Alligo AB (publ) (ALLIGOB) Earnings Call Transcript

Good day, and thank you for standing by. Welcome to the illegal Interim Report Q3 202 Conference Call and Webcast. [Operator Instructions] Please also note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Samuel Altebolg, President and CEO. Please go ahead.

Hello, everyone, and welcome to the presentation of the third quarterly report of Allego. -- we are just starting up here some technical issues. So just give me a second. But the presenters for today is me, -- some Altaba, CEO of Allego. -- and of course, together with Iranian Bombelander, our CFO and Deputy CEO of the company. And the agenda for today, we're going to give a bit of a brief of Aligos as a company. Then we're going to talk some highlights of the third quarter. We will give an update on some specific developments in all our countries, more or less and also in our logistics expansion of the logistics center in -- or -- and then, of course, detail into the financials and a summary and outlook for rest of the year. So that's what we have in front of us. So let's start. And let's start with Elligo as a company. Probably this is familiar to most of you. But still to remind ourselves, we are a leading player in workwear, personal protection, tools and supplies and also industrial components across the Nordics. And we operate, of course, then across Norway, Sweden and Finland. We do a revenue, which is just now below SEK 10 billion and very close to it. we are roughly 2,500 employees. And currently, we operate through 237 stores. This number has changed upwards with 3 stores since last time we spoke, and it's our acquisitions of welding companies on the East Coast in Sweden, Kalmar and Bea and even 1 more store added to that account. So this is us. And then to describe ourselves, we often divide us in 1 part that we call an integrated Nordic business, and then we also have a nonintegrated business that I will come to -- but this integrated business, that's, of course, our big concept brands of the doll and tools, which I hope you are familiar with. And they are built on a platform which has been developed over time, and it spans across several areas. It starts with a common store network. -- which is fairly the same, more or less the same across the 3 countries and the independent of brand. And then we have added a logistic function to that, which is then homes across the countries and serves all those 3 countries in the same way. We have common IT systems, ERP and even a BI platform, which creates a very strong transparency across the group in all types of data and how we are performing and how we are developing ourselves. -- which is very strong. And then, of course, we have also built own brands and own capabilities in certain product areas, which we can also then spread across this integrated platform. So a very strong base, again, has been developed over time. And I think for us now, and we will talk more about that, it's a lot about utilizing this strong platform as we move along. Sales also split across various channels to customers. Of course, the stores are strong and important. Roughly 45% of our business is channeled through the stores. The absolute majority is in the fixed stores we have. And then we are complementing ourselves with some industry-specific stores. Those are a pop-up kind of stores that you build in an area or in a certain project temporarily to follow that project over its lifetime and then you dismantle that store when that project is finalized. The 45% relates to store and 33% relates to various omni or sorry, digital channels. So it can be direct sales or online or web or whatever. And then, of course, the 22% that is nonintegrated. So let's come then to that. If we are building on the strong core that we discussed, and then we have complemented ourselves with a set of companies in different technology niches. And we spoke already last time that this is a mix that I really like to build on because we have this strong core with a strong product assortment with a strong customer base. And then we complement ourselves with these niches somewhere in the periphery of the strong core. And what I mean then is that from a product perspective, it partly overlaps with the core, but the niches also add uniqueness, expertise and depth, of course, in those type of products. And also from a customer perspective, we partly overlap with slightly same customer base. But again, these niche companies comes with a broader customer base and of course, new customers that we can then work on in the totality, so to say, of all the things we can offer. So really happy with our product media niche with our welding companies, with our battery capabilities, and then we have a few others as well, which are also performing strongly. And again, I think this is a strong base to complement the integrated business with these niches and to find synergies across, especially on the commercial side. And we are doing that more and more, and we'll gradually, of course, develop how we work as a whole company, the integrated and nonintegrated together. But that's the way to describe who we are. And then just to finish off, we have developed ourselves with these acquisitions over time. And I think in the past 5, 6 years, we have acquired companies to the value of SEK 1.7 billion in terms of revenue. It, of course, goes a bit up and down. That's the story when you work with M&A. So we have always had a pipeline. We try to develop ourselves, and we want to find good companies of strong quality that really complement ourselves well. And of course, sometimes several of those comes in, and then it can take some time before the next kind of batch comes in. So it's a bit of a catch-up kind of effect thing to do. But over time, I think we have developed ourselves nicely then through acquisitions as a complement to the strong core business. That's a short reminder of who Alligo is and how we are developing broadly. So let's come in then to the third quarter, and let's talk some highlights of what has been happening here for the last couple of months. Starting with macroeconomics, obviously, a factor we all need to consider. And there is a geopolitical uncertainty. We are aware of that. But the kind of effect of that is still the same, as we have said before, which is very limited if you talk about direct impact. And of course, we live in the same financial climate as everyone else, and that is probably to a certain extent, impacted by the geopolitics. But there is nothing in addition to that, that is, so to say, impacting or in any way, harming or disturbing for Alligo. And I think we are strongly mitigating and managing effects coming out of this uncertainty that is out there. Then, of course, we can also talk about industrial activity. We will come a bit more to the market and what's happening there. But we still see a mixed picture and overall, a quite cautious market in our core countries. In Sweden, obviously, we've had growth for some time, but we still see the market being a bit cautious or slow. We also, in the third quarter, had a little bit of negative from weaker seasonal demand. And then on the other side, we also see upsides in various industry niches in some areas of the country. So it's a bit scattered, but overall, slow. And the same more or less goes for Norway. It's a bit more evident there that oil and gas has been a fantastic market for many years, and we have talked about the projects that has been a strong business for us, which is good. But of course, naturally, such projects also phases out over time. We still see a potential, so to say, in the market and that good things are happening. But equally to Sweden, it's still on the slow side from what we want, of course, and what we aspire for the future. And then come Finland, that is continued strong or maybe even stronger than what we said before. Recovery manufacturing, defense is strong, but we see it across also towards the smaller construction companies, the electricians, the plumbers, whatever it can be. So of course, happy to see the development in Finland, which is very, very strong. And in this type of market situation, with the geopolitics, et cetera, that are uncertain, of course, we as managers need to be super proactive and super agile when it comes to actions and how we steer and develop Alligo. This is a trading company. Sales focus will always be top priority that how it works. And of course, we