ITAB Shop Concept AB (publ)

So I would like to say big welcome to everybody to the first quarter of 2025 and also the first time that we present combined figures for ITAB integrated into together with HMY. So just to remind everybody, I mean, I think most people that follow us are aware of the acquisition we made and that it became also HNY became part of ITAB as of 1st of February this year. So we have two months of HNY into the ITAB figures in the quarter, but we have decided to focus on the pro forma in order for comparability. But just to remind everybody what we are, what we've been focusing on, because when you combine two market leaders like ourselves and HNY, it's super important to keep focus on business continuity, customers and our people first, making sure that everybody understands what is going to happen, making sure that all customers are being prioritized. And then we focus on getting to know each other, understanding the strengths, the opportunities, the challenges that we have together so we truly can become better together as intended, but also to start to deliver on the synergies because this will help to make us stronger in front of our customers. It will help to deliver more value to the company. And as everybody knows, we will find these efficiencies and synergies within procurement, cross selling and general efficiency improvements. so when looking at itab group now combined with pro forma numbers for 2024 those that follow us follow us can see that sales have now doubled so we are on above 13 billion swedish in sales we have 24 manufacturing sites spread over 17 countries and we have operations in more than 40 countries with a total of around 5,400 employees. For 2024, combining the two companies, the adjusted EBIT margin was 6.9. And then adjustments are made for, of course, transaction costs, because this is truly an industry-changing transaction. So we have significant transaction costs, but also then some factory adjustments and divestments of operations both in Mexico and in Africa. China restructuring in Mexico, not divestment. And for everybody that knows us, groceries, our biggest customer group, followed by do it yourself and home improvement. Of course, fashion is very important. And then uh but we are in most um i would say all sectors of retail we are present consumer electronics is big food food to go pharmacists etc and our focus is really to go from being very product oriented like the whole industry have been traditionally into becoming truly solution oriented so focusing on what delivers value for our customers And how can we drive that value even more through our solutions, both existing solutions and the solutions that we develop together with our customers and together with our suppliers. When you look maybe a little bit closer into the segments that we are active in, you can see the size of a grocery in the performer numbers. It's a little bit more than half our sales. Home improvement, do it yourself is 11% of sales and fashion then follows from 9%. And then as you can see, the other segments that covers all other sectors is quite significant. When you look at just some highlights on the first quarter, you can see that sales grew with 16%, so a really good sales growth. Also, the adjusted EBIT grew by 12%. We have been really, really focused on getting a good start by focusing on our customers and our people, and that has helped us to have a good start also with the integration work. focus on on business continuity despite then you could say the increasing macroeconomic uncertainty with tariffs one day and maybe not tariffs the next day and I would say it's more the uncertainty in the world around us that we see as something that this creates added I would say added risk at the same time I would like to point out that we have limited exposure to effects coming from the tariffs. We have operations in most of our present geographies, so we'll be able to manage this without more than maybe marginal effect. The acquisition of HNY and the whole integration work that comes after a long process where we have a clear idea of the strategic rationale behind and also a clear plan for the future in how we can help to deliver increased value for our shareholders. But maybe what's most important is increased value, a broader portfolio, more solutions, more capability, more, I would say, experience and know-how to all of our customers. So by that I hand over to Ulrika to go through the interim reports Q1 to focus more on the figures.

