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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, welcome to NIBE Q3 2021 Results Presentation. [Operator Instructions] Today, I'm pleased to present Eric Lindquist, CEO; Hans Backman, CFO. Please begin your meeting.
Thank you. Good morning.
Good morning.
Well, we will organize this presentation as before. We start to present our report relatively few minutes and then, it's opened for questions and hopefully good answers. And we will try to end the meeting at 12 o'clock. So thank you very much for calling in. I start, it's Eric talking here now.And we are, of course, very pleased to note a very strong first 9 months this year. And the order inflow has been very, very strong. And as before, it is very much the sustainability profile that is benefiting us when it comes to the good order inflow. But also something that's happened during the pandemic where people have started to refurbish their homes in a way that perhaps haven't seen in the more recent years. And as good as that is, we're also noting of course as we write and report that our supply chains have been disturbed. It seems like our sub-suppliers not only in this industry, but in most industries, as we understand it, have not really been able to keep up with the demand. And of course, we are a little bit surprised ourselves to a point. So we can't only blame sub-suppliers. I think that we also have to realize that we could have been more accurate perhaps or more bold in forecasting things that we shouldn't only throw stones at our sub-suppliers.But nevertheless, it seems like they have not been able to keep up with the demand. And it's not only the production. It's only the shipping side as we all know that is not only delayed, but it's also very costly. And on top of that, of course, we have those sharp price increases, and it's impossible for any manufacturer, I think, to speculate in price increases. So we, of course, have to observe what kind of prices we will be hit by and then, eventually we have to increase our prices. So there are always going to be a delay. And we also see that, of course, in our report that we've been hit hard by the price increases, whereas still have some time to go before we are -- have fully compensated for that.But if we look at the numbers of course, the strong growth organic, and we've had some headwind there with the Swedish currency still. Of course, it was a very -- sort of very weak situation during the pandemic, and it has now strengthened, so -- and of course, also a little bit cumbersome for the figures. And the operating results and the operating margin, they are showing a very pleasing development. And of course, that is due to the growth, but also strict cost control and the focus on productivity, although the productivity side has also been suffering due to shortages of components because we have not been able to run our factories as, should I say, it's flexible and as floating as we are used to. So there are many negative factors when material doesn't come in as expected.Acquisitions, of course, during the pandemic, we weren't so successful in acquiring companies. And it's starting now to come more into a period when we can start closing ongoing discussions. So far 2 this year, and of course, we have several more ongoing. We just had a look at the figures themselves, healthy growth here, and the organic growth is, of course, larger than this since the 15.3% is also hit by the currency. The gross margin on the whole 9-month period, we've been able to keep up that one, but as we're going to see in the last quarter, there, we are suffering a little bit more. And the operating margin is up some 38%, which again is due to cost control and also we mentioned before. And you see that little star there, so that now we talk about results without the revaluation of additional considerations, which we added last year and that all the figures we talk about now, they are the sort of net figures.Operating margin up from 12.1% last year to 14.5%. And here, again of course, it's a very pleasing jump, but we have to always keep in mind that last year was not really an ordinary year with an extremely weak first part, particularly the 3rd March to June, and then the recovery. So the pleasing figures of course, they should be viewed in that perspective. But nevertheless, it's a healthy growth and the operating margin as well as -- and the profit after net financial items, which is very pleasing to us naturally.And if we just look at the quarter as such, here, we see that the market growth is still healthy and the gross margin we see here is slightly below last year's third quarter. And there, we see more the price increases have hit us a little bit harder than we would have liked to see. Operating profit is up again, and the operating margin is again exceeding what we had last year. And last year's third quarter was extremely strong. It's almost like all the demand that we lacked in the first 4 months, I talked about March to June, came back in the third quarter 2020. So we are quite pleased that we were able to, after all, beat those figures. It wasn't so easy we thought when we entered the quarter.If you have a look at the graph here, I think that the bar on Q3 illustrating that we are suffering from the shortage of components. Typically, that bar is now extended a little bit above the Q2 2020; of course, it was extreme, it was like 10%. So typically, it will be like 4% or up to 6% of the deviation there. And again, that's an illustration that we have