Dustin Group AB

STO:DUST

Earnings Call Transcript 2022-Q1

[Operator]

Hello, and welcome to the Dustin Group Audiocast with Teleconference for Q1 2022. [Operator Instructions] Today, I am pleased to present CEO, Thomas Ekman; and CFO, Johan Karlsson. Please go ahead.

[Thomas Ekman, President & CEO]

Thank you very much, operator, and good morning, and most welcome everyone, and Happy New Year, both to our existing and new and potential new shareholders to our first quarter presentation and conference call. We hope you are well and staying safe and had a good morning so far. Here on our side on the call is myself, Thomas Ekman and Johan Karlsson, CFO; and also our IR team with Karl Förander and Fred Satterstrom in the room. So today, we present our first quarter results for our fiscal year '21-'22. And we kick off our financial year with really strong performance, solid growth accompanied by solid margin development. I am, as always, very proud of everyone at Dustin for doing their utmost every day to deliver the great customer experience, but I might even be slightly more proud this quarter given the circumstances with the overall turmoil in the world with markets opening and closing back and forth, which gives challenges in supply chains and also, of course, in sourcing of products. But despite all these challenges, we managed to have a double-digit organic growth and capture the demand from our customers. The first quarter once again also shows that availability and delivery capacity generate high growth. We have, as you know, worked hard during the last years to automate our purchasing, our pricing and our logistics. This work obviously never stops. We can always improve, but it's encouraging to see that it for sure pays off both in growth and efficiency in margin. Let's go to Slide #2 on just to give you a brief on Dustin at a glance. And most of you have seen this one before. But as you know, we are a hardware, software and service company, 280,000 harder and software products in our assortment, primarily sold online, split is now 60-40, given the changes we have seen also when we acquired Centralpoint. We are across the Nordics and the Benelux. Now with Netherlands it's our biggest market with 35% of the sales, followed by Sweden at 26% and then Norwegian market and Finland at between 10% and 15% and Belgium at 3%. And we are primarily a B2B company. 97% of our sales is to B2B and 3% is on B2C. So it's a small area. And then 50-50 roughly on SMB and LCP.So that's us in a short nutshell. But let's move to Slide #3 and go through the financials -- financial highlights. Really strong organic growth, as said, in -- at 11%. We have strengthened our position in the markets and our productivity and strong position in the value chains also benefited our performance. This, in combination with an intensive cost focus, overall, high economic activity in society gave us an adjusted EBITA increasing to SEK 301 million and the EBITA margin strengthening to 4.8%. And in addition, our online core business performed strongly in pace with a higher share of online retail and a greater need for mobility, cloud services, security driven from the underlying strong trends. And these market trends that we build our strategy on I mean the online shift, the growth mobility and the cloud services demand for predictable IT costs, focus on security and integrity and finally, of course, sustainability have continued during the quarter and increased in importance as well, and that makes our long-term position even stronger. Total net sales were SEK 6.2 billion, SEK 6,247 million, up with 69% versus last year on a reported level and the organic growth, as said, was up 11%, of which SMB showed a very positive 11.7% and LCP at a very good 12.9%. And B2C at a negative 17.4% as an effect of much less campaigning on Black Friday due to the overall component shortages. But overall, strong organic growth, which shows not only good underlying demand, but also our capability to make use of it and deliver. Gross profit was SEK 894 million compared to last year's SEK 577 million, giving us a gross margin at 14.3%, somewhat down from last year's 15.6% because of us adding more LCP volume from Centralpoint. But on a comparable numbers, it's on the same level as last year. Our adjusted EBITA increased a lot, passing now SEK 300 million and came in at SEK 301 million versus last year's SEK 171 million. And as said, that gave us an adjusted EBITA margin at 4.8% for the quarter versus last year's 4.6%. So very strong performance and strong earnings. The margin has improved by good performance and the structure changes we are doing, combined, of course, with good cost control within all segments, but both SMB and LCP show really good progress in the margin uptake during the quarter. Items affecting comparability was minus SEK 7 million, consequently then giving us an EBIT at SEK 251 million compared to last year's SEK 132 million. And EPS, earnings per share, grew to SEK 1.47 per share versus last year's SEK 0.99. And our leverage at the end of the quarter was 3.1 versus 2.2 last year increased because of the acquisition of Centralpoint, but deleveraging very good sequentially from Q4. And cash flow also strong from operating activity was SEK 369 million compared to last year's SEK 265 million. So apart from an intense quarter in general, from an operational perspective, we have continued the integration work with Centralpoint. Furthermore, in the Benelux, Vincere is now operating under the Dustin brand. And as a consequence of that, we have done a reclassification of segment costs and all transferred customers between our segments. We have also completed our refinancing and signed a sustainability-linked credit facility. And worth mentioning, given the power and electricity demand that's going on, we have also installed solar cells on the roof of our central warehouse, which not only reduces our cost, but it, of course, also reduce our climate emissions. So that has been a good project within this. Now Johan, you can take us through the financials for the different segments.

