Relais Group Oyj (RELAIS) Earnings Call Transcript & Summary

Very Good morning, everyone. Warmly welcome to follow the Webcast Presentation of the Half Year Financial Report of Relais Group and greetings from the warm and sunny Helsinki this morning. My name is Arni Ekholm, I'm the CEO of the company; and together with me as usual, we have our CFO, Pekka Raatikainen. And I think the picture I chose for the first slide has a certain symbolism because we all know that surrounding world, there's a lot of dark clouds because of the geopolitical and economical situation, but there's still always light and we will shed some light to the first half year this morning in this presentation. And also I want to remind everybody that the dark season is starting and it's a good time to fix some good auxiliary lights for your car for the sake of the traffic safety. The contents of the presentation basically follow the same structure that we always have in our quarterly and half year presentation. So some of you who have followed this presentation will recognize some of the slides. But I still think there's quite a lot of people who haven't met us before personally or online so I will take some time to explain our value creation model and strategy and then we will go through the first half year business review and financial review and then wrap up with the strategy and long-term target. As usual, you have the chance to submit questions and I really urge you to be active with the questions. There should be a submit question button that you see in your screen and then we have Lumi and Sebastian here to facilitate the questions at the end of the presentation. So I reckon we will today spend a little bit more time on the group company level details so I think it's going to take about 40, 45 minutes and then we will have time in the end for the questions and please be active and challenge us. That's why we are here. What is Relais Group? The core of the Relais Group? We are a sector-focused consolidator. We focus on the aftermarket of the vehicles. And how we aim to deliver shareholder value is by combining strong earnings growth with the creation of a modern and stable long-term player in the changing mobility landscape. So we have a long-term strategy, we intend to stay in this market and become a prominent player in the aftermarket. So as I said, we focus on the aftermarket that gives some benefits, scale benefits and also in-depth knowledge. And then the strong earnings growth that we aim and have had and aim to have of course also in the future is based on 3 themes: acquisitions, then drawing synergy benefits between the acquired and present companies and then by doing constant operational improvements in the area of operational efficiency. Our sector focus gives us an in-depth knowledge of the trends that are actually affecting the aftermarket medium and long term. And what's happening on the mobility market? How do ESG related issues play in, demographics, e-commerce, macroeconomic factors? So we feel that the sector focus gives us a strength in understanding in what's going on. Our value creation model is, I would say, a classical buy-and-build model where we spend a lot of time in investing -- investigating different companies, analyzing the profitability. We have to be confirmed that there's a healthy core. We don't buy companies where we don't feel confident that there is a stable profitability projection also for the future, that the management is good and on top of things and is also committed. So we are not a company who buys distressed companies and then reshuffles them and then sells them. So basically we have a perpetual ownership perspective time-wise. Then we want -- when we are looking at the companies so that we can invest in the right companies, we are looking at the value creation potential. How does the future look like? Is it going to be a stand-alone business, an add-on business to what we already have or are there synergies? Are there possibilities for add-on acquisitions in that company? And then of course we know this business. We meet a lot of companies. We get a lot of information through our group companies and that is a kind of iterating model that we get more in-depth knowledge about the business all the time, which makes choosing the right targets better and easier for us. Then the next step in the buy-and-build model building great businesses. We, all of us, in the management team are participating very actively in the operational running of the companies on the Board level. So we have a direct contact of course with all the group companies and we can buy our own knowledge of the business, also help these acquired companies in getting more professional. I'm not saying that they are not already professional. They are in most cases, but we can also bring the group perspective and knowledge into running those companies and then we from the management team can make sure that all the group companies follow their group strategies. And also in the area of synergy benefits, we really get the economical benefit included. And then this is, as I said, a reiterating model. Then the result is to be able to accelerate growth. When we