Storskogen Group AB (publ)

Hi and welcome to Stor Skogs presentation of our third quarter report. My name is Daniel Kaplan, I'm the CEO and co-founder and together with me presenting today is Lena Glader, CFO. So welcome, let's turn to the first page directly into Q3 highlights. In short, it was a business as usual quarter in line with our expectations. We focused on cash flows and I think we saw some good results from that. Sales 8.3 billion, organic net sales growth minus 2% with an adjusted EBITDA of 726. Organic EBITDA growth of minus 9%, and the EBITDA margin 8.7 slightly below last year. Year to date however margin wise we're at 9.4 still better than last year. So looking at some key events and figures we could see that we had significant cash flow from operating activities at 584 million as compared to 204 million last year. A significant improvement of course in all our hard work delivering strong cash flows. And this means of course that year to date we have 1.3 billion in cash flow from operating activities. And this is of course due to the, partly due to the strong cash conversion. We of course communicate a target of 70%. We're currently the last 12 months at 95%. So gradually, well producing some strong cash flows. Interest bearing debt we reduced that with almost 900 million in the quarter and the interest bearing net debt within 190. We did five divestments and two add-on acquisitions. So those were the key events in the period. Moving on a little bit deeper into net sales in EBITDA. As you can see sales quite decent more or less on par with previous years despite the fact that we have done some divestments. The margin however in the quarter has been decreased primarily driven by trade. As you know we have headwinds both with regard to currency effect but also simply weak demand. To some extent we could see that as well coming in from services affecting margin as well. And we had a slow July but a much better August and September. Looking ahead I think we're looking forward towards a seasonally strong Q4. As you might know Q1 and Q3 are weaker quarters and Q2 and Q4 are stronger quarters in our seasonality. So moving on to next page. Every quarter we will try to do one deep dive into some business aspects for relevant reasons. We're looking at cash conversion this quarter the business insight section. So looking at last year this time after Q2 2022 we had like a 32% cash conversion the last 12 rolling. And as you can see we've gradually increased that as we have increased our focus and our various activity programs have come into effect and currently at 95%. In the long term of course we think that we gravitate back to towards 70% which is our long-term healthy target. But that said I think there's lots more to do within the reducing networking capital going forward. Because even though we've been quite successful we're still not really there yet. Q3 as a rule is a quarter where we build up networking capital to be able to sell goods in the fourth quarter. That's the seasonality from a cash flow perspective but that said so we're expecting strong cash flows in Q4. That said still not reaching our internal targets so we have lots more to do in the year to come as well to continue to drive strong cash flows. Looking how we do this in practice I mean it's in theory it's not rocket science in practice it's hard work and some rocket science as well. It's inventory reduction accounts payable improvements and proactive accounts receivable work. We do this of course setting up on an overall level we're setting incentives and KPIs where we measure and drive these behaviors to do this. More specifically looking at for example inventory reduction within trade that means categorizing your inventory, setting targets following up, of course understanding the service levels appreciated by customers so that you don't have things in stock that you don't need to have basically. Another part is of course the fact that we have reduced supply chain disruptions which enables us to well I think we're far off from the previous -in-time methodology that you could previously use. It's still not functioning as well but still better and better so you can be tighter and tighter in your inventory planning. When it comes to inventory reduction when it comes to work in progress for industrial companies it's all about designing the goods in the right way understanding the supply chain as well. And of course you can all kinds of automated tools for inventory management. Looking at accounts payable it's you understand your supplier relationships you get deeper trust you understand when to pay and how to pay and what to pay and then being stringent and disciplined and over time that delivers better accounts payable. Looking at accounts receivable especially important I would say in potential tough times so that you reduce losses from insolvent customers you just have to be stringent and on your toes and being systematic in how you invoice when you invoice who you invoice at what time and also your terms of course towards your customers. Through business intelligent dashboards and new routines you become more efficient. Two examples LNS and CronLift LNS in industry producing automation equipment the peripheral automation equipment you can see tremendous work there reducing their net working capital with 138 million year on year reducing working capital to net sales with nine percentage points. A tremendous journey for them. CronLift is a