Hanza AB (publ)

Good morning, everyone. You are most welcome to this presentation of Hansa's third quarter 2024. A quite important quarter, not only because we are meeting the market expectation and showing a positive financial trend, but also this report marks the end of a nine-month action program we have been running. And I'm Erik Stenfors, the CEO and founder of Hansa, and I'll be glad to walk you through this presentation together with our excellent CFO, Lars Åkerblom. And the agenda will be in the standard format. We will start with have a look at the market development. Then we look at the operations. Lars will guide you and tell you the latest progress report from financials, and then we will draw some conclusions for the future. And as normal with the Q&A session, please use that for any questions you might have. But first of all, let's just take a minute and review the Hansa business model. Our goal is to make manufacturing easy. It can be quite complicated with outsourced manufacturing. You need several different contract manufacturers. They are normally doing one part of your product. What we have done is to group together different manufacturing technologies in what we call manufacturing clusters. In such a cluster, you can both have the part production and the part assembly. Still, there can be challenges. And one challenge is that if you have your existing manufacturing, it can be that it's deeply rooted. You need some help to replant it to find a new solution. And for that, we have something we call MIG. It's our advisory services. This is when we help our customers to restructure and optimize the supply chain. Then also we have product development. We don't have any products of our own. We are pure contract manufacturer. And why then do we have product development? Well, sometimes our customers, R&D department are completely saturated with all the work they have to do with the new products. We can help them by adding them some R&D services as well. And it can also be that we help them to make the manufacturing easy by advice how to develop a new product. So this is our business concept and it's been serving us well. We have created what we think is a really good customer base. And this is important and I will come back to this in just a minute. So if we move then to the market development. There has been a discussion about how the market has developed in Q3. We have seen some profit warnings. But it's not that there has been a downswing in the economy this quarter. It's rather that it was an expected upturn in the economy that did not materialize. In the beginning of the year, it was some optimism that it was an aggressive purchasing during 2023 and there will be some destocking in the beginning of this year. Second half of this year, we should be able to see an increase in demand. While we cannot rule out an upturn, still we said, and for those of you who have been following us, we stated this a couple of audio costs before, that we cannot rule out an upturn, but we cannot rely on it either. So we are preparing for a downturn which may last this year, maybe also next year. And if we then turn to Hansa and look at this quarter, how can you handle a downturn in the economy Then we have to move back to the customer base. It's really important to create a customer base. We had some questions regarding this, I think, a year ago. What will happen if the recession comes? And we stated that what we try to do in our customer base is to have different segments and different companies in different segments and also trying to avoid things which are more like trends, electrical vehicles and consumer products. and avoid things with a low money like automotive. A lot of the stay in areas which are more evergreen, like agriculture, mining, forestry, defense, and classical industry. And this has really served us well. And that's why we see an organic decline of 4% this quarter, but it could have been much worse. Actually, we are heading back to organic growth. And that is the challenge. Because in a downturn like this, How to gain market shares in this economy? That's the big question. If this downturn stays next year, there are different ways to do this. For Hansa, it's connected to the business model, and that's why it was so important to repeat this. We have created this MIG. So again, that's when we restructure our customer supply chain. The demand for MIG becomes stronger when the economy is weaker. And then we were glad in this quarter to announce two MIG contracts. One in August, one in September. One was that we are helping a German company to restructure the supply chain. It will end up in our Central Europe cluster. Second one was that we helped a Canadian company who was back sourcing, moving production back from China to Sweden. These two contracts together have volume annual sales volume of 50 million euro or more and if you look and large will come back to this if you look at our 12 months rolling sales it's about 4.6 billion meaning that this these contracts will add three four percent organic growth so this is the way this is how we plan to continue to grow even if the economy is slow working with having a good customer base and also adding new meet contracts. And we are confident that we will be able to announce more of these contracts in the future. If we then turn to operations, a rather tough year, a challenging start. We have just acquired OrbitOne in the beginning of this year. It was the largest acquisition to date. And of course, if you buy a large company, you have to have an integration period. It was also that Orbit One came with a margin that was about two points lower than Hamsa. We were running about 8% operating margin. They had about 6%. So we also stated to the market that, of course, due to the size of Orbit One, it will download the group's margin. But we will handle this during 2024. And when we come back to 2025, we will be back on 8%. Then also we have a strategy called Hansa 2025. If you've been following us, you know that this is all about increasing the size of some of our manufacturing clusters. And therefore we opened a new factory in Estonia just before the summer you see the picture down to the right and we're about to open a new factory in Sweden by the end of the year and it will be some opening ceremony in the beginning of next year we'll make sure to have an invitation sent out so if you like please come and see this state of art factory in Värmland Sweden but all this means that there was a lot of of work going on in the beginning of the year. We also had one big MIG from the last year, this Mitsubishi, you might recall if you've been following us, where we removed 40 suppliers for Hansa. You see the forklifts up to the left. So these are the products we have moved into Estonia. And on top of all this then came the downturn, so the recession. And therefore, we had to launch a quite large activity plan running for three quarters. The first quarter was about the integration of the acquisition of Orbit One and also the Synergy program, making sure that we increase the margin. Secondly, we were working with a factor consolidation program where we consolidated both customers and technologies to some of our plans. We also initiated discussions with the union of closing to our units it's been successful these negotiations even though it's quite hard and in this quarter we made a program for the rest of the group because the first two programs Q1 and Q2 were mainly focusing on Sweden and Finland and then we had for the whole group so now if we go to the current situation it's been a really hard year it's been tough decisions we have also had substantial one times cost and Lars will come back to this. This also means successful. We see now that we are back on track and we can announce again that we will reach this margin of 8% next year. And then we are talking about the current load. So we are not including or expecting an upturn in economy, but at the current situation, we will still reach this 8%. And by that, I will give over to Lars and he will talk about sustainability, which is both about the environment and about the workplace. Please go ahead, Lars.