have good companies that we then develop, then we can draw synergies between the companies and create add-on acquisition possibilities. So it's a self-reinforcing pattern that we intend to follow in the future and have done also historically. Looking a little bit back on the history of the company starting from 2010. Our turnover is now tenfold of what it was and you can see that there's been a very steep recent growth almost doubling the business in 1 year. So the company is a real growth company. I think when we did the IPO, we said that we would make 1 to 2 acquisitions a year and over a business cycle, I think that's been the historical average. But you can see in 2021 we really managed to make a lot of acquisitions. This year we have done so far 1 acquisition in May, which I will get back to and that is -- of course our intention is to continue with acquisitions actively also in the future. What kind of businesses do Relais Group consist of? And I'm grouping the companies into 3 different baskets or divisions to make it easier for you to understand what kind of business we are operating in. So first group is what I call the wholesale of spare parts and equipment and it consists of companies distributing vehicle spare parts and equipment to resellers. So basically we are not selling directly to workshops by rule, there might be exceptions as well. ABR and Startax are mainly focusing on passenger car spare parts. Startax also sells heavy commercial vehicle spare parts. TD Tunga Delar, Trucknik and Huzells are purely commercial vehicle wholesalers. So this group is about -- I mean during first half year 2022, this group stands for roughly 40%, 45% of the business. And then our newcomer, new kid in the block is our strategic investment in the heavy commercial and light commercial vehicle maintenance and repair business in the Nordic countries. So we bought Raskone over a year ago, then STS Sydhamnens Trailer Service in Sweden and then Skeppsbrons. So we have over 30 outlets -- workshops in Finland and Sweden now serving the independent aftermarket of the commercial vehicle repair business and this is about 33% or roughly 1/3 of our business during first half year. It used to be before the latest acquisitions about 1/4 of our business and when we come to the business mix of the first half year, it's important to bear this in mind. Then the rest over 25% comes from what we call the lighting, power management and e-commerce. And you will see Startax here in 2 places because quite a good chunk of Startax business is also own branch-related lighting business so this is then the rest of the turnover. We have 1,000 professionals in 6 countries. And at this stage before going to comment about the first half year results, I again want to thank our personnel. It's been a rocky ride with all the things happening in the world and you have stayed loyal and committed. So I really thank you for spending your time with us and your best effort to make the business flourish. Then some news from this morning. We made an announcement of complementing the management team. So we wanted to get some new resources into the management team and we made what I would call a rejuvenation of the management team. So on the left side of the picture you can see the recent management team. So we didn't change the management team by removing anybody so all of us continue. Me being CEO and then Pekka CFO. Then we have Juan Garcia who has now also a new PMO role, but he is the Regional Managing Director of the Scandinavian units. Ville Mikkonen, Managing Director of Startax Finland and Baltics and also looking after our e-commerce businesses. And then the new members: Johan Carlos, who is the Managing Director of Strands, brings with him a solid experience of lighting business, a huge success; Jan Popov, our Managing Director of Raskone, specialized in the commercial vehicle maintenance repair business; then Sebastian Seppanen, who is now taking over the role as Director of M&A and business development with a solid background in M&A and banking; and then Jon Strand, who is the founder and previous owner of Strands Lighting division with a very, very good and solid understanding of how to create brands and he's going to help us on marketing and sales development as an interim member in the group management team. So I really warmly welcome the new members to join the team. I feel that with this expanded team -- extended team, we will get a much better direct contact with our operating units also on the headquarters and can also share the resources and understanding that we have in the important business areas that are now represented in the management team. So I look forward with working all of the new members as of today. Then let's look at the business review what happened in January-June 2022 and I kick off with the quarter 1 taking a short look at what happened in the quarter 1. It was a very exceptional quarter I would have to say not only because the quarter 1 in 2021 was very strong because we are -- at least in our wholesale business, there is a big seasonality when it comes to the weather. I mean we have electrical spare parts and batteries that sell very well