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Ann-Sofi Jönsson: Welcome to the presentation of our fourth quarter results. I'm Ann-Sofi Jönsson, Head of Investor Relations and Sustainability Reporting here at the Electrolux Group. With me today, I have our CEO, Yannick Fierling; and our CFO, Therese Friberg. We will go through the presentation. And after that, we will open up for a Q&A session, both for those on the conference call as well as for you on the webcast. [Operator Instructions]. With that, I hand over to you, Yannick.
Yannick Fierling: Thank you very much, Ann-Sofi, and good day to all of you. Very glad to be with you for the Q4 report. I will start, if you allow me, with some highlights about 2025. We are happy to report that the organic sales has been at the level of SEK 131 billion, which represents an organic sales growth of 3.9%, very close to the 4% we have been communicating about in the capital market update, I mean, midterm. The improvement in the operating income was at the level of SEK 3.7 billion, which represents 2.8% on net sales, which is again an improvement of 0.8 points versus last year. This SEK 3.7 billion were supported by a high cost reduction level of about SEK 4 billion, driven mainly by procurement and value engineering. We had one of the strongest quarter ever in Electrolux in the fourth quarter in terms of cash flow, delivering SEK 5.2 billion, bringing the entire year at the level of SEK 2 billion, which is taking our financial position in terms of leverage at the level of 3.0. With that, I would like to go into the fourth quarter. I'm sorry, the slide is not changing. Technical issue, which was working, of course, nicely, this morning. It's always like that. Okay, very good. Now it's working. Apologies for this technical issue. Very good. Let me deep dive into the fourth quarter here. First, we're glad to report out that, I mean, we have been gaining market share once again in Europe, Asia Pacific, Middle East and Africa and Brazil. We have been delivering a flat market share in North America, very high level of price pressure in the 3 regions. The operating income has been positively impacted by cost reduction at the level of SEK 1.2 billion. But we have been delivering on efficiency in engineering, in procurement and on the conversion side of the equation. On the headwind side of the equation, unfortunately, we had to face a high level of cost due to U.S. tariffs and the currency with dollar depreciation. Let's move now to Europe, Asia Pacific and Middle East and Africa. First, as I said, I mean, we are happy to say that once again, we have been growing market share with Electrolux and AEG. We have been gaining more market share with Electrolux and AEG than we have been losing by ramping down with Zanussi. Very high level of pressure in this region as well. I mean we have been going into Black Friday. We have more and more pressure from the Asian competitors, but we have been managing to grow organically by 3.6% in the quarter, which is pretty remarkable, especially when you think that the market has been going down by 1%. We had a positive mix effect, helped by significant volume increase here. And the region has been benefiting by a high level of cost efficiency as well. We have been introducing major innovations in Europe here, and we thought it was wise to fuel this innovation with a higher level of marketing spending. The negative news is certainly on the volume side of the equation. Can we change to the next slide, please? I mean, the negative news is, of course, about the market level. The market has been losing, once again, 1%. We have been down 1% in Western Europe, and we have been up 2% in Eastern Europe. With Western Europe representing more than 80% of the volume overall, the market has been once again down. We are now at the level of 2016. We're 10% below the fourth quarter of 2019. It is a 10 years low in terms of volume. And the market remains subdued. Of course, we have positive signals from interest rate and the construction side of the equation, but it will take time to have these positive signals materializing in additional volume for home appliances. Moving to North America. Now I mean, the quarter has been very challenging. Of course, we knew Black Friday was highly promotional. But certainly, I mean, we did not expect the level of competitive pressure we have seen in the market. And I think entering into the promotional season here, we had no choice but to reduce the price increases we had implemented throughout the year 2025. And that's explaining why we are delivering a negative EBIT in the fourth quarter. So a very high level of price pressure in North America, which has been forcing us to step down for the price increase we had implemented throughout the year. The good news is that after the promotional pressure here, prices have been bouncing back to last year level. But still significant negative external factors are driving our results down. And these factors are simply the U.S. tariff as well as the depreciation of the U.S. dollar. Tariffs are what they are, 15% to 20% for imported goods out of Southeast Asia, 55% to 60% out of China. So if the industry is reacting rationally here, and we will see price increase in the coming weeks, in the coming months, we should be benefiting from that being a North American producer. The market has been pretty resilient when you look at this picture here. The market has been going up in the fourth quarter by 1%, mainly driven by laundry. But still consumer sentiment is pretty low and price increase could have an impact moving forward on the demand. Moving now to Latin America, and I'm glad to say that, I mean, we had another strong quarter in Latin America, gaining value market share in Brazil. The entire region in terms of volume has been growing. We saw Brazil slightly slowing down in terms of increase, but still a good quarter in the region. We had a very strong Black Friday, which is a promotional pressure, but the team has been doing pretty well. And we were helped finally at the end of the quarter by a heat wave, which has been present in the region. Our position remains very strong in the region. I just want to underline one point, which is explaining part of the 11.5% in terms of EBIT. We were helped and supported by a onetime high level of supplier rebates at the end of the quarter in this region. This rebate has not been material for the group, but certainly has been relevant for LatAm. Let me show you a short video on how we have been communicating during Black Friday in the region. [Presentation]
Yannick Fierling: So very strong results in LatAm during Black Friday. We're also glad to report that, I mean, we have been reaching SEK 4 billion in terms of cost reduction. And just as a reminder, SEK 4 billion was on the upper level of the fork we have been communicating about in the last months. We have been reaching this SEK 4 billion through value engineering, better sourcing and higher efficiency in our factories. So we have a very strong process in place internally to deliver these type of results. With that, I have the pleasure to hand it out to Therese, hoping that the pointer will be working, Therese, in your fingers.
