Good morning, welcome to the year-end report January, December 2018. My name is Anna, I will be your coordinator for today's conference. During this call, you will be on listening only. However, at the end of the presentation, you will have opportunity to ask questions. If at any time you need assistance, please press star zero on your telephone, you will be connected to an operator. I will now hand you over to CEO Pehr Oscarson, your host for this call. Thank you.
Thank you, welcome everybody to this presentation of the year-end report for 2018. With me on the side here is Åsa Söderberg, also our CFO, who will help me through this presentation. Let me start just with some comments from my side around the year 2018. It was quite a year with both, I would say, huge success with the large acquisitions that we made. Honestly, I have to say that I'm a little bit disappointed that we didn't succeed to grow the core business in the old markets in Sweden and Norway. That core business is a very profitable business, growth in that area is very helpful for the company's growth. With that said, we have also taken a decision of a cost-saving program, which we will come back to a little bit later.
That is also to be a little bit more flexible for the future for changes in the market and to be able to increase the profit in the core business. I will probably be back on more details later. I will hand over to Åsa to talk us through some numbers.
Yes. Hello, everybody. Mekonomen growth in the Q4. As you know, the large acquisition of FTZ & Inter-Team made group revenue change dramatically up to 94%, almost doubled our revenue from SEK 1.507 billion to SEK 2.922 billion in this quarter. As we communicated in January 2017, we have an EBIT of SEK 57 million compared to SEK 96 million last year, the same quarter, we have SEK 53 million in items affecting comparability in this quarter. For like for like, EBIT excluding those items affecting comparability, Q4 EBIT is SEK 110 million compared to SEK 103 million. I will come back to those numbers on the next page. We have also been asked from the market to present also EBITDA, since we have customer-related goodwill that we now amortize on. We also present those figures in this report.
EBITDA, excluding items affecting comparability, amounts to SEK 160 million for the quarter compared to SEK 132 million last year. Back a little bit to sales. We had an underlying sales growth of 5% in the quarter, excluding FTZ & Inter-Team. With that said, looking at the growth in comparable units, could say that is core Mekonomen Group, we had a decrease of 1%, and Pehr will come back to that. That decrease has, of course, impact EBIT for the quarter, together with high Euro-SEK exchange rate and also result EBIT from newly acquired businesses with no or low EBIT. I go to the next page, the bridge between EBIT 2017 to EBIT this year for Q4. The first three, you have FTZ & Inter-Team. They had a result of SEK 61 million in the quarter, but they were affecting our integration cost of SEK 25 million.
We have communicated that we could have up to SEK 60 million in integration cost. We now have taken SEK 25 million of those costs, and we are expecting some more integration costs during 2019, but not up to SEK 60 million. They will be lower. We also have the additional amortization from the FTZ & Inter-Team acquisition. Altogether, this makes a plus SEK 16 million. Mekonomen has an adjusted EBIT of SEK 7 million. It is lower due to lower sales in the quarter. We have one-off items affecting comparability of SEK 28 million from the return of frames, as described in the press release January 17th. We also had items affecting comparability last year in the quarter. Sorry, I forgot MECA. MECA has an EBIT on the same level as last year. Sørensen & Balchen, they have a better EBIT if we take away the write-down of stock within. No, sorry.
Sørensen & Balchen is minus SEK 2 million as I told them. We come to other segments. It is minus SEK 23 million compared to last year, and there we have the non-core businesses and the newly acquired smaller businesses, as Pehr said in the CEO word, and will come back to as well, has diluted our EBIT this quarter. On the next page, I guess you will ask questions about this as well, but a little bit details what Pehr said here in his introduction about what we are doing right now and will do to increase EBIT during the year. We will increase efficiency and adjust our cost structure throughout the group, and that goes for old Mekonomen Group as well as the newly acquired FTZ and Inter-Team.
