Kesko Oyj Unsp/Adr

to sunny Helsinki, and thank you for tuning in for Kesko's Q2 2024 release call. Our agenda today is the following. CEO and President Jorma Rauhala will give first the Q2 presentation. We have here together with us our business division presidents, Ari Akseli for grocery trade, Sami Kiiski for building and technical trade, and Johanna Ahli for car trade, as well as CFO Anu Hämäläinen. After Jorma's presentation, it's time for questions both by phone and via chat function. All the materials related to Q2 can be found at our webpage, kesko.fi, under Investors. My name is Hanna Jaakkola. I work as IR Director at Kesko. I will be at your service after the presentation for your questions and discussions. But now, Jorma, the stage is yours. Please.

Thank you, Hanna. Ladies and gentlemen, Welcome also on my behalf to this release call. I am Jorma Rauhola, and I have now the pleasure to present Kesko's Q2 results. Today's headline is Good Performance in a Weak Market, and it describes the second quarter well. Now I will give an overview of our business's performance and open up elements behind the results. Key events in the second quarter. Net sales and profit decreased as expected. Gas flow from operating activities strengthened. In grocery trade, net sales were down and profit at a good level. In building and technical trade, profitability weakened as expected due to the weak construction cycle, but decline was slower than in Q1. In car trade, net sales and profit were down. In May, Kesku agreed to acquire the operations of the Autotalo-Lohja dealership. In June, we published our updated strategy. Main strategy pillars are intact, and competitive advantages as well as targets for each division were refined. There were many changes in the company's group management board. Sami Kiiski was appointed as president of building and technical trade. Johan Naali as president of car trade. Anu Hamalainen as chief financial officer and Lasse Luukkainen as EVP legal and sustainability. Net sales in Q totaled close to 3.1 billion euros. It was down by 11 million euros. Net sales increased in building and technical trade as Davitzen acquisition is now included in the figures. Rolling 12 months net sales were over 11.7 billion euros. In Q2, comparable operating profit was 178.3 million euros, and operating margin was 5.8%. Comparable operating profit decreased in all three divisions. Rolling 12-month operating profit was 656.3 million euros, and operating margin was 5.6%. Return on capital employed was 11.8%. Return on capital employed decreased in all divisions as earnings declined. Financial position. Cash flow from operating activities rose clearly to 309 billion euros. Cash flow strengthened on the comparison year thanks to further improvement in working capital management. Interest-bearing net debt increased year on year as a result of investments in logistics and in grocery trade store site network. Net debt to EBITDA was 1.1. Capital expenditure decreased in Q2 and totaled 128.4 million euros. We continued investments in grocery store site network. Other investments include Onninen and Keiauto shared logistics center in Hyvinkää, Finland, where construction is expected to be completed in 2025. Expenses. Expenses were up due to David's acquisition and real estate costs, but personal expenses were at last year's level, excluding acquisitions. Fixed costs were 532 million euros and cost rates was 17.2. It was down compared to last quarter, but up year on year. We have succeeded well in focusing on cost efficiency. Now to grocery trade. Profitability was at good level. In Q2, net sales totaled 1.6 billion euros and declined by 28 million euros. Rolling 12 months, net sales totaled 6.3 billion euros. In grocery trade, comparable operating profit for Q2 was 114.5 million euros, and it was close to last year's level, decreasing only by 3.9 million euros. Profitability was 7.2%. Rolling 12 months operating profit was 439.5 million euros, and operating margin was 6.9%. The decrease in comparable operating profit was impacted by an increase in store-side costs and a decline in net sales for K-City markets' home and specialty goods, so-called non-food. The comparable operating profit for Gespro increased slightly. Key events in grocery trade in Q2. In the grocery trade division, net sales and operating profit decreased. Operating margin was close to flat year on year. K-group's grocery sales were down by 1.1%. K-group's net sales were down by 1.3%, still again exceeding market growth. K-city market non-food sales were down by 4.3%. Online grocery sales continued on the strong growth trend and grew by 13.5%, and were some 4.1% of K-Group's grocery sales. Total grocery market growth was approximately 0.1%. K-Group's sales performance was likely below the market. Price inflation for groceries in Finland stood at 0.1%. Last year, at the same time, it was over 10%. Customer flows continued to grow thanks to campaigns, but average purchase was down. There was a change in Finnish legislation that enabled the sales of beverage with 5.6 to 8% alcohol content in grocery stores and tent of shoe. Previously, the limit was 5.5%. These beverages were