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

Good day, and thank you for standing by. Welcome to the Alligo Interim Report Q2 2025 Conference Call and Webcast. [Operator Instructions] Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Mr. Clein Ullenvik, CEO. Please go ahead, sir.

Thank you, Raz. Welcome to Alligo Q2 Report 2025. Presenters, as always, will be our CFO, Irene Wisenborn Bellander; and myself. We usually have a slide with us to own it, but it has gone missing somehow. We will try to focus only on the highlights. It's a report-heavy day today, and we try to have different themes to be as transparent as possible and to educate you guys on what we are doing. Last time, we talked about ReCare and the efforts we're doing in Finland. And at this time, we will talk a little bit about our platform. And as you can see the CEO section of the report and the headline is that we one final time will talk about our integration that we now can leave that finally behind us. We will not use that as an explanation going forward for any shortcomings. That is done. And it's also a signal to ourselves and to our organization that will lead the integration process behind us and are focused fully on going forward. So looking at the map, 241 shops. It looks like we are heading backwards in own brands. But as you know, that is due to the fact that we do acquisitions, and they mathematically, of course, have 0% of brands when they are included. Sweden dependent. That's why we are suffering a bit when the market is slow in Sweden, both in volume and in EBITDA. So Sweden is our super profitable country. And that's why we are suffering a bit, but the market is not really with us. One busy slide, but just to take you through a few highlights. You know we have the 2 concept brands Swedol and Tools. But we perhaps not talk so much about that. We are a true Nordic organization. I don't know of any actually, but there probably are some. But we have a true Nordic organization. I will show you a slide later on, where all the functions are Nordic functions and the countries are focusing on sales. So that's a bit of a twist in our setup. The nonintegrated businesses are becoming an increasingly big part of our group, now 20% of sales. We have our lovely 13 product media companies. You saw 2 add-on acquisitions done recently. We have our 6 welding businesses, the Batterilagret acquisitions completed this year. And then we have some other companies, but not other sounds diminishing, but it's super well-run business, it's Mercus and the 2 HTP and RTP in Finland that we acquired a year ago. But looking at this slide, it's also -- you can also reflect that when we say that something is market-driven or not market-driven, it's -- we have so many contacts facing the market from different daughter companies or the integrated business. And when we see similarities in the development, for example, in the welding -- 6 welding companies as we do in the integrated business, then it's fair to assume that it's a market that is developing in that way. That's the extra good part of having these businesses, it gives us a reality check to what's market-driven or potentially not market-driven development-wise. Acquisitions. Yes, we have done a couple of acquisitions, Batterilagret being the biggest one and 2 actually add-on businesses, SEK 130 million and SEK 140 million business, but it's add-on business to already acquired product media businesses. Highlights. Market situation, it's challenging, but we dare to say it's stable. We had times during the last 2 years when it's been steadily downwards, but we feel that it's much more stable now than it has been. We've signaled before that. What we hear is more positive, but the customers are still very cautious. We, as a management team, focus on what we can focus on, driving sales to the greatest extent. We are very afraid of being caught -- being too late. So we are always early on adapting with costs. Irene will show a slide later on that I think proves that we are fairly good at that. And still, we haven't seen the big effects of the plans that we launched Q1. We have continued to do acquisitions. We are constantly working with inventory levels, launching new private labels, own brands and trying to find the right balance between external strong brands. That's the beauty of our offer, the good mix between external brands and our own brands and to do price adjustments. And in all openness, we started a bit in Norway when we launched the Jeeves system in February this year. That's exactly when you normally do your price adjustments in our countries. So Norway has a little bit of a backlog catching up because there are always disturbances when you implement a new ERP system, but they are progressing nicely. Delivery capacity is good throughout the group. It's best to be having a little bit of a backlog in incoming goods at the moment. But besides that, everything is good. And the macroeconomic, yes, it is what it is. So Q2 in brief, revenue grew by 1.6%. Oil and gas, Norway, being stable. Organically, unfortunately, 4.3% down. But if you adjust for 2 things, defense-related orders, which were very high Q2 last year and also, [ Northvolt ] for obvious reasons. Then Irene, if I say the right number now, is it 1.3?

It's 1.3. Yes.