We have already launched an efficiency and cost-saving program to reduce costs by SEK 65 million on a yearly basis, where SEK 30 million will be achieved already from Q3 this year, with full effect from Q4 this year. We have already launched the program, and the savings will ramp up through the quarters. Our organization will prioritize among the projects we are currently running to be able to focus on core projects as the warehouse catalog, et cetera. We will also act on the unprofitable business, mostly in the segment others, as you saw in the bridge. Price increases have already been made from the beginning of this year to compensate for the higher purchasing costs due to the strong EUR in Norway and in Sweden. We also have the upcoming synergies in the purchasing area that will increase our profitability during the year.
We will see synergies already this year, they will be fully implemented 2021. Next slide, some updates about the reporting from Q1 this year and onwards. We had the IFRS implemented, and we have calculated the effects on the balance sheet and expect the right of use assets to amount to approximately SEK 2 billion, and the same at the liability side for the leasing commitment. Equity will not be affected, and the group will not restate comparable figures for historic periods. We will report in four segments starting at the Q4 this year. We will report Eftersett as a segment, Inter-Team as a segment, MECA Mekonomen as a segment, and also Sørensen og Balchen. There will be four segments going forward to adjust to the new structure of the group. Over to you, Pehr.
Thank you. We'll move on to look a little bit deeper into the different segments, and I am on page eight, where we started FTZ, the Danish operation, which we have had four months in 2018. We had a small decline in sales, about 1%, and that's affected by the weak market, which was in the autumn in Denmark. Of course, we have integration costs which affect this segment. That's SEK 80 million, which is related to that. Just a short about FTZ after the acquisitions, I would say that I'm still very impressed in what I see. The management is intact, and we have also very motivated and committed management in Denmark. I have very good faith in the future for them. We move on to Inter-Team. That's our Polish business, also included four months of the year, where we have an increase in sales about 5%.
Poland is a growing market, which we have said before, it's also a market with very high competition, which leads to weak gross margins. The Polish business also have quite a large part, which is in export, where they export to countries around Poland and the rest of Europe. That export business also was growing during last year. Zero EBIT margin. Again, as we have said before, the Polish business has an interesting future because we know that it will be a consolidation somewhere along the road, which normally leads to better margins, and it's a very growing market and interesting in my ways. MECA had quite good sales trend despite the weak market, which is mostly because of some minor acquisitions. Unfortunately, those acquisitions don't give the same EBIT, so on the EBIT side, MECA is quite stable even though the sales is positive.
Still stable operations, both in Sweden and Norway. Mekonomen, both in Sweden and Norway, was affected by this effect of SEK 28 million related to the frames which we need to take as a one-off costs, which was also included in the press release earlier this year. Otherwise, I would say that we have a small decline. We have not done any acquisitions, this is probably more reflecting how the market looks. Still if we compare EBIT adjusted, I would say that we have a very good positive development. For you who remember the years especially with Mekonomen Sweden and the challenges which we have, can still repeat that we feel that the last years now has been stable. Organization is working very well, and I'm very confident with that part of the company. Sørensen & Balchen, we're on page 12 now.
For the full year, of course, very affected by the very strong drop in sales in DAB products compared to 2017. We also had on the full year effect, the write down in the inventory of DAB products. Besides the DAB, the sales are in a positive trend now, this is a company with very efficient cost control and a strong EBIT margin. We will move on to market and market trends on page 14. It will be interesting now to see in the future, we have had a very strong sales on new cars a couple of years, which dropped in Sweden and partly Norway after the summer, especially in Sweden it was very dramatic. The prognosis for this year to 2019 is still that it will be a good year for the car sales.
Since we have had that a couple of years, we believe that those cars starts to move into our target customer groups, and that is when they reach the age of five years and older. There should be a possible potential in market increase in the future, when we look at those numbers. It's also interesting as a reflection that I think that one of the reasons for a low car sales coming up is, especially in Sweden, related to political decisions where it has created a very, I would say here, hesitation among the car buyers.
