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Dustin Group AB
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Welcome to the Dustin Group Audiocasted Teleconference Q2 2022. [Operator Instructions] Just to remind you, this call is being recorded.
Today, I am pleased to present CEO, Thomas Ekman; and CFO, Johan Karlsson. Please begin your meeting.
Good. Thank you very much. Good morning, everyone, and most welcome, both our existing, of course, the new and potential new shareholders to our second quarter presentation and conference call. I hope you are all well. Here on my side of the call is myself, Thomas Ekman; and Johan Karlsson, CFO; and Fredrik Sätterström also, Head of IR, in the room as well.
So today, we present our second quarter results for our fiscal year '21/'22. And to start with, I must say, this has been, of course, a very special quarter, starting the quarter with more or less open markets and societies in December with then relaxed corona restrictions to complete lockdowns in all our markets in the end of December and January, causing a lot of challenges, of course, and then to fully open markets again in February. And then a couple of weeks later, into a catastrophic phase of the Russian invasion of Ukraine.
And so a lot of turmoil. But despite all this, we continue our growth journey this quarter with 80% reported growth and a very strong 12.2% of total organic growth. Margins, which we'll come into later on, were impacted by mix effects driven by high deliveries of low-margin products and temporary cost increases due to a lot of sick leaves in the mid of the quarter and also, of course, the higher share of LCP sales in general.
And as always, I've said this before, but I'm always very proud of everyone in Dustin Group for doing their utmost every day to deliver a great customer experience and this second quarter very much put the light on the skills and competence and engagement we have in the group. Given the turmoil in the world and the effect, of course, it has amongst us humans and our work, the supply chains are continuously disrupted and driving an intense work in sourcing and delivery. But despite all these challenges I've said, we managed to have a double-digit growth and captured the demand from our customers.
And the second quarter once again shows that availability and delivery capacity, it is the driver of high growth and drives -- generates high growth. And that, of course, builds on our cash-generative and asset-light business model.
So let's proceed in the presentation. And for your reference, we have Dustin at a glance on Slide 2, but I think we can move directly to Slide 3 for the financial highlights to see how we are performing during -- and improving during this quarter. A strong organic growth of 12.2%. We have strengthened our position in the market, and our productivity and position in the value chain, of course, benefited our performance.
Our EBITA margin was impacted by customer and product mix effects as well as temporary cost increases due to corona lockdowns. Adjusted EBITA increased to SEK 275 million, while the EBITA margin came in at 4.2%.
Our SMB segment performed strongly on both the growth and margins in the quarter. And our LCP segment had a very strong growth, while slightly lower margin due to high share of sales of low-margin products such as PCs, Apple mobile phones and software.
The market trends that we build our strategy on, the online shift, growth mobility and cloud services, demand for predictable IT costs, focus on security and integrity and, of course, sustainability, they have continued during the quarter to increasing importance. And that, of course, makes also our long-term position better.
So total net sales were SEK 6.6 billion, up with 80% versus last year on a reported level. And the organic growth, as said, was 12.2%, of which SMB showed a positive 10.1%, LCP has a very good 17.2% and B2C a negative 22.4% as an effect of much less campaigning due to the overall shortages of products. Overall, good organic growth and strong, which shows not only a good underlying demand but, of course, also our capability to make use of it and deliver.
Gross profit was SEK 904 million compared to last year's SEK 591 million. That gave us a gross margin at 13.7%, down from last year's 16.1%. The change is mainly attributable to an altered mix with higher share of sales from LCP and within LCP. And that, of course, relates to the acquisition of Centralpoint together with higher organic growth also in LCP.
Our adjusted EBITA increased to SEK 275 million versus last year, last year's SEK 201 million. And as said, that gave us the adjusted EBITA margin of 4.2% for the quarter versus last year's 5.5%. And the EBITA margin was affected by the customer mix towards LCP and the product mix of lower-margin products within LCP as well as the temporary costs obviously before in the quarter, the sick leaves in December and January.
Items affecting comparability was minus SEK 13 million, and that consequently giving us an EBIT of SEK 220 million compared to last year's SEK 177 million. And EPS, earnings per share, was SEK 1.27 per share versus last year's SEK 1.34. Strong cash flow from operating activities at SEK 388 million versus last year's SEK 218 million.
