Good morning and welcome to Mekonomen Group third quarterly call 2019. 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&A in the end of the session. I want to hand you over to CEO Pehr Oscarson, 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 third quarter of 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, the cost savings plans and others are doing according to plan. We are also proud that the attractive concepts and brands contribute to an increased sales. The increased sales are mostly within the affiliated workshops. Together with me here is Åsa Källenius, CFO. We will try to shift between us. I will hand over to Åsa.
Yes
with some numbers.
Hello, good morning, everybody. As Pehr said, we had a strong sales growth in the quarter, +56%, of course, driven by Inter-Team and FTZ, not fully included in the quarter last year, only with one month from September. We also had an organic growth in the old Mekonomen Group. As Pehr said, it was mainly to the affiliated workshops. Group sales amounted to SEK 2,879,000,000. EBIT amounted to SEK 191,000,000 compared to SEK 118 last year. We are proud to have kept our EBIT margin on a stable level. Adjusted EBIT margin is 8%, same as last year, EBIT is 7% compared to 6% last year. I will show you on the next slide 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.
Of course, that means we were successful in keeping cost on a decent level. As Pehr 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 SEK 191 million in EBIT. That is an increase of SEK 73 million compared to last year. Of those comes SEK 65 million from FTZ and Inter-Team. FTZ and Inter-Team had only SEK 30 million in the quarter last year. We are also adding EBIT from old Mekonomen Group, SEK 22 million. We had items affecting comparability of SEK 4 million last year. As a minus, we have the increased amortization from the acquisition of FTZ and Inter-Team last year. Next page, the EBIT. The gross margin, sorry, we will come back to that a little bit later.
We made a bridge to explain what we see in our numbers. As a starting point, we have recalculated the EBIT margin 2018 as if we had FTZ and Inter-Team the full year. As you know, they were only included from September. Recalculated the gross margin was approximately 45.6%. We have positive impact from the purchasing synergies, about 0.5 percentage points. We, as you know, have also negative impact from the weak Swedish krona and also Polish zloty. 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 reduce gross margin with 0.7 percentage points. Here we can talk a little bit later on what that means. 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 FTZ, our Danish acquired company. We had a net sales of SEK 800 million in the quarter. EBIT improved, and we have SEK 69 million in EBIT in FTZ. We see purchasing synergies and cost savings within FTZ. The margin is 9% compared to 5% last year, only included one month, we even see stronger margins. Going to next page, we have Inter-Team, our Polish company. Net sales amounted to SEK 532 million, a very strong sale growth, it's driven by both a strong growth in Poland, also a strong growth of our export markets. Here we estimate that we gained market share in the quarter.
EBIT was SEK 9 million and improved from SEK 0 million last year, and we are also increasing EBIT margin, even though we have had fluctuations with the PLN against the EUR during the quarter, negatively impacting our EBIT margin. We are having 2% EBIT margin in the quarter compared to 0 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, in Poland, we are just at the moment, these coming weeks, we are opening a new regional warehouse in the southern part of Poland. This is in order to increase the efficiency and availability to the market in the south region. This will be done that it will be direct deliveries from the suppliers to both the central warehouse and the regional warehouse. It will not give any extra transportations costs. It will be actually the opposite, that we will be able to reduce cost of logistics by this way. We get closer to customers. We can deliver directly to a workshop from the regional warehouse or through the branches, which is located nearby. It also gives us a little bit of a headroom because the central warehouse outside Warsaw is very, let's say, utilized at a maximum level.
This also releases 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 work, and that also, of course, affects the salary levels. This is also a way of reducing that risk or that pressure somewhat.
MECA/Mekonomen business area, our largest business area, and mainly the old Mekonomen Group. We had a net sales of SEK 1,349 million, a growth of 6%. Out of that, we had organic growth of 3% in the quarter. As we said before, it's mainly to the affiliated workshops. 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. We are increasing EBIT from SEK 116 million last year to SEK 128 million in this quarter. That's an increase with 10% when net sales increased 6%.
