Thank you very much. Good morning to you out there.

Good morning, everyone.

We're going to start like we usually do with me going through some slides and then Hans following up. We hope that this will be no more than 22, 23 minutes, and then it's room for questions.

As this day coincides with our annual shareholders' meeting starting at 5:00, quite a number of discussions and interviews today. At 12:00, we have to stop this session if we are not impolite suggesting that.

With that said, once again, welcome, and let's dive into the presentation. Of course, you've already read the report and the main headlines, or the main numbers are, of course, the organic growth in fixed exchange rate of just north of 7, operating margin 9, and the net debt in EBITDA 2.7, all indicating that we are on the right way.

It's the fifth consecutive quarter when we are reporting positive sales and margins and results. We're very pleased to note that.

Of course, the Swedish krona, the Swedish currency, diminishes that to a point, at least when you look at it just briefly. That's a very solid growth behind there.

Of course, we've been able to fight off the tariffs within Climate Solutions and Element fairly well, whereas stoves have been hit the hardest there. We can say that the world around us, that's of course pretty unstable, and there are typically two reactions that we see among customers.

That's, of course, that the fossil fuel dilemma is once again pretty much pronounced. Then again, people start to look away for other alternatives.

It's also so that, of course, when there are wars and political turbulence, people are a little bit hesitant to spend money, which we also see, of course, on consumer spending, particularly on stoves. The figures themselves, you see the 96 50 here with the operating margin coming in around 9 versus the 8.1 the previous year.

Of course, that's a fairly hefty growth, and also in the profit after financial items. That is, of course, an illustration of the fact that we are borrowing less and interest rates are a little bit lower anymore, which is pleasing, of course.

This graph is, of course, indicating something flattish, but then again, it's not in fixed currency, so that fools the eye a little bit. The profitability goes like this, and that's an indication that we are on an uptick, as we write about.

Coming to Climate Solutions, which is the largest business area, it's a solid improvement both in sales and margin. We've been talking about that for the fifth consecutive quarter.

The pleasing thing is that both in residential and commercial, it's moving in the right direction. Here again, of course, the Swedish krona is shadowing part of the development.

When it comes to residential heat pump of the hydronic kind, the European market has been fairly, if not buoyant, but pretty decent, well in line with what we anticipated and our own growth. Also the heat pump sales in commercial is very pleasing to see.

In those countries, particularly Germany, where they've been a little bit more hesitant if you go back historically, they're really back to a growth pattern now, like Switzerland. The Nordics, we continue up here to have a decent growth.

When it comes to the US, of course, we all know that the tax subsidies were taken away in beginning of this year. We must say that we anticipated perhaps a harder hit than actually happened.

We sort of interpret that as the interest for heat pumps also in the US is to a lesser degree dependent on subsidies, but also a true interest in changing over from fossil fuels to another, more environmentally friendly alternative. What we also see, and we've been preaching about that, that the traditional pattern of first quarter, third quarter, and so on, grows more and more into the second half of the year when it's coming to a crescendo, if we like to call it.

That's really reestablished. There were some years here between '22, '23 when you couldn't really see that pattern.

In '24, of course, when we had that downturn in demand from wholesalers and installers, that wasn't either a real picture of the demand. We are bold enough to say that now we are there to make money on the historical levels again.

That's pretty much shown on the next slide comparing to the 9.2 and 10.3 in operating margin now. We are fairly confident that for the full year, we're going to be up in that range between 13% and 15%.

We just touched the 13 base last year, which was a very, very clear ambition, and I think you see our historical development here. Of course, it's very obvious that we like to climb into that 13% to 15% margin.

That is an indication that we believe that the remainder part of the year also going to be fairly decent to us. Element Excuse me.

My voice is a little bit weak today. I had a cold, and I almost lost my voice a few days ago, but I'm on the go again.

Of course, here also electrification and digitalization, those are the main drivers, whereas white goods and those sectors are more down or more neutral, we can say. Also the heat pump segment is, of course, vital for the Element group.

It's very pleasing to see that Element is coming along fine. Of course, the wars is affecting us to a point, but we've been able to fight that off fairly well.

