Alligo AB (publ) (ALLIGOB) Earnings Call Transcript & Summary

Hello, and welcome to Alligo Audiocast Teleconference for Q4 2021. [Operator Instructions] Today, I'm pleased to present our first speaker, CEO, Clein Johansson Ullenvik. Please go ahead.

Thank you. Welcome to Alligo year-end report, Alligo, formerly known as Momentum Group. As you know, there was a name change during December last year from Momentum Group to Alligo, so Alligo is a listed company today. If we change to Slide 2, today, you will not only hear from me, the CEO, you will -- I have 2 brilliant colleagues and very good presenters, Irene Wisenborn Bellander, CFO; and Ulf Lilius, Business Area Manager, Component & Services. What you have in front of you, the report is a fairly complex product. It, to the greatest extent, comprises only the Alligo the business area, the remaining business due to IFRS 5 and also in some comparison with 2020, Swedol was included the second calendar quarter, which makes some comparisons also difficult to make. And we also changed fiscal year during 2020. So this is a really, really complex product to say the least. And even if we have to do this like I said, due to IFRS 5, of course, there is a presentation of Component & Services, which Ulf will give in a few minutes. So if we turn to Slide 3, a quick overview of Alligo. We are a leading player in workwear, personal protection, tools and supplies. We have a mission that we make companies work. We make our customer's company work. We are based on an efficient and sustainable business model. And if you look at the picture, it's Alligo. We all belong to Alligo. That's our strategy. It's our core values, it's our mission and vision, but we have different concept brands where we meet the customers, Tools, Swedol, Univern and Grolls. So different concept brands, but we are all the same family. If we turn to Page 4, we look at how 2021 turned out. We are an approximately SEK 8.5 billion turnover business. As you can see, the majority of the turnover is from Sweden. EBITA, SEK 645 million, an even greater extent from Sweden, as you can see. And we have a fair share of own brands, 20% of our sales. Some really strong brands being Björnkläder, Gesto, Univern, but also in the tools and supply side with AmPro, Award and so forth. And you can see the number of stores are actually less than last time since we -- as we have communicated in our integration project, co-locate our shops. That's why the number of shops are reducing just according to the plan. If we turn to Page 5, you can see the agenda for today. And you have already reported will not be an extensive presentation where we repeat the report letter by letter. We will make a few highlights where we think it could be of interest for you. If we turn to Page 6, a few bullets of Q4. The activities around this split into separate listed companies, proceeds according to plan. There's not much more we can communicate there. You will see, in due course, more communication coming out, but it's going as planned. Name change, as I mentioned, the change of management was in November as a preparation for this split. One acquisition in Norway and one divestment of Gigant as we talked about last quarter, so that is no news. We will move the logistics operation from Alingsås to Örebro. We'll come back to that quickly. We had a good sales during the quarter, 10% increase, but let me underline and highlight that 2021 was a very specific year. We had actually 2 winter sales. So to a great extent, the sales you normally have in January and February, we -- due to good weather -- for us, good weather, we had it also in November and December. So normally, you use weather effects and mix effects as explanations for a bad performance, we use that as an explanation for a good performance. So this cold weather was beneficial for us. And we could also, in that case, sell high-margin products. So we got 2 good things combining each other. So the EBITDA -- EBITA, sorry, up 54%, which is a good jump, and cash flow, as it should be, strong in Q4. If we turn to Page 7, this you have seen, but we want to be a fully integrated company with as few legal entities as possible. Having our backbone, our scalable platform, we focus on professional customers, and our priority is to be strong facing the end customer. As you know, we say that because we don't use our private label to go in other channels. You will not find our own products in any of our competitors' shops or websites or anything else. We have consumables. We are not focusing on OEM business, and service is an important part of what we offer our customers. And we would meet the customers where the customers want to meet us, if it's digitally, if it's through shops or through external sales or whatever, we should be best in all different channels. If we turn to Page 8, we see a map of how we look in the Nordics, and we have Tools and Grolls in Finland, Swedol, Tools and Grolls in Sweden and in Norway, we have closed the brand Swedol. So that's Tools and Univern left. So the store integration is continuing as planned. We had 5 left at New Year's, then we merged our 2 shops in my home country, [ Eskilstuna ] in January. So now we have 4 shops left to integrate. The implementation of the Nordic assortment is continuing, but as we've communicated earlier, delayed due to the transport situation and other difficulties in the sourcing area. Coordination of logistics will happen during first half of this year. Pricing system, Sweden will be changed first half of this year. And ERP change, Sweden, will happen first half of this year. All those 3 being extremely important, potentially dangerous activities if we don't have it under good control, which we believe we have, but we're doing 3 major changes more or less in parallel in the first half of 2022. But we have our common values. We have our strategy, everything is common. We all belong to the family Alligo. We have established new financial and nonfinancial targets. So if we skip to Page 9, those are the 4 financial targets. Organic growth should exceed 5% per year over a business cycle. And on top of that, our aim is to do acquisitions, which should make us arrive at above 5%. EBITA margin above 10% over a business cycle. The ratio of operational liabilities in relation to EBITDA should be less than 3x and also the dividend in a span between 30% to 50%. If it is room for that, it could be our financial position, cash flow, other growth opportunities that we're pursuing are else-wise, but during normal conditions, we should be somewhere between 30% to 50%. If we turn to Page 10, so the equity story, 5 reasons to invest in Alligo. We believe we have a market which is attractive with resilient customer segments. We believe in our scalable platform. It's a good foundation for organic growth and also to dock-in future acquisitions. We have a third reason. Own brands, which give us a very good competitiveness and also good profitability. Fourth, we believe in sustainability, of course, and that's an integrated part of our business. And we have great responsibility there as we have such a high share of private label. So we can, to a great extent, ensure that ourselves. And five, we are a leader in the consolidation of the Nordic markets. We have, for a period now, of course, been a bit introvert when we have been dealing with integration projects, a few acquisitions we've been doing, but we'd like to be more active in consolidation of the Nordic market. Very good. So if we skip to Page 12, and I hand over to Irene.