Yes, that could lead to that they keep the old car a little bit longer and an old car that's getting older needs service that's good for the economic business. You can also see on this chart we have added now Poland which has a strong increase in new cars the last couple of years. If you look on the chart on the right side, you can also see in the age structure of the Polish cars that they have a very large amount which is eight years and older. It's definitely a very interesting market in that perspective. If we look at the number of branches and affiliated workshops, I would say that we have some variations when it comes to workshops. We have decline in number of workshops in the old Mekonomen business.
However, when we look into the sales through that channels, we have increased that. The reason for that combination is very simple, and that is that the smaller workshops are by one or other reason leaving the concepts. When we recruit new workshops, it's larger one with more mechanics. That means that it's maybe more interesting to look the capacity in terms of number of mechanics instead of number of workshops. We have had that trend the last couple of years in Sweden and Norway, and it seems to continue in the future as well. The number of branches, of course, increased by the acquisitions. If you look in the old group, we are approximately on the same number. As I have said before, it will decrease slowly over the years, it's not very dramatic.
We need a footprint because the local branches is a very important part of the logistics change in order to serve the workshops with daily deliveries. Just a couple of words about the synergies coming from the acquisitions which we made. Most of the synergies is from purchasing synergies, and that work started already the same week as we had closing in September last year. This work is going well and according to plan. We are very confident that we will be able to deliver on that goal. We have two central warehouses in Sweden which we're merging into one, and it's the warehouse in Strängnäs who had during the last couple of years been rebuilt and now is automated system. We started to use that in the summer and we have ramped it up. Now it's for distribution in the Mekonomen channel.
I would say it's up and running. Next step in this project will be during the Q3, we will start to distribute to MECA branches as well. Somewhere in next year we will be able to get rid of the cost for the old warehouse in MECA system and that will give us SEK 50 million of savings as from 2024. I also wanted to talk a little bit about the off the market when especially when we talk about electric and hybrid cars which is a development which we can see is very strong in Norway and almost non-existing in Poland. We have the countries between Sweden and Denmark. Just that fact gives us a good possibility to learn a lot from Norway which we can adopt in the other markets when we see the same development in the other countries.
Our intention and goal is of course to reach the same level of market shares on these car as we have on the current fleet. We have started to see some changes in the market in Norway where we have the largest amount of electric cars. It's not clear that it's definitely in total it will be a lower market, but it's definitely another structure when we don't have the service parts in the same way. We have reparations in the other end who might compensate something about that. We're learning. We have in the Nordic countries also mostly developed from Norway, of course, technician training, and we have also expanded our assortment with spare parts and accessories also for the electric cars as long as the demand increases. In Norway, MECA has implemented an electric car certification.
In the next quarter, we expect that about half of the MECA car service workshops in Norway will have that certification, and by that, be fully equipped in dealing with those cars as well. I'm on page 19, and talk about workshop and technician development. We informed in the autumn that in Norway they are changing the way of how car inspection should be done and what kind of education those inspectors should have. Norway is a bit special compared to other countries because the car inspection is done by regular workshops, not like we have in Sweden, where it's a separate industry. However, they need to be trained, and they need to have a certificate. Our ProMeister Academy is one of the largest training acts we have, and with a very large market share.
During the end of last year, it was 420 inspectors that got the certification, and 360 of those was educated in our ProMeister Academy. In Sweden, we started upper secondary school, which is called ProMeister Fordon, two years ago. Now we also have introduced an employment guarantee after graduation, as a way of getting more young people to want to go to this school. It's also that we really need more mechanics, so it's a win-win concept. Sweden has also a new industry standard called Godkänd Bilverkstad, which we think is very good in order to make sure that we have the right quality towards the consumer. Mekonomen in Bilverkstad Mora was the first Mekonomen workshop that was approved in that system earlier. A little bit about the future and focus 2019. We will focus on the customer value always.
