Clemondo Group AB (publ)

And a warm welcome to this report interview with Lemondo. Lemondo released his Q2 report for 2024 here this morning. And now we have the great honor to be able to talk to CEO Jesper Svensson and CFO Jesper Friis Jespersen. A warm welcome Jesper and Jesper. Thank you very much. Thank you very much. You will start with a presentation about Q2 and Clemondo, and then we will end with a Q&A that consists of partly my questions and then questions from your owners that they have sent in to me here during the week. So with that I hand over words and pictures to you.

Thanks so much, Hugo. Thanks so much. Vi har släppt en rapport nu på morgongen som pratar dels om en tuff marknad, men också att vi ser där de effekterna vi vidtar får effekt. Lite olika på olika affärsområden, men vi kommer tillbaka till det. En agenda där vi går igenom lite om Tremondo, vår vision och strategi, vår marknadsområde, viktiga händelser, nyckeltal, finansiella resultat och summering. Jag hoppar direkt in på Clemondo för nya lyssnare. Vi gör hållbara rengöringslösningar. Vi har tre marknadsområden. Vi har fordon där vi gör rengöringsmöjlighet till tvättar bilar och fordon och båtar. Vi har industri där man tvättar industrimaskiner och vi har hygien som riktar sig till vården, rengöring av människor och sjukvårdsutrustning. A few years ago, we released our new brand Greenium, which is a completely plant-based cleaning series that helps our customers achieve their sustainability goals. We are moving from being a chemical company to becoming a sustainability company. On this journey, we rest in our It means zero emissions to the air, zero impact on the working environment. It is both here in our factory and in the customers' business. Zero water pollution and zero land emissions. It is based on our sustainability ambition. We did it. Clemondo was early out with sustainability work, but we have accelerated that strength since 2021. I'm not going to go through all the things on this list, but we keep a high pace when it comes to being the best at being able to keep clean without polluting nature. I was going to go through a little background on why we are where we are and understand the environment. Climonde has a history of being unprofitable for many years. We set up a new management in 2019, and in the next five years we have made a turnaround. We have made it successful, but over time we have also had a pandemic that has been challenging, and we have had a raw material shortage and hyperinflation of our materials. So 2024 is the year that we go from profitability to profitable growth, and we are in the middle of that transition and that journey we are in. If you look at the chemistry industry in general in Sweden, it is still in a decline of between 15 and 5 percent. That is the environment we are facing, a significantly smaller market this year than it has been in previous years. When you look at our top line, I think you should have that in your calculation and evaluate it. If we look at Q2 and our three market areas, vehicles, hygiene and industry, I'm going to go through the respective business areas and start with vehicles. It is in those business areas where we have a problem. It is partly a tough market in transition. En marknad i absolut Sverige toppnar när det gäller konkurser. Jag tror ni har läst Hedin Bils årsredovisning med kraftiga minusresultat. Vi har Bilia som skyller sina siffror där det inte ser så bra ut på sin verksamhet just i Sverige. Det är den kunden som står för 60% av vår omsättning. Så det är den marknaden vi verkar i. Vi håller på med ett intensivt förbättringsarbete. Det går från att korrigera prisbilder både upp och ner, men hitta rätt i det. Vi var också tydliga i rapporten att det tappet vi ser är hänförde till ett mindre antal kunder, och där pågår såklart ett intensivt arbete i att förstå varför vi tappar, och förhoppningsvis då också kunna återgå till de volymerna vi hade tidigare. What is nice is that we see that the first marks on the work we put down, that it starts to break. And it can be said that the market has continued to go down during Q2 in general. During the same time, we have slowed down our loss. All the other same means that in a smaller market, we perform a little better. And that means that we have become better than we were before. Vi håller samtidigt på med en strategiöversyn. Den kommer presenteras under kvartal tre. Jag hoppas vi får göra något tillsammans med dig, Hugo, och presentera det lite längre fram. Så detta är ju här vi har våra problem på fordon. Tittar vi på våra andra affärsområden däremot, tittar vi på hygien, här ligger vi, de senaste fem åren har vi haft över 200% tillväxt. We have 7% growth in the quarter, which is strong in the current economy. Growth is increasing in this quarter compared to the previous quarter. It is also a business that depends on the economy. People, unfortunately, get sick even in bad times. About half of our contracts are publicly traded and half are through different types of resellers. But what recognises all of our contracts is that they are often long contracts that run for three, four and five years. So it's a very nice business to rest against and have at the bottom. So we are very satisfied with the quarter. Relatively strong growth, one can say, one grows essentially much higher than the market in large. Same thing with our industrial business, where we started a investment during October last fall. We are now up to 8% growth there. That's 2% more than what we had during quarter one. Since we have received evidence that our investment is breaking, we have also expanded the investment and employed more resources. We have done running. The last resource that came here to us actually came as late as last week. What you can say is that when you invest in sales capacity, you have about a delay period där du inte får någon extra intäkt de första sex månaderna, utan det kommer där bortom. Så det är en inbyggd förseningsmekanism med ungefär sex månader. Givet det så är vi väldigt glada för den tillväxten vi klarar att uppvisa i kvartalet. Och sen ska Jeppe ta över och presentera vårt hållbarhetsarbete.