not been able to deliver as much as we would like to. Order intake has been, as we mentioned in report, phenomenally strong, but also delayed orders from our side. It's definitely on too high side.Result-wise, yes, that's pretty much in line with the graphs that we had in the past. Of course, had we more invoicing, the bar here on Q3 would have been longer naturally. But you can't really ask perhaps for everything being perfect. It is that now when the world is going sustainable, we would have liked to demonstrate that we are ready, and we just believe that the world is now going in this direction, and everyone has been smart enough to help companies going in this direction.Now, just a few comments about the business areas. And of course, The NIBE Climate Solutions, they didn't suffer that much really during last year. There were a few weeks only where order intake was down, otherwise pretty much was pumping in an ordinary way. And when it comes to the growth during the first 9 months, it's particularly Europe that's pleasing. Practically, all markets are going -- are having a strong demand and that again coming back to the sustainability idea.We have launched -- we have been able to launch new heat pump production or generation with the new refrigerants and also with better performances. And we've been showing these in a different way. Since shows have not -- the fairs have not been allowed, we've been having trucks, large trucks out on the roads, demonstrating the product in different countries, Germany, France, Holland and so forth, and naturally also up here in the Nordics. It's actually a quite efficient way of demonstrating products. So it will be also used in the future.We also started during the year here, very ambitious investment program because we see that eventually, our capacities will be limited if the volume increase will match our expectations. So we have to be ready as far as equipment and factories are concerned and also laboratories and visitor centers and so forth. Again, I mean, I already have been dwelling on that. And the shortage of components, we believe that's sort of a shorter time-wise phenomena, but nevertheless right now, it's annoying. And also the price increase is here naturally, and we have not been able to match the price increases that we've been hit by with our own prices, but that is to come naturally. But despite all that, it's an improved operating margin. Again, the growth, of course, is behind that and still a very good cost control. So there's always in the background of our 3 business areas.And Climate Solutions, the figures there, they take a jump from 14.2% in operating margin up to 16.3%, which is, I think, the highest ever we had. And as far as operating profit, it's more than SEK 0.5 billion jumped from the previous year. So that is naturally a substantial improvement here. And the volume increase of 13% is matched by almost 30% increase in operating profit. So we can't complain too much about those figures.And just a quick look into the business area, NIBE Element. And of course, here, we have sort of a sense into all different industries using elements or using electricity. And we can say that practically all have been growing, which is very pleasing to see naturally. But particularly, the sustainability side of the product categories and also the semiconductor industry, they really continue to prosper for us, and we have received several questions because there was an article in one of the business magazines in Sweden, how could we possibly benefit from the semiconductor industry blossoming. And of course, to say the reason is that we supply the equipment manufacturers with our component. So when now the semiconductor industry is having a good time, in that particular segment, we are able to supply our components to -- again to the manufacturers of machinery in those gigantic factories. But here again, of course, components and raw materials have been hindering our growth. We could have grown more, delivered more have we been able to receive more goods and materials.And just as with Climate Solutions, sharp price increases that we've been hit by, we've not been able to fully compensate for that. So that's why more price increases will occur. But nevertheless, we've been able to improve the operating margin. Again, the growth has been enough to sustain the improved operating margin in combination with good cost control. And if we just have a good -- a quick look at the figures, here again, now we are above the 10%. It was cumbersome for us last year where the pandemic was at its peak. And now, we are back solidly around a 10 or above 10. And it's a substantial, as you see, should I say, jump in the operating profit, whereas the volume is up some 16%. The operating profit is almost up 40%, it's up 38.9% [ of the daily growth ]. Now, it's very pleasing to see those figures as well.And finally, the NIBE Stoves, they took the hardest hit when it came to the pandemic. Then, of course, they come back remarkably strong in all markets, not only in Europe, but also in North America. And of course, we continue to spend quite a bit of money on the future demands when it comes to wood burning and the combustion there, reducing particles. And that's something we really look forward to be able to launch in the market.Again longer lead times, we are very sad to note that many customers have been disappointed in our delivery performance. But again, that's due to the shortages of components coming to us. Same, should I say, phenomena again with price increases