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Ladies and gentlemen, welcome to the Munters Q2 report 2018. [Operator Instructions] I'll now hand the floor to our host, CEO, John Peter Leesi; and CFO, Jonas Agrup. Gentleman, please go ahead.
Good morning. Thank you very much, and good morning and good afternoon to everybody joining us today on the Munters Second Quarter 2018 Presentation. We have a few core messages that we want to make sure come across relating to the second quarter. The first one is that order intake is low, and this is relating to our -- mainly, to our Data Center business, but also to Air Treatment. Having said this, we believe that order intake -- we expect order intake to pick up during the second half of 2018. Second point is that we've had strong net sales growth in the quarter, thanks to the phasing of projects. We're also happy to post increased earnings in a form of adjusted EBITA and contributions from all our business areas, including Services. And as a final point in the core messages around the Q2 2018 is that for the remainder of this year, we do expect to continue to improve the group's year-on-year performance and earnings. If we move to Page #2, we have the key headline numbers for the quarter, and you can see that order intake was down with 18% year-on-year. You can see that net sales at a bit more than SEK 1.9 billion, was up 13% year-on-year. And when it comes to our earnings level in the form of adjusted EBITA, standing at SEK 211 million, this is an increase of 11% compared to the same period last year. We want to highlight that in the result, in the earnings for the second quarter, we have a restructuring cost of SEK 5 million relating to some restructuring activities that we have undertaken in our AgHort division. So with that, I hand over to our CFO, Jonas.
Okay. And then we move to Slide #3, where you see the order intake and net sales bridges for the second quarter. If we look at -- start at the order intake, we saw a organic climb -- growth climb of 20% in the quarter, mainly driven by Data Centers. We will come back to more of the details later on. We had the positive currency effect, plus 2%, driven by strong U.S. dollar, strong euro against the Swedish krona. Net sales in the quarter, quite strong organic growth, 11% up compared to the second quarter prior year. Currency effect the same as for the order intake, plus 2%. If I then move over to Slide #4, we have the orders received in local currency, you can see the different regions. If we start with APAC, which is 22% of the total order intake rolling 12 months, we continue to grow strongly in that region, up 23%, and this is mainly driven by China where we have really strong momentum right now. If we look at Americas, it's down 22%, and this is mainly related to the Data Center business where we posted large order -- a large order during the second quarter last year, and we also continue to see a quite weak development in the commercial subsegment within Air Treatment. And then finally, EMEA, 43% of the orders, down 12%. And this is again mainly related to Data Centers, where we had a large order in the second quarter last year. We saw, however, a strong performance for Air Treatment in the second quarter. If we then move over to -- or move on to Page #5, we have, as you know, 4 business areas. The largest one is Air Treatment, representing about 50% of net sales. And you can, in this slide, also see the margins for the various businesses in the second quarter.
And this brings us to Page #6, which is outlining a few of the highlights during the second quarter. If we start with orders, we have 2 points. Several large orders have been received relating to the Swine segment in our business area AgHort and Swine production in China. So orders won there very good. We've also won a number of smaller orders in our Mist Elimination business area, and these are important to us because they become the very examples of the strategic repositioning we're doing in this business where we want to make ourselves less dependent on the coal business and more focused on the Process and Marine subsegments. Another area that has been good and rewarding for us has been the continued focus on our Services business, and we've been able to continue to penetrate the contract market for Service and we've been able to post net sales growth in Services of 16% year-over-year. We're also happy to announce that we've made an acquisition of Humi-Tech, which is a U.K. service company, which then gives us further strength in the U.K. theater when it comes to services as well as expanding ourselves into more -- into the humidification side. So that is good news as well. On other topics on Page #6, we have 2 points. We have seen the impact of the increased raw material prices, and we will also see some impact of this in the second half of the year. We have undertaken selective, smaller restructuring actions to reduce cost in certain overhead areas in order for us to continue to invest and grow in more strategic areas. And as we said earlier, the results in Q2 have been impacted with SEK 5 million, which is included in the result for these actions.