when it's very cold or very hot so in that respect and this applies mostly to the Finnish wholesale of spare parts. And quarter 1, as we all know, was not a cold quarter. I don't overemphasize the importance of the weather, but it is really -- it plays a role in certain product groups. When it's minus 20, it's different than when it's plus 5 degrees. So now in quarter 1 it was very challenging amid mild winter conditions, the Russian illegal attack on Ukraine and the following war and the resulting steep rise of the energy and fuel prices and then there was the COVID-19. As if the political situation was not enough, COVID-19 affected really negatively. There was a lot of sick leaves not only on our side. In the warehouse, in the mechanics and also on the customer side; they couldn't simply come to the workshop. And then when the demand actually was in place again, there was also shortage of personnel. So all in all coming back to that quarter 1 was a tough quarter. I think the organic growth of the wholesale business was roughly minus 10%, which varied a little bit between the months, January being the toughest month. And we believe that this is roughly in line with the market for that period at least in Finland, maybe in Sweden it was a little bit stronger market at that time. When we did the quarter 1 publication, we already saw some signs of a partial market normalization, but still April month was very sluggish I would have to say and I think we were very cautious when we were assessing the outlook for the future because of the uncertain market situation Okay. Then I'm trying to depict what kind of factors played into the results during the first half year. So first, you have to understand the business mix perspective as I kind of gave you the rough percentage-wise shares of business of the different business units. So in our first half year, the effect of the repair and maintenance business was one of the factors that weighs into the result. By nature the maintenance and repair business is less profitable than the wholesale business. I'm not saying that it's not profitable. There is a chance to take the EBITDA levels from roughly 4%, 5% up to even 10% in the course of the coming years by utilizing synergies and efficiencies. But looking at H1 isolated, there were some special events also happening. I mean the capacity was really constrained in the maintenance and repair business because of sick leaves as I just explained during the worst time of the pandemic. In Q2 the demand recovered somewhat, but then we had lack of mechanics also. There's this huge fight of mechanics in, I would say, all Nordic countries and that is really a constraint. I think I will get back to it, but I think we could easily employ about 20, 30 mechanics right away looking at the amount of work we have and customer demand. So these parts has recovered. And then as part of the optimization of Raskone workshop network and usually we don't go to this level of detail, but I think it's important for you to understand to see behind the numbers. So we do this kind of pruning of the network on a regular basis and we discontinued a couple of workshops and put them together here in the Helsinki area. But isolating, in H1 the effect of course is quite prominent, it's EUR 2.8 million turnover and EUR 0.2 million EBITDA effect. The cost optimization measures we did of course following when you do some pruning, you have to also match the cost. That positive effect is not yet reflected because of long notice period time. So that will kick in, in the latter part of H2. So it's a kind of a double whammy, if you will, on the first half year. Then if we look at the wholesale business, as I explained, the first quarter was really strongly negative and as I say, we also believe for the entire market. But then there was a partial recovery. I would say April was still sluggish, May was really good, June started very well; but then I think due to a lot of focus on the electricity price increases and fuel prices, the demand started to go down a little bit on the 2 last weeks of June. So all in all, quarter 2 was a plus/minus 0 quarter for the wholesale business where May was the strongest and April was the weakest month. So if you put the first half year together by business unit, then the wholesale business was about minus 5% organic growth as a combination of quarter 1 and positive quarter 2. But that was not enough to lift the whole business. I mean we then of course had shortfalls due to the reasons I explained on the maintenance and repair business. So the positive development of the wholesale business during quarter 1 wasn't enough to cover for that part. And then of course there were some issues regarding the currency effect and partly salary inflation that I will get back to. So I think this is kind of intertwining coinciding factors that happened and you have to then understand the business mix. What I didn't mention was that the lighting and power management business developed very positively. It was about I think between 7% to 9% in net sales. But that's still a smaller part of our business so that is not enough to cover for these shortfalls. Then a little bit deeper look