that have been hit as hard. And we, of course, have increased our prices, they're going to take some time before they fully apply. But again, we shouldn't complain because the operating margin is still up there, and if you look at those figures, of course, the Stoves during the period, they've grown with almost 30% volume-wise, again comparing as to weak period. And it's remarkable to see, of course, the operating profit growing from SEK 111 million to SEK 270 million, it's almost -- I think it's beyond 140% growth.So, I mean the figures I think when we look back at 2020 and 2021, further when we are back in or when we are in 2022 and 2023, I think we're going to view -- have to view 2020 and 2021 as exceptional years. And of course, the pandemic was very exceptional and also the figures are sort of twisted, some quarters being extremely strong and some quarters being on the contrary, extremely weak. Some pie charts to finalize. Of course, it's pretty much the same distribution of sales; Climate Solutions, almost 2/3; and the Elements a little bit more than 1/4; and the remainder Stoves. And on the results side, the Climate Solutions typically little bit above the 70% mark, and then Elements 20% and NIBE Stoves some 8%.And the final pie there would be the geographical distribution I think. And there, we can see that Europe has -- and the Nordics, they've taken over more from the North America, where we have not had that strong growth. I don't know whether that pie chart is coming up. Yes, here it is. So particularly Europe has had a very strong growth. And that is, of course, due to the fact that in large countries like Germany, like Holland, like Britain, like France, now really start to move in the direction of sustainability. Even if we grow in the Nordic parts, we are a little bit outgrown because of the demand in Europe. In North America, it's coming back, but we haven't been able to match the demand growth in Europe.So I think that's what I can mention. I don't know whether it was so short. But it wasn't anyway short, Hans.
All right. Thank you, Eric. Yes, I will continue with a little bit of number crunching, but try to keep it quick so we can open up for the questions. If we take a little deep dive into Climate Solutions, as Eric mentioned, we have a similar pattern here as in the previous quarter in the sense that the sustainability theme really drives the business and where we've seen a very strong demand in mainland Europe, but also the Nordics and somewhat weaker in North America. The difference to the second quarter is, however, that the comparables now have become a little bit more difficult, although Climate Solutions is the one that's least affected by this in a way.Sales up to SEK 14.7 billion, almost up from SEK 12.9 billion, the increase there of 13.3%. And there, we had a fairly considerable negative currency effect into that. But we were able to increase the operating margin slightly and then, very pleasing to see as Eric mentioned, the growth in the operating profit there of close to 30%, jumping as 2 percentage units on the operating margin, which leads us to on a rolling 12-month basis, be up at SEK 19.7 billion there, a growth of 12% compared to full year of 2020; and with an operating margin there above the 16%. So it's overall been a very pleasing performance so far.And the third quarter was also nice in the sense that we grew by some 12% and with a much less effect from the currency there, but with very little contribution from acquisitions as we have not had so many of those during the pandemic. But you do see the effect on the gross margin side. It's down almost, well, 2 units there and which really is connected to the price increases we have seen and the juggling we've been forced to do, you can say, to keep the production up and running. So the quarter as such came in on the exact same margin as the one from last year.In terms of distribution of sales, and what Eric mentioned there is that Europe really has grown stronger, Mainland Europe, you can say, stronger than the other parts of the world. So that portion is now 52%, up from 49% a year ago. And whereas North America has come down to 18% from 22%. And with the Nordics, it's fairly stable, it's grown 1 percentage unit. So that's the most stable business area you can say in the sense that it was one that was the least affected during the pandemic.If we move into NIBE Element, we've seen a very strong growth there across the board, but specifically driven by the segments with a clear sustainability focus, plus semiconductor on top. However, also here, the supply chain issues have had an impact on the performance.Looking at the numbers year-to-date, sales came in at SEK 6.2 billion, up from SEK 5.3 billion, which is an increase of some 16%, but also here with a fairly substantial negative currency impact. So the underlying growth in local currency was actually higher. But very pleasing to see then the growth in the operating profit, up with close to 40%, 38.9%, up from SEK 469 million to SEK 652 million, bringing us up to the margin again above 10%. But we should not forget that last year in Q2, the business area had a drop of 15% in sales. And then, on a 12-month rolling basis, we're up to SEK 8.1 billion, a growth of some 13% and with an operating margin there just above the 10%, which we strive for.In the individual quarter, the sales were up by some 19% and here, the strengthening of the Swedish currency has led to the fact that acquisitions and currency basically take out each other, showing a very good underlying