Good morning, everyone. Welcome to the Lagercrantz presentation of our year-end report. Me speaking is Jörgen Wigh, CEO of the group, and together with me here, I have our CFO as well, Peter Thysell. We're gathered here in the Stockholm office. It's a beautiful morning, and it was great to also release our numbers here. We will go over the presentation. As always, we have our presentation on our website, so you can download it there if you'd like to watch. I will try to keep up with what page we're covering along the way. Please download it from www.lagercrantz.com, our website. There it's been uploaded here since 30 minutes ago or so.
We will cover the presentation. It usually takes around 40, 45 minutes or so. We will go over it in three steps really. First of all, we will give you all that are new to the group a little bit of an introduction. After that, we will jump right into the year-end report. After that, we will talk a little bit on what the key aspects of what is happening and how we see the future as well to some extent.
We will gather our Q&A at the end of the session, but if you feel like you just have to sort of would like to jump in and you can also do so by pressing star six, you will unmute yourself. We will put everyone on mute. But if you would like to unmute yourself, you press star six on your phones, and then you can sort of jump in if you have a question that you urgently want to ask at that specific time. Otherwise, we will gather that in the end of the session towards the end of the session. We will mute everyone now.
We will jump right into slide number 2, which is an introduction to Lagercrantz Group and an overview. As you know, we are a tech group, and we would like very much to work in creating and building leading positions in niches. We are 65 companies in the group currently, and we're expanding both organically and through M&A, with some 5-8 companies per year that we acquire. The total revenues of the group is SEK 5.5 billion, and we have close to 2,000 employees currently in the group. You can see over to the right there where we have our different companies.
We have our headquarters in Stockholm, but otherwise we are in the Nordics and in Northern Europe, and are building footholds also in other parts of the world with China, India, and the US as well. Thank you. We work very decentralized in our group, meaning that all companies are working under their own name, under their own brand name, addressing their specific niche, their specific market, their specific customers. We then try to be a good owner of these companies, building them for the future and challenging the local management, but it's driven through the local management of the different profit centers that we have in throughout these geographies that we talked about.
We have been on the Nasdaq Stockholm since 2001, but now here also since the beginning of January here, this year, we are on the Large Cap as well. We have been growing from small cap to mid cap to Large Cap throughout the years here. Looking at page 3, we are very proud to show that we have another good quarter behind us here, a very strong quarter. You can see also that both the organic growth and the profits have picked up here in the last year or so from a trend that we had. It was upwards already long before that, and we had a very good steady growth of some 15% per year.
It's been much higher here in the last year or so due to very strong demand, but also some recovery after the pandemic, and now lately also with some really good acquisitions that we brought to the group as well. Slightly bigger acquisitions we made in the last year is also adding to the numbers in a very good way here. What is really, I think, above expectations is our very strong organic growth we've had here in the last year or so. We have been driving our margins quite a lot earlier on, and that has also hampered our top line growth.
Since now a couple of years back, we have really been addressing the organic growth and have been successful in that here in the last 4, 6 quarters or so. That's good to see on page number 3. Looking at the quarter, I mean, the Q4 was a very strong. We felt that the strong underlying demand was good in most markets, especially in the markets we're in than with the Nordics and Northern Europe. It's a very much of a broad-based improvement that we see from many parts of the group. The revenue was then up 41% in Q4, and the organic part of that was 20%. 20% organic growth.
We have been used to sort of a little bit better than inflation maybe, but not to the 20%. This is a very strong number and the highest we've seen here for many years. That's really great to see that all the work that we put in has had an effect when it comes to sort of driving growth ambitions in our different subsidiaries, and setting higher ambitions and getting the companies to grow. Of course also a good underlying demand has helped us and also good improvements also from restructuring we've made, especially within the International division a couple of years back has also paid off very well here along the way.
Then we added some 17% through acquisitions and the currency exchange rates also improved the top line a little bit with 4%. What we also have as a comment here is that the very proactive management we've seen with price adjustments in many of our companies, it has been a tough quarter since so many of our raw material prices has gone up, and we see struggling with lead times, struggling with getting supplies from suppliers, especially from Asia. Those shortages I think we've dealt with very well in our companies. We still have some dealings to do with that and still are struggling with that.
