Lagercrantz Group AB (publ) (LAGRB) Earnings Call Transcript & Summary

All right. Good morning, everyone. I think we have a lot of people joining here. So we will now put you all -- this is -- welcome. Warm welcome to Lagercrantz's year-end report presentation that we will run here during 45 minutes to an hour, I think it will take, or so. We -- as we normally do this, we try to let you all have the presentation available on our website and it's currently available on www.lagercrantz.com. You can download the presentation. And we will run it through. And we have -- as normally, we will cover some pages in the beginning or chapter in the beginning. We will give you a background to all those of you that are new to the group. Then we will go over the year-end report and the figures, and then we will also talk about what we see ahead of us and also connecting them to our new program, the Lagercrantz towards one billion, which is the [indiscernible] share a month ago. [Operator Instructions] Okay. So let's get started. I think we've released the numbers here this morning. And as you're -- I'm sure you're all familiar with, we have a year that is ending end of March. This is -- so this is our full fiscal year 2021 ending end of March, so 2021. And the numbers were released this morning. And together with me here today is our CFO, as well, Kristina MacKintosh. She will also join us. She's also available here over the phone and ready to answer any questions you may have. We try to run it like we are giving the presentation and we will open up the Q&A at the end. But if you feel an urgent need to sort of put a question in between, please don't hesitate, but do so. But we will open the quick Q&A at the end. So that I think is a better option. So let's start with Page #1 and 2 here. To give you the first an overview, Lagercrantz is currently a tech group with -- and we are some 58 companies currently with all the latest acquisitions we made. We view companies as profit centers or businesses. And it might be more than one legal entity in each of them, but still, as we run them as profits and we divide them in the end. And currently, it's 58 different businesses that we have within the group, all very niche oriented, addressing a specific market, which are niche -- we're -- technologies and working in niches, building strong market positions in the different niches. All the companies are very different, but they all have in common that they all work B2B with different types of technologies addressing a specific market. And we did quite a lot of value-creating and value-adding within the group. So we don't do sort of just pure distribution or pure box moving or anything like that. We offer the products, add things to the product, and we also drive a lot of the proprietary products currently, which I will describe a little bit later. The revenues in the group is currently exceeding the SEK 4 billion, and we have been growing the group steadily for many years and have reached that number now, and we are around 1,600 employees. You can see also the divisional structure at the -- to the top of Page #2. That is the new structure. So for those of you familiar with us know that we have up until now, really been running 4 different divisions. But we are -- may now made a reorganization of a new structure where we are putting up the 5 divisions, and I will describe them a little bit later. You can see over to the right, where we have our -- how we are dividing -- where we have our businesses geographically. And you can see that we are basically in the Nordics and Northern Europe. But also, you can see all of the way to the right, you can see also that we have some footholds and some sales companies in other parts of the world with both China and the U.S. and a couple of other places is working. What is important to know about us is that we have acquisitions as a very clear thing within our DNA and are making some 5 great acquisitions per year. That is part of our business model. And we've been on the Stockholm Stock Exchange since 2001 as a separate company. Before that, we were part of the Bergman & Beving Group and have been, as such, part on the stock exchange since 1976, so we've been around for many years. We move on to the next slide, which is the division on -- divisions on Page 5 -- sorry, on Page 3, there we have the divisions again, and again, according to the new structure. We have now split up the different businesses in these segments or divisions, the Electrify is basically the old Mechatronics, where we are -- have quite a number of companies that are addressing the trend in the side with more electrification have quite a number of different companies addressing and driving products and services around -- into that market. The second one is the Control, that's basically half of the old division Communications, where we have a number of companies in sort of the area of measure and control with Precimeter, Radonova and a couple of others that are the main ones, but we also have a number of more niche-oriented smaller companies as well. The third sector, we think is very interesting for the future is the TecSec sector, that is technical security. We see a lot of things happening there, and we also see that we can address that, with some of our companies already addressing that. With -- we started out with the ISG Nordic and a couple of other companies, more of a traditional type of TecSec company. We have built the group broadening that with some arc on with the sprinkler systems, but also now with the Frictape coming into that division and also CWL the which is the new company we acquired just a month ago. And this fourth division is then the Niche Products division, that is basically unchanged compared to previously. But here, we managed to make quite a few acquisitions over the years. And it's clearly the -- one of the key parts of the group. It's -- currently niched is really important part when it comes to profit and sort of -- and on the same level as Electrify when it comes to business volumes, they have around 30% each in -- of the volumes and profits in the group. Last but not least, it's going to be the International division, which contains some of the companies that we have done in Central Europe. Here, we have the German companies, the U.K. companies and a lot of the Danish companies as well. And here, we plan to go more for exports or International-related type businesses and have some acquisitions being made in the U.K. and also in Germany. We -- thank you. So that's sort of division structure. Then entering into the numbers then, let's look at the Page #4. You can see here our