Storskogen Group AB (publ)

Hi and welcome to Storskogen and our presentation of the second quarter. My name is Daniel Kaplan, CEO and co-founder of Storskogen and together with me today, Lena Glader, CFO. So let's get into it directly. First a brief recap of Storskogen. We're an international group of businesses, 37 billion in sales, EBITDA of 3.5 billion. Our mission is to empower our business to realize their full potential. We believe that we are uniquely positioned to identify, acquire and develop market leaders with sustainable business models with an infinite ownership horizon. And what we offer our investors is profitable growth and resilience. Resilience through managed risk, through diversification. The reason we have this is that we have services, trade and industry, three business areas. Services headed by Peter Ahlgren making up 32% of our turnover, divided upon seven verticals. Trade headed by Christo Hansson with four verticals making up 28% of our turnover. And finally industry headed by Fridik Bergegård, three verticals and 40% of our turnovers. So diving into the second quarter. It's characterized by strong cash flows from operations. We're quite happy that we protected our margins despite the challenging environment. Net sales, almost 9.5 billion, which is a 4% increase. The adjusted EBITDA, 922 million, it's a 5% increase. And they adjusted EBITDA margin .7% as compared to 9.7 last year in the second quarter. The organic net sales growth minus 2% and the organic EBITDA growth of minus 5%. So looking at our key events, this quarter we had a success relations of 2 billion in bonds and repurchase of the outstanding 24 bond of 3 billion. So we finally got an average maturity, now death maturity profile of 30 months. So that's satisfactory to us. We're quite happy that we managed to protect our margins in the second quarter. And looking at the first half year, we have actually improved our margin from 9% to 9.7%. So that's also satisfactory. Cash flow, strong cash flows, about 850 million approximately. A significant improvement compared to last year. And this is partly due to the fact that we have had a strong cash conversion of 105% in the second quarter. We did four acquisitions, out of which one, AC Electric was the platinum acquisitions, the other smaller add-on acquisitions. And we also concluded four divestments, including Dextre Group, we go into that later on. So moving ahead, looking at our strategic priorities and how we're delivering on those. Almost a year ago we had a capital markets day and we basically stated six short-term strategic priorities. The first one, most important potentially, is to improve cash flows and refocus on cash flows. And we have to say that we're quite happy now that with three consecutive strong cash flow quarters, we're quite happy about that development. We still have some way to go. We have lots of work and potential left. So even though we're not guiding any results or things like that for the second half of the year, we do believe that we continue to have strong cash flows in the second half of the year. Protect profitability. Well, 2022 was characterized by strong margin pressures, basically with currency movements and all kinds of headwinds. And I think these have continued this year, but in a new form, primarily through weakening demand. But that said, we still have improved our margins. So we're also quite happy with that development. Even though, of course, over a business cycle, we're guiding towards 10%. In a weak business cycle, in theory, we would be happy with 9.7%. But of course, we wouldn't put this in green until we are at 10% or higher. So working towards the goal, but making headway, so to say. Leverage. Well, we peaked at .7% interest-bearing net debt through EBTA. We still have some work to do. The ambition remains that by the end of the year, we will reduce our leverage to the lower end of our 2 to 3 spectrum. And the way to do that, of course, is the strong cash flow, the protective possibilities, but also the reduced M&A pace. We are doing strategic add-ons and very few select acquisitions, but very few. We are complementing that with some strategic divestments, divesting low performers and companies not aligned with our ESG or strategic agenda, including margins, for example. And finally, we have reduced central cost as well, from .1% of sales to .7% of sales. And in fact, that's a 36% cost reduction as a percentage of sales. So it's actually a significant reduction in our central costs compared to our sales. So long story short, we believe that we are making great progress on our strategic priorities and with a strong ambition that this will result in reduced leverage by the end of the year. But most importantly, moving to the next page, is of course that we create value for our companies and in the end, producing profits and resilience into our portfolio. The case study today we've chosen is Veebe Group. This is a company we bought in 2021 in Q2. This was a carve-out from Schneider Electric. It's a leading company with regard to cable ladders, cable trays and match trays. They have some global really strong brands and operations in six countries, 280 employees. So it's a significant company seen from the eyes of Storchbogen. The reason why we bought it at the right price was of course that this was a carve-out and carve-outs have risks and complexities that makes it unsuitable for all types of buyers. But we do feel confident in our operational capability to help a company become so to say an independent entity. So what we have done since the acquisitions is that we have created an operational platform to work together with Patrick and the management, an independent organization, a separate sales organization, an independent systems architecture supporting the business and the entire infrastructure from procurement to sales as an independent company. Of course, they have been excluded from the Schneider Electric purchasing agreement, etc. But on the other hand, Storchbogen by now has more than 60 frame agreements supplying and assisting Veeba to achieve strong margins even going forward. And in addition to that, we've invested in the business. We have done an acquisition creating a further strengthened product portfolio. And the result of this in the case of Veeba has been a significant rise in sales, 27% uptick in sales, but also stronger margins. So we're very happy with the performance of Veeba currently with a turnover of around a billion Swedish kronor in the last 12 months. So this showcases our operational capabilities when it comes to how to create values, but also to create deals that might not be suitable for all types of buyers. So looking forward to continue to support Veeba going forward. Back