All in all, I think we have been very good in our local companies to address these issues and find other routes and a lot of creativity in order to compensate for that. However, we have had a need for an increased safety stock along the way, as we will see. I think that this cash flows was quite okay, but still some buildup of safety stocks and also some customer credits also built up in the quarter here a little bit more than normally really. Still very strong cash flows, I would say.
What we see ahead is of course, I think we are concluding a very strong quarter, and we feel that things are still continuing in a very good way. Of course, we're also very sort of looking into what's happening in the geopolitical turbulence that we see in Europe, and a new wave of COVID-19 in Asia will probably also have some effect on what we're doing. It's very difficult at present to really say what effect that will have for us. Still, up until now, it's been a very strong underlying demand still, and that has continued here also for the last period here really.
Looking a little bit more into the numbers for the fiscal year, as you all know by now, is that we're ending our fiscal year end of March. We are talking about our Q4 here, our fiscal year Q4, which is the January through March 2022, and the full year, which is ending in March. During the full 12 months, the net revenue then increased by 34%, up to SEK 5.5 billion really, from SEK 4.1 billion the year before. Organic revenue growth for the full 12 months was then 16%, as opposed to the 20% we had here in the last quarter. The EBITA increased by 45% to SEK 895.
We also released a number here that organic EBITA growth was 29%, and acquisitions stood for 14% in that number. The EBITA margin was then 16.3% as opposed to the 15.1%. The EBITA growth was very much coming from organically, which I think is great to see now that we have been pushing organic growth, and it's paying off in a very good sense. That's also good to see. Profit after financial items then grew by 48%. As those of you that have been with us, I mean, we were at the 502 a year ago, and then we launched the Lagercrantz towards 10 billion program.
We said that we would reach SEK 1 billion in five years. Now we had an excellent first year with SEK 741 million then, so we basically went halfway or so in the first year, which we feel it's been a very good achievement for the year we have behind us. During the year, we concluded seven acquisitions, and they bring some SEK 665 million in sales, some 18%. I think we have a target of some 10% on a normal year, so 18% is a very strong number for us. It's seven acquisitions, and there are some of them that are slightly bigger. I will come back to them, but they are listed there as well.
It's the CW Lundberg, Libra-Plast, AC Antennas, Eonflow, GM Scientific, Westmatic, and RS Security. That especially CW Lundberg, Libra-Plast, and Westmatic are a bit more sizable than the others. And that is adding a very good volumes and profits to the group as well. All in all, we had some profit after tax, which increased to SEK 572 then, and the earnings per share increased by 47% to 2.80 as opposed to the 1.91 for last previous fiscal year. A strong earnings per share growth, and that is the maybe the most key metric for us. We would like to sort of yeah drive that as a key thing for us.
More than just growing volume or sort of raising capital and things like that. We are more into driving earnings per share here with how we're driving things and generate our own cash flows along the way. That is sort of more the more normal thing what we're doing. The return on equity then was at 28%. That is for a fiscal year an all-time high. The previous quarter, we had 29%, so it's but it's still on a very good level at 28% and an all-time high for a fiscal year as opposed to 22%.
The target for the group is 25% to be seen over a business cycle, and the 28% we're very proud of at the moment. The equity ratio was at 36% as opposed to the 40%. The larger acquisitions has affected this number, but still it's on a very good level, and we still have a lot of power really to make more acquisitions along the way. Last but not least, the board of directors yesterday decided to propose an increased dividend to SEK 130 as opposed to the one crown last year per share. 30% up in terms of dividends as well, which also we feel is an important thing in the way we drive the business.
Looking at page number 6, we look at the Q4 numbers. You could see here that the trend is somewhat stronger in Q4 than the rest of the fiscal year. We've had a very strong demand. We've also been managing to get some volumes invoiced during the quarter, and that has been in the backlog previously. That was also good to see here in February, March, that happened as well. Net revenues was up then by 41%, and the organic growth was 20%, and the EBITA was up 38%, and a very good EBITA margin.
