Lagercrantz Group AB (publ)

Welcome to the presentation of Lagerkrantz Group Q2 report for 2023-2024. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants on the teleconference are able to ask questions by dialing star 5 on their telephone keypad. Participants following the webcast can write your questions in the chat below. Now I will hand the conference over to CEO Jorgen Wye and CFO Peter Theisel. Please go ahead.

Welcome everyone to this morning's conference around Logit Crowns Q2. Me speaking is Jorgen Wye and together with me here on the call this morning is Peter Theisel, our CFO. And we will jointly try to guide you through the report and the presentation that we have here up on the screen. And I hope you're all sort of prepared for that. We will do the presentation in sort of three sections. We will start off with giving everyone that are new to the group a little bit of a short introduction. Then we will jump right into the numbers and look at the Q2. And after that, we will talk quite a lot today around the new sort of, we are expecting to raise the bar and how we plan to move on with Lager Grants going forward. For those of you that have been with us for some years, we have always been trying to find growth and building the group with some 15% per year. And a couple of years back, we raised the bar to the 1 billion in profits that we reached here this summer. And now we'd like to talk a little bit about what comes next and raising the bar and doubling once again. That is the message that we have communicated here this morning as well in the report. So we'll jump right into it and go through these sections. We will then in the end have an open discussion and with some Q&A. So there's a queue that you can add on yourself too if you'd like to put some questions out later on. So we will start off with a short introduction then. I mean, we're building the group continuously around a tech group or an industrial group, trying to find niche-oriented, preferably product companies that we would like to have within our portfolio companies. You can see here on the slide that we have sort of put them into the five divisions that we have. Electrify, Control, TechSec, Niche Products, International, and you can see how many companies we have in each of these divisions. Each company are working autonomously, independently in their own market under their own brand name. So we keep the companies as they are when we acquire them and build them from the standpoint that they have. Finding new growth opportunities in terms of exports or new initiatives within the companies and thereby growing them along the way when we require them. Currently, we have some revenues of approaching 8 billion and some 2,600 employees. We are some 20 people or so, a little bit less really in the overhead. But otherwise, the rest of the employees that we have within the group are all working in the different subsidiaries that you can see over to the right here where we have our needles and where we are. You can see that it's Northern Europe, the map there. But you can also see all the way over to the right where we also have some footholds in other parts of the world, especially China, India, and the US, where we have some growth ambitions and some companies that have some footholds. And we try to help our companies get abroad with exports in many different new markets that we see over there. We are strong believers in running things in a decentralized way. So we have currently some 70 profit centers in the five divisions. So each company, as I said, is run independently to a large extent. And acquisitions is a very central part of our business model. We will today communicate the race of the bar in terms of the number of acquisitions that we have from the five to eight that we've been working with, the eight to 12. And that is also an initiative that is going on in the divisions more and more along the way. That we'll talk about a little bit later on. We have been on the stock exchange in 2001. Before that, we were part of the Bergman & Beele Group. So we've been on the stock exchange in one form or the other since 1976. And the group was founded already in 1906. So we have a long heritage. of doing what we're doing. I think we have a very strong platform today that has been built through a lot of business culture and philosophy around decentralization and working very sort of thoroughly with the companies along the way, building the group over the years. So that's an introduction to the group. We will communicate this morning then the Q2 figures. We have a year that's starting 1st of April. So this is our Q2 figures we communicated, which is up until the end of September then. And you can see the very good trend that we have here, the good trajectory we've had for some years now. And we surpassed the bar here of the 1 billion, you can see all over to the right here this summer. And now we added to that even more here in the last with a profit increase here in the quarter of some 20%. So it was a strong quarter and we feel that we have a very strong path to continue building the group along the way. We'll come back to that. You can also see that the scales are proportional from left to right here and thereby also you can see along the way that margins have improved. That has been very important to us along the way. We are more keen on driving profits and and margins and profitability rather than focusing too much on top line. We would like to have the bottom line preferably to work for us. And that's been sort of part of our inheritance since many years now. So that's an introduction to the group. We'll look further into the numbers and looking into the business conditions. The way we see it is that we feel that the market has held up better than expected. So we think it's been remained stable on a good level for most of our businesses. We see it's broad-based. We have actually been, as we have a community, also expecting some slowdown. And we see some of the slowdown, but not to the extent that we expected, really. So we feel that it's holding up in many parts of the business. And we see the industrial sort of related type businesses are doing very well. The electrification is holding up very well. and a number of other niches, the tech sec is also holding up better than expected. So we think the market has actually, we've been expecting sort of that we should work with our plan Bs and stuff for a year now, but so far we have not been working with those very much. It's been holding up better than expected. And we also saw the order intake for comparable units was actually slightly above the same previous year and in line with the revenues for the quarter. So I think it looks pretty promising. And we also feel, why is that then? Well, we feel that the broad focus that we have with many different companies in different end customer segments and different geographies is working very well for us. especially with the focus that we have within more related to the the green transition with electrification with the infrastructure building that is going on and and security and safety products and also some specialized products that we have other segments that we have especially within the niche division and also within international provide some good resilience for us And we see, of course, some type of slowdown in a couple of markets, but not worse than we've seen previously. And we also feel that it's holding up very well, generally speaking, across most markets. We will look further into the numbers here on the next slide. And Peter, can you take us through the numbers, please?