trend over a long period of time, all the way back in 2005 and '06, and you can see the upward trend in our profits and you can also see that the profit line is exceeding the bars behind, which is the net sales on -- and you can see then that the margins are improving along the way. And you can also look at -- and see that we had a -- we've been affected by the COVID-19 pandemic last year, but we see that we've been picking up along the way, and we have now had a couple of better quarters, and especially the last one was -- we feel very strong with some really good numbers and good margins as I will come to. And for the year, we now climbed above the SEK 500 million limit in terms of focus on the financial items, which is something we've been working towards along the way. So it's a very strong sort of uptick in the last quarter, as you can see all the way over to the right. So we're basically back on track and feel that we are confident about what we have ahead of us. Looking at -- and moving a little bit more into the numbers. We have also communicated in our report now around the business conditions that we saw a general improvement. I'm on Page 5 now then. We saw a general improvement in recovery during the quarter. And even though the top line wasn't growing, we saw some stronger order intake. We've been like that over the years, as we have seen a sort of an upwards trend in our numbers along the way, and the order intake was up 5% compared to the Q4 last year for comparable units. But we also saw that a handful of our groups, some 55 or even 58 businesses that I talked about earlier, still are affected by the pandemic is that the Frictape, it's Radonova and a couple of others that we have mentioned. But otherwise, we feel that most of the companies are doing very well, and especially the bigger ones are doing very well. For instance, as we pointed out here that Tormek has been doing it very well for us during the last year and continue to do so. Wapro is another one and NIKODAN and also then Elpress, of course, within the Mechatronics division delivered another strong quarter. What we also saw in the quarter was that the restructuring measures, I've been talking quite a lot about them in the last year in the Electronics division, we have not been satisfied with the types of businesses and what they've delivered from the Electronics division for some time. And we decided a year ago to do some restructuring in Germany and Poland and a couple of companies in Norway as well. And we now saw some effects of that or we had 2.5 quarters of effect from that, which means that the Electronic side -- the division Electronics side delivered quite -- much better numbers now in the last couple of quarters. During the period, we also brought 5 new acquisitions on board. Meaning that we also added to the numbers. As of first of January, we have VP Metall, Hovicon, Esari, Proagria came in a little bit later, and then also -- Vihab also, a little bit later. And they complement our existing operations, these companies. So we are very sort of -- there we also can see some synergies along the way. I think it's also very important to point out the CW Lundberg acquisition we made here in the last month, that will add to the group here starting in first of April. That is one of the bigger acquisitions we made over the years. And we see that net sales is close to SEK 200 million there, and the EBITA some SEK 33 million was last year and has been growing quite nicely in the last few years, and we expect a lot of CW Lundberg going forward, a very nice acquisition to be brought on board to the group and will be some of it. I think it will be a cornerstone for us going forward with that acquisition as well. Looking a little bit, we have more on the numbers on Page 6, you can see that the net revenues that amounted to be SEK 1.118 billion which is slightly up from last year, but not very much really. We -- again, we saw some of -- most of the businesses doing very well and also having some good growth in some companies. But again, some 5 companies or so, a handful of companies, were quite affected still by the COVID. And therefore, we didn't manage to grow the net revenues during the quarter. The EBITA, on the other hand, was very strong, increased by -- to SEK 192 million as opposed to SEK 152 million last year. And that meant that we have an all-time high EBITA margin of 17.2% as those of you who have followed us know that we have been in the 13%, 14%, 15% range earlier on. But now we reached the 17.2%, which I think is great. We see that we have a stronger and stronger portfolio along the way. And it was great to see that we also managed to deliver a very strong EBITA margin here in the quarter. Our net profit after financial items then was increased by 32%, which you can see there. And as also important to point out the cash flows and the acquisitions, I think I've covered the other ones on that slide. Looking at Page #7, we have landed a good year, we feel. Given the pandemic, I think it was a very strong year. Sales again, picked up a little bit in the last part of the year, but earlier on, it was a bit soft, so -- and affected by the COVID again. But EBITA for the full year then increased by 9%. And a strong EBITA margin of 15.1% as opposed to 13.5%. That is also the strongest that we've had for the full year. And profit after financial items increased by 9%. And you can see that earnings per share reached SEK 1.91 per share. The return on equity was then 22%, which I think is a good level, even though we have the target of 25%. So it's slightly below that, but still on a very good level, I feel. I think it's also important to point out the cash flows. They were really, really, really strong. They were strong last year with the SEK 507 million as well, but they were even stronger this year with this SEK 782 million, which I think is a very strong number. During the year also, we -- on the last part of the year, we also launched a program for the future growth, which we call the Lagercrantz towards one billion. As you know, we are growing in the 15% per year, and that means that we basically have the ambition to double the size of Lagercrantz within 5 years -- every 5 years. And given now that we are at the SEK 500 million for the year. We basically are aiming for the SEK 1 billion here in the years to come. And with some good acquisition along the way, we are -- along the way, we feel that we have a good opportunity to reach that within the 5 years. And the Board of Directors then finally proposed a dividend rate, good rate really from SEK 0.67 to SEK 1 per share, which will be handed on the Annual