Okay, if we move on to Slide #7. It shows the order intake bridge for the second quarter. We were down 18%, organically down 20%. We saw a good growth in the quarter for AgHort and also for Mist Elimination, up organically 7% and 9%, respectively. Positive in the quarter was to see that we continue to grow nicely in the Marine and Process subsegments within Mist Elimination, so we saw really strong growth in these 2 subsegments. We had lower order intake in Data Centers and also lower order intake in Air Treatment compared to the second quarter previous year. And in the Data Center business, we had good order intake, as you probably remember, in the second quarter where we actually won 2 large orders from digital players, one in the U.S. and one in Europe, and the total order value was SEK 507 million. If I then move on to Page #8, you see the net sales bridge for the second quarter. We saw increased net sales of 13%, organically 11%. We reported organic growth in all BAs, all business areas, except Mist Elimination. And we saw good deliveries out from the Data Center business in Europe with good phasing of projects, but also we saw improved production efficiency in the [ sound factory ]. Very strong performance for Services in the quarter, net sales increased by 16%. If we then move over to Slide #9, this is the adjusted EBITA bridge for the second quarter. We increased earnings 11% to SEK 211 million. We increased the adjusted EBITA in all business areas. And the Data Center improvements, you can see there SEK 22 million in the chart. It's mainly driven by higher volumes in our Data Center business. And for other, the increase in cost in other, it's mainly related to costs for being a public-listed company. If we then move over to the next slide, it's Slide #10, it shows the 6 months' performance 2018. If we look at the order intake, we saw a decrease of 11%. Our net sales increased 9%, and we posted a adjusted EBITA of SEK 326 million, which is down 3% compared to the same period previous year. The margin -- the adjusted EBITA margin was 9.2%. If you look at the cash flow from operating activities, the cash flow was weak in the quarter and also year-to-date. And one of the main reasons in the second quarter is that we have late payment from a large customer. The total is SEK 120 million, and that payment will come in the -- it slips over the -- into the third quarter, and it will come in the end of July. We also saw some reduced advanced payments in the quarter as a result of deliveries, mainly out of -- from our Data Center business.
Okay, thank you. We will now move over to some more detailed presentations, business area by business area, and we move to Page #11 and start with our biggest business area being Air Treatment. Air Treatment, as you can see, order intake has been coming down on a year-over-year comparison. And in terms of our segments, our segments in Air Treatment, where we have seen some weakness, has been on the Industrial -- in the Industrial side as well as in the commercial side. Looking at it from a regional perspective, we can see that both Europe, Middle East and Africa and Asia Pacific have been quite strong, especially Asia, whilst America has been weaker in both these areas. On the Industrial side, this is in line with our expectations and our estimates, and we also need to remind ourselves that we had some really big orders also in the Air Treatment side in the first quarter -- in the second quarter of 2017, which we just need to be aware of, making the comparison a little bit tough. And on the commercial subsegment in America, it's relating to the supermarket business and our client, Walmart, which has been lower. So that is on the order side. On the net sales side, we see a similar development where Europe and Asia has been strong, America a bit weaker, but Industrial and Components in the segment dimension have been the drivers of actual growing net sales year-on-year. And when it comes to our earnings level, we have an improvement in adjusted EBITA, and it's mainly thanks to the improved production efficiency in our Mexican operations that have been able to offset some of the negative impact of the declining supermarket sales that we saw in the quarter in America as well as some raw material price increases. So that is the Air Treatment summary.And we'll move over to Page 12 where you can see the quarterly trading pattern for the Air Treatment business area. It goes back to 2015. And for Air Treatment, as you probably remember, the first quarter is normally the weakest quarter, and you can see that clearly in this graph. And then it's -- it follows by much stronger quarters and sometimes we can see really strong quarters in Q4. And for the second quarter this year, you can see that the margin was mainly on the same level as previous year or roughly at the same level. And this brings us to our second division, AgHort, on Page #13. And here we can see that both the order intake and net sales grew at healthy levels. Order intake grew, thanks to again, the Swine segment in China. And America continues to be weak when it comes to orders. If you look at the net sales growth, we can see that here we have various projects in both EMEA, but mainly Asia Pacific growing well, whilst, again, America has been a little bit lower. Our earnings level has increased, mainly driven by the volume growth, but has been a little bit negatively impacted by the lower volumes, relatively speaking, in the U.S. and also some investments that we've continued to do in our MTech software business that we are building for the future. And as we have said a couple of times here, the adjusted EBITA number of SEK 81 million includes this restructuring cost of SEK 5 million, and we expect to see benefits of this restructuring kicking in from the very end of this year in terms of run rate savings.
Okay. And then we move to Page #14, where you can see the quarterly trading patterns for the AgHort business area. We see a clear seasonal pattern where the second and the third quarter are the strongest ones. And if you look at the margin in the second quarter this year and the -- which is 14.5%, and if we adjust for the onetime cost that we had in the quarter, we are in line with the margins for the second quarter previous years.