Yes. Thank you, Jörgen. Overall, as Jörgen mentioned, we are quite happy with our Q2. We feel it shows solid numbers with broad-based margin improvements. Our net revenues increased by 12%, and the organic growth was a little bit lower than previously, minus 1%. Contribution from acquisitions were 9%, and currency effects 5%. But maybe the strongest part of the report is our margin in improvement that took us to a record high level of 17.8%. And it was quite broad based where all five divisions contributed to improved EBITDA and EBITDA margins. Our cash flow was a rather normalized cash flow from operations at 219 million compared to 211 last year. And during the last 12 months, we've had close to 1.4 billion in positive cash flow. So that's quite strong, but now at more normalized levels. Our profit after financial items increased by 21%. And looking into the net financial items, we can see that they were more or less entirely driven by increased interest rates. And currency translation effects were not significant, didn't have any significant effect in this quarter. And profit after tax increased by 21%. If we look at accumulated numbers for the first six months, we had net revenues increased by 20% and the organic growth was at 2% and acquisitions contributed with 13%. And EBITDA margin was 17.6%. Cash flow increased by 137% to 505 million. And profit after financial items increased by 20%. So it's very, very stable. And it's the same in net financial items were driven by increased interest rates rather than anything else. And currency effects were not significant, didn't have any significant effect. We also noted that our profit after tax increased by 19% and our earnings per share increased to a record level of 4.01 sec in the last 12 months. Our return on equity was 30% and our equity ratio was at a very high level at 36%. And we completed four acquisitions during the first six months, contributing some 300 million in annual net sales. If we look at the outcome per division, we can note that most divisions have over the past 12 months improved their margins, except for the control division. And I will come back and take you through the outcome per division, where, for example, for electrify, we had a very stable and positive market situation driven by electrification and infrastructure investments. And most units within the division delivered strong results. although some entities were affected by lower volumes from the wind power industry, which is our biggest customer work, one of the biggest customer segments. One noteworthy thing is that within infrastructure, QD delivered a good quarter, but this time without any significant project deliveries. If you remember in our Q2 last year, we had some extra project deliveries in the order of 30 million with the high profitability that we didn't have in this quarter. So that explains some of them. You have to take that into consideration looking at the numbers. We also noted that our recent acquisition within Electrify Tycoflex had a very strong performance in the quarter and also the newest addition Letty had a strong start in the group. For the control division we have been focusing on improving the profitability and EBITDA improved by 24% and the EBITDA margin improved to 12.9 in the quarter compared to 10.4 in the same period last year. But we have a challenging market situation with a slowdown in demand for some businesses and seasonal effects for other business like for example Radenova with their radon measurement which is in a low season in the second quarter. We noted though we had a positive development for several businesses like Sterg Boys and Direktronik, Leteng and others. If we move on to TechSec, we noted, if you remember last year, we were quite acquisitive in this division, but not in these numbers. And we had a healthy improvement of EBITDA, some 20%. and the EBITDA margin improved to 18.5%. And we noted a very stable and favorable market situation for most business units, where ARKON and ISG Nordic and COBS performed quite well, but also our biggest acquisition ever, PCP and CWL also. had a good performance and made the greatest contribution to earnings. We also noted that there are recent acquisitions FICO and Doran Joiner in the UK delivered quite strong. Then for niche products, which is our, let's call it the broadest spectrum of products, had a very good performance. They had a good performance already last year, so quite tough comparables. And we noted an improvement of a bit of some 13%. close to record high EBITDA margin of 21.3%. And the market situation was in general quite stable. This is the division where we have noted maybe in the past three quarters some slowdown, but here it shows some growth once again. And we noted particularly good improvements for Asept, PST, Vapro, Westmatic and also Tormek. And last, international, but not the least, we had a very, very strong development for the international division, where the EBITDA improved by some 33%, and the beta margin improved to 16.6%. If you remember, this is the division that a few years back lagged behind the other divisions, but it's now closing in on the average performance. And it's particularly good performance in our marine businesses. The Libra in Norway, Tebul in Finland and ISG in Denmark, but also for Schmidt's Technik in Germany and E-Tech in the UK. So it's rather broad-based improvements. And also our recent acquisitions, Glova Rail in Denmark and SupplyPlus in the UK had a good development. and turning into the net sales per market segment we show here first the last year financial year but also the first six months and you can see that it's very stable in between the different market segments and I think I receive the question quite often about our exposure to the building and construction segment, particularly the residential, and it's between 1 and 2%. So it's very, very small and remains quite small. But I think the takeaway here is that it's very, very stable and rather broad exposure to very different market segments. So back to you, Jörgen.