Therese Friberg: Thank you, Yannick. And then looking at the sales and the EBIT bridge. We had a 2% growth in the quarter, which was driven by volume growth and also positive mix in Europe, Middle East and Asia Pacific. And we also had a positive volume growth in Latin America. Unfortunately, if we look at then organic contribution to earnings, it was slightly negative. And this is a result of that the positive volume was then offset by negative pricing pressure, especially in Europe, Middle East -- in Europe, Asia Pacific, Middle East and Africa. And as Yannick mentioned, we also had to back off from the previously introduced price increases in North America in the quarter. This volume growth and positive mix was supported by increased investments in innovation and marketing. And we also had a quite strong quarter in the fourth quarter in terms of cost efficiency. And we can also mention here that group common cost was below the last year level, and this is a result of cost containment during the year, but also due to part of a timing effect where the cost in group common cost last year was at a high level in the quarter. When looking at external factors, we had another quarter with significant headwinds. Of course, the introduced tariffs in U.S. continues to be at a high level and a high impact in the fourth quarter. But also, we had a negative currency impact, both from a devaluation -- both from a strengthening of the Swedish krona, which is then contributing to a negative translation effect for the group, but also for North America, where the weakening of the U.S. dollar versus many or several of the important production currencies like the Mexican peso and the Thai baht and the Chinese renminbi is then giving a negative result on the group. And the negative effect in acquisitions and divestments is related to the divestment we did last year of the water heater business in South Africa in the fourth quarter. And then taking a look at the full year, we had a sales growth of 3.9%, where we had volume growth in all our business areas, and we also had a positive mix for the group. This also contributed to a positive organic contribution to earnings despite that during the year, we did see a price pressure, mainly in the European market that also was negative for the full year. We were boosting and supporting the volume growth and our strong product portfolio by increases in investments and marketing in the year. And as Yannick mentioned, we managed to hit the SEK 4 billion in cost efficiency. We had for the full year, heavy headwinds in external factors. Of course, the tariffs we have talked about a lot. And on top of the negative currency that we saw in the fourth quarter, also for the full year, we have negative currency mainly in the Latin American markets in Argentina and Brazil and also in the Australian dollar. And then looking at cash flow. As Yannick mentioned, we had a strong end to the year. So we had SEK 5.2 billion operating cash flow in the quarter, which took the full year then to SEK 2 billion, which was almost in line with the last year cash flow. The strong operating cash flow in the quarter was driven by positive working capital and mainly by a large reduction in inventory. As you know, our seasonality is like this that we always have a positive contribution from reduced inventory in the fourth quarter. But also as we have talked about during the year, we came from a position where we, specifically in certain categories and in certain business areas, were at a high level going into the fourth quarter. And specifically then mentioning air conditioners in Brazil, where we, at the end of the year, had the heat wave in Brazil, which also helped us to reduce inventory further. We're also keeping high containment of CapEx, and this has also been helping and CapEx is below the last year level. And then looking at the balance sheet and liquidity, we have a solid liquidity and a well-balanced maturity profile. In the fourth quarter, we were amortizing a long-term borrowing of around SEK 2 billion, and we also draw down on the previously announced loan with EIB of USD 230 million. If we look into 2026, we have a maturity upcoming in October of SEK 5.5 billion. And as at the end of December, we have a liquidity, including revolving credit facilities of SEK 32.7 billion. We have no financial covenants, and our target is to maintain a solid investment-grade rating and our leverage improved during the quarter and the year. So we ended the net debt to EBITDA by the end of the year at 3x. And with that, I hand back over to Yannick.
