Storskogen Group AB (publ)

STO:STOR B

Earnings Call Analysis

Storskogen's Q2 2024: Sales and Profitability Steady, Strategic Divestments Pay Off

In Q2 2024, Storskogen reported sales of SEK 9.2 billion and an adjusted EBITA of SEK 894 million, with a margin of 9.7%. The company showed a 2% organic sales growth and matched margins with Q2 of '22 and '23, benefiting from strategic divestment of 9 business units. These divestments enhanced profitability and allowed Storskogen to refinance bonds maturing in 2025 at better terms. Despite a 2% decline in net sales due to past divestments, the organic growth and acquisitions contributed positively. The CFO highlighted a 21% increase in adjusted net profit to SEK 0.16 per share. Storskogen aims for a 10% EBITA margin and strong cash flow, driven by operational efficiency and market improvements.

Transition to a Permanent Leadership

The earnings call begins with significant leadership changes. Christer Hansson, who was serving as the interim CEO, has formally transitioned into the permanent CEO role as of July 1, 2024. His vision for Storskogen emphasizes driving earnings growth, which he believes is already on the right trajectory, especially as he and CFO Lena Glader articulate the positive developments seen in Q2.

Solid Financial Performance

In the second quarter of 2024, Storskogen reported sales of SEK 9.2 billion, with an adjusted EBITA of SEK 894 million. This translates into an adjusted EBITA margin of 9.7%. Notably, the quarter achieved organic sales growth of 2%, indicating a rebound in performance compared to the preceding quarters. The company aims for a long-term EBITA margin target of 10%, which they are steadily progressing toward.

Strategic Divestments Enhancing Profitability

Hansson highlighted the strategic divestment of nine business units as a crucial step to return to a more normalized operational state. This divestment not only consolidates their portfolio but is also anticipated to improve their profitability profile. Excluding these impacts, the first half margin would have improved to 9.7%, compared to 9.1% for the previous year. This strategy is aimed at resources focusing on high-potential areas that align with the company's strategic goals.

Segment Performance Insights

The company's various business segments showed mixed results. The Services business faced a net sales decrease of 7% to SEK 2.8 billion but achieved a margin of 10.2%. This decline stems from prior divestments but was offset by organic growth and acquisitions. The Trade segment saw a slight sales decline of 2% to SEK 2.5 billion, mainly due to divestments impacting sales by 5%, yet organic growth and favorable currency movements contributed positively. Notably, the Industry segment recorded net sales increasing by 2% to SEK 3.9 billion, highlighting a solid order intake despite market challenges.

Operational Efficiency and Future Outlook

Storskogen is focused on enhancing operational efficiencies and adapting their cost base, aiming for improvement in profitability as market conditions evolve. They foresee Q3 as seasonally slower, influenced by summer holidays, yet expect a rebound in Q4. Suggestions of potential interest rate cuts were viewed as a factor that could improve consumer confidence moving forward. The company remains cautiously optimistic about market sentiment.

Cash Flow and Financial Health

Cash flow has been a focal point, with Storskogen achieving a cash conversion rate of 96% for Q2 and maintaining a twelve-month rolling cash flow of SEK 3 billion. Their net financial position reflects a balanced approach, with interest-bearing net debt reduced by over SEK 700 million since last year. Additionally, a successful bond issuance has improved the maturity profile of their debt, signaling strong financial management.

Guidance on Growth and Market Sentiment

Looking ahead, Storskogen envisions continued organic EBITA growth alongside strong cash flow as critical components of their strategy. With signs of improving market sentiment, they express optimism regarding returning to normalized growth. However, they cautiously outline the complexity of external factors influencing consumer behavior, including inventory adjustments and political climates.

Final Thoughts

In summary, while Storskogen has made robust strides in its financial performance and strategic direction, the company acknowledges the challenges posed by market volatility and cautious consumer sentiment. Their ongoing efforts in divestment, operational optimization, and focus on organic growth set the stage for potential recovery and enhanced profitability in the future.

Earnings Call Transcript 2024-Q2

[Operator]

Welcome to the Storskogen Q2 Presentation for 2024. [Operator Instructions]

Now I will hand the conference over to the CEO, Christer Hansson; and CFO, Lena Glader. Please begin your meeting.

