Hanza AB (publ) (HANZA) Earnings Call Transcript & Summary

Good afternoon. Happy Fat Tuesday, and welcome to HANZA's Capital Markets Day. My name is Francesco Franze. I'm the Chairman of the company, and I have the pleasure of welcoming you here today. As a shareholder or a stakeholder of a company, you have a few opportunities of getting engaged with management. You can attend the shareholder meeting, pretty boring events, or call into the quarterly results meeting, which are backward-looking events as well. So there is a few interaction possibilities. And this is not the case today. Today is a session where we have the opportunity of listening to broad range of management, the first line of managers, all good looking and sharp. They will tell you about their ambitions, their view of the future, and most importantly, the full lineup. Having said that, I wish you all warm welcome again, and I hand over to our CEO and Founder, Erik Stenfors.

Thank you, Francesco. And I, of course, also like to welcome you to this event, both those of you who are here in Kista today and all of you who are watching this online. So I'm Erik Stenfors. Let's take a deep dive into the HANZA Group. And to do that, I'm glad that we are surrounded with some of all the fantastic people we have in HANZA. We have a team here today representing an outstanding mix of knowledge in manufacturing, services, business development, HR and finance. So I'm sure we're going to have a very good afternoon together. But first of all, we'd like to show you a short video. [Presentation]

Okay. Welcome back. Let's look at agenda. We will have 2 blocks today. First, we will look at the situation in the HANZA Group, the progress and the situation right now. And we will do this by 6 presentations from different areas of HANZA. Then we will have a short break. And after that, we will go into the financial development and also the strategy of HANZA. And as you also know, we released our financial goals this morning. We will talk about them. And after that, we will have a Q&A session. And please use that. We will be more than happy to answer any of your questions. And of course, for you online, you can also post them during the whole event. Then after the Q&A, for those who are here, we have a special thing for you. You will have the opportunity to visit our factories. We have our VR headsets here, and you can then use them to enter any of our factory. Quite amazing. With this short introduction, then I'd like to welcome our first speaker, who is Tom. Welcome.

So welcome. I am Tom Dahlen, Head of Sales at HANZA. I think we at HANZA have a vision which is to create a unique manufacturing experience in the industry. So that's the mission of the company. I will talk today about the unique offering of HANZA as well as some of the market trends and outlook from a HANZA context. So first of all, simple ground data about HANZA. HANZA is a contract manufacturer. We manufacture parts and/or complete products for product owning companies mainly coming from Sweden, Finland and Germany. So with that, we are not a product owning company. We only produce for customers. Besides from manufacturing, we are a bit different from others. We are geographically located in what we refer to as clusters, which could also be known as industrial parks for various technologies. We manufacture several technologies in-house, such as electronics, machine parts, sheet metal, heavy mechanics, wire and harness and complete assembly. And this makes us a bit different from a contractual manufacturer point of view. But we also provide advisory services to look through customers' total supply chain. We do R&D for customers to help them. And of course, we do continuous product development throughout the product's life cycle. If we then look at what is unique about HANZA and the cluster thinking from industrial parks, I would say it's the word that we announced here as regional and complete manufacturing in clusters. That is what makes us different. With this, from a customer point of view, we provide a more robust supply chain. It's less vulnerable from things going on outside. We provide higher flexibility. We can start production of various technologies at the same time. In the model is built-in the environment and the CO2 emissions. If you do this on a regional level with a complete set of technologies, there are less emissions made choosing HANZA as a supplier. The lower total costs. We always talk about total cost in HANZA. Of course, it's obvious that you need to spend less time with suppliers asking only HANZA to do it for you. And we think we can do this in a very, very economical way. There's also less capital tied up. We are -- having all the technologies in-house, we are faster from raw material to finished product, which helps the tied up capital. And we can also provide alternative production sites meaning if something would happen somewhere, we have the technology elsewhere, and we can provide that as a safety. The services that we provide is advisory services, how to tailor make the supply chain for a customer. We have this knowledge in-house, and we do it when we talk about complete outsourcing. The R&D services is, of course, unloading and helping customers' R&D. And also throughout the product life cycle, we talk a lot about design for excellence and design for manufacturing. Besides from this, we are investing all the time in capacity, automatization and digitalization. It helps us. And also, we have always a focus on customer value and always with a long-term view. And on the right-hand side, you can see where we strive to be. Of course, we can be a deliver of a single part as anyone. But going through this ladder of partnership, as we call it, you can more and more gain from the HANZA go-to-market model. Then if we look at the general market and trends as we see it, we can see a visible downturn 2024, mirrored in lower demands generally speaking. But here is the interesting thing about HANZA, we don't follow the cycle. We use it because with this unique offering, we actually can gain from a lower economic situation in the market because that's the only time when the customers spend time on reviewing their own supply chain. Are we doing the right thing? Are we focusing on our core in this business? And then starts a dialogue if and when they plan to outsource products, it could depend on so many things, but it's a strategic customer decision, and we are there for them, of course, but with a unique offering. And those things usually take place in a downturn. On the medium term, 1 to 3 years from now, we expect a robust growth from the segments that you can see on the right-hand side. We expect between 5%, 15% annual growth besides from the Defense & Security business, which will grow in a much faster pace. We also claim the supply chain situation to be back to normal. There's been a lot of things going on in the last 3 to 4 years. I would say that, generally speaking, this is not something that we could talk to customers about. We're now back to a normal situation. Market trends again from a deglobalization and geopolitical consideration. This is actually ongoing now and has been for a time. Some customers would like for various reasons to take production closer to home, so to say, which is the de-globalization. We have several of those dialogues going on, but not new, but since 1 year or 2, customers also have geopolitical considerations, where would we like to be? And it's a question of branding and safety or risk. So that's also ongoing dialogue with some customers. Buy more from less. Well, this is more about with a set of customers that HANZA has, it's, of course, much easier to grow with customers where we have a relationship or we have a contract in place. And from a customer point of view, it's quite expensive to add new suppliers. So there's a lot to do also here for us because there is a consolidation going on in the marketplace and growing with existing suppliers who performs well, that's, of course, a trend in the market consolidation. And then coming to the second point here, strategic and complete outsourcing. A lot of customers question themselves, especially in market times like this. Are we doing the right thing? And we can see that we are in dialogue with several customers about this complete outsourcing, which could be for them to be able to take the next technology step or for them to take the next step in volumes. They need help in this. And now is the time to review those things. And last but not least, the cyber war, we can read about it every day. It gets more and more important. We can see customers who suffered from this. And it's a constant ongoing thing. So data security is a key for HANZA to stay on top of. Yes, that was all for me for now. Thank you very much.

Thank you, Tom. To understand HANZA, it's really important to understand the difference between us and traditional contract manufacturers. So important presentation by Tom. Last month, we finalized the acquisition, the so far largest acquisition we have done, Orbit One. And now I'd like to welcome our next speaker, who is actually Mattias, the CEO of Orbit One.

