Bufab AB (publ) (BUFAB) Earnings Call Transcript & Summary

Hi and good morning. Welcome to everybody here in Fotografiska in Stockholm. It's a cold winter day today. But we say a warm welcome. And we do say also a warm welcome to everybody that are joining us live right now during this Capital Markets Day. My name is Jonas Gallneby, and I will be the host for this event. We will have a great couple of hours ahead of us that we will listen into the Bufab journey right now, discovering the next solution. So we will do it like in 2 parts. We will have a 1-hour more or less, and then we will have a break at least here in food-to-go office gap. We will grab some coffee and some sandwiches and so on, and we hope you do the same wherever you are watching. And then we will have part 2. And we will also make it possible to ask some questions later on. All right. We're up and running for it. And before we begin and before we let the President and CEO, Erik Lunden take the stage here, we will look into Bufab, the movie. Here it comes. [Presentation]

Good morning, everyone. And from my end as well, warm welcome to Bufab's Capital Markets Day. My name is Erik Lunden, President and CEO of Bufab Group. And it's great to see so many here at Fotografiska in Stockholm. And of course, also a warm welcome to all of you that joins us online. We will have 3 exciting hours in front of us. We will talk about what we've done in the past in Bufab, but more importantly, what we aim to do going forward. And I would like to start to talk about 3 things that I want you to bring with you when you leave this meeting today around lunch time. So there are 3 key messages. Today, we will talk about our position, where we are. We believe that we are very well positioned to take the next step on our growth journey. We also believe that we have strong drivers behind us, market trends that will help us take the next level on our journey. The second thing is, of course, our new strategy that we call discovering the next solution. We have had many years of success in Bufab, but as we see it much more to come. And there are things that we can do much better also in the future. And those opportunities we want to grab. And as part of our new strategy, we also have decided to do a review of our manufacturing business. Some of you might have seen that today on the press release and also talk a little bit more about that, why the Board of Bufab decided to do a strategic evaluation of our manufacturing business with AB Lann and Hallborn. And then finally, I would like to talk about our ambition as well. We have high ambitions for the future. And also this morning, you might have seen that we will raise our profitability target and reach 40% EBITDA by 2026 at latest. And hopefully, we'll get a good understanding why we believe that is achievable and how we will make it happen. So the agenda we have in place to go through this. I will start to talk a little bit about who we are, about our market and our position in the market. And then I will have 3 of my colleagues in the management team. It will be Johan Lindqvist, Carina Lööf and Johan Sandberg, who will help me talk about our strategy. And also, I will have 3 MDs. As you know, we have 50 companies in the Bufab Group, so 3 MDs will be here today and talk about their business as well and how they add value to our customers. And then Par Ihrskog, our CFO, will go through our ambition and our new financial targets. And then I will have a closing remark, then, of course, we will have time for Q&A at the end as well. Before I jump into who we are, I would like you to know that you will see a lot of nice slides during this presentation today. In each product, you will see on the slides, you see a Bufab part in it. So that gives you a little bit of idea of our diversity as well. So have that in mind when you see all the slides throughout the presentation. So let's start with who we are then. And I actually want to turn it around and say, what we have become in Bufab. Bufab was founded back in 1977 in the deep part of Småland. And back in the days, what we were good at was to source cheap screws, bolts, parts, and nuts from Asia and sell it at little bit better price than the competitors that source from Europe. That was a starting point from Bufab. And then also, we were very successful in working with our customers hand-in-hand and grow with them and add more and more value to them throughout the journey. So throughout the years, we added on a lot of things to ending up in a turnover today that are SEK 8.9 billion. And the value that we added have happened throughout the years. A lot of things in our offering has come because of close collaboration with our customers. And then on top of that, we also acquired companies on the journey that helped us be even broader in our offering and adding even more value to our customers and ending up to be one of the global leaders in C-parts and technical components. As of today, we have a strong global footprint. We are operating in more than 50 -- sorry, more companies 50 companies, in more than 28 countries, and we have more than 800 solutionists in our organization. And I will come back to why we call ourselves solutionists. And what we do for our customers is to provide different kind of solutions within C-parts and technical components. And to our help, we have more than 175,000 items. And those number of items is actually increasing every day as we speak because we follow our customers on their growth journey. And then to our support, we have more than 8,000 suppliers around the globe to ensure that we have the right part at the right time for our customers as well with the right quality. And looking back, we are proud of our history. To be frank, we're not good at looking back. We're looking forward all the time. We're looking for continuous improvement. But now it's time when we have a Capital Markets Day to also look back and see what we have done well. And looking back, we have 45 years of profitable growth in Bufab. We have had organic growth above the market because of good growth. Because of good margin and good cash flow, we've be able to also acquire a company. We have now acquired more than 50 companies since we were founded in 1977, and we've also been able to have good profitability and good cash flow throughout the years. We have, I would say, a very attractive business model in a very attractive segment within C-parts and technical components, and we haven't had any year with operating loss so far. And 2014, we got listed on the Stockholm, NASDAQ. And since then, on net sales, CAGR has been 16%. And on EBITDA, we have a CAGR of 18%. So also a good journey since we got listed back in 2014. So what are the key factors behind the success? And I would like to bring up one that we believe are the key factor for success in the past, but also in the future, and that is our people. And now I'll come back to why we call ourselves solutionist. There are 2 things I will like to talk about when it comes to our culture and our people, and I would like to start to talk about our values, who we are? We are an entrepreneurial company. As we said in the movie before, we want to take decisions as close to our customers as possible and that the people are empowered to do so around the globe. And we call us ourselves a family of entrepreneurs. How we work? We work as a team. For us, our commitment to the customer is the most important. And to be successful, and deliver on those commitments and with bettering competitors, we need to utilize all the resources we have in the Bufab Group. So we are good at doing that and deliver as a team. How we contribute, we see ourselves as a responsible partner to our customers. And I think this is very important. This goes back to what I said before that if we set up something, we want to deliver on that. We don't go home until we sort out the issue for today. Our promise then to our customers linked to that is that we should be fast and flexible, we should be dedicated and trustworthy. And all in all, it comes up to that we should be, as we call ourselves, solutionists. And one important part of this is, of course, also to ensure that when you get new people joining Bufab that they are the right kind of people that suit in our culture, but also they challenge us as well because we want people to come in to challenge us and make us better. And of course, when we add new companies to our portfolio, we spend a lot of time to understand that they have the right fit for Bufab Group. So a few words about the market and position. And here, I would like to start to talk about A, B and C-parts and why we are so passionate about C-parts in Bufab. Starting with A and B parts. Those are the parts that most companies, industrial companies and others are spending most time on. A and B parts have high value, direct cost for those are high, often around 80%-or-so of the total cost. The know-how in the companies around A and B parts are big. They spend quite a lot of time with those suppliers and it's quite often very close to the company's core business. Often, a number of suppliers are limited. We talk about maybe a few suppliers of A and B parts to an industrial company. And quite often as well, management spent a lot of time with those players and ensure that they have the right price in place, right quality and so on. And look in total, the direct cost is 80% of the indirect cost, which means dealing with those A and B parts alone, maybe around 20% of the total cost. And I can just take myself an example. When I was working for Sandvik before I joined Bufab, I worked -- spent quite some time with A and B part suppliers. But my headache when it comes to deliveries and issues was actually with the C-parts. So I was doing a big consolidation in Sandvik to ensure that we have the right C-parts suppliers in place. And I was not the only one. I think there are many out there that have the same problems because when it comes to C-parts, it's a different story. Here we're talking often about quite low value on the parts. The cost for -- procurement costs related to the value in relation are, of course, high. It is a big risk with C-parts. If you have one C-parts failing and not there at the right time, the whole production line can standstill with huge consequences for the customers. Same thing with quality issues as well. And the problem with C-parts is that there are many and often also you have many players to work with, often maybe ending up having 20, 30, 40 to 50 different C-part suppliers. The internal knowledge around C-parts as well are quite low. It's not close to the core, it should just be there and it should just be sorted out, so to say. And what we see very clearly is that the complexity for our customers increases all the time. They got more and more regulations they need to follow and also they'll be more and more costly to follow up on all suppliers that they have. So therefore, it's a big consolidation ongoing to have less suppliers that can sort out all the headaches they have related to C-parts. And what is the beauty here is that if you look at the total cost dealing with C-parts, it's a different thing completely compared to A and B parts. Here we have indirect cost dealing with the part as the higher thing. All the FTEs that are involved to take care of the C-parts and ensure that they're the right part at the right place. That is the highest. We're talking about 80%. And the direct cost for the part itself much lower. Here, we're talking about 20-or-so approximately. And here, Bufab comes in and ensure that our customers get peace of mind and we take care everything related to C-parts and technical components. So I mentioned in the beginning that you can see C-parts more or less everywhere around yourself. And the same thing here if you look around the room today, you have C-parts in that TV, you have it on those chairs, and you have it on those lamps up there, more or less everywhere we have C-parts. So in all industry, you have C-parts. And of course, we have the opportunity to grow in the industries that we think make sense for us and for the future. There are a few mega trends that are shaping our industry and that's helping us on our journey and also actually helping us to get more opportunities to grow. And I would like to go through 3 of them. The first of all is that the C-parts markets, in general, are growing. It's changing more or less all the time and also expanding. The second thing is the demand for a full supply chain partner that increases all the time as well. And then on top of that, more focused on the total costs dealing with C-parts. And then thirdly, maybe not a big surprise, sustainability. It's a big impact for our customers and the whole market when it comes sustainability that are shaping now the future when it comes to C-parts. I will quickly go through each one of those, and I would like to start them with C-parts market that continues to grow, change and expand. Start with the market as such. The C-parts industry is fantastic. I was a consultant many years back when I started to read about C-parts industry and fell in love completely because it was extremely fragmented business. But with a strong underlying growth and demand from the customer for a bigger players that can sort out their issues with C-parts. And this is still the case today because the market are still very fragmented even if a consolidation is ongoing as we speak right now. And our market share, even if we are one of the biggest players in the world are very small, and very difficult actually to tell how big it is. We talk about maybe 1%, 2%-or-so maximum globally. So it's a very fragmented market going through a big consolidation. And when we compete, we compete with local players, more or less most of the -- 90% of the cases or more than that are small local players. Family-owned players, maybe SEK 150 million, SEK 200 million in turnover that are specialized in a certain part within the C-parts environment. And what we see as well is that those players get more and more issue to compete with a bigger player like Bufab. Then of course, we have bigger players as well in the market [ Wort ] and others, but quite seldomly, we actually compete with those guys. These are the local players that we compete with. And a funny fact about our market share is actually the fact that every time that we are growing, our market share actually decrease in many cases. And one example is TIMCO that we acquired last year. TIMCO has a turn of around SEK 800 million. And when we entered that business in U.K., we realized that our addressable market totally expanded and our market share decreased because we went into a new segment. So adding SEK 800 million was actually a decrease in market share because something totally new opened up that expanded the market share for us. That's quite a good example of how our industry works. And to look at the summary of this slide, you can say that this, for us, is a major opportunity. We want to lead this consolidation, of course, by helping and serving our customers in the best possible way. Of course, reaching new markets, new segments and also new customers. The second thing, I would like to talk about, of course, is the demand for a full supply chain partner. We see a global trend around us that are all in the Sandvik company more or less want to reduce the complexity when it comes to C-parts. I mentioned initially about all the suppliers that we need to deal with. And for every day, that becomes more complex for them. So it's a big headache, and they want to reduce the number of suppliers. They also become more and more mature when it comes to C-parts, which is good for us. Many customers come from looking at the price for the items, but they start to realize the same thing as I just explained, that the total cost, the big part of that is actually indirect cost that we need to reduce. All the man hours is spent on taking care of C-parts. So we see an increased focus on total cost, and that changed the dialogue we have with our customers as well and help us actually to grow and take market share. And few players meet up with the new demand that's coming from our customers. They want global presence in many cases. They want us to have sourcing for different parts of the world. If something happen that interrupt supply chain, they want us to be able to source from somewhere else. A local player quite seldomly have any options. They also want to ensure that we can help them with their supplier base in total, lead this consolidation and also help them with all the kind of regulations around C-parts. Once again, I can mention sustainability as one example. A and B parts is a big thing for them with complexity around reporting sustainability, take the C-parts with many more suppliers, that becomes a big headache. And the good thing from our perspective is there's only a handful of players with