In Sweden or in the business area, MECA Mekonomen, 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 Mekonomen business a little bit earlier this year, and now there is initiated pilot deliveries to a handful of MECA branches, both in Sweden and Norway, where they will receive the goods from the automated upgraded warehouse in Strängnäs. We'll do the evaluation of this pilot in the end of the last quarter. After that, decisions will be taken how to move over to the next phase and roll out the full-scale distribution. 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.
Yeah. Over to our smallest business area, Sørensen og Balchen. Operating in Norway, net sales in the quarter amounted to SEK 192 million, an increase of 6%. The organic growth was negative due to lower B2C sales in our store. This was compensated by the acquisition we did the 1st of January 2019. We continued to have a high EBIT, higher than same quarter last year. EBIT was SEK 30 million and EBIT margin 16%, on the same level as last year. We experienced a very good cost control and an ability to adjust to the market condition in Sørensen og Balchen. Over to you, Børre, market.
Yeah. We are at slide 14. No news since last quarter, just a description of our main markets and trends. I will not talk so much about that. Slide 15, the footprint. We have pretty much the same number of branches as last quarter. There is some changes in numbers of affiliated workshops, and that is a normal, I would say, variation, and it is an ongoing trend as we aim for larger workshops within the concepts, and the quality demands gets higher, then it will be some of the smaller workshop which will not fit into these concepts. 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. 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. We have about 10% which is business to consumer sales, both physically and digitally. The business to consumer sales through e-commerce have a very strong increasement. It's up 74% compared to last year. 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 at the workshop need to go through an education, which we are providing.
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 on the training facilities for the next coming years. We have developed a competence portal or learning management system, which we use in our business, but it's also introduced in other markets within other customers. Far, we are operating that one in four countries, but we have about 15 countries more where it will be launched during 2020. 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 Malmö and Stockholm, where we now in autumn 2020 will open in Örebro as well. We're proud that 97% of the students state that they have recommend the education to others, and we also offer a job guarantee of all the students after the graduation. Swedish business paper Dagens Industri 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.
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 prizes will be announced here later in the autumn. Last but not least, again, Mekonomen was appointed as the strongest brand in this industry of car parts and workshops in Sweden. That'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. Of course, we want to grow and develop both the core and new businesses. That's the focus forward. With that, we will hand over for questions.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. We will then introduce you with your name, then it's your turn to ask your question. We did have a quick person coming in, that's from Stellan Hellström from Nordea. Please go ahead, your line is now open.
Yes, hi. I'd like to ask first about the savings that you've achieved in this quarter, the cost savings program. How much roughly will you say?
We are proceeding as planned, and we have said that we will have full savings from Q4 this year, meaning that cost saving SEK 65 million in the first quarter and ongoing. You can calculate a little bit yourself, we are not disclosing exact amount. We have cost savings. You can see it if you look at the figures in Mekonomen.
Right. You say also that you will currency 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 our prices is not including the currency effect, which we have. 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 increase in Poland, but that was done already in August and September.
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 why?
There's a lot of factors, there's never a good time to increase prices. 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 are more aggressive on price?
Yeah. 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. We face a lot of discounts, extra campaigns all the time in Poland, which of course puts pressure on the market. Since it's so fragmented and so many actors, 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. 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.
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. Within the independent players, it's quite stable competition landscape.
All right. Finally, just if you can say something about FTZ here, where you have had, I think you did say that at the end of last year, the EBIT results would have been SEK 340 when I do the nine months rolling here, it's around SEK 300 only. It seems like profits have fallen by 50% in FTZ since last year. Is that correct? Why is that?
I think we need to come back there because I do not reckon the figures you have for FTZ.
They're from the annual report.
Okay.
Rolling 12 months.
We will come back to you, Stellan, on that one.
Okay, good. Thanks.
The next questions come from Mikael Löfdahl from Carnegie. Please go ahead. Your line is now open.
Yes. Hi, thanks. First on the other segments that you have or the non-core businesses that you have within MEKO, Mekonomen, you have mentioned before or provided updates on the work there to improve earnings in those non-profitable or with weak profitability, including Finland as well. Can you comment on the progress in this quarter, where we are and also potentially how you explore to divest potentially parts of that?
