Dustin Group AB (publ)

Great. Thank you very much. Thank you. So, good morning and most welcome, everyone, to our fourth quarter presentation and full year presentation and conference call. I hope you're all well. Despite the turmoil in the world, but here on I thought of the call is said myself, Thomas Ekman, and Johan Carlsson-Sifo, and also Fredrik Setterström is also in the room here as well. So, today we present our fourth quarter results and full year results for fiscal year 2021-2022. But before we go into that, just to start with the other news we also sent out this morning, as you might have seen in the press release, I have today, this morning, announced my resignation as CEO to the board. I will, during 2023, take on the position as CEO of Axel Jonsson, who is, as you also might know, Dustin's largest shareholder, holding 29% of the shares. It's acting, of course, but however, here now is the focus on Dustin, and I will stay on and secure a thorough handover to the next CEO. We're of course also a recruitment process for that is being initiated as we speak. But without further ado, let's go into our Q4 and full year presentation. And for your reference, as you see on slide two, we have a dot net loss. But I think we can move directly to slide three for financial highlights. So see how we are improving and performing now during Q4. We reported strong organic sales growth at 15% for the fourth quarter. mainly driven by strong demand for hardware. Our sites and our active work in purchasing has created a high degree of availability for our customers in a market that has still been affected in various ways by disruption in supply chains and the overall unstable geopolitical environment. Zooming in on our market, the availability for standard hardware, such as PC and mobile phones, is continuing to normalize, as we also saw in the end of Q3. But the more advanced hardware, and in our world, higher margin products like infrastructure, network, and AV equipment, it's still scarce, but it is improving, which is, of course, encouraging to see. Total net sales were 5.7 billion SEK, up with 18.2% versus last year on reported level. And the organic growth, as I said, was 15%, of which SMB showed just about flat at 0.2%. and LCP at a very good 24.6%, and B2C at a negative 20.8%. Obviously, that's an effect of much less campaigning, but also less demand in the consumer segment. Given the geopolitical instability with the continued Russian invasion of Ukraine, increased energy prices and overall inflation, we can see the same signs as we have seen in previous crises, as our SMB customers are the first ones to react. by the larger corporates are slower and public sector continue to suspend on IT. Our LCP segment logically therefore also performed strongly in the quarter with a very strong growth while slightly lower margins compared to last year but sequentially improved margins since Q3. Also encouraging. And the quarter I think clearly shows our capability to actually define demand, make use of it and deliver. Market share wise we have again strengthened our position in our different geographies. And continuing on gross profit was 880 million SEK compared to last year's 758. And that gave us the gross margin at 14.2%. The change there versus the change versus gross margin versus last year is mainly attributable to an altered mix with higher share of sales within LCP together with, of course, the high organic growth in LCP as well. Our adjusted EBITDA was 202 million SEK versus last year's 229. That gave us the beta margin at 3.5 for the quarter versus last year, 4.7. Down versus last year, but slightly up sequentially from Q3, 3.4, which is in the right direction. Overall, the beta margin was affected by the current customer mix towards LCP and product mix of standard hardware or lower margin products within LCP. Integration of our acquired operations is proceeding as planned, and short-term, obviously, we do carry a bit more costs due to that, also affecting the EBITDA. Actions affecting comparability, both minus 12 million SEC, consequently then giving us an EBIT at 147 million SEC compared to last year's 157 million SEC. EPS, earnings per share, 0.73 SEC per share, a 12% increase versus last year's 0.65%. And cash flow improving from operating activities was 104 million SEK, a good increase versus last year's negative 222 during the quarter. Showing a good positive underlying cash flow generation, which we of course also see encouraging increase. Our leverage at the end of the quarter was 3.9 versus 3.4 for full last year. Increase from currency fluctuations as well as inventory levels versus last year. However, inventory is sequentially down from Q3. And given that there are obviously questions in general on inventory levels in the market or in the industry, it is good to remind that the majority of our inventory relates to customer-specific or pre-ordered inventory with very low risk. Come back to that also later on. So apart from an intense quarter in general, from an operation perspective, we have continued to do the integration work with our Benelux companies, where clear steps have been taken. One of those is that we announced reorganization for