Welcome to the Dustin Q3 presentation for 2024-2025. During the Q&A Welcome to the Dustin Q3 presentation for 2024-2025. During the Q&A session, participants are able to ask questions by dialing #5 on their telephone keypad. Now I will hand the conference over to the CEO Johan Karlsson and CFO Julia Lagerqvist. Please go ahead. Good morning, everyone, and a warm welcome to this Q3 presentation from Dustin Group. As previously said, Julia and I will try to take you through the main messages of the report. We move to the content of today. We will go through the Q3 result. We will also follow up on the rights issue and talk about our strategic focus and the way forward. If we look at slide 3 and the Q3 result, as in the last quarters, sales was affected by a weak market with continued general cautiousness by the customers in many of our customer groups. However, we saw some positive developments in both LCP and SMB sales. Sales in the quarter was SEK 5,089,000,000, representing an organic growth of -2.9%. Both segments performed at the same level, and SMB had an organic growth of -2.6%, while LCP was down by 3.0%. In SMB, we saw some stabilization of the market, and the negative market development was slowing down, while margins in SMB continued to be at good levels. In LCP, we had challenges due to lower market volumes in the Netherlands, while the Nordics performed well. Gross profit ended at SEK 680 million compared to last year's SEK 821 million, mainly as a result of lower gross margin. Gross margin was at 13.4% compared to last year's 15.0%. Gross margin was mainly affected by the lower margins in the Benelux region. More about that in the next slide. Adjusted EBITDA came in at SEK 72 million compared to last year's SEK 130 million, and EBITA margin was at 1.4% compared to last year's 2.4%. Cash flow from operating activities was SEK -139 million compared to last year's positive SEK 454 million. Leverage at the end of the quarter was 4.3% compared to 6.0% last quarter, mainly reduced by the finalized rights issue. We will move to slide 4 and look at the gross margin in some more detail. As said before, gross margin this quarter was 13.4% compared to last year's 15.0%. If we look at the different parts of the business, we can see that LCP Nordic developed well from a margin perspective, and that total SMB also performed well. The shortfall in LCP Benelux mainly comes from two things affecting margin. The first one is in Belgium, where we have won many new contracts in the public sector and where the margins initially are low. Here we also see a double-digit volume increase in sales. The second one is in the Netherlands, where a slow market for many quarters has resulted in price competition. This is particularly visible in the tender business to the public customers. All in all, the negative margin effect coming from the LCP Benelux business was 1.7%. Let's move to slide 5, where Julia will take us through the status in our efficiency initiatives. Thank you, Johan. Yes, on page 5, we look at the cost development in the quarter, and here we can see that the reorganization and our cost efficiency measures have had a clear positive effect compared to last year. The overall SG&A expenses decreased by 14%. This was positively impacted by Forex, but also excluding this, cost decreased 11%. The cost efficiency measures previously estimated at SEK 150 million-SEK 200 million of yearly effect are now near completion and landing in the higher end of the range, and it's the main reason for the decrease. Looking at the number of FDEs, we see that we have reduced with 150 FDEs or 7% versus the same quarter last year. If we go back two years, the total decrease is 12%. In addition, we have also reduced consultants and temporary staff, plus reduced number of offices as part of our cost efficiency program. If we then move to the overview of the SMB segment on page 6, we see that sales landed at SEK 1.4 billion, or 5.3% below last year. The organic growth was minus 2.6%. As Johan mentioned, in this quarter, we see some signs of stabilization, but the overall market remained tentative due to the ongoing economic uncertainty. We do see a slight increase in demand in the larger SMB customers in the Nordics, but in total, the sales dropped versus the previous quarter. Looking at the product mix, we saw that the share of software and services increased somewhat up to 13.8%, mainly a result of a stronger focus on standardized service portfolio. The increased share of software and services also contributed positively to the gross margin, which was flat versus last year, but improving versus the previous quarter, thanks to focused price discipline. The improved cost base, as we just mentioned, protected the segment result, which landed at SEK 37 million, which was in line with last year despite the lower volumes. All in all, the segment margin ended at 2.7%. This was a slight improvement versus last year, though coming from a low level. Going to page 7, we look at the LCP segment, the large corporate and public customers. The sales in LCP was SEK 3.7 billion in the quarter, down 7.2% versus last year. The organic growth was minus 3%, so there was a large negative forex impact coming from the strengthened SEK in the quarter. Here we have a bit different picture between the regions. The economic uncertainty impacted