[Christer Hansson, executive]

Good morning and welcome to the presentation of Storskogen's results for the second quarter of '24. I'm Christer Hansson, the CEO of Storskogen, joined today by our CFO, Lena Glader. During the last quarterly presentation, I was 3 months into my role as an interim CEO. As of July 1, I'm pleased to announce my transition to a permanent position. When I took on this role, I did so with a clear objective to drive earnings growth. Our performance this quarter indicates that we are on the right track, which I look forward to shedding further light on along with Lena Glader. So let's begin with an overview of Storskogen before we take a closer look at the quarter. Storskogen is a diversified international business group with sales of about SEK 35 billion over the last 12 months and with an adjusted EBITA of SEK 3 billion spread across our 3 business unit areas.

I'm pleased to announce that Asa Murphy has also moved from her interim role to become the permanent Head of Business Area Trade. I'm confident that Asa alongside Peter Ahlgren and Fredrik Bergegard will continue to drive our mutual success. So let's move to the second quarter. We reported sales of SEK 9.2 billion and adjusted EBITA of SEK 894 million and adjusted EBITA margin of 9.7%. Cash flow, organic EBITA growth and profitability remains our top priority. This quarter I think that we are showing that we are on the right track with an organic sales growth of 2% and improving our organic earnings significantly from Q4 and Q1. The margin continues to improve and we are now on the same level as Q2 of '22 and Q2 of '23. Cash conversion continues to be ahead of our target and we are benefiting from the great work that our companies has done over the past years.

Our continuous efforts to optimize our balance sheet progresses and I'm happy that we are able to refinance part of our bonds maturing in '25 at significantly better terms compared to a year-ago. Finally, I want to highlight our strategic divestment of 9 business units. This is key step in our journey to return to more normalized state, but I will get back to that later in the presentation. As we noted in the Q1 report, we believed that Q2 would be stronger than Q1 with improved sales and margins. As you can see in this graph, the Q2 margin is back on the same level as '22 and '23 and we are moving towards our target of 10%. I'm happy to see that we are continuing to improve our margin as sales pick up, to some extent positively affected by some of the initiatives we put in place to drive organic EBITA. In sum, however, we will continue to work hard to reach our target of 10%.

In the second quarter, the Services business area saw a decrease of net sales by 7% to about SEK 2.8 billion entirely driven by divestment in the past year at minus 11%. This number was offset by organic growth, acquisitions and FX contributing with a combined increase of 4%. The margin came in at 10.2%. There are positive signs of improving market sentiment and operational efficiency measures are yielding early positive effects. Demand in the quarter continued to be muted for companies with exposure to construction impacting our performance in this segment. However, product and consultancy companies in the digital service vertical sustained strong demand and profitability trend. Overall, we see positive signs of improving market sentiment in the business area. Looking ahead, we anticipate Q3 to be seasonally softer to a large extent caused by the summer holiday period followed by a pickup in Q4, similar to how Q2 is stronger than Q1.

Further interest rate cuts are expected to support the positive signs of an improved market sentiment though effects may be a little bit slower compared to for example some of the companies in the business area Trade. Overall, our focus remains on adapting our cost base and expanding our service offerings to foster growth and respond dynamically to changing market conditions. In the Trade business area, we saw net sales decrease by 2% to about SEK 2.5 billion in the second quarter. This slight downturn was primarily due to divestments, which impacted sales by 5%, but were partly offset by 3% combined increase from organic growth, acquisitions and favorable FX movements. As we noted in Q1, there are encouraging signs of improvement in the overall market sentiment. The adjusted EBITA margin improved to 9.8%, up from 9.6% in the same quarter last year and the EBITA of SEK 246 million was in line with last year.

This shows the initial success of our ongoing efficiency measures and initiatives aimed at driving organic EBITA growth. Demand in the quarter remained muted for companies with exposure to construction and end consumers, consistent with trends across these industries. Looking ahead to Q3, we anticipate seasonally softer quarter similar to Services, but we expect to pick up in Q4. We remain cautiously optimistic about the overall market sentiment; increasing consumer confidence, however, slow and anticipated interest rate cuts could provide a boost. However, ongoing issues such as delays and increased sea freight rates due to the conflict around the Suez Canal remain challenging. To sum up; while Trade business area navigates in a complex environment, strategic divestment and focus on improving operational efficiency are paving the way for more resilient performance moving forward.

