Relais Group Oyj (RELAIS) Earnings Call Transcript & Summary

Very good morning. Greetings from the wintery Helsinki, and welcome to join the online presentation -- webcast presentation of Relais Group financial statements review 2023. My name is Arni Ekholm. I'm the CEO of the company, and I have the pleasure to present the '23 results together with our CFO, Mr. Thomas Ekstrom.

Good morning.

So together, we will take you through the presentation. And as per normal, you have the chance to make questions by pressing the Ask a Question button on your screen, and we really hope that you are active and present a lot of questions that we will entertain at the end of the presentation. The presentation will take roughly 20, 25 minutes and after that then we will answer the questions for you. Looking at the contents, Relais in brief. I think there might be people who do not know us yet, and some of the people have heard these presentations before, so there's a certain amount of repetition. But I think it's very important to explain what we do and what our strategy is. Then I will explain the events during quarter 4 and the full year '23, the kind of business review. Then Thomas will make a deep dive into the numbers and walk you through the financials. And then at the end, a summary of what is Relais as an investment, from an investor point of view, and as I said, at the very end questions and answers. Relais in brief. How do we position ourselves, how do we see ourselves, what is Relais Group about. We're focusing solely on the vehicle aftermarket. We are one of the biggest and most profitable growth platforms in this sector in Northern Europe. Why are we focused on the vehicle aftermarket? It's because we see the best value creation potential in that market as opposed to other parts of the value chain in the vehicle business. I will explain that slightly later. Aftermarket business is also less cyclical. It's not so sensitive to the trends in the economical environment and more defensive than many other markets. And it grows steadily. The number of vehicles is steadily growing in our markets. An interesting thing is also as a large part of our business is coming from commercial vehicles, and that is also important to understand because other types of technical trends are imminent in the commercial vehicle part than in the passenger vehicle part of the business. How do we create shareholder value? We aim to do it by delivering strong earnings growth with a very simple strategy based on 3 reinforcing themes: growth by acquisitions; organic growth; and operational excellence, which I will explain more in detail later. What is the vehicle aftermarket? We talk about vehicle life cycle. It's when the vehicle is produced and to the end of life when it's demolished and then recycled. There are different parts in the value chain. And we have focused on the parts of the life cycle that start when the vehicle is imported in the country, whether it's equipped with lighting or power management, whether it's repaired and maintained and needing spare parts. And also, we have as a newest business area, workshop equipment business. So we're helping the workshops also to develop their business. So this -- the orange colored section in this life cycle is our target market for acquisitions and also where we operate with our own companies. We estimate the size of the market to be roughly EUR 20 billion. It's a question of definition, how do you define the aftermarket, because they are adjacent businesses and product groups that may fall under the aftermarket or not. But still, it's a huge business in the Nordic and Baltic countries. We also estimate that there are about 19 million vehicles in this geographical area coming all the way from 2-wheeled vehicles to materials handling, excavators, lorries, trucks, off-road vehicles and so forth. And every vehicle for us is a revenue platform. Either you can sell equipment to make the vehicle work better or then you can repair the vehicle and prolong the life cycle and the life of the vehicle, which is also from a sustainability point of view a very good deed. Then looking at the Relais Group companies, we are, let's say, operating 2 types of businesses, technical wholesale and products where we have the magnitude or let's say, majority of our companies fall under that business area. And then we have the commercial vehicle repair and maintenance business area. Looking at the companies we have under the technical wholesale and products, you find different companies that are focused on, let's say, commercial vehicle spare parts like Huzells and Tunga Delar, [ and partly ] Startax. You have lighting and power management companies like Strands, Awimex, S-E-T, SEC in Denmark, and you have online business, Lumise, and then you have the workshop equipment business, AutoMateriell and Nordic Lift in Norway. ABR in Sweden is a very known and established spare parts wholesaler focusing mostly on passenger cars and light vehicle, like commercial vehicles. So also, here on the technical wholesale and products you see a big focus on commercial vehicles. And product business, we have companies selling products with their own brands like Strands and partly Startax, which is very important to understand that the