successfully added to grocery store selection all over Finland. The impact of the legislative change on Kesko sales is expected to be around some tens of millions of euros annually. Nearly 450 wine products are now sold in K-group grocery stores. Approximately 30% of sales are coming from products that are available exclusively in our stores. White wines account for about half of the wine sales. Also, some 100 stronger beer products were added to selections. They now account for a few percent of total beer sales. New alcohol products were introduced to stores in a responsible manner and wine is typically bought as a part of larger food baskets. The possibility to buy strong alcoholic beverages from a grocery store increases customer convenience and benefits especially smaller stores in rural areas. And now to building and technical trade, where the result was in line with expectations in a difficult cycle. Net sales increased by 55 million euros to 1.2 billion euros, thanks to Davidson acquisition. In comparable terms, net sales decreased by 5.4% due to the weak construction cycle. Rolling 12 months net sales was 4.1 billion euros. Comparable operating profit for the building and technical trade division totaled 56.1 million euros and operating margin 4.7%. Rolling development's operating profit was 173.4 million euros and operating margin was 4.1. The decrease was due to a decline in net sales, which was impacted by the weak construction cycle. Key events in building and technical trade in Q2. Construction cycle is still weak in the Nordics, but turnaround can be seen in Poland and the Baltics, where online sales are growing. Overall, net sales and operating profit development were in line with expectations. Davidson is included in the figures. Oninen's operating profit, in particular, was impacted by weaker sales and profitability of solar power products compared to the exceptional levels of Q2 2023. The allocation of fair value related to division acquisition, mainly related to inventories, had a positive €1.2 million impact affecting comparable operating profit. Write-downs of overdue trade receivables totaled €2 million. Share of results from Kesku Senukai was 6.3 million euros. There are signs of a pickup in sales in both building and home improvement trade and technical trade. In this picture, we can see Keerauta's and Oninen's sales development in Finland since 2019. Keirauta is the market leader in building and home improvement business in Finland and Oninen in technical trade. Both have nearly 50% market shares. And these two represent approximately half of the whole building and technical trade division. In the graph, we can clearly see the consumer COVID boost for Keirauta in Q2 and Q3 2020. And then in 2021, we saw B2B sales increase with high demand and global price increases. The same demand and price increases happened in Oninen too. Turning construction cycles started to affect First Keirauta in 2022, but Oninen was at the time boosted by high demand for alternative energy solutions, like solar panels and heat pumps, as energy prices increased due to Russia's offensive war to Ukraine. After several quarters of week cycle, we can now see sales turning. First in Keiraata, but also in Onninen. This positive trend has continued also in July. In car trade, good performance in a challenging market. In cars rate, net sales for Q2 decreased by €39 million and were €299 million. Net sales decreased in new cars and increased in used cars and services. In the comparison period, net sales for new cars increased by the clearing of order books as the availability of cars improved. The comparable operating profit totaled 14.9 million euros and decreased by 9.5 million euros year-on-year. Operating margin was 5%, rolling 12 months operating profit was 70 million euros and operating margin was 5.9%. Key events in car trade. Market demand for new cars was mute. Q2 first registration in Finland decreased by almost 20%, and market for used cars were up to 0.9%. Net sales and profitability were at expected level in a difficult market. New car sales were down, but customer demand for new models is at a good level. In used cars, sales grew significantly outpacing the market. Good growth continued also in service sales. Growth in K-Lautaus EV charging proceeded according to plans. There are over 1,700 charging points located on K-Store's parking lots, creating also customer flows to the stores. 