growth you can say. But also here, gross margin has been impacted negatively by the price increases that we've seen, but with -- thanks to good cost control in other areas, being able to protect there a margin of 10%, so up slightly from last year. In terms of distribution of sales, this is just as before, our most global business area and where sales are pretty stable also from last year in terms of distribution across different areas.NIBE Stoves as for the first 9 months showed an unusually strong demand in all markets really, of course, largely driven by the pandemic in the sense that people have been spending a lot of time at home and taking the opportunity also to renovate their homes, when they have not been able to travel. But also, here the shortage of components has hindered us from really delivering what we could have delivered. So currently, the waiting time is pretty long for Stoves.Sales came in at SEK 2.1 billion for the first 9 months, up almost 30% from last year, but also here I mean, Stoves was really badly hit in the second quarter, specifically of last year, losing some 17%, but that has now then come back. And due to this increase in sales, we have actually here been able to increase the gross margin on a year-to-date basis and more than doubling the results up to 143.5% that Eric mentioned, up from 111% up to SEK 270 million bringing the operating margin, doubling that basically from 6.7% to 12.6%. But the comparison to last year is not really fair in a way.On a 12-month rolling basis, we're just above the SEK 3 billion mark in terms of sales and with an operating margin of just 14% or exactly 14%. The quarter as such was also strong. It was up from 10% with very little effect from both currency and acquisitions, making it as possible to also increase the gross margin slightly here as well and bringing up the operating profit as much as 30%, so up from the SEK 78 million to the SEK 103 million and landing then an operating margin of 13.8%. So overall, it's been a very strong year so far for Stoves and much stronger in Q1 and Q2 than what we are used to. It's usually in Q3 and Q4 where everything happens. In terms of distribution of sales, it's a similar picture as previous years where Europe, Mainland Europe is close to 50%, the Nordics is 1/4, and then almost 1/4 in North America as well through the acquisitions that we've made over there.If we then just quickly jump into the balance sheet, there are not much or not many changes here. I mean, they typically come from larger acquisitions. So here, it's just the continuous buildup, you can say, of cash and equity, although we have been building inventory as well during the last quarter. And if we immediately jump to the cash flow analysis instead, you can see that we've generated a healthy portion of cash from the operating activities close to SEK 3.6 billion, up from SEK 2.67 billion last year. But the change in working capital there of minus SEK 1 billion or SEK 1.1 billion is solely from buildup of inventor, where we tried to secure raw material and components for the continuous production. The changes in receivables and payables have basically taken each other out. So it's very much related to the inventory buildup.Then, we continue to invest in current operations as before. And by saying as before, it's what we have been doing now for the last year or so, where we've increased investments in factories, in building more capacity into our operations to meet the demand. So it's slightly higher than what we had up until 2018 where we typically would be slightly below our depreciation. Currently and in the coming year or so, we will be above.Just a quick glance on some key financial figures. I mean, given the performance so far, I mean, they develop, of course, in a good way. The investment in total have gone down, because we have not had that many acquisitions. But as I mentioned, the investments in current operations continue at the level of around SEK 800 million. And we have a good portion of cash available, and then bringing down our interest-bearing liability further and having a net debt now, which is below 1. And that coupled with the good equity assets ratio, we have a good position to make acquisitions now when things start to move again.And the working capital, well, I just mentioned that in a way, I mean, we are building up inventory and the level we had when we left 2020 there or 12.9% was clearly too low. We had sold out basically everything. And that's why we're trying to build up inventory again. Things are selling out quickly in a way. So it's a lot of raw material and components that we have been building up.And then, just summing up with a very last key financials. They have developed nicely across the board, return on capital employed up from 12% to 15.7%; return on equity up from 13.2% to 17.6%. Net profit per share has also increased. And if we were to include the revaluation of the addition of considerations for acquisitions, which we, of course, officially need to do in the numbers, the key figures would actually be even better. We would have a return on capital on -- of 17%; return on equity of 19.2%, which is very close to our target of 20%. I mean, we have included those because we seem to have not been generated as other business transactions in a way, but from a bookkeeping point of view, I mean, it's all correct of course. So those are our official numbers. But that sums up the statement from my side.And I guess, we will open up with questions, unless you would like to add something, Eric?
