Atlas Copco A Aktie

Welcome to the Atlas Copco Q1 2026 Report Presentation. [Operator Instructions] Now I will hand the conference over to CFO, Peter Kinnart. Please go ahead.

Thank you, operator, and good morning, good afternoon, good evening to all participants to this Q1 Earnings Call for Atlas Copco Group. Before I hand over to Vagner, I will, as usual, already now ask you to limit yourself to one question at a time, especially today because we are on a very tight schedule as we will be heading to the Annual General Meeting of Shareholders today. So we have even a little bit less time than usual. But without further ado, I will now hand over to Vagner, who will start today's call.

Thank you, Peter, and welcome to this conference call where we will report the earnings of first quarter of 2026. So first, the summary. We have seen flat orders when it comes to Compressor Technique, but very good development in Vacuum Technique. Compressor Technique, I will elaborate a little bit further because Gas and Process compressor orders were down quite significantly. We are not concerned about that, but we will give you more details later on.

Again, Vacuum Technique, very good organic growth. We saw weaker demand coming from automotive that impacts our industrial and assembly and vision solution. And when it comes to Power Technique, we have seen growth in most business lines within Power Technique. Also, our service business continued to develop very well according to our strategy, and we are also quite happy and proud to see this continued development.

Organic revenues was up, which we are also quite happy about it. It was good to see a bent in the revenue trend and also stable profit margin despite of currency headwinds. We continue to deploy our M&A strategy. And this quarter, we acquired 4 companies. So when it comes to the financials, the level we have had SEK 45.3 billion is quite a strong level. We saw an increase in activity level in Q1. We were quite happy to see, mainly driven by vacuum equipment. That led us to 5% organic growth that we see an increase in our overall organic growth. In Q4, we had 4%, now 5%. I think it was good to see that development, quite happy with that.

Also, revenues reached SEK 40 billion. So -- and again, happy to see organic development of 3%. So operating margin at 20.4%. We have an adjustment in Power Technique. We have communicated in the past that we were not happy with the profit level, took some measures, and we had an adjusted margin of SEK 8.3 billion and a margin of 20.5%. So earnings per share ended up at SEK 1.28, strong operational cash flow, but impacted by the inventories and return on capital employed, we end up at 20.3% (sic) [ 23% ]

But all in all, we are happy with the development in orders and revenue considering the level. And we should also consider that we had minus 11% currency on our orders received and revenues. So when you look to the geographical spread of our orders, so if I start with Asia, plus 7%, very good development. The main driver there was Vacuum Technique and positive development as well in Industrial Technique. The negative development that we saw in Gas and Process was mainly coming from Asia. So we will explain when we talk about Compressor Technique.

In Europe, again, a positive development despite of an environment that is not so good with all the instabilities that are going on, good development. Also happy to see good development in North America with plus 17% growth. And it's also fair to say that now also Vacuum Technique has a good development in North America. And a little bit more weaker on the rig side in South America and in the Middle East, we saw a weaker development, especially in Compressor Technique and Power Technique. Those are the 2 biggest business areas -- business area in the Middle East.

Then when we combine everything, then we see structural changes of 3% coming mainly from our acquisitions. Currency continued to be negative at minus 11% in revenues and in orders. And like I mentioned before, organic growth of 5% and 6% with a total growth of minus 3% and minus 5%. If we then look into our orders and organic per business area, you see now Compressor Technique being 45% of our business in orders received in the last 12 months and in the quarter, delivered minus 3% organic growth. Vacuum Technique now 23% and plus 32%, driven mainly by semiconductor market. Power Technique also delivered positive organic growth and minus 2% in Industrial Technique.

If we then go deeper into the business areas, starting with Compressor Technique, and here, the industrial business in general was more basically flat, a little bit more favorable in larger compressors coming from some dedicated market segment like petrochemical, aerospace, batteries, but the overall market was basically flat. Then our orders for Gas and Process were notably down, like we mentioned. And here, we have high comparison base in Q1 2025. We had basically one of the biggest orders that we ever received in Asia that was booked in Q1 last year. We managed to get one part was this big order that we had last year. And on the other hand as well, we had quite a lot of wins last year. and brought a very strong result into Q1 2025. And now we have a high comparison base.

We see that the decision process for some market segments that are relevant for us, it will be more step-by-step this year. So not too many decisions in quarter 1. The level also that we had in Gas and Process also was not so low. I mean we had sequential growth between Q4 to Q1 2025 in Gas and Process. I think -- and we should also remember is a business that we have sometimes book orders in a quarter, sometimes we don't have and then you create this comparison basis. But our portfolio, our quotation pipeline is quite good. There is good interaction with our customers, good pipeline. I think we will see the development over the coming quarters.

So also there, we continue to have growth in our service business and revenues were up 1% organic. Our order -- we have a solid order book that we continue to invoice. Last year, we had organic growth in revenues. We believe we can continue to have a good development in revenues considering the order book we have. Operating margin at 23.8%. And here, we have currency headwinds and also a little bit of tariffs that are playing a role on the profitability. But the level of almost 24% profitability is also quite good. It doesn't mean we cannot do better, but that's a good level in terms of profitability for us, and positive contribution of volume, price and mix effect.

Return on capital employed also quite solid. And we continue to invest in innovation. Here, you see a new type of dryer that is used together with turbo compressors, large volume of compressed air. This application, you can basically -- this type of dryer can be basically used in manufacturing systems, companies like semiconductor, pharmaceutical, whenever you require a very low -- very high volumes of compressed air with very low pressure viewpoints, continue to invest in innovation.

So when we move then to Vacuum Technique, here, we see quite happy to report 32% in orders received growth with a significant growth in the semi market, but not only also we had positive development in the industrial market and then also in Scientific Vacuum Equipment, positive development. We have also two service divisions in Vacuum Technique that are also growing organically. So good development.

Also nice to see bend in the trend when it comes to revenues. That was a challenge last year. Now we see bend in the trend and a lot of focus now to ramp up production in Vacuum Technique. Profitability also was 20.5%. So nice to see as well above 20%, supported clearly by increasing volume and also improved in operational efficiency. Still some currency headwinds as well in Vacuum Technique.

Also in Vacuum Technique, we see product development continues. We just released this new turbo molecular pump that is utilized within the two that goes into the chip manufacturing and this new pump has quite a strong development -- quite strong improvement in terms of efficiency with 45% performance gain. So if you look to the right to the level of orders received in vacuum, you see that we are close to record levels that we have had in 2023.

So then moving to Industrial Technique. Here, we had a negative organic growth of 2%, but I'm quite happy with the development in the general industry. There, we saw positive development, offsetting the headwinds that we have in the automotive market. And also good growth in service. We continue to development -- to develop the service business in Industrial Technique. Revenues are flat, and profitability at 19.1%, which we are happy to see the development as well, considering that they have currency headwinds and trade tariffs as well playing against the operating profit margin.

So return on capital employed at 16%. Also there, we continue to develop our product development journey. Here, you see a product that was developed and is dedicated for the Chinese market developed in China for China, and we see now quite a good development when it comes to orders in this product range in China.

So if we move then to Power Technique, we see also here 4% organic growth, solid growth in equipment, good growth as well in our rental business and continued growth in our service business as well, good development. Revenues was also up 4% organically. Also quite happy to see that. And when it comes to profitability, I think last quarter, we mentioned that we were not happy with the level. We took some actions, including looking into our rental fleet, and we took a decision to adjust our rental fleet. And the underlying profitability, we see a bend in the trend, and we will keep on working to continue that trend when it comes to profitability.

So -- and they also had positive contribution from volume, price and mix effect. Also there, nice innovation. We have released a new hybrid generator. What is a hybrid generator is a generator that combines a battery power pack together. And regulation is software is really important because it's not only to work with the power pack, it also work with the grid with different systems with the micro grid. We believe this product has been quite well accepted. We see that it's quite well accepted in the market, and we believe it can be very successful as well. Quite happy with that new development.

So with that -- so just a summary. Orders received SEK 45.4 billion, very strong level. Revenues, SEK 40.5 billion. So EBITDA, excluding the depreciation of intangibles coming from acquisition, the level was 22%. But to continue to talk about the P&L, now Peter will take it over. Please, Peter.

Thank you, Vagner. So as already indicated, operating profit at 20.4%. The net financial items are basically flattish, and we also expect that, that will continue to be similar in the near term next quarter. Profit before tax, SEK 8.1 billion and the income tax expense of SEK 1.9 billion, which represents an effective tax rate of 22.9%. For Q2, we expect that the tax rate will be quite similar to what we saw same quarter last year. So somewhere around 22.5%, slightly lower than Q1 because we typically see less adjustments that are related to the previous year in the second quarter. This is typically happening in Q1 when we are preparing for the tax declaration and everything. And so in Q2, we will see a little bit less of that and therefore, a lower effective tax rate of 22.5% roughly is what we anticipate.

If I then move from the group total to the profit bridge to dig a little bit deeper into the operating profit margin development, starting from 20.1% in Q1 2025, very minimal positive impact from the share-based LTI programs. as you can see, with SEK 40 million. There was an LTI or items affecting comparability of SEK 156 million, consisting of SEK 232 million related to Vacuum Technique from last year. That was a cost then. But we also have now the SEK 76 million from Power Technique related to the adjustments to the higher fleet as well as some restructuring costs that we initiated within the Power Technique business area.

The acquisitions were, I would say, almost as usual, a bit -- a little bit dilutive to the group's margin. The currency, of course, had a much more significant impact, negative impact in this case, diluting the margin quite a bit. And then on the other hand, I think the very good news was that the organic development of the margin was actually quite positive, and that's even considering the fact that we have a negative impact from tariffs across the group. We always said that the impact was not huge and well below 1%, but it's still there, of course, and it basically pulled down the margin slightly. But despite that effect, we still see a positive organic development of the gross margin. So we're very pleased with that development.

When it comes to the currency, quite negative on the margin, also as Vagner already indicated, quite negative on the top line on the orders and the revenues. How do we see the foreign exchange development for Q2? Well, basically, we expect that if the exchange rates remain at the current level at the end of March, basically, then we would assume that the currency would be having hardly any effect on the margin. You could say basically somewhere around the 0 point is what we anticipate for Q2, all things being equal, of course.

If I then move to Page 13, where we split a little bit further into the different business areas. Then I think the picture is fairly similar on the items affecting comparability I already mentioned, the Vacuum Technique costs from last year that now comes in as a positive. And on the other hand, the fleet impairment as well as the restructuring that we have done within Power Technique. The acquisition is dilutive across the different business area. For Power Technique, very minor, also for Industrial Technique, a very minor impact.

The currency then across all business areas having a negative impact, mostly in Industrial Technique, quite dilutive, while for the others, the impact is a little bit more mild, but still negative for all business areas. And then when it comes to the organic development, positive for all 4 business areas. Of course, there are impacts related to volume, price mix that help this development, while the tariffs are offsetting in most cases, that to some extent.

But we should also not forget that all the activities we have done over the last several years, whether it has been in Vacuum Technique, whether it's in Industrial Technique or even now in Power Technique are starting or are generating positive results from a leverage point of view. And that is one of the reasons why we also see this positive effect despite the typical volume price mix effects that contribute across many of the different business areas. So overall, I would say, even though at first sight, maybe the margin is slightly -- is not as high, 20.4%, the fact that the organic development is positive across all business areas is really encouraging for our team to continue working on this going forward.

If I then move to the balance sheet, not so much to say here, to be honest. The main development we see is that if we look at the asset side is, of course, the impact of the acquisitions adding especially the intangible assets, but also a little bit on the property and equipment and other type of investments as well as -- and that is then the second most important point in the balance sheet, I would say, the development of the inventories and receivables that we will also see back in the cash flow on the next page.

Besides that, I would just like to highlight the fact that we will soon be approaching the payout of the dividend or at least the first installment of the dividend. The ex-dividend date will be tomorrow. The record date will be April 30, and the payout date will be on May 6.

Then moving to Page #15 in the slide deck, the cash flow. The cash flow, you could say, is operational cash flow quite a bit weaker compared to the same quarter last year. This is not so much coming from the operating cash surplus, which is even though slightly lower, but I would say, relatively on a similar level. But the main detractor here is the change in working capital of SEK 2.2 billion in the quarter. Not entirely surprising that this happens in Q1. We tend to have always a low working capital at the end of the year following lower orders, higher level of invoicing in Q4. And of course, now also adding the improvement of some of the demand -- underlying demand in Vacuum Technique, for example, we, of course, also need to prepare for that, and we are also building up a little bit of inventory, although we, of course, try to monitor that very closely.

From a relative point of view, though, the working capital is not really fundamentally changing. The inventories are in relative terms down. The payables are in relative terms somewhat up and the receivables are quite stable. So from that point of view, no reason for concern from my perspective. And with that, I would like to hand back to Vagner to comment on our forward-looking statement.

Thank you, Peter. Just to remind you, our forward-looking statement is not a sequential guidance. It's not a straight projection of our orders received. It's our best estimate of our customer activity level for the coming quarter. So -- but then if we look to the parameters, if we look to Q1, it was already an elevated level of activity based on what we have reported now. We continue to see as well some business climate uncertainties. I think if you look to what is going on in the Middle East, Also, we have changes in the tariff in the U.S. once again. So I think the environment also has quite a lot of uncertainties.

So -- and until now, this uncertainty have created hesitation among our customers. You see some industrial part of our business a bit more flattish because of that exit. We also see that the auto market has not peaked yet. It's quite on the weak side, not creating that opportunity to continue to grow the business. When it comes to semiconductor, you could see that we are close to peak levels we have had in the past. It was a quite strong order received. We do have a strong level of activity now in the semi, but nothing that can show us that this activity level will grow further.

So it's already a quite strong level. And we shall also consider that the semi is a key account business. We have fewer customers, and we never know when they decide to place orders. Based on the above and also when we speak with our divisions, based also in the conversations we have our customers, we don't see that our activity level will further increase. That's why we believe the activity level is elevated, and we believe that we will stay at the current -- our activity with our customer will stay at the current level.

Thank you, Vagner. So with that, we come to the end of our presentation, and we can start with the Q&A session. Once again, I would like to repeat, especially today as we are in this very tight schedule going to the AGM after this meeting to just ask one question at a time. And then I think we will run smoothly to this Q&A session. So with that, I hand over back to the operator for the Q&A.

[Operator Instructions] The next question comes from Daniela Costa from Goldman Sachs.

I will ask a question about Vacuum Technique. And I believe you had in prior quarters mentioned that you have some mothballed or not fully set up capacity in the U.S. Just wondering if that capacity is now live, what's the utilization rate? And what will that do to contribution margin in the coming -- in the foreseeable future?

Yes. What we see that what we say we have the manufacturing facility that we are ramping up in the U.S., but we are prepared to supply the U.S. from our factory in Korea, for instance, that we can continue to do. We are -- ramping up is going to take a little bit of more time to ramp up in the U.S., but we are ramping up in Korea to supply the demand that we have in the U.S. We have adjusted a little bit production capacity as well in one of our factories we have in the U.S. But that we will be able to supply from other manufacturing places that we have. And we are really all focused now on Vacuum Technique. It's all about ramping up production now.

The next question comes from Alex Jones from BofA.

If I can go back to compressor. You talked about industrial compressor orders basically being flat year-on-year in Q1, which is I think a small deceleration from an increase in Q4. Could you just highlight the drivers of that deceleration, whether it's directly the Middle East, customer hesitation since the start of March or just comparison base? And then how we should think about those factors as we think about Q2?

Yes. I think last quarter, we had quite Q4 2025. We had good organic growth, mainly due to low comp in Q4 2024. And historically, Q1 is a quite strong quarter. I'll not read too much into that. When it comes to Middle East, it was slightly negative in Compressor Technique indeed. But the main driver was as well Gas and Process. We saw lower decisions taken in Q1, maybe not really related to the current situation in the Middle East, we haven't seen that impact. But talking about the Middle East, perhaps it's also good to remind that the Middle East represent less than 4% of our orders received. I think it's also good to put that in perspective, Alex.

The next question comes from John Kim from Deutsche Bank.

I'm wondering if you could give us a little bit of color and context on what you're seeing in the semi cap production and supply chain. Any comments or color you can give us on lead time, component availability and decision-making out of your key accounts, reading in certain limiting factors like perhaps helium and industrial gases.

So I think on -- if I start from the helium, I think it's difficult to know. To be honest, difficult for me to have an opinion. What I see, at least on my side, we are ramping up production. The supply chain is also working on it to make sure we can support our customers. I think we don't see some limitations. I think we need to -- the sooner we can deliver the better it's going to be, I think, for us and for our customers as well. And that has been the focus now in Q1 and definitely the focus in Q2.

The next question comes from Rory Smith from Oxcap.

It's Rory from Oxcap. I just wanted to stay on Vacuum Technique, if I could. I'm just trying to square your commentary there, Vagner, on the near-term activity level not increasing any further and the kind of higher level industry-wide outlook for wafer fab equipment CapEx on some readings, it's up 35% in the last 6 months for the industry as a whole. And then looking at where consensus is for Vacuum Technique orders this year, it looks like it's going to get back to the sort of 2022 peak. If you just had any commentary there on, first of all, do you think you can get back to the 2022 peak in orders in Vacuum Technique and how we should think about the kind of medium-term growth rate in that business beyond the near-term outlook that you've already given, that would be really helpful.

Right. We're actually guiding between quarters, between Q1 and Q2. And like I said as well, that's also a key account business. Based on the information we have now, we don't see reason. It's already at an elevated level. And we believe that the levels happen. We don't know if customers will decide to pull in from their planning into Q2. We don't know that. So I think it's hard to say. This is based in the information we have now. I think it's a good activity level. We are quite happy after 2 years where we see that the orders were not really according to what we would like to, what we have been prepared for. Now we are quite happy as well with this level.

The next question comes from Klas Bergelind from Citi.

Vagner and Peter, Klas at Citi. So I have a question on tariffs, maybe for you, Peter, on the new Section 232 ruling from April 6, now 25% on the total imported value versus 50% before on the content, steel, aluminum and copper. How is that changing your effective tariff rate? I'm trying to understand to what extent this will be an incremental headwind for you now from the second quarter? And how do you feel about the price compensation?

Thank you, Klas. Yes, it's quite a jungle out there with the tariffs moving back and forth all the time. But based on what we see, of course, that the 25% flat tariff on compressors and tools, for example, would definitely substitute an increase compared to where we were before. But we still continue to believe that it will not create a major effect just like it has not in the past, but it will probably increase a bit. However, there's a lot of other things going on at the same time to evaluate how these different items are exactly classified, et cetera. So there's a lot of work ongoing in the background and things are -- continue to be quite uncertain, to be honest.

But if we would simply put out the 25% tariff out there, then that would constitute an increase compared to where we were before. But it was not only the 15%. We also had other tariffs that were playing part already. So as a result, it will not be positive, but it also will not be dramatic, let's say. And therefore, we continue to believe that overall, the impact on the profit margin will continue to remain moderate, slightly higher than what we see today, but still, let's say, on a relatively low level compared to the overall margin for Atlas Copco.

Am I right to think that we go from roughly 20% effective rate to 25% then? Is that sort of the magnitude roughly, Peter?

No, I think it's really difficult to put the exact number on there. And I don't just say that -- I don't say that just to try to be avoiding the answer here, to be honest, because it is really, really difficult. This is right like reading tea leaves, honestly, sometimes these tariffs. It's extremely complex. It's not only compressors, there are also other products involved. So in the end, the overall impact on the overall profitability or the relative cost compared to the import value, which is not the same as the revenues, obviously, is not exactly the 25%. There is much more to it. So again, I think it will be an increase compared to where we were before, but it will not be dramatic, and it will not change fundamentally, I would say, the impact on the profitability going forward.

The next question comes from Max Yates from Morgan Stanley.

I just wanted to ask a question on compressor order seasonality. If -- when we used to look at this business kind of pre-COVID, there was never a huge amount of seasonality in the compressors business. And then we came out of COVID, and we had this dynamic of a very strong Q1, a much weaker Q4. And I guess if you could just update us on how do you currently think about the seasonality of this business? And I guess just us trying to get a better sense of how to model this. Is it right to think that the kind of SEK 19.5 billion that you've just done is the high point of the year and then we see sort of typically Q4 being the weakest? Or has that just been market dynamics? I guess just any color on how you currently think about the seasonality for the business post-COVID and particularly through this year?

To be honest, I don't see a big change, to be honest, Q1 is usually a quite strong quarter. Q4 in terms of orders is normally the lowest quarter and Q2 and Q3 is a bit more average. That's what we have seen over the year. I don't see a big change in that trend, to be honest.

But it never used to be like that. 2019, 2018, it used to be just flat. So I guess I'm trying to understand, is this the new seasonality and therefore, Q1 this year should be the high point.

I think we've always -- in Compressor Technique, I think we've always worked with and lived with this kind of -- there has always been a level of seasonality across Compressor Technique. Maybe it has been more outspoken in recent years. But that's, I think, more due to Gas and Process impact than it has been due to a change in the seasonality pre and post-COVID. So I think it's more the Gas and Process impact that has created huge Q1s for a couple of years, '24, '23, and that creates this huge comparison numbers of '25, was actually quite strong, as Vagner already indicated, but the seasonality has always been there as far as I can remember, but maybe a bit less outspoken due to the Gas and Process development that we have seen in recent years.

Okay. So no reason to assume this year is any different?

No, in Q4 -- as already said, Q4 tends to be a bit softer. Q1 tends to be strong, and Q2 and Q3 is somewhere in the middle. And of course, then there are unique orders, et cetera, that sometimes make the quarter still stand out in a different way than what we could assume as normal seasonality. So there is no very good mathematical formula, in my opinion, to just say seasonality is plus 4% and minus 3% here. But there has always been a level of seasonality in the basic industrial business.

The next question comes from Sebastian Kuenne from RBC Capital Markets.

It relates to your exposure to the semiconductor CapEx cycle. We get some idea of your exposure through the BT business, which has exposure to electronics, 60%, maybe 65%, but there's also a component in the compressor business. And given that semi cycle is kind of a detached cycle from everything else at the moment, can you tell us a little bit of your stance on what your real exposure is at this moment in terms of exposure to data centers, semi CapEx, the whole branch of industrial investments. And can you give us an exposure in percent maybe for the group?

No, we don't have a value to share, but I would say that it's quite small compared with the size of CT. Do we have activities? Yes, we do have activities in the electronic business. We supply compressed air. They do need clean and dry compressed air, and we do supply. I think there are two factors to consider. They get the orders in different phases because normally, when they are building up premises, the fab and the fab maybe has no equipment, that is when we discuss about compressors. And then later on, when the fab is populated, then we get orders for vacuum. So it's a bit -- the timing is a bit different, but the magnitude is quite small. So compared to the total CT Compressor Technique business. The same for data centers. Do we sell to companies doing assembly of the components that goes into the data centers? Yes, we do, but that is small compared to our total business in Industrial Techniques, for instance.

So can we assume maybe 5% for CT, 65% for BT as a rough -- very rough guide?

No, we don't have a one figure to share there. I think it's quite -- the exposure is -- I would love to have a bigger exposure, but it's not -- we don't -- it's not that relevant, that's better for us not to share a figure.

The next question comes from Andreas Koski from BNP Paribas.

Just coming back to Compressor Technique and the Gas and Process business. Could you maybe give us an idea of how big Gas and Process was in Q1, either in absolute term or as a percentage of CT? And based on the strong orders that we have seen for new LNG carriers in the past 6 months, should your Gas and Process orders not improve in the coming quarters? Or is your LNG exposure not big enough to move the needle for Gas and Process?

No, I think when it comes to the contribution of Gas and Process in the overall CT business, we always talk about 10% because this is quite a lumpy business. Sometimes you have book orders that are quite large. We can get larger orders in LNG, like you mentioned, definitely, and there are quite a lot of activity in this area. I think what we see last year, we got some orders in LNG, but not only. And some decisions were taken or many decisions were taken in Q1. We see this will be a bit more spread out throughout 2026 because different players, maybe smaller players taking orders taking decisions, then the order is going to be a bit more spread towards 2026. That's what we see at the moment.

We continue to have a very strong position in this market segment that I would like to highlight. And when these decisions are taken because you also have the different phases of the decision. One thing is a ship operator, ship owner taking the decision to build the ship. And then in a later stage, our part in that ship will be negotiated with the ship builder, so with the shipyard. So -- and then these are different phases of the process. But I can reassure we remain a strong player in that. If there are decisions to be taken, we will play our role in that market.

But if we are seeing LNG carrier orders being up 150% or more in the last 6 months, should that not come through in your order intake with, I don't know, a quarter's lag or so?

I don't have -- they depend always when the shipyard decides to place their orders with us, and they have their own tactics on that. So -- and that's why it's difficult for us to make a strong correlation on that.

The next question comes from James Moore from Rothschild & Co Redburn.

Could I come back to the stable industrial compressor orders? You mentioned Vagner, that the market is flat. But when I look at world CapEx currently, it's mid- to high single digit and accelerating. Short-cycle demand trends are improving in cutting tools, in automation, markets where you've often moved in a similar direction. I see favorable data points in China and the U.S. I would have thought that we might have seen a better picture and an outlook that starts to talk about improving dynamics.

So could you, a, talk about the different regional trends? Is there any market share loss in here? And, b, comment on whether you see customers starting to order more on energy efficiency given the oil price given Iran? And, c, whether you think that there is an issue with all the strong buying that happened in 2023 on the supply chain with people having overbought 3 years ago and still having to digest that. Just to help understand why we're not seeing a slightly better picture.

Yes. I think it's a bit similar to what we said. Q1 is an elevated level. We don't see an acceleration in that level. If you take -- if I can make a couple of comments regionally, I think our business in U.S. continue quite strong with a positive development. But you have some other markets like Europe and for us, that has not been as strong as it used to be. So quite a lot of crowds in there in Europe. Let's see how that develops further, but I don't see so positive environment. You see the main markets in Europe that are not so strong. So -- and you have all the uncertainties and tensions that are ongoing now.

The uncertainty is coming mainly from the war. I think the impact in the Middle East in terms of orders received, we said it's below 4% may not be so big. But if you have some consequence, the indirect impact of that with the inflation could create quite some higher level of uncertainty. And that's why we guide for a bit more flattish environment. And we have no signals. Our data doesn't show signals that we lose market share.

Any sign of the high oil price driving -- after Ukraine, the gas price spike, you did fantastically. One might argue that energy efficiency is back on the map again. Do you see any sign of that in customer conversations?

No, not yet, but it has the potential for that, definitely, but not -- this has not been translated in more activity.

The next question comes from Vlad Sergievskii from Barclays.

A strong step-up in Vacuum Technique to keep stability this quarter and achieved with a relatively moderate increase in volume at least in revenues. If we get the demand cycle in Vacuum similar to what we saw in '22, '23, is there anything that could prevent you from improving margins to historical up cycle levels of, say, 23%, 25%?

Thank you, Vlad, for your question. I mean we would love, of course, to go for a margin of 22%, 23% in Vacuum Technique or in any other business area except for CT, where we would like to do more. But I think it's hard to speculate at this point in time where the demand cycle will take us. For the moment, as already indicated, we expect rather stable development also within Vacuum Technique given the high level we are at. Hopefully, there is more in the market, but that is what we think we can see for the moment.

Then, of course, we have done a lot of restructuring, as we already indicated, that should generate leverage. And I think it's something we definitely see this quarter happening already quite nicely in the operating margin of Vacuum Technique specifically, should the revenue volume continue to grow, which I think should normally follow given the fact that we've had good orders in Q1. Then we do expect that there will be some operational leverage. Now we should also be a little bit careful because we will also need to ramp up a little bit of production and invest in a few things. But definitely, all the restructuring activities we have done should generate some leverage. Whether that will immediately lead to profit levels of the absolute summit days of '21, '22, that I think is too early to say at this point in time.

The next question comes from Rizk Maidi from Jefferies.

Just perhaps if I go back on pricing actions within Compressor and Industrial Technique. It looks like you're struggling to offset the trade tariff impact for quite some time. Now you've alluded that Section 232 is going to become even more of a headwind. We're in a very favorable environment when you look at energy prices, and we know compressor is all about energy efficiency. Just struggling to understand why you're not able to offset the tariff impact through pricing. Why is it taking you so much time? And perhaps when should we expect it to sort of neutralize?