Yes, good morning, everybody. As Andreas already mentioned, to illustrate the financial effects of the acquisition and give you a representative view of the development of the business, we have mainly focused this presentation highlighting the pro forma development. And you will, of course, find all details on the reported figures with HMY consolidated 1st of February in our interim report. So zooming out on the development over the recent years, you can clearly see the effect of the transformative acquisition of HMY doubling our size. In the first quarter 25, we have a performance sales growth of 16% despite the hesitant market and also given the fragile macroeconomic stability. Performance sales in the first quarter was 3.3 billion compared to 2.8 last year and adjusted EBIT excluding non-recurring costs and also amortization of acquisition related intangible assets amounted to 209 million SEK. If we look at the rolling 12 full-year performance sales, we have 13.7 billion SEK in in first quarter 25 and an adjusted EBIT of over 900 million SEK corresponding to an EBIT margin of 6.8. Summarizing the financial highlights for the quarter, we see growth across most geographies and customer sectors, especially within legacy HMY. Due to higher sales of retail technology products, we have historically higher margins and results within legacy ITAB, and we are coming from a very strong comparable result in Q1-24. driven by the favorable product mix where we last year had the highest EBIT margin in ETABS history. So in all, increased sale had a positive impact on earnings. At the same time, the merger with HMY impacted the product mix with lower share of technical solutions during the quarter, also affecting the combined margin for the new ETAP group. Performa adjusted EBIT for the combined group in Q1 of 209 million corresponds to an EBIT margin of 6.3%. Looking at our customer sectors, we can see that grocery and fashion sectors have been driving the sales growth in the first quarter with a growth over 20%. Our sector exposure in the group is now further diversified after the acquisition. And within the grocery sector, it's especially the discount segment in Central and Eastern Europe that has been driving the growth, but also fashion has invested in new concepts and refurbishments across geographies. The market is continuing to show considerable interest in the group's technical and digital solutions for loss prevention and the sales trend for customized shop fittings were also positive. We have recently signed agreement with one of Europe's largest home improvement and gardening chains for shop fitting solutions. in five new stores and also a new agreement was signed with one of the largest grocery chains in UK for the rollout of new smart gates in over 200 stores. If we look at the combined group market exposure, we can see a shift from Northern Europe to Southern Europe, where this acquisition is complementing and clearly strengthen our presence in Spain, France and Turkey. So as you can see in Northern Europe, we previously had around 30, 25, 30% within the old ETAP group and Southern Europe was around 20%. In the new combined group, we have sales in Southern Europe of above 40% and a little bit more evenly divided in the other geographies. Looking at our cash flow, this was affected. We have in the first quarter 26 million. This was affected by higher operating capital. And this is also excluding the month of January for HMY. So the cash flow is not on a pro forma basis. Rolling 12, we still have a strong cash flow of 586 million with a cash conversion of 80%. And also that is not on a pro forma basis. And by that, I hand over again to Andreas to conclude on the presentation. Thank you.

