Inwido AB (publ)

STO:INWI

Earnings Call Analysis

Aiming for Significant Growth by 2030

Inwido has set an ambitious goal to achieve SEK 20 billion in turnover by the year 2030. The company is strategically positioning itself as Europe's leading window group, focusing on sustainable growth through acquisitions and capitalizing on the EU's green transition. Currently, Inwido operates 35 business units across 12 countries, primarily in the Nordics and the U.K.

Financial Highlights from Q3 2024

In Q3 2024, Inwido showed signs of resilience despite declining market conditions. The order intake grew by 3% and the order backlog increased by 9%, reaching SEK 2.6 billion. However, net sales dipped 3% on a quarter-on-quarter basis, with an organic decline of 1%. Operating EBITA stood at SEK 304 million, slightly down from the previous year but improving its margin to 13.4% from 13.2%.

Challenges in Specific Regions

Despite overall growth, regions like Finland, England, and Norway are encountering significant challenges. In particular, sales in Eastern Europe plunged by 15%, influenced by tough market conditions and substantial competition. The management remains optimistic, asserting that the company is gaining market share as others struggle.

Performance Metrics and Margins

Inwido's operating EBITA margin has improved, reflecting efficiency gains from prior investments, climbing to 13.4%. This margin is higher than in previous quarters but still below pre-pandemic levels. The company aims to maintain profitability while facing price pressures and fluctuating sales.

Investments and Capital Expenditure

The company has ramped up its capital expenditures by 20% compared to the previous year, now standing at 4.3% of sales. The increase aims at enhancing operational capacity and efficiency. Interestingly, Inwido's net debt decreased when compared to Q2, reflecting a seasonal cash flow characteristic typical within the industry.

External Market Dynamics

Looking ahead, Inwido anticipates tailwinds from external factors, notably the EU's Green Deal starting in 2025, which is likely to bolster demand within the renovation and new build sectors. Continued investments in product development and synergistic acquisitions will further reinforce Inwido's market position.

Key Performance Indicators and Profitability

Inwido's return on operating capital is currently at 13.1%, shy of the 15% target, largely affected by lower sales. The company reported a profit after tax that is 25% lower than the previous year, while earnings per share dropped by 28%. This underlines the importance of a stable market environment for future profitability.

M&A Strategy and Market Position

Inwido remains active in mergers and acquisitions, signaling a willingness to capitalize on industry valuations. The recent acquisition of Artic-Kaihdin represents the company's commitment to growth, particularly in sustainable product areas. Management views their M&A strategy as a core part of their growth framework.

Outlook and Expectations

Inwido expects to maintain its operational growth despite prevailing market challenges. Leadership is confident about improved order intake and stability in core markets as they continue to invest in expanding operational efficiencies. The management referenced ongoing efficiency improvements that may enhance profit margins once market volumes normalize.

Earnings Call Transcript 2024-Q3

[Operator]

Welcome to the Inwido Q3 2024 Report Presentation. [Operator Instructions]

Now I will hand the conference over to speakers: CEO, Fredrik Meuller; and CFO, Peter Welin. Please go ahead.

[Fredrik Meuller, executive]

Thank you. Good morning, everyone, and welcome to this webcast and telephone conference covering Inwido's third quarter and 9-month year-to-date performance in 2024. My name is Fredrik Meuller, President and CEO of Inwido, and joining me on today's call here in Stockholm is Peter Welin, our Group CFO. You know the drill by now. The structure of this call is that I will start with a run-through of where our group is finding itself right now, our latest achievements and financials. And then Peter will provide an educational deep dive into the financials at both group and business area level to pay close attention to this. And as usual, this presentation material is already available on Inwido's website.

At Inwido, we are on a mission, an exciting growth journey towards becoming a SEK 20 billion turnover company by year 2030. Through our 35 business units and across 12 countries, our employees are making good progress on that journey and it will be further boosted by the EU's green transition as well as by synergistic acquisitions. We are de facto Europe's leading window group with particular strongholds in the Nordics and in the U.K. This year we celebrate 20 years as a group, 10 years as publicly listed on NASDAQ Stockholm and Elitfonster are marking their centenary. So we're obviously in it for the long haul. Importantly, we are not just producing high quality windows and doors, we also improve people's quality of life through our energy efficient and aesthetically appealing solutions.

