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Edited Transcript of INDT.ST earnings conference call or presentation 25-Oct-19 8:30am GMT

Q3 2019 Indutrade AB Earnings Call

Kista Oct 30, 2019 (Thomson StreetEvents) -- Edited Transcript of Indutrade AB earnings conference call or presentation Friday, October 25, 2019 at 8:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Bo Annvik

Indutrade AB (publ) - CEO, President & Director

* Patrik Johnson

Indutrade AB (publ) - CFO

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Conference Call Participants

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* Johan Dahl

Danske Bank Markets Equity Research - Analyst

* Julius Rapeli

SEB, Research Division - Analyst

* Oskar Vikström

ABG Sundal Collier Holding ASA, Research Division - Research Analyst

* Robert Redin

Carnegie Investment Bank AB, Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the presentation of Indutrade AB Q3 Report 2019. Today, I'm pleased to present Mr. Bo Annvik, CEO; and Patrik Johnson, CFO. (Operator Instructions) Speakers, please begin.

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Bo Annvik, Indutrade AB (publ) - CEO, President & Director [2]

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Good morning, and welcome to this presentation. Another good quarter from Indutrade. We start, as usual, with some broad overall highlights from the quarter. And we can positively say that we have had good order intake and good sales growth in the quarter and also a positive book-to-bill, even if it's slightly. The demand is remaining or did remain at a good level, but we see that the market is flattening out. And under the surface, we also see a bit more variation between companies and market segments and also geographical markets. And we will elaborate more on this further down in the presentation.

Also stable EBITA margin on high level, 12.8% again, which again is the highest level we have had since the IPO, so very good. We also had good cash flow during the quarter, and we are a bit -- maybe not disappointed, but we would like to see the working capital come down a bit. And we are working very hard and focused on that. So that will come, I'm sure. We have had very good acquisition activity during the quarter. And during this year in total, we have now made 14 good acquisitions and added about SEK 1.5 billion sales on an annual level. So great progress in terms of acquisitions as well.

If we turn to the order intake on group level a bit more specifically, you can see that we came in, in total on plus 13%, which is, I would say, very good in this type of market. And as I said also earlier that the book-to-bill is slightly positive. More importantly, the organic part of the order intake came in at 5%. And we presented a bit lower organic order intake in quarter 2 and now we are bouncing back to high levels again, which is comforting, obviously. Also the acquisition effects came in at around 8%, which is also very good.

So we can perhaps also mention then that we had a slight positive impact on the number of working days during this quarter, perhaps around 1% or so impact, I would say.

If we then turn to the overall sales situation, it mirrors the organic -- or it mirrors the order intake quite well, overall plus 12%; and organically, also positive at 3%. A bit lower than the order intake, but still very good.

If we try to describe our sales in a more geographic market perspective, we can say that Scandinavia has been solid and strong. Sweden, Norway, Denmark and also Switzerland, solid growth organically in the quarter. We also grow in the U.K., but there we see a bit leveling off. And I would say it's mostly I think driven by more worries and perhaps not really understanding where Brexit is heading. And then we have 2 geographical markets with more flat development in Holland and Finland. Finland has been flattish for quite some time and now Holland is added to Finland in this quarter. And Germany is declining and weaker for us. And I think Holland is actually impacted by the neighboring market, Germany, and that's driving Holland to be having more of a flat development for us.

Okay. Then we turn page and look at the EBITA development. As I said, we came in at 12.8%. Good, stable, high level. And we increased by 12% in the quarter. And here, the organic impact was 1%, perhaps slightly lower than where we would like to see it, linked the organic sales growth of 3%. And I would say the main reason is the Dutch and German markets, companies and also, I would say, tough references for the MST sector or business area. We will explain this in more detail when we come to the business area part of the presentation. Acquisitions contributing with 8% and divestments also contributing positively with another percent to the EBITA.

Then if we go to the same situation on a business area level, it's comforting to see that actually 7 out of 8 business areas had an organic sales improvement. So I think that's good and positive. But again, I think it's place to say that below the surface, we see a bit more variation between the companies and the segments and the markets.

If we start with business area DACH, we are supported by, I would say, good activity in the pharmaceutical and chemical industry in Switzerland. And we have a number of companies providing building components and also Flow Technology components into those sectors. And there are, I would say, actually greenfield facility investments, brownfield renovations, but more importantly, a lot of new production lines being installed where we sort of benefit from that type of activity. So even if DACH was up 7%, they actually suffered from a weaker German market also. It could have been better. But I think we will have that weaker market in Germany for a while, unfortunately. But all in all, a very good situation in DACH and many companies contributed to that.

