KONE Oyj (KNEBV) Earnings Call Transcript & Summary

Good afternoon, and welcome to KONE's Q3 Results Presentation. I'm Sanna Kaje, the Head of KONE's Investor Relations. I have here with me today our President and CEO, Henrik Ehrnrooth, who will go through the Q3 highlights and discuss a bit the outlook; and CFO, Ilkka Hara, who will discuss the financials in more detail. After the presentation, we will have time for your questions. Henrik, please.

Thank you, Sanna, and a warm welcome also to -- for me, the Q3 webcast. It's a great pleasure to announce another set of strong results. We had a good quarter despite the environment. And we had a good quarter again because of the phenomenal job all of our people have done in navigating this very unusual situation. Mostly, as I said, in connection with Q2, and I think I said in connection with Q1 could not be more -- I couldn't be prouder of the team that I am right now of what everyone at KONE has been doing. But it's clear that the situation continues. We have learned a lot, and I think we have a lot in store to how to navigate a situation like this. Today, I'll talk, as usual, start with the highlights of our results. Talk a little bit how we developed KONE, about our markets. Hand over to Ilkka for the financials, dive a little bit deeper into them. And I'll wrap up then with the outlook for markets and for our business for the rest of the year. But let's start with the highlights. Highlights really are the growing earnings and, I would say, extremely strong cash flow in a tough and unusual environment. Our development in China was very, very strong, something I'm, of course, incredibly happy and proud about. In the quarter, we also once again completed our annual customer royalty survey, and we had positive results. So we can see we're going in the right direction. And also, as I think most of you know, as we talked in our Capital Markets Day, we are raising the bar in terms of sustainability and set the most ambitious pledge in our industry. I'll talk more about that. But let's start with the key figures for Q3. As I mentioned, already highlights were growing earnings and the very strong cash flow. Orders received just shy of EUR 2 billion, minus 3.8% compared to last year. But if you look at comparable currencies, they actually grew by 0.4%. Our sales, EUR 2.587 billion, growth of 1.1% or 4.9% in comparable currencies. Again, like in Q2, we improved our earnings. So our EBIT improved by 6% to EUR 333 million, and our adjusted EBIT from EUR 322 million to EUR 340 million, and margin improved from 12.6% to 13.1%. I think that's a great performance in this environment. As I mentioned already, really highlight is the strong cash flow. Already last year's cash flow, if you remember, Q3 at EUR 463 million, was a very strong cash flow. Now we had even stronger, EUR 600 million following from the all-time high we had in Q2, we made another all-time high now in Q3. I think it tells quite a lot how we've been running the business in a very good way. Earnings per share of EUR 0.50 compared to EUR 0.48 a year ago. But 1 quarter is always a short period of time to look at. Now we have 3 quarters behind us. So it's a little bit more perspective. And for the first 3 quarters, orders of EUR 6 billion minus 3.2% in comparable currencies. As I think you remember, if we look -- go through the year, orders received first quarter quite flat. Second quarter, down 10%, now a little bit better at 0.4% plus. Our order book remains very solid at EUR 7.9 billion, that gives a good situation going forward, down slightly year-over-year, 1.4% down in comparable currencies. Sales, actually very good, EUR 7.3 billion for the first 3 quarters growth of 1.7%. Also, operating income up from EUR 836 million to EUR 846 million. And actually, interestingly enough, our adjusted EBIT exactly the same as last year. And Ilkka's has promised me that this was not something they adjusted to get there. This was the real number. It, of course, looks like there will be quite a low likelihood to have exactly the same number, but that's what we had, and that's a good number and margin stable at 11.9%. Cash flow in 3 quarters, we've had about the same cash flow as we had for the full year last year. And last year's cash flow was good. So this is, of course, incredibly strong. Our earnings per share, up from EUR 1.26 to EUR 1.27. As we talked before, this year has thrown a lot of challenges at all of us. Many challenges that have been the first time we've seen those kind of situations and something we just have to figure out. When I look at the culture at KONE, how people have taken this, the commitment they have shown, the dedication they have shown to work, figure out ways to work safely and serve our customers has just been remarkable, of course, incredibly grateful for what they all have done without the KONE culture, without our strong values, we wouldn't be here today where we are. When I look at Q3, we can see that momentum in many of our businesses actually improved. Particularly, if we think about maintenance, momentum improved, but we are not quite back to normal, but we are still, in some places, far away from normal, but at least we're going in the right direction. And we thought we're going to share a little bit of data with you to show what is actually the activity in a few countries. And I think this picture is quite an interesting picture to look at. What do we have here? Well, we have a sample of 5 countries and here you see the average number of elevator starts per month and indexed to one back in beginning of 2019. And you can see the fluctuation from there on. And then you can see that -- and actually, the sample we have behind here are about 100,000 elevators. The elevators from a connected base that we can follow this data on a daily basis. So you can see when the crisis hit, elevator usage or number of starts was down anywhere from 29% to 71%. But we've seen that -- we've seen a clear recovery, shows the activity has increased. Germany is only 11% below normal. And that we can clearly see in our maintenance business there as well, whereas U.K., for example, is still 37% below normal. Okay. U.K., of course, has more commercial equipment rather than residential, which is more prevalent in Germany. But this actually gives us a little bit of insight in how we expect the market to develop. And just to share some of the data that we have now at our fingertips given the more and more -- broader connected base that we have at KONE. So this was just a little bit to show some -- a little bit different type of data I think is quite interesting. Some other highlights from the quarter. We talked this year a lot about our DX Class elevators, which we launched late last year and our 24/7 Connected Services. The rollout of our DX Class elevators has actually gone very well. It's the fastest rollout of a new product family for KONE ever. This is what we sell in Europe now. We have also expanded to new markets, and we expanded it to modernization. So we can modernize an old elevator to become a KONE DX Class elevator. Also, we can see that momentum has further improved in our 24/7 Connected Services. So we have a good momentum here. This is really a service that is very well suited to the time that we are in now. But I think what is important is that this service is not static. It's not that we have developed these -- our 24/7 Connected Services, and then it's going to stay like that forever. No, we are upgrading it constantly. And in this quarter, we brought out a new part to this service that we call 24/7 Planner. It's for facility managers, facility owners to help them plan their future repair and modernization needs. It has been received extremely positively by these customers who said, "Hey, now I really have data on understanding what I need to budget, how I should plan." And this, of course, based on data that we have gathered in their equipment during the usage. We also had an important launch in the Americas, our new MonoSpace 300 for low-rise buildings. These are buildings that need an elevator for 1, 2 or maybe 3 stops. That's a segment that we have not really addressed at KONE before. That's a segment that we mainly served through hydraulic elevators. But now we have a product where our customers can actually get a great modern elevator, also these types of buildings. So what I'm actually very pleased about is that, that's a segment that we haven't really covered before. So now we're expanding our addressable market in the U.S. with a very competitive, great new product. So a good time when the market in the U.S. is falling significantly, but we can address the market more broadly through this new MonoSpace 300. And as I mentioned, our Net Promoter Score in our new customer loyalty survey increased. We talked about that also in our Capital Markets Day. And we can continue to see that our customers appreciate KONE very much for what we are, being a reliable partner, high-quality products for