Sandvik Aktie

Ladies and gentlemen, welcome to the Sandvik Interim Report Q3 2026 Conference Call. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Louise, Investor Relations. You will now be joined into the conference room. Thank you.

A warm welcome to Sandvik's presentation of the third quarter results 2026. My name is Louise Tjeder and the Head of Investor Relations. And beside me, I have our CEO, Stefan Widing; and CFO, Cecilia Felton. We will, as we usually do, start with the presentation. Stefan and Cecilia will take you through the highlights of this quarter. And after that, we will move on to the Q&A session. So with this short introduction, it's over to you, Stefan.

Thank you, Louise. And also from my side, hello, everyone, and welcome to the third quarter report. If we summarize the quarter, we think this was a very good quarter. We see broad-based demand. We have strong operational execution. The profit margin is above our target range, and we also have a record high cash flow in the quarter.

Total order intake grew by 20% and the organic order intake growth was 17%. Total revenue growth was 29% and the organic revenue growth was 25%. Adjusted EBITA came in around SEK 8.5 billion, and this corresponds to a margin of 22.5%, up from 19% in the prior-year period. And the rolling 12 months EBITA margin is now at 21.3%. Adjusted profit for the period amounted to SEK 5.8 billion, and the free operating cash flow then came in at SEK 7.2 billion, up from SEK 5.6 billion and corresponding to a cash conversion of 87% in the quarter.

If we focus a bit on some of the key strategic highlights in the quarter, starting with Rock Processing, a good product launch in the screening business on the Compact Screen size. We usually have engineered products in screening, but these are standard products that are preengineered. And this means that we can deliver faster and also reduces the amount of time we have to spend on each order. So a good product launch from them.

On the Mining side, we had our Future of Mining event with over 600 customers in the quarter. And there, we launched our concept surface drill rig, which showcases the future of surface mining. This is a fully automated and battery electric machine combining AI, robotics, electrification and digital connectivity. And it shows our vision for how we think surface mining will develop in the future. Those of you that will attend our Capital Markets Day in Finland in November, you will get to see this machine performing live in our surface test mine outside of Tampere.

Intelligent Manufacturing had a milestone also this quarter. We participated both Intelligent Manufacturing and Machining at the IMTS trade show in Chicago. This is one of the largest manufacturing trade shows in the world that happens every second year. And here, for the first time, we showcased our digital solutions under the Sandvik brand umbrella for the first time. And we also launched a new solution called Manufacturing Lifecycle Management, where we connect the dots between design, machining and quality data across the entire life cycle for the first time. Also this, we will showcase more to those of you that will attend the Capital Markets Day in November.

And also to show that we also, of course, innovate in our core product range, Walter released a new portfolio of solid carbide end mills in the quarter. These are products that are tailored for the aerospace sector and especially hard materials such as titanium and special grade stainless steel. So important innovation in the core business as well. If we shift to focus on the market development, we continue to see a robust development, both upstream and also downstream. High commodity prices continue to underpin a strong activity, and we see a good demand both for equipment and aftermarket.

High utilization rates and an aging fleet, of course, drives consumption demand for parts and services also this quarter. We continue to see a good interest and demand for our digital automation solutions. And we also see now a bit of an increased activity in downstream mining, even though we do not see it in the order book yet, but we do see an increased activity, which is positive.

Infrastructure market also continues to develop positively. We should highlight demolition and recycling and also North America, which is where we see the most positive market sentiment, but also slightly positive in aggregates and in Europe. If we look at the Industrial segments, starting with general industry, we see a quite broad-based demand picture here, up across all regions. Aerospace and defense is very strong also across all regions.

Light vehicles continues to be subdued. We could say that Europe and North America are stable at low levels, while China deteriorated in the quarter. India is really the only larger market where we see a positive development in the quarter. And then for the other segments, mining and energy, and transportation, medical and electronics, we overall see a positive development with some specific highlights around the power generation and some of the transportation segments.

If we look at our organic order intake for cutting tools in the period, that, of course, broadly or in most cases, align well with the underlying market I showed. A few deviations. If you look at general industry, you can see negative China. Here, we see a positive development in the premium cutting tools, but we have a business around blanks. And this is a product that sits between the powder and the finished cutting tool, selling sort of half-finished products on the Chinese market.

And here, we saw significant pre-buys or stocking up earlier in the year, driven by tungsten price dynamics. And now with stable tungsten prices, customers are simply using the inventory they bought earlier. So that has a negative impact in the quarter for that business. Otherwise, light vehicles also, you can see the negative in China. Europe is up high single digits, but there's, of course, a lot of price in there. So the volumes are actually down. North America also slightly down on volumes. Otherwise, I think there are no specific things to call out in this picture.

If we go to orders and revenues, orders close to SEK 37 billion in the quarter, revenues SEK 37.7 billion, book-to-bill of 98%. As you recall, we typically have a second half of the year with higher deliveries and usually a slightly negative book-to-bill below 100%. So this is nothing unusual for the season. If we look at this from another angle, organic and structural growth. I think a key thing to highlight here, it's the sixth quarter in a row with double-digit order intake growth and solid organic growth across this period.

And this was also a quarter where we started to meet a bit higher comps. We grew 16% in the same period last year and now 17% this year. So I think strong order growth on top of a strong quarter last year. Revenues, of course, we continue to ramp up and very solid execution there with a 25% revenue growth in the quarter.

Going into our business areas then, starting with Mining. Again, a very solid demand across both equipment and aftermarket. We have good organic order intake growth driven by strong growth across all our aftermarket divisions and summing up to 16%. Equipment, 23% growth if we exclude major orders. As you recall, we grew equipment by 75% last year, driven by large orders. I think the large orders this quarter are okay at SEK 700 million, but very tough on the comp side. So I don't see this as anything that is concerning in any way.

Profitability was strong at SEK 4.3 billion, profit margin of 21.8%, good organic leverage of 31%. And then a little bit of a mixed impact from currency, where it had an absolute positive impact. But since the top line was even more positive, it had a slightly dilutive effect on the margin in the quarter. You can also see the split. Brownfield 55%, greenfield 13% and replacement 32%. This is fairly in line with what it has been in the past couple of years, maybe slightly stronger brownfield at the expense of greenfield, a couple of percentage points if we look at the average over the past couple of years.

Rock Processing then, robust underlying demand in mining and also, as mentioned, the positive market sentiment in demolition and recycling. Total order intake, though decreased by 2%, and the organic drop was 8%. Here, we had no major orders this quarter, while we had a couple of large orders last year. So this was more flattish if we exclude for that. We also see a very strong demand in aftermarket, which is positive, shows the activity levels in the business. But orders on the equipment side in this a little bit smaller business area are lumpier and that we also see in this quarter.

Adjusted EBITA, SEK 418 million, a solid margin then of 15.0%, basically the same as last year, down 10 basis points. We have a negative operating leverage in the quarter. Since the revenue growth organically was flat, it's very small numbers we are talking about here. And we are investing in the front line as we see a positive demand picture going forward and which means we have a little bit of higher cost there in the quarter that is not yet met with higher revenues. But again, overall small numbers in that bullet point. And currency also a small impact accretion of 10 basis points.

Machining then, positive demand, as mentioned, across the board, except for light vehicles, total order intake growth by 35% organically or at fixed exchange rate 33% and also organically 33%. Cutting tools grew by 19%. In that number, we would say, underlying volume improvement around 5%. On top of that, a couple of more percentage points driven by pre-buys and then the remaining part is essentially price. We continue to see development continuing in the same way now into the fourth quarter.

EBITA was high, SEK 3.7 billion, a margin of 25.7%, up from 19%. Here, we then have positive contribution from the higher volumes from the powder business and also from our savings programs, which are contributing SEK 82 million in the quarter. The temporary timing effect coming from tungsten came in at SEK 104 million, which is about SEK 100 million lower than our guidance, and this corresponds then to an in-quarter effect of 70 basis points. The leverage was very good in the quarter, 45% and currency had a slight positive impact of 10 basis points.

Intelligent Manufacturing had a very solid, and I would say, uneventful quarter, broad demand across the board, strongest coming from aerospace and defense. We have a double-digit order intake growth in both licenses and subscriptions. If we normalize for the negative 2% that comes from the transition towards subscriptions, the order intake growth was 14% underlying in the quarter. And profits were also good, SEK 258 million, leverage of 33% and a margin of 27.1%, which is very strong. Neutral from currency in absolute terms, slight dilution on the margin and then also a very positive effect from our acquisitions year-over-year.

So with that, I hand over to Cecilia.

Thank you, Stefan. All right. So let's dive into the numbers then in a bit more detail together. And as Stefan said, strong growth on both orders and revenues, which resulted in order intake just short of SEK 37 billion and revenues of SEK 37.7 billion. Earnings came in at SEK 8.5 billion, corresponding then to a margin of 22.5%. And this is the second consecutive quarter where we are above our margin corridor. Net financial items came down compared to last year, as you can see here. Tax rate, excluding items affecting comparability and also on a normalized basis was 24.3%, so in line with guidance.

Net working capital continues to gradually come down. We're now at 27.2%, and this is on a 12-month rolling basis. And you can see that it is an improvement of 2.1 percentage points compared to last year. As Stefan mentioned, it was a strong cash flow quarter, SEK 7.2 billion, corresponding to a cash conversion of 87% in the quarter. Returns also improving year-over-year, reaching 19.1%. And if we exclude PPA, we are at 20.4%. Adjusted EPS grew by 65% compared to last year and reached SEK 4.64.

So good earnings growth and also margin improvement compared to last year, and this is primarily driven by higher volumes, good profitability in Powder Solutions and also our ongoing savings program. As Stefan mentioned, the temporary timing effect from the tungsten price development came in a bit lower than what we guided at SEK 104 million. And this is due to, as you might have seen, tungsten prices came down slightly towards the end of the quarter, which resulted in a revaluation of our inventory and hence, the slightly lower outcome. However, at a group level, this corresponds to an in-quarter impact of 30 basis points.

It was a good, all in all, a good leverage of 37%. Currency was slightly dilutive, 20 basis points. And as you can see here in the graph, on a 12-month rolling basis, the margin is now at 21.3%. If we continue with the bridge then, and as usual, we'll start with the organic column. The good leverage of 37% resulted in a margin accretion of 3.6 percentage points. Currency was positive, as you can see here, both on top line and on EBITA, but the top line impact was bigger, and hence, there's a slight margin dilution of 20 basis points.

Structure was slightly accretive. And all in all, that brings us from a margin of 19% last year to 22.5% this year. If we continue down in the P&L, looking at net financials and as usual, starting with the interest net. Here, you can see that it came down but very slightly compared to a year ago. And this is a net impact of, on the one hand, lower borrowed volumes. But as you can see here at the bottom of the table, we also have a higher borrowing yield. Then last year, we had a negative impact in FX and other asset classes, whereas this was slightly positive this year, which, and these are the main explanations for the reduction in the finance net.

Tax rate, as you can see here, a very uneventful in the quarter, 24.3% on a normalized basis, which is in line with our guided range. And here, you can see that net working capital in relative terms continues to trend down. As I said, we're now at 27.2%. And on the right-hand side, you can see that this is primarily driven by mining and rock processing. So a good development and achievement so far, but also a continued focus area for us going forward.

If we then continue with free operating cash flow. And if you, as you can see in the bars here, it was a strong cash flow quarter, SEK 7.2 billion, corresponding to a cash conversion of 87%. You can also see that on a 12-month rolling basis, cash conversion is now at 75%. And looking at the year-over-year development, you can see that EBITA adjusted for non-cash was significantly higher compared to Q3 of last year. CapEx was a bit higher, and then you can see the impact of the net working capital buildup. All in all then ending up with a free operating cash flow of SEK 7.2 billion.

Financial net debt remained at SEK 30 billion. It's the same level as we had in the second quarter, and net debt also remained at SEK 37 billion. Our balance sheet target, however, came down slightly. We were at 1 at end of Q2, we're now at 0.9, and this is driven by a higher 12-month rolling EBITA. Looking then at outcome versus guidance. Currency came in at SEK 158 million. The temporary timing effect from tungsten price, as I mentioned, SEK 104 million. And then on a year-to-date basis, CapEx is now at SEK 2.8 billion, interest net at SEK 0.5 billion and the normalized tax rate at 24.2%.

And looking ahead then at the fourth quarter and full year, we expect a continued positive currency impact of around SEK 0.6 billion in the fourth quarter. In terms of the temporary timing effect from the tungsten price development, here, we expect a limited impact in the fourth quarter, and this is based on the tungsten prices as of last of September. We will also have a tariff refund in Machining in the fourth quarter, and this would be of around SEK 400 million, which will then negatively impact both order intake and revenues for Machining. As we have received this tariff refunds, we have booked them as a liability on our balance sheet. And this means that there will be no impact on absolute EBITA. Then for the full year, we have left the guidance for CapEx and tax rate unchanged, but we have increased the guidance for interest net slightly to SEK 0.7 billion.

And with that, I will hand back over to you, Stefan.

Yes. Thank you. I just want to clarify when we talk about the tariff refund that we have already received that refund and now we're talking about that we will give this back to our customers, just so there's no misunderstanding there. On the conclusions, I mean, if we start on the macro side, we, as said already, continue to see a strong demand in upstream mining and also an increased activity downstream. We see a positive demand picture in cutting tools and the supply constraints and high market activity continues to support a strong tungsten demand as well.

We have a strong financial performance, order intake growing double digits and the strong execution led to 26% revenue growth in total. Our profit margin is above our target range, and we delivered a record cash flow. As Cecilia mentioned, the earnings per share is up 65% in the quarter, which I think is a quite remarkable number, especially that we should consider that there is no onetime sort of effects in the comp or in the current period of any material size.

The strategic progress is also very solid. We continue to launch important innovations in both digital and also surface mining, as I've talked about. We continue to show good innovation progress also on the digital side, and it was really a milestone that we could start to show bigger common solutions now at IMTS. We also closed the acquisition of Diemme Filtration, which also meant that we now have a 24th division in the Group.

We continue to deliver consistently each quarter while we also invest into our long-term strength. There is a volatile market out there, but I think we continue to show that we have the agility and speed in adjusting to meet all the different developments that we see out in the world. And I think we have again proven the strength of Sandvik's business portfolio, our strategy and our operating model.

So thank you for listening. Let's go to the Q&A.

Thank you, Stefan and Cecilia. Yes, indeed, it's time for the Q&A session. So operator, we can take the first question, please.

[Operator Instructions] The first question is from the line of Alexander Jones, Bank of America.

Two, if I can, please. First, on cutting tools, you called out a benefit from pre-buying for the last few quarters. But you talked in the prepared remarks in China as though that's unwound a little bit given the stabilization in tungsten prices there. With European tungsten prices now also seeming to have stabilized, are you seeing any signs of the pre-buying outside of China slowing, ending or even unwinding? Or if not, is that something that you would expect to happen in the coming quarters, please?

And then secondly, just on the large orders in mining, I think if I take the past 4 quarters, it's averaged just over SEK 1 billion per quarter. How should we think about that run rate moving forward? And does the pipeline give you confidence that, that could be similar or potentially even higher as we move into Q4 and 2027?

Thank you. On the cutting tool and pre-buys, yes, we saw, as I said, in this quarter, about a 2% sort of boost from pre-buys driven by price increases in the quarter that didn't fully unwind within the quarter. I mean, the Chinese impact was, if we talk about the pre-buy effect back in the first half of the year, significantly larger. It was very, let's say, unusual type of pre-buy numbers there. I think it's very clear that the purchasing decisions and tactics there are very, very different.

So if we look at China year-to-date, it's still a good positive figure. A lot of pre-buy in the first half and then starting to, or to a large extent, unwinding now for a couple of months. The pre-buy effect we have seen outside of China has been much more limited. And if you recall in Q2, we said that orders and revenues and so on, they were fairly balanced. We still carry sort of a pre-buy effect orders versus revenues from Q1 that have sort of, we are still having with us.

So I mean, I cannot fully predict. I think to some extent, some of this will stay at higher inventory levels as we are also seeing an underlying demand pickup. It's quite usual that we see that in an up cycle. Maybe some of it will slightly unwind. That is a possibility, but nothing we sort of can predict. But again, it's not very big numbers we are talking about here. So I'm not so concerned about it.

On the large orders in mining, yes, I mean, the reason we call out the large orders is because they are a little bit lumpy quarter-by-quarter. We had in the previous, in Q2, it was SEK 1.6 billion or so, if I remember correctly, now it was SEK 700 million. You talked about the average around SEK 1 billion plus. I mean, I see no -- I will not guide going forward, but I see -- I mean, we continue to see high commodity prices, very strong demand underlying in the way our equipment is being used, customer activities, order pipelines and so on. I see no reason for why current demand picture will change and therefore, on average, why sort of large orders would sort of go in any negative direction. But again, it's not a guidance. It's just what we see in the market right now.

The next question is from John-B Kim, Deutsche Bank.

It's actually John Kim from Deutsche. You previously spoke about seeing some better activity potentially in downstream. I'm wondering if you could flesh that out a little bit. And I have another question for later.

Yes. This is -- I mean, we know downstream is a little bit more late cycle. Typically, customers are running the processing plants at a lower utilization rate than sort of a max capacity, which means that when things are picking up, they can do without investments for incremental investments for a while. They also tend to make those investments in larger chunks.

So I mean, with mining equipment upstream, you can add 1 or 2 or 3 loaders or drill rigs. When you come to the processing plants, you need to take bigger steps, which means that it takes a bit longer before they are ready to commit to that. And, but we are seeing in terms of how we look at RFQs, customer engagements and so on that we feel that the engagement is picking up, and it should be supportive going forward, even though we didn't see it in the order intake in this particular quarter.

Okay. Helpful. And if we shift gears back to tungsten, please. We've seen a pretty strong deviation between the Chinese and European pricing. Have you seen any change in behavior on finished tools or products from Chinese OEMs into domestic or export markets as a result?

No, not really. I mean, we have always for some years, seen the Chinese here and there, but quite limited outside of China. They are competing in the mid-market. We tend, as you know, to be primarily in the premium segment. In the mid-market, there's always been sort of a price-driven competition. So this is nothing new. I cannot say that we are seeing things getting better or worse from this dynamic at the moment.

The next question is from Klas Bergelind from Citi.

It's Klas at Citi. So my first question is on the tungsten impact, which came in at SEK 100 million versus SEK 200 million guided and you guide for a flattish impact into the fourth quarter. I had a question on the absorption impact. The profitability in the mine at these prices is good. You get good fixed cost absorption in powder.

Now with scrap prices coming down and we start to see APT leveling off a bit as well, how should we think about this line going forward? Your margin is still 25% underlying, including this effect, but curious what could happen here ahead? I'll start here.

Yes. Here, as you say, tungsten prices, they came down slightly towards the end of the quarter that resulted in the inventory revaluation effect. And in Q4, we guide a limited temporary impact. Then, of course, depending on how tungsten price develops going forward, it impacts the profitability in Powder Solutions, but we also have offsetting impacts in the cutting tool business over time. And that's how we also create resilience across the group.

Then it is a bit of a complicated picture because it's, as you know, for our production, we use virgin material from our own mine. We source material externally. We also source scrap material and we also buy back from our customers used cutting tools for recycling. So you need to take all of these factors into consideration. But overall, we see that we have good margin resilience across the Powder Solutions business and the cutting tools business.

That leads me into my second question on price cost in cutting tools, and you talked, Cecilia, about the resilience. The pricing on orders when I back it out, was up around 11% in Machining, not too different versus the second quarter, but we understand that you're now raising prices quite a lot more than that as the tungsten impact in cutting tools start to now increase a lot given the 9-month lag from when tungsten increased a lot in November last year.

So how should we think about pricing in the P&L in the fourth quarter? I mean, I calculate that we could be up 15%, 20%, right? You raised prices a lot here at the end of the quarter on orders. And then thinking about when you guide flat impact overall in the fourth quarter, so price cost positive in absolute terms against powder weakening and offsetting that? Yes, any more clarity on price cost and prices would be very useful.

Yes. Sure. So we made, as you said, a price increase towards the end of the quarter. And with this price increase now, it sets, it will offset the impact of the current tungsten price levels. Then it's, of course, also just like usual, when we make price increases, we also look at how we think more general inflation will develop going forward. And there, typically, we have a slight accretion initially when we make price increases as we have this temporary timing impact between price and the inflationary, normal inflationary development coming into our P&L.

Then in terms of breaking this down further, we are a bit careful with doing that for commercial and competitive reasons. So the best guidance we can give is that net, we see a limited impact in the fourth quarter in terms of what is should be considered a temporary effect. So no temporary boost or the opposite in Q4.

Okay. Absolute final one on mining. On the aftermarket, the 16% growth, still very strong numbers. You have a big mine planning business, sort of, in digital Deswik where growth should be linked to the strong exploration activity. I think you also have some tungsten pass-through still in rock tools. If we zoom in on just parts and rebuilds, which are more comparable to some of your peers, Stefan, what was the growth in these segments on orders? And did growth here accelerate versus the second quarter?

Yes. I mean, I think all components of aftermarket actually this quarter were growing at relatively similar pace. So parts and services was also up there in the high teens.

The next question is from Chitrita Sinha, JPMorgan.

I just have a follow-up on the pricing dynamics in Machining, please. So I just want to know like broadly how are customers reacting to prices falling? And do you see your ability to retain pricing into '27 as unchanged, obviously, in the scenario that prices keep falling?

Yes, I can take that one. I mean, we, customers are never happy when you raise prices, but I would say this has been one of the more straightforward ones. It was the same in May because it's very clear the underlying reasons, and we are not alone either, we can say. So I think this is something that the industry recognizes that it's for, the reasons are clear, and therefore, they also accept these increases.

And this is, of course, why we are so clear and focused on that we do this to protect our margins, but we are not doing more than that, even though there currently is, to some extent, a shortage of tungsten. So yes, that's how it went down now. And for that same reason, we don't see why in general, price increases are not sustainable. Of course, it will depend on what happens with tungsten prices. But if we assume, kind of, a main scenario there, we see no reason why these prices are not sustainable.

And sorry, if I could follow up. I mean, do you expect maybe competitors to lower their pricing in order to get market share gains? Is there any signs of that, that you've seen so far? Or do you see any risk of that kind of behavior?