Yannick Fierling: Thank you very much, Therese. See, it worked fine in your hands. So let's hope it will be like that as well for me. So moving now to sustainability. And as you all know, I mean, sustainability is in our DNA, and we are very proud to be one of the sustainability leaders in the industry. We do have very ambitious targets moving forward. We are planning to reduce, between 2021 and 2030, Scope 1 and 2 by 85%, Scope 3 by 42%. We're planning to have 35% of recycled material in our product. And in terms of incident rate, we have a very ambitious target to be at 0.3, which is best-in-class in the industry here. We made tremendous progress in 2025. And we're proud to say today that, I mean, we have been reaching, out of the 85% already in 2025, year-to-date, 45%, 33% for Scope 3, and we have 23% today of recycled material in our products. In terms of incident rate, we have been reaching the target of 0.33. Let me just come back. I mean, it's a little bit more than 1 year that I'm in this position today, and we have been defining very clearly these 5 strategic pillars when I started. First, it was about improving North America. And yes, we had a difficult quarter in Q4 in North America. However, let's take into consideration that we have been growing organically in this market by more than 6% in 2025. We have been gaining shop floor spaces. We have been entering into channels like the contract channels in a very significant manner. We have been ramping up Springfield in Q1 to cruising altitude today. Yes, this market is extremely difficult because of tariff, but producing in North America the vast majority of our products, we are well placed moving forward. In terms of profitable growth, we have been declaring the target of growing by about 4% mid- to long term during the capital market update. We have been growing in 2025 by 3.9% after a strong growth as well in 2024. So we are restarting to grow in Electrolux after having lost quite a lot of scale in the past years. We have been strengthening our market position. We have been launching a lot of great innovations in 2025. I would just mention some of them. I mean, we have been presenting the pizza features. I mean, we have been launching this feature in North America very successfully, in Europe. We had new kitchen lines in Europe as well under AEG and Electrolux. We have been launching our new dishwasher in 2025 as well. Lots of innovation here, innovations we have been fueling once again with marketing spending. Cost reduction, we're proud to say that, I mean, we have been reaching the SEK 4 billion. It was a challenging target we put in front of ourselves here. We communicated a fork between SEK 3.5 billion and SEK 4 billion in the last months. We have been reaching the upper spectrum here. But more importantly, we have a very solid [indiscernible] in place in the company to keep on delivering cost saving moving forward. Last but not least, it is about culture, it is about leadership. And I always said, my objective is to combine 120 years of history of Electrolux with all the changes we see in the market right now in order to drive more speed and agility. And that's the perfect bridge to the next slide. We have 4 very clearly defined strategical drivers, which are, first, our bread and butter customer preferences. The second one is about life value creation, sitting next to our customers along the consumer journey from the purchase to the disposal of the appliances. It is about cost leadership and certainly about cash. But all of that will only be possible if we have the key enablers on the right-hand side. And one of them is about culture. And that's why we're happy to announce today a second wave of organizational changes. And the aim of these organizational changes is to get us closer to the end consumers, in order to be able to listen to them and innovate more and more and bring progress in their homes. This new wave of organizational changes will clarify a role, reducing duplication of responsibilities moving forward. We will be faster, we will be more agile, having end-to-end clear accountability in the organization. I'm moving now to the market and business outlook. During the fourth quarter, market demand in Europe decreased with geopolitical and macroeconomic uncertainty weighing on consumer sentiment. Consumers continued postponing discretionary purchases, and demand for building kitchen products remained subdued. In a longer perspective, it is important to remember that the European market is on a 10-year low. Again, we have been losing 1% in the fourth quarter 2025. Looking at 2026, we expect market demand to be neutral. There are signs of recovery as a consequence of a low inflation and interest rates. However, market demand is expected to remain subdued due to continued geopolitical uncertainty. Now moving to North America. In North America, market demand remains resilient in the fourth quarter with a plus 1%. The industry market price adjustments did not reflect the implemented U.S. tariff structure, and competitive pressure and promotional activity remained high, and we decreased prices in the quarter. In 2026, we expect market demand to be neutral to neutral negative. Geoeconomic uncertainty is foreseen to remain in North America, and under the current tariff structure, general market pricing should adjust to reflect associated tariff costs. This may adversely impact consumer demand and market growth. Consumer demand is estimated to have increased in Latin America in the fourth quarter. Competitive pressure increased in the region, most notably in Argentina, where the strong growth was driven mainly by imported goods. Consumer demand grew in Brazil, although at a slower pace than in the fourth quarter 2024, mainly due to inflationary pressure and high interest rates affecting consumer spending. Brazil will have elections in 2026, which might elevate uncertainties, and we expect market demand to be neutral with a stabilizing consumer demand following growth in 2024 and in 2025. Let me turn to the business outlook 2026. Volume, price and mix is expected to be positive in 2026, driven by volume growth and growth in the focus categories. This is expected to be partly offset by a negative price development. We anticipate that the high degree of demand will continue to be driven by replacement purchases. We expect investments in innovation and marketing to increase in 2026, again, to fuel our new products. New product launches provide us with a great platform to continue driving growth in our focus categories. Our focus on cost savings and improved efficiency throughout the group is critical for our competitiveness, and we anticipate, again, SEK 3.5 billion to SEK 4 billion earning contributions from cost efficiency in 2026. External factors are expected to be significantly negative for the year, driven mainly by increased tariff costs. The impact from currency and raw material is expected to be relatively neutral. The full year capital expenditure is expected to increase to approximately SEK 4 billion. With that, I close, and I hand that to you, Ann-Sofi.