679 of the charging points are fast charging. In sports trade, net sales decreased, but market share strengthened. Now let's move to some key highlights to summarize the businesses. In grocery trade, consumer confidence in Finland is still weak, but it has improved in recent months. Consumption is polarized, price is still important, but quality and convenience are important too. The development of our store site network continues. There will be seven new stores openings in the second half of 2024 and 23 stores updated. OPPO season is strong in all areas of food trade. In building and technical trade, market is showing signs of picking up in all operating countries, but the cycle is still weak. We will continue the execution of country-specific strategies. Inventories are today at a healthier level in both building and home improvement trade and technical trade. In car trade, the business portfolio is balanced. New car sales are muted, but new models are expected to support sales. New models include, for example, Audi Q6 e-tron, Porsche Macan, a new Volkswagen ID.7 Tourer and Volkswagen Passat. Strong sales growth is expected to continue in used cars and services. Guidance and Outlook Outlook. There are actually no changes to the outlook compared to what we said in January and in Q1. The big picture is that in grocery trade, B2C trade and the food service market are expected to remain stable. In filling and technical trade, the market is expected to continue the decline in 2024. The cycle is expected to turn in 2025. In car trade, new car sales are expected to fall short of the level 2023 level. Sales of used cars and services are expected to grow. Profit guidance for 2024. Kesko's operating environment is estimated to remain challenging in 2024. Kesko's net sales and operating profit are estimated to remain at a good level in 2024 despite the challenges in the company's operating environment. Kesko estimates that its comparable operating profit in 2024 will amount to 620 to 680 million euros. Previously, the comparable operating profit was estimated to amount to 620 to 700 million euros. The profit guidance specification is based on development in the first year half and on updated estimates regarding development in building and technical trade and car trade in latter half of the year. In June, we published our updated growth strategy for 2024-2026. I'll go through the key slides now. Kesko's growth strategy in one page. This is my most important slide and the way I lead Kesko. The leading and most attractive trading sector growth company in Northern Europe. This is our vision. Strategic targets. Delivering profitable growth. Strengthening market position in all businesses and all countries. Building focused B2B and B2C business portfolio. Increasing customer value. Competitive advantage, operational excellence. This is very important, critical, and also very difficult. It includes our daily processes, store concepts, assortment, and pricing management, product availability, delivery accuracy, and so on. But these are the most important for our customers. Omni-channel customer experience, both physical stores and digital services, and customers make the choice. K-retail model is important in the grocery, B2C business, and K-router and intersport. Commons of spirit in all our businesses. Forerunner in sustainability is important, not only, for example, in fighting the climate change, but it is important for our customers too. We focus on three businesses, grocery trade, building and technical trade, and car trade. Our purpose is to strive for better trade every day, customer and quality in everything we do. The way we work in Kesko is to operate directly, openly, and honestly, creating trust. In grocery trade, our aim is to gain market share. Key actions. Strengthening store-specific business ideas. Focusing on strengthening chosen competitive advantage and raising the quality level of stores. Developing store site network. Targeted investments in the store site network focusing on growth centers. Improving price competitiveness. Strengthening price competitiveness and improving price image. Continuing good development in Gespro, further strengthening Gespro's market leading position. Store site and price investments will have a slight impact on grocery trade profitability in upcoming years. However, EBIT development will be stable and profitability clearly above 6% despite investments during the strategy period. In building a technical trade, we are focusing on securing profitability. Key actions. In Finland, continuing growth and winning over market share. In Sweden and Norway, stabilizing and improving business performance and integration of acquired companies. In Denmark, finalizing the integration of Davidsen and improving performance through growth. Growth through acquisition, M&A to boost profitable growth in Northern Europe. Our long-term target of 6% to 8% operating margin is still valid. In car trade, focus is on outperforming the market in all businesses. Key actions. Continuing with growth strategy execution. Major turnaround and continuous development establish a robust foundation for the next strategy period. Maintaining the balanced business portfolio, new cars, used cars and services. Cooperation with the Volkswagen Group, continuing the good cooperation with the Volkswagen Group and Porsche. Sports trade, continuing as a strong market leader in sports trade. Solid EV development and number one brand awareness and preference. The team to lead this strategy is our group management board. There have been five changes in management team this spring. New presidents for billing and technical trade and car trade, new CEO, CFO, as well as new position for legal counsel, including responsibility for sustainability. I am happy to have this professional and ambitious team in place. Well, this was my presentation from my behalf. I guess it's time for questions now.

