Bulten AB (publ) (BULTEN) Earnings Call Transcript & Summary

Okay. So welcome to the Bulten's Capital Markets Day 2020. My name is Kamilla Oresvärd, and I am Senior Vice President, Corporate Communications. And I am really happy to present an exciting agenda for you today. But first, some practical things. Emergency exit, you can find here and also the stairs, where you came up. Also keep your phones on silent mode. And I would also like to inform you that all presentations will be published on our website, of course. So the agenda that I'm going to present along with the Bulten team here today, we are going to start with sustainable growth, presented by Anders Nyström, President and CEO, if you can stand up, so everyone can show you -- can see who you are. Going into strong financial platform, presented by Helena Wennerström, Executive Vice President and CFO. I am very happy to welcome Marco Suzuki, who comes here directly from U.S., and he's here to present PSM International. After that, we will have a coffee break. And going into the next session, we will start with our newest member in the Bulten management team, Fredrik Bäckström, who is Senior Vice President Production, who will talk about our manufacturing footprint. Then after him, Marlene Dybeck, Senior Vice President HR and Sustainability, will talk about sustainability as a driving force. And then we will go into something very exciting, something new, something that we are very proud of presenting here today. Philip Lejon, Vice President Technology, will talk about BUFOe, a sustainable product line that is just recently launched. And then Magnus Carlunger, Senior Vice President Marketing and Sales, will talk about stronger sustainable offer, FSP 2.0. Then we will go into a wrap-up by Anders Nyström, and then will be time for Q&As. But if you have Q&As during the presentations, please feel free to ask them preferably after the presentations, but we can do it continuously. So let's get started by welcoming Anders up on stage.

Good afternoon, everyone, and warm welcome. I've been looking forward to this day for a long time, I can tell you. As always, when you work long and hard at developing something, in this case, a new or revised strategy for our company and set of targets, of course, it's always a highlight to be able to take the veils off of that and show it, and that's what we're doing today. Let me just say a couple of words about the headline reset for this session, sustainable growth. I suspect there's a few of you in the audience who think to yourself that that's a couple of corporate buzzwords. But I hope that after this afternoon, you're all going to -- you'll be convinced that there is no company that takes this to heart and action more than Bulten and sustainable commentary aspect, both economically and ecologically, and I hope that that's going to be convincing to you after what you've heard this afternoon. I'm really excited by where most of this is going. I also think that after this afternoon, you'll share my excitement about that. Bulten has a proud history. We're 3 years away from 150 years, which is quite remarkable, and most companies that were founded back in those days are gone. We're still around and we're still developing, which means that we're -- as a company, we've been able to combine both multi -- the vast amount of experience and knowledge that we've accumulated over those years. We are willing to change, a willingness to develop and to capture the opportunities that comes with the market, and we've been doing so very successfully over these 150 years. So change is definitely in our DNA. The way we go about managing our customer base and our customer relationships is one of -- definitely one of the uniquenesses of Bulten, and I want to dwell on that for a minute. As you can see, we have 3 categories of customers. It's heavy-vehicle, commercial vehicle OEMs, it's light-vehicle OEMs and it's suppliers of the industry. And having a supplier code and being an approved supplier to this many OEMs and having those on our customer portfolio means a lot of opportunity. We're -- for some of these, we're dominant players in our -- in automotive field. For some others, we're not so dominant, so that means that we have room to grow. And the way we handle our customer relationships and the way we intimately contribute with value to these customers, it is -- it's quite unique in our industry. And we do that not only by providing a mere hardware, like it started back in 1873, bolts of Bulten that's what we've shipped to customers. We're doing much more than that now, which I'm going to come back to. But I want to tell you just a short anecdote from my first meeting last year with one of our biggest customers. And after 35 years in this industry, I can tell you that I have never before seen a passenger supplier making the list of the top 30 strategic suppliers of an OEM. It takes a lot for a fastener supplier to make that list. And where this customer showed me in their -- not only their list of their top strategic suppliers but also the performance rating on those, we were the #1, and by a long way, actually, in that segmentation. So there is recognition in our customer base of the value that we provide to them, and that's something that we aim to continue to build on and to capitalize on and develop them. And I was talking about hardware versus software and what we actually provide in terms of value to our customers. These are our core products. If we had said we're only merely providing those, probably wouldn't have been as successful as we are. We've expanded that in terms of products to also provide those types of components that we do not necessarily manufacture ourselves, but we outsource them, and we provide them through full-service supplier contracts to our customers. And maybe, most importantly, with those customers that we have an FSP relationship, we also provide engineering, testing, design, procurement, logistics and line feeding. And this is not merely engineering and developing fasteners, but also helping the customers to optimize their systems and subsystems to make the whole product more competitive and to standardize across their system. And do things that the OEMs traditionally don't do the way they are being organized as they are feeding the products all the way up to the assembly part on the assembly line. And actually, there are a couple more companies out there that do similar things, but I think we can stick our head out and say we are the only ones that do this in earnest. We have value words, like most companies do, and I just want to explain a little bit what these means to us. Being professional is something that we pride ourselves in being. Everyone wants to be professional. I think we are very professional in the true sense of this word because we are looking to enrich the customer and help them succeed, and we use our collective experience to do so. We're innovative, and that doesn't mean only being innovative in a product engineering sense of the word, but also inventing business models that are kind of win-win for us and the customer. So we have a history of doing that and are continuing to do it. Our people are extremely dedicated. It's something that I could experience stepping in from the outside and joining this company 1 year ago that there is a certain Bulten culture and a Bulten spirit with extremely dedicated employees. It's also done with a lot of seniority. We're empowered. It's the value word that's also stapled -- put on the PowerPoint slide. But this is -- this manifests itself in the way that we go about serving the customers, and they are acknowledging that with Bulten, they are up against fighting bureaucracy. They meet people every day in their operations that are empowered to make decisions when it's critical and do that with a fast turnaround time. So it's also something that we pride ourselves in, and that's not just a word on the PowerPoint. The other uniqueness that I would like to point out that sets us apart from our competition is our presence, our geographical presence. The red orange dots on -- over here represents where we have manufacturing presence. We're in Sweden, Poland, Germany, U.S., Russia and China with our own manufacturing sites, and we're expanding that also through the acquisition of PSM Group, which we'll come back to. Fredrik will take you through the minutiae of our manufacturing footprint. But it's important to point out that there is nobody out there that is as complete as we are in serving customers with global platforms. And this is also important to understand that our customers, they deal with the same products everywhere around the world. And if it's not the exact same vehicle, it's based on the same platform. And of course, they've outsourced this once and outsource it 3 times or 4 times when they developed a platform, that means 3 times or 4 times the validation cost. And that's why we're benefiting from being globally spread. I should say also that we are taking steps, and that's an integral part of our strategy, to become more truly global. We want to increase our presence in regions where we haven't been -- where we haven't had scale before. We are -- we have been in the U.S. and in China for a long time. Now we're really, really focusing on becoming a global company. We're scaling all those regions and becoming a little bit less European-centric than we have in the past. 2019 was a special year for Bulten. It was a difficult year for very many in our industry as the year had lots of promises that met headwinds in the market. The car market had a lot of rocks thrown at it from different directions, primarily from our dear politicians, with confusing statements about diesel cars being allowed in cities or not, new emission legislation and taxation, not making it very easy for consumers to decide on what to buy or if to buy. And we had Brexit, which has -- also didn't make life very easy. So in 2019, the total global car market fell between 4% and 5%, and that's what we were up against. Now we were able to maintain more or less flat top line. It probably means that we've gained a little bit of market share. But we had to take some decisive action, so we did -- during 2019. We did -- we took some very, very exciting action for the future. We also took some painful but necessary action. The year started with a new CEO, I'm not sure if that's being -- fell into the painful or the exciting category, but I'll leave that up to others to judge. But we did execute on our previously communicated plan to transfer our production in China from Beijing to Tianjin, significantly increasing our capabilities in China, and we had a grand opening of that plant in November. We -- one of the painful things we had to do, for sure, was to rightsize our cost structure in our German operation, and that was because of some of the headwinds in the product range that Bergkamen is producing, so that was absolutely necessary. Then we did some really exciting things in terms of the acquisition of PSM, which we published just before Christmas, probably when most of you just went to the last leg party for the season. But that's when we finalized the contract, and we're extremely excited about that. We also competed the purchase of the land in Poland, which we had announced previously that we would. And for the entire year almost, at least a good portion of the year, we worked to take cash out of our warehouses, which was also partly a consequence of the market headwind that we met, but we -- our production rates were higher than -- going into 2019 than they needed to be. And that had an impact on our results for the year, but it was absolutely necessary. Now the year in numbers, and you're probably very well familiar with these numbers who've studied our reports. At SEK 3.1 billion our sales was a slight drop, less than the market though, compared to '18. What I want to draw your attention to on this slide is the fourth quarter because we've been telling you about our backlog of orders, taken contracts that are about to rev up and get launched and -- in the form of new vehicles sitting in the road. And during '19, we experienced some delays in those product launches from our customers. But in quarter 4, you can see it's gone through. And quarter 4 was a bit of a trend break for us, with sales about 5% up compared to Q4 '18, which wasn't a bad quarter, by the way. Order intake of 13.6% versus '18. So this is kind of how we ended a difficult and very eventful year, and it gave us a good jump-off point for 2020. So here we are, leaving '19 behind us and with a fresh strategy. Some exciting actions being taken, and a partly new management team, some additions to it. And we're facing 2020 and beyond, which is extremely exciting, I can tell you. I'm looking forward to that. Stronger 24, by the way, just to explain that. When we started our strategy revision in February of last year, we gave it this name because stronger is a name that we've been using in Bulten for a long time. So it's an allegory. Our products are strong, strong connections, and we want to be a stronger company, significantly stronger 5 years from now than we are today. So it was a natural word to use stronger in 2024. As part of the strategy work, we reestablished the vision and the business concept and the mission for the organization. And everyone who's done this at some point or a couple of points in their careers, you probably know that trying to take what you want to do with a company, I mean there are so many aspects of developing something and point that down to one sentence and capture the essence of it, that's difficult. So we spent a lot of time on this because we thought it was important to [indiscernible] first, so we could explain this to the world, and we came down with the sentence you see on this slide here among the roll-up. We say, "We create and supply the most innovative and sustainable fastening solutions." It sort of signifies what it is Bulten about. And we continue giving that a bit more meat saying that we continuously deliver market-leading fastener solutions that meet the customer requirements on efficiency, quality, price and sustainability. With clear objectives, global presence, responsible conduct and the latest in technology and innovation, we are the company that makes a difference, creates the greatest benefit for the customer. That actually is on the process and organization, which drives where we're headed. Now I won't take you through sort of every word on this slide, but here's an additional piece of meat that gives more granularity. But really what it is -- what we're saying here is that we -- as I alluded to, we're taking our 150 years of knowledge and experience and we build on that. I used the allegory before of Bulten as a fortress. We're not going to tear anything down, but we're going to build on it, and we're going to add a wing and add a tower, and that's what we're doing. And we're going to continue to provide complete solutions, not merely fasteners, not merely the hardware that you can hold in your hand, but use our knowledge in every aspect and help the customers succeed based on those complete solutions, and continue to be innovative on products and business models and provide new functionality and new services that we haven't provided before. And you'll see some of that when Magnus Carlunger will take you through how we're developing the FSP concept, and you will understand what we mean by that. And sustainability and cost efficiency. Sustainability being one of the headlines -- one of the 2 words in the headline of this afternoon is at the core of probably everything we do. And both Philip's and Fredrik's presentations will make -- help you understand better what that means when we make -- we take that from a word to action. So what's really new then and what are we building on and what are we adding? Bulten being a strong entity as it is with a lot of uniqueness and a lot of aspects that have made us successful in the past, and it's not necessarily entirely what it takes in order to be successful in the next 5 or 10 years. So you're seeing parts of our strategy already being materializing. The first step is the addition of PSM, which I'm really excited about. Phenomenal company that brings a lot of value to Bulten. And in a true sense that I think we can put it to use there an old allegory making 1 plus 1 3, I think, is very possible in this new context. Adding about SEK 0.5 billion of sales to the group with very healthy margins of 10%. And not the least, a stronger position in Asia Pacific and the U.S. As I mentioned before, we're a global company, what we call a truly global company. PSM helps us very much to add scale, both in terms of manufacturing, but also and then maybe first and foremost, in the customer portfolio, product portfolio and a sales presence in those regions where we want to -- where we think we're underutilized in. And then we have a business potential in the headroom to market. You saw the digital customers. We're dominant to some of those customers, not so dominant with others. We're not at all dominant in the Chinese market, if you look at our market share. And it doesn't take many percentage -- decimal points of market share in China with 20 million units a year to significantly move the needle on our sales in China. So we have a lot of headroom to grow there. Adjacent markets and products. What we mean by that is moving into the more than just being in light vehicles and commercial vehicles, but also in other products. PSM has successfully done that. And as you will see from Marco's presentation, a portion of their sales come from other industries. And that's going to help us capitalize on the product range that we traditionally had in Bulten, and also showcase those to those markets. The request for sustainable solutions. Again, Philip will talk more about this. But our customers are faced with gigantic penalty fees today for being CO2 emitters. They do that based on some criteria today, other criteria tomorrow, but our customers will be desperate for CO2, low-carbon products, and that's what we're going to capitalize on. And potential additional acquisitions. And I want to just point out, we're not going on a shopping spree. And some of you have waited a long time for the PSM deal or something similar to that to happen. Now it did happen, it means that we've -- we grabbed -- we've selected our target with a lot of care and a lot of analysis, and we -- we're not on a shopping spree. But we're going to continue to look for good companies that will add to the fulfillment of our strategy, add the right technology, add the right geographical presence for the right product -- completion of our product portfolio. So that may happen going forward as well. Now the strategy will be nothing without delivering results, so we also want to communicate to you our revised financial targets. And all of this is going to take us in 2024 from the SEK 3.1 billion today or in '19 to SEK 5 billion in 2024, that's a 65% or 70% growth, 10% CAGR, give or take. That's an ambitious goal, but we're confident we'll get there. EBIT, above 8%, and an ROCE of 15%. So this is not going to come for free, it'll be a lot of hard work. And there are some drivers and some cornerstones of that delivery. Again, we have a strong position and the uniqueness of the FSP concept, the geographical synergy for our customers and sustainable solutions that makes up a strong offer that we have today. We have momentum in our organic growth through the contracts that we have acquired. And we have people say momentum in our inorganic growth as well, with PSM being the first step. And the margin expansion will come naturally from acquisition synergies, from our strengthened position in China and the U.S. and the sheer scale of moving our top line upwards. And we will also shift gears when it comes to our efficiency work. And we have a lot of improvement opportunity, both in production and in distribution, probably more so in distribution, which is going to be very much a focused area in 2020 and 2021 for us to work on. Technology is a great enabler. And the financial platform that allows us to act -- it's not an enhancer, we have a strong financial platform, which Helena will talk more about. That means that we're also -- have a certain freedom to do what we need to do to get to these goals. So with that, I want to leave the stage to Helena, our CFO.

