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Good day, and welcome to the Finnair's Q3 Results Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Mari Reponen. Please go ahead, ma'am.
Good day, ladies and gentlemen. I am Mari Reponen from Finnair IR, and it's my pleasure to welcome you to this Q3 earnings call. I have here with me our CEO, Topi Manner; and our CFO, Mika Stirkkinen. And now I'd like to turn the call over to Topi Manner.
Yes. Thank you, Mari. And good day to you all, and welcome to this Q3 earnings call also on my behalf. Moving into the Q3. The main headline from our perspective is that the revenue and the number of passengers were up. The comparable operating profit was down on cost and cargo, and related to cost, it was primarily driven by currencies and fuel cost. If we go forward in the presentation, our market shares continue to increase. During the Q3, we carried a record number of passengers, altogether, 4.1 million of passengers. Drive point of the report is the strength of the European traffic. The Asian traffic did not develop as well as the European traffic, but it was very much ringfenced to a couple of selected markets, most notably Hong Kong, that is impacted by the situation in Hong Kong. The cargo market is definitely being impacted by the global trade war. We see some significant yield pressure, and just lately, we received global industry statistics that basically showed that the air cargo market is having the toughest operating environment globally in 10 years. And we certainly felt that, although our volumes still developed well, and we are competitive on the cargo market. Our market share is edging up in that part of the business. In travel business, we have been going through a challenging first part of the year, but Q3 was more upbeat. And we see a more positive demand, and that is also an indication of more positive demand outlook for the remainder of the year for the travel services part of the business. In terms of key figures, during Q3, our capacity in terms of ASKs went up to 9.5%. Our revenue increased with 7.9%. So comparable EBIT landed at EUR 101 million approximately. And the difference between Q3 last year and this year, the approximately EUR 17 million difference, is explained with fuel costs where we saw the fuel price increase, accounts for something like EUR 12 million, EUR 13 million. And the U.S. dollar discount rates, it's a little bit of technical item that impacts our maintenance cost, that was closer to EUR 2 million, and the remainder is basically accountable to the cargo business. Our customer satisfaction measured with Net Promoter Score was stable. We have been changing the measurement at the population a bit, and the 38 Net Promoter Score actually compares well with our peer group. So we are developing positively on that front. Loads were up with 1.7%. The operating cost was up with 10.9% and, excluding fuel, 9.1%. So we are basically growing cost faster than capacity and revenue, and this means that scalability of cost is not entirely what we want it to be. And therefore, we will be putting more focus on cost efficiency going forward. Cost is naturally also driven partially by the passenger numbers, and then the passenger volume, as stated, was record high, increased with 12%. And with that figure, just for the time being, we are actually one of the fastest-growing airlines in Europe. But having said that, maybe sort of a little bit -- sort of longer look forward, we see our capacity growth moderating, and then we will be all in line with the market growth during the upcoming years. On the back of the high sort of growth on passenger numbers, our market shares have been developing well, both on Asian traffic as well as European traffic. In Asian traffic, we have been growing during the last couple of years, and then that certainly was the case during Q3 as well. And on those routes where we fly, our market share today is more than 6%. And actually, when you are really sort of carefully looking into the chart, it is [ just higher teen ] margins, higher than it has ever been. In European traffic, to and from Helsinki, during the last couple of quarters, our market share also has been increasing notably. What we see on the purple curve there is that our competitors during -- starting from '17 continuing during '18, they increased capacity in the Helsinki market. And lately, some of them have been pulling capacity out, and that is also visible in our market shares. And this is a rolling 12-month market share. So the odds are that the market share growth will continue also into the next quarters. When we look at the revenue development by category, the passenger revenue developed, all in all, pretty much according to our expectations. The strength of Europe was the positive, and then the Hong Kong was the negative on that one. Ancillary developed basically hand in hand with the passenger revenue, although in terms of ancillary, we need to state that we have higher ambitions, and we want to grow faster in terms of ancillary income than passenger revenue going forward. As stated in cargo business, we experienced notable yield pressure as high as 15% on the unit price. But the volumes developed well, and therefore, the impact on net revenue was minus 3.9%. What we see lately in the cargo business is stabilization after a challenging summer, and then, of course, we are now approaching the most sort of important quarter in terms of the cargo business on the overall during Q4. Travel services also developed hand in hand with passenger revenue and ancillary business, and there, as stated, we -- the indications of more positive outlook during the remainder of the year. When we look into the performance by traffic category, starting from North America, we have been increasing quite a bit of capacity to the North American traffic during this year, especially because of the opening of the Los Angeles route. The capacity increase amounts to 28%. The revenue