Shareholders Meeting in August. Looking at Page #8, you can see the outcome by division, how that looks. This is the older divisional structure. I have another slide later on with the new divisional structure. But you can see it was a very strong quarter. You can see that we -- down below to the left, you can see the very strong EBITA margins in all divisions really. The Electronics, you can see, had a few softer quarters looking backwards there, in time series there. But have been delivering now some nice numbers here for 2 quarters with a 12.5% and 14.3%. And the other ones have been doing very well and came in very strongly here. We also put it out some comments by division here on Page #9. And you can see that the Electronics division then increased -- yes, the increase in EBITA with a strong 85%. But given that -- and that is heavily affected then by the restructuring they made in Germany, Poland and Norway, as I pointed out earlier. And we also saw some improvement in the market situation in Germany, which is also something we commented on earlier on that has been turned for the better, for the companies that we have around there, and that also contributed to the strong earnings here in the quarter within the Electronics division. Within the Mechatronics division, EBITA increased by 9% and had a very strong EBITA margin. We saw some positive developments, especially in the bigger companies with the Elpress and a couple of others as well in Kpro, and Norwesco also did it very well. But we also saw some negative impacts by the pandemic in some of the companies, the Frictape, which was part of the Mechatronics up until now, the 1st of April, where it will be moved to another division. But they were -- I mean, they're addressing the helideck out the offshore and it's very hard for them to perform in installations given that they're not welcome out there for the sake of not spreading the virus. And therefore, they have been struggling a bit. We also had last year some International telecom projects that affected the numbers very nicely last year that was not repeated this year. But they are moved to at least a day, some of those also affected by the pandemic. But on the other hand, the acquisitions Esari and VP Metall contributed very well to the improvement in earnings in Mechatronics. So it's -- I would say, Mechatronics performed a very nice quarter even though they didn't have all companies doing well and then affected also by these delays in the national -- in the International telecom projects. Communications also reached SEK 39 million and basically the same level as last year, but an improvement in margins. We saw some positive developments in a few other companies, Precimeter, ISG Nordic and Leteng in Norway, which performed very well. On the other hand, Radonova, which is a strong profit contributor, especially in the winter time when they're making measurements around radon and they have their season, that was negatively affected by the pandemic. Customers have a lower tendency to measure radon when everyone is occupied with sort of dealing with the pandemic rather than worrying about radon. And -- but we know that, that probably will come back in a year or so. So not a huge effect, but still effect that affected the total numbers. We also have the R-Con, which is one of the main contributors within communications. They had a good order intake. But the company was moved to new facilities, new premises, and that affected the invoicing and the production facility down in our shopping during this quarter, which we feel is a temporary thing. Last but not least, we have the Niche Products division, which then was the really contributed very well with an increase in EBITA with 49% to SEK 61 million, and a very good margin. Niche Products is becoming really one of the very key things within Lagercrantz with -- becoming the biggest position, seems struggling a little bit with Electrify. So those 2 sort of divisions are the biggest ones within the group going forward. And we saw some strong volume growth in earnings improvement from several businesses, and especially the Tormek, NIKODAN and Wapro, we highlighted here. They all reported a good growth. But we also saw some continued challenges due to the pandemic for ASEPT and SIB with the brushes for airfields that has also been negatively affected by the pandemic. So we still have a handful of companies that are affected, but all in all, a very strong quarter, I would say. That was what I would comment on the year-end report. Then I would like to move on to what we see ahead of us. And I would like to describe a little bit on [indiscernible] it with Lagercrantz towards one billion. And as pointed out, we have made a strategy work here and during the year. And we feel that we have a very strong business concept within the group and we have to build together in a strategic program that we will -- that really lines out, that will continue the journey for the next -- for the future. And within 5 years, we have definitely the ambition to build an even stronger B2B Tech group with -- and later SEK 1 billion in profits, and that is the EBITA profit that we're talking about then. And that is all the highlights of the whole thing. And what does this mean then? What will we do? We have it both internally and externally and [indiscernible] clarify the strategies and the financial goals and make them even clearer and sort of ambitious for the future. We have then decided also to reorganize into 5 divisions with clear growth ambitions for each division. We have decided to increase the capacity within M&A, try to speed that up even more and focus there and more ambitious ambitions for M&A going forward. And we will also then focus on sustainability, which we feel is very important to all our companies. It's something we've been working with for many years, and we will continue to do that for the future as well. And to go into this a little bit, we were -- we have then clarified our vision and financial goals. We would like to be a sustainable supplier of value-adding technologies with market-leading positions in several expansions niches is our vision statement going forward. And that means that we will continue to being a big group than and [ cougar ] here over to the right, which is a very good picture of that, where we'll have a really niche-oriented sharp companies within the group, and we can perceive ourselves as a good owner of these companies. And they will, together, bring a very sort of stable profit growth for the shareholders and for the group. And that means that we have our annual growth -- profit growth target of 15%, which is the