Lindab International AB
STO:LIAB
Earnings Call Analysis
Q3-2023 Analysis
Lindab International AB
Lindab has achieved its highest third quarter sales ever, driven mainly by the robust performance of its Ventilation Systems business area, which makes up about 75% of the company's total operations. Even under challenging market conditions marked by dampened demand, Lindab has successfully delivered an impressive operating profit surpassing 10%, which is significant in the context of the overall industry landscape.
Ventilation Systems has reported record sales for the quarter, bolstered by demand for energy-efficient systems, acquisitions, and positive currency effects, although the organic growth has witnessed an 8% pullback. On the flip side, Profile Systems, which is more exposed to the sluggish Swedish market, has seen an 18% drop in organic sales growth compared to the previous year.
Amidst the economic turmoil from cost inflation and rising interest rates, Europe's construction activity has slowed. However, pockets of strength persist in key markets like France and Italy, offering optimism in a otherwise tense environment. Lindab's forward-looking approach focuses on adapting to these tumultuous conditions, in particular by bolstering its well-performing Ventilation Systems and by deploying cost-saving programs expected to save approximately SEK 150 million annually.
Flourishing with a resilient balance sheet, Lindab sports a comfortable debt to EBITDA ratio of 1.4, facilitating an aggressive growth strategy geared towards acquisitions. With aspirations to hit SEK 20 billion in revenue and maintain a 10% operating margin by 2027, the company's sights are set on becoming the preeminent European ventilation entity through a balanced mix of organic growth and strategic mergers and acquisitions.
Embedded in Lindab's ethos is a commitment to sustainability – a priority that is increasingly resonating with both legislation and consumer expectations. In alignment with this core value, Lindab prides itself on being a pioneer in adopting recycled steel in its ventilation duct products, which boasts a 62% reduction in climate impact. The continued innovation around products, including a foray into fossil-free steel, underscores Lindab's leadership in creating climate-efficient solutions.
While acknowledging the European installation market's projected 12-month weakness, Lindab's strategic arsenal includes tailored cost adjustments, working capital improvements, and continued pursuit of attractive acquisitions. These initiatives are designed to strengthen gross margins and cash flows in anticipation of fluctuating market demand, particularly in the challenged Swedish market, signaling a proactive posture in tackling potential adversities.
The formal presentation ends, paving the way for a Q&A session. Analysts are keen on understanding the factors contributing to the improved margin in the Ventilation Systems division, specifically regarding the impact of acquisitions, cost-saving efforts, and raw material costs, as well as insights on the demand stability for energy-efficient solutions across European regions.
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Welcome to the Lindab Q3 presentation for 2023. [Operator Instructions]
Now I will hand the conference over to the President and CEO, Ola Ringdahl; and CFO, Lars Ynner. Please go ahead.
Hello, and welcome to this call. My name is Ola Ringdahl, I'm the President and CEO for Lindab Group. And next to me, I have our CFO, Lars Ynner. Let's start with some Q3 highlights.
Lindab reported its highest third quarter sales ever. Business area Ventilation Systems, which represents around 75% of Lindab's total business, had a solid development with the highest sales for the third quarter, driven by structural growth and some currency effects. Business area Profile Systems was impacted by a weaker market, but also has high comparison numbers from the same period previous year. Profile Systems has high exposure to the Swedish market where construction activity has slowed down significantly in the last year.
The operating profit has gradually improved during the year. And for quarter 3, it exceeded 10% for the Group and for both business areas. We see that as a strong achievement given the current market conditions. The Group's operating margin in Q3 was 10.8%, generating an operating profit of SEK 351 million.
Our cash flow was very strong in the third quarter. Cash flow from operating activities was SEK 444 million, twice as high as the previous year.
All in all, we are very pleased with the results in this quarter. We managed to defend our margins and market shares despite a lower market demand. Lindab is in good shape.