In the Industry business area, we're seeing sales align with our expectations with net sales increasing by 2% to SEK 3.9 billion in the quarter. Adjusted EBITA was SEK 437 million in the second quarter, in line with last year. Our EBITA margin has continued to show sequential improvement for the past 3 quarters at 11.2% for the quarter, slightly below what we saw last year. Despite seeing the soft demand in certain sectors in the quarter, the overall market conditions remained robust supported by solid order intake across several companies during the quarter. Also our sustained efforts in operational efficiency have helped us protect profitability. Looking ahead, the pace at which the soft demand in the consumer and construction sectors will recover is still uncertain due to broader political climate.

However, the overall market outlook remains solid and our focus remains on leveraging on our strong order books supported by global trends of electrification, reshoring and optimization. As we move forward, our unified focus across all of our business areas is set on driving organic EBITA growth and continue to improve our profitability through various initiatives. As we look at our short-term priorities, I want to revisit the slide from the Q1 presentation. As mentioned, our main focus today is on driving organic EBITA growth. We're committed to building on strong cash flows from last year and continuing to work to improve our leverage ratio. As I will get into a bit momentarily, we are taking key steps in refining our portfolio and we aim to ensure that every business unit aligns with our strategic goals and financial targets.

Achieving a satisfactory leverage ratio remains a crucial trigger for our return to a more normalized situation where we deploy and invest our cash flow towards achieving a combination of organic and acquired EBITA growth. In sum, our efforts are not just about navigating today's operational and economic landscape, but are aimed at positioning Storskogen to achieve EBITA growth. To take a look on how we are driving organic growth, I want to turn your attention to some of the initiatives across 4 key areas: sales, pricing, investment and cost control. I'll highlight a few selected examples from our business group to illustrate these efforts. If we begin with sales, this area typically includes activities such as broadening of product lines or new brands or other activities to increase geographical or market reach.

For instance Scandinavian Cosmetics, one of our biggest business units, has a super professional approach of attracting new and developing new brands and have increased their geographical reach by establishing a presence in Finland. INGENIOR'NE, our Danish engineering services firm, is expanding by opening an office in Copenhagen. This move have attracted numbers of qualified consultants and increased its market reach. Acreto, a distributor in the trade sector, has successfully expanded its product portfolio while excelling it in its core business of mosquito repellents. Looking at pricing, this is an area that can include initiatives to optimize prices through more sophisticated pricing strategies or it might mean a systematic approach to revisiting quotation, processes or renegotiating terms.

This is an area that we are focusing on throughout the business group, including Acreto that I just mentioned who have effectively expanded sales while applying a solid approach to pricing. In the U.K., our service company Stop Start has also refined its pricing strategies to better align with market dynamics, enhancing competitiveness and improving margins. Turning to investments. Stop Start like most business units are implementing initiatives that relates to a combination of the 4 areas highlighted on this slide. In addition to its pricing adjustment, Stop Start has also upgraded its warehouse facilities, optimizing its distribution chain to meet increased demand. Primulator, a distributor of coffee machines among other products, have invested in sales training of its technical staff. This effort keeps costs down and also enhance revenue opportunities by enabling technical service personnel to pursue sales in the customers' interactions.

Another example in the area of investments is A&K, leading provider of ultra fresh ready meals in the business area Industry. A&K has doubled in size over the past years in part by tapping into the growing trend in Germany of providing warm meals. We are supporting A&K in expanding their facilities to manage their increased demand. In the automation sector, we are capitalizing on the global automation trend by fostering increased collaboration among our automation businesses. This approach allows us to offer cutting-edge solutions in order to meet rising demands. In summary, our business units are not just reacting to current economic conditions. They are proactively moving to take advantage of future market opportunities to enhance profitability, organic EBITA growth and cash flow; keys for our continued success.

Before handing over to Lena Glader, I want to comment on the divestment of the 9 business units that we announced at the end of June and which closed yesterday on August 14. First of all, I want to emphasize that our primary objective is to port our business units, prioritize those that align with our strategic goals. By divesting these 9 business units, we can better focus on areas with the highest potential for growth, profitability and returns. If we look at the financial impact of this transaction, excluding these divestments of entities, our margin for the first 6 months of the year would have improved to 9.7%, up from 9.1%. Looking at the last 12 months, the margin improvement is even more pronounced showing a gain of 0.7 percentage points.

