Metso Outotec Corp

Good afternoon, good morning everyone. This is Juha from Metsos Investor Relations and warm welcome to our first quarter 26 results conference call where we have our president and CEO Sami Takaloama and CFO Pasi Kykling briefing you about the results. Sami will start with some of the highlights and then Pasi will walk you through financials and cash flows in more detail and after that we are taking your questions. Before we start, a couple of reminders. First of all, we will have our forward-looking statements disclaimer in the presentation deck. And today is our AGM, so it's a busy day, and that's why we are going to limit this call to 50 minutes. So please take that into account and ask as briefly as you can. We would appreciate that. With these words, Sami, over to you.

Thank you Juha and good afternoon also from my behalf to everybody. Let's go through the Q1 performance. In a nutshell, strong orders and delivered solid margin during the first quarter of this year. Our orders received amounted 1,555,000,000 This is 6% growth year on year and in organic constant currencies it's 10%. Sales was 1,252,000,000 and this was also growth from last year 3% or in organic constant currencies 5%. Adjusted EBITDA 203,000,000. Growth 5% year on year and representing 16.2 margin relatively. Operating cash flow for the quarter was 78 million and in the rolling 12 months it's representing 856 million of operating cash flow. So I said the order intake for the year was strong and kicked off our year very well and nicely. Our book to bill for the period is 1.24. Improvement from the last year when it was 1.21. Order growth was strongest in the aggregates equipment and minerals aftermarket. Our backlog went up by 6% and this was heavily driven by the aftermarket in our backlog now. Sales growth that we delivered that was mainly led by the minerals equipment where we continued to finish the projects and minerals segment was the main contributor to adjusted EBITDA growth that we delivered in Q1. Our strategy we go beyond that we launched Q4 last year and now under execution it is focusing on the high value growth elements. We are doing the investment in a rubber products plant in China. During the period we also completed the acquisition of MRA Automation, Australian based automation and software company. And one I really want to highlight here is the partnership with Lösch and we are introducing the vertical roller mill dry grinding technology, groundbreaking with a very energy efficient way of doing the grinding in the future. Completion of our divestments, both the ferros and our loading and holding businesses, they were completed as planned during the period and creating further strength for our strategy execution, focusing on the right topics. We have also completed the ERP renewal project. Rollout is done. We have now state-of-the-art software in use for the whole company the same way. And the next phase is then to get the benefits of this investment in the coming quarters and years ahead of us. And also want to highlight that record high engagement score and also noteworthy the active co-creation that is strengthening the growth culture that we have. We are measuring the employee engagement four times a year and it was a pleasure to see the all-time high scores now in the Q1 round. Regarding the outlook, we keep the outlook unchanged. We do see the market as a positive, meaning that it stays in the stable good activity level. Market activity in both minerals and aggregates are expected to remain at the current level. And I want to highlight also in this statement as well that the geopolitical turbulence would potentially affect the global economic growth and therefore also the market activity in our segments. And now if I give the microphone to Pasi to walk through the financials and the cash flow topics.