Thank you. As Clein mentioned, we ended the year strong, favored by unusually cold winter weather with increased sales of high-margin products and continued recovery from COVID-19. Revenue increased 10% to reach SEK 2.5 billion in the quarter and then increased by 5% for the full year. Organic growth in local currency in the quarter reached 7%, driven by good sales development from all markets and corresponding 4% for the full year. We had a positive currency impact in the quarter following movements in NOK. Meanwhile, the currency impact was close to 0 on a full year basis. EBITA increased by 54% to SEK 250 million in the quarter, corresponding to an EBITA margin of 10.2%. And for the reporting period, EBITA increased by 40% like-for-like. The improved profit is driven by a favorable product mix in combination with integration synergies and good effect of implemented price adjustments. The intensive integration project between Tools and Swedol is running according to plan and SEK 26 million of the restructuring reserve has been released in Q4 and corresponding SEK 47 million for the full year. Turning to Slide 13, and let's have a closer look at the development in each market. The main part of the EBITA improvement in the quarter and for the full year is related to the Swedish business, was partly contracted by weak development in Finnish business. We have had a stable organic growth in Sweden related to small and mid-size companies. However, we still have challenges in the industrial segment. The EBITA margin improvement is related to synergies improving the gross margin, but also decreasing the cost base. Moreover, we have been able to implement price increases to offset supplier price increases and higher costs for freight. In Norway, we are not back to the 2019 sales level and the oil and gas segment remains weak. We had a slight positive EBITA margin development and the integration between Tools and Swedol has created synergies to our assortment mix. We have a positive sales development in Finland, but deteriorating EBITA. The weak profits are a result of continued unfavorable development in the customer mix and weak impact of the price increases implemented in an inflationary economy. However, there are some entities in our Finnish business with strong profitability, and we will be focused going forward on increasing the portion of small and mid-size companies together with improved sales and assortment management. Let me turn to cash flow, Slide 14, please. And note that the cash flow analysis is related to the total business and not only the remaining business. Cash flow from operating activities in the fourth quarter amounted to SEK 512 million, which was a slight improvement compared to last year, but impacted by continued buildup of inventories, which has been the case throughout the year. The inventory buildup is driven by sales growth and the ongoing assortment merger between Tools and Swedol, but also increased share of own brands, implying higher volume purchase orders in store. In addition to this, we're focused to ensure high product availability despite the disruptions in the global supply chain. The right-hand graph shows the development in liquidity and the starting figure is your expectation of SEK 375 million at the end of Q4 last year, having the cash flow from operations, deducting the impact of investing activities, the majority of which is M&A related in the Component & Services, but also related to store in terms of warehouse reductions and IT-related investments in Alligo. Finally, there are financing activities, which are primarily related to amortization of leasing liabilities, but also includes amortization of the current term loan and the dividend paid to shareholders, bringing us to the period end of SEK 345 million of liquidity account. Slide 15, please. The group's net debt amounted to SEK 1.3 billion at the end of the quarter and the ratio of net debt-to-EBITDA amounted to a multiple of 1.7. On top of our liquidity at hand, we had unutilized credit facilities at the end of the quarter of just over SEK 1 billion. And the funding and capital structure are expected to be in line with the existing structure even after a separate listing of Component & Services. In summary, our strong financial position means that we can continue to invest in organic growth and take advantage of potential good M&A opportunities in our markets. Handing it over to Ulf and Component & Services.

