Lagercrantz Group AB

STO:LAGR B

Earnings Call Transcript 2025-Q2

[Operator]

Welcome to Lagercrantz Group Q2 Report 2024-'25. [Operator Instructions]

Now I will hand the conference over to CEO, Jorgen Wigh; and CFO, Peter Thysell. Please go ahead.

[Jörgen Wigh, executive]

Good morning, everyone. Welcome to Lagercrantz's presentation of our Q2 report. Speaking here is Jorgen Wigh, CEO of the Group. And together with me here, I have Peter Thysell right beside me. We're maybe a minute early here, so we will just hang on a little bit before we get started so that we don't miss anyone.

We will start at 10:00 a.m. And according to my watch, it's another minute or so. So we will just wait. Hope everyone is doing well and that you're -- yes, all enthusiastic about listening to us here this morning. So there we are, right, 10:00 a.m.

So welcome again, everyone, to the Lagercrantz interim report. We normally -- as you know, we have a year ending end of March, meaning that we today have released our numbers for Q2 ending the end of September. So it's our 6 months report that was released this morning. And we normally have this conference call just a couple of hours afterwards to give you a heads up -- give you some information around those comments around it and also end up with a Q&A at the end of the session.

It's me here, Jorgen Wigh, and Peter Thysell also beside me here, the CFO. We normally have this presentation in slightly 3 parts really, where we start with a short introduction for all those that are new to the group, but then we get right into the numbers and then we end up with some sort of a highlights for the future and also some where we think we are with our strategy work within the Group, where we are with ambitions and stuff.

So let's get started with give you an introduction for those that are new to the Group. I mean Lagercrantz is a tech group. It's been on the stock exchange since 2001, was formerly part of the Bergman and Beving Group. We are building a group based on our subsidiaries where we have some 80 or so at present, building quite a lot through M&A with some 5 to -- 8 to 12 acquisitions per year and building leading position in spans in niches with all the companies that we have.

And you can see here that we have split the group -- split the companies into the 5 divisions that we're working with, where we have all the companies. And you can also see over to the right on the map there where we have our pins and where we are located with the companies. This is highlighting the Northern Europe, but we also have, as you see, some footholds for exports all the way to the right here, where we're also present in the U.S., we're also present in India and in China with some mostly sales companies in those markets.

We have a total revenue in the group exceeding some SEK 8.5 billion and approximately 2,900 employees at present. We are very fond and keen on driving things the way we like it in a very decentralized fashion. So all companies have their own name, working under their own brand name dedicated to serving their customers in their specific market, which we feel is a great way of running the Group. And again, acquisitions is a central part of the business model.

That was a short introduction to the Group. Let's dig into the numbers then. I mean, I think we've concluded -- closed another very solid quarter. It seems like we are continuing on our path and you can see our trajectory here when it comes to our sales and our earnings or profit after financial items here on this slide. You could see that we have been on an upwards trend for quite some time now and building both organically and through acquisitions.

Some years back, we decided when we surpassed the SEK 500 million in terms of profits, you could see also that we set the bar towards the SEK 1 billion and we surpassed that last year. So currently, we are at SEK 1,176 million or whatever it is, towards the SEK 2 billion. So we have raised the bar once again here towards the SEK 2 billion, which was basically 1 year ago that we communicated that. So it's been a strong performance over a long period of time and that has continued for another quarter here.

Looking at the business conditions and a few comments on that. We feel that the market situation on an overall level has been stable also for this quarter and that goes for most of our businesses. We feel that we have a very -- a number of very strong performers in the group and they have continued to do it very well, both in terms of sales and also in terms of profits. We have some really strong companies, companies like Elpress and Tormek and a few others that are -- continue to do it very well for us.

However, we also feel that we have been waiting for the recovery and it's been holding -- it's been delayed a little bit and people are, like you've heard from most companies also that it's been pushed a little bit into 2025. We had expected some stronger underlying growth here in this quarter, but at least we concluded a positive 1% here for the quarter. So it has been a bit of a recovery, but not to the extent that we expected here.

