Kamux Oyj (KAMUX) Earnings Call Transcript & Summary

Very good midmorning to everyone. My name is Katarina Hietaranta, and I'd like to welcome you to Kamux Corporation's Quarter 3 Results Presentation. After the presentation, we shall take questions first via the teleconference line and then from the audience as well as via the chat. So please feel free to use those. Now I hand over to CEO, Tapio Pajuharju; and CFO, Jukka Havia, to present the results.

Thank you, Katarina. Welcome on board. And I think today, we have not one of our best quarters, and I think the headline tells it quite straight and fair. But I think behind the headline, we have a lot of good actions, good things happening on the marketplace. And today, we'll have a deep dive on where we are, where we are heading and what do we have in the plans to make it better going forward. We'll have a deeper look on the Q3, then we'll have a couple of events and actions we have done after the quarter. We'll have a highlight on the market positioning, look at how we've been implementing our strategy. Jukka will have a deeper dive on the financial development, then we'll go through the targets, guidance and outlook going forward. And then we have time for questions and comments at the end. All in all, I think we had a bit of a tough quarter. And on the top line, we were unfortunately giving in almost 1% on the top line and steady journey in Finland and Germany, but not offsetting the issues we had in Sweden. Gross profit decreased, adjusted operating profit decreased, like-for-like showroom decreased, so not good in that respect. But then on the adjacent services and a couple of other areas. And when we go through the countries, I will share some of the highlights where we are very happy and very proud of. And then I think we can have an action plan how to address the issues we had very soft on the quarter 3 of '24. After the period, we did a couple of issues, which are strengthening our capabilities in the sourcing arena. One, we acquired the Webcars Logistics from Sweden, one of our long-term partners and also a couple of guys from Kamux been in that one. They are very good in sourcing cars from Sweden, selling them to Finland Central Europe, Baltic states and then lately also for Sweden. And we are very happy to have the team on board. We are integrating them together with our purchasing team in Sweden, in Germany and in Finland. And I think we used to be one of the customers. Today, we are a different customer, but for sure, we continue independently and service also the other customers. We intend to increase the volume quite a bit. And I think that will help our issues in Sweden going forward as well. Then in terms of the visibility and having a grip on a newer fleet, more green fleet and well-maintained branded cars, we made a long-term strategic partnership with Secto Automotive. We'll have access now to roughly 35,000 cars on an annual basis. 65%, 70% of that is personal cars, rest is vans, and we will fit the vans for our Kamux works in Finland and then the personal cars into our fleet in Finland, mainly skewed towards the capital region where we've been a bit substandard. So that's helping in that respect quite a bit. And on our worth the trust and selling the transparency and higher value and better quality cars, this will have a major step forward. Then on top of that, in our toolbox, we didn't have the leasing opportunity for the vans. Together with Sector, we have that available. And now we have a visibility of 3-month visibility, what is coming on the marketplace, and then we can be preparing for the actions based on that. So for example, if there will be suddenly 150 Volkswagen hybrid golfs, then most likely we will tune down the sourcing of that model in other channels. And on top of the cars and the 2 stores, which both are in the capital region, one in Frisila, one on the Ring Road 1 in a very prominent place, we will get 14 colleagues and very experienced employees. And I have had the luxury to meet the guys and the ladies and a good addition to our skill set and team in that respect. Then on the used market in all of the arenas doing rather okay, but there are certain pockets of where the sourcing has been really difficult and different. So all the markets are a bit different. And then also during the period, it's not been the same. And when we entered the period in Finland, we had small lack of certain cars that was prevailing until end of the quarter. And then towards the end of the quarter, we were okay. Sweden, we have had other issues. Germany, we have had plenty of cars and doing okay. Still, the new car sales is impacting the whole network and the whole value chain. And then going forward, if we continue seeing numbers like this, that means that both Finland and Sweden start to import a lot of cars and the magnitude is getting bigger. We've been beefing up our capabilities of importing the cars big time. But what we see, we need to continue doing that and doing that in a multiple of maybe 2 or 3 going forward if this continues on this level. Then when having a look on the graphs, then on the top line first, we were not landing where we wanted to be. We were a bit shy on the value development more on the volume development and especially on the profitability, a major drawback compared to where we wanted to be and clearly behind even Q3 of last year and only slightly ahead of '23. So not very happy, and that's why we have actions and activities ongoing to boost the profitability. On the volume of cars, I think we did a decent job on Finland, Germany as well. Sweden is where we had the most drop, and I will dive deeper when we