global scope and ambition. Because to raise the bar and become big, it's a big journey to take. So we have put ourselves here in a very good position. Also, we see a lot of macro factors around those that accelerate this consolidation. Those things are not news to you. You have seen them around us now for the last couple of years. Supply chain constraints impacting a lot the industry. And a lot of questions come about where do you have my parts? I need them at the right time. I need them in a certain place and they want to source from a certain area or I want to have options. That is happening all the time. Also questions about near sourcing comes up as well. They want alternatives. They want to have sourcing maybe locally in Europe or in U.S., and have questions around that as well. Trade wars and barriers is also good for us. The more you can say, mess that is around us, the better for our industry and actually for us to take market share to a certain extent. Same thing come with the last bullet here. Financial turbulence, inflation, and the cost pressure also drives the demand for consolidation. Most companies around us now, they look at the cost right now. They try to push down the cost. And of course, to do that also within the C-parts. So a part of me actually like this environment right now where we have a lot of cost pressure because for me that's opportunity to take market share because it's a consolidation ongoing when we talk about that. If they have 20% as direct cost for the C-parts and 80% indirect cost, they will look at the total cost and will go for consolidation, and they will change the market share for sure in the market. Number 3 then, sustainability. I've already mentioned #1 here, but this one is very important to highlight. Regulatory compliance and reporting becoming a bigger thing for the companies. Many companies have realized that now it's actually coming. Before I could talk about it, but I didn't need to do that much. Now I actually need to show what they've done. And when it comes to C-parts, we can play a key role here to help our customers with this journey with C-parts. We also see that increased demand for transparency. Customers wants to know where the product is coming from. Have we sourced them from the right place? Have we control of the whole supply chain? Put yourself in a customer's shoes where you have 20, 30 or 40 supplies to C-parts and there'll be thousands of C-parts to deal with. To have control over that and transparency about the flow is very difficult, obviously. And here, Bufab can come in and help. And then we have a shift, thirdly here, a shift that are changing all the time and helping also some segments to grow quite quickly. And that is the adoption for renewable energy that's also impacting our industry quite a lot. So how do we, in Bufab, then creates value beyond C-parts and other players out there? I've give you a flavor already, and would like to recap again, the slide I started in the beginning. For us, it is the journey to what we have become and the position we have today that give us a very good position and a pool position to grab market share. Because we have gone from a traditional trading company for simple screws, bolts, and nuts to become a global leader in C-parts and technical components. And this is the advantage we have versus many of the small players that we compete with. And of course, it's difficult to explain what we're doing because have in mind that we have 50 Bufab sister companies, and they all do -- they are tailor-made solutions for each and every customer. So our offering look different. If you go and visiting a Bufab Finland or if we go visit FLOS, they have a different way of create value. But to give you an idea, all of them provide large value made of small parts. So everything that fits in Euro pallet more or less we do. And it could be technical things and it could be more simple things as well, but more or less everything we can do. And to give you an idea, we can divide it in 4 areas, what we do today within source, simplify, improve and secure. And I would like to start to talk about source then. First of all, our supplier base. I think this is one of the key aspects to our success is that we have more than 8,000 suppliers around us. And actually, every time that we're adding a company or actually growing with the customers, this is actually changing as well. We're getting more suppliers on board. But at the same time, we also, of course, remove some suppliers, it's not there for the future. So this work is ongoing all the time. But having a broad supplier base, more or less covering the whole world is a big advantage for us to ensure that we have the right supplier base to support each and every single customer. And what we do is that we help our customers with their supply chain journey completely from A to B to C and so onwards. And we've put up a tailor-made solution for them that suits their needs for the future. And to our support, we have what we call a full range offering. I mentioned initially 175,000 items that are expanding as we speak right now with new solutions for the customer. Because what happen quite often is that we start with, I would call it, quite simple consolidation. And then we've been working with a customer from time we get more and more advanced, we help them with their development, we help them with the R&D process, and we get more advanced products, in many cases, actually even B-parts that we supply. And to be able to do that, we need to have a broad offering, and we need to help each other. Therefore, we also acquire companies with different profile that are experts in a certain area that can be helped in that specific region, but of course, also utilized by other Bufab companies. So the full range offering that we have and that we have created throughout the years are very important for our offering. Simplify. And here, of course, the reduction is very important. And here, we're talking about total cost and reduction of cost for our customers through a consolidation of the C-part suppliers. Replenishment. We help out. We have logistic solutions that we can provide that are tailor-made for our customers and, of course, also one delivery. Imagine if you have 20, 30 or 40 C-part suppliers, it's also a big headache just to deal with the deliveries. And here, we make sure we have the right stock at the right time. Improve. I mentioned also before that where -- logistics issues is quite common when it comes to C-parts. A and B-parts, quite simple. C-parts more difficult. And many of our customers that actually are quite poor in forecasting to know where they need the parts there to just expect the part to be there at the right time. So here, we can help out and make them more efficient and lower their total cost when it comes to warehouse logistics with our solutions. We also do kitting and assembly. And a good example of what we mean with kitting and what we do for our customer, all of you have been buying something from IKEA. And they've got those small plastic bags, that is most likely a Bufab bag you have in your hand. And nowadays also the right number of screws, bolts and nuts in those bags as well. That's the one thing we can do for our customers as an example because those things are obviously C-parts. And then we have engineering R&D. I already started to talk about that. But quite often, and in many of our sister companies, we get more and more of an engineering company R&D company. Because as you grow with the customers and help them develop the next generation of product, we are already in that process -- in the R&D process to ensure that the right parts in place for the future with the right quality and with right price. And that's part of being more mature in the relationship with our customers. And then we have secure. I've already mentioned sustainability and all the regulations actually comes with sustainability, it's a big thing that we can help out with global right now. And how it works in Bufab is quite often that demand starts somewhere. Sustainability is a good example. It started off, obviously, Northern Europe. So Bufab Sweden are really good at this. But then what we do that when it comes to other countries, now it start to be more a question about the Southern Europe as well, soon U.S. and Asia will most likely follow. Then we have some experts in the group that knows how to deal with this. They have offering ready that they can take, so we don't need to invent the wheel again. Quality, I also mentioned, it's extremely important that you have the right quality. Equally important, we have the right quality on the C-parts than on the A-parts or B-parts. So you get the same problem if the machine is not working, if the problem with a small part. And then, of course, inventory management and on-time delivery. Helping out to have the stock at the right place, ensure that they have the right stock also in-house at the right time and that we do this in an efficient way, good for us and good for our customers and that they don't need to think about it. They should just be there and we should sort it out for them. So all in all, what we do is that we give our customers peace of mind. We do it in different ways across the globe, but all of them create peace of mind for our customers. And of course, maybe this is given, but I think it's a good reminder. The more peace of mind that we create, the higher margin we can get, obviously. Looking back and also to a certain extent still today, there's a little bit too much product and price focus. You have the product and you price margin on that product, but that is changing. We're going now from product and price to actually looking at the value that we provide. What is the total value we give to customers? And the more value we add on that list, of course, the more margin we will get as well. And that's one of the reasons why we can now raise the bar and go to 14% 2026 instead of 12% as we delivered so far. And what we do is that we take care of high-value and high-volume products. This is the landscape that give you an idea of how it looks like in our environment. You have here customer value and complexity to the left and then you have volume. And if you want to buy a few items, of whatever C-parts, you don't go to Bufab. You go to maybe Amazon or you go to a local store and buy that. Then we have the local C-parts players and the regional C-parts players. They are helping out with the bigger customers actually. Because when I talked that they have maybe 20, 30, 40, 50, it could be big industrial companies, they are actually buying from small local and regional players. But what we are doing is that we are taking care of the consolidation. So we take market share from the local C-parts players and the regional C-parts players and put them up on the value chain. So we get the products with high customer value and higher complexity and then with total high volume. In the past, this has been a problem for us actually. We have been too much customer-focused sometimes. I've been down and grabbing customers with, that is not good for us to be honest. They don't see the value that we have, then it's better that they buy from someone else. And this is a journey we are on actually to gradually improve to ensure that we actually get a gross margin that makes sense for the value we create. And for us, the big potential is actually to improve our product and customer mix that are very, very broad as of today. You will later hear Cynthia, MD for ABS, talking about their journey when it comes to product and customer mix and how they improved their gross margin. And this is the journey that many of our companies are actually on right now to give an understanding of how we actually can do this, and we'll do this also for other Bufab companies. To give you an idea of how it could look like for a typical Bufab customer, here, we have Väderstad, a customer in agriculture. To understand that it's not an easy thing for them to sort out their C-parts themselves in-house with all those suppliers is that we are providing more than 2,000 unique items to Väderstad. In more than 6,043 bins actually. So in their one production plant, there's a lot of bins with C-parts. We provide with them 40,000 order lines, and 95% of the items are special, which means there are some kind of drawings behind. So it's quite complex. And to our help, we have 140 suppliers. And of course, now we maybe understand why Väderstad started this journey and started work with Bufab. For them to deal with this themselves become a nightmare, obviously. The cost got higher and there are also more quality issues. Going to Bufab, and we take care of this will help them to get what we call it, peace of mind and, of course, lower the total cost. And this is how it works quite often. And I would like to give you an example was in value how it could look like. And of course, all Bufab companies look different and the customer look different, but give an idea how it could be for a customer. Take, for example, a customer that have around 1,000 C-parts and as a starting point, maybe 30 suppliers. Quite often then, they have some issues with this. It starts with quality issues. Maybe of those 30 suppliers, 25 do a fantastic job, but 5 are doing -- have some issues that interfere the production line. So they start to get problems. They also say that logistics costs are very high. They don't get any scale benefits of this. So they have a high logistics costs. They also get increased amount of sustainability and it's a reporting. You have transparency around what are actually those guys sourcing from? And on top of that, they also need to take care of everything that comes to quality and the purchase of course, in-house. So they have approximately 15 FTEs involved in care of all those things. Total cost SEK 20 million for C-parts direct cost, just buying the parts in this case are low, SEK 4 million, but indirect cost to take care of this is high, SEK 16 million. We have a discussion with this customer, and we say that, yes, one, we can enter. We can take care of 500 parts, and we can phase out 10 of the 20, let's start with that. So we start with that journey. And they realized that, okay, those guys actually secure the quality and they take care of the deliveries. We also provide stability reporting, they don't need to think about that. They also see that instead of having, let's say, 3, 4 people working on quality, they can remove half of them, let's say, from the beginning. And they realize when we have done it, it actually gets smoother and cheaper for them. So they have only, let's say, around 12 FTEs involved in total. And after year 1, the total cost for them are decreasing by, let's say, 15%. And also, they have less quality issues than others. And the big saving is not in direct cost, the big savings in the indirect cost for this customer. What happens then year 2? We realize and they realize that there's much more value we can provide actually. This is just starting of our relationship. We take out additional 250 parts and phases out 10 more. We also realize that we can help them with the logistics solutions and VMI solution at their facility. They realized that it is a good thing that can lower their costs, and they think it's a good idea. So we work on that. We also start to help with engineering support. We start with more complex parts. We started with the simple ones, and we get more complex parts and maybe even get involved in R&D process. And now after year 2, we end up in 8 FTEs involved from the customer side and the total cost decreased for additional 5%, let's say. And then year 3, the journey continues. We take over even more part, but we realize as well that there was not 1,000 C-parts, it was much more than that because that often happens actually we go out there. With the first meeting and the first review, we realized maybe have a potential of 1,000, but in many cases, end up to be 50% more than that because a lot of parts, the customer don't even see as C-parts. And also when you grow with them up in the value chain, the more things that we call C-parts so to say because definition is very broad. And we have become a trusted adviser for them now. We help out with sourcing, supply chain, engineering and sustainability as well. And they realize that they -- this is better for them because they can focus on the core business, and that is not C-parts, that you just work out. And of course, the good thing is that people talk to each other. So this company have a factory in Poland as well that they have the same issues at the factory in this case, let's say, in U.S. has. And we started dialogue with that factory and we get a new potential of SEK 10 million and another 1,000 parts, and we start to work with a new factory. But in this specific case, the savings continue and they get additional 5%. So this is just an idea of how it could look like