No. It's fine. It's very clear. I think it's -- now, we have some 28 minutes for questions. So please go ahead.
[Operator Instructions] Our first question comes from the line of Gustav Osterberg from Carnegie.
First off, a question on the M&A environment here. Are there still any clear bottlenecks in terms of travel restrictions, etc., that sort of prohibit you from operating at a higher level? And also, if you could zoom out a bit and talk about industry activity within the Climate Solutions segment, have there been any sort of large changes there in activities over the past 6 months?
Well, I think that in Europe, we've been able to travel. We started to travel already in August. So we haven't had any limitations. Of course, you have to bring your passport or your -- whatever you call that, when you've been vaccinated. And right now, Klaus, our Business Area Director for Climate Solutions, he is in the U.S. So we feel it's not back to normal, but right now, we can travel. And then we haven't been really to Asia recently. And there, of course, we've had difficulties, particularly in the Vietnam, but they also have opened up now, but that's been closed down for quite some time.
And we don't know what's going to happen in the coming quarters when the infection rates we see in the news for many countries.
No, that is right. I mean, it's very difficult for us to predict. It just seems like they accept -- if you are vaccinated relatively recently, then you just show your vaccination, what you call, certificate and then you can pass. I mean, we haven't had any difficulties the last 3 months traveling. And as far as activities are concerned, of course, they are -- as soon as you can start to travel again, I don't know whether you mean from our side, from our side or how we should interpret your question, whether there are other acquisition going on and whether we have been able to --. There are always acquisitions going on, actually. So I don't know which one you are thinking of particularly…
I was sort of asking in relation to what you've seen over the past 12 months? Are you seeing sort of an easing of activity or activity coming back in general in terms of M&A within the…
The answer is clearly yes.
All right. Perfect. And just a follow-up on the product launches within Climate Solutions, where you're talking about the more environmentally friendly refrigerants. Sort of, does that go for the new products, even for the ground source heat pumps, or using R290 there as well?
The difference, I don't know whether we like to disclose that, particularly, but it's not an initial step R290, but it's well below the 670 GWP.
All right. Perfect. And then just a final question. It's a positive comment, I think, in the report on an easing sort of from sub-suppliers from a supply chain perspective. Sort of, can you give more color on what's driving that? Is it production of specific components that comes online again? Or is it easing of logistics? Or is it any -- are there any clear drivers here? Or is it a general leasing?
Well, I think it's more we've seen, of course, that there is -- has been a trend that raw materials have gone down or have peaked. I guess that's what we can say. And it has to start there. I mean, if steel goes up, I mean, being used in so many other components, of course, it's difficult to say that the price increases will not continue. But once you see that the raw material is sort of peaking and going the other direction, I think that's viewed as a positive sign.
Our next question comes from the line of Carl Ragnerstam from Nordea.
It's Carl from Nordea. A question on your gross margin. It came down maybe as you said, from 35 or -- yes, from 35 million last year to just above 33 million this year. I mean, how much would you say is pricing? And how much would you say is inefficiencies related to sort of the component issues? And the second part of the question is whether you think that price increase is expected to sort of start to be materialized in Q4 or at least seen a sequential improvement compared to Q3?