Yeah, thank you. Thank you, Peter. And with that, we wrap up this sort of section around the quarter. I'd like to now talk about the future and what we have discussed. And of course, you have already realized that we surpassed the one billion here this summer. And we feel that we have been revisiting our goals and have been looking into that quite a lot here internally to discuss where we are up for next. And for those of you that have been with us for quite some years, you know that we have a long-term financial goals, two of them. One is that we should grow our profits by 15% per year, i.e. doubling in five years. And we also have the return on equity that should be about 25%. Those are our two financial goals that we have within the group. And of course, we've been revisiting those in the last couple of years with sort of reaching the 1 billion. We did that much faster than expected. And we feel that we now would like to raise the bar to 2 billion. And you can discuss how long that will take. The 15% is still there, so it should be within the five years. And given that we have it, a sort of new market situation. We have been a bit careful. So let's say it should be within five years, we should reach the two billion. We see that the opportunities for us and the platform we're working for out of is very strong. We've been talking quite a lot here now about the broader based sort of set up we have with many, many good business and a very strong portfolio of companies within the group. And we feel that we have a very good opportunities going forward and that the 2 billion is definitely doable within the five years that we've been talking about. We would like to go over and clarify strategies and financial goals. We will continue working with the five divisions with the clear growth ambitions within around sustainability and in areas where we see some underlying structural growth. thing we set up a few years back when we released the previous sort of setup we will continue we feel it's it's been very strong for us and we will continue to be that for a couple of more years going forward really and then we will increase the capacity and scope within the M&A and raise the bar there somewhat as well and we will also then focus on sustainability and that is something that all companies are doing and us definitely also we We have just recruited a sustainability officer here, and that is something that we will work even more with going forward, setting some clear targets and working with that, as we will discuss here a little bit later on. So let's dig into a few of these. I think that what we would like to build within Lagerkranz is this strong portfolio of very good companies. And I think we have a very strong portfolio today, and we would like to grow that even further. We are some 70 companies within the group at present, and with the growth that we expect in the near coming years, we will probably reach 100 or so within the five years. So that's what we're aiming for. We feel that we should have these very strong, mainly these very strong product companies that have good sort of opportunities, are very strong in their niches, but with some good growth opportunities for exports or by driving things in the sense of pruning and also working better in the market they're in, and thereby performing even better than they did when we acquired them. And that has been sort of something we've been working with and working very well for us in many instances. quite a number of success stories at the moment in our companies that we've acquired. And we will stick to the annual profit EBT growth of more than 15%. That has been with us for many years, even since the listing. And we feel it's a very strong one. And we would like to continue on that level. We plan to generate our cash internally for the acquisitions mainly. And therefore, we would like to have a pace that we feel that we can live with and that has been holding up for a longer period of time and that we feel is a good growth pace that we can have over the years. And we would think that at least one third of that will go organically and the rest through eight to 12 acquisitions per year. In the previous one, it was five to eight, so that there we raised the bar significantly. We feel that the setup with the divisions that we have currently is making us more broad-based, and we also have greater resources, and we can do that more in different markets and run more processes simultaneously, and also by that adding more acquisitions along the year. And so that is definitely doable. We also feel that we should stick to the return on equity. The 25% has been with us for many years and we still feel that that's a very doable level. We have been a little bit over, a little bit under different years, but here in the last couple of two, three years, we've been more in the neighborhood of 30%. So we have been above that and we plan to stay there, but we have decided also to keep the bar here for the time being. um we will in this in this ambitions we will continue building the five divisions we feel that we have a very broad based as said uh portfolio and we also feel that the the where we've where we're building is very sort of attractive in the sense that we have found some some segments uh that are have some underlying structural growth and where we see the the the green transition taking place within the electrification, for instance, within the control, where we more and more measure and control things from a distance. That is also something that is growing, an area which is growing. And also in the tech sec division, with the security and safety solutions, we also see some good