when we add value. So yes, we lowered the total cost, but the biggest saving is coming from the indirect cost savings with our customers. But we're not only growing with organic growth, I mentioned in the beginning that we have done a lot of acquisitions and to be more specific, 51 since 1977. Since we got listed back in 2014, it's 14 acquisitions and we have added more than 900 employees and SEK 3.4 billion in turnover to Bufab. And we are, I would say, a different, more diverse and a stronger company today, just if you compare a few years back. This graph shows Bufab since 2018, and we have divided our company in the new strategy now in 3 different types of companies. And I will come back to more details. But very quickly, trading are the -- here that are the biggest part or a traditional Bufab company that have a broad range of products. And that the company -- that our trading company looked the same more or less in each country. Sweden and Finland have more or less the same offering and more or less the same way of doing business. What we have added recently, I would say that this has accelerated the last 5 years is niche companies. They have a specific profile, and they are good in a certain area. It could be, for example, BUMAX. It could be Magnetfabriken and we have a few others. And if you look at acquisitions, the last acquisitions were done, 7 of them has actually been niche companies. And that part in orange here, are increasing, becoming a bigger part of Bufab. And then we have the manufacturing business. That is the smallest part, been an organization for Bufab for a long time, and it's been more or less stable here. Here we have Bufab Hallborn and Bufab Lann around SEK 400 million in turnover. So we are a different company today. And I would like to share how that looks like in more detail. But let's start with the overall situation. We have 64% of the companies are, as we call, trading companies, 31% are niche companies, and then 5% turn always to manufacturing then. And those are run independently with full profit and loss. An EBITDA range is quite broad. We have companies performing 2% EBITDA up to 30% in EBITDA. If we start then with the traditional trading companies, they have a broad range of C-parts and technical components. How it works is that when we grow with our customers for the trading companies, quite often, we end up in also supplying B-parts. Sister companies, that are trading companies, have similar customers and similar local market knowledge and their focus is to become local market leaders. They don't compete with each other. So Bufab Finland and Bufab Sweden that are both trading companies, they are within the boundary of the country and they don't go in across and enter a new country. EBITDA range for trading companies are between 2% and 22%. It's also quite a big range here when it comes to EBITDA performance. And then we have niche companies, and this is the area that is increasing lately. These are companies that are supply chain partners deal with a special know-how. Of the meeting more complex customer demand, it could be, in some cases, actually a long selling process, more like projects in certain cases, when others is more or less linked to engineering or that we have specific products that have a little bit higher complexity. In those cases, we can have own manufacturing, if we think it makes sense. One example will be mentioned further describing today, and that is BUMAX. And we have made a big change here in the new strategy. In the past, those niche companies were actually treated like all other companies. So they had regional limitations. Magnetfabriken, they didn't go outside Sweden without going through a Bufab company. The problem with that strategy was that the Bufab companies in another country didn't have the competence in many cases to actually sell that product. So we're ending up doing a good job in the home country, but had problems to actually expand that company to other countries as well. So now we are changing that. They have full P&L globally because they don't compete, they're trading companies. So their plan that they put in place now. In the coming 3 years will be a global growth plan, if it makes sense, obviously, and they decide the way they go to market outside the home country. They can, of course, utilize the Bufab trading company that we have in that company, if they think it makes sense. If not, they can use their own sales force or using a distributor to enter that market. And therefore, we believe that, that can accelerate the growth for those niche companies. EBITDA range for niche companies is also quite broad. We're talking between 7% and 30% as of today. And then we have our manufacturing companies. Here, there are 2 of them in the group, Lann and Hallborn, turnover SEK 400 million. Their core offerings are in manufacturing capabilities. They have the majority of the sales to automotive and there are few synergies with the group. Approximately 5% of the turnover of Bufab Hallborn and Lann is going into Bufab, so quite different than the other companies in the group. EBITDA range for Bufab and Lann are between 5% and 10%. And in this industry, that I will say, a little bit different than we're operating in the trading niche, having an EBITDA range of 10% around that is actually very good performance. And as we have raised the bar, for Bufab Group, and we want to reach at least 40% EBITDA. This will be very difficult for a manufacturing company like Bufab and Hallborn to actually achieve, 10% is a very good performance for a manufacturing company. Looking at CapEx, it also has a lot of CapEx in this industry. When you do manufacturing and auto trading, you have a big part CapEx, obviously, and of the group's CapEx, 40% is actually Lann and Hallborn. So therefore, the Board of Bufab have decided to do a valuation, as we don't see manufacturing as a core business going forward. So we will immediately start evaluation to see what we do with the manufacturing business with different strategic options, obviously. So looking then how we are -- when it comes to diversity, we are, I would say, very broad. On this slide, you see 10 different industries, but we are in much more industries than those 10. We are actually in 30 different industries as of today and also in many subsegments. And no subsegment is larger than 10% of our net sales. And this diversity that we have, of course, helps us now in times like this to reduce our volatility, but it also creates opportunity for us as well. Each sister company in Bufab, they can decide their own growth path as long as profitable and as long as they're growing quicker than the competition, and each sister can choose where to grow. We don't need to be a certain segment. If we've been in a segment that is not profitable or have been a segment with low growth, we can easily go to another segment. And that is the pressure and the opportunity we put on our sister companies to ensure that we are in the right segment with the right growth opportunities going forward, obviously. I would also like to mention sustainability. We aim to lead the development when it comes to sustainability in our industry. And I would say that we are very well prepared even if you have a lot of work in front of us. The work started many years back. This timeline starts in 2016. And many things that we started with was actually because of regulations and other things, but ending up to be something that's actually adding value for us today but also for our customers. We start off to talk about responsible sourcing programs with our suppliers. We talked about code of conduct with our suppliers and all those things. We signed up for EcoVadis in 2017. And then I would say, the big shift for us, we really started to take our CO2 journey seriously was when we signed up for science-based target in 2021. And we said that we will be part of Paris agreement and improve. Linked to that, we started with our sustainable supply engagement program, started to work with our suppliers to get them onboard on this journey. And as we speak, a lot of work is ongoing to put ourselves in a really good position for the future. Because we have a very, I would say, aggressive plan when it comes to sustainability. And we are advancing for net zero together with our customers in 2050 and this work is ongoing. And the beauty here is that I think for our -- we started off to deliver on our commitments to the market. But now it actually goes out to something we can add value to our customers. When we meet the customer today, especially in Europe, this comes up on the agenda. This is one of the big selling pitches we have today actually because we are on the front end, we can help them on their journey. So we have gone from something that we did for our own to deliver to actually something that's added value for our customers. And of course, when that starts to happen, that the sales guys in the organization realize that I can sell these things actually, then you get a different attention and focus also in the organization. And much more MDs and others realize this is part of my P&L now, and I can actually raise my P&L by making this happen. And that is a big shift for us when that starts to happen in organization. So looking back then on our performance financially. We think we have had a solid financial development last years. Those graphs you see from 2019. Revenue has been solid and improving with stable CAGR every year. And I think we show now that we are quite resilient in times like this when we see a fluctuation in demand for different industry last year or so. Same thing, I think we're showing resilience also in the margin. We said last year that our short-term initiative was now to take market share, protect to improve our margin and ensure that we get better cash flow. And I think we've done a good job when it comes to the margin to maintain a good margin. And show the customers that we have a good value we provide in times like this as well. Cash flow has been a journey for us. We strategically decided to have a lot of stock throughout the pandemic because there was a lot of supply chain constraints and we needed to have stock to support our customers. And on top of that, we have long lead times during that time. We had a lot of inventory and we had a weak cash flow, and we decided also last year that now it's time to really take a big grip on our cash flow and work with our inventory. And that is paying off. So this year so far and also in Q4, we're expecting a very strong cash flow. And part of that is, of course, linked to inventory and release of inventory. And looking at our net working capital journey, we will come back to that because that is one of the area that we see in our new strategy that we need to improve, how we work with net working capital and especially inventory because here, we see a big room for improvement. So we will come back to that topic. So to sum up, we think we have done well, but this is just the beginning of the journey as we see it. We have major opportunities in front of us that we need to capture now. We have a strong offering and a strong value to our customer. That is clear. And the last couple of years become even stronger. We want to give more customers peace of mind. Secondly, there are still things that we can improve and do better. We're changing now in operating model to help our niche companies to grow. We see that we have a lot of work to do with our margin to improve our gross margin, have the right product and customer mix. We will address that. And of course, also work with our inventory. If you're in the training business, you should be really, really good in net working capital, obviously, because that's part of our DNA. And then number 3 here, we feel that the market trends are behind us. There are global trends that will help us on this journey that we can fly on, so to say, and we aim to lead this market consolidation. And all in all then, we see major growth opportunities in front of us to grow. And as I mentioned, we think that we have just started our journey. This is a world map where we have the Bufab sales companies today. But in many cases, we actually have a very low market share, even if we start to get a good footprint. And to give you an idea of our potential, our market share is less than a few percent, as I mentioned, maybe 1% or 2%. So we're very small in the market, even if we were one of the biggest Secondly, let's say that we could only work with our existing customer base. That will be enough, by far, to double our turnover because our market share with existing customer base are still low. Growing all the time, obviously, but it's still very low. But luckily, we can also grow with new customers, but it would be enough for us to have the existing customer base to grow. Thirdly, Bufab Sweden, this was funded back in Sweden. So it's still one of the biggest companies, have a turnaround SEK 1 billion. Here, we have 30% market share more or less, difficult to get a good understanding exactly what it is, but let's say around 30%. Let's say that we aim to reach 10% market share in some other countries. In this case, Poland, Germany, Spain and France, that alone, only 10% will be additional SEK 13 billion turnover to Bufab. So the potential is always huge to become much bigger than we are today. And I think it should be easier now to grow as we have this footprint than we had back in days where we were growing in Sweden because we are much bigger now. We have a much better starting point in many of those countries than we had when we were growing in Sweden many years back. So all in all, we have just started our journey. So to make this happen then, we have updated our strategy. And we call the new strategy discovering the next solution. We are very proud of our past. We think we've done a very good job. So what we've done is now to take the good things that we had in the past, building our success but then address areas we can do better going forward. And also in short to capture all the potential that we see in the market. And therefore, we have put together a new strategy. But a lot of things are familiar for the organization. So our strategy for profitable growth. And I would like to start here to talk about our mission. This will not be a big surprise to you because what we want to do is to create peace of mind for our customers by creating sustainable and outstanding value. We have set 5 focus areas: The first one, customer value creation. And you will get a few examples of that from organization, how that looks like. Of course, that differs in different part of the Bufab organization. Secondly, accelerating efficiency. There are many areas we can improve on how we do things and become more efficient. And today, you will get one example. Johan Lindqvist will talk about net working capital because it is one of the few initiatives that actually will happen globally. In every company, Bufab company, they now have a plan for their net working capital in the coming 3 years. Therefore, we take that as one example on what we're doing on this focus area. Other than that, there are many other initiatives in each of the companies within this field. But net working capital is something that happened for all companies in the group. And then we have sustainability. Here, we are looking from the customer point of view. Yes, we want to deliver on our targets, but what we'll talk about here is how we actually also add value for our customers when it comes to sustainability. World-class supplier base. If you are in this business, you need to have the world-class supplier base to help us on this journey. So Carina will take us through our journey with our supplier base. And then at the end, Johan Sandberg will talk about M&A, how we aim to drive the market consolidation. We say in Bufab that we deserve M&A. So when we have a good growth, good EBITDA and good cash flow, then we can acquire companies and a quite good companies that fit our portfolio. So we want to go through how we aim to continue working with that. And our fundamentals that will make this happen going forward, of course, is our people. This is critical for us that we continue to develop our culture and that we still have a strong solutions culture also going forward. And then linked to that is also that we have a good operating model. We have further developed our operating model, talking more about empowerment, accountability, but of course, also very strong performance management. They are absolutely critical if you work in decentralized operating model. And all in all, what we want to achieve, that is profitable growth. So we would like to start to talk about customer value creation. And we think it's then best to start to listen to the one that knows best and that is the customers. So we will start to listen to what the customer thinks about Bufab and value creation. So please. [Presentation]