Thank you Sami and good day everyone also on my behalf. Let's start by looking at our orders and revenue development. Order intake at 1,555,000,000 representing 6% year-on-year growth or 10% growth in constant currencies. The equipment side of the business grew 8% or 12% in constant currencies and aftermarket orders by 4% or 8% in constant currencies. And the order performance was especially good in aggregate capital side and then minerals aftermarket business. Aftermarket part of the overall orders was 66%. In this quarter, we also won the 100 million greenfield copper project in Peru. And in the comparison period, we had 60 million order from Almaluk project in Uzbekistan included. The order book at the end of Q1 totaled to 3.6 billion. It's roughly 6% up year on year, and all that increase comes from minerals aftermarket business. Then our revenue at 1,252,000,000 was 3% up or 5% in constant currencies and it was driven by equipment after market was 1% down and after market represented 55% of our sales. Let's then look at our EBITDA development and earnings per share. Our EBITDA increased to 203 million euros and then from margin point of view the increase was 0.3 margin points from 15.9 to 16.2. The higher volumes contributed with 13 million in a positive way and the gross margin increased by 25 million or by two margin points. Then on the headwind side we have increase in our SG&A by 12 million. And then under other items, it's primarily currency, where we had last year some tailwind and this year some headwind. And this relates primarily to hedges that we don't hedge account and we need to market at the end of each quarter. Overall in Q1, both equipment businesses in aggregates and in minerals continue to deliver healthy margin levels. Then EPS is unchanged from a year ago at 14 euro cents. If we then move to our cash flow and cash flow from operations was lower than in comparison period at 78 million. This was mainly due to inventory build up and timing of the cash flows in our mineral capital project deliveries. In inventory it's primarily work in progress inventory and it is in both aggregate capital and then minerals of the market. In minerals aftermarket, it is especially upgrades and modernizations where we have had good order intake during last year and are now in the middle of delivering many of those activities. In aggregates, aggregates capital is more seasonal. We are preparing for the stronger equipment delivery season during the European or Northern Hemisphere summer period. Looking at the rolling 12-month cash flow from operations and then the cash conversion, we continue to be at a healthy level and we expect to deliver also healthy cash flow throughout the 2026. If we then move to our balance sheet, and balance sheet continues to be strong and supports fully our strategy execution. Net debt to EBITDA is unchanged at 1.2 times. We continue to have BAA2 long-term credit rating with positive outlook from Moody's. And that continues to be a good support for us while we execute our strategy. Let's then look at our segments and start with aggregates where we have all time high order intake at 440 million. And it's noteworthy that in this order intake, we see a clear pattern that some of the orders are placed not only for the second quarter, but also for the second half of the year. So sort of a pre-buying phenomena visible in that regard. The equipment orders represent 20% growth and aftermarket is 14% down. Regarding the aftermarket development, I just want to highlight that we have done a minor adjustment in our presentation between capital and aftermarket when it comes to screens. And that has a slight negative impact on the reported growth numbers in the aftermarket part, both in orders and revenue. and we have not adjusted the comparison barriers. Then EBITDA in aggregates was 1 million down at 48 million with solid 16% margin and continued healthy margins in the equipment side of the business. If we then look at our minerals there, the orders increased by 5% or 8% in constant currencies to slightly above 1.1 billion. Equipment orders were flat or 3% up in constant currencies. And again, just want to highlight the major order that we won from Southern Peru Copper Corporation regarding their greenfield copper project in Peru. small and medium size orders were at good level and in average at the same level that we had during 2025. Then aftermarket orders increased 7% in reported currencies or reported numbers and 10% in constant currencies. And the upgrade and modernization part of the business from other point of view is up 14% year on year. So we continue to see a very healthy development there. And then spares and consumables are supported by the good high utilization in our existing customer minds. Aftermarket share of the total orders was 66%. Then sales increased 5% to 953 million, representing 6% organic growth. We had 3% currency impact and then also 2% positive impact from acquisitions that were concluded after the previous period. Equipment sales up 14% and aftermarket up 1%. And again, we continue to have a very strong order backlog when it comes to aftermarket and expect that to deliver also revenues during the coming quarters. Adjusted EBITDA at 168 million with solid 17.6% margin and this was supported by overall sales increase and then healthy profitability in our equipment part of the minerals business. With that I would like to hand back to Sami to summarize our quarter.

Thank you Pasi. As said already, very solid start for the year and strong orders creating a very good healthy backlog. We do see the heightened geopolitical uncertainty remaining as a risk and then our strategy execution is progressing very well at the moment.

With that, to you Juha. Thank you gentlemen and operator, now it's time to open the Q&A lines.

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 Chitri Dasinha from JP Morgan. Please go ahead.

Yeah, hi, good morning, Sami and Pasi. Thank you for taking my questions. I have three, please. Just firstly, to ask on the phasing of the aftermarket deliveries this year. If I look at the average orders of the last few quarters, it's been above 650, but then Q1 deliveries was weaker. It was below 600. So can we expect to pick up from Q2? How are you thinking about that?

