Earnings Call: Q3 2019

Nov 8, 2019

Good morning, and welcome to Mekonomos Group Third Quarter Call twenty nineteen. My name is Anna, and I will be your coordinator for today's conference. During this call, you will only be listening, but there will be a Q and A in the end of the session. I will now hand you over to CEO, Per Oskarson, your host for this call. Thank you. Thank you, and good morning, everybody, and welcome to this call where we will try to guide you through the 2019 for Mekonomen Group. In short, we have had a strong sales growth and we have improved profitability. We have improving activities which we have, for example, cost savings plans and others are doing according to plan. And we are also proud that the attractive concepts and brands contribute to an increased sales. And it's the increased sales are mostly within the affiliated workshops. Together with me here is Ossa Sjilenius, CFO. So we will try to shift between us, and I will hand over to Ossa with Hello. Some Good morning, everybody. As Per said, we had a strong sales growth in the quarter, plus 56%, of course, by Interteam and FCZ, not fully included in the quarter last year, only with one month from September. But we also had an organic growth in the old Mekronomen Group. And as Per said, it was mainly to the affiliated workshops. Group sales amounted to €2.879 EBIT amounted to €191,000,000 compared to 118,000,000 last year. And we are proud to have kept our EBIT margin on a stable level. Adjusted EBIT margin is 8%, same as last year. And EBIT is 7% compared to 6% last year. I will show you on the next slides that we have a pressure on our gross margin. But even if we have a pressure on gross margin, we were able to keep the EBIT margin stable. And of course, that means we were successful in keeping cost on a decent level. And as Per said, we are seeing results from our efforts to reduce cost. I go to the next page where we have the bridge between this quarter and the quarter last year. We are reporting $191,000,000 in EBIT. That is an increase of $73,000,000 compared to last year. And of those comes $65,000,000 from FTSEF and Inter team. FTSEF and Inter team had only $30,000,000 in the quarter last year. We are also adding EBIT from Odin Economen Group twenty two million dollars We had items affecting comparability of 4,000,000 last year. And as a minus, we have the increased amortization from the acquisition of F2S and Interteam last year. Next page, the EBIT, we will probably the gross margin, sorry, the gross margin, we will come back to that a little bit later. But we made a bridge to explain what we see in our numbers. And as a starting point, we have recalculated the EBIT margin 2018 as if we had F2 set it in between the full year. As you know, they were only included from September. But recalculated, the EBIT the gross margin was approximately 45.6 We had positive impact from the purchasing synergies about 0.5 percentage points. But we, as you know, have also negative impact from the weak Swedish crown and also Polish zloty. And this is the effect we have on our purchasing costs. We have other effects as well in our margins, of course, from selling prices. Selling prices, market pressure of customer and product mix reduced gross margin with 0.7 percentage points. And here we can talk a little bit later on what that means, but it's not only negative of course, it can mean that we add EBIT as a total amount, but we sell to other customer that is perhaps larger and have better prices out of scale. Next page, we will go through the business areas, starting with FSS, our Danish acquired company. We had a net sales of SEK 800,000,000 in the quarter. EBIT improved and we have SEK 69,000,000 in EBIT in We see purchasing synergies and cost savings within Efteset. The margin is 9% compared to 5% last year, only including one month, but even we see stronger margins. Going to next page, we have Interteam, our Polish company. Net sales amounted to €532,000,000 a very strong sale growth and it's driven by both a strong growth in Poland, but also a strong growth of our export markets. And here we estimate that we gained market share in the quarter. EBIT was €9,000,000 and improved from €0 last year. And we are also increasing EBIT margin even though we have had fluctuations with a sloppy against the euro during the quarter negatively impacting our EBIT margin. We are having two percentage EBIT margin in the quarter compared to zero last year. We experienced a continued high pressure on price on the market and see aggressive activities from the competition. As you know, it's a fragmented market with a lot of players competing. Yes. And in Poland, we are just at the moment, this coming weeks, we are opening a new regional warehouse in southern part of Poland. And this is in order to increase the efficiency and availability to the market in the South region. We this will be done that it will be direct deliveries from the suppliers to both central warehouse and the regional warehouse. So it will not give any extra transportation costs. It will be actually the opposite that we will be able to reduce cost of logistics by this way. We get closer to glass customers. We can deliver directly to Worksop from the regional warehouse or through the branches, which is located nearby. But it's also gives us little bit of headroom because the central warehouse outside Warsaw is very, let's