Thank you. And so all in all, we are I would say we're proud to have, I would say, a good start to the year. We've had the integration work so far have have been over expectations people are really connecting people are speaking the same language sometimes we use the same words but we mean different things sometimes we we mean the same things but we use different words so we're really in the process of getting to know each other and so far it's has been an overwhelmingly positive experience We've had just two and a half weeks ago, we had 90 senior leaders coming together in the first time to discuss how we become better together, better as a company, better as an organization in empowering our people, but also then better in our value proposition to our customers. Usually when we have these presentations, I start to talk a little bit about what we are doing and where we're going and why we believe that we are doing the right things. I will end the presentation today a little bit on that note. As we all know, retail is truly transforming and so is ITAB. this all comes from changing consumer expectations. And this has accelerated, as we all know, fueled by the democratization of technology and of information and networks of information. And expectations no longer maybe come from your retail competitor. It comes from an online experience, maybe not at all in a retail situation or in a in a situation where you are purchasing. So it's all about me, my experience, my needs, my expectations. And this poses a true challenge, especially for traditional retailers. And that's the focus for ITAB. So traditional retailers, they need to They need to invest in new channels. They need to change their priorities. They have to reduce their costs. At the same time, they have to invest in expanding and enhancing the experience and the convenience in their brand experience and keeping up with pace in the ever changing needs of the customers. This really creates a cost versus experience dilemma in how to get the best return on capital for most retailers. And this is also where our opportunity comes to really be curious, consumer oriented and understand this and focus on what drives value for our customers. And by that then help them by being more agile and more focused on their needs and less romantic about our own portfolio. and more on which solutions we need to develop together and this really comes from since a couple of years back when we have been improving step by step it really comes from focusing on the outcome that we create with our customers so what is the desired consumer brand experience how can we help to improve the physical store experience driving the footfall and driving then retention of consumers But that is not enough to create a great brand experience. You also have to drive increased sales and conversion. And no longer is that enough for many years. That was fine. But you also have to improve the efficiency of the store and the service level of the store because consumers is not just happy with having convenience on the that doesn't benefit them. It has to benefit them. And at the same time, these investments need to benefit also the retailer. And then if you also then can help to reduce the operational cost for the retailer, you have really found a sweet spot. And this is what we talk about when we say an outcome based value proposition is to focus on how we can drive these values for our customers, and then being confident in that that will also drive value for us. And this is a slide that I like to use. And for some people that see it for the first time, maybe it's a little bit busy, but it's on the left side, you have kind of where we are today and how we also influence through our proposition. We really influence a retailer's consumer journey. be it inspirational, be it the convenience. And we also influence the retail operations. How do you operate the store? How do you operate the fleet of stores? So that is ITEV's influence today. And we believe that that will continue also in the future. But it will not be enough for us to do that through our traditional solutions of interiors, lighting, retail tech. We need to do that with more and more services, more and more insights that comes from being connected, being able to use data and insights that comes from other stakeholders, other ecosystem partners, and combine that with insights that comes from our solutions and to bring that to the benefit of the retailer. Because the retailers, they have this dilemma. They need to take out cost at the same time they need to invest in experience. So it will no longer be enough just to do that in the store format or in the fleet of stores. You have to do that across the retailer's value chain. And then you need more data. And that's what we are investing in becoming more and more strong there. That is also what is driving the logic behind. ITAB and HNY joining forces because the demands of data safety, technology, connectivity, integration, those demands become increasingly tough and needed. And it becomes also difficulty if you don't have the right size to be able to invest in these areas and provide the safety and the innovation that our customers require. And just kind of reminding everybody about our strategy that we've had for a couple of years, that was really about coming from a position where we were struggling a bit. So we had to stabilize. We did our cost and capital restructuring. We have a tick box there. We really simplified what we were doing. We clarified a lot of things. Then we amplified by investing in new capabilities, new go-to-market, new services, new proposition to our customers. and then to expand the growing organically and growing through acquisitions. And I put the tick box there as well. So our strategy for the last five years have really served us really, really well. And we have, we have realized most of these things. There are still more to do in order for us to drive our maturity and to be the leader in our industry that we, that we now are. Um, but we also need to set the new direction going forward. So what about the next five years? So towards the end of this year, we expect to have a new strategy that we'll be ready to communicate. And by that, I close the presentation part and I open up for questions and answers.

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 Eric Sandstedt from Kepler Shoebrew. Please go ahead.

Hi there, thanks. Erik Sandstedt here with Kepler. Got quite a few questions here. But if we start off with the sort of ITAB old company, if you like, it seems that sales growth organically was up around 8% in the quarter, and that follows some 10% growth in Q4. And still you talk about the hesitant market. To me, it suggests that you're performing pretty well recently. Maybe just help us understand a little bit what's actually driving the strong sales growth here in the past couple of quarters for the organic business or the old business, if you like.

I would say that the sales growth that we see now is coming from, I would say, the recovery of the market that we saw and then the uncertainty we've been talking about for a longer period that comes from, I would say, the macroeconomics and that creates hesitation. So even though we are growing in total, we also see the underlying current of hesitation and that sales processes take longer, decision making takes longer time. And it makes predictability more difficult than maybe historically. And I think everybody that is kind of following the macroeconomics these days are aware of the volatility. So that's how you should read that. And then the growth that we have that comes from, I would say, from quite long sales processes that have then materialized. But we have seen a positive underlying kind of confidence coming back from the difficulties that was in 2023 when the market took a downturn. So we have not seen a strong kind of recovery yet, but we have seen that our efforts and our actions have helped to improve.

Yeah, thanks. And then also in terms of the synergies here relating to the acquisition of HNY, I appreciate things have really only just started here, but maybe talk us through a little bit the confidence levels in reaching the synergies and also how we should think about the facing up to full run rate by 2027.

