Alligo AB (publ)

Good day and thank you for standing by. Welcome to the ILLEGO Interloom Report Q2 2025 conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Alternatively, you may also submit your questions on the webcast at any time by typing them in the question box and click Submit. Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Mr. Klein Ullenvik, CEO. Please go ahead, sir.

Thank you, Raz. Welcome to Allegro Q2 Report 2025. Presenters, as always, will be our CFO, Irene Wissam Holbelander, and myself. We usually have a slide with us too on it, but it has gone missing. We will try to focus only on the highlights. It's a report-heavy day today, and we try to have different themes to be as transparent as possible and to educate you guys on what we are doing. Last time we talked about re-care and the efforts we're doing in Finland and this time we will talk a little bit about our platform and as you can see the CEO section of the report and the headline is that we one final time will talk about our integration that we now can leave that finally behind us. We will not use that as any explanation going forward for any shortcomings. that is done and it's also a signal to ourselves and to our organization that we leave the integration process behind us and focus fully on going forward. So looking at the the map 241 shops it looks like we are heading backwards in own brands but as you know that is due to the fact that we do acquisitions and they mathematically of course have zero percent of brands when they are included. Sweden dependent, that's why we are suffering a bit when the market is slow in Sweden, both in volume and in EBITDA. So Sweden is our super profitable country, and that's why we are suffering a bit when the market is not really with us. One busy slide, but just to take you through a few highlights, you know, we have the two concept brands, Viroland Tools, but we perhaps not talk so much about that. We are a true Nordic I don't know of any actually, but there probably are some. But we have a true Nordic organization. I will show you a slide later on where all the functions are Nordic functions and the countries are focusing on sales. So that's a bit of a twist in our setup. The non-integrated businesses are becoming an increasingly big part of our group. Now 20% of sales. We have our lovely 13 product media companies. You saw two add-on acquisitions done recently. We have our six welding businesses. The battery lagers acquisitions completed this year. And then we have some other companies, but not other sounds diminishing, but it's super well run businesses. And they did two HTP and RTP in Finland that we acquired a year ago. But looking at this slide, we can also reflect that when we say that something is market-driven or not market-driven, we have so many contacts facing the market from different daughter companies or the integrated business. And when we see similarities in the development, for example, in the welding, six welding companies, as we do in the integrated business, then it's fair to assume that it's market that is developing in that way. That's the extra good part of having these businesses. It gives us a reality check to what's market-driven or potentially not market-driven development-wise. Acquisition, yes. We have done a couple of acquisitions, battery logging being the biggest one, and two, actually, add-on businesses, one 13, one 14 million business. But it's add-on business to already acquired product media businesses. Highlights, market situation, it's challenging, but we dare to say it's stable. We had times during the last two years when it's been steadily downwards, but we feel that it's much more stable now than it has been. We've signaled before that what we hear is more positive, but the customers are still very cautious. We as a management team focus on what we can focus on, driving sales to the greatest extent. We are very afraid of being caught being too late. So we are always early on adapting with cost. Irene will show a slide later on that I think proves that we are fairly good at that. And still we haven't seen the big effects of the plan Z that we launched Q1. We are continuing to do acquisitions. We are constantly working with inventory levels, launching new private labels, own brands, and trying to find the right balance between external strong brands. That's the beauty of our offer, the good mix between external brands and our own brands. And to do price adjustments and in all openness, we suffered a bit in Norway when we launched the Jeeves system in February this year. That's exactly when you normally do your price adjustments in our countries. So Norway has a little bit of a backlog catching up, because there are always disturbances when you implement a new ERP system. But they are progressing nicely. Delivery capacity is good throughout the group. It's best to be having a little bit of a backlog in incoming goods at the moment. But besides that, everything is good. And the macroeconomic, it is what it is. So Q2 in brief, revenue grew by 1.6%. Oil and gas, Norway, being stable. Organically, unfortunately, 4.3% down. But if you adjust for two things, defense-related orders, which were very high Q2 last year, and also Northvolt for obvious reasons, then Irene, if I say the right number now, is at 1.3%.

It's 1.3.