It would be minus 1.3%, the organic growth, if you adjust for those 2 things. Northvolt will, of course, not come back, but defense-related orders, they come when they come. We cannot do much about that. Operating cash flow is down a bit, quite a lot, but we -- it's all driven by own brands and, of course, the lower results level. So we arrived at an EBITDA of SEK 144 million compared to SEK 166 million last year with one trading day less, which should do something around SEK 12 million perhaps in -- per day. And an EBITDA margin of 5.8% and a stable gross margin. And as you also know, when we acquire businesses, it's very seldom, if ever, that they have as high a gross margin as we do in the group. So when we add acquisitions to the greatest extent, mathematically, that brings down the gross margin. So to be on the same level as before, it feels good. High sales focus in all countries. We are running a lot of growth initiatives. We try to be more efficient in sales. Of course, we merged 2 very different groups, and we try to find our common ways of working, and we are improving, but we have much more to do in sales efficiency, that's for sure. Pricing system. I wrote, perhaps some of you have been able to read it in the CEO section of the report that when we build a company like this, of course, there could be things that comes out less positive for some customer groups. And one example I brought up was our dear small- and medium-sized customers, the so-called former Swedol customers when we need to agree on a new pricing system that fits both super large customers and smaller customers, of course, every little change you do is to the negative side for the smallest customers. We used to have a very simple pricing system. But the slightly change you do, it's perceived as more complex. So we are fine-tuning that to make them feel that it's as easy as it used to be. Sustainability, we have been now approved by the science-based -- SBTi, science-based target initiative, and we work closely with our suppliers. It's tough targets, but we are dedicated on achieving that by 2030. Tools turnaround Finland. Finland is a super focus for us, of course. As I said, margin improvements in Norway. We have now all the opportunities in the world to continue that work with the teams in place and working. We need to do more on the assortment side for fine-tuning, and we are constantly working with cost reductions. And as we informed you last time, during Q1 in 12 weeks, we identified the need and actually carried out the plan of that so-called the biggest effects of that, the positive effect, the cost reductions is ahead of us. And capital efficiency, we have much more to do that we have communicated earlier. Prioritized growth areas, just quickly. We think we are very good in offering different type of services to our customers. That differentiates us from our competitors. So the whole store, the way we run our shops is differentiating and that's very much of a focus. We'd like to become much stronger in the construction sector. We have, to a great extent, the legal group is industry focused, and that is good. We will need to keep that, but we also have a strong offer to the construction sector, and we are constantly working on that. And then our own brands. It's not a given that we need to have as high own brand share as possible. Of course, if we were equally profitable and equally competitive with external brand, of course, that would be easier in many ways. But if you take the workwear part, it's -- the brands we have, it's almost a pity to call them own brands because they are so strong, Bjornklader, Univern and Gesto, it's real, real strong brands and those we invest in. Turnaround project Finland is ongoing. You know they don't need to be on the 10% we say for the group, but they need to be in the range of 6% to something around 8%, whereas they are a little shy of 3% of the first half year. But just to illustrate, the levers we have. So the own brands is at 9%, where Sweden is at 21%. The share of store sales is at 21% compared to Sweden 53%. So if we can focus on the right type of customers, serving them in an efficient way and increase those 2 shares, which we have, we are dedicated to do that will improve, of course, the Finnish profitability. So just quickly about our scalable platform, one last time. So we set the common strategy and core values in a very hectic meeting in 2020 with our mission ambition and our core values, and that was the guiding light for the whole organization, building Alligo. We have this true Nordic organization, which is super-efficient, when everything is stable. It's super burdening when you are doing big changes because most of the topics end up at the table of the group management team. But it's when now everything is in place, the Nordic organization has only benefit. Simplified legal structures, coordination of logistics is done. The ERP platform is done. A common pricing system, yes, some changes for the small and medium-sized customers. Standard range of assortment. Little fine-tuning but to the greatest extent is done. And store coordination has been done. So we are now in a phase where we need to do more continuous developing the business and focus on sales. So ERP, as I said, just giving a few figures. Harmonized Nordic standard range of assortment. So we reduced the supplier base by 50%, the number of articles by 66% and the own brands increased the share of sales. And in store coordination, we have closed or merged 35 shops. So it has been a busy period. This is then the slide to show how simple in a way our organization is. The country is focused mainly on sales. And then as I said earlier, the Nordic functions supporting all the countries equally. So by that, we can drive efficiency, and we have also scale. So we don't have a step up in 3 different ways, in 3 different countries. It's truly Nordic, and it works for us. The logistics is also done. Of course, we'd like to have a nice warehouse in Finland, of course, than the one we have in Kotka. But that we will wait until we know what actions are being -- we need to take in Finland. But in Vestby, we're brilliant, very nice new build warehouse, and Örebro, where we invested a lot in a super-efficient warehouse, and Örebro is also a little bit of a Nordic hub also for the other central warehouses. Finally, Irene, financials.