underlying growth in that market. Also connected to that we would like to take better care of environment and people and everything. And that is driving the demand for safety and security products in different dimensions. And that is a good sector as well to be in. Within the niche products division, there we found quite a number of proprietary product companies building around that. We've done that in certain markets and building some clusters underneath in different sort of product segments or customer segments and building clusters around a couple of different sort of initiatives within the niche products division. Been working quite well for us for a number of years. Here we've seen even the best performance over a longer period and we can plan to continue to grow that going forward as well. And that sort of whole concept we're copying more and more into the international division where we do it more that concept we're taking abroad and setting up businesses in different and acquiring businesses in different markets, especially in Denmark. We're strong in Norway, but also in the UK where we are definitely growing quite significantly and lately with a number of acquisitions taking place there, but also some feet on the ground there working for us with building the international division. So we will continue building. We feel very satisfied with the divisions and the segments we're in. We will continue to build here and we will really go for and be even more clear around building around sustainable segments where we see some underlying structural growth, as we've pointed out many times. But we will be even more clear around that along the way. We talked about the different markets we're in and the broad-based strong portfolio companies we have. One way for you guys to understand that, for us to illustrate it, is to look at where we have our different companies. As you know, we do a lot of measuring, comparing and challenging our companies, listing them from the best to the worst in terms of different dimensions. Here we have the dimension of the return on sales, which is the net margin, the EBT margin, where we have the companies listed from the best to the worst. And for us that have been within the group for many years, we see that this has gradually improved over many years. We have never had this many companies in blue and so few companies in yellow and red looking back a few years. And it's good to see that we are climbing and that the sort of comparison between the companies are working for us. And you can see that the number of companies in the 20 and 15 to 20 categories have increased here since last year. So this, I think, proves the broad-based sort of strong portfolio that we have within the group. A number of very good companies that can do good things for us in the future. And that is, I think, very promising when we look forward. We're also raising the bar in terms of proprietary products. For those of you that have been with us for quite some years, I think in some 10 years ago or so, we set the bar for ourselves to aim for 75%. and that we reached here now last year or so. So we will continue growing that. We will work with the other parts as well, but we will along the way gradually become more and more dependent upon the proprietary products. We see within proprietary products that we have higher margins and also that we control the situation better ourselves when we have that type of setup in the companies. The company controls their markets, their products, their customers much better. And that means that when they do that in a good way, they also can earn better margins. And that also gives opportunities in terms of growth. Then you can set aside things to find growth in terms of new products, but also to go for new markets in terms of expectations. So we see a significant difference in performance when we look at the proprietary product type companies. And therefore, we would like to continue raising the bar here to the 85%. We will still acquire a few of the others as well. We will work with those. We feel that some of them are doing quite, but we can be scrutinized that even harder and be even more selective when we look at the companies that we have within and adding through acquisitions, also in value adding distribution, for instance. So there will be exceptions, but most of it will be around proprietary products as seen here. And we're raising the bar from 75 to 85% is the new goal that we're communicating. Along the way, we've also been very keen on keeping focus on value add. We are very profit driven and we would like to deliver shareholder value in terms of increased earnings per shares and good growth in earnings per shares along the way. And to do that, we feel that the margins and that we do the right type of business and generate the right type of cash flows is very, very important along the way. And here you can see our good trend in terms of the focus on value add and the gross margin that we have within the group. And it's good to see here now that we have an all time high here in the year to date. And we also had an all time high here in the last quarter. And we've seen some raw material prices coming down. We have seen some currency effects sort of working for us. But we've also done a very good job in keeping prices and raising prices in our companies. Less so now, maybe than a couple of years back, but also less needed when we see inflation rates coming down a little bit and we see that cost inflations especially in raw materials when we talk about metals and things like that, that we buy quite a lot of, has come down to some extent. Then we also see some improvements