Ferronordic AB (publ) (FNM) Earnings Call Transcript & Summary

Welcome to the Ferronordic Q1 2025 Report Presentation. [Operator Instructions] Now I will hand the conference over to speakers, CEO, Lars Corneliusson; and CFO, Erik Danemar. Please go ahead.

Thank you. This is Lars Corneliusson here and welcome to the report on our first quarter of 2025. And if we can press -- sorry. And we call the report steady despite uncertainty. And obviously, there are -- there is increased uncertainty in our markets and in our industry. We will obviously come back to that. And despite that uncertainty, our revenue actually increased by 3% to SEK 1.2 billion. However, we saw a decline in gross profit and that was partly due to revenue and product mix. And selling and administrative costs came down. And that was partly thanks to cost reduction that we have entered upon and lower sales commissions. So we had an operating result, which decreased to SEK 13 million, which was mainly a result of the lower gross margin. We also had net debt that decreased to SEK 1.8 billion. If we go to the next slide. Clearly, there is an uncertainty on the tariffs and the fiscal policy in the U.S., which obviously is also then in itself spreading over to Germany to an already weak market in Germany. We should, however, say that despite this uncertainty, the mood among our customers in the U.S. remains very good. However, dealers still have high levels of machines and inventory and in their rental fleets. So mainly thanks to a robust service and parts business that we have, our underlying business remained stable. If we look at the market, the U.S. construction equipment market declined 5% in Q1. Our sales of new equipment and sales from the rental fleet decreased by 6% in units. In Germany, the truck market continued to decrease and decrease by 28% actually during the quarter, whereas our sales of new trucks decreased by 6% and then we obviously took market shares in Germany. One very, very positive thing in Germany is that we continue to reduce the inventory and the inventory is now 59% lower than in the end of Q1 2024. And many of you remember that we had an issue with too high inventory, which was a result of the supply disturbances that came under, but mainly after COVID, which resulted in a far too high inventory in Germany, which we have worked very, very hard to reduce and we are now in a situation which is very much better than previously. It's also good to see that our electric truck business, the rental business we have in Germany continued to contribute positively during the quarter. Also, our cost run rate in Germany is in line with our cost reduction targets. In Kazakhstan, our sales of new machines increased to 28 units. And also in Kazakhstan, we have, in the last year, worked very hard to reduce inventory that came from similar reasons as in Germany and we are actually now 68% lower inventory than a year ago. Quickly then on group summary financials, Erik will go into more details, but the U.S. revenue was up 9%, German revenue down 9%. Kazakhstan revenue plus 26%. In terms of operating profit, we had a decrease in the U.S. from a very, very strong first quarter last year from SEK 60 million to SEK 48 million, an increase in Germany from minus SEK 12 million to minus SEK 9 million and an increase in Kazakhstan from minus SEK 3 million to plus SEK 1 million. Obviously, with the foreign exchange effects that we saw on mainly the U.S. dollars, our net income then decreased very, very much to SEK 150 million. And similarly, as our debt is mainly also in the same currencies as our assets, it also decreased mainly due to repayment of loans, but also currency translation effects. Still 30% equity to total assets and book equity of SEK 1.372 billion. Some more highlights from the U.S. The market for larger construction equipment, which is our main segment, declined by 5%, as I said. In our sales area, the decline was 8%, mainly driven by lower sales of wheel excavators. We had then a decrease of 6% in units. We saw a good increase in sales of crawler excavators and wheel loaders. However, it's -- they were partly fleet deals with lower gross margins. So we sold 71 new units, 20 used units and we had 30 units that converted to sales from our rental fleet. Good thing to see that the demand for service and parts is continuing to be good and our parts business and service business was largely stable. And very importantly, in April, we launched a new CRM system, which will form the basis for the implementation of our automatic lead generation system also in the U.S. in the future, which we hope will bring a good use in mainly the aftermarket, but also in the sales where we can be more proactive and understanding customers' needs from telematics of the machines and basically sell more in the aftermarket mainly, which is very, very positive. We continue to make investments and work on branding and marketing. If we move to Germany, we see a market that remains challenging. Obviously, the market was down 28%. However, government spending plans now lead to optimism actually. In our area, we saw decrease by 20% and the area then represented 90% of the total German market. Our own sales, as I said, decreased by only if we can bracket 6% and by 15% then to SEK 221 million in revenue. And it's obviously good to see that we're keeping up sales. It's very, very important for the future that we have a population that we can continue to service also in the future, which is obviously the key to reach profitability in Germany. And we saw in the quarter continued good demand for our service and parts. And in fact, as we talked about before, we could have sold more service and parts if we had more qualified mechanics. We saw some good traction actually in recruiting mechanics. So that shows positive -- should have had a positive impact on our ability to catch that demand going forward here. So that's looking good. And another very positive thing, obviously, is that our inventory is now more or less in line with where we wanted to be. And coming from a year ago, it's a very, very big difference in the inventory numbers. So we can compare the numbers then from end of Q1 '24, we have SEK 519 million and now we're down to close to SEK 200 million. So I think it's a good work done there on the inventory cleanout basically, we can call it. Yes. Take the next slide, please, go to Kazakhstan. The market continues to grow in Kazakhstan. However, we think -- we estimate it grew by 37% from a relatively low level, however, in Q1 '24. Kazakhstan sees growth in the mining and construction sectors and we see -- at least planned, we see some actual also, but planned very much spending on infrastructure, notably on the road network in Kazakhstan. And also then, as I said, we continue to reduce our inventory and we've taken it down from -- with 68% year-on-year to SEK 80 million in the end of Q1 2025. And we obviously then had a big increase in unit sales from a very low Q1 '25. Slightly lower parts and service sales, however, but the total revenue increased by 26% in Kazakhstan. The look, half of the U.S. network, most of you know this, where we are in the U.S. We've been there now for a year and a quarter more or less. And in November '23, we acquired 100% of shares in Rudd Equipment Company, which is one of the largest distributors of all the CE in North America. They also have very strong other brands such as Hitachi, Sandvik, Link-Belt Cranes and Bergmann. And obviously, U.S. is the world's second largest market for construction equipment with substantive infrastructure investment programs. And clearly, again, there's a lot of talk about the U.S. tariffs, et cetera, et cetera, but we see -- we continue to see a very positive attitude from our customers. There is still strong demand for aggregates for the infrastructure investment needs that are there. And as you can see from the numbers, the business is going on quite nicely still. In Germany, we have a network that looks like this. We have 20 outlets in Germany and we are the biggest private dealer for Volvo and Renault trucks in Germany. And in Kazakhstan, we are strategically placed in the main hubs of business activity in our industry in Kazakhstan. So by that, I hand over to Erik for some more numbers and economic development, please.