have the Sweden page on that one obvious reasons. On the other hand, very happy that we took the strong medicine and now we are on track on that one, but it had a very big impact on the quarter numbers and especially at the end of the quarter, activities and top line volume as well. Kamux Plus doing solid, and I think we've been doing it well. Same applies for the insurance sales and the finance sales improving. And where I'm very happy we've been maintaining and increasing the margin on the financing services. Kamux Plus in Sweden with the new team, we have a bit of a new start training and onboarding to get back on the old numbers. We are doing it, but it will not happen overnight. It will take minimum 1 quarter to get closer to the numbers where we were. And I think the team is working on that. But we do understand that this is a very important part of our value add and can in the optimal circumstances, double the metal margin, that's what we are trying to establish. Then on the store network, a lot of things happening. Starting in Finland, we've been moving into new premises in Hyvinkaa. We left the old premises for works over there. Klaukkala and Tornio being closed and then 2 sector showrooms are currently converted into Kamux. One on the Ring Road, one is already looking like a Kamux from the outside and indoor, still a lot to do. And then we are moving into new premises in Klaukkala, larger, clearly more modern and fit for us. And at the same token, we are merging the [indiscernible] store to Kokkola. Sweden, we've been upgrading our Sundsvall Helsingborg store. We've been closing Boras, Norrtalje and Heron City and Gavle we are currently out of the current rental agreement. We are doing house hunting on that area, most likely returning, but only when we find an optimal location. Then in Germany, we have closed Lubeck and Kaltenkirchen, which were substandard on the profitability and sales. We have opened Siershahn, but later when we go look and then the German numbers, we were a bit undemand in certain stores, and that was visible on our top line development in Germany. Finland is in a way a bit twofold. And I think starting with the good news. And I think in our plan and strategy, we say that we will need to increase the average sales price of our cars. We need to have younger fleet, lower mileage, more electric and hybrids. Those we can say well done out of them and an excellent job and major move. At the same token, unfortunately, we have forgotten a bit on our bread and butter, which is in the way the combustion engine diesel and petrol cars in the price range between EUR 5,000 to EUR 15,000 or maybe even EUR 7,000 to EUR 15,000, those been difficult to source. And on the other hand, we were too keen to sell the younger, better fleet, and that's where we got the hit, and that's visible on the volume. Having said that, we have actions and activities to improve that. And that's an area where we used to be very strong and will be strong again on that respect. Then on the cost-related issues, I think we have some -- I'll call them a bit of a culture related, where we've been moving to the higher average price, we've been not able to obtain relative metal margin improvement. At the same time, we've been sticking to the absolute, and that's something we have now addressed. And then when we have been importing more cars, not all of the cost has been fully integrated into our value chain, and that's why we get a small hit on the car cost going forward. On the offering and the availability, it's been improving and our game, especially on the capital region when we see what is currently happening now, doing better. And also most of the regional city stores, we are doing okay, and we are on a steady path in Finland. And I think when having a look how our people are reflecting our is Spirit, Finland is doing okay. Sweden, I think we had a plan. We had a good medication, but then still we found areas where we need to give a stronger medication, especially on the area of trading. And we are very good trading with the customers. When then we learned that our dealer sales were not all very good and very profitable for the company. And that's something we stopped completely during the period. We've been now gradually restarting in an auction platform and very selected limited dealers and now doing clearly healthier business. And we went into that far that we had a daily monitoring of every single transaction done on an online and putting them on green, yellow and red. And we started with all the colors of rainbow. And today, we have only green and it looks very good, but it was a big, big step on the organization and took a big hit on the top line. Actually, the Metal margin per car sold increased very nicely and became healthier, but the volume took a big drop on that respect. But I think now we're on a good track and we know what to do. At the same time, we have a bit of an incremental inventory, which we've been dieting and going forward in a very healthy platform in Sweden. Germany, I think it's been a very solid, very safe journey, but we were lacking the volume. And then on the areas where we could have increased, we didn't have the manpower, which is in a way, own goal. Now we have addressed that and going to be okay. Then I think one thing where we are very unhappy and need it happened. In Germany, there's been a car dealer and car business-related frauds, mainly on the cybersecurity and these type of things. We became victim of one of those. And I think Jukka may dive a bit deeper on that one. costed us EUR 300,000 and lesson learned, and that's where we are. Anything else you would like to say on that?

