Alligo AB (publ)

Welcome to Aligo Q3 Report 2024. The presenters today will be our CFO, Irene-Vise Målmerlander and myself, Klein Öhlendvik. Those pictures are only two weeks old. I didn't think I could reach a new level of pale and gray, but I did obviously, but our CFO looks alive and well. It's a report busy day, and as always we'll focus on the highlights. And as per your request, the theme of today is welding. So Aligo, we've had, as you know, sometimes many slides describing the Aligo group, and they have become fewer and fewer, and this time we only show one slide. So unfortunately, still a bit shy of 10 billion SEC turnover, 2,415 stories, I think actually it is now. And what is good is that we now have one concept brand per country, but many other smaller companies within our group, but main concept brands are tools in Norway and Finland and Stedal in Sweden. So highlights, the market is still weak, and we're still suffering a lot from our beloved small and medium sized customers that we love a lot. They are suffering. We, together with many others, had hoped to see some signals in the sales figures by now that the market is recovering. That is yet to be seen, but we still hear positive signals. We as a management, we reflect every day, have we done whatever possible to drive the group forward? And I think we can conclude that to the greatest extent, we think we've done that. We try to find areas where it's stability or even growth. We continue to focus on acquisitions. We were very early on identifying the potential downturn in the market, so we've been working with cost structure and efficiency for the last year and a half or even more. Fine tuning our inventory levels, and working with price adjustments, partly in the high inflation environment, and now heading into a very low inflation of our environment, part of the assault and perhaps even in a deflation environment. So not surprising ourselves out of any important customer segment. So the delivery capacity, the group is stable in most aspects. We are still working with fine tuning the new warehouse outside Oslo, Norway. We have some things still to be done, but it's moving on in the right direction. And macro factors, I don't even need to communicate it. It's obvious for everybody, I think. So Q3 in brief, slight growth driven by acquisitions, mainly operating cashflow, quite a lot above last year, but on the other hand, they have it all quite a lot down here and we'll come back to this in a while. So I don't need to dig into too many details, but the adjusted EBITDA margin down from nine to 6.4%. And the gross margin, it's reflected in the mix of our customer segment, but we'll come back to that. Highlights, we have linked the already existing loans we had to sustainability targets. We think that is a signal that we are doing the right things and we're taking sustainability issues in the greatest respect and have a great focus on that. We continue to do acquisitions, completed four of them and during the quarter, 220 million back in the turnover. And two of them in the welding segment, come back to that shortly. And two other acquisitions has also been in Finland, which is fun. At least one of them very much focused on the defense industry in Finland, which is to say somehow, unfortunately predicted to have a good future sales-wide. And we are investing in sales. We have appointed two Nordic sales segment managers, one for construction, one for industry. And we are actually investing in people in positions to drive the right type of sales. So to go into investments, just when we say investments, what do we mean? So if we look at this slide and from the down left, we have since a while been working with own products in price sensitive areas where we can strengthen our competitiveness. One being Inno in Fasteners, we've talked about that before. One being 1832, which is a professional high quality workwear brand, our own, but at a little lower price point for the very price sensitive customer segment. So as a step in brand for parts of the assortment, 1832 will play a very important role. Then they have Pro-Weld, sounds like a shampoo, but it's actually hand tools, also to take that position of a little lower price position, but very good product. And then award in the more technical product workwear, lightning and so forth. Then one step up, we are focusing on services, smart services you heard us talk about before, that we are focusing even more on, but we are now launching smart wear, where we can have sewing services, laundry services and so forth, which is a big market that we have not been active there yet. And it's good for many different reasons. First of all, being that you first sell the workwear, and then you can have a recurring business when you actually do the laundry and the adjustments on the workwear going forward for many years. And as I said earlier, reinforced sales organization, the two segment managers, whose main responsibility is to put together an offer, which is perfect to the construction customers and manufacturing customers, making sure that we have the right assortment, that we have the right service segments within the bigger segments that actually shows growth. For example, in construction, if housing construction doesn't pick up, it seems to be a sound issue, but hopefully I'm back on track. I'm not quite sure where we got lost, but just to finalize where the investment areas, where the services, smart service and smart wear we invested a lot in, we tried to focus on the growth areas available in construction and in manufacturing. In construction, it is in the infrastructure side, it's predicted to have a growth, and then the service sector. And in manufacturing, we try to sell. Historically, we have delivered a lot within the tools and supplies area, and we have an undershare of workwear towards the manufacturing industries. So there we invest and we have hired people to assist our key account managers. I hope you didn't lose too much of that slide. So if we then move into welding, as per your request, and looking at the map, it starts to feel good. We've made six acquisitions since June last year. We have more than doubled our welding sales. We had pretty big sales towards welding before, but now we have more than doubled it. And it includes the welding machines, consumables, service repair, training, and even rental. But looking at the map, as you can see, two good ones in Finland, plenty of them in Sweden, and we already had a pretty big existing welding business in Norway. So why is that a good fit for us in Aligo? First of all, it's technical sales, and we'd like to move the group more and more into technical sales to actually add expertise to our customers. And we also want to be closer to the customer's process. And the welding companies are really involved. And by that, you also get a long-lasting relationship. Many of these companies have decades-long relationships with their customers, and healthy margins. So we have a customer base within Aligo, within the toolstance for all brands, with customers that needs a better welding offer, which we now can offer with these companies. Their relationships are mentioned, and there is good synergies to extract. First of all, with the welding companies within them, to focus on the right assortment, but also to sell more of product available from the Aligo group to these customer categories. So welding is getting into more technical sales, closer to the customer process, to their own processes, and to get synergies. So they will be kept as specialist entities, not being integrated and lose their identity. And it's already started this coordination, which is so nice to see, where, take Westeros, for example, where we acquired Brandt & Stieg, they are, as we speak, sitting down, looking at the customer list, which customers did this Vidal district have, which needs more welding, which customers did Brandt & Stieg have, that needs more to be done. And we also have a lot of work on the customer side, to get the right tools and work where, so that that work has already started, and it's good findings coming out of that. And we have done a lot, but there is more to be done within the welding side. We see great potential to continue to grow organically and through acquisitions. Yeah, so eight acquisitions during 2024, adding a little shy of half a billion SEC to the sales, full year effect, so to say. So financials, Irene.

