Storskogen Group (STOR) CMD 2024 summary

Strategic Review and Future Direction

• Focus on resilience, stable profitability, and healthy returns, with capital allocated to areas with the best returns over the next three years.

• Portfolio to be reshaped by increasing exposure outside Sweden, reducing cyclicality, and investing in long-term growth themes such as well-being, automation, energy, sustainability, digitalization, and infrastructure.

• Disciplined approach to leverage, aiming to reduce it during economic peaks to maintain acquisition flexibility in weaker markets.

• Acquisitions will target companies with strong cash flows, higher EBITDA margins, and less cyclical exposure, focusing on core markets and existing verticals.

• Add-on acquisitions will comprise 30-40% of capital allocation, with a sweet spot for platforms at SEK 20-50 million EBITDA and SEK 200-500+ million in sales.

Looking Back

• Four development phases since 2012: foundation, accelerated growth, international expansion, and current focus on operational excellence and portfolio review.

• Diversification and active ownership have been key to growth, with a shift to more operational focus and cash flow management in recent years.

• Historical resilience demonstrated through diversified business units, withstanding macroeconomic turbulence.

• Net sales grew from SEK 8.2bn in Q3 2020 to SEK 34.6bn in Q3 2024, with adjusted EBITA peaking at SEK 3.5bn in Q3 2023.

• Selective divestment of underperforming units began in 2023-2024, refining the portfolio.

Where We Are

• Operates a decentralized model, acquiring and developing leading SMEs in selected industries with a long-term ownership horizon.

• Portfolio is diversified across services (30%), trade (28%), and industry (42%), with 46% of sales in Sweden and growing international presence.

• Strong operational cash flow, with LTM cash flow at SEK 2.9bn in Q3 2024 and adjusted cash conversion above 70%.

• Focus on organic growth through sales initiatives, margin protection, investments in scalability, and cost control.

• Collaboration and networking among business units drive cost savings, sales growth, and best practice sharing.