Thank you. So yes, we have a strong position to support further growth. Today, I will touch base on the financial targets, on market development and our -- on our financial platform. But first, some comments on the -- our key financial -- key ratios in relation to financial targets 2019. Volumes and strategic initiatives as well as stock adjustments affected the outcome of 2019. So in this perspective, we are looking at the figures excluding the items that affect the comparability, and that is the one in the middle. So our sales were down by approximately 1.2%, but with our pipeline of contracts, we are in a good position to continue to take market shares going forward. Our profitability with an adjusted operating margin of 4.8% was affected by the volatile market and to our stock efforts short term. Adjusted return on capital employed of 8.1% is lower than our target due to the lower profitability and a higher investment level. And the Board, they suggest an unchanged dividend of SEK 4 a share divided into 2 payments, one in April and one in October. So all in all, 2019 was a middle year for Bulten, affected by a cautious market and initiated programs of measures. So we now start off 2020 stronger, in a better position. And it has been a very exciting year, mapping out the future of the company. And this resulted in the -- our strategic agenda, Stronger 24, with new vision and new financial targets. The Stronger 24 has developed our vision beyond Europe and automotive industry, and it is also reflected in the financial targets as we aim to improve our efficiency and productivity. More about the financial targets within short. But with our sustainable approach, strong customer offer and core values, we create great benefit for all our stakeholders. Some words about the market development and LMC production predictions. So looking in a longer perspective, the industry forecasting LMC Automotive estimates a gradual improvement of production of vehicles in the years to come. LMC Automotive forecast a global increase of 1.1% for light vehicles compare -- 2020 compared to 2019; and a decrease of 7.3% for heavy commercial vehicles, 2020; and weighted for Bulten exposure, this means a decrease of 0.1%. And the market in short-term view. In 2019, the light-vehicle market amounted to about 90 million units, and the largest markets are China, followed by the U.S. and Western Europe. And it was a turbulent year for the industry as a consequence of new regulations, the political climate and the uncertainty around Brexit. New tax regulations linked to CO2 emissions introduced in a number of European countries during 2020 also add some uncertainty. But we maintained our market shares in 2019. And going forward, we will focus on growing globally. That was a little bit quick, no? That's all right. Okay. Some more comments about net sales and order intake then. And despite a continued cautious market development, Bulten's net sales and order intakes developed quite well during the fourth quarter. Net sales increased by 5% and order intakes by 13.6%, which indicate this -- that the deliveries of already contracted business are now gathering momentum. And this is, of course, a very good sign. But as I just mentioned, there are some uncertainty about the economic situation, the outcome of Brexit and effects of coronavirus. So we need to pay close attention to this, and the coming months will be a little bit difficult to predict. Looking on the right side here, we can see the number of production days. So Bulten is actually not exposed for traditional seasonal variations, but the year reflects quite well our customers' production days. So we have actually 3 quarters that is quite even. But the third quarter is lower production days and also lower net sales and earnings. We predict a stronger Bulten organic growth versus the market. But of course, the market uncertainty, as I just mentioned, may have an impact on the volumes. However, we will underline that the -- we have a good pipeline of won contracts. And in this slide, you can see the different ramp-up contract and in what phase they are of the implementation. And during 2019, several contracts went into full pace, and new contracts have entered into ramp-up phase, which have balanced the effect of the market volatility and the model shifts. But still, we have EUR 47 million of new contracts that has not yet gone into production, and this will support Bulten's growth even further in the years to come. Now some comments on our new financial targets. The new growth target is to have a profitable growth of SEK 5 billion within 2024, corresponding to a compound annual growth rate of 10%. And as I said, with our pipeline of contracts, we are in a good position to take market shares going forward. And with the expansion of our business through the contract of acquisition of PSM, that will also help, of course. So we are in -- on our way to become a truly global company with sustainable growth. With a margin expansion, the new financial target is an operating margin of at least 8%. We actively run our organization to be profitable over time and create a sustainable business with good financial leverage. The -- our margin expansion will happen through the production and distribution efficiency, economy of scale, technology and of course, acquisition synergies, and then finally, to strengthen global position will also add on. The target of return on capital employed remains at least at 15%, considering the IFRS 16 effect. The key ratio reflects the new target of the profitability and a target of efficiency in utilizing the capital. With our strong financial platform, we can create great benefit for all our stakeholders. Bulten's strong financial position provides flexibility and preparedness for the future, both when it comes to investment in increased capacity and for strategic acquisitions. In the beginning of 2020, the agreement and acquire of PSM International Holding Limited will be finalized. And during the -- and this acquisition will strengthen Bulten's position in the international fasteners market and provides a strong platform to continue growth globally. And during the first half of 2020, we will also start to build our new facility in Poland, an important production and logistics plant to meet future volumes. And this will continue to strengthen Bulten's market position in the years to come. And we are aiming for green financing through a BREEAM certificate for the facility. And BREEAM is a leading sustainability assessment method that really ensures and enhance that the wellbeing of people who live and work with them and help to protect natural resources and make for more attractive property investments. And we continuously also invest in increased capacity and efficiency, but more about that in very short. We have an equity ratio of 55.2% at the end of 2019, affected by the outcome of the market in 2019 and IFRS 16, but still on a very solid level. So some financial guidelines. Yes, to be clear, it's not considered to be financial targets, but yes, we'll guide you through it. So the guidelines for average net working capital in relation to 12-month sales is about 20% to 25% going forward, depending on the growth pace. And in the end of 2019, we had a level of 25.5%, which is slightly above our guidelines, but activities are ongoing to reduce that level. In guidelines for the capital expenditures as a percentage of 12-month sales, we are in a level of 7.1%, an evidence that we actually invest in the future growth activities. But the guidelines are to be 2% to 3% for maintenance of equipment and additional up to 2% for capacity, depending on the market development. And the guidelines for depreciation is a -- 12-month sales is 4 to 5%, considering IFRS 16; without, it's between 2% and 3%. And in the end of 2019, we're in line with that guidelines. And finally, the guidelines regarding our tax rate is between 24% and 28%. But in the end of 2019, the average tax rate was 41.7%, and it was mainly caused by the relocation and a negative result in China for that period, which has an overall impact on the calculation for the group. If we exclude that, we are in line with our guidelines of -- with 26.3%. Now Bulten invests and develops its business at a low risk. And all of the investment base, maintenance of equipment generally between 2% and 3% of the annual turnover. But mainly in short term, when adapting to higher volumes or higher degree of refinement, we actually are up to 2% from the sales. And for the coming months or years, it will be a bit higher as we have a -- as a result of all the investments to increase capacity. Now we are talking about Poland with a new facility as well as adding value investments in surface treatment. But these investments will probably improve Bulten production pace even further. Bulten was listed on Nasdaq Stockholm on 20 of May 2011, and we have strong, long shareholders. Our largest shareholder is Volito and second largest is Öresund, and they are also representatives in our Board and are also here today. And as you can see, Bulten is among the top 5 shareholders who're in the share buyback program. This will however change going forward when we now use 1 million shares in the acquisition of PSM. Then you can see we'll become one of our largest shareholders, and the next [indiscernible]. So let us now recapture the development in Bulten before we are going forward in our next section, PSM. Bulten started being part of FinnvedenBulten when it was introduced to the stock market in 2011. In 2013, we had an improvement to new growth SEK 3 billion. In 2014, we divested what is the half of the company, but at the same time, we actually grew 34% because of some percentage points in the operating margins due to repeat ramp-up of few contracts that we renewed at the end. In 2015, we continued to grow 12%. And now we actually managed to get back to the operating margin of 6% through our optimization program. And we predicted to have that volume development during 2016, which we also had. But during that year, we worked very hard in consolidating and optimizing our organization. So it which -- it paid off quite well with an improved margin of over 7%. Year 2017, we started to grow slowly. In 2018, we were back in at a normal level, SEK 3 billion and an operating margin of 6.7%. And as we have mentioned before, 2019 was a turbulent year for the industry as a consequence from new regulations, the political climate influencing the terms of trade in many countries and the uncertainty surrounding Brexit. Volumes associated with new initiatives as well as stock readjustments affected our 2019. And I think it doesn't come as a surprise that the automotive market, in many aspects, is undergoing structural change, and this change is influenced by several long-term trends. Some of them such as sustainability and electrification are today involved in all of our customers' [ life cycle ]. And these trends, in combination with the utilization of the new legislations, makes the industry more complex, and suppliers like Bulten need to pay close attention to that development. But through the path and our contracts and acquisition of PSM, we will add to our geographical presence and become a more global company to a SEK 5 billion company in 5 years. And we actually run our organization to profitable over time, and thanks to this, we can create sustainable business. And we have a strong financial platform to support further growth, and our sustainable approach will create great benefit for all our stakeholders.