in terms of gross margins. So good to see that we have this good trend, and if you isolate Q2, then it's an even stronger number for those of you who would like to do that. In terms of acquisitions, we were also raising the bar. I talked about the 8 to 12 companies. I mean, this is really important to us to do more M&A. We feel that the M&A landscape is looking quite good. We feel that there are a number of good companies to look at. And we see that there's been reasonable multiples and reasonable price tags attached to that. So we are definitely looking at more acquisitions. We have been quite acquisitive here in the couple of last years here. And since July 2022, we've made 11 acquisitions that add about 735 million in terms of business volume. We have been even more selective a couple of instances here now lately, but we still feel that it's very good and we will keep up the pace. And we see some really good opportunities in our pipeline at present. So this is really promising. Along the way, looking at the log across towards the two billion, we also have we are increasing the capacity along the way within M&A. For those of you that are close to us, you know that we have added with some own resources in the UK and we have made some Z4 acquisitions there. And we also have been looking quite a lot into the Benelux with a couple of instances there and a couple of in Germany. So we are along the way also broadening our scope on the capacity in different sort of nearby markets that we have not been into previously. We have some companies that will come across through add-on acquisitions and similar to what we already have in this market. But along the way, we will increase the capacity and the number of deals that we conclude in these markets. We will probably also look at add-on acquisitions in other markets. We have been looking for instance in a couple of add-ons to companies that we already have in the US for instance. So we will along the way grow here but gradually and doing it very sort of deliberately but gradually along the way learning as we go into new markets. So that's also very promising when we look further down. We usually in this meeting also comment a little bit on the more recent acquisitions. So here is the latest one we did. We tried to put together these fact sheets on all of the companies that we acquire. This is a fairly small company in Norway, Deletti. But we've been working with them. We have been distributing their products in Sweden for some years through our Norvesco company. So we know the company quite well. And now it came up for sale and we feel that this is a very strong company, very established and very well thought through product range, doing their job for people working with this. And a very strong company that has been performing very well for many, many years. And we expect it to continue to do so. I think the company, we are putting some energy and some new structure maybe into the company. We will go more for exports. They're very established in Norway and also in Sweden. But I think there are more to do in Finland than in Denmark, for instance. So there are other markets that we can go for with this company as well. So this is a good start. Not very big, but still a good sort of performance and a good add-on to what we have within the electrified division. Here in the last six months, we've also concluded Globarail. Globarail is the market leader or a strong market player really in vacuum toilets for cranes. And this we communicated earlier. But it's also a good example of what type of companies we're looking for. Very niche-oriented, strong player in their market and with some excellent good numbers adding to what we have within the group with 25% you can see down there. And Global Rail has come into the group in a very good way. So performing well in the first four or five months, whatever it is. FIACO is another one. Here we're talking about the UK. A couple of companies here that we have acquired in the UK. Manufacturing fire doors hardware, as you can see up there. A very strong company and the door guard is very well established in the UK. And also with some exports, with some sales of 7 million English pounds. And a strong performance there as well. Picked up and overachieving the expectations really so far in the group. So it's been a strong start from the FIRECO team and the team working with that. We also acquired here another good example of companies that we would like is the Supply Plus. It's a product company with ladders and hose reels for firefighting. Very niche-oriented for emergency rescue services, especially in the UK, but also with some, I think it's around 30, 25, 30% exports outside of the UK into Central Europe, most of it. but also into the Nordic space. We see some of these ladders on fire engines and those types. A very niche-oriented product with high demands from customers. The firefighters really need these things to work and the quality issues here are very important. And this is a very good example of a company that we can bring into our group. You can see some good numbers down to the right, but here we also expect some even better improvements along the way. So it's looking promising to have that type of company within the group as well. So those were the companies and the acquisitions. Jone Peter Reistadler, The log accounts towards the 2 billion, we also have some sets on some high aspirations and good goals in terms of the sustainability. Jone Peter Reistadler, And and here's the framework we communicated already this spring, maybe maybe pete you have something you're responsible for this, and maybe you have something to add here or.

