NIBE Industrier AB (publ) (NIBEB) Earnings Call Transcript & Summary

Welcome to the NIBI Q2 presentation for 2026. [Operator Instructions] Now I will hand the conference over to the CEO, Eric Lindquist and CFO, Hans Backman. Please go ahead.

Thank you very much. Good morning, good afternoon, whatever it means you are sitting out there. We are back, and we're going to give you like a 20, 25-minute presentation of the report. And then we're going to, of course, invite you for questions. Just a couple of things. We have to finish around 12 because we have other tasks to fulfill today. And also, we would ask you to only put 2 questions at a time to allow as many as possible to get their questions across.

Yes. Hello also from my side. Hans here, and I'll be happy to fill in where Eric hands over.

Okay. Fine. Well, the overall headline is, we believe it's a strong report that demonstrates both, of course, the growth in revenue and profit and also margin-wise. And it's the sixth consecutive quarter. So we might say it's a trend anymore rather than just a quarter coming along. So we're bold enough to suggest that. And we've given a few hints here on the slide that you have in front of you. And that is, of course, that it's less pronounced with the Swedish kroner this time, it's more like par with the -- here we go -- there we go -- with the previous similar quarter -- corresponding quarter. . We also talk about tariffs. Of course, we have to do that. But they've been fended off fairly well but for stores, we're going to come back to that during the presentation. And we see also a trend towards more renewable attitudes both in Europe and also in North America, also something that we're going to comment more on when we come back to the third quarter per business area. And then, of course, we are very pleased to see that our assortment now is so well received and our presence is appreciated, of course, both national and also international. And we keep the good cost control, although we see that things are improving. It's very tempting to perhaps increase cost. We have to have that discipline. And also we see that our investments in new facilities have given us a good productivity development. And they're sitting there. We are just idling now to to fulfill the demand that we believe is going to come for the years to come now. Just to quickly answer the figures. You have them before, of course, the growth there of the 7.6% organically, that is really 8.7%, which is a healthy growth. And it's also the gross margin that's improving, which is pleasing to us, demonstrating that we are publishing in our cost and keeping the cost discipline. And the operating profit speaks for itself, but also that the operating margin has taken a considerable jump compared to the corresponding quarter last year. And the graphs that we typically have, that's also indicating that we are now on a stronger path towards the revenue. And we also see -- I'm sorry, the profit after financial items, and that is, of course, a function or of several factors, the sales improvement, also that we have a pretty good cash flow. We borrow a little bit less or quite a bit less than we did a year ago. So all those things are working in the right direction. If we talk about Climate Solutions, we've already mentioned that, that the market is solid when it comes to improvements. It's very pleasing to see that in Europe, both the single individual home market for heat pumps has increased, and that is particular for renovation, of course, the new construction is not so prospers until now anyway and also the commercial segment is expanding. In the U.S., as expected, the single-family home market for heat pumps went down, many subsidies were taken away. But nevertheless, the commercial segment is really outnumbering that. So overall, we still have a growth there. And also that we have also these political uncertainty that we mentioned initially, but we -- when it comes to -- looking at it in the U.S. with the manufacturing there, they will really have an upper hand. So that's a good thing. Of course, people are affected by the political situation. But I also think or believe which is sad in a way, perhaps, people are getting used to these things. And eventually, we have to continue to live. So we feel that there is an uptick in demand and in positive in all 3 segments, really. And that I think has to do that eventually, you get fatigue listening to all these problems, you just have to continue living. And again, the product launches have been very, very efficient and successful. And that feels as with the satisfaction naturally that people are looking for better refrigerants and intelligent controls for energy optimization and so forth. So we feel we are really on the right track. And the investments we have them, the larger ones behind us now. That's not something that we're going to start now. They are installed, ready to take on the challenge. And very quickly, Hans is going to come back to more detailed figures when it comes to gross margin and such. But it's important