Swedish krona, the same again, of course, is disturbing the immediate visible figures. For the full year, also here, we're bold enough to say that, well, we should be back within the historical range between 8% and 11%.

That is, of course, viewed here going from 6.2 to 6.6 in operating margin, and also looking at the development last year. There we had a very clear ambition that we should be up to 8.

We missed that with a percentage unit mainly due to some shortages in orders from the semiconductor industry, but that is coming along now. We are fairly confident that we're going to be within that band between 8% to 11%.

On the Stoves side, as we so precisely have explained, it's tougher for us because there the tariffs, of course, in North America, they are in the US. They are coinciding also with a consumer reluctance when it comes to investing in a stove, when they feel on a daily basis that wars and political turbulence are reviewed in front of them.

That's tough enough. Then around Easter, another message came about from the US government when they said that now they were going to increase the already burdening tariffs with 25% on all sales going into the US.

It so happens that we have all our three factories in Canada, of course immediately it will be very difficult to compensate for that. As with the first slide of introduction of tariffs, we're trying to fight those off with price increases and with, of course, rationalization, and also selling more rather than trying to, in the short term, protecting the margin.

I think we are taking a hit, but in the long term, we're going to come back, of course, selling more and having price increases, but also adjusting our costs. The European market is as soft as it was last year, but we can see some signs of recovery.

We like to be a little bit cautious there because typically stoves, they are a few quarters behind the others when it comes to coming up again, and we just feel that there might be some positive signs eventually where Europe might come out of this, whereas in North America, demand going to be good, but the tariff's going to be hard to beat. A seasonal pattern again, that's very pronounced on the Stoves side typically, also disturbed during those years that I mentioned before.

There we see clear signs of the second part of the year being stronger again, as it had been prior to '22, we can say. The return to that span will come short, of course.

We will not be able to do that. The illustration here that the first quarter last year was relatively good, and this year we come out with 4.4, and it would be unrealistic, we believe, to say that we would come up to the 10 to 13 this year, although that was the target when we budgeted and we entered the year.

Now, of course, adding those 150 million kronor in burden, it'd be cumbersome. Of course, we'll do our utmost.

That's why we suggest a span of 6% to 8% rather than the 10% to 13%, and that is short- and mid-term. As before, if we just look at the pie charts before I hand over to Hans, it's pretty much the same where two-thirds come from Climate Solutions and NIBE Element 30%, and of course the first quarter, NIBE Stoves being relatively small, whereas their peak is at the end of the year.

Geographically, of course, or yeah, I don't know whether this is a correct description really. NIBE Element sales is not geographical distribution, it's a distribution of the operating margin.

The Element then is coming at 22 and Climate Solutions, of course, having both the size and the better margin on their hands, it's almost three-quarters of their profitability, and Stoves again being very minor during the first quarter for obvious reasons. Geographically, of course, the Nordic countries pretty much stable around the 19, and 45 in Europe, excluding the Nordics, and North America 30%.

Outside those continents and including the Nordics, we have Asia, and that's pretty much Element that's active there. I think I hand over the monitor to you now, Hans.

All right. Thank you, Eric.

Thank you very much. Before digging into the individual business areas and balance sheet and cash flow, Well, first of all, I hope that you appreciate our new format for those of you who have been following our reports before.

Not only is it in landscape format making it a little bit easier on the screen hopefully to read, but it also contains a little bit more information where the currency is much clearer stated, of course. The cash flow statement is also more in detail.

I hope this is appreciated. If you have further views, please holler and we'll listen to you.

One little small detection that we've made is that the sales by geography on page 12 had a little sum error in it for the Nordic countries. The sum is not 18 50, it's 18 40.

Then just one more comment on the group before heading into the business areas. For those of you who have seen it already, the elimination line in the group accounts is a positive 1, and typically it's a minus 10 to 30, 35.

That's where we typically have one-off costs of different kinds, very often related to acquisition costs. It could be for due diligence work, for purchase price allocation work, or consultancy or advice of some sort.

As we've not been that active on the acquisition side for a while now, the costs are much, much lower. In this specific case with the positive 1 there, we actually had to reverse costs set aside for an anticipated acquisition that didn't happen.

We had to reverse that. It has nothing to do with any revaluations or anything.

