Welcome to the Dustin Q1 report for 2022 and 2023. For the first part of the call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now I will hand the conference over to CEO Thomas Ekman and CFO Johan Karlsson. Please go ahead.
Thank you. Thank you. Good morning, everyone. Happy New Year also, and welcome to our first quarter presentation conference call. I hope you're all well. Here with us is myself, Thomas Ekman, and Johan Karlsson, and also Fredrik Sätterström in the room here as well. Today we present our first quarter results for the year 2022-2023.
Our Q1 from September through November 2022 has on a macro level been characterized by the obviously continued escalation of the war in Ukraine, high inflation followed by increased interest rates, a fairly weak Swedish krona, and high cost of energy. Is obviously a dramatic change compared to our comparable Q1 just a year ago. We kicked off the financial year with a continued total growth, despite an anticipated and fairly cautious development in SMB.
Access to standard hardware increased sharply, and that has fueled a certain degree of price pressure in the market, which, combined with the cost inflation, affected the margin for the quarter. We see the same patterns as we have seen in previous economic crisis periods where the SMBs are the first ones to react.
Corporates are slower, and the public sector continue to spend. Typically, these periods have lasted around three quarters, and we have now passed the second one, which is a clear low point. With that said also, we are now further intensifying our cost focus to adapt our operations, of course, to the prevailing economic climate.
I am though pleased to say that the integration process in Benelux is proceeding according to plan, and that will enable continued positive growth and of course, synergy effects and thus lower costs over time. Let's go into the Q1 presentation.
For your reference, we have Dustin at a glance on Slide 2, but I think we can move directly to Slide 3 for the financial highlights to see how we are performing and now during Q1. The first quarter of the financial year was as said distinguished by a g eneral economic uncertainty and thus a clearly cautious trend among some of our customer groups, primarily SMB. The supply situation for standard hardware was highly favorable, you can say, which impacted the price and campaigns in the market.
For us, that have had a negative impact on growth among smaller SMBs as well as consumers, primarily. Greater availability, though, and a continued healthy demand among our large customers and public sector laid the foundation for strong sales growth in the first quarter, despite a sudden expected and more cautious approach by the small and mid-sized companies.
Organic growth was 8.5%, of which, a -8.1% for SMB, a very good 17% for LCP organic growth and a -3.3% for B2C. Like recent quarters, growth was mainly driven by strong sales of standard hardware such as mobile phones and computers. In the quarter, availability of the more advanced hardware has improved within certain product categories, not everywhere, but within certain product categories.
The net sales in total rose to SEK 6.6 billion versus SEK 5.8 billion in the corresponding quarter last year. That, of course, leads us to a 13.9% reported total growth. Gross profit was SEK 893 million compared to last year's SEK 894 million, giving us a gross margin of 13.5%.
The change in gross margin versus last year is mainly attributable to pricing and order mix with higher share of sales within LCP together with the organic growth in LCP. Adjusted EBITDA amounted to SEK 201 million, and compared to SEK 301 million last year. The Adjusted EBITDA margin was 3% compared to the 5.2% last year.
The lower margin was mainly related to lower gross margin combined with the cost inflation, which we are adjusting to, but it has not filtered through yet. EBIT amounted to SEK 138 million, and including items affecting comparability of a negative SEK 90 million compared to negative SEK 7 million previous quarter.
Primarily, that of course, relates to the integration of Vincere and Centralpoint. EPS, earnings per share, was SEK 0.59 per share versus last year's SEK 1.47. Cash flow from operating activities amounted to minus SEK 85 million during the quarter, mainly impacted obviously by the lower EBIT combined with a higher net working capital. This was predominantly the result of the further accumulation of inventory for individual customers in the public sector.
As a result of the increase in net working capital and negative exchange rate differences combined with lower profit, net debt in relation to Adjusted EBITDA increased to 4.3 versus 3.7 last year. The current leverage, though, is, it is higher than our target, and it is still assessed as being temporary, and it's expected to fall significantly in the next few quarters as inventory reduces as a result of the deliveries or anticipated deliveries of large orders to individual customers with high stock balances.
