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Kim Junge Andersen: Good day to everyone, and welcome to ROCKWOOL A/S conference call regarding the results for the first half of 2025. My name is Kim Andersen, and I'm the CFO of ROCKWOOL A/S. Today, I am pleased to present CEO, Jes Munk Hansen. [Operator Instructions] As a reminder, this conference call is being recorded. First, Jes will go through our presentation and give you an update of the results for the first half and second quarter of 2025. Afterwards, we'll be ready to answer all your questions. Before I hand over the word to Jes, I would remind you to on Slide #2 on the forward-looking statement, and please be aware that this presentation contains uncertainties. We can go to the next slide.
Jes Munk Hansen: I will start on Slide #3. As you all are aware, the construction industry is still a bit challenged in the macro context owing to an increased uncertainty and geopolitical. And at least from our side, we do not expect that to change for the rest of the year. For us, the revenue in the first half increased by 1%, where the acquisitions we made in October last year contributed with a EUR 0.02 increase. As expected, the decline in our Russian performance, our group performance influence the group. And without Russia, the organic growth would have been stable. Pricing had a impact in the first half year where inflation and sales prices by large, were offsetting each other. As expected, the EBIT margin declined to 15.8%. However, we think the results are acceptable as it comes on the back of an unusual high performance in both North America and Russia last year. If I go to the Q4 highlights on the next page. You see that in Q2, sales were affected by fewer working days and a continued decline in Russia. Also, the record high performance in North America last year made the comparison to the comparables to last year, very difficult. The construction industry, as I said before, is significantly affected by geographic turmoil and particularly related to trade and tariff issues we are facing, which has led to a role of delays in projects in the pipeline. And I can come back to that during Q&A, but it's particularly something we see in the U.S.A., where we see strong pipelines and ongoing quotation, but simply not the orders being placed. On the EBIT margin, the Q2 results were affected by 3 main factors. First of all, provisions for closing down the factory in Trondheim in Norway and 3 longer than planned production stoppages. The stoppages in themselves were planned. They were just taking longer to perform. Secondly, we had higher spending in capacity expansion projects and our ongoing digitalization than we had last year. And last but not least, the continued decline in Russia business has also affected our margins. In short, we believe we have navigated well during a very challenging quarter, especially when we compare to the very high Q2 last year. Now turning to Page #5 regarding our first half year revenue. When I look at the Insulation business, the Insulation segment, the 1% revenue growth was by technical installation and our acquisition in Wall Systems and also from our North American business. That was on the other side, offset with a slowdown, primarily in Eastern Europe, as I said, particularly in Russia. And here, just to repeat acquisitions accounted for 2% of the revenue growth. In our Systems segment, the 1% revenue decrease was driven by our Grodan business due to a lower sales in the legal cannabis market in North America. Our Lapinus and Rockpanel business had single-digit increases, while our acoustic Rockfon business was flat compared to last year. When I look at Q2 revenue, it was down 2%, and sales in the beginning of the second quarter of '25 were particularly impacted by the fact that Easter fell in April, which has actually reduced the quarter by 2% working days, so to say. Sales were, in general, difficult in April and May, but actually improved towards the end of the quarter in important markets such as France, Spain, United Kingdom and actually a little uptick also in the U.S. Insulation segment, specifically, the 2% revenue decrease was driven by a slowdown in East Europe as just mentioned, and here, mainly Russia. And in Systems segment, the 2% revenue decrease in the quarter was again driven by Grodan, as I just mentioned. When I look at the sales or the revenue by regions, you can see that Western Europe was flattish. And in Western Europe, there were actually also some markets that did well with double-digit growth in the U.K., Italy and Spain, where we had Germany with a small decline and a double-digit decline in the Nordic countries. In France, the French government has a renovation support scheme that has been temporarily paused actually due to an overwhelming demand in these fronts and although sales picked up again towards the end of the quarter for us. In Eastern Europe and Russia, as I said, we saw a decline and sales in Poland, on the other hand, started picking up at the end of the quarter. In the United States, we compared to a record high and unusual high Q2 last year, although demand remains strong. There's still a lot of this wait and see, as I briefly alluded to before in the market. And the hesitations are driven due to the ongoing uncertainties around inflation and around tariffs with our customers and their customers looking to greater clarity before air placing the actually orders on the projects existing in the pipelines. Page 8 is about quarterly profitability, which