Now let's look at the quarter that just passed. And I'm proud and pleased to announce that our profitable growth has continued also across July through September. Both our order intake and order backlog continued to grow for the second consecutive quarter. Despite our invoicing being slightly down quarter-on-quarter, Inwido's operating EBITA margin edged higher than Q3 last year as a result of increasing efficiencies originating from our investments made in people and in operations. Importantly, our endless efforts to cater for the well-being of our coworkers are continuing to bear fruit in the form of further improved figures within both health and safety and sick leave. While leading market indicators are gradually becoming more positive, primarily within consumer related segments in Denmark and Sweden, we as a group are not yet out of the doldrums.

In fact several entities in Finland, England and Norway still face a tough market, substantial competition and related price pressure. In light of this, however, Inwido's business units handled the situation in an impressive fashion delivering on their customer promises and being perceived as a flight to safety when some peers struggle thereby gaining market share. On this slide, we summarize our key financials for Q3 this year relative to Q3 2023. Order intake grew by 3% also organically and our order backlog reached an impressive SEK 2.6 billion, up by 9%. Net sales in turn declined by 3% quarter-on-quarter, organically the decline was 1% reflecting the harsher conditions witnessed this year. In spite of this, our operating EBITA reached SEK 304 million, a tiny SEK 4 million down versus last year; but equaling a margin of 13.4%, up from 13.2% in 2023. All business areas fared better with the exception of Eastern Europe.

Net debt in relation to operating EBITDA went up from 1.1x last year to 1.2x now or 0.9x if not applying IFRS 16 accounting. Accordingly, safely within our set target and still offering ample room for, for example, acquisitions. All of our business areas performed well this quarter, particularly considering their different operating context. Scandinavia keeps delivering strong profit margins, leveraging its leading positions and enjoying a favorable mix. Within consumer, i.e., renovation, Denmark is rather stable and Sweden is showing signs of recovery, but Norway remains soft and so does new build across all 3 countries. Eastern Europe in turn bucked its sharp demand drop in new build by enhancing the efficiency of its operations. Both order intake and backlog grew nicely compared to Q3 last year.

Business area e-Commerce goes from strength to strength now growing both top and bottom line and taking some strategically important marketing measures that will pay dividends further down the line. Last, but not least, Western Europe's strong results now came from a broader base than last quarter where all larger entities performed well alongside Sidey and Carlson while still experiencing a tough market climate. If we stay with Western Europe, I'm very pleased to announce that Jonna Opitz has now been named permanent in her EVP role for this BA in addition to her responsibility as Head of Communications. So well done, Jonna, big congrats. Other examples of matters worth celebrating this quarter of course include our exciting acquisition of Finland-based sun protection supplier, Artic-Kaihdin as well as our continued investments in sustainability.

Listen to this: in our Sokolka factory in Poland, our new paint line will from now on save us some 23,000 liters of paint on an annual basis. How about that in terms of making a concrete positive difference to the climate. Time flies when you're having fun and since we are already in the month of October and since lots of achievements have been recorded across Inwido during the first 9 months of this year, it is worth taking stock of what some of those strategic milestones are. First, the addition of myself and Mikael Jonson to our group for our strong group management team and Board of Directors, respectively, is of course highly pleasing, he says humbly. The fact that we have developed and launched innovative and sustainable new products like the CO2 window in Finland recently or Elitfonster's energy efficient 100 series or Diplomat's collaboration with Yale on smart doors is so important for our organic growth and for solidifying our leading market position.

The Artic-Kaihdin acquisition also sent a strong signal that we are back on the M&A track. And while others have stepped on the brakes, we have done the opposite, investing further into operations and sustainability to come out from the cycle downturn even stronger. Getting our climate goals validated by the SBTi is yet another proof of us doing the right things. At the end of the day though, I'm most impressed by how we handled the sharp drop in demand in such an agile fashion without destroying either our short-term capacity or our long-term competitiveness. Those of you following us closely have of course registered that Inwido's performance has improved step-wise so far this year. Q1 was still severely hampered by low market demand, but in Q2 we started growing our order intake again and even more importantly, that pattern has continued also now in Q3 despite sentiment out there not being back where it should be. Do note that our profitability has remained rather high throughout all 3 quarters, I'm very pleased about that.