innovation, although we have things to be done in the area, for example, responsiveness. So a lot of learnings always, and that's how we take this. We take them to learn what do customers expect of us to be able to serve them even better. So those are some highlights. Then I also have a couple of important longer-term developments that are fundamental to our longer-term competitiveness and who we are at KONE. And let's start with the first one, sustainability. We have decided, and during the quarter, we announced that we are taking much stronger action to tackle climate change because we think that is the biggest challenge of our time. And we have now set science-based targets to meet the 1.5-degree challenge. These pledges that we made are clearly the most ambitious in our industry. We want to show the way. We are doing this because it's the right thing to do, and we believe it will have a very positive impact on our growth. We can see that customers and capital more and more going into green buildings, green modernization. And we can see that customers expecting also their partners to be sustainability leaders. We have already a lot of good assets in this area, including having the most energy-efficient products in the market. But now we're really taking the next step forward and showing the way in our industry. What have we pledged? Well, it's to reduce our greenhouse gas emissions from our operations by 50% by 2030 and be carbon neutral by then so the rest we would compensate and also, we have committed to a significant reduction across the value chain. So we will reduce by 40% our greenhouse gas emissions from our products and materials lifetime energy use, so-called Scope 3 emissions relative to products ordered. This will, of course, mean that we need to get very much our suppliers involved here as well. So this is an important pledge and tells a lot about what type of company we want to be. As I mentioned in the beginning, we wouldn't be where we are today without the KONE culture. It's something that really defines who we are. We are a company based on very strong values that I think you can see from many things that we have done also during this crisis. The values that we have defined for KONE, were already defined 15 years ago, and they have served us incredibly well. But we felt it was time to refresh them, and we have worked actually a lot during the past year with a broader group of KONE people and what we want KONE to be both aspiration and what we are today. So we're also launching our new value set today, which are very important today, worth to us. It's about who we are and what we aspire to become. And we have defined that in 4 values for KONE. We talk about care, customer, collaboration and courage. So care is what we care for each other. A very strong commitment to diversity and inclusion. We're setting very strong targets for us there. It's also about compassion. In customer, we say we are committed to our customers' success. We need to be curious about their business. This is really a continuation of what we've done. But everything we do has to start from how do we help our customers succeed in their business. Third one, collaboration. We collaborate as one team. We co-create with each other with our partners and with our customers, that's how we bring the best solutions. And we perform with courage. At KONE, we want to continue to set the bar higher all the time for our performance, constantly improve and aim higher. We are not afraid of setting tough and high targets for ourselves. That's about courage. And if I think about the COVID crisis, I think we've shown very much how we lead by these values. For example, compassion. When the crisis hit, our first objective was not cost on the contrary. Our first objective, how do we make sure that everyone stays safe, healthy and how do we keep everyone motivated through this area. So rather than furloughing people broadly, we said that the first thing you do is if you don't have work is you train yourself. And what I talked about previously, the number of classes completed in our e-learning platform, which I believe compared to most other companies, very actively used before this already was 6x up in April, we still more than double compared to usual. So that was first thing. And then we said, take some personal holiday, create negative work banks and this is really paying off in a significant way rather than just look at cost, cost, cost. Yes, we are -- we have been able to reduce costs, but that was not the first objective. So that again shows who we are. And I think from the commitment of our people is paying back many, many times, encourage people have not been afraid of resolving really complex problems in this environment with very strong local accountability. So that is a little bit more about how we operate and who we want to be. Very important announcement a few days back that we announced that we have appointed Tricia Weener as our new Chief Marketing Officer and Executive Vice President for Marketing and Communications. Tricia is currently leading HSBC's marketing globally in their business-to-business side. She has a very strong track record in digitalizing sales and marketing channels, go-to-market models. She's a very commercial executive with, of course, a strong global experience as she's been based in Asia for the past almost 8 years, which, of course, very important to us. So I'm very excited about having Tricia on board -- on our Executive Board as of 18th of January and help us continue to propel KONE even further in this area as well. So very happy about this announcement. So that was a little bit about KONE's development and things we've done during the quarter. Let's look at the markets briefly. New equipment markets, big differences in development. North America, markets declined significantly. In fact, one of the hardest-impacted markets have been the United States, where the market has declined strongly, probably more than most other places apart for maybe some Southeast Asian markets. Europe, Middle East and Africa, clear decline in the markets. But again, a big difference market to market. Continuous Germany and the Nordic countries have been pretty robust. And of course, more impact in U.K. and Southern parts of Europe. Middle East, a little bit better than it was in Q2, but of course, also there clear decline. Biggest differences between markets, of course, in Asia Pacific, where China developed -- the market developed very strongly. An even stronger recovery in Q3 than in Q2. But the rest of Asia Pacific markets declined significantly in Southeast Asia, India, although we did see India starting to improve somewhat towards the end of the quarter, but still, of course, hard hit. Maintenance markets have been resilient. North America maintenance market is pretty stable. Europe, Middle East and Africa, they've grown slightly and good development continues in Asia Pacific, particularly because of China. Modernization markets have been hit. There, we can see really a slowdown in decision-making. So significant decline in both North America, Europe, Middle East and Africa, and slight decline only in Asia Pacific. Here, positive development in China, but then important Australia market decline. But we can see, again, big differences, and Ilkka will then actually dive a little bit deeper in how we have performed in various markets. But overall, we have been able to navigate this time quite well. A little bit more about China because the development there was straight out remarkable from a market perspective. In units ordered, Europe markets grew significantly year-over-year. We could see that many developers really working very hard in catching up lost ground from Q1. But really, of course, what's driving this is strong consumer demand. Intense competition from a pricing perspective, despite the strong volumes, it's clear that everyone wants to now succeed in China as many other markets are weak. The real estate sector overall had a remarkable activity in Q3. We could see a little bit easier financing environment for developers in Q2 and then tightening towards the end of Q3. Infrastructure investments continue to be favored by the government to boost economic activity. It's a good development there. Looking at some of the data. So real estate investments are up almost 12% year-on-year in Q3. We could see improvements everywhere, but the biggest driver here was land purchase, particularly the value of land purchase. But residential sales volumes up 9.9%, and new starts also up. So we can see that demand really is there. Restrictions that are in the market have kept price increases modest, which is a good thing. There, I would say, policies have worked and 4.5% increase year-over-year in September. And the trend that we've seen where larger developers are growing, the overall market has continued. But with that, that's about the market. Let me now hand over to Ilkka to dive a little bit deeper into our financial performance.