I think the key takeaway is that we're working actively with sustainability in four areas where we take into consideration sustainability factors when we do acquisitions. And we're, as many companies, we work quite actively with reducing our climate and environmental impact. And also important is we keep our employees motivated and it's top priority for us to have safe work uh conditions with no workplace accidents and we work also with with the diversity inclusion and equality in in the workplace and also that that we push our code of conduct and ensure our value chain is with high standard of ethics so that's our four main areas And we're preparing for CSRD that will come into play in about a year for us or starting in April next year.

Yeah. And I also think it's worth mentioning that we have been working quite a lot with the CO2 emissions here in the last six months or so. We had that for our MD conference this year. That was a key theme to discuss CO2 emissions on a company by company level. to make everyone understand the importance, but also understand what's driving it and understand their own situation and be able to take measures along the way to really make changes in terms of CO2 emissions. So that has been a key theme for us for quite some time and now recently even more around the CO2 emissions. Well, thank you for that. We move on here. Just to sum up the log accounts towards the 2 billion. I think what we tried to do and the ambitions we have there think it's good to see that we are raising the bar we are really like to keep the trajectory and keep the pace that we've had we like to keep it up we would like to build a strong group with some 100 companies or so within the next few years we are at 70 currently with with a lot of leading product companies in the different niches And we feel that what we've been doing for some years now has been working very well for us and also for our development along the way. We were aiming for 85% proprietary products. We were aiming for some 5% organic growth. and some good EBITDA margins. You can see how it looked in each of the divisions. We are above this number currently, but we're so well above the 15% EBITDA margin as we would like to be and are currently, so that will continue driving margins. But we also don't want to limit the scope too much by setting the EBITDA margin too high. We still would like to have a lot to look at and see companies that we feel can fit into the group. But the beta margins will definitely be higher than the 15%. We will still run things in a very decentralized way with the company level is still the most important. So each company by company and working very independently in each of the companies, trying to encourage people and empower people to do good things for us out in the different companies. But we will also build some increased capacity when it comes to different things, especially M&A on a divisional level. We have been doing that for a couple of years now, but they're a little bit left to be down there. But otherwise, we will get the divisions fully operational to really go and be a strong driver of the divisions' growth and profitability development over time. We will along the way increase our geographical scope. So the UK is definitely on our map currently and has been growing quite significantly in the last couple of years. We will in the next phase look for Germany, Benelux, Poland and the Baltics. We are in those markets already, but we will definitely increase our capacity and also ambitions in those markets as well to find even better or greater extent of growth opportunities. We still feel that there's a lot to look at and especially now I think that the M&A market looks quite promising also in the Nordics. So we feel very happy with where we are currently, but along the way we will also increase the scope gradually along the way. So to sum up, I think we posted another very strong quarter. We feel that the growth in profits were around 20%. And you can see the EPS growth here is around 23%. So very strong numbers continue from us. We feel that the market has been holding up better than we expected earlier on. Even though the organic growth was slightly down in the quarter, we still feel that it's holding up very well for us. And better than we expected maybe six months ago. So with that, I think we round off and open up for questions.