In short, our 9-month figures comprised an organic net sales decline of 10% and an operating EBITA margin of 10.2%, down from 11.0% in the same period last year. Return on operating capital has been 13.1% compared to 16.2% in 2023. And the negative delta in earnings per share before dilution from SEK 8.52 last year to SEK 6.12 is largely related to items affecting comparability and to positive currency effects in last year's financial net as per our Q2 communication. Now before I hand over to Peter, let me just briefly share with you a highly positive personal Inwido experience. This summer I replaced old windows and doors with new Elitfonster ones at my house on the island of Oland in the Baltic Sea. Yes, I'm biased and yes, I bought them prior to joining the company and yes, it's a big investment. But still, the seamless process in which our just-in-time delivery and top-notch quality is worth a lot in this business and above all, the fantastic impact this type of renovation has on your quality of life is just mind boggling. It goes far beyond "just windows and doors."

Peter, over to you. Please go ahead.

[Peter Welin, executive]

Thank you so much, Fredrik. And we start with the income statement. On this page, we can see the income statement for Q3 to the left this year as well as last year; in the middle we can see the development January to September; and then third to right, we can see the latest 12 months as well as full year last year. Starting with the quarter, sales was down by 3%. The organic sales decline is 1% compared to last year. The gross margin has been improved from 26.7% to 27.1% due to mix, but also positive development when it comes to pricing as well as sourcing as well as improved efficiency. The operating EBITDA as well as the operating EBITA has declined by 1% compared to last year and the operating EBITA margin has improved from 13.2% to 13.4%. Looking further down the income statement, we can see that profit after tax as well as earnings per share was minus 1% compared to last year.

Looking to development January to September, sales has declined by 4%. Organically, sales has declined by 10% equal to SEK 728 million lower sales compared to last year. The gross margin is slightly down compared to last year due to the performance in Q1 and beginning of Q2. Operating EBITDA is down by 7% compared to last year and operating EBITA is down by 11% compared to last year. And operating EBITA margin has declined from 11% to 10.2% and the main reason is the lower organic sales of SEK 728 million mainly from Q1. Further down the income statement, we can see that profit after tax is 25% lower than last year and the earnings per share is 28% below last year. And that gives us a rolling or the latest 12-month development of sales of SEK 8.7 billion and operating EBITA of SEK 947 million equal to 10.9% and an earnings per share of SEK 9.32 per share.

On this page, we are describing how we calculate the organic growth. We do it somewhat a little bit differently compared to some other companies. What we do is we recalculate last year. So if we start with Q3 in 2023, we had a sales of SEK 2.339 billion and then we add on on last year's sales the acquisitions and this is mainly then Artic that we acquired in September so we add on SEK 8 million because that was their sales last year in Q3 in September. And then we had a pro forma for Q3 of SEK 2.347 billion and then we recalculate the pro forma with the currency as of today meaning sales declined by 2% or minus SEK 46 million and then we compare to the sales development as of today showing an organic sales decline of 1% or SEK 29 million.

This page is showing a waterfall showing the sales development as well as the operating EBITA development for Q3 where you can see the different business areas and their performance. Starting with sales, we can see we have a negative sales development in Scandinavia of minus SEK 46 million as well as Eastern Europe of minus SEK 87 million and then we have a growth in e-Commerce as well as Western Europe and then group-wide eliminations and other is more or less the same as last year. Looking at the operating EBITA, it is from SEK 308 million to SEK 304 million. Scandinavia we have a decline of SEK 2 million due to lower sales, Eastern Europe is also decline SEK 20 million due to lower sales, we lost 15% of sales in Eastern Europe in the quarter whereas in e-Commerce, we have positive development on operating EBITA plus SEK 2 million and in Western Europe, we also have positive development of SEK 16 million.

And Western Europe is actually a like-for-like growth right now because we acquired Sidey Group beginning of Q3 last year so we have the same group this year as last year when we compare the groups. And then group-wide eliminations and others are exactly the same as last year ending up on an operating EBITA of SEK 304 million. So despite the negative development of Eastern Europe, we have been able to improve the margins and the operating EBITA margin for the quarter was 13.4%. This page is showing sales as well as operating EBITA margin for Q3 for the period 2019 until 2024. And the margin this year of 3.4% (sic) [ 13.4% ] is above the margin of last year as well as above the margin of Q3 in 2022. It is, however, below the margins during the pandemic. We had really strong margins in Q3 in 2020 as well as 2021. And if we look at more historic perspective, the margin this year is also above the pre-pandemic level.