Yeah, thank you. Good question. And your logic is correct. So we do see that we have this good backlog that has been built up and the deliveries are starting from the Q2 onwards then. And that is something that you can expect to see from the Q2 sales point of view.

Great, thank you. And then my second question is just if you could provide a bit more color on kind of the demand backdrop in minerals. You know, we've clearly seen a significant amount of volatility in commodity prices this year. Maybe buy commodity would be really helpful.

Yes. We have highlighted this also in the report that we do see this as a risk. We all remember what was the year 25 and how tariffs did impact partly for that demand. However, the indications of any major delays or postponing or even cancelling the decision of the new capital projects are not really here. So we don't hear that from those customers that we discuss at the moment. But it's very clear that especially the energy price cost and how does the future look like is having an impact and it needs to be calculated in for those projects so that's why we do keep that as a potential risk at the moment

Just adding a little bit color from commodity point of view. So like we have seen during the course of last year and early this year, we still continue to see high amount of activity in copper and gold driven projects. So we don't see that those demand drivers have changed by any means. So it's the same market where we continue to operate.

Okay, thank you. And then final question is just on the inventory build up this quarter. I know you've provided a bit more color in terms of why that happened, Maybe if you could give a bit more detail in terms of what kind of range should we be thinking about? I mean, previously, we've spoken about maybe going towards the 1800 level. And now if I look at the Q1 inventory level, it's gone up back towards the 2 billion. Is there maybe a range that we should be thinking about when looking at inventories?

Thank you. Thank you for that and a fair question. At the same time, we will not provide you a range, but rather think that way that over time, the inventory efficiency and as a matter of fact, the working capital efficiency overall should not deteriorate. And while we don't have a formal target, a financial target on working capital and inventory to be more specific, we see opportunities to improve the efficiency. And obviously, you know, first quarter was not the proof point of that, but it's only one balance sheet point. And we are working with the underlying drivers there to improve the overall efficiency and then provide solid cash conversion. And when I talk about efficiencies, I'm referring to working capital over sales or then, you know, DIO, DSO, DPO type relative indicators.

Thank you very much.

The next question comes from Claes Berglund from Citi. Please go ahead.

Thank you. Hi, Sami and Claes at Citi. So my first one is on Section 232 and the changes to steel, aluminum and copper from April 6. I'm trying to understand the extent you're impacted. Will this increase your effective tariff rate? And by how much? And can you remind us of the import share to the US for the group and for the two divisions? And how much today of cogs is steel, aluminum, and copper? I have a 50% import share for the group and about high single-lidded share of cogs being raw mats. But any more sort of color here would be very, very helpful. Thank you.

Yeah, thanks, Klaas, and good, and current one. Not sure if I can provide all that detail to you, but if we start from the helicopter point of view, so aggregate business continues to be excluded from 232, and we indeed recently saw the change in 232 when it comes to sort of the calculation basis for that earlier, it was the steel aluminum content, and now it seems to be the total tariff value of the equipment in question and then obviously you know that's driving the tariff base up from our point of view we continue to work with the same approach as we have done during the course of last year so we work with our customers with surcharges and the new surcharges based on this initial period seem to be higher, which makes sense from the calculation logic point of view. And that is what we are charging from our customers. So again, we are not making money out of those, but we are not suffering from those either. That's the approach we have taken and continue to take on this.

You are basically seeing the reciprocal tariffs, basically. You're not seeing anything on steel, aluminum, and copper from Section 232 impacting the aggregates business, just to confirm if that's how it is.

That's correct. So to be more specific on aggregates, and maybe I said it already, but screens and crossers are excluded from this tariff. And there was a speculation late last year that the exclusion would come to an end, but we haven't seen that happening, which is obviously positive.

