Welcome to the Bergman & Beving Q1 2024 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. If you are listening to the presentation via webcast, you can ask written questions using the form below. Now, I will hand the conference over to speakers, CEO Magnus Söderlind and CFO Peter Schön. Please go ahead.
So welcome, everyone, to this conference of the interim report for our Q1. We will do as always. We will start to present the quarter and the quarter results, and then we will have a Q&A after the presentation. So let's start with some highlights from the Q1. We have improved results, profitability, as well as cash flow in this quarter.
And if we take some kind of non-figure highlights, so we communicated in June that we have renamed our divisions to mark our expanded acquisition strategy. This doesn't imply we haven't changed the kind of company that is part of each individual division, so it's this kind of similar structure going forward. It's more like more accepting that we will have a broader strategy in terms of acquisition going forward.
And also our acquisition ambition is unwavering. We made one acquisition in the Q1, and we made one acquisition July 1. So we have a little bit slower tempo than we had last fiscal year, but you shouldn't see that as a signal that the ambition or the conditions to kind of deliver on our target is not
there. It's more that we're very cautious about the quality of the acquisition we make and the valuation that we and the kind of the money we pay for the acquisition as such. So if we then get into the highlight numbers, the revenue increased 2%, whereas the organic growth was -7%. But the gross margin continued to strengthen 1% unit this quarter, and we are now at 47.
We also have, given the kind of underlying market challenges, we have still a continuous strong cost control. So actually, the organic cost has decreased during this quarter compared with previous quarter, the same year or the last year, sorry. So the EBITDA increased 13%. We delivered SEK 119 million this quarter, and the EBITDA margin continued to improve, and we now are at 9.5% compared with 8.6% last year quarter.
And a little bit trend, it's kind of a new trend, is that the EBT now increased, and it increased 19% this quarter. So we delivered SEK 74 million EBT this quarter. So this is now we are kind of meeting quarters with a similar type of interest rate levels.
We have some other elements in the financial net that Peter will address later on in this presentation. But anyway, I think we now have a easier, comparable EBT results in the quarters coming forward. Also, very positively, our profitability, that is measured as profit working capital, continues to increase, and we are now at 27%. A 5% is unit improvement compared with the previous year.
This is a result that we have continued to work down the working capital in combination that we increased the profit as such. This in total also generated a solid cash flow from the operating activities, so we're also increasing the cash flow, ended up with SEK 194 million in this quarter.
So once again, we are quite satisfied with the quarter results, with improved results, improved profitability, and strengthen our cash flow despite the tougher market conditions. Acquisition, yes, I mentioned earlier, we may have made two acquisitions so far this fiscal year.
One is Maskinab that we acquired in the beginning of Q1, and this is part of the industrial equipment division, previously Tools and Consumables division, and they are a market leader in the Swedish market, in machinery that is used for the industry in this case, making. Sorry, Peter, can you help me? What is the English word? Plåtbearbetning.
Sorry, sorry, Magnus. For what word? Sorry.
Uh, plåtbearbetning.
Sheet metal-
Sheet metal, yes, sorry.
Yeah.
Machinery. We already own a company, Belano, that is the market leader within the construction center in sheet metal machinery. Now we have strengthened this cluster and take a leading position within the industry segment as such. Here we can leverage some cooperation between the companies in, for example, service, resources and those type of things.
We also continue to acquire companies in the UK, so we acquired first of July Spraylat. It's a product company that will be part of the core solution, previously Building Materials division. This is, I think, a very interesting product company. They have a chemical that they actually use to paint or spray windows, and then give it protective for window surfaces during construction.
And this is a very cost-effective way to protect windows, prohibit them, you know, to be damaged. And damages can delay projects significantly if they need to order new window surfaces, and also it would generate a lot of costs. So they are leading for this type of application in the U.K. market, and we foresee some good export opportunities. Already 50% of the volume is in export.
They haven't invest in export. They have been very reactive in that segment, and here we see some opportunity to be more proactive, both in the current market they are operating outside U.K., but also in the Nordic, where we already have some platforms that could be used for kind of expanding this type of business in the Nordic region.
And as communicated earlier, we're really focusing on buying highly profitable companies with a hurdle of EBITDA margin above 15%, and of course, profitability or profit working capital above the 45%. And this is kind of the kind of conditions we have also to invest for growth. So both these companies are on a kind of growth path.
