Deutsche Boerse AG (DBOEY) Q2 2016 Earnings Call

Gregor Pottmeyer – CFO

Earnings grew faster than revenue; Expecting double digit in full year

“In total, net revenue increased by 10% to EUR601 million. At the same time, the adjusted operating costs increased only slightly, despite a higher cost base, due to consolidation effect. This was a result of targeted cost containment measures, we have implemented in the last couple of months. As a consequence the EBIT and EPS grew over proportional at a rate of 19%. With this, we are well on track to achieve our double digit earnings growth target for 2016.”

The merger with LSE is well on track

“ We have also made good progress in the merger process with the London Stock Exchange Group. On July 4th, LSE shareholder approved the transaction in an extraordinary general meeting and this week we cost the necessary threshold in the tender offer for our shareholders…we still continued to work towards closing of the transaction in Q1 2017”

They are examining the issue of the location of the merged entity and its materiality to the merger

“…we have a referendum committee to talk about exactly that{headquarters of the holding company being in London or in the EU} and the referendum committee has started its work and the referendum committee will make recommendations to the Board of both companies. And we want to ensure that the combined group will meet all regulatory requirement, first, to secure closing of the transaction and, second, to achieve its commercial objectives, but we won’t report on the discussions which takes place in the meeting of the referendum committee in the upcoming months.”

GlaxoSmithKline’s (GSK) Q2 2016 Earnings Call

Sir Andrew Witty – CEO

Solid top line growth

“…we delivered a strong second quarter, with group sales up 4% CER to £6.5 billion. Sales growth was generated across all three businesses in the company, and was particularly driven by new pharmaceutical and vaccine products.”

Cost control enabling solid bottom line growth

“..with the continued progress we are making on cost control, and the delivery of integration and restructuring benefits, which are tracking ahead of schedule. Taking together for the quarter, we have delivered core earnings per share of £0.245, up 16% on constant currency basis. For the half year, core EPS growth was 12% CER”

Expected to deliver on EPS projections despite the expected currency headwinds

“…we now expect to deliver core EPS of the upper end of the guidance we gave to investors in the first quarter. With 2016 core EPS percentage growth now expected to be 11% to 12% in constant currency terms. Clearly, currency has had a significant impact on our results for the quarter, both in total and core reporting”

There are several Intermediate term concerns resulting from the Brexit

“ There are clearly lots of downside risks of separating the U.K. out, but there are possible upsides. So I think where U.K. regulatory decisions go, will be a very important issue, number one. Number two, parallel trade, so will there continue to be a free movement of goods, between the U.K. and continental Europe?…There is the potential for increased complexity in the supply chain, if Britain were to separate from the European regulator…You could paint a picture, which says, in the long run, a standalone British regulator doesn’t have as much influence globally, and you do less clinical research in the U.K., and that over time, starts to have an influence on where you might want to do your long term research, which is a very long term question, but is clearly a possibility.”

 

Simon Dingemans – CFO

Positive but even growth expected in H2

“After the strong start to the year, we now expect growth for the two halves to the year to be more evenly balanced than we previously thought, and with the additional visibility we now have, we have tightened up the range for our guidance to the higher end of the range previously provided.”

The weaker pound adds to their bottom line via higher topline growth and lower operating costs

“A weaker pound benefits our core earnings, not just through a stronger topline, but also in the operating leverage across the businesses. We continue to have a higher proportion of our costs in the U.K. than revenues. And so while this hurts us, while sterling is stronger, it helps us when it decline.”

Emerging market sales are down

“Within international, sales in emerging markets were down 9%, with further declines in our China business, as we continue the reshaping of that business. Outside of China, emerging market sales declined 8%..”

Deutsche Bank’s (DB) Q2 2016 Earnings Call

John Cryan – CEO

Restructuring to continue

“At Deutsche Bank, we are undertaking as much restructuring as possible in 2016 despite the burden of lost revenues and the added expense in the year. Not to do so would simply perpetuate our structural inefficiency and delay the achievement of our fundamental goal that of returning to sustainable profitability. We’ll not deviate from taking tough decisions just to flatter results in the short-term.”

