brussels. We also see the brutality in Ukraine. We just have to do something else. That is a, it's a very positive development, but of course, not so dramatic as it is in Europe. I think that's the best way we can answer that. Yeah, understood. That's all for me. Thank you. Thank you. Thank you. One moment, please, whilst we take the next question. Our next question comes from Philip Buller from Berenberg. Please go ahead. Your line is now open. Mm-hmm. Hi. Good morning. Thanks for taking the questions and congratulations on another strong set of numbers. I'd like to ask a slightly broader question, if I may, on the evolving competitive environment, specifically around climate solutions. I think, you know, we all understand that the market is increasingly attractive. I'm curious to hear what you are seeing in terms of the behaviors of your competitors, both in terms of M&A bidding or lobbying or on list prices on the organic side. I guess I'm keen to just understand if we should expect to see any material market share changes in any key markets. If not, are you comfortable with the long-term margin resilience? Thanks. Yeah, that's we understand the question, as we say. Of course, when the market is growing, like it is, of course, that attracts a number of also new players, and also results typically in mergers and acquisition. Everyone wants to become stronger. That's a very natural phenomena in the market economy. I think that's why the EU authority is so specific. We have to change the continent into more heat pump solutions. Of course, that's a very, very positive sign for a company that's been with heat pumps for more than 40 years. We certainly have the ambition to even increase our share. But most of the other companies, they might say the same thing. Of course, they're gonna be a competitive race out there. The market growth, as we see it, we think that the bigger players, you know, they have a little bit of a, should I say, positive situation. If you start from scratch, of course, you're gonna have to build a brand name and all that. The well-established companies, we believe, will have a good start into this competitive future that we see. It is not like a year or two or three. We foresee, you know, easily 10 or 12 or 15 years when you're gonna rebuild the continent like when we're doing. It's very important also to emphasize that everything has to be done with quality, you know. Everything has to be done in a orderly way, otherwise the customer is gonna be disappointed. I went from gas to heat pump, it didn't work. I think we all have a responsibility to carry out large or small, whatever we installed, we do it in an orderly way. As far as mergers and acquisitions, we are certain that that will also quicken. We saw a large one here with an American operator come in, Carrier, and they acquired Viessmann. I think that was a surprise to most of us been in the business for many years. Well, how that will turn out, I think that a number of companies just gonna continue as before. What does this boil down to? I think that the companies out there, we're all trying to make money, but you have to do it in a rational way. In a growing market, we don't foresee any, should I say, constraints or margins anything. We feel that they're gonna be... That's years ahead, possibly, but not when the market is growing like it is. I mean, I'm philosophizing. That's a long answer to your question. No. I'm trying to be responsible. Yeah. It's very helpful. I guess, you know, as a follow-up to that, it's quite hard to rationalize sometimes when others are being irrational. maybe they're not being irrational, but I guess the question is, internally, are you changing in any way your own hurdles in terms of the payback period for M&A? I'm asking as your M&A growth relative to history has moderated a little bit. I'm wondering if that requires a competitive response because of potential irrational behaviors for your competitors or perhaps they're just taking a longer term view in terms of the payback period. Well, I think we've explained this before. I don't know whether you've been following us. You know, to make a successful acquisition, it takes time. It's not something like we do in a, in a quarter. I think that our more regular pattern was up until the pandemic. For some reason, we were just able to close two or three prior to the pandemic that we had been talking to perhaps during 24 months. Now, we've lost 24 months or some 30 months. The acquisition rate that you've seen recently is not, if I, if I may call it, normal because we have not been able to visit until, you know, mid-2022. Typically, it takes longer for us to date, if I may call it, and do the proper analysis before we actually sign on the dotted line. It's not that we are shying away from acquisitions at all, it's just that we like to do it as methodically and accurately as we've done it in the past, not just running into it and say, "Well, oh, we haven't bought some companies now for some time." You'll see the same pattern in the future as in the past. Very