Okay. No, that's good to hear. My second very quick one, I know we're only allowed to ask one question, but this is super quick. Just on aggregates, you're talking about pull forward of orders. Can we talk a little bit about like the reasons where there's some pull forward and because people were thinking that this could be a change for tariffs? Was this North America led and also in Europe? Are you seeing some hesitation and obviously aggregates is and construction is quite sensitive to inflation rates and so forth it's early days but are we seeing any sort of customer discussions showing some hesitations in in europe just to get some more color on this pull forward and and also european

commentary thank you yeah thanks class so so what did what we did see was um was this um orders in in in us for the aggregates with the requested delivery date not immediately but later on the year so we took that as a positive signal that the customers and our distributors do see the market as a very very good and looking good also going forward and and these have been then reflecting these orders, the situation in the market. When it comes to the Europe, it still remains kind of like not one rule to apply for the whole continent, but it's more like a country-based approaches. We see activity in a southern and eastern European side and then remains still quite slow from the perspective of so-called maybe even more traditional aggregate countries. And from that point of view, do we see elevated level of hesitation discussions? Not maybe really, Klaas. So it's not unchanged from the end of the year when it comes to the European side.

Maybe then just from order point of view, both Europe and North America had a healthy order of growth. So this growth is coming from both of our main markets.

Thank you.

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

Morning, Sammy. I want to start on the Middle East, if I may. Can you just confirm your percent sales exposure to the region, maybe highlight any single country context worth discussing? And then you mentioned in the release targeted measures to manage supply chain and operational risk. I appreciate it's fluid but what's your current base case for the direct and indirect cost effects?

Yeah to start from the region so it represents something like three percent of the whole company sales so that's the exposure and of course the situation has created certain activities also on our side Logistics is one clear one. We have been quite good situation because many of our supply routes have already been going around Africa before the before the incident started. So from that perspective, the countries in question, obviously Saudi is a big one for us. We got at the end of last year, the cold plant order as an example. And then also Oman has been a country that we have a lot of activity at the moment. As it is today, operations continue, our work continues, but we of course need to very carefully all the time observe the situation and how it develops, but this is how we see the Middle East situation at the moment.

Maybe still just to add a color, obviously logistics costs are up. We see some fossil fuel related inflation and the way we are approaching this is similar that we did during the COVID time. So playing inflation game in a way in both end of the supply chain in one hand with our suppliers and then in the other hand with customers to manage it well. Just to confirm that we obviously see also some of those inflammatory pressures that have surfaced after the crisis.

Thank you. Can I just come back to the section 232 and also your comments on aggregates pre-buy? If a customer is ordering now, are they affected by the tariff if it changes later? Do you think the pre-buy is about that tariff? concern or you think it's more about hopes for a demand improvement?

Kristian, it's a very good question and you know when it comes to tariff speculations obviously you know should there be tariffs we don't know how they are implemented whether they are implemented on sort of new deliveries or you know everything that crosses the border at after certain point and so forth so that's difficult to say our read is more that you know that's a sign of confidence to market development in the U.S. and sort of our partners, distributors, customers preparing for that, not only in imminent short term, but also looking to launch the second half of the year.

Thank you.

The next question comes from Auntie Kansanen from Seb. Please go ahead.

Hi, guys. A few questions for me as well. I'll start with the demand on the minerals aftermarket side. And I mean, good growth and you have had now four quarters of decent growth on the business. So could you maybe remind a little bit on kind of the growth potential going forward, the comparison, the timing of kind of when you started to see the modernization and retrofit business increasing? I mean, is it reasonable to now assume a bit of a normalization on the growth or do you think you can still accelerate on that one?

Thanks Antti. For the minerals aftermarket side it's one of those centerpieces of this growth strategy and we do see potential to continue to deliver growth and actually the target as well is that we see the aftermarket products demand very good at the moment, market as well, and that makes us to see that strong single digit growth numbers to be delivered also in the future. you know very well and reminder that we are having the widest portfolio of the technologies in the downstream of the minerals processing and that gives us very good potential for the growth going forward as well. Modernization and upgrades, they are the one that have certain cyclicity and from that perspective as Pasi was stating we have seen a good amount of these orders coming in the past few quarters already. How that looks going forward is that the funnel, the pipeline for new orders is looking good. And then it's about the timing issue of the customers to make the actual decision to move forward with these opportunities.

