Alleima Aktie

Hello, everyone. Welcome to Alleima's presentation of the second quarter results 2026. My name is Frida Adrian, and I'm Head of Investor Relations. I'm joined by our President and CEO, Goran Bjorkman; and our CFO, Johan Eriksson. Goran and Johan will take you through the highlights of the quarter. And following the presentation, we will open up for a Q&A session. You're welcome to ask questions via the conference call or submit your questions through the webcast interface. The presentation materials are available for download at alleima.com. And as always, safety is a top priority for us. So I trust that you are familiar with the safety procedures at your current location. And with that, I hand it over to you, Goran.

Thank you, Frida. I would like to begin this webcast by addressing a very sad event that happened on May 5. And I want to express my deep sorrow with the tragic traffic accident at our industrial site in Sandviken, in which one of our colleagues sadly lost their life. Our thoughts are with our colleague's family, friends, and colleagues, and our deepest sympathies go to all of those affected. This tragedy is a painful reminder of why safety must always remain Alleima's highest priority.

We are cooperating with authorities while continuing our long-term work to strengthen our safety culture, mitigate risks and ensure a safe working environment for everyone. This is an ongoing effort that is never complete and that requires our full commitment every single day. So while this loss has been deeply felt across the organization, I will now turn to the key developments and highlights for the quarter. So let's look at them.

Overall, I think it's a strong quarter on several fronts. We are, for the first time since quarter 1, 2025, again showcasing top line growth where both order intake and revenues grew organically. The 12-month rolling order intake went from minus 12% organic order intake in quarter 1 to now plus 3% in quarter 2, supported by strong performance in key segments like parts of oil and gas, medical, industrial heating and transportation.

And as you have seen, we received the largest order yet in the history of Alleima on almost SEK 1 billion for umbilical tubing. At the same time, there are still uncertain markets where the situation in the Middle East still affects us, mainly in the OCTG business, but creating overall uncertainty in other areas as well. While we are pleased with the quarter, but remain cautious going forward.

Earnings-wise, we saw a strong contribution from Kanthal, which I will get back to, but also strong performance from the umbilical business as well as titanium tubing to aerospace. This is somewhat offset by weaker short-cycle business within tube where the weak Europe continues to dampen the result. We also noted a slight FX tailwind. We'll continue our journey on long-term value creation. During the quarter, Alleima inaugurated Tube Mill 2026, expanding capacity for steam generator tubes to the nuclear industry by 60%. Also paid a dividend to our shareholders on total of SEK 625 million, an increase of 9% compared to 2025.

And in addition, the targeted measures announced in the third quarter last year are progressing according to plan and are delivering cost savings in line with expectations. I think taken together, these actions position Alleima well to continue creating value going forward. Moving to sustainability, which remains an important part of our strategy. And during the quarter, the share of revenues from a sustainable product portfolio increased, mainly driven by the growth in medical and industrial heating segments.

Health and safety, always our highest priority, rolling 12-month accident frequency improved versus quarter 2 last year, but sequentially increased due to more accidents this quarter than quarter 2 last year. And we need to continue and to maintain a strong safety focus across the organization. CO2 emissions increased mainly due to a lower share of biogas and a higher use of natural gas. At the same time, the share of recycled steel remained high at above 80%, both on a rolling 12-month basis and year-on-year.

If we take a look at our view on the market development, we still view it as mixed, uncertain or challenging, whichever word you like, stemming from the uncertainty around the Middle East and an already weak Europe. Volatility is expected to linger, but we also expect momentum to continue in key segments. Maybe you noticed it changed that we changed a few arrows, but I will walk you through each segment, starting with oil and gas. And I can say that I feel confident to say that it was a good decision to increase output pace for umbilicals in the beginning of the year.

Major order received is a confirmation that the market is strong, and we stick to a positive view as the project list still is very attractive. For OCTG business, on the other hand, we talked last quarter about the effects from the situation in the Middle East, and we flagged for a weaker outlook already in the Q4 report, and we stick to that view as well where we land in a flat arrow.

Industrial, European demand is still weak. Asia also declined, but North America improved but on low levels. Chem, petrochem volumes in Europe and North America are low, while Asia has been holding up better, but we -- where we now have a slight slowdown. Industrial heating, we continue to see growth driven by Asia and North America, while Europe is still on the weaker side. And it's still some segments like electronics and semiconductors are still the main drivers.

Consumer, flat demand on a good level and medical, strong momentum, no signs of slowing down. And let me remind you again of our greenfield investment in Malaysia that will be up and running towards the end of the year.

Transportation, titanium tubing for aerospace, also including space is continued to be strong. Mining and construction demand was stable overall, again, driven mainly by the mining industry. Nuclear, nothing has changed where the outlook remains positive. And last, renewable energy, there are some bright spots, for instance, biofuel, but all in all, still weak.

So let's turn to the Middle East. Market uncertainty continues. The situation remains unstable. And as you know, there is new information emerging almost every other day. The uncertainty is negative for the market as it affects visibility, customer sentiment and decision-making. And just as previous quarter, it's important for us to focus on what we know and to avoid speculation, whether it's negative or positive.

Our larger exposure in the region is within OCTG, which is part of the Oil and Gas segment. And this business has both direct and indirect exposure to the Middle East and is being negatively affected by the developments in the region. We continue to see a slowdown in new well completion, which is expected to negatively impact our order intake in coming quarters. And as I said, in quarter 1, we have reduced our output to support our customers in avoiding excess inventory, which has had a negative impact on revenues.

We also have a chemical and petrochemical business in the Middle East, and that is also effective, although this is a much smaller part than OCTG in that region and therefore, less significant from an overall exposure perspective. And at the same time, the impact on Alleima's other businesses remains limited.

Moving to order intake and revenue. Order intake rolling 12 amounted to SEK 18.6 billion, again, up 3% organically compared to the minus 12% we had in quarter 1. And this is supported by strong development from umbilicals, including the large order, but also excluding the large order umbilicals was good and also strong development in industrial heating, medical and aerospace. And we are growing despite the lower OCTG volumes we flagged for previously, and we are still low in chem, petrochem, while we strategically have booked some more contribution business in the quarter to cover cost, which will have a somewhat dilutive effect in the margin near term.

Revenues grew organically by 2%, supported by the same key segments that drove order intake. Tube and Strip declined while Kanthal grew. And book-to-bill rolling 12 recovers to 102% from the 90% we had in quarter 1. Earnings. Adjusted EBIT improved to SEK 519 million and a margin of 10.6%, a strong performance despite lower volumes in the OCTG and the short-cycle businesses. This is explained by solid performance in umbilicals, aerospace and I would say all of Kanthal.

And in addition, we see positive effects from the targeted measures announced in quarter 3 last year and somewhat helped by FX. Cash flow of SEK 330 million, which Johan will get back to show some details later. So let's look at the division performance during the quarter, starting with Tube. And I would say it is a mixed picture. Some parts of the business like umbilicals within oil and gas, titanium tubing within transportation are performing really well. While short-cycle business, mainly industrial and chem, petrochem still are weak.

Our APAC unit has previously held up strong both in terms of top line and earnings, but we now expect a somewhat weaker Chinese market. Rolling 12 order intake grew 1% organically on the back of the major umbilical order, held back some by high comps in both SGT and OCTG. Revenues declined by 3%, again, affected by the short-cycle business, OCTG and also some timing effects in nuclear.

Book-to-bill grew to 101%, recovering from the 85% sequentially. Adjusted EBIT margin of 11.2% on par with last year despite lower revenues coming from strong contribution in umbilical and aerospace as well as savings from the targeted measures, mitigating the negative effect from the short backlog in short-cycle business and the lower volumes in OCTG. And currencies had a positive effect on SEK 18 million year-over-year.

Kanthal, let me take a moment and really highlight the great performance of Kanthal. In the recent downturn where volumes in industrial heating were low, while facing a significant FX headwind throughout most of 2025, they've done an excellent job in taking actions to protect profitability. And now when volumes have recovered and with growth investments ready to scale, I would say the future of Kanthal looks really bright. Rolling 12 order intake grew organically with 19%, where medical and industrial heating were the main drivers. And the same can be said for revenues, which grew 21% organically.

Rolling 12 book-to-bill of 109%. And the adjusted EBIT margin of 19.6% is a record high in the quarter, and we see contribution from several product groups, both within medical and industrial heating. FX had a minor positive effect of SEK 4 million year-over-year.

So to Strip. It's been a challenging quarter for the Strip division. We have experienced some production disruptions in Sandviken. I would say these issues have now been resolved. mitigating actions are ongoing, and Strip is working to strengthen its cost position with, of course, the aim to once again contributing positively to the group margin. Rolling 12 order intake declined organically with 16%, heavily impacted by a negative development with the hydrogen business, but also a weaker Industrial segment.

Revenues declined 1% organically with the consumer segment contributing positively. Adjusted EBIT margin was 2.5%, but impacted negative SEK 3 million year-on-year and underlying margin was 3.3%. And book-to-bill amounted to 89%. And by that, I'll leave over to you, Johan.

Thank you, Goran. So looking at the financial summary and starting with the table to the right. So order intake for the rolling 12-month period amounted to SEK 18.6 billion, corresponding to an organic growth of 3%. We had a negative impact from FX and alloys of 4% and 1%, respectively, indicating a total growth of minus 2%. If we look then at the quarterly revenues, we reached SEK 4.9 billion with organic growth of 2% and still some impact from FX, which in total had a negative impact of 1%, while alloys had turned to a slight positive effect of 2% on quarterly revenues.

If we look ahead into the quarter 3, we see on revenues, a neutral currency effect, and we expect roughly plus 2% from alloys. And for -- on the order intake side for the rolling 12 months, we expect minus 3% on currency and a neutral effect from alloys. So -- and we have no contribution from structure, we can conclude. We haven't done any acquisitions in the last 12 months, and then there are no structure effects on top line then.

And then back to the big table on the left, where I'll get back to adjusted EBIT in the coming slide. The reported EBIT increased to SEK 715 million coming from higher revenues and positive metal price effects. Net financial items for the quarter amounted to minus SEK 10 million compared to plus SEK 18 million last year, mainly driven by valuations of derivatives, which mostly were in the comparison period last year.

Normalized tax rate at 21.1% for the quarter, but preferably we look at the year-to-date figure, which is 22.5%, so on the lower side of our guidance. Free operating cash flow came out at SEK 330 million in the quarter, and I'll get back to that in a coming slide. And finally, adjusted EPS for the quarter at SEK 1.57, impacted possibly -- positively by a higher adjusted EBIT.

So let's have a look at the bridge for adjusted EBIT. We start at last year's SEK 454 million and a margin of 9.5% compared to this year's SEK 519 million with a margin of 10.6%. And this is a solid organic development, I must say, with a healthy leverage of 46% and a strong contribution from, as Goran also mentioned, from Kanthal and parts of the tube business and of course, the targeted measures that we announced after the Q3 closing last year.

So these -- all of these mitigated then the under-absorption effects that we saw from the lower OCTG volumes and the weaker short-cycle business. And we are pleased that the targeted measures are proceeding according to plan, both the permanent ones and the volume-related ones. So in total, they yield some SEK 45 million in the quarter, putting us roughly at 85% of our targeted run rate. And we saw no contribution from structure in the EBIT bridge this quarter.

Moving over to the balance sheet and looking at the capital efficiency. Net working capital increased in absolute terms year-over-year, mainly due to the higher metal prices, but it decreased as a percentage of revenues, so in relative terms, down to 35.5% due to higher quarterly sales. Sequentially, we increased net working capital. You can see that in the graph, and that can be derived from increase of accounts receivable and higher inventories then driven by the increasing metal prices and some volumes as well.

Capital employed that you have on your right-hand side, excluding cash increased year-over-year to SEK 16.6 billion, mainly driven by higher net working capital. And the return on capital employed, excluding cash based on the reported operating profit, so that includes metal price effects and items affecting comparability, that was 7.7% for the rolling 12-month period, down from 9.2% last year, coming from a lower rolling 12-month period reported operating profit.

Looking at the cash flow. And what's worth mentioning and some food for thought is that we have been talking for some quarters now about a challenging market and not being 100% satisfied with our own performance. But this graph shows that we, despite that, are generating and continue to generate a healthy cash flow. And moving to the table on the left, EBIT and EBITDA, I think we've touched on already. The noncash items, which mostly -- most commonly refers to cash or noncash effects from provisions or provision releases. And this year, it was affected by cash flow effects from the ongoing restructuring activities.

We note the negative impact from changes in working capital, mainly due to increased inventory, and that comes from the higher raw material prices then and some volume effects as well. And this -- and also higher accounts receivable affect this net working capital number. And CapEx for the quarter is almost on par with last year. Amortization of lease liabilities is slightly higher this year. And all in all, this leaves us with a free operating cash flow of SEK 330 million. And please remember that cash flow normally is lower in the first half of the year when we have seasonal buildup in preparation for the maintenance stops that we have in the third quarter.

Looking at our financial position. And overall, our financial position remains strong, where we are well below our financial target of a net debt-to-equity ratio below 0.3x. At the quarter end, we were at negative 0.02x. And net pension liabilities has decreased to SEK 604 million from last year's SEK 813 million, mainly as a result of higher discount rates. And the leasing liabilities are slightly lower than last year, and our cash position continues to be strong. Despite paying dividend of SEK 625 million in May, we have a net cash position of SEK 283 million.

Let's look at the guidance we gave ahead of the quarter and the outcome of that. On CapEx, we guide on full year. And so far, CapEx spend for the first half of 2026 is almost SEK 400 million. And normally, half year -- the second half of the year is more CapEx heavy. Currency, transaction and translation effects came in at minus SEK 39 million. where we estimated minus SEK 60 million.

In the total currency effect, the transaction and translation effects were more than offset by hedges and bridge effects from revaluations. So this year, we had positive hedges and positive revaluations. And last year, we had some negative revaluations, resulting in a total bridge effect from those items of plus SEK 57 million. So that takes us to the positive SEK 19 million that we have in the total currency effect.

If we then look at the metal price effects driven by increased metal prices, the metals affected us positively in EBIT with almost SEK 200 million, where we guided for SEK 150 million. And the normalized tax rate year-to-date is 22.5%, where we are guiding for 23% to 25% for the full year. so at the low end, but quite close to the range. And looking into the third quarter and full year and the guidance for that.

Full year CapEx, we keep the full year CapEx guidance of SEK 1.1 billion coming from growth projects for the year of the one that you know that we have inaugurated the steam generated tubing capacity increase in Sandviken, but also investments like the industrial heating in Japan and medical in Malaysia. And a little less than half of the total is also for maintenance. Currency effects for the third quarter based on the rates per the 15th of July the transaction and translation effects are estimated to be neutral.

On the metal price side, based on the metal prices and currency rates per the 15th of July, we anticipate a positive effect also in the third quarter of SEK 100 million. And here, it's probably worth reminding about the dynamics that the price increase for -- especially for nickel, but also for molybdenum and chromium over time leads to positive metal effects in our EBIT, while a stronger SEK against the U.S. dollar, as an example, has the opposite effect.

On the tax rate for the full year 2026, we expect a normalized tax rate in the range of 23% to 25%, just as before. And by that, I hand back to you, Goran, for outlook and summary.

Thank you, Johan. So the outlook for quarter 3, I would say the start of the third quarter has been influenced by new tensions in the Middle East, further dampening for us an already weak regional business within tube in Europe and North America and also some indication of a slowdown in APAC and especially China. In contrast, umbilicals, industrial heating, medical, aerospace as well as space as well as nuclear remains strong with solid backlog and the momentum going forward.

Product mix is expected to be similar to quarter 2, but there might be some diluting effects from the product mix given that we short term have taken more contribution orders to compensate for the lower OCTG volumes. Earnings in quarter 3 will also be somewhat impacted by some planned ramp-up costs for the new SGT mill. And as always, cash flow is normally higher in the second half of the year.

Coming to summary. Overall, I think we delivered a strong second quarter with organic order intake growth moving from minus 12% in quarter 1 to plus 3% in quarter 2, supported by strong development in umbilicals, medical, industrial heating and aerospace. At the same time, profitability improved, supported by a strong performance across several segments and particular by an excellent quarter from Kanthal.

That said, market uncertainty remains, visibility is still limited in parts of the market and the external environment continues to be unpredictable, while we maintain our discipline and our focus. And we constantly execute on our long-term strategy, focus on profitable growth, attractive niches and a strong product mix. And we continue to implement the target measures introduced in October last year, driving cost savings and efficiency improvements, which we continue to see the effects from.

And I would say, overall, I think the quarter shows that we are progressing well despite a still uncertain market. And with that, back to you, Frida.

Thank you. We will now begin the Q&A session. Please feel free to ask your question via the webcast or directly through the conference call. Operator, please go ahead.

[Operator Instructions] The first question comes from the line of Kaleb Solomon from SEB.

You mentioned there will be some ramp-up costs related to the reopening of the facilities for steam generator tubing. Can you give us a rough figure of how much that is and maybe a rough split of how that will be divided in Q3 and Q4?

You can look like this. We're leaving the project phase and now entering into sort of real production. And during the ramp-up, there is no invoicing. And with roughly 100 people, it's roughly SEK 20 million cost in the quarter that we will have -- until we have invoicing. So quarter 3 worse than quarter 4, I would say. So in the size of SEK 20 million.

And just as a follow-up, how long do you expect the ramp-up will sort of take before you reach normal utilization rate?

I mean I don't have the date right now, but our plan is to be operational end of the year, so including [Audio Gap] so then we will have absorptions from the factories exactly when the first invoicing will happen, I don't know right now. So sometimes even in quarter 4, that ramp-up cost will be reduced.

Okay. That's clear. And another one for you, maybe, Goran. After the sort of previous ramp-up issues in Sandviken, you mentioned that catching up to the OCTG backlog would take until mid-'26 and that it should be sort of fully operational by summer. So first, just sort of wondering what, if any, impact it had this quarter and if the backlog reduction is now fully sort of done? And then second, is there any sort of impact to consider for Q3?

I didn't follow the question.

The delay related to the last year's ramp up.

That effect was not so big in quarter 3. It was more in quarter 4, wasn't it?

Yes, the delay into this year. If I may, I believe you referred to that we had delays due to that, that would sort of linger into OCTG then into quarter 1 and quarter 2 this year. And that has been caught up now and it's more the market that.

Yes, absolutely. The market has changed heavily since we were in those times.

Yes.

Okay. And Mining and construction was a negative contributor this quarter, which seems to be sort of a common theme among companies reporting today. Can you maybe give some color on what you're seeing from that segment and if you're sort of expecting anything else for Q3?

We see a stable good order intake from a couple of big Swedish customers.

Okay. And just a final one. You give the same sort of comments just related to general uncertainty that you've done in the previous quarters, but it sounded a little bit in the CEO letter that you -- like you were somewhat more optimistic, Goran. Is that correctly interpreted? And why is that?

Probably colored by sort of the strong order intake we have had in quarter 2. And to some extent, I think we were kind of getting used to operate in a very uncertain times because when you look around weak Europe, more in Middle East, U.S. with tariffs, China, maybe a little bit slower growth. But it looks like we are sort of managing that pretty well. And of course, some of our important key segments like umbilical, industrial heating, medical, aerospace, nuclear will be positive. I think that is what is probably coloring my approach there.

The next question comes from the line of Adrian Gilani from ABG.

A couple of questions from my end. First of all, a follow-up on the nuclear line ramp-up. When it does start ramping up significant volumes, should we see this as sort of extra volumes coming in that you didn't produce before? Or is it volumes being redirected to the nuclear site, which would be sort of more of a mix effect rather than a growth effect?

No, it's extra volumes. We will be able to make 60% more, and we have a backlog for that.

No, I'm talking at the group level. So I understand it's more nuclear volumes, but is it volumes that you would have produced in other segments being rerouted to nuclear, creating a positive mix effect...

We wouldn't and it's open for this product. And if we didn't open this, we wouldn't produce something else. And in the backup system -- back-end system, I mean, the nuclear part is a small part. So it's more the value on the added value product.

Yes. I understand. And then just on the orders in tube. When you talk about orders at the group level, you talk about it being somewhat broad-based improvement. If we look at tube specifically, would you say that the majority, even if you strip out the one larger oil and gas order, would you say the majority of the improvement is still in oil and gas improvements? Or even within tube, is it a broad-based improvement?

So it's -- I mean, talking about order intake, of course, they are heavily impacted by the umbilical. And of course, we had almost SEK 1 billion order. But even if we wouldn't have had that order, umbilical would have looked good. So as you can imagine now how strong it was. But if I look at other segments, I think they are strong in aerospace, that was good.

And I would say those are the 2 segments that are the strongest within the tube division in order intake-wise. Then as you know, I mean, we don't book nuclear orders every day. So that is quite unstable from that perspective, but we have very strong backlog. So that would still create revenues starting from end of the year.

Understand. And then sort of for us, when we're going to set our near-term revenue and earnings assumptions, given that your orders can have lead times of anywhere between a quarter and several years, how much does the current very strong order intake in Q2 derisk estimates for perhaps the second half of the year? Are these orders that will be delivered fairly soon further out?

That is a very good question. I will try to answer it. If you look -- and I need to take them one by one. And if we start with umbilicals, this is not impacting near-term revenue in umbilicals. We increased our output in the beginning of the year, even though the order backlog was not so strong. So that was a clever decision of us. So these orders, including the big one, is more adding on to the backlog. So that will continue strong.

Medical, they had some good orders. Some of their customers don't place order on a regular basis, and so there were some big ones. They are growing double digit all the time. So in some way, it's impacting quarter 3 and quarter 4, but not the orders as such.

Industrial heating, I would say, is more positive from that because we are growing industrial heating. And you can see that Kanthal organic revenue growth was around 20%. So that, I think you could expect going forward as well. So it's a mix, somewhat with impact and some is building backlog.

The next question comes from the line of Johannes Grunselius from SB1 Markets.

It's Johannes here. I'd like to zoom in on Kanthal and the very strong organic growth and even more stronger orders. We know that both medical and industrial heating are strong. But can you maybe give some light there, Goran, which one is the strongest of these 2? Or are they like equally strong now?

If you take them over a few years, Medical is the strongest. But then if you remember, industrial heating was struggling a little bit '24 and '25 and started to grow I would say, end of quarter 3 last year. So we have seen strong growth in industrial heating, but in their case, coming from, I would say, lower levels, which is not the case in Medical. I don't have the numbers in front of me, but I think both industrial heating and Medical are growing well now in quarter 2. And if you look at orders, Medical had some, I would say, strong order intake that -- where some of the customers placed orders maybe just 2, 3, 4 times a year.

Okay. That's helpful. And I was thinking also about capacity utilization and the different pockets in Kanthal. Do you have available capacity where you are at the moment? Could you maybe comment on kind of the operating rates there?

We don't -- we're not transparent with capacity utilization numbers since I don't want my competitors to know that. I think it's a mix. I think if you look at medical, they are -- now -- I mean, we communicated Malaysia. I think we also communicated that we're increasing capacity in Tube, the second site we have in the U.S., not a very big investment, but still they are constantly increasing capacity, small investments all the time. So I'm not worried about that.

If I look at industrial heating, it's a little bit mixed. There are some units that still could gain -- could use some more volumes. Then we've done investments, for instance, in Perth and in U.S. for silicon carbide. So there we're investing capacity. We are investing in capacity right now in Japan that will be utilized. Then there are a couple of examples where we are struggling a little bit with output where the growth has been, I would say, significant, and that is part of the semicon business and do everything with some new businesses there and really good levels.

But if you are surprised by new orders, you could have some struggle. But I'm not worried about the capacity utilization in Kanthal. I think they are running at good levels. And I think mostly they are able to continue to grow.

The next question comes from the line of Trollsten Viktor from Danske Bank.

I perhaps just have one, and I'm just trying to sort of square what you see in terms of demand. Obviously, it's a very mixed and dynamic picture, but also versus what you have sort of reported in terms of figures. So I mean, for the last couple of -- 4 quarters, order intake has been almost every quarter around SEK 4 billion, right? Where now if we take away the large major order, we are SEK 1.5 billion up from that level, so SEK 5.5 billion. And obviously, you mentioned a very strong umbilicals market, aerospace.

But what is sort of the delta from the SEK 4 billion to SEK 5.5 billion in Q2? And obviously, there's seasonality, Q3 perhaps 10% lower, Q4, 10% up from that level later on. But is this sort of the new normal base, if I put it like that? If you could help me from that perspective, please?

Sure. Can give you the data. I mean one reason, Viktor, why we are communicating and reporting order intake on rolling 12 is that it differs between the quarters. And then you have done your math, and you can see through that. I mean, I think we communicated for some time that umbilicals is strong. And apart from the order, it was a very strong umbilical quarter. Industrial heating is growing and continue to grow. And medical, as we've seen before, has sometimes large orders coming in, then it's slower.

So I would say nothing surprising. It's just that a lot of it came at the same time. And what I am happy with is that it is in for us, key important segments where we have the strong order intake. I think one comment to make is, of course, this is building backlog in umbilicals. And we also know that the backlog for our main competitor is pretty long as well. So for us, it's important to keep some flexibility to continue because when I see -- when I look at the project list, even though we booked this big order and a lot of other orders, it still looks very attractive.

That's good to hear. And perhaps also on the demand side, but industrial heating has obviously been quite strong for several quarters now. What is the main driver of that? Is it increased focus on energy efficiency? Is it on the CapEx side? Is it on the OpEx side? Just to understand sort of what's driving the strength?

Because I mean, in the sector overall or within capital goods, obviously, there's a very mixed picture on what is working, what is not working. So just to understand what is driving that very solid growth in Kanthal and what makes you comfortable that, that could continue ahead to some extent?

I'll try to answer that question. But if I start answering on your reasoning, I mean, still industrial heating is meeting pretty poor comps. They started to grow end of quarter 3 last year. So of course, it's been easy to have sort of good percentage number growth. But now they also start to be at good levels. So I don't think you should expect double-digit sort of end of the year or beginning of next year, but still on a good level.

It's clear -- I think it's a little bit of difference. If I look at Kanthal, Industrial Heating Europe and sort of furnace builder metals, that is still pretty weak. The main driver, what we see is semicon glass, which is also in electronics -- and electronics. Those are the main drivers for the growth in industrial heating.

How big is semiconductors now -- sorry, the last one for me, but just to get a sense.

Semicon. Around 20% of the industrial heating part.

The next question comes from the line of Akerblom Anders from Nordea.