Ann-Sofi Jönsson: Thank you. So we will open up for Q&A, and we will start by opening up for questions on the telephone conference.
Operator: [Operator Instructions] We will now take our first question from the line of Fredrik Ivarsson from ABG Sundal Collier.
Fredrik Ivarsson: First, on North America, if you could help us out a little bit with the bridge in Q4 as the losses increased by almost SEK 200 million in the quarter. I presume tariffs and FX played a significant role, as you alluded to. But if you could help us out with that, that would be helpful. And also, if you have any view on the inventory situation in the U.S. market today with some focus on the nondomestic players.
Yannick Fierling: I can start with that, Fredrik. Thanks for your question. I think the main impact, as we said previously here is the fact that we have been reducing our prices. In all fairness, as we said, we were able to compensate for the vast majority of the tariff impact in Q2 and Q3. That was due to the competitive pressure we have been observing in Q4, unfortunately, not possible. And we had during the quarter, we had to take the difficult decision to reduce our prices. That's the first aspect. The second one, as you said, is certainly tariff, tariff and the devaluation of the U.S. dollar, which has been weighing pretty significantly in the negative external factors we had to face in the fourth quarter. So that's it. I mean, as I said previously, I mean, prices have been bouncing back pretty quickly post Black Friday in North America to last year level. Our last year level is not enough to compensate for tariff. Now I mean, it's very important to just repeat and remind everybody about the basics. Imported duty goods out of Southeast Asia are taxed today between 15% and 20%. Out of China, it's between 55% and 60%. We have competitors which are massively importing out of these regions here. So if the industry is reacting rationally, what we should be seeing, what we should be expecting in the coming quarters is certainly a price increase. Now to your last question about inventory. I mean, we have been mentioning it very clearly as well in the last report. I mean, we expect the last goods to be arrived without the full tariff impact to have arrived in North America beginning of October. I think it is wise to see or think that most of these goods have been consumed during the promotional season on Black Friday. So I think most probably what will be remaining today in the North American market are goods which are fully impacted by the tariff level I mentioned previously.
Therese Friberg: And maybe we can just add that the vast majority of the headwinds we had for the group in external factors is related to North America. So let's say, that's the magnitude of the headwinds we saw that we were then again not able to offset with price increases. But the underlying performance then from the business was positive.
Fredrik Ivarsson: Yes. That's very clear. I think I lost you a little bit in the end, but that's a super clear answer. And then second one on LatAm, quick, if you could just talk about that onetime high level of supplier rebates in the quarter. How much did that sort of add to the margin, which was obviously very high?
Yannick Fierling: First of all, we are very proud about the earnings we do have in LatAm. I think, again, I mean, LatAm is delivering very strong results in 2025. And believe me, it is thanks to our strategy, and it's not a short-term strategy, a long-term strategy we have been putting in place in the region here in terms of product leadership, I mean, go-to-market. So that's the first point, and we should be underlining that. Certainly, we are stressing the fact that, I mean, we had a one-time supplier rebate at the end of the quarter. I mean, this supplier rebate is not material for the group. It is relevant for the region, and that's why we have been mentioning it, but I want to underline that it's not material for the group.
Fredrik Ivarsson: Okay. And then just one last housekeeping before I jump back into the queue. If you have any guidance on the group costs for '26 since they were fairly low last year. I guess you mentioned a timing impact there, Therese. But if you could help us out with some expectations for '26, that would be helpful.
Therese Friberg: Yes, I would say for the full year, I could say that it is a little bit on the low side. Of course, we will try to really keep a very high cost containment in the group common cost. But also for the full year, I would say it is a little bit on the low side, as an indication.
Fredrik Ivarsson: You mean 2025 was on the low side?
Therese Friberg: Yes, exactly, yes.
Fredrik Ivarsson: High in '26. Okay, good.
Operator: We will now take our next question from the line of Johan Eliason from SB1 Markets.
Johan Eliason: Also sort of relating to the pricing component. You also mentioned pricing negative in Europe and rest of Asia. I guess, it's mainly Europe. Is that sort of -- you talked about the trade down, but I think it sounded like you have a lot of new products coming in, in AEG and the Electrolux brand. Is it so that you also sort of discounted out some of the older products still remaining, and then the pricing should somehow then be a little bit of a temporary issue? Or is that wrong of me to think like that?