say, utilized at a maximum level. So this also released a little bit of the pressure, which we have in Warsaw. There's also a situation in Poland that the labor market makes it, especially in the bigger cities like Warsaw, starts to be very difficult to get employees in this kind of works. And that also, of course, affects the salary levels. So this is also a way of reducing that risk or that pressures somewhat. MeccaMeconomen business area, our largest business area and mainly the Old Mekkonomen Group. We had net sales of $1.349 a growth of 6%. Out of that, we had organic growth of 3% in the quarter. And as we said before, it's mainly to the affiliated workshops. We have even if we have an increasing purchasing cost due to the exchange rates situation, we are able to keep our EBIT margin on a stable level 9% same as same quarter last year. And we are increasing EBIT from 116,000,000 last year to 128,000,000 in this quarter. And that's an increase with 10% when net sales increased 6%. Yes. And in Sweden or in the business area, Mechanic and Agronomy, we also have a logistics project, which you probably know about, and that's the merging of the warehouses in Sweden. That was up and running for the Mekka and Econorme part of business earlier this year. And now there is initiated pilot deliveries to a handful of Merca branches, both in Sweden and Norway. So that's the and where they will receive the goods from the automated upgraded warehouse in Strenus. And we'll do the evaluation of this pilot in the end of the last quarter. And after that, decisions will be taken how to move over to the next phase and roll out the full scale distribution. But as I said many times before, this is extremely important that we keep up the service level to our customers. So it will be done when we are really ready. Yes. Over to our smallest business areas, Cerence and Obalchon, operating in Norway. Net sales in the quarter amounted to SEK 192,000,000, an increase of 6%, but the organic growth was negative due to lower B2C sales in our store. This was compensated by the acquisition we did the January 1. We continue to have a high EBIT higher than the same quarter last year. EBIT was $30,000,000 and EBIT margin 16,000,000 on the same level as last year. We experienced a very good cost control and ability to adjust to the market condition in Cerence and Ovulsion. Over to you, sorry, market. Yes. And we are at Slide 14. No news since last quarter, just a description of our main markets and trends. Will not talk so much about that. Slide 15, the footprint. We have pretty much the same number of branches as last quarter. There's some changes in numbers of affiliated workshops, and that is a normal, I would say, variation. And it is an ongoing trend that we as we aim for larger workshops within the concepts, we and the quality demands gets higher, then it's will be some of the smaller workshop, which will not fit into this concept. So and again, the most important is to have the right number of mechanics to be able to have the capacity to serve the car owners. That is within the concept. But I will point out that, of course, the smaller workshops is always welcome as customers to our company. On Slide 16, a little bit about the e commerce development. We have approximately 90% of the group sales is business to business. And within that, we have a very large portion of the e commerce because the Workshops is ordering the parts digitally from us in most of the cases. Then we have about 10%, which is business to consumer sales, both physically and digitally. And the business to consumer sales through e commerce have a very strong increasement. It's up 74% compared to last year. So that's a good development, however, in a small part of our business. Moving on to Slide 17, a little bit about the general business development. When it comes to training, we have the system in Norway, vehicle inspection license, where all the workshop all the mechanics of the workshop need to go through an education, which we are providing. And we have a very large market share in doing those kind of trainings. There is still many of the mechanics which has not done this training. So it will be a pressure to on the training facilities for the next coming years. We have developed competence portal or learning management system, which we use in our business, but it's also introduced in other markets in other within other customers. So far, we are operating that one in four countries, but we have about 15 countries more where it will be launched during the 2020. And then we also have the adult education, where we work together with the Swedish employment service completed. And 71% of our adult students have jobs or moving into jobs after completing these internships. We have the upper secondary school, which we so far have been running in Malmo and Stockholm, where we now in autumn twenty twenty, we'll open in Odebru as well. And we are we're proud that 97% of the students state that they have recommend the education to others. And we also offer a job guarantee as all the students of the radiation. Swedish business based pedagogy industry ranks companies according to sustainability, and we are proud to be ranked at number seven, which means that we are well on track in order to keep up a good sustainability company. And now I'm at Page 20, where there's a list of a lot of nomination, both in Sweden and