increased with 26%. And thereby the unit revenue, RASK decreased with minus 1.7%. We think that this is a good result given the strong growth of capacity on this traffic category. And we are happy especially with the load factors of North American traffic. So these routes have been finding their customer base, and of course, the load factor is also an indication that over time, we potentially have possibility to gear up the yield as well. European traffic, we increased capacity with 5%. Revenue increased with 10%. So this -- when we look a little bit longer track record for the European traffic, this is a strong performance on that part of the business. Domestic part was basically stable. In terms of Asia, when we look into the RASK figure, I think that there are a few things worthwhile mentioning. First one is the Hong Kong that I already covered. The impact of Hong Kong to the RASK figure is 50%. So Hong Kong accounts for half of the RASK decline. Shanghai routes, where we have been seeing a little bit additional competition, especially on the back of Juneyao Airlines opening a service from Shanghai to Helsinki, is another one impacting these figures, much less so than the Hong Kong. With respect to Juneyao and the Shanghai route, what we need to remember is that the Juneyao customers are providing feed for the European traffic. And therefore, the positive side of that is visible in our European figures. And when we look at the net-net of Juneyao, that is a positive for us. And this is also something that we will need to keep in mind when we consider these are dynamics of Chinese competition at large to our business. So we will need to be rather granular when we look into the development of the Asian part of the business. Moving on to Page 8 where we look at where the growth is coming from during this quarter. It indeed came from the European business in terms of revenue. And some of you might remember that last year, during this time, there were questions around the performance of the European traffic. And now within the scope of 1 year, they both really have been turning in terms of the European traffic. Looking into the cost. As stated, we will put more focus on OpEx, and we want to see productivity and scalability impact in our cost base going forward. We have a number of levers in our toolbox. Examples are, for example, fuel efficiency. We, of course, have been doing a lot in terms of fuel efficiency during the past years already, but we will be turning every possible stone on that one. And that is also an important part of our sustainability agenda. Another example is on-time performance measured especially by the arrival punctuality. And we will be putting even more focus on that one. And while that is, of course, good customer service, we estimate that, that will be enabling us to use our resources more optimally. And then, of course, by definition, will mitigate possible customer compensations coming from EU 261. Digitalization and automization of processes is an important part of this agenda, together with overall cost consciousness. We will be elaborating on this agenda in our Capital Markets Day that will be taking place on the 12th of November. Moving on. I already mentioned that the impact of fuel price, taking currency and hedges into consideration, was EUR 12 million during Q3. In terms of emission trading, the emission trading cost for Q3 increased with EUR 2.2 million, and that's included in the fuel cost. And the hedging ratios, you see on this slide as well, they -- basically, policy on that one remains intact. When we look at the balance sheet, there's not much to say about the balance sheet. It is very stable as it is. We have a strong cash position, and that cash position we will be using to finance our investments going forward, especially the upcoming deliveries of the A350s during next year. We are, all in all, investing, and then the invested amount during this year is EUR 480 million. So going forward, it is all about sustainable, profitable growth for us. And as mentioned, productivity measured around cost are important parts of that agenda. We also have been, during the quarter, renewing our distribution strategy, launching new finnair.com website with some early encouraging results, especially on the conversion rates and then, hopefully, in time, boosting our digital sales, ancillary sales. We have introduced our new distribution capability partner program recently and are currently onboarding travel agents to that program. We are introducing new, exciting destinations. We just recently announced summer '20 service to Tokyo Haneda, which we estimate will be the crown jewel of our network. We are opening next spring also a service to Busan as the first European airline in -- through the second biggest city of South Korea. And then in couple of weeks, we will be opening the service to Daxing Airport in Beijing. Also Sapporo and Punta Cana are part of the openings for the winter. And then Sapporo demand actually has been quite upbeat, especially originating from the Japanese market. We're constantly working on sustainability. During last quarter, we flew flights -- biofuel flights financed by our Push for Change program where customers are participating. And we also recently announced that we will be joining a Nordic initiative to promote electric aviation. So in terms of outlook and guidance, we stick to our guidance in terms of capacity and in terms of the operating result range. When you look at the accumulated EBIT for the first 9 months, then it's fair to say that the odds are that we will be rather at the -- sort of -- or toward the lower end of the range rather than the high end of the range. And as stated already, on 12th of November, we will be having our Capital Markets Day, where we will be going through, in more color and in more detail, our sort of strategic direction going forward, including the long-term -- renewed long-term financial targets. So I'll stop at that. Thank you.