I mean, it's slightly lower than last year, yes, but still the mix and the currencies and all things sort of moving around quite a lot means that 16.8 is a very strong number as well. Sorry. I'll take a break there. Good. The profit after financial items increased by 29% then, and cash flow operations was also strong in the last quarter. I said already, we moved the share was moved from the Large Cap as of January. Peter, maybe you should comment on the, a little bit on the next one here, the outcome by division.
Of course, happy to do so. As Jörgen mentioned previously, the performance has been rather broad-based, on both growth, but also on profitability improvements. As you can see, on the bottom, the EBITA margins, the Electrify division has improved to 17.1%. Control division won the race for the year with 21.7%, and TecSec has 19.1%. Niche Products and International. Well, Niche Products came from very high levels, and were for some companies affected by the supply chain challenges. A little bit lower margins in Q4, and International some of the same.
On a group level, we're about the same level as last year, which we are quite happy with. Yeah.
Yeah. We've had a number of quarters now with the 16%-17% EBITA margins, and it was good to see now that all five divisions increase their EBITA, as opposed to last year, and we saw some good growth in all parts of the business. That's a very strong sort of indication that it's very broad-based, the demand and the improvement that we see all along, all across the board really, among our different businesses. We have some comments on page 8 as well with the Electrify. Yeah, the Electrify had a very good quarter, generally speaking.
The electrification of the society is benefiting several of the companies, and we also saw some really good performance on QD. For those of you that have been with us for a long period of time, QD has had quite a lot of project-related business. To some extent, that's still true, but it's also more broad-based now. They're working more with sort of the general sort of transformation into the 5G infrastructure, and that is one key thing driving their margins. Driving their business, and that's especially here in the Nordics and that is more broad-based than the more project-related business they used to have.
I also believe that within Electrify, we have a number of businesses that are more sort of dependent upon metals, have metals as a key raw material that they use. Here we have really worked with increasing prices in order to compensate since things have been moving so much. I think that there's been a tremendously good job being done around that in the Electrify division. Within the Control division, the EBITA increased by 37%. We saw some significant improvements all across the board really from many profit centers. It's also important to highlight that the Radonova business had a very strong season this year.
They have a seasonality that is skewed toward the winter, and therefore, the Q3—our Q3 and Q4 are normally their strongest quarter, and that was also true this year. Radonova concluded a very strong year here. That is also affecting the margins and the numbers for the Control division. You see more of a seasonality there in those numbers. The TecSec division also had a very strong—they increased their EBITA by 118%, and that was driven both organically through the ARAS, ISG Nordic, Idesco, and Frictape businesses that reported a very strong organic growth. On top of that, we also concluded here in April last year, the CW Lundberg business that came into the group, and they have performed very well along the way.
Here since January, we also have the ARAS Security business, which is also adding to a good very good performance from the TecSec division. Moving to page nine, I have a few comments on Niche Products as well. Niche Products increased their EBITA by 36%, and the margin was 18.3%. Here we see improvements in demand and earnings across most businesses, especially Wapro and Dorotea Mekaniska, Kondator, and PST stood for very strong improvements and good organic growth. Tormek, which is maybe the most important part of Niche Products and the second biggest company within the total of Lagercrantz, it continued to perform very well, and a few others, Asept did a good recovery as well.
The Westmatic business, which was acquired in January, also had a very strong quarter adding to the numbers for Niche Products during the quarter. Last but not least is the International division. They increased their EBITA by 24%, and a strong development for many businesses and the majority, especially ACTE in Denmark, Norway, and Sweden, the sort of our old legacy business, has managed the component shortages very well. And also the acquisition of Libra and AC Antennas continued to perform well. Those were acquisitions done last summer, the Libra, and the AC Antennas here in, I think it was August or so that have come into the group in a very good way. A very good performance, I would say, across the board here.
We still have a few companies to work with, but across the board, it's been a very strong quarter and a strong year that we're leaving behind us. Looking a bit ahead, I think it's important to remind everyone around the Lagercrantz towards 10 billion. I'm on page 10 then. That was the program that we put together a year back and launched that platform, where we would like to raise the bar a little bit, making sure that we grow in a nice and healthy way and reaching new heights with the group. The key themes in that program was that we would like to clarify the strategies and the financial goals.