Tack för ordet Jesper. Yes, if I start with Greenium, then we have a fine Greenium share. That is what Jesper was talking about, where we can affect our customers. It is at 42%, which is part of our range. Then we have a number of other KPIs that we measure here in our journey towards zeroing. It is partly to reduce electricity consumption by 5% per year. There we have a decrease so far this year at 3.46%. We have that we will recover 100% of our process water by 2030, and so far we are at 98.32%. And then we have zero emissions to the ground, where we also have a nice figure to follow. If we look at important financial events during Q2, we have had a renewed contract with Lyreco worth 16-20 million SEK during a two-year period. If we look at the development of that contract so far, it is a very nice development that we have on Lyreco, so it looks very promising and good on that side. Let's take a look at the key figures under Q2 2024. If we start with the top row, just as Jesper mentioned, two of our three market areas have performed well, also due to the general situation we have, where both hygiene and industry are growing by 7-8%, which we are very happy about. As Jesper also mentioned, So har vi inom fordonsidan, så har personbilsidan, den har det tufft. Våra kunder har det jobbigt. Det återspeglar över till oss deras affärssituation som de befinner sig i. Det gör att då tappar vi på en handfull kunder inom fordonsidan. Det gör att vi får total negativ tillväxt. Ser vi till vår bruttomarginal, så har den växt både i kvartalet och ackumulerat med en och en halv procent, vilket är väldigt positivt via de effektivitetsförbättringar som vi har gjort för att stärka upp våra marginaler. Det arbetet fortlöper och löper på fint i verksamheten och vi ser också att det biter här. Ser vi tyvärr rörelsekostnader, ja, där har vi också sett att vi We have decided that we are now going to seek to turn and create growth. This means that we hire consultants, we hire people at a certain pace, and this increases the costs of movement at that pace. So it follows that development according to the plan we have seen. If we look at our results, we can say that we do not reach our financial goal here with 10% EBITDA. And the main reason for that is that despite the fact that two business areas, hygiene and industry, are growing well, with the problems that exist and on the passenger car side, it cannot compensate for that loss and then it becomes a total volume loss that runs through and that affects negatively. We have had focus on profitability in the turnaround and it is clear in our solidity that it has given effect. We are now at over 60%. We have a low debt rate of 0.6%. And that gives us a sense of security when we want to invest and use that solidity to make use of the ability to create growth. If we look at our cash flow, we are pleased with the decrease in volumes. We have improved our cash flow both quarterly individually and compared to previous years. Earlier listeners recognize this diagram. The blue stacks show the sales and the red curve shows the EBITDA margin. What can be said is that compared to previous year's stacks, the Q1 and Q2 sales stacks are almost the same height. There is not much difference in turnover between the two, as it has historically done here. Otherwise, it follows quite well. The higher the volumes we get, the more often we get the possibility that our fixed costs spread out to a larger volume. Now we look at our financial goals and how we have succeeded with that. Yes, 12% growth per year of half organically. No, we can't do that thanks to the situation we have right now on the vehicle side. som vi jobbar för fullt med på vända. En EBITDA på minst 10% över en konjunkturcykel, ja, vi når 8,2%. Det är som jag sa, det är personbildsidan som är huvudsaken till att vi faller ner i kombination med att vi samtidigt aktivt har valt att stärka upp med resurser för att öka vår förmåga att skapa tillväxt. Och soliditetsmålet, ja, det klarar vi med bravur uppe på över 60%. I leave the floor to you, Jesper.

