Welcome, everyone. Great to see you all, and many thanks for coming to Storskogen's second Capital Markets Day. I know you're all very busy, so we really appreciate you taking the time to come today. My name is Philip Löfgren, and I head up Storskogen in the U.K., and to explain to you why I'm here as your host today, I will tell you a very short story. Let's all go back to London in the autumn of 2020. I had to finish yet another private equity interview, and having gone to all of these interviews at a lot of private equity houses, I felt that they were all kind of the same, and to be honest, I couldn't get very excited about any of them. I asked myself, if I owned a company, would I want to sell it to private equity?
Now, I had previously been CEO of three different family-owned companies. And the families I knew wouldn't want to sell to private equity. They wouldn't want the debt on the balance sheet. They wouldn't want the army of consultants. And they certainly wouldn't want the short-term decision-making. And that got me thinking, who would I want to sell to? My mind drifted towards the Scandinavian SME compounders that I had followed for years. And when I started doing my research on the SME compounders, I came across Storskogen. And I was instantly hit by how well Storskogen's proposition would work on the U.K. market. A long-term owner with a decentralized management approach and staffed by people who had real entrepreneurial experience themselves. Someone who would look after your life's work. Fast forward a few months, and I was hired to start Storskogen in the U.K. Today, we are eight companies.
I would say eight high-quality companies. And we have sales north of SEK 3 billion and a little more than 1,000 employees. And what's striking to me is how well Storskogen's proposition works on the U.K. market. It's been extremely well received. And I know there are a lot of SME compounders out there in Scandinavia, but in most other markets, and what we found in the U.K., is that the concept is fairly unknown. And the reason I believe in Storskogen and why I invested my own money in this business is that I believe we're only at the beginning of a very long journey where SME compounders will enter most markets globally, much like private equity has. And I think Storskogen is very well positioned to take advantage of that tailwind. So that's the reason I'm here. Let's now have a look at the reason you are here.
There we go. We divided the day into three different chapters. We'll start with some history. Then we'll have a snapshot of where we are. And then finally, we'll look to the future, the strategic direction for Storskogen going forward. And we'll have a short break at around 10:00 AM. And then we'll have a slightly longer break, about 20 minutes, about an hour later. At the end of the day, there will be a Q&A. So you can ask questions in person. Or if you're joining online, you can submit questions through the online platform. All right, let's get started. Please allow me to introduce our Group CEO, Christer Hansson, to the stage.
Thank you so much, Philip. I want to take you back to 2015 in March. I'm on my way to an IT conference here in Stockholm just for a meeting. Just a few weeks earlier, I've been part of taking Dustin, an IT reseller, public. And with that, I had resigned my role as Head of the Nordic Solutions. At the time, my plan was clear. I was going to take a year off, play golf, and spend time with my family. This morning, I wasn't expecting more than a routine catch-up meeting with one of Dustin's owners. But at a glance at the agenda, I saw that Daniel Kaplan, an old acquaintance of mine, was going to be the keynote speaker of the conference. I listened to Daniel, and he told me about Storskogen over lunch.
He described his vision of acquiring and developing small and medium-sized companies, looking for companies with great cash flows. And as I listened, a thought began to take root. I had been part of a lot of acquisitions during my time at Dustin. But what Daniel described was something different. He was talking about entrepreneurship, decentralization, and continuous sustainable growth. That night, I went home to my wife, Carina, and told her, "I think that I've found a pretty good investment opportunity for us." So in the summer of 2015, I founded my own investment company that started to invest in Storskogen. And in the coming years, we would become one of the largest shareholders of Storskogen. And I quickly found additional investors who wanted to join my company. The plan about golfing? Well, that's still on hold. My name is Christer Hansson, and I'm the CEO of Storskogen.
It's a pleasure to welcome you here today. I know that you're busy, so we appreciate that you take your time and spend that with us for the next couple of hours. For myself, it's hard to believe that I'm now on my 10th year here at Storskogen. First started as an investor, as I said, and then heading up the Business Area Trade. Now the CEO since February. First as an interim, and then as permanent CEO from 1 July. Throughout my career, I've been really passionate about helping companies grow. From my early days in the telecom industry and financial industry to my time at Dustin, where I first started to found Dustin Financial Services, and then later became the country manager for Sweden, and then Head of Nordic Solutions.
Today, we want to share the opportunity to reflect on our journey so far, where we stand today, and where we're headed, and our vision for the future. Our agenda today will take you through our strategy, our achievements, and our ambitions. Just to help you navigate throughout the day, I want to highlight three key takeaways. First, Storskogen is a diversified group that generates strong cash flows, with net sales of about SEK 35 billion and EBITDA around SEK 3.1 billion. This gives us a solid foundation for growth. We actively support our companies so they can unlock their full potential in driving organic growth and operational excellence. Lastly, Storskogen is on its path to refocus on our investment approach towards acquisitions in the SME markets. With that, let's get started. As Philip said, today's agenda is divided into three stages.
First off, I will try and brief you on a little bit short journey on where we all started. We will then examine where we stand today and also look, most importantly, where we're headed as we continue to grow and strengthen our company. The Storskogen journey can be divided into four distinct phases, each reflecting a step in our growth and evolution, each one with its own challenges, insights, and milestones, and looking at this chart, you can see our growth over the years throughout these different stages, but let's start with our first one, the first three years to better understand our journey. Our story started out here in Sweden when Ronnie Bergström, Alexander Bjärgård, and Daniel Kaplan acquired three industrial companies in the northern part of Sweden in March of 2012, and with that, Storskogen was born.
The ambition was clear: to acquire and develop small and medium-sized profitable industrial companies here in Sweden looking for new ownership. A small group of investors helped to finance the acquisitions. From the very start, there was no agenda for making exits, only commitment to doing investments that could deliver great cash flows and meaningful returns. There was a passion for doing business, helping companies grow, and challenging previous entrepreneurs in the way to take them to the next level. The decentralized operational model also came into play at the very foundation of Storskogen. We never removed accountability from the management team, but remained actively supportive in governance and support. During the first three years, Storskogen doubled in size, from three business units in 2012 to six business units in 2014, so if we move to the next phase, phase two, this is a period with significant expansion and diversification.
During this phase, we grew from 10 companies in 2015 to 58 companies in 2020. As Storskogen grew, expansion beyond industrial companies happened and included services and trading businesses. These companies, however, shared common traits: need for a generation shift, strong cash flows, and niche strong market positions. To manage the expanding business group, three distinct business areas were created in 2016. Strategic diversification became a cornerstone in our model, enabling us to effectively manage risks and opening us for new opportunities. At the start of this phase, growth was financed by about 20 investors alongside the founders. Financially, this period was highly successful, delivering strong annual yields for the owners, and our portfolio companies did well, and as I said, growth has always been a central part of our strategy. Towards the end of this phase, the group of owners expanded, and the pace of growth increased.
However, and this is important, the foundation remained intact. We still acquired small and medium-sized companies with solid cash flows and strong market positions. A milestone in this phase is the acquisition of Frends in Norway in the summer of 2020, marking the start of our international expansion. Later today, you will hear from Daniel Odéhn, who's the CEO of ByWe, which is a business that was created by merging several of our hair care distributors in the Nordic, including Frends in Norway. The success of Frends' acquisition and also the combination that the group had resilience during the first year of the pandemic gave us confidence that we could expand our model outside of Sweden.
By the latter half of 2020, we laid the groundwork for our international expansion by establishing a local team in the U.K., led by Philip Löfgren, and in Switzerland, led by Mikael Neglén, who headed the whole DACH region. This geographical diversification brought additional benefits for us, including exposures to different GDP growth patterns, different FX exposures, and opportunities for operational and financial growth. In 2021 and 2022, we entered a phase of accelerated growth. We expanded our ability to identify investment opportunities, enhance diversification, and reinvest cash flows into further growth. The accelerated growth phase was driven by our own growth agenda, of course, but also a strong investor interest, with capital offerings consistently oversubscribed. During this period, we maintained a balance across our three business areas while advancing geographical diversification. In 2021, we made our first acquisition in the U.K. and also that year in Switzerland.
We grew our workforce both in Sweden but also locally on our new markets in order to take care of the expansion of the group. We also adjusted our scope a little bit during this period. Ahead of the 2021 IPO, we acquired portfolios of businesses both in DACH and in Sweden. We also began to buy larger business units, a few with annual turnover of over SEK 1 billion . And to manage this growth, we enhanced our due diligence processes, introducing greater rigor and improved evaluation. 2022 marked a turning point in our growth agenda, as many challenges converged in a short time span: the Russian invasion of Ukraine, lingering effects of the pandemic, surging inflation, and central banks implementing the steepest rate hikes in modern history. This created an unprecedented volatile environment for us. At the same time, supply chain disruptions from 2021 almost disappeared overnight.
Businesses became overstocked with inventories, and this exposed critical challenges for us, both in our cash conversion, rising leverage, and mounting interest payments. So in the summer of 2022, recognizing the need to adapt, we took decisive actions to these challenges head-on in order to strengthen our balance sheet. I remember myself in early June of 2022. I gathered all the CEOs of the trade business area to tackle the growing inventory issues that had rapidly grown. A massive effort was launched, focused on reducing inventory but also improving working capital, not only in trade but in the whole group. By 2023, this initiative led to free up SEK 900 million for the group, and the impact of this work is still visible in our today's cash conversion. These efforts also led to us being able to take down our net debt with 2.8 billion SEK in 2023 alone.
To maintain the momentum, we strategically slowed down our acquisition pace, refraining from doing any platform acquisitions in 2024. In parallel, we also continued to review our portfolio. This led to several divestments in 2023 and culminated in the 2024 divestment of nine loss-making business units. That brings us to the next chapter of today's agenda, where we stand today. Our look back brings us where we stand today. With nearly 13 years of acquiring and developing leading small and medium-sized businesses, we're still guided by our mission to empower businesses to realize their full potential. Our vision is equally ambitious: to become the leading international owner of small and medium-sized businesses. Our vision is driven by our four core values: entrepreneurship, respect, professionalism, and long-term thinking.
These values underpin our decentralized active ownership model, which is super important for our ability to attract sellers, retain talents, and deliver value to stakeholders. Our business model revolves around three interconnected elements. First of all, the opportunity. The opportunity and the potential in the whole SME market. Two, our model. This is our framework in seizing this opportunity and lastly, the result that drives our sustained growth, so why do we seek to invest in small and medium-sized businesses? We believe that SMEs play a critical role both in local communities but also in the global economy. Yet many face challenges when it comes to securing long-term ownership that can unlock their full potential and this gap is where we come in. We view the SME space as an evergreen opportunity: businesses with proven models and great, strong cash flows that can benefit from stability and growth-focused ownership.
I also think the number speaks and scale speaks for themselves. In Europe alone, there are over 230,000 businesses with 50-250 employees and sales below EUR 50 million. Many of these businesses are undervalued, and as part of a larger group like us, we believe there is a significant opportunity to unlock value. So how do we seize the opportunity? Well, our model is built to empower businesses while providing long-term support. Sellers of family-owned businesses typically look for buyers that share their vision for a long-term vision. Storskogen had this in mind from the early starts with its long-term approach. And rather than pursuing short-term gains and quick exits, our idea is to provide the business with stable, long-term support, nurturing growth over time.
Through Storskogen's decentralized approach, we preserve local expertise, allowing the management team to be close and work close to their customers, suppliers, and markets, and this structure preserves the entrepreneurial spirit and enables growth at the ground level. The decentralization is balanced by active ownership and central support, which include guidance on strategic initiatives, governance, and operational excellence. You will hear more about that later on in the agenda. One last point I would like to make on decentralization is that it is a prerequisite for scalability, and as I said previously, diversification is a cornerstone of our model. Ultimately, we want to drive stable, profitable growth with the aim to reinvest our cash flow to strengthen the business group, drive EBITDA growth both organically but also through acquisitions. Let's take a closer look at the Storskogen organizational structure, which is designed to support our decentralized model.
At the corporate function level, we have people managing areas such as governance, ESG, HR, myself, strategic directions, IR, etc., and M&A. At the business area organization, we have it across trade, services, industry, in addition to our finance department, and one point that I would like to make regarding the HQ Storskogen organization is that it has been significantly reduced since our peak by about 40%, and we now think it's properly staffed for the coming years. At the lower end, you see that at the business group level, we have the heart of Storskogen. We have almost 11,000 employees delivering value across our business units. Later in the presentation, Åsa Murphy will delve deeper into the balance between decentralization and central support.