Yes. It's literally the same answer as on the last report. What we're doing is that we are evaluating all this. There is a lot of these businesses which is quite small, I would say also. We mentioned three areas last time. One is that we, among the 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. 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 can be sometimes it's change of locations, could be change of management or just helping them to improve the business.
It can also be that we close down or that we try to sell it to a private entrepreneur who will run it instead. The second area was Preqas, which we named, was pointed out, and that's the workshop 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. So far, they are following this plan very well. We see a positive development from that area also in the quarter. 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. That's also an area where we look at all possible measures to take on that.
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 Preqas and Finland? I think Preqas 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. If you look compared to last year, it should be significant better at least.
Okay. Both Preqas and Finland are in this quarter isolated, are generating losses?
Yes.
Okay. Second question on the price increases that you're mentioning. It's a bit contradictory when you hear about price pressure on the one hand and then price increases on the other hand. 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 to reduce the prices again. 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. The 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 from the car owner perspective. When you service a car, there's much more components than just the prices of the parts.
It is also the labor cost and so on, who is the final decision on which workshop you should use.
Okay. On the purchasing synergies, where are you relative to your plan? 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. 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.
The costs for getting those synergies through, you guided for some cost initially at acquisition, but that has been, I think, below what you guided for at that point. Will there be any more cost or EBIT for this?
Yes. We guided that we will have cost for integration for FTZ and Inter-Team. For the purchasing synergies, we do not see that high cost. It's more a workload required there. There could still be some integrating cost coming going forward. No greater amount, but there can be some in the coming quarter.
Okay. Final question on just general questions. 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? Second question, now that you have owned FTZ and Inter-Team 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 in general, we are stable and we keep our market shares. In some areas, I would say that we are 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. Question about FTZ and Inter-Team, I would say it's pretty much as we expected. In Poland, the challenge is to increase the 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. I would say that in Denmark, to defend that position is very important.
For the future, I see the same pattern as we have described that there is a high competition, but with 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 Liss from Kepler Cheuvreux. Please go ahead. Your line is now open.
Yeah, hi. Good morning. Can you hear me? Yeah?
Yes, good morning.
Good morning. Just a couple of follow-ups I guess, lots of good questions. First, looking at the seasonality of the business there and should we expect the same as always that the fourth quarter is slowing down somewhat due to the holidays, et cetera? We are a pretty long way into the fourth quarter now.
It's still difficult to predict because in a normal situation, yes, because of the holidays, and you can always count the workdays because it differs in different years to evaluate that. There is also this weather possibility, I would say. As it looks outside at the moment, it looks pretty normal. Some years we can have a very cold November and December, and that will be good for us. I would say that 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. Looking at the FTZ there, I guess previously you have talked about the seasonality is very limited there. The third quarter is a good guidance for the balance of the year for the fourth quarter, I guess.
That's a pretty good assumption. We have the same situation in Denmark. They not so often even change to winter tires, but if they get snow in November, December, that definitely makes some boost in the market, but that's very seldom happening. It's more of a happening in Denmark than something to rely on.
Yeah. Could be good news then. Coming back to the price increases there, are they implemented already or is it something that you will do in Baltic?
No, it will be implemented in the end of the quarter.
End of the quarter. Okay.
Yeah.
Should we expect any sort of pre-buy impact there before the price increases? Are they substantial that customers will try to stock up or increase their inventories ahead of that?
I think it's too small, and most of our customers is workshops, and they don't have places to store. There will not be any pre-sale boost, I guess. The effect from the price adjustments will be coming in January, or as from January.
Okay. You talk about the integration of the warehouses there in Sweden, and it seems that you have an option there to keep a dual warehousing there, keep the old one, or you do not need to exit the contract or the hire. You could keep both. It sounds like that, or could you say something?
Yeah. We need to make a decision somewhere in 2020. The contract now is for the full year. We have some, let's say, space and time if we need that for the implementation. We, of course, can make new decisions somewhat during the year if we would need more time.
