Relais Group Oyj (RELAIS) Earnings Call Transcript & Summary

Very good morning, everyone, and warmly welcome to follow the webcast presentation of the first year -- first half year results of Relais Group. My name is Arni Ekholm, I'm the CEO of the company. And together with me today, as usual, is my brother in arms, Pekka Raatikainen, our CFO, and we will take you through the presentation today. The presentation will take about, let's say, 30 to 35 minutes, after which you have the chance to submit questions. Or actually, you have a chance to submit the questions already during the presentation. And our moderator will collate the questions and then present them at the end of the presentation. So then we will have the chance to entertain the questions, and I hope everybody is really active and challenges us with a lot of questions. That's why we are here. Good. Before going to the contents of the presentation, I would also like to thank our dedicated staff. We have achieved very good growth again this year, this half year. It doesn't happen automatically. It's the result of the heavy work and hard work that the women and men who work to Relais have put in every day. And at this stage, I also want to thank our corporation partners, our customers, suppliers and shareholders and other business partners for being along on this journey, and I hope that you continue to follow the journey together with us. Right. So today, we are going to talk a little bit more about the strategy of the company. I think fairly many in the audience do not really know Relais too much. We are still quite new company on the First North Growth Market list. And I would like to take this opportunity to explain a little bit more what kind of animal Relais is, if you will, what do we do, where we compete and how we compete, what is our value creation model and operating model. And then we will have a look at the market, the aftermarket, and a small run-through of the group companies that we have in Relais Group. Then a little bit more classically looking at the business during the first half of the year and taking a crack on the numbers. Then Pekka will walk you through the numbers. And then a small summary. And then hopefully a lot of questions from the audience. So without further ado, let's kick off and look at how we position ourselves. We are a leading player in the vehicle aftermarket in the Nordic and Baltic countries. We are a consolidator. So we buy companies and draw synergies of having a group of companies within the aftermarket that can work together. We have a sector focus as opposed to some other companies who buy companies without really being focusing on a specific sector, and why we are sector-focused, I will explain in a few minutes. The business we are in is vehicle life cycle enhancement. And I will also explain what does that mean in practice. On top of that, we also serve as a growth platform for the companies that belong to the Relais family. Then just a short look at the numbers. We grew with 79.4% reported from the first half year versus last year, EUR 105.8 million. And the EBITA reported for the first half year was EUR 12.2 million. There is a growth of 62.6% versus last year same period. What is our strategy and long-term target? We quite recently, in May, came out with some new financial targets for the long-term period and also made a slight recalibration of our strategy. And let me explain what does it mean. And the fundamental of the strategy remain the same as we have said before, which is that we grow -- we aim to grow through acquisitions. So we want to be and we are an active consolidator with a sector focus on the Nordic mobility aftermarket. We broadened the scope slightly as we published in early summer, that we are looking at the mobility market a little bit broader than before. That being said, it does not mean that we are totally stepping out from the core business that we are operating in at the moment, rather probably looking at adjacent services and that kind of things. But the core is still the core and we stick to it, I would say. Organic growth is really important for us as well. So it's a combination of both acquired growth and organic growth. And as you will see in the numbers, we are happy that we have been able to perform better than the market, which is our target always, to grow faster than the market in the -- in average. We also aim to invest in our own brands, and I will get back to that as well a little bit later, and to fully utilize different e-commerce solutions. Then looking at our customers, what kind of value do we add to them? We have a comprehensive product range. I mean, we have companies who operate as nationwide and region-wide wholesalers. So of course, for us, it's important to be able to help our customers with the exactly right product at the right time. And the innovative digital solutions, we have to make it easier for the customer to find the right product and to also place an order. And then to have a superior customer service, of course, very important for us. In the same connection, when we recalibrated our strategy a little bit, we came out with a new strategic target. The first target we published in 2019 was to double the turnover from that time, aiming at roughly EUR 240 million. And now our new target is to reach a turnover of EUR 500 million by the end of 2026 on a pro forma basis. So the performance bar has been taken up quite much. The reason to -- why we did this was basically that we consider it very likable that we will reach the first financial long-term target much earlier than what we said in the first. Right. Then also, let's look at the team who is running the company. Apart from myself and Pekka, we have Juan Garcia, who is in charge of the Scandinavian markets, has a long experience within the aftermarket. Ville Mikkonen is heading Finland and Baltics, also a very long experience despite both gentlemen's young age in the aftermarket. And then the new kid on the block is Lennart Sjöblom, sorry for the misspelling on your name. He is the Head of M&A and Business Development since the 2nd of August. So I really welcome Lennart warmly to the team. And this is the team, that is the executive management team that I will refer to a little bit later as well. Good. What does our value creation model look like? And I promise to tell a little bit more about how we operate, and I think it's important for everybody to understand the way we operate and why we do and what we do. So we are, let's say, a buy and build company. We