earnings before tax. And we have also highlighted that we really are pushing from better organic growth going forward. We feel that we have good opportunities more proprietary products. And as that share of sales increases, we feel that we can go more for exports and have a better organic growth going forward, once we are through the pandemic and everyone is sort of back to normal, I think we believe that, that is a very justifiable goal for us. And we have then also decided to raise the bar a little bit when it comes to acquisitions to the 5 to 8 acquisitions per year. And those 2 together, the organic growth and the acquisitions per year should nearly lean us 15% per year. And we should also do this very comfortably with having the return on equity in exceeding 25%. We have been in that neighborhood for quite some years now, and we plan to continue doing that. And along the way, also deliver fully on the 25%. I think the key thing in doing this, I'm on Page 12 now, is the aim for the 75% proprietaries. In the last report here, we communicated a 65%, which is the level we are at the moment. And you can see how that gray field here has been improving and increasing along the way over the years all the way since we first acquired Elpress in '06. We've then -- we really basically seen an upward trend in the share of proprietary products within the group. And we have the clear aim of 75%. And given that we now have made some more acquisitions of companies with proprietary products, obviously a little bit of lift already there here in the months, the quarters to come. So -- and that's very key to us. With the proprietary products, we see that the margins are higher. We see that the gross margins are higher, we see that the EBIT margins are higher, and we see better opportunities for growth when it comes to exports, when it comes to sort of -- yes, developing more products and addressing new customer segments. And that means that the opportunities for organic growth, we feel are better when it comes to proprietary products. And also with some higher margins, and that it's a -- so we feel confident that, that's the right street for us to go. And we will also remain our focus on value add. On Page 13, you can see the development back in '05, '06. And this is, of course, something we're very proud of. This is a very good trend. And we reached a new all-time high, as you can see here in the last year, so at the 38.5%. And of course, this is very important also to our bottom line to have some good gross margins. We will -- in the Lagercrantz towards one billion program also, then reorganized into 5 divisions. We have highlighted in our communication, in our report, some really clear and obvious reasons for doing this. And we feel that the older divisional structure has been -- we've always been opportunistic, and that means that we have, to some extent, also acquired things we believe in, even though the headline is not maybe the right thing. But along the way, we feel that these headlines is better for us because they both, it will clarify what's in the different divisions, but it also clarifies where we would like to go. We only have identified a number of areas where we feel that there is underlying structural growth, and that is something that we're aiming for now. And especially within the Electrify, and it is very clear within Control. We see a lot of measure and control technologies, including sensors and other type of things. That is also very sort of an area of growth. We see the TecSec area where we feel that, that is also a growing area, where we would like to take better care of society and personnel and health and environment and when it comes -- and TecSec area is growing depending on those things. The Niche Products is doing basically what they have been doing. And internationally, then taking the companies that we have already within the International division, the ones that we have in Denmark, in Germany, in Poland, in the U.K. and here, we basically would like to take the Niche Products concepts really on exports. So we basically should look for companies that have proprietary products that are working maybe in those areas, in those geographies rather than in the Nordic and sort of copied a little bit what we've been doing in Niche Products and doing internationally within the new International division. So I think this is very exciting. This is very promising for the future. And you can see that with the different divisions down there, you can see they have a little bit of difference in price. But they all have good ambitions when it comes to EBITA margins down to the bottom there. And you can also see what companies that are in the different divisions. So -- and we have communicated this. I think it's very promising, something that's very important for us internally. We have in our communication, as we pointed out on Page 15, you can see how the pro forma in the new division structure would look like. We have done this 2 years back sort of, so you can see the pro forma quarter-by-quarter. And this is how now we will follow-up the group and communicate to the market as well. As of first of -- our first Q1 report, and we will drop the old way of reporting or the old divisional structure and moving into this one instead. Part of this program is also the increased focus on sustainability. Here we have basically gone with what most are doing, working in the [indiscernible] I mentioned environmental sustainability, the governance factor and the social society factor, you can see there. We have basically put together some clear goals and some clear ambitions in those levels. But I also think it's very important to highlight the one we have on the left here, where we have some 50-plus local initiatives in our different companies. I think we have a very strong portfolio when it comes to what is sustainable, what has growth, what would add to society going forward. But to highlight that even more and to make everyone involved in the group, we have now launched some 50 local initiatives or really have some initiatives going in each company, and we will follow-up on one goal per company in our follow-up to make sure that everyone is involved, everyone is taking this seriously. And people are really sort of changing the way they're doing business to a more sustainable way of working. And that I think is very promising for us going forward. Last but not least, in this program on Page 17. We also feel that we should increase our capacity within M&A. As pointed out earlier, we see some 1/3 of our growth coming from -- organically, while 2/3 should come from acquisitions then. And as the