Good afternoon, everybody. As Erik said, my name is Mattias Lindhe, and I'm the CEO and also one of the former owners of Orbit One. I guess I speak for all of us today when I say that we're really excited to be here. But for myself, I'm a little bit extra excited because this is really the first time where I am in my new context. And this is a context that have been clear from the beginning. But as we have started the integration and merging activities, it has become even more clear, more crisp, more precise. I made a little comment in the beginning talking about the perfect match. And it was really a perfect match. Orbit One as a company, we come from a history of Ericsson, Nokia back in the '60s. We formed as a company in the early 2000. And over the years, we have built a company that prior to the acquisition was around -- or I should say, at the time of acquisition was around SEK 1.1 billion. Very entrepreneurial, 6 owners and somehow being absorbed by a large company like HANZA could be perceived as scary. But as the journey continued from our perspective, this was the super natural fit. It's not all companies that perform a people and culture due diligence when they merge with another company, HANZA does. And I have to highlight the comfort that, that gives to the organization of the acquired company. So it is really a perfect fit. And then, of course, if you add the systems that we use and the machines that we use and the customers that we have, you really see the super complementary fit. So a few notes around Orbit One as a company. We are headquartered in Ronneby in the beautiful garden of Sweden in Blekinge. That's where we have our headquarters. That's where we have our largest facility from a revenue perspective. The largest facility from a headcount perspective is situated in Poland, in Prabuty in the northeast part of Poland. And then we have a smaller facility in Stockholm, Huddinge, Flemingsberg, whatever you prefer. That is one of our smaller facilities, more like a shopping window towards the Scandinavian market. Headcount, around 600 people. And as I mentioned, the revenue of around SEK 1.1 billion. So as a company, of course, we all believe that we are different. We all believe that we have certain unique selling points. Forming and shaping Orbit One to what it is or what it was at the time of the acquisition was very much around becoming #1 in automation and robotization. We live in an industry that is now pushed by the macroeconomic trends. There's a lot of company that went to home shore. We need to be really strong when it comes to robotizing and taking out the labor part of manufacturing. For this purpose, Orbit One acquired a significant part of an automation company. So you could basically say that we have our in-house automation and robotization consultants. It's a company called Spectrum Technology. And this is something that we will drive on for the future. More looking at the complementary side. If I look at the management style and how we manage the business, we want to be perceived and we want to act like a really knowledge-based company. We've been doing this for 60 years. I've been in the industry myself for 25 years. So we think we're pretty good at what we're doing. But we're also very keen on having a decentralized model, where decisions are made where they should be made, on the manufacturing floor, close to the customer to create that extra level of value. We also believe that being data-driven today, tomorrow, towards the future is also a key point. So we focus a lot on what we call business technology, which is really around pushing IT towards the front of the business and making IT an enabler rather than being a support function. Lean is maybe something that we should touch on a little bit extra. So Orbit One became the lean champions in 2022. That means that we are best in Sweden when it comes to Lean, and we didn't get the price because we had the best tools, the sharpest methods. We got the price and the award because we have Lean built into our DNA. It's everywhere in our processes. We have been working with decentralized management on the shop floor since 1996. We started our Lean journey back in 2007 when it was still very much connected to the Toyota philosophy and the Toyota ways of doing business. So that's something that should be highlighted and something that we are now bringing with us into HANZA. The partnership model is, from my perspective, it's a super natural thing today. Doing EMS business, you need to work on a partnership basis because we own manufacturing, the customer owns the design and together, we need to sit down and agree on how can we do this in the most cost-efficient way. And that kind of partnership model also exists in HANZA. Strong potential for growth. Orbit One has 70 customers, 7-0, spread across 5 market segments. With the macroeconomic trends that are now blowing, we already sense that this will be -- we will have a good future ahead of us. And then when it comes to the management style, entrepreneurial for us is a key word. Decentralized, I mentioned it at the beginning, decisions should be made where decisions should be made, and that's close to the customer or close to where the action is. And of course, we hold the necessary ISO certifications. Building Orbit One as it is today, has really been trying to create a local player that has a global view on the business. I have spent a few years in the big international American EMS industry. And there's a lot of talk about vertical integration. So when we created Orbit One, the way it was created at the latest acquisition when we acquired Flextronics' Swedish operations in 2015, we focused a lot on building a complete suite of services, spanning all the way from near design activities, like DFX, design for manufacturing, design for whatever, all the way to logistics services and even in some cases, recycling and refurbishment. So we hold that complete suite. And if we look at some of our customers, for example, DeLaval, we help them with design. We look at all the new electronics that they are planning to integrate into their milking machines or as you see on the picture, a milking robot. And then we manufacture it for them, put it in a box and ship it to DeLaval in either Sweden or in Poland, depending on where the end market is. So basically, if you look at any DeLaval equipment worldwide, the electronics on the inside will be from Orbit One in either Ronneby, or I should say HANZA in either Ronneby or Poland. Another interesting customer and probably our most infamous customer is Sensys Traffic. I think Sensys is a good example of a fabless company, so they have no manufacturing of their own. They do the design and the concept, and we basically take it from there. So we sit beside their designers. We tailor the new -- for those of you who don't know, we have 2,500 of these on the Swedish roads today, and there's about to be 6,000 within the next 5 years. And all of those are basically tailor-made through the cooperation between Sensys Traffic or Sensys Gatso as they're formally known and Orbit One or HANZA. And I would say that Sensys is also a good example of a company that actually -- where we support their customers. So they never touch the product. They design it, they conceptualize it, we take it from there. Axema, building and automation, you've seen these systems all over the residential areas of Sweden. This is a customer that is also completely fabless, and we handle everything from design support to manufacturing and close to logistics. One of our more recent customers, recent being, let's say, around 5 years, the other ones have been around customers for more than 20 years, is LumenRadio. So Lumen has an idea of replacing cables for professional lighting purposes with a wireless application. And we manufacture that complete application for LumenRadio and we ship it to their customers. And last but not least, Växjö based company called JLT. They are #1 when it comes to rugged industrial computers. They have actually manufactured more computers now than [ Luxoft ] had, for those of us who are as old. So we have shipped out more than 140,000 of these ruggedized computers to JLT. And in the case of JLT, we do everything. We take it from design, we manufacture, we ship, we do aftermarket services, we do refurbishment, the complete suite of services. With that said, I hope you have gotten a good view of Orbit One, who we are and what we do as a company, and I thank you for your attention.

Thank you, Mattias, and the acquisition is, of course, not the end, but the beginning. Now the real work starts. And it's been really positive road trip that we made to all your customers. Because we have said many times, we don't buy a company to be bigger, but to be better. And it's really interesting to look into the eyes of the customer and listen their opinion about this deal. And everybody says the same. This is really adding value for us. It's a good acquisition. Now HANZA consists of 2 parts, as you might know, it's manufacturing and it's services. And I think it's time now to dig into the manufacturing part. And therefore, we welcome our COO, Andreas.