So we had improved profit in this quarter, and we now have 18 consecutive quarters with EBITDA increase. And this quarter, we increased the EBITDA with 13%, but if you look at the current figure, it's 30%, if you prolong this period for the 18 quarters. And this also we also have an EBITDA margin improvement.
I earlier said 9.5% in this quarter, and this is kind of the improvement path that we had during the 18 consecutive quarters, with roughly an EBIT margin improvement with 1% per year. That is kind of the ambition level we have also going forward to reach the EBIT of 10%, latest, fiscal year 2025, 2026 then.
This is the revenue, and as communicated, we continue to focus on the high margin businesses, i.e., doing some 8 outphasing or low margin, high volume products. We are getting to the end of that process, but still we have some work to be done that will be in favor for the margin development going forward as well, even if it will not be as big as it has been historically. But we're also facing a weaker underlying market.
As communicated, said earlier, we have an organic decrease of 7%, and the majority of this decrease is related to a weaker market, underlying market as such. And hopefully, we are kind of at least perceive that we have leveled out the underlying market now, and hopefully it will kind of pick up here in the autumn. And then we have some great opportunities to leverage all the efficiency measurements we have done across the group during this time of tougher times. We also a part of this product mix enhancement and focus on the profitable part of the company's business.
We have a positive trend also in gross margin development, as you can see here on the chart. We are now at 47.4% in this quarter. We also perceive over time that we should have some minor improvement in the gross margin organically going forward as well, in combination with margin improvement in the acquisitions we do going forward with highly profitable companies that per definition also have good gross margin as such.
We have continued to focus more on product companies. If we look at the acquisitions we made recently during the three years, it's mainly product companies, and that is also shown in a mix between proprietary products and other products.
So we're now at 72% own product, and the portion of other products has gone down from 32% to 28%. That is, if you would have any kind of change in this dimension, it would be more own product, a higher portion of own products, going forward. That also will be positive for the gross margin development, going forward. With that, I will leave over to Peter to talk about the earnings per share and some other financial topics.
Thank you, Magnus. This slide is actually a bit more fun to present this time than it has been for the last five quarters, since we have had a decreasing earnings per share, even though we increased the EBITDA over time. Finally, it starts to even out, and we now have an increased earnings per share. And of course, the main reason is the improving EBITDA, but also a decreasing net debts, and that the interest rate is at least coming down a bit. It's not on par with the last year, but it's getting there. Hopefully now we'll see an increased earnings per share quarter by quarter going forward.
If you look at the inventory on these slides, you have the actual inventory on the bars, and you have the rolling twelve figure on the red line, and you have the inventory turnover on the black line. So, this was actually what I was most happy with in the report. As we earlier communicated, we have said that we do have more inventory to reduce, but that it will go with a slower pace going forward. So I was really happy that we got a good inventory release this quarter as well. So, yeah, really good. Even though when we're coming to the inventory turnover, we're not on the pre-COVID levels yet.
So we'll still going to see a reduction in inventory, but as we said earlier, it will go in a lower pace going forward. It's not as easy anymore to release inventory. And consequently, the cash flow was also really good in the quarter, and of course, that's mainly due to the increased profitability, but also the inventory reductions. So a really strong cash flow, SEK 194 million, compared to last year, SEK 179 million. So that was also a thing that I was really happy with. And of course, then looking at the net debt, it also came down a bit. It was SEK 962 million compared to SEK 1,065 million last year, so it came down quite a bit.
And if we look at the level, it's around par with the Q1 2022, 2023, even though we made acquisitions for SEK 500 million. So, yeah, really strong performance cash-wise, I think. And also net debt EBITDA is going down, of course, due to lower debt, but also that the EBITDA level has increased with the SEK 125 million since 2022, 2023. So, yeah. Good. So Magnus, back to you and the divisions.
Yeah. So, the previous Building Material is now renamed to Core Solutions. And, if you see on the curve down there, this was actually the Q1 for some quarters that actually the performance was a little bit weaker. And this is, I would say, solely due to demand effects. And Essve is the biggest company in this division, and they have had a kind of a weaker demand in Q1 compared with previous Q1.
Even if they are not exposed to kind of the consumer market or neither to the new construction of housing, but still, the kind of construction market, they have some effects of a weaker general construction market that we hopefully—I'm sorry, it's tough. Yeah. </transcript
Hopefully, we will see a pickup here, even already during this quarter in Essve And if that will not materialize, we need to look at, you know, some efficiency measure, also in Essve going forward. But several companies within this Core Solution division had some weaker demands during this quarter. But once again, I think we have kind of leveled out on this level, and if something will happen, it will kind of be a little bit better demands going forward.