are a consolidator. Some would even use the word compounder. And the way we create value for our shareholders is by acquiring the right type of company. So we want to be confirmed that the companies we acquire have a healthy core. There's good management. There's stable profitability. It's important for us to be able to identify clear possibilities for synergies and thus value creation potential. So we are fairly picky with the companies that we acquire. And we want to see a good future for the companies, too, joining the Relais Group. So we are basically not looking for distressed companies or turnaround cases. So we spend quite a lot of time in the due diligence processes of turning every stone and looking also at the management and how would the people fit into our team and culture. So we have the chance to run certain companies as stand-alone, but most often, we have considerable synergies, whether it be then in purchasing or back-office systems or whatnot. The good thing, when we have the sector focus in the aftermarket, is also that we can bring something to the party for the company. So we have a, let's say, a deep knowledge of the business and the sector that we are operating in. So it's a kind of a give-and-take thing that we can also add value to the companies from a management point of wise. Then how do we build great businesses? I mean, once we have acquired the companies, the story doesn't stop there. So it's the onboarding period is very important. So what we aim at is to professionalize the running of the acquired company. So we put a lot of focus on the execution of the common strategy or the joint strategy, and we participate in the Board work. So let's say, everyone in the executive management team, the team that I showed, is participating actively in the Board work of these companies, the group companies. And it's also very important to really enable this intercompany synergy potential and possibilities. So as I said, the story doesn't end there where we have acquired a company, it actually starts there, and then really the hard work of getting the synergies and making the companies work together. We do not integrate. We do not hard integrate the companies. We do that also to a certain extent, and I will get back to it. But mostly, it is a cooperation that we are talking about. Then the beauty of the model is as well that this enables add-on acquisitions or bolt-on acquisitions. We have some examples. And of course, in the pipeline, some ideas for bolt-on acquisitions for existing companies to make them even stronger and roll out the concept further. And then maybe from a capital market point of view, the multiple expansion is one part of the value creation, meaning that we try to find companies at a reasonable price. And once they become a part of a bigger group with a higher valuation, then there is a certain increase of value. How do we cope with derisking when we have sector focus is that we -- the sector is, let's say, diversified enough to enable risk management. So we do not have all the eggs in one basket. The aftermarket is wide enough to enable derisking from that part. And Then usually, we buy small- and mid-sized companies who then become a part of a larger corporation and, hence, also add value to the big picture. Good. And just a very short example of the track record. I think we've done 5 acquisitions during the last 18 months. So it has really accelerated. It's not only growth by acquisition. There's also been traditionally a good and solid growth -- organic growth. And it's been a huge journey. I started 2015. The turnover was EUR 54 million. So we have seen a lot also together with Pekka and the management team during the last times and the story still continues with even higher speed. Good. How does our operating model look like? We have what we call a decentralized operating model or a hybrid operating model in the way we work. As I said, we -- on the onboarding phase of the companies, we do not hard integrate the companies. Of course, it's case by case. But most often, the companies have a solid existing management or entrepreneur and there's a strong culture in the company. We won't take the benefit of that and also let the company serve their customers in the best possible way. I mean the wisdom is not only here in the ivory tower, it's most often in the operating units, and we can then support from the Board to maybe work more systematically in some cases. So it's really a combination of a central type of approach and a local type of approach, maybe more focused on the local coordination. We have marvelous examples of how we work together. I mean, if we take Huzells and Tunga Delar in Sweden, both operating in the commercial vehicle sector. So we just recently combined the management and purchase and marketing of the companies, but still, the face against the customer remains separate, and we have a slightly different customer bases for those companies. But we can draw benefits from purchases and some product information systems and so forth. So we want to foster this entrepreneurship locally and ownership and pride of the company and Huzells was established 1888. So it's a very strong culture in the company that we want to also take care of. And as I said, the group executive management members, we all participate actively in the Board meetings and the Board meetings are, let's say, very practical and operational. So it's not an additional layer. It's more like a tool that helps the companies to reach their targets. Do we centralize some functions? Yes and no. I mean some functions, of course, are centralized by nature. They have to be looking at certain parts of the finance and administration. We have to have a common reporting basis and financing cash pool. These are good examples of where it makes sense to work together. Product information management, purchasing it is very, let's say, I wouldn't call it a low-hanging fruit because it takes a lot of work, but it's also worthwhile spending some time on drawing the benefits of centralized purchasing and negotiations with the suppliers. And it's -- we basically only do it whether it's -- when it's beneficial for the group or whether it's, let's say, legally obligatory to do it. Then we have certain policies that, let's say, are connected to us being a public company, Code of Ethics, ESG-related questions, data security, risk management, certain IT components where we either centralize functions or then we work very closely together under common coordination by Pekka and his