Teleconference Q3 2022. For the first part of the call, all participants will be in listen-only mode, so there's no need to mute your own individual lines. Afterwards, there'll be a question-and-answer session during which you can ask your questions in either English or Swedish. Today, I am pleased to present CEO Nils Carlsson and CFO Sofie Tarring Lindell. Speakers, please begin. Good morning, and welcome to the Q3 presentation for Resurs Holding. Let's swiftly move on to page two. My name is Nils Carlsson. I'm the CEO of Resurs Bank, and together with our CFO, Sofie Tarring Lindell, we're going to present our development for the third quarter of this year. With me, I also have Stefan Noderén, who is our Chief Credit Officer, and he's going to be our active CFO during the time when Sofie will be off on parental leave starting in the middle of November. Page three, slide three. For a summary of Q3 2022, during the third quarter of 2022, we saw good growth in both our segments, and the lending book was up by 12% to SEK 35.7 billion. Excluding a net financial transaction, we saw an increase in operating income by 7%. We also see that the NBI margin increased by 0.2 percentage point compared to the previous quarter, Q2. Cost of risk ratio was stable, 2.2% it amounted to. If we look at net profit growth, excluding net financial transaction versus last year, during year-to-date 2022, we see an increase by 7% compared to last year. Our financial position and capital position remains strong and stable. Total capital ratio amounted to 15.8%, which is approximately 2.4 percentage point above the regulatory requirement. Slide four. In the third quarter of 2022, we saw a world around us which was fairly turbulent. At the same time, Resurs has a stable line of operations. As I mentioned, the third quarter showed a strong growth in our loan book and an improved margin. The journey of transformation we've mentioned several times before is well underway with a high level of activity in both our segments and in all our markets. If we have a look at our focus on B2B, it's showing results. During the quarter, we started up a new collaboration with Komplett, one of the largest e-commerce players in the Nordics and leading in distribution and resale of office and home electronics. Komplett are using Resurs' cloud-based B2B platform, creating opportunities and openings for products which are optimized for company financing. We also see that the demand for sustainable investments is greater than ever. We've started up a collaboration with Skandia, where we offer Swedish consumers green mortgages adapted to sustainable investments in their homes through the platform recently acquired by Resurs from Hemma AB. In this way, we give private individuals an opportunity to invest in their own energy supply, create, and maintain balance in private finances, and at the same time, we're contributing to the transition to a more sustainable society. The development of our cloud-based core banking platform is progressing according to plan. We're creating the opportunities for rapid, simple, and secure customer experiences and in time also improve scalability and efficient operations. We'll be able to offer personally adapted self-service services in real time, and we'll also be able to integrate towards innovative future fintech solutions to a much greater extent than before. During the quarter, we've also produced and rolled out a campaign to make ourselves known to more and show what ambitions we have. Towards the end of the quarter, we launched a Nordic marketing campaign, We Know the Feeling, and you can find out more and see it on various online channels. Slide five. Moving on. For the past while, we've increased our transparency on these calls in the different markets to show our development and what it looks like. Compared to last year, we've seen a positive development in all our markets with the exception of the Danish one. Looking at the Swedish market, we see a loan book continued growth by 11%. That's good growth both for the quarter and compared to last year. We also note with satisfaction that the Norwegian market, which has been negative, is now growing by 6% compared to last year. In Denmark, as I mentioned, we have a negative growth, and we're impacted, like the rest of the industry, negatively, adversely by the Danish Financial Supervisory Authority's requirements on credit assessment procedures introduced at the beginning of the year. We focused very much on automating the customer journey and improve how we gather and collect the external customer data according to the supervisory authority. You need to bear in mind that Denmark remains our smallest market, however. If we have a look at the Finnish market, we've had very good growth over the past quarter, and there's no difference in Q3. We continue in the same way and we're growing by 15% compared to last year. Slide six. Let's have a look at our business segments, starting with Payment Solutions. In spite of a fairly turbulent world around us, we've seen stable demand for our products and services during the quarter. We continue to grow. We're gaining market shares also outside of Sweden. You see that lending to the public as per the 30th of September 2022 was up by 12%. Factoring services is one important component in our future growth strategy, and that's why we're particularly happy to be able to note that in September we started up cooperation with Komplett, as I mentioned earlier. To aid and assist our partners with their online presence is something which is crucial to us. We're historically strong in segments with, for example, higher average ticket sizes. One example is the new cooperation with Välinge Flooring, a fellow subsidiary to a company which invented the click flooring, for example. During the past quarter, they've started to offer Resurs installment payments in their e-trade solution. That's only one example of how we help our customers online. Moving on to slide seven. If we look at our other business segment, Consumer Loans were growing by 11% in our loan book. We see continued strong sales and increased profitability in the Swedish market. During the quarter, we achieved yet another new sales record, and the loan book grew very significantly compared to previous year. In spite of the increased focus on profitability, the demand in the Swedish market has remained stable, and all our channels have contributed to this sales growth. Compared to the same period last year, the loan book in Norway remains stable, and our measures to increase the NBI margin in the portfolio is starting now to generate effects. It's had a very positive impact. In Finland, we see good growth. Our sales through our own channels have remained stable during the quarter, and it's up as a total share of sales. We see more competition, lower demand in external channels compared to earlier. It's very likely the uncertainty in the interest rate development and higher inflation, which are considered to be the main reasons why customers are somewhat more cautious. We see since the introduction of stricter rules and provisions in Denmark by the Danish Financial Supervisory Authority, Finanstilsynet, that there's an impact in Denmark. We work with