to the quarter and our performance net sales and EVITA margin. We're quite happy actually that we've managed to protect our margin in the quarter through the diversified portfolio. This has been strengthened by the strong performance of services, but trade is of course suffering from the recession, especially in Sweden and the weak Swedish kronor, especially towards the dollar that affects the margins in trade adversely. And continued focus on margins in this challenging environment. Looking at the market development in general, well we do see a solid demand in industry and services. We can see that the cost inflation that we could see accelerate during last year has stabilized. And many of the supply chain disruptions have also gradually been reduced, which makes life easier for us and our companies with margin consequences, positive margin consequences of course. That said, we have a weak consumer demand in all industries related to consumer and durable goods and also companies early in the construction cycle are suffering from weaker demands. Looking at the transaction market, it's a decent deal flow actually from Storhågen's perspective, a very strong deal flow from many markets and many different industries. Multiples have stabilized and I think good companies always remains the same with regard to prices. And from our perspective, there are not that many bargains just because there is a low turn on the other hand, when we have done a few exits now we have achieved decent multiples on those as well. Of course, transaction processes take a little bit longer and this is because it's a more complex environment. But for us that suits us quite well because we're currently focusing on de-levering, so we're doing less acquisitions, being very selective on what cases we are choosing at the moment, prioritizing small add-ons that support our current market positions and a few, very few platform acquisitions. So, looking at how we are performing against our financial targets, well one, and these are the two main points that we are working on. We are working on the business cycle, assuming access to capital. Looking at the organic EBITDA growth, we're guiding towards real GDP plus one to two percentage points, we're currently at minus five percent year to date. Not particularly surprising, but of course not something that we're happy with even though we believe over a business cycle that we are on target. Looking at the adjusted EBITDA growth including acquisitions, we hope to guide it on line with historical levels. However, without bringing new capital, we have a 25 percent growth year to date. I think that's satisfactory. I think we will see slower growth going forward as we have reduced our M&A pace. Looking at the adjusted EBITDA margin over time, 10 percent, I think in this case I think we are on target, 9.7 percent so far this year in a recession environment. I think that's decent, but of course, like I mentioned before, we're not satisfied until we've beaten that 10 percent target. Cash conversion, our strategic priority for the year, we're really over delivering here. 87 percent is last 12 months and hope to continue on that journey to deliver strong cash flows. Helping us with our final goal to reduce leverage, we are in the middle of our span 2 to 3 in net debt, interest-bearing net debt through EBITDA. But that said, we want to be in the lower range and we will not stop until we're there basically. So, looking at our three business areas, we have services who made a very strong quarter, significant margin improvement, and a decent organic EBITDA growth of 80 percent, or a strong EBITDA growth actually this year. Some of the verticals that had a tough time last year, installation and infrastructure, are actually really improving both margins and sales. And even some of our other verticals like digital services, logistics, etc. continue to deliver. Whereas companies with exposure to new construction, especially engineering services, they have a weakened demand. We know for a fact that Q3 is a weaker quarter for services due to holidays, etc. But we do see a solid demand in most areas and have more visibility in this quarter for the second half of the year in a positive manner when it comes to services. So, that's on the services side. Looking at trade, well, trade is certainly having a tough time. They have an organic sales growth of minus three percent due to that, but an organic EBITDA growth of minus 22 percent. And this is of course due to soft demand with consumer-related durable goods, e-commerce. It's not always consistent. A few of our companies do perform strongly. And from a vertical perspective, health and beauty remains strong. But we believe that the tough times will continue in the second half of the year. There's certainly a meeting, significant headwind with the weak Swedish pruna towards the dollar. But I think what they have done quite excellently is to retain their market positions, even strengthen the market positions. They're doing a lot of hard work, including cost-cutting programs to protect profitability. And they've been really good at releasing working capital, getting their inventory down. So, I think trade has been the great contributor in the second quarter to our strong cash flows. We're happy about that. Looking at the industry, they had an extraordinary Q1, still a strong but more normalized second quarter. We see a somewhat softer demand side in the autumn, but still from high levels and still a stable development for industry. We had a sales growth of nine percent in Q2 and a margin expansion. So, I think that's a positive thing, of course. Industrial technology is performing really well. We saw increased competition in automation and price pressure. But nevertheless, you have these underlying trends, reshoring, ground transition, and a great demand for automation solutions. So, they're all underlying the strong performance of industry. So, going into Q3, we do see the trends of the second quarter to continue. Looking at our transactions, like we said previously, a reduced M&A pace, mainly doing some small atom acquisitions. One platform acquisition, AC Electrical. Looking at the divestments, we have done a few, Dextre Group being the biggest. These, of course, could be low performers or they could be companies not aligned with our overall strategy. And, of course, if you look closely at these divestments that we've done, they have a turnover of about 1.2 billion. And they contributed with 41 million in EBITDA. So, from a margin perspective, that's below, well, it's closer to three percent or three and a half percent. So, that kind of shows a little bit why, the thinking behind why we've done those divestitures. So, Lena, financial performance.