team. So this describes the way we operate in a decentralized way, but in an effective and controlled manner. So it's not anarchy or just laissez faire that everybody does what they want. Okay. Then let's look at the aftermarket. How does that look like? Where do we play? Where do we compete? I used to work life cycle enhancement. And if you think about a vehicle from when it's produced and imported and sold in a specific market, then starts the aftermarket part of the life cycle. And then at the end of life, there's demolition and recycling. And that's -- if you look at the blue part of the market, that's where we operate. This is the heart of our operations and also the scope of our acquisition target companies. So our business is split basically between equipment and spare parts. And also worth to mention here is that roughly 2/3 of our business is directly related to commercial vehicles, whether it be heavy or light commercial vehicles, and 1/3 is thus relating to passenger cars. So this is basically the scope. We do not operate companies in each of these sectors. So we also use partners who do the customizing and equipping and we provide them with the right products. But also now when it comes to service and repair, we took the strategic step with the acquisition of Raskone, which I will then get back to, where we also operate repair shops in Finland. I said in the beginning that we decided to take a slightly broader scope on the aftermarket when it comes to acquisitions. And again, I would like to point out, having said that, it does not mean that we are totally proliferated and start to look at everything from financing to insurance and vehicle sales. This is just to show that there's a lot of potential in the aftermarket. And we are currently in spare parts equipment customizing. But there might be areas where we are looking that might be synergies. For us, it's important to have these synergies between the existing companies as well. But we will have a look on the market. And now that we have also invested in the organization and have more resources in the acquisition functions, we will be able to broaden our long list of target companies. Good. How do the market trends look like? I had shown this before. The ones who have seen my previous and our previous presentation, it hasn't really changed too much. There are about 19 million vehicles in the market where we operate. That is the Nordic and Baltic countries. It's steadily growing. The car park is steadily growing. And there is a need to get from A to B. I mean we have also seen it during the COVID-19 pandemic that, let's say, the last-mile deliveries have increased dramatically, which then supports the light commercial vehicle business. People order a lot online. And to solve the last-mile delivery problem, the transport companies have had very busy days. And all in all, I'd say that this year, the amount of traffic has really picked up, again, which then drives the spare part sales and equipment sales as well. Good. The market trends as such, what do they mean for us? How do they affect our business? There is a consolidation going on in the aftermarket, and we are an active driver in that and tend to be an active driver also in the future on the consolidation, the big get bigger. It's a little bit like go big or go home type of situation in some businesses. The powertrain evolution, electrification, what does that mean for us? I would maybe like to preempt the question by saying that I think there's a fairly common consensus that the electrification will happen very soon. I mean, 2030. Roughly half of the newly sold vehicles most likely have a fully electrical powertrain. This is, of course, very hard to predict. Roughly 1/3 of our business relates to passenger cars where this transition most likely is going to happen much quicker than the commercial vehicles. And then half of that 1/3 is relating to internal combustion engine parts in our business. So the estimate is that the market for spare parts is affected by about 2% annually, which then is 2% of our 15%. So that is not really a big thing for us. Mostly, I think we see it as an opportunity because the electrification produces new business and ecosystem. So we welcome that development, of course, also from that perspective. Another part that is important to understand and remember is that the complexity and value of the different components is increasing as well. So there might be fewer moving parts in the vehicle in the future, but they are more expensive. So it's not only about the volume, it's also about the value of the repairs and the spare parts in the future. So this is a fairly complex equation, but we see a lot of value creation possibility and welcome that development. Digitalization and e-commerce, we want to embrace very actively. And we are already taking some important steps there. It will change the market and it is already changing the market, and we aim to be in the forefront. There's a lot of data generated by vehicles and a lot of opportunities to then also utilize the data, where possible, for different business possibilities for different companies. Right. Then let me just flip through different group companies we have before going to the review, and I'll take this very, very quickly. Just to remind of what kind of family we are. And since we have bought so many companies during the last year, it's important for everybody just to get a picture of how we operate and where. Strands is one of the newest members in the family, a fantastic company, really combining passion and entrepreneurship, selling the brand Strands globally and utilizing the social media very innovatively. And it is a fast-growing company, and we are very happy to have the Strands team as part of our family since the beginning of this year. Just to give you an example, I mean, there's a very active group of people posting pictures of the different lighting solutions they have on the trucks or cars. And I mean, 6,000 followers on Instagram, which is really a fantastic start for Strands. And also, I think they are active on TikTok even today. So that's nice as well. So please have a look on YouTube or Instagram on the post of Strands. Raskone was a strategic move for us. We had analyzed the market and came to the conclusion that if we want to grow on the heavy commercial vehicle and light commercial vehicle sector, we want to go into the repair business as well. So Raskone is Nordic's largest independent nationwide multi-brand maintenance and repair chain for commercial