are applying that across all our channels all the time. And we are focusing on short perspectives, of course, which always need to do to stay super relevant, but also in mid and longer perspective. So how do we further develop our capabilities and structures and steering of sales. We will come back a bit more to that, but this is a core topic for us as a company and should always be. And then in parallel, of course, continued cost cautiousness, we need to continuously monitor our cost base so that it's relevant and that we adjust. And this can be locally. Some cities doing really well, maybe need some more headcount, for example, other cities, which has a slower period, of course, then we need to be very active to make sure that we have the exact relevant staffing that we need. And that's part of our job and that we do continuously across all the countries and companies. And then growth by acquisitions, as we said, a super interesting way to complement ourselves and build ourselves even stronger and find commercial synergies, and that agenda is continuing as it should. And for this year, we have also been focusing maybe even more on our inventory levels and making sure that we are very optimal in what we store and when so that we can tie up some capital. There is a program underway and is delivering according to our plan. And then last but not least, in this again then geopolitical uncertainty with oil prices and other stuff going up and down per the day, we need to be very active also in price adjustments, especially towards those segments that are impacted mostly. And we are that. So you could -- if you would see our pricing system, you can see that all those oil-based products and effective products, I should say, we are doing very active updates on price levels, et cetera, to follow the market and protect our margins. So that's some flavor on proactive management. And then just to repeat on delivery capacity. The situation is still the same. It's good and stable in all countries. We see no major disruptions despite all these effects, and we see our ships with containers coming from Asia having to take longer routes, et cetera, but we have the margin and the flexibility to maneuver that and also the partnership with the freight companies so that we get our products on time to our logistic warehouses. So good to see. And again, repeating that from a delivery perspective, we see no big hiccups at all. That's good. Yes. Then going into the third quarter. And at a first glance, this can look quite good. We have a revenue growth, roughly 5% -- we do organic growth of 1%, which is the fourth quarter in a row now we are growing organically as a company, which is, of course, positive. We are improving our profit, and we are sustaining our profit margin or even improving it slightly. So again, at first glance, this is quite positive. But then, of course, when you look underneath, which we will talk about more, it's a very varying picture across the company -- or the countries where Finland is doing really well and developing nicely beyond our plans basically or faster than our plans. But the softer market in Sweden and Norway is problematic for us, and we're going to be honest and say that we are disappointed with the development we see in Sweden and Norway. And of course, with our proactive management, we have already taken measures during the quarter to handle and mitigate this as quick as possible and to react both in a short and a long perspective. Yes. So overall growth, quite similar to second quarter, but growing slightly in -- I shouldn't say the wrong areas. You always want to grow in all areas, but we're growing in more segments and countries with less kind of margin, and we are -- have a slower or softer market in the areas where we typically do a bit higher margin. That's why our profit is not increasing even more, which we, of course, want. But let's come back to those details with the help of Iren further on. If we're going to take some highlights for the first quarter. Again, the strong improvement in Finland, higher volumes, we see it across the customer base. And again, coming back to that a bit more later, but really positive and sums up for all the hard work that has been done in Finland over time, and that is now paying up really well and that we are, of course, continuing to do. Then we have the last couple of months, pushed ourselves in terms of sales activity in Sweden, Norway, primarily then, of course, Finland as well. And we are working both short term, of course, to make sure that we are super relevant and steering ourselves towards the right customer segments, et cetera. We have also launched a quite broad agenda with a mid-, long-term perspective on how we're going to prioritize and focus our activities. And I will come back to this in detail later on to describe what we are doing there. Also important to say, we see a continued positive development in our service offering. And this is, of course, good to see. We have talked a lot about RCare as a new service we have launched where we start to see really good customer pickup and really good dialogues. We have Smart Service as a Service we have discussed before, which is growing continuously and is a very good way to create attractiveness and long-term relationships with our customers. And then there are plenty of other services we offer as well, and we are focusing more and more on them as a whole to make sure that we are relevant not only from a product perspective, but also how we serve the customer with these products. On operations, I think the key highlight is, in a way, profitability improvements. We have, of course, as we said, a continuous monitoring on our cost level, and we adjust gradually over the year in relation to what we see. But we have pushed that agenda a bit more in Norway. We did that during summer, just after summer, and we do a cost takeout more in a program form now in the second half of the year, which will give some strong effects as we move along, and we are just in the making of this now. And then, of course, across the board, continued cost cautiousness and focus on capital efficiency, that's part of our DNA. And obviously, when we are a bit disappointed with the results we see, that's, so to say, even more applied to the whole organization and to ourselves, even if it's part of our DNA and something we always do. Then also on some strategic initiatives. We have said before that we are expanding our logistic capabilities in -- this is a quarter that also on that. But it's important for us, Oberois a very cost-efficient distribution platform for us, and we are utilizing that even more in our across the full base of countries. -- and we can do that even further when we have expanded it, and that's positive for us, both from a delivery capability but also from a cost perspective. And then also, we are and we will review ourselves from a strategy perspective now in the second half of 2026. And this is a very natural thing to do. There has been, of course, a long-lasting strategy within Elligo for a number of years, where we have done all those good things in combining toolset and building this solid platform that we're operating from. So now it's a quite natural time to also ask ourselves a bit more the question how do we utilize and take benefit out of this strong platform in the next sort of say, horizon. And there is plenty of ideas opportunities, discussions ongoing now in the company. We are doing this in a quite inclusive way together as a company to make sure that we stay super relevant to our customers and again, utilize the platform that is built. So it's a refinement or an evolution of the strategy we've had, and it's going to be the base for how we continue our growth journey in the coming years. Yes. Let's then do a few deep dives. And we will go through 2 in Finland and give you the status of the program and the evolution of the development we've had there. We will talk about growth initiatives, both in Sweden and Norway. -- and also give you a status then of rebrand Orebro, automated storage handling is what you see on the picture here, which is a fascinating operation, superefficient way to provide our customers with their needs. -- will give a status update on how we are expanding this. But starting with Finland. And as you know, Finland historically has been a challenging market. And of course, there are many reasons for that. And we have launched a program long