Munters Group AB (publ) (MTRS) Earnings Call Transcript & Summary

Welcome to today's presentation of our second quarter results for this year. I'm Ann-Sofi Jönsson, and I'm Head of Investor Relations. And I'm here today with our CEO, Klas Forsstrom; and our CFO, Annette Kumlien. We will run through the presentation. And those of you who are viewing on the webcast, you can put questions throughout the whole presentation and we pick them up in the Q&A session. And we will also open up for Q&As from those of you who are listening in on the conference call when we come to the Q&A session. So with that, I would like to hand over to Klas.

Thank you, Ann-Sofi, and good morning, everyone. Let me first give a short introduction before we go into the webcast. It was a quarter that delivered solid growth in prioritized and long-term growing market segments. I'm particularly proud of that we were able to grow in the industrial area of AirTech and also showing good and strong progress in Americas for FoodTech. We delivered continued service growth, and that is also pleasing. We experienced raw material increases through the year, supply chain challenges, but I'm very pleased how our operations is handling the disturbances. From the beginning of the year, we have started to implement price increases and then they will deliver consecutively through the year and all the way into 2022. The strategy continues to be implemented. So what is the agenda today? It is highlights of the quarter. I will talk about the strategy, hand over to Annette for financial highlights, summarize and then open up for Q&As. So solid underlying demands in the second quarter. Order increased by 23%. It was driven by the industrials and, generally speaking, batteries. And FoodTech, as I said, also growing in U.S. Net sales increased by 13%, currency adjusted. And a similar pattern there as in order intake. But here, I also have to highlight APAC when it comes to batteries. The EBITA pretty much in SEK flat and slightly below last year. It was driven by constraints in the supply chain, but also changed product mix. Coming back to the constraints in the supply chain. I think this is something that is for most industries. It delivers a challenge when it comes to longer lead times for us, but what is pleasing to see that is that the market accept those prolonged lead times. Cost increases are progressing over the years, but I feel that we are mitigating them step by step. Very pleased to have said on our execution on the long-term strategy. Signs of that we have now started to deliver on our M&A agenda. First, IP patent-related acquisition. And then also, we are moving into service area in a good way. FoodTech has set a new strategy that is very promising for the future. Let me talk about the order intake growth, growth in most markets. It is about U.S., but then also when it comes to APAC and also EMEA. Annette will present more in depth, the areas. But generally speaking, as I said, it is AirTech that shows the strong growth, but then also rebounds in FoodTech Americas. EMEA, also good development in AirTech and FoodTech delivering growth. Asia, as I said, when it comes to FoodTech, it is a little bit reset from last year when it comes to China and as expected. And AirTech also here driven by the battery segment in a strong growth mode. When it comes to our challenges in order -- in raw materials and supply chains, as you're all aware, this is something that concerns all the different markets and players. It represents also challenges for Munters. What is -- what do I talk about when we talk about supply chain challenges? It is replanning of deliveries. It is adjustments in production schedules. But I have to underline that our organization is handling this in a very, very good way, and we have not had any major disturbances. What is good to see that is that the underlying operations are delivering in a very good way. Okay. So when it comes to raw material cost increases, we have, through the years, implemented consecutive price increases. And I'm pleased that the organization is delivering on the set agenda forward. And all in all, what is then prolonging our price implementation is very much related to that we have longer delivery times in the marketplace. Market trends. Let me come up to market trends in AirTech. And here, I think it is very, very important to say that, if you take a look on the arrows, they are much more green compared to a year ago. Industrials showing current growth and long-term growth, leaded by the battery segment, but also in the different under-segment in industrials. And what is clear here, this is the areas where we have predicted that we should focus on. Data Center also showing strong underlying growth and Components also pleasing growth in the end markets. Mist Elimination, to some extent, flat, but here we're also changing our scope of Mist Elimination and moving in more to clean tech. Commercials, solid replenishment in the markets for supermarkets. And Services continue to deliver a solid growth. Let me drill into battery and the industry around battery. What is our long-term game here? Our long-term