Then we had a number of business areas where we were actually benefiting from good organic development in the infrastructure segment in water and waste water, in the marine segment and also in the automotive aftermarket sectors. And these sector were good in Finland, in Flow Technologies and also in Fluids & Mechanical Solutions. So they were all up around 2%.

And one could have perhaps expected that Flow Technology would have been even better this quarter in terms of organic growth because we have some marine-related business in that area. And because of, I would say, positive growth in exhaust gas cleaning and ballast water treatment, we also benefit actually quite good in terms of those businesses. But it's a fairly still small part in the bigger picture of Flow. We also, in Flow, saw a very good development in terms of medical gas distribution within the health care sector. But holding us back, I would say, is also Germany to some extent and certain project-related business for companies. So the net effect organically was 2%. But yes, still okay, I would say, and hopefully can be better going forward.

If we take Industrial Components, we have a number of companies in that area in the med tech segment, and they representing good organic growth, I would say. We also saw good organic growth in components to industrial automation in that area. And industrial components, I would say, overall is a collection of good technical trading companies in Scandinavia, and Scandinavia held up well organically for us. So that was sort of benefiting in this respect.

If we take Measurement & Sensor Technology, we had good organic development, plus 6%. But I would say it came from a number of larger project deliveries for a large number of companies in that area. They actually had a very good quarter, also quarter 3 2018, and I will explain it a little bit more about why we didn't see better EBITA development from this organic growth development in the slide here later on.

U.K. was also growing with 2%. But as I said earlier, we are -- our companies in the U.K. are actually experiencing, I would say, that business impact from Brexit. There are -- there is more uncertainty, and some customers are a little bit more hesitant, I would say. We don't think it's going to be dramatically worse, but it's been leveling off a little bit in quarter 3 versus before. But still good level, positive level.

The only decline was seen in the Benelux area. And I would say the [predominant] reason for that was that we saw lower sales of valves for the power generation sector, but also I would say some general impact from weaker market in Germany having an impact on the market in the Netherlands also.

If we then turn page and elaborate a bit on the EBITA margin per business area, there are 2 business areas standing out positively with margin improvements. It's Finland. Finland had an all-time high margin in quarter 3. And then also Fluids & Mechanical Solutions, which is also mostly Scandinavian companies, quite a bit of mix of the technical trading companies and companies with all manufacturing. But these 2 areas had good organic growth in many companies, I would say, complemented with good cost control, good cost efficiency and also completed some divestments and had positive effects from that.

Then we have 2 business areas with, I would say, flat development on a high level. Industrial Components, as I said, benefiting from Scandinavia and had stable performance, positive from the med tech sector and these automation components. A little bit weaker development in some cutting tools-related companies where the automotive sector is impacting a bit.

And fairly equal situation in terms of Flow. As I said, positive contribution from the Marine segment, from the water distribution and wastewater treatment sector. But Germany a bit weaker. And then certain project-related companies, a bit weaker in Flow. But altogether, still on a good and high level, I would say.

Then we have 4 areas where we see a little bit of decline. If we start with Measurement & Sensor Technology, as I said, they had a good organic sales growth and overall total sales growth. But I would say it's mostly a product mix and project sales related reasons for the lower EBITA margin development. And they came from a very high level of just below 20% in quarter 3 2018 and now almost 17%. So it's still on a good level. But yes, certain negative mix impact and project impact in the quarter here. But it's still an area with positive growth opportunities where a lot of, I would say, mechanical-related companies need more intelligence, and this business area can provide that going forward.

U.K. also had a slight negative development but came in at over 15%, which is still a very good level. And as I said earlier, I would say, characterize it by a bit more uncertainty in more companies than before linked to Brexit there.

Then we have 2 areas left to comment on, and it's DACH and Benelux. And holding DACH back is, I would say, some companies with larger sales to the German market. And then we have a pharmaceutical-related company with sales in North America, and this situation with opiates in North America is basically putting a wet blanket on the development for them right now there and have been so for a while. So we'll see if that eases up in the next coming quarters here. But currently, it's -- or having a negative impact on DACH's EBITA performance.

And then Benelux is primarily, again, then these high-pressure valves to the power generation sector impacting a bit negatively. And then some companies who have lower, I would say, sales due to a generally lower market activity impacted a bit by Germany, I think.