It would be minus 1.3, the organic growth, if you adjust for those two things. Norfolk will, of course, not come back, but defense-related orders, they come when they come. We cannot do much about that. Operating cash flow is down a bit, quite a lot, but it's all driven by own brands and, of course, the lower result levels. So we arrived at an EBITDA of 144 compared to 166 last year with one trading day less, which should do something around 12 million perhaps per day. And an EBITDA margin of 5.8 and a stable gross margin. And as you also know, when we acquire businesses, it's very seldom, if ever, that they have as high a gross margin as we do in the group. So when we add acquisitions to the greatest extent, Mathematically, that brings down the gross margin. So to be on the same level as before, it feels good. High sales focus in all countries. We are running a lot of growth initiatives. We try to be more efficient in sales. Of course, we merge to very different groups and we try to find our common ways of working. And we are improving, but we have much more to do in sales efficiency, that's for sure. Pricing system, I wrote, perhaps some of you have been able to read it in the CEO section of the report, that when we build a company like this, of course, there could be things that comes out less positive for some customer groups. And one example I brought up was our dear small and medium-sized customers, the so-called former Svedal customers, when we where we need to agree on a new pricing system that fits both super large customers and smaller customers. Of course, every little change you do is to the negative side for the smallest customers. We used to have a very simple pricing system, but the slightly change you do, it's perceived as more complex. So we are fine tuning that to make them feel that it's as easy as it used to be. Sustainability, we have been approved by the science-based SPTI, science-based target initiative, and we work closely with our suppliers. It's a tough target, but we are dedicated on achieving that by 2030. Tools turnaround Finland is a super focus for us, of course. As I said, margin improvements in Norway. We have now all the opportunities in the world to continue that work with the in place and working. We need to do more on the assortment side of fine tuning and we are constantly working with cost reductions. And as we informed you last time during Q1 in 12 weeks we identified the need and actually carried out the plan that so-called and the biggest effects of that the positive effect the cost reductions is ahead of us. And capital efficiency we have much more to do that we have communicated earlier. Prioritize growth areas just quickly. We think we are very good in offering different types of services to our customers. That differentiates us from our competitors. The whole store, the way we run our shops is differentiating and that's very much our focus. We'd like to become much stronger in the construction sector. To a great extent, a legal group is industry focused and that is good. We need to keep that, but we also have a strong offer to the construction sector and we are constantly working on that. And then our own brands. It's not a given that we need to have as high own brand share as possible. Of course, if we were equally profitable and equally competitive with external brands, of course, that would be easier in many ways. But if you take the workwear part, the brands we have, it's almost a pity to call them own brands because they are so strong. Björnklädd, Uniburn and Gestor, it's real, real strong brands. And those we invest in. Turnaround project Finland is ongoing. You know, they don't need to be on the 10% we say for the group, but they need to be in the range of six to something around 8%, whereas they are a little shy of 3% of the first half year. But just to illustrate the levers we have, so the own brands is at 9% where Sweden is at 21. The share of store sales is at 21 compared to Sweden at 53. So if we can focus on the right type of customers, serving them in an efficient way, and increase those two shares, which we are dedicated to do, that will improve, of course, the Finnish profitability. So just quickly about our scalable platform, one last time. So we set the common strategy and core values in a very hectic meeting in 2020. with our mission and vision and our core values. And that was the guiding light for the whole organization, building a legal. We have this true Nordic organization, which is super efficient when everything is stable. It's super burdening when you are doing big changes because most topics end up at the table of the group management team. But when now everything is in place, the Nordic organization has only benefits. Simplified legal structures. Coordination of logistics is done. The ERP platform is done. Common pricing system, yeah, some changes for the small and medium-sized customers. Standard range of assortment. Little fine-tuning, but to the greatest extent, done. And store coordination has been done. So we are now in a phase where we need to do more continuous developing the business and focus on sales. So EFPS has said, just giving a few figures, harmonized Nordic standard range of assortment. So we reduced the supply base by 50%, the number of articles by 66%, and the own brands increased the share of sales. And in store coordination, we have closed or merged 35 shops. So it has been a busy period. This is just a slide to show how simple in a way our organization is. The countries focus mainly on sales. Then, as I said earlier, the Nordic functions supporting all the countries equally. So by that, we can drive efficiency and we have also scale. So we don't have a setup in three different ways in three different countries. It's truly Nordic and it works for us. The logistics is also done of course we'd like to have a nicer warehouse in Finland of course than the one we have in Kotka. But that we will wait with until we know what actions are being we need to take in Finland. But in Bestby we're brilliant very nice new built warehouse and Örebro where we invested a lot in a super efficient warehouse. And Örebro is also a little bit of a Nordic hub also for the other central warehouses. Finally, Irene, financials.