Denmark. And we have a lot of nominations, almost 20, where the prices will be announced here later in the autumn. And last but not least, again, Meconoman was appointed as strongest brand in this industry of car parts and workshops in Sweden. It's, of course, something which makes us very proud. The focus forward is still profitability, improved sales efficiency and cost control. We focus on customer value. That means that develop our concepts to the affiliated workshops and other B2B customers, all done with a consistent consumer insight. And then of course, we want to grow and develop both the core and new businesses. That's the focus for Foreman. So with that, we will hand over for questions. Thank you. We then introduce you with your name and it's your turn to ask your question. We did have a quick person coming in and that's from Stellan Helstrom from Nordea. Please go ahead. Your line is now open. Yes, hi. I'd like to ask first about the savings that you have achieved in this quarter, the cost savings program. How much roughly will you say? We are not we are proceeding as planned, and we have said that we will have full savings from Q4 this year, meaning that cost savings $65,000,000 in the first quarter and ongoing. So you can calculate a little bit yourself, but we are not disclosing the exact amount in but we have cost savings in there. You can see it if you look at the figures in the make up economics. Right. You say also that you will currently adjust your pricing in the fourth quarter. Can you comment a little bit why this is happening now given that the euro really strengthened in May? We still believe that we are priced. Our prices is not including the currency effect, which we have. And now we believe that there is a good timing, and it will be in the end of the quarter that we will adjust prices in Sweden and Norway to compensate for the increased purchasing prices. We have also done some increasement in Poland, but that was done already in August and September. And the reason why you think it's more best timing now, is it because you've seen something by competition or just that timing is right or what? There's a lot of factors, but there's never a good time to increase prices. But at some point, we need to do it. All right. The price pressure you were talking about here, can you elaborate a little bit more on which markets are affected and who is the who are more aggressive on price? Yes. It's I mean, the highest pressure is, of course, in Poland. Poland is sometimes used as a dumping market for some of the suppliers, which means that there is a lot of campaigns from suppliers to the distributors in Poland, which goes directly out into the market. So we face a lot of discounts, extra campaigns all the time in Poland, which, of course, put pressure on the market. And since there's so it's so fragmented and so many actors, it's I can't really point out anybody who is better and worse in Poland. We believe that the largest actor in the cars, the listed company is maybe not that aggressive nowadays, which is a positive sign. But otherwise, it's pretty much the same. In Sweden and Norway, it's the same competition landscape as we had. We have some low price actors, and they are fighting with price all the time. And so it's really no difference compared to how it was before. Denmark is according to prices, it's more of a pressure from the authorized that they start to be active on pricing. But within the independent players, it's quite stable competition landscape. All right. Then finally, just if you can say something about FTC here where you have had I think you did say that at the end of last year, the FeetZvet results would have been SEK $340,000,000. And when I do the nine months rolling here, it's around SEK300 million only. So it seems like profits have fallen by 50%, as you said, since last year. Is that correct? Or and why is that? I think we need to come back there because I do not reckon the figures you have They're for from the annual report rolling rolling final five Return back to you Stella on that Okay. Good. Thanks. And the next questions come from Mikael Lovdal from Carnegie. Please go ahead. Your line is now open. Yes. Hi, thanks. So first, on the other segments that you have or the noncore businesses that you have within Mech and Mech and Omen, you have mentioned before or provided updates on the work there to improve earnings in those nonprofitable or weak with weak profitability, including Finland as well. Can you comment on the progress in this quarter where we are? And also potentially your how you explore to divest potentially parts of that? Yes. It's a little bit the same as answer as on the last report. What we're doing is that we are evaluating all this, and there's a lot of this business which is quite small, I would say also. We mentioned three areas last time. And one is that we among a little bit more than 80 workshops, which we own, there has been a smaller number, which has been unprofitable. We have been able to reduce some of that in this quarter as well. So that work is going, I would say, according to plan. The actions which we do is that we, first of all, try to make a turnaround. It could be sometimes it's change of locations, could be change of management or just helping them to improve the business. But it's going can also be that we closed down or that we try to sell it to a private entrepreneur