Hello everyone, and a warm welcome to the SKF first quarter results 2022. My name is Bethany, and I will be your operator today. If you would like to ask a question on the conference call, please press star one on your telephone keypad, or to ask a question on the webcast, you can type your question in the tab above the slide. I will now hand over to Patrik Stenberg, Director of Investor Relations and Mergers and Acquisitions at SKF Group. Patrik, please go ahead. Thank you. Good morning, everyone, and welcome to this SKF conference call on the first quarter results. As usual, we'll start with presentations by our CEO, Rickard Gustafson, and our CFO, Niclas Rosenlew. After the presentation, we do look forward to answering all your questions. You could either choose to post your questions live on the phone, or you could use the chat function as you prefer. The chat function is open already now if you want to. With that for a brief introduction, I will leave the word to Rickard. Please, there you go. Thank you very much. Good morning, ladies and gentlemen, welcome to this presentation, and thank you for joining us this morning. Looking into the quarter, putting it in a context to start with, it's been a quarter that has been divided. We have seen some significant headwinds in our business. Some of those headwinds are of such a character that we wish we never experienced them. Of course, I'm referring to the awful situation and the war in Ukraine that also caused us to now exit our presence in Russia. We have seen a situation where cost inflation has continued to be on the rise. We have seen a very challenging logistics and supply chain situation, and most recently, we have also seen a complete lockdown of the important industrial region, Shanghai in China, of course, impacting our customers and thereby also impacting us. In that context, and to deliver the numbers that we're about to present to you today, I need to express my sincere gratitude and thank you to all my colleagues in SKF that have, I think, managed in a fantastic way in really trying to navigate in these very, very difficult waters and still deliver these results and at the same time safeguard themselves, our customers, and our business. There has been a number of tailwinds in the quarter as well. First and foremost, we have seen a very strong demand across our geographies and across several industries, which of course is shown in the organic growth rate that I'll come back to shortly. We are pleased to see that we have been able to actually maintain, and to some extent, even further enhance our operating margin, especially within our industrial business, which is a good news. That in itself is also partly driven by our ability to drive price to compensate for the cost inflation that is hitting us. Both headwinds and tailwinds. When it comes to our strategic framework, I'm also pleased to announce that we feel that we have had good progress in the quarter in our intelligent and clean growth strategy. A number of those growth segments that we identified that's especially of interest to us, they all show great progress in the quarter, and I will come back to that. When it comes to our service offering, we today announced what we think is an exciting new collaboration with Amazon Web Services that I also will come back to. Then in the quarter, we have also operationalized our new way of working, so our new operating model, where we have the autonomous business units or business areas that have full accountability and ownership end to end for the entire value chain, creating more agility, being close to our customers and hopefully also more speed in the way we operate. Overall, a good progress. Turning to the quarter and the numbers. I think we are off to a good start for 2022. Net sales came in just below twenty-three billion Swedish krona, representing an organic growth rate of 6.5%. Again, you know, if you look into what's building up to that, you will see that the industrial business is really, you know, spearheading the growth, growing around 11% organically, while we see a small decline in our automotive business of - 3% growth rate. Our adjusted operating profit came in close to SEK 3.1 billion, which is somewhat ahead of the same period last year, representing a margin of 13.3%. You break it down and look into the Industrial, that had a very, very strong quarter where we have reported a margin of 16.5%, which is actually somewhat stronger than the same quarter last year. While Automotive have a more challenging comparison period, given that the first quarter 2021 was exceptionally strong, I still believe, given the circumstances, that to deliver 5.2% margin in Automotive is also worth noticing. Maybe the one number that we're less happy with in the quarter is the net cash flow from operations that is SEK -270 million, as you can see on this chart. There are good reasons for this. All point to the build-up of inventories. A lot of that is driven by our need to build up buffer stocks to ensure delivery and quality to our customers in this very volatile and challenging environment I described before. The underlying cost inflation by itself is pushing up the value of our inventories. Of course, the lockdown of Shanghai has also come in as an event that has driven up inventories in our Chinese business. Hopefully of more short-term nature, but for the quarter, they do have an impact on our cash flow. If we stay a bit on the group level before we go down to the industrial and automotive part, turning it back and focus to our Intelligent and Clean Growth Framework that we announced a quarter ago. As you may recall, in that framework, we identified four growth levers for our business, and I'm pleased to say that we have made some good progress in all