QleanAir AB (publ) (QAIR) Earnings Call Transcript & Summary

Hello, and welcome to QleanAir teleconference Q4 2021. [Operator Instructions] I'm pleased to present CEO, Christina Lindstedt; and CFO, Henrik Resmark. Please begin your meeting.

Thank you very much, and very welcome to our Q4 and 2021 results presentation. I would like to start on Page 4. And I will start by summarizing our key takeaways from Q4. And I am very proud to say that we continued our strong growth in our air cleaner product category, and we are up by 120% compared to the same period last year. And I'm equally happy that we also continue to grow our cleanrooms business, where we are up by 72% compared to the same period last year. And that means that our 2 newer product categories, our growth product categories together represent 43% of our total sales, which is a very important development, which is completely in line with our strategy. We also continued to increase our installed base and delivered an increase of 19%. And in terms of sales value, we delivered growth of 12%, reaching SEK 120 million adjusted for currency fluctuations. When it comes to the margin, we delivered an EBIT level of 15.2% in the quarter, which was lower than previous quarters. And that was partly linked to investments in sales driving activities and in marketing. On the 1st of February, for example, we launched a new website, which will be a very important tool and base for our future digital marketing. But we also faced some challenges when it comes to supply chain with higher costs for logistics and for material prices, and we also saw some impact from the change in product mix and revenue mix. But on a year-to-date basis, we delivered very strong EBIT level of 18.5%. Our proposal is to pay out a dividend of SEK 1.5, which would mean an increase of 15%. Next page, please, Page 5. For those of you who might not know us so well, I would just like to start by providing a quick description of who we are. QleanAir is a premium provider of indoor air cleaning solutions, and we are at the forefront of air cleaning. We have more than 3,000 customers globally. And our main markets are Japan, Europe and the US. And we have an installed base exceeding 11,000 units. And this installed base is a very important [achievement] for us. It constitutes our future base for revenues and also the base on which we deliver clean air. And we continuously measure how much clean air we deliver, and we continuously increase that number as our installed base increase. And that amounted of 5.39 billion cubic meters per month at the end of last year. We have a business model where we work with long-term rental contracts to a large extent, a 36 months typically. And in 75% of the cases, these contracts are either extended or renewed. So, we have long-term relationships with our customers, and we have satisfied customers. We also have an asset-light business model where we work with the external partners for both manufacturing and for service. Next page, please, Page 6. Sustainability has always been at the heart of what we do in QleanAir. We deliver the freedom of clean air to our customers, and we protect people from indoor air pollution and we contribute to healthier, safer and more productive workplaces for more and more customers in more and more context. And when it comes to sustainability, we focus on the areas where we have the greatest impact. We focus on sustainable products, a responsible value chain and being an attractive employer. Our business is sustainable, and it's based on long-term relationships with our customers. And our solutions remain on site at our customers, on average, more than 6 years, and we deliver performance guarantees to our customers during our whole relationship. And investing in our product portfolio and in innovation and focusing on product quality are top priorities for us at QleanAir. And our impact is that we deliver healthy indoor environment and we protect our customers, people, products and processes. We have long-term relationships also when it comes to our partners for manufacturing and for service. And we work very closely with them with high requirements, and we ensure that we have local presence in terms of manufacturing in the continent where we are present. And we also work with long-term relationships with our employees, and being an attractive employer and working with the team development is a key priority for us. Next page, please, Page 7. At QleanAir, we know that there are a few things as important as clean air. And we have a significant impact on health, performance and quality. Next page, please, Page 8. Looking at our sales development, we saw then a good sales development, a good growth of 12% during the quarter after a couple of initial challenging quarters during corona. We delivered good sales growth in Europe, where we both had a positive development and continued growth in Germany on the Air Cleaner side and in Sweden on the Cleanroom side. In Japan, we've been partly impacted by longer periods of lockdowns in the Japanese market, but we are moving in the right direction. And in terms of order intake, we saw positive good development in Japan. When it comes to the total order intake, we see a somewhat bigger variations in between the quarters, which is linked to the fact that we are working more towards bigger businesses, both on Cleanroom side, on our Air Cleaner side, but also on the renewals on the Cabin Solutions side, where we, for example, ended last year with a big order on the Cleanroom side and we had a strong renewal orders from Porsche on the Cabin Solutions side, which we announced here in January 2022. So, that will be part of the Q1 2022 and not in Q4 2021. So, there are little bit of variations in between the quarters in terms of impact on order intake. And we delivered then an EBIT margin for the full year of 18.5% in spite of some challenges in the EBIT level in the quarter, where we ended up at 15.2% for the reasons as mentioned previously. Next page, please. So very positively, we developed and delivered strong growth in our newer product categories, the Air Cleaners and the Cleanrooms. And they now then represents 43% together of our total same quarter last year. And in terms of value, we delivered 96% in value growth compared to the same quarter last year and for the full year, 49%. So, this is a very important signal for us that we are delivering on our strategy. Next page, please. Looking at the regional breakdown of sales and order intake. You see that it is Europe and APAC with Japan that has the biggest impact, both in terms of sales and in