Yannick Fierling: Johan, thanks for the question. It's an important question here. First of all, I mean, mix and volume have been positive in Europe in the fourth quarter. And I think I don't know how familiar you are with the concept of price index, but price index being basically at 100 would be the average of the prices here. What is very important for us, and we have been fighting for that, is to keep the price index we had throughout the year for both Electrolux and AEG. So we absolutely have been very directive on keeping the brand positioning in the regions. And actually, our price index has been even going slightly up. So the decision we took now a couple of years ago to exit the entry price point and really focus on the core plus and premium segment has been the right decision. And we are occupying today and growing into these 2 segments, which are core plus and premium segments. Where the big price war is going on even in a more fierce manner is certainly in the entry price point segments, where we have more new entrants putting pressure on the price level. And that's taking a little bit down the entire European market. I think what is very important for us is, again, to leverage our brand, to leverage the strength of our brand, leverage the innovation we are putting here in the market and actually occupy and grow where we belong, which are the core plus and premium segment in the market.
Johan Eliason: Good. Then just on your pricing outlook again. You say price/mix and volume to be positive in '26 and then you focus on volume and the mix, sounding like prices could be negative for full year on a group level. Then your comments on U.S. prices have to adapt to the tariff level leaves me with the thinking that pricing should then be negative in sort of Europe, Asia and Brazil. Apart from Europe, where we discussed the tough in the entry level, what about Brazil? It seems like you were more comfortable with the Q4 development than Whirlpool were in their outlook statement.
Yannick Fierling: No, I think you're absolutely right, first of all, to divide this question per region, because the answer will be slightly different region by region. First, I think if you look at Europe and Asia, we're absolutely expecting the price pressure to continue moving forward. I mean, we will have more and more pressure, as I said, especially on the low-end segment and entry price point segment, and we need to defend basically the value on the core plus and premium segment. In Latin America as well, you're absolutely right. I mean, to mention Brazil and Latin America, we have price pressures in Latin America as well with new entrants coming out of Asia as well in Latin America and as well in Brazil. However, once again, I mean, our position is pretty clear. We are playing in Latin America as well in core plus and premium. And the new entrants are mainly playing in the low-end segments. And that's why we are gaining and we keep on gaining value market share in this region. And in all fairness, I mean, the biggest battle getting played is in the entry price points here. So we're redefining our go-to-market, we're redefining our innovation in Latin America, the strength of our brand. The brand is very strong in Latin America, and we're executing here. The last one is, of course, North America here. North America would very much depend if the industry would be reacting rationally now to the tariff structure. As we said many, many times, but I think it's worth repeating, the current tariff structure is benefiting the local producers, and we are only 3 major local producers in North America under the condition, of course, that, I mean, prices would be moving up. Otherwise, you just need to absorb the tariff structure in the negative external factors. So I think it will be very interesting to observe moving forward what the price evolution would be in North America. I would just finish by one point, which is extremely critical here is that, I mean, we certainly are expecting higher pressure moving forward on prices. And it's making cost reduction and cost efficiency even more important moving forward. And that's why we are putting as well so much emphasis on getting more efficient, preserving, of course, the quality of our products, preserving consumer preference for our products here, but getting more efficient as a company such that we can mitigate the price pressure we'll be encountering in the 3 markets.
Operator: We will now take our next question from the line of Uma Samlin from Bank of America.
Uma Samlin: My question is on the raw material front. I mean, given a lot of the raw mat that you use, steel, for example, the prices increased quite a lot over the past few months. I was wondering that how do you think about that going forward? It seems like you think it will be neutral when it comes to raw material impact in 2026 in your slides. Just wondering how does that work? And how should we think about that? That's my first question.
Yannick Fierling: Absolutely. What we said, just to be very precise, is that, I mean, the impact from currency and raw material is expected to be relatively neutral. But let me put a little bit of flavor on that. As you know very well, we are hedging. We're hedging our plastic material, and we're hedging even on a longer time period, I mean, steel. So I think we have been hedging part of plastic, and we have been hedging part of steel. What we see right now, of course, is a potential increase in steel in North America because of tariff. So that's what we're expecting here. So I think we see pressure on the steel side of the equation on North America. However, if you balance, I mean, currency together with raw material, we see that to be relatively neutral moving forward. Therese, do you want to add anything on that? No? Very good.
Uma Samlin: Okay. And just a follow-up on North America. I was wondering like what are the dynamics you're currently seeing in Q1 post the Black Friday period? I mean, obviously, I guess you understand that a lot of the inventory has been perhaps still there for the Black Friday promotion period. But after that, I guess, previously, you've said that you expect pricing to normalize, stabilize going forward, because it wouldn't make sense for especially the Asian competitors not to compensate for the tariffs. So just wondering, what are you seeing today on the market? Are you seeing similar dynamics so far in January as in Q4? Or are you seeing any improvement there?