If we then comment on our acquisitions so far this year, it's been great. We have bought 14 companies, really good companies, and we have added about SEK 1.5 billion in annual sales and around plus 8 percentage impact. And it's also very good to see that actually 7 out of 8 business areas have been involved in acquisitions, so it's a fairly good balance across the group in terms of acquisition impact. And we think this will continue in a good level for the remainder of the year and beginning of next year.

We bought 4 good companies in the quarter here. A Norwegian company called Finisterra involved in, I would say, instrumentation for measuring humidity in different industrial applications. We bought the company in Holland or in the Netherlands called the Sensor Groep, they are basically providing sensor for industrial automation in the Dutch market primarily. We bought a very interesting company in the U.K., making custom-made drying and curing systems for a very broad range of application areas in industrial print, in biosensors, in industrial labels and so on and so forth. And last but not least, also a company in Finland providing valves for the process industry, high-quality valves.

And then we have also made 2 more acquisitions after the close of the quarter: A company in Switzerland called Uniska, providing high-quality glass partition systems; and another company in the Dutch market, a niche manufacturer of sensors for geotechnical measurements, for example, ground water level sensors and infrastructure vibration sensors.

And the last 4 are actually what we call add-on acquisitions. So an already sort of existing Indutrade company is taking responsibility for this company, and we'll integrate and develop them in their clusters going forward.

By that, I leave the word over to Patrik to comment on the financials.

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Patrik Johnson, Indutrade AB (publ) - CFO [3]

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Thank you, Bo, and hello, everyone. So let's start with sort of an overview of the main key datas. Total growth for orders and sales was plus 13% and 12%, respectively; and year-to-date, plus 10% for orders and plus 9% for sales. And we continue, as we said, then with a positive book-to-bill. To continue further down to the gross margin, it is stable, both the quarter and year-to-date. And the Swedish trading companies, as you know, that they have a challenge with a weak Swedish krona. So I think they really do a good job -- pricing job then versus their customers. I think yes, the margin shows that they're doing a good job.

EBITA margin stable at 12.8%. And Bo said then, again, it is a historically high quarter 3 margin. And there's a large increase on the finance net, but roughly half of that increase relates to IFRS 16 and half is due to the increased debt level and also some -- a little bit higher interest rates as well.

Tax increased to 7%. That means that the underlying tax rate is basically the same as last year. Earnings per share up 8% for the quarter and 9% year-to-date. Return on capital employed 19% compared to 19% last year -- also last year. And excluding IFRS 16, the return on capital employed is actually 20%. Cash flow -- operating cash flow was SEK 534 million, which is a high and good level. However, the improvement versus last year is actually related to IFRS 16 reporting changes, and I'll elaborate a little bit more on that further on. On the debt side, net debt-to-EBITDA at 2.3. That's an increase versus last year's 2.1. But again, then excluding IFRS 16, it is 2.2, so it's a slight negative impact.

So that's sort of the summary of the key data, and we will move on and dive in a little bit more into this IFRS 16 effects. They impact both balance sheet, P&L and KPIs, as you know, that you see as a year-to-date effect. And so relatively big impact on the balance sheet, SEK 842 million in the opening balance. And now it's up to around SEK 900 million. And as you see the different impacts in the different lines in the P&L. And you see also the impact on net debt-equity, plus 13 percentage points. And remember when you calculate the impact on different other measures, that for instance, return on capital employed is calculated on a rolling 12-month basis, so the impact comes gradually during the year. And the impact in Q3 is almost 1 percentage point, and it will be slightly more negative than in quarter 4 because of that 12-months rolling calculation.

So moving on and looking at the cash flow. And it came in then at SEK 534 million, and that's an increase of 13%. And -- but that relates only, I would say, then to IFRS 16 changes. But the level as such is a high level, and so that's a good level, even though that increase is IFRS 16 related.

Working capital, as Bo mentioned, still on a slightly high level, and that is due to that many of our companies has increased their inventories during last year mainly to ensure delivery service and availability for the customers. And we are working very much with our companies to reduce the levels, but I don't expect large reductions then short term. The stable and strong, good delivery service, they are key for our companies, so it's important that we don't jeopardize that on that journey.

Regarding then stock reductions then. We -- may be important to know that we don't really see big risks or downside on the profit when we work with the stock reductions because most of the stock increases is related to purchased items and reducing them will not lead to big [stock options], and that I think is important to note.

