Yes. Good morning. Hello. Welcome to the second quarter presentation of Loomis. I am Patrik Andersson, the CEO of the company, and today I have also with me here, Anders Haker, who is the CFO. If we then turn to page number two, we have the content of today's presentation. We will go through the highlights, the different segments, the financials, finally Q&A. Then we turn to page number three, and these are the highlights of the quarter. I will go through some of these points in more detail later on in the presentation, but let's start with the growth. We had a real growth of 7% in the quarter versus 2% last year. We had an organic growth of 3%, and we have a strong growth in the U.S., as we haven't seen the last quarters and years.
We're taking market shares in the U.S. market. We have a negative organic growth in Europe. That's affected very much by France and also to some extent in Sweden. We have made acquisitions, which is very much according to the plan and the strategy we have. We have acquired a company in France called CPoR Devises, dealing with FX foreign exchange. We have bought a company called Chile Valores in Chile, and we now have a 30% market share in the Chilean market. When it comes to the margin, the margin ended up at 10.6%. The difference versus last year is very much due to France, where we have lower volumes, lower profitability, also then restructuring costs that takes the result down in France. I will touch a bit more on that later on.
In the quarter, we have positive items affecting comparability amounting to SEK 98 million, and that is a revaluation of the U.K. pension scheme, and that is then SEK 178 million. We have that at the same time, written down goodwill in two of our countries and also some other write-down costs. The net is then SEK 98 million. All of them are non-recurring items. EPS is then, of course, positively impacted by what I just mentioned. EPS is up 24%, the operating cash flow is good in the quarter, 90%, which is very much in line with historical levels. If we then turn to page number four, we see the margin development. As you can see that the margin came down versus same quarter last year. We had last year a very strong development.
As you can see, we were up 1.2% in Q2 2017. We have been aiming for 0.5% growth year-over-year when it comes to margin. As I said, this is due to the situation we're having in France. If we then turn to page number five and look at our segments, then immediately turn to page number six, we start with United States in the quarter. As I said before, we had a good and strong organic growth of 7%. We are growing in all business lines. CIT, including ATMs, we're growing by 3%, CMS 3%, then SafePoint 18%. SafePoint is now accounting for 13% of the total revenue, very much in line with our plans and targets. We see that we are increasing volumes and gaining market shares.
We are winning contracts now more smaller and mid-sized customers, but we are also gaining volumes from existing customers. The trend we have seen the last couple of quarters is continuing. If we turn to page number seven, we have a look at the SafePoint development in the U.S. By now we have in total installed close to 25,000 units in the U.S. market. The revenue, as I mentioned, is 18%. What's very encouraging is that in the quarter, we had 1,301, to be precise, in new installations. I think that this is the best quarter we have ever had when it comes to SafePoints in a single quarter. We are now very confident that we will reach the 5,000 units for the year as such.
Just to mention that we also had 461 refreshes, and that is existing customers that is continuing or refreshing the contracts. I think that's very important that we see that the customers we have won, they continue with the concept. In many cases, they change the SafePoint as such or the software. That is, of course, taking some time as well, but it's very encouraging to see that that number is high and it's increasing. We are at the same time also investing in the sales organization, building up the key account management parts, IT, customer service, et cetera, to be able to continue to fuel the growth of SafePoints. We had actually 150 new customers in Q2, and we have 2,900 in total, and we have more than 200 provisional credit banks supporting the growth in the U.S. market.
We now turn to page eight. We look at the margin. We had a margin of 13.1% in the quarter, of course, it's coming from more high-margin services like CMS, more SafePoints. We also have economies of scale due to efficiency in routing, efficiency when it comes to branch efficiency, and so on and so forth. We also have invested not only in the sales organization, but also investing in a rollout of a software program called Track and Trace, which we're now having in most of our branches, that is taking some costs as well. In the long run, that would be very good for the efficiency going forward. We can also mention that the San Juan branch is back on track after the hurricane we had last year and actually having higher margin than last year.
