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

Good day, and thank you for standing by. Welcome to the Alligo Interim Report Q1 2025 Conference Call and Webcast. [Operator Instructions] And please also note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Mr. Clein Ullenvik, CEO.

Thank you, Ralf. Welcome to Alligo Q1 Report, 2025. The presenters, as always, will be Irene Wisenborn Bellander, our CFO; and myself. And as usually, we will focus on the highlights. It's a report busy today and yesterday. So we'll keep the speed up and focus on the relevant things. So this time, we will bring up -- we normally take up a couple of themes and this time will be one growth area, which is ReCare, which is being launched right now, and then we'll touch upon the turnaround project in Finland. So this is Alligo, SEK 9.4 billion turnover, 2,500 employees and 243 stores. The number of stores have increased quite a bit, thanks to the acquisition of Batterilagret, that added 27 new stores to our group. As you know, Sweden heavy in turnover, even more Sweden heavy in results and own brands as it looks 18%. But as you know, the more companies we buy, which mathematically will have 0 owned brands when we acquire them, will mathematically then reduce the share of own brands into our group. We increased sales of own brands, but that is a mathematical effect when we add companies to our group. So if we take the 2 different models we work with, we have the integrated business with the Swedol brand in Sweden, the Tools brand in Norway and Finland. And that business -- our group as such is 48% of through stores, 39% of direct sales and 13% of the nonintegrated companies. So we believe in the scalable platform with the Nordic functions, shared functions. It could be purchasing, procurement, logistics, finance and so forth. And that's a scalable platform. But when the market is shrinking, it's difficult also to reduce in a similar way as the volumes is going down. So it's a brilliant upside when business is going up, but it's also more challenging when business is going down. But we have this scalable platform and now it's -- all the pieces are in place. So to touch upon the nonintegrated companies a little bit, we have this group of product media businesses, 13 to the number, SEK 0.5 billion in turnover. We have the welding, as you know, another competence area, technical area, 6 companies with SEK 400 million in turnover. Battery, we sell battery in the integrated channel as well, but we also acquired Batterilagret, adding some SEK 275 million to our turnover. And then we have other areas. Mercus is the one stand-alone workwear business. These 2 in Finland, HTP and RTP, I'm not even trying to pronounce it in Finnish, added SEK 175 million to our turnover. And then we have 5 other businesses, which are a bit separate, some of which could be included into the integrated channel at a later stage. So last year, 9 signed acquisitions, added 42 stores. We acquired a growth of 4.5%, 200 employees, SEK 750 million in turnover. And we're especially happy that we could add some competence areas in battery and in welding. So we really took the grip of the welding business and also have a nice footprint now in battery. Highlights. It's still a little bit annoyingly slow development in the market and things which is happening around us is not perhaps pushing the turn to come quicker. So we've still been facing some weak demand in Sweden, Norway, still the same story as always. Oil and gas is progressing nicely. We see some improvement in Finland. And we see positive market signals. We see more and more things which are in favor for us, the upcoming [indiscernible] in Sweden, interest rates is coming down. The dollar coming down is positive for us. The trade tariff war opens up opportunities for us. So there are many things which is pointing in the right direction. But as of now, we don't really see it in the figures. But we can also say that we continue to be very prudent in which projects and which customers we do take. So we keep -- we want to safeguard the gross margin and not starting to go for volumes and affecting our gross margin. So that is also offsetting an organic growth potentially to a certain extent. We think we are doing a pretty good job. Despite all of that in the management team, we are focusing a lot on sales. We have, during the quarter, identified, initiated and finalized a cost reduction program, which will add or reduce rather, SEK 100 million to the cost base at the end of the year. We've been focusing on growth by acquisitions. We are heavily focusing on inventories even if we are adding more own brands, which has a negative effect on the cash flow. So generally, we are focusing on our inventory situation and price adjustments, trying to adjust this market situation we are in. We have a good delivery capacity. Sweden has been done since before, and Vestby has now been stabilized and in a much