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes. Thanks, Thomas. Let's move to Slide 4 and the SMB segment in some more detail. So sales for the quarter ended at SEK 1.925 billion, an increase of 18.7% over last year, representing an organic growth of 11.7%. Sales growth continues to be strong despite the challenges in the global supply chain, mainly as a result of a very strong economic performance, both in the Nordics and in the Benelux. As in previous quarters, we continue to see good sales development in hardware categories from all customer groups in the segment. However, in Q4, we had a particularly strong sales towards the larger SMB customers. In terms of services, we have good development of the integrated recurring services with above-average growth rates. At the same time, project-related services are now stabilizing on a high level. Geographically Norway had the strongest rates growth followed by Sweden and the Netherlands. In the quarter, the sales towards SMB was affected by customer moves between the segments. The effect was SEK 140 million less sales in SMB and the same addition in LCP. The shift of customers from SMB to LCP was done to harmonize the segment definition in the group. This explains the major part of the difference between reported sales and organic sales development in the quarter in SMB. Segment margin for the quarter was 12% compared to last year's 10%. Reclassification of segment costs to Central costs and customer moves affected this year margin positively by 1.1%. The reclassification was done as the Vincere Groep is now run as an integrated part of Dustin and hence forms part of Dustin's Central platform. Further to that scalability, as a result of higher volumes in SMB, affected the margins positively. Also in private label, we performed well in the quarter, adding to the margin improvement. Software and services sales was in line with last year, but share of total sales declined from 21.2% of last year to 19.5% this year, mainly as a result of the strong hardware sales development. If you then move to Slide 5 and LCP. LCP sales in the quarter was SEK 4.183 billion, an increase of 119.4%, of which 12.9% was organic. During the quarter, we saw a very strong sales increase in both public sector and large corporates. As discussed before, the public sector sales has remained strong throughout the pandemic while corporate sales dipped at the beginning of the pandemic, but is now back in full swing. Turbulence in the supply chain is still there, but we have secured good supplies during the quarter. Geographically, we saw strong sales in Norway, followed by Finland and Sweden. Segment margins ended at 7% compared to last year's 6.7%. From a business perspective, the increase over last year is mainly explained by generally improved margins in some of the larger contracts, cost benefits coming from larger volumes and effects from last year's cost efficiency activities and also coming from customer moves from SMB SEK 140 million and the move of segment costs to Central costs affected the margin positively by 0.3%. Segment result improved from last year's SEK 127 million to SEK 293 million or by 130%. All in all, a very strong performance in LCP, both in the Nordic region and in the Benelux region. If we then move to Slide 6 and the B2C. B2C had a tougher quarter in regards to the volume and declined by 16.8%, of which 17.4% was organic. B2C represented in the quarter 2% of the total sales of Dustin. The main reason for the sales decrease was the Black Friday, mainly due to lower campaign sales as the market shortage of product continues. Our focus was, therefore, again, on margins and securing the segment result. We have performed well on keeping margins up and ended with a segment margin of 11.1% compared to last year's 6.3%. In total, this ended with a segment result of SEK 11 million -- of SEK 16 million, up from SEK 11 million last year. If we then move to net working capital on Slide 7. So net working capital was negative SEK 334 million compared to last year's negative SEK 531 million. Last year was highly affected by the actions taken as a consequence of the pandemic, where our focus was on securing working capital to mitigate potential risks in accounts receivables. Further to that, the inclusion of Centralpoint has affected the individual items in the working capital significantly. Moving on to look at the details of working capital. We can see that inventory in the quarter was SEK 1.138 billion compared to SEK 507 million last year. The main reason for the increase was the inclusion of Centralpoint adding SEK 421 million and the higher purchase volumes to reduce the risk with a shortage of components. Accounts receivables was up SEK 1.4 billion, mainly as a result of Centralpoint adding approximately SEK 1.2 billion and the rest explained by the higher business volumes. In accounts payable, which was SEK 3.713 billion, which was an increase of SEK 1.7 billion, Centralpoint added the majority of the difference compared to last year. In total, we continue to see strong performance in the area of working capital, where we continue to stay in or below our target range of negative SEK 100 million to SEK 200 million. Leverage, that means net debt in relation to 12-month rolling EBITDA, at the end of Q1 was 3.1, including rolling 12-month EBITDA of Centralpoint. And as you remember, our target is to stay in the range of 2 to 3. Strong operating cash flow reduced the leverage from 3.4 at the end of last year to 3.1 at the end of Q1. Moving on to Slide 8 and cash flow. Cash flow for the quarter was SEK 294 million. That's compared to SEK 176 million last year. If we look at the parts and cash flow from operating activities before change in net working capital was SEK 283 million compared to SEK 169 million last year. Change in net working capital was SEK 86 million positive compared to SEK 96 million positive last year. And there, the difference is mainly the increase of inventory that is due to the market turbulence. Cash flow from investing activities was negative SEK 40 million compared to negative SEK 52 million last year when majority comes from CapEx. Cash flow from financing activities was a negative SEK 35 million compared to negative SEK 37 million last year, where the mean -- it's mainly because it's of reduction of lease liabilities in line with IFRS 16. Looking at the investments in some more detail. Total investment amounted to SEK 81 million compared to last year's SEK 53 million. CapEx-related to IT development was SEK 19 million compared to SEK 10 million last year, the main difference came from the investment we are doing in Centralpoint IT platform. Investment in tangible and intangible assets too was SEK 46 million compared to SEK 33 million last year, where new circularity center [indiscernible] was finalized during the quarter. Investment in assets related to services was SEK 17 million compared to last year's SEK 12 million. All in all, SEK 40 million out of the SEK 81 million in CapEx was affecting cash flow. The others will change, increase or rent contracts. And like that we move back to Thomas.