Thank you. And now we move over to our Data Center business area on Page #15. And here we can see the swings, again, very emblematic of this lumpy business where order intake is down by 70%. So even with order intake at SEK 167 million, the comparison compared to large -- last year becomes brutal because we had these 2 big orders, one in the U.S. and one in Europe, amounting to over SEK 500 million. So heavily down on order intake. Net sales, on the other hand, heavily up, thanks to the phasing of deliveries, but also thanks to the improved production efficiency that we managed to achieve in our European manufacturing operations for Data Centers in Belgium. We have then turned the business into profit in terms of adjusted EBITA and the margin has also increased, mainly driven then by the volume growth. We do have and we admit that we have limited visibility regarding the timing of the future orders, and it does create some uncertainty when it comes to our net sales and our deliveries for the later part of 2018. So increased level of limited visibility.
Okay. And then we move on to Page 16, and we look at the quarterly trading patterns for the Data Center business area. Data Centers, it's a lumpy business and it's driven by large projects. There is no seasonal pattern in this business, and we can see here in the graph that we posted a profit in the second quarter now, which was the second quarter in a row with profits.
And we wanted to provide you with a little bit more description around the Data Center market and what we're doing in this market. So we move to Page #17, where we will describe the latest in terms of market development. We do continue to see high growth in the Data Center cooling market and the build and the construction of data centers around the world. We see a bit of a polarization here where we see the market moving more into hyper-scale type of data centers, providing a lot of cloud services. And we also see colocation data center operators providing this service for more of the digitals. So that's one thing we see in terms of a theme. The other theme we see is that we see the emergence of so-called edge data centers. These are data centers that are smaller in nature, and they are much more closer -- have a closer proximity to the end application. And the reason for this is that when it comes to latency-sensitive applications, you just physically need to have service closest to where the data is needed. So we see these 2 developments. This then translates also to some implications for how we see cooling technologies developing in this marketplace. And we see an increased focus from customers when it comes to flexibility, lead times, scalability and capital cost when it comes to their investment, also when it comes to cooling equipment. We also see a development where we see an increased demand for so-called dry solutions, where the consumption of water is significantly less than you see in the mainstream evaporative cooling solutions today. And therefore, we also see new competitors entering this market, and we've talked about this earlier. So competition -- competitive pressure is increasing in the marketplace and also leads to some price pressure. And when it comes to these big orders that we get from digital clients -- mainly digital clients, the visibility of the timing of these orders have become more uncertain. When it comes to our actions and our strategic initiatives on the backdrop or with this market development as a backdrop, what we are working on then is that we are broadening our product offering and our product portfolio to this marketplace, and we have earlier already talked about SyCool being a new energy-efficient and leading solution addressing this need for less water consumption. And as you probably remember, is that SyCool does not consume any water at all, which we think is going to be a cracking solution in the marketplace. We also work in other areas in order to strengthen our product offering to these types of customers. We are expanding and trying to diversify our customer base where we do not only rely on big digitals, but actually expanding it to other customers. And as we have mentioned before, we have continued our investment in production capacity in China, and we, today, have a fully capable manufacturing facility outside Shanghai to be able to supply the Asian theater with data center products. Brings us to Page #18 in our Mist Elimination business. Here, we have growth in order intake, and we wanted to highlight this because, as we said earlier, we have been able to create traction in these important segments, Process as well as Marine scrubber subsegments. And this was part of our strategy to focus the business, making it less dependent on coal flue gas desulphurization. So this is good use, being able to post increased order intake of 12%, specifically in these areas. However, sales are down because of still projects around FGD and specifically in China being lower. But even with this sales drop, we do have profit increase, and that is mainly, at this point in time, in this quarter, it's relating to cost reductions in the business area.
We'll then move to Page 19, where you can see the quarterly trading patterns for the Mist Elimination business. There we don't see any seasonal pattern, and then you can see that the margins are down. And this is a result of lower net sales, and this is mainly related to the coal FGD market in China where we see much lower volumes over the last quarters than we have seen before.