Thank you very much, Lars. I start, as I usually do, with macroeconomic overview, market context. So U.S. growing 2% year-on-year, but we did see a quarter-on-quarter decline, very much driven, it appears, by imports ahead of the tariff announcements and uncertainty around trade policy that followed. Looking to full year, we're seeing forecasts between 1.6, 1.8, a bit wider range than typical, which reflects, I think, the uncertainty that forecasters face. Core inflation, also uncertainty about how trade and fiscal policies will affect, but currently at 2.6. The trajectory of that will, of course, have impact on the next item here, which is the Fed funds rate, which affects us and it affects our customers when they borrow to do business in the U.S. But it is lower and there is an expectation that we will continue to see rates trending down in the United States. Looking at Germany, year-on-year, again, we see negative. Germany has struggled. Again, we have 2 years -- 2 consecutive years of negative growth. But we did have quarter-on-quarter positive developments and we know that the newly formed government has promised investment plans in defense, in infrastructure that it is believed could stimulate and spur a recovery in the German economy. That said, current consensus forecast around flat 0% growth. Inflation at 2.2%, probably there's some room for inflation to come lower and maybe for the ECB to go lower there as well. Kazakhstan grows strongly. And we see, again, there is growth in construction, in mining and the government is spending, as Lars mentioned, on infrastructure and notably on the road network. Inflation is slightly higher and that has resulted in the Central Bank raising rates. Liquidity, availability of funding is an important factor for our customers given the high rates that you have in Kazakhstan. It is a limiting factor in our sector, we feel and again, to the customers that we speak to. So that's on the top level, so to say. I move on to our income statement in Q1. To the left of this table, you will see the comparative period last year for each market and for the group. And to your right, you have the current reporting period. Total revenue quite stable compared to last year. I mean, this is the first quarter when we report full quarter for year-on-year for the U.S. business. In Q4, mind you, it was only really December when we compared year-over-year. But in first quarter, we have full quarters for all segments and again, show relatively then stable revenue year-on-year. The distribution between the segments, almost 2/3 being the U.S., 63%, 1/3 Germany and then Kazakhstan at 4% in the quarter between revenue streams, 57% on equipment and trucks and then 37% on the important aftermarket, which again is a stabilizing factor in an environment of heightened uncertainty when customers may be more hesitant to renew fleets and make CapEx decisions. They still need to run and maintain their current fleets. And 6% other, mind you, that's mainly rental income or rental revenue that we have there. Gross profit down 15% and margin -- gross margin decreased by 3.4%, mainly driven by the U.S. segment partly by a reclassification that I will give you some headlines on so you understand what's -- how we reflect things slightly differently in 2025 and what the impact is there. Similarly, SG&A decreased 11%. That's partly due to cost cuts. It's partly due to lower sales commissions, but also reflective of these reclassifications that we had year-on-year. As a percentage of revenue, SG&A declined to 16.2%. Operating margin stood at 1.1% and the operating profit at SEK 13 million. And net income, a big hit from our foreign assets there, the parent company holding loans in -- or loans to the respective segments in Germany and in the U.S. So the Swedish krona between the opening and closing dates strengthening significantly against both the U.S. dollars and the euro had that effect. So out of the SEK 150 million, SEK 129 million was due to foreign exchange rate effects. With that, I move over to the balance sheet. And again, here, you will have the comparative period last year. And also, so you can see quarter-on-quarter comparison and towards year-end, you have Q4 in the table to your left there. And also, we separate the U.S., something we did last year and we continue to do this year to show what the segment contribution is. If we start looking at the property, plant and equipment, we are higher year-on-year despite one can say against the foreign exchange effect that we have in the first quarter and that's much driven by the growth and increase in the rental fleet in the U.S. and to a much smaller extent to the e-rental fleet in Germany. In Kazakhstan, net working