significantly smaller company but having done even more impressive work in that respect you can see improving cash conversion tremendously. They actually already from the start had a cash conversion of 173 percent previously so they actually went up from strong levels to more than 300 percent this year and they released another 48 million in networking capital. CronLift which is a distribution company distributing mini cranes across Europe, Middle East and Africa basically. So hard work still lots of things to do here especially industry has some work to do and hopefully we will see some of our trade companies well delivering in the fourth quarter. So moving ahead and this of course translates into strong cash flows and here you can see the cash flow from operating utilities the last 12 months how it's developed moving from 1 billion in Q3 2022 to the current 3.2 billion almost. Of course even if you 2 billion which is of course a significant amount to use to reduce debt or acquire companies and in other ways create value for the shareholders. So how has the quarter looked like then for our different business areas? Number one is services. If you're looking at overall in the year you can see a significant margin recovery year to date 9.5 percent compared to 8.8 previous years. That said in the third quarter a relatively tough quarter affected by both by companies exposed to construction or early stages of construction and our HR and competence vertical has also at least one company has suffered they're exposed to low it's basically a job matching company and of course they have been exposed to lower unemployment and dysfunctional markets basically. Looking at net sales minus 8 percent primarily due to divestitures organic net sales growth minus 2 percent organic average growth minus 6 percent in the quarter. I think looking ahead I think we can see a solid performance in the infrastructure digital service and installation. I think we see even in looking ahead a strong Q4 seasonally stronger and an overall solid demand across all the verticals and most companies but of course the challenges remain in in companies exposed to new construction as well in some parts of the HR and competence vertical. So looking at trade this is the business area with with that have really had a tough time with weak consumer confidence the high interest rates and the weak Swedish corona has really been tough on some of the trade companies. Sales 2.3 billion so they're still actually keeping sales up gaining market share very confidently actually utilizing this this market sentiment by being more forward looking and forward leaning. So I think they're doing great work from a strategic perspective and I think it would be a lot stronger on the other side of this business cycle. The organic net sales growth minus 3 percent EBITDA 188 million with an organic EBITDA growth of minus 21 percent of course and this is of course a combination of currency headwinds and the weak demand. So it's not particularly surprising at the bottom of the business cycle for our trade companies. However we do see that some of the de-stocking we've seen in the value chains with our customers it's improving that so we do see some light in the tunnel we will see how long that but people of course are cautious when it comes to restocking as well. Adjusted EBITDA market in 8 percent and year to date that's 8.7 as compared to 10.3 so a tough time for our trade companies looking forward to Q4 which is a seasonally stronger quarter. Health and beauty I should say is of course the star of the trade business area at the moment very resilience and strong performance. Okay industry well industry is doing quite well it's they've had a fantastic year and a half you might say and demand is normalizing but it's still quite decent decent order books but of course decreasing from these high levels. Net sales 3.4 billion the organic sales growth 0 percent EBITDA 350 million with a minus 1 percent organic EBITDA growth so still quite decent I would say. The margins somewhat lower in the quarter but still ahead of last year year to date. Products performing well margins expanding and I think the underlying trends of reshoring green transition and demand for automation it continues to be supportive and of course some of the big projects in the north of Sweden really support our industry and some of our services companies as well giving us significant orders and providing demand. So that's on industry looking at transactions we have done a few strategic divestments we are of course reviewing our portfolio to sell off low performers and companies that we don't really believe are part of our long-term future for various reasons. We're doing some few selective add-on acquisitions and acquisitions looking at the right column here you can see that we've sold off companies for .1.8 billion 85 million in sales or rather billion sales and you can see that that's a minus or approximately four percent margin of the divested companies whereas the companies we have acquired with 583 million in annual sales have about 20 percent EBITDA margin so you can see some of our strategic intention here gradually shifting the portfolio to the financial trades that we want to see with regard to margins and long-term growth and of course one of the effects of this is of course that we free up capital to reduce leverage but it's actually not the primary objective with the divestitures. So that's on the transactions. Lena.