It was just a cost that didn't come, for which we had set aside some money. Then looking into Climate Solutions and continuing with the business areas, as Eric stated, we've seen a decent and sound demand in the quarter for the business area both in Europe and the US.

In Europe, it's been very much Germany, Switzerland, and the Nordics driving demand. In the US, we've actually seen a quite decent demand as well and not as a sharp fall on the residential side as we could have expected.

Of course, there has been an effect when the tax credits went away. Anyway, this has resulted then in an organic growth of 10.3.

The face value of the growth is 3.4 due to the currency effect there of 6.9, as you see, but the underlying growth has been quite decent. When we get volume into our factories, we also of course improve our gross margin, so that has risen by more than a percentage unit, then leading to an operating profit there which in itself has risen with almost 16%.

It's been a decent development, we think. In terms of geographical distribution of sales within Climate Solutions, there have not been many very large movement from last year.

The pie chart looks basically the same as before. We instead move on to Element.

Overall, the Element business area has also seen a quite decent growth, as a matter of fact. It's been very different between the different segments, whereas semiconductor, the HVAC, for example, process heating have been quite nice, the process heating being very important for the electrification of the industry that is going on.

Whereas, of course, automotive, white goods, and also on the industrial side, it's been a little bit weaker. The underlying growth there was actually plus 6.7%, but with the currency effect there, we came in at minus 1.5.

The contribution from the acquired company is from Selmo that we have announced before. Also here, of course, more volume generates a better gross margin, but it's also combination of the cost-saving program that we ran in 2024 and trying to keep a tight cost control.

All in all, we came in at the 6.6% of operating margin, which is decent, but of course we can improve from there as well, and we will as the year moves along. Also here, the distribution of sales per geography is very much similar to what it looked like last year.

It's our most global business area with a good portion of the business in North America, which is continuing quite well. Moving on to Stoves.

For Stoves, demand has been reasonable or stable in North America. The tariffs don't necessarily influence the demand as such.

It's more on the profitability side, of course. In Europe, it's been very cautious for the reasons that Eric mentioned before, and this despite relatively cold winter and high energy prices.

It is, of course, a signal of people holding very tightly to their cash for discretionary products given the world around. When it comes to North America, we will see an effect due to the tariffs going forward, the news that were announced just a couple of days ago.

Here, we didn't decline in sales with 10.1% if you dig into the numbers, if you take away the currency effect. If you look into local currency, we had a drop of just about 2.

Of course, it is a tough period that we're going through, but it should of course be seen under the light of the difficult time right now in general, but also the more or less overconsumption that took place during COVID and then when Putin invaded the Ukraine, the initial phase of that. When we lack volume here, it has an effect on gross margin, taking a hit.

We've been very, very careful on costs here, and also taken out a lot of costs, we've been able to defend an operating profit here of 37 million and an operating margin of 4.4. As always within Stoves, the Q1 and Q2 are the weaker quarters of the year, and it's always in the second half where things take off.

Also here in terms of geographical distribution of sales, the picture is fairly much similar to what it has been before. Also on the balance sheet side, both on the total assets side and total equity and liability side, there have not been very many movements, you can say, from the end of the year, more a natural development of the business simply.

We'll move on to the cash flow statement instead, and I think that it's pleasing to see that the cash flow from the operating activities basically has doubled compared to a year ago. We've generated a good portion of cash there.

Then, we're also back into our more seasonal or traditional seasonal pattern, meaning that we are building inventory and preparing for the sales to come during the latter part of the year. We're tying up more in working capital.

Here we've increased inventory slightly, receivables, but also the payables. There's also a currency effect here running in the wrong direction, which hurts that number a little bit more than necessary, to speak.

Overall, the cash flow has almost doubled, and investments, they have been cut in a third almost from a year ago. We are clearly seeing the end of this very large investment program that we were running, which of course then has an effect on the depreciation side instead, which I'm sure many of you have seen.

All in all, operating cash flow, plus 324, whereas it was minus 376 of last year. A few key financial numbers.

We have pretty good cash on hand, to speak, which we can start to use for acquisitions, as Eric mentioned. The net debt is seemingly on the same level as at the end of the year.