If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Max Bako from SEB. Please go ahead.

Yes, good morning, Jorgen and Peter. Three questions from my side, if that's all right. First off, could you perhaps provide us with the growth split on EBITDA level, organic growth effects and acquisitions?

Yeah, you take the one at the time? No. We feel that that number is a bit misleading. It is lower than it has been, but we also last year had quite a lot of extra profit coming in from the more of the of the project-based sales that we had within electronics. So this time we're not giving out that number. We think that the total growth is very good. Most of it is coming from M&A, but it's still at a good level and definitely when we compare it to the extra volume we had last year.

Okay, understood. And during the quarter here, did you see, I mean, adjusted for seasonal effects month by month, but did you see any changes to demand? Was it quite stable throughout? And perhaps if you can comment on October also, what you have seen so far?

As we have communicated, I think that it's holding up very well for us. We have not seen a deterioration in September or late here in the quarter or recently. It's been holding up very well, we think, in the same sort of pace that we've had before.

Perfect. And the last one also, as you stated yourself, I mean, you have raised prices quite significantly during the last two years, and now we start to see that material prices are coming down. Have you seen any tendencies among customers that they are pushing you to decrease your prices?

Yeah, they always do that, right? It's a discussion you have all the time with customers on how to elaborate on that and how to change prices. I think the raw materials prices has come down maybe for nine, 12 months, for the last nine, 12 months, right? So the discussion has been going on for quite some time. And I think that to some extent we have also lowered prices in a couple of instances. But we also raised prices in other instances. So I don't think the price effect now is very significant at all, really. We don't measure that, as I think you're aware of. So we can't measure that with the structure we have. But I think that we see in some companies that we have actually been lowering prices a little bit, but not to the extent where we see low raw materials. You can see the gross margins picking up. So it's still that we're holding up very well. I don't think the price effect is very significant at the moment, if any at all.

Okay, yeah, understood. That was all from me for the moment. Thank you very much.

Thank you.

The next question comes from Carl Bockvist from ABG Sundal Collier. Please go ahead.

Thank you. Good morning. My first one is on the... Let's say next five year plan with the M&A opportunities there. Are there any divisions in particular or regions where you see particularly good potential to do this step up to eight to 12 acquisitions?

I think we are working with it in a very broad, that also in a very broad based sense. We're expecting some maybe two acquisitions per division. That's the way we would like to look at it. And it's up to really the divisional teams to find those attractive M&A deals to be made each year to the multiple sort of ranges that we have defined. So that's the way we look at it. I think there are some good opportunities if we look into the electrification sector, that there are some good opportunities there. But we also feel that others are also aiming for that sector. So maybe we also feel some increased competition there. We have been within control. We've been looking at a few cases. Some of the cases are more software related. We are still interested in that, but then we also see price ranges pick up a little bit and therefore we have we have not concluded a few deals there so there are some ups and downs in different markets but generally speaking I think there are good opportunities and a balanced set of opportunities among between the divisions.

Understood and then on end market dynamics you did mention that the wind power segment for example which was a relatively important area for Electrify was a bit weaker but are there any other end markets here worth commenting that are of bigger importance to the group such as power electricity distribution infrastructure and transport?

Yeah we have those dependencies and that's where I think it's holding up better than expected. I think the electrification we have been discussing and I think generally in society also we've been discussing that we need to in invest quite a lot in our power grid. And people have been discussing quite a lot about sort of the approval processes around that in society in general. But I think it is, as we see it, it is picking up a little bit along the way. And there are some significant investments ahead of us in the coming three to five years. So it is picking up to the better. Looking at other sectors, so I think that the sort of segments we're in, the segments we are in, is working in our favor at the moment.