Thank you Daniel. So on the following page here we have the financial summary for the third quarter let's have a closer look at numbers. Net sales growth was as Daniel said minus one percent which is impacted by an organic growth in the quarter of around minus two divested companies affecting another minus three percent whereas acquisitions contributed one percent and currency translation contributed plus three percent to sales growth. Cost of goods sold as percent of sales is fairly unchanged as you see here and so is selling an admin or sgna expenses also unchanged as percent of sales which means that it is other operating income and expenses that explain the lower EBITS and I will as well as items affecting net financial comparability of course. I will come back to that on the next slide. We have an increase in net financial items largely due of course to the higher base rates compared to a year ago since our interest bearing debt in absolute terms has been reduced by 2.5 billion swedish krona from last year. In the net financial items we also have currency effects that stand for 73 million swedish krona increase where interest costs are 121 million swedish krona higher compared to the quarter last year. Return on equity was 6.1 percent obviously also impacted by the financial costs. Return on capital employed was 8.6 percent. Net of goodwill return on capital employed was 19.3 percent so in other words the return of the underlying businesses is still around the 20 percent mark. Earnings per share was 0.09 before and 0.08 swedish krona after dilution although this is twice as high as in the second quarter it is notably affected by the net financial items leading to a -on-year decrease. We'll have a closer look at the earnings bridge here on the following page still sticking to the third quarter. We try to illustrate here what items affect the underlying profit in the third quarter versus the third quarter last year obviously. Here shown as profit before tax or PBT. If we disregard non-operational items affecting comparability and effects items and other non-operational items in the financial net these are the gray light gray bars here the comparable profit before tax was 443 million in Q3 last year and 230 million in Q3 this year these are the two dark blue bars on this chart. Reported earnings were in other words favorably impacted reported earnings were fairly impacted by non-recurring items last year but adversely impacted by non-recurring items this year. Gross profit held up well as I said previously despite the inflationary environment and so did sales and admin expenses being flat approximately flat -on-year. So what did affect profits seeing the gross profit and sales and admin expenses were pretty much in line. Well first we have 62 million SEC explained by lower other income in Q3 this year compared to Q3 last year and the vast majority of this 62 million is due to that the third quarter last year had large revenue fairly large revenue from third party relating to a company which was divested earlier this year so this revenue is not included in Q3 2023. Second net interest expenses have increased of course as mentioned earlier due to significantly higher market rates. The steboar is up by more than three percentage points compared to Q3 last year and of course higher coupon on the recently refinanced bond that we did in June this year. We've now however hedged around a quarter of our loans to fixed rates in order to stabilize this somewhat but given that rates may be higher for longer further reducing the absolute debt level will as you understand continue to be a top priority. That was about the third quarter now let's have a look at the -to-date financials on this page. -to-date net sales growth was a plus 11% to 27 billion Suishkona impacted by organic growth of minus two percent in the -to-date period divestments affecting growth by minus one percent acquisitions contributing plus 11 percent and currency translation contributing another plus three percent. When it comes to cost of goods sold and SG&A expenses the same goes for the nine-month period as for the isolated third quarter discussed previously. These costs are kept fairly stable or actually somewhat lower as percent of sales during the -to-date period. Profit before tax was about 1 billion 77 million Suishkona for the period a decrease of 32 percent due to the higher base rates affecting net financials again. Earnings per share for the nine-month period was 0.40 sec compared to 0.64 for the same period last year. And over to the cash flow statement for the third quarter our focus on cash flow is yielding significant results as shown on this page. Cash flow from operating activities after interest and tax was 584 million in the third quarter which is a year on year increase of 380 million. Changing working capital contributed minus six million so pretty flat in the quarter in a quarter when we normally would build inventories. Reduced inventories and increased in payables of items contributing slightly