[Thomas Ekman, President & CEO]

Great. Thank you, Johan. And let's continue to Slide #9. As mentioned before, we are entering a new chapter for Dustin and we expand our Nordic -- or our strong Nordic position to a European strong position. I know some of you tuned into our Capital Markets Day, we had this just before Christmas in November, but let me repeat some of our messages from that. We stick to our financial targets and aim to continue delivering 8% organic growth and also continue to search for bolt-on acquisitions that can further increase our addressable market and our relevance for our customers. As you can see on this slide, we have different buckets and levers that will contribute to our target to be a SEK 40 billion company by '25-'26. First, we find growth, obviously, within our core business within SMB and LCP segments as well as we continue to grow within services where we see good development in recurring business and especially now in the now integrated bolt-ons that we have previously done. Then we work on the integration of Centralpoint. And from that, we estimate synergies both on sales and costs. And then at the last bucket, you can see that we've given our stronghold now in the -- also in Mainland Europe, we'll continue to look and search for further geographical expansion. With our business model and approach towards both SMB and LCP, where we use a combination of push and pull sales, we see good potential in taking market shares and finding our customer segments also in new markets and territories. And with all these levers, we aim to reach SEK 40 billion in sales by '25-'26. And then over to next slide, Slide 10, on our margin development. We aim to reach a 5% to 6% EBITA margin even though we now take on more LCP volumes. We continue our automation journey, making us more efficient in delivery, operations and procurement. We also see opportunities with our scale to serve broader or a broader base of larger customers as well as increase our private label penetration, both in the Nordics, where it has been very successful and now we're also launching our private label sales in the Benelux. We are also, as previously announced, building up our own -- and as Johan also mentioned, our circularity center in South of Sweden, covering for the Nordics, and that will also contribute positively to the margin development. And when we enter a new region or market, it will have a short-term effect on the margin, but our many levers and our daily efficiency hunting will make us deliver on this target. And then over to Slide 11, adding to our pure financial targets, we, of course, also drive our sustainability commitments for 2030. We aim to reduce our CO2 emissions to 0, and we aim to have a fully circular offering by 2030 and also do 100 actions and initiatives to improve social equality in our value chain. For us, this is not something we do at the site. This is fully incorporated in our strategy, and we look at sustainability as a driver for increased profitability. We have and are doing a lot of actions here and some of the actions worth mentioning this quarter is the launch of our take-back production facility. That will increase the circularity, of course, but -- and give us growth, and it will also give us growth from the increased demand from our secondhand products as well as the margin expansion. We have also linked our long-term financing to our sustainability KPIs, which gives us a clear incentive to drive this. I mean, in short, if we perform as we want, we decrease our financing costs, and if not, we don't. But we will, and we know how to do this. Then combining with changing to renewable energy at all our sites and offices, we have also built solar cells on the roof of warehouse. And that's a good timing given the challenges and thermal and site demands that we have on the power market and electricity market in Europe right now. And that will, of course, reduce costs, but more importantly, will also reduce our emissions. So it's