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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day and welcome to today's presentation Troax Group AB First Quarter Report 2024. [Operator Instructions]And at this time I'd like to hand the call over to Mr. Thomas Widstrand. Please go ahead, sir.
Thank you very much. Thank you for listening in. I will, for those who have been with me before, follow more or less the usual presentation. More meaning than that, you can find what we call the report of the quarter 1 development. You will find it then on the Troax homepage, troax.com, and you will find it under Investor; and under Investor you will find an -- if you scroll down a little bit the first quarter presentation, which we this time call Highlights for 2024. So I will roughly follow this presentation mode, but I don't think that you will have any problem to follow what I say in any case, even if you don't have access to this kind of presentation.So I'll start direct by saying then that most of you probably have know a little bit about Troax, so I'd just very briefly summarize on that. We are working in 3 different segments. Machine Guarding is 65% something; we have what we call Warehouse Partitioning, which is 24% or something similar; and then Property Protection, which is the smallest one and especially strong, I would say, in northern part of Europe, which is 12% of our turnover, all related into 2023 figures.Then I will also refer to what we call Automated Warehouse, which actually is a hybrid between Machine Guarding and the Warehouse Part, where we used the automated solutions mainly for machine learning. But of course, since it's being installed in warehouses, it's sort of something mixing between those. And with most of you also have heard me say now a couple of times, Automated Warehouse have had a quite significant impact on our figures because during the COVID time, it went up significantly. And then of course when these big international customers realized and that we as a customer are not buying so much through the e-commerce as they thought, then of course they postponed or in some cases even canceled some projects. I will come back to this, but this was the history.We also then trying to introduce something new a little bit within Troax, that's what we call Active Safety, and that's where we then more actively prevent accidents. I mean, we are -- I think, we can be proud to say then that we are quite good in supplying very good solutions then for physical safety for people in the manufacturing or wherever they are. But now we are [ partly ] introducing some complement to this, which we call Active Safety, where we are then coming with solutions and with -- as the name implies, we then more actively help the worker or the person or visitor or whoever it is who goes, for instance, to a warehouse; and we then have a safe environment and not being in a hazardous area, where, for instance, a forklift truck could by accident hit this person.I jump a little further into the presentation and talk very briefly about the year in brief. So we have approximately 80%, if -- or a little bit more, it's actually in the more, let's say, developed countries, where of course -- where we report mainly Europe is this big one, where we have [ projects ], and of course Germany and Italy, who are very strong consumer markets for us. We have U.K., who is complementing this in a good way, 9%; and the Nordics with 16%. Even if we see from quarter 4, including now also quarter 1 in '24, there's of course the building market where the Nordics is quite dependent on, is then substantially reducing. I will come back to this. North America also been reducing in practice and because of this Automated Warehouse, but nevertheless, we think we have a good position for future growth. So in percentages, there was 17% which was the same as last year.And then we have the growth potential more long term, which we call new markets, which of course includes the Asia-Pacific markets, India and a few other countries, which is now [ for '23 ], we've been growing from 6% to 8%, there we have roughly then the split up from geographical area.I'll jump to next slide for those who are into this because this just shows the financial figure for '23, and we already talked about that last time where we ended with EUR 264 million in turnover, and approximately 20% in operating margin, or EUR 19.6 million to be exact. So I go through what we call the financial targets and make a summary of that for the first quarter.First quarter is actually manifested or you can say that -- when we talk about the first quarter, there's not really much that has happened from a market point of view. It's a similar market compared with quarter 4, meaning it's a little bit weaker, but still a good market, I would say, for most of our product offerings and most of our regions. It's a rather stable development, I would say. Nevertheless, because of Steel, we have some delay from this Automated Warehouse invoicing that we had last year. We have a reduction organic growth of 6%, whereas we have including the acquisition of Garantell that we did 1st of December last year, then we actually have an increase then. But organically, we have seen a slight decrease of the demand during first quarter.And obviously we continue to have target on the profitability side, which is 20% or more. So when we then look at the EBITA, it's actually a little bit lower this quarter, and normally first quarter is a little bit lower; but this quarter, it's been influenced by a few one-off items or one-time issues that