Well, thank you, Daniel. Over to the numbers here. So, let's have a closer look at the Q2 numbers. First, repeating what Daniel just said, Q2 net sales grew by 4 percent to 9.2 billion. This growth is driven by acquisitions, as you understand, since the organic sales growth was slightly negative during the quarter. And I'll come back to that in a little while. For the last 12-month period, net sales were 36.9 billion and Performa, which is now adjusted for acquired and divested companies. So, divested companies are removed for the entire 12-month period here, whereas acquired companies are included for the entire 12-month period. So, that leaves us with 36.1 billion in Performa turnover. Adjusted EBITDA grew by 5 percent -on-year to 922 with the last 12-month period delivering 3.5 billion in EBITDA and Performa again 3.6. This corresponds to an EBITDA margin of 9.7 percent for the quarter, same level as Q2 last year. For the first six months period, however, EBITDA margin in fact improved substantially from 9.0 to 9.7 percent -on-year. This reflects in numbers, obviously, the operational efficiency improvements that you just mentioned, Daniel, price increases that have been successful as well as good performance overall in industry and services. Besides the softer demand in trade, as just mentioned, the weak Swedish Krona obviously also continued to put pressure on margin for the business area trade compared to Q2 last year, in fact, the net effect of this weak Swedish Krona against the dollar pressed the trade margin by as much as one percentage point, in fact. The group operations, HQ costs, as we call them, were maintained at the same level as Q1, significantly lower compared to last year, 68 million Swedish Krona compared to 97 a year ago, representing 0.7 percent of sales, which is, I think, unchanged for the past few quarters. EBITDA adjustments amount to a total of 101 million for the quarter, where approximately half is a revaluation of earn-out and half is net capital loss on divestments. We have recorded both capital gains and capital losses on these divestments. The net is negative 46 million. Net financial items were pretty high in Q2, 357 million versus only minus 26 million in Q2 last year. So there's a big delta here, which, of course, impacts the net results and especially the net results at development versus last year by quite a bit. However, the actual interest costs are unchanged from Q1 at roughly 220 million Swedish Krona. This is equivalent to an interest rate of 6.2 on the average interest-bearing debt during the quarter. Other items in the net financials are non-recurring costs related to this early redemption of the 24 bond that you just mentioned as well, Daniel. And then we have revaluation and effects for the parts that are un-hatched in the internal loans that are negative 84 in this quarter. So therefore mentioned net adjustments and non-recurring financial items affect net results by all in all a negative 236 million or 0.14 Swedish Krona per share, which, of course, impacts the reported EPS, which was 0.04 for the quarters, 0.18 if we had adjusted for added back these non-recurring items. And this, of course, also impacted the return on equity, which was 7.7 percent compared to 9.2 in Q2 last year. However, return on capital employed increased from 9.6 percent to 10.2 percent. Return on capital employed net of cash was in fact 11.8 and net of goodwill 24.2 percent. So this is a good improvement from 18.5 percent a year ago, which reflects a healthy return on capital employed in the subsidiaries, of course. We had cash flow from operating activities as in the cash flow statement of 852 million Swedish Krona in Q2, which is an improvement of the all in all 517 million from last year, from Q2 last year, with 2.8 billion Swedish Krona in cash flow from operating activities during the last 12 month period. Cash conversion was 105 percent in Q2, a significant improvement from last year as well, and 87 percent for the last 12 month period. So I'll come back to both cash conversion and leverage separately in a little while. Let's spend some time on looking at the organic sales growth in the meanwhile. So on this slide, we show organic sales growth per quarter. In the isolated Q2, this was minus 6 percent. As you can see on this graph, sales growth has been strong the past years, driven by volume