Thank you, Jorma, for your presentation. And now it's time for questions. Let's go first to the conference call line. Do we have any questions coming from the conference call? Please.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Frederick Ivasan from ABG Sundal Collier. Please go ahead.

Thank you. Thanks for the presentations and taking my questions. I have three at least. The first one, I think you mentioned the margin in BTT was sort of boosted by higher gross margins of solar power products. And in that sense, what does the comparison figure look like, because I think I remember You were saying in Q3 last year that these sort of products already started to decline. So can you give some color on the comparable figures in terms of those products, please?

Yeah, for your question. Actually, we opened up the solar panels in Q1 this year and gave quite a bit of a flavor then. And then we described that the majority of the margin came in the beginning of the year, in the Q1 and Q2. So the comparison figures were quite high last quarter. Any, Jorma, Sami?

Yes, I agree. So if I remember by my heart, it was something like 4%. first quarter and second quarter was something like more than 80%, maybe 85% last year, what we said about solar panels. So last year, 2023, second half of the year was very weak when it comes to solar panels. And now the situation is much better. The solar panels that we are selling now are kind of new inventories and cross-margin is okay. So I would say that this problem has now solved.

Okay, good. Very clear. And then in terms of the June figures you reported a couple of weeks ago, which I guess were on the soft side, minus 8% comp sales in grocery and minus 14% in BTT. Can you give us some color on these figures? I guess it's difficult to quantify, but was it due to poor weather? It was quite cold and rainy, for instance. Did that impact grocery at all and BTT for that matter?

I can start so that, of course, the sales days, we have two or even three sales days less. That was definitely the most important reason behind that. But maybe, Ari, you can comment about grocery business and Sámi PTT.

Yes, we have this. Maybe some of areas was depending about the weather. Weather was excellent in May. We had excellent days in May, but it's not so good in June. It affected especially for the barbecue and ice cream sectors. These are the main reasons.

And in building a technical trade, it was pretty much what we expected in June. And there was, of course, less days, sales days and so on. But it was pretty much what we expected.

Okay. Thank you. And last one from my side. On the store site investments and price investments, that's going to impact grocery margins. Yes. Can you give us something more than this? Are we talking tens of basis points or more?

Yes, I can start. Of course, we published our updated strategy at the beginning of June, and those will be the actions, what we will do in our strategy period in grocery division. And of course, those actions, of course, we have increased already some investment in store site network, but we will increase those investments and also those investments which we'll be doing in pricing and quality, those are not yet done. But what we said when we published our strategy was that we believe that in grocery and also in future, we will do clearly about 6% margin.

Okay, fair enough. That's all my questions. Thanks so much.

Any further questions on the conference call line?

The next question comes from Mika Ihamaki from DNB Markets. Please go ahead.

Hi, it's Mika from DNB. Thanks for taking my question. Firstly, grocery sales lacked roughly 1% and the gap didn't narrow sequentially. So are you currently satisfied with the level of investment in prices or do you feel that you need to further increase campaigning?

Maybe you can take this one, but I refer our updated strategy. And of course, those actions we haven't started yet. But if you want to add something.

Yes, we will invest to the prices, but we will use more data. So it's more concentrating how we use the customer loyalty card data to offer best offers for the best customers. And by doing this, we try to increase the average shopping basket because we have been able to increase already the number of visitors in stores.

That's clear. And then secondly, how much was building and technical trade profitability in Finland?