sometimes happens, but it's not so that we have these kind of costs every quarter. I wouldn't call it extraordinary cost, because we do this kind of, let's say, restructuring or changes from time to time. But nevertheless, it's important for you to understand that what we show here, which is actually rounded off down to 16%, which was in reality 15.5%, was more, I would say, 17%, or actually a little bit higher than 17% if you exclude this kind of one-time costs that I'm going to share with you in a minute or 2. So I'm coming back to that.On the capital structure, despite the purchase that we did or the acquisition of 1st of December, it's quite good. We are still in relationship by the net debt to EBITDA. We are in 0.9 or far below our target level, so we were in quite good situation. And regarding dividend, as you probably know, perhaps already, we've had the annual general meeting today, and the assembly -- and in the General Assembly accepted on the proposal. So this the 4% that was proposed from the Board, it has been accepted, so this will be paid out now in the beginning of May for those who are shareholders, I think on Wednesday this week. That's the date where it's being based upon.So if I try to summarize, the first quarter, you will have, for those of you who are following this presentation, you have a summary of that in the presentation called, Summary first quarter. I think we can say then it's been characterized by a continuation of a little bit lower market activity, especially from the Automated Warehouse customers, but also in the building market that started to go down in the fourth quarter last year, and now during first quarter has, so to speak, have the same development. And as you know then, the building market for new building in the Nordic area is very weak and every statistic is pointing in the wrong direction, so to speak. So even if, of course, we are trying to continue to increase our market shares in this area, I think we're expecting them to have a rather weak development in this market towards the end of the year. I think, at least for '24 we're going to see a continuation of this low activity level there.Now having said this, it was so that the quarter actually started, I would say a little bit weak by January and February where March was starting better and gradually improving. And we have seen certain, let's say, highlights which are positive in the quarter meaning that some customers were starting to request quotes for bigger projects, which was not so -- we didn't have so many of those requests, let's say, during January and February, so whether this is a more positive trend we have to evaluate. And I -- my successor, Martin Nystrom, will have to comment on this when you will hear him then in August when we present the second quarter. But at least towards the end of first quarter, it looked a little bit more positive at least compared to the beginning of the quarter.Generally speaking, we think that the market is going to -- continue to have stable activity levels with the exception that I already described. We've seen a reasonable development except in the Nordic area and a continued lack of -- also in the Automotive sector in North America. The Automotive sector in North America seems to have postponed an [ enrolling of ] project especially within the electrical car sales and investment part.So we were told in quarter 4, which was already then rather weak for North America that this was going to start up again this investment we mean in quarter 1, but we haven't seen this actually. So now the information is that -- they inform us that this will be started up again during the summer, and this could very well be true. But our gut feeling is, of course, that all these projects are being a little bit delayed. So I wouldn't be surprised if there are a little bit further delays maybe before the orders come to us. But that -- they will come to us, I'm convinced, so -- but you could argue a little bit about when they will come. So we're not terribly worried about the development from an order point of view, even if of course then 2024 will not be, from an order point of view, I think is fantastic.Regarding steel price, it has been more -- continuing to be stable, so no real deviation there. And as I said -- and already in the introduction, we've seen a lower EBITA in quarter 1, '24, partly because of volume situation is -- as regards Automated Warehouse was done of course below what it was quarter 1 last year. And in general, there was a little bit weak volume development in -- especially in the American and the Polish manufacturing units. But for the other ones, it was quite okay. So it's not -- I wouldn't say that it has a major influence even if, of course, it is reducing a little bit the coverage of fixed costs. But during the first quarter, we have had a few, what I call, one-off costs or one-time costs, and the main one is done that we have closed, which has been planned for a long time -- we have closed the remaining acquired manufacturing unit in Poland.We bought two a couple of years ago when we bought the company, Natom; one was closed very quickly after the acquisition; and the last one is now closed here in actually March. And we have taken down some one-off costs for that, both connected with the actual physical move from the old factory to the new one that we have had now for a couple of years outside of Poznan in Poland. So then the cost for moving is, of course, then included in the result as negative item. We also have made some depreciation of machinery. It was also not fully depreciated, which