who will run it instead. The second area was Prieka's, which we then was pointed out, and that's the work from equipment company who is doing a very big turnaround, and that goes according to the plan. They are not profitable yet, but the plan is that they will be during next year. And so far, they are following this plan very well. So we see positive development from that area also in the quarter. And then we talked about Finland, where we are actually improving in the quarter compared to last quarter, but it's still quite far away from that we should be happy with that. And that's also an area where we look at all possible measures to take on that. But I don't have any other status than that we are looking into it. Is it possible to give any year on year numbers here for both Priaqas and Finland? How much? Because I think Priyakas was very weak in Q4, and then you have mentioned that it stabilized in Q1, Q2. And now potentially, it has improved sequentially. But on a year on year basis, can you comment on how it was in Q3 last year? No, we don't disclose that numbers. But your assumptions is right. So if you look compared to last year, it should be significant better at least. Okay. But both Friacas and Finland are in this quarter isolated are generating losses? Yes. Okay. Second question, on the price increases that you're mentioning. I mean, it's a bit contradictory when you hear about price pressure on the one hand and then price increases on the other hand. So how confident are you in actually getting those price increases through without losing market share? We are confident enough to take the decision, I would say. There's always a risk when you increase the prices that you will lose some market share or that you need to fall back and go back on the to reduce the prices again. But there is a little bit two different things because when we increase the prices, we increase the consumer price, which is the base for all the rebates and bonuses and so on for the business to business customers. And the pressure is the margin pressure is much about which kind of rebates the different players is offering and maybe not so much about the consumer price. The consumer price is important to be on a decent level compared to authorized garages and also, of course, to be competitive in from the car owner perspective. But when you service a car, there's much more components than just the prices of the parts. It's also the labor cost and so on, who is finally decision on which workshop you should use. Okay. And on the purchasing synergies, where are you relative to your plan? I mean the guidance was to full effect by 2021. Are you running ahead of that or in line with that plan? We haven't communicated exactly how the plan is more than it should be full effect from 2021. But we are satisfied with the development. And I would say that the internal goals which we have been and how we structure that work and so on is working very well according to how we plan it to be. And the costs for getting those synergies through, you guided for some cost initially the acquisition, but that has been, I think, below what you guided for at that point. Will there be any more cost or EOI for Yes. We guided that we will have cost for integration for excesses in Interteam. For the purchasing synergies, we do not see that high cost. It's more a workload required there. But there could still be some integrating cost coming going forward, but no greater amount, but there can be some in the coming quarter. Final question on just general questions. First, do you when it comes to market share in your core markets, are you experiencing that you are gaining market share losing or defending your market share? And second question, now that you have owned FTZ and Interteam for a year and so on, and earnings seems to have stabilized in general, What are your main concerns for the coming years for the group? When it comes to market share, I think we are in generally, we are stable, and we keep our market shares. In some areas, I would say that we're doing better than the market and some areas may be stable. In Poland, we definitely think that we are gaining market shares, but we also have some of the concepts within the other markets, which is performing very well. And a question about after set and into team, I would say it's pretty much as we expected. I mean, in Poland, the challenge is to increase EBIT margin, as we talked about before. And we could see that it's slowly moving. That is, of course, one challenge. In Denmark, we are the market leader. So we can still grow in Denmark, but we can't grow by acquisitions. But I would say that in Denmark, it's to defend that position is very important. And then for the future, see the same pattern as we have described that we there is high competition, but we wind our focus on profitability and keep control of our costs. That is the way we want to handle the future. Okay, thanks. The next question comes from Mats Liz from Kepler Cheuvreux. Please go ahead. Your line is now open. Yes, hi. Good morning. Can you hear me? Good morning. Good morning. Well, just a couple of follow ups, I guess, a lot of good questions. First, looking at the seasonality of the business here and should we well, expect the same as always that the fourth quarter is slowing down somewhat due to the holidays, etcetera? I mean we are a pretty long way into the fourth quarter