Well, not really. I think in all of these cases, it's very much out in the public, you know that cybersecurity and all of these phishing and e-mail frauds are happening in our case as well. This is a case which has affected other car operators and dealers and used cars operators in Germany as well. So we are not the only victim. But unfortunately, even if we have various controls and double checks and triple checks in this case, the people affected and the people that were involved didn't follow our own processes. But now we're going to make sure that the systems will force all the people to sort of operate in just one way, and that's going to be the medicine in this case.

Then on the cross-selling opportunity and lately, if the ones will be monitoring moobile.d and all the other platforms, then you will realize that Germany is actually quite loaded with EVs and the price points are becoming very affordable. And Germany is going to be a sourcing market for Scandinavian players in the EVs and certain hybrids. And I think that's where we can beef our game in Sweden and Finland as well. Then I think on our positioning, we are still holding on the position. But with this growth level, we are running a risk that we're going to be dropping out of the podium. So we'll make sure that will not happen and we'll make it work. And I think with the actions and medicine we have given, we are going up on that ladder in the future as well. Then I think on the vision, that is unchanged, and we are now #3. And I think with our own organic, that is most likely taking a long time. So I think we are still open for actions and things on the M&A arena. But first, we need to get the house in order to focus on the things that we are 100% waterproof and we can make profitable growth in our own platform. Then on our strategy, I think on the customer promise, we've been doing rather well. And now we've been beefing up our offering on the cars where there is a demand. Good job on that one. Transparency, quality, also very good. Then on the operational efficiency, and I think later on, we'll have a bit of a look on our project core. That's where we still have areas to improve. Germany is roughly at par where we should be, but we still have some muscle to use. Finland, Sweden, we are in the early phases, and we'll make it happen, but that's the other. And then the third angle is on the people issue. And I think now we have the people, we have to have the time and activity level right and the frequency of the demand, both when buying and selling has increased, and we need to be ready for that. And what I've seen, we have a great improvement in domestic marketplace. Same applies in Germany. Sweden, we still need to improve our frequency of the clock going forward. And then passing on to Jukka.