I mean, I cannot really comment on what they might or will do, but let's remind ourselves that from a competitive position, we have the best competitive position here with our own mine and over 50% of the input material coming from scrap. Scrap prices are lower than virgin material prices since there's a limited recycling capacity, especially outside of China. So that builds further competitive position for us.

And on top of that, at least publicly traded competitors don't really have a margin profile that means that they can sacrifice further margin, to try to gain market share, especially knowing that our cost base is probably the most competitive across the board. So I feel quite confident that the competitive situation is to our favor rather than the other way around.

The next question is from Magnus Kruber, Nordea.

I'm Magnus from Nordea. A couple of questions from me. You will be opening up the books for 2027 on powders in the fourth quarter. And given the momentum we have in the pricing within there, could you comment a little bit on the mix impact on pricing we could see in Machining in Q4 or potentially at least help us explain what the mix was between powder orders and cutting tool orders in Q4 last year?

That we probably have to come back to. I actually don't remember the split in Q4 or how much we disclosed back in Q4. So we will have to come back to that.

But is the thinking right, you should probably have a positive mix impact in Q4, at least from a pricing perspective in Machining?

You mean from the fact that we're going to take -- open up the books for orders for powder?

Exactly. Yes.

Yes. I mean, that I cannot really guide on. And I mean -- but let's comment a little bit broadly on that. I mean, as we have stated in previous quarters, I mean, the order intake that you see also this quarter in powder is primarily then a revaluation of the order book to current -- to the price levels we actually deliver on, while the actual orders were booked in Q4 or to some extent, Q1, typically then a 12-month order.

And then we have kept the order book closed now for a couple of quarters because of this dynamic, we want to make sure that we take the learnings from this year. And as we open up the order books that the price models and everything is aligned with how the market operates currently. And it's true, yes, we will then open it up in Q4, but I expect also there's to be conversations with customers on sort of updated maybe pricing models or what have you.

So I think it's a little bit uncertain how much will end up in Q4 and how much will end up in Q1. And it's not only that we don't guide for that. I don't know how it will end. We will, of course, make sure we, first of all, that we protect the business by making sure that we get quality orders into the order book, even if it takes a little bit longer to have those conversations. So I can only say it's going to be tricky to predict that element in Q4 unfortunately about powder.

Well. That's good. Okay. Finally, could you explain a little bit the year-over-year delta and the magnitude of that within the cutting tools part of Machining specifically, it could be very helpful to see what's going on there?

You mean pricing versus the tungsten development?

No, just the margin delta year-over-year, if you can scope that to some degree in cutting tools.

Yes. Yes. If I take Machining as a whole, and then I will also cover the cutting tools there. I mean, the key drivers for the margin improvement is good leverage in the cutting tools business. Also, we have the ongoing savings program. Then we have good profitability in Powder Solutions, sort of, underlying at these tungsten levels, and then it's a temporary timing impact. Those are really the biggest drivers for the margin improvement year-over-year.

The next question is from Edward Hussey, UBS.

Just 2 from me, maybe just taking them one at a time. So the first question is just on metal cutting volumes. Earlier in the call, I think you're referring to a kind of net pre-buy effect. So just on that, if we think on a, sort of, monthly basis, does that mean that you had a pre-buy positive effect in the first 2 months and then a negative volume effect in the third month? Is that the way to think about it?

Yes, basically. Because you get the pre-buy up until the price increase and then you see a little bit of a drop afterwards. But the net 2% we refer to is simply then that our estimate of what the drop should be based on the pre-buys in the first couple of months was not fully compensating them for what we expect, what we consider to be the pre-buy component.

Okay. That's very helpful. And then just another question. You've included a really useful slide on the tungsten price dynamics in Machining. And you've spoken about this before, but you showed that the cutting tool costs has a 9-month lag to the tungsten price. My question here is that you have, I mean, if I look at sort of Q4 '25, '26, you already had prices going up sort of in metal cutting by sort of 4%, 7% I've, I've calculated.

The question here is, why are you already putting up prices by that level if there's a 9-month lag to the, for the cost going up? And on top of that, I think you've also said before that there's a dilutive price cost impact within metal cutting. So I guess the question as a whole is, how does that kind of work if there's a 9-month lag to costs, but you were already putting up prices in Q4 and Q1?

Yes. I mean, here, the picture that we show in the appendix, it's -- first of all, it's a bit of a simplified model is the better we can give you, but it's, we're talking about averages on the one hand. Then for cutting tools internally, you also need to remember that when we do pricing, it's both the APT price and scrap price development that we need to take into consideration for how we do pricing. That's also true when we look at this from an internal perspective.

And I mean, ultimately, I think the best way I can answer this, what we are aiming to do is to offset and, sort of, protect the margin. And that's how we have set the price increase now in the third quarter. Then it's impossible to get the timing exactly right because we cannot make price increases every month. So sometimes we can be a little bit ahead and sometimes we can be a bit behind. But with this price increase that we've done now, that should protect our margin in for the cutting tools at current tungsten price levels. I think that's the best answer I can give.

Yes, absolutely. And just to comment on, you referred to the, let's call it, the first price increase here early this or actually at the end of '25. I mean, we usually have a cycle where price adjustments are done in the beginning of the year. Now coming up to the fall of '25, I mean, tungsten prices started to increase late spring, early summer actually last year, even though most people didn't notice unless you were in the industry because the levels were not at the level they are now.

So we could already in the fall see that we need to compensate for these higher tungsten prices. And then the question is, do we wait until the normal cycle or do we pull it in earlier to not be exposed unnecessarily? So that one we pulled in earlier. And then that one is also then containing, as Cecilia mentioned, maybe compensation for general inflation expected and so on. So that was our best guess for what we needed to do to compensate in '26. And then, of course, they continue to go up. So therefore, we have then subsequently done additional price increases, but always with the intent that we try to hit this, let's compensate and protect the margin as good as we can predict.

Okay. That's very helpful. Maybe just following up on that question though. Just, I mean, is there any reason why we might be seeing the costs come through faster than 9 months in metal cutting? I mean, for example, the way that you account for inventory within, for tungsten, I mean, is that, sort of, weighted average cost and that might be why there's a possibility that we basically see the cost coming through sooner than with a 9-month delay, if that makes sense?

Yes. I mean, the 9 months, it's an average. It's not true for every product and every assortment, but it's an average. It depends on the mix, for instance, also in terms of what we sell. So there could -- it's not a strict 1:1, sort of, correlation to the 9 months, but it's an average.

If you have a high runner, you might actually deliver a product after 3 months with a higher tungsten price content, for example. But yes, this is why we, I mean, yes, we have to work with averages in the sense how we create the model.

The next question is from James Moore, Rothschild & Co Redburne.

Stefan, Cecilia, I wonder if you could say what the powder volumes, excluding price, did year-on-year in both orders and sales in the quarter? Maybe start there.

Yes, they are down double digits on both.

Okay. And can you say what the cutting tool margin, you talked about the year-on-year development, but could you talk about how that developed Q-on-Q?

Quarter-on-quarter. I think we need to come back on that.

On the margin, you mean sequentially?

Yes, sequential. We need to come back on that, James.

Yes. Okay.

Just keep in mind that there is seasonality, as you know, in Machining with Q3 having vacations. And then, as Stefan and Cecilia have talked about, we have done further price increase in the third quarter.

Right. And lastly, if I could. Could you say what the percentage price assumptions were that you used in the quarter for Argus and APT?

Price assumptions, you mean for the price increase that we've done or?

No, for the input prices of scrap price and APT, I believe you use those 2 prices. And there's multiple sources of scrap prices. And given the movements, it would be helpful to know what number you're using really?

And the answer there is also for us, it's a mixture. It depends on what type of scrap we source. So also for us, it's varying input prices depending on what type of scrap material we get hold of and how that is priced in the market. So it is quite a complex picture.

And I mean, Argus, to my knowledge, is the only one that is sort of, let's say, a public, even though I know it's some kind of paid service. But is still a number that you can refer to and you can go and look. Then as Cecilia says, there are various scrap prices that are simply sort of the dealer price. There are no public, kind of, data on it. It's just what you get when you do the deals. So I think Argus is the only thing we can refer to. And then we can just acknowledge, as you say, that there is a spread also here in reality.

The next question is from Daniela e Costa, Goldman Sachs.

I'll have 2 questions. But I just wanted to, sort of, like follow up, sorry to do a lot of questions on the Machining part. But back when you had the last CMD, you were targeting 22% to 24% margin. You at the time had about 20%. Should we assume that you've got sort of like all of the actions that you had back then, which was pre the big jump in tungsten prices that you captured all of that and that your, sort of, underlying margin is somewhere within that territory and anything else above that is just tungsten?

Or would you say there's been other structural things that make this 25% plus now be equivalent to what you envisaged at the time of 22% to 24%, basically trying to get again at, sort of, how much was that underlying from the actions that you were targeting back then before tungsten price increases?

Yes. So I mean, you're right, I think. So for the margin corridor that we set for Machining at the last Capital Markets Day, that was before we saw the tungsten dynamics. So that was not factored into when we set the margin corridor of 22% to 24%. Having said that, though, the margin corridor is a long-term target. And we have said, like with all margin corridors, it can be periods of time where we are a little bit higher than the margin corridor. But we will also come back to this in a bit more detail at the Capital Markets Day in November and explain our thinking here a little bit more. So it will be a cliffhanger until then.

Okay. Got it. And then just in terms of the aftermarket in mining and the strength that we have carried on seeing in there for a while. Would you say this is mainly because just production levels are very healthy? Or how would you divide that between what is like pure fleet age penetration of market share being higher versus just healthy production levels?

I think there are a number of factors. One is, as you mentioned, of course, high production levels in combination with an aging fleet, which drives even more demand for service and aftermarket and in combination with the fact that our fleet has increased over the last couple of years due to strong demand for new equipment. So if you factor all those in, those are 3 important contributors.

On top of that, we have a structural contribution from the fact that the machines we deliver and have delivered in the past 3 to 4 years are more advanced. They are all automation-ready, have a much more advanced, sort of, control system. They have more sensors, et cetera, which means that the total amount of service needed per machine has also structurally increased. And on top of that, with these more advanced machines, we tend to get a higher share of that service because you cannot do it yourself or you cannot bring in some third-party local firm to do it. You basically need to have the tools and knowledge that we have. So that's also a structural element to this that contributes.

The next question is from Bruno Gjani, Morgan Stanley.

If I could just start off with metal cutting and pricing. And if we just take a step back and without getting into very specific terms, could you give us a flavor of just where we are in terms of the overall price level of metal cutting today and where you need to take that in the coming months to offset where price of tungsten prices in the market today? So are we 70%, 80% of the price level increase that's needed? Just some color here would be useful.

Yes. I mean, as we said, with the price increase that we did now in this quarter, that is set so that we can protect our margins at these current tungsten price levels. And then it also contains an element of compensating for normal general inflation, which is normal when we do price increases.

And to add to that, just when we do the price increase and it happens during the quarter, of course, it doesn't happen like this, and it's 100%, sort of, in all orders we take. So you will see, of course, it's a gradual implementation of the price increase even if we communicated at one date. Certain contracts need to be negotiated and so on. So there is a lag effect until it has come through fully.

Yes. But then there's also a lag on the cost side. Yes, we're cutting tools.

And I guess if we zoom into the mid-market versus premium cutting tools, I'd assume that tungsten as the cost of COGS for these mid-market players is larger. And so therefore, the price hike needed by them would be larger as well to compensate. So I guess, how different is your pricing now from these mid-market players? Has it narrowed? And is that inspiring a move into more premium cutting tools in the market?

Yes. I think I mentioned this, it was probably 2 quarters ago, exactly the dynamic you mentioned that, of course, mid-market cutting tools, higher COGS, meaning relatively, they have to increase prices more. And that narrows the delta between premium and mid-market. And on top of that, of course, then the value proposition from a premium tool, meaning it lasts longer also becomes more important for customers. So it, sort of, pushes you in the direction of the premium business model. And this is why I have said that I think, overall, this dynamic has been good for us or is good for us.

And in powder, given we've seen that large divergence in carbide scrap in set prices in APT, I was wondering if you could provide greater color on the production process of powder. So we understand scrap has been around 55% of feedstock. But how flexible is this? Could you take this up to 75% or 80% if you wanted to in time? What's, I guess, the bottleneck or preventing you from doing so? Is it technology? Is it just the process? Just some color here would also be good.

Yes, there is a limit. I'm not sure, let's come back on the exact percentage points. But it is so that we can increase from 55%, but around I will not speculate. Let's come back with the exact number. But there is a limit where you need an element of virgin material to get the exact recipe and mix right because with scrap, I mean, you get what you get. And then you need to top up with virgin material to get it to what you want to. But let's come back on the percentage of that.

But then, if you increased, would then your pricing change? Or do you, sort of, leave your contractual terms unchanged for the mix of your production and feedstock, if you understand what I mean? So if you move to scrap or greater scrap, that means that essentially your margin would also benefit from that? Or do you then just actually give that back to the overall customer?

Short answer...

And then we need to wrap up.

Yes, okay. Right. It varies from customer to customer. This is down to the specific commercial agreements that we have with different customers. So this will vary. That's the short answer.

All right. Thank you very much. We are at the end of the webcast. Before we close, though, I want to repeat, Stefan and Cecilia, we have our Capital Markets Day November 24th and 25th. If you haven't signed up, please do. It's still time. And with this, thank you all for calling in, and wish you a good rest of the day.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

A warm welcome to Sandvik's presentation of the second quarter results 2026. My name is Louise Tjeder, Head of Investor Relations here at Sandvik. And beside me, I have our CEO, Stefan Widing and CFO, Cecilia Felton. We will, as usual, start with the presentation, Stefan and Cecilia will take you through the highlights of the quarter. And after that, we go on to the Q&A session.

So without further ado, over to you, Stefan.

Thank you, Louise, and welcome also from my side to the second quarter report presentation. To summarize the quarter, it was a very strong quarter with record revenues and profits. We see strong momentum across key regions and segments as well as also good price realization, which is, of course, very important in the current environment. Total order intake grew by 17%, and organically, we grew by 70% as well. Total revenues increased by 24%, but organically 23%. Adjusted EBITDA came in at SEK 8.3 billion, up from SEK 5.6 million in the prior year period. This corresponds to a margin of 22.6%, up from 19%.

And rolling 12-month EBITDA margin is now 20.4 million. Adjusted profit for the period, SEK 5.8 billion, up from SEK 3.7 billion, and the free operating cash flow came in at SEK 3.6 billion corresponding to a cash conversion of 46%. This is on the lower side, but it's driven, of course, by our significantly higher invoicing, and we will go through the components of that a little bit more throughout the presentation. I want to start with highlighting the acquisition we announced in the quarter, which is very strategic for us, the filter press manufacturer Diemme Filtration, which is based in Italy. This means that we are entering a new market segment in mining, filtration and dewatering, and this will also form the base for a new filtration division within Rock Processing.

We have said for a number of years that we have a strategy to grow in attractive initiates in downstream mining. We started 3 years ago with the acquisition of Schenk to complement our crushers with screens. And this is now -- these next steps we're taking as we also now go that into filtration and dewatering. This is a very attractive business besides the structural growth in mining Filtration is growing even faster. This business market that they are in is growing around 15% per year, driven also by regulatory trends where mine operations want to derisk the tailing dams and also to get the permits to operate the mine, they increasingly move to filter process instead and you need large filter process for this. And in this segment, Diemme Filtration is the market leader.

They have a total addressable market of SEK 20 billion in their core offering. If we had also adjacent offerings that they have, it increases further. Good growth, as I said, the company has revenues of SEK 1.1 billion expected this year. accretive margins and a higher share of aftermarket. So all the attributes that we would like to see in what we call them the attractive niches in industries mining. So a very strategic acquisition for us in the quarter.

Other key strategic highlights in the quarter. listed here, Dormer Pramet’s released a new turning grade with increased tool life and productivity for our customers. This is an important launch for us to capture the growth opportunities we see in the middle market. And then very important is a completely new generation of AutoMine called AutoMine Aura. This is a complete rewrite of the AutoMine platform. So making sure we are on the latest and a modern technology platform that can scale for the future. It also adds a significant new features, such as 3D mapping in real time.

Currently today, the automation solutions used in mines have a 2D navigation system. Going full 3D means that we can, in real-time map the tunnel of 9, we can see things like potholes and rocks on the ground. And overall, it means we can increase the speed of the automated equipment by over 15%. And has also been validated by customers in their natural environment. So really important new technology step for us in auto mine to make it easier to deploy, easier use and increase productivity further. And then intelligent manufacturing in collaboration with machining have inaugurated a new innovation hub in Pune, India. This is a good talent pool, not only for software and AI staff in general, but also for CAM engineers.

There's a lot of software companies there, CAD and CAM, I should say. So it's a good place for us to have a new innovation hub that we expect to scale up to around 400 people now in the midterm. So an important part in growing our digital offering. Looking then at the market development, starting with mining. We continue to see very favorable market environment, both streams and downstreams. Of course, favorable commodity prices is what is spurring the high activity. We see high production rates among customers. And we also have an expanded and also somewhat aging fleet, which means that the consumption of spare parts and maintenance is very high currently.

We also see investments in new equipment and brownfields are making up by far the largest share of this. I'll come back to that. And then also very strong demand for both digital and automation solutions in the quarter. Infrastructure here, we continue to see a recovery, both in Europe and North America in both aggregates and demolition and recycling. Asia is a bit more flattish. It continues to be muted by the market in China, which continues to be, yes, fairly muted. If we look at industrial manufacturing, we see a good market development almost across the board. Very positively, we see an underlying improved sentiment in general industry with some underlying volume increases.

We continue to see very strong aerospace and defense. Light vehicles is maybe -- or it is the only segment I would call weaker this quarter. Europe is flattish. North America flattish a little bit stronger than Europe, but still flattish underlying. China is down in the quarter. India is up. Rest of the world is also flattish.

Mining and Energy is improving. I would say it's maybe the segment that is improving in the most interesting way. We see quite strong demand from energy customers as they are delivering gas turbines and diesel generators to data centers. Transportation also positive, a little more flattish in Europe, but otherwise good across the board in the world. Underlying medical and electronics also strong, especially driven by Europe. These are the underlying market trends and now looking at how our organic order intake development for cutting tools look like. It, of course, reflects very closely, but there are a few things that sticks out. But if you look here, general industry, aerospace and defense are up double digits across the board.

Light vehicles a bit weaker up mid-single in Europe, double in North America, high single in China and overall up high single digits. But looking at then the underlying market trends, you will understand that it's quite a lot of the price and other effects in this. So this does not reflect so much the underlying market. Mining and Energy up double digits across the board. Transportation, up double digits, except in Europe. Medical and electronics here, we are a bit down in Europe and North America. This is still a quite small segment for us, so it will be a bit volatile quarter-by-quarter. This typically reflects more specific customer dynamics that will vary across the quarters.

Over time, we should follow the underlying trend. Order intake and revenues. Order intake of SEK 37.8 billion, revenues of SEK 36.8 million, book-to-bill of a positive 13%. And looking at this separate and more sequentially, we can see that order intake has now been up double digits, 5 quarters in a row. And what's pleasing to see here is, of course, that we continue to grow at a high space even though the comparables this quarter was also double-digit growth quarter. revenues, a very clear trend that we are successfully ramping up, converting the orders into revenues. But as you saw previously, we still have a positive book-to-bill. So we are still building order backlog but we now have a good momentum in also the in which will, of course, turn into profits and cash flow as we go further.

Then going into the separate business areas, starting with Mining. We continue to see high activity, strong demand and the record high order intake. It's the first quarter where we note over SEK 20 billion in order intake in a single quarter. Aftermarket business is very strong, driven by parts and services and digital mining technologies. As you can see here up 17% in the quarter, which is quite exceptional for the aftermarket business. Equipment also grew a more modest 2%. But then on comparables that are -- that were all-time high in the quarter -- same quarter last year. So we still think that's a good number given where we were last year with a growth of 50%.

Excluding major orders and order intake increased by 13%. Profitability came in at SEK 3.8 billion. a margin of 20.5%. Here, the organic operating leverage was 25%, which is on the weaker side. We had a couple of one-offs in the quarter that impacted negatively with some litigation costs related to a settlement and also on customer mine -- diamond mine in South Africa closed, which hit us a little bit in the quarter. Currency also had a negative impact of 60 basis points. You can also see the breakdown there that brownfield continues to be very strong, 66% of sales order intake, I should say.

Greenfield and replacement 26%. And this is very much driven by strength in brownfield, greenfield and replacements are also very strong. Rock Processing then, solid demand in mining, positive development also in the Malaysian and recycling and aggregates. Total order intake increased by 8%, organic increased by 7% and Here, we also got a major order from LKAB in the quarter of SEK 173 million. This is fairly unusual for us to get orders of this size in rock processing.

I think it's a good sign that the broader offering that we are putting together also increases our potential to get the larger orders also in rock processing. Overall, the organic order intake growth was down 6%. Profitability, SEK 392 million, 14.6%. They had an operating leverage of 25%, which is approximately where they should be. but they had a dilution from currency then of 50 basis points offsetting this. This margin is still not where we want them to be over time, but it's a significant improvement versus the relatively poor Q1 and as we convert now the order intake into invoicing as we usually have a better second half of the year, we expect this to continue to trend in the right direction.

Machining. Of course, a lot happening here in the quarter. We see, as I already mentioned, solid broad-based demand for cutting tools with strong growth in all key regions. Underlying demand has improved in general industry and was strong in, for example, aerospace and defense, also energy and mining and transportation. Total order intake increased by 29%. And of this, the growth was 30%. And then as we also write in the report, the cutting tool organic growth was 20%. And and on the sales side or revenue side, 19%.

Daily order or but as we have also said, unusually high uncertainty driven both by geopolitical environment and the Tungsten price dynamics means you should take this for what it is. It's an observation for the first couple of weeks. Profitability was very strong, SEK 4.2 billion, almost double from the same period last year. This corresponds to a margin of 28.7%. This is driven by higher volumes, good price realization, good cost absorption in powder and also the savings program. Then we also have a temporary effect in this number.