better shape. More to be done, but it's absolutely good enough. Well, the macroeconomic factors, you can read any magazine or anything on the web. It is what it is. But we have not been -- we don't sell products from the U.S. We import a lot from China, and we sell to the Nordics. So from our perspective, this is actually not negatively impacting us. If anything, it should positively affect us going forward. So first quarter in brief, a growth by 2.5%. As I said, oil and gas in Norway is still stable. Irritatingly enough, still negative organic growth. So the gross revenue growth we see is acquisition driven. Cash flow of minus SEK 38 million, more or less on the same level it was 2022, than we had in 2023 and 2024 in between when we reduced stock levels at this time of the year heading into slower markets. So that is also a little bit of effect there. We have an adjusted EBITDA of SEK 74 million to compare with SEK 84 million last year, 1 trading day less, which ends up in an EBITDA margin of 3.3%. And the gross margin is in line with what it was last year if we adjust for the acquisitions made. They have a good net margin, the acquisitions, but in most cases, they have a lower gross margin. So when you add those volumes to us, we have a little bit of an effect on the group gross margin. So it's stable. Highlights. Focused on sales. Haven't they said that for a long time at Alligo? Yes, of course, we've had. But we also have things ahead of us we needed to fix first, Vestby in Norway, Jeeves in Norway, all the other grips we have done throughout the years. But from now on, we do not have many other excuses. It's brutal focus on sales. We launched ReCare. I hope you've seen it in press and other places, which will be interesting to follow. And the 1832 is a super powerful weapon for those customers who are more price sensitive. Batterilagret we mentioned, we can skip that. And the additional cost program we have launched of SEK 100 million is already closed and done. So it's not just to wait before the cost runs out. ERP implementation in Norway has gone well, as you know, but a little bit of a hiccup during the quarter when it comes to the actual invoicing to make sure that people do the right thing. The salesperson should mark an order if it's ready to be invoiced and the finance function should do their part and that process had some hiccup. So we've had an unnecessary effect on the cash flow based on that. And the TTA, as we call it, the turnaround project for Finland is started up and ongoing. So a little bit on prioritized growth areas. I think we've shown this picture before. We say we focus on services. We focus on our store sales. We have a special focus on one customer segment, which being construction industry, and we focus on own brands. So if we take the services part with ReCare, it's now - we've mentioned it many times, but it's now launched, and we have a team working with it, visiting customers. And we feel it's a super competitive offer at a lower price point for the customers. We already signed some 5, 10 contracts. We have a good pipeline of customers coming in. And now we need to fine-tune it in Sweden to make it up and running and then it will be launched in the second half of 2025 in Norway and Finland. Our Norwegian and Finnish colleagues are eagerly waiting to launch this. Of course it's a little bit of a process of setting up with the laundry service, sewing and repair, reuse and then the whole process around. It takes a little bit. So we need to do it in a structured way. But it's now in the market, and we are marketing it and selling it. Tools turnaround project, as you've seen, it's not a new thing. It's an old problem we've been fighting with -- that the Tools part of the Finnish organization has a profitability level, which will not assist in bringing us to the 10% EBITDA margin we've set for the group as our strategic target. So we need to address it. Nobody has been able to fix it in the past. We, for sure, have taken the challenge and say we will be the ones that fixes it. So we're closing shops. We are reducing costs. We are looking at the customer base. Are we overservicing some customers? Do we have unprofitable customers? And could we find new customers that appreciate the offer we have? So Finland in order to contribute to our group target needs to be on 6%, 7%, 8% EBITDA level. That is not the Tools business as such. It would be enough if it is a little bit above 5%. So it's not that we try to achieve something totally impossible. So if the Tools business is about 5%, then we can make the Finnish part of our organization profitable enough to add to the big puzzle of the whole Alligo Group. A little bit lower -- substantially lower own brand part, 11% and only 27% in store sales. So you know that we are focusing on increasing the share of own brands and increasing the number of small- and medium-sized customers, i.e., store sales. Financials, Irene?