capital has come down and that's driven much by the lower inventories that we have, to some extent, receivable as well. But Lars mentioned, 68% lower on total inventory. Mind you that includes the parts and oils, et cetera, as well. But the main bulk of it is, of course, the equipment. That's a year-on-year comparison, mind you, so to first quarter of last year. Germany, also lower net working capital. This is put in relation to last 12 months revenue. And here, again, inventories lower and receivables also, but the big move is on inventories where we did work hard last year to try to reduce the inventory we had left from previous periods and indeed, to some extent, all the way back from COVID effects, the pandemic. 59% cut in total inventory in Germany year-on-year and that's reflected in the lower working capital and the capital tied up in inventory. In the U.S., also a slight decrease quarter-on-quarter, partly driven by ForEx effects. And net debt declined SEK 152 million and that's both due to repayments that we've done, but also again to foreign exchange. And our equity assets was flat quarter-on-quarter. And with that, I move on to the next slide, which is slightly technical, but to make sure that we explained here that we did have a reclassification in the first quarter of this year versus the first quarter of last year and that is in the U.S. segment. There is no impact on operating profit, but there has been reclassifications from other income to revenue and also of general and administrative costs to COGS, cost of goods sold. The latter, for example, refers to something like when mechanics are not billing, when they are not working where the U.S. has treated this as a administrative cost, whereas we, in our group results have it as a COGS, cost of goods sold. So that's been reclassified. And this slide, it's also on Page 8 of the report serves to show in the 2024 adjusted column, which you have to the right of the pink column here, you can show what 2024 would have looked like on a like-for-like basis. And here, you can see that the change in gross margin is then smaller. It is still a negative development of 3.4% which then is the underlying effect and that is much driven by a product mix, not revenue mix in this case and product mix in last year, we had a big share of articulated haulers, whereas in this quarter, more excavators and wheel loaders and more fleet deals. So that's what I'd like to say on that slide. And again, do find more information also in the report on Page 8. In terms of EBIT movement year-on-year, just to illustrate, we see that the U.S. is again lower than last year. First quarter of 2024 was a very strong quarter in our U.S. segment. Germany is up slightly year-on-year. The market, if we look at the equipment sale is not there yet. We do hope again that the economy will pick up and that, that will provide a boost to the market as well. However, our aftermarket remains firm, as you can see in our segment report. So largely flat year-on-year despite some weakness in the economy and then -- economy, sorry. And then again, our cost efforts that we did last year has also lowered the operating leverage, so to see, say, for us, providing a more resilient organization in Germany. Kazakhstan, in a way, a reverse story there. We have continued to reduce inventory and put machines into the market and despite putting an extra effort on getting machines out to reduce inventory, we still have had positive results in the equipment sales. The aftermarket was lower than last year in Kazakhstan. However, we do hope for that to pick up in the subsequent quarters. Slightly higher group costs due to professional services than last year, which lands the business at an EBIT of SEK 13 million compared to the SEK 21 million we saw in the same period last year. The group NAV illustrating where our assets are versus our liabilities. You will see cash equivalents and then our receivables, inventory and we separate out the rental fleet in the U.S., particularly here to illustrate where that stands in the balance of the asset side. And then we have our property, plant and equipment. So here, you would have our workshops and also fixtures and fittings mainly, but also things like the car pools, the vehicles that our mechanics and technicians work when they operate. Yes, I think I will move on to our financial objectives, which I think are familiar to many returning listeners. We stay firm on our long-term goals to double our revenue and to reach a higher operating margin above 6% and to work down our net debt EBITDA to below 3x over a business cycle. And with that, Lars, I want to pass back to you for something on the outlook before we go into Q&A with the audience.