Thank you, Erik, and glad to be here, and welcome to all of you. So my name is Andreas Nordin, I am the COO of HANZA. And what I will be talking about today is the footprint, where we do have our manufacturing clusters, about our technologies or capabilities that we can offer to our customers. And also how do we expand? We heard about customers, how we're going to expand and take, of course, market share and so on. We also need to have the factories prepared for it. And I'm going to tell you how we're doing that. And at the end, of course, we also need to know that our colleagues, they are safe when they are in the factory. So that is also how do we work to avoid work accidents. And then we also with the suppliers, how do we audit suppliers and make sure that they are good suppliers to HANZA. Let me start here then. So the manufacturing clusters, we have heard about those. So we have 6 manufacturing clusters, 5 in Europe and 1 in China. And in total, we are operating on 170,000 square meters. So if I add on all the factories that we do have out there in this cluster, and I add it up, I get 170,000 square meters. Again, decentralized organization, of course, very important. We believe that we should have decisions taking out there in the -- where the action is. The people out there in the clusters, they know the customers, they know the suppliers, they know our colleagues, they know the market, they know the culture. That's where the decision should be taken. Here in the headquarter in Kista on sixth floor, we are only 5 people, and that's what again then decentralized. We believe that we should have the decisions out there. Yes, management. We have different -- in the first-line management or in the second line second management, we do have managers coming from within. So we have also people that have started actually on the shop floor, work them up and get -- gain experience doing some extra education and so on and now they are on a high level within HANZA. But we have also hired from outside coming into HANZA. So I think that is a very good combination where you can have internally people growing and you can bring in also from outside. That makes a very good fit. And all in all then, after the recent acquisition, we are now almost 3,000 people, so 2,800 people out there in these clusters, where we have Sweden and Baltics being the biggest, as you can see, of around 800. And then we have Central Europe, 650. Central Europe consists of Poland and Czech Republic. And then Germany, Finland and China. So what are the technologies here, capabilities? What can we offer to our customers? We are different. We heard that we are different. We are -- we can offer many technologies here not just only electronics or only sheet metal or only machining, we combine them into one, and we can deliver this with an assembly. And then we have a submodule or a module that we can deliver to the customer. So we are bringing that value instead of having a [Audio Gap], the sheet metal parts and then maybe he does the assembly by himself. Now he calls to us, and he says, I have -- I need to increase my volume by 20%. Okay, there's one call to HANZA and we fix it. So that is the strength. And we are talking about here the different types of technologies. And we have the sheet metal technologies, thin millimeter, think millimeter, we are bending, we are riveting by doing things millimeters. And then we have further down on the slide, it says heavy mechanics, then we talk centimeters, steel that are thicker and that are heavy structures that we are doing for our customers. And then in between, we do have the electronics manufacturing. We have cable harnesses and then we have at the end, as I said, the complex assembly. So if you can see here, by combining all of this, I can make on product. I can make a submodule, I can make a final model, final product to the customer. And I think that is a very big strength. And that is also how we are building up our manufacturing clusters that we should have -- should be as complete as possible in those 6 manufacturing clusters. So again then, we also need to ensure that we do have the capacity. We have grown a lot. If you look in the last years, past years, we have grown a lot. It can be through different ways. But we need to ensure from operations and what we're doing in production that we do have the capacity in place when it comes to space, when it comes to machines and when it comes to people, this is what we need to do. And here on the left-hand side, you can see that we are also working a lot on how do we invest, what is the investment plan that we need to have for the coming 3 years. And we are looking into roughly around 4% of our turnover that we need to invest. And investment is, of course, that we need to replace machines, machines get old, they're getting used. We need to replace those. But we also need to -- we are in countries where we need to have good robotization, good automation. We are investing in that. We need to have the latest when it comes to how can we automate and now we are thinking about not just how do we put a robot to a machine, but what else can we automate, everything that we can automate, we should do it. We should robotize. And that's also what we are doing. And then of course, we need to buy 1 more of this bending machine here. Because we need it, because we have the capacity. So those are the 3 different ways that are driving how we're thinking about investment. But then at some point in time, we also see that now, we cannot put in a new machine here. We need to have more space. We need to have more square meters to work on this one. And that's also when we start to look into our buildings. What can we do with our buildings. And I would like to show you here on the right-hand side, 1 example of that in Estonia, in Tartu, where we have actually the biggest factory. And you can see here the -- how we have built it over the years. We started with land. We built an assembly hall and then to complete to the already existing sheet metal. And now we feel that we needed to expand the sheet metal. You remember the sheet metal, the millimeters that we are doing. And that's what we have done now and it's going to be ready now. And we are continuing to grow by buying new land. So we are prepared all the time and we can put buildings and then put the machines in, we are ready to take next steps when it comes to the growth. You see also back on the left-hand side here on the recent press release we did around the expansion in Sweden in our Swedish cluster in Töcksfors almost on the way to Norway, on the E18, we have started expansion of the factory there as well, and it will be ready sometime towards the end of this year. In Narva, we just inaugurated a new assembly hall for a customer that we got MLE. We have made a press release about that one as well for some time ago, was last year. And then in Poland, we also bought the adjacent building, so that we could continue the growth in Poland as well. So you see the philosophy here. We build machines, make sure that we have the machines. We are prepared for the growth. We take the steps through modular expansion on the space. And by that, we try to always have the capacity in place when the customer need it because we want to provide the customer value so that the customer can grow. Also very important here, of course, that everyone should feel safe when they come to work. They must feel safe when they come to work. And that's what we're working with as well. How can we all the time avoid work accidents. Things happen, but we do have a process to take care of that. So we are always analyzing all our work accidents, what has happened. We're also analyzing near happening accidents, so incidents when something could have happened, what can we learn by that. And then we are trying to change that as well. We're reviewing them, of course, weekly. We are reviewing them monthly, we take the action and we are providing the necessary reports and we analyze those, and we make sure that the people are following our instructions in this. We have safety, we provide the safety equipment, and they should be followed. Supplier base, of course, also very important, a big part of what we are doing here, to make sure that we are able to deliver to our customers. And we also need to make sure all the time that our suppliers are good, our suppliers are following our code of conduct and that we really can trust on them what they are doing. And that's also why we do have audits in place where we work with the suppliers. We do the audits, we check with the suppliers. Based on that audit, all the findings, we are following it up with them to see what they need to improve. That's the same way as customers are doing with us. Okay. Thank you very much. That was all from operations.

Thank you, Andreas. And yes, safety first. This is really, really important. We still have accidents now and then. Luckily, we haven't had anything serious. It's bruises and some cuts, but it should be -- must be zero. And if there is an accident it's reported directly to me, and we discuss how to avoid in the future. Also interesting to hear about the modular expansion, which is our way to -- in a cost-efficient way, expand our operations. And then you might ask, why do you buy companies. But it's always make or buy that the difference is if you buy a company, you also get a lot of competence. When we expand, we still have to recruit, and we will come back to this later. This is one of our challenges. Now we've been talking on a group level. I think it's time to go down to some more cases. And therefore, we would like to zoom in and that we will do on Sweden by the help of Veronica.

Hello, everyone, and thank you very much. My name is Veronica Svensson, and I am Sales Director for Scandinavia in HANZA Group. And apart from being responsible for Scandinavian as a customer market, I'm also responsible for the sales of Cluster Sweden. You have now been listening to my colleagues and you've gotten a good overview of the cluster concept, the offering within manufacturing, the synergies that we can create with the different technologies and also in the end, the increased customer value. Now let's take a deeper look into Cluster Sweden. We are the largest cluster in HANZA from a revenue perspective. We're also the most mature cluster in HANZA. So we have been able to see the great benefits of the regional and complete manufacturing within HANZA. But also, we have been able to further develop the concept to add value to our customers. And this is what I'm going to present more in detail. Firstly, let's have a look at our cluster. It consists of 6 manufacturing sites. After the Orbit One acquisition announced recently, we have incorporated Ronneby and Huddinge into our Cluster Sweden. We have a good balance between mechanics manufacturing and electronics manufacturing, and we also own 40% of the shares in Spectrum Technology, which are experts within robotization, automatization that will help our customers with robot cells or other automated solutions. If you look down to the bottom right, you can see a graph of the sales development in Cluster Sweden over the past 4 years. And as you can see, we have close to doubled our revenue. And this is without the acquisition of Orbit One. So the growth comes from new customers and existing customers, where we have increased our share on the market. And with that said, we have also grown across the board of customer. Because from a liability perspective, no customer in Cluster Sweden is larger than 10% of the revenue in Cluster Sweden. We have built a stable and diverse customer base in Cluster Sweden. And here, you can see some examples of world-leading customer products that we are producing in Cluster Sweden. And as you can see, we are present in many strong segments. We have environment, agriculture, energy, we have communication, defense security and also the medical sector. So how do we take our offering further? We know that 70% to 80% of our product cost is built in already in the design phase, which makes it crucial to Design for Excellence. And with Design for Excellence, I mean design for manufacturability, design for assembly, design for quality and design for logistics. If you do not take these parameters into consideration when designing a new product, it is most not likely going to be competitive on the market. And what we see with product owning companies' R&D departments is that they are experts within designing a nice-looking product that with all the features, the market demands, but it's lacking one important skill. And that is the manufacturability of the product. How is it going to be optimized for production to make sure that there's no extra built-in cost? And this is where we can bridge the gap. We help our customers with manufacturability. We can review a product already in the design phase and tell them what tweaks and turns that needs to be done in order to optimize the production flow. And I will now show you 2 examples of how this is done and this is examples that hasn't been shown before. So this will give you a valuable insight into the extra value that we can create beyond the cluster concept. The first project, some of you that are following us have seen this in a press release. This is for a customer working with automated warehouse solutions. And our contribution in this project is the box in steel that you can see down to the left. And this project is going to the National Library in Nordland of Norway in Mo i Rana. This is a special product because it's actually blasted into a mountain. So therefore, the box has to be in steel. The customer came to us with a finished drawing also with the target cost of what this box should cost. And what we immediately saw when we reviewed the drawing was that we can make automations to this product in order to optimize it for production. We could reduce the material, we could optimize the production flow and we could optimize the logistics. So in the end, the savings for this customer were actually SEK 6 million compared to the target price. Of course, we won the project, and we are now delivering 86,000 steel boxes to Mo i Rana. The next example is a good example and help our customers. Here, you can see a large machine. This is shipped in containers to U.S. and Australia. And prior to us working with Design for Excellence, we fitted 2 of those into 1 container. We looked it over. You remember the times when scarcity of containers, the price of containers skyrocketed. So we needed to do something to help the customer. So we changed the level of assembly of this product, meaning that we could stack 2 of them on top of each other, and we could also reduce the pallet size so we could put 3 in a row. So after this project, we could fit 6 into 1 container instead of 2. That is a reduction of 67%, 67% for containers, 67% of freight costs, but also 67% of CO2 emissions and the footprint of the product. This started in Cluster Sweden as an embryo working with Design for Excellence, and it's now a full-scale concept of selling. Today, we are working with many of the larger customers together with their R&D departments when they develop the next generation of products. Who would you pick for manufacturing? Thank you so much.