Yes. Thank you. As Clein mentioned, the trends seen throughout 2024 continued into Q1, and we have further reduced the cost base while focusing on sales. Revenue increased by 2.9% in the quarter, driven by a 7.8% growth from acquisitions, but contracted by a negative organic growth of 2.5%, 1 trading day less and FX effect. The organic sales development was weakest in Sweden, while Norway continued to be favored by a strong oil and gas sector and sales in Finland have recovered, although from low comparables last year. EBITDA reached SEK 74 million, a decline from SEK 84 million last year, and the result was weaker due to 1 trading day less, weaker demand for the integrated business in Sweden and Finland and the decreased gross margin in Norway. Acquired results and cost savings have partially offset the decline in gross profit as illustrated in the EBITDA bridge. And as you can see, the cost reductions have balanced the annual salary increases and inflation effects related to other expenses. And furthermore, as Clein mentioned, we have initiated an additional cost saving program to reduce the cost base by approximately SEK 100 million with a gradual impact starting from midyear. And you recognize this picture as well. And as you can see, Sweden has the highest shares of SMEs and own brands, followed by Norway, while Finland has the lowest. And this directly correlates with profitability in each market. The higher the shares, the greater the profitability. The integrated business in Sweden faced challenges in 2024 as the weak market primarily impacted small and midsized customers. However, the decline related to SMEs is now less significant, partly due to low comparables and the share of SMEs has increased from 65% to 70% in the quarter. In addition, the share of own brands in Sweden has increased from 26% to 28% of sales of our own brands since the main part derived from the store channel. And the share of SMEs and own brands has improved slightly, as you can see in Finland and Norway. The gross margin decreased slightly in the quarter, driven by negative country mix and a higher share of acquisitions with lower gross margin and also a continued positive sales trend within oil and gas in Norway. However, this was somewhat offset by Sweden's increased share of SMEs, which positively impacted the group's gross margin in Q1. Moving on to some highlights of each market's development in Q1. And the market remained weak in Sweden with organic growth declining by approximately 7% and the decrease is primarily related to larger industrial customers and the reduction in one-off orders within the public sector, implying a more favorable shift in customer mix and an improved gross margin. Cost savings and acquired results have a positive impact on the overall outcome, but they cannot fully offset the weak organic sales. The oil and gas market has remained strong in Norway, as said earlier, but the sales have also suffered from the ERP change in the quarter. And the result is behind last year due to the slight drop in the gross margin. And there was a sales recovery in Finland. However, it was from weak comparables. While our recent acquisitions have contributed positively to the result, the old Tools business is still struggling. And as Clein mentioned, the projects initiated in Q4 to reverse the negative profitability trend is progressing, but it will take some time. Operating cash flow was lower than last year because of reduced EBITDA and inventory buildup of our own brands and temporary challenges in the invoicing process related to the ERP change in Norway. The investing activities primarily relate to the completed acquisition of Batterilagret, our largest acquisition to date. And the organic investments have been deprioritized in favor of acquisitions and are lower than last year. And the CapEx to depreciation ratio was 0.9, which aligns with our long-term target level. If we look into the financing activities, that relates to the amortization of leasing liabilities and the increased utilization of our credit facilities explains last year's positive cash flow from financing activities. The net debt at year-end was SEK 2 billion, an increase from last year due to higher acquisition pace and decreased operating cash flow. And the ratio of net debt to EBITDA was a multiple of 2.9, while 2.7 was reported to Handelsbanken as we can consider the full year expected profit from the acquisition. The ratio is higher than last year and year-end due to a combination of lower EBITDA and increased net debt. Our covenants relate to interest coverage and equity asset ratios, and they are fulfilled at the end of the period, and there is still good headroom before reaching the threshold. And despite the increased leverage, we maintain a solid financial position. Leverage remains within the financial target range and will decrease gradually. Handing it over to you, Clein.