game is to establish a clear leader position. And it's pleasing to see that, that is what our customers are telling us, that we are a clear technology leader in the battery segment. And what is the long-term plan? That is to put us in the leader board and then also to put a position for continuous service deliveries. And what are we delivering? It is lower energy consumption. It is better climate. It is, at the end, a more predictable and strong production environment. And coming into service. I think one -- here is one example. Since years, we have been very, very strong in China. And now we have revisited quite a few of the earlier installations. And as you know, in China, then it is very much about price. But here, we are able to upgrade already installed installations and by new fans, in this case, plug fans, we can improve the energy consumption, something that is very, very important also in China going forward. And as you can see, it is a payback time that is about 2 years. So the long-term game when it comes to battery, that is to own the market and then start to service the market. Moving over to FoodTech. It is a mixed market here. But what is good, that is it is clear signs that the U.S. market is picking up. But it's also good to see that its greenhouse and dairy is moving forward as an underlying market. And all in all, I think that there is a solid outlook for this market segments. So if I summarize where are we at the market, we are gaining momentum in the areas that we have decided to focus on where we can see long-term growth. We are building platforms, especially in the industrial area, to service the market even more, very much in line with our strategy. So implementation of our strategy, if I go in there, customer, what has happened during the quarter? We have implemented long-term strategies for more efficient pricing. We have started to deliver clearly on the raw material challenges. I'm not 100% happy, but we are moving in the right direction, and that is very promising. Innovation. Innovation is not only what we do. It is also about acquiring innovations. And here, it's the first sign that we can also acquire innovation and deliver better solutions to our customers. And the portfolio alignment, product portfolio alignment is well on track, and we will meet our targets there. When it comes to markets, we have expanded in service into 2 new markets. We decided not to acquire service companies. Instead, we said it is better that we set up the service there ourselves. And as said several times here, we are growing in the prioritized segments. When it comes to the implementation of long-term strategy, it is progressing well on track, and I'm pleased to see the efficiency measures taking place in AirTech and FoodTech. And above all, we continue to generate a solid cash generation. People, at the end, is about culture. And they're moving our culture to become even more forward-looking. It's through change management trainings. It is about management when it comes to sustainability and so on. We are setting the organization in line with our strategy. So at the end, once again, we deliver on our long-term strategy. In AirTech, it is growth in prioritized market and strengthening our technology. And in FoodTech, it is setting the next steps moving ahead. Expansion in service, Mist Elimination moving in to become Clean Technologies. We will go deeper into that in the next quarter, what we mean with that, but that is to expand it and make it wider. We have secured a frame agreement with a larger data center hyper scaler that gives us the opportunity to also deliver recurring revenues in this segment. There are decisions to delay some of our strategy implementation, and the main reason here is we need now to deliver on the demand out in the marketplace. FoodTech. Digital solutions, accelerated growth in IT and SaaS solutions, concentrate on climate solutions, i.e., the normal industrial play, increased value-based selling, increased continuous improvements and innovation. And clear signs of that especially the organization is started to be connected here. We have a new Head of Connected Farms appointed, and I see a lot of positive signs in this area. Climate change is a driver, a major driver for Munters. And I'm so pleased that both in what we deliver to our customers in helping them to improve their operations, lowering the energy consumptions, making them more sustainable, but also what we deliver when it comes to sustainable energy. As you know, we have set the target to strive for 0 emissions in our own operations by 2030. And here, you can see 1 very clear sign of we are walking the talk. In Munters Lansing in U.S. now, we have 100% renewable power sources delivered into the facility. When it comes to quality, we are moving ahead and setting more and more ISO standards. We are setting a better and better way of working. I'm pleased with the progress. And when it comes to governance, a solid governance in how we deliver on sustainability, KPIs, and we are training our people. I'm very, very positive for this area. So with that, I leave over to you, Annette, moving forward.