four of them in the quarter. Starting with the high growth segments. You can see on the right-hand side of this chart an example of a number of those segments that we identified as strategically important to us, and I'm really pleased to say that most of them, or at least all of them that are presented on this chart, they all demonstrate solid double-digit growth rates. When it comes to new technologies, which is important, we will continue to invest and be the leading player to provide our customers with the most relevant products and capabilities. I like to point out that in the quarter, we have seen good progress in magnetic bearings that is really enabling and opening up a new industry, i.e. hydrogen, and I'll come back to you with a concrete example later on in that regard. When it comes to our ceramic bearings, they are in high demand, and they are the foundation for our growth in the EV segment. We are a clear number one in the market here, and that is really, you know, putting us in a very, very favorable position at the moment. Service and aftermarket. There, I'm gonna refer back to the announcement this morning with the collaboration with Amazon Web Services that we believe has the potential to really drive significant revenue opportunities going forward. I will come back to talk to you a little bit more, give you some more flavor to this shortly. Finally, portfolio management. Here, I don't have, you know, massive or significant event to point to, but in our new setup, in our new operating model, where we have each of the business areas, they all now look into their portfolios to really assess what do we need to prune. What are the loss-making accounts, and how can we further improve our overall profitability within our portfolio? That has also helped to drive some of the improvement in the underlying margin as we're seeing in the quarter. Again, good progress on our strategic framework. If we then move forward and look into industrial. To give you the context, Industrial, as you're probably all aware of, is the main Industrial segment for us, representing just north of 30% of revenues and close to 90% of our earnings. Industrial has, as I mentioned, had a very strong growth. We come in at SEK 16.5 billion in net sales, representing some 11% organic growth. You can see that the two main markets or geographies, I should say, EMEA and Americas, had strong double-digit growth, as well as India really growing rapidly across all our different Industrial segments, north of 20%. Then China is the one that stands out with a small negative growth rate for the quarter. I'd like to draw attention to two things that is really the driving this. It's primarily wind and rail that has a tough comparison versus the same quarter last year, given the incentives that really, you know, drove growth in wind a year ago. If you would exclude rail and wind from these numbers, we would report a mid single digit growth rate for the rest of the industrial business in China. Again, I've already talked about the growth rate here, but I like to reinforce the margin improvement of 16.5%. Here, we're really seeing that we have been able to drive price and other cost mitigating actions effectively throughout the quarter, which is really boosting up our margins. With that said, though, we are not complacent. We know that we are chasing a moving target, and the team is as on it as it was when we started this quarter to continue to ensure that we do everything in our power and use all the levers available to continue to drive efforts to mitigate the cost inflation. We're pleased to see the momentum that we built in the first quarter that we foresee is going to also follow into the second quarter and onwards into 2022. I'd like to end the industrial part of this presentation by also pointing to a few customer success stories, starting with agriculture, which is one of our key strategic themes or sectors that we focus on. It's always good to get some sort of proof point from customers. We use here, you know, the John Deere Excellence Award that our SKF Brazil team in Brazil has won for the third consecutive year, which is, you know, well done and well-deserved. We have also in the quarter signed some new partnerships that we believe have the potential to unlock some new industries. Now, I already touched upon them, but let me give you some more flavor starting with Amazon Web Services. We're excited about this because this can really take our scalability of condition monitoring and data analysis to a new level. This will not replace what we have today. It will complement what we have today by adding affordable, easy to scale, easy to use condition monitoring and software analysis capabilities to our existing customers. That then could afford to maybe hook up and connect more of their less critical machinery or applications. It will open up opportunities for mid-sized manufacturers and entry-level users to also get into the game here and start to connect their applications, or their machinery. We believe that this has the potential to really drive our recurring revenue going forward within our service business. We're excited about this announcement today, and this is gonna start in North America. We're gonna prove the concept in North America, and then hopefully scale it and roll it out in other parts of our geographies as well. Another key example, as relates to hydrogen, where we have in the quarter is part of a solution for new hydrogen energy to a customer in North America, and in order to liquefy hydrogen, you need turbo expanders. We don't do turbo expanders, but the main component in a turbo expander is the magnetic bearing, and here we have a unique capabilities. Our uniqueness and our capabilities in really providing the bearings