Given that there are questions in general on inventory levels in the industry, it is good to remind on that the majority of our inventory relates to customer-specific pre-order inventory with low risk. Nevertheless, though we are working our way down in inventory levels from the overstock we had during the pandemic period.
Apart from an intense quarter in general, from an operational perspective, we have continued the integration work with our Benelux companies, where clear steps have been taken. We are on track with the synergy extraction, the identified SEK 200 million-SEK 210 million will show with clear effects from second half of this financial year. As an example, I mean, private label is really taking off in Benelux, which is very promising and encouraging.
We have also merged our SMB organization and that starts to surface also e-efficiency from that. Yesterday, we announced a cut of 35 FTEs in the managed service organization. That is just one example of what happens when we merge the organizations, that we can be more efficient and work as one organization for SMB over the group.
As you know, I will soon move on, the recruitment for my successor is ongoing, hopefully we'll be able to communicate that the name of that in the coming weeks. Now, Johan, you can take us through the finances for the different segments and how we re performing in Q1.
Yes. Thank you. Moving to Slide 4, and then the SMB segment in some more detail. Sales for the quarter ended at SEK 1.771 billion, representing a negative organic growth of 8.1%. In the quarter, we saw that the economic uncertainty is continuing to affect mainly our small and medium-sized B2B customers and the consumers.
However, for the larger SMB customers, demand continued to be somewhat stronger. The market sentiment is similar in all our geographies, but the overall growth was strongest in Finland and Norway. As we are realigning the service portfolio, the share of software and service was down from 14.4% last year to 12.2% in Q1 this year. The main reason being the move away from time and material consulting towards standardized managed services.
Segment margin reduced from last year's 12.4% to 10.1%. A higher share of standard hardware, such as computers and mobile phones, had a negative impact on margins in the quarter. Recurring revenue from standardized managed services was developing well and contributed to the margins positively. Also, private labels is continuing to deliver strong sales and margins, contributing positively to the margins and profit.
Segment result ended at SEK 180 million compared to SEK 230 million last year. Moving on to Slide 5 and the LCP segment. Sales in LCP was SEK 4,727 million in the quarter, an increase of 23.3%, of which 17% was organic. During the quarter, we saw a very strong sales increase in both public sector customers and large corporates.
As for the SMB segment, availability of standard hardware has continued to be good, and deliveries are now back with more normal lead times. From a geographical perspective, growth was strongest in the Netherlands, Sweden and Belgium. Segment margin was 5.9%, down from 7.6% last year. Compared to last year, the higher share of standard hardware had negative impact on margins.
As we are growing at a very high pace by winning new frame agreements, this impact the margin negatively as the margins at the beginning of a contract period are lower than at the end. As in SMB, private labels products affect margins and result positively in the quarter, and we're continuing to see good potential for further development as we are launching more and more products in the Benelux region.
The Take Back offering continues to show good development, and the interest from customers is strong. Segment result in LCP for the quarter was SEK 279 million, down from SEK 293 million last year. Move to Slide 6 and the B2C. Sale s in B2C was SEK 139 million.
This was down 0.7% compared to last year, and the organic growth was -3.3%. The main reason for the sales development was the economic instability, affecting negatively, but a better supply situation affecting positively. Segment margins are now normalizing and was 6.9% compared to last year's 11.1%, mainly due to the better availability of products. Segment result was SEK 10 million, which was down from SEK 16 million last year.
We move to Slide 7 and net working capital. Net working capital was SEK 336 million compared to last year's negative SEK 334 million. The higher net working capital is mainly an effect of higher inventory as the supply situation for our main suppliers are improving back to normal and more orders are being shipped.
Looking at the details, we can see that inventory in the quarter was SEK 1,610 million, or up SEK 472 million compared to last year and SEK 270 million compared to Q4. Part of the increase is seasonal as end of November is in the middle of the peak season for us. However, part of it is also customer-specific inventory being delivered to us as the supply situation has improved. More about inventory a little bit later in the presentation.