group becomes bigger and bigger, of course, we need to make bigger and more acquisitions along the way. So that means that we are now aiming for 5 to 8 companies to acquire per year. And in order to do that, we will expand our geographies. When looking, we will look a little bit more into Central Europe. We will continue doing it in Nordics, of course, but we will sort of reinforce and strengthen our capabilities in other markets as well. And we will look mainly at Germany, Poland, Benelux and the U.K., all those markets that we'll look in as a little bit of new [indiscernible] when it comes to acquiring sort of -- we have made more add-on acquisitions previously, but we will look for new companies as well now when we go into these markets and feel that we have the strength and the size to do so. Looking at the acquisitions lately, I will round up with the chapter here around acquisitions. We have -- during the last year or so, we have made some 8 acquisitions and especially so now here in the winter time. We took a pause here in -- when the pandemic hit us here last summer or spring-summer, this time around last year. And -- but since then, we have made quite a number of acquisitions here in the last quarter or so and some really important ones as well. So I will cover them a little bit briefly here. Quite a lot of them, so it's difficult to -- but what we try to do is put together a fact sheet for each of our acquisitions when we make them. And the first one we made here or the first one I'd like to brief you on was VP Metall, which is a Norwegian company. This is -- has a good split with -- a good strategic fit with our Elpress, which, as you know, is our biggest company previously. They're also making electrical connectors but both companies are making electrical connectors, but this -- given VP Metall is based on what we call implosive connectors. And those are primarily used for high-voltage applications. A very strong company, a very niche-oriented company. It has a very strong market position in Norway, somewhat in Sweden and Finland and Canada as well. And our ambition here is to make them more international and build that company geographically with a very strong niche-oriented products that they have within that company. You can see down to the right here, I try to put them -- together some numbers when we make acquisitions. And as you can see, they had a strong EBITA margin with some 23%. The growth areas, you can see, has not been great. But given that we see some opportunities internationally for this company, we expect the growth to pick up here under our ownership. The second one I'd like to cover is the Esari, that is a Finnish company. And they're making these type of equipment shelters and technical buildings or technical houses, as you can see over to the right there. And building those have a very strong solid performance at the -- with some EUR 5 million of sales, very strong in their market in North of -- in North Finland. And also expanding into Sweden, have had some projects in Sweden as well and also some really good performance, you can see down to the right there. This company has a clear connection also with the [indiscernible] capturing, which we already have. And we plan to sort of -- they have slightly different product ranges, and we plan to bring Esari, a bit to Sweden, and we plan to guide [indiscernible] capturing a bit to Finland. And that's how they will sort of expand together and find growth for both companies, some cross-selling opportunities we see there. The third one, I'd like to comment on is the Hovicon. Hovicon is add-on acquisition for ASEPT, which is within the Niche Products division. And this is a very strong company in Central Europe, especially in Holland and France and the Benelux, with these type of dispensing solutions. For those of you that look into ASEPT homepage, you can see that these are similar products. Even though this is more -- a little bit more of trading products and a little bit more of products that are sort of not [indiscernible] always, but -- so it complements also product-wise, the ASEPT business that we have. And as you can see down to the right, there is very strong performance as well when it comes to the margins and also some growth in that company. The fourth one I'd like to comment is the Sajas. Sajas, we acquired here just before Christmas. Yes, it was even a little bit earlier than that. And they're making the brushes. This is adding to the SIB business with the brush systems for airfields. Here we have a brush systems for road sweeping and have a clear market-leading position in Finland and in Sweden. But also has some strong volumes in Germany and the production facility in Tallin as well. Also some strong performance even though we plan to bring this higher up -- this is not living up fully to our standards, but we see some good opportunities to develop this further and to bring the margins and the volumes up here, given that they can also work together with the SIB business that we already have within the group. Last but not least, I would also like to cover the CW Lundberg, which is the company we acquired in Sweden in [indiscernible] in dollar amount in Sweden. And this is a very important acquisition for us. Here, we have a little bit more sizable business and some really strong performance, as you can see down to the right there with close to SEK 200 million. This will be a very strong company within the TecSec and a very important part of building the TecSec division going forward. And they -- CW Lundberg is the leader in safety products for roofs. You can see the bridges and the other type of product that's not at all Sweden Swedish, preventing snow from falling down from roofs. You can see the barriers that they put up there. And that type of product they have and are a very strong player in Sweden, but also have some export ambitions in Poland, where they have a subsidiary. And also in Norway, we also have a subsidiary. But this, I think, will be a very strong company for us going forward. To round off, I think that it's been great to be able to present all this to you. I think we concluded a very strong year. I think we concluded some of the best margins we've had. We went through the pandemic in a very good way. Came through the pandemic in a good way. We have now landed some good acquisitions, and we also have the new program, Lagercrantz towards one billion, which I think is very exciting and promising for the future. We know where we're heading. So yes, that was sort of the presentation we had for this morning. Kristina, would you like to add something or -- before we open up for Q&A.