It's, if you look at the second decimal, which is not displayed on the picture, it's actually come down a little bit further. The interest-bearing liabilities in relation to equity have also come down, and the equity-assets ratio has improved.

Overall, I would say it's a fairly stable balance sheet that we're looking at. Working capital is also on the right track.

It's slightly lower than a year ago. It's a little bit up from the end of the year, but for the reasons that I just mentioned, that this is the time of year where we build up working capital for the second half.

Of course, an intermediate target is to come down to 20% here, as we've mentioned several times before. Then just on the last slide, some additional key figures.

They are also all moving in the right direction. Return on capital employed, a year ago 7.3, at the end of the year 8.5, now up to 8.7; return on equity from 6.2 to 8.5 to 9.

It's of course not where we want them to be, but we're on the right track towards our goals. One should not forget either that it's communicating vessels with our equity-assets ratio, which of course is fairly strong, where a target in a way is to have at least 30%, and we're almost up to 50.

That has an effect on those key numbers. Then, net profit per share has also increased nicely.

All in all, I think it's a solid balance sheet that we have now after Q1. I'm sure that many of you have questions out there, I guess we open up for that.

Thank you, Hans. I think we took 25 minutes, but now we have 35 solid minutes for questions.

Yes, hello, Gerteric and Hans. Thank you for taking my questions.

Hi. Firstly, I wanted to ask a bit on Climate margins, which you said you expect to land well within the 13% to 15% range despite higher D&A.

I was wondering about how much of this remaining margin uplift do you expect to come from sort of volume recovery vis-à-vis price, cost, productivity, mix, and sort of what has to happen in Europe and in North America for that margin range to be achieved?

I think that we compare ourselves to the previous year, we've arrived at 13%, and I think that it would be a disappointment if we couldn't improve that based on, of course, growth, more rational production with all the investments behind us, as Hans suggested. The product assortment now being even broader than before, and also the commercial side coming along very neatly.

All those factors, and of course if something would happen even more dramatically in the world. I think we've been able to demonstrate that despite the fact that the world isn't so neat all the time, we are moving in this direction.

'25 wasn't so glamorous either outside our world, but we were able to grow. As we continue that, as I said initially, we have a pretty good momentum.

Of course, to look into the crystal ball is always difficult, but those are the main factors.

Yeah. No, that makes sense.

I was wondering a bit as well sort of about what gives you confidence in sort of the H2 acceleration? Of course, with the crystal ball comment that you said, but how sensitive do you view that outlook to consumer confidence and housing-related activity, especially in Europe then?

Could you please repeat the question once more?

You point to a return to sort of a more traditional seasonal pattern with stronger H2 despite cautious consumer and macro uncertainty. If you get my question.

Yeah. No.

It's a very traditional pattern, and that's been like that, as I said, all years, but for two or three in a long, long time. Also, of course, the confidence or the signals we get from each market is not that we just sit here and guess in Markaryd.

Of course, that's also a combined picture from our companies out there, and sales crowd and marketing people saying, "What do you expect? What's happening?"

That's the picture we get. Combined with a you can say historical pattern coupled with our own observations.

Of course, if we were hit by a severe war in Europe, of course that wouldn't materialize, but we don't anticipate that. It's been bad enough, and it is bad enough.

We are still performing as we are. Again, to stand here today on the 19th of May saying we know everything about the future, I think it's pretty bold of us to suggest what we do is not a pipedream.

Last year, we had the same ambition to come up to the 13%, and very few of you out there, or not the majority anyway, said that wouldn't be possible. Now we say that we're going to dive well into the interval, and it's a lesser move now, percentage-wise than it was then.

That makes us fairly comfortable if we ever can be comfortable in this world.

No, that makes sense. I appreciate that answer.

Final question from my end, a bit on sort of Element and market mix and utilization. With some of your end markets here showing quite nice growth, could you elaborate a bit more on sort of which of these are sort of earning the highest incremental returns on capital, where do you still have underutilized capacity, and how should we think about sort of in Element the balance between organic investments and acquisitions as you work back towards the historical margin range?

I think that the margin range that we are talking about for this year is, of course, as we run the show right now, that's not to be mixed with any major acquisition or anything like that. That's where we stand right now.