Let us sort out those questions, well, which one we can start with. Divide them into price increases and inefficient. I think that the major part is actually price increases. But of course, also inefficiencies, they are substantial when you have equipped the factory with people or operators, and they can't -- all of a sudden, it's a stop in the production. And it's a tremendous blow to productivity. But if you say that we have dropped some 1.8% unit wherever it is, they're very difficult. With more than 50% definitely on the pricing side. I don't think we can be more precise on that.
Perfect. It's very helpful. And also, you managed to take out quite significant selling expenses in the quarter, both as a percent of sales as well as in absolute numbers. Is that purely related to lower marketing expenses, of course, selling expense as well given the pandemic? Or is it also internal efficiency measures, which could be sort of more long term sustainable?
Well, I think that we all have observed and experienced a lot of things during the pandemic now. I don't think that we don't think that we're going to go back exactly to the same pattern that we had before, when it comes to travelling, when it comes to marketing products. We definitely see that we have been trying now a different method as I said on exhibiting products, driving around in Europe, being closer to the customers rather than a lot of the installers coming from Frankfurt or coming from Milan, because that's very cumbersome for operators or for installers to be away for a number of days. But when we visit them, it is easier to attract attention. So that's one thing, of course, being much less expensive.And as far as traveling, I mean, we don't like those Teams meetings, particularly the old square headed in a way, but we will not go back to having those Board meetings, all those meetings we've had in the past physically. Actually got to cut them, if not in half, but at least cutting down to 1/3. So I think as bad as the pandemic has been, as has also demonstrated to us that's not necessarily ever been doing everything correctly. They could be carried out in a more efficient way. So your answer is yes. Some of the savings will continue long-term.
Our next question comes from the line of Pam Liu from Morgan Stanley.
I have 3, please. The first question is to understand the demand driver in Climate Solutions. Would you be able to disclose the revenue split between new build and renovation? It's just because we note that in the key markets where you operate, there had been a surge in new residential building permit at the beginning of this year. We also know that in many countries, particularly in Mainland Europe, there has been new or renewed subsidy programs available for heat pumps in terms of energy renovation. Now obviously, both matters for you, but I'm just trying to understand which of these factors have a more immediate impact for you?The second question is on the component shortage. Would you be able to say which specific components are causing the problem here? And where are they sourced from? Is this a heat pump industry-wide issue or more of a business-specific for NIBE?The third, final question is on margins and how we think about margin going forward. So if we compare margins on a year-on-year basis, obviously, there's a decrease on gross margin, but increased on EBIT margin, I'm talking about Q3 year-on-year basis. So that means that operating leverage is really the main drivers here for the EBIT margin expansion that we are seeing. Now going into 2022, I would assume that your price increase will start to take full effect. I would also assume that at some point, hopefully, the input cost pressure would ease. And let's say, if demand remains strong, does it actually means that we would likely to see your margin continue to expand from the currently really good level already? And how should we think about that?
That was like a machine gun questionnaire, I'd say. Thank you very much. As far as drivers are concerned, of course, the new construction is important. But as a market in total, new construction is typically, I'd say, at an average, perhaps 15% to 17% of our sales. But then it's up to every individual market. But now when we start to look at the growth in the larger countries, of course, it's not only new construction, it's also a refurbishment that's coming about, which is much stronger than in the past. The new construction is always the forerunners. They are taking up new ideas. And that is eventually, should I say, rollover into refurbishment market. But a mature market there, 15% would be new construction typically and the remainder would be refurbishment. I don't know if that answers your questions, but that's an attempt any way.
Yes. Sir, can I just confirm, is that 50% or 15%?
15%.
15% to 17%, yes.
Okay. Got you.