Positively is that the newly acquired K.I.T. and Elkington have a very strong top line growth, and the order book is also strong. So, those acquisition has performed very well since they came into our group, and that's very positive.
As said earlier, the Spraylat is part of this division since July 1 this quarter for this fiscal year. This kind of demand effect is showing that the revenue was a little bit weaker. It was, you know, SEK 5 million below previous year, and the EBITDA was SEK 5 million lower as well, and the EBITDA margin was a little bit weaker. But once again, we kind of will wait and see, but if the market doesn't pick up, we need to address that and take some efficiency measures in some companies in this division.
If we look at Safety Technology division, that was previously in Workplace Safety, they are now on par with last year, and five out of the seven companies in this group is increasing the profits. This is a division that had a deteriorating profit trend during some quarters, and now they are on par with last year. And my expectation is that this division should, you know, improve over time here and get into a positive trend, going forward.
And here, Skydda is one of the bigger companies in the group, and we have taken some efficiency measure here and product phase out. But they have some, you know, weaker underlying market that is kind of affecting Skydda in this division, in this quarter.
This is one of the seven companies that doesn't have any improved profit in this quarter. But on a group, on a division level, the revenue increased still by 3%, and the EBITDA, as said before, is on par with last year, with SEK 34 million, and also the EBITDA margin is roughly on par with 8.2%. And as you can see on the graphs here, the EBITDA % and the rolling twelve EBITDA now has leveled out.
And as said before, my expectation is that this division should pick up over time. And lastly, but not least, the Industrial Equipment division, the previous tools and consumables, that continue its steady trend of improving profit and have another quarter with all-time high results.
And the Nordic industrial customer demand is stable, but on a lower level. So this is not kind of an effect of that, underlying market has picked up. It's really about we have made some good acquisition that deliver good profit and margins, in this division.
And we continue to work with Luna with some efficiency measure and product phase out, but still they are facing a slower underlying market, and so the result in Luna is in level with previous year quarter in this Q1 quarter. So we still have some struggling with Luna and need to continue to work on efficiency and product mix changes in this company. So in this division, the revenue increased 4%, but the EBITDA increased 48% and is now SEK 46 million in this quarter.
This is a very strong result, and once again, this is due to that, for example, Luna revenue is going down, both due to the product phase out, but also to slower underlying market. And we have replaced that with high-margin companies in the acquisition we made that is giving this high leverage on the EBITDA improvement, despite that the revenue only is up 4%.
But the increase in revenue is related to the highly profitable companies. And here we are now steady above the 10% margin, so we have an EBITDA margin of 10.1%, and that is a 3 percentage points increase compared with previous fiscal year. So a very strong performance within the Industrial Equipment division.
So as communicated earlier, we still, you know, stick to our targets with delivering an EBIT of SEK 500 million, the latest fiscal year, 2025-26, then the EBITDA margin of at least 10% the same year. I think we are on track, based on this quarter results and what we see going forward.
And also, we have some improvement in the profitable working capital as communicated, and that is to be 45%, one year later then. And we have a good improvement, and a path on the profitable working capital, and we need to do some more things, and we have plans and activities around that. So I still feel confident that we should be able to deliver on the 500 10 45.
As I said earlier, we have had a little bit slower acquisition pace so far, but we stick to the target of acquiring SEK 50 million-SEK 80 million in combined annual earnings per annum. And the path you have seen so far is more a result of we sticking to high-quality criteria on the companies that we acquire, and that we will stick to the valuation range that we have set for ourselves. And the underlying market is there for us to deliver on this, and we still expect to deliver on this SEK 50 million-SEK 80 million during this fiscal year.
As you saw on the graph earlier also, we continue to decrease our percentage of own products, and that will help us to improve the EBITDA margin over time, as well as the profit of working capital dimension. That is also a target that we aim to deliver on fiscal year 2025, 2026 then. How to reach those 510 45? There is not really anything big news here. It is continue to what we always do, profit expansion over revenue expansion. We have our capital allocation model, the focus model, that is really steering where we allocate capital and the agenda that the company should have.
For example, Luna, that is below the 25 profit working capital, is not about increasing the revenues, it's about increasing efficiency and improve the product mix, and by that, the gross margin... And instead, we allocate growth capital to the companies that is above the profitability of 45%. And once again, the focus more on our capital allocation is really a company by company strategy, and they have goals and activity accordingly.