Of course, we see that segments out there that would be very interesting to enter into or also make additional acquisitions, to make segments that we already are making even more prominent. I don't know whether I fully understood your question, but I think that on the Element side, I think that we are very solidly charging ahead towards the target that we set in the report, and that's not a pipedream either.

Contrary to the Stoves, which you're going to come back to, of course, there we see a hindrance that we can't overcome in the short term. With our position in the electrification, rail, process industry, heat pump industry, and very importantly and naturally on the semiconductor industry, we are as confident as you can be, whereas white goods, of course, and the general industrial investment level, they are low.

That's always like that, or most of the times. Not everything is glamorous.

That's why we are present as we are in different segments. The main thing is that we are better represented in the segments where it's growing rather than the other way.

Of course, if you compare us 15 years ago, or even 20 years ago, we were pretty much into white goods, we were pretty much in segments that are not so buoyant anymore. Of course, process heating and heat pumps and the semiconductor, they are relatively new segments for us on a broader basis, and that fills us with confidence.

Okay. Thank you for your answers.

Appreciate it. I'll get back in line.

Thanks.

Sure. Thank you.

We'd just like to remind you folks out there that to allow as many as possible to put questions, please try to minimize them to two per interview.

Yes, hello. I also had a question on the profitability, and specifically the operating leverage in Climate Solutions.

I, of course, heard the comments on the margin range, but how should we think about this drop-through in the quarters to come? The reason why I'm asking is I think it looks a bit low now in Q1 versus recent quarters considering you have the highest organic growth in three years and also a relatively modest step-up in depreciation.

I'm wondering is there something negatively sticking out in the EBIT bridge this quarter, FX revaluations, anything, and yeah, what is the reasonable leverage to consider going forward? Thank you.

We don't look at it like that. Of course, you can't really take away your organization.

You have the organization you have, and we don't adjust spending on marketing and sales and R&D depending on quarter. That has a steady course.

Of course, if you divide that evenly over quarters, of course then with the lesser sales relatively seen, you get a lower margin. I think that's the only immediate answer I can give you there.

All right, but that's a reflection of seasonality, right? I was more thinking about why is the incremental EBIT not higher this quarter?

Is there something that sticks out? Should we think about leverage being in the 30% plus range going forward?

I think you're ahead of me math-wise here. I don't see that the growth in the first quarter would raise any eyebrows, perhaps I'm behind you there and your analysis.

We typically know that the first quarter is relatively seen not as strong, and that's the only thing I can say. Had I had another answer, I could have given you.

I think that's a very plain one, but unless you have a math analysis there that, again, they are quite a bit ahead of me.

No, but if I just may add, the underlying growth as we fairly clearly state is around 10%, and the operating profit grows by almost 16. I understand you would like to see an even higher growth in the profit there.

One item that we don't fully track, but which we are of course aware that happens, and you mentioned it yourself a little bit, is of course currency effects in terms of transaction effects. That's pretty difficult to measure within such a decentralized organization as the one we're running.

The translation effect is of course easy to measure, and we do that. The transaction effect between companies is a little bit tougher, and we know that has had some impact to all of this.

Also as Eric states, we have the organization that we have, and of course we try to trim it and so forth in the long run, but not that we do it between individual quarters to maximize the effect in that sense.

Okay. Thank you for that.

Thank you very much, everyone, and good morning. I have a couple of questions.

I'll go one at a time. My first question was just wanted to understand more about your comments on Stoves.

You commented that Section 232 tariffs will have 150 million kronor impact. The starting point last year was around a 4% margin, and this is around a 4 percentage point margin headwind, but at the same time you've been cutting costs.

Between all these factors, with you getting to a margin of around 6% to 8% for the full year, would you be able to walk us through the moving pieces that help us get to that new level? Thank you.

To start with the new tariffs, of course, they have not been affecting the present quarter, the quarter that we just left. They are calculated very bluntly on sales into the US, and with a 25% tariffs on that.

Then, of course, we already had tariffs that were now substituted with the new ones, and they came last year. Those are the ones we've been trying to fight off with moderate price increases and cost rationalizations.