Thank you, Irene. Summary and outlook. And then Q1 2025 in summary, increasingly focus on sales and launching ReCare as we've talked about and 1832 and finding ways of meeting the customers in a better way. And the added cost reduction program of SEK 100 million was also started. So outlook for 2025, we have very clear strategic priorities and what we need to do. And we think we have good opportunities to win customers and increase sales even in a not super growing market. We continue to refine our offer, but all the data that is more and more being visible looks more and more positive after an incredibly long and terrible time of only burdening terrible statistics. It all sums up that it should slowly start to turn in the right direction. So handing it back to you, Ralph.

[Operator Instructions] We are now going to proceed with our first question. And the questions come from the line of Emanuel Jansson from Danske Bank.

I think we -- I think it was very interesting that you displayed on how big part of the group -- the -- I don't know what to call it, the legacy business, Swedol and Tools business are at the moment. And I assume then that the acquired companies at the moment are also achieving quite a bit higher EBITDA margins as well than the legacy business. Just to be clear here when talking about this group margin target of 10% EBITDA margin, should we expect that the legacy business should also be able to reach 10%? Or is it the group as a whole?

It's the group as a whole, the legacy business should -- especially in Sweden, should be well above 10% to make this equation.

We said 12%, I think, for the Swedish legacy business.

Yes. And as you know, Emanuel, the challenges in the legacy business has been the cost base. In our type of business, if volume goes down, it's difficult to mitigate to 100% in cost reduction. In personnel, you can do it to a certain extent. Other costs, you can only do it down to 0, but then you are stuck with the rental cost. And then we have rental costs of approximately SEK 0.5 billion. So that is difficult to mitigate in a continuous volume drop. On the other hand, when the volume comes back, you get a good leverage on that when things turn up.

Yes, totally agree then. But as I think you mentioned, Tools business then in Finland, somewhere around 5% over time, right? And then Norway, I know, 6 -- 5% to 7%? Or is that fair?

Countries as such Finland and Norway needs to be on 6%, 7%, 8% and Sweden needs to be on 12%, that we have all the opportunities in the world, especially when we have helped especially Finland with good acquisitions. So we -- just put in quotation marks, need to get the Tools business to run on a decent profitability level and then add the good acquisitions we've done, then Finland will add to the group financial targets.

That's very clear. And just looking at the cost base, as you mentioned, it's quite difficult to mitigate the cost increase from store rental increase, et cetera. But going forward, do you think that it is reasonable to believe that the comparison base for the upcoming quarter will be -- I don't know, if this is the right wording, but easier given the cost reductions you have made the last couple of years? In other words, should profit development become more stable if the market remains in the same manner as we have seen in this quarter?

No, we will have -- the biggest effects of the program we launched this year will come just before and after summer. But we also brought down the cost base last year by approximately SEK 100 million during the year. So yes, month by month, we should see a lower cost base, but the last SEK 100 million package should kick in after summer.

Yes. And could you maybe give us some more details on this cost reduction?

Yes, it's a lot of different things. We are closing shops. We're even closing 2 in Sweden, which I wasn't really thinking that we should do. But we are co-locating as we did -- in the merger, we co-located 30 shops. It's nothing new for us. But we're co-locating some shops. We're even closing 2 shops in Sweden, which are not performing in line with what we have said. And it's a 100-person plus after all these programs we have been running during the years. We had the plan B, C, D, E, F and whatever letters we were at, at the end. And now we are making another program of 100-plus persons. And this time, we need to start doing things differently. It's not savings anymore. It's taking away resources and doing things differently and really increasing efficiency. So the personnel part is quite a significant part of the SEK 100 million.

Yes. And I assume that you are willing to add on extra sales personnel if the market allows it, right?

Absolutely. And that's an opportunity we get when you bring down the cost base when we see positive signals in the market, it's a brilliant opportunity to actually add sales resources and take advantage of the upturn when that comes.