And our leverage at the end of the quarter was 3.3 versus 2.0 last year, increased obviously because of the acquisition of Centralpoint and the dividend payout during this quarter. And we are working our way down in leverage to come into our range of being between 2 and 3x versus EBITDA.
So apart from an intense quarter in general, from an operational perspective, we have continued the integration work with Centralpoint and former Vincere companies in the Benelux. We've also come further with our Nordic integrations with, for example, now Danish Exato now fully integrated.
So Johan, you can take us through the financials on our different segments. Going to Slide 4 then.
Yes. On Slide 4, SMB. Sales for the quarter in SMB was SEK 1.941 billion. That was an increase of 20.2% over last year, representing an organic growth of 10.1%, as Thomas mentioned. Sales growth continued to be strong despite the challenges in the global supply chain and with a very high underlying demand.
During the quarter, we saw strong demand for hardware in general, but computers and mobile [ calls ] in particular. All customer groups in the segment performed well, however, the largest customers performed the best.
On the services side, the standardized managed services performed well, while the consulting business was down from last year. This is a result of higher standardization of the service portfolio and in line with our strategy.
From a geographical perspective, sales was strongest in Norway and the Netherlands. Segment result for the quarter ended at SEK 214 million, up 26% year-over-year. Segment margin was up from last year's 10.6% to 11.0% despite a negative effect from customer moves affecting margins negatively with 0.3%.
Private label continues to contribute positively as we are increasing sales in both Nordics and Benelux. And also, using the supply chain challenges to our advantage was improving the margins. However, the quarter was also affected negatively from high share of computers and mobile phones with lower margins and by higher cost for delivery coming from the high sick leaves due to COVID. The delivery cost issues was mainly affecting December and January and is now back on normal levels again. In summary, we saw the same trend in demand for IT products and services in Q2 as we did in Q1.
We then move to Slide 5 and the LCP segment. Sales in LCP was SEK 4.533 billion in the quarter, which was an increase of 139.3%, of which 17.2% was organic. During the quarter, we saw a very high sales increase in both public sector and large corporates. As our quarter 2 contains the end of the calendar year, we also had strong sales software in December. This was affecting sales positively, but margins negatively. Sales in the quarter from software was up by 300% compared to the same quarter last year. From a geography perspective, growth was strongest in Sweden, Norway and Denmark.
Segment margin was at 6.5%, was down from 7.2% last year. As said before, product mix was affecting margins negatively as software was increasing in share of sales. Further to that, large inbound deliveries to fulfill the large rollout commitments further weakened the margins. Also higher cost in delivery, as mentioned, in SMB was affecting the LCP margins.
However, product -- private label product increased as we were expanding in the Nordics and launching in Benelux, and this contributed to higher margin. The customer transfers from SMB and cost reclassification added 0.7% to the segment margin compared to last year. Segment result was up from last year's SEK 136 million to SEK 298 million, an increase by 119%.
We then move to Slide 6 and the B2C segment. The B2C segment lost 20.5% of sales and ended with SEK 139 million of sales. The main reason for the lower sales was the reduction in price campaigns as the supply of product was scarce and all focus on delivery was put on SMB where margins are higher. Segment margin went up to 9.6% from 8.6% last year due to the lack of price campaigns, which usually affects the margins negatively. Segment result was SEK 13 million, which was down from SEK 15 million of last year.
Let's move to Slide 7 and net working capital. Net working capital continues to perform well. It was negative SEK 433 million compared to last year's negative SEK 549 million. You can compare it to also Q1 of this year, and net working capital in this quarter was approximately SEK 100 million lower. But as in previous quarters, we have seen negative effects on inventory levels coming from turbulence in the supply chain, but this has been compensated by longer payment terms to suppliers and more effective payment process from customers.
We look at the details of working capital. Inventory in the quarter was SEK 1.259 billion compared to SEK 574 million last year. The main reason for the increase was the inclusion of Centralpoint, adding SEK 476 million, and higher purchase volumes to reduce the risk of shortage of components. Accounts receivables was up SEK 1.351 billion mainly as a result of Centralpoint adding SEK 995 million and higher business volume coming from the strong organic growth.