on the repair and maintenance business. As I said, there's a good underlying demand, shortage of skilled labor. We are not just waiting for miracles to happen so we are of course making actions to remediate the situation. So we do cooperate with recruitment platforms, we do direct search. Before you would do direct search on the executive position, now you do direct search of the critical production factors, i.e., mechanics. We are expanding the recruitment base to the Baltic states and then we have also some cooperation with the technical schools. But that's a long way, I mean it's not like a quick fix for anything. Of course I think the direct search will help to a certain extent, but these long-term issues will play in a bit later. And as I said, this is a common challenge for all of us in the aftermarket and across Europe at the moment. Then a detail maybe small, but still worth mentioning in connection with the retainment of mechanics. We did do some changes on the salary system for the mechanics moving parts from a variable to the fixed salary, which seems to be what the mechanics at the moment are appreciating during these uncertain economical times. So this is in a way a cost-neutral solution where the moving parts are moved more to the fixed part and that caused a certain negative effect on the first quarter, but will then be vanishing in the next part of the year. Then moving forward in the recap. As I mentioned, the lighting and equipment business is doing very nice and mostly driven by the export success of Strands. They are very innovative in use of social media marketing and they have a very loyal user group and target group and to that level that the truck owners are actually content providers at the moment. So they are taking pictures of their nice lighting solutions with Strands lights and then posting them on the Instagram. And Strands uses very actively YouTube as a channel to launch new products. I mean we have 1.1 million views so far this year on the YouTube channel. You can see Mr. Johan Carlos there presenting himself. So we don't use external actors, we are doing it ourselves. And then on the Instagram, we have 90,000 followers for Strands so it's a huge success. And before we started to work with Strands, I mean I wasn't even aware that the social media is such a big channel for these type of products and B2B market. So now over 65% of Strands sales go to markets outside Sweden. A few words about acquisitions. We announced already earlier we continued our acquisition activities. We bought Skeppsbrons in Jonkoping and that further reinforces our position as the biggest player in the independent commercial vehicle repair and maintenance sector in the Nordic countries. At any given time, we are talking with several different entrepreneurs and companies and looking at acquisition possibilities, but we also work in a very disciplined and methodological manner. So some part of course is always ad hoc contacts and stuff, but we have a process that we stick to and we want to do a solid and good research of the companies and really make sure that the capital that we allocate is really having a good return for the future. And then as I stated in the beginning, the sector focus and in-depth knowledge that we have helps us to identify these targets in the market. Then looking at the economic turbulence, we think that there's a fair possibility that it can trigger several interesting acquisition opportunities. Usually in these kind of times things start to move and happen and people start to think about maybe selling the company so we are getting an increasing amount of contacts and seeing a lot of opportunities. And well, we expect to see a contraction in the valuation multiples compared to what they have been during the past couple of years. It's hard to be more specific, but it's more like an expectation and partly also an observation of what's happening in the markets. Right. Then almost the last slide for my part in this review part before letting Pekka to take over and then I wrap it up in the end. There are some operational efficiency measures and also, as I mentioned in the beginning, when I was describing what Relais is made of. So we have to increase the working capital efficiency started a pilot project in Startax Finland and using some external help also in that project because Startax is one of our biggest, absolutely biggest wholesale operations and there we want to of course find also group-wide best practices that we can then roll out in the other group companies. So we expect to see some tangible results already during H2 of how to free capital from this part. Then with this new group management structure, as I said, I believe there will be and there will be additional focus throughout the group on accelerating the synergy benefits between the group companies because in a way it's much more easier now that we have the representatives of these bigger units also participating in the management team work. And we will for sure look in the areas of procurement, supplier management, cross sales and product range harmonization. I mean each percentage point we can carve out from the cost or get better terms from