Welcome to the Capital Market Day of Troax. Today's agenda, if we switch to that one, we now have a presentation for the next one and a half hour by Martin and Anders. After that, we will have a Q&A session where we will walk around with a microphone if you have any questions. There will be a factory tour where we will divide you in groups, and you will be taken around different stations around the factory. We will finish with a wrap-up. Okay, then I'll hand over to you, Martin.
Wonderful, thank you, Jonas. Also from my side, a very warm welcome to Hillerstorp. It is a nice excursion on a Wednesday, and I am really happy to see so many of you here, even though I realize there are quite a few hours of traveling by car or by train or, hopefully, not private planes. Today I will talk about three things. We will go through and go over our position, who we are. We saw a bit of that in the movie. We will also look at what makes us the world leader and what makes up our position. Then we would also talk about the market, what drives our business. Secondly, we would talk about our revised strategy.
There's been a revised strategy, and we also, through this year, we have started to, or implemented, a bit of a new way of organizing the company, making it also aiming for future-proofing the business. Last but not least, we will look at our ambitions for 2030. We announced new financial targets last week, and hopefully today we'll be able to shed some light not only on the targets themselves, but certainly also our way and how we aim to get there. I'd start with our position, and we decided to name this day "Shaping the Future of Safety." Obviously, we've been around for 70 years, shaping the future of safety. We've also been on the stock exchange for 10 years, so we have a double anniversary this year, which is something we're very proud of.
I think we've also had a very fantastic journey over many, many years. I also think that this, as an introduction picture, kind of illustrates a lot what we mean by safety. We truly believe that everyone should be able to come to work, work through the day, and also get home safe to their relatives and friends. That also means peace of mind for the business owners, peace of mind as in we protect the productivity and we protect the assets. It is a double-sword thing. To us, we work in the big scheme of safety, and we are a niche player, so we provide one part of the big safety environment for our customers. We deliver our solutions into manufacturing environments, as in this example on the screen. We do deliver warehousing and logistics safety.
We deliver safety for valuables in storages, mainly here in the Nordics, and we have done so for a long time. We have now, the last couple of years, also started to dip our toe into providing safety and protection for data centers and for digital assets. We do so through a couple of product areas. We have our machine guards, our biggest business. We do doors, protective structures, like the one in the data center example. We also provide several products when it comes to racking, so shelves, horizontal, and to collapse vertically. Since a few years back, we are now pairing this hardware with sensors and connectivity. I will come back to that a little bit later in the presentation. Briefly about the Troax Group, last year, so 2024 full year, we had sales of EUR 279 million and an EBITDA margin of 17.3%.
That means if we go back over a longer period of time, we have grown the business 12% CAGR, so between 2015 and 2024, we have grown 12%. Nine of that roughly is organic, and 3% are through bolt-on acquisitions. By the end of last year, we were 1,200 employees globally. As you know, through this year, we have adjusted to the market, so today we're roughly 1,100 people. We're spread out across 40-plus countries. You can see some of the countries where we're present in the map. Here you can see that there are still quite a few white spots or gray spots where we still have potential to grow. In most of these countries, especially the European ones, we are the market leader and the market leader by far.
I'd also say that we are the, in fact, only player who are truly global, which means that we're the only producer in our niche that have sales, product development, and production in all continents, which make us really unique. Before we look forward, let's take a little bit of a look back. I've already alluded to this. We were founded in this very place, 1955, so we celebrated our 70th anniversary this year. We're also having the second anniversary, which is 10 years on the stock exchange. Believe it or not, today is the first Capital Markets Day for the company, which we internally, as well as externally, want to celebrate a little bit extra. We are truly the market leader in our niche.
We're almost three times larger than the second player in the world, who happened to be another Swedish company, not that far away from here. We do generate, we think, strong profitability, good returns, and we have a good, strong cash flow. This is very much based on an attractive business model, relatively simple, and also with low risk. Looking back the 10 years we started our journey on the stock exchange, we had EUR 104 million of sales to EUR 278 million, but EUR 279 million last year. A really great journey to date. If we then look at what our business is composed of, and if we start with how we go to market, our market is, and our way to market is very much through integrators as well as distributors. Roughly 75% are through integrators and distributors until they reach the end users.
25% is straight to key accounts or the end users, could be through direct sales, but could also be through e-com channels. We sell mainly still into Europe. 79% last year of our sales went into Europe. 16% went into Americas, mainly North America, and 5% went into APAC. If we look at our market exposure and our market segments, our largest end application would be for warehousing and the warehousing segment. The second largest would be automotive, so OEMs, tier ones, tier twos, etc. After that, we have our processing industries, meaning pulp, paper, steel, food, beverage, pharma, etc. Last but not least, we have an array of different subsegments. In the others bucket, we have probably 30 different subsegments, each being very small, but all in all, 25% of our business.
If we then look at our business also from an application point of view, the market segments is into which industries are the products going. If we then look to which type of application, a large customer can have both a manufacturing environment as well as a warehousing environment. If we then look to this from an application point of view, we are having roughly half of our business going into warehousing environments, 35% into manufacturing environments, 10% into storages. Since a few years back, we're also now growing really quickly in the data center application. This is a very common theme, and I'm not sure how often we get the opportunity to explain this. Very often we say the products, they look quite simple when you look at them, like here on the slide or on a piece of paper.
I am hoping that with the factory tour and with the stations later today, you will get to touch and feel and talk to the team members really making these products the best in the world, I would say. Hopefully you get away from this day feeling that the products are not, in fact, that simple. However, you might argue or think that the products are simple or not. If we look at the business in itself, it is in fact pretty complicated for a few reasons. If we put ourselves in our buyer's positions, our products, if we take the machine guarding product as an example, they are mandatory by law and regulation. We have this regulation in Europe. We have another regulation, but still regulation in the U.S. Parts of Asia are still not regulated. It is something you have to have. It is a small spend item.
You could spend millions on industrial robots or on warehousing equipment, etc. Our products are, in fact, a very small part of that total spending. What also is unique is that there are very few robot cells or installations that are just the same. There is always a tweak. There is a door in this place, or there is a panel looking this way. You might put the post in a different way. Every configuration is different, which is, of course, comes to the buying situation. Very often, our products get in late into the process, meaning that I'm not sure in most companies, projects often run late. Since these products come in late, obviously we get in quite late into the process. That also means that the customers are in a position where they buy something that they need to buy.
It's pretty small spending, pretty unique, and it's urgent. Also to consider, and I think it's well displayed in this picture, is the fact that we also need to collaborate with others. It's integrate with other types of solutions, other types of hardware. It could be the robot makers, could be the access control, could of course be the facility manager, the project teams, etc. In fact, there are quite a lot of different things that need to fall in place to make this happen. Another thing that our customers find out usually is that we have beautiful drawings of everything. When you get to site, you start to look at, okay, is reality really the same as on the drawing? Very often you realize that the floor is not even.
You might realize we can move the fencing or the protective equipment slightly because then we get a better floor layout, etc., etc. Reality is very often different from the plan. Now, what can we offer here? Yeah, we can definitely offer a cost-effective insurance. The fencing in this example is relatively small spending. The alternative cost, if there is an accident or if something happens, is usually very high. Factory or the production line stands still. In fact, this is very physical cost-effective insurance. Another thing where we need to meet our customer needs is we need to have a very wide, very flexible offering. I think we're doing very well. We have the widest offering in the market as a group. Given that it's often very late, we need to be very flexible, and we also need to be quick.