You know that we have a temporary effect from the increased powder prices, which means that we are selling at market prices, and we bought the raw material at a cheaper price. So it's a temporary effect. That is partly offset by that we are lagging a little bit on the price increases in cutting tools to offset this increased raw material costs. The net effect of this is a positive SEK 550 million. corresponding to 380 basis points. So if you want to take out these temporary powder effects and look at the more sustainable margin, you are around 25% in the quarter.

The organic operating leverage was good at 5%. And also if you exclude powder, the cutting tool business had a good operating leverage in the quarter. currency, slightly negative then by 20 basis points. Intelligent manufacturing, a very solid quarter, good broad-based demand in both CAM and metrology software, high single-digit organic order intake growth in new licenses and continued strong growth in the subscription sales. Total order intake increased by 15% organically 7%.

Then as you can see in the table in the bottom right corner, the subscription transition impact was about 2 percentage points on both orders and revenues. So if we normalize for that, we are approximately where they should be high single digits to low double-digit organic growth. Good profitability development as well, SEK 198 million, up from SEK 151 million with a margin of 22.5% and a leverage of 41%. And slightly dilutive from currency of 40 basis points, but accretive from the reseller acquisitions of 110 basis points.

With that, I hand over to you, Cecilia.

Yes. Thank you, Stefan. All right. So let's dive into the numbers in a bit more detail together. And as Stefan mentioned, we had good growth on both orders and revenues. Orders reached SEK 37.8 billion and revenues SEK 36.8 billion. Adjusted EBITA came in at SEK 8.3 billion, which then corresponds to a margin of 22.6%. Looking further down the P&L, the net financial items came down year-over-year. I will show you a bit more details on the development there in a few minutes. And the tax rate, excluding items affecting comparability and also on a normalized basis was 24.2%.

Net working capital continued to trend downwards. On a 12-month rolling basis, we are now at 27.5% and it's an improvement, as you can see here, of 2.1 percentage points compared to last year. Free operating cash flow came in at SEK 0.6 billion, and this corresponds to a cash conversion of 46%. You can also see here that rose improved year-over-year and also that we had good growth in adjusted EPS. As said then, adjusted EBITDA increased year-over-year. It reached SEK 8.3 billion. It's an increase of 48% and compared to last year. And this is driven by a combination of higher volumes, strong price realizations and cost savings.

And then as Stefan mentioned, we also have this timing effect from the Tungsten price development, SEK 550 million in the quarter and at group level, that has -- that corresponds to an in-quarter effect on the margin of 150 basis points. So good organic leverage of 4%. Currency was dilutive by 50 basis points. And on a 12-month rolling basis, the adjusted EBITDA margin is now at 20.4%. If we continue with the EBITDA bridge then, and as usual, starting with the organic column, here, you can see that revenues grew by around SEK 7 billion. and adjusted EBITDA by SEK 2.8 billion. And then as I said, this gives leverage of 40% and then accretion to the margin of 4.1 percentage points.

Currency was dilutive by 0.5 percentage points and structure was neutral, which then brings us to a margin of 22.6%. If we continue down the P&L, looking at the net financials, it came down year-over-year to SEK 254 million. And as you can see here in the table, this is driven by a lower interest net which is a result of lower borrowed volumes. The reported tax rate came in at 25%. But if we exclude items affecting comparability, and then also on a normalized basis, it was 24.2%, so within the guided range for the year.

Looking at the balance sheet then and starting with working capital. As I said, we continue to trend downwards in relation to revenues, as you can see in the blue line here on the left hand side. And on the right-hand side, you can see that the improvement was driven by all business areas in the quarter. Free operating cash flow was SEK 3.6 billion, as I said, corresponding to a cash conversion of 46% and if you look at the graph here on the left, you can see that on a 12-month rolling basis, cash conversion is now at 80%. And in the table, you can see the year-over-year development, where EBITDA adjusted for noncash was significantly higher compared to last year.

CapEx was largely in line, a slight increase and then you can see the impact of the net working capital buildup. Financial net debt increased sequentially from Q1 into Q2. This was driven by the dividend payment in May and that also resulted in a slight uptick of financial net debt over EBITDA. So we're now at SEK 1 billion. Capitalized leases were largely unchanged in the quarter. Pension liability came down a little bit, driven by higher discount rates. And all in all, then a net debt of SEK 37 billion.

Looking now at outcome versus guidance. You can see currency. It came out at minus SEK 173 million. And then on a year-to-date basis, CapEx is now at SEK 1.8 billion, interest net at SEK 0.3 billion and the normalized tax rate at 24.1 million. And looking ahead then at the third quarter and full year. Here in starting -- if we start with the third quarter, we expect a positive currency effect of around SEK 0.2 billion, and this is based on the currency rates per the last of June. We also expect to continue to have a positive timing effect from the development of the tungsten prices. And in the third quarter, we estimate this to be around SEK 0.2 billion. And then for the full year, we have left guidance for CapEx, interest net and tax rate unchanged.

And with that, I will hand back to Stefan.

Thank you. Going into the conclusion then. To summarize the market and macro environment. We continue to see strong momentum in mining, recovery in demolition and recycling and aggregates during the first half of the year. We also see improved sentiment in general industry and continued strong demand in several other segments such as aerospace and defense. Then of course, the political and macroeconomic environment is very uncertain with everything going on in the world. We don't see any impact of that as of yet. The trends we are seeing is underlying positive, but of course, this creates increased uncertainty.

Our financial performance is very strong in the quarter. Order intake and revenues grew double digits. We have record profits and margins above our target range even and if we look at the unadjusted EPS, the growth in the quarter was 63% and over 50% if we look at the adjusted number, which is, of course, a very strong development. We continue also to make strategic process. We have entered the filtration and the watering segment with the acquisition of DM Filtration. We've also strengthened our leading electric offer with our first surface drill rig that is electric. It's a top hammer drill.

Also shown here a number of other innovations that we have launched in the quarter. We continue to execute on our strategy, which also means consistent delivery every quarter, while we are continuing to build Sandvik stronger in the long term. I think we have shown in this quarter that we are capturing key business opportunities and responding quickly to both market and customer needs. Sandy continues to be a very strong platform with a strong culture and the mindset where we are winning together.

Thank you so much. Let's head to the questions.

Thank you Stefan and Cecilia. Operator we can take the questions.

[Operator Instructions]

The first question comes from the line of Chitrita Sinha from JPMorgan.

I have 2, if I may. The first 1 is just on the machining margin. As you said, if we strip out the impact of the 380 bps relating to tungsten, then the underlying margin should be 25%, clearly, a very strong result. With regards to the guidance for Q3, it is obviously very helpful that you've provided. But all things being equal, should we expect a 25% margin to be the underlying level? Or is there anything else that we need to be aware of?

I can start if you want to add something there. I mean, when we break down the margin for this quarter, then we have the temporary timing effect. It's has a positive in-quarter impact of 380 basis points. And as you said, that will then come down as per the guidance for Q3. What will remain is still good profitability in our tungsten mine at these high tungsten prices. We also get good fixed cost absorption in the Powder division. And then on the cutting tools side, in the second quarter, price versus inflation was still a bit dilutive. And then it's, of course, very much volume dependent.

My second question is just relating to the aftermarket development in mining. Can you please elaborate on the drivers of the 17% year-on-year growth as this is now the second quarter of double-digit growth now here this year?

Yes. As we also mentioned, the primary drivers are Parts & Services and digital technologies. Digital technologies has very good growth. driven by automation and Deswik, which is mine planning software. Part and Service is driven by a number of things. Of course, customers are using the equipment to the fullest extent. We have a standing fleet. We talked about that before. Also the fleet is fairly old. All of those things are driving aftermarket demand. services. Also the fact that the fleet we are now putting out there is more advanced machines which tends to also increase the aftermarket per machine because it's more advanced and it becomes more sticky in terms of the aftermarket coming to us since it's difficult for others to service that type of equipment.

And then we can also say that on the consumables side, meaning the combination of rock tools and ground support, it was also a good development in the quarter overall. So Yes, I could say simplify it and say it's across the board, but those are the specific drivers.

Sorry, and just to follow up on that, is that development different by commodities? Or is there anything notably different versus on the equipment side?

No, I wouldn't say there is a commodity aspect to that. Of course, if you have a commodity that's where you don't want to mine, it would have an impact. But today, even though it varies a bit all commodities or most of the commodities are at good levels, especially the commodities related to underground.

The next question comes from the line of Alex Jones from Bank of America.

Two as well, please. Maybe first, just to follow up on that service question. is double-digit sort of order growth now the level you would expect and we should expect for that business, given all of those drivers that you just highlighted? Or is there anything sort of exceptional about this quarter, in particular, that means we should expect a slight normalization?

We stick to our long-term guidance of high single digits. We have now a period behind us with higher growth than that. But I think at some point, it should -- it will probably normalize around the more high single digit because that's what we see as a sort of a long-term sustainable pace. Now there has been a number of these things with high production rates. We're converting the fleet from maybe a little bit more older equipment and newer equipment. So maybe there are some additional boosts here or there are. I cannot say or we are not guiding for either how long that could last, so to say. I mean it's up to you, how long you will want to pencil in the double digits. But if you take a long-term trend view, I would say you should put high single digits.

Okay. Understood. And then maybe just on machining profits. I guess if we exclude that timing effect, your profits in the business were up about 70% year-on-year. Can you just sort of what the most important drivers of that are? And the ones that are a bit less important, it seems to me as though volume growth in cutting tools isn't especially high at the moment. So the tungsten mine profitability versus some of the market share gains versus some cost absorption just to help us understand what are the key ones driving that 70% growth maybe?

I'll start with the top line.

Yes. Let's start with the development on the top line -- maybe just also to give 1 data point that could be relevant for you going forward. because I know you're all trying to estimate the split between cutting tools and powder. And what we can say that in the quarter, powder business was 19% of machining from an invoicing point of view. So just to give that as a data point. Then if you look at the development of the cutting tool business, up 20%, we are seeing and what we expect is very difficult for us to see this fully through, of course, but around the 7 percentage prebuy effect.

Orders and revenues are at the same level in Q2. But if you remember, we had a higher order intake in Q1. But we are, in a way, still sitting on that backlog even though it's, of course, we have delivered the orders in March, but it has been refilled by new prebuys. And this is in our view of it, that it is expectations of more price increases later in the year, which is a reasonable expectation. So customers are sitting on a little bit higher inventory levels at the moment because of that. So 20% cutting tools, maybe 7% is a prebuy effect.

Then, of course, there is a price effect in there. And then what you have left is an underlying market-driven volume of high single -- sorry, low single digits can add maybe 1% or so to that for us because we see we are taking some market shares. Then we also see some longer-term restocking, which is normal in a cyclical upturn to adding to that. So the underlying, let's say, volume-type development is still in the high single digits, you could say, but some of that -- this restocking dynamic, the rest underlying in market share. So there is a volume effect, and I think that helps in this if you take it from that.

Yes. And looking at the margin development then. And this temporary tanks then pricing effect is the biggest contributor to the year-over-year margin development. But then as I also said, we have material impact also from better profitability in our mind and good fixed cost absorption in the powder business. Then on the cutting tools side, price versus inflation is dilutive on the cutting tools as we're still lagging on the raw material costs in comparison to the price increases that we've done. But then we get positive leverage on higher volumes and then we have the restructuring program. But the powder business, both the temporary and the fixed cost absorption that has both of those have a sizable impact on the year-over-year development on the margin.

Okay. And just to clarify, that price cost element is also negative in absolute terms. It's not just margin dilutive because you're raising price a lot and cost is going up the same, but it's actually negative on absolute profit dollars in [indiscernible]?

Yes. Yes. And the net effect of the positive absolute effect in powder and cutting tools duste550 together.

Understood.

And the reason we choose to, let's say, provide it like this is because -- of course, the negative effect you have on the cutting tools side, that is actually something we are having as profit in our powder business, that's where the money end up. It makes sense if you look at machining as a whole to look at the net effect of this.

We now have a question from the line of John-B Kim from Deutsche Bank.

Two from my side as well. Staying on the topic of tungsten. If we use the notionals and kind of track that versus what developed in Q2 I think it might be fair to say there's a little bit of a disconnect. Perhaps any guidance here on how we should think about modeling powder price up and the framework agreements as we had in Q3 and Q4?

I mean I can start and you can see if we want to add something in. It's, of course, quite a few parameters to take into consideration. First, you need to look at the APT price development, but you also need to look at the scrap price. Earlier, they were fairly similar, but actually diverged quite a lot recently. So if you have that as a starting point, and then you need to take into consideration that we say that about 55% of the material that we use on average is recycled material and the rest is virgin material, either from our own mine or from other mines outside of China.

So that's some of the parameters need to think out. Then as Stefan said, powder share of machining total invoicing is around 19% in the quarter. which also means then if you do the math, that volumes are down. We also said that in Q1 of this year for the powder business, and they are down low double digits in tonnage, yes. And then, of course, when you look at these indices and you take a quarter average comparing with another quarter average a year ago, and you have very short development during the quarter that can also skew the picture. I think there, it's important to do a more precise calculation also looking at how it has the pricing has developed within the quarter. So I think those are a few things that can maybe help when you try to model the impact here.

Yes. I think this with averages, I think, is a very important point because you almost have to do the calculation on a weekly basis to get even more accurate than the -- personally, I think this quarter is basically be impossible from an outsider to predict this number because, of course, it's a lot of -- it's basically a mathematical exercise. But you don't have all the information. And even for us, if I look at -- looking forward a quarter ago, it's very difficult for us to assess these impacts because the -- when you have things going up several hundred percent over a quarter in a steep curve, the timing becomes very, very important.

So that's also why we are trying to guide a little bit more bite a little bit more data. So going forward because now, of course, the prices have been quite stable during Q2. So taking this and the new information you're getting should -- if the tungsten prices stay where they are, it should be a more easily sort of predictable development going forward?

And maybe also on the volume taking orders?

Yes, good point. So another thing we want to remind is that we had very high powder order intake in Q4 and also Q1 and the normal thing, the powder business is that we take frame orders at the beginning of the year for the whole year. And then now it and also in Q4 because of these dynamics, customer wanted to place orders earlier to secure supply. But this also means that now in Q2, for example, we are basically not taking any orders for next year. We have the orders already the order effect you're seeing is sort of the revaluation of the order backlog based on increased tungsten emphasis.

So if you are modeling sort of a forward rolling 12 months order intake to sort of always have the next 12 months in the order backlog, then you will end up wrong. What happens now is the backlog is shortening. And then in the fall, we will open up the order book for next year. And we have customers wanting to place orders now. We don't want to take them because it's such an uncertain situation -- so we prefer to wait with that and then we'll open up the order books in the fall. And maybe I should say, primarily Q4 as well.

Okay. Super helpful. I want to pivot to mining for a second. Could you help us unpack the operational leverage in the division in Q2? The incremental year-on-year, I want to say 20, 30 basis points here, you had some ForEx headwinds. You mentioned the mine closure in South Africa. But did the drop-through margins and the velocity of the equipment delivery to meet the expectations? Or is there some kind of one-off or timing effects we need to be thinking about in the print?

Yes. I mean what we've said for mining is that the normal leverage is around 30% and now we came in at 25% in this quarter, and that is primarily a result of those 2 one-off items that we mentioned. First, a settlement for a litigation. And then one-off cost related to this diamond mine that was effectively put into restructuring. So it's those 2. So this is not a drag that will continue in coming quarters. It was specific to the second quarter.

And just a follow-up, if I may. Is there any change in the time line from book-to-bill or order to revenue recognition right now?

No, I would say we're still around this slightly elevated. So maybe 10 to 11 months is where we are sitting with lead time.

The next question comes from the line of Daniela Costa from Goldman Sachs.

Sorry to drill back into the Tungsten. But just wanted to understand sort of you mentioned that you think clients might be expecting more price increases on the tooling going forward. But how do we square that with like Tungsten price in Europe seems to have flattened out over the last couple of months? And I guess tools sold out of China probably have significantly lower prices now, why do you think it's possible to put more price increases? That's the first question.

And then just on the math. I think in the last quarter, you have mentioned that you had sort of like a raw material or a COGS lag that could go up to 9 months. So just wondering why you had a negative net price impact this quarter. If or have you started to use things more on spot? Just to kind of understand exactly why it was negative and not slightly positive, given you put prices at the beginning of the quarter in May?

Do you want to start with the Chinese competition development?

Yes, yes, on the price going forward here. I mean you know the dynamic, we have a 3-month lag announcing price increases and so on and of course, when we announced, if we take the mid-May or the early price increase we did, that was maybe announced in early February or so, even if we are a week after that, no, we should have done more. We cannot do price increases every week or every month. So it means there is naturally so we have to wait a little bit. And that's why it's fairly obvious also when you look compared to other players that there will be more price increases coming.

We don't see that -- I mean, that should be fairly obvious. In competition from China, I guess, you're referring to that Tantan prices are a bit lower in China currently. This is not a dynamic we are seeing really in our segments also with primarily premium tools, we have always faced cost competition. That's nothing new that's been there for ages. The Chinese players that are exporting are primarily or they are in the mid-market, selling through distribution, always competing on price, nothing new.

If you look at what this price differentiation and tungsten between the different regions mean you apply it to the COGS of the cutting tool, it's something we can manage. We are selling on value and not price. Of course, there are also many markets where it's a big resistance to go into Chinese tools as well, which is also putting up a bit of a barrier there. So we are confident that whatever price we need to put through that will also come through.

I think you answered both questions. All right. Any more questions?

We now have a question from the line of Sebastian Kuenne from RBC Capital Markets.

Again, on Tungsten. I don't quite understand when you have a SEK 550 million effect, windfall effect in Q2, which is a year-on-year effect how this effect then drops to SEK 200 million in Q3. I would expect that if you get these time lags through -- also for the cutting tools in the next quarters, if anything, the windfall gain should rise, could you maybe explain a little bit why the windfall itself already subsides now? That would be my first question.

Not sure I quite understood the question.

You guide to SEK 200 million Tungsten effect driver for Q3?

Net, yes, powder and cutting tools, yes?

Powder and cutting tools, That means the windfall gain is declining again?

But we would consider a temporary effect because we're only trying to estimate to isolate what we think is a temporary margin boost or a temporary margin a negative impact on the cutting tools. Then when we do cut into price increases, there are not -- if we come out of a dilutive position, then we don't think that is a temporary boost any longer for the cutting tools. If that makes sense, maybe.

And the 9 months of inventory cutting tools. Now you have 9 months of tungsten inventory for the cutting tool. You have 3 months for powder, but 9 months for cutting tools. I would have thought that the windfall gain, that timing difference remains rather high, but might be wrong?

Yes. Let me try to explain also. I mean, first of all, on the powder side, I mean, you can look at the tungsten prices, they went up they were creeping up in the fall, but they had the major kind of rise in Q1. So it was during 1 quarter. So it's not so strange that we now have 1/4 of this positive coming effect because after that, they have leveled out. And with this up to 3 months lag then in the COGS that should start to level out into Q3 since that we are now working with raw material in the powder business that have been bought at these elevated levels as well.

When we come to the cutting tools and the 9-month lag, we are, of course, I mean this is part of this with the timing of price increases in cutting tools. In Powder is an automatic pricing, which means we get this windfall. In cutting tools, we are matching or we're trying to match we can, the price increases with the pace at which it flows through our COGS. So when we estimate the price increase we need to do in 3 months, we are trying to do them at the level of -- so we match the COGS that will flow out at that point in time to have a neutral effect on the margin in cutting tools.

And this is, of course, we want to be fair to our customers and also for competitive reasons. We don't want to sort of overdo this. We're just trying to maintain our margin in cutting tools despite this higher raw material cost. So if you could change prices in real time, there will be no effect. Now we have 3 months notification period and so on. It creates a little bit of a dynamic, which means right now, we're a little bit behind. We will eventually catch up in the fall, and then it will neutral.

And then on top of this 3 months notification time, we also need some internal planning and preparation before that. So our decision point is even earlier than the 3 months notice period.

Understood. I have another question now for mining aftermarket volume. I mean you saw a 17% increase, but I would assume that this also is affected by tungsten pricing. I mean mining is buying the components probably from your powder business in machining and machine will book all the gains for this but there is still this inflationary pressure now that you have in the aftermarket in mining. Can you maybe give us an indication of how much in this aftermarket growth, its pricing how much is volume and how much is just the pass-through of higher format costs just for us to understand what the volume increase is?

Yes. I mean you are right, of course, that on the rock tools side, the drill bits contained, tungsten to, and there are price increases coming through there as well. Rock tools, though, in the total aftermarket business, Rock Tools is sizable, but it's a definite minority. Parts & Services is by far the biggest. Now you have ground support and digital mining in there as well. And also on the rock tools, the taste portion of the raw material, it's mainly steel. So the tungsten portion of the raw material means that it's not the same effect as you will have in a cutting tool.

And then another effect here is that we are not -- rock tools, we're not selling through distribution, et cetera. It's mining contract. It's a little bit more slow moving in pricing as well. We have not we have not sort of broken out that effect in aftermarket. And I would say in this quarter, it's immaterial. It is something maybe to consider going forward but it's not something I would call out at all this quarter.

The next question comes from the line of Max Yates from Morgan Stanley.

Just 2 questions from me. Just the first 1 is just around M&A. And you obviously completed the Filtration acquisition. I'm just wondering kind of how broad are you kind of prepared to go as you kind of move out of crushers? You've obviously added filtration and dewatering. There's other areas like high-pressure grinding rolls, slurry pumps. So I'm just curious, when you think strategically about your rock processing business, how do you think it looks in 3 years' time in terms of the depth and breadth of your product offering?

Thank you. It's a good question. I mean we have been not so specific around this, but what we have said is we want to grow in attractive niches. We mean by that is product categories where there is a high share of aftermarket service, meaning typically good margins and a resilient business. It's also where we think we can add something to -- in terms of competence and so on. If we are in the comminution circuit, meaning close to the crushers, it also -- you asked about M&A, but there are also other ways going into markets there with organic developments and so on.

So I think we will, 3 years from now be a little bit broader than we are now. I do think we took a big step forward will filtration, and we'll probably let's say, consolidate that for a while. I mean, [indiscernible] was 3 years ago. We took a few years to sort of get fully into that part of the market, establish, start to scale it, get synergies -- it will take some time also with filtration and dewatering. So I don't want to be more specific than that. We will definitely try to broaden it a little bit more. but it will be also based on what opportunities arise and what kind of organic investments we are ready to make.