to note, though, that the real underlying growth here, if we take away the the effect of the currency is around 9%. And the operating margin is now up well into the spectrum, whatever we call it, or interval that we really aim for between 13% and and 15%. And of course, now we have on a running basis, 12.2%, so still a little bit to go, but that's quite a bit better than the corresponding period the previous year. Swinging over to Element. And there, we really have had a positive development, and that is particularly for the semiconductor segment. Everyone talks about the segment, AI and all that. And here, we are positioned so well in North America with our subsidiaries delivering components to those manufacturers that really stand behind the manufacturing of the chips themselves. And they, of course, predict a steady growth in the future. And now we have gotten a sniff of that, and that is, of course, one of the major factors behind the growth. But it's also that the HVAC market is certainly coming back, and that also has a positive effect on Element. However, of course, the new construction that is still slower in Europe and elsewhere. And of course, when construction is slower, that is dampening the whole mechanism in society. Construction drives the whole society. So that's -- when it comes to the home compliance and stuff like that, that is, of course, still limping along. And just jumping over to the next too quick. No, here we are. So I'm sorry. There we are. Again, net sales, quite an improvement. And of course, now we see a growth of organically 11.6 million and even our numbering climate solution. And then on top of that, we have a couple of percent of growth when it comes to acquisitions. And very pleasing to see that our operating margin is back within the interval again, 8.9% versus 6.6%. That's quite hefty improvement. And I'm very pleased to see that. And also the gross margin has taken a good step, which Hans is going to come back to and explain. Stoves, I've said that earlier during interviews today that we would have liked to have this discussion or this press release or press conference 2 days later because we don't really know what's happening on the tariff side in North America. That is, of course, very, very important that, that is mitigated somehow. We have had those tariffs since '25 and then they were worsened in April this year. And of course, we hinted about that it's going to be difficult to mitigate that. We feel that in a little bit longer time, we will be able. But now we know that negotiations are going on between Canada and the U.S. And as long as people are negotiating, they still hope -- and hopefully, tonight their time, they will have reached some kind of agreement, and we are -- we hope that the tariffs will be e-staff a little bit. We don't know. There certainly won't be hardened to any spec. So what we see now, what we describe is worst case. And we thought it was well thought out to present that to you. But we hope that after negotiations tonight, that will -- we're going to come back with some better news. And despite headwinds, we dare to say that demand has started to improve a little bit, and we see signs in Europe of improvement in demand, not so strong, but still we had an organic growth around the 2% during the quarter. It's been more stable in North America, say, whether they are not so anxious as we are in Europe or what's behind that, we can't really tell. But it seems like the market has been more stable altogether, both in Canada and in the U.S. But it's very promising to see now that we believe that we've been down at the very bottom also on stopes on the second quarter, that's very pronounced, as we all know, the seasonal pattern for stopes. And we just hope that we're going to have a real comeback now during the coming 6 months or come let's say, 5 months as of today, of course. So that's a little bit about the store situation. And here, we have the figures. The margin, of course, operating margin is still negative, with a considerable improvement from the previous quarter corresponding year. So that's why we are fairly optimistic about changing this into a decent result. If the 25% tariffs would remain, it would be a bit more difficult to, of course, mitigate that in the immediate future. But we are fairly optimistic about looking after that, see what happens tonight. Just a few more pie charts. Excuse my language, excuse my voice. Here, we have the distribution of sales. Of course, now Stoves has not been able to grow. So that's a very obvious dominance by the Climate Solution and eBay element. And when it comes to the the operating profit, of course, that is now all taken care of by Climate Solution and NIBE Element with the 78% and 22%. But we hope to change that pie chart fairly quickly. And I think with that, that is the last pie chart that I have, the Nordic countries, slightly under 20%. Rest of Europe, 45% and North America, just about 30% and in Asia, 7%, which is predominantly element. Hans, I hope your voice is better than mine. I hand over to you.