Now let's take a closer look on the sales and margins on the next slide. Lindab's total revenue has been growing for the past 2 years, mainly thanks to acquisitions, but also as a consequence of price increases to compensate for higher raw material costs and other inflationary effects.
Business area Ventilation Systems has continued to grow strongly and reported its highest third quarter ever in terms of sales. Sales for Ventilation Systems increased by 7% compared to the third quarter '22. Acquisitions contributed positively by 7%, currency by 8%. However, organic growth was negative by 8%. And there were no positive price effects versus previous year.
The European construction activity has slowed down as a result of cost inflation, increased interest rates and continued turbulent global conditions. The market in Western Europe, which is Lindab's largest ventilation market, was relatively stable with growth in important markets such as France and Italy, but somewhat of a decline in Germany. The Nordic region is relatively weaker than the Continental Europe.
Business area Profile Systems has high exposure to the Swedish market where construction activity has been slowing down significantly. And the Swedish market represents roughly half of Profile Systems' total business and therefore has a major impact on the business area as a whole. For the third quarter, organic sales growth for Profile Systems was negative by 18%, but it would be fair to point out that the comparison numbers in 2022 were historically high. Our assessment is that the demand situation has somewhat stabilized on current levels for Profile Systems.
Now let's look at operating profit. Since Q3 of '22, fluctuating raw material prices have put pressure on our gross margin and, consequently, on our operating margin, especially for Profile Systems. We have previously communicated that we would have these adverse effects during several quarters. From the month of June this year, we can see that the negative raw material effects are near 0 for Ventilation Systems. But in Profile Systems, most of the adverse raw material effects are behind us. However, in Eastern Europe, which represents around 20% of profile sales, the adverse effects will also exist in the fourth quarter.
Despite weaker market conditions in Europe, Ventilation Systems delivered an operating margin of 11.2% in the quarter and the highest operating profit ever for a single quarter for ventilation. The demand for energy-efficient ventilation systems has partly offset the downturn in construction activity. Acquisitions have contributed positively.
Business area Profile Systems was affected by significantly lower demand in addition to the mentioned raw material effects. However, we have seen gradually improving margins during 2023, and the business area reached 10.2% operating margin in the third quarter, which we were very pleased to see.
During the second quarter, Lindab initiated a cost savings program in all parts of the Group to strengthen earnings. We have already seen positive effects from this cost-saving program during the third quarter. The actions have full effect from October at an annual cost saving rate of SEK 150 million. It can also be mentioned that efficiency improvements throughout the Group have reduced the number of employees by 7% in comparable units over the last 12 months.
In addition to the cost saving activities, we are reviewing if there is a need for further structural changes to improve Lindab's profitability margin and to reduce the cyclicality of sales and earnings in the future.
I now hand over to our CFO, Lars Ynner, to guide us through our financial position.
Thank you, Ola. Lindab had a strong cash flow during the third quarter. Our cash flow from operating activities increased to SEK 444 million compared to SEK 260 million in the third quarter last year. The strengthened cash flow from operating activities was primarily related to changes in working capital due to less capital tied in stock. Our free cash flow adjusted for M&A increased to SEK 377 million, versus SEK 156 million in Q3 last year. Rolling 12-month cash flow from operating activities increased to SEK 1.6 billion versus SEK 379 million in the previous 12 months.
Let's now look deeper into our net debt situation. Net debt has increased slightly compared to previous year and amounted to SEK 3.3 billion, of which SEK 1.3 billion is related to leasing liabilities. The increased net debt-to-EBITDA ratio from 1.3 end of Q3 last year to 2.0 this year is mainly affected by our acquisition activities the last 12 months.
We have introduced a new supplementary definition and KPI this quarter, financial net debt and financial net debt/EBITDA, to clarify our financial position and net debt. Financial net debt is net debt excluding leasing liabilities and pension-related items. Financial net debt/EBITDA is average financial net debt in relation to EBITDA excluding IFRS 16 and excluding leasing liabilities and pension-related items. This ratio is at 1.4 end of September and gives us the possibility to be active and focused on acquired growth going forward. We continue to focus on our activities to strengthen cash flow and a special attention to our stock and [ day sales stock ].