Yes. Thank you. As Clein mentioned, the second quarter followed the same trend as the first. The market remained weak, but we continued investing in sales and maintained good cost control. Revenue increased by 1.6% in the quarter, driven by a 9.7% growth from acquisitions, but contracted by negative organic growth of minus 4.3%, one less trading day and adverse FX effects. The organic sales growth was weakest in Sweden, but it was significantly impacted by large projects orders to the defense industry last year and the loss of Northvolt volume this year. Sales within the manufacturing sector in Finland recovered, although from low levels. And in Norway, the oil and gas sector was still strong, but other customer segments were weaker. EBITA reached SEK 144 million, a decline from SEK 166 million last year, and the result was weaker due to one fewer trading day and weaker demand in Sweden and Norway. Acquired result and cost savings have partially offset the decline in gross profit as illustrated in the EBITA bridge. As you can see, the cost reductions have balanced the annual salary increases and inflation effects related to other expenses. And as Clein mentioned, the cost-saving program that we implemented in Q1 will further decrease the cost base for approximately SEK 100 million annually starting from mid-year. Sweden has the highest share 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 downturn in the market has primarily impacted small and midsized customers. However, the decline related to SMEs is now less significant, and the share of SMEs has increased from 68% to 73% in the integrated Swedish business. And additionally, the share of own brands in Sweden has increased from 25% to 28% as sales of our own brands primarily derived from the store channel. And the share of SMEs and own brands is in line with last year when it comes to Finland and Norway. The gross margin decreased slightly from 40.3% to 40.1%, driven by negative country mix, a higher share of acquisitions with lower gross margins and the continued positive sales trend within oil and gas in Norway. However, this was somewhat offset by Sweden's increased share of SMEs, which had a positive impact on the group's gross margin in Q2. Moving on to some highlights of each market development in Q2. The Swedish market remained weak with organic growth declining by approximately 7% and 2% adjusted for the large project orders to the defense industry last year as well as Northvolt volume. Sales in the stores stabilized further, 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 in Norway has remained strong, while other customer segments have had a weaker development. And the result is behind last year due to lower volumes and the drop in gross margin. There was a sales recovery in Finland, but from low levels last year. While our recent acquisitions have contributed positively to the results, the old business, as Clein mentioned, is still struggling. And we have made some progress in the ongoing project to improve the profitability, but it will take some time. When it comes to cash flow for the quarter, it was lower than last year due to reduced EBITDA and also an inventory buildup of our own brands and decreased trade payables. We have an ongoing capital efficiency project, and we have reduced the inventory levels of external brands; however, the investment in our own brands contract this progress. Net working capital as a percentage of sales is 28%, and we are aiming for 24%, which was the level in 2022. The investing activities primarily relate to the earn-out payments. The organic investments were lower than last year and CapEx to depreciation ratio was 0.5. Net debt at the end of the quarter was SEK 2.1 billion, an increase from previous year, primarily due to higher acquisition pace and decreased operating cash flow. The ratio of net debt to EBITDA was a multiple of 3.2. The ratio is higher than last year due to a combination of lower EBITDA and increased net debt. But the ratio is expected to decrease gradually. Our covenants related 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 these thresholds. And despite the temporary increase in leverage, we maintain a solid financial position. Handing it over to you, Clein, for summary and outlook.

And when you say increased leverage, it's a decision we took as we communicated with you guys when we saw good acquisition opportunities. We said rather than to be a little bit above our target, we'd rather do that than instead of passing that opportunities. So it was...

Done.

Yes, it was done. Q2 2025, in summary, still slow business climate, but we see signs which are more positive, and it's stabilizing. We do whatever we can, at least, to attract the customers. We think we are best suited to serve. Our climate target has been approved. And we continue to adapt our cost base and be much more efficient throughout the group. Still some caution from our customers. We talk to them daily, of course, and that even if they are filling up their order books, it's still cautious. We are well positioned. We can now focus on sales. The gross margin is there. The cost base is improving. We need to adjust the capital efficiency a bit and go full on sales. We think we have a very strong offering. We get that feedback from a product perspective and from a service perspective. So what we need to do now going forward is fully focused on sales. We used to do. We used to know how to do that. Hopefully, we still know how to do that. So that is, of course, the top priority for 2025. Very good. That concludes our part, Raz, over to you.