Yes. But first, I think it's not only about price, it's a combination of actions. We also have a competitive landscape that we need to consider as well. We are investing in local production in the U.S. I think we are -- we have several investments ongoing there. Some were even taken before all the tariffs because we want to be more local for local in the U.S. And those investments are ongoing.

Just to give a bit more concrete example, we are expanding our production facility in Albany to produce turbo compressors. We expand our facility in Bay Minette to produce all injected compressors. We are investing as well in a production facility in Rock Hill. So we are also expanding our logistics system in the U.S. with a major investment, expanding production capacity of turbo oil-free compressors for the oil and gas market in Houston. There are a lot of things ongoing that are part of the mitigation. Price is one of the components to mitigate these actions. And the development, we are also developing a supply chain that is more North American focused. So there are quite a lot of activities and not only price.

And then I just want to add that, of course, the tariff impact is included in our organic development, volume, price, mix and other. And there, we see across CT, but also the other business areas, an overall quite positive picture. So I think in that sense, maybe from a direct pricing point of view, we don't compensate. But overall, as we have a positive effect on the overall profit margin, we are able to basically absorb the tariff impact in the organization.

The next question comes from William Mackie from Kepler Cheuvreux.

A lot of my questions covered. So just coming to high level on the cash flow. Can you provide perhaps a bit more color on how you expect the cash flow to be phased through the year and the unwind on inventories and receivables? And perhaps building on the strength of that cash flow, your balance sheet is strong. So could you provide an update on how you see the pipeline for M&A and maybe your view on current M&A pricing given that it seems to have been a relatively quiet period for bolt-on deals relative to history?

Yes. Thanks, William, for your question. When it comes to the cash flow, I think we expect, of course, to continue to have a solid cash flow going forward. Just -- I mean this quarter was a bit less due to the investment in the working capital. I think we also need to be conscious of the fact that if business continues to develop more positively that we will also see, of course, higher levels of receivables, higher levels of inventories to be able to cope with the demand. And that, of course, has a certain cost impact on the cash flow as well. But I think we will continue to have a healthy cash flow as we have always had within Atlas Copco Group.

It doesn't necessarily impact our appetite for acquisitions, not at all. I think we have across the business areas, a very solid pipeline across all of them. If we haven't landed, let's say, a lot of projects in the very near past, then I think it's more related to the fact that the timing of the decision is not falling exactly in this quarter rather than the fact that we would slow down the activities because, in fact, like I said, all the business areas continue to have a pipeline of many projects. In terms of pricing, of course, each project is different. Each segment has its own dynamic. And I think we will always try to aim for finding the right targets at the right price, but most importantly, having the most promise to deliver good value for the shareholder.

The next question comes from Bruno Gjani from UBS.

It's just on Compressor Technique, APAC. I think orders were down 18% year-over-year in Q1 all in, so including currency and scope and maybe down 10% organic. The service business would have been up. So the implied organic equipment development is quite soft. Could you maybe just go into the detail into the drivers here, specifically? Is Industrial Compressor also down meaningfully? Is this all Gas and Process? Is this all China or other countries in APAC also down?

No, it's mainly -- not mentioning country. It was mainly the Gas and Process orders that was extremely strong in Q1 2025. The remaining part of the business continues. If we remove that one, we have growth in several countries. I think there is a quite big impact coming from that one.

So Industrial was growing for APAC?

No, it's a bit flattish. There are countries. If you take China, it's still a challenging environment, I would say. And we do have growth in countries like Korea, like India. So just as an example.

And just coming back to the energy efficiency point with compressor. I guess, how much of the energy inefficient compressor installed base do you think was replaced in 2022 and 2023? And is the TCO argument as powerful today if some of this inefficient installed base was already replaced? Could you just perhaps just discuss this very, very briefly?

I think it's very difficult to have a figure on that one. There are quite a lot of possibilities to continue to replace machines in the market because we can replace our own machines, we can replace competitor machines. If we look from that angle, I think there are still quite a lot of potential available. So on that front, I think we are quite confident that we can, over time, continue to grow the business with the product portfolio that we have, combined with the portfolio we also have in the pipeline because we keep on investing in R&D and we keep on improving the performance of our current products that will unlock potential for replacement as we stretch the boundaries of technology. I think that there will be always a potential there.

Thank you, Bruno. And with that question, we have come to the -- that was the last question of our call for today, and we have come to the end of this earnings call. Thank you all for attending and looking forward to meeting you at other occasions in the near term. Thank you. Have a nice rest of the day. Goodbye.

Welcome to the Atlas Copco Q4 2025 Report Presentation. [Operator Instructions]

Now I will hand the conference over to CFO, Peter Kinnart. Please go ahead.

Thank you, operator, and a very warm welcome to all of you attending this quarterly earnings call for the fourth quarter 2025. Before I hand over to Vagner to start the actual presentation, I will already now, as usual, remind you that when the Q&A session starts to just ask one question at a time. Please keep disciplined, so everybody has an opportunity to ask their most important question once we get through the first queue. Of course, you can line up again for a second question afterwards, and we'll be happy to answer that. But that being said, no further ado, I will hand over to Vagner Rego to guide us through the presentation.

Thank you, Peter, and welcome to this conference call. So first, we had in the first picture, a wafer, just to remind you that we are exposed to the CapEx that is relevant for the wafer production. Then if you go to the first slide with a summary of the fourth quarter of 2025, first, we had a good organic order growth, driven by industrial compressors that went somewhat up. But not only, I think, also Gas and Process compressors, also had delivered a very good quarter, and solid growth as well in vacuum equipment, I would say, including semi equipment.

On the other hand, we had weaker demand for industrial assembly and vision solution followed by weaker demand on power and flow equipment, where we will go a little bit more in details later on. Once again, it was very good to see that our service divisions continue to deliver a very good result and we are quite happy about that. Revenues on the other hand was unchanged, but we have a quite high level in 2024 as well. I think the level was not bad and followed by a lower operating profit, mainly driven by negative currency effect where Peter will come back with more details, followed by negative effect coming from the tariffs and also from acquisitions.

In the quarter as well, due to the low demand in industrial assembly system that is connected to the automotive business, we also decided to have -- to further adapt the organization of Industrial Technique, and we have booked a provision to make sure we keep at a good profit level. Cash flow were solid, and we continue to work on our acquisition pipeline. We have acquired 8 companies in Q4.

So when it looks to the financials, I think we can see for the group, 4% organic growth that we are happy, driven by 2 divisions. Once again, organically, it was unchanged in revenue. When it comes to profit margin, we delivered 20.5% in terms of adjusted profit margin. And we have booked this provision of SEK 261 million to adapt the organization in Industrial Technique.

So basic earnings per share, SEK 1.36, and strong cash flow, still good return on capital employed.

If we then look to the summary of the year, and I would not spend too much time here, but we had overall a mixed demand with unchanged basically in terms of orders received and revenues. It was quite similar with some segments improving, some segments going down, but it was a flat year with quite a lot of challenges and headwinds in the profitability, I would say, and the good thing our strategy in our service divisions continue to deliver good profit and good growth that we are quite happy. And we closed the year with 29 acquisitions. And once again, Peter will come back with more details about our ordinary and extra ordinary dividend proposal.

So it -- once again, if we go to the full year financials, like I mentioned, already, it was unchanged, more -- 1% organic growth in orders, 1% organic decline. But of course, we had the acquisitions that came. On top of the organic growth, quite a lot of currency headwind in our results. And with the bottom line of 20.3%, if you adjust for the restructuring costs that we have done mainly in Industrial Technique and Vacuum Technique, the profitability, the adjusted operating margin was 20.7%, still solid cash flow and return on capital employed.

If we then continue with our results working -- looking more geographically around the world, what has happened. If I started with Asia, we had, in the quarter, 13% growth. That was a quite good development, mainly in Compressor Technique and Vacuum Technique. I would say that was driven this -- driving this result. So we end up the quarter with 13%.

When it comes to Europe, I think we were quite positive. Happy to see 10% growth in Europe. Basically, all the divisions had positive growth. I think the only exception was Industrial Technique that was flat. So all in all, considering the situation of automotive, I think we were happy with what we saw in Europe, but it's also fair to say the comparison base was lower, but very good to see.

In North America, we see 8% growth. And there, the acquisition of NTE has quite a big impact. If you exclude that, still positive growth of 3%. We see a little bit more challenging environment in South America with a flat development in Q4 and also challenging in Africa, Middle East, but it's also fair to say, especially on the Middle East, 2024 was a great year. So I think the level is good, but the comparison base is quite challenging.

Then if we go to the next slide on the sales bridge, then you see the currency headwind that we have had in Q4 amounting 11%. So that was continued headwind coming from currency. I think the structural changes that are mainly acquisition had a quite good development in orders and revenues. Of course, that will later on generate an impact in the profitability as well. But I think the level of the acquisitions are quite good. I mean we have done some acquisitions like NTE that's quite sizable. Then that means that we had an organic growth of 4% and unchanged organically in revenues. And we end up the year with 2% on acquisitions and a total currency headwind of 6%.

If we then go to the orders received per BA, you see that very nice to see Compressor Technique developing with plus 7% organic growth. Very good to see Vacuum Technique now plus 13% organic growth, with good contribution from many divisions within Vacuum Technique. Power Technique, a little bit more challenging, but I will come back later when I talk about Power Technique. And Industrial Technique, minus 1%. Considering the environment, I think it was also a good achievement, although we don't have organic growth that we'd like to, but considering the overall environment, I think it was a good achievement in terms of orders received.

Now going more into details of the business areas. We can see Compressor Technique with 7% organic growth, driven by industrial compressors that were up. And there, we see a little bit more on larger compressors than only smaller compressors in terms of growth, but both with good development. Strong Gas and Process compressors, but again, it's also fair to say Q4 2024 was also a challenging quarter. So for Gas and Process, so they had a low comparison. The service, like I mentioned, continued to grow. We continue to grow with a good profitability. We're quite happy with the development of service in all business areas.

Revenue continued to increase, 3% organic growth. We have a good order book in Compressor Technique that will allow us to continue to deliver good revenue or organic revenue growth, so considering the order book. Profitability was in a good level, 24.3%, still a good level if you consider there was impact coming from acquisition, sales mix and the trade tariffs. So I think we are quite happy with the development of Compressor Technique. And also, we continue to innovate delivering new products. Here is just an example of a nitrogen system that is dedicated for laser cutting applications. So completely tailored for this type of application.

So if we then move to Vacuum Technique, we saw good order growth of 13%, notable growth for semi equipment. And there, I think it's also fair to say that the comparison was quite low in Q4 2024. So -- and then we saw -- that's why we mentioned notable growth, but it was a low comparison. But anyhow, it's good to see the environment and it's good to see growth in semi equipment.

Solid growth as well in industrial and scientific vacuum, and growth in the service. Basically, I think it was a good development in all the divisions of Vacuum Technique.

We still have the challenge with the order book. So revenues were 3% down. I think we still have to overcome that challenge. And operating margin was at 19.2%, so negatively affected by currency and dilution from acquisitions. So they also continue to develop the new products and a new compact product for the semiconductor this vertical booster that are dedicated for semiconductor was also released. In the Capital Markets Day, you also saw some other innovation, and here, we continue to come with innovation in Vacuum Technique.

When it comes to Industrial Technique, then we saw order decline of 1%, basically driven by automotive because when we look to the general industry, we had a good development, also is where we focus to find some new growth and I think still quite a lot of transformation that can be done in the general industry, and that's where we focus.

Service orders essentially unchanged and revenues, they also have challenges with the order book and the revenues were -- went down 3% organically. The adjusted profitability was 19.8%. We want to highlight here the underlying profitability because the profit was -- the profitability was 15.9%, of course, affected by the SEK 261 million in provision for the restructuring cost.

We still continue to invest in innovation even in a tough environment that we have now, we continue to release, and we continue to combine the solutions we have with the vision technology that we have also in the portfolio. So I think also here, continue very nice innovation.

So if we then move to Power Technique, we had an order drop of 6%. And I think it's also fair to say that we had a little bit more than normal cancellations because we had an order book that was a bit too old with old prices, and we decided to take actions on those orders, either the customer would have to take those machines or we will not carry on the orders with old prices. So it was a little bit proactive from our side when it comes to this, let's say, slightly higher than normal orders, but still would be negative but not as much as 6%. Service business continued to grow, and we saw some challenges in the quarter in our rental business that all we know also that drove the revenue down 4%, and the operating profit was at 16%, affected by currency, but also by lower utilization of our rental fleet. And I think that's the level of profitability that we are not happy with. Definitely, we'll take some actions to drive the profitability back from the levels we want to have.

Anyhow, they continue to innovate. Now you know we have invested in several pump assets, more connect -- this one is more connected to dewatering. So we have a new product that can be used now by our distributors but also by our own rental companies because with the acquisition of NTE, we also have now a rental company in U.S., rental company in Australia, rental company in Brazil, dedicated for pumps, and we are also supporting them with our own products.

So if we then move to the next slide, you see then the profitability, the [ EBITA ] at 21.4% in the quarter and the profit of, if you don't adjust for the restructuring cost, 19.8%. But then perhaps this time now to pass to you, Peter, that you continue to explain our profit.

Yes. Thank you, Vagner. Net financial items, slightly negative, a little bit higher than last year, mostly because of somewhat higher financial exchange rate difference and lower interest income in the company. But we also expect it would be probably on a similar level going forward in the next quarter. Then the income tax expense, which is on the low side, I would say, if we take the effective tax rate of 20.5%, that's definitely a low number. We are benefiting from all the activities we do around our innovation and the tax relief that we can get there. But we also had quite a couple of positive one-offs throughout the fourth quarter. So that is why we have this low effective tax rate. Then going forward, when we think over the next quarter, then this low effective tax rate is not maintainable because these one-offs that we benefited from will not repeat themselves, and therefore, we expect the tax rate for the first quarter to be at around 22.5% that is currently our best estimate.

If I move then on to Slide #14, where we can dig a little bit deeper into the profit bridge. There's quite a few comments here to be made, how we get from 21.8% to 19.8%. There's a minor impact from the share-based LTI programs, as you can see. We had items affecting comparability of SEK 220 million in the bridge. It's a combination of quite many things. Vagner already mentioned the restructuring costs this quarter of SEK 261 million in Industrial Technique business area. And basically, the difference between those SEK 261 million and the SEK 220 million are a list of a number of items that we corrected for last year leading up to the SEK 220 million and diluting the margin obviously somewhat.

Also the acquisition dilute the margin in a similar way as the items affecting comparability. We are in the first year of the acquisition here. And of course, there's a lot of integration costs, while the synergies are not fully maturing yet. And that is the reason why we see that lower profitability on the revenue within the acquisitions.

Then I guess one item that is requiring the most explanation here is then the currency effect, which has been quite negative, both on the top line as well as on the bottom line. And in fact, if I summarize it fairly simply, I would say we have translation effects, transaction effects, and we have the revaluations of the balance sheet items. And the first 2 items, translation and transaction effect in terms of margin basically compensate each other. One is slightly positive from a margin point of view, the other one is slightly negative from a margin point of view, and they basically end up to 0. So you could say that the entire difference that we see here is caused by the revaluation of the balance sheet items. And there, I would like to remind you that last year, in the same quarter, we had a huge revaluation positive impact in the income statement, which was mostly linked to Vacuum Technique at the time, also partly to Compressor Technique, but mostly to Vacuum Technique and led at the time to a very positive currency effect, which, of course, now in the bridge creates the opposite effect because we will -- we have not repeated the same positive currency revaluation in the balance sheet items. And that is also why you see later on in the next page, the very high currency impact on Vacuum Technique specifically.

Then when we then look at the organic development here, I think despite a negative development of the top line, we are actually seeing a positive development on the bottom line. And of course, that is more explained if I go to the next slide, 36 (sic) [ 15 ], if I take it business area by business area as there are quite a number of different positive aspects that add up to this number.

So if we take it business area by business area, then we can start with Compressor Technique. Acquisitions dilutive across all the business areas, in fact, somewhat more, somewhat less depending on the specific business area, but basically all dilutive, generating positive profitability, but not as much as we are used to within the respective business areas, so dilutive effect across the 4 business areas. The currency impact for Compressor Technique is even though negative in absolute terms, in relative terms, is quite mild. And then we see a margin organically that is quite in line, slightly higher, but only marginally higher than what we are used to in Q4 2024. And that leads us to the 24.3% result of Compressor Technique, which I think we continue to consider as a good and healthy level for Compressor Technique to perform. So here, you could say despite also tariff impact and despite acquisitions, we maintain a good level there.

On the Vacuum Technique side, the main detractor by far is the currency, which has a huge impact due to the fact that we had this huge positive last year, which we don't repeat this year. In fact, revaluations across all business areas, but also on the group as a total is actually quite limited this quarter, basically not a value to be mentioned in the bigger scheme of things. It was mostly the effect of last year that basically created this negative currency effect in the bridge. Otherwise, also the acquisitions were dilutive. We also didn't have the items affecting comparability this year that we had last year, which was a one-off that we benefited from at the time.

The positive news I would like to add on Vacuum Technique is the strong development of the margin also here, negative development on the top line. We just heard from Vagner how the organic growth Vacuum Technique on the revenues has developed. But operating profit, on the other hand, is positive. And this is thanks to basically the effect that materializes from all the efforts in the business area to restructure, to reorganize, to cut costs in order to adjust the size of the suit to the size of the body, and that's how we end up with the 19.2% here.

On Industrial Technique, 19.4% to 15.9%. Obviously, the restructuring cost is a big item. Vagner mentioned SEK 261 million this year. Last year, in the same quarter, we also did a round of restructuring for about SEK 134 million, so the net is SEK 127 million, having a dilutive effect on the margin this year still.

Acquisitions were, in this case, not adding too much from a dilution point of view, but the currency also there had a bigger impact. Although in this case, not so much due to the revaluation items, a bit more related to the transaction effect. But in the end, a bit negative on the margin.

And then finally, I would say, from the bottom line perspective also here, a negative development of the top line, given the difficult climate in the industry, but no negative impact on the bottom line. So that is also positive that we see that the negative impact doesn't immediately pull down the margin. And of course, with the restructuring we are doing now, we expect to continue to create savings that will support the organic development of the business area.

And then last in the row, Power Technique. Here, we dropped the margin from 17.8% to 16.0%, as Vagner already implied, not the level that we are absolutely pleased with. Acquisitions have a moderate dilutive effect here. The currency is also a bit negative, but also organically, we are not seeing a positive development. And here, it's mostly the utilization of the rental fleet as well as continued investments in A&M that we are doing within the business area. We are thinking of, for example, building up the customer centers for the industrial flow business. We're also thinking about having dedicated salespeople for the portable power and flow business, for example, and also continued investments that we started up in upgrading our ERP platforms across the different divisions that are creating quite a bit of cost investments that are necessary for the future, but with the current business climate, of course, a bit in conflict with the top line development.

When we then look at the foreign exchange development going forward, I would say that we are not at the end of the negative development of the currencies. Both on the top line as well as on the bottom line, we foresee still a quite negative development and estimate that, on the bottom line, we would see an effect of at least around SEK 1 billion negative impact from currencies in the first quarter 2026.

Then I would move to Slide #16 to briefly comment on the balance sheet. In fact, not so much to comment. On the one hand, of course, we've seen currency effects pulling down many of the values, but at the same time, we also see some organic improvements such as in the inventories, for example, which will also be noticeable in the cash flow. And we also see the increase of the rental equipment and the intangible assets, which is both, in fact, mostly linked to the acquisitions we recently added.

NTE was already mentioned, that, of course, increased the fleet as well as the intangible assets. I think on the balance -- on the liability side and equity side, there is not so much to mention, I think, to save time, let's say.

If we then move on to the cash flow development, we think that the SEK 6.8 billion cash flow that we generated throughout the last quarter of 2025 remains solid, but of course, as you can see at a lower level than last year. The main reason for this is, I would say, two things. On the one hand, the change in working capital, which actually is still positive with SEK 650 million, but last year was even much more positive with SEK 2.3 billion. And the second item that, of course, influences the cash flow negatively here is then the lower operating cash surplus, which goes hand-in-hand, I would say, with the operating profit development that we have seen. And those are the 2 main items that basically pulled down the cash flow compared to last year.

And then finally, maybe just to point out that for the year, we concluded with SEK 26.8 billion, SEK 11.6 billion, let's say, SEK 12 billion of which was used to finance our acquisitions, and 2/3 of those were actually taking place in the last quarter with SEK 8 billion.

So with that, I conclude my comments on the financial statements and give back to Vagner to comment on the near-term outlook.

Thank you, Peter. As you know, the near-term outlook is not a guidance for the orders received. It's just how we see the sequential development of our customer activity level. But then, we still continue to have a mixed picture. If I qualified a little bit more this mixed picture, on the positive side, we see a bit more vivid and active semiconductor market when we speak to our customers. And that does not mean that we will see orders coming in Q1, but there are more interactions ongoing with our customers. We also know that this is hard for us to predict because it's a key account business, decisions can take quite fast. So in talking about quite large amounts. So it's difficult to predict if this -- we will see some reaction in the Q1 orders received. But there are more activities, let's say, I wouldn't say more activity, but perhaps more interactions with our customers.

So on the [ less ] positive side, we still see challenges in automotive, especially in Industrial Technique. And that's the reason why we also have decided to further adjust the organization. So there it's a more challenging environment. And then when we look to the Industrial segment, and we talk about industrial pumps, industrial compressors, general industry for Industrial Technique, I think we still see hesitance that is still a challenging environment, full of uncertainties. We have seen how the year has started and how many development so far, and we are still in January. So -- and that's why -- with this mixed picture, that's why if we combine all this, we believe that the overall demand for the group remains at the current level.

So moving back to you, Peter, then.

Yes, I will just round off this presentation by informing you about the proposal that the Board has made to bring to the Annual General Meeting of Shareholders. And the intention is that a proposal will be made to offer ordinary dividend of SEK 3 per share, topped up by an additional distribution to the shareholders of SEK 2 per share, adding up to a total of SEK 5, and that SEK 5 will be paid in two equal installments, one in the course of April and one later in the year in October.

So I think with that, we are at the end of the presentation. And before giving the floor to all of you asking your questions, I just want to remind you, please stick to one person -- one question at a time so everybody has an opportunity to raise their questions. Thank you.

[Operator Instructions] The next question comes from Alex Jones from BofA.

Maybe I can follow up on Vacuum Technique. And it would be really helpful if you could expand a little bit on the comments you made with regards to the outlook, especially thinking about Q4, how much of that acceleration in semis orders was easy comps, given you said you're not necessarily expecting that acceleration in conversations to feed through in Q1? And that acceleration in conversations, is there any difference between different geographies, thinking about China compared to the rest of Asia compared to the Americas? That would be very helpful.

Yes. So definitely, we see -- if we look to Q4, it was indeed lower comps. I think Q4 2024, it was not a great year in terms of -- great quarter in terms of orders received for Vacuum. But anyhow, there is always a little bit of seasonality, but I think we are happy with the development of the orders in the semiconductor, although we had low comps. But going forward, we see a bit more interaction with our customers. It doesn't mean that we -- like I said, we will see the orders in Q1, but we get more questions, when we say just to qualify a little bit when say more interactions, more vivid and active let's say, activity. What we mean, we get now more questions, are you prepared to increase volumes? And I think that's more what we hear these type of discussions. And again -- and we haven't seen. We cannot say that the orders will come in Q1, but there are more discussions on that line. But that is more -- the majority of the production of chips are coming from Asia. That means there are a lot of interactions in that region overall.

The next question comes from John Kim from Deutsche Bank.

Following up on Alex' question, can you give us a little bit of color on the Q4 order intake as to whether this is going into newer facilities? Or is it refreshing or expanding production at existing fabs for your semiconductor clients?

I think it's always a combination of both. But depending on the players, I think they don't need to build new fabs. They have different strategies. Some they don't need to build new fabs. They have a space where they can populate with more equipment. I would say, we have seen more that and there are also players that are building new fabs to populate later. So I think there is both, some that was built in the past and now are populating -- are being populated and there are semi players where they have -- they can rearrange the current facility to increase production and then we got some good orders in Q4.

The next question comes from Rory Smith from Oxcap.

It's Rory from Oxcap. It's just on the order intake in Compressor Technique. I think you called out significant increase in Gas and Process from several different customer segments. Really keen to just know what those segments were in a bit more detail, if that's possible.

Yes. There are several market segments that performed very well. Sometimes we get a little bit more orders from LNG, for instance, because the nature of the business when they decided to take orders -- to place orders, you talk about 10 ships or 20 ships, which was not the case. We got a couple of orders for LNG. But we also had orders for gas processing equipment. I think we still see quite a lot of opportunity around gas processing, fuel gas boosters that goes together with gas turbines. If you want to generate -- if you want to have a gas-fired power plant, you have the turbine and the turbine needs fewer gas booster. We got some orders from that. Also, air separation units was also okay and a little bit for chemical and petrochemical. It was quite balanced, I would say, this quarter more than previous quarters, I would say.

Could I just squeeze in a quick follow-up then on that? What percentage was Gas and Process of the Q4 orders versus industrial in Q4 in Compressor Technique?

I think we don't disclose that figure on divisional level. Over time, it has been around 10% of the Compressor Technique business area.

The next question comes from Klas Bergelind from Citi.

So I just had a question on the larger industrial compressor orders. They are up year-over-year against an easy comp, but some debate today around that they're down quarter-on-quarter. But isn't that just seasonality, i.e., down fourth over third, at least according to my model. You don't see any underlying weakness, right, Vagner, on the larger side in compressors. I think you said last quarter, in October, that orders started to come back in Europe, but that China was still weak. I'm just keen to understand the quarter-on-quarter underlying trends on the larger side?

I think it's still challenging in China, I would say, giving a little bit more color. I think we were positive about Europe and happy, to be honest. And we saw a little bit less growth in North America, but still positive development if that can help you a little bit more.

The next question comes from Sebastian Kuenne from RBC Capital.

Regarding compressor business again, could you tell us a little bit about the market and pricing situation in the U.S., specifically for the compressors that you have to import from Belgium? And given that you have local competition like Ingersoll, who can maybe outbid you on pricing, maybe you can give a bit more color on the situation there.

Thank you for the question. Yes, indeed, I think we do have the tariffs. But it's fair to say not everything that we sell in the U.S. is important. We also have local production. I don't disclose the number of how much is local, but there is quite a good portion. We are increasing the content of local production. That will come step by step. But it's fair to say that the main driver is price, and we are increasing our list price. And it's a balance act because we also want to keep or even increase our market share. So I think that is the balance we do now while we increase list price of different product lines, we also keep fighting to increase our market, not even to maintain, but to increase our market share.

We do have the impact like Peter had already mentioned, but I'm quite happy with the development, to be honest, on the market share. Not all the product lines are doing well, but some are even increasing the market share. That was quite encouraging to see under such a tough situation we can further increase. And when it comes to competition, difficult for me to talk about any competitor, but many of them also have a lot of important items as well.

The next question comes from Max Yates from Morgan Stanley.

Just my question was on your exposure within the vacuum business. Obviously, over the past few years, you've kind of expanded in China, you've built up a facility in the U.S. And I guess essentially, my question is, when we look last year, your business kind of underperformed wafer fab equipment spending. And I guess what I'd like to understand is, given we're seeing kind of disproportionate price increases across memory, maybe some of the customers like Intel and maybe their CapEx is growing slower than the overall kind of pie. So just trying to really understand kind of any nuances in your exposure? And any reason when you look today at your kind of key accounts and your exposures to them as to why you would outperform or underperform wafer fab equipment spending as we go into 2026 in your vacuum business?

Yes. I think we have explained in the Capital Markets Day. Perhaps it's good to go back to that meeting where we said that the WFE now have different components and the components that is correlated to advanced packaging is growing quite fast because of AI. And that creates a bit of imbalance between if you want to compare the vacuum result with WFE. On top of that, when you go to lower nodes, you have some different process steps that are not exposed to vacuum. I think then that definitely creates a little bit of imbalance.