we of course, will not then move to the new unit. And then we have, of course, some redundancy costs for the people -- for the 25 people that we may redundant and have left now after 1st of April.On top of this, we've had also some start-up costs with our new manufacturing unit in China. I wouldn't exaggerate those figures because these are normal figures. But of course, on the top of it, it costs EUR 200,000 extra in the result account during the quarter when you start up these activities, because we still have partly then during the quarter 2 manufacturing units. Now the old one is closed, so we shouldn't have any costs from that after 1st of April. But as I said, during the first quarter, we've had a little bit of a double costs for that. So if you then exclude these one-off costs and this is just a hypothetical issue, obviously, but just for your understanding, especially for you who are following the company, I would say if you exclude this kind of one-off costs, we would end up somewhere between 17% and 17.5% in EBITA margin, which is more in line with what we should be, even if it's still a little bit on the low side. And the difference then to round this off totally to where we should have been under normal circumstances is standard.We still have, as I said, already a little bit lower volume than especially in the American and Polish units. And then coupled with that, we also in Europe have sold in the first quarter quite good volumes to the Automotive industry. And in that industry, we have slightly lower margins. Nothing wrong with that, but it has a little bit of a negative impact, of course, on the margin side. So otherwise, it's been rather stable and not anything which is worth mentioning. If you look specifically on the gross margin, it looks on the paper it does not reach the targeted level. But as I said before, if you then exclude the acquisition of Garantell, which gives when you consolidate the activities down from these more, let's call it, low margin products, that Garantell is producing and selling. We get a negative impact of somewhere between 1% and 1.5% on the consolidated gross margin. So if you exclude that already there we are on the same level as last year. Hypothetically, I mean. And then on top of that, we have already said that we've had this one-off cost which, of course, also had mainly an effect on the gross margin.On the sales side, I've already commented what was negative, but I can say also something that was more positive. We've had quite a good development in new markets where especially the Asia-Pacific have shown them good development during Q1 with -- for many years. As you know, we've been there and we've been trying step-by-step to grow our business, and at least now for the first quarter, it was quite okay and much better than before. Very stable, I would say, also in Continental Europe, despite the fact that it shows more or less a similar figure than last year. But I would say that bearing in mind and the demand probably is a little bit weak, generally speaking, I would say then that this is what we've done with orders and sales in Continental Europe is quite okay. So because and the EBITA was lower, of course, you get an adjusted earnings per share which unfortunately is a little bit lower, that's something for us then, of course it came back to and try to compensate for the rest of the year.On the working capital, it's on a similar level to last year. We have before reduced inventory, so this quarter has not been a big influence. There are still a few things to be done. But I would say that, generally speaking, working capital is quite okay. And the newly acquired company, Garantell, they've continued with a decent development. And the result, which we are not specifically showing that I can at least say then that it's according to specification -- sorry, expectation and follows then what more or less our ideas were that we could do in the beginning.Right. So I go very briefly and talk a little bit about the next page about the figures. I won't go through that in any details, but you see then -- with the acquisition of Garantell, we have higher order intake and sales. But as I said, if you exclude that and you take the organic growth, unfortunately it is on the negative side. The gross margin, as I said, looks a little bit lower this quarter compared with last year. But if you just exclude the Garantell, then we will come very similar to last year. And then of course, these margins are negatively influenced by the one-off costs that I've already now described. And this, of course, goes through down to EBITA and of course further down the result. So it's fairly easy, I would say, to both the analysts and to understand the results for the first 3 months.If you look at the regional development, I already commented, which we will follow, this presentation is on the next page that I would say that the Continental Europe have done quite a decent job. We are in line, I would say, with our expectation. Nordic is going down quite substantially because of the many of the building sector, and you can see then that the orders is going down lower than the sales, which means that we are expecting then on the sales side to get a little bit lower turn, I would say, during the rest of the year. U.K. is doing quite okay, as you see on the order side, so very positive there. North America, lower in orders, again, Automated Warehouse -- sorry to repeat myself, but it is the main effect. Otherwise, North America is doing quite okay, even if I say also the Automotive have been rather weak here during first