Yeah. So, I mean, like I said, so the start has been better than expected. People have really been open. So a climate of sharing, seeing the same thing. So the opportunities that we, you can say that now we are much bigger than before, but previously when, before we made the acquisition, we made a number of assumptions of synergies that we would be able to extract and deliver and so far in the integration work and remember we have only two months of work in these figures we have not seen anything that makes us kind of shy to deliver on the promises so the promises we have made before still stands Then, of course, when we made the promises back when we announced this, that was based on the assumption that maybe the closing of the deal would come maybe even in the first of December or something. maybe there's a slight delay of a couple of months but we have not changed our target for 2027 so that remains like we have said so synergies of 30 million euro compared to what we presented then back in September compared to 23.

Thanks. Ben, just changing topic a bit. You recently announced a new order win, I think amounting to 8 million euros, right, to be reported and or delivered in Q2 now. More generally speaking, could you share any details of the type of profit margin that you have on these coins? We know that, you know, The comparison figures have been quite impacted now for three quarters by the Australian order. So maybe just help us a little bit to understand the types of profit levels that you have on these projects.

Yeah, we don't comment on individual orders' profit levels, but at the same time, the solutions that we have with this customer are solutions that help to prevent shrinkage in stores. product loss or theft so it's it's smart products that use a combination of i would say sensors and different types of technology connected to the checkout solutions and then that these products open or close depending on behavior and transactions you could say So that's the type of products that we announced. And if you have followed us in the past, you know that those are products where we have higher margins than for traditional shop fitting. So I think I cannot guide you more than that. Fair enough.

But is the Australian order now completely

out of the books so to speak it has impacted now the comparison base for three quarters right yeah will there be any more comparison effects going into q2 um i would say maybe not from that single order that you referred to but i mean we take these types of orders all the time but then we communicate them you know when they are I would say €8 million or larger, otherwise we don't communicate them. So it's not just depending on large orders, even if they are important, but it's also about the mix, the general mix of the I would say the underlying business. And as you all know, our business is a project business project and programs that we win and lose. And when we develop and deliver those projects, they don't come back in exactly the same shape and form. Sometimes they do, but most often they don't. So it all needs to develop, be developed and won together with our customers. so it's there is no kind of that underlying um stability but but we do expect that there will be more once the macro is a little bit more predictable we think that the underlying stability will become more solid given the increase of size and the diversification across retail segments and geographies. So we believe that we will become less sensitive to variations in demand, I would say.

Thanks. Then just finally for me to sort of financial questions here on the quarter on the detailed side perhaps, but financial expenses in the quarter in the P&L was at least higher than I had expected. I think you comment in the report on currencies and hyperinflation. Could you give any more details as to sort of the more underlying financial expenses or how much these impacts were in the quarter?

Ulrika, would you like to see if you can answer that?

Yeah, of course, as we mentioned, we have an underlying increase in interest costs, but for the quarter we saw some impacts on currency and hyperinflation that were more related to that. I don't want to give any numbers on that because it could be quite big variations in different quarters, depending on how the currency and how the hyperinflation is accounted for. It's easier to look over time, I think, and not single quarters on the financial cost.

Yeah. Fair enough. And then just finally, was there in this quarter or will there be going forward any sort of non-cash amortizations of intangible assets following the acquisition of HNY that you will report on the EBIT line?

Yeah, as we said in this report, we have in the adjusted number also adjusted for this estimation we have done. We have, as you have seen also in the pro forma communication, we have not yet finalized the purchase price allocation. So this will be done. And the final payment for the deal is estimated to be in Q3. So what we have done now is try to make a high level estimation of the amortization for the two months. But this will be developed during the next quarter and the third quarter. And we will continue to show the adjustments without this kind of amortization.

Okay, perfect. Thank you very much for all your answers.

Thank you.

The next question comes from Carl Johan Bonnevier from DNB Markets. Please go ahead.