Thank you, Topi, and now we have time for questions. And I'd like to remind you that we also have the CFO, Mika Stirkkinen here to answer. Then -- so please go ahead.
[Operator Instructions] We will now take our first question from Pasi Väisänen from Nordea.
This is Pasi Väisänen from Nordea. Just going back to the cargo and the kind of the situation there. So did you actually say that yield in cargo was down 15% in the third quarter year-on-year? And what are, actually, the countries facing the cargo [ broad band ]? Is it because Germany, U.K. or China? Could you actually elaborate that a little bit? And that was my first question.
The yield reference was more a reference to what we see on the market on the overall. And Mika -- when we go into the yield performance of our business, then -- if okay I come back to that exact yield, but as you can see from the figures, the absolute revenue declined, while the available ton kilometers increased double-digit. So the available ton kilometers declined by roughly 14%.
Okay. Yes. On the -- actually, did you say that your -- actually, kind of -- were weighting a bit more cargo environment in the fourth quarter or remaining part of 2019. Or where actually, this kind of view is coming from because when looking at the kind of situation in Hong Kong or in Central Europe or even on global basis, it's extremely hard to see that how come that the kind of the overall economic environment would actually get any better than it was in the third quarter.
Cargo market seasonality -- there's the -- not the same way as the seasonality of the passenger traffic. In cargo market, the most -- the biggest period in terms of sales is Q4. So we see that the -- versus last year, the difference is roughly the same as in Q3. But since last year, Q4 was way higher than Q3 last year. So that's the reason for that.
Exactly. I think that we will need to be very specific on this one and when we are talking about seasonality within the year in cargo business. As Mika was stating, Q4 is the sort of typically the most strong quarter in cargo business in terms of volumes. But then as you rightfully point out, if we look at sort of longer-term demand trends in cargo business, and when you look at the sort of global macroeconomic outlook and, for example, the impact of the trade wars, then we are looking at a subdued market. And then we see a shift in our operating environment where some of these global uncertainties have now translated into slower cargo. And that is, of course, impacting all of the businesses out there, also us and also our cargo business.
Okay. And if I may continue with this kind of a decline on the discount rates you have been negotiating for the forthcoming cost items. So I guess it's fair assumption that it's not the kind of cash flow item. But I guess, the higher cost base is going to stay in your reported figures still in -- when looking at the coming quarters. And then actually, a few ones more. One question related to growth in next year or next 2, 3 years period. You actually said that you're going to receive kind of a close to market growth when looking at the Finnair. So what figure you are referring at with the market growth from same sales in 2020 and '21?
Yes. I think that -- I mean if I start from the U.S. sort of government bond -- 5-year government bond discount rate, I mean you're right that, that's not a cash flow item, and it is a little bit of a technical item. And some might call it even a one-off. But as stated, we have our accounting practices, and we are following those. When we look at the sort of interest rate outlook, then I think that, of course, there's always some changes. But that outlook is not going to change materially. So therefore, you are correct in your assumption that this -- this is going to stay there for a while. When we look at the growth part of your question, then -- and when we look at next year, the upcoming years, what we estimate in terms of market growth in those markets relevant for us, it would be -- we would be talking about mid-single digits, plus/minus, and that's so far.
Yes. And the final one, if I may, related to CMD you're going to hold in the near future. So -- when kind of hearing your cost-saving targets. So are we going to see a kind of a cost savings program launch on the CMD because it actually wasn't practically included in the third quarter announcement today?
Yes. We will be elaborating on this agenda in our Capital Markets Day. I mean we will be presenting a holistic, balanced strategy, looking into revenue, looking into cost, looking into building competitiveness through customer experience, keeping in mind that employees are a big part of building competitiveness in a service business. So as part of this holistic agenda, we will be addressing cost. But as stated, we think that we have plenty of opportunity to improve productivity by continuous improvement measures.
[Operator Instructions] We will now take our next question from Achal Kumar from HSBC.