I think when it comes to the CapEx that is important for us, all the CapEx utilized for the production of wafer, I think that is the CapEx that we should consider. I think it's not always available, but that is the one that can define if we are performing well or not. And we feel very comfortable with our performance or with our product portfolio today and going forward. Going back again to the Capital Markets Day, we have shown a new EUV system that we have released beginning of 2025. I think we're very well positioned there. We also have shown a new platform for the semi market that we call Ganymede that we are introducing step by step that is quite relevant for us. I think that is the most important because that will allow us to stay competitive in these markets, even delivering more value for our customers. I think that is the most important, in my opinion.

The next question comes from Daniela Costa from Goldman Sachs.

I wanted to ask you a little bit to talk through sort of the restructuring and how you view that going forward? I believe at the CMD, you've mentioned that the actions were mostly done and the benefits would sort of come. So do you expect the headwinds on margin and on cash that we've had in '25 from restructuring to maybe more normalized or be significantly lower going forward? Where do you stand in that process?

I think, Daniela, we will continue to monitor the situation. I think it's difficult to say. If we feel the need that we need to adapt here and there, I think we will do. We're still harvesting -- I think Peter when he was presenting the bridge, I think he also mentioned that we already harvest that Q4 was a good example in ITBA and in Industrial Technique and Vacuum Technique where they did benefit. But we still need to do a little bit more in Industrial Technique because of the outlook. And again, we will continue to monitor. Of course, these restructuring costs that we have just booked in Q4, we have benefited slightly in Q4. So -- and that will come step by step in 2026.

The next question comes from Vlad Sergievskii from Barclays.

Could you provide outlook for your compressor business for Q1 or near term similar to what you have done for Vacuum and for Industrial Technique just directionally following a healthy 7% growth last quarter, of course?

I think what we mentioned, Vlad, is that the demand will stay -- the activity level will stay flat. I think that is valid for Compressor Technique as well that is exposed to several industries. I mean, I think it's -- you see that the market still has some uncertainty. Globally, there might be positives here and there. But if I look to China, the demand is still challenging. You don't have triggers from the consumer demand. Some pockets of growth here and there, but the underlying demand is not as strong as it used to be. So I think it's the -- that's why I think you should consider what we have said that the activity level will remain the same.

The next question comes from Andreas Koski from BNP Paribas.

Could you give us an idea of what impact the tariffs had on the margin in the quarter? And if you still expect to be able to cover that by pricing, rerouting, et cetera, in 2026?

Yes. Thank you, Andreas, for your question. When we look at the current quarter, I think last time, at the end of Q3, we said that the third quarter only had a partial impact from the changes in the tariffs like 232, et cetera, so that we haven't seen the full impact yet. While at the same time, we were, of course, implementing a number of mitigating actions. And I would say that over Q4, the impact of the tariffs was basically similar as what we saw in Q3. And so that even though the impact in absolute terms was maybe higher, considering it was a full quarter, but on the other hand, the mitigating actions also partly took effect.

That being said, we also admit, let's say, that competitive situation in the market is, of course, there. Demand is not always as vibrant in some areas. And as a result, of course, everybody fights for the orders, us included. And like Vagner already indicated as well, we are not willing to let go our market share. So I would say, in a nutshell, the result is that we are not fully able at this point in time to compensate for the tariffs, that the effect was similar as what we had seen in Q3 from a margin point of view. But that we expect to continue to work hard to mitigate through price increases, through logistic flows or assembly in the U.S., for example, other type of activities. And that this combination of all these activities over the next several quarters should ultimately lead to being able to compensate for the tariffs. But at this point in time, we are not fully able to do so.

But it's only a 1/10 of a percentage point or so that the impact is. It's not....

Well, I don't give an exact number because only measuring it is already quite a challenge to see all the different aspects of it. But I mean it's definitely less than 1% on the margin.

The next question comes from Phil Buller from JPMorgan.

Phil had to jump on to the other line. It's Jeremy from JP. On the topic of capital returns, it's good to see the special dividend when operating cash was a little bit lower year-on-year. I'm wondering, is there anything we should or should not infer from this? I mean, on M&A, maybe the pipeline is a bit lower in 2026 and maybe you should see capital surplus? Or is it just a reflection of growing confidence on end markets improving, i.e., cash should be better this year?

No, I don't think anybody needs to read too much into this. I think it's not the first time that we have this kind of extraordinary or additional distribution, even though we did it in a kind of a different shape or form in the past, but now this is in this way. It doesn't have any impact with regard to our acquisition pipeline or whether we have or have not any good projects in the pipeline. I think when it comes to acquisitions, the key is always, is this the right fit for the company for the growth of the future to create value for the shareholders. And I think even with the additional capital distribution, I think we still have quite sufficient firepower to acquire both small, but also bigger targets should we feel that they are the right fit for the group.

The next question comes from Anders Idborg from ABG Sundal Collier.

Just a question on the Vacuum margin. The way I interpret you, Peter, is that the 19.2% that you have now, that's a pretty clean margin and representative of the current basically interest -- sorry, currency rates, et cetera. How should we think about the drop through when volumes start to come through as they probably do in 2026, given the footprint optimizations that we've done? That's the question, yes.

Yes. Thank you, Anders, for your question. As always, very difficult to give a very precise answer to this. What we have said when we discussed the different restructuring measures that we have taken with the business area was that we were targeting mostly indirect functions, try to limit as much as possible the impact -- try to prune a little bit, let's say, the management structure to become more efficient. And that over time, should, of course, when volume comes back, generate leverage from a margin point of view.

Of course, once the volume goes up, we do expect that we will need to increase maybe some variable costs in line with the volume increase. I mean that's only normal. But how much exactly the leverage effect will be is hard to say at this point in time. It will depend a lot on what kind of volume growth we might be able to harvest. But that is definitely the idea with the actions we have taken to create leverage on the margin once the volume kicks in again.

The next question comes from Rizk Maidi from Jefferies.

I just wanted to double-click on the North American order growth. I think you said it was 8%, but only plus 3% ex acquisition. It doesn't feel that it's a high number given the amount of pricing that you need to put through there. Just perhaps if you could just double-click on this, especially on Compressor and Industrial Technique. Are you guys not pushing pricing as much? Or are the volumes quite weak in the region?

Thank you for the question, Rizk. If you take there are different colors, of course, we have been performing very well in compressors. I mean that is the component of price indeed. We saw there, perhaps, I think, to give you a little bit more color, the Gas and Process business was more flattish in North America that might help you, while Industrial Compressors in general was positive. So in Industrial Technique, there, we have a little bit more headwinds in Q4, but I must say as well that 2025, North America was a great year for Industrial Technique. I mean we had quite a lot of [ project ]. It was good development. And Q4 was weaker, definitely there.

And I mentioned about portable that we had some cancellations was mostly related to North America. So some orders that we -- all the orders from large rental companies that were in our books for some time, and they were not taking the equipment, we decided to cancel these orders because the price was a bit behind what we would like to. So -- and I think when you combine that, you have the 3% growth.

The next question comes from John Kim from Deutsche Bank.

Sorry, my question was asked.

Okay. Thank you, John. And we have one last question.

The next question comes from Sebastian Kuenne from RBC Capital.

Just on Power Technique. I think you mentioned earlier that you're not happy with the rental rates and the uptake on orders in North America. Did I hear you correctly that you mentioned that you may need to have further adjustments there for capacity? Or did I understand that wrong and we discussed that earlier?

Yes. But maybe to give you a little bit more color. I think the main problem is in rental. I think Peter already mentioned. The rental utilization was a little bit lower than what we would like to. And we had lower activity level in Europe and Asia for the rental business, and that's where we will concentrate our efforts. But it's not only about restructuring, it's also about activities, finding new customers because we had some traditional customers that -- where the demand is not there today, and we have to repurpose the fleet and do some sales activity to bend the trends.

So higher operating cost for some time to find new customers?

Yes. I think when it comes to Power Technique, if we feel the need to adjust, we will adjust, I think. But we will concentrate the efforts on the rental business for the time being.

Okay. Thank you, Sebastian for that last question. The time is unfortunately up. But of course, if you have any further follow-up questions, our IR department will be very glad to assist you in providing any further clarifications.

With that, I would like to thank you all for attending the call and wish you a great rest of the day. Thank you very much. Bye-bye.

Good morning, and welcome to Atlas Copco's Capital -- Atlas Copco Group's Capital Markets Day 2025. Welcome all of you. Welcome to you participating via the web. Welcome to you here on site. Good to see so many of you here in Stuttgart. We will soon move into the agenda. But before that, as always, some safety. We have an emergency plan here in case of emergency and we need to evacuate. You will hear an alarm, I promise, 2 emergency exits in the back of this room there and one on each side of the stage.

It's going to be a full day. So a bit of practicalities in the beginning. I start with this. Please make sure those of you on site that you have checked out from the hotel. And if you haven't, please do so during the break. You will probably not have time during the lunch. The WiFi, if you haven't figured it out, it's Movenpick, there's no password required, and you can already now download today's presentation on our website.

So what are we going to do today? This is what we're going to do today. We're going to start off with a presentation about the Group with Vagner and Peter, followed by a presentation of Industrial Technique. And then we will have a very, very short break because we want to be efficient, followed by Vacuum Technique and then this session here with the question-and-answer sessions. Then we will serve you lunch outside this room until the buses leave for the innovation tour in Bretten. And these buses will leave 12:30 sharp. They will not leave 12:31. So please make sure you're on the buses. In Bretten, we're going to walk you through an innovation tour, and we intend to end this day at 4:30.

And with those words, I welcome our President and CEO, Vagner Rego.

So good morning, everyone, and welcome to this Capital Markets Day. So I'm Vagner Rego, President and CEO of the Atlas Copco Group. And today, we are going to talk about the Group performance, but not only that, we will review our strategy to continue to grow -- to continue our sustainable profitable growth journey. Compressor Technique is not here today, neither is Power Technique, but we will also review their performance and also talk a couple of minutes about them. And then Peter will talk about the financials of the company, and I will come back on the stage to talk -- to summarize our presentation.

But then before we start, I think it's always good to remind our journey because we are in a journey of sustainable profitable growth. And over the years, we have been delivering quite a good organic growth in a quite sustainable way. Of course, we see difficult times nowadays, but we are in a long-term journey, and we are well equipped to continue that journey.

If you look to return on capital employed as well has been quite solid and also the profitability. If you look over the years, our profitability remained quite stable. Doesn't mean that we cannot further improve the profitability. Our main target is to continue to grow organically. But I must say, I have nothing against to continue to grow our profit level.

So with that, perhaps before as well, it's good to review our Q3 results. I will not talk about Vacuum Technique or Industrial Technique because they will talk about their results as well. And I will just review on the Q3 orders of compressors were relatively flat, and we had negative organic growth in Gas and Process, but we have been saying that in the conference calls where Gas and Process is a bit booky. We get large orders, and we might have a couple of quarters where we don't have those large orders. So it's more the nature of the business.

Also, it's good to see Power Technique continue to develop quite nicely. We see a good development in infrastructure projects, but not only that, they are also exposed to some market segments like in the industrial pumps, they are also performing quite well. Very good to see as well our service business continues to grow organically despite of this long-term journey where we are, the growth continues to come, and we are quite happy with that.

When it comes to revenues, we see the revenues were up organically, not significantly, but slightly up. And the profitability has pressured as you could see during our conference call. It was negatively affected by restructuring costs. We are rightsizing our organization when we feel the need. Also, we continue to do acquisitions and the acquisitions, they come normally with a lower profitability. On top of that, we want to accelerate some synergies. We want to integrate these companies faster, and that is -- there are more costs at the beginning of the acquisition. But it's according to our plan to make for sure these companies they are, as soon as possible, part of our ecosystem. And also, we had headwinds in tariffs. We continue to have quite solid cash flow that we are quite happy about that.

And then if you look to the regions, the picture here looks quite good in some regions. If you take North America, for instance, sequentially and also year-on-year, we can see a good development for the entire Group in North America. Then South America, the same sequentially is a bit more flat. Europe, it's -- we can see good growth year-on-year, but again, sequentially flat. And perhaps where we see more headwinds is in Asia, where we see modest growth and sequentially was also flat, mainly driven by the compressor business. I think the market size is not the same, especially in China, where we don't see the same number of projects like we saw back a few years ago with investment in lithium-ion battery production, solar panels, automotive industry investing quite a lot, and we don't see the same level nowadays.

So -- but then if we go back to our growth journey, I think it's important to highlight the growth varies according to the time frame, according to how you look, how many years you cluster. Here, you have a sequential -- sequence of 12 years, and you see 5% organic growth during this journey. But also, you can see that this is varying over time. You see 2010 to 2014, 6%, then another time frame, 4%, then an acceleration to 8% between 2020 and 2024. But then if you want to slice in a different way, you can also find 30%. But I think the message here that is the growth varies over time. And the most important is our long-term trajectory stays solid, and we will review the fundamentals of why we believe we can continue this growth journey.

Then going now to our strategy to -- and fundamentals to continue our sustainable profitable growth journey. I think before we talk about more in details, it's good to review our targets. So when it comes to financials, we continue with our growth target of 8% over the business cycle. I think you have seen in a time frame of 12 years, we have delivered 5%. And then on top of that, we have done quite a lot of acquisitions that we will also review the impact in our results. So we want to keep high return on capital employed, and we want to pay 50% of the net profit in dividend.

It's also part of our targets, also environmental. We continue to have targets around the environment. We will not change our strategy. There are some changes in demand for this type of focus, but we will keep our focus on sustainability. So also when it comes to our social targets, we will continue working on it. We believe we can -- we want to have access in the full talent pool. And for that, we will keep on investing and also having targets around that topic.

Also, we want to do the business in the right way, and then it's very important to have some targets around governance, compliance as well that we will continue to have. But then the world has quite, let's say, has changed over the last years, and there are some trends that does not change. And there are some new challenges that I believe can also be transformed in opportunities. If we look in the past, we talk a lot about digitalization, but now the combination of digitalization and AI can create quite a lot of opportunities.

On the semiconductor side, AI creates quite a lot of business opportunities, but the utilization of AI in our own company can also drive quite a lot of interesting, let's say, interesting growth levers, I would say, even. So automation continue to be very important during our innovation tour this afternoon, you will see some clear examples, very tangible examples where we can play a role in automation. But we are also in a world that is not as globalized before the globalization is real, it came and it will stay.

And once again, deglobalization can also mean some opportunity because we are a global company with a global presence and we need to be flexible and exercise our agility muscles during these turbulent times that is full of uncertainties for sure. But I also believe they are full of opportunities as well. One of the opportunities as well that is very important to highlight is the energy transition. I would say as well, it's not only about energy transition, it's also about energy security nowadays before people were not so vocal, I feel more and more people more vocal to say that it is about as well energy security. And those actions to move, to make the energy transition and also to have energy security also creates quite a lot of opportunities.

And if the transition is not fast enough, also some assets will need to be decarbonized, and we can also play a role there. If the energy transition goes fast, we have opportunities. If it goes a little bit slower, and we have to do CO2 capturing and we are positioned to support customers on that journey as well. So we see quite challenging environment, but full of opportunities that can help us to continue to grow long term.

And then I think it's important to go through these steps on how I got also some questions yesterday evening, how do we analyze the business? What is our focus? I think it's a good opportunity to review the way we analyze the business and how we want to build businesses as well. Everything starts with a very well-defined market segment. We want to be in niche markets where we can be profitable that way you see you can find growth and we can have the right profit level. I think we spend quite a lot of time analyzing markets and looking to what are possible opportunities.

Are there new niches? New adjacent areas where we can have good growth, good profitability. But good profitability and growth only comes if we have a leading position in that selected market segment. And the main driver for a leading position, in my view, is differentiated technologies.

We said that we are a technology company, and we really live on that. I think we acquired several assets, we acquired good technologies. And when we are not happy with R&D pipeline, that's one of the first things we try to fix is to make sure we have a good R&D pipeline, because if you have leading differentiated technology, you can also solve bigger problems to our customers. And then you can become a little bit -- you can become more critical for customers' operation. And the combination of this can really drive your price up and then you can have good margins. I think that combination, I think it's important.

We also want to be in markets where we can play a global role. If a market is only important in one country or in one region, maybe it's not a technology that we will select to be part of our portfolio. We also want to have a diverse customer base because that is, again, brings resilience. We need to have these fundamentals that brings the growth, but we also -- we need to think about resilience. We also try to attack or to penetrate the market in different ways. We don't have a fixed way to market. And I know that some companies, they have -- in our company, we only go direct or we go indirect.

The way we work, our divisions, our 24 divisions, they are the ones deciding what is the best way to increase our penetration in the market. It's more direct, more indirect is up to the division. And we have a full range of tools and examples that can be used, including as well our approach when it comes to different value propositions. We have several brands in the portfolio. Those brands, they have different value proposition. And I think they are very important because with one brand, you cannot satisfy the customer base.

Also, we see in some markets, the customers, they evolve over time. So their requirements are also different depending on their phase, if they are growing, if they are mature or not, which technology they are entering. And that's good to have this portfolio of brands that allows us to come with different value proposition. But of course, nothing can happen without people. And I think this afternoon, you are going to have a very good example of passionate and committed people that we have in the group, better to show than to talk about it. And I think this afternoon is going to be very interesting.

So also, our decentralized model is another keystone of our strategy, and I think we keep on nurturing that model. We also want to be in markets where we can be resilient and asset-light. And another point, operational excellence is also extremely important in our strategy. And I would say within our 24 divisions, they are in different stages when it comes to operational excellence because some of the assets we have acquired, we have combined them together in a division. The -- I still don't see them where we want them to be. So there is still a journey to really drive operational excellence in some of our divisions, and we are definitely focused on that.

So more than ever, nowadays, it's important to have speed and agility in our organization with a lot of uncertainty in the market. We need to be able to adapt to scale up in some regions and scale down in other regions. I think that is a very important part of our strategy. And we want to be in business that can offer a very good service opportunity. And the way we want to attack the service opportunity is by having leading service offer. It's not by selling spare parts and labor. I think we are past that phase. We want to use technology to further penetrate the aftermarket business and build service offers around that.

We see quite a lot of -- quite a lot of steps that we follow to make sure we are in the right market segment, and we can play a significant role with a differentiated technology. As a result, we have a presence in several market segments. As you can see, general industry and process industry are quite important. Electronics is also important. Automotive, 9%, also important for us. And that also translates to a good service penetration of 39%.

And then talking about service, I think one thing that I'm very happy about is today, I think in the past, we talked a lot about the Compressor Technique Service division. And I think we were quite happy with their development when it comes to connectivity, data collection and what do you do with the data. But I'm quite happy to see now that the same platform is used in Vacuum Technique, for instance, Vacuum Technique service. The same platform is used now in Power Technique service. So the same technology, of course, it's the same landing zone technology.

And of course, Power Technique and Vacuum Technique will build their own dashboards and their own application layer because they have different customer needs like in Power Technique, they have a lot of rental companies. So -- and rental, they already have their systems. Then this connectivity is more about API first that you can exchange data with the rental companies, then they build their application around that. Vacuum Technique, they have other needs, then they build application around their needs. But the layer, the technology to upload the data is the same. The platform to receive the data is the same. And we gained quite a lot in scale. I'm quite happy with that development as well.

And also semiconductor service, I think there will be a dedicated station this afternoon, and you will hear more about how they are using our data to drive their business forward. Quite happy with that development lately. So -- and then you can see the growth in equipment is what we miss lately. But we -- on the other hand, we are extremely happy with the development we can see in the service. We are developing, we are delivering more machines to the field, and we managed to capture the aftermarket potential. And we all have the feeling within the company that we can continue to drive the aftermarket further.

So of course, in challenging times, like I said before, it's extremely important to exercise our agility muscles. So if you don't have the orders received and the revenues, it's important to reduce our variable cost and also working capital, and that's what we have been doing. I would love to do that once one announcement and it's done. But of course, the market is full of uncertainties. We don't want to restructure too much. We have been quite careful in the way we have adapted the organization because we have worked in management layers. We see that maybe we could combine companies, reduce number of managers, and we kept the sales force almost intact. Of course, we always do adjustments with low performance, but we -- our ability to sell and grow, we don't want to touch. We want to keep that because if the market bounces back, we will be very well prepared to capture the opportunities that will come.

So I explained quite a lot in detail last Capital Market Day about our divisions and how we work. An update on that one. We are always looking to how to optimize as well our -- not only the product portfolio, but the way to market of this product portfolio. And we have decided in 2025, since January 2025, we have created 2 additional divisions, and we also have consolidated 1 division. So we added 2 and we consolidated 1 in another division.

So you see air and gas applications as a new division of the group because they will -- they are more application driven than it's a bit of different sales process than only air compressor. Air compressors is a bit more simpler sales process for some of the products that we have now in our air and gas application, you need to understand the application.

So -- and then you need to be organized to support our customer centers in terms of application knowledge. I think it's a better way to be organized, and we believe that this will allow us to continue to grow. The same thing for industrial flow. We have dewatering pumps that is a completely different market segment. It's portable pumps. And then we now -- we have subtracted that portfolio from the flow business. And now we only have a cluster of companies focused on industrial flow. And those divisions, their main responsibility is to drive their product portfolio to develop solutions around this product portfolio that will cover our customer needs and sell solutions, solving, like I said before, bigger problems for our customers.

So also our decentralized model, we say a truly decentralized model. We have now 650 companies that we follow up in a monthly base, the P&L. So I explained last time as well, the concept of the business line. So it's basically, it's actually 5,000 business line P&L. To simplify, we say 650 companies, but underneath these 650 companies, we have another 5,000 P&Ls. And that structure give us the granularity to find issues, to keep our balance sheet clean and to make sure we have the right level, we know the right level of detail, not in a centralized way, this is decentralized, but we have our organization to follow up.

Our culture as well, we continue with our culture of freedom, with accountability. Those words, they go together in our view very nicely. We give freedom to the people to come with ideas to organize their business in different ways, but that has to come with accountability as well. But in a decentralized model doesn't mean that everybody does whatever they want. There are a lot of common processes. If you take the financial reporting, it's a fully standardized way of upload the data, producing the reports. We are even now creating a better way to follow up on this -- all these financial KPIs.

There are a lot of common process. We also have several process councils like purchase, like logistic council. They sit together and they try to combine volume as much as possible to reduce cost. So there are a lot of things that happen in that direction. It doesn't mean that everybody decide -- the same from IT, IT infrastructure, it's a big volume of things that we buy, we buy it together to really minimize the cost.

So I think it's good to highlight that -- the fact that we are centralized doesn't mean everybody goes in any direction in any topic. So there are several topics that we try to combine to make sure we have the right scale. So -- and in Atlas Copco, we do believe that leadership is about achieving sustainable results by nurturing our people growth and enabling them to reach their full potential.

So now changing a little bit gears and talking about our global presence in footprint. In a world with a lot of uncertainties, it's very good to have the production footprint that we have with more than 100 production units worldwide. So we also have customer centers in more than 70 countries with our own people analyzing what is happening in the market. So a lot of activities in that area to scale up, scale down production according to the market needs.

And the last topic here is about digitalization, leverage on digitalization. But to talk about digitalization, maybe I will go back some Capital Markets Day, some years ago. And we did present that strategy we had around digitalization. We decided in the past that we would not have a digital officer or digital change officer.

We decided that digitalization should be part of every business unit. So everybody should have a good strategy, not a good strategy should embed digitalization in that strategy. And then we create a cluster of activities around digital for customer value, digital for customer engagement, digital for operational efficiency.

And then if you translate that now considering AI, Atlas Copco as a group will not have AI strategy because AI should be part of every strategy that we have. We should use AI to power our strategy, to deliver our strategy. And I think that the focus will be similar. We will have AI for customer value, AI for customer engagement, AI for operational efficiency. And there are some areas that I will really push to make sure we get it right, like AI in R&D. I think that is a, I would say, kind of nonnegotiable for me.

We need to make sure we are using the latest simulation tools. We can -- we have already experimented and we found that you can definitely increase the performance of our products by using AI. And I think I'm fully supporting the organization to really explore these new possibilities that we have by the utilization of AI.

And another area that I see a lot of potential is to use data in service. I think we did a lot in Compressor Technique service, but now I will push to have a more uniform approach across all the BAs to make sure that everybody is using data to drive their service business. There are a lot of things going on in all business areas, in all service divisions, but that is an area I want to double down because service, you have a lot of tickets, a lot of small ticket items and AI can help us to gain efficient to understand the behavior of the machines to do service, to provide good quality service for assets that -- where the value is not so high. If we use AI, I think we can untap some potential there.

Another area that is important for us, it's the R&D. I think we keep on investing in R&D even during tough times. You see that in absolute value, it's more or less the same. But in relative terms, it's growing the R&D spend because I believe this is about the future. We cannot compromise our long-term growth, and we will keep on investing. Also, R&D can drive organic growth if you come with a new solution, but also can drive -- if you come with good features, you can drive the price up. And if you even are very good on the design, smart simplification, you can come with features, but your cost can also go down. I think it's a very important part. We will continue our investment in R&D.

Another area that is important here to talk about is our addressable markets. Today, through innovation, we can grow the core business. I think here, you can see why we can do a lot of transformation through more efficient products. We can increase productivity. I think you can read it through. But we can also transform the market. We can also through R&D, make our market bigger. And there are several examples from ITBA, for instance, where you can transform your market instead of selling a tool of EUR 20,000, you can sell a solution, an automated cell for EUR 200,000. So -- and this is through innovation. You can transform your market. Another example from ITBA is the electrification, but that Henrik is the specialist on that. He will talk. But those examples are present as well in Compressor Technique, in Vacuum Technique and in Power Technique as well.

Another important point from my side when it comes to R&D is not only about the budget. We put a lot of focus now to increase the output and to increase our speed because the value we spend, of course, is significant, has a lot of importance, but we also need to pay attention. And we -- let's say, we spend a little bit more time to make sure we have the right output here. And we came with fantastic innovation. I mean, VSD compressors that can save up to 60% of energy compared to previous generations.

But in dispensing technology, for instance, we have decreased the time, the process time by 50%, and we just released this solution and we started to present for our customers. The same for these chillers that are in the vacuum business area, 20% improvement in efficiency. Today, we can generate oxygen, on-site generation of nitrogen, sorry, with 99.999% of purity, which is really high. So we normally -- you only get there if you have cryogenic process in the air separation plant. But today, with on-site generation, we can reach very high levels of purity. And LEWA as well, a recently acquired company continues to innovate and are now developing some products that can also go into the marine business.

So -- and here are some other examples of technologies that we have added in our portfolio that we believe that we can expand the total addressable market. And I put some examples here like low pressure over the years, a CAGR of 90%. Liquid ring pumps, also a nice CAGR. Electronic dispensing and industrial pumps as well have been developing quite nicely. And we do those developments sometimes organically, but also through acquisition. If you look to the -- over the last 10 years, we have acquired 160 companies. Over the last 5 years, we have acquired 100 companies. And here, we have our process, our sweet spot analysis. And the way we do all our 24 divisions, they do have an acquisition strategy so that we activate or not according to the needs of the market.

But also here, I would like to highlight one thing, acquiring so many companies in the last 5 years requires quite a lot of efforts. And what we have done, we have -- we are upgrading our post-acquisition process because we believe there is some upside there to integrate the companies faster and to get synergies faster as well. We have dedicated training programs. We are building pilot talent pools. And we are also investing organization just to support the acquired entities to get the synergies as fast as possible. So it's an area that we -- I believe we can do better. We can integrate this medium and small-sized companies faster.

So -- and then switching gear again, now talking about Compressor Technique has been a quite good development. Of course, we believe we can continue to grow because there will be investments in the industrial production. Energy efficiency will remain very important, driving total cost of ownership down and is something that we are good at in Compressor Technique is to drive the cost of ownership down. And we also see quite a lot of possibilities to improve efficiency to optimize our customers' utility room. I already talked about the service opportunities and there are some focused new division that can bring quite a good growth. And you see the development has been quite good, 8% on equipment over the years, also 8% in service and very high -- very good profitability.

And here, one example of how they will -- how they want to tackle the utility room challenge.