ago or several months ago, it has been executed really well by the management team and all the people, of course, working close to Finland and in Finland. And we now see good effect across the customer mix. So we have good development towards the industry within the manufacturing segment and the defense area. But we also have a good and strong development in the store sales towards small and mid-tens customers, it can be cans, whatever, fascinating to see that the development is positive across -- and even -- and despite, I should say the fact that we have also moved away from 2 quite big customers within the last 12 months. We are able to recover that and grow in total with 12% in the quarter. Also then that has been applied. There has been an efficiency program with the cost takeout, and we have pushed, of course, our price level a bit. So in totality, we are landing in adjusted EBIT or 6%. That that almost twice in percentage what we did last year. So hat-off really impressed by all the good work that has been done towards Finland and is progressively in Finland by all the people board. There is more to do. We will definitely continue this journey in trajectory and see how far we can stretch and improve our business in Finland, but good so far. Next up then. We have a lot of ongoing activities, both in Sweden and Norway. And of course, there is always ongoing activities, things we do to improve ourselves, both in the short and long perspective and then with the proactive management that we apply, we are sharpening ourselves quite quickly here, given that we are disappointed, as we said, with the outcome of the third quarter. And if we talk a bit about short-term actions, I think there's a lot of good initiatives is now Sweden and Norway, but let's start with Sweden. We start to talk about tailored industry-specific offerings and what do we mean with that? If you look on a Lego and the pedal, if we're now in Sweden, we have huge opportunity in the broad customer base that we operate towards. So a really broad mix and a high number of customers across various segments. And that's fantastic, and that's really something we are building on. But -- what we want to achieve is, of course, also that we are really sharp towards all the specific initiates -- so when we speak with a plumber or nutrition or a construction worker, we come with a tailored offering, which is very unique and attractive for that specific type of customer. So we are now step-by-step building a bit more structure around those specific offerings, and we're putting them to the market. And we do that both in Sweden and Norway, we should say. -- and that started some months ago, and I think we see early good signs and good outcome as we launch these offerings 1 by 1 basically. So a good initiative. It can give a kick on short term, but it's also going to be a way that we strengthen ourselves in a longer perspective. Then if we come to pricing, always relevant in any company and in a trading company, maybe even more so, -- there is a continuous process, how we review our pricing and make sure that we are relevant towards all type of customers. And specifically now, of course, we have been targeting some key products that we know is super important for our customers, and we have also in partnership with our suppliers, make sure that we have a very relevant price point in the right way with the right margin. We have also been focusing price discussions with some bigger customers, and this should be mentioned also for Norway to make sure that we really have a good situation and the profit we need to get out from the business. so quite a lot of price discussions ongoing right now from manager with bigger customers. So this is important. And then in Sweden is very positive to see now the step-wise increase of cross-selling also within the group. And there are plenty of good examples and we have gone hand-in-hand with our welding companies together then with petrol, we are in Sweden. And we can see that we can now start to say welding components and products to industry customers of vedo, and we start to sell for dual products to various welding company customers in the past. And we go together approaching these customers with our full offering. This is still in an early phase, but again, very positive signs, and we want to make that a little more structured and of course, create an offering where we are really relevant, fooled with all store networks to all type of small customers needing anything in relation to welding and where we have a nice transition up to the specialized and expert niche companies in welding when the customers have more complex demands or needs. -- that we are establishing now across Sweden. And then as always, there are many campaigns launched in this type of company. As the dual organosol days, I think it's a famous theme for all of us, and we are running them right now. That's always a landmark in how we approach our customers, and it's very appreciated across the country with high energy and engagement across both our sales and customers. So that's happening right now. And in Norway, there is also good reasons to accelerate our sales focus even more. The activity is about the same, I should say, as in Sweden. Here, we also have an ongoing cost adjustment, as we mentioned, that will imply a quite strong cost takeout and that's going to help us as we move forward. And then in addition, we are focusing a bit further on service takeout and applying all our service concept across the country. and that can be both smart service, which is evolving nicely but also how we work with foot scanners, et cetera, in stores to strengthen our PPE offering even further. So a lot of things happening in Sweden and Norway, in addition to all the things happening in Finland, of course. And then in the long-term perspective, there is more that we want to do structurally -- and we talk about tailored industry offerings, as we talk about pricing initiatives. All of that also goes in to strengthen our sales management and our steering towards prioritized segments in a bigger context, -- so we are working in parallel with the short-term actions. We're also establishing a bit stronger steering and management of sales in all aspects for the longer perspective. So that we are working on. we are continuously now developing our omnichannel presence and penetration with customers. The store concept will always be the heart of our operations. That's how we connect with the customer. We build relationships and relevance. But then, of course, our customers will not only buy from us in stores. They also have needs and reasons why they sometimes want to buy it online. And we have that capability. We have fast deliveries. -- we're just now making sure that we are really sort of say only present across the customer base so that we follow the customer both when they have needs from a store and from any type of digital channel. -- and that's also going to be both a short and long-term priority. And then again, as we said, strong service offering that we can develop even further, but we are already happy with all the services we have, and we are pushing them across the customer base to create an even stronger relevance with our customers. So plan happening, both in the short perspective, but also building ourselves even stronger in the long run. And then to finish off the deep dives, or blue, it's a fantastic logistic hub that has been developed over time. efficient and so fascinating to see this automated store concept and how we very efficiently then package the stuff we're going to supply to customers and to stores. We need more capacity in the group, and we have communicated an investment that will increase our capability with 6,500 new square meters, which is quite a lot. And we are then also moving towards an additional land so that the whole yard that we are utilizing becomes bigger, and we are building part of that as a first step. Design details, everything is now being finalized and some regulatory approvals, as always, when building something, and then we will start construction early '27 and the new capacity will be in place early '28. -- which we think fits really well with the development of the company and the needs of simply more capacity. So looking forward to see the finished expansion of Blue Yes, that was the deep dive. So now I'll leave it over to Everi. -- please take us through the financials a bit more in detail.