Yes. Moving on to earnings per share. It has grew with 8% in the quarter, and that improvement comes from the stronger operational profit of course. But it's somewhat offset by increased amortizations of intangibles and increased financing costs. And those 2 are both related to the increased acquisition pace and natural from that perspective. Looking at the EPS development over a longer time, over the last 5 years, we have managed to increase earnings per share then 15% per year. Important to note.

Yes. Moving on to debt. The debt -- net debt level has increased with approximately SEK 2 billion. And it may look a little bit dramatic, but here again the IFRS 16 impacts a lot. And half of this increase actually related then to IFRS 16, and half related to the increased borrowing related to the higher acquisition pace. Remember also the reference last year, we had maybe relatively lower acquisition pace. So that's why it also looks maybe more dramatic than it is.

And the KPIs, net debt -- net debt KPIs, commenting on those a little bit and 91% net debt ratio. And if you exclude IFRS 16, it's on 78%, and that is pretty close to where we were last year. And if you compare it to preceding years, it's even lower, I would say. Maybe good to repeat on. So when you talk about the debt situation that we, in quarter 2, strengthened the long-term financing of the group with a new SEK 3.5 billion revolving credit facility, 5-year credit facility. And all that together, I would say that the debt levels, ratios, they are normal and the balance sheet remains strong, and we are in a good position then for further growth.

And by that, I'm ready, and I leave the word back to Bo.

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Bo Annvik, Indutrade AB (publ) - CEO, President & Director [4]

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Thank you so much. Talking a bit about our business model. We think it's a successful model, we have used it for 41 years basically, and it's built on developing the companies we already own and acquiring new, strong, good companies. And we feel that this, we'll be able to continue for quite some time going forward. We are very long-term oriented and we definitely think we can double the size of Indutrade based on this model. And doing so maybe in the next 5 to 8 years, depending on the business climate. And the development I mentioned is, I would say, mostly driven by our passionate entrepreneurs we have in our businesses and we try to support them in a number of ways. And I will come back to that.

Commenting a bit briefly on the acquisition side. As I said, we have now a great year. We still have a number of projects in different phases going on. And we have a high-caliber team here centrally, and we also have, I would say, very experienced persons out in our different business areas making acquisitions. We are done with our succession in the management team. And we have left, I would say, most of the extraordinary divestment activities and restructuring. So its full focus on business development going forward, and I think we can scale up now in terms of this -- in terms of a capability perspective. And I would say that each business area should be able to make 2 to 3 acquisitions per year without us taking more risk or buying less-quality type of companies or anything like that, basically continuing as we have done successfully over the years.

And coming back to the development I mentioned. We have a number of strategic initiatives which we have had now for a while. And I appreciate focus. I'm not going to launch any new initiatives. We have much more to do in terms of those we have here.

So we focus a lot on people, developing people based on our values and based on the culture we have within Indutrade. And we have now, I would say, in the Indutrade-specific programs to do that. And we are step-by-step building an Indutrade toolbox our people in the different companies can benefit from, in everything from digitalization through value-based pricing, purchasing and so on. We offer certain tools to benefit from.

We are also engaging in active knowledge-sharing, and we try companies in the group to meet and share experiences on the market sectors or product areas, perhaps also geographies like far-away markets.

And last but not least, we are engaging very much, I would say, in sustainability. We see that as a clear business opportunity for us as a group and for the individual companies we have. And I would say we are already good at sustainability and are now taking steps to become even better.

By that, we try to summarize the quarter 3 and we have stated what we see as the key takeaways from this presentation here. Stable level of earnings on a high level and order intake and sales grew organically 5% we said order intake-wise and 3% sales-wise. So a good quarter in that perspective.

And the demand is, I would say, at a high level, good level, but it has flattened out. And the outlook is that it will, I would say, continue on the level we see right now, so a fairly flat outlook and increased variation between the companies and the segments. So no dramatic difference between Q3 and Q4 in that perspective.

Q4 is always, I would say in terms of December, something to note. We don't know how that will play out. And we will obviously try to do whatever we can to deliver, I would say, stable and good in December. But sometimes, some of our customers are shutting down a bit early and want to watch their operating capital and things like that. But I would say that's the only comment I have in terms of the outlook for quarter 4.

I've already said the high pace on acquisitions, and I look very positively on that also going forward. And hypothetically right now, if we were to enter a recession, which I don't say we are, I think we can manage a recession as a group in an agile and flexible way. We are an aggregation of a lot of small, middle-sized companies, and they are close to the customers and also have the, I would say, autonomy to make the right type of decisions in situations like that. And we have a stable platform, a great leadership team and great people in our companies to manage this in a great way going forward.