Looking at the group as a whole, our current net sales of about SEK 35 billion and almost SEK 3.1 billion in EBITDA gives you an idea of the size of our company. And I think this highlights the scale and financial strength of our operations. Looking at the business area net sales, which looks as follows. Our services area has 30% of net sales, trade a little bit less with 28%, and industry, our largest one, with 42%. Broadly speaking, services can be divided into infrastructure services and business services. Infrastructure services are riding on trends related to urbanization, electrification, and sustainability. The business service part of the group is riding on trends such as digitalization, sustainable logistics, and technical advisory for innovation.
Trade, on the other hand, is broadly divided into distribution of professional B2B products and consumer products, riding on trends like lifestyle, health, and well-being, with our distribution model driven by digitalization and automation. Lastly, industry includes automation and industrial and product solutions, riding on trends like electrification, automation, and infrastructure growth. Currently, the average size of our business unit is about 290 million SEK of sales. The median is pretty much in the same range. Do you have an idea of, yes, that's it, the idea of the size or the age of our largest business unit? Yeah, as you can see on that, it's about 45 years, between four and five decades. Think of it. That means that they have been around for many different business cycles and changes.
Their businesses are typically leading in their respective niche, and we are super proud of our companies, both our large ones and the smaller ones, across our geographies and across business areas. At our peak in 2022, Storskogen consists of 136 business units. Following the divestment in 2023 and 2024, we now have 116 business units with a sales distribution as follows: 46% in Sweden, the remainder split between Europe and nearly 10% outside of Europe. Two important observations that I would like to make about our current portfolio. One, we still have relatively high exposure to Sweden, 46%. Two, we also have relatively high exposure towards cyclical businesses, and this, of course, has led to an impact on our organic growth and resilience of the past couple of years.
However, and this is important, even in a period of slow market and tough markets, our base for generating cash has been robust. As you can see on this graph, almost SEK 3 billion the last two years, which is about a triple of the size when we went public in October of 2021. Since becoming the CEO, I have emphasized the importance of organic growth, both as a means to take our leverage down but also to focus on long-term success of our business group. We have pursued these four areas to achieve and improve our organic growth. And I think the same way that our organization managed to work on improving working capital in 2022, I see early signs that our focus on organic growth sees the same improvements. So that takes us to the next part, Philip.
Good presentation.
Very much. Thank you.
Is it working? Hello? All right. Christer, many thanks.
Thank you.
So looking back, what are some of the lessons learned that you want to underscore for the future?
Well, there are, of course, a lot of lessons that we have learned during these years. One really important one is I think that we continue to make acquisitions at a fairly high pace until the summer of 2022. I think in hindsight, we should probably have kept a slower pace and probably stopped around when Ukraine was invaded, also to take care of our leverage a little bit better. I also think that we started to acquire some larger companies, which we really like. But I think going forward, I think we're taking, buying a little bit smaller companies. And sometimes we also did a portfolio sale or acquisitions, and I don't think we're going to do that going forward.
And why is that?
I think the reason is simple. I mean, doing these really, really big acquisitions and portfolio acquisitions, the multiple is higher. And we believe that we can take the size down a little bit and go back to where we were in what I presented in phase II, coming back to maybe a sweet spot of 20 million-50 million EBITDA range. I think that's going to be our sweet spot going forward.
Makes a lot of sense to me. You finished off by mentioning the current portfolio composition with a slightly too high exposure to cyclical businesses. Is there a lesson to be learned from that?
Yeah. I mean, even looking back at our accelerated phase, we were really focused on geographical expansion and also tried to have a really good mix between our business areas.
I think looking back, we should have focused even more on the end demand exposure across the business areas, so we didn't end up with too much exposure to one sector like construction or consumer demand, so that's a lesson learned.
Certainly. Some good learnings there. The next section of the agenda will explore Storskogen's strategic direction. What can you tell me about the work that's gone into the strategy review leading up to this Capital Markets Day?
Well, we've been working on this for the past year, and it's been a lot of work, a lot of workstreams, and I'm super happy with the effort that people have put into this. I mean, we have gone through everything, our capabilities, how we want to shape our portfolio for the future, our lessons learned, so it's been a lot of work.
And also for myself, stepping in as a CEO, I mean, I had the opportunity to meet people throughout the organization, both on H.Q. but also in the business area to learn, to discuss and see the challenges, the opportunities. So it's been a great year of a lot of work. So I'm excited about what we have accomplished.
Brilliant. Brilliant. As part of that process, we visited several of our companies in the U.K. And do you have any reflections from that visit?
Yeah, it was a fantastic trip. We met AC Electrical and Tornado Wire and J&D Pierce. And I was really, really, really happy with the performance of the management team. And I think that the operation is doing great. So it was a great trip and great for me to meet other companies outside of the trading business as well in the U.K. So happy with that trip.
Brilliant. Brilliant. Good to hear. So before we move into the third chapter, I will let you go for a quick break, a glass of water.
Thank you.
And in the meantime, we will have a look at a short video from Christer's visit in the U.K.
So we're here in the U.K. We've been visiting a couple of companies the past few days. Started off in Blackpool, visiting AC Electrical. Went up to the northern part of England and Millom and met Tornado Wire. And now today, we've been in Scotland meeting the team of J&D Pierce and looking at all the factories that we have up here in Scotland. Here's a few pictures of our visits.
I'm Chris Pullen, and I'm an investment director in the U.K. team.
We're up here in Blackpool, which is in the northwest of the U.K., and we're visiting our company, AC Electrical. So we've owned AC Electrical for just coming up for two years now, and it's an electrical fit-out business that operates across the U.K. We started looking at the business about three years ago, and what was really interesting for us is that it's operating in a really good niche with some fantastic customers, with some really good long-term relationships, which makes for a great long-term profitable business. And it has all of the characteristics that we look for.
I'm Rebecca Galley. We're here at Tornado Wire. I'm the CEO. We're at our factory in Millom. We have been manufacturing here for over 40 years. We manufacture high-quality, high-tensile wire fencing for the agricultural market. Knock your intermediate posts in, and then you'll tension the net.
We have a robotic arm, which is a plasma cutter.
I'm Derek Pierce. I'm Founder and CEO of J&D Pierce Contracts Limited. We're a structural steelwork contractor based in Scotland, working throughout the U.K. We cover a multitude of structures, from simple distribution warehouses through to football stadiums and arenas and aircraft hangars and such like. Today, we are going around our facilities in Scotland, the Glengarnock main facility, and we're here at the moment at our StruBeam facility, which is heavy plate girders. It does a variety of special projects such as bridges, plate girders, and trusses. The StruBeam facility has been for about five years. We brought this on board as part of the group. We've been part of the Storskogen Group for now two years, and it has been a very successful partnership. That was a short break.
Let's move into the next part of our agenda. It's now time to have a forward-looking view of the Storskogen strategic direction. Our strategic review over the past year has examined goals, our capabilities, our KPIs, our financing, and also how we want to shape our portfolio for the future. This work has resulted in a sharper focus towards how we aim to achieve resilience, stable profitability, and healthy returns. Looking ahead over the next three years, we plan to grow and shape our businesses using our significant ability to generate cash flows and allocating capital where it creates the best possible returns. We aim to reshape our portfolio around three key priorities. First, increasing our exposure to other whole markets outside of Sweden, which, as I said, have about 46% of our sales today. Also, we want to increase our exposure towards less affected by economic cyclicality.
That's how I should say it. And thirdly, we will focus on investment in areas aligned with the long-term growth opportunities, like well-being and automation. And I want to underscore two points related to the geographical and cyclical exposure. One, the Swedish economy is projected to recover after several years of slowdown, with cyclical sectors like construction and trade expected to improve. Two, despite volume drops with about 20%-25% in some of our business units, strong cost controls and pricing strategies have maintained both margins and sales. And I think these experiences have strengthened our business units and also made them less or more resilient for the future. And it's positioned as well for generating strong cash flows as the market recovers. As mentioned in the previous slide, our growth strategy will focus on investment themes, including health and well-being, automation, energy and sustainability, digitalization, and infrastructure.
These themes already are a significant part of our current portfolio, and there are areas that we like and that offer a substantial growth potential for the future. They cut across all our business areas, and just to make an example, we currently have business units in all business areas benefiting from digitalization. But looking at our automation is primarily a part of our industry group, and here, I think in the future, we will have both trading businesses and services businesses with offerings geared towards automation. So in terms of investment, we will be moving in a direction of being more focused going forward. Alexander will go into more details in this topic later on. One of the key learnings from the recent years is the importance of managing leverage. Moving forward, we aim to reduce leverage during economic peaks to maintain flexibility to acquisition during weaker markets.
This disciplined approach will ensure stability and resilience, helping us grow consistently over economic cycles. The situation that we previously saw in our accelerated growth phase of 2021 and 2022 is a situation we will aim to avoid for the future. Let's revisit on how we plan to shape our portfolio, which is primarily about allocating capital where we believe it has the best possible returns. I think we look at investment funds, and they can serve two purposes. One, driving organic growth, and this is about allocating funds such as CapEx or OpEx, supporting our business areas, for example, achieving reach, scale, or efficiency, and beyond the daily activities already carried out in the business units. Secondly, we also talk about enabling the acquired growth.
This includes acquiring new companies, informing new business units, or supporting the already existing ones with add-on acquisitions to achieve synergies and/or strengthen their market position. So to sum up, going forward, our approach will be more targeted, ensuring that any future acquisition aligns closely with our overarching goals, ensuring a more resilient portfolio. We have accepted our performance, and our focus on driving organic EBITDA growth is starting to deliver results. This ongoing work gives me confidence in the progress across our business group. With the sharpened strategy and more focused approach to the business group and the future investment, we are well positioned to achieve growth in the coming years. As a result of this, we have decided to adjust our financial targets for the next three years. We expect EBITDA growth of 15% compound annual growth rate over these years.
The EBITDA margin is expected to be higher than 10%. The target around our cash conversion remains at above 70%, and so does our leverage ratio of two to three times interest-bearing net debt to our Adjusted EBITDA. But important to say here that we still will focus on taking this down between two and two and a half in near term. The dividend ratio is 0-20% of annual profit, which also remains unchanged. Lena will go through the financial targets more deeply further on in the presentation. This concludes my presentation for now. But just before I let you go, let's take a look at the agenda for the rest of the day. After the break, we will explore two areas essential for achieving our strategy towards profitable growth and resilience.
The first will focus on how we ensure that the business group does well in order to produce and generate strong cash flows and organic growth over time. The second part is all about acquired growth, an essential component for our business model. So with this, thank you so much for your attention, and I will return for a Q&A session and concluding remark at the end of the day. But before we take a break, I would like to introduce the next speaker, Åsa Murphy. Åsa brings extensive leadership experience and role as a Business Area Trade, having previously served as Director of Expedia Nordics and the CEO of Bookatable for the Nordics and DACH. And Åsa will begin her session promptly at 10:00 AM, so nine or eight minutes and 40 seconds to stand up and move around a little bit.
But we will begin sharply at 10:00 AM. Thank you so much for listening.
September 1992. It was in the middle of the Swedish financial crisis, and the Swedish policy rate just hit 500%. I was a teenager, and my dad was running his own business, a tire workshop located in a small town called Mullsjö, and everyone there knew my dad. A couple of years prior to this, he had extended and built a new warehouse, funded with a bank loan. And in 1992, his bank went bankrupt, and his business was stuck with an interest rate of 23% for a long time. And I can still today feel his emotional stress and remember how powerless I felt because I couldn't do anything about it. And at this time, he had around 10 employees in the business, and they were all like an extended family.
The realization that he might need to let people go, that was hard, and it had a huge impact on all of us. If there's one thing I've learned from my dad, it is to never give up, and he didn't. He fought hard. He didn't take a salary for years. He found new revenue streams, and he managed to build the business up again to become a very profitable business and sold it 15 years later to [Bigger Group]. What was important for him when he sold his business was to ensure financial security for us in the family and to make sure that the company lived on because neither I nor my sister were interested in taking over the business, and to make sure that all of his employees would be looked after after he stepped down.
My father's journey has become my driving force throughout my career. I have 25 years of leadership experience in building organizations in international growth companies. I have managed a turnaround company, and I've run my own consultancy business. Before joining Storskogen, I was part of selling a company, not my own, but it was as important for us in the leadership group to find the right buyer and to ensure financial stability for the group and to make sure that all employees would be looked after after the deal. Values that I grew up with and are still important for me today, and values that our company sellers might identify with when selling to Storskogen. My name is Åsa Murphy, and I'm heading up the Business Area Trade.