Yes, thank you. As Erikan mentioned, the same trend that has been seen throughout 2024 continued into Q3. The weak market has primarily impacted small and mid-sized businesses, and negative customer mix effects have hurt our contribution margin. Revenue increased by 1% in the quarter. The negative organic growth in Finland and Sweden continued, ending at minus 3%, but it was offset by acquisition-driven growth of 4.8%. EBITDA reached 137 million SEC compared to 191 million last year, and the result was weaker in all markets, but primarily in Sweden, which has the largest share of SME. The EBITDA margin declined to 6.4%, and the drop in profitability was driven by weaker demand and margin pressure caused by unfavorable customer segments and size mix effects, as well as disruptions at the logistics center in Vesti. This slide, you can see the parameters that are affecting the trading growth margin, and as you can see, we continue to increase sales related to our standard assortments. However, the share of sales of our own branch has decreased due to recent acquisitions, and the customer mix with a larger share of industrial customers find fixed assortments of external branch. The weak market has primarily impacted small and mid-size customers, and the decline in the share of more profitable SME customers in Sweden negatively impacts the group's contribution margin by 0.6%. However, we continue to uphold the margin within the SME segment in Sweden. In Norway, the oil and gas segment continues to develop well and represent the higher share of total sales. This development has negatively impacted the group's contribution margin by .3% for now. In summary, the negative customer segment and size mix in Sweden and Norway are the main explanations for the .1% drop in contribution margin in Q3 compared to last year. Looking into each market, we can see that sales in Sweden increased by 1.5%. Organic groups was negative at around minus 5%, contracted by six completed acquisitions, four of which were within the welding sector. And the weak organic groups primarily impacted SMEs, while some larger customers, such as those in the defense and energy industry, had a positive sales trend. EBITDA ended at 97 million, and the EBITDA margin reached 8.3%, which is behind Q3 last year. And the decrease is due to weak volumes and margin pressure caused by unfavorable customer segments and size mix, while cost savings somewhat mitigate that effect. Sales in Norway were in line with last year, including through acquisitions. Organic growth reached 2%, driven by a continued strong market in the oil and gas customer segment. And when it comes to Finland, sales were in line with last year, including two acquisitions, and the clear slowdown in the manufacturing industry in Q4 last year continued, and organic growth was negative at minus 8%. When it comes to cash flow, the third quarter is similarly the weakest quarter from a cash flow perspective. Operating cash flow improved from last year and amounted to 160 million SEC. And weaker sales and work with decreasing inventory levels have had a positive impact, while lower EBITDA and the customer mix with larger share of larger industrial customers with longer payment terms contracted. The first nine months investing activities are mainly related to M&A of 290 million, from 15 of 10 completed acquisition, but also investments in non-current assets of 80 million SEC. CapEx to depreciation ratio amounted to 0.8, which lines with our long-term target levels. And finally, the financing activities are related to increased borrowing, amountization of leasing liabilities of 288 million and dividend paid. As you can see, net debt at the end of the year was 1.8 billion, an increase from year end, due to the completed acquisition and the increased dividend payments. We're still in line with September last year. The ratio of net debt to EBITDA was a multiple of 2.2, which is higher than last year due to lower rolling 12 months EBITDA, but still well within the financial target range. Leverage is expected to improve year end, following that Q4 is the seasonally strongest quarter. And as claimed mentioned, our existing term and revolving facility were sustainability linked in Q3, and this will impact the interest rate slightly from Q1 next year, up or down, but at maximum 2.5 basis points, depending on whether we perform on the sustainability target. Unutilized credit facilities, including cash, amount to 1 billion SEC. And our confidence related interest coverage on the F&T asset ratios, and these are fulfilled at the end of the period, and there is good headroom before reaching the threshold. Handing it over to you, Glenn, for summary and