now. It's difficult to predict because in an enormous situation, yes, because of the holidays, and you can always account the workdays because it differs in different years to evaluate that. But there is also this weather possibility, I would say. As it looks outside at the moment, it looks pretty normal. But some years, we can have a very cold November and December, and that will be good for us. So it's I would say that there's we don't predict any big changes this fourth quarter compared to others as long as it doesn't mean a dramatic change in the weather. Okay. And then looking at the FTZ there, I guess, previously, you have talked about the seasonality is not well, very limited there. So the third quarter is a good guidance for the balance of the year for the fourth quarter, I guess. Yes, that's pretty good assumption. We have the same situation in Denmark. We they not so often even change the winter tires, but if they get snow in November, December, definitely makes some boost in the market, but that's very seldom happening. So it's more of a happening in Denmark than something to rely on. Yes. It could be good news then. And then coming back to the well, price increases there, are they implemented already? Or is it something that you are will do in Baltic No, no, it will be implemented in the end of the quarter. End of the quarter, okay. So should we expect any sort of pre buy impact there before the price increases? Are there so sort of substantial that customers will try to stock up or increase their inventories ahead of that? I think it's too small. And we I mean, most of our customers is workshops, and they don't have places to store. So there will not be any presale boost, I guess. And the effect from the price adjustments will be coming in January or as from January. Okay. Then you talk about, well, the integration of the warehouses there in Sweden. And it seems that you have an option there to keep the dual barrel thing there, keep the old one or you don't need to exit the contract or the higher you could keep both, it sounds like that? Or could you shed some flavor? Yes. Actually, we need to make a decision in somewhere in 2020. But the contract now is for the full year. So we have some, let's say, space and time if we need that for the implementation. But then we, of course, can make new decisions somewhat during the year if we would need more time. Okay. But you will still have the SEK 50,000,000 savings impact if you I mean, if you do it The SEK 50,000,000 is counted as from when we exit the rental contract for Eskisewina Warehouse, then we have the full effect. The 50,000,000 consists of the rent and personnel costs. So to get the full 50,000,000 we need to move out, close the doors. Okay, clear. And then finally, I mean, you mentioned the new logistical hub in Southern Poland. Kind of investment should we expect there for it to be finished? It's very small investments. And it's so it's more that we will have a little bit another local cost structure because it's mostly shelves, which we are invested in and some trucks. So it's very, very small investment. We don't see that we need to increase the inventory level that much because we reduce in the branches and we reduce in the central warehouses. So that will also be pretty much the same level. And we will have some higher rental costs for premises, of course, but we will have lower transportation costs. Clearly, I don't think you need to put any investment calculation. No. No. Okay. Thank you very much. Thank you. Thank you. The next questions come from Andreas Lundberg from SEB. Please go ahead. Your line is now open. Yes. Thank you and good morning, everyone. Back to FDSET, you said you had an EBIT of SEK 69,000,000 in the quarter, and you said it improved versus last year. Does it mean that you compare with the consolidated EBIT of twenty eighteen Q3? Or is there an underlying earnings improvement? I think when I said improved EBIT, it was the EBIT margin that went from 5% to 9%. And when it comes to the acquired companies, FSS and INTT, last year's figures are hard to compare with because they didn't do monthly closing and quarterly closing the same way as we time wise and other circumstances you can say. So we do not compare externally with last year because they were quite September 1. If you were to make an estimate? Well, they are in line with our expectations, you can say. And how should we view that close to SEK70 million versus the first half, which was €90,000,000 per quarter basically. Is Q3 seasonally smaller? Or how should I see that number? We do not do forecast going forward. So I can't advise you there. I thought you said that Q3 in general should be smaller than the first two quarters or I think you have to wait and see at least so we have a full year in order to evaluate how the seasonal differences is. And since we're not guiding, you have just have to wait another quarter and you would have the picture. Okay. Thank you. And lastly, what's your CapEx guidance for this year and for next year? Thank you. Yes. We are expecting CapEx next year to amount to around €150,000,000 and it's about the same as we expect this year to end, plus and minus. We are presently in the budget process, so we do not know exactly how the investments what investments are needed next year to fulfill our business plans. But if nothing large if no larger investment than ERP system or