Okay, great. And then maybe a follow-up on the things that you said on what you expect from the decision-making and kind of the geopolitical uncertainties. I just wanted to make sure, because you've been quite optimistic on certain large orders and investment decisions. Have you seen any concrete evidence kind of in March or early April that some of your clients have been maybe – slowing down some of the processes or are asking to recalculate some of the project items because of inflation or is this just a kind of a cautionary statement if the war lingers on and will have an additional impact?

Yeah, we have, as I said already, Many of the customers that we have discussions in a certain phase, they have not indicated any change of the timetables. But then on the other hand, yes, we do see also changes recalculation need also coming to our direction to check certain project elements and the timing of them and also the price from our side of them so it's an indication that the recalculation it is happening and for me it makes sense also to do that of course but this is why we remain a little bit cautious of that what will be the true impact of this for this project greenfield and large brownfield projects going forward during this year.

Okay and the very last for me is your exposure to LNG availability and prices through your foundry setup. Could you comment if there's any substantial risk that you see because of the war?

Yeah thank you and that's coming mainly from the India side where the LNG was and is the main energy source. Yes, we did see the risks, especially in the beginning of the escalation of the situation and the incident in Qatar. So what we have seen is that the prices have increased, which is natural, but the biggest risk that we had in our hands was that do we have enough LNG to run the operations? That has not materialized, so we have been able to operate normally. But the cost level has increased and also our suppliers have been seeing the same and adjusting the prices. So as Pasi was saying, this is what we see logistic side and also then the component and supplier side.

And this will lead to price increases from your end?

This is the normal way to handle these. So as I said, we have taken this into account in our price increases that have been introduced in April and first of May, the next batch.

All right. Thank you very much.

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

Thank you. Good afternoon. Thank you so much for taking the time. Just two questions left for me, both on the aggregates side of the business. First one would be, so we do see now and for a while a pickup in the equipment demand in aggregates. But on the other side, the service part, the aftermarket side of things remains fairly low and weak. Could you just help me square this together? So there's need from customers for new equipment, but on the other side, the utilization still remains low. Thank you.

Yeah, for the aftermarket question, so it is exactly as you said, when the utilization of the machines is low, so then the demand and need for the aftermarket products is also low and that's the reason for our aftermarket not yet in a growth mode in the aggregate side. And then our capital equipment business in aggregate is going through the distribution especially in the US and then the equipment is ordered and delivered and they don't always go directly for the end customers to use to generate the aftermarket either because During the 25, the distributor stock levels normalized, meaning that every month they were in a lower and lower level. So now there is a need for restocking and having the machines available for the work for the end customers with the coming months and quarters.

Okay, I understand. Then maybe just to follow up on this one. So when utilization still is low, it seems like the overall end market demand has still not really picked up. So the current growth in equipment and you also mentioned some pre-buying already for the second half of the year. So is this all just distributor driven or is this actually end market demand driven to pick up that you see?

I think the pickup is the end market driven, but need to remember that this is very regional or let's say even local business. So as an example from the Europe, there might be good activity both in the new equipment orders and also utilization of the existing equipment in the country and then the neighboring country might be on the quite opposite way. This is what is highlighting also the dynamics of the aggregate industry in general.

Okay, understood. And then just one last, a very brief, I understand strength in Europe is largely driven by the Eastern European countries. Any sense around Germany or other Western European countries picking up again, any impact from the infrastructure package from Germany? If there's something you can share. Thank you.

Yeah, there's a so-called traditional good market for us, like Germany, France and so on. So they are not zero, but on a lowish level. And for the Germany specific question, so our customers do not see yet any impact of that stimulus package that was announced. So that's why they have not been activating themselves either when it comes to the orders. Perfect. Thank you so much.