That's to have the right quality, the right concept services, develop online booking, e-commerce, and customer service. I would say that this year will be very much focused on profitability, that we improve the sales efficiency and cost controls. We have synergies which we can leverage on and best practice from different markets. As Åsa said, we have launched this cost-saving program, we will definitely or are already acting on unprofitable businesses. By unprofitable businesses, I would say that that's more or less businesses which is outside the core business. The core business is in many ways very healthy, but we have some acquisitions and some startups and some other things which we need to act on urgently to either improve the profitability or find other ways to control that. Of course, we also want to grow.
We believe that there's good possibilities to leverage on the initiated strategic investments which we have done the last couple of years. Can be business systems, spare part catalog, the warehouse augmentations, and acquisitions which is made earlier. We also believe that with increasing the focus on the customer value, we should be able to have a good organic growth in the future also. The main focus for 2019 will be profitability. All right. Åsa, did I forget something?
No, I don't think so. There will be more questions asked.
Yeah. We will hand over for questions.
Hello? Can you hear me now? Sorry, I'm so sorry. I was on mute on my extension phone. Ladies and gentlemen, if you would like to ask a question in this meeting, please press star one on your telephone keypad. We will introduce you with your name when it's your turn to ask a question. The first question come from Niklas Tamm from SEB Equities. Please go ahead, your line is now open.
Thanks, operator. Good morning to you. My first question would be if you could give us I know you don't announce or disclose the results in the Mekonomen segment between Sweden and Norway, but if you make some assumptions, it looks like Mekonomen Sweden may be particularly weak in this quarter compared to Q4 2017. Sorry if I'm missing the first five minutes of the call, but could you revert and tell us a bit more of profitability in Mekonomen Sweden in your core business, please?
Just a moment.
Yeah.
When we look in Mekonomen and Sweden and Norway, it's the same development in both countries. There is no significant in Mekonomen Sweden. I would almost say opposite when you compare those, that if it's some of the countries that is a bit weaker, it's actually Norway.
Okay. Thanks for clearing that. Can I also ask you, even so, Mekonomen Sweden has had issues for a few years now. You've been trying to cope by some restructuring programs, et cetera. Where are we now in your plan for 2019? Do you actually contemplate that Mekonomen Sweden will revert to profit growth in this year? Are we still, for various reasons, a bit far off from that still?
We don't make prognosis like that, but I would say that Mekonomen Sweden as an organization and the business model and the concept is well prepared for 2019. I have the same expectations on them as the others. There is nothing, if you remember the very big problems which we had 2016 and 2017, which was the rollout with the store ERP system. It was the sales organizations, it was that we removed part ownership and so on, and we had an organization which was a little bit messy. All those things is no longer a problem in Mekonomen Sweden.
Niklas, I can also comment on the adjusted EBIT for the full year from Mekonomen, which you have in the presentation on page 11. There you can see that adjusted EBIT for the full year is SEK 331 million compared to SEK 317 last year. We have a profit growth in the Mekonomen segment for the full year.
Sure. Another way to ask the question, how will you distribute the cost reductions of SEK 65 million between the different business areas? Where will you reduce costs?
In all the areas, and it will be in operating sales companies, it will be in overhead and central functions, and it will be in all the countries. Exactly how much, where, and when, is information which we don't disclose.
Are these cost reductions mainly relating to staff costs, and will there be any costs to achieve these savings?
No, we don't expect any costs for achieving this part. My first question, yes, there is one part which is staff reduction, but it's also other costs. It's a mix, but we don't see any structuring costs to achieve this.
Okay. That's all for me right now, and maybe I can come back later in the call. Thank you.
Okay.
There is no questions at the moment. Ladies and gentlemen, if you would like to ask a question, please press star one. We did get a quick reply. It's Mikael Ödén from Carnegie. Please go ahead, your line is now open.
Yes, hi. First, could you perhaps specify the acquisitions in MECA? How much did they contribute to sales growth on a year-on-year basis?