Yes, thank you. As Clayne mentioned, the second quarter followed the same trend as the first. The market remained weak, but we continued investing in sales and maintained good cost control. Revenue increased by 1.6% in the quarter, driven by a 9.7% growth from acquisitions, but contracted by a negative organic growth of minus 4.3%. one less trading day and adverse ethics effects. The organic sales growth was weakest in Sweden, but it was significantly impacted by large project orders to the defense industry last year and the loss of Norfolk's volume this year. Sales within the manufacturing sector in Finland recovered, although from low levels, and in Norway, uh the um oil and gas sector was still strong but other customer segments were weaker every day reached 144 million a decline from 166 million last year and the results was weaker due to one to a trading day and weaker demand in sweden and norway Acquired results and cost savings have partially offset the declining gross profit as illustrated in the FSA bridge. As you can see, the cost reductions have balanced the annual salary increases and inflation effects related to other expenses. And as Cain mentioned, the cost saving program that we implemented in Q1 will further decrease the cost base for approximately 100 million annually starting from mid-year. Sweden has the highest share of SMEs and owned brands, followed by Norway, while Finland has the lowest. And this directly correlates with profitability in each market. The higher the shares, the greater the profitability. The downturn in the market has primarily impacted small and mid-sized customers. However, the decline related to SMEs is now less significant and the share of SMEs has increased from 68 to 73% in the integrated Swedish business. And additionally, the share of own brands in Sweden has increased from 25 to 28% as sales of our own brands primarily derived from the store channel. And the share of SMEs and own brands is in line with last year when it comes to Finland and Norway. The gross margin decreased slightly from 40.3% to 40.1%, driven by negative country mix. A higher share of acquisitions will lower gross margins and a continued positive sales trend within oil and gas in Norway. However, this was somewhat offset by Sweden's increased share of SMEs which had a positive impact on the group's gross margin in Q2. Moving on to some highlights of each market's development in Q2. The Swedish market remained weak with organic growth declining by approximately 7% and 2% adjusted for the large project orders to the defense industry last year as well as Norfolk volume. Sales in the stores stabilized further, implying a more favorable shift in customer mix and an improved gross margin. Cost savings and acquired results have a positive impact on the overall outcome, but they cannot fully offset the weak organic sales. The oil and gas market in Norway has remained strong, while other customer segments have had a weaker development. the result is behind last year due to lower volumes and the drop in gross margin there was a safe recovery in finland but from low levels last year while our recent acquisitions have contributed positively to the results the old tourist business as plain mentioned is still struggling And we have made some progress in the ongoing project to improve the profitability, but it will take some time. When it comes to cash flow for the quarter, it was lower than last year due to reduced EBITDA and also an inventory build-up of our own brand and decreased trade payables. We have an ongoing capital efficiency project, and we have reduced the inventory level for the external branch. However, the investment in our own branch contracts with progress. Networking capital as a percentage of sales is 28%, and we are aiming for 24%, which was the level in 2022. The investing activities primarily relate to the earn-out payment. The organic investments are lower than last year, and capex to depreciation ratio was 0.5. Net debt at the end of the quarter was 2.1 billion SEK, an increase from previous year, primarily due to higher acquisition pace and decreased operating cash flow. The ratio of net debt to EBITDA was a multiple of 3.2, The ratio is higher than last year due to a combination of lower EBITDA and increased net debt. But the ratio is expected to decrease gradually. Our covenants relate to interest coverage and equity asset ratios, and they are fulfilled at the end of the period, and there is still good headroom before reaching these thresholds. And despite the temporary increase in leverage, we maintain a solid financial position. Sending it over to you, Pleng, for summary and outro.

And when you say increased leverage, it was a decision we took as we communicated with you guys when we saw good acquisition opportunities. We said rather than to be a little bit above our target, we'd rather do that than instead of passing that opportunity. So it was done. Q2 2024-2025 in summary, still slow business climate, but we see signs which are more positive and it's stabilizing. We do whatever we can at least to attract the customers we think we are best suited to serve. Our climate target has been approved. And we continue to adapt our cost base and very much more efficient throughout the group. Still some caution from our customers. We talk to them daily, of course. Even if they are filling up their order books, it's still cautious. We are well-positioned. We can now focus on sales. The gross margin is there. The cost base is improving. We need to adjust the capital efficiency a bit and go full on on sales. We think we have a very strong offering. We get that feedback from a product perspective and from a service perspective. So what we need to do now going forward is fully focus on sales. We used to know how to do that. Hopefully, we still know how to do that. So that is, of course, the number top priority for 2025. Very good. That concludes our part. Raph, over to you.