I'm now giving back the word back to Ola. Thank you.
Thank you, Lars. And we will talk a bit further about the journey we are on and how we are building a stronger Lindab. So let's take a little look at where we come from and where we're heading. . Looking back, we can see that Lindab has developed through a number of phases. After the financial crisis in 2008, Lindab had to focus on reducing debt. Few investments were made in the business and the generated profits were used to get Lindab's balance sheet back on track. On average, our revenue at that -- during that period was around SEK 7 billion with a 6% EBIT margin on average. Slightly more than half of our revenue came from the ventilation business.
I joined as CEO in 2018, and the company was in better shape by them, thankfully, but it was still underinvested with several loss-making units. We managed to raise the profitability quite fast by focusing on fewer markets and fewer product areas. 32 countries were reduced to 20 countries. One business area was divested, and we grew the share of the ventilation business to around 70% during the period, or, as it is today, 75%. The increased profitability allowed us to launch the largest investment program in Lindab's history with the objective to strengthen Lindab's efficiency, capacity and possibilities for profitable growth.
In 2020, we started to acquire high-quality companies to strengthen our offering and market shares in the core markets in Europe. Now we are at the end of our investment program. The company has grown to SEK 13 billion in sales. And with the continued focus on profitability, we can redirect our generated profits and substantial cash flow to increase the growth speed.
The target for 2027 is to reach SEK 20 billion in revenue with at least 10% operating margin. And this will be achieved in a combination of organic and acquired growth. But it is fair to say that M&A will be the main driver. We are building the leading ventilation company in Europe.
In the short term, we have a number of areas that we are focusing on to drive Lindab's profitable growth. We continue to implement actions to reduce the sensitivity to market fluctuations. Product areas and geographies that do not meet our high standards of organic growth possibilities and stable profitability will be evaluated. We will also continue with cost control and continuous improvements of the profitability.
We see that in markets where we have a strong market position, the profitability is higher. That is why it's important for us to continue to develop our product offering as many markets have local preferences and building standards. We also see a potential in improving our current product offering, sharpening the functionality and production efficiency.
The investment program has been ongoing for several years, and it's essential to follow up on the initial plan and ensure that the necessary actions are taken to harvest the full effects and the full potential from each investment.
Sustainability, that has been high up on Lindab's agenda for several years. And this is an area where both legislation and customer demands are moving quickly. Lindab is and will be at the forefront within sustainability.
Finally, some of the first acquisitions we made have now been part of Lindab for 2 or, soon, 3 years. And we are fine-tuning our support to these acquisitions to make sure that we benefit from the synergies from having these companies in our Group.
Now let's look at the 3 large areas on this slide, starting with the investments. Investment program. This has been, as you know, at the top of our agenda since 2019. It's very rewarding to see how the benefits are very visible, and I think that can also be an important explanation why we are performing well despite tougher market conditions. We see results in higher production efficiency, higher capacity and a safer working environment.
We have now come to a point where no major investment decisions are planned, and we have made very few investment decisions during this year. So the investment level is gradually declining. We are expecting it to be around SEK 250 million in the year 2025, and it will be around SEK 250 million to SEK 300 million in 2024. In the third quarter, the investments amounted to SEK 68 million, which is slightly lower than Q3 last year.
We move on to acquisitions. Lindab's strategy is to acquire well-managed, successful companies that complement our offering in selected regions and product areas. The acquired companies continue to operate independently under their own brands, while at the same time benefiting from Lindab's sourcing agreements, expertise and sales network.
In October, just after the end of the third quarter, we acquired the British ventilation company HAS-Vent. HAS-Vent is one of U.K.'s leading manufacturers and distributors of ventilation products. The company has its own production of circular, oval and rectangular ventilation ducts, as well as distribution of a wide range of ventilation products. HAS-Vent has 10 branches in the U.K., some in locations where Lindab does not currently operate. With around 105 employees and an annual turnover of SEK 280 million, and an operating margin that is higher than Lindab's, we think that HAS-Vent is a perfect addition to our business in the U.K.
