Metso Outotec Corp

All right, good morning, good afternoon, everybody. This is Juha from Metzos IR, and I want to welcome you all to this conference call where we discuss our third quarter 2024 results, which were published earlier this morning. Results will be presented by our president and CEO, Pekka Vauramo, and CFO, Eva Sipilä. And at this time, we are also joined by our new president and CEO, Sami Takaluoma, who will take over on November 1st. And Sami will say a few words after the results presentation, and then we'll open the lines for the Q&A. Before we start, a reminder of the forward-looking statements we will be making. And with this, I'll hand over to Juho.

Please go ahead. Okay, thank you, Juho. And welcome to this call from my side. A few comments on the quarter first. Market activity very much in line with what we said one quarter ago. No change in that regard. Of course, we are headed in aggregates to low season, and the third quarter was already the low season, strong seasonality, where the first half of the year is always more active than the second half. And as we said also in the previous quarter, Results call that we have a few larger projects in minerals side, which we think will progress during the rest of the year. And we saw some of them moving ahead as we have announced some of the new projects. new orders during the quarter, and also after the closing of the quarter, we have announced some additional orders. Margin performance, that was probably the highlight of the quarter, was a very robust 16.9% adjusted EBITDA. That is exactly the same margin that we reported in the second quarter. quarter. And cash generation has been an issue for us for several quarters. We had a good cash generation, especially if we exclude the discontinued operations where we announced separately a sort of cost relating to waste to energy, termination of waste to energy business during the third quarter. But then if we look at the numbers, orders, we see 3% increase on order line in group level. Sales continue to decline, and that is because of the lower order intakes during the previous quarters, three quarters, four quarters. We've been on declining trend already before this. Adjusted EBITDA, 196. That's 8% down from the previous, and that's because of the volume difference. But good margin, as I already said, improvement on a year before. And operating profit, 178 million, also following mainly the volume and slight uptick because of the margins. out there, 15.3% operating profit and the earnings per share, 15 cents, and cash flow from the operations here. We need to remember that there is the termination of waste-to-energy business, which makes the cash flow from operations negative. We'll see later on what it would have been without it. In the aggregates, when we look at the segments, a slight decline still in the orders, 10 million. below previous year. This is a low season. We earlier said that we might be fairly close to the previous year level, and this is what this one shows. Equipment order slightly down, more so in services, 8% down in aggregates segment. Sales continue to decline more, and that's, again, because of the order bookings development during the previous quarters, and services share continued at 35%. Adjusted EBITDA from the aggregates 45 million and a year ago we had 8 million more. Margin still very resilient at 16.1 and we continue to manage our costs well and that's what is supporting our margins at this moment rather than the market. Then to the mineral side, orders up as you see there. We have also booked some orders after closing of the quarter, as I said already, which will be then reported in the fourth quarter numbers. But the equipment orders grew 13 percent, services remained flat. Sales continue to decline for the same reason as in the aggregates, order bookings during the previous quarters are not supporting higher level. Services down 4% equipment, 26%. We do have in all of these numbers about 3% or 4% negative currency impact, so that should be also noted. I'm quite sure Eva will talk about that one a bit later on. Services share 66% along the lines as in the previous quarter, but up from a year before. EBITDA 161 versus 174. Margin went up to 18.3. So we are on our journey towards the 20%. But on this sort of volume levels where we are, it is tough to reach out. But once the cycle turns, we are in well position to head towards that one. strong execution all together and yes we are managing our costs and of course the services high share supports the margin development and at this moment I'll hand it over to Eva