Let's turn to page number nine, there you can see that the CMS share of the total revenues continue to increase, now we're up to 34% CMS turnover in comparison to the total turnover. That's encouraging to see. We turn to page number 10 and talk about Europe. We had a real growth of 8% in the quarter, what's adding on top of the organic growth is, of course, the acquisitions we have made in Chile, Germany, also what we call Loomis Value Solutions or Intermarketing from Finland. We also, as I mentioned, made an acquisition in the quarter of CPoR, which is a FX company, a very successful company, high-margin company, that's very much in line with our strategy to grow in new areas, FX is a very interesting area for us.
We have a turnover or a company in the Nordics already, now we're expanding those operations into Europe or main Europe, so to say. We are continuing that process, and we think that this is a very interesting opportunity for the future for more M&A activities within FX. When it comes to the organic growth, it was negative in the quarter. However, I'd like to mention that we had a very strong growth in Argentina, close to 70%, Spain growing 3%, Turkey 13%, Belgium 13% as well, Austria 7%, and Portugal 9%. There are many countries in Europe which are really contributing positively to the top line.
What's also encouraging to see is that we are now moving ahead with the SafePoint concept in Europe, we have very positive development in many countries, especially I would like to mention Spain, France, and actually in Sweden as well, where we made a big contract with one of the leading retailers in the Swedish market. When it comes to France, it's negative on the top line. That is what we have communicated before, that it's contract losses during mid 2017. I'd like to say that we are now, of course, working very hard to make a change in France. We have a program which we launched, of course, immediately after we made the losses, we are going to reduce the number of employees by 150, and we're now a good way through that program.
We have taken out 110 FTEs, we are saying that now that during the rest of the year that the situation in France will stabilize. We think that when we are through this program, it will be better and we will come back to the margins we had before. On top of that, we will incorporate the CPoR company, which we bought recently. I think that that mix, the combined effects of merging these two companies and the trimming of the Loomis France, it will make a very good and strong company in the end. When it comes to Sweden, we had the notes and coins exchange program in 2017, of course, we're meeting those numbers. On the top line, it's of course negative.
When it comes to the margin, of course, as I mentioned, France both the profitability in the French business but also the restructuring costs are lowering the margin in Europe in total. The margin is 10.7% versus 13.1% last year. On top of that, we have a bit of a diluting effect from the acquisition in Germany. It's a EUR 45 million business with lower profitability. However, that profitability will increase over the quarters to come. If we then turn to page 11, looking at international, just a few comments. Back to growth again, which is nice to see. We see more stabilized markets for cross-border transport, and we have a positive trend for the storage business. Operating margin is slightly down.
We have higher profits in storage, somewhat lower margins in the forwarding business, and we have invested in the Asian business and also into the diamonds and jewelry business that we bought some time ago in the U.S. It's encouraging to see that we're back to growth, at least now in the international business. We then turn to page 12, and then immediately to page 13. I just highlighted a couple of points from the statement of income. Real growth is 7%. Items affecting comparability, as we said, SEK 98 million coming from the revaluation of the U.K. pension scheme. Then, as I mentioned, the earnings per share up 24% in the quarter. Having said that, now I hand over to the operator. Operator, do we have any questions to me or Anders?
Ladies and gentlemen, we'll now begin the question and answer session. If you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, star one if you wish to ask a question. Our first question comes from the line of Mikael Holm. Please ask your question.
Yes, hello. I have two questions. The first is on European margins, where you in Q1 said that adjusting for workdays, non-recurring items and the acquisitions operating margin was basically flat year-on-year. Now you had help from more workdays, compared to last year, and still the margin decline accelerated. How much of this drop would you say are related to the costs that are more non-recurring to its nature? That's the first question.
The margin drop, if you exclude the France situation, I mean, the margin drop is entirely due to restructuring programs ongoing and the valuation of the German business. Once we get back on track in France, the margins will come back to historical levels. It's very intense work ongoing now. It will continue slightly into Q3, and I think when we get to Q4, then we should be pretty much back on track again.
