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. Today I have with me Mattias Leire, who is the CEO of Arcoma. Welcome, Mattias. Thank you so much for being here. You released your report last week, so we're going to dive into it. I thought if we start with the gross margin. It is quite strongly strengthened year over year and we know that the market mix is important here. What other factors play into the strong gross margin you have? I'm thinking product mix and pricing and so on.

We have received good reviews of our premium products. We see which one has paid. We are convinced that we have been careful in the business we take. We see that the i3 we released has started to have a good effect and is appreciated by the market. And we see that it plus a number of options for good. So it's a combination, but we're more careful and we're looking to increase profitability and push in low-marginal markets where we focus on those segments where there is profitability.

When you say that you choose marginally strong businesses, can we see it as a shift to how it was 12 months ago? Are you prioritizing more profitable businesses now?

AME 2024 has been a year where we have prioritized profitability, which has had an effect. We have an increase in EBITDA of 70% compared to 2023 and reach an EBITDA margin of 13%, which we are very pleased with. We have had a great focus on profitability.

If we stop at the gross margin, you have a post-market business that is developing very well. Could you talk a little bit about where the driving force is here? What can we expect if we look forward a little?

We see through our distributors that you can run business in a slightly slower market. You can do upgrades of an installed base, both larger and smaller, and change parts or entire segments of a retail system and in that way run business, despite the fact that perhaps the larger deal rate has been a little slower in the end.

Is there anything to say about the potential you see there? Where are you today? Have you picked up the low fruit? Or are there further upgrades to be done before you put up resistance on that development side?

No, I think we are very early in it. There is an installed base with some age that you can work on. There are also things in our pipeline that will be able to contribute to us being able to sell in the aftermarket.

You also mentioned that even though the margin was very strong in Q4, you said that you feel that there is more to give on the growth side. Are we talking about internal things that you could do, or are we rather waiting for a return to important markets? Or are there things that you can do to drive growth further, as you see it?

There's a lot left in the markets where we're located. Working closely with our distributors and our partner Canon makes sure that we match the businesses that are out there in a good way. We have an exciting pipeline of new things in the market. And then we're also adding new markets. Our latest Korea, where we started sales now, we got very good feedback on them. Then we look both downwards. We have signed new distributors in Romania, so we are actively working on that. But you can say that in existing markets there is a lot more to give.

If we look at European sales, what indicators do you look at? What signs do you see on how the market could develop before 2025?

We see how many projects we are involved in, where we work early and see that what we price and specify is what the customer wants. There we see increased activity now into 2025, where I think that the insecurity that existed during last year is decreasing.

And if we look at North America, the market went very well during 2024, and especially with emphasis on the beginning, it was very strong. How should you relate to the sales levels that you had there with the underlying demand that exists in North America? Do you see that you can get back there, or were there factors that made this a bit of an upturned level? How should you look at the sales figures that you had there in the beginning of 2024?

The underlying business is absolutely there. It's profit-driven to take pictures in healthcare. And we also see a trend that people work more outpatient with imaging. So it's absolutely there. I think we're only on the surface in the potential there is. We also see that Canon makes large investments. They want to be one of the top players in imaging and make corresponding investments. So I think there is a lot of potential to pursue.

And the underlying market, if we talk about it in terms of North America, what do the indications look like there? I'm thinking about the pace of investment with customers and what do you see in the eye for 2025?

What we see is more business. I think that the strong economy and the stabilized interest rate have made us press the button more now than we did a couple of years ago. I think we can see some parallels to what we see in Europe now, with interest rates rising. Then it becomes a bit detracting. In the US it's not like that, but there is an obvious need that you are now executing on. It is more to keep up and make sure that the installations happen in time with this slightly heightened inflationary situation.

You also write in the report that you plan to develop the offer. Would you be able to develop a little? What is it you see here? What is the potential to capture here?

We will put out two systems at ECR in two weeks. The big fair in Wien. It's very exciting. We work a lot on the workflow and support to get an effective and good workflow, camera-based. Then the other track is to take the technology that comes from our partners in optimizing to have as low a dose as possible and get as good a picture as possible. And there we have a lot of unique technology from Canon, their Intelligent Noise Reduction, which we work with our partners in the market, which we consider a very unique tool.

Are we talking about product launches in 2026?

We have a lot of excitement going on.

Super good. Is there anything else you would like to underline here before 2025?

I think we should be very pleased with the fact that we had in 2024 created a platform for good profitability with future growth. So we see a lot of exciting things happening now. It's going to be a lot of fun.

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