Thank you. And despite the current uncertainty, we remain optimistic about our U.S. business and the long-term opportunities there. We see demand supported by a dynamic economy and a significant need to upgrade the country's infrastructure. We currently have no information about major infrastructure projects in our sales area in the U.S. being canceled or postponed. And we see opportunities to further develop and expand our business in the U.S. The German economy remains weak. And as you know, we've taken steps to reduce costs and make our organization and balance sheet more resilient. And we are confident that the aftermarket demand that we see will remain strong and we're optimistic about the long-term potential of the German market as well as the opportunities in e-mobility and sustainable transport solution. And on top of that, recently announced government spending plans could accelerate a well-needed recovery in Germany. And Kazakhstan represents a minor part of the group's operation and we continue to see good opportunities in the market. So by that, I'm handing over for questions and answers, please.

[Operator Instructions] The next question comes from Adrian Gilani from ABG Sundal Collier.

I'd like to start off with a question on the U.S. business, where you mentioned the gross margin was down even after sort of factoring in the reclassification of OpEx and COGS. And you mentioned a worse mix effect being the main reason. Would you say that, that was a particularly bad mix in Q1 that should improve ahead? Or what's the status there?

I think as we [indiscernible] Adrian, by the way. I think as we write, we still see a dealers having high inventory and that, of course, creates a pressure on the margins. And we also had, as I mentioned, some bigger fleet deals with lower margins. So hopefully, that is not a recurring issue. But it's difficult to predict at the moment, but it's mainly a factor of those 2 issues really.