In total, we have made 22 additions since 2020, adding SEK 3 billion in revenue. And as you can see in the chart, around 90% of the acquired revenue is within the ventilation business.
We have also divested businesses with a turnover of total SEK 1.3 billion since 2020, and the largest divestment was the business area Astron Building Systems.
And sometimes we talk about steel. We talk about steel prices. This time, we will talk about other types of steel.
Lindab has recently taken another step towards reducing the climate impact of our products by extending the standard product range with ventilation ducts in recycled steel. Recycled steel and fossil-free steel are the 2 materials that Lindab has chosen to reduce both its own and its customers' CO2 emissions. Fossil-free steel, unlike recycled steel, is not yet available in large-scale production. The first volume deliveries are expected to start in 2026.
The recycled steel is already available in sufficient volumes for ventilation ducts to be included in Lindab's standard product range. It contains 75% recycled material, resulting in a 62% reduction in the climate impact. Lindab receives its recycled steel from Arcelor-Mittal's steel mill in Europe and has ongoing dialogues with other steel suppliers. Lindab has previously communicated that the company is the first supplier in the world to offer ventilation ducts in fossil-free steel. Thanks to a test delivery from SSAB, Lindab will have access to it before the large-scale production is expected to start.
The fossil-free steel from the test delivery will be used for selected customer projects as it is only available in a small quantity, unlike the products in recycled steel that can be offered on an ongoing basis.
For Lindab and for our customers, sustainability is business-critical. Lindab is and will be the leader in climate-efficient ventilation solutions.
Let's go to our final slide and talk about the outlook and our priorities. Year-to-date, the European ventilation market is estimated to have declined by around 5%. The Nordic region has had more challenging market conditions than the Western and Southern Europe. The ventilation market has shown relative stability due to increased renovation and demand for energy-efficient ventilation systems.
Our assessment is that the European installation market will remain weak over the next 12 months. We are prepared for a market -- for this market to continue to be relatively slow, and we have adapted our resources to the current demand.
Profile Systems has high exposure to the Swedish market where new construction has slowed down. Year-to-date, the market is estimated to have declined by 20%. After some tough quarters, the situation is beginning to stabilize. Our capacity has been adjusted to the current market situation and the implemented cost program is reaching its full potential during October.
So what are Lindab's near-term priorities? Well, naturally, in the current economic environment, we are working with proactive measures, especially in business area Profile Systems where the margins need to improve and where the market demand is weaker. We are adjusting our pricing to strengthen gross margins and to mitigate the inflation effects. We are continuing to reduce our working capital to free up cash flow. And we intend to continue to pursue attractive acquisition opportunities within ventilation. The European ventilation industry is fragmented and there are plenty of opportunities to create long-term value.
We have a clear plan for how Lindab will continue to develop positively. And after the transformation of the business in recent years, Lindab is in good shape and we are now ready to enter the next phase towards 2027.
We now conclude the presentation and we open up for questions.
[Operator Instructions] The next question comes from Sofia Sorling from Carnegie.
Two questions I would like to start with. So this improved margin in the Ventilation Systems division of 11.2% compared to the 10% same period last year, could you give some color on how much is derived from actual acquisitions, cost-saving plan and perhaps lower input material?
And then also another question on Ventilation Systems. You mentioned that West and South Europe were stable during the quarter and also that there was some increased demand for energy-efficient solutions. Do you expect this to continue? And is it limited to any geographical regions outside the Nordics, for example? Or if you can give some color on that. That's my first 2 questions.