Moving to accounts payables, which was SEK 3.784 billion, SEK 1.753 billion higher than last year, again, Centralpoint added the majority of that 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, as we heard before, that is the net debt in relation to the rolling 12-month EBITDA, at the end of the quarter was 3.3, including rolling 12-month numbers for Centralpoint. And as you know, our target is to stay between 2 and 3. The effect compared to last quarter was mainly coming from dividend and a slightly higher net debt due to currency differences in the debt number.
We then move to Slide 8 and look at the cash flow. We can see cash flow for the quarter was SEK 15 million compared to negative SEK 32 million last year. If we look at the parts, cash flow from operating activities before change in net working capital, SEK 278 million compared to SEK 207 million last year. And change in net working capital was SEK 110 million compared to SEK 10 million last year. The main difference came from the increase in receivables.
Cash flow from investing activities was negative SEK 75 million compared to negative SEK 18 million last year where majority comes from CapEx investments. Cash flow from financing activities were negative SEK 298 million compared to SEK 231 million last year, the main difference being the increase in dividend.
When you look at total investments, they were at SEK 90 million compared to last year's SEK 43 million. CapEx related to IT development amounted to SEK 40 million, that was SEK 31 million above last year, mainly coming from IT investments in Centralpoint where we're moving the ERP platform to the cloud. Investments in tangible and intangible assets increased to SEK 40 million from SEK 24 million.
And last but not least in the CapEx, investment in assets related to service delivery was at SEK 9 million. It's basically the same level as last year. All in all, SEK 54 million out of the SEK 90 million in CapEx was affecting cash flow. The others were changes in lease or rent contracts.
And with that, moving back to Thomas.
Good. Thank you, Johan.
And then continuing over to Slide #9, and let's do a little deep dive in our EBITA margin development. As you know, our target range long term is between 5% to 6% EBITA, and we're not back there yet, but we are on our way. The challenging turmoil obviously affects us as -- I mean the challenging turmoil in the markets in general obviously affects us as everybody else. And to give you some flavor to it, you can see the graph at the left-hand side of the slide showing development since Q4 as a reference. And also, Q4 was the first quarter with fully Centralpoint in it.
And what has affected the margin in Q2 is, as we have been into before here, you heard from Johan as well, is the customer mix, with strong share of sales from LCP and within LCP. It has been a higher share of basic hardware in both segments as well as large software rollouts within LCP. And that has -- and to that, the temporary higher cost connected to the extensive absence we have due to corona lockdowns at approximately SEK 15 million.
We have also seen higher irregularities in the inbound deliveries caused by the disruption in supply chains, making it slightly harder to exactly forecast the estimated time of arrivals for products. And it is somewhat, of course, difficult to assess the short-term effects from both lockdowns in China as well as the Russian invasion of Ukraine and what might be the effect of all that. But I can assure you that we have our eyes on the margin [ ball ] to reach our target of being between 5% and 6% of EBITA.
And it is actually, as you also heard from Johan, it is also the share of between SMB and LCP. SMB had a good -- continued good performance with strong margins and good performance on growth, and the higher share of LCP sort of pushes down the margin somewhat. But that is also why we are working hard to increase the share of SMB sales in our core profile.
Good. Continuing then on to Slide 10 to give you also an update on our value creation agenda. And during the quarter, we have continued our rebranding activities in the Benelux with now all the former Vincere companies rebranded to Dustin. We have also initiated the rebranding of Centralpoint, and that will now take place in May, which is very exciting, of course.
We have also launched our private label product, as you heard from Johan, in the later part of the quarter. And that's, of course, very exciting given the -- given, as you know, private label is a good contributor to our margins. And the initial response also in the Benelux is very positive, so that is very promising.
Several group initiatives are also ongoing with now we're setting up a global procurement and vendor management team. That's being set up as well as the launch our group common cloud-based ERP platform. And that is built now from the Benelux side and then will be integrated also to the Nordics. And this platform, we aim to complete during the next fiscal year, planned in '22/'23.
And as previously announced, we plan to invest approximately SEK 50 million to extract the estimated annual synergies of SEK 150 million, and those will be fully implemented in the year of '23/'24. So we have a solid agenda to speed up our ability to reach our long-term target.