[Operator Instructions]

Can you hear me, Jörgen? [ Do you want to ] to hear that?

Yes. Yes.

Just a couple of quick questions. Firstly, on the -- as you put, Electrify right now. Yes, hearing some substantial investment programs, mainly in transmission, Sweden. Can you just talk about what sort of visibility you have in this area? And what you're getting from your main customers? And how you are sort of staffing this operation to cope with the growth, if you see it?

I think, there has been quite a lot of talking about growth in the newspapers, and we think that it's heading that way. But so far, we haven't seen that sort of explosive type of growth that we might see in the future or not explosive, but a good growth. I think what we see is we are -- there are a lot of sort of official reports and stuff that you can read around it, and they all are quite promising. But for it to take off, I think we get -- need to get to the pandemic and we will see some investments. What we're doing is that we are addressing this market on a sort of a broader perspective. We have quite a number of different products addressing [ both these ] market, and we are working mainly through wholesalers and also some OEM customers with sort of the wind turbine manufacturers and that type of -- so for instance, those guys, but also ABB and those type of companies are customers of ours. So I think we're very well positioned. And I think it's very promising for -- in the years to come. But we don't see it happening sort of this quarter. That will probably take some more time before people are really starting to invest in this.

Just a follow-up, your ambitions to acquire companies outside Sweden, outside Nordics, to what extent is that due to the fact that you're seeing increased competition for deals sort of locally or domestically? Also, can you just talk about what sort of normalization you expect on sort of SG&A cost for the group as we head into a post-pandemic type of world here in the second half?