Just wanted to understand a bit more on the trading in different regions in North America, the Europe, Asia. So I can see there is a significant change from what was discussed and elaborated in the last quarters and so far then, but if I take in Europe. In the second quarter, your yield was down. And we -- and when I ask about -- so that despite Norwegian airline cutting capacity, which is positive for you, why the trading should not have positive impact? And you said because it's not just directly related to the capacity. It's also related to how the competitors are pricing. And now that has reversed, so we can see the positive RASK. So has the pricing changed by the competitors? So how that happened in Europe? Similarly, in Asia, actually. So you're saying, of course, there's an impact from Hong Kong, there is an impact from the competitors, Juneyao Airlines, you said. But then obviously and -- if I see the load factor as broadly down 2.3%, which is, I mean, so similar to what was there in the last quarter, and yet your RASK was positive. And then now it is quite a bit significantly down, 6%. So how the pricing hasn't changed in Asia, in Europe and similarly, in North America? So that is my first question, if you could please help on that.
If I -- Mika Stirkkinen here. If I start with the Asia. So Hong Kong played a major role in Q3. On top of that, we saw some softness in traffic flows from Europe to Asia in general. But we -- and you need to remember that the bulk of the business in Asia, the Asian traffic category in Q3 comes from Asia, Europe traffic flows. So the softness in Europe to Asia flows played still a smaller role. But the Hong Kong -- especially Europe to Hong Kong was quite soft, especially latter part of the quarter, okay?
Yes. What I would like to sort of add on that one, I mean, if we look at the Asian traffic on the overall, I mean, I think that the Hong Kong issue, we already covered. And there we will need to remember that we have been adding quite significant capacity to the Hong Kong route. We are flying 2 times per day with A350. So from our overall ASKs, Hong Kong accounts for 7%, and in the Asian traffic category, Hong Kong accounts for 14%. So that's the -- and the other part was the Shanghai Juneyao, which is a net positive to us. But the positive side is visible in the European traffic category. And then the Europe-Asia softness that Mika mentioned, I think that, that is also something that can be ringfenced to some markets and -- there, especially Germany, Germany is a -- and the corporate demand from Germany is visible. So if we propose those 3 items aside, I think that the overall Asian traffic category actually was quite okay, and then that's the way we look upon it.So then the European competition, do you want to start on that one, Mika?
Yes. If you look at our Q3 in terms of European traffic category, the growth in capacity was 4.9% and the revenue grew by 10.1%. And I think the kilometers grew by 11.9%. So it actually, it didn't come from the yields. So we were not aggressive in pricing. So then the demand was robust there. And there are a couple of reasons behind. Market capacity was flat basically during the quarter. And our capacity grew, so our market share increased. And then last year, I mean, 2018, there was extremely good weather in Finland in July. So the comparison year effect is there also. And on top of that, the revenue management system, what was implemented last year, it started to show positive signs in the revenues, and that was visible in the traffic of the year.
And the North America?
North America, well, the capacity growth, 28%. The revenue growth, 26%. RPK, plus 33%. So it was quite a positive performance. And whenever you open a new route like LAX for us, there's always a kind of a, let's call it, inverse [ honey model ]. So it's not working immediately. But I have to say that the LAX -- LAX the price of the -- at the -- is [ be personally. Positive slower. ] It's been positive in terms of profitability already. Was it second or third month of operations. So Q3 was good overall in North America. And look at loads, they were visible, okay?
Right. While I'm on this point, I also want to understand 2 more things. One, in Asia, why did you said that it's Europe to Asia, which is probably softer, and then that's had an impact on the yield, on the RASK. So going ahead, I mean, if the euro continues to depreciate against Asian currency, I mean, so then you -- so do you see a bigger impact will continue? I mean do you see -- so that impact will continue, and that should be the case. I mean do you see that? And in -- and second thing, are you sort of -- are you planning to pull the capacity [ around ASK ] given that the uncertainty around in that region -- are you expecting to pull back that capacity [ on ASK ]? On going on Europe, I also wanted to understand how the competitors' pricing is. I mean you said that pricing is not aggressive. How the competitors' pricing you see in Europe, especially on Nordic markets.
When it comes to our capacity on the Asian markets, I mean we are in it for the long term on the Asian markets. And then therefore, we are gradually, consistently building our presence in Asia. And therefore, we will stick to that strategy, and we take that into consideration in our capacity allocations. When it comes to the impact of currency to the demand, I mean just by observing the market, I would say on that one would be that probably the impact of the currency has been relatively limited on the demand so far. So I think that the phenomenon of Q3 RASK in Asia can be, sort of, ringfenced and identified on the points that we already covered. And then Mika, do you want to comment on the...