I think it's also fair to say that we had a strong quarter in Q1 '24 with the...

Yes. And it's a product mix as well. In Q1 last year, we sold very many articulated haulers to private customers. This year, we sold many wheel loaders to public customers, if I put it that way.

Okay. Understood. And then on the net debt, I mean, it's good to see it sort of start trending down, but also cash flow has been very volatile from quarter-to-quarter. So can you give us any sort of outlook comments on whether you feel confident that the leverage ratio will continue down in coming quarters as well?

I think, Adrian, I mean, we're clear on how we want to drive the balance sheet. And I think it's been quite clear what we've done and especially in Germany and Kazakhstan. So there, we have taken down the working capital and that goes to pay down the debt that is used to fund the inventory. We want to, as we communicated in our financial objectives, to bring down the overall leverage. And then I think looking quarter-on-quarter, it depends on movements that we have, especially in working capital. That is the big swing factor. But the direction is there, Adrian.

Understood. And perhaps a bit of a detail-oriented question on the debt. Given that a majority of your operations are now in the U.S., is it fair to assume that the majority of the debt is also denominated in dollars because that -- in that case, it could come down by SEK 100 million plus in Q2 on just the sort of translation effects. Is that a reasonable assumption?

I think it is a reasonable assumption. The majority of the external debt is in U.S. dollars, for sure, yes.

Okay. And then finally, perhaps a question for Lars, more bigger picture. Can you say a few words about the decision to step down as CEO and whether that's tied to any strategic shifts in the company or whether we should expect things to remain more or less unchanged?

Well, as an Executive Chairman provided that the AGM will vote for that this afternoon, clearly, there I will focus more on the strategic issues. I think the strategy we have is -- remains, but it will allow me to spend more time on that, which is very good. So I'm really looking forward to that and the relations with customers and relations with suppliers, but mainly strategic issues. So I hope that will -- that the AGM will vote for that today.

The next question comes from Anders Akerblom from Nordea.

I have 2 questions on the gross margin. Just firstly, following up on the previous question. It would be interesting to hear how large share of this gross margin contraction that stemmed from the fleet deals that you mentioned in the U.S.? Is it roughly half of it? Or how should -- and I mean, of course, the underlying contraction?

Maybe I'll try that one, Lars. I think, Anders, you know we're cautious on giving guidance. And I think trying to pin out precisely which transaction and product contributes to what is probably not going to be helpful for you or the market. I think what's fair to say is that, as Lars has also suggested, on the one hand, we have a market in the U.S. where there is at least slightly heightened inventory levels, combined with a heightened uncertainty given the macroeconomic situation, although, again, sentiment as we feel it is strong. And then we have a situation where in this quarter, as we write in the report, we have more sales of excavators and wheel loaders in these fleet deals, which typically come bigger deals with smaller margins for sort of each unit. And on the one hand, that for this quarter, this year. And then if we look year-on-year, so going back to first quarter 2024, then we had a strong quarter given by, again, a lot of big machines, a lot of articulated haulers in more private transactions in -- with smaller customers, so not fleet deals. So I probably -- I mean, for you to look at that this was probably maybe lower than one might typically expect. It will depend on, again, how product mix and market will develop going forward and that Q4 2024 was a strong quarter from a product mix point of view.

That makes sense. I appreciate the clarification. And on the gross margin going forward, I know you're cautious to guide, but just in terms of your relative position in the market, it would be interesting to hear if you think you will perhaps need to be more aggressive on pricing just structurally and make some trade-offs on the margins in order to gain or potentially even maintain your market share in the U.S.? How should one sort of think about that?

Anders, I don't think we answered that. I mean, this is a day-to-day business. Clearly, we want to see continued high market shares with good margins. And so far, I think the U.S. team has done a great job in doing so. And some quarters when you have different product mixes and different -- it can change up and down, but we don't see a change in the way we do business at all. I mean, there is no point in doing that. So we will continue to do what we have done. There will be swings ups and downs between what levels there are in the market of inventories and product mixes and customer mixes, et cetera. But no overall change in our go-to-market strategy. No.