All right. Now it's time for a break before we move on to listen to some of our companies around the world. And we're going to do like this. We have 15 minutes break right now in here in Fotografiska and for those of you that are joining us online make sure that you also grab a cup of coffee or standing up because in 15 minutes, we will be back here on stage, and we will have a call from the U.S. So we see you in 15 minutes. [Break]

Okay. So welcome back Bufab Capital Markets Day. We will continue talking about customer value creation in our strategy part. And we saw the customers before, now we will listen to the sister companies and actually 3 of them. So we will have first of all, Cynthia joining. Cynthia Alvarez is MD for ABS in U.S. Talk about the different type of companies in Bufab. ABS is a trading company, have SEK 800 million in turnover, EBITA range between 15% and 20%. And I mentioned before that we have some companies have been very good in working with their product and customer mix and also through good pricing. And here, ABS has been a role model since they joined Bufab back in 2019. And Cynthia will give an example of how we can do it in our industry to be better at this and especially for us in Bufab. Then we have Bufab Ireland, Kevin is here talking about his company. It's also a trading company, a smaller one, but with strong growth, SEK 100 million in turnover more or less and EBITA range between 15% and 20% and have very strong financial development. A little bit of a turnaround, actually. We have been a loss-making business and now has strong sales growth and also a good profitability and a really good journey now to continue that growth here in Ireland. And then we have Bumax here. We have Lars Holm talking about Bumax, and Bumax is one niche company then, different than ABS and Bufab, around SEK 300 million in turnover, EBITA around 25% to 30%. And here, we see a big potential for further growth. So Cynthia, Kevin and Lars will take us through how they add customer value and a little bit also on what they aim to do going forward. So having said that, I leave the word over to Cynthia. Are you with us, Cynthia?

I'm here. Hello.

Excellent. Welcome.

Thank you. Thank you, Erik, and hello, everybody. I am Cynthia Alvarez, BMD for ABS. I've been the MD since 2019. American Bolt & Screw was founded in 1946. But anyway, we were founded in 1946 and acquired by Bufab in 2019. We have 85 solutionist and we have a total of 7 locations, 6 of those in the U.S. and 1 in Mexico. At ABS, we hold the industry together through our dedication, teamwork and quality of C parts. We pride ourselves in selling bulk quantities, which allows us a fast-paced and efficient operation. Combined, we have over 300 years of experience in the industry. Some industries that we serve are the RV industry. Here, we sell over 200 items in addition to fasteners. We sell here our ABS patented drawer slides, gas struts, slideout rollers, cabinet hardware and many other items all the way down to toilet paper holders. And then we have our cargo industry where we sell over 150 items. Our skin screws for aluminum siding are the highest volume items for this industry. We also sell -- our patented bar lock, E Track, tie downs, entry door flush locks, rubber bumpers, Jackson couplers, everything down to the safety chain. A quick story on our safety chain, there was an older couple that was traveling and they were pulling their trailers. They lost control and their truck actually went off the cliff, but the trailer stayed on the road. So they were hanging off the cliff by the safety chain. The chain held up until help could come and pull them up. So basically, the chain actually saved the couple's life and their dog. All 3 of them were in the truck that have flipped over. So I thought that was a pretty nice story about how our safety chain is a pretty good product. And then we have our modular home industry. Here, we sell over 200 items. The main item that we sell here is the ICC approved lag screw. This is a structural fastener for the bottom of the frame. And among other items, we sell all of the cabinet and drawer hardware, such as pools, knobs, hinges, slides, the exterior and interior locks, porch brackets and multiple other items. This is just to give you an idea of how much ABS does in addition to fasteners. We offer many solutions to our customers at ABS depending on their specific needs. Our just-in-time approach help give our customers peace of mind with their inventory levels and their needs. ABS does not have one cookie-cutter approach. We work with each customer on a case by case to provide them with the most ideal solution that works for both sides. This, in turn, creates a long-term partnership. Our on-site QC lab has been instrumental in working directly with our customers to expand our product offering and design items specific to their applications. In some cases, these items have become legally patented items for ABS. Thanks to our QC lab, we are also able to offer our customers peace of mind through stable quality. We also have our own in-house kitting machines, which allow us to handle our customers' bagging needs quickly and efficiently. In 2019, when we were acquired by Bufab, our gross profit margin averaged about 35%, 36%. Since then, we have made a number of changes to improve our efficiency and pricing. Some of the changes that we made were passing on tariffs, which have not been done previously. We implemented daily price modifications as needed. We properly quote our fill-in product. So if we run out of overseas, and we have to source domestic, we quote it based on the domestic price, not off of the overseas like we used to. Corporate quarterly pricing is now something that we do for our larger customers with multiple locations. We now account for freight out when quoting. This was not done before. Quotes are done by our inside sales staff only and we've been working really hard training inside sales to quote based on the customers' requirements to ensure that ABS is paid for the job that we're doing. Our biggest challenges with price increases were not with our customers. The challenges that we faced were internal with our own sales team. In some cases, we have to part ways with some of our employees who could not or would not adapt to our need for improved margins and efficiency. Today, as you can see here, our margins have improved to about -- our gross profit margins have improved to about 47%. And this is thanks to the hard work done by the ABS team and our strong relationships with customers. Looking forward. Looking forward, ABS will continue offering VMI solutions, keep quality consistent and offer vendor consolidation for our customers. We will also continue to offer a local presence for smoother, quicker deliveries and sales representation. Building strong relationships is how we have grown with our existing customers and how we will continue to grow with our new customers going forward. Thank you very much.