The restructuring have been painful

“The Bank’s own finances are in very good shape. Over the past four quarters we’ve taken a lot of pain in restructuring the balance sheet.”

Loan losses are smaller compared to historical levels

“In credit, we’re very comfortable with the quality of our portfolios. Our loan losses remains small by any historic measure and our credit books have high stress resilience. ”

Historical low risk trading levels

“In global markets, our aggregate risk-taking – risk trading risk sits at historic lows. Risk management remains tight and vigilant as was demonstrated when markets tested us with the extraordinary volatility we saw following news of the Brexit vote.”

But they still are on the lookout for opportunities for growth

“So we really like the portfolio we have, but we’re also looking for opportunities to take advantage of the environment to deepen in assets we see as attractive. And we continue to look for creative repositioning opportunities.”

They are making good progress with cost control remaining a central focus

“To sum up, the overall report card for the quarter shows reasonably pleasing progress in some trying circumstances. We need to build the Bank’s profitability and the main task of management remains the control of costs, for which we do need to continue to invest. ”

Brexit may give them a competitive advantage

“Yes, on the Brexit, when we operate in London, we in the vast, vast majority of cases, operate out of Deutsche Bank AG itself. So we’re facing our clients and counterparties out of the German bank…We basically view this as something that will essentially be client-driven for us. So we wouldn’t intend to do anything ourselves other than we have to respond to our clients’ requirements. So we are reticent to make any long-term commitments about U.K. other than we don’t plan to do anything of our own best. But if our Eurozone clients in particular increasingly want us to be facing them from locations within the Eurozone, if that proves to be the case, then we are reasonably well-positioned because our head office in home is in the center of the Eurozone. So for us I think we end up slightly bizarrely by having something of a competitive advantage which we didn’t want to create and it’s a bit inadvertent, but we come out of this relatively strongly.”

Marcus Schenck – CFO

The revenues took a big hit

“Global markets revenues were down €924 million compared to a strong prior year quarter, mainly driven by macro uncertainty impacting client flows and idiosyncratic effects stemming from our implementation of Strategy 2020”

Their loan loss provisions declined; they hold a very well diversified Italian loan portfolio

“Loan loss provisions are down 10%, reflecting the continuous good quality of the portfolio. On the back of the recent events in Italy, it is important to note that PWCC’s Italian loan portfolio is very well diversified and provision for credit losses were in line with prior quarters.”

Fiscal discipline helped stabilise costs as revenues remained dim

“Non-interest expenses were up by 5% driven by an increase of restructuring and severance charges of €69 million and higher litigation charges of €28 million for the second quarter. Excluding these charges, the adjusted cost base remains stable…This reflects again strict cost discipline in a pretty weak revenue environment.”

They are committed to the restructuring effort as they aim at sustained profitability

“2016 remains the peak restructuring year for Deutsche Bank. Any meaningful pullback from our restructuring plans would simply delay the Bank’s return to sustained profitability and it’s something we do not plan to do.”

Settling litigation issues have been burdensome

“Litigation remains a burden and while we now have had two consecutive quarters of setting a number of outstanding cases within existing reserves, we still are working diligently to settle the major issues that remain. Unfortunately as you know, the timing of those eventual settlements are ultimately not in our control but we remain hopeful of achieving major settlement this year.”

From the Press release:

  • 20% lower revenues year-on-year reflecting challenging environment and strategic decisions on Revenues and Pre-tax profit of 408 million euros, down 67%.

 

Man Group (MNGPF) PLC H1 2016 Earnings Call

Manny Roman, CEO

Impact of Brexit difficult to assess but uncertainty lies ahead

“The EU referendum result came as a surprise to many in the industry; and without knowing the specific details of the changes that will be put in place if the UK left the EU, it is difficult to comment in detail on the impact. However, it is fair to say that we will experience a period of uncertainty and transition.”