That's also why our business needs to be quite local or regionalized. Another thing that many of our customers, when trying an alternative, finds out is that, in fact, the quality and the consistency of the product impacts the time it takes to install. If we look at these things from a total cost of ownership point of view, you could say 60%-70% would be the product, and 30%-40% would be installation and everything that's kind of surrounded the product. If the floor is uneven, if the panels or posts are not consistent, you lose a lot of time while installing. The product quality has a direct impact on the customer's total cost of ownership. In reality, getting this installing kilometers of fencing or miles of fencing, small or big, it's a lot more complicated than you think.
Now, you could say there are plenty of players who can make a mesh. What makes Troax stand out? We believe it's a few things. I already said we're the only global player, meaning that we are strong in the respective local markets, but we're also the best partner the global customers can pick when it comes to securing that their operations look and touch and feel the same and have the same level of safety in all different continents. I think that's a clear USP for Troax. The other part where we stand out is that we do have the widest offering. I am not sure if there are any applications where we cannot supply or provide a good solution. I'd say also given our size, that we're so much larger, we have built a lot of knowledge over the 70 years.
I would say in terms of domain expertise, we are really good with this. You'll see later on today that we do have the most sophisticated, most thought-out supply chain in our business, which provides both, of course, the scale, but also the cost efficiency and the flexibility that are needed to meet our customers' demands. Last but not least, this is also something that speaks very well for Troax in many of the countries. We have the largest sales force and foot on the ground, so to speak, in most of these countries, which is also first in mind, we're best to serve. I think we have some really clear USPs, why we've taken market share, why we continue to take market share, and have done so for a long time.
Coming back to our megatrends, we are exposed to a couple of strong megatrends, not all of them, but most of them. Definitely the automation trend, which continues strongly. We do see with the environment globally that more and more customers want to have regionalized production, regionalized warehousing. I think many companies learned this both before COVID as well as after COVID, that long supply chains, long lead times, security of supply were problems. We do see more and more regionalization of both manufacturing as well as partly warehousing. That is a very positive megatrend for us as Troax. Also, I'd say if we look at e-com, if we look at the consumer pool, every year we add more consumers to the pool. Those consumers, young people, they tend to prefer e-com more than the ones who are leaving the pool.
That is in itself also a very strong trend for us. Another trend worldwide is that we become more and more aware of safety. We take it almost for granted, and we think it's a right to be able to come to work and be at work and get home, certainly in the Western world and more and more so also in Asia. There is more awareness, there is more willingness to spend money on this, and this also trickles into government regulation and stricter and stricter rules. That is in itself also something that's very good for Troax. The other side of the coin would be our width and size, which is resilience. We're exposed to pretty much, and you'll see this a little bit later in the presentation.
We are in many places which you can imagine that this is clearly a Troax place, but there are also quite many places where you would not imagine or reckon that there are some Troax products in there. That is great for us because it provides us resilience. None of the end user segments that we are exposed to is larger really than 20% if we look at it. From that point of view, we are also in a very good position from a resilience point of view. If we then look at the longer-term market growth trends, and I will come back to where we are a bit more here and now in a few slides, but this is the way we look at the world. If we look at this from an end user or industry point of view, we have an exposure to automotive, which is roughly 20%.
We do believe that this long-term growth is some 2%-3% a year, long-term. We're exposed to warehousing. Roughly 35% of sales go into the warehousing industry. Automated warehousing, we do quite a lot with forklifts and pallet tracking and, of course, also packaging related to this. This has the closest link to the e-com trend, and we believe this segment over time grows some 8%-10% a year. Construction, new residential buildings, some renovation grows, we think, with GDP, so 2%-3% a year. Process grows faster than GDP. We believe it grows probably two percentage points more than that globally. Others, as I said, it's a wide array of different subsegments.
You could say it's general industry growing a few percent a year, but there are also a few really stronger growing segments if you could take data centers or we could take defense and so forth. You can think of others as GDP plus a little bit. If we weigh all of these things together, we have an underlying market longer term that we think grows 4%-6% a year. The addressable market for us is EUR 1.5 billion if we look at what we've considered core up until today. That all sounds fine and good, I'll then take a dive into the quarter three numbers, which we published last week. I think it's clear that we're on a very strong growth path in APAC.
It continued now in the third quarter, and we had to that a very good first half of the year. We grew 66% on orders in APAC, strong in all countries and in all segments. Very good development for us in Asia. Europe, on the other hand, our largest market, continues to be soft, generally speaking. We see automotive being challenged. We see, of course, the construction as well as others being challenged as well. However, I would say that there is a bit of a positive sign in the warehousing space. We saw some markets, some customers now starting to take the pre-sales activities that we saw in the first half of the year. This now starts translating into orders at our end as well. We do see this partly from our customers as well when they report.
A bit of cautious optimism in this regard for Europe. We go to Americas, which I think is probably for the time being the market which is most difficult to predict and also the worst. We had 26% down in quarter three. I think here we are somewhat frustrated because we have a very strong pipeline of projects. We're also not losing any projects, but it seems to be very difficult for the customers to make a decision. In Americas, we see a lot of activity, but unfortunately, we're not able to convert that to orders or we were not able to do so in quarter three. All in all, minus seven in the quarter. When it comes to the profitability side, we are having low volumes coming from the market mainly in Europe, partly also in the U.S.
We are busy transferring our Polish operations to Sweden. That impacted our profitability. We also were not able to push all the price increases that we should have done in the third quarter into the third quarter, which also means that our profitability came in a little bit lower in the third quarter. We reported 16.1% in the quarter. If we add the Polish factory transfer as well as the American pricing, if we add that back, we would have been around the 18% mark for the quarter. Also, I'd like to say that despite we are struggling a bit with the volumes, we generated a very strong cash flow in the quarter, EUR 12.6 million or a bit more than 120% operational cash conversion. I do think that from that point of view, the quarter was very solid and very strong.
Now, coming back to the topic of growth, and on this picture, you recognize the map where we have all of our different countries, the blue countries. If we then break this down a bit more into regions in terms of sales and what that translates to into market share. If we start with Europe being close to 80% of what we do, this is where we have relative strength. We have a very strong position in Europe, roughly 30% market share. In Europe, I think there is one exception. We are the market leader in all these markets. We do not give up until we are number one in all countries, just to have that said. There is room to grow even further. Unfortunately, not all customers appreciate what we do. There is still room to grow even if we have a relatively strong market share.
Moving over to Americas, which was 16% of sales last year. Here we think we are, and we know we are number two in the market if we look across all the brands. Still, our market share is estimated to be below 10%. There is a lot of room still to grow in the U.S., both because the market is maturing away from blacksmithing into something that is more sophisticated and more industrialized, and there is a lot more market share for us to be had in the U.S. and in North America. If we move over to APAC, and this is now without the acquisition that we announced last Friday, also here, quite big market. We are making a lot of progress in terms of how we grow, but at the same time, our relative share and position on that addressable market is still very low.
A lot of room to grow. That is also one of the reasons why we made the platform acquisition of Vichnet, which we announced last week. Strong position in Europe, excellent opportunities to grow in the rest of the world. Now I take a look into how our different businesses are performing. Now I take the product view instead. When we look at this, we are looking at our machine guarding products. The machine guarding products go into manufacturing environments, of course, but they also go into warehousing environments. This product or product line, you could say, is roughly 65% of what we sell across the group. If we look to our performance with these products, and we do look at this over a period of time, there are a few really important takeaways from this.
If we look from 2019, so 2020 to 2024, we have had 11% of organic growth. With one exception, which was the second quarter in 2020, we have had growth every quarter with this product. That is a very good thing because it is really the core of the core, and it is also having a profitability level that is in relative terms higher than group average. Here, it is all about continuing to grow profitably. There are still customers to chase after. There is still business to win in all regions. Very strong performance despite the weak markets. In this case, I would say that we are gaining market share in the market also through the last couple of years. If we then switch over to the warehousing products, which is shelves, dividers, anti-collapse systems, this is a bit of a different journey for the group.