Well, great. And you're also mentioning -- I think if you're focusing on Sweden, which still sees kind of heavy negative organic sales development. I assume that we -- beside trading days, et cetera, and maybe some weather effect that this should not have the same material impact now in Q2. But could you also maybe give us some sense on how the market has developed so far in Q2? I know for instance, that you're having a lot of sales initiatives and for historical reasons, you also have these Swedol days. And could you maybe give us some flavors on how the reception has been so far from especially the small, medium enterprise customers?

Exactly. And as you said, in the Q1, we didn't even bring it up because it's so boring to talk about the weather, but it was the warmest January and February since the measurement started. But Q2, the signals from the market are increasingly positive. And the Swedol days as you mentioned, has been very, very good. And it's a way -- that doesn't solve everything, but it's a good signal that you can activate the customers. If you have events in our shops and you have campaigns and you -- it's -- for us, it's normally a signal because we have it every spring and every autumn, and that's a little bit of a good signal. Are the customers still out there or how hurt are they? But I can say that much that it has been a positive response to the Swedol days we've had in Sweden this spring. Now the Toolsday will follow in May in Norway and Finland, but hard, hard work from the sales force in Sweden, mailing, calling and really making the customers come to our shop. And that has been -- has had a positive effect on the sales this year, which has been incredibly good to see.

Interesting. Very good to hear. And as you mentioned, I assume when the SMEs are maybe being -- starts to grow again, the SME business that this should also be very supportive for the margins going forward. But should we also be -- how should we view the larger customers? It feels like you're also mentioning that they maybe has become a little bit more unstable during Q1. I don't know if you can give us some flavor over there?

One part is probably market driven as such. But we -- as you know, we are very cautious on which type of contracts we take on. We are very, very, very strict in what level we can accept from a contribution point of view. So that has not helped the top line, but hopefully, it has helped the gross margin. And our experience is that the level of gross margin you accept in a slow market is -- that's a bit sticky. So when the market turns up again, you are stuck with a lower gross margin. That's why we've been so brutally tough on not winning contracts on too low levels. So when the market slows down, it's not only that it's less volume in the market, everybody starts to act differently. The competitors, of course, act differently. The suppliers act differently and also the customers act differently. So even if you have a contract with the customer, they send out purchases on tender to all the players in the market, making the sales process so much tougher. But we've been quite strict on that. That's why we kept the gross margin on the same level, but we have not at all doped the top line by getting unprofitable contracts. So it's a combination of market and us being very strict on the gross margin.

And is your feeling that you're being much more strict on the gross margin versus competitors as well?

I probably only get informed with the worst cases, but there are some terrible examples out there with low single-digit gross margins. And luckily, our people step away when that's the level. So -- but yes, there are examples like that out in the market. And then we don't do that. We think we need to take responsibility on keeping the market same, not doing crazy things.

Yes. Sounds fair. Looking at the inventory levels now and the overall working capital in relation to sales, it's a bit higher now versus what it has been. Do you think that this is a more stable level that we should assume and we should interpret it that the cash flow should improve just from earnings are recovering? Or should we also see some cash release from lower working capital going forward?

We have more to do on the working capital side. That's for sure. And we are a reasonably new organism, and there's much more fine-tuning to do also there, trade payables, trade receivables, inventory levels all over the place. And we are constantly looking over the assortment as such. Do we need to have own brands on all different products we have today? Or could we buy that externally? So we have a lot to do. We have a homework to do in the capital efficiency.

We're aiming to get back to 24% of total sales in working capital. That was level that we had in 2022. And…

So we're now at 28%, right, or something like that?

Almost.

Yes.

Yes.

We have homework.

Okay. Great. And maybe -- can you maybe give us also -- given that the Swedish krona has strengthened that much versus the U.S. dollar, can you maybe give us some direction on when this should start to impact your margins?