But I wouldn't expect -- I mean you shouldn't expect something like this every year. We want to build it slowly but steadily. And we're in it for the long term. I think mining will be a good 30 years from now as well. So we're not in a hurry. But we will -- the direction is clear where we want to go.

Okay. And maybe a quick follow-up just on the large order pipeline. So you've obviously had a much better quarter than your competitor or your nearest competitor in terms of large orders. I guess I just sort of think through -- we've seen orders oscillating anywhere between kind of 1 to slightly above SEK 2 billion. Do you -- when we think about and I'm not going to kind of try and pin you to a quarter, but when we think about sort of the second half, does the pipeline look like that kind of level can be sustained? Or was this kind of really a quarter where everything came together, both in terms of projects being sized, but maybe you're kind of getting a foot ahead of your competitor in lots of those bookings?

I think major orders above SEK 2 billion in the quarter is fairly rare. That's also why we were quite happy that we at last year's level again. But I would be stretching myself if I would say that, that's some kind of new normal. But I will also say, we do see a very active market out there. There's lots of projects, a lot of business to be won. So SEK 2 billion is unusually high, but there is no reason for why it shouldn't be major orders also in the upcoming quarters. Let's put it like that.

We now have a question from the line of James Moore from Rothschild & Co Redburn.

Yes. everybody, thanks for the time. I've got a few on the same topic, forgiven. But thanks for the powder share, 19%. Any chance you could call out the previous 5 quarters, I'm assuming 6-8-8-9-12 but it would be quite helpful just to see the sequencing. That's the first question. Maybe we go 1 at a time.

We haven't split it out. What we've said is that for 2025, the powder business was high single-digit share of machining.

So you just miss in Q1 then. Let us come back on that to see if we should provide that. We haven't discussed that. I don't think we thought about that. we will come back to see if that's something we should in that case, share in some way that everyone gets the information.

And on the machining margin, 25%, excluding the SEK 380 million sustainable is a funny word. I think it still includes a premium powder market. But we do it possible to say what the increase in the pure cutting tool margin was year-on-year? I think that it was down 100 bps in the first quarter and now it's up. But is it like up enough to get to 25%. I assume it isn't up 340 bps so say, 21% to 25%. I assume it's something more modest than that. But any scaling on the cutting tool margin will be great.

We're not giving really any specifics, but I mean, cutting tools did improve the margin year-over-year, but I would say a larger share of the margin improvement comes from the powder business. I think that's as specific as we can be.

Okay. And I see the tungsten prices roll down a bit, but the European ATP price is flat. Is there any way you could help us with what we should use as a regional global basket on ATP, mix wise?

I think you should use the Rotterdam prices because when we are talking about these dynamics in our powder business and so on, China is completely separate also for us. It's a completely separate supply chain and so on. So our powder business is the non-Chinese part, and that is driven by the Rotterdam prices and also the scrap notations.

That's really helpful. And just lastly, on the 50 and the 200 million, any chance you could get the 2 gross impacts powder versus cutting talk? I still really understand whether they're made up of 2 very disparate numbers?

Yes. No. So we don't. We're not giving a split between the 2. Just a net number, I'm afraid.

Okay. So it's a net of a bigger powder positive and a negative in tool impact in the quarter?

Yes. Yes, that I said before. That's true.

And you couldn't say whether 1 is bigger than the other in magnitude at our sizing it?

No, no, sorry. We're not giving more specifics than that, I'm afraid.

Is just a temporary effect anyway. You know it would be in Q3.

Absolutely. But we don't want to model it. So we need to...

Next question comes from the line of Vladimir Sergievskii from Barclays.

They will both be on mine. Number 1 would be on new equipment orders, but the base orders and not large orders. If I try to estimate those, I end up with those base new equipment orders declining sequentially, potentially quite materially versus always very high level -- so question is, was it really the case of the decline sequentially? And this -- that was the case. What was the reason for that?

Yes. I think it is a little bit of a dynamic where probably in Q1, there were some customers placing more orders to secure the supply during the year. And now it's more normalized. I don't have a specific number on that or anything like that. It's a fairly normal seasonal pattern that we have a more positive book to build in Q1. So maybe it was more -- I haven't looked at that actually sequentially versus prior years. Maybe it was a little bit more emphasized this year, I don't know, but that is a fairly normal pattern.

Understood. That's super helpful. And then I wanted to come back to the 17% aftermarket growth. I know Stefan, you explained the drivers behind that, but indicates it's an exceptional number is in any historical context. Was there any material pricing contribution to the 17%? And then if it was in the material pricing contribution, how surprised you itself to see this?

A short answer, no.

There is no material pricing in that it's a normal pricing, I would say. So nothing that is sort of an extra material driver. How surprised were we? Well, a little bit, let's put it like that, we are always impressed, especially when part and services come in with these growth numbers because they have been growing for a long time now at a very high level. So it's -- we understand you can see the underlying drivers. But of course, you're always happy to see things coming in a little bit on the upside.

All right. We need to wrap up, actually a busy reporting day today. So it was pleasing to see that we went full hour. If you have any further questions, please test to call IR. And we thank you for calling in, and wish you a great summer.

Good afternoon, and welcome to Sandvik's Presentation of the First Quarter Results 2026. We want to start apologizing. We had some technical issues, and therefore, we're a bit late. We will start, as usual, with Sandvik, present the highlights of the first quarter and presenting our CEO, Stefan Widing and our CFO, Cecilia Felton, and my name is Louise Tjeder, Head of Investor Relations.

So we start with the presentation and the remaining time we will spend on the Q&A session. And with this short welcome, I hand over the word to you, Stefan.

Thank you, Louise. Also from my report in 2026. As you have already seen, we had a strong start to the year, strong demand across all business areas with double-digit organic growth in the quarter in all 4 business areas. Total order intake grew by 12% and organic order intake growth was 23%.

Total revenues increased by 5%, and the organic growth was 15%. Adjusted EBITDA was just over SEK 6.1 billion, corresponding to a margin of 20%, up from 19.7% last year. Also, the adjusted profit for the period increased to SEK 4.1 billion from SEK 3.8 billion in the prior year. We had a free operating cash flow of SEK 3.6 billion, corresponding to a cash conversion of 62%, which is in line with normal seasonality for this time of the year.

Some strategic highlights in the quarter. In mining, we completed an acquisition of ThoroughTec Simulation. ThoroughTec is designing and delivering OEM-agnostic, mining and construction training simulators. This is a key capability for us as there is a skills gap in the industry, and the machines are getting more and more advanced. So a very good addition that will strengthen our aftermarket and digital offering.

Rock Processing launched 2 new cone crushers in the high-running segments, the 400 and 600 series in the quarter. They have improved aftermarket capabilities and improved automation capabilities, for example. Intelligent Manufacturing have launched a very important technology for us, EverPath. EverPath is the next-generation toolpath platform. Toolpath platforms are basically the brains of a CAM software. It's the algorithms that are defining the path the tool will take when you machine a component. Most players in the industry are using a third-party algorithm for this. We have spent the last 3 years developing our own unique algorithms based on Sandvik Knowledge that provides better quality and higher performance in the machining process.

This is, again, a core technology for us, and we will spend more time talking about this also going forward. You will probably hear more about it at our CMD, for example. I cannot underestimate how important this launch has been or will be going forward.

Also in machining, we completed an acquisition of K&Y Diamond; this is a Canadian company and the leading manufacturing -- manufacturer of monocrystalline diamond tools for ultraprecision applications such as optics, medical and aerospace, where you need extremely good service finish. This is a technology that is required. We have not had it in-house before. So it adds a strong capabilities in high-growth segments that are important for us going forward.

Going then into the Mining market. Here, we have continued good momentum both upstreams and downstreams. The activity levels remain high in the industry, driven by favorable commodity prices. We also have a high production pace, more advanced machines and combination with an aging fleet that is driving consumption of parts and services. We also continue to see strong investments in digital and automation, and we see increasing exploration activities, of course, also driven by the favorable commodity prices.

If you look at the Infrastructure market, we have indicated in previous quarters that we have started to see some improvements, but we have been waiting now for the first quarter, which is an important quarter for ordering ahead of the summer season. And we're happy to see a strong recovery in Infrastructure in both U.S. and Europe and in both aggregates and demolition and recycling. In Asia, it's a bit more mixed picture where China is more muted, while India is strong.

Then you might have seen in the report, we have a new market segmentation for Machining to update for the current state of the business. The old one was starting to get a bit obsolete. So I wanted to take a few moments to explain it here. We have a general industry, 64% of the business. This is the previous general engineering segment, which also includes a big portion of the distribution sales complemented by a number of other smaller segments that tend to go into general industry or products that are going broadly into various markets.

Then we have Aerospace & Defense, the second largest segment, 12%. Here, we have aerospace, defense and space, which is an increasingly important segment for us. Then we have Light vehicles, 9%, which I think is self-explanatory. Mining & Energy, 7% of the business, also fairly self-explanatory. Transportation, which is 6%. And here, we have heavy vehicles, such as trucks, railway and shipbuilding. And then we have the smaller segment, Medical & Electronics, 2% that we are breaking out also because it's a strategically important segment with high growth going forward. So something we want to highlight more in the future. So these are the segments we will comment on going forward.

And if we do that, I want to also emphasize the arrows on this slide represents the underlying development in the market. It's not representative of our organic growth, I will come to that. This is how we see the underlying market development. Here, we can see general industry has turned to positive. It's been flat for a couple of quarters. Now we see early signs of an improvement in general industry basically in all regions.

Aerospace & Defense continues to be very strong across the board, a little bit more flattish in China. We should remember that in China, this is primarily commercial aviation and certain segments are missing in China for compliance reasons. Light vehicles is down overall, muted market, a bit flattish in Europe, but down in North America and China, very strong in India, but quite weak in the rest of the world.

Then the other segments, Mining & Energy, transportation, Medical & electronics are all fairly positive. They are up in Europe, a little bit more mixed in North America and China. And we are not commenting on these in India and rest of the world because that combination -- in that combination, it's too small sales to draw any real conclusions from the underlying market in a given quarter.

Then I usually comment also on organic growth. So we thought why not include that as a picture as well. So here, you see our organic growth, our price volume in the combination of these segments and regions. You have a 0 for flat, 1 plus for low single, 2 pluses for mid-single, 3 pluses for high single digit and 4 pluses for double digits or, of course, minuses if it's going in the negative direction. This will, of course, broadly correlate with underlying development, but it's not a given in every place, so to say.

But you can see General Industry, Europe up high single, while in North America, China and India is up double digits. Rest of the World, up mid-single and overall up double digits. Aerospace & Defense, strong across the board, double-digit growth. Light vehicles then a bit more mixed. Overall, low single-digit growth, same then in Europe and North America, flattish in China, strong in India, weak in rest of the world. And then for the other segments and regions, you can see good development, high single digits to double-digit growth, more or less in all combinations here of segments and regions. So a good demand picture overall, except for light vehicles.

Looking then at order intake and revenues, we have order intake of SEK 36.8 billion, which is an all-time high. We have revenues of SEK 30.7 billion, and this is a book-to-bill of 120%, very positive, of course. You know we always tend to have a positive book-to-bill in the first quarter. But I think it's fair to say that the order intake was stronger than also we had expected in the quarter. So a very strong performance from the business.

And looking then at this from a growth perspective, we can see that we had a fourth consecutive quarter of double-digit organic order growth, eighth consecutive quarter of growth on the order side. And we also see now the revenues are starting to pick up with the second quarter of double-digit revenue growth, now following the strong order trend.

Going into our business areas, starting with mining, continued very strong demand with positive momentum across the board pretty much. We have a record high order intake. First time we passed SEK 19 billion in a single quarter. We have double-digit organic order intake growth in equipment. And as you can see in the table down to the right, it's actually up 43%, which is a strong performance given also relatively good comps.

Aftermarket up also in the double digits or 11%. Also, I want to emphasize the strong performance we saw in digital mining technologies, which is also reported in the aftermarket portion of the business here helping that further.

So total order intake increased by 11% and the organic growth was 22%. If we exclude major orders, it was up 26% showing a very strong underlying demand that is very broad-based in the business.

Adjusted EBITDA, around SEK 3 billion, pretty much the same as last year. Profit margin 19.8%, down from 20.8%. We have a very strong operating leverage of 38% on the higher volumes but it's not enough to offset a very negative currency impact of SEK 810 million, which is a margin dilution of 310 basis points. We should also comment maybe a bit on the seasonality of the revenues. We have a revenue growth of 14%, which is the same as we saw in Q4, meaning that the ramp-up is continuing as planned, and also meaning that we have the same sort of sequential seasonality drop from Q4 to Q1 as we had also last year and that, as you can see in this graph is what we normally have as a seasonality impact in the first quarter. So ramp-up is continuing as planned otherwise.

Rock processing, a solid recovery in infrastructure, as we've said, broad-based demand in both demolition and recycling and aggregates, also positive underlying demand in mining. The total order intake increased by 3% and organically, it increased by 12%. We had a couple of large orders, which was nice to see. Besides, if we exclude that, the organic order intake growth was 6%. You can also see in the table to the right that the orders were driven by strong equipment orders a little bit weaker on the aftermarket side. That is primarily a timing effect related to some specific customers that we expect to recover throughout the year.

Profitability was weak in the quarter, SEK 290 million, a margin of 12%, down from 15.1% last year. We had the revenue growth organically of 0, which, as you can understand, means a negative volume if we take out the price component. So this was driven by timing of deliveries. We didn't manage to get out certain deliveries that was planned. Unfortunately, these were also higher-margin products. So we have a negative volume in combination with the negative mix in the quarter, driving a negative organic operating leverage. So not happy with the margin in the quarter, but we expect them to recover throughout the year.

Of course, the negative currency of 220 basis points when the volume is negative, that will hit straight into the P&L. Very difficult to mitigate that with a negative volume. So that was a challenge for them as well in the quarter.

Machining had a very eventful quarter, we can say, driven by the dynamics in the Wolfram market, but strong underlying demand in important segments, as you have seen, aerospace, defense, medical, very strong, also solid demand in general industry. This is partly driven by prebuying, but also we are seeing early signs of an improved underlying sentiment in the market.

Cutting tools grew by 18% on the order side and 10% on the revenue side. And this difference is important because this is essentially when we talk about prebuying, what we are really talking about is preordering. So this is the delta between orders and revenues. Our customers placing orders for a bit later delivery to secure supply and to secure price.

Then we have the Powder business, which more than doubles the order intake in the quarter, driven then by the surging tungsten prices. Order intake increased by 17% and organically by 28%.

If we look at the first weeks now in April, we see the daily order intake for cutting tools being above the average daily order intake in the first quarter. If we take normal seasonality into account, we want to emphasize that there is, of course, more uncertainty than normal in this given the volatile dynamics around tungsten and also in general in the world, but we are seeing a good start of April, for sure. April -- sorry, EBITA in the quarter, SEK 2.8 billion, up from SEK 2.4 million, a profit margin of 22.9%, up from 21%. Here, we have good price realization with cost inflation being covered by pricing. We also have a positive margin effect by -- driven by timing in the Powder business, we can comment more on that later. I'm sure you have questions.

Also, higher volumes, savings from the restructuring program contributed positively, and we have a very good organic leverage of 41% in the quarter. Then, of course, a negative currency impact of 130 basis points offsetting part of that.

Intelligent Manufacturing then first time reported as a stand-alone business area. A good start of the year, solid broad-based demand for both CAM and metrology software solutions. We see the strongest growth in North America and also globally in the Aerospace and Defense segments. We have high single-digit organic intake growth in maintenance and double-digit growth in license sales. And this is also partly due to lower comps as last year started a bit on the weaker side.

We also see good growth in subscription sales, and that is also why we have the table you can see down to the right where we have the reported organic growth of 11%, but we also show the impact that the conversion from perpetual license to subscription is given to the top line, so you can also see the underlying growth.

As we have said before, subscriptions are still at a low level for us. We are at the start of this journey. It's in the low single digits currently, but with good growth. So we expect that to continue to grow over the next years.

Total order intake increased by 6% and then, as I said, organically by 11%. Solid profitability margin of 20.7% versus 20.6% last year. Since this is a new business area, you're not so familiar with it, but I think it's important to look at the 2025 bars in the graph, you will see that we have a clear seasonality effect in Intelligent Manufacturing, where margins are lower in the first half of the year and much stronger in the second half of the year. So this is an expected and solid start of the year from a margin point of view.

We have higher volumes and good price realization, but partly offset by a restructuring charge that we have taken that impacts the margin by about 100 basis points. This charge is not in items affecting comparability because we expect to see returns within the year. So we just see it has a timing effect on margin. And yes, this will contribute positively then in the next quarters throughout the year. We also had currency diluting by 50 basis points and structure having an accretion -- driving an accretion by 10 basis points.

So with that, I hand over to you, Cecilia.

Yes. Thank you, Stefan. All right. So let's dive into the numbers then together in a bit more detail. So as Stefan mentioned, we had good growth both on orders and revenues, orders reaching SEK 36.8 billion and revenues, SEK 30.7 billion. Earnings grew year-on-year by 6%, reaching SEK 6.1 billion, and that then corresponds to a margin of 20%. So within our margin corridor.

Net financial items came down year-over-year. I will go through that in a bit more detail in a few minutes. The tax rate, excluding items affecting comparability, was 25.2%. And on a normalized basis, it was 24%. Net working capital continued to trend down, both year-over-year and also sequentially on a 12-month rolling basis, reaching 28.1%. Free operating cash flow was SEK 3.6 billion, corresponding to a cash conversion of 62%. Returns improved slightly year-over-year and adjusted EPS increased to SEK 3.27.

If we then look at the profitability development. As I said, adjusted EBITDA grew by 6% year-over-year, reaching SEK 6.2 billion. And as Stefan mentioned, this was driven by good price realization, higher volumes and also a positive margin effect mainly driven by timing in the Powder business. And from a group perspective, savings were accretive with 40 basis points, which then resulted all in all, in a good leverage of 41%. We still had a significant headwind in terms of currency, 240 basis points for the group. And on a 12-month rolling basis, the adjusted EBITDA margin is now at 19.4%.

If we continue with the bridge then, and starting with the organic column, as I mentioned, a good leverage of 41%, and this was accretive to the margin by 2.7 percentage points. Currency was a significant headwind, as you can see here, both on revenues and EBITDA and diluted to the margin by 2.4 percentage points and structure was slightly accretive. And all in all then, that brings us from a margin of 19.7% last year to 20% this year.

If we then continue down in the P&L, looking at the finance net, as I said, it came down year-over-year. And as you can see in the table here, if you look at the first row, this was mainly driven by a lower interest net. And that, in turn, was a result of lower borrowed volumes.

The reported tax rate was 23.9%. And if we exclude items affecting comparability, it was 25.2%. So a bit on the high side compared to our guidance. However, we had some charges related to transfer price adjustments from prior years in the quarter. And if we exclude those, the normalized tax rate was 24%, so within the guided range.

Net working capital, as you can see on the left, continues to trend down on a 12-month rolling basis, reaching 28.1% in the quarter. And compared to a year ago, it's an improvement of 1.7 percentage points. And on the right, you can see the development by business area. And you can also see, if you look at the blue and the gold and trend lines that the improvement was driven by mining and Rock processing.

As you can see here, if you look on the graph -- on the left in the bars, Q1 is, from a seasonality point of view, a lower cash flow quarter. That was also the case now in 2026. We had a free operating cash flow of SEK 3.6 billion, corresponding to a cash conversion of 62% in the quarter. If you look at the rolling 12 months trend line, you can see that we are now at 88%.

And if we look at the year-over-year development in the table, you can see that EBITDA adjusted for noncash was higher than last year, CapEx was a little bit lower, but then we had a bigger net working capital buildup this year as we are ramping up for future growth.

Financial net debt also came down in the quarter, driven by the positive cash flow and reached SEK 24 billion. And in relation to 12 months rolling EBITDA, we're now at 0.8. Capitalized leases and the pension liability increased very slightly sequentially, resulting in a net debt of SEK 31 billion.

If we look then at outcome versus guidance, currency came in pretty much in line with guidance around SEK 1.4 billion negative for the quarter. CapEx was 0.8 billion. Interest net, as I mentioned, was minus SEK 150 million and the normalized tax rate was right in the middle of the guided range. And looking ahead then at the second quarter and the full year, if we start with currency, we still expect a headwind in the second quarter of SEK 0.5 billion, and this is based on the currency rates as of the 20th of April. For CapEx, interest net and the tax rate we have left guidance unchanged for the full year.

And with that, I will hand back to you, Stefan.

Thank you. I will just conclude then. I will start from the market side. As we have said, we see a strong Mining market. We see recovery in Infrastructure. We also see signs of improved sentiment in General Industry & Manufacturing. But we also have a continued uncertain geopolitical and macro environment, of course, that we need to take into consideration.

Our financial performance in the quarter was strong. We saw strong demand across all business areas. We have order intake and revenues growing double digits, and we have a margin within our margin corridor. We also continue to make good strategic progress. We have a couple of very interesting acquisitions in the quarter, as we talked about. We see double-digit growth in our digital businesses, and we continue to innovate at a good pace. Looking forward, our focus will be to continue to deliver consistent financial performance every quarter while we continue to invest into building a stronger Sandvik for the long term. We have a very solid platform to build on, I think a strong performance culture and a very flexible mindset and organization. So we are ready to face the challenges that the world is continuing to throw at us.

Thank you so much. Let's go in Q&A.

Thank you, Stefan, and thank you, Cecilia. Yes, indeed, it's time for the Q&A session. So operator, please, we can start with the first question.

[Operator Instructions] The first question come from Sinha, Chitrita with JPMorgan.

My first one is just on cutting tools demand. It's obviously very helpful to have the slide with the detail by end market. However, trying to understand how much of that 18% order growth was driven by prebuying the underlying volumes and then pricing? Clearly, the comments for the start of April are also positive. So is this largely due to prebuying? And given your conversation with customers, how sustained do you think this demand is?