And continuing on the long-term agenda theme, let's move to the next slide, Slide 11. And let me just give you some quarter highlights connected to our 2030 commitments. During the quarter, we have launched our in-house takeback service also in the Nordics to increase circularity. We have a production facility south of Sweden to cover for the Nordics. And we also have the facility in south of Netherlands to cover for the Benelux.
Our circular share in relation to net sales now amounts to 19.7%. And since -- and we have, since launch in the middle of the quarter, sold also refurbished products for around SEK 5 million, which may not sound so much, but with SEK 5 million, but it's a very important milestone to start off this in the way we do. And we can already now see the margin contribution possibilities this will give to us going forward.
And we have also finalized our solar cell facility, which enable us greener warehouse and lower electricity costs. And all in all, we work hard to fulfill our 2030 commitments, and we are on a good way there.
So before going into Q&A, let me just sum up our second quarter results on Slide 12. Net sales grew with 80% to, on reported level, to SEK 6.6 billion where organic growth for the group was 12.2%, with SMB at a strong 10.7% (sic) [ 10.1% ], LCP at an equally strong 17.2% and B2C at minus 22.4%.
Gross profit at SEK 904 million versus SEK 591 million, and gross margin came in at 13.7% versus last year's 16.1%. And change in sales mix, as we've been into, with higher share of LCP sales and higher share of -- or vast deliveries actually of basic hardware and software is behind the change in gross margin.
And adjusted EBITA came in at SEK 275 million, giving us an EBITA margin for the quarter at 4.2% due to the flow-through of the reasons for the drop in gross margin and the extra cost due to the temporary corona restrictions. EBIT, that's SEK 220 million, an increase from last year's SEK 177 million. And EPS at SEK 1.27 per share versus last year's SEK 1.34.
On balance sheet, strong operating cash flow at SEK 388 million, and the leverage ended in the quarter at 3.3 at EBITDA. So solid growth in the quarter with mix effects negatively impacting the margin right now.
The pandemic is still present in the world, teaching us a lot and not the least a new way of working. The escalation of the war in Ukraine and the Russian invasion of Ukraine also puts pressure. And of course, we sincerely hope for an end to that. The market trends continue to accelerate with the distinct changes in customer behavior. The IT service demand is there, and there is an increased demand for instant availability online as well as security, mobility and remote management.
Security and knowledge around cybersecurity is obviously a big topic at the moment and will continue to be, given the overall uncertainty in the world. We have extensive experience and knowledge in that, and we can serve our customers in all our markets in those areas. And for us, I must say, the last years has meant that our position has clearly strengthened and shows that our asset-light business model is very robust. So in short, we are well positioned.
And with that, Johan, I think we can conclude our presentation and are happy to take any questions you might have. So operator?
[Operator Instructions] And our first question comes from the line of Daniel Thorsson of ABG.
I start off with a question related to software. You say that software sales are up 4x in the quarter, but that is not affecting the margin that much, it's actually diluting the margin. How should we think about that in the future? And what type of software is it? Is it like Microsoft licenses or anything else?
Yes, indeed, when we talk about it in this perspective, it is large deals with, in this case, mainly Microsoft licenses, yes.
Okay. And they'd be a margin more or less in line with the basic hardware sales, I guess?
Lower, much lower than the...
It's lower.
Okay. And then secondly, on the -- yes, go ahead.
No, I think you can split software into groups. These are these larger, let's say, one-off deals with low margins, and then you have other types of software which actually is relatively good margins. But it's not all software that is diluting margin at all.
No, exactly. Exactly, I imagine that. Can you give an example of a high-margin software deal?
Well, that you can do Office 365 is much better than, let's say, these big rollouts for large customers. If you do it to small customers, let's say, that's more in line with hardware sales.
Okay. Okay. And then secondly, on the COVID effects here in the quarter, what part of the organization caused the SEK 15 million negative effect from sick leaves? Is it mainly the logistic centers? And is that fully behind us now as of Q3?
Yes, it is. You're correct in both. It is the -- it was the logistics center. And it was, as we remember, we have nearly forgot it, but it was in January and December when we had a quite strict quarantine rules, so people were sent home. And then we had to have extra personnel in and that was causing the cost in the warehouses primarily. But that is sort of behind us now.
Okay. So you could still deliver the product, but it costs you more money. It was not the loss of sales.
No. No, it was not. So we had to bring in a lot of extra people to the warehouses.
I see. That's clear.