I remember the second one better than the first half. So let me try to answer that. It is -- I will admit, it is difficult to exactly know how much -- how many orders or how much volume is going specifically to the energy efficiency renovation segment. When talking to our main customer group, which is the installation companies, clearly, they see an increased activity in the past 18 months in that segment. So I believe it is a strong driver, but quantifying it is rather difficult for us.
But I think it is not isolated to one specific country or market in Europe. This is something overall and driven by the higher energy prices primarily. Secondarily, it is, of course, driven by several sustainability factors where we need to improve the energy efficiency of buildings throughout Europe to reach the climate targets.
So this will be a long-term growth driver for Lindab. It's not isolated to this very year or this very quarter. This will be an ongoing I'll say tailwind for many years to come, stimulating demand for these types of solutions, and Lindab is extremely well positioned with the with the best ventilation system in the world when it comes to air ducts and creating tight systems.
Then you had a question about where -- why this margin improvement in Ventilation Systems versus previous year. And there are, of course, several factors. One is the cost reduction and focus on efficiency, definitely. The cost reduction activities, we have 7% fewer people in comparable units compared to a year ago. Not all of that is connected to the specific program we announced in June. But there are many ongoing actions to adapt our cost to the current market situation.
Second effect is we started to have adverse raw material effect in the third quarter last year. They ended by June of this year. So that helps the gross margin to recover a bit. And then third factor that you speculated a bit about the acquisitions, well, the acquisitions are contributing slightly positively to the margin improvement, but it's not a major explanation factor. I think efficiency improvements and improved gross margin from raw material effects, those are the 2 main ones.
All right. And while we're talking about raw material and inventory level, so you mentioned that you're starting to normalize this inventory level per Q3, should we expect that you need to build up inventory again already in Q4? Or will that happen into 2024? Or if you can give some more color on that.
That is a clear no. We still have room to reduce both raw material inventory and finished goods inventory. And we are quite focused on that, to trim it down to optimal levels given the current market demand situation. 1.5 year ago only, we saw a terrible war starting in Europe, and of course, the natural reaction after that was to stock raw materials and make sure that we had not only toilet paper but also steel and everything. And I think what we see now is a kind of European destocking effect where everybody is trying to trim the stocks to a more normal level.
So I think in terms of cash flow, we have quite a positive outlook on the coming quarters [indiscernible] optimize and create strong cash flows in the coming quarters.
All right. And my final question is on M&A. So regards your ambition to continue with this M&A. So how far are you willing then to go in terms of capital structure level? You have a net debt to EBITDA now of 2.0, and you introduced this financial net debt, so that was 1.4. But your financial target is 3. So what can we expect?
We have quite a lot of headroom there, generating such strong cash flows, and we are introducing the, let's say, a second measurement on calling financial net debt to EBITDA. Many other companies do that. With Lindab's portfolio of leased properties, we have, I'll say, a relatively high leasing liability for rental agreement basically. But what is really the interest-bearing debt, debt from the banks, and I think it is important for us to clarify that we are definitely not deeply in debt. Financial net debt to EBITDA ratio of 1.4 is not in any way high.
So we have quite a lot of headroom there, and we are also generating strong cash flow, and the investment program is coming to its end. So I believe we will have quite a lot of acquisition capacity in the next 12 months, but also, of course, beyond that.
The next question comes from Carl Ragnerstam from Nordea. .
It's Carl here from Nordea. A couple of questions from me as well. I mean, I'm a bit curious to know about -- a bit more about the cost saving program. You obviously launched here or communicated in last report. I mean when you communicated, it sounds like it would materialize from late September, also, as you said, full effect October. But what effect did that specific program have on your, obviously, earnings in both Profile as well as partly as well in Ventilation in the quarter?
We announced it -- we started it beginning of Q2, and it -- I'm sorry, beginning of Q3. It has been running -- ramping up with full effect from October. I think it's fair to say that it has 50% effect during the third quarter. So dividing SEK 150 million by 4, and then taking 50% of that, so we are talking roughly SEK 20 million in cost savings. Distributed around half-half on Profile Systems and Ventilation Systems.
