Clemondo Group AB (publ)

Hello and welcome to this report interview with Climondo. Climondo reported here in the morning their fourth quarter, the end of 2024. For the quarter, they showed an increase of 1% and an EBITDA margin of 9.3%. A little bit down from last year, but it was expected after they in Q3 said that the cost base will increase a little bit due to sales investments. We will talk a little more about this with the CEO and CFO. The presentation will be that the management will make a presentation of the quarter and then we will end with a question time. The questions are mixed with my questions and questions that some of your shareholders have sent in beforehand. Thank you very much for that. And with that, I would like to hand over the floor to the CEO Jesper Svensson and CFO Jesper Friis Jesperkjön. Welcome and the floor is yours.

Thank you very much. I will start right away. We will talk briefly about Climondo for new viewers. Our sustainability approach, our market area, important events, key figures, results and to conclude with a summary. The Mondo, we do three different market areas. We direct ourselves with cleaning products to industry, to the food and to hygiene. Hygiene should be understood as a platform where you clean people's health. Our competitive edge is that we make it a little more sustainable than our competitors. I'll describe a little bit about 2024. We've been working for a whole year, and 2024 is a year of change. In 2019 we did a turnaround, we went to profitability. Then we had a pandemic, and then we had a hyperinflation in the employment material. And by 2024 we were done with the turnaround. The building blocks were left right for growth in 2025. Det är viktigt att ha med sig när man tittar på rapporten. Vi tittar på hur kvartalet har varit konjunkturmässigt. Det har varit lite svag kontraktion i marknaden. Vi ser det främst i vår fordonsaffär. Tittar vi på hur Q4 har gått på våra tre marknadsområden, fordon, hygien och industri, så börjar jag med fordon. Vi har haft över 50 % av vår omsättning där bilar byter ägare och det har varit en bransch med mycket konkurser, mycket fallande försäljning så vi har mött en svag marknad. Vi har under året bedrivet ett intensivt förbättringsarbete som har innehållit att vi har lagt och släppt och börjat implementera en ny strategi. Det är oerhört trevligt att se att åtgärderna biter. Under första halvåret 2024 tappar vi 24 % av vår omsättning på vårt största affärsområde. Det minskar till 9 % under andra halvåret. Och även om man inte ska dra studsvakt på enskilda månader, så tycker jag ändå i denna bilden, när man försöker rita en trend, att det är We have, after the end of the period, written a big deal with the Västra Götalandsregion, which will add about 12% growth to the volume we have today. Here we have a semiconductor-based business, it is stable, it has long contracts, a typical four-year contract, a very nice business to have at the base of the business. I'll go on to our industry business. We started a venture in 2023, which involved widening our range. We have put in a new team with sellers and sales management. We managed to grow by 8% over the year, but we see that at the end of the year, growth increases quite markedly in this business area. Three nice trends. We are in all of our business areas. The vehicle is left to take us over the zero. But the trend is good. Who do I have for you there, Göta?

Thank you, Jesper. Let me describe a little bit about our journey towards zeroing. And then we have a number of tropics that we relate to. To the left, it shows the proportion of ringworms. Den visar den inom fordonen, inom varumärket La Haga. Där har vi en aktualiserad siffra nu på 43 procent. Så 43 procent av de rengöringsprodukter som lämnar bolaget då, ja, de är klassade som rengör nu. Det har varit en växande siffra år från år då. Sen mäter vi även vår elförbrukning. Vi ska minska den med 5 % per år. Vi har lyckats under det här året att klara det målet fint. Vi har minskat mot 8,4 %. Vi har att vi ska ha noll utsläpp till vatten. Då ska vi återvinna 100 % av vår processvatten. Det är faktiskt en siffra som vi redan uppfyller här glädjande. And we do this thanks to the fact that we have facilities in the factory. We collect it in our tanks and then reuse it. Then we have zero emissions to the ground. We do this by measuring production waste to destruction. There we have that we will come down to zero also there. And there we also have fine figures that we are at 0.28 percent. So it's pretty close. Jag fortsätter med viktiga finansiella händelser under det här kvartalet. Ni som har följt oss och är aktieägare vet att vi har haft en stämma och vi gjorde en sammanläggning av aktier och så vidare. Den genomfördes under hösten. Efter periodens utgång har vi fått ett tilldelningsbeslut från VGR. Det står för Västra Götalandsregionen. Det har vi också pressreleasat separat. I start 1 maj har vi sammanlagt värdeområdet för förlängning med 44 miljoner kronor. Så det är ett avtal som vi är väldigt glada för. According to our figures, if we start at the top of the net turnover, as Jesper has been talking about the details for respective market areas, then we can say that throughout the year we have lost about 6%, but we have now had 2% or sorry, we have had 2 quarters in a row with a supply. So the whole loss that we have had sales-wise, this comes from the first It's just like Jesper mentioned with the trend, that it's quite important. When it comes to gross margin, yes, we lose 0.6% in this quarter, but we see it throughout the year, so we improve with hardly any percentage. So it also feels good and stable when we look at our raw material prices. When we look at the volatility in the euro, we also think that it has stabilized. This means that we now have EBITDA of 6.5 versus 7.9 last year. A little bit under our financial goals, 9.2 percent versus 10.9. The final result, after all, is 0.5 million less than last year's quarter. We have good solidity, 62%, a little bit low, and our debt rate is very low, 0.6%. And our cash flow in the quarter, well, a little worse than last year's cash flow compared to the quarter. This graph, Den visar då försäljningen i de blåa staplarna. Den visar EBITDA-marginalen. Då ska man säga att 2024 har varit ett år då vi har satsat för tillväxt. Vi har blivit 14 procent fler medarbetare under året. Vi har också använt konsulter i större utsträckning för olika projekt och så vidare. Så det har varit ett år då vi har satsat på att skapa och lägga grunderna, att lägga pusslet för tillväxt. Och där har pekar väl den gröna kurvan lite mer nedåt än vad det annars brukar vara med att följa omsättningstalen. Det vi versus våra finansiella mål då, Ja, vi får vara glada. Vi har två kvartal i rad med tillväxt. Det är en bit från vårt mål med minst 12 procent, var hälften ska vara organiskt. Men kurvorna, trenderna, de pekar i rätt riktning, vilket vi är väldigt glada för. EBITDA har landat på 9,2 procent, och det är som sagt ett prio i de 9,2 procenten att vi skulle We could lay the ground for growth in this. And the solidity that I was talking about is that it's a check in the box with a rake on it.