vehicles. And the start has been really good. We are very happy to have the whole Raskone team. It's, of course, different business that we have had before in the group, but we really have good synergy potential on the spare part side and also on the equipment side. We have 19 outlets in Finland who can equip and help our customers as well in the future. Good. Then Lumise was also a strategic step as we announced in last of March '21. We want to be in the forefront of the digitalization and utilizing different e-commerce solutions. And Lumise is very fast growing together with the Swedish daughter company designed by Scandinavian Metal. And thus, we have been able to create a much stronger digital channel that we have had before. And one more strategic thing and approach here is that with the acquisition of Lumise, we also got a lot of critical capability and competency in the company when it comes to developing e-commerce also on a broader sector than in "only lighting." Of course, lighting is a very big potential for us, it's also our own brands we are talking about. But this also gives us the possibility to build a platform for e-commerce for other products within the group. Startax, a household name in Finland, everybody knows Startax, who is buying electrical spare parts in the business. It is a business-to-business company, located in Lempäälä, was the first acquisition of Relais in 2010. Strong own lighting brands and operates in Finland, Norway and the Baltic countries. Awimex, we acquired a few years back, specialized in light commercial vehicles and lighting system and power management. Really active and niche market and good team there in South of Sweden, selling all through the country in Sweden. ABR, really a big name in Sweden on the independent sector, focused on passenger car spare parts and equipment and recently moved into new offices in Sollentuna near Stockholm and also have a logistical center in Malmö, serving customers all over Sweden. Huzells, we bought at the same time as ABR, specialized in trucks and buses and spare parts and equipment, operates from Karlstad and sells all through Sweden and cooperates very tightly, as I said, with TD Tunga Delar, which has a slight more focus on the heavy commercial trucks and vans and trailers. There are operations in 5 locations in Sweden and run together now with Huzells. SEC, the smallest of our family members, but a very, very strong culture, good team, very active, working on different video surveillance camera systems, safety systems for cars, and lighting and power management. So we -- this is our bridgehead in Denmark. We hope to be able to grow organically and also with some bolt-on acquisitions in the future. Good. Then before letting Pekka to take over, just 2 slides from my side, looking at -- now moving to the first half year of 2021. Business-wise, as I stated, we grew very much, 79.4% versus the first half of the year. Of course, a big part of that was the result of the acquisitions that we did during quarter 1 and 1st of April. But also the positive market situation supported the organic growth. For a long time, since a long time, we had a good winter and that always affects positively the sales of certain electrical spare parts and equipment. And hence, I chose also a little bit wintery picture here. And that really gave a good boost for the start of the year. And we do not basically have an official pro forma number, but our estimation is that we grew considerably more than the market. And we estimate the market to have grown anywhere between 2% to 5% in different -- between different countries in the Nordics. So we were able to reach, let's say, a low double-digit number on the organic growth, which I think is very good. And I want to thank our teams for being able to produce that increase in sales. The overall market situation, despite the COVID-19, has been, from a transport and activity -- economical activity point of view, fairly normal in our type of business. But we want to also point out that the risks have not disappeared, although we do not see overly dark clouds, but we cannot say that this would not possibly affect the global logistics network and availability of certain components as well. You will have seen on the numbers that the effect of the pandemic, maybe you could say, can be seen on the increased net working capital. And what does this mean in practice is that since there have been signals of delivery problems and, let's say, lack of semiconductors globally, we were -- we made a strategic decision to advance some of the shipments, and we have increased the inventory levels of specifically lighting products for the starting season. So we want to be able to help and serve our customers so that they get the deliveries from us. So we have invested, made the strategic decision to really invest to be able to deliver on the back half of the year, this specifically for the starting lighting season and some other critical products to ensure the availability. Yes. And as I stated, the impact of the acquisitions has contributed largely on the result of the first half year. Also strategically, the weight of the product and business groups in our company has changed slightly towards more lighting products and also partially towards the service operations with Raskone. And the first steps with both companies have been really positive in terms of sales and earnings. And also in Raskone -- and the Startax and Raskone teams are working very actively to coordinate the spare parts procurement and to get the synergies from there. And we see a lot of good growth potential for us in terms of bolt-on acquisitions as well. And also for Strands to get back there, we see a lot of global potential for the -- for the brand. So it's the weight of the own brands has risen and also the weight of the lighting products have gone up. Lumise, also very good start. What we also have to bear in mind that the very big part of Lumise's result comes on the second half of the review period, I mean, because of the seasonality. And Lumise's product range is slightly more focused on the auxiliary lights, which is very heavily dependent on when it gets dark outside. Apart from maybe Strands and Startax, we have a little bit broader lighting range. And the vans are and the trucks are equipped all through the year. And this can be seen slightly on the weight of the H1 versus H2 will have changed slightly. Right. And then I will hand over to Pekka to look at the financial review for the first half year. So take it away.