All right. Here we go. Okay. I want to remind you of what it was we did, what we announced just before Christmas. We did announce that we were going to purchase PSM at a price tag of USD 24.5 million. And being in the profession you're in, I'm sure you've done the math on the multiple already. So I don't need to explain that to you. Why did we do this? Well, there were a number of driving forces behind that. We've waited a long time to find the right target. And PSM was attractive to us because it gave us exposure in markets where we have not been that strong before, I mentioned that to you previously, in the U.S. and China, where PSM are very strong. PSM are not so present in Europe from a sales perspective, which is our home market, and we're very European-centric, as you know. From a product standpoint, to make it very simple, you could say that on Bulten -- with external threads, Bulten is an M6 and up, PSM, M6 and down and not selling internal threads. So there's an extremely good fit, actually very little overlap between our product ranges. Also on the customer side and the market segments we're in, we have a little bit of overlap on OEM customers, but it's quite small, which means that the exposure is -- the increase of our exposure is great. So those are the primary driving forces behind -- PSM is also a very competent company. It's a strong brand with a great organization, and we're excited to work together with them. So with that, I have the pleasure to introduce Marco Suzuki, who is the President and CEO of PSM. Marco has an extinguished career in the automotive industry. He's been working for Toyota, for Sumitomo, for Impro, 25 years plus in senior positions, working both from the U.S., from Japan, China and Europe. So right now, he's joining us from the U.S., and welcome, Marco.