Diversification helps build resilience in volatile times.

“From a funds-under-management perspective, the recent volatility in markets post the Brexit vote created a difficult environment for discretionary strategies, but benefited AHL, which demonstrates how the ongoing diversification of our business has enhanced our resilience as a firm.”

The are prepared to deal with regulatory changes that may result after the Brexit

“As far as regulation is concerned, we feel we are well positioned to manage any subsequent regulatory change, and plan to proceed with the investment to comply with MiFID 2. We currently operate in 18 different jurisdictions, with a global client base, and are experienced in operating in different regulatory environments and responding to changes.”

There operation currency is the USD hence the resulting weakness in the Sterling has been a boon to them

“From a currency perspective, we earn a profit in US dollars, and the weakness of the sterling is not a particular concern for us as we have a higher proportion of costs denominated in sterling in comparison to revenues. The weakness of the sterling will create a net benefit for us in 2017 onwards, due to us hedging our sterling cost base on a quarterly basis one year in advance. And our dividend will be higher in sterling terms.”

A fragile operating environment makes for a cautious outlook

“As we have seen in the first half of this year, the overall operating environment continues to be quite volatile. Flows are better in places, but investors’ appetite remain fragile. Our strategies have held up reasonably well, given the backdrop. However, we remain cautious in our outlook for second half of the year, given the heightened uncertainty.”

Flows in Japan are mostly driven by feelings

“What we have observed is that flow in Japan has a lot to do with how people feel about Japan…If people hate Japan, everything else being equal, it’s more likely there will be outflows; people love Japan, everything else being equal, it’s more likely there will be inflows….And it’s one of these markets where people have strong views, either positive or negative.”

Jonathan Sorrell, Co-President and CFO

They expect redemption rates to decline despite the uncertain times

“Notwithstanding the uncertain macro environment, we would hope to see our redemption rate decline over time as our assets and client base become increasingly more institutional in nature.”

Luke Ellis, Man Group plc – President

Manny is leaving and Luke is coming in but the strategy is still the same

“But Manny, Jon, and I have built the strategy together, we’ve worked very closely over the last few years, Manny and I have been friends for 20-something years, so the strategy we have is a joint one, and so the strategy going forward will be very much the same as it was before.”

The redemptions or sales levels were evenly spread out in the quarter: No spikes around Brexit

“no elevated levels of {redemptions and sales} particularly around Brexit. And I think redemptions and sales come in relatively evenly through a quarter; possibly, a weighting of sales towards the first of each month, but that’s about it.”

 

Transcript at http://finance.yahoo.com/news/edited-transcript-emg-l-earnings-144528182.html

BP Plc (BP) Q2 2016 Earnings Call

Robert W. Dudley, Group CEO

Strong oil global demand; Stable oil production expected by year end

“As we expected, growth in global oil demand remains strong and we have seen some slowing in global supply growth stemming from supply disruptions, partially offset by the continued increase in Iranian production. In the United States, production continued to decline, and we anticipate a further drop in the third quarter. But with producers slowly adding back rigs, production should stabilize by year end.”

In oil markets, near term rebalancing expected while long term fundamentals are robust

“While some of the factors that have recently supported oil prices may only be temporary, we see the overall fundamentals bringing the market into balance during the second half of this year. Over the last quarter, we have seen oil prices strengthen in anticipation of this rebalancing, with some weakening primarily due to the strong dollar in the last week or so. The longer-term fundamentals for the industry also remain robust.”

High oil inventories are holding back further price increases

“For the time being, oil inventories remain high, well above their five-year average, shown in the green band, and these inventories could still hold back further increases in oil prices for a while yet. So the forward curve has flattened, although it still remains positive. Markets also remain cautious as they await more clarity around the impact of Brexit on oil demand.”