Yes. So on your first question, if we start with orders up for cutting tools, orders up 18%, revenues up 10% organically. The prebuy effect we are saying is really a preordering effect, so the delta is between the 18% and 10%. If you look at the revenue growth of 10%, we see very negligible prebuying effect in that number. The 10% consist of -- we have a tariff effect that we have talked about before of around 1.5% that you need to factor in there. Then we have a normal or the price, let's call it, the inflationary price increases we have done. We will not give that specifically, you have to give your own assumptions.

And then what remains is the volume growth, which then is sort of a demand-driven growth. So with that, I think you get a pretty good idea of where we are sitting in the underlying volume growth. How sustainable is the current pace? It is very difficult to say. But if we look at the order intake, we know there is some prebuying there. The driver for that -- I mean, normally, when we do a price increase, we see some pre-buying the weeks ahead of the price going into effect. And then we see an offset of that the weeks after the new price release or, let's say, a month before and the month after and then it's neutralized.

So we had not expected really any effect in March, given that the price increases we have announced are happening in the beginning of May. But that would still be a factor. We also think it's a factor that tungsten prices continue -- have continued to go up throughout the month. So there might be so that customers feel that it's just not pointing waiting, why not already now increase inventory levels a bit or at least place the orders for doing that.

But then there is another effect as well, which I think is maybe for us, the most interesting, which is that we are seeing competitors not being able to supply due to raw material constraints. And then they come to us instead, and they want a reliable supplier, meaning there is also a market share impact here, where customers simply want to secure that they have supply, and that is also then given -- we might call it the prebuy. It might also be partly market share gain. It's very difficult for us to assess what is what at this point in time. So my conclusion is this is, for us, a positive dynamic, but it's very difficult to quantify it with such short period of data that we still have in this relation.

If I could just follow up on market share comment. Is there anything that you've seen that from competitors, which might -- in terms of change activity that might play a part in going forward?

Sorry, please, can you repeat the question? There was some glitches there..

I was just following up on your last comment on the market share development. Is there anything that you've seen thus far in terms of competitor changes or anything that maybe you might be seeing that they will be -- they're doing differently to -- for this, obviously, tungsten increase?

No. What we are seeing is key competitors are following our price increases. And so the only difference, as I was alluding to, is we are quite unique in the supply chain we have, which gives us certainty of supply which is something some customers are looking for in this situation. But we're not really seeing any difference in terms of how others are acting currently.

And just my final question on mining demand. If you could just provide a bit more color in terms of commodity, given -- by commodity, sorry, given the different -- given the volatility in prices this year?

Yes. Of course, there were some reduction in some commodities following the conflict in the Middle East. They have rebounded a bit from that again. And at current levels, with gold around 4,700 to 4,800 copper still close to 13,000, it's still a significant buffer for our customers at this price level. So I would say most mines would be profitable at half the gold price and probably have 40% downturn in the copper price before it becomes an issue. So I think it's very -- still very strong underlying demand, and it goes for a number of other commodities as well. So at this point, I don't see that as an issue.

The next question comes from Daniela Costa with Goldman Sachs.

I have 2 questions as well. But the first one is kind of following up on the tungsten topic, but actually focused on mining. I understand on drill bits, there is also significant exposure to tungsten, and I guess you can leverage your own mine, which some of your peers are not able to. So when you look at sort of the double-digit growth in aftermarket, how much of that is kind of like pricing of tungsten? And are you also gaining market share on that? Maybe if you could help us quantify that? And I'll ask the second question afterwards.

Yes, you are right. Of course, we have tungsten coming into the drill bits as well. I wouldn't say at this point, it has had any specific impact actually. Aftermarket growth is not driven by Rock Tools business. I would say they are pretty neutral overall in that regard. We have not really taken advantage, so to say, of this situation from a market point of view.

Tungsten prices are a smaller part of the overall cost of goods sold for a drill bit than the cutting tools. So you will see a smaller impact than you would have for cutting tools. And we have a value-based pricing model anyway on the rock tools side. So we will see going forward as things flow through the supply chain. But currently, in this quarter, I would say it has had not any material impact on the Rock tools business.

Very clear. And my second question....

Parcel services and digital also in aftermarket.

Yes. Yes.

Just switching gears a bit to the intelligent manufacturing. I mean market is discussing a lot in whole debate of software and AI and the impacts and you have some important software exposure in there. Can you kind of help us think about how do you see like pricing models changing ahead? I guess there's a lot of debate about commoditization from a potential AI threat on software versus there's also a benefit of cost savings maybe for yourself. So how do you still think about the changing environment for software business?

Thanks. Good question. I'm super excited about the development in AI and in particular, in relation to our software business, I mean these are not generic software solutions that you can just replace with an AI agent. The software solutions are, first of all, in many cases, tied to our hardware business. So there's hardware connection. There's a data connection. It contains a lot of proprietary knowledge that I don't think even the best models have, so to say, and this is also why I mentioned EverPath this tool path platform, which is unique and proprietary algorithms that is not available unless you have the domain expertise cutting that we have.

So for me, the AI technologies that we are also using in our products, they are super exciting because they help us accelerate the vision we have with, for example, closed look manufacturing or optimizing the output from a mine. So I don't see us being let's say, impacted negatively in the sense that is being debated in the market for some more generic software providers. I see it as a net positive for our software business.

[Audio Gap]

To Stefan's reasoning on the top line for -- if you start with cutting tools, we have the -- a 10% organic growth. We have the tariff surcharge 1.5%. Then you apply a price assumption, slight volume growth on the revenue side. But then for the cutting tools, we also have a headwind coming from both currency and also price not being able to mitigate inflation as we are lagging due to the higher raw material costs.

So also when you look at the year-over-year improvement of the margin for the machining business area that is also driven by the powder business. And then in powder, as you know, it's the margin development there, it's mainly driven by timing in terms of pricing, where -- versus cost where price lags ATP prices with 1 month, whereas on the cost side, we have a 3-month lag.

Am I right that you still -- I'm not happy to confirm the tonnage of tanks you need per year. I mean there's some numbers out for your mines in Austria for the tonnage they produce, and you mentioned 10% to 15% is from own sources. So we can deduce it. But is there a particular reason why you don't disclose the tonnage actually because that would make everyone's calculation easier.

I mean it's just -- it's an operational number that we simply don't disclose and partly because as you say, I mean, you can estimate it fairly well. And we don't want to be talking about tonnages of the mine. We are not in the business of tungsten and the mine. It's an operational -- well, it's not detail anymore maybe, but it's just something we have decided we will not disclose. I don't think it will improve your calculations meaningfully, considering what the data you already have.

Yes. But I'm just saying it distorts the growth numbers this year quite drastically. That's why it is relevant. But I understand your argument. And my last question is on the mining equipment pricing. So there is a certain FX headwind from the -- between orders and revenues, and that seems to have affected margins. Can you tell us a little bit about the pricing plan for mining equipment and what you see going forward in terms of pricing development?

Should I start? Yes. So I think we have to separate a bit equipment and aftermarket or parts and services. For equipment with FX impact, when we take an order for equipment that is going to be delivered maybe 10 months later, we hedge that order. So then there is no FX exposure anymore. So we lock in the margin at the time of taking the order. And then, of course, as FX moves and we have new deals coming up, we adjust the price. Basically, the business is being held to a gross margin on the deals. So they adjust that continuously and then lock in the FX effect.

There can always be timing effects in this. And sometimes we have some hedging mismatches and so on. They tend to be pretty immaterial. But from that sense, FX is handled in the equipment side. Aftermarket is a bit differently with parts and services, where there is more kind of framework agreements or pricing has been agreed for the flow of parts. Here, we have currency clauses in the contract. So typically, if FX moves by 5% or in some cases, maybe 10%, we have the right to adjust the price list. And that we have done in a number of occasions now.

And -- but it also takes a little while before that is flowing through in the P&L. But you can also say that the reason we can -- I mean, we have always said the operating leverage in mining should be around 30% is stronger than 30%. Now part of that is, of course, because we have to compensate a little bit for the adverse FX impact in some markets.

The next question comes from Edward Hussey with UBS.

Sticking to the tungsten theme. I just wanted to ask 2 questions on the dynamic. So the first one is, in a scenario where the tungsten prices begin to pull back, how is this going to impact pricing within the Metal Cutting business? Because some of your peers have been talking about essentially following the market. So I'm just wondering how much confidence you have in terms of holding on to pricing in that scenario?

Yes. I would say, we are, of course, doing scenario planning around various things, but it's a hypothetical scenario at this point. And I think it depends on a lot of parameters; what is the change, the rate of the change, et cetera. So I don't want to speculate at this point how we will act. It's -- of course, if -- let's assume prices go down by 50% just picking a number. Of course, it will have an impact on pricing. But I don't want to speculate on exactly how we would act in that situation.

Okay. And then the second question is just on the dynamic that we're seeing between China versus ex-China PBT pricing. It seems like the Chinese pricing is beginning to pull back, and the spread seems to be widening between the two. Clearly, this stands to benefit potentially from the Chinese metal casting companies. How do you think about this from a market share perspective? Do you see any risk of the Chinese metal casting company is potentially taking market share?

No, not driven by this. Well, first of all, remember, we now have a sizable cutting tool business in China as well after some recent acquisitions. So we are part of the, let's say, the positive growth in the Chinese market currently. You are right that it has been a bit of a widening gap on the tungsten prices inside China and outside of China. But I don't think we can draw too much conclusions from that yet. It's still a very volatile and dynamic situation.

And we, of course, have supply -- we have Chinese tungsten supply to our Chinese cutting tool company. So if needed, we can also compete using our Chinese brands, if that would become a major issue. But yes, again, too speculative at the moment, I think how that would -- that dynamic would be more specifically.

Okay. And then maybe one more specific question. On that dynamic, again, if we begin to see -- I mean obviously you work more on the premium side, so maybe there's no risk to you guys. But if we begin to see some of the sort of mid-market, maybe lower market metal casting being replaced by Chinese competition, do you think this could create an arbitrage on the price and then ultimately is going to put downward pressure on the European tungsten price?

I think that's too many steps in the reasoning that are, at this stage, hypothetical for me to comment on that. You would have to see a massive shift in market shares for that to have an impact on the tungsten prices. For me, it feels pretty far-fetched even though it might be a theoretical scenario. I don't see really a risk at the moment for that dynamic, no.

Next question comes from John Kim at Deutsche Bank.

Two questions, if I may. If we think about the aftermarket order growth in SMR or in mining, if you were to characterize what you've seen in Q1 versus last year, is the acceleration growth more on the volumes? Or is it more price mix driven?

It's volume-driven. .

Better activity levels.

It's volume-driven.

Volume driven. Okay. Sorry, I didn't hear that. And if we think about the tungsten price up and the market demand, I'm struggling a little bit with how pricing is being digested in this market because the -- if I understand it, your tungsten prices up pretty substantially year-on-year. That's a pretty strong component of the carbide insert. And you have about 3-month delay, if I heard Cecilia right, on the notional versus the kind of order pricing.

Given this dynamic is the market and your competitive base here preproducing to kind of keep ahead of the price ups, underlying cost up?

No, I think we should clarify the time lag there. The 3 months is on the powder business. So that's the starting point. And then the powder business is providing powder to our cutting tool business, and then you have another 6-month approximately lag. So the cutting tools we are selling now give or take, are using powder that was bought 9 months ago, which is why...

Understood.

Sorry, go ahead.

Please go ahead.

You can continue with your next question, please?

Just to follow up on that, how would you characterize your Q1 inventory levels given the dynamics in price cost in your various businesses? Are you strategically...

We had in price and volume and increase in inventory within machining business, driven by higher tungsten prices. That's both for the cutting tools and for the powder business combined in terms of volume, if we take the tungsten price to aside, there was no increase.

The next question comes from Vlad Sergievskii with Barclays.

Thanks very much for taking my 2 questions; first will be on mining demand. Excluding large orders, base new equipment orders in mine actually appear to go to a completely new level in this third quarter compared to already a very high level last year. Any color you could give on it. Is there any particular commodity or customer group driving this increase? Are there any market share gains that could potentially explain such strong performance in Q1?

Yes, you're right. So strong order intake on the equipment side. If you look at the breakdown, between the different categories, you can see that brownfield was very strong in the quarter. It was 63%. It's usually around 50%. And it's not because greenfields and replacements were weak. It was because of an exceptionally strong brownfield month. I mean, besides that, there is nothing to call out in terms of commodities and so on. Of course, copper, gold and these commodities at high prices are contributing in a good way, but there are also many other commodities that are at good levels.

As far as market shares goes, it's difficult for us to say. I guess we will have to wait a week or so to find out more about that. But at least we are confident that we have a strong position in the market currently. But that's all we can say at the moment, I guess.

The second will be on tungsten. How much roughly do you think cutting tool prices need to go up to reflect current spot cutting price? And based on your assessment, how material is a physical shortage of tungsten today? And is there a possibility that smaller cutting tool producers over coming months or quarters will find it harder and harder to secure a material supply for them?

If I start with the second part, maybe you can comment on...

Yes, sure.

The first one. It's difficult for us -- I mean, in a way, it's pricing that is then impacting the demand level and how much more tungsten would be required for prices to be more in balance, I don't know. We cannot really say that. But of course, this is driven by a combination of China putting more restrictions on export. It's important to say that the reason prices are high also in China is because also in China, there is a shortage, partly driven by output from mines being down, driven by depleting ore grades and other dynamics.

But that is on the supply side of the things. Then there is a demand side of things as well, where about 1/4 of the tungsten market, at least historically, have been consumed by the defense industry. An important metal for certain applications, such as ammunition. And of course, that demand is going up, as we all know, quite a lot. It's also being used more in certain electronics applications that is also driving demand beyond what used to be the historical levels.

So I think there is a real supply shortage. How big it is, I don't know. As I mentioned earlier, we are seeing competitors, especially, of course, you tend to be more vulnerable if you are smaller that have issues with getting supply and have issues also delivering, which, of course, in this case, is working in our favor. Whether that situation will get even worse going forward or whether this supply imbalance will balance -- will be more balanced and it will be easier, I don't know. We cannot say that. Our focus is, of course, to use the fact that we have a safe and secure supply chain. That is a business advantage when we engage with customers. That is, of course, something we should try to take advantage of. That's our focus. When it comes to the price levels, I don't know if you have...

I can comment as much as I can. But I mean, I cannot, of course, be specific in terms of what increases we are planning going forward. We've announced a price increase now in May. We are, of course, looking at the tungsten price development and our ambition is, of course, to mitigate this also for the cutting tools businesses over time.

I think it's important also to think about from our customer perspective, as our typical customer, cutting tools is around 3% of the total production costs, I think that also puts it a bit into context from the customer perspective.

I think it's also another point around pricing power and the dynamics in the market is also if you are -- if you compare a premium supplier or brand versus a mid-market brand, then in terms of the price, if you're a premium supplier, of course, the raw material cost is a lower share as compared to if you're a mid-market provider.

So if you are a mid-market player, you are -- will likely need to increase your prices more in relation to your current price which, of course, then is a favorable dynamic for us and our premium cutting tools brand. And then the only last point I can give to -- help to give you some guidance is what Stefan referred to before that for the cutting tools, there's a 9-month lag, 3 months coming from powder when the powder, raw materials in the powder business getting processed and then an additional 6 months as part of the inventory turnover time for the cutting tool brands. So the raw material costs that we are seeing now in Q1 is related to 9 months back. I could not be super specific, but I hope that can give us a little bit of color.

The next question comes from Tore Fangmann in Bank of America.

Just 2 from my side. The first one is a follow-up question on the strong aftermarket growth and the acceleration to the 11% that you've seen. What has really driven this? So basically, which kind of products or service offerings have driven the growth? And is this double-digit growth sustainable?

Yes. Despite another great quarter for Parts and Services and aftermarket, I think we stick to that we think long term, this is a high single-digit growth business although we had a very good quarter. What is driving this at the moment is a number of things, starts, of course, with high production pace from our customers, which means they will spend on parts and services to keep the machines operating as much as possible.

We have a larger -- we have a growing fleet, especially on surface, which is now starting to kick in and provide more aftermarket business for us as well. The machines are, in general, more advanced, which both drives more need for service, it also tends to increase our capture rate because it's more difficult for a third party to come in and do service.

We also have an aging fleet. And I think here, it's a dynamic where in this current environment, some of the orders that maybe originally were a replacement order is now -- becomes almost like a brownfield order because they instead of replacing an old machine, they keep both to keep producing as much as possible. And that is also helping the aftermarket business. So I think it's a combination of factors driving the current strong demand.

Okay. We will take one more question, and then we need to wrap up.

Our last question comes from William Mackie with Kepler.

My question relates to Rock Processing. I'm sorry, I got dropped off if I missed it. But can you give a little more visibility on how the backlog that you have in Rock Processing is expected to convert into revenues from Q1 into Q2? And specifically, how you see that -- the bridge towards your 14% to 15% margin target level versus what you saw in the first quarter, please?

I mean we have had solid order intake in the business also in Q1, and that is, of course, positive. We have a positive book-to-bill. Unfortunately, deliveries were a bit short in Q1, but we expect a normal backlog conversion going forward. And here, the lead time, it varies a lot, of course, but let's say they are around the 4 to 5 months typically. So that is the type of backlog conversion we should see in general. I don't know if you want to comment on the margin.

On the margin, as we said in this quarter, it was very much impacted by the delays in the deliveries, and we are not, of course, able to adjust our cost base because of some timing of deliveries between the quarters. But with the catch-up coming now and on the delivery side, margins should also improve, of course.

All right. Thank you. It's now time to wrap up. And again, apologies for the technical issues/disturbing noise, but we thank you for calling in and for asking your questions, and we wish you a good afternoon. Thank you.

A warm welcome to Sandvik's Presentation of the Fourth Quarter Results 2025. My name is Louise Tjeder, Head of Investor Relations. And beside me, I have our CEO, Stefan Widing; and CFO, Cecilia Felton.

We will start off with the presentation. Stefan and Cecilia will take you through the highlights of the quarter and the remaining time we will spend on the Q&A session.

So, let's start. The word is yours.

Thank you. And also from my side, of course, a warm welcome to the fourth quarter report in 2025. If we summarize the quarter, we see a strong ending to the year with double-digit order intake and revenue growth. We see a strong demand in mining and infrastructure is continuing to improve. There's a mixed demand in cutting tools with strong demand in, for example, aerospace and defense, while automotive remains weak. We also see a strong demand in both software solutions and powder solutions.

Total order intake grew by 4%, and the organic order intake growth was 15%. Revenue increased totally by 1% and organically by 12%.

We also see a stable margin on the significant currency headwinds. Adjusted EBITA came in at just below SEK 6.4 billion, corresponding to a margin of 19.6%, which is a slight improvement versus last year, even though the figures round to the same number. On the rolling 12 months basis, the margin is 19.3%, up from 19.2% in the year before.

The savings in the restructuring programs had a positive bridge effect of SEK 131 million in the quarter. And the adjusted profit for the period came in at SEK 4.2 billion, up from SEK 4.1 billion. We also had a strong free operating cash flow of SEK 6.7 billion, corresponding to a cash conversion in the quarter of 110%.

A couple of strategic highlights, as always. We continue to see strong momentum for digital solutions in Mining. In the quarter, we booked two large automation orders, which were significant. We also see strong growth in our software offering in mine planning. And overall, Digital Mining Technologies booked good double-digit order intake in the quarter. And for the full year, the business also grew in the double digits.

In Intelligent Manufacturing, our Metrologic business unit launched a new version of their software, where we now include our Copilot AI technology also in this software. They also launched a New Machining Module, which is important for us because it means that the Metrology software will, based on the measurement, recommend machining process updates to ensure that the component is more aligned with the intended design. So, we start to connect the loop between metrology and machining.

Rock Processing launched a new Jaw Crusher platform with significant new automation features, also significant productivity gains and longer service life. And this platform also received Sandvik's Internal Innovation Prize Award in 2025, because of the significant improvements in the product.

If we look at the market development, and we start with a geographical perspective, Europe was up 13%. And here, cutting tools was up in the mid-single digits. North America, up 9% with cutting tools up in the high single digits. Asia up 14% and China cutting tools up in the double digits. And then mining markets, Africa, Middle East, up 5%, Australia, up 43% and South America up 13%. So, solid growth across all geographies.

If we then go to mining, as I said, we continue to see strong demand basically across the board. General engineering, here, underlying, it's stable, but we do see low double-digit growth, driven then by good double-digit growth in China. Europe up low single digits and North America up mid-single digits.

In infrastructure, we see continued improvement in particularly driven by North America. But overall, on a global scale, we still characterize it as a fairly stable development. We also see some signs of improvement in Europe.

Automotive is a bit weaker, overall, up in the low single digits. Europe is flat. North America up mid-single and China is down high single digit. Aerospace, strong, up in the double digits, and both Europe and North America is up in the double digits, while China was down in the double digits, primarily driven by timing of orders.

In the other segments, we are up high single digits. Europe is up high single, driven then in particular by defense. North America is up mid-single, while China is flattish.

Summarizing then the order intake and revenues. We booked orders in the quarter of SEK 32.7 billion, revenues SEK 32.5 billion, and this is a positive book-to-bill of 101%, which is fairly unusual in the fourth quarter where we typically have strong deliveries of equipment. But thanks to the strong order intake, we still maintain a positive book-to-bill also this quarter.

Looking at this from another angle, we can see the order intake continues to be strong in the solid double-digit space. We also see revenues picking up also now in the double digits. And this is, of course, a consequence of that we are also now delivering and invoicing mining equipment at a higher level than before, showing that we have managed to ramp up production to meet demand in a good way.

Adjusted EBITA improved by 1.4% in absolute terms, SEK 6.4 billion almost, up from almost SEK 6.3 billion last year. This corresponds to a margin of 19.6%. And here, we see solid leverage on the higher volumes. We also have good price execution and good savings, but then offset by the strong currency headwinds. The currency impact came in at almost SEK 1.2 billion negative, a dilution of 130 basis points. And as you know, this is a more adverse headwind than we had guided for when the quarter started. Of course, driven by a continued weakness of the U.S. dollar and a continued strengthening of the Swedish SEK. Rolling 12 months then a margin of 19.3%.

Going first into the Mining business. We continue to see a strong momentum with strong demand both for our underground and our surface solutions. We see a double-digit organic growth across all our equipment divisions as well as Parts and Services and Digital Mining Technologies.