positively to cash flow or to operating capital while increased receivables continue contributed slightly negatively but no large amounts here. Cash effects from M&A activities including earnals and minority payments was plus 65 million for the third quarter and this 65 million consists of proceeds from divestments of 454 million. This includes a partial payment related to the dextre divestment in the second quarter as well as the divestments that were actually completed in the third quarter of course and paid earnouts and minority purchases of 389 million sec in the third quarter. Earnouts will be substantially lower going forward but we expect to continue to buy back minorities also in Q4 and next year but please note that having smaller minorities actually impacts the earnings per share positively. Given that we've paid down loans substantially during Q3 using cash flow and cash at bank the total cash balance was reduced to 1.4 billion sec but total available liquidity is still high at 8.2 billion if we include unutilized credit facilities. Cash conversion as Daniel mentioned before strong at 85 percent in Q3 and 95 percent for the LTM period. Let's have a closer look at the cash flow bridge here. On this page we illustrate our cash flows for the last 12 month period. Please note that the previous page related to Q3 only. Cash flow from operating activities was 3.2 as Daniel said before during the LTM period of this. A capex was 637 million approximately 1.7 percent of sales which is a normal state and IFRS leasing which is of course not defined as operating according to IFRS but in reality it is pretty operational. That was 557 million or 1.5 percent of sales so that means that free cash flow after leasing was 2 billion as Daniel mentioned for the last 12 months which is a -on-year increase of 2 billion. M&A activities including minorities amounted to a total of minus 70 million for the last 12 month period and earn-off payments related to previous year's acquisitions were 633 million during this 12 month period but will as I said earlier be lower going forward. This means that cash flow before dividends and change in loans amounted to 1.3 billion for this period. Over to the next page we illustrate cash conversion which is pretty much the same as Daniel showed on his scene slide there with a group target of 70 percent marked as the dotted line on this page. The rolling 12 month cash conversion has of course improved every quarter now from Q2 last year thanks to good work by our subsidiaries in reducing inventories and receivables. Over the last 12 month period working capital has been reduced by 412 million and not including effects from divestments. Lower inventories and receivables contribute by 570 million to this whereas payables are also somewhat lower which affects cash flow negatively by around minus 160 million. But the work is by no means finished we believe that there will still be further positive effects in the coming quarter. And then a look at the balance sheet on the following page here we show social and groups condensed balance sheet for the end of Q3 23 the end of Q3 22 the end of last year and the change from the end of last year. Our total balance sheet is 3% lighter year to date and this is largely due to divestments as well as working capital focus which has enabled us to lower our debt and strengthen our balance sheet. Seeing here also that equity has increased by 5% year to date while debt and net debt have been reduced substantially both interest bearing and non-interest bearing and I will show this closer at the next page where we have total debt and leverage. Development since Q3 quarter on quarter Q3 last year is what you see here on this page. So compared to a year ago interest bearing debt is 2.5 billion Swedish krona lower while contingent considerations meaning earnouts and minority liabilities are 650 million Swedish krona lower year on year. Compared to last quarter so Q2 interest bearing debt is 900 million lower while contingent considerations are 375 million Swedish krona lower. We have used our cash flows as shown on the previous page this was 1.3 billion Swedish krona as well as cash at bank to do this. We have significant cash and cash equivalents at the end Q3 still totaling 1.6 billion which in addition to cash at bank or 1.4 this also includes derivative instruments as well as cash in transit related to divestments at the very end of Q3 that were paid at the very beginning of Q4 and these two total 210 million. We will continue to use existing cash and expected good cash flow in the fourth quarter to further reduce debt. However due to negative organic profit growth during the period as Daniel showed the reduction in net debt was not enough to bring leverage down. Interest bearing net debt to EBITDA was in other words still up 2.6 times at the end of the quarter. Nonetheless our ambition remains to reduce not only gross and net debt but also to reduce the leverage going forward. That was it from me over to you again Daniel.