Accounts receivable was up SEK 186 million, mainly as a result of higher sales volume and more sales in the LCP segment. In accounts payables, which was SEK 3 billion 856 million, this was up SEK 143 million. The majority of this comes from higher business volumes. As the supply situation is now improved and our way of operating mainly in the Benelux region is being changed, we believe that inventory will come down to more normal levels during the year.
This makes us continue to believe that our target range of negative SEK 100 million to SEK 200 million in net working capital is realistic. As Thomas mentioned, leverage that this net debt in relation to rolling 12 month EBITDA at the end of Q1 was 4.3, where our target is to stay in the range of 2-3.
The higher net working capital, the currency differences and lower result affected net debt and leverage going forward. We then move to Slide 8 and look at inventory in little bit more detail. As said before, inventory in the quarter increased by SEK 270 million compared to the previous quarter. We have, in order to explain the difference, we have tried to detail a little bit of the, of the different kinds of inventory that we have invested.
If we start from the bottom, the core inventory increased by SEK 76 million. Core inventory would be the inventory that we use primarily for our online business, and the increase by SEK 76 million here is mainly coming from the seasonality effect of moving from end of August to end of November.
In private labels, we see a sharp increase in the business volumes, hence inventory is following, the increase of SEK 10 million is really an effect of higher business volumes. When we then look at customer specific inventory, we see the increase of SEK 132 million.
This is mainly attributed to the public sector customers, it's a result of the better deliveries that we now get from our suppliers. This part we expect to come down in the next couple of quarters. We move on to Slide 9 and cash flow. Cash flow for the quarter was SEK 218 million compared to SEK 294 million last year.
Looking at the parts, we see that cash flow for operating activities before changing net working capital was SEK 1 50 compared to SEK 283 last year. This is mainly a result of the lower operating result. Change in net working capital was negative SEK 235 million compared to SEK 86 million last year. The main difference being the increase in customer specific inventory, the public sector customers.
Cash flow from investment activities was negative SEK 51 million compared to SEK 40 last year, and out of the SEK 51, SEK 40 was related to IT investments. Cash flow from financing activities was positive SEK 353 million, mainly coming from new loans raised. Total investment if we move to total investments.
Total investment amounted to SEK 63 million compared to last year's SEK 81 million, of which CapEx related to IT development was SEK 40 million, and out of the SEK 40 million, SEK 13 million was coming from the project of moving our ERP system to the cloud.
An investment in tangible and intangible assets was SEK 17 million, which was down from SEK 46 million last year. Finally, investment in assets related to service provision was SEK 7 million, down from SEK 17 million last year. All in all, SEK 51 million out of the SEK 63 million in CapEx was affecting cash flow. The others were changed or in lease or rent contracts. By that, moving back to Thomas.
Good. Thank you very much, Johan. We move on to Slide 10. Just let me elaborate a bit on the gross margin development in the quarter. The gross margin, I said earlier, amounted to 13.5% for the quarter versus last year's 15.4%.
The change is primarily attributed to a supply driven price pressure compared to the opposite scenario last year, which was marked by high demand and limited supply. This combined with larger customer specific rollouts in LCP and all then also changed the sales mix with a high share of standard lower, slightly lower margin hardware an increasing share of sales in LCP, which also adversely impacted performance compared to the corresponding period of the last year, also had an effect on the gross margin.
Also saying this, supported by our strong position, the SMB learned after their greatest success in maintaining its margin, although the decline in growth in SMB. Let's continue to just an update on the synergies and the integration activities we're doing.
As we have previously announced, we believed when we did the acquisition of Centralpoint that it would be possible for us to extract synergies at estimated SEK 150 million, where we, as you know, added another SEK 50 million-SEK 70 million in last quarter, where we have identified more opportunities in synergies. Now we have an estimated SEK 200 million-SEK 220 million annual savings and synergies.
They will come from and are already starting to surface from both revenues and costs on the revenue side for SMB in Netherlands or in Benelux. It is to merge one organization for SMB, and that is an enabler for what we've been working in the same way, in the same platform with the same offering portfolio.