Looking at the cash flows. The cash flow from the operating activities was up 2% from SEK 330 million to SEK 335.7 million. Then Inwido is operating with negative working capital and this is of course very positive, however, not when you are declining. So looking at the change in working capital, last year we had a positive development of SEK 11.6 million; this year we have a slightly negative development of SEK 3.4 million. Then Inwido has also increased the CapEx level. The CapEx level or investments in activities, excluding change of financial assets and excluding acquisitions, is up 20% for Q3 compared to last year meaning that cash flows before financing activities is slightly down by 8% when comparing to last year. The graph to the right is showing our CapEx level for the full year 2019 until the rolling 12 months now in September and then also year-to-date for last year as well as this year.

And as you can see, we have an increasing CapEx level during 2023 as well as 2024. Prior to pandemic, Inwido had a CapEx level of about 3%. Then during the pandemic the CapEx level decreased and now we have to have a bit of catch-up during the low levels between 2020 and 2022 and thereby, we have improved the CapEx level and is today on 4.3% rolling 12 months. But despite the higher CapEx level, we have been able to reduce our net debt. The net debt was reduced in Q3 comparing to Q2 and this is normal for the business. We have a large seasonality and the seasonality has always a positive cash flow generation in Q3 as well as in Q4. So in normal business, the net debt is decreasing in Q3. This was not the case last year, but that was due to the acquisition of Sidey. Excluding Sidey, the net debt was also reduced in Q3 when compared to Q2.

Today, the net debt is more or less the same level as last year. And if we look at net debt versus EBITDA, we can see we are today on 1.2x compared to 1.1x last year including IFRS 16 and excluding IFRS 16, we are on 0.9x compared to 0.8x last year. And both those KPIs has been improved when comparing to Q2. So Inwido has a good headroom compared to financial target of maximum 2.5x. Another financial target of Inwido is return on operating capital. There we have a target of 15% and we are today on 13.1%. The development has stabilized compared to the peak in Q4 of 2022 and we have the same return on operating capital in Q3 as we had in Q2. When comparing to the peak in Q4 2024, the main reason why we have lower return on operating capital is of course the lower result.

EBITA has decreased during this period and at the same time operating capital has increased due to acquisitions, also due to higher CapEx level and also somewhat due to the working capital because we have a negative working capital and the working capital is then increasing. Looking at our working capital in percent of sales and the operating working capital is quite stable. So the main reason why we have lower turnover capital is then the lower volumes and thereby the lower operating EBITA. And talking about volumes, this page is showing the order intake as well as the order backlog. To the graph on the left, we can see the order intake for Q3 for the period 2019 until 2024 and to the right, we can see the order backlog end of September 2019 until 2024. The order intake this period is plus 3% in total.

When we exclude acquisition, it's still plus 3% because acquisition has quite a small impact on order intake this year. It's very hard to see the small, small line, we can see the figure of SEK 5 million and that is the impact from Artic in Q3. The order backlog is plus 9% and if we then exclude acquisitions also from the order backlog, it's plus 8% when comparing to last year. And the Artic has an order backlog of SEK 11 million thereby a figure of SEK 11 million on top of this table for 2024. If we then look at the different business areas start with Scandinavia. In Scandinavia, we have improved the margin and we have increased the order backlog. Sales is down by 4% to SEK 1.014 billion compared to SEK 1.060 billion last year. Operating EBITA margin has been improved from 16% to 16.5% in the quarter. The order intake is plus 2% and the order backlog end of the quarter is plus 18% compared to last year.

Eastern Europe: Eastern Europe is still struggling when it comes to sales. Sales is down by 15% compared to last year. However, we have improved the order intake on a weak market. The margin has improved in the quarter compared to the first half of 2024 and is also above -- the operating EBITA margin for Q3 is also above the level of 2021 to 2022. So in a historic perspective, we are below last year, but we are above the level of 2021 and 2022. Sales minus 15% to SEK 473 million. The operating EBITA margin declined from 12.7% to 10.8% and the order intake is plus 11% and the order backlog end of the quarter is also plus 11% compared to last year. e-Commerce: in e-Commerce, we have a high order intake and we also improved the margins and we have improved the margin despite the increased marketing investments for future growth.