terms of order intake. And we saw a strong development in terms of sales. And in Japan, we are, on the order intake side, progressing towards a growth level. Whereas in the sales side, we were somewhat lower in the quarter compared to last year. Air Cleaners as a product category has been our most important growth vehicle in 2021. And we have delivered really good sales growth of 102% this year. And going into 2021 on innovation and product development, and we have increased our offering both towards our traditional customer segments but also on the newer customer segments that we have developed during the pandemic with an increase in the awareness of how important the indoor air quality is and also an increased understanding that sophisticated high-quality air cleaning solutions can make a difference and have a great impact in terms of providing safer and more healthy environment and reduce virus concentration. And we have concluded that this increase in understanding will constitute an increase in demand for air cleaners also in the medium and long term. Next page, please. At Clean Air, we also understand the sense of security -- next page, please, Page 13. At QleanAir, we have a tradition of solving difficult air cleaning programs [contents] within our core segments in production [indiscernible] to grow our presence and to grow our business in these customer segments, both in the German markets and in the Nordic markets and both in Sweden and in Denmark. Next page, please. And what we've also seen and what we continue to develop on the Air Cleaner side is our newer customer segments in health care, in offices and in schools and public sectors. And we announced, for example, in Q4, a big order from Deutsche Bahn for a business for their office environment in order to deliver healthier and more secure environment in the office environment. And that amounted to EUR820,000 in terms of value. And we also continue to deliver air cleaning solutions to the hospital sector. So, this has been a new opportunity for QleanAir to really make a difference on the challenging circumstances during the pandemic. And we see strong opportunities to continue this growth with more customers and in more markets. Next page, please, Page 15. We had strong sales, as mentioned, on the Air Cleaner side in Q4. We were up with 120%. And looking at the average annual growth over the last 5 years, we delivered 32% in terms of growth. And we see great opportunities for us to continue our growth, both in our traditional industrial segments and also in the newer segments in office environment, in public sector and in healthcare. So far, where we have really created a strong established base is in Germany and in Sweden. And we have had a good progression during the last year when we have started introducing our solutions in Japan. And we've been really successful in building on our customer relationships from our Cabin Solutions business in Japan. We see great opportunities to continue the growth on Air Cleaners also in Japan and in other markets where we haven't really gotten started yet. So, great opportunities for us to continue our growth path on air cleaning solutions. Next page, please, Page 16. Looking then at our Cleanrooms, our second growth area. We have 2 main markets, one being the US, where our primary customers are pharmacies within hospital systems, but then also Swedish and the Nordics market where we have a broader range of customers found within medtech, life science and production, for example. Next page, please, Page 17. In Q4, we delivered strong growth in the Cleanroom category. We delivered growth of 72%, and an average annual growth during the 5 last years of 17%. And this was very much driven by the successful development of our order book in the Nordic region, a high-activity level in the Nordic region. We have, in the US part of the business, had a challenging phase during the pandemic. And in 2021, both the order intake level and the sales level has not been in line with our expectations. We've seen longer decision processes with our customers during this phase. But we have strong belief in the opportunities in our US operations. We have a strong installed base. We have a high level of returning customers, and we have solutions that are relevant to many more customer segments. And we are also in a transition phase where our current President for the US operations will go into retirement. And we have recruited his successor, who is now onboarding with QleanAir, started in the beginning of February. And we will have a transition phase where he takes over the responsibility from 1st of March. So great opportunities for continued growth in our Cleanroom business in the European markets as well as in the US market. Next page, please, Page 18. Third, we will have our Cabin Solutions business where we have 2 main markets, Japan and Europe, where the European market is more mature and the Japan market is a growth market. Next page, please, Page 19. When it comes to Cabin Solutions, temporarily, during the pandemic, we have been impacted by the fact that in our strong Japanese market, people have been working from home. There has not been a high presence in the office environment, which is our main customer segment. We see that we will come back to a normal state, and we will move out of lockdown phase also in Japan. And we see great opportunities for us to come back to the same growth pace that we have had previously in the Japanese market. I am very impressed with the level of new business and the level of stable renewal business that we are delivering through our very strong Japanese team during a challenging phase when it comes to corona. So overall, stable sales development, the strong renewal that was announced here in January on the European side and great opportunity for growth in Japan also going forward. At the same time, as we see, the European market context more stable going forward. Next page, please, Page 20. As mentioned, we also measure the impact we have on society in terms of how much clean air we deliver. And as our installed base of air cleaning solutions increase, we also increase our cleaner delivery rate. And to make this figure of billion cubic meters a bit more visual, we translate this figure into the number of Avicii Arenas, which is the world's largest spherical building. And that figure amounted to 12.38 Avicii Arenas per hour at the end of the last year. And that represented a growth of 26.7% in terms of clean air delivery during 2021. And with that being said, I would like to hand over to our CFO, Henrik Resmark, for a financial update.