We would like to reorganize the five into five divisions with some clear growth ambitions in the different areas and segments where we're working. We would like to increase the capacity within M&A as well, and we would like to focus on sustainability and work a lot more with that than we have done, even though we have been doing that for a number of years already. To push that even further here going forward was an important part of the Lagercrantz towards 10 billion program. I have a few comments around that. Well, to start with, I think it's important to highlight that on page 11, you can see the financial goals that we're working with.
I mean, we would like to build a very strong portfolio of companies all working in niches in B2B tech. That is something that we are really sort of focused on doing. We don't move out of that scope. We would like to stay where we are in that aspect, but we are growing geographically instead. You can see also from the numbers that we have some increases in our export sales more than in general as well when you look at the numbers. We would, through this sort of program, continue our strong annual growth of some 15% plus per year.
Stated here as well that at least one-third of that should come organically, and the rest through some 5 to 8 acquisitions per year. The return on equity should prove that we are very profitable, generating our own cash in order to mainly at least finance our acquisitions, and that has been the 25% you can see there as well. These sort of financial targets have been with us for many years, and we have outperformed them over a long period of time as well.
That is also very good to see that we have some good ambitions, and we are achieving them or overachieving them as well as in this last fiscal year. Looking at page 12, we have the reorganization into the five divisions. I've been talking quite a lot around this, and I won't dig very deep here. It's important to understand that we are now addressing some markets that we feel are better structural growth, and we are sort of putting our focus to areas where we see good growth and good sustainability aspects of what's happening in the market as well. The electrification is really covered through our Electrifly division.
The Control is control and measurement and control different types of things. It's also a very strong trend in society. The TecSec and the Niche Products and in the International, you see, can also see there what the focuses are. Strong underlying growth areas is what we're looking for. You can also see from that that has picked up quite nicely here in the, already in the first year. I think it's also interesting sort of important for you guys to understand that looking at the organic growth part has been very important to us. I'm looking now at page number 13.
I think it is important to understand that we have a very strong program for what we would like to do with the companies that we acquire. We are working quite a lot with business plans. We are working quite a lot with making corrective actions, driving it through our board work in our different subsidiaries. We are working with an MD conference where we meet all the MDs once a year, and have been putting strong focus on growth there for the last few years. I think it's also very important to understand that we have our BIM program, which stands for Business Improvement Modules, meaning that we can address some specific aspect of a company or driving a company.
It might be sales work, it might be digitalization, it might be exports, where we gather people that are interested in driving those things in their specific subsidiary, and we try to highlight that and sort of push that when we work with developing each of the subsidiaries that we have. All these programs we've had for quite some years now, and I won't sort of go over them all, but it's important to understand that we have a well-thought-through program around this. The stock turns is something that we are revitalizing right now since we feel that the stock has picked up somewhat, and therefore, we are pushing there a little bit harder with our companies right now.
We are also pushing since a couple of years the digitalization and also pricing as well. It's a constant sort of strive for improvements in what we do with our businesses. In order to see that, we also brought in the page 14 here, which is the measure, compare, and challenge. For those of you that have been with us, I mean, we are also keen on doing some quite strong benchmarking between our companies. We basically have our internal league of what's sort of how we rank the companies from the best to the worst, and here is the managerial return on sales.
If you have a return on sales of more than 10%, then we would like the company to focus on growth, maintaining profitability, when we're moving further down, when we have lower return on sales, then we would like them to focus on profitability. In order to highlight where we have our companies, I've also added the numbers over to the right there, where we have about 20%, we have some 14 companies that are up there. We have between 15%-20%, we have 14 as well, and the 10%-15% is 17.
You can see that we have, I've had this slide a couple of previous presentations, and it's good to see that especially the 10%-15% has picked up quite nicely with a lot more units up there, and it's been moving up all along. I think in the last one that I, a few years back I looked at, the less than 5%-3% was some 7 or 8 units, while now we're down to 3 units. You can see that it's our improvement is broad-based.
You can see that we are pushing and that we are sort of improving the businesses along the way, and also, of course, also sort of downsizing or sort of closing even units that are not performing in the right direction here or might divest them as well. It's good to see that we have a nice, healthy portfolio of companies within the group here that I hope that you can see that's what I'm suggesting here with this slide number 14. The key thing for us has also been the aim for more of proprietary products, and we have that on page 15. We have been monitoring and following that.