high activity in this area as well. So before going into Q&A, let me just sum up on Slide 12, our first quarter results. Net sales grew with 69% on reported level to SEK 6.2 billion, where organic growth for the group was 11% with SMB at a strong 11.7%, LCP at an equally strong 12.9% and B2C has at negative 17.4%. Gross profit at SEK 894 million versus SEK 577 million last year and gross margin at 14.3% versus 15.6%. And change in sales mix with the higher share of LCP tech and strong demand in hardware sales also drives a change in gross margin as when comparable numbers sits on the same level as last year. Adjusted EBITA passing now SEK 300 million at a good SEK 301 million, giving us an EBITA margin for the quarter at 4.8%, an increase from last year's 4.6%. And the initiatives and actions we have taken on the cost side, both strategic and short term has given effect as well as our strong performance, obviously, during the quarter at. EBIT at SEK 251 million compared to SEK 132 million and earnings per share EPS at SEK 1.47 per share versus last year's SEK 0.99. And on balance sheet, strong operating cash flow was into at SEK 369 million and leverage ended at -- for the quarter at 3.1, a good deleveraging from Q4 with 3.1 to EBITDA. So solid growth and strong earnings in the quarter with the pandemic still raging over the world. That has taught us a lot or teaching us a lot, not the least, a new way of working. The market trends have accelerated with distinct changes in customer behavior. The IT service demand is there, and there is an increased demand for instant availability online as well as the underlying trend for security for mobility and for remote management. We have extensive experience and knowledge and can serve our customers in all our markets. And for us, these last years, I must say has meant that our position is clearly strengthened and shows that our business model is very robust. So in short, we are well positioned for what's going on in the world. I think with that Johan, we can conclude our presentation, and we are happy to take any questions you might have. Operator, will you support in doing that?

[Operator]

[Operator Instructions] Our first question comes from Daniel Thorsson with ABG.

[Daniel Thorsson, Research Analyst]

First question on the reclassified costs from Vincere the central costs in SMB. Should we see these costs as scalable going forward or should they grow in line with the rest of the business as if they were a part of SMB?

[Thomas Ekman, President & CEO]

As you can look at them as the other central costs that we have that they are scalable going forward in the same level of scalability as we have in the rest of the business. So yes, they are moving into a more scalable platform than we had before.

[Daniel Thorsson, Research Analyst]

And that's the reason why you reclassify them, I guess, and move them to...

[Thomas Ekman, President & CEO]

Yes, it's actually -- yes, you could say that it's the step we are taking towards a more integrated way of working with the Dutch entity.

[Daniel Thorsson, Research Analyst]

Okay. And second question related to the market. You say that Norway is strongest, both in SMB and LCP, is there any reason for that? Or what's the main driver product or services wise?

[Thomas Ekman, President & CEO]

It's hard to say what is the reason. Norway seems to be doing quite well under the pandemic, but from an economic perspective, but we are really driven by hardware sales in Norway. We are doing very good there. We have a very good team in Norway that performs extremely well at the moment. So I think it comes from both external factors but also our own performance in Norway. Yes, it's a combination as usual of the economic activity, but also our own performance. So definitely a good market.

[Daniel Thorsson, Research Analyst]

Yes. Okay. Is it driven by any large tenders, larger deals or is it broad-based?

[Thomas Ekman, President & CEO]

Broad-based, yes, which is -- we find very good.