Thank you Lena. So in conclusion I think we're still working hard on our strategic priorities. The primary one is of course to generate strong cash flows so that we can reduce leverage over time. I think we're seeing some great progress there even though we're not finished yet. I think we have lots more to do there. We have done some we're continuing our strategic review. We've done a few divestments in the quarter and of course in these challenging times from a macro perspective we're focusing on margin and we're actually quite happy in the business unit level with our ability to gain market share and position ourselves strongly going forward. Looking ahead in Q4 we know we're looking forward to a seasonally stronger quarter of course both from sales and the cash flow perspective. So thank you very much and let's get into questions.

If you wish to ask a question please dial start at five on your telephone keypad. To enter the queue if you wish to withdraw your question please dial start five again on your telephone keypad. The next question comes from Carl Ragnestam from Nordea. Please go ahead. Hi Carl.

Hi good morning it's Carl from Nordea. A few questions firstly looking into cash flows inevitably quite good in the quarter but as you said debt or leverage remains sequentially unchanged of course due to continued consideration option payments. Could you remind us whether you will have any significant payouts coming here in Q4 and Q1 related to continued considerations or minority options and are you still as convinced as you were in Q2 that you'll sort of reach the lower end of your leverage target year end here?

Well I can I can hi there Carl I can answer the first question. There will be let's see now a minority liability payment or purchase rather of I think around 100 million could be expected for Q4. Small amounts in Q1 typically and then we would have some earn out payments in due in Q2 if everything goes well which means that the underlying companies are performing as planned in the second quarter so smaller amounts but there will still be some earn out payments in the second quarter likely.

Yeah and coming back to your second question we do feel confident that we will generate strong cash flows in the fourth quarter you know positioning us in a good way to reduce leverage. If we will reach the lower end of the lower end of the spectrum I think that's remains to be seen it certainly is more sticky than we had anticipated on the leverage but I think we were expecting some headway in Q4 but it is of course a challenge to reach the lower end but we don't know yet that remains to be seen.

I will correct my previous answer and say that we also expect some earn out payments or minority payments in the first quarter as well even though we typically don't do that I believe we would have some smaller amounts paid also in Q1.

Are we talking a couple of tens of millions SEC or what's the smaller amount is it in that range I guess?

I think it's more than a hundred million. Okay. But then again bear in mind that as I said before buying back minorities would also be positive for EPS since we would own a larger part of the net profit. Sure

okay very good and also I mean on leverage here in terms of capital allocation you on one hand want to reduce leverage but you also continue to do some acquisitions and some divestitures of course but how should we look at capital allocation going forward? So if you look at your for instance free cash loan next 12 months and what portion with visibility you have today will be allocated towards acquisitions and also on that note you have an ALOI currently either from acquisitions or divestitures.

So coming back to your question I think looking at this year we have done two types of acquisitions one has been platform acquisitions which has been two and the rest have been add-on acquisitions. The platform acquisitions have actually contributed to lowering our leverage this accounts for both those transactions so those have had a positive effect on the leverage if you're talking about physics cafe and AC electrical. Those that have actually had a negative effect on leverage is the add-on acquisitions and of course on each individual acquisition has been very small but on aggregate they have you know basically compounded into affecting our leverage somewhat. That said they are enabling our portfolio companies to obtain stronger market positions and increase profitability over time as well so of course they are of a strategic nature as such. Going forward I think we will be given the fact that it has proven to be more reduced leverage than we anticipated partly due to the negative organic growth. I think we will be even more restrictive going forward when it comes to acquisitions. I mean during the capital markets day we basically communicated that we were going to reduce M&A pays not that we would halt it. I think we will be very restrictive going forward so more or less with the exception of some very small add-on acquisitions maybe which is more or less related to CapEx or something like that you can most mention that. I think we will really focus cash flow here to reduce leverage as our primary objective.