Thank you, Irene. If we turn to Slide 17, I'll give you some highlights of the quarter and the year. We had a good underlying demand during the fourth quarter in all our companies. And -- but the global component shortage affected somewhat final deliveries. Organic sales growth in combination with good cost control, acquisition and well-managed price increases from suppliers meant that EBITA increased by 23% compared with the fourth quarter last year. Our entrepreneurial companies with decentralized responsibility for results and local proximity to customers continue to create good opportunities for us. There is currently a demand surplus for certain product areas, which, in combination with material shortages, lead to somewhat delivery delays in part of our business. We have a good strong financial position and a clear strategy. And during the year, we have acquired 5 companies, and the acquisitions strengthened our focus and market position. During the fourth quarter, net sales increased by 35% compared with the previous year. Growth in comparable units was about 14% and EBITA increased by 23%, corresponding to an EBITA margin of 12.2%. And for the reporting period, the revenue increased by 11% for comparable units and EBITA increased by 24%. If we turn to Slide 18, as mentioned before, the main focus of the business area is to operate, develop and grow through acquisitions. We are looking for companies working with industrial components as well as industrial services in 3 main focus areas. Acquisition targets should be able to achieve a long-term sustainable profitable growth and have a committed and proven management with the willingness to improve in a decentralized environment based on simplicity. Based on this strategic focus, we have so far been able to add 5 interesting businesses with niche competence and offerings in industrial services as well as in components, with the total turnover of around SEK 300 million in 2021. If we turn to Slide 19, beyond the work with the listing, we are focused on developing our companies through active ownership with the group resources as well as support the local manager to grow through decentralized responsibility and enable employee development in order cultivate each company. We also want to grow through acquisition of sustainable companies and the acquisition pipeline continues to look interesting for further development. And we continuously work to meet more and more companies in the Nordic area. And then if we turn over to Slide 20, I think Clein have the summary and outlook.

Thank you, Ulf. So if we turn to Page 21, a few words on the split preparations. I would imagine you have questions there. There is not much more we can say than it follows the established plan. The name change, you know, management change, you know. We communicated and Nordstjernan has initiated a conversion of A to B shares. And as we've said before, that will be -- the plan is to have a separate listing of Momentum Group in the first half of 2022, and more information will follow in due course. If we turn to Slide 22, just to give you a little insight on the management team focus for Alligo for 2022. We are running so many activities at high speed, but we need to agree on a few overarching themes, first being make our people grow. We are in a people business. We don't have machines doing all the jobs. It's a relationship business towards our suppliers, towards our customers and towards each other. So our core values are extremely important, and we will continue the implementation of that and to train our people. Continue the coordination work and ensure that we get the effect that we have promised. If it's rollout of brands, pricing, logistics structure, legal structure and all that, we need to ensure that we deliver on what we promised. Thirdly, get on track with growth and margins in all other parts of the business, and it was far too obvious in one of the slides Irene showed that we have a country which is underperforming at the moment. So we are focusing very much on that and have a good plan how to, over time, change that. And also, fourth, to improve collaboration and processes. We are setting a new structure with -- a Nordic structure. So we need everybody to work efficiently and effectively together. So then we will continue -- it will take time to get that in total harmony. So if we turn to Slide 23, that's a summary of the outlook. We will do, let's be clear on that, a few dramatic changes during the first half of this year. Pricing system, as I said, which is a necessity for us to be able to establish one company, we cannot have that a customer is having relationship with Grolls and then it's a one price, with Tools, and it's another price, and then Swedol is another price. We need to have the same pricing system so we can offer our customers one agreement and one invoice and all that. So it's very vital. And we're doing that in a high inflation environment, as you know, I guess, that are affecting all businesses. So there are big increases -- price increases in from our suppliers. We have a history of being successful to roll that further to our customers, but we do that now also trying to establish a much better and more modern pricing system. We're changing the IT and ERP system in Sweden in Tools, and the logistics centers, as I said. We will continue to have challenges. We believe so in sourcing from China. Transportation-wise, factories can only have open 2 or 3 days due to energy shortage or they close them down for climate reasons. We are so big now, so we have effects also from factories where we have such a high share of their production that we have hit a glass ceiling. We need to look at different supplies for some products. So there will continue to be disturbances in the sourcing side. We have managed them well during 2021, and we hope we can continue to do that in 2022, but we're not through those challenges. And in 2022, we will, in Q1, be affected. So I beg you to remind these words when we talk about the Q1 report and also Q4 report 2022, that 2021, we had a big share of the winter sales already in the last quarter, thanks to the weather. So that is all from us 3. Turning to Page 24 and handing back to our coordinator.