I wanted to follow up a bit more on Kanthal. Obviously, very impressive margin print. I mean, just in a general sense, Goran, I mean, how much of this would you say is sustainable? And as we sort of ramp-up the growth investments in Japan and Malaysia, I mean, how should we think about that margin sort of scaling and phasing?

I'm not sure what you want me to answer, Anders, but let me put it this way. I mean this is the best quarterly result Kanthal has delivered. But I would not say it's sort of all stars align and this was extraordinary. I'm not saying that they will meet these levels all the time, but I don't think it's any extra.

I think the market is with them. We have done the right investments. And of course, also, I would say, credit to the industrial heating part that from the downturn they were in, they mitigated and defended their margins well. And now when market is coming back, of course, they have a very good leverage on a labor cost than before. But I see no reason why this sort of -- this is a level where Kanthal should be.

Sounds promising. And I mean, you said that the semiconductor end market is approximately 1/5 of industrial heating, if I didn't mistake you there. I mean if you just look at growth this quarter in Kanthal and industrial heating specifically, how much of that specifically was driven by semiconductor customers?

Not sure if I had the number, I could give you -- I don't have that number, but I would say the majority. I don't have the number, Anders, but there's a reason why we point out these ones. And I think -- and to give you some more information then without going into too much details. I mean, semicon has been a business within Kanthal for quite some time. It's the furnace builders who make -- the furnaces look pretty much the same if it's solar or semiconductor, semiconductor is a little bit more advanced, but there are always new businesses.

There is a very thin glass thing into the semiconductors and in the production of those, they need furnace elements from Kanthal. So there are also new businesses that we didn't have before driving this. All of this in it. The majority of that in Asia. So I'm very positive for business...

Yes. It feels like it's driving a lot of growth for many companies in different ways. So interesting that you have that growth as well. But I wanted to ask a bit as well in sort of the contribution business. I mean you mentioned that you're booking some more contribution business as well. Could you quantify a bit how much you booked and sort of what the margin differential is between your normal mix? And I mean, how many quarters you think you need this sort of buffer, so to speak?

I thought you want to ask us if we're leaving the strategy we had, which we are not, of course. The strategy is not to be panicking and book unnecessary orders. This time, we have decided to book more. The main reason is that the OCTG volumes were reduced very fast since we are supporting customers that were overstocked. And if you have looked at these tubes for OCTG, they are huge heavy tubes. So there's a lot of volume upstreams, both in extrusion and of course, in the primary system. I don't have the numbers, Johan, how much this is.

But it's -- if you only look at gross profit margin, it is, of course, quite much lower, but the alternative to have absorption issues would have been even worse. I don't have the numbers.

And it's quite short. So it's a quite short turnaround. So it's not that we're building a long backlog.

Right. Okay. Makes sense. And finally, I mean, obviously, leverage is -- I mean, you have essentially a net cash position even after the dividend. I mean, how are you thinking about deploying this sort of balance sheet strength? I mean, are you looking to further M&A activity? Or could you accelerate buybacks? Should we see some additional growth CapEx going forward? I mean I know that you guide for 2026 in terms of growth or CapEx in general. But how should we think about the respective components here?

First of all, I don't see a strong balance sheet as a problem, but I understand your question.

Not at all.

We always look for M&A opportunities, especially in medical, but it has to be the right company and it has to be the right price. And we have a pipeline of companies we're looking at. And yes, I think you should expect more growth CapEx. Those are in our plans. And when we are ready, we will communicate that.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Frida Adrian for any closing remarks.

Thank you all for calling in and for really good questions. I think this concludes the call, and we're wishing you all a great summer.

Hello, and welcome to Alleima's presentation of the first quarter results 2026. My name is Frida Adrian, and I am Head of Investor Relations. I'm joined by our President and CEO, Goran Bjorkman; and our CFO, Johan Eriksson. Goran and Johan will take you through the highlights of the quarter. And following the presentation, we will open up for a Q&A session. [Operator Instructions]. All the presentation materials are available for download at alleima.com. And as always, safety is a top priority for us, and I trust that you are familiar with the safety procedures at your current location. And with that, over to you, Goran.

Thank you, Frida. Hi, everyone, and thank you for listening. So I'll start with the highlights for the first quarter. Well, market uncertainty continued throughout the first quarter with the ongoing geopolitical instability reducing our customers' willingness to invest. We also have this situation in the Middle East that has impacted the market and in particular, affecting our OCTG business. I will come back to that shortly. But these circumstances continue to impact our short-cycle business, which began to experience a slowdown rough at this time last year. On a positive note, key segments such as medical and industrial heating have contributed favorably supported by a strong organic order intake.

Look at the order intake for the group, rolling 12 months declined 12% organically. Revenues declined 5% organically, also affected by the short-cycle business and OCTG, somewhat mitigated by medical, nuclear and industrial heating.

Adjusted EBIT amounted to SEK 386 million and a margin of 8.4%, down from 10.5% last year, but here diluted roughly 150 basis points by FX. We have started to see positive impact from the earlier announced efficiency measures. They cannot, however, yet compensate for the negative currency effects and the lower sales in the quarter. But given the market and currency circumstances, I believe we, in a good way, still are protecting our profitability, while our solid balance sheet enables us to stay with our long-term strategy. And during this quarter, we opened up 2 facilities for industrial heating focused on silicon carbide heating elements, one in Perth, U.K., expanding our production capacity on that site and one new service center in Concord, U.S., which expands our reach of silicon carbide heating products and improves our position on the American market.

Moving on to sustainability. The sustainability performance remained solid in the quarter with continued progress in safety, high share of recycled steel and a record high sustainability product portfolio. Safety remains our top priority, and I'm pleased that performance continues to move in the right direction. the measures we have implemented are delivering results, and we will continue to build on that progress. Our share of recycled steel stayed above 81%, both on a rolling 12-month basis and year-on-year. I think that is a strong outcome, especially considering our product mix with relatively high share of high-nickel products. We saw an increase of CO2 emissions in the quarter. That was mainly due to the cold winter and also temporary cost-driven energy mix effect with somewhat lower share of biogas.

And our sustainable product portfolio reached nearly 26% on a rolling 12-month basis, which is a new high. Through close cooperation with customers, we help them address technical challenges and support their sustainability and climate goals. Moving on to the -- our view on the market development. Yes, given the situation in the Middle East, market uncertainty has increased. One could argue that high energy prices would be positive for us. And this is, to some extent, true, but it needs to be high energy prices for the right reasons. And I believe what we see now with oil and gas prices are rather speculative and not driven by increased demand. But we are, of course, monitoring the situation closely, and we are ready to act.

Overall, demand stayed weak in Europe, subdued in North America, while Asia showed strong resilience, but not as strong as last year. And several key segments are performing well, and I will walk you through the development in each segment, starting with oil and gas. Overall, our view on the underlying demand is still solid, but more so for umbilicals, where the project list of upcoming tenders and potential orders remain strong, and we have increased production pace during the quarter. For the OCTG business, we flagged a bit weaker outlook already in the Q4 report. And given that a large part of that business is exposed to Middle East, we are, of course, affected by the development while the arrow now is pointing down.

Industrial, European demand is still weak. Asia declined, while North America improved on low levels. Then in petrochem, we noted some improvement in Europe, but on low levels, so it's too early to tell, while Asia and Middle East was weaker and North America at low levels.

Industrial Heating continued to see good growth, mainly driven by Asia and North America, while Europe is still on the weaker side. Subsegments like electronics and semiconductors are the main drivers for the growth. Consumer demand continues to be flat, but on a good level. And in medical, continued good momentum across the product portfolio and our greenfield investment in Malaysia is going according to plan and will add additional capacity by the end of the year. In transportation, titanium tubing for aerospace continued to be strong, while marine and automotive is weaker. Mining Construction demand was stable overall driven by the mining industry with somewhat weaker demand related to the construction industry.

Nuclear continued good activity and a solid backlog. But please remember, it's a business with naturally long lead times. And we will then take the last one, hydrogen and renewable energy. Hydrogen-related business is negative, but with some bright spots in renewable, for instance, for biofuels. So let's look more in detail on the Middle East crisis. I mean it's not only increasing uncertainty in the market, it's also causing volatility in energy prices, shipping costs and the risk of inflation has increased. And we're monitoring that -- those areas closely. I understand that there are questions how this crisis is affecting Alleima. I think at this stage, it's important to focus on what we know and avoid speculation, whether it's negative or positive.

At the same time, we are, of course, working with different scenarios. Our OCTG business, part of the Oil and Gas segment is currently affected both direct and indirect exposure to the Middle East region. What we know is that the drilling pace in the region relevant to the OCTG business remains low, and we're working closely with our customers who is currently operating at a lower pace than normal, and they have asked us to hold back, which means that we have reduced output pace for the time being. And we, of course, also know that similar business in the region are also impacted. What we don't know yet is how long the situation will last or how much of the oil and gas infrastructure in the region that may be damaged and required repair.

And if we look at the OCTG business, it's mainly CapEx driven and can actually vary year from year. And we are expecting lower OCTG volumes in 2026, partly due to the weaker market that predates the Middle East crisis. Now it's been about 8 weeks since the war in Iran began. So we, like the rest of the world are working to get a clearer picture on how this is affecting our business. And we are, of course, also closely following the development and noting cautious customer behavior causing tenders and project decisions to be postponed. So let's look at the order intake and revenue in the quarter. Order intake for the rolling 12 months period amounted to SEK 16.3 billion, down 12% organically.

This is mainly explained by the major order of SGTs received in Q1 last year as well as OCTG. Adjusting for those 2 products, order intake would be slightly positive. For the SGT business, this is normal given the nature of that business, while the Middle East crisis is affecting the OCTG business negatively. On the positive side, strong order intake from Kanthal both in medical and industrial heating. At the same time, we saw the short-cycle business continue to be negatively affected by market uncertainties and lower investments in our value chains. Revenue on SEK 4.6 billion negative order growth of 5%, where both Kanthal and Strip again grew, while Tube declined, affected by the aforementioned short-cycle business, but also lower revenues from OCTG in the oil and gas and also some lower in Automotive and Transportation segment.

Book-to-bill rolling 12 months was 90%, which is on the low side. but not really surprising given the market development and high comps in the project-related business. Book-to-bill rolling 12 was 100%, excluding SGT and OCTG. We move to the profit. So adjusted EBIT decline, which, of course, I'm not pleased with. But as I alluded to earlier, I think we are doing an okay job working on what we can affect. And given the lower volumes in industrial and especially the more profitable chemical and petrochemical segment, gross profit is lower. We also get lower absorption in some of our factories. Margin was 8.4%, 9.9% if I adjust for FX. The early ramp-up issues with expansion press in Sandvik had only minor impact on performance in the quarter. Press has been operating more efficiently than in quarter 4 and is not any more restricting production volumes and expect to be fully operational during the summer.

We started to see positive effects from the already announced efficiency measures. They cannot, however, yet compensate for negative currency effects and the lower sales in the quarter. And finally, we had a negative cash flow in the quarter of SEK 65 million due to lower EBITDA and also working capital and cash flow is normally lower in the first half of the year than the second half. So let's look at the performance of the division, starting with Tube, where we have the largest volumes. I mean Tube has been the division most affected by the market development over the last 12 months. Although some areas are performing well, such as umbilicals, where we're ramping up output for 2026, also titanium tubing for aerospace and the Asian market.

However, overall volumes remain on the low side. Order intake rolling 12 months period declined organically by 19%, and that is on back of the major STG order in Q1 2025 and somewhat high comps in oil and gas as well as the short-cycle business. Revenues declined organically by 9%, affected by the aforementioned short-cycle business, but also lower revenues from OCTG in the oil and gas and automotive in the Transport segment. Book-to-bill amounted to 85%. Adjusted EBIT margin on 8.9% and 9.2% excluding FX effects of SEK 23 million year-over-year. And the fact that Tube has the lowest relative FX headwind stems from the fact that Tube has most of the project-related business and therefore, the biggest hedges, but also the fact that they make the biggest purchases of raw material in U.S. dollars, which, of course, is mitigating the negative effect.

Moving over to Kanthal. Kanthal continued the positive trend seen over the past few quarters with a broad-based growth and a strong performance in the quarter. I think they a great achievement. Rolling 12 order intake grew organically by 14%, driven by Medical and also industrial heating, especially in North America and APAC. Revenues grew 8% organically on the back of Medical, Consumer and industrial heating with strong performance in the same regions. adjusted EBIT margin of 17% or 18.8% adjusted for a negative SEK 41 million coming from FX is a good level coming from a solid product mix. All in all, a really solid performance from Kanthal in quarter 1. Strip, I think also is doing a lot of good things, for instance, with the channel partner network and also to improve the cost position, aiming to again be a margin contributor to the group.

Rolling 12 order intake declined organically by 16%, driven by all segments, but this is heavily impacted by the negative development within the hydrogen business, while we should call it the original Strip is still on a good level. Revenues grew 5% organically, driven by especially razor blades and book-to-bill amounted to 88%. Adjusted EBIT margin was 5.9%, but heavily impacted by FX, negative SEK 29 million year-over-year, and the underlying margin was 12.6%, where the Consumer segment was strong across all regions. Also solid performance from Strip. With that, over to you, Johan.

Thank you, Goran. So the financial summary and starting with the table to the right. Order intake for the rolling 12-month period amounted to SEK 16.3 billion, corresponding to an organic decline of 12%. We had negative impact from currency and alloys of 6% and 2%, respectively, totaling a growth of minus 19%. The quarterly revenues reached SEK 4.6 billion with a negative organic growth of 5%, including the U.S. tariffs that is estimated to impact us with plus 70 basis points. Also for revenues, we note a significant impact from FX, primarily from a stronger SEK against the U.S. dollar, which in total had a negative impact of 6%.

Alloy effects impacted by minus 1% on quarterly revenues. And looking at the coming quarter, we see a neutral currency and alloy effect for that fourth quarter time period. We had no contribution from structure, meaning acquisitions or divestments as our latest acquisition, Endox now has been with us for the full year and no longer affect comparability. Going back to the big table on the left, where I'll get back to adjusted EBIT in a coming slide and the reported EBIT declined to SEK 391 million, affected negatively by lower revenues, FX and items affecting comparability, while helped somewhat by positive metal price effects and the savings from the targeted measures. On the items affecting comparability, we now have in total taken SEK 344 million of the estimated SEK 400 million for the targeted measures that we communicated in the earnings call for the third quarter.

The remainder is expected to be taken in the coming 3 quarters. Net financial items for the quarter amounted to minus SEK 11 million compared to plus SEK 13 million last year, and this is mainly driven by valuation of derivatives. The normalized tax rate came out at 24.5% for the quarter. Free operating cash flow came out at minus SEK 65 million in the quarter, which I'll also get back to in the coming slide. And finally, adjusted EPS for the quarter at SEK 1.14, impacted negatively by the lower adjusted EBIT. So looking at the bridge then for adjusted EBIT, where we start at last year's SEK 540 million and a margin on 10.5% compared to this year's SEK 386 million with a margin of 8.4%. And like Goran pointed out, FX is a big factor behind the development. This quarter dilution was 150 basis points.

But of course, we also are affected by the negative organic development stemming from the weaker markets, especially in the short-cycle business and therefore, impacted by under-absorption effects. Meanwhile, we also had some contribution from the savings related to the targeted measures with positive effects of roughly SEK 30 million in the quarter. The SEK 6 million contribution in structure comes from an M&A-related cost booked last year. Moving over to the balance sheet and capital efficiency. Net working capital decreased in absolute terms year-over-year, mainly due to volume and currency effects, but increased as a percentage of revenues to 35.5% due to lower quarterly sales.

The sequential increase of net working capital in the graph can mainly be derived from an increase of accounts receivable given that invoicing was tilted more towards the end of the first quarter. Capital employed, excluding cash, decreased year-over-year to SEK 16.2 billion, mainly driven by lower net working capital. The return on capital employed, excluding cash based on reported operating profit, so that meaning that we include metal price effects and items affecting comparability was 5.0% for the rolling 12-month period, down from 11.9% last year, coming from the lower reported operating profit due to the reasons described before. Looking at our free operating cash flow for the quarter. As you can see on the graph to the right, the Q1 cash flow normally is lower than the preceding quarters as per normal seasonality.

As we, during this quarter, start preparing for the Q3 summer shutdown and maintenance. Moving over to the table on the left. I think we've touched on the EBIT and EBITDA already. Looking at the noncash items, which most commonly refers to cash or noncash effects from provisions or provision releases. And this year, it's also affected by cash flow effects from the targeted measures, the restructuring activities. So that is about minus SEK 20 million from that in this year's cash flow. We note the negative impact from change in working capital, mainly due to higher accounts receivable coming from the strong invoicing at the end of the quarter, but also increased inventory as per normal seasonality. The decrease in CapEx year-over-year mainly comes from timing on the ongoing projects.

Amortization of lease liabilities is only slightly higher this year. And all in all, this leaves us with a free operating cash flow of minus SEK 65 million. And as I pointed out, this follows seasonality and as cash flow normally is lower in the first half of the year when we start to prepare for the upcoming summer stop in the third quarter. And looking at our financial position, it remains strong, and we are well below our financial target of a net debt-to-equity ratio below 0.3x. At the quarter end, we were at a negative 0.04x. Net pension liabilities decreased to SEK 699 million from last year's SEK 839 million, mainly as a result of higher discount rates. Leasing liabilities are slightly lower than last year.

And our cash position continues to be strong, and we have a net cash position of SEK 596 million, which will come in use as there is a dividend proposal of SEK 2.5 per share for the AGM later this week. So looking at the guidance and how we guided prior to the quarter end and the outcome. On CapEx, we guide on full year. And so far, the CapEx spend for the first quarter is SEK 160 million. And then it's worth noting that normally, the second half of the year is the more CapEx heavy part of the year. Currency, transaction and translation effects came in at minus SEK 173 million, where we estimated for minus SEK 240 million, where the difference mainly is due to a weaker Swedish krona towards the end of the quarter.

In total, the currency effect -- in the total currency effect, the transaction and translation effects were partly offset by a bridge effect from this year's hedges and revaluations and last year's negative revaluations. So in total, giving a bridge effect of plus SEK 80 million, so taking the total currency bridge effect on EBIT to minus SEK 93 million. Metals affected us positively with SEK 8 million, where we guided for minus SEK 50 million, and the reason is mainly increased metal prices during the quarter. Normalized tax rate came in at 24.5% for the quarter, where we were guiding for 23% to 25% for the full year. Moving over to the guidance for the second quarter.

So full year CapEx, we keep the full year CapEx guidance of SEK 1.1 billion coming from growth projects of, for example, steam generated tubing capacity increase in Sandvik and as well as industrial heating in Japan and medical in Malaysia and a little less than half of the total is for maintenance. Currency effects for Q2 based on the rates as per 23rd of April, so last Thursday. The transaction and translation effects are estimated to minus SEK 60 million on the back of a stronger SEK. Looking at the metal price effects based on metal prices and currency rates also the 23rd of April last Thursday, we anticipate a positive effect of SEK 150 million for quarter 2.

And here, it's probably worth reminding about the dynamics that the price increase for nickel or molybdenum and more chromium over time leads to positive metal price effects, while a stronger SEK, for example, against the U.S. dollar has the opposite effect. And the tax rate for the full year 2026, we expect a normalized tax rate in the range of 23% to 25%. So by that, I hand back to you, Goran, for outlook and summary.

Thanks, Johan. Yes. So the outlook at the start of the second quarter has been influenced by the development in the Middle East, further dampening an already subdued willingness to invest. But we maintain a solid backlog in several key segments, providing good visibility into near-term deliveries, mainly then in umbilical in oil and gas, in industrial heating, medical and in nuclear. -- continue to see challenges in other more short-cycle customer segments, which already have affected and is expected to continue to affect short-term deliveries. Product mix is anticipated to remain broadly in line with the first quarter. And finally, cash flow tends to be lower in the first half compared to the second half of the year.

So coming to a summary then. Well, market uncertainty increased during the quarter and customers are postponing their investment decision. And I think the visibility for near-term deliveries worsened, especially with the OCTG business in the Middle East, also the short-cycle business still on low volumes. Meanwhile, key segments and products like medical, umbilicals, nuclear, aerospace and industrial heating have better momentum. And I think despite the turbulence, I believe we again showcased an underlying resilience and earnings are therefore on an okay level, partly driven by the positive development in Kanthal. FX was again a major negative factor in the quarter. And we're confident staying on our long-term strategy, investing for the future and mitigating where needed to ensure long-term competitiveness enabled by our solid finances.

With that, back to you, Frida.

Thank you. We will now begin the Q&A session. Please feel free to ask a question via the webcast or directly through the conference call. Operator, please go ahead. Do we have any questions?

[Operator Instructions] Our first question comes from Kaleb Solomon with SEB.

First, on OCTG, you mentioned that the sort of market conditions currently are mainly impacting oil and gas negatively. And you touched on this, Johan, and I appreciate this sort of geopolitical turbulence is bad for investment appetite overall. But at the same time, I would have thought that higher oil prices, I mean, even if it's for the wrong reasons, should increase rig activity outside of Asia, which should be positive somewhat at least for demand. So are you seeing or expecting to see any positive impact from that at all if prices stay up here for a while? Or do you simply expect the sort of negative impact to outweigh any potential benefit from higher prices?

I kind of expected this question. I think what I've tried to be clear on is because it's easy to start speculating. A long-term good high oil price is normally good for us. But I don't want to sort of fall into the trap of saying that, well, now it looks better because we haven't seen any evidence of that so far. What we have seen is that the drilling pace in that region has been reduced. And with that, we have reduced our output. So I mean, I don't -- that is my comment. Of course, we have scenarios with a long-term high oil price and what that means for us, but I don't want to speculate on that.

Is it fair to say drilling activity outside of that region has increased even if it's in that region?

Kaleb, the war has been ongoing for 8 weeks. The timing on a project like this has a much longer lead time. So we haven't seen anything like that yet. And both you and I can speculate what happens if this is a long-term effect, but I don't want to come into that. Umbilicals on the other hand, as I said, we see that as positive. We have increased the pace and umbilical is almost not at all impacted of the Middle East crisis due to there's a lot of onshore and it's very shallow waters in that region.

Okay. That's clear. And you also mentioned that the production constraints related to the expansion [indiscernible] in Sandvik became less pronounced during the quarter. But can you clarify what the margin effect was in Q1?

It's almost neglectable but we're running a higher shift than we would need for the volumes. Of course, it's cost for that, but that is neglected looking at the large numbers. And of course, it's a double effect here. The press is working better than before. But of course, we also have a slower market. So the need is also less. So it's -- you can neglect that impact.

Okay. That's clear. And sort of a similar question. You mentioned that the cost savings program had some effect this quarter. So could you tell us how much that was roughly? And sort of as a follow-up to that, if I recall correctly from last quarter, you said you expect to reach the sort of full effect by Q4 and maybe half of that by Q2. So what's reasonable to assume for Q3?

We can start by Q1 then. So that was SEK 30 million, 3-0 in savings.

I have a Q3 number, but I would take the average of full effect of half effect.

Thank you.

The next question comes from Adrian Gilani with ABG.

Just to start off a follow-up on the oil and gas outlook. When you talk about the weakness on OCTG, you mentioned both a direct and an indirect effect. The direct effect, I understand. But what is the indirect effect that is impacting OCTG, but not umbilicals?

I think what we -- what is indirect and direct. What we see is that simply said, our customer and the customers' customer is not right now the need as much tubes as we originally thought. And that is why we have reduced our output for the time being. How long will we do this? I don't know. Then of course, there is a business outside Middle East. And we are impacted in the same way as our main competitors, of course. So the fight of contracts outside Middle East has, of course, increased. I think that is what we mean with the indirect effect.

I understand. And then I guess on a similar note with to oil prices, have the higher natural gas prices have an immediate impact on demand in the industrial heating segment as well.

Not that I can say. I think it's so clear what is sort of driving the increase is more the digitalization and the semicon, electronics, long-term industrial heating will benefit for higher gas prices, of course, but that is too early to see.

Okay. I understand. And then a question on the outlook in the Industrial segment. You just do have the arrow pointing down still in industrial. I think that's a bit surprising since we've seen PMIs both in the U.S. and the EU bouncing in recent months. So shouldn't this mean you should see some improvement on the short cyclical sales?

[indiscernible] Asked me to speculate. I think at some point, you reach the bottom. And of course, moving into second quarter, it was the second quarter last year where we started to be impacted by the tariffs and the uncertainty. So from that point of view, we will meet sort of weaker comps. And from that sense, I think your question is very rational.

Okay. I understand. And then a final one from me, more a mechanical question on the FX impact. When you guide for SEK 60 million headwind in Q2, can you tell us anything about how much of that do you expect to mitigate with hedges as well?

I mean I think it's with minus SEK 60 million, I think the hedge effect will be very limited. So that would -- this time, it -- let me think we had about -- well, so I think minus 60 million is fairly fair. We will probably have some hedge effects, but they will be fairly low in the grand scheme of things.

The next question comes from Anders Akerblom with Nordea.

I wanted to ask firstly about nuclear. So as you've said many times, long lead times, of course, but not really something new. So I was wondering if you're seeing anything in particular in the project pipeline that's sort of prompting your downgrade of the outlook in this market?

It's not downgraded. It is more flattish on a good level. There is a project list as we normally say, both in Europe, Americas and Asia. I'm positive on that, but I've also been around for so long. So a quarter is a very short time period in that business. So we still want to see the decisions coming through.

Yes. And sorry, maybe I'm reading it incorrectly, but the aero, so to speak that you used to be up and now it was sort of, as you say, flattish, but between that, a downgrades. So that's sort of more how I meant. But basically, you want to see orders coming.

We continue to see it as very good.

Okay. And in tube, I was wondering if you could give some more details on the ramp-up in umbilicals and sort of what that will imply for overall production capacity?

We increased capacity. There is not one number because part of the factory is sort of the cost driver is meters in some part of the factory, cost driver is upon sort of volume. But I would say between 10% and 15% increase depending on the sort of the size mix of the product, 10% to 15% is a good number to use.

Okay. And following up on the previous question with regards to sort of the short-cycle business and improving PMIs. Could you give any sort of just general reflection about sort of the trends during the quarters, what you've seen into early Q2? That would be very helpful.

What we have seen in the quarter One important segment is, for instance, chem and petrochem. We started to see some growth in Europe. I think that's very promising. It's a low level still. I think it's fair to -- here comes the speculation. It's fair to believe that at some point, I think a lot of the chem and petrochem industry in Europe is sort of maintenance driven. At some point, you start have a maintenance that and they start to need to invest. I'm not sure that's the case. But I think that's a good estimation. Asia, a little bit lower than before, but one should understand that, that comes from very high levels. And we've had a couple of years where especially fertilizer has been extremely strong.