Thank you very much. Moving into Page 22, please. We see continued growth in Air Cleaners in Europe in the fourth quarter versus fourth quarter last year. Again, it's up by 120%. This is really important to us. We continue to see clear traction for Air Cleaners in primarily Germany and the home market, Sweden. And we are also glad to see that Cleanroom is contributing to the growth in the fourth quarter, up by 72% versus fourth quarter last year. In this case, Sweden is a strong driver. Moving into Page 23, please. QleanAir business model continues to deliver strong cash flow. We have an efficient business model. It's a combination of recurring revenues, sales to finance companies and pure product sales. However, the margins in the fourth quarter are lower than previous quarters, and there is a combination of factors. First, we have a higher COGS due to supply challenges. We have a different product mix in the fourth quarter, and we also have higher sales provision and marketing costs in the fourth quarter. However, full-year 2021, the EBIT margin is 18.5%, while we continue to invest in R&D, in product portfolio, marketing and sales to deliver long-term growth. We have a goal of 15% to 20% full year and a single quarter can be a bit lower, but still, we are above the 15%, even though we are having some challenges in the fourth quarter and we are building for the future. Moving to Page 24, please. We continue to grow our installed base quarter-by-quarter, plus 19%, in the last 12 months. This is, of course, one focus area for us. Increased installed base will deliver growth in revenues long term. We continue to see growth in Air Cleaners in Europe, while Cabin Solutions in Europe is a mature market. And also the average prices per unit is lower within Air Cleaners than compared for a Cabin Solutions unit. And finally, Page 25, please. Net debt is down to SEK 153 million. Equity ratio improved to 32%, and net debt equity ratio is down to 0.8%. All this in combination with a dividend of [ SEK 19 million ] during last year, during 2021. And now a dividend of SEK 1.50 per share is proposed for 2022. That is an increase of 15% versus last year. Having said this, I hand over to Christina for the final word.

Yes. Thank you. Page 26, please. So we have 2 mid-term financial goals. We are a growth company. We are focused on generating top line growth. And over time, on average, our target is to deliver a growth of 10% organically and to deliver a profitability level between 15% to 20%. And in the quarter 4 in 2021, we are within our financial targets, both when it comes to growth and profitability. And also when it comes to the proposal of paying out the dividend of SEK 1.5. Next page, please, Page 27. At QleanAir, our air cleaning solutions ensure healthy and safe environment for employees and visitors in offices, conference centers, hotels, restaurants, schools, healthcare and care facilities. Next page, please, Page 28. To summarize, our key activities looking ahead is to focus on top line growth. We will continue to leverage our current product portfolio. We will continue to leverage our very strong customer base of 3,000 customers globally. And we will continue to focus on growth of Air Cleaners in Europe, where we, as mentioned, we have a strong base in Sweden and in Germany. Overall, we have a presence in many other markets. So, we see great opportunities for geographical growth, for customer segment growth, both in customer segments where we present from before and the newer ones. We also see Cleanrooms in Americas as a great opportunity for growth and increase our coverage in terms of customer segments and accelerate growth. And we see great opportunities for us to get back to growth in terms of Cabin Solutions in Japan. We're broadening our product offering and we're broadening our market coverage. And we see great opportunities to increase our coverage by continuing to develop and add salespeople to our direct sales force and develop different types of strategic partnerships and cooperation. And lastly, we will continue to invest in our brands and marketing and in our product portfolio and in innovation. And with that said, I would like to hand over for some Q&A.