It's good to see that it picked up quite nicely here in the last year from the 65% to the 70%, and the aim for us is the 75%. We see that proprietary products brings us, they work with higher gross margins, they work with higher net margins, and they also are better at finding new customers abroad. Exports are more viable, a more viable opportunity for companies that have a very their own products. Therefore, we have set as a strategic ambition to aim for more proprietary products. Since a few years back now, some five or six years back, we're aiming for the 75% proprietary products, and we're basically approaching that goal.
Good to see that we moved here in the last year from 65% to 70%, so that's good as well. Last but not least is the acquisitions. Here we are at page number 16. Acquisitions, I mean, that is a clear sort of strategic aim for us, with having M&A resources and working with M&A. We would like to be very selective though. When we feel that the prices are not fully right, or we feel that the company is not sort of fully up to the standards or have the quality that we would like, we try to be very selective as well. We have a clear ambition of growing some 5-8 companies per year.
You can see here over to the right that since 2006, we've concluded some 62 acquisitions. In the last year and the quarter, there was two of them, Westmatic and RS, as you can see there in 2022. In the last fiscal year, it was seven all in all. What we've done with acquisitions is also that we have increased the push for doing this on a divisional level. When building the new divisions, we have some increased resources there as well. We will basically be able to run more acquisition processes simultaneously as we grow. We have just put feet on the ground in the UK as well. We will look into that market. We will look into Germany as well.
We have, as you can see here, also been more active in other parts of the Nordics. We used to be very Swedish if we look 10, 15 years back. Along the way, we have been more and more international doing acquisitions in Finland, in Denmark, in Norway, in the Baltics, in Germany, and in the UK as well, and also in Belgium and Holland as well. It's great to see that the acquisitions are evolving in a very sort of sensible way, I would say, doing acquisitions with a strong focus and being very selective in what we do. Looking at page number 17, I also like to introduce the newcomers as well.
We have the Westmatic business, which came in here by the end of, sort of in the beginning of January. That is a Swedish company based in Arvika, in Värmland in Sweden, but also have a production facility in Buffalo, in Upstate New York in the U.S. They are coming in very nicely. They are making environmentally friendly automated washing systems for heavy-duty vehicles like buses, trains, trucks, and construction equipment. The way we work with sort of reusing water and taking care of things around an environmentally friendly way of washing, that is something that we have been developing in Sweden for many years. That is an export opportunity into other markets around the world that Westmatic is sort of working with.
They have set up feet on the ground also in Australia and in other parts of the world as well. They are in Sweden and in the US at present, but also setting up some businesses and since a year or so in Australia as well. Very promising and came in very nicely here in the first quarter of their journey together with us here at Lagercrantz within the group. The other company I would like to introduce is the RS Security on page 18. That is a Danish security company and system developer specializing in combined alarm and access control systems with their own platform. As you can see down to the right there, you can see very strong numbers over a number of years.
We have these type of businesses in Sweden as well with the ISG Nordic company that we already have. The thinking here is that they will continue as separate companies, of course, but they will exchange some ideas and exchange some customers and work together on the two different markets in order to grow both businesses. That's an ambition we have there. A very strong, I think, and important acquisitions for the TecSec division. The Westmatic is within the Niche Products division, I forgot to say. To round off, we have our financial overview here on page 19. It's great to see that we concluded another very strong year.
The net sales, as you can see, surpassed SEK 5 billion or almost SEK 5.5 billion, as you can see there. You can see the EBITA margin picking up nicely every year. You can see the EBT growth where we have the clear goal of 15% per year. We have been there for quite many years of these, not all. We've had some hiccups a couple of years, but otherwise, we have been at the 15%. Here in the last year, it was 48%. We concluded a very, very strong year and the best year ever really in the 2021-22.
You can also see the return on equity is at an all-time high at the 28%, and you can see the earnings per share and the earnings per share growth along the way, which we feel is also a very important metric for us to work with. Yeah. Thank you for that. Let's open up for questions. If you would like to put in a question, you press star six, and we will try to answer your question.
Hello? Is my line open? Can you hear me?
Yes.