Yes. Thank you. So what I'm going to do is mainly look at this from a group total consolidated basis. And of course, Tapio have reflected some of the things. But just as one sort of main driver, Sweden is one of the major negative contributors and attributes quite a lot to the decline if you compare last year's Q3 versus this year's Q3 or even if you look at the year-to-date basis. Of course, now we have had challenges in the Swedish volumes. It was like 20% decline, close -- a little bit more than 20% down Q3 versus Q3. And that, of course, has a major impact while at the same time, like Tapio already showed, our sales prices have been going towards the higher region. So even if the volumes are flat or down, the nominal revenue is up. And secondly, which is also an important driver for the profitability, the services income is on the higher side. And of course, that comes with a certain delays. So for example, the Kamux Plus or some of the finance services, we get the income later. And now when the interest rates are going to -- are declining that is happening on the marketplace, that's going to give us a little bit of a help. Our approach has been and still is to hold on to the current or the healthy levels of the pricing we give to the customers, which might have a little bit of an impact. If you look at the Finnish finance penetration in Q3, it is marginally lower than what it was in the previous Q3, but we haven't seen any major elasticity in demand in that respect, even if we have kept our sort of pricing. The gross profit per car was 2% down. So it's actually quite close to where we were Q3 last year. Now the sourcing market is tight. That is something we already referred in the previous report, and that has had an impact. Secondly, like Tapio stated, that we have been moving upwards in the sales prices. Probably we haven't with the hindsight, we probably haven't fully utilized the pricing power, the sales pricing. And then finally, we have had, for example, in Sweden, certain inventory revaluation aspect that is shown already here in the Q3 results. So even if in Finland, our rotation of inventory has been very good. In Sweden, we didn't have that at the level that we would have had. So it was not adequate, and that has led to certain write-downs during the end of the Q3. Inventory value has been trending up, and that is driven mainly by the fact that the mix is geared towards the higher end and sort of higher-priced cars, not that much about the volumes. However, in Sweden and in Germany, we have had higher inventories than we should have had. Let's be honest about that. The sales-through hasn't been at the levels that we anticipated. And that's why then in the fourth quarter that we are now running, we have been taking actions. And now towards the end of the year, like is typically case in this business, we are heading towards lower inventory levels. The net cash flow very much and that net cash flow being negative is all of the cash flow. The operative cash flow is positive. I'm going to come back to that a little bit later, but the total net cash flow was down. That is negative. There's about EUR 4 million delta versus last year's Q3. In the operative cash flow, it was more than EUR 10 million. And that is driven mainly by the fact that now we have more money tied on the net working capital. And then when we did the Secto deal in October, of course, we're already then going to have more cars coming out of that. So we will going towards the end of the Q4, be very careful about how to manage the inventories, both value-wise and of course, assortment-wise. Like Tapio stated, of course, then the balance sheet metrics, returns on equity, return on capital employed isn't at the levels where we would those to be. So a little bit like a short-term hiccup there. I think longer-term perspective, still like if you look at the equity ratio, the balance sheet of the business is solid. It's a good basis for the future growth. And we are now running, like we stated last time, the refinancing process is not yet finalized. It's expected to be finalized during the Q4. We are planning to have similar type of a long-term financing setup than previously with the banks. And thereafter, we should be good to go for the next years as well. And on top of that, of course, we do utilize for short-term finance in the commercial paper market. We do issue commercial papers out, and that is what we have done, for example, in the second half of '24. The EPS or the basic earnings per share, only EUR 0.05, down from the last year. And of course, now we have had one-off costs as well. So one thing to note is that as we do the restructuring, we also, of course, get the benefits. We do get the cost savings, but we're also, in the short term, going to have one-off costs, and those are reflected as one of the drivers why the EPS is down, not the only one, but one of them. From the table sort of perspective, these metrics, I'd rather now concentrate more on the year-to-date numbers. Looking at the top line after the 9 months this year versus last year, we are 1.7% growth rate, of course, not the pace we expected, very much affected by the Swedish challenges. But also in Finland, I think we should have been able with the market development, being able to grow more. In the beginning of the year, we did have some bottlenecks in the sourcing. Now those has been addressed with Sector, with webcars, all the other actions we have taken. Alti has joined our management team. He is an expert in this sort of car flow. And I think that's going to help going forward. The real challenge we have been facing is on the margins. So the further down you go on the P&L, you can see that now the margins are going down. And there are 2 things I would address here and maybe Tapio can sort of give a little bit more light as well. One is the fact that the car-related costs, whether they are before the sales happens or whether they are afterwards, we are doing a lot of actions, but it looks to take more time than we anticipated. So in order to get the results, it takes some time plus, of course, in order for that to reflect in the P&L, there's the inventory rotation as well because some of these costs will be activated on the balance sheet. And then the second point, of course, is that even if the integrated services are up by 10% if you compare sort of year-to-date 9 months this year versus year-to-date 9 months last year, which is positive for the profitability. Unfortunately, that has been eaten out by the fact that the cost game we haven't been good at. Inventory turnover in days is actually better what it was at the same time last year. But of course, here, we have to be a little bit careful. Like I said, the real challenge short term has been that a lot of money capital has been tied in and it has 2 components. One is the cash side. The other one, like I stated, for example, in Sweden is then to be careful that the inventory you have, the value is valid and it doesn't lead to write-downs. And there's now a lot of actions on that as well that we have been doing all the year, but probably are doing even more as we speak.

Yes. Inventory management is a skill. We used to have rather good grip in Sweden. Now we learned that we need to improve, and we've been improving and taking actions, but also taking the write-offs on the cars.