Thank you very much, Eric. I hope you recover quickly now for the question and your answer session. All right. Hello again from my side to everyone out there. And just like previous -- on previous calls, I will take you through the numbers a little bit more in detail and of course, also the balance sheet cash flow and some key parameters. If we then again look at Climate Solutions here. I mean, as Eric said, we've seen a robust growth in this business area in both sales and profits in most markets. and both on the residential side and the commercial side, the only exception really being the residential in the U.S., but which has not declined as much as we expected following the Trump administration, seizing of the tax credit. So they've actually done fairly well under these circumstances. . And with regards to the U.S., our local manufacturing footprint is a clear advantage over there. because we virtually do not ship any product across any borders there, meaning that tariffs within this business area is not much of an issue. So for that reason, we have neither had much of tariffs nor any refunds. It's the underlying business, which we show here. And looking at the underlying business, I mean, as Eric mentioned, we saw a growth in the quarter of 9% cleaned from the currency effect, which, by the way, is becoming less and less pronounced for every month that passes. Coming in at sales of SEK 7.3 billion, up from the SEK 6.8 billion, leading to an increase in the result of some 20%. And if we would do the cleaning of the currency impact here, it's actually up to slightly more than 23% improvement in margin. And the reason for this is the improved gross margin which comes naturally when we get more volumes into the factories, but it's also, of course, a consequence of the investments that we have made, where we have more efficient, more modern and automated factories. Year-to-date, we're up some 9.6%, up from the SEK 12.8 billion in sales to more than SEK 13.5 million, also with a good improvement in gross margin because, of course, that took off already in Q1, leading to a result there of -- or result improvement of more than 18%. And -- so on a rolling 12-month basis, we're now at 13.6%, thanks to the 13.8% that we made in and carrying the 12.2% with us from the first half of the year. So all in all, we feel very confident and happy about the development in this business area. In terms of geographical distribution of sales, there have not been any large movements at all, a small shift between Europe and the U.S., where Europe has taken a percentage point, you can say because that's where we've seen a larger growth. And then the U.S. just coming down to 23% from 24% a year ago. Moving on into Element. Also, as Eric mentioned, we've seen a phenomenal growth here in the second quarter of 11.6%, and the Element business area has seen an overall strong growth, mainly driven by semiconductors very much in the U.S., but in general and also the HVAC business as well as an improvement in -- coming from the electrification of the industry that is going on in general. And this growth has been achieved despite of the geopolitical uncertainty that's out there, leading to not very many houses or buildings being built and people are also careful when it comes to private spending, be it the white goods industry and so forth. But the statistics and what you hear, so to speak, from central banks and elsewhere, is that this slowdown in economy is coming to an end. So we should hopefully here also see an improvement as we move forward. And also in this business area, the local footprint for us, manufacturing footprint that is clearly a strength. And neither here, do we see any large impacts of any tariffs. So again, the numbers speak for themselves. Sales, as I mentioned, up by 11.6%, up from SEK 2.8 billion to more than SEK 3.1 billion in the quarter, leading to an improved profit of 50%. And also when you clean it for currency. Here, we've seen the gross margin improve by 2 percentage units, also coming from more volume in the factories, but of course, the large investment program that we've been carrying out over the last 5 years has been within all 3 business areas. So Element has naturally benefited from that as well. Then landing the operating margin in the second quarter at close to 9%, well within our announced interval there. And year-to-date, we're up some 9% and with an operating margin of just below 8%. And rolling 12 months, we are at 7.7%. and have good hopes to, of course, improve this for -- during the remainder of the year. Geographical distribution of sales within Element Here, here we have had some movements in the sense that both North America and Europe have improved if you compare with a year ago. So things are clearly moving here in the right direction and in our very strong markets. Nordics has kept its share in this respect. Stoves is, as Eric mentioned, of course, still facing an overall challenging market. But in North America, it's actually fairly stable. It's, again, these tariffs that causes some questions, of course, but the negotiations between the 2 countries are ongoing as we speak. And we interpret that as a positive sign. From a market point of view, we definitely think that we've been down at the bottom and are moving in the right direction. And I think a very clear sign of that is the small, but very important