Yes. First, your first question around M&A, I think that we still feel that the Nordics is a very good place to be. I think there are a lot of good opportunities. We're looking quite a lot at companies but we also see some increased competition. And that is -- we see more bidders out there and people are sort of more aggressive, a little bit more aggressive. But we don't see it sort of really going the wrong way or we feel as it -- and you can see that, for instance -- I think we are a well-established player, and people like to do business with us. And therefore, the CW Lundberg, for instance, is, I think, is a very sort of good example of where they choose us and which you stand and we manage to sort of cope with also a competitive landscape. So -- but we also need to sort of -- I think it's important to realize that I mean, we are becoming more and more sort of panned Northern European. And of course, the bigger markets are in Germany and in the U.K., and we also see some of our peers going that way. And therefore, I think it is good opportunities for us to be there as well. So I think it will fuel growth. But I think we will still feel -- you will still see that we are making quite a lot of number -- quite a huge proportion of our deals in Sweden and the Nordics. And that was needed -- some sort of an answer to the first one. And the second one with SG&A. Of course, we see some effects from the pandemic in a positive way when it comes to SG&A. People are not traveling. People are -- we don't run fairs or go to fairs at the same extent that we used to. On the other hand, I think we also see -- so what we feel is maybe that some of it will come back. We need to have some positive -- what we call positive costs when it comes to sort of going out to customers, entertaining with the customers, going to fairs and build business in the long term. So I think some of it will come back, but I'm pretty sure that not all of it will come back. And you can also see that we have -- due to the pandemic, we have also reduced our number of employees during the year with some 6% like-for-like. So we have also some cut out on costs. And that, I think, is not a temporary thing. We plan for that to be sustainable. Someone else would like to have some question?

[indiscernible]. Can you hear?

Yes, we can hear [indiscernible].

Regarding Electronics, the margin was really strong. Should we expect a level like this considering the restructuring?

It's a difficult one. I would maybe add a couple of more quarters before we see it sustainable. It depends a little bit on what -- I got the same question really on the previous quarter, when they were at a 12% level. And I put out the same answer basically that I think we should see it for a couple of more quarters before we see it as sustainable. I think that what we have done is we have carried out some lower-margin business, and therefore, it should be. But I think the 12% to 13% range is more sustainable or something I would still expect rather than -- maybe 14% is a little bit on the high side.

Okay. One more question from me. Electronics also had quite strong margins. Was that mainly a sales mix effect? Or have you become more efficient in the companies in that division as well?

Yes. I think it's both. We see that some of the higher-margin companies with Elpress. And I think many of the companies are doing quite well within Electrify, within that division or Mechatronics. The ones that's been slowest really is the [indiscernible] at the moment, and that we're moving [indiscernible]. And I think that will come back once the pandemic is -- we're through the pandemic. But -- so it is, I think, a mix effect, mostly. But still, some of the -- some of our companies are doing it really well. But I also have a few others that are not really fully running on the full year.

This is Markus at [indiscernible]. Can you hear me?

Yes. Hello, Markus, welcome.

Yes. Sorry, I wasn't sure how to get onto the line. A couple of questions from me. First of all, thank you very much for giving us the order intake growth of 5%. Can you talk a little bit about the book-to-bill, so where you are right now? And also, I would assume that the order intake is higher than sales, and how does the component shortage play into this? And do you see any impact from this on sales?

Yes. I think that we -- we do see some shortages in some areas. And we see some what I would call it imbalances when we talk about sort of the different type of components, we see some price inflation as well when it comes to -- we see some raw materials that the prices are fluctuating quite a lot and moving up. So it is somewhat of a turbulent time that we are going through. But I think all in all, in a group level or at Lagercrantz level, we see that, yes, it levels out. And we also -- I think we have very strong pricing power. I think we've proved that so many times by being sort of very niche oriented, and being very strong in specific niches, we also have some good pricing power when it comes to adjusting the prices, if you are hurt by increased raw materials or currency effects, something like that. I think also what you're pointing out is that we see some -- I don't like to comment on the book-to-bill because I don't think that's fair to everyone else. But we see some order intake and some order bookings that I think people are out placing just because they see shortages and make sure -- want to make sure they have their raw materials. But on the other hand, I think that's also in the end, driving growth. So I think that, that goes for everyone really.

Okay. Okay. And continuing on the margins. So I mean, very, very good margin. Just to make sure there are no special items in there, which is lifting back temporarily or anything like that, but you are at a higher level this quarter, like how do you think?

Not really. No, we don't see any really temporary effect. Yes, we had one -- we -- the [indiscernible], the additional -- we released a reserve of that from SEK 5 million. That is on group level. And we also commented. But other than that, we don't have any temporary effects or sort of projects related or anything like that. I think it has to do with improving some margins and doing a good job out in the company, but also then having somewhat of a lower cost base than normal due to the people can't travel, and we can't do the sales work as we normally do.