Yannick Fierling: I think -- of course, I mean, we will not be discussing in detail about Q1. What I can tell you is that, as I said, I mean, prices have been bouncing back in December to last year level post Black Friday, and they have been bouncing back quicker, I would say, compared to 2024 post Black Friday. I think I'm stating the obvious to all of you here, but I mean, there has been quite a lot of discussions around tariff as well with the Supreme Court. And I think this discussion probably has been inducing doubts on how sustainable tariff would be moving forward or if there will be changes. So I think now it's pretty clear that, I mean, the decision will not be -- has not been happening in the first weeks. So again, with the level of tariff we're having out of Southeast Asia and China, rationally, I mean, we should see movements at least in the market.
Therese Friberg: Sequentially, we have seen prices then improving post Black Friday, but we're not really seeing price increases to offset the current tariff structure.
Ann-Sofi Jönsson: We have a few questions from the web as well. And here is one that is a little bit repetitive to what we have been speaking about. But are 2026 savings enough to offset external headwinds? And any color on where external headwinds will have the main impact?
Yannick Fierling: I think, again, it's very difficult to say. I mean, we don't know exactly how currency will be moving on. Very difficult to predict here on the matter. What we say is that, I mean, we're setting again very ambitious targets in terms of cost reduction, which is between SEK 3.5 billion and SEK 4 billion in 2026 here. And I think it will be of prime importance to deliver on this target to face any type of headwinds we will see in terms of price pressure, tariff and others moving forward. But again, as Therese said, I mean, tariff, we were not able to compensate, at least in Q4, the full tariff impact through our pricing strategy.
Therese Friberg: And on external factors, of course, as we've talked about, we expect currency and raw material, with the current levels and the, let's say, current hedging, to be essentially flat right now. And then, of course, we have significant headwinds still year-over-year in tariffs. And then we are still having some inflation. So we're still having, of course, some high inflation countries that will also be a negative impact a little bit then, yes, broader across the regions.
Ann-Sofi Jönsson: Now we go back to the conference call again.
Operator: We will now take our next phone question from the line of Akash Gupta from JPMorgan.
Akash Gupta: I have a couple of questions as well. The first one is on external factors. I think you said you're expecting significant, but I was wondering if you can help us quantify a bit. So if you look at, in second half last year, on average, you had SEK 700 million-ish external factor with SEK 1.5 billion in second half primarily coming from tariffs. So is it fair to say that when we look at 2026, probably we should expect similar SEK 1.5 billion external headwind in first half before it might go down a bit in second half, because you have the same base as year before. And therefore, overall external factors based on how it looks today could be somewhere below SEK 2 billion. Would that be a good estimate?
Therese Friberg: Yes, of course, we are not that specific, but your overall rationale seems like a reasonable logic.
Yannick Fierling: I would just remind everybody that in the fourth quarter, at least, I mean, the external factors were split between tariff and currency and the depreciation of the dollar.
Akash Gupta: And my second question is on your cost efficiency. Again, the number you guided for 2026 coming in ahead of what people were expecting. But maybe can you tell us about where is it coming from, which geographies, which product lines? And will there be any cost to get this cost efficiency that might lead to some one-off below the line? And also, when we look at the phasing of this cost efficiency, I mean, can you give an indication? Last year, we had a very big Q4. How should we think about the spread between first half, second half this year?
Yannick Fierling: Thanks a lot for the question. I think it's an important question. I mean, as mentioned previously, we have been putting in place -- end of 2023, actually, we started to put in place a cost excellence program in the company, which is a very well-structured program, a cross-functional program heavily focused on engineering for design changes, procurement in terms of sourcing and of course, conversion in our factory. I mean, we took some time to ramp up in 2024. And in 2025, I mean, this program has been delivering to the level we have been describing here on the SEK 4 billion. It is, again, very much process oriented. The program is the same across product categories. So I think there is no significant differences in terms of product categories here. And it is as well, I mean, very well distributed across the different regions. So no major differences from product line to product line or from region to region. I think the important matter is really the systematic approach we have to address cost reduction and efficiency. And I think, of course, we'll be leveraging that moving forward.
Operator: We will now take our next question from the line of Timothy Lee from Barclays.
Timothy Lee: So the first question, I would like to follow up a little bit on the Latin America, the supply rebate. What's the nature of this given it is onetime, why it is not recurring? And if you think about the margin going forward, what level of margin should we expect for the Latin American market if we are not considering this supplier rebate to continue?