Yes, good morning, Andreas and Erika. First, I was slightly late into the call, so if I have a question that you've already answered or details in the original part, excuse me. But just to start off with the 8 million euro order that you described so nicely, looking at the short kind of timeframe for delivery of that kind of order, is there really any other players out there that could do those kinds of short-term integrations that now you are able to do? That must be a real competitive advantage.

um no i would say that i mean this is one of our strengths uh this particular kind of deal but but also i want to remind people of what i've said in the past that these types of orders they have very long sales cycles and then i mean step by step you kind of grow the I would say you reduce the uncertainty if the deal will happen or not, but you don't know until you get the actual order and you can communicate it. But of course, then you try to prepare your readiness to be able to deliver. But this has been one of our strengths that it's not just to win the sales, but also to implement and then deliver the outcome for the customer, because the customers are doing this in order to reduce their shrinkage. And then once they take in their decision, it is of essence that it happens fast. And that is what we have been really focused on to quickly then turn around and deliver it. But I would say these are very customer unique because it depends on the situation of the retailer. It depends on how tailor made the solution is. And it depends on kind of the focus the retailer have and the pace of the rollouts that each retailer have. So there is no kind of clear pattern that each time one of these orders is one, it will be implemented within a quarter or within a month or something. So it's all project by project based. Sorry to be boring in the answer there.

No, no, no. It sounds fair. But it also, I think, really proves your strength, why you are at this stage with your relative size in the market that you're they are able to do an implementation on such a short time cycle. At least it feels short for me, but maybe I'm wrong.

No, but it is. I mean, we've had another example where we helped a large fashion retailer in 2022 to change all the lighting in all their stores in the US. And this was done over just a few months. And it was all done during the night when the consumers were not shopping. So all the lighting in the stores were changed overnight. And then you do store by store. So, of course, it requires a lot of preparation. It's part of being a solution provider that depending on the needs of the customer, you have to find ways to do this with the best kind of, yeah, the best solution for the customer. And in that case, that example, it was to reduce the downtime of a store so they don't lose their commercial hours where they're selling to consumers.

That sounds very market-driven. Thank you very much also for the Performa breakdown in our giving for 2024. And just to get a feel for it, though, I guess we have a better knowledge about your statistics that happened during 2024. Are there something similar that we should be aware of that you have seen now in HNY that may be made, say, a single quarter unrepresentative for the underlying performance? Or do you see, say, the Performa numbers as a good paid, so to say, for judging you during the development during this year.

Ulrika, do you want to take this?

Yeah. No, I don't think we see any significant impact from product mix and so on in HMY. But in general terms, we can say that We had a very favorable first period of 24 with a positive product mix in ITAB and HMY on the sales side were a bit weaker in the first part of 24. So they had a stronger finish in 24. So in that sense, for the combined group, it more evens out in the performer numbers. I think you can see that in note eight. If you look at ETAB standalone.

Yeah, that's why I asked, because I saw Q2, Q3 had been fantastic in X and Y. Yeah. And it was driven by its time. That makes you worried about meeting those numbers now, so to say.

No, I would say that it's like Andreas commented before, we have a project business and they also have a project related business. So sometimes it's more about what kind of project you win and how that is faced during the year.

So and also what I want to remind everybody that we are we're two months into the integration so far, everything has been, I would say over expectations. So we are really we're we're starting to see how great this will be, but we also want to remind everybody that we are still not, I would say. we don't have the same kind of deeper understanding of the underlying legacy HMY business as we have for the underlying legacy ITA business. Of course, as an organization we have without a doubt, but for us who do the consolidation and look at the business from the helicopter, we of course have a lot to learn during the next few months. And we also expect that we will need to come back with you with further details and further clarifications on our plans moving forward. But the message today is that so far everything is in line with expectations and everything between people have been above expectations, I would say.

Sounds excellent. And when you now look at the combined group, Ulrika, what kind of tax assumptions should we use, so to say, where those are getting HMY into the numbers? It looks slightly higher that you're accounting for in Q1 at least. What is your view?