I will talk about what it's like for our companies to become part of the Storskogen family and how we work with them to reach their full potential and how that is driving organic growth for us as a group. We work with a decentralized yet active ownership model, and where we offer added value through our expertise network and collaboration within the group. This gives us scale advantages and is an enabler for growth. Our business units continue to have a high degree of independence once they join us as a group, which promotes entrepreneurship and allows for decentralization. Decisions continue to be made close to the ground by the people that live and breathe their product and their market. They know their business best. They know their customers' needs, and they know how to seize a new opportunity in the market.
The local management team has full accountability of the financial performance. Storskogen acts through board involvement, and this is where the word active comes in. We help them to structure and to professionalize their businesses at the same time as keeping the entrepreneurial spirit. As a small business owner, they might not have worked with a board before, and this might be a new way of working for them. It's probably the biggest change once they join us as a group. They might not have done a monthly financial report prior to this, while we require them to report by the fifth working day every month. As a publicly traded company, we are bound to obligations and regulations that also our affiliated businesses need to adhere to. At the time of acquisition, we identify the need for governance structure.
Often there is a need to strengthen the finance team with a finance director or similar role. And we have added a finance director to more than 50% of our businesses. And this helps to both de-risk and add financial robustness to the businesses at the same time to help professionalize and make sure that the company's delivers on the targets set. And often an entrepreneur keeps a lot up here in the head and bases a decision on a gut feeling. While we help to give structure and to take data-driven decisions to make sure that we bet on the right things to allow for profitable growth. And that can mean that we ask for an investment case for a CapEx investment, for example, or before entering a new market if this needs investment.
And we follow all of our business up on margin growth and cash conversion, and also other KPIs related to the business or the industry that they are in. And we challenge them to continuously improve operational excellence. And this can mean for a trade business, for example, to improve warehouse efficiencies, get better payment terms, or make sure that we improve the inventory health to make sure that we have high runners in stock and very little of the slow-moving goods. And one of our most important tasks as an owner, and that is part of active governance, is succession planning. And I will come back to that in a little bit. So the backbone of our work with our business units is our quarterly board meetings.
That follows a structure where we in Q1 start the year with a performance analysis of the previous year and do a risk assessment together with the CEO to identify potential vulnerabilities internally and look at the market and overall macro. In Q2, we focus on a long-term strategy, also with sustainability impact to allow for longer-term value creation. Then in Q3, we drill this down to a business plan and set clear initiatives that are measurable and that will drive profitable growth. Then we translate this into a budget in Q4, where we agree on sales and EBITDA targets, cash conversion targets, and also look for potential investment that might be needed. On top of these quarterly board meetings, we also have monthly check-ins with our CEO and CFOs, where we go through monthly financial results and any operational matters in the business.
And on top of this, there also are various ad hoc meetings, all depending on the business needs. That could mean a phone call now and then from a CEO. Sometimes I get a text with an update, while it can also mean more involvement if the business needs it for a project or if it's a challenging time for them. But it all depends on the business needs. And as I mentioned, succession is one of our most important tasks as an owner. To make sure that we have the right key people in the right place and that we develop and retain them is core of what we do. And we continuously work with identifying succession needs, often together with a seller if he or she is still part of the business. And succession is usually something a founder wants help with.
There might not be a natural successor in the team, or there might not be a required skill set to take the business beyond its current scope, and we might need to invest in key positions, both to de-risk and to make sure that the business is structured for further growth. Initially, this means an increased cost base for the business, but that is something that we consider at the time of acquisition. As part of decreasing risk and making sure that we have the right skill set to scale the business, there is also to identify if there is a need to change the CEO, and we have done changes of the CEO in more than half of our businesses over the past decade. However, 45% of those are still active in other operational roles or part of another business board of directors.
And this way, we ensure knowledge transfer both internally as well as in between the businesses. And recruitment is something that we have extensive experience of. And when we look for a new CEO, we look both internally and externally. Most important is to find the right man or woman for the role. And looking at gender distribution, there are less women in CEO roles out in the market and also less female founders out there. And with that in mind, how many female CEOs do you think that Storskogen has of today? Okay. We currently have 13 female CEOs in the group, which represents 11% of the pool of CEOs. A figure that we would like to see improve. But I'm pleased to say that out of the CEO recruitments done so far this year, half of them are female CEOs.
One important criterion that we look for when we recruit a new CEO, other than having strong leadership skills and a financial proficiency, is to have an entrepreneurial mindset. This helps to bridge between the founder-led and a more structured approach. And it's also one of Storskogen's values and one thing that we look for when we recruit to Storskogen. And succession planning is also about developing our current CEOs and strengthening their skill set. And on an annual basis, we have development talks with the CEO to identify strengths that can be utilized within the broader group and also development areas, as well as discuss succession planning for the individual CEO. And this could mean to take a board role in another business, or as for one of our trade CEOs this year, that took on an interim CEO role with another business.
That helped us while we recruited for a new CEO, helped the business, of course, and also was a new challenge for the CEO. So how is our business organization set up to support our 116 companies? So we are 36 people in the organization working across our three business areas, industry, trade, and services, and also across our geographies that we are present in. And we have a mix of industry experience and local expertise. And one person might be the chairman of the board for a cluster of companies in a specific niche, such as logistics, for example. And one person might be the chairman of the board for several companies in one market, let's say U.K.
This way, we make sure to realize potential synergies in between the companies, as well as building up in-house and local expertise so that we bring relevant experience to each board to take better decisions. Our team has extensive experience and background from previous CEO roles and other senior leadership roles. Some have run their own business, and some have management consulting background. The team is used to and equipped with dealing with the various challenges and matters that our companies are facing on a daily basis and can therefore support them if and when needed. We have a breadth of companies with various sizes and complexity. We need to customize the way that we are working with them and adapt to the situation that they are in.
And with our pool of skilled CEOs, a broad network, and a wide range of skill sets in-house, we can offer our businesses know-how within specific areas, such as AI, for example, that you will hear Jonas talk about a little bit later in the panel discussion. That will help to create value within the group. And we already have most skills somewhere in the broader group, so we rarely need to take in external expertise or consultants. And this way, we both save costs and ensure knowledge sharing within the group. And you will soon hear my colleague, Fredrik Bergegård, talk more in depth about how we facilitate knowledge sharing and collaboration and how this is creating added value for our businesses. So Storskogen's value creation to our businesses is all about decreasing risk and increasing upside, which our proven decentralized operating model yet active governance demonstrates.
Our network of expertise creates added value for the businesses. Our businesses become part of a big family when they join us. They're not only getting financial stability and a sounding board in terms of a professional board, but they also get access to a network of experienced colleagues to support them. Making sure that we have the right key people and develop and retain them is core of what we do. Balancing the entrepreneurship and professionalism and bridge the gut feeling and a structured and data-driven approach. That will all lead to that our companies reach their full potential and that will drive organic growth for us as a group. With that, I would like to thank you for listening to me and introduce my colleague, Fredrik Bergegård.
At the end of last year, Olle Henriksson was sitting up in the VINAB office in Gällivare scratching his head. SSAB had just called and given the go for a project to refurbish a drying oven for SSAB. It was a big project and of millions of SEK, and they wanted to go now, but Olle had an issue. Over the last years, steel from Russia had been under sanction, making the purchasing process from the traditional suppliers of cast iron in the Baltics much slower and less competitive. A year earlier, Storskogen had initiated what they called the Norrlands-projektet, consisting of Storskogen companies targeting customers up in North Sweden, and there, Olle had met another Olle, Olle Ahlström, CEO of the Storebro Foundry down in Småland in South Sweden, so Olle called his colleague in South, and they decided to meet.
After a meeting in Storebro, they agreed to collaborate. Within four months, Storebro had designed prototypes. They had produced 2,000 wall tiles in 450 different models, altogether costing 150 tons of iron. SSAB were very pleased with the quality and the fast delivery. Actually, they were so pleased that now also LKAB has been down visiting Storebro. My name is Fredrik Bergegård, and I'm responsible for Business Area Industry. I've been with Storskogen for four years and part of building up our portfolio of industry companies. Before Storskogen, I had leadership roles in a number of private equity-backed portfolio companies and altogether been in product and industry companies for 25 years. As we heard from Åsa and Christer, Storskogen has a decentralized model, working actively to support our companies with operational improvements.
As we never must take away the responsibility of our CEOs, nor their motivation, we work a lot with encouragement and making tools available for the CEOs. And one such thing is this networking, enabling collaboration like what we heard between Olle and Olle. That way, we can achieve synergies in a voluntary way on market conditions between our business units. So today, I will highlight examples of how we within Storskogen create networks between our CEOs, expand that to their management teams. We come together and join forces in saving costs and even pull ourselves in to various sales and business opportunities. And all this together, this networking leads to generate organic growth, resilience, and improved margins within Storskogen. So we'll start off with the CEOs. We encourage networking and knowledge sharing by introducing the CEOs to each other.
We arrange CEO meetings, and they also get to sit in each other's boards, and this way, we connect the dots between the CEOs. They build relationship, trust for each other, and informal leaders step forward, making it fun and attractive to actually come and participate in these groups. Niklas Näslund is the CEO of Alfta Kvalitetslego, one great example of such appreciated CEO, who actually sold the family business to Storskogen, partly to become part of a community. When his dad and his uncle, who had started the business, retired, Niklas had been the CEO for some years, but then he started to feel lonely. Still being young and only having worked in the family business, Niklas wanted new influences and see new things and insights. Niklas came across Storskogen.
He liked the Storskogen business model and convinced the family that the right way forward for the family business was to sell the majority to Storskogen. Niklas is still with us, and Alfta is today a very good delivering company in our industry portfolio. And talking to Niklas, he highlights the value of networking, both for his own development, but also for Alfta's and his company's development, but also getting the opportunity to contribute to other companies and CEOs' development, as well as to Storskogen overall. We also have Jonas Cederås, CEO of Borstagruppen within trade, and we have Ola Jonsson, CEO of SISAB within services, both also emphasizing the value of the networking, sitting in other boards, getting to know the other companies and their capabilities, and pulling each other in to various business opportunities and join forces.
Later today, as you heard, we will also meet Daniel Ödehn, CEO of ByWe, who you heard Christer saying that also ByWe is actually a result of what started out as a collaboration between a number of our trade companies. By listening to the CEO's challenges and their ideas on how Storskogen can contribute, several centrally organized, but voluntary knowledge groups have been created. These groups are not limited, as I said, to the CEOs, but include a larger pool of functional managers participating in the meetings and forums. Today, there are multiple groups and forums within Storskogen. If I grab one example, we have here a production efficiency group consisting of production managers and some CEOs within industry.
Because regardless of what you produce, you share the same daily issues and concerns, like how to best perform daily steering, continuous improvements, and digitalization of your production. Another example here are the home accessories distributors, who meet to share insights about customers and trends within the interior design industry. And these groups also result in informal contacts, where the members call each other for ad hoc questions, troubleshooting questions like, "What KPI do you use to measure this performance?" or, "Do you have a template that I can reuse for this purpose?" or, "Do you have any good experience from a software for this application I'm looking for?" And also, you get friends in these forums, friends that strengthen your feeling of belonging to Storskogen. But as mentioned, the networks don't stop with knowledge sharing. They also result in collaboration, such as joint purchase agreements of indirect materials.
One example is the industry companies' consolidated purchases of supplies from the wholesaler Ahlsell. An average industry company might buy indirect supplies for, say, SEK 5 million , and then they spread it out on multiple wholesalers. By pooling it, we now buy for 50 million SEK from Ahlsell alone. But we took it one step further. We joined a big purchasing organization called LRF Samköp. And LRF, they buy for SEK 500 million from Ahlsell. So an average industry company in Storskogen now has the purchasing power 100 times what they would have standalone. And this, of course, saves costs. So on an annual basis, on those agreements, we save around SEK 10 million . But in addition, our companies, they get access and advice to much better service from Ahlsell's key account organization, LRF, who has 16 purchasing professionals just overseeing these agreements.
Of course, we also get better payment terms, which is very good for our cash conversion. A similar example is our freight initiative. This was actually created in the U.K. by our trade companies in 2022, when a container was more or less impossible to get hold of. With the combined container volume of 4,000 20-foot containers, shipping is a significant cost within Storskogen. By joining forces and setting up purchase agreements with most of the big forwarders in the world, we have generated an annual saving of SEK 20 million per year. Finally, I just also want to mention the purchase agreement with Vattenfall. Here, our companies get green electricity for the same price as fossil electricity. It gives also the companies access to Vattenfall's trading desk, so they can get advice, for example, on how to best hedge their energy costs.