And when I met with customers in November, they were sort of saying that we're not sure they're going to keep that pace for the next year. So I think we see -- I think we see it as sort of maybe a couple of quarters slowdown, but on good levels. And what I said on the industrial before, I think sooner or later, you meet very low comps and then probably you reach the bottom.

Goran, we like to hear your speculation. So I appreciate you saying that.

[Operator Instructions] The next question comes from Viktor Trollsten with Danske.

Perhaps, firstly, just I read your comments correctly, Goran. But for the outlook for the second quarter, you mentioned that, call it, the general economic climate has weakened during the first quarter. Could you relate that to the cadence of your orders? I guess what I'm after is that all else equal, does this mean that Q2 orders will be lower than Q1? Or what does that mean in terms of orders? That's my first.

That is not necessarily what we mean. And I can -- I understand that you could read it. I think what you should read into it is that the overall geopolitics with Middle East is sort of the added on uncertainty. If this lasts long and we have a global energy crisis, inflation, that will not be good for Alleima, will not be good for most companies. I think that is what you should read, not necessarily that we view sort of direct orders on a lower level. I think OCTG is reasonable to believe it will be lower.

And how much of total sales is that now basically ? 10%?

No, it's less than 10%. I don't want to give you that number because it varies from here. This is project orders. So they can vary between the years. But now it's less than 10%. This year.

Okay. No, that's clear. But then it sounds like more like -- it's not like we have seen so much into your actual order numbers more than that there is more like a warning that inflation, et cetera, is not -- wouldn't help you.

I think I've said this before, it's more difficult than ever to predict the future. I think -- I mean the Middle East, if that continues, it's not good. On the other hand, I'm really pleased that we see strong growth in industrial heating, for instance. Medal continue good. Aerospace continue good. We have a good view on Umbilicals. So there are a lot of big parts of the business that could be very positive as well.

That's super. And then perhaps to my second question because once upon a time, we received the organic order growth on a quarterly basis and now we get it on a 12-month basis with the argument that that's the sort of best indicator for organic sales growth, if I'm not mistaken. And now I know that you have a lot of different lead times within the business, of course. But just to hear your thoughts how we should think about it that last 12 months book-to-bill below 0.9%, what does that mean for organic sales growth ahead? If you could help us because there's a lot of moving parts there.

What do you say you want. I mean I think one thing you could read into it, and we have been clear ever since quarter 2 last year is that the order backlog in the short cycle has been short for a long time, that has been affecting the revenue, and it will continue to affect the revenue until it goes up again. And that is thematically, comps will be lower, but that's sort of math. Then Industrial heating, I mean that is pretty short cycle as well, at least part of it. So there, I think one could be more optimistic going forward.

The SGT and OCTG adjusted, if we can talk about it.

Yes. But if you -- if we exclude SGT with its really high comps in the first quarter and the OCTG with the issues we see right now. If you summarize all other segments, it's slightly positive on rolling 12 months.

And then just finally, and perhaps I missed it, but on the U.S. tariffs, which actually mentioned is a 70 bps positive contribution. I missed -- what was that? And should we expect that in the coming quarters also year-over-year?

I mean this is basically -- I mean, of course, we don't know if tariffs change, et cetera. But this is the last quarter where we clearly have a difference between the comparison period and the current period. So the 70 basis points positive that we had on top line from tariffs is while meeting sort of before the updated tariffs in the U.S.

But is it basically pricing or.

Yes, yes. Yes, it's pushing the tariffs forward to the customer. So the tariffs that we carry when we import the material, we then put on the price to the customer.

There are no more questions over the phone.

Very good. Then we say thank you all for calling in and for really good questions as usual. This concludes the call, and we're wishing you all a very good day.

Thank you.

Thank you. Thanks.

Hello, everyone, and a warm welcome to the presentation of Alleima Q4 and Full Year 2025 Results. My name is Frida Adrian, and I am Head of Investor Relations. I'm joined by our President and CEO, Goran Bjorkman, and our CFO, Johan Eriksson. Goran and Johan will take you through the highlights of the quarter and the year. And following the presentation, we will open up for a Q&A session. [Operator Instructions] The presentation materials are available for download at our website, alleima.com.

As always, safety is a top priority for us, and I trust that you are familiar with the safety procedures at your current location. And with that, over to you, Goran.

Thank you, Frida, and hi, everyone, and thank you for listening. Well, to sum up the full year of 2025, which has been heavily affected by geopolitical tensions, trade barriers, events, all contributed to making a difficult year to navigate overall.

The biggest impact we've seen, I mean, it has increased the uncertainty amongst our customers, an investment decision have been pushed into the future as rules of trade has been changing sometimes from 1 day to another. At the same time, I believe we show some strength despite the turbulent environment, we deliver flat organic revenue growth in the year on total SEK 18.6 billion. And we are clearly benefiting from our diverse exposure and the fact that we have strong positions in very niche markets.

Our global footprint, including local production in the U.S. has also enabled us to cope with the tariffs themselves by passing along the high cost to our customers. But this means, however, increased cost for our customers, which also have a negative impact on the growth.

To continue with some positives. Oil and gas remained solid throughout the year, and we are especially positive towards the umbilical business. Activity level in nuclear was on high levels and Medical continued its strong growth trajectory. Towards the end of the year, we also noted the start of a market turnaround in industrial heating, which has been subdued for almost 24 months.

We noted a weaker market for a more short-cycle businesses, mainly the industrial and petrochem segments and especially in Europe and North America. But the backlog is short and it is affecting revenues, also something we noted in previous quarters. Asia showed more resilience. Adjusted EBIT amounted to 1.5 with a margin of 8.3% and is impacted by currency effects of SEK 341 million year-over-year. And if I should exclude FX effect, the adjusted EBIT margin for 2025 would have been 9.8%. Given the weaker climate, which is difficult for us to control, we have actively been working with what we can control. And in quarter 3, we announced a number of targeted measures for increased efficiency and strengthening the company in the long term.

Despite all the turbulence, we delivered a free operating cash flow of SEK 1.1 billion, strengthening our balance sheet, which is a prerequisite for us to continue to execute our strategy; we are staying with actively working with our order booking to maintain price leadership while we proceed according to plan, we are capacity expansions. For example, the greenfield investment in Penang, Malaysia for the Medical segment and the capacity increase for nuclear steam generator tubes. Both these initiatives are expected to start deliveries by end of this year 2026.

Lastly, the Board proposed a dividend of SEK 2.50 per share, corresponding to 71% of net profits, adjusted for metal price effects and an increase of 9% compared to last year.

So let's take a look at the financial targets. I would say in general, we are performing in line with our targets. Starting with organic growth. We have a target to deliver profitable organic revenue growth in line with or above growth in targeted end markets over a business cycle. We grew 0% organically in '25. I think it's important to remind us that we don't want to grow in all pockets or serviceable addressable markets, we are aiming for growth in attractive niches to improve our mix long term. This spans across most of our customer segments where despite it's a bit simplified, but the industrial segment is not a segment where we want to go in line with the market. That's profitability in January is lower in this segment. Over the 4 years, we've had the financial target total organic growth again 5% on average and more than 7%, if I exclude the Industrial segment.

Looking at earnings, margin of 8.3% for the year average of 9.5% for the 4 year. We had the target and target is to be above 9% over the cycle. And capital structure, net debt to equity of minus 0.05. And please note that the 0.3x is a maximum target. And dividend, as I just said, the Board proposed a dividend SEK 2.50 per share, corresponding to payout ratio of 71% of net profit adjusted for metal price effects. And average over the 4-year period of 43%.

So let's zoom in on the quarter and look at the highlights for the fourth quarter. We are, as I've said, for the full year, we experienced a similar market situation as we did in quarter 3 with a lot of so-called wait-and-see attitude among customers. And it is affecting especially the chem, petrochem segment and the industrial segment. Also the OCTG business declined back on high comparables and order intake role in 12 declined 4% organically.

On the brighter side, our umbilical business within oil and gas as well as medical segment continued their strong momentum -- and while industrial heating continued to show signs of market recovery.

Revenues declined organically 5% year-over-year, stemming from poor market in the aforementioned industrial and chem, petrochem segments where order intake effects revenue.

Parts of the oil and gas and industrial business were also hit by the delayed ramp-up of the maintenance stop in quarter 3. And we also noted some timing effects in nuclear affecting us negatively. The adjusted EBIT margin declined year-over-year to 8.1%. And of course, that is not satisfying development. but it's heavily impacted by a significant FX headwind, diluting the margin with almost 300 basis point, indicating we would be around 11%, excluding FX. This is, of course, not an excuse, but it is the main reason for the negative developments.

With that said, we are acting and adjusting to current market condition. In quarter 3, we announced a number of targeted measures to further strengthen our operational efficiency and long-term competitiveness. And all of these actions are progressing according to plan so far.

Our balance sheet is strong, and we continue to generate a healthy cash flow, enabling us to stay with the strategy also in downturns. And during the quarter, we inaugurated a new production line in Zhenjiang, China, further strengthening our local-for-local offering of premium tubular products in the region.

To give you some more details on the efficiency actions we announced in quarter 3 and a few reminders of what we will achieve. Firstly, we are consolidating a number of smaller units in Americas and in Europe, where we see the opportunities to better leverage our global footprint. Secondly, we are reducing staff. The permanent staff reductions are mainly targeted towards white collar. And thirdly, we are adjusting our production capacity according to current market conditions. This will result in annual cost savings of approximately SEK 200 million, roughly 75% would be permanent savings and 25% more of volume related. All of the one-off costs of roughly SEK 400 million, of which we booked SEK 342 million in quarter 4. An expected run rate is around 7 -- sorry, 60% savings achieved in the end of quarter 2 and 100% by end of the year.

Moving to sustainability. As safety always is a top priority at Alleima, we have, for a long time, continuously and actively implement the measures to make our workplaces more safe. The development continued to trend in the right direction. The number of accidents are on record low levels. Share of recycled steel remains high and remains over 80%, both on a rolling 12-month basis and year-over-year. which I think is a high share given the product mix, where we have more and more high nickel products.

Our CET emissions are steadily decreasing even though we noted a slight uptick in the quarter, but we are in line with our targets and the target is to reduce by 50% from the year 2019 to 2030. And our sustainable product portfolio grew almost 25% rolling 12-month basis, which is also an all-time high level.

So let's look a little bit deeper into the market development. I mean the market sentiment remains mixed and of course, affected by the ongoing macroeconomic uncertainty, demand stayed weak in Europe and in North America, while Asia showed stronger resilience. And we continue to see solid momentum in several key segments, and I'll walk you through the development in each segment, starting with oil and gas.

Overall, our view on the underlying demand is solid. More so for umbilicals with the project list of upcoming tenders and potential orders remain strong. for OCTG, the outlook is a bit more uncertain where we see that some projects have pushed a bit forward and where we, to some extent, also are negatively affected by the FX from a competitive point of view.

And Industrial, the European demand is still weak on low value-add products. In North America, we noted an increase but from really low levels and much of this should be tariff-related effects. Chem-Petrochem, Europe continued to be on low levels, same with North America, while Asia is better. Industrial heating in quarter 3, we noted a positive growth from lower levels, and that trend has continued into quarter 4 and especially in Asia, and it's for subsegments like electronics, semiconductors and glass. Consumer demand is still on a good level, mainly driven by the white goods industry in the Strip division.

Medical. Market remains strong, driven by multiple factors, I think we have solid momentum across the product portfolio and the integration of Endox is going according to plan. Transportation, solid demand driven by Titanium tubing for Aerospace, which is strong, oil automotive worsened. Mining construction flat underlying demand year-over-year. Nuclear, real high activity, including also discussion on next-generation reactors, but 1 should remember, this is an industry with natural really long lead times.

Hydrogen and Renewable Energy segment remains mixed, but overall negative, and I would say, especially in the hybrid and related businesses. Order intake and revenue, order intake rolling 12 amounts to SEK 17.7 billion with a negative organic growth of 4% mainly coming from the OCTG in oil and gas segment as well as a negative development in chem, petrochem and Industrial. And looking at it from a geographical point of view, Europe and North America weak, while Asia remains in better levels.

Medical, industrial heating grew, and we continue to book good umbilical orders in the oil and gas segment. Revenues amount to SEK 4.5 billion with a negative organic growth of 5%. Kanthal and Strip grew and Tube declined, where tube was affected by the weaker market in Europe and North America as well as a delayed ramp-up after the maintenance stop. Biggest positive driver for the group came from the Medical segment. Rolling 12 months book-to-bill is 95%.

So let's take a look at the earnings. Adjusted EBIT amounted to SEK 364 million with a margin of 8.1%. And Johan will dive into the EBIT bridge later on. But overall, I would say that there are some main reasons for the weaker results. Significant FX headwind impacted margins with 290 basis points, which is difficult to mitigate in the short term. The weaker market is affecting special volumes in industrial and chem-petrochem. This result in reduced gross profit, especially from the more profitable chem-petrochem segment, but also lower absorption in some of our factories and the delayed ramp also affecting both deliveries and absorption.

Free operating cash flow of SEK 422 million, higher than last year, impacted by changes in working capital and lower CapEx, and Johan will provide more color on this as well.

If we take a look at the divisions, starting with Tube. Tube, noted organic growth of minus 7% for the rolling 12-month period. Chem-petrochem and Industrial and Europe are the main reasons for the development. North America continued low levels and Asia on okay levels. Order intake was also affected by the OCTG business within oil and gas on high comparables. Backlog for nuclear and umbilical within oil and gas remains solid. And due to the more positive market in umbilicals, we are now increasing the output pace in the beginning of this year 2026.

Organic revenue growth of minus 11%, mainly driven by a negative development in short-cycle business due to weaker markets, production limitations to the delayed ramp-up affecting industrial and oil and gas as well as some timing effects in nuclear. Book-to-bill was 93% rolling 12. Adjusted EBIT on 8.4%, affected by already mentioned variables, the weaker markets, FX headwind and delayed rampup. The FX headwind was SEK 97 million, which implies that excluding FX, the EBIT margin would have been 11.1%.

Kanthal. Organic order intake growth for the rolling 12 months period of 9%. Medical is continuing on a strong trajectory and also nice to see that we now, again, are growing industrial heating. Even if it's still from quite low levels. Applications like ceramic elements for electronics, including semiconductors and glass industries, especially in Asia, are strong and it is for these applications, our announced investments in both U.K. and Japan are related to.

Revenues grew organically by 10%, driven by both medical and industrial heating. Book-to-bill grew to 105% rolling 12. Adjusted EBIT margin was 16.3% in the quarter and 19.7% excluding FX. And this is despite the rather low level of volumes we have in Industrial Heating.

Moving to Strip. Strip noted organic order intake of minus 11% on the rolling 12 months basis. But the numbers are not really telling the whole truth as Strip in quarter 4 last year received a large order for pre-coated strip steel, which interferes then with the comparables. The development for the division's most important product, the compressor valves steel was positive. Organic revenue growth of 20% in the quarter, driven by the consumer, but also the renewable hydrogen segment. Book-to-bill rolling 12, 91%, which is due to some timing effects from orders. I mean they have -- I mean, did book sort of annual orders and some of that will move from quarter 4 into quarter 1.

Adjusted EBIT margin improves to 9.5% despite the currency headwind. Excluding FX, it would have been 11.5%. So a nice increase from the Strip division if we look back a couple of quarters. We mentioned quite often that with a strong balance sheet that we can stay with our growth initiatives also in more challenging times. To give a short update on what is going on, we showed this slide, which comes from the Capital Markets Day we had in November. So to give some examples of what we expect to happen during 2026. With the investments we do in U.K. and U.S., we are increasing our capacity of products in silicon carbide, which is a product that has shown growth also during the time industrial heating had a market headwind.

And the investment in U.S. will also allow us to offer shorter lead times on the American market. Additional vacuum remelting capacity will allow us to grow more in advanced grades, very often for application in segments like aerospace and medical. And we will during 2026, start ramping up the increased capacity for industrial heating in Japan, which will support the steady growth we've had in that market, especially for subsegments, electronics, semicon and glass. End of the year, we will start ramping up the increased capacity of nuclear steam generator tubes. And of course, very satisfactory that we already today have a good backlog for this investment. And also end of the year, we will ramp up the Malaysian unit for medical wire. And with that, I'll leave over to you, Johan, to dig deeper into the financials.

Thank you, Goran. And before we move into the details on this slide, I just want to comment on the targeted measures that Goran mentioned and that we communicated in our previous report of the expected items affecting comparability cost of approximately SEK 400 million. we have charged SEK 342 million in the P&L in the fourth quarter, and the remainder will come in 2026. The cash impact, which is roughly half of the SEK 400 million will be quite evenly distributed across the quarters during 2026. And for the savings, we have realized SEK 10 million already in this quarter, in quarter 4 2025, and we believe that we will be at 60% of the savings run rate at end of quarter 2 and have the full run rate effect realized from quarter 4 of 2026.

So now let's talk through the bridge to the right. Order intake for the rolling 12-month period amounted to SEK 17.7 billion, corresponding to an organic decline of 4%. Total growth was minus 9%, impacted by currency and alloy effects with a stronger SEK and lower metal prices accounting for 6 percentage points.

Quarterly revenues reached SEK 4.4 billion with a negative organic growth of 5%, and that includes a positive 90 basis points from U.S. tariffs. The revenues were held back by weak market conditions in Europe and North America as well as delayed ramp-up affecting parts of the oil and gas and industrial segments. Currency effects, primarily from a stronger SEK against the U.S. dollar had a negative impact of 6%. On the alloys, alloy effect impacted by minus 2% on quarterly revenues. Based on metal prices and currencies at the end of December, we see a continued negative alloy effect in the coming quarter, both on rolling 12-month order intake at minus 2% and quarterly revenues at minus 1%. But here, it's worth noting that the recent trend of increasing nickel prices can, of course, have an opposite effect. But that on the other hand, is offset by the trend of a stronger SEK. So making those 2 noughts.

On structure, we have some positive contribution from Endox, although here it's rounded off to 0 and the integration is going according to plan. And this was the last quarter that Endox affected comparability. I'll get back to adjusted EBIT in a short while, but the reported EBIT declined to SEK 15 million. And here, we see the effects from the items affecting comparability of SEK 342 million.

And we are also impacted by the lower revenues and the delayed rampup. Net financial items for the quarter amounted to minus SEK 1 million compared to minus SEK 22 million last year, mainly driven by valuation of derivatives. Normalized tax rate ended up at 24.9% for the quarter, while the reported tax rate amounted to 185.5%. And that is, of course, affected by the -- some nondeductibles and that's amplified by the low reported profit. Free operating cash flow ended up at SEK 522 million sec [ SEK 422 million ] in the quarter, which I'll get back to in the coming slide.

And finally, adjusted EPS for the quarter ended up at SEK 1.06, impacted negatively from the lower adjusted EBIT.

So looking at the bridge, starting with the graph to the left, showing adjusted EBIT bridge for the quarter. It decreased SEK 220 million compared to last year. The biggest variable here is being a significant FX headwind, as Johan pointed out. But of course, also a negative organic development coming from absorption effects, both from the mentioned weaker market and from the delayed ramp up.

But let me give you some more flavor on the FX effect by putting it basically into 3 buckets. First, we have the translation of local results, so profits made in other currencies than SEK. Here, we have had almost minus SEK 40 million. Secondly, we have the transaction effect, so transactions in other currencies than in foreign currencies. And the transaction effects are netted off by some hedges, almost 40% was netted off by hedges and ended up at minus SEK 90 million.

And finally, we had minus SEK 35 million in bridge effects from revaluations of open positions in foreign currency at the end of the quarter. And we got minus SEK 23 million of that in the P&L for this quarter and for the same quarter last year, it was plus 12%. And this minus SEK 23 million is due to the strengthening of the SEK late in the quarter, and this is something that we actually could have done a bit better, I think.

And on a year-on-year comparison then, excluding the FX margin, we would have been at 11% EBIT margin. The organic development was particularly noticeable in Tube while all 3 divisions are impacted by FX and that in particular for Kanthal. Structure refers to Endox and that is reported in Kanthal. The operating leverage in the quarter was minus 24%, which is quite decent level given the challenges that we've mentioned. And for the full year that you have on the right-hand side, the development is mainly explained by FX headwind but also the weaker short-cycle business and the delayed ramp-up affecting revenues and earnings, where margin declines from -- in total from 9.9% to 8.3%, but would have been 9.8% if we exclude the FX effects.

Moving over then to the balance sheet. The net working capital decreased in absolute terms year-over-year, mainly due to volume and currency effects, but increased as a percentage of revenues to 35.5% due to lower quarterly sales. To continue on inventory, they are lower in value, both sequentially, which is as per normal seasonality and year-over-year coming from both lower volumes in inventory and lower metal prices, and that's influenced by currency as well.

Capital employed, excluding cash, decreased year-over-year to SEK 15.7 billion, mainly driven by lower net working capital and the return on capital employed, excluding cash, which is based then on reported operating profit, including the metal prices and items affecting comparability. Just to be clear, was 5.8% for the rolling 12-month period, down from 9.5% last year coming from the lower reported operating profit due to the aforementioned reasons.

Looking at cash flow. The free operating cash flow amounted to SEK 422 million which is higher than last year, and that comes mainly from the lower net working capital and a slightly lower CapEx spend compared to last year. The noncash items that typically refers to, for example, provision or provision releases in the operating result that have no cash flow impact. And in this case, is offsetting the items affecting comparability that we have in the EBITDA. Positive impact from lower working capital, mainly from lower accounts receivable and inventory.

And on the CapEx side, as I said, we had a lower CapEx spend in this quarter compared to the quite high quarter last year. And we were expecting to be lower than the comparable quarter, but we also had some project delays and some positive effect from sales of assets in this quarter, and the amortization of lease liabilities is slightly more negative this year.

If we look on the graph on the right-hand side, we can note a healthy cash flow in the last 2 years while running more growth investment, like Johan pointed out and which I might remind you that these are -- these investments are in segments that are more profitable and less capital intense and will to yield in the coming years.

So overall, and as Goran also pointed out, our financial position remains strong, where we are well below our financial target of a net debt to equity rates below 0.3x. At the quarter end, we were at negative 0.05x. Net pension liabilities decreased to SEK 589 million from last year's SEK 820 million mainly as a result of higher discount rates and the leasing liabilities was on par with last year. So our cash position continues to be strong, and we have a net cash position of SEK 864 million, which will come in handy as the Board proposed a dividend of SEK 2.50 per share through the AGM in April.

So looking at the guidance we gave ahead of the quarter. CapEx for the full year came out at SEK 1.1 billion and the full year guidance was SEK 1.2 billion. Currency transaction and translation effects came out at SEK 182 million -- minus SEK 182 million in the quarter, where we guided for minus SEK 150 million. And the total bridge effects, which I alluded to earlier, including the hedges and revaluations was minus SEK 163 million. And the main reasons for the fairly high effect is, of course, the stronger SEK and the revaluation effects due to SEK movements late in the quarter.

Metal prices affected us negatively with SEK 8 million, which is very close to the neutral effect we guided for. And normalized tax rate came out at 23.9% for the full year, well in line with the guidance of 23% to 25%.

So looking at the guidance for quarter 1 and full year 2026. And I'm -- I feel I need to comment that a few of these key metrics are quite volatile at the moment, which makes it difficult to give guidance but we will continue to give it based on the rates and prices at the closing of the latest quarter. So please have that in mind.

So the full year CapEx, we maintain at the level that we came out of 2025 with meaning SEK 1.1 billion also for 2026. And in that, we deliver on the projects of steam generated tubing capacity increase in Sandviken as well as industrial heating capacity in Japan and medical capacity in Malaysia.

On the currency, for Q1 2026, based on the rates per end of 2025, the transaction and translation effects are estimated to be minus SEK 240 million on the back of the stronger SEK. On the metal price side, based also at the end of December metal prices and currency rate, particularly nickel and U.S. dollars, now we have anticipated actually a negative effect of SEK 50 million for quarter 1.

Here, it's worth reminding about the dynamics that the price increase for nickel or even for molybdenum and chromium, but nickel being the most significant one, over time, this leads to positive metal price effects, so a price increase in those. While a stronger SEK, which we are seeing now against the U.S. dollar has the opposite effect. So please bear that in mind. So tax rate for the full year 2026, we expect the normalized tax to stay in the range of 23% to 25%, just like we had said before. So by that, I hand back to you, Goran, for outlook and summary.

Thank you, Johan. So outlook for the first quarter. I mean, the general economic environment was continued to be uncertain during the fourth quarter. And also given the recent development, we don't see that, that will change during quarter 1. But we maintain a solid backlog in several key segments, which provides good visibility into near-term deliveries, mainly in umbilicals and oil and gas, nuclear and medical. But we also see challenges in the more short cycle customer segment, customer segment, particularly in Europe and North America, which already have affected and expected to continue to affect short-term deliveries.

We expect some dilution effects related to delayed ramp-up to affect also first quarter profitability, even though that equipment performs much better in the end of quarter 4, but still some effects also in quarter 1. Product mix is anticipated to remain broadly in line with the fourth quarter. And as Johan just explained, we expect a significant currency headwind also in the first quarter. And finally, cash flow tends to be lower in the first half compared to the second half of the year, which moves us into the summary.

I mean -- we are affected by the continued uncertainty stemming from geopolitical turbulence. Customers are postponing their investment decisions. But in all of these turbulence, I believe we are clearly benefiting from our diverse exposure and global footprint. Revenues were flat organically for the full year 2025, but the short-cycle business was weak, mainly for chem, petrochem and Industrial segment, while segments like medical, nuclear [ part ] , oil and gas remained strong. Earnings were affected by the significant FX headwind and absorption effects from weaker markets as well as the delayed ramp-up.

Despite this being a difficult year to navigate, it is a strength that we continue to generate healthy cash flows that combined with our strong balance sheet creates foundation for continued strategy execution. And I'm confident that will make Alleima more resilient and more profitable company long term. And with that, I hand it back to you, Frida.

Great. We will now begin the Q&A session. Please feel free to ask the questions via the webcast or directly through the conference call. Operator, please go ahead.

[Operator Instructions] Our first question comes from Adrian Gilani with ABG.

Yes. So a couple of effects I wanted to ask about regarding Q1. Specifically, first of all, you mentioned the ramp-up delays after maintenance stops. If I remember correctly, you had previously guided that those stops would have 80 basis point margin impact in Q4. Are you able to give some similar quantifying metrics for Q1 as to how much that will impact.