Okay. I can start here. Hi, Jörgen and Peter. It's Victor Hansen from Nordea Equity Research. Firstly, on input prices, we've seen quite volatile metal prices here in the last few months, and I'm wondering, do you see any risk that your price hikes haven't been high enough or quick enough to fully mitigate this in the short term? I think you mentioned in the report that it wasn't actually fully compensated in Q4, so what to think here in the very short term ahead?
It's a bit tricky to answer because things are very volatile, and it's going both up and down really. We've seen, for instance, the copper prices has been, went down here a couple of weeks back, so it's also sort of not only up, but it's also to some extent down. The aluminum prices are also important to us, and the steel prices are important to us. What we see, for instance, in El p ress, which is one of the key companies, is that they have been pushing quite a lot and I think they are fully compensated or almost. We are talking some sort of parts of a percentage points or so that we're talking in margins all in all.
You can see that it's but the mix effect is usually much bigger than the price effect. I think we have been compensating. We also have the sort of aspect of when prices are taking effect. For instance, when you work with wholesalers for instance, they have sort of price tariffs that allows us to change prices once every six months or so. That is also changing now, so they're increasing their sort of how often they do it. They're moving from once every six months to every three months. On some other areas, there's also some day-to-day prices. It is a very volatile market.
I think to the very most extent or if not fully, yeah, almost fully I would say that we have been compensating.
Yeah. Understood. Thanks. Thank you very much for that answer. On M&A and yeah, of course I understand it can be a bit lumpy, but I'm still wondering, is there any particular reason behind the lack of acquisitions since January?
Well, the simple answer is no, there is no particular reason. We try to be selective, and we've run a number of acquisition processes, and we are at present running a number of acquisition processes and it will happen. We concluded 2 here in the beginning of the quarter. We have been quite active here during last year and also sort of using some. I mean our equity ratio has gone from 40% to 36%, right? So it's also about finding the right things and being selective, and that's what we've been doing. But the simple answer is no. We will continue to do acquisitions, and we are running a number of processes at present.
Sounds good. If you could provide some color on the component side here, perhaps how much of your sourcing would you say comes from China, which is hurt by lockdowns as we all know? Perhaps what business areas have the highest sourcing exposure to this region would be very helpful.
It varies quite a lot, depending what type of sort of components we're talking about. Many of the metals that we are just sort of working with at the EL Press or at Elkapsling and also other are from China, but they are sometimes also sold through wholesalers and other routes to in Europe as well. It's coming from China to begin with. That's affecting the market. In general speaking, and also when we talk about semiconductors and more of electrical electronics type suppliers, then it's more in the International division.
I think the more straightforward and simple answer is it might be more in the Electrify and it might be more in International as well, while the others are more locally sourced. How much is it all in all? Well, I would assume it's yeah, 20% or so, 20-25% or so is a rough estimate. I don't have the number really.
Yeah. That's helpful. Finally, very interesting with an update on return on sales here. Could you possibly mention which business areas have the highest share of units below 6% and 10%?
Generally speaking, I think it's the distribution-related type companies have a higher proportion that they have less CapEx as well, so it also justified. They still have a good sort of return on capital or return on investment. In terms of ROIs, they are slightly below the average of the group, while the top performers are usually product companies. There we have a few that are even above 30%. Generally speaking, it's, I think it's in the International division and where we have more of distribution-related businesses. We have a couple within Control as well.
Okay. Thank you for all the answers, Jörgen. That's all for me.
Yeah. Thank you.
Hi, Jörgen. Can you hear me?
Yes.
Perfect. Just going back to the price increases, as you say, we have started to see that input prices are starting to come down. I was just wondering how sustainable do you think your price increases are? If the input prices are coming down, do you think you will have to lower your prices again or will you be able to keep them?
I think in an inflationary environment, I think most prices will be kept at a quite high level, I would say. Of course, if the raw material prices comes down sustainably and to a large extent, customers will put pressure on that. I think it's important to understand, I think the pricing power comes from us working in niches and being very specialized in what we're doing. Of course, we also have some competition. I mean, it's still so that customers might find alternatives if we don't sort of. When the price raises are up, then it's affecting all suppliers, right?
It's then the prices goes up, and if the prices come down again, well, of course there will be a price pressure as well.