lighting business within this business area, we have our own private label brands. And commercial vehicle repair and maintenance, we are one of the biggest, if not the leading independent repair and maintenance chain in Finland and Sweden, having almost 30 workshops in 2 countries, with Raskone and STS and then also Skeppsbrons. And the latest acquisition was in [ Jyvaskyla ] Truck Center -- Jyvaskyla Truck Center in the middle of Finland. It's an example of an add-on acquisition, which I will explain later. Then if we think of how the business is divided -- how our business is divided from a geographical point of view, you will see that the Scandinavian part, its importance has gone up quite much during the last years. Even from '22 to '23, the weight of the Scandinavian markets has gone up from 52% to 55%. And at the same time, the Swedish krona has weakened. So actually, with constant exchange rates, the weight of the Scandinavian market would be even higher than the 55%. And then the remaining part, 45% is Finland and Baltics. So starting from a purely Finnish operation over 10 years ago, this has become much more Scandinavian or Nordic -- a true Nordic company. Then sales by business area. The business areas I showed on the map, technical wholesale and products. Technical wholesale is about 2/3 and the repair and maintenance business is about 1/3. It's not a huge change. We've made some acquisitions on the wholesale and product business, which then increased the relative share of that business. But 2/3, 1/3, that's easy to remember. Then finally, on this chart, sales by product group and pay also attention that the black part here, repair and maintenance is virtually the same as in the previous page. We do not split the repair and maintenance business into work and parts. So we consider it as a product group in this comparison. So the blue one is the -- let's say, the original core of the company, the spare parts business, which is roughly 30%. The weight of the lighting business relatively has gone down from 24% to 21% because the equipment part, where the acquired Norwegian business falls under, has relatively gone up from 13% to 17%. So that kind of has changed a little bit. Does it imply that the lighting sales would be on a downturn? It's more that the relative share of the lighting is smaller. I think this is, in a way, good for everybody to understand where the sales is coming from. Then going to the business review '23. Year '23, highest net sales and EBITA in the history of Relais Group. In this context, I want to thank our teams. Again, I mean, there were some tailwind, and there were also some, how to say, headwind in the market. And it's in a way split into 2, the Scandinavian markets had a very positive trend from -- let's say, from a market and demand point of view, whilst the Finnish and Baltic markets were more soft, especially in the wholesale part, and I will come back to it. But I want to thank our team. So you did a tremendous job, both in Finland, Sweden, Denmark, Norway. Really, really I want to congratulate you for this result. I also want to thank our customers and business partners, shareholders and owners for supporting us. So this kind of marks a historical moment in our growth path. Then in numbers, which then Thomas will explain more in detail. But in the big picture, the full year we reached EUR 284 million. It's a growth of 9%. And the EBITDA was EUR 28.5 million, which is a growth of 24% versus last year. Then looking at quarter 4, the net sales grew with 8% and the EBITA for that quarter grew with 25% to EUR 7.8 million. And then again, Thomas will explain later more in detail. Looking at '23 in a nutshell, looking at positives and negatives. So I tried to kind of give you a picture in the -- from a helicopter perspective, what it was that happened last year and how do we see the development last year. As I just stated, the net sales grew healthy with 9% EBITA, also very nicely 24%. But again, it was kind of a binary development where Scandinavia was positive for the whole year. I think the market conditions were stronger and better. Also the price increases that we managed to carry out contributed to stable gross profit levels. So even if the Swedish krona was weaker, which affected our purchase prices from the suppliers, we managed to then again defend our gross profits by adjusting our pricing. All-in-all, in Finland and in Sweden, the repair and maintenance business performed extremely well. We are really happy of that business area, and we have gained market share from the, let's say, automotive importers controlled workshop chains. So the independent players as us have gained market share, and we have also strongly increased the profitability of those acquired businesses. We only acquired this business area, let's say, roughly 2 years ago. And already, we have really, really increased the profitability of that business. Also here, I want to congratulate the teams in those businesses for these results. Despite the sluggish corporate acquisition market, we managed to acquire 4 companies, 2 in Norway, one in Finland and then later also another one in Finland, an asset deal. Looking then at the negatives. As I stated in the beginning, the Finnish market was soft, mostly coming from