I will not give you a number, but I will try to explain the situation of why that is a bit difficult. Yes, it's right that we gave you a guidance of 80 for the quarter 4. I think we came in maybe in line with that, I think maybe even a little bit worse, but it's one of the biggest impacts it has is that it has a negative absorption effect in some of our factories and absorption effect, it's sometimes difficult to see if it comes from this problem or that we, in some of the cases, have lower volumes due to the market. So it's a combined absorption effect. So you won't have a number, but I would say it is at least 50% of what really happened in quarter 4 because the machine is working much better now, but not perfectly.

Okay. That's helpful. And then also on Q1 and the FX guidance, which I appreciate is especially hard to give now. But at Q4 and rates. Again, I remember you said that for Q4, you had roughly half of that being hedged, but is that the case going into Q1 as well that the SEK minus 240 million is excluding hedges. So on the end of Q4 rates, it would be SEK minus 120 million actual effect. Is that fair?

It's -- no, it's not that high hedge effect. I mean the hedge effect sort of is falling off as we -- quarter-by-quarter. So -- and if you recall what I said when I tried to explain the FX then on the transaction side, we were able to offset in quarter 4, it ended up to be about 40% of the transaction effects we managed to offset and I think that effect sort of falls off for every quarter going forward.

Okay. Understood. Then on a more general note, I mean, 2 orders continued to sort of come down. And previously, you've been fairly confident that you can that you can still -- or that the backlog in oil and gas has supported a solid growth ahead despite that. Would you say that that's the case still? Or is the oil and gas backlog starting to become thinner now?

It's yes on both questions. I think umbilical, we are very positive on, not that the backlog is extremely between 2 and 3 quarters, but that also makes us flexible to book more orders. And we're at least so positive for the rest of the year on umbilicals that we are increasing the production pace and the output pace now in the beginning of the year. So confident there. OCTG, we have backlog maybe 3 quarters. I think the order booking is a little bit slower than we want. So there might be a risk on OCTG end of the year, but there are still some big contracts out there. I mentioned in my comments also FX. I mean the main competitor sells -- have their cost in Japanese yen. So of course, that has an impact on sort of our competitiveness in the oil and the OCTG.

Okay. Understood. And one final question on Kanthal regarding industrial heating, where you saw more positive on the outlook and the arrow even points up now in your arrow slide. What has really changed there? Because overall industrial activity remains fairly subdued. Is it a specific end markets driving that improvement?

Yes. It's good reflection. I think first of all, it's both end markets, but it's also geographical. It's really Asia supporting this. Europe is still soft and it is segments like electronic, semicon and glass; glass also very much related to electronics. So it's those segments, and it's mainly Asia.

Our next question comes from Kaleb Solomon with SEB.

Just a few questions from me. You mentioned that timing related effects in nuclear contributed negatively during this quarter, and that -- some of that should sort of spill into Q1 instead. Can you give us a rough figure of how that -- how big that effect should be?

I'm looking at Johan if he has the numbers, but I can start to explain what it is, because we are so positive in nuclear and then we come and say it's negative timing effects. Of course, that could always happen since this is normally large contracts and they don't sort of invoice every week. But I think the main effect we saw in quarter 4 is that in some cases, in some contracts because this is a very long internal value chain, we have the possibility to invoice before sort of the tubes are ready for shipping. So we can -- we have some steps in the value chain where we can invoice. And that we had such a contract last year. We didn't have that this year. So there was some invoicing from sort of intermediate tubes last year that we don't have this year. That's the main reason.

Okay. That's clear. And maybe another question on the oil and gas part. You said some of the outcome during this quarter was sort of due to production limitations from the delayed ramp-up. Can you maybe split how much was due to that versus the sort of overall weakness within OCTG, meaning how much should we sort of extrapolate going forward?

I think all the impact we saw in quarter 4 was related to the delayed ramp-up because we have full order book for 2, 3 quarters. So it was a lack of supply of extruded hollows to the cold-working operations. So all impact came from that.

Okay. And is there anything you can say about the sort of time line on reopening the Sandviken plant? And how soon can we sort of expect to see any sort of contribution from increased nuclear capacity there?

We said end of the year, I think what sort of stipulates the timing is lead times of equipment. I Was there walking through the factory a couple of weeks before end of the year. And now I think everything is -- about most things are supplied and now it starts to be built up. So I don't think we're changing the timing. It will be end of the year. If any of the production could start a little bit earlier, I think that's too soon to conclude. But we do what we can to start as soon as possible.

Great. And just 1 last one. You very briefly touched on pricing, how potential price hikes and how that sort of impacts your customers. Can you maybe comment on how much, if any, of the sort of order decrease was pricing related?

No, I cannot do that, but that would -- that's a good question, but that would be to speculate too much. I think -- but think about it. I think I've been quite transparent before, at least when it comes to the tube flow. And of course, this depends on what grade it is. But on a cold-working product, we've said that price increases needed is around 10%, 15% to compensate for the 50% tax because it is a tax we pay on the imported bar. And of course, 10% to 15% price increase, that's a lot. But I cannot speculate in percentage how much that impacted, sorry.

The next question comes from Anders Akerblom with Nordea.

Yes. So firstly, I was wondering about just high level. I mean, previously, you've mentioned maintaining order booking discipline several times. Now with book-to-bill below 0.9 in the quarter. Could you quantify a bit more how much volume you're actually walking away from to preserve pricing?

I understand how you ask the question, Anders. I cannot tell you that because you never know until -- because if we lower prices, maybe the others also lower prices, you don't know where you end up. So I cannot -- I don't want to speculate on that. But of course, we can book tons into the steel plant. I think I would say we -- right now, we are -- I mean, now it's been down for some while. Some of the factories are running on a bit lower volumes.

This is the time when it hurts the most to have this strategy. But if it starts to move in the other direction, we have short backlog, prices will be better. So I think now it's sort of very important to stay with the strategy we have. Also say, of course, this is not binary. It's, of course, they book some orders sometime. But I cannot give you -- I cannot give you a number. But I can say we're running -- I don't have the latest updates, looking at table. I think we communicated before that we're running roughly the steel plant at 20% lower volumes than we did in 2019. That does not imply that we could book 20% more. But I think, as I said, this is -- right now is when it hurts the most, but now we need to be cool and keep on our strategy. We don't want to have price wars to get some low value-add products.

No, makes sense. Makes sense. I really appreciate that answer. Makes sense. I would also like to know a bit with regards to then, obviously, industrial and chemical and petrochemical. Could you share anything in terms of how confident you are in sort of a demand recovery trajectory in 2026 for these markets?

What I just said was that -- I mean, sometimes you could argue if it's the segments or the sort of geographical market. It's these segments that hurts the most in Europe and North America. I would claim that it's mainly Europe that is weak and that industrial investments are sort of lagging. That is, I think, what is happening. And I think even since quarter 2, we have seen that sort of order intake is low and it affects revenue, and it happens again. And it would have been nice to say, I think those times are over. They are not. We will see this also in quarter 1. Then of course, mathematically, we will start to sort of meet lower comparables. But that is more mathematical than sort of dollars. I don't see a turnaround short term.

Right. I appreciate that. I didn't mean that you have to. Didn't mean to put you to repeat yourself.

I don't see a turnaround short term.

Right. And I appreciate that. I didn't mean that you had to -- mean to put repeat yourself. I was more wondering about because you did not really touch previously upon kind of the CBAM or tariffs that the EU is implementing. I mean, some in the market are discussing that? What's your view of that for your business?

I would say that overall, I think EU is taking a good decision, even though we are both a company and a country that prefer sort of free trade, but you cannot sort of stay with that politics, if others don't do that. So I think it's good that Europe is taking that decision. That is sort of to secure that we will have a steel industry in Europe. With that said, I think it's much more related to, let me call it, bulk steel industry in Europe. Swedish steel industry has since a pretty long time become very more specialized. So I think we are less impacted in a positive way than others. With that said, I think we also have some more -- some of the more low added value products, for instance, in Tube, I think on the margin, it will be positive for them. But it's more for sort of the other part of the European steel industry. But for Europe, I think it's a wise decision.

But you don't want to quantify that impact for your part?

No. I can guarantee you that I've asked too the exact same question and they cannot quantify it. But it's not big.

The last question comes from Igor Tubic with DNB.

First of all, I just want to confirm, did you Goran said that the lead times for the umbilical business is 2 to 3 quarters or 2 to 3 months?

The backlog is -- and maybe I said month. That was a mistake, it such that it's still 2 to 3 quarters' backlog.

Okay. So it's 2 to 3 backlogs for umbilicals and 3 quarters for the OCTG business.

Yes.

Okay. And then I just want to -- if you can give us some sort of to understand -- better understand the Tube division that declined 11% organically in revenues and order intake was down 7%. Were there any larger orders in Q4 last year? Or can you say anything how we should think about that in the coming quarters as well?

I'd say that there are some -- obviously, mainly, there are some tough comparables in OCTG. There's some tough comparables on nuclear, because they booked steam generator tubes in quarter 4 2024. And then they're impacted by the weaker market in especially Europe but also North America.

Okay. Okay. I see. And in Q1, yes, this year or last year, are there any -- should we take into account any significant or large orders there as well? Or how should we think about that?

Not sure we had any large order.

Yes, we had nuclear in the quarter 1 last year. Yes, we had a big nuclear order quarter 1 2025.

Okay. And in terms of...

And that was over SEK 500 million, that order.

Okay. And in terms of chemical and petrochemical, do you have any view when this segment is starting to have easier or lower comparables?

Post that we would start to meet lower comparables in Q2.

I think mathematically, we'll start to look better, but I think we need to see a turnaround on industrial investments in Europe and also in North America.

Do we have any further questions?

We don't have any further questions over the phone.

Thank you very much. Thank you all for calling in, and thank you for very good questions. This concludes the call. Thank you very much, and have a good day.

Thank you.

Bye-bye. Thank you.

Good afternoon, and welcome to Alleima's Capital Markets Day 2025. A special thank you to all of you joining us here today at the historic Vasa Museum, but of course, also welcome to you watching online. My name is Andreas Eriksson, Investor Relations Officer at Alleima, and I'll be your moderator today. We've just seen a short film showing how Alleima's materials and innovations advance industries around the world, making them safer, stronger and more sustainable. That story is all about progress, about looking ahead, shaping the future through advanced materials, but value creation could also mean taking care of what you already have, and that's why we're here today at the Vasa Museum.

Alleima is the main partner of the museum's ambitious restoration project support Vasa. And the pins you see on me and all the other speakers today represents just this important initiative. Before we kick off, safety is always a top priority at Alleima. There's an emergency exit located at the back of the room, and there are several emergency exits throughout the building, all marked with the green exit sign. The assembly point is located on the large lawn outside towards Junibacken. And for you watching online, I trust that you're aware of the safety procedures of where you're located.

A few other housekeeping notes. We're broadcasting live today, meaning everyone in the room will be filled, but only from behind. And there is also photographer taking photos, but he will focus on the speakers and the general atmosphere in the room and not focus on individual guests. And if you have any concerns, please don't hesitate to let us know.

We're here today to take a closer look at Alleima, our current position, our view on several end markets, strategic priorities and much more. You'll hear from Goran Bjorkman, President and CEO, who will share an update on our strategy for profitable growth; Olof Bengtsson, CFO, will then give you our view on how Alleima's strong financial position supports that strategy; and finally, our 3 divisional presidents, Carl von Schantz, President for Tube; Robert Stal, President for Kanthal; and Per Eklund, President for Strip, will dive deeper into their respective areas. We will finish off with a joint Q&A session. And for you watching online, you can submit your questions at any time during the program in the interface on your screen.

And with that, let's get started. Welcome up on stage, President and CEO, Goran Bjorkman.

Thank you, Andreas. Also from my side, a very warm welcome also to you online. My name is Goran Bjorkman. I'm the CEO of Alleima. It's been a little more than 3 years since the listing of Alleima and about 2 years since the last Capital Markets Day. And despite the turbulent market we see right now, I'm really pleased with the performance of the company. And I would say the main messages today are that we really have improved the financial foundation of the company. We are more profitable and less volatile than we were just a few years ago. This has been achieved through focused sharp strategy execution.

And the last thing, I think we have the right prerequisites to continue this development. We'll dig deeper into the details of that, including a small part where we will look at how we view our different businesses from a shareholder value creation point of view. We'll also dig deeper into the respective divisions, both their performance and their strategic direction.

I think I'm missing a clicker. There it is. Thanks. But let's start looking at who we are today, I mean we are a very niche company. We're high value-added products in advanced stainless steel, other special alloys, ultrafine medical wire for medical applications, including components, and as well as the products for industrial heating. We have a strong market position across a wide range of niche end markets, serving 10 different customer segments, and our fully integrated value chain from strong own in-house R&D to finishing operations and a global sales force.

I said it many times, our products are designed for very specific customer applications in the most demanding industries. Normally, we have a strong position. Normally, we are #1 or #2 where we decide to compete. So just to share a few examples with you, starting with Tube. In the Tube, we're #1 in umbilical tube for the oil and gas industry. We're #1 in aerospace titanium and #1 in steam generated tubes for the nuclear industry. All these industries, of course, really appreciate the high quality and the technology leadership. And this is both from our customers, but also especially also from our end users.

If you look at Kanthal, we are #1 in products within industrial heating, with exciting examples like Flow Heaters, electric process gas heaters that Robert will talk more about later on. I'll say we're #2 in medical wire. There are some competitors with a broader market -- broader portfolio than we have. But in the areas where we compete, we have a leading position. And to me, this is just potential for continued increase of our market shares. And if we look at the development in medical wire, I would say this is one of the successes in Alleima if we look back a few years.

In just 5 years, we have quadrupled sales. We've gone from one single production unit in the U.S. Now we have one more in U.S., several in Europe that has come through acquisitions. And we're right now in the phase of establishing the first unit in the APAC region with the investment we do in Malaysia in the Penang. If we look into Strip, they are #1 in compressor steel. And I'm really happy to see that our latest material already now is starting to be designed into new compressors.

Normally, when we talk about medical, we focus on Kanthal wire, but also the other 2 divisions has good products in the medical industry. And for instance, Strip has a leading position for bonesaw applications. We're serving, as I said before, 10 different customer segments. So I would say this is one of the strengths with Alleima, our broad exposure. Of course, some of these segments are partly cyclical. But in the total, it reduces the volatility of the whole company.

Since we are engineering for the most advanced industries, this not only helps the volatility, it also gives us good opportunities for future development. Of course, these segments are extremely large, but in the small niches where we decide to compete, we have really good market shares. And if we look at the share of the revenue, of course, that will change over time. And this is due to our mix shift towards increased growth in segments with higher market growth and more profitability and also better capital efficiency. I will come back to that later on because that's an important part of today's agenda, but first, let's start looking at the present market situation.

Of course, we see the turbulent market right now with the geopolitical issues, trade problems, and that is affecting many industries, including ours. We see that in segments like industrial, we see it in petrochem, we see it in the industrial heating, while other segments continue to be strong like oil and gas, nuclear, medical. And if I should look at this from a regional perspective, I would say, of course, the U.S. market is affected by the high -- still high import taxes to U.S., still 50% tax on imported steel to U.S. We have been successful in passing on these costs to our customers. And with all the added value operations we have in the U.S., of course, we don't need to add as much price increases in percentage as the taxes. Johan will show this more in detail later on. But for sure, our products has become more costly for our customers. And of course, this has somewhat softening on the market in the U.S.

I think Europe is, from a regional perspective, the weakest market right now. I think there's a series of things that has affected Europe. I mean, the war, the war came with an energy crisis in Europe, Germany really weak, European automakers really challenged by cheap and good EV cars from China. And now on top of that, Europe has been challenged from the U.S. on tariffs. Of course, this has an impact on the European industry. We see a lot of, I would say, industries hesitating to invest, and that is affecting us.

APAC still holds up stronger. This is also why we -- which we announced in the quarterly report are taking some measures now to improve our operational efficiency. Actually, I received some questions last week on -- so do you view the markets going even worse or don't you see its improving? I think it's difficult to speculate, and I will not speculate. I think what is important is that we cannot trust that it comes back soon. We need to work with what we can impact, and that is our own costs. So we've taken measures now. It's a number of initiatives to reduce our cost with roughly SEK 200 million on an annual run rate. And roughly 75% of these cost improvements would be permanent. So if volumes come up again, roughly 75% will continue as improved cost efficiency. And we expect run rate savings at full SEK 200 million around end of next year, I would say.

Despite this and despite the challenges, I think we are showing resilience. I think we have improved both the margins and the volatility the last years. Of course, this has to do working with cost flexibility. And of course, it has to do with improving some of the units. But we say it's 2 main reasons for this development. The first one is operationally. I think we're much more reluctant today to fill the mill in downturns to any price. We had a tendency to do that before. We rather work with our cost flexibility and other measures instead of filling the mill with, I would say, poor prices and poor mix products.

Even though maybe some of those orders, we could always book more orders, might be sort of positive from a contribution point of view, maybe also positive from a cash flow point of view. But the main reason why we are reluctant to do this because after downturn normally comes an upturn. And when the upturn comes, you don't want to sit with a long order backlog with poor prices and poor products. Because when demand starts to come back, price environment improves, then it's good to have a short backlog, and we are ready to take orders. So that is the operational reason.

There's also a strategic reason. And that is we already, I would say, have good impact from targeted growth in certain segments, not everywhere. I mean if we just look a few years back, we were much more dependent on the Tube oil and gas business. That is, of course, still very important. I would say it's even better today than it was some years ago. But we've grown in other parts. We made the company much more balanced than it was just a few years ago. For instance, the improvement we've seen in Kanthal, both in the industrial heating part and especially in the medical part. Also in chemical and petrochemical, it's much better today than it was some years ago and especially due to the growth and the really profitable growth we see in the APAC region.

And to continue this development is really the core of the Alleima strategy. If you look at how we view that our addressable market is growing, it looks really good. Even to be honest, it doesn't feel like that right now. But mid- to long term, we view the addressable market as growth as positive, around 6% CAGR. And of course, some of the segments even better than. We have decided to target 5 segments as the priority when it comes to growth, or at least the priority when it comes to capital allocation for growth.

And with capital allocation, I mean, larger CapEx and M&A. These segments are -- I mean, you see them here, medical, nuclear, chem, petrochem, hydrogen renewable energy and industrial heating. So how do we come up with that priority? And it's a balanced view from certain perspectives. Of course, we look at how the attractive the market is. And with that, I mean size of the market and the growth of the market versus our own position. We look at profitability and profits, also size matters and of course, capital efficiency. So these segments are then our priority when it comes to capital allocation.

Someone might wonder why not tube oil and gas? Well, tube and oil and gas is really important for us. But we look at the long-term projection, and Carl will show it later on. I mean, there is a positive growth, but not in the level of some of these other segments. But this is not a binary thing. Of course, if we see that we have bottlenecks in oil and gas restricting our sales, we are not stupid. Of course, we're going to invest in reducing those bottlenecks. But I mean, for me, this is more about building new factories, doing acquisitions. And just to be clear, not all investment decisions are based on this. For instance, safety, cost efficiency, maintenance investments, that is based on other kind of decisions.

This shows how we sort of execute our strategy in what areas we have initiatives to drive the company in the direction I just explained. Of course, we still focus on profitable growth. That is the word pretty often used. For us, profitable growth means growth that adds shareholder value. And we define that as return above cost of capital. And we will show you a little bit later on how different products in our portfolio act in that way. But we also have a contribution business. That is also important. It covers a lot of cost for the group. But in order to grow, that growth has to be creating value.

The strategy also focused on continuing to be the materials innovator and technology leader. This is, of course, about developing our long-term product portfolio. Operation and commercial excellence. This is about continuous improvement, automation, digitalization. It's about improve our way of how we understand customer value, price leadership, go-to-market models. And sustainability, I mean that is, of course, also linked to growth because also that should generate customer value. And then we have our common operating model, strong in-house R&D, our fully integrated value chain and the decentralized organization setup.

So let's look into some more details on profitable growth. When we look at that -- we look at it from our 3 building blocks: business development. Of course, this is about our technology leadership. It's about our focus on R&D. But it's not only about sort of making the next good material, next good product, which is, of course, important. It's also about our deep understanding of customer application, serving the customer with the existing portfolio, making them create value based on what we already have. Growth investments is, of course, that's a continuation of business development. When we are successful in business development, maybe run out of capacity or understand there's a new capability that we need, then we need to invest.

And in some cases -- because the main part of our growth is organic. But in some cases, if we view that the organic route maybe is not fast enough or maybe not possible, M&A comes into play. That is normally focusing certain product portfolio, some missing capabilities or it could also be a geographical footprint. So let's dig a little bit deeper into business development. I will say this is the foundation of our growth strategy. This is about the technology leadership, the focus on R&D. I would say it's the DNA of the Alleima company.

Really long-term customer relationship. It's built on collaboration. It's built on trust. And of course, as I said before, extensive know-how, not only in our own metallurgy, also in customer applications. The integrated value chain, I think, is core for us. And the combined, I would say, hard to copy, combined know-how along our internal value chain makes it possible for us to produce our, I would say, pretty complicated products with good efficiency and good yield. Our products are very often positioned early in the value chain. But still, it's very critical for customers and end users' applications. So let's look a little bit about some of the ongoing R&D projects. Of course, when we do our prioritization, we look at customer needs, current needs and also, of course, future needs.

And if you look at the trends, customers is asking for lighter and stronger materials, materials that withstand higher temperatures and even more corrosive environments, tighter tolerances, better fatigue resistance and sometimes also coatings. To give you some of the examples we have, we are continuously widening our high nickel portfolio. This is for demanding industries in, for instance, chem, petrochem, in aerospace, also in renewable energy, very often looking for properties -- material properties like strength, temperature and corrosion resistance.

We also developed a next-generation super duplex that is targeting heat exchangers, and heat exchanger with even more challenging corrosion environment and also for customers that ask for longer tiebacks and even higher pressures. We are already today delivering tubes for SMR, that is water cooled SMRs, nuclear reactors. But there's a lot of development work ongoing for the next-generation nuclear, what we call advanced reactors. That is cooling medias like helium, sodium, lead, molten salt. There's a lot of activities ongoing. We invest quite a lot of R&D into that. We think that is a really good future opportunity for us.

If we look into medical, very often medical is about developing the next generation of an already existing feature or application. And I think medical is really a good role model within Alleima, how to work very close with customers. And to mention a few interesting areas, glucose measurement. We also have advanced heart monitoring. We also developed a next-generation umbilical, basically the same corrosion resistant as the current material, but with higher strength. That makes it possible for our customers to design lighter umbilical cables. That is, of course, always good, but it's especially important if you want to go to even deeper wells or even the weight of an umbilical could be an issue.

We also developed -- that's an innovation, first of all, rather small powers now it's larger power Flow Heaters within the Kanthal division. We will soon show you a film. This is about project where the customer asked for Flow Heaters above 850 degrees. This not only that we managed to deliver that, we also delivered for the customer helping them to improve the position, efficiency, and sustainability.

[Presentation]

Dr. Markus [indiscernible] a fantastic person I have to say. Moving on to CapEx and growth investments. As I already said, that, of course, a natural continuation if we are successful in business development. Most of the investments are in the end of the value chain, I would say. So I think we should look at some of the ongoing examples of what we are doing. I would say that one of the most important differences being an independent company instead of being a small business area in a large group is that you are in control of your capital allocation.

To me, that is fundamentally important if you want to execute on the strategy. And I think we are. I will not go through all of this, but let's look at some examples. Let's look at the examples that we took decisions last year. We're adding a new vacuum remelting furnace. Some materials have to be remelted. And this allows us for a continued growth of really advanced materials. We're also growing the Kanthal industrial heating business in Japan. I mean, I've been around for some while.

And according to my experience, if you really want to be successful in Japan, it's good that you have footprint in Japan. And Kanthal has had that for some time, and now we have grown out of the capacity. So we are adding capacity. We also took the decision last year to reopen Tube Mill 68. That was closed roughly a decade ago due to the downturn in the nuclear industry. Our nuclear industry is really going up again, and we decided to invest. So we're investing and we will start up that factory end next year. And by that, we're adding 60% capacity for steam-generated tubes.

We also, as I said before, took the decision to open our first production unit for medical wire in the APAC region, where we're now investing in Malaysia, in a town called Penang. That is a medtech center. So already now we have already buying customers and potentially future customers at that place. I think all of these are examples that we are executing our strategy and that we grow in these selective segments that we have pointed out.

M&A, as I said, normally focusing a certain product portfolio, certain capabilities or geographical footprint, sometimes also if we could grow in the value chain. Of course, also M&A, we search for acquisition targets in the targeted segments. And that could, of course, be wrong, which is okay. I don't think there are that many opportunities, for instance, in nuclear, maybe not in chem, petrochem either.

The organization could prove me wrong, that's okay. But I think the main opportunities we right now see is in industrial heating and in medical. That's how we're focusing our efforts right now, where medical has the highest priority. And if we look the last 3 ones, we did are all focusing medical, 2 of them in medical wire in Kanthal and 1 for Tube. And the Tube case where we add capability for small-sized bars is also actually targeting aerospace. This slide illustrates, I would say, the overall strategic direction of Alleima, which is a mix shift strategy.

I think we've already, as I mentioned before, been quite successful. We've already balanced the company more than we were some years ago. We want to continue this development to grow faster in the targeted segment and grow less in the industrial segment. It is in the industrial segment where we most of our contribution business. So the goal is to grow the target segments to 45% to 50% and reduce industrial to somewhere between 10% and 15%. This picture illustrates how we view our businesses, some of the business from a return point of view and growth point of view.

I really understand that there might be some people in the room that would love to see some numbers on this, not today. But I will walk you through because this has an impact on how we prioritize our different businesses. So we start with group #1, very high return, really a value creator in our company. Main focus is to grow. There are more value creation by growing this than to improve margins a little bit. And the return is so good, so we could even grow this with, I would say, leverage as low as current margins. And if growth is really high, we could even go a little bit lower than current margins.

Tube -- sorry, not tube. That was your target. Kanthal medical wire is in that group. If we go to Group 2, also good value creators, not as high as medical wire. Here, both growth and margin improvements or return improvements generate additional value. We want to grow these businesses as well. But here growth comes with a very clear target. We have to grow that with a positive leverage. Growth has to generate more -- a higher margin than we have today.