[Operator Instructions] Our first question comes from Karl-Johan Bonnevier with DNB Markets.

Yes. As you pointed out early, Clein, it's obviously not easy to follow the numbers in this report, given all the pro forma things and the consolidations and these kind of things. But -- and maybe my questions will be a little more scattered due to that. And if you look at it and following the presentation is that, when you talk about the market and what you want to achieve with Alligo going forward, could you just give me the idea how you see the market? What is the Nordic market size in different countries? And what is your current market position and so on?

Yes. We have a leading position. If you look throughout, I think that the market totally is defined at SEK 45 billion, SEK 49 billion. So it's a fairly big market we are addressing, the biggest, of course, being Sweden, but we see good growth opportunities in all our markets, no matter which size we have in the country already to start with. We see, as we say in our equity case that we have, we are in an interesting market, and we see resilient customer segments. We have customer segments which are stable and doing well. And we also see that, for Alligo, going forward, we are so much longing for leaving this introvert period and go for growth again, turning our noses not inside but out to the market again. And we had a big discussion in the management team last meeting now to reengage the sales force, which has, to a great extent, not been able to meet customers for almost 2 years, which is crazy when you think about it, and have to make everybody now again feel the urge to contact customers, jump into cars and go to customers or whatever, we need to meet customers. So in the short term, that's my biggest worry, how to reactivate our sales force after 2 years of not being able to meet customers, even if they've done it digitally, of course. But we have great hopes that we are in a good position from an assortment perspective, what different companies has brought to the table, former Tools and former Swedol and we pick the cherries out of those, I'm convinced that we will have a good offer going forward.

And when you look at that market, that of -- as I said, SEK 45 billion to SEK 49 billion, how big would the industrial segment be in that kind of thinking if you're looking at where you're struggling for the moment to some extent?

I don't have that figure. We had just from -- also we did a huge analysis per product group and per customer segment, and I don't have all the figures on top of my mind, but we have good growth opportunities. But what is even more important for us is to select the right customers. We need to lead this top line partly if it doesn't contribute to a good profitable growth. So one good example of what I'm trying to say is Finland, which Irene described, where we are growing, but we are reducing our profitability, unfortunately. So being able to pick the right customers, which are good for us and appreciates our offer, there are far too many customers out there which have a very, very complicated structure and the cost to serve is gigantically high. But I don't see any segment where we can't grow a lot.

And maybe I could sell the market in some other way. I know you prefer to talk about the SME segment, and that's where you have maybe the better opportunities and the better profitability. How big would that segment be of the Nordic market?

I don't have those figures exactly, but we have done that transformation before, and we need to do it again. If we talk about the industry segment, you have industries and then you have workshops, and we'd like to go also for the smaller industries, not always the very biggest industries. And we have also lost some of them during the last 2 years, which has put us in a better place to a certain extent. But we still have that problem in Finland where we have -- it could be that a single customer could be 10%, 15% of our sales in Finland. So we need to go for smaller customers, appreciating that part of our offer being served more locally, there we have a good growth opportunity.