Synergies will also be realized in full by year 2023-2024 for SMB. Same for LCP, where we given our size now have a larger portfolio of contracts, and by that being less dependent on certain deals, we can choose more thoroughly and with better quality what contracts to hunt for, which also of course will help the margin also in LCP going forward. Opportunities, they will primarily come from obviously integration activities we do in the Benelux entities, merging organizations.
As said, we did a small change with managed services, for example, yesterday, where we can be more slim and more efficient in our way of propose or communicating and delivering services to our customers. private label has had a very good start in Benelux. It's very promising and encouraging. In the reorganization we announced in October, we have also established a group-wide procurement and vendor management organization to make use of our size in full.
Of course, further improving our purchasing power and being even stronger and better partners to our vendors, distributors as well as customers. We are working to launch our own or common cloud-based ERP platform in Benelux, and that will follow us in the Nordics, and that we aim to complete now during this fiscal year.
That will, of course, also improve the efficiency and reduce the workforce. That will be a good and quality improvement. Obviously on quality, process and quality and efficiency will also contribute to an improved cost base.
We see that we will see clear effects from this, and they will be visible from the second half of this year over this financial year, 2022, 2023. The full effect of these synergies will expected to come in 2023, 2024, the financial year of 2023, 2024. Going through to Slide 12, and an update on our 2030 commitments and the current actions we do towards reaching those.
For the full year of 2021-2022, we increased our circular revenue share to 25%. Now we have increased that to further 33.7%. As you might know, our target is to reach 100% until 2030. Good development here. Take Back, where we take back older products from our customers is progressing very well. We have so far taken back 150,000 units this year.
They are either refurbished or they are recycled or resold. We see continued increase in demand for those services. Our facilities in both in Växjö in Sweden covering for the Nordics as well as in Wijchen in the Netherlands covering for the Benelux is growing and taking on more volumes.
This is obviously great for us as it is great also for the environment for sure. Before going into Q&A, let me just sum up the Q1 results on Slide 13. Net sales grew with 13.9% to SEK 6.6 billion, where organic growth for the group was 8.5%, with SMB at a negative 8.1%, LCP at a very strong 17%, and B2C at - 3.3%. Gross profit at SEK 893 million versus SEK 894 million last year. Gross margin came in at 13.5% versus 15.4% last year. Change in sales mix, as said, with higher share of LCP sales and the vast deliveries of standard hardware is behind the change in gross margin.
Adjusted EBITDA came in at SEK 201 million giving us an EBITDA margin for the quarter at 3% compared to last year's 5.2%. Margin is affected by lower gross margin coming from sales mix, pricing and cost inflation, as well as that we carry more cost right now due to the integration activities. We see, of course, good progress in those.
EBIT was SEK 138 million compared to last year's SEK 251 million, and EPS SEK 4.59 per share. Cash flow, as you all see, from operating activities at minus SEK 85 million. Average 4.3 above our target, high at the moment due to currency, working capital and customer specific inventory.
To summarize, September, October, November of 2022 will not go down as the best of our quarters, rather the contrary. Of course, also the geopolitical and macro environment has also been among the worst for a long time. Regardless of that, I mean, we are not certainly not happy with the numbers or with the performance, but we have a plan going forward, and we look forward to that.
As said earlier, we see the same patterns now as in previous economic crisis in how SMBs and LCPs are reacting. Historically, these periods last for 3 to maybe 4 quarters. When drawing conclusion on that would be give us that we are in the middle of it and on typical low point, and that would also have the opportunity to give us a brighter spring.
We have now passed also three years of the pandemic with a lot of all-time highs and all-time lows in very short time frames. A big difference from previous crisis is obviously the level of digitalization and the need for investment in IT, security and mobility and of course, new equipment even, new way of working for all companies.
Things can change fast, and that plays in our favor, and we are very well positioned for that. For us, it's just to continue to work hard, adapt, adjust and keep our customers moving. I must also say from an internal perspective that we are progressing very well with the integration. It is very positive to see that our Benelux business is delivering very strong growth.