outlook. Very good. I don't know if it was the picture of me that

made me not being able to hear me speak, but I hope it's better now. Continued weak markets. We drive growth wherever we can find. We are developing and strengthening our offer. We know we're doing the right things. We know it will pay off. We are proving our sales effort and offerings, and we are continuing to make strategic acquisitions. As you have seen, we have increased the acquisition pace, and we will continue to do that. We have invested in welding. We have invested in product media companies, and other technical areas will follow. Good delivery capacity. Cautiously, we can see that we see positive market signals not visible in sales statistics yet, but just this month, we are having the so famous Svedal days and tools days, and just talking to customers who are in our shops. It feels like it's a much more positive tone these days. So the outlook for 2024, as we've said so many times, we're well positioned. We will take advantage of this slower market to continue to improve, to continue to improve our offer, and to make acquisitions. Those new launches we are making will make us more competitive, not losing customers, because we don't have an offer in the lower price range. We are stopping that with these launches. And then of course, we will set climate targets in line with SPTI, and send in this more or less as we speak for validation. Very

good. So back to you, Nadja.

Thank you, Klein. Dear participants, as a reminder, if you wish to ask a question over the phone, please press star 1-1 on your telephone keypad. If you wish to ask a question. To withdraw a question, please press star 1-1 again. Alternatively, you can submit your questions via the webcast. Please don't bother to compile the Q&A

queue. This will take a few moments.

And now we're going to take our first question. And the question comes from Amarnel Jansson from Danske Bank. Your line is open. Please ask your question.

Perfect. Hi, Klein and Irian. Hope you can hear me. And sorry if I may be repeating some questions. I had some technical difficulties here. I'm sorry, I'm not sure if you can hear. Hearing some parts of the conference call. But just looking at the different niches that you are active in within product media, your more or less legacy business, if you can call it that. And also the welding business. Can you maybe give us some coloring on how these three different niches are performing at the moment? Which faces the toughest time

and

yeah, other way around.

Very good question. And we're happy to see that the welding business, if it's our brilliant intelligence or it's luck or something in between, but that is very resilient and it's developing nicely. So the welding sector is keeping up nicely. Yeah, of course the industrial sector is not as hit as the construction side. So that is of course a part explanation. But the welding business is keeping up well. The product media companies are keeping up okay. And then in the normal mainstream business, of course the smaller the customer, no matter what segment actually, the tougher they have it. So even in the manufacturing side, the smallest customers are suffering there too for some reason. But the most worrying trend since a long time now is of course in the construction sector, the lovely smaller medium sized customers we have. And they I think would need some more positivism from us as private persons to get the wheels turning again. But welding is keeping up very well. Product media, okay. And then it's a scattered picture for the rest of the group, but positive signals throughout the group, of course. And not to forget, we have a lot to do, even in a slower market, we need to be better at going for the volumes that

exist in the market. Perfect, thank you, that's super clear. Just looking on the small medium enterprise customers, have you experienced a slowdown throughout the quarter or in the beginning, or have it improved somewhat? Or what have you seen during Q3?