[Daniel Thorsson, Research Analyst]

Okay. And then the last question for me is obviously that the net effect from the supply chain issues are negatively by the fact that you cannot source everything but you are also positively affected by the fact that you probably are better off with the smaller competitors and you can drive prices higher. Do you think that the current situation has a net positive effect for you? And in what case can you kind of quantify that or what's kind of the magnitude?

[Thomas Ekman, President & CEO]

I think currently, it has a slightly positive net effect. In margin-wise, we see the possibility to, let's say, work with margins as we have supply and others don't. And obviously, being one of the biggest resellers in the Nordics and Benelux, we have the possibility to purchase. On the other hand, it adds to working capital, and it adds to the volatility of volumes coming in, let's say, that's the negative side. But overall, I would say we are slightly positive from this situation from our let's say, strong business model at this moment.

[Daniel Thorsson, Research Analyst]

Okay. Okay. Fair enough. I follow up with the last one. On the CapEx guidance, can you give us some hints on what to expect in the different quarters in this fiscal year from CapEx? I saw it was up more than twice in this quarter on the IT development cost, for example.

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes. I think we have said previously that you could expect the cash CapEx to be in the range of SEK 120 million to SEK 140 million on a yearly basis. And there isn't a big difference between the quarters, actually.

[Operator]

Our next question comes from Mikael Laséen with Carnegie.

[Mikael Laséen]

Okay. Three questions from my side. How would you describe the current supply situation for different hardware categories? And how this has changed last quarter and what you see ahead?

[Thomas Ekman, President & CEO]

In general, it has been -- it has -- I mean as you know, during the pandemic and also before the pandemic, there was a lot of semiconductor shortages, but that was there present before the pandemic as well. That has somewhat eased up a bit, but there are still shortages when it comes to other components in the computers. So it is a general shortage, but it's also not only a shortage from a production perspective, it's also the overall turmoil with harbors in quarantine and troubles in shipping and so forth. That is also putting extra pressure on this, of course. So there's no specific products. It is -- in general, as we said before, it is the more -- if you have a large order of customer-specific products and it might be harder to get everything in place in 1 go, but there are products available. And for us, as you saw also in this quarter, I mean availability for us is what drives the growth. So there are products available, but you need to be really on your toes. And I think our combination of automation and human interaction is what has given us a lot of benefit during this quarter.

[Mikael Laséen]

Okay. Is it going to depend on a well volatile on the shipping side that sort of comes in batches? Or is it sort of a steady flow or quite easy to foresee? Or -- so can you elaborate a bit on that?

[Johan Karlsson, CFO & Executive VP of Business Support]

I think it's -- you can maybe divide it in 2 different product categories. One is the 1 that are highly dependent or affected by the work from home like headsets and the equipment you bought in order to upgrade your home office, they have been on a shortage for a long time as a product group they are getting better now because, of course, the effect is less now than a year ago. If you then look at PCs and mobile phones, there it's a different kind of challenge we have because there, we are a broad liner. So we sell all the brands for PCs, for example. So 1 quarter, there might be an issue with supplies of HP and the next quarter, there might be on a Lenovo side. But there, we can equal out a little bit between the different vendors. But it continues to be a challenge if you would look at the total market. But as we are selling all the brands, we can kind of benefit a little bit from that portfolio risk.

[Mikael Laséen]

Okay. So how are you performing, do you think, compared with your competitors and other players in the market in the Nordics and in the Benelux?

[Johan Karlsson, CFO & Executive VP of Business Support]

Without knowing the details, it seems like we are performing maybe slightly better than the market.

[Thomas Ekman, President & CEO]

We believe we take -- we gained market shares in this quarter, we do. We can see that the benefits of having, as also mentioned before, as having the combination of a push and pull model has been really good. And we see now we have long experience in buying to our own stock and buying down warehouse and make use of that model. So that is really paying off. has really picked off during this pandemic, I must say.

[Mikael Laséen]

Okay. And can you also talk about the sort of competitive situation right now and the market climate and the pricing climate?

[Thomas Ekman, President & CEO]

I mean, pricing has been, as we mentioned before, pricing has been up somewhat from some of the vendors. But overall, it is obviously a competitive market given that IT as such is moving in more to the heart of every business and it's more crucial than before for everyone. So in that sense, of course, there is the underlying economic activity and underlying demand is strong. But as in all markets where there is high demand, there's also a lot of competitors coming to the market. So -- but I think there, our business model and our strength and our scale, of course, gives us benefits to be able to deliver. But again, I think it's the possibility of have everything available for the customers. So the instant availability is what has been an important driver during this quarter. And there, we -- I must say even though being humble, I think we have taken a good position there during the quarter.

