Arcoma AB

Then we say hello and welcome to Carnegie and today's report interview. My name is Hjalmar and I work as an analyst and stand here together with Mattias Leire. Welcome, Mattias. Thank you very much. And you have released your Q4 report here today that we are going to talk about. I thought we would start with the big exclamation mark. There was a very strong growth here in the fourth quarter and it ended strongly in 2023. You mention here in the report that Sustainable Precision is driving all growth. Can we say that what we see now is an expected increase in growth of this system and how should we look at the market's attitude towards the premium segment right now?

We have worked for a long time. It is a result of our strategy where we have worked with the premium segment, North America, efficiency. Now we see a strong pressure and we also see that commercial partners are good at selling premium systems. in markets where we may not historically have sold, where we have had a more mixed mix. So we see that it is a long work that is beginning to get effect.

And we come back to the market-specific components there, but I thought we could talk a little more in general terms. Have you adjusted pricing during the whole year here? Is it something that has affected the margin profile of the various systems and how has that work continued?

We have long sales cycles, so we can take orders now where we deliver in one to two years and we can win deals. We have adjusted the prices for a year, we have not had the full effect of that and then we always see our competitiveness in each market. We want to win the business and that is what we have seen now that we actively win the business.

If we take a look at the specific markets, you mentioned that America continues to go strong, because it was strong even in Q3. If we listen to what actors in the market are talking about, Canon says that there is a robustness in the market on the medical side. Is that what we see now, that the underlying market in America is recovering from being plagued by lack of staff and other such burdens? Or how do you see the underlying market in America?

I think we see a combination of both the underlying market is growing and then our distributor, commercial partner, Canamelka Systems, has made a lot of commercial investments that are starting to get effect. So both the market is growing and we are taking market share. So it's a very good combination right now.

Let's look at Europe. In Q4, you had some growth in the region, but we know that the underlying market is in a hurry. If we look into 2024, how do you see your market composition? Where do you think the growth will come from, geographically?

As we talked about, North America is an important growth driver for us. Europe, as we have communicated, is a bit more patient. At the same time, we see that our commercial partners are driving and working very actively to take the businesses that are out there and to work actively in aftermarket sales and upgrades. So we see it as a bit more patient now. Depending on how it looks in the long run, in six to nine months, it can turn a lot.

Super interesting. And then I thought we'd look at the gross margin. Historically, it has been volatile, and as mentioned in the report, it is driven by both the geographical mix and the product mix, and the combination in between. If we look at the Q4, can you say that the product mix was specific? I'm thinking about the system and service that led to the development, or what factors were involved?

It was driven by the geographical mix. It is the underlying driver of the marginals in the quarter.

Looking a little further down in the results calculation, you have actively worked to reduce the moving costs, and we have already seen that in the previous quarter, but you really attach that direction here in Q4. If we look forward, what do you think of the moving cost side there? Will you be able to grow with the cost costume you have now, or do you need more investments in staff, maybe mass efforts and so on? What can you expect in 2024?

We have worked actively with efficiency and damage, and we see that we have a lot of productivity in the quarter with a lower cost costume. We see a possibility to make selective investments, but I think we see that where we are now, I absolutely think we can deliver in 2024.

Super interesting. And then I wondered if you could comment briefly on the news we saw at the end of 2023 when you changed the owner book. Is there any comment on the new structure and the changes you would like to make?

First of all, we want to thank Sandstone for their long support. It has been an exciting process with a lot of interest. from new and existing owners. What we can see is that we see that some existing owners have increased their content. We see Link, we see CEO Lars Kvarnen, I myself have also bought shares. And at the same time it was a very good process and a lot of interest. Then we can not comment, it's information that we do not know more than the official data that is in the owner's book.

If we take a look at 2024, are there any areas of focus that you would like to highlight? If we look at the balance between margin, relative growth, underlying market trends and geography. What do you see if we look ahead?

It's the three priority areas. We see North America, Absolutely. We see that we should drive into the premium segment and continue to work there. And then this scalable efficiency so that we get a breakthrough on the bottom line on the growth we create. Super good.

Thank you so much, Mattias, for taking the time to come here and answer our questions today.