anything, we keep around €150,000,000 Thank you. The next question comes from Selam Helmsmann from Nordea. Please go ahead. Your line is now open. Yes. Hi. Just wanted to come back to Poland and what you said there about Poland being the main reason for the price pressure or the main market where price pressure was the highest. And squaring that with what you're saying that Poland is definitely the market where you're gaining market share, does that mean that you are actually being quite aggressive on price and that is the reason for the pressure? No. But I would say that not better than the others, which means that we are fighting the price war as well. But I think the market shares, we don't get by that. The market shares is that we believe that we have somewhat better concepts when it comes to the domestic markets in terms of our workshop processes more developed. We have a better academy, we have better technical support and so on. So the price war is we need to have the good prices also. But thanks to having good concepts, gained shares. All right. Good. Thanks. The next question comes from Miguel Lardal from Carnegie. Please go ahead. Your line is now open. Yes. Sorry, two follow ups. Just first on the Central Warehouse. Maybe I didn't hear or catch it, but when or how fast or when can you terminate the lease contract? Or have you done so already? I mean, we can be out of the lease contract as of 01/01/2021. So that's the possibility, and that's what we are aiming for. If we are ready earlier and if we can find somebody who will take over, that's a possibility to be out earlier. If something would go terribly wrong with this, there is a possibility that we can still prolong it. But it's a decision which we need to be taking during the first half of next year. When it comes to the savings, the SEK 50,000,000, how much of that is the lease, much is staff and other savings? I think this is just from the memory. Don't kid me if it's wrong. But I think it's about €20,000,000 which is on the lease contract, and the rest is savings on OpEx and mostly personnel. Okay. Good. And also just a follow-up on this seasonality and, I guess, prominently for FTSED, which very weak during the second half of last year, both for Q3 and also Q4. So it's quite difficult for us to know exactly how this is going to play out, obviously, for Q4 this year. So it's quite important to guide on the seasonality, how it is, how big it is, if there is any, or if we should just look at this on a quarter to quarter basis. And perhaps could say something about the current trading environment for FTZ. I mean last year, there was a weak Q4 because of the market is what you mentioned for FTZ, not so much perhaps the weather, but there was a weak market throughout Europe, and we saw that among peers and suppliers as well. But so market more normal now in October and so far in November for you? And are the comparable figures for FGZ last year making earnings of €36,000,000 and a margin of 4.5%? I mean is that even comparable in any way? No. We are not to say too much, but have a better quarter Q4 in after set this year than last year. There were many special postings in the result to other monthly closing routines, processes, etcetera. But the market, Paris? Yes. Denmark is at the moment, which I said from the beginning, it is the slowest market. And when we listen to our friends and neighbors, there is Western Europe is also still slow, and it's only the Eastern Europe who is growing. And we feel that Sweden and Norway sticks out a little bit better. What I hear from Finland, they are also in the same and the Baltics, same situation in Denmark. So it is we're not helped by any recovery in the market. But I think as also said, the Q4 for SSS was affecting with a lot of other things, which was not driven by the market situation. So is your best assessment or guess here is that 2019 is or the first half is seasonally stronger than the second half. And what you performed in Q3 is a good proxy for Q4. And then as we move into 2020, as we saw in 2019, and that's sort of a more of a normal run rate for FTSE, all else being equal. I hear what you're saying, but we will not comment on that because it would be too much of a guidance. Mikael, are you done with your questions? Yes, I'm done. Thank you. The next question comes from Mats Liss from Kepler Cheuvreux. Please go ahead. Your line is now open. Yes, hi. Well, coming back to cash flow. I mean, was pretty good cash flow quarter. And just well, my question is more like how should we view the dividend policy going forward? I guess, given the cash flow generation, it should be sort of supportive, I guess. Well, the dividend policy and the dividend will be a decision for the board in February. So we cannot comment on that. Great. Then looking at the integration of the two warehouses, I mean, is an earnings impact, of course, but then again, there is an inventory there also, which could sort of improve cash flow or have a cash flow impact. Could you say something about that? You mean the positive effect from reducing stock levels? Yes. Yes. We are still expecting the stock the merged stock levels to decrease with that €80,000,000 and we didn't change how we view that. No. And that's still to come. It's not sort of in the numbers yet? It's not in the numbers. It's you can contrary say, it's stock levels combined with Mekonomen are a bit higher