[Presentation]

You will continue to hear more about that when we talk about Compressor Technique. But then Power Technique as well has growth drivers connected to the industrial productivity, industrial production. So with our industrial pump business, also infrastructure is another drive for Power Technique, also the need to increase in productivity and CO2 reduction, especially in some construction sites, they want to decarbonize, and we see a lot of opportunities for portable or mobile electric compressors. So electrification is also present in Power Technique.

Profitability of Power Technique, it's something that we believe we can do better. Over time, we want to, first, bring at 20% EBITDA excluding the amortization of intangibles. But over time, I think we -- that is the aim to bring EBITDA also to 20% profitability. And if you look to the service business also good development as well, helped by our penetration in the rental equipment business as well. And here, I would like to share a video on how they have built a portfolio of industrial flow assets that is now part of our industrial flow division.

[Presentation]

Good. And now it's time for our CFO, Peter Kinnart, to talk about our financials.

So good morning to you all also from my side. Very happy to be here and very excited to talk a little bit more about financials. As you will see, I think sometimes ingredients change a little bit, maybe things get a bit more hectic in the kitchen, but the recipe remains the same.

So digging into our 3 financial group targets. First of all, the growth target of 8% on average over a business cycle. Here, the goal is to reach 8%, as you know, measured over a business cycle. We also, at the same time, want to make sure that we keep our market-leading position. If 8% is not enough, we might try to do a bit more, but we also want to make sure that we stay ahead of our competitors, while we are growing the business.

As you know, primarily the growth should be coming from organic growth. The reason of this is, of course, that we believe that organic growth is the least risky. It requires the least investment and it delivers the highest return. But then there are different reasons why we either want to go faster, why we want to add new technologies to the portfolio, which would take a long time maybe to develop, or to build new adjacencies in which we have not been present for a long time and where we want to build a new footprint.

And then selective acquisitions are a perfect fit to add to the organic growth path that we are on. And as you can see, of course, divisions are acting a little bit differently. Sometimes some divisions are growing faster from an organic point of view. Sometimes there's a bigger focus on acquisitions. But overall, again, organic is the main focus, and we like to top it off with acquisitions.

The second target is the sustained high return on capital employed. Here, of course, the basis is to begin with the growth, the 8% growth that we want to achieve because with significant growth and with stable profitability, thanks to strong operational excellence and very good execution, we are able to deliver this profitability at a sustainable level. And while we, at the same time, are an asset-light type of business with limited investments in plant, property and equipment, but also a high part of our cost of sales being outsourced with external suppliers, we are able to use the means in the company and not spend too much in strong investments. And as a result, the return of the capital employed within the company remains on a sustainably high level.

And then the last target is then the final result to the shareholder, where we promised to deliver 50% of our net earnings to our shareholders in annual dividend. We do that partly by being cost efficient and have a strong funding setup where we have low interest cost, also limited funding, external funding requirements, combined with good cash generation to the business, which is partly helped also by the asset-light setup that we have so that we don't need to spend too much of the cash we generate through the operations into our own facilities or other type of projects.

Now these are great targets to have, and we've had them for a long, long time, as you know, but how are we currently doing compared to those targets? First of all, on the long-term growth, I think here, it's very easy to see that we are delivering according to the expectations with a growth FX adjusted over a long period of about 9%. It also clearly shows that the growth is not a constant, that is hard to deliver, to be honest. Different businesses are in different cycles. And as you know, currently, there are a couple of segments that are maybe struggling a bit more. There's a lower appetite for capital investments at this point in time due to a lot of uncertainties across the globe, markets being in different conditions and shapes.

So the growth of 8% on average is expected to be there, and we aim to get there again, but it might be going up and down from time to time, and it might be lower like it currently is. That in itself does not scare us too much. We know that we are working on the right things, focusing on the product portfolio, making new technologies, adding adjacent businesses. So we are confident that the growth over time will continue to be at this 8%, and we still believe that there's a lot of potential to do so.

The second target was the sustained high return on capital employed. I think in itself, the graph doesn't need too much explanation. I think we are reaching roughly around 25% at current, and we have been higher. We have been lower at occasions, but always at above 20% level for the group. And I think that is something we can refer to as high. It's, of course, based on the growth again, but secondly, also on the execution and the fact that we have a good, agile and resilient business model, thanks to service, amongst other things, to be able to continue to deliver sustainably even when things are maybe not as bright on the growth side, we are still able to deliver a similar return on capital employed over time.

The basis for this return on capital employed is the operating profit. Here, operating profit per share. And I think the message I want to give here is that on the one hand, it's the operations that make it happen. They are contributing by far the biggest part, if not the whole part of the entire value that we create in the operating profit. The impact of our financial net cost is really extremely limited, thanks to a well-balanced portfolio of external funding. And given the fact that we are a highly cash-generative company, also limited external funding that, of course, then also results in a lower net financial cost for the group.

The second part of the return on capital employed is, as I mentioned earlier, based on the balance sheet. We are an asset-light company. We have very limited investments in plant, property and equipment. You can see on the graph here in the red color that what those investments have looked like over the past 10 years. And even though you can see that in the last 3 years or 4 years even, they have been quite a little bit more substantial compared to the early days of the decade, they are still very limited compared to the overall operating profit that we generate in the group.

Secondly, we also see that the company is quite cash generative. We have -- due to the fact that we don't need as many investments in our -- in the capital, in the fixed assets that we have, we are able to finance that entirely easily from the cash we generate through the operations. Not only are we able to finance all of those different assets that we need to keep our operations at the best possible shape, but we also are able to use this cash flow to actually fund basically all of the acquisitions we have done. And as Vagner has explained, there's quite a lot of them, as you saw over the last 5 years, last 3 years, and we've been able to finance those basically with our own generated cash flow. And that, of course, makes us also quite strong and resilient.

The result of all of that, of course, is that as we have limited needs for external funding and now we are able to keep the cost low, and we are a good deliverer of profitability from our operations, we have actually a low debt ratio, as you all know. We don't have really a target for the debt ratio, not where we are today. And considering that we are cash generative, we don't see any real immediate change to this ratio either. The benefit of having this structure, on the other hand, is that we have freedom to act. And that means that we have done a lot of acquisitions, but you also know that most of the acquisitions are relatively small, some very small, but let's say, medium-sized type of acquisitions.

This means that we have quite a lot of firepower in-house to be able to also perform bigger acquisitions should we want to. And I say carefully, should we want to because this is not a firm promise that we will because with bigger acquisitions come bigger risks. And of course, we will act if we see targets at the right price with the right business model and the right added value for the Group. But I think the main point here is that the capital structure and the balance sheet of the company allows us to do so when we want to.

And then I would say the proof of the pudding is in the eating. The third target is then the cash generation that is going then to the shareholder. First of all, when we generate cash, of course, our first priority is to make sure that we continue to invest in our -- in the company's future. We do that through enhanced R&D to increase expenditures, but also efficient expenditures in R&D. We do it through the acquisition path we are following. We are constantly looking at how we can change or improve the business model slightly. And of course, we use the cash generation basically to fund all of these initiatives. But once that is done, we promise to our shareholders that we will deliver 50%. And I think this slide shows to you that we deliver on our promises.

It also shows that in terms of our targets, we are a stable, growing but also predictable company. And you can count on these kind of targets when you plan for the future. And of course, it would not be possible if we didn't have the high growth delivery on our first target. And if we wouldn't have the high profitability and the resulting high cash generation that is then linked to the return on capital employed. But this, I think, is then the ultimate measure of success, you could say, being able to give a solid return in terms of dividends to our shareholders.

With that, I conclude the unsurprising report on our financial targets and our performance. And I would like to give back to Vagner for a short summary.

Thank you, Peter. So if I then try to summarize this first part of our presentation today. So we are in a diverse business with several niche markets where we try to focus to be market leader in that niche market through technology, through our products, offering differentiated technology that can solve bigger problems for our customers and then have as well the right margin. We want to have -- to be present in businesses that offer quite a strong service opportunity. But to tackle this service opportunity, is not about selling spare parts. It's about delivering packaging a nice service offer.

In Atlas Copco, we have several product managers for service that they will package our service offer in different ways according to the customer needs. And that's what we mean with strong service offer. It's not about spare parts and labor. It's really about using technology to find new ways to do our service. We have a consistent strategy, as you could see today. And those new elements like digitalization and AI will support us to deliver our strategy. And I'm a true believer that we cannot switch all the time the strategy, but we can use everything that is coming now into the market in terms of technology to support us to deliver on our strategy.

We continue to be committed to innovation with tangible customer value creation. I think that is extremely important, and that's our main focus is to make sure we exist. We are here as a company because we have customers that they like what we develop for them. And we cannot lose our eyes, not look -- not forget that because that's why we are here. And that's what we need to continue to focus on it from my side and also the entire organization. We have to deliver value to our customers.

And then when we deliver value and the customer appreciate we can have good margins, good profitability. Part of that profitability, like Peter explained, we are going to reinvest either in more R&D, either in more acquisitions or we will release more to the P&L. Like I said at the beginning, I have nothing against operating in higher margins. But if we see our priority is to continue to grow the 8%, that is the #1 priority. But we want to continue to reinvest in these topics. And if we see opportunity to further expand margins that will happen.

We also have new areas for growth. I think that is important to highlight. And these new areas for growth, we have organic investments and acquisition as well. And our financial strength like Peter have demonstrated allow us to do both. So -- and we want to keep on doing both. We also need to have a global presence, and it's part of our strategy to have global presence and also flexibility. I think agility muscles. I think that needs to get stronger because we will use a lot in the years to come, have an asset-light operation with viable costs.

And we are very proud of our decentralized model because that has been a key, let's say, pillar of our strategy to make this business model scalable. And that's why I believe we can add new adjacent markets. Those new adjacent markets can become bigger. Maybe they can also become a division in the future or so on, so forth. And the model that we have allows us to deliver on that.

So thank you very much for your attention.

Thank you, Vagner. Thank you, Peter. Now we will have a listen to one more presentation before the break, and that's about Industrial Technique. So welcome on stage Business Area President, Henrik Elmin.

Good morning. I am very excited to be here to talk about the world of Industrial Technique. So my name is Henrik Elmin. I've been 18 years with the group and 8 years in this current role as responsible for the business area. We start with some short facts, then a bit about the business, the fundamentals, but most of the time, I will talk about our strategy for long-term growth.

So let's start. If we start to look at right here, you can see the latest quarters. And I would say, after several years of very good growth, we have seen a bit more challenging market situation over the last year, I would say. Of course, this is partly also due to currency, but we also have a small organic decline. On the profit side, we've also been under pressure, challenged here, and it's, of course, due to the top line decline, but also impact from currency, also tariffs, some dilution of recent acquisitions as well. And I would say here, the main short-term focus is to get back to historical operating margin levels, but then also to improve further on the relative level from there. We've also had some restructuring costs in Q3, very much also due to the uncertainty in automotive, and we have adapted our cost structure in line with market demand as we always do.

On the left here, a few things about what drives our business. And I think here, the main point is that the equipment part of the business is very much driven by CapEx. So when customers invest in new products, need to produce new products, need to do more advanced manufacturing or they need to increase capacity. That drives CapEx, which drives our equipment business. The service business is driven much by industrial production volume.

So then with much volume, our installed base of equipment is used a lot, and we then provide relative services. In general, we can say manufacturing technology changes is good for us. When things change like battery electric vehicles or the way you manufacture, that's normally a good thing for us because that means we need to innovate to find new solutions.

If we take the geographic split of Industrial Technique on the top, we have 39% in Americas, so quite a big portion, 27% in Asia. But as you can see, we are very global. If we look at the different markets, if we compare with last year and we look at the third quarter, the biggest challenge is in Europe, if we talk about the biggest market, minus 6% organically versus last year. And if you look at the arrows, it's the sequential development, and it's relatively flat if you look at Q3 versus Q2.

Let's then talk about what we do and the fundamentals of our business. So it's really about advanced manufacturing or we say smart manufacturing solutions. A lot is about assembly technologies, putting things together. It's about tightening solution, drilling, dispensing of adhesive sealants, mechanical joining like self riveting, but we also have industrial tools for maintenance and material removal applications. We also have the vision systems to help customers automate and check quality.

And if you look at the customer base, more than 50% is automotive, but then we also have many other customer segments. Out of the other part, we have a lot of business in electronics, aerospace, energy, but almost every industry where you need to put something together, need to assemble something.

Our business model -- for our business model to work, it's really critical that we are, I would say, market leader, innovation leader in the decided niches. And in general, in most areas, I think we have a very strong position where we have, let's say, decided to play if you look at the left side here.

So what is it then that we do for our customers? If you want to summarize it for the whole business area, you can say that we really help customers and we deliver for them quality in their production and productivity. And we talk about critical manufacturing methods that are really important to them. And then we do that by offering standardized solutions that are very much integrated often with software into the customers' production systems.

So I will explain a little bit how we do this. To simplify our quite broad offer, we can group the offer in 4 different type of solutions. We start here on the left with what you can call Industrial Tool Solutions. Here, you have an operator in the work cell using the equipment. Then we have on #2, Automated Assembly Solutions. Here, it's often a robot, no operator fully automated. We do not provide the robot, but we provide the process solution when it comes to assembly or joining technologies. The third is about In-line Quality Solutions, almost in all customers and businesses customers have separate stations where they only check quality to see that the component or product is correct before it moves further downstream in the production flow. And here, vision systems is a very important technology, and we focus on this In-line Quality Solutions. And then the service offer.

So let's take a look at the automotive part. Here, we have a very broad offer, and we are present throughout the value chain, starting with sub-suppliers or tiers, for example, making seats or electronics components. We have -- that's a big part of the business. But then also when we assemble the battery packs in -- for EVs, but also in body shop, paint shop and very much in final assembly of the vehicle. So we're really broad here.

Then if we say automotive, relatively few big customers, the plant, maybe 1,000 plants globally that are very important for us to cover. we say the rest of the potential, we call that general industry. Here, we have millions of different small, medium-sized, but also large customers across industries. So here, it's a little bit different in terms of the number of segments and customers. But here, you see some of the big areas where we help customers to assemble and check quality.

Then we have an important slide here explaining a little bit our business model. And we can say in Industrial Technique over time, we have moved quite a lot from selling more products into more solutions. So a lot of our business is project-based. We deliver a full solution of a process, et cetera, into the customers' production line.

Then one very important point here is that we standardize very much this solution by modularizing the offer. It's more and more software. Half of our R&D team is actually software engineers, if you look at the total, but it's also, of course, a lot of hardware. And when we provide these solutions for customers, we talk about make standard, but sell special. And also, it's a lot of integration into the customers' production line. So we don't do any big engineering projects, build production lines or complex automated cells, but really staying to the standard, but some customization around. So this works across the different divisions for Industrial Technique, and it is really a quite strong differentiator in the market.

Before we go into the future, let's look at the historical revenue development. I think we've had very good growth over -- here, we have 12 years. You can also here see that we are quite cyclical. When there is uncertainty in the market further back, financial crisis, but also COVID and now with the current uncertainty, we see also that we have an impact on demand. And we are used to that and adapt for that, as I discussed. But the most important thing here is to look at the long term to continue this growth over the coming, let's say, 10 years.

We can also say that this growth here in '22, '23, quite a lot is related to electric vehicles, new production lines, but also what I mentioned that we have moved from products into solutions, more software, more content, more scope, and this has also increased differentiation. So I would say, long term, we stay with the ambition here to continue to grow 8% over the longer term.

So let's move into the future. What's happening and what are we doing to continue to grow. If we start with some of the trends, let's start in the middle here. We have many industry-specific trends. This is automotive car production that you see on the bars here. And as you can see, the peak in terms of car production volume globally, 95 million cars was in 2017, and we are still not up to the same level this year. Actually, the forecast is '29, '30, we will be back to 95 million cars. So of course, this is not a great market when you look at it like this. But still, we have been able, I think, to grow extremely well, and that is because of what I discussed, the changes in the product, manufacturing and CapEx is what drives our business.

On the left, we see a big trend. You can summarize it by digital manufacturing or smart manufacturing and almost all customers want to automate more of the production. There is a lot of new technology, it's vision systems, robots, sensors, softwares. And one of the big challenge for customers is to integrate these things, these technologies together. And coming back to our modular approach, providing solutions, this is a great opportunity for us to help customers in this area.

Then we have the geopolitical development. We see many Chinese companies and the customers being very innovative, being going global, building plants also outside China. And I think that the deglobalization is a clear trend right now. Of course, on the negative side, short term, it's maybe uncertainty, people or customers are replanning their portfolio and production footprint. But if you think about it a bit more long term, if we have more regional supply chains, we need more manufacturing capacity in each region. It could also be something that over the longer term drives the need for CapEx and could be good for us.

I will now go through 7 points around our strategy to grow for the future. And it's actually 4 points that are linked to the 4 groups of products that I talked about: Industrial Tool Solutions; Automated Assembly; the Vision in In-line Quality; and the Service. Then I have 2 points that are linked more to the automotive and general industry, what we are doing there and one last point around more the geopolitical and the, let's say, the production and R&D footprint that we have.

So let's start with Industrial Tool Solutions. And this is where we have an operator still very much in the center of things. And if we look here at the left, one of the main growth areas is that we transform to in tightening to smarter tools. In automotive, most of the customer has already taken that step to go to smart and electric tools. But in general industry, still, if you look at the number of tools we sell, 50% are pneumatic tools. And here, we have a big potential to transform to smart tools.

So why hasn't this happened before? Obvious question with all the advantages. Well, if you take electronics with very, very small screws or you take aerospace with very specific solutions or you have energy with maybe big volts, you need to adapt the products and the smart tools to fit into those applications. And over the last years, we have invested in R&D and developed this offer. And now we see that we can transform also general industry to smart and electric tools. And the times 2 to 5 here means that if you transform one pneumatic tool to a smart tool, it can be between 2x the value of revenues up to 5x depending on the tool. So it's quite a good growth generation there. We should also say that sustainability is a driver for this. It's more energy efficient to go to the electric tools.

On the right side, we have workstation. So when you have a human in the center, it's very important to make sure there is productivity and quality. And we also provide workstations standardized like with operator guidance, but also other things like sensors that knows where the operator is working, et cetera, to secure quality. So here, we talk about integrated workstations, and it's a lot about software, but also hardware that we add on here. And this is really for the most critical applications where nothing can or should be -- can go wrong. Also on the potential, times 3 means that if we transform one tool into a workstation, it can be a lot of value and revenue, so 3x just, let's say, selling a tool.

Here, we have, over the last years, also done some smaller M&A and also developed internally a solution to be able to offer this, and it's very good feedback from customers. But then if you look at tightening applications, it is a lot about automation. Still many of the operations in the industry is done by humans and customers want to automate. And this is a very exciting story because this used to be a threat or a weakness for us because instead of selling an ergonomic advanced tool with the software in the station, the customers only needed a standard tool to put on the robot and then the integrators did the rest. So for us, it was harder to differentiate. It was harder -- it was also smaller revenue potential. And over the last 5 to 7 years, we've really now developed a differentiated portfolio of automated assembly solutions in tightening to be able to be part of this and help customers do this.

So what is it then? Well, you see up right, you see a tube, and this is where the screw is fed. When you have a human operator, you place the screw manually and tighten it. But when you have a robot, no human, you need to automatically feed the screw and the bolt to the robot and the tool. Here, we have done both M&A and internal developments. And from starting at 0, I would say, we are now market leaders in screw feeding, selling thousands of these per year.

Also the vision systems, you have seen how you guide the robot in the application to the right place to do the tightening. There is also a lot of mechanical solutions. Bottom right, you have the software integration. When you have all these technologies, you want to make sure they work together and that you have easy integration of the different component. So standardized approach helping automation, and now this is a big upside and potential for us. So example here is a standardized cell to assemble seats. And if you look at the smart tool, it's 10x the value of revenue if we get this business. And we see very good sales of exactly these standardized cells as we see here.

But then we have, over the years, also expanded into other assembly technologies, dispensing of adhesive sealants, mechanical joining, electronics dispensing and in line with customer demand and new materials in the industry. And here, we have had very good success to innovate on the process together with customers. How do you applied the adhesive, what is the real application, and we constantly innovate and upgrade these solutions. But one of the challenges has been more this modular approach of standardization, adding more standardized software around the core product.

Also, you see an integrated vision system here. So what we have done over the last years is to develop one controller platform for all these 4 process technologies called the 8000 platform. And that both creates scale, cost benefits, but also it creates this platform to build this modular software approach around the different products. So here, you see an application in the paint shop where you first measure and find the location of where to apply the bead and then you see the very accurate application of the bead.

Moving to the third. It's about expanding our scope going into vision system and these In-line Quality Solutions. As you have heard, we sell Integrated Vision, a lot of vision systems together with the assembly technologies, but we also focus on this direct business selling vision as for In-line Quality Solutions. And what is then our focus? Well, if you take a door on the production line, customers want to make sure that all components are correct before it moves to the next stage of production. You have metrology where you want to measure the tolerances or you have the surface inspection where you make sure that there are no scratches, et cetera, on the door before it moves to the next stage of production. So these quality gates or In-line Quality Solutions is the main direct focus for the Vision business.

The fourth is around Service. We've heard a lot about that today. We focus very much on the customers product life cycle. Today, it's very much, if you look here at the top in R&D and production engineering, a lot of focus on speed to short time to market for new products for our customers. And we work here early on with them as partners to find the right solutions at the same time as when they are actually designing the vehicle or the product they produce. Then we help with installation commissioning. We also take care of production -- and maintenance, not the production itself, but also optimization and upgrades.

And if we look at the Industrial Technique Service business, I think it has developed very well over the longer period. We see that our service ratio for service, including some consumables is close to 30%, but we continue to see a big upside here. So how do we do this? Well, we work with this service ladder where you start, of course, with reactive and proactive service and maintenance. But one of our biggest, you can say, growth drivers is what we call tool management centers. That means that we have an on-site team of our service technicians inside the customers' production plant working in a workshop or on the production line helping on a daily basis. And here, globally, we have 392 last week of these contracts where we have tool management centers. Last time I presented 3 years ago, I think it was 270, so continued to grow here.

Then we have the data-driven optimization. We still see that many customers are not using data enough to optimize maintenance and production processes, and we have both on-prem and cloud-based solutions to enable this value, and we can really help them with that.

So then moving into automotive after the 4 product areas. It's a lot of things happening in automotive. We have, of course, the electrification, the battery electric vehicles, but we also see new ways of making more [indiscernible] and for example, you have the giga castings when customers replace several parts with one casted part. You have more centralized electronics and you also have more focus on automation. So here, we are really following very closely the big trends.

Also, if you look at the middle here, we have -- we see now with the geopolitics, many customers are going for a more regionalized footprint, need to produce more products in the or more car models in the same plant. That drives the need for flexibility. Again, labor shortage and the focus on automation is important and Chinese OEMs going global is, of course, a big, big trend.

If you summarize it, I think we see we have a little bit more content for battery electric vehicles than combustion engine, but it's not in both type of powertrains, we have a lot of business. I think we see when we look at these innovation leaders that we are well positioned with our type of technologies. Also the focus on innovation, the focus on the quality control, the software, how we help customers with solution is really important. And we also invest further in our R&D and operations and supply chain in China. But I will come back to that a little bit later.

Moving over to general industry or other industries outside automotive. So first of all, as you remember, we have adapted very much the offer in -- for tightening. Actually, the same thing applies to drilling also in aerospace. So we have now a very strong offer adapted for other industries like I talked about. But we also, of course, look into the future, what could be really big potential for us, and if you start here in the middle, humanoids, here, we're working with the companies here starting production now. And let's see how it goes. But if it works and this becomes a big volume, you can say we have more than 500 screws typically in one of those humanoids we see, but also a lot of dispensing applications. So that would be very good if this is a big industry.

Here also, we work on putting a tool -- industrial tool in the hand of humanoids to also make sure we are part of that development. Then we have the eVTOLs also, of course, a lot of now tightening, critical tightening and dispensing. And here, we're also working with companies that are starting to produce. Then we have Energy segment. We see -- we've heard the need for electricity. We are in solar, checking the quality of solar panels, but also throughout the energy supply chain. And if you think about it, AI is driving a lot of this, the need for electricity, but also enabling humanoids and eVTOLs, for example.

So let's talk about the last growth focus here, talking about presence and geopolitical resilience. Here, you see our global footprint for Industrial Technique today. We can see we have the majority of plants in Europe with 7, but 3 in Americas and already a significant production in Asia and China with 2. Then we have these application centers. That's a type of light production unit, which is very, very global that we have from Brazil to Korea, to India, but also in other markets. So here, we are very, very global.

So I think we are well positioned. What we are doing is to further strengthening R&D and operations supply chain footprint in China. We see a lot of innovation happening there. But we also are building R&D, for example, close to customers in aerospace in the U.S. to be closer to those trends there. Talking about presence, I think we are quite present. We are quite global. But for us, it's more about how to optimize presence with digital tools and a different way of working.

We talk about the physical presence. We want to free up the time for our field salespeople to help with the complex sales, with the project sales, the transformation. But then with digital tools and inside sales, we want to optimize more the standard part of the business. And we call that transformation program, customer center of the future, really important to feed the strategy and enable the strategy. But we also continue to evaluate the footprint linked to everything that is happening.

So where and how will the growth long term happen then? Well, to explain a little bit how we think about it, let's look at the full potential of the business as we call it. If you take today the number of customers we have on the Y-axis and we have an average sales per customer on the horizontal level here, you can think about our business today. But actually, we are very present with something at many customers. But of course, there are new customers like the winners of tomorrow, where we can gain new customers. But the bigger portion and opportunity for us is to sell more product lines, more solutions to the existing customer base. Maybe we are selling one type of product or -- and we can expand into other solutions to cross-sell and sell more to the same customer, increasing customer share is an even bigger potential.

The next one is about creating the market that we are doing and we want to continue to do. We call it transformation, very much this modular approach, more software, more intelligence in the solutions. Automation is one great example. Then we have data-driven service also for existing customers. This is both a differentiator that creates a lot of value. It also generates extra revenue for us with existing customers, really important part. And at the end, of course, M&A. We have done some smaller M&A, more technology bricks, but we're also reviewing more adjacent businesses, but very much focused on the existing customer base because we have a lot of room to grow, and we have a lot of value in these relationships and business today with our customers.

So at the end here, it's also another way to look at our business model. It is so much about people. You will, this afternoon, come to one of our innovation center here in Germany, and then you will understand this. The theory here is more how it helps us to grow the business. If you -- if we think about selling a product and we don't know so well the customer, what they will do with it, we get to a certain level. But if we understand the customers' application, we say we own the customer process, really understanding the application, then we can generate more value for them, but we also see that our hit rate goes up a lot. So if our customers in our innovation center, we have a very high likelihood of getting the business. Also, it differentiates us a lot. So profit goes up and then you get this bigger square of profit pool, let's say. But it is really about competence, collaboration with customers and internally and innovation.

So at the end, just a summary to recap a little bit. We -- I talked about these 4 type of solutions. You have the operator-based solutions. You have the automated assembly, in-line quality and service. We talked about the short term now, a little bit more challenging with uncertainty getting back on the historical operating profit margin. But then I think we really have a strong focus on the long term about growth in the long term. It's a lot about this from product to solution, more software, but also then to work with the leading customers, both in electric vehicles or automotive and also in the other industries where we are present.

Thank you very much for your attention.

So before the last presentation of today, we will have a short break, a short break only 15 minutes. So coffee is now being served outside this room. In case you're looking for the restroom, it's downstairs. So see you here at 10:15 sharp where we start the next presentation.

[Break]

So welcome back, everyone. Now it's time for the last presentation before the Q&A session, and that will be about Vacuum Technique. So let me introduce you to the Business Area President, Koen Lauwers.

Thank you, Daniel. Good morning, everyone. My name is Koen Lauwers. I'm the President for Vacuum Technique. I'm very happy to share with you today some insights about the developments that we see in our Vacuum Technique business area. We have the same agenda structure as my colleagues, and I have quite some materials to cover. So let's dive immediately in there.

According to the market researchers, the end markets in semiconductor have recovered quite well, running this year around USD 700 billion and expected by 2030 to grow north of $1 trillion. This is mainly driven by the AI trends that we have seen, the rise of the data centers and this despite a much softer conventional bulk of the market in PC, mobile and automotive. High bandwidth memory and advanced node adoption is fueling our business at this moment. And this type of chip does require a lot of vacuum and abatement. And in order to produce this type of chip, vacuum and abatement is critical.