The second question is on the top-line development in France. You lost these contracts in mid-summer last year. You started to talk about this, but now it seems like the competitive situation has it worse than during the first half of this year. Is that the interpretation we should do?
I think that the top line is slightly negative. The worrying thing, I mean, we're not worried about anything in France, but the big negative factor is the profitability. The top line is down a couple of percent, and that's actually a bit better than we thought. What's happening is, of course, that when you have big tenders like that, what we had last year, after that, I mean, some of the competitors trying to regain some volume through smaller customer, and that's giving some turbulence in the market. The big tenders, the big contracts have been settled now. Now it's a bit some small waves continuing still, but I would say that the top line in France for Loomis France is actually a bit better than we expected.
The big drop is in the profitability due to the fact that we have to reduce the number of employees, and that's costing quite a lot of money in France.
Okay. Thank you.
Our next question comes from the line of Daniel Thorsen. Please ask your question.
Yes. Thank you very much. Two questions. The first one, the roughly SEK 100 million write-down of goodwill in Europe. What does that refer to?
It's not SEK 100 million write-down. The net amount booked is SEK 98 million, which consists of a gain of SEK 178 million, based on a revaluation of the U.K. pension liability plan. The write-down of goodwill, which is roughly a little bit more than SEK 30 million, reflects two smaller operations in the European segment. It's in the Czech Republic and it's in Belgium.
Okay. I understood that the positive effect was SEK 178, you had a negative write-down effect, taking down the net to SEK 98, the write-down effect should be roughly SEK 80.
Yeah, those are the major parts. It's a U.S. pension plan and the write-down of goodwill. U.K. pension plan.
Okay.
The goodwill is not the remaining amount. There are some other amounts in there as well.
Okay. I see. Write down the goodwill roughly SEK 30 million then.
It's actually SEK 50 million. Sorry for that.
Okay. That's fine. Thank you very much. A question regarding to the U.S., given that CMS share of U.S. revenues and SafePoint is increasing, why did we not see a year-over-year margin improvement in the U.S. larger than the 10 basis points that we saw now?
Good question. I think the changing factor is that we have now invested quite a lot into sales people, IT system, Track and Trace, and also some investment into the operation, into new branches and so on. It's actually costs that we're taking to be able to continue to grow in the U.S.
Okay. That's fine. Do you expect those costs to increase or decrease looking in the second half of the year?
I think that we have taken quite a major step now. We will continue to increase cost a bit. It's not just a one quarter thing. It will continue in Q3 and Q4, but not on exactly the same level as this quarter.
Okay, excellent. A final one on France specifically, the restructuring costs in Q2, were they higher or lower in Q1? Do you expect them to increase into Q3 or decrease?
They were higher in the second quarter than the first quarter, but they will not increase in the third quarter. According to the plan, we should be complete in the third quarter when it comes to the restructuring. We have pretty much of the program behind us.
Okay. That was all from me for now.
Our next question comes from the line of Imrich Gulin. Please ask your question.
Yes, thank you. Good morning. I would like to go back to the question on the restructuring in Europe. You said restructuring were higher in Q2 than in Q1, which makes sense, but you did not quantify them. If I look at Q1, given the margin dilution of Germany, I think you said flat margin in Europe, excluding these items, that would imply a EUR 30 million-EUR 40 million restructuring charge in Q1 in Europe and in Q2, therefore, I would imagine it's more like EUR 40 million or EUR 50 million. When you look at Q3, are we talking about a similar EUR 40 million to EUR 50 million, or should we assume that because the program is almost done, it should come down? Obviously you're not doing this for nothing. You expect a payback, with 300 people being taken out of the cost base.