than they normally are due to the merger because we need to have more SKUs assortment in Stringnaz than before due to Mirka having supplies from Stringnaz now. So it's a little bit higher than it should be normal wise, and we are expecting the stock levels to decrease after the merger as we said before. Okay, great. Thank you. And just a final one there on service and bulk and you have a pretty weak organic development and I guess you lose some market share to or could you say something about that development? And going forward, do you expect to sort of improve? Mean, do you have business concept that sort of balance the competition in that area? So St. Paulsen has a larger portion of retail sales in from their stores. And that is weak and that is a weak market. People are not buying accessories, which this is mostly and it's also the with yourself area, which is weaker. There is competition, of course, with a lot of other actors. We also have a quite new competitor, Danish company, which started up in Norway one point five two years, and they are opening stores overall in Norway. And you can also see that there is some trends that it's shifting to more e commerce, this part of the business. What we're doing is focusing on costs to compensate for that, which we are doing very well. So we will keep the EBIT on the same level. But we're also focusing more on business to business in that company as well and developing the company's concepts for that. And I think they are progressing fairly good, I would say. Difficult So to say about the future about the retail trends, if it will continue, but we are on the problem and we're doing the transformation. Okay. Thank you very much. The next question comes from Johan Sverdrupal from Mark Cap Group. Please go ahead. Your line is now open. Yes. Good morning, everybody. I'm a little bit curious just what you're in all the changes and initiatives that you're taking and that you've been doing for some time, I'm just wondering how do you support all your leaders? I'm thinking about store managers, for example, to be specific, managers maybe in Poland. They are not always that trained. So I'm just curious about how you keep them trained so they are doing the right things, the things that you really want them to do, so they are focused and that they can keep focus to their employees as well to behave in the right way, the way you expect them to do. Yes. It's a very good question, and it's a very important question because that's definitely where we have good store managers, we have good performing stores and branches. So it's of course very important. There is differences in culture and how to educate and how to train. So this is a little bit decentralized in the four business areas. So Poland is they are doing it in their way and Sweden in another way. But for example, we have in Sweden, we have a special training program, which is I think it's a six months program, which we are doing for the store managers to lift their competence and to give them all the tools which they need. I know that Denmark has a similar program, which they have been running for a couple of years. So we it's a very important, as you mentioned, and we do also a lot of training. It's also not only training, this is also very important matter when it comes to recruiting because when we recruit, we need to be very, let's say, keen on that we really get the best persons. So I mean, because it's important also in the aspect of in the perspective of keeping them as with all the changes you're doing that they are that they really are have the desire to be in this. And of course, the training is important. So it's good to hear. Thank you. There is no further questions in the queue. So I will now hand the call back to you. Actually, there was just one last one just dropping in. So I will open up the line for Mikael Lardal from Carnegie. Your line is Yes, sorry for holding you, but just one more. On the acquisitions of predominantly Workshops done in MekkaMaknomen and also Cernes and Embalchen. Where this is something we don't get so much information of other than the actual impact in reports. But what when were the last acquisitions made in business areas and so we know how that will affect in some forward looking statements? Maria, you have that in the report. Sorensen and Obalchion, they have not acquired anything since January 1. And in Mekam Economen, we acquired one store and worked shop in Sweden during the quarter. And is it possible to make numbers here? But it's very small. Is very, very small operation. It doesn't really affect the numbers. It's very small. So in Sorensen and Balchin, the year on year effect or the contribution from acquisitions will be roughly the same in Q4 as in Q3, and then it will fade off? Yes. And then in Mekamik, normally, it will be a much lower contribution in Q4 and then fade off as well? Yes. Yes, if we don't do any acquisitions during this quarter, of course, but as it is at the moment We have acquired very few entities during this year. So it's minor impact on the sales and EBIT. Okay, thanks. There is no further questions in the queue. So I will hand the call back to you. Thank you. Well, then thank you, everybody, for listening, and thank you for your good questions, and I wish you a good day. Thank you. Thank you for joining today's conference. You may now replace your handsets to end this call. Thank you.