[Mikael Laséen]

Okay. Got it. And I just have 1 follow-up here on the sort of why you shifted costs from the SMB and LCP segment to central functions? If you can elaborate a bit more on that and explain that more in it detail?

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes. Let's -- when we acquire a company before it's integrated, we keep all there, let's say, OpEx cost as segment cost because they don't form part of our, let's say, group functions as not integrated. And that has been the case within the Netherlands up until this quarter. So what we have done now is that we are classifying their cost because they participate in the, let's say, dusting platform cost as of the first of September. And therefore, the costs that were previously in segment costs is now classified as central costs, that has this effect on moving costs, let's say, down in the P&L from segment cost to central and that has the effect of 1.1% approximately on the SMB margins and 0.3% on LCP.

[Mikael Laséen]

Okay. And...

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes. It's actually -- it's an integration move that we are making with the total group that we haven't done financially before.

[Mikael Laséen]

Okay. This makes it a bit difficult to evaluate the performance of the margin development for SMB and LCP and compared to central functions and how we should look at that historically and also going forward, but I assume that this will be the same also in the coming quarters that we should add 1.1 percentage points to the SMB margin and so on. And what happens when you do this with Centralpoint or have you already done that?

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes, we have already done that. That's a progress from previous ways of doing it. Yes.

[Mikael Laséen]

Okay.

[Johan Karlsson, CFO & Executive VP of Business Support]

So this is basically the larger chunk that you will see moving in this direction. And as you say, indication-wise, it will be the same and move every quarter.

[Operator]

[Operator Instructions] Our next question comes from Erik Elander with Handelsbanken.

[Erik Elander, Research Analyst]

So yes, I was just wondering about the -- what is actually driving the demand that you have -- that you see in the market right now? And the reason I'm asking for that is that we saw in 2020 due to the pandemic that people work from home and then you got a boost from the home office in terms of hardware sales because in 2019, before the pandemic, the hardware market was really weak. Is it still the home office sales as driving the demand in the market or what is actually the difference between 2019 where the hardware market was weak, 2020 when it was strong due to the home office purchases and right now and what you see in the future?

[Thomas Ekman, President & CEO]

I think overall, you can say that there is a strong -- I mean, overall, there is a strong economic activity, obviously, in as a whole that is. And -- but it has also what has really happened during the -- since 2019 is that the importance of IT and we actually -- the usage of all the applications that everyone is now using, I mean previous -- in 2019, the usage of Teams were nothing compared to what it is right now, which demands more power in the computers, it demands more processor power. It demands the other types of graphic arts, it demands other types of specifications in the computer. And that is going on in all companies. Everyone is leveling up on this. And you need to have a better capacity in your networks in the company. You need to be more secure. So there are a lot of investments, which are -- which we could have seen coming or we have talked about it for several years also before the pandemic that this is where we're going, given that the world is going more digital. But the pandemic has, of course, boosted this a lot. So we have taken the leads that we are talking about before. And we see also that the upgrading of home offices also continues that you are -- I mean the first 2020 move was to get everything up and working and everyone was sent home and started to work on home, but now you're upgrading as your home office, you need a better screen, you want the better workspace at home or where we work and many companies are moving from towards laptop usage. So there's a lot of peripherals also selling, of course, like docking stations and keyboards and larger screens, et cetera and better camera. So there are a general upgrade, which we -- I mean, you can see continue because of the fact that we have learned a new way of working. So I think there's an overall uplift in the IT environment in both within the company, but also in the other workspaces like for home, for example.

[Erik Elander, Research Analyst]

Okay. So it's basically a structural change, which is positive for you? And how long do you expect these kinds of investments and upgrades to prolong for? Is it like 5, 10 years? Or do you see an end to it? Because historically, when I look at your organic growth numbers, it tends to be a little bit lumpy. One year it's very good, due to, I guess, high investments among customers and the other year it's a little bit weaker because prior year was the bump and then you get a little bit of that the year after. Do you see it's going to be structurally at a higher level due to this kind of upgrade trend going forward?