Thank you. I would like to conclude by summarizing what Jesper and I have tried to convey. We have three business areas, where our hygiene area delivers according to the plan and the growth rate increases. We also have an increasing focus on geographical expansion. Vårt industriområde levererar enligt plan. Vi har utökat satsningen under våren och under sommaren. Även här är vi nöjda generellt sett. Fordon, tufft klimat för bilhandeln. Vi jobbar intensivt, så mycket vi kan. Det som är glädjande är att vi i kvartalet ser de första tecknena på att arbetet vi lägger ner får effekt. When it comes to the storage side, as Jeppe mentioned, we are a solid company today with both good cash flow, good solidity and profitability. The work continues, we have the finances for it. We have under quarter two also received ownership support for a broad storage strategy. We hope to be able to return more to that in the strategy draft later during the quarter. With that, I thank you so much for us, Hugo.

Thank you very much for this presentation of the quarter. I'm going to start with some of my questions, and I'm going to sort them out according to how big the segment is. So I'll start with the vehicle segment. And just as you say, there have been a few challenging quarters here. And now you also have a new segment management in place. And you say that you have made some adjustments. Can you tell anyone or any of these adjustments that have been carried out?

We do, but we don't want to tell exactly everything we do for all our competitors, make life too easy for them. But as I said, we have adjusted and corrected prices where we had a little imbalance, I would say, which is now corrected. It is also when the stage is concentrated to a handful of customers, then you can also draw conclusions that there is probably improvement work to be done with that customer mass. It's easier to do when it's a handful of customers than if it's a thousand customers. So there is to find better ways to work with those customers so that they get out. We create more value for that handful of customers.

And also in the VD-word, I think that you also make sense of it during this presentation, is that it starts to look a little more positive. And you start to see a little more positive market and future. Does this feeling that I have and why do you feel this way?

Well, I would say half, half, half, half of your feeling, Hugo. The market has continued to decline, so we don't really see a positive effect on the market, but we see a positive effect on our ability to work in it. And there we see that when our, we see that our ability increases and we see that when that ability increases, it has an effect on how we perform on the market.

I think we'll move on to the hygiene segment. And it continues to be stable and now also shows fine growth figures. But this growth we see, does it depend on that you have increased prices, does it depend on increased volume sales or is it something completely different?

Our prices are relatively tied to raw material prices and we have rather a Svag nedgång i våra priser, alltså ökningen i liter är högre än ökningen i kronor. Så detta är ju för att vi har ett starkt erbjudande till marknaden. Vi har en bra produkt till ett pris som kunderna är villiga att betala och vi ger dem bra service. Så vi presterar väl helt enkelt.

Jo, perfekt. Just like we were talking about at Eureka, we see that the business is growing according to the plan in combination with other agreements. So when we have historically presented press releases about agreements, it always takes time before such an agreement starts to work and so on. So there are several components that cooperate in that. Right.