So we remain cautiously optimistic for the future. And we feel that it's -- the interest rates and things are sort of encouraging people to do more investments. And we see that happening in some areas, but not to the extent that we maybe expected here earlier on. And -- but it is happening, but a bit delayed.

We feel that especially demand was strongest within the Electrify and the Niche Products divisions and we see the infrastructure and electrification continue to do it sort of recovering and growing. And we also see some of the Niche Products division companies and the segments that we're working there, we'll come back to that, but that is also growing for us.

While we see some -- still some struggling in the construction sector and some companies that are also within the industry sector, which is within the Control and TecSec divisions mostly. So we also -- from a geographic perspective, we feel that we are -- our strongest and our largest markets in Sweden, Denmark, Norway and the U.K. are showing some recovery, while we feel that the market is still sluggish in Germany and in Finland, especially. So that is sort of -- yes, there we have more to struggle with.

But in total, we feel that the order intake for comparable units were in line with the invoiced sales. So we basically had a book-to-bill of 1 here in the quarter, which is also encouraging. And yes, still -- yes, that it's stable underlying, an underlying stability in what we're doing.

You can see down there is also that we see that our ambition to grow the proprietary products is continuing. So the 77% currently on a moving 12 months basis. And we also see that we are becoming -- over to the right, that you can see that we're becoming more international along the way. And we see that especially United Kingdom has picked up here to 7%. You can see that that part of the bar there is increasing over the years. And we also see that we are becoming more Northern Europe and more international along the way, which is we feel is also a bit of an ambition for us along the way.

So that was the comments on the business conditions. Peter, maybe we should hand over and you can talk about the facts to the numbers here.

[Peter Thysell, executive]

Thank you, Jorgen. So to start, overall, we are quite happy with the result in the second quarter, where we met moderately tough comparables from the previous year. The net sales increased by some 16%, mainly due to acquisitions which grew by 17%. The organic growth turned positive with 1% and then we had slightly negative currency effects of 2%.

The EBITA increased by 16% where the EBITA margin was stable at a good level of 17.8% in the quarter. The profits after financial items increased by a good 14%. And this is, as you may know, a little bit below our 15% target for the year, but still on a good level. The cash flow was probably the area where we were not entirely happy in this quarter. It's on a good level, but we have high ambitions with cash flow.

In July, we completed 2 acquisitions with a total annual revenue of about SEK 280 million. And then adding for the rolling 12 months, we are now at a little bit more than SEK 1.1 billion, which is some 15% compared to the annual revenue a year ago. So we have kept the relatively high rate of acquisitions.

And during September, we also signed an agreement for the acquisition of Mastsystem in Finland, which has an annual revenue of about SEK 170 million. And this is still under regulatory approval process, but we estimate that this will come in and be closed during November and December this year.

About the first half year, we note that net revenues has increased by 13%, mainly due to acquisitions which grew net sales by 15%. The organic growth was slightly negative and currency effects were also slightly negative with 1%. The EBITA increased 12% and the EBITA margin was at a good level, 17.4%. And for the first half year, the profits after financial items grew by some 11% which means that we are a little bit behind our 15% target, but we have a great hope of achieving that in the second half.

The return on equity was 28% and the equity ratio was 34%. And the earnings per share increased to SEK 4.41 compared to SEK 4.25 in the last financial year.

Looking at the result per division, we can note that the positive development was quite broad-based, where 4 out of 5 divisions increased their EBITA. The only exception was the TecSec division, which was -- had some challenges in the businesses related to the construction businesses. But looking at the EBITA margins, we had the most positive development in Niche Products, which is now above 22% EBITA margin on a rolling 12-month basis and also the International division, which has had a positive development for quite some time now and they are above 17.5% on a rolling 12-month basis.

On the more challenging side, we can see Control and the TecSec division, as said, mainly due to challenges in businesses related to the construction sector.

Then maybe back to you, Jorgen, about comments by division.

[Jörgen Wigh, executive]

Yes, we have a few comments by division as well on the coming slides here. So let's start with the Electrify division. I think they had a good revenue growth of 26%, but most of it -- all of it came from acquisitions with 29%. Organically, it was actually down 2% even in the quarter here.