decreased. And in short, just to take it from the top, the EBITDA is down 10% from EUR 253 million to EUR 227 million, which is resulting in a 2.1 percentage point lower EBITDA margin due to lower operational efficiencies in a couple of factories and unfavorable country and product mix. If we look at the EBIT margin for the quarter, it landed at 15.5%, a larger decrease than the EBITDA, and that is due to a higher depreciation from our larger investment program and write-downs relating to the closure of the factory I mentioned in Norway in Trondheim. In total, the restructuring provisions and the write-downs related to the factory closure amount to around EUR 5 million. Excluding the acquisitions made last year, EBIT margin would have been 15.7%. And all in all, we believe that considering the global uncertainties and macroeconomics, these results are acceptable. I'll turn to Page #9, where we look at the segments and profit. And looking at the Insulation segment, profitability, the EBIT margin in Insulation segment was down 2.9 percentage points compared to Q2 last year, and this is largely impacted by what I said before and the negative country mix. In the Systems segment, profitability declined compared to last year, and this was driven by lower revenue and decrease of profitability in the Grodan business, as I mentioned. To the next page, 10, which is our investment activities. You will notice that -- we also in our outlook call on to our investment activities, and this is reflected here as we believe in the long-term demand for our products, and we remain very optimistic about the future. And that's why we continue to invest in capacity expansion, our own decarbonization, manufacturing technologies to improve productivity and importantly, digitalization of our business. And our biggest investments here in the last quarter were related to capacity expansions in Romania where we're currently in a sold-out situation and in the United States, and electrification of product lines in our large factories in the Netherlands, in Oman and in France, in. Then I have a piece of good news. I just wanted to share with you, and that is that we have gotten the building permit for our new factory in Sasan in France, is something that we have been waiting for quite a while, but now we have the building permits and can also start the construction there. A quick look at the cash flow on Page 11, where we had a free cash flow of EUR 84 million, which generated a net cash position of EUR 86 million. Then because at half year, we have 1 slide just briefly talking to our sustainability goals, all in all, here with one slide. Let me start with safety, which is our top priority in ROCKWOOL, where we did not live up to our own expectations and where we really actually had a fatality and a couple of incidences in the first half year. We, of course, spent quite a lot of resources on investigating what went wrong and share lessons learned among our factories. All and all, the LTI rate has improved over last year, but for the last 2 quarters, we had these incidences. On the sustainability side, we are progressing as planned, actually ahead of plan, both on the SDG-related goals with the baseline 2015. And you see that on the left of the slide and the SBTi-related targets, Scope 1 and 2, that's, of course, a baseline 19. You see on the right side. And we are quite on track here and keep on investing into these targets. We are also on track with the remaining SDG-related goals, although we used more water during the first half of 2025 due to a lower use of recycled and reused water as well as some timing differences in cleaning and maintenance activities. But all in all, very well on track with our sustainability efforts. Last but not least, Page 14, the outlook for the full year, and I'm sure what you noticed yesterday mostly, and just a few comments to that. While adjusting our outlook to reflect the uncertainties that we see in the market, and that is very much also why we did this adjustment. We do stay committed to investing for the long-term value creation. It's a very bad macroeconomic environment that we operate in and with the ongoing geopolitical uncertainty that we keep on seeing and expect the near term to be constraining some of our key markets, particularly in North America, we had to make this small adjustment to our outlook. So assuming no major changes in the current conditions and based on the first half year performance in 2025, we expect that our full year revenue will be at level with last year in local currencies compared to the previous outlook, where we had an outlook of low single digits of revenue growth in local currencies. We, of course, continue to monitor the market condition and assess the possible impact on performance across organization, and we will adjust capacity and activity level, if needed. Based again on the first half year, earnings level and the ongoing efforts, we forecast now an EBIT margin below 16% compared to the previous outlook where we had an EBIT margin formulated to be around 16%. The large investment projects are on track and the investment level around EUR 450 million, excluding acquisition is a target we maintain also in our outlook. These were the main comments to the slides, and we will now open up for questions. I don't know if you can hear me, but there's some technical issues. So just stand by, so it gets fixed. It's our understanding that you can hear us. We can unfortunately not hear you. So we keep on working on resolving this technical issue. So standby.