thank you eric um and as always we present the main activities within sustainability and also the main kpis as we see it and start with the kpis we have the most important KPI and that is work related injuries and we can see it's a little bit up in Q3 but still on a lower level compared to 2023 and the previous years and this is of course something that we would like to see being even lower but we are satisfied with the trend that we have and also the waste and the use of energy are on more or less the same levels as before. And other parts of sustainability, we have done the employee engagement survey that we do every year. And we are glad to see that we have still a positive trend and good results. And most important, we now look into what to do based on the feedback we get. And we also started the leadership training in Q4 that will continue for 2025 as well. We are preparing for CSRD, we are working with the double materiality analysis and we're also working with the Finnish consulting company GAIA to be able to see if we can how to account if possible for the science-based targets and the plan is to come back with new targets on sustainability early 2025. Financials as Eric mentioned we see a positive trend in the development in financials we are growing by 16% and if you adjust for currency and acquisitions it's a decrease organic downturn of four percent um and as i mentioned we can see other companies in the segments that are well above these these numbers in decrease and we have now rolling 12 months we are on 4.6 billion sex um Erik also mentioned that we have taken one time cost and it's due to what we see as the third and final part of the action program to right size the cost base in Hansa, but also taking some adjustments on the balance sheet and mainly connected with China. We have the strategy for China is to be a gateway and not a cluster like the other five clusters that we actively trying to reach 100 million euro in sales. And we see that more and more also based on the changes in the economy and the market situation that this is the right way forward. So we took a one-time cost of totally 33 million SEK, 25 of those will affect EBIT A and the margin. On the other hand, did a revaluation of the purchase price of orbit one and we see that there will be no additional purchase price so we released 33 million sec as a one-time income and adjusting for for these um one-time cost and one-time income we reached some 6.7 percent compared to 9.3 a year ago but maybe the most important is that we see a positive trend we come from 5.3 in q1 to 5.7 in q2 and now 6.7 and then you should bear in mind that july is the weakest month in in the year so adjusting for that effect it's even stronger than 6.7 And also we see that the programs we took, the one-time cost and the programs we initiated early in 2024, starting to have an impact. The one-time cost we took in Q3, did not affect the 6.7 margin so that that effect will come in early 2025. We also see that the full effect of the previous programs will also reach the full effect in early 2025. The finance net in line with last year minus 27 million and In all this led to 0.88 in earnings per share compared to 121 a year ago. We have quite low tax due to the fact that part of the one-time cost are not affecting or not taxable. Looking into the segments, we see that the main markets have a organic decrease of 8%, still on a very good margin of 8.9%. And we also here see a positive trend coming from 7.2% in Q2. For comparable units, we see that we have 9.8% compared to, or 9.8% compared to 8.9%. So we still see that Orbit 1 as Eric mentioned, was on lower margin when we acquired it. And even though it is increasing, it still takes down the profitability level in both Hansa in total and main markets and other markets. And coming into other markets, we see an increase. We see an organic growth of 3%. And it's mainly... The reason is mainly this MLE project, MIG project that Erik mentioned that now we are in full swing. We announced it a year ago and we said it's going to take a year until we are up in full scale. And now we are since the summer in full scale. So that has a positive effect on the sales in other market. in other markets we also see positive trend in over the the last three quarters we reached an operating margin of 4.4 percent and for comparable units we are a little bit higher on 4.6 percent eric also mentioned the mig project in poland and that has a negative effect on the on the profitability But like MLE project, we see that we take the cost initially and then we get the positive effect when the MIG project is up and running in full scale. Cash flow continue to be strong. We are quite satisfied with the fact that we have a positive cash flow in 114 million and the main reason is that we've been successful in decreasing the working capital we have an effect of working capital change of 38 million sec compared to actually minus 82 a year ago CAPEX is reduced and we still see that the big part of the CAPEX is connected with buildings or machines that we will fill the factory in. And if you look into 2023 and 2024, you saw on the pictures in the previous slides that the main part of the CAPEX is connected with new factories and right now we do not have any new project with new factories and we see that the capex will decrease in 2025. the Positive cash flow also led to that the net debt decreased with close to 70 million in Q3. We are on a higher level in net debt, but due to the acquisition on Orbit 1. But as you see in the second bullet that we are decreasing the net debt compared to the EBITDA. And that is very important in order for us to be able to continue to invest in MIG projects and also acquisitions. And we have a quite solid balance sheet. We have an equity to asset ratio of 39% and a net debt to equity ratio of 0.6. And they are the same as a year ago. We had some changes in the ownership, not major ones, but the main owner, Ferna, bought shares during Q2 and increased their owning from 21.5% into close to 23%. And we are also glad to see that Första och Tredje AP-fonden are increasing their ownership and together they are now close to 6% of the owning in Hansa. And also Erik bought some shares during Q3 and is now owning 1.4% of Hansa shares. And by that, I leave over to you, Erik, for a summary.