the market development. This was mainly evident in the Netherlands. In addition, some frame agreements were impacted by increased price pressure. On the opposite, we saw positive development in Sweden and Finland, mainly driven by development in the defense investments. For Finland, this was a trend shift compared to the previous quarters, where budget austerity has hampered growth. Belgium displayed very positive growth, driven by some large new agreements. As said before, we do see large volatility in sales between quarters in LCP. As Johan just shared, the gross margin dropped in the quarter compared to last year, mainly driven by Benelux. The high share of new frame agreements with initially lower margins, combined with increased price pressure and diminishing volumes, had a negative effect. On the opposite, margins in Nordics were slightly improving, mainly due to country mix. In addition, the negative customer mix of a lower share of large corporate with a higher average margin also had a negative impact on the result. We continue to see an increase in take-back, which had a positive impact on the bottom line, and we also saw positive development on our private label business. The improved cost structure had a positive effect on bottom line but could not compensate for declining volumes and margin. Overall, this led to a segment result of SEK 63 million versus SEK 130 million last year. The margin ended at low 1.7% compared to 3.3% last year. Moving on to cash flow and CapEx on slide 8, we see that the cash flow for the period landed just above SEK 1 billion, mainly driven by the rights issue. Looking at the details, we see that the cash flow for operating activities before change in net working capital was SEK 27 million, lower than last year. The difference was mainly driven by a lower operational result. Cash flow from change in net working capital was minus SEK 167 million compared to last year's positive SEK 373 million. This quarter was mainly affected by increased inventory and delayed payment flows linked to timings of public holidays at the end of the quarter. We will look more at net working capital on the next slide. In total, operating cash flow was minus SEK 133 million in the quarter. Cash flow from financing activities was impacted by the rights issue, as said, and more on this in just a few slides. Looking at the CapEx, we see that the total investment in the quarter was SEK 69 million, of which SEK 47 million affected cash flow. This mainly linked into IP development investments. Investments in tangible and intangible assets were SEK 28 million, only SEK 10 million affecting cash flow. The non-cash items is mainly lease contracts. Investments related to services was only SEK 4 million compared to SEK 8 million last year, non-affecting cash flow. Coming to page 9, we look at the networking capital development. Networking capital landed at SEK 261 million, which was higher than last year at a very low minus SEK 205 million, and also an increase versus the previous quarter. Inventory levels increased versus previous years and also somewhat versus previous quarter, now at SEK 1,098 million. This is due to lower than planned activity at the end of the quarter, mainly linked to the Netherlands. This is above our preferred levels, and we have a clear target to reduce going forward. Accounts payable and accounts receivables were both lower than the same quarter last year, mainly due to timing effects of large orders in the last year and lower sales. However, receivables decreased less than payables. They were impacted by delayed payments due to timing of public holidays at the quarter end. As said before, we always have some timing effects in individual quarters, but our long-term target for networking capital remains to be around SEK 100 million minus. With that, I hand back the word to Johan. Thank you, Julia. Let's have a look at the finalized rights issue. The rights issue is now completed, and the net proceeds amounted to approximately SEK 1,240 million. As previously announced, the proceeds will be used to reduce debt. The reduction in net debt resulted in a leverage reduction from 6.0 to 4.3 on a net debt to EBITDA basis. The work will, of course, continue to reduce the leverage even further in the coming quarters. We then move to slide 11 and look a little bit more on our plans for the future. On this slide, we have listed the most important activities that we're working on in order to get back on track with the result. The ongoing activities are that we have implemented the new organization structure around the offering, the sales channels, delivery, and support functions. This new way of organizing enables a higher pace in the strategy implementation. The new organization with less management layers also increases efficiency and reduces cost. As Julia mentioned previously, the savings are in the range of SEK 150 million-SEK 200 million, where we see that the result will come in in the higher part of that range. We also have decided to leave the consumer market and focus on B2B. B2C represents only 2% of sales and requires special components that do not scale into the B2B sector, and therefore we have decided to leave B2C. Further to that, we are moving the managed services portfolio to standard in all markets and to all customers. We truly believe that standardized