So that was the cause.
Yes, I see. Okay, that's clear. And then finally, how should we think about your service organization as a margin driver? As you have now decided to trim that a bit post the pandemic, sales from services are declining year-over-year, is that still an important contributor for you to reach the margin target? Or should we expect that to come back? When should we expect that to come back?
I think it is an important contributor to the margin target over time. What we see in services is the transition from, let's say, the old world of selling services to the new world of selling services where we come -- where we are transforming, let's say, highly customized service offerings to standardized. And that means that you will basically sell less of time and material consulting and you will sell more of standardized managed services. And that, in the long term, that is really good for the margin and also really good for the relevance to the customer, us becoming more -- speaking to the customers with that offering. So I think it's really a margin contributor going forward. But of course, the transition from the old way of doing it to the new way is, in some cases, painful.
Okay. And is the market development in favor of standardized managed services at the moment? Or do you expect that to happen maybe in 2023 and onwards? Is that more of a bet you're taking on the future or something you see right now?
No, we see it right now. And we are doing quite good in that sector. But because of the mix, let's say, within services, it's hard to see it on the total number. But from standardized services, we are growing very well.
And the more, just to complement that, the more complex sort of the IT world becomes with complexity and security and mobility, the more standardized solutions you tend to seek for as a company. Even the most sort of a tailor-used CIO is seeking for standardized solutions right now because you need to have that in order to be safe and secure in your networks.
Currently, we have one further question in the queue. [Operator Instructions] And that next question is from the line of Mikael Laséen of Carnegie.
I was just thinking about the Central functions costs, how we should sort of model that going forward, if you can help us out a bit. It increased quite a lot sequentially here. Should we expect the same level in the coming quarters?
I think the level where we are at the moment with the current activity as we are doing is the level we will see for some time. As you know, I mean, we added Centralpoint and we have included the central cost of Vincere. That affects the numbers, of course, from last year. But we are also driving a more aggressive IT agenda at the moment compared to what we did before because we believe that, that will drive the synergies and integration of Centralpoint in a better way.
So we are taking costs here that are higher than before and will continue for at least, I would say, 1 to 2 years because of that, the time it will take the whole group up to the cloud-based ERP and CRM platform. So I think you can see that number is a good number for at least for the next 4 quarters, let's start with that.
Okay. All right. And the same, I guess, is relevant for the selling and admin expenses.
Yes. I don't see that we have any special costs there, except for the SEK 16 million of delivery that was in this quarter that is odd. So I think that the numbers we have, minus the one-offs, let's say, or COVID effects in this quarter, it's a pretty -- it's a number we can keep.
Okay. There's no seasonality in that or it usually comes down quite a lot in the summer, for example.
Yes, because of holiday, I think that's maybe the reason for some of it. Because activity goes down a little bit during summer, and therefore, cost is usually a bit lower during that period. But if you take the other -- and that effect comes in our Q4, I would say, mainly. Even for the Netherlands, you would see that effect in August probably.
Okay. But in the near term, this level is relevant and where you're operating right now, I guess, around SEK 655 million.
Yes. Yes.
Okay. Another question here is on the product mix dynamics. If you can talk to us about that, what is sort of the difference between a weak mix in terms of EBITA margins and a strong mix? So the spread there and how we should think about this mix going forward, is this something that you see continuing right now that customers are demanding this type of products? Or how should we sort of model this?
I would -- if we start by looking at the variance of the mix and if you would start by, let's say, a gross margin around 15%, then you would see PCs and mobile phones being a couple of percentage points below that on average. And you would see accessories and these kind of product groups will be higher in general terms. And also infrastructure is higher, for example. Then -- so that would be the product category mix.
Then of course, you can add to that the customer mix. So if you are a little bit below on PCs, you would be even more below, let's say, if you sell to a large frame agreement public customer compared to the SMB customers that are relatively good margin also on PCs. So that would affect your mix when it comes to customers.
And then you have the third variance that you can talk about, which is the vendor mix. So meaning that if you sell vendors like Apple, you receive less margin percent than you do if you sell HP. So that would be your vendor mix. So all these 3 are, of course, working at the same time and all together. So that is a little bit what we have tried to explain in this call and in the report, that these are the things that has impacted the numbers for this quarter.