or the magnetic solutions to unlock this industry is second to none, and we can provide 100% friction-free, high-speed rotation that is really enabling growth in this exciting industry. It's kind of emerging, an emerging industry. We believe it has huge potential, and we're pleased to take part of it from the beginning. Moving on to Automotive. Automotive represents less than 30% of our revenues and about 10% of our earnings. Automotive had SEK 6.4 billion net sales in the quarter. On the totality, that's down by some 3% in the quarter. Here you can see again that EMEA and Americas represent our largest geographies, where EMEA has a small single-digit growth rate and Americas is dropping a little bit, down 2% on the organic growth, while India has a kind of mid-single-digit growth rate. China is the region that stands out. Here there are two things I need to draw your attention to explain that rather significant negative growth rate of 20%. Firstly, it's of course the ongoing lockdown of Shanghai that has made it impossible for many of the OEMs in the region to continue their operation and therefore also have an implication on us. Secondly, it's the comparison on commercial vehicles that are a bit problematic, where the first half or the beginning of last year, we saw some significant growth before they changed the emission legislation in China. So that's really, you know, the comparison that makes it a bit difficult from that point of view. Hopefully, at least the lockdown in China and the Shanghai region are of short-term nature. We have no idea how this will evolve and then when they might open up. It might be so that it will get worse before it gets better, but at the end of the day, I hope that China will also open up within a reasonable timeframe. Time will tell, and we have to manage accordingly. Looking into Automotive in a bit broader perspective, as I said here, the negative growth, but they are delivering a 5.2% adjusted operating margin that, given the circumstances, I think it is very solid and well done by the Automotive team. Also here, we have seen an ability to drive price effectively, not just within the aftermarket, but also within the OEM part of our business, which is satisfactory. We also, as I mentioned, we have seen some pruning of the portfolio that is also helping to improve the margins in Automotive. On the positive side, EVs are growing rapidly, and here we are a clear number one in the market, and we are taking advantage of this, and we see that more and more of the world's EV manufacturers are turning to us, and our ceramic bearings or hybrid bearings are in high demand to deal with the stray current issues that they, those OEMs suffer from as voltages go up in the vehicles. Strong growth and not just from traditional EV manufacturers, but also traditional OEMs are now turning to us for their EV solutions. Also, the aftermarket has been very strong within Automotive globally. Here we are a clear number two globally, and we have made some further inroads and progress also in that part of our business. Even in Automotive, we have seen some customer wins, and they all refer to EV and electrification, and we have a really strong foothold in e-axles and e-powertrains, and we see some good wins for some major OEMs in Europe that we're very pleased about that provide some promising growth opportunities in the future. With that, I think it's time for me to hand over to Niclas to give you some more insights to our numbers. Niclas. Thank you, Rickard, good morning, good afternoon, everyone. Starting off with sales. We had SEK 22.9 billion sales in the quarter. That's a growth both sequentially and compared to last year. Its overall growth is 15.5%. If we split that 15.5% into organic and currency, we had 6.5% organic growth, and the currency tailwind was 9%, with the biggest differences coming from our currencies being the dollar, the euro and the renminbi. All in all, good, solid sales performance in the quarter. Commenting on the adjusted operating profit. We had an operating profit in the quarter of SEK 3,058 million, and that's a growth year on year. If I just put that into perspective, we had two distinct parts here. We had an organic growth of roughly SEK 1.4 billion, and then we had a cost tailwind of roughly SEK 1.4 billion. Going through this step by step, we had a positive currency effect of SEK 288 million. The organic growth SEK 1,376 million up, consisting of two parts. 30% of this is volume driven, and roughly 70% of this is driven by the positive price and mix in the quarter. Cost on the other hand SEK 1,395 negative. This very much reflects the inflationary environment in the world. We had higher component costs, we had higher logistics costs, and we had higher energy costs, which is the vast majority of this SEK 1.4 billion negative. All in all, a good performance when it comes to operating profit with organic growth and price mix offsetting the negative cost. Commenting on the cash flow, as Rickard said, this is the one thing we are not particularly happy with in the quarter. There are good reasons, good explanations for it. We had a negative operating cash flow of SEK 271 million, and it was very much driven by a negative net working capital or an increasing net working capital. Net working capital was driven by two things really. One was the increase in receivables, very much following our sales growth, quite normal there. On the other hand, we also saw an increase in inventories. The inventory increase you can really break it down into a couple of components. One is that we, as Rickard said, we do continue to prioritize customer deliveries. Very important for us to make sure that we are able to deliver to the customers. That drives some buffer stock essentially. On