Atlas Copco AB (PNK:ATLKY) Q1 2025 Earnings Call Transcript

Atlas Copco AB (PNK:ATLKY) Q1 2025 Earnings Call Transcript April 29, 2025

Atlas Copco AB misses on earnings expectations. Reported EPS is $0.13 EPS, expectations were $0.14.

Peter Kinnart: Hello. Good afternoon. Welcome to this quarterly earnings call for the Atlas Copco Group. My name is Peter Kinnart, and I’m here together with Vagner Rego. And we have the pleasure of guiding you through this hour. We will start, as usual, with a short presentation on the results and to give a little bit of color to more details on the — underlying the orders, revenues and so forth. I will — before handing over to Vagner to start the presentation already now, as usual, you know the drill, I will ask you to please make sure that when the time comes to ask questions that you only ask one question at a time, especially today, it’s very important because we are really tight — have a tight schedule today as we need to run off to the AGM right after this call. So I would appreciate a lot if you could help us a little bit with that discipline. So now with no further ado, I then like to hand over to Vagner Rego.

Vagner Rego: Thank you, Peter, and welcome to this conference call. As you can see in the first slide, we saw a picture of Gas and Process compressors, and we had a good development in Q1 for Gas and Process compressors, and we showed one example of one of the machines that they produce. Now talking about the Q1 result, we saw a strong development in terms of orders received. We are happy with the order level that we have had. Then we also had a continued growth in service. Our growth journey in the service business continues, and we are also quite happy with that. Overall orders in equipment were flat. I already mentioned about the Gas and Process order that we — that was significantly higher compared to previous period. And we saw vacuum flat.

We have yet to see a recovery in the vacuum business, but it was also good to see that they had a flat development. Industrial assembly and vision solutions were down. And here, the automotive sector is the main reason. And power, air and flow in Power Technique equipment were down. Those are the highlights of the order development in the quarter. And then we had a lower operating profit, driven mainly by negative revenue volumes development, but not only also mix and functional costs played a role there. And in the quarter, when we saw the development of our revenues as well in vacuum, we have decided to further reorganize or rightsize the vacuum organization for the revenue volumes and then we booked also a provision for that reorganization.

So positive flat cash flow, but a solid cash flow. Even with lower revenues and lower profit levels, the cash flow remained at the same level, which is quite positive. And we have completed 10 acquisitions in the quarter. Then if we move to Slide number 3, the order levels at SEK 46.6 billion is quite a high level. It was the second best quarter ever behind Q1 2023 in terms of orders received. Revenues, we had a decline in the organic growth of 2%. Positive — we will see a bit more in details, but positive in Compressor Technique, but negative in the other 3 business areas. So I have mentioned already about the orders received, about the profit in the period and also good cash flow development, driven mainly by the reduction in our inventory levels that we have worked to make sure we believe we can operate with lower inventory levels.

It was good to see the development in Q1 this year. So going then to the next slide, Slide number 4, where you can see our development in the different regions. If I can start with South America and Africa and Middle East, they had a very positive development. South America, as you can see, 22% growth; Africa and Middle East, 18% growth. If we then move to — and I think it’s important in those 2 regions, South America, and Africa and Middle East, we saw positive development base for business areas. In those 2 regions, our business area has performed quite well. Then when it comes to Asia, we saw with plus 7%, we saw positive development in CT and VT. Power Technique was significantly up with very good orders in portable air, but not only also Industrial flow was quite strong in the region.

Q&A Session

And we have Industrial Technique down mainly because of the automotive sector. So 3 business areas performed quite well in Asia in Q1. Now moving more into the regions that were more negative. We had Europe. In Europe, CT was flat. Equipment in Compressor Technique was slightly down, and then the service business continues to grow and compensate, allowing Compressor Technique to have a flat quarter in Europe. And then Vacuum Technique, Power Technique and Industrial Technique had a negative development. I think there, we see several market segments with negative development in terms of orders. When we move to North America, there we see — if I start as well with CT, orders for industrial compressors were somewhat down. In North America, VT, it’s a different or Vacuum Technique is a different dynamic.

We saw industrial vacuum developing well together with scientific vacuum, but a negative development in semiconductor vacuum in North America. Power Technique, in the other hand, we normally have quite high orders received in Q1 coming from the rental companies. And I would say that we didn’t see that development in Q1 this year. It was notably down in portable air. So — and that impacted the overall Power Technique result. And on the positive note, the Industrial Technique had quite a solid growth in North America, supported by the acquisitions. The acquisitions we have done of Air Way last year is performing quite well and allow them to have good growth. Without the acquisition, they were flat. So that is the development in the different regions.