And of course, having most of our companies buying green electricity, it's also a big contribution to our CO2 footprint and our ESG activities. But we don't stop there. We also join forces in driving sales and organic growth. Our digital service company, IVEO, they developed a storefront application with a web shop and an ERP backbone, initially to our trading company, Vårdväskan. And with them as a reference, they also supplied the solution to some other Storskogen trade companies, ByWe and Session. But more importantly, they could expand this concept to external customers. And this, of course, generated both external growth, but also investments needed anyway that now ended up in Storskogen's own pocket. And our automation company, PV Systems, they have provided automation solutions to two of our product companies, Swedstyle and Wibe.
For Swedstyle, they delivered an automated production line, and for Wibe, an R&D testing machine, giving them a unique competitive edge, and again, these projects on market condition was a really good deal for PV Systems, nice project, but also really good payback on the investments for Swedstyle and Wibe, and finally, down here, we just also have a picture from our friends Olle and Olle with Storebro's casted products for VINAB and customer SSAB, and actually, an additional benefit was the green electricity that Storebro buys from Vattenfall, highly appreciated by the customer SSAB, so with that, I hope I have highlighted how we, as an active owner, still working decentralized, can create networks and collaboration on market conditions across our business units. Building these connections are one example of driving operational improvement and organic growth.
And to give you a glimpse of what this can look like, we will show you a video in action from our CEO event in January this year. And after that clip, we will move on to the next section where we will have a panel discussion, and you will meet more of our fantastic colleagues from Storskogen talking about operational excellence. But first, please join me to come to the CEO event earlier this year.
At the global CEO event, I shared best practice on improving working capital, which we successfully reduced with 35%. At Primulator, we focus on three key areas: optimizing inventory levels without losing sales, negotiating better terms from suppliers, and lastly, ensuring faster payment cycles, applying fees for late payments. We achieve this by engaging employees across seven countries, identifying the best practice in each area, and implementing these strategies consistently across all markets.
Good afternoon, everyone. My name is Jesper Kronstrand. I'm the CEO of SoVent Group. I've become the Nordic leader in chimney sweeping and also offer services in fire safety and ventilation. My presentation focused on culture development, sales strategies, pricing approaches, and leveraging the growing scale of our business group, for example, by applying a value-based pricing model for certain services. Through these initiatives, we've achieved nearly 7% organic growth annually with improved margins. My presentation at Storskogen's CEO Day is centered on SoVent's approach to improving net working capital. Before joining Storskogen, this wasn't a priority from our previous owners, and we often kept high inventory levels to gain market share, taking advantage of low capital costs at the time. By targeting inventory management, accounts payable, and receivable, we've achieved a 23% year-on-year reduction in working capital for 2023.
As a leading cosmetic distributor in Scandinavia, our presentation highlighted best practices in sales. We've adopted a structured approach to driving new business growth, involving dedicated resources and active participation from top management throughout every stage. This integrated method ensures sales growth remains a core part of our strategy. Great.
Hi again, everyone. We will now move on to our panel on operational excellence. As Christer mentioned earlier, and as he mentions every day, to be honest, one of our top priorities is organic growth. So we have 160 business units in the group, and there are a lot of initiatives going on organic growth, and we would love to share all of them with you, but I don't think any of you have the time for that.
So we thought a way to kind of illustrate that for you is to invite a few panel participants, and we can discuss a few cases that hopefully can give you some color and flavor on the things that we do. So with that, I would like to introduce you to my dear colleagues, Chris Pullen, Lina Falk Jiménez, and Jonas Tulldahl. To the stage, please. All right, welcome. So I thought I would just kind of give you some background on who you guys are, and I'll start with Chris. So you spent your kind of formative years in the British Army as an infantry officer. After 12 years, he moved on to the commercial world and has since been CEO of four different services companies, ranging in size from about 50 employees up to 50,000 employees.
And you've been part of Storskogen now for about three years, and you're sharing a number of the U.K. businesses. Moving on to Lina. Lina works in the business area services and is responsible for our logistics portfolio. You joined Storskogen in 2018 when the group had about 25 companies. So you've seen a lot in those days. And over those years, you've done a number of kind of initiatives on organic growth and operational excellence. You've also been involved in more than 20 M&A transactions and recruited eight CEOs. Finally, Jonas heads up our corporate development activities on a group level, has a background in management consulting, as an entrepreneur, and has held different positions in industry. At Storskogen, you work with overall group strategy and drive strategic initiatives, including AI, our knowledge exchange, and frame agreements, to mention a few. Shall we get started?
Yes.
All right. Thinking about how we manage our portfolio, and overall, we have a decentralized approach where we work through the boards and through the management teams, but equally, there may be times when a more involved approach can help to accelerate growth in a company. Chris, could you tell us about your recent involvement in one of our U.K. companies, Stop Start?
Yeah, sure, so Stop Start is a niche logistics business which specializes through a network of small vans in delivering fragile bathroom products such as shower screens and sinks across the whole of the U.K., and this business has been really successfully grown by the founder over a number of years, highly profitable and a great business.
And last year, though, to support the founder's transition, I had the chance to go in as interim CEO, which was super interesting for me, but also gave a great opportunity to have a look at how we could accelerate growth a little bit more. And I remember in the first few days walking into the planning room where everything was planned out for the next day, the routes, etc., and seeing about 800 pieces of paper being shuffled around to build the routes for the next day. And I thought this looked a little bit sort of old school, but actually, more importantly, it was a real constraint to growth because until you'd shuffle these pieces of paper around, three people taking five hours, you couldn't go to the next stage, which is loading the vans, and they all had to be out by 4:00 AM in the morning.
What we did is to implement a route planning system, so state-of-the-art, the same system that IKEA uses, another big international company with loads of volume, and we digitized the whole process. As a consequence of that, that planning of 15, 16 man-hours a day went to two hours through the system and can be optimized even better as time goes on. It also meant that we saved a million sheets of paper each year, which is, of course, great for the planet.
Brilliant. Glad to hear. May I ask, what are the tangible results from this transformation?
Yeah, it worked really well, actually. We were maxed out at about 700 deliveries a day, and that's where the business has got to. Last week, we did 1,450 deliveries. We basically doubled the operating capacity of the business by doing that.
We've improved customer service and also, of course, through digitizing the business and that planning process, we're getting timely, accurate data insights, which means we can carry on optimizing week by week. So overall, we've doubled the business, basically.
Brilliant. It's been quite a journey. Were there any particular challenges in this project?
Yeah, I mean, I think one of the key aspects that we bring from Storskogen is some sort of pretty broad and deep industry experience. So, for example, you touched on my experience, and I've run a number of companies that are generally slightly larger than the typical Storskogen investments, which means that I've sort of seen the next level up and the next level of scalability. So when it comes to implementing a project, I sort of know what the challenges are. I can foresee them and deal with them that way.
And what we found at Stop Start was probably a fairly typical situation that the founder had sort of run out of runway in terms of knowing what to do next for growth. But then, of course, from our perspective, we do know, and we can do that, and we've got experience to show it. So I think that's one of the great ways that Storskogen can bring value to our companies.
Indeed, indeed. Digitization is something that we try to put on the agenda of most of our group companies. Another area that we try to increase focus on when we become owners is sustainability. Lina, given some of the highest emitters in Storskogen are within your logistics portfolio, may I ask, how do you work with the management teams to drive emission reductions?
Yes, it's definitely challenging in sectors like trucking or delivery services like Stop Start, which Chris just talked about. And for many years, diesel was the only commercial variable fuel, and then growth also led to higher emissions, unfortunately. I've been working with the logistics companies for the past six years, and we began actively measuring our emissions in 2020 and have since committed to reduce them significantly. Being willing to invest in a modern fleet has been part of the solution. Each upgrade in our heavy trucking fleet is about 10% more efficient than the previous. And we also replaced 25% of this fleet with trucks running on non-fossil fuels, a mix of biogas, electric vehicles, and also an increasing portion of HVO. And the sales team actually has an HVO target in order to reach our annual emission reduction target. Brilliant, brilliant.
What's the attitude from management teams of having targets like these or implementing sustainability initiatives generally? Well, in this specific case, it was actually a sales manager who asked for targets in order to make it tangible. And I think that's a perfect way in also leading him to make it achievable. However, it's not always the case that everyone is that positive. And it's been a journey. I've encountered questions like, if the competitors aren't doing this, why should we? Or the customers will never pay for this solution. Concerns of range limitation, margin impact, and infrastructure challenges, all common concerns which are valid. The attitudes have, however, changed over the years. And I think much thanks to that, our initiatives have been well received on the market and to our customers. It's great to see how the management teams have evolved.
I think the HVO target has been a perfect example of that, from initially leaning back to now leaning forward, and they are practically coming to us with investment cases and proposing new business models and taking ownership of their initiatives to reduce emissions. So yeah, that's very great to see.
Good to hear, good to hear. May I ask, a common view is that there's a trade-off on one hand between sustainability and on the other hand, commercial viability. What's your take on that?
Yes, it's of course a concern. HVO is currently around SEK 2 more expensive than diesel. An electric truck is about 3x the price of a diesel truck. I think, however, it's important to look at this as a business opportunity, not just an additional cost.
Having the commitment from customers and also adjusting our price structures to fit those conditions of using non-fossil fuels has been very essential for us to reach or to make it financially sustainable, and we were the first player in the market and also today one of few who can offer fossil-free freight in our own fleet. Today, our customers also have reduction targets, and we are able to meet that demand thanks to our early investments. We have managed to extend our customer contracts, which can now span over multiple years instead of only one, which is the general practice, and we also have full coverage of the HVO price difference, so I think when you make it commercially viable like this, it's not difficult to get engagement from the management.
Interesting, interesting. How does this fit into Storskogen's overall sustainability target?
Storskogen has committed to the science-based target initiative. So in a short perspective, that means that we should reduce our Scope 1 emissions another 42% until 2030. We, as a group, have started to focus on the BUs, which have the highest emissions, such as heavy trucking, where our actions also have the most impact. So yes, that's really the thing. And I know that Chris is working with us in the U.K. too, across our boards. So it's not only the larger BUs, but rather it's an agenda for all of our companies. However, in the U.K. market, it's offering other conditions than here in Scandinavia, right?
Yeah, that's right, Lina. So I mean, we're obviously, like other market areas, trying to do everything that we can to improve our Scope 1 emissions and generally improve our ESG credentials.
For competitiveness, sometimes it means we do have to own factories. Sometimes we do have to own our fleets. And like the Stop Start example I gave earlier, where we own the fleet, clearly that contributes to Scope 1 emissions. And unfortunately, in the U.K., the EV charging network is not really very well rolled out yet, and HVO and biogas is not particularly readily available. So it feels as if we're a little bit behind some of our colleagues here in Sweden and the rest of Europe. But then there are other things we can do. So with that fleet of 70 vehicles in Stop Start, of course, optimizing the route planning means that we're doing more efficient routes and thereby saving fuel and saving emissions. So yeah, we're making progress, but I think a little bit further behind our colleagues.
Catching up, catching up. As you all understand, there are a number of topics where the group function can really contribute to the development of a group company. It can be succession, it can be transformation, it can be sustainability, or it can be digitization, as we heard about. One topic that has come up a lot lately is AI. Jonas, what's Storskogen's view on AI?
We strongly believe that AI as a technology can have a significant positive business impact for many of our business units. It can be increasing volumes or optimizing prices or reducing costs, all in all, of course, driving organic growth for our business units. And we are actively working now with our business units to help them and support them applying AI in their own respective operations. And among other things, we support them in building competence, but also by reducing the technical barriers.
You mentioned technical barriers. What does that mean in concrete terms?
Let me give you a concrete example. So SoVent, our group of chimney sweepers here in Sweden, they decided in October that they wanted to have an AI-powered chatbot launched on their web page that would be able to answer the questions from their consumers. And only two weeks later, they launched that by then had been trained with their own unique questions and answers that SoVent typically gets from their customers. And this was made possible through the AI platform that we developed on a group level in Storskogen. So it's a platform that allows our business units to set up their own AI-powered chatbots based on the retrieval-augmented generation technology, but they can also train own AI models on this platform.
Currently, we actually have 20 AI-powered chatbots on the platform, delivered at lowest possible cost and shortest possible time to market. Of course, the customer support use case is a common one that we see, but we also see our business units using AI for enhancing technical support for machines or assisting sales staff or as an internal training or efficiency tool. All in all, the common theme is that it actually can have a significant business impact when applied in operations. One and a half months later, Emily, the chatbot that SoVent launched, has answered more than 500 questions now. Those questions otherwise would have been answered manually through emails or phone calls.
Lina, do you have any examples in your portfolio?
Yes, two of our freight forwarders, Jata Cargo and Téco Logistics, are about to release two of these chatbots which Jonas just mentioned.