In this case, in 2020, we acquired a Polish company called Natom, which had a phenomenal development through the COVID years where we had exceptional demand. In 2023, or late 2023, we acquired Garantell, which is not so far away from here. Through these two acquisitions, we have gone from being pretty much almost nobody in this business in 2019 to being the leading player today. It is a big shift. Now, if we look at the market development and the market dynamics, 2021 and 2022, we had exceptional growth. 2023 and 2024, it is the backside of the bullwhip, meaning that the markets have been very slow, 2023 and 2024. Here, I would say when we acquire two companies which are pretty much in the same niche in the two products, there are, of course, a lot of synergies that we can harvest from that.
That could be on the sales side, but that could also equally be on the cost as well as on the capital side. This is what we're busy doing for the time being, putting these two product offerings together. I'll come back to that in a later slide. I'd also say that if we look at the profitability line on this slide, you can see that it's a decline, and it's, of course, volume-driven. These acquisitions also come at a dilutive profitability to begin with. Here, I'd say that when we return to something that we can consider to be normal or a normalized market, we do all of the job that we're now busy with internally, putting the offering together, putting the supply chain together. This business will return to solid and very attractive margins and attractive returns as well.
Here, we're in a bit of a restructuring mode from an offering point of view as well as from a supply chain point of view to be ready for when the market picks up again. All in all, we've seen a 14% growth over this time. Needless to say, it's predominantly driven by acquisitions and not the organic volumes. A business wouldn't be anything without its customers. Obviously, we do have probably 20,000 customers around the globe, and we couldn't fit all of them into one page, so we had to select a few. On this page, we have just a selection of customers, and this is to show you a bit of the width that I was describing in one of the slides before. You'd find you probably recognize all of the names on this slide.
With many of them, we also have long-lasting relationships, and we have also grown with these customers. As you can see, there might be consumer brands, there might be OEM brands, car brands, logistics brands, etc., etc. You also see that they are from pretty much every corner of the world. I think this is probably the favorite slide of the whole presentation. I think we can be super proud of this team Troax. I would also like to bring up this quote, which comes from a Spanish retailer called Mercadona, which we have been working with for 15 years, roughly. We asked them before this day, "Would you mind trying to summarize how you look at Troax?" I think this quote says a lot. I think it shows that we have been doing really what we should be doing.
We are partnering up with them through the whole process, from design to execution. We are delivering the right product quality. We're delivering on time. We make sure it works for them in reality, the last mile of the process. I think this is a very good quote, and this is how we want to be recognized by the customers, and in particular, Maricadona in this case. With that said, I'll jump into this as a strong foundation. Strong customer base. I think we are having a very solid business, even though we're struggling with the warehousing predominantly, as well as with the storage, to some extent, volumes. We're in a very good, strong position when we start our next five-year journey.
Since I came on board a bit more than a year ago, we've spent quite a lot of time with the team internally on our strategy, where to go, what to tweak, and so forth. We've also thought about, "Okay, how do we now best set ourselves up for success? How do we organize ourselves?" If I start with the internal part before we get into the strategy, we have a new way of organizing the company since the 1st of January this year. I'm born and raised. I came from Sandvik before I joined Troax. Decentralization and true P&L ownership is important to me. I think it's important for many different reasons. First of all, I think it's important for business reasons. We are by far the largest in our niche. When you are large, you tend to become slow.
Our business is a lot about speed and agility. Chopping the Troax elephant makes a lot of good sense. Performance management, P&L accountability is also very good for building the new generation of leaders. Another thing which we have put in place is that we are now looking at geography over brand as the main dimension for how we measure the business, which means that all of our country managers are using the whole portfolio to the extent possible to win the business and gain market share. That is both good when it comes to driving sales, but that is also great for making sure that we do this in a cost-effective way. I'd say we have done a lot of progress during 2025 to run this way.
Going into 2026, I'm hoping that we will have clarified and put all the last pieces in place to be able to run really according to the model with full speed and enthusiasm. Important here is also that the regions are the result owner. It means setting their own strategy. It means sorting out all of the executional parts and also living with the results. That also means that the regions are the ones who are driving our M&A efforts. The team in Asia obviously would be better suited than me sitting on this side of the world to figure out what pieces of the puzzle are we missing in Asia. It is also a decentralized responsibility to drive not only the organic growth, but also the acquisitive growth. We support from a group or headquarters point of view with specific skills.
It could be legal, financial, DD, operational excellence when it comes to, for example, manufacturing, etc., etc. Headquarters is there to support. The main thing that needs to happen and should happen and is happening is surely that our regions are the ones running, driving the business, and being accountable for the result. Last but not least, decentralization sounds great, but without clear performance, without clear targets, and without a clear performance model, decentralization will fall flat. That is also one thing that we have spent a lot of time on, which will generate good, I think, outcomes going forward. Now, it is great to listen to me, and I have met most of you or all of you before, but I think the real heroes of the group, or the real hero is not me.
I think it's, in fact, the team and all the 1,100 colleagues that we have across the group. I'd like to take the opportunity to introduce the ones from the group management who are here. You'd see the nice faces and functions on the screen here, but perhaps we'd go a quick round the group management to say, "Hi, Mia, would you like to start?" Mia is our Head of HR. Hi, Mia. Who's next? Camilla, who's Head of Marketing? Thank you, Camilla. Martin? IT. IT? Cool. Christian? Thank you. We have Jonas, who you've met, who's heading up our new business. You do a bit of strategy and portfolio development as well. That's right. Double hat. Anders. You'd introduce yourself when it's your turn. Very good. Great team. I think management is super important, especially in a decentralized environment.
I would like to say that nothing in this business would happen without our colleagues, the ones who are working day in and day out to make sure we sell something, we deliver something, we develop products, we make sure the IT platforms run well, we make sure it looks cool on LinkedIn. It is really, really about the people. Guided by our purpose and vision and mission, guided by our values, this is what guides our promise to the customers. What we promise our customers is that we do things in a responsible, quick, responsive way, that we do things efficiently, and also that we are acting with integrity, meaning doing what is right, playing fair, playing just, etc. Very important promise that we give our customers as well as our suppliers and, in fact, also ourselves.
Now we get back a bit into our vision and mission. As you hopefully understand, we're very passionate about safety. Our goal and mission is really to make sure we have zero-harm workplaces. Zero-harm workplaces, obviously, for all the people that work in the manufacturing and warehousing environments, but surely also it's zero-harm to the business owners when it comes to minimizing productivity, downtime, asset damages, etc., etc. It's a zero-harm in a very conceptual way. If we look at our role in this from 1955 till today, we have been doing this mainly through our machine guards, through our partitioning, and also through our racking offering.
A few years back, we started to dip our toe into something where we can provide our offering and our customers also with sensoring technology, where we can have people and machines talking to each other to make sure that we even prevent the accidents from happening in the first place. Here we have done a lot of good work the past couple of years to grow that business and provide value to our customers. We do not think our mission ends with our mesh products and our active safety solutions. There are other natural parts of this ecosystem where we have a role to play, we think. A couple of obvious products or solutions would be barrier systems, for example. It is in a way a version of guards.
There is also a lot of value that we can provide our customers by advising them, acting as their partner, training them, and equipping them with the right tools. With this, we can, of course, have cross-selling and make sure they buy more of the right products. The advice in itself is also a very valuable, highly profitable part of this. That sounds perhaps good and a bit theoretical. If we now look at what this wider view of taking safety at the center and not the product does to the addressable market, we looked at these numbers before, and we said the addressable market is roughly EUR 1.5 billion, growing 4% to 6%. If we now add new segments safety-driven, we believe that we are looking at the market that is roughly EUR 7 billion big.