Thank you, sir. As a reminder to ask your questions on the phone line, please press star 1 and 1 and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Once again, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. If you wish to ask a question via the webcast, please type them in the question box and click Submit. Thank you. We are now going to proceed with our first question. And the first questions come from the line of Emmanuel Janssen from Danske Bank. Please ask your question. Your line is opened.

Good morning guys, hope you can hear me. A couple of questions from my side. You mentioned once again that you are hearing more positive tones in the market. Would you say that that is across all three geographies here?

Firstly, it's mostly Sweden. At the end of the quarter, and we know that from talking to many of our suppliers and hear the signals, actually despite our own development it was a reasonably slow end of the quarter in Finland and in Norway we are hearing and getting some feedback on volumes to the construction sector being dramatically down actually but we are so small in the construction sector in Norway still unfortunately in one sense so we weren't that much affected but when we say much more positive signs. It's mainly when we try to figure out where the small and medium-sized customers in Sweden are heading.

It sounds quite good, given that the larger chunk of the profits is within Sweden, right? Absolutely. Firstly, do you think that the more positive tones is any effect of the root deduction that we have seen in Sweden?

We have analyzed that a bit and we knew when it was launched that it's not increasing the total amount you can apply for, but it's increasing the percent. Of course, it's not negative for us, but it has not affected as much positive. Of course, our customers have gotten, I think there's one or a number of terraces being built. So I think if you supply direct building material, they have probably benefited the most. But while installing these terraces, hopefully those carpenters and builders have worn out their clothes and their tools at one point, and it will continue. be a positive effect for us as well. So, of course, it has a positive effect, but not much visible for us. Yeah, okay.

Got it. And perhaps, can you maybe give us some colors? Have you seen any, like, increase of visitors in the stores, or maybe the basket size starting to increase again, and of those, or yes, yeah, and of those markets?

The number of customers is stable, perhaps a slight increase. But what we think is a signal of the business climate is that the average receipt is not taking off. They still buy exactly what they need. And that's a typical market signal of what the climate is. Whereas, you know, my old stories of how you can influence our type of customers to buy to buy things that they need. But these days, it's exactly what they need to buy and nothing else.

And perhaps it's also possible to maybe quantify or give us some color on how you're developing versus the market in general.

We don't have any good figures, but we, of course, consume everything we can get our hands on. And we talk constantly with our suppliers and they give us their feeling of the market. And we hear, of course, from competitors in different ways. And we can also, I mean, being so reasonably wide as we are in assortment and also geographically spread and also having these... freestanding companies we have we can quite okay paint the picture where we see the market trends. If you take Mercosur for example being a freestanding group selling workwear within a legal. If they have exactly the same development as our workwear sales in the integrated channel then it's fair to assume that that is market driven. So I think we have a good, even if we don't have the exact figure, there are no industry, as you know, it is in electrical wholesaler business and in heating and plumbing, but there are no good indices for us to follow. So we had to put different pieces together and make an educated assumption. Yeah, okay, perfect.

Thank you for giving us that context. But do you think, I think, maybe a pattern maybe one year ago or so that maybe customers were looking for cheaper alternatives and going to more low-end businesses regarding price tickets. Is that still the case or are those customers returning now or and how well price position are you with your private labels?

A very good question and that is probably key for us and That is a fight that will continue for a foreseeable future. I was down at the shop yesterday in Interesa and met some customers. And of course, I talked to them and they honestly said, of course, they have been to Jula. They don't want to go there, but as one low price competitor being them. But that's what our 1832 assortment is targeting, that our customers want to do business with a professional player as us. we need to get that information out on a weighted basis so everybody knows that we have that. So it's okay to go to Svetlana and still buy things at even a little bit lower price point than we used to have. Gesto used to be the price fighter, but obviously we needed one price point lower than that. And that's why 1832 was launched. That was something we identified two years ago and we have in a super speed developed it and launched it, as you know. So that will help us to stop that from happening. Yeah, okay, great.

And just looking at your different sales channels here, for example, in Sweden, where you had a lot of, how to call it, headwinds maybe in the quarter regarding top line with Norfolk, defensive orders, et cetera. I think looking at direct sales, it was down around 13% year over year versus last quarter. And I think this store channel was down If we adjust for these one-off events or how to call them, I assume that you're seeing closer to more stable sales development in direct sales now, right?