Total order intake increased by 5%. The organic growth was 17% and the growth of equipment was up 39%. Excluding major orders, we were growing organically by 12%.

The adjusted EBITA came in at just below SEK 3.4 billion -- sorry, SEK 3.8 billion, corresponding to a margin of 21.5%. We have good leverage on the higher volumes, but it is offset by the very negative currency. The operating leverage was 32%, which we are satisfied with in this business. The currency then was negative by over SEK 700 million year-on-year, corresponding to a dilution of 120 basis points.

Rock Processing. Here, we saw order intake in the mining part of the business declining year-on-year on tough mining comps. The underlying market demand was robust. We saw solid demand in infrastructure, driven in particular by U.S. demolition and recycling as well as for the first time in a long time, I would say, an improvement in aggregates. And we also see positive signs in Europe.

Total order intake declined by 9%, but organically, it was a black 0%. And excluding major orders, it was an organic growth of 2%.

Adjusted EBITA came in at just below SEK 400 million. This corresponds to a margin of 14.5%, slightly down from 14.6%, but a strong operating leverage of 41% with good savings was offset then by a very negative currency impact, almost SEK 100 million negative impact corresponding to a dilution on the margin of 170 basis points.

And then Machining and Intelligent Manufacturing. Of course, the last quarter, we will present this in this form. Going forward, you will see these two businesses being reported separately. We see a mixed demand for cutting tools between the regions and segments. Strong demand in aerospace and defense, as I've said, while demand in general engineering improved, but it was primarily then driven by a strong development in Asia and China, while automotive remained weak across more or less all the regions.

Orders in cutting tools overall increased in the high single digits. It's partly due to low comps. Remember, for example, that Boeing was on strike in the fourth quarter of '24, but also positive contribution from price and tariff surcharges. We see a double-digit growth in intelligent manufacturing and also in powder solutions.

And total order intake increased by 5% and the organic increase was 15%. If we look at the start of January, we continue to see a stable development compared to the fourth quarter if we look at the daily order intake and take normal seasonality into account.

The adjusted EBITA came in at SEK 2.4 billion, corresponding to a margin of 19.7%, which is up from 19.4% in the prior period. We see good price execution, very good savings and also structure supporting margins, then partly offset by a negative currency. The savings had a positive effect in the quarter of SEK 103 million. Acquisitions had an accretive effect of 20 basis points, while currency then had a negative impact of SEK 330 million, corresponding to an 80 basis point dilution.

With that, I'll hand over to you, Cecilia, to take us through the details.

Thank you, Stefan. Hi, everyone. All right. So, as usual then, let's start with the growth table on the right-hand side here. As Stefan mentioned, we had very strong organic growth. Orders grew by 15% and revenues by 12%. Structure was neutral on both orders and revenue, while currency had a significant negative impact, minus 12% on orders and minus 11% on revenues. All-in-all, though, total order growth of 4% and a revenue growth of 1%.

Adjusted EBITA increased year-over-year to SEK 6.4 billion, corresponding to a resilient margin of 19.6%. Net financial items continued to trend downwards year-over-year. I will show you a few more details around that in a few minutes. The tax rate, excluding items affecting comparability and also on a normalized basis was 24.4%, so within our guided range.

Net working capital also continued to gradually trend downwards. We ended the year on a 12 months rolling basis at 28.7%. So, an improvement of 1.2 percentage points compared to last year. As Stefan mentioned, strong cash flow in the quarter, SEK 6.7 billion, corresponding to a cash conversion of 110%. Returns improved year-over-year and adjusted EPS grew to SEK 3.38.

If we then continue with the bridge. And as usual, starting with the organic column, you can see that revenues grew by SEK 3.9 billion, and that generated an EBITA of SEK 1.2 billion. So, solid leverage of 31%, which was accretive to the margin by 1.3 percentage points.

Significant currency headwind, both in absolute numbers, as you can see here and a dilution to the margin of 1.3 percentage points, and structure was slightly accretive. But all-in-all, resilient margin and good development considering the currency headwind.

If we then continue down the P&L, looking at the finance net, it came down year-over-year, and this is mainly driven by the lower interest net. You can see it on the first row here. And that's the result of both lower yield cost but also lower borrowed volumes.

Reported tax rate came in at 24.5%. Items affecting comparability had a small impact in the quarter. So, excluding items affecting comparability and also on a normalized basis, the tax rate was 24.4%, so within the guided range.

As I said, working capital continued to trend downwards, an improvement of 1.2 percentage points on a 12-month rolling basis. So, a good achievement this year, but also a continued focus area for us across the group. And on the right, you can see that the net working capital improvement was driven by Mining and Rock Processing.

In the bars, you can see that it was a strong cash flow quarter, as we said, 110% cash conversion. In the trend line, you can also see that for the full year, we had a cash conversion of 95%. If we then look at the year-over-year development, earnings adjusted for non-cash was higher. CapEx was a little bit lower and a positive impact from net working capital was also a little bit lower compared to last year. But all-in-all then, an increase in free operating cash flow to SEK 6.7 billion.

The positive cash flow also resulted in a reduction in financial net debt, which came in at SEK 27 billion. And in relation to 12 months rolling EBITDA, we're now at 0.9. Capitalized leases and the pension liability came down a little bit sequentially, which resulted in a net debt of SEK 34 billion.

Looking then at outcome versus guidance. Currency, as Stefan mentioned, came in at SEK 1.2 billion, a bit higher than our guidance of SEK 1 billion that was based on the rates at the end of September. CapEx for the full year, a bit lower than guidance. This is partly driven by currency, but also timing of some projects and initiatives. The interest net and the normalized tax rate came in, in line with guidance.

And looking ahead then at the first quarter and the full year. If we start with currency. Here, we expect the significant currency headwind to continue into the first quarter, both on top line and also on EBITDA. And as you know, from a seasonality point of view, Q1 is also typically a low invoicing quarter. Nevertheless, unexpected negative currency impact of minus SEK 1.4 billion, and this is now based on the currency rates as of the 23rd of January.

Then if we look at full year, we estimate CapEx to come in at between SEK 4 billion and SEK 4.5 billion. We expect the interest net to continue to trend downwards with a guidance of SEK 0.6 billion. And for the tax rate, we have left the guidance unchanged.

And with that, I will hand back over to you, Stefan.

Thank you. So, if we go into the conclusion, we see a strong financial performance, both in the fourth quarter and in 2025 overall. In the fourth quarter, we have double-digit organic growth in orders and revenue and improved margin and strong cash conversion. For the full year, the organic order intake and revenues increased by 11% and 5%, respectively. And the margin came in for the full year at 19.3% despite tariffs and significant currency headwinds.

We also continue to make good progress in our strategic priority areas. We have a continued good innovation pace, and we welcomed several new companies into the group. We see strong progress in our digital offerings. Strong growth in both Intelligent Manufacturing and Digital Mining Technologies. And in my view, this has been the strongest year we have had when it comes to the development of our digital businesses, both in terms of financial performance and the strategic progress we have made.

We also continue to make successful traction in the surface mining business, and we see strong growth in important regions in Machining such as India, and the local premium segment in China.

And for us, this is not only the last quarter of the year. It's also the last quarter of our 5-year strategy period, the shift to growth strategy period. And if we summarize this period, we see a strong and good financial performance throughout the period with strategic progress despite the significant macro and geopolitical challenges that we have managed throughout the period. We have strengthened our offerings. We have gained traction in important growth areas and also introduced many leading solutions.

So overall, we go now into the new strategic period, Advancing to 2030 as a stronger group. Thank you. And let's go to Q&A.

Thank you, Stefan, and Cecilia. Yes, it's time to move on to the Q&A session. So operator, please, we can take the first question.

[Operator Instructions] The first question comes from Gustaf Schwerin from Handelsbanken.

Yes. I have a question on the cutting tool growth. The positive trend you're calling out for general engineering in Asia, is that mainly an effect of pre-buys in China on the tungsten prices?

And secondly, given the spike now in price, do you have any evidence at all that customers and other markets have been building inventory as well?

On China cutting tools, it's a combination. We see an underlying growth in the demand picture. But we also see an effect from pre-buying, not because we are raising prices, sort of, here and now. But because of the increased tungsten prices some customers are buying or they're increasing their inventory levels basically to, because you anticipate some level of price increase. We are not seeing it anywhere else. It's a dynamic we have seen in China specifically.

The next question comes from Chitrita Sinha from JPMorgan.

I have three, please. My first question is just on mining demand. So 17% order organic growth is obviously a very strong result. But could you provide more color on the demand by commodity and whether you're seeing anything incrementally different given where gold and copper prices have got to the start of this year?

I wouldn't say, we have seen any specific change throughout, sort of, the past quarters. Of course, gold and copper are key drivers. They remain above 60% of our total exposure. But of course, we are also seeing many other commodities, silver, palladium, et cetera, that are strong. So yes, maybe led by gold and copper, but a strong demand across the board.

Very helpful. And then, my second question is just on the margin in mining. So, operating leverage was obviously very strong this quarter. But how should we think about the margin heading into 2026, especially if we expect equipment deliveries to pick up?

For mining, we have a margin corridor of 20% to 22%. And we also have a normal leverage of around 30%. So that gives a rough framework of where -- what we are aiming for in terms of the margin.

When it comes to higher equipment growth, there, you need to look at the incremental leverage of those additional equipment sales. So, even if you look at the full margin of equipment versus aftermarket, of course, equipment has a lower margin, but the incremental margin that we get on additional equipment sales should not be dilutive.

And just to add to that, I mean, this is something we have been talking about for a few years based mainly on comments from other in the industry. If you want proof that what we just say is correct, and just look at Q4, we had significant increase in equipment deliveries and we see a solid operating leverage. So, no negative mix impact.

Perfect. Very helpful. And then my final question is just on Machining and Intelligent Manufacturing. So, comps were slightly easier in Q4 than Q3, especially in software and aero, as mentioned. Can you please explain the moving parts heading into Q1? And is there any easy or tough comps to be aware of?

I think the main thing that impacted, sort of, from a comps point of view was that we had a dip in aerospace in Q4 in '24. As I said, there were strikes in the U.S. in particular. And then there were maybe a few other segments that were on the weaker side. The fall of '24 was a little bit weaker. It jumped up a little bit in Q1. So sequentially, so to say, on a dailies perspective. But that's the only thing I would call out.

The next question comes from Edward Hussey from UBS.

Maybe just a couple, if I may. So just firstly, on the organic drop-through in Machining and Intelligent Manufacturing of 28%. I mean, clearly, a strong drop-through. However, my understanding was that when volumes returned in metal cutting, we could be looking at drop-through closer to 40% or 50%. Could you maybe just talk through the delta between the two? I mean, is 40% or 50% organic drop-through an unrealistic expectation? Or has tungsten been a headwind to achieving that level?

No. We still stick with the assumption that around 40% is a realistic leverage for the machining business long term. Now in this quarter, a lot of the growth was driven by price to offset inflation, we have tariffs surcharges and so on. And when you have a very high component of the growth driven by price, then to mitigate these type of effects, then we are protecting our margin. We're not expecting an incremental margin of that -- on that type of growth. So, that's why it's a little bit lower in the quarter.

Yes. That's very helpful. And then just maybe -- I mean, you might not be able to answer this, but I mean, do you have any concerns around the tungsten price? I mean, do you see any risk that it might pull back this year? I mean, for example, if new supplies brought online, if the pre-buying, sort of, stops or if China relaxed export restrictions. I mean, what's your kind of base case at the moment into 2026?

I can start with that. No, but I mean, there are several dynamics driving this. One, as you say, is sort of some type of constraint of supply from China. That is, of course, possible that it's being reversed quickly and then that can have an impact on the prices. There are other dynamics as well, such as the growth in defense industry, which is also driving demand for tungsten. And then, you have tariffs and so on, that comes into the picture as well. So it is a complex picture. Tungsten, historically, has been volatile. So we are prepared for all, sort of, eventualities and scenarios. But yes, currently, the momentum is positive, at least. I don't know if you want to add.

No, I think you summarized it well.

The next question comes from Alex Jones from Bank of America.

Two, if I can. The first, just on the capacity ramp-up in mining as you, sort of, start to deliver more equipment, clearly, strong revenue growth this quarter. Could you just give us an update on that capacity ramp-up and whether you've encountered any bottlenecks or it's all going smoothly so far?

Yes, I think it's going well and very happy with the strong deliveries in the quarter, which I think is a testament that -- I mean, when we invoice, it means we have produced them maybe 3, 4, 5 months earlier, and then it takes a while to get them to customers and do local adaptations and so on. So this shows that a while back, mid-year production levels were starting to ramp up and reach higher levels, and then it has now taken a while to get it out to customers. And of course, now we have a continuous feed of new equipment on its way to customers.

We are continuing to do adjustments to the production plans and so on as we speak. But I think the step change has been managed. And we can also see it on the lead times that we are managing to keep the lead times under control despite the high order intake, which I've said has been a high priority for us, because we have seen in prior upturns that if the lead times becomes too long, you start to lose business on lead time, and we have really wanted to minimize the risk of that.

Then of course, as Cecilia mentioned, we have a bit of seasonality in the business, as you know, with Q1 being typically a little bit lower invoicing, simply because you have the southern hemisphere with countries being on holiday in the beginning of the quarter. But yes, I'm happy with the ramp-up, and I cannot say we -- there are anything I would like us to have done differently or more.

Great. Okay. And then, one just on capital allocation. Could you give us any color or update on, sort of, the pipeline for bolt-on opportunities in the various areas you outlined as strategic priorities at the Capital Markets Day last year?

Yes. I mean, if we start with -- I mean, as we have seen here, the cash flow is strong and the net debt-to-EBITDA is coming down. We've always said we want to be maybe slightly below 1, and that's where we are now. It also means that we have given green light since a while back to most of our divisions to pursue M&A in the strategic areas. It takes a while once you have taken a little bit of a pause to get back and, sort of, make the pipeline active again. But I would say across the areas we did identify, we have ongoing conversations. And then it's always a matter of right price, right timing. But we have an active pipeline, and I would expect more M&A to come in this year than in '24 and '25.

The next question comes from Klas Bergelind from Citi.

My first question is on the growth in cutting tools of 8%. How much was pure pricing out of the 8% growth, so not tariff surcharge of 1.4%, but the pure price component.

And when you look at this running quarter, the first quarter, Stefan, I would assume that you will push prices further. You are -- I think, correct me if I'm wrong, but I think that you are 15% to 20% self-sufficient on tungsten. So obviously, the cost headwind should grow. So I would assume that the pure price component should move up even more into the first quarter. Interested in the dynamics there.

Do you want to take the price first?

Yes. When it comes to pricing for the cutting tools, we don't give a detailed breakdown in terms of the specifics. We had slight volume growth. And then, surcharges related to tariff and the rest is price, but we cannot, unfortunately, be more specific than that.

Then it was a little bit difficult to hear you, but were you talking about the pricing dynamics coming into 2026?

Yes. On the back of that, obviously, you have your own mind, Stefan, but you're not that self-sufficient, right?

Yes. I mean -- okay. So I mean, tungsten prices, of course, continue -- have continued to go up, scrap as well, which means there will be a continued price dynamic here. On the powder itself, we are adjusting prices on a regular basis, basically on a monthly basis, depending on the latest APT notation. And then, when it comes to our other products, cutting tools or drill bits and so on, then of course, we adjust prices when needed to compensate for the increased raw material costs. But I cannot give more specifics. Other than that, we are -- if tungsten prices continue up, we will, of course, have to continue to do price adjustments for that.

Yes. My second one, and I hope you can hear me, is on the demand in Europe. So if you look at construction, you're saying that there are positive signs, but you didn't move the arrow upwards on infrastructure in Europe. And then, on -- if you can comment, Stefan, on general industrial demand in Europe through the quarter, it seems like there is a little bit of, sort of, green shoots, but I'm interested to hear across what products and countries that you see this development?

Yes. No, you're right on the infrastructure. We say there are positive signs, but it hasn't really translated into order intake increasing to a level where we put our arrow up, but we are positive. We are seeing a little bit more activity, quoting, stock levels coming down and so on. So, it is a positive trend, but not yet visible in our order intake in Q4. Of course, Q1 will be important. As you know, it's the order where you typically get the orders for the summer season, construction season. So, we will have to see in Q1 if we can continue with this trend.

For general engineering, yes, we say it's in Europe, it's stable. You are right. I would also say that there is a little bit of also positive sentiment in some areas, in particular, certain countries where maybe we have seen a little bit more positive development, some of the larger continental European countries. But also here, not something we can really claim is visible in the numbers, and PMI is hovering around the 50. There is still uncertainty. So, I would say the jury is still out on, sort of, more broad-based recovery.

The next question comes from John Kim from Deutsche Bank.

A couple of questions, if I may. Staying on the topic of visibility and demand. What are you seeing, if anything, from stimulus programs, particularly in Europe? Or any early signs there?

No, I wouldn't say -- I mean, some of this infrastructure, sort of, positive sentiment is, of course, also coming in Germany where there is a big package. And even if it hasn't, sort of, come through yet, it means that some dealers or customers are maybe preparing for higher demand picture. So in that sense, indirectly, it might impact. But otherwise, I cannot point to any specific, sort of, stimulus outcomes. Unless you count -- sorry, unless you count defense into the stimulus package, of course, but that's -- I put that in a different category. In defense, we indeed see, of course, significantly increased demand.

Okay. And if we -- zero in on the SRP division, the comments indicated that you saw some good activity in demolition. I'm wondering if you could give us some color here, whether that's more infrastructure or construction related.

So demolition and recycling for us, that's our attachment tools, and they go into things like civil construction projects, also infrastructure projects. So it's a mix. We also say we see an improvement in aggregates, which is more, kind of, infrastructure, road building and so on. So I would say, if you look at the U.S., we are positive in infrastructure more generically right now. We did get -- for a couple of years, we haven't really seen, sort of, dealer orders coming in, in anticipation of the summer season. But in Q4, we started to get some dealer orders for that, which is a good sign. We'll see if it continues into Q1.

Okay. Great. Last question, if I may. Any color on the CapEx focus for this year?

On CapEx focus, well, we gave the guidance. Typically for us, the larger share of our CapEx is maintenance or replacement CapEx. But then, of course, we also have expansionary CapEx built in there, and that's mainly for the mining business.

The next question comes from Rory Smith from Oxcap.

It's Rory from Oxcap. Hopefully, you can hear me okay. My first question is just on the breakdown of order intake in mining between brownfield, greenfield replacement, or cutting it a different way, between surface and underground, is that something that you could comment on?

Yes. If we start with the first one. It was pretty similar to prior quarter and also the, sort of the, full year picture, meaning brownfield is the majority, slightly over 50%, replacement is about 1/3, and then the remaining being greenfield. And that's been fairly consistent besides certain quarters when we have received a large greenfield orders such as the second quarter. But that's a general trend, I would say that's been there for a couple of years. Which actually means, if you look at the growth that it is a broad-based growth because that, of course, means that everything is growing since the ratio is the same.

On underground versus surface, I would say and as I mentioned earlier, we see solid double-digit growth in all equipment divisions, meaning both surface and underground. If you take more specifically, for example, the rotary business, I would say we see growth that is higher than the average for our business. But in general, surface and underground are equally strong.

That's great. And then my second question, and apologies, this is quite short term in nature, but just looking at 1Q '26, is there any reason to believe that, that operating leverage in machining is going to be any different to the sort of 28%, 30% level seen in Q4?

I mean, we cannot say too much, but I think the main driver for it being higher than around 20%, 30% now, it would be if we would have a volume recovery. And that is, of course, something we do not give guidance on. We said Q1 started at a stable level compared to Q4.

I understand. That's helpful. And then just finally from me, maybe I misunderstood this, but I was -- given the tungsten price action last year and the Wolfram mine that you own, maybe I misunderstood this, but I was sort of expecting to see slightly better margins in Rock Processing. So I was just wondering if there was, A, have I misunderstood that? Or if there's any, sort of, comment you could give around the breakdown of the margin outcome in Rock Processing?

Yes. The tungsten, the prices don't really impact the Rock Processing business. When we look at the margin development for this year, it's driven by a positive price versus inflation last year with a weak comparable. We had some price pressure in wear parts last year. Then we have good leverage on the higher volumes. We have the positive impact from savings, but then a significant currency headwind of 1.7 percentage points. So those are the main components for the margin development within Rock Processing.

The tungsten dynamics will be in the machining business. That's where we have it.

The next question comes from Vlad Sergievskii from Barclays.

Thanks very much for taking my three questions. I'll ask them one by one. First one, could you give us an idea on what was the share of growth projects in the new equipment mining orders specifically? I suspect the share of total orders that you provide also includes aftermarket, which is, of course, the reflection of historical installed base. What would be interesting is to see the proportion of new mining demand coming from [ coal ] customers specifically.

Yes. I mean we will -- you will get an updated figure with the annual report, but I don't think we give quarterly breakdown for commodity. I'll look at you, Louise.

No, I think we can wait.

Yes. What I can say is that, of course, copper and gold are -- have been a bit stronger than the average that you would see in 2024. But as I also said, it is a broad-based demand picture. I mean, we have a good business within silver, palladium and so on as well. So slightly higher than the historic average, but yes, not materially higher.

I think it's a fair reflection that the quarter looks quite similar as the -- on a full year basis.

Understood. That's very helpful. Also, is there a reason why orders from mining customers in the Rock Processing were down? Is it a function of commodity mix over there compared to your main mining business or something else?

No, actually, the main reason this quarter was high comps. They had some larger orders and a strong demand in Q4 of '24. The underlying demand, as we see it, is unchanged. Then of course, if you compare to our mining business area, they don't have the same dynamics in the sense that their largest commodity exposure is to iron ore, where you have a lot of crushing and screening. And iron ore, of course, is at decent levels, but it's not at the gold, copper, silver type dynamics there.

And then finally, downstream' mining have a different -- slightly different cycle than upstream' mining. It tends to be a little bit more late cycle. You need to first ramp up production enough to hit your thresholds for the processing plant capacity before you do additional investments there. So, it is a little bit of different dynamic. But overall, the mining demand in Q4 also for Rock Processing was robust.