And if you look at the cyclicality of the business, of course, there is this buildup in the beginning of the year towards the summer season. And then after the summer season, starting from these days, typically, we go down on the inventory value and the inventory is the #1 driver of our net working capital, and it's also the #1 driver of our cash flow. So in the value terms, inventories were up by 7% end of September versus end of September. And of course, thinking about the top line growth, 1.7% and the inventory growth comparing a little bit different periods. But anyways, it's clear that we haven't been able to get all the value out that we should have. And that's one of the -- on top of the inventory management and sourcing side, of course, the sales and the pricing is going to be one of the key areas to concentrate on. And then the cash flow implications of this, and this is now the operating cash flow here, which we have. Of course, we have had some one-off costs. So we will pay out and that sort of pay out some of the actions we do. It's going to have an impact on the cash flow short term, but the main driver here has been the fact that the inventories are higher and that is where the cash has been tied. Going into the Q4, looking last year, looking at the year before, typically, of course, in this business, that is where most of the cash flows in, and that's still the expectation we have that we're going to have a strong Q4. And now, of course, in Q4, end of October, we already have paid the second tranche of the dividend. That was about EUR 4 million. So that has been flowing out. And then looking at how the future look like and what is sort of the longer-term implications. I start with these long-term targets. On the right-hand side, the LTM is the run rate. That's the last 12 months run rate where we are. And it's clear that we haven't been able yet in the first 9 months of this year when we have started to execute. We haven't been able to get the volume growth or top line growth that we have been planning. So more work to be done. And the EBIT margin is a function of that as well. I think in this sort of business, getting the scale and being able to utilize the scale will also drive the margin. So we are down or at flat versus where we were last year. Of course, the plan long term, which we haven't stated where the long term is, is to grow the business and get better profitability, both in absolute terms and relative terms. So there are a lot of work to be done, of course, early days as well. Secondly, we do have nonfinancial targets, 2 of them. NPS, which is the customers' Net Promoter Score is going quite well, going quite well in all the markets actually. 51% is the latest quarterly average. Of course, there's variation between countries and variation between the stores within the countries, but it's actively followed. There are actions going on at the store level. So I think that is something that is getting good traction. And I think that is also an indicator of the trust factor worth the trust, that is one of our key cornerstones in the strategy. And then the second component of the nonfinancial metrics is the eNPS, that's the employee NPS. We just had end of August, beginning of September, a measurement. We're going to do it another time this year. The measurement took place in the time when the restructuring activities started. So you might have to be a little bit careful reading into the numbers. But we wanted to do it anyways, got a lot of feedback. The eNPS average was plus 6, down from 33% last year. We also changed the service provider. They might not be exactly comparable. But I'm not sort of going behind that. So it's down. A lot of work to be done. Let's see what will be the next measurement we're going to do still end of this year. And then maybe one note behind that, which we do not report here is that still the people themselves, there are other questions as well, have a lot of confidence that they have the tools, they have good spirit and all of that is in there, but still we get the eNPS, which is down. That's a fact.

And maybe one more comment on that. It was quite a versatile outcome, but this is the average of the all. And I think our largest market, we were very steady and okay, even though we had the codetermination negotiations ongoing, the biggest hit we had on the market where it should have been as well. So I think this is an outcome. It's a good snapshot on the time, and I think it will look different when we go forward.

Yes. It's, of course, adversely affected also by Sweden. That's a fact. And then on the outlook going forward, of course, we did release 3 weeks back, a negative profit warning. So we have revised our guidance, the outlook for '24. Our revised guidance expects us to reach an adjusted EBIT for this year, the full year within the range of EUR 15 million to EUR 17 million. And now Tapio, please.

Yes. And I think that's now clear. And then looking at the performance, I think the headline tells it all. And I think we did a decent job in Finland and also on the right track on Germany, but those were not enough to offset the underperformance in Sweden. And the underperformance in Sweden was the outcome of the medicine we've given. And I think still feel very happy that we've given the medicine. Now we are on the right track, and we have a healthy basis to go forward. And now I think we have time for questions and comments.

Yes. Thank you, Tapio. Thank you, Jukka. Do we have questions from the teleconference?

[Operator Instructions]. The next question comes from Pia Rosqvist-Heinsalmi from Carnegie Investment Bank.

It's Pia here. Sorry, my own line was muted. A few questions. If I start with the guidance and the reasoning behind your guidance range of EBIT -- adjusted EBIT EUR 15 million to EUR 17 million. So how would you describe the low end of that guidance? And what would reaching the high end of that guidance require?