But as we've seen here, what we're doing is that we are compensating a slower growth in organically with more acquisitions and that is sort of something that holds true for most of what we're doing in [indiscernible] at the moment.

The EBITA was above -- up 25% to the SEK 100 million and the EBITA margin continued to be very well at 18.8%. So strong performance from Electrify even though the organic growth was slightly negative. The strong quarter then came to some -- to a large extent from the newly acquired Nordic road safety company that we acquired here this spring, but also other several units within the electrification addressing the electrification was also noted a favorable development. For example, Elpress, our very strong performer over many years. Also Elkapsling is doing it very well. VP Metall and EFC in Finland is also -- did it very well here in the quarter.

And also good to know is that in September, which has not affected the numbers at all yet then is that we concluded or signed an agreement for the Mastsystem. I'll come back to that company later on, but that's an important investment and an important acquisition for the electrifying for Lagercrantz as a whole.

Looking at the Control division, the revenues were high -- that is the division we have been struggling with. I think I see some -- we see some positive signs along the way here now. We see that revenues here for the quarter was up 28% and acquisitions then stood for 27% of those.

But organically, we also grew with some 4%. The FX there is the difference. But the EBITA then grew by 26%. So we're seeing some positive signs within the Control division, even though the EBITA margin is not at a satisfactory level at the moment with a 12.1%. There we have higher ambitions than that within the division.

We see that several businesses still note some challenging market situation, especially the ones addressing the more of the construction sector with Vanpee in Denmark and Norway and Stegborgs also in Sweden was impacted there. While we also then have an acquisition adding to the numbers here, which is the CP Cases that was acquired in the U.K. which is a leading manufacturer of protective cases. I'll come back to that as well later on. But that is also important for the Controls performance and what they've achieved so far within the division.

Looking at TecSec, that was the slight disappointment, I think, with revenues growing only 6%. We see the acquisitions stood for plus 13% and organically it was actually down some 5%. But EBITA held up fairly well still to the SEK 87 million versus SEK 89 million, but it was slightly down from last year, but an EBITA margin still at 17%. Here, we see a number of companies still doing it very well and seeing some recovery in the market, which is especially in Denmark, but also in the U.K. with the ARAS, Fireco and PcP. The newly acquired SuomenDiesel Voimain Finland also did it very well and contributed positively to the result in the quarter.

But we also, along the way, see that the more construction-related operations, especially with the bigger companies, a couple of the bigger ones, which is the CW Lundberg and the R-CON continued to be affected by the weak construction market and showed some -- and struggled in the quarter really. And in July then, the Principal Doorsets was acquired. So we also have an acquisition here within that division. I'll come back to that as well. That also came in very well here during the quarter.

Looking at Niche Products division and a couple of comments there. That is the division that stood out the most positive, which grew revenues by 21%. And there, we see 16% through acquisitions and organically plus 7%. So strong performance, both through acquisitions and organically in that division. And we see the EBITA growing by 21% and an EBITA margin then -- I think it's an all-time high of 22.9% in that division as well. So very strong performance here. And we see a number of companies. So it was broad-based with the Asept, the Wapro, the Tormek, the SIB, the Sajas and Vendig companies did very well in the quarter.

At the same time, we still have things to work with, within the Niche Products division. And we, for instance, see the Westmatic and Waterproof Diving noted some more challenging market situations. And there we have to get those companies to the right level is something to work with within that company -- within that division.

In the Prido company, which is a leading manufacturer of the high-quality folding type industrial doors that we acquired here this spring, also contributed well to the result here according to plan within that division.

Last but not least is the International division then. Their revenues grew by 4%, where 5% was through acquisitions and organically plus 2%. And EBITA grew by 10% in the quarter and the EBITA margin at 17.6%, which is a very good number for that division. It used to be much lower some years back, picked up to the average of the group almost.

So it's good to see that performance over a long period of time. Especially we have a couple of new companies that have come in, in the last few years here and especially the Libra has continued to do it well here during the last few years and also during the quarter here.

And we also have some new companies in Denmark with -- and also in the U.K. that delivered good earnings here as part of the Lagercrantz Group, while we're still struggling with some of the companies that we have in Germany and Poland as well here within the International division. So a few comments there on what we see in the different markets.