Thank you, Pekka, and good morning, good afternoon to all of you on my behalf as well. Continuing from what Pekka already said, I would comment a few additional lines from our group income statement. So indeed, the currency impact on the sales line had a 4% negative impact on the group level. Then the graph on the right deserves a comment as the result from discontinued operations materially differs from the earnings for continuing operations. And as Pekka already reminded you, in early September, we announced that we had completed the termination of the waste-to-energy business and settled the related legal processes concerning these historical projects. The related one-time expense of 250 million euros pulls down the result of the discontinued operations in the third quarter. That's where it is booked in and hence explains the negative reported earnings per share as well. On the tax row, effective tax rate for the quarter was 24%, and year-to-date we're at 25%, which is what we have guided on for the full year as well, so well in line. Regarding our balance sheet, so total assets at 7 billion euros are up a few hundred million euros from the end of June, but slightly below where we started the year from. Inventories are finally down a notch from the previous quarter. And net debt is up by 100 million euros to 1.16 billion due to the funding raised to pay out the one-off cash charge from the termination of the waste to energy business. Group cash flow for the quarter is also, as already said, impacted by the one-off cash outflow in discontinued operations. Hence, we've separated the two rows for the profit for the period, so continuing operations and discontinued separately to help you then do your own math on what's truly operational. And if we exclude the cash outflow of 275 million in discontinued operations, our net cash flow from operating activities would have been 256 million euro positive. Cash flow remains supported by the healthy profitability and the strong margin, as Pekka referred to. Also, the change in net working capital was finally positive for the quarter. Clearly, obviously, a very small number, but we do expect a clearly bigger positive impact from working capital in the fourth quarter. And moving to my final slide on our financial position, so liquid with funds consisting of cash and cash equivalents amounted to 467 million at the end of September. During the third quarter, we drew one 250 million euro loan that we used for the payment of the one-off item, while another new smaller 50 million loan was undrawn at the end of September. Both our equity to assets and debt to capital at the end of the quarter stood at around 38%. And with that, I would hand it back to you, Pekka.

Okay, thanks, Eva. On the portfolio side, we've announced three acquisitions. Two of them, two first ones, have closed already. Already on the third one, which I signed just recently, we're expecting that to close early 2025. The first one being a very small minerals processing specialist for valves and flow control. So we're talking really about the mining industry and minerals processing application here. The second one, Diamond Sea, is a green machine supporting the growth of our aggregates business, green machines supplying equipment fairly similar to mobile aggregates production as the traditional metro line, and Diamond Sea more focusing on recycling the waste that's coming from infrastructure, i.e. construction materials, and expanding our offering and and we'll integrate these ones into our aggregates business line. And then the last one, Swiss Tau Mills, where Metso did have a 15% shareholding as well, and we announced the plan to acquire the outstanding shares from the other. other owners. Here the offering is vertical mills, which are energy-saving mills, and they very well complement Metsos' existing vertical mill and grinding offering. And we feel that this technology is a winning technology because of the energy-saving features that it does. So these are the acquisitions during the quarter. Then the next one on sustainability development, planet positive side, the actual number is a decline, but decline is smaller than the overall decline. Our sales declined overall 12% and planet positive went down 9%, so relative share improved slightly. Our own operations, we continue to implement actions, take actions there. We have now first plants that are already on net zero level, and we will see in future more of our plants joining that group where we are internally on net zero basis already. In the logistics side, we have more challenges and it will be difficult to reach the 20% target. What we have here, we are so much dependent on shipping fleet, global shipping fleet conversion to different type of fuels. fuels, and therefore our sort of ways and means to achieve that target are rather limited. Then on the other hand, with our suppliers, we are very pleased with the development that we've seen them and willingness of our suppliers to join the science-based emission targets, and we are already at our target level, which we which we should have had by the end of next year. And then the market outlook, we expect exactly the same outlook as before. So we expect the market activity to remain on the same level in both of our segments. And then we announced also today appointment of Sami Takaluoma as the next president and CEO of Metso. Sami is here with us, and he does have a long background with Metso. He joined Metso in 1997. He has been in different positions in our wear parts and consumables businesses and service businesses more lately so. And he has been also working in the market areas previously outside Finland. And from my side, I'll welcome Sami on board. And I will hand over, as it here says, on November 1, so very, very soon. Between November 1 and end of the year, I will be here with Sami. We'll make some customer visits and we'll visit some investors to make sure that Sami gets going. And then I'm sure Sami has a few words to share with you before we go to Q&A.

Thank you, Pekka, and good morning, good afternoon to everybody also. From my behalf, really excited about this opportunity to lead this really great company and continue a lot of the great things that during Pekka's leadership the company has been developing. So there's a lot of good that will continue and then of course looking forward for the future needs to make this company even greater and towards the tier one and the industry leadership. So That's going to be in the agenda. We will continue to invest for the technologies that we choose. And then, of course, we will continue to invest for the people in the company to make the company strong. The handover will be happening soon. I don't think that I need the traditional 100 days to understand what the company is and what the products are. So that 100 days will be spent for much more different kind of things than in the other kind of situation. But looking forward for discussing more with all of you in the near future.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Class Berglind from City. Please go ahead.