I think we feel, like I said on the presentation, rather solid performance in Finland. We anticipate that to continue and getting better. Same applies for Germany. Sweden is, in a way, the area where we don't have a full visibility where we're going to be landing. And if we need to continue on the strong medication or can we start gradually easing it up, and that will have a major impact on the volume. And that's why we put the lower end on that. But I think to reach the higher end, we would need to have all 3 markets doing a solid job and making the plans for this year.

Okay. Then if I continue, you have discussed, I think, earlier a lot about your journey to standardize operations across the board. Where on that journey do you think -- or where do you assess that you are currently? How much of the job is done and how much is still left?

And by the way, now I realized that we missed one important thing. It was maybe not in the plan, so I flipped it very fast. We have this Project Core, and we have a plan to deliver EUR 5 million to EUR 7 million incremental savings. We have realized that we are rather okay and slightly even ahead of the plan on the network and people-related area. On the car related, we are doing okay in Germany. Rest of the markets, we are behind and the impact is going to be later. As a totality will be clearly on that number, maybe even beyond, but the car-related process changes have been taking more time than we thought. And I think like Jukka referred also, we get a bit of a new capability and skill set to speed up and ease up the journey, Altivis then joining us a Head of Development, but the car flow is the issue where we need to have a team effort and make it more standardized and synchronized.

All right. Then regarding the deal with Sector and Web cars, any early learnings in addition to the ones you discussed in the presentation? Are there any early learnings you would like to share on the success or any challenges?

I think the Sector case is in a way, learning that there is really visibility and we see what is coming up, what is -- still the visibility is maybe not up to 100% because some people in today's economical climate may decide that, okay, I will take still an extra year. So -- but we don't know how much of that is maybe 5%, but we have a good visibility. The cars are in good shape. They are well maintained. They are well also fixed and prepared for the sales. Documentation and the integration to Kamux system is ongoing. The people seem to be on a good spirit working together. So all good in that respect. And then the store base, what we got is at par with our expectations or maybe even better. And I think we can increase the utility ratio of both stores we get on the capital region. So in that respect, looking good. Then I think on the hindsight, I don't see any things would have been surprising us on that deal. Webcars, I think we've been their customer for a long time. We know 2 of the main people behind it for a long time. Rest of the team, we are learning and we are integrating -- the system integration has not started yet. We still operate on the Webcars platform and going to continue having that visible on the KMS as well. The logistic platform they have and the visibility of the location of the car, we don't have into Kamux as of yet, but we will have a nice impact and additional thing going forward. Time when it's going to be available, I don't know. Then the opportunity to really have a in the same team with Germany, Finland and Sweden will also be a lot of our capabilities in all of the 3 markets. And I think we need the expertise of Webcars to help us in the sourcing of Sweden as well. So in that respect, really good.

Before moving on to questions here in the audience, there's one quick question in the chat, which I think might be good to address. What is the restructuring you are referring to?

Well, let me take a couple of examples. Now the store network, we have been changing quite proactively now in all 3 countries. So we have been closing down quite a lot of store in Sweden, 2 stores in Germany. And now in Sweden, we have been doing the same. So that's one part of it. Secondly, we have made quite a lot of changes on the personnel side at all the operations, including the headquarters as well. So that is the other part of it. And then finally, these aspects that Tapio just referred, linked to the centralization of car-related processes and so on and so forth. Those are the restructuring activities linked to this project that is aiming to get us cost savings in the range of EUR 5 million to EUR 7 million next year.

Nothing to add, good answer.

Thank you. All right. We are now open for questions here from the audience. Maria, please go ahead.

Yes. This is Maria Wikstrom from SEB. In a used car business, I think the employee compensation is typically -- I mean, there is a lot of variable component, which is linked to the number of cars sold. And given that, I mean, the numbers of sold cars didn't really grow in Q3. So my question is, and maybe this is reflecting to your biggest market, Finland that how do you -- I mean, have you seen a big employee turnover on the sales side, given that, I mean, you haven't shown much growth versus your competitors have grown, I mean, throughout '24?

We have not seen major turnover, more the opposite, and we'll be very happy. Then the question is, have we been active and dynamic enough to raise the bar. And I think that we have also addressed going forward.