So by that, we end the formal presentation part and say thank you from our side and open up for any potential questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from the line of Johan Dahl from Danske Bank.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [2]

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Just on the -- on your general assessment of market demand and your outlook, I'm just curious to understand, last quarter, I think you had sort of flat orders and you were quite clear that you saw -- fairly optimistic on things. This time, orders are clearly better and growing year-on-year, but you seem to indicate a slightly more cautious of -- what actually leads to that judgment? Is it more of a macro call? Or is it what you're hearing from customers not yet listed in orders? Or how would you put it?

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Bo Annvik, Indutrade AB (publ) - CEO, President & Director [3]

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But as I said when I summed up here, I think the business climate in -- we are experiencing right now is not very different from a couple of months ago, and we don't expect it to be very different in the remainder of the year either on, I would say, broader level. And then between quarters, it can differ a little bit in terms of how some project-related companies benefit and impact from their businesses, I would say. So yes, we were flat, I would say, in quarter 2 in terms of organic growth and now we are a bit up. And maybe it's better to look at the average between these 2 quarters and say that -- yes. So it's a fairly flat market, but some of our companies are, I would say, benefiting from positive project orders still. And overall, that leads then to some positive organic impact.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [4]

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Is the energy valve business -- is that sort of the primary factor behind the growth in orders organically here in Q3?

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Bo Annvik, Indutrade AB (publ) - CEO, President & Director [5]

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It's not the primary, but it's adding now again positively organically, which is very good to see. And the sentiment we have right now is that, that will continue to be positive in quarter 4.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [6]

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Got you. Can you say anything regarding potential effects of this toolbox that you've introduced in Indutrade? You talked about management succession being done, focused on business development. These other sort of initiatives that you've driven, what could we expect from that and when?

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Bo Annvik, Indutrade AB (publ) - CEO, President & Director [7]

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That's more, I would say step-wise, fairly slow. A performance impact, perhaps, but still positive impact. So it's very difficult to say that through numbers, I think. But we will, over time, improve competence. So hopefully, we will be better at pricing. Hopefully, we will be a little bit better at purchasing. And hopefully, we will benefit a little bit from learning from each other in a market sector perspective and so on and so forth. So not any very significant impact on a quarterly basis, obviously, but year-over-year and in the next couple of years, I'm sure it's going to have smaller impact on both growth, but even more, I would say, operational results.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [8]

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Okay. Just finally on the inventory side. Clearly, you don't seem concerned about it, but if -- where would you like to be given where the market is right now in terms of inventories, i.e., what's the delta sort of that you're aiming for if we look a couple of quarters ahead? And what is the sort of profitability impact of that? You're clearly saying it's low, but can you provide any more sort of guidance there?

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Patrik Johnson, Indutrade AB (publ) - CFO [9]

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Well, we don't have sort of a target or optimal level on where it would be then. But if you look at the total working capital as we define it internally, it has increased then year-over-year with 16%. But a lot of that is actually related then to acquisitions and currency. So underlying organic growth is 5% year-over-year. And that -- if you -- that corresponds to between SEK 200 million and SEK 250 million. And much of that, I would say, is related to inventory. And I guess that's sort of one perspective on looking at it. That is sort of at least what we want to, long term, reduce.

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Bo Annvik, Indutrade AB (publ) - CEO, President & Director [10]

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Not too long term.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [11]

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Okay. And I guess inventories were high last year as well. And any sort of guidance you can give on the profitability impact of that reduction?

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Patrik Johnson, Indutrade AB (publ) - CFO [12]

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That's difficult. I don't want to give a guidance on that. I mean remember that around 60% of our companies are trading companies. And also the manufacturing companies, they are to a large extent assembly workshops and a lot of input materials bought [from some] suppliers. So I would say it's small. I can't guide more than that.

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Operator [13]

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The next question comes from the line of Oskar Vikström from ABG.

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Oskar Vikström, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [14]

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Yes. I have another question to complement there on Benelux. So you saw orders come in -- come up now. And I was just curious about what's the time frame until that we can see that in sales? And then how should we view Benelux as a segment, considering maybe orders are coming up within the valve segment and then you have Germany dragging down? So how should we view that going forward into Q4 and Q1 2020, let's say?

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Bo Annvik, Indutrade AB (publ) - CEO, President & Director [15]

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Well, good question. We will see better sales and deliveries in quarter 4 in terms of valves to the power generation sector. But as you say, we also see -- in some of the companies, we see a weaker general market and which will lead to lower sales for them. But probably a little bit better than perhaps what we saw this quarter.