Thank you, Lars. So let's try to draw some conclusions for the future. First of all, based on this large activity plan we have done, Q1, Q2, and Q3, we see that Hansa is back on track with the Hansa 2025 strategy. meaning that, first of all, we will reach the operating margin next year of 8%, but also that we can fully focus on this strategy forward. We have stated earlier on that we like to grow. Lars was also touching on this, trying to reach a size of maybe 100 million euro per cluster. We see that we are a bit too small in Finland. We see also that we like to be larger in Germany. We are a fairly large in Germany, but it's a huge market. And therefore in our strategy is included expansion on the current clusters. And that's why we have stated that we have a sales goal of 6.5 billion for next year. How will you grow? You can grow with building factories like we have done in Estonia and Sweden. We can grow with larger MIG projects and we can also grow with acquisitions. But it's still the plan to grow within 25 in these areas. And Speaking of acquisitions, it's important to remember that we are not buying companies in order to be larger, but to be better in the sense that we will be able to go to our customers and state we did this acquisition. Now we have increased our offer to you a bit. And it means also we receive maybe two, three offers per month, but we are quite careful. If we are going to proceed and do an acquisition, it has to be as successful as Orbit 1, both providing operational synergies and contributing to our financial targets. That's really important. But on the other hand, there are such targets existing. So it could be through acquisition that we continue to build Hansa. If you look a bit at the long term, It's unchanged. First of all, we have to achieve the goal, Hansa 2025, operational and financially. Then we will continue to expand. We have said it will be a geographical expansion. have a copy paste model so we will be glad to launch another cluster in line with the need of our customers because we have no own opinion where to be in the world it's completely driven by the markets and we have a close cooperation with our largest customers trying to see how we will expand hansa in the best way for for their production and of course when we then launch the next strategy call it Hansa 2028, they become new operational and financial targets. And by that, we leave the floor for questions.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Fredrik Nilsson from Redye. Please go ahead.