More importantly, by addressing and divesting these business units, we are not only strengthening our profitability. Again it also frees up resources to focus on areas with greater potential for profitable growth. While our portfolio review is constant, these specific transactions has effectively addressed the low performance we want to address. Looking ahead, I'm committed to continue our focus on driving organic EBITA growth and maintain our strong cash flow and moving us closer to a more normalized state.

With that, I hand over to Lena and a closer look at our financials.

[Lena Glader, executive]

Indeed. Thank you, Christer. So let's have a closer look at the financials then. Given the items affecting comparability this quarter that we communicated in relation to the aforementioned divested portfolio that Christer just described, we'll show you 2 sets of P&L statements here. First, the adjusted on this page; and on the next page, reported. In the adjusted, we have removed all items affecting comparability. Net sales growth was minus 2% to SEK 9.2 billion and the organic growth was, as Christer mentioned, a positive 2%. And I'll show you a more detailed sales bridge on a separate page in a while. Adjusted EBIT then also declined by 2% to SEK 690 million indicating an unchanged EBIT margin compared to Q2 last year of 7.5% underlying in the quarter. Net financials adjusted again for nonrecurring items were at minus SEK 237 million versus minus SEK 306 million in Q2 last year when we had higher FX related cost items.

Of these SEK 237 million, net interest costs represented SEK 228 million, which actually is somewhat more than SEK 218 million in Q2 last year. Thanks to lower financial costs, pretax profit increased by 13% and net profit increased by 21% compared to the second quarter 2023. The effective tax rate when removing these nonrecurring items was 28.5% and I'll remind you that these items are generally not tax deductible. Then turning to the financial KPI table below. Christer already mentioned adjusted EBITA and EBITA margin, which was in line with that of Q2 last year. However, adjusted return on equity was lower, 4% for the 12-month period. And return on capital employed for the 12-month period was 6.7%. These are obviously burdened by the, however, negative organic growth that we've had in the past 12 months even though this has improved significantly in Q2.

Net of goodwill, the return on capital employed was 15.4%, which is a better indication maybe of the operational return on capital employed without goodwill. And finally, earnings per share adjusted for these nonrecurring items grew by 21% to SEK 0.16 from SEK 0.13 in the second quarter last year. On the following page here, we have the unadjusted reported profit and loss statement for the quarter. All line items below net sales were obviously affected by the costs that we communicated in conjunction with the portfolio divestments and these costs make up almost all items affecting comparability and I'll try to explain these briefly, but you'll find more details in the text here. Our total nonrecurring costs above EBIT or operating profit line amount to SEK 957 million and this consists mainly of capital loss, asset writedown and goodwill impairment, which is the largest share of that item.

And again of the SEK 958 million, all of SEK 976 million so a little bit more than that relates to this portfolio divestment and goodwill impairment. The rest is other capital gain and a small earn-out revaluation. Now looking below the EBIT line in net financial items, another SEK 37 million is nonrecurring and out of this, SEK 20 million is relating to the portfolio divestments that Christer described in the previous page and SEK 17 million to fund buybacks that we made in the mid quarter. Over to the sales bridge for the quarter on this page and here we illustrate contribution to sales from organic, structural and currency changes. Organic sales growth again plus 2% for the group in the quarter. It was positive in all business areas. Divestments represented minus 5% of the minus 2% sales decline. The largest divestment here being the Dextry Group and the electrical installation company sold last year.

Just to be clear these divestments here do not include the portfolio divestment that we talked about, which will actually take effect in mid-Q3 this year. Acquisitions and currency, small effect this quarter representing a combined plus 1% of the year-on-year change in sales. On the following page we have 2 sets of bridges, sales and EBITA for the second quarter divided here by business area. Starting with the sales bridge to the left. As mentioned on previous page, all 3 business areas contributed with positive organic sales growth in the quarter. But however, recent divestments and acquisitions, small however still in Services and Trade not yet again including the most recent large portfolio divestment, impact the group's reported sales growth by a negative 3% and 1%, respectively, explaining the reported 2% negative sales growth.