Do you have any ongoing divestitures here or are you done with the sort of low hanging fruits with the installation companies for instance and also the painting companies?

I think we will continuously regardless of business cycle always review our portfolio and looking at divesting both performers and companies not aligned with our long-term strategy so to say. So there will always basically be discussions with their about to that. I think that said one should anticipate that you know the market the M&A market at the moment is relatively slow. I think multiples are more or less the same actually for these companies but a lot fewer buyers and a lot fewer companies for sale as well both on the demand and the supply side. So any type of process takes longer to put it like that. So it will be a continuous process looking at the divestitures. However I think we really we do you know we always get bids on some of our companies continuously because we are in lots of different sectors and geographies so we always have companies that are of industrial interest to various types of buyers. However we have decided you know basically we feel very comfortable in our cash flow generation. So we are avoiding if you will fire sales or selling of companies previously but we stick to selling companies that we don't really think fit the portfolio long term. So I think sacrificing a few fast deals and basically doing the deals both on divestitures and acquisitions that we really really want to do. But of course the next year will be more related to divestitures but if that might answer.

Oh it's very clear yeah and the final one from my side is a bit on pricing. We see obviously raw materials coming down, logistics cost as well. So could you perhaps shed some light on how you work with pricing currently? Should we expect you to have pricing power enough to keep up your prices and probably benefit from various costs coming down or should we see a bit of deflation in your numbers or do we actually see it currently here in the organic sales growth?

I think we don't see a general trend of costs coming down. I think we do have even though I would say the entire inflationary circle so to say certainly grinding to a halt. I think that's as you can see in the macro but individual costs for individual items can of course or services can of course decrease. I think we have a decent pricing power. I think we have managed to push on price increases to to a large extent to customers. That said for example within trade when volumes go down and you have fixed costs even if you have a decent margin upticks it still results in the total margin going down. So I think it is of course always a struggle to keep the margins up when demand is relatively weak for those companies that have suffered that. But I mean for us diversified portfolio in services most of our companies are performing quite well in industry. It's more normalized demand situation still performing most of the companies performing well. So I think we will be seeing a decent decent margin development but of course it depends a little bit on the demand situation for next year.

I might add to that as well when speaking of margins and protecting margins that trade this is area trade still have quite substantial negative impact on margins from the stronger dollar against the Swedish Kronor the weaker Swedish Kronor rather in the third quarter. We said I believe in the in Q2 that this was approximately one percentage point of the EBITDA margin. Q3 slightly less but still 0.7 or something like that percentage point actually of the trade margin is currency. So had the SEC been stable compared to last year then margins would have been 0.7 percentage points higher.

I should say it's not only about price it's also about cost. I think we are for example within trade we have conducted significant cost reduction programs in a number of our companies that will come into play gradually during next year hopefully contribute to some margin protection there. And I think we have contingency planning for every company depending on how they develop to keep costs tight in this environment.

Very clear thank you so much. Thank you Koel.

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

Hi Johan.

Good morning everyone. Just two quick questions. You talked about Daniel a bit more sticky depth perhaps that than you had anticipated in the beginning of the year. Obviously underlying earnings impact your ability to reduce that but just focusing on working capital are you able to see any sort of structural improvements in the group looking in the rear view mirror also if you could put into sort of in the coming one two years what are your ambitions your updated ambitions in terms of structurally reducing working capital as percentage of sales?

I mean very good question on that. If you're coming to the networking capital question I think we have seen some significant process progress in our companies and also with ourselves in how we introduce KPIs and incentives into the companies and work hard on educating the companies on how to and I think we can see those improvements. That said we had internal targets that you know basically were higher than we have achieved so far. I think Q4 of normally I mean Q3 is a time where you build inventory so that you can sell items in this fourth quarter but so I think we will make some additional headway in the fourth quarter but that said not all the way so we haven't really produced new targets for next year. I think that's a part of our budget process actually but I think coming back I think there's some significant some significant work that remains to be done when it comes to cash flow or networking capital Can

I add to that thanks? Just a quick reminder the companies that we've sold so far this year are pretty much within the installation business in services that tie up a lot less working capital typically than trade and industry so this of course skews the whole networking capital to sales a bit given that these companies also did have quite high turnover that is and low relatively low working capital.