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

A couple of questions from my side. And you're mentioning Clein, once again, that you are hearing more positive tones in the market. Would you say that, that is across the all 3 geographies here that you're seeing or hearing at least?

Yes. Firstly, it's mostly Sweden. I mean, at the end of the quarter, and we know that from talking to many of our suppliers and hear the signals, actually, despite our own development, it was a reasonably slow end of the quarter in Finland. And in Norway, we are hearing and getting some feedback on volumes to the construction sector being dramatically down actually. But we are so small in the construction sector in Norway still, unfortunately, in one sense, so we weren't that much affected. But when we say much more positive signs, it's mainly when we try to figure out where the small and medium-sized customers in Sweden are heading.

Okay. It sounds quite good given that the larger chunk of the profits is within Sweden, right?

Absolutely.

And is it possible -- firstly, maybe have you -- you think that the more positive tone is any effect of the route deduction that we have seen in Sweden?

Yes, we have analyzed that a bit, and we thought -- we knew when it was launched that it's not increasing the total amount you can apply for, but it's increasing the percent. And we -- of course, it's not negative for us, but it has not affected as much positive. Of course, our customers have gotten -- I think there's one or a number of terraces being built. So I think if you supply direct building material, they have probably benefited the most. But while installing these terraces, hopefully, those carpenters and builders have worn out their clothes and their tools at one point, and it will be a positive effect for us as well. So of course, it has a positive effect, but not much visible for us.

Yes. Okay. Got it. And perhaps can you maybe give us some color, or have you seen any like increase of visitors in the stores or maybe the basket size starting to increase again any of those? Or just -- yes, any of those in the markets?

The number of customers is stable, perhaps a slight increase. But the -- what we think is a signal of the business climate is that the average receipt is not taking off. They still buy exactly what they need, and it's a typical market signal of what the climate is. Whereas you know my old stories of how you can influence our type of customers to buy things they need. But these days, it's exactly what they need to buy and nothing else.

Okay. Great. And perhaps it's also possible to maybe quantify or give us some color on how you are developing versus the market in general?

We don't have any good figures, but we, of course, consume everything we can get our hands on, and we talk constantly with our suppliers, and they give us their feeling of the market and we hear, of course, from competitors in different ways. And we can also -- I mean, being so reasonably wide as we are in assortment and also geographically spread and also having these freestanding companies we have, we can quite okay paint the picture where we see the market trends. If you take Mercus, for example, being a freestanding group selling workwear within Alligo. If they have exactly the same development as our workwear sales in the integrated channel, then it's fair to assume that, that is market driven. So I think we have a good -- even if we don't have the exact figure, there are no industry -- as you know, it is in the electrical wholesale business and in heating and plumbing, but there are no good industries for us to follow. So we had to put different pieces together and make an educated assumption.

Yes. Okay. Perfect for giving us that context. And -- but do you think -- I think maybe a pattern maybe 1 year ago or so that maybe customers were looking for cheaper alternatives and going to more low-end businesses regarding price tickets, is that still the case? Or are those customers returning now? Or -- and how well priced positioned are you with your private labels at the moment?

A very good question, and that is probably key for us, and that is a fight that will continue for a foreseeable future. I was down at the shop yesterday in interiors and met some customers. And of course, I talked to them and they honestly said, of course, they have been to Jula. They don't want to go there, but as one low-price competitor being them. But that's what our 1832 assortment is targeting that our customers that want to do business with a professional player as us we need to get that information out on a wider basis. So everybody knows that we have that. So it's okay to go to Jula and still buy things at even a little bit lower price point than we used to have. Gesto used to be the price fighter. But obviously, we needed one price point lower than that, and that's why 1832 was launched. That was something we identified 2 years ago, and we have in a super speed, developed it and launched it, as you know. So that will help us to stop that from happening.

Yes. Okay. Great. And just looking at your different sales channels here, for example, in Sweden, where you had a lot of, how to call it, headwinds maybe in the quarter regarding top line with Northvolt and orders, et cetera. I think looking at direct sales, it was down around 13% year-over-year versus last quarter. And I think the store channel was down 2%. If we adjust for these one-off events or how to call them, I assume that you're seeing more stable -- closer to more stable sales development in direct sales now, right?

Yes. That's true. That's true. Adjusted for the defense project orders and the Northvolt volume, the organic growth was negative at minus 1.3%. And that's almost the same level that we see in the store sales business. So adjusted for this it's about that level.