That would be adding active safety components, that would be adding advice training tools, that would be adding barriers, that could be adding also the data center in a sense, which has not been seen as core. If we then look at this EUR 7 billion of additional potential, the beauty of this is also that these segments are growing faster than the core. We believe that is 6-8% annual CAGR longer term. This makes perfect sense for our customers. They are already asking us to do this today. Partly we do that, but I think there is a lot more that we can do for our customers if we organize and structure ourselves a bit accordingly. I think this is very promising when it comes to growing Troax and growing Troax profitably.
Here, I'd say also when it comes to selecting segments and products and solutions that fit into this vision or this mission purpose, it's important that we select, that we are careful. It needs to make good sense for our customers. It also needs to be products and solutions that provide high value. Very good. How do we then get there? We have said ourselves, I think it's pretty clear why we're here. We're here to make sure that our workplaces are zero-harm, that they're safe, both for people as well as machines and assets. We do this by acting as a safety authority towards our customers, being there to help them with advice, being there helping them with design, helping them all the way through the process. We do that in a beautiful way with the machine guards already today.
We have set ourselves seven focus areas across the group. There are two fundamental things. The first fundamental in our beautiful strategy house is safety. Obviously, we are a safety company. If we sell safety, we also need to live safety internally. We can also preach safety and teach our customers safety. The other part is about being sustainable. We've been around for 70 years. We want to be around for at least 70 years more, hopefully even longer. It is being in business sustainably, but it is also about making our business even more sustainable. There are two meanings in this. It is a very fundamental thing, and I think it is also very well ingrained in the company. We've been doing a lot of minimizing waste, optimizing transportation, using as little material and as little energy, and all of this for many, many years.
It is very much a continuous improvement and a continuous process. The other fundamental part is around our people and our culture, making sure that when we are the biggest, we do not become fat and happy, that we are quick on our feet, that we are speedy with our customers, and also that we live our values, coming back to being efficient, being accountable, and acting with integrity. A lot of work and dialogue goes into this with middle management, with our employees, etc. Without those two fundamentals in place, the five boxes on top will not fully work, or we will not get full leverage on that. If we then look at the focus areas, we will continue to grow market share in what we have decided to be core segments. We have innovation to be done, and also here in two ways.
There is more innovation and development to be done on our core products. It could be big and small things. It could be technical innovation. It could also be commercial innovation. The other part of this is to make sure that we develop products and solutions that are more sustainable from a planet point of view. Here we have two avenues, so to speak. At the center of our strategy, we have our customer experience. Our customers should have the best journey with Troax. Everything from, "I realize I have a need," we should be easy to get, we should be easy to deal with, and we should make sure that we deliver what we promise and do the aftercare. It is the whole customer journey and the whole experience.
Now, this is something that we, since we're working 75% with distributors and integrators, this is something that is a bit of a challenge for us practically. Here we do need, I think, to put in quite a lot of effort. We're doing a good job today, but good can always become greater and better. The third or the fourth area is the acquisition agenda. Here it's about acquiring with care. It's finding companies and niches where we truly believe it makes strategic sense, where it makes financial sense, and also where we can find an operational fit where we can work well together, because that's really how nice music gets played. Acquisitions, bolt-ons, as well as defining acquisitions are part of the strategy. As said, it's also a decentralized responsibility from 1st of January .
Last but not least, we are and have been doing a good job when it comes to cost and capital efficiency. This is very much into the spirit of continuous improvement. There is more always that can be done on the cost side, on the efficiency side, and how we use our capital. These are the seven areas that we were focusing mainly on. If we start with going for growth, we have set ourselves a target of EUR 550 million in 2030. It all starts before we even start about growing with existing customers, growing into new markets. It all starts with delivering good value to our customers and doing that to 100%. That is the foundation and really where we start.
If we start with the map, which we saw a few slides back, we still have a lot of gray or white spots in the world. There are new geographies which we can move into. In some of the markets, we do not have the market share. We can still grow market share as well, also in existing geographies. There is more room to grow share of wallet with existing customers in all regions, I would say. We are deliberately also attacking and going after market segments where we have a relatively low share. If we look at the period where the last 10 years, we have been very busy with automotive, we have been very busy with warehousing, but there is more to be done in the other segments. There is more to be done in processing.
There is more to be done in parts of the other segments as well. Of course, we have our acquisitive agenda. Also here, it's about then carefully selected acquisitions that we add over time. When it comes to growth potential, I'd like to open up a bit with the data center example. Obviously, this is an area which is very strong for the time being. We started with our data center offering a few years back, so pretty much from zero. We've grown this niche in the company, we've doubled this every year since we started. We're growing very fast from a low baseline. Here we're targeting both the hyperscalers, and here we do need to get the same recipe as we've had with the automotive guys and with the warehousing guys.
We want to get into the specs of the hyperscalers to be part of how they set up their centers. We have done good progress with this over the past two years. Hopefully this is something we can harvest from going forward. Opportunities exist in all regions, so it's not only Europe or it's not only Spain or France or Sweden or only Singapore or only Saudi or only Texas. It's really all over the place. Here I'd say we have a good foundation when it comes to our offering. We have a lot of capabilities and knowledge that we have built in-house over the years. Here we could also think about perhaps expanding that offering a little bit, either through own developments or potentially M&A. Big growth opportunity for the Troax group.
Coming back to the customer experience, here it comes back to having speed and service at the center. We definitely have the widest offering. We have the best product. We have the best quality. We also need to make sure that the experience, the speed, and the service matches the product. I think we can do more. We're not doing this. We are good, but we can become greater, I would say. We compare the product also with advice and support. It could be installation, could be project management, etc. We have a great opportunity to open up the e-com and digital channel, both externally to our customers. We can invite them to do a little bit more in the process.
There is a lot of things we can do internally to support and to pair the customer needs with the product and the offering that we have. The digital tools have a big portion and role to play when it comes to enriching this whole journey. We have started this year investing in these tools. In parallel to building an e-com channel and supporting our customers in a quick manner, there is also the portion for the 25% of our business, which is key account management, that we do support the large direct customers in a good way. That needs to be done. That could be done regionally. That could be done globally. This is also a good area or an essential area, I would say, to be able to grow.
It is really the portion of this that directs whether we grow share with the large customers and that we grow with them globally, that we grow with them in the region, and that we support them and that we are truly a partner. We have a key account program going since a few years back. Also here we are making really good progress. We have high expectations on this to deliver value for our customers as well as for ourselves. The fourth area and something I would like to pick up is also our M&A agenda. I think I view M&A as, I should not say the cherry on the top, but it is certainly a natural part of our growth journey. Based on the strategy, we are targeting targets in four core areas.
We have something we call core expansion, which is really to continue to consolidate the machine guarding markets, so the core of the core. We could do like in the Vichnet case. We can acquire a target to get a foothold or a platform. We can target smaller companies. There are targets in every region, which is more about buying a brand or a customer base and finding either market synergies or cost synergies. Plenty of targets out there. I think we need to be very careful and very selective when we do acquisitions. I will come back to the Vichnet acquisition specifically just after here. The second area, which is the service portfolio. Last year we acquired a company called STNL from the U.K. This is very much about advisory and machine safety. It is a very specialized, very niche player that adds to the core.
We add another layer to the onion. What we want to achieve here is more touchpoints with the customers, of course. We do want to provide more and more value coming from this that also then gets associated with the products and with the core. I think there is also here a few targets which we potentially could add to the group. The third area is adjacent products, which are natural to buy from customers. Of course, there is a safety umbrella or safety touch to that. Here I think it also comes back to finding the products which really add value to the customer, which are natural for them to buy from Troax. It should also have a significant contribution to the customer's safety. The fourth area is around active safety.