When we now come into the second quarter, then, of course, the new tariffs, they will hit us fully. That doesn't mean that we're going to just say, "Well, okay, thank you very much, we won't do anything."

Of course, we'll try to do our utmost to be as effective as possible. If there would be a possibility to further increase prices without harm our presence in the market, if anything we like to sell more.

They are going to take of course quite a bit of sales increase to compensate for this. The presence in the market that we have been building up, and now I'm talking about also our predecessors, the owners, it's taken them 50 years to establish the market that we have now, and we're not going to diminish that or disrupt that by short-term decisions.

That's why we explain to you that if really things would hit us very, very hard if we wouldn't do anything, it would be 150 on a 3.5 billion, that's pretty much 4%. Of course, we'll try our utmost to compensate, and we will not be able to compensate up to 10.

That's unrealistic. We give you a span of 6 to 8: 6 if we wouldn't do anything, and then anything better than that, that means that we've been able to counteract.

I think that's the best answer I can give you on that.

Fully understood. Thank you.

My second question is on Climate Solutions. I understand it's difficult to comment on shorter time periods, that's not your disclosure and so on, but I'm just interested in some color as to how you saw trends develop through the quarter, post the quarter.

Really what I'm interested in is whether you saw a pick-up in activity into March or into April, and trying to disaggregate how much of this has been the preexisting trends that was going into the quarter given the market's recovery versus whether you've seen an impact positively after the Middle East conflict. Thank you.

I think you answered the question partly yourself, how difficult it is, but we are all affected by what we see on our screens, whether it's TV or telephones, whatever. Of course, people are affected by what's happening in Ukraine, what's happening in the Middle East, what's happening in Gaza, and so forth.

It's all around oil and gas. Eventually the thoughts will penetrate into our own actions.

Are we going to do something differently? It's not only heat pumps, but it's also with cars.

Should we continue to drive petrol-driven cars or should we do something else? I think that every time something happens of this nature, the last weeks here with the Middle East development, of course, that is stirring the interest.

At the same time, I think that we need to give consumers a little bit more time. Not everyone is running out and saying, "Now I like to have, for instance, a heat pump or I like to have an electric car."

I think that subconsciously people are affected by the negative news and that they are more willing to change for alternatives. In that sense, it has affected consumers, and we are a little bit hesitant to say now the whole world going to open up.

We'd like to see a few more quarters, but we are fairly confident that the development will continue as we said. That's why we are bold enough again, using that word, to come back to a margin within that span 13 to 15.

I guess that's an illustration of long term, what we think about a long term, but the remainder part of the year. I think I don't dare to be more explicit than that.

Fully understood. Just as a very quick follow-up to that, is there any sort of color you can give us as to when you talk to that 13% to 15%, what organic growth assumption for the full year you are assuming there?

There's also an answer that you know you wouldn't get fully.

Worth a try. Of course, without

a substantial or a relatively decent growth organically, as we demonstrated this quarter, of course you wouldn't get there. We are always geared for growth, and that's not only because of the market, but also because of our own products and new products coming to the market, not substituting the ones we have, but adding to the assortment.

That's

pretty much as deep as I can get. Understood.

Thank you.

Good morning, Gerteric and Hans. Thanks for the opportunity.

I wanted to start on cost inflation and what you're seeing in terms of copper and steel prices, how you're managing those, and maybe you can help us scale the primary materials within a heat pump and whether you're able to pass that inflation on to customers?

We, of course, are a bit cautious with price increases ourselves without being able really to explain to our customers the reasons. Of course, we are really holding back because of our purchasing power.

You can always refer to a copper price going up, but we can always argue about the volumes we provide our suppliers with. It's not so easy that it's one to one.

Of course, we could also say to our customers, we have such a good assortment of products, we just like to propose price increases. I think it has to be, if I use the word again, civilized between suppliers and ourselves, and ourselves and our customers.

We are really trying to fight back all price increases. It's not easy, but we are in a situation where we have long-term relationships with our suppliers mainly.

It's not a new phenomenon. We've been telling them, "If you're going to be on board with us, don't come and tell us that now you need that and you need that.

You're on board because we trust you. You have to fend off price increases on your side with being more rational, just like we have to fend off our prices being more rational."