It's very strangely between more or less weeks and with months, we felt that in August now everything is pointing in the right direction, and then it slowed down again in September. And I hope this volatility, it's the long range of it at least, if you look at the trend diagram, it's pointing upwards. And I mentioned the Swedol days, I were in some shops in Stockholm, and I ran into our regional manager, Therese, and she said, look at this, she said. I said, what should I look at? Look at this, don't you see? And I said, well, what should I see? The shopping carts are out again. Because for a very, very long time, our customers have come into our shops and they're not buying more than they can carry, more or less, in their hands. At the Swedol days, the shopping carts were out again and they were filling them with products. So I take that as a little, little signal that things are picking up, but much more positive tones. But again, we have so much more to do to direct our sales efforts to areas which actually shows growth as well. And we historically have been able to do that.

So would you say that the reception of the Swedol days was quite okay, or how would you put it?

Absolutely, no, it was in line with last year. And that is, the market has turned to the worst during that year, but it was in line with that year. So that we see as at least a stability signal. So that

is good. Okay, great. And maybe Irene or Juk Lange, maybe give us some more additional coloring on the gross margin here, which decreased somewhat year over year. I understand the mixed effect here, but maybe give us some more colorings between Q2 and Q3. What have you seen impact, why have you seen a high decline of the gross margin this quarter compared to Q2?

It's quite complicated because it's different, several different mixed effects. But the drop related to the share of STDs has actually seen the same level as we have seen in Q2. So that's more or less the same thing. And when it comes to Norway, that's also the same thing. But of course, that are different kind of things that also impacts the gross margin, like custom handling and so on. And we were hit by some costs related to custom handling as well in the quarter. So that also explains the significant decrease in gross margin in Q2.

Per customer segment, the gross margins are stable. Luckily, we have been able to find volumes in sectors, which unfortunately are at the lower gross margin level. So it's in a way that is disturbing the picture that we've been able to grow in areas which has not been a small and medium size customers with the highest gross margin. But if we look customer segment by customer segment, as you showed in the previous slide, we can explain the drop in gross margin.

And that's

one of the two things as you as a management team should really focus on in slow times. Do whatever you can on the cost side without destroying the business in the long run, and keep up the gross margin per customer segment because the gross margin you establish in bad times, that is the gross margin you're stuck with when the business turns up again. And we can conclude that we have within a few tenths of a percent the same gross margin per customer segment. And it is a mixed effect. I know the word mixed effects is something you use when you have no clue what you're doing, but it's actually true. It's a mixed effect looking because of the different customer segments growing or shrinking.

Actually both customer segment and customer size. Yeah, yeah.

And just heading to the short term here and the next upcoming quarter, then what do you think we should expect here? Should we expect the gross margin to follow the same pattern as we have seen here in Q3 or?

For the last quarter, let me take that. And for the last quarter, we already have one month behind us. And it will be a similar picture, but we all had hoped. There are so many companies that has reported and will report where we all collectively predicted that we should also see a market upturn during second half of 2024. And that has not materialized, that is obvious. So a bit into 2025. Hopefully first the market stabilizes and in combination that our sales office pays off in combination that the acquisitions we've made pay off. So a long answer, but for the last quarter, it shouldn't be any major changes up or down. But step by step during 2025, I see no reason why we shouldn't come back to it. We were customer mix one. And then I also see.

But would you say that you have seen a stabilization already now in the market or is it still deteriorating?

It's not getting much worse. No, it's stabilizing, absolutely. As you know, we are very prudent and do not dare to give any hints of that. Now everything is hunker-dory and we will grow like crazy. That's not the situation. We are fighting for the contracts. We're fighting for the customers. And what happens in a market which works, it's a market economy and it works, is that the areas that are stable and that can show some growth, of course, everybody, all of our competitors, they also enter that market. And we have a clear ambition of keeping the gross margins up. So it's a delicate game going on every, every day. But yeah, let's conclude that it's reasonable, stable as it is. I will not be able to say that we can see that it is starting to grow.