the group, now valid from October 1st, where we merged our SMB segments to one for the full group. I am then responsible for both the Nordics and the Benelux, headed by Rebecca Talmark, and the same for operations, headed by Salma Sbysht. which is now merged into one, catering for both Nordic and the Benelux as well. And this will enable us to extract more synergies than we previously expected. We now have identified an additional 50 to 70 million SEC annual synergies. And then obviously the news from this morning, as mentioned earlier, that I will take on the position of CEO for Axel Jansson in 2023. But now Johan, you can take us through the financial for different segments and how we have performed in Q4. Okay, let's move to slide 4 then, an SMB segment in some more detail. Sales for the quarter ended at 1,529,000,000, representing an organic growth of 0.2%. Reported sales was down due to the movement of customers between the segments in the Netherlands. In the quarter, we saw that the economic uncertainty is now affecting our smaller SMB customers and the consumers. This effect is similar to the previous economic slowdowns in the last 15 years. However, in the quarter, we also saw better and better supply situations for standard hardware, and the situation for SMB is now close to normalized. Especially, this affected the larger SMB customers where sales were growing. Overall, from a geographical perspective, Finland, Norway, and Sweden showed the best sales performance. The share of software and services was down from 19.2% last year to 13.2%, mainly as a result of the customer moves mentioned above. Segment margin improved from last year's 10.3% to 10.8%, and the improvement was a result of improved availability of advanced hardware, good sales at strong margins in the recurring services and good sales of private label products. This was to some extent offset by strong sales of computers and mobile phones. Segment result ended at 166 million compared to last year's 170. After the brand change in the Benelux, we are now setting up the online business and the operational processes in the same way in the Netherlands and Belgium, as we have in the Nordics. This will increase our possibilities to use the competence we have in the Nordics to further develop the online-based business to the SMB segment in the Netherlands. And with that, we conclude SMB, and we move to LCP on slide five. Sales in LCP was 4,105,000,000 in the quarter. That was an increase of 33.9%, of which 24.6% was organic. During the quarter, we saw very strong sales in both the public sector customers and the large corporates. As for the SMB segment, availability of standard hardware continued to improve, and in the Nordics, the backlog was down by 300 million. However, in the Banlux, it continues on high levels. This had a positive impact on inventory levels, which we will come back to later in the presentation. Price increase had some effect on sales development, and our estimate is that it impacted around 3%. From the geographical perspective, growth was strongest in Denmark, Netherlands, and Belgium. Segment margin at 6.8% was down from 7.5% last year, but up from Q3's 6.4%. Compared to last year, the high share of standard hardware had a negative impact on margin, and also the recent price increases had somewhat negative impact. Strong sales of private label products affected margins positively. In the quarter, we also saw strong demand for our circularity offerings, such as take-back. And more and more customers see this as an integrated part of the service we provide. And we continue to slide six on B2C. Sales in the B2C was down by 18.7% to 110 million. The main reason for the lower sales was the economic instability and continued low level of price campaigns. Segment margin continues to be at high levels at 8.3%, mainly due to the lack of price campaigns affecting margins negatively. Segment result was 9 million, down from 11 million last year. Then moving to slide seven on networking capital. Networking capital was 80 million compared to last year's negative 256 million. The higher networking capital continues to mainly be attributed to the Benelux region, where the change to an asset-light business model is continuing. The change in the model will be implemented gradually during financial year 2022-2023, as we are changing the IT platform and moving towards a global organization for purchasing. We look at the networking capital details. Inventory in the quarter was 1,340,000,000. down 130 million from the previous quarter, but up compared to last year by 325 million. It's important to remember, as Thomas mentioned, that approximately two-thirds of the inventory, or 850 million, of the total dust in inventory is pre-ordered by customers and awaits delivery, and is not exposed to price risk. This represents approximately 20 days of sales. The other third, or $450 million, is related to our online sales and private labor. This part of the inventory remained at the same levels as last year. Moving to accounts receivable, that was up $710 million, mainly as a result of higher sales, but also a shift towards more LCP with longer payment terms. Accounts payable was $3,790,000. or 643 