Thank you. So I see the quiz. Thank you. Many people does not get right for PSM name. So few say [ shame on ] you, but after this presentation, you still don't remember the PSM name, [ it's sure not me ]. So okay. This is a PSM highlight. This year, we are 89 years celebrating. PSM has -- is founded 89 years ago, 1931. Currently, global we have about 350 people, employees and production in China, Taiwan, and U.K. With our facility distribution, we have about over 22 countries. The most of people are from China and Asia. China have about 60% and Taiwan 20%. So majority of our employees is from Asia. The finance performance, 2019 is a very challenging year for everyone. Compared to 2018, we have in the past 2 years, we tried to get more business. Many businesses from China dropped a lot. Some customer dropped 80%, 20%, 50%. So 2019 as a result, we have about 2%, 3% growth, new project covered the drop a lot. And for our EBITDA, we have about 19% growth through many initiatives in past weeks, including the restructuring, including, we do adapt combination, consolidation, a lot of initiative from everywhere. We use our technology to have offshore that, for example, finance. We have used a lot of China team to support others, other than we have -- everywhere have a finance team, for example. So the 2019, this is the result. If you found the segment and geography, you can say PSM a lot of automotive, and these 2 years tried to develop more parts and more customer for industrial customer. And even within the automotive, we try to get more business for like electronics, battery related, I will introduce you later. For geography, about 50%, half of the business from Asia, including China, Japan, South Asia. So this is Precision Screw Manufacturing, PSM. This is the history we have. We started from U.K., this -- from Willenhall, U.K. And in the past several years, we have gone to Taiwan, 1982. Everybody knows fasteners are very famous in Taiwan. It's a very strong supply chain. In 1982, it does not -- did not have much fasteners. We bring our machine from U.K. to Taiwan. So starting to boom in Taiwan fastener industry. And in the 2002, we started China very early. And later on 2017 (sic) [ 2007 ], 10 years ago, EQT acquired PSM. In the 2016, we moved to a new facility to Wuxi. I joined PSM in -- on April 2018, almost 2 years, and the past 2 years is of challenging years. Last year, we celebrated 88th anniversary. The 8th number is -- in China is a lucky number. We had double 8 last year. But also we have a double punch last year. Number one is the Brexit. We are a U.K. company, so first punch, Brexit. The second punch, you have a lot of business for China. So we have -- Mr. Trump have a trade war between China and U.S.A. We do a lot of things to try to minimize risk. We try to have something in U.K., we can produce in China, so we can reduce the Brexit risk. And we -- luckily, we have Taiwan. We can -- we do many things in China, and we can move something for Taiwan. So from Taiwan to U.S.A., we don't have a trade tax on that. So in the past 2 years, we opened -- expanded our cold form expansion in China, we opened plant 2 and plant 3. And come to the 2020, we have Bulten together. This is our global footprint as we cover 22 countries. We have our distribution, especially for Asia, for example, we have an office in Singapore, warehouse in Singapore, Thailand, Malaysia. We have agent in many South East, the China. Other than -- In U.S.A., we have several office. For example, we have office in the West Coast, in California to serve Apple and Tesla, for example, Wisconsin with Chicago and the manufacturing we just introduced. What is -- who is our customer? And where our parts go? 70% of the business go to automotive. For example, these are -- we -- some OEMs, most of our customer for automotive is Tier 1. For example, we have Schaeffler, Mahle and CATL. Many people maybe know, CATL is the battery manufacturer, it's the largest other than Tesla. Recently, last year, CATL invest EUR 1.8 billion in Germany because they are going to grow the business with BMW and others. We are the key supplier for CATL last year. It's a new business last year, used to be CATL, their Tier 1 supplier to choose the parts. But they find out that 30% of business -- 30% of problem for quality delivery is from inserts for plastic. So CATL take back all the purchasing power, so that's only 2 supplier in the world to supply their inserts for plastic, and we are one of them. We are very excited because they expand into Germany, and later on, we have Germany with Bulten, we have got more opportunity with those facilities. And the other one which I'd point out is the thermo management module, it's for Schaeffler. They are very -- we are the only -- first one supplier localized in China successfully do that with the cold form plus machining, plus the centers grinding, multiple applications. Other than automotive, we also have industrial, especially these 2 years, we tried to go get more diversify ourselves. For example, we have -- we get the 5G for Huawei business, it's antenna, they're growing very fast in China. And we also have a watch. If you have a latest, most popular watch in your hand, it's the Model 5, it's the [ first ] watch, so we have 15 very small screws in this watch. Maybe people cannot imagine how small it is, so I will -- here take a look. It's small. We have 15 in that watch. Other than that, we have GEs, Sony and others. For example, Mindray is the largest medical equipment in China. We help them to consolidate a part from 100 more part number to 25 part numbers. So we become the one -- only one supplier for them, for their inserts. So you can see PSM try to go to several industries, growing and more advanced and the combination with multiple application together, including cold form, machining, grinding. As many as much we can add in one component, we have a more higher barrier to prevent our competitor to come into our business. Okay. So new journey for 2020. So what happened, I think Anders already introduced synergy, I would like to dig a little bit more to tell you what to -- from perspective of PSM. From product perspective, PSM has been doing this for 89 years, for the nuts, and our main customer is Tier 1. And the Bulten is very famous on the bolt. We have one product, it's a combination, we call compression limiter assembly, bolt and the nuts and together, and we assemble that that exactly is a combination between PSM and Bulten. So we can get a more good price from Bulten, and we have good assembly capability, so give more competitiveness to our market. And from the customer base, this is -- you've seen this page before. Most of our customer, major for Bulten is OEMs, they go to Volvo, Jaguar. And for PSM, we most go to the Tier 1 suppliers. So from the perspective of full-service provider, we have vertical integrated each other, including the products and customer. If you found the global footprint, we leverage each other. Bulten very, very strong in Europe, and we are very strong in Asia and customer. So these 2 combination. And coincidentally, in Ohio, we have Bulten there and we are there. So we have more synergy each other combined in North America. When we talk about the -- most thing about the Bulten synergy, we can play a different game in China. PSM have in near Shanghai area. Don't worry, it's not corona. I have 2 home. One is in China, Wuxi, one is in Chicago, okay? So I left China on January 20. So -- and past 2 weeks in Chicago. So I'm safe. So don't worry about corona. So we are very close to Shanghai. And later on, we have a partner in South China, making that small parts also. And now Bulten have a plant in North China. So for customer or for China, we can cover entirely for manufacturing, for our sales, sales team will cover China. That is we think is a great synergy between the 2 companies. This is my final one. And I just heard we have Taiwan and also like Anders mentioned about, they purchase a lot from Taiwan. This morning, I was very surprised, [ Karl ] our Senior VP, he told me a great news. Because the purchase team had said, can you introduce the Taiwan supplier to us to our China -- Taiwan team. They had conversation. They call -- had a conference with the Taiwanese supplier. And this morning, [ Karl ] has told me, the Taiwan supplier told them -- tell them we are going to cost it down for you, the major part, the 8%. So only, I think [ Karl ] get more call every day to that supplier, so we can get synergy together. So 234 years combination, great synergy, we are very excited to looking for 2020. Thank you.

So I hope you all feel refreshed after the coffee break. My name is Fredrik Bäckström, I'm the SVP of Production of Bulten since December 2019. So obviously, not yet an expert in fasteners. I most recently came from Arcam, a manufacturer of 3D printer for metal, delisted in 2018 when acquired by General Electric, so quite new to the business, but very, very excited to be here in this journey. So Bulten has a very strong manufacturing footprint. By producing near our customers, we can provide them with instant service and shorter lead time. Also by our manufacturing strategy, we are combining the best of 2 worlds, high-volume production of our own internal specialized product and a wide range of fasteners needed for -- to serve our customers' complete range of products. Through our Central European units in Hallstahammar, Bergkamen and Bielsko-Biala, Poland, we manufacture our core -- individually core range of products that are specialized in a manufacturing perspective to make the plant as efficient as possible. With our units in Hudson and Tianjin and Nizhny Novgorod, we are producing a complete range of automotive fasteners for that specific market. With the additional footprint of the manufacturing facilities of PSM, we will be able to strengthen our regional and local presence to become even more flexible when it comes to suit our customer needs. The total production capacity in Europe, as it is defined, is by how many tonnage we can produce through our heat treatment. And the combined volume now in Europe is roughly 50,000 ton annually, with some capacity to grow still, which is interesting for the Stronger 24. And also remember that I said it is actually in the heat treatment that is the capacity constraint. When Philip is talking about what we are doing on the product side, that will shed some new light on what we are doing. With PSM in our group, there will be significant synergies between the 2 companies. With the cold forming, where we are -- at Bulten, are specialized in external threads and PSM are specialized in internal threads as in specialized nuts. We can combine our manufacturing capabilities, in-sourcing production that is currently sourced from outside vendors, but also making sure that we are specializing each factory to what it's best suited to do. So probably moving some from Bulten factories to PSM factories and from PSM factories to Bulten factories. In machining, PSM has a very strong position, complete factories for this. This gives an excellent opportunity to utilize those resources for Bulten products. Heat treatment is an area and even surface treatment is an area where Bulten has a very strong position and PSM has none. So we're currently, at the PSM side, sourcing a lot of those activities outside the company. So by bringing them in, we will get better revenues and increased margins. Site footprint. Marco already mentioned this, there are a few low-hanging fruit there, especially when it comes to our U.S. operation. We do have a close proximity in the U.K. and also in Taiwan, there is this big opportunity. Not previously released, Bulten had plans in order to start up some kind of sourcing office in Taiwan. The need for that may no longer need -- is needed when we have a very, very strong sourcing team under the umbrella of PSM, Marco revealed some really good news there previously. Also when it comes to shared raw material suppliers, Bulten has a sourcing range, which is much wider than PSM by much, much higher tonnage. PSM will be able to piggyback significantly on our big volumes that we are sourcing in the rod segment, for instance. So these synergies will come. So for those of you who are not familiar what is the actual production process of a bolt. So in its simplest form, making a bolt is you form it, you heat it, you quote it and then you ship it. So that's very easy. And that is basically the core of what Anders -- if you remember those circles that you have the core of them. However, there are a lot of additional value-add that can be made in the production process afterwards. So this simple routing here is not the case for the majority of our products. If we talk about our production strategy, when it comes what products we are making, where, we can start out by looking at the Polish plant that we just saw on the movie. The Polish plant is specialized in smaller dimensions and with a lot of value added to it. Typical size range from below M10 and the more the labor content and the more specialized, the higher they can go. Our German facility, they are, let's say, in a sweet spot, where we are very standardized, extremely high volumes, very low labor content and it's by far our most efficient when it comes to produced number of screws per employee hour. So very specialized in a very narrow segment. Our Swedish operation is going towards much larger dimensions. Their most extreme one is actually 30 millimeters by 300 millimeters. That's a severe bolt. It can lift 54 tons, so one single bolt, quite heavy-duty. But also in the special range, they can meet this. Stainless steel and high-temperature application is specialized by our Swedish operation. Our markets in China, Russia and the U.S., they provide the fasteners needed for the customers we currently are serving there at this point. So that means that they cover the full range. When the operation is growing and we will become much stronger on the market, we will probably see a specialization even there from a perspective that specialization gives higher margins when possible. As you can see, there is a gap here of micro fasteners, and micro fastener is typically something you would find in smartwatch. There is also a gap on the internal threads, nuts -- special types of nuts. And this is where the PSM comes in now. So with the addition of them to our production portfolio, we will be able to handle fasteners from the size 0.8 millimeters up to 30 millimeters in dimension. And Marco, how short are your shortest fasteners? Just maybe 1 or 2 millimeters, right, up to 300?