[Operator Instructions] We have a first question. It's from Anders Roslund, Pareto Securities.

Yes. I'll just start off with some questions about Cabin Solutions. It seems that Japan is holding up very well, but Europe has been, since the COVID-19, it's not -- sort of falling almost every quarter in sales. How do you see upon the European development? You say mature, but I see falling sales there.

Yes. I mean, we don't see the same growth opportunities overall in Europe that we do in Japan, but we see a very stable continued demand in the customer segments where we are present. Part of the changes that happened, for instance, like in the Nordics market, where several years ago, we had presence in the office landscape, we don't any longer. But the customer segments where we are present, we see -- we will continue to be present in long term, like [indiscernible], like different types of institutions and so on. And similarly, in the types of customer segments where we're present in Germany on the industrial side and so on, we see that demand as being there long term. And then we see pockets of opportunities for growth to capitalize more on local success stories for markets where we haven't really explored that yet. And there are also geographical markets where we haven't really gotten any presence yet. So, we don't see any dramatic decline. We don't see any dramatic growth opportunities in Europe, but we definitely see pockets of opportunities to develop.

Okay. And Japan, the order intake seems a little bit weaker, but you're saying that you see interest there and that the COVID is sort of hampering growth. What do you expect there? Is it a quick recovery? Or is it more lengthy recovery? Or what sort of scenario do you have in Japan?

We see that we will be able to come back to growth in the coming future here. We see that during 2021, there was a long period of the state of emergency and lockdowns in the Japanese market and also during the Olympic Games and so on. And in spite of that, on an ongoing basis, we generated new [base] business and managed to maintain strong renewals and so on. Then of course, we know that the last quarter 2019 and the 2 first quarters of 2020 were exceptionally strong in Japan due to the Health Promotion Act. So, that is a little bit still of a tough reference going, so to speak. But we definitely see that also in Japan, it will open up and the health impact from Omicron is not at all as severe as the first corona variant. So, we see that we will be moving up to opening up in the Japanese market also.

And to add on that, Japan and Cabin Solutions is definitely one of our growth areas going forward. We have a very positive side on the position we have in Tokyo and the possibility we have in Japan totally for Cabin Solutions.

By the way, have you started to see any sales of, I say, [facilities using] the Air Cleaners in Japan?

Yes. I mean we launched Air Cleaners during the last quarter of 2020 in Japan, and that has developed very well during 2021. Now primarily within the office segment, we have really the opportunity to capitalize on our strong customer base from our Cabin Solutions business. So that has been the first step. But then we are also developing the other customer segments where we have a strong track record in Germany and in Sweden on the industrial side. So growing air cleaner solution in Japan will be one important continued opportunity for us going forward.

Could you say anything about how large share of the APAC, the Japanese sales that are from Air Cleaners?

We don't share the mix of product categories combined with geography. But it has quickly, during this year, started representing an important part of the Japanese business. Then as well in Japan as in Europe, the value of an Air Cleaner in terms of installed units is lower than Cabin Solutions.

That's very impressive. Also coming to the Air Cleaner segment, what do you expect now? I suppose that the very large part of the growth here is coming from fearness of COVID-19, or a need for protecting against COVID-19 viruses. So are you afraid of that will sort of come down now when we may not look at COVID-19 as something that's dangerous?

Yes. I mean we see strong growth in our traditional segment, also when it comes to warehousing and logistics and on the industrial side. So, we have seen that the corona pandemic and that has increased overall the awareness of how important it is with quality in the indoor air. And that has an impact also on our traditional customer segment, if you will. Then we are convinced that the need for creating healthier environment in offices, especially now when people are coming back to work to a much larger extent, that awareness is much higher today and that we are convinced it will remain. There will be other challenges to address than the coronavirus. Then there are certain events that happened during 2020 and 2021 with the subventions in Germany on the school side, for instance. And that will, of course, eventually stop those types of governmental subsidies. So, that type of market demand is more short, medium term we believe. But the overall demand for high quality in the indoor air, that will remain. So, we see strong continued increase in demand for Air Cleaners.