Operator: Okay. So this is the operator speaking. I will join you back into the conference call. We have the host line back again.
Kim Junge Andersen: We are now ready for questions. And I know that Kristian from SEB are the first in line. I hope that we can open up your line Kristian.
Kristian Tornøe Johansen: Can you hear me?
Kim Junge Andersen: Yes, we can. .
Kristian Tornøe Johansen: Excellent. Well, you dropped out just before you were going to talk about your EBIT margin guidance. So fortunately, that is exactly what I was planning to ask you to begin with. I'm a bit puzzled why you have chosen an open-ended guidance. So when you say below 16%, what do you actually mean? Do you mean 15% to 16% or 15.5% to 16% because your growth guidance is fairly specific. So can you just elaborate a bit on what you're trying to communicate by saying below 16%.
Jes Munk Hansen: But we're trying to say it's closer to 16%than 15%.
Kristian Tornøe Johansen: Okay. That is quite clear. Then to your comments about North America and the slowdown or delay which you are referring to maybe trying to a bit deeper into this. So what segments are primarily impacted in -- and what is the reason for these customers sort of delaying projects in these given segments? Is it the direct impact of tariffs or is it consumer sentiment? I mean, do you have any more details on exactly what is driving this?
Jes Munk Hansen: Yes, I can elaborate quite a lot on that. And that is the most important factor in us changing our outlook is the market sentiment in Canada. It's very important for me to say, Canada and the U.S. So let me elaborate a little bit on that. And it's also important for Kim and I to say that this change has been quicker. And I don't mind saying somewhat dramatic here the last few weeks. And that's also why we feel we needed to make these adjustments to the outlook. Let me elaborate. And I've just been to Canada and the U.S. to meet with our teams and meet with large customers. And when I say customers, then it's distributors that I'm talking about, all contractors that we sell to. And the following picture is what we see in Canada and what we see in the U.S. And it is that the pipelines of projects are very strong. And it's projects, we are mainly in industrial commercial segments. And the commercial industrial segments have strong pipelines with our customers. There's also still quantation activities going on. And if you take just some applications, there's warehouses or industrial buildings, where we, for instance, deliver flat roof products too. But these many products that are in the pipeline -- many of them are affected by the end customer being uncertain about the future and hence, delaying them. They're not getting canceled as we see it now. They're just getting delayed. And when we're asking to them why they're getting delayed, it is the uncertainty that they are facing themselves. Tariffs is the big driver, but it's not necessary the direct tariffs. Sure, steel prices and other things have gone up, also making these projects more expensive. But it's also the end customers or, for instance, warehouses that are concerned about how their businesses are going to be affected by tariffs. Then there's a couple of other macroeconomics, the interest rate in the U.S. which direction is it going. We see particular Canada being hard hit. I was in Toronto, the Quebec area. That has been a growth driver for much industry where it's almost a standstill that has happened, but also throughout the U.S., we see the same and hear the same across our distributors. So these are very, very large distributors that had activities throughout the U.S. and Canada. So it has been fast and it has been maybe the dramatic is not the right word, but significant. And that is unusual. I mean I've been in the building material industry most of my career, for 14 years in the U.S. I've only seen once or twice in financial crisis and coil such quick change of sentiment. And again, I do want to stress that -- it's not that they are not projects available. They are in the pipeline. They have been quoted and quotation continues. They're just not being -- they don't put in the POs as we call it, they don't cut the POs. So it doesn't lead to sales. When that will become released when that uncertainty gets released, I simply don't know. And that is, of course, the challenge we have now. How long will this last? And to what degree will it continue? I hope that was helpful.
Kristian Tornøe Johansen: Okay. Yes, definitely helpful. If I may just ask a last additional question because we've previously been talking about, you're actually running out of capacity in North America and having to look at importing products. So this slowdown in sales and demand. How is that impacting your capacity?