Okay, okay, okay. And then moving on to acquisitions. So I mean, very, very good level, especially at the end here. Is it -- I mean is this what you want to do? Or is it -- I mean, are you -- did you aim to go this way? Or is it just -- because I know that you want to focus more on acquisitions, right? That's a clear target of yours. But is this an effect of that? Or is it also pent-up demand from the pandemic and a bit of a catch-up?

Yes. I think we are constantly running the M&A. We have one theme going. Basically, we have an M&A theme going in Sweden, we have one in Denmark, we have one in Finland, we have basically a guy in Germany, we are looking more and more into the U.K. So it is like we are broadening our capacity and increasing our capacity. When it comes to sort of concluding deals, it's also very much a matter of whether you're sort of -- yes, manage to get all the way through and make sure that we would like to be sort of -- yes, we're doing our due diligences, and we are running our processes. And it happens quite often, really that -- or not quite often. But sometimes it happens that we are all the way to the sort of finish line that we don't end up concluding the deal anyway. So it's a matter of some sort of ups and downs when it comes to running the processes. And I think we -- during this winter, I think it was a bit of a sort of stack up a little bit due to the pandemic. But after the summer, we have seen quite a number of processes sort of picking up, and we have then managed to conclude these deals. I think the ambition that we're putting out here is the 5 to 8 acquisitions per year. Now we managed to make 5 acquisitions in the last quarter. And I don't think we will make 5 acquisitions every quarter. That's not what I'm saying. I think the 5 to 8 is more reasonable looking forward. But on the other hand, I also think we expect us to do -- make a little bit more sizable views maybe on the way.

[indiscernible] Yes, because that was my second question. But first, it's -- because I know the timing is very difficult. I mean, of course, it's a negotiation between you and the seller. And you can never predict when these are going to come in. But at the same time, I also know that you are focusing more on actually making acquisitions with a clear target, I mean, express target that you have, that you are focusing more on it. So -- but it might be too early also, so hence my question. On -- yes. And then on the larger targets, just a bit curious to see your thoughts about -- because you move abroad, right? There were some other questions about you moving down to -- more towards the continent. And do you expect at the same time -- we usually see targets in the U.K., in Germany, in the Netherlands being a bit larger. Do you expect the same thing here? So as you move kind of from the Nordics and more south, that we should also expect the targets to be a little bit bigger.

A little bit, yes. But on the other hand, if you look at the ones that we have concluded, you can see that they are like the same size that we have previously done. You can look at [indiscernible] that I mentioned on earlier here. So it is but some -- I mean, the markets are bigger, and I also expect that some of the targets to be a little bit bigger. Especially if they're sort of for sale for an international buyer, which we would be then coming there, right? So it's -- I think you could expect this slightly bigger targets or deals down there that I think as well. Do we have some final one or the additional one? Any questions? [Operator Instructions]

That's right. Can you hear me?

Yes, I can hear you.

Perfect. So then, just one more question regarding your new acquisition strategy. As you say, you are a well-known name here in the Nordic market and companies tend to choose you. Do you think it will be more difficult to enter relationships with companies outside the Nordics, and do you expect longer processes, M&A processes in these regions? And should we expect a bit slower structural growth in the international divisions going forward here?

I think not really. I think, yes, we are a bit more unknown, that's for sure. But we also have been entertaining and working M&A, the companies and firms, for the last 3 to 5 years. So we are building our networks, and we have come some way with that. So it's -- I don't think it will take us that long time really. But of course, we are more unknown. And it is also about arguing to the sellers that the business model that we are running and being sort of more of a Scandinavian-type company with a Scandinavian-type culture as well. I think it might take us a little bit more time to sort of convince everyone that is the right way to try to [indiscernible] the shoes to go with us. But on the other hand, I think when we get into sort of discussions, that happened to us a few times. I think they like what they're seeing and they like our concept. But also when we look at some of the companies here, the [ Hovid ] conference, for instance, is a good example. That company. I mean that is something we've been working together with them and view them as a partner in the industry for quite some years. So it's also more that we are also addressing areas where we're already in when we go for that. In the International division, however, we will also look at new things. New type of companies. So it's a little bit of mix there. But I think the main thing will still be to work with the Electrify, the TecSec and the Control divisions and the Niche Products division to sort of also build the clusters and the areas that we're already in, but doing it now in mid-Europe, Central Europe. Good. Kristina and I will be available if you would like to take a call to us. Please, I think our contact info is available on the website. If you would like to sort of have additional questions or so. But thank you, everyone, for listening in, and have a good day.