Technical trade profitability in Finland. Let's see, we have... We don't actually publish the figures by country, so you have to assume from the figures we give.

We can see that DIY building and home improvement side was quite strong when it comes to the whole division. It was only 3 million euros decrease compared to last year, and technical trade was the a bigger issue because of those solar panels, mainly in Finland and Norway, I would say so.

That's correct.

Okay, and maybe lastly, any losses in any of the operating countries? Is margin positive in PTT in all countries?

Oh. Like I said, we don't publish those ones, but I would say that, yes, we are on a positive side in all countries. Yes, that's true.

Now, of course, we have disclosed the Oninen Finland numbers there, and that is in the report also, so result-wise.

That I found well, thank you.

Any further? One more coming from the conference call line, please.

The next question comes from Anna Schumacher from BNP Paribas Exane. Please go ahead.

Let's take my questions. I have a couple. So the first one is on grocery and a bit of a carry-on from Mika's question. So a likely decline of 1.7% suggests that you've lost volumes in the quarter and industry data is suggesting the volumes are actually returning to Finland. So why is it that you're losing volumes and what levers will you pull in the future to have those volumes return to yourselves?

So grocery and volume, maybe Ari, you can comment this one.

I think the main reason why we are losing the volumes comparing to the market, it was something that we actually expected level. And main reason for that is that our main competitor has been opening 40 new hypermarkets during the recent years, and we haven't opened any. Now we are concentrating to the investment in them. in the growing areas of the Vinland and in the bigger store sites. This is one of the key issues. And if you think about the profitability side, typically the hypermarkets are the most profitable part of the business. So in the long term, that will bring more profit for the company. And secondly, we need to invest more to the prices, but we keep on at the same time this clearly profitability target more than 6%. So we need to use more data how to optimize these prices. And we are putting more effort for the best customers, how to offer more to best customers to increase average shopping baskets.

Okay, understood. And So where you compete with your main customer and they haven't opened a new hyper, are you not losing volume there? It's only in these new sites?

I think the main reason is these new store sites, because if you look about what is happening in the market, the biggest changes in the markets are in the hypermarket segments.

Okay. Okay, thank you. And then I had a question, so on your working... capital. So you've significantly improved your working capital again in the quarter, which looks to be driven by other non-interest bearing liabilities and accrued liabilities. Can you give us a little bit more color on what they are and what measures you've taken to improve them?

Maybe, Anu, you can take this one.

Yes, thank you, Anna. The thing is that if you look at our cash flow, we have been doing quite good effort or putting effort to inventory management, actually. So our inventory turnover has been improving when we sort of internally look at it. And on top of that, of course, there is a especially on accounts payable, which has been like on the lower side last year than what this year compared to the year end. So as such, you know, the accounts payable have been putting also a lot more emphasis pluses to our cash flow compared to last year. So I would say that these two are the things. And as you saw, I think that it was also published in these slides that our accounts payable, we have been writing off only 2 million euros and on group level, 3 million euros on that side. So it's a very small amount there. So... I would say that the main reasons are really the inventories as well as the increase on our accounts payable side.

Okay, understood. That's clear. Thank you. And then maybe just one final question. So you commented on the change in legislation, which means you can now sell alcohol up to 8%. Are you able to share what uplift you've seen in sales due to this change in legislation and what you might expect going forward for the year?

So alcohol and wine questions maybe. Ari, you can take this one.

Yeah, I think the sale has been pretty much what we expected with the alcohol sales, maybe a little bit in the positive size. And I think that especially the sales in the rural areas with the smaller stores have positive impact, especially for these stores, because now customers don't really have any reasons to go, you know, different city and then they do all the shopping from bigger stores over there. And I think that the customer feedback from these new wines has been quite positive, especially the sale of the white wine has been more than 50%. And I think it's looking quite promising. But of course, we are looking for the future because we like to be one of these European countries which are allowed to sell alcohol under 15%.