Yeah, this is, of course, taxes and especially tax rate as a percentage is really difficult to look at in a single quarter, especially also since we only have two months and it also depends on where in which regions you have the profit and where you have maybe tax losses carried forward that you can or cannot utilize. So I think we need to understand a little bit more on the rolling 12 and full year figures in the new combined group. But I have no reason to estimate that there will be very big differences compared to previously when we look at it over time.

So an adjusted tax rate around 25%, that's still a good proxy, right?

Yeah, as I said, it's really in the beginning of the consolidation, and we need to work a little bit more on the combined business. But I would say that it's not the reason to draw very big conclusions on looking at just the Q1 numbers, because it becomes a bit twisted.

No, no, that's fine. That's why I asked the question as well, sir. And looking at CapEx, I saw when I read around your report that you obviously continue to do quite large investments on the platform side, ERP system and so on. Is a proxy of two to two and a half times sales or percent of sales a good CapEx proxy for this year as well?

I think that, I mean, if I take this one, I would say that we have, what we have said to the market previously is that we want to be sure that we get a stable year. So we are staying a bit cautious when it comes to investments. Some things we have to do and should do because it's helping us, but we are also being a bit careful and cautious with some investments because we want to know that We do a good integration and we get good control of the underlying business. But if everything is as usual, then I think you should assume the same type of investments as historically, I would say. But me and Ulrika, we are a little bit cautious. as an approach this year, just to make sure that we get control of the company. So yeah, I hope that answers. So we don't know. It's a good indication. It sounds very logical as well. Yeah. So we don't, we don't, we usually are very careful with forecasting and because of the project nature and the uncertainty in the world around us, but But the only forecast that we do have given was when we announced the intention to acquire HMY and that we confirmed today as well still stands firm. And that is that during the coming, I would say, 30 to 36 months, we will deliver synergies that should have a full run rate effect of 30 million euro.

Excellent. And one more question on slightly more of the details. You've obviously done very good work on working capital in the old infrastructure. Is there anything to do on the HMY side on that part or were they as efficient as you were, so to say, towards the end?

No, but I think if you go back and look at the numbers that we are presenting, you can see that ITAB have historically had a higher profit level. So if you turn that into efficiency, I would say that ITAB have probably been a little bit more efficient. On the other side, HNY legacy have been stronger in driving organic growth. And we all know that ITAB came from a position where profit levels were not so good. So it's been a lot of work because you need to stay competitive in front of the customers. You need to deliver more value. And at the same time, you need to improve your profits so you can invest in the future. I think the synergies will not just come from the HNY side of the business, the legacy HNY. We are one group. We are one company. We are integrating. The synergies will come. Sorry if I'm repeating myself, but the synergies will come from that we are doubling our procurement portfolio. So it will come from purchasing. It will come from efficiencies in SG&A, of course. And it will also come from cross-selling opportunities that we get. um that the combined customer portfolio get access to more capabilities from itad side more solutions and that will drive positive effects commercially as well so those are the sources of of this so and that will come from the combined group it's not coming from i would say single parts of the group but but we see that there are there are room for improvements for for the combined group in territories like france and turkey there are room for improvement in in regions in europe like uk so we are focusing on those areas and then there's also room for improvement i would say in in north america and in and in south america And we are working on all of this, of course, like we have the last couple of years. To continuously become a little bit better every year is our goal. But we want to remind people about the size of the acquisition and the complexity that comes with it. And also then that we see that so far everything is playing out according to our plan.

Excellent. I'll stop bugging you on the acquisition details and lots of good new numbers for you. But just on the comments you made on the market environment, they say stable without really seeing any growth out there yet. Could you give us some more granularity which segments you see maybe is being like showing best potential for strength and where you still see weakness and maybe your graphic kind of perspective to that?