Strong positions upstream and strong presence downstream underpin good prospects for BP going forward

“Our upstream has strong incumbent positions in many of the world’s top basins, with growth in the near term to 2020 and beyond that to 2030. And that’s without the need for a large acquisition, as some have suggested. In our downstream, we have a strong and focused footprint, including advantaged manufacturing assets and an orientation to growth markets with high returns.”

But they still are on the lookout for opportunities for growth

“So we really like the portfolio we have, but we’re also looking for opportunities to take advantage of the environment to deepen in assets we see as attractive. And we continue to look for creative repositioning opportunities.”

While exercising great fiscal discipline

“So making the most of our strong portfolio is important, but we also know we must stay very focused on capital and cost discipline, even as oil prices start to strengthen. It’s about using our scarce capital wisely to preserve our growth objectives while making sure that all the changes we make now are sustainable for the future.”

The business has been resilient in the face of the tough H1 environment

“We’ve made a lot of progress so far in 2016. As predicted, the first half environment has been challenging. But as we look through the seasonal fluctuations in quarterly earnings, our business is proving resilient, and this is even before we fully complete our cost rebasing, which will take us into 2017.”

The deepwater Horizon accident scarred them but they are wiser having picked up invaluable lessons

“Significantly, following the substantial progress we have made in resolving outstanding claims arising from the Deepwater Horizon accident, our results today incorporate what we believe is a reliable estimate for all the remaining material liabilities to BP. This brings six years of managing the aftermath of the accident towards closure. We can now draw a line under it. It’s been a tough period for us, but it has reshaped how we think and how we operate, and it has made us more disciplined. In short, it has made us a better company. We will always be mindful of what we’ve learned, but we are now able to give full attention to our future.”

The future looks challenging but they have repositioned the business for it.

“So we expect 2016 to remain challenging, but we are starting to see a much stronger outlook for the group. Near term, our balance sheet remains robust to deal with uncertainties. Looking further out, as oil markets rebalance, we expect to see more support for oil prices, but we are not relying on this. Our confidence comes from being firmly down the path of transforming our business to compete whatever the future holds.”

On how they will deliver upstream growth going forward

We expect to deliver growth in four ways, first, from growth in and around our existing fields through continued infield drilling, the next phases of existing major projects, and from new projects that progress to FID. This activity is very competitive versus our existing base.

In sum

“But just to sum up, we’re making steady headway in what remains a tough environment. We’re sticking to our financial frame, and this is putting us on track to rebalance organic sources and uses of cash by 2017 at $50 to $55 per barrel. This will allow us to sustain our dividend while still maintaining the flexibility to grow.”

Brian Gilvary, Group CFO & Executive Director

They expect prices to firm up in H2 2016

“Although prices remain weak, the combination of declining production and increases in gas-fired power generation have helped to limit storage overhang and should continue to support some firming in price over the second half of the year.”

Expect disciplined investment and cash distributions should rebalancing in oil prices occur

“Our ultimate aim over time is to sustain a position where operating cash flow from our business covers capital expenditure and the dividend…If the price environment improves, we will look to ensure the right balance between disciplined investment for even stronger growth and growing distributions to shareholders over the longer term.”

Bernard Looney, CEO Upstream Division

´Medium-for-longer´oil prices necessitate the industry to consider co-ordinated cost reduction

“I would say that I think the industry as a whole needs to continue to work together to lower the total cost of doing business in our industry. And rates is an element of that, an important element, but a far more important element is looking at the entirety of the pie and saying what we can do to drive the cost structure down for what I think one of those service company’s CEOs described as a medium-for-longer price environment.”

Cost cutting will continue

“…we expect to continue to drive the cost base of the business down. We’re top quartile in operating costs today. We intend to continue to push and to drive that further.”

They are ramping up production with higher margins on the way

“we’re going to bring on the 800,000 barrels a day of production between now and 2020. The projects are 70% on average complete. They are on average ahead of schedule and ahead of cost, and they bring with them margins that are on average 35% higher than today’s equivalent or the 2015 equivalent at $50.”