Thank you, Veronica. And yes, why choose something else than HANZA? There's no reason. I have to be a bit personal here. When we started HANZA a little bit more than 15 years ago, it was said that manufacturing has no place in Sweden, everything is going to be moved to Asia somewhere. And when we talked about having a factory long term in Sweden, it was a bad idea. So it's extra nice to see this from Veronica's picture how we have grown, how stabilized it is and how well this is working today. And thank you so much, you also gave a good color on the HANZA picture with these examples. Now it's really good that we have strong factories, that we have strong customers, that we have strong equipment, but it wouldn't be anything if we didn't have strong people. And therefore now, we welcome our HR Manager, Diana.

Hello, everyone. My name is Diana Thorin, and I work as Head of HR and Communication in HANZA Group. Today, I will talk to you about the people and culture of HANZA, and I will focus in on how to manage to continue to grow because Andreas has talked about it, that we need also to have good people to continue to grow and also as Erik said and also Mattias have talked about, we need good people to continue. So I want to focus on, first of all, why it is important, but also to give you some examples about how we are doing this in HANZA. To be a successful company, you need to have a strong business model and a clear strategy, which we have. But we also need to have excellent people. But to attract and retain talent nowadays, it's not enough to just have a safe work environment. Of course, it is important. No one should be injured at work. And of course, everyone needs to get paid, so a monthly salary, that is also something people take for granted. But to be able to compete, they want something else. The candidates want to have something that stands out in the crowd. And if we could be done a great place to work for the people who already are working in our organization. They will also then become ambassadors and speak positively about us as a company, focusing on our own people, be a great employer for the people who work in the organization, and that will have positive effects. So for instance, imagine one of our employees are sitting in the local coffee shop, having a cup of coffee with his friends talking about how great it is to work in HANZA, that they have some fantastic colleagues, they have great working hours and that the leaders always are so supportive and flexible, trying to help in all the possible ways to ease the life puzzle. So that is what we believe in. Be a great employer that will help with employee branding, that will also make sure that we can attract the right talents. So how are we doing this then? So first of all, we have an organizational model that supports our ambitions. You have already heard that we have a decentralized organization model, where we encourage local decision-making, but it's very important because if we delegate responsibility but also accountability that will create both ownership and innovation, things that are crucial to be able to continue to develop HANZA. Andreas said, we have a very small headquarter, but we have a lot of different common functions, but these functions are very often located in one of our factories. So in this way, they are close to the market, they know what is going on and the feel the daily pulse in the operation. So that's a very important thing. And we are also carrying out each our due diligence to make sure that we are acquiring companies that fits into our company culture. You heard Mattias talking about our most recent acquisitions and how we are such a great fit. And that is what we do. So before we are buying a company, the HR function are visiting the company and dig deeper into the value of the company culture and the people. And we are not just interviewing the management and look at facts and figures. We are also observing if what they say seems to be true. So how are they treating the cleaning lady? Do the people look happy? And I was very happy to see that the culture in Orbit One and the value is exactly the same that we want to have in HANZA. So that was an acquisition that HR function approved. Because if it's a match, then it will be very easy to integrate a new acquisition into the group. And if it doesn't match, well, then we will have a real struggle. Another important part is that we need to aim to be a great employer throughout the whole employee journey. So with that, I mean everything from making sure that we have a good onboarding process so that the newly recruited people feels welcomed, they get to know and learn the task very quick, but also that we continuously develop the people, that they have the possibility to grow inside the company and that we also could make them engage and want them stay within HANZA. But also to do very good offboarding or exit with people for some reasons chooses to leave us because if they have had a long working life in HANZA they should feel appreciated also when they leave. And as I said, they will also then talking positively about us as a company, which will strengthening our employer brand. And a lot of companies are talking first about the attracting part that we need to work a lot with employer branding. We need to be visible on social media. We need to show how great it is to work in the company, that we are focusing on our people first. And if we also are a great place to work and the people confirm that, then our employee branding communication will be true. So otherwise, you could do a lot of great social media post and recruit a lot of new talents, but if they join the company and very soon realize, okay, what they said isn't really the truth, then they will leave very quickly. But to succeed then, to be a great employer throughout the whole employee journey, we need to have skilled leaders. We have high expectations of our leaders, but we also need to make sure that we provide them with the right [ resources ] and tools to be successful in the role. So during this year, for example, we are carrying out a leadership program that will focusing on strengthening our leadership communication skills. So based on that, the leaders spend 70% to 90% of their working time communicating, this is something that they need to be really good in. And I'm also convinced that if we treat our people well, they will be happier. And happy people will perform better. They will stay healthier, and they are less likely to leave. So that means that we increase our profitability, we will also minimize the cost for employee turnover and sick leave. So it's basically a win-win situation for everyone. Thank you.

Yes, this is a very important part of HANZA and it has happened that we found this fantastic technology in the company. And then Diana went there and said that the culture is not working with HANZA, so we have to leave it. But that's the way it should be. So Mattias met first Diana and then Andreas in our internal due diligence. We talked about that HANZA consists of 2 parts, it's manufacturing and it's services. And we talked a lot about manufacturing. So now I think it's time to look at the services. And therefore, we welcome Jeannine.