I'll pass on the floor to you, Jesper. Yes. I'm thinking about how to summarize this statement, Hugo. The most important thing about this statement is that all market areas show positive trends. I would like to add a few more things. The vehicle shows signs of growth. Hygiene, up to 6% growth. We have already taken a contract that corresponds to 12% growth. And we have 14% in our industrial business. If we look here, we reach our financial goals in two business areas. Thank you very much.

Thank you very much for a good presentation. My short summary of this report is that it is yet another stable quarter. I think that 2024, as you mentioned, is a year of change. I think it is a stable base to enter 2025. What you want to see in 2025 is simply growth. Therefore, my questions are a little more focused on growth. I think we'll start with the vehicle. After the Q3, you said that you didn't see any clear improvement in the vehicle market. Now you say that you see signs that it has begun to drop. What is the difference now in Q4 versus Q3?

The biggest difference is that with the measures we have taken, I started to see an effect. In Q4, there is not much difference in market activities out there. If we look at the new car registration, we see that the effect comes under Q1. There comes the new car sales increase. It does not exist in Q4. We have widened our business. We have been more careful in our segmentation of customers and worked a little differently against those customers.

Yes, and I think we should talk a little more about this widening of the vehicle business, because we were talking about it in the last quarter, that you also go more towards trains, trucks, buses and such types of vehicles and not just passenger cars. How has this initiative gone, do you feel?

We are very pleased with this initiative. It has also come with the fact that we have widened the range with the products we have widened the industry range with. It's a bit more that a customer who buys a bottle of rainwater from us can also buy paper to dry up the chimney or the kitchen to put the chimney in. It also makes it possible to sell a little more to each customer and we become a little more attractive to the customer so he can take away a supplier.

I think that the shift we have tried to make in our sales We see the result of it. Improvement in the figures, it is not that the market has improved itself, it is rather that the results are in internal pieces, that they are better than before.

This sounds like a very good basis for 2025. I know that you don't give any guidance, but what is your feeling for the vehicle segment and 2025? What should investors expect here?

I don't know what part of your opinion I should focus on, that we don't leave any forecasts or what our feelings are. We have tried to be very clear with the trends. We don't leave any prognoses. We have done our best to be clear with the trends. And then for each one to do their homework and draw the line where it points.

And I think it has been quite clear that the trend is turning. So I look forward to 2025. And then we quickly jump over to the hygiene segment. It continues to be extremely stable. It grows by 8% despite the fact that we do not see the effects of this Västra Götaland region agreement yet. We will return to that. But what is the big difference here? What is it that drives the growth in the hygiene segment this quarter?

A few years ago, when we started this project, we were very dependent on the contract. We also work with the resellers who work with the market. This is a constant. The growth comes from increased sales to the resellers.

To grow the hygiene segment, we have previously talked about that you will widen the product portfolio to be able to sell several types of products to the same customer, that is to say increase the share of the wallet with the same customers. How has the development of these products gone? Do you have several products in the product range now that you already see that you are starting to sell to the same customers? And does this go hand in hand with the increased investments we saw during this quarter?

But you have made a smart conclusion, Hugo. That is what you see in the increased investments. Exactly when and how this burning will happen, we will return to that in the near future.