And then if we have — we put all the results together on Slide number 5, you can see our organic development flat in the group supported by the acquisitions, 2%, so with the structural changes. So — and we end up at SEK 46.6 billion. Revenues, on the other hand, had a negative development of minus 2%. And then we had a compensation coming from the acquisition that allow us to have a flat month compared to the previous — flat quarter compared to the previous quarter. So if we look to the split among the business areas, we see now that Compressor Technique is 47% of our orders received in the last 12 months. And we continue to have our organic growth development this quarter was plus 3%, definitely supported by the Gas and Process order development.

Then Vacuum Technique had order — is now 21% of our business, 1% organic growth. It’s good to see a positive figure there. Then Power Technique. Now in the last 12 months, orders received, this is slightly higher than Industrial Technique. And the order development was minus 4% followed now by Industrial Technique, where the order development was minus 8% organically. Then if we go more in details in the business areas, we first talk about Compressor Technique with a 3% organic growth and industrial compressors somewhat down, and that we see that in the small compressors and large compressors, mainly, like I mentioned before in Europe and U.S. Then we had a significant development in Gas and Process compressors. It was about LNG orders in Asia, but not only.

They had a good development as well in other market segments like fuel gas boosters for power generation, air separation equipment as well. So it’s a bit more diverse and quite expressive in the LNG market. So we continue our growth journey in Compressor Technique service, supported more and more from the — by the digital solutions we have there. Very good to see continued growth. Revenues increased 3% organically and solid profit margin around 24.4%. It’s a good — we are happy with the profit margin. So supported by increase in volume and currency. And then we have a negative effect coming from mix, the acquisitions that we are doing also higher R&D. We keep on the same pace when it comes to R&D because I think as you can see below this solution, this new compressor, oil-free compressor is key because of a machine at this size, when you can come with higher efficiency that can activate during difficult times replacement market as well.

I think we will keep the pace on R&D. We had higher functional costs as well. I think here, I would say we have decided as well to be more focused in application-driven products, and we decided to create a division for that. We consolidated one division. Professional Air division is now consolidated into Industrial Air that allowed us to create a new division that we are investing. And we believe that will bring results as well. The combination of the R&D that we are making around these products and the creation of this new division will bring results over time. If you look at the profitability, it has been quite stable over time, very solid development there. If we go to Vacuum Technique, we see the 1% organic growth. Like I mentioned before, we have yet to see the recovery in the semi-vacuum part of the business.

AI is strong. We get quite a lot of orders around the AI, but it’s not strong enough to make a growth to bend the trend in terms of growth for the entire semi-vacuum part of the business or even the vacuum business area. But it’s good to see a positive figure there. Industrial vacuum and scientific vacuum flat. We see more positive in scientific vacuum. I think that was a good development that we saw in the quarter. Industrial vacuum is a little bit more negative. So — but good — the combination of both, we had a flat, but it was — we were quite happy to see the scientific vacuum picking up again. And then we continue a very good growth in the service business, mainly driven by the semi side of the service-driven of the service business.

We see quite a lot of activity. Of course, there are — there were quite a lot of fabs coming into place. And now the requirements to do maintenance is coming, I think it was good. On the negative side, the revenues were down 5%. And of course, that drove us to further adjust the organization. But it’s important to highlight as well, I think we are happy — if we look to the profit levels we have now, of course, we are not happy with the level we have now, but we are very happy with the activity level to adjust the profitability. I think that we could say, they came with this organization that we still don’t see all the benefits from that organization because we decided in Q1 and then we started the execution in Q1. We see a little bit of benefit in Q1, but it will come in the coming quarters, all the benefit.

We also benefited in Q1 from previous restructuring costs that we are finalizing now, the ones that we have announced about Germany. So — and that means that the underlying profitability at 19.6% was a good development in our view and the activity level to adjust the profitability is quite good, and we are happy with the activity level to bend the trend. And they also continue despite of the focus on some cost measures, they continue the focus on innovation. That’s an area that we cannot slow down innovation. So as you can see, a new plasma wet abatement system that we have released. So we will continue to come with new products to support the different market segments they have. Then on Industrial Technique, we had order decline of 80%, mainly driven by automotive, but not only now.