And on the EBITA waterfall to the right, you see a similar effect on EBITA where the net of divestments and acquisitions in services and trade reduced group EBITDA by 1% and 1%, respectively, so 2% in total. Central functions costs increased as a result mainly or entirely actually increase is explained by oneoff costs stemming from share incentive programs that were decided at the AGM in May and these are organic characters. Over to the next page where we have cash flow statement for the second quarter. I'll start actually here with the income tax. Paid income tax was minus SEK 190 million in the quarter, 24% lower than Q2 last year. The cash flow effect from change in net working capital, which has been a focus area here as you might have understood by now, the contribution was plus SEK 54 million in the quarter. Higher payables and somewhat lower inventories contributed positively while higher receivables contributed negatively.

All in all we are of course glad to see that working capital efficiency persists. Summing up cash flow from operating activities, and mind you this is after interest and tax, we arrive at SEK 855 million for the quarter and SEK 3 billion for the rolling 12-month period. CapEx to sales 1.1% or just above SEK 100 million in the quarter. So around the same level as in Q1, but below previous historic levels where CapEx to sales has trended around 1.5% to 2% of group sales. Cash effects from M&A, very small net SEK 2 million only in the quarter, but this is net of divestments, acquisitions including acquisitions of minority shares in our companies and paid earn-outs. Finally then, cash flow from financing activities was a negative SEK 619 million, including loan amortization, leasing and of course the paid dividend to shareholders.

Summing it all up gives us a cash flow for the period of SEK 99 million in the quarter. And then what is the free cash flow after leasing the past 12 months? This is a KPI we like to look at internally. This was SEK 1.9 billion again free cash flow after leasing, which is actually exactly almost the same as a year ago. The 12-month rolling basis here is recommended to look at because we do have seasonality in cash flows typically. Our cash balance was SEK 1.5 billion at the end of June, around the same level as previous quarter with total available liquidity including undrawn credit commitments of SEK 3.7 billion, which is a comfortable level obviously. On the following page here, we have a graph showing the operating cash flow and cash conversion trend for a longer period of time since Q2 '22.

These bars are shown on a rolling 12-month basis here. In Q2 '22 we were at a low level with a cash conversion of 32% only, which is below the target level of at least 70% marked here as the dotted line. However, this has improved now and the cash conversion has actually been above or around 100% for the past rolling trauma for the past 4 consecutive quarters now. And for the isolated Q2, we had a cash conversion rate of 96% and on a rolling 12-month period, you can see here it's 101%. However, as demand returns and growth starts to come back, we do expect cash conversion to normalize again, but at a more efficient level than pre-pandemic obviously. However, just pointing out that the cash flow will continue to be a high prioritized area for us at Storskogen.

Looking quickly at the balance sheet on the following page. We have the condensed group balance sheet here. Total balance sheet is 6% lighter compared to a year ago largely as a result of divestments and as well as of course working capital focus and consequently reduced debt. Equity ratio increased to 45% from 44% a year ago despite impairments and writedowns affecting equity negatively by SEK 866 million as shown on previous page. Now this relates obviously to the portfolio divestment there. So our interest-bearing leverage ratio was 2.7x at the end of Q2, a reduction from 2.8x at the end of Q1; but nevertheless, an increase from 2.6x a year ago. Interest-bearing net debt has decreased by more than SEK 700 million or 6% since June 2023, but EBITDA has also decreased partly as a consequence of divestments, but also of negative organic growth during this 12-month period, which explains the leverage.

And then finally, a closer look at the debt and cash development and leverage development over the period. We show quarter-by-quarter here since Q2 2022. The dotted line shows the 12-month pro forma EBITDA used in our leverage definition. After a period of declining EBITDA stemming from divestments and organic development as mentioned, we now had a flat RTM EBITDA for the quarter compared to Q1, which is encouraging obviously. Debt and net debt came down in Q2 thanks to the strong cash flow shown on previous page. Interest-bearing net debt was in fact SEK 336 million lower than in the first quarter. And while speaking of debt, I'd like to spend a few words on the most recent bond transactions we made in June. We issued SEK 1.25 billion new 3.5-year bond and we used those proceeds to buy back parts of our bond with maturity in December '25 to improve the maturity profile obviously.