the other hand, we also had a, or we continue to have a challenging supply chain situation in the world, leading to, for instance, mismatch in components. The logistics chains are long. We have goods in transit, which is on a higher level than normal. Last but not least, we also had the Shanghai lockdown, which affected us in the end of the quarter. We do see this as, or many of these, items being temporary in nature, but nevertheless, we do take additional action as well to improve our net working capital in the long term. Commenting on the balance sheet. We have a strong balance sheet. We had a net debt in the end of the quarter of SEK 10.4 billion. That's an increase, primarily driven by the dividend payout which took place in March. The return on capital employed also is developing in a positive way. 15% return on capital employed for the last 12 months, very much driven by the good profitability. With that, back to you, Rickard. Thank you, Niklas. To sum this up, as I said in the beginning, I think we are off to a good start for 2022 with what we present now for Q1. There have been some significant headwinds that you all are aware of, and I mentioned them. Of course, you know, the Russia-Ukraine one is horrific in itself, but it's really driving some issues for us. It's also caused to take the decision to exit the Russian market permanently. The Chinese lockdown, of course, drives a lot of uncertainty and volatility, where we don't really know where it's going. We believe that it's of temporary nature, as I mentioned before, but for how long and if it's gonna spread to other regions, it's too early to tell. I guess we should not be surprised if it gets worse before it gets better. We are very pleased with the strong growth and the margin that we have been able to deliver, especially with Industrial. To grow Industrial organically with around 11% at improved margins is something that we are pleased about and that we will bring with us going forward. The accelerated price realization is something that we feel good about in the quarter, but with that said, we're in no shape or form complacent. We know that there's a lot of hard work ahead of us. We are constantly chasing a moving target here, and the inflation environment is here to stay for at least Q2 and probably for a large part of 2022. When it comes to strategic framework, as I mentioned, we are excited about some, you know, key developments in that area. The new partnership with AWS is something we worked on quite intensively, and we're very pleased to have that now and be able to talk about and start work with it. Also the progress within a number of the high growth segments, that is the cornerstone of our Intelligent and clean growth strategy, is something that we're pleased with, and also the technology development within hydrogen and ceramic, as I mentioned before. It is a volatile environment, and we look into the outlook. It's hard to predict what's gonna happen, and especially, you know, how things gonna evolve in China. We believe that from an organic growth point of view in Q2, we expect to be flattish versus the same quarter last year. Of course, it's highly dependent on these uncertainties, but still that's what we anticipate. For the full year, we remain still optimistic, and we now believe that we're gonna have an organic growth rate of around 4%-8% in that range. That compares with the previous guidance of 5%-10%, and the main difference is I like to draw your attention to Russia again. Russia was normally 2% of our net sales, our revenues. We have actually compensated for that in our outlook. Again, it's hard to predict, and it's rather volatile around them. With that, we stop the formal part of the presentation, and I will now ask Patrik to help us together with a facilitator online to help us facilitate the Q&A session. Thank you. Thank you, Rickard. With that, end of the presentation, we are good to go, and start off the Q&A session. Operator, please, we'll start with questions on the phone, and then after that, we'll start with the questions that have been posted on the chat. Please. Thank you. As a reminder, if you would like to ask a question on the conference call, you can press star one. Our first question comes from Daniela Costa at Goldman Sachs. Daniela, please go ahead. Hi, good morning, everyone. Thanks for taking my questions. I have three, but they are quick. First one I wanted to check, you talked about accelerating pricing, and you seem to have done at least like five percentage points of pricing in 1 Q. Within your 4%-8% guidance for the full year, what pricing carryover are you assuming? Just thinking about that. Second, you talked about 70% being priced and mixed within your EBIT bridge, where you have the organic bar of SEK 1.376 billion. Mm-hmm. What about the inventory, the impact of the inventory build on that? That's question two. The question three is just regarding the cash progression throughout the year. You obviously mentioned you're dissatisfied with that. Do you see a full compensation to what would be a normal cash conversion this year, or this year, given the nature of all that's happening with supply chains and cost inflations and so on, is a bit of an atypical year. Those are my three questions. Thank you. Thank you, Daniela. I think I'm gonna divide your three question among the three of us. I can take the first one, and then Patrik gives the second one, and Niclas will answer the cash question. When it comes to pricing and how much will be carryover into, you know, the growth rates for the full year, actually is that is not anything that we disclose. The only thing I can say that we have seen that our actions and activities has resonated well with our customers in the quarter. We have been able to