Yes. Well, my name is Jeannine Budelmann. I'm Managing Director of HANZA Tech Solutions, and I would like to talk about the R&D perspective today that HANZA provides. And as Erik already said, we have a service side and the service side consists of R&D and also of consulting opportunities. And what I want to focus on is the research and development. And we are not just a separate unit that does development. But through the R&D that we provide, we want to give value to our customer, additional value that is not -- that goes beyond pure manufacturing. So this means that HANZA Tech Solutions supports the whole HANZA Group. And the idea behind this is that when we help our customers within R&D, then these customers will be able to produce more. Well, and what happens if customers produce more, then hopefully, HANZA produces more. So there's the whole rationale behind us providing R&D services. And here you can see what the normal classical process looks like. Normally, customers come to HANZA and ask for an R&D project and R&D support. And this is where HANZA Tech Solutions starts. And we have experts that communicate with the customers, find out what the real problem is and combine knowledge from very different sectors and very different segments and industries to provide the best solution to the customer. And then after we have started an R&D project, we will do the prototyping. And here is something that's very crucial and very important to our customers. which differentiates HANZA from many different other companies. That is that we have the prototyping in-house where we have our engineering team. So the engineers are very close to the production floor. And it has already been said before that it's very important to consider manufacturing throughout the R&D process. So here, we can make sure that all the necessary people communicate with each other. After the prototyping phase, we hand over the developed product and the prototype to the HANZA clusters. And we have several of them and very competent ones, and so they will take care of the pre-series and later on, do the serial production for the customers depending where the customer is sitting. And then after some time, it may be that some components run out of life or that we have to do some kind of technical improvements or adaptations that the customer wants. And then there starts to technical redesign. And then basically, we start from the beginning with a new R&D project and tie the customer -- we are about to finish our second part of the building. We have doubled in size now, so that we have a lot of capacity for new colleagues in the next years as well. As I said, we have many engineers and many different people in the team. And we have them from electronics, whether we have mechanical engineers, but we also have software engineers. And I don't want to dig too deep into the technical details, but we can develop everything from small microcontroller-based electronic boards up to industrial PC-based systems. And we can also develop the enclosures for the components that we provide to our customers. And when it comes to software, we've also experts for software that is running on either very small microcontrollers or huge PCs. And sometimes, these components have to be connected to a smartphone or to a server. And in these cases, we also write application software, meaning that we don't write an app just for a smart phone that's not related to any kind of production, but if the smartphone has to communicate with HANZA component, then we do that as well. And before the development process and during the development process, we also have consulting aspects that we take care of. So as I already said, when the customers come and have a problem, a technical problem, they very often have an idea in mind, but very often, this idea is not optimal from a manufacturing perspective or even there might just be something that is technologically better suitable, for example. And in these cases, we do workshops with our customers and help them to improve their thinking and their idea of what they really want to have from a technical perspective. And of course, the product is not only a product, but it has to have certain kind of certifications. And in case our customers need to help with that, we can provide them with help as well. So if they need testings for CE certification for example, they can come to us and they get help from us as well. So that was very technical and very theoretical. So let's jump into some example projects that have brought with me. So here, you can see what is called a loop sorter. This is something that you have at airports, for example, where the bags are sorted. And they run around through the building and then go to the different areas and the customer that we have had the problem that the small wagons that transport the bags that can be damaged quite easily. Sometimes, we don't really know what's happening. And sometimes it's a small damage that you don't notice. And very often, all of a sudden, a wagon doesn't function anymore, and then it's too late. So the question was, can we detect that before something is damaged. And that basically means predictive maintenance, and we develop a solution for our customer. That means that we developed a low power sensor and Internet of Things low-power sensor module. And this module measures acceleration between the wagons and communicate via LoRaWAN to a century unit that collects the data and can notify if something goes wrong. So in that case, we could help the customer to improve the whole process around the product itself. So -- we don't -- we have large systems, but we also have very small systems. And they can be as small as a security shoe or a safety shoe. And in that case, we had a supplier for safety issues and they wanted to enhance their products because they are a German supplier, and it's very difficult in the market to compete with Far Eastern companies and to differentiate. And they wanted to have an embedded sensor that can be put into the shoe and that detects if somebody falls for example, if somebody needs or is running. And all of these sectors can be detected with this very tiny module that we developed and that is that is communicating via Bluetooth low energy and it can communicate with a handheld device. And this is also very important because it gives you opportunities to enhance worker security. So you can, for example, combine this shoe with the machines that are running. So you can prevent accidents that can happen within the shop floor. So I would love to bring even more examples in between, the very huge and the very small projects that I could show you today. Yes. But unfortunately, I'm not allowed to do that. And so if there are questions later, I would be happy to answer them. But I hope that you have gotten a very small glimpse on what Hanza Tech Solution is able to do, in order to support our customers and give them more value and to give them the whole holistic journey throughout the Hanza Group. Thank you very much.

Thank you, Jeannine. And it's a bit technical, but I think you see the difference. Veronica talked about the effects. So it can be designed for manufacturing when we help our customers to adapt, to make it easier to produce, that's done on the sites, whereas here, we're talking about finding technical solutions for our customers, hence the name. So that's the difference. And also good that Minster is an old HANZA [indiscernible] in Germany. Okay, we did well. So I think we can now run the break to 20 past hour. So let's start again 2:20. Thank you. [Break]

Okay. Welcome back. Now we have finished the first part, and we have met some of the fantastic people we have in HANZA. And now we will talk a little bit about the financial development and also the strategy we have moving forward. Now you saw hopefully that we released our new financial targets this morning. And you might ponder on why did you not move these targets forward in time to a later year, we saw many of our colleagues that have moved out targets at 2027. We stick to 2025. Well, there's a very easy explanation. And to understand why we need to have a look at how we have expanded HANZA. So since start, we have built HANZA with defined milestones, defined targets, step-by-step. And we can actually grow HANZA in 3 dimensions. We can increase the scope of our offer. We can increase our global footprint or we can just grow the existing business, and that's is the picture up to the right, the Coordinate system. And when we reached 2022, we sat down and discussed what will be the next phase. And I think that's quite important to understand. So I like just shortly repeat HANZA 2025. Here is the analysis. So we concluded that we have a really strong business model. It helps us both in strong economy and weak economy to gain new market shares. The acquisitions we have done so far, all of them have performed better inside HANZA than they were earlier standalone. And we also saw that we have a number of good technologies and also a good footprint. But we have an imbalance some of the clusters we have are not equal. There are different degrees of maturity, a different degree of size. And we said that next step again would be geographical expansion because that's the demand we see from our customers. But before we do that, we should create a solid platform of the existing business. So that's why we decided that this phase HANZA 2025 should be all about more of the same. So increase the existing business. And here we are almost in the mid end of this HANZA 2025, and I think it will be valuable to go more into details on the different years in HANZA 2025. So let's look at it year-by-year. We were off to a flying start, 2023. We did modular expansion, like Andreas explained, we did a large acquisition of Orbit One. We had a number of new good orders. So really, really strong start. And now '24, what will happen. Where we still have to work to integrate this large acquisition, it will not maybe last the whole year, but it will last at least half a year before we're done. We also see that the economy is a bit weaker, not necessarily bad news for us. We have seen that in every downturn, there's new opportunities for us. We are not selling as manufacturing. We are selling manufacturing solutions meaning that the number of product owned company will look for new solutions when there is a downturn economy, but there will be a focus on sales also. Furthermore, it could happen that we make additional acquisitions. We still have some positions where it will fit with an acquisition. But again, it depends on Diana she likes the company. It depends on also that fits our strategy 2025. That is existing geographies, existing technologies. And then we have 2025, where are we now. And now it's time to wrap it up. We are soon going to launch our seventh cluster. So it needs to be a solid platform. And it's not just about what I talked about. This is also about governance, cybersecurities, all the internal rules that must be in place in order for us to dare to take a next step, which might be then HANZA 2028 or something like that. But the strategy stays, and that's why -- we have kept 2025 as our target date for the financial goals. But due to this quick start in '23, we had to revise these targets. Strategy stays, only new targets. And with that, I leave over to our CFO, Lars.