Jes Munk Hansen: We still assess this to be a temporary situation. The big question is, of course, how long it will last. The good news for us, and that's why we're focusing on is that we still have a small market share in the U.S., and we hence have a lot of opportunities in developing additional customers, additional applications and additional geographies. And that's what the teams are doing now. But because it has happened fairly fast. And because we came from this sold-out situation, it takes a little bit of time then to move into these other channels. One area that is actually strong in the U.S. still, that is the -- we call it the big box. So that's the Lowe's and the Home Depots. And there, we grow simply because our product is still gaining market share. So it's hard for me to say whether or not Big Box is doing well. It's simply because we're growing shelf space in the retail arena.
Operator: Next question is from Claus Almer of Nordea.
Claus Almer Nielsen: Also a few questions from my side as to the guidance. I'm a little bit unsure what your assumption behind the guidance. So you are saying a report that you don't see any major changes to the current trading environment. Is that compared to what you saw in Q2? Is it what you see in Q3? That will be the first question.
Jes Munk Hansen: It is what we see now. I mean, we simply don't know when this situation will improve. And I am here talking in particular about the U.S.
Claus Almer Nielsen: So that should mean that you are assuming a very difficult North American rest of the year. Is that -- it's a little bit difficult to get that to match up with slightly down revenue in the second half versus first half.
Jes Munk Hansen: But that is our outlook. And that is what made us meet that adjustment to the outlook.
Claus Almer Nielsen: Okay. And then about the profitability, it seems like you're also assuming still a stable pricing environment. Is that correct? .
Jes Munk Hansen: That's what we have seen so far that we -- I think I told you in 1 of the previous calls that we have instilled pricing drum beat of a couple of percent, and it varies by market and that we still see that the prices are holding. They're sticking as we call it. We've had a little bit more than 1 percentage point pricing. And this is an average number. It's quite different when you look country by country, and that we see sticking.
Claus Almer Nielsen: Yes. It seems like pricing is still keeping up pretty healthy. So the reason a high single-digit price increase you did in the U.S., I guess that has nothing to do with the very short strong the decline you have observed in within a few months?
Jes Munk Hansen: This also takes into account what the competitors are doing. And we see prices go up in the U.S. on building materials. So yes.
Claus Almer Nielsen: Okay. And then just my final question, again staying in the U.S. As you said, you are going to try to penetrate new channels, so to speak. Will that be possible to do at the current pricing level, given how low activity level you are seeing in the U.S? .
Jes Munk Hansen: Yes. In general, yes, it is -- it is really -- we have a very low single-digit market share in the U.S. where in Canada, we are around 12%. So there's a lot of space to maneuver on. But the challenge operationally has been that we have been in a sold-out situation. So we didn't want to open up too many new customers and disappoint too many customers. But now in a different situation. So we are opening up new customers and also new geographies, including the West Coast, where we get our new factory in Wallula, Jumbo line and then we use this period also to develop the West Coast, not least the California market, which is very promising to us, a market that is not only looking at energy efficiency, but you can imagine that fire and fire protection is something that is of great concern in California. So we simply have so many opportunities in the U.S. that we now -- that we can keep on developing.
Operator: The next question is from Pujarini Ghosh of Bernstein. .
Pujarini Ghosh: So one question on Eastern Europe. So can we say that the decline is exclusively driven by Russia or some of the other European countries have also some declines because you mentioned has been growing and then Poland also returned to growth by the end of the quarter. And my second question, coming back to the EBIT margin guidance. Could you talk us through the different moving parts on pricing, which you mentioned was slightly positive and then raw material costs to Aegis Energy. And then given what led you to the slight decrease in the margin guidance of around 16% to just under 16%.
Jes Munk Hansen: The decline in East Europe is -- it is Russia that has moved that. Other important markets is Poland, where we so far have had a flattish development. We see an uptick in Poland, by the way, also a little bit stronger prices there. And then we have a couple of countries, but not so large that they can fully cater for the Russian decline, actually having good growth. I think Romania is one of the ones we have mentioned several times where we actually are growing double digit. And actually, in a sold-out situation. So we have to bring in products from other regions to cater for that. And then your second question?
Kim Junge Andersen: Yes. We were just trying to keep track of your question Purarini, I think it was about pricing. And as yes, just said here that we have managed to go with the pricing drumbeat in most places. And in aggregate, for the first half, we have between 1% and 1.5% positive pricing for the group. And was your third question. .