Thank you, Jonas. And that brings us to Page #20, which is the summary of what we have talked about. And the summary is low order intake in the quarter -- in the second quarter, driven mainly by Data Centers, but also in Air Treatment. However, we expect orders to pick up during the second half, and this is mainly also in the Data Center area. Strong net sales in the quarter.Increased earnings in the quarter year-on-year comparison and contributions from all our business areas, including Services. And for the remainder of the year, we expect to continue to be able to gradually improve the group's year-on-year performance and earnings. Thank you.
[Operator Instructions] Our first question comes from the line of Graham Phillips of Jefferies.
My questions are around Air Treatment and Data Centers. Just, first of all, on Air Treatment, could you give us a little bit of feeling about where margins are going in this division? Now I know we've cited the weaker mix but if my memory serves me correct, I think we started to talk about weaker mix already in the second quarter of last year. So wondering when that starts -- the sort of have already worked through. I know we've got higher R&D costs coming in, and again perhaps some order of magnitude there compared to last year may be helpful. And of course, with the very strong growth you keep reporting in Service, and of course, Service is mainly only in Air Treatment, why aren't we seeing better margin progression in Air Treatment?
Yes, I can start with answering some of your questions. If we look at the margin development in Air Treatment, of course, we have seen the commercial subsegment being quite weak. And as you know, it is a very profitable subsegment for us. So as long as we see lower levels in that segment, we will sort of have a negative impact on the margins for that Air Treatment business. But we have seen good performance in the Industrial subsegment and also in the component business, where margins are quite healthy. The reason for -- I mean, we are growing the Service business, and we are investing quite heavily in the Service business, which has had a small impact or a light impact during the beginning of this year. But we expect service margins, which are much higher than for the product sales or equipment sales, to improve a little bit during the second half of this year.
So what's -- I mean, when you say investing, so that's separate -- when you say, is that included in the R&D number? Or is that 2 numbers, R&D plus the -- with these new products coming out of Air Treatment plus also investing in Services that means more locations?
Well, more service technicians, more people in service in order to drive the service business and growing the service business. If you look at Air Treatment where we have had the investments, are within R&D, to develop new products, it is within China -- the Chinese market where we have seen very strong growth. So we have invested in that market, and it is in Services. So it's in those 3 areas where we have the main investments in the Air Treatment business.
So when will -- when do you think you get the benefit coming through in terms of margins of all those actions? And once again, the comparison on the mix start to work out because it's, as I say, it was already being spoken about in the second quarter last year.
Well, as I said, for the Service business, we expect it to pick up during the second half. With the commercial subsegment, I think it's more difficult because we have quite core visibility when it comes to Walmart and when they sort of will start to invest and when the business will pick up. But I mean the installed base out there is huge and eventually, they need to start to retrofit equipment. So it will come. But when it will come, we don't have that visibility today.
Okay. And on the SyCool market, have we had any interest in orders? And how -- when -- how big is that market? And when could we perhaps see orders on that product? Is that more focused on edge or on hyper scale?
No. It's going to be -- our existing product portfolio when it comes to our indirect evaporative cooling solutions is more focused on the hyper-scale side and less addressing the edge side. When it comes to our SyCool products and the different variations that we are developing for SyCool, it's going to be able to address both subsegments. When it comes to the timing of SyCool, we already said earlier that we expect to be able to get orders in the beginning of next year and we will be prepared for production towards the end of this year.
Our next question comes from the line of Agnieszka Vilela of Nordea.
Just to the touch upon your opening remarks, did I understood it correctly that you expect the order intake for the group to pick up in the second half of the year?
That is correct, and we believe -- we expect that -- notwithstanding the lumpy nature of the Data Center business, but we do expect that orders will pick up during the second half of the year versus the first half.
And what will be driving that?
It will mostly be the Data Center business.
Okay, perfect. And then -- there, however, you say that you're a bit more uncertain about the timing of these orders appearing in your books. And the question is, for me, is it only the kind of timing issues that you see right now? Or do you rather see that maybe the market is getting, as you also say, a bit more competitive and maybe some of these orders will not land in your pipeline? What is happening there?
Well, I think that we've all -- I think we've -- all the time we've talked about a market that in the beginning of this period that started already in 2015, we were going to see [ one loaded ] very strong growth and then we would get more of a normal saturation or maturing of the market. So we do believe that we're moving into a phase where the market is maturing a little bit more. We also see -- as we said, we also see -- thanks to the still good and strong underlying growth in the market, we still see more competition coming in. And therefore, we are highlighting the fact that it's difficult for us to see when are these orders coming in, in which quarters are they coming in? That is a difficulty that remains and creates uncertainty for us.