The remaining share of that bond with maturity in December '25 will likely be addressed within the coming quarters. The issue was down at 375 basis points above Stibor, which can be compared to a similar transaction we did a year ago at 687 basis points above Stibor. This is obviously at substantially better terms, which I believe is a testament to the almost complete restructuring we've done in the past quarters of our debt portfolio and improved maturity profile.

So with those positive words I think, I'll hand over to you again, Christer, for concluding remarks.

[Christer Hansson, executive]

Thank you, Lena. To conclude this, if I reflect on the first half year; it has been 6 months since I stepped into the role as an interim CEO and I'm honored to now continue as the permanent CEO. I want to highlight 3 areas that paved the way for improved performance and growth in the quarter. First of all, strategic divestments. This has significantly enhanced our profitability profile and opens up greater potential for profitability growth across our business group. Secondly, operational initiatives. The initiatives being implemented have started to yield early results setting a strong foundation as we progress into the second half of '24. Organic EBITA growth and cash flow. Our continued focus here is crucial to us returning to a more normalized operational state where we add acquisitions in addition to organic EBITA growth initiatives.

And with that, I want to thank you for joining us today and we are ready for questions.

[Operator]

[Operator Instructions] The next question comes from Carl Ragnerstam from Nordea.

[Carl Ragnerstam, analyst]

It's Carl from Nordea. Couple of questions. Firstly, it's great to see that you returned to positive organic sales growth. But could you give any flavor whether you saw any variations of this during the month or the quarter and also perhaps if you could say something about the trend continuing so far in July and August?

[Christer Hansson, executive]

Carl, as I said, it was still a tough quarter; but we see broadly improvement in the quarter in the business areas. And July, it's too early to say, but we continue to be cautiously optimistic on the trend going forward. But we have seen it's broad where we have a better situation in all our business areas.

[Carl Ragnerstam, analyst]

Very good. And in general in Q3, you see quite a few business areas is seasonally slow, as you said, due to the summer break. But do you see that the customers might take longer holidays this year owing to a somewhat muted market or is your feeling that it's more or less same to last year?

[Christer Hansson, executive]

It's hard to comment on that. But as you said, some of our companies -- I mean small companies almost closed their businesses in July. We have services companies that are really, really slow in the summer. But if it's more or less than last year, I don't know that. It's hard to answer.

[Carl Ragnerstam, analyst]

Okay. In 1 part of the report, you mentioned that you saw a solid order intake in Industry and in another, you saw a strong order intake in industry. Just to clarify. Is it possible to give any numbers on the order intake, whether it's solid or even strong in the quarter?

[Christer Hansson, executive]

It is strong in the quarter, but we don't give any -- but it is a strong order intake in Q2 for Industry and it has been for some while. So they are really doing well.

[Carl Ragnerstam, analyst]

Perfect. And is it longer orders that is expected to be delivered during early '25 or should we see effects from this already in second half in deliveries as well?

[Christer Hansson, executive]

No, but that's both. I mean there are longer orders that we take now that will be delivered in '25 and some of them are even in '26. So it's a wide range of that. But it's a solid order intake if you look at the industry as a whole.

[Carl Ragnerstam, analyst]

Okay. Very good. And in terms of trade, you guided that you saw quite a broad-based improving in markets here. To what extent would you see -- I mean it may be hard to tell. But to what extent it's driven by better underlying sort of sentiment in the market and to what extent do you think it is distributors after long period of time reducing inventory starting to refill inventories again?

[Christer Hansson, executive]

I think it's multiple things there. Of course there are some distributors effectively that buy -- what you were talking about inventory buildup from the customer side. But I also say that still consumers are getting more confident, but still there are kind of -- it's not a strong sentiment from consumers yet. Hopefully, we see if we get interest rates cuts in Sweden in particular for the trade, hopefully that will help the consumer to come back and have confidence again. But of course there are some things regarding the inventory things that is improving.

[Carl Ragnerstam, analyst]

Okay. That's very clear. And finally, you said that you saw enhanced collaboration between the companies and you're seeing effects from this. So I'm a bit curious to hear more about how you accomplish this. Is it driven centrally or is it locally for some reason that the company started to collaborate?