You saw the small ones.

Yes, yes, yes, right. They are so small if you sneeze, they will go out all over. So that's how small they are. So flexible by standardization. Bulten has concept when it comes to how we standardize our machines, our toolings and our operation systems that allows us to have a great inter-operational flexibility between different units. We also have a shorter ramp-up. When we're starting a facility like the one in Tianjin, we can add resources from our existing facility and provide that over to them to help them ramp up. It also gives the emergencies handling when -- for instance, in 2018, Hallstahammar ran out of capacity due to unanticipated demand. We could flexibly shift that operation over to our German and our Polish operation. And since we are using standardized machines, we will also reduce CapEx quite significantly. Combining our sourcing volumes to a few of the suppliers, of course, we can leverage our bargaining power when we go out and buy more machines and buy more equipment. So preparing for profitable growth, Bulten 20 -- Stronger 24 calls for a significant growth in volume, that volume will come from existing capacity in our current facility. We have still some growth potential in our Central European factories. It will also come from new operations, and you have already seen the information about our Tianjin factory and the purchase of a plot in Poland. Quick snapshot about our Tianjin facility that we inaugurated last year. We did a successful move without interruption for our customers. That by itself is a great achievement. It is expensive not to meet the customers' demand. The size is roughly 9,000 square meters, 100 employees, and it's a fully equipped factory right now. We've taken the CapEx with that. So it's fully equipped. Ready to grow, ready to ramp. So it's going to be exciting to see the volume increase there. From a sustainability side, it can be interesting to know that the surface treatment in the special environment, so which means that we have the local community, government taking care of all the residuals from the plant, making sure that there is 0 waste from our operation here, which is very, very important when it comes to -- especially the surface treatment. So our new plant in Poland. It's in a place called, if you can say it, Radziechowy-Wieprz. In short, we call it Rad. And I think you all understand why. It's plot size, that is roughly 100,000 square meters. In the initial phase, we planned for a facility size of about 25,000 square meters. You can compare that to the size of the Tianjin factory. Initially, we will in-source a very expensive operation, the surface treatment, it's done at a subcontractor in the region. Currently, we are struggling with that supplier when it comes to all aspects of operation, pricing going up, capacity not sufficient, lead times high and also quality issues. By bringing that inside, we will have a significant better position when it comes to our own operation. And we also have the possibility, as we said, with the facility to incorporate more operations. Heat treatment, for instance, is one of those, should it be needed. We will move our logistics center from Wilkowice and put it in the same building. And from a logistics and transportation cost and sustainability cost, that's a huge advantage because we eliminate a lot of transportation. So we will reduce lead times significantly when it comes to that and cost. What else? Yes. Helena already mentioned the green financing we will have through the BREEAM. So a lot of efforts going to making this a very sustainable building, both when it comes to the design of the building itself, but also the surroundings of it. And an interesting point when it comes to sustainability about this, in China, the local governments think that the waste is so hazardous, they don't trust anybody with it. Here, it's the opposite. We will have 0 contaminated water from this facility, exactly 0. And how do we do that? Yes, we will recycle it through evaporation and then condensation, so which means we will clean the water, we'll get completely 100% clean water back. The slurry that remains will be dried and left of many cubic meters of contaminated water, we believe tiny, tiny, tiny cake of material that we actually can sell on the market then. So a very, very comprehensive cleaning procedure in that facility. So margin expansion, also part of the Stronger 24, very important, of course, to have money in the pocket when you want to go increasing your volumes. So how we will do that. Well, the quest for increased margin, that's a never-ending story. You just continuously need to do that. But some of the activities we will undertake is production consolidation. It will come partly from the acquisition from PSM, where we will move production from one site to another and in-sourcing of externally sourced production. It will also come from the fact that when you are entering in a full-service provider agreement, time to market is of essence. Magnus will talk about our full-service provider concept later on, but sometimes, when you take over a supply chain, it's not as efficient as it should be. So from the source components, it can be that the OEM has provided, you should only purchase from them. So possibility to resource and re-in-source that type of component will give some margins. Already mentioned the way we are in-sourcing high-margin operation from the outside. Heat treatment and surface treatment, examples of that. Distribution network efficiency, Anders talked briefly about that. We do have some parts that are well traveled, we can say. So they've been around the world a little bit. So there is significant savings to be made there. We're currently running a project around this, probably reducing our warehouse footprint, reducing transportation cost also around the world. Localization of production, producing in a foreign country, shipping it with trade costs, that is a waste, so Bulten is one of the few that has the opportunity to actually produce near all the customers that gives lower cost, and we do have projects around that as well. Then on a personal note, being new I can say that standing here right now that when it comes to lean production, we are good. But we are not super great. So there is actually measures to be made there. So I think that the fact that the plants have been allowed to run -- be run rather independently means that the units that are excellent in one area does not use the center of excellence of another. So by combining the best practice from all units, we will achieve additional operational efficiency. Bulten production system, it's great. But it needs to be implemented to a fuller extent. Also coming from the 3D printing industry, where the production units are -- I would say, they are 100% digitalized. There is very little manual information. I think there is an untapped opportunity when it comes to Industry 4.0 as well. We can be better at digitalizing our factories and using more modern technologies when it comes to digital improvement. And last but not least, sustainability efforts. They will lead to reduced cost. So it's not pro bono work we are doing when it comes to sustainability. It's actually core. We will save money on this. That leads us to sustainable operations. Already talked a little bit about what we're doing in the Polish plant. This is actually in our old Polish facility, where we have installed solar panels to the capacity of roughly 100,000 kilowatt hours in yearly production, a significant contribution to our electrical consumption in that factory. And by, already in the design phase of the new building, incorporating this, we can achieve a very, very efficient solar panel installation without having to retrofitting, it's much, much cheaper when you do it from the beginning. So these -- oh, sorry, sorry, again, even more, sorry. So in total, what we are seeing on those parts of the building here that corresponds to roughly 450,000 kilowatt hours per year. That will cover roughly 16% of the total consumption there. This is a rather cool feature, it's actually a customer parking. So if you have electrical vehicle, you will get the electricity from the roof, shading it here. So maybe not the greatest contribution, but still, it shows the customers that we are caring. Also part of the plot here, a big portion of the land, is reserved for what is called a solar farm that will actually be completely dedicated to the production of electricity. And in combination with all these, it will be -- well, not 100%, but large, large, large portion of the total electricity consumed at that plant. And once again, it's not pro bono, it's actually something that is giving us higher margin saving costs. So -- as I'm quite new, I can take absolutely no credit for this, but I'm so immensely proud to show these figures anyway. So these are the CO2 footprint reduction from our oldest factory in the operation, founded in 1873. So you don't have to do -- you don't have to start from scratch, you can actually do significant amount of work and so -- and yes, systematically working to reduce our CO2 footprint gives excellent result. And when we come to Marlene's and Philip's, then keep this graph in mind, these 2 numbers. It's a teaser for what will come. In Sweden, it's easy here to reduce your CO2 footprint because there is clean energy available, you can buy clean electricity. But even in our German facility, we've been able to reduce it with 1/3 over a couple of years, and the graph continues down like this. So it's actually something we will continue to work with. So -- well, that ends the sustainable growth session on the production. Any questions about our manufacturing and -- our manufacturing footprint? Crystal clear like the sewage water from the Polish surface treatment plant. Okay. Marlene?

Thank you, Fredrik. So let's talk about sustainability as a driving force. I'm quite sure that you understand that I'm a very happy person today as I'm heading up the HR and sustainability function in the company. So by talking about sustainability as a driving force, I think we should ask ourselves one important question, and that is who is deciding our future besides ourselves? Any suggestions? Come on, who is important, who decides the future of Bulten? Any Suggestions?

Customers.