services is the future. For us, it gives opportunities for scalability, and for our customers, it gives security and predictability. These moves will help us develop our customer offering towards the B2B across all sales channels. It will also help us to further develop the automation towards the B2B customers. With that said, let's move to slide 12 and the summary of the quarter. In summary, Q3 was a quarter where we saw challenges in the Netherlands LCP business, but some improvements in the LCP Nordics and in the SMB segment. Net sales was down 2.9% organically, with similar numbers in LCP and SMB. Gross margin at 13.4% was affected by the price competition in the Netherlands, but the margins were stable compared to last year in LCP Nordics and SMB. Adjusted EBITDA at SEK 72 million, down from SEK 130 million, mainly as a result of lower gross margins. If we look at the quarter, in the quarter, we concluded the rights issue of SEK 1,240 million and reduced debt. We concluded the majority of the efficiency measures announced during the autumn and estimated to reduce cost in the higher range of SEK 150 million-SEK 200 million previously announced. We also announced to leave the consumer market representing 2% of sales in order to gain more strategic focus. I think that concludes the formal part of the presentation, and we can move to if there are questions. If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Jesper Stegamo from Handelsbanken. Please go ahead. Yes, good morning, Johan and Julia. Good morning. I was wondering on the agreement and lower profitability in Netherlands. Are these entirely new contracts, or are they contracts that have been renewed with a lower pricing point, let's say? I would say they are a combination of new and renewed, and they are primarily contracts that are linked to a frame agreement where the individual, let's say, sales agreements are mini tenders, what is called, where you bid for parts of the volume in the tender from a legal perspective. That creates a new, it's almost like a new tender process under the frame agreement. There we see a higher price competition. That part of the market moves with, let's say, the volumes that are available in the market, and as the volumes are quite small at the moment, that means price competition is high. All right. Do you see any kickback from the sort of the refresh cycle on the PCs side and, yeah, from these new larger tenders across the Nordics and Benelux? I think we are starting to see signs of, let's say, renewal coming from the Windows side. At the moment, that picture is a little bit blurred by the general uncertainty in the market. Even if you see some customers moving towards the change of Windows, others are kind of delaying investment decisions and hence the continued kind of weak market. When do you think we could see this trend pick up? I was thinking around SMB customers maybe sort of delaying it a bit further as you can secure one additional year for the update with just a $30 payment, so to say. Do you think the likelihood on the SMB side is to postpone this additionally to the next year maybe, or do you think it's more, yeah, will we see it pick up here during the autumn, you think? I think it will gradually grow because it is also, and I agree with you that there will be customers that do exactly what you said, prolong it for a year. Also, the activity level coming from Microsoft and from the PC vendors will increase now to make people or to make customers and companies change. I think you will see a higher market activity that will drive a slightly higher change rate than we have seen previously. It is also our feeling that in the SMB, it is, of course, volatile depending on what is happening in the world, but if the world is, you know, we have seen a slightly, I think, stabilization of the SMB market in this quarter, which is, I think, you know, even if it is not the turnaround, it is at least a stabilization on the levels we are at the moment. Right. And then just one last question for me here. I heard that many Microsoft licensing agreements are up for renewal. I think it's here in June. Given the new incentive structure on these more legacy agreements from what you are receiving, the commission going forward, do you see any temporary headwinds for the margins here in Q4? I think we've talked a bit about this before, and I think we are, of course, losing on the enterprise agreement side where the compensation is lower. If we move that to cloud-based licenses, actually the compensation is better than before. This will be a trade-off between losing a bit on one side, moving customers to the other side, which is, of course, the intention from Microsoft. If we are able to move customers to the cloud side, we can even get better compensation from that. Our view is that it's relatively neutral over the next coming quarters. All right. Perfect. Thank you for that, Johan. Just second line. The next question comes from Daniel Thorsen from ABG Sundal Collier. Please go ahead. Yes. Thank you very much. I noted in the report here that Swedish sales are up some 10% year over year in Q3 here. What is behind that? Is it the SMB market recovering a little bit, or is it a couple of new LCP contracts? Hi. It's mainly due to activities within the defense world. It's on the public side, I would say, is