Thank you, Henrik, and also a warm welcome on my behalf to this third quarter results announcement webcast. As already highlighted by Henrik, I'll take a bit of an overview to our performance in all of the different geographies, given the varying market environment that we operate in. Before I then deep-dive to our financials as normal. First, we start from orders received development across the different geographies and businesses. I would highlight, from China perspective, how strong the performance has been. We've seen very strong growth across all the businesses, new equipment, modernization and also maintenance orders received development. At the same time, if we look at the rest of the businesses in new equipment -- sorry, if we look at the rest of the areas in new equipment, there is clearly a different environment or development in orders received. The Asia Pacific, Europe, Middle East, Africa as well as Americas are declining more than 10% from orders received perspective. Also, if we look at geographies, Americas clearly is the most impacted, and we see the impact in all of the businesses in orders received there. Then from a sales perspective, China continues to have a high activity level, and we see both new equipment and modernization continuing to perform very strongly. At the same time, Asia Pacific outside of China continues to decline in this environment. And more stable development, slight growth in Europe, Middle East, Africa and Americas in new equipment and modernization and maintenance business outside of Americas is again growing and overall growing, therefore. So clearly, varying development across the businesses and areas in these markets. Then to the financials. And I'll start with orders received development, which for the quarter, we reached EUR 1.9 billion of orders received, which has declined 3.8% on a reported basis, and on a comparable basis, a growth of 0.4%. Here, as highlighted already earlier, the key driver for the development was China, where we saw in units, our orders received growing more than 20%. And both like-for-like prices as well as mix contributed positively. So the monetary value grew more than units in the quarter. At the same time, if we look at the margin for our orders received, we saw that being stable in the quarter when we exclude the positive mix impact coming from the strong orders in China. Then to sales. Our sales for the quarter were EUR 2.587 billion on a reported basis growth of 1.1%. On a comparable basis, growth of 4.9%. All businesses contributed to this development. Strongest growth been in new equipment, 7.5%. Maintenance returned now to growth to 2.1% and modernization growing 1.3%. Already highlighted the geographical differences. But clearly, the strongest growth here in Asia Pacific, led by the deliveries in China, especially in the new equipment business. There are 2 highlights in our results in this quarter, first is clearly the development of our adjusted EBIT. At EUR 340 million, it is a growth of 5.5% from last year, and we also saw a margin improving from 12.6% to 13.1%. Good development in this tough environment in the quarter. Secondly, it is good to see that both growth as well as profitability contributed positively to this development. But also, I'll highlight that as in our guidance, also already in this quarter, we see more headwind coming from currencies at EUR 9 million. Accelerate program, which is nearing to its end at the end of the year, had costs of EUR 6.7 million and the benefits were roughly EUR 15 million in the quarter. Then to another highlight of our results in this quarter clearly is what -- it was cash flow. Exceptionally strong cash flow in the quarter at EUR 600 million. Although there's always fluctuations in our cash flow on a quarterly basis, clearly, so far, we've seen very good development in our cash flow. And from a net working capital point of view, the key contributors to that is, first, our accounts payable being on a high level, driven by the strong recovery in China. We always saw that been visible in Q2 and continuing now in Q3. Also, there are countries where we've seen extension of payment terms for things like VATs, which continues to have a EUR 50 million positive impact to our working capital. And also advances received have been having a positive impact to working capital. Clearly, very strong development from a cash flow perspective. But with that, I'll stop the financial review and hand over back to Henrik to go through the markets and business outlook.

Thank you, Ilkka. So let's wrap up with the outlook for the rest of this year. This market outlook is unchanged from what we recently announced. So clearly, with a good development in China, particularly in Q2 and Q3, we expect the market to grow for the full year. Other regions, we expect new equipment markets to decline as a result of the current environment. Maintenance markets, we expect them to continue to be resilient. Of course, there's an impact of the direct impacts of lockdowns, such as on repairs overall in the market. But of course, there as well, we have seen a slightly better momentum. Modernization, underlying drivers are there, as we've seen very good growth in the past years. Now clearly, there's delay in decision-making that's impacting the market for modernization projects. Our business outlook is unchanged from what we recently announced. We expect our sales to be in the range of minus 2% to plus 2% compared to last year in comparable currencies. And our EBIT margin to be in the range of 12.8% to 12.7%. And we continue to have many good things driving our performance. A solid order book and maintenance base. That's, of course, there. We are seeing that the improved pricing and the improved margins in orders received over the past couple of years is really being reflected in our sales. So that's fantastic. And we are reaping benefits from the Accelerate program. There are, of course, burning factors, the COVID-19 outbreak, some direct costs, but of course, also the fact that revenues in many markets in Asia and South Europe are lower than expected. And that, of course, creates more of a cost burden. Subcontracting costs are increasing despite the situation in many countries, and we have proactively decided to invest in our capability to sell and deliver digital services and solutions. And as Ilkka mentioned, there is a clear impact from the strengthening of the euro compared to dollar and RMB and so forth. And that we expect is about EUR 40 million negative for the full year if rates stay at where they are right now. But let's also take a sneak peek in the beginning of 2021. This is not a full year outlook. This is really what the outlook looks like going into 2021. Something we talked about in the Capital Markets Day as well. We have a number of positives, strong order book with the improved margins of orders received. It's clearly helping us. Very solid and robust maintenance business. And also our efficiency improvements and performance improvements, as you're aware of. But clearly, what is the challenge? It's the uncertain outlook. We all know that the situation with COVID virus is worse at the moment than it was just a couple of months back. So that, of course, blurs the outlook for the coming year. Geopolitical uncertainties can bring unexpected consequences. And then we expect that some discretionary costs will resume to more normal levels during next year, probably not in the beginning yet, but later on, such as travel and other things like that. But overall, we have a very solid situation going into next year. So as a summary, very strong performance overall in the third quarter despite the fact that it was mixed between different geographies. We're expecting a solid result for 2020, full faith in that because of the very strong commitment of our people and the trust our customers have shown us and the great work they have done together with us. So with that, we are ready to go over to your questions.