The service demand is rising with better fab utilization. And when we talk about fab utilization, there is a bit of color there. All the fabs working towards AI, data center needs, they are fully booked even already for the next year. So they are fully utilized as well. Although the fabs which operate in more conventional side of the market, we have seen that the utilization has been going up, but we are not yet at these triggering points for new CapEx waves.

Needless to talk about geopolitics, semiconductor is very much subject to geopolitics and of course, the regional push for chip self-sufficiency. Interestingly, we see that we are able to continuously expand our total addressable market with our vacuum solutions, especially in the space of scientific and industrial applications. Quantum space commercialization, electrification trends, energy, energy conversion, energy distribution are opening up our total addressable markets. And I'll come back to that in a later phase.

On the customer side, I think nothing changed too much there. Customers still prioritize on the life cycle cost. They want the sustainability in the product. And of course, they want our products to be digitally enabling their control algorithms and their controls in their plants. So if you then look at the graph with the previous quarters on orders and revenues, this very much reflects the sentiment and it very much reflects that there is still quite a bit of excess capacity in many fabs that operate in the conventional nodes.

Looking at the global order distribution, it's not surprising that for Vacuum Technique the picture looks a bit different than for the Atlas Copco Group in general. 64% of our business this year is coming out of Asia. Again, I think not surprisingly, given the fact that most of the chip makers that operate for the AI industries are producing out of Asia. And I think we are in a very good position there to capture that AI demand, given that we have driven our local-for-local policies with local leadership in the Asian countries with local footprints, both on factories and service centers.

On top of the semi business, we were able to pick up. We see also that on the General Vacuum, we have good business in Asia, business is driving in Asia. And this is unlike what we see on the Vacuum Technique side in Europe, where we see that there is a lack of investment appetite, both in General Vacuum and in the semiconductor industry.

Looking at the U.S., you see that we have a negative growth this year of minus 8%. I think that we can almost fully attribute to one of our key accounts in the semiconductor atmosphere who is operating on a very tight and very strongly reduced CapEx budget. If you look at the General Vacuum side in the U.S., we do see good business in the U.S. for General Vacuum operations and markets.

Our semi operations are growing everywhere in the world. So I think that's the resilient part of the business. We support customers in all industries. And of course, we're very strong in our traditional industries in the electronics with the semiconductors. But we also enable a lot of new technologies and very advanced technologies that require very advanced vacuum systems and solutions in the scientific atmosphere, such as, for example, high-energy lasers, nanotechnology, quantum space simulation. And you'll see a lot of that in the afternoon session in one of the innovation stations.

On the industrial side, with the Industrial division, we also operate from very advanced vacuum systems for process industries, chemicals, pharmaceuticals to the more straight forward type of applications in food and bev and canning bottling and so on and so forth. We operate through 6 divisions in Vacuum Technique business area, and that's a good model. The 6 divisions all have their own products for their own segments, and they can operate somewhat independent from each other, and they can operate at multi-speeds. If some markets are thriving, one of the divisions can be in investment mode and capturing growth, whilst if another market is subdued, the other division might be in cost restructuring mode and fitting cost to purpose.

Let's talk a bit about the market and the business fundamentals. And it's no surprise that most of our business we do in Vacuum Technique is in the Electronics segment, where we have a clear market leadership position both for vacuum and abatement. We are strongly positioned to capture that business that's coming from the chip makers that serve the AI markets. And we see some increased momentum coming back in the flat panel markets. In order to open up further and increase our total addressable markets, we're continuously strengthening our global and vertical reach in some of the adjacencies of these markets, such as, for example, working further towards our cryogenic solutions and as well moving further into the leak detector products and portfolio.

29% of our business is in the process industry, where we have a clear leadership position in many segments, as for example, in coating, metallurgy, electrification, energy, but also in the analytical and R&D vacuum market segments. We're well positioned, and I'll come back to that in the presentation, to capture some of these new emerging technologies, disruptive technologies that require significant amount of vacuum such as quantum computing and space simulation. And we're continuously advancing in the chemical and pharmaceutical markets through some of the acquisitions we did, mostly the liquid ring pump type of products that we needed with a more vertical setup to support our penetration in these markets.

8% of our business is in the general manufacturing space. And there, we have seen great success using the Atlas Copco compressor channels to reach this very diffused market and as well using some of the Atlas Copco compressor concepts, meaning centralizing vacuum, providing centralized vacuum installations rather than having point-of-use vacuum all across the factories and the plants. That, of course, allows for energy efficiency, better controllability, better serviceability and so on and so forth. So these proven compressor concepts we have applied in vacuum over the past 10 years since we acquired Atlas, and that has served us well to open up the total addressable market also in the general manufacturing space. And we keep adding new products into that portfolio as well. I feel and I still owe you probably a bit more color on our expectations when it comes down to the electronics market, what's going on in the electronics market.

And to do so, I'd like to talk a little bit about the different stages of the chip production. And stage 1, of course, is the design of a chip, and that's done without vacuum, right? That is NVIDIA, AMD and the likes, and there is no vacuum needed there. But once the chip is designed, it has to be produced. It needs wafers, and we are at the heart of the wafer output. So wafers drives vacuum need. Then we have the wafer testing. There is not a lot of vacuum in play when it comes down to the wafer testing phase.

And then there is this interesting trend as well of packaging of chip moving from the back end to the front end into the fab. And there, we start to talk about advanced packaging and more advanced tools as well. And those advanced tools might also need vacuum. Often, they do need vacuum. And often vacuum is again critical to enable those advanced tools. Although those advanced packaging tools are not going to have the same vacuum intensity as the tools that you need in order to produce the wafer.

And then we have the final testing and shipping. But what is important, I think, for everyone to understand is that wafers drive our semiconductor vacuum business. So this is really important to understand that the wafer output in the WFE, the wafer and the tools that support the wafer output, those are the critical ones. And those are the tools that are going to need a lot of vacuum in the vacuum chambers.

So one of these wafers stays typically 2 to 3 months in a fab. It's being continuously built up, go through all these phases, litho, deposit etch, some control, some measuring and keeps going. And basically, it's most interesting to understand then what do the market researchers expect when it comes on to this wafer output. And we believe that the wafer demand now is set for a sustained expansion into 2030, where you see that the total wafer output is expected to grow with a CAGR of 7%.

And yes, the discussions around the hype of AI provide for bigger CAGRs on the high-bandwidth memory type of chip on the leading edge with 32%, with 18%. But what's also really important, I think, is to understand and fully acknowledge that the bulk of the market still sits with DRAM, NAND and advanced and mature nodes. And then it's really important to acknowledge that we also see a positive CAGR in the future there, where we have seen that in the past years, the growth there was stagnant or even negative. So if we can believe the market researchers, the wafer output, which is set to grow will also drive, again, the vacuum needs in the next years.

We have talked now about the CapEx, but also let's talk about OpEx. Let's talk about what it will do with service. This time, I will use a different metric. The metric is millions of square inches output, which is similar as the wafer output in the previous slide, but we correlate our service models and our service capacity needed and our service activities typically very much to this metric of millions of square inches produced in the year. And we have a very strong correlation in place between our service business and this metric.

And looking at the expectations of the market researchers, the yellow curve, where millions of square inches produced will steadily grow again into 2030 as the semiconductor end markets grow to $1 trillion. And if we then apply that correlation into our service business, we see that our service business will become a very healthy business and a backbone of resilience for the Vacuum Technique business area in the future.

Having talked about CapEx and OpEx, let's see whether we're ready to capture that growth when it comes. In all divisions, we continuously work on our core products and our core products are a wide portfolio that cover all kinds of applications within these divisional segments. And we work on these core products through product life cycle management. Continuously, these products are innovated and upgraded in order to have the market lead and provide these features that customer needs. And one of these features is, of course, to add sustainability in our products, further sustainability, reduction of PFAS, lower energy consumption and so on and so forth.

On top, our products need to be digitally enabled. We have that all available. So when markets pull, we feel we're ready to capture that demand. But on top and beyond, we're continuously looking at expanding our total addressable markets as well so that we can grow both with tailwind from markets, but also when markets are slow. And we do that through new products for new applications. And there you see some of these new products for the new applications that we have been launching and are launching, and I will come back to those in the coming slides. You will also see some of those in the afternoon's innovation stations.

And let's talk a bit about our strategy for sustainable, profitable growth. For Vacuum, we typically enable our customer that disruptive technologies and disruptive ideas. And we do that by being early in the design processes with our customers to enable their new technologies. And we do that continuously. We do that massively in the width. But today, I will illustrate that with 4 examples in 4 different technologies, which are well known to most of you.

And the first illustration is our EUV alignment with leading EUV, little tool manufacturer since 10 years. So when EUV got adapted into the market 10 years ago, it needed an exhaust system to go with it, communicating continuously with these EUV systems. And we were there. After years of close co-engineering, we were able to capture that part of the market as well. We all know that these companies go fast and spent huge percentages of the revenue back into the R&D. And so we also need to go fast. And just to give an example, to align and stay aligned with the road map of such a supplier in EUV lithography, you need continuous R&D efforts to continuously have your technology inserts ready when they bring a new generation in the market.

And just to give a bit of a feel there, their tools over the past 5 years became so much more productive that within the same footprint, we had to increase our capacity to take the gases out of the litho tools 5x. That means that requires a tremendous amount of energy and engineering work in order to -- within the same footprint because we need to stay in the shadow of the clean room in the sub fab to go for the 5x higher exhaust. Doing that, we also feel like we could go beyond it. We know that EUV litho uses tremendous amounts of hydrogen. It's a tremendous hydrogen consumer. And that hydrogen is typically disposed in atmosphere afterwards. So we came with a concept as we are anyway pulling the hydrogen out of the tool to also purify the hydrogen and bring it back to the tool. So creating full circularity solutions for the semiconductor industry for the fabs. And this starts to be well acknowledged and well accepted in the market, and we do have first orders on these type of systems.

In the afternoon's session, there will be quite a bit more on the technology shown to you. That's why I will stick to this. Another one is space commercialization. Space commercialization increases the need for satellites dramatically. So satellites need to be tested under space conditions. Space conditions are, of course, ultimate vacuum, but also very cold, so our cryogenics play can get very hot as well when the satellite is passing by the sun. And our early adoption, our early focus on developing full turnkey solutions for this segment has paid off well in the past. And later, I'll show you the CAGR in this sector that we have seen.

Quantum computing is another very rapidly fast emerging market where they need vacuum and cryogenics to unlock the potential of quantum computing to create the qubits. The qubits they can only exist in a very controlled environment with temperatures close to 0, and we are well positioned to provide those controlled environments. We have been participating in many of these different quantum computing technologies, which are being worked on by many different incubators. And whatever the technology that will prevail and there are different roads to the stabilized qubit we are participating. We have the competence. We have the knowledge, we have the data points. We are in close co-engineering with all these companies. So when one of these technologies scales and becomes maybe the dominant technology, we will scale with them.

Last but not least, I'll illustrate with an example in the industrial vacuum space, where through some acquisitions in China with acquisitions that brought us vertical setups in the liquid tank pump markets, we started to understand that there is a huge potential in process markets to do mechanical paper decompression. That means to take steam and other heat sources out of processes and reuse that heat and then cut cost and waste. So even through our acquisitions, we see that then we can open up further total addressable markets as we learn from our acquisitions as well.

Local for local, we have been on that journey for quite some years. And with the current volatility in the market, we believe this is the right journey to be on. With Vacuum Technique, we have a truly global footprint with local competence and local leadership as well, I should say that as well. and product factories and service centers in all major semiconductor markets. On the General Vacuum side, we can always go fully synergetic with the other business areas in markets where the semiconductors are not as present. So we have a good global footprint there to capture demand, and I illustrated that this morning by talking about how strong we are in Asia and how we are able to capture the growth that is coming from the chip makers in the AI space.

We're ready to scale when demand picks up in the U.S. We are building a dry pump factory total vertically set up for semiconductor industries, and this will be the first American dry pump manufacturing place that serves semiconductor industries. In Chandler, Arizona, we are very close to many of the chip makers. And in Haverhill, we have installed a new factory with a lot of lab capacity in order to move forward on our journey with cryogenics after we acquired CTI out of Brooks Automation. In Qingdao, we have our model factory and we're localizing all our dry pumps over time in Qingdao, and we're well on that road, and I think we have progressed well. There is still a bit more space for some dry pumps from the Scientific division to be localized as well. In Korea, Cheonan as well as in Asan, we have increased capacity, machining capacity, but also we have increased lab infrastructure. As we know, there is a lot of the chip makers there, and we want to be able to innovate close to our customers. So we have installed a lot of lab capability there, both on the EUV and the abatement technology side.

In China, we did a joint venture with a company called Shareway. This gave us immediate inroads into plasma abatement. Plasma abatement produced very economically in China, focused on Tier 2, Tier 3, and we see opportunities to take that product and also bring it into Tier 1 through our premium brands whilst upgrading the product. In Wuhan, again, we're building a service center close to our customers, close to one of the main chip makers in China. And then in Pune in India, we're also setting up more vertically in order to capture the Indian demand, both in General Vacuum, but also on solar and the upcoming semi ambitions that the Indians have too.

So our local for local progressing well. As a market leader, innovation is key. And we innovate not only in the sub fab, but also in the clean room. And that's why we have 2 divisions. We have a semi equipment division operating in sub fab, and we have a semi Chamber Solutions division focusing on the typical dynamics in the clean room.

Looking at the sub fab, we have quite some innovations coming through. We're innovating our platform of dry pumps for better energy efficiency, lower footprint, digital capabilities, but also for harsh process applications, dust handling capacities, handling nasty gases. And that's where we thrive. That's where we play at our best. I'll come back in the next slide to where we are with that platform. I already talked about our continuous reengineering and upgrading and innovating of our EUV systems to be perfectly aligned with the EUV litho tools and to remain in the shadow in the sub fab to enable and power up these EUV litho tools.

I just talked about Shareway and our access now to economic plasma abatement, and we talked already about the hydrogen recovery systems where we have first orders and where we're delivering. Ganymede, we have a lot of -- it's a program. It's a full program, and it might take a few years to do the full platform because there is a lot of different variants and different sizes being reengineered. But the first phase is hitting the market. We have multiple units deployed across leading fabs to check, validate and verify the pharmacists and to get these qualifications from these fabs for our product. We have also already secured first customer orders with this product.

In the clean room, we have moved from 4K turbo molecular pumping on tool to 5K, and this is really important because this enables the tool makers to make the tools within the same footprint more productive. So with our 5K turbo molecular pump that has been qualified at several tool makers, we are enabling for the same footprint, more productivity, more output of chip through the tools.

We are making good strides in our ambition to become also a clean room valve manufacturer, isolation and transfer valves after the acquisition of PSS, which is going very well according to business case. We're now looking into making the setup more global, making the production more lean as this is a small company, and we can add our production lean principles there and also adding design efforts in order to expand the portfolio of these valves.

And then, of course, we're redesigning and upgrading our portfolio for cryogenic pumps and cryogenic compressors. On the compressor side, there has been a lot of progress. We bring a new helium compressor in the market that has a unique benefit to stabilize the tools better. So again, to bring quality to the tools, but also to reduce the power consumption for this helium compression significantly. Again, also here on the 5K, which you will be able to see later on in the innovation stations in the afternoon, we are qualified already at several tool makers with the 5K, and we have first orders in.

On the industrial vacuum side, we have been expanding quite significantly in the process industries through acquiring liquid ring pump technologies. And we acquired them mainly for vertical setups for economic production, having factories that could match cost with our competence and our market knowledge that we had already available through acquisitions of Atlas and others. And doing that, bring that competence of application know-how together with economic setups with factories that can produce at good cost in China. But also we have one of these factories in the States. We have seen a very good CAGR of 45% in this space.

I talked already about centralized vacuum and how after the acquisition of Atlas, we decided to fill one of these spaces in general manufacturing through centralized vacuum through the Atlas Copco channel, going highly in synergy with compressors. This delivered a CAGR of 27% over 10 years.

In Scientific Vacuum, we talked already about our positioning in the quantum space, where you see also thanks to an acquisition of Montana Instruments that operates mainly in the quantum research area, we have a CAGR of 45%. And of course, if one of these technologies starts to scale, then these markets can become very significant and very huge.

I talked about leak detection, how we operate through acquisitions more vertically, how we operate more globally through system capabilities. And you can say, okay, this is a CAGR of 14%. The acquisitions, however, that we did to have a vertical setup with NOY in China and to have a more horizontal setup on systems capabilities with ESA in Italy, they were done in the quarter 4, quarter 3 and quarter 4 of last year. So they don't yet fully come into that CAGR. So if we would have 25% in there, that would also be a very significant CAGR in fact. And we talked already about the capabilities for space simulation.

So let's talk about service. And we feel that service will become a strong backbone and a resilient sector in Vacuum Technique business area. You can see that the service division start to outgrow the pace of the growth of the equipment divisions. And with the installed base that we have on the General Vacuum side, but as well with the growth on wafer output in the fabs and the metric of MSI, which I have shown you on the OpEx slide, we feel that service growth will continue at high pace.

In service, we don't reinvent the wheel. I think we learned from our colleagues in Compressor Technique, the very successful Compressor Technique Service division. And we take these concepts and we bring them also forward in vacuum. So we move from reactive run to crash type of models at fabs and also in General Vacuum, and we provide value. We provide uptime. And this customers really start to appreciate as our customers are also under pressure for OpEx and the more and the longer we can keep those tools in the semi fabs up and running, the more chip goes through and the bigger the output of a fab. So we see a lot of good momentum there, and we do measure in the different ranks of the service ladder, and we see that our business continuously moves from the more reactive into the core service plans all the way into the advanced service.

Again, in the afternoon, there will be a dedicated session to illustrate how we do that also using AI and using our unique capabilities of having end-to-end. We produce the pumps, we produce the abatement. We remanufacture the pumps and service. And therefore, we have so many data points and enhance per tool per process, we can start to work together with AI on prescriptive maintenance formulas. But for that, you need the end-to-end, and there, we are uniquely positioned.

Service is also very much an operational business. Just like any factory, it's about productive hours. It's about being lean. And in service, we are on that transformation strategy in PTBA. We see service and PTBA as a business, and we see that there is still a lot of room for growth and a lot of room for efficiency as well. So we're working on different transformation programs in the past years in order to further professionalize and make our service operations more lean.

M&A and adjacent growth, well, Vacuum Technique, in fact, the business area came to exist as one big acquisition happened, which was the acquisition of Atlas in 2014. And that then developed through organic growth and further acquisitions. And the next big one was LEWA in the General Vacuum space into a business area, which got reported in the annual reports. Since that time, we have been adding acquisitions, both in General Vacuum and in the semiconductor space.

In General Vacuum, we see that we still have room and headroom when it comes down to closing the portfolio, growing market share through portfolio additions, technology additions. Factory additions being more vertical, but also going further global with distribution and commercial type of acquisitions of sales channel. And we will keep going with our efforts there, mapping out the targets and see what makes sense. Where we have higher market shares, like in the semiconductor industry, we might not be able to acquire any more in the dry pump space. But there, we're more looking into adjacencies. [indiscernible] was one of those where we start to move into the valve business. With Suisse, we moved into the vapor delivery system business, with CTI and cryogenics, and we're continuously on the look for small and maybe bigger acquisitions in these adjacencies.

Vagner talked about the decentralized model, which, of course, we also operate in Vacuum Technique business area. And that decentralized model requires a certain profile of employees and leaders. So we continuously support that decentralized model with intentional talent management, bringing the right profiles in through early careers, having them grow with our company. And once they reach that leadership stage in their careers, also providing them with training on the leadership in a decentralized model.

Also and very important to note, we see that we want to operate through local leadership in China as well. For us, we operate fully equal dignity and we have the local leadership in China to drive our local presence, but also drive our factories there and make sure that our supply chains are local too.

So in summary, as a market leader, we need to stay ahead of the game. We need to be early into the new technologies. We enable our customers the critical technology through our vacuum solutions, and we will keep doing that. We believe that early involvement is a critical success factor. We have strong focus on developing our service business where we still see quite some upside in the coming years and the coming decade. And we're continuously positioning ourselves into new emerging markets. And I talked a bit about these 4 illustrations, the quantum, the space simulation, being early with EUV and matching the EUV and the vapor recompression. We operate through a truly global operational footprint, local for local is one of our strategies, and we feel that's a good strategy to handle the volatility in the market. And we keep besides being ready to capture growth in the market, we also keep opening up the addressable market through adjacencies.

So thank you. I think now we will go into a Q&A session.

Thank you, Koen. Now it's time for the Q&A. So please stay on stage. Bear with us a bit.

So for those of you who are with us via the web, you can write your written questions just in the player and we will bring them forward. For those here in the room, as always, with Atlas Copco we kindly ask you to please limit your questions one at a time. So the first question goes to Klas Bergelind, Citi.

So I just want to come back to one of the first slides where you show the growth during different periods. Obviously, you grew 8% CAGR since COVID, but you had a lot of abnormal growth drivers at the time, a lot of compensation. Before that growth is more in the sort of mid-single-digit range. Is that when you look at sort of your 8% total, which is organic plus M&A, is that what you see ahead? And -- or can that -- and can semis potentially going back to 10% and push the organic higher? I just want to understand a little bit how you think about the composition between the industrial part and the part around the trend growth.

I think one thing to remind on the recent years as well, we also have quite a lot of inflation. So -- and I think that definitely it's part of that accelerated growth. But we also have a super cycle in semiconductor, if I can call that super cycle, Koen, it was a fantastic growth there.

I think going forward, I think we are committed to the 8%. I think the semi market, we are quite confident. Koen can speak more about that. But we are confident, like Koen showed, we have quite a lot of, let's say, indications from this research that this market will continue to grow. And we are quite confident. On the ratio, it's very difficult to see how the market will unfold. It's very difficult to say the vacuum is going to accelerate. They have a very good position in some new upcoming technology that looks quite promising. And also the industrial vacuum can continue to grow quite nicely. But it's difficult to say that vacuum will be higher or lower. I think over the cycle, we are committed to the 8%, and that's perhaps the main message.

A quick follow-up, if that's okay. No, because obviously, 7% growth in terms of demand for wafer and then you just outlined a very promising growth outlook on service, like when you sort of -- equipment and service, pretty clear that it looks like you can come back to 10% in VT. And yes, it looks very promising at least when I sort of listen to your presentation.

We will see how that will unfold over time.

Next question goes to Daniela Costa.

It's a question for Vagner because it relates actually to Compressor Technique. So you mentioned the globalization, and we saw just on the slides on these divisions, how you fit for that. But if you look at your biggest division on Compressor Technique, you still have a very core of manufacturing of the OE basically in one location in Europe. So can you talk about sort of like your plans for really truly local for local there and how we should think about the impact of that in your margins and profitability and CapEx going forward?

That's a very good point. Indeed, we have a large -- our largest manufacturer footprint is in Belgium. But it's also fair to say that what we have today in China in terms of footprint is almost as big as what we have in Belgium. Our new Wuxi campus, it's really, I would say, the same size, and we have built quite a lot of R&D capabilities in China that we were lacking. We were centralized the R&D effort, especially they are part of R&D in Belgium, but we believe we can also benefit from knowledge, existing knowledge in China from the general market, also from the speed we have in China. I think we have invested. We are quite happy with that investment. because we can also -- when Chinese companies go global, we can also benefit from that in different ways like Chinese OEM going global and then we can supply compressors together with a strong brand, we can -- we are very well suited to support them globally.

Chinese EPCs going globally and winning projects globally. We also sell to Chinese EPC in China that will deliver contracts all over the world. So our position there is good. Maybe your question is more about the U.S., I know. But in U.S., we have production footprint, what we are doing recently and not because of tariffs, much decisions we took before, we are expanding our Gas and Process facility in Albany. There is an investment program going on there. We are -- but that was already a decision we took in the past.

We are expanding our expander facility in Santa Maria in California. We are increasing the production of turbo compressors in Houston. We have a facility there dedicated for oil and gas. They will produce as well turbo compressors or package turbo compressors in the U.S. We have our production of or injected compressors in Alabama in Bay Minette. We are scaling up. That production facility was dedicated for the Quincy brand that we have acquired, and we have good position in the U.S. We will also produce some Atlas Copco compressors there.

And we also are expanding our manufacturing capabilities in Rock Hill and in a quite asset-light way because we don't know what is going to happen with the tariffs over time. So in a quite asset-light way, we will also produce oil-free compressors in Rock Hill area. So it's a lot of movement, some investments we have decided before. Some we are doing -- by the way, we are also increasing our logistic capabilities in Rock Hill, where we have a center of gravity. We have quite a lot of people there and facilities. And also our logistics center, we will expand in the U.S. because we will have more local products being purchased there, and then we need to increase our capabilities there. There's a lot of movement ongoing. We don't plan to do any machining centers or to build machining centers there. I think that we will keep centralized.

Okay. Thank you. We have actually one question from the web. I will read out loud. I think it's for you, Koen. It's from Rory Smith at Oxcap. Thank you for the question. I just wanted to understand more about the Ganymede. Can this product and back-end products innovation more generally generate replacement demand outside of the wafer fab CapEx cycle? Or is it product development necessary for Atlas Copco to benefit from the next wafer fab CapEx cycle?

Very clear. I think to the question is, yes, you can bring it back into the existing fabs. When you do so, that product needs to be qualified to a certain tool, right? So we know that chip makers always wants a qualification phase, 3 to 6 months on a specific process, on a specific tool. So if we go through that effort, no doubt there is this upgrading opportunity, which we have been doing on some of our other products as well like IXH for the legacy products. So this is an ongoing effort. This is a clear yes, we can do that independent from the next wave.

So that opens that upgrade but it doesn't go just easily. You need to first qualify at a certain process at a certain tool and the chip maker needs to be interested in reducing its OpEx taking the benefits of lower energy consumption and so on and all the benefits and the features that these new products bring. But this is a yes, if you go through the qualification procedures.

Sounds very good. Next question goes to Sebastian Kuenne.

I have a question to Vagner as well. You mentioned the electrification trend as a mega trend. And we saw this very impressive in the Industrial Technique business where over the years, compressed air for handheld was replaced by electric motors. And of course, in Industrial Technique, you could play that game and maintain business. But there are other industries, process technology and discrete processing industries where a lot of compressed air is used today. But now companies like ABB come along and say, well, you can also use a small electric motor with drive and you don't need the compressed air anymore. So how do you see the risk that other client groups are moving away from compressed air, which is quite cumbersome to handle in a factory and replace your business?

I think that question has been around for quite some time. It is not new for us. When I took over as business area President of Compressor Technique, that was the same connection because we lacked organic growth and the first connection, well, we see less and less compressed air. I think what we are doing in Compressor Technique, it's to -- you have that trend. For instance, the electrification of tools, we have absorbed in our results already for many years. There are some trends like you mentioned, but there are so many new applications as well that we find for compressed air that it's really -- and sometimes I'm even surprised with the things we can do.

Examples on how we have changed the trend as well on-site generation of nitrogen. Just as an example, before, nitrogen was only transporting book. You have the cryogenic process centralized and then transported, bottled and transported by truck. We have developed this on-site generation. And why did we do? Because you -- it's not only because of the generator business, nitrogen generator because you need a compressor to feed. So -- and that creates a new market for us that we didn't have. We supply oxygen generators, for instance, for fish farming. It's a market we didn't have before. Now we have the oxygen generator to feed the oxygen generator on-site, you need a compressor.

So -- and then we keep on developing those new applications. We have been talking about low pressure as well. I think in low pressure, if you see what is going on in terms of food production, a lot of fermentation applications are popping up that will create the need of different types of compressor, medium pressure, low pressure. So I acknowledge that there are some trends, but what is the impact. And I want to align that as well with the fact that we see another trend as well because the applications we have, the requirement to a higher quality of the air, it's really improving.

So the requirements for the quality of the air, it's higher now. That means you sell now the compressors, you sell a high-spec dryer, absorption dryer, you sell different types of filters. So they spec of the compressed air that you need to deliver, it's higher as well. It increases the potential of quality air products. So there are different trends going on as well.

Next question to Andreas Koski.