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Oskar Vikström, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [16]

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All right. And then just in terms of also DACH again, if you could just repeat the margin there. So you have a negative effect in Switzerland from the U.S. exposure and then you have some companies doing more poorly in Germany. I was just thinking like going forward, is this lower level sort of what we should expect going forward given uncertainties in Germany? And then I mean is this also a matter of mix? So where the growth is coming from this quarter, does that have a generally lower margin? Or...

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Bo Annvik, Indutrade AB (publ) - CEO, President & Director [17]

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I think mix, not a big mix effect, I don't think. But I think the problems in Germany will probably remain -- or the weaker market in Germany driven by the automotive sector and indirectly impacting our companies will remain for, yes, partly into next year, definitely. And I would guess -- and this medical sector company suffering a bit in the U.S. I think also will have -- I don't think this opiates situation we have there in the U.S. will be solved sort of very quickly. So unfortunately, I think it's going to impact us negatively for a couple of quarters going forward.

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Oskar Vikström, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [18]

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And just in terms of the organic growth for the group, is there any like pricing involved here? Or is this just pure volumes? Or has prices increased any? Or could you comment on that?

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Bo Annvik, Indutrade AB (publ) - CEO, President & Director [19]

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It's difficult to say. We also have -- I mean we definitely have pricing. But as Patrik said before, we have also had to price because of colorful currency reasons, I would say. And the main target is to equal that situation out as fast possible. And then yes, there is probably a little bit pricing effect, but more of a volume effect, I would guess.

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Operator [20]

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(Operator Instructions) The next question comes from the line of Julius Rapeli from SEB.

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Julius Rapeli, SEB, Research Division - Analyst [21]

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Yes. My question regarding the Measurement & Sensor Technology division. You mentioned that some larger projects there are driving the organic growth in Q3. Nice comeback from Q2 on that side. So should we expect these deliveries to continue into Q4? Or the growth rate's more likely to normalize?

And then another one regarding the same division. Last quarter, you mentioned some struggles in North America and the market situation there. Any color on that one as well.

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Bo Annvik, Indutrade AB (publ) - CEO, President & Director [22]

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Thank you. Yes, I think it's going to continue fairly positive for that area also in quarter 4. And the issues particularly the company had -- one of the larger companies had in North America is improving. So that's good. At the same time, I'd like to say that the margin level we had in quarter 3 2018 of 19.5% is -- that's not a, let's say, [sound of a level]. Yes. Sort of we are working towards that, but the mix in that quarter was very good. So that's probably a difficult [to maintain probably].

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Operator [23]

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(Operator Instructions) The next question comes from the line of Robert Redin from Carnegie.

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Robert Redin, Carnegie Investment Bank AB, Research Division - Research Analyst [24]

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Just one question on acquisitions. So obviously, you've done a lot of acquisitions this year, adding SEK 1.5 billion of sales, something like 9% of 2018 sales. So you've done a lot, but could you comment anything on sort of the pipeline? Have you bought all of the companies in your pipeline? Is the pipeline looking shorter or weaker than, say, 6 months ago? Or is it looking fine still despite the high number of acquisitions year-to-date?

And secondly on acquisitions, in this sort of slower-demand environment, do you expect to see a slower or better inflow of ideas or possible targets?

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Bo Annvik, Indutrade AB (publ) - CEO, President & Director [25]

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Good question. No, we see a fairly positive outlook in terms of acquisitions, and we are in a number of projects in different phases. And I would be surprised if there isn't more acquisition finalized before we close this year. And then in terms of acquisition opportunities in a more demanding market, that's not positive, I don't think. It's -- those sellers who can sort of avoid of selling in a weaker market, potentially affecting their profitability and also the price of the company will probably refrain from doing that. So maybe a little bit less companies in a recession. But in a flat market development, or as we have it right now, I don't think it's a big difference.

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Robert Redin, Carnegie Investment Bank AB, Research Division - Research Analyst [26]

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Okay. So if market demand is flat, it's the same you think as in a more positive market?

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Bo Annvik, Indutrade AB (publ) - CEO, President & Director [27]

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Not a very big difference, at least.

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Operator [28]

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(Operator Instructions) There are currently no further questions registered. I'll hand the conference back to you, speakers.

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Bo Annvik, Indutrade AB (publ) - CEO, President & Director [29]

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Then we say thank you for listening and participating. And we close the call and wish you a nice weekend. Bye-bye.