Competitive pricing in Europe? Yes. Overall, the pricing is -- it's very difficult to comment overall in Europe because there are several submarkets within Europe. There are markets which are really corporate work travel-purpose markets. And then there are markets which are leisure kind of purpose markets. So those vary or can vary quite a lot. Even the same -- same competitor can ride the same route as a work travel-purpose market. And then depending on the time and the day of the week -- time of the day and day of the week, differently. So you can -- generally, you can see that if there's a so-called low-cost carrier, they -- they price maybe a bit more aggressively. And if you have a, let's say, legacy carrier they -- they price this more less aggressively. However, those have converged quite a lot lately. Some -- there is some effect in the European traffic category due to the EU chairmanship. So Finland is the -- an edge to the EU Chairman. So there is some effect in the Europe to Helsinki travel due to that. And that continues until -- I'm sorry. Q4.
Okay. Understood. So sorry, I have two more questions, if I may. I'm really sorry for the long list of question as usual. So I also wanted to understand a couple of things. One, is the business in Europe -- you highlighted about the weakness in the corporate demand. But do you -- how do you see the corporate demand elsewhere? I mean if you already discussed about the corporate demand and -- ex Germany, you said. And so how do you see the corporate demand elsewhere? Secondly, I also wanted to understand about the impact from flight chain. So what sort of bet are you facing clearly visible in the Nordic market? So how do you see that? The third thing I wanted to understand a bit more about the cost. So you have quite a lot -- I mean a significant focus on the cost. And yet the costs for this quarter have reversed. I mean last quarter, the unit cost was down significantly. But now this quarter, the costs are up. And then given that your fuel cost, I mean you have the fuel hedges, and most of the hedges are out of the money. I mean so how do you see your unit cost behaving going through the next 2 quarters?
Okay. Thank you for the questions. We like the questions. So Mika, you start on the corporate, I can take flight chain, and then we share on the costs.
Yes. On the corporate, the greenest corporate market we see is Germany, definitely. But on the other hand, in German markets, the leisure segment has performed nicely. But on the other hand, if we look at our top 10 or 20 corporates, it's surprisingly green overall. So I would say it's overall, it's at least the corporate development of the year-on-year.
So big news to any side?
No. There's no big news. Naturally, the question is that whether the German -- whether that German disease spreads. So no major signs of that.
Then in terms of flight chain, I mean, I think what we experienced in our operating environment, especially in Northern Europe, I mean, the Nordic countries, is that -- I mean the climate change obviously, is a hot topic in the overall society. Our customers are very interested about this one. There are many questions and customers are very interested about how to make aviation more sustainable. And we are definitely working on that one all the time. But as you see from our traffic figures and number of passengers, we don't see any impact on our traffic figures or number of passengers coming out of the flight chain. And Q3 number of passengers was record high for us. Number of passengers increased with 12%. And as such, we are one of the fastest-growing, if not the fastest-growing, Pan-European airline for the time being. So I guess that tells the story. But at the same time, we do realize that we have an obligation to work with more sustainable aviation, both short and long term, and that we will be certainly doing.
And finally, on the cost base.
Yes. The cost -- the unit. Could you just refresh our memory? Specific point that you had around unit cost was...
No. I mean so I just want to say that, I mean, you had focused on the cost, you want to cut the cost per plane. In the last quarter, the cost was down significantly. This quarter, the cost was up. So -- and then especially, of course, I understand the ForEx impact. But on the other side, the fuel hedges, of which you have, are out of the money. And in that scenario, how do you see your unit cost behaving in the next couple of quarters? And obviously, the ForEx impact of it is probably or will probably continue. So in the overall scenario, how do you see the unit cost behaving for you?
We don't disclose the future unit cost development as such. However, there are a couple of drivers there behind the unit cost increase. Naturally, volume, and whenever we grow our volume, our volume base does increase. The volume driver might be passengers, flights, power cycles, ASKs and so on and so forth. Then we have currencies. So when you look at our report, you'll see that we are short on dollar. So we have more dollar-based costs than dollar-based revenues. So whenever dollar appreciates, our cost base versus the revenue line increases. And then the -- last year, in Q3, we had EUR 27 million of hedging gains on the fuel cost line. This year in Q3, we had 0 gain -- EUR 0 million gain on the hedges. So in the comparison period, we had fairly negative gains, and now it's flat. And as you pointed out, when you look at our notes, we can see that the fair value of our jet fuel hedges is negative by EUR 53 million. But on the other hand, the dollar hedges are in the money. So...