Okay. Very good. And the remaining, obviously, it sounded like it would be more tilted towards Profile when you announced it, or has anything changed? Or is it maybe an initial impact or?
Relative to sales or to revenue, it is still...
Okay, fine. Okay. Okay, very good. And also, you said that you still have raw material headwinds in Eastern Europe in your Profile business continue entering Q4 as well. Could you help me with the dynamic there? Is it because of your sort of -- is it a lower inventory turnover? Or is it your maybe pricing action that comes into play? Or why do you still have headwinds in Eastern Europe?
The volume decline in Eastern Europe on certain product groups was quite dramatic for some months. It is starting -- it's stabilizing now, but there were some months with very low sales in those units. And they -- those countries bordering to Ukraine basically, they made sure that they had enough stock to take them through a very difficult situation, supply situation. So they had too much stock. Sales went down quite a lot. So simply, it takes longer time to consume the stock.
Now the demand is picking up, and we are handling the stock situation very actively. We believe by the end of the year, this will not -- this will not be something that we will blame beyond Q4.
Okay. Sounds fair. And also on Ventilation Systems organic growth, it's sequentially worsened or fairly flattish, but the margins sequentially worsened. Have you seen any changes during the quarter? Is it worsening? Or is it same as you say for Profile stabilizing at the current level? Or how should we look at it? Because I guess it's a little bit more less cyclical compared to Profile, right?
I would agree with that. It's a bit more late in the cycle than Profile Systems. So normally, what we see in Profile Systems, we see 6 to 9 months later in Ventilation Systems just given the nature of how you're directing and finishing building projects. So while we have seen a reduced rate of decline for Profile Systems versus previous year, you are correct that the gap seems to increase a bit for Ventilation Systems.
We see some weakening trends in some of the, say, continental Europe markets. Germany, some subsidy programs have ended in the middle of the summer. So we started in August to see a little bit weaker demand for certain product types that have been -- where there have been German government subsidies for energy renovation, for example. Nothing dramatical, but I think the increasing interest rates, they are affecting more countries than Sweden. So I believe that there will be continue -- the ventilation market or the demand will continue at the current level or slightly lower, but we are not foreseeing any dramatic changes in the market demand.
Sounds fair. And a bit on pricing, coming back to that. I mean, have you done any change, just your -- if you look on a high level here, have you done any changes to your pricing during the quarter? We've seen steel coming down a bit, right? Have you lowered prices? Or could you continue to keep up your fairly good prices here? And have you seen your competitors making any big changes in pricing? I mean, you are obviously a price leader. So do they continue to follow you? Or do they try to lower in order to gain shares?
When the market volume is down, there will always be some actors in the market who try to get some more orders for their half-empty factories maybe. We are not going down that road. We are prioritizing profitability over volume. Then of course, we like to win. So it's not like we are giving away orders. We enjoy being successful in our sales.
So I think we have a very dedicated organization. They have defended market shares, but also defended the price levels. Over time, you see a slight price erosion. I think our average prices now are 1% to 2% lower, the net prices, than they were 2 quarters ago. But -- and this means that we don't get any help in our revenue from, say, pricing growth. It's probably on the contrary, some negative effects there.
But it is important for us to defend the market position and also try to get the optimal gross margins. And I think that we have done that quite well in the quarter. In the organization, they are quite, I would say, they are very professional and experienced in handling that.
And then there is one more thing. In more turbulent times, in tougher times, customers tend to choose the reliable supplier, the supplier they know will be there also after the bad times are over. So they know that Lindab is a very strong, reliable company. We will be there also next year and the next decade. And that is an advantage for us versus any newcomer or any very price-aggressive competitor.
Sounds fair. And the final one from my side, if I may. On M&A, as you said, becoming a more important part of your growth, which we've seen. Could you give any idea if you have any LOIs currently? Or how many companies have you sort of in warm discussions?
You wish. Nice try.
But you have an active pipeline at least.