You mentioned Lyreco. Can you tell us a little more about the Lyreco agreement? Because it is large and very important for the hygiene segment. Is there any possibility for geographical growth or something like that with Lyreco?

Since they are very exciting. It's always a bit of a trick to comment on individual customer relations. which is between us and Loureco. But Loureco is a successful company, they are growing, it is going well for them. They have won a larger deal in the country that we now act on, mainly the subcontractor takes on. And the volumes that come from there are rather a little bigger than a little smaller than we had believed. Men nu fokuserar vi på att göra ett bra jobb med Loreco i Sverige och sen så faller det sig naturligt när vi har klarat det att man ska försöka hjälpa dem på andra marknader också.

Härligt. Vi hoppar rast vidare till industrisegmentet och där har ni redan varit lite inne på det här. Men tidigare i kvartalen har vi pratat mycket om industrisegmentet och det är här vi också ser en väldigt stor potential att växa väldigt mycket mer. Hur känner du att den här satsningen har gått? Hur tycker du att satsningen har gått hittills?

Man vill ju alltid att allting ska gå fortare. Det är väl kanske en bra drivkraft. Men vi har nu, nio månader efter vi inledde satsningen, nått en tillväxttakt på åtta procent i nedåtgående marknad. Det får man säga är väldigt bra. Det är inte så att världen där ute växer med 4 %, utan den är kanske runt nollan. Det innebär att vi låg och taktade samma siffror ungefär innan. Nu växer vi med 8 %. Vi är jättenöjda med den satsningen.

I kombination med det som Jeppe nämnde tidigare, att det tar ett tag innan kontrakten faktiskt ger I understand your feelings there. Earlier we talked about the fact that the product offer has not been complete. How do you feel about this now? Have you developed the product offer or does it work anyway?

I would say that we have reached a good enough status. There are always some improvements you want to make, some fine adjustments, but in the big picture, we have a product offer now that is good enough to serve the market.

I think marginally now, and then I speak for the whole group, How important is it with higher volumes to increase the margin? Or are there more things to work with?

You can say this, like everyone who is a manufacturing unit, regardless of what you are doing, then of course higher volumes will give you a larger mass to distribute your costs on. If we look at the margins where we are now, and we have improved ourselves, with these 1.5% to see where we were last year, then we are satisfied with that part. And we have also succeeded via, you can say that when we have reduced volumes, we can say So the conditions decrease. But we have managed in the factory to compensate for it by increased line speeds etc. So then it's like it's growing. And of course it is so. If we manage to create growth, which everything goes out to, and our volumes then increase again in a total way. Yes, then it will be a win-win situation for us.

I thought Teddy, it sounds more positive in the future when you increase the volumes. So it sounds great. And then we move on to a little more of the questions of the shareholders. And one of the main things that we are all very curious about is of course this strategy update. But it has now been clear that it will come in Q3, so we have to wait a little longer. The one who is waiting for something, will never wait any longer. So let's jump to the next question, and that is of course the vehicle segment. Many are thinking about that. What has happened and do you feel that you could have discovered and done something earlier?

I think we have been clear in earlier comments and words that we have stepped up a little in that market and we have done it at the same time as the market is not so good right now. And that's clear, but when you're sitting with a facet in hand, you wish you saw it earlier. But we saw it as soon as we could, with what we had in front of us then.

Yes. And you can also add, as Jesper mentioned initially, yes, we've had a hyperinflation. If you have as many products as we have, you should price them utför då steg priserna så snabbt. Ja, ett led i det. Då hamnade vi lite snett i olika prisbilder. Det har tagit en tid att korrigera det. Så där ligger vi nu mycket bättre i fas via det arbete som vi har genomfört. Så allt vad vi kan påverka själv, det försöker vi ju rätta till så mycket vi kan. Sen den personbildsmarknad, så som den ser ut just nu, Ja, det kan vi inte påverka. Det får vi förhålla oss till, att så ser det ut. Så det är så långt vi kan säga här och nu.