Yes. And what I would add to that one is that within -- when you consider the cash figure during the next quarters, then, of course, you need to remember the past seasonality.
[Operator Instructions] We will now take our next question from Jaakko Tyrväinen from SEB.
[indiscernible] capacity. Where are you planning to [indiscernible] capacity outlook?
Sorry. We cannot -- I mean if we are supposed to hear something, we actually cannot hear a thing. So...
Okay. Can you hear now?
Yes. Now we hear a lot better.
Sorry about that. I was asking regarding still about the next year capacity outlook. And could you elaborate a bit more where are you planning to put the capacity growth of 5% group? Will it be like that -- will it be equally weighted with Europe? And then the long hauls or more on the long hauls and -- than the [ shorts you're rolling ] on the European routes?
You can -- we have told that we will add 2 more A350s next year in H1. And you can see that we have told about the routes, the routes in Busan, Haneda, Sapporo. What we haven't 100% announced yet is the full summer '20 nor winter '20 schedule. So unfortunately, I can't tell about the -- I can't give you the full picture of the capacity development. But I guess you can do some guessing that we take delivery of 2 wide-bodies. And we haven't -- have nothing on the narrow-body delivery schedule. So you can guess.
Right. Excellent. That's enough. Then regarding the -- did you mention that you're benefiting from -- or you are seeing that the Norwegian is cutting their capacity. Could you elaborate a bit more how much you are seeing that they would cut capacity for the winter season from Helsinki?
I think that, that is a question for the Norwegian. So I mean you see the numbers on our European traffic category, and that you see the market share development. And I think that there's common knowledge on the marketplace also based on the winter schedules that capacity will be adjusted by some of the competitors. So -- but it is impacting our competitive environment on the short term, and that's where we are. But then, of course, medium to long term, we will need to remember that this is a competitive industry. And then therefore, capacity has its way to find itself to new markets as well. So that's something that we need to keep in mind. One more addition to that. So I don't know how closely you follow the published schedules, but the other airlines, we can see capacity of our beloved peers on a weekly basis. So that in turn, we see it and touch base with on public information. So you can do it yourself as well. But the thing there with some of our competitors is that they change the capacity almost on a weekly basis. So it's difficult to draw any conclusions based on that.
And then, of course, perhaps, needless to remind, but when we look into the capacity outlook for 2020 on the narrow-body side, then, of course, the return of MAX 8, traffic will be also something to consider. Although in European airspace, the MAX 8 impact will be somewhat limited.
Right. Right. Then still a few words regarding the North Atlantic growth, which is quite rapid for you, guys. Where do you see the demand coming from? Given that you are growing like 30% versus previous year.Is it coming from only from Finland and from the U.S.? From point-to-point, Finland? Or is it from somewhere else?
Well, that's towards East -- so we have lots of transfer passengers flying East. The same applies to West. Not to -- not fully to the same extent. That's one thing. Secondly is that we have a really, really good cooperation through our Atlantic joint business cooperations together with American, BA and Iberia. So we have a good network and activity through our partners. Historically, we have got quite nice feed from Russia [indiscernible]. Now in the Los Angeles there we had one of the best connectivities from Northern Germany. So actually, I will say it's from Northern Germany has increased quite a lot to Los Angeles. Good connectivity, and actually, the last travel time is quite competitive from Northern Germany to Los Angeles.
So basically, the demand for the North American traffic is probably more diversified than you would think.
Yes. Okay. Interesting. And then as a small item regarding the sales and marketing costs, which were significantly up year-over-year. Could you give a bit more flavor what's -- what was the main driver behind there? Or -- will that continue or is it a goner?
It will continue. Two reasons. One was -- it's a credit card cost increase due to the mix effect. There were a bit more uses of a bit more expensive credit cards. And the main reason was that we have talked about our distribution target, changes to the distribution. So there, in connection with the freedom of pricing we have now, the unit cost of distribution has increased a bit.
[Operator Instructions] It appears there are no further questions at this time. So I would like to turn the conference back to our presenters for any additional or closing remarks.
Okay. Thank you all for your questions. And many of them, we are looking forward to discuss with you in connection of our Capital Markets Day or at the latest in connection of our full year results early next year, and wish you all a nice afternoon.
Thank you.
Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.