the macroeconomic factors, partly also the tough competition and the mild winter. And here, I want to stop for a while to explain the winter. Why is winter -- why does it play a role for us? It is the type of products we sell in Finland, spare parts, where we also count the starter batteries, generators, alternators, heaters, boosters, battery boosters. If it's minus 5 degrees and there's snow on the ground, it doesn't move the needle, but when there's minus 20 for 2 weeks, then it really, really blows the sales -- really blows up the sales. And looking at the quarter 4, yes, the winter came fairly early. But as I said, it's not enough with a few minus degrees. Even if it was like wintery conditions looking from the outside, it's not enough. So if you compare then a little bit jumping to this year in January, if you had -- and we had about 2, 3 weeks of minus 20, so that really affects the market hugely positively. And our business is quite sensitive to electrical spare parts which are related to that development in the weather. So I hope this kind of clarifies the weather -- the weight of the weather in our business. So it really needs to be cold. And in the summer, also if it's really warm, that has a similar effect on the sales of batteries and also air conditioning compressors. So a really cold winter with many, many days or weeks or really cold weather has a positive effect. But a normal winter, even if it comes early, does not really have that big effect. So this is important to really understand. Then, the online business-to-consumer part that we have in our group suffered because of very low consumer demand almost all year long. The products that we sell through that channel are to a very high extent discretionary products. I mean people do not necessarily need a lighting product for their car if they can -- if they have to spend the money to something else like paying the electrical bill. Not all of our business in lighting at all is coming from discretionary products. More of our lighting business actually comes from business-to-business, which is more steady across the year. Then we had some operating cost challenges during H1. And then we have changed the operating model and the organization and now the cost base is starting to be where it should be to match the lower demand in the Finnish marketplace. Looking at the rear view mirror and the acquisition cases, as I just explained, we managed to acquire 4 companies or businesses, but we didn't manage to buy really big kind of game changer companies. And last year was a bit special. I think there were a few cases, structured deals where a lot of private equities were competing with us and paying more than we were ready to pay because they have a different type of risk profile. On the other hand, a lot of kind of what I call the diamond companies did not want to even discuss selling last year because their valuation expectations were much higher than what the market actually would have indicated. Now I feel that the situation has changed a little bit and some of these cases are actually coming back who were put on hold last year. So it was kind of a mixed message. We would have hoped to make bigger acquisitions and then still hope, of course, to and aim to make them this year. Then the exchange rate issue that I mentioned, the krona still weakened during last year. And if we would have had the same exchange rate that we had in '22, the EBITA would have been EUR 1.5 million higher than reported. Quarter 4 -- more comments about quarter 4 in detail. It was also the fourth consecutive quarter with a double-digit EBITA growth. So still, even if the market was sluggish, we managed to grow the EBITA during the last quarter. Basically the same picture as I explained for the full year. Scandinavia growing very nicely and strong market demand, and commercial vehicle and repair maintenance market demand remained solid. That market -- though you have to remember that quarter 4 in '22 was really a strong quarter for this type of business. So there was not a similar improvement anymore than we had in quarter 4 or '22, but it was still very stable. Negatives. The wholesale market continued to be soft. I think the statistics show about flat market for quarter 4 in Finland and a minus on the equipment business, which is then lighting business. This is very crucial for the lighting business how, let's say, the peak season works. As I said, it's not a huge part of our business, but still it's very decisive for the success in quarter 4, whether the consumer-driven market is hot or not, so to speak, and the kind of Black Friday or Black Week or Cyber Monday or call it what you want. If you miss that and if the customers don't buy, then it really makes a negative effect on your results. And that's what we saw this year. The consumers didn't buy as much as they had done before. Let's say, purchase power was down and maybe the consumer confidence was also down and people [ were ] spending on other things. This is generally seen in Finland and many other discretionary product groups during quarter 4. But all in all, I still think it was a good quarter 4 despite of this demand -- let's say, challenges in the Finnish demand situation and market situation. And then just a small detail