Yes, hi, Pekka, Eva, Sami. First on the service orders in minerals, I think, Eva, last quarter you said it was a timing issue with a weak June and we should see a bounce back. I'm just trying to understand the mechanics here. Did we also see push-outs of sort of decision-making or are the miners concerned also on the service side, i.e. being hesitant? How should we think about the orders here into the fourth quarter? That's my first one. Thank you.

Thanks, Klaas. Indeed, slightly softer than we hoped on that side. There is an element of that hesitancy and pushing on anything that's slightly bigger. I mean, obviously, in our aftermarket side for the mining customers, we also have some sort of refurbishment type of bigger ticket items. And there you could say that whilst the dialogue is very active with the customers, the final decision-making sometimes gets delayed. And indeed, we had a slightly slower September than planned. But nothing really to sort of... as such pinpoint in a way on the underlying activity we're still very comfortable with.

Okay. My second one is on the margin. Did you manage to get through some incremental price increase here that came through in the P&L? Or was this sort of cost action that drove this mostly? I'm keen to understand how pricing in the P&L is looking both on the carryover or if you get any sort of new pricing on top. And then on the standardization of the project offering, which would help the gross margin over time, and this is obviously in minerals, did we see any benefits here that is starting to come through, or is it other cost measures driving this?

Thank you. Naturally, the mix contributes to the margin at the time when the equipment orders or sales are declining faster than services is expected. is rather resilient on top line anyways in our case. So that's probably the main contributor. Pricing itself, I don't want to comment too much on that side of it, but we are doing continuously improvement actions, productivity improvement actions in the company. And if you recall, we had a certain restructuring ongoing in our minerals, which we completed earlier in this year. and that has contributed also to the improved margins in our mineral site.

I get that the mix is obviously positive, but I was thinking whether pricing is coming through in a big way, then I might have thoughts, but okay, fine. My third and final one is on the copper side, Pekka, where you sound a little bit more upbeat. If you look at the order pipeline and the discussions, would you say that they have intensified a quotation activity compared to when we spoke last quarter, that the overall decision making is slow, but we started to hear of a bit more green fill activity on the copper side coming through and I'm keen to understand if that is what you're seeing as well.

That's what we see and we feel and if I look at our proposal pipeline, we are now third quarter into clearly higher level in proposal pipeline. in our mineral sites. And predominantly, anything bigger there is predominantly copper. We do see some gold, but gold is a very different type of business. It turns into smaller orders rather than big orders. and then typically gold, which is byproduct in many mines, almost like I would say most mines have some gold, and extremely high gold prices is naturally motivating the miners to sort of make sure that they do get more gold out of the material that they are handling as a side product. So we see some investments there in that area, but they are smaller ones.

Thank you.

The next question comes from Christian from Goldman Sachs. Please go ahead.

Yes, good morning, Pekka, and welcome to Sami. My first question is a follow-up on Klaus's one on aftermarket orders. I think you called out slow decision-making around rebuilds in minerals. I'm just curious as to whether you think that that's temporary hesitancy today versus perhaps a normalization from the strength we saw in 2022 and 2023. And then similarly on the aggregates business, I think this is the first sub 100 million aftermarket order number since 2020. Do you think that's just a summer slowdown or should we take from your stable outlook statement that this is a more realistic run rate for the quarters ahead?

Maybe I can take this. So definitely there is a customer need for these products. bigger upgrades and that is also driven by the demand of the production so a little bit how Eva was already answering so the hesitance comes more from the timing that when the customers want to spend this money from their own financing plan point of view so in that sense this is this is slow down of these orders as we speak. And they are all in the pipeline and customers have not dropped the discussion about these opportunities with us. They want to continue and they are waiting for placing those orders as well in the upcoming months.