Just det. Men det kan vara svårt att avgöra också, vad som är internt, vad som är externt, när det just är en nedåtgående marknad också. Så det där är klurigt. Och en annan fråga, som ni också var lite inne på under presentationen, och som många undrar, det handlar ju om förvärv. För det har vi pratat mycket om. Och hur ser det ut på den fronten?

No, but you can say implicitly, when we say that we have got a broad mandate, then we say that it may have been a little too narrow before. If the target is too narrow, then it will be harder to meet, so to speak. We think that it starts, we would have liked to have made a contract with this team, so we hope with the broad mandate that we have the opportunity to return to that question.

Sen kan det ju vara så att vi har varit inne i kyrkan på väg upp till Alta, men det är först när man kommer ut ur kyrkan som allting är klart. Vi har jobbat med den här frågan under tid, men det har säkert varit nära också. Men vi står där vi står och jobbar vidare i frågan.

Ja, men det ska bli rätt. Det är det viktiga. Then there is also a question here regarding communication and press releases. And then, when there are such quiet periods as there have been from May until now, does that mean that you do not win any new deals? Or why is it quiet? And how should the shareholders think during such periods?

There are two aspects of that. There is one type of press release that gets a Mars stamp. It is the type of press release that you think can affect the share price. And then we follow a kind of legislation, you could say. And then there are other press media that we think can be of interest to the stock market, but that we do not judge can affect the stock market. If we have 2000 customers, we win 10 every day and then we lose 8. That's how it will look. De flesta kunderna köper för 50 000 om året eller 100 000 om året. Det avslöjar inte vi av intresse för aktiemarknaden att följa det. Vi väljer att skicka PM på väsentliga händelser. Tycker vi att den gränsen är ganska lagom?

Ja, jag instämmer i det. Risken är att man urvattnar PM och tappar de här viktiga händelserna. its weight and weight in the PM. So I think you have a good balance there personally. And then it seems that more have expected the annual income to increase faster within the industry segment where you have strengthened the sales organization. What should they expect in the future and how should you think about these sales recruitment?

I tried to say that in the presentation there, that you have, for every newly employed salesman, you have six months where you are really only affected by costs and no increased income. And from month seven, the incomes start to come and then they rise. And then we have employed running here during the spring and summer, so we expect that they will give effect afterwards. But the one we hired on April 1st, So he starts delivering growth first in October. That's how the game works.

Yes, yes. And growth-wise then, and we think forward, we might think above all a little bit about the vehicle segment. How do you think about geographical growth? For example, Germany, because it's an enormous car market. Do you have any thoughts on that?

Well, there we will ask to get back to the strategy presentation during the quarter. I think it's premature to talk about it here and now, but ask our shareholders for a little patience.

Yes, yes. And then the hammermatic business, how does it roll?

It is a hammermatic business. verksamheten, den befinner sig i ett stabilt läge skulle jag vilja säga. Alltså den genererar sina pengar, den är fungerande och rullar runt och så vidare. Så den är ett stabilt läge för oss.

Ja, och avslutningsvis då, om vi tittar på utvecklingen, säg tre år framåt, I can imagine what the answer will be, but that's up to you. Where do you stand in three years?

We are clearly in a transition from focusing on profitability to profitable growth. Vårt tillväxtmål är 12 % om året. Vi skulle helst då ligga över det. Jag hoppas att det inte är tre år bort tills vi är där, utan det ska ske innan dess.

Härligt. Tack så jättemycket för att ni har varit med och berättat sådant ni kan berätta nu. Så ser jag fram emot att vi hörs här under Q3 med en strategiuppdatering också. Tack så mycket Hugo. Tack så mycket Jesper. Tack så jättemycket till alla som har tittat och till alla som har ställt frågor. Har ni ytterligare frågor är ni varmt välkomna att ställa dem till mig på hugo.lijo.kanegi.se. Tack för att ni har tittat.