Thank you very much, Klas. So let's dive into the performance of the quarter and the year-to-date. If we look at it today, growth is kicking in. I mean we are riding on the megatrends that digitalization, for instance, sustainability is showing. So 13% up year-to-date. If we look at margins, we are trading well when it comes to the midterm targets that we set out a couple of years ago. So we are at year-to-date to 13.3%. And then when it comes to leverage, we have maintained leverage during the quarter in spite then of paying out dividends and also having some increased inventory due to the sourcing situation. So when it comes to order intake and net sales, yes, it has been strong. I mean FX adjusted in the quarter, we had a growth of more than 20%, and it's particularly in the area of AirTech, where we're seeing the battery segment delivering in APAC as well as in the Americas. When it comes to FoodTech, it's really nice to see actually that the Americas is picking up as that has been trailing earlier on a very sluggish levels, but it's picking up. And also, EMEA, when it comes to greenhouses, is picking up for FoodTech. When it comes to sales, again, on the back trailed of the strong order intake that we have seen earlier, we are FX adjusted plus 13% in the quarter. And again, it's the same segments that we have seen earlier, also then including services. When we look at the year-to-date figure, again, we show strong growth during the whole year with an adjusted FX of around 22%. And then when you look at the changes that we have done in the strategy by taking out a noncommercial Walmart business, there's smaller up trail when it comes to the year-to-date figures for order intake. And obviously, net sales is more impacted by that. We took it up. And in spite of that, we are growing 13% in sales. If you look at the backlog, strong growth. We are up more than 20% year-to-date. And also when we look at the Services today, it represents around 14% of the sales. If we go into AirTech, you see the same figures, but the stronger development. And again, it's driven by the battery segment in APAC and Americas. And also, Services showing good growth with all the improvements that we have made and changes and on how we're driving the service businesses. Also, net sales, again, strong growth. And again, remember that we have taken out a noncommercial Walmart business in the U.S. So that is actually meaning that we have a stronger growth in the underlying segments than what we are showing. And again, Services, when you look at AirTech, it's about 20% of their business. And when you look at the year-to-date, you see the same picture as you see in the quarter. And again, if you look at book-to-bill, we're at 1.2, which is very good. And order backlog up 24%. Going into the FoodTech business then. The good growth in the U.S. has been offset by the decline in China. But in spite of that, we're actually up 5%. And also, as we talked about earlier, EMEA has grown in particular when it comes to the -- also the greenhouse segment, but not only the controllers in the U.S. under broiler segments. APAC, as I said, declined, and that's actually in the wake of the strong growth that we had last year in the swine segment. FX adjusted, when it comes to sale, is more or less on the same level plus 7%, and it's coming from the back trail of the order intake that we have seen earlier. And then when you look at the backlog, in all, we were up 12% versus last year. Coming then into our margins. We have more or less flat margins compared to last year, a little bit lower, impacted by the sourcing activities going on and also impacted by the raw material prices that you have seen earlier. But one should remember that what we have done during this year is done consecutive price changes, and that's all in the area of around 7% to 8%. That then will roll into our performance as these new orders are delivered as well. If we look at AirTech, we have improved margin. And again, we have had a very strong growth, so that economies of scale are coming in. But that is obviously offset a bit by the constraints in the supply chain and also by the increased raw material prices. But again, consecutive price changes have -- or price increases have been made throughout the year. FoodTech, yes, we have had a weakened margin in Q2 and also year-to-date, but it's also an impact, obviously, over the sourcing situation and the raw material and freight costs that we have had. But also once you remember that last year in Q2 we had strong growth and a strong margin base because of the growth in the same markets in China. But again, when we're coming to the margins, consecutive price changes have been made that will roll in as the orders are delivered, and that will obviously depend on the lead times that we have in our supply chain at the moment. If we look at delivering our strategic journey, you have heard us talking earlier about what we did in 2020 and also the newly implemented strategy for FoodTech that we did in 2021. The early communication is more or less the same when it comes to delivering of the values once we have executed the programs and also when it comes to how much it will cost. The change that we have made, as Klas mentioned, was that actually, when it comes to the AirTech program, we have pushed out the full implementation towards end of 2022 or early 2023 in order to manage the situation today with the increased demand. But all in all, it's trailing according to the plans that we set up from the beginning, except for this latest change. If we look at cash flow, I mean, the work that we have done over the past 2 years have really focused not only on growth and profits, but also making sure that we have a strong cash conversion, and that's continuing. And yes, we do have some changes when it comes to the inventory in the wake of the sourcing situation we have today. But again, with the changes that we have made, actually, we have an organization that delivers on it also, which makes that, in spite of the sourcing situation, we're actually at the leverage that is around 1.9, basically delivering what we have seen before. As you also have seen from the report is that we have refinanced the group. So we have settled a new 5-year financing facilities in place, and you saw on the same levels that we had before. We have also changed the focus on the agreement, so it has become more of an LMA standard. And also, we have more baskets that are dynamic in order to make sure that the refinance supports the growth and the strategy that we have implemented. So with that, Klas, I would like to hand over to you to do the summary.