continuous improvements in the Danish market, and like previous channels, we focused intensively on automating the customer journey and improve the process for credit assessment. Now I'm going to hand the floor over to Sofie. Thank you to Nils. As always, let me just state that all figures in this presentation are excluding one-time effects. We continue, and we look at the loan book growth. Like Nils has said, loan book was up 12% compared to last year and now amounts to SEK 35.7 billion. In constant currencies, growth was 9%. We also had good growth compared to Q2, and the loan book was up 3%, which is gratifying to see that we have good growth in both the Payment Solutions and the Consumer Loans. If we continue with the income, operating income for the quarter was up 6% compared to last year and amounted to, in total, SEK 810 million. Net interest income as well was up 6% due to higher volumes and price adjustments that were carried out in the quarter. Compared to Q2, NIM was up 10 points. The higher interest rate situation and the actions of central banks will have effects on our activities, and we're going to continue to work actively with the price adjustments in the future, just as we have been doing this quarter. As was said at the Q2 report, there could be some timing effects as to when and how we can make those price adjustments on deposits and lending. If we continue with fee and commission income, it was up 15%, thanks to strong volumes in new sales. Net income from financial transactions was SEK -9 million compared to SEK +3 million last year. That is mainly due to the unrealized depreciation of interest-bearing securities being a consequence of the market volatility that we see in the interest rate market. Excluding that, the operating income was up 7% compared to last year. If we look at the total NBI margin, it's lower than last year due to lower margins in Norway and the mix effect within payment solutions is something we've been talking about before. It is very positive that compared to Q2, NBI margin was up 20 points, and that is the highest level that we've seen in 2022. If we continue with the cost of risk, Nils has said that the cost of risk compared to last year, well, it's stable, amounting to 2.2%. In absolute numbers, cost of risk was up compared to last year and last quarter alike, and that is because of the loan book growth, but also because of the financial forecasts are having an impact on our macro model and of course, the turmoil around us. The increase compared to Q2 is because of the macro provisions, and I want to stress that in the quarter we see a stable payment pattern from our customers that has not changed. We see no change in how customers are acting. As we have said before, we follow the financial developments in society carefully. If we continue with next slide, you can see that we have long experience in working with credit granting. We've been doing this since 1977. Since the beginning of the 1990s, we have had a credit loss level between 1% and 3%, and also during turbulent macro times. One of the reasons why we have such a stable history, and you know about this, is that much of our lending is to customers where we have unique information about their payment patterns on consumer credits, and at the same time, we have a conservative stance to credit granting. That in combination with the actions that were taken at the start of the pandemic, that is something that we feel will serve us well in the future. We work methodically with the continuous follow-ups, and during the quarter, we have also looked at inflation interest rate situation, and we've decided to make adjustments at the models that we're working with in order to ensure that the growth that we bring in will be profitable over time. If we continue with the segments, and if we start with Payment Solutions. Payment Solutions loan book, it was up 12%, 9% in constant currencies compared to last year. Compared to last quarter, growth was 4%. Growth is mainly due to retail finance and B2B, whereas loan book within credit cards is flat. Compared to last year, income is stable, margins are lower, and this is because of the fact that the bigger proportion of the loan book today is from partners and sectors where we have a lower margin. Segment is also negatively impacted by net financial transactions. Excluding that, the margin would have been strengthened with 20 points compared to Q2. Income is up 6% and the total NBI margin is strengthened with 30 points, and that is mainly due to price adjustments that were made in the quarter and also the improved mix. Cost of risk ratio has improved compared to last year, which is because of the underlying improved credit quality. At the same time, we also know that the cost of risk ratio in Payment Solutions is somewhat more volatile, something that we've also seen historically. If we then look at Consumer Loans and those activities, we see that the loan book was up 11%, 8% in constant currencies, and here is mainly Sweden and Finland are driving growth in percentages and also in absolute numbers. Compared to last quarter, growth was 3%. Income was up 8% compared to last year, and the lower NBI margin is explained mainly by the lower margins in Norway that we've talked about before, and also net financial transactions that had an impact, a negative impact on the NBI margin with 10 points compared to last year. If we instead make a comparison to Q2, income was up 4% and the NBI margin was strengthened with 20 points, mainly due to price adjustments that were made in the quarter. The credit losses of the quarter was up in absolute numbers and also as a percentage of the loan book due to growth in the loan book and higher provisions due to negative financial forecasts that will have an impact on the reserve based on the macro model in IFRS 9. as has been said before, the customers' payment patterns were stable in the quarter. If we then look at expenses were up 9% compared to last year, and that is mainly because of higher IT costs and also a number of smaller items of one-off character and the C/I ratio in total was 40.6%. We do have a higher ambition level when it comes to efficiencies, and the objective to reach a C/I ratio of 35% in three to five years is an important guiding star in our transformation. If we look at the operating profit adjusted for net financial transactions and one-offs, the result was stable compared to last year. If we are to summarize the first nine months of 2022, excluding net financial transactions, operating profit was up 7% compared to last year. Since Q4 2021, we have had a positive development quarter by quarter in the operating profit. If we then continue with page 17 and our capital position, you can see that our capital position remains strong, with a capital ratio 15.8% and CET1 being 14.2%, which is well above regulatory requirements. The reason why the capital ratio numbers are lower than last year is partly due to increased growth, but also the fact that we in January repaid a subordinate loan that was issued in January 2017, which had an impact on our capital ratio with 0.6 percentage points. As we've said before We think that capital requirements will increase in the future. To conclude, I