Vodafone’s (VOD) Q1 2016 Conference Call

Vittorio Colao – Chief Executive Officer

Organic service revenue is up

“Group organic service revenue grew 2.2% to €12.3 billion. This follows an underlying 1.8% growth in Q4.”

A good data story

“Data story is good, but what about data monetization will ask some of you?…The strategy is simple. We charge a little bit more and offer a lot more value whether it’s more data, worry-free roaming, better services, extra options for the customers, so much more for more.”

Adopting a different strategy that suits each market

“The solid early momentum we’ve seen our Red tariff schemes had this pricing change reinforces the point that these markets are distinct, and we believe that our two tier strategy is working…we would always say we take a market-by-market approach given the substantial differences between the countries…”

Pokemon will not change the future of Vodafone

“On Pokemon Go, if you’re interested, unfortunately the average utilization of data of one hour of you chasing the monsters, so whatever you call them, is only 20 megabyte per hour. So, while it is a great thing to talk about and to do from a usage perspective, Pokemon Go will not change the future of Vodafone but we are all very amused by this thing.”

In sum, It was a good first quarter

“…we have made progress during first quarter, this first quarter of the financial year. As we said, good performance in Germany, Spain and Italy, offsetting the challenges that we are working very hard to address in the UK, the much more-for-more propositions working on improving ARPU and growth momentum in AMAP remains strong with good performance in South America, Turkey, Egypt and ongoing recovering in India.

Data, broadband and enterprise to drive growth

“And finally, as I said in my presentation, we continue to have the strategy centered on mobile data, fixed broadband, and the enterprise and this continues to be driving growth for the company.”

Nick Read – Chief Financial Officer

Better margins ahead

“Beyond Q2, we continue to expect to make steady progress on our underlying top line growth in second half of the year. And as we begin to lap the higher OpEx base created by projects spring and our fit-for-growth initiatives accelerate, we expect this improved growth to translate into higher EBITDA growth. So for EBITDA, we expect a higher weighting of growth in H2 versus H1.”

Aberdeen Asset Management PLC (ABDNF) Q3 2016 Earnings Conference

Martin Gilbert – Chief Executive

Diversification in asset and client base has been beneficial

“Overall we continue to benefit from the diversified asset and client base of the business during the period. A combination of currency changes, our exposure to a broad mix of assets and good investment performance…and our funds outweighed net outflows leaving our AUM up to £301 billion from £292 billion at March 31.”

Markets have been stable if you look beyond Europe and the Brexit

“Away from the U.K. and Europe, markets have been pretty stable. For example in quarter two, the MSCI Emerging Markets Index returned 0.8% in U.S. terms, 8% in sterling terms, and the MSCI World Index returned 1.2% in dollar terms and just about 9% in sterling terms”

Expectations: A volatile Europe as they deal with Brexit but a relient market overall

“As we go forward into the rest of the year, we expect some continuing volatility in U.K. and European equity markets as the political negotiations around Brexit proceed. However, broader market performance is likely to remain resilient given the supported monetary policy and a lower for longer environment.”

They offered liquidity at a price to those who withdrew from U.K. property fund post-Brexit.

“The interesting thing is people panic if they don’t get liquidity. By offering liquidity, I think we’ve created an enormous amount of goodwill with the holders of the fund rather than gauging the fund and I think it’s worked.”

Restoring confidence has helped stem outflows

“we’re not seeing any massive outflows. And really I think restored confidence in our fund and hopefully build goodwill for the future.”

G20 Finance Ministers and Central Bank Governors Meeting Communique 23-24 July 2016

http://www.mof.gov.cn/zhengwuxinxi/caizhengxinwen/201607/t20160724_2367836.htm

The Global economy is recovering slowly though significant risks persist

“The global economic environment is challenging and downside risks persist, highlighted by fluctuating commodity prices, and low inflation in many economies. Financial market volatility remains high, and geopolitical conflicts, terrorism, and refugee flows continue to complicate the global economic environment..”

Brexit added to uncertainty but they are positioned to address the consequences.