the main driver, even though we see some positive signs also in the larger segments in the SMB. Defense is the biggest driver. Okay. Would you say that the SMB market in Sweden is more flattish year over year, or slightly up or slightly down? I would say relatively neutral. We've seen the larger SMBs, I would say, slightly positive and quite volatile in the quarter because we saw at the beginning of the quarter large, let's say, geopolitic turbulence and then more stability by the end of the quarter. It is a lot of things happening and a very sensitive market is my interpretation. If there is any news coming out on TV, it affects immediately the sentiment of our customers in the smaller segments. I see. I see. That's clear. On Netherlands sales here, that's down some 20% year over year. Is that mainly market volumes, or is it some lost contracts by intention, or what is what here? Yeah, this is what we talked a bit about in the, let's say, the market is relatively slow. The Dutch market is slower than the Nordic if you would compare them in this quarter. The price competition is high. What we have done is, of course, you have to make a trade-off if you want to take the volumes at lower margins or if you want to kind of leave them for someone else. This is a trade-off in every tender process that we are in at the moment to see what margins should we go for and can we get volumes at decent margins. That affects both the margins and the volumes. You will see that in the numbers that volumes are down a bit and margins down a bit. That is a. Yeah. No, I see. I see. Should we expect to see a continued weak gross margin in the coming quarters due to this price pressure in the Netherlands? Or are there any signs that you see or understand in that market that will recover this near term? I think market pressure will be there for a while more. What we can do, of course, to compensate on that is to increase our efforts in the corporate market, and we can also add even more, let's say, product life cycle services to the tenders with the lower margins. We can work on margin around the tenders, but I think the price pressure will be there for some time more given what we look at, how the market looks like. Yeah. No, that's clear. In terms of cost reductions here, you are, as you showed in the presentation here, 2,115 employees. Where do you think that number will kind of end roughly before you can go into a more growing mode again? Also, what region is being most affected by those employee reductions? If you take the last question, I think we have, it's actually affecting all our regions. I mean, we did a global, it was a global project, a global reorganization. So it's no specific region that's been targeted more than another one. In terms of where we expect to land, I mean, this is a continuous work for us. We will always try to optimize the different organizations that we have internally, but we do expect to come down a little bit further from the numbers that you see today. This is obviously an average over the quarter as well. I think you can add to that that the strategic focus work that we're doing at the moment by leaving consumer and moving more into standardized services, that move will reduce the number of employees as such. That is an ongoing work, and that's what we're doing now. Rather than just cutting, we're actually, from a strategic perspective, looking at what should we actually do in the future that will add value to our customers. Yeah. No, I understand. How many people are kind of fully devoted to the consumer business? Quite few are fully devoted, but of course, some people will be affected by this change. It will not dramatically change, let's say, the total number of employees, but it will reduce a bit. Both this one and the move from non-standard to standard services, both these will have a tendency to reduce the 2,115 downwards. Yeah. Okay. Okay. That's good. Then we will continue to see this facing downwards a little bit more at least. We will see, for sure. That's clear. Thank you very much. Thank you. The next question comes from Thomas Nielsen from Nordea. Please go ahead. Thank you for taking my question. Given the significant challenges in the Netherlands, what is your detailed turnout plan for the Dutch market, and what specific timeline do you have for returning Netherlands to acceptable profitability levels, and are you considering any structural changes in Benelux? Let's look at the Dutch market in two different sectors. I mean, we have the SMB side of the Dutch market where we have a very low market share where we are building up the, let's say, the SMB online business in the way we have in the Nordics. That work is ongoing, and we are gaining momentum on that. I think that is one part of, let's say, the profitability plan going forward. On the LCP side, we have a very strong market position. We are the market leader on hardware when it comes to public sector in the Netherlands. Here and therefore, we have to look at adding value to the customers through product life cycle services and through adding such as offerings like take-back and other life cycle services, but also adding the private label assortment to the tenders in the Netherlands, which we have started that work, but we are not finalized. If you look at the Netherlands, you almost have to look at the Benelux