have a slide of our funding. We have been working with the funding for a long time to make it more diversified, and this is something that serves us well in these market conditions. Our LCR was 222% in the quarter. With that said, I'll hand back over to Nils. Thank you very much, Sofie. If we look at the upcoming period, it's no major secret that we'll continue to focus on strengthening our profitability and our growth. We're going to continue to focus on new partnerships in retail and continue to maximize the potential we see in all our existing collaborations when it comes to Resurs Bank. We'll continue to focus on developing our new cloud-based core banking system. It's a central component to strengthen our competitiveness over time. During the quarter, we've experienced that the general demand for credit has remained good, but over time there's uncertainty as to the demand for credits, how it might be impacted as a result of the existing macro situation. You need to bear in mind at the same time that there's potential in this. We have an opportunity, for example, to assist clients and customers when there's great demand for energy investments, for example, and installment payments in tougher times. With those concluding words, we'd like to say thank you for your attention and we'll open up for questions. It's time for the 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 is announced, you can ask your question. As mentioned in the intro, you can ask a question in both Swedish and/or English. If you find your question is answered before it's your turn to speak, you can dial zero two to cancel. Once again, that's zero one to ask a question or zero two if you need to cancel. Our first question comes from the line of Patrik Brattelius of ABG. Please go ahead. Your line is open. Thank you very much. Yes. I have a few questions. I thought I'd begin by asking about costs. Historically speaking, you've been able to keep good tabs on costs, but they're up by almost 10% year-on-year. You've mentioned increased IT investments. How should we perceive this for the future period when there's wage inflation? Not least, what about the cost volume generally in the next year? That's correct. We have somewhat higher costs, but at the same time, you need to bear in mind that we have quite good cost controls. We have our IT investments that is a driver of cost, but we're keeping good control of it. We don't believe that you as analysts need to expect any major increases of costs. Sofie might want like to add something. Let me just say, Patrik, that if we look year to date and compare to last year, the cost level all in all is up by 3% in total. We said in Q2 that we were a little bit lower than the cost side then. 3% is where we're at year to date. That's what we need to focus on for the future. We have a different situation when it comes to inflation. It might impact cost, but we don't see any major dramatic impact. You don't expect an acceleration in IT investments, for example, for the next two to three quarters? No, we don't. Okay. Thank you very much. You showed a graph which showed credit losses from 1990. When we move into a downturn in the economic cycle, lower disposable income for private individuals to some extent, how do you yourselves expect credit losses to develop over the next few quarters? Well, we don't give guidance on that moving forward, but there are risks when the disposable income of households drop, and it's going to have an impact on credit losses. However, we monitor this carefully. We have good controls of our lending portfolio, and we haven't identified any dramatic expectations here and now. I think that's what we can say for now. Okay. Let me turn it around a little bit and put it this way. Credit losses to some extent are based on future focused macro models that you've built up. Could you tell us a little bit about the sensitivity in this and how your credit losses would have been impacted if we had seen an even weaker forecast for GDP growth in your macro models and somewhat higher unemployment? Could you give us any sense of where that would have taken us? Well, those exact details and how this works is not something we can go into in detail. But if the forecasts continue to disimprove, to deteriorate in the future, our models will produce a requirement for provisions. That needs to be taken into account. The important point, something we work on a daily basis, is how we manage our credit portfolio in such a development and be fully updated on how actual credit losses develop. Thank you. A final question from me when it comes to the new collaboration with Skandia. Could you tell us a little bit about your expected volume increase as a result of this collaboration? No, it's not to be seen as a major volume driver. This is a complement to our operations and a possibility for individuals, for consumers to choose somewhat higher tickets, bigger ticket sizes for energy-related investments. There's quite a lot of demand for this right now. We're not expecting any major volumes in that collaboration. Let me also add that we are brokering mortgages to Skandia, so we receive compensation. The loan book is in Skandia's portfolio. That's right. Yes. I think we've discussed this before. Thank you very much. Thank you. Our next question comes from the line of Jens Hallén of Carnegie. Please go ahead, your line is open. Thank you. First of all, about the margins. This was the first time for 10 quarters where we've seen a positive margin, and two questions. The Norwegian mix effect that has put a pressure on margins perhaps, and maybe that is slowing down so that we do not see as much of that in Q3. We might imagine that it will take some time for you to shift around the things in your loan book. What is the situation and what are the driving forces that we can expect in Q4, time effects, funding costs, things like that, and the price adjustments that might happen? Could you give us a bit of a feeling for what will happen? Well, looking at the Norwegian market, as you know, that has been a bit of a problem child for us for quite some time now. We've seen decreases in the loan book. What we see now is clearer now that we see growth in the loan book in Norway, but it's taken time for us and perhaps more time than we was expecting. Norway, well, we see strong demand. It's a good market. Ever since we have the debt register, the Gjeldsregisteret, in 2019, and while margins have improved, we have better volumes, we know more about our customers, what customers we should focus on, perhaps not bring into our portfolio. There are many things. Still we do have challenges in the Norwegian market that we can still see. However, this is a big shift in the trend that we see in the Norwegian market with better volume growth, better margins, among other things. You also had a question about funding. Well, I can try to answer. Hope I remember your question correctly. The central banks will act, and that will have effects on the funding, and it depends on competition in the market. It also is a bit of a different in different markets, what we can do and bring over to customers, Norway and Denmark. We might see some timing effects, and we might see some timing effects within