And then specifically, Christian, to your question on the aggregate side. So obviously the seasonal issue plays a role here. I think you should be cautious on the aggregates, fourth quarter, be it equipment or services for that matter. Last year there was... the sentiment was somewhat better in a way, and we did have that end-of-year increase in orders. And now, looking at the external environment around us, I think we see we're less optimistic of seeing something like that, so rather in that sense on these levels, and it will really, in our view, take into 25 before we see an improvement in the aggregate side, as said, be it equipment or aftermarket.

Thank you both. Maybe I can turn to inventories now. $1.97 billion in the quarter, so broadly flat sequentially, but still at around 40% of revenue. You've previously talked about an ambition to cut that number by about $500 million. That's about a quarter of the current balance sheet number. I'm just curious if that ambition still holds. How long do you think it will be necessary to achieve that? And is there any risk of any write-downs on the inventory balance today?

Well, I think we're happy with Samitu to continue with Pekka's ambition level in that sense. However, I think in most of the calls we've been kind of indicating a couple of hundred million as the more sort of shorter-term target, so maybe a reflection of that. And indeed, I think we are slightly behind, as said, the actions. are moving forward, so we are clearly more optimistic on the Q4, but I think some of the work will certainly go into next year as well. And then really to achieve the higher ambition, that requires also more work with our tools and more work in how we plan and a bit more work on the operational planning side as well.

Thank you. Maybe just a final one. The Swiss Tower Mills acquisition, I think that they had a distribution agreement with Weir Group previously for the vertical stirred grinding mills. Will that remain post the acquisition, and can you give a sense as well for the installed base of its products today?

We are currently between signing and closing, and we do not comment on any action after the closing at this moment. But obviously we have looked into this one and this one. whatever activities other companies may have around Swiss Taomil, we are happy to supply even after closing of these ones. But like I said, I mean, any other actions, I cannot comment at this moment.

Fair enough. Thank you, Pekka.

The next question comes from Max Yates from Morgan Stanley. Please go ahead.

Thank you. Good morning. My question is just around aggregates margins. And if you look at the price or price cost on orders that are going into your backlog, how does it make you think about kind of margins over the next couple of quarters? Should we assume that the kind of 50%-ish level that we've just printed is the sort of trough level of this business, or does kind of price cost and pricing in the equipment tell you that that margin kind of could potentially go lower from where we are currently?

Well, I think we're quite comfortable with the price-cost development as such. And the challenge is more the size of the backlog, not the quality. And so obviously, we lack operational leverage in what we do. But in a way, this third quarter is always the summer holidays when factories are closed. And in that sense, you could say that this is a tougher from our operational leverage than Q4, even if we then have Christmas holidays in some countries, but clearly shorter. So, yeah, I think we've worked very hard to prove that aggregates margins are more resilient than I think the market was expecting. And in that sense, that work does continue.

Okay. And just secondly, I just wanted to come back to the minerals margin just to kind of really understand it, because I think if I think about it on a sequential basis, your margins have gone up by more than 100 basis points quarter on quarter with no real big change or no real positive change in the mix. So I'm just really trying to understand, like if I look versus the first half of the year, margins are meaningfully higher this quarter. Is there anything you can help us with or sort of point to try and explain kind of why that happened? And I guess what I'm really asking is sort of above 18% a new normal or do we kind of graduate back to those kind of low 17s? It would be really helpful to understand what drove that to understand the kind of sustainability and whether that should be considered a new normal.

Well, I think Christian, like Pekka hinted to in his presentation, we talked about a mix. We really had a good mix in the equipment side, so not so much the service capital mix, which perhaps is what you were referring to. So product equipment side margins were higher. We're high and I think high on a level that certainly many stars were aligned. So in that sense, I wouldn't say that we're sort of sustainably on an 18% level yet. But... But I think it's just nice to see that we are, the direction is correct and there is certain lumpiness and that's something that's good to bear in mind, but directionally correct. And I think that's really the hard work behind that. It's not only a volume game, it's really the efficiency game also behind.

And could you just, sorry, just final one, maybe I should know this, but could you just explain to me within your margin mix, within equipment, what constitutes a good quarter of mix? Is it like a particular region? Is it a particular product type? Like what means you have a very, what is it that drives a very good equipment mix when you talk about it?

Well, it means the offering. So there's margin differences inherently between the product groups, so to say. And then, of course, it's just execution that things can sometimes go also very, very well from a delivery point of view and where we sort of do sort of really achieve a clearly better performance at the sites.