I would say that retailers that have a solid foundation, that have a strong balance sheet themselves, they are investing where it adds value for them. They reduce costs, they improve efficiency, they improve the consumer experience. Where we see hesitation is more with customers who have maybe a strained balance sheet and that are maybe going through, I would say, integration or acquisition, or they have been recently sold or been bought, those ones that are more sensitive to their capital, they need to prioritize even harder. There the business case and the payback becomes increasingly important. And because they are sensitive to the effects of margins, they're sensitive to the effects of uncertainty. I would say that is how so we don't we cannot identify that it's that consumer electronics everything is fine but in fashion everything looks difficult it's not like that it depends on who is the retailer what's their plan are they winning do they have the means to accelerate that is more playing in but the overall macroeconomics makes it more tricky than before to get, say, the order in our books. But it just means that we need to work harder. We need to deliver stronger business cases. We need to be even closer to our customers to help to understand why they're hesitating and how we can help them to overcome that hesitation so they can deliver and unleash the value.

Thank you for that extra color. Just one final for me. When you're looking at the tariff environment we're seeing now in the discussions out there, does this have any direct or indirect implications for you? Maybe on the direct side on your source model somewhere or on the indirect side that customer orders that you see being pulled that you might have seen otherwise?

I would say that our estimate so far is that, I mean, the direct effect will be marginal. But then if the macroeconomic kind of preconditions change, then we will be affected as an industry or as all industries in the same way as other companies are. But the direct effect for us is marginal. So it's a very small effect. Leike, would you agree to my description or would you like to add some flavor to that?

No, I agree. It's more related to the effect it could have on the total environment and in direct ways delivering or sourcing from US or countries affected directly. It's very small.

Yeah. I mean one thing that we can see I mean during the last couple of years is increased interest in European sourcing and the majority of our manufacturing and of our supply base is in Europe of course we also have operations in I mean, on all continents, except in Australia. But we see that, I mean, if you take North America, I mean, as the clear and obvious example, US, the products that we are selling there deliver very high performance. payback and very short paybacks on loss prevention. And we see some effect, but not that it would change the decision to invest. But then we see that it's more I would say cultural challenges that you need to overcome before you maybe invest in loss prevention solutions. Or we sell lighting solutions with very high energy efficiency and quick paybacks. Those could be affected, but marginally. And we see that most competitors would be affected in a similar or higher way. So that's why we say this will have a marginal effect on us. in the direct way.

Good to hear that this is something we don't need to worry about, at least in your case, to a larger extent than the general market kind of environment.

Yeah, exactly.

Thank you very much for all the answers and all the best out there.

Thank you very much.

okay there are no other callers waiting we have a couple of questions in writing and the first one is do you have any plans to consider consolidate offices or production facilities in southern and western europe to gain economies of scale

In the Synergy plan that we have, there has been no factory closings or stuff like that in our plan. We believe that if that becomes relevant, it should be the result of normal optimization. capacity efficiency efforts or through investments so there's the synergies doesn't come from from efficiency on the factory side it mainly comes from procurement and SG&A side there could be some the question was twofold so it also had offices so we in some places we have maybe dual offices and then we'll try to make sure that we have what is best for our people And I'm a firm believer in people sitting together is always the best. But bringing people together, allowing them to get to know each other. But that is not a huge part of the SDG&A savings. And also it will be the result of work that happens locally, I would say. So that's how we kind of deliver the synergies. It's from local actions.

Okay, thank you. I have a couple of questions on the HMY side. The first one is, I note that HMY's EBIT margins in Q1 or Q2, and especially Q1, were lower than in Q2 and Q3, which was not the same exact case, exact same case for ETAV. What happened here? Or is there any sectionality for HMY?