I think we need to come back on that one. We have it, but not with us here in the presentation.
On the same topic, when you do the numbers and then come up with the growth and adjusting for both currency and Workday and so on, you have different numbers from page three into the which you typically have. I struggle to see where you come from underlying growth of 5.2% to a negative of 0.9%, when you include all the I guess the only difference between those numbers is the acquisitions in MECA or is there something I'm missing? Sales growth in comparable units, -0.9%.
Yes.
The underlying increase for the old businesses, which is 5.2%. So what is your actual?
Yes.
Your organic.
Its underlying sales is adjusted for currency and number of workdays. This is.
0.9 is not adjusted for those items, but adjusted for all the acquisitions, FTZ, Inter-Team, and all the other acquisitions also in MEKO.
Yes, they are. I guess we need to come back with this one.
We will be back on the exact definition, but it's acquisitions that are excluded, but it's not only in MEKO, because some of those acquisition we will find in the segment others.
Others. Most of them.
it's most in others. Let us come back with a clear definition between those.
On a group level, if you look at the company excluding FTZ and Inter-Team, did sales, adjusting for FX and calendar effects, did sales actually decline in Q4 year-on-year?
Yes. In comparable units, yes.
Okay. That means that there's a 5% on a group level, 5% impact then from MEKO's acquisitions. That's quite big. Okay.
We can sort this out, but in underlying sales, you also reduce number of workdays and also currency.
Yeah, I know.
Let us come back on this one. I think we can't sort it out.
I still don't think you can take those two measures and just compare them. We will be back.
Okay. If you look at FTZ and Inter-Team, is there any other costs or any other extraordinaries in the quarter, or is the only thing the integration costs that we should be aware of?
Yes. I think it's a difficult quarter because both FTZ and Inter-Team are changing their financial year. They had financial year from June to May. Of course, there are things that could be extraordinary in the quarter, but not as far as we can see. We have an effect from slower sales in FTZ in the quarter, impacting EBIT. Then, as you know, also integration costs. Otherwise, we do not see that.
All right. Going forward, you guided for SEK 60 million in integration costs. You took SEK 25 now, that leaves us with SEK 35. You hinted after the profit warning that SEK 60 million might be on the high side. Do you have any new guidance on how much it will be? Also going forward, will those costs, as in this quarter, be taken directly in FTZ and Inter-Team and not on the other line or something like that as in comparabilities?
No. They are taken locally, we stand by we won't have SEK 60 million in integration costs. It's hard to say exactly, we won't have SEK 25 again in this quarter, in Q1. We will have some cost-
These costs, will they last into 2020, or will they be taken in 2019?
2019, I would say.
Yeah.
We will have some minor amounts during Q1, for we have now taken over also Nordic Forum Holding January 11th, so there will be minor costs to liquidate that company. Otherwise, it's as we see, smaller amounts.
Another question on the financials. The other financial items, minus SEK 22 in this quarter, what is that exactly?
What page are you looking on in the report?
On the P&L. You have other financial items, minus SEK 22 million.
Just a minute.
Minus SEK 23 million, you have interest income, you have interest expenses, you have other financial.
Oh, that's the recalculation of loan in foreign currency, most of it.
That's a pure FX hit?
Assuming FX stays.
You see for the full year, it's a positive of SEK 117 million.
Yeah, that was another extraordinary in Q3.
Yeah.
Okay. It included there the write-off of the costs for the new loans. I guess we write that off in, what is it, three years or so, SEK 5 million a year or if I'm correct-
Yes
five years maybe.
Yes.
Included in the 22? Okay.
Yep.
Okay, good. Otherwise, if you look at the market development now in so far this year, if you also add to that your price increases, should that be seen on top of, if you're saying that the market is back to growing by 1%, 2% or so, what about the price increases that you have also implemented? Should that be on top of that growth?