million higher than last year. The majority of this comes from higher business volumes. In total, we saw a reduction in the inventory in the quarter over quarter. And it is our view that we will see inventory normalizing back to levels around 1 billion to 1.1 billion in the coming two quarters. It makes us continue to believe that our networking capital target range of negative 100 to 200 million is realistic. To bridge the time it takes to implement the asset-light model in the Vanellux, we have initiated a project to sell part of the receivables related to the public sector. We expect this to be implemented in the first half year of FY22-23 and have an impact of around 500 to 800 million. Leverage, that is net debt in relation to the 12-month rolling at the TA at the end of Q1 was, at Q4, was $3. where our target is to stay in the range of 2 to 3. The higher net working capital and currency differences affected net debt and leverage upwards. Moving to slide 8 and cash flow. Cash flow for the quarter was 8 million compared to last year's 130 million. To look at the parts, we see that cash flow from operating activities before changing networking capital was 212 compared to 201 last year, mainly as a result of better operating results. Changing networking capital was negative 108 compared to negative 423 last year, where the main difference in last year would come from the acquisition of CenterPoint. Cash flow from investing activities was negative 45 this year, of which 35 was related to IT investments, compared to 3,072,000,000 last year, where the acquisition of CenterPoint affected the numbers. Cash flow from financing activities was negative 51, compared to 3,424,000,000 last year, and last year was affected by the refinancing of CenterPoint. Total investments in the quarter amounted to 66 million compared to last year's 65. CapEx related to IT development amounted to 34. And of these 34, 14 was investments in the IT project in Centerpoint, where we are moving the ERP system to the cloud. Investment in tangible and intangible assets decreased from 24 million last year to 20 million before this year. And finally, investment in assets related to services. Service delivery was 11 million, and that was down from 15 million last year. All in all, 45 million out of the 66 million in CapEx was affecting cash flow. The others were changes in lease or rent contracts. And with that, we move back to Thomas. Good. Thank you, Johan, for that. Round two. And then we proceed to slide number nine. Let me elaborate a bit on our integration and synergy development. As we have previously announced, we believe that when we did acquisition of Central Point last year that it would be possible for us to extract synergies at an estimated 150 million SEK annually. They would come from an order they are starting to surface from both revenues and costs. On the revenue side for SMB in Netherlands, the merge to one organization for SMBs in the Netherlands, that's where we will be working in the same way, in the same platform. or on the same platform with the same offering portfolio and synergies will be realized in full by year 2023-2024. Same for LCP tender, where we, given our size, now have a larger portfolio of contracts and by that being less dependent on certain deals, which then ensures that we can choose more thoroughly and with better quality what contracts to hunt for. Turning on to slide 10 and look where we are now. We have taken good steps in the foundation for the realization of our synergies. We have rebranded to Dustin in the Benelux. It's fine life. Everything is Dustin now. Integration of Benelux entities is ongoing according to plan. Private label was launched in late Q2 and now starting to show traction with about 10 million sec of private label sales in the quarter, which is a really good start. And in the reorganization now from October 1st, we also established a group-wide procurement and vendor management organization to make use of our sites in full. So we're improving our purchasing power, obviously, and be an even stronger and better partner to our vendors and the distributors, and of course, also to our customers. Also, launch of our common cloud-based ERP platform in the Benelux is ongoing with a completion plan during this fiscal year, during 2023. And so far, we have taken steps of extracting approximately 50 million sec of the earlier expected 150 million sec. So we are on schedule there. However, during this work and with the new structure, we have also identified an additional 50 to 70 million sec in cost synergies coming from better processes, efficiency gains, as well as streamlining of our central functions. And that leads us to quality improvements and less cost. And combined with that earlier 150 million SEK, we therefore raised the target to approximately 200 to 220 million SEK in total. And all that should be fully implemented by the end of our fiscal year 2023-2024. So improving there. Continuing then to slide 11 for an update on our 2030 commitments and the current actions we do towards reaching those. For the full year, 2021-22, we increased our circular revenue share to 25%. As you might know, our target is to reach 100% until 