Andreas Koski from BNP Paribas. A question for Henrik and the growth outlook because if we look at light vehicle production, the CAGR will be 1% to 2%, I guess. At the same time, on the general industry side, we are seeing the transition from pneumatic tools to smart tools. So I got the impression that the other part, the non-auto part is expected to grow much faster than the auto part. But I just wanted to hear if you share that view and what you expect for autos versus non-auto and how that mix change could impact the margins for...

Yes. That's a good question. Thank you. I think we see automotive business also being very attractive, good profit levels, and we see a good outlook there to really create more business. We are not, as I explained, so dependent on the production volume. But of course, we know it's a very separate business. So for us to grow general industry faster, that I would agree with. That should be the ambition. And we see, of course, a much bigger total potential in general industry. I think there we have now the product portfolio and the presence to go after that. So it's not either or it's really both, but I agree with the ambition on general industry side.

Thank you, Henrik. And before we move to the next in the room, I have another one from the web, and it's from [indiscernible], and he's asking this. We have seen some volatility around Vacuum Technique margins over the years. How shall we think about normalized profitability over the long term given the secular growth themes you presented and the different services offering to CT?

Sure. And thanks for the question. And I would say, first of all, in the past quarters and in the past 2 years, we have seen revenues coming down somewhat whilst orders were flattened out now for 2 years. So we are at a point where revenues and orders are kind of similar. So this famous book-to-bill B2B is around one at the moment. So that's encouraging.

We have done the necessary cost restructuring. We don't believe that orders will further drop with the current situation. You never know, of course, if something happens in the world. But given what we know, we don't see orders dropping any further from the current levels. And we have done that cost restructuring to make sure that our profitability is solid. And cost restructuring will still start to hit the results as time goes by. There are all kinds of effects when you do cost restructuring. There are local legislations, you have to talk in certain factories with unions and so on and so forth. So the benefits of the cost restructuring is themselves somewhat over time as well.

So knowing that our book-to-bill is coming close to 1, we don't see orders dropping any further. We see service business continuously growing and strengthening. We see some markets opening up again. I think we should be able to move back to historic profit levels. Of course, it will need a bit of time. So no promises on the immediate, let's say, perspective here. But I think we are doing all the measures that it takes to bring that profit back to where it should be.

Next question goes to Anders Roslund at Pareto.

I have one question regarding acquisitions in Industrial Technique and specifically regarding the market area vision technologies. That market potential could be 10x bigger or it's only your own limitations. What are the opportunities for you or the limitations when coming to acquisitions in that field?

Yes. No, but a very good question. I agree. It's a big potential. If we take now our focus for Vision, it's 2 business models. One is to combine it with assembly technologies and the other part is this in-line quality solutions. And I would say in both those areas, we have really big opportunities to grow organically.

Also to add specific acquisitions and technologies into that picture makes sense. We acquired one smaller company last year. I think it was that -- added to the portfolio. At the same time, we want to standardize and get the operational excellence into the current business. So -- but definitely also M&A potential over time.

Next question is James Moore, please.

It's James from Rothschild & Co Redburn. One clarification and one question, if I could. Just to clarify to your answer to Daniela's question. In Compressor Technique, my sense is the degree of localization in the U.S. before the changes that you talked about is very low with a lot coming out of Belgium. Could you put a number on that? And could you say once you've done all the things you talked about, what the degree of localization would be? That's the first question.

And then secondly, on operational excellence, Vagner, you mentioned there were a number of 34 divisions that aren't where you'd like them to be. Would it be possible to say how many are not in a growth mandate? And could you name check them and say what the plan is? I'm really trying to scale what the margin potential for the group is from uplifting the remaining nonperforming businesses to where you think they should be.

Good. Coming back to Compressor Technique. Of course, we don't disclose that ratio. That is some of the plans that we had, like in large compressors, we were producing in Germany and to ship a 10-megawatt or 20-megawatt compressors from Germany to the U.S. was a bit a challenge, and we decided to do that a few years back to do that in the U.S.

So I think we are happy with that decision because now we will need. We will -- because of the tariffs, there will be an impact like we communicated during Q3 result, and we will mitigate already with the decision that we had in the past. We will accelerate, but everything is business case driven. I don't have a figure to show what is the ratio because we need to make sure we have a business case for that. It's not that now we have the tariff, then I can find the right supply chain because supply chain is a challenge in the U.S. and we are really working, ramping up our capabilities to source more from the region and then you need to look at the region. And if you look at the region, you need to look into the U.S., you need to look into Mexico. But if you look into Mexico, you need to buy American steel. So it's a complicated puzzle to come up with a figure.

I think the direction, we are increasing our sourcing capabilities. We will increase production capabilities. The CapEx, to be honest, is quite limited what we are going to do because we do assembly lines. An assembly line, I mean, the CapEx to do that is not significant. I think the major investment we do is mostly around the testing cells and so on and so forth, perhaps too much details, but it's good to exemplify. I think we are not concerned. I think the concern, it's sourcing and people could be a problem. But we have our production footprint there.

We know how to recruit. It's just a matter of scaling up what we have. So -- and we are -- we will ramp up one facility around Rock Hill. We have already a quite nice footprint in Rock Hill that -- so we are well known in the region with partnerships. So I'm not -- I'm less concerned about people, I'm more concerned about sourcing to have the right business case to build in the U.S.

Okay. Next question goes to Gustaf Schwerin at Handelsbanken.

I also have a question on Machine Vision. To go back to in 2022, I think you showcased the integration with the industrial tools that you mentioned. I think back then, I mean, the value propositions are quite strong. You were talking 10x value for the customer, but they fully implemented this. Can you give us a sense of what success you've had in scaling this to nonautomotive customers? Maybe give us a sense of the installed base today versus 3 years ago? And also to what extent you've captured that value through price?

That was quite a lot of questions. If we start, I think I think what I presented in 2022, I think, is still very valid. I see no change of direction. We have been, I think, very successful in integrating the vision with the assembly technologies. You will see it in real life this afternoon, then it becomes really clear how the vision complements and creates value together with the assembly technologies. And it's really about standardization and making that happen.

Then on the direct business, this in-line quality stations, I think we still have a quite low penetration. It's a market that is also about to be created. And we are working with key customers, both in automotive, but also a good balance outside automotive when it comes to creating this quality inspection solution. So we will continue that route and also consider over time, M&A to expand it. So it's an exciting opportunity.

Next question, Magnus from Nordea, please.

Magnus from Nordea here. I wanted to return to the service opportunity within the Vacuum. I think it's about 30% of sales at the moment. Is there any way where this could approach the group average over the coming years? And if it does, could it eventually become margin accretive to the business area?

Can you repeat the second part?

Yes. Could this eventually become margin accretive to the business area?

So do we expect that we will match over time the Compressor Technique kind of ratios? I do think so. As semiconductor keeps buying and there are several plans as we go into this and semiconductor industry, which is above $1 trillion in 2030. And as we see that wafer output being needed, I think, sure, there is going to be quite a significant amount of growth there.

On the General Vacuum side, we have a lot of installed base where I feel we were not yet in the past years, fully capturing that installed base because we were so focused on our market shares in equipment. So I think now we -- because of the economy is a bit softer, we have the time to put that focus into the service divisions, both on semi side and General Vacuum side. And sure, I think ratio-wise, that will grow. Also, as we professionalize the service businesses, I do believe that there will be an accretive element to it. When it kicks in and how much it will be, it's hard to say. But I do believe, in general, that, that will become accretive.

If I can maybe add one comment to that is that, of course, now we need to also be aware that the amount of equipment we are putting in the market is more relative compared to a couple of years ago when the growth was really steep. So for the moment, it might look like a positive development. But if there is a new wave of capital investment and much more products being put in the market, the ratio might not necessarily go up.

So the ratio as such is not a real target. And we also do not compare, let's say, in that sense between the business areas because the nature of the business is very different. The dynamics are quite different. So it's not like we're trying to mimic the ratios kind of as a hard number. But of course, the fact that we have good service business is very important for the resilience of the group overall. So of course, in that sense, it's very important that we continue to work on the strategy, as Koen explained.

Thanks for that clarification. And we have a next question back over there, please.

It's Bruno Gjani from UBS. Talk a little bit about China just in more detail. So specifically around, I guess, BT and IT. And if we start with BT, how would the business be impacted if, say, we reach those external 2030 market projections, but the regional mix within shifts such that China with domestic companies, not multinational companies within China, but domestic companies take a greater-than-anticipated share. Is there an impact to the Vacuum Technique business as a result?

And then for IT, if we do have more regionalization, I guess, for more Chinese OEM plants in Europe or elsewhere, if this were to have a negative impact on incumbent OEMs, what would the net impact be to your overall business for Industrial Technique? So how does your market share differ between those incumbent OEMs and some of those Chinese OEMs?

And then I guess just broadly in China overall because we started off with some more cautious commentary at the group level and as it related to Compressor Technique, you noted market challenges, a period of strong investment now with slightly weaker in certain end markets. Is the planning assumption that China is softer or more muted for a number of years? Or is it -- when do you see a recovery within that broader market? And are there other factors at play? So it's not just market dynamics and it's perhaps are there competitive factors that are weighing or something else that perhaps is worth speaking to?

And I guess, finally, because it was sort of quite cautious commentary. But in terms of on the other side of the coin, what are some of the opportunities that you see in China in terms of to offset some of those pressures or market challenges? What gets you excited?

So to summarize, I think there's quite a few questions in that. So maybe Vagner can start to elaborate a little bit and then there was a specific question to Industrial Technique, correct?

If I can start to talk about China in general, I think we see softer demand in general. Of course, there are growth pockets that's true. So you can see they are investing in the semi, Koen will comment later. But if I relate to Compressor Technique, some of the growth pockets are not as strong as before. Going forward, it's difficult to see how the market is really going to unfold. But I see a lot of potential still in terms of replacement market because if you consider, for instance, that they have been so focused on greenfields and the culture there was build, build, build, expand the capacity.

So there are a lot of compressor rooms, and that could be applied to other technologies as well that we have that there is a mismatch between capacity and demand that creates a lot of inefficiencies. And we have seen that when they went through the consolidation phase of the steel smelters, for instance. That consolidation phase created a lot of opportunities for us to sell new different type of equipment fit for purpose because the winners, the Chinese market is a lot of players and you have part of the market where you have a lot of newcomers and a big battle and some winners. The winners of the market that will drive consolidation, they will think more about efficiency.

And I think we are very well positioned to support those customers to improve their efficiency as they become dominant players. And we have seen that in the consolidation, like I said, of the steel market. So we also to get ready for that phase where replacement is going to be more important. We have even adapt our organization to create really a dedicated force to be able to address that because it's more about project management. Greenfield, it's a completely different process.

Brownfield, you need to have project management skills. It takes time. You need to budget with the customer because maybe the customer doesn't have the budget. All that is now ongoing. We are creating competence also a good pipeline. I do see potential. And there are pockets that will continue to grow. If they continue to grow in semi, we also sell a lot of compressors for the semi business as well. If you see more production of lithium-ion battery, we are positioned there. So we are positioned in several market segments.

And regardless what is going to happen with the Chinese GDP, I mean, we all read a lot of news on the paper, what is going to happen. Let's say it's 2% GDP to grow. I'm not saying it's going to be 2%. I'm saying, let's say, 2%. It's going to be a significant market is still where we will pay a lot of attention that we will present, we will continue to develop technology, and that is across business areas. So we are committed to local production, local R&D and now more and more IT development as well.

And then one particular question to Henrik.

Taking the Industrial Technique part of the question. I mean, first of all, I would say it's not only about automotive in China, it's really also a lot of other industries for us. Number two, if we want to be successful with the Chinese companies building plants outside China, we have to start with being successful in China to -- if automotive OEM builds a factory in Hungary, you need to first be successful, I think, in China normally.

So then I think our presence, we started early. We have been successful so far in China. I think the picture I showed with how we can grow globally also applies to China. We have something with most customers, some product line, but we can cross-sell, take more customer share, transform in a similar way. So I think we are very committed to continue that journey.

And Koen, you want to add?

I think I'll give some color on semi, which is, I think, at different speed in China than most traditional industries because of geopolitics. And we have seen China investing a lot of memory, but those investments have stalled. Now they're looking into progressing on the logic side, and we see quite some investment coming through on the logic side.

But we also see that self-sufficiency happening. So we see local tool makers that need also on tool vacuum pumps. There, we're also collaborating co-engineering with them. I think we're very happy with the customer shares that we have with the local tool makers in China. They do need a product, and that refers to what I have been saying in my presentation. We're always early in the development phase. So they rely on us to make the tools also operational and make them work.

When you're talking about the domestic competition, of course, in the easy applications, load lock and so on, you see that domestic competition coming through. We would call that Tier 3, Tier 2 type of segments. But there where tools are critical and productivity needs to be up there. And the gases in the tools are nasty. They fall back on our products still. So we still are very strong in that Tier 1 space.

And then to address your question, if you then look at 2030, do you expect that the domestic players will take a bigger share? I don't feel like that will be happening at that pace in these more difficult applications. And on the easier applications, it has happened already. So how do we mitigate that by being local, by having our supply chains local. That's very much appreciated by chip makers. But also what have we done with, for example, the joint venture Shareway, we now start to look into joint venturing acquisitions in order to also have that local profile and play in that Tier 2, Tier 3 market as well with the chip makers. So these are all activities ongoing. We feel that China for us is, for sure, an opportunity and not as much as a threat on our market share, I think, just bottom line.

Thank you. Next question goes to you, Kim.

John from Deutsche Bank. If you could refocus back on BT for a second. There's been quite a bit of localization and reallocation, I think, of strategic investment. Where are you on that journey? Have you chosen to invest early in certain areas? So if we see recovery or the growth rates that you showed in the certain subsegments, are there some regions that will effectively pop? Or will you need to invest and we need to consider that when we think about margin evolution?

I think in the past years, driven by that super semi cycle, I think we wanted to make sure that we could scale further, right? And supply chains were limiting. Also here and there our machining capabilities were limiting. But I think we have addressed that. So all the big infrastructure works, having factories being able to scale up, those are addressed.

As from now, we're fully focused on R&D, engineering and making sure that we are the market leaders in the semi space and also in the general taking space for that matter. So we feel like operationally, we don't have a lot of investments to do anymore. There will always be upgrades or efficiency projects on the investment maybe a service center that has grown out of its capacity, and we need to add the service center or expand the service center, but we don't need major investments anymore for the next years, I think, on the infrastructure side.

And next question is to Johan.

Johan Sjöberg, Kepler Cheuvreux. A question for you, Koen. Very interesting to hear about the service offering in the BT and how that has progressed and you're adapting to the CT also. You have previously talked about the margin difference between service and equipment being lower in the vacuum business compared with the other business areas. How have you seen sort of that difference developing now over the last couple of years?

Sure, sure. So basically, I think when you compare with the Compressor Technique service, they have scaled over the past 30 years. So they are a humongous size. And of course, they have the scaling effects as an efficiency factor there. If you look at our General Vacuum service setup, it's very much aligned with what we see in Compressor Technique, but we're not yet that scale. So there are some inefficiency factors there as service mechanics that are trained for vacuum pumps specifically might not be fully loaded. And hence, we're working on that lean and that operational mindset of making sure that we have productive hours as much as possible and making sure that we're lean.

On the semi side, there, of course, our service model is quite a bit different than the Compressor Technique service model where we take pumps, we decontaminate them. We then kind of reassemble them. So these are small factories. So there, you talk about a service division that also has quite some factories in there. But also there, we see a lot of lean opportunities. One of these lean opportunities is to automate the decontamination as much as possible. It will always need some handling and operators, but we have been working on R&D and engineering concepts and service space as well to automate to make sure that we become more efficient, a journey that we have been on and that starts to yield more and more as we go forward. Although for semi service, we will always be pushed and forced to be close to our customers, have these service technology centers closed, they are infrastructures. And hence, it can never be as lean as a Compressor Technique service setup, I think. So -- but there is upside possible.

Just one comment, Daniel, just to address what James Moore asked. I think Koen addressed somehow one of the areas where operational excellence we can improve. I think he just mentioned, I think they were -- they could -- and Koen is addressing that. Some of the -- Koen if you take, for instance, industrial flow, it's another one. We put -- we have these assets, now we create a division. Now we need to go to that phase where we standardize processes. And we also -- should we have all the factories producing what they are producing today or should we reshuffle to create operational efficiency. And all that is ongoing as we speak. There are -- those are the areas, I believe that especially on the acquired companies that we can address.

Alex Jones, Bank of America. Vagner, you talked about wanting to accelerate integration of small and midsized businesses once you acquire them. Concretely, can you tell us what you've changed in that acquisition process? And what were the barriers historically that prevented you integrating those businesses quicker?

Very good question. I think what we tried to do, we did a quite a good exercise in terms of lessons learned in the acquired entities, what went good, what did not went well. And then we set up a training program dedicated for integration managers. So I think that we set up a couple of years ago. We started in Compressor Technique. Now we have a business area training program that in advance, we identified potential integration manager, general managers of these future acquisitions, and we train them in a proactive way.

When the opportunity comes, we have people with a very good knowledge about what means to run an acquired entity and how to drive synergies. But we also saw this was not enough because when you acquire an entity, today, we pay a lot of attention for cybersecurity, for instance. We want to take over IT infrastructure as soon as possible because they become vulnerable when they are part of a group and not fully integrated. So -- and there are a lot of other aspects of the integration that we want to be to do cultural aspects as soon as possible because we buy to hold. We don't buy to trade later on. And then the cultural aspects are important.

And then the integration manager was a bit too busy with those things and the value creation synergies were left a bit for later. We have changed that. In Compressor Technique, we have built an organization to support the acquired entities to deliver on the synergies. To the point that pre-acquisition before closing, we go through all the synergy points, and we identify what are the biggest synergies, what is required?

Do we need engineering resource yes or no. If we need, we can allocate resource in our engineering hub in India, everything upfront. When we closed the deal, we hit the ground, we start as soon as we can do. But we didn't have the people to support it. But now we allocated dedicated people because the number of acquisitions that we do is quite impressive. And I think vacuum is upgrading the acquisition as well, post-acquisition process, Power Technique as well.

And I think that's what -- and I have benchmarked with best-in-class companies. We also -- doesn't mean we were doing that, not at all. But if we believe in our book that we say there is always a better way, I believe there was a better way in this process, and we have worked on it. And I think we are quite happy now going back, we also have done benchmarks with the companies with private equity as well, how they do on the value creation side. And I think it was a nice exercise. I'm quite happy with the structure that we have built and the strategy we have. Now we have to execute according to this new plan.

Okay. Now we actually have time for one last question, and that needs to be a bit short because then there's a lot of practical information, but that's for Anders Idborg at ABG, please.

Okay. I'll try to. Just for Koen, could you help us set the expectations straight for the timing of these greenfield investments in the U.S.? Because I think we were all a bit carried away when we saw TSMC going from 1 to 6 fabs, et cetera. You built up a plant. I don't think any of your competitors have done so. So I expect has -- is this process already underway? Do you have already now visibility on your market share in populating these fabs? And when do you think we could expect that to flow through in orders?

So it's fully in our own control at this moment. So the building is there. The tools, the machining tools have arrived. They will be brought in. And then the timing from now onwards is fully in our own control. Of course, we want to make sure that once we take the machines up in production that they will be working, right, in order to make sure we are efficient, we live up to our profit expectations. So we can control when we kick in and when we produce from there. Most probably somewhere summer -- after summer of next year, we can do that. But it's in our control. We could speed it up. We could delay it a little bit. It depends a little bit on how we want to move loading wise of the factory.

Just I don't know if the question is about our factory or the factories that have been -- the fabs that have been announced.

I'm sorry, I thought you were talking about the Genesee factory. Okay, so the timing on the factories, it's always very speculative. It's very blurred. And I think there are only a few in this world who really know and then you have to wonder whether they know for sure or whether they will change their minds.

So for us, I think priority is to be agile to make sure that we can ramp up when it happens, that we can ramp down when it's not happening or that we can stay at level when it's not happening and to secure that profitability at the order income. So I think we're, at this moment, well set in Vacuum to ramp up whenever something would happen. So I'm not too concerned about that. But when it happens, there are probably much other people who know better than I do.

Okay. Thank you, Koen. And with this, we will end this Q&A session. Thank you all. Thank you all in the room. Thank you for all the questions. And for those of you joining us now via the web, we will leave you now. Thanks for joining today.

Welcome to the Atlas Copco Q3 2025 Report Presentation. [Operator Instructions]

Now I will hand the conference over to CFO, Peter Kinnart. Please go ahead.

Thank you, operator, and a very warm welcome, good morning, good afternoon or good evening to all of? You attending this third quarter 2025 earnings call. Together with me is Vagner Rego, who will guide you through the presentation together. But before we start, I will repeat the same topic I always say when we start the call, and that is when we start after the presentation with the question round, please only ask one question at the time. So we make sure that all participants have the opportunity to raise their most important question. Is there more time available afterwards, you are, of course, more than welcome to line up again to ask your next question. With that, I hand over to Vagner Rego, who will start the presentation.

Thank you very much, Peter, and welcome to this conference call. We're quite happy to be here once again. So if we go straight to the summary of this quarter, we have seen a mixed demand with stable orders pretty much aligned with what we have said on the guidance for Q3 during the Q2 conference call. So -- and then you can see industrial compressors flat. Gas and process, we see a decline in the orders received when you look to year-to-year comparison was good on the industrial vacuum side, but negative on the semiconductor vacuum side.

When it comes to industrial assembly and vision solutions, there, we saw a negative development, mainly driven by automotive due to the conditions in the market. We had a solid growth for power equipment that we were quite happy to see that. And again, good growth on our service business. We see that our efforts to further develop our service business and the implementation of the installed base, I think we managed to capture that installed base that has been deployed over the years.

When it comes to revenues, it was somewhat up, and we had 2 business areas with a good organic -- reasonable, let's say, organic development and 2 business areas with a negative development that led us to a growth of 1%. The profit margin has been affected by restructuring costs. We will come back with more details and acquisitions. We have done 6 acquisitions. 2 acquisitions I would like to highlight because they are very important for our strategy.

The first one is ABC compressors that is increasing our ability to serve customers in hydrogen and CO2 applications. And the other one is Shareway, which is a joint venture. We acquired 70% of the company, and it's going to be a very important one for our development in China, adding as well technologies that we didn't have in our portfolio. So cash flow was quite solid. We were very happy to see we continue to generate very good cash flow.

So going to the next, if we look into the financials, how was that translated? We reached SEK 40.5 billion in terms of orders received, as you can see, SEK 41.6 billion in revenues, orders received more or less aligned with previous quarter, but unchanged organically. And like I have mentioned, 1% organically in the revenues. Operating margin was 20.5%. But then if we readjust for the restructuring cost, we end up at 21.3%.

And the operating cash flow, we have mentioned already SEK 7.3 billion, which is quite solid, and we were quite happy to see that development. If we then move to how we have performed all over the world. If I then start with North America, we saw still the environment there is, let's say, has challenges, uncertainty, but we are happy with the quarter with plus 10%, if you correct for currency.

So -- and there, we see very strong development in Compressor Technique and Power Technique that it was really good to see. And Vacuum and Industrial Technique were slightly negative, impacted by semiconductor and the automotive market. When it comes to Europe, it was also good to see 10% development. And here, again, Compressor Technique had a good development, positive development, Power Technique, the same, and we had a negative development in Vacuum Technique and Industrial Technique. When it comes to Asia, basically, all business areas had a good development, positive development.

The only headwind we had was in Compressor Technique, mainly due to large gas and process compressors and some large industrial compressors where we saw negative development. But combined, we still had a positive development of 1%. Latin America continues -- not Latin America, but South America being more specific, had a positive development, almost basically most of business area with positive development [indiscernible] Industrial Technique negative. And then Africa, Middle East, they had quite a big comparison to be. And there, we saw a negative development that is mainly influenced by Compressor Technique and Power Technique.

Overall, if we adjust for currency, plus 2% in orders, which is more or less aligned with what we have seen year-to-date. If we then move -- if we combine again all the figures, we can see that we had plus 2% in structural change. That is basically our acquisitions. In revenues, the acquisitions performed better, plus 3%, quite a lot of currency headwind, minus 6% in orders, minus 7% in revenues, organic growth unchanging orders like we have mentioned, we end up at SEK 40.5 billion in orders received and SEK 41.6 billion in revenues.

So if we then see the split among the the business areas. We can see now that Compressor Technique in the last 12 months as an order -- has contributed to 46% of our orders received and this quarter with 0% growth or no growth basically. Vacuum Technique, 21% of our orders with 1% growth, very good contribution from Industrial Vacuum and Service. Power Technique continues a good development in orders, 17% now of our business, plus 5% in the quarter and Industrial Technique with minus 3% in orders received.

If we then move to Compressor Technique, it's what we have seen, industrial compressors were basically unchanged. Let's say, a little bit more negative towards the larger compressors, a little bit more positive towards the smaller compressors. That is not a big indicator, but just what happened in the quarter. We saw decreased order intake year-on-year on gas and process compressor, but sequentially, we saw a good development and improvement compared to Q2. Service business continued to develop very well. Once again, quite happy to see that.

Revenues as well that shows that the quality of our order book is good, and we continue to develop 4% organic growth profitability, we are quite happy with this level of 25.3%. We should have in mind, we have done slightly larger acquisitions that has a bigger impact, and we are focused to do more integration items at the beginning, meaning deploying our IT, our -- especially when it comes to cybersecurity. So a little bit more cost at the beginning to safeguard our acquisition. So a bit more cost, but we are happy with that level of 23.5%.

So ROCE remains at a good level. And we continue our innovation pipeline with Compressor Technique. And here, today, we brought an example of our development in China that sometimes you have to develop to come with more features that you can come with a different value proposition to the customer. Sometimes you have to innovate to cost reduce. And this is a good example of how we innovate also to cost reduce to be competitive in China, but also to create options as well in other regions. A very good achievement now with this new innovation.

Then if we go to Vacuum Technique, we saw 1%. It's good to see positive development, although it's not in the semi market, but it's very good to see that industrial and scientific vacuum in terms of equipment continues to develop very well. We still don't see -- we are yet to see a positive development in the semi market, but we still have headwinds, especially for North America when it comes to the semi. In the other hand, it's very good to see the service business developing very well, especially in the semi part of the business, new fabs being built coming into operation, and we managed now to get the aftermarket from these fabs. But also not only on the semi service, but also the industrial service is developing quite well.

And then we have headwinds in the revenue. Revenues were down 6% organically. That put pressures in the bottom line, but we see good traction on the restructuring activities that we have announced and performed during the year. But this quarter, we felt that we could -- because of the headwinds we have in the North American organization when it comes to some market and semi as well, we decided to further optimize our footprint there without damaging our ability to grow, to sell, to further develop the business.

I think that we didn't touch, but we have reorganized our North America that include to reorganize one factory to adapt one of our service centers to integrate and also to work in our customer center, try to optimize, decrease management structure and safeguard that our ability to support our industrial and semi customers are not touching.

I think that was the main target. And that's why we decided to do a new round of restructuring in Vacuum Technique to make sure we safeguard our bottom line. So then the adjusted operating margin was 20.1%. So return on capital employed 18%. And we continue to innovate in the semi market. You know that real estate is very important in the semi market. I mean, the footprint that your product utilized is very important, and we managed to come now with this integrated abatement system that we occupy 30% less space in the fab. That's also important to support our customers in that market segment.

If we then go to Industrial Technique, we saw order decline of 3% and is mainly driven by the headwinds in the automotive. And I would say not everything is negative in the automotive. We still get quite a good level of orders when it comes to flexible production lines, meaning if the production line needs to be more flexible, we can support our customers on that. We have more products, more software-driven products as well that can support our customers. And we also see more demand for automation. That is good.

But in the other hand, we see less production lines being built, and that means less project. And the project business is having more headwinds. So -- and that's what we have seen. And service was basically unchanged. That has also -- that is also influenced by the number of cars produced. And that's why we see a stable level in Service and Industrial Technique. Revenues were down 1% organically. Operating margin were at 18.8%, excluding the restructuring costs, a minor restructuring cost of SEK 53 million compared to Vacuum Technique. So we keep on fine-tuning our organization in Industrial Technique because we have the headwinds. And it's the same concept. We have optimized management structure, and we try to adapt to the circumstances that we see today in the market.