Okay. So it might be like what crushes as particularly good margins relative to grinders? I've just never ever heard that. I've covered Metso for a while. I've just never ever heard this talked about. So I'm just curious. Can you give us an example?

Well, I mean, it's certainly nothing new, Max, and I think it's obviously it does relate to sort of one's market share and kind of how strong a position we are. And then there's a certain element, obviously, related to the wear and tear as well and the criticality of the equipment. I mean, nothing surprising, I would say, certainly in capital goods that you would have these differences.

Okay, understood. Thank you.

The next question comes from Chitrita Sinha from JP Morgan. Please go ahead.

I've got two questions, please. So, firstly, on minerals orders, I think in the release you said that you've got about 170 million of large orders, but given the announcements that were made, I had more than 200 million. So I guess if the large order was indeed $170 million, does this imply the base order intake was about $220 million, and therefore this is the level we would expect for Q4? That's my first one.

Yeah, I would confirm, Chitrita, that your calculation is correct in a way on that. And then it doesn't sort of automatically, of course, mean anything for the fourth quarter, but indeed the smaller side was a bit slower in Q3.

Thank you. And then I guess the second one, which is a follow-up for the earlier question on inventories, Could you just provide a bit more color in terms of what have been the challenges in reducing the infantry levels thus far, and obviously, I guess, how you would get to those 100 to 200 million incremental going forward?

Well, it's a broad-based effort. And then, of course, the main challenge, I would say, is really getting all our efforts aligned globally and sort of not sub-optimizing somewhere else if you take too aggressive action in one part of the country. one part of the value chain. And how we sort of break it down is really into very granular efforts coming from sort of a few million rather than sort of a one big program. It's really a sort of long list in Excel that I look at and when we follow it up on a monthly basis. So I think it's really the speed is perhaps also one thing where I think originally we were – we thought that the supply chain kind of works from order to delivery quicker, and then when you start sort of even if you stop ordering or slow down ordering new things in, the actual sort of turn times in – through our sort of global system, so to say, which consists of many inventories in warehouses and factories. So kind of that chain, the length of that chain, and obviously that points to certain opportunities for us going forward in a way where we can and do need to further streamline. But it's these type of things. And as I said, we've also wanted to sort of do it in a very responsible and way from a margin point of view because we feel the inventory as such is current.

Thanks, Eva. Very clear.

The next question comes from Vlad Sajevsky from Barclays. Please go ahead.

Good afternoon and thank you for the opportunity. I have three questions and I'll ask them one by one. First one is a follow-up on inventories. So this 200 million reduction or 500 million reduction over the long term, would you be able to give us an idea how those numbers could be split between finished goods inventories on one side and all other inventories on the other.

Well, the bulk of the work, Vlad, is going on on the finished goods side in a way. That's where we consider the... the, uh, the excess to, to be, I mean, then obviously we have, uh, uh, in our business model, uh, is inherently that work in progress goes up and down depending a bit on how, how projects move and, and, and that, uh, That to us is something that we wouldn't as such want to in any way sort of mess up with. It follows the course more of kind of how things move and proceed in the customer projects. And sometimes there may be delays. Sometimes things move earlier. And there's obvious that's a big puzzle of many, many parties involved. So in that sense, this 200 million is really around the Finnish goods side.

Superb. That's very clear. If I can also ask about the customer hesitance, which you highlighted on both small and new equipment orders and large upgrades in service. What do you think is driving this hesitance today? Metal prices are very favorable. Your customers, I don't think, have any problems with the cash flows. So what do you think is the reason for that hesitance?

Of course, we need to look at what metals we talk about or what minerals we talk about. Copper prices and gold prices are favorable, and we don't see any issue in that part of the market. But at the same time, nickel mines, zinc mines, and – And, of course, all the battery metal side, those businesses are very much in sort of cost-cutting, cash-preserving mode by themselves. And we need to remember that both our segments, our customers and our distributors, went into or came out of pandemics with fully, fully stocked, and so were we fully stocked. And this destocking is still that needs to take place before we start to see the sort of fresh volumes flowing in properly.