2030. So good development there, compared to last year's reported number, 12.4. Now we're also in former central point numbers in this, so we have both grown organically as well as through the acquisition. And the same is valid for take-back. We have taken back 423,000 products this year, which is great. And you can compare that to the 296,000 end of Q3. Our facilities, both in Växjö in Sweden, covering the Nordics, as well as in Viken in the Netherlands, covering the Benelux, is growing and taking on more volumes. And I think that the demand for take-back is increasing among larger corporates and public sector, and we believe that we can soon see a much clearer or a clearer mix of second- and first-hand products in larger contracts. which is obviously great for us, but it's also great for the environment. Not to say the least. And with that, we also have mentioned in Q3, we also launched our carbon calculator in the end of the third quarter, to help companies to get an overview of the climate footprint of their IT products and how to reduce it. They also can see an increased attraction on that. But all in all, we work hard to continue to fulfill our 2030 commitment on that. So before going into Q&A, let me just sum up the full year results for 2021-22 on slide 12. Net sales grew with 57% to 23.6 billion SEK, where organic growth for the group was 11.4, with SMB at a strong 9.1%, LCP at a very strong 15.9%, and BTC at a minus 23.6%. As you know, our financial priority is to be on 8% organic growth, so well on that. Gross profit ended at 3.4 billion SEK versus 2.4 billion SEK last year, and gross margin came in at 14.7% versus 16.5%. Change in sales mix with a higher share of LCP sales and vast deliveries in standard hardware is behind the change in gross margin. And the adjusted EBITDA increased 29% and came in at 979 million SEC versus last year's 759 million SEC, giving us an EBITDA margin for the full year at 4.1% compared to last year's 5.0%. Margin is affected by lower gross margin coming from customer mix and product mix, as well as that we, for the moment, carry more cost due to the integration of former center point and obvious debt-to-year. And what we have behind us now has been continuously affected by higher distribution costs due to overall disruptions in the supply chains. EBIT increased with 31% to 758 million SEK compared to last year's 576 million SEK. And EPS, earnings per share, increased with 10% to 4.22 SEK per share, which is also 3.62 SEK per share. And cash flow from operating activities had a very strong increase at 245% to 584 million SEK versus last year 169 million SEK. A good cash flow generation. And leverage as you want was into only that 3.9 towards EBITDA. Given it's about our target, as you mentioned, for rational reasons, though, we are very active in working it down. We're active working at working capital and continuously focused on cash. So, all in all, a good year with robust organic growth, with mixed effects impacting the market in the short term. The pandemic is still present over the world, although we have, during this year, learned and accepted how to deal with it. The change among our customers to a new way of working is for sure here to stay, which over time also increases our potential market. The continued escalation of the war in Ukraine also puts pressure on humans, creating worry, and we sincerely hope for an end to that. We see signs of, as mentioned earlier, we see signs of a more cautious market in SMB, especially like earlier crisis where the smallest SMBs are the first ones to react, but also the first ones to come back. And the market trends, however, continue to accelerate with distinct changes in customer behavior. The IT service demand is there, and there's an increased demand for instant availability online as well as security, mobility, and remote management. IT is also, of course, a big enabler for companies to be more efficient in their way of working in platforms and the tools they use. So IT is very central for most companies. especially when times are getting tougher. Security is obviously a big topic now and will continue to be, given the overall uncertainty in the world. We have extensive experience for that and knowledge and can serve our customers in all our markets. And for these last years has meant that our position is clearly strengthened and shows that our business model is very robust. All in all, we are very well positioned, although obviously affected by the geopolitical instabilities. I'm as always, just before we go into a queue, I'm always very proud of everyone in Dustin Group for doing their utmost every day to deliver a great customer experience and driving our competitive edge. This year has been extraordinary with a lot of unpredictability, but despite all that, we have continued to deliver and giving our customers a very good experience built on reliability and trust. With the continued integration work, we have taken clear and important steps to build one Dustin with one brand One culture, one platform, and a unified offering in all our markets. So with that, Johan, I think we can conclude our presentation and are happy to take any questions you might have. Operator.