organic growth that we achieved in the second quarter of 1.8%. So we didn't come up from the SEK 678 million to SEK 686 million and have also here been able to improve gross margin. And numerous actions have, of course, here been taken to fend off the impact of the weak market and the tariffs. So I think we're very well positioned for further growth. And the operating profit, which is a loss, but if you read the line itself profit, I mean it's been cut in half which also is a very good sign for us. Year-to-date, we're basically on a plus/minus 0 situation, a small profit in there and expect to improve from there. On a 12-month rolling basis, we're at 4.3% and have said that we should aim to be somewhere between 6% and 8% for the full year. Also here, the geographical distribution of sales. The Nordic region has actually taken a slightly larger portion of this pie compared to a year ago. North America has kept its portion, whereas Mainland Europe has been losing out a little. And that's where we've seen the strongest weaknesses over the over the last quarters, you could say, but where things are beginning to move again. Leaving the business areas and moving into the balance sheet. I won't dwell too much upon this. I think we can comment upon the nonfinancial current assets, having increased from 16.2% at the end of the year, up to 18.4%. I would say that is a very natural trend for us. That is the working capital, the inventories that we built during the first half of the year to -- in order to have our stocks filled with good products for the sale that takes place during the second half of the year. So it's all within our planned levels. On the equity and liability side, the equity itself has increased by some SEK 2 billion from -- compared to the beginning of this year. Long-term liabilities there have increased slightly the long-term ones we've made issued a bond, and it was a very successful bond emission that we made. It was oversubscribed quite substantially, and we decided, given the good conditions that we got there to simply take on board a little bit more bonds than we needed to replace as a matter of fact. Very pleasing to see from -- coming from the performance of the business areas and the group in total during the first half year and not the least in the second quarter is, of course, the cash flow, we've increased that by some 50% if you look at the quarter now compared to a year ago from some SEK 950 million up to SEK 1.4 billion. And of course, we have had a slightly negative effect from the change in working capital. But again, that's just what I mentioned, that's building the inventory. And then the investments in our current operations has also been reduced quite substantially, down from SEK 480 million there to SEK 330 million roughly -- meaning that this large investment program that we have been carrying out has come to an end, and we're more moving into normal maintenance investments. So, all in all, an operating cash flow in the second quarter of close to SEK 800 million, up from minus SEK 100 million a year ago. And then the remaining positions there are more mathematical character, you can say, financing activities, for example, being the dividends that we paid out. Looking at the cash flow year-to-date, it's actually increased by some 6%, which is a sign of the increased sales and profit from our business areas. And working capital, roughly on the same level as last year, but then investments being cut in half. So I think it's a very good cash flow. And we will come back to the net debt on this page instead because that is now on 2.7. It's the same number as we had last quarter. If you do the decimals again, it's actually an improvement. It's 2.65. But going forward, during this year, we are quite convinced we will bring this down around roughly to the 2.0, 2.1 line hovering around there. And this is a key parameter, of course, that the banks look at, investors look at and so forth. And we keep it very much under control. We're not worried about this at all. It follows exactly our path. The only challenge was back in '23 when we made this very large acquisition at the peak of the cycle and then the market turned sour. But ever since things have normalized, the development here has been exactly according to our plan. So we're quite pleased with that. Interest-bearing liabilities as a portion of equity have also continued to decrease at the same time as our equity assets ratio has increased. So we feel that we are quite stable and also well positioned for both an organic and growth through acquisitions going forward. Working capital, a slight improvement there from a year ago. It's natural, again, that it is a little bit higher during this part of the year. because we need to fill our stocks for the sale, which I just mentioned. And now the last slide here before we open up for the Q&A return on capital employed, return on equity, they are, of course, not at the targeted level yet, but they are improving step by step as they were also last quarter. So they are on the right way. And of course, the result again of this improved sales and profitability situation that we have. And the equity per share has also increased. And the closing day share price, we will know at the end of the day with that -- I won't comment that any further. But with that, I'm ready for questions. I don't know if you have anything to add.