That's right. Thanks, Henrik. Thanks, Ilkka. Ready for the questions, and we can go straight to the telephone lines. So operator, please.

[Operator Instructions] We'll now take our first question from Jeff Sprague from Vertical Research.

I was just hoping you could elaborate a little bit more on what you're seeing on pricing, right? There's -- I interpret a little bit of a mixed message, right? You're talking about price intensifying and understand the thought process there. But by the same token, price is positive, margin and backlog appears to be relatively stable, if not improving. So maybe you could just elaborate a little bit more on are you expecting price to become more intense as we look into the back part of the year? Is the price competition just isolated in the China market, for example. Just any additional color there would be helpful.

Sure, sure. Happy to do that. So I would put quite a strong correlation between the intensity of price competition and development of the markets. It's clear when you have a rapidly shrinking market, other players are fighting for a smaller pie. We've stayed quite focused on pricing in this environment as well. That is important to us, but we can see the environment around us has become more challenging during this situation. If you think about China, you can say, "Hey, why is it there, given the extremely positive development of the market." I would say that anyone who has a position there, of course, is trying to replot growth from China right now as many other markets are weaker. And that's, of course, creating more competition there. But we've shown, again, the strengths we have in the market that we grew very strongly, clearly above market again and was able to do a good pricing. So I think that speaks quite a lot about our competitiveness there right now.

You also just addressed the cost side, and I asked the question through the lens of kind of carryover benefits you'll have from the structural programs you're taking relative to maybe the temporary costs that would return in 2021. Would that equation be as it stands now, a net positive or a net negative as you look into next year?

Do you want -- Ilkka, address that?

Yes. So I think I would talk about a few different buckets. So clearly, one big item that we've been working on for quite some time has been our Accelerate program, which is driving many other things as well, but also cost efficiency. And there, we continue to see good development this year. Overall, for the year, it is approximately EUR 50 million, and there's some tailwinds coming from that to next year has been growing throughout the quarters. So that's something we can take with us to '21. But then this year, the discretionary costs have been down. So for example, travel obviously has been something which has been done a lot less than normally. And many of those items, obviously, we will learn. So I doubt that we will travel as much going forward as we've done in the past. But there is some costs that will actually come and are coming back to more normal level in '21 as we get out of the, COVID-19 crisis. And then for the rest of the cost, we'll manage those prudently. So that's more of a business as usual.

We'll now take our next question from Klas Bergelind from Citi.

Henrik, Ilkka, it's Klas from Citi. So the first one is on equipment orders falling like this outside China, double-digit down. The lead time is longer from orders due to revenues outside China. So when do you think Henrik that this will start to weigh on top line coming out of the backlog already by the first quarter next year? Or do we have to wait a bit? And on equipment orders in nonresidential now at the start of the quarter in October. Are we seeing further sequential weakness from current levels right now? I will stop there.

As I mentioned in the highlight going into next year, I mean, we have a good order book going into next year, particularly because, as you mentioned, the lead times for new equipment orders are 9, 12 months or so. So we have a good situation. Perhaps modernization a little bit can be impacted already because of shorter lead times. But then the good thing is that China has a shorter lead time where we have now very good orders, and that is probably going to propel us quite nicely into next year. So I think towards the end of next year, we have to see that is going to depend on order intake for the rest of this year and a little bit what type of orders. What is still also a difference is that the volume business overall has performed better than the major projects business. So if you look at major projects, those are the ones who have more -- people are thinking about a little bit more on hold. And those are, of course, then usually orders for next 2, 3 years or so. So that helps a little bit also the more near term.

And on October there, Henrik, on nonresidential equipment orders, are we seeing a worsening or same level as in September?

I wouldn't say that there's been a really big difference or...

I wouldn't call out the difference right now.

Yes. It varies market to market, but no significant difference. I don't think at least markets would have worsened.

My second one is on maintenance. It's growing 2% in the quarter. That's obviously better than in the second quarter. But the 25% of the business, which is more discretionary spend still seems to be down. But I guess, we saw an improvement quarter-on-quarter? And how much do you think this business can grow again already in the fourth quarter? Or do we need to wait a bit longer interested in that 25% of the business that is more discretionary?

And again, it varies a lot. There's more discretionary part. And that's, of course, a very important part of the maintenance business. So that part is much more down in, for example, United States and in parts of Asia Pacific where lockdowns have been very strict. Actually, some of the repair business, if we look at some countries in Central North Europe actually grew already now. So it's so linked to the activity, and that's a little bit -- you can go back almost to the picture I showed at the beginning with the number of starts per elevator.

And that's largely -- the picture I actually showed also on the repair side. So that's the maintenance orders that you're talking about, giving a bit color geographically.

Okay, fantastic. My very final one is on mix. So right now, the mix is positive because of high equipment sales in China. Next year, obviously, it's going to take some time, but we might have slower equipment growth in China against tough comp and probably negative volumes maybe on the commercial side, outside of China. So here's my question, Henrik. On the commercial side and equipment, is there anything we should know about differences in margin? Could this weigh on mix? Or is it mix neutral?

I don't think it should be that big impact from a mix perspective.

Country by country, not that.

That's not a significant driver now.

We'll now take our next question from Guillermo Peigneux from UBS.

I wanted to ask about Slide #8, in which you described the sales growth at comparable FX rates for maintenance in China. And if I'm not mistaken, and obviously, taking out the first quarter of 2020, it is the first time in a long time that it grows not double digits. So it grows anything between 2% to 10% growth, as you define it. So I wanted to see whether this is just tough comparables or just what happened there when it comes to organic growth?

I have to ask first that what were you referring to?

Maintenance, China organic growth.

Okay. It was just -- it wasn't double digits this quarter. Okay.

Correct.

It wasn't far from double digits. We continue to have good growth there. I would say, it's quarter-to-quarter fluctuation. If you remember, last year, most quarters was more than 10%, some it was just below 10%. So not a big difference, actually.