And then we saw a very strong growth figure on the used car registrations for October. I think the statistics was up 8%. And now for the Q3, your number of sold cars in Finland declined 1%. So my question is that -- do you see the trend continuing what you saw in Q3? Or have you been able to join the fantastic growth that we saw in October month?

I don't know which number you refer to when you say 8. We have a bit of a different number on the month of October. We use 4.6, 4.7 on that one. And that's the official from the industry, we concur with that. I think with the pieces, we're going to be improving our game when we go back on the focus on the more economical and smaller cars between EUR 7,000 to EUR 15,000, which we ignored when we increased the value, but it will not happen overnight. Then at the same time, when we have a look on the value increase, we are very well in line with the market on that respect. But the pieces also contribute to the bottom line and that contribution we need to have and will have.

And then I would also want to get a little bit more clarity on the cybersecurity issue in Germany. So I mean, really explanation that what actually happened. So can you please enlighten a bit?

To simplify, we have certain counterparties with whom we buy cars from on a regular basis for a long time, most probably which we don't know, but most probably they were hacked or somehow there that counterparty systems were compromised. And already earlier this year, which we only found out later, the company that's our counterparty did make an official police report in Germany. And there are -- I don't know how many, but there are a few companies affected.

5, 6.

And based on that, they were able to get access to a very valid looking e-mails. And so we had communication by e-mails, by telephone as well, so different channels. And then we went into the trap, unfortunately, that we executed the deal. And in this business, you buy the cars first and then you get -- so you pay out the cars first and then you get the deliveries later. And in our case, we lost the money, we didn't get the cars. And it's very unfortunate that a lot of things went wrong. And even if you have multiple ways of securing that, it should not happen. In this case, it did happen. And it was very plausible looking like you know all of these today as well, they look very real.

It's Rauli from Inderes. Continuing on Germany, you said the performance was decent or something like that, even if the volumes were down, of course, 2 stores less. But going forward, now the coming quarters, should we expect the volumes to remain around flattish? Or do you think you can grow even with the lower number of stores?

The offering we have and the inventory we have is good for the growth. And now we've been increasing the amount of salespeople in the stores and meanwhile maintaining and improving our metal margin and the profitability, we should see a gradual -- not a major step, but a gradual improvement in Germany.

And what about -- can you say anything about the plans for opening new stores in Germany?

We are house hunting, and we have areas where we are doing house hunting. And if and when we land on a thing, we're most likely going to open 2 to 3 stores on a year. And one is on the ex-eastern part of Germany, one is further south where we are today. And we have certain cities where we're doing house hunting. Some of them look very promising. But when we have news, then we'll come and tell.

Great. That's helpful. Then one question on the cost savings still on the part of the car processing in particular, given the market, especially in Finland is tight and you're referring that the sourcing market is tight, should we basically expect those savings to kind of rather improve your competitiveness and support your volumes than flow directly into your profits?

It should be a bit of both. And I think the time line is something we revised. We thought the addressing the car cost is going to be equally easier than actually the network and the people. It was not. We had so many partners and so many different processes and standardizing on the fixing and washing is ongoing and happening. But to get it fully done and getting the benefit also on the P&L takes a bit of a time. And then the bigger car flow-related things, utilizing like we do now in Germany, hubs type of thing, that's a bit of a longer term where first we need to have the hub, have the right manning and the right partners, but it's in the plan, will happen and then gradually come in.

Great. And then maybe final question regarding Sweden. You have been closing and relocating quite a few stores. Where are you at the moment kind of you still several stores in your network to kind of evaluate? Or has that work been now done mostly?

We have still 2 or 3 stores where we need to either make it work or then step out. And at the same time, we are house hunting in the Greater Stockholm area, 1 or 2, and then we are still virgin in the north. Beyond Sundsvall, we have nothing, and that's a very lucrative market, both for buying and but also selling.

[indiscernible]. First question about this cost efficiency and this EUR 5 million to EUR 7 million program. Where we are at the moment? Are we halfway of proceeding with that or.

We are actually knowing that we can deliver to the full, but the split is different than we thought. And I think we will not give up the car related. That's going to be an incremental, but will take a bit of a longer time.

So we are over halfway with proceeding with that when we are looking at our P&L.