Thank you, Erik. I will look into what we released this morning, the Q4 report. But also since it is a full year going into the full year figures and describe the development, the financial development. I will also -- coming into the acquisition Orbit One from a financial perspective, how it would affect the figures in the group and also the capital raise that we did in the end of last year and the beginning of this year. We had a really good quarter 4, very much in line with the rest of the year that we have had so far. We reached again over SEK 1 billion in turnover. Approximately 5% growth, a little bit positive affected by the currency. But on the other hand, a year ago in quarter 4 '22, we had material and energy that we also invoice to the customers. So they are the currency and that part is sort of equal out. So 4% is the organic growth in Q4. We had result that was quite affected by the onetime cost, but the acquisition of Orbit, but also the fact that the German company in HANZA [indiscernible] that we bought 1.5, 2 years ago, we actually was doing better than we expected. So we had to increase the earnout to a higher amount. So that was another SEK1 million in the onetime cost. And adjusting for that, we reached 8.4% in EBITDA above the financial target we have of 8% and in line with what we have for the full year 2023. The EPS increased to SEK 1.16. The EPS is affected by the onetime cost that we have for the acquisition. So without that, it should have been a little bit higher. We have a fantastic main market is continuing to growing quite rapidly and having over 10% in margin, which is leading in the industry. We have other markets that is a little bit affected by this imbalance that Erik talked about. On the other hand, we are increasing the margin. And we have said this many, many times that there is no really need for seeing a difference in the profitability in other markets in main markets. And main markets is where Andreas said that we had or Tom said that we had the customers, the main part of the customers. That's Sweden, Scandinavia, Germany that are the main customers. And that's where we are producing it in the same place as we are also having the production sites. Looking into the full year, we see a good development. We have increased SEK 600 million in turnover, and that's organic growth have increased the profitability from 6% to 8.4%. And why did we do that? Part of it is, of course, that Germany, the acquisition we did a couple of years ago is doing a lot better than it did in 2022. We also see that we have invested and capacity in good time so we can make profit out of those investments, and we have actually moved in the cost from personnel costs to depreciation. And that has, in total, giving a positive effect on the profitability. We see that the main market again is growing a lot on having a really strong profitability. Other markets are increasing a little bit behind that is picking up. So in total, it looks very good from a group perspective, and you can see it to the right the development, quite impressive development of the sales in the time that HANZA has performed. Balance sheet and cash flow. We have now an extremely strong balance sheet due to profit and positive cash flow, but also the fact that we did a new share issue at the end of 2023. Part of that, the strong balance sheet will be used when we -- we also used when we closed the Orbit deal in the beginning of January. I will come back to that. We have a net debt that is below 1 towards the EBITDA. We have an equity to asset ratio that is 46%. And this morning, we announced that the Board proposes a dividend of SEK 1.20, which is corresponding to 22% of the EPS and the dividend policy we have is approximately 30% of the net profit that we should give us dividends. So this is a little bit lower. I will come back to the new financial targets. But looking down to the right, you can sort of see the reason for the Board taking the decision to give us new financial targets. We have actually reached the financial targets as of the end of 2023 when it was supposed to be by the end of 2025, partly due to the acquisition, but in profit-wise, EBIT-wise, we're already above the 8% that was our financial target. The other, I will come back to them, but they are unchanged. Sustainability. My colleagues have talked about sustainability. It's part of the business model. And we -- in the beginning of this year, we took the opportunity to decide on new targets for sustainability, and we also decided to every quarter reveal them in the quarterly report. I will not go into the details, but we can show that we are developing in all these parts that we are -- have decided to pinpoint in the quarterly report in a positive way. And as Erik said, we are, of course, not satisfied with the fact that we have a few accidents every quarter and we are trying to come down to 0. We did a share issue in the end of 2023, approximately 8% dilution we took in SEK 300 million, SEK 260 million of them in the end of last year. So they are part of the balance sheet and SEK 40 million in the beginning of this year. And we are glad to see that financial institutions that entered into HANZA became owners earlier, decided to join this share issue as well, ODIN Fonder and Lupus Alpha. But also that we now have Tredje AP-fonden as new owner and they took a quite big stake of that new share issue. And then our main owner, Gerald Engström via Färna also participated in the new share issue. And we're also glad that NASDAQ of course, depending on our growth and the way we have performed, we are now moved to mid-cap from small cap. Turn to the right, you can see the shareholders the biggest shareholders. And we're also glad to see that a few of them Francesco, is present today here. The acquisition of Orbit One, we signed in December, first of December, we signed the agreement, and we closed the deal on January 4. We had an initial purchase price of SEK 367 million. And then we have a potential earnout of maximum SEK 91 million. In order for the sellers to reach and get that additional earnout, they need to do better in profitability wise in 2024 compared to 2023. And the valuation of Orbit is approximately 7x the EBIT in enterprise value. And if they increase the profitability, it will still be 7x the EBIT that we pay for the company. And also Mattias, after the acquisition after the closing decided to buy HANZA shares. That's good. And this is how we look in the pro forma figures. Orbit is today running at a couple of percentage points lower in profitability. So by combining HANZA with Orbit, we will actually have a lower margin. We will not be on 8.4%. We will reach SEK 5.2 billion. And we also expect, by combining and work with synergies that we will be able to get positive cash flow from the balance sheet in orbit and also by synergies, we will increase the profitability -- and Erik mentioned it will be integration phase. But then in the end of 2024, we expect to get synergies out of the acquisition. And as I said, this morning, we released the new financial targets. And there are 2 that we have increased and that is the sales, the growth and the profitability. And the growth used to be SEK 5 billion, and we are today on SEK 5.2 billion, and we increased that to SEK 6.5 billion in 2025. We kept 8% in EBITDA margin, but it's still an increase since we're now saying that it will be for the full year 2025 before we said it should -- we should reach 8% during 2025. Part of the financial goals to reach those SEK 6.5 billion. We are open for acquisitions. And -- as we said previously, we see that every company so far has done better within the HANZA Group than as a stand-alone company. And when we do an acquisition, it will be for strategic reason, but also to increase the size of the clusters that are not on the SEK 1 billion size. By doing the acquisition of Orbit, we increased the Central Europe cluster. Sweden is already beyond SEK 1 billion and Estonia is also -- or Baltics is also beyond SEK 1 billion. But we like Finland and Germany also to be on SEK 1 billion level. And by that, I'll leave over for Q&A.

Okay. So now we are ready to answer any of your questions. [Operator Instructions] So I don't know if we maybe start with a question from the web.

Yes, we can do that. We have some questions coming in from online viewers. Here. Congratulations on the results. Regarding M&A, mergers and acquisitions. Going forward, the strategy is to acquire more niche businesses with higher -- I'm sorry, it's something more questions, margins or to further integrate vertically? Or what are your thoughts on this?

So the answer is that we would rather do it according to our strategy 2025. So we like to have our classes on the same side. So it's more a question of geography and filling the gaps on a specific technology, but it must add value for our customers. So it must be something like Orbit One when we can go to our customers and say that this acquisition, what you think about that? We like it. Okay, then we did a good work. So if that was an answer. Okay. Maybe questions from a microphone.

Yes, Anders Roslund Pareto. I had a question regarding the present situation. You had an organic growth of 4% or 1.5% if we take away these price effects. When you're going into this year, I assume that you will remain on those levels a couple of percentage of organic growth until the market recovers. Or will you have additional new sales, you have talked about last year. Yes, the [indiscernible] industry and forklift business, et cetera.

You're fishing for a forecast I can see. And that you will not have. But I can talk in general terms. And that is that I can always look backwards and say that historically, we have grown 50% organic, 50% acquisition, and that will be the target forward as well. And you see our targets for 2025, I think you should look at that perspective. So when we end 2025, would we have grown 50% organic acquisition, it would be as normal, but it can also be more or less for one of the parts. That's the politician answer you're going to get from me.