Here, we have some of the products or segments. Industrial heating is here, Tube, steam-generated tubes for the nuclear industry is here and most of the chemical and petrochemical as well. If we go to Group 4, take that before Group 3, I mean here, return is lower. So the main priority here is to improve margins and then improve return. Here, we have, for instance, Tube OCTG and Tube Aerospace. I think we've done really excellent in Tube OCTG. I think just the latest year, we have improved that from traditional actually contribution business now to a margin contributor to the whole group. And we want to continue that development. Tube Aerospace, I mean, I think we need to improve the return in that business. And I think that is important because we see the market growth as very positive.

So then go to Group 3. Here, we view the growth possibilities as lower than the other businesses. That could be for reasons like the market is not growing so fast. It could also be that we already have really high market shares. So here, the main target is to defend position and defend return. Here, we have, for example, Tube umbilicals and Strip compressors. Just wanted to share with you, this is how we reason when we set targets and plans for our individual businesses. And sorry, there were no numbers.

Let's move over and see to other areas where we can improve margins, and that is we add on our operational and commercial excellence. We start with the graph to the left, that is our growth plans. We want to grow also in volume some, but what you see is that the revenue growth is much higher than volume growth. Of course, that comes with I already described, where we focus on some segments to grow faster. But it's also about, let's say, mix improvements in the individual segments and also price increases.

If you go to the left, we can see 3 bars improving margins. The first one is what I just went through. Of course, this mix shift strategy will improve margins in the company, but there are also strong commitments in the divisions to improve operationally and commercial excellence. Of course, many, many initiatives ongoing in this area because the nature of them is like continuous improvements, but I'd like to mention some examples when I look at the priority list we have today.

When we compare ourselves with the competitors, we come out strong in areas like being global, or as we say today, we're local in many places, our product portfolio, our quality and the technology leadership. And that brings us to a leading position as a technology that also gives us a price premium. And that is exactly how it should be. We should not be a good enough low-cost alternative.

But we look at cost position, I think there is, in some areas, potential to improve. Of course, technology leadership and premium comes with the cost. That's natural. But we cannot afford not to be as good as the potential we have. And we have done some more detailed studies, looking at some of our products compared to our competitors. And based on that, we have done some findings, things where we can improve. And of course, that is part of our priorities.

We've had a Tube unit, I would say, that has been underperforming. Now it's much better. And the reason why it's now is much better is that we have had a structured approach, how you work with improvements. And this is not investments. It's about how you work in the day-to-day and strategically to drive continuous improvement and have a structured way to drive that. That I know that Carl now is looking at maybe that is something we could replicate across the whole Tube division and make that way of working as, I would say, the operational framework within Tube.

If you look into Kanthal, the development in Kanthal has been fantastic. And I know some of you have been to Kanthal factories. I mean there is an automation potential in Kanthal. We are right now developing a road map how to automate more and drive more efficiency in the Kanthal units, especially targeting our heating operations. In Strip, not a small part, an important part from a volume point of view in Strip. We don't have the position where our price premium compensate for the cost we have. So we have set up a program how we should drive efficiency improvement at Kanthal with some investments where that part of Strip has to be profitable or even better profitable than today on current market prices. That is one of our priorities. I think Per will show that later on.

Also in commercial excellence, we have a number of initiatives. All divisions are focused on improving value sell. I mean, to be honest, we are a product company, and we should not leave that, but I think there is a potential of being even more sort of understanding customer values. By understanding customer values, understanding the customer's next best alternative, I think, gives us good sort of data on how we can optimize our prices. This is about sales framework, about sales playbook, et cetera. It's about how you structure, how you prepare, how you execute, how you follow up the sales process, including training. I know that's ongoing in all divisions.

There are also some initiatives about changing go-to-market models. So I'd like to mention Tube. In Tube Americas, this is the Tube American regional business. We are right now investing in improving the sales force. And the reason is that we want to have an even more close relationship with end users. Today, we are too much dependent on the distributors. So that is an action ongoing in the Tube Division.

In Strip, in a way, it's the other way around. Strip's normal sales process is sort of key account sales. And by that, I mean, we are limited on how many resource we have, and we have difficulty to reach really smaller customers where there potentially are a lot of. Now Per will show that later on, but what we're doing now is to increase the number of channel partners to with that, meet more smaller customers. And it's not only but especially targeting the knife steel business. All 3 divisions are also increasing, I would say, the focus on product management. Many reasons for that, but one obvious one is we want to have an even more close relationship between sales and R&D.

So many activities to drive improvements, many activities to drive margin improvements in the company. I know we have a Q&A later on, but I think there is one question that I should answer already now. And first then I need to ask myself that question. So with all improvements you've done in the company, and with all the potential you have, why don't you change your financial targets regarding margins? I think all the analysts are laughing here. That's a relevant and very rational question. And I think not yet, not right now. And the reason for that is, I think there is too many market uncertainties right now. And we don't know where the dollar versus the krona development will take us. So I think the timing is not right. But of course, what you see is that we have a lot of initiatives with a lot of potential to drive the margin of the company.

Let's move over to sustainability, and I will start with what is most important, safety. I mean we have improved. I'm not sure I'm pleased with the level, but I'm really pleased with the improvements we have done, really good progress. We are at the lowest ever accident frequency in the company, I think history with 160 years old, but at least numbers that I have seen, which is, of course, really good. And of course, it's the result of a really dedicated work throughout the organization.

A lot of the focus we have is how we act in hazardous environments, focusing having the right PPEs, how we have safety instructions, how we work with behaviors, trainings, et cetera. Of course, that is important. We should continue to do that. But I think we need to focus more on not only how to act in hazardous environment, also making some of the workplaces less hazardous. I think we need to spend some more resources on, for instance, automation so that we can separate the operator with the machine.

So let's look at our sustainability targets, and you can read them here. Essentially, as I said before, sustainability is a business enabler, and there are so many perspectives on sustainability. Number one, that is to be a responsible employer. That is about safety, as I just touched upon. It's about how we treat our people. It's about DEI. Right now, there's a lot of political discussions around DEI. But let me be clear, for Alleima, this is not politics. At Alleima, we are sure that diversified teams perform better. We're also sure that if we treat our people with respect, give them the chance to develop according to their potential, performance will improve. And of course, an including leadership, I think, is crucial for driving improvements and performance.

If you look at the climate side of sustainability, our targets has now been validated by SBTi. I think we are already world-class when it comes to at least Scope 1 and 2 from a CO2 efficiency point of view, but we could do more. The target is to reduce it by 54% starting in 2019 until 2030. We are right now roughly on 40. So we removed -- reduced it by 40%, but we could do more. Scope 3 is a little bit more new to us. There, the target is to reduce by 28%.

A lacquer approach towards this. The approach is that we don't talk that much about it. We pick the technology we need at a certain moment and keep a flexible approach. But for sure, to meet these targets, I guess we need to electrify some of our heat treatment processes. But for me, it's absolutely important that when we do that, it has to create additional customer value. I know companies have both invested a lot, also increased their energy costs to claim a fossil-free steel with some problems today because there is no one wants to pay that premium. And we should not end up in a situation like that. But for sure, we are the Scope 3 of our customers. So that should be additional customer value.

Another part is, I mean, by reducing our CO2 emissions, there's a potential to reduce future cost of CO2 taxes. So what I'm saying, concluding, is that there has to be a decent realistic payback when we invest in reducing our own CO2 emissions. To stay about 80% circularity, we are there right now, it's a continued challenge. If you see this mix shift journey with much more advanced alloy and less, I want to say, more standardized stainless steel, it's a really tough target to stay above 80%, which is our target.

And I said it so many times, our largest possibility to drive sustainability, that is through our products and offers. And that is why we have a target where the products which we define as supporting sustainability should grow faster than average Alleima. Last year, they were on 24%. This is products for the green transition. It could be renewable, it could be hydrogen, it could be nuclear, it's also electrification through industrial heating, also energy efficiency through the compressor steel in Strip and also medical. It's not only climate also makes people live longer and have a better life. And as I said, these products should grow faster than average Alleima. We show you a film with some interesting examples.

[Presentation]

So to summarize, I think we clearly have improved the financial of the company. We are less volatile and we're more profitable company today than we were just a few years ago. And we've done so through sharp strategy execution. And with a solid financial performance, we have the right prerequisites to continue to do so. So that ends my part. Now I would like to introduce the next speaker on stage, which is our new CFO, Johan Eriksson. He might be new in the role. He might be new to you, but he's not new to me. I mean he's been heading the business control function in Alleima for many years. So Johan and I have worked close for, I don't know what is it, 6, 7 years. So welcome up on stage, Johan.

Thank you very much, Goran. And actually, it's 8 years. But I'm the finance guy and you're the engineer. So -- and again, very welcome, everyone, to this CMD, both here in the room, very nice to see you, and online, of course. I think it's very obvious and listening to Goran also that we have the financial prerequisites for executing our strategy. And I will walk through and comment on where we are financially, touching on areas like EBIT, capital allocation, CapEx, cash flow and capital employed. But before we get into that, I want to touch on 2 current topics that have been in focus the last couple of quarters, and that's currency and tariffs, U.S. tariffs then. I won't talk about global tariffs everywhere and talk about the U.S. ones.

Starting off with currency then. When you look at our cost base, it's a fair proxy to use the personnel numbers, the FTEs then to see where our cost base is located and how it's split between different countries and then different currencies. And that you will find on the graph on the bottom left-hand side. And as you know, we have a strong footprint in Sweden, but we also have significant capacity in other countries, which then partly offsets the currency exposure in those countries.

But there are, of course, 2 countries that stick out as the main exporting countries in our supply chain, and that's Sweden and the Czech Republic, where we, in both cases, produce for other markets. In the second graph, you can see also that the main sales currency is U.S. dollar, where we have the biggest net exposure and the euro is the second largest. But overall, the production and thereby our currency footprint, that's who we are, and that's something we continuously handle. And to some extent, you could say that local for local and by that, meaning that we have value-add activities in the U.S. for the U.S. market and in China for the Chinese market as 2 examples. That allows us to mitigate some of the exposure. But we also have, you could say, a natural U.S. dollar hedge from our exposure to raw materials where several are priced and traded in U.S. dollars.

And then we have hedging, of course. And that's something we actively work with. Here, time to delivery on orders that are exposed in other currencies than what we produce in or produce the product in plays an important factor. So the time lag. And in general, you could say that we hedge our projects, so the project orders, and that is in order to safeguard the margin on that project. And not only then do we hedge the currency, but if needed and if possible, we also do it on raw materials for that order.

But over time, of course, currency fluctuations are handled through price and productivity in our business. But given that our biggest net exposure is U.S. dollar, it's also could be interesting then to learn what that means from a U.S. tariffs point of view, and what we have seen so far. And first of all, and we take -- I've taken the revenues 2024 as a reference point, just so we can have something to start off with. First of all, there is, of course, a big part of our business that goes to other countries than the U.S. So that's a good fact to start with.

And when talking about the U.S. then, in general, it's worth noting that the products we make and sell to the U.S. have no or very limited local competition and no fully integrated local competition in the U.S., meaning that the competition that is there also has to import material. So that's an important fact. And if we take 2 of the products that Goran highlighted in Tube, for example, the steam generated tubing in nuclear and the umbilicals in oil and gas, there is no local competition. So all the competitors are based outside of the U.S.

So if we add that then to the last year's sales, you could say that, well, the finished products is sold to the customer without any tariffs. I mean the customer takes care of the importing in that sense. So that's -- and that's independent then of which supplier they choose. Then we have the value-add activities that I talked about earlier, the local for local, you could say. And there, we can take, again, Tube as an example.

If we then import bar from the back-end system in Sweden, and then we add -- do the extrusion and the cold working on that product and have a finished tubular product to sell in the U.S., that's quite a lot of the value add that's actually happening locally. Well, that means then that the relative part of the final price, the impact from the tariffs will be, well, you could say, modest at least. And then -- so -- and that's the key that the value add takes place in the U.S. So internally sourced, but with high local value add.

And then we have the final category, which is when we do less value add. We still import the material. We could take the bar example again, but we only do the extrusion as an example, and then we sell it. Then, of course, the relative part of the tariff on the final price will be higher. It's mathematical. But what have we learned so far then? I mean, there's been going -- tariffs have been going on for a couple of months at least. And what we've seen so far is we have the ability to pass on the tariffs to our customers. And we haven't seen any significant changes in customer behaviors apart, of course, what Goran alluded to, the hesitation and general uncertainty that the overall sort of tariffs and geopolitical situation has created. So that's our finding so far in this area.

So let's move on then to our financial development. And also, as Goran touched upon, I think we've become a much more solid and less volatile company when we look at our profitability. We can take the average 15 to 20 and compare it to the average 21 to 25, and we can see 140 basis points higher average for the adjusted EBIT margin. And that despite that we have seen some challenges -- challenging business climate in parts of our business for the last 12 to 18 months. But with that said, we're sure that we can continue to improve and especially through the focus we have on the prioritized segments, as we've talked about and through the capital allocation possibilities that we have.

So let's move into that then. I mean, it's not shying away from that we do have a strong balance sheet. That's a really good starting point. And we are cash generative. So we are generating operational cash flows. And roughly SEK 400 million, you could say, annually is needed for maintenance CapEx, so to keep the machine running, if you will. And what can we do then with the excess cash that we create? Well, we could always sort of increase our cash balance. I don't know if -- well, that could be nice. But obviously, we also distribute dividend to our shareholders. And then we have the possibility of growing through -- organically through CapEx or acquisitions and that in strategically prioritized areas.

I could mention also that, in addition to this, we do have an undrawn committed revolving credit facility with our 6 core banks of SEK 3 billion as well. And you might think so, but we're not afraid to take on debt. It just needs to be for the right reason. So keep that in mind. But moving back to the CapEx then. So what have we seen and what sort of is happening in that area? Well, it's very obvious that we've increased the pace the last couple of years to what probably is a normal level for us now, I would say, or especially when we have these growth CapEx initiatives.

So while we, in 2020 and 2021, cut back on CapEx to protect cash flows in the pandemic downturn, we have now spent more and increased in different types of CapEx, but especially in the growth CapEx. And through these growth investments, we want to position ourselves to capture future growth and to improve our competitive position looking forward. And where are we then allocating that CapEx? You might ask yourself, and Goran alluded to this picture as well, which I think is a good one. And even if it doesn't have numbers, it at least illustrates something.

In our strategy, which includes then a portfolio strategy and capital allocation strategy tied to that. We aim to drive value creation by increasing the returns and the revenue growth. And we build it on market attractiveness, like Goran said, and that includes then the growth projections for the market and the market size and also our position on that market and our profitability. So we wanted to have -- we want to have a strong market position. We want to have higher profitability on that market than our average in the group, and we wanted to have lower volatility.

And then we wanted also to contribute within higher-than-average return on capital. So from this, we identify what we believe to be the most attractive parts of our business and where CapEx can help us grow and improve. And looking at this then our growth CapEx currently is mainly being spent in Group 1 and 2, obviously then, but it can have an impact on other parts of our portfolio as well. So it's nothing in isolation, but focus on 1 and 2. And how has that impacted our cash flow? Well, looking at the dark red bars, this is the free operating cash flow, and that then includes working capital changes. It includes CapEx spend, and it includes lease amortizations to name a few. And these graphs clearly show that we continue to be cash generative while executing on the strategic agenda.

And as I just showed you, increased our CapEx spend. But what can have an impact on us is when metal price changes, and that will then impact our net working capital, and in turn then cash flows. And this was especially notable in 2022 when we had quite a drastic increase in, for example, nickel prices and you can clearly see that reflected then in the cash flow in '22.

So -- and talking about net working capital then because that has an impact on us. And it has an impact not only from the metals, but the metals are an important factor. And this is something we work continuously with. It's an important asset for us. And as I showed you in the last page, it's not eating our cash. It has the potential to do if the metal prices run away, it could then temporarily impact our cash flows quite drastically. But some of the other challenges that we are working with as we have, for example, geographical shift. So if you see that arrow on the far right-hand side, the geographical shift, especially with growth in Asia, of course, when we're sourcing from Sweden, material needs to flow to Asia.

And what we experienced when the war in Ukraine started was that shipping by -- or sending by railway, all of a sudden wasn't a possibility any longer. So and that, together with other geopolitical conflicts has meant that we need them to send material by both all the way around Africa, et cetera. So that, of course, at the same time as we're having growth in that region. So that sort of impacts net working capital and lead times from that aspect.

Another aspect is also the metal mix if we go towards more high-value alloys, which we in parts want to do, that can also have an impact then on the total value of our net working capital, even if the product itself will become more profitable. But -- and the overall price changes in metals also in relative terms will have an impact on the relative net working capital. So if the metal prices rise, the relative net working capital values will -- in percentage will increase. So what do we do to mitigate this?

Well, we continuously work with this in the divisions. We work towards improved planning, supply chain efficiency and lead time improvements. And again, the mix shift. We're talking about the mix shift. And one of the criteria, as I just said, is that it's less capital intense to a large extent, in many of these products. So the mix shift itself should have a positive impact also on an area like net working capital.

So taking that, taking the net working capital development, the CapEx spend that we just looked at and just put in relation that we roughly depreciate SEK 900 put that together into capital employed there, of course, a few more pieces to capital employed, but the entire sort of fixed asset base is in there. But what you can see is slightly increasing capital employed and that's mainly then driven by the growth investments that we're doing. And the return on capital employed that you can see on the far right-hand graph, where we measure reported EBIT in relation to capital employed in this case, excluding cash, is at the moment lower than a couple of years ago, and that primarily comes with the negative metal price effects that we've seen in the last 2 years, which in my experience, evens out over time.

I mean, metal prices will fluctuate and we've had a negative trend the last 2 years basically. And so again, the journey we're on aims at improving the mix and over time, improving the returns on our capital.

And where does this take us then? Well, we have a strong balance sheet, and we're very happy about that. It's a great starting point. It's a strong balance sheet that gives us room to execute also in downturns. We are well below our financial target of net debt to equity, and yet we've paid out a total of SEK 1.4 billion since listing to our shareholders through dividends. So all in all, we're a cash generative, less volatile company with a strong balance sheet, and this allows us to do targeted investments and execute on our strategy. And that's -- with that, I thank you all.

Thank you, Johan. On the minute, I think, perfect. We'll now have a break, coffee and refreshments are served just outside. We'll meet here in 30 minutes at 3:10. We'll start again. Thank you.

[Break]

All right. Welcome back. I hope that you're again energized and ready for the second half of the program, where we will dive deeper into the divisions. Starting with the biggest one, please welcome Tube President, Carl von Schantz.

Thank you so much, Andreas, and hello, everybody. My name is Carl von Schantz. I'm the President of the Tube division. And I joined Alleima into this position 2 years ago. And most recently before that, I was one out of about 20 divisional presidents within the Atlas Copco Group globally. So when looking at the Tube division, this is how we look. And when you're coming in from the outside, there are a couple of things that has been standing out to me when looking at the tube business.

First of all, we have strong market positions in many customer segments and markets across the world and strong market positions signaled sustained differentiation and customer loyalty which is making it hard for rivals to erode our share or to copy our value proposition. And in this presentation today, I will give you a couple of examples of our strong value -- strong market positions.

Another thing that is a unique trait of the Tube division that stands out is our integrated value chain. And this is really differentiating us from our competition. And there are many customer benefits from our integrated value chain. And in this presentation, where I will now mention two, one of them is quality control. We are producing products for the most demanding environment. It could be for nuclear power plants. It could be for aircraft and spacecraft. It could be for environments of 800 degrees Celsius or more with high pressures.

Our tubes can fail and the quality requirements of our customers are set at the highest standards. So as we control every step of the manufacturing process and that we don't need to work across different companies in the value chain, makes us being able to control quality in a better way than most of our competitors. And this is a real advantage because our niche in the steel industry is based on a commitment to quality. So this is very important for us.

Another customer benefit of our integrated value chain is our ability to innovate with and for our customers. Our customers are often faced with new technical challenges that they come to us for support for. And our integrated value chain enables faster iteration, deeper technical insight and tighter coordination between production and R&D. And these are customer benefits that are difficult to copy in nonintegrated setups with fragmented capabilities and slower feedback.

So -- and the third and final thing that when I look at this, that kind of stands out is that we're looking a bit to European-centric. 49% of our share of business is in Europe. And Europe accounts for about 20% of global GDP. It is not the fastest-growing market, but if we only adjust for our oil and gas business that is invoiced in Europe, ends up in this 49%, but our end customers are in the Americas, in Middle East, in Africa or in Asia, this 49% is more 40%-ish. So I will say that we have an attractive global footprint, and we have a good momentum of growing faster in high-growth regions.

So for the last 3 years, we have delivered an adjusted EBIT margin of 10%. And we have had currency and alloy adjusted revenue CAGR of about 2%. So in addition to having done a great job with pricing, in general, the steady incremental improvement is based on 3 factors.

We have increased our profitability in our Oil and Gas segment by improving productivity. We've seen excellent profitable growth in our Asia and Pacific region, and we've had a general good mix shift into more attractive business.

Of course, my job and our ambition is to perform better than this and drive both growth and EBIT targets for the Tube division. And to do that, we have outlined a few strategic priorities. And the strategic priorities that we have outlined are these. We want to grow in nuclear and the chemical and petrochemical segments. We want to maintain our strong position in oil and gas. We want to further strengthen position in other growth segments, and those segments can include aerospace, space, hydrogen, renewables, semicon, medical. And we want to strengthen our performance culture and improve our ability to leverage on our strong market positions.

So today, I will focus on these 3 segments: nuclear, chemical and petrochemical and oil and gas. Together, they represent 2/3 of our business. So it's a significant share of our business. I won't be speaking about our other growth segments, but I can tell you, we have really interesting developments in those areas as well.

For example, in Aerospace & Space, which represent about 6% of our business and is reported under transportation. And I will also talk about this last point. So if we dive into this and start with nuclear, which is a segment that we want to grow. And in this segment, we sold products in 2024 of a bit more than SEK 1 billion and it's a segment that we see excellent growth opportunities for us in.

We sell products into 3 categories here. So we have the steam generator tubing that goes into the steam generator, and that is used both for conventional reactors, SMR reactors, advanced reactors for the future, and this represents 65% of our sales and is our most important area on the nuclear side. Then we sell nuclear fuel tubes, also called cladding tubes and the house the fuel in the reactor. And then we sell nuclear tube and pipes and those are nuclear certified products that goes around different parts of the nuclear power plant. And if I focus on the steam generated tubing, which is where we see the best growth opportunities and which is the biggest share of our business, today there are only a handful of suppliers around the world, supplying products into this segment. It's us, it's a French company, it's 2 Chinese companies, it's a Japanese -- 2 Chinese and 1 Japanese company.

And what sets us apart here is that we are an independent supplier. We're not tied to any specific reactor designer. We're not tied to any state authority. Our loyalty lies solely with our customers. And we will be less impacted by external factors, and this is a real advantage. We see a highly positive outlook for the nuclear industry. According to the World Nuclear Association, global nuclear capacity could double by 2040. And if you look at this graph, the line here represents conventional nuclear. The shaded area represents the uptake of SMRs, Small Modular Reactors that can be in different ways. And we can achieve -- we can really feel that this is happening. And there's lots of things to be written about nuclear.

But if I will just tell you what are we seeing, what is happening to us at in the Tube division. We see big tech companies entering the industry. The rapid expansion of data centers, AI infrastructure, electrification of industry is taking electricity needs to new heights. And SMRs in nuclear offers a stable, high output, low or no carbon supply of energy for this.

And based on this, we see a new wave of interest of new companies that didn't visit us 5 years ago or 10 years ago. And the list of world-leading companies that are coming and visiting and wanting to do business with us. That list is just amazing. We see the development on the nuclear side on multiple fronts. We see that we see new builds of conventional reactors. We see refurbishments of conventional reactors. We see conventional reactors and small modular reactors. And we have already sold and fulfilled orders to the small modular reactor industry, which is pretty rare. And a good sign of us being there from the beginning. And it feels so encouraging that -- and we also see customers from across the world.

So we are interacting with mostly customers in North America and in Europe, but we're also present in Asia and having lots of discussions, both with customers and industry partners there. And it's so encouraging that the Tube division is a natural speaking partner to leading companies from across the world in this segment.

And based on this development, we are now investing to capitalize on the opportunities that we see in the market. A year ago, we announced the expansion of our steam generated tubing capacity with 60%. And work is now progressing to have the first deliveries from this new capacity in the end of next year 2026. And it's -- and for this new capacity that is -- that we're building right now, our order backlog is very strong up until 2029. So already for that capacity as soon as we have it up, we will -- as fast as we can get it up to full capacity, it will run on full capacity. And I think one of the reasons why we have this position and why we have a full, solid order book for capacity that is not built yet, is that we've been in the nuclear industry since the inception of nuclear in the 60s.

Over the decades, we have built a unique and highly specialized competence in this area and in competence that is difficult to replicate and especially valuable today when we see this enormous growth on the nuclear side. And the competence we have now and developed, we're continuing to develop that. And that is important because we see the next generation of nuclear reactors developing. So we have -- I mean, the products that we have sold so far is based on water as a cooling media. But we see very promising developments with the generation for nuclear reactors and small modular reactors based on other cooling media than water.

It could be molten salt, lead, helium. And for several years, we have invested significantly in this area, and we are today talking with many of the leading players in this industry globally, and we are well positioned to also develop our business in this next generation. So to finish off the nuclear section, I would say that we have a strong market position in this area. So that's nuclear.

And if I go into chemical and petrochemical now, and chemical and petrochemical, that is a segment where we also see excellent growth opportunities. And this segment represents about 1/4 of our turnover in the Tube division. And in 2024, we sold products for SEK 3.4 billion into this industry. And the products that we supply into here is the heat exchanger tubing, hydraulics and instrumentation tubing, high-temperature tubing and other types of products. And this is such a wide segment. So just for -- to give some examples of what are the subsegments in -- what are some of the subsegments in this broad segment? I will show you a couple, but we see also very promising growth prospects here.

So for example, Ethylene is the most produced organic chemical globally and it's considered a basic chemical because it serves as a fundamental building block in the petrochemical industry. It is primarily used to produce plastics and chemicals. Intermediates are derived from basic chemicals and used to produce more specialized compounds or material. PTA is primarily used to manufacture polyester fibers for textiles, pet plastics, packaging material and industrial coatings.