When we present ourselves anymore to our suppliers, we say, "We've invested 10 billion kronor the last 4.5 years to become even more rational. You're part of that trip.

You're part of that voyage, and you can't come and penalize us by increasing prices." That's the reasoning we have when it comes to our suppliers.

We're really tight with allowing any price increases. Sometimes we might allow that, and then we say, "Okay, fine.

Can we fend it off with our own more rational production and our own products coming about, or do we have to increase prices?" That's our general attitude.

Long answer to your question, Christian.

That's very helpful. Thank you.

Maybe turning to more of a top-down thought in terms of some of the policy changes this year. Obviously, the ROT allowance is to decline from 50% to 30%.

I wonder if you think heat pump sales in Sweden can grow in that backdrop. Then secondly, you may have seen the France announcements banning gas boilers in replacement settings in 2027.

I just wondered if you could remind us your sales exposure to France and then whether you're hearing anything from customers on that change?

In Sweden, I think that the subsidies there, or whatever you call it, or the grants, I don't think that is affecting us that much or the industry. I think the market is so mature.

When it comes to retrofitting, it's if the heat pump breaks down, which it very seldom does, but eventually, then, of course, it's replaced with a heat pump, disregarding tax subsidies or not. It could have been a better, of course, motivation had we had any new construction of sorts, but now very few houses are built.

That means that even there, it's tough. I think that it might be very blunt to say it doesn't have any effect, but on a mature market, I don't think it has that much of an effect as in a newly developing market.

That would have been totally different. In France, coming back to that, there, of course, we are in hydronic heat pumps: air-to-water, ground source, and exhaust air.

The growth in France has been predominantly, or very almost exclusively, in the air-to-air segment. For your interest, we've been very, very stubborn and not entering that sector.

As you might have heard from the show in Stockholm, during the second half of this year, we will also enter that segment, which is a totally new territory for us. That also adding to the sales increase that we talked about previously.

Our customers, or installers, they appreciate our assortment, but to be fully equipped, we've understood and we've been, as I said, a little bit reluctant, but there we are now. We will introduce air-to-air during the second half of the year to be complete, which we'd be able to compete more in the long run in France in that segment.

Far, we've not been acting there. Hope that answered your question then, Christian.

Sure. Thank you.

Can I just squeeze a quick one maybe for Hans? The depreciation, 391, is that sort of run rate what we should expect going forward?

I think you can work with that number. Yep.

Thanks very much.

Thank you, and good day. I just have one really, and it's more about when we look into 2026 in Climate Solutions, if you have anything left to realize from savings actions apart from volumes and other things that could help the margins now when you have potentially cost inflation, but also the depreciation charging affecting the margins?

Cost reductions? You mean going back to the program we had a year and a half ago, or what you're referring to?

Exactly, and then potentially some other actions you took in, well, in connection to that, but that potentially were not part of the original plan.

Oh, I think that we have completed the programs. Now we are out on fresh fields again.

There might be, of course, if a company would have difficulties, then it's always up to individual company to do some cost savings, but not any programs or anything like that. Now we are, on Climate Solutions, we are charging ahead, and if there are any local adjustments that have to be done, fine, but nothing that we orchestrate from Markaryd.

No,

but if I just may add there, with a group of 200 companies, we did run the big program then back in '24, but with so many companies within the group, you will always have one or the other company not performing as planned, to speak. I think that that's part of daily life where, as Eric just mentioned, the local management, sometimes supported by the division management or business area management, will look into that company to deal with cost savings, of course.

Then in the background also, we have a continuous deeper cooperation and collaboration between our companies. Purchasing has always been on the radar screen very clearly, but it's evolving into more and more areas.

It's something that we're continuously working upon.

All right. The kind of when we look at the margin of 13 in '25 and how this can develop into '26, the kind of bigger plus sign that can help you is volume growth, and then you have potentially some minuses that you expect to manage in a good way then.

Yeah. Of course, when you have volume growth, then also allows you to produce more rationally.

That's why we have invested as we have. They're all intertwined.

Of course, if you produce of a unit 15,000 versus 20,000, of course you can benefit from a more efficient setup if you produce 20,000. That comes on top of the actual gross margin added to the actual sales growth.