Thank you. Good morning, Erik and Lars.

Good morning, Fredrik.

Good morning. I just want to start with a clarification on your financial targets. In the headline of the report, you state that they remained unchanged. Yet, when I read the CEO letter, I get the impression that you are more confident in the margin targets. and the sales target. Is that correct? And could you elaborate a bit on your view on the targets in the current market?

Yes, I can start. Maybe Lars would like to continue. That's correct, Fredrik, because that's what I also tried to state before that we can create a margin level on our existing business. But in this Hansa 2025 and now after the large activity plan all focuses on that Saturday is the expansion of these areas. And that is something which is more complicated to i cannot give you any details for for for starters uh but we have a number of um opportunity to grow hamza in these markets and we feel confident that this will happen so yes we are confident uh but still we it has materialized we have to show you that we can grow in this direction and it could happen things that makes it impossible but we don't think so but but it's true like you state that the margin is something that we control the uh large expansion in these areas is something that we need to come back to. I don't know, Lars, if you'd like to add something on that.

No, I think that's exactly the way we see it, that we need to adjust the cost base and size of organization within Hansa to reach the financial target on margin in existing operation and then if and when we do an acquisition, that will of course affect sales and margin. But we need to be solid in getting at least 8% in the existing operation.

Was that the fair answer, Fredrik?

Yeah, I think that's clear. Thank you. And as you've touched upon, you seem to do significantly better than most of your peers. Could you give us a brief update on the demand situation in your most important customer segments?

We have not really gone out with details on the company names, but we can talk about sectors. And I think that's the tricky part. It's not that easy to forecast the future The mining industry, for instance, that went down this year, I think nobody saw that coming, that the defense would go up with more, let's say, something that you can expect. But that's why, of course, we should try to do the best forecast possible. But we have to rely on our customer base because there will always be surprises. up and down. But if you have a well populated customer base, that will handle the situation and also avoiding as important as selecting customer market is to avoid some customer markets, like consumer products, and we'll talk about before. So I think that has been the trick. And we don't see any changes in, in our customer base, it's quite solid. In total, of course, there is variations behind. But in total, it's a solid customer base. And we are almost on on break even now when it comes to organic growth. So it should be possible to come on plus figures within short just thanks to the MIC concept.

Okay, I see. And could you give us some light on what signs you see suggesting a stronger market in next year?

No. I think that this is speculation. And I think everybody's talking about this upturn in the economy. I think you recall, Fredrik, we had a call earlier this spring when we had the same question that when will it happen? And it's so many things now. We have the election in the US, we have the war in Ukraine and so forth. It is really hard to predict. And so I think that what we are stating is that let's assume that this recession will last next year and be outgoing from that, even though there are multiple signs in the market that there will be an upturn in 2025. Let's put that aside and work with what we have. Is that okay's answer for you Fredrik?

Yeah, yeah, it's okay. Last question from me. The opening of the new facility in Sweden, is that somewhat delayed as far as I understand? Why is that?