the suppliers is going to be a huge effect in the size if you look at the size of our company. And then, as I mentioned before, some of the implemented overhead cost optimization measures in Raskone will start to kick in during the latter part of H2. Looking at the economical and profit results for H2, of course we are not happy and we are not satisfied and hence we are developing action plans of how to improve profitability and that is of course a kind of household task that any company has at any given time. So there's nothing special to it. But I just want to reiterate, we put a lot of focus on making the operational efficiency even better than it is at the moment. So it will probably also include a slightly tighter central management approach to the group companies than before in certain areas like sourcing and pricing and best practices. So that is kind of a countermeasure for enhancing the profitability for H2. Then I will just wrap up the H2 before letting Pekka to take over the financial review. So as I explained, the H1 result is a kind of result of different variables impacting our profit margins and the dynamics in the business mix at the same time. Some of these factors are outside our control. I mean we can't possibly control what's happening on the demand side always. We can of course do campaigns and marketing. But the big macroeconomic picture and the political picture, increasing prices and everything, there's not much we can do about it. But what we can do, of course we will do internally. We see still considerable uncertainties affecting the market demand during H2. On the market demand, I would say that, as you have noticed, the H2 is and has typically been more important for us from a profit generation point of view because the wholesale business is then relatively more heavy and we have the lighting season that is important to us. It's still early days to say anything about the lighting season. I can't comment our performance of course during this quarter. But if I comment the market, I see the July market started quite strongly, but then I think the latter 2 weeks of July were not as strong as first 2 weeks of July. What we get is very solid data from our e-commerce operation so kind of leading by data is much easier for us. Now we get online information about the consumer behavior and what we can see is that the lighting season has now started. I mean usually it has started already in July when the customers have preordered. But now there's a fair amount of customer uncertainty due to the economic situation, but they have started to order now. It's still too early days and I would make any statement of how I see the market rather than there are uncertainty factors enough, but there are some positive signs on the lighting season. I don't need to reiterate the macroeconomic factors. We all know the fuel and energy prices, the war situation and the consumer and customer confidence is weak at the moment. And since we are a business-to-business company, we sell through resellers, the customer and consumer trust is very important and their confidence. If the consumer is not confident, our reseller is not confident either. So at the moment we are not anymore seeing a lack of production capacity that much from the Asian suppliers or let alone a component lack too much. I mean it hasn't vanished, of course it's still there but the delivery times are still long so you need to plan ahead. We have a good delivery situation in our most critical products at the moment. Then another part which I foresee for the coming months is that usually in the history in tough economical times, people tend to repair their vehicles because they don't maybe afford to buy a new vehicle or then in this case as is now, the delivery time of the new vehicles are very long. And especially on the commercial vehicle side, which is the main source of revenue for the transport company or excavation machine for the entrepreneur, you have to repair the machine otherwise your cash flow is not there. So we see that there is, kind of as we said when we IPO-ed the company, that our business has certain defensive characteristics. So I think there is a fair chance that these defensive characteristics will play into the picture for the second half year. I already mentioned that we have ramped up our inventory of lighting products so we foresee no delivery problems of any magnitude coming forward if the consumption is there. What we can see is of course if the consumption will and the demand will be there, but we are prepared for a good H2 season and that's very important for us and our customers as well. So all in all even with all these macroeconomic and external things and of course always internal challenges as well, we feel that we are well prepared for the future by having development of operational efficiency as I mentioned, tangible action plans, utilizing intercompany synergies and pursuing more corporate acquisitions. So it's what we can control, we can control. Right. And then this is the wrap up of the first half year and I'm ready to take questions then after the presentation. But still we have a financial review that Pekka will take over, please?