It's not only that you grow sales, but you also produce in a more rational fashion. That's been the whole idea of the investment program.

All right?

Understood. Yeah.

That's all from my side. Thank you.

Thank you.

Hi, good morning, everyone. Thank you very much for taking my question.

I just have one, please. Could you give us a bit more color on the demand picture you see?

Have you started to see any impact or any positive dynamics since the conflict in the Middle East, since the gas prices have increased in your key markets? Does that change your expectations for the year?

Also, on top of that, how should we think about the market share dynamics in your key markets such as Germany, Nordics, Benelux? It would be really helpful to hear a bit more about that.

Thank you.

I think we've been touching upon it early here, and it's very sad to realize that it takes a war for people to think differently. We believe that people are smarter than that.

Of course, that's again announced, of course, that okay, gas and oil going to be more expensive, it's not totally reliable. That's something that doesn't leave you even if the oil price will go down tomorrow or the gas price.

It's something that is not totally reliable. Just like among friends, if you have a friend that isn't trustworthy, don't necessarily trust that friend even if he says, "Well, I'm a good guy again."

I think we are like that. We are like human beings.

Of course, the situation in Iran and the sound down there, that again an illustration of how we are affected subconsciously about that. We believe that Europe, we just have to stay away and get away from fossil fuels for many reasons: dependence, and climate, and being respectful for next generations.

Everything is speaking for the advantage of going for electrification, heat pumps, or what have you in the new world. It's old-fashioned to go with oil and gas.

It might again be bold to say, but I think younger people, and everyone is young in my world, I'm sure they look at it as very old-fashioned to burn oil or burn gas. I think they're willing to change over for many reasons.

Of course, what's happening now in the world, that is affecting demand for newer ways of doing things in a positive way. Hello?

Thank you. What about market share?

We monitor the market shares very, very closely. Of course, we answered that question indirectly.

On hydronic systems, we defend our market shares very well. Where we haven't been is in the air-to-air, and we realize that perhaps we should have been there.

It's a very difficult market. To be complete, not to say that we're going to stay out of that, we will also enter that market.

On the hydronic side, we are very confident that we are on the ball. Okay.

Thank you very much. That's very helpful.

We're getting close to 12:00.

Good morning, gentlemen. Thank you for taking my question.

Just a follow-up question on the margins for Q1, if I may, focusing on Climate Solutions. You delivered a very strong organic, but the operating leverage appears to be lagging versus recent performance.

One of your peers flagged volume growth outpacing sales in Germany alongside some elevated promotional activity weighing on margins. Is this a market dynamic that you've noted?

If not, what explains the outperformance? Thank you.

I think that you have to repeat that question for at least me. Could you repeat that question?

Sure, sure. It's just a follow-up question on the margins for the quarter, focusing on Climate Solutions.

You delivered a strong organic, but operating leverage appears to be lagging versus recent performance. One of your peers in the market flagged outpacing volumes over sales in Germany alongside elevated promotional activity weighing on their margins.

Is this something you've noted as well?

Of course, we notice activities all the time, and I think that we are more structured in our marketing activities. We don't look so much at what the competitors are doing.

We do that naturally to a point. We've been very cautious about protecting our margins, but at the same time growing.

We know that price initiatives, if we might call it in a gentle way, they will always be eaten up by something following that. If that was a question, I think that that's the answer.

Of course, we noticed from time to time, and perhaps more aggressively so during '24 and also '25, part of '25. I think it's been of a lesser should I say importance in later quarters.

That doesn't mean that it's gone away. Of course, particularly if you feel that you're losing, you try to do something obviously.

I don't know whether that helps you, but that's as good as I can answer the question.

Okay. Thank you very much.

Thank you.

I think that was it for today. Let's see what the master voice is saying here.

Thank you very much for all the questions, and we hope that we've been trying to help you somewhat. Some questions, as we can't answer for discrete reasons, but other questions we've been trying to explain to you as good as you possibly could have.

With that said, thank you very much for calling in. Now it's the annual shareholders' meeting in a little while, and we are getting prepared for that.

Thank you once again.

Thank you very much, everyone out there. Thank you.