Thank you, Annette. And If I summarize the quarter, continued good demand in the second quarter. We are growing in the areas we have decided to grow, areas that will deliver long-term solid profitable growth. It's also important to realize that we can deliver service expansion in those areas. Here, I'm very pleased to see how we progress. When it comes to the constraints in the supply chain, it is not different for us compared to any others at current. We have a strong organization that battles this every day, and I'm very sure, when we come out of those constraints, we will be even stronger. Price increases, already from day 1, we started to -- day 1, myself and Annette came in. We started to deliver. Here, we need to set up a strong organization in order to sell on value. Now we have been able, besides setting that way of working, also consecutively increased the prices through the year. It is linked to the demand in the market, and day will come when we deliver the orders that we have taken. Delivering on our long-term strategy. It is about innovation. It is about being in the right market. It's about growing strategy -- growing service. And I feel that we are delivering all this. And you can see some clear signs that we are gearing up when it comes to M&As. And here, I'm very excited for the future. So with that, let's open up for M&As..

Q&A.

Q&A. A Freudian slip there.

Yes. Okay. So I know that we have a couple of questions on the conference call. So let's open up the conference call line.

[Operator Instructions] Our first question comes from the line of Lucas Ferhani from Jefferies.

I have a few. Maybe we start with the first one, a quick one. Can you give us roughly the level of price increases? And maybe what's the price element in revenue growth for Q2?

When it comes to the price increases that we have set so far, let me divide it into 2 elements. I mean, first of all, and this is the long-term strategy, always yearly implement price increases. That is in the range that we started all at the end of last year in the range of 2%. And then on top of that, we have delivered consecutive price increases through the year. And they will play in as they go through the order delivery system, so to speak. And all in all, that goes up to around in between 6% to about 8% per segment. And if needed, then we continue to increase prices. What was the...

The second one was on the margins. Can you provide a rough bridge of kind of what's the impact of the positive operating leverage and maybe what the impact of supply chain, raw material pressure as well as some of the cost savings you also have for this year to help us reconcile a bit what has driven the margin to get there?

I mean, if you look at the net impact from price increases and also the supply chain restraints, if we put that into one word, I mean, obviously, we're a net negative from a margin point of view. But with the price increases we have made that are in the pipeline, they offset quite a bit actually the impact that we have from the cost increases. And I think you can see part of that also AirTech with the good volume growth that we had there, also the economies of scale, helps out in this situation. So in spite of raw material prices, the margin goes up in AirTech.

Okay. Perfect. Another one would be on the battery segment. Can you maybe provide more color on the growth? Is it kind of several very large orders or many small and midsized order? And geographically, is it mostly APAC? Or are you seeing now more orders from U.S. and Asia?

That is a very good question.

From U.S. and Europe, sorry.

That is a very good question. And if I go take it back a little bit, I mean, a couple of years ago, in the battery segment, we saw strong growth in APAC and China. And then it lowered down. It was consolidated. And now it's strong growth in APAC and China, in particular as well. But what is interesting, as I mentioned, we also see that we can gain service business by revisiting already installed areas. And then the easiest way to describe it, then this goes across the regions. We see strong demand picking up now in Europe, and I expect that to continue because the electrification of automotive industry will continue. And then moving into Americas, that will be the third wave. But also there, we see strong growth. So all in all, I mean, we are the market leader in the battery segment. We aim to continue to be the market leader in the battery segment and the long-term play that is also to generate service business in this area.

Okay. Good. And my last one is actually on the service business. If you look at it, it's 14% of sales, I think, for H1, so slightly lower share year-on-year. Is there anything that kind of preventing growth in Services? Or is it just the stronger growth in the equipment business driving the mix?