Yannick Fierling: I want to repeat what I said previously. First of all, I mean, it's not exceptional. I mean, we have year-end rebates on the supplier side of the equation. And Michelle, our procurement lead, with the entire team, I mean, globally and in Latin America, have been doing an outstanding job in 2025 here, which have been driving to a one-timer significant rebate at year-end. But I want to repeat, I mean, and I think it's very important in terms of verbiages. I mean, this one-timer is not material for the group. It's only relevant for LatAm, and that's why I think it was very fair to mention it. On the other hand, I mean, if you look at, I mean, the 3 first quarters, and the last quarter is always the strongest one in the year from a seasonality perspective, we have been delivering very well in Latin America for the 3 first quarters. And I think we had a great Black Friday, again, based on an outstanding work from the team, especially in Brazil, but as well in Latin America, which have been driving to these results. That's what I would be saying. For sure, I think it was worth mentioning this one-timer. I mean that's very fair here. But I mean, that should not be undermining really good ongoing results for Latin America.
Therese Friberg: And while we wanted to mention it, it's not a one-timer, if you look at it in the full year perspective. It is a one-timer in the sense that the full effect is happening in the fourth quarter. So that is what is then boosting a bit additionally, let's say, the results, specifically in the fourth quarter for Latin America.
Timothy Lee: It's fair to say that -- obviously, we have the seasonal factor, we have the seasonal stronger quarter in the fourth quarter, but this year is definitely much stronger. So can I assume, if we are not seeing this higher rebates than normal, it is probably the margin in the quarter is somewhat similar to what we had in the past quarters or in the previous year in terms of seasonality?
Yannick Fierling: Again, I want to repeat. I mean, there is always a seasonal effect. I mean, in our industry here, fourth quarter being the strongest quarter here. I mean, we cannot go much more into detail here regarding that, but I think the explanation we gave is the one. It is a strong quarter in Latin America. I mean, these are onetime rebates not undermining the performance level in Latin America right now. And again, it is something which is not material for the group, but relevant for Latin America.
Therese Friberg: And what we want to say is that Latin America has not reached a completely different profitability level. So I guess your conclusion of that, it is continuing to perform at a high underlying level, boosted by additional seasonality in the fourth quarter and by this additional supplier rebate.
Timothy Lee: Okay. Understood. And my second question is on Europe. I think you also mentioned there was some positive effect on earnings due to the phasing of the innovation and marketing expenses between quarters. Can you elaborate a bit more on that? Does that mean there was some marketing expenses, which probably deferred from Q4 to, let's say, Q1?
Therese Friberg: No, not related to Q1, I would say. But it's more the phasing as well during the year where, specifically for Europe, we have had some additional marketing earlier in the year compared to last year. So it's only a phasing, I would say, within the year of 2025.
Timothy Lee: Understood. And my final question would be on your cash flow statement. I think there was a provision that you released in Q4 of SEK 476 million. Can you explain what's the item for this release?
Therese Friberg: No, that we don't recognize a large provision that was released. The main impact that we mentioned is the reduction of inventory of SEK 3 billion in working capital.
Yannick Fierling: Yes. And that's what we said. I mean, there was a very significant effort in the fourth quarter to reduce our inventory in the 3 regions, and that's what we have been delivering.
Ann-Sofi Jönsson: Okay. Thank you. And we have more questions from the web. So the next question is, the leverage improved in the fourth quarter, but still the net debt remained rather high. So could you -- or do you have concerns about the net debt level? Could you elaborate around that?
Yannick Fierling: Yes. Listen, I mean, we have been delivering SEK 3.7 billion in EBIT in 2025 here, 2.8%, which is 0.8% better than last year. We have been getting our leverage to 3.0. But I mean, it's a fact, I mean, our debt level is pretty high. And I would say that like any other companies in the same situation, we are constantly evaluating the capital structure we do have today in order to deliver the strategy, the profit and the growth we have in front of us.
Ann-Sofi Jönsson: Okay. Great. Now we turn over to the telephone conference.
Operator: We will now take our next question from James Moore from Rothschild & Co Redburn.
James Moore: It's James from Rothschild. I've got a few. I'll go one at a time, if I could. Just on cost efficiency, great to see the SEK 3.5 billion, SEK 4 billion again in '26. And I know you're doing an ongoing best cost country procurement sourcing action, and you're trying to be more sustainable in the ability of savings to get every year. I'm just wondering, is this level for '26 indicative of the sustainable potential in the outer years of, say, 2027 to 2030? Or is the run rate this year still elevated? Is there any sort of way you can quantify what your new procurement savings machine looks like in the outer years?
Yannick Fierling: I think, first of all, thank you very much for pointing that out. And good day to you. I mean, because, yes, best cost country sourcing is absolutely something we are focusing on in the procurement organization. Big focus in 2025 with the arrival of Michelle. Michelle is located in Asia today. And I think we have been focusing throughout the year to understand what best cost country sourcing was for the different regions, because as you can understand, maybe, I mean, China is not a best cost country sourcing region any longer for North America, at least for all the components we do have today. So we have been really doing, I think, a good job on the procurement side of the equation to expand the supply base. We have to be fast as well in releasing these components here without endangering the quality we do have. And that has been a source of the saving you see right now. But I mean, whatever we have been implementing in 2025, of course, will remain in our products in 2026 moving forward. And we have this clear process in taking additional actions in procurement in order to investigate what are the other components we may be going and source from better suppliers.