We saw also a slowdown in the general industry, but it’s also fair to say we had a very strong Q1 2024 when it comes to general industry, then they have a tough comparison. But quarter-on-quarter, it was negative. We continue to grow our service business there. I think we are also happy with the development there. Revenues were down 9% organically. And if you look to the table on your right, you see that they had a record revenue quarter in Q4 last year. Now it’s lower that has an impact, and they came out with a profitability of 20%, definitely affected by lower revenues and currency. And also there, they continue to invest in innovation here is about the MicroTorque that they can sell to the electronic business, the assembly line of smartphones, for instance, we can use this type of product.

Now going to Power Technique. We saw orders development down organically. Equipment orders were down mainly coming from rental companies in the U.S., but not only. Also Europe was low in terms of rental companies order. Also, industrial flow in Europe was weaker compared to last year. Our specialty rental business continued to grow, and our service business was somewhat down, mainly driven by the U.S. Revenues was down organically. And there, we see they do have orders that they can invoice. We see rental companies getting equipment in a slower pace. So — and that has an impact and the profitability was affected by lower revenue volumes, but not only. We saw capital cost increase from the rental assets. We have our own rental companies. I think we were investing for growth.

We didn’t see the growth that we would like to see. We still see growth, but we didn’t see the growth we would like to have there. We will go through some adjustments as well in the rental fleets to bring profitability down. We also have the functional cost increase, and that is coming also because we have acquired several assets around the pump technology, and we have decided to create a new division. I think we have communicated on that. We will have a division for portable power and flow, meaning dewatering products, portable dewatering products, and we will have another division only for industrial flow. And that focus will bring dividends over time. But now we have to do the investments on customer — on the customer-face functions to make sure we can sell all the products that we have worldwide.

So — and we still don’t harvest on that one. And then you see this decline in the order — in the profitability. Then here, you can see the consolidated picture when it comes to profitability. But I think I will hand over now to you, Peter. You can further elaborate below the OPI lines.

Peter Kinnart: Okay. Thank you, Vagner. So then I will continue with net financial items. You see that from basically a value close to 0 last year, we went to minus SEK 135 million. In fact, we are having lower net interest costs. But on the other hand, we incurred some higher financial exchange differences, partly linked to the hyperinflation in Turkey, for example, but not a very big item in the income statement. Then when we go further, profit before tax, SEK 8.47 billion or 19.8% of revenues. And income tax expense of SEK 1.9 billion approximately, which is an effective tax rate of 22.1%. I would say currently on the lower side, also if you compare to last year’s same quarter, that is mostly linked to a number of continued release of provisions related to our high-tech innovation incentive that we benefit from.

For next quarter, we rather expect a somewhat higher effective tax rate of about 23%. And I would also like to remind you at this point that if you compare to Q2 last year, you will notice a very, very low effective tax rate of 17.6%. So of course, overall, on a 12-month rolling basis, we will go back to a higher effective tax rate again. And that gives the profit for the period of just SEK 2 million shy of SEK 6.6 billion, a basic earnings per share of SEK 1.35 and return on capital employed close to the return on capital equity of 28% there. Then I would like to go to the next page and dig in a little bit more into the profitability into the profit bridge. First of all, if I go from right to left, we have our, let’s say, almost usual component of share-based LTI programs, in this case, adding 0.3%.

The items affecting comparability are referring to the restructuring efforts we are doing in Vacuum Technique business area, roughly 2/3 linked to our semi business, 1/3 roughly to the general vacuum business in order as Vagner already indicated to, let’s say, adjust the size of the suit to the size of the body, given the fact that we are faced with these lower revenues for the moment. The acquisitions also had a slightly dilutive effect, even though they did generate some profit on the top line. The currency, on the other hand, was accretive and added a bit to the profitability. But then the drop-through, unfortunately, was not positive. And what are the main contributing factors for this on the total group level, if we summarize, then I would say the volume, of course, had a big impact.

So Vagner referred a couple of times already to lower revenue volumes for the different business areas. The mix was quite important. We will show that in the next slide in more detail. And then the continued investments that we do in R&D as well as the functional costs that was then mostly referring to the fact that we have 2 new divisions that we want to fund in order to make sure that we get the right speed to execute on that strategy. When it comes to the currency expectations for next quarter, to be honest, this is probably the most difficult quarter ever to try to predict anything, including foreign exchange rates. But we do believe that looking at the latest developments, the currency effect will turn negative, potentially up to almost SEK 1 billion negative — SEK 1 billion negative potentially, of course, all things being equal, and I wouldn’t want to commit to all things remaining equal in the coming 3 months, to be honest.