I think that is one of the explanations. And let me divide it into -- I mean we see strong service growth in Americas, and we see solid growth in APAC. Then when it comes to Europe, I mean, a lot of the service there is still, I mean, visiting factories, moving closer to them. And that has not yet opened up due to the COVID situation. I'm very confident that we step by step will continue to increase it. But call it, it is a trailing COVID effect, if I put it like that, in Europe. And one thing I'm coming back to, I mean, the long-term plan is, I mean, whenever we put an OEM contract into place, I mean, we have service businesses to gain afterwards. So I'm solidly positive to our service development. And I may add as well, I mean, now we will start also to establish ourselves in new markets when it comes to service. And without overpromising, I mean we will start to deliver on the pearl -- the chain of pearls when it comes to smaller service acquisitions. The question is just when we will start.

But just to correct one thing, also actual services had a higher percent of sales in Q2, so it's not that it's lagging behind. It's actually growth.

It's 1% up.

Yes, it is 1 percentage up actually. And one should also remember that is based on a large increase in the sales as well also. So it's very much maintain and increasing positions in Munters.

And the ambition is, and I think I said it several times, that is in between 1% to 1.5% organic percentage improvements and to top that off with also M&As into the service area.

And the next question comes from the line of Kenneth Toll from Carnegie.

Yes. I have just one question. We see now that order intake is stronger than sales and the order book is growing, and you point to logistic challenges and so on. Do you see a risk that you might lose some of the orders you have since delivery times are prolonged and so on? And do you think that some of your competitors have a more favorable situation than you do?

Ken, it is a very good question. And maybe I need to underline it that what I hear and what I see from the market that is that there is a strong acceptance of prolonged delivery times in the marketplace. If we decide to lose an order, if I may put it like that, I mean, then it's due to that maybe we are not -- we are too tough on pricing as an example, but then it's deliberate. But I feel that we are keeping or taking market share in batteries as an example. And I'm not afraid. I have no indications that we are going to have order drop-offs. It is a fairly wide acceptance in the marketplace when it comes to prolonged deliveries. And we are -- we are doing -- we are not overpromising delivery times.

I want you to remember it's for everybody in the marketplace at the moment. And it's not that it's a problem with the way we are producing. The problem is actually moving the material around in the world, which everybody is experiencing.

And the next question comes from the line of Mats Liss from Kepler Cheuvreux.

Yes. Just coming back to this book-to-bill 1.2. And I guess the delivery times have been extended. Should we expect it to sort of be extended so long that we don't experience any sort of sequential improvement in sales that is more coming into next year? Or could you give some flavor?

Mats, that is also a very good question. And I think that what you can see now, I mean, the order intake is about the invoicing, but we still show strong underlying organic growth in the invoicing side as well. The order times, when it comes to projects, predominantly, they have been prolonged with, let's say, 1 to up to 2.5 months at current. So yes, it will be some sort of adjustment moving the delivery of orders into consecutive quarters. But at the end, I mean, I look upon it as the current trend when it comes to the difference in between order and invoicing is sort of in balance. And then, of course, the more we can get out of our system, the better.

But one should also remember, if we look at our strategy, our fifth -- one of the part is actually operational excellence. And we have worked consecutively since -- for the past 2 years and even earlier actually to make sure that we open up for more capacity. And that's something that we're moving in all in all. And if we look at our lean philosophy in it, it has actually supported us also in making sure that we can deliver on what we have so far, and we will continue to do that. So there's a lot of activities going on in the sourcing chain to make sure that we keep it open.

But maybe, Mats -- I can put it like this. I mean, if you would have asked me half a year ago about what would be my belief for 2022, I can say, at current, I'm much more positive about 2022 and, let's say, how the business. We see solid order intake growth in the areas that we predicted should grow, and that is great.

Good. Sounds reassuring. And just a reflection maybe about the -- or you offer the Chinese market some upgrades in the FoodTech area, if I don't remember wrong. And you mentioned 2-year payback there. And I mean, I know you talked a lot about value-based pricing and so on. But I guess it seems to having to sort of going to be more aggressive on pricing than that. I mean, it's a pretty good payback for the customer.

It is, and it was towards the battery segment. And it's AirTech, but the logic is the same. I think what this proves, that is, first of all, if I'm fair, when I came in, let's put it like this, we could definitely improve on value selling techniques. And what I really like with this example that also in a price competitive market as China, our personnel is actually moving on value-based pricing. They are delivering operational improvements for the customers, and the customer is demanding improved energy consumption. So from that perspective, that is something very positive in China. This is already happening in Europe. We are more value-based driven, so to speak, but it's a clear sign that our strategy is starting to bite, if I put it like that.