James Moore: But you can't say whether the rate in '26 is elevated versus the outer years?
Yannick Fierling: I think -- and again, in all fairness, I mean, we -- I don't want to -- I'm never somebody who is pleased to start with. So it's difficult to be fully satisfied about that. But in all fairness, I mean, the delivery we had in 2025 was a strong delivery. And that's why I think we were able -- I mean, procurement has been a major contributor in delivering part of the cost savings here. So I'm expecting them not to slow down in 2026.
James Moore: Okay. And just on price, I hear everything you say net negative U.S. -- sorry, Europe, Asia more than offsetting positive U.S. I would have hoped for a sort of like a mid-single-digit price hike all in net after promotion in '25. And obviously, it depends on the behavior of rational or not rational agents. But is it fair to assume that you're assuming materially less than 5% behind your comment? And I'm trying to gauge your degree of conservatism. Do you think that it is possible to achieve that in the situation that the Chinese and Korean manufacturers hike their prices? And talking of that, tied to that, have you seen the Chinese or Korean manufacturers hike their prices in the first month of the year? I can't see any channel indications that they have yet.
Yannick Fierling: First of all, I mean, I think we should not be forgetting about what has been achieved in the first quarters of 2025 in terms of price increase. And I need to recognize my North American team for the agility they have been showing, because the picture has been changing several times, I mean, throughout the months in 2025. And we have been taking and grabbing any opportunity we had to increase prices, and we have been leading price increase in Q2, Q3, and we have been compensating the vast majority of the tariff impact in Q2, Q3. I mean, this situation was simply not sustainable any longer in Q4, especially in the light of the promotional period we had. And we had to face reality, especially looking at, I mean, potential volume impact that we had to step down on prices. And let me tell you that promotional level in 2025 was at least at the same level as in 2024, which is pretty incredible when you think about the tariff level imported finished goods are facing today, 15% to 20%, 55% to 60%. So I cannot -- I mean, as Therese said, we have not seen -- we have seen basically prices bouncing back in December quicker than last year. But in all fairness, I mean, we have not seen tariff being reflected in the price level in North America. Now the big question is -- I mean, we are benefiting from producing in North America. The big question is, is this situation sustainable with 15% to 20%, 55% to 60% tariff for people and for competitors which are sourcing most of their products today for the North American market.
James Moore: Great. I've got a couple of more technical ones, if I could. Just in terms of your external factors, I think, Therese, you mentioned the majority of the SEK 739 million group impact was in North America. There's obviously some dollar impact and there might be some stuff in Asia and Europe. But would it be fair to say roughly SEK 0.5 billion was the impact of pure tariff in the quarter? And would it be possible to say whether your FY '26 tariff assumption is closer to SEK 1 billion or SEK 2 billion, to gauge the tariff?
Therese Friberg: Yes, we don't give that specifics. But yes, I would say a relevant portion of the external factors was related to currency in the fourth quarter and the rest was tariffs. So there was a significant impact of tariffs.
Yannick Fierling: The majority was tariffs.
Therese Friberg: Yes. And this is, of course, the level that we are expecting to continue for the first half. And then to your point, it will then -- for the second half with the current tariff structure still being in place, it will sort of even out from a year-over-year perspective.
James Moore: Okay. So we comp out easier in the second half? Could you remind us, was the third quarter a similar magnitude to the fourth? Or was that sort of like half?
Therese Friberg: It was similar, I would say.
James Moore: Okay. So it's really a first half outstanding impact that we have yet to address?
Therese Friberg: When it comes to the tariff impact, yes, the majority in the first half.
James Moore: That's great. And just the final one, just going back to that other point. Has there been any indication of Asians rising price in the U.S. market in the last 30 days?
Therese Friberg: No, not apart from what we mentioned, that sequentially, the heavy promotions from Black Friday has been, of course, lifted, so to say. So sequentially, we have seen pricing coming up, but we're not really seeing price increases to offset the tariff structure that is in place on top of that.
Ann-Sofi Jönsson: Thank you very much. We are now running out of time. I know we have more questions. We will make sure that we will get back to you from the IR team. And I would like to thank everyone who has listened in, but I would also like to hand over to Yannick for a few closing words before we end this session.
Yannick Fierling: Again, we have been making progress in 2025, and we have been delivering according to the strategic drivers we defined early on. I mean, we're very much looking to do the same in 2026 and delivering basically in the coming quarters. Thank you very much for attending today.
Therese Friberg: Thank you very much.