We started our journey back in 2022 with the Spanish company called KLY--TEK, which has had a great development in the Troax group. There is always new technologies that we could add. There is also an element of critical mass when it becomes electronics more than steel. From those two points of view, we would look at this. For all the four themes, we do have targets in every region. I think we're not lacking opportunities. I think it's more making sure that we select the right ones and for the right reasons. I would like to say a few words about Vichnet, which we announced last Friday. Vichnet is the market leader in China for machine guarding solutions and also cable management or Y-Trace.
Last year had a turnover of EUR 26 billion and a profitability which is pretty much like Troax Group to begin with. We are in the process between signing and closing, and we aim to close this before the end of the year. I think here this is a beautiful example of where strategic fit, financial fit, and also the fact that we like each other really comes together in a very nice way. This means that Troax will become the market leader in the core of the core in Asia. Very strong platform, very strong offering that complements what we already have. In addition to strengthening the machine guarding position, we also now get to expand a bit into the data center business. We are already with the Vichnet acquisition, making sure that we get more of a foothold into the data center business.
The Y-Trace or the cable management systems is not something we've had in the portfolio and is something that we want to add both for data centers, I should say. This is probably the biggest short-term opportunity, but also more in general that specific applications for Y-Trace are very attractive for us to have in the portfolio. I will move over to cost and capital efficiency. On this slide, you find a pretty fresh picture from Portland in Tennessee. This is our new North American manufacturing facility, which we will inaugurate next year, sometime mid-year. Why are we doing this? We definitely have a higher need for capacity longer term, and we definitely also want to move away from the manual or semi-manual operations that we've had in Illinois, Chicago.
We're bringing the best of breed, so to speak, practices, flows, etc., into the North American context, which will provide a lot better efficiency and also profitability eventually when we're up and running. I'm not sure what you guys think, but I think it looks pretty nice. The other topic to cost and capital efficiency comes back to the acquisitions that we made into the racking portfolio. Here we, after the acquisition of Natom in 2020 and Garantell, are equipped with two half-full factories and partly overlapping offering. The exposure as such and the market as such long term is very healthy. We looked at that through e-com and warehousing. At the same time, we're now having a setup where we have two factories, we have two offerings. The question is, does this from a longer-term point of view, does this make sense?
We have come to the conclusion that, probably we can fit it all into one place with one management, with one ERP system, with one combined offering, so stronger offering. We are now busy with both going through the portfolio to streamline and prune and fix that. We are also busy moving the equipment from Poland into the facility that we have some 30 km away from here in Värnamo. By the end of the year, we will have all of the equipment moved and the factory in Poland closed, bringing everything under one umbrella in Värnamo. We will have a fully fledged racking offering consisting of shelves, anti-collapse systems, and it is all part of the same portfolio on the same supply chain. We are looking forward to this.
This makes sense not only from a strategic point of view, but it also makes a lot of sense from a cost and capital efficiency point of view. I would like to say a few words on one of the fundamental, on the foundation in the house. Safety and sustainability is, in fact, for Troax, nothing really new. We have been on this journey for a long time, and we are committed to doing our part. We have submitted our SBTi commitments, and we are pending for approval. We have EcoVadis Silver, and we are aiming for more. You might say from your point of view that EcoVadis Silver might not sound like something extraordinary. In our nation, in our business, it puts us light years ahead of the others. It is, in fact, a business advantage.
We can always ask for more, but certainly a big achievement by the team. Another thing that I think is definitely worth mentioning is that we are mainly a producer of steel materials, so steel mesh. Steel is perhaps needless to say a very sustainable material. It is highly recyclable. We use probably as little as we possibly could. We are not only using virgin material and virgin steel. We are, to more and more extent, adding recyclable material into the mix. I would say we are in a very competitive position from our niche point of view. Last but not least, I would say that it is always about making sure that we can always do a little bit better. Hopefully we are a little bit better today than we were yesterday, and next week we are a little bit better than this week.
This is an endless process. Of course, we do our part in this. I know Christian is chasing waste a lot. We're chasing waste, as in papers in the offices. We're chasing a lot of things to always become a little bit better, not only from an environmental point of view, but certainly also from a business point of view. I think here is really where business and sustainability go hand in hand. Perhaps something that might not come intuitively is also the regionalization. We are, in fact, shipping very little. Within the region, we are shipping from our factories to our customers, but we're shipping very little cross-continental. We're self-propelled in Asia to a very high degree. We're self-propelled in Europe, and we're self-propelled in the U.S. and will be even better made next year.
That is, of course, in itself also very good from a sustainability point of view. Excellent. That being said, Anders, can you make sure we get some decent numbers and returns out of this?
I will try my best. Thank you so much, Martin.
Thank you.
I think I have met you all before, and you know me very well. For the sake of it, my name is Anders Eklöf. I'm the CFO of Troax Group since eight years. I will now talk a little bit about our financial targets. Before I go into that, since I'm a finance person and I like to close books, let's close the books of the previous financial targets looking back over a five or a ten-year period. As you know, we have divided our financial targets into four different buckets.
The first one is sales growth, where we have defined the target as growing more than the market. As you heard from Martin, we are defining the market growth to be between 4-6% on an annual basis. If you look at the last five years, we have grown 11%. If you look at the last ten years, we have grown 12%. In that regard, we are by far exceeding the market growth. We give ourselves a fully meet on that one. When it comes to profitability, we have had a target of exceeding 20% adjusted EBITDA margin over cycle. Here we did not reach the goal all the way through. Over the last five years, we have had an average EBITDA margin of 19%. If you look at the ten-year period, we reached an EBITDA margin of 19.7%.
Close, but not really there. Here we have plans to improve, but overall, I would say that we're not extremely unsatisfied with this. Having an EBITDA margin between 19-20% over a ten-year period is quite okay anyway, we believe. When it comes to capital structure, we have said that we should have a net debt in relation to EBITDA of less than 2.5 times. Here we have had many, many years, I think seven years or so, with a constant ratio of below 1.5. We have been way below the ceiling here for quite some time. Last but not least, the dividend policy. We have had a policy of sending out 50% in annual dividend of net income. That is something we have done if we look at it over a longer period of time.
The last seven years, in average, we have sent out 50% in dividends, but it has fluctuated between 40% and 59% during that seven-year period. To summarize the historical financial goals, we have three targets that we have met fully, and there is one target where there's a little bit way to go, but still a decent performance over the last five or ten years, whatever you want to measure. Let's go over then now to the new financial targets. I will go through each and one of them and go a little bit more into details of what we can expect from an activity point of view, how we will reach there. First of all, I just wanted to mention the sales growth or the growth targets in numbers here.
If we start with the sales growth, we are moving away from a relative target of growing more than a market to a fixed target of reaching above EUR 550 million in 2030. That means, give or take, 15% CAGR over that five-year period. When it comes to profitability, we have changed that from exceeding 20% to get at least 20% EBITDA margin. It is a little bit same same as we see it. You should not see this as a decrease in our ambition, but we wanted to reflect a little bit what Martin said before. When we look at acquisition targets, they are rarely at 20% as we require them. They are rather perhaps between 15% and 20%.
With a more aggressive M&A agenda, it will give us some room at least to bring these companies into the Troax portfolio and increase the profitability from where they are. Getting to at least 20% EBITDA margin will be our target for the next five-year period. Capital structure, basically no change. We will still be below 2.5, but we will give ourselves the opportunity to step over the 2.5 times over a shorter period of time. That could be in conjunction with a bigger acquisition, for example. We allow ourselves to go above 2.5 times the ratio. When it comes to the dividend policy, we are moving away from the fixed 50% dividend ratio, and we will go over to a range of between 40% and 60%. As I said before, we have actually performed in that range over the last seven-year period.