Thank you. If you wish to ask a question, please dial 01 on your telephone keypads now to enter the queue. Once your name is announced, you can ask your question. If you find your question is answered before it's your turn to speak, you can dial 02 to cancel. Our first question comes from the line of Daniel Torsen of APG. Please go ahead, your line is open.

Yes, thank you very much. I start off with a question on SMB. Can you give us a feeling on how SMB developed during the quarter? Did you see a slowdown and hence negative organic growth in the end of the quarter, for example? And also, what type of products or services and regions do you see the first signs of slower demand?

We can start off by the mid-month. Actually, the quarter was, August was strong. And June, July was a bit more cautious, but August was strong. But in general, I mean, I think we would see the same, as mentioned before, Don, and also we would see the same going forward, that the S&P will probably be more cautious given how the market develops and how the overall instability in the world. But that, during the quarter, it was a strong August, I can say. And the second question was on different markets. Yes, exactly where we see it. And which products? which products and services. Exactly. On market, I should say, it's rather similar across the board, across the different markets we have. Similar behavior. And that's obviously also that we see the same customer behavior in our market. On product-wise, I mean, there is a continuously upgrade that you upgrade to a better PP, a better product that continues because you use more of the capacity, as we have mentioned before. That you do. Services is typically also going towards more remote management on PC, obviously given that people work from other places than the office. So the modern workplace, as we call it, which is a PC and remotely supported and managed, that is a good service. And then, of course, also infrastructure and network is the services taking more ground, you can say now.

Okay, and where do you see some weaknesses?

The weaknesses, I think, you can say it's a general weakness overall, you can say, on that companies are more cautious. So it's not so that it's specific product lines or so. It's more a general weakness. I think what we have seen there is similar to previous, let's say, economic downturns is that the customer would tend to buy less, let's say, cheaper products of the same category, so less specification. If you buy a mobile phone, you buy one that has less memory or less functionality. Okay. Makes sense.

And then a second question, LCP here. Denmark delivered good in LCP, you said, and now it seems like you're not delivering on the DKK 500 million annual contract in Denmark in the coming years. Did you see good growth outside of that contract in Denmark, or should we expect pretty meaningful lower growth in Danish LCP in the coming quarters?

I think you will see a lower growth or a decline, actually, in Denmark, having no deliveries on that contract, but As we said before, the situation now is very different to when we won that deal because we have a lot more LCP contracts at the moment compared to what we had at that time. So I think the effect on total LCP will be limited. But of course, in Denmark, it will have an effect.

Okay, that makes sense. And then the last question for Johan as well, I guess. Good cash flow, 100 million a second, a quarter, despite that the leverage increased to 3.9 times given that earnings fell here. So how important is it for you to come down to three times before doing any meaningful M&A? And also the strategy for de-levering ahead, you talked about inventory reductions a bit. And then also related to that, obviously,

reason for the board to await the dividend proposal until the agm any thoughts on that okay let's start with the working capital then i will give the word to thomas on the dividend but i think to start with working capital seasonality perspective is always worse in in a end of august compared to the other three quarters and that has to do with the relation between accounts payables and accounts receivables that differs a little bit due to the summer holiday mainly in sweden in July, which means we are a little bit worse off in Q4. So if you de-seasonalize the working capital number in Q4, it would be give or take on the same level as we were in Q3, but with the positive effect that inventory went down. So I think from that perspective, we're on the right track. It takes some time to change the way we have done business and the way we operate in the Benelux in order to achieve the same situation as we have in the Nordics. We're on it, and it is dependent on things like the IT systems and the IT platform, which we are changing, as you know. We are fully, let's say, we believe clearly that we can run the operations in the Benelux the same way as we do in the Nordics, and hence remaining with the target of network capital. So I think that is clear. But as you also heard, in order to, let's say, bridge the gap when that model is not really in full What we are now looking at is to, let's say, finance the receivables from the public side in order to, let's say, improve the financial situation during this period. When it comes to acquisitions, we have said, and I think that's fair to say, we are spending our utmost focus now on integrating Centrepoint and the Vinciere entities in the Benelux. I think that is our first priority. If there would come a complementary or bolt-on acquisition that has an offering that we are really interested in, I think we would consider it. But given the work that we are at hand, it has to be very good, to put it that way. When it comes to dividends, yeah, Thomas. Yeah, let's see. I mean, what the board has said so far is that we will announce dividend proposals at the same time when we send out the invitation to the agent. So we'll come back to that. Obviously, given more time to see how the world develops and how things are developed in general. But still, the target for us is, as you know, the financial target is to have a dividend.

Yeah, absolutely. Thank you very much. Thank you. Thank you.

Thank you. Our next question comes from the line of Claes Danielsson of Nordea. Please go ahead. Your line is open.

Yes. Thank you for taking my questions. And Thomas, congratulations on the new opportunity, I must say. So Daniel did a good work on the questions there. I have a few things to start up with a follow-up on his first question, I guess. The development during the quarter is, as I guess you said, but could you maybe kind of give us some flavor on how the trading in September and October has looked as well?