Okay. And then I wanted also to ask about 24/7 Connected Services. You mentioned momentum improved. But I'm actually wondering whether you could share some numbers on 24/7 installation for us in unit terms or number of installations? And if not, can you compare it maybe with the absolute level of unit installations that you're putting from an equipment perspective. I just want to understand how you penetrate in the market with 24/7 Connected?

Right. So what we said is that the penetration of how many units we have installed of course, we sell and then there's a backlog to install. But how many we installed in the market and are generating revenues because, as you know, these are -- we sell this as a commercial service, and that's a significant uplift on the average service price with this included. So we are currently in the range of between 5% and 10% of our service base is -- we have the 24/7 Connected Services. If we look at total number of connected equipment, which sometimes gets confused here, then we're talking 400,000, 500,000, something like that. But then we talk about legacy connectivity as well. But if we look at the new 24/7 that comes with actually strong revenues, we are between 5% and 10% of the maintenance base.

And maybe a follow-up on that. Every -- do I understand that every new unit, elevator unit that you are installing will be with 24/7 Connected?

Well, I would say every KONE DX Class elevator comes with connectivity built in. That means that we can just like that switch on the service. And -- but of course, it needs to be something customers need to decide that they want to have this service. In the countries where we don't have DX Class elevators, we are shipping most with connectivity. But for example, in China, it's -- the fitting of the connectivity device is so quick, so it's actually not a big point. But I would say that where do we have the highest hit rates for this service? It's with new conversions. So there, actually, hit rates are pretty good. That's where it's growing the fastest, of course, than in Europe and other countries, it's more selling it to existing elevators. But not every unit comes automatically connected yet, but when we have DX across the world, then every unit will automatically have connectivity built in.

We'll now take our next question from Andre Kukhnin from Crédit Suisse.

I don't know if Andre's... [Technical Difficulty]

Apologies if your mute function is enabled, could you please disable it?

So Andre, we could hear your first part of your question, but then you went silent.

Apologies. Maybe we could requeue that question. In the meantime, we'll take our next one from Lucie Carrier from Morgan Stanley.

I have a few questions. The first one, I was hoping you could give us, if not quantitatively, but at least qualitatively, the growth or decline you have seen between your nonresidential, your residential and new infrastructure business in terms of order momentum in the quarter?

Well, I would first say that infrastructure, usually, those orders are quite lumpy. So they are -- you sometimes book bigger orders. And so those I wouldn't compare quarter-to-quarter. I would say that, that market is overall strong. And over this year, we have booked quite good orders on that. In general, residential is less impacted than commercial. And commercial is less impacted, for example, than retail and hospitality and things like that. If you look at residential markets around the world. Apartment sales in most countries are actually very strong, and those markets are robust. And that's why I think they will be more resilient. Clearly, in Southeast Asia and some Asian markets where lockdowns have been very severe. Also, those markets have been impacted. But actually, Europe, quite robust in most places.

Any number you can maybe attach to residential and nonresi or at least some sort of ranges? I mean nonresi could be less and more impacted than resi, but still be quite positive. I mean, what are we exactly talking about here in terms of impact on either resi or nonresi?

Are you talking about our orders or the market's?

I was talking about your orders specifically, yes.

You were talking about our orders. Well, I think you would go quite into detail here. What I would say is that resi orders and markets, in general, more resilient. And then major projects, which tend to be more commercial, of course, or mixed-use -- well, for mixed-use, it perhaps will be a little bit better. They are more down. So I would probably leave it there.

Yes. No more granular to go on a quarterly level, it makes less sense.

Okay. My second question was actually around the cost that you have in terms of shift this year. Ilkka, you've spoken about some discretionary cost will potentially come back next year. But I'm guessing, also this year, you had some increased cost regarding hygiene and safety and so on. Can you maybe help us understand how much of a discretionary cost reduction you have seen year-to-date? And how was that offset -- either fully offset or only partially offset by increased cost due to COVID-19, so we have maybe a better sense of the balance of the shift for next year?

Yes. And I would -- also, when it comes to costs related to COVID-19, I think there's direct costs, which are more the PPEs, like you said, but there's also cost of complexity. So things are changing rapidly. So you need to shift, for example, deliveries and so on. So that's also then additional cost that we have in place. And this complexity actually probably is a bigger cost than the direct cost. But overall, if I look at the discretionary savings we are having for year-to-date, it is some tens of millions. But net-net, I would still say that it is a slight headwind from that perspective. So clearly, the cost of complexity especially is something hard to measure, but clearly is influencing the overall cost level.

And my last question was maybe on the Connected Services. I remember at the Capital Markets Day, you made the argument that the scale of your installed base was giving you an advantage, especially versus a smaller provider of services. Can you explain maybe which type of data you collect specifically? I mean which kind of KPIs are really important from your standpoint? How are your maintenance employees or incentivize to make sure they perform a good collection and monitoring of the data? Because obviously, for a lot of them, this is quite a new thing. And how also should we think about the scale argument, considering that half of the elevator you maintain are not of your own manufacturer, if I understood well from the Capital Markets Day material?

Okay. There were many questions in one and wanted at KONE to understand when you said at what data employees collect. Of course, the input data. We have -- I think we have the leading field systems in the market. So we can, of course, gather data on what they've done and what the interactions. So that's something that automatically happens. But I think your question is more related to the connected equipment and what data we collect and utilize. That's a proprietary information that we utilize. But of course, what are the most important things they have to do with movement of doors. It has to do with electronics and it has to do with the accuracy with right comfort and a lot of things like that. And we look at all those parameters. We learn from them. You create service needs. My point in the Capital Markets Day is that before you have several thousand units connected, you're not going to have enough information to create good service needs and good algorithms to create that predictability and the understanding going forward. And that's why I think big players have a significant advantage here. Then you talked about many of our equipment are non-KONE. That's okay. We connect them as well. So that doesn't really, again, change the picture here at all. They are connected in a slightly different way, but we get almost as good data from them as we get from KONE. And we're learning there as well, more and more, the broader base we have. So that's perhaps a little bit more flavor on what we talked about in the Capital Markets Day.

We now have Andre from Crédit Suisse back on the line.

Can you hear me now?

Now we can hear you.

Great. I wanted to ask first a follow-up on the question on those kind of on long lead orders into new equipment into EMEA and North America. When you get kind of customer indications or inquiries or RFPs that I'm sure you can collect and measure as well, has there been a trend in that during last 3 months?