As components are concerned, I mean, we rely on the largest suppliers when it comes to critical components. We are -- as I said, I mean, we are humble enough to say that we -- had we been listening of course, we should have warned our suppliers that the growth should be precise to this. We aren't that intelligent. So that's why we had foreseen good growth, but not the growth rate that we have now and neither I think, has anyone else. So the components that we are lacking are not components typically used by us, but by our industry. But we will not mention any names. We are not using providers or components that are sort of unknown or forming a risk. They are the largest, say, providers of those critical or crucial components. And they've been taken by surprise. So they have their delivery or supply chain issues. But it's a phenomenon, very much shared with the whole industry. That's our understanding.And margins going forward, well, it's no secret that we've not been able to compensate fully. We try to exemplify and clarify that, because you're always going to be a little bit behind price increases coming to you, particularly in the market that we see now. And in some commodities, they forewarn you and say, well, we're going to increase prices at 2.5% or 3% coming quarter 3. But that's not been the phenomenon for most sub suppliers. There's been more sort of very rapidly suggested price increases because they have been hit by sudden price increases. So of course, our aim to bring it back and -- by our own price increases and also by productivity once we are starting to get components in, in a more orderly fashion. All right?
Our next question comes from the line of Phil Buller from Berenberg.
Apologies also if some of this is detailed in the slide. For some reason, they don't seem to be showing up on my screen. But I have a couple of questions, which I'll ask one at a time, I guess. Firstly, I was just hoping you might be able to help scale the impact on revenue that was missed from Q3 due to these supply issues. I appreciate that's a very difficult job to do with any accuracy. But I was wondering if you could give us your best guess on what that delta in growth was in the quarter? Are we talking about 1% or 2% or 5% or perhaps even larger than that? That's the first question.
Okay. Well, I think I've tried to answer that question before. If you look at -- because I think you can look back in our report, if you look back to 2020, then, of course, the difference was something 10%, but that was extraordinary due to pandemic. If you go back to '18, I think the difference was like 4%. And in '19, if I remember correctly, was between 6% and 7% or so. So if we would take something like 5%, 4% to 5% perhaps, I mean, we can't be more accurate than that, but I think that would have been more normal. And that doesn't seem that much, of course, because we are invoicing, if you take those SEK 7.8 billion to SEK 7.9 billion, and you divide it with some 65 days or how many days you had, you end up with some invoicing of SEK 120 million a day. So we talk about 3 to 4 days delay. But of course, once you start to have delays of this kind, it's affecting practically all deliveries. Because it's not that you can stand stiff 4 days. So whereas you can compare, oh, that's only 4 days, it's more much more cumbersome than that. But that's an illustration.Yes. So that's an attempt to answer your question.
That's very helpful. And then also a question on the comments that you made around M&A and the fact that you're all able to travel a bit more freely now, things are getting a bit more active again. The question is around the movement in prices or anything that you're seeing. Obviously, prices seem to have been moving a lot in terms of asset prices, including your own share price. I guess what are you seeing in terms of the transaction prices? And how comfortable are you with those as they stand today?
Well, it's a very sensitive question, but you're correct, of course, that it's almost like people have forgotten their math book at home, if I may joke a little bit, the prices have gone up. So we have to be very realistic about things. But at the same time, we can't hide any losses, just being in Markaryd. We also have to tag along and understand that the market is very prosperous. We have to be out there. And I think it's our model, doing transactions in 2 or 3 tranches. That's been very helpful in the past, and we believe that they're going to be very helpful also in the future, particularly if you talk to companies, where the management or substantial owners, and they like to continue. But of course, we noticed that the prices have gone up, and we just have to be very, very, should I say, sensitive to that phenomena's. I mean, we have to -- we can't be crazy that we're going to just pay anything. I think that in the past, we've demonstrated that we are fairly cool headed. And of course, Hans is mentioning now that he has been gathering a lot of money on the balance sheet. And that we should spend it prudently. But at the same time, when the market goes up, we can sit again and hide. And if we don't like it, and therefore, we won't buy anything. It's a balance, of course.