and price. But in the negative territory, as I just said in Q2, we have all in all been successful in increasing prices also in the second quarter, but volume growth in particularly in trade, notably the home and living vertical, has impacted group organic growth negatively. On the next page, we're going back to the cash flow here. We're showing operating cash flow now here defined as the EBITDA less change in networking capital less capex and cash conversion, which is the same divided by over EBITDA. So essentially how much cash is generated out of the operating activities. On this graph, we show the last 12 month period, the rolling 12 month in the bars here. Operating cash flow, LTM, as I said in Q2, was 3.9 billion. And cash flow has, as you can see, improved significantly quarter by quarter over the past four quarters on the back of substantial work with reducing working capital especially. In Q2, cash flow was positively affected by reduced inventories and higher payables. And but overall receivables were fairly neutral here. Cash flow improvements from Q2 last year are significant, showing through in cash conversion, which was 105 percent in the isolated quarter compared to 44 percent a year ago. So now we are significantly or a bit above the 70 percent target again, which is as we planned. So capex to say 1.8 percent in Q2, pretty much in line with previous periods. And then over to net debt and leverage on the following on the next slide. Showing here is the interest bearing net debt and interest bearing net debt to EBITDA leverage. Interest bearing net debt was 11.9 billion at the end of the second quarter, which is down from 12.1 at the end of Q1. And in fact, so that's a decrease of 230 million Swedish kronor during the quarter. In fact, with an unchanged or stable Euro rate, the decrease would have been 100 million more. But leverage was 2.6 or actually just below 2.6 at the end of the quarter, which is the same as last quarter, where it was a tad above 2.6. In fact, which is within our target range. But as I think Daniel made it pretty clear here just now, we have an ambition to reduce this further by year end. The denominator here, the RTMEBDA, so that's a performer EBDA in Q2 was 4.6 billion versus 4.7 in Q1. So this, of course, affects leverage as well. Liquidity wise, our total available liquidity amounts to 8.9 billion, 2 billion in cash and 7 in unutilized credit facilities. Regarding the overall financing strategy, we've continued to work towards extending the overall maturity profile to arrive at a more diversified debt portfolio and to reduce the absolute debt. This is particularly relevant, of course, for the current interest rate environment. And as part of this focus, we extended our bank loans by one year in Q1 and in Q2. We continued the work by refinancing the 24, the bond maturing in 24, reducing its size by a billion and rolling to of the 3 billion over to a new bond maturing in 2027. This means that we now have no debt maturities in 2023 or 2024. And in fact, when looking at the gross interest bearing debt, we in fact reduced the gross interest bearing debt by a billion since year end. So we are working towards lowering the gross debt, so not only focusing on the net debt. And during the quarter, we reduced the gross debt by half a billion. And then finally, looking at this, showing this diversification effect in a nice illustration here. We have a diversified business portfolio, obviously, of businesses that we operate in the three business areas. And on this page, we illustrate the diversification by showing the EBITDA margin of our business areas over the past eight quarters. The dotted line there that you see is the group, the Storch Guggen Group EBITDA margin. And you can see here that this is actually a net of the HQ headquarters. So this is the business areas only. And you see here obviously that EBITDA margin from our businesses, the dotted line here is much more stable on a group level, which is obviously the diversification effect when the business areas are combined. And in Q2, you see that trade and services are moving up, in fact, sequentially, with industries on a strong margin level, but slightly lower in Q2 than in Q1 here. And this is pretty much the expected seasonal pattern for the quarter. I think that's it from me, so I will hand the word over back to you, Daniel.