I would say that now we are one group so we are ITAB group and we have two brands but I mean on the legacy side like we've communicated before ITAB's product mix is slightly different compared to HMY so within ITAB there is more of technical solutions that may be have a higher margin. Also, ITAB have been really focused on improving margins the last couple of years. So I would say that that explains it more. Then there has been a positive development within legacy HNY. So 24 had a better margin than 24. But I would like to remind those that follow us that looking at individual quarters is always difficult because of the project nature and the program nature. So if we have a delivery to a major brand, usually it's a quite focused delivery. So it has a big impact in a quarter and maybe there's a spillover effect into two quarters. But then usually that disappears. There is a natural seasonality that everybody wants everything to be done before the Christmas period, and then nothing should disturb the consumers during Christmas. So there is a normal seasonality with a peak leading up to Christmas and then a slow period, December, January. That is the normal seasonality. But we have seen the last couple of years that these patterns are changing a little bit. They're changing because services is growing. They're also changing because retailers are they're challenging the status quo and the normal things of doing conducting their business. So we see some small pattern changes here. And then also when it comes to more tech heavy implementations, they are usually not following the same logic as maybe being ready for the Christmas shopping. They more follow investment decision cycles, budget allocation, readiness to implement, et cetera. So that is breaking a little bit the seasonality. But normally there is a peak leading up to Christmas.

Okay, thank you. Another question concerning HMY. HMY has a high share of interior fixtures. Would you say that this company's gross margin is representative for ITAB's interior fixtures product category?

I would say that in many aspects we are very similar. So that's why it's so easy when you put colleagues together because we are the same, we act in the same business. I would say that ITAB, the fact that ITAB are a public company and the focus that we've had the last couple of years of restructuring and focusing on capital and cost out have helped us to drive the margin. I would say that explains more differences than anything else, than like a cultural difference. And in the future, we are going to be laser focused on profitability and capital efficiency. But of course, it will take some time before we act as one, even though we are one, we still need to get to know each other. We need to set the culture. that is shared common way of leading and as I mentioned previously we need to explain also where we set our aim the next five years because that needs to be reworked during this year so we can explain that to the market because we have delivered on the strategy that brought us here now we need to make sure that we will set ambitious targets for the future as well.

Okay, thank you. And finally, I have two more detailed questions concerning the legacy ETAB operations maybe. One is what are the reasons behind the divestment in operations in China? I assume that concerns the divestment done in Q4 2024. And the other question is, Do we hedge for fluctuations in raw material prices, such as metal prices?

Yes. So, I mean, in China, we divested our manufacturing of the drivers for lighting that we had in Shenzhen. and we divested that to our partner that we are now sourcing from so it was so we are still being supplied from the same factory but we decided that it was better for that factory to find more more customers than just itab so that this the shenzhen divestment when it comes to what was the other help me again that's the other topic that was uh it was if we had uh fluctuation for head yeah or fluctuations in raw material i mean norm normally we agree on on um on periods uh on the purchase price for for a given period and that's always you could say something that is tricky and then we try to use indexes as much as possible we also like to mirror that together with our customers sometimes our customers agree sometimes they don't but usually it's better when everybody has kind of a backwards protection because then you follow the ups and downs of the raw material because our value add should not be if we are lucky in purchasing or not, it should be because we are strong in delivering added value and that we can deliver the outcomes that drives value for the retailer. So we try as much as possible to work in a very dynamic way, both acting on opportunity in raw material, but also then to secure so we have stability and predictability. And this, as I think whoever's asking the question might kind of allude to, now when we bring the two companies together, we have a combined purchasing that is more than twice as high as before. So, of course, we have high expectations to drive not just efficiency and cost savings, but also improvements in how we allocate and use capital.

Okay, thank you. We're coming up to the hour now, so I will answer any more questions in writing after this meeting, so I'll hand it over to you, Andreas, to for any final remarks.

Yeah, so sorry if I sometimes answer by not giving all the clarity that maybe whoever is asking the question wants, but we are careful when it comes to future predictions. At the same time, I'm super proud over what all our coworkers have achieved because it's quite a big thing when two of the largest companies in our industry who have been fierce competitors for decades just because we sign a piece of paper and a transaction is made, we are all of a sudden best friends because it's still people. And I must say that I'm so proud over these first months together, both the legacy ITAB part and the delivery in the business, the legacy HNY part and the delivery in the business. And also then our leaders coming together and our coworkers coming together, really being curious, being open and eager to learn and bring the insight and the value to our customers. So a big thanks to all our employees and also big thanks to all our shareholders and for you guys who've been listening today. So that's it from our side. Thank you.

Thank you.