Got it. That's very clear. And my final one, more a housekeeping one. Other operating expenses in the P&L were 19 million positive this quarter. which is the highest quarterly number over the past years from what I can see. What is the nature of this big positive contribution to earnings through this line, please?

Well, Vlad, it is a bit of a mixed bag. I mean, there's, you know, gains from disposals, various kind. There's some FX included. Sometimes there's some sort of non-operational provisions related. So Yeah, indeed, it was a higher number in this quarter, but really nothing specific I would pinpoint to in a way. But yes, I wouldn't sort of expect that every quarter from here on is like that, but sometimes a bit lumpy.

Understood. Thank you very much for the answer.

The next question comes from William Mackey from Kepler Chuveryux. Please go ahead.

Yes, good morning. Thank you for the time to ask the questions. So my first question is very top-down. Pekka, you leave a great legacy of transforming METSO to its shape today, and the transitional handover to SAMI is done from an internal perspective to ensure continuity so with those things in mind as the company moves into a new era or a new phase can you share any thoughts as to where you see the most critical priorities to develop from here and perhaps given sammy your background uh what do you initially sense if it's um perhaps too early, but what do you sense are the areas where you can push to develop and take Metso to the next level?

If I start, of course, I don't want to put or add anything on Sami's list of things to do, but I see very much that we are on a journey. And even though there's a change in leadership, I don't think it's a reason for us to stop. And we have so many good things in the pipeline. We have a good mindset how to implement those things. And I'm quite sure that Sami will sort of review what those are valid going forward and which ones are not. We have certainly discussed already in this call some of those things. And obviously, we need to pay attention to that. that in different shocks that we continue to see in the marketplace and in the environment that we manage our inventories better than we have succeeded during my time and understand that part. I'm sure that Sami won't be able to escape that one. But I would leave more or less the rest for Sami to comment.

Yeah, definitely. there is a good foundation to continue a lot of the things that are already ongoing and they can be accelerated and having more focus. I think, thinking your question here, so one area that we can still improve is definitely to... show for our customers the true complete value in our offering from the perspective that the total cost of ownership is even more visible for our customers. And that is one area that we will going to work together as a big team of Metso. And then, of course, we have those operational excellence areas where where I'm more than eager to take a look at what can be done faster or better, or with better results going forward in the upcoming years. But the main building blocks are there already. We have culture where we have people, easily coming online to understand that what is important, and we are then able to move as a complete company to the right direction. And then, of course, we continue to build this resilience when it comes to continuing the journey of our margins, for example, which will be very much in the agenda for the management going forward.

Thank you very much for that initial insight. My second question comes back to mining, or perhaps the group. I noticed that there was a big step up in revenue recognition over time in Q3 this year compared to last year. That's not broken into the segments, but I mean, how should we think about the revenue development in the fourth quarter of the year within mining or minerals rather? given that you've been trending down about 20% each quarter through the year, and we haven't seen a material shift in underlying orders.

Well, I think indeed the backlog does kind of dictate what's sort of feasible to expect on the top line. And whilst we've now had a better quarter in orders, obviously these recent orders don't really contribute much sales into this year. That's more for 2025. So in that sense, whilst I would say that the sales in the third quarter were on the low side, there's not that huge a difference necessarily feasible to expect in the fourth quarter. Hopefully a bit briskier activity on the aftermarket at this point. And then some opportunity. Usually the fourth quarter is slightly better on the capital side. There's deadlines on deliveries in a way that we'll certainly try to make.

Super. Thanks. And the last one comes back to aggregates and the service business. I mean, when you look at the decline in underlying service in aggregates, Maybe what's the best way to interpret that? Where do you think it is that the customers are dropping off on their service rates?

Well, the challenges in aggregates are clearly focused around the mobile equipment. The stationary side is performing better and that does then apply both to equipment and the aftermarket side.

Super. Thank you very much.

The next question comes from Antti Kansanen from SEB. Please go ahead.

Hi. I had a two follow-up question. And first is on the margin and the positive contribution from the other operating expenses. an income and I mean, you also have a clear reduction on your current provisions on your balance sheet. So I just wanted to understand, is this something that is driving the strong margins on the minerals side? I mean, you flagged the equipment mix, but is there something related to project execution that results on the release of provisions and the contribution on the other OPEX line? So maybe Eva, if you could still open up that a bit more.