Pujarini Ghosh: No, no. So I was actually trying to get to your margin guidance assumption. So I wanted to talk about -- to talk about the different moving parts. So pricing has increased, but maybe some of your costs have decreased, which has led you to decrease the EBIT margin guidance slightly. So can you talk about the cost part?
Jes Munk Hansen: As also yes, mentioned here for the first half, the pricing and increased input costs more or less offset each other. We have had a higher fixed cost base OpEx base as we are recruiting in more engineers and digital people to help us to build more capacity in the coming years. There is nothing here in the second half of the year, neither on pricing or on inflation in our input cost that has any material impact on the guidance on the EBIT margin. That is as -- again, yes, I said primarily the uncertainties we have in North America, which today is a higher profitability region than it used to be. So it is a bit of a negative country mix or regional mix, if you want to.
Operator: The next question is from Chase Koblan of Kampen. .
Unidentified Analyst: I have two. And to start off, yes, regarding maintenance CapEx. So actually, over the last few years, of course, we've seen your maintenance CapEx grow both in absolute terms, but also as a percentage of sales. And I think you mentioned in the press release that your factory maintenance costs were higher than usual in the second quarter. Can you elaborate a bit on what is driving that exactly? And is that sort of a structural change that we would expect to continue going forward? Or is this really a one-off?
Jes Munk Hansen: I'll let Kim also give you more detail, but it's also an operational issue. Therefore, I'm jumping in. when you have situations where the factories are not running at 100% capacity, then we're also trying to squeeze in more maintenance. So that becomes a timing issue, if you understand what I mean. You don't want to do my maintenance on factories that are at full capacity. So because we have areas that are not utilizing our capacity is full, then we have chosen to make some upgrades and cleaning, whatever it takes. So there's a special effect coming in there.
Kim Junge Andersen: And on the maintenance OpEx part, i.e., the one that is impacting the Q2 results. We have already mentioned that we had 3 longer- than-planned factory stoppages that did cost us some money in the second quarter. And I can also quantify that for you. It was about EUR 5 million, EUR 6 million more than a normal maintenance period. So that happened in quarter 2. It amongst others, included a fire in a small transformer station in U.K., but also a lining shift in one of our couplers. So there are major sort of breakdowns that we didn't anticipate in quarter 2.
Unidentified Analyst: Okay. That's very clear. And then my second question, just regarding working capital. I think you mentioned that was a bit less favorable in the second quarter. I see as a percentage of sales, it also increased, I think, almost 1 percentage point. So could you just talk about the expectations for second half year? What should we expect by year-end '24? Is there some unwinding, what's your internal view there?
Kim Junge Andersen: Yes. It's quite a natural seasonal flow. We -- as I said, we normally build up in the second quarter capacity or you can say, inventory capacity. And then we use that here in the autumn period. So our expectation is that it is going to come down again in the second half, the inventory levels. And that's the primary driver behind the working capital increase.
Operator: The next question is from Alexander Craeymeersch of Kepler Cheuvreux.
Alexander Craeymeersch: Yes, Alexander Craeymeersch Kepler Cheuvreux. I'm just wondering, with the Russian Ukraine conflict approaching to a possible end. I was just wondering like what the total capacity is that you have in Russia currently? And if the export restrictions would be lifted, how much of that capacity would be possible direct to export markets? And the second question would be also on capacity. I mean congratulations on the French building permit. That's nice to hear. I was just wondering if there's the original plans and capacity you're talking about?
Jes Munk Hansen: We really hope folks in Ukraine as quick as possible. What it then means for sanctions or access to in Russia and I simply don't want to speculate. I don't know it better than you as soon want to go out and speculate in that. the French factory is going to be one of our modern setups with electric melter as a whole jumbo line. It's 110 north of 100 the 1,000 tonnes or one of the bigger factories.
Operator: The next question is from Zaim Beekawa from JPMorgan.
Zaim Beekawa: The first would just be on your I appreciate there's been a lot of commentary on the hesitation in North America, but what are you seeing in the recent trends in Western Europe? And then second, as you grow your capacity expansion projects into next year, can we see CapEx being materially higher? And how can we think of leverage any chance you'll be in a net position in the coming years? And maybe if I can squeeze one last one in. Obviously, margins have been quite volatile in recent years. What do you think the normalized margins for ROCKWOOL should be? And do you think there's scope to grow these further with the volume recovery?