realize more of the price increases that we have seen in the past. We have further added more price to the equation during the quarter that has not yet materialized in our numbers. That will come. I gonna refrain from referring to how much of the, you know, 4%-8% that's gonna be derived from prices and, what's gonna come from other means. We're on the case, and we work diligently with price and other cost mitigating activities. Okay. Thank you. On the inventories, yes, it's correct that we have built some inventories as we usually do in the first quarter. Not that much, though. In the bridge effect, I would say it's a net positive on the EBIT line of about SEK 40 million in the quarter compared to last year. Hi, Daniela, to your last question about cash progression. I mean, again, we are quite confident that we'll make a comeback in terms of positive cash flow in the year. Typically, as you might know, typically first half is a weaker cash flow period for SKF, while then the second half is stronger. But nevertheless, it's something that we are working quite diligently on and are quite confident that when things normalize in the market and when our actions start to bite, we are back in the game. Thank you for those. The next question comes from Klas Bergelind from Citi. Klas, please go ahead. Thank you. Hi. Hi, Rickard and Niklas. Klas at Citi. A couple of questions, please. The first one is on pricing and cost inflation. Price mix around 5% in the quarter, and the comparatives are getting tougher for the price mix after the second quarter. I know, Rickard, you don't want to comment on the price mix for the year, but do you think you can maybe help us a little bit, looking at the second quarter, given that you have a tougher compare, if you can achieve a similar 4%-5% there for the second. On the cost inflation, I think the gross number was SEK 1.5 billion from material logistics and energy, and netted off by SEK 100 million from some net savings. How should we think about the costs into the second quarter? I think energy was around SEK 300 million. That could potentially grow. I'm keen to understand the moving parts there, into the second. Thank you. Well, hey, Klas, and thank you for your questions. I guess I'm gonna be disappoint a bit on my answer to your first one. When it comes to, you know, the price mix that we achieved in the quarter, how much do we think we're gonna achieve in the second quarter? I don't dare to give you a number for that because it's not a fixed target that we're chasing. It. The inflation environment will most likely change during the quarter, and I don't know exactly what it will look like. We're trying to the best of our ability to predict this, and our sales teams are out there actively engaging with customers and trying to make sure that we compensate ourselves for what we know and what we anticipate to come. If we are right in our estimates and our anticipations, time will tell. Again, I'm gonna provide you with some details for how I think Q2 is gonna play out. More than saying that we are on the case, as I mentioned, we have already negotiated some additional price increases that have not yet materialized in our books so far. Then Klas, to your question about cost inflation, just to give you some additional flavor, what we saw throughout Q2 was a bit of a normalization or not normalization, but stabilization at a high level when we talk about materials, logistics, and energy. It is quite a volatile environment. Even if we saw a stabilization in Q1 or throughout Q1, saying that will hold for Q2 is just tricky in this environment. What we can say is that in Q1, at least inflation didn't get much worse. Okay. No, that's helpful. My second one is on the guidance. It seems like you are only taking down the guidance to the 2% sales impact from Russia. I know you don't want to say, Rickard, of course, and I totally understand, you know, what price mix can end up for the second quarter. Let's say that you would manage 4%-5% again in the second quarter, then flattish organic would mean that the underlying volumes ex Russia will be down 3%. I'm trying to understand how much of this -3%, for example, then is driven by China lockdown, European wire harness issues in automotive, or if you see any weakness at all in the industrial core segment as well. Well, again, you know, the forecast I will provide is subject to uncertainties. It is always uncertain, so you can argue that's kind of normal. I think this year with both the, you know, the ongoing war and the situation in China, it makes it even more complicated to really provide a forecast. We stick to what we said with the 4%-8%, and the rationale behind it is that when we're going through our business, we still see a strong demand across our geographies. We still see growth opportunities primarily within industrial that sounds, looks very promising and robust. No real signs yet of that should, you know, start to shift in any shape or form. Automotive is more complicated. Of course, in order to deliver on the 4%-8%, it will imply that China is not in a lockdown for the full year, but it's that it will open up at some point during the first half of this year. You know, we have some sort of bounce back within automotive. That's also part of how we made up the forecast. As always, we're trying to provide with our best estimate or our best guess, and we stand by the 4%-8%, even though I know it's a lot of uncertainties and volatility within it. Maybe just to. No, I get it. I understand that. Yeah. Just to add to what Rickard was saying, I mean, the demand is there, and the demand is actually strong. What we see is essentially one-off disruptions. I mean, the Shanghai area, we have quite a lot of business and production in the Shanghai area. It's