Okay. Great. And then just about the EBIT line, not the EBITDA. Could you confirm that it includes the SEK 89 million of FoodTech extra cost towards the strategy implementation?

Yes. I mean adjusted EBITA is obviously excluding the nonrecurring costs. But obviously, the straightforward EBIT, EBITDA includes them, as per the normal financial processes.

Sure. Yes. Great, great.

[Operator Instructions] Our next question comes from the line of Anders Roslund from Pareto Securities.

I have 2 questions. One regarding the business mix. Could you elaborate a little bit on that? And normally, in the FoodTech area, the U.S. margins tend to be slightly higher than the Chinese. So in that respect, the high usage should mean higher margins, offsetting the Chinese downturn. That's the first question. And then the second one is, do you see any changes in those supply chain disruptions during the second part of the year? Will they intensify relative to second quarter? Or will they be on the same level or slightly less? Or how do you see the supply chain disruptions develop during the year?

Two good questions, Anders, and let me start with the second one. Supply chain challenges, I think that is the game -- name of the game. I mean it has been through this year, and I think it will be carried through the end of this year. Just so I sort of frame it, I mean it is more about we need to replan. We need to reshuffle. We need to sort of -- we lose efficiency in our operations. But our people are doing a great job on doing this reshuffle. If we wouldn't have had those, let's say, late calls or late deliveries or components, et cetera, of course, we would have a much smoother operations, but I'm very pleased in how our personnel and our organization are handling that. I think that is the one hundred million dollar question, so to speak. I mean, will this remain? Well, we predict that it will continue to be similar challenges through the remainder of the year. But so far, we have handled it well, but it puts a pressure on us. Then when it comes to the different -- the business mix, I mean, if I take it in a larger picture, the business mix is moving to the areas where we see -- we have very predictive sustainable growth. And it's interesting to see, it is also industries that are linked to sustainability, where change is taking place in it is electrification, it is data centers, it is digitalization in FoodTech and so on. So if I generalize on the business mix at current then, it is a business mix that is moving more towards industrial and AirTech if I take a look upon Munters. It is a business mix that slowly step by step, the 1%, the 1.5% is moving into aftermarket and service. And then when it comes to FoodTech, it is an increased demand in North America and leveling off and slight lower demand in China. And I think, when it comes to China, we indicated that already last year and saying that, I mean, that will level off. And then as normal, after a year, it will pick up again. The underlying market is definitely there.

And I think, just to add also, obviously, when you look at the margins, it's not so simple to just say that it's a business mix and then the U.S. should have a positive impact. You also need to remember, again, what's going on in the marketplace with increased raw material prices, supply chain restraints, freight costs and so forth. So there was a lot of different elements that are actually being put into the mix of it when you look at the margins. And again, as we said, we have made consecutive price changes throughout the year so far in order to handle the -- in order to counteract when it comes to the raw material increases. And again, those will be rolling into the results as we deliver on the new orders. Because obviously, new price increases don't go into old orders. They only go into the new order side. So that's what you need to factor in. And then also when you look at FoodTech, usually, FoodTech has a bit higher raw material content than what AirTech has as well, so that has to be balanced also.

And as there are no further audio questions, I'll hand it back to the speakers.

Thank you very much. Then we will take a question from the webcast from [ Filbert Vesias ]. And it's a question related to the FoodTech market in the U.S. and if we could comment on what elements is driving the recovery that we are mentioning and also if we see it as sustainable. And then the second part of that question is if some of our customers are still delaying construction work due to very high raw material prices like previously we have been speaking about lumber, for example.

That's a very good question as well. And I start with it, and Annette will also pitch in here. But if I take a look upon FoodTech in North America, we have the different segments. And what is clear, that is that we see more than early signs that the swine segment is now starting to pick up. And I believe that will continue. We indicated already the last year that we saw signs and now we see it ticking in. We talked about last year as well when it comes to the, I call it, the chicken segment, and that certain -- the wood price had a dampening effect on construction, et cetera. Now the wood price is going down in price. And I think the market then at a certain time will start to construct again. But that is the normal routine. And then in some other areas, steel prices may have a dampening effect. But all in all, if I summarize North America, most segments are either flat or on the upswing. But please, Annette, if you have any more.