Should we assume that the EUR 100 million plus cost of cutting costs would effectively produce EUR 100 million margin improvement in Europe on an annualized basis next year? That's the first question. Second, on the U.S. margin dilution, you mentioned two things, the inflationary fuel surcharge. Would it be possible to have the percentage impact on the organic top line in this second quarter? Also in terms of the sales and IT investment, how much is the extra cost in absolute term? Especially, are you doing this with a view to support the 7% organic growth, or does that reflect the rollout of the larger cash recyclers that you were planning for the year end?
Last but not least, you have this German acquisition that is diluting margin, and you said it's going to be low margin for the rest of the year, but how far do you think you can raise the margin of that acquisition in the coming year, please? Thank you.
I can start with the last question first. Germany, we're making an inroad into the German market. We're number 3, and to be honest, we are not making any money in Germany right now. The plan is of course to get to margin, which is somewhere between 7% and 10% over the quarters to come. That is the plan, and anything else would be not good enough. That is done, that will take some time. We are in the German market for the long run. That's question number 3, and I turn to my CFO to answer the other questions.
The first question was around Europe and the restructuring programs, you are correct in your analysis when it comes to the magnitude of the cost we're taking. In Q2, we were on a level between SEK 40 million and SEK 50 million, and of course, these are non-recurring. If you add up what we booked in Q1, those will be the cost savings going forward as well.
In Q3, therefore, should we assume SEK 40 million-SEK 50 million again?
No, it will be less as we have the majority of the programs behind us, that number will come down.
Starting in Q3. The programs will continue for a while in Sweden, but from the French restructuring programs we will have behind us when we leave Q3, and they will be smaller than in Q2. When it comes to the U.S. situation, to just give you a bit of context, I think that over the last three, four years, we have actually not increased the support organization or the sales organization, the IT organization. Now there is quite a strong need to strengthen that organization. One, to be able to handle all the customers that we have already, especially in SafePoint, and be able to refresh, and install, and take care of the customers we have. Secondly, to be able to grow SafePoint even further.
Thirdly, as you mentioned, we have now in the pipeline to launch the recycling concept, will take some time, but it's really about strengthening the sales organization. Also when it comes to IT, I think that the technology now that goes into the SafePoint is very important, and we need to be on top of that development, and be able to offer new solutions when it comes to IT. There is a need to really invest in software people and so on and so forth. Thirdly, I think that also in our branch structure when it comes to what we call Track and Trace, it's a software system which tracks all the different deliveries, the routing and so on.
There is a need to invest in the U.S. market, and I think those costs we take right now to be able to continue to fuel the growth, just to give you a bit of context.
Okay. The fuel surcharge, the percentage impact on the top line and just to get a sense of the real organic growth, so to speak.
It's roughly 1%.
Okay. Thank you.
Our next question comes from the line of Carina Elmgren. Please ask your question.
Yes, hi. A couple of questions. Most of my questions are already answered. The German acquisition, are you happy with the development there? Can you tell a little bit more what you expect from the German market? The margin increase in the U.S., which was lower than in the previous quarter, I understand it is due to investments as you have explained, but is there something else that we should know in the market in the U.S., like increased transportation costs or tougher competitions from your peers? Thank you.
Germany is one of the biggest, I would say, cash markets in the world and in Europe. It's still a market which is fragmented and a bit underdeveloped, I have to say. We think as a market leader in Europe, we want to be in Germany. What we've done now is that we bought the cash part of a guarding/cash business, and we're now carving that out and investing into a separate organization to take care of that. Our expectation is that the German market will undergo same development as many other markets. I mean, being more outsourcing, more consolidation, et cetera, and we want to be in that market. It will take some time, as I said, we have a great expectation and great plans for Germany.
Okay.
Our next question comes from the line of Viktor Lindeberg. Please ask your question.
Thank you. Just a question on this partnership with Sonect that you published a few days ago. Just interested in understanding a bit more of this. I have a three-fold question here. First, is this the same thing that we basically see and already have here in Sweden when you go to the supermarkets, that you can withdraw cash in the retail store? Just to understand that. Second, when we look at this partnership, what potential revenue streams do you see coming out of this? Is there a, call it cannibalization effect from you servicing the ATM volumes today, relative to them servicing the retail segments? Just to understand that dynamic would also be of interest. Thank you.