Okay. Then maybe if you could touch upon the AgHort business. Do you see any implications of the trade wars on the demand already? Or do you expect anything to happen?
No, we haven't seen any so far. But I mean, of course, we are worried about higher -- if it will be a trade war or not, I mean -- and we are worried about -- especially I would say our U.S. business because we know that we are -- or U.S. farmers are exporting quite a lot to markets like China and Mexico, for example. What we have seen lately is actually that investment in Mexico in the AgHort area is actually increasing a little bit, but we haven't seen any negative effect so far from the potential trade wars.
Okay. And then the last questions from me, you mentioned the increased raw material prices affecting your margin in the quarter. Can you quantify the impact? And also, can you remind us what kind of mechanisms you have in place to offset that? Can you, for example raise your own prices to the customers?
Yes, we saw a negative effect in the second quarter and it was actually accelerating a little bit in the second quarter compared to the first quarter this year, and it's mainly related to that we had some hedges in the first quarter that ended during the second quarter. And we saw -- on the direct material, we have a negative impact of roughly 1% of the total standing in direct material, and we expect that to continue during the rest of this year, roughly on the same level. What we do, of course, is to try to increase prices to customers, so we have initiatives in basically all the business areas. And then, of course, if we have large contracts like in Data Centers, we commented that we had a negative effect in Data Centers, we are not able to increase prices on contracts where we actually work and deliver. And then, of course, we can renegotiate contracts when we get new orders. But we have a negative impact on contracts [ et cetera ] where we actually have won, and that we are sort of delivering on.
And our next question comes from the line of Kenneth Toll of Carnegie.
So I have 2 questions, please. One is that you say that you expect orders to pick up in the second half of this year. So that point to that the sort of discussions of orders in the Data Center are still very active in that area, right?
That is correct, yes. A lot of activities ongoing, yes.
Yes. So you don't think that it's a slowdown in the investment cycle in Data Center as a whole for a while?
What we think is -- further to my earlier comment, is that this high growth that we saw starting from 2014 and '15, that market is maturing a bit. So we're going to see less growth than we've seen at the very outset of this market boom. So there's going -- a bit of a maturing of the market, but still at healthy growth levels.
Great. And then the other question is on the U.S. AgHort side, you said that some U.S. farmers are exporting products outside of the U.S. and so on. Do you think that might be a reason why investment in the U.S. is not really taking off big time?
No, I think that's more related to the layer segments that we have talked about earlier and the cage boom that we saw during '16 and mainly during the first 3 quarters in '16. And we are expecting to see a second wave in investments, but that has not materialized yet. And we don't have visibility when that will start actually. So that's -- I would say that's the main reason and not trade barriers and things like that.
And our next question comes from Anders Roslund of Pareto Securities.
Yes. I had a question regarding the Industrial part in Air Treatment. Your outlook of better order intake for the second half, is that also related to Air Treatment? And a little bit, could you elaborate on the Industrial -- U.S. Industrial part there, how will that look in the near future?
Yes. Pertaining to our comment around second half order intake improvement, as we said, it is mainly related to our Data Center business, that's what we expect. When it comes to our Air Treatment business, we're going to see a more -- we believe we are expecting a more stable development when it comes to order intake overall. On the Industrial side of Air Treatment and U.S. specifically, we -- as we said, order intake is down mainly in the commercial, but also in the Industrial side for Air Treatment. And looking at our core segments in pharma and electronics within Industrial -- and it sounds a little bit presumptuous to start explaining things with hard comparables from last year, but we did have some really important and bigger projects in Q1 2017. So generally in the U.S., we all are in line with our own estimates when it comes to Industrial and order intake, but it is, as a matter of fact, in comparison, it's lower than last year.
Our next question comes from the line of Mats Liss of Kepler Cheuvreux.
Just coming back to Data Centers there, and you -- well, if orders are difficult to predict now. What about the flexibility in production? Have you sort of -- could you just update me on that one and if you are sort of preparing yourself to maybe -- sold out production...
Yes, I know, you're actually making a very good point, and we should have highlighted that earlier. The -- it's not the quantum of sales and the quantum or the millions of SEK that we're invoicing in a specific quarter that defines our ability to make money, it's also how this affects the loading across our different manufacturing plants. So it is complex. So of course, generally speaking, higher sales helps us to be profitable in Data Centers, but the whole phasing of when and in which factory we can keep our production lines busy becomes defining points for our profitability, and that is why this visibility of when this order play in becomes a uncertain activity for us.