We're also working on optimizing our order process where AI will play a role. And there are further identified areas which we plan to address going forward. But Jonas has been a great sounding board when it comes to finding technical solutions to our challenges within scalability or manual processes.
Jonas, I know you spent time on this topic from a technical perspective. Can you share some insight related to this work?
So there's a vast amount of knowledge and competence in Storskogen for sure, but we needed to find a way how to effectively share that across the whole group. So on the group level, we developed a cloud-based technical platform for knowledge sharing. We call it KX.
All individuals in our business unit have access to the platform where we share best practices, frame agreements, we host events, and we allow individuals in the group to connect with each other. Currently, we have more than 750 users with access to the platform. We publish more than 200 documents. Every month, we see around 350 document downloads from the platform. Worth mentioning, I mean, Fredrik talked about a couple of examples of frame agreements. Out of all of the documents we published on KX, 80 is actually frame agreements that are used more than 300 times in our business units.
Quite an impressive outcome, must say. Sounds like it contributes both with kind of cost reductions and knowledge sharing. Back to you, Chris. We saw a short video earlier of Chris's visit to the U.K.
In that video, you told us a bit about the company AC Electrical that we acquired in April 2023. At that point in time, there were quite a few macro headwinds. Could you elaborate on how we got comfortable with that acquisition?
Yeah, sure. Aside from doing the normal due diligence we do, which is pretty in-depth, as you can imagine, there were two sort of key areas that we really focused in on. Firstly, quite broadly, we just reviewed and analyzed the management information, all of the financial information over a long period of time. We took 18 months or so to look back at the financial information, look at the projections, see if the projections were being met.
Because they always were or being exceeded over such a decent period of time, we built up a really good amount of faith in the management and how they're running the business and their forecasting. That gave us a solid foundation and a trust in the business as we went through that 18-month process. The other side was that we did a real deep dive into the customer situation with AC Electrical. We did a lot of analysis to see how those customers were reacting in the downturn that we're going through. One of the customers, quite an important customer, is called B&M. It's a FTSE 250 listed in London. The useful thing there was that there's lots of publicly available information. We had regular updates on their store opening program, their LED lighting refits, and this is all work that we did for B&M.
And we also had a good look at the discount and value retail sector that AC Electrical served. So all of that sector is quite countercyclical. So we got pretty happy that an important, not overly significant part of B&M's customer base was countercyclical, which would mean also that AC Electrical would be fairly countercyclical as we go forward. So it's really those two areas. There's sort of an extra long time of getting confidence with the numbers that were being reported and the management team building trust. And then on the other side, that deep dive into the customer contract portfolio. And I'm pleased to say that two years on or so, the business is performing fantastically and still beating expectations.
Brilliant, brilliant. Thank you very much, Chris. I think that example gives the audience a good flavor of how Storskogen will work with acquisitions going forward.
On that note, I would like to thank the panel for participating and the audience for listening. As I said before, there are so many initiatives going on, but I hope this gave you some color on what we're doing. Now, you've just heard from us at group level on the topic of organic growth, but now it's time to hear from someone from our group companies. Please allow me to introduce you to Daniel Ödehn, who is the CEO of leading haircare company ByWe. Thank you very much.
All the CEOs of Storskogen and all the great companies we have out there, I find these presentations today very interesting because these are things that are actually happening. We have, for example, ourselves, we have IVEO developing a state-of-the-art web shop for us. We're using the frame agreements with DHL, sending thousands of shipments every day.
We're soon also part of AI. I'm going to tell you a short story of us, one of about 115-ish companies in Storskogen, and how you can go from being an IT consultant to selling hair products for almost SEK 800 million a year. We all have a shower every day. If you look in your own bathroom, hopefully you will find some of these exclusive products. If not, that kind of disappoints me, but hopefully then your better half has realized what it's all about. I was also the 15-second guy before, but it's all about appearance and it's all about hair, right? My name is Daniel Ödehn. I'm the CEO of ByWe Group. We are a Storskogen company within the health and beauty vertical.
This journey for me started about 18 years ago when I was an IT consultant at Volvo and got a crazy idea to start selling hair products together with two friends. After having this as a side business, working day and night for a couple of years, we discovered the beauty of the professional salon industry, and we realized that this is what we want to do. To make a long story short, we started distributing a hair product, and over the years, our portfolio of brands slowly grew. We realized we were pretty good at building brands and creating a desire among consumers to want them. Business has always been going pretty well, growing at a steady pace, and we have always been working with our hobby.
Five and a half years ago, we were in the process to sell a part of the company that we started, and we met with different investors. Once we had the meeting with Storskogen, we realized that this is the perfect match. They were not the highest bidder, but they were everything we wanted in terms of a new majority owner. We could stay on, and we could still run the ship as we see fit. And that's why we're still here today. When selling your life's work, I wasn't sure how long the next part of that journey would actually last. I was thinking maybe a year and a half, maybe two, but I'm still here, five and a half years and counting. And thanks to this team, my job is more fun than ever.
Together, we have certainly been able to take this little hair company to the next level. One of the key success factors, I think, is that the team here and all the people behind them at Storskogen, they are really good at making people that don't need to stay want to stay. So what does Storskogen really add to the game? That's a question I get a lot. Well, when you're running a small entrepreneurial company, board meetings, for example, don't exist. Now they do. Adding structure and investment support are two of the things I value the most. Having a budget to compete with, combined with the entrepreneurial spirit to always win and always sell as much as you can, that really helps to improve your game.
Growing the business, and not just with that gut feeling as we heard before, but at the same time minimizing the risks, that's something we for sure didn't think much of before, but that has really been important, especially these last couple of years. Let me tell you another short story. March 2020. We all remember, right? That thing, the pandemic that would never come to us in Sweden, was suddenly here in just a few weeks' time. In one week in the middle of March, our business went from SEK 950,000 a day on the Monday to SEK 150,000 on the Friday. That is an 85% drop in sales in one week. That's kind of panic. Many of our employees, they of course got really nervous. They read and they hear about people being laid off.
I thought we're a pretty strong company financially, and we have an even stronger owner behind us. So I could tell our staff, trust me, no one will lose their job because of the pandemic. I was saying this time after time for a couple of weeks, and they started believing me so we could focus on what we did and what we can do to sell hair products. We then got the idea, an idea that we learned a lot from. We sat down in the office every single morning, and whoever wanted to join was welcome to do so. And we discussed one thing. What can we do to maximize today? Suddenly, it was all short term. We needed to maximize every single day. And without Storskogen behind us, I'm not sure we would have been able to do so in that way.
Sales went pretty well, and we actually came through this with a 35% growth the first year of the pandemic. When Chris and the team came on board in our team, it didn't take long until they started understanding our business and industry. And we then embarked on a journey together where we started looking at other companies and acquiring other players in the industry. Having their acquisition skills combined with our industry knowledge, that created quite a unique advantage in some of those deals. Some of them took place, and some of them we actually decided to walk away from. And the combination of this, I think, is a great success factor for us. As an example, I was helping out in the first acquisition we did of a hair company in DACH. And now, four years later, I'm still a part of the board there.
Together with two other companies that we worked with, that we acquired, we worked together as sister companies. We one day realized that we should merge these to create an even stronger player on the Nordic market. This was not forced upon us from Storskogen. It was actually an initiative from our end. And that was the birth of ByWe. Together with these companies, we could continue growing and become an even stronger player on the market, growing in a sensible way, creating that desire to need our products. We are today the largest distributor of professional haircare in the Nordics, about double the size of our nearest competitor, which is L'Oréal. We have a fabulous reputation among industry suppliers, customers, and employees. We have built well-diversified companies with different brands selling to salons, beauty e-comm, and prestige retailers.
What we have done in the last three years has opened quite a lot of new doors for us. Looking back seven to eight years, it was almost impossible to get a big supplier or a big brand in the industry to look at us in little Sweden. Now, three years later, they all want to work with us. So we carefully have to select which brands we should focus on. The latest addition is Dyson, a brand I'm sure you all know of. For us and the industry, it's like becoming the distributor of Apple. And this will for sure open a lot of new doors for us in the future. So how do we work and interact together with Storskogen within ByWe? Well, besides the general calls and sales updates, we have board meetings four times a year.
We have CEO presentations once a month where we discuss the previous month, where we discuss the current month about halfway in, and different challenges or opportunities we have, actions we need to take. Basically, anything that we might also need help with. Is everything great all the time? Of course not. We do have our disagreements, and we do think alike, but we do find a way forward together. As an entrepreneur, it's sometimes good to stop and think twice if we really should do this before moving on. At least when your company reaches a certain size, it's really good to think twice and not just base the decision on that gut feeling. We, of course, also have administrative tasks and reporting routines that you heard a little bit about.
Sometimes I haven't always appreciated those, but they do create a really good structure and security that I now must admit is really, really good to have. In my mind, the key to success to what we do together in this room is to find a balance between Storskogen's long-term thinking and everything that comes with that, and the entrepreneurial spirit and motivation. This combination creates a sustainable business with strong growth, profit, and margins. And in my mind, I would say that this is the beauty and essence in everything we do. Thank you.
Thank you, Daniel. I'll step up. You were taller than me anyway. Thank you very much. Absolutely brilliant. It's always great to hear a story from a company seller's perspective and CEO in this case. May I ask, how do you see the future?
We often like to talk about the lipstick effect that was created by Estée Lauder in the financial crisis 20 years ago. That means that when there is an economic downturn, our type of products are normally the last resort you cut down on. Because even if you can't afford your lifestyle, you still want to feel beautiful. We have had a good couple of years, I must say, considering that. I must say that, of course, I would look forward to lowering interest rates, our currency being a bit stronger, and the general Nordic citizen having a bit more money in their wallet. I think the future looks really bright the next couple of years.
Brilliant. It's been good to see your resilience. Thank you so much for participating. We really appreciate it. Thank you.
Thank you.
That concludes the first half of our day here. We will now have a 20-minute break. We'll see you here again at 11:30AM sharp.
Welcome back, everyone. Hope you're all well caffeinated by now. Let's start the second part of our Capital Markets Day. We will first start off with a look at acquired growth, followed by financials, and then we will round things off with a Q&A and some concluding remarks. Next up is one of our co-founders, Alexander Bjärgård, who leads our M&A and corporate development efforts. Over the past year, I worked closely with Alexander and other colleagues on our acquisition strategy. His curiosity, drive, and commitment to improving our approach have been key in shaping our direction going forward. Please join me in welcoming Alexander to the stage.
Thank you, Philip, and thank you all for being here today. I really appreciate it.
I guess that many of you basically have the same job as I do. We investigate different investment opportunities and, at the same time, try to figure out how to optimize our portfolio. It would have been really interesting to have a sit-down with each and every one of you, but let's see these coming minutes as a start, and let's get the discussion going afterwards. I would like to start by telling you a little short story. I was in Småland in the south of Sweden visiting a really successful logistics company. They had been outperforming their peers for many years, both in terms of margin and growth, and I was convinced that during that day, I was going to find out what the secret sauce might be. Was it the distribution model? Was it the level of automation?
Or was it an overly lucrative customer contract that made the company perform so well? And this was the year 2005, many years before I co-founded Storskogen. I was heading up the legal due diligence of the company together with a team of operational and financial experts. My first thought when walking around the premises was that every staff member I met seemed very, very open, and in lack of a better word, they all seemed happy. Then, walking through the warehouse, I noticed that this might be the tidiest place I've ever seen. Not just for being a warehouse, it's basically the tidiest place I'd ever seen. And after a day of asking a lot of questions and looking through binders of documents, you actually had to look through physical documents back then, I felt that this is a really well-operated company.
I couldn't really point to something that was special, something that stood out. Later that week, I met with a senior member of our deal team who was responsible for our logistics companies, and he explained to me that well-run logistics companies rarely have one single thing that stands out. Rather, they are really good at many small things. He said that, for instance, the IT infrastructure of this company really supported the company's operations. He also said that the customer mix made it easy for the company to have full utilization of their warehouse. Also, in the organization, everybody had clear roles and responsibilities. He continued, the thing that had made this company so successful over so many years was the fact that they had a great corporate culture, making me think back to the happy people and clean warehouse.
We ended up buying this company, and it continued to outperform its peers for many years. So why am I telling you this story? Well, this is just one small learning of the importance of operational excellence and corporate culture. And from one transaction. And at Storskogen, we all have the similar experiences, both from our previous jobs, but certainly from all our acquisitions here at Storskogen. We learn both from our successes, but even more from our mistakes. And all of these learnings have been critical for us in shaping our strategy going forward. And I will share some of these insights with you today. Yeah, there we go. I'm going to start out by sharing some of our thoughts on capital allocation. The main objective for our capital allocation is to deliver profitable growth and resilience, as Christer mentioned before. And here we talk about total profitable growth.