That's good. Sonect is a small startup company in Switzerland, and what they do is that you can withdraw cash from the retail store, and you can do that, you go into your bank account, get a QR code, and then you scan it in the store and get money. You ask yourself, "Well, what's the difference?" The difference here is that the retailer gets a fee from doing that. Many of the bigger banks are now, still on a relatively small scale of building these solutions into their apps, into the banking app, et cetera. There is a benefit for the retailer to get people into the store and also getting a fee from that. That's the main difference versus other systems. Our idea is to build that into our service.
You can have a recycler concept, it's basically a recycler concept in a way. You can have a SafePoint, you can have CIT CMS, we're offering that to our retail customers, but also banks are interested in this solution because it takes down the cost. You don't need to have that many ATMs and so on. For us, it's good because it's supporting cash in the society. It's still very much on the low scale, but we see that where it's launched, in Switzerland, for instance, it gets quite a lot of traction. We're starting by building this into the offering we have in the Nordic countries, it's very exciting, and I'm quite hopeful for that in the future.
Yeah. Sounds exciting. Just to understand, when looking at your revenue split between retail and bank today, can you quantify how much is banking and ATM-related volumes or revenue?
In Europe, I look at Anders now, it's about 50/50, I think.
Yeah. It's pretty much a split 50/50, it's more or less the same situation in the U.S.
Yeah.
In certain countries, it is 60/40. It also, of course, depends on the outsourcing level. If you take a country like U.K., it is a minority that would be banking business. It is mostly retail work for us.
Okay. An additional question for you, Anders. I am looking at the U.S. division and the reporting, and you mentioned 7% organic growth, and there is no acquired growth. When I calculate the revenue year-over-year, it is significantly higher than that. The FX component should actually be negative year-over-year. Is there some funny stuff in the revenue line this quarter in the U.S. or?
Not really.
What is the discrepancy then?
There should be no discrepancy. Assume you're using the same FX rate as last year.
Okay. Maybe we can discuss that later then. Final from my side for now, looking at margins, just to understand what you're implying here. When you say margins in Europe should recover, when I look at 2017 levels, they were at close to 13.5%, and you're now talking to get back on track. Is this the level that you target when we look into 2019, and is this on a like-for-like basis, or is it including CPoR that should be margin accretive?
It's not including CPoR. The focus we have is to get the margin back on historical levels, everything else being equal, you compare the same business operations.
All right. Thank you. I'll get back in line.
Our next question comes from the line of Philip Richards. Please ask your question.
Hi there. I had two questions on France, please. On the restructuring, did anything unexpected happen there in the second quarter? I believe in the first quarter, you mentioned that you were 80% done with the restructuring. Today you say that the restructuring costs were higher in the second quarter than the first quarter in France. Did it take longer, or did anything else unexpected happen here? That's the first question. The second question is, if you could comment on the general pricing environment in France, now that the other tenders are coming to market after the more difficult situation last year, what are you seeing in terms of pricing of new tenders coming to market? Thank you.
Thanks. The first question, I think that what happened is that when you have big tenders, like we had in France, you're winning some contracts with one customer in one region, and then you're losing in another. It takes a bit of time to get that whole routing structure, to get that in place, and that has taken a bit longer, I would say. The complexity of taking out volume in one place and getting it in another place, that has taken a bit more time. Also that this is the peak season in France. France is one of the biggest tourist countries in the world, and now the peak season starts. We cannot lose the eye on the quality. That's why we've been really careful about cutting to the bones too fast. Those are the two things that sort of impacting in France.
The whole program is well on track, I would say otherwise. When it comes to price pressure, I think that, as I mentioned, the big tenders are now through and done, then of course, there is some competition for the retail customers, which are not on big tenders. Of course, there is some competition, but not at all of the magnitude we saw during 2017. It's in a much smaller scale. To be honest, we have also won some customer, we talked about the Kingfisher retailer in France, which we won. I think that also my expectation is that our top line will stabilize also in Q3 and Q4.