If I then move to Page number 13, then we dig in a little bit more into each of the business areas because there are quite a few differences. And I will actually focus now entirely on the organic development. Happy to take any other questions on — with regard to the bridges, but I think the organic development is the most important point to comment on. We see across all the business areas, in fact, a negative impact on the margin, but the reason why it differs a little bit between certain divisions or business areas, sorry. First of all, if we look at Compressor Technique, then there we see a positive impact from revenue volumes, also positive impact from currency, by the way. But in Compressor Technique specifically, there is quite a significant negative mix effect.

And that has to do with the fact, on the one hand, for example, Gas and Process is a fairly big contributor. We have sold quite a lot more equipment. The margin of equipment in Gas and Process obviously lower than what we see in the service business, for example. And we also see that the businesses or the divisions that have been contributing most to the revenue volume improvement are actually having a lower profitability in general, while the ones that have — on the other hand, maybe have a bit more struggles were normally contributing with higher profitability. So quite a significant mix effect in Compressor Technique for this quarter. And then also notable in the bridge, the acquisition impact, which is also somewhat negative. And as I already mentioned, R&D and functional costs, considering that we have created a new division, air and gas applications and the continued investments in the product portfolio.

On Vacuum Technique then also a negative impact on the margin. Also in this case, however, there is a negative impact from revenue volumes to begin with, and that is by far the biggest impact we see that basically explains, I would say, the negative drop-through that we note in Vacuum Technique. On the other hand, also currency has a negative impact on Vacuum Technique for this quarter. Industrial Technique, also here, revenue volumes, the main contributor by far when it comes to the margin development, meaning the revenues are down and the cost structure is not following exactly with the same speed. And as a result, we see a bit of a deterioration of the margin here. And then last but not least, Power Technique. And actually here, the answer is broadly the same.

Revenue volumes having quite a big impact, but there is more in Power Technique because if it was only revenue volumes, then I think the impact on the operating profit would have been lower. But Vagner already mentioned before as well, the impact from the rental fleet. You have noted in the previous quarters that we have repeatedly mentioned in the cash flow, continued investments in the rental fleet, partly related to the fact that during COVID, we kind of stopped investments, so we needed to catch up. But additionally, we’ve also been working on building up new segments within specialty rental and that, of course, requires fleet. Now for the moment with revenue volumes not really booming, knowing that the new investments are also at a significant higher cost after the high inflation that we have seen, the impact of this rental fleet is affecting the margin negatively.

And there, we will make certain adjustments and be more selective and make sure that the rental fleet is fit for purpose. And then last, but not least, as Vagner mentioned, the new division for industrial flow splitting it out of the Portable Power and flow division in order to make sure it gets the best opportunities in the market. Then I move to Page number 14 on the balance sheet. To be honest, I don’t think too many comments to give here. There is, of course, the impact of acquisitions on the one hand. I think the one thing which I would really like to highlight a little bit is the inventory development because that is after a long time of — have seen an increase. We are finally able to bring down the inventories to somewhat at least. I don’t think we are at the end of that journey yet.

We believe that there is more potential still, but at least, we are seeing that we are making some good progress here. And I think that is very rewarding for the organization to note these positive results. Then my last point to mention here before I hand over to Vagner again is then on the cash flow. We believe that the cash flow for the current quarter was actually quite solid. It’s on par, you could say, with the same quarter last year. But the difference, of course, at the operating profit in absolute terms is a little bit lower. But on the other hand, the change in working capital is basically more than compensating for that. So I think that again is a positive note with regard to the working capital that we see the positive development there.

With that, I think I have given all my comments to the financials, and then I would like to hand over back to Vagner.

Vagner Rego: Thank you, Peter. Before we go to near-term outlook, I would like to give some words about the tariffs. So we believe there will be a limited impact expected at the current tariff rates. So — but this is changing so rapidly with new teams coming and going, so new information quite often. So what we are doing now is really working on the mitigation actions and perhaps the main one is the price management and tariff surcharges. I think that’s the main mitigation, but not only. I think we are looking to the production what we — like we have mentioned in other opportunities, we have 18 production facilities in U.S. We analyze what makes sense or not, what has a business case or not to produce in the U.S., considering the current levels.