And I appreciate all the moving parts also now looking at the first half of this year and the huge integration that is now being realized. And when you look at the different components of that, I guess you did the ERP setup in Finland during this year. And it's obviously not seen in the numbers you report, but do you feel that, that project delivered what it was supposed to deliver? And so you feel encouraged about the opportunity in Sweden from that?

That's a very good question. From an IT perspective and from an ERP perspective, we all agree on that the Jeeves system is the one for us. It's well known, well established throughout our group. And all countries, all businesses will be in Jeeves at the end. Unfortunately, our system change in Finland coincided with not the best processes in a highly inflation-driven economy where we, to a great extent, have customers where we don't have the best power. So hence, the development in Finland, where, of course, the ERP system change hasn't helped, even if that is not the root cause, but I feel so secure that, from an IT and ERP system perspective, it's the right thing to do. Then we need to do it correctly from a change management perspective, and that's the challenge.

And in Finland, you feel that you now have at least the infrastructure in place to be able to, say, start monitoring and balance the situation?

Yes, absolutely. We have a clear picture of what the situation is. And, to a certain extent, there are things we could do immediately and to a certain extent, it's over time, and the customer mix, for us, is unfavorable, and that is quite obvious. If you have high price increases in -- and our suppliers push them through within a month or 2, and we could -- if I give you an example, for us, it could be 4, 5, 6 months before we are able to push it through with our customers, of course, that puts us in a very unfavorable position. So that's what we're struggling with in Finland.

And when you look at the lessons so far from the store integration, you say that you have 4 units left. Now that means that you have done 20 plus or something like that. Have you been able to, say, maintain key customer contacts and have customers been accepting that you have, say, joined forces, so to say?

The initial estimates were good. It was -- the brilliance of this was that, from the former Tools offer, the shop was not necessarily a shop sales. It was -- you needed to have a shop in that city in order to serve those customers locally, but you didn't have hundreds and hundreds of customers running to that shop. So as you know, this whole store integration project was driven by cost. But we also took into consideration and it has turned out that, that was the outcome that 1 plus 1 from day 1 is perhaps 1.7, but we also see, as time goes by, that it has very much the same development as when you open a new shop. So it picks up and after a few months, we're passed that 1 plus 1 is actually 2 and then it goes from there. But it's a cost-driven project. And we have learned a lot. We made jokes about that at the latest Board meeting that actually, one surprising cost element that we didn't expect was that actually tearing down the old shop. That cost, we missed by a multiple of 4. So it's really interesting. But overall, it has gone according to plan cost-wise, time-wise and also sales wise.

Excellent. And the last part of that question, implementing the standard assortment, when -- obviously, I appreciate that the China angle to the sourcing area is a difficult part to have an opinion about. But when do you feel that you will be up to the level where you want to be when it comes to implementing the standard assortment?

It's also a very good question and also very complex to answer. We will, by summer, have, to a great extent, the standard assortment in our offering. But does that mean that all our customers have accepted that we change from this brand to another brand? Absolutely no. And as we said all the time that, that is a longer process. So if you go to a big industry and say, you used to buy this product from this brand, but it's no longer in our standard assortment. It's the same function, but it's this brand instead or even our own brand. There, our very skilled salespeople need to initiate and have that discussion with our customers and over time, change. So from a shop sales perspective, our experience is that, that goes quickly, but from bigger customers to change, it takes a longer time.

And when you take all these things together now, and I saw you did some extra reservations in the quarter, do you feel that with, say, the first half in front of you now with all these structural changes and then obviously all the operational changes, that we shouldn't expect much more of nonrecurring items, so to say, during this period? Or is that something we should expect [ taxable ] numbers for instance?

I think I said last quarter that we have had to promise our report not to come with any more of those. So no, if that would be sometime in the future, than it should be a brilliant calculation with an extremely good payback. No, we have nothing like that in mind as it is now.

Excellent. And, Ulf, maybe I might ask you a couple of questions on Component & Services as well. Looking at the demand supply situation, as you said, there's very strong demand and component shortages. Is that the main reason for the margin impact? Or is that related to acquisitions coming in with lower margins? Or what's happening there?