Thank you so much. Thank you. And let's start with the key figures here. During this review period, we completed acquisition, representing -- acquisitions representing more than EUR 90 million in terms of net sales. And in these circumstances, it's obvious that the acquisitions have a heavy impact on almost every or every single KPI or reported figure we are reporting. To pick up some of those KPIs, this is the very same set of them we are constantly reporting. I mentioned the slight decrease in profitability in terms of EBITDA margin. This is mostly due to the effect of acquisition of Raskone. And by saying so, it's almost unfair comment to them as the company has been performing extremely well, progressing constantly. And it's just a different type of business in terms of cost structure and business model. And behind that, the existing or other parts of the companies, the group companies performed, as Arni mentioned, very well. The winter conditions were favorable in Nordics and had an impact on sales of certain spare parts and equipment. The last figure in the list, full time employee personnel, there's significant growth. If we think back to '19 -- 2019 when the journey continued, there's almost 4 or 5x, fivefold growth in the professionals, amount of professionals employed. So currently, we are employing more than 850 automotive aftermarket professionals. Balance sheet reflects very much the acquisitions we've been making. The total of balance sheet grew drastically in comparison with first half of 2020. Group equity was contributed by the acquisitions on its part, when they're -- or if used a part of the contribution purchase price paid to the sellers. Net debt, as earlier the acquisitions are significantly financed by debt financing, not forgetting the operative cash flow in this respect, that is contributing a lot to our ability to perform acquisitions. Cash assets, as Arni mentioned, the companies have been accelerating and increasing their purchases for the second half. And at the same time, the seasonality of the business has increased along the acquisitions of Strands and especially Lumise. And given those facts, the cash position remained very stable, and we were able to make those accelerated investment without any significant harm or without any harm to the daily business. And we still have cash reserves, decent cash reserves left. Where we can clearly see in the accelerated purchases is the cash flow from operations. And traditionally, net working capital management and cash conversions have been our crown jewels in a way that they have been traditionally on a very high level. And we are not saying that wouldn't be the case in the future, but in these accelerated purchases, are resulting in growth in net working capital that is weakening the cash conversion. But if ever, we see that this is the time to make that kind of compromise to enable the growth in second half. Earnings per share. These are, I think, well in line with the growth of the business and the impact of the acquired companies as well. And we can see clear growth in comparison with last year's figures. I think this is the time that Arni -- I'll continue for a while. Yes, as mentioned by Arni earlier, we announced a new net sales target in May. And so far, everything is very well in line with this -- the acquisitions made during first half, very strongly contribute to this target. Dividend policy has remained the same, and there's no change in this respect. Thank you very much.