Yeah, that's true. Adjusted for the defense project orders and the north-south volume, organic growth was negative at minus 1.3%. And that's almost the same level that we see in the store sales business. So adjusted for this, it's about that level.

And the defense industry is super interesting going forward, but you never really know when the orders comes. If it could be a couple of big ones as it was Q2 and a little bit Q3 also last year. and then it's being delayed or it's being pushed forwards and backwards in time Northvolt is of course gone and the funny story there is that we stepped away from that negotiation many times but as I've said many times we are especially good with customers that have high demands with complex solutions so actually they asked us to sign on which we did and we said let's go for this green tech sector. And now we have to excuse why we have a loss in volume due to that.

But I mean, you don't know when these kind of defensive orders will happen again, of course. Maybe this year or maybe next year, but I assume they have also won a lot of other contracts with new customers or winning at least agreements. Do you think that will start to play out in the second half of the year?

Hopefully gradually they will do and we have signed some interesting deals with customers and then it's also always frustrating to see how long it takes until it ramps up. I mean you would love to see that you sign it and the next month it's already flying high but that also takes time but we have to focus on our own game and select which customers we think we can serve the best and think we have a good game. We could increase the intensity even more of course but I think we have a good backlog of customers to work with.

And if the direct sales like stays on this stable minus two, minus one percent growth in the near term while you're seeing store channels start to grow again, maybe a couple of percentage. Will that be enough to increase the profits level in Sweden? Is that how profitable the store channel is?

Absolutely. Absolutely. Absolutely, so a continuous lower cost base, increased sales in shops, those two will benefit greatly to the result in Sweden. How much do you think is needed in order to grow in Sweden? That's a very good question, but you can just make estimations with our healthy gross margin, if you could add a number of millions and everything else the same, you get good leverage. But we need to increase the focus on the mechanical marketing because if you're going to send out the salesperson to each customer we want, it will take enormously much time. So we need to improve the good old mechanical marketing that we also used to be good at. and start to drive customers to our shops. That we've done before and we need to do it again, refresh it.

Yeah, sounds good. Maybe last question from my side before letting other people ask questions here, but you're not alone with hoping much for the second half of 2025. What's your view on this second half year? You're not the only company where the investor market hopes or expects that growth or volumes will be returning. What's your view now on the second half and how you think we should expect it?

I love that you asked that, Manuel, because you asked me the same thing this time last year and I and everybody else was dead wrong. We see that the market has stabilized. We hear positive signals. But again, we have so much on our own hands that we can do. We have such a strong offer. So if we can get the mechanical marketing back into shape, continue the good sales push that our brilliant external sales people are doing and our shop employees are doing. But I mean, again, it feels like interest rates are coming down a bit uh hopefully uh now it's picked up a little bit but the the dollar uh the sec strengthened versus the dollar is is giving us some more competitive advantage and also together with our external suppliers so when their cost base is getting lower and our cost or purchase price is getting lower we can increase competitiveness so i i i'm now leaving all this integration project behind us very much is in our own hands the coming quarters. So it's a non-answer to your question, because we really don't know. But the GDP development seems to tick up nicely also. It has been delayed. The curve is still in the same direction, but it has shifted downwards. It's all the information we are getting, but an increase in GDP is normally good for us because then the general economy is better and then we are such wide in our offering that it's normally good for us. So all the signs are there and we have so much to do ourselves. So by God, we need to get the sales up and running.

Thank you, Clive, for trying at least to give us some picture of it. I know it's difficult. Well, I think that's all my questions for now, at least. So thank you very much.

Thank you, Mona. Enjoy the summer.

Likewise. We are now going to proceed with our next question. And the questions come from the line of Carl-Johan Bonivier from DNB Carnegie. Please answer your question.

Yes, good morning, Klein and Irene. A lot of good answers already, but a couple of more questions from me, if possible. Just looking at, you mentioned the working capital build-up being related to own brands largely, and you also talked about the good delivery capacity. How do you see, say, data dynamics? Are you now at the level where we should see, yeah, reversals of, say, working capital in the second half of this year on the base of this, or... Do you see more need to build up more of inventory to be where you want to be on the on-brand side?

No, we have invested in fasteners. We haven't been talking much about that lately, but we have done in our own brand Inno. We have the 1832 that we have talked a lot about. We have a totally new line on both mid-priced segment and a little bit lower priced segment on Gesto shoes, which has already come into the shops to a great extent and has been well received. And since we book cash when it's being loaded onto the ship in China, we have a lot coming home for the autumn. So it should, by God, not increase from this level. Now we have a good set of own brands offerings. So no major investments going forward. It's piled up a bit, unfortunately, now.