[Christer Hansson, executive]

This is of course locally. It's driven by we have a decentralized business group and they are collaborating on their own. Of course we can help on doing that together with the company, but it must be driven by the companies and the will to want to collaborate. But we see that in several areas where companies do take a wider -- kind of in orders, taking a better grip on orders together.

[Carl Ragnerstam, analyst]

I know that you're decentralized and so on. But I mean for a company just to wake up 1 day and say hey, we need to collaborate with another company in an improved way. I mean have you done anything to enhance the collaboration or the...?

[Christer Hansson, executive]

This is something -- I wouldn't say that we have done something. We have always wanted our companies to collaborate so this is not something new, but we might see more of it often. So this is not something that just wakes out. This is something that the companies want to do and if they have a good profit of it, all of them, that would be more of that. So I think that's something that we'll continue to see if the companies want and see that they profit of all of that so to say.

[Operator]

[Operator Instructions] The next question comes from Johan Dahl from Danske Bank.

[Johan Dahl, analyst]

Just 2 questions, please. Firstly, on this minority options, I was wondering if you could possibly update with some sort of payment schedule there if you have that for the current year and possibly next. What the cash outflow is then for there? Secondly, I was just wondering if you look on the LTM EBITDA for the group, I think you put down SEK 4.1 billion approximately in this quarter. It peaked I think a couple of years back at SEK 4.8 billion. I was just curious to know when you adjust for all these divested units, is there any sort of material difference in the volatility of the LTM EBITDA? Just to understand the volatility of the portfolio post the divestments that you've made if there is any material difference at all?

[Lena Glader, executive]

Johan, I can start with the first question, which is the easier one regarding the minority options. We do have total liability of SEK 2.1 billion in the balance sheet, of which SEK 530 million something is short term so the next 12 months and of those, we believe that around SEK 150 million might be called upon during the coming 2 quarters so Q3 and Q4 this year. And of course this is touched with a lot of uncertainty because it might also be that minority shareholders do not want to sell at this point. But if they do, then that would be SEK 150 million roughly. And then the earn-out liability is very small. It's only SEK 60 million in the balance sheet, of which SEK 30 million is short term of those. So only a very small amount is likely to be paid out in the short term, if that helps.

Regarding the question about the RTM EBITDA, you're right, it was SEK 4.1 billion at the end of Q2. It was the same amount at the end of Q1 and it was significantly higher at the end of last year. Again this is a result of course divestments that we've made. Bear in mind that we divested electrician companies and the Dextry portfolio and some others during last year, [indiscernible] only also in Q2 this year that had a low profitability, but yet profit making and that of course impacts. And then the other ingredient there is obviously the negative organic EBITA and also EBITDA growth that we've unfortunately have seen especially in Trade and Services due to macro mainly in the past quarters. I'm not sure, maybe you want to rephrase the question about patterns or trends.

[Johan Dahl, analyst]

I was more interested in sort of the long-term view looking a couple of years back when I think you had SEK 4.8 billion in LTM EBITA on a pro forma basis. And now the portfolio has changed slightly, I mean it's not huge the changes. But I was just interested to understand if you've done that analysis, whether the volatility in the portfolio has been materially reduced following this divestment, you see what I mean. So if you make the adjustments to SEK 4.8 billion a couple of years back to these companies, which you've now divested. Is there anything we should take into account or just if you've done that analysis?

[Lena Glader, executive]

Yes. Now I understand your question. And I think you're right that the companies that we have divested have contributed with higher earnings volatility and then unfortunately, primarily negative in the past years and we're also talking about the mainly even more so the portfolio that we just divested yesterday that we closed yesterday, which has contributed with quite significant, as you understand from the numbers, earnings volatility and then again earnings decline, if you will, during the past years. So I think that you are right about that. And of course all the activities and transactions that we do when it comes to both divestments and acquisitions of course and the underlying work that Christer is describing in the existing portfolio, those are all kind of done with the idea of reducing volatility in earnings for the longer period going forward.

[Operator]

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

[Christer Hansson, executive]

Thank you for those questions and thank you for listening in today. If there are any questions after this meeting, you know where we are. But thanks a lot for listening in and see you later. Thank you.

[Lena Glader, executive]

Thank you.