I feel that in a quarter, but if you look at it, I think we can, in general, what we can say is that we will see a sort of slowdown, also the fact that we will meet our own numbers and have fantastic growth during the last couple of quarters. But we can also see a slowdown in S&B. I think that will continue during this quarter as well.

Yeah.

Yeah, not only for this quarter, but I think also for maybe one or two quarters, depending on how the world actually develops. Because now, as we said before, the S&Bs are reading what's in the papers and react on to that. But still, they don't have an inventory of their own with the computer. So when it breaks, then they need a new one. So then they buy. So that's it, and there we are having availability for them as well. I think in general, I mean, we are a large company now that has the right position, but obviously we will also be affected by or see that in the SMB market, I think.

Yeah, all right. That's good. And then, I mean, as you say, F&B is usually kind of quick to withdraw, and LCP is usually a bit slower. How do you actually expect LCP to adjust? I mean, are you seeing any signs there, or is it just gross disguise, or should we expect also a slowdown there in the next kind of coming?

I think we should be, I mean, logically, we should see a slowdown, especially if you compare to our own. I mean, our own comps, we will see a slowdown. Then I think it's still a good market in that many companies are still, as I said earlier, they are still investing a lot in IT because IT is an enabler for saving costs. And so they will continue to spend. And there is a need of upgrading many large corporates as well in IT equipment and IT services. So that will continuously go on. However, as I said, if you look at our numbers, if we have grown like 20, between 20 and 30 percent now for many quarters, then obviously we'll meet those numbers. And I think from that perspective, we will see a slowdown in our growth rates. And, I mean, let's see how the world develops, but it's the same. SMBs react first. SMBs slower. And public sector, given that the tax basis will still be consistent and the same, then the public sector will continue to spend. Very good.

And then just maybe a bit more detailed, you mentioned 3% price increases roughly. How much did kind of purchase prices increase? Was that on par or were you managed to kind of take out the whole gross margin situation or how did that look?

Our ability, I think, to charge on, let's say, higher prices is still good, remains good. And it's... The only glitch you can get is within a month or within a quarter where some customer contracts, you are not allowed to change the prices within a certain time period of maximum one month, I would say, or one quarter. That could have an effect. But apart from that, over time, we still have the same possibilities as before to charge on to customers.

Okay, so price increases on par with purchase prices, I guess.

Yeah, exactly, exactly.

Good. No, that's all for me. Thank you very much. And again, congratulations, Thomas.

Thank you very much. Thank you. Thank you.

Thank you. Our next question comes from the line of Daniel D'Urbay of Handels Banking. Please go ahead. Your line is open.

Thank you, operator. And good morning, Thomas and Joanne. And congrats also to StrongQ for and also Thomas to the exciting career move you do. Yes. Yeah. I would like to start off with the LCP side, and if you can comment a little bit, you saw a backlog coming down in the Nordics, less in Benelux. A little bit on why you saw that trend, and also if you can, when you look at the backlog, is it, should we assume a better margin mix, and IMO routing switches and servers staying in the backlog, that could help out in perhaps 2023 or something. And also if you could comment on the supply there on Cisco and other stuff.

Yeah. I think let's start with a backlog question. It's an interesting observation that the backlog or let's say the order book is not reducing in the Banalex because the supply situation is very similar in the two regions. So we don't, from our perspective, don't see a need to have different ways of ordering products in the Benelux compared to the Nordics. But obviously the customers are behaving different in this respect. So in the Benelux, they keep ordering things for the future because they are uncertain if they would get it or not, which they are not doing in the Nordics. So it's a difference at the moment in behavior, I would say. Because the supply situation, as I said, is improving and it is no difference between Benelux and the Nordics.

Okay, and if you might comment a bit on what you see in the mix going forward, if you could expect the margin mix.

I mean, as we have said during this year, we have had large rollouts of let's say PCs or standard hardware, and that mix should improve as we go along during 22-23, which would mean improved margins.

Yes. Nice. Perfect. And may I also ask you a little bit on, you have quite aggressive EFT targets, and what can you say about lesson learned so far, and you still think they are achievable, obviously, since they are still around, but where do you meet the toughest?