“ the outcome of the referendum on the UK’s membership of the EU adds to the uncertainty in the global economy. Members of the G20 are well positioned to proactively address the potential economic and financial consequences stemming from the UK referendum. In the future, we hope to see the UK as a close partner of the EU.”

They are determined to see growth using all tools possible with clear communication of actions

“We are taking actions to foster confidence and support growth. In light of recent developments, we reiterate our determination to use all policy tools – monetary, fiscal and structural – individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth…We will carefully calibrate and clearly communicate our macroeconomic and structural policy actions to reduce policy uncertainty, minimize negative spillovers and promote transparency.”

They promise to not use competitive devaluation & protectionism

“We reiterate that excess volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability…We reaffirm our previous exchange rate commitments, including that we will refrain from competitive devaluations and we will not target our exchange rates for competitive purposes. We will resist all forms of protectionism.

A steely response to excess steel capacity

“We recognize that excess capacity in steel and other industries is a global issue which requires collective responses… The G20 steelmaking economies will participate in the global community’s actions to address global excess capacity.”

Reaffirmed support for financial reforms including Basel III

“Recent market turbulence and uncertainty have once again highlighted the importance of building an open and resilient financial system. To this end, we remain committed to finalizing remaining critical elements of the regulatory framework and the timely, full and consistent implementation of the agreed financial reforms, including Basel III and the total-loss-absorbing-capacity (TLAC) standard as well as effective cross-border resolution regimes.”

The end of fossil fuel seems nigh as commitment to end them is reaffirmed.

“We reaffirm our commitment to rationalize and phase out inefficient fossil fuel subsidies that encourage wasteful consumption, over the medium term, recognizing the need to support the poor. Further, we encourage all G20 countries to consider participation in the voluntary peer review of inefficient fossil fuel subsidies that encourage wasteful consumption.

Nordea (NRDEF) Q2 2016 Earnings Call

Casper von Koskull, President and Group CEO

A significant dip in Net Interest income YoY but stable QoQ and leveling off margin pressure

“Net interest income has been under severe pressure for many years due to lower interest rates and low volume growth. NII declined 8% compared to the same quarter in 2015. However, it improved somewhat sequentially and for the second half of 2016 we expect an inflection point with an improving trend, for the first time since 2012.”

Q2 reflects effective cost management.

“Costs are under strict control and increased by 3% in local currencies compared to the second quarter of 2015. The cost-to-income ratio increased to 50%, compared to 47% in the second quarter of 2015. We expect costs to increase by 3% in local currencies in 2016 and to remain on a largely

unchanged level in 2018 compared to 2016.”

Ari Kaperi, Group Chief Risk Officer and Head of Group Risk

Stable loan losses compared to previous quarters

“Our loan losses in this quarter were reductively at a stable level compared to previous quarters so that we have had these levels of losses now in eight, nine consecutive quarters, which is still within this long term average level of 16 basis points.”

Impaired loans were up 4%

“One issue which made raise some potential risk to impaired loans they were up 4% roughly $225 million in absolute terms in this quarter. The reason for this is three individual customers and the fact that all these customers are quite well collateralized for example the biggest one of these which is representing half of the increase 100 — is grafted by ECA, Export Credit Agency. That means that our individual loan losses for this new impaired loss were relatively small and thereby our provisioning level at a group level is somewhat down. We are highlighting this quarter that what we had said even earlier that their strategy and we see clearly increased risk levels in oil and offshore side.”

They expect losses on the offshore oil portfolio.

“The overall size of our oil and gas plus coal services plus offshore portfolio is roughly $7 million, 75% is still consider as healthy, but 25% is bit higher risk. We anticipate that from this portfolio we see increased losses both in individual level as well as collective provisioning level, but nevertheless, the biggest relative size of this portfolio in Nordea context is relatively small, so its only 1.5% and it should not so significant or have significant impact.”