I think with that, Johan, we can conclude the presentation and are happy to take any questions you might have.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Klas Danielsson from Nordea. Please go ahead.
All right. Thank you for taking my questions. First one starting off with the kind of dynamic in how the sales mix will move forward here. I think typically the dynamic for you in a, in a recessionary environment or rather perhaps an uncertain environment has been that SMB has dragged down quite quick than LCP has lagged them a bit. Now, looking at where we are at this point, I think we've seen the SMBs come down quite quickly as according to that dynamic, LCP is still going very strongly.
I think when you look at them and when you talk about the activity on the LCP side, should we expect this to also start to come down initially in the next few quarters here or what's the progression looking like and the communication from their side?
Well, I think you can if you look at least historically, you would see that public sector customers would continue throughout I would say ups and downs more or less the same. There is more about winning new contracts. We have actually won a few new contracts there that as which is boosting at the moment a bit of sales.
We don't see any. We don't see the economic situation in our markets affecting a lot the public sales numbers. Corporate on the other side, that depends a little bit how the economy is developing. There, we might see some reductions going forward. Again, more limited compared to the SMBs, at least from an historic perspective. Yeah.
Is that primarily because I think also what we could see in a kind of recessionary environment, and that sense is also them gearing more towards a replacement market and less of that kind of ad-advanced equipment. I mean, I know you've had very little in terms of mix from or sales from these types of customers, or equipment rather, in the last few quarters. What should we actually expect from growth margins? Is there a tilt towards those more advanced equipment still going on in the next few quarters, or should we expect a continuation of this more basic equipment mix?
I think in general, it's improving for advanced hardware. It is, which is, of course, plays in our favor. It does. We see the continued need among customers that the upgrade for advanced, I mean, everything from routers to network products, which of course is good. As you know, China has now opened up for sure. We'll see how that pans out.
Still it's promising that things are coming back to more normal also on those products. With that said, we see positive signs on the advanced hardware. I also think that if in a situation like this, the private labels assortment is really taking off because obviously a very cost-efficient way of supplying primarily accessories.
Yeah.
That's good for us because our margins there are better.
Mm-hmm.
Exactly.
Yeah. Should we expect an improving gross margin in the next few quarters? Is that kind of a definite approach or how should we think about that side?
From a mix perspective, you could expect that. Then it's all about what happens to volume, because obviously that will affect the segment margin, if volume goes down more than we can compensate with cost.
Mm-hmm. From mix?
From a gross margin perspective, yes. Yes.
Yeah. Okay, fantastic. My last question, just a quick one as well. Thanks very much for the details on inventory. I appreciate it. It is a bit higher than normalized. I was just wondering, could you give us some additional color in terms of just pure numbers and how much higher it is versus the levels you've had historically?
What type of kind of progression towards the normalization should we expect over the year? I mean, will you be back on the normalized levels already by Q4, or is this kind of a multi-year story or what should we think about on that side?
I think that's a really, that's a really good question because what is actually normal nowadays, that's a good question, especially since it is basically the acquisition of Centralpoint in the middle of this turmoil. We really believe that the inventory levels is in the range of SEK 400 million-500 million too high compared to where we would like to be.
That will be our target to get it down by these numbers. Personally, I believe it will take us the next, let's say, three quarters to get there. That means end of this financial year. Given the fact that supply situation is continuing the way it is at the moment.
The start of this was actually the uncertainty in deliveries, meaning that we would have to keep higher, let's say, safety stock locally in our markets. This is now normalizing. We don't need to carry all that inventory anymore to secure deliveries to customers. That is really the foundation to reduce our inventory levels.
Yeah. Okay. Thank you very much.
Good. Thank you.
Yeah.
The next question comes from Fredrik Lithell from Handelsbanken. Please go ahead.
Thank you. Good morning. Thank you for taking my questions. I have a few, if I may.
Sure.