very kind of binary, when is it opening up, is the real question there. Yeah, my question referred to the second quarter. Who knows what will happen in the second half? Right. Yeah. Exactly. That definitely comes to my very final one is on the strategic framework. You talk about. Mm-hmm Rickard had magnetic bearings, ceramic bearings, and there is no momentum seen in these technologies. What the market, I think, is lacking post a strategic review at the full year is a little bit more disclosure over time, say, the addressable markets and how to bridge the intended 8% CAGR to 2030. Are you planning more disclosure gradually than during the full year? Just wanna finish off on that. Thank you. Yes, thank you, Klas, for that question. The answer is yes to your question. We have tried to articulate, you know, more the framework for you where we see the opportunities. We are now trying to also describe that we see some good progress in a number of those. If everything goes according to plan, we will, before the year is over, host a Capital Markets Day where we should be able to provide some more details and more clarity around our path for growth into the future. The answer is yes to your question. Thank you very much. The next question comes from Lars Brorson at Barclays. Lars, please go ahead. Great. Thank you. Good morning, Rickard, Niclas, Patrik. Can I start with price mix, please? The SEK 1 billion or so in your EBIT bridge that's price mix. Can you give the split between price and mix? Niklas? As said, out of the SEK 1.4 billion, roughly 70% is price mix. Both are positive. I'll actually leave it with that, because pricing, not to bore you with a lot of details, but there's different forms of pricing. There's surcharges, there's you know, the normal price increases, and so on and so on. Depending a bit on how you look at it, they land in different categories, sometimes in price, sometimes in mix. That's why it's not that relevant to look at exactly price and mix, but look at it in total instead. Both are positive. I understand, Niclas. Maybe I can ask differently then. Specifically to the industrial division, can you help me with the impact on margins from mix within that division? Maybe to ask a bit differently, how substantial was the outgrowth in your industrial distribution business versus the 11% organic for industrial overall? Was that a meaningful impact on margins in the quarter? Yeah. You're absolutely right that the distribution grew well on the industrial side and also aftermarket grew well on the automotive side. That affected mix positively. Distribution actually grew in industrial more than 11%, somewhat more than the 11% that overall industrial grew. You're not able to help us with the margin impact from mix? I don't have an exact number, as we don't split out the margins for distribution and OEM. Out of memory, I think the distribution growth in industrial was closer to 20%, actually. Helpful. Thank you. Can I ask secondly, just regionally for Europe, I wasn't enthused about the reclassification of regions, but that aside, on the re-acceleration in Europe that stood out to me, and I guess also to Rickard's comment earlier around a robust demand outlook, which I presume includes the distribution business. Are you seeing more broadly, and do you expect to continue to see more broad-based channel restocking that continues to support your distribution business this year? Well, good question. As Niclas mentioned, we have seen a very strong development generally within our distribution business, both in Europe or EMEA and in Americas, for example. As of now, I have no indications that is about to change. Can I squeeze a third and quick one in finally? Just on cost absorption for the remainder of the year. I appreciate the SEK 40 million. Thank you for that, Patrick. If you look ahead now, obviously last year, 2021, was a quite meaningful inventory build year and with quite meaningful earnings tailwind through the year. I appreciate now that your 2022 outlook suggests a more moderate sort of sequential top line recovery in the second half. Should we brace ourselves for perhaps more significant headwind from under absorption as we get into Q2 and second half? Yeah. That's a tricky one. I cannot immediately think of a good reason to see why it would be a major issue, but let's see as the year moves along. Understood. Thank you. Thank you, Lars. The next question comes from Andre Kukhnin at Credit Suisse. Andre, please go ahead. Good morning. Thanks for taking my questions. Can I just follow up on the inventory build comment you made in the questions before. The SEK 40 million P&L benefit versus the SEK 2 billion cash outflow seems quite modest. I appreciate that there are many moving parts in there, but I just wanted to check if you could give us how much your goods in transit are up right now as a kind of value within that overall number, and whether that's included as the benefit to P&L from the ramp-up in that. Sorry, Andre. Once more. I lost you there. I just wanted to kind of get a bit more clarity on the kind of inventory ramp-up that we've seen, the kind of cash commitment Mm. That you've had in this quarter and obviously in the prior four quarters. Absolutely. Whereas the P&L benefit is, it seems quite low. I just wondered if you include. Yeah. The potential benefit from higher goods in transit in there as well as just your. Mm. Manufacturing and. No, absolutely. Thank you. No, what we were referring to was the buildup of finished goods inventory in the quarter sequentially. During the first quarter this year, we built about SEK 650 million in terms of finished goods inventory, compared to year-end. Last year, we had a buildup of about SEK 400 million, so the delta is about SEK 250 