Yes. I mean, it's easy to get carried away given the valuation we have. We could make many acquisitions accretive in a way, but they also need to stand on their own legs. It's about…
It's encouraging to hear that there's good discipline. And just finally, I'm sure you can't comment too much, but I just want to make sure that I'm understanding the cautionary comments around Q4 being another difficult quarter. We're kind of mid-November, the 6 weeks to the end of the year from where you stand today, looking at consensus expectations for the full year. Do they feel right to you in terms of operating profit in the 4.5 million, 4.6 million range? Or is the comment that you're making around Q4 suggesting that those numbers may be too high? Or are they appropriately based, would you say?
Well, I think that the comment we made in the report, that is as far as we're going to go. Because I think it's -- you're into a very sort of sensitive material now. We like to inform shareholders and investors and analysts you know as correctly and evenly as possible. So I think it's -- it wouldn't be fair to dwell any further on that, if I'm not -- if we are not implied.
Understood. It's more a question just to make sure that we weren't -- I wasn't missing anything around the sequential deterioration in Q4 versus Q3, because Q3 was actually relatively, I would say, strong in the -- given the macro backdrop. So yes, it was just to make sure that wasn't misinterpreted in Q4 common sheet.
Our next question comes from the line of Karl Bokvist from ABG Sundal Collier.
So most of the questions have been answered. I was just a bit curious on your view when it comes to the time line or the rollout of products that you are now releasing to the market with new, more environmentally friendly refrigerants. The products that you highlighted, is this one particular category? Or is it just a NIBE brand? Just to get a sense of the time line for the entire heat pump business of NIBE Group.
Well, it's -- of course, we work intensely, together with the different manufacturers, but we were referring particularly to this launch on the NIBE brand. But the other brands in Europe are also following very closely here. When it comes to exhaust-air heat pumps, we are the only provider within the group of exhaust-air heat pumps. So their CTC and Alpha-InnoTec and WATERKOTTE are providing that. And that's an important factor. When it comes to air/water, of course, that will be -- there will be something we're going to introduce all 4 manufacturers, and NIBE and Markaryd is leading the race.
Understood. And just curiosity on element. If I remember correctly, the companies you've historically acquired that are active within the semiconductor industry are located in North America. I was just curious to understand the sales pattern. Are all of your semiconductor companies located in, for example, North America, but they mainly sell to Asia? Or is it that you're seeing strong demand from regions outside of Asia when it comes to semiconductors?
They are. I mean, they're all head officed in the U.S. That's correct. But they all have also manufacturing entities in Asia. But of course, when we -- the majority of our customers are still located in North America, since the equipment manufacturers is heavily dominated by American manufacturers. So of course, they produce both in the U.S. and in Asia, but the products then typically would go to -- the majority would go to packaged back in the U.S. It's on the respective launch through other companies.
Understood. And in climate, just looking at these different near-term challenges with supply chain and components and cost inflation and everything. But just looking at the entire industry, if -- do you get a sense if there's been any changes between companies such as yourselves with local production or compared to manufacturers that might produce in Asia and sell into the European market, for example?
Well, we don't have precise information about that. So I think that when you talk about possibly some products like air/air. Air/air, like those stand-alone units, they might be -- they might come in from manufacturers in Asia. We don't have so much information about that. But typically, when you talk about Hydronic solutions, which are the prevailing solutions for the European side, then they also produce here in Europe for this part of the products. I think they'll be all fighting same problems, practically all of us. That's our understanding.All right. Well, the timing, wasn't so bad. So it's like 2 minutes prior to 12, right? Thank you for calling in and listening to us. I hope it hasn't been too much hide and seek. We try to be as transparent as possible. And I think the report is also breathing that message. And well, if nothing else is on the radar right now, then we just thank you very much again, and hope you have a nice day, and we talk to each other again if not soon, it will be in February when the first -- for the full year report for the year is coming out, right?
Yes. So it's almost Merry Christmas already now.
Yes, right. So yes, so we see that decorations are put up outside our window here now and the nice trees are coming up and stuff like that. It almost is always a surprise when you see those decorations coming up. And the Candelabra in the Sweden that was for the advent, that is so close, because it's very dark and terrible right now. So we are looking forward to that. So with that said, thank you very much, and you have a good day.
Thank you.