retail finance as well. Together with partners there, well, we discuss this and who should pay for the higher funding cost, the partner or the final customer. There might be effects there. in Q3, we haven't made increases, and that will have a full effect in, well, what we will see in deposits, and that might act both ways. Q2, Q3, we have been proactive with increases that have been made. that's why I'm asking really. driving forces, well, I would have imagined that you would have seen margins under pressure, and perhaps that you see margin effects coming back, but we haven't seen that in Q3. it looks like you've been able to break that negative trend on margins already in Q2. my question is, can we expect to see something like this also in the future, that you make price adjustments, so disruption in the trend, so to say, that should give a bit of a more impetus for margins in Q4? Is that correct? Well, I think that you should expect stable margins in the future because there are different timing effects. We work with the different partners. We have renegotiations, and we've been able to have some of those renegotiations earlier on. We've seen some bigger increases now recently that we perhaps did not expect. For the future, we're working for a stable NIM and NBI margins. Okay, thank you. Credit losses. Thank you, I would like to say, for page 12 because that was a really exciting image. I'm not really going to talk too much about it now. Perhaps we can do that later. When COVID came, you were very quick. You changed your templates, and you reduced your risk appetite, and that gave good effects. Now, when we might be heading towards a recession in 2023, have you done something here or are we talking about the changes that were made previously and you think they suffice for the future? Well, we haven't really made any changes now similar to what we did when we entered into the pandemic. We see that what we did then is serving us well in these market conditions that we're entering into now. However, in the different NBI margins that we're using for the different markets, we have made adjustments to the costs that we use in the models, and we have adjusted those for the inflation. Okay. Thank you. Last question. Oh, Lord. Yeah. Mortgages and Skandia, you get a fee, distribution fee, and that is positive. The product as such and this fee for distribution, is it something that will be significant or is it more of getting customers to Resurs? Is this that you're adding more and more products so that Resurs will be the place to go to for customers? Well, I said this before that we think this is a very exciting product. Of course, we want to test it, and we're really happy to have this collaboration with Skandia. As I said before, we shouldn't expect any huge volumes or huge commission income. We want to see how this develops the next few quarters. It's a very exciting product. Sofie has already mentioned that it's not mortgages that we bring into our books. If you think that, you have misunderstood what we do. This is an opportunity where we want to give consumers a possibility to invest in sustainable investments because there's a huge demand for that, be it solar, other types of energy. We think that it's really exciting, and it will be very exciting to see how this will develop. That is what I can say right now. Okay. We'll just have to wait and see if you add products. To conclude, you've been talking about B2B and that segment and the partnership with Komplett. Could you explain what that will do, to help us better understand what this might lead to and how it will impact other products? Well, the B2B side for us is a product where we have good margins for the bank. Historically, we've focused on the technology shift. Now we're switching the core banking platform, and previously we have made changes to the factoring side and B2B side. I think that is what you should think about. Komplett is the biggest customer right now that we get that is on this cloud-based platform that we offer, where we have factoring services, buying invoices, and it's something relatively big, and we're very happy to have been given this confidence. I can add that B2B is about 1% of our total income right now. It's a very low percentage of income. It might grow, but it's not one of the bigger drivers for income. Exactly. You've also talked about that in your report, and we'll see what happens. It was a nice turnaround in Q3. We're looking forward to 2023 and 2024. Thank you. Thank you. Our next question comes from Emil Jönsson at DNB. Please go ahead. Your line is open. Good morning. Thank you very much for this presentation. First of all, I have a question on costs. In your report, when you talk of costs during Q3, you mentioned that they were up by 9% year-over-year, and that this was due to increased IT costs. There's also a mention of small, one-off non-recurring items, but I can't see that we've seen any explicit items in the numbers. Should I interpret it that there are one-off costs which have not been explicitly mentioned in the Q3 numbers, or am I misinterpreting this? No, they're included in the Q3 numbers, and the reason for this is that they are non-recurring cost items, but they're not reported entirely as one-off. We don't expect them to be incurred again, and there's a number of smaller ones. That's why we've chosen to express it this way, but they are included in the numbers we've shown you in the presentation. Okay. W hat's the order of magnitude? Is it SEK 0.5 million or SEK 10 million? It varies a little bit from one cost item to another, but there's nothing dramatic. The sum, the total sum is an amount that we felt we wanted to mention specifically at least. Okay. Thank you. I also had a question pertaining to the information you give on, and that you hold on customers in consumer loans in particular. Am I right to assume that you have complete or virtually complete, data on the other loans held by customers such as mortgages, for example? Stefan Noderén here. Yes, you could say that. Having said that, we have this information from the credit processing and, granting point. This is not something we update regularly, due to the current, regulatory provisions, what's required by law. Okay. Thank you. I understand that you don't do explicit calculations for private individuals, but I would expect that you've made some sort of stress testing of their resilience, at least. If we say, for example, that you end up at a 4% interest rate and some additional inflation added to that and some unemployment, when should we expect that a significant, share of the customers are in financial difficulties? There has to be a line, a limit somewhere where you stop seeing absolutely no impact on the payment patterns of the customers. Correct. Thank you. The line can be identified somewhere, of course, but we have very good control, of our credit portfolio and how the risks are moving in the portfolio. Having said that, we're also not naive. There are risks inherent in a drop in disposable income. If there's a further deterioration, the risks will increase. We have a number of scenario analyses that we've made based on all the available data that we can access. You need to also bear in mind that