I understand, I understand. But once, since you're seeing maybe a larger share of big customers in Sweden, for example, how has the development been with large customers regarding private or own brands? Good,

yeah. And that is, it is positive. But as we said originally, when we started this journey some four years back, when we built a Lego group, the more of a shock behavior a customer has, small customer or large customer, but the more they acquire their needs in our shops, the easier it is for us to convert them. But then they are face to face with our brilliant colleagues. And they say, oh, you want the shoe of this brand, why don't you try the guest or shoe? It's better at a little lower price point. But the more you have a customer relationship, which is that you are fixing the assortment in a conference room somewhere, the longer that transformation takes. So it differs a little bit from customer to customer, but slowly but surely we're getting there. And slowly but surely we are getting there also, making our key account managers feeling comfortable presenting this. And that is exactly what I meant when I said we have hired people that are experts in our workwear offer to help our key account managers to present our workwear offer to larger industries. It will take too long time to train everybody to be experts in workwear. We need to speed that process up. So that's why we have hired workwear specialists that can co-visit customers with good potential and presenting our workwear offer. That will accelerate that development. Yeah, okay.

They're very good. Then is it possible to maybe quantify maybe the average share of private brands and private labels that the average large customer buys from you? Is that possible?

I don't have it on the average. It's not that I don't want to share it. I don't have it. But of course, some industries of course have, I guess, close to zero.

And

some we manage to. We have examples in Finland, I don't know if I should mention, but a large Finnish industry where we, in a sitting meeting and being one of those conference meeting negotiations, the customer said, ah, but it sounds good with the guest or shoes. Let's go for the guest or shoes. So it's the whole spectrum. But the average share of course is significantly lower. The more of industrial behavior, it's slower. They have different groupings that needs to accept what type of workwear and personal protection you should have as opposed to a small construction company with five employees, then they can decide on the day. You have an example of last week when one of our sales guys went into a construction company, you had a different brand of workwear and converted that customer within 20 minutes. So the more of a shop behavior, the easier to transform and the more of a large industry behavior, the longer it takes of course. Yeah, okay,

perfect, that's great. And maybe a last question from my side, maybe you can answer it, but from your long experience and expertise within this industry and then just looking on the general market and how it develops out there, what's your best guess then on when we should expect to see, I mean, Svedalus has a history of being very early into the cycle and seeing opportunities to grow early. What's your best guess here then going forward on the market recovery?

Yeah, and you partly answered the question, you know the group so well, you partly answered the question yourself. And we were early in the downturn of course, and we traditionally are early in the upturn. And there's a lot of discussions going on that will the housing construction levels be on the levels they were a few years back or will they establish on half that level of 30,000 units somehow. But for us, that is not the problem. We don't sell heating and plumbing or electrical materials or any other building material. For us, the essential part is, and that is the core of these wonderful smaller medium size customers. When we say construction companies, it's very much on the excavating side. So for us, it's important that it's being built bridges and tunnels and also houses of course, the foundations for the houses. So if there will be more of investments in the infrastructure side, that is brilliant news for us because that segment we have a strong grip on thanks to our, we have hydraulics, we have oil, we have components for the machines and we have work where, which is actually made for those types of customers. So that is good news for us. And as to your question then, when will it turn up? That is the million dollar question, but it has to come during the first half of next year. But again, even on this level, I would be very disappointed. I will go home free of charge. If we don't manage to grow even in a slower market, that would be super disappointing if we cannot activate our sales force. So that's what we are doing 24

seven. Okay, great. Thank you for that Klein. I think that was all my questions for now at least. So thank you very much for. Thank you.

Thank you. Thank you. Now we're going to take our next question. And the next question comes to the line of Carl-Johann Bonnevier from the EMB market. Your line is open, please ask your question.

Yes, good morning Klein and Miriam. Emmanuel asked a lot of good questions already. So I see my list here going a little empty, but maybe we could elaborate a little more on what you see for Q4. And maybe looking at the comparison from last year, when you look at the sales mix then, you've obviously, there was an early kind of winter kind of thing hitting you, hitting weather-wise last year. Is that now a big challenge if you are getting more of a warm, normal kind of autumn into the winter? Or how would you see Q4 from that kind of comparison perspective?