Of course, we have a whole funnel where we start with opportunities and you work them through the funnel, get to tenders and all of that. And it varies. Many markets actually, that activity has increased a bit. But that is, of course, then more of our proprietary commercial activity. But I would say that commercial activity is not that bad actually at the moment. We can see decision-making take some time. But that's usual thing in a time like this that if we then get more clarity, then many of these will come through. If not, if it continues to be uncertain and we probably see delays and some of those opportunities not coming to fruition. But I would say commercial activity overall is not that bad. It's actually quite okay.

Great. So if I interpret this kind of size of the funnel, it was actually not too different to pre-COVID, but everything takes longer and conversion is slower. That -- would that be fair?

It, again, varies a lot. In some countries, actually it's up. In some large countries, it is up, and I'm talking about outside of China. And some, it's clearly down. So again, it's clear that some of the hardest hit Southeast Asia market, it's down. There's no question about that.

I appreciate the detail. And I obviously understand it's commercially sensitive. Can I then move on to China? And it's another quarter where when you talk about intensifying competition and yet you outgrow the market substantially and with positive price. Could you talk a bit more about the kind of secret sauce that you have there and how that's achieved? And maybe we can look into a bit more detail on KONE brand versus GiantKONE? Or is it a specific vertical or subsegment of the market that maybe you were not fully present in, already that you expanded to, thinking along the lines of that MonoSpace 300 launch in the U.S.? Is that the kind of outcome of something like that?

Well, as I say, it's always a bit of a secret sauce, and that's how we want to keep it. But to be serious, I think we talked about it many times, to be successful in the China market, you need to be strong on a broad basis and have really the trust of the customer base that you are a reliable partner. And that takes many years to build up. And we can really see that we're reaping the benefit and the fact that we would -- I would claim the first player who really started to focus on service in China, and that was 10, 15 years back. And therefore, we have a footprint there. We have an excellent product portfolio and constantly come out with new solutions. It's -- in the end, that's how you build long-term trust with your customers. That's what it's in the end all about. When we see -- when the market has now been active and many developers actually want to speed up their projects, we have a delivery capability like no one else. As I think we talked about it, we can deliver an order in 7 days from order to site delivery today. My understanding, no one else gets really close to that in China today. So there are kind of then these special things. But it's -- in the end, you have to have a broad competitiveness. It starts with your people. It starts with your footprint, your service, your ability to install your products and all of that. So if you cannot really pinpoint one thing -- if it will be just one thing, it would, of course, be easy copy. But I think we have a fantastic team in China who has done an absolutely great job there.

And my final question is on the order intake margin. Could you remind us -- when you comment about that, that's at the current cost base, right? So with current setup and kind of raw material component cost? And hence, if I think about you delivering these orders in 9 to 12 months' time, and if we assume you have further productivity, then would that be fair to assume that margins can be higher even on those orders received in Q3, subject to all the other things staying the same?

Well, first, we do think about our margins based on a certain productivity. So if we would have better productivity than we estimate, then yes, we could deliver those at the higher margin. But that's obviously subject to us being good at driving that productivity. And then for the cost base, we look at where we are now and use that as a proxy. Obviously, we don't have a crystal ball when it comes to raw material prices going forward.

Got it. So just to double-check, so in that comment on the margin of orders received, that's assuming future productivity improvement does improve every year?

Some.

We'll now take our next question from Rizk Maidi from Jefferies Group.

I'll take them one at a time. So the first one maybe, as we head into the year-end, can you just maybe help us on your China outlook in Q4 and perhaps the early part of 2021? I think, Henrik, in your presentation, you mentioned some tightening financing environment on the developers' side. Any color on there would be very helpful, please.

So what is clear is that the development market in Q3 was extraordinarily strong. So we shouldn't expect as strong of a development in Q4. But looking at the next couple of quarters, actually the outlook looks good. So we expect a favorable development in the market, but clearly not at the pace we had in Q3. So there, we can see some impact of these cooling measures, but still, the momentum seems to be there. So hopefully, that helps.

And maybe to add to that from a financing perspective, which was the second part of the question. Yes, we've seen in Q2 maybe a bit easing of liquidity in the market overall, and some of that impacted also the developers, our customers positively. Now in Q3, we've seen somewhat tightening liquidity on overall market and also for our developer customers. So that's really a bit color where we expect a certain tightening in the market for the remainder of the year.

Okay. The second one is just a follow-up on Andre's question on the comment on the margins in the orders. So my understanding is you're getting a higher mix from more China orders, which should come as a positive impact on the margins. And that is offset by sort of less repair business as we speak. Can you perhaps just walk us through why you've changed your word in there from slightly positive to now stable, exclusive of positive mix in China?

Well, first, I think we wanted to give a bit more color this quarter where the orders from China were exceptionally strong, I would say. And for the rest of the margins, as I said, outside of China, we've seen more pressure on prices. And as a result then, our orders received margin has been stable as a end result.

Okay. And then the last one and a very quick one just on the duration of your order book. Now that you have a higher mix of China orders plus more volume business versus sort of large projects, well, is it still 9 to 12 months?

For China, that's clearly the fastest rotating market. So it is somewhat below 9 months. It's been actually this year accelerating a bit the rotation. But overall, residential strength is also then faster moving than some of the major projects, which normally might take years to be delivered.

Our next question comes from James Moore from Redburn.

I've got 3. I'll go one at a time as well, if I could. Firstly, could we get back to 24/7, please? Could you talk a little bit about what is the magnitude of the price uplift that we're seeing in the latest quarter or so? And has that changed compared to, say, a year ago in terms of a price uplift against a standard maintenance contract? And is that price uplift varying between the different regions around the world, or is it broadly similar as U.S.?

So actually, I think pricing is maybe even slightly better this year than last year. It does a little bit vary from region to region. U.S. would be the highest, Europe then and then Asia somewhat lower. But pricing has actually been -- continue to be good there. So I think the customers see the value and understand why it actually improves their business in a positive way.

And then we're talking about a 10% price hike against a standard contract or more than that?

Much more than that.

Or less?

Much more than that.

Do you care to go any further?

That's okay. You can buy one of those services, then you find out.

It might take me a while to figure how to do that. Maybe I'll turn to the balance sheet. You've got a very strong balance sheet. [indiscernible] Do you want to keep the firepower in case that asset moves again in the future? Or is it time to think about less cash?