regarding the krona. It still had an effect also on the quarter 4, about [ EUR 200,000 ] on the EBITA. So basically, the same picture as in the full year, but then accentuated by the weight of the lighting business, consumer business in this quarter. Operational excellence. That's one part of our strategy is to make the companies work more efficiently. And we had a couple of big themes that we focused on, and we still continue to focus on is the pricing policies. So we have had -- in our major companies we have gone through our pricing processes and, let's say, installed and implemented new strategies and policies. It's not only about how we price towards the customer, it's also to what price do you buy from your suppliers. It's sometimes even more important to have a full control on the purchase prices that you are already kind of following also the market and what's going on there. So that has a huge impact on the gross profit. So we managed to defend our gross profits and even improve it in some cases. Then when it comes to the very important commercial vehicle workshop chains, the repair and maintenance chains, as I said, we have managed to increase the profitability of both or all of our repair and maintenance companies. There are no -- let's say, it's no rocket science. It's -- the devil is in the details of how effectively do you run these companies, what is the utilization rate, or how many hours are the mechanics able to invoice for the work they are at the workshop and stuff like that. It's more like what you measure is what you get. And also, by investing in our personnel, Raskone made a huge, let's say, change in their -- even in their branding and image and also the way the team spirit is kind of coming through. I'm really impressed by the work that's [ been ] done there. And also, STS has done a lot of work on the quality enhancement and the quality processes and sustainability. So there's a lot going on, on there, which actually have a big effect then on retaining the personnel, which is important for us to -- for this machine to work to keep the mechanics in our business. Then a few words about strategy and financial target before I let Thomas lose. Just recapping our financial target. As communicated before, EUR 50 million EBITA -- pro forma comparable EBITA, including the latest 12 months comparable EBITA of acquired businesses. So it's kind of a run rate target by end of '25. How do we -- how are we planning to get there? This is the strategy chart I have shown you before, the 3 enforcing themes: growth by acquisitions; operational excellence; and organic growth. And our value creation model then based on the strategy, I have also shown this before, coming from investing right and then building the businesses into great businesses and then accelerating the growth. And maybe I'll just pick up a few points from here that we are really focusing on finding the best companies because we do not, let's say, have the idea of buying distressed companies and then to build them. I mean this is not a kind of a, let's find a company in really bad shape and then let's shape it up. It's more like to find a good company with good management, stable profitability and then build that business even better and then to accelerate growth by what we call the competence compounding. So it's not only compounding and allocating capital. It's also the competence we have as aftermarket specialists. We learn from each other, and we have also evidence of knowledge sharing and best practice. It really works. It's not just empty words. Then just looking at the growth path of the company now with the recent results, EUR 284 million and EUR 29 million. Actually with comparable exchange rates, you can easily add about EUR 2 million on the EBITA. So you can see the curve from -- let's say if you even take 10 years back in time, the company is almost 10 times bigger than it was then, and the profit is over 5 times more than it was then. Then finally, before I let Thomas lose, the outlook for '24. Not much has changed from what I said the last time. It is still the macroeconomic market demand factors that have the biggest effect on how we look at '24. I think the economies in Europe and globally are not yet done with the [ inflatory ] development. The interest rates are still on the level more or less that they were last year, which has increased the financing cost for businesses and also, let's say, it will affect and has affected the purchase price -- purchase power of the households. There are also signs of increasing unemployment and layoffs, not to mention the latest news about the strikes in Finland. But on the other hand, the vehicle market, as I explained, is fairly defensive by nature. And often in tougher times, the independent aftermarket takes market shares because the fleets are more keen to find, let's say, more competitively priced service providers than the vehicle manufacturers' own chains. That is -- that has been historically the trend. Our inventory situation is good. Resource situation is good. We can meet the customer demands with our products and services. So all-in-all, we feel that we are well positioned to continue on our growth path in a sustainable and profitable way also during '24. And now over to Thomas.