Urea is the most widely used nitrogen fertilizer globally. It boosts crop yields and ensure stable global food supply and is applied directly to soil or as part of fertilizer plants. And biofuels like sustainable aviation fuel aligns closely with chemical and petrochemical infrastructure using compatible processes and renewable feedstock. So these are just 4 examples. But this, for example, to give you an idea, this is -- these subsegments represent around 20% to 35% of our sales into the chemical and petrochemical industry. And it's interesting to see our indirect exposure to industries that you may not directly think about, if it's food or fuel or textiles, but there we are.

And for these industries, and you see the different products that our tubes are used inside here on some small slides. Stainless steel tubes are absolutely essential for these 4 subsegments and for many other subsegments as well because our products are used in highly corrosive environments and high-temperature applications where the need for advanced material is absolutely necessary. And we see a trend to temperatures getting even higher and the corrosive and the environment becoming even more corrosive here. And this is a perfect match for us because this is where we come in with our advanced material.

And also what you can see here on this slide, you can see when you're looking at the growth, you can see that the growth is very high in China on the ethylene side. It's big in China and India on the PTA side, it's big on the urea side. This -- the chemical and petrochemical segment is an important segment for all our regional businesses around the world. But the growth in Asia is much more dynamic and aggressive than in other parts of the world.

And if you look at within Asia, China leads in volume and infrastructure, but India is catching up and is investing to become the next chemical powerhouse of the world. And on the back of this development, we have expanded our facilities in Mehsana, India and Zhenjiang in China to support growing regional demand for advanced tubing especially for the chemical and petrochemical segment. And I think these investments that we have announced and that are well known, is a sign of the commitment that we have for being a local premium producer into the local markets in Asia.

And I think one of the things that we can be really proud of is the growth that we have generated in the chemical and petrochemical segment in the APAC region. Our CAGR over the last 7 years is over 20%. And of course, this is something that we hope to develop. And with our strong team and strong footprint in the APAC region, we've been able to pick up a large part of this growth in the APAC region that we saw before. And we've been able to create a solid value proposition for our customers based on local production.

So that was the chemical and petrochemical segment, where we see good opportunities. If we then move into the third and final segment that I will dive into oil and gas. We have 2 primary product offerings in this area. It's the Umbilicals and it's the OCTG, Oil Country Tubular Goods. And starting with the Umbilicals. The umbilical tubes are used in offshore exploration where they supply chemical and hydraulics from the offshore platform down to the bottom of the ocean. And this is, of course, often very corrosive and high-pressure environment. And they're also supplying the tubes that you see on the seabed that goes from the production side to different wells. So it's both tubes that goes down from the offshore platform down to the seabed and then across the seabed. That's the umbilical tubes.

And in offshore oil and gas exploration, the deepwater which is 300 meters and more, and ultra-deepwater, 1,500 meters and more, investments in those fields as well are higher than in more shallow fields and also in existing fields, when these fields are extended, the tieback distances which is called from like how do you get from the well to the center, those distances are increasing.

So both that the Umbilicals needs to be longer from the offshore platform to the production unit and then the connections on the seabed is getting longer. That is a good development for the demand for our tubes because the need for high-strength umbilical tubing is increasing.

And -- then we can go to the OCTG area. And the OCTG tubes are used inside oil wells to safely transport oil and gases from the well up from deep underground. And in this area, we are targeting the corrosion-resistant alloy part of the OCTG market, not the carbon steel or low alloyed part of the market. And exploration and development is higher in more corrosive materials -- areas where our material needs to be used.

So also in this area, we have a higher growth than the general OCTG market. And for our OCTG tubing, we have a long-term strategic partnership with Tenaris. It's a USD 12.5 billion company that are a leader on the carbon steel OCTG production, and they have that. And they act as our sales partner. So Tenaris secures contracts and engages us when their carbon steel solutions are not sufficient. And for Umbilicals, we are #1 in the world. And for OCTG, we are #2 in the world.

And the market outlooks for this industry, including those from the International Energy Agency, indicate that global demand for oil and gas will be relatively stable or decline only gradually until 2040 or 2050. While electrification is reshaping select industries, overall energy demand remains high and hydrocarbons like oil and gas will be a cornerstone of the future energy mix, at least up until 2040 and 2050. And you can see -- you can look at -- have different angles on this, and it's linked, of course, to different political measures. But what is, for us, the most important part here is kind of the red area that goes down, it's -- we see a rapid depletion of existing wells.

So even if we're going to continue having the same output from the oil and gas industry or even slightly lower, there needs to be upstream investments. And it needs to be investments in existing fields or it needs to be investments in new fields. And our products comes in when you invest in new or existing fields. So from our point of view, we think that the outlook is positive on this side.

So those were the 3 segments. And we have now like looked at these 3 segments that together represents 2/3 of our business. So it's a major part of the Tube division. And across all these 3 segments, we have established strong market positions and a key reason for why we've been able to create these strong market positions is our commitment to research and development because our strategy is to be the technology leader in the market.

And our approach to R&D begins with a deep understanding of customer trends and in our prioritized segments. So if we understand the customer trends and in our prioritized segments, we have a better chance of allocating our R&D money to where it makes the best difference for us. And then we take these trends, we align them to actionable customer needs and then we develop products based on that. And the alignment from the customer trends to the customer needs, we look at what are the critical materials demands that are needed in different areas, which applications will our products be used in.

We work in close collaboration with our customer with R&D and our technical marketing. And based on that, we develop value solutions for different new products or new processes. And I will give you a couple of examples of how this is working kind of in practice in -- for some of the products that we have recently launched on the market or products that we have on the -- in the R&D pipeline. And these examples kind of illustrates our customer trend-driven approach and how that is creating customer value.

So if we start the nuclear -- the trends that we see in nuclear, there's a trend towards wanting to have higher safety in nuclear operations and data centers, AI and overall electrification increased needs for smaller scale modular reactors. For this, we are now developing products for the next-generation nuclear technology, including small modular reactors and Generation 4 nuclear reactors. We are developing across different technologies and new tubular material for reactor use include high-temperature resistant FeCrAl alloys. It's alloys based on Ferrum, Chrome and Aluminum, but it's interesting to solve the high-temperature problems that we have in certain part of that development.

In the Chemical and Petrochemical segment, we see higher pressures and temperatures for increased process efficiency. And we see a high demanding mixed service conditions that needs advanced material with larger operational window. You can think about this as different types of raw material coming in into the chemical and petrochemical processing plants.

And for this, we have created the Sanicro 35 product. That's a multipurpose grade with a performance that can match even higher alloy and more costly grades in many critical services, thus making this grade a very cost-efficient alternative for our customers. And on the oil and gas side, we see the customer trend of deeper wells and longer subsea tieback system. And for this, we have developed SAF3007. It's the next-generation super duplex stainless steel umbilical tubing, having higher strength and similar corrosion resistance as the current product 2507 that are the industry standard. And by the way, the product that is used as the skeleton for the Vasa ship here.

So I think this is some examples of why we have taken the strong market positions that we have and how we're working to maintain and develop these positions going forward across different segments.

As we've seen, the opportunities in our market are significant, and we are well positioned to create value for our customers and other stakeholders. But to fully capture these opportunities and deliver even better results, we must also look inward and strengthen the way we operate. We want performance, and we have 2 kind of areas that we try to put focus on in this area is to strengthen the performance culture and it's to improve our ability to leverage our strong market positions.

So as part of the strength and performance culture, we want to -- we are developing an enhanced financial steering model. We want performance to be transparent, enabling better decision and sharper execution across the organization. And very soon, as we're working on this, we will be able to track performance on a lot more nodes throughout our organization. We will further decentralize accountability. And by pushing decisions closer to the customers, we will increase speed, agility, customer orientation. And I think this will -- and we will also make ourselves and even more people in the company more accountable for the areas that they are accountable for because if you're accountable for an area, but you're not financially measured on it, it's not the same. So we're trying to combine the accountability with the financial tracking.

And we will agree on a common business principles that will guide us in our daily work. And these principles will guide us in our daily work, speed up decision-making, increase engagement and improve the understanding of what is required from us working in the Tube division. And when these common business principles are integrated into our culture and processes, these principles will be very powerful.

And on the improved ability to leverage our strong market positions, we are clarifying our commercial excellence methodology. We can do a better job in planning for growth, selling the value of our products and offerings and tracking performance and we will enhance our product development process. It's a bit -- might sound a bit contradictory, but because it's our excellent R&D work that has taken us to where we are with a strong market position, but we are now putting a lot of effort into improving our product development process so that we will have even better -- get better bang for every R&D dollar that we spend.

So altogether, these actions aim to convert our strong market positions into sustained improvements in both gross and net margins. And I will leave you with 3 key takeaways of what I talked about today. We have really strong market positions in a diverse set of customer segments globally.

We see attractive market developments in our most important customer segments. We saw nuclear, we saw chemical and petrochemical. We saw oil and gas, and we're delivering well. Yet significant opportunities remain to enhance our operations and drive stronger margins and growth. Thank you for listening. Thank you. And with that, I'd like to welcome up Robert Stal, President of the Kanthal division.

So welcome, everyone, here in the room and also those of you calling in online. My name is Robert Stal. And as of February next year, I have had the position as President of the Kanthal division for around 3 years. Before that, I have a long experience within the Alleima Group. And now we have the opportunity to spend around half an hour or so talking about and deep diving into the Kanthal division.

And I will elaborate a bit of where we have taken the company from a historical perspective, significantly improving our earnings and becoming a more resilient business as of today, how we have also strategically shifted our product portfolio within the business we operate in and also how we intend to build on that going forward.

If we look at the Kanthal business and start looking at our customers and our customer segments, we are active in 4 different customer segments, while Industrial Heating and Medical are our prioritized growth areas. That has to do with our ability to earn money in there. We see higher margins and higher growth, and that is where we put our focus in that sense.

If you look on the map on your left-hand side, you can see our global footprint. We -- looking at the size of the company, I would say that we are well represented in all 3 major economical hubs of the world, meaning North America, Europe and Asia. And that has been important and is important to us to stay close to our customers, both from a proximity perspective, but also in order to understand what kind of challenges and trends they have, but also allow us to leverage on building competence and capabilities in our organization in different parts of the world.

If we look at our sales distribution as well, you can see that on an aggregated level, we're fairly evenly distributed between the 3 regions, making us exposed also to the different geographical trends that we can take opportunity in as we act in our business. If we look at the financial development over time, there's a few things I would like to highlight.

To start with, as you can see that we have been able to being a much more profitable company today than what we have been historically, both by increasing our top line and at the same time, expanding our margin then being able to yield higher earnings from that perspective. If you look at the last few years, you can see that we have somewhat a declining top line, and we have been focusing on, sort of say, showing resilience to our business.

And I would say that there are 2 main reasons for that. One is that we early on acted on cost where we saw volumes going down. The other one is that we have been successful in continue to grow in our targeted segments and more specifically, our medical business during this time period. And this is also an area where we have faced quite significant currency headwinds from that perspective as well. But one thing that's been very important when it comes to achieving this growth is our organic development.

We have made acquisitions along the way, but the majority of the growth we have seen historically has come from organic initiatives, and that is also a very important part of our business development going forward. So despite the fact that we have addressed our cost situation to lower volumes, we have continued to have a strong focus on R&D and our product development. And during this time period as well, we have actually significantly increased our focus and spend here because we believe that this is a key enabler for being sustainable in driving profitable growth long term.

And in practice, we have almost doubled our spend into R&D, both in relative and absolute numbers during the last 2 years and have now ramped up on a different level when it comes to trying to bring innovations and new products in the hands of our customers. The other part I talked about was the, sort of say, the strategic shift of our product portfolio. And on the left-hand side, you can see the share of our customer segments, actually as presented on the last Capital Market Day 2 years ago.

And on the right-hand side, you can see where we are today. And if we start looking on, sort of say, the combined level, we were at 2/3 in 2023, while we can now acknowledge that the share of our prioritized target segments within our total share of revenue is up to 74%, though, so almost 3/4. What is also worth mentioning is the fantastic development of our medical business, going from 70% to 27%, which is, I think, quite an achievement in that sense.

But what is also worth noticing, if you look at the Industrial Heating part, you can see that from a numbers perspective, it's a lower share today, but the reduction compared to 2023 for Industrial Heating is significantly lower than what you would observe in Consumer and Industrial segments. And looking at what we want to do is, in essence, to continue this journey. That is the key message that we're saying today.

We want to continue a high pace growth within our Medical side and also scale up that business. We have quadrupled the sales within the 5 years of this. And of course, this also comes with the need of scaling organizational capabilities and putting business processes in place as well as you grow from being more of a regional player to a global business that we want to leverage further on.

The other part is to use our strong position within Industrial Heating and continue to grow that into attractive subsegments that we are present in today. And I think the picture here illustrates a good opportunity. It's a high-temperature diffusion furnace in a semicon fabrication setup where our technology goes into the wafer processing that are then later being turned into semiconductor products.

I alluded to earlier the importance of being innovative and investing in product development. That is also a very important area for us going forward. And all of these 3 are areas that I will come back to later in the presentation. While the 4 part is as needed as the rest of them, making sure that we are as efficient we can in our operation, but also improving our business from -- through productivity and efficiency gains.

And what I can say here, if we look kind of back in the last few years, we have directed a larger amount of our CapEx into growth initiatives, taking positions both in medical and industrial heating. But if we take, for example, in our Industrial Heating segments, I foresee rather a redirection of CapEx going forward. There will be certain needs of capacity expansions in selective areas, most likely. But we will also see a higher focus and ambition of investing in our existing footprint, improving efficiency and productivity there.

We will start by looking at and talking about our medical offering. And to put this into context, you can try to describe this from 3 components. I mean, we are a producer of ultrafine medical wire as thin as a hair. And these wires are metal-based, but can then be coated with certain polymeric or insulated covers, but can also be configured in multiples of 1 or 2 or 3, in essence, producing very, very small cables that are very beneficial for certain therapies within the Medical segment.

The other part is that we can also configure these wires into different configurations such as you can see on the picture here, in order to achieve certain mechanical properties or meet the needs of our customers when it comes to creating the best value for our customers' devices. And the third one would be moving into wire-based components. And here, you can see an example of that with a braided nitinol filter in that sense used in different therapies.

But before I talk a little bit more about the market, we will show a short movie explaining how we at Alleima every day support the quality of people's lives through our medical products.

[Presentation]

So fantastic, right, being able to go to work and know that you're producing products that actually improve people's lives every day. We talk a little bit more about the market. I mean, some of you heard me say before, medical is, by definition, almost a good market to be in because over time, it has shown to grow -- outgrow global GDP from that perspective. And that is, of course, fueled by both an increased need of health care due to an aging population, but as well as welfare increase, the spending going into health care is also increased over time over time.

But what is also interesting for us is to look at sort of say, niches or sort of say, trends within this that we can play an important role. And one of them is the growth in remote patient monitoring. I will come back to that as well as the increased use of minimal invasive surgery. But in essence, there is a commonality here. These products allows for a higher level of self-care.

It minimize the patient's need of being in a hospital, and it improves both, so to say, the precision in care given by a care provider as well as it also reduce the cost of providing that care. So usually also supported by insurance companies. Many parts of the world, health care is supplied through insurance and not as the system we are perhaps used to in Sweden.

And if you look a little bit about these trends, and we start talking about remote patient monitoring, and that is driven by the shift of sort to say, out-of-hospital treatments, but it's also an opportunity to generate data where a doctor in that sense could gather a much, much higher level of data than before and apply, for example, algorithms in order to provide a more precision-driven care in that sense and being more selective in sort of say, what treatment is needed.

But also on an aggregated level, a larger set of data allows for both sort of say, medical research as well as product development in better trying to understand and work with these challenges. You saw the examples of CGM, the continuous glucose monitoring. So I thought I will try to explain another area where we're active, which is in within heart failure monitoring.

And in essence, here, we are developing a sort of say, a sensor consisting of a wire configuration in that sense. And that sensor, in essence, measure your -- the health and status of your cardiovascular system in that sense. And what it does then is by that, our partners then are able to kind of conclude and see what health status your cardiovascular system has and is able to translate that more specifically to your heart health and in this case, then identifying or finding early warnings for heart failure in that sense.

So it both allows the patients to -- you don't need to go to a hospital to be connected to a device to measure this, but it also allows for a doctor to be more productive and have a better control of patients with these -- with this situation. So that is a super interesting area that we see a lot of interest from our customers going into them.

On a similar note, minimal invasive surgery is becoming more and more asked for in that sense. And it's the same thing here, minimal invasive surgery compared to, sort of say, open surgery, which would be the alternative. It both sort of say, reduces the trauma to tissue in a way. I mean you harm the patient less. And that means you have a more speedy recovery, which means you also spend fewer hours in a hospital bed.

So not only does the patient being allowed to get home earlier after the surgery, but also there is a less need of the care provider to offer, so to say, hours in a hospital bed, which drives cost in that sense. So it's also a very cost-effective and we can also see that insurance companies are also promoting these kind of therapies to order because it's a cost-effective and good way.

And here, for example, we are developing products within the area of nitinol, which is a material we got access to through one of our acquisitions in that sense. It's a super elastic and biocompatible material, which is very, very suitable for this. Another example here is connected to the most recent acquisitions that we made within Endox. What they are really good at is a product called a guidewire.

And a guidewire does pretty much what it says. It's something you use in an early phase of a minimal invasive surgery, locating the affected part of your body through a guiding wire that needs to be very, very flexible and very, very thin in order to sort of say, navigate anatomical very, very narrow pathways in that sense.

And after that, the surgeon can then apply different kind of surgical tools such as, for example, catheters or other things needed to perform the procedure in the right location. So that gives us an opportunity and further strengthen our product offering into this area and complementing our current business.

What we're also able to do with this is to kind of packaging these wires in both a sensing and stimulating aspects, meaning able we are allowed or we're allowing for different therapies to perform certain things in close dialogues with our partners through combining different configurations of ultrafine wire in that sense.

And last but not least, we see an increased request of sort of say, speed and focus when it comes to product development. Our customers and our partners ask for prototypes of medical device IDs that they have. And there is very important for us to also be swift so we can respond in a fast way with sort of say, relevant and good proposals of how we can sort of say, help them further innovate and drive their product development part.

So here, we are also investing in R&D, both in North America and Europe for the time being in order to strengthen this part of our business. So if we look a little bit of where we are -- where we come from and where we are and where we're heading in that sense, this business originated from United States from our key site in Florida. This is still where we have our strongest customer base in that sense and also a very important area when it comes to innovation, but both product and technology development.

We have taken the step into Europe. We have had 3 bolt-on acquisitions within Europe, establishing our footprint there, getting an access to that business, but also now being able to and capable of setting up R&D and technology structures also in Europe. And last but not least, we are now establishing ourselves for the first time organically in Asia with a factory in Penang, Malaysia, which will be operational during next year.

And this is a market where we today have a low direct penetration indirectly, our customers sell here as well. But there's also an opportunity going future for further growth through geographical expansion then. And this is absolutely an area where we are actively looking and interested in acquisitions, of course, not only in Asia, I would say that goes for the whole world in that sense.

And naturally as well, we don't mind growing with our U.S. customer base either, but it a little bit gives you a flavor of where we come from, where we are and how we intend to continue this, so to say, journey. So of course, with a strong customer base, follow them closely, continue to invest in R&D in being, so to say, putting new products on the market as well as taking the opportunity, so to say, of the geographical expansion that we also have.

Moving along then and shifting focus now. Now we go from the world of medical to the world of electrical industrial heating. Here, we have a product offering that started ones with resistance material that has developed through heating elements, further on to heating modules and our latest addition is addition of process gas heating, both in terms of larger scale as well as higher temperatures.

And what we can see has happened during the evolution of Kanthal is that we have added more value into our products, supporting our customers and providing them with better solution, solving their true challenge, which is to, in a very effective way, generate heat in the right way in the processes.

So if we look a little bit in the same way of the market here and try to explain a little bit about the subsegments and how we view that within industrial heating. And if we start on sort of on the top banner of these segments, looking at electronics and semiconductor, for example, this is an area mainly driven by Asia, I would say now that we have seen a good demand during this year. And it's also fueled by the increased, sort of say, level of automation and digitalization that we see around it.

Everything from semiconductor, but also from other electronic components and power electronics as well going into the electrification of car fleets is driving the demand here. And our technology plays a role in producing these products. The same goes for glass, which is in one way connected to the electronic and semicon side. For example, display glass that you have on your phone, you have on your tablets, even in your cars today that is also being generated that need from the digitalization, but also supporting -- also requiring electrical heating technology in order to be produced.

We also have solar, currently a quite overinvested area, frankly. But however, long term, solar, PV solar is one of the highest, fastest-growing energy sources being invested in now. So also going forward, we believe this is an important area and a segment we're active in. If we look on the lower part and give you some few examples, when it comes to transportation, we have one exposure, which is to lithium-ion battery, also a segment that has been a little bit weaker than last year.

But long term, the trend is there that the car fleets around the world is electrifying, but also looking at other areas such as underground mine, harbors, ports, airports. There's a lot of vehicle out there pursuing the way of being electrify also looking at the need of this.

And the other part is that we have also seen activity and have discussions now on the other side of it, meaning recycling of lithium-ion batteries because there's a lot of batteries being out there in the -- in the life cycle perspective. And there, we see an opportunity also in that end of providing our technology in the recycling part of that.

And last but not least, of course, we are also very eager to help our customers to electrify even more in their industries. And that is an area that we're also investing a lot of R&D in, but also time, of course, talking to customers and trying to help them take the step of in increasing their share of electrical heating in their operations.

If you look sort of say, where do we create value from our products. And maybe it sounds a bit like a cliche, but it's actually true. If you would ask employees in Kanthal what they would do, they would say that they generate heat. And then we have a lot of products to do that in a sense. And I think that tells a lot about the culture. And I think it also tells why Kanthal has become such a strong brand within this area. And heat in this picture is illustrated where we say end user. That is where our products are then used in order to do that in that process.

And there is -- that is really where we make a difference. The transactional way there could be through a furnace builder, but could be also be direct. But understanding sort of say, what products the customer needs for this heating process understanding what operational conditions they have, but also understanding how they should run their furnace operations in order to get the best bang for it, so to say, to be it as productive as possible, as efficient as possible and as sustainable as possible.

And that is where we can really help our customers. And that is what we do. And then their end applications could be different. I mean, we -- you will not find Kanthal products in an electrical vehicle. You will not find it in electronics components, and you will not find it in solar cells on your roof. But in order to produce those products with high productivity, efficiency and in a sustainable way, we can enable that through electrical heating.

And the other part connected to that is, of course, how we work with, so to say, our sales approach and the value selling perspective that we have heard talking about before. I mean this is, as I say, a very good opportunity to be in this position in order to be able to explain how we can create that value and then, of course, capture that through the products we supply.

So we put a lot of effort into really understanding our customers' applications, what are the values that we provide and also, of course, how we should price our products in relation to that. And that is also a very good way of, sort of say, keeping competition out of the door, being the best in trying to convey and understand the value you can provide for your customers, not only supplying a product in that sense.

If we look at electrification then, industrial specifically in this case, I mean, there's no doubt that there's been a policy divergence lately. There's been a market uncertainty, and this has, of course, resulted in sort of say, delay and hesitant when it comes to investments that we see as well. But if we look at the underlying trend for this and the demand for electrifying industry, we still believe that, that remains in that sense. And we do see the rising cost of carbon permits, which is incentivized having a more cleaner and more sustainable heat source in your operations.

But also, if we look on sort of say, the share of operating hours in a year of natural gas, which is the largest energy competitor to electrical heating compared to electricity specifically in Europe, we can see that the percentage of those hours have in the recent years increased. And in certain Nordic countries, it's even significantly higher than this if we would look year-to-date 2025, making electrical heating also a more viable and cost -- should say, cost viable option compared to natural gas, which historically has been cheaper in that perspective, all other things aside.

So if we look at, so to say, transferring this into customer trends in the same way and what we see, if we look at the industrial electrification part, one enabler there is the ability to electrically heat gases, different kind of compositions of gases, but the common denominator is usually higher volumes and higher temperatures. And there, we are developing and have developed products under the collective name of Prothal, which is our electric process gas heater lines.

The flow heater that you saw earlier was -- in the movie -- was an example of that. Another example is the demonstration heater that we will now put in at Emsteel together with our partnership with Danieli. So in outside of Abu Dhabi for -- during the first half of next year, we will have the first electrical process gas heater installation at the real DRI plant.

And in that case, the DRI plant is natural gas based. It's already existing today and running as we speak in a sense. And we have looked at this together with our partner in that sense, if you can take a natural gas DRI plant, combine that with electric process gas heating instead of fossil heating of that processed gas and combining that with an existing electric arc furnace, so to say, steel producing system, you can reach a CO2 saving of 60% to 70% compared to a blast furnace and even in sort of say, favorable conditions, that could go even higher.

And we also believe that for many actors around the world that, that will be sufficient in order to produce in that sense. And it's a significantly, sort of say, easier and less CapEx-intense way of drastically reducing sort of say, emission connected to steel production. The other one I talked about, energy flexibility. We both see it from a supply constraint perspective. Many companies learned that, especially connected to the energy crisis in Europe a few years ago.

But it also has to do with the increased to say, competitiveness of electricity if you look on the sort of say the level of operating hours over a year. So what we have now developed products from and we have installations of is a hybrid heating solutions where you, in essence, can combine natural gas and electricity.

So you can either choose it from a perspective where during different heating cycles of your process can, for example, initially use gas in order to get a lot of energy in to start with and then you can maintain your heat treatment parameters running with electricity or that you can actually, depending on what available prices you have on electricity and gas, choose between your mean resources optimizing your cost of running your operations then.

So these are also 2 examples of where we put focus and R&D development now into helping our customers. I would just like to share this last slide on industrial heating. We have announced capacity expansions. We have -- we're currently expanding our silicon carbide manufacturing in Perth. We're also putting those capabilities partly in the U.S. We have announced an expansion in Sakura in Japan to capture the growth that we see in the Asian region.

We've just inaugurated wire capacity and capabilities in Hosur, India and also investing in, so to say, our German facility in Waldorf. And looking at the current trade political or geopolitical situation, we are well represented now. But also with the investments we're doing, we're also moving capabilities even further to those regions. So we're building even also a more resilient, so say, footprint connected to current, so to say, trade challenges, if you will, not only investing in capacity.

So with that said, summarizing where we are, we have a proven financial profile where we have also seen a strong profit growth. We are keen on continuing that within our prioritized segments, and that is very much aligned to the growth and the trends we see on our customer sides.