Customers. Thank you. And you. What I'm talking about is actually what we have been working very consciously over the last years is our stakeholder mapping and model. By saying that, as a company, it's important to really understand who are your stakeholders because they are actually deciding your future. This is the stakeholder mapping that we have done in Bulten, and we have been working with this for a couple of years. We have, of course, identified the customers, but also some other high-level groups of stakeholders. But that is not enough to only focus on the stakeholders, of course, because you need to put everything into a context. And this model is showing 2 aspects, 2 example of aspect that is really key for our standards. And that is what is going on globally? What are the global trends or the global movements? And the next question is, what will drop over to become a legislation? Because we know, I know, you know that what really drives change is normally what comes into legislation. So that is a really key for us and this is what we have been working for really hard for some years. By saying that, I can give you one example of a global trend. Do you remember like 2017, what the 3 biggest global trends were? One, you can probably guess. Well, it was digitalization, shared economy and sustainability. The Paris agreement was just a few years old. One of the first legislations that came into force that really had a big impact on businesses and their sustainability work was actually the reporting initiative. 2017, almost all European companies had to start to re-put out formally on their sustainability efforts and work and start to measure and present that officially, transparent. That was hard work at that time, but I can promise you that these days, it's even harder. So what do you think is the most powerful aspect that impacts the global trends today? According to World Economic Forum, which are identifying global trends annually, last year, they identified that the environmental aspect, the negative environmental aspect is actually the key contributor to the global trends. So almost -- well, at least a majority of the global trends are really impacted by the environment and especially the CO2 footprint. We know this is no news. We all know this. But that is really showing the fast speed in this around us. So what is currently the key driver and what is around the corner -- what is coming around the corner for our stakeholders? Well, I think we should try and focus on 1 group today and the customers. So why don't we listen to see what they have to tell us. So what is really the key drivers for our customers these days? I would say that avoiding penalties is probably the most important thing these days and you know about that as well. We have heard about this earlier today that all the European -- all OEMs that are operating in the European market, they are facing big penalties because of the new legislation that says that you can only emit 95 gram of CO2 per driven kilometer. And no one -- none of the OEMs are meeting that demand today and not even next year because the penalties will be even higher next year. So by saying that, you could say that the tailpipe emissions, that we are talking about right now, has really driven the electrification. But what is coming up now, the next thing if you look into the trends and legislation, it is actually something which is called this, the life cycle CO2 footprint of the products, of the cars. And this means totally new demands on our customers and on us, of course, because we are part of their life cycle. This is one picture, this is one example of how a customer of ours is describing the CO2 life cycle emission. And it starts with the production with the supply chain. We are part of supply chain. The next thing is the production with the OEM's own production. And then you have the next phase, the user phase, and that is about fuel and energy supply and energy consumption of the car. And then you have the end of life, which is about recycling. So all the full life cycle emission will be taken into consideration and that will, for sure, be the next legislation coming up and we know that. So what are the customers doing now, they are actually putting in place systems to measure the CO2 impact, which comes from their supply chain, which come from us. And we are prepared for this. Why are they doing that? Because they have committed -- you saw the movie, they have committed to meet the Paris commitment to reduce with 30% per car by 2025. It's only 5 years ahead. So for sure, I would say that the quote from Volkswagen, which we have here in the bottom of the picture is really telling the truth, but it's also an opportunity. They say, "in the future, there is to be a sustainability rating, which would be taken into consideration in the assessment of suppliers. Sustainability is to become a selection criteria that will be just as important as cost, quality, technological competence and innovative strength." And all our other customers are also saying the same thing today. So Stronger 24. Bulten aim to be #1 in our business when it comes to sustainable development, and we have a road map for that. And this road map is taking care of the stakeholder mapping, the value chain of ours, we know, of course, where we have the biggest impact and where we can make a difference. It's also taking into consideration the global context. But now it's also integrated in our business strategy. So these are the 5 areas that we are focusing on. We focus on the corporate governance and business ethics. We focus on responsible and sustainable supply chain because no one can solve this by themselves, we need to work together. So we also need to work together with our supply chain. Sustainable own operations, for sure, we have vision and plans and Fredrik just told us about some of the plans we have. And then sustainable product offer that both Philip and Magnus will talk more about very soon. And this is carried up by our organization, which is characterized by diversity and inclusion. So how do we know if we are on track or if we perhaps even are in the forefront. I don't know if you have heard about any third-party assessment, but actually, we -- as a supplier, we are asked on a regular basis from all our customers to participate in different assessments. And as you can understand, it's not -- we -- no one is in a position to say no. So of course, we do this happily. And we are very proud about that. EcoVadis, which is one of the biggest global players when it comes to CSR assessment. They assess about 60,000 companies. There are more than 450 global big companies that are using EcoVadis to assess all the supply chain, but also to find new suppliers. We made this -- we went through this assessment and third-party analysis last year, and we actually came out with a gold medal. And what does that mean? That means that we belong to the 5% of the global companies, the top 5% of companies globally when it comes to CSR and sustainability. And as you can see, we actually are positioned in the top 1% of companies within our own business. So I think we have some evidence that we are, for sure, on the right track and that we are even in the forefront. So by saying that, we are ahead of the game. What is it about then? In the end, how can we deliver the vision that we have, that we want to create and supply the most innovative and sustainable fastening solutions? We have heard the story today. The strategy we have, and it is actually about developing new products and services, and you will, for sure, hear more about this. It is about manufacturing approaches, Fredrik talked about that, but Philip will also talk a bit about that as well. And it is about our relations with customers and stakeholders, really to understand the context and the stakeholders and act upon that. So why is Bulten well positioned when it comes to take on this lead. It is based because of -- we are an old company, and we are here for a reason. Our values is really key to us but also the creativity. The technology and the innovation power, and for sure, you will hear more about this and also ask a lot of questions that we hope that you have. And this gives an expertise. So this is really what is framing why we strongly believe that we will be #1 when it comes to sustainable development in our business. So before I hand over to Philip, I thought that I would share with you the voice of the customer. I -- we had some teasers in our social media right before we published our press release for today's meeting and the BUFOe here. And one of our biggest customers, I will not mention who, but the person who is the Head of Global Sustainability immediately posted a chat with me, and he said like this, "Marlene, in reference to your LinkedIn post, so how is it possible to reduce the CO2 footprint for bolts?" And then I answered him, "Hello, just wait a few more days, and then you will get to know more." And then he answered. "All right, we are working now exactly with these questions. Please send me more info." So I think that is a really good example. And I think timing is everything. So Philip, please come and tell us more.

Thank you.

Thank you.

Thank you very much. And I think that we have a very good understanding of the context, and why it's so important that we are developing new solutions that really make a difference when it comes to carbon emission. First of all, when we understood that reducing carbon emission is actually business-critical for us, we asked ourselves this question, what is the carbon footprint of a bolt? Does it really matter? Can we make a difference? So we set out to try and understand what the average EU bolt production -- actually, how -- what is the carbon footprint? And what's the energy consumption? And what is it in each and every step? And this is the result. And we can clearly see that talking about energy consumption alone, it actually -- heat treatment stands for more than half. And in CO2, it's more than 30%. So naturally, heat treatment is on top of our list for improving this. And now I'm really, really happy to be able to introduce BUFOe, which does exactly that. Before I tell you a little bit more about how it works, I wanted to give you a history lesson about BUFO, the brand BUFO. It's short for BU is Bulten, obviously. But FO is actually Forssell. Professor Carl Forssell back in 1918,invented a product, which was the first of many innovations, which actually established BUFO and Bulten on as the technology leader in high-quality and high-strength bolts. So we are doing the same thing again in another context here. We are now launching the first high-strength bolt, which is also ecofriendly, which makes it very natural to add just an e to this branding. So how does it actually work? I know that most of you are not engineers. So I will try to make it very simple and understandable. Our customers, they require a certain strength from all our bolts, and we have these tools to make that happen. We have the material properties, our cold forging process, and we have the heat treatment. So the normal process looks like this. We receive a material with a certain strength. We cold forge it and by work deformation, it actually -- work hardening, it gets a little bit stronger, but then we put it in the oven, and we heat it up twice. This is why we have so high energy consumption here because we have to heat it up to make it strong and then heat it up again to make it -- to de-brittle it. Otherwise, it's too hard, and it will break. With BUFOe, we use a slightly different material. But the key is this, the cold forging. This material has hardening mechanisms, which are triggered by deformation. And with our know-how and our testing, calculation and development, we have figured out how we can consistently get the required strength just by forming the parts, which we already do, making this very energy-consuming, carbon-emitting process redundant. So we achieved it, 30% less CO2e. CO2e is actually carbon emission equivalent. 50% less energy per bolt. But there are other benefits. And Fredrik said something about how we measure the capacity of our operations and what the heat treatment can process. So obviously, we can increase capacity if we take away the bottleneck, which is heat treatment. We don't need to invest in increasing capacity by adding even more carbon-emitting ovens. We can reduce the lead time because we're taking away one of the steps in the process. And as a matter of fact, the biggest source for quality issues is heat treatment. So by removing that, we have a possibility to actually improve quality even further. And we are releasing this now this week to you and our customers simultaneously. And you've already heard the reason and the timing for this, all the customers now ask us for solutions just like this. To give you a very specific example, I know that you have already had lots of examples from Marlene and others. But Volvo cars, specifically, they've said to us that we want you to challenge the traditional ways of doing things because we know that it's impossible to reach these goals by doing the same thing as we all have done in the past. And BUFOe is really challenging the traditional way of making bolts, which is by heat treating them. Another example from Daimler is that they are working on finding a way to make steel from iron ore into steel billets without using blast furnaces. Blast furnaces are one of the most carbon-emitting processes that we have, and we're not solving that problem with BUFOe, but at least Daimler, if they choose BUFOe, they don't need to heat it up -- heat up the steel once again to make it strong. We do that by our cold forging instead. So is 30% enough? Well, it's enough to meet the goal for the Paris Agreement, but we do -- we think that we can do more. If we look into every step of the process that we either own or control and optimize those, we believe that we can cut the emissions in half. So reducing 50%. And this is without adding renewable energy. If we bring in that as a factor, we can do even better. So solar farms, well, renewable energy from the sources that we have in Sweden. I mean this is -- we have the possibility to really make a difference here. The obstacle to -- that we have to overcome to achieve this is the traditions. The specifications that the industry have today. So we really need to get a -- we need to find a way to let the customers let us help them. And we think that our Full Service Provider model is a part of that solution. Because when they gave us the confidence to control the complete value chain of fasteners, then we can start doing all these incremental improvements step by step. And then we can deliver not only the least carbon footprint for our products, but also as Fredrik and others said before, probably the best price as well. And I will hand over to Magnus, who will tell you more about how Full Service Provider works, how eco-efficient solutions and quality and Bulten runs through it in a natural way. Thank you.