I would say, clearly, the logic of a deal there hasn't gone anywhere, but we closed our files. We're moving forward. We are in a good shape as we are. I would say, in this crisis -- of course, we have a very strong balance sheet. And with the cash flow now, it is truly strong. What I would say is that one of the learnings to me out of this crisis, and people may argue with that, is that the value of a strong balance sheet has been very high. When the crisis hit us, I didn't have to and Ilkka didn't really have to spend any of our time at that point in figuring out that how do we stay liquid. We could immediately be on the front foot, how do we make sure that we can really do the best business, continue to improve, strengthen KONE and do the right thing with our people without having to think about that. That was actually a huge important factor. Do we need to have as much cash as we have on the balance sheet? The answer is probably no. But generally, I think a strong balance sheet has really been positive to us.

Great. And finally, China pricing on new order intake, positive, which is great. Has it gone up a bit with the strong demand in the quarter? Are we talking around 1%? Or is it more meaningful than that at the moment?

I wouldn't go into too much detail on the pricing. It was a positive contributor. There's obviously -- it's not a science. You have different products and the like-for-like pricing analysis -- percentage doesn't really give you a good picture of that development. But it was a positive contributor.

We'll now take our next question from Andrew Wilson from JPMorgan.

I'll try and be quick. In terms of the pricing, I think it's been very helpful in terms of clearing up some of the commentary on China, and clearly, things like you are performing quite significantly there. So I can just sort of drill into the comments around the pricing intensifying. Is that solely a comment around equipment? Or is it also relevant to service? And if you are seeing the pricing intensifying, is that by the local players or is it by the sort of larger OEMs?

I would say that's mainly comment for new equipment more than services. And China, you have about 15 quite large players. So you cannot really pinpoint towards anyone. I think it's -- everyone in that market is fighting very hard to gain part of that market growth. And being the largest market, of course, everyone is very focused on it. I wouldn't pinpoint that it's one or the other. I would say it's everyone.

Perfect. And just a couple of questions on 24/7, actually following up on one of Lucie's questions earlier. I think we were talking around the engineers and the way that they work in the field. Am I right and informed from your comments that the engineers, when they're out on a site, they are documented in all of the repairs that they make are being logged and that data that you use in terms of helping to provide that connected service down the road? I'm just trying to literally understand the practicalities of how -- where the engineer is working has changed over time?

Clearly, they document what they do and through their devices they have in the field. So the data we have for any given elevator is what they have used, but of course also the data that we collect from sensors and through the connectivity that we have into these elevators. So the fact that they've been collecting data for what they do and fault codes and what have you, that has been there, of course, for a longer period of time. Now they have more information at their fingertips to understand what they should do. And of course, if there's a fault about to happen, you get a direct -- it goes directly to the field device of the technician to inform them that they need to do an intervention. And they also have now much more support from our technical help teams that can then guide them and give them a better information based on data we have. So it comes from many different sources. And that is something you just built up over a long period of time.

And I guess, just an additional question on 24/7. I think historically, you've sort of set -- I think it was that there could be 1 million connected elevators or you could have 1 million of it in maintenance base. I guess just of the development that you've seen at 24/7 so far, have you changed your sort of ambitions or, I guess, increased or decreased confidence in what that might actually mean for the business over the longer term in terms of kind of percentage of the maintenance base you can get on 24/7?

I don't think we have changed our ambition here. Perhaps in the beginning, we thought it would be faster to roll it out. Perhaps what's been a little bit slower is as we have a commercial model to sell, to install and all of that has been somewhat slower than I would have predicted a few years back. But the business case is very much there. Pricing probably better than what I thought a couple of years back. So it's a little bit both. But the fact that we think that the majority of our service base in the future will be connected, that view hasn't gone anywhere. But we haven't also given a time frame when we think that's going to happen.

Our next question comes from Lars Brorson from Barclays.

3 if I can, Henrik, all relating to your service business in Europe and North America. Starting with modernization. I just wanted to try and understand exactly what the message is on modernization going into next year to try and sort of scope the earnings impact from that drop in order activity we've seen? So if I understand you correctly, generally speaking, we talk about order delivery times for modernization somewhat shorter than for new equipment, so call it maybe 6 to 9 months in Europe, I don't know, 12 to 15 months in North America. But is the point here that the downshift you see in orders on the modernization in developed markets in the last couple of quarters will predominantly hit your P&L in 2021?

That's correct, except for the major projects. But the large -- the volume business there would have a lead time of maybe 3, 6 months, depends on a little bit type of project.

And also, obviously, next year, what happens going forward is also impacting next year. So it's not only the backlog we have.

That's clear. And maybe just on the earnings impact, I know you're not going to give me the margin on modernization. But historically, we've talked about modernization being closer to a new equipment margin than maintenance. You've obviously done well in the last couple of years, raising margins in modernization. Maybe just relative to group margins, that's 13%. Can you give me some help with where modernization sits today?

It's still somewhat below. We've improved it, but it's still below.

Do you think you are outgrowing competition in modernization, if I can ask?

I think in the past couple of years, I think, yes, we were. Now maybe more in line with markets. It's difficult to say that market, how we are. I think in some places, I think -- we think we've outgrown and maybe some other places we haven't. So I think a mix is our best understanding right now.

And secondly, Henrik, on your repairs business, I understood here before that's fair that it's obviously very linked to activity. I wonder whether you have some sense of how much of a boost in Q3 there might have been from a catch-up in the second quarter, i.e., repair is not done during lockdown? And to what extent we should worry about new lockdown measures starting to impact your repairs business in the fourth quarter?

Well, that's a good question. We don't know what kind of lockdown measures we will see in the markets. At least what we've seen so far, of course, have been more targeted lockdowns and less impact so far. I think that's something we have to wait and see. Was it a catch-up from Q2? I think it was more normalization than anything. That's my understanding.

And finally, on maintenance contract, if I can, I appreciate your point, it continues to be resilient. But I think I did hear you at the Capital Markets Day talk about some de-scoping of maintenance contracts, particularly in the U.S. I appreciate the impact is pretty limited still. But can you help me understand whether that trend has continued and when we might see the impact of that on your P&L? In other words, how real-time is that? Is that also perhaps more of a 2021 impact?