I've been trying to cure my voice, my vocal cords, we should be ready. So please, you shoot now.

[Operator Instructions] The next question comes from Christian Hinderaker from Goldman Sachs.

I want to start on the working capital, Hans. You mentioned, obviously, it's up year-on-year. I think inventory is actually broadly flat in that sense, but you had a more than SEK 700 million lift in both receivables and the liabilities line. If we look at the noninterest-bearing current liability, SEK 8.6 billion, including province that's up quite considerably quarter-on-quarter and was well ahead of consensus. I guess 2 parts to my question here is, first, what drove that increase? And are those drivers structural? And then second one is actually in this number because when I look at the annual report, I think only 1/3 of the line is coming from trade payables. I think you have some contributions in here from acquisitions, just interested in the split, if you can share those.

Well, there are no major or how shall I put it, one-off effects in these numbers really. The effect from acquisitions is fairly limited because we have not made any larger acquisitions in this respect. We have some delay when it comes to the invoicing or the effect from receivables. And we saw that quite clearly during last year as well, where they kick in more during the second half of the year. We have a tendency here of invoicing very much at the end of every quarter, very much in the third and especially in the fourth week, which has an effect. And this is especially pronounced, I would say, when we come to the quarter as well. So I mean, the inventory we've been building. Actually, we should even possibly be building even more to meet the demand out there, but the payables and the receivables which are the major things in there have developed quite normally. But we can dig into the numbers in a separate call if you have remaining questions.

Appreciate that color. My second 1 is on M&A. You have a through-cycle growth target that includes a 10 percentage point contribution from acquisitions, that the software end markets in recent years, growth from M&A is understandably been a bit more modest since 2023, that you've acquired Beltrami in the quarter and the release talks about to be more proactive on acquisitions. I guess just interested in, NIBE is still targeting M&A of that scale, mid-single-digit, double-digit percent of sales? And then what are the technologies or segments really that you're seeing as a particular focus in your pipeline?

Well, of course, we are going to go back to acquisitions. But as they say, once bitten twice shy. And Hans mentioned that, of course, when you acquire a company that's relatively large at the peak of a cycle and then the downturn comes. And we have, of course, been very, very cautious not to overburden the balance sheet since then. I think that the overheated market '22, '23, particularly in Climate Solutions, has also taught us a lesson that we have to be cautious when we aim for larger acquisitions. Hopefully, also the market has been taught that lesson. So we are definitely back to again, evaluating acquisitions of larger kinds than the Italian ones you referred to, not to diminish that one to any point. But certainly now with Hans projections here of the important ratio coming down to in the vicinity perhaps of 2 or so we are certainly positioned to take on larger acquisition. But without being, of course, to the risky minded. So we are back on track when it comes to evaluating acquisitions of larger kinds again. I hope I answered your question partly anyway.

And is it just -- is there any sort of regional technology kind of focus there?

Well, I think that -- there are no specific regions. But of course, we are fairly well set in the Nordics. I mean that's very important to note. I mean we could possibly buy 1 or 2 companies. But the growth is going to come from mainland Europe and North America for all 3 business areas. That's as clear as I can be there, I think.

The next question comes from Karl Bokvist from ABG Sundal Collier.

Yes. My first one is just on Climate Solutions here, we think about what we see happening in the market, and I'm specifically talking about heat pump volumes here. Of course, that's not all of the Climate Solutions division. But now when we come into the second half here, and we've had organic growth of -- well, for the first half close to 10%. You also should have and that to your guidance here about the stronger second half than first half. I'm just a bit curious about how you expect kind of the seasonality to help you, given that all else equal, this should also support a bit of an acceleration in your year-over-year figures.