That's very difficult because I think there will be a mix in the end. I don't think that you can put all the price increases on top of the market growth because when we talk about market growth of 1%-2%, there is also that we see, let's say, a general inflation on the price of the products on a long-term basis. For example, that spare parts tends to be more complicated and by that more expensive. It's difficult to say. I would say that we hope that most of this price increase will be on top. That's more to see in the future. It will probably be a mix.
The savings from centralizing the warehouses, will there be any savings already in 2019 or will everything come in 2020?
It will be coming in 2020 and nothing in 2019. We still don't know from when in 2020 we'll start to see that effect. That's very simple because the absolutely most important in this project is that we keep up the availability and the delivery rates for the customers. Now when we start to distribute to MECA, we need to take that carefully, and we don't know exactly when we can close down. That's one parameter. We have the closed down costs for Eskilstuna. Probably starting from some point in 2020, we'll see that effect.
Okay. From a CapEx point of view, I guess most is taken on the CapEx side.
Yeah.
Regarding the dividend or rather no dividend, from your point of view, I guess it's a board decision. Was it driven by the banks or was it driven by what you saw in Q4? Could you say something about the dividend?
From a management point of view, we look primarily in what would be best for the company. The board has to take in, of course, other parameters in the decision. We believe that since we just recently made the rights issue and gotten in money from the shareholders, we don't see any logic in paying back already five months later. We think it's better to use the money in paying down debts and securing the balance sheet for the future. That's the logic from our point of view.
It's not been driven by the banks and covenants?
No.
No.
You never considered to actually mention this in conjunction with the rights issue and the transaction that there will be no dividend paid for 2018. I guess you see with what the share price is doing right now, obviously people are concerned about this item and might have been better to communicate it earlier, perhaps.
Well, the board stands by the long-term financial goal of paying dividend of 50%. That's the long-term goal. They are each year looking at what is best for the company and try to find balance between reducing leverage and pay dividend. That's the decided recommendation from the board, and Pehr and I think we stand behind that.
Okay, final question from me. You are merging MECA and the Mekonomen business areas now as of Q1. Will we get any detail- figures or is it just simply to add those two together? Nothing else will change by that?
Nothing else will change, and it's that governance model we now have in the group running this company as four segments. Old MEKO-Norden Group, excluding Sobi, is one segment, and Sobi one, and the acquired business is two additional. It's the way we run the business, and we look upon the segments also in the light of the new warehouse where MEKO and the Knorr-Bremse will be more tightly connected.
Yeah, you're right that you should be able just to put it together and to get the comparability. There might be some changes between others and into the segments, we will comment that if we do such transfers.
Okay. Thank you.
We have a couple of more questions coming through, ladies and gentlemen, if you would like to ask a question, please press star one. The next question is again from Niklas Tamm from SEB Equities. Please go ahead. Your line is now open.
Thanks again, operator. Can I ask you on FTZ, because I guess Inter-Team is sort of a break-even business for the time being, but would you care to give us some idea of what they made in EBIT in Q4 a year ago?
It was pretty much the same level.
Okay.
It's pretty much
Excluding, of course, the integration costs.
Yeah, they also had a 1% decline in sales, of course, affecting EBIT.
Otherwise, in line. It's a complicated quarter when they are adjusting to a MEKO-Norden Group financial year, new accounting principles, integration costs, et cetera. In line with last year.
Okay. Thank you. Can I also ask you, could you care to give us some update on trading so far in Q1 in terms of the market development for you?
As we said in the press release, we are expecting a more stable market, and I don't want to make any more comments about that.
Yeah. What's the visibility there, Pehr? I'm sure you expected the same in Q4 at some point, obviously, that was not the case. Is there any particular reason for why you actually are experiencing a more stable market so far?