First one is really if you could sort of elaborate a little bit more on the supply-driven price pressures, how that is influencing your gross margin. If you could describe that maybe Not really understanding it would be fine if you could put some color on that in more detail. Then also central function cost was up year-over-year with SEK 30 million.
Can you maybe give us a path on how that will develop going forward and what the items are that will sort of take it down a little bit? Final question would be on your synergies and what part of the synergies do you actually, you know, maneuver? I mean, OpEx is something you can really decide yourself, sorry.
The sort of the revenue synergy effects and all that stuff is something that you can plan for, but really can't really judge if they will really show up or not. It would be nice to have a, You know, if you can divide them into those two buckets, the synergy effects you expect. Thank you for that.
Sure. Good. Thank you for questions. If we start by the your first question on the gross margin. For the price, the supply-driven price, I mean, there has been a rapid change or dramatic or maybe not dramatic, but there has been a rapid change on, in supplies coming back to normal, as Johan said also on the inventory questions, where the standard harbor and supply standard harbor is in just this quarter back to sort of a more normal situation.
That, of course, gives, given that also our competitors has a lot of stock, that also created some of the price pressure towards the smallest customers, small SMBs and also consumers obviously, and where we sort of do not fight for those price fighters that search for really price campaigns. That is not our way of working.
Therefore, we also lose out a bit of growth there. That is also, that growth, of course, impacts also the gross margin over time. That is practical for not to be too aggressive on price, but rather keep our price levels, but lose out on different growth and from that point, losing a bit on the gross margin. Long term, that is a better way forward.
Okay. If I understand it then, better availability of standard products is sort of influencing competition a little bit more, and you have to fend that off. It's not that the supply side is pressuring you on prices.
No, exactly.
Okay. Okay.
It's actually a bit over-distributed at the moment.
Yeah
... in the market.
Yeah. Okay.
Which is of course the exact opposite of what it was a year ago, where it was no supply and we could also work a lot more with pricing for all customers, all segments within the customer base.
Okay. Understood.
Yeah. I think on the question of central cost, I think two primary components on the increased side. First is inflation, but also FX rates increase the possibility there. The other one is more investments in IT. These are the prime change from last year there. Going forward, you will see improvements coming from the synergy side.
When we come back to the talk about synergies, part of them will affect also central cost because today we are running in some of the central cost functions, we are now running kind of double organizations, one for the Benelux and one for the Nordics, and that is obviously not the most cost-efficient way of doing it, so that we are moving away from.
There you will see improvements in the next couple of quarters.
Yeah. That was another-
On the your question also on the synergies and the extraction of that, you're very right, of course. I mean, cost you control in a to a larger extent than you can control the revenues. If you look at the revenue side, the on the SMB, sort of SMB, we as you also saw on the slide there, we estimate around SEK 40 million-60 million in EBITDA coming from revenue side on SMB, which comes from the fact that we are now merging to, or we have merged to one organization. With that, we can have the same offering portfolio. We can also have the same type of communication. We obviously work in the same platform.
The one way of working there helps a lot in our revenue synergies, especially in the Netherlands and Belgium side. There, we also have seen that the SMB part, and also one of the reasons why we also acquired Centralpoint was that the lack of SMB before our acquisition, and of course we see the opportunity to build up that SMB position.
Also being the reason for us exporting ourselves to other countries is to perform SMB and use the large CTA space for that. That we believe that will come. On LCP, obviously there we see that, I mean, if you look at the growth, a lot of the growth this quarter also comes from the Benelux.
We have a very good way of working there when it comes to tendering and when it comes to participating and winning contracts, for both for the public sector but also for the large corporate sector. That we are also improving in the Nordics and using the same way of tendering, using the same way of delivering towards the customers.
With the portfolio we have now with a lot more LCP contracts, that also creates more a similar thinking and way of working as with SMBs, where we have a lot of customers and becomes like a portfolio of customers. The same for LCP, where we have a portfolio of customers now, which enables us to be more targeted when it comes to deals that we hunt for, and therefore also finding better margin.