But I think when we've defined and set the bottom up targets for each and every business unit I think we can see what we will have for internal target on networking capital for next year but I think we know for sure that there are some things to do here especially within industry to be transparent I think they could do more when it comes to releasing networking capital.

All right I heard Elena you talked about hedging interest rates a quarter of the portfolio was that right? What is your strategy here going forward for your debt portfolio and the duration approximately for those hedges?

Yeah the strategy for the debt portfolio is to reduce it and to reduce interest costs gradually going forward one way to do this is obviously the large work has been we've done a great work in reducing the absolute debt I mean that's the most important 2.5 billion and interest bearing is lower compared to a year ago also trying to stabilize the interest rate by fixing now as I said a quarter of the loans to between three and five years rates which would reduce it somewhat somewhat going forward. We are looking at now I guess rates have come down a little bit more the past week so we are looking at doing some further transactions actually in the Q4 during Q4 and yeah but then the strategies as I believe Daniel mentioned also is to even out the maturities to have a longer average debt maturity profile it's now around I think 26 months but we are gradually paying down the shorter term debt and now we issued a longer term bond in June which also impacts that so yeah we're working on all fronts here both interest rates and absolute numbers and maturing.

Thanks thank you Joanne.

As a reminder if you wish to ask a question please dial star five on your telephone keypad. The next question comes from Carl Johan Bonnevier from DNB markets please go ahead.

Yes good morning Daniel and Lena. Good move on the free cash flow and I just want to pick your brain on the on the two billion that you now report LTM adjusting for the for the leasing effect. What kind of building blocks do you see for movement in that over maybe the next 12 months? Would you expect it to be a sequentially much higher number or is this a good level that you

have? To what two billion were you referring was it the

the the LTM after the LTM

free cash flow after

leasing?

Well I can maybe start there we're not giving any guidance on profit development for the next year so that would be up to your own guess or estimate what that would be. CAPEX has been maintained at a very stable level the past years between 1.5 and 2. Now it's been at 1.7 this year to sales. Leasing is also really stable a little bit lower than CAPEX 1.5 maybe to sales so those two you can you can calculate on and then it of course also has to do with the interest costs that we now said we are working towards lowering those going forward hoping that Q3 was the peak point. We are also continuing to work on working capital as you just said Daniel in Q4 we expect to see a good improvement there and we will continue to work next year so I don't know those are the building blocks maybe that we can talk about.

Yeah but I think I mean the cash flows and I think we are confident that we will generate strong cash flows next year. I think that's that's the key of course for us to manage our deleveraging strategy basically.

But let's say like this taking away unforeseen events and these kind of things that we might see I guess with the business mix you have and the revenue size and then the profitability size we're talking about when you're talking about the RTM numbers and so on it would suggest that that we should see another yeah maybe three to five hundred million upside in that kind of cash flow numbers that's totally unrealistic.

I think we cannot comment on that question I don't know what our investor relation says here in the room.

Yeah that's fine that's fine so that's fine. Yes Elena could you just remind me what kind of refinancing needs do you have over the next 12 months as well please?

Actually none.

We've

got no maturities in this year and none in 2024. We do have the next bond maturing in December 2025 and we are continuing to work on the bank loans obviously so those are the ones that we are now paying down as well so no near term maturities.

Excellent thank you very much and all the best out there. Thank you Kjell. Thanks.

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

So thank you for listening in today have a wonderful day in the grey Swedish weather and any questions don't hesitate to give us a call. Thank you very much.

Thank you.