Sales is plus 7% increased from SEK 267 million to SEK 286 million. The operating EBITA margin has been improved from 7.5% to 7.7%. The order intake in the quarter is plus 16% and the order backlog end of the quarter is plus 5% when comparing to September last year. And then we have Western Europe. In Western Europe, we have a positive development for all larger business units and the profitable growth continued in the third quarter. Sales is plus 11% from SEK 456 million to SEK 506 million. The operating EBITA margin has been improved in the quarter from 11.4% to 13.5%. The order intake, however, is minus 8%. And in Western Europe, especially in Ireland and Scotland, we are working with quite large projects so it depends on when we take these large projects. But nevertheless, the order intake is minus 8% compared to last year. The order backlog, however, is plus 4% compared to last year.

I now hand over back to Fredrik.

[Fredrik Meuller, executive]

Thank you very much, Peter. This slide adds flavor to where Inwido is finding itself strategically as a group right now and above all, what the main building blocks are on our exciting growth journey towards 2030. We foresee a gradual increase in tailwind from external factors starting already in 2025 where EU's Green Deal is a big deal and where return to a more normalized demand level in both renovation and new build will make a substantial difference as well. On top of that, our own efforts within for example new product development coupled with synergistic acquisitions will definitely be value adding. Combined, this new volume shall flow through a more efficient structure, ensuring profit margins stay healthy.

To recap then. In the third quarter, Inwido further proved that it can grow profitably even though market conditions are far from optimal. Order intake, order backlog and operating EBITA margin all improved for the second consecutive quarter. Our position has strengthened through gained market share and the acquisition of Artic-Kaihdin. Leading indicators are gradually becoming more positive and EU's Green Deal for energy efficiency is being worked on in all member states. Altogether, we remain enthusiastic about what lies ahead. And last, but not least, we would like to make some noise about our upcoming events. So please make a note of these in your calendars already now, particularly our Capital Markets Day that will take place in Stockholm on the 11th of December. As always, you can find a lot of useful information on our website and via our frequent post on LinkedIn.

And now Peter and I will be delighted to answer any of the questions that you may have, please.

[Operator]

[Operator Instructions] The next question comes from Jonny Jin from SEB.

[Jonny Jin, analyst]

A couple of questions from my side. Starting with the gross margin, it looks like it's very strong in the quarter and you mentioned some mix effects here, but you also mentioned some price pressure in other markets. So maybe can you break this down a little bit and what drives the gross margin and how we think about the gross margin going forward? That's my first question.

[Peter Welin, executive]

We have a positive mix development meaning that we have a mix development when it comes to our sales. We have a high degree of consumer sales compared to industry sales and then we also have mix development, some of the most profitable business units have a higher growth compared to other business units. So there's a mix development. When it comes to pricing and when it comes to sourcing, we have been able to hold on the prices. We see some development when it comes to material prices. We see a bit more upgoing trend when it comes to some material prices. The material prices went down in 2023 and the beginning of this year, but then we see it stabilized and we see little more increasing material prices for the future; not a big increase, but some increases. And we have been able to keep our sales prices in general I must say and of course in some markets where the market has been more negative, where the competition has been a little bit harder, there we see a little bit of price decreases. But in general, we've been able to keep the sales prices. And then we've been working with our efficiency. We have been during the last year increased our CapEx level to improve the efficiency as well as the capacity for future growth. We have then been able to utilize some of these efficiency in the quarter. And that's the total impact of the gross margin.

[Jonny Jin, analyst]

I understand. That's very clear. And going into the segments a little bit here. In Eastern Europe, it looks like cost is down materially in the segment. So my question here is do you see further room to reduce cost in Finland to, so to speak, help profitability or will it require more volumes and drive from the market here to drive margins and profitability from here?

[Fredrik Meuller, executive]

Jonny, this is Fredrik. I think it's a relevant question. It's a difficult balancing act and I think all else equal, we have done a really good job here in Finland given the circumstances and we see that some of our peers are really, really struggling. There was actually one competitor that went bust just the other week. Of course we stay close to the situation. Now order intake picked up quite nicely in the quarter so that gives us comfort for what comes ahead, particularly on the renovation side. But as you know from before, we don't want to go down too much in cost level because that will hamper both competence and capacity. So I think we're rather pleased with where we are right now and hopefully we can actually turn it the other way around rather soon.