In general, yes, we believe in our targets. We do that, and we see strong improvements also in circular revenue and reduction of CO2 emissions. I think that the biggest challenge we knew when we set the target was, of course, that we are part of a very big value chain. and there are a lot of of different players in the value chain that have to deliver in order for for all of us to reach the targets we want to do but also for us and we're working very closely with the with the different manufacturers and on that it is it is to do sort of the full what you call it due diligence on what what all the components where they come from sustainable working conditions etc with all the vendors we know what to do but it's a lot of hard work to get there and to also see sort of how can we make it even more easy for the customers to choose the right products for example have a co2 label on it how much emissions a certain computer sort of Amit so so there I think there's in general we knew where the hard hard times would be and that is working with the pool value chain from the sort of the component Digged up somewhere to produce a computer in a factor that should be have healthy working conditions to the transport and to the to ourselves and now to the customer there are a lot of there are a lot of issues here but still we think it's good we have the possibility and we have the we can and we we want to to drive this because we see that with the size we can really we can really make an impact here and that's why we're the continuous issue let's try to do this and another thing i think is more from another perspective is that the The offsetting that will be probably done by many companies in the end is, I mean, today's CO2 is too cheap. So many companies will buy themselves out of this, and that will not help out. So there, I think, in general, we need to see an increase on the prices so it will not be too easy for companies to escape from these targets that they've set up. But that's maybe for another quarter. Yeah.

Thank you. It's very important, of course. And then my last question. You have this new group-wide organization formed to facilitate further synergies in the group. Can you just comment a little bit on the structure and how to secure that this group is not expanding and so it will be very cost-efficient?

Yes, yes. I know we have a very tight and both Johan and myself are very eager to keep as small Or as small central functions as possible, because that is the most efficient way. And so that is what we're driving for, and have a very efficient, clear group functions or group operations that run and do over time. I think more and more will sort of be pushed out towards the segments, so we can even more slimline the central functions. depending on the growth. And that, of course, you come to a certain point in a company in the growth when you can do that. We're not full there yet, but now we see when we enable the same platform work on IT, for example, the same IT platform, which is a really strong enabler for us and for other companies to have more efficient ways of working. That we will do during next year, and that will also encourage that we have the possibility to be even more efficient on a good function. And I think the change in organization is really driven on the areas where we see that we could scale from more volume. So SMB is typically scalable, and the operational side is clearly scalable, while LCP is slightly more, let's say, locally driven, and therefore we remain with two regions there. So it's focused on where we can find scale.

Yes.

Perfect. Thank you so much. Thank you. Thank you.

Thank you. And we currently have one further question in the queue. That's from the line of Mikael Lettien of Garden Key. Please go ahead. Your line is open.

Okay. Thanks. Yeah, I have a few questions as well. First of all, the SAP segments grew strongly in the quarter. Can you tell us something about the growth in the Nordic region?

And how much you grew in the Benelux? In general, we don't comment on the regions, but we had better growth in the Benelux this quarter than in the Nordics. But we were good on both.

Okay, so the difference is not that significant? No, no.

It's really good actually in both, but it's slightly better in a percentage way in the Benelux. Okay.

I thought that comparisons were quite good in the Benelux. Last year it was a bit slow, I think.

Q4 in the Benelux was good last year, not Q4 this year.

Okay, perfect. Okay, then on SMB, the margin improved quarter on quarter, so that was good. Can you just remind us the reasons behind this sequential increase and how we should think about the SMB margin going forward? It's 10.8, 11 more where you are in terms of mix and efficiency and scale.

I think we are in the range of 10 to 11, depending a little bit on where we are in the season and where we are in, let's say, hardware mix. So this quarter probably we went or we had slightly less of Apple products, for example, which improves a couple of digits on the margin. I would say more normal mix this quarter when it comes to vendors. which is, I think, the sequential change. Compared to last year, again, the factors improving is really private label, a good margin in services. That takes us a long way. In general, it would be good also to get even better supply of advanced hardware, where we are still lacking supply.

in in many areas particularly on av and network okay yeah so so if if they have even better or even more normal mix um how could that uh impact the audience could it be 11.5 is that where you could could it could be

It all depends on the time frame for that question. I think as we are running the business now, it's probably at 11, which is good. But then obviously we are every day increasing the share of the standard services. And we're also managing to sell more private labels. So all of these factors actually should contribute to the better margin going forward. I don't think we have changed our view there. We can also, I think over time, As you've seen in the Synergic case, we can improve the margins on SMB Benelux, where we are currently, say, below the Nordics.