Okay. You will still have the SEK 50 million savings impact if you do it.
The SEK 50 million is counted as from when we exit the rental contract for Eskilstuna warehouse, then we have the full effect. The SEK 50 million consists of the rent and personnel costs. To get the full SEK 50, we need to move out, close the doors.
Okay, clear. Then finally, you mentioned the new logistical hub in southern Poland. What kind of investment should we expect there for it to be finished?
It's very small investments. It's more that we will have a little bit another local cost structure, because it's mostly shelves which we invested in and some trucks, so it's 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. That will also be pretty much the same level. 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 calculations.
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.
Yeah, thank you, and good morning, everyone. Back to FTZ, you said you had an EBIT of SEK 69 million in the quarter, and you said it improved versus last year. Does it mean that you compare with the consolidated EBIT of 2018 Q3, or is there an underlying earnings improvement? Thank you.
I think when I said improved EBIT, it was the EBIT margin that went from 5% to 9%. When it comes to the acquired companies, FSS and Inter-Team, 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. We do not compare externally with last year because they were acquired 1st of September.
If you were to make an estimate?
Well, they are in line with our expectations, you can say.
How should we view that closer to EUR 7 million versus the first half, which was EUR 90 million per quarter, basically?
Yeah.
Is Q3 seasonally smaller, or how should I see that number?
We do not do forecasts 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. Since we're not guiding, you just have to wait another quarter, then you would have the picture.
Okay, thank you. Lastly, what's your CapEx guidance for this year and for next year? Thank you.
We are expecting CapEx next year to amount to around EUR 150 million, 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 what investments are needed next year to fulfill our business plans. If no larger investment than ERP system or anything, we keep around EUR 150.
Thank you.
Ladies and gentlemen, before we let the next person through, if you would like to ask a question, please press star one on your telephone keypad. The next question comes from Stellan Hellström from Nordea. Please go ahead, your line is now open.
Yes. I 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. 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. I would say that we are not better than the others, which means that we are fighting the price war as well. 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 concepts is more developed. We have a better academy, we have better technical support and so on. The price war is. We need to have the good prices also, but thanks to having good concepts, we gain shares.
All right, good. Thanks.
Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. The next question come from Mikael Löfdahl 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, how fast or when can you terminate the lease contract? Have you done so already?
We can be out of the lease contract as of 1st of January 2021. That's the possibility, and that's what we are aiming for.
Okay.
If we are ready earlier, 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. It's a decision which we need to be taken during the first half of next year.
When it comes to the savings, the EUR 50 million, how much of that is the lease, how much is staff and other savings?
I think this is just from the memory, so don't kill me if it's wrong. I think it's about EUR 20 million, which is on the lease contract, and the rest is savings on-OpEx and mostly personnel.
Okay, good. Thanks. Also just a follow-up on this seasonality and, I guess, predominantly for FTZ, which very weak during the second half of last year, both for Q3 and also Q4. It's quite difficult for us to know exactly how this is going to play out, obviously, for Q4 this year. 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. 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.
Is the market more normal now in October and so far in November for you and are the comparable figures for FTZ last year, making earnings of SEK 36 million and a margin of 4.5%? Is that even comparable in any way?
No. We are, not to say too much, a better quarter Q4 in FTZ this year than last year. There were many special postings in the result due to other monthly closing routines, processes, et cetera. The market, Pehr?
Denmark is at the moment, which I said from the very beginning, it is the slowest market. When we listen to our friends and neighbors, Western Europe is also still slow and it's only Eastern Europe who is growing. We feel that Sweden and Norway sticks out a little bit better. What I hear from Finland, they are also the same, and the Baltics, same situation in Denmark. We're not helped by any recovery in the market. I think, as also said, the Q4 for FTZ was affected with a lot of other things, which was not driven by the market situation.
Is your best assessment or guess here is that first half of 2019 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 more of a normal run rate for FTZ, 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.
Yeah. Hi. Well, coming back to cash flow, it was pretty good cash flow quarter. My question is more like, how should we view the dividend policy going forward? I guess, given the cash flow generation, it should be supportive, I guess.