[Jonny Jin, analyst]

Okay. And in Scandinavia, I know it also looks that the margin is very strong and impressive in the quarter here and we talked about the mix here a little bit more consumer, but would you say that the backlog has similar profitability as in the quarter in Scandinavia or how should we view the margin there going forward?

[Peter Welin, executive]

So once again, we missed a little bit. What was the question?

[Jonny Jin, analyst]

The profitability in the backlog in Scandinavia.

[Peter Welin, executive]

Looking at the profitability in Scandinavia, there is a little bit mix development. We have Denmark going strong. They went strong also in the beginning of this year. So Denmark is still strong. In Sweden, we see more stabilization when it comes to consumer market whereas the industry market is still very challenging. And then Norway is also behind Sweden in that sense. So Norway is still a challenging market for us, both consumer sales as well as industry sales. We mostly have consumer sales in Norway, but still a challenging market for us. So we also have a positive mix impact looking at Q3 development when Denmark is going strong, which we have higher margin in Denmark compared to Sweden and also in Norway.

[Fredrik Meuller, executive]

Just to add to that, I think also we haven't seen all efficiency improvement projects come to fruition or come to an end yet of course either primarily then in Denmark and in Sweden, but I guess also in Norway. So that will of course all else equal, add to the margin, add to profitability particularly when we get more volume sometime hopefully in 2025.

[Jonny Jin, analyst]

Okay. And building on that, the last thing you said there, Fredrik. Given the solid margins that you can deliver now in this tough market for the group here, would you say that you have created an even more cost-efficient platform from here that can push margins for the group even higher once volume return and that you have created a new higher lowest level so to speak?

[Fredrik Meuller, executive]

Yes. Definitely I would agree to that. And again we haven't seen all of that come to fruition yet so there's more to come. But yes, I would say we're doing a great job here across all of our entities really given the circumstances. So that again, we talked about it already in the Q2 report where others have stepped on the brakes, we have really stepped up and stepped on the gas pedal and I think it's a sign of strength that we can invest what we de facto have invested. But it's not always about the money, it's also about project management of these rather large and substantial projects and there I think we've done a great job. So yes, it does give me a lot of comfort for what's to come.

[Jonny Jin, analyst]

Okay. And then on the M&A side, could you please give a comment here on how the pipeline is developing and if there is something in particular in terms of acquisitions that you are looking for? And yes, that's my question.

[Fredrik Meuller, executive]

Yes, it is of course, as I mentioned several times, it is a core part of our -- core pillar of our strategy since some time and also going forward. Activity level within M&A started to pick up in May, I would say, in the spring and has increased ever since, which is a sign of the industry itself getting back on its feet, but also a sign of Inwido being very much perceived as an attractive buyer and owner. I was happy to see us taking one deal to the finish line now in early September in the form of Artic-Kaihdin in Finland, not super large, but strategically quite important and a company that we know well and they will add to broadening our offering in terms of some protection in this case. We have a solid both gross list and net list when we look at our pipeline and the funnel that we have.

It's very difficult to say when the next transaction will happen, but I'm very comfortable with the team I have in-house and the work that we're doing. We're not stressed up about M&A. We have high activity level and it looks good. And it's more -- yes, it could be a catch-up effect at some stage where you get a number of deals happening at the same time, fine. But at the moment, it looks rather good and we are typically aiming both for new markets and for deals in existing markets, which is also I think a sign of strength. And it would of course be nice with something where we get little bit more bang for the buck. So particularly if we go into a new entry into a new geographic market, then we would like something bigger to get a strong foothold already from day 1.

[Jonny Jin, analyst]

Okay. And just one final one from my side. Can you please comment and say something about October, how that has started for you?

[Peter Welin, executive]

No. It's a relevant question, but I don't think we can do that, unfortunately, Jonny.

[Jonny Jin, analyst]

Okay. But would you say that the market is, so to speak, similar if you talk in broader terms?

[Peter Welin, executive]

No big material changes compared to development in Q3.

[Operator]

The next question comes from Albin Nordmark from Nordea.

[Albin Nordmark, analyst]

Albin from Nordea here. So I think I can just continue on the last question there regarding M&A. So what geographic markets are the most interesting from here if you're getting into a new one?