Sure, Antti. So the change in provisions, I would say, really relates to the waste-to-energy termination. I mean, as you remember, we did have provisions there, not unfortunately enough to cover then the final outcome, but that obviously is still a relatively sizable change. So... Not really a link, as I was telling, I believe, Vlad earlier in the call, this other income and expenses is more than a sort of combination of many smaller things, so to say. So not really linked with this sort of then project provision related issues.

So if I understand correctly, even if it's a discontinued operation and kind of the negative items are booked there, it's still visible on the balance sheet on the provision line when you release the original one or...

Typically, because these have been sort of discontinued for many, many years, at some point you need to bring some of the balance sheet things back on, even if the business from a P&L point of view continues and discontinued. Yeah. And, of course, you also have the slightly reduced balance sheet in the interim reviews so that, I mean, fewer rows, it will be perhaps more clear when the annual report comes out.

Okay, that makes sense. And then another follow-up was on the finished good inventory situation and on the, let's say, mid-term potential to release the finished goods there. So could you talk about that? Is the bulk of that a consumable, a spare part, an aggregate equipment inventory that is sitting there? Because I think kind of the size of the market and the situation among the clients is a bit different between the different products. So just wanting to understand what's the challenge of getting that out to the market.

Well, it certainly impacts both segments. On the mineral side, it is really aftermarket, so services consumables related. In the aggregate segment, there is a sizable equipment chunk, but there is also then aftermarket, so both spare parts and consumables related.

And if we compared kind of the excess inventory value between what's minerals, what's aftermarket, is there any comment on that one?

Nothing. I'm not quite sure of your question, Antti.

No, I just wanted to understand that on the size of kind of the inventory release that you're targeting midterm, is it more commercial? bigger portion of the excess inventories in value, let's say minerals, aftermarket products.

Yeah, all right. Yeah, then I would say that indeed it's really the mining aftermarket where there's a sizable chunk and that's really obviously the area that really got a bit sort of clearly too big with all the concerns for downtime and obviously in an area where our customers are are very demanding what comes to availability of the spares and wares.

All right. And then maybe a last one, if you could remind, because you mentioned that a year ago on Q4, you had a bit of that kind of a before year end pre-buying on the aggregates equipment. Was the turn of the year last year still a period when you made price increases on that business? which kind of resulted in clients buying before that.

That was part of it. But then if you remember, it was a very brisk start of the year into this year in the aggregates. And then it actually then it quickly slowed down. So there was also a clear sentiment booster that it impacted the customer behavior in sort of late, late 23 already, and then certainly continued well into early 24.

All right. Thank you very much.

The next question comes from Ponu Leighton-Maki from Danske Bank. Please go ahead.

Thank you. I have three questions. Firstly, on the order intake, can you talk about your expectations for Q4? I mean, we have now seen some announcements, but in Q2 report, you were expecting for better order momentum and we saw a good Q3, but does this comment still hold for Q4 as well?

I would say mineral side, they still do hold, but I want to sort of just say that always when we talk about bigger orders, they can easily move one quarter to a later date or even two quarters. So there's great uncertainty when we really look at the order intake. I commented earlier that we do have an increased proposal pipeline, and there is potential for near-term orders. But anything bigger, I mean, difficult really to say. I mean, if the boardrooms are not ready to decide or so, I mean, there's very little we can do about that one. But if things proceed in the boardrooms, then, of course, we do see see then with a small delay from that one orders on our side as well. Proposals we have, but no certainty on timing.

Okay, thank you. Then secondly, on the margins, did you get benefit from lower raw material costs in minerals? Because I recall that two years ago, There was this issue with consumables suffering from high energy costs and so on, but have you gotten it the other way recently?

If you recall, we also said that we did index our contracts, which means that when the inputs are getting more expensive, we're getting price increases, and then it works the other way around when the inputs are cheaper. So nothing material. With these actions, we tried to hedge our margin, and I think we succeeded reasonably well with that one.

Okay, thanks. Then the third and final question is just on kind of project risk. I just noticed that Freeport is having some issues with the smelter, which I believe you delivered. There was a fire and a delayed startup. Even if you cannot comment on an individual customer, can you kind of on a general level comment, is there a possibility for you to kind of have to pay something if customer gets a delayed startup because of something delivered by you?