Exciting. We have also talked about geographical expansion for the hygiene segment. Is that something you have also looked closer at?

Vi jobbar löpande med den frågan. Vi tror det är viktigt att närma sig varje marknad på rätt sätt. Under Q4 och Q1 har vi gjort en fördjupad marknadsundersökning för att vara helt övertygade om att vi går på rätt väg. Den är nu färdig och då ska arbetet ta väg så att säga.

Right. Then you will start to execute it according to the plan that is in place. And then I think we will talk about the big contracts that you have won with Västra Götalandsregionen. In total, it is 44 million over four years, so it is about 11 million per year. So it is a clear increase in revenue from just this agreement. Can you tell us a little more about what you are going to deliver? When do you start delivering? Is this something that you think will increase in volume or will you start delivering quite full at once, or how does it work?

Well, it gets pretty full at once. They have a little too much of the previous supplier, but it should go for a month or two until you are up in full volumes. It goes pretty fast, you could say. What we deliver is salt and disinfectants, is what we deliver to this customer. A part of the contract means that we are up in the value chain a bit and we will get back to you with more information about that.

It is cryptic now, there are several things that we will get back to in the future. And then I think we'll move on to the industry segment. It was the segment that grew the fastest during this quarter, and that's what we've talked about this year as well, that this is where we see a lot of potential in the future. What has driven the volumes during Q4? Are there any special things, or is this more of an in-house trend, as you can see?

It's a combination that we've talked about in the previous presentation. In the end, we made a deal. And we have presented a number of PNs earlier on the industry side. It takes a little time before they produce power and so on. And the longer the time goes, the more they take it. Then we have skilled, experienced sellers within the industry that know how to process and go to the market. And then, last but not least, we have added a new part of the assortment. It is absorbents, dry cloths and so on that we introduce. I think that part of the assortment can also have synergistic effects on the vehicle side. But it is mainly on the industrial side that the new assortment is being introduced.

Yes, and in that answer you also mention a few questions that we have received here. And that is just that during the first half of 2024, we saw news about several winning orders, especially in industry. We have not seen the same here during the second half. Is it that the interest has decreased or how should you think about the decreased news flow from this segment?

I think you should look at the trends and draw your conclusions from that. Growth wins power during the year.

I think that's what you should choose to focus on. That was a pretty clear answer for 2025. I think the trend looks positive here. Let's look more generally at the group level. Already in Q3, you flagged that the costs will go up. You make sales efforts and aim to grow. We see a certain effect out of this quarter. You still have growth. It is not as big as the cost increase. How would you say that these sales efforts have given effect? Because we don't really see it in the figures yet.

No.

We can add to that, Hugo, that people have started at different times during the year. For us all, when we start again at a place, it takes time. You have to learn the assortment, then you have to go out, you have to go next to someone, and so on. So that is also a factor, the longer you have been, the slower you get up. It's all about going out.

Exactly. Let's get to the cost increases briefly. Are they mainly salespeople or is it another part of the organization that has also been strengthened?

It's sales-related costs. It doesn't just have to be salespeople. It can also be something on marketing or something like that. It's sales-related costs.

Yes, it's forward-looking. And for investors here now, we think that 2025, it shows an increase of 10% for the whole year. How should you as an investor think that the cost mass increases? Will you need to increase the cost mass more to grow these 10%? Or do you have the organization in place to grow these 10%?

We have not answered the specific question, but we have done a bit to our costs to handle a larger sale. It will not increase at the same level as it has increased during Q4. But with increased investment, the costs will also increase. But they will not be parallel.

Exactly. So we will see a margin improvement here when we look at growth in 2025, which I think you still testify a little bit about. And then we also think that an improved margin, we also want to see in the cash flow. Now we had some increased investments here in Q4. How should you think investment-wise into 2025? Will you invest more or what are your investment needs here?

I think you should see investments in the factory. Then it will happen. In the next 5-6 years, we will increase the investments in the factory. There are no giant investments like this. I would say 1, 2, 3, 4, 5 million and maybe it will be bigger in a year and smaller in a year. De olika investeringarna kommer ju påverka kassaflödet för att vi ska finansiera dem och så vidare. Samtidigt är de ju av en effektivitetshöjande art i detta här. Allt vi puttar in där ska ju göra att det går snabbare, bättre exekvering och så vidare, vilket kommer att förbättra marginalen. Så det går på två håll i resultatet av kassaflödet i det här.

And finally, if you have one message that you want to send to existing and hopefully future shareholders, what is that message for the future?

Look at the trends.

My summary of this is that you have a stable base to grow from. You have made growth investments that you see in trend starting to turn. You have also widened product assortment. You have changed a little bit which customers you specialize against. And it sounds like we have a lot to come back to here at the beginning of 2025. Thank you very much Jesper and Jesper for presenting and thank you very much to everyone who has watched.