good. Thank you. Just one final quick one from me on stoves, so different topic. Obviously this is a business which has been doing incredibly well for a while. As you say in your, in your presentation, it's moved from being almost a nice-to-have product to a security one. I take that as it is. I think it makes a lot of sense. I guess I'm wondering, given that we've had a couple of years of very strong growth, and I don't know whether or not the security issue is starting to moderate. Are you seeing any signs of demand softening here, or do we expect the kind of stoves demand that we've seen more recently to continue for, let's say, another 12 months or so? Thanks. No. As we say, we see a slightly weaker demand on the gas because I think that that's also natural that people like to go for wood that is also, you know, in a way, depending on how you define it, more sustainable. I think that people would have liked also to invest more in wood pellets had there been wood pellets around. There's also a shortage of that is partly driving the wood burning stoves demand. I think it would have been also a quite higher growth rate on the wood pellet stove side had there been wood pellets at a decent price. But a shortage and the prices were just ridiculous. Okay. Thank you very much. Thank you. Thank you. One moment please while we take the next question. Our next question comes from the line of Viktor Trollsten from Danske Bank. Please go ahead. Your line is now open. Thank you very much, operator. I hope you can hear me loud and clear, Gert-Erik and Hans. Absolutely, yeah. Super. So first, I would like to follow up on something that you mentioned during the call, Gert-Erik. You said that you're able to cope with, you know, current growth rates, in your current structure, but you're obviously investing for, you know, the growth rates that you are anticipating going forward. Mm-hmm ... so just follow up on this, and please correct me if I'm wrong, but you said that, you know, heat pump growth was, you know, let's say 40% in the quarter. Yeah. Is that basically implying that, you know, you're able to grow 40%, you know, going forward, and that you're even anticipating higher growth than that? Yeah. You took out your math book, didn't you? Well, yeah, we can cope with the growth. It's of course, margin-wise, you know, when you're, when you produce practically 24/7, of course, that's a relatively expensive way of producing. We like to come back to a situation where you produce more ordinary shifts and not necessarily over weekends because you cannot do that in the long run. Of course, that'll ease enough now when we open up the factory here in Markaryd already this quarter, but producing during the second part of the year. Then we foresee a another rate of should I say direct labor. As you say, I think that we have to be able to grow quite quickly in the future to be able to cope with the demand. I think that, the 40% growth is of course, pretty substantial. You also have to remember that in that we also include the North American entities that are now coming from a lower level. Mm ... to be included there. We also think that historically, we've been more used to coping year after year organic with some 25%. To grow 40% year after year, we have not experienced that in the past, so we can't say that. We say, well, we'll do our utmost to even conquer that. We think that there might be other hindrances on the way there. I mean, also the whole industry has to be able to cope with this growth. I shouldn't say that we hope for bottlenecks. We just know from history that organic growth of 40%, that's tough. Mm ... having experienced that, we have not had factories ready to expand. We've taken that, you know, out of the already existing premises. We have leased the premises. We are investing more orderly, suggesting that, okay, that should not be a hindrance for us. Of course, our suppliers still gonna be a question mark, not only ours, because they supply our colleagues as well. Is there gonna be an installation constraint, possibly? Can installers all over Europe, you know, all of a sudden do all this? We believe in their ability to change, but there's also a number of new installers that have to be educated and move into this. Mm. Yeah, we cannot promise. We can grow, we believe, you know, like we've done now. We are working for investing in a direction of being beyond the 25% organic growth. A very precise number, well, I'd like to leave that out for a moment. It's certainly something we would like to participate in. We've been waiting for this opportunity for some, you know, 20 years, and we're certainly gonna participate now. That's why you see those investments coming in. No, that's clear. Maybe as a good follow-up then, because it sounds like you're obviously investing for profitable growth. Maybe on, you know, on the margin profiling Climate Solutions, I guess I'm just trying to understand how much is perhaps, you know, temporary short-term, you know, lag effects and how much is structural. You mentioned, you know, three