Thank you. So my name is Magnus Carlunger, been working with sales for 25 within Bulten. So I just realized that I'm the oldest Bulten person in this room today. Sorry, there I am. Our FSP concept is not a new invention for now. Actually, the success story was introduced 20 years ago. But it has been developed through the years to the state where we are today. And we work in an industry who is heavily loaded with abbreviations. So now it's a quiz for you. What do we mean with FSP? Anyone?

Full Service Provider.

Thank you. Perfect. Yes. So welcome to the Bulten Full Service Provider entirety. I will give you a picture of our updated FSP concept, where we have strengthened the customer offer by taking an increased responsibility of the supply chain. And this is a sustainable supply chain. Fasteners is a complex commodity that requires its focus, and we are convinced by optimizing the structure to the optimal solution of one point of contact, all stakeholders will benefit out of a win-win perspective. However, at Bulten, we are always interested in winning, gaining new businesses, from a single-part order to a complete full FSP contract. Because we have to bear in mind that a single-part order can develop into an FSP solution. And an FSP solution as such is the crown jewel of Bulten's offer to the customers. And that is, for sure, an award of trust in a relation between a customer and Bulten. We can ask ourselves, what is the reason behind starting to selling the FSP concept. And it is true that fasteners is a challenge for the automotive industry. It's really a complex commodity with a lot of part numbers, and it's difficult to control the total cost of purchase. In an assembly plant, we can talk about 8,000 to 10,000 different components that has to be assembled together. And out of these 8,000 to 15,000 components, 20% to 25% of them is fasteners. Then if you look into the purchase value of the components, fasteners represents roughly 1%. So it's a huge number of parts to a part by part, very low-cost and complex. This is the basics for Bulten entering to the arguments of FSP. On top of the complexity, we are all meeting new demands and much related to the environment. And this is something where we as Bulten want to contribute and take a responsibility of the complete supply chain. So with resources from Bulten, we can support them with customized, optimized solutions, one point of contact, and last but not least, a global footprint, supporting the customers locally. And as of today, we have a new product line, which we really hope will trigger the engineers to work closely with Bulten. And that is the BUFOe. And I'm excited to go out and meet the engineers today, and hear, are they willing to start to question on the traditional standards that are controlling the fastener specifications today. Time, money and resources are wasted daily when design and organizational processes grow out of control. What do we mean with this? Yes, this is an environment that we meet when we meet the customers on a daily basis. First of all, time and resource is required a lot of in terms of developing cars. And today, we are forced by shorter lead times to get out with new products on the market. We have unmanaged process changes, meaning that fasteners as such, imagine a car company, they have designed areas, in everywhere, the single point of contact is fasteners. Without control of the fasteners, they will grow to a massive number of part numbers. Last but not least, there is a variety of suppliers providing fasteners and challenge the efficiency. There is too many steps from order to delivery. And you can always ask the customers how do you utilize your resources wisely. The Bulten customer offer is an experienced partner, 147 years of fastener engineering, capable to understand all specific customer requirements and cover all solution. Bulten is a partner where we can source, produce 100% of the demand for assembling a car. And in the jungle of suppliers, the one point of contact will simplify the relation with your fastener supplier. What is the base of Bulten when we're entering the Full Service Provider system? We are going in, in the beginning, with a clear objective to make it more efficient. And as someone mentioned before here, entering an FSP concept can be very, very complex and -- complex and cost driving. Bulten wants to take responsibility and start to work. Through our work, we can step by step improve the margins for Bulten. And that is a lot many times through commonalization. Commonalization means that we are reducing the number of parts and increasing the volumes produced per part. That is crucial. Simplified assembly, a screw can be designed in many ways, and without support from a competent partner, this is costly. We are focusing on cost when the part is assembled in the car. It's the same as in-place cost. This is the tradition for Bulten for many years. And then sustainable solutions, challenge the traditions, new materials, new solutions, and as of today, BUFOe. Full Service Provider, we say, it is modules. And why do we say it's modules. Yes, FSP is not one solution fits all. We will find out together with the different customers, their request, how they want to see the relation between their work and Bulten as their supplier. It can be from a single part supply to a complete chain from research and development to the aftermarket. And we had, for sure, the competence to implement whatever solution suited to make a change for the customer. And the change is something that we see is the difference, and we do it in different modules. Engineering, for example, we can support with faster engineering services. We can be on-site from Mondays to Fridays at customers', supporting them in fastener questions. Or we can be off-site, supporting them with their demands. The crucial thing is that right part from the beginning will give you a speedy development pace and a cost-efficient solution. Speed is important, while we are focusing in rapid prototyping. If we can come up with an idea today and supply prototypes tomorrow, we have a great advantage towards our competition. And important is that we can also secure the test and validation of each and every individual fasteners. Manufacturing, we have innovative technologically advanced products. Some of them you can find here. I had an interesting discussion during the break, about new steel material, and how we have the solutions for adopting fastening solutions for high-strength materials. They are here. You can go and watch them later on. We are producing something that is mentioned TAPTITE, TAPTITE 2000, FASTITE, FASTITE 2000, which are special designed fasteners for different types of assemblies. We have a strong manufacturing footprint, with production in China, in Poland, in Russia, China -- United States, which are enabling every customer to get the local support. In each site, we have the same competent support to our customers with the same questions. Procurement capabilities. This is one of the substantial part of our FSP system, where we are supporting the customers with 100% requirements for an automotive assembly. It's also a good guidance for Bulten to check the market pricing on a global market level. Logistics, by using FSP system, we are able to have control of the end-to-end distribution, how do we load our shipments. We are not -- we are trying to eliminate shipping air, maximize the loading of our containers coming to Europe. And we also have a distribution network of suppliers where we can ship bolts in an optimal way throughout our facilities. Packaging is another topic where different suppliers are using different types of packaging. Bulten are customizing the packaging upon requirements to the customer, simplifying the way how a delivery looks like, day out, day in. I will give you some examples where Bulten have made difference to the customers. This is a customer using a very expensive locking-nut system on various assembly points in the car. Our engineers went in and analyzed the requirement, the need of this special locking feature. They made tests and validated that it worked without this locking feature and by the end of the day, when we introduced a new solution, we could save the customer EUR 800,000 a year. That is substantial savings, and this is for fasteners. Another part is a screw design for a steering column, a tricky assembly where the fastener was hard to assembly. Same here, our engineers looked into it and optimized the design, took away some features that were unnecessary, and the savings for one single part number was EUR 100,000 a year. There is a reason to engage with an FSP supplier. You can find savings. What we do focusing now in FSP 2.0 is the eco arguments, eco-engineering. What do we mean by eco-engineering? Yes, we are talking about optimized design, lightweight materials, elimination of waste, correct material from the beginning, reusability. There are fasteners that you can reuse that today on a service are disassembling as scrapped. You can use parts that you can reuse again without scrap. That is waste to take scrap. And last but not least, BUFOe, a potential for the future. Eco-manufacturing, cold forming, cold forming as a technology as such is an eco product with very limited loss of material. We do today secondary machining, but if designed optimally, you can avoid to do secondary machining. Heat treatment, as Patrick said -- Philip said, we do not need the heat treatment in the future. In-house manufacturing, create the value internally what Fredrik said, take control of the total process chain from raw material to a finished product. Reduction of nonrenewable energy, initiatives that we are doing in every investment we do in the future. Can we do something that is supportive for this environment? We will do it. And increase the usage of raw material from electric arc furnace with a high degree of recycled material. Procurement, we have a wide global supply base, but they are committed to work with carbon emission reduction. They are committed to support a 0 defect policy because defects is waste. Right thing from the beginning will improve the CO2 emission. And also internally, we were talking about the Bulten production system and the lean manufacturing. With a higher focus on lean manufacturing, we will avoid doing mistakes. Mistakes is waste. Logistics, this is a very interesting topic, where we are looking into how can we improve the way that we transport goods, green ships, trains, how can we identify a supply base located where we can utilize trade -- rail and green ships. And again, this is a really strong topic that we have to work with our customers, where they have a variety of [indiscernible] from plastic boxes, plastic bags, carbon bags. If we could standardize that to a more unified system, we have a lot of benefits to do, not only for Bulten, but also for the customers. So Bulten, yes, we deliver value chains that makes a difference. We have the competence, we have the eco-efficient solutions. We have the EcoVadis, and EcoVadis is something that we within Bulten are really proud of. Talking to the customers, and we have mentioned EcoVadis, they really raise their eyes, oh, because they are talking about in their sourcing strategy, EcoVadis is one point that's pushing you in the forefront when choosing a supplier. That is what we said today, it will be very interesting when it comes shop to a quote, if we had to quote a little bit higher price, if EcoVadis overruns the price. Quality, for sure, Bulten is a renovated supplier within quality. The improvements made through the years is a very good evidence of the right actions made within Bulten. Last but not least, that really makes this difference is the culture. Bulten are seen as professional, Bulten are seen as innovative, Bulten are dedicated and Bulten are empowered. No matter who you meet within our organization, we will always do whatever we can to find a solution. So the vision, we create and supply the most innovative and sustainable fastening solution. This is the new Bulten. Thank you for listening.