This is a very recent event in that case, and we do not have really full details of the case, and therefore I do not... comment anything on the Manjar case. Future will show what the cause of this one was. And then, of course, we need to look at what consequences it has or hasn't on us. But at this moment, there's nothing pinpointing that we would be responsible for what has happened there.

Okay, thank you.

The next question comes from Mikael from Dopel. Please go ahead.

Yes, thank you very much. So firstly, on the aftermarket business in minerals, I remember you have previously said that you do target growth there, both in terms of orders and revenues this year. So just wondering if this target still stands, given what you have reported so far, expectations going forward.

That's still what we have in our estimates as well.

Okay, that's very clear. Thank you. And partly relating to that, I mean, you also mentioned the FX impact, which was quite negative, actually, in the third quarter, if you look at at your numbers there on both, you could say, orders and revenues. Any ideas of what do you expect in terms of the FX impact on the year-over-year base in Q4?

Ooh, that's a tough one, Mikael. I wish I knew. I think many people in the world would want to know with all, all these geopolitics, it can go many ways, but, uh, but, uh, um, uh, yeah, I, I, I mean, well, it, it is what it is and, and, and, and we'll, we'll, we'll just sort of, uh, report it separately. So, so that you can sort of see the underlying underlying trend.

Okay. And then finally, I mean, you mentioned in the report as well, uh, the still challenging mobile equipment market for aggregates in the US in particular. So maybe just give some of the latest update there. Where do you see distributed inventories now? Have they changed in the past months? And when do you expect to see improvements there?

Yeah, I would say that since we are in the low season now and considering that a lot of inventory sits with the dealers, so it's inventory that we have sold to dealers and that mostly sits in North America. So the season, I'm sure that we will see uptick for the season. Is that going to be stronger than last year? I don't sort of comment on that one at all. But I would say that earliest we could see an improvement in our sort of order bookings would be second quarter of next year. But that depends really on how strong the season is and if the destocking really clears the dealer stocks during the first quarter or not.

Okay, that's very clear. Thank you very much.

The next question comes from David Farrell from Jefferies. Please go ahead.

Hi, thanks very much for squeezing my question in. I just had a quick one around discontinued operations. I noticed in the recent Al-Malik announcement, roughly about a third of those orders were going into the discontinued business. So can you give us an update as to kind of what's left in discontinued and actually what the plan is for the discontinued operations over the medium term. Thanks.

Well, now post the termination of the waste-to-energy business, what's left in discontinued operations is the metals businesses that we announced some time back to be divested. That's the ferrous heat transfer business and then the... more of the chemical side, acid plant side of the business. And they are still working on divestments and finding new homes for those businesses. And then obviously any sort of order intake we have in those businesses would then most likely move to the new owners.

Okay, thanks very much.

The next question comes from Tor Fangman from Bank of America. Please go ahead.

I've got two questions, but they, I would say, go hand in hand. You mentioned a little bit earlier that you see improved green fields. So I was just wondering, you said it's mostly focused on copper here. Could you please also explain a bit more in which regions you see this, a bit more about the trends here? And then this in combination to we have seen now improving OE, order intake for the minerals business. And would you say that this is something here to stay? Do you feel like we're here at an inflection point going forward? Thank you.

I think the inflection point we still need to see truly happening, but we have the proposal pipeline which is clearly on higher level and it's now third quarter into that we see the proposal pipeline being on higher level. Geographies, we will see things moving ahead in South America sometime next year. Next year, both in Peru and in Chile, possibly in Argentina as well. These are all copper, and there's several companies that do have their properties that they can develop. We might see also something in southwest U.S. happening, and then smaller gold mining companies projects in various countries that are gold producing regions.

Thank you.

All right, ladies and gentlemen, we are now at the hour, and we need to conclude our conference call shortly before we go. Pekka, this is your last conference call. I'm sure everyone in this room and on the line can join us in thanking you for your contribution over these years, and we wish you well. And Eva, Sami, and the rest of us will be coming back in February discussing our fourth quarter results. But I'm sure we'll be meeting many of you before that and looking forward to it. But now, thank you and have a good day. Thank you.