this is highly individual. The households and private consumers' knowledge of and awareness of what type of margins you have, what other types of expenses you have to cover, and where you can strike a balance. It's difficult to give an overall general answer. Of course, the higher the policy rates and the interest rates generally and the higher and more insistent and constant inflation becomes, risks will increase. That's something that we monitor on a daily basis to ensure that we know how the development impacts the movements in our portfolio. Okay. If, for example, you wanted to look at the 10% of the private customers who have the smallest margins in their private finances, could you say anything about their resilience in sort of the tail end of the loan portfolio? When it comes to cost of risk and credit losses, they, the ones with the greatest risk, of course, are the most interesting to look at closely, not just aggregated across the entire portfolio. Well, I agree with you. The ones who are on the margin are the most relevant ones to have a look at, and we do this. We don't have a crystal ball. We can't know where the policy rate heads off. We don't know where inflation will end up. It's difficult to surmise a guess on the actual concrete development. We do see for the foreseeable future that the single most important parameter, all else being equal, is how the labor market develops. Because as long as people have jobs, they have room for maneuver to balance their costs. Okay. Those were all my questions. Thank you very much. Thank you. Thank you. There are currently no further questions from the phones at this time, so I'll hand the floor back to our speakers. Okay, Okay, we say thank you. Thank you for your interest in our Q3 presentation, and thank you for all the questions, and we wish you a wonderful day. Thank you. Good morning, and welcome to the Lindab Q3 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing Star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on your telephone keypad. To withdraw your question, please press Star then two. Please note this event is being recorded. I would now like to turn the conference over to Ola Ringdahl. Please go ahead. Thank you very much. Hello, and welcome to this call. My name is Ola Ringdahl, and I'm the President and CEO for Lindab Group. Next to me, I have our CFO, Jonas Arkestad, who will help me to answer questions. Let's start on slide number two. Lindab continues to develop in a positive direction. We are going through a major transformation in the past three years. We have divested Astron Building Systems and focused on our core business in the HVAC and ventilation segment. We have upgraded our production sites through an ambitious investment program, and we have managed to complete 17 acquisitions in the past 2.5 years. In Q3, Lindab increased sales by 30%, of which 20% are related to acquisitions. Felderer in Germany and R-Vent in the Netherlands are the main contributors to the acquired growth. The organic growth in the quarter was 7%. Our operating profit was a solid SEK 361 million compared to SEK 403 million last year. The operating profit is one of the highest Lindab has ever achieved for a single quarter. The adjusted operating margin reached 11.1% in Q3, and 12.1% year to date, which is above our financial target of 10%. The operating margin is lower than for Q3 last year, and it should be noted that the comparison numbers are high. I will comment more on the margin development later in the presentation. Let's take a closer look on the sales development on the next slide. For Lindab, the quarter began with unexpectedly weak sales in the month of July, but during August and September, sales developed as expected. Sales in the acquired companies have developed well. Ventilation Systems reported organic growth of 8% in the quarter, and Profile Systems reported organic growth of 6%. In July, we experienced lower volumes than previous year. In August and September, volumes were more in line with previous year. Now we move to the EBIT development on the next slide. On this slide, you can see a 12-month rolling trend of the adjusted EBIT margin, and you can also see the red line, which is the quarterly margin development. Lindab has had strong earnings growth and margin development during the past four years. The margin level in 2021 was particularly strong, especially in the third quarter, as you can see in the graphs. There are three main reasons why we see lower operating margins in quarter three of this year versus last year. First of all, the comparison numbers are clearly challenging. If we look at the years 2018 to 2020, the average operating margin for the third quarter was 10.8% for Lindab. In quarter three, 2021, it was 16.2%. As I have mentioned in previous calls, Lindab's operating margin in 2021 was boosted by increasing raw material prices. Lindab managed that well and reacted quickly. We managed to increase prices to compensate for these effects, and we were successful in doing so. During the past six months, steel prices have declined, and Lindab is experiencing the opposite effect of 2021 since we prioritize high delivery capacity and the necessary safety stocks so that we can always deliver to our customers. This means that there is pressure on our gross margins during the second half of the year as we turn over our stock of raw materials, but these effects will pass. Secondly, the high energy prices in Europe have created strong cost inflation for raw materials and for transports. In an already strained market, Lindab has not been able to fully compensate for this yet. Finally, there is a margin effect from the acquired companies. The acquired companies are profitable and successful companies, but they are joining Lindab with a lower average profitability margin. The dilution effect on the operating margin in quarter three is approximately 1 percentage point. Over time, the acquired companies' margins will increase as the positive synergies are implemented. Now let's move to the next slide and the financial position. Cash flow from operating activities increased to SEK 260 million compared to SEK 202 million in quarter three last year. Our cash flow has been strained in the past year because of the high raw material prices, and we have tied up additional cash in our inventory. If the steel prices remain stable on the levels we have seen since August, we expect a positive impact on Lindab's cash flow in the next coming quarters. Net debt has increased as a result of completed acquisitions and increased capital tied up in stock of raw material. It is not the stock levels as such in tons, but rather the changes in raw material prices that are affecting the stock value. The net debt to EBITDA ratio is at 1.3x, which is on the right side of the target level that we have to stay below 3x. Our financial position remains strong and supports continued growth, both organically and through acquisitions. With that, I would like to move to the next part of the presentation, Building a Stronger Lindab. We start on slide number seven. Let's start by talking about acquisitions. Lindab strategy is to acquire well-managed, successful companies that complement our offering in selected regions