Key messages and Q&A on Alligo’s Interim report January-June 2022

Comment from Clein Johansson Ullenvik, President & CEO

“The second quarter of the year was one of intensive integration. In May, we completed the implementation of our joint IT and business system in Tools in Sweden, the transition to a new pricing system in Sweden and the relocation of the logistics operations of Tools in Alingsås to Örebro.”

Intensive integration work

Several key milestones in Alligo´s integration strategy was achieved during the quarter. While most things have gone well, the relocation of logistics operations from Alingsås to Örebro has caused disruption to various logistics processes, resulting in late deliveries to customers. We are working hard to solve these issues to regain the confidence of those customers that have been affected.  This relocation will in the long term provide both cost savings from streamlined goods flows and better service for customers.

Stable market development

The continuing unrest in the world makes for uncertain market conditions, but demand on Alligo’s markets has stabilised relative to the first quarter. The restraint shown by small and medium-sized enterprises during the first three months of 2022 because of Russia’s war in Ukraine has lessened. This customer group is normally highly resilient in weaker economic times, and it displayed stable organic growth during the quarter.

Sales growth

Revenue for the quarter amounted to MSEK 2,275 (2,157). The increase of 5.5 per cent in relation to the comparison period was driven mainly by development among larger industrial customers in Finland and Norway, as well as small and medium-sized customers in Sweden. Acquisitions, price adjustments and currency effects also had a positive impact.

Increased profitability

EBITA amounted to MSEK 172 for the quarter (164), corresponding to an EBITA margin of 7.6 per cent (7.6). This improvement in profit was driven mainly by increased volumes among larger industrial customers in Finland and Norway, as well as among small and medium-sized customers in Sweden, alongside synergies between Swedol and Tools.

Confidence in the future

The uncertainty in the world around us makes future market conditions hard to predict, but Alligo’s balanced mix of customers of different sizes and in different industry segments gives us the strength to withstand economic downturns. With a strong financial position and a shared platform now in place in Sweden – Alligo continue to focus on profitable growth.

Selection of Q&A from webcast

Q1. When do you expect logistics Sweden and ERP to move smoothly and have no more negative effect?

• In the short run the logistic integration in Sweden will add costs – as we can see in the Q2 results. We expect to see some negative effects in Q3 but expect that most of the backlog will be solved in Q4 2022. As communicated before, in the long-term the relocation from Alingsås to Örebro will generate annual estimated cost savings of MSEK 25, result in a more effective logistics processes and create better customer service.

Q2. Are you reiterating 10% margin target and is s there a delay expected?

• We are working on different scenarios, but we have really merged the companies (Swedol and Tools) now which gives Alligo good opportunities in a slower market. And we see growth potential for large parts of Alligo’s organisation even in a weakened economy, so our 10 % margin target for next year is there as long as there is a market to fight for.

More information about Alligo’s Q2 results can be found here:

• Interim report Q2 2022
• Webcast