Mm-hmm. Yeah, there's several reasons. There are some trends which we follow with our European colleagues, where we can see that they see the same thing. We have the growing fleet of older cars, which are helping us. We also see that since we are quite often blaming the weather, at least when it's negative, I don't see any possibility that the weather could be affecting us negatively, actually this year, because we had the worst-case scenario last year. Even if it's right now plus five in Stockholm, I'm not worried because it was the same last year. We kind of hit rock bottom in those areas.
Mm-hmm. May I also ask you, on IFRS 16, is it fairly correct to assume that you will increase both the asset and the debt side of the balance sheet by about SEK two billion?
Ish.
Ish, yeah. Sorry.
Yes, it is correct.
Yeah. What all else equal will be the impact on EBITA margins or EBIT margins in 2019 from purely apples to apples from this change in accounting, please?
You are correct in the SEK 2,000 million. It would be both on both sides, we do not communicate the EBITDA impact yet, it would be positively impacted, of course, on EBITDA level. Give and take the same on EBIT. Today, I communicate that number.
All right. Final question. I have to go back to the issue with other financial costs, because I was under the impression that somewhere in 2018, you would take a total of SEK 27 million in acquisition-related financial costs. Now, I have no idea how much of that you have taken, in Q4 financial net, how much of that is actually referring to acquisition-related financial costs, please?
We have several types of financial acquisition costs. Some of them go directly to equity and some go over the P&L. It's a mixture.
I must come back with the exact amount, but not all of those are hitting the P&L. Some goes directly to equity.
Okay.
Most of them go directly to equity, but I can come back with the exact figures.
Yes, please. When you read the prospectus, it sounds at least like there will be a SEK 27 million cost charge impact in your P&L, but obviously that's not the case. Okay. Thank you. That's all from me.
Yeah.
The next questions come from Mats Liss from Kepler Cheuvreux. Please go ahead, your line is now open.
Yeah. Hi, thank you. Two questions, please. First, just coming back on the IFRS 16 question that Niklas asked about, I just want to confirm that the net debt, what would that impact be?
The asset and liability side will both be SEK 2,000 million in the balance sheet.
The net debt, as you present it, will be unchanged?
Yes.
Great. About Denmark there, the FTZ performance was down 1%. Was it due to tougher market conditions or do you experience somewhat changes in the competitive environment as well? Could you say something there?
No, I'm very confident there's no changes in the competitor landscape in Denmark. No new actors, no new concepts from the existing competitors and so on. As I said, our management is intact, and we also have very good commitment in the organization. This decline of 1% is 100% related to a weaker market due to weather and maybe some other factors, it's no lost market shares.
Just a final one about price increases. How do you implement them? What timeframe do you see? Are they sort of half year, semi-annual, or could you sort of make them work immediately? Could you give some flavor about that?
From a decision to change the prices, we have approximately six to eight weeks until it's implemented. That because it's quite a big job because it affect the assortment with 100,000, 150,000 SKUs. We normally cannot just put a factor on all the prices because we need to go at least into the different product groups. When we talk about price increase of X%, it's always a mix where it can be both up and down. We have also in some markets, we have contracts with the customers or the workshops that we need to tell one month before it's implemented so they have time to change their prices. We do it regularly in Denmark and Poland as an annual, let's say, ordinary thing to do every year.
In Norway and Sweden, the tradition has been more driven by currency than it happens. If it's no changes in the purchasing prices, then the prices is more or less flat. That's a tradition in the market too. It's not our tradition. It's how the competitors work as well.
Yeah. Okay. Thank you.
Ladies and gentlemen, there's nobody in the queue at the moment, so if you would like to ask a question, please press star one. This is the last one to be able to ask a question, and we do have one from Mikael Löfdahl, and then afterwards you want Sandoval. I will now transfer Mikael Löfdahl from Carnegie. Please go ahead, your line is now open.
Yes. Hi, just two more from me. First of all, if you could say something about if you look at the FTZ and Inter-Team, more particularly FTZ and what they perform for the full year, you have that on page 18 in the report.