You can say we are adjusting our goal more towards how we have performed. I will come back later on why we do this. This is a slide that Martin has already showed, so I will not go too deep into this. There are some buckets here that will drive growth to EUR 550 million in 2030. Martin talked about the geographical expansion. You saw all the map. There are some white spaces in that map. We have some of the Eastern European countries. We have Middle East. We have some of the countries in Southeast Asia that we can do more in and also in South America. For sure, there is more to be done on the geographical expansion side. We have the grow with the existing customers. As also Martin mentioned, we have a 20,000 customer in our customer base.
However, very few of them are single sourcing. That means that in every quotation situation, we have competition. One way of driving growth is by increasing the hit rate with the existing customer. It could also be that we are introducing new products to our existing customer. That could be barriers, for example, that Martin mentioned. It could be active safety products. It could be services. We can do a lot more with our existing customer to drive growth. The third bucket here is new segments. Martin also mentioned this, that we are strong in warehouse. We are strong in automotive. When it comes to the core business, there are still industries where we are not so strong and where we can get more sales and growth.
As Martin also mentioned, we have new segments, new industries, the data center industry, for example, which will help us grow also the sales. Last but not least, we will grow through acquisition. It could be smaller bolt-ons when it's applicable. It could also be more of a platform acquisition like we did with Vichnet last week. All in all, with these activities, we hope that we will reach at least EUR 550 million in sales in 2030. Coming to the next financial target, reaching an EBITDA margin of at least 20% over the period. Here we also have four different buckets that we will drive activities within. The first one is talking about volume. It's talking about price. It's talking about mix. If we start with volume, you all know that we have had a little bit of a headwind now for some quarters.
When the market will bounce back again, there is a lot of assets that we have in our company right now, both in terms of machinery as well as in people that will drive the sales growth without much addition, I would say. At the time the market bounces back, we will get a pretty nice flow through of additional volume in the beginning. When I talk about price, it is not that we are not driving price initiatives today. We are, but there could be more done when it comes to customer segmentation, product segmentation to get more price out of our portfolio. When we talk about mix, I am really talking about products mix. We will help our customers choose the products that are most profitable for us.
Hopefully with those activities, we will drive more sales of a more profitable product and we will decrease sales of less profitable products. It could also be that we are removing some products from the market that are not as profitable as we would like them to be. Operations improvement in Europe, Martin talked about already. We are closing our Polish factory and we will save a lot of fixed costs in that transition. No doubt about that. Also, Martin talked about the operational improvements in Americas with the new machinery in a new factory. It will drive efficiency. That will also help the margin. One thing that we have perhaps not talked so much about is lower sales and admin costs. That will really come from digital investments. We have been very highly efficient, I would say, in our factory for a very long time.
We will try to do the same journey now in our selling and admin expenses by investing in digital tools. We will try to get this efficiency of scale also in the selling and admin cost. That is, and that's why you will see more of CapEx going into digitalization tools in the next five-year period than what you have seen in the past. The third financial goal is about our net debt ratio. Here you saw also that, I mean, we have been below 1.5 for the last seven years. Right now we are at 1.0. We are utilizing right now EUR 80 million of our facility. If you go back, you can go back to the introduction on the stock market. We actually had EUR 70 million of debt when we went into the stock market.
That means over a ten-year period, all dividends, all CapEx, all acquisitions have been made through cash coming from operations. Yeah, we have a lot of power to increase debt. We will continue to drive a good cash flow. Those two in combination will give us an opportunity to find and acquire those good companies out there. I can say with a normal multiple on future acquisitions, we can for sure more than double that debt and we will still be far below the 2.5 times target. There is a good opportunity for future growth through acquisitions. Last but not least, I will talk a little about the utilization of cash flow. As I said before, we are using the free cash flow for CapEx, for dividends, and for acquisitions.
When it comes to dividends, the reason why we are changing now from a 50% fixed ratio to a 40-60% ratio is to be able to give our shareholders, I would say, an annual growth in dividends in EUR. The net income might fluctuate between years, but giving us a range between 40% and 60% will enable us to give you a stable and increasing dividend on an annual basis. I have talked a lot about acquisitions already. When it comes to CapEx, I would say that with this investment that we are now doing in the America, we are very well equipped both from a capacity standpoint as well as from an efficiency standpoint in all three regions. Of course, there will be future CapEx in machinery. It will come with the market growth. There will be capacity investments.
There will also be a need for replacement of old machinery over time. I think also that what you will see now in the next five years is that we will move a little bit towards more digital investments to get that efficiency of scale also in the SG&A costs. Overall, I think you can expect from a total CapEx point of view, combining the machinery with the digital tools, you can count on approximately the same ratio of CapEx that you have seen in the past. It is just a little bit of a shift towards more digital investment and perhaps a little bit less of machinery. I think that was all I had. I will hand over again to Martin for closing comments before Q&A.
Thanks, Anders.
To conclude this part, I would say if we look at Troax as an investment, we think we've done good to date, but there is definitely more to come. Takeaways is that we are the leader in our niche and we're the only global player. That means we have the strongest offering. We have probably the strongest customer value. We can provide that to our customers. We are well positioned for organic growth. The macro trends and the markets are turning and are working in our favor. We've set ourselves a profitability target of at least 20% of the cycle. There are improvements underway to improve the profitability, footprint consolidation, as well as efficiency improvements into the North American market. We do have a strong financial position.
We have a strong balance sheet, which we can hopefully work a bit more actively with, especially on the acquisitive side. We do see attractive opportunities for M&A in the market. We have a strong pipeline, and we do aim to lead the market consolidation both within our core niches, but of course also drive the industry with safety in mind. We are long-term committed to sustainability. We're very much in the forefront in our nation, in our industry, and we will continue to be the leader. Thank you so much. Now I'll hand over to Jonas for Q&A.
All right. Well done. I think we're seven minutes ahead of schedule. We have planned a bit of a Q&A session for the next half an hour, roughly. We'll see what questions you have. After that, we'll go on with the factory tour.
When you have a question, if you could ask the question in English, and we use the microphone there as well. Okay.
Hi, Daniel Lindqvist with Danske Bank. I basically have two questions. Could you maybe flip to the graph with the way forward to your financial target? Looking at that graph, I am a bit surprised with the organic ambitions you have because the part from M&A seems to be much smaller than I expected. Should we read that bridge as illustrative of the sizes and the parts of it or just an illustration of the components?
I think, yeah, perhaps you could help me out a bit there, Jonas. I think you should look at it more as a conceptual thing. I think when it comes to growth, the lion part should be organic growth.
I think we have all the means to continue to grow organically. I think what we're saying is that we do think that we could do a little bit more on the acquisitive side, perhaps comparing to the previous period. You should not look at this as we give up on growing organically and then it's all acquisitive growth and balance sheets. I think it's both. The lion part of this needs to come and should come from organic initiatives.
Okay, perfect. The other question is a bit on the same theme. If you look at the improvement in EBITDA, I guess now with the capacity utilization of some 60%-75% something, then I would have expected the scalability on SG&A to be a much bigger part of the improvement in profitability. How should we view that?
Yeah, I think there are two sides to this. I think there is the relative measure, and I would agree that we'd get in relative terms perhaps more help than what you'd see on the screen. View it as conceptual. At the same time, I think it's also managing SG&A in absolute terms, which is the other side of the coin. Oops. I should be standing here. Thank you. I think we consider both of them. I think we do need to bring some of the SG&A costs in absolute term down. Of course, as we grow the top line in relative terms, we'd also get more help from that.