Okay. And finally, if I may, just in Germany, of course, with the used truck sales declining quite significantly compared to the new unit sales, it would be interesting to hear you just elaborate a bit on the demand dynamics here sort of impacting that.

Well, I mean [indiscernible].

Sorry, I can't hear you currently.

Can you hear me now?

Yes, yes.

Okay. Sorry. No, clearly, I mean, we have even communicated that we saw a strong uptick in the order intake last year and we see that being realized in Q1 in terms of deliveries. So relative to the market, which is declining very much, we obviously then take market shares. And for us, it's extremely important to do so and not to lose sales in truck business, not so much for the truck business in itself, but to make sure that we have a population of trucks going forward, which we can then service in the aftermarket. So I think it's a sign of that we're getting stronger in Germany and that we -- customers trust us even in downturns and that is something we see clearly in the aftermarket and service and parts where we actually have a strong demand. And as I said, Anders, we could have sold more in service and parts if we had more qualified mechanics. So it's a thing that I think -- it's a sign, I think, that we're getting stronger in Germany and I think it's a very good sign really.

Anders, did I understand correctly, you also asked about the used fleet or used or did I misunderstand you there?

Yes...

Specifically?

No, no, you didn't. That's correct.

Okay. Yes. So I think -- I mean, if that's -- I think it's more reflective of our strategy than of market dynamics there on the used side. I mean, our decision has been to really try to work towards a tighter balance sheet and higher capital turnover in Germany and we continue to do that. And that includes also the used fleet or used inventory we keep. We want to keep that really as tight as possible and turn it as quickly as possible. So we have taken the scale of the used inventory we keep down and that's the objective to continue to keep it tight, but then try to make sure that we can turn it more quickly. So we can get back to revenue levels without keeping more inventory on our balance sheet.

That makes sense. And Lars, best of luck in what I assume will be your new role after this afternoon.

Thank you. Thank you.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

All right. We have got some questions from -- on the e-mail. And I think one question, which is -- which is important and I think a lot of you might wonder and it's not easy to answer it, to be honest, when -- and I lost it here a bit. It's -- you can read it for him.

Yes, there is a question about something we say in the report and there is a quote of that, all OEMs, so original equipment manufacturers of construction equipment have parts of their product ranges manufactured abroad and are likely to be impacted by any potential tariffs. Can you provide some more color on this? Have the OEMs that you represent or their competitors communicated anything on how they will react to the new situation? Do you expect that prices on equipment will go up? And will it be significant?

Yes. I mean, it is clear that we are working in a global industry and all OEMs, regardless of their nationality or global companies with global supply chains and all are affected of potential tariffs. And I don't think we can say that anybody is more or less affected than anybody else. And clearly, any tariff that will be imposed or is imposed or have been imposed or may be imposed or might be revoked or whatever it is, will have an impact on the end price for customers. It will end up there. That is clear. Now the question for us is how will our competitive situation look like? And again, everybody -- I don't think we are in a worse competitive situation than anybody else, which is a good thing because everybody are global, everybody will, of course, review the situation and change maybe to a certain extent the supply chain, but that doesn't happen in a afternoon. So I think the uncertainty around it is there for sure. Any positive increases that might be there will eventually be moved forward in the value chain, which is what happens in any value chain, I suppose. So I think that's the answer really to that question, which I think everybody -- is on everybody's mind at the moment. But that's very simple. Have we seen anything? Has anybody communicated anything at the moment? No, not yet. I think it's a wait-and-see situation for most companies. But the most important thing is that there is still demand out there and our customers are quite optimistic about the future and that's a good thing.