Thank you, Arni. Good morning and welcome to follow this short financial review section of this presentation regarding the first half of '22. Despite all the challenges we were facing during the first half, we were able to grow, which is very important for us within the current strategy. And why we unlike during the past quarters and past years this time didn't succeed in turning this growth into increased profitability was, as described earlier by Arni, mainly due to the market conditions that were challenging, but also to the business mix that is constantly changing around acquisitions. And these 2 things combined result in the profitability we saw during the first half. Gross margin is as in all businesses important for us and we did succeed in maintaining or even increasing the gross margin during the first half. That is given the inflationary circumstances a good performance and partly of course contributed, as I mentioned, the changing business mix, but the traditional all the old parts of the company and the group were able to maintain the gross margin that is appreciated a lot. The further we get downstream here in reading the income statement, we see a drastic change especially on a quarterly level in KPIs like EBIT, EPS and that's because of the cost and financing structure of the company. We have this intensive amortizations on goodwill and financing cost related to the acquisition loans and that combined with the organic development may result in a drastic change on a quarterly level in terms of these KPIs. This is how the key performance measures regarding balance sheet look like after the first half. Very intensive preparations by the group companies for the second half that is for seasonality reasons significant for us in this business. And how we see it here is the cash assets significantly below last year as mentioned. And what has been the case for recent quarters is that we have been significantly increasing the inventory level for delivery security reasons and have been doing it for roughly a year by now and that's why the cash assets are currently tied up in the inventory. It also increases the net debt on its part and net gearing of course. But this is the strategy chosen for the delivery security and that is how it results in balance sheet currently. Otherwise in other respects, the changes in balance sheet are typically mainly driven by the acquisitions and that's the case also this time on H1. Key drivers in group cash flow typically are the cash flow from operations and from investments. Here we can clearly see the impact of the increased inventory as a result in cash flow from operations. In a year-on-year comparison, we have been increasing the inventory and net working capital level roughly in EUR 15 million and it is a big amount of investment for us in this size of company. Cash flow from investment is the KPI where we can see the acquisition impact. This year's acquisition so far has been the Skeppsbrons and the minority shares of SEC and Tunga Delar and they are totaling roughly EUR 11 million. Cash flow from financing is the part where we can see the impact of the acquisition financing, debt service items and dividend distributed being EUR 6.5 million for 2021. Earnings per share is affected. As I mentioned earlier, this impact that 1 quarter can be drastically impacted if the organic growth is missing so it's clearly demonstrated here.

Thank you. Then I just make a short summary about the aftermarket especially for people who haven't seen this presentation before. So I'll take it quite short, but just for you to understand the magnitude and size of the opportunity in the market. So this is the group focus area. So if you think about the vehicle as being and having a life cycle from where it's manufactured to when it's demolished. So we focus on the aftermarket starting from the vehicle is imported and then it starts to be equipped and distributed to the customers and then it needs some parts for service and maintenance and then there are some operations and supporting services for these vehicles as well that we are focusing on. Then you can look at the different segments, personal transport and then commercial transport, and then they are also divided into subcategories that all offer very interesting opportunities for growth. I mean we estimate the Nordic aftermarket, whether you choose to include the OE part or not, but if not about EUR 20 billion depending on the definition of the aftermarket. I mean it's hard to get an exact statistics on this. But by combining the public data of the turnover of different companies in the aftermarket, it is huge. What I want to tell with this one is that there's a lot of acquisition opportunities, also opportunities for organic growth because this is a solid market. The aftermarket has been growing over years and the amount of vehicles is steadily still growing. So you can group the market if we are looking at different kind of acquisition targets by different segments. I mean value chain segment, whether you're customizing, you're in the maintenance repair and what part of the life cycle are you in, I mean car care or car wash or then other supporting services. And then you can focus on different type of vehicles: passenger car, light commercial vehicle, heavy commercial vehicle. Then you would have different product types to operate with: spare parts, consumables, tires, body parts, paint, workshop equipment. So it's an endless line of different product groups, which we only cover by part at the moment. On the distribution side, you can have different roles: national, regional, local, you can have agents. We are not involved in the local resale, but we are a national wholesaler and a repair and maintenance operator. Then you can also look at different target: the customer type segments B2B versus B2C. I mean B2C we are doing basically only with our e-commerce parts only partly. Then you can consider on our fleets or owners and private versus state and municipal, large and