Jes Munk Hansen: Let me take the first one. Let's talk a little bit about Europe. And Europe is like in our last call, a very mixed back of market situations and performance. However, at large, we can say the more south, we look, the better it goes and the we go, the top of the market is. I don't think there's a build in logic in that other than just how it is. So if we take it from the good news first we are doing really well in Spain, in Italy, Croatia, Romania, where we actually are in sold- out situations and need to bring in material from our large feeder factories in Germany. Also a very important French market is after a difficult period, picking up a little bit again, a place where we did had to be a little bit tactical on some pricing in some projects, but it's starting picking up again. As I said before, Poland, it has been flat, but also we see a better outlook in Poland. And then we have Germany as or, of course, a super important market for us, that is very sluggish, flat, a little bit down at times and there in Germany, I do think I said before, there's a lot of wait and see around the large stimulus packages that Germany has announced, but we have not seen effects of yet. Quite a lot of those funds are directed towards energy efficiency and upgrading infrastructure. But I must say we haven't seen it yet and also don't expect to see any effect of this calendar year. I have no reason to think that it's not going to be activated. It's just not having an effect in the market this year. U.K. is doing really well, which is -- we're in Cardif yesterday. And as you know, we are planning for a new factory in Birmingham. And that market is doing really well, very robust, driven by not only energy efficiency discussions, but at large also fire. And then the last, but also least attractive market right now is the Nordics where we see countries like in Sweden being extremely subdued particularly in the industrial commercial arena, the flat roof business, that is one of our strongholds is down dramatically. The market is simply -- there's no big projects right now and the volume in those markets are down 30%, 40%. So not our numbers, but the market is down. So that -- I hope that gave you a little bit flavor -- and then we have talked to about Russia and Russia's impact on our numbers. So that was a little bit too through Europe.
Kim Junge Andersen: On the CapEx and the CapEx -- the size of the CapEx is clear that we have started construction, more factories. And that, of course, cost money. We are operating within the boundaries that I think we have previously talked about that the Board is quite conscious about having a very short balance sheet, and they do not want to see an equity ratio below 60 that we can't -- we operate with debt today. But of course, we have been an unfortunate situation where we have been able to generate more cash in the last 3 or 4 years than we have spent and thereby having a net cash position. We have also -- that is stipulated also in our dividend policies and you can say, capital structure policies in the annual report that the Board be set sort of a limit that we will operate on a leverage to EBITDA below 1. But that, of course, means that in a period, we could think about a situation we are taking in debt to finance the necessary capacity investments.
Operator: The next question is from Cedar Ekblom of Morgan Stanley.
Cedar Ekblom: I've got 2 questions, 1 on the U.S. and 1 on Russia. Firstly, on the U.S., can you talk about where you expect margins for this region to develop to once assets are fully ramped up? Appreciating that that's a few years away, it would just be helpful to understand how expansion in the U.S. might change group margins? Do you expect those assets to have a similar level of profitability to your European business? Or do you think it might be higher or lower and for what reasons that would be helpful a little bit of color? . And then secondly, on your Russia business, it really does seem that a lot of the miss in the quarter and the downgrade to the outlook is around Russia. I understand that you don't have much visibility on this asset, but considering how material this is to earnings and to the stock price, it would be helpful to get a little bit of color on how you see the margin of your business in Russia? How you see the margin in Russia developing at the start of the third quarter, if you have any liability on that? I'm not sure how often you get reports from the local team there? And then maybe you could give us some color just around how much of the EBIT margin cut is Russia. And I know in the past, you haven't been willing to give a lot of color on this asset, but -- to be honest, it's really material for your stock price and your earnings at the moment. So a little bit more help would be very, very well taken.
Jes Munk Hansen: Let me start with -- thank you for the questions, Cedar. Let me start with the U.S. And yes, you're asking to predict something in 2, 3 years from now. But we have an above group level profitability and margins in the U.S. and expect to maintain that. also with the new capacities coming in. So I don't see why a reason that would change.