Good morning, everyone. Hello. My name is Kevin Donnelly. I am the Managing Director of Bufab Ireland. So I really want to thank you for this opportunity to share some information on my company, Bufab Ireland, and of course, how we create value for our customers in Ireland. So you will see some photographs, some pictures of the impressive and innovative machinery that our customers produce in Ireland. And all of these machines that you see in front of you include components both standard fasteners and special parts that are supplied by Bufab Ireland. Top left hand corner, you'll see Sandvik crushing and screening machine. Top right-hand corner, you'll see a double-deck bus. Bottom right-hand corner, you'll see a Moffitt truck-mounted forklift. On bottom left-hand corner, you'll see a range of industrial pumps. I'll expand a little bit more about these customers in the next slide. But to start off with, I'll talk a little bit about Bufab Ireland and, of course, trying to show you our business model on how we have developed. Bufab Ireland have around about 100 customers. Those 100 customers cover round about 4,000 part numbers, individual C-class parts that we supply. If we look at the balance of parts, 46% of those parts are standard fasteners. What we call a standard fastener is an item, which you would associate with a typical fastener company. So a hexagon bolt, a hex knot or a washer. We also supply special parts. And by definition, these parts are advanced technical parts according -- normally to customer drawings. They could also be assembly parts. They could be [indiscernible] items or also distribution items. The interesting fact is when we look at the split, it's almost 50-50 between standard fasteners and of course, special parts in terms of the part numbers. But when we dig a little bit further and have a look at the revenue stream coming from those part categories, you'll see with our standard fasteners, we get 27% sales revenue. If we look at our special parts, we get 73%. You can see the focus in Ireland has been very much on looking at special parts. This is the demands coming from our customer because they ask us to supply not only the standard faster components, but also special parts. And we do this with the use of our VMI logistics solutions. It's very easy to grow share of wallet of customer when we have are well run and put together VMI Logistics Solution in place at the customer. So major customers and some of the products. You've seen some of the products earlier on that were manufactured by in the previous slide by our customers. I'm going to talk through some of those customers. I'll just ask you to look at the photograph in the background. That's a Moffett truck-mounted forklift, that's produced by Moffett and then dock and they are part of the up group. I would guess one time or another, one of us have seen this truck minded on the back of a trailer driving, and we've driven behind it. This is produced on the dock. They are the world-leading design and manufacturer of this type of equipment. We are very fortunate to supply to some customers that are world-class and cutting edge. Sulzer Pumps Ireland Limited, part of the Sulzer group. They're a major manufacturer of pumps for the dewatering industry and, of course, in the mine and construction. Sandvik, I'm sure, is a name that you will all recognize instantly. And in Ireland, we supply Sandvik for their crushing and screening industry. And also interesting point to note is that Northern Ireland produce 80% of the world's mobile crushing and screening equipment. We are what they call it, the screener triangle as opposed to Silicon Valley, we have that in Ireland. Wrightbus are a leading-edge manufacturer of sustainable transport. Wrightbus our leading edge in terms of manufacturing buses that are powered by electricity. Of course, hydrogen is also one of the new fuels that we're looking at going forward. And Wrightbus enjoy the accolade of being the first manufacturer to produce a double-deck bus powered by hydrogen. And we're very, very proud that our components are in these buses that Wrightbus produce. LAPP, U.K. and Ireland are also a large manufacturer of cable assemblies. So you can see we have a diverse range of customers in Ireland. But how do we create value? We create value to our customers because we operate close to them. We're very much involved in supplier consolidation exercises with our customer. And of course, we give logistics solutions through our VMI, which are innovative and match the needs of our customer. Of course, this is all wrapped up and sustainability. We're going to talk about the case whereby we transferred some business from one of our sister companies and Bufab Flos in the Netherlands across to Bufab Ireland. In this sentence, we're going to talk about Moffett truck-mounted forklifts. Bufab Flos had been the kind handler from Moffett for a few years. And at the end of 2021, the decision was made that this business will be transferred to Ireland. One of the key reasons for that was due to Brexit. The complications surrounding Brexit meant that delivering parts from U.K. suppliers to our customer and then dock via our sister company in the Netherlands made it more difficult. This wasn't an easy decision. But of course, within Bufab, there's always the focus that we should have a local company, being the speaking partner with our customers. And of course, this is for the benefit of not only the customer but also for Bufab and the synergies that we can create. As a result of this close cooperation with Bufab Flos and our customer Moffett, we have managed the grid to bring in some value over and above their expectations. In 2022 and 2023, as a result of the movement of the account to Bufab Ireland, we have increased the turnover with this customer by 53%. We have increased the number of parts that we supply this customer by 25%, moving from 500 parts to now over 625. How do we do this? We did this by using a well-integrated VMI logistics solution and being a solutionist. And we still have to discover the next solution for this customer. We're very proud that as a result of this movement of the account from Bufab Flos to Ireland. Bufab Ireland was the first supplier within Moffett to achieve a 100% score on their internal supplier capability. We're also the highest scoring supplier in our category, and we continue to be that. We did that yet again with VMI and a hand-in-hand approach with the customer. In 2022 and 2023, we have consolidated more than 20 suppliers for Moffett and that includes more than 125 parts. Our customer recognizes the value and the reduced total cost of ownership when Bufab supply these parts, and as I said, there's 20 suppliers. Some of these suppliers are well known, some are very small. But Bufab can handle the sustainability aspects because we have the credentials where some small suppliers will not have those and can't support our customer in that respect and they instantly recognize the value that we create and TCO and, of course, sustainability. But we haven't stopped there. In 2024, due to the good momentum that we developed with our customer Moffett, we will continue on more supplier consolidation exercises. And we will look at another 7 suppliers in 2024. We've consolidated them in to Bufab and we will then bring on board another 151 parts. We haven't stopped there because as Moffett moved to their factory of the future planned for 2026, we will be integral on how we help them plan their production footprint and how we introduce our logistics solutions into Moffett's to help them be more efficient and to be a factory of the future. Of course, looking forward, you can guess for Bufab Ireland, the focus will be aim for a VMI logistics solution where possible. We recognize and we understand that when we create a VMI logistics solution at our customer, we get increased satisfaction. We also get profitable growth. And this profitable growth we need if we're going to outperform the organic Bufab growth targets that exist in the next 3 years. So I want to thank you for listening a little bit about the journey that Bufab Ireland has been on and of course, how we're going to continue to focus and develop and create customer value for our customers in the future. Thank you.

Yes. Lars Holm is my name, and I'm really proud to say that I'm the Managing Director for Bumax. And I'm also super happy that I'm, at this point, we're going to enter a journey for the future and exciting to be there. As you can see, Bumax is an old company. We found in 1899 and did start to produce the first stainless steel bolt in the world in 1926. So we have a long history behind us. We are producing high-strength stainless steel fastener and we start actually with the standard A4-80 and the standard A4-80 is actually the highest quality you can buy as a private person in the open market. So when that ends, we take one, meaning that we are aiming for critical application in tough environments. We're also proclaiming that we are doing the strongest bolt in the world, which we do, actually, so that's I'm proud of as well. The main market is in Europe and in North America. And we are expanding the market, especially now with focus in North America with more people. And we have a stable foundation to stand at in the United States, we're going to turn our eyes towards Asia. So what's the difference then between Bufab and Bumax and where do we fit in? Obviously, yes, we are a niche company, and we have our own manufacturing site up in Åshammar [indiscernible] . And Bufab is our largest customer, today. And if we look to the past and the history, the strategy was that we should sell through our Bufab sister. And that strategy to bonus didn't fly. We started to shift for about 3 years ago to take on some business ourselves and with a good result. And the new strategy we have that we should stand more and more on our own legs and take care of the P&L, it's playing us straight in our hands, I would say. So in future, in the past, if we look back 3 years from now, we have doubled the turnover. And if you look for the future, we say that, yes, we're going to double it again in the coming 3 years. It's a tough statement to say here on live TV and in front of the audience. But at the same time, if we look at the project pipeline we have, it's full, a really good and interesting projects. So I'm pretty comfortable that we're going to achieve that. So if we look into the segments, we are working on, you're going to have a better understanding how I can say that. In the background, you see actually the CERN, the particle accelerator it's put together with Bumax high-strength material. The defense section is super big for us. We do deliver a typical application, I would say, submarines. And we do deliver to almost all NATO's submarines manufacturing around the world, except for U.S. Navy so far. Aerospace is also a big segment for us and it's growing rapidly. We're sending more and more stuff out in the space. And a typical application is satellites, rocket launchers, and of course, ISS, the International Space Station, is put together with our products. Future nuclear and energy. Yes, of course, it's booming. Everyone in this room was affected by energy crisis last year. And of course, the pumping in money into that type of business, and we are part of it. We have the marine and offshore. It's the old core business for Bumax. It's at some point, I also think that's been blocking us for taking on other segments and other markets because we've been focusing too hard on corrosion, seawater, saltwater. So if we remove the eye patch and look around us, we're going to see new segments coming and construction is one of them. Construction with all the regulation, we see around the world with sustainability, buster regulation and so on, it's going to be a big market for all type of stainless steel and we will be one of them. Another segment, not on the slide, is the high-tech market. We're talking about semiconductor market. It's also a game-changer for us for Bumax starting in the early 2024. Good, then if look why the customer choose Bumax? We are not the cheapest solution, but we're the most reliable solution on the market, I would say. We take the solution to a deeper level, hand-in-hand at end user, the customer and looking into their end product. I mean, since we're producing the strongest steel bolt in the world, we can actually downsize, make a project a little bit smaller, but just a strong, can go from M10 to M6 and make it lighter. If you put that into a drone, we're going to get that drone lighter, can fly higher, reach longer. That's approach when we're talking about the solution. I'm also really proud of our R&D team because we go also hand-in-hand with the customer and looking into the real need to have -- and they are also working constantly to develop the next generation. Then if we take -- yes, the know-how, I'm super proud we probably have one of the best technical department when it comes to stainless steel in the world. Sustainability, of course, is a big point for everyone. When it comes to Bumax, it feels like I'm bragging now, but it's actually the truth. It's in our DNA. First of all, we're producing a product that will last forever and I mean forever, that's sustainable. We are using a material stainless steel itself is also sustainable. We're not using any overseas transportation. We source from [indiscernible] . So we have about 10 minutes drive to the closest source, so that's sustainable. We can downsize and use less material, that's also sustainable. So we put that all together, it's unbeatable. On top of that, we have created an EPD. EPD stands for environmental product declaration. And I have not seen any other manufacturing in the world has created that yet. So it's a big punch line for a selling point for the market. So we're not just producing the strongest steel bolting in the world, we're also producing probably the greenest. So looking forward by the -- of course, we need to work as a brand sales independently from the group with a full profit and loss, continue work on the next generation and focusing on R&D. And since we doubled the turn over the past 3 years, I don't see any point why stop now. So we're going to double it again, coming 3 years. Yes, that's me. Thank you.