And the defense industry is super interesting going forward, but you never really know when the orders comes, if it could be a couple of big ones as it was Q2 and a little bit Q3 also last year. And then -- so it's being delayed or it's being pushed forward and backwards in time. Northvolt is, of course, gone. And the funny story there is that we stepped away from that negotiation many times. But as I've said many times, we are especially good with customers that have high demands with complex solutions. So actually, they asked us to sign on, which we did, and we said let's go for this green tech sector. And now we have to excuse why we have a loss in volumes due to that. So it's...

But I mean, you do not know when these kind of defensive orders will happen again, of course, maybe this year or maybe next year. But I assume you have also won a lot of other contracts with new customers or winning at least agreements. Do you think that will start to play out in the second half year?

Hopefully, gradually, they will do. And we have signed some interesting deals with customers. And then it's also always frustrating to see how long it takes until it ramps up. I mean we would love to see that you sign it and the next month, it's already flying high, but that also takes time. But we have to focus on our own game and select which customers we think we can serve the best. And I think we have a good game. We could increase the intensity even more, of course. But I think we have a good backlog of customers to work with.

And if the direct sales like stays on this stable minus 2%, minus 1% growth in the near term, while you're seeing store channels start to grow again, maybe a couple of percentage, will that be enough to increase the profit level in Sweden? Is that how profitable the store channel?

Absolutely. So continuous lower cost base, increased sales in shops, those 2 will benefit greatly to the result in Sweden.

How much do you think is needed in order to [indiscernible] in Sweden?

That's a very good question. But you can just make estimations on add -- with our healthy gross margin, if you could add X number of millions and everything else the same, you get good leverage. But we need to increase the focus on the mechanical marketing to get -- because if you're going to send out a salesperson to each customer we want, it will take enormously much time. So we need to improve the good old mechanical marketing that we also used to be good at and start to drive customers to our shops. That we've done before, and we need to do it again and refresh it.

Yes. Sounds good. And maybe last question from my side before letting other people ask questions here, but you're not alone with hoping much for the second half of 2025. What's your view on the second half year where you're not the only company where the investor market hopes or expect that growth for volumes will be returning? What's your view now on the second half and how you think we should expect the year...

I love that you ask that, Emmanuel, because you asked me the same thing this time last year, and I and everybody else was dead wrong. But we see that market has stabilized. We hear positive signals. But again, we have so much on our own hands that we can do. We have such a strong offer. So if we can get the mechanical marketing back into shape, continue the good sales push that our brilliant external salespeople are doing and our shop persons, employees are doing, yes. But I mean, again, it feels like interest rates are coming down a bit. Hopefully, now it's picked up a little bit, but the dollar -- the SEK strengthened versus the dollar is giving us some more competitive advantage and also together with our external suppliers. So when their cost base is getting lower and our cost -- or purchase price is getting lower, we can increase competitiveness. So -- and now leaving all this integration project behind us very much is in our own hands in the coming quarters. So it's a fluffy nonanswer to your question because we really don't know. But the GDP development seems to tick up nicely also. It has been delayed. The curve is still in the same direction, but it has shifted downwards is all the information we are getting, but an increase in GDP is normally good for us because then the general economy is better and then we are such wide in our offering than it's normally good for us. So all the signs are there, and we have so much to do ourselves. So by God, we need to get the sales up and running.

Thank you, Clein, for trying at least to give us some [indiscernible]. I know it's difficult. Well, I think that's all my questions for now at least.

Thank you, Emanuel. Enjoy the summer.

We are now going to proceed with our next question, and the questions come from the line of Karl-Johan Bonnevier from DNB Carnegie.

Yes. A lot of good answers already, but a couple of more questions from me, if possible. Just looking at -- you mentioned the working capital buildup being related to own brands largely, and you also talked about the good delivery capacity. How do you see, say, that dynamics? Are you now at the level where we should see, yes, a reversal, let's say, working capital in the second half of this year on the base of this? Or do you see more need to build up more of inventory to be where you want to be on the own brand side?

No. We have invested in fasteners. We haven't been talking much about that lately, but we have done in our own brand Inno. We have the 1832 that we have talked a lot about. We have a totally new line on both mid-priced segment, a little bit lower-priced segment on Gesto shoes, which has already come into the shops to a great extent and has been well received. And we have -- since we book cash when it's being loaded onto the ship in China, we have a lot coming home for the autumn. So it should, by God, not increase from this level. Now we have a good set of own brands offerings. So no major investments going forward. It's piled up a bit, unfortunately, now.