It's not delayed. It's opening according to plan by the end of the year but we're going to have an opening ceremony in the beginning of the year where I hope that you will attend. It will hopefully be a very nice event and we will send out invitations before the end of this year.

okay now I understand that that sounds sounds fun great that's all for me thanks thank you the next question comes from Anders Roslund from Pareto securities please go ahead yes good morning I had a question regarding the demand situation you reported 8% organic fall in uh main markets and three percent plus in other markets is the eight percent more in line with the underlying demand and the four percent is plus is due to then the the meg project the uh the michibishi deal i don't know if you'd like to elaborate on that

No. Hello, Anders. Yes. Of course, we have a positive effect, as I mentioned, with the MLE contract in other markets. But I would say that giving the total for the group is a fair figure on how the customer base is developing. We always have customers increasing or decreasing or during a year and we see different sectors as eric mentioned in the previous question some some sectors coming up going up and some going down so it it's not fully only the the mig project that led to an increase of of organic increase in in in other markets it's also that we take market shares.

And good morning, Anders. I pushed it to Lars because it's complex. We also have the vacation period where we tend to be more out in the Scandinavian countries than in the other markets. But you shouldn't read any trend out of this. Like Lars says, the top line is giving the signal for the future.

No, I just asked this because of the previous question that you are really outperforming other contract manufacturers quite significantly in this quarter. So I just tried to figure out whether there is new business explaining part of the relatively strong outcome.

Yeah, you have to also put into account that Sweden is a large portion of Hansa now, and we are not the standstill, but it's quite slow during July.

Yeah, but I'm talking about the year-on-year effect here, that the minus 4% was definitely better than what other contract manufacturers have reported. Many have reported minus 10, minus 20%. So that's why I'm asking if it's new business coming on board. You mentioned taking market shares. As I see it, taking market share is new business unless you grow with existing clients.

And therefore, for that question, I think we have a good answer. And that's the customer base in itself, which is fairly well put together and is delivering a good trend. And of course, on top of that, we have a new business. If you remember, we announced some good deals on the last quarter, a defense deal and a deal with Munters, which is on the strong part of Munters, which of course will add over time.

Will you see the 50 million euro in Germany? Will that start to be seen already in the fourth quarter or is it to some extent already in the third quarter? Or how should we model that increase?

It's for 25. It's not included in this quarter. It takes longer than that. We are moving existing production. You saw that MLE order took one year. So it It takes some time to move it. On the other hand, it hits the ground running because it's existing products. Normally, if you have a new order, you do prototypes, pre-series, and then you see the volume later on. So when we have moved it, it's full speed ahead.

Will you see those 500 or 50 million euro be fully realized in next year or is it starting next year and sort of

part of it coming in 26. i think again that normally we cannot talk specifics but normally the meat product takes one year between the sign the contract and we are in full swing you saw that with the forklifts so that would be the typical period of time sorry for coming back on this demand situation again when you say you take market share is that growing

sales from existing clients or taking new business or how do you define taking market shares?

Market shares is new customers and or new parts of existing customers. And what we saw in these MIGs in August and September was a brand new product range from China being moved to Sweden and a brand new customer coming in from Germany to Central Europe.

So there is nothing sort of unusual with this third quarter figures that we should bouncing back in the fourth quarter in any way. We should start looking at the third quarter as sort of a running rate looking into the fourth quarter.

I think that you must taking into consideration that if you compare the development of margins, so we had a margin increase from second quarter to third quarter, from 5.7 to 6.7, you have to remember that second quarter is three full months, whereas the third quarter is two full months plus July. So it means that this margin increase is actually somewhat higher if you would compare apples with apples.

Yeah, that's true. So then if we look at the margin development here going forward, it seems that you are improving the main markets somewhat more than other markets, despite that you have a higher sales increase in other markets. Is that due to the cost you were talking about here?