Yes, with that, we will look a little bit ahead. I mean, I think it was another strong solid quarter from us. I think it's -- we feel that we are struggling with the market. We see a bit of recovery along the way, but it's also taking some time to see it really come through for us in the market.

And I think that is what I hear from most of other businesses in the Nordics at the moment. So I think we are on par with most other companies there. I think we are then -- have the ambition -- have the opportunity in our business model to compensate a lower organic growth for some time with also the more acquisitions instead. And that's what we've done. So the acquisition pace has been very important to us.

But our aim is as it has been to grow the group with some annual profit growth of some 15% per year and do it with a return on equity of at least 25% and you will see the numbers later on here. So we will continue on the path where we are. And we will continue building our 5 divisions on the next slide here. This is a reorganization and a setup what we did some almost 2.5 years ago now and it's been working very well for us.

We are building the divisional sort of teams and we are doing it in sectors where we see some underlying structural growth based on also a lot of sustainability where we see good business opportunities with the green transition and the electrification on things in some parts, but also in IoT and the Control division and safety and security products in the TecSec and also the other ones in Niche Products and International. So I think we're very well positioned within our different -- in our different divisions to grow the Group for the future. And the setup that we did 2.5 years ago has really been working out well for us.

Last but not least is then the acquisitions. And here, we can conclude that we have closed some 7 acquisitions in the last 12 months. We are more broad-based and we're growing through our divisions more than before. We have the ambition to have 8 to 12, but then adding some 10% of ourselves. And this is, as Peter already suggested, some 15% of ourselves here, the 1,145 there. So we are ahead of plan really. And that means that we have concluded some somewhat larger acquisitions lately with the Prido, the Nordic Road Safety and are the main ones among the 7 there.

And then we also here now have signed the Mastsystem acquisition, which is not in the numbers yet that we hope to close here in November or December based on regulatory.

So just to give you an idea on what we're acquiring, I think we will look at -- yes, the previous one, please, which is the Principal Doorsets. It's the company we acquired here during the quarter. And that is a company providing different types of bespoke fire doors in the U.K. We have a similar company already within the U.K. So this is another one adding to that cluster of companies. And it's a very well-run company. You can see down to the right there where we're putting down some numbers on how they're doing. And a great company that is adding to the TecSec division here in the quarter and for the future. Acquisition we closed here during the quarter in July.

The next one is the CP Cases. I'd like to highlight it was also during the quarter. Here, we are talking about protective cases and high-performance protective cases and racks used for mission-critical equipment for commercial and military applications. So all kinds of -- different types of protective cases and racks with some annual revenues of approximately GBP 12 million with good profitability and also addressing the U.S. market. So they have a subsidiary in the U.S. as well here in Delaware.

And here, we acquired some 87% of the company and management keeping 13%. So this will be a good collaboration with the management there in building this company for the future. And some good numbers down there to the right. I would expect that to pick up a little bit along the way. That's our ambition at least, but still on a good level with a 16% EBITA margin there.

The next one is something that we already communicated. That was the Prido case that we did here this spring. I think that just to highlight that we are trying to make a bit of a factsheet for all the acquisitions we're making. And the Prido was a somewhat bigger one here this spring and it's been coming in very well for us doing it, having some -- had a very good start to the year and the first 6 months of the year within the Group, delivering on what they have promised along the way. So that's a good company to also have in there.

The next one is the other bigger ones that we also have communicated earlier is the Nordic Road Safety that we also did this spring. And they -- as we point out in the -- they have a bit of seasonality to their business. So they are actually in their high season right now here, about to close this year's high season here in the coming months or so. But doing it very well for us and had a good start as well.

And the last one I'd like to bring up is the Mastsystem, which is the one that we have again signed but not closed, i.e., the numbers aren't with us yet, but this is a very high-performing company, as you can see down to the right there with a EUR 15 million almost in sales and some EUR 6 million in profits. When we communicate these bigger deals, we also like to give some additional information around what we have closed these deals at or are signed in this case then. So this is an EV/EBITA of around 7x.