Thank you.
Our next question comes from the line of Daniel Thorsen. Please ask your question.
Yes. I have two follow-up questions on Europe. The first one, what is actually driving organic growth in the European countries that you mentioned, like Spain, Belgium, Turkey, Austria? Is it higher volumes, better pricing, or just outsourcing activity from banks and retailers increasing?
That's a bit of a split. If you take Turkey and Argentina, that is basically continued outsourcing. The market is continuing to outsource. When it comes to Spain, Austria, and Portugal, for instance, it's basically that there has been some turbulence in the market that's in a calming down, and with our quality, has been able to win contracts. Don't forget SafePoint, which is also helping supporting the top-line growth. Maybe not that much in volume, but in terms of a different price set and thereby increasing revenue. In those sort of more mature markets, it's actually we doing quite a good job in developing the market, getting new customers, and taking market shares.
Belgium is growing also by 13%, which is very good, and that's according to the plan we had, that we want to take much more part of the outsourcing going on in the Belgian market. It's a bit of a mixed bag. I also like to mention U.K. U.K., we had some issues, as you remember, a couple of years ago here. U.K., we're actually growing in the U.K. and actually developing the margin as well. I think that there are many very positive things happening in many European countries for different reasons. Of course, hiding a bit behind France, but I'm quite pleased with many of the European countries.
Okay, that's excellent. The final one on LATAM. How large share is Latin America of Europe today?
It's still a fairly small part. Our Argentinian businesses has total sales of around, say SEK 200 million. Chile is roughly, we don't have everything, all the effects into the Q2 numbers from the recent acquisition of Chile Valores, as that will come into Q3. I think that our expectation is to get closer to SEK 500 million in turnover by the end of 2019, to give you a rough figure.
Okay. That's fine. A follow-up on that. When increasing your presence in LATAM, how is the situation with organic growth today, inflation, currency weakness affecting fundamentally within the market and also financially when translating into SEK? How do you see the development now?
If I comment first on the markets, I've been to LATAM myself some time ago, traveling around. It's a very dynamic market when it comes to our business. Still a lot of things to be done when it comes to outsourcing. We are launching, actually, as we speak, SafePoint in Chile right now, and there's been a sort of a great appreciation from the market of that concept. There are many things to be done in these markets, which, let's say, these markets are 10, 15 years behind Europe when it comes to outsourcing development. It's a very promising market. It's not that price sensitive either. From a business point of view, very interesting.
When it comes to inflation and exchange rates, you have a totally different situation in Chile than Argentina. Chile, for instance, is much more stable. You don't have the same inflation, and you don't get the same pressure on the FX rate. Argentina, on the other hand, you have a very high inflation. What's good for us is that our organic growth has been much higher than the inflation rate. Of course, with high inflation, you get the same pressure on the FX conversion. Expressed in Swedish currency, you don't get the same benefits. Considering that our growth has been much higher than inflation, we still have a very fantastic development in Argentina.
Okay. Margin-wise, looking into 2019, do you expect it to be higher margin than the rest of Europe or a lower margin region?
Argentina is today the country in Loomis where we have the highest margin, and that will continue to develop. Also Chile, not on the same level, but will increase over the years to come. I think that in a year or two, Argentina and Chile will be the countries with the highest margin in Loomis.
Okay, excellent. That was all from me.
Our next question comes from the line of Carina Elmgren. Please ask your question.
Yes. Hi again. Maybe going back to my second question there on the margin in the U.S. The increase was less than previously due to investing, that I understand. Is there something else impacting the margin negatively, like transportation costs or tougher competition in the U.S.?
I think everything is related to the expansion projects we have from the U.S. In order to keep a high growth rate long term between 5% and 10%, we need to invest in the business and recruit more people, both on the sales side and on the support side. That's mostly what's driving or what has an effect on the margin expansion. U.S. has really delivered well in Q1 and in Q4 last year as well. It will not be able to keep that pace of margin expansion. If we can do roughly 50 basis points per year, we would be very happy with the U.S.