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

Yeah, good afternoon, and thank you for fitting me in here to you all. My first maybe was to go back to the question about minerals aftermarket and just dive into the discussion about the disconnect between the order intake and the revenue booking. Can you maybe provide a bit more color on what it is that has caused the lumpiness of orders and the disconnect for the revenue booking in aftermarket minerals? And when we look into the Q2 to Q4 acceleration of revenue bookings, I mean, can you give a little flavor as to either the regions or the product segments which you expect to lead to that upturn in aftermarket, please?

Yes, Will, thank you very much. A good question. I mean, if we start from lumpiness point of view, so especially the orders, you know, we believe we have seen sort of a solid, healthy, you know, high single digit growth from period to period like we saw also now. Maybe, you know, if you refer to with lumpiness to the revenue side, so indeed, you know, the growth has not yet picked up in, you know, in revenue and that is simply timing question for us. So the backlog is healthy. We discussed the upgrades, modernizations, retrofits, delivery times there are longer than in the transactional part of the business. Then you were also asking about regions. I don't know if we can point out the specific region. I mean, it's generally the mining regions. One area to highlight when it comes to upgrades and modernizations is, of course, Australia and the iron ore-related modernization cycle that needs to happen and is happening there. But it's not only that, it's also in the other mining regions. Again, we believe we are in a very good position with the order book. Like I said, the full backlog growth is from minerals of the market, order of magnitude 200 million euros, year-on-year growth there, and that will realize the revenues during the coming quarters.

Thank you very much. Maybe the second or follow-up was that I wanted to go back to your medium-term goal of 20% margins in minerals. I mean, if we look, you've made a great step forward to the 17.6, but it's still 240 bps below your target. And equipment seems to be rising as a share of mix, which is normally something of a headwind. So perhaps you could walk through again the levers to get us back to the 20% with regard to pricing aftermarket efficiencies and what sort of timeframe to get there.

If we start from the time frame, so target is to deliver those margins both in minerals aggregates and as met so by 2028. So that's the timing we are looking. Then when it comes to levers, it's about growth and specifically in aftermarket. We recognize that in capital side it may be lumpier especially orders, to some extent also revenue recognition, but even the big projects, the revenue spans over six, eight, in some cases, even 10 quarters. And then will the point you are raising regarding the business mix between capital and aftermarket, not at all a major concern for us. And the reason is simply that the margins are good to start with we have healthy capital business in minerals and if we see volumes going up which we by the way don't currently see because the order book has been built with you know aftermarket market focus that will give us volume leverage And then we are also working with the portfolio optimization to sort of grow the higher margin solutions or businesses that we have within minerals and then improve profitability in the areas where we lack behind our targets. Finally, self-help is also something we are doing. And again, none of us will make miracles overnight, but the time horizon we have in mind is to deliver in line with these targets by 2028.

Thank you very much.

The next question comes from Panu Leighton-Mackie from Dansky Bank. Please go ahead.

Hi, I wanted to ask about SG&A costs. What was behind the increase we saw in Q1 and how should we think about ERP costs? So are the kind of ERP implementation costs over and should you actually get the benefit from the new ERP system going forward?

Thank you, Panu. And the costs are up, you know, order of magnitude 3% in line with the inflation. Obviously, you know, something we are not happy with, our ambition is to offset the inflation. And then when it comes to, you know, inflation is the main driver in the cost increases that we saw Q1 year on year. And then, you know, ERP specifically, like Sami said, as part of his summary, the implementation is over. We have closed the implementation project. So the specific costs related to implementation, we had some still in Q1. second quarter we will not have those anymore so I'm going forward we have a clean ride from that point of view and now is the time to start harvesting benefits from the investment and you know it has been a massive project it's a big change to our teams but we see those efficiencies coming through but again will not happen overnight requires dedicated work provides also opportunities to apply more new technologies. Everybody is talking about AI. We are also thinking and working with AI. It relates to ERP, but it relates to other things as well. So a big investment and indeed you are right, we need payback for that.