It's time to wrap up. I hope I'm just going to show you this last slide, which you recognize from the introductory session earlier today. In achieving our goals, we said we have a strong position. We have growth momentum. We have actions in place to drive margin expansion, and we have a strong financial platform. And I hope that from the presentations you've seen this afternoon, as you recognize what it is we're doing, the substance that we have behind all of these drivers and all of these building blocks of reaching our goals. So I'm not going to repeat them, but there are a couple that really stand out, the introduction of the BUFOe, the PSM acquisition that gives us a unique set of synergy opportunities, both when it comes to revenue and when it comes to cost efficiency. And all in all, I hope that you've seen why I'm so passionate about the journey we're on with Bulten, and that you want to come along with us. Okay. That concludes the presentations, and we're going to go into -- there's an opportunity to ask questions. So I would like the presenters to come on stage, please. We'll try and manage the microphone here. We have a hand mic, so we can use the hand mic for questions as well as pass that around for answers.

So a couple of questions on various subjects. First, the financial targets of reaching SEK 5 billion of sales in 2024. Do you need any additional acquisitions, except from the PSM side?

Well, we have to see. I mean as I said, we have a good momentum when it comes to organic growth. We have a good momentum when it comes to nonorganic growth. And the -- it's in the nature of it, that when you identify a target, that could -- you can't determine the size of that target ahead of time, but it will definitely contribute. And once we get there, you will see whether that makes us overachieve or...

Okay. Then also with the Full Service Provider concept, have that been used also on the PSM side? Or is that an opportunity?

Not in the same way. I think Marco mentioned a few examples where PSM has really helped customers to achieve their goals and to save costs and improve performance. So in a way, I don't think that you're unfamiliar with it. But all of the building blocks of the FSP, we think we're actually the only ones applying right now.

So that could be an opportunity for the future, maybe?

I would like to comment. Yes, it is an opportunity. And the reason why I say this is that looking into Europe, you have -- Europe is seen as a small part of the globe. But even in Europe, you have regions where distant supply has been stronger and protected by the customer base. Already now, and I don't think even Marco knows this that since last week we get quotes in the name of Bulten PSM in regions where Bulten has been weak. So there is for sure an opportunity to grow here with PSM, where the portfolio of PSM is much, much broader today than it was a year ago.

And also if we look at the history of Bulten, you used to belong to a larger group with the Bufab as well, which is more of a trading company right now. But they were concentrating on industries outside of their automotive and you used to be concentrated on automotive alone. And with the PSM acquisition, it opens up more. So are you seeing yourself going for the Full Service Provider concept also for other customers outside of automotive maybe, to be more direct competitor to Bufab, for example?

I'm not sure that we can claim that we would be -- oh, sorry -- direct competitors to Bufab because our product offering is completely different. Yes, we will touch the customers, but we do it in our way.

To the extent, for instance, the white goods sort of consumer electronic company would like to go into more of an FSP relationship, we're going to be open to that.

Okay. And finally, a few ones on the BUFOe product. And the material you use, is that very much more expensive than the traditional material?

Fortunately, no. It's not that much more expensive. And by eliminating the heat treatment, the small increase in cost of material is neutralized.

Okay. So...

You heard me?

Yes. Will you still go for charging higher prices for that one, then?

That question I have to pass over to the sales department, of course.

I think we defer that to the price negotiation.

Okay. And then also I learned from way back, I am a mechanical engineer, that the trick in getting a hard outside and a soft inside in a bolt you get by heat treatment. And some Chinese low-cost producers have difficulties getting the right qualities, and heat treatment has been the trick in getting that done. So now when you can do the thing without heat treatment, are you afraid of being more copied and afraid of more sort of low-cost production? Or do you have some patents or something protecting the process?

Let me take that. What we're doing is moving the know-how from the heat treatment processing to the forming process in such cases, but this requires quite a lot of know-how. We've been doing forging. We've been forming metal for 150 years. And that means that we've figured out a thing or 2 about how cold forming works and what that does to the grain structure of the metal. So that's where the secret in the sauce is.

So do you -- in this transition, do you need new machinery? Or you can use...

No.

Any other questions? Mats?

Yes, I could sort of join Kenneth there. But looking at what does it need for the -- from the customer to use the new fasteners, BUFOe technique besides testing it? Is it sort of a given that they sort of see the opportunity in reducing the CO2 footprint? Or is it more like while we need to test this for a few years, or how -- when could we see a potential ramp-up of...

We've done the testing and validation to prove that the product is equal in terms of performance to what the customers are buying today. But what they need to get used to the thought of not trading or not buying to a standard, but buying to an engineering specification.

And given that this sort of fastener content of a car was about maybe 1%, is the CO2 footprint a larger part of the car? Or could you give some sort of...

Please ask that question again, Mats.

No, I mean the fastener content of a car. I mean you mentioned it's 1% or something like that. And could it be the CO2 footprint is -- that the fastener create, is it a larger part of the CO2 footprint for the whole chain?

I'm not sure I fully understood the question, but let me answer like this. There are several thousand fasteners in each car. One doesn't make a huge difference. But considering that we, in one of our plants, produce 5 million parts per day, the combined reduction of CO2 will have a huge impact naturally. When it comes to the -- you remember the picture that Marlene showed you of the life cycle, you have -- the supply chain is about 6 tons of CO2 emissions. We believe that for each car, we are about 1% of that. So it's not a big -- in that costing, it is not that big. But also again, looking at the example from the video by just reducing 0.5%, it's the equipment of a forest twice the size of Shanghai when it comes to sequester carbon emission by that increase. So it's big.

So let me just add to that. I mean having spent all my career in the automotive industry, been through the weight chase that's been going on for decades. When you -- and I think this is very similar, the CO2 chase is going to be very similar to the weight chase, where there is no way -- if you're taking 200 kilograms out of a passenger car, there's no way you can do that from 1 or 2 systems. You have to optimize every single component, and you cannot afford not to do it on every single component. You have to take 30% out of the life cycle CO2, you need to go at it exactly the same way. And the suppliers that cannot provide that reduction, they are going to run off the road. And we're determined to be at the head of that and to be the only supplier that they can afford to choose.

And you're the only one suppler in this kind of technique at the moment?

So far, yes.

Yes. Then about the financial target, I just wondered, I mean you talk about these synergies in sort of the PSM acquisition. And I guess, are those synergies involved in the target to the full extent? Or do they come later than 2024?

I'm sure we will find synergies on the other side of 2024 as well. But the synergies are a great enabler for us to reach our targets.

And the targets then, I mean 2024, it's a couple of years ahead, should we expect the -- do you expect to reach the -- are they back-end loaded? Is it sort of things that happen '23, '24? Or how should we see it? Is it a straight line?

I won't be able to give guidance. I think you have to be patient there.

Other questions? No?

I had some comment to -- actually on PSM. The Full Service Provider concept, I really like it. I didn't think about that way for PSM for -- because most of the part, we go very closely with our customer into the design and tailormake for that. Some time, we have general part numbers. But after we think about the combination of Bulten and PSM, think of it as a synergy for PSM too. For example, the Bulten is a Full Service Provider. And then by allowing them on to our side, they now can switch to PSM. That's number one. The number two is from PSM's perspective, we already have a supplier for many customers, including the OEM Tier 1, and even we have for -- like Tesla for those kind of related, we talked about that during that -- our break. We are the largest fastener supplier for Tesla, I did show in the presentation. So we will bring Bulten to our supply chain. And previously we tend to supply part of that for the nuts. But now we can expand out in our portfolio, including important parts. So that PSM will become our customers' Full Service Provider.

Okay. If there are no more questions, then I think we're...

Just coming back to the BUFOe technique there. We'll -- do we expect this or could it be that the heat treatment capacity you have in house will be redundant? Or is it sort of complementary to -- could you -- I mean could these fasteners be used in your whole offering, this technique? Or is it more sort of a niche part?

I think it's overestimating that all customers will switch to BUFOe immediately. So one scenario could be that we are increasing the capacity in the other assets while not increasing in the -- and thus meeting the capacity demand for the SEK 5.1 billion target that we were talking about in 2024.

We want to see BUFOe as a growth opportunity rather than a replacement. And I'm sure that the demand for heat-treated bolts will be there for a longer time.

They are -- and there are differences. Lot of them can be replaced, the heat-treated parts that we -- the customers use today. Some can't be and also there's a lot more to learn because this technology, the BUFOe technology has actually benefits other than just reducing CO2 or increasing capacity for sure. There are properties that increases fatigue resistance, hydrogen embrittlement issues that will be solved with this. So this has -- but this has to be researched and developed further over time.

Not only the heat treatment from my experience in China or the Malaysia, especially for China because the environmental regulation is getting more stricter and stricter. For example, for many cities in China, there's no more license for plating and there's more stricter and stricter for the heat treatment. So heat treatment cost is getting higher and higher, and the license will be smaller and smaller. It is not easy to get a license for heat treatment. In heat treatment, the lead time getting longer. So even the price is same without heat treatment, but the raw material getting higher, something to pay off even. But the lead time are getting more shorter. The other one is in the risk because you are getting harder to find a heat supplier or getting those kind of things. That will be a great benefit to your cost, clearly time. That means your competitiveness in the market.

Okay. Yes. I guess that concludes it. And thank you very much, ladies and gentlemen, for spending the time with us this afternoon. Been a pleasure, and I wish you a good continued late afternoon and evening. And I'm sure I will see most of you soon.