[Johan Karlsson, CFO & Executive VP of Business Support]

I think the average spend per, let's say, employee is higher. That's going to stay. So we don't see any reason why that should not be continuing. However, obviously, to reach that higher level, we have had a bit of a boost now to upgrade everyone because no one was on the higher level before. I think going back to your comment on the been bit lumpy, I mean, we should remember that our -- in the historic numbers, at least we have been affected by the SMBs quite a lot, and they are a little bit lumpy in their behavior because they react to the economic outcome in a -- yes, they get cautious and they then stop buying a little bit and then they come back and continue to buy again. So that's the way see coming from the economic activity of each of our markets. And that will continue. But obviously, now right now, that has a lesser impact on the total sales because now LCP is slightly higher on share at the moment.

[Erik Elander, Research Analyst]

Okay. Great. So I mean, at the moment, you are performing really, really well, and you have done that for some quarters right now. And this really feels like, yes, it's really flying for you fundamentally. What -- if the things go -- does not go according to plan for 2022, what has happened, meaning what keeps you up at night? What could go wrong for Dustin right now this year?

[Thomas Ekman, President & CEO]

There's a lot of things not -- we sleep well at night, but course we work a lot in the day. But we -- I think, overall, it's for us to continue to be on the toes, continue to be on our toes for sourcing, for overall procurement, be very close to our vendors, we're very close to our partners. But in general, it's more if there are other economic terms in the society that can affect us. But as Johan was before, we are a broadliner and we sell a lot of rent. So we're not specifically sort of linked to a specific brand. But for what we can see now is that the IT market as such will continue to develop. And then if we continue to move even closer of importance in companies. But it's just -- we have -- our crystal ball probably looks like yours and see how will the future develop. But it's just to continue to be where we are and be awake every morning for what can come our way. and be relevant for our customers. I think that is the most important part.

[Erik Elander, Research Analyst]

Okay. I'm very glad to hear that you sleep at least. I did to, actually. But then I have a last question and that is related to the fact that you want to expand geographically. And -- I mean given what -- where you are right now in Europe, at least in the Nordics, you are a really strong position already. But in Europe, you are mainly Benelux region. And then if you go to the right on the map, you have Germany, which has a very big German player. And then if you go to the left of the map, you have the U.K., you have some other big players also listed companies as well. So where could you actually go given that this is really a volume business and have a competitive edge duty?

[Thomas Ekman, President & CEO]

I think overall, also the reason for us moving into Benelux is, of course, that we see as was into also and before is that we see that our business model is very good to export. And we have a slightly different models than the other competitors, you are talking about here in Germany, for example, where we have nearly a consumer-driven model towards SMBs, which is not the typical thing that is possible to get in other countries. And we see, of course, the opportunity of building that up with all the experience and all the knowledge we have. And it's not something that you just can do just like that. It just not start up and then started because it's a complete change of how you do your business if you go that way. So I think we are also perceived from our competitors in Europe that we have another model, a slightly different model, even though we work in the same market. So we see potential, of course, in that. But what we look for is to see where we can find the same customer behavior, where we can find markets where have Internet usage and Internet networks that are up to speed and markets upward change in all markets right now in Europe are changing a lot, and there are new demands coming from, especially the small and medium-size companies. But with that said, also for us entering a new market, we have seen that our way of entering market is to find preferably an LCP player where we can build volume from and from that scale out to SMB as we do now in the Benelux. And that has been the same table we have used sales in Finland and in Norway and in Denmark in the same way and then build out the strong SME position from an LCP volume perspective. So that's what we continue to look for. And we see the possibility for that. So that's what we do.

[Erik Elander, Research Analyst]

You basically feel that if you were, for instance, enter into Germany, there will be room for you and the B2B?

[Thomas Ekman, President & CEO]

Yes, yes, yes. I mean if you talk about fragmented market, then you can say that Germany is 1 of the most fragmented market.

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes. There are like 90,000 companies stating that they are IT companies. So there are a lot of room. But competition also builds the market, and we see an opportunity, of course, in taking on that.

[Operator]

There are no further questions. I hand back over to our speakers.

[Thomas Ekman, President & CEO]

Great. Thank you very much, and thank you, everyone, for tuning in and listening in and just get back to us if there are any more questions, and we'll see each other soon later on here. Thank you very much.