In order for us to secure this objective, we focus on eight different areas. All these eight areas are important when making capital allocation decisions. But depending on our assessment of our portfolio from time to time, we chose to focus on certain of these areas. And this has implications on our acquisition criteria and then ending up in what companies we acquire and where we acquire them. I'm going to walk through all these eight areas and our current assessments where we think we are today and how they impact our capital allocation decisions going further. Starting out with EBITDA growth. Obviously, that's very important for us. And here we look at the underlying organic growth or potential growth over a business cycle. And today we believe we, in fact, have an undergrown growth potential in our group that's in line with our current targets.
This doesn't mean that we will stop working really hard to achieve organic growth, which we talked about earlier, but it rather means that we don't have to change our risk profile by acquiring potentially high-growth companies with higher multiples. We also assess the underlying EBITDA margin over a business cycle, and as you probably know, EBITDA margin doesn't drive the mathematics behind the compounding model. Nonetheless, we have decided to increase our EBITDA margin through capital allocation, both in investing in our current businesses, but also by significantly increasing the margin threshold when acquiring companies, and as you understand by now, the ability to generate cash is fundamental for our business model. Although the work with improving cash flow will never end, we feel that we already are on a healthy level going forward.
This means that we don't have to change our portfolio mix in order to become even more or increase our cash flow even more. Since we are an acquisitive company, we need to get good returns on our acquisitions in order to make new acquisitions, you understand. When it comes to acquisitions, we primarily look at a cash flow yield metric. Translated into an EV/EBITDA multiple or price, we will continue to target a multiple of seven. This has been a level that we've been on consistently during the past years, apart from a short period of time where we, as Christer mentioned, bought a few bigger companies and portfolios of companies. This is no longer a part of our strategy going forward. One area where we have a gap is our geographical mix.
As Christer mentioned, we have 46% of our net sales in Sweden. Even though we think that Sweden will have a pickup these coming years, we will use our capital allocation to prioritize acquisitions in our other core markets in the near term. Although our group of companies had been decent in protecting margins these past two years, we would have liked them to be even more resilient. Over these coming three years, we will therefore reduce the cyclicality of our portfolio by allocating capital to other types of businesses. This will be an important acquisition criteria for us going forward. Another area which both affects the portfolio growth and resilience is ESG.
Even though we believe that we will reach our communicated targets, we have seen lately that lawmakers change market conditions, making it harder for us, not just us, but everybody to reach those targets. And also we see shifts in customer demands. And here capital allocation is an effective tool for us to stay relevant over the real long term. The last of these eight areas is our business mix. And in order for us to be profitable, regardless of business cycle or any single market conditions, we need to have a sufficient business mix. Today we believe that we are diversified enough. And therefore we will instead focus our resources on areas in which we already operate and which we feel are extra attractive. And these are the investment themes that Christer mentioned before. These five themes, can you see them? Yep.
All rely on strong underlying macro trends, such as digitalization, urbanization, optimization, aging population, and sustainability, among other trends. And within some of these areas, you typically have less cyclical businesses, such as healthcare and infrastructure, while in others you have industries that grow regardless of business cycle. And you will find these in, for instance, the digitalization and automation trends. And as Christer mentioned, we already own a substantial number of companies within these themes that are supported by these underlying macro trends. And we have companies within health and well-being, for instance, that are less cyclical and infrastructure. And we also have seen our companies with, for instance, within automation and digital services being growing throughout this latest business cycle.
Owning these companies has helped us get a clear view of where we want to be in each value chain, what end markets we want to address, and also what type of businesses we want to own. And focusing on these themes will help to build on this knowledge going forward. To give you a few examples of the companies we own, I can just mention a few. So we have, for instance, Fokus Personal and Scandinavian Cosmetics, which are two leading companies within the health and well-being area. We have L&S, PV Systems, and the ARAT Group, who are all leading companies within the automation industry. We have UT99 and Riviera, who provide products within the energy and sustainability theme. Then we have Swedwise and Buildercom, who both leverage on the digitalization trend.
And also Stål & Rörmontage and Danboring, who provide products and services within the infrastructure area. Since we already have acquired all these companies, we are confident that we can continue to source companies within these investment themes and also that we can acquire them at the right price. To be clear, not all industries or positions in value chain are interesting for us within these themes. To mention a couple, we don't want to own hospitals or companies that produce electricity. However, we do want to leverage on the increase in demand that these types of industries may generate. And to give you one example to illustrate this is our own company, Wibe, who is a leading brand for cable ladders and cable trays. I think you can see some of their products right above me in the ceiling here, keeping the cables in place.
They have developed a special offering for wind turbines. Although it's been challenging at times to own wind turbines, the number of installed units has been growing for many years, making Wibe's market grow. They also have an offering specialized targeted towards data centers. That market has also grown for many years and is continued to or forecasted to grow beyond GDP for the coming years. Leaving the investment themes and moving on to another part of our capital allocation, and that is the balance between platform acquisitions on the one hand and add-on acquisitions. Many of our business units plan to grow both organically and by acquiring other companies. Typically, these companies are smaller and they have a high risk profile. But on the other hand, you could acquire them at lower multiples.
These acquisitions should help our business units strategically, either by, for instance, entering into new markets or strengthening the current offering of our business unit, and the business unit that wants to acquire a company, they usually have or always has a view on what type of company they want to acquire. And most often, they have actually identified one or two companies that are specifically interesting, and this means that we have an overview of all our different add-on opportunities at any given time in advance. And we are able then to compare these opportunities and allocate capital towards the ones that best will help our overarching goals, even though each one of these opportunities might make perfect sense to our business units, but this is only the add-on part, then we are convinced that we can buy great platforms as well.
And sometimes these platforms might help to reach our overarching goals better than add-on acquisitions. So it's important for us to keep a balance between the two. Without foregoing any future capital allocation decisions, we foresee that between 30% and 40% of our capital will be directed towards add-ons these coming three years. Now we talked a bit about capital allocation on a portfolio level. However, the actual decision boils down to acquiring a specific company in a specific market. So how many of you have acquired a company? You don't have to. Well, a lot of hands. So then you know that you have to evaluate a vast number of things in order to secure that this company is a company that you want to own at that price.
I'm not going to go through all of these things today that a company needs to be able to qualify as a Storskogen company. I would just like to share some examples of things we like and dislike, starting out with some things we like. I'm not going to go through all of these things, just a couple. We've already talked about cash flow, the importance of cash flow and margin improvement. I also talked about EBITDA growth. Just to give you some more color on EBITDA growth, we want our companies to be able to grow more than the GDP. The easiest way to do that is acquiring companies in markets that grow like that. Obviously, it's because it's easier to grow with the market than to take market shares.
Since we don't have an exit agenda when we acquire a company, it's really important for us that the company is relevant for the really long term. And a proof point could be that the company has a proven track record. But more importantly, is if the company is viable for the long term. There we look at the company's offering, trying to figure out customer demands in the future, looking at the market, but also if the company is able to adapt to changes that we all know will come. And the last example here on the list I would like to highlight is business stickiness. And here we're not only talking about recurring revenue companies such as SaaS companies. We like such companies, but we also talk about companies with a high level of repeat business. And it's not just the business model that can be sticky.
It could also be, as an example, a company. There's one company delivering products to its customer and another company delivering products, but at the same time also is a part of the customer's development of these products. And typically, these types of companies are more sticky. Then you have basically any product or services which are inconvenient for the customers to replace. They also tend to be more sticky. Almost as important to understand what we like are things we don't like. Due to our long-term ownership horizon, we dislike companies that cannot control their own destiny. Therefore, we don't typically like political risks or technical risks because they are usually outside the company's control. And talking about lessons learned, political risks or avoiding political risks has been a part of our strategy since we started Storskogen. And we have made a couple of exceptions during the years.
We also learned a lot because in one of these companies, this risk actually materialized and the market conditions completely changed, making it very hard for our company to be profitable. That was one of the companies we actually sold earlier this year. We will be very strict on this going forward. Talking about market conditions, we don't like markets that are changing too much because the risk level is typically too high for us then. One example of this is now the clean energy and electrification markets, where you have really, really big projects, new technology, and untested value chains. We instead, we look at more mature industries and value chain positions, but at the same time, we want to leverage on the same trends. We also avoid companies with too high key person dependencies.
Since we buy small and medium-sized companies, there's usually key person risks. But having done so many acquisitions and being really good at assessing key persons and also good at succession planning, as also I talked about earlier, we actually have an edge in buying these usually owner-operated companies. But sometimes the risk is simply too high. And mainly here we talk about or look at if key persons would leave, it would be detrimental for the company and we can't remedy the effects of them leaving or the cost for remedying that would be too high. These were only a few examples that we evaluate and like and dislike when we evaluate platforms. When it comes to add-on acquisitions, it's a bit more complicated. Therefore, we have developed a framework on how to evaluate and compare these opportunities. First, we look at how acquiring business unit is performing.
Simply put, it has to be performing well in line with our internal and external targets in order to be prioritized. The logic behind this is that we don't want to build on things that will make it harder for us to reach our goals. Secondly, we assess the business unit's ability to integrate and take care of the acquired company. This is really, really important because otherwise it's going to be really hard to extract any synergies or you could have a situation where the combined company actually performed worse than the two individual companies. We evaluate if the potential add-on acquisition is in line with the business unit's strategy. We compare different add-on opportunities for that business unit, but also compare it to alternative organic growth and initiatives, simply a make or buy analysis.
After having looked at the business unit, we shift focus to the add-on, and there we do typically the same assessment as we do with platforms, but we also look at the integrated company. Both from a risk perspective, those of you who bought companies and integrated them, you know that there's always a risk, but we also look at the synergy potential and when we can expect synergies. Worth mentioning here is that we rarely pay for any synergies, but we expect them nonetheless, and lastly, we look at how the add-on acquisition will affect Storskogen as a whole, both from a return perspective, but also how it will affect our key metrics and our capital allocation priorities, which I talked about earlier, and this concludes the part of how we intend to allocate capital and what type of companies we want to buy going forward.
I'm just going to conclude with some thoughts on how we will actually go about buying the companies that we want. As you know, there are cultural, legal, commercial differences between all geographies, not to mention language barriers and in some instances, even nationalistic tendencies where company sellers don't want to sell their companies to foreign entities. Therefore, we have a network of local teams in our core markets who possess both market competence, industry competence, and M&A competence. In addition to giving us a better understanding of the local conditions, we see these following main benefits. We find it much easier to source relevant cases since we have contacts with local brokers and we could do proactive sourcing much more effectively.
We also think that it makes the quality of our assessment much, much better since we understand the local conditions and also where the local market is heading. We can also build relationships with all local stakeholders, which is very hard to do from afar. And this helps us both in the acquisition phase, but also when we own the company. And speaking of owning the company, that's the most important thing. We think that we are better owners long term when we have a local presence. And for the avoidance of doubt, most of our staff in our local markets work with the companies after we bought them and only a few with the actual transactions.
Based on our knowledge and experience, we have developed tools and templates helping us assess all aspects of the M&A process, ranging from sourcing to assessing, negotiating, implementing, onboarding companies, and also post-acquisition evaluations. And these documents and processes have helped us get a common way of working throughout our geographies. And this, in turn, makes our capital allocation decisions much better since we know that we have a quality that we want, but also we base the decisions on the same type of documentation. Our common way of working also helps us in transferring knowledge between each other and also that it makes it easier for us to continuously improve the way we work. And the last piece of the puzzle of making sure that we allocate our capital in the very best way possible is our governance model.
We have tweaked this model over the years, and now it looks basically like this. The management team decides on the total available funds for the coming period. They also decide on the balance between add-ons and platforms and also on our capital allocation priorities. The local teams source cases together with the business units when it comes to add-ons. If a case meets all our criteria, it's entered into a deal pipeline. The management team revises this pipeline continuously and makes early prioritizations in order for us to only work on the most interesting cases. If a case is interesting enough, it is brought to the management team for decision to hand in a non-binding offer.
Should we say yes, well, then we have decision points throughout the M&A process to secure that we close any open issues or if we need to alter the transaction in some way or even abort the transaction based on any findings we do. To summarize, we have a clear view on how to allocate capital, what we want to buy. We have an organization in place that is well equipped for future growth through acquisitions. We have a governance model that will help us make the right decisions. With that, we're going to head over to the section most of you have been waiting for, I guess. We're going to talk numbers and money. The person to do that is our excellent CFO, Lena Glader. Welcome up, Lena.