Thanks, Jena. So in conclusion, some key takeaways. I think we're continuing to deliver on our strategic priorities. A strong cash flow in the quarter, retained margin in the last six months, significant margin increase, actually. Seasonally strong performance in services, showcasing our diversification in the portfolio. Looking at our maturity profile, it's been extended first by extending our loans in the first quarter, and we are now refinancing the 2024 bonds with a smaller 20th issue due in 2027, so a successful refinancing as well. Looking forward, we're still continuing our operational focus, protecting our margins, focusing on cash flow, and of course we want to continue our work with our balance sheets, reducing leverage going forward. So thank you very much for listening in, and now it's time for questions.

Please go ahead.

Good morning, it's Karl-Erik from Nordea. A couple of questions. Firstly, looking at the negative organic growth in the quarter, is it by any chance possible to give some flavor on the organic development month by month? I guess we've heard quite a few companies reporting a weak start to the quarter. Have you experienced the same, or is it fairly flatish throughout the quarter?

No, it was certainly... Hi Karl, by the way. So, I mean, you're absolutely right. I think in this, the culprit, so to say, was April, which was a weak month at the start of the quarter, whereas we could actually see a much better May and June, which was actually quite strong. Was

it strong in the sense that you had positive organic growth in June, or is it still slightly negative, would you say?

I don't want to comment really on that level, but I'm not sure how to respond. We're

not giving any monthly organic growth numbers.

But I think April had fewer work days, and there were all kinds of aspects there that made it a less profitable month.

Okay, very good. And could you perhaps shed some light on the order intake situation in services and industry, where I guess orders make more sense, I guess? And also, if you could give maybe some comments on the length or size of the backlogs you have currently in both of these segments.

I'll try to respond to those that I can. Looking at services, we do see a relatively steady inflow order intake. Like I mentioned, the visibility for the second half of the year is much better now in a positive way. So we do feel confident in services. Looking at industry, we do have a decent order intake, but this is from very high levels. So as compared to previous levels, it's still a softening of that with a slight decrease. And of course, transparency in industry is a lot less. So we're not as bullish in industry as we are in services. So somewhat weaker order intake in industry, but still decent levels.