and product areas. The acquired companies continue to operate independently under their own brands, while at the same time benefiting from Lindab's sourcing agreements, expertise, and sales network at their chosen pace. During the quarter, we have acquired four companies. In June, we announced the acquisition of Muncholm, and with Muncholm, Lindab gains established relationships with architects, builders, and tinsmiths in Denmark. Acquisition was closed in July and adds approximately SEK 250 million in revenue on an annual basis. Muncholm will belong to our business area Profile Systems. In July, we acquired Eurovent in Sweden. They manufacture rectangular ventilation ducts in the Stockholm area. Eurovent will be part of Crenna, and Crenna was an acquisition that we made in 2020. Both Eurovent and Crenna produce rectangular ventilation ducts, and we see very good synergies between these two companies and with Lindab overall. Eurovent has sales of approximately SEK 55 million on an annual basis. In September, we made an acquisition in the U.K., and this was in the area of fire protection. DISYS Technologies have developed intelligent fire and smoke control and monitoring solutions for ventilation systems. They have sales of approximately SEK 18 million on an annual basis with excellent growth prospects and very healthy margins. Also, in September, we made our first acquisition in a long time in France. With Liftas ud, we will increase sales in France by 50%, 50. Liftas ud gives an extended distribution network, and we gain access to a broad range of HVAC products. Liftas ud has sales of approximately SEK 250 million on an annual basis. In total, we've made eight acquisitions in 2022, and in 2020 and 2021 combined, we made another nine acquisitions. The companies we acquired in the last 12 months have added 20% sales growth in the third quarter. Some of the larger acquisitions have had a lower margin than Lindab in general when they have entered the group, and this makes the average margin for the acquired companies lower than the group. As these are well-managed companies where we have dedicated and skilled management teams, I'm confident that the margin levels will increase over time. A good example of a positive synergy comes from Felderer in Germany. They are one of Germany's largest ventilation distributors, and we acquired them in April. They are now planning to launch the Lindab Safe ventilation ducts as part of the product offering. This is an excellent way to please both customers and raise the margins for both Felderer and the Lindab Group. With that, let's move to the next slide. Investments. Lindab's investment program has been at the top of our agenda since 2019, and it's rewarding to see how the benefits become more and more visible. In the third quarter, we invested SEK 72 million in our operation, in our European operations, and we will continue to invest on a higher level until 2025. This will gradually be reduced every year now since we have completed a large part of the program. We reached the peak of these investments in the year 2020. Now let's move to slide nine and talk about Lindab's market in the future. We have shown this slide before about the increasing demand for energy-efficient and sustainable solution. This remains very high on the agenda, and especially so with the current extraordinarily high energy prices in Europe. Buildings in Europe make up about 40% of the total energy consumption in Europe. To reduce the amount of energy consumed in Europe, we believe that there will be a major renovation wave in terms of energy efficiency for buildings. We can already hear from the major ventilation installers that they're increasingly busy with energy efficiency projects. The demand for energy efficient ventilation and sustainable solutions will favor large suppliers with premium products and a strong sustainability profile. Lindab is really at the forefront here, and we aim to take a leading role in this transformation all across Europe. We can move to slide 10, Outlook and Priorities. In the short term, we are prepared for a scenario with lower demand and volumes for both business areas as the construction industry suffers from higher costs, rising interest rates, and longer decision times. This is specifically for the part of Lindab's business, which is aimed at the new construction of new buildings. However, in the medium term, we are quite optimistic about both the industries and Lindab's p prospects. The high energy prices put even more focus on well-insulated buildings and energy-efficient ventilation, which benefits Lindab. We expect a long period of renovation of public and private properties in Europe. As Lindab has half of its sales today towards renovation and remodeling, we see good, very good growth opportunities in this segment as necessary energy efficiency projects are started throughout Europe. Within new construction, the demand for sustainable and energy-efficient buildings will increase further, also to the advantage of Lindab and our leading product range. If we talk more about Lindab's near-term priorities, obviously, in the current economic environment, we are working with proactive cost measures to balance costs and the future outlook on demand. We are also adjusting our pricing to mitigate higher energy and transportation costs. Finally, with our strong balance sheet, we intend to continue to pursue attractive acquisition opportunities. The European HVAC industry is still fragmented, and there are plenty of opportunities to create long-term value as an aggregator in this industry, and Lindab intends to play a leading role here. We have a clear plan for how Lindab will continue to develop positively. After the transformation of the business in recent years, the subsidiaries in the group are well managed and profitable, and in our decentralized management structure, they are able to make quick decisions, and they take very high responsibility for delivering the required results. We now conclude this presentation, and we open up for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press Star, then One on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star then Two. Your first question comes from Carl Ragnerstam from Nordea. Please go ahead. Good morning. It's Carl here from Nordea. Firstly, you just said that you're looking to adjust prices again. What increases are we talking about? When do you expect to sort of implement them? And also on that note, I mean, we heard rumors that or actually fact that one of our biggest competitors is actually lowering prices on several ducts. I mean, so what is your pricing sort of strategy from here? I guess raising prices. Are you worried to sort of have long-term effects on your market shares when competitors are lowering, or how should we look at that? Thank you, Carl. I think there are several components in the pricing which you need to take into account. Of course, if transport costs increase significantly because of higher prices of diesel and other factors, it is necessary to compensate for that. Lindab is working very much with trying to be a sustainable company and to reduce the carbon footprint, and we think that putting the correct price on transports is a very