Thank you, Lars. There is -- from the same person, there is another question about -- further 2 questions, which I think are related. One is with regards to the stock price performance and related to initiatives on the one hand, on the group cost side and on the other hand, looking at Germany, where there has been an initiative again on reducing capital tied up and costs, but are we considering further actions? And I would say, I mean, in this forum on this kind of call that, yes, I mean, we are looking at both and constantly. But I mean, going into details on particular initiatives is probably not sort of the forum here. We are constantly looking at how we can make both the top organization and the business in Germany and for that matter, in Kazakhstan as well and in the U.S. more efficient. I think when we did the cost cuts in Germany last year, we spent a lot of time looking, as we've also written about to how we can cut back administrative costs, costs that are not generating revenue without impacting that revenue. So cutting the costs without hurting and if possible, of course, improving the sales organization, both when it comes to trucks in Germany, equipment in other markets, but the very important aftermarket business, so the technicians selling service and parts. So that's a very generic answer, I know, but I think that's what we can say here at that point. It also goes into another question about how we want to create value over the next 1 to 3 years from another investor. And here, I think, again, I can refer to what we said in our -- on our Capital Markets Day and the material we produced for that. That's how we want to drive the business going forward to create value for our shareholders and stakeholders more broadly. With that, I have also some more concrete questions from one investor here in the audience. Is it possible to separate service and spare parts business in the upcoming reports? It is possible, but I do think that we feel we have a good balance of detail in the reports and that we also provide information on the level that is useful for the market, for investors. I think -- I mean, also, if you see changes otherwise in the distribution of those 2 quarter-on-quarter, I'm not sure it's helpful because it's probably driven by single period effects and transactions. So I think maybe more a possibility would be that one takes a look at the distribution of the 2 rather than going into constant reporting of that. Second question from the same person, selling trucks is obviously a complex business with relatively low margins, but some risk in carrying stock. And the question is and I think more maybe for you, Lars, is it possible for us to take more part of the value chain, so to say, to paint customized trucks go into truck washing, all these, the add-ons, the superstructures, all that part of the value chain?

Yes, clearly, that's an opportunity that we have. At the moment, to also combine that with the question that was before if we need a stronger market for trucks in Germany, we need to make sure that we cover, first of all, the demand in the aftermarket and that's the main driver of profitability. And that's our focus at the moment. And then we can add when we get there. And for that, actually, we don't need a stronger market. We just need to get -- make sure that we have enough trucks out there for the coming years ourselves to make -- to be able to service them. As we all know, it is in the service and parts business where -- which is the driver for the profitability. And when we have made sure that we cover that demand, we can obviously move into and make additional services for trucks, clearly, absolutely.

Thank you, Lars. I think the next one is -- I'll pass to you as well. It's with regarding to the e-mobility or Transport as a Service business in Germany. Any update we can provide on that? And maybe in this related swing, there is a follow-up question on how investors should look at the e-truck rental business, if it's working inventory or a business contributing in itself? So is it more like in the U.S. where we carry a rental fleet to convert and sell? Or is it more a going rental business, especially for the e-trucks?

The e-rental business in Germany is a business in itself where we are renting out e-trucks to customers and would like to continue to have them in our fleet. And it's not only an issue of renting them out, but it's also to gather information about how these trucks are being used, how they're working to be able to become even more competitive and professional in the e-business in general. So that's an additional benefit that we get from the e-rental as such. So it's not like our U.S. inventory, which is a way to go to market to sell equipment to rent them out first and then convert them as it's called. It's more a rent-to-rent business in Germany, which is -- which, as we said, is contributing nicely to our bottom line. As for e-mobility, we don't have any update to give at this stage. Sorry, e-mobility services, I should say.

Okay. And I think that's it. I hope I haven't missed questions online. I don't have more questions. So if someone who wants to raise something, then I pass back to the host, although given that the host pass back for us for conclusion, I think we're probably closing up here. So thank you very much, everybody, for attending and for taking interest in Ferronordic. You can reach us at our investor e-mail or call us if you have follow-up questions or other specific questions for us. Thank you very much and hope to talk to you next time. Thank you. Bye.