Yeah. Okay.
I think the margins that we have in the group. I think we at least plan to have them sustainably at a good level, at a very good level that we have them.
Okay.
Yeah, at least.
Perfect. As you say, you have increased inventories, safety stock. Do you have any feelings if your customers have done that as well, which have supported sales in this quarter, or do you know anything about that?
I don't think that there's a dramatic effect around that, no. I think that the supply chain has filled up and we have some orders that is also. I think the underlying demand has also been good. I think it will sort of move on from here. It would be a lot of struggle still, but I think along the way, we will muddle through this sort of and then find a new balance later on, I would say.
Okay. Perfect.
It's not like I see there will be a dramatic drop. I don't see that happening really.
No. Good. Yeah. That was all for me. Thank you.
Mm-hmm.
Hello, is my line open?
Hello? Welcome.
Hi. Can you hear me?
Yes.
Yeah. It's Adrian here. I'm calling in from ABG. I just had a few questions on my end. First of all, is it possible for you to give some sort of indication on the split between pricing and volumes in the organic growth for this quarter?
Yeah. Working the way we do, I mean, we have a lot of mix effects as well, so it's a bit difficult to sort of do that. From a rough estimate, I think we have concluded that about half of the organic growth or 20%, half of that is probably price.
Okay. As for the margins in Niche Products, and especially International, which were a bit softer for the quarter, can you sort of, I mean, you mentioned supply chain issues, but are there any other reasons behind why this was the case for the quarter?
No, those are the reasons, really. It again, it's a lot of mix. For instance, we have in Germany, we have a very strong performing unit in International, and they had a little bit of a slower quarter this quarter. That's affecting those numbers, but it's still on a very good level. Niche Products, they have made some acquisitions a couple of years back, and those we are working with, they're not up to level when it comes to performance. They're doing some integration work in a couple of units there. That has also affected the numbers within the Niche Products division. While others are doing it greatly, I would say the Westmatic, they came in very nicely. The Tormek continue to do it very well.
The Wapro did it very well on a total. It's still on a very good level, but still, not all units are really up to speed.
Okay. The final one from my end, just on the current trading so far in Q1, would you say that demand has been on par with Q4 levels?
Yeah. Yeah. It is, it's continued in a good way. I mean, we also had in April, we saw some effect from the Easter that we normally do, so that is sort of affecting the numbers a little bit in April. Otherwise, it's been continuing in a good way here during since January and onwards. Of course, we are meeting tougher and tougher comparables, so that you of course have to keep in mind as well.
Okay. Thank you. That was all for me.
Mm-hmm.
Hello, can you hear me?
Yes.
Yeah. Hi, this is Rasmus with Hansab ank in equity research. I'm standing in for Anna today. There are a couple of reports in the sector, as you might be aware. I was coming back to the question on price. Is this price effect increasing as we roll forward, given the situation during the first or the fourth quarter here? Or is it roughly stable, do you think?
I think the turmoil really continues, but it.
Mm.
All in all, I think it's on a sort of generally speaking at the same level as it was in Q1 or sorry.
Mm.
Yeah, yeah. Yeah, calendar Q1. It's continued throughout the spring here.
Yep. Yep.
We'll continue to see sort of price increases to offset the raw materials that we saw during the last quarter, taking effect going forward as well.
Yeah. Cool. The second question, just an observation on your SG&A cost. You really managed to get them down from a couple of percentage points going back a few years. Is that sustainable or is it? I mean, it's a changing mix, of course, of companies, but it's also the fact that a lot of SG&A was sort of held back during the pandemic. To what extent do you think that the kind of levels we see now are sustainable going forward?
I think they will pick up to some small extent. I think the traveling and sort of visiting fairs and doing a lot of outdoor sales work that has been limited also during this quarter. It's been affected also during this quarter. The pandemic in January and February, I mean, people were sick and people were not out to customers at that point, but now it's picking up. I think we will see some effect on the SG&A that is, but not dramatically, I don't think either, I would say.
All right. Thank you so much.
Yeah.
Hi, can you hear me?
Yes.
Hi. Hi, Marcus at Pareto Bank here. Couple of questions left. First one is just on the receivables. You see pretty big pickup in the quarter from last quarter. Just want to check that is just temporary. There's nothing strange there. That's my first question.