And last but not least, we have a global business, and we will be leveraging those capabilities as well, but ensuring that we also have a very strong regional presence, both when it comes to capabilities and footprint to serving our customers' needs. So with that, I would like to thank you all for listening into the update on Kanthal, and I'll take the opportunity to welcome Per Eklund for the Strip division up on stage.

Okay. Good afternoon, everybody. Very nice to meet you. My name is Per Eklund. I'm the Head of the Strip division. I took this position in March this year. So I'm quite new to this role, but I have a very long background in the Alleima/Sandvik groups and most recently from Sandvik Coromant. We will talk about the Strip division. And the Strip division consists of 2 units. One is the Precision Strip unit, which is roughly -- actually more than 90% of our revenues and another unit, which is SurfTech and the priority today will be on the precision strip part.

And the main topic of the day is around margin improvement. If we take an overview of the Strip business, we have our main operations in Sandviken. Roughly 90% of our cost base is in Sweden. Our footprint, so to speak, is also a number of smaller service centers in -- one in the U.S., one in Japan and our main service center, I would say, in China. And I'll come back to why it's the main center in China.

If we look at our customer base, it's quite different from the rest of the divisions. We are heavily exposed, so to speak, to the consumer industry and a significant part as well in industrial applications, which is primarily around food processing, I would say, but also to some extent, in the printing industry.

And then we have a, I would say, kind of a shrinking part, which is transportation, primarily automotive, which has historically been a big area for the Strip division, but it's getting smaller. If we look at our geographical exposure, Asia is our dominant area, and China is the by far biggest part of our Chinese exposure or Asian exposure, I should say, whilst North America is very small.

One of the reasons is that in the U.S. today, as an example, compressors are no longer made in the U.S. There is virtually no compressor manufacturing in the U.S. Most of that is done in Asia today. And tied to that as well, Johan talked earlier around currency exposure. And our biggest currency -- single biggest currency is the Chinese yuan.

And combined today, roughly 50% of our invoicing comes from U.S. dollar and yuan. Even though the U.S. dollar is -- or the U.S. market is fairly small, we have a lot of contracts with larger customers that are in the U.S. dollar. To put it in a little context in terms of where we're coming from, if we look at going back to the COVID years, you see a peak here, which is quite different from the rest of Alleima. And there are good or good reasons for that.

We have very, very limited exposure to CapEx-intense industries. The majority of our customer base is, as I said, in the consumer segment. So during the COVID years with the distorted supply chains, availability of material was a critical thing for our customers. So there was an inflated demand during those years in terms of ensuring that our customers could service their supply chains with products.

That, in turn, of course, led it to -- how should I put it, less price sensitive at the time. But combined with that, we were able to keep a very low cost base at the time. Then after COVID, destocking happened and the market shrunk and price competitiveness became higher. Inflation went up, and we were not fully able to compensate the cost increases we had with price at the time.

And if we look at where we are now in 2025, we've had a number of operational issues that we are addressing right now. Also, we've taken quite a bit of cost in our inventories, both one-offs, but also generally devalued our stock levels a bit. And at the same time, as many other parts of Alleima, a significant currency headwind as well. But the currency headwind, that's the new normal, so to speak. So that's what we're working on as we speak, so to speak.

Looking forward, though, the ambition for the Strip division is that during this strategy period up until 2029, clearly become above-average profitability in the Alleima Group. And a lot of the focus now will be talking about how are we going to do that. If we take a quick look at our product portfolio, Johan mentioned a couple of those products where we today have a very, very strong position where we are a clear #1.

One is in the compressor segment, and I'll do a little bit of a deep dive in that. But then also in the medical sector, and it is primarily what is bone saws. So if you're unfortunate to do a hip replacement as an example, the second picture to the left there, that's a bone saw that your surgeon will use. But at least you can feel confident that it will be a very, very good bone saw.

Then the third picture here is knives, and that's handheld knives. Knife steel is a big product for us from a volume perspective, but it's quite a variety of products. Part of it is handheld knives for high-end chef knives as an example, but also high-end hunting knives, which is one part of the market, but there is also a big market for knife steel for food processing.

And we'll come back a little bit around knife steel and how we intend to sell that. We have not been successful in selling our prime knife steel so far, which is a Damax grade a very unique product. And then last but not least, our biggest product from a pure volume perspective is razor blade steel or shaving products and this shows what we refer to as wet shaving.

So if you have a regular razor, it's typically -- at least if you buy it in Europe, it's very frequently our material in it. But in addition to that as well, one of our key products is for electrical shaving, where we have a very, very strong position with premium electrical shavers.

So our priorities going forward now is, one is around maintaining our technology leadership and market leadership in our core products being flapper valve steel or compressor valve steel and bone saws.

We have a number of commercial excellence initiatives that we intend to drive or have actually started to execute on already, but then also work on our cost base to improve our cost base, but also to improve our capital efficiency overall.

If we take a little bit of a deep dive in the compressor valve business, a compressor is used typically in refrigerators, freezers, air conditioning units, heat pumps, and it's the main component that consumes energy in those appliances. So energy efficiency is a key driver when it comes to compressors.

And looking at what it is right now, roughly 20% of the electricity consumption in buildings comes from cooling. And that cooling is primarily air conditioning and refrigerators and freezers. And if you look at what is happening right now, the number of air conditioning units in India and China is tripling during this decade. And if you look at India, that trend is definitely going to continue. They have just started on an individual level to buy air conditioners, I would say.

And if we look at how we work with this to safeguard our position is that we work across the whole value chain, not only with our direct customers, which is the so-called stamper. Basically, what our direct customers are doing is that they buy a piece of strip from us and then they punch out the valve. Then that valve goes into a compressor and how that compressor is operating has a very, very tight link to the actual valve. The valve sets the performance of the compressor.

And sometimes some of the end users or OEMs, I should say, the white goods manufacturer. Some of them have in-house developmental compressors themselves, but the vast majority source their compressors from a designated compressor manufacturer. And more than 80% of all those compressors are made in China today. And that's why we have, over the last 15, 20 years, developed a service center in China that has safeguarded that we have this position.

So what we do together with the compressor manufacturer is to safeguard that our material goes into all new designs of compressors because if we have our product specification in that compressor, that means that, that material will be used for that whole series. And those series could be in the tens of millions of compressors. So working very closely with compressor manufacturers is the key thing to make sure that we are present in the future compressors of this industry.

And consequently, that's also where we spend our R&D resources primarily. One of the things that we are developing right now is to work jointly with the compressor manufacturers in working with them on the valve design and through that, also do the testing of that valve design. We have especially designed testing equipment that we have developed with our customers or compressor manufacturers, so we can shorten the lead time of bringing a new compressor to the industry or to the market.

If we move on to commercial excellence initiatives, sustainability is a very critical part for us. We have a very solid base in terms of belonging to Alleima and the Alleima integrated supply chain with a metallurgy, which is very cost energy efficient and has very low emissions, so that in itself gives us a leading position, you could say. But one of the things, of course, is that a lot of our customers are also signed up to science-based targets, which means that we are scope 3 in that sense and circularity becomes a critical part.

So one of the things that we have accelerated during the year is what we refer to as a buyback program. Because if you remember that picture where our customers stamp out or punch out material, there's a lot of scrap. And when we can buy that scrap back, we can put it straight into our integrated supply chain. And this is a good financial benefit both for us and our customers because we can typically pay better for that scrap than the local scrap dealer. At the same time, it's well sorted scrap, which is very cost efficient for us. So it's a very good financial aspect of this as well.

And then Goran talked also about value-based selling. That is very critical for us as well, of course. To be successful at value-based selling, you need something what we refer to as technical marketing. Technical marketing competence is what translates product properties into an understandable customer value. How does those product properties add value for the customer. And that's an area where we have not been strong enough recently. So that's one area that we are investing in now in those type of capabilities and competencies.

But then also as we all experienced, I think we have expectations in the digital environment where all of us, I think, are accustomed to very good response rate when we buy something online, for example. So one of the things that we are striving for is to safeguard that we move towards call it Business To Customer experience for our customers as well versus Business To Business experience. And that for sure will also increase the customer -- or improve the customer experience overall.

And then last but not least, Goran mentioned as well in his starting, we are good at key account management. If we look at our top 100 customers, they contribute with a big share of our sales, and we manage them very well. But there's a weakness with that as well that becomes too dependent on how they grow. And what we need to do is to find better ways of servicing smaller customers. And the answer to doing that is to work with channel partners.

Channel partners is a very cost-efficient go-to-market model. There's no associated fixed cost and they sell on something else. They'll sell on availability, which means that they can sell to a different price point. And where we have started to work with channel partners versus direct sales is primarily in the knife industry to get access to smaller knife makers. And they are typically clustered in different countries. There's one region outside Lyon in France. There's one in Solingen in Germany. There's one area in Japan. There's one area in China. And that's where we have located channel partners to work with us. We stock material at their place, and they have very short lead times to their customers, which is beneficial for all, I would say.

And we kicked off this initiative end of last year. And today, we have signed up 10 partners where we have formalized agreements, where we support them with marketing. We support them how they promote themselves on their website. We train their salespeople. On top of that, we have identified 9 targeted channel partners that we're talking to right now to establish during the next few years. So we start to get a very solid global network of channel partners now. First target has been high-end knife steel, but we have already seen that there's a lot of opportunities to work with these channel partners or other products as well, which will give us a completely different reach.

And this, as far as what we've seen so far, the business that we do with this distributor has a positive margin effect as well. Then if we look at the cost side, especially for the products which has large volumes, and I see a lot of opportunities to improve our cost base. And if we look at our maturity when it comes to automation, that's still on a quite low level. And we have initiated now a program to upgrade our finishing operations. Our finishing operations is our most labor-intense part, and we see a lot of opportunities there going forward now.

Another factor which has hurt us during the year, especially is poor yield. I think we've underestimated the effect of poor yield on our financial results. So earlier this year, we also launched a program to improve our yield, and we've started to see effects of that already now, I would say. Then on top of that, overall, also workforce flexibility as such and last but not least, the inventory issues that we've had, I think we have started to get a really good control of our inventories in a different way, and now we really start to see effects of that as well. So inventory management will be a critical part going forward as well.

So when summarizing, I think we have a lot of good activities ongoing already in execution to improve the margin because that is our priority. And as I said, during the strategy period, the Strip division should be above average -- Alleima average when it comes to profitability, make sure we manage our leading positions, which are strong today, very strong, expand our reach, strengthen our market presence, invest in digital capabilities to give a better customer experience. And last but not least, safeguard that we have a much better cost base and inventory management.

So with that, thank you for your attention, both here and online.

And with that, I hand over to you, Andreas.

Yes. Thank you, Per. We'll now move over to the Q&A session. And while we get sorted on stage, just a few reminders. [Operator Instructions] And with -- yes, I think we can maybe welcome our speakers back on stage. All right. Questions from the room. Yes. Maybe we start with Anders.

Anders Akerblom from Nordea. So firstly, I would like to ask a bit on your expectations of through-cycle growth in your targeted segments. You stated this is 6%. Relative to the previous Capital Markets Day, you stated that at 7% roughly. So a slight downgrade, although it's coming from a separate base, I recognize. But is there any market in particular apart from perhaps hydrogen and renewable that's driving that slight downgrade?

Maybe I should try to answer. First of all, I mean, it's not perfect science to do these things. We do them annually always as a start of the strategy period. So normally, we do this once a year, roughly this time of the year. Sometimes a little bit apples and peers. I think we have, for instance, in some of the segments more targeted towards applications where we are in. So there's nothing in particular apart from what you mentioned, especially hydrogen is lower.

And the second question, if I may, utilize both. So previously as well, sorry for the Bean Counting, but you stated that industrial, the target was for it to account for approximately 15% of the sales mix in 2030. At least at the midpoint, you're downgrading this 10% to 15% 2030 now. Is that in any way related to the recent cost-out measures that you've announced?

No, no. And I think in our plans, of course, we have a number, but then we need to have some sort of margins on that. I think one reason why we're somewhat unsure, what we're doing, we targeted sort of the growth in certain segments. And if we need sort of capacity, we reduce in industrial. And you have to remember, that is so much more volume, so they take some time.

And then, of course, the one in the part, I think what will impact that number when we come to 2030 is, I guess, what is the business cycle in oil and gas at that moment. So it's -- there is no specific reason. And I think it takes time to reduce the industrial because it's still quite a lot of volume. I received one question when we took the decision to reopen the Tube Mill 68 for the nuclear.

And the question was then you can reduce a lot with industrial. That's not true because the volume part for nuclear is so small than it's high revenue.

We can go straight to Adrian maybe.

Adrian Gilani here at ABG. My first question is actually for each of the divisional heads. I hope that still counts as one. So I guess how much of your current portfolio would you say is currently being priced as a value-based approach? And how much is sort of a pure price per kg or price per meter approach?

Thanks. Good question.

So the question is what are we value selling and where are we selling a contribution type of product that is hard to say. I think that it's hard to give a direct answer. But I think in the segments that I showed, the 3 segments, of course, we are value selling in those areas. And then we have house a big share of the industrial sector within our business, and that is very much supply and demand related.

And I'm not in a really good position to give a percentage number there. But I think if you look at the industrial share of our business, part of the industrial share of our business is things we can value sell in. I would say it's a smaller part. The bigger part is maybe more of a contribution nature, then it's important. There's a shift also going on in that area because we are investing in the additional remelting capacity and the products that we sell out of that in the industrial sector, there's -- we can value sell those.

Any answers from the other divisional heads?

I can quickly comment on that as well. No, I think if you look at our targeted segment, medical and industrial heating, that is clearly our ambition and our sort of say, operating model when it comes to sort of say, pricing prefer. And then we can arm wrestle how good we are at it, of course. And I think you can always improve your ways of working. But when it comes to more consumer and industrial-related products, it's more difficult to claim value there by having such an approach, which is more related to, so to say, we should refer to it as a market price or similar in that sense then.

Adrian, am I okay to answer that question as well?

Yes, absolutely.

Because I can take the opportunity to put some pressure on my dear colleagues here. I would say roughly 80-20. I would say 20% is our contribution business. That does not necessarily mean that 80% is done perfectly from a value sale point of view. I think the tradition a company with a high focus on our products and technology, we should continue to have that. But I think we can improve the way we understand, discuss and sell the customer value, but it is more from a commercial improvement point of view.

Yes. Maybe we continue with Kaleb next to Adrian.

Kaleb Solomon from SEB. Kind of related to Andreas point on growth and what you said earlier, Johan, on recent CapEx sort of being more representative than historical levels. I mean, given that you're growing from a higher base. Isn't it reasonable to assume CapEx should keep growing in absolute figures for the next few years?

Do you want to?

I don't think so. It would maybe be great because that will be good idea. I think it is -- I mean, if you look at the graph or the slide I showed with a lot of initiatives ongoing, I think we are fully occupied of finishing those. So I think it would stabilize. That is my view.

And you've talked about this before, but you've kind of been able to raise prices to sort of offset tariff costs. And maybe this is very hard to answer, but do you think you'll be able to compensate in the same way if currencies keep developing in the wrong direction?

I mean I think that is more difficult. I think it's easier to have a discussion with the customer saying, I'm not prepared to pay the tax that your country is putting on my products. I think, is more difficult. I think over time, it has to be solved through -- prices could also be some footprint. But an American customer who paid $100 per kilo does not understand why you should pay $110 per kilo just because the dollar went down. So I think it's more difficult.

But I can also just add to that in -- I mean, we are in very specific niches. And of course, we have really tough competition in the different areas, but it's not that many competitors. And it's also interesting to look at where our competitors located because it's not only us that are challenged with currency situations, and that may impact the pricing to the end customer. So it could give us some more chances of also adjusting for currency, but it depends on how the competitive situation looks like and how our competitors are impacted by the currency.

But just a comment from my side. Typically, we do not involve currency in price negotiations, if you will, because when it goes the other way around, our customers know that as well, then you end up in a never-ending discussion about price levels. So it doesn't make sense always to -- even though something we need to be mindful, of course, and to Carl's point, what position do our competitors have, then sometimes we need to act and adjust based on that.

Super. Viktor, maybe?

Viktor at Danske. So also on CapEx first. And I guess when you speak about stabilizing CapEx, it sounds like a lot relates to the mix change or growth CapEx, but a lot of the other opportunities, efficiency, taking down CO2 will probably also cost money. So could you sort of quantify how much CapEx you're willing to take home to or take down CO2 and also in terms of the efficiency part, how much could that add to annual CapEx? That's first.

It's impossible to give a number of that. I think it depends on so many things. First of all, with the CapEx, we still should be cash generative. So I think looking at the balance sheet is an important part. I think it will be -- it has to be good paybacks. If there is a good payback on an investment and we have the resources to do it, normally, we would do it but I had difficulties to share a number with you.

But I'm sorry for pushing on this, but at stable CapEx, would you take down CO2 by the levels that you sort of indicated to 2030? Or would that require additional investments?

Potentially. But as I said, we have different -- we've gone from where we were 2019 to where we are today. We have reduced it by 40%, 41% without taking on any investments. To some extent, we have increased the cost of energy because we have partly some biogas and biogas, even though it's the same molecule as natural gas, it's a little bit more expensive. So different ways. We also have hydrogen on pipe. We're not going to build a hydrogen plant. We have hydrogen on pipe, sorry. We're not going to build a hydrogen plant. Potentially, yes. But what I tried to describe in the sustainability part, we are not going to invest a lot of money to claim a little bit less fossil -- more fossil energy products if there is not a customer value or if there is not a saving on the other side, then we will not do that. And...

And then secondly, I appreciate the sort of scatter plot that you showed on return on capital employed and also growth, but it seemed to be a fifth group that you didn't mention with low returns and basically no growth?

But I think I mentioned those. I mean, industrial is such an area. They exist in our portfolio, and they are not small. I mean there is a reason why they are not prioritized and that is because they are lower. On the other hand, if I just would remove them, that would have a negative impact on all the other products. So I mean it's -- it goes together. But what I was clear on is that the contribution business, which is a lot of industrial, that is important as we are. But if you want to grow that business, that growth has to generate value. There might be some opportunities. There are also some nice businesses within industrial. So this is, of course, a simplification. But it's not okay to grow that if we don't create value.

Maybe we can just hand -- pass it on to you.

Igor Tubic, DNB Carnegie. I have a question related to the OpEx and CapEx business that you have. Looking at all the growth initiatives that you have, is it fair to assume that everything is CapEx business related? Or is it -- because what I'm trying to understand is if your CapEx-related business will grow the total share of your -- and make it more cyclical, so to say.

I don't think I have a number. We could reason together on stage here. I mean what we do in medical, that is not CapEx heavy. What we do in nuclear, that is CapEx decision. I think most of the petrochemicals also CapEx related. Industrial heating, 50-50 maybe.

That's a fair assumption.

And then the second question is I wonder around the nuclear. You said before, if I remember it correctly, that you have orders until 2029. Are those based on fixed prices already? Or will you be able to increase prices if the market moves in the right direction going forward?

Yes. I think I -- I mean, we have a good order backlog for our new capacity up until 2029. So -- and we have our existing operation as well, our existing capacity. And there, we don't have as long order backlog, but still a good one. And everything that we have in our backlog are priced. But it's -- I think a comment was made before that some of the business that we now are coming out was priced after the Fukushima incident when the demand was very low. So I don't think -- it's not a big problem, I would say, that we have -- what we have in our backlog is priced.

But metals and currencies are hedged.

But can you share and give us some sort of ballpark around how much prices has increased? Is it like double digit or single digit or just to give up to understand?

In the nuclear part, I can say that maybe you can -- but we have -- when I come back to SMT end of 2017, the Tube Mill 68 was closed. Actually, the new mill was also closed. People were working elsewhere. And then suddenly started to come back, and we're really happy to book some orders. And that was not very good prices. It's also in China. That is starting to be flushed out of the system. But to give you a percentage, I cannot say.

I think it's difficult to say. But I think it's -- yes, hopefully, we will be able to show that -- show how things are developing in our quarterly results. moving forward. I think it's difficult for us to comment because it depends on the mix of customers. We're selling to different types of customers in different parts of the world. And it's that mix of customers within -- the nuclear segment is also having an impact. And it's not just pricing for individual customers, how that is developing. So I would probably say too much if I started commenting on our backlog because...

But I think one thing we could estimate, sometimes we have had Chinese orders. I guess if you compare the Chinese order with the North American order, I mean, it's more than 10% difference in price.

Right. More questions, Andreas again.

The analysts are the most active people in the room, right?

I waited for a moment. Robert, a question to you on your expectation of demand for industrial heating solutions in Europe. If we would see a potential postponement of the ETS or at least free allotment phaseout in Europe, how would that impact demand for industrial heating solutions in your view?

Specifically, that's a difficult question to answer. But I think what's important here, and I think your question is related to that, if we look today, so to say, the electrification of industries are a smaller part of our current business in that sense. It's rather an opportunity going forward in that sense. And of course, all sort of say, regulatory measures like EPS, the emission rights the cost of CO2 emissions in Europe. If that goes up, it will help us if that's delayed, that might postpone, so to say, decisions of investments going forward. But right now, what we're seeing, so to say, I would sort of say, to start with, I would rather see a pickup in general business climate and investment levels in general in Europe. I think that would be more important to us if we look a bit shorter term than specifically that question. But of course, less regulations that helps customer to take that step is, of course, not positive in a sense.

And that is -- we are part of that. We have gas fueled furnaces. Not all of ours are Kanthal fueled.

Yes.

And we reason in the same way. If we cannot make a payback calculation, that will take longer time. It's a sort of rational decision-making.

Yes. We have another question from Viktor. I just want to make sure if there's any other people in the room who wants to ask a question besides our analysts. But please go ahead.

Yes. Perhaps for you, Carl, just on -- in the Tube division and specifically in the U.S., how much would you say is energy related in the U.S. specifically, i.e., nuclear and oil and gas of that sales?

Yes. I think when we talk about tougher demand in the U.S., it's in our regional business. It's in our chemical and petrochemical business where we see uncertainty that is holding back CapEx. Then on the energy side, it's a different story. Demand is good. On the aerospace side, demand is good even though many of the aerospace customers are on fairly high stock levels. So -- but down the line demand in aerospace is very good. Underlying demand in aerospace is very good. And the question is how much -- sorry, the question was what share in the U.S.?

Yes, exactly. Is it like 50% of U.S. sales? Is it...

You will proceed from here?

Yes, that is related to nuclear and oil and gas, specifically, how much of the U.S. business?

I could -- I can't give -- do you -- could you help me with an answer? I don't give the wrong answer...

I don't think we have. I mean it differs a lot from year-to-year. I mean, it could be a nuclear project. If it's in U.S., it's good. If it's in Europe, then it's lower. So the product business makes this difficult to answer the question.

I mean I can easily say that kind of the energy part and kind of aerospace part is more than 50% of what we sell in the U.S.

And between oil and gas, is it like 50-50 split or basically...

And that I can't answer specifically for the U.S. because it depends on that information, I don't know. But in general, in oil and gas, it's that split about...

And sorry, if I just may one more, but on -- and that's for -- this one is for you, Goran. But in the indicative EBIT margin bridge that you showed, we have spoken about the mix shift historically. We sort of understand that. It seems like you've added a bit of components. So secondly, you talked about efficiency and volume leverage. Volume leverage feels like you showed that you won't grow volume so much. So it should be mostly efficiency, I guess.

It depends on how you -- I mean, if you run more complicated products through a finishing operation, even if it's not much volume on our total numbers, there's still more volume in those machines, and that gives absorption and gives leverage. Okay. But I think you're right. I think the overall strategy is the mix shift journey. But I think in certain areas, either because we see more potential or -- I mean, everything in a company does not always work in a perfect way. And I think we are deciding to drive more of the performance-related initiatives as well, both in operation.

And I think you, Carl came in here and say, what a fantastic technology you have and what a product focus. And maybe we could add a little bit more focus on customer value. I think that's a very, very valid comment that you came in with. And some of you asked the question, what's the percentage in contribution and value sell. I think we could do much more value sell, but it's sales training and it takes some time.

I'm sorry, Igor, but we're over time actually. And I just wanted to finish up with a question to you, Goran, as well. If you were to give our listeners a final takeaway of the day, what will that be?

First of all, I think we are developing the company in the right direction. I think clearly, we have improved the financials of the company. We are more profitable. We are less volatile than before. And it's not coming by sort of accident. I think we have a strategy. We're executing on a strategy. And I think there's a lot of opportunities to continue this. And I think what the division President has shown in the different parts of the organization, a lot of opportunities to both generate growth, but also to drive performance improvements. That would be my summary.

Great. Thank you. And thank you all for your questions. Thank you, Goran, Johan, Carl, Robert and Per. The full program has been recorded and will be available on our website around lunchtime tomorrow. For those of you here in the room, we invite you to stay for some refreshments. Please follow our hostesses. They will guide you up to floor 6, where we can continue the discussion with management while also enjoying a pretty cool view over the Vasa Ship. And this concludes our stage program. Thank you all for joining us.

Hi, everyone, and welcome to the presentation of Alleima's Interim Report for the Third Quarter 2025. My name is Andreas Eriksson, Investor Relations Officer. I'm joined today by Goran Bjorkman, President and CEO; and Johan Eriksson, CFO.

Goran and Johan will walk you through the operational and financial highlights of the quarter. And following the presentation, we will open up for a Q&A session. You're welcome to ask questions via the conference call or submit them through the webcast interface. And the presentation materials are available for download at alleima.com.

As always, safety is a top priority for us, and I trust that you are familiar with the safety procedures at your current location.

And with that, I'll hand over to you, Goran.

Thank you, Andreas, and hi, everyone, and thank you for listening.

Let me start with the highlights of the quarter. The geopolitical situation is still turbulent, and we are still seeing a market with continued uncertainties. Customers are prolonging their investment decision. And I would say the overall kind of wait-and-see attitude remains. And I think this is particularly visible in Europe, but also in Americas, where volumes related to the more short-cycle businesses like industrial, chem, petrochem and also industrial heating are low.

Despite this, I think our underlying performance is decent given the challenging environment, and we are clearly benefiting from a diversified exposure. Order intake rolling 12 declined 1% organically and revenues were flat year-over-year. Backlog remains solid in important segments like oil and gas, nuclear and medical with good product mix and visibility for the near-term future. But as I stated in the more short-cycle business and then especially in Europe and Americas, backlog is weaker.

Our adjusted EBIT margin declined year-over-year to 4.7%. And this is clearly below last year and also as we guided for in quarter 2, but it is in line with what we expected. Main reasons for the softer result are the weak European market, where we have short backlogs, and it's actually impacting revenue, but also the prolonged maintenance stop we had during the summer and of course, the FX headwind. The reason for the prolonged stop was a large maintenance investment replacing the expansion press in the large extrusion. And we have some weeks' delay in the start of ramp-up, while there will be some effects also in the fourth quarter.

