Key messages and Q&A on Alligo’s Interim Report Jan-Sept 2022
Alligo published its Interim Report January-Sept 2022 on Friday Oct 28, 2022, at 8:00 a.m. CET. Here are the key messages and Q&A on the report.
Integration strategy closed to be finalized
During the third quarter, we have been able to refocus within the organization, from integration to marketing and operational efficiency. We have successfully solved the disturbances in the logistic process in Sweden, that was caused by the relocation of logistic process from Alingsås to Örebro in May 2022. We also started the roll-out of Nordic standard assortment in all markets – marking the final activity in Alligo´s integration strategy.
Profitable growth in challenging times
Alligo has so far handled the uncertain market situation well. Employment levels at small and medium-sized customers have remained high, as they historically do even in times of uncertainty and weaker economic conditions. We are nevertheless seeing a degree of slowdown in relation to larger industrial clients in Sweden.
Sales growth
The Group’s revenue for the third quarter amounted to MSEK 2,118 (1,856), an increase of 14.1 per cent compared with the same quarter last year. Organic growth was 10.2 per cent (5.9). This increase is driven mainly by larger industrial customers in Finland and Norway, as well as small and medium-sized enterprises in Sweden.
Improvement in margin
Group EBITA amounted to MSEK 181 for the quarter (149), corresponding to an EBITA margin of 8.5 per cent (8.0).
This improvement can be seen across all countries and is driven by increased volumes, price increases that compensate for higher purchase prices and synergies. The effect is mitigated by an unfavourable country mix in the form of stronger growth in Norway and Finland than in Sweden, as well as the coordination of business systems and logistics that has been carried out in Sweden.
Focus on operational efficiency
Alligo has a successful concept for driving profitable organic growth, which we are implementing on all our markets. We are well equipped financially, and we envisage good opportunities for supplementing our organic growth through acquisitions.
Selection of Q&A from webcast
Q1. Can you break down the 10.2% underlying sales growth in volume and price/mix?
– It’s a mix of several factors. We have had a big growth with larger customers – a segment where we also have been successful regarding catching up in implementing late price increases. Inflation is another factor having a positive impact on the organic growth.
Q2. Have you experienced any improvements in the supply chain during the quarter?
– The supply chain situation has improved a lot and is more or less normalised. The container prices are down to a normal high level (approx. 6 000 USD/container). Freight costs are better and the supply chain as such is working with no ships stuck anywhere. The disruptions we are experiencing now are related to energy shortages in some countries where we produce our own products.
Q3. Because of the roll-out of the Nordic assortment will the inventory levels go down in the coming quarter or is there still an upbuild period?
– From now on the inventory levels should go down. We are not far off but are still working on balancing the stock levels and have a lot to do in inventory management going forward.
Q4. Challenging market environment – how do you plan to protect Alligo´s business in a recession with weaker demand?
– A potential downturn in the market will happen when Alligo is a much more stable business – where we can benefit from synergies from our integration strategy, focus on sales and operational excellence. But we are discussing different scenarios – what happens if the demand weakens with 5 or 10 percentages? And we have a high level of readiness to take any measures that needs to be taken. But historically, another advantage that Alligo enjoys in times of greater price sensitivity is a relatively high proportion of our own brands in several product categories, where we deliver high quality at a competitive price.
More information about Alligo’s Q3 results can be found here:
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