So there is no specific spike in the demand. You got this Deutsche Bahn order. But otherwise, you could say there is an underlying growth within the figures for the fourth quarter.

There is a good underlying growth in demand on the Air Cleaner side, yes. The spike more coming from things like the school sector, for instance, with the governmental subventions.

And also from Japan here. That's interesting. Okay. Then coming to Cleanrooms. There were very, very strong figures here in the fourth quarter, but mainly that came from 2 large Swedish orders. And the order intake seems a little bit weak from the US. So, I mean, I guess you could see another year of falling demand in Cleanrooms next year unless US picks up. I guess there is no -- except for the 2 big Swedish orders, there is not the same underlying type of growth in Sweden. Or -- I mean you have a weak US market. And what we, could you call it, Swedish market, how do you see upon this year?

Yes, I mean, given the value of the Cleanroom orders and given also that we, to a larger extent, in that category, sell the projects, then there is little bit higher variations in between the quarters. But we have a good activity level in the Nordics, and we are also having a good increase in terms of activity level in the US. So, we definitely have strong belief in our future growth opportunities on the Cleanroom side both in the US and in the Nordics. But we are also eager to capitalize more on what we've done in the Nordics, also in the US and get into new customer segments. Our solutions are relevant to any customer segments outside of the pharmacy segment.

Any news about the pending legislation in the US in the Cleanroom area?

Sorry?

Any news about the pending legislation being implemented in the US? Historically, there were 2 pending laws that were going to promote the use of Cleanrooms for US pharmacy?

And that legislation, the USP 797 and 800, that is still the one of the drivers behind the market growth and the installed base we have, absolutely. Then we haven't fully sort of experienced always the follow-up from authorities in terms of adherence to and compliance with the legislation. So, there we haven't really fully seen the sense of urgency that could have been expected in the beginning, but that is very much the driver behind the growth in the market and our installed base.

Okay. And I just wanted to know a little bit about more, your margins here. If you look at the gross profit here, it has come down sequentially quite a lot. It has been around 70%, up to 75%, and now down to 69%. Is that a new normal given the product mix you have? Or are there some cost effects you talk about? And how you -- in that case, how do you address those cost issues with higher prices or rental fees or what?

Good question, Anders. I wouldn't guide saying that it's a new normal. The fact is just that we have been affected, of course, with supply challenges and also in combination with a different ratio of recurring revenues in the fourth quarter, also a different product mix. So, those factors are explaining the gross margin in the fourth quarter. But of course, I mean, we do all we can to improve that and to be on high levels, of course. But we should also remember that we will most likely be affected by the supply challenge also in the beginning of 2022. But it's no more [drama] than that.

No, but that is -- what could you do on the pricing side here to cover for those costs? Or do you have to wait until the costs are coming down? Or what sort of measures have you taken?

Yes. I mean, this impacts then clearly only our new business, so to speak. So it is something that we can, in certain cases, put forward in the chain to our customer side. But that is, to some extent, there is a little bit between the different product categories and the context. But it is something that we are working with -- very hard, the team at QleanAir and also closely together with our partners.

I mean the rental contracts you have, I assume it's quite difficult to change rental conditions in the contract.

But they are not impacted by the material prices. There we have already the units installed. So it's only impacting the new business. So, that is also a strong element in our business model.

Yes. But if you do a renewal, that's what I was thinking about. And you -- in the case, sometimes you have to change your equipment, but that's not really -- the big issue here is more for the new sales that is the cost issues or...

It's for the new sales and new products.

Okay. That means that you are able to -- given that you can change your future rental contracts or sales contracts, you should be able to compensate cost increases? Or..

Yes. Yes.

Okay. When it comes to the admin cost, are you sort of lifting anything in regards to future growth or sales force, et cetera? Or do you expect to keep the present level or to invest? How do you see upon staff costs?

We have increased our investments in terms of both product development and in terms of marketing. And we plan to continue increasing investments and also continue to add sales resources in some of our markets. For instance, in our German market, where we have been very successful in developing our Air Cleaner business, we are also adding sales resources. And that is something that we are -- we will do also when it comes to a number of other markets in Europe and equally in Japan when we see that, that is a fruitful step in order to accelerate further growth.