And that was just some example where I talked about Luna about their strategy and goals and activities based on where they are in our capital allocation model. We also have our Bergman & Beving toolbox. I will not get into that. I presented that earlier.
It's kind of how we can support our companies in the kind of development, and that is something that is very appreciated by our companies, but also when we're out in the market acquiring company, where they really see that we can bring some great benefits to them, and for them to be part of the Bergman & Beving group.
I already talked about decisions, that the ambition is on the same level as the target, and we will continue to work on that. If we look at the kind of market and conditions to deliver on our target, we think they are kind of there. So once again, we stick with our target in terms of acquisition, but we're really focusing on acquiring high quality companies to within our valuation range.
Then we have some current themes. It's still about strengthening our cash flow. It's still some work to be done on the stock that Peter mentioned earlier, and to get us back to the pre-corona level, and from that, they continue to improve and optimize our stock. And we're also very cautious in investments, currently in our portfolio companies, based on the kind of underlying market is still the kind of not picking up.
We made some selective investment in the highly profitable companies. So it's not that we have an investment freeze, but I would say we're a little bit extra cautious based on the kind of underlying market situation as such. And that is also reflected in the very tight cost control we have.
As communicated initially here, we have an organic decrease on cost, since we take some efficiency measurement, especially in the companies that doesn't have a profitability on the level that we would like to see. And finally, but not lastly, we had had a very good solid gross margin improvement over time, but we are really kind of making sure that we protect that going forward.
I earlier said that big portion of the phase out has been done now. We have still some kind of product mix improvement that we can make over time, but we also need to make sure that we protect the gross margin on the healthy business that we have, and that is something that we have a strong focus on going forward as well.
So with that said, once again, we are kind of happy with the quarter, with this increased profit, increased profitability, and the strengthened cash flow. And we still see some good opportunities in the market, despite it's kind of a tough underlying market in some companies and some situations. But we also see a good kind of opportunity for us to continue to improve over time, and also to deliver on the financial target that we have set and communicated. So with that said, I will leave over to the Q&A.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Sino Engdalen Ricciuti from Handelsbanken. Please go ahead.
Yes, good morning, Magnus and Peter, and thanks for taking our questions. I would like to start out on a bit general on where you're seeing we're going ahead. So in this quarter, and also in the last one, you were expecting a stable market and hoping for a pickup in the autumn. I would just like to hear, since the last quarter, basically, if you have gotten more or less confident in that sort of pickup, if you're seeing this ground sprouts, so to say, coming now during the start of summer?
Thank you, Zeno, for the question. If you look the kind of macro indicators, there are some signals that, you know, the buying index for industry is kind of picking up, the interest rate is coming down. So I think there are a very good kind of macro indicators that the general market will pick up over time. But to be honest, we don't see that actually in the company during this quarter.
It's not that, you know, customers is indicating that they will increase the kind of purchase in a dramatic way. We get some signals that some customers perceive that the market is starting to pick up, but in terms of orders and deliveries, we haven't seen that in this quarter.
... Hmm. I see. Thank you. And just on the comment on a weaker demand from some of your industrial customers, which you highlight, and you also did last time as well. I'm wondering if the continued weakness from what you're hearing from your companies, if it's broadened or if it's relatively, how to say, concentrated?
I think in a general way, I would say it's kind of have stabilized, but stabilized on this lower level The difference in this quarter is the core solution and the S-sphere division. I mean, they have had also in the Q4 a little bit weaker demand, but that continues in this quarter, and maybe a little bit strengthened, actually, this kind of a weaker underlying market.
Okay. So if you're looking in the quarter specifically, was it basically then the same, was it constant during the quarter, or was there a change within the month, so to say?
I would say on a group level, I would say it was constan I think you can see that also if we compare with the organic kind of development this quarter compared with previous quarter as well.
Just lastly from me on safety technology, where you highlight that we should expect to see some kind of pickup. Would you say that it's more related to efficiency gains, which will come through, or some of the slight improvements you have noted?
I expect it to be a combination of a lot of things, actually. The efficiency measure that we take, we have still some that you don't see in the figures yet. We also see a slight pickup in some companies that hopefully will give some effect. We have made one acquisition at Tieco that is contributing in a good way that will support this development. Hopefully, we will have some acquisition in this division going forward that will help and support the growth, profit development as well.
Okay. Thank you, Magnus and Peter. That's all for me.
Thank you.
The next question comes from Emanuel Jansson, from Danske Bank. Please go ahead.