Thank you, Arni. Yes, I will continue from where Arni started. Let's have a kind of quick look again on the net sales and the profitability. It was really a good year of strong and profitable growth. You can see that the sales increased by 8%. And even the EBITA was plus 25%. There I could perhaps a bit elaborate more that the comparable increase was about the same level in Q4 as last year. And the biggest reason here was that the commercial vehicle repair and maintenance business has been good the whole year '23. But also -- in the last quarter the comparison period were also good. So there we didn't have such a big increase anymore in the profitability from -- due to that. But all in all, the whole year the technical wholesale and products business in Scandinavia was good. That was also continued and even enhanced in Q4. And then on the negative side, you can see here is that, of course, as Arni said, the technical wholesale and products here in Finland and the Baltics has been sluggish. So this has all impacted development. But all in all, you see the pattern of a really strong and profitable growth during the whole year. And then to perhaps dig a bit more deeper into the reasons behind the EBITA, the gross profit and gross margin. You can see that we had a bit of a negative development in Q4. And there was -- the reason here was that we had a larger business mix on the technical wholesale and products, which then kind of impacted negatively on the margin picture there. But looking at the euro gross profit, there was continued good increase, both in the last quarter and the whole year. But it's important to keep in mind that the mix of the business impacts and also here in the last -- second half of the year, we also bought new businesses, AutoMateriell business, which is more of a kind of wholesale and spare parts business, with a different margin picture passed [ on the ] commercial repair and maintenance. So it's always key that the mix also plays a role here in the whole picture of the margin and the gross profit. Operating expenses were really on check still, and the share of expenses to net sales came down both on a full year level and also on the last quarter. So that's also a key metric in this sense. Net working capital is always in a business like ours in the kind of -- on the forefront. And we see that it has a bit increased now during the last quarter. But then if you look at net working capital against net sales, which is a key metric, that has come down. So we have still managed to keep the efficiency up in the business. And also, it's key to remember that in the last quarter of '22, there were really kind of big improvement measures there where we managed to reduce inventories a lot. And of course, that has not been the case. We have been kind of doing more kind of basic normal measures here this year. And that's why the difference perhaps is not so big or the increase here is a bit negative. And also, when we bought AutoMateriell in Norway, we have been building up the receivables, so net working capital to that business because we bought only the business and not the receivables. So this became also a bit of a negative visual impact from that. And of course, we bought the inventories also in the AutoMateriell business. So there you have the key impacting factors on the net working capital. And then [ this ] impacts also the cash flow and the cash flow was strong, especially when you look at cash flow before net working capital on an annual level, but also it was -- it kept on a good level in Q4. And then net working capital, you see the change was very high in the last quarter of '24 -- '22, I'm sorry. But all in all, here, a really good performance, again, and cash flow -- our cash conversion was stable for the full year and in Q4 also good, but not anymore at a kind of exceptionally high -- one-off high level in Q4 '22. Here you see a different picture of cash flow. You can see that also the cash flow from investing activities was a bit lower due to different M&A activities at the kind of second half of the year. And also, cash flow from financing activities, we did not raise any new loans this year, which kind of impacts the cash flow from financing activities. No big change here either. The net debt picture, it's a bit stable. And as said, we have kept kind of amortizing the loans in a normal way. We had stable cash flow, stable liquidity and also stable available funds. Perhaps a bit -- here you see the cash is a bit lower due to that we have said, invested a bit in the building of net working capital in the acquired businesses in Norway. But nothing big to measure. So stable development here also and no big change in the leverage picture. Net financials -- net financial expenses. Of course, as I said in the previous occasions here is that due to the increased interest rates, also the interest expenses have increased in '23. They have about doubled from '22 levels. But then you see that the impact of the FX changes was favorable in Q4 and also for the full year. And this has to do with the fact that we have FX-denominated loans, external loans, but we also have internal loans or loan receivables in the parent company from subsidiaries, and that impacts the -- kind of the bookkeeping of these exchange rates. And now -- it's been a negative impact so far in the year, and now it was a positive impact in Q4. Here, you can see perhaps on the lower side that equity ratio was stable and also gearing was stable, a bit lower, so good development here. And the balance sheet has grown due to acquisitions and somewhat higher net working capital due to the reasons I explained a while ago. And then lastly, dividends to be paid for '23. The Board proposes a dividend per share of EUR 0.44 and that's an increase of EUR 0.04 against last year. And as also previously, the dividend is proposed to be paid in 2 equal installments in April and in November '24. And compared to earnings per share, it's -- this earnings per share was EUR 0.76 and last year EUR 0.56. So in that sense, the proposed dividend payout is about 59% this year. And you can also see here on the screen the distributable funds of the parent company from which dividend is paid. So really kind of stable proposal here also. Yes. Arni?