Excellent. And except for this very interesting growth of Air Cleaners in Japan, are there any new market initiatives we don't know about?

We want to broaden our coverage in the US on the Cleanroom side and go into new customer segments, and build more on what we've done in the European markets. So, I think that is one important [deliverer] for growth. When it comes to Air Cleaners in Europe, it is really in Sweden and in Germany that we've developed a significant presence so far. So, we see definitely an opportunity to grow in other markets, also in Europe. So -- and as we talked about in the beginning, Air Cleaners in Japan, where we have only started and we see great opportunity both for the increase on the office segment side, but also on our products for the industrial segment. So, we have a number of important growth opportunities that we are focusing on.

Excellent. I think I'm very happy with this. So, I have no further questions.

[Operator Instructions] We have our next question. It's from Mattias Ehrenborg, Redeye.

Hello, Christina and Henrik. Mattias from Redeye here. Perfect. So, thank you for your presentation. Pretty much all of my questions have already been answered during this Q&A, but I still have a few, I think. So, I was wondering about the order intake in the different geographies. As mentioned in the report, EMEA is down nearly 20% year-over-year despite high activity on the sales levels in primarily Air Cleaners and also Cleanrooms. And for QleanAir as a whole, the sales to order intake ratio is also not as good in recent quarters. Would you say this is an effect of, as you mentioned earlier, larger corporations and a higher degree of rental contracts, which then makes order intake more volatile? Or -- so for instance, if Porsche had been in the press release during Q4 and perhaps another Cleanroom order would also have a press release in Q4, I guess I would not have asked this question. Or how do you think one should see this matter?

If you're talking about the difference between order intake and sales, you are correct. And I mean, we have a history of lower intake in the quarter compared to the sales, and it's a combination of factors also here. Of course, we have recurring revenues that is a base, that are contracts that were signed much, much earlier and also timing of larger contracts. For instance, if we had a Porsche one week earlier in, let's say, end of December, the picture would have been totally different. And we will see how this picture will pan out in the first quarter 2022, when we have this larger Porsche deal in the order intake. And also, we shall not forget that we have -- we signed short-term contracts, 3 months contracts, and those contracts, they tend to continue beyond just 3 months. And that is also a very, very important part of our revenue stream, and it's part of our recurring revenues. And they are also then included in the sales, but not to the same extent as in order intake. So again, it's a combination of factors. And again, we have a history of always being lower on the order intake and on revenues. And that is primarily due to the reasons that I just explained. So I think, we -- yes, it is what it is.

Okay. Perfect. And also, the press release, the order from Deutsche Bahn Group earlier during this year or maybe it was last year even, I was just wondering how much of this order that has been recognized already in -- not in -- maybe that specific, but I was just wondering because you mentioned in the press release that some would be recognized in December and some would come in Q1. I'm just trying to get a sense of the underlying growth in this segment, excluding this order?

Yes. In terms of order value, I mean, that was fully part of the order figure for Q4. In terms of revenue, it's partly in Q4 and then partly in Q1. Exactly how much in each quarter, we don't sort of declare. But a significant part of that is going into Q1. So, we will have less growth from the Deutsche Bahn deal also in Q1 2022.

Okay. Okay. Perfect. And also, perhaps this has already been answered as well. But if we take a look at cabins, again, it declined significantly year-over-year. And I think it was -- the revenue was SEK 68 million this year, I think, and SEK 81 million last year. And this decline, is it primarily in Europe or Japan? Or is it both? And is it also due to new sales being lower possibly due to COVID, if we take a look at Japan, for instance?

Yes. I mean, then looking at the full-year 2021, then we have, as we have mentioned, a tough reference figure from 2020, taking into account the record 2 first quarters of 2020 in Japan. So, that's sort of -- that's really a big spike, explains part of the delta. Then, yes, partly new business has been impacted in Japan due to the fact that people during the whole pandemic, to a large degree, has worked from home. So really, with the sort of really strong sales team we have in Japan, in spite of this, we have managed to develop, on an ongoing basis, new business and maintain our renewals. And we believe, of course, that, that is a clear sign that once society opens up and once people are back in the office, we will also be back at a significantly higher growth pace than where we have been during pandemic. So, I really take our ongoing new business generation in Japan under such circumstances as a strong validation that we will get back to growth once people are back in the office.