Okay, that's all understood. Thank you. Thanks, everyone.

Thank you so much, Anna. And now I will go to the chat function and ask some questions I have received. We have received, so Svante Kruukfors from Nordea is asking, your profitability in grocery trade is holding up well despite weakish top line. What are the main reasons on cost efficiency side, cost and efficiency side?

The overall cost efficiency has been very under contract control, despite, you know, the growth in sales in the past years. And one of the reason is that we have been using more and more data in AI, how to optimize investments in the marketing, pricing, and how we are able to improve, you know, the sales per kilometers in the stores. So the use of data in wide base and very, very efficient cost control system in our division.

Very good. Thanks. This question was already a little bit answered, but I ask it anyways. What are your working capital management efforts that boosted strong cash flow in the quarter? So if you want to elaborate something on the working capital management side.

I think I don't worry.

I kind of answered it already. Do you have anything to add?

Well, like I said, we are still going to put effort to our inventory management. So doing that and, of course, doing these kind of – Well, I think that is the main reason really here.

Yeah, very good. The 20 million euro decline in 2024 EBIT guidance high end. Is it more BTT or car trade?

Yes. What comes to our EBIT guidance, typically we give a wider range beginning of the year, and then during the year when the visibility increases and also the results accumulate, then we narrow the range. So I would say that there is no drama behind that. So we have mentioned those two divisions, and I don't have so specific figures, but if I... I would mention maybe, for example, that new cars market is softer than we expected. Maybe this is one reason, but we don't have so exact figures.

Yes, very good. Then Arttu Heikura is asking, grocery trade market in both businesses was quite weak. How do you see the reasons for weak market development during the quarter? And what is your expectations for H2? This is somewhat answered in our guidance, but you want to say something?

Ari, do you have anything for that?

I think we said already in the guidance, but main reason is that the customer's buying power is still very low and they are worried.

Yeah, that was mentioned too. Yeah, that's true. Grocery trades average purchase was down. Does this stem from decrease in price points or in volumes? Does it come from... Yeah.

The main reason is that customers are now looking for better prices. They go picking up campaigns from different stores and right to optimize the use of the money.

Very good. Has the price campaigns in grocery trade impacted your gross margins?

It has had light impact to the gross margins, especially because we have been doing more campaigns and with the better price points.

We already discussed the wine sales, but is there anything to elaborate on the start of the 8% wine sales? At least it was a success logistically, how we distributed all the wines to the stores all over Finland in a couple of days.

Yes, I think that was the good flavor for that, because we got the final approval from the governments on Friday, and we started business on Monday.

That's quite efficient start. Yeah, it was discussed in the presentation and already earlier. Could you elaborate the market share development in building and technical trade?

Sam, you can take this one.

Thank you. Good question. And it's diverse per market, of course, and also in that respect that we don't have the latest numbers. Finland we have, but from abroad, the latest numbers are normally coming or next ones are coming during August. But what we can see in Finland is that the core out are still gaining the market share and that we are very happy. And then only a little bit losing first six months of the year, losing the market share just slightly. But that is also what we expected because of the product mix, but also the mix of our customers and the segments.

If I remember right, that we gained market share in HEPAX side. Yes. And we lost some in electric side and mainly because of those solar panels. Exactly. That was the case.

So HEPAX, we are still very strong. Yeah, that's true. And that's the thing. And then when we go to different countries, just to say it shortly, it differs, but we can see that the market starts to recover a little bit more now from the consumer business side. And, of course, we are strong in B2B side, and that's also a little bit affecting. But we are in line there also in the abroad.

Yes, and last, because what I remember from Poland and the Baltics, there we gained market share. And I would say that in Norway, Pukmaker, quite in line when it comes to markets, maybe a little bit losing there, and only in Norway it's okay. But mainly gaining market share, but in some areas a little bit losing. Exactly.