Yes, if you look at it, I think it's the layer, broiler and swine segments that are actually picking up in the U.S. And as we said, we talked about the lumber prices before, that actually goes more into the swine segment. If you look at the chicken -- and that's -- now that the lumber prices are maybe a bit more corrected. Then when it comes to the metal prices, those have gone up quite substantially if you look at the picture we showed earlier over the past quarter, basically. And obviously, when you look at chicken, those are normally placed more in metal constructions. So that could be a hampering effect later on. But at the end of the day, when you look at it, we also need to remember that U.S. has been quite sluggish. When we got in, Klas, 2 years ago, it was really just going down and down and was at the downturn. And then it was added -- the complexity was added with the African swine fever. That also put kind of like a wet blanket over it. Now it's picking up again. So we need to remember it comes from a lower level than we had earlier. But it's positive signs, and that's good.

Okay. Perfect. Thank you. Also, when it comes to China and the swine market, we are now commenting that we see a decline there or not such a strong growth as last year. So do we see a prolonged decline for this segment in China for the coming quarters? Or how would you view the market development?

I mean the underlying growth in China, the long-term underlying growth, it is -- I predict that being sold. And we can divide it into different parts. One is that the Chinese industry, when it comes to the swine industry, is becoming more and more modern. And that is something that plays into our hands. Last year, we had a lot of larger orders when it came to upgrading specific customers. And normally, in China, it is 1 year, and that goes for many industries according to my experience. 1 or 2 years that is up, 1 year a little bit flattish, and then it normally starts to grow again. So my prediction would be this, this is -- this year, it is flattish or slightly declining and then it will start to move up. But then I ask to refer to the normal patterns in China.

And then one can add also, I mean, as you have seen in our report, it has been a bit disruptive because we can see that there have been pockets of actually outbreak of African swine fever, and that puts also a little bit wet blanket in certain areas. And we also have seen that the swine prices have come down. So maybe that's also part of actually being a bit more cautious when it comes to putting in orders from the farmers.

Okay. And then we have a third question from [ Phil Barron ] that's if we can comment on the FX impact on the margin in Q2.

Obviously, we have had FX impact. I mean, that comes into it, and that plays a minor role in actually the performance that we have had. The bigger impact that we see is obviously the sourcing activities and the balance then with our price increases and then the sourcing increases. And as we have said earlier also is that the consecutive price increases will roll in as we deliver on the new orders, and that one also needs to remember then based, obviously, on the delivery times that we have.

But all in all, if you take top line and as you have -- you can see that we have roughly a currency effect of around 10%, and it differs. It's slightly higher in some markets than others.

Okay. Thank you very much. Then we have another question from Francesco Cavallo. And he is wondering if -- how they should factor in the actions related to the restructuring plan and the savings that they will -- that we will get from that and the price increases already implemented, if this should offset the cost challenging -- cost challenges that we are mentioning in -- already in the second half or if we should expect them to have a negative effect on EBITDA in the next 2 quarters.

As we have talked about is that we have made consecutive price changes as we have seen raw material prices increasing. And obviously, that will roll into our performance based on the deliveries that we have. And also, if you remember, one of the first slides Klas showed, we talked about that most of that impact will probably come during next year. If you look at AirTech, they usually have longer delivery times. FoodTech have a bit shorter delivery times. So there, we could see it quicker. But again, it's based on -- it depends also really what's going to happen with the raw material prices going forward. But there are price increases that will roll in, but they will roll in over time.

And I have down the line here that we have the yearly price increase that has already played in and is delivering, then we have the consecutive price increases coming, and they will roll in as per orders turn into invoicing.

Okay. Thank you very much. So for the moment, we do not have any further questions from the web, so I would like to ask if there are any more questions on the conference call.

There are no further questions on the phone.

Perfect. Thank you very much. Then I would like to thank everyone who has listened in and viewed the webcast. And we will be back at the third quarter results in October. And we wish you a great summer until then. So thank you for listening in.

Thank you.

Thank you.