Well, the dividend policy and the dividend will be a decision for the board in February. We cannot comment on that.
No. Great. Looking at the integration of the two warehouses, there is the earnings impact, of course, there is an inventory there also which could improve cash flow or have a cash flow impact. Could you say something about that?
You mean the positive effect from reducing stock levels?
Yeah.
Yeah. We are still expecting the merged stock levels to decrease with that SEK 80 million, and we didn't change how we view that.
No. That's still to come. It's not in the numbers yet.
It's not in the numbers. 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 FTZ assortment in Strängnäs than before due to MECA having supplies from Strängnäs now. 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. Just a final one there on Sørensen og Balchen. You have a pretty weak organic development, and I guess you lose some market share to
Two, or could you say something about that development? Going forward, do you expect to improve? Do you have business concept that balance the competition in that area?
Yeah. Sørensen og Balchen has a larger portion of retail sales from their stores. That is weak, and that is a weak market. People are not buying accessories, which this is mostly, and it's also do-it-yourself area, which is weaker. There is competition, of course, with a lot of other actors. We also have a quite new competitor, a Danish company, which started up in Norway one and a half, two years ago, and they are opening stores overall in Norway. You can also see that there's some trends that is 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. We will keep the EBIT on the same level. We're also focusing more on business to business in that company as well and developing the company's concepts for that.
I think they are progressing fairly good, I would say. Difficult to say about the future, about the retail trend, if it will continue. We are on the problem, and we are doing the transformation.
Okay. Thank you very much.
Yeah.
This will be the last reminder, ladies and gentlemen. If you would like to ask a question, please press star one on your telephone keypad. The next question comes from Johan Sephtaval from Marcap Group. Please go ahead, your line is now open.
Yes. Good morning, everybody. I'm a little bit curious just in all the changes and the initiatives that you are 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, store managers may be in Poland. They are not always that trained. 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. They are focused, and that they can keep focused to their employees as well, to behave in the right way, the way you expect them to do.
It's a very good question, and it's a very important question because we definitely, where we have good store managers, we have good performing stores and branches. It's of course very important. There is differences in culture and how to educate and how to train. This is a little bit decentralized in the four business areas. Poland are doing it in their way and Sweden in another way. For example, in Sweden, we have a special training program, which is, I think it's a six-month 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. It's very important, as you mentioned, and we do also a lot of training.
It's not only training, this is also very important matter when it comes to recruiting.
Yeah
When we recruit, we need to be very keen on that we really get the best persons.
It's important also in the aspect of, in the perspective of keeping them as with all the changes you're doing, that they really have the desire to be in this, and then of course, the training is important.
Yeah.
It's good to hear.
Thank you.
Okay.
There is no further questions in the queue. I will now hand the call back to you. Actually, there was one last one just dropping in. I will open up the line for Mikael Löfdahl from Carnegie. Your line is now open.
Yes, sorry for holding you. Just one more. On the acquisitions of predominantly workshops done in MEKO, Mekonomen, and also Sørensen og Balchen, this is something we don't get so much information of other than the actual impact in reports. When were the last acquisitions made in business areas? We know how that will affect going forward.
You have that-
Yeah
in the report.
Sørensen og Balchen, they have not acquired anything since 1st of January. In MEKO, Mekonomen, we acquired one store and workshop in Sweden during the quarter.
Is it possible to mention numbers here?
It's very small.
Very small, yeah.
a very small operation.
It doesn't really affect the numbers. It's very small.
In Sørensen og Balchen, 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.
Yeah.
Yeah.
Yeah.
In MEKO, Mekonomen, it will be a much lower contribution in Q4 and then fade off as well.
Yeah.
Okay. Thank you.
Yeah. If we don't do any acquisitions during this quarter, of course, but as it is at the moment, yes.
We have acquired very few entities during this year. It's minor impact on the sales and EBIT.
Okay, thanks.
There is no further questions in the queue. I will hand the call back to you. Thank you.
Well, thank you everybody for listening, and thank you for 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.