This is due to the big change we are doing in in many Poland I think we wrote about this in the report that we have two activities going on one is that we restructure Poland of the deposition we got in this factory in Prabuti from orbit one and we had the project only in our own factory we would like to specialize factories so both of these factories were doing everything now we would like to have one as a center for our electronics production and the other big to be more assembly So we are moving customers and doing some stuff. On top of that, we have the new MIG, which is quite substantial moving into Poland. So there's a big work ongoing there in Q3 and will remain for some more quarters.

But it's very impressive what you're doing there in the other markets that you're lifting sales. So margin improvement will come then hopefully next year.

Yeah, if you're going to reach our 8% more than that, it's a yes on that.

Yeah, yeah, exactly. Now, I think I'm ready with my questions.

Thank you, Anders.

Yes. The next question comes from Oliver Usitalo from Aktiespararna. Please go ahead.

Good morning, Erik and Lars. I just have a couple of questions from my end. First of all, in terms of the new MIG contract that you had signed, you should have completed the first deliveries here. How has the collaboration gone so far? Are you satisfied with their commitment? And can you perhaps comment anything on the pipeline for a new MIG agreement?

Good morning, Oliver. It's gone really well. what we are transforming, the MIG from Germany to Central Europe is not that easy. It's quite complicated products. And it's also a factory that, and that's typical. Normally you go into Germany, you find a factory which has been there for a hundred years and they're doing something special. You don't know what it is, but they are a market leader. That's Germany. And it means also that they have, it has deep roots. So deep roots, being at the same place for so long time and you have to, replant this production. Quite a challenge. But we have done this before a number of times, and I really feel that we have experience now. It's gone, I would say from my perspective, even better than expected. And to your second question about the pipeline mix, we see that the demand is stronger, as said, when the economy is lower. So there are a number of companies there thinking, how can I change my supply chain? Normally you do that when you have a new generation of your products. That's easier to make an RFQ and do something. But now with existing production, how can I transfer this? And I think that We are the only company with a fair offer on that. So I think we have a good pipeline. It's normally a rather large contract, so it needs to be negotiated. But you should see some more mix during this recession.

Yeah, I know we have touched upon the strength in your business model previously. Well, thanks for that extra color. Following up on Fredrik's questions on the financial targets, in order for my numbers to add up to your financial target at a 6.5 billion in sales, you need a quite substantial acquisition. And let's say that you go through with that substantial acquisition, such as the one

uh with orbit one what's your view on the initial integration process that might damper the margin development orbit one has been a success story and one of the main reason is the thorough due diligence on the company culture that's what's building the company it's not me in large it's all the fantastic people in hansa And we have been happy then also to announce some good new positions on the people on Orbit One on high positions in Hansa. This is also how we are looking for new acquisition. We would like to repeat the success story of Orbit One, of course, if we do a new acquisition. And that's also why we are quite careful with new acquisitions. And I also like to state that it can be big, but that's not the challenge. The challenge is the company culture. But the second thing is, It can also be MIG that we are taking over some customers facility or moving some production or something like that. Same thing apply. We have to make sure that we can handle it, that it can be people on the transmitter side that we can work with on the receiver side. So the size itself is not the challenge. The challenge is to make sure that it's good people coming on board into Hansa.

Okay, I understand. Do you see that there is any chance that you might revise your financial target for 2025?

You mean up or down?

No, your choice.

I'm just joking. No, we have been so far putting milestones in Hansa. And now we have passed three milestones. This is the fourth milestone. So far, we've been able to accomplish our goals for every milestone. Now it's Hansa 2025. So we stay committed to these goals. And Then there will be a new milestone, Hansa 2028, with new targets. But as Lars also explained, the margin side, and we also have targets on the balance side, as you know, solidity and our debt versus our EBITDA. are confident with all of them on the sales side we have to make sure that we can do another successful expansion in these geographies so that is the thing that could happen that we have to change the sales goal we don't believe it that we need to at the point where we are right now we feel confident that we will be able to handle this otherwise we would revise it already but if if something should be revised also like gosh pointed out it would be in the sales side can also be positive of course

Thank you for that answer. And just a last question from my end. The reversal of additional purchase price for Orbit 1, is this solely related to the economic situation or do you foresee any change in, for example, the competitive situation or so on?

not sure if I got the question, the reduction of the price was the mechanism we had when we bought the company, taking into account it could be a downturn in the economy, therefore the purchase price was depending on the outcome of 24, and then we have to pay less simply for the company due to the situation. But maybe that was not your question.