So this is an unusually sort of unfortunate sort of mix at the same time in all of these different segments.
Yes, you could say that it's rare that you have all these 3 moving against you because sometimes -- most of the times, you would have compensating factors, let's say, within this system. But now, this time, we got everything positive on volume, but then probably all the factors that could push the margins down was actually on the low side.
Okay. And your margin targets of 5% to 6%, what type of mix sort of is built into that assumption?
I would say it's a mix that you would take -- if you take the average of the year, if you go back a year and look at the total effect of what we had for that year, that's what we have based the target on, not on a specific quarter that can have pluses and minuses. So I think if you take a longer period, that will be the mix. We haven't assumed a change of, let's say, either brands or within the categories, let's say.
Yes, makes sense. And here in the near term, do you see that this mix is continuing into Q3 so far?
It's really hard to predict because of the turbulence in the supply chain. But if we get a release of some of the larger, let's say, deliveries, then of course, there is always this effect. But on the other hand, there is relatively good margins as we look at the backlog that we have at the moment. So that will compensate positive. So I think it will be -- I don't see that any obvious thing that it should continue on a very low level, no.
Okay. And my final question is on the general availability of IT products and how that has changed during 2022 and now in the short term after the invasion, if that's -- if you have seen any effects from that so far during March.
I mean, overall, it is a turbulence, of course. And it's -- we'll see what -- how it comes out with the effect from the invasion of Ukraine. That sort of disrupts this or with the ways the goods travel, whether they go by plane or by train or by both. And so it creates an overall turmoil. Then what creates right now more is how actually China also will deal with their -- they have, as you know, they have 0 vision for corona and they closed down and open up. And that, of course, affects the deliveries from China.
But in general, we are -- as we have been on the other quarters, we have been very much on our go-to to source and find products and take them into our warehouse and use our model for that. And that has proven to work very well. So we see it as probably as it has been during the full pandemic, but now with extra attention to it, of course, given the invasion. But that is -- from this perspective, it's a part of the world that does not disrupt the sort of the traditional value change that much, but it, of course, disrupts in general the [ EBITA ]. But it's the same level as we have had before.
Okay. Can I just follow up with one final, yes? It's all on transportation, logistics costs, if that is impacting your margins in any way or if the distributors or OEM side is taking that.
I think you can say that, yes, it impacts because prices are very high. We can see it on our own private label. We have, let's say, our way of operating, that is, of course, to add that to the price of the customers. But in the times like this, it's sometimes hard to raise your prices fast enough. So there is an inherited maybe a smaller loss of margin from a time perspective as how fast can you cover up for the increased cost primarily on transport line, but no big impact coming from transportation on our own margin, rather on price to customer.
And we have one further person in the queue, that's Erik Elander of Handelsbanken.
So I mean it's pretty good now. You have been over 10% organic growth for 3 quarters in a row. So obviously, the demand for your products and services is out there. But now we have the corona situation in China, we have the semiconductors, might be issue -- or have an issue with the Ukraine-Russia war and the freight or shipment issues that you talked about as well.
I mean how should you look at this? Can you actually continue this organic growth roll that you actually are on and have been on for like 6 quarters or something? I mean, volume-wise, I guess it will be difficult. But on the other hand, if there's great demand, it should be compensated by prices on the same products. Or how should we look at the organic growth potentially in the coming quarters?
I think we -- I mean, first, there is, as we said, there is a strong underlying demand that it is, and there is a change in customer behavior that sort of is behind this. And there is also a need for upgrading in terms of systems when it comes to security and mobility, for example. So that, we see right now, it's continuing.
And then over to the interesting question regarding pricing and the overall inflation, of course, as you know, our product is quite sort of a -- the pricing is sort of set in the market in a way. But of course, we compensate where we can increase prices wherever we can at all times, using our, what we have talked about before, our dynamic pricing model. But it is as a short term, as Johan was endorsing, it's, of course, affected by the share, the mix of -- between the segments, how much LCP rollout we have versus how much SMB rollout we have.
So -- but we still believe there is a demand. But for us, it's more -- going forward, I think it's more the balancing between the margin and the growth here that will be even more delicate for us to drive, to continue to find the growth, but -- and which we can do, but also securing that we do it with the right margins.