quarter. And then new market which is done substantially better in percentages, but you see also that the absolute figures are not that high. So it had -- unfortunately it doesn't have that big influence on the situation.So if I try to conclude before we move into some final words and you get the opportunity to ask questions. I would say then that it's been a rather stable development despite and that the market has been demanding a little bit weaker. We've received several important orders in all segments, even on the building side, even if the total figure, and of course, in this quarter is what I would say on the lower side. The lower result reported is reflecting both a little bit lower utilization of our manufacturing units and some one-off cost connected with -- mainly on the closure of this unit in Poland, which I have been trying to describe to you.There are no major changes in demand, I would say, during first quarter even if you remember I said that we started the quarter with a little bit lower activity and it improved in March. Let's see now during quarter 2, how it will go. But again, to building market, we do see that it will not improve short term. And then the question is when the Automotive segment in North America will get started. Probably it will be either during Q1 or Q3. Whereas the Automated Warehouse, as we have communicated before, will not get started earliest during the end of the year, probably during Q1, I would say, next year. It's more realistic as that is today.And the Garantell is following the calculations that we did. So we're quite happy with development so far. Jumping down to the more overall issues. We still have on the next page the summary of the growth factors. And you've heard this before, so I will not bore you with going through this again. But it's still based on them that we have an increased industrial automation and robotization. And this is continuing also in bad times, so I don't think we are very afraid of seeing any negative development there. Of course, it will go a little bit up and down with the financial development generally in the world.We have also the growth in e-commerce, which I said that at the moment is quite quiet, but it will get started probably, let's say, during Q1 next year. The onshoring of manufacturing, many people are talking about that. We see some signs of it. But I don't think that we should be, let's say, too concerned about this neither positive nor negative because we do see that some customers are expanding the facilities then, for instance, in Europe or in North America where it before was in Asia or Asia-Pacific. But of course for us being down in the industrial parts of the world, it doesn't matter so much if we make an -- if the customers make an investment in China or in North America as long as they make the investment, because that's the key, of course. So for us, it might be a little bit better, of course, to make it in North America or Europe, because we have better market share. But otherwise, I would say in principle it doesn't have this huge impact on us as a company.On the next page you have the summary of the production units and there are some smaller changes here. We have, in China, an increase in capacity from a little bit below 100,000 meters per year, or 100,000 [ panels ] to at least 300,000 which means that at least -- mathematically we have low capacity utilization. But this is of course based on that we long term or preferably a medium term, expect to see a good volume development there, meaning that the capacity utilization will go up. And then of course we have the acquired Garantell, which is on the right side here, which is placed in the city not far away from Hillerstorp or Varnamo. And then we have a lot of capacity, both for shelves and for anti-collapse. And we think that the capacity utilization give or take a little bit, could be around 60%, maybe a little bit higher. Let's see about us when things are stabilized a little bit more.With this, I don't want to bore you too much, because I think you heard most of it. You know that we are working internally, we're trying to increase the recyclable steel, we're trying to reduce and of course the CO2 impact, we're try to do investment to do it based on the environmental evaluation, et cetera, et cetera. And we will start now with reporting in accordance with CSRD in 2024 and the reporting in the next year on the report. The other things here you can read for yourselves. So with this, I would like to just summarize and say, from our point of view, first quarter was not really an extraordinary quarter, a little bit weak [ and low, that ] was a stable development. So don't get a little bit too hung up on that the result was a little bit lower because a lot of it was coming from these one-off items even, of course, there are some -- sometimes the system, which is also working against an improved result, but this is the way it always is, not changed.So with this, I'd like to end my presentation and give the words to you because I'm sure you have a number of questions now connected with it. So please go ahead.
[Operator Instructions] Our first question comes from Gustav Berneblad from Nordea.
Yes. It's Gustav from Nordea. Just in terms of the gross margin, I mean, you were probably very clear here, but just to clarify, was Garantell alone impacting the gross margin negatively by 1 to 1.5 percentage points? And then, yeah, okay. And then if we adjust also for the one-off costs, I mean, you write in the report that you would be at the financial target. Do you refer to 39% to 40% then or?