Thank you. Can I just ask, can you quantify what was the ERP implementation cost in Q1?

Well, I mean, in Q1, we talk about single-digit millions like we have had throughout the implementation phase. Second quarter last year, you may remember, we had a bit accelerated or increased costs because that was the biggest sort of a goal life that we had. But other than that, single-digit millions that we have had in P&L from that per quarter.

Okay, thank you.

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

Hi, morning. Thanks very much for taking my question. I just wanted to circle back to one of the highlights of the period, which was the partnership with Lush and the VRM product. that you are pursuing there just give us a bit of extra detail around that kind of what is it looking to replace kind of what kind of market share do you think that kind of gives you just any extra color around that would be great please thank you for for that question it's it's very very new technology for the mining circuit but we we chose to partner with

with the market leader in other industry, mainly in cement, the Löscher. So what is this technology doing? First of all, it is dry grinding and we all know that The new greenfield locations, they are quite challenging locations, not only with the infrastructure, but also when it comes to the supply of water. And in that sense, this is going to be helping a lot for those future flowsheets in terms of not needing to have that amount of water in the mining minerals processing processes. Second clear benefit is that this is energy efficient way of doing the grinding. We talk about 40% less compared to the conventional grinding operations. And then as a cherry on the cake, you can also optimize the flow sheet. So actually less equipment is going to be needed when the dry grinding is fully implemented in the flow sheet. So we see a lot of positive elements here for making a difference in the mining operations.

Thank you. And just as a follow up, when do you think we could perhaps see the first one of these orders be received by Metso? That's an excellent question. Yeah.

This typically is a slow process from the perspective. Of course, we are more than happy to take the orders immediately. We are ready for that. But it's a slow process because it first needs to get into the flow sheet and then the process starts from the customer side to develop the project, get the financing, get the cost base and so forth. So typically it is some time from this kind of launch that we start to see the first orders. teams are very engaged and there is a good interest towards this technology. So we are waiting eagerly to see when we start to get the benefit of orders.

Okay, thanks. I'll turn it over and let someone else have a go before the end of our 50 minutes.

The next question comes from Michael Dople from Nordia. Please go ahead.

Thank you. Very briefly, coming back to working capital, just one question on that. So you talked about the reasons for the buildup there, but I was wondering if you have any comments on the full year. Do you expect that to reverse in the second half? Thanks.

Thank you. Thank you, Michael. Like I said, in relative terms, we have an ambition to be in power or improve our performance over time on a rolling basis and not to repeat the working capital investment that we did in Q1. Then again, If the business continues to grow in a significant way, it may be that in absolute terms, we need to invest more. I guess that's really what we can say at this stage.

Okay, thank you.

All right, thank you everybody. As a final question, I have received a question from Ed Hussey of UBS by email. Ed is offline, but he wants to ask about operational leverage. So he says that Metso delivered strong drop-through margin in Q1 despite equipment being a bit higher in the mix. So what was the main driver of improvement across margins and what kind of drop-throughs should we think about going forward, specifically in minerals?

Okay, thanks, Ed, for the question. I think we partly discussed this during one of the earlier questions, but the starting point is that we have healthy equipment margins. We had healthy equipment margins also in Q1, and even with this business mix, we're able to deliver a solid minerals margin. The gross margin uplift there is of course a function of price work, cost work, and that continues. We don't guide on margins, so can't give you an exact number there, but what we expect, like we have also discussed, is the the aftermarket order backlog to realize the revenues and aftermarkets continues to have higher margin than the capital. So that will also support us going forward.

All right. Thank you. And we have spent exactly 50 minutes. So thanks for being efficient. Thanks for your questions. Thanks for participating. We conclude here. And just a reminder that half year review will be out on July 24th. But we hope to see many of you in the meantime in various events. So thanks again and goodbye.

Thank you. Thank you.