Thank you. And as Soma mentioned, we delivered another quarter with organic growth and improved profitability. And this was the fourth consecutive quarter of organic growth and the fifth quarter of improved results. However, sales development in Sweden and Norway was as Saumen mentioned, disappointing. Revenue increased by 4.9% in the quarter, supported by 1.1% organic growth, 1.5% acquisition-related growth and positive currency effects. . Finland continued its positive organic growth trend while Sweden and Norway developed weaker. Fewer project orders in the oil and gas segment explained the lower sales in Norway -- and the Swedish market remains slow and sales were weaker in several customer segments excess the defense industry. reached SEK 168 million, up SEK 10 million or 6% versus last year. And the increase was driven by improved results in free loans supported by higher volumes and cost reductions. Gross margin was 41.1% versus 31.4% last year, driven by less favorable country and customer mix. Moving on to some highlights of each market development in Q3. And total revenues in wide were in line with last year. acquisition-driven growth and somewhat higher internal sales offset negative organic growth in both the integrated and nonintegrated business. The sales development in Sweden was disappointing with declines across several customer segments. And in September, we also completed our e-commerce platform upgrade that disrupted customer traffic. And we estimate the negative impact on sales and primarily on our own brands in the range of SEK 8 million to SEK 10 million. was slightly lower than last year due to lower volumes and lower gross margin driven by customer mix. Following the with profitability, we will continue to adjust the cost base while maintaining a super strong focus on sales. Revenue in Norway increased supported by currency effects acquisition-related growth and higher internal sales to Sweden with negative organic growth, partially offset this. The decline in organic growth was mainly due to fewer project orders in the oil and gas segment, which began to slow in the second half of 2022. And while sales in the Construction segment improved in Q3. EBITDA was slightly lower than last year due to lower volumes and a slight gross margin decline driven by unfavorable customer mix. And as Damon mentioned, we established a project during the quarter to improve the unsatisfactory profitability in Norway, and activities include initiatives to drive growth improved gross margin and adjusted cost base by SEK 35 million, and we expect the cost-saving initiatives to have full impact from year end. In Finland, sales continued to recover in several customer segments, primarily manufacturing and defense, and we're seeing a positive trend in attracting SME customers, although from a low base. And this development more than offset the impact of the 2 larger customer relationships that have now been placed up. And as Anil mentioned, the efficiency program in Finland is progressing according to cloud and has strengthened operational execution across the business. And EBITDA improved during the quarter, driven by higher volumes and ongoing cost saving realization. And when you come to cash flow, the third quarter is seasonally the weakest quarter from a cash flow perspective. Operating cash flow was lower than last year despite an EBITDA improvement, but remains significantly higher year-to-date. Q3 last year, benefited from a positive tax timing effect. And this quarter, we had negative working capital movements. Inventory typically builds up ahead of the Q4 season, and the increase was slightly higher this year. The increase in receivables reflects business growth and the higher share of customers with longer payment terms. And the decrease in liabilities mainly reflects lower purchasing volumes and timing effect of the supplier payments. Average net working capital as a percentage of sales reached 27.7%, which is 1 percentage point lower compared to year-end. And we still have work to do on a capital -- when it comes to capital efficiency and we aim to reduce average working capital as percentage of sales to 24% the level achieved in 2022. Investing activities during the quarter related to organic investments and final purchase price settlement for the recent rating acquisitions. -- and the CapEx to depreciation ratio was 4.8 on a rolling 12-month basis. And finally, financing activities reflect amortization of the revolving credit facility and leasing liabilities. -- but also cash outflows to former product media shareholders selling their remaining shares. Net debt at period end was SEK 1.6 billion, down from Q3 last year and year-end, driven by strong operating cash flow. Leverage improved from year-end, supported by higher EBITDA and lower net debt, but was slightly higher than Q2, which is typical since Q3 is the weakest cash flow quarter. The net debt-to-EBITDA ratio was 2.2% at quarter end, down from 2.5x at year-end, which is well below our financial target. -- our covenants relate to interest coverage and equity asset ratios. And we met all covenants as per down with good headroom before reaching the threshold. And as mentioned earlier, we refinanced the business during the year, and currently, we have SEK 1.9 billion in available cash and unutilized credit facilities. And combined with healthy operating cash flow, this provides us with a strong financial position and the capacity to continue investing in organic growth and capitalize on attractive acquisition opportunities. I'll hand it over to you some for a summary outlook.