Thank you, Pekka. And then looking at the outlook for 2021 and a slightly longer-term perspective. We consider the company being well positioned to continue the execution of the chosen strategy. And as Pekka just explained, if ever, now was the time to mount up the inventory levels to be able to support the customers for the rest of the year because we see signs of lack of components and we were able to really get some deliveries before we normally would have done. So we think we are well positioned to be active in the market. So we ramped up the deliveries of many lighting products. We have a good amount of new products coming for the autumn season. And then some other critical products where we foresee some issues with the availability, we increased the inventory level. We consider the market to be continually robust in the Nordic countries, if we look at the macroeconomic factors and everything. So we are positive about that. Nevertheless, as I refer to the still ongoing COVID-19 pandemic and the lack of semiconductors and also some logistical problems with lack of containers globally, we cannot rule out the effect, specifically for quarter 4. I think we have fairly, fairly good visibility for the coming weeks and months. But the longer we go on the back half of this year, the less clear the picture is and we cannot rule out that this could be a big deal. I don't want to paint a too dark picture, but anyhow, we are well positioned to start and step into the H2, but we refrain from giving numeric guidance for the year. If we look at the longer perspective, as Pekka also reiterated, we just recently recalibrated our strategy and then increased our turnover target to EUR 500 million. And it is for us a good and challenging but realistic target and based on acquisition growth and organic growth, which is higher than the market average, supported by the synergies. So this is -- this is what we are aiming at. And also, finally, we did announce this year our intention to study the possibility of moving the company to the NASDAQ main list in Helsinki to also support the growth plans for the future. And allow us to get back to that one when we have something to say on that part. Good. Then finally, from a shareholder perspective, how does Relais look like? What are the strength of Relais as an investment and a company? As I said in the beginning, we are an active consolidator, and we have a sector focus which gives us a unique insight into the business to support the companies we acquire. And we have a track record already of many successful acquisitions. And the story is, by far, not over for also the growth of the acquired companies. So stay tuned for the story. We have a strong cash flow and profitability, as Pekka said, and continue to be so. The market looks healthy at the moment. And we have -- as I said, we are well positioned to support the customers. The market is growing steadily, the underlying market, so -- and it has certain defensive characteristics which we have seen during the last 1.5 years with COVID-19 pandemic going on. So it hasn't really affected the transport market that much on the spare parts and equipment. An interesting point and an important also possible crown jewel in the future is the growing lighting business, which we estimate to be roughly 1/4 of our business and mostly owned brands. So it's a fairly high share of own brands for any company. And why it is important to have own brands? It's because they are proprietary and you can get a better and a bigger part of the value chain when you own the brand. The e-commerce solutions that we are developing ourselves give us a global potential to market our lights. I mean, we can create the best vehicle aftermarket lighting web shop in the world. So that is a kind of target that we have said to ourselves that we want to be active also there and to develop that part of the business. And then we have an effective and decentralized operating model. Why is that important? What's the effect from an investor point of view? It is, of course, that it's easier for us to onboard the acquired company, so we do not have to spend a lot of time to turnarounds and to fix things that are broken because we have quite tight criteria, set of criteria and when we acquired the company. So they are very ready to join us. So it's more to then foster them and to help them grow for the future. So this pretty much wraps it up. And I think I overdid the 35 minutes with a few minutes. And then I want to thank you for staying tuned and following the presentation. And then we have the chance to take some questions in case they have been submitted. Let's hear.