[Fredrik Meuller, executive]

Yes. We want to get further down into Central Europe, typically speaking if we talk about new markets and of course the sentiment across these markets if we talk France, Germany, Austria, Switzerland, but also other parts of what we would refer to as Eastern Europe. The climate and sentiment varies quite a lot. But overall, we thankfully have solid cases or rather attractive cases in basically all of these markets at the moment on top of the ones that we have within jurisdictions that we are already present in. Let's not forget that it's a very fragmented market and I think a good opportunity is to try to buy the right ones as well. So there are quite a few cases coming up and quite a few cases that we're working on. The net list, I would say, is probably 15-plus companies at the moment and that's the net list.

[Albin Nordmark, analyst]

All right. And in the report, I think the most surprising thing from my side was the margin uplift in Western Europe 200 bps or so. So what does this exactly stem from?

[Peter Welin, executive]

We have a good development on the latest acquisitions in Scotland. There we have improved the margins. But then we have also in a very tough market in England where the market is down, we have been able to gain market shares and we also take some customers from those competitors who went into bankruptcy. And we have then also in total been able to improve the efficiency on some of the larger businesses in England. So even though the market is challenging, we've been able to compensate that by taking new customers in and we have then been able to improve efficiency and thereby improve the margins.

[Albin Nordmark, analyst]

And are you taking -- so the volume is the main driver here?

[Peter Welin, executive]

Volume and improved efficiency.

[Albin Nordmark, analyst]

All right. And then just on the Finnish acquisition here 2 months ago, sun protection solution is somewhat a new area for you. How has the integration been going there and should one expect more acquisitions of sun protection companies?

[Peter Welin, executive]

I think the integration is going well. We know this company fairly well from before. As we stated in the press release, roughly 15% of the business is actually already to Inwido since some time back. So in that sense, that ensures that we have a bit of a smooth integration here. So yes, definitely potential for cross-selling across our Finnish operations, but maybe beyond the Finnish border as well. I'm not saying that we specifically look into this character when we look at the additional investments or additional acquisitions further down the line. But it is an interesting one where we see an increased demand of this combo of sun protection and windows. As the windows typically get larger in size, you have more light inflow and together with some climate changes, of course you need to protect your houses more from the sun and from the heat. So I think this is an interesting one.

[Albin Nordmark, analyst]

Sure. And lastly, you made some comment about some savings of 23,000 liters of paint or something similar. So apart from the obvious climate reasons, how is the financial return on these kinds of investments?

[Fredrik Meuller, executive]

Good, I would say. We have a very stringent process for discussing and reviewing and approving investments, but also very solid follow-up of the bigger ones. But I'm pleased to note that sustainability is one key topic item that we're looking for when we talk about the major investments. This particular example I think is one good example out of very many that we perhaps should make even more noise about going forward because there is a lot going on. And of course 23,000 liters of paint is a big deal both financially and environmentally and improves the workplace for our coworkers as well. So yes, it is an important factor that we take into account when we look at bigger investments.

[Albin Nordmark, analyst]

But can you say anything about the payback time?

[Fredrik Meuller, executive]

Difficult to say, Albin. It's typically good payback time on, I'd say, 3, 4 years, perhaps is something that we're typically looking at. But in the current state of market, it's rather difficult to find a normalized volume level that of course, as you know, affects the payback time rather dramatically. So it's a bit of a wet finger in the air at the moment. But the good news is at the same time that we're really in it for the long run together with our Board of Directors and we have very good discussions around this in both the group management team setting and in the Board of Directors setting.

[Operator]

[Operator Instructions] There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions or closing comments.

[Peter Welin, executive]

Okay. Thank you. We have received one question and that is from [ XF Invest ] where they ask our definitions on the order intake and order backlog. Saying that on Page 8 in our report, we are saying that the order intake is down by 8% for Western Europe whereas the order backlog is plus 4% and they ask us to explain the difference between order intake and order backlog.

The order intake that means in the quarter new orders in the quarter compared to new orders in the quarter last year and that is down by 8%. The order backlog or in Swedish it's called order stock is plus 4%. That means that the total amount of orders end of September, which has not been invoiced compared to the total number of orders -- or not numbers, value of orders compared to last year end of September. So the order intake, that means new orders coming in. The order backlog then means the total value of all orders that we have that has not been invoiced end of September compared to end of September last year and that was plus 4%.

We don't have any further questions. So we hereby close this meeting.

[Fredrik Meuller, executive]

Yes. Thank you very much, Peter, and thanks, everyone, for attending. That's it from Peter and myself. Take care out there. Goodbye.