Thank you. So then to summarize the third quarter, again, at first glance, continued organic growth. and roughly 5% growth in the quarter. And of course, that's good. Finland, recovery. really well and developing more or less quicker than expected in the improvement program, which is also very positive. And then as we've said, challenging and disappointing even in Sweden and Norway and a long list of actions that we started to take already around summer. And of course, some of them also being part of a natural evolution that we continue to do as per active managers. So that's where we stand. -- happy with the platform, all the opportunities we have moving ahead, and it's going to be a lot up to us now to develop also the way we operate and work so that we get the full benefits out. And if we take the outlook for the rest of the year and also looking a little bit into -- it is a partly slow market environment still, and there are some effects in that. Of course, we want to deliver growth across despite market in a way, but looking forward also to a more positive market development in Sweden and Norway. Long list of items actions, things we are underway to do to strengthen ourselves, the way it should be, and we see good trajectory or progress in the things we are launching gradually now across Sweden and Norway. And then to repeat the strategy refinement towards 2030, really building from our core strengths, building from our customer needs and customer dialogues and twisting and turning on ourselves how we can evolve the way we work into something even stronger and take benefit of all the opportunities we have. And this strategy refinement process will continue throughout the year. And then of course, we will implement and work actively with that when we move into '27. So I think that that's our presentation for today and of course, now available for any questions.