So thank you, Lars, and hi, everybody. My name is Johan Lindqvist. I'm the Director of the segment North companies in Nordic countries, and I will talk a little bit about efficiency and in this case, mainly net working capital. And as you all know, of course, net working capital is quite hot topic today due to many reasons, but mainly I think it is that the money today cost money, so to say. So I will tell you a little bit what we do in Bufab right now to be in a better level in the future. All these companies that we have 50 companies have today a 3-year plan regarding the net working capital. And I think the majority of the companies will reduce the net working capital. Some will probably also increase them due to the business model because if you can get paid for that, I think it's also necessary to do that, so to say, have an increased net working capital. And for us, in Bufab, it's mainly the inventory we talk about when we talk about net working capital, not so much the payables or receivables there. And within the group, we try to share good information. So we have a lot of synergies, we think. We will use our best practice and knowledge. So if we find good solutions or good tools to work with this, of course, we will share them together. We will also do some benchmark, of course, because we are pretty much look-alike companies in the group, and then we can do benchmark and see if some companies find the best way to do this. And of course, we try to see if we can copy that to other companies and also countries, of course. We will, of course, measure it net working capital in each company, and we do it in different ways, but also we do it and can compare, so to say, the net sales in relation to net working capital or also EBITA level in relations to our network capital. So with look back a little bit regarding our net working capital. So if we started 2014, we have been, let's say, between 40% and 45% all the way to the pandemic because then it's starting to be a little bit crazy. We stopped buying the first half year. And then after that, we buy as crazy to fulfill the needs of our customers. As I think Erik mentioned before, we decide to have a high stock that to really make sure that our customers have deliveries so they can keep on their production. That was important for us. And now we are pretty much down to this normal level, a little bit above, I think, a little bit above 45%. But as Erik said also, in the Q4, we expect also a lower inventory there. So let's say, we are more or less back to normal level. But we also know, since the past, that Bufab level is not the best in class, and we would like to be best in class, of course. So we think there is more to do there, definitely. And then some of you maybe say, okay, why haven't you done it before, if you know what to do, so to say? But I think one thing, as I said before, is that today, money costs money, more important. And I also think that before the pandemic, we focus much more on growth, I think. So that's probably the simple reason. If we look into a little bit what we should do now. If I go for the Nordic companies, where I'm most familiar with, we will do these 3 things among more, I think. It is, for example, deeper collaboration with the suppliers. We try, as Carina probably will mention later on then, to consolidate our volumes to fewer suppliers, meaning that we can also put some pressure on them. For example, to have consignment stock. They maybe we can own the stock, but in our warehouse so we can pay when we use it, so to say. That will, of course, decrease our inventory quite heavily and also shorten the lead time for the customers, of course. We will also do much more -- be more transparent, you can say, with the data and what are forecasting from our customers to various players, we can be more sure that they know what we want for the future there and our customer wants, you can say. Another thing, that's also tricky thing, I think, and a challenging thing for us in Bufab is our customers' forecast. To be honest, the quality of the forecast from our customers are high and low, you can say. Some of them really good and some of them really poor to be honest. And we try to navigate there, of course, and see what we can do with these numbers to crunch it and see what will be the really need that they have next year or next month or whatever it is. So there, we need to have skilled people. We need to have good tools to really see the accuracy of this forecast and that's not an easy thing, I can promise you. Because we have as Erik said, 175,000 part numbers and monitor them and see what happens there is not an easy thing. We also need tools for that, of course, to see and discuss with the customer what is the reason that they send in forecast for 100, but they only buy 70. Is that the trend that they will have in the future or not? What should we do? Another thing is item management to take care of these part numbers, this huge number, really need to monitor them in a good way, meaning that we need to know if they are ramping up or ramping down or end of life or whatever it is. Maybe the customer put this partner in 3 other products that they use, of course, suddenly this increasing a lot this demand. So we need to have good item management behind this. And in the bottom there, maybe also -- maybe the foundation for this is to have good data analyzed, meaning that we have people that can do it; we have tools, as I said before; but also, we have -- need to have a really good quality on our data. I think we'll touch it again then when Carina talking about sustainability because there is a lot of data needed to report everything in sustainability, but also take care of this item management. And if you don't have the quality in your items and that kind of stuff, you can't start doing machine learning or using AI because if the data is poor, you can't do it, I promise you. You don't get the result that you want. So this is a little bit what we would like to focus on in the future. And I'm -- to be honest, quite sure that we can take a next step there with net working capital and especially then, as I said, regarding our inventory. So thank you very much. And now I think it's time for Carina.

Thank you. So still good morning, everybody. My name is Carina Loof, responsible for sourcing and sustainability inside Bufab. And I will go through some activities that both our customers and ourselves are seeing in both the area of sustainability and sourcing. So first of all, I will talk about our decarbonization journey that we started in 2021 by signing the science-based target initiative. That also led us to realize the emissions that we actually have in our full value chain. So our Scope 3 emissions is 99.6% of our total emissions. By that, we also started a sustainable supply engagement program to make our suppliers do the same journey as Bufab. And to do that, we helped our suppliers with trainings, we have the tools for them and give them the knowledge that Bufab have today with our suppliers. I think it's really important. And with that, we also secure that we will have 70% of our spend into the supply engagement program by 2025. That data that we gather from the engagement program is important both for us, but especially for our customers. So we can provide them with their carbon footprint on the specific items that they are buying from us. In 2026, we also secure sustainability toward this on 80% of our spend. And by 2030, we will reach net 0 of Scope 1 and 2, our internal emissions. And here, all 50 Bufab company have done a really good plan to point out the steps and activities that are needed for each single company to reach and at 0 for Scope 1 and 2. Then we continue with the suppliers. So by 2031, we will have reached a reduction of 55% in our value chain and then net 0 by 2050. Our customers, they are facing higher demands on compliance regulations. For example, we have the material compliance with REACH RoHS conflict mineral among many, many others. We have the sanctioned packages that have increased also during the war in Ukraine. We have the EU taxonomy where we drive the sustainability investments. We have the carbon board adjustment mechanism that just came into force, now the fourth quarter of 2023, where we need to collect all the emission data in the full value chain back to the mill. So actually, it's a lot of data that our customers needs to fulfill and provide the data on. And we also have the regional and national legislation. We have the corporate sustainability reporting directive that come into force first of January 2024. And here, we have a main part of our customers are actually into this legislation and that is also applying for Bufab. So during the latest few years now, we have really done a good platform for sustainability, so we can do reporting in a really good and structural way for our customers. We generate the customer value by the carbon emission deduction that we are doing to limit global warming on 1.5 degrees Celsius. We have the human rights due diligence that include our enforced code of conduct in the full value chain. We do not do business with any supplier unless they have signed our code of conduct. And then we also do the conducting the sustainability audits, supply audits, quality audits. So we have a robust due diligence process with our supplier partners on the globally. Carbon board adjustment mechanism. Here, we are in line also with the initiative that we have with the sustainable supply engagement program. Actually, what we already started over a year ago that data is exactly the things that EU now are asking from the suppliers. So it's the same thing with our customer and with Bufab. So we have really important and good information to provide there, and we keep records of the imports that we are doing. On the conflict material, here, we have a yield scanning with all suppliers and items in Bufab to make sure that we are not using minerals from conflict areas. And the trade -- regarding the trade sanctions here, we do require records from our suppliers and we make them also signing off the trade sanctions agreement before doing any business with them. I think this shows a comprehensive strategy with a commitment to sustainability, ethical sourcing and regulatory compliance in the full value chain. Okay. Now I will talk a bit about our world-class supplier base. So in the coming years, we will continue to focusing on the partnership consolidation. And we do consolidation to out of those 8,000 suppliers that we have, we consolidate to the partners that are performing best. And partnership qualifications is that they should be competent, competitive, compliance, so we can give our customer a peace of mind. We find a lot of synergies here. We make sure that we have the best total cost of ownership for our customer, and we bring in savings, especially large savings we find through the group fastness, where we really have a lot of similarities among our sisters. So here is extra good synergies for those categories, so to say. And we have the sustainable supplier engagement program also in force here in the full value chain. When it comes to risk mitigation. Dual sourcing is one very important part, especially now in a very volatile geopolitical market. So we secure that critical items have dual sourcing on different continents and countries. And for the efficiency and digitalization, this is really the way forward. We work with the consolidation. We're optimizing the logistical flow and we save worked hours. And I also think that the digitalization that we are working with also, it makes it much easier for us to collect this large amount of data from all the transactions that we're doing with these suppliers. And that is actually a gold mine for us that we can give further to our customers. The short term items that we are doing by forecasting and building consignment at our partners help us to improve the net working capital. Here is also some of the key metrics that we have for the world-class supplier base is to do the saving of 3% per year. We do the reduction of carbon footprint by 55% per year and the sustainability audit of 80% of the spend by 2026. By those initiatives and actions that we have ongoing here, we deliver the best total cost to our customers. So by that, I will introduce Johan Sandberg. So thank you very much, everybody.