factors that, you know, was driving the margin. It was an efficiency gains, volume leverage, and then also price cost. Is it fair to say that those three were quite, what should I say, equally drivers for the margin or? Of course, when we get products in, I mean, we are, I dare to say, very rational. Of course, I mean, there always gonna be some kind of competition naturally. I don't think that we can promise to just increase margin every quarter. I think that you've seen a healthy margin, you know, on NIBE Climate Solutions, quarter-after-quarter and year-after-year. Some year we went down a little bit, but I think we have established ourselves around a healthy margin, more like if you look at on a 12-month rolling basis rather than being, taking one exceptional quarter. You also have to remember that this quarter, of course, last year we also had a growth because that was then everything really started. We all have to remember that these quarters have been sort of extraordinary, although we don't, we are not satisfied. Of course, last year we grow with some 29%, and now we grow with 38% or 39%, even 44%, if you exclude the Schulthess. Those figures are extraordinary. That is of course from a base that was relatively low. Of course, when you are at the level where we are now, 40% means something, you know, totally different. We also have to have respect for the, for the math in itself, for the, denominator and denominator. We of course, never developed our company in the direction of growing for just growth and not making money, then it's use is meaningless. We always try to make a decent margin, that's why we came to the stock market. The balance never be below 10, and I think we've been there once in 26 years. You've seen a fairly steady development and fairly good, if I may say so ourselves, that we kept our promises. We're gonna be out there, and we're gonna hustle, and we're gonna do our damnedest, excuse my language, to participate and grow. No, that's clear. Then maybe just finally, a final one. I hope it's okay. You know, Q1 is the smallest quarter, obviously. Looking at gross margins, I think you in Q4 mentioned that, you know, looking historically in the period, let's say 2016, 2017, you had a gross margin of, let's say 35%. You're now at 33.5%. Just maybe some commentary if, you know, I guess you're up to speed with price versus raw materials, but efficiency-wise, you know, do we still have, you know, some way to go on the gross margin? Yeah, of course. I mean, you know, if we get, as I said before, if we get products and can produce orderly, then we have a very nice running machine. We are not there. I, you know, we don't like to overpromise either. You can imagine when you always have stop and go, stop and go, and you have all the staffing, it's not only that you have stop and go, you have all the staffing. All the factories, we have more than necessary operators to be able to cope with the situation where new components are coming in that we've been lacking. Those extraordinary staffing is going to produce what we missed yesterday. The ordinary staff, they're gonna produce what's already planned for today. That is a heck of a situation for us and also to motivate people because they say, "Well, okay, now I have to wait four hours," and then the new component, crucial one, arrives. Then everyone has to work like crazy, perhaps even work overtime and say, "Well, I didn't work in the morning. Why do I have to work two more hours now in the afternoon?" No one gonna make a productivity hit out of that. Of course, when we get components, then we're gonna be more efficient without question. We also assume that we are not the only company in this segment that is suffering. Sometimes it's almost like we be the only one suffering. I would be surprised if we've been penalized more than anyone else in the industry. We assume that our suppliers are fair, just like we are fair to our customers. We cannot put priority on anyone. We know that our customers are not satisfied. We know that they are angered sometimes that we cannot deliver. We say, "Well, we cannot favor anyone in front of the other." We just believe that our competitors are treated in the same fashion. They are not up at their full speed, up at their full efficiency, we would assume. I mean, we don't have daily control and not even yearly control because... That's why we are a little bit, shouldn't say secretive, but not so open with everything because we are about the only company being listed. We give out margins and ambitions and everything. Most of our colleagues, you know, but for the Italian company now, Ariston, they are not so open with their information. Mm. Mm. We have to keep that kind of a competitive edge. All right? Yeah. No. Yeah. No, I see. You know, well, well done during the circumstances and exciting to follow you in the coming quarters. Thank you. Thank you so much. I'll step back. Thank you. Yeah. Thank you. One moment, please, whilst we take our last question. Our final question comes from the line of Douglas Lindahl