You are extremely well informed. Of course. No, of course. We are a much better company, this Q4 than last Q4, but the market is on a lower level. And then we have this little section of the equation, which is unknown, that is the weather. And of course, it's not helping us when it's 14 degrees outside and sunshine, but still it's not that problem. In October, it can be super sunny and nice, and it can also be worse off. But I think it will continue the year out in the pace and the structure we have. That is our best guess, and that's what we plan for. So we have been running cost mitigating actions. And as I've said, I'm super surprised that we've been able, and potentially 2023 turned out too well for us, because you should not be able to mitigate market challenges as we have done with 215 stores and all the central warehouses. Our group structure is, it's essential that you grow. And if you don't grow a group like ours, it's super difficult, but I'm so proud what all our wonderful colleagues have been able to accomplish on the cost reduction side, and also keeping the margins, even if all our competitors are clinging onto the parts of the market where the volumes are, we are still having a stable gross margin. I'm super, super happy about that. But for the rest of the year, my best guess would be the same customer mix, a trend tends to stick a while, at least it doesn't shift too much from a quarter to another quarter. But again, we are having so many sales initiatives and we are running new customer campaigns internally with competitions and so forth. So it will be good, let us enter 2025, but the last of 2024, I think we'll be at the same pace as this.

Excellent, and when you look at the cost savings and the mitigations you have been forced to do to say balance the -to-day operation to the worst demand, don't feel like you have become too anorectic so you can't basically then cope with when demand recovers but you need to then finally get a lot of the cost back in there again.

That is the trick, and we've said I'm into, if we were to start closing shops, then we would add to the downward spiral which we do not want to do. And as you said, we want to capitalize on the challenging market conditions, not ruin the group. So it's a very delicate thing and we are down to a minimum manning in our shops. A potential next thing we haven't done and if it continues that we could do that is that we have opened on Saturdays in the Swarol shops in Sweden. Of course, if you didn't have open on Saturdays, you get at least one FTE for a manning schedule over a shop over a month you could reduce. But it's a little bit in our concept that the smaller medium-sized customers, they actually come to our shops also on Saturdays. Some of them are so small so they don't know if they're there as a private person or as a business person. So, but it's exactly those evaluations we have to do continuously. And still I can say to this point, we haven't done anything which will ruin any opportunities going forward. On the contrary, I think I even said early on in this downturn that to a certain extent this is perfectly timed for us because we built this group with an ax during burning COVID. Of course, we needed to get more efficient in different parts of the organization. So the first year was perhaps perfectly timed and even needed of this market downturn. But now it's getting a little bit boring. Another half year of market challenges that is getting a little bit frustrating. But so far we haven't ruined anything and we have the full intention of not adding to worsening the situation.

I fully appreciate your frustration, Klein. Irian, you mentioned a normal kind of free cash flow pattern for Q4. Is there anything that could, I guess the only thing that could challenge that is if you get an enormous pickup in demand. So you need to restock levels and all these kinds of things and end up with a lot of payments over the year end. Or is there any other part of that equation one should be aware of?

No, I don't think so. We think that it will be almost the same pattern that we have seen the last two years. So Q4 is expected to be a good quarter cash flow wide.

And we have also, I mentioned, I should also mention that we have a new sourcing, purchasing and sourcing manager in Predrick and with a brilliant last time Klein. And he is also now able to in a more structured way. Now we have a full time resource working with purchasing and stock levels and cash conversion and he's super dedicated. So going forward over time, inventory levels should be even more optimized because we'd rather use the cash tied up of course in stock. We'd rather use that for acquisitions of course. So we invest at the same time as we try to be cost cautious. That's a delicate thing to do.

And when you look at the gearing at 2.2 at the end of the quarter, is that in any way holding you back from acquisitions at this stage?

Not now, absolutely not. But of course if the result levels were to come down a lot then of course we need to be more cautious but it has in no way affected us yet. And we have the financial target is three in gearing but we've said that we don't want to exceed 2.5. So no, it's not limiting us at this point.

And just to understand the welding segment, a quick one as well. When you talk about now having about more than 400 million revenue in that segment, what kind of market share would that be in your business as I say in the Nordic framework?