So my name is Johan Sandberg. I'm responsible for M&A in Bufab Group. Two months ago, I was at our global leadership conference in Bostad and had a speech like this. It was the last summer weekend in Sweden, and we were showing Bostad at its very best. In front of me was more than 100 of our top leaders coming from Taiwan, from Poland, from Austria and from California. When I was standing here and I looked at the audience and the number of new colleagues in the room, it was quite amazing. It's amazing to see how we grow, how we add more and more companies, but how we also add more and more people. Not only are we adding new business every year, but we keep on adding new companies as well. In our culture, we want and expect and contribute to the acquired growth. People are extremely proud of that we successfully managed to mix organic growth with acquired growth. Since Bufab was founded, we have acquired more than 50 companies, 15 of them since 2014. We have added more than 900 new colleagues and as well SEK 3.8 billion in sales. To make acquisitions successful, we have developed a list of things we look for as well as the opposite things that we avoid. Following this has proved very successful for us. We look for well-run companies. Bufab is not a turnaround company. We want companies that are profitable and are well run. We look for growth synergies will for companies where 1 plus 1 equals 3, will they contribute to our growth? We also look for win-win deals. We are convinced, and we also know that it's possible to make deals that are good for the seller, but as well for us. Also, we want them to share the Bufab values and culture and actively support the group diversification and risk mitigation. And we avoid companies that are not supply chain partners, companies that do not supply C-Parts, production companies and high-risk countries. When we do this, we are successful and the acquired companies are as well. When we buy and integrate according to our strategy, the acquired company actually accelerates sales and/or profitability. We have internally talked about this quite a lot, but only looked at the individual companies. I decided to dig a bit in the numbers a few weeks ago and see if it's just a feeling or are the consolidated numbers saying this as well. Here, you have the last 6 acquisitions that we have owned for more than 2 years and you can clearly see that this is happening. On the left, you have 5 years of sales and profit development before joining Bufab. On the right, the development when being part of the group. If I would add the companies that we have owned less than 2 years, the upward trends on profitability and on sales are even stronger. I think this is super cool and it shows that Bufab Group adds value when we buy according to our strategy. This is what you want as an owner. So what is the recipe that we use after transaction? So when I joined Bufab, I got a master thesis from a student in a Dutch University. He'd been looking at the integration process according to the handbook and compared it to what we do. His conclusion was that Bufab is not following the commonly used integration process, but we are achieving results. And clearly, we must be doing something right. I also have the Baker-Mackenzie post-acquisition integration process handbook in my office, but we don't follow that because that's not our way of doing things. When we buy companies, we never call them or treat them as subsidiaries. We never go in with an aggressive cost synergy plan. And we never make a top-down integration plan. Instead, we talk about sister companies, we focus growth synergies, we let the new sister company pull on the things they want from the group. Obviously, we have some mandatory stuff that is implemented, but sisters run their business. You might think, does this really work? Yes, it does not only in performance numbers, but as well, it gives us access to entrepreneurs that want something else than only the maximum price for their company. I travel a lot and meet a lot of entrepreneurs and I can tell you not all of them think like you do. You look for highest return at a certain risk level, your professionals in maximizing money return, but these guys, they -- and ladies, they value some other stuff as well also. Last week, I met an entrepreneur for a coffee and his largest concern was, do I need to implement the Bufab computer system? And my answer was no. We can dock into your database and get what we want. The week before I met a founder and he was wondering do you keep the company name? Will you stay in my village? And my answer was, yes, unless you decide else? When I was in Bostad in that conference, and I talked about M&A, I constantly got the question, Johan, when will we buy a new company? Probably you will ask me the question today as well. However, we do not have a target to buy a certain number of companies. We think it's dangerous and it could tempt us to not follow our criterias. And as you all know, to buy, you need money. To get money, you need profit and you need cash flow. We have all of this and it's a cycle that Bufab has handled very, very well over the last decade and we are getting into position again. We make money. We have a strong cash flow. I'm having coffee and discussions with a lot of targets, as I should do. So my answer to that question is lots of interesting projects going on. Thank you. And now it's up time for Erik, again.

Thanks, Johan, and thanks, everyone else, who had been on stage. So we have 2 important things to talk about as well when it comes to our strategy, and that is what we call our fundaments. And those are 2 things that will make us successful and actually deliver on the strategic areas that we just discussed, the focus areas. The first one is our people and solution is culture. And I started off when I talked about our success in the past and the key reason behind. I start to talk about our culture and our people. And this is the same slide because we believe that this will also be a success for us going forward that will be continue to develop our values and our promise and continue to have this strong solution is culture in place. My job together with the management team and all the MDs is to continue to ensure that we have the right people at the right place and that they can continue developing our culture and we're always having the customer first. But linked to the culture, we also have other operating model that we think is a very important part of our success. And this model that are very decentralized, we have further developed now in the new strategy. The foundation is the same. As Johan pointed out, we have the sister companies with full profit and loss and that remains. Although what we have done, as I mentioned before, is that we have actually strengthened that mandate. The niche companies, they are now allowed to go outside their home country to take the next step. That's one thing. And also, we made it very clear to all the MDs that they have the full profit and loss. That includes, of course, the net working capital. It includes also sustainability in all things that their responsibility. And that's not always been the case, unfortunately. What they need to follow as well, when they set up their plans for the future is, of course, things that we see as mandatory that Johan Sandberg just mentioned. Few things that we think are very important, how we treat each other and how we treat people around us and of course, also things ready to reporting that we listed the company. But beyond that, they run the show. They put the 3-year plan in place. And what we demand for them is profitable growth and that they grow quicker than the market. And then also, we have synergies and support. We have a situation, as Sandberg said just before, that it's up to them to pick from smorgasbord of things we have in Bufab, and that's working very well. When you work decentralized, a strong performance management absolutely critical for success. And that everyone knows what is their mandate to have. And to make that very clear, how we look at this is that what you want to have, first of all, we doesn't like operating model is actually quick decision-making and ownership. MD should know that he's responsible for delivery on his plan and that he has the right team in place to make that happen and that decisions are made as close to the customer as possible. Then you get strong execution and often a very good result, close to the customer. Linked to that, we need to have empower people. On all the levels in the organization, people should feel how do I contribute with my job every day to Bufab success? What is my part of it? That is very important for us in Bufab that everyone knows how they can contribute. And then, of course, clear KPIs and simple KPIs, I must say. It should be very clear what success looks like X years from now? And therefore, from a top management point of view, I'm a very simple man, I look at simple KPIs to see the trend that we go in the right direction. And linked to that is strong performance management. And what do we mean with that? Yes, we believe in continuous improvement and that is the key for success, that every sister company has a good journey. Obviously, the journey will look different for different companies in the Bufab world. Here, we try to illustrate with those bubbles that we have different companies that are different positions in the world, and they have a different journey to go. And what we do for the top management is that we look at the trend in the companies. We look at the net sales development, we look at EBITDA development and look at profit or net working capital. How they're working together. And as a baseline, we have asked all the companies to have a 3-year plan in place that makes sense for their opportunities going forward. Obviously, Bumax have a different plan than ABS, for example. And also, we have companies that you saw before that have much lower profitability and lower growth rate, for example. Therefore, we have told the companies that you are in different phases. Some companies are in, for example, stability phase. They might have low profitability and then they need to fix that. They might need to work with customer and product mix that's wrong. They might need to work with the team. That's not maybe the right person, the right place and get all those foundations in place, they can read profitability and then take the step to growth. Other companies, they have done that very well. They have already the stability in phase. They have the right customer product mix. They have a good organization in place and they need to invest to take the next step. Bumax is a good example of that. Here, we need strong growth now and they are ready, they have a strong foundation. So each company have different plans in place right now. In some cases, we don't care if we lose some customers in some cases because it might be the wrong customers, and that is part of the plan. So we look at the trend on 3-year plans than that they go in the right direction. If not, we want the plans to proactively come up with an improvement plan and react proactively if you see deviations. So therefore, I think it's very important that those 3-year plans are aligned with us, obviously, and then we will see that they will deliver accordingly. And if any deviations that they practically take actions. And of course, we are a very competitive company. So people in Bufab they like to look at each other and learn from each other. And we have benchmarks with companies how they perform, league tables and others, which is a very good tool actually because no one wants to be in the lower part. Everyone wants to go up. So they look at the trend and so on. But the beauty is that they're going to compete with each other. So they can talk to each other and learn from each other. So therefore, it works very well. So we benchmark and learn from each other and that is part of how we will be successful also going forward. I mentioned briefly about how we learn from each other then, and we have a structure for this as well. We call it Best Practice Circles and Committee. There are 8 of them actually as we speak in Bufab, where people from different parts of organization talk to each other and learn from each other. And this goes, as we speak right now, might be dialogue ongoing between different companies, how they do things in their world. And then they learn from each other, of course, adjust depending on their needs and make it happen. And that we have seen in many cases. Right now, we have a lot of discussion about net working capital. All of a sudden, the phone starts to go warm. They have realized that some guys are really good at this. They start to talk to them, learn from them and then they come up with a new plan, how they will that suits them, but we're learning from from other company how they will take the next step, as an example. And we believe that this is a very strong tool and that will help us also going forward. Every time we add a new company, sister companies are curious, what are they good at? How can they have that kind of profitability? How can we have that inventory level with those kind of parts and so on? So that is something that's very important also going forward, we continue developing the best practice that we have in the organization. As part of our new strategy, we have also changed or will change from first of January, how we are reporting. We had now segments and we'll go from segments to regions. There will be 5 of them, will be region Americas, Region West, Region U.K., Ireland, Region North and East and Region Asia Pacific. And we believe that this new setup we have in place will work very well with the new strategy and how we also aim to work with performance management. And linked to that, I will partly have a new management team. You met a few of them today, but I also then we'll have Johan that is responsible for West; Urban responsible for Americas; and Matthias are heading our Asia Pacific region. That was it regarding the strategy. Now I will leave the word over to Par and talk about our ambition for the future.

Thank you. So my name is Par Ihrskog. I'm the CFO of Bufab Group. As you might have seen today, the Board of Directors have updated our financial targets. So -- and also Erik mentioned that earlier. But before we look into those, I would like to just look at our present or current financial targets, which were launched 2021 in our last Capital Market Day. So we have 4 areas: profitable growth, profitability, financial stability and dividend policy. 10% net sales growth year-over-year, 15% growth on our earnings per share year-over-year. We have an EBITDA margin of 12% and our net debt-to-EBITDA range is between 2 and 3. And finally, we have a dividend policy to distribute 30% to 60% of our net profit. So how have we performed on these targets the last couple of years. On net sales, we have been above the target in 2021 and 2022, but slightly below the target in -- so far this year. We had strong organic growth and help from our acquired companies back in the history, not so much required growth in 2023. And also we are facing, as you know, a weakening demand. Our earnings per share has been well above the target '21 and '22. But so far, 2023, we are below, very much explained by the higher interest rate and financing cost. Our profitability target, we have gradually improved year-over-year. And the last 3 years, we've been more or less on our target, going above the target that we set out the present year then being 12.5,12 months rolling in Q3. And also, as in the previous slide, our end target of our EBITDA margin was 2023. Our dividend has been on the lower range, around 30% the last 3 years. And we've been within more or less the range when it comes to net debt/EBITDA between 2 and 3, slightly above when we did the acquisition of TIMCO. So let's look then at the new targets. First of all, we reconfirm the structure as such. We keep the 4 areas: profitable growth, profitability, financial stability and the dividend policy. We also reconfirm the target as such on all areas except our profitability. We keep net sales growth year-over-year with 10%. We keep the 15% earnings per share growth year-over-year. We then increased -- raise the bar on our EBITDA margin to 14%. Gradually, we will improve, and we have the ambition to reach this at least latest 2026. On our financial stability, we keep the range as well, 2% to 3% -- no, 2 to 3x. And finally, dividend policy is also unchanged, 30% to 60% of net profit. So let's discuss and show what -- how we think we can reach the profitability target of 14%. So we believe we have significant potential for margin improvements. You have heard my colleagues today talk about showed examples and activities in various areas where we believe it will bring improved margins. Let's start with the value creation. With a continuous focus on the value creation, we think we can drive increased gross margins. We have also talked about our private and customer mix. We will continue to focus on that, and that will drive improved margins. We have talked about the sourcing. We believe we can do more in sourcing, pricing-based practices, supply-based consolidation and logistic efficiency. We also believe we can continue our journey on internal productivity improvements, utilizing best practices, continue with digitalization and being a data-driven organization. And also market share growth within existing customers, increasing the share of wallet, that will lead to operational leverage and improve our margins. And finally, then our new study directions with focus on our core business, which is trading and niche companies will improve our margins. So all in all, this is assumptions and our beliefs how we can reach latest 2026, 14% in EBITDA margin. Thank you.

