Back to press releases

Key messages and Q&A on Q3 Report 2025

General & Market Environment

• Slightly improved sentiment: The market remains challenging but stable market, with more positive signs. Increased customer optimism has not yet translated into stronger sales.
• Mixed regional trends
  • In Sweden, in-store sales stabilized while direct sales declined, mainly due to the loss of Northvolt volumes and fewer large defense orders compared with Q3 2024.
  • In Norway, a weaker demand except for Oil & Gas industry.
  • Finland’s manufacturing sector continued to recover from low levels

Revenue, Sales & Operating Profit

• Revenue increased to 2.1% to MSEK 2,485, driven by acquisitions (+6.3%), while organic growth was –2.7%.
• Profitability improvement: Adjusted EBITA increased to MSEK 158 (144), with a margin of 7.2% (6.4%), supported by cost savings, stronger gross margin, and acquisition contributions.
• Margin drivers: Better customer and product mix, higher share of own brands, and to some extent lower USD purchasing costs contributed to improve the profitability across all countries.

Financial Position & Cash Flow

• Improved cash flow: Operating cash flow strengthened thanks to higher EBITDA and preliminary tax repayment.
• Debt ratio trending down: Net debt at ~SEK 2.1bn, with leverage 3.1x adj EBITDA, expected to decline further in Q4 and within the long-term target of reaching below 3x EBITDA.
• Capital efficiency focus: Inventory reductions and working-capital initiatives continue.

FAQ Q3 2025

1.Market & Demand

Q1. How would you describe the market development during Q3, and have the early signs of optimism from Q2 translated into stronger customer activity?

After six quarters of weakened profits due to the market downturn, bucking the trend with a positive earnings performance in Q3 is very welcome. The market is however largely unchanged vs. Q2: some improvements, but customers remain price-sensitive and cautious.

Q2. In Sweden, organic growth remained under pressure. How much of that is explained by the loss of Northvolt volumes and fewer defense orders, and what does the underlying trend look like?

Adjusting for last year’s defense orders and the loss of Northvolt volumes this year, Sweden would have had positive organic growth by a couple of percent, and the Group would have been flat.

Q3. Among SME customers, are you seeing changes in customer behavior or buying patterns—such as store traffic, order size, or spending mix?

Store visitors are stable (even up), but the average purchase is still lower, and customers buy exactly what they need.

2.Profitability, Margins & Costs

Q4. EBITA margin improved in Q3 after several weak quarters. What are the key drivers behind this recovery, and do you see scope for further margin improvement in Q4 and 2026?

We consider the improved profitability to be evidence that we are making the right investments and implementing the right measures and that they are delivering results.

Q5. Regarding the SEK 100 million cost reduction program launched in Q1, what impact has it had so far, and how much of the benefit will flow through in Q4?

The cost saving program implemented has further reduced the cost base in Q3 offset salary/inflation effects. Roughly 25% the savings were visible in Q3, with the remainder to materialize in Q4 and beyond.

Q6. Gross margin strengthened during the quarter, supported by FX and customer mix. How sustainable are these improvements and how much additional tailwind do you expect from currency movements in the coming quarters?

Alligo is not a gross-margin-maximizing case, we aim for a solid base to push sales. Currency is helping, and professional purchasing and higher shares of own brands/SMEs help.  We began to see positive purchase effects from a lower USD, with more to come as hedges roll and new stock flows through.

3.Cash Flow, Leverage & Capital Efficiency

Q7. Cash flow from operations improved sequentially in Q3 despite it being seasonally the weakest quarter. What were the main drivers, and should we expect this positive trend to continue into Q4?

Q3 is seasonally our weakest quarter. We improved operating cash flow due to increased EBITDA and repayment of preliminary income tax.

Q8. Your debt ratio decreased slightly during Q3, and you continue to target below 3x adj EBITDA, excl. IFRS 16.  How confident are you about reaching that level?

Typically, the debt ratio increases from the second quarter to the third quarter, as Q3 is the weakest cash flow quarter. However, the debt ratio has decreased slightly from Q2 and is expected to continue to decline. Despite the temporary increase in leverage, we maintain a solid financial position and expect leverage to be well below the financial target level by year-end 2025.

4.Status Turn-around in Finland

Q9. What tangible progress are you seeing from the TOOLS turnaround efforts in Finland, and when do you expect profitability to reach more sustainable levels?

The project is ongoing (store-network review, direct sales customer profitability, clearer leadership). Profitability is not yet where we want it, but we’re moving in the right direction, even if it’s from low comparables. Primary focus is on lifting trading gross margin, especially in direct sales.

Q10. Finland showed positive organic growth in Q3. What is driving the improvement, and have you seen results from the store transformation program?
Growth was mainly supported by a few larger industrial customers with strong development, while the transformed stores are showing gradual improvement. Most of the new concept stores are developing nice, but the results will take time to materialize

Q11. What is the current status of the Finnish store network transformation?
Around six to seven stores have been converted to the new concept. And we have paused further shop conversions to evaluate whether this model is the right fit for the Finnish market. We are taking a cautious approach, ensuring that the transformation delivers expected results before expanding further.

5. Market position, M&A and Outlook

Q12. The Nordic market has become increasingly price-driven, especially among SME customers. How is Alligo defending its market share against low-cost competitors such as Jula in Sweden and Puuilo in Finland?

We have maintained our market position. Alligo is particularly competitive in workwear/PPE, with own brands Björnkläder, Univern, Gesto and 1832 positioned across premium, mid and affordable price segments. Our differentiated price portfolio lets customers stay with Alligo while accessing lower price points, successfully defending our SME market shares.

Q13. Are you evaluating new M&A opportunities despite the higher debt ratio?

Acquisitions have helped us to grow overall, and we can see that our acquisitions have continued to deliver after becoming part of Alligo. Acquisitions remain an important tool for growth and profitability, while we are also balancing this against the target of significantly further reducing the debt ratio.

Q14. As you (Clein Ullenvik) prepare to step down, what do you see as the most important task for your successor, and what should be the main focus to take Alligo to the next level?

Everything needed for continued progress is already in place. Alligo’s financial targets are solid, and the current strategy provides a clear roadmap forward. The company is now in a strong position to execute rather than restructure.