important pricing mechanism to encourage a behavior which is also taking the environment into account. We are not able to absorb higher transport costs, so these types of costs need to be forwarded to the user, to the customer. If we talk about electricity and energy costs, well, we have seen very sudden increases in Europe, especially after Russia's invasion of Ukraine. Normally, in a normal environment, these types of costs are built into the product price, so to say. But we see that with these significant fluctuations in energy prices, we need to either add them more quickly to the product pricing or, in many cases, we need to add them as an extra charge for specific energy costs. There are different ways to compensate for this. If we talk about the general price level, we do not see any possibilities to reduce prices, at the given how the inflation in Europe is working. Yes, steel prices are coming down, but many other costs are increasing rapidly. All in all, I believe that price stability is what we will aim for going forward, with some certain surcharges on specific costs that have increased significantly in the past months. If we look back over the past, I mean, two years or so, I mean, we had obviously a scarcity of steel. You had big inventories, and by that, of course, with a good brand also, but you managed to push forward prices quite nicely. Do you believe that your customers will take price increases now that we don't have scarcity on steel anymore and/or? I think there is no reason or nobody wants to implement any unjustified price increases. That is not what I'm talking about. I'm simply talking about compensating for the increased costs that you have as a major supplier. We aim to have a fair and reliable pricing to our customers, and we believe that to have, say, long-term pricing agreements with the customers is very important. It is also important that the customers know that you can always deliver. We have proven that during very tricky times, during the pandemic and during scarcity of material and also in connection to Russia's invasion of Ukraine, that we can always be relied on to deliver to our customers. I think they very much appreciate that. Of course, we aim to have a fair pricing model, definitely. Also a bit on sort of the margin impacts in the quarter. Is it possible to sort of rank the three points you're making in the report on negative impacts? Which one is sort of the bigger effect? I think they are in the order that they are written today is the correct ranking. The major or most important effect is the raw material effect. We had a tailwind last year, and we have a headwind during the second half of this year. We today have an inventory of raw materials that we have to turn over for the price levels or the cost of steel to come down. That takes around two quarters to do that. We are in that period now. Second effect mentioned in the comments is the other types of inflation that we see in Europe, much of it is energy related, but not everything is energy related. We also see a broader cost inflation in Europe, including salaries and a lot of different materials and services. That would be the second one on the list. The third one is a natural consequence of the acquisitions that we have made. The acquired companies are performing well, and they have developed very well under Lindab's ownership as well. They do enter Lindab at a somewhat lower margin level, and thereby they dilute initially the operating margin for Lindab. We will gradually work on that and get them up to the group level of profitability. By that with sort of constant steel prices from here, you said it, half a year inventory cycle, then is it fair to assume that you'll have a neutral steel price impact already in Q1 or Q2 then or? Around that time, yes. Okay. It's difficult to say an exact month because it depends also a bit on how the volumes are developing, et cetera. It will be in Q1, Q2, where these effects are diminishing. That is, of course, assuming that we have stability in raw material prices going forward. We will see about that. We have seen stability of steel prices, at least since the month of August. You know, we've gone through a period of two, three years here with extreme movements in raw material prices. It's best to be cautious when guessing what the steel prices will look like three or even six months from now. Okay. That's all from me. Thank you. Thank you, Carl. Thank you. The next question is from Douglas Lindell from DNB Markets. Please go ahead. Hello, Ola and Jonas. Thanks for taking my questions. I want to ask about your, well, obviously, the new construction business is most likely entering a tough period here in 2023. Talking about the renovation, the part of your business, 50% of sales, what sort of visibility do you have there? What are your sort of expectations there in the more short term? That's my first question. We hear from our partners or our customers, the big installation companies, that they are quite fully booked with these types of jobs. What that will look like half a year from now, I don't know. At the moment, the activity level seems to be very high, and there's, in many countries, a shortage of installation capacity for all the type of work that needs to happen. I think there are some signs also that the component shortage is easing up a bit. I think that part of the business will be increasingly busy going forward. Whether or not the installation capacity will be a bottleneck to really get full traction or not, I don't have to say. I am quite bullish about the activity levels on the energy renovation side going forward. Okay. In terms of, I guess we're as always entering uncharted territory, but going back historically, what is your experience from the performance of the renovation exposure relative to new construction exposure? Thinking about both, in terms of growth, but also on the margin side. Are you able to give some sort of comparison between the two? I would guess the renovation part is much more stable, but just hear your wording on that. Well, I have in some ways been a long time at Lindab, four years now, and in other respects, maybe not long enough to experience how this fluctuates over a complete business cycle. We, you know, our sales is to quite a large extent decided by the activities of our main customers, the ventilation installers, the tinsmiths and builders. They have their personnel resources that they allocate to the projects that are the hottest, and when new construction is weaker, they tend to find more projects or allocate more people to the renovation side. The type of products that Lindab that we are selling they are very similar whether we sell them to new construction or to renovation. The same components are needed. Yeah. We don't have perfect traceability of that. We listen to our customers and see how their activity level is developing. Okay, very clear. Switching topic and on the M&A side, very helpful with the comment on profitability. Also you mentioned that you have synergy expectations for Felderer. Are you able to give some sort of magnitude on by how much you think that could expand profitability for Felderer and then maybe a time frame on when you expect those impacts to come? No, I