Thank you, Par. We are getting closer to the end now, and we just have 1 more thing on agenda before we leave the room open for questions. And that is a closing remark from my end. I would like to end where I started with today's key messages. I hope when you leave this room that you have got a better understanding of our position. We strongly believe that we are in a very strong position as of today. As I mentioned, we have gone from a traditional trading company being good in screws, bolts and nuts to become one of the market leaders when comes to C-parts and technical components. We also believe that the market are with us. First of all, we're operating a fragmented market with strong growth but also consolidation ongoing. Secondly, the demand for a bigger player that take care of the issues around C-parts is very clear. And here, we are there to grab market share and ensure that we are the first choice for our customers when they consolidate the C-parts suppliers. And then thirdly, there are also a lot of things happen in the world right now that will help us to grow. All those issues around us, supply chain constrained trade wars and actually also conflicts and others are helping us to take market share. Of course, inflation, cost pressure, and cost pressure in general is actually helping us to consolidate quicker than we've done in the past when there's more or less an upturn period, so to say. So we believe that we're in a strong position and the market trends will help us. But to make sure that, that is happening, we have this new strategy in place. And I would like to call it that we're building on our success. I mean a lot of things we have discussed today is not a revolution, it's an evolution. We try to fine tune and address areas not working well and ensure that we do those things a little bit better in the future. And I'm very confident when I've been discussing with the organization that those cornerstones have in place now with those fundaments are the right one for the future and that we can continue to give our customers peace of mind and give them sustainable and outstanding value. And finally, we have high ambitions for the future. We want to continue to grow, but we want to continue to grow in a profitable way. Therefore, as Par pointed out, we have decided to raise our profitability bar to reach at least 14% by 2026. And we think we have all the tools to make that happen. And we're also confident that the value that we are providing to our customers will continue actually to grow all the time. And therefore, we call this strategy discovering -- next solution because we are on a journey for continuous improvement and adding more and more value to our customers. But all in all, I hope we have got a good understanding of position, our new strategy and what we aim to do going forward. That was it for today. We will now leave the floor open for Q&A.

Yes, we will because now it's time for you guys in here and also online for you that watching this online, we do have an e-mail, as you can see on the screen right now, that you can send your questions to, if you have any questions for Erik, Par and the others that have been up here on stage. But of course, also for you attending here at Fotografiska, what we're going to do is that we're going to just repeat the question so they can hear it as well online. All right. So while we're waiting for questions from online. I guess it's time for the audience in here. Do we have any questions for Erik or Par standing up here? Yes, we do have a question here to start with. So Erik repeat that question afterwards.

[indiscernible] efficiencies and what can you do on each [indiscernible]

Yes. I would say that when come to margin, the margin improvement. I think working on our gross profit and the mix of products and customers are very important part for that driver, I would say. So I think that is maybe the easiest way of driving our margin improvement, I would say. So I didn't repeat the question.

But you can do it afterwards now. It's like [indiscernible].

Yes. So it's like [indiscernible] do the other way around. Yes. The question was, what is -- anything that was more important than others when it comes to driving the profitability improvement, correct? And then I mentioned that I think that the gross margin improvement that we aim to do, I think, is a leading key. And you saw here also that we have a quite broad range of companies in terms of performance. but all of them are in the same industry, all of them are the same opportunities. So obviously, that we have areas where we can address going forward, and that we aim to do. Yes.

Good. Thanks for that question. To start, we have another one here.

Yes. Some of the working capital you mentioned that you [indiscernible] what would that be in terms of sales? [indiscernible]

Yes. We've got a question about net working capital and that we want to be best-in-class. And then the question is what is best-in-class? Yes, I wish I could answer that because there's no other peers that look like Bufab that we can compare with. So what we decided is that we should look from each sister company, what is their best-in-class, they are as of today and put the plan in place accordingly to be better. And that differs quite a lot. And that is here, we put our focus. So we don't have a focus on group. We have focused on the different sister companies and what they should perform. And that is they want -- they should be best-in-class in their world. So we don't have anything on group. And if you squeeze me, okay, what will that be on a group level? I don't know. I think we're on a journey here to understand our potential and to find a balance between, of course, what we keep in stock and the money we get out of it, so to say. Because as [indiscernible] pointed out, we have no problem to keep stock if we get a good return for it. But it's balanced between top line, EBITDA and what we keep in stock that are important for us. So time will tell where we will end up at. But I think, to be honest, this is a never ending story. We will continue working on this for years to come. And we know at least that we have a big room for improvement overall.

All right. We do have another question in the room as well.

Yes. [indiscernible] assumptions [indiscernible]

Yes, we've got a question about assumptions for our raised target on EBITDA, I guess you said. Yes. So we look at this over a cycle, and we want to reach this by 2026. That is what we have said. And we believe that this is a gradual work that we actually started already to improve. And if you look at the potential that we have internally, but also, of course, working with our customers and get the value out in a better way, we believe that by 2026, we will reach at least 14% EBITDA level. So that's based on the analysis we've done in the strategy, the areas we can improve and work on and also, of course, the potential we will see now when we're releasing some of the companies on their journey as well and put a little bit extra pressure on the ones that are in a stability phase and profitability phase to step up as well. So we ended up that by 2026, we should have a lead at least 14%.

And we could add also to that answer. This journey is fully integrated in our 3 years plan with our companies. So it's not me and Erik, who has the ambition. It's our company, our sister companies who has the ambition.

All right. As you can -- as you saw for you that watching this online with you have an e-mail and we do have some questions coming on from that online formula. I start with this one. Why don't you have a cash conversion target on net working capital targeting your financial targets?

Yes. I also got some comments about that earlier this morning. And we do have targets internally on cash conversion and net working capital, very important targets for us in our performance management. We believe they are more operational, and we use them very much in our communication with our sister companies. But we believe if we are very good in cash conversion and in our ambition to reduce net working capital, it will support our ambition to be in the right range when it comes to net debt-to-EBITDA. So indirectly, it supports that financial target we have on financial stability.

All right. Thank you so much. I see there are coming more questions here. Do we have any questions more in the room? -- who goes over here. Yes, we do have 1 more here. Go ahead.

[indiscernible]

Yes. We got a question about how we aim to raise the gross margin if there were any specific regions that we're focused a little bit more if we get you right or product mix? Now I would say that we start with the first one about the regions. It's no specific regions. This comes more back to actually, in which segments we operate and which customers we have taken on board. That is the #1. So -- and not at all, I'm thinking about the region, but there's no aspect of region at all geographically. It's only the -- and when it comes to products, yes, I think it is. I showed before, I had a slide here on the landscape of Bufab versus smaller players. And I think we've had a tendency in some cases to hold a bit too tight with customers that have low-volume products, and there have been some times also low-value products. We are not the best partner. If we should be partner for them, they need to pay for it as well. And here, we have opportunity to raise the price levels actually and see if they are with us. If not, it's not a big issue for us. So we want to be up there with more complexity and more volume. And today, we have a big tail that we need to work with. And so we're going more towards technical solutions and a little more advanced solutions well for our customers in offering. So that you can say will impact and help us on our gross margin journey.

All right. I update here live right now, and we do have 1 question more from the audience online. Regarding the margin target. Is the improvement mainly to come from higher gross margin or is better SG&A efficiency as important?

Quite much linked to the first question we got, and I would say that is more working on the product and customer mix. Of course, we have a lot of things we can improve in terms of efficiency and how we do things as well. And that's a continuously journey that we have that will contribute as well. But we see bigger potential in the short time horizon to work with our product and the customer mix, for sure.

Another question here. How will you be able to reach EBITDA margin of 14%?

Same thing. I think that we explained today, I think we have a very strong offering that we really create value for our customers. That will help us for sure. And then once again, that we are more strict on the product and customer mix. And that is now reflecting in the plans that we have got bottom-up from our companies. And as Par pointed out, it's not the management team's plans we're talking about. It is the sister company's plan on how they should improve their , in this case, gross margin and EBITDA margin. And they have their individual action plans that they are taking to go in towards that direction.

Yes. Right. Do we have any other questions in the room right now? Yes, 1 more. Yes.

[indiscernible]

Okay. We got a question about our different type of companies that we have trading. We have niche manufacturing and if you have any plan to further develop 1 of them more than others? First of all, obviously, is that we are focused on our core now is the trading in the niche. If you look at the trading niche, both of them are core for us, and we will aim to grow both of them. So both organically and inorganically for acquisitions, they are equally important for us going forward. And combined, they are very strong as we see it. because often trading companies can leverage from niche companies and actually other way around as well. So having them growing both hand in hand will make each sister company stronger and also Bufab stronger. That is what we believe.

[indiscernible]

We -- yes. So have we revised our internal cash conversion targets was the question? Yes. We don't have an internal outspoken cash conversion target, but we are focusing much more on that. I am focusing much more on that in my dialogues with the sister companies. And when we talk about net working capital, it is our -- it is extremely important that everyone feels net working capital and having activities how to reduce is very, very important. And that's how we will get the positive cash conversion. But we don't have an internal outspoken cash conversion. But every time it's below 100, I get really nervous. And every time it's above 130, I'm happy.

All right. So it's almost 12:00 now, and we are soon heading for lunch. So if we don't have any other questions, I see there are still typing some questions here, and we will have to come back to those. But we do have some one-to-one meetings afterwards -- for everybody in here at Fotografiska is soon time for lunch. Are you up for that? It seems like you are for that. All right. So it will be lunch here out in the restaurants. And after that, we will have some one-to-one meeting for those that have booked those. And for you that are attending online, thank you so much for watching this event. And Erik, we are now -- this has come to an end. Yes.

Yes. Thanks a lot, everyone, for coming, and thanks all of you that joined us online. Thank you.

This was Bufab Capital Markets Day 2023. Thank you so much and Merry Christmas.