small. There's a lot of different segments to look into. So this is just to show that there's a big opportunity in the market and I won't dwell on this, it has a lot of details. This is just to show that under each headlines, there's a lot of different types of vehicles and distributors and different products and services. So the list of acquisition targets and possibilities is really large depending on where to focus. And we don't intend to shoot with a shotgun may be a bad comparison here, but I mean we'd like to then have a very targeted approach to what we do. We might also sometimes step outside the box and look at opportunistic kind of acquisitions where we feel that there is a good return on investment and equity. But I think the probability of finding synergies between the different companies is of course bigger in this core area that we are now operating any adjacent company. So if you do add-on acquisition, usually they have a synergy benefit. But it's not the mantra, we do not always have to have synergy benefits. It's of course an additional asset if we have a synergy benefit. Then almost there in the final slide. So I just want to reiterate our strategy and long-term target. You saw the curve from 2010 to 2021 growing from EUR 20 million to EUR 240 million roughly. So our target is to grow the company to a net sales of EUR 500 million by end of 2026 on a pro forma basis and we are well on the track on that one. So we intend to grow through acquisitions and we are intending to be an active consolidator in the Nordic mobility aftermarket also in the future, having a sector focus there and we combine this with organic growth. We aim at a faster than market average growth, which from time to time can be challenging as we have seen and the market can also sometimes be minus. But we intend to beat the market average growth by the synergies and cross sales opportunities that we have by having this sector focus. And we also have kind of a still largely unexplored area of e-commerce solutions that we are developing and seeing a lot of potential in that part. And then of course as a wholesale operation, which is a big part of our operation, we want to make sure that we have a comprehensive product range that we can help our customers. Innovative digital solutions, I mean ordering platforms and catalogs that we can help our customers to find the right product and superior customer service. So we also have a very solid organization helping the customers with technical questions Then the summary. If you look at Relais as an investment from an investor point of view, we are, as I said, an active sector-focused consolidator with a strong track record of successful acquisitions in the Nordic market. Historically, solid cash flow and profitability track record. There's a growing underlying market with defensive characteristics as we have seen over the business cycles. There's a growing lighting business with own brands and that of course from profitability potential point of view important, the bigger part of the value chain you control, the better. And then a growth potential, which I dare to say, is even on a global level with our own e-commerce solutions. And then the effective and decentralized operating model and we can always be better there and be more effective so there's still gold to dig in that area. So with these words actually 44 minutes, I said 45 minutes, this is the end of the presentation. And now we would be very willing to entertain some questions if we have some. Do you, Lumi, have a lot of questions or how does it look like?

Yes. Thank you, Arni. We have received a lot of great questions and I would like to begin with Joni Sandvall's question. You mentioned that in May to June, market has recovered close to prior year's level. Can you give any comments on the current trading conditions?

I think I basically touched this in my presentation by saying that July started well on the market and then slowed a little bit and now it's too early days to say anything about August. So I cannot give a more precise answer on that one.

All right. Then Joni Sandvall continues. Inventories are at a high level. How confident are you to reduce working capital in H2? How much of the inventories are related to lighting products?

If I take the latter question first so a big part of the inventories are lighting for us so we have ramped up for this important season. How confident am I? I mean what we can control is our own actions and we have initiated a project on the working capital as such. But now also starts the lighting season and we have the campaigns and activities in place. What we can't control is of course the macroeconomic situation, the purchase power of the customers and consumers. But I'm confident that what we can control is in place.

Okay. And the final question from Joni. Your leverage ratio has increased following recent acquisitions. How much room you have for acquisitions when thinking next 12-month period?

Yes. As can be seen in the numbers, we have a certain amount still in the senior facility agreement left. I would say so that the bigger acquisitions, bigger fish would probably require some type of new arrangements. But moving forward smaller ones, we tend to use a combination case by case on using our own share so cash and then also a facility so outside financing. So it's impossible to say exactly how the world is going to look like. But I would say if there's a big, big structural -- big acquisition, then we would be looking at different types of financing solutions.

All right. And the next question comes from Petri Gostowski. If we annualize the Q2 revenue impact of discontinued workshops, is this a good estimate of impact on a full year level? Do you expect more cost burden from this or has the total impact been seen on Q2? When you said wholesale was down roughly 5% in H1, does this include changes in prices or is it solely volume? Any comments on the development of prices in whole on a broad level would be very helpful.