And again, the innovation efforts continue. Here, we develop a product that is reducing the dispensing time in about 50% that definitely can support some of our customers, and we are also quite happy with that development. So if we then move to Power Technique, and that is more a positive picture when it comes to the orders development, solid growth in equipment. Basically, most of the Equipment division had a positive development. Good growth in rental. I think that we continue to develop. Revenues were up 3% organic and operating margin at 17%. And here, we have higher functional cost and then a little bit of dilution from the acquisition. But I think the main topic here is higher functional costs.

We have created a new division to sell industrial flow products. We are building up competence in our customer centers. I think that will bring -- is bringing a good organic growth, but I think we haven't seen -- we are yet to see translation in improved margin that will come over time. We believe we can operate in a higher margin with a higher margin in Power Technique. And now it's important as well, the acquired companies, we also invest in innovation.

On the functional cost, there is also a component of higher R&D because also the acquired companies, we buy technology, but we believe we should continue to innovate. And this is one example of an innovation of one of our acquired companies, Wangen that they managed to come with a new twin screw pump for applications, pumping high viscous media in demand high flow rates. So also there, very good to see our innovation. So with that, I will transfer to you, Peter, to talk about our profit margin.

Okay. Thank you, Vagner. So from the operating profit of SEK 8.5 billion, we go through the net financial items, which are slightly lower due to somewhat lower exchange rate -- financial exchange rate differences to a profit before tax of SEK 8.5 billion compared to SEK 9.2 billion last year. and an income tax expense of SEK 1.8 billion. That means that we have an effective tax rate of 21.1% for the quarter, which is on the low side. Main reason for that is that besides the normal things that we see recurring that we also had a lowering of deferred tax liabilities linked to the lower announced tax rate for the German market.

Therefore, this is a fairly low tax rate. It also still includes some of the release of provisions from the past from China high-tech we used to have. And so for the next quarter, we think the effective tax rate will be somewhat higher, probably around 21.5% to 22% in the near term. And that gives us a total profit of the period of SEK 6.7 billion and basic earnings per share of SEK 1.37 for the quarter. Then I will move on to Slide #12, talking a bit more about the profitability in detail. I would say, first of all, overall, I think we were quite pleased with the overall profit level that we managed to achieve in these quite turbulent and difficult circumstances.

As already explained by Vagner, we had some restructuring costs. Actually, also last year, we had some restructuring costs. So therefore, you see here in the bridge, the net. For this year, the total cost was about SEK 205 million. For last year, we had a cost of SEK 123 million, leading then to the net SEK 82 million in the bridge, slightly diluting the margin as well as the impact of the LTI programs also having a small negative impact. But the main headlines of the profitability development, I would say, were, on the one hand, a slightly positive currency development. As you remember, last quarter, we had quite significant impacts of currency, but this month -- this quarter, it's much more mild and actually slightly positive. So I will not go into more detail like I did last time.

The acquisitions, however, are then a detractor of about 0.6%. And also the tariffs had a bit of a negative impact on the profitability for the quarter. Nothing dramatic, but I have to admit that we did not manage to completely compensate for the tariff impact and the turmoil in that particular area throughout the quarter. And so I think that are the main contributors to the profit development for the quarter.

Talking about currency, also for next quarter, we do expect actually, in absolute terms, a continued negative development of the currency contribution due to the fact that the average rate continues to lower, all things being equal. And therefore, we would expect anywhere around SEK 800 million potentially of cost impact, also depending, of course, and that remains to be seen on the revaluation of assets on the balance sheet.

If we then take the profitability and dive a little bit deeper into each of the business areas, highlighting the main contributors to the respective profit developments on Slide #13. Then starting with Compressor Technique. First of all, 25.3%, continuing at a very good and solid margin. There was a slight detraction from the acquisitions, which is, in our belief, a very important investment in future growth. We also front-load a bit more with costs in order to safeguard a good, speedy integration process from the beginning onwards. And that is the reason why we see a bit more of detraction from the acquisitions. Otherwise, I don't think anything else was very strong.

Secondary, maybe also, of course, the tariffs had to have a minor impact as well. On Vacuum Technique, here, a bit of a mixed picture, a bigger impact from currency, as you can see. The main reason is that last year, we had quite a big negative impact, and that in the bridge then turns into quite a significant positive. Otherwise, it would be relatively comparable to the other business areas, but that's the reason for the high positive. On the other hand, volumes were the main detractor. We see, of course, the top line going down with SEK 591 million, and that has an impact on the profitability on the bottom line. That's the main contributor. But also here, tariffs are part of the equation. Again, a minor impact, but still an impact in our profitability development. And of course, we already mentioned the restructuring net impact in the profit bridge as well.

Industrial Technique, also here, the impact of the restructuring cost, as I already mentioned. Further then also revenue volumes being negatively affecting the profitability. The currency also slightly negative impact from a margin point of view. Also, the acquisitions were a bit dilutive. So overall, going to 18%. But I think with the restructuring activities, we are also there working hard to try to turn the corner and improve the profitability. As already indicated, we evaluated quarter-by-quarter how things develop. And whenever needed, we take the necessary measures. And we need to do it cautiously because, for example, in Vacuum Technique, you've seen the very solid development of service. So obviously, we cannot just cut away everywhere in the organization. We need to do it in a careful way, so we don't jeopardize the growth of the respective businesses.

And then last, in the table here, Power Technique with delivering a solid margin of 17% again. Here, as we already mentioned, the main topic of the lower profitability from an organic point of view was more the functional costs. We are investing in a new division as one aspect of it. We are also working on a number of transformation projects, rejuvenating some of the old ERP systems we have for specialty rental for some of our production entities, for example. And that also triggers a number of additional costs for the time being. But over time, of course, we expect them to become more efficient and as a result, also improve the margin coming from those different investments.

Also investments in dedicated salespeople in Power and Flow also within IFD in the Industrial Flow division, we are working hard to build that organization so we can leverage the sales of all the different technologies we have acquired in the last few years. So I think that explains the overall profitability business area by business area. If I then move to the balance sheet, I would say, relatively uneventful. Of course, on the one hand, intangible assets go up due to the acquisitions. On the other hand, we amortize, so basically quite stable.

We see some impact on the inventories, for example, which is beneficial. We are actually indeed improving the inventory levels across the organization with all the different actions that we have ongoing. The receivables overall fairly quite stable, especially from a relative point of view. So we are quite happy with maintaining that good performance on the receivables side. On the equity side, also there, not so much to mention, mainly the equity is changing because of the fact that we are generating more profit, while on the other hand, of course, we are also paying dividends. And on that point, I would like to just highlight the fact that tomorrow, we will actually pay the second installment of the dividend related to 2024, SEK 1.50 per share roughly in total volume, an amount of SEK 7.3 billion.

And with that, I turn to the cash flow. In the cash flow also there, I think a solid performance. You could say, well, yes, it's a little bit lower than last year. But on the other hand, quarter-over-quarter or over the different quarters, I think this is quite a significant value of operating cash flow we are generating. On the one hand, we have a little bit lower operating cash surplus, but we have a little bit less taxes paid. On the other hand, we have a slightly less positive impact from the change in working capital compared to the same quarter last year. But we also see a gradually slight slowdown in the increasing rental equipment, but also in the investments of property and plant.

We continue to do a number of investments that are necessary for the future to replace some of the old assets, but also to build some new capacity, but at a slower pace than we used to a while ago. Also, of course, given the current climate, I think that makes a lot of sense. And with that, we end up with the SEK 7.3 billion operating cash flow. And with that, I think we have come to the end of the comments to the financial statements. And I would like to hand over back again to Vagner, who will comment a bit more on our near-term outlook.

Good. Thanks, Peter. And once again, I would like to repeat that our forward-looking statement when it comes to the outlook is not -- is a sequential guidance. It's not a straight projection of our orders received. And again, to do that, to come to that statement, we look to the external world. And once again, we don't see a change in the environment. The world continues with a lot of uncertainty that are not supporting our customers to take decision, especially on large orders. So -- and then when we also look to our business internally, we don't see a dramatic change.

We talk with our 24 divisions, look to the pipeline, different market segments, and we see no reason to believe that there will be a dramatic change compared to Q3. So that's why we continue with our statement that we expect that our customer activity to remain at the same level -- to remain at the current level. And then I would like to invite you for our Capital Markets Day that will happen in Germany. We will first go to Stuttgart, and there, we will have some presentation. And after lunch, we will go to our innovation center in Breton, where we will share some of our innovations related to Industrial Technique and Vacuum Technique. And I'm looking forward to see you there.

Yes. Thank you, Vagner. And we actually have still a few places left. So if you're really eager to see those products, then please come forward so we can reserve your seats. With that, we come to the end of the presentation, and we would like to start the question round. Again, I would like to repeat, please refrain yourself to only asking 1 question at a time. And then we are looking forward to receiving your questions. Back to the operator.

[Operator Instructions] The next question comes from Daniela Costa from Goldman Sachs.

I want to ask a question about sort of what you mentioned regarding the margin still and the fact that you didn't fully compensate the tariffs entirely. Is this -- do you see that as sort of a delayed impact? We should see sort of eventually the full compensation within the coming quarters? Or is it more sort of an intention to not fully compensate it, I don't know, because of competitive reasons or anything else? Can you elaborate a bit there, please?

Sure, Daniela. Thank you for your question. No, first of all, it's definitely not intentional not to fully compensate for the tariffs. I think it's just been a very turbulent quarter with a lot of changes, especially towards the end of August with Section 232 being added to the equation and asking quite a lot of effort from big parts of the organization to investigate more deeply and to qualify a number of products, et cetera. So that has caused, of course, a bit of delay in being able to answer fully to some of these issues.

And therefore, we have somewhat higher tariffs. I wouldn't say that it is necessarily so that in the very short term, we would be able to fully compensate, but we are quite confident that over time, over the quarter that we will be able to compensate for the tariffs as they exist today.

With that, I also need to immediately apply some caution because as the changes are happening overnight very often, we don't know, of course, what's coming, but we continue to monitor it very closely. Maybe one thing to underline as well is that I did indicate that the tariffs did have an impact on the profitability for the quarter, but I also want to underline that the impact was not humongous that it was not totally destroying the profitability level. But we do admit that we did not manage to fully compensate for the tariff impact for the time being.

The next question comes from Michael Harleaux from Morgan Stanley.

I'll limit myself to one as requested. On the large gas and process category, would it be possible for you to help us understand where we are in the LNG ordering cycle?

Well, I think to say exactly where we are in the cycle, I think it's a bit more difficult. What I can say is this -- our presence in the market, we cover several market segments including LNG. Particularly this quarter, we did have orders on LNG as well. We had orders for fewer gas boosters. There are quite a lot of investments ongoing to increase the energy production capacity with gas-fired turbines. So -- and we do have products for that. And -- but we also saw good order development in industrial gases, for instance. So it's a quite a diverse market, let's say, segments that we cover, and we saw a good development this quarter, including in LNG.

The next question comes from Klas Bergelind from Citi.

So I just want to come back on the impact from tariffs. You mentioned Section 232 added through the quarter, but that was 18th of August. And then you probably had some inventory to cover you through September, right? So shouldn't Section 232 hit you harder, Peter, in the fourth quarter when the full effect kicks in from steel and aluminum. So shouldn't we see a weaker drop-through here in the fourth quarter? Or can you take out enough cost to raise prices to mitigate that incremental impact?

Thank you, Klas. I think a very fair question and logical reasoning, of course. But I think it's also fair to say that the introduction of 232 didn't allow us immediately to get to lower tariffs with the Section 232. There's a lot of documentation required to pass the customs in order to prove that you don't need to pay 200% tariff or that you pay 50% tariff. So as a result, I think we had a bit of a spike, you could say, maybe in September towards the end of the quarter when it comes to the impact of 232.

While now, of course, we have worked with a lot of people in the organization on trying to sort out both through our suppliers, both through our engineering departments throughout different locations, et cetera, how we can document all the products in the best possible way in order to be able to get the best possible tariff, so to say, under the present rules.

So as a result, I think in quarter 4, we are better placed to pass the products to custom duties. That being said, I think on the other hand, of course, there will be more products going through the full quarter, as you indicate. And therefore, you could say that in absolute terms, the cost will be higher. But I think overall, and it's hard to really estimate, of course. But overall, I don't think it would result in a dramatic increase of the tariffs in the fourth quarter for us.

The next question comes from John Kim from Deutsche Bank.

I'm wondering if you could give us some color on what you're seeing in semiconductor demand. I'd say fairly recent news flow has been positive both on the memory side, plus you have better clarity on what Intel is going to do or not do. Can you just tell us what you're seeing in VT right now and how we should think about development into next year?

Yes. What I can say, I think when it comes to leading edge nodes, I think the market environment is very positive, very good. A lot of investments ongoing, players that are -- some that are more mature on scaling up really the leading-edge nodes. Some are trying. And there, I really cannot say where they are. So we also not -- we don't comment on specific customers. We are not allowed to talk about specific customers.

But one thing that is important to remind, leading edge node is going well, and we get orders. We are happy with that business. But of course, the entire market still has quite a lot of capacity. So -- and if you take a little bit advanced nodes and legacy nodes, there -- there is overcapacity. And of course, we need the entire market developing very well in order we can see a bend in the trend when it comes to orders received in that market.

Okay. And can you comment on memory, please?

Sorry, I didn't get the last comment.

Could you offer a similar comment on memory, memory customers?

No, we are a bit more agnostic when it comes to memory and logic. We are present in both markets. And I think if there is a good development in that market, we will be able to capture that development. I think we are well positioned to capture any movement in that market.

The next question comes from Sebastian Kuenne from RBC.

I spoke recently to some of your competitors in Europe, and they speak of a more aggressive pricing behavior of some of your American competitors inside of Europe. Could you maybe give us an idea of what the pricing situation is and whether that's related to the currency differential?

Yes. I cannot really comment what is happening with our competitor. I must say we do have positive price development in our -- if you are referring to our compressor business, for instance, we do have positive price development, including in Europe.

We also have positive development in the U.S. that we try to compensate as well for the tariffs. That's what I can say. difficult for me to judge what's happening. I think our position in Europe remains quite solid. I think we had a good development in Q3. As you could see, I mentioned that we had positive development in Europe. So we are quite happy with the development in the orders that we have had in Q3. So good. That's what I, let's say, I would like to comment when it comes to price.

The next question comes from Magnus Kruber from Nordea.

Magnus from Nordea. Sorry to labor the point about the tariffs. I think you had a 40 bps headwinds on the organic part in the bridge -- margin bridge this quarter. Could you help us frame the tariff impact within that? I'm not sure if you want to comment exactly what it was, but some help on the magnitude would be helpful.

Yes, I think it's hard to pinpoint exactly, of course, because, okay, on the one hand, we do follow up quite closely what is the exact impact of the tariffs. As such, the custom duties that we need to pay when we clear the goods. On the other hand, there's, of course, a lot of indirect costs as there's a lot of people in the organization working hard on the whole topic. Secondly, there's also additional storage costs when you are holding goods for a longer time before clearing them into -- waiting for maybe additional information or other type of things.

And then last but not least, of course, we also work a lot with extra support external to help us make sure that we don't make big mistakes in the way we assess the value on which the custom duties will be paid. But like I said, overall, I think the tariff impact was not dramatic.

It didn't turn around the profitability completely. It was one of the contributing factors. So okay, as you say, minus 0.4% overall on the group from an organic perspective. Tariffs were a contributor to that, but not the only one in there. There was also volume mix and price combined, you could say. So I think, like I said, no very substantial impact, but altogether, still an impact in that I think we didn't -- we don't want to shy away from, so to say, to say that there is a minor negative impact from the tariffs in the profit margin.

The next question comes from Alexander Jones from BofA.

You mentioned that industrial compressor orders in Europe were up in the quarter, whereas last quarter, you talked about stable. Could you highlight for us whether that's driven by any particular areas? And how are you thinking about that European outlook in the coming quarters?

I think it came especially from our effort -- we have created as well a new division that we call Air & Gas Solutions. And they managed to have quite a good development for some gas generation project. I think we did quite well. Also, medical air did quite well. There are some pockets where we can find good opportunities for growth.

But the industrial market in general, there was not a huge uptick. But in some pockets, we managed to have good business. I think it's also fair to say smaller compressors developed quite okay as well. That was important. So -- but not something that I wouldn't like to say the overall market is bouncing back. It's more driven by the activities that we have done to try to gain market share and in some areas to have -- to capture the opportunities in a market segment that is developing a little bit better.

The next question comes from Rizk Maidi from Jefferies.

So the question is, can we double-click, please, on Compressor Technique in 2 regions, North America and China. If you could just walk us through how you've done in small- to medium-sized compressors, gas and process and large industrials and how you feel your competition has done as well, how you feel you've done versus the market?

I think in North America, to say against the market, I think it's a bit difficult. But in North America, we are quite happy with the development in Q3 because we have all these uncertainties around tariffs and Session 232 and the teams, they did a very good job, very solid job.

We had a double-digit growth in North America when it comes to compressors. We also had good development in -- in gas and process compressors. And there is more around industrial gases and fewer gas boosters that they go to gas-fired power plants. So that was the pockets that we're doing quite well. And then if I comment a little bit more about China, there is a little bit more challenging. I think the scenario has not changed. We see less projects in industrial compressors, but also in gas and process gas and process is a little bit more difficult than industrial compressors.

The next question comes from Rory Smith from Oxcap.

It's Rory from Oxcap. I just wanted to sort of double-click on that industrial compressor piece. And if you could add any more color to the difference you're seeing in the quarter between the sort of small and medium-sized industrial compressors and the large industrial compressors. Is that by market, by region? Any color there? And I might try my luck with a follow-up, if that's okay.

I think overall, like I said, it's a bit more difficult in Asia, particularly in China that we have mentioned already. There is a very small difference between small and large, a little bit more in favor of the smaller compressor, but it's not a huge difference. It's not something that is becoming an indicator, I would not use as an indicator because the difference is very small. But it was more in favor of the smaller compressors.

Understood. And if I could just follow up on that. You obviously called out the investment you're making to innovate to cost compete in China. I was just wondering if you'd be able or willing to put some numbers around that R&D piece, yes, for the investment in sort of, I guess, not lower spec, but yes, innovating to cost compete. Any numbers around that, that would be the question.

No, I don't have a number to share. But what I can say, we are focused as well to be competitive in China. We have done an investment in our facility in Wuxi that we call now the Wuxi campus, where we have concentrated most of the Compressor Technique facilities in one place.

And that gave a lot of R&D capabilities to the team we have in China, capabilities that we didn't have before with more test cells with more R&D facilities to do test, to do design. We are increasing the autonomy that our Chinese teams, they have in terms of design, still with good collaboration with our Belgium team, but a little bit more independence. And I think that is going well. And that's why we would like to share that product because I think that comes out of that reorganization and that investment.

The next question comes from Johan Sjöberg from Kepler Cheuvreux.

My question is also regarding semi CapEx. I understand your near-term comments on leading edge and also the overcapacity. I think that is sort of comments you made before, Vagner, if I'm not mistaken. But given all this, a lot of news flows in during Q3 here, when you're talking to your customers about sort of 2026 and beyond, how have they responded to these news and also especially the future CapEx plan from their side because -- I stop there.

Yes. It's difficult to talk about 2026. We only talk about Q4 first. In Q4, we believe that it's going to be stable. I think it's difficult. You know this market, how it works. It's key account business. When they decide to place order or to populate a fab when they -- first, they do the R&D stage and then they do the pilot, then they need to try to nail that production facility with the right yield and then they scale up and sometimes can come very fast. I think it's difficult for me to comment looking at 2026 or even 2027. What I can say from Q3 to Q4, we see the market -- we don't see any reason to change the trajectory that we have seen lately.

The next question comes from Anders Idborg from ABG.

Just wanted to ask about acquisitions. So we've seen a very nice flow of bolt-ons. I'm just a little bit surprised when we look at the -- over the last, well, 6 quarters, basically, there's been very little of EBIT contribution on the bridge, and I don't have really the impression that you bought unprofitable companies here. So what is the reason? Is there some just initial cost restructuring going on? Or could you -- would you care to explain that?

Yes. Thank you for the question. I think we -- definitely, we try to add good businesses to our portfolio of technologies and companies that we have definitely. But we also have an effort to integrate these companies faster and I mentioned during the presentation that we -- for instance, cybersecurity is very important. And we try to -- that is a kind of nonnegotiable. We try to bring that to our spec as soon as possible. We have deadlines to meet because I think it's very important to protect the assets that we have bought.

And of course, that incur in some cost at the beginning. We have seen now with the acquisition of Shareway. For instance, there was quite a lot of costs that we had at the beginning. So -- but of course, those companies are profitable. And that happened -- that has happened as well in the years before. So the first year is a bit more challenging. And then we recuperate over time deploying synergies.

And acquisition is very important for us. We have reorganize our post-acquisition process to be able to capture the synergies in a good and structured way. We are reinforcing the teams there because we have acquired more companies that required even more structured process that what we used to have. So we are investing on that as well to be able to capture this value that we believe when we -- before the acquisition. So I think we are happy with the companies, a lot of activities. And year 1, we see that is normally challenging because we want to do some of the integration items quite fast.

The next question comes from Sebastian Kuenne from RBC.

I have a question on VT. You mentioned lower volume as one of the key reasons for the lower margin. But at the same time, you have competition that sits in Japan like Ebara, you have Busch in the U.S., [ Pfeiffer ] in Germany. Is the price situation in the global vacuum pump market stable? Or do you see the pressure from manufacturers in lower-cost countries effectively?

What is key for the price development is technology, and we need to continue to develop our products to come with better products to be able to exercise some pricing power. And I think that's our focus, and we will continue to develop the products that will allow -- that can deliver superior value to our customers, and that could help us with our price efforts. So -- and I think that's where we are focused on now.

Okay. So no change in pricing.

Next question comes from Magnus Kruber from Nordea.

Just reverting to some of these announcements that has been in the media over the past couple of months with respect to some big framework agreements, particularly on the memory side. Is there any way you can sort of help us scope what these opportunities could mean to you if they come to fruition over the coming years? How -- can you frame them, for example, with respect to sort of how big that potential is compared to your legacy semi business?

What I can say about the market, we -- let's say, we know all the players in the U.S., in Asia, including China. So we are present in all these players. We have a good position in most of the players. If this comes to fruition, we will be there to capture. I think that is our main focus. We don't know which one we will scale up first or later. That we don't know. I think the most important for us is what give us confidence as well is the fact that we are very well positioned. Any movement we will be able to capture.

Got it. And can I just have an additional question. You talked a little bit about ramping up on R&D in Compressor Tech going forward to drive additional growth. Is that sort of a China-focused initiative? Or could you highlight a little bit of potentially how much you would be willing to interest and invest and in which pockets?

I would say the investment were more in capabilities in facilities, better places where they can test the machine testing environment. So those capabilities we have -- we have created -- we have increased actually. We always had, but we have increased in China. And I think we continue -- this is not a dramatic increase in R&D in Compressor Technique. They have been focused. They will continue being focused. But I think we can get more out of our Chinese organization. That's what we are doing, getting ready for that.

Okay. Thank you very much, Magnus, for that question. And actually, with that, we have also answered the last question on the call. I would like to thank you all for your presence and for listening to our presentation.

As always, of course, should you have any further detailed questions on any of the business areas or the group overall, you're more than welcome to contact our IR department as always. So with that, thank you very much for attending, and have a great rest of the day. Thank you. Bye-bye.

Welcome to the Atlas Copco Q2 2025 Report Presentation.

[Operator Instructions] Now I will hand the conference over to CFO, Peter Kinnart. Please go ahead.

Thank you, operator, and thank you, everybody. Welcome, everybody, to this quarterly earnings call for the second quarter for the Atlas Copco Group.

Together with me is Vagner Rego, and we will together join -- drive you through this presentation. We will try to be crisp and sharp, so we leave enough time for you to raise your questions based on the published results.

But before I hand over to Vagner, I would like to restate, as usual, that I would like to ask you to only raise 1 question at a time so we give everybody the opportunity to at least raise their most important question. And if we, of course, get through all of people online with their questions, then of course, we can come back for a second follow-up question should you have.

But with that no further ado, I will hand over to Vagner Rego.

Thank you, Peter, and welcome to this conference call.

Before we continue with our presentation, first, you can see 2 vacuum pumps that we utilize in our scientific vacuum division. They are used in mass spectrometry and has been a good development also in the quarter for this type of products.

Going further then into the Q2 summary, you can see that in terms of equipment sales, we have seen a quite mixed demand with the divisions performing quite differently. If I look then to Compressor Technique, we had a negative development in orders driven mainly, but not only for -- by Gas and Process compressors. I was happy to see that equipment vacuum was flat, not a positive growth in semi, but positive growth in industrial and scientific vacuum. But it was good to see the overall business area, good development. Orders for industrial assembly and vision solutions were basically unchanged. And there, we still see a quite difficult environment in automotive. So -- and when it comes to power, Power Technique products, starting with power, air products and pro products, there, we had a quite positive orders received, good development when it comes to orders.

If we then look to the service business, there, we had a very good development. Our service business within the business areas, plus our rental business is developing very well. We are quite happy to see that we continue to grow our service business. As you know, as you have seen, we had quite strong currency headwind that impact the absolute value. And then revenues have been impacted as well negatively. Two -- three business areas had negative organic growth when it comes to revenue, while Compressor Technique had a positive development. As a consequence, operating profit was also impacted by currency in one hand. In the other hand, we had a positive contribution coming from the combined volume, price and mix effect. Cash flow is healthy, and that allow us to continue to do investments in our own facilities, in our own company, but also in acquisitions that we managed to add another 5 companies in our portfolio.

So going then into the Q2 financials. So the decline, we had around SEK 40 billion in orders received, a decline of 1% organic. We go more in detail on the decision, but it continues this quite mixed demand in the market. Revenues, as you can see as well, minus 2% decline and operating profit of SEK 8.4 billion. That means that represents a margin of 20.6%. So solid cash flow and also quite a good return on capital employed, although it's going down, but 26% is a solid level.

If we then go to the development around the regions, I think if I start with Asia, we had a flat development, 0 growth in Asia. If I give you a little bit more color, we see a positive development in Industrial Technique, mainly driven by orders in the electronic area. So within our industrial part of the business. So positive development in Industrial Technique. Also vacuum is developing quite positively in Asia for us. And while PT was flat and CT was negative, Compressor Technique was negative, mainly driven by lower orders in equipment, specifically in China.

So when it comes to -- if we then go to Europe, we see minus 2%. And there, we saw negative development in Compressor Technique, Vacuum Technique and Industrial Technique and a bright spot in Europe was Power Technique, where we had a quite good development in orders received. When it comes to North America, we had a quite flattish month, positive in Power Technique, but Vacuum Technique was negative, mainly driven by the semiconductor market, where a couple of key accounts was not investing as before. And then you see the development in South America and Africa and Middle East continues to be very good.

So with that, if we then look into our sales bridge, we see that we still have a positive contribution coming from our acquisitions of 2% in both in orders received and revenues. We see also the currency developing negatively, minus 9% in our orders received, minus 8% in our revenues. And then the organic, like we mentioned before, minus 1% in orders, minus 2% in revenues. So it was a mixed clear picture of a mixed demand for us.

If we then see the contribution by business area, we saw that in the last -- we can see in the last 12 months, Compressor Technique has a contribution of 46% in our orders with minus 7% now organic. Vacuum Technique, very good to see positive organic development of 3%, also positive development in Power Technique, plus 10% and flat development in Industrial Technique.

So if we then go more in details and talking about Compressor Technique, we had an organic development of minus 7%. If we start then with the industrial compressors, it was down, overall down, but mainly driven by larger compressor. If we look to smaller compressors, more getting close to be flat and larger compressors is more -- it was more negative. And most of the large compressor projects are in China. And I think there, you see the main driver for a lower development in industrial compressor, but not only. I think Europe was slightly negative there as well, good development in the U.S. So I think I would say that China had an important impact.