And in services, I guess especially in the construction-related parts of it, we've heard that the pricing landscape could be defined as quite fierce, I guess. And with obviously the risk of taking on less profitable projects, which you could suffer from for quite some time, as lead times are a bit longer. Could you give any sort of flavor on how you monitor project calculations, maybe change your incentive structure in that segment, or maybe tightening the thresholds on what projects you could take on at various levels?

I mean, you're certainly correct that if in those companies that you would see a decline in order intake, that some managers could get nervous and start to take on projects that are not really that profitable. In most of our companies, we haven't seen that situation. In fact, we are retaining the margins or even increasing margins in services. And I think we actually see that demand is quite good in most of our companies, as illustrated by the second quarter in services with an improved margin. And I think that trend actually continues in the third quarter, with the exception of a few companies, of course. As a rule, most of our companies keep a close watch on costs. And to the extent that those are movable costs, so to say, they would refrain from taking on profitable projects. So it's not really something that we see yet. But we're monitoring closely and of course in every board meeting, we're looking at utilization rates and the upcoming projects, if they're significant, having a discussion with management. But they, of course, need to run their business as good as they can.

Okay, very good. And the final one from my side is on working capital. We saw the LTM level of 16.5, it looks like at least. Are you still confident in reaching 15% by year end? And is it fair to assume that industry and services will be the main driver of the release, if you are still convinced that you will reach the 15%?

I would want to say that we will reach the 15%, but we are certainly aiming for it. We do see that we will have strong cash flows. I just don't want to commit to exact levels. And I think we have good progress in services. We have very strong progress in trade. Industry has had quite a strong situation in the first half of the year. So they have had more difficulties obtaining their, reaching their working capital targets. But well, I know that they're working hard to achieve them, you might say. So a bit of a fuzzy answer there, but we do know that we will have strong cash flows, but I wouldn't want to commit to the 15%. That's more of an internal target for us.

Okay, very good. That's all for me. Thank you.

The next question comes from Johan Dahl from Danske Bank. Please go ahead.

Good morning, everyone. Just a few questions from my side. Firstly, on the balance sheet, I think you've been fairly clear on your ambition to reach the lower end of this indebtedness interval. It just seems as if, you know, when we look at the cash flow, operating cash flow clearly improves, but the, you know, the metrics net debt EBITDA doesn't really budge. Net debt in absolute numbers doesn't really budge. I was just thinking, looking in the second half here, you know, what sort of measures are you taking to actually take down the debt? Is it a stop for acquisition? Is it further divestments? Because the denominator in that measure seems to be going down slightly if we look at EBITDA on a rolling 12-month basis. Just to understand, you know, what measures you're taking to actually get that net debt down in absolute numbers.

Should I start? And then Daniel comes in regarding the technical aspects of that. First of all, the net debt was reduced during the quarter and has been reduced during the first half of the year. In the second quarter, just as a reminder, we did pay dividends to our shareholders and part of that to minority shareholders as well. We did have some earn up payments as well in Q2, but those will obviously also have in Q3. And then there were some acquisitions, but also some divestments in the second quarter. But overall, as I said, I mean, net debt was reduced during the quarter. And going forward, I mean, the operating cash flow is strong, as I said, and the M&A pace is significantly slower than previously. There is still a lot to do in terms of reducing working capital and releasing cash from operations. And as you just mentioned, especially within the business area, all business areas trade is continuing to work well. Services is tying up less than the other business areas. And we do expect to see positive results from industry as well for the second half of the year. So we are pretty confident and our ambition is clear to reduce the net debt to EBITDA towards the lower end during the second half of the year by year. And without going into specifics about specific plans, but it has mainly to do with operating cash flow as we've seen before.

But have you changed scope in a way in terms of looking at the potential divestments? You talked about the share of sales that are not really performing as you have planned. But has there been any, can you give us any update there or any changes?

