Key messages and Q&A on Q1 Report 2025

General & market environment

The weak economy remained the single biggest factor impacting the sales trend. One less trading day and currency effects also had a negative impact. There were more positive signs from the market during the quarter, but these have not yet translated into sales

The organic sales trend was weakest in Sweden, while Norway continued to benefit from the oil and gas market. Finland saw an improvement compared with a weak first quarter in 2024.

In the first quarter of 2025, Alligo has continued to pursue sales and product initiatives where we see potential, while at the same time balancing investments with good cost control.

Revenue, sales and operating profit

Revenue increased by 2.9 per cent to MSEK 2,232 (2,169). Acquisitions made had a positive impact on revenue and compensated for negative organic growth in Sweden and Finland, one less trading day and negative currency effects. Organic growth amounted to -2.5 per cent, with a slightly positive contribution made by new store openings. Acquired growth amounted to 7.8 per cent and relates primarily to acquisitions in Sweden and Finland

Revenue from like-for-like sales, measured in local currency and adjusted for the number of trading days, decreased by -2.6 per cent compared with the corresponding quarter last year.

Operating profit amounted to MSEK 37 (65). Adjusted EBITA (operating profit excluding items affecting comparability and amortisation of intangible assets arising in connection with acquisitions) amounted to MSEK 74 (84), corresponding to an adjusted EBITA margin of 3.3 per cent (3.9).

The decline in profit was the result of one less working day, weaker demand in the integrated Swedol and Tools business in Sweden and Finland, as well as pressure on margins in Norway. Acquisitions made, efficiency measures and cost adjustments had a mitigating effect.

Acquisitions contributed profits of MSEK 20 during the quarter.

Further cost-cutting measures were implemented, saving over MSEK 100, which will have a gradual effect from mid-year 2025.

Q&A

1. Highlights from Q1?
   
   We launched ReCare, our full-service solution for workwear, in Sweden. The service includes clothing, laundry, repairs, reuse and recycling and creates new sales opportunities and has been well received by customers.

   As we continue to await the overdue upturn in the market, we have implemented further cost adjustmentss in Q1. These measures, including reorganization of central functions and store coordination are expected to reduce the cost base by around MSEK 100, with full impact from mid-year 2025.

2. What is the status of the Turnaround Project for Tools Finland, and is there a timeline for when you expect to see results?
   
   We continued the strategic review of the Finnish Tools operations, closing three stores and initiating organizational changes. Measures are underway to improve profitability, particularly among larger industrial customers.

   For Finland to contribute to the Group’s 10% EBITA target, an EBITA level of 6–8% is needed; for Tools specifically, slightly above 5% is sufficient and achievable.

   The Finnish market has been tough for all players over the past 2–3 years.,We are confident in our strategy: increasing the share of own brands and improving operational performance.

   There is no fixed timeline, but positive effects are expected soon. The project is managed as a strategic initiative with strict follow-up and accountability.

3. Can you comment on the negative cash flow development this quarter?
   
   Operating cash flow was lower than last year because of reduced EBITDA in inventory, build-up of our own brands, and temporary challenges in the invoicing process related to the ERP change in Norway.
4. Given the strengthening of the Swedish krona versus the US dollar, could you give some direction on how might impact Alligo’s margins
   
   If the SEK remains around 9.5–9.6 against the dollar, it will have a positive effect. Around SEK 600 million is purchased annually in USD. Hedging has been successful, with the highest rate at SEK 10.3, which limits some upside. The longer the SEK stays strong, the more positive the impact will be for Alligo.
5. From a global perspective, 2025 began with a turbulent first quarter marked by tariffs and trade tensions between China and the U.S. – how is Alligo affected by this?
   
   Alligo has a strategic direction to reduce dependence on China, partly due to geopolitical risks. As a result, some production has been moved to countries like Bangladesh, Pakistan, Laos, and Vietnam. However, with declining exports from China to the U.S., free capacity and lower prices have emerged. And in the short to medium term, we may actually shift some production back to China, as it will improve Alligo’s cost efficiency. Currently the situation is expected to benefit Alligo going forward.
6. In 2024, Alligo completed 11 acquisitions. How has the acquisitions contributed to the Q1 results?
   
   The acquisitions have had a positive impact in Q1 and also bring a different seasonality compared to our integrated operations. For example, Batterilagret typically sees a sales uptick during spring, driven by seasonal demand such as batteries for boats and solar panels for caravans and camper vans. So the warm weather in March was very positive. Another peak occurs in late autumn, as colder weather increases demand for starter batteries and start boosters.
7. When do you expect the market to turn, and how are you navigating the current environment?
   
   The market environment stabilized in Q1 2025, although at low levels. Alligo’s industrial and construction customers are expressing cautious optimism, although this is not yet reflected in sales.

   We are hopeful that infrastructure investments within the construction sector will start to gain traction. Historically, when infrastructure projects are activated, our SME customers tend to be involved early in the process, generating increased activity and demand.

   Sales remains our top strategic focus for 2025, supported by new sales and marketing initiatives. Alligo’s strong customer offering and committed organization position us well for growth, even in a weaker market.