will not quantify that today. Felderer, I mean, today, they are performing around 5% EBIT margin, so that can be a data point. They are a ventilation distributor, and distributor margins in Germany are normally not double digits. We aim to support Felderer in increasing their EBIT margin through different activities. We aim to capture certain synergies from internal purchasing and insourcing of production as well. All in all, if we combine the different effects, we aim for Felderer to have a total integrated profitability on the same level as the group within, let's say, three years. It does take some time to lift it from the level where it is now. That said, I am very happy with how the Felderer company is performing, good sales development, extremely motivated organization, good plans. There is no criticism in it. It's simply how the German distribution industry looks at the moment. I'm quite confident that we can develop it further. Just a final question, if I may. On the investment program, where is your focus right now on the CapEx side? Since 2019, we've had a primary focus to automate production processes. It's for efficiency reasons mainly. There are two other important priorities as well. One is, you know, while automating our processes, we get the added benefit of higher production capacity so that we can grow organically without losing efficiency. The third aspect is that we are working very much with increasing the work safety for our employees. Old machines without the necessary safety equipment and so on should be replaced by new equipment where it is near impossible to injure yourself or your fingers, et cetera. Now we have come very far on the safety side. They have the safety investments always prioritized. We have pretty much eliminated the machine-related accidents in the company in a short time, which I'm very proud of. There's not so much more to be done there. When it comes to capacity investments, we have removed bottlenecks, and we are prepared for organic growth, strong organic growth when that period comes and when the European economy allows that. What remains is still some investments in the area of efficiency. We still have some decisions made waiting to be implemented, and we see that as we invest and improve certain parts of the production, other weak spots are identified where we can make very good investments. I think it's on the automation side where you will see the most investments going forward on a lower level than we have seen in the past two years, but still on a higher level than, say, Lindab traditionally has been on. Perhaps one extra comment is that the acquisitions they are of course also interesting investment opportunities and low-hanging fruits in those companies. They might not have been able to afford certain investments, or they didn't have the expertise to make the right investments or identify the right technical solutions. With our very skilled automation teams and machine builders, we are able to find the right solutions for those companies and find very good efficiencies in those companies. Thank you very much, Ola. That's a very extensive answer. That's all the questions from my side. Thank you, Douglas Lindell. Thank you. Once again, if you have a question, please press star then one. Your next question is from Anna Winström from Handelsbanken. Please go ahead. Hello, Ola and Jonas. Thank you for taking my questions. I have two questions, and maybe just beginning on, because I'm trying to figure out, like, as we now see steel prices that are decreasing and stabilizing at lower levels, at the same time, we're seeing costs such as electricity and transportation increasing. Could margins for Lindab become a bit more volatile, or how should we sort of think about the structure of your contracts on these costs? Let me see if I understand the question. I think for any industrial company, pricing and margins will be more volatile if all raw materials and services and, you know, utilities you have to buy, if that price volatility is very extreme, as it has been in Europe for the past two years. What all of us want, including consumers and, you know, in your household when you buy electricity, you want stability. You want to be able to plan, you want to be able to pretty much print the product catalog and send it out with prices, and it doesn't change. That doesn't work now. Inflation and wild fluctuations of a lot of your costs makes this extremely difficult. You have to be agile. That's the new word. You have to be very agile, constantly update. I'm hoping for stability, but we are preparing for several scenarios. I think the energy prices are especially difficult right now. How will the impact be when the winter comes in continental Europe? The costs for people and companies, they are difficult to estimate at the moment. When it comes to steel prices, I mean, steel prices have come down, but they are still 30%-40% higher than they were three years ago. There has been. They are on a high level. Will they be able to come down further? They have gone down, like, 50% from the peak. I don't think that they will come down much further because the energy prices are keeping the steel prices up. You know, we have to update our product calculations and all our assumptions every month. It used to be okay to do it every quarter or every half year, but now it's every month. We are careful not to make promises about very long price agreements. We need to be able to change costs. That's the best answer I can give. Okay, thank you. Maybe if you could maybe give us some comments on the different geographies outlook from here. In your report, you mentioned the Eastern Europe, for example, having quite a cyclical impact currently. Yes, I can try. Well, we say in the report that we have seen the most clear signs of a slowdown we've seen in Eastern Europe. We saw it actually in general in July, but then it recovered for the group in August, September. Specifically in Eastern Europe, we've seen volume decline in the quarter. Our Profile Systems is rather heavy in several of our Eastern European countries. Normally, we know from the past that Profile Systems is more sensitive to the business cycle than Ventilation Systems, and Eastern Europe is more sensitive to ups and downs in the business cycle versus Western or Northern Europe. I think this is what we're seeing. They are closer to the war. They are more exposed to very high gas prices, natural gas prices. The interest rates have been seriously increased in those countries. It would be natural to think that certain projects and investments are delayed. That is what we see. It's not the bread and butter sales, so to say, that has slowed down very much, but it is the project sales where we see hesitation in the market, a delay and wait-and-see approach. Let's see how that is spreading through Europe, but the earliest signs we have seen are in Eastern Europe. Perfect. Thank you so much. Thank you. There are no further questions at this time. I'll now hand the conference back to Ola Ringdahl for any closing remarks. From myself and Jonas Arkestad, I would like to thank you all for listening in, and I wish you a good day. Thank you. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.