No, the margin impact is, of course, if you compare it to last year, we had corona effect with less personnel cost, traveling cost and government funding. And then, of course, also we have initiated some development now becoming our own public listed company, and then we have the listing as well. And also, in Q4, we have some dis-synergies because we're taking our own cost as an own independent company. So the underlying margin is not that bad that you see, but it's still double digit.

That looks good. And looking at the acquisitions you did during 2021, obviously, there was quite a few of them being done at the start of the year. Just comments on how they have delivered, and how you feel about the acquisition strategy and opportunity when you get into your own, so to say, operation again?

Well, I think the companies we acquired, we got a platform for the Technical Service division. And also then we took out some of the daughter companies to Momentum Industrial to build a larger division. And then we also invested in that we have 2 people who's running that division now as operational daily, but also developed with the acquisitions. So I think that is well set. And then we have the division with components, and that is divided into 2. One is the MRO, which is [ given a leader ], Managing Director for Momentum Industrial. So he's running the acquisition and organic growth in that. We -- during the year, we also opened up in North of Norway a new sales units for Momentum. And then we have the specialist division, which is somewhat more OEM company, which I am running with a couple of more people. So I think we have a good setup. We have a good division structure, with good people on board. And we also have good talks with a lot of the companies out there.

Excellent. And Clein gave us his financial targets for Alligo. Would you see that Momentum Group coming back to the market would have a very much different kind of financial targets than Alligo?

We would disclose that more in the prospectus when that will be released as well as the combined financial statements where you can see the 2 business areas as well as and de-synergies and we will try to disclose that also quarter-by-quarter. So U.S. analysts can follow where we comparable units and so forth. So we will disclose that in the prospectus.

But would it be fair to say that you wouldn't have much lower financial targets for your unit than for Alligo?

I think we are a different kind of creature. They're running one company, and we are running many companies with decentralized responsibility. So I think we will probably be more like our sister companies in how to run and how to measure and also the cash flow is very important for us. And as you know, we have old figures that has been the permanent [ basis ] since ages, which now is the EBITA through working capital. So we're looking into that and we're talking with, of course, our new Board.

And with that kind of cash flow reasoning, it should be -- there shouldn't be any reason why you shouldn't be able to work with, say, a net debt-to-EBITDA of up towards 3% -- 3x, I guess, as well in that -- in your operation if you find the acquisition targets and so on?

No, no. We haven't, we haven't. I mean, as I also have said, if it's good opportunity, is good acquisitions, you also have to find the cash to make the acquisition. But we haven't really disclosed or talked about that yet. It will be in the prospectus.

Excellent. One final -- sorry for taking so much of your time. But Clein, you choose not to use the [ EBIT through ] working capital measure as the financial target. Any special reason for that? You don't think it works for your kind of business?

No, we don't believe in capital efficiency at all.

Exactly, exactly.

Absolutely. We've got other measures that brings us probably at the same place, but that as a specific measurement we don't use it, no.

But I think your financial target fits well together.

[Operator Instructions] Our next question comes from Emanuel Jansson with Danske Bank.

Can you hear me?

Yes.

Perfect. Very good presentation. And I think almost all of the questions I had were actually been answered, but if I can start with a couple of questions to start it with to Clein. Looking at the 3 markets, Sweden, Norway and Finland, we can see incredibly strong margin in Sweden, of course, driven, of course, of the cold weather and integration synergies. But going forward and with the present presence with physical stores in all 3 regions, do you think it's possible to reach the 10% EBITA margin in all of the regions with this presence you have as of now?

Yes. No, our financial targets and our promise is that we, as a group, will arrive at above 10%, yes. Do I feel confident that we will have a 10% in all countries? No. So if you look at the relative level as it is today, and then all 3 has to shift upwards. So no -- the short answer is no. We have countries where I don't think we will have 10%.

Yes. But could it be possible like you are going to open new stores in Finland in order to get a greater presence and also increase margins over time? Or is it through -- mainly through acquisitions or customer -- and customer mix?