[Operator Instructions] And the questions come from the line of Emmanuel Janssen from Danske Bank.

Good day nerd I hope you can hear me. And a couple of questions from my end and relating to the development in the Swedish market for you. And giving the more positive Swedish manufacturing and also looking at building material index here in Sweden, which is growing, I think around 7% year-over-year in Q3. Can you help us understand the gap to your negative organic growth that you displayed in Q3? Do you think it's -- do you think it's mainly customer exposure or timing? Or are there as where you are losing market shares at the moment?

As you say, we also see a bit of a gate view where we -- there are definitely improvements in the market on parts of manufacturing industry, a little bit depending on your exposure and also in parts of the building materials sector. We definitely do not believe that we are losing market share, but maybe the uptake of our products and the initiatives we operate in, specifically the towards construction industry, maybe comes a little bit later in the cycle. So obviously, it's positive to see that our construction companies in Sweden are talking about positive numbers and improvements. but we think it's early stage in what they do and will build as we move along. And of course, we will follow them along the way. So No, we don't see that we're losing market share, but definitely, we expect to be part of the growth cycle if it continues, of course, across the market.

All right. And also looking at your sales initiatives, some of you have not been in the country for that long, but the company itself have highlighted the increased sales activity for some time. and yet the organic sales growth in Sweden remains weak. What you think has held back the impact of earlier initiatives? And why should we think now that the new actions will be working to a greater extent than before. better therefore?