Even though we have segments with strong market, our global footprint that helps us to mitigate the more direct impact from tariffs, we don't foresee a fast recovery of the market, or at least, we cannot trust that, that will happen. Therefore, we are now initiating a number of targeted measures to further strengthen our operational efficiency and, of course, our long-term competitiveness.

The majority of these efforts will permanently reduce cost levels, including restructuring initiatives, while others are, I would say, more a natural part of our ongoing work to align capacity and cost with current market conditions. In total, we expect annual savings of roughly SEK 200 million, coming at a one-off cost of almost SEK 400 million and a total reduction of about 250 FTEs. And I cannot stress enough in times like this, our balance sheet is a real advantage. Our financial position enabled us to stay with our strategy where we have several ongoing profitable growth projects.

Moving over to sustainability. I said it many times, we are generating a positive impact both through our own operations and through our product offering. Safety is always a top priority at Alleima, and we are continuously and actively implementing measures to maintain safety as a top priority. I'm happy to say that the development again is trending in the right direction, and the accident frequency is on record low levels. Our share of recycled steel remains high and remains over 80%, both on a rolling 12-month basis and year-over-year. And I think this is a good figure given our product mix.

Also our CO2 emissions are steadily decreasing, even though we noted a slight uptick in this quarter. Alleima's largest contribution to sustainability through our products where we support our customers in their sustainability journey. That is why we are introducing a new KPI where we measure the share of sort of products supporting sustainability. This is things like fossil-free energy, renewable, nuclear and hydrogen, energy efficiency, electrification, medical and where the overall target is that this part of our business shall grow faster than the Alleima average.

And as you can see, we have had a good development, but now more flattish. I would say that nuclear, medical and also energy efficiency through compressor steel still strong, but we see more headwind in areas like electrification, hydrogen and renewable energy.

Some other sustainability highlights from the quarter. Alleima was once again awarded the EcoVadis gold medal for our sustainability performance, placing the company among the top 5% of over 150,000 rated companies globally. I think this recognition confirms our long-term commitment to responsible production and sustainable development.

Another important milestone is that Alleima's climate targets have been validated by the science-based target initiative, ensuring alignment with the latest climate science and international agreements. Together, these achievements mark an important milestone in Alleima's work to increase customer value by reducing climate impact and strengthening sustainability across the value chain.

So let's take a closer look at the market development. Market sentiment remains mixed with continued macroeconomic uncertainties. Demand remained notably low in Europe and stayed subdued in North America, while Asia continues to show more resilience. And we maintain momentum in several key segments. But I will walk you through the development in each segment, starting with oil and gas.

Our view on the underlying demand is still positive, and I would say, especially for umbilicals with the project list of upcoming tenders and potential future orders is solid. We are a bit more uncertain, however, on the midterm outlook for OCTG. We still have a solid backlog, and we are on historically high levels. And maybe as important is that we have managed to increase our operational efficiency and thereby improve profitability for our OCTG business, and we are comfortable in our partnership with Tenaris also moving forward.

Chem and petrochem Europe is on low levels, same with North America, while Asia remains solid. Industrial, the European demand is worsening on the low value-added products. North America, we noted an increase from low levels. But I have to say much of this is actually tariff-related effects. And that is -- you can -- we see our price increases to compensate for the import tax. But also here, Asia is on an okay level.

Industrial heating overall, somewhat improving, but still on low levels. Applications like electronics, semicon and glass are improving. And we have been on low levels now for, I think, about 18 months. And if this improvement we now see is a turning point, I think that is too early to conclude. Customer demand is still on a good level, mainly driven by the white goods industry in the Strip division. However, some customer indication from U.S. indicated the market is starting to soften somewhat. Medical market remains strong, driven by multiple factors, and we have a solid momentum across the product portfolio.

And I'd also like to mention that the integration of Endox is going according to plan. Mining construction, flat underlying demand year-over-year. Nuclear, high activity, growing demand continue to support a solid backlog, providing good visibility going forward. Transportation, I mean it strengthened year-over-year, driven by the titanium tubing for aerospace, which is strong, while automotive is worsened. So aerospace is up, automotive is down, giving a -- that aero should be flat, sorry.

It is on the curve.

Yes. Hydrogen and renewable energy, this segment remains mixed with varying performance across this broad range of businesses. But surely, there is a headwind in the hydrogen, renewable area.

Moving over to order intake and revenues. Order intake rolling 12 months, SEK 18.7 billion, a negative organic growth of 1%. This is mainly coming from the petrochem and industrial segments, especially in Europe. North America is weak, while Asia remains on high levels. Nuclear, medical and consumer grew and industrial heating grew from low levels and continue to book good umbilical orders in the oil and gas segment.

Revenues flat organically, Kanthal and Strip grew while Tube declined. Biggest positive impact came from medical and while we see the weak Europe that impacted us negatively. Rolling 12 months book-to-bill of 97%. And our backlog is still healthy levels in key segments like oil and gas, nuclear and medical, but for the short-cycle business in Europe and America, the backlog is short. Earnings, the adjusted EBIT amounted to SEK 197 million with a margin of 4.7%.

Given the weaker market in Europe and Americas with short backlogs for the short-cycle business, the extended maintenance shutdown and the FX headwind, the result came in line with our own expectations. However, course and clearly lower than last year. And with the market with continued uncertainty, we are now taking the measures to reduce cost and improve operational efficiency. These actions, together with the ongoing growth investments in medical, nuclear chem, petrochem will make us stronger going forward. And we're staying with our strategy, which also includes our order booking discipline now in downturns. Free operating cash flow SEK 285 million, lower than last year, mainly impacted by lower operating profit and higher CapEx.

So let's look into the divisions, starting with Tube. Tube noted an organic order growth of minus 6% for the rolling 12-month period, where we continue to see a weak Europe and North America for the regional businesses. Asia continues to develop well.

Backlog in key segments like nuclear and oil and gas, still solid, and we maintain a positive view on both those 2 markets. Organic revenue growth of minus 3%, mainly driven by a negative development in chem, petrochem, but also timing of nuclear orders that was built in Q3 last year. Book-to-bill, 93% rolling 12 months. Adjusted EBIT margin of 3.6%, and this was dampened by the weak Europe as well as the higher-than-normal under-absorption effects due to the prolonged maintenance stop, where we replaced expansion press in the large extrusion.

And as I mentioned, we've had some weeks delay in the start and ramp-up, and we will have a negative impact also in the fourth quarter. We will, however, be able to catch up some of these effects, but due to the large backlog we have in the large flow like OCTG, that will take until mid-2026. Tubular FX headwind of minus SEK 16 million year-over-year.

Moving over to Kanthal. Organic order intake growth for the rolling 12-month period of 9%, which is a good growth, but still on relatively low comparables in the heating part. Medical is strong, and we noticed some rebound in industrial heating, where applications like ceramic elements for electronics, including semiconductors and glass industry stood out positively. And it's also in these applications, our announced investments in Japan and in Scotland are related to. If this is a real -- start of a real rebound, I think that is too early to conclude.

Medical segment continued to show strong momentum with growing order intake and revenue and a solid backlog. Book-to-bill, 104%, rolling 12. Adjusted EBIT margin was 16.1% in the quarter, which considering the rather low volumes in the heating part of the division, the FX headwind and also some costs related to preparations for ramp-up of investments, I think it's an okay result.

So Strip. Strip continued to grow its top line with an organic order intake growth of 24% on a rolling 12-month basis with growth in all segments, of course, then the Consumer segment being the main driver. Organic revenue growth of 5% in the quarter, all major segments contributing to that. Book-to-bill rolling 12, 112%. Strip came in on an adjusted EBIT margin of minus 4.2%. There is a continued negative impact from the weak fuel cell business, but also the Precision Strip part is not performing in line with last year despite the positive growth.

Strip with most of its operations in Sweden normally has a seasonally weak quarter 3, and they also had continued FX headwind. But there is also efficiency problems where I would say, quality and yield had a negative impact. Strip has not been performing well in the last quarter despite the positive market and the operational problems, they are addressed, and they showed a clear improvement in the end of quarter 3, while I am positive that quarter 4 will show an improved performance.

And with that, over to you, Johan, for some numbers.

Thank you, Goran.

So before we move into the financials on this page, I'd just like to highlight that the targeted measures that Goran mentioned, and it's expected to result in an item affecting comparability charge on the P&L of approximately SEK 400 million in the fourth quarter. However, please note that the cash impact, which is roughly half of the SEK 400 million, primarily will occur during the first half of 2026. And on the savings side then, we can say that the run rate savings will be achieved half of it, about 50% by the end of quarter 2 next year and full effect by the end of the year.

So now let's jump into the bridge on the right-hand side. So order intake for the rolling 12-month period amounted to SEK 18.7 billion, corresponding to an organic decline of 1%. Total growth was minus 5%, impacted by currency and alloy effects with a stronger SEK and lower metal prices accounting for 4 percentage points to each. Quarterly revenues reached SEK 4.2 billion with a flat organic growth, of which we actually had 100 basis points coming from tariffs, the U.S. tariffs. The revenues were held back by weak market conditions in Europe and North America, just like Johan pointed out.

Currency effects, primarily from stronger SEK against the U.S. dollar had a negative impact of minus 4%. Alloy effects impacted by minus 2% on quarterly revenues. And we see looking into the fourth quarter, a continued negative year-over-year effect from alloys. And we expect the rolling 12-month order intake to be at -- have around minus 2% from alloys and the quarterly revenues at minus 1%. And in Structure, as Goran also pointed out, we have some positive contribution from Endox, even now it's rounded off to 0, and the integration is going according to plan.

Moving over to the left-hand side. Adjusted EBIT, I'll get back to in a coming slide. So we'll get on to the reported EBIT, where the margin declined from 2%, 3% from 6.5% last year, impacted by negative metal price effects of SEK 70 million compared to minus SEK 24 million last year as the trend for metal prices and the U.S. dollar have continued to be more negative this year compared to last year.

The net financial items for the quarter amounted to SEK 6 million compared to 0 last year. And one of the items in the financial net is the positive interest net on our cash balances. And in the quarter, they were yielding approximately 1.98%. The normalized tax rate came out at 25.8% for the quarter, while the reported tax rate amounted to 36%. The reported rate is impacted by a couple of prior period adjustments. Free operating cash flow came out at SEK 285 million, and I'll get back to that in a later slide as well. And finally, adjusted EPS for the quarter came out at SEK 0.56 per share, impacted negatively from the lower adjusted EBIT.

Looking at the adjusted EBIT and the bridge. Going from last year's SEK 314 million or 7% to this year's SEK 197 million or 4.7%. And we note an organic decline on EBIT of SEK 78 million, resulting in a negative organic leverage. This is mainly driven by the weaker markets in Europe and North America and the higher-than-normal under-absorption and maintenance effects, primarily in Tube then, and as Goran pointed out, the yield and productivity issues in Strip. It's worth noting, though, that we've been able to compensate for the U.S. tariffs, making it EBIT neutral in the quarter.

The currency headwind continued, and we were impacted by the strengthened SEK mainly versus the U.S. dollar. The total effect corresponds to a margin dilution of 70 basis points in the quarter. And structure, again, it's the contribution from our acquisition of Endox that Kanthal made early at the beginning of the year.

Looking at the balance sheet and capital efficiency. Net working capital decreased in absolute terms year-over-year, mainly due to currency effects and lower metal prices, but increased as a percentage of revenues to 39.5%, and that's due to our lower quarterly sales. Continuing into inventories, they are lower in value, both sequentially as per normal seasonality and year-over-year coming from both lower volumes in inventory and lower metal prices. And we continue to have a lot of focus on this in the divisions.

Capital employed, excluding cash, increased year-over-year to SEK 16.3 billion, mainly driven by the higher CapEx levels. And the return on capital employed, excluding cash based on operating profit, including metal effects, was 8.1% for the rolling 12-month period, down from 9.9% last year.

Looking at cash flow. The free operating cash flow amounted to SEK 285 million, which is lower than last year. The EBITDA is impacted by the negative metal price effects and currency headwind as well as the operational effects that we explained earlier. The noncash items were slightly more positive this year. This refers, for example, to provision or provision releases in the operating result that have no cash flow impact. The positive impact from lower working capital mainly comes from accounts receivable and inventory. An increase in CapEx comes both from our prolonged maintenance stop and increased growth CapEx.

And if we look on the graph on the right-hand side, we can note that we continue to deliver a healthy cash flow, although in the last 2 years, we have effects from the ongoing growth investments, which, may I remind you, are in segments that are more profitable and less capital intense and will start yielding in the coming years.

Overall, and as Goran also pointed out, our financial position remains strong, where we are well below our financial target of a net debt-to-equity ratio below 0.3x. At the quarter end, we were at negative 0.02x. The net pension liabilities decreased year-over-year to SEK 735 million from last year's SEK 938 million, mainly as a result from higher discount rate and value increase of the pension assets. Leasing liabilities was on par with last year.

And again, our cash position continues to be strong. And we have a net debt or rather a net cash position of SEK 362 million and a SEK 3 billion unutilized revolving credit facility on top of that.

Looking at the guidance we gave ahead of the quarter and the outcome. For CapEx, the outcome is that we are now at SEK 745 million year-to-date. We guided for SEK 1.2 billion for the full year. So I would say that we're well in line with that guidance.

The currency -- the transaction and translation effects is -- came out at minus SEK 113 million. We guided for SEK 115 million -- negative SEK 115 million, so well in line there as well. And the total bridge effect, including the hedges and revaluations was negative SEK 41 million. Metal prices affected us negatively with SEK 70 million, where we guided for negative SEK 150 million. Here, the deviation comes from several metals, but mainly from the development of molybdenum in the quarter.

Normalized tax rate was year-to-date 24.1%, where our guidance is in the range of 23% to 25%. For the quarter, the normalized tax rate was on the higher side at 25.8%, mainly due to the country mix for the profits in the quarter. And then looking at the guidance for the fourth quarter. We remain -- we maintain our guidance of SEK 1.2 billion of CapEx for the full year. The currency effects, we estimate for the transaction and translation to about minus SEK 150 million, 1-5-0, on the back of the stronger SEK, of which I would say that half will be mitigated by hedges, roughly half.

Metal price effects based on end of September metal prices and currency rates, particularly nickel and U.S. dollars, we anticipate a neutral effect for quarter 4. And the tax rate for the full year 2025, we expect a normalized tax rate in the range of 23% to 25%.

And by that, I hand back to you, Goran, for the outlook and summary.

Thank you, Johan.

The general economic environment was continued uncertain during the third quarter, and we expect that to linger into the fourth. At least we don't trust it will improve much. One-off cost of about SEK 400 million related to restructuring activities is expected to affect fourth quarter results. We also expect some diluting effects related to the delayed ramp-up from the installation expansion press, and that will have some impact on the profitability in the fourth quarter.

We maintain a solid backlog in several key segments, providing good visibility into near-term deliveries. However, we are seeing challenges in other customer segments, particularly in Europe and North America, which already have affected and is expected to continue to affect short-term deliveries. Product mix anticipated to be remained broadly in line with third quarter, and we also expect currency headwind in the fourth quarter. And finally, cash flow tends to be strong in the second half of the year compared with the first.

And that brings me to the summary. So let me summarize. We are affected by a continued uncertainty due to the geopolitical turbulence, but we still have good backlog and momentum in key segments like oil and gas, in nuclear and in medical. Revenues flat organically where Kanthal and Strip grew while tube declined.

The biggest positive impact from the Medical segment, while a weak Europe impacted us negatively. EBIT margin declined year-over-year, mainly due to the weak Europe, the FX headwind and the prolonged maintenance stop. And therefore, we are initiating a number of targeted measures to further strengthen our operational efficiency and long-term competitiveness. Majority of these efforts will permanently reduce cost levels, including restructuring initiatives, while others are a natural part of our always ongoing work to align capacity costs with current market conditions.

Our financial position remains strong, which will enable us to continue to execute on our strategic agenda, where we now are driving several growth initiatives to strengthen us long term, while we stay with our order booking discipline also in downturns.

And with that, back to you, Andreas.

Thank you, Goran.

We will now begin the Q&A session. Please feel free to ask your questions via the webcast or directly through the conference call. Operator, please go ahead.

[Operator Instructions] The first question comes from the line of Kaleb Solomon from SEB.

Just 3 questions from my end. On the effects from the sort of delayed ramp-up following the maintenance stoppage, could you maybe put a rough figure on what the impact will be in Q4?

Group level, maybe 80 basis points in fourth quarter. And as I said, I think roughly half of that we will catch up, but that positive effect will remain until, I would say, mid next year.

Okay. And on the SEK 200 million in sort of annual cost savings you expect to achieve from the measures, did I interpret you correctly, Johan, that we'll start seeing half of that run rate effect in Q2 next year for the first time? And will those sort of cost savings be fairly evenly distributed throughout the quarters?

Yes. So half of it from quarter 2 and full effect by the end of the year in run rate.

Okay, that's clear. And on the sort of topic of tariffs and general uncertainty in Q2, you mentioned June was significantly worse than the rest of the months. And I know you say customers sort of continue to be cautious. But based on your Q3 orders, it at least seems like things have gotten a bit better since June at least. Can you maybe give us some color on that, and what you have been seeing in Q4 so far?

The comment I made regarding June that was in Americas and June stood out as very negative. That came out better in July. And I think it's been kind of flattish. It looks, number-wise, more positive, but that is due to that -- I mean, we bring up prices due to the tariffs. And I think it's more or less a stable development. June was not -- I mean, that stood out as negative, after that, more flat.

And once again, I mean, we compensate for tariffs. I think the main issue is all the uncertainties. And even if there is now a deal, Europe and America, even though the new things come every week, remember, that deal does not include tariffs on steel imports to the U.S. That is still to be sold, hopefully, through quotas, which I think would be the best idea.

And just a short follow-up. Could you maybe say something about how competitors who ship more finished products and kind of lack the local processing capacity have managed to handle tariffs? Have they been able to pass on costs to the same extent or...

That I don't know, honestly. We have not seen any big movements on sort of the competitiveness situation in Americas. My assumption, but this is just a good guess is that some of our competitors that don't have so much added value in the U.S. perhaps take a hit on -- maybe they take some of the cost for the imports themselves. But I don't know that. That's just speculation.

The next question comes from the line of Adrian Gilani from ABG.

Yes, I'd like to start off with a question on the savings program. I guess, can you go a bit more into specifics? Is that localized to a specific segment or geography, or will it sort of be spread out over your entire business?

I can say, it is -- first of all, we see that majority will be permanent. I think we estimate roughly 75% of the SEK 200 million will be permanent. So if volumes go up, that will still be a saving. And in respect to the ones that will be -- where things will happen, I cannot communicate this in this kind of meeting.

It's in several countries, including Sweden, and it's a combination of sort of staff reduction, there are also some expected closures, but I cannot go into more details because I want my personnel to hear it from us not through this kind of call, if you're okay.

Yes. No, I understand that. Then on industrial heating, you sounded a bit more optimistic, I think, than you did a quarter ago. Can you expand a bit on what you sort of base that on? Is it the current trading in Q4 that is pointing up a bit, or what is that optimism based on?

So you heard that. I was trying to play it down a little bit. I mean it's the numbers actually. On the heating system, which is the more added value part of the industrial heating business, there was a positive uptick in the quarter, but what I'm saying is, I mean, I have all the hopes that, that is an improvement in the market, but hope is not a good strategy. So I'm carefully optimistic maybe, but there are small movements in the right direction, but from low levels.

Okay. Understood. And then, I mean, do you have any view on -- you talked a bit about tariffs in the U.S. before, but Europe's proposed steel safeguard package. I understand that for your more specialized products, a tariff on the raw material doesn't have a massive impact. But for your less specialized products in Europe, is this something that's going to have an impact, you think, on you?

Yes. I think it will have a positive impact. How much, we are trying to understand. But you're right, I think there are other steel companies in Europe that this is much more important for the more sort of standardized carbon steel producer. And I think the commission has taken a wise decision. I think this is good because, I mean, it's huge overcapacity in China. They are subsidized and in a way, they export unemployment. So I think this is the right thing to do. If it has any impact on us, it's on, I would say, on the more less special part of our portfolio, but I cannot quantify it at this moment.

I understand it's difficult to quantify the impact, but could you talk a bit about sort of what products perhaps where you are seeing high import pressure so we can understand.

I mean, it's mainly in Tube, I will say.

Okay. Understood. And the final, just very quick one. Just to check that I heard you correctly. Did you say half of the forecasted FX headwind for Q4 will be mitigated by hedges?

Yes, yes, that's correct. Estimated -- that's estimated.

The next question comes from the line of Anders Akerblom for Nordea.

So just a follow-up on the previous sort of topics. Not discussing specifically the import volumes to the U.S. among your competitors, but rather kind of domestic capacity. Following these tariff announcements, are you seeing any indications of sort of incremental capacity additions in the U.S.

No, we don't see that. I don't see any of our -- at least larger competitors are moving forward with any kind of investments that I am aware of, no.

Okay. And in terms of the cost-out measures, you touched upon this previously, but I'd just like a bit of a clarification in terms of -- I mean, is this predominantly driven by you seeing sort of clear efficiency improvement opportunities or that there's some aspect here as well of kind of positioning for potentially lower demand from some of the key segments than if this would be in Tube, say, or similar?

I'm not sure how I should answer that question. I think what -- I mean, we've seen a weaker market for some time, especially in Europe. At some point, probably that will turn back again. But we cannot trust that, that just will happen. We have to take measures. It's more from that point of view. So it's more the view we have on the market right now. No speculation it will go in any direction going forward.

Okay, that makes sense. And finally, on the FX impact that you guided for previously for Q3. I mean, adjusted for this and the final outcome, I guess, results were a bit weaker than expected. So could you elaborate a bit on sort of the kind of greater-than-expected organic under absorption in Q3? And you mentioned 80 basis points impact in Q4. But what was it that mainly drove this kind of in Q3? Was the production stop longer than expected or from what you said previously?

No. The stop was according to our plan in quarter 3. And if you remember, in quarter 2, we guided for a quite weak quarter 3, and it came in roughly as we expected. The longer summer stop that we referred to in third quarter is that we made -- we were doing quite a large investment. And it's the ramp-up of that machine that is causing some delays that now is also impacting quarter 4.

The next question comes from the line of Tubic Igor from DNB Carnegie.

I just have one follow-up question. Can you give us some sort of update on your upcoming projects, the coming years, where we are in terms of time line and when the projects are expected to start to ramp up if they haven't yet?

Looking at you, Johan, they are all in line with what we have communicated before. So for instance, I mean, Tube Mill 68 or Tube Mill 26 that we call the nuclear will start up end of next year. I will be in China in a few weeks to do the inauguration of the new Tube plant in China. That is 2. The other ones is also on time, yes.

Should we expect the Chinese ramp-up to start here in Q1, or how should we think about that?

Yes, in a way. I mean, when we make a decision like this, of course, we look long term at the market development. And we have had a fantastic development in China, if we go back a decade or a little bit less than a decade. And if that would continue, we would run out of capacity, and we expect the market overall to continue to develop well and then we had to add capacity. That's the background for the decision.

Then when machines are in place, and we have people running it, then of course, the ramp-up will depend on the market situation right at that point. But we will have machine capacity by the end of this year, and then we can take more orders.

Okay. That's clear. And can I just ask you, have you started already to take on some orders for this new capacity, or are you planning to do that once everything is clear?

That's the detail that I cannot answer. But since I'm going to be the mid-November, I was surprised if I guess everything is up and in a way running already now. And if there are orders to book, I guess they book them. But Igor, I don't know that detail.

[Operator Instructions] The next question comes from the line of Viktor Trollsten from Danske.

I had to call in a little bit late. So sorry if you have answered some of this. But firstly, on Kanthal and industrial heating, if we should say, outlook, just is that driven by the CapEx side of demand, or is it OpEx driven? That's my first.

I'm not sure I can answer that, but I guess more CapEx. I mean we see it in semicon. We see it in electronics. We see it in glass. How much of that is to add new capacity and some of that they order, heck, I cannot really judge, but it's clearly in those part of the subsegments of industrial heating, we see improvements.

Okay. And just as a reminder, could you help us how much of industrial heating is to the CapEx-driven sales, and how much is [indiscernible]? Is it basically 50-50 or...

Yes, that's what we normally touch, yes. Semicon normally is CapEx driven. So at least that one should be like that.

Okay. No, fair enough. And then on the currency in the quarter, and again, sorry if I call in a little bit late here. But what's the difference between the transaction and translation impact of SEK 113 million, basically what you guided for and the total currency effect of SEK 41 million. Is that hedges or...

Yes. Yes. So between that and the total effect there comes hedges and revaluations of bank accounts and [ ARAP. ]

Okay. And was there any particular division that was more or less impacted or...

We had a fairly similar impact on Kanthal and Tube, I would say, so yes.

Okay. Yes. That's clear. And then just finally on my side, on the oil and gas business. I mean, oil prices coming down quite a lot. So just obviously, you keep your arrow flat, so to speak. But if you could remind us where are you in terms of capacity utilization now in that business? Is that running at 100%? What's the overall ceiling in the industry? Your 5 cents on it would be fantastic.

Not sure that you were there -- here, Viktor, when I went through the arrows. I think overall, we judge oil and gas flat on a good level. I think we're a little bit more optimistic on the umbilical side than on the OCTG side. Both of them have good backlogs. But since you asked the way you asked, I mean, we have actually been running umbilicals not at 100% capacity utilization this year, then it has not been visible because the pricing has been so good from a value point of view, it's been high. And we've -- I mean, there's a lot of potential orders to win, and we think we're going to be successful.

So we are actually planning for a slight increase of pace of umbilicals maybe around end of this year, beginning of next year. So I think we are -- we will increase output in umbilicals if things go as we wish. So that's our plan.

Very good color. Good color in light of what we see in the oil price, et cetera. It doesn't feel like you -- you doesn't sound too concerned on...

No. I mean, oil price, it's always volatile. But if you go back half a year or maybe more, it's been between SEK 60 and SEK 30 -- SEK 60 and SEK 70, and SEK 60 is still a good price. And then we have to remind ourselves, it's not only oil business, it's also gas.

There are no more questions from the phone at this time.

All right. Thank you. Then I think we will conclude this call. Thank you for all your questions and for joining us today.

Thank you.

Thank you.