Yes. I know that the economic cycle is difficult to discuss, but your own initiatives, that's interesting to hear.

Yes. And I think that closest for us right now is, of course, the huge new order book from Orbit One. We had almost no overlap of our customers. They were used to buying only EMS [indiscernible] electronics. Suddenly have a chance to buy the whole concept, can also include mix, like we did from Mitsubishi. So that would be maybe 1 of the drivers. Secondly, we would look at the economic situation where we already are in discussions with some customers who think that's time to reshape the supply chain like we have done before with mix. But I cannot give you any numbers. I only give you a general feeling that there will be organic growth and there will be acquisitions.

Yes. You don't see any sort of that you are profit cycle that it won't get worse or because that's what I see in the general manufacturing, it's sort of stabilized on a lower level.

But again, we are not disconnected from the economy. Of course, we are affected by it, but we also see opportunities in the difficulties, meaning that we feel that we can increase sales a bit when the economy is lower. And when the economy is growing, we can work more with the existing business. So we are not afraid of sales as such. Our challenge is what we talked about before, to get in enough skilled people to grow. We've been growing really quickly. We will continue to grow and you see our targets. We're going to fulfill that means additional people, additional manufacturing square meters. So if you look at the challenge we're not put it on the sales side but rather on the execution side. And I think our COO, Andreas would agree.

And the fact that you've grown a little bit faster now in main markets versus other markets, but should be the vice versa maybe. So when will we see other markets catching up again.

We have a slight delay in other markets, if you go into details, we were going to open a new sheet metal extension by the end of last year. Now we say it's going to do it in Q1. So there are some minor things. But again, I'm not looking at quarters, it's too short period. You must look at year when it comes on to be preferred, you should look at 2025. And as you see, it's a quite substantial raise of our goal, 30% from SEK 5 billion to SEK 6.5 billion, and we are SEK 5.2 billion last year. So -- we have high hopes for not...

Without any acquisitions that would mean roughly 12% organic growth, 24%, 25% to reach SEK 6.5 billion from SEK 5.2 billion. So either you grow very strongly or you make an acquisition.

Or both. And that's a minimum level of SEK 6.5 billion. And you saw that last in the year, now it was SEK 600 million in organic growth last year, we have been up to SEK 1 billion in organic growth. So we can grow quickly organically also. But I know you want to give me a cost give you forecast, but I will not.

I ask the same question in another way.

Thank You.

Hi, Niklas, Carlsquare. Just once again about the -- You mentioned sort of mixed outlook high level?

Yes. So of course, some of our segment is still booming. So we have defense industry that's very strong for sale reasons. We have energy sector, which is really strong. We have recycling machines really strong. So we have a big portion of our customer base growing, but we also see in other ends that they are declining, and it's not a problem on a group level, but it could be a problem on the next level that we have this imbalance I talked about. And then we also see that the larger manufacturing classes we have. We can make an example when we have pandemic, we had a 30% decline in the Swedish cluster. And then we fell from -- margin wise from double digits to 7%, and then we were up again. We were almost not heard about that because the size of the cluster. And again, you have to remember our business idea that we can share resources -- so we can share both white collars and blue collars inside the group. And that means that when we get a certain size, it's much easier to cope with up and down turns in the economy. And that's also why the reasons we have to create a larger or, let's say, more even size of our clusters.

Okay. You mentioned taking you will take new market share. Is that -- what you mean new customers or do you mean existing customers increase business? Or...

All of the above. I foresee that we will have new customers this year. We will have existing customers growing with new technologies and a bigger scope, and we will also have existing customers just with new products. On top of that, I also think we can look at maybe some more mix, so this big offer we have and we replace the supply chain with another.

Okay. And regarding new customers, I guess, that means that will need some ramping up before that turns into sales or...

That's correct. And that's what we also try to state that -- what you're seeing right now or the forecast level here. But yes, we will see new customers, and we're expecting the ramp up, and we expect to see the full volumes in 2025. That's why we can be so bullish with our target that year. But we cannot rely on the economy. I think that, that's a mistake you do say that the economy will be stronger in the second half of the year or something, who knows? We don't know that. You have to have a way to grow your company respectively, if the economy goes up or down. And that's also the difference between HANZA and the rest, let's say, the traditional contract manufacturer factor that we've been able to grow now for 15 years. and that's no coincidence. That's why we are able to get new market shares when the economy goes down. So not relying on the general economy is very important.

Okay. And final question about Orbit One. In existing HANZA, you have a sort of a profitability gap between main markets and the other markets still. How is it in Orbit One? Is it also a gap or if you could provide some color on that?

I don't know really how much I can say, so I leave over to Lars.

No, we haven't revealed those figures. And so far, actually, the full year 2023 is not finalized with in Orbit. So even if I couldn't tell you, I don't know. So yes.

Fredrik Nilsson, Redeye. I want to start with the demand picture. You tell us that some customers are slowing down a bit, while others still accelerates. Could you give some kind of common group level outlook, combining those 2 factors for us?

Lars. We are down to this forecast giving so.

No, I don't think we want to go into that. I think it's you, Erik, that we see that.

Yes. No, we will not give you specifics. I think what I answered earlier that we have some segments growing, some segments declining. Overall, it looks good, but we have an imbalance, we need to correct that. That's a full answer.

You tell us that at SEK 1 billion, approximately, your clusters are getting really profitable. But what about the cluster in China? It's quite small today? Should we expect a large acquisition there? Or what's the long-term strategy about that cluster?

That's a very good question. China is another cup of tea. We call it the gateway. So here, we help our customers from Europe to move to China. So we are in the midst of a big project where we help a German company to get into China. But this is more a service. It's not that we're going to expand to be SEK 1 billion cluster in China. That's not the intention.

Okay. And before Orbit One, your Sweden cluster was very much focused on Varmland. Now it's more spread out. What was the pros and cons with leaving Varmland or expanding.

We don't look at proximity like in kilometers, but rather in culture and language and everything. We think it's a good advantage to keep different technologies together within the country, let's say. So that is no drawback. The only thing is that there is an ongoing discussion, which cluster is the biggest one, the Baltics or the Swedish after this, and you can look at it for revenue and you can look at different number of people. But other than that, no implication. Maybe we'll take another question from the web.

Yes, of course. We have some questions about the mergers and acquisitions, but we can take this one. What specific contribution does the acquisition of Orbit One offer, particularly in the areas of customer engagement, electronics manufacturing and other areas.

So electronics is a very important part of our offer. So it's in every product. Doesn't matter if it's a product for the mining industry or it's a small product for consumers. And we wanted to be wider and deeper in electronics. It was the smallest part of HANZA, but an important part. So for the old HANZA customer, it means that we are getting up to a really big size in electronics. And I think that, that could be the only argument not to use HANZA that we were not deep and big enough in electronics, which is a wide area. But with Orbit One, we fill all the gaps, no need to show somebody else than HANZA. From the Orbit One perspective, it's very clear that their customers were only buying electronics and now they get all the mechanics, they get all the footprint they get all the knowledge of tech solution. So it's -- and that was what I referred to earlier. It's been a really, really nice journey when we've been out traveling to the customers of Orbit One that they are so positive for this deal. So clear advantages for both customer groups.

And what we're talking Orbit One, maybe you could tell us a little bit more because there's a question on the process, the duration? Are there any other prospective parties expressing interest in the acquisition?

This was really a nice process because -- and also because I think we can reveal that, that when they decided to sell the company, they didn't do an auction or get a financial adviser to bring in different bidders on the company, but they asked us -- and I think the reason, if I talk for the seller side, they have been working with this. They said the last word they said was take good care of our baby. And it means that they think that our concept would actually means something good for them. And I think that if they would sell this to another electronics company or a financial investor, there is a higher risk and something bad will happen over time. So giving it to us was a confidence, and we were the only 1 taking part in this discussion, which was really important also.