We've had a good invoicing, and that is affecting that number. Especially in February, March, it was a strong invoicing, and that's affecting that number. It's nothing strange, no.
Okay, perfect. Continuing on the pricing, but a bit different question. Are you—I would assume that at some point in time, as prices keep coming up, you will have an impact on demand as well. Just curious to hear when you are discussing with your customers, are we still not at that level, or are you starting to see some hesitation in discussions et cetera, because price levels are coming up?
I don't hear very much about that at present, and I haven't during this spring, really. I think it's inevitable that when we see consumers pushing back towards and becoming more price sensitive, that is affecting the suppliers or those building consumer goods. That will have an effect also on business to business in a later stage. It's inevitable that you'll get there at some point, but we're not there yet, no.
Okay. Yeah.
I think it's also important to understand. I mean, it is, it's the sort of price raises are quite significant. I mean, it's we're talking 15, 20, 30, 40 even % sometimes. That's when you do that once, it might work, but when you do it twice, you get a much more resistance, right?
My final question is just on the M&A. Just curious to hear that you listed on one of the slides that you are increasing the M&A capabilities. Are you increasing that further from where we stand now? Or is this tied to the more closer to 1 billion strategy that your target for the year that you launched a year ago?
It was launched a year ago. Now we have made some changes and are working with it in a different way. We are increasing our resources somewhat, but most of the people have now been hired, and most of the changes have been done. That means that we are sort of working in a new way, and that we are approaching sort of where we would like to be.
Okay. Still.
We put some feet on the ground in the UK here lately, and then that was the one key aspect of it. But other than that, we have been building resources in the divisions a little bit and to do more acquisitions and to get them sort of warmed up, and that's where we are at the moment.
You have a full team now, and that's kind of this is something that has been gradually going on throughout the year. We should expect in terms of feet on the ground, we've seen kind of a gradual ramp up. As you say, I mean, you have a bigger capability now in terms of man-hours working on the ground than you had three and six months ago.
Yes, that's true.
Okay, perfect. Thank you very much.
Good.
Hi, Fredrik Nilsson from Redeye here. Can you hear me?
Yes. Hi, Freddy.
One question about the return on sales graph. I mean, despite the very strong numbers on the group level, you still have about 10% of the units that are performing on a quite low level on margins. I mean, are there any initiatives going on, or what's the reason behind that?
Well, the 10 units have never been that few, so we are gradually moving in the right direction. Of course, there are things going on. We have some restructuring program going in 2 or 3 of the units, and we have one that is, yeah, we took some extraordinary write-offs as well in one of the companies. That's also in order to change the direction of the company, moving from one type of player in the market to another type of player, changing strategy, really. Definitely we are working on all of the companies, and especially those that are not performing up to standards.
Okay. Also on M&A, have you seen any changes in the multiples of the companies that you're looking at, and perhaps a slight decrease in competition considering the tougher market conditions in the listed environment at least?
Yeah. To some extent, I think that's been gradually happening for a couple of years now, that we see some since money have been very cheap and interest rates have been very low. Of course, there are some increased competition along the way, and that's also to some extent driving the margins multiples. We are not talking significant, I don't think. It's maybe moving from 5 to 6 or 6 to 7 or 7 to 8. That is basically where we EBIT margins multiples. That is usually where we sort of work.
You haven't seen any trend shift recently considering the more tough environment with rising interest rates, for example, that might reduce the competition somewhat compared to earlier?
I think that might happen later on, but up till now I haven't seen that, no.
Okay, thanks. That's all.
I think we're all getting accustomed to a new environment when it comes to interest rates and inflation rates. I would say I think it will take some time before you see that in multiples, really.
Okay, thanks.
Good. Someone else?
Yeah. Hello.
Hello. Some final question? Someone more left with, that have some questions? Okay, good. Well, let's round off then. Peter and I are available here for some one-to-ones over the phone if you like, so give us a call. You know where to find us. I think our phone number is on the webpage, and you can call us if you would like to have some additional questions put to us. Other than that, thank you very much for listening in, and looking forward to talking to you soon again. Thank you. Bye-bye.