But that probably ties into the next part of my question. Obviously, the currencies have started to move slightly more in favor for if you at least look at the US dollar. The Norwegian krona, I guess, is still a challenge. But if you're looking at the US dollar, the thing you get in now, is that going to give you that currency advantage compared to before? Or is there a longer cycle to get the US dollar out in the pricing?

You know that probably better than us but you have both the stock turnover rate and then of course you have the hedging and we used to love our hedging when the SEC went down. Now we don't love it that much when the SEC gets strengthened but of course time flies and we can see that the spot purchases we are doing are now on a totally different level. So absolutely, what is being brought into stock now, at least, is on a different level. That's for sure.

I think that should basically start filtering through already in the second half of this year.

Hopefully, yes. Now it's been an uptick again. It's a little bit irritating. 9.72. It was good when it was 9.49, but it's better than 10.5 for sure. Excellent.

And just on the efficiency cost improvement program, the $100 million, I think you heard Julian saying that that is now coming through as of next year. Yeah. And what kind of concessions do you feel you have done on, say, regaining sales when volumes come back from this cost rationalization program? I think you talked before that you had already basically saved back to the bare bones, so any more savings was going to have an impact.

That's a good question. If you look at the shop structure we have, we are down with the back against the wall. If we don't want to shorten the opening hours, then I think we will add to a downward spiral, and that we don't want to do. So with the present opening hours, we have, and it's an overall concept, even open on Saturdays, except for summer period. There are a few persons left, but there we are super, super lean. And in the plan Z that we did in Q1, which will have an increased effect going forward, we focused mainly, even if there was some sales oriented, but mainly on central functions. And it's, yeah, the old saying, never miss out on a good crisis. So we had to take actions and we did, and that will help us going forward. So, but yeah, of course, there's always more to be done, but I think we've closed the shops we need to do. We have co-located. So a little bit more to be done, but first we will hopefully enjoy the effects of what we have done.

Good. And one final, looking at the slightly elevated gearing for the moment, if there was any good acquisitions coming along? Would you, with that in the back of your mind, say hold back on them due to the gearing situation? I appreciate that you say you're far from any covenants or anything like that.

Good. No, of course, in those discussions, and we have a couple of them, you can manage time in a good way. So the discussions we have, I mean, in many cases, we have been the one pushing for quick closures. And perhaps at times like this, we don't push as much. But we shouldn't be slow, so we lose them. But of course, it's much tougher now than it used to be. But for good reasons. You and I talked about battery loggers when we acquired them. Am I happy we did it? Absolutely. That looks amazing. We are happy we did it. And we rather excuse our little bit higher gearing and have them than the opposite. But of course, yes, we don't push for quick closures as much now as we normally would have done.

Sounds logical. Thank you very much and all the best out there.

Thank you. Enjoy the summer.

We have no further questions on the phone. I will now hand back to you, Mr. Ollendrik, for the webcast questions.

Thank you, Raz. We have gotten a couple of them and I think some of them we already answered. There is one. Could you elaborate on the gross margin going forward due to the currency changes? Could they have an effect already in Q3, Q4? We touched a little bit with Collier 1 just now. And yes, hopefully, of course, gross margin is so many different things. First of all, the word mix effects, depending on which customer categories, which product categories that we managed to sell. But isolated, absolutely, it should have some effect. Absolutely. Now it has been a couple of months with a stronger effect, at least. So the effects should be positive in Q3 and Q4. Then I think we have two more. I think it's FX effect we answered and cost reduction program we answered. So I think it's okay from here. Do you have any other ones on the telephone line, Raz? Or should I go for the closing remarks?

No, we have no further questions on the phone line, sir. So please go ahead with the closing remarks. Thank you.

Thank you very much. Okay, everybody, we are halfway through 2025. We would have loved to say at this meeting that the market is booming, but it's not. But we continue to focus on what we can focus on, cost efficiency, keeping up the gross margin, getting sales in shape. And in all honesty, we have much more to do. And some adjustments also that we need to do. Pricing for small and medium-sized customers. They're also all customers we need to adjust. But we know what to do and we do it. And hopefully we get better day by day. And at one point we can also see that we get a little bit of help from the market. That would be lovely. So enjoy the summer. This journey continues. And thank you very much.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you and have a good rest of your day.