Okay. And now a question about the share issue? Why and then pay dividends.

Maybe that's for you. A year ago, we did a similar share issue. In order to have a financial strength to do an acquisition like the 1 with Orbit. We actually were able to finance the acquisition of Orbit with loans, credits, we did not need to do the share issue in order to acquire Orbit One. And we like to be in a similar situation going into 2024, having the possibility to do an outsourcing or a big project like the MLE project that we signed during the summer and maybe another acquisition without having to combine it with a share issue. So that's the main reason. There was another part of the question as well. Why pay dividends. Well, be kind to the shareholders. But now we have this policy that we should give a dividend of 30% and it's really a board decision to decide what dividends to give out. But that's the policy we have, and we like to keep that policy and have a dividend in line with the policy and we also -- it's a little bit lower. It's 22% compared to the policy over 30%.

Maybe also we have Francesco, if you'd like to comment on this.

Basically, it's respecting the policy. We should give clarity to what you get when you invest in HANZA. The policy is 30%. We have respective to the last few years. We want to keep it increasing possibly. I think you can calculate backwards what the future dividends will be with that policy as well. So stay strict with it.

Would you prefer to perform M&A with organic cash flows and not issue more equity that dilutes return on equity?

I can answer that one. It really depends on the size of the acquisition. -- we are open for both. We are open for finance it with own cash or possibilities to finance it with debt financing, like we did with Orbit prior to the share issue. But if it is a major acquisition, of course, our balance sheet cannot take an acquisition like that and still have a strong financial situation. So it really depends on the size of the acquisition.

I see. Now we have a question in the room.

Just wondering -- you have been completed and announced on expansions in particular in assembly, I guess, in Europe and the facility in [indiscernible] . And could you explain a little bit why assembly and why -- is this mainly -- I guess it's mainly existing customers?

Yes, this is versus proximity needed for assembly and treatment. And I think maybe, Andreas, you could give a few words on this.

Yes. So assembly, we have -- so for assembly, we do have for the existing customers, of course, but the 1 that we opened up in Narva, that was with the customer So the 1 that we took over and we did this week and then we started up the supply chain. So that was for that. And like I said in my presentation as well is that we can offer and our goal is to do as much as and as possible for our customers. And again, like Erik Stenfors said, it's very important that we have assembly close to where we have the sheet metal. So that we don't get scratches and all the things on the sheet metal when we start with the assembly.

So maybe comment on Tax portion also.

Yes, exactly. Then in tax portion also that we have started the expansion in [indiscernible] , about over 8,000 square meters. And that is also, of course, to be able to provide assembly to the existing customers that we do have there. So the same concept as we have been doing in Estonia.

Yes, coming back to the cross-selling opportunities with the Orbit One acquisition I guess it will take some time before you have to sort of convince the clients about the excellence of ordering more. I guess it's a complicated process to move from just 1 component to a full product. Isn't that more for 2025? Or will we start to see something already in '24?

We didn't start the sales process this year. The sales process is ongoing. And like I said, it takes some time. But if you continuously working with the sales process, now and then you will get in some orders. So it's -- and we don't use the normal fund and we are rather more directly. Maybe even Tom, if you'd like to elaborate a bit on that.

Yes, new customers. Well, I would say in HANZA more -- the sales process might vary from other subcontractors in the sense that we are always looking to be as complete as possible in our offering. So even though the initial scope might be PCBs, we need to understand the full scope, and we need to understand the long-term view from the customer and there is a strategic way forward. So what's down the road. And having said this, I mean, the qualification process of HANZA new customer is always to understand, first of all, how did they find HANZA and for what reason are they going for HANZA and what problem can we solve for them. So that's -- it is a longer journey because we don't look to add 50 customers per year. We look to add the customers that is a good fit for HANZA. But that is an ongoing process. And it's never ending, I would say, because you need to fill up with customers from underneath. But it's important also that it's the right customer for HANZA for the right reasons.

Any more questions here? Or should we move. Okay, we have 1 over there.

I just had a question regarding the uncertainty events in the Red Sea and in this West Canal. Does it affect HANZA in any way in terms of increased cost and pricing? And -- or perhaps a question for Tom as well, does it affect the customers in any way, the relation and discussions with them.

We have not seen an impact from this lately. And from what I'm aware of, it has not impacted the dialogue with the customer yet, I would say.

So there's no -- sorry, there's no layer of uncertainty added due to this uncertain events.

Not up until now, I would say I would.

No. I would say it [indiscernible] shows that you should have a local complete supply chain like we are offering. And now when you scale it up from being some pilots with the machine gun to full terrorist with the missiles and helicopters, you see that it's really a fragile thing to have a global supply chain. So why don't use a local supply and said, which is what we're offering. But of course, it can be could affect the material -- the component situation.

It would, of course, but it hasn't up until now. But also, we need to understand that these companies, customers of HANZA, the big industrial companies of Sweden or Nordic or Germany, which means that this is not easily taken decisions, it takes time, but that's part of the geopolitical topic I raised before that they are looking into this, especially in times like this.

Okay. And also, if I may continue. The margin goal is set at 8% for 2025 with the main markets already running on double digits and there's nothing really hindering other markets also to improve to the same level. Doesn't 8% seem like a rather conservative goal for 2025.

It's minimum 8%. But we are now a bit pushed down, like Lars explained, with acquisition Orbit One. And we also see a decline in some orders. So of course, it's a journey, but we also say it's 8% for the full year, meaning that we should enter the year in a good way, and it can be above. But I think it's a realistic goal and the most important thing so far, you saw the time line before every target we have put up, we have met. And I think that's very important. If you make a target, you must be able to feel that you can fulfill it. So minimum 8% for the full year 2025. I think that's a good goal. Something more from the web?

Two more questions from the web. And this is from Lupus Alpha. Does the SEK 6.5 billion sales target in 2025 include any M&A addition how much organic growth do you expect for 2024 and 2025 to reach those targets in 2025.

We're back to this. Lars, will you try to...

No, but we were clear that it's part of the business model is acquisitions. And we do acquisitions every now and then and to reach those SEK 6.5 billion it can be partly due to an acquisition in combination with the organic growth that we will not tell what we expect in percentage wise.

And back to explaining about the China cluster here is Karl. But could you please dig a bit deeper? Why are you not interested in expanding more in China?

I didn't say that we're not interested in spending more. I only said we are not going to make a complete cluster, SEK 1 billion. It is an interesting market. And we have a number of Scandinavian and German customers which are helping to move there, and we are growing with them. So we actually take manufacturing from this side moving into China. Again, it's in China for China. We're not producing China for Europe. So I wouldn't give the numbers only that it's not going to be the same size cluster as the rest in Europe. That's what I can say. Okay. Any more questions in the room? Something more for the web.

Only a comment. What an impressive CMD Capital Markets Day can almost feel the HANZA culture which makes me confident having a time frame on my investment. Keep going.

Thank you. Okay. So then if there are no more questions, I would try to summarize this afternoon with 1 slide, if I may. What we have been talking about today. So first of all, we feel that we have a proven business model. The difference between us and other contract manufacturers, we have been able to grow for 15 years. So we really rely on our business model. We stay on our strategy 2025. It's still valid, and it means more of the same. That's a simple thing with that. And if we look at where we are right now, we think that we have had a really flying start. It has been a good start of this strategy. And with the new financial targets, that's also an indication that we really trust in further organic growth, further mix and possibly acquisitions. And the final remark. Maybe the most important thing. If you ever think about starting a company, you need 2 things. You need a fair business model. So somebody actually is buying what you're selling. And then you need good people. And I would say that HANZA has both. Thank you.