Okay. And when it comes to managed services and your service parts and software also, how should we look at that in terms of a margin driver over the medium term? Or is it just that you want to improve the Benelux F&B situation and that increased scale and service offering in those countries will take the margin higher for the F&B segment?

I think it's both. I think first is to improve the F&B business in the Benelux, but that is primarily online hardware where we can improve. And then we are, of course, converting these... customized servicing companies that we have acquired into more standardized services, and we see that the margin in standardized services is really good, but obviously it is, how do you say, it costs a little bit to convert them from the customized offerings to a more standardized offering. And we are in that process now, so it's really hard to see on the On the total number that we are improving, but actually if you look at only the standardized services, which is the end goal, let's say, these are clearly complementing on margin. So it will improve over time. We know the journey. We have done part of it in the Nordics. We will now copy that work in the Danlux, and it will contribute to the total margin in SMB going forward.

Okay. Okay. So can you say something about the profitability for the F&B side in the Benelux? Is it possible to isolate that a bit to understand where you are now in terms of burden on the margin maybe and where it could be once you're fully up and running?

Well, I think we are maybe in the range of 2% to 3% below average in the Benelux, and that comes a little bit from actually relatively poor margin on the hardware online sales, but complemented with relatively high share of relation sales on SMB plus services. That is better margins in the Benelux, so we can improve the online part there. That's the key thing at the moment to do actually. And we're spending quite some effort actually to set up the system in the Vanelux exactly as a copy of the Nordics. And that work is ongoing at the moment and the change of brand is an important part of that. We are also moving all the SMB customers to the same IT platform and web platform as we have in the Nordics. And that we're doing as we speak basically. And that will help us using the same operational processes in the two regions. And that is also part of the organizational change that we did or announced recently.

Okay. And can you also say, discuss this a bit, but can you say how this migration will be done? Because you are using Microsoft Dynamics right now, and now you have I mean, you're moving from on-prem to the cloud. So what is the difference there in terms of efficiency and the customer experience and so on?

Well, the first move is actually taking the former center point business into a more standardized ERP. They have a very old and custom-made ERP at the moment, which doesn't allow them to do certain things that they would like to do. This day we have worked on, or actually Centerpoint worked on it for three years, and the launch is expected during the calendar year of 2023. That will take us quite a long way when it comes to, let's say, LCP business in the Benelux, improving efficiency. Second step of that is actually taking that platform and introducing that to the SMB business, both in the Benelux, but also then obviously in the Nordics. And having the same platform, there we can extract, let's say, the scale and the synergies that we see in the two regions, primarily in operations.

Okay, interesting. And I was thinking about your central functions cost going forward. I should think about that. Between under the 51 level of where you are today, how much is project related and how much is temporary or will sort of fade away and what is underlying or recurring cost that we will have regardless of these projects in the Benelux?

I think we are the level we are on now is obviously an effect of what we are trying to achieve and part of that As you see in the cost synergies, we have at the moment somewhere in the range of, you know, 60 to 90 million of cost synergies. A lot of these will, of course, come in the central cost or, let's say, in the associated segment cost area. These are the savings that will come there. So they will help compensate for over the next, period would have to compensate for the project-related cost that is in the central cost. But as we have said before, I think that the level of, let's say, 4% is something that we are trying to aim for. And we still believe that that's in that range where we should be.

Okay. So we should, I mean, think around the 4%. No, I was thinking about maybe scaling central functions to decrease it a bit below 4%. I mean, to achieve your long-term targets.

It all depends on what is the time frame, but if you say the next two years, I think I will be rather closer to my number than yours.

Okay, good. And the final one, if I may, about the cash flow. Can you just remind us here and tell us something about the receivables, how much we have sold in Q4, if anything, and repeat again what you expect to do in the Benelux in terms of receivables sold.

Yeah, receivables, we haven't sold anything yet. It will start, I would say, commencing a couple of weeks from now. um total potential is somewhere in the range of 800 million i think realistically 500 to start with would be a good expectation for let's say end of q2 um and the working capital in the panelax was it yeah that was basically my question yeah thank you

Thank you. Is there no further questions from the lines at this time? I'll hand back to our speakers for the closing comments.

Good. Thank you very much everyone for tuning in and all the questions and just reach out if any more questions and we're happy to answer anything on that. So thank you very much and have a continued great day. Thank you. Bye-bye.