from DNB Markets. Please go ahead. The line is open. Hello, Erik and Hans. Thanks for taking my question. I wanted to come back to the sub-supplier topic, and I realize, Erik, you wanted to be a bit secretive here. Is it possible to share some sort of insight on what components you're missing specifically? I know that fans was something you missed historically, and from my understanding, fan manufacturing capacity has been built out quite a lot. Semiconductors should have improved quite a lot. Just if you can comment a bit on that would be interesting. Well, as we say, you know, I think it's a gentleman's agreement or a lady's agreement that you do not sort of name or badmouth anyone. It's a correct observation that fans being a problem in the past, they are in that group or the manufacturers are in that group where we say they have built up their capacity satisfyingly. On the semiconductor side, we are not saying that we've returned to the price level where we'd like to be. Due to our own ability or abilities to reprogram semiconductors, that's not the major issue as far as availability is concerned. As far as price, it's still a concern. Mm. We never very seldom stand still because of lack of semiconductors. Prices have not returned to where they were before, so it's still a hit to the margin. I don't think that we're gonna dwell on those suppliers again, not, you know, being up at speed. I think that would be that would be out of question. That's not our style. As I said before, if you were sitting here and reading our papers, you'll find less than 10 companies that are causing us a problem now. Hmm. Okay. Interesting. On pricing, how are you thinking now, going forward in 2023 for Climate Solutions? Are you in a position that you will continue to raise prices, you think, or, will you stay at these levels? I mean, our idea has never been to increase prices, you know, more than necessary. In the past, I think you if you've been listening in, you've heard that we on the contrary have been very cautious, saying, well, we try to absorb some of the costs ourselves. The last six or seven quarters prior to today and to a lesser degree, of course, first quarter this year, we've been so brutally hit by price increase ourselves. There's no way that we could have absorbed that ourselves without increasing our own prices. On top of that, as I tried to explain earlier here, having so erratic supply chain, you know, that has hurt our productivity on top of that. We are not after price increases just for the sake of it to say, now we're gonna increase our margin. Our philosophy is really to be as efficient as possible ourselves and try, still try to absorb some of the costs on our behalf here. Of course, if we are not able to do all that, then we might have to increase, but that's not our style. It's been extraordinary that we have been forced to increase the prices like we've done, you know, the last year or so. We're not aiming for that. Of course, we follow the market. I mean, we can't be a solitude. We are all solitaire. We are like any other company exposed to, you know, price increases or price decreases. We just hope that we gonna be out of this terrible, crazy Inflation Act where everyone takes a chance to dig in a little bit. Mm. That doesn't correspond to our philosophy at all. I guess you're still. I mean, the NIBE Climate Solutions margins are very strong, record strong, right? I guess. Yeah, of course. When you expand like we do, I mean, you don't need per se a new managing director, starting myself, even if you sell 40% more. Of course, that is, you know, typically a very good example. You have so many individuals that can still cater for, you know, the same or not so much more volume. Of course, that means that your gross margin improves. That's the whole business, you know, to grow, and then your overhead becomes lesser. That's pretty clear, natural. Yeah, that's obvious of course. Historically, the operation leverage hasn't been as strong, which was sort of why I mentioned that. No. No, No, no, that's true. Neither has, you know, the market been so buoyant and neither has the growth been so quick as we said before, we've had growth of some 25% over some years, but not to this degree. Yeah. Yeah. That's super strong. Thank you so much. You sound a little disappointed in your voice there. No, no. Not at all. Not at all. No, thank you. That's excellent. Thank you for your answer. Thank you. Thank you, Lindahl. All right. I believe that we have to rush to another meeting here now if we are not temp online. Thank you. As there are no more questions registered, I'll hand back to our speakers for their closing comments. Okay. All right. Again, thank you for calling in and listening to us. Of course, we don't answer every question fully, although we could, but that's a little bit of a, you know, our edge to keep some of the information to ourselves. We appreciate always these discussions and that keeps us on our toes. Thank you very much. Thank you. This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.