Yes, it's a good question. And that's -- for once, there are things happening in the world that is positive for us. It felt like everything which is happening in the world is our negative side, but this is positive. And down to SEK 10 per dollar we said it's more or less in the channel that the SEK has been versus the dollar in the last 3 years. But if it's over time, staying at SEK 9.5, SEK 9.6, of course, that is positive. So it will have a positive effect. We buy around SEK 600 million in dollars per year. So everything else the same, then you can do the math what that could be as a positive effect on the result. But we have been also been quite successful in hedging, so I think -- the most expensive hedging we've had is 10.3%. So -- which is bad now because it would be - if this would have been lasting, then the upside would have been bigger. But we've been able to mitigate the worst peaks of the SEK versus dollar. But the longer it stays on this level, the much more positive for us, of course. So yes, it would be positive.

Yes. Great. And maybe last question from my side before I open up for other questions. But you've done a lot of acquisitions recently. And I think everyone is quite excited of this Batterilagret. And now when we will be fully consolidated now in Q2, should -- could you maybe give us some explanation or details on how the seasonality looks there because they have kind of promising profitability, at least, which should contribute well to the group?

It's a super nice business and batteries, as you said, is the obvious month where the battery sales is a bit slower and the obvious month where the battery sales is a little bit higher. So spring is typically one period when the battery sales picks up a little bit. It could be boats and everything which is battery -- need start batteries and especially at the autumn, just as for us, that is our experience is before when it's below minus 8, then all start battery starts to suffer. So then we normally have an uptick in sales in the integrated businesses. And the same thing is for Batterilagret. So spring and autumn, late autumn are the typical high points of that business. So they're included in the family and it's operation started already.

[Operator Instructions] We are now going to proceed with our next question. And the questions come from the line of Karl-Johan Bonnevier from DNB Markets.

A couple of more detailed things, digging into basically the same thing you have already been asked. But if you look at Batterilagret to start, any contribution already in Q1? Or is that neutral?

Actually, we normally complain continuing the discussion with Emmanuel, it actually had a positive effect in Q1, thanks to -- and hold on, I'm saying something positive about the weather. The early spring helped the Batterilagret sell batteries actually. So March was, I guess, a little bit better than it normally is. So for the first time for a long time, you hear me now say that we had a positive weather effect in that part of our business, and that's for sure.

I like the trend. I like the trend. And when you look at the SEK 100 million program that you are now initiating, the SEK 90 million you charged in Q1, is that what you see the full cost for that implementation? Or should we expect more to come in Q2?

A little bit more will come when it comes to lease contracts, rental contracts for our shops. But the payback time, if you do a quick and dirty is tremendously good. But the -- no record had this quarter was more or less 50-50 split of costs related to this and also costs related to another battery-related business, the customer losses in Northvolt.

Understand, understand. So what is coming in Q3 will be in addition to your restructuring reserve basically? And what you have seen now is straight cash cost going out or...

Come again, we will take more cost -- sorry.

Yes. Looking at the lease contracts, I guess that's going to be a capitalization against your restructuring reserve? Or is that -- and I guess most of the costs that saw in this quarter are purely more cash costs.

It will be -- exactly, it's more cost than cash because it's exactly -- now I understand you. Exactly. No, we're taking the cost upfront for the shops we closed now, but it has no cash effect exactly. That's true.

Excellent. And looking at what you're now trying to achieve in Finland, have you put any time line for when would you think with the different kind of things could be put in place, you can then see a net impact in the way you discussed it?