On an annualized basis, we should have the full amount in the books. And I think if we say 5 to 7, we put 6 in the middle on an annualized basis, we have 6 in the pocket.

Like stated, that's going to reflect in 2025 numbers. So please note, not all of that happens this year.

That was the question I asking. Then any other cost efficiency improvement activities besides this program we were discussing?

It's maybe not cost efficiency. It's more on the data and how you use data on the managing the business. Pricing, I think, is now one of the key issues. And we say that it's a centrally driven fair pricing. It means that when you buy from the consumer or you buy from the auction from that, you need to have the price right very fast. You no longer go for the big hunt and maybe have 2,000 in between kind of work. You need to be roughly right in the first go and then you do a minor adjustment. That's where we are heading. And the same applies when selling a car. And I think traditionally, we were still maybe 2 years back, we had the tendency and even a plan to be always lowest on the mobile.d and lowest on the Nettiauto and Blocket. That's not going to work. You need to be fairly priced on the right spot and then sell it fast and don't go for the big hunt, but don't go too low either. And that's where the -- I'll call the range of the early pricing, which is centrally driven fare is very important. We are heading towards that. That's not cost efficiency, but it will bring bottom line and will also bring inventory turnover quite nicely.

Okay. Then my second question about used car industry. How about those margins we are facing, if you think 2, 3 years back situation now and huge trends. How about those industry margins, how they are evolving or developing?

I think especially what we have now seen both in Germany, also in Sweden and also in Finland, they've been squeezed and the sourcing market is clearly more challenged. And especially when the new car business is not picking up, the flow of merchandise into our line of business is in a way challenged. That's why you need to do more Europe and more cross-selling and good management of the logistics as well. Logistics used to be in a way, given, don't care. Today, it's a very important part of being efficient and being profitable on the industry.

Any further questions from the audience?

Given that you've been relocating your stores in quite a few of the places and thinking now that you still have 2 to 3 stores, you need to make a work or then relocate in Sweden. Can you discuss a bit about your rental length that how quickly you can actually do these changes in your store network?

The ones we have under the radar, they already long way into the contract, and we can get quite fast out if needed. One of the ones which we have decided to really make it work is the Gothenburg store, which is the largest store we have in Sweden. But then if that's not going to happen, then we can maybe share the premise with someone. But currently, we are working on making it really work and fly.

And then you have -- I mean, the guidance range for this year is still quite tight, so EUR 15 million to EUR 17 million. And then you said that you have a too high inventory in Sweden and Germany that you are going to work on during the Q4, which typically, I mean, to my ear, sounds lower profitability. So have you built this into your like low end of your guidance?

I think we said we had -- we've been addressing it, and we have improved our inventory management in Sweden. We've already taken a hit in the end of September in Sweden. We also addressed that in Germany. Finland, we know what we do, and I think we should have a solid grip on the inventory. And I think the outcome of the value of the inventory, Finland also has a big share, and that's where the average price increase is becoming valid. And I think that's something we want to keep, but we want to beef up the offering on the EUR 7,000 to EUR 15,000 on top of that.

And then my final question is that, I think, I mean, this year, more or less is a bit of a lost year, especially if you're looking at, I mean, your profitability compared to the previous years. And you have a lot of things going on to improve the profitability going towards next year. So if we look next year, I guess, I mean, the only reasonable assumption is that you expect adjusted EBIT to grow.

Then I think starting maybe a bit on a longer term, I think the long-term financial targets do remain valid, and we are going towards that direction. And then for sure, we're going to be improving, and we are not happy with the outcome of this year.

Very good. We have a question via the chat, and this is in terms about electric vehicles. Could you share insights on any significant differences between the procurement progress processes for electric vehicles and combustion engine vehicles?

On the procurement process, I think the sources of the cars do vary quite a bit. And then in the actual, whether it's part of the procurement, but it's in a way, the worth the trust, the battery capacity and the condition of the key electronics of the car is on the high focus, whereas we have different focus on the combustion engine cars.

So about the pre-examination of the cars, that for sure is different. Very good. There are no further questions in the chat. What about the audience? Everybody is happy with what you've asked. Very good. Then it's time to say thank you for now and until next time.

Thank you.

Thank you.

All the best. Bye now.