Well, I mean it's perhaps a very naive answer in a way that the seasonality is -- you can always argue and reason around it, but it seems like heating equipment has more of a season towards the second half of the year. And then that comes for heat pumps, that comes fo stoves. to a lesser degree, of course, on the Element side, where we supply so many categories of the industries. So I think it's an old established truth that equipment that we supply has typically -- it's more major season during the second half of the year, and it's very pronounced for Stoves, of course, whether that is in intelligent or not, you can always argue, but you like to have your stove in for Christmas, whether you live in Sweden or whether you live in France or in North America. And it seems like when you have renovation is going on. There's now comes to season could be, of course, a little bit of a difference when it comes try air conditioning that you like to install in the spring. And that is more pronounced on the South or the Mediterranean market in Italy, for instance. So it's more a tradition than anything else. So we don't foresee that, that pattern will go away. How much is that going to influence the whole thing? Well, I think we have to look at the figures prior to the war in Ukraine and the pandemic, where we had more of a seasonality of a certain kind.

Understood. And I'll limit myself to 2 questions. So the second one is just on -- also on climat shut here. But when we think about last 4 quarters really, the increase in operating margins have to -- well, almost -- well, to a full degree, been driven by higher gross margins. Of course, you get the benefit, as you talked about from more volumes in your factories and so on. And as we now look into second half and think about your margin range guidance and so on. Should it still be expected that if we fast forward to the end of the year that it will have been driven by a continued increase in your gross cans rather than efficiency on the SG&A and R&D line, for example? .

Well, I think that overall, I think we are through the streamlining that we went through '24. So that is more to monitor that. There won't be any major additional savings on that, just trying to keep what we've achieved now. So that is one thing. And of course, productivity wise, as volume now will increase as we predict, of course, the productivity is going to be more pronounced. So that is the major things, of course, when it comes to gross margin, the -- I don't think that we can cut down any further on sales and those activities. I think they have to tag along with the growth because we are utilizing our sales resources very, very, should I say, to the maximum right now. .

The next question comes from Daniel Khajenouri from Morgan Stanley.

I have 2, and I'll take them one at a time, if okay. I wanted to start with the Climate Solutions segments. Organic growth was 1%. But if I reverse FX benefit in Europe, growth in behind peers, market indicators and it has decelerated sequentially. I do appreciate this is a decentralized business, but it would be useful to get some color about the underlying top line trends, where you're seeing growth by product category and just be useful to comment on growth by peers here.

Yes. When we take Europe, -- we also mentioned in the report, we are fairly large on water heaters. I mean the fundamental idea years ago when we started to acquire was to acquire companies selling water heaters and then couple that with the heat pumps produced in those days here in Markaryd, Sweden. So of course, water heaters today, they don't have any growth, a very modest one. It's more of a replacement and for some reason, it's rather replaced in several instances by a heat pump for just tap water. And also district heating that we have invested in, and that's typically a Nordic phenomena that is also fairly flat. So it's the heat pumps in Europe that is driving the growth. And what's pleasing to see is also that the HVAC commercial segment is improving considerably in Europe. And that's something that we're looking at were very focused because we believe that there's a lot of things to do there, saving energy, adding air quality to offices, hospitals, schools, that has been I shouldn't say it hasn't been forgotten, but compared to individual homes, it's on a lower level. So that is to come, very pleasing. In North America, that the drive there is, of course, on the commercial side. And that is naturally ventilation, cooling and also heating, particularly on the commercial side. On the individual single home side, there's been a downturn, as we have explained a couple of times now, mainly due to the subsidies or the tax subsidies taken away. But we also see there that that downfall is not as big as we would have anticipated, hopefully, giving us a signal that also there, the understanding is now coming, you have to heat and ventilate and and cool your home in a different fashion. I hope I answered your question there, the first one.