Well, I think we have to separate between 2 different things here. One is that probably there's more in United States and other places that there's been concessions related to service contracts. Not broad, not a big issue, but perhaps more than other places, i.e., that you have got a concession not to pay for a month or something like that, your maintenance fee. Then I think Ilkka talked there about that there was some de-scoping. But I think it's not that big of a difference in the end. Either if you have a fully comprehensive contract, everything is included. Then if you have de-scoped your contract, not everything is included, then you have an opportunity to sell that as repairs. So in the end, it's not that big of a difference. The discretionary part can a little bit fluctuate more, but I wouldn't -- not a huge thing.

Yes. And if you look at the development for the revenue in maintenance business, the contracts revenue actually was growing quite nicely, roundabout 5% in the quarter. And then the impact to revenue overall maintenance revenue was coming from the repairs business.

We'll now take our next question from Tomi Railo from DNB.

It's Tomi from DNB. I know that the guidance range for the fourth quarter is quite wide, but maybe you could just remind us about the main elements there and if you have confidence to say whether your EBIT margin would be flat or up from the last year's fourth quarter. Especially maybe keeping in mind that during the past 2 quarters, the margins have actually improved year-on-year?

I would first at least give our perspective that we've been trying to give as accurate of a guidance as we've been able to throughout this year. And I think we have quite a specific guidance for the full year. But of course, that gives a range for Q4. That's clear. That's always going to be the case. As I said in my summary that we expect a solid full year, we haven't commented on margin for Q4. What we have to remember is that we actually had quite a nice margin uplift last year in Q4. So we have a tighter comparison. But that doesn't mean that we're not expecting a solid and good quarter for Q4 as well. But of course, there's always going to be a range of outcomes, I think, as we all see that the market is more uncertain now than it was just a couple of months back. So if we put all that in context, I think we have quite a specific guidance out there.

We'll take our next question from Wasi Rizvi from RBC Capital Markets.

Just one more from me. Slightly stepping back in the Americas, could you just help me understand what's happening there a bit more? I mean all segments down double-digit on orders. I mean is the [ bar ] situation there really meaningfully worse than Europe and the rest of Asia? I mean, is there some short-term election uncertainty? Or is it muted market position somehow? I'm just trying to understand if there's something more underlying we should be aware of. I mean we had another industrial company report this morning with exposure to U.S. construction. And obviously, they're much shorter cycle, but the investment is quite different. So I'm just trying to understand what's going on.

Yes. I would say you have to remember that our industry is very much exposed to commercial sectors. If you talk to someone who's more in residential construction, they don't usually have elevators in United States because of a lot of single-family homes. So I think you need to look where people are operating. And so you can say that U.S. is -- there are a couple of things. One is that very much exposed to commercial. Retail has been important, and we can say leisure. That's one aspect. And then actually, the beginning of the year, as we had discussed earlier, we started to see the U.S. market already coming down slightly. So I think these are perhaps the factors that are the drivers of it.

We'll now take our next question from Daniel Gleim from MainFirst.

Yes. I've actually got 3 on 24/7 Connected Service. And apologies for belaboring the point. The first is on the short-term impact. You gave us some guidance for the incremental service growth tailwind you're currently enjoying. And I'm wondering whether you could give us a little bit of guidance for the next 12 months, whether this tailwind is going to meaningfully change? Or in other words, are we already witnessing peak tailwind? Or is this something you could even step up in the quarters to come potentially by more markets becoming addressable and the like? That will be the first question, please.

Well, geographically actually for 24/7, we have a good coverage already. So a large part of the maintenance markets that we have are covered. So geographically, it's not so much of an expansion story from my perspective. Then second, I think the key for us really is to ramp up our capability to sell. And there, we have opportunities to continue seeing acceleration of the commercial effort. So -- well, not -- in my mind, I think we've done a good job bringing the momentum up there. But there continues to be good opportunities going forward also to see further revenue growth as we ramp it up in units across the globe.

I would only -- a little thing I would add to Ilkka's is that, let's remember, we are still quite at the beginning here.

Maybe moving on to the long-term impact. And I asked a question that was already raised a little bit differently. Do you think in the long term this connectivity, now that it's built in within your elevator class and potentially competitors will do the same in the future, that this 24/7 service will become standard in the elevator industry? And in other words that the addressable share within your maintenance space eventually will go to 100%? That is first part of the question. And the second part, tied to that, if it becomes a standard in the industry, do you think the meaningful average selling price increases you're currently enjoying will last in the long term? Or is this going to become more a commodity?

Well, I would first say that, I think, yes, I think it will become more of a expectation in the market that you have it. And you can see that most players in our industry are investing in one form or another in it. And we are doing in a slightly different way, which is, I think, the sign of a competitive market. So -- and we have to remember that who are we selling to, who are -- is our competition selling to. It's mainly to our existing service base or only converting new elevators into the service base. That's where we're mainly acting. So there is a huge market for all of us to address. I do believe that it will continue to be a commercial service. But that doesn't mean that this service is going to be exactly the same as it's today. So as we -- I talked about 24/7 Planner, that's our next step. So we have the base service. And as a digital service, we can constantly build up new features on top of it. And that's what we will continue to do. And that's how we continue to add more value and make sure that it can be a good commercial revenue source continuously. If we would stop just here, it could be a different case. But no, we're not going to stop. We're going to continue to develop it constantly. And that's just an important perspective to keep in mind. And I think we haven't seen anyone else with something like 24/7 Planner in the market yet. So it was, again, our next step. Next step will be then something else. Let's see what that is.

And one last question on how the 24/7 Connected Services works with new elevators you sell. Is this bundled already with the initial service period? Or is this something you sell incrementally? So if you look at the penetration rates that you disclosed with us, is this including initial service periods or only the elevators that are converted after the initial service period?

We always look at like-for-like. So we look at both what is converted after the service period. And when we talk about our maintenance base, always remember that we talk always about elevators in the -- with a paid maintenance contract. So we all -- we don't include in the maintenance base the ones that are in the first service period, which we probably have the largest base there. So that's always good to keep in mind when you benchmark maybe to other companies. So we always look at like-for-like here. To your other point that, yes, we are selling it in connection with new equipment as well more and more. That is something that is ramping up quite nicely in some markets. And then it will come in your first service period, and then it's actually quite good the conversion rates to maintenance. So we're selling through that, we're selling to our current service base, and of course, trying to address all of them more and more.

It's time to wrap up.

That does conclude the Q&A session. I'd like to hand back to the speaker.

Thank you. Thank you, Henrik. Thank you, Ilkka. And thanks for the active participation. Have a nice evening.