We have a very interesting pipeline. And we have had a very interesting pipeline for the last 3 years, and I think that the results of that are seen. And as important as it is to have a good pipeline, we also have a very high success rate in the discussions we initiate. And perhaps even more important than that, the development of the acquired companies is very satisfying. And yesterday, the Board of Lindab Group visited Felderer in Germany. We had a Board meeting there and the review of the business. And it's very -- we are very pleased to see how well the acquired companies are developing, I must say.
Very good, sounds comforting. Thank you.
The next question comes from Anders Jafs from Kepler Cheuvreux.
That's Kepler Cheuvreux. But yes, so jumping to the margin on ventilation, I just have a question. I know you made some acquisitions previously, which had a lower margin than the Group, if I'm not mistaken. Maybe it was Felderer that you communicated in a previous conf call had a margin of around 5%, if I'm not mistaken. Like how has that in increased or changed up until today? Is that -- just to get maybe an idea of how quickly you can raise margins in acquired businesses.
That's a fair question. I mean Felderer was our largest acquisition to date during this -- among these 22 acquisitions made. They entered the Group on somewhere 4%, 5% EBIT margin. Since then, they have managed to grow sales by around 25%, and EBIT levels are now on 7%, 8%. So we increased profit in money but also the increase in profitability. But it's very satisfying to see.
Now German construction market is not fantastic either, so let's not celebrate yet. But really, they are taking the right steps. And also we enjoy internal synergies when they are shifting their purchasing to Lindab factories, giving additional benefits, of course.
Then Felderer, they were the key to also opening up new acquisition possibilities. So not even a year after they entered the Group, they acquired a rectangular ventilation company with margins substantially higher than their own margins. So they are, in their turn, creating a profitable group of companies.
So I think it gives additional effects, but I think I answered your question that we do manage to improve profitability. If you're a distribution company in Germany, let's not dream about 20% profitability, but at least it should be approaching the 10%.
Yes. Well, that's very interesting. And also jumping to the margin on Profile as well. So just if I have understood everything correctly, if we take -- let's assume all variable stays the same, but you continue with the cost program additional couple of quarters, then this will continue to act as a positive factor on the margin side as -- on Profile going forward as well, yes.
Some slight help from, say, diminishing negative raw material effects. And of course, we will meet lower comparison numbers quite soon. So hopefully, we are not that far away from showing year-over-year improved performance.
All right. Yes. Perfect. Perfect. And just last question. You mentioned in the report that obviously, all Nordic markets are showing weakness. But is there any Nordic market that's maybe not as worth not as bad as the other -- as the others or?
Well, to make sure we are not bragging about the Swedish performance, I think Sweden is the sick man of Europe. That is not true for all the Nordic countries. We sometimes we lump them together. But the sales level in Norway has been relative -- I mean, that has been relatively stable. The Norwegian economy is following its own rules. In Denmark, parts of the business have been running quite well, the past not. So there it's a bit of a mixed picture.
In Finland, they are affected by the higher interest rates, lower activity level, definitely. But our team in Finland, they are so bloody good that they are delivering very strong results no matter what. So I'm extremely pleased with how we are performing in Finland. But the market is quite a lot down, not as bad as Sweden. But I think if you look at other companies, say, similar to Lindab, their activities in Finland, they would also say that it's a tough market right now.
Yes. Perfect. And regarding that, maybe it looks a bit more stable in Denmark. Are there more renovation projects there currently in Denmark? Or is it the same split as the Group or...
I passed by the Copenhagen airport yesterday evening, and I think one explanation is the currency, they can still buy things with that currency, which is more difficult for us living in Sweden. There is still activity -- relatively good activity in the Danish construction industry, and Denmark is -- has always been one of the core markets for Lindab. We have a very strong position there. So we do well in Ventilation. It's been a bit tougher in Profile Systems.
[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
Then from Lars Ynner and myself, we say thank you for listening in, and enjoy the rest of the day. Thank you.
Thank you.