Yes. So first, there will be 4 questions from Joni Sandvall. First of all, congrats for the solid H1. Can you give any color on how your organic growth evolved on a group level and in different geographies?

Yes. If I tackle that one first. I think I said -- well, I said in the presentation that we have, according to our own estimates, roughly above 10% growth, maybe even up to 12% growth, but it varies much from geography to geography. But there are some smaller companies growing really much higher than that. But on a big picture, we estimate that we have grown much faster than the market.

Okay. And then to the next one. How much synergies do you accept from the recent acquisitions? Are they mainly related to top line or cost?

The synergies we expect from the existing -- the recent acquisitions are mostly relating to purchases of spare parts. And we have not set, let's say, a numeric number behind the synergies, but they are considerable and they will affect both top line and profitability. There is not too much cost-driven synergy baked into the equation as we usually buy companies that are already in very good shape.

Okay. Then still from Joni. As we are closing important lighting season, despite advanced deliveries, do you expect availability issues due to lack of semiconductors? In addition, logistic prices appear high. What kind of impact do you expect from this?

Yes. Thanks, Joni. The answer is twofold as was the question. Yes, we cannot rule out the effect of possible delivery problems for quarter 4. Not that we have some huge indication that there would be big problems, but we cannot rule out it from the signals we get from the suppliers. And -- but as to what extent it will affect the market, we do not know yet. That can be the kind of second wave of deliveries that can be affected by this. When it comes to the logistic cost, yes, the freight costs have risen. I think we have a reasonable chance to move the cost prices to the prices of the product in this situation.

Okay. Then last question from Joni, at least at the moment. Other operating expenses increased substantially. Can you elaborate how much of these costs are related to acquisitions? What is the run rate going forward with the current structure?

I think that is maybe, Pekka, for you to answer.

Yes. The increase in any expenses are almost totally driven by the acquisitions. The cost discipline and cost control remained on a very good level. And we expect some costs to rise during the second half during -- because of the seasonality of the business, such as marketing and other commercial expenses. But the run rate is -- and was close to normal. Of course, traveling is very limited currently and will probably remain limited. But for the second half, we will see some marketing expenses and other strategic areas that we will be investing in. But not a drastic movement to be expected, I would say.

Okay. Then the next question comes from [ Mika Karpinnen ]. How the integration of recently acquired companies has progressed? Any surprises, positive or negative? Any comments on the synergy potential and timetable for these acquisitions?

Yes. Thank you, [ Mika ]. Let's say, the integration and the way we do it has progressed very, very well. I mean, as I said, we do not hard integrate the companies. Of course, we do that if there's a reason for it and benefit for it. But let's say, from looking at how we operate together with Strands, and we're actively participating in the Board work, aligning the targets, looking at, let's say, some delivery supply issues together with Raskone. The task forces are very actively looking and already transferring some spare part purchases to group companies. So this, to name a couple of examples, Lumise team is also taking some steps to help to digitalize the company. At this stage, I'm unwilling to give, let's say, a more specific number on the synergy potential. It ties into the fact that according to our let's say, experience and the way we plan the bigger part of the synergy potential starts to roll in after, let's say, 12 months. And let's say it's a process of 1 to 2 to even 3 years sometimes, depending on the level of integration you do. But some of the synergy potential for the spare part purchases is coming very quickly. But the bigger part of it is coming, I would say, during the next year. It takes some time to change the product ranges. And you want to, of course, [listen] and respect to customers and their wishes as well. But there is a good potential and it will come within the next coming 24 months.

Okay. Then we have 3 questions from Erkki Vesola. First one is any kind of indication how much did Raskone press your EBITDA margin?