Their margin for the full year was above 10%, if you would have integrated them on January 1st. That number is very good compared to the four months that you have had the companies integrated, obviously. Is there anything in the personality that we should be aware of and consider when we try to estimate the impact from FTZ in the first, especially the H1 of 2019, where the margin is much, much higher in the H1 compared to the H2? I know that the H2 was probably weaker than you had expected, anyway. On sort of that topic also, if you look at your sales number in Q4, just looking at the difference, I am coming a bit back to this what is organic growth or not.
For me, I think the sales number as such doesn't really explain the weakness on the earnings in this quarter. The sort of earnings collapse in Q4, it's difficult to actually see where that is coming from if you only look at the sales development and the gross margin. There's a huge increase in OpEx as well, obviously coming from the acquisitions, but on a quarter basis, there's a quite sharp increase in OpEx. Is there anything here you can tell why that is?
I would say that as at least one explanation that if you look at the old group, the core business, we don't have any organic growth. All the sales growth which you see there is acquired, and it's also with a very low profitability. It dilutes the EBIT margin. As we say, sales growth in comparable units, it's even down. That's the reason why you can't see the sales increase in the EBIT. We do have, as I mentioned also, we do have some areas, and I can point out some of them as an example, but we have the workshop equipment company, Preqas, which is reported under the segment others, which we acquired a couple of years ago, who had an extremely tough year last year with huge losses. That also kind of hits the EBIT margins.
If you instead have had all this growth in the core business selling car parts to garages, then we would have the same EBIT margin, but that wasn't the case. You had some question about FTZ, there might be some seasonal effects. There's definitely effects about, since they come into our kind of financial reports, there is an effect that their financial year is not used to be what we have now. Since the profit level which they have had is, of course, what we are expecting for the future.
We are expecting.
We don't see that just that they should be having lower EBIT margins in the future.
No. As you see at page 18 in the report, we are expecting them to perform, of course, as they did last year, and the calculation we did when we acquired the company. We see no reason why they shouldn't.
Already in 2019?
Yes.
The seasonality then, because obviously the H1 must have been much stronger than the H2, 2018.
I think the seasonality is not that strong if you look at it year by year. This is also, I believe it's since we had a weak market in Denmark in the autumn, and that was mainly a weather effect. If it will be the same weather as last year, then you will have the same seasonal pattern. I can't predict the weather going forward. I don't see any Sorry.
As you reported, you don't have the numbers for Q1 and Q3 to compare with, and we won't get those numbers either in the coming report.
No.
No.
For 2018, I mean.
Oh, that's correct. We don't.
Okay, thanks.
We only have one question left, and that's from Johan Settewall from Market Cap Group. Please get your line is now open.
Good morning. This is a slightly different question. I'm thinking about Mekonomen Sweden, you talked about some tough times in 2016-2017. I wonder, what would you say about the leadership? What in the leadership you have has been the driving forces so that you have been able to make those changes that where you are now, taking care of the, as you said, some messy things back. What is really the strength in the leadership, you would say, in the Swedish organization of Mekonomen?
I think that you should understand that Mekonomen Sweden is also part of a matrix organization where they have a huge dependency on the wholesaling company and the central functions in different areas. We have a leadership now and an organization who is focusing very much on the small details out in the stores, making sure that we have the right costs every week, every day, and every hour, and that we also have a large focus, of course, on the customers, both the consumers and the workshops. In combination with the help from the central functions is what makes it stable now. With that said, I don't blame the leadership in the past, when we had these messy years, it was also very complicated communication between all these central functions and the stores and the salespersons.
Okay. You're also working much better cross-functionally, I understand what you're saying.
Yeah.
Okay. Thank you very much.
Thank you.
There is no questions coming through. I will hand the call back to you. Thank you.
All right. We will end here. Thank you everybody for listening, and thank you for the good questions. Have a nice day.
Thank you for joining today's conference. You may now replace your handset to end this call. Thank you.