We already had some business plans ongoing. I think we will continue with our exercise on that area. We also have the ramp-up of our production facility for dry vacuum pumps in upstate New York that continues as well. So that analysis are done underway and some already actions are being implemented. We are reassessing as well supply routes from specific markets, intensifying local sourcing when we see that possibility, quite a lot of activities ongoing right now. So — but we don’t have a figure as well to share how much we believe is going to be limited margin impact. Our forward-looking statement then. Just to remind a bit, our forward-looking statement is that sequential guidance. Of course, it’s not a straightforward projections of orders received and it’s our best estimation about what is going to happen with the customer activity level.

And we see that there are quite a lot of uncertainties now in the market more than before. We have several things ongoing. Ongoing, I don’t need to repeat about tariffs and also quite a lot of hesitation in the market. So — and when we look to all these factors and also if we look to the development of our industrial compressor business, our industrial vacuum business, general industry in Industrial Technique, we see quite a lot of hesitation really because this level of uncertainty does not drive too many decisions. So — and that level of hesitation is definitely included in our sequential guidance. Also on the semi market, there is nothing telling us that there will be a big uptick coming up. So I think also we cannot project that. So — and considering all that, that’s why our near-term outlook is — while the world economic development makes the outlook uncertain, Atlas Copco expects the customer activity level to weaken somewhat.

And I think this weakened somewhat and the uncertainty. I think those are the 2 main words of this outlook.

Peter Kinnart: Thank you, Vagner. And with that, we finalize the presentation, which I will try to keep my intervention as short as possible now. Again, just repeating that I would like to ask all of you to stick to only ask one question at a time so everybody has hopefully an opportunity to raise their most important question. Again, we are a little bit tight for time today as we need to run off for the AGM at the end of this hour. With that, I hand back to the operator.

Operator: [Operator Instructions] The next question comes from Michael Harleaux from Morgan Stanley.

Michael Harleaux: Would it be possible for you to share your view on the margin developments that we should take into account for the rest of the year for the Vacuum Technique division, please, given the restructuring efforts that you’ve mentioned?

Peter Kinnart: Well, I think it’s a bit early to give any very specific indication on the margin development. I think what we are saying is that the current margin level that we see if we take away, of course, the restructuring costs and the currency impact, even though it is better than what we saw last quarter, which I think was quite positive for us to note as well. Of course, these activities need to be deployed. We also need to make sure that we respect the process in a good way and that we do the proper process. So of course, this will take a little bit of time. And as a result, it’s not very, very easy to exactly predict when they will come into effect. I think overall, however, I think it would be probably fair to expect that in 2026, we should see full benefit from the impact of these different activities that we have launched both last year as well as this year.

Operator: The next question comes from Daniela Costa from Goldman Sachs.

Daniela Costa: I was wondering if you could expand a little bit on how customer segment across regions and industries have evolved, particularly since the beginning of April, given so much change compared to the earlier part of the year?

Vagner Rego: Yes. Normally, we stick to the Q1 result. And I think we — I tried in my presentation to explain what has happened in the different business areas. But if I could give a little bit more information on some segments like industrial compressors, we saw negative development in North America and Europe and flat in Asia. So then it was compensated by strong Gas and Process business in North America and also in Asia. So we mentioned about the semi equipment that was quite strong overall in Asia, but weak in North America and Europe. And if I look to the — again, to the industrial vacuum part, I think we saw flat development in industrial vacuum plus scientific vacuum flat development in Asia and Europe, but positive development in North America. In automotive, the only bright spot we see is North America. So the other regions are quite negative, I would say.

Daniela Costa: And this includes China since tariffs?

Vagner Rego: Overall, in Asia, I think the development was quite good. If we are specific in China, we saw a negative development in several product lines that we have. There are some bright spots, but not too many.

Operator: The next question comes from John Kim from Deutsche Bank.

John Kim: I’m wondering if you could give us some color on what you’re seeing in semiconductors right now. I’m particularly interested in the memory side, either on the high-bandwidth memory, the DRAM and the NAND exposures just in terms of customer velocity, order pushouts, however you want to frame it?

Vagner Rego: So normally, we don’t disclose between memory and logic. But like I mentioned before, our business in Asia is developing quite well in Q1. I saw quite – we saw a quite positive development overall. And you know that it’s not too many countries. So – and I think we are quite pleased with the development in Asia, while North America what was weak.

Operator: The next question comes from Rory Smith from Oxcap.

Rory Smith: It’s Rory from Oxcap. Thank you for the detail on the sort of divisional bridges. That was really helpful, Peter. My question is on Gas and Process orders. I think you called out marine LNG, air separation and natural gas power plants. I was just hoping you could give a bit more color on those areas, particularly around geographies or customers.