When it comes to Gas and Process compressor, we saw a significant decrease. But then we need also to remember that this -- we talk about large orders, not too many orders. Sometimes when we get an order, it can go up to SEK 200 million in one order. So -- and we have a tough comparison last year and last quarter as well. And we don't see -- we didn't see too many projects being decided in Q2 2024. There are a lot of hesitation in the market, and customers did not decide as we usually were seeing.

So positive note, service continued to grow in all the regions. I think we are quite happy with the development of the service business in Compressor Technique. Also, we had organic revenue, solid profitability supported by the increase that we had in volumes and also affected by the currency and acquisition. Return on capital employed remains at a solid value at 82%. And we keep -- and here, as an example of innovation, we share a different application. We are investing in filtration products. And here is one example of product that utilized in filtration for liquids. So quite a good development on revenue and profitability and headwinds when it comes to orders in Compressor Technique.

Vacuum Technique, like I said before, we are happy to see a positive development, driven mainly by industrial compressors, industrial vacuum and scientific vacuum together with service. We still see slightly negative development in the same -- the semiconductor equipment business. So although we see solid development in Asia, I have mentioned as well before, we see negative development in semi in Europe and North America. Revenues down 5% organic, and the profitability was around -- was 18.9%, supported by the activities that we are doing to improve the cost base.

So we have announced in January a restructuring plan that this is still ongoing, and we started to see the benefit in the bottom line. Of course, we had the currency having that also played a role in Vacuum Technique, where Peter will explain more in details, but we are happy to see the positive effects from our sourcing and restructuring activities. So -- and then as an example of innovation, we have our new GHS pump VSD+. This product was released at the beginning of the journey when we started with vacuum when it was still being Compressor Technique, and now we came with a new range of products to further drive innovation and efficiency. That is Vacuum Technique.

If we then go to Industrial Technique, we saw a decline of 1% and the equipment -- demand for equipment in automotive was flat. And here, we have some parts of the business that are doing really well with -- if you take, for instance, everything connected to automation, quality assurance and flexible production line, upgrades to have a more flexible production line. That is going quite well, I would say, even with organic growth and everything connected to new production line, like dispensing equipment and vision equipment. I think there is a bit more difficult because we don't see too many projects like we used to see.

So overall demand for the general industry was stable. So -- and that includes that we got a quite important order for electronic industry and the service business remained basically unchanged. Revenues, there, we have quite a lot of headwinds when it comes to revenues down 12% with an operating margin of 17.1% that had a quite significant impact coming from currency as well and a positive organic development. Also there, we are implementing some measures that we see good results. As an example of innovation and there, we continue to do our efforts to innovate our products, this is a manual torque range that has been -- has received the Red Dot Award in 2025. We are quite happy with the award as well.

If we go then to Power Technique, we had a solid order development of 10%. I think it was quite encouraging to see perhaps the level previous year was not so strong, but I think very nice development. Basically, several product lines in power, in industrial flow, in portable flow, they all developed quite well. Specialty rental as well had a quite good development. Unfortunately, we haven't seen good revenues. It was down 1%. But of course, we had a quite tough comparison. We were last year catching up with our backlog. So we had quite solid stronger revenues. And with the orders we get now, revenues should come in the future.

Operating profit margin, 17.1%. That was also negatively affected by currency, but not only also there, we are investing in this Industrial Flow division. Like we mentioned in the previous quarter, we've decided to create -- to separate the portable flow from the industrial flow. There is a new division we are investing. We still don't fully harvest on that. We start to see the first signals, especially in the U.S. that we are moving in the right direction. So as an innovation, we have this new dryer that is focused for portable application -- portable and rush applications to be used with our portable compressors. So -- and then if we look then to our profitability, we have reached in the quarter 22% EBITDA.

With that, I transfer to you, Peter, then you can continue on other lines of our profit margin.

Thank you, Vagner. Net financial items were negative, but slightly slower than last year, interests were basically on the same level, but the financial exchange differences were more positive compared to last year. We also had a small additional positive impact from the bonds we bought back from the market, as a kind of onetime small effect there. Then the profit before tax at SEK 8.4 billion and the tax expense at SEK 1.9 million, which is 22.4% effective tax rate. You see that last year, we had this very unusual low effective tax rate of 17.6%. That was mainly due to the fact that we then released a provision of SEK 510 million related to a high-tech tax incentive that we have in China. So this is not the normal. So the 22.4% is actually much more close to what we expect to see. And in fact, for the third quarter, we expect an effective tax rate of around 22.5% going forward.

If I then move on to Slide #12, I would like to dig in a little bit deeper into the profit bridge because there's quite a lot of different impacts here. First of all, we have the LTI programs that we exclude, which is SEK 258 million, a little bit positive for this year, and SEK 176 million, negative for last year. Then we have had last year restructuring costs in Vacuum Technique, where we started basically with the first leg of our restructuring activities in that case, mostly around the industrial and scientific vacuum space, which is added back.

The acquisitions are slightly dilutive as you can see. But then the headline, I would say, of the bridge here is then, on the one hand, quite a strong negative currency impact as Vagner already explained as well. But then I would say, on a positive note, a positive drop to for the overall group performance with despite, let's say, a negative top line volume/price mix effect here on the top line. So where does it come from? Well, basically, the price/volume mix effect in total is the main reason for this improvement plus a lot of smaller other items that together add up to this amount and this margin improvement.

On the currency side, there is a mixed bag of different things. Considering the height of the amount, I would like to specify a little bit more in detail. First of all, the translation impact. Well, all the currency impacts were basically negative in absolute terms. The translation impact, however, in relative terms was accretive to the margin. The normal transaction effect, excluding the operating exchange differences, was on the other hand, negative and they basically compensated each other. And the whole remaining part was then related to balance sheet revaluations. So basically payables and receivables that we evaluate at the period end rate. And for the majority, I would say roughly half of that is related to intercompany payables and receivables.

And then the other half is kind of related to the external exposure we have. And we, as a group, are basically long in U.S. dollars and we are short in euro, and given the strong development of the dollar over the quarter, starting with a very deep drop in April and then followed by a continued decline in June, led to this very significant currency impact, reducing the margin quite significantly. But again, once we were able to identify that, I think the positive that we take out of it is that we see a positive drop through.

And if you look in more detail on each of the business areas, then I think you can see that 3 out of the 4 business areas have actually a positive drop through and all of the business areas are basically struggling a bit with the currency development across the board. Some more than others. In Compressor Technique, it was a negative impact, but relatively mild. And then the positive drop-through was driven by increased organic revenue volumes, which I think was quite positive here, resulting in a fantastic margin of 25%.

On Vacuum Technique, the currency impact was quite significant. But also here, very pleased to see that the impact of all the efforts that the division and the business area is doing are really starting to kick in and starting to pay off, resulting in a better underlying margin than the previous quarter. And it's related to the restructuring activities, of course, on the one hand, excuse me, but also related to initiatives around product cost reduction, to sourcing initiatives and many other things that are ongoing at the same time within the [indiscernible].

On Industrial Technique, also here, quite a significant currency impact, mostly linked to the fact that this is largely Europe-based manufacturing environment with exposure to all of the areas in the world, of course, and then quite a big impact. But also here, a positive drop-through for the business area, improving the margin somewhat, but then, of course, completely compensated by the negative impacts on the currency. So despite the negative volume development, price -- volume price/mix development still a better margin ultimately than if you exclude the currency, of course.

Power Technique, here, we also saw a negative currency effect but much softer as well here than for the others. And that has to do with how the business is basically spread out across the globe and where the manufacturing is taking place. So they are a little bit less exposed than some of the others. But here, we saw a negative impact on the margin from the volume/price mix and other items, partly as Vagner indicated, mix was a negative item, but also the investment in the division, where we are trying to put in the right resources in place to really leverage the capabilities of the industrial flow business, for example, which are pulling down the margin for the time being a little bit.

How do we see the currency for the near term -- to be honest, it's probably the most difficult question to ask at this point in time, looking at how the currencies have developed over the last quarter, but all things being equal. And then, of course, comparing the currency rates against last year, we still continue to expect a negative effect, but this quarter was heavily affected by the revaluations. And if the currencies would stay exactly where they are today, then that devaluation impact would be significantly lower. So still a negative impact, but significantly more moderate we expect than we have seen this quarter.

Then on the balance sheet, I think it can be fairly short. If I compare balance sheet of last year June to this year, June, then we have had more, of course, acquisitions that have added to the equation, which, on the other hand, has been offset or more than offset even by the currency development of the balance sheet items. And then on the other hand, also some organic growth of the balance sheet items, which was mainly linked in to the cash development, which was quite healthy as well throughout the quarter. Of course, also here to take into account that we paid the first installment of the dividend of 2024 into 2025. On the equity side, also here, no major things to comment on besides the fact that it's mainly the equity that changes as a result of the profitability and the payout of the dividend and the revaluation of the equity as a result of the currency development.

Then on Slide #15, we have the cash flow. This cash flow, as you can see, is not a record cash flow. It was actually even a little bit less strong than last year, which is also why we felt that to qualify it as healthy was good because the level is still quite reasonable with SEK 6.1 billion operating cash flow. And the decline is mainly coming in this case, from the operating cash surplus, basically, let's say, the lower operating profit that we have seen in the quarter. There are, of course, other movements in there like the working capital that was a little bit up in view of certain deliveries of projects that need to happen in the third quarter. But that was also offset partly by increase of liabilities. So those are, I think, the main items when it comes to the cash flow.

And with that, I would like to hand over again to Vagner, who will comment on the near-term outlook.

Very good. Thank you, Peter. And here, once again, this is our forward-looking statement is a sequential guidance between Q2 and Q3 this time and is not a straight projection of our orders received. We try to do our best estimation about what is going to happen with our customer activity level in the coming quarter. So we also need to consider that the uncertainties in the geopolitical scenario remains in place. I don't see any change. I think we all follow the news and what is going -- what is happening in the global economy. I think we don't see that -- we don't see light at the end of the tunnel that the environment is going to be better. So that's still very difficult to predict.

And then to give you guidance, of course, we look into our business. I must say that this quarter, we went even deeper to understand what was going on in terms of the activity level. And then based on the information we get from our divisions in their engagement with our customers and everything that we see in the market and based on the -- and the expectations as well of our divisions, we come up with this guidance that while the outlook for the global economy continues to be uncertain, and I think that we all agree with that, we expect that the customer activities will remain at the same level.

Okay. Thank you, Vagner. We are almost ready for the Q&A, but just I would like to still steal 1 minute of your attention referring to our Capital Markets Day, which will take place on November 26. So if you haven't done already and have not been informed so far, please try to save the date. I think it will be definitely worthwhile to take part.

This time, it will take place in Stuttgart and in Bretten. In Stuttgart, we will start with the general presentation of the group, but we will focus also on Industrial Technique and Vacuum Technique this time. And then in the afternoon, we will go to Bretten, where we have our innovation centers, which is focused around all kinds of fastening and joining technologies, where we will then showcase different products and different solutions we can offer to our customers within the Industrial Technique business area, but also innovations that we are bringing to the market from our Vacuum Technique business area. So I think definitely worthwhile to spend your time to join us there. And the registration link will be sent out after the summer. But November 26 can already be highlighted in your agenda as an exciting day to look forward to in the later part of the year.

But with that, enough talking, I will give the word back to all of you to shoot your questions at us and we will try to do the best we can to answer them satisfactorily.

[Operator Instructions] The next question comes from Michael Harleaux from Morgan Stanley.

Just one, if you could give us some color on the underlying drivers of the weakness of the demand for the large Gas and Process category that would be very helpful.

Thank you for the question, Michael. Yes, what we see now, it's quite a lot of hesitation from our customers to place orders. So -- and then like I mentioned during the presentation, we do have some large orders. And then if you have 2 or 3 customers hesitating or further analyzing asking more questions, so then you can have a quarter where orders can be quite weak.

So on the other hand, what I can say the activity level in this type of the products remain quite healthy. We see quite a lot of projects, but I think the main question is the hesitation how we see customers taking longer to decide to place the orders. A lot of discussions, but we -- no orders. But it's also fair to say I don't see signals we lose more orders as well. I think that's the clear signal. The projects are there, are alive. It's a matter of time now to the customers decide.

The next question comes from Daniela Costa from Goldman Sachs.

I just wanted to follow up on some of the comments you had on the margin and maybe if you could dig a bit further, especially on Vacuum Technique, which was sequentially down from 1Q. And in Industrial Technique, you mentioned functional costs. Even the contribution margin ex FX is a bit lower. So is there anything else more of an exceptional nature, restructuring costs, tariffs? And then how should we think about those evolving in the coming quarters?

Thank you for your question, Daniela. Maybe a good point that you raised is, of course, the burning question of the tariffs, which I didn't even address during the call. And I think the comment we can make with regard to the tariff is that where we are today, we haven't really seen a significant impact at all of the tariffs on our bottom line. We've been able to increase prices a little bit. We've worked with surcharges with certain customers, et cetera. But on the other hand, we've also worked a little bit on certain logistic flows without really moving production structurally from one location to the other. And that has helped us to mitigate basically the impact.

So if we talk about tariffs, we talk about anything between 0%, minus 0.1% maybe impact, but really, really minor at the moment. Of course, taking into consideration that maybe there is still an impact of stock that is already available that is not exposed to tariffs, et cetera. So remains to be seen how things play out. We don't really know exactly what kind of tariffs will be in place to begin with. But at least no major impact so far. And I think the actions we've taken have helped us to mitigate.

When it comes to VT then specifically, your question about the margin, well, I think the currency impact is, as I said, very significant for Vacuum Technique. Also, the revenue volumes are down, as you can see from the bridge on the top line. But despite a drop in revenues, which we have already seen also in previous occasions, we are able to reduce the impact from a cost point of view and as a result, get actually a better margin, better drop-through for Vacuum Technique. And that signal today in second quarter is stronger than it was in the first quarter. And that at least gives us, let's say, a positive feeling about how the future will look, and we expect that we will continue to see the impact of those efforts we have done with restructuring and so forth into the margin and the production cost as well as in the functional cost of the business area.

The next question comes from Klas Bergelind from Citi.

[indiscernible] at Citi. So back to Compressor Technique, obviously, investment decisions pushed the right given the hesitation out there looking at large orders, and that shouldn't improve anytime soon, but no further declines quarter-on-quarter here, at least if we read your outlook right. But on Gas and Process, could you help us, Vagner, with the order pipeline there at the moment? This is obviously a lumpy business. We know that vessel contracting looking at LNG is down a lot and carbon capture and other sort of decarb areas are fading from the peaks. But what are you seeing in terms of pipeline customer negotiations? Are there still interest to place orders, do you think once the hesitation eventually abates?

Yes. Of course, always difficult to predict, but I think we see a lot of activity. I don't see cancellation in projects. Of course, nothing above the usual. You always have new projects coming in, projects dropping out. But I think the activity level is quite healthy. On the Gas processing side, I think it's quite healthy. If you take some particular specific region, if I look to North America, for instance, I see increase in the activity level there. Other areas might have decreased, but there, we see increase. We are quite active coating. But of course, customers are not deciding, but I think the activity level has increased even in some specific areas. But of course, we still need to see, like you rightly said, customers need to decide to go to final investment decision, which we have not seen. And sometimes they have decided, but we still haven't seen the order even if we know that we have good chances there are LOI in places, but those are not firm orders.

So I think there are quite a lot of activities. You are right when you pointed out carbon capture. To be specific, Q2 last year, we had a huge order for carbon capture in the Gas processing plant. And now we need to see if this market will continue to evolve. But there are many other opportunities that are ongoing in this.

For LNG, it's another market segment that's important. We are also doubling down. I think it's important to communicate on larger compressors for air separation. We have come with new technologies that we have invested a bit in AI that allow us to even come with more efficient product. I think it's exciting what we have for the future. But we need to have a better environment and that will allow us to the customers to decide with a bit more comfort, let's say.

Got it. So a quick follow-up. What is the share of Gas and Process today? It used to be 10% of CT. It went up to 20%, I think, maybe even more at the peak? Where are we now in the quarter?

Yes. We normally say that it's around 10% class. It varies, sometimes can be slightly higher when we get some LNG orders, but I think we have been communicating around 10%.

And then super quick, just balance sheet revaluation out of the currency drag. Obviously, like the quarter-on-quarter effect, Peter, given that we had this massive sort of move in the dollar. I wonder whether that also played a role to the currency or if this is only sort of transaction and translation on the average rate?

Absolutely, Klas. The revaluation effect on the balance sheet was really very significant. The normal translation and transaction effect that we normally see, they were kind of in balance. One was positive on the margin. The other one was dilutive to the margin. They basically kind of compensated each other. So what remains from a margin development perspective was mostly linked to those revaluations, which is also why we believe that if we look to the next quarter, the impact of that currency effect should normally be -- even though it will still be there, of course, because our revenues will still continue to be affected based on average exchange rates by the currency development, given the current state of the dollar, et cetera, and also transaction effect will continue to play.

But I would assume that all things being equal, and that I, of course, say with a lot of caution, all things being equal, that revaluation effect should normally be significantly lower if the currency rate remains where it is. And so we think potentially maybe SEK 600 million could be maybe an amount that we would still see negative on the bottom line. But as I said...

Exactly. Yes, it's very important because -- yes, because the quarter-on-quarter effect is obviously what matters here. And unless the dollar is moving a lot quarter-on-quarter, then yes, that should abate. So that's good to hear.

Thank you, Klas. We need to move on to the next one.

The next question comes from Rory Smith from Rory.

It's Roy Smith, from Oxcap. Actually, Michael and Daniela and Klas did a good job of asking my first few questions. So I'll try something else. Vagner, your comments around not seeing the light at the end of the tunnel, no improvement in the near-term outlook. Obviously, mix demand in the quarter just seen in FX, big headwinds there and then some mix and investment headwinds in several of the business areas maybe going forward still. Would you consider at this point, expanding the restructuring program in Vacuum Technique to the other business areas? And what can you say today about your expectations for margins across the group in 2026?

First of all, I think what we did in Vacuum Technique was really necessary. You see the drop in the orders now. And I think we had to take actions. We did. I think it doesn't mean that the other business areas they are not doing, they are doing. Smaller programs that you definitely -- we don't highlight too much, but a lot is happening. And depending on the business area, you can act as a divisional level. For instance, if you have a division that is in a certain market segment that has a little bit more headwinds now, they are already adjusting.

I think that -- but regarding to demand, the one thing that I want to highlight, I think the main point here, the demand is mixed, meaning we have business line or product lines that are doing very, very well. And there are product lines that are not doing so well. Like I mentioned in Industrial Technique is a good example. You see if you take the product lines connected to automation, connected to quality assurance, so -- and flexibilization of the production line, they are doing quite well. So -- and then you take the ones more focused on projects that is connected to new production line, then there is a bit more difficult because you see lower CapEx in that area.

So in a lot of investments or some investment, let's say, going to have a more flexible automation, more flexible production. That's one example. The same can be applied for Compressor Technique. If you take now the new division that we have created, the Air and Gas application division there, we are investing in the organization and you see now the quotation level going up, orders received is improving. So of course, it's not big enough to make a huge difference in Compressor Technique, but the direction is very good. So there are several examples like that. And that's why I think our main header is that the demand is mixed.

And if I may add maybe a comment to that, we also announced in the previous quarter restructuring cost within Industrial Technique. So there are multiple activities ongoing. But that is, in a way, kind of the beauty of the decentralized model that we run is that we have 24 divisions, and they all are in different phases in different parts of the cycle. Some are, as Vagner's explained, are doing really well. Service can be developing very strongly. So you don't want to go out with a general marching order to say, hold all investments because there are still things that we need to continue to do. While on the other hand, the ones that are, of course, in a little bit more stormy waters need to make the adjustments that are necessary.

Great. And any guide rails on 2026 margins?

We normally don't guide on margins.

The next question comes from Alex Jones from BofA.

If I can go on VT, you talked about industrial activity having increased in terms of orders. Can you give us a sense of whether that's actually sort of underlying improvement or whether there's just a comp effect there, and generally what the sentiment is from customers?

Yes. Good -- I think there, if we go back last year, we had quite a lot of headwinds coming from the solar and lithium-ion battery in the industrial vacuum. That is not really what is bringing now the orders. I think what we have done as well because we were nicely positioned to benefit from solar, from lithium-ion battery, from steel degassing, some major market segments that are not as strong as before. So then we concentrate to go more into a diffuse market, and now we start to harvest on that. I think these activities are now paying off. Together with the scientific vacuum that is more OEMs and last year, we had a little bit of destocking on the OEM side, now they come to a normal pace and then they started to place orders as well. So -- and therefore, we had a positive development.

The next question comes from John Kim from Deutsche Bank.

If we could stay on the topic of VT, I think you mentioned in the early part of the presentation that you saw less activity from key accounts in semi cap. Can you give us a bit of color there whether this is a timing issue? Or is it a situation where you're seeing a significant play in investment around CHIPS Act and subsidies? Any color here would be helpful.

Yes. What I can say, maybe a bit repeating what we have mentioned, Asia continue to be strong. I mean all the major countries, we see positive development. And of course, all those key accounts, there is 1 year, they place nice orders. The next year, they need to, let's say, implement what they have ordered, get their production at the right yield and so on and so forth. And then you might have changes in the key accounts. But overall, in Asia, it's very good. Europe has been weak, especially because it's connected to automotive and that the market is not doing so well. And then U.S., you have -- I think there is a major account there that is not -- doesn't have a CapEx budget as before. And I think the U.S. is the main headwind we have when it comes to semi.

The next question comes from Andreas Koski from BNP Paribas Exane.

I want to come back to Compressor Technique and the organic order decline of 7%. I understand that you've seen a significant decrease for Gas and Process compressors. But as you mentioned earlier, it accounts for a fairly small part of the business area. So I just want to better understand to what extent the weakness that we saw in industrial compressors contributed to the minus 7%. Did also industrial compressors decrease in absolute numbers similar to what you saw in Gas and Process compressors?

You should consider Gas and Process was half of the decline. And then the other half was industrial compressor. Industrial compressors in size is much bigger than the Gas and Process compressor. So in relative terms, it is smaller. So...

Yes. If I may, could you indicate that the revaluation impact in the quarter amounted to roughly SEK 700 million, SEK 800 million, or did I misunderstand it?

No, that is approximately right. I think that's around about the amount that we had in operating exchange differences for the quarters, revaluation of balance sheet. Not the regular translation and transaction effects.

The next question comes from Sebastian Kuenne from RBC.

I would like to dig again a bit deeper into the currency or earnings bridge with currency impact. So if I run the calculation, you lost about 200 basis points on margin from currency. And if you say translation effect was the majority here. So SEK 700 million would be translation and the remaining SEK 740 million would be transaction and balance sheet. I just try to figure out how big the transaction impact was, how big the balance sheet impact was? You mentioned earlier, SEK 600 million you see as a rough number for the -- for the first quarter, but SEK 600 million would then mean no negative margin impact. right? Because you have maybe SEK 3 billion on revenues and SEK 600 million on earnings, that's 20% drop-through, that's basically no margin impact. So can you just clarify how big balance sheet revaluation was and whether you really see no headwind from currency in Q3?

Yes. So what I indicated earlier, and I think also what I just mentioned on Sebastian's -- on previous question, sorry, is that we talked about SEK 700 million to SEK 800 million roughly on operating exchange differences and that the remainder of the transaction effect, the normal transaction effect, let's say, excluding operating exchange and translation were from a margin perspective, offsetting each other. Both amounts were negative, but the translation effect was not as high as you indicated, was a bit lower.

And again, I cannot predict the exchange rates period end exchange rates for the next quarter. So I can only assume that if the exchange rate doesn't move that there would be absence of an operating exchange difference more or less. And so therefore, the currency effect would be significantly lower than the SEK 1.5 billion we've taken this quarter. And so that's how we end up based on some of our calculations that there would still be a negative effect considering that last year's average rates were better as well as the transaction effect was based on different rates at the time.

And so therefore, we still think a negative currency effect looking forward in the third quarter. But excluding operating exchange differences, you would end up in the range of maybe SEK 500 million, SEK 600 million, potentially SEK 700 million. It's hard to really nail it down 100%, but that's, I think, about the range, which we think could be the currency impact. Then of course, the reality will be different because things will start moving as the quarter progresses.

Understood. And as a follow-up, I saw that volume price mix contributed 75 bps in this quarter, but the main support came from one-offs and from reduced share incentives. how much of the share incentive support do we get for the rest of the year? And how much can you raise prices...

That's something we cannot predict at all. It depends purely on the share price development. It's linked to the LTI program. So we cannot give any forecast of that. But despite the period end exchange rates, we don't know how they will plan out in the next quarter.

So distributed shares is based on the share price actually. Understood.

Yes.

The next question comes from Gustaf Schwerin from Handelsbanken.

Can I ask on the deliveries in Industrial Technique, which strike quite low. I'm wondering if there's an element of timing on larger projects, or if this is more a reflection of order books getting depleted now?

Can you repeat the question? We missed the beginning of the question.

Yes, sorry. So it's on the deliveries in Industrial Technique. I think the strike is quite low in the quarter. So I'm wondering if there's an element here of timing of larger projects, or if it's more order books starting to get depleted?

No, I think the point we got orders indeed, but those are projects. It takes a bit more time to be able to deliver. So I think that is the main effect. You also should consider that the automotive business is quite in a changing environment. Sometimes they change priorities. It does not help with our planning. So -- but fundamentally, it's the project together with this element of constant change that we have now, I think changing priorities, what needs to ramp up or run down. I think that has an influence of that. Our acquisitions that we did in the U.S. dedicated for Industrial Technique are performing very well. And of course, the invoicing level is not as good. By far, it's not as good as the orders. So they still need to catch up to further ramp up production.

Okay. Sorry to push on this, but just to be very clear, could there be an element here of delayed deliveries, especially on the automotive side impacting Q2 deliveries?

Yes. There is a constant change, but the lead times of the orders are also higher because it's project based. You get the order, you need to organize the project. It's not the items that we have in our inventory. Some we do, but depending on project, especially automation, we have got quite a lot of orders for automation. And then you need to work with the sales, with the line builders as well. It takes more time. The lead times are longer. I think that's the main issue.

Now we have time for one last question. James Moore will be the one who will be asking that one.

The next question comes from James Moore from Rothschild & Company Redburn.

I've got 2. One on China first, if I could. So the drop in large compressors, largely China, how is that -- is that lumpy? Or do you see any indication that, that continues at the end of June and into July? Do you think that is the new normal or just a function of the normal degree of lumpiness that we see? That's the first one, if I could.

I think there is more about large industrial compressors, still not as big as the Gas and Process compressor, large industrial compressors. The biggest part of the market is China. We see less activity level there.

Answered earlier. My question was I think that, that was something that will persist into the third quarter and the second half, or whether you think it's just a function of temporary volatility?

Of course, the overall uncertainty definitely plays a role, but it's very difficult to see what is going to happen with the Chinese economy. If there is signal that the economy will strengthen with local consumption, of course, we could have some positive environment. I don't see. I just believe it's difficult to predict if it will go further up.

Great. And then my last one, if I could, is just on the competitive dynamics given the weaker dollar and your Belgian compressor footprint. And given what we may be heading into on the 1st of August with a 30% European reciprocal tariff unless a deal is reached. Are you seeing any competitive dynamics at the moment with your potential cost disadvantage against your North American competitor? And do you think that with a step up to 30%, you've got to do something different in terms of production and shifting to Quincy or the likes?

Of course, that would be a quite steep increase. We don't know what is going to happen, but then we might have to have a deeper look and what we are going to produce where. I think with the 10%, I think Peter explained, we managed to maneuver that quite well. I think it was a combination of things, changing flows, and I think we didn't see a big impact. If that goes up, we will look into what is needed to be done. But it's always a combination of things. It's not only we stop producing in Belgium, we produce is a combination. That's what we have seen. Maybe we do more kits here and do some final packaging in the U.S., then we will have a deeper look if that comes. But of course, we're stating that there is always a lot of activity ongoing on that area.

Okay. Thank you, James, for those last questions. And with that, we conclude the earnings call for the second quarter 2025. Thanks for all your questions and your patience listening to us today, and we wish you all a very nice summer and look forward to meeting you again once you're back from the holidays.

The host has ended this call. Goodbye.