Mastsystem, we think, is a very sort of interesting company, delivering some high-performance telescopic masts, located in the midst of Finland or in Joensuu in Finland. And hopefully, we'll be part of the group here and we plan to have it part of the group here as of mid of November or so or early December.

So with that, I think we should round off and open up for questions. I'd like to just highlight that, yes, we'll look at the financial overview. I think we posted another strong solid quarter. And we're looking very cautiously optimistic into the future and delivering along our trajectory here is our ambition. So with that, I think we should open up for questions.

[Operator]

[Operator Instructions] The next question comes from Gustav Berneblad from Nordea.

[Gustav Berneblad, analyst]

It's Gustav here from Nordea. Maybe just to start off here when it comes to you acquiring companies, I guess you have completed -- you have a complete sort of different way of working with price management than what the companies you're acquiring have before you acquired them. So I guess my question is that now when you have increased the M&A pace in the last couple of years and we have had a period of very high cost inflation, would you say that we are seeing an increased positive price component in the Group's growth here?

[Jörgen Wigh, executive]

It depends on what period you're comparing with. I think what we've seen -- I think when the war started in Ukraine, then I think for a period there, we had quite a lot of inflation and quite a lot of price -- purchasing prices going up. And then we had quite a lot of compensation and we did quite a lot of price raises back then.

I think that period is behind us. I think that we have here in the last year or so, the price component has not been that significant. I think we are more sort of coming down to more normal levels of price increases along the way. And you can see that also from the inflation rates coming down, right? So I think that was true for a while, but not lately, no.

[Gustav Berneblad, analyst]

Yes. Okay. No, I was just thinking about maybe this last year that we have had companies that you acquired today that hasn't really raised their prices and that you're seeing a potential now when you acquire them sort of implement -- or sort of impacting the numbers right now, but okay, that sounds like that's not the case.

[Jörgen Wigh, executive]

Yes. We are pushing price and looking at price initiatives in many of the companies that we acquire. And I think that has been -- yes, I know -- we know -- I have on top of my head, I have a couple of cases in the U.K. where we have reorganized and restructured their pricing policies and working with that as a clear ambition as a post-acquisition sort of post-acquisition project or ambition that we have in a couple of companies. Yes. It's part of our playbook definitely.

[Gustav Berneblad, analyst]

Yes. Okay. Got it. And then if we move over to the tax rate, we discussed it in the last quarter. And as I interpreted, it should -- we should expect a higher tax rate in Q1 generally for you. It still looks quite high this quarter. So just once again, if you can comment on how we should think forward here.

[Peter Thysell, executive]

I think that might be a question to me. We will see marginally higher taxes as we expand, for example, into the U.K. and also in the U.S. where they have higher tax rates. In Q1, we had a few extraordinary items that increased the tax rate in that particular quarter. But as we -- in the coming quarter, I think we will see more of the normal. So we will probably be some 23% or something like that for the full financial year. And one of the extraordinary items we had in Q1, for example, was the tax on dividend from Latvia.

[Operator]

The next question comes from Zino Engdalen Ricciuti from Handelsbanken.

[Zino Engdalen Ricciuti, analyst]

I would like to start off in the Control segment. You mentioned that you are not happy, of course, with the margin in that segment. Do you feel that you need to, so to say, wait that out for a recovering market in some of the companies? Or are there initiatives which you hope to see some effect there?

[Jörgen Wigh, executive]

Usually, how we view it is that, yes, we are working quite hard for some companies to come back and that -- sometimes that has to do with the construction sector or sort of that volumes are temporarily down and that we might wait out. We are also then working with other companies who are working more with the restructuring sort of thing and that then we are sort of, yes, driving that hard and maybe sort of reorganizing or restructuring companies.

On top of that, we are also the third [indiscernible] then to work with also making high-margin acquisitions to bring to that division and that we're also looking into. So we have a number of levers that we're working with. But I mean, our ambition is to have the Group well above 15% EBITA margin and that goes for all the divisions as well. So when you're there at 12%-point something, then we definitely have an ambition to get them well above 15% as the other divisions are.

[Zino Engdalen Ricciuti, analyst]

Understood. And just over to TecSec on a bit of a similar note. But on the weakening there in the margin, do you feel that that is, so to say, correct -- that correctly reflects the business environment in that segment when we're looking ahead?