And if we continue discussing -- discuss Japan, will you say that both Air Cleaners and Cabin Solutions has been affected in the same way due to COVID, because it still seems like you have managed to grow the business there in Air Cleaners?

Yes. Exactly. I mean there is a little bit difference. I mean, as mentioned on the cabin side, when people, then to a large extent, are not in the office, it can be understandable that not the same amount of customers are investing in solutions to protect from passive smoking temporarily during this stage. But on the contrary, when it comes to our Air Cleaners, that reduced the risk for spreading the coronavirus. Then, of course, for the company, who have presence in their offices and really want to send a strong signal that they take care of their employees, for them, there's been a big increase in demand for air cleaning solutions like ours. So in that sense, we can say that they have been a bit in reverse, more dampening effect on demand on the cabin side, but definitely increasing demand for air cleaning solutions in offices to reduce virus.

Okay. Perfect. I was also just wondering when we -- I think it was during the Q3 conf call, we discussed a bit regarding the restrictions in Japan due to increasing rates of COVID after Olympics and so on. But then we see declining rates during the beginning of Q3 -- I mean, in Q4? And then COVID picked up again, and we could see even greater rates of COVID in -- especially in the end of Q4. I was just wondering if -- because you sounded pretty optimistic about -- or you said it could be an optimistic start to the quarter due to the lower rates in the beginning of Q4. Now as we enter Q1, would you say that the outlook has changed much from that? Or how do you deal in the near future in terms of restrictions and the possibility to increase sales, especially in cabins perhaps?

I mean, in terms of corona, we've seen basically the same progression in Japan and in the other parts of the world. What we saw after -- we talked about this last time, and we saw the huge impact from Omicron in terms of contamination levels and in terms of restrictions as a result of that. And -- I mean that is having an impact also in Japan. So, they have also then after that had an increase in infection levels, but with much less impact on health. So, I'm convinced that they will follow the same type of ways as we have done, and that will come down in Japan as well and restrictions will be lifted. But they have been a bit behind us. And we don't believe, initially, in getting the vaccinations out and also longer quarantine times when it comes to traveling in and out of Japan and so on. But, for sure, we definitely believe it will go in the wrong direct -- in the right direction there as well. And overall, the infection levels have been much, much lower there than here in Europe and in the US.

Okay. So perhaps maybe the increase of sales will perhaps take place in Q2 rather than here in Q1 then. I mean, we are already 6% into Q1 here. So maybe it will -- how do you deem the [indiscernible] of sales increasing in Q1 compared to Q2?

We are not guiding on that. We are just sticking to our long-term growth target of approximately 10%. And, yes, that's it.

Yes. I understand. So final question for me then. And it's regarding Cleanrooms. You press released the 2 orders in Sweden for a total of SEK 20 million during August, I think it was. It was one to CELLINK or BICO. And it is, I think, still expected to be installed with start in Q1. And then you also had BioLamina, which was expected to start in January. Is it possible to get a sense of what the revenue recognition looks like in this project? Has there been a recognition in revenue already because we saw quite strong sales in Cleanrooms in this quarter? Or what does it look like?

Yes. I mean, definitely, a big part of the strong growth in Q4 is linked to the strong order intake in Sweden in Q3, definitely. And that will continue. That installation work and revenue generation will continue into 2022, definitely. Then exactly the sort of [tinkering] in Q2, Q4 versus Q1 is not something we declare, but we definitely continue to have a high activity level also in Q1 here linked to these projects.

The next question is by Anders Roslund, Pareto Securities.

Yes. I just had a minor question here regarding taxes. It was quite a heavy tax burden here and it was deferred taxes. Could you explain what happened? And what we will look forward to as a more normalized tax rate?

Yes. Good question. As you know, we changed the transfer pricing policy in December 2020. So the comparison is a bit difficult to make. That's why I stated in the fourth quarter report the full-year tax rate for 2021 compared to the tax rate in 2020. And it's around 21.5%, 22% full year. So that is a percentage that could be used to forecast our tax costs going forward.

There are no further questions for the moment. And so I hand back to you.

We would like to thank you very much for your attention and for your questions. Have a good weekend.