million, hence the SEK 40 million EBIT impact in the bridge this quarter. Okay, great. Thank you. I'll maybe come back some of this offline as well. Thank you for splitting out some of the verticals growth rates in one of the front slides, I think slide four. Could you help quantifying the size of the automation segment for you that you split out there? The entire automotive segment or. Automation. Or. It's the second. Automation You gave after marine. Yes. Right. I need some help here to get the numbers. Is it, if I recall correctly, can you help me there? Yeah Patrik? Yeah. It's single digit. Right. O f the total. Still, you know, material enough and quite an exciting segment where we see long-term growth. Got it. Thank you. Yeah, it'd be great to see kind of continuation of that kind of disclosure to track the sub-verticals. Just final one. Right Coming back to the Q2 growth rate versus the full-year guide. In the Q2 guidance, could you help us with how much of the kind of maybe temporary China lockdown impact you're baking into that flat guidance? Because when I look at the comps, how they kind of evolve for the second half of the year, we do need quite a ramp-up sequentially to get to 4% or above the full year. I appreciate what you said on automotive. Yeah Sequential ramp-up. That's fair enough, but obviously that's a smaller part of the business, so we need to see that in industrial as well. Yeah. Just wanted to check. Yeah. Specific kind of impact for China baked in. Yeah. I mean, China is roughly 20% of our overall revenues. You know, seeing what's happening now in China with a pretty drastic lockdown in the Shanghai area, it means that the business volumes with our customers are significantly down. That's what we see now in April. It's really a question of when the opening will happen and how it will happen. That's as Rickard mentioned here earlier, it's a bit difficult to predict. We've taken that into account to some degree, but we do assume that China opens up here during the quarter. Okay. Got it. Thank you for your time. Thank you. The next question comes from Mattias Holmberg at DNB. Mattias, please go ahead. Thank you. Could you please provide us with an update on the progress of the factory closures and where you stand in terms of run rate cost savings in the SEK 5 billion? Thanks. Sure. We continue according to plan. There's nothing really new to report in terms of additional factory closures in the quarter. For those who are residents in Sweden, you may have seen an article this morning that indicates that we were about to shy away from closing down Mülheim. That is not correct. That is an incorrect article, and we are maintaining our pace there according to our plans. When it comes to the savings of the SEK 5 billion, I think now we are at an average of SEK 1.3 billion-SEK 1.4 billion has now been achieved so far. It's a bit flattish from last quarter, but we are following our internal plan. Great. Thank you. The next question comes from Erik Golrang at SEB. Eric, please go ahead. Thank you. I have one question. I got a bit lost in all the comments about sequential cost and price mix development. What's your best take on the net between cost increases and price increases for the second quarter? Hi, Erik. Best as you can. Yeah. Would love to kind of say the exact figures, but it's hard to predict. What we- Directionally is fine. No need for the exact figures. No, no. I appreciate that, Erik. No, but I mean, as discussed here earlier, we continue to work with pricing, essentially price up. What we saw in terms of inflation in first quarter, as I mentioned, was some stabilization, you can say. Let's see if that stabilization, you know, holds also in Q2 or whether a combination of the war in Ukraine and the challenges in China will drive inflation further up. You know, quite a few moving parts, but rest assured we are on pricing. We have a good momentum there, and we'll continue to work with that. Okay. Thank you. Thank you. The next question. Sorry, is this a question or someone is maybe needs to mute themselves? Okay. The next question. All right. comes from Sebastian Kuenne at RBC Capital. Sebastian, please go ahead. Yeah. Hi, gentlemen. A few questions regarding your electric car exposure. I recall that you had roughly SEK 800 million revenues with the electric car OEMs for the powertrains last year. What's the current run rate? What do you expect for the year ahead, and what percentage of, you know, auto OEM would that be? Secondly, you mentioned some new customers in Europe also, you know, conventional car manufacturers that go into electric vehicles. I'm not asking who that is, but which customers would you still like to have for electric vehicles? Is there a large customer? Is there a large customer globally? I mean, we know you have six or seven contracts in China even. Yeah. I think that Ford is not really on your list. Would that be one that you still want? Finally, also on electric, you mentioned the ceramic bearings gradually rolling out for, let's say, high performance electric cars. What is the price point for these? I mean, if you have three, four large bearings in the powertrain of a BEV, they are very large, diameter 15 cm. What's the price point compared to a normal steel bearing? Thank you very much. Right. Again, you ask a lot of good questions, and a number of them, it's hard for us to really disclose so many details on it. You're right, we have seen a very, very solid growth with our EV, as I mentioned. We have seen actually close to doubling the size of our revenues in this space. Year-on-year? Okay. Yeah. Mm-hmm. Which has been, you know. It's growing rapidly. I think I have to leave it with that. How, you know, how big portion that is of our total automotive, I refer to give