So even if you sort of -- if there is some certainty towards the end of the year now, you don't expect -- well, profitability and capability of production have you? You don't need to make any adjustments at the moment, but will you do...
Well, when it comes to our order backlog, the -- when it comes to the invoicing and the deliveries in Q3 and the planning of production for Q3, we have quite good visibility of how that's going to develop. Our uncertainty relates to the fourth quarter of this year, depending on how that loading of our 3 factories will actually play out for the fourth quarter. That's going to define the level of profitability for us in Data Centers in the fourth quarter, and that's the uncertainty we have.
But you are prepared to some extent, and I guess last year, you had some impact there during, well, fourth quarter at least...
Yes, we're more prepared than we were last year when we were caught in the headlights with some operational issues in the year.
And again, you also mentioned there are some restructuring there in AgHort, and will there be more to come during the second half of restructuring?
Yes, we will look into other areas. We haven't taken any decisions yet, but most likely I think we will probably announce something during Q3, but it's too early to say. But I mean this is normal business for us to sort of streamline the organization to be more efficient and so on. So it's nothing big and nothing unusual for us.
Okay, great. And a final one on currency there. The year-over-year impact during the second half will be more positive, I guess, given the current rates.
Yes, we had a positive translation effect on net sales and order intake in the -- we have a -- we had a positive effect in the second quarter. It was negative in the first quarter. So the currency rates that we have today, it will continue to be slightly positive.
[Operator Instructions] And we have one further question coming through, that's from the line of Oscar Stjerngren of Danske Bank.
I have 2 questions on China, please. Firstly, on the ag side. When it comes to Swine, can you talk a little bit about the sustainability of the investment boom that you're seeing in Swine? Do you think that will continue? Or where do you see that going? And secondly, can you please update us on the marketing work when it comes to Data Centers and capturing orders for the Chinese Data Center plan. Have you secured any orders for that plant yet?
Okay, I can start, Jonas, and you can fill in. If we start with the Swine dynamics in China, this has been a market that we have specifically focused on since a while back, with large food integrators and food producers recognizing the need of climate to improve their productivity for Swine production. So it's a recognition from the customer base that climate really is important, and that's been the main underlying driver. During this period of time, we have seen pork prices actually come down in China, but still with continued investments in infrastructure through these food integrators. And we -- Oscar, we've actually been a little bit worried about the sustainability of these investment levels with the low pork prices in the markets. But what we have seen recently then is that we've actually seen the pork prices improving over the last months. But I think that you are -- we don't have a crystal ball on this. We have seen sustained strong levels of investments, pork prices have come down, but have churned up a little bit. But I mean that is something we're keeping our eye on in order to understand, and we're preparing ourselves if the market would turn down a bit on the Swine side in China.
That's very useful. I just want to understand the dynamics.
And Oscar, I can also add to John's points here that we are investing now in China within AgHort and other subsegments as well, and that we have been doing that for a while. But I mean, we have increasing -- we have increased the pace a little bit to be stronger also in the poultry segment, for example.
When it comes to the marketing work in China and Data Centers, this is now the -- it is a big opportunity for our type of technology in China as well. And if you remember, we've been working with direct evaporative cooling around the world. We've worked with indirect evaporative cooling. And indirect evaporative cooling is used in markets where the air is more challenging. China is, unfortunately, one of these markets where the air is challenging, where indirect evaporative cooling, we believe, is a very good technology. But as you also remember is that when we enter a new market, it's quite the long process of actually gaining customer acceptance around new technology and so on. But we have made progress in this area, and we're quite optimistic about the opportunities in China. And we are working on a number of areas in order for us to actually be able to win our first orders, and I think the first orders of evaporative -- indirect evaporative cooling in the Chinese market. So we're working hard, Oscar, but it's too early to say when we're able to start announcing orders.
Okay. But in the meantime, we use that plant as a leveling factor for the remaining, if you get the load-up in the Data Center as a whole?
Yes, we are preparing the factory. We have already produced units there. And remember, we can produce in China not only for China. We can produce for the Asian theater as a whole.
[Operator Instructions] Okay, there are no further questions coming through. So I'll hand back to our speakers for the closing comment.
All right, thank you very much everybody. And again, thank you for taking the time out to meet with us here on a sunny morning in Northern Europe. Thank you very much, and we wish you all the best. Thanks. Bye