Thank you, Thomas. Thanks for going through the numbers. And then before taking a crack at your questions, summarizing Relais as an investment. So as I said, we are a sector specialist, and we aim to consolidate and we consolidate the Nordic vehicle aftermarket. And this sector specialist role gives us a competitive advantage. We know the companies. We know the business. We can develop them better. We are already now one of the leading and most profitable growth platforms in this sector in North Europe. We have a long track record of doing successful acquisitions and making our companies grow and that is what we aim to do also this year and next year and the year after that. As Thomas just explained, we have a solid cash flow and profitability track record. The vehicle aftermarket, the underlying market for us is growing. It grows every year. It's defensive and it has less cyclicality than many other businesses. And also, inside our business, we have a very exciting business, our own branded lighting business, which is also growing steadily and has a big potential also outside our geographical region. And then we have an efficient and lean operating model, which is then also reflected in our operating expenses. Thank you. And now over to questions and answers and [indiscernible] will read some of the questions we have received. I hope they are many and tough ones.

Yes. There is many questions. Let's start from the question from [indiscernible]. How do you define a larger M&A target in terms of revenue? And what does their situation look like for the year 2024?

Larger for me would be anything over -- and this is very rough, over EUR 2 million in EBITA, is already a larger. Between EUR 2 million to EUR 5 million, I would say, is kind of a sweet spot for us. There are quite many of potential targets in the market also for this year.

Then moving on to next one. Petri Gostowski is asking, given the weakness in online sales and discretionary demand, have you taken some actions due to the weaker market? Can you give some more color on the operational change?

Yes, sure. It is -- we have basically 2 online companies that is now operated as one. It's called Lumise. And as I said, the last year was tough. We had during first half year 2 big operating cost versus the sales. So what we did was that we rightsized the organization, if you will, and put together the Swedish and Finnish operations and also now logistically under our Startax operation. So it's kind of integrated from an operational point of view in our wholesale business, which then also acts as the logistic hub for this company. So we have seen not yet the full effect of the cost reductions, but we will see them during quarter 1 and quarter 2, and it's going to have an effect on that business. But the most decisive way to success is then to have commercially well-functioning operations for the H2 of this year because that's when the business is really, you make it or break it. But now the machine has been rightsized and also the processes has been [ effectivized ] for that type of business. But it's also a material cost saving.

Petri continues. Given [ the ] already seen and possible new strikes in Finland, do you expect this to impact your business in some way or have you already seen some impact?

To answer the first -- the last part of the question first. No, we have not seen any effect yet. What we predict to happen, if the harbors are closed, most likely will not affect us in short-term because most of the business we run with spare parts we're actually sourcing from Europe with -- on wheels, so not on containers from Asia. So this time of the year we are not so dependent on Far East import, which is then coming to the harbors as containers. So our prediction is that the potential 2 weeks strike will not have a material effect on our material flows or sales.