[Jörgen Wigh, executive]

Yes. Yes, it's market related, definitely, yes, it is. We have a couple of small companies that we're working with and struggling with there as well. But the main ones are really construction-related and construction sector-related, which is the R-CON and the CW Lundberg, which are definitely in that sector. And they are down from last year and previously, but we expect them to come back once the market turns for the better.

[Zino Engdalen Ricciuti, analyst]

Understood. And just lastly from me, of course, September is an important month in the quarter. But when you're comparing with the usual trend or the trend you had expected, would you say that it finished off in a better or worse way? Or was it muted throughout, so to say? And if you see any sort of say, green sprouts, which might not be -- have been converted to orders yet?

[Jörgen Wigh, executive]

Yes. I think we are looking at sort of a good project pipeline and we're looking at good inquiries from our customers. So we are, as we said, cautiously optimistic for the future. So I think we have some positives there as well. I think from sort of looking at September separately, it was a good month, but it didn't stand out as sort of that we had a really stronger trend in September versus the other couple of months. It was fairly even over the quarter compared to last year.

[Operator]

The next question comes from Karl Bokvist from ABG Sundal Collier.

[Karl Bokvist, analyst]

The first one is on the M&A side, where you've had a good pace and you reiterate the ambition of 8 to 12 here. What I do note, and you have talked about this before, of course, but you made some really interesting larger acquisitions this year. How do you think about the size of the acquisition compared to the number of acquisitions now if we look, let's say, ahead into the next 6 to 12 months?

[Jörgen Wigh, executive]

I think I have that -- I think, generally speaking, what we -- our overarching ambition is to grow the 15% per year EBT rate, 15% per year. And when we think about that, we think that 1/3 of that should come organically over a longer period of time and then 2/3 should come from acquisitions. So I think that 10% of ourselves, we should buy 10% of ourselves every year. And as long as we do that, then I think it's good that we can see that we both will do some more acquisitions. The number of acquisitions will pick up, but also the size of the acquisitions.

However, we will stay disciplined. We are -- when we are looking at larger acquisitions, we're bidding for a few larger acquisitions. We are very occupied with the price tags and that we are sticking to our -- staying disciplined in terms of the multiples and the price tags we're paying for the companies. So I think that to give you an idea, we have highlighted that it might sort of -- or it looks like we're going to close some 8 to 12 acquisitions per year. But if we can sort of compensate a lower number with somewhat larger acquisition, I think we will even prefer doing that if we can stay disciplined in terms of the price tags we're paying.

I think we have concluded some -- in the last couple of 3 years, we have concluded some bigger acquisitions as well and those have been really good for us. The CW Lundberg is one example. The PcP is another one, the Prido, the NRS and now also Mastsystem.

[Peter Thysell, executive]

Libra.

[Jörgen Wigh, executive]

And Libra, of course, yes, is also another one. So I think we have been able to do good acquisitions even though they've been slightly bigger.

[Karl Bokvist, analyst]

And then when we think about the current group and you have a lot of, for example, Niche Products, of course, with a lot of diversified niches. But you've also been able to now acquire throughout the years companies that are operating within fairly similar end markets. So how are you thinking about forming -- creating informal clusters in order to promote collaboration and so on?

[Jörgen Wigh, executive]

I think we're doing that quite a lot and we're doing that quite a lot, but we're doing it from a sort of a business and logical perspective and also staying with our decentralized model. People are meeting quite a lot in between the companies. I think that also has to do with our size that we are not that big, so people can interact and collaborate between the companies.

We have our MD conference every year where people are meeting on a broad base. We have also divisional sort of conferences here in the wintertime where they meet within the divisions and have meetings sort of, yes, around different subjects. We're collaborating quite a lot around sustainability issues.

We're collaborating around innovation and product development issues in some parts of the group. We're collaborating around ERP systems as well. Not that everyone has the same ERP -- they all have the same ERP systems, but they're collaborating and sharing experiences what they like and don't like about different systems and thereby collaborating and yes, sharing experiences from different things.

[Karl Bokvist, analyst]

My final one is -- yes, sorry.