You could say that. Yes, correct. Yes.
Yes. Okay. Perfect. That's clear.
And regarding EBITA, just to be very clear, we will probably not reach exactly the 18.7% that we had last year or 20% that we have as a target because, firstly, the first quarter is normally a bit weaker quarter. And secondly then, as I said, we had a little bit too low capacity utilization during the first quarter to reach our targets.
Yes. And maybe just on the EBITA margin, to also get that clear, you comment on higher normal cost of sales, partly due to marketing done. Is it possible to quantify these at all or?
Yes, what you can get from me is a little bit [ sales on ] that. If you look at the higher cost of sales. A big part of that, of course, comes from the consolation of Garantell. But then also we've done, let's say, our own increases, which maybe you can say was a little bit on the aggressive side from a cost point of view during the first quarter, and you can calculate that to be in the range of EUR 0.5 million or something like this.
Okay, perfect. So when you adjust or reach the 17% adjusted EBITDA margin, does this include the adjustments for the higher cost of sales or?
No, the -- when I say 17% or something like this, this includes this kind of sales cost that we had during first quarter, so I have not excluded any costs there.
That's clear, that's clear. And then, I mean, looking at sort of a -- you commented a bit on seeing some signs of demand from nearshoring in Q4, primarily in machine guarding. Are you still seeing this? Or is this?
No, we are seeing this. What I said before is I want to turn down a little bit the expectations, as [ Jonathan ] because wherever we deliver, it doesn't make so big difference for us. But yes, we see some development in these area, both in Europe and in North America.
That's great. And then just the last one here. I mean, it seems like the year-over-year price level still remains sort of unchanged for you, but we have seen some signs there from early Q1 reports of price decreases from companies here. Would you say that you still expect to have lower prices or have to lower prices somewhat to your customers going forward? Or what do you see here?
This is very sensitive because I think some customers, I'm sure, are listening into this call. But I can say like this, that during Q1, we have not reduced any prices. Of course, you will have some negotiations with customers here and there, where of course, you end up with hopefully something which is acceptable from most parties. But we are not expecting any major price reductions or general reductions with what we know today.
That's very clear. That's all for me. And also, good luck out there.
Our next question comes from Daniel Lindkvist from Danske Bank.
Thomas, so just starting off, many of the questions are on the gross margin and extra costs and so on were answered. But on the Garantell side, now reading the report, it seems like Q2 should seasonally be their strongest quarter. Is that right? Because I think the order intake is much shorter than for the rest of the business. So they could basically have order intake for yet 2 months after this that could still be delivered in Q2. Is that right?
Yes. You're probably right. I haven't dug into the figures from the order book so much for Garantell this time. But in principle, you're right, they have a short order book. And normally, they ever rather short lead time between they get the orders and they send it out. So yes, you're probably right. Daniel.
And in Q2, in a normal year is the seasonally strongest quarter?
Yes. Yes, normally, Q2 is quite strong. Correct.
Cool. So then, I mean, I just want to thank you for this time then, Thomas. I mean you've been a role model in so many ways, and it's always been evident that you genuinely enjoyed your work, and that has made us.
Absolutely.
And that has made us enjoy our work as well. And with, I think, many with me have felt personally recognized when dealing with you and also learned a lot, especially when it comes to your proficiency in making the most of the market-leading position you have. And also, I think, a role model when it comes to guiding investors, no matter what knowledge level or experience you have with your company. So you will be dearly missed, but it seems like you have a good successor in place, and I'm happy that we'll meet again here soon in other instances. So Thomas, all the best of luck in the future.
Thank you very much, Daniel. Very nice words. It was too nice. But nevertheless, I will remember it for the years to come.
[Operator Instructions] Our next question comes from Anna Widstrom from Carnegie.
It's Anna from Carnegie. So firstly, I wish to ask you on some details on the Polish cost savings and the planning expansion. And sort of what kind of cost savings are expected? And I mean, you mentioned that the people are going home on 1st of April. So should we see some positive cost effects already in Q2? Or are there some balancing things, so maybe we should see firstly in Q3 and so on?