Hey, good morning, Magnus and Peter. I hope you can hear me.
Yes. Hello, Emmanuel.
Great. Hello. I think we can continue to touch upon the safety technology division. I think you're mentioning in particular that you see a slight improvement primarily for companies delivering to resellers. I've I think for quite some time with this division has struggled since a lot of I think at least the Nordic retailers have worked a lot with reducing their inventory.
Is it this what the primary source of the slight improvement here is that the Nordic retailers are starting to maybe fill up the inventories again? Is that what you see, and is that also the trend that you expect here in the near term as well, to continue to improve?
Yeah, that relates to the comment I had with, on Sino's question. We see some companies in the safety technology that is actually having a slightly higher demand from the Nordic reseller. But if that is kind of a trend that will continue or not, that is still uncertain. So I think it's too early to say that, you know, this is, this is a constant trend that will kind of continue over the next coming quarters.
Yeah. Okay, perfect. And I assume that we should expect that this division will, we will be one of the, like, main contributors to the earnings development going forward since it's previous quarters with quite some struggles, right?
Yeah. My expectation is actually that all of the divisions over time should, you know, have a positive and good profit development. And of course, then safety technology had some quarters previously with kind of actually declining profits, and now we are on par. And my kind of expectation is, once again, that they should kind of improve the profits over time. If that will materialize in this current quarter or it will take some more quarters to kind of materialize that, I think it's also too early to kind of say.
Yeah, I understand. If you compare the three divisions, which one do you see have the highest potential here in achieving the highest EBITDA margin in the longer term?
If you talk about the EBITDA margin?
Yeah, exactly.
Yeah. That, that's a very good question. Of course, that would be dependent on the acquisition and the level of acquisition that we make. It's not that we have set specific targets for each individual division of, you know, in terms of acquisition. We like to have, you know, let the best candidate win.
So it's really what type of acquisition opportunities the different divisions will have going forward will of course be one very important part of the kind of development going forward. If we look at organically where we are today based on the platform, I don't see it's a big difference between the opportunities for them to improve in terms of margin. I think that will be very much affected about the acquisitions and the amount or the level of acquisitions they will be able to make going forward.
Yeah. Okay. Thank you. That's very, that's very clear. And regarding the acquisition environment and M&A environment, we're also seeing some macro indicators are improving and maybe hopes of lower interest rates going forward. Do you also have you starting to see some slight uptick in valuation multiples when you're trying to acquire companies well? And could that be some of the reasons also with the slow start of the M&A pace so far in this year?
I cannot say I see a clear pattern.
Yeah.
But for me, there are some indications that in the Scandinavia market, it's picking up a little bit in terms of valuations.
Mm.
Now we made this Swedish acquisition, Maskinab, but we also made one acquisition in the U.K. We think that the U.K. market is. There are many very good companies, industrial companies with very good, you know, financial figures. The competition isn't as intense as I think the competition is in Scandinavia. So I think time will tell. We don't see any clear, once again, pattern in kind of competition currently, but it should be interesting to see what will happen now over the next quarters.
Okay, perfect. I understand. That's great. And I think last question from my side here, can you maybe give us some flavor on the demand between the different regions here? I mean, probably Sweden seeing the maybe a slightly better improvement, but also supported by M&A, of course. But can you maybe give us some flavors between Sweden, Finland, maybe UK as well, and Norway, in terms of overall demand?
Yeah. We communicated that if you should have one KPI on a kind of group level that indicates the underlying market development, we would say it's the number of employees in the industry and in the construction sector. If you look at those indicators, the kind of weakest market is actually the construction sector in Finland.
Mm.
That we can see. And then, we have some weakening, and this is calendar year Q1 figures. That's the latest available figures that I refer to now. But we also see a decline within the industrial sector in Finland and in Sweden as well, whereas Norway is kind of flat. And also in the construction sector in Sweden, it's weaker, but not as weak as in Finland.
Okay, perfect. Very much, yeah,
If you look at aggregate on a kind of a group level, we talk about in the range of, you know, 4%-5% fewer employees in the Nordic sector within the industrial and construction sector.
Okay, perfect. And what's your view there on your market shares in this market environment? Are you maintaining market shares or gaining?
Yeah, I mean, if we look on a kind of overall level, I would argue that we actually gained some market share. We haven't had any companies losing any big customers. Instead, we have some companies gaining new market share. Just for example, SV, as we enter Beijer Bygg, that's quite a big customer, and it starts to build up now.
Mm.