That is, sometimes I wonder if you have some informant that we are actually looking at because it's not super easy to identify. It's probably a pretty big, there are different figures where you have external help to define the market and it's not super easy but I would just say something. Say 15% market share perhaps as it is now but it's a fairly fragmented business but also the welding segment is, one thing is the product category side, the other thing is what the welding customer needs because it's cutting and grinding many other articles that could be included into the welding area. We know that the potential is huge. We know that the potential is huge comparing so it all customer needs, if you take Sweden or tools, customer needs in Norway and Finland with a larger welding offer. But we are trying, we have an extra strategy day with the board in November. We said we need to pinpoint then and put the foot down and say what is our market share? So we're actually looking at that as we speak but so far it hasn't been needed because there's a lot of room to grow so we don't have the exact figure actually.

Excellent and I'll come back and chase you on that at a later stage. Please do. Thank you very much and all the best there.

Thank you, Koje. Thank you. Dear participants,

as a reminder, if you wish to ask a question over the phone, please press star one one on your telephone keypad. Alternatively, you can submit

your questions while the webcasts. Dear speaker, there are no further questions

on audio lines, therefore I would like to hand over to yourself for any written questions.

Yes, there are a few of them and I try to read as I speak. There was one on acquisitions. I think we more or less covered that through Koje one. Aligo closed four acquisitions in a quarter, has so far signed eight acquisitions to 24. How is that acquisition pipeline going forward?

Is it possible to specify interesting sectors? That's a super good question, of course, and we have a good pipeline. The case is closest in time. I'm not sure if I'm saying too much or perhaps a little bit bigger and fewer but there is different areas to grow within and other interesting sectors. Yeah, we are now digging a lot where we stand, that is the welding side and the product media companies. And then of course, we have some ideas what, we'd like to do the rope trick again, as we have done with the welding because now we found a model how to do this and what the potential is. So there are other, so to say, technical areas which are similar to welding, we could do all over again but there is a lot still to be done within the welding side.

And then there is a question, I appreciate that

the market is tough but how are you gearing against competition? How is your market share developing? Thank you. That's a very, very good question. And we had a board meeting yesterday and we consumed a lot of market statistics. It's heating and plumbing statistics, it's electrical market statistics, it's the hardware business index. And whatever we can see from a volume perspective, we are holding our grounds nicely. I mean, looking at our top line, it's compared to any statistics, it's holding up good. Our difficulty to communicate with you guys is to explain that it's the reduction of volumes in the smaller medium size customers that is hitting us. If everything had developed as the smaller medium size customers had developed, then we would have a significant drop in our top line and it would be easier to explain. Then the contribution margin would have been the same but our results would have been worse. So of course we go for what we think is profitable volumes wherever they exist. But we, you probably read the same thing as we do, Derum laid off 120 people yesterday. So the building material sector is suffering. Looking at the different countries, we know what's happening at the tests and what's happening at different players. So I think we are holding up nicely so far, but I think there is opportunity to do much, much more. I think I've been pretty clear on that. Very good, I think that's all from the digital

world. So

what do you say Nadia, should we go for the closing remarks?

So dear speaker, just a last reminder, if you wish to ask a question over the phone, please press star one one on your telephone keypad. Dear speaker, we will just give a moment to our participants. Thank you. So there are no further questions. I would now like to hand the conference over to your speaker, Cleen Ullendwijk for any closing remarks. Please go ahead.

Thank you, Nadia. Just quickly, as I said, a report busy day. The market was built tough during the

Q3 and it's frustrating. We think we do a lot of good things and we get no benefits from that so far. Not no, but very little so far, but it will come. We have -by-step adjusted our cost structure. Now we are fine tuning it, but we don't, as Korya was mentioning, we don't want to do anything that destroys the setup when business picks up again. We are keeping our trading margins, which I think is the best grade you can give to a management or a company if you manage to do that in tough times. Trying to buy volumes at lower gross margin is not super clever to do. So day by day, we build a better company. We dare to invest in growth initiatives, own, or so to say, organic growth initiatives, and we make acquisitions. And I think we've done it quite successfully. We actually changed the welding market already and we've just begun.

So thank you everybody. Sorry for

the sound challenges. It's not only the market that is against us, also the technical side is against us. So the journey continues and thank you for listening in.