Yes. You should see some cost savings already in Q2 because the 25 people that we have laid off, we have in [ principal ] pay now, the redundancy and their salary, that I mean they had a normal salary wages during the first quarter, which in principle should disappear for quarter 2, if we don't get new very high orders, which demands more extra people.So if you calculate for yourself then that 25 people times what the average cost in Poland is, which of course, is lower than Europe, but nevertheless not that low anymore. You'll get this -- some sort of cost savings and that you can use for your own sake, so to speak. And you also have -- we have, of course, also some other reductions of cost, meaning then that you have less energy because now we produce in one place and the machines will run in a more efficient way. You have less cost of land, but I don't want to work with [ more than the figure is ] because it's on a consolidated basis is not that high figure. But in principle, that will of course also help which is needed as we have seen and that Natom is badly hurt by this reduction in volumes from the Automated Warehouse. So this reduction of 25 people was very clearly, it wasn't easy to reduce under costing in that unit.
Okay. And looking on the cash flow, there's some increase in working capital. Could you maybe give us some detail on this?
On working capital, I can say, if I start from the other angle, from the cash flow, normally we have a little bit lower cash flow, weak cash flow in quarter 1. But this year we also -- if you read everything in detail, you will find that we have paid EUR 2 million of our own shares, so we have bought back roughly in value EUR 2 million, which of course influenced our cash flow. So that has a certain influence of course indirectly of the working capital.Otherwise, I would say that we have the receivables is under control; in general, also inventories under control. But by the end of first quarter, we have a little bit, I would say too high inventory on the work in progress, where customers then are either installing our stuff where we're helping them, where we then have to wait until it's finished, until we can invoice or in some cases, as you know, so -- we have ourselves been maybe a little bit too flexible in, let's say, ordering too early and so we have liberty to do that, but we're not talking about big money here, Anna.
Okay. And to ask you on the -- if you have any sort of guidance on the new construction exposure in Garantell?
Sorry, I didn't catch. New construction of?
Yes, basically Property Protection, sort of that aspect of it.
Yes. Also, Garantell is hit a little bit by, of course, building market, albeit that is in lesser extent than the Troax Nordic areas, because Troax Nordic is quite heavy -- or has a good market share in that area. Garantell has a lower market share and there's also other type of products which for the first quarter have had more, let's call it, stable development. So, you on the total for Garantell, you don't see these kind of negative figures, as you see for Troax, but in principle, they get influenced in the same way. It's just that they have a little bit different product mix and different dependence on the building sector, so you don't see it in the same way.
Okay. And one of my last questions then, we had the Easter in Q1. Could we sort of expect that the sales and order intake was slightly affected in a negative way from Easter being in Q1?
Sorry, I'm sorry, Anna. [ I hear ] you very well. Could you repeat your question?
We had Easter in Q1 in 2024.
Yes. Easter, yes.
Could we expect that we had a negative effect on sales and orders from the Easter effect?
That's a very good question, and I quite understand it. I would say that, yes, you have lower invoicing days in March this year compared to last year. So obviously, it has an impact. I would say, though, on the order side, you shouldn't see it to have that effect because I because I do believe that the customers will put in orders, even if they go on Easter to have a vacation. But on invoicing, yes, it has a certain effect, that is correct. But not so much on orders, I would say, Anna.
Okay. Great. Then I just want to join in with Daniel and wish you good luck.
Anna, I appreciate that and looking forward to seeing you all again.
Thank you. And it seems there are currently no other questions at this time. This I'd like to hand the call back over to Thomas Widstrand.Apologies. We have a pop-up question from Johan Skoglund from DNB Markets.
Okay.
So just a question on Garantell with that coming into the Group. So just so I understand, what are the steps here to increase the margin? Is it automation, sales volumes, decreasing overhead or any other factors?