you at this stage. It's clearly, as we said, in our strategic framework, we have identified a few areas within automotive where we really wanna play, where we believe that we have uniqueness and some strength, and EV is one of them. Large commercial vehicle is another one, and the general automotive aftermarket is the third one. Those three are, you know, things where we will focus going forward and continue to invest and drive growth. I'm not gonna give you my wish list of customers. We are pleased to see that we are already engaged with most of the pure EV manufacturers. We do have a very strong footprint there, and they are growing rapidly, which is, you know, of course, you know, promising. We have also started to engage with a number of the traditional OEMs, both in Europe and North America. If we can demonstrate our worth and our value to others that not yet have experienced, you know, how it is to work with us and our solutions, of course, I will welcome that. I'm gonna refrain to provide you with my wish list. On the price points for ceramic bearings, you're on to a very important point. We are working aggressively trying to reduce the cost for these, but they are significantly more expensive than a traditional bearing. We talk about, you know- Is it factor 10? Yeah. Could be somewhere factor six to 10. Yes. Yeah. Since you say you want to reduce prices, costs there, is it at the moment at a similar earnings level, like margin level compared to deep bearings? Or is this still a development phase where you say, "Okay, you know, once we roll it out large scale, we make good money, but at the moment it's still loss making." What's the situation there in some. It's not loss-making. Okay. I can't give you the margins. It is still emerging, because the key issue for us is actually to how to test and inspect each individual ball. That's the main bottleneck at the moment to really scale. Right up production. We are, you know. There are solutions that has been invented by SKF that we are testing that are very promising. That's one area. You know, how do we ensure that we have more industrialization of how to inspect balls and rollers, in this case, primarily balls. The second key headache that we have is that there aren't that many producers of good ceramic balls globally, and small balls. We make larger balls and rollers, we make them in-house. Small balls we source from outside. Mm-hmm. We need to have more robust and high quality suppliers globally to satisfy the need that is building up. That's another area that we're working hard on. Okay. Thank you so much. The next question comes from Andreas Koski at BNP Paribas. Andreas, please go ahead. Andreas, go ahead. Thank you. Thank you very much, and good morning. Just three quick questions. Firstly, on your Q2 outlook of flat organic growth, did you mention what you expect for your industrial division and automotive division respectively, or could you please do that? Maybe I can take that straight on. We believe that we're gonna see some growth. We don't quantify it, but we still believe there's gonna be growth, organic growth in our industrial segment, while we foresee that automotive will have a negative growth rate also in Q2 as it had in Q1. Thanks. Secondly, on the price mix impact, did you get any support from price increases in the automotive division, or is all of that related to the industrial division? No, it's not. We also see progress in automotive, where we have been able to push price. Definitely, of course, in the aftermarket, but also in the OEM space. We have some successes and we're seeing that, you know, we get acceptance for to be compensated for the cost inflation that we have incurred. It actually, it's not just with industrial, it's also impacted or also applies to automotive. Yeah. A question from Niclas Rosenlew. I understand this is not on top of your mind at the moment. When I read your annual report, I noticed that your expenses, your other expenses, which is primarily purchased services, declined by more than SEK 4 billion in 2021. I would like to understand what is explaining that significant decline in your other expenses, and if the 2021 level is sustainable. Yeah. Andreas, if you don't mind, we can take that separately. I'm just conscious of time as we just have a minute or so left. Yeah. We'll take it separately. Understood. Thank you, Niclas. Thank you. Thank you. Operator, please, we are getting short of time, so we have to round off here at 10:00 A.M sharp. Yeah. We do realize that there are several questions that have been left unanswered, especially those posted on the chat. We will get back to you separately on those issues. If there are other questions that you need to get answered, please get into contact with either me or Andreas, my colleague on the IR, and we'll try to help you. With that, a couple of closing words for the last couple of seconds here, Rick. Well, thank you. Again, thank you for your attention, and thank you for joining us. Again, as I said, I think you know we are viewing this set of numbers as a good start to the year. We know that we operate in a highly volatile environment and on a lot of uncertainties, but underlying we're still optimistic about our business. We believe there are significant growth opportunities for us to grab, and we are pleased with the fact that we can also realize some of the you know price changes are now also showing in our numbers. We're in for a good start, but it's gonna be a lot of hard work in store for the rest of the year. I think that the SKF team and my colleagues around the globe have demonstrated their worth during this quarter, and I'm sure they're gonna do again as we move into the second quarter. With that, I thank you so much and wish you all a great day.