Excellent. My final one would be on cutting tools. You mentioned some pre-buying effects in China because of the tungsten price. Why do you think you are not seeing those pre-buying effects outside of China? I assume your customers can see what's happening to tungsten price and can anticipate what will happen to cutting tools price later on.

I can start, and you can see if you want to add something. Yes. Of course, it's -- we don't have a straight answer to why we see a different dynamic. But one reason is that the pricing dynamics in China is different. In China, the pricing for cutting tools are also more directly linked to the tungsten price. While in the rest of the world, it is, sort of, embedded into a normal list price. So I think it's, the visibility is much higher. And also, I think the way they operate is a little bit different as well, but it's difficult to say, but that would be my speculation.

And maybe also another factor that could have an impact is we haven't had price increases in China for a very long time. So this is a little bit of a new phenomenon. I think in the rest of the world, Europe, U.S., we have had continuous price increases for a long time now. So, I think that could also feature into the dynamic.

I think it's a very good comment. I mean, we have had many years in China where price increases has been off the table completely. Now also our local competitors, which have been operating at very low margins are -- have to raise prices in line with the tungsten increase, which maybe creates a broader market dynamic anticipating this phenomena, so to say.

The next question comes from Daniela Costa from Goldman Sachs.

I have two. One is a follow-up on this tungsten debate. When we think about the technologies it gets used on, is there any potential substitution? Have you seen that in the past when tungsten prices went up a lot? Or is it just simply not possible and customers are just going to have to eventually weather the full price increase? That's my first question. I'll ask the second once you answer this.

There is, to my knowledge, no substitute, unless you go to even more advanced materials such as diamond-based materials and so on, which is even more expensive.

Got it. And then one other thing, I guess, that we have, sort of, started to hear about is more and more, sort of, memory chip shortages, I guess, throughout your portfolio, be it in metrology or in some of the automation that you have on mining, I'm not sure. Can you talk through like how significant a user you are of this and whether you see any tightness? Or how are you prepared for potential tightness there?

We see no impact from that. And I mean, overall, we have, of course, it's high mix, low-volume products that we have in this area. So our volumes are -- we tend to not feel this kind of dynamics since we can always, worst case, find things on the spot market since our volumes are so low.

The next question comes from Sebastian Kuenne from RBC.

Thank you for taking my two remaining questions. One again on tungsten. You got your own mine, as mentioned. Can you confirm that it has about 1,000 tons of tungsten output per year? And then I would like to know if your priority is to maintain the margin in the tooling business or to kind of take a little bit of market share, because you can be less aggressive on the full price increases? Or if you go with the same price increases as your competitors and therefore take a bit more profit? I would just like to understand a little bit more your thinking here.

I think the last question, I think we got it last time as well, and my answer is the same. I mean this is, let's call it, the business tactics or business secret. We will not give that away to the audience. So we will manage that tactically as we feel gives the most value to the business.

I think you mentioned earlier something like flat margin if volumes are not increasing, when it's were to increase, you get some operating leverage in the tooling business.

Yes, that will come with a -- yes, just because we would have better cost absorption with higher volumes, that is what will drive a higher -- a more normal leverage around 40% as opposed to the 20%, 30% we're seeing at the moment.

And on the mine output, I don't have a ton for you. But what we can say is that for -- in terms of the overall production of powder, the mine is roughly or just over 10% of our supply. And then 55% roughly is recycled material from buyback programs, and the rest is sourced from other sources to make sure we have a diverse supply base.

Understood, okay. And then, my second question is on mining OE. You mentioned that you plan to increase capacity this year for obvious reasons. And in what areas do you see bottlenecks specifically on the supply chain at the moment?

I mean, historically, we have typically seen bottlenecks with major components such as engines or certain drivetrain components. We worked fairly diligently about a year ago to get ahead of that this time. So at the moment, I mean, we can produce as we have planned to produce. No specific bottlenecks. We have, of course, been helped, A, by the fact that we were early out here. And secondly, that we don't -- I mean, in general, we don't see this type of, let's say, increase in production in adjacent industries. So, we have -- we can get what we want, so to say, for the moment.

When it comes to assembly and these kind of things, we can scale fairly straightforward with partners, our own people and also the fact that we have said before that we have also new sites coming online in Asia, both in India and Malaysia. So it's -- we can produce what we have or want to produce right now.

Next question comes from Max Yates from Morgan Stanley.

Just two quick questions from me. Just the first one is on the aftermarket side of mining. I guess, we're kind of used to these businesses growing mid- to high single digits and some people would make the case that given the commodity price backdrop, there's a huge amount of incentivization to get stuff out of the mines by the customers. But that's also been happening already. So, I guess my question is simply kind of from those, sort of, 8% growth rates that we're seeing now, is it actually possible for the business to grow much faster than that given volume production rates, what the customers are doing already? Or would we think that is a very good growth rate historically and therefore, kind of any acceleration or meaningful kind of next step-up has to come from the brownfield and greenfield?

I mean, we stick to what we have said in terms of long-term growth rate should be high single digits. Now in this quarter and some quarters in '25, we have been in the double digits. And that is maybe a bit of an acceleration driven by the commodity prices and the fact that customers want to push even harder. But I think the long-term trend, we believe it should be high single digits.

And it's driven by a number of factors. Our fleet size continues to grow. That obviously drives aftermarket growth. The fleet is still very old in relation to historic fleet age. That also drives aftermarket. The technology content in each machine we deliver is increasing constantly, which both means you need more service and parts, different types of parts as well, sensors and so on. It also increases our aftermarket capture rate because the more advanced the machine is, the more difficult that is for a third party or local service workshop to do the service. So, all of these things are combining into the dynamic that we are seeing this healthy growth in the aftermarket business.

Okay. And maybe just a follow-up. Obviously, if you kind of go back a few years, there were a lot of discussions around -- well, at least from the, sort of, investment community about, sort of, potentially a separation of Sandvik into the machining business and the mining business. We're continuing to see kind of businesses simplify across industrials. I guess your share price and multiple would kind of indicate your decision for not doing that at Sandvik, given it's clearly been a great run for the share price.

I guess my question is, to what extent do you still discuss this internally? And is there any consideration on this debate as to it matters where machining is in its cycle and if we get to a more, sort of, mid-cycle level in demand and margins, then that decision comes more back on the table? Or given where the multiple is versus the peers, which looks very healthy and looks like there's no major discount versus the peers, is that decision -- is that discussion really internally, kind of, off the table for now? Just -- so the latest thinking around that would be helpful.

I mean, our approach to this has always been that you have to have a very long-term perspective. We have obviously explained before how we believe we can be value accretive to our shareholders based on the strategy and execution that we have had or have. And we are, of course, very happy that we feel we have gotten a recognition for that in the past, yes, 12 months or so. And if the discussion would be there in any way, it would never be around tactics around share price or cycles or anything like that because if you do it, you do it once and for eternity, so to say. So it has to be driven by other fundamental reasons. And we believe, as we have said, that Sandvik is a great group. We have 23 market-leading divisions. And based on the strategy and the operational performance, we should be able to create value, and we have created value now in the current group structure.

Okay. So we have a few minutes left, and three in line, so I ask you to keep your Q&As short.

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

I'll try and make it shorter. If cutting tools were high single, machining overall 15%, it would suggest 80% for powder and software. Could I assume triple-digit powder in 2030 software?

And I'll give all three together at the same time. And on whatever the tungsten and tariff price impact is to the whole of machining in orders in the fourth quarter, is that the peak? Or would you expect that impact as a percentage of contribution to growth to increase going forward?

And finally, on the mining aftermarket side, you said high single, I think? Did you say the number? Did you say if it was 7 or 8? And how are Rock Tools and Ground Support doing? Are they flat or down? And what's happening there?

Okay.

That was record long, is that okay?

If we start with the growth in machining, I mean, as we said, software is growing double digits. Now, it's not in the 20% to 30% range. And if you wait a little bit, you will soon get the broken out Intelligent Manufacturing restated figures, as you know, since we will start to report it separately. So then you will get even more or you will get the exact figures. But it's not in the -- it's not -- it's below 20%, let's say that.

I'll jump to your third question on...

Rock Tools and Ground Support.

Rock Tools and Ground Support, yes. Yes. So, I mean if parts and services are growing double and aftermarket is high single, you can see that they are a little bit dilutive. That is, I would say, normal. They -- all the dynamics I mentioned around the growth dynamic, around service and parts, all of them are, of course, not relevant for Rock Tools and Ground Support. They are more purely production-driven. So you have a little bit of a lower overall market growth there.

On tungsten, I'm not sure if we can say about that.

I think, well, it was a question on tungsten and the tariff and this is reaching the peak now in terms of the PV impact. I think here, there are -- I mean, some dynamics is that we will start to have these effects also in our comps from the second quarter onwards. So that's, of course, limiting the impact when you look at the year-over-year development, but I think in terms of, are we at the peak or not, it's very hard to say, both how tungsten or ATP prices will develop, also with tariffs. There were some discussions, as you know, between U.S. and Europe, again, just a couple of weeks back around additional tariffs. So very hard to say, I think, how this will develop in '26.

Yes.

All right. The time is out. The idea was good, but we can't manage now to take any more questions. But please reach out to Investor Relations, and we can help you further. And with this, we thank you for calling in, and as usual, for good questions. Thank you.

A warm welcome to Sandvik's presentation of the third quarter results 2025. My name is Louise Tjeder, Head of Investor Relations here at Sandvik. And beside me, I have our CEO, Stefan Widing and CFO, Cecilia Felton.

We will do, as we usually do, we will start with the presentation. Stefan and Cecilia will take you through the highlights of the quarter, and then we will move on to your questions.

And with this, it's time to listen to the presentation. And over to you, Stefan.

Thank you, Louise. And also from my side, welcome to Sandvik's third quarter report in 2025. It's a quarter that's been characterized by a strong momentum and strong demand in several of our key segments. We see a strong demand in Mining, in software solutions. Also, cutting tools are up high single digits and the underlying demand in general engineering has been stable. We have seen strong growth also in aerospace and defense and however, a weak picture in automotive. In infrastructure, the demand has been mixed, and I'll come back to that later in the presentation.

Total order intake grew by 7% and organically, we grew by 16%. Total revenues decreased by 4%, but grew organically by 5%. We see a resilient delivery on the margin considering the significant currency headwinds we have in the quarter. Adjusted EBITA came in at SEK 5.5 billion, which corresponds to a margin of 19% and the rolling 12 months is now 19.3% versus 19.2% same period last year. We see continued effect from our restructuring programs with savings of SEK 145 million in the quarter. Adjusted profit for the period amounted to SEK 3.5 billion, and we had a good operating cash -- free operating cash flow of SEK 5.6 billion, corresponding to a cash conversion of 105% in the quarter.

We have launched several key innovations in the quarter. First of all, is the Mastercam copilot. We launched about a year ago AI-based solutions in several of our softwares. And now we have also launched a copilot in our largest software suite, which is Mastercam, increasing productivity for our customers. We've also launched a new jaw plate range, which is actually very important. You might remember about a year ago, we had price pressure in the wear parts in rock processing because this is very much a commoditized product with a lot of oversupply historically. And launching new products like this to differentiate our offering protects our margin and volumes in the aftermarket business. So this was an important launch.

And then AutoMine surface drilling training simulator, yet another module in our AutoMine suite helping our customers to more easily adopt our new surface drilling solutions.

Going into the market and the segments. If I start then with the geographical perspective first, we are up 6% in Europe. Cutting tools in Europe is down low single digits. North America, we are up 18%. Here, cutting tools are up double digits. Important to note, of course, that we have a bigger price element than normal in North America because of tariff surcharges. But even without that, good underlying demand in North America. Asia, up 18%. Here, China was strong with double-digit growth as well on the cutting tools side. Also here, we have a price dynamic, which is a bit unusual, driven by the high tungsten prices. This has already come through also in price increases and therefore, higher top line than normal. But also here, even without that price effect, a very solid demand picture. And then we have the mining markets, which all are up, of course, given the strong momentum we see in mining.

If we then take this by market segment, of course, Mining, very strong, continues with strong momentum. We'll come more into that when we're going through the businesses. General engineering, I would say, a positive in that it has turned from being a negative to now underlying stable. From a PV point of view, it's actually up high single digits. Europe is stable. North America is up by single digits, and China is up double digits. And the reason you see a difference between sort of the underlying and the PV numbers, of course, partly relate to what I mentioned around tariff surcharges and price in China.

Infrastructure, a bit of a mixed picture. Overall, it's stable at low levels. We did see an uptick in North America, especially in demolition and recycling, where we see some stock filling orders from our dealers, which is a positive sign again now in infrastructure. Automotive is weak overall, I would say, down low single digits. Overall, Europe is down low single. North America is down mid-single, while China has been stronger, up high single digits.

Aerospace is strong across the board with double-digit growth in all regions. The other segment here is a bit mixed. We see very good demand in some smaller strategic segments like defense, medical and consumer electronics. The other part of this is more related to general engineering. So here, we see overall a mid-single digit growth, Europe up low single and North America and China up in the low double digits. So overall, I would say, a decent momentum if we exclude automotive.

This converts then into an order intake of SEK 30.8 billion, revenues of SEK 29.2 billion and a book-to-bill of 105. And of course, noteworthy that it's the third quarter in a row where we have a positive book-to-bill and thus building order backlog. If we look at it from this perspective with organic and structure, we can see the order momentum in the past quarter has been growing. And the revenue momentum is also improving, but lagging the order intake. So I would say we have not yet, in this quarter, seen the positive effect of the very high order intake we've had in mining, in particular, in the past 3 quarters. But of course, something we expect to start enjoying shortly.

Then coming to EBITA, margin again of 19%, SEK 5.5 billion, down 5.6% versus the same period last year. We have good leverage on the volume increases in several of the businesses. Also very good price execution, but this is then, of course, offset negatively by currency. The currency impact came in at minus SEK 837 million, so slightly worse than what we guided for and a dilution of 130 basis points. And as already mentioned, the rolling 12 months EBITA margin is now 19.3%.

Diving a little bit deeper into the various businesses, starting with mining. As already mentioned, continues very strong momentum across the board. Equipment growth up 75%. We should be honest here and say it's, of course, partly due to that we have had a couple of weak Q3s in the past years. Now the momentum just continued and then gave a very strong growth.

Also, the service business, parts and services grew double digits again and also digital mining continued with strong momentum and grew double digits. Total order intake then increased by 13% and organically by 24%. If we exclude the major orders we had in the quarter of SEK 1.6 billion, the organic order intake would have increased by 16%. So this shows, I think, good momentum both in the major orders, but also excluding them in the smaller replacement and expansion orders also very healthy.

Adjusted EBITA, SEK 3.1 billion, corresponding to a margin of 20.1%. Good leverage here on the volume increase, but then negatively offset by 150 basis points due to exchange rates. We also had an impact from the ERP go-live we talked about in Q2 of around 30 bps also in this quarter. When it comes to tariffs, we expect them to be fully offset by -- they were fully offset by our surcharges. We also expect a little bit of impact from this ERP go-live in Q4. We can come back to that and go through the bridges.

Going then into rock processing. Also here, they saw solid growth in mining. We talked about the infrastructure with a positive acceleration of dealer activity in the U.S. in Demolition and Recycling as sort of a highlight. So total order intake was flat, but the organic growth was 9%. And excluding major orders, we had some larger orders in Q3 last year, the organic order intake grew by 14%. Adjusted EBITA of almost SEK 400 million, corresponding to a margin of 15.1%. Very strong organic leverage, driven by savings and also the fact that we had some negative pricing in the same period last year related to these wear parts. So a good offset of -- even also the currency impact of 130 basis points and also here, tariffs were offset in the quarter.

Coming then into Machining and Intelligent Manufacturing, as already mentioned, a bit more of a mixed demand picture with strong growth in aerospace and smaller strategic segments. Underlying demand in general engineering was stable, which we regard as a positive and then a weaker automotive. The organic order intake for cutting tools increased by high single digits year-on-year, and that's, of course, partly driven by the lower comps that we had in Q3. Sequentially, this represents a stable development from the second quarter. We also saw strong development in powder with low double-digit growth in the quarter on the order side. And as already mentioned also double-digit growth from the Software and Intelligent Manufacturing. This means that the total order intake grew by 1%, of which organic was 8%.

If you look now at the start of the month in October, we continue to see a stable development. Maybe something to say about the development within Q3 here for context. As you know, Q3 is a bit of a tricky quarter with 2 holiday months and then a long and important September. I would say September came through in a good way for us, meaning it met expectations and delivered solidly in regard to what we expected. So yes, that was a good testament that we are now more waiting for things to turn around, again, which is good. Adjusted EBITA, SEK 2.2 billion, corresponding to a margin of 19.2%. Good price execution, strong savings here in total, SEK 116 million. And also here, tariffs fully offset, but then a negative exchange rate impact of 60 basis points.

Here, we also had some additional currency effects, which is sitting in the organic column, which Cecilia will explain a bit more in her part of the presentation. And with that, I'll hand over to you to continue the presentation.

Great. Thank you, Stefan. All right. So as usual, let's start with the growth bridge on the right-hand side here. And as Stefan mentioned, we had a very strong organic order intake, up 16% and revenues grew by 5%. Structure was neutral on both orders and revenue, but we still saw significant currency headwinds on both orders and revenues, minus 9% and minus 8%, respectively. So all in all, this meant that orders grew by 7%, while revenues declined by 4%. Earnings at SEK 5.5 billion, as Stefan mentioned, which corresponds to a resilient margin of 19%. Net financial items came down year-over-year, and I'll show you a detailed bridge of that in a few minutes.

Tax rate, excluding items affecting comparability and also on a normalized basis was 25%, so just within our guided range. Net working capital in relative terms continued to gradually come down. On a 12-month rolling basis, we're now at 29.3%, almost 1 percentage point lower than last year. Free operating cash flow, strong in the quarter, SEK 5.6 billion, corresponding to a cash conversion of 105%. Returns improved year-over-year, while adjusted EPS declined due to currency.

If we then continue with the EBITA bridge and start with the organic column. Here, you can see that we had a good leverage at group level, 34%, which gave an accretion of 0.7 percentage points. And as Stefan mentioned, though, when you look at the leverage for Machining and Intelligent Manufacturing, it's lower than usual. And one contributing factor to this is that, as Stefan mentioned, we have a currency impact here in the organic column. And the currency impact comes from internal flows in and out of our distribution centers. And these were not hedged. And a few months back, we had a very sudden and sharp strengthening of the SEK, which has then resulted in this currency impact. And the reason why we treat this type of currency impact as organic is because we want our divisions to work with mitigating these impacts as part of running their business.

Now we are looking into improving our processes and hedging these flows. So unless we see another sudden change in currency rates, this is a one-off item. We do, however, expect part an impact also in the fourth quarter from this.

If we then take the next column here, currency. You can see that also this quarter, we had a significant currency impact on top line, similar to what we saw in the second quarter this year. And we also expect continued currency headwinds on the top line for a couple of more quarters. On EBITA, we had a negative impact of SEK 837 million, which gave a dilution of 1.3 percentage points. Structure then was slightly accretive, 0.1 percentage points. And all in all then, that brings us from a margin of 19.4% last year to 19% this year.

If we then continue down the P&L, looking at the finance net, you can see, as I mentioned, that it's down year-over-year. This is driven by the lower interest net, you can see on the first row here. It's almost half of what it was a year ago. And this is due to a combination of both lower borrowed volumes, but also, as you can see here at the bottom, lower yield cost. The reported tax rate for the quarter was 25.8%. But then as I mentioned, excluding items affecting comparability and also on a normalized basis, it was 25%, so just within our guided range. Year-to-date, though, we are at 24.1%.

Yes. If you look at the graph here on the left, you can see that net working capital in relative terms is gradually coming down. We're almost 1 percentage point lower than last year. And on the right, you can see that it's the business areas, Mining and Rock Processing driving this improvement. We had a strong cash flow in the quarter, SEK 5.6 billion. If you look in the graph in -- at the black trend line, you can see that cash conversion is at 94% on a 12-month rolling basis.

When we look at the year-over-year development, EBITDA adjusted for noncash was slightly higher than last year. CapEx was a bit lower. But last year, we had a significant positive impact from net working capital. And if you look at the bars on the left, you can see that we had some timing impact between the second and the third quarter last year. But this year then, a strong cash flow and a cash conversion of 105%.

Financial net debt came down sequentially to SEK 33 billion, driven by the good cash flow. And in relation to 12 months rolling EBITDA, we're now at SEK 1.2 billion and capitalized leases increased slightly sequentially. Pension liability came down, which resulted in a net debt of SEK 41 billion. Looking then at outcome versus guidance. Currency, minus SEK 837 million, as we mentioned before. And then looking at a year-to-date basis, CapEx is at SEK 2.8 billion, interest net at [ 4.1 ], so in the middle of the guided range.

Looking ahead then at the fourth quarter and full year. So for Q4, we expect a continued negative currency impact on EBITA, minus SEK 1 billion based on the currency rates at the end of September. And for the other items, CapEx, interest net and the tax rate, we have left guidance unchanged for the year. And with that, I will hand back over to you, Stefan.

Thank you. I'm going to the summary. Yes. As we said, we think the quarter is defined by a very good order growth momentum and overall good performance in the quarter. Strong organic order intake of 16% with good momentum in key segments, a resilient margin of 19%, considering the significant currency headwinds and also tariffs fully mitigated also this quarter. And a strong cash conversion of 105%. We're of course, also very happy to see that we continue to leverage on our strong digital platform. This is an important part of our strategy, and we saw now double-digit growth in both Intelligent Manufacturing and Digital Mining Technologies.

We continue to see good progress also on the mine automation side with AutoMine, and we have launched several new important innovations in this area in the quarter. I think we can see that we have a very solid foundation and culture that drives strong financial performance and strategic execution. Our strategic initiatives are yielding results. And the decentralized operating model we have is, of course, even more important in times like this. We can really see that it provides very fast reaction to the quickly and frequently changing market conditions in the world around us. We'll continue to see this uncertainty, of course, going forward, both geopolitically and on the macroeconomic side, but I believe Sandvik is well equipped to continue to handle these challenges.

Thank you. Let's go to the Q&A.

Thank you, Stefan and Cecilia. Good. We saved some time. So we have time for many questions now. So operator, we can take the first question, please.