Good. How was the sales of solar panels products in 8 to 23? But I would like to refer to Q1 presentation where we open it up quite well. So only 13 and 4% of the margin gross margin came from solar panels of the whole in in 23. But you can look at the presentation. You can find it online. I'll go to the next one. How Davidson has developed under Kesko? Did its sales and operating profits decrease compared to the group development?

Some of you can continue, but I would say that all in all, Davidson has been a very good acquisition and the performance has been, I would say, exactly what we expected. Maybe the market has been a little bit softer than we expected, as maybe all markets, but some you can add.

Exactly. You said it already in the right way, that only the market has been a little bit softer than what we and also the forecast was showing early in the year. But other than that, we have been very happy of how Davidson is performing and also how the management is executing the strategy there.

Yes. One question. How has your assumptions regarding the guidance changed from the guidance that was introduced in Q423, so when we released our full year results? And here I would like to say that we already commented that in Q1, and we then said that the Weaker than anticipated outlook for construction was then seen in Q1. Anything else to add? No, we have opened it up in the slides. Then, do you want to give some color on grocery trade margin sacrifice in coming years, magnitude and sources, price investments, store investments, and timing? Again, around this comment on clearly above 6% EBIT.

Ari, do we have anything to add? I think that we have already opened it as much as we could now. I do agree. Yeah.

Your comparable EBIT is down 17% year-on-year in the first half. The midpoint of your updated guidance range implies that a 1.7% decline. What is driving this decline? The improvement that is baked into the guidance. So since the sales decrease quite a bit in the first quarter.

Yes, I would say that building a technical trade is, of course, the biggest reason. And what we have said that we believe that the next year will be stronger. And of course, the change most probably what happened in 1st of January. Of course, as we have seen now that the markets start to pick up a little bit and we have already those evidence of that already in Poland and Baltics. Sales are now in black figures. And also we can see in other countries that every day when we look, every morning when I look, I will say from yesterday sales, there are more and more days that there are several units that are now positive increase. So billing and technical trade start to improve and I would say that this is the most important reason.

Thank you. And we commented on the presentation that new car sales were down, but the customer demand for new models was at the good level. Johan, I would like to elaborate a bit about the new models and customer demand for that.

Yeah, of course, this is product business and new products are always really important in the card trade. And in our portfolio, there are now many new great products and we can see that the customer demand is really focused on new products in the market. And like it was mentioned by your main presentation, there is numerals in each of our brands. And maybe just to repeat and comment that in Volkswagen, for example, ID7 is having great demand in Porsche Macan as well, bringing customers. Quite a new kind of product for Porsche business in Finland. And then Audi Q6 e-tron has also created a nice demand in the market and surprised us positively.

Very good. Thank you. And how much synergies do you expect to receive for the next four quarters from Electroscandia is the next question. We haven't opened up Electroscandia synergies, but any comments on that?

It's always very difficult to say exactly about synergies because we have now integrated two companies totally. So now one organization, now one customer agreement, one supplier agreement. We have integrated everything, but it's not so easy to give any exact figures. But we will get synergies, and now the integration has completed. It was a very challenging IT exercise what we've done, especially in IT side, but it was done now in end of June, and I think we are ready now to gain synergies or something to add.

Yeah, and integration is still a little bit on, but yes, particularly in IT and ERP, of course, we believe that there's already some synergies. And then, of course, like Jorma said, from the purchases and suppliers side, and also then, of course, the products know how we can serve our customers even better. There's also synergies, but we don't give any exact numbers out like I said already.

Very good. I think that was the end of our Q&A session. I would like to thank all the active participants for your questions. And if you have any further questions, I will be at your service. Don't hesitate calling. Any last comments, Jorma, to the audience?

Ah, last comment. So, as we stated, we market, especially, I would say, that in building and technical trade, in car trade, but good results what we made, and I look, I would say, quite positive what comes to the future, and what we, for example, in our presentation was this kind of change, what is happening now in building and technical trade. I have to say that, of course, this is what we have expected also, but now it's good to see those results. changes, what is happening now. So it looks very trusting the future, what we see now. Very good. Thank you.

Thank you.