I also think that -- I mean I think -- I mean we haven't changed our view that 8% organic growth over the cycle is the one we are chasing. We had some difficult quarters before the pandemic, and now we have done very good in the last couple of quarters. I think it shows that our 8% on average is not such a bad number. And of course, it will not stay at double digit forever. So it's a strong period now. And it will -- I think, naturally, goes a bit up and up in the quarters.
But we stick to the 8% and the 5 -- 8% growth and then 5% -- 5% to 6% EBITA margin.
Yes. Yes, because the thing here is that I was just wondering that, I mean, this is my very amateurish conclusion about when a lot of people want the product and the product is not available, the prices on the products should go up. And why I made this -- why I say this is because, I mean, electronics industry has been on the price decline for a long period of time. But now, since there are more things than ever, it needs to be done within this industry and the people realize that, okay, it's not as easy as it was before to get the product due to the corona situation, due to the shipment issues and so on. The same products should go up in prices. That's my conclusion at least. Or what's wrong with that kind of argument?
And that's a good conclusion. If you look at the SMB market, where we are kind of setting the price in the market and where we are also having better margins than in a long time, so it does affect actually our margins in SMB positively. But on the other side, you have the public tenders. And there, unfortunately, supply and demand doesn't affect that much. So there, you don't see the same thing.
So -- and there also, the contracts are set, and that has been, of course, challenging. With that, there's a long delivery time. So the contracts are set with the prices and then we deliver sort of on those prices that were -- and the contracts were set. And we see, we don't have any negative effect of the cost for the products, but it's still based on the pricing that we set at the time. So it's more the old pricing of the products.
Yes, because somewhat that's really weird to me. I mean the public sector can buy like 2,000 computers. And you have to buy 2,000 computers from somewhere else in the global market in order to get that kind of volume, but then the customer doesn't pay for it. So it means basically that you have negative margins then on these framework agreements. Or is that correct?
No, no, no.
In most of the contracts or basically all contracts where we have a price commitment, that price commitment, we have a back-to-back agreement with the manufacturer or with the brand.
Yes, yes. So we are not squeezed.
Okay. Nice. Then I also had the other question related to your friend or your enemy or however you like to say it in Norway. They have been much more severely impacted by the supply chain issues over the past 2 years than you have been because they sell a lot of more servers, for instance, than clients. What I also saw was that Dustin was one of the providers now for a Swedish framework agreement for selling just servers. How much of your sales is clients versus servers, for instance? And also, are you expanding into servers?
Well, to start with, infrastructure and including servers are a relatively small part of our sales. I mean clients and associated products, so clients are probably 5x as big or 6x as big, which is, as you rightly say, it's the opposite probably for or not, but a very different split in our friends in Norway. So that is clear.
We are, I would say, not increasing that much in that area. We are increasing a little bit because we are adding functionality to our own platform. So it's possible to sell these kind of products, but not rapidly increasing. We are increasing, however, on the, let's say, SaaS products of infrastructure because they fit our sales model much better. So we rather sell infrastructure on tap through a SaaS arrangement rather than selling the server as such physically. So we have changed. We are using SaaS as a delivery model or cloud as a delivery model rather than selling hardware in that sense.
That's the model.
Okay. I like that you call them friends and not enemies. You're a promising sign for humanity, Johan.
Thank you.
Yes. So yes, just the last question that, I mean, Q2 is actually a kind of high-margin quarter generally for Dustin. And now you've been at 4.2% this quarter. Should we expect that you could go down below 4% in the coming quarters, given that Q3 and Q4 are generally much weaker than Q1 and Q2? Or how should we look at that?
Well, I think you're right in seasonality. Q2 is normally a strong quarter. And you could see that last year, it was probably the highest number we ever posted, a bit affected by the cost reductions coming from COVID. But I think you should normalize this quarter and then look at the future, which means, yes, that we will come to weaker quarters seasonality-wise, but they will become better from, let's say, all these mix issues that we talked about now. So I don't see any reason why we should now, let's say, use this quarter to extrapolate seasonality and then end up with a very low number. I don't see that coming.
As there are no further questions in the queue at this time, I will hand back to our speakers for the closing comments.
Very good. Thank you very much, everyone, for listening in. And just reach out if you have any further questions to us, and we will be happy to respond to that. Apart from that, have a great day and stay safe out there. Thank you.