Okay, perfect. Thank you.
I'm not sure, Anders, if you want to add something.
No, I agree with you.
Okay.
Yes, thank you. It's Gustav here from Nordea.
I thought maybe just to start off, if you can elaborate a bit more on where you are in capacity utilization in the different areas, just for us to give a better sense of where we can see a sort of swing factor once sort of demand returns.
Yeah, I'd say just high level, I think we're about half here. We're probably about half or just north of half in Italy. Poland, for obvious reasons, on its way down. Värnamo, a bit below 50%, of course, probably even lower. 30-40% perhaps. China, we are somewhere between 40% and 50%. And in the U.S., we are, given the processes and so forth, we're closer to the capacity ceiling, even though the volumes currently are down. I'm not sure if that's even a fully relevant question given where we are with the factory transfer either.
No, that's fair. Thank you.
Then maybe on the acquisition also you made last week, it would be interesting to hear because what we've heard previously was maybe to look more into distributors to approach the Chinese market and to sort of get access to the larger customers. Now you buy sort of a producing company. It would be interesting to hear your strategy there, what has changed, and also if there's any risk of overcapacity situation also in China as you have two plants there.
Yeah, I think if we start with the first question on the market channels, in fact, I think Vichnet has built a very good distributor network in combination with their own direct sales force. I do think we're tapping into that distributor network through the acquisition. In a sense, I do think it's kind of a little bit similar thinking as to before.
When it comes to what we are seeing more longer term in Asia overall and in China, I do think that we will be in dire need of capacity looking at the market growth rates and what we believe will happen both in the Chinese market as well as in some of the other Southeast Asian markets. I think for now we're not looking at overcapacity in Asia specifically as the biggest topic.
Hi. Hello? Can you hear me? Okay, it's Jonny here from SEB. A couple of questions from me as well. I think we'll start. You talk a lot about you entering new market segments and that would increase your addressable market significantly. I'm trying to understand this a little bit better. Could you specify a little bit more what exactly you're trying to add, what applications and such?
Also, can you say something about why you aim so much to go outside your bread and butter business? I mean, one mean interpretation could be that you see limited growth opportunity or a mature market in your core segment. Could you maybe elaborate a little bit there?
Yeah, no, I think there are two. I think it's a great question. First of all, I think there are two sides to this. I do not think you should interpret widening the offering as such as there is less potential in the core. I think we had in the presentation roughly where we are market share-wise. There is still a lot of room to grow in the core. In addition to that, I do think there is also a strategic context to being a niche player versus widening the scope a little bit.
I think we want to make sure that we're strategically stable with other niches and other products. If we look at what the customers want, they really love our core offering and our core products and our machine guarding solutions and the way we interact. At the same time, they're asking us to, okay, can you provide and help us more? Can you simplify our lives with expanding on that offering? That would be a natural expansion to core. I wouldn't even say that's Troax pushing ourselves into the market. I would say it's also the market kind of pushing this space a little bit. I wouldn't interpret that as we're less optimistic about core. That's simply not true.
When it comes to specific segments, I do think there is both the customer side of segments, so segments where we have not been able or have not focused on before. We talked, for example, about process in this case, food, pharma, beverage, etc. are great businesses to be in where we have a relatively low market share. There is more room to grow. The other side of the segments or products is coming from what we just discussed before. You can look at data center as a new segment. Really, it is quite close from a product point of view and from a capability point of view. It is pretty close to core in a sense. Okay, dimensions are different. Perhaps the mesh is a little different. The customer base might be a little different, but it is quite close to home in a sense.
It is in a sense also a new market. If we look at the active safety, which is a big potential addressable market, very healthy, provides a lot of value to our customers. That would also be something to expand into. Also stemming from the fact that the customers are asking for, okay, is there more? Can we extract more out of this? Can we combine this and that? Can you help us with more things on site? I do think that is also a customer-driven process. Last but not least, I do think there are some hardware products we talked about, for example, barrier systems, which is a big business in itself. There are different types of barriers. There are steel, metal barriers. There are plastic barriers. That in itself is also very close to our customers. They usually buy it in connection to our products.
That is a natural way for the customers to ask us to provide more, and it's a natural way for us to grow. With that said, we have one leg in each ditch, so to speak.
Maybe I can add a little bit to that as well. I mean, of course, you can look at it from our addressable market perspective and an opportunity for us to grow our business, a little bit like Martin already alluded to that. From a customer perspective, these are also complementary solutions. We want to be an industrial safety leader, and there's no one else in that space. Like someone does machine guarding, someone does barriers, someone does active safety. If we take the lead and can provide a full-scope solution, that provides us a competitive advantage, which is also good for our core business.
By doing this, we're also protecting ourselves and creating synergies for the customers. There's a logic beyond just finding a bigger pie to go after in doing this, I would say.
Okay. Do you see any close or nearby segments that could add the aftermarket component to your business, or is that not possible?
I think this concept of aftermarket, if we look at steel, if we look at our core steel products, they're not much of an aftermarket product. I don't think they should be either. For sure, there are some of these products that are a little more, perhaps not aftermarket per se, but more recurring. If we look at some of the active safety solutions, they might be subscription-based. They might need upgrades and so forth. You could say that's kind of a repeat business with this shorter cycle than the steel.
I do think if we look at potential new segments as in barriers, they get probably hit a little bit more than or more often than because they're in more positions or places in the warehouse which get hit more often. Those are an aftermarket and replacement business with shorter cycle as well. You can say the aftermarket intensity is higher on some of those segments. That being said, if we would look at this as a, will this make us an aftermarket-driven business overall? Likely not, at least not short term.
Okay, fair enough. One final from my side. I mean, you talk a lot about your investment in America, which sounds very promising. Could you say something about the profitability in America today and also where you aim to go with that investment?
I think we have deliberately been quite cautious on this for several reasons. I do think we have good experience with upgrading facilities and seeing what those results are. I think we do have an internal pretty good view of what we're aiming for. I would be at this point a little bit conservative and not give you any numbers. I prefer that you'd see them in the P&L later on. I'd say that it's substantial. It's a substantial improvement. On Americas, we are not reporting externally per region, but it's fair to say that the North American operations, both at the current volumes as well as with the current way of running it, it's below group average.
Okay, sounds promising. Thank you.
Hi, Anna from DNB Carnegie. My first question is on the Vichnet acquisition.
Could you tell us a bit on how the historical growth has been and how much of that has come from data centers?
Yeah, I think if we look at Vichnet, they've gone from zero to EUR 26 million from 2006 to now. I do think they have grown half of their business in machine guarding over the last five or six years. Very strong growth on that side. On the data or on the cable management system, it's both data center-driven and, of course, also for all the other customers. I think the growth of Vichnet has not predominantly been to date data center-driven, but I think going forward, I do think it's fair to assume a substantial part of that growth coming from data centers.
And then my second one is on, you've talked a lot about the pool of possible acquisition targets.
Could you maybe give us a bit more of your sense of the multiples that you must pay for the high-quality ones and what the general financial qualities of these are? You talked about margins potentially diluting at least in the beginning and such.
Yeah, I think first of all, I do think between the different themes, the margin profile is quite different. Both the growth and the margin profile is different. If we look at active safety targets, usually growing a lot faster as we've seen in the market, usually more profitable, okay, then you end up with some kind of multiple and some type of agreement. If we look at core machine guarding acquisition targets, they would be performing, yeah, roughly around the level where we are, depending a little bit on the width and then on the complexity and the market.
It varies quite a lot. It varies also whether the companies are well run or whether there is room for improvements and so forth. I'd say it's a big spread. If we look at acquisitions into the core of the core, we're talking single-digit multiples without being more specific than that.