No, good question, Emmanuel. So I mean, just to start question, if they have paid off well or not, I mean, it has been a very challenging market for Alig over time. So I think there's plenty of good things that have been done to sort of say, remain relevant and active on the market that has been there. But of course, you can always add a twist and flavor. And again, it is a both positives and to a certain extent, kind of challenging, we have a very, very broad opportunity base across so many types of customers -- many customers and also serving them with many various products. And what we will develop a bit more than is our approach on how we're addressing them with that big sales organization and store network so that we are even stronger in relevance towards each and every type of segment. And that is a bit of a new approach to us, and we will also add a layer of steering on that, which is a bit more robust than what it has been in the past. So I would say adding some flavors in terms of steering and approach that is a bit different from the past. And we strongly believe that this will help us to get even more efficiency out of our sales organization.

All right. And have you seen any like early indication of positive development from these actions or activities already now in the fourth quarter? .

Yes. I will comment on the third quarter. And definitely, as we have applied a bit different pricing structures in some areas. We talked about those initiatives, but also then a few concepts relating to customer offering. The uptake has been positively received, both in our own sales organization as a start, which is important, but then towards the customer base, and we definitely see early positive uptake on those items. But I would say we are early in a mid long journey, so to say. So let's continue to progress on those things and adapt, of course, if we see anything else. But currently, yes, positive.

Right. That's good to hear. And when we're talking about pricing, you mentioned growth in lower margin segments and ongoing price discussions with larger customers -- is it possible to quantify? Or how much of the margin pressure in this quarter is due to mix versus pricing with existing contracts, you would say?

I'm looking a bit at the Ren here. I will not be able to quantify that specifically. That's a big question and of course, important one. But definitely, if you look on the totality, we all know that the store concept in Sweden is by far the most kind of profitable concept that we have. And then we also talk a lot about on brands. And those 2 together is what's driving profit. Unfortunately, in the quarter, then close sales was a bit slightly weaker than normal, and we think that relates to the weather. And also we have some IT incidents affecting whether or flowing sales most. So that's probably the impact. And then, yes, we are addressing the bigger customers where typically volume flows are bigger, but margins is slightly lower with active price discussions then to make sure that we stay relevant.

Right -- and maybe a question for Irene. But depreciation, amortization and the impairment charges fell around SEK 20 million year-over-year. What explains the decline? And what the run rate should we assume going forward here?

Yes, it's a little bit down. But I think the level that we have on the rolling 12-month basis, is the run rate going forward.

All right. And maybe last question on my side from Finland, very positive development there, and you described a broader recovery in Finland. And alongside benefits from pricing and efficiency measures, is the current margin sustainable sustainable base to build from, you think? Or how should we view that 6% EBITDA margin? .

Yes. If we look midterm ahead and even half long term almost. We think this is a sustainable margin level in Finland. There is a strong uptake with quite a broad customer base. And as long, of course, as the market develops in a nice way, and it all goes well. this should be a sustainable level. But that's not to say we need to work more. Of course, there are always more opportunities to capture and to grow, but we are quite comfortable with the level we are at now.

Perfect. Well, I think that was all my questions for now. .

We are now going to proceed with our next question. And the questions come from the line of Karl Johan Bouvier from DNB Carnegie.

Yes. Good. I guess I'll probably say still good but getting close to good midday, Samuel and everyone lots of good colors already. maybe a little more on Norway and the initiatives you are now driving there. And if I remember correctly, the oil and gas project related headwinds that you have seen for a couple of quarters. really starting in Q4 last year. Is that a right interpretation that we are getting into maybe also slightly easier comparisons coming into Q4.

That's correct.

And when you look at the initiatives you alluded to in that hopefully full impact of it from year-end, but have you already started to see a ramp-up of it.

It has started slightly to ramp up, but we expect the full impact from year-end. .

Yes. It's been a gradual effort you could say for some time that we have pushed further in Q3. So there are gradual effect, but it also takes some time to get the cost base in new shape Yes.

And continue to -- on the earlier question on your market share in Sweden, how would you interpret the different development in Norway and Finland in the same context on your relative position in the market? .

So you mean the question, if we look losing market share or where we are basically on market share.