The first question comes from the line of Harleaux Michael from Morgan Stanley.

The first one would be on mining. Will it be possible for you to give us an indication on whether we are done with the ERP transition, and also if there was something affecting revenues this quarter? And then the second one would be on the growth of SMM. If you could comment on whether we saw some regions accelerating more than others and how we should unpack volume versus price, that would be very helpful.

Shall I start with the ERP question. Yes. So this division that is impacted, they went live with a new ERP system in the second quarter of this year. So we are done in terms of going live. We're now up to speed with production again. So no impact on top line. We have some extra costs as we need to fly more of the goods to the end customer as opposed to traditional shipping. But we still expect some impact of this also into the fourth quarter. This quarter, it had an impact of 30 bps.

Thank you. On growth in Machining or both maybe, but focusing on Machining regional perspective, no, I would say, except for what I talked about, no major changes between the regions. So Europe continues to stay, I would say, muted. We continue to see good progress in North America. Maybe we could say that there was a positive uptick in China driven by the different segments I went through. On volume versus price, the only sort of number we are giving here is that we did have 1.4 percentage points on group level from tariff surcharges. And of course, you have a proportion of that going into the Machining business as well. That is on top of the normal price effect.

The next question comes from the line of Sinha Chitrita from JPMorgan.

I have 3, please. I'll take it one by one. So firstly, on your comment on the mining revenues, given what you see currently in the order backlog, should we expect a pick up in Q4? Or will this be more of a 2026 case?

Yes. We are not guiding for revenue. But of course, we, as you know, usually have roughly 9 months of lead time. So if we started to see an increase in order intake at the beginning of the year, that should lead to some of that flowing through into the fourth quarter. But I don't want to be more specific than that.

Okay. Very clear. And my second question is on powder. So you mentioned that there was a low double-digit growth this quarter. How do you see this developing into Q4? Should we expect a similar or maybe even better development?

Yes. So same comment there. We don't guide on that going forward. But of course, as long as general market dynamic doesn't change and as long as we don't go the full cycle and start to meet comps, the market should be fairly similar. Then we have to caveat that way that with that the powder business is notably lumpy in terms of timing of orders. And there is nothing we have called out in Q3 that it was extra high or low, so to say. But any quarter can be a little bit of a surprise, so to say, given when certain larger orders come in. But as long as tungsten prices stay where they are, ATP prices stay where they are, which is, of course, currently driven by geopolitics, the momentum should be okay in powder.

And then my final question is just on the margins in Machining and Intelligent Manufacturing. So I understand, of course, that there was the FX headwind, but could you just give a bit more detail on the organic development in this business?

Yes, sure. So I think if I take one BA segment at a time, so starting with Machining, they had a leverage of 19%, which then includes this currency impact, which it was an effect of around 100 bps in total. Then most of the growth was driven by price increases and surcharges to offset inflation and tariffs. There, you don't get the same level of leverage as you do with volume growth as those are not necessarily margin accretive in the same way. And then there was a positive impact of savings. So that's breaking down the 19% leverage for Machining. For Intelligent Manufacturing, they had a very strong margin in the third quarter last year, which was a fair bit higher than their margin target of 22% for this year. It was a one-off project delivery that they had last year. So it was a very tough compare for them.

The next question comes from the line of Schwerin Gustaf from Handelsbanken.

First, can I ask on the mining order intake. If I look at this historically, we've seen metal prices leading orders with about 1 quarter's lag. We're now coming back of 2 very strong order quarters for equipment. If we look at the metal prices where we could argue maybe some supply elasticity, they have clearly continued up. So Stefan, in Q2, we're very optimistic on the back of improving when we ask you about the increased capacity internally. Would you say now that the underlying demand is continuing to trend upwards into Q4 in '26? That's the first one.

Could you repeat that last one, trending upwards towards Q2 of '26, did you say that? Could you clarify that?

Yes. Sorry, I have a bit of a cold. That's why I sound like that. Yes. No. So the last part, if I look at just how metal prices have led orders historically, it looks like there's still more to give from the outside. So underlying demand here, if we take away the large orders and the lumpiness of the equipment orders, do you think underlying demand is still trending upwards?

I will say the same thing as I said a quarter ago that -- I mean, the demand picture is driven by, obviously, the high metal prices first. And that, of course, has continued to trend in an even more positive direction. It's also driven by the fleet age that is old or high. And then, of course, the more long-term trends such as depleting ore grades. All of these are still in place. Then I don't want to speculate in terms of is the demand going to go even further up or flatten out or so. But I think what we said a quarter ago still holds, meaning we don't see any reason for why the strong market demand would not continue. Then exactly at which level, I don't want to speculate in.

Okay. Then just secondly, machining. I didn't quite catch volumes specifically. Would you say they're quite flat versus Q2 or even up a little bit?

They are stable versus Q2. Then what I want to convey is more that, of course, Q3 is a very tricky quarter in that you have 2 low months in July, August. And then to save the quarter, you need a very strong September. And what we saw last year was that, that didn't materialize. That was sort of why the quarter became weak. And if you have a more unsecure sort of economical cycle, that's typically what happens. The summer shutdowns are increased by a week or 2, and then that will ruin your September. This year, we saw a solid September that came through in the level we wanted. And it doesn't mean it's still a stable sequential performance, but I still think it's a little bit of a vote of confidence in that we have troughed out and now more waiting for things to turn upwards. Otherwise, I think we would have seen that in September, some weakness.

The next question comes from the line of Sebastian Kuenne from RBC Capital Markets.

I have 2. One is in the Mining OE side, we see ever stronger organic. Growth and Mining OE now takes a larger share of the overall mining order intake. Given that there's a certain mix effect coming up, are you concerned that you have to jeopardize your 20% to 22% EBITA margin in that division? Or do you think you can compensate later on with pricing? That would be my first question.

I can start. Even though equipment has a lower margin than our aftermarket business, we still get good leverage on incremental equipment sales. So we don't see a risk from that perspective in terms of having to revisit our margin corridor for the business area Mining.

Yes. No, exactly. We can have some mix effects in a given quarter, a little bit back and forth. But typically, it is at levels where we don't even talk about it or we don't talk about it. It's so immaterial.

Secondly, on the Tungsten side and the powder side within Machining, can you give us a little bit of an idea how much it contributes to profitability. I can imagine it could be quite distorting in quarters where tungsten prices are very strong and there's some shortage in China and so on. Just for me or for us to understand a little bit what the underlying profitability of the tooling business is.

Yes, I can start and you can add if you want to. So the powder business structurally has a lower margin than our cutting tools business. When we look at the impact of the powder business in this quarter, though, we can see that, of course, we get a higher share of the powder business, which should dilute the margin, but the higher volumes and revenues and the positive price development also improves the margin of the powder business. So for Machining overall, it has a neutral impact. I don't know if you want to add anything to that, Stefan.

No. I mean it's the same dynamic as the previous one with the equipment that, yes, if you look at it statically, it has structurally a lower margin. But with growth and leverage as long as the leverage is higher than the average margin, then you don't get the dilutive effect.

The next question comes from the line of John Kim from Deutsche Bank.

Two questions, if I may. Could we just talk about price/cost dynamics in mining? I'm trying to figure out as we think about the margins or the bridge going forward, how much adjustment we have to do on cost to serve. Things that I think I would group in there would include higher OpEx, just higher distribution costs, impact of tariffs, nonoptimal working capital allocation. Is that a fair comment? Or how should we think about that and lapping that comp?

I mean, if I look up until now, we have managed cost inflation, tariffs, et cetera, in a very good way with surcharges and price. So to date, there is no negative impact on the mining from these type of dynamics that you are describing. And we will continue to work with this also going forward.

What I would add to that, I would make your -- your reasoning a little bit more simple and just say we have said that we should have around 30% leverage on -- in the mining business. And that is, of course, factoring in all the things you mentioned that we need to do capacity expansions and invest here and there, but that is factored into that leverage number. So I would make it more simple and just say 30% leverage is what we're aiming for.

And just a quick follow-up, if I may. If you think about the strength of your equipment order intake for the first 9 months this year, how should we think about the load on your factories and perhaps OpEx required or CapEx maybe?

Yes. I think what we have done, which we started with at the beginning of the year is to ramp up capacity when we saw sort of an expectation of higher demand. And I would say the divisions did it in a good way in the sense that they also -- even though we didn't have the proof points at that point, ordered a higher level of key components such as engines and so on than we may be needed at the time to secure those vital components, which is usually where we get the bottlenecks.

And then gradually, as the order intake has come in, we have also ramped up production. We have increased with production lines in both Finland -- in Tampere and Turku, and we have our Malaysia factory for [ Louden Hall ], which was already in the process of being ramped up. We have some additional capacity also coming online in India. So -- and also our partners that are also helping us build machines. And that is already coming online as we speak. So we are seeing higher throughput, and we foresee -- and in a sense, it's already in our cost base that higher operating level. And we are not foreseeing that we will not be able to meet the demand we see currently. I think the divisions have done actually a very, very good job in ramping up in a controlled and quick manner. So we are quite pleased with that.

The next question comes from the line of Edward Hussey from UBS.

Just 3, if I may. So first up, could you just talk through how U.S. demand for metal cutting tools developed through the quarter and whether you saw any signs of a slowdown in September?

I would refer to what I said that September overall came through exactly as we needed it. And if the U.S. would have weakened off, that would have been visible in the numbers because it's such a big market. And as we also mentioned, overall, U.S. did well in the quarter with double-digit growth, albeit some of that is, of course, tariff surcharges. So no, we cannot say we saw a slowdown towards the end of the quarter, no.

Okay. That's helpful. And then I mean, it's interesting to see such a strong order intake in the U.S. on the mining equipment side. I mean, were there any specific projects that drove this? And did this have anything to do with the 10 projects that the U.S. administration earmarked for accelerated permitting?

I don't think so. Meaning, it's not been called out in any way. And I think even if you -- they say they are accelerating them, in this industry, accelerating means it will take a few years less. It doesn't mean it will happen this quarter. So I think there is overall a good momentum in the market, partly driven by the dynamic you described that there is a strategic, let's say, an ambition and focus on more domestic supply. But I don't think these 10 big projects were part of it, to my knowledge.

Okay. That's very helpful. And then just final question. I saw in press release, you mentioned seeing positive pricing in China for the first time in a long time. Firstly, was this -- I mean, from your competition that is, is this on the metal cutting side? And secondly, do you think this is driven by anti-involution in China?

Yes, it's cutting tools to be very specific. What we have seen is -- I mean, we have some Chinese competition that has been operating at extremely thin margins, if any margin at all, for a long time. So it has been very tough from a competitive point of view, which is why we did the Ahno acquisition last year to have a good horse to play, so to say, in terms of competing against that. What has happened now with the high increase in tungsten prices is that they have gone completely underwater and been forced to raise prices for the first time in a long time. And the good thing with that is even if we are, of course, impacted by similar dynamics, it does change the dynamic in the market when also the local players start to increase prices significantly because then you sort of end up in a different discussion than that any price increase is a big no. Then you can start to negotiate from there and it does create a different dynamic. For us, I would say it's a positive.

The next question comes from the line of Rory Smith from Oxcap.

It's Rory from Oxcap. I just wanted to ask, in mining, the report mentioned strength across brownfield, greenfield and replacement. I just wanted to know if you'd be willing to put some numbers to that, either sort of levels of split or relative growth rates in those 3 areas. And I've got a follow-up on mining as well.

Yes, of course. So we saw particularly strong demand in brownfield. It was 70% of the order intake. Usually, it's more around 50%. On the other hand, we saw a weaker quarter for greenfield. It was down to around 5%. It's usually around 15%. On the other hand, in Q2, we had a big order, so it was 25%. So this can really -- I mean, the greenfield can vary over the quarters depending on when we get larger greenfield orders. And then replacements were around 25%, and it's recently been more hovering around 30%. What I think you should take away from this is rather that it was a very strong brownfield quarter and that is sort of pushing down the percentages on the others, not that it was weak in greenfield or replacement. So very strong brownfield quarter.

Understood. Very clear. And then just my follow-up on that to follow up on a previous question around the margins there. Would you be willing to put a mix headwind/tailwind number to -- if service versus equipment moves 1 percentage point in the mix. What's the sort of relative headwind or tailwind to the margins. Is that something we should be thinking about in terms of modeling this out?

No, I think it comes back to what we said before that even though when we get a higher share of equipment sales, we still get a good incremental leverage on those additional equipment deliveries. So typically, it's quite a small number. I think looking into the next coming couple of quarters, if I take a little bit more short term, it's more the currency headwind that has the biggest margin impact on the mining business.

The next question comes from the line of Vlad Sergievskii for Barclays.

I'll go one by one. First of all, you're obviously focusing on ramping up capacity in the mining business. Can you give us some idea of the magnitude of this ramp-up you're working out? Is it 10%, 20%? Is it something else?

I was going to say it's nothing. Of course, it's something, but no -- but we have a very flexible production setup. We're about, first of all, worth noting 70% of cost of goods in mining is purchased components. The rest is related to assembly. Of the assembly, 50% roughly is outsourced with partners and the rest we do in-house. And what we do in-house is basically assembly. So it's people with wrenches and power tools. So very limited in terms of CapEx and the cost is basically labor and space. And yes, so it's nothing material at all in terms of investments -- and the costs, so to say, is, of course, just rolls into the cost of goods sold. So if we do this in a timely manner, we shouldn't really see any margin impact in that sense.

Absolutely, Stefan. I was more thinking about volumes that are up we're talking about, right? Because obviously, your new equipment order intake is up about 50% in the first 9 months of this year. I assume there is some order book extension. So it's unlikely it will be a point when the growth in new equipment revenues will be 50%. But I was trying to understand what this growth could be? Is it 10%, 20%, 30%? That's the nature of the question.

Okay. And of course, then we come into the revenue guidance, which we don't really do. So you will have to you will have that sort of -- how this converts into revenues over the quarters is not something we can guide on.

No problem. Can you also give us some color on the strength of demand across different commodities, maybe splitting into gold, base metals, including copper and bulk commodities, iron ore, coal.

Now of course, the main demand increase is coming from the commodities that have had the best run, so to say, so gold and copper, which, of course, gold for us is around 35%. Copper adds another 25%. So 60% of the demand or our business is gold and copper, and that's where you see the biggest strength. Then there are several other commodities that are maybe not as big, but still significant in silver, platinum, palladium, you might have seen some orders we have announced in Southern Africa, not South Africa, but in Southern Africa, which is very much platinum and palladium where we have a very strong position.

So might be small commodities as such, but can be important from a business point of view. Then if you go into the bulks, of course, iron ore prices are okay and many of the larger producers, of course, making good money, but it's not any exceptional levels whatsoever. So it's more of a replacement demand picture. And some of the other bulks like coal, for example, is, of course, down. So much less investments there.

That's great. Final one from me. Could you please update us on your drilling rig offering on the surface side and specifically on large surface drill rigs. Did you manage to win just sizable orders over there? How material are those orders if they are? And what sort of market share can you envisage Sandvik having in large surface drill rigs in 2 years' time, 3 years' time?

Yes. When you say big, I assume you mean the rotary drill rigs, which, of course, as we have said also at the Capital Markets Day, is a priority area for us in terms of growth. I would say it's the last part where we are not really happy with our market share in terms of what we believe is our potential. Right now, roughly 20%, maybe a little bit more. It's something we intend to grow. We have had a very solid order intake on that side. We haven't announced specific names, but one of the bigger orders that we had this quarter was related to a quite significant rotary win, which was a customer we did not have before. So I think we're making good progress, but we still have a way to go. And we are not giving any specific targeted market shares. But what we have said is we want to establish ourselves as the clear #2 while we come from a position where we were more sort of battling for #2 spot. So that's our next sort of strategic goal.

The next question comes from the line of Klas Bergelind from Citi.

Klas from Citi. So my first one is on the aftermarket growth in mining when you exclude ground support, parts and services up double digits. Stefan, did you see an acceleration in the parts growth this quarter? And was this linked to accelerating activity at the miners, higher production? Or would you say that this was Sandvik specific. I'll start here.

This is the bumblebee that continues to fly. There was -- I think we had a similar momentum in the second quarter. And well, we have had a similar momentum for a long time. And sometimes it's high single digits, sometimes it slips over to double digits. But it's been a very long positive trend. And I think the drivers are the same fundamentally. We're gradually continuing to increase our fleet. What we have seen lately over the past year is that the surface -- our larger surface business that we have earned over the past years is now converting also into more aftermarket business.

We have the automation and digitalization, which also drives more aftermarket. It creates more stickiness with customers, and there are more things to service and replace. And then on top of that, we have, of course, the high metal prices and the need for -- or the desire for customers to run their equipment to the maximum and some of which are quite old. So all of these things are contributing to this momentum.

Got it. Then on the brownfield comment, is that -- i.e., that it was quite high share in the quarter. I guess that must be linked to gold then when you saw more momentum given your solid exposure, given that greenfields are more on the copper side. And then I will try you again on the lead times here in mining and revenues ahead. Would you say that these are getting longer? Or should we use the normal lead time, which I think in the past has been around 9 to 12 months.

That range is still valid. Maybe we are now a little bit at the higher end of that range simply because we have been ramping up and need to catch up a little bit, but we're still within that range.

Got it. And then very quickly, coming back to powder, less than 1% of the 8% organic order growth, it was growing low double digit. Can we talk a little bit about the dynamics here again? Could we -- if we stay at the current prices, could we see a bigger impact here into the fourth quarter given the framework agreement you're running. Or are we simply overestimating the impact on growth as tungsten on the raw side is not being up as much as the APT prices in the quarter. Some insights would be very helpful.

Did you get that?

No, can you repeat?

Can you repeat that question, Klas. It was a lot of aspects in your question.

Yes. So obviously, we have APT prices, and then we have tungsten, and then you have the framework agreements. And sometimes it's tricky to get this right relative to the big move we have in the prices. So my question is, if we stay at the current level, could we see the impact to Sandvik's growth in Machining and in Intel manufacturing be a bigger impact at the current level, i.e., with a lag into the fourth quarter?

Yes, I would say it's -- I think it's tricky to answer from the perspective that you end up with, okay, what was the comp and so on in the previous period. So the way I would describe it, and please help me out if you have more. But of course, if the prices stay where they are, underlying -- I mean, we will be at the plateau level. Then you have the comps, of course, that can play a dynamic here. But then as you rightly saw, we have framework agreements. Some of them are written maybe for 12 months. They are, of course, protecting us from increase in ATP prices that we get through sort of immediately. But what they are not capturing is if there is also a general scarcity in the market, which there is today, then we cannot change prices on top of what the ATP prices have moved.

But of course, if we see -- I mean, we are operating the largest smelting and refinery operation for tungsten outside of Asia. And of course, it fits. It checks all the boxes if you're into ESG aspects and nonsanctioned sourced material and what have you. So we see, of course, a very strong demand also from peers and competitors to source from us because it's one of the few sources that is available. That we can currently not capture or that takes longer to capture because of the way the contracts are being set up. And the way -- the reason we have these longer-term contracts is, of course, because powder is a notably very volatile, lumpy business with a lot of what do you say, bullwhip effects in the supply chain. So it's really to protect us from the downside risks when things turn more sour. And then we have to live with a limited upside for a while. So there is more that could come if the prices continue where they are, if the scarcity continues as we can work through and get paid for our ability to deliver.

And we can say also for spot orders there, we adjust pricing continuously. It's normally a 1-month lag between APT prices and our prices -- on our pricing, but we work with that on a monthly basis, on a regular basis.

The next question comes from the line of James Moore from Rothschild & Co.

Could I do a quick follow-up on powder. Could you just say how much of the low double-digit organic sales growth was price versus volume given the tungsten comments? And maybe I'll go one at a time.

Can we? I'm not sure...

Price was a big part of it in order this quarter.

We'll leave it at that. Price was a big part.

Okay. And you talked about stickiness in mining aftermarket earlier. Could you update us with where the penetration of your own installed base is these days? Percentage. I mean, it was 5 years ago or something. Has it gone up?

Yes, it's gone up. I think 5 years ago, we said we had roughly 50% penetration, not 50% of the machines. But if we say that the total addressable market on our machines is 100, we said we had roughly 50% of that. That's been going up, and it's now more towards the 60%.

Great. And lastly, if I could, I don't know how to ask this question. I was just thinking about the duration of a mining CapEx cycle. If we say we peaked in '12 and what's really been a capital disciplined environment up until late. What -- greenfield, you tend to see new projects and capital announcements from the likes of [ Rio Valley and Co ]. What's the lead indicators do you see on brownfield. Like the good brownfield orders that you've seen recently, was there something that signaled that. Or is it just reactive and a function of moving copper and gold prices?

Typically, if you take brownfield orders, we have had them in the CRM system for a while. What is always tricky to know is when the customer will pull the trigger. And what we have seen now, obviously, is an acceleration of that. I mean we know they are looking at whether they are replacing a number of machines or an expansion and there is -- but -- so we typically have it on the radar, but how quickly they convert that is sort of what is difficult to project. And obviously, with these prices, they have been able to convert it quicker. There are, of course, so-called surprise orders as well, but that's fairly rare considering how close we are with our -- staying to our customers.

And given what's in your CRM system and given where copper and gold prices are, what I'm struggling with in my mind, and I suspect a lot of people are, is the very high equipment orders in mining in this quarter and last. It's going to be quite a tough comp next year. Do you think that's a comp that you can even grow off? Or do you think that will be a challenge and that's likely to be a tough comp that you declined from on equipment orders, at everything you know today?

Well, if you're worried about the comp next year, you will never be happy. So I think we worry about that in Q3 next year. But of course, as I said, part of the high growth, the 75%, which is, of course, abnormally high, is partly because we had a fairly low Q3 last year and the Q3 and the year before. We typically have a little bit of weakness in Q3. Now we didn't see that at all, which speaks to the momentum. But if you look in absolute terms, I mean, Q2 was actually bigger than Q3, even if the growth number is higher now in Q3. So I don't think it's an abnormal number in terms of the absolute number. So I mean, yes, I don't know. Let's see where we are a year from now when we think about the comp.

All right. So we will have to leave it at that. The time is 2:00, and we need to end this webcast. Thank you all for calling in and for very good questions as usual. And have a good day.