Cedar Ekblom: Can you put some numbers around what the -- can you put some numbers around the gap? Like is it a 200 basis point improvement relative to group average? Is it 100 basis point? .
Jes Munk Hansen: No, we -- for competitive reasons, we don't do that. But you can do some desk research by looking at material prices in the U.S. versus Europe. And I think you get a fairly good idea of the price points, Europe versus North America across product categories. Yes. About Russia, let me start it and then Kim can help me. I have to explain to this group that it's a passive health asset. We have no interaction with the group over there. We only get a cup of numbers on a regular basis. I have no insight into the market. I don't talk to our leadership over there. I have no idea how the Russian market is developing. That is very, very unusual, but that's the situation. As you know, they are fully caught off from our IT that don't use our brand. They don't share our IPs. So I have no insight in the Russian market. The decline was expected and has no impact on our outlook. That's not why we made the adjustments.
Operator: Last question comes from Pierre Rousseau with Barclays.
Pierre Sylvain Gilbert Rousseau: On your different capacity additions, there's a lot in the pipeline. So opportunities in Sweden, in the U.S., in the U.K. and then France. Could you frame a little bit the timing and CapEx around all of these as they are super material. And for the time being, we don't have a very precise guidance. The second question would be a small one about Systems margins. What are your expectations going forward? Do you have a reasonable hope that margins could not start recovering any time soon?
Jes Munk Hansen: There for competitive reasons, we don't give very great detail about exactly which factories open when also not with which product types and and at what cost. But the next ones, I can say that are going online is Romania, where we are with the -- and it's India, importantly, where we're also very far with the construction work. So we don't give long-term guidance. So I can't answer that. I only got half of your questions on Systems, but I think you asked about the margin improvement in Systems. We have a lot of activities going on in the systems divisions. It is a bay. It's a portfolio of products. So the numbers you see are averages across -- some of them are performing really well. Some need an uplift in performance. And we have a performance improvement catalog of activities going with the usual suspects, everything from price to cost outs and other efficiency measures. So we are actively looking at how to improve the system business margins.
Pierre Sylvain Gilbert Rousseau: Okay. Maybe just one follow-up, if I may. On the recruitment and OpEx investment in IT and engineering capacity. Do you think that should continue in the second half? Or are you happy with your current capacity now?
Jes Munk Hansen: Yes. No, we are continuing the hiring of engineers and digital personnel. So it will take a tick-up.
Kim Junge Andersen: Obviously, right now, Pierre, as we are recruiting these new people in, they are right now not assigned to a specific project. So they are expensed off in OpEx. But we do, of course, plan to use some of these resources on some of the CapEx projects, and then they will go into a capitalization of cost instead. .
Operator: The next question is a follow-up from Cedar Ekblom of Morgan Stanley.
Cedar Ekblom: I had a follow-up there. Apologies. Would you consider guiding excluding your Russian business, considering you have normal influence or oversight on that region? And if not, what is the rationale for keeping it as part of the group guidance?
Jes Munk Hansen: We will not guide on Russia alone. We still get the dividends, although we have this passive ownership, we do get dividends from them, and that's why we keep in the total numbers.
Operator: The next question is from Anders Christian Preetzmann of Danske Bank.
Anders Christian Preetzmann: And just one question from my side. You mentioned that the sales have been challenged in the months of April and May, but improved towards the end during Q2 in important markets such as France and the United States. And I was just wondering if this positive trend has continued into Q3 so far and what you currently see in particular for the U.S.
Jes Munk Hansen: Thank you. That gives me an opportunity to clarify that because, yes, the trend has improved for France and a couple of other countries in Europe. It has not in the U.S. So we did see an uptick in the end of Q2. But here the last few weeks, we've seen this dramatic stop and slow down. So no, the U.S. has not improved, that was temporary in Q2.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Kim for any closing remarks.
Kim Junge Andersen: Yes. Thank you very much. And first of all, of course, I must apologize for the technical blip that we had in the call today. First time in my time that we have had this, but I hope you all sort of survived this. We like to thank you for the earnings call today and all the good questions, and I appreciate your interest in. And if you have further questions, you are free to call me and you can also find the contact details in the ROCKWOOL Investor Relationship website. Thank you very much. Have a nice day.