Yes. The time line is yesterday. No, it's really -- we have great respect for all the efforts that has been done over the years and has not really been successful. And it's a lot to do on the management side and getting people to do things a little bit differently, and that normally takes some time. But closing shops goes quickly, parting from some customers if we don't find a good commercial common ground, could also be quicker. But to change people's behavior in many geographical locations is a challenge, and it's probably why it has not really succeeded before. But in all honesty, the Finnish market, looking at all our competitors, all the players has been very, very tough the last 2, 3 years. So if you look at the profitability, starting from a high point or a low point, they all had a sharp downturn in profitability. But it's frustrating for us because we do think we are convinced that we know what needs to be done, and we know that we have the tools, the fix tools that we need to have a more private label, higher share of owned brands. So it's just trying to get the work done. So it's a long answer, and I didn't answer your question. I understand that. So we don't have a fixed date, but we need to see positive effects reasonably quick. And it's run like a strategic project where we really ensure that all the activities agreed on are being done. I don't think we've had such a strict follow-up on any project, at least not since the merger. So this is personal. We need to be the one that fixes it.

Good to hear. And just looking at the working capital headwind you talked about, how big was the impact of the Norwegian invoicing kind of challenge? Because I guess that hopefully has already been reversed during Q2? Or is that still an outstanding issue?

That situation will be solved, and we estimate that effect to approximately SEK 40 million.

So it's a major part of that working capital, I guess, headwind you saw in Q1 then.

Yes, exactly.

And during this week, we finally got the last feedback that it's nothing wrong with the Jeeves system. It's how you work with it and process related, so which is also good. So yes, it's a new system and everybody doesn't necessarily need to know how things work from day 1. So yes, there's no system problem going forward. It's fixed.

And not just you have been very active of late in looking at acquisitions, although we have seen your peer Ahlsell doing some larger transactions. Were you ever interested in looking at Skydda or the Rexel operation they now bought in Finland?

We have our -- I mean, there have been many and perhaps we've also teased -- of course, installation material could be something for Alligo in the far future, but we have so much to be done where we are. So Workwear and Tools, we have such a strong position. And our conviction is that certainly, it's easier to add new countries with assortments we know rather than new assortments to countries we know that we have an agreement with the management team and the Board. So in that case, I'd rather move into a new country with our strong offer in especially workwear. So -- and Skydda would be a very difficult equation to -- since they sell to -- so you will lose such a big part of the business if anybody like us would buy it because we sell to -- would sell to competitors and they wouldn't buy from us, of course. And a little bit of that effect, I predict will need to happen for Ahlsell as well. But no, that was nothing for us.

We're looking forward to volumes coming back…

We have no further questions at the moment on the phone line. So I'll hand back to you for any webcast questions that you may have.

We have a couple, but I think it's been addressed. There were many good questions from both Emanuel and Karl-Johan. Trade tariffs is perhaps one which was only partially touched upon. I think I mentioned it a little bit quickly that -- but one little bit of a paradox will probably happen is that we have a strategic direction, as you probably know, that we want to reduce our dependence on China. Since we had expected that next world event would be that China enters into Taiwan, and then we will have difficulties. So we have moved out a little bit of our production from China. But in this current situation that a lot of the production that China does towards the U.S. will -- has already stopped and will be stopped. So there will be free capacity in China. So we will probably move some production we have moved to Bangladesh and Pakistan, Laos and Vietnam and so forth, back to China. So the paradox in the short- and medium-term range will probably be that we move back to China, some of the production because the price levels are coming down. The price levels are coming up in the countries I mentioned, and the price level is coming down in China. So in the medium time range, that paradox will probably appear, which is beneficial for us for our cost, but a little bit different.

We have no further questions on the phone line. So please go ahead with the closing remarks.

Lovely, lovely. I think I wrote in the CEO section of the Q4 report that finally 2024 is over. Now we are into 2025. It's still not a booming market. I don't think we should need a booming market to perform on a high level from this. The cost base is coming down. We're keeping a strict control over the gross margin, and we are fighting for the volumes that is present in the market for the customers that appreciate our offer. So I think we have a good position. The platform is ready. We have now even fine-tuned the invoicing processes in Jeeves that we didn't know that we had to do. So we are in a good place to focus on one thing, sales. So that will be the brutal focus for us going forward. Nothing else should cloud the vision. So by that, the journey continues. Thank you, everybody, for listening in, and take care.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a good day.