I do have numbers to show you, so buckle up. Thanks for that presentation.
It's pretty hard to be last on stage after such good presentations, but I'll do my best and I'll be backing everything up with numbers, so don't worry about that. It's nice to see so many familiar faces here today and some new ones too. My name is Lena Glader. I'm the CFO here and I've been with Storskogen for very close to six years now, and however, I used to be an equity analyst like many of you or some of you here as well, actually starting in May 2000 at Alfred Berg as a telecoms analyst at the very peak of the stock market's boom. And telecoms was, of course, the place to be in 2000 and the place not to be in 2001. And I remember attending many Capital Markets Days during those years, obviously.
There were those particular years in 2000, 2001. I remember the nervousness surrounding these Capital Markets Days in the wake of the dot-com bust. In many ways, or in some ways at least, actually, we faced a similar situation at our previous Capital Markets Day in September of 2022 when it had only been a year since our IPO, but the external conditions had changed drastically. We had started to see inflation rising very rapidly in Sweden and other countries, and the central banks had just started to raise their interest rates. Our own share price, of course, had taken a few hits by then.
Meanwhile, behind the scenes of our Investor Day back in 2022, just as Åsa Murphy described with the annual wheel, and Daniel Ödehn testified to as well, our subsidiaries were working on their budgets, on their business plans and scenario planning for the coming year and the coming years as well. We had asked them to prepare a particular plan B, each and every subsidiary for the year 2023. If certain triggers occurred, could be a sharp drop in demand typically or other triggers such as raw material surging, then certain actions would be taken to remedy or to stabilize the situation. Quite often, of course, in terms of cost reductions. These action plans were then presented to us at the management group a couple of months later by which time the markets had deteriorated further.
We now had 10% inflation in Sweden in January of 2023. But instead of feeling alarmed, going through all these action plans, knowing our subsidiaries were on top of it, actually made at least me and I think the whole management team feel pretty confident that we would nevertheless be able to deliver on the promises that we gave at the Capital Markets Day. So what was the outcome from 2023 up until today? Well, demand eventually did weaken, as you know. We lost 13% in organic operating profit in 2023 alone. And some of our companies had actually to activate their plan Bs, and it worked pretty well for them and for the group. So we've actually managed, despite these challenging times, to maintain our EBITDA margin fairly well.
9.6% margin in 2022 went down to 9% in 2023 and now 9.3% year to date with a close to 10% margin in the third quarter alone. We also made a number of divestments, as you know, to further enhance our margins. And we've generated and continue to generate really solid and good cash flows. And we've used those cash flows to reduce the debt by, I believe Christer mentioned, SEK 2.8 billion in 2023 alone. I'm sorry. So today we're presenting new financial targets for the coming three years. And my ambition for this session is to back up or to explain how we back up those targets. One important ingredient is, of course, historic performance. We've owned these companies. We were founded in 2012, and we have owned these companies for a number of years, but they have been around much longer.
I think Christer mentioned 45 years on average for the top 20 businesses we owned. That's a long period of time. We do have history. In this graph, we show the operating margin for these businesses between 2000, when I was the telecom analyst then, until the end of 2023. We, of course, see the effects of the IT bust there, dramatically dropping margins, but also a very quick bounce back. We see the same in the global financial crisis, quite quick bounce back. This one, this current downturn, I don't know if it even has a name yet, but anyway, this current downturn has been much more prolonged. Recent quarters, not shown here because this ends in 2023, have, as I said, indicated an upward tick in the margin development of our businesses.
But zooming out for the bigger picture, you can see that we've got a fairly resilient portfolio. We know the fluctuations would have been much bigger if we hadn't had these three legs to stand on with the three business areas. And we can also see clearly an upward going margin trend. So, as I said, understanding history is fundamental for understanding the future potential in the long term. And what about the short term? Well, in the short term, to guide us there, we've got this wonderful, we've got a lot of things, obviously, we've got our CEOs, but we've got our confidence indicator, and this is a special baby of mine. We've been running this since April 2019. All of our CEOs answer 10 questions about market demand, basically, and inventory levels, etc., every month. And the dotted line is the Storskogen average.
You can see here the lowest line there is business area trade that has been running with quite negative sentiment for almost two years, starting in 2022, but has turned gradually more positive towards their sales situation and demand in recent months. Now, this, of course, ends in June as of this year because we were not allowed to show anything fresher than that due to compliance reasons. I believe head of legal might be in the room even. Then you see Business Area Services and Industry have been fluctuating around the zero line there, with services in particular showing a very sharp rebound in the beginning of and first half of this year, which is also reflected in their quite strong Q3 margins. There is a clear correlation between this and the trailing three-month EBITDA development. What's the conclusion from this?
We do see uncertainties, obviously, as does most. In relative terms, the changes in recent months are supportive for us in all business areas, actually, especially trade and services from quite low levels, though. Before moving to the financial targets, let's have a look at our ESG targets here. Needless to say, and I believe Lena described this really well before, steering towards sustainability targets adds shareholder value. We're quite confident on that. It will make our companies more sustainable, more competitive, and it will reduce group risk as well. Starting with the environmental target there, in line with the Paris Agreement and based on Science Based Targets initiatives, we will reduce CO2 emissions by 42% in Scope 1 and 2 by 2030 and by 64% in Scope 3 by 2034. Then we have also our targets include net zero emissions by 2050.
The social targets are for an equal gender distribution, especially the senior central roles at Storskogen and also in the boards of our business units and especially the board members that we appoint, and today we have 40% women, 60% men at central organization, and the distribution in boards is 30%-70%, but growing, if I understand you correctly, Åsa, right, and then finally, governance, that relates to identifying high-risk suppliers, basically, and to make sure that our requirements are met in our agreements with them and that they comply with our code of conduct, and by the end of last year, 90% of our subsidiaries had already mapped their supply chains, and of the identified high-risk suppliers, 75% of our agreements with them did include our requirements, so that's a good level, but it's bound to get better, I hope. Now, let's move to the financial targets.
I'll go through them one by one. First financial target being the EBITDA margin of at least 10% over a 12-month period during 2025 through 2027, obviously. And this is a change from the previous 10% over a business cycle. First, why EBITDA margin? Why is that relevant? Well, it is a relative measure that over time ensures and guides our companies towards efficiency control, which will help them absorb external fluctuations and get leverage on market opportunities, but also enhance their cash conversion. And here we show how the rolling 12-month group margin has developed over the past four years. And yes, it has declined from 9.8% to 8.9%, so by 0.9 percentage points over a business cycle, which to our subsidiaries has not always been benign.
So on one hand, and in relative terms again, we know that our subsidiaries, especially those that have exposure to consumer markets and construction segments, have been able to maintain, to keep up their margins fairly well relative to many of their competitors, but still their margins have been hit. On the other hand, we're not happy with this trend, which is one of the reasons why we divested these unprofitable companies and companies with low profitability earlier this year, and also one of the reasons behind the strategic directions pointed out earlier today about less exposure to Sweden, less cyclicality, somewhat higher demand on margins in new acquisitions, and also to maintain a slimmer central organization, so this shows the trailing 12 months. Looking at isolated months, the most recent quarters there, we're moving in the direction toward 10%, as I said, with 9.8% margin in Q3.
If we double-click on that and look at the three business areas, again, rolling 12-month margin and sales for the past two years, this is what it would look like. Quite different trends, as you see, between the business areas. And if you recall the confidence indicator that I just recently showed, you'll see a pattern, especially regarding trade, that has clearly suffered more than the others from the recent inflation and interest rate hikes, which has affected consumer demand, obviously, and consumer confidence. And where you see the industry has been much more stable, services also, but has picked up quite clearly in recent quarters there. And we also see the pickup in trade in recent quarters. And why is that? Well, firstly, we've had positive organic sales growth in the second and the third quarter. This obviously contributes to margins in a positive way due to scale.
Secondly, as described earlier, some of our subsidiaries have implemented cost efficiency measures and programs even. It takes some time for those kinds of programs to take effect, but we do clearly see the effect of that, particularly in services, but also in trade in recent quarters and also industry for that matter. And we have, of course, divested these businesses that also contributes positively to the trend in recent quarters. So all in all, we are confident that our companies will be able, based on this and based on history, to generate an EBITDA margin of more than 10% over a rolling 12-month period during the coming three years, supported by a gradual normalization of demand and particularly consumer demand.
If we combine the business areas, and this is not rolling 12 months any longer, this is isolated quarters, but nonetheless, you clearly see the diversification effect there with a dotted line being the Storskogen average margin. This is excluding central costs or operations, so just the business units per se. And yeah, so point here being, yes, we do have a positive diversification effect from our three business areas. Second target being adjusted cash conversion of at least 70% over a 12-month period. This is also unchanged. Why cash conversion? Well, cash flow growth is what ultimately will determine how much capital we can allocate and in the long term what our EPS growth can be. Cash conversion is defined as EBITDA plus or minus change in working capital less CapEx. So it essentially answers the question how much cash out of every operating profit krona.
On this page, we show this operational definition. This is before taxes and interest costs. You can see that in the past quarters, we've generated on a rolling 12 months more than SEK 4 billion annual operational cash flows. The line there shows the cash conversion, which was very stable at around 70% in the first four years in this graph. It dipped in 2022, and then you've seen the gradual or quite quick actual pickup there. We've had a cash conversion rate, which is really strong, obviously at 100% on a rolling 12-month basis during the past four or five quarters, which is good, of course, but 100% may not be sustainable over a longer period and in a growth environment. However, looking at this, we do feel confident that our businesses will be able to meet this target.
And the biggest contributor to our strong cash conversion is reduction of working capital. And we set ourselves a target to get from the 17.5% net working capital to sales at our previous Capital Markets Days two years ago to get to 15%, which we achieved in five quarters. And now we've been able to maintain it at around 15%. And I mean, it sounds easy, but I know it is really hard work to maintain this and to improve it, to keep the right items in stock and the right number of items and to make sure customers pay on time. I think we saw a lot of good examples from the video we saw just recently from our subsidiaries how they've worked with this, but there's still lots to do.
We concluded that based on history and our projections, we expect to report gradually improving margins and continued good cash generation. But what about growth, which is the third target here? And it's a new target. We aim to achieve a total EBITDA growth of 15% compound annual growth rate between the beginning of 2025 and the end of 2027. And the previous target was for an organic EBITDA growth exceeding GDP, basically. So why do we move towards a total EBITDA growth? Well, it is to incentivize capital allocation to where it generates the best returns, simply, be it organic or acquired. Alexander described this pretty well. So in times of higher organic growth, we may choose to allocate less to acquisitions and more to other purposes such as deleveraging or buying back minority shares, etc.
In times of lower organic growth, we may choose to allocate more to acquisitions, and our ambition is to have that headroom going forward in our balance sheet to actually act in those situations, but we aim to fund the growth with our own cash flow, and what does that look like? Well, this is a snapshot of the rolling 12-month cash flow as of the third quarter this year. You see the cash flow from operating activities of SEK 2.9. This is after tax and after quite high interest payments that we included there that will obviously come down as interest rates are being cut. On the other hand, we might not expect to have such high positive contribution from change in working capital, but in this case, we had SEK 1.6 billion to allocate, and internally, this is what we call the true free cash flow.
We can allocate that to acquisition, debt repayments, dividends, and buyback of minority shares in our existing companies that we show here. Please note that the earn-out liability is almost gone from the balance sheet now, and the SEK 1.9 billion we have as the value of the minority shares, and those are shares held by our sellers and CEOs, and typically a minority stake is around 10%, but why do I include this and how does this affect our M&A pace? Well, we will likely want to buy back parts of these shares during the coming three-year period. We may be talking about a quarter of that during next year, but as I think Daniel Ödehn also pointed out just now, many minority owners want to stay on for longer, and we want them to stay on as well as it is skin in the game and creates good incentives.
But some of this will be bought back. Acquiring shares in our own businesses is EPS accretive, so it is essentially a share buyback of subsidiaries or of minority shares, and with our current level of operating profits, with this in mind, with lower interest rates going forward, with normalized margins, normalized cash conversion, normalized organic growth, none of those assumptions is very aggressive, I believe. There will be room for acquired growth going forward during the coming three years. Acquisitions and other growth investments will be funded by our own cash flows and when leverage is at a good level, also partly by new debt, which brings us to the fourth and fifth financial target, interest-bearing net debt and dividend policy.