But that probably ties into the next part of my question. Obviously, the currencies have started to move slightly more in favor for if you at least look at the U.S. dollar, the Norwegian kroner, I guess, is still a challenge. But if you're looking at the U.S. dollar, the thing you get in now, is that going to give you that currency based advantage compared to before? Or is there a longer cycle to get the U.S. dollar out in the pricing?

You know that probably better than us, but you have both the stock turnover rate. And then, of course, you have the hedging. And we used to love our hedge when the SEK went down. Now we don't love it as much when the SEK has strengthened. But of course, time flies, and we can see that the spot purchases we are doing are now on a totally different level. So absolutely, what is being brought into stock now, at least, is on a different level. That's for sure.

That should basically start filtering you through already in the second half of this year.

Hopefully, yes. Now it's been an uptick again. It's a little bit irritating, 9.72. It was good when it was 9.49%, but it's better than 10.5% for sure.

Excellent. And just on the efficiency cost improvement program, the SEK 100 million. I think you heard and you've been saying that, that is now coming through as of midyear.

Yes.

Yes.

And what kind of concessions do you feel you have done on, say, regaining sales when volumes come back from this cost rationalization program? I think you talked before that you had already basically saved back to the bare bone. So any more savings was going to have an impact?

It's a good question. I mean if you look at the shop structure we have, we are down with the back against the wall if we not want to shorten the opening hours. And then I -- then I think we will add to a downward spiral and that we don't want to do. So with the present opening hours we have and in all concepts even open on Saturdays, except for summer period, there are a few persons left. But there, we are super, super lean. And in the plan that we did in Q1, which will have an increased effect going forward, we focused mainly even if there was some sales oriented, but mainly on central functions. And it's -- yes, the old saying, never miss out on a good crisis. So we had to take actions and we did, and that will help us going forward. So -- but yes, of course, there's always more to be done. But I think we have closed the shops we need to do. We have co-located. So a little bit more to be done, but first, we will hopefully enjoy the effects of what we have done.

Really good. And one final. Looking at the slightly elevated gearing for the moment, if there was any good acquisitions coming along, would you -- with that in the back of your mind, say you hold back on them due to the gearing situation? I appreciate that you say you are far from any covenants or anything like that...

Good. No, of course, we -- in those discussions, and we have a couple of them, you can manage time in a good way. So the discussions we have, I mean, in many cases, we have been the one pushing for quick closures and perhaps at times like this, we don't push as much. But we don't -- we shouldn't be slow, so we lose them. But of course, it's much tougher now than it used to be. But for good reasons, you and I talked about Batterilagret when we acquired them. It's -- am I happy we did it? Absolutely. So...

Yes, it looks amazing.

Yes, yes. So it's -- we are happy we did it, and we rather excuse our a little bit higher gearing and have them then the opposite. But of course, yes, we don't push for quick closures as much now as we normally would have done.

Sounds logical. All the best out there.

Thank you, Johan. Enjoy the summer.

We have no further questions on the phone. I will now hand back to you, Mr. Ullenvik, for the webcast questions.

Thank you, Raz. We have gotten a couple of them. And I think some of them were already answered. There is one. Could you elaborate on the gross margin going forward due to the currency changes? Could they have an effect already in Q3, Q4? That we touched a little bit with Karl-Johan just now. And yes, hopefully, of course, gross margin is so many different things. First of all, the word mix effects depending on which customer categories, which product categories that we manage to sell. But isolated, absolutely, it should have some effect, absolutely. Now it's been a couple of months with a stronger SEK at least. So the effects should be positive in Q3 and Q4. Then I think we have -- there's 2 more. I think it's FX effect. We answered. And cost reduction program, we answered. So I think it's okay from here. Do you have any other ones on the telephone line, Raz? Or should I go for the closing remarks?

No, we have no further questions on the phone line, sir. So please go ahead with closing remarks. Thank you.

Thank you very much. Okay, everybody. We are halfway through 2025. We would have loved to say at this meeting that the market is booming, but it's not. But we continue to focus on what we can focus on, cost efficiency, keeping up the gross margin, getting sales in shape. And in all honesty, we have much more to do, and some adjustments also that we need to do pricing for small and medium-sized customers, the customers we need to adjust. But we know what to do and we do it. And hopefully, we get better day by day. And at one point, we can also see that we get a little bit of a help from the market that would be lovely. So enjoy the summer. This journey continues, and thank you very much.

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