Then the last question from Petri. Given the flat gross sales margin year-on-year, would you say you have been able to fully compensate the inflation through price increases? Or what other factors should one consider?

I think actually the -- there, you have to now bear in mind the business mix that Thomas was explaining that on the wholesale and repair and maintenance. Outside the recent acquisitions, the gross margins have improved in repair and maintenance and we have kept the wholesale gross margin. But the new business that we have acquired for quarter 4 had a negative effect. I know it might be hard to see through that, but let's say, as Thomas explained, the relative weight of the newly acquired businesses took down the wholesale gross margin. However, having said that, it does not mean that, that's the same in quarter 1 and quarter 2. It's like always when you take over a business, there's also some friction in the integration process and the, let's say, utilization ratio of the field service that we have in that business that contributed to a lower gross profit than normally. So a long answer, Petri, to your question. But yes, we have managed to, in effect, defend our gross profits.

Then moving on to questions from Joni Sandvall. Given cold start of the year, have you seen clear pickup in sales of spare parts early 2024?

Yes, of course. I can only comment the general market and not our own performance, but the general market is -- according to the -- let's say, the trade statistics in January was about plus 30% for the spare parts and equipment. So that is kind of what I said about, if you have minus 20 for 2 or 3 weeks, it really moves the needle. So you don't see that type of development in many businesses. But anybody who read the news and saw the news about flat batteries and cars that you have to tow away from the streets and yards, it kind of has a big effect.

Gross margin was down on a year-on-year basis in Q4. You had a mix change, but have you seen any changes on underlying gross margins?

Not really. As I just explained to Petri's question, this is almost purely coming from the business mix.

Then, how procurement costs have developed? Has there been challenges with logistics owing to the Red Sea situation and how you expect logistic costs to develop in 2024?

Not in a material way. The fact more is that the freight times, delivery times have increased with, let's say about 10 days when they cannot go through the Red Sea, not materially on the cost side. It's more like a time delay, and that is relevant -- would be relevant if that would happen suddenly in the peak season of lighting. But as again, most of our import is coming from Europe on rubber wheels. So it's only lighting and some electrical equipment that's coming from China. We have not seen increases in freight cost, and the Swedish krona, of course, has had an effect on the purchase prices relatively in Sweden, but we have managed to mitigate that with the price increases. And also, I would like to mention that we are -- as part of the operational excellence have been more successful, I think, in negotiating with large suppliers by putting together our volumes and really negotiating with the suppliers and also it's a partnership. We can also help them to make a better business in this region.

Then a couple of more from Joni. You mentioned that you are well positioned to continue profitable growth in 2024. Are you expecting positive organic growth in 2024?

I think the situation in Finland continues to be challenging. Even the cold weather has helped and will probably help the first quarter market demand. But looking -- as I stated in my outlook [ at ] the macroeconomic situation in Finland is still shaky. And most likely, that will put a break on the organic growth. With that said, I do not have quite as big worries for the Scandinavian markets, which, of course, they are not neutral or immune to the macroeconomic factors either. But I'm more hopeful on the organic growth on the Scandinavian side. We push, of course, and try to sell more in Finland as well, but -- the environment is tougher, but it's not hopeless in any way.

And then the last one. How much M&A firepower you have taken into account the current leverage level?

Yes. I think as Thomas showed in his chart about the financing, so we have about [ 15 million ] uncommitted gun powder still in the senior facility agreement. And then it's been very clear. And as I've also said that when we go over that and have bigger acquisitions, we have also the option of increase the use of our share, but also to raise more equity or equity-like financing. So that's the kind of a next step in the acquisition path.

That's everything from the chat.

Thank you, [indiscernible], and thanks for everybody for following and I wish you all a continued nice week.

Thank you.

Thank you.