Understood. And my final question is, and apologies for being a bit blunt here, but so if I understand it correctly, you decided to report organic earnings during a period where you felt you had extra profit growth and now you don't disclose it. And then my question is just, for sales in the divisions you have for five straight quarters reported organic growth and not any longer so my question is just why have you not stopped disclosing organic sales on a divisional level?

Basically for the same reason we had a discussion around that internally and for the same reason really that we see it's the project-based sales that we have within electrification is is sort of skewing the numbers and making people draw the wrong conclusion. That's why we decided to do that. But generally speaking, the organic growth has been slowing down. We see a better uptake and a better sort of development in terms of order intake, as we have commented along the way. Looking at the divisional split, the organic growth was slightly stronger within the international division, while it was held back for these reasons in other divisions. But generally speaking, we don't see that the international is doing very much better than anyone else. And then we see that it's more sort of broad based and we think it's holding up. And therefore, I think that sort of the aggregated number gives you a good picture of what's happening.

OK, understood. Thank you.

The next question comes from Nicholas from Red Eye. Please go ahead.

Hi, Jörgen and Peter.

Hi there.

Thanks for the presentation. I have a question with regards to PicoFlex, which you bought in the winter last year. It seems like the business is continuing to perform really well in a cyclical downturn for the telecom industry. Can you elaborate a bit on the reasons for why it's managing so well in this environment?

I'm not sure I am fully aware of all the details there, but my understanding is that they are positioned with their products. Their products are very well sort of established. They've been with the company for many years, and they're very niche-oriented. It's a product company. They have very sort of niche-oriented products. that has a strong market at the moment. So there is a good demand for these specific products, even though others are struggling a bit more. That is one key thing. The other key thing is that they're running some bigger projects around globally, and they're working especially with one in the US that is also holding up the numbers or are doing well for them here in this period. Not huge, but still for that company a good sort of platform to work from. I think that Tycoflex, as you may be suggesting, is that Tycoflex is holding up better than the industry in general. But they've been well positioned and doing it very well. Whether the company is failing you, so whether that will be the same situation in three years, I don't know really. But so far it's been good.

Okay, perfect. And then another question on that you're raising the target for proprietary products from 75% to 85%. I just wonder, will that mainly come from acquisitions or also because of organic growth in the existing units?

It will be both, because we see that companies with proprietary products have a higher growth rate than the distributing type companies. So it will come to some extent organically, but most of it will be through acquisitions.

Okay, my last question is with regards to the control division, which has struggled for the last few quarters. But now you come into the seasonally strong third and fourth quarters. I mean... What's your take on the coming two quarters for the division?

I think we have been through the companies. We have a new division head there since a year and a half now. And he's been working quite a lot through the different companies, making some changes and really finding new growth paths for many of the companies. I think a lot of that work is done now. So now we expect it to pick up and also find that the right type of acquisitions there. We also feel that there are some big contributors in that division. One is the RADANOVA, and RADANOVA has had a stronger start to the season this year than last year. So that's a bit promising. And we also have the Presimeter, which is very, very important to the division. And then it's about sort of how the development of the aluminum market will will develop and and then also what would happen to electricity prices in europe so that there are there are quite a number of external factors going into the presbytery situation uh so that's a that's a bit of a hard hard hard thing to judge really yeah i understand that okay but it looks better in control along the way i think okay perfect thank you

As a reminder, if you wish to ask a question, please dial star 5 on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Let's see how we do this now then. We have a couple of long questions. written here. Let's see. Peter, have you looked into these?

Yes, but maybe we should take them offline.

Let's take them individually with the people that posted those questions. I think that will do. Thank you everyone for listening in. Thank you for uh yeah being being patient with us today was a bit longer today then but we wanted to communicate our new ambitions and our new two billion goal and hopefully that will uh i think we're all set to have a number of good years ahead of us so thank you very much for listening in thank you