in that perspective because we are under, let's say, represented in Belgium, where we have now won a few public tenders that cover a large part of the public market there. That gives us the opportunity to continue to grow the Benelux market share, even though we probably have a hard time to kind of increase a lot in the Netherlands. We will have to gain market share in Belgium in order to improve the total Benelux situation. I think that combination is what we are moving towards in terms of gaining back profitability in the Benelux region. Okay. Thank you. Thank you. The next question comes from Michael Leseen from DNB Carnegie. Please go ahead. Yeah. Thanks. Good morning. First question here is on the cost savings. How much have you realized in Q3 so far, and how much is expected to come through in Q4 and beyond? I think we have realized the majority of the 200 that we have now said that we were going to do. I think the activities are all done, basically. Now there are some cost savings or reduction of costs that will roll into Q4, but the majority, as we say in the report, is done. Okay. What type of baseline should we use when we look at the OpEx and to measure from? I think the SEK 50 million a quarter is what is in that, let's say, work that we have done long term. This quarter was extreme, of course, with the cost saving of almost double of the SEK 50 million. That also comes from some issues last year or some items last year that did not occur this year. It also came a bit from currency, and it also came from more short-sighted cost savings in this quarter. They are, of course, a little bit more not so long term, this other part of the SEK 100 million that we are below in Q3. I would use the SEK 200 million divided by 4. Yeah. I mean, of course, it varies between the quarters. There are always ups and downs. We have to cover a bit of the inflation as well. Yeah, what Johan is saying, you should give a rough estimate. All right. Yeah. Thanks. Also wondering here if you can say something about the service standardization initiatives and how you have so far seen any sort of margin support from that initiative. I think we've seen we've done this work in the Nordics, we've done it in Sweden, Norway, and Denmark, where we are basically 100% standardized at the moment, where we see clear margin support coming from these changes and where margins are at the level that we aimed for a couple of years ago when we started to talk about services, which is about double the margin of hardware. We still have some work left to be done in Finland and in the Netherlands on the moving customers to standard. That is where we are working at the moment with the actual move. The effect, I would say, we can see in Norway, Sweden, and Denmark at the moment. Okay. When do you expect from Finland and the Benelux region to be more mature in terms of standardization? Is that coming sort of in line with the SMB rollouts, or? Yeah. I think if you take Finland, it's not so far away. It's a few customers left to be done. It's a little bit more work in the Netherlands left to be done there. I would say that will take a little bit longer, but it's a clear dedication from our side to move away from these, let's say, very customized service agreements with specific customers. It will not happen in, let's say, a month or two. It will take longer. Okay. I was thinking about here, I mean, if you can quantify the impact from the frame agreements in the Dutch market. For example, if you can comment on how many suppliers are typically involved in a frame agreement and if something has happened recently to this type of the setup that you described, sort of mini tenders in your frame agreements. Yeah. I think there are almost always nowadays three or four competitors in the same tender. That is quite the common setup in the Netherlands at the moment. This is something that we have seen in both Denmark and Finland going a little bit up and down over the years. Sometimes there has been a multi-reseller tender in Finland, and sometimes there has been a single reseller tender. The same goes for Denmark. Now we see the same situation in the Netherlands. A little bit, I think, depending on the mode of the purchasing agency in that country. At the moment, we are in a situation where we have many competitors in each of the tenders. Obviously, if then the volumes are low in the market, everyone is chasing that low volume, there is price pressure created. That is not a huge surprise, but it's something that we have to deal with, and we have to, let's say, we have to be very innovative on how to make margin around the tenders. If we are not able to do it on the PC itself, we have to do it on either the accessories to the PCs, the service around the PC. That's what we're doing at the moment to mitigate the situation. Okay. It's sort of the key driver for this minus 20% roughly sales drop year on year in the Dutch market. That is a big share of that, yes. I mean, you could easily get that number to zero, but then the gross margin would be even lower. Yeah. It's a balance. Okay. Thank you so much. Thank you. As a reminder, if you wish to ask a question, please dial #KEY5 on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. Okay. Thank you, everyone, for joining the Dustin Q3 report, and we wish you all a great day. Thanks so very much.