No, the question is whether the the economic outturn for orbit one has been well affected solely by the economic situation well the overall economic situation or if this is a well temporal effect or if you see some sort of structural change perhaps in the competitive landscape okay two answers to that first of all

This was a standalone company in electronics, so they were hurt by the recession and we were already coming in with a margin a couple of points below Hansa. So what we did in this integration was also the synergy, meaning that it becomes much stronger with our model. And we are of course confident that they will also be part of our 8% margin goal. When it comes to the market and this part of Hamsa, it is what I mentioned before, that we are glad to go to our customers and say, now we're even better. So also for the customer base coming in from Orbit One, we could have a road trip to them and explain about the new situation. They were really happy about that. And that's also why these two MiGs actually originated from Orbit One. So quite happy customers, no structural changes, will be part of Hamsa and be part of both the growth and the margin. Did I answer this time?

Was it? Yeah, yeah. I think I got it this time. Thank you so much. Great answers. I jump back in the queue and have a great day.

Thank you so much.

the next question comes from jacob soderblom from carnegie investment bank please go ahead uh good morning lars and eric can you hear me yes we hear you good morning perfect uh good morning i just have a two questions actually uh if you can talk a bit about the inventory development uh in the quarter and if there are any specific measures you've undertaken on where you see the development going into Q4 and also into Q2025. Lars, I guess this is a question perhaps directed to you.

Okay, I will try to give you an answer. We had an increase of inventory a couple of years ago due to the shortage in components. And we have said in similar questions during Q1 and Q2 that it takes some time to come back into a normal level or the same level on inventory compared to sale. And especially when the sales are dropping, it takes a little bit longer. Now we can see a positive effect on the working capital that is adjusted to the lower sales margin or even more. And we are continuously working with decreasing the stock level to free up cash, but also reduce the risk if one customer or so are having problems. I cannot promise you, and I've been saying it several times, that one quarter is a short time to measure the change of inventory. You can have a MIG project or you can have some other thing that have a temporary effect on the stock. But over time, we aim to reduce the stock if you compare it to the sales volume.

Okay, I understand. Thank you for that. Also, perhaps in the same area, but I discovered there's a 25 million Swedish kronor increase in something in your other receivables item on the balance sheet. I don't see how we could expand on what this increase reflects.

Are you trying to of technical questions here yeah trying to put me on on on the spot now um i need to look in into that there is always a change i i and this is maybe a little bit of a guess but you have a decrease of the the vacation depth etc so that that has an impact but i need to i need to look into that question and then come back to you separately because because i cannot it wouldn't be fair to give you an answer without knowing

That's perfectly fine. I think maybe the final question is, if you're talking in acquisitions, but also regarding your technical capability footprint, do you have any feel for where you see the best fit for a new acquisition? I mean, you were talking geographically about expanding the clusters up to certain sales size and so on, but do you feel anywhere in your technological capabilities where an acquisition would fit? If there's any area within electronics or mechanics or anything else that you feel excited about growing in additionally i will give you a short answer yes possible to expand or anything or do i have to stay curious so we we are um

We are evaluating and trying to make sure we have a very good fit. We have our toolbox to fix our customer supply chain and there is always a specific tool needed, but we wouldn't disclose exactly what we are looking at.

I think that's all for me. Thanks so much.

Thank you.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Okay, thank you. So that will then conclude our Q&A session and our call for today. And let me just finish by saying that our goal is to continue to perform as you expect. We do prioritize openness and clarity. So thank you for joining and see you all next quarter. Bye.