[Jörgen Wigh, executive]

And the business side, I should remember the business side is also very important. They are sometimes collaborating, putting together products or system integration solutions for specific customers and interacting in that way between the companies.

[Karl Bokvist, analyst]

Understood. My final one is just on the electrification there. When you -- if I didn't misinterpret you, you said that you saw a bit of recovery here. Any certain niches that are driving this improvement in electrification and/or Electrify division overall?

[Jörgen Wigh, executive]

I think that we are about to start investing more in electricity grid and that has been held up for -- we have been expecting that for some years, but the approval processes have been taking time. I think that that has -- is at a better place now.

They're improving more and things are going there in a way that hasn't happened before. Now I think they're struggling more with finding the right sort of installers and having that happening in some areas. But we see, for instance, for Elpress that where we see that they're building electricity grid, those end markets are picking up at the moment.

[Operator]

The next question comes from Niklas Savas from Redeye.

[Niklas Sävås, analyst]

I have a question on the Control division. I have a question on the Control division. I mean, we're now going into the high season for that division. But I just wonder if you could elaborate a bit on -- I mean, you moved a few businesses into that division recently. So I mean, should we expect some differences in terms of the normal seasonality for the business area?

[Jörgen Wigh, executive]

No, I think as the division looks now, I think the seasonality remains. But I think that the seasonality is very connected to the Radonova business. And as the Radonova business will -- the Radonova business is growing. So it has good organic growth.

But still, as we make more acquisition and build the division on a large scale, I think that it will -- that sort of effect will be diluted to some extent along the way. But we are definitely expecting now the high season to pick up and that we will see improvements in terms of margins and profits in that division as we have had in the last few years in the coming quarters for the Control division.

[Niklas Sävås, analyst]

Perfect. And then I have one question on the -- I mean, the climate for acquisitions. Have you seen any sort of differences in terms of the competitive landscape across the geographies?

[Jörgen Wigh, executive]

Across the geography? What do you mean there?

[Niklas Sävås, analyst]

I mean, are the multiples going up or down sort of in the Nordics and the U.K. and so on?

[Jörgen Wigh, executive]

Okay. No, I think it's actually been quite stable over the last couple of years. We saw before the Ukraine war, we saw high multiples. But since then, after that, they came down quite significantly. But we have been doing our acquisitions at a very stable sort of EBIT multiple here for the last couple of years. And that, I think, remains stable and we don't see any significant differences between the countries either.

[Niklas Sävås, analyst]

What I'm also getting at is, I mean, you've managed to do a few quite large acquisitions. I mean, still at good multiples. So does that mean that -- I mean, do you saw other competitors for those type of acquisitions before? And are they now gone? Or how do you see that?

[Jörgen Wigh, executive]

Yes. It's a bit puzzling for us as well. But I think we have been managing -- we have managed to close a couple of very interesting deals of the larger size. I think there might be that some of the risk capitalists or PE funds have been very reluctant to make these smaller deals, in their word, smaller deals that are bigger for us, right, for a period of time. Now we think that if stability comes back and interest rates come down, I think we will see them more in the market in the coming years than we have in a couple of last 2 years. So that might be an effect that we might see some of, but we will still continue doing what we've been doing, which is that we are bidding for those companies as well.

And as we feel that -- yes, our discipline -- with our discipline, then we hope to close -- continue to close also some bigger deals. And I think we have quite a number of them looking -- to look at at the moment as well. So I don't see that change happening here in the near term, no, but maybe in a couple of years' time.

[Operator]

[Operator Instructions]

[Jörgen Wigh, executive]

Do we have any questions in the chat there?

[Peter Thysell, executive]

No, not as I can see, but we can give them a few seconds.

[Jörgen Wigh, executive]

Yes. Okay. Anyone that would like to add a final question?

[Operator]

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

[Jörgen Wigh, executive]

Okay. Thank you very much for listening in. I think we are well underway with building Lagercrantz for the future and has posted another strong quarter. I think that we're very happy with that. And looking forward to talking to you guys along the way. And Peter and I are, of course, available here during the day if you have some additional questions you'd like to put through us in a phone call or so. So thank you very much for listening in and have a good day.