Yes, that was very useful. And my second question is on the cost and margin because in my view, this is the key positive surprise for investors. But if we exclude operational leverage, could you maybe give us a little bit more detail what drove the better cost performance. And it would also be very useful to understand if you see any cost inflation coming down the supply chain looking into the rest of the year.

I think that's all manufacturers, they are looking at the inflation when the product is coming in. And I think that is very important for us to do everything our utmost to hinder that. We have, of course, very ambitious savings programs going on where you, together with manufacturers of our suppliers, do it in a different way, where you say, well, if we promise you with certain volume over a number of years, you also have to come down in price, but we also allow you to modify the design, not only brutal, saying price cutting, but also designing the products in a different way for us to benefit the ready-made product at a lower cost. So that's going on parallel with guarding off with the price increases that everyone wants to have now. So I think we have a fairly good defense mechanism short term, but we also have a longer-term defense mechanism where we really work together with our suppliers to lower the cost in a more constructive, civilized way if you may call it.

The next question comes from Anders Akerblom from Nordea.

Yes. I wanted to follow up again on climate. You've been through sort of the automation sort of operating leverage uplift. But I was wondering a bit on sort of the pricing side. How do you see sort of, I guess, pricing potential in the current environment? You raised quite a bit a while back, but how do you see sort of that potential developing?

I think that as inflation has come down, as interest rates have come down, it's not that much of a maneuvering room for price increases. There might be room for smaller ones. But I mean, they can't be compared at all to the price increase we had just some 36 months ago or even 30 months ago. So that's come to a totally different scenario. And of course, that is balanced out with a better volume -- so I think that's -- they are communicating vessels. You cannot continue to increase prices when inflation is fairly low, at least here in Europe, and of course, it's not so positive to hear from one point of view that the interest rate is going to go up, but also an indication that the market is coming back and which we feel. So I don't know whether I answered your question fully, but that's how we reason. It's difficult to import larger price increases, work together with suppliers.

That makes sense. And -- and I guess the sort of second question that sort of piggybacks a bit on that. I mean from a competitive point of view, would you see that sort of -- that's impacting your outlook on sort of pricing to any extent? And I guess a sort of quick question in that. I mean, how do you see the competitive landscape mainly from a sort of volume perspective and capacity additions in the market now that market growth has been good, a lot of projects that have been sort of potentially not really ramped up. How do you see that developing going forward?

Well, typically in the past, we were not so well geared up when it comes to taking on all the volumes. So we believe that for once, we have done our investments. It's never ready. You know that. But the major chunk is done. We are ready to expand. Of course, we have to get labor accordingly and when we see the order intake coming. So that's very important. And as far as the landscape of competitors, they've always been there, -- and I think everyone is really singing on to the market shares they have. I don't think that anyone going to give up, neither will we give up. So it's a fight out there. But I think that -- the pleasing part is, when market is developing in a positive direction, I think it's becoming lesser of a dog side. So we look at it as a at a fairly decent situation, but always a tough competition, but there's nothing new. .

The next question comes from Uma Samlin from Bank of America.

Two for me, please. The first 1 is to add. I think in the last quarterly results, you announced that you're going into the R2R segment. Would you be able to give us a bit more update on what are the opportunities there? What are the time line of the product launches? And what would be the expectation in terms of margins for that product in Europe .

Well, I tried to be as expedient as possible there, Uma. When it comes to air-to-air, a number of our companies that we have acquired have had agencies for air-to-air machines. But they have been limited to their respective countries, Italy, Norway, just to mention a few of them. And we've not been able to capture or broaden that because there, there have been other countries that have that agency. Now we decided to work with another company to broaden our NIBE umbrella. The products that are produced here in [indiscernible] and because there, we have exhausted there, we have water, air to water and we have ground source. And we do not have the supplement of air to air. So that's why we introduced that on. It's not a new subject in our group but it's new under the nib brand name. Was that clarifying?