Okay, great. Thank you.
Our next question comes from the line of Mikael Holm. Please ask your question.
Yeah. Yes, I have a question on the organic growth in Europe. I had some problems getting the breakdowns on the countries correct, because you have earlier said that the Nordics are declining mid-single digits, I think. You mentioned France being down 4%-5% in the quarter, then I guess that in this particular quarter, Sweden was probably down then, yeah, more than double digit. If every other country in Europe is growing, it's hard ending up at -1% organic growth or a -1% organic decline. What am I missing in this equation?
Mikael, I think we need to sit down and go through the numbers. The situation is that a decline in primarily Sweden and France, as you said, and some of the countries are flat, and good growth from other countries. The situation is that what we have lost in France and Sweden over the last quarters has not been compensated by growth in the other countries.
What's the decline in the other Nordic countries? Is it still single-digit declines?
Yes. You see, it's clearly visible in Sweden, but the other Nordic countries are more on a flat level, just slightly negative.
Okay. Yeah.
In Sweden and not the other Nordic countries.
Sweden, that's roughly 10% of Europe.
It's more. You have the effect of the growth rate that we had in Sweden last year because of the exchange of the notes and coins. The underlying drop is much smaller than the reported numbers.
Okay. Yeah, I understand that. Okay. Thank you.
Our next question comes from the line of Aymeric Dore. Please ask your question.
Thank you. Just a quick one on the capital allocation. Obviously, you've been very acquisitive, and yet your balance sheet continue to be very solid. Is there a point where you might consider that the share price offer a good alternative use of capital versus acquisition? Is all of the financial firepower going to be redirected at M&A? If so, is the pace of M&A that we've seen so far this year likely to continue in the coming couple of years?
Yeah, that's good. We will use the strong balance sheet to acquire companies. Basically, we want to continue at the pace we're having right now. As I said, on the capital markets day, we have a SEK 10 billion pipeline of objects, and as you know, it takes two to tango, of course, but we have just one thing in mind, that is to use the money for M&A, and there is a good pipeline.
Okay.
Our next question comes from the line of Viktor Lindeberg. Please ask your question.
Yes. Thank you. Just to ensure we understand the dynamics correctly going into Q3 on Europe on organic growth. Sweden was, I think, peaking last year in Q3 when it comes to extra business volumes. We should then anticipate year-over-year that it's going to be quite a severe downturn. When you look at the current run rate with -1% in Q2, do you anticipate growth rates to maybe decelerate further down in Q3 temporarily in Q3, or do you think it's still going to be stable at 1%, give or take, -1%, give or take, also in Q3? What's your gut feeling as of now?
We expect the growth rates to be stable, whether they will be negative 1% or on the flat level, of course, we don't know. We don't expect them to move in the wrong direction.
Okay, that's good. Finally from my side on Argentina, it seems they might be entering a recession. Just looking at your business in Argentina, how do you think, or have you seen any signs of this so far, and what effect do you anticipate this may have given that it's a very profitable and strongly growing business for you?
You're correct. I read about the same thing as you have, we haven't seen any effect. As I said, I was down there a couple of weeks ago, very much we have a strong business plan, we have a strong team, we are really going to invest more into new facilities and new trucks and stuff like that in Argentina. We don't see any sign of that our business is going into any kind of recession. On the contrary, we are continuing to growing. The question is, of course, will there be a pressure on the prices? I don't see that either right now. I think that in Argentina, it's very much business as usual for the time being, I don't have any other signals.
All right. Sounds comforting. Thanks.
No further question at this time. Please continue.
Okay. Thank you very much for all the good questions and listening to us. I wish you all a very nice summer or vacation for some of you maybe. Thank you very much.
That does conclude our conference for today. Thank you for participating, and you may all disconnect.