Both of them are unchanged, but I'm repeating again what you, Christer, just said and emphasized this morning, that our aim is still to get to the lower end of the range, which we, and by that we mean between 2 and 2.5 times interest-bearing net debt to EBITDA. And dividend policy is still pretty modest there, unchanged. So still a couple of words on the debt in the balance sheet. It has been reduced substantially, as you know, both the contingent liabilities in terms of earn-out liabilities as well as the actual interest-bearing debt as well. And the distribution of our debt maturities we show here, I'm sure you can have a closer look in the presentation later, but we have also reduced our refinancing risk substantially by extending debt maturities now until 2028, much more even distribution between the years of maturity as well.
The next maturity, which is of SEK 843 million in December 2025, our plan is to manage that in due time, but it can also be comfortably handled and managed by actually existing cash, but also unused credit facilities. Down below, the smallest numbers there, I realize now, are the actual leverage ratio, which is the target. It has, as you see, been very stable or, as I think some of you have said, sticky. All the actions we've taken, prioritizing cash flows, cost control, halted M&A pace the past years, divestments as well, have meant that the leverage ratio has not increased despite negative profit growth in a very challenging market.
Nevertheless, to reduce our interest costs and to maintain a healthy credit rating, right now we've got a double B stable from Standard & Poor's there, and also to reduce our interest margins for the upcoming refinancing and ensure more than sufficient headroom for acquisitions throughout a business cycle, our leverage still needs to come down from this level. But with the gradual pickup that we've seen signs of now in recent quarters and even with a stabilized EBITDA, also the denominator there, it will be reduced. But until then, acquisition pace will be slower. Finally, onto a completely different topic, better aligned reporting. There you go. So we would like to take this opportunity to announce, and I think this is not a huge announcement, actually.
We take this opportunity to announce that as of the first quarter next year, we will actually be switching towards a P&L statement that is classified by nature of expense rather than by nature of function, which has been. And the reason for that is to better reflect how we manage our portfolio companies and how we follow up our operational performance. You will be able to see more clearly that I believe our interesting cost items such as raw material, personnel expenses, depreciation, and amortization, whereas net sales and EBIT and everything below EBIT are still, of course, unchanged. And this is also a preparation for the upcoming IFRS 18, which I'm sure you'll learn more about. It's being implemented in 2027. Right.
Summary of the presentation that I've had is something like 15% EBITDA CAGR growth during the coming three years will be achieved, provided improving profitability thanks to cost efficiency measures, other initiatives that are ongoing that we learned about today, volume growth as demand gradually returns, continued successful cash generation, working capital management that will enable us to allocate some capital or more to acquisitions in the coming years for sure than we've done in the past two years, with a good free cash flow returns on those acquisitions. I think that wraps up my presentation. And I don't know, should we ask Christer back on stage now?
Please. Thank you very much, Lena. We will now do. Well done. We will now do a short Q&A session before we round the day off. We have Lena and Christer here on the stage.
And here on the first row, we also have all other speakers. So if you wish to ask questions to a specific person, please do so. Shall we start with a question from the audience? Anyone? We've got some microphones there. The lights are blinding. Yeah, we can. It's hard to see your faces, but I can see that it's you. It's fine.
A couple of questions from my side. Firstly, looking at the EBITDA target, 15%. As you look at the business right now and sort of the future of the business, could you provide any kind of flavor on what portion you think would be from an organic component? We'll start there. Thanks.
Well, thanks, Carl.
We're not providing a split, but of course, over the years and what I have said also, the importance of growing organically. That will be a key for us to continue that plan. But we believe that we also will be able to allocate funds to be able to acquire it as well. So over this period of time, it will be both. And we will not say what level each of these are. However, over the past years, our business units have grown beyond GDP growth, but not in the last two.
And also coming back, I mean, the message partly on the Capital Markets Day is that we're ready to do M&A again, I guess. So your balance sheet is not constrained, but you still, as Lena maybe said, you had some sticky leverage. When do you see that you're ready to revamp the M&A agenda area? Is it first of 2025 or second of 2025? Or what is the gut feeling? I mean, obviously, things are changing quite rapidly.
I knew that that question was going to come. And I look at that this way, Carl. If the market continues the way that we believe, Lena was saying that we're seeing a pickup. I believe that we can start to do add-on acquisitions in Q2 or Q3 of next year. So you're right there. In between H2 or in that area is what we believe.
Okay, very helpful. And jumping into M&A here again then, maybe it's for you or Alexander, I'm not sure, but you talked about that you want to expand out of Sweden. You also want to expand into less cyclical verticals, which you're partly already in. And you also showed a flag on, I think it was Singapore, right? Yeah.
So are you planning initially to focus on the countries where you currently have a presence like Germany, Switzerland? Are you also willing to go outside of the current markets? Sorry, it's a long question. No, no, but it's a great question. And finally as well, when it comes to verticals, are you willing? Because before you entered new verticals, which maybe to some extent became too much to handle, partly with some becoming non-profitable or so. Do you think that you'll stick to sort of adjacent areas to where you already are in verticals as well?
Try to answer first of the question on geographical expansion. We're not moving into any new areas, so that's important. We're going to stick with our home markets where we are today, so that's important.
But we want to move in to have less dependency on a large market like Sweden, which is 46% today. So we're trying to have a geographical diversification going forward, but not any new markets. The second part there is that we're trying to look across our business areas and cross-vertical for themes that we like and that we can see in kind of expanding over our. So that's what Alexander was referring to is we're going to stick and try to do more acquisition within those areas and those themes rather than finding new ones. So I hope that answers.
Do we have any other questions in the audience? This gentleman at the bottom.
Hello there, Johan Dahl at Danske Bank. Thanks for very interesting presentations today. Just a question on incentives in the group for your CEOs.
Can you just talk about briefly how they have changed in the last couple of years during this phase that you described as sort of reducing debt, etc., and also reflecting the ambitions that you highlight today to put further focus on organic growth, EBITDA, CAGR, 15%? It would just be interesting to hear how those align.
Yeah. First of all, as Lena said, I mean, we have a lot of minority shareholders. A lot of them are CEOs. I think we think that's a brilliant way of handling incentives because they are in the same position. Then, of course, different markets have different pace. We have great incentive programs in all our businesses, and I've said since I started in February and the focus on organic growth, and Philip said it, I'm almost talking about it every day.
I think that is clear for our CEOs out in our subsidiaries what we are aiming for. We talk about it, we discuss it. So absolutely, growth of earnings is super important. And taking care of cash flows, which has been kind of what we have been working on since the mid of 2022. So in order for us to have that, I mean, our CEOs are absolutely in the same boat as ourselves. And just finally on the share repurchases, I appreciate it's a question for the board, but as we've talked a lot about capital allocation, it's obviously an issue that pops up with the shares trading below book. How has that been a component in your development of the message today regarding capital allocation?
We think that short-term, we believe that organic growth is our key priorities in order for us to come back to start doing acquisitions again. And we believe that that's a great way for us to get good returns for our shareholders. Long-term, I mean, there's always going to be a discussion on capital allocation there. But in the short-term, we are believing that we are going to do what we have said here today. And then we don't rule anything out on that occasion. That has to be case-by-case, but that's going to be the longer-term discussion with the board.
Any other questions in the audience?
Yes, thank you very much for very good presentations. Just a question on the acquisitions again. I mean, you're aspiring for exceeding GDP growth on your new acquisitions, but at the same time, stay on the seven multiple. How do you look upon the current discussions and interest rates going down?
Well, I could talk on multiples. We have been on the seven multiple over time, even though we did some large acquisitions in 2021 and 2022 that we paid more for. So we believe that this is an area where we can stay and be on going forward. And we also, as Alexander told us, said, I mean, we are in these areas already and paid for that kind of multiple. So we believe that that's going to be a valid target for us going forward. Okay, thank you.
Maybe regarding the effect of the interest rate on that, of course, we do implement. I mean, we do use higher discount rates now, obviously, in our valuations of businesses than we did three years ago, needless to say. So it does affect the valuation, and also, I guess it does mean that the hurdle rate underlying free cash flow yield needs to be a little bit better today than it in the calculations with a lower discount rate.
I think, Alexander, do you have any?
I would like to add something. Just going back to the mix we have between add-ons and platforms. The platforms typically are bought at a multiple of seven or slightly above. But then we have the add-ons, and they are typically bought at a multiple of four, for instance.
And if you do the math, we allocate 30%-40% on add-ons. And you can see that seven multiple is not really that hard to achieve.
Thanks for that clarification.
Lovely. Any more questions in the audience? Difficult to see your audience. Shall we move over to some online questions maybe?
Oh, you had prepared questions.
Yes, indeed. Well, this is from the people joining online via the platform. Could you share some insights on current trading between the business areas?
I mean, common trading.
Yeah, could you share some insights on current trading between the business areas?
Oh, current trading, right.
Well, we don't disclose any current trading. We had a quarterly report just a couple of weeks ago where we showed that pretty much all of the business areas are going in the right direction.
So, with services doing a fantastic margin expansion in the quarter as the kind of the key takeaway. Wonderful. Any more?
No, I think, of course, I mean, as everybody else keeps saying, we are expecting to see, we are slowly seeing, and we expect to see more, of course, positive effects of interest rate cuts. Having been what we said as well before, slightly delayed, but we do see early signs of increasing demand among, for instance, retailers for next year.
Lovely, thank you. How should we interpret the themes in relation to the current verticals?
Well, you shouldn't take, I mean, themes are, as I said, they span cross areas. So these are areas where we like, and they will be, as I said, we hope that we can find automation companies that's in our industry business area today.
Hopefully, we can find services companies and trading companies that are geared towards those kinds of offerings, so we don't see it as either/or. Our verticals is going to be there, but we're going to focus on these themes that are long-term good for our growth.
Does this mean that you will only acquire companies with the announced themes?
I mean, this is going to be our focus, and we were starting right now to look at acquisitions, as I said, in Q2 or Q3, so we're absolutely going to focus within these areas, and of course, if there's a great opportunity that has everything, then we discuss it, but these are going to be the focus for us going forward.
Thank you. Another one. When it comes to the portfolio, should we expect additional divestments of underperforming business units?
I think I've said this many, many times.
What we did in the summer, we took care of what we needed to address at the time. So we don't see any big divestment or project going forward. There could be one or every year or something like that, but it's going to be case by case. So no big things to look forward to or to look for. No, we don't look forward to that at all. So no, we handled what we needed to handle.
Good to know. Thank you. Another one. What is the sweet spot in terms of new acquisition when it comes to annual sales?
Well, because I've said the EBITDA is between SEK 20 million and SEK 50 million. And of course, you can do the math. If we're going to be above that, it's going to be above 10%. And of course, we're going to be between SEK 200 million and above SEK 500 million.
So in that area, we believe it's going to be a good sweet spot for us going forward.
Not from acquisitions.
From platform acquisition, yes. We're going to do, as Alexander was telling you, a lot of add-on acquisitions, and that could be a 20 million net sales deal.
Wonderful. Thank you. Any more questions from the audience? All right.
Am I off the hook now?
I think you're off the hook. Thank you. Thank you very much. Thank you very much, Christer. All right. Thank you for some very valuable and insightful questions. I hope we gave you some clear answers. We now need to round the Q&A off here, and we would encourage anyone with further questions or anything that comes to mind later on, please contact our investor relations department, and you can have a continued conversation with them.
Then I would like to thank you all for attending today. I hope it's been worthwhile. Really appreciate you coming. And now I will leave the word to Christer for some concluding remarks.
Thank you, Philip. And as we come to the end of today's session, I would like to highlight a couple of key themes that have shaped the day. First, the foundation for growth. I think we have reaffirmed that Storskogen is a strong and diversified-built business group with net sales of about SEK 35 billion, EBITDA of SEK 3.1 billion, along with strong cash flows. We have a solid foundation that positions us for future growth. Secondly, our capacity to support organic growth. Today's agenda has illustrated how we are empowering business units to thrive. Åsa Murphy shared valuable insights in our operational model. Fredrik Bergegård demonstrated the power of collaboration.
The panel discussion on operational excellence highlighted the ongoing work in our company. Of course, Daniel Ödehn [gave] fantastic practical reflections on a CEO in our company and also a business seller. Then lastly, the trajectory for acquired growth. Alexander and myself, we have discussed our disciplined approach towards acquisitions. As we continue to drive organic growth and monitor market conditions, we aim to improve our leverage ratio to between two and two and a half. And when the timing is right, we'll focus on acquisitions that align with our defined investment themes and enhance capital allocation strategy. I think these three pillars, our foundation for growth, our capacity to support organic growth, and our disciplined approach to acquired growth define the Storskogen direction as we look for the future, and with that, I would like to thank all today's speakers and participants for their contribution.
Thank you to all of you for your time and for being here and attending this event. I wish you a great day and a great week ahead. Thank you so much for being here and goodbye.