No, I think we don't have any changed scope as such. We're still looking at low performers and we're also looking at the companies not aligned with our long term strategic agenda. Apart from ESG issues, that could entail that they have margins that would make, I mean, Dextre is an example where it's a roll up case. If we would continue to buy painters at a 4% margin, that would be detrimental to our overall margin target. So that's not something we would want to do. So in the Dextre case, it was quite clear that we were not the best owner going forward if that roll up case was going to be continued. So we're looking at when we're reviewing our portfolio, those are the things that we're looking for. Will they fulfill our targets for organic growth, for resilience, cyclicality, margins, etc. So those are our main focuses. So when we're looking at divestitures going forward, not only this year, but I think continuously in the long term. We will gradually look at our, we will always look at our portfolios also. But there is no change in scope from such a perspective. But we do feel like, again, as I said, very confident in our ability to generate strong cash flow. So it's more a question of when that will take more effect in our leverage ratio.

Hi,

I hear you. Secondly, on the industry business area, it just seems as if organic earnings in the second quarter was down some 25%. Can you walk us through what contributed to that and what potentially you take away from that going into the second half here?

Without commenting on the organic growth number, I mean, the industry actually had a decent, a decent second quarter.

No, the 25% is not the number we have for industries about that week. Organic EBITDA growth. Yeah,

so they actually had a decent second quarter. I mean, comparables were really tough because they had a very strong second quarter last year. But all in all, they're actually performing quite nicely. Most of the companies, there is some weakness in some of the consumer facing or construction facing companies. But overall, we do see a decent performance by industry. So I guess that would be the negative organic EBITDA growth in the second quarter, even though it's not 25%. It's more related to comparables rather than their actual performance from and our expectations on their performance.

I just look at the first quarter, you know, you had that 25% organic EBITDA growth in Q1 and then it was a zero for the first six months. So that's just how I looked at it. But you've also talked about strong order books, etc. But if you're happy with the performance, I hear you. I'll get back in line. Thanks.

Great.

Thanks.

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

Yes, good morning, Daniel and Lena. Lena, just a couple more questions on the financials, please, if I may. You alluded to that net interest in Q2 was on a similar level as in Q1. Do you see that with the kind of duration you have on the portfolio and the refinancing you have done being a good guidance also for the second half of this year given the current environment?

Well, if we're talking about the rate, I mean, you can calculate that backwards with the 221 in net interest costs over the average interest bearing that including these things, of course, here, you would arrive at .2% in Q2. Now, this was not including obviously the new bond, which is a bit more costly. And also, I believe that we have had some price as a rate hikes during the quarter, which may not have fallen through completely in that. So you would expect to have a higher interest interest rate as a percentage point in Q3 and Q4. However, as you point out, I mean, we've reduced the debt as well by a billion during the first half of the year. So in absolute numbers, the debt is obviously lower now, which offsets the interest rate hike. So I don't know if that gives you an answer. We don't have any guidance specifically for Q3.

No, no, it's good color. Good color. Thank you very much. And looking at the move with the maturity moved from on the 3 billion bond from 24 to 27, what's your average maturity of your financing for the moment?

Yeah, well, that's a good question. It's 30, 3-0 months at the end of Q2. This average maturity, which is actually for more than 40, closer to 50 percent better or extended compared to the end of last year. So there's all this work that we've done with the extensions and this bond, even though the bond is slightly more pricey, has had a significantly positive effect on the overall maturity, which gives us plenty of room to to wait out the market and negotiate new refinancing as we need them. But there is no urgent need to do that right now.

And looking at the portfolio, have you done any move between the variable part and the fixed part of the financing?

Unfortunately, there is no significant such move now during the quarter. So there is there is some part that is hedged. It is approximately I think it's approximately 10 percent of the loan or the debt, including the bonds that is hedged with I think it's like four years as of now. But the rest is variable. So let's keep our fingers crossed that the rate hike will snap them out eventually.

I agree to that. Thank you very much and all the best out there.

Great.

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

So thank you all for listening in. I wish you a wonderful day. And if you have any questions going forward, please contact Andreas or myself and Lena and we'll try to answer it offline. All right. Great. Take care. Bye.

Bye.