That's just one example of customer that we have, kind of, won.
Perfect. Thank you. That's very clear, Magnus. That was all my questions for now. Thank you very much, Magnus and Peter.
Yeah. Thank you. Thank you, Manuel.
The next question comes from Karl- Johan Bonnevier from DNB Markets. Please go ahead.
Yes, good morning, Magnus and Peter. Good answers to a lot of my questions already here. So and, but one, maybe you could elaborate a little on the minus 7% organic growth and how much of that impact you saw coming out of the phasing out of the high volume, low margin products in SV and Skydda during the quarter.
Yeah, if you look to those -7%, a big portion, I would say even the majority of this decline is related to Skydda and Luna. Part of their kind of decline is related to this phase out. But part of this, and I would say majority of this, is also related to a weaker underlying market. But that is also kind of giving a positive gross margin effect on the group level as such, is those type of companies doesn't have kind of they are below the kind of group average gross margin level. So those are the two major kind of reasons for the organic decline.
And when you look at the business propositions of Skydda and Luna, it sounds like you still see good opportunities and you still see it being a part of the group. Is that the right interpretation? And maybe also elaborate a little on what kind of growth opportunities you might see in that portfolios also over time.
Yeah. The first answer is yes, we see improvements in both of those companies. And they are now facing a weaker market, so we are taking a lot of efficiency measures in those companies, as well as, you know, improving the product mix to kind of prepare them for a stronger underlying market, as such.
If we look at Luna, I've said it before, they have a monopoly situation as a wholesaler in Norway, and there is no other wholesale alternative to Luna, and they only have Tome'e in Sweden as a competitor, and they are focusing on the construction sector. So Luna more or less has a monopoly situation, you know, as a wholesaler industrial segment. And that as such is giving them a strong good opportunity to leverage that over time.
And that is something that we have kind of increased the focus on, on actually segment the markets, the reseller markets, and make sure we have competitive offerings that also give Luna a good, you know, margins as such.
So there are a lot of activities that has taken place and preparing them for, you know, a stronger market, and that in such will help them to improve the profit as well as the profit working capital ratio. So there is a lot of things and a lot of activities has taken place and is taking place in both of those companies, and we see they give effect and we have an improvement. And I have, you know, a belief that they should all be, both be able to, you know, improve over time.
Sounds promising. And just to come back and pick your brain a little more on the hope for and maybe the option for a pickup in general demand coming autumn, which segments do you already see that you are maybe fully loaded at this stage, so you can't really take on more? And what areas do you see normally the biggest swings when market demand comes back again?
I mean, since we have 31 companies now and they are addressing, you know, different type of segments within the industrial and construction sector, is really need to go into company by company because they have different type of exposures. But generally speaking, if the biggest one is Skydda, Luna, and SV.
And of course, if kind of the construction sector and number employees of the within the construction sector start to pick up, that will have a positive effect on the underlying demand for SV. And they are exposed to the Nordic and the Baltics, and all of those markets has been, you know, weakening over time. And when the interest rate comes down and the activities start to pick up, there should be a positive effect on SV.
And then Luna and Skydda is more focused exclusively on the Nordic region and exposed both to the industrial and construction sector, and that will have, you know, it's not a specific segment. They are in all segments, more or less. So it's more like when the general pickup will take place within those type of within the construction and industry, we will see that effect on in Luna and Skydda. And then the other ones are more kind of niche market oriented. So there you need to get into each individual underlying market to kind of see what triggers a pickup in the demand.
Excellent. Thank you very much, and all the best out there, and have a good summer holiday.
Thank you. Same to you.
The next question comes from Marcus Almerud, from Carnegie. Please go ahead.
Hi, Marcus Almerud here. Most of my questions have been answered, but maybe just one quick one on the margin. So just looking at the driver of the margin here in terms of the growth margin in last quarter was mainly driven by internal measures, and then you had the acquisitions driving the EBITDA margin, or the combination of the two. But given that the phasing out of product is almost done, should we expect that the internal work is more or less done, and there's gonna be acquisitions going forward driving?
Yeah, I would say as we still have some work to be done, but the kind of low-hanging fruit is done and you shouldn't have such big organic gross margin improvement going forward. Still, there are some opportunities, still there are some expectations to improve that going forward, but the majority will be acquisition driven.
Mm-hmm. Okay. Well, excellent. Yeah, all my other questions have actually been answered, so thank you very much.
Okay. I think that was the last question. So thank you very much for listening, and wish you a very summer holiday.