No. Garantell is by definition, a little bit lower margin than the rest of the Troax Group. So, it has a similar structure than Natom, which we bought a number of years ago, because these products are more competitive from a cost point of view compared with competitors. And so it's not so that I think that we just, by coming in, we can raise prices. We don't have those ideas because we are, as you know, a long-term partner to our customers. So it's more -- to answer your question, it's more about raising the volumes, which I think is quite possible to do in Garantell, but it will take a bit step-by-step. So you shouldn't expect any short-term major improvements from a gross margin point of view. But I think over time you will, there are quite possibilities to see some improvements in margin and of course also in the result, but it will be step-by-step.
Great. And I realized you answered my second question there as well.
We have a few more questions in the queue, and the next slide comes from Zino Engdalen from SHB.
Just to be clear on the one-offs. So we then can expect some cost savings ahead, but just to make sure that have all the costs, so to say, been taken in this quarter, should we expect anything in Q2?
You mean from the -- this closure in Poland?
Yes.
No, we've taken all the costs that we know about at least in quarter 1. That's the only -- whole setup. We don't want to have any costs going forward. So what we have now today, we've taken all the costs in Q1.
Perfect. And just with regards to Automated Warehouse. It sounds now that maybe 2025 is more realistic to get orders than in late '24.
Correct. Yes.
But have you heard any -- has the tone of your customers changed in any material way due to higher interest rates and such?
Yes. I think in general, you're right that I think especially at the beginning of the year when I said that it was a bit lower activity, I think that had a major effect coming from this with interest rate, and people were waiting to get some signals that the interest rates were going down. Now, even if this is a little bit speculation from my side, this is the message we get from our customers. So I think that, that will -- when that now, which looks at least probable that it will start to decrease sometime during next -- or this year, that will have a healthy effect on these kind of huge investments that we're talking about in Automated Warehouse. But how that with -- how in practice this will influence when they put order to us, it's difficult to assess. So I do believe that what they've been telling us is more or less true, even if I'm a little bit cynical about when the orders will come, because I calculate it will take a bit longer time.But in the meantime, I do see also that some of the integrators that are working with these kind of big international players, they don't have a lot of work. So there are not so many projects out there. So I think these kind of customers primarily -- even if, of course, we also feel it, but this kind of customers will have a difficult period during '24 until the new product will be started, regardless if that is towards the end of this year or beginning of next year.
Okay. Those were my questions and applause to you, Thomas and your team, for what you have built during your tenure as CEO, Best wish you there.
Thank you very much. Appreciate that, very kind of you.
And we have a follow-up question from Daniel Lindkvist from Danske Bank.
Thomas, I just want to make the most of the opportunity to have you still on these kind of conferences. So I mean, now I was hoping for something visionary in the report, but then as soon as I read it, I realized you were too much of a gentleman to put any heat on Martin for the future. But if you just look back from when you started out, now we have a very much broader offering and many interesting names. So should we still read the 8% to 10% as a normalized year in a normalized economy for the future as well? Or has anything changed in that sense?
I understand your question, Daniel. It's a good question which I will refrain from answering with an exact percentage, obviously. But I can say like this that, during many years we've had or as an average, we've had this, 8% to 10%, in some cases higher percentages in organic growth, there's nothing in the circumstances creating in, let's say, a good business atmosphere for us that we can utilize both with the market going forward and we've taken market share. There's nothing which has negatively influenced this so far as I can judge, so the circumstances that we've been working with before are still there, even of course right now we have maybe a little bit gloomy general economic condition. But over a business cycle, there should be the possibilities to continue to grow. Even I don't want to nail down a specific percentage.
Perfect. That's all for me.
And it appears this was the last question today. With this, I'd like to hand the call back over to Thomas for any additional or closing remarks. Over to you, sir.
In that case, I'd just like to thank you very much. You have given me very many nice works, which of course I appreciate. But as you said, it's a very good teamwork here from the people, and these people will remain here also when I leave, and I will still be in the Board and see if I can do some news continue for the Group. And I believe I've got a very good successor here in Martin Nystrom, who will hopefully then come with a little bit new ideas and new ways of approaching things. So hopefully then you will be able to ask him in August and what kind of ideas he has and what kind of impression he has over the future.But until then, I would like to thank you very much for listening to me and also your interest in Troax, and I hope that, that will continue and I wish you all the best. Thank you very much. Bye-bye.
Thank you. This concludes today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.