We believe we have a lot of things in place in order to deliver on those synergies. Of course, we of course with that said, also, we are very much on a tight plan, strict plan on following our cost synergies side there, and by that also delivering in the revenues.
Okay. Thank you very much. Very clear answers. Thank you.
Thank you. Thank you.
The next question comes from Mikael Laséen from Carnegie Investment Bank. Please go ahead.
Okay. Thank you. Good morning. Thanks for taking my questions. Just a couple of follow-ups. It's on the central functions cost. Just to be clear here, should we expect around SEK 270 million per quarter also going forward?
I think... I mean, the normal level we have said is, around SEK 250 million, we are slightly high right now. That, of course, as you wanna explain earlier, it comes from, post items or inflation items as well. Typically, we should, we should... I mean, our target is to be around SEK 250. That is where we should aim to be on that.
Okay. The FX side and inflation should continue also in the next couple of quarters or?
Yes, we are also taking action. Yes.
Okay. We can use SEK 250 in our models going forward in the coming quarters?
Yes.
Okay.
That is our term firmly. Yes. Yes.
Okay. Excellent. Then maybe also just to follow up on that one, how much roughly could be more fixed cost in the central functions area where you can scale? How much is variable?
I think it's variable to, let's say in one way, you would say almost all of it is fixed. You mean fixed in relation to sales volume. It is not fixed towards our investments for the future. Let's say IT, we are investing a lot in IT at the moment, moving to the one platform and moving to the cloud for the total ERP system.
That is of course, it doesn't really change a lot if we sell more, but of course it changed a lot when we are doing this initiative. It is variable in a different way than the, let's say, other types of costs. I don't know if that explains.
Yeah.
-your question, it's a different sentiment of these costs compared to the ones that you have in segment costs, for example.
Mm-hmm. Yeah. When it comes to the double cost situation where you have too high cost, I guess, in the Benelux.
Yes.
Is that following or the reduction following the comments you made about the synergies?
Yes. Yes. It's very much linked to actually the integration of the entities in the Benelux.
Can you say something about roughly how much that impacted this quarter?
In cost?
Mm.
Yeah.
Yes.
Maybe in the range of SEK 20 million, if you take the total effect.
Okay. Good. Just a final one, can you say something about the receivables side? How we should think about that going forward, and if you are planning to sell any of those?
Yeah.
I think you made a comment about that, last quarter.
Yeah. We have that possibility at the moment. We have made that agreement together with our financing partners. We will pursue that primarily to public customers to start within the Nordics. I think the effect in the next one to two quarters could be in the range of SEK 400 million-SEK 500 million.
Okay. That will be in addition to the inventory reduction of SEK 400 million-SEK 500 million that you expect until the end of this year?
Yes. Yes. Yes. Exactly. They are independent from each other, let's say.
Okay. And the plan, if I understand it correctly, just to be clear, is to sell those receivables now in the coming two quarters and then pay those back when you normalize the supply situation or the situation where you have a higher inventory than normally in the Benelux side, right?
Yes.
How should we think about that?
I think you can think about it that way, but it is actually at the moment beneficial in terms of financing costs to make this move. At the moment it's purely cost-based. We, by moving, by selling them, we will reduce financing costs.
Yeah.
As long as that's, you know, accretive to the Dustin value, we can continue to do it, but we don't have to do it as such.
No.
We can do it from a cost perspective. The intention.
You will continue with the receivables program, for the foreseeable future until the financing situation is changing.
That's a possibility for sure. Exactly. It's lower financing cost for that rather than the. Yeah, it's best cost. Let's see. It's only for that reason.
Okay. Okay. Thank you.
Good. Thank you, Mikael.
There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Good. Thank you very much. Thank you very much for participating and tuning in, reminding you that we have, as you've seen, sent out an invite to a capital markets update on the 20th of February, which you are all invited to join, of course.
We will come back with more information on that. Please make a note in your calendars for that day, 20th of February. Good. If anything more, just reach out to us if any questions or comments. We're happy to answer that. Otherwise for that, I wish you all a good day. Thank you very much. Thank you.