The final from my side is on the active safety. I'm a bit curious on which customer segments or anything else that could sort of be the ones that are most in demand for these new kinds of solutions, and also how you're experiencing the competitive situation amongst other players who are offering this.
I'd say I think where we have experienced more interest and also we've had more success is definitely more to the food and beverage side. The big beverage makers would probably be in the forefront from our point of view.
We could look at the American ones or we can look at European ones. I think that's the area where we've been most successful to date. When on active safety, it's a pretty scattered marketplace. We do have the forklift OEMs, which this is not really their core business. We do have plenty of startups being more technology product-driven. There is us and a few others. I think what the end customers want to see from this, because they trust us with data, they have concerns about liabilities, about the safety, making this work, are we now in a sense collaborating with someone who will be there for the long run? Is there support and service and reliability to this?
I do think that we're in a good position because we are agnostic from an ecosystem point of view, which helps with the forklift makers and with the customers, especially in the mixed fleet situation. At the same time, we are larger than the smaller technology developers because they're not having the scale and credibility that we would have. I do think from that point of view that we're kind of in a sweet spot from that point of view. We're clearly a safety company. We're listed. We're large enough to provide the security. I do think from that point of view, we're in a pretty good position. I'm not sure if you want to add something, Jonas.
I could add that. I mean, if you look at the machine guarding business, as Martin mentioned in the presentation, that's regulated in the developed markets.
If there's a robotic welding cell today, it needs to have machine guarding. That's already a reality. When you look at active safety, that's not regulated. That is driven by customers that want to go above and beyond in safety. If you look at that megatrend, that safety is becoming more important, more and more companies will consider active safety as a way to take their safety work to the next level. More and more customers will not consider machine guarding. It's already a regulation, right? That's why that market can grow quicker than the machine guarding market, which requires new robots to be installed. Whereas here, we already have thousands of warehouses without active safety. All it takes, if management decides we want to lower our incidents, this could be a solution, right? I think, yeah, so potentially.
Thank you.
Thank you.
Hi, so Fredrik here from Handelsbanken. I have a question about your historical M&A and what would you say is the greatest learnings or what do you take with you going forward?
That's a good question. I think connected to Troax specifically is that doing M&A and getting all the value out of it is complicated and it takes a lot of work. I think we have learned a lot through the various acquisitions that have been done over the years. I do think also that it comes back a little bit to, I think, the basics. I think does this make strategic sense? Do we have the financials on our side or can we potentially get there? It is also getting together with people that you can imagine working with.
I think the way I look at this, I prefer targets that are a little bit larger because the small companies, you need to go through all of this integration work and get them into the family. If you can acquire companies that are slightly bigger, they've proven themselves, they're also a little bit less dependent on a certain individual, which makes it a lot easier to create value and create value quicker. I think if there would be anything, I'd prefer to do something that's a little bit more sizable. I think the Vichnet acquisition is a great size. I think the Garantell acquisition is also a great size where we have a certain quality on middle management and it's less dependent on a few things. That would probably be, I guess, one learning. Andrew, do you want to say something?
You've been around longer than I have.
Oh, I am. I agree with you. I totally agree.
I have a question about the new organization and you mentioned KPIs. What's the most important KPIs that you will push on your bosses?
We grow, we make money. Simple as that. 50-50, 60-40, 40-60.
Thank you.
We have 10 minutes left, so a few more questions. Still possible.
Yes, thanks. Just two more here from me as well. Maybe on the data center offering. I mean, we all understand the major shift we're seeing in that space today, but just regarding your offering within this niche, I mean, has that accelerated with the value of servers increasing, so to say, that you need to protect the value of them, if you understand my question? I'm not sure I do understand it. Perhaps, Jonas, it's your.
I mean, you look at NVIDIA valuation. I mean, a lot of data capacity is necessary to do all the computational stuff related to AI, right? Data centers are popping up like mushrooms everywhere. For every data center, those servers need to be protected from being accessed and tampered with. Fundamentally, it's a similar solution to machine guarding, but you have machine guarding is protecting the human from the machine, but here you also need to make sure the human cannot get in to the server. I mean, that's the main function. For example, you have smaller aperture on the mesh, but then there's also cooling, heating, direction of airflows that our products contribute to as well. Size. Size, yeah.
Is it possible to say how much more mesh panels it is in an AI data center versus a traditional?
I don't think so. I mean, it all depends on the size of the data center, the type of operation and warehouse and so on. Yeah, I mean, if you walk into a data center, there are aisles and aisles of servers and they are all encapsulated. There are a lot of protective structures in a data center.
I think your question is difficult to get a firm reply. I think it is fair to say this though, that on average, on the average project, the data centers are larger on average deal value, which is kind of a proxy for content or meters or whatever, square meters or whatever you want to see.
From that point of view, the data center business contains a higher share of large projects, especially comparing to the bread and butter business that we have on machine guarding where the average order size is relatively small.
Perfect. My second one is on installation. I think you mentioned that before. Has your view changed on that driving installation business?
No, I still think installation is a nice complement to our products and we do quite a lot of installation already today with some of the key customers. I do not think we are going to be the ones providing installation for each and every customer, for each and every design. I do think we do need to work a bit with care, definitely with large customers, perhaps in areas where we have high density of installations, etc., etc.
I don't think we're not going to, to all of a sudden, have a huge installation force with own wrenches all over the globe. I don't think that is not our business. Certainly, coming from a customer point of view in terms of being easy to deal with, holding their hand through the whole process, certainly there is an element of installation. Now, that being said, since we're having a big portion of our core business being dealt with through integrators and partners, we also need to be very careful to be on the right side of the fence, so to speak, when it comes to not stepping out from a vertical integration point of view.
If we just look at the acquisitions of Garantell and Natom historically, in those markets, you had quite some success with your basic Troax offering.
Has those offerings been helped by the acquisitions you made in those countries or would you have the same success even if you hadn't bought the Folding Guard operation?
I think that would become very hypothetical, first of all. I do think we can debate whether a certain acquisition has been successful, has been successful in a certain period of time, has been successful in the long run. I don't think that we would have the combined market position if we take North America without adding critical mass. In a sense, I do think there is a correlation between growth, being able to also get the supply chain in place, critical mass and skills to be able to grow. I do think there is a connection between those two things. Absolutely.
Perfect. Thanks.
Hi, Anna from DNB Carnegie again.
I just figured a bit on the channels to markets where you have 75% through integrators. Are you happy with this current setup or would you benefit from having increased ratio of either of those?
Yeah, no, I would like to have a bigger share of the sales straight to the end user for a few very obvious reasons. Number one is we get direct feedback on what the market wants. That connection is easier. If we have a higher share with the direct customers, we also get more touchpoints. We get more stickiness in the customer relation that helps additional sales, obviously. Having fewer middlemen along the way, of course, is helpful for the margin. Those would be the reasons. If we can move the needle a little bit more towards the end users or end customers, I think the better.
Is there any region or end segment that you have a higher tilt towards the direct channel or is it very evenly spread out?
I'd say probably from a, we would most likely have more to date, I should say, before the Vichnet acquisition, we have a higher share of direct in Asia. In fact, if we look at it proportionally, than we have in Europe and the U.S.
Moving the Natom volumes into Garantell, just thinking about how they have their e-commerce setup, is that going to be beneficial from that point of view? I think overall, absolutely, because it's a much better user experience or customer experience. It's smoother, quicker. The customers can choose how much they want to do themselves, how much they want help with. From that point of view, I do think it's very positive.
Some of that will then go through straight e-channel and some of this would then also be utilized in the key account structure by our own colleagues as well as the customers. I do think from a service point of view, it's going to be very beneficial for our customers and also for ourselves in terms of sales, call it efficiency and smoothness.