Peter Kinnart: Yes. When it comes to LNG cargo, it’s only – it’s basically Asia where you see fewer – some shipyards with the capability to build that. It’s mainly coming from Asia. And then fewer gas boosters, you see investments – it’s quite spread out.

Operator: The next question comes from Benjamin Heelan from Bank of America.

Benjamin Heelan: Just a quick one to follow up on Gas and Process. Obviously, it’s been strong for a while. Can you talk a bit about the pipeline in Gas and Process and how sustainable this growth can be? And can you give us a rough estimate of how big is Gas and Process now within the compressor business overall?

Vagner Rego: Yes. If you look into Q1 was quite significant. It was 15% of the business, while revenue was around 10%. So 15% in orders for Q1, around 10% in terms of revenue. But I think what is important to highlight those orders are really long lead times. We — for instance, these orders that we took now, I think we will deliver in the coming years even. So it’s going to take a while. It’s not that you receive and you can project for this year, for instance. They have a pipeline that they are delivering because they got some orders last year as well. These they are delivering. The ones that are coming out is not for short term.

Benjamin Heelan: Okay. But there is a pipeline of orders in Gas and Process where the order momentum will continue. Is that fair?

Vagner Rego: I would not say that there is good activity in that area, but I would not say that every quarter, there will be a big order for LNG cargo like we had last quarter. So I wouldn’t say that. So because you know those – these are negotiated together. So once you get, you may not – you may spend 2 quarters without an order or even more.

Operator: The next question comes from Jonathan Day from HSBC.

Jonathan Day: I was wondering if you could talk a bit more about Power Technique and the rental orders, in particular, did they slow down? Was that due to some tariff and general economic uncertainty? Or was there some other sort of factor around that? And what about the service orders as well? And then just linked to that, with the new business areas you’re creating, when do you have a rough idea of when that might start to make a positive contribution?

Vagner Rego: Good. Yes. When it comes to the rental companies, I think the level of uncertainty might be playing a role for them to pull more equipment because it’s 2 impacts. We also have – we still have our order book from previous year to be delivered for the rental companies that they are not, let’s say, so aggressive to take the machines that they have ordered last year. We have that impact. And then normally, in Q1, we see quite a big uptick in terms of orders received that we didn’t see this quarter. That is the other effect. When it comes to the power – to the industrial flow, I think we have some areas that are doing quite okay. We have some project business that are already doing quite okay, especially what is based on the acquisition of LEWA.

That is based in Germany, that’s performing very well. And then we have acquired many assets. Some are German-based. And the idea was they had a strong revenue in Germany and the idea was to globalize those companies. And that is the activity that is ongoing now that we are ramping up competence in the local customer centers all over the world to allow them to sell these technologies that were not globalized really. So I think that is the effort that we are doing now.

Operator: The next question comes from Rizk Maidi from Jefferies.

Rizk Maidi: So my question is on tariffs and thanks, Vagner, for your comment earlier about it. So my question is, how are you planning to change your manufacturing flows within CT compressors? I think you source quite a bit from your factory in Antwerp. And how much you believe you need to raise prices/surcharges if there is 145% tariffs applied to China just to keep margins flat?

Vagner Rego: Yes. Rizk, when it comes to the flow from China into the United States, I think that is really limited in our case. So I think the main flow is from Europe into the U.S. At this point in time, you know the tariffs that they have. We don’t know how that will evolve. Price component is going to be a very important — price management is a very important component of that. And — but of course, we will watch competition. I think even the local players — if you have a player that has more local content, local production than I have, it’s also a global supply chain. To be competitive, you source from different places and all that will be impacted. We will see what is going to be the net impact, but price management is important.

We are already working on it. But of course, we will watch what is going on in the market as well to see how all that will unfold. But I think it’s going to be a mix of actions. I don’t believe there will be a drastic action in terms of moving production. But we are analyzing by product line, what makes sense, what does not make sense to ramp up production in U.S.

Peter Kinnart: And of course, moving in production to some smaller or larger extent, of course, is a slightly more time-consuming effort to take into account. So the short-term actions are more on the pricing and surcharges. Okay. Thank you, Rizk. Well, apparently, my message has scared everybody away, and there are no more questions in this call. So we have a very good time now to — enough time to go to the AGM. Thank you all for attending this call. And of course, as always, our IR team is at your disposal should you have any further questions to be answered. So thank you for attending and looking forward to meet you at our next meeting. Thank you. Bye-bye.