Both. I mean, Finland, I've highlighted many times, I see as a very interesting growth opportunity. And I've -- we've made 2 acquisitions in Finland quite quickly, Imatran Pultti and Liukkosen Pultti. So I mean, half of the acquisitions we've done in modern times have been in Finland. And I'd love to open stores again. We have a wonderful history of being able to do that when we do our homework correctly and see the market potential locally and open stores. And even if I said north of 10%, but looking at the Finnish market, we have competitors, which are highly profitable. So of course, over time, but when I -- when we talk about above 10% as a promise for full year 2023, I don't think it's possible, but over time, we have. And we have parts of our own business in Finland, which is on top 3 profitability level in Finland. One company we acquired back in 2017, I think it was #2 in profitability in Finland. So we have parts of the organization being very profitable and parts of the organization being less profitable. And the less profitable part is due to negative customer mix.

Perfect. Got it. And I just didn't catch up fully. Have you implemented any new like own product brands in the Tools chain this quarter? Or has it been struggle due to the supply chain?

It has continued to being rolled out. And I think we communicated last, we prioritized Finland and Norway to get our own products before the fewer Tools shops in Sweden, but those will now being rolled out as well. But it is a struggle to find products and to find how to keep everybody happy to actually get this weapon as it is and not launching and then saying we can't deliver, then you have missed the whole rollout and the experience from our local shop keeper will be negative. So it's a balance we are trying to find there.

Yes. Perfect. And could you -- if it's possible, could you give us some indication of how far you have come in the integration process, like 1/3 of it or 2/3 or...

We made jokes earlier, if that question comes, what should we say? But we arrived at -- we are more than halfway through. But it's difficult to make any forecast based on that. I mean, it's included in our promise to arrive at 10% next year. But we are a bit past halfway. I think I agreed not to say anything, but I said it anyway.

Okay. And looking on the competitive landscape, have you seen any like new competitors or existing competitors getting more strength out there? Or are you continuing to take market share? Or how is your view?

No, I don't think they are. No. We know -- I mean, Norway, we've said that we had lost market shares in modern times. Finland, we probably haven't lost market shares in turnover, but unfortunately, then we have lots of nice profitability development and it goes back and forth. Sometimes you hear a competitor X being very aggressive on price, and then you hear competitor Y being extra competitive on price. So, no, nothing where we can see. And I think it's a fairly stable market from a customer perspective and also from a competitive perspective. And I think everybody is just trying to do a good job in this high-end price inflation environment. So no dramatic changes.

Okay. Perfect. And just, I think, 1 or 2 questions for you as well, Ulf. When as of the separation that will happen in this first half year, and looking on the M&A pipeline, it sounds like you have a couple of companies in the pipeline in the short term. And should we expect the acquisition rate to increase compared to 2021? Or how should we view it?

I think we have said before that 4 to 5 companies per year is achievable and maybe more, but it also depends, of course, of how great volume those companies have. We have a pipeline, but of course, it takes time and it also takes time to get -- to sign the deals. So our ambition is, of course, doing at least what we did last year in acquisitions. But it's never done until it's signed. So we will see. And of course, our ambition to -- but that's, of course, our ambition to reach our growth target.

Yes. Is it mainly in Sweden, you're looking or Finland and Norway as well? Or...

We're looking in Sweden, Finland, Norway and Denmark. But of course, due to the corona situation in the last 2 years, the visit of companies in Norway and Finland and Denmark has been less than in Sweden. So mainly, we have been visiting companies in Sweden the last year.

Yes. Okay. Perfect. Got it. And also coming back to the earnings and profitability. You had a decrease in this quarter compared to the same time period last year. And just looking at the OpEx, should we expect it to increase going forward in order to continue the growth journey or like personnel costs and so on?

I'm not that focused on the EBITA margin. I am focused on the profit expansion, of course, and then the EBITA margin can vary a little bit due to the companies we can acquire. But the EBITA margin in the last quarter and the year, of course, has been affected, which I mentioned to Karl-Johan that the corona, less personnel traveling, the government funding and then also now in the last quarter or 2 quarters, we have invested in some development to be able to run as an old company with 3 divisions. And then we have the listing process. And then in quarter 4, we have been operated as solely our own business area and taking out the dis-synergies. So the EBITA margin should stay above 10%, and it was extremely high last year. But we will see. But profit development is the most important for us, and stay above 10% margin.

At this time, we have no further questions. I will now hand back to the speakers for a final remark.

Thank you very much. Thank you for good questions. And thank you, Irene and Ulf, and that's all for now. Bye-bye.