…but they cannot estimate the level of offshore losses though they have made provision for them

“And we expect loss levels from this risky or part of the oil offshore — oil portfolio. It’s very difficult to give on – actually impossible to give any kind of precise estimate…Currently, we have around 90 million of collective provisions just to cover increased risk for individual losses in this portfolio.”

There’s risk of a rate cap in Norway that may dim earnings in Q3 and Q4

“So the risk you can say is that there would be a rate cap in Norway in September which I believe is our economist’s view and many other as well, so, if that rate capital come, then in September that will then partly take out the positives that you would see in the third quarter, but that will come in the fourth quarter.”

 

Extra Notes on Q2 financials

 

  • Net interest income down 8% YoY and unchanged QoQ, Net losses down 1% YoY
  • CET 1 ratio improved 10bps from previous quarter to 16.8% (Pro forma 17.2%)
  • 2016 preliminary outcome of SREP indicates a minimum requirement of 17%.
  • Diluted EPS EUR 0.25 vs. EUR 0.24 YoY

 

 

Electrolux AB (ELUX) Q2 2016 Conference Call

Jonas Samuelson, CEO and President

Performing well in major appliances

“Electrolux operating income for the second quarter increased significantly compared to the same period previous year and amounted to SEK 1,564m. Of the Group’s six business areas, four achieved an operating margin of above 6%. The improvement was particularly strong in Major Appliances EMEA and Major Appliances North America. Major Appliances Asia/Pacific and Professional Products showed a stable development in earnings.”

Uncertain times in Europe following the Brexit yet positive in outlook

“Following the Brexit referendum, the outlook for UK demand and the British Pound is uncertain…We expect the European market to continue to grow in 2016 and therefore increase our outlook to 2% to 4% growth for the year from 2% to 3%, reflecting the good trend but also an increased uncertainty in the UK.”

Currency movement are eating into earnings

“Currencies continue to have a negative impact on earnings. However this was to some part mitigated by price mix. All-in-all earnings improved in all business areas versus last year except for Latin American.”

Outlook positive for Europe and North America, negative for Latin America

“We expect the positive growth trend in Western Europe to continue in most markets but with the Brexit uncertainty. In Eastern Europe we have seen Russia stabilizing and expect the region as a whole to show growth going forward. We anticipate demand in North America to remain positive in 2016, supported by a solid macroeconomic environment and good consumer confidence. Latin America continues to be weak with low visibility.”

They see opportunity in North America

“North America is the largest professional kitchen equipment market in the world, so it’s interesting from that perspective…a lot of the global chains are headquartered in North America and we’re relatively weak in the North American market which means that we have a lower chance than we otherwise would have of being a key supplier to some of these chains. So that is one of our key strategic priorities, to make sure that we build the presence in North America so that we can become a true global supplier. I think we see a lot of opportunities there.”

Anna Ohlsson-Leijon, CFO

Sluggish organic and acquisitive sales growth

“Organic sales was down 0.9% in the quarter mainly due to lower volumes in Latin America and the repositioning in small appliances, in combination with lower private label sales in North America. Acquired growth was 0.1% positive due to contribution from our acquisition of Veetsan last year. The currency impact was negative 3.6% and this resulted in reported sales of negative 4.4%.”

Significant cost cutting boosted earnings

“Moving to the net cost efficiency. This shows the net impact from product cost improvements of in total, SEK761 million. This included cost savings from raw materials which was about SEK250 million in the quarter and the impact of other productivity work and efficiencies throughout the Group. In total we had a margin accretion of 0.6% from the organic part and a 2.5% in contribution from cost efficiencies.”

A strong cash conversion rate gives them the firepower to invest and acquire going forward

“The strong cash conversion rate in 2014 and 2015 leaves us with a strong balance sheet which means that we have the funds and the firepower to continue with our investments as well as look at further acquisitions.”

Additional note on cash by Jonas: “the Board will make sure that we have a plan to have an appropriate balance sheet strength going forward but not over-capitalized and of course that includes M&A and possible cash distribution.”