Valmet Oyj

Good morning, everyone, and welcome to Valmet's Q1 Result Webcast. Before we start the short practical note, today's webcast is audio only due to a flu in the team. Thanks for your understanding. I'm Pekka Rouhen from Investor Relations, and with me today are Valmet's President and CEO Thomas Hineskuv, as well as CFO Katri Hokkanen. Today, Thomas will start with an overview of Valmet from the customer and investor viewpoint and go through the first quarter performance. Katri will then discuss the financials in more detail. After that, Thomas will return to cover the guidance and short-term market outlook before we open the lines for the questions. And as usual, you can submit written questions through the webcast platform at any time. But with that, let's get started. Thomas, the floor is yours.

Thank you, Pekka, and good morning, everyone, from me as well. The headline message for this first quarter is that we continue to execute our strategy in an overall demanding market environment, while sales mix had a clear impact on our profitability. Customer decision-making remained cautious, and the geopolitical situation decreased visibility. Against that backdrop, our process performance business continued to deliver strong margins why biomaterial business was impacted by project facing and the mix. Importantly, the benefits from the early and decisive operating model actions we took last year are clearly and continue to be clearly visible, supporting earnings quality also in a softer market. Before we go into the core and detail, let me briefly remind you what Valmet is fundamentally about. Our strategy is built on improving the performance of industrial assets across their lifecycle. We help customers run their operation reliably, produce more efficiently with fewer resources, and operate with less manual effort. We do this through services, upgrades, and automation, often in operations that are critical to our customers every day, but also critical to a lot of us in society. For shareholders, this is important because it means recurring demand from our large global install base and less dependency on capital projects. So while quarterly results matters, the overall direction of the company is perhaps even more important. We are building a stronger, more resilient environment by creating measurable customer value every day. In short, Valmet today is far more than a product company. We're a lifecycle performance partner for our customers. This case is a good example of how our strategy translates into real business opportunities beyond our traditional markets. Today, more than 500 advanced vessels globally rely on Valmet's automation solution in mission-critical operations every day. For customers, these systems help save cost, reduce risk, and support increasingly complex vessel operation. For Valmet, this expands our install base into another attractive lifecycle market with long asset lives and recurring revenue potential over decades. It also demonstrates the strength and the scalability of our automation business. I think something we all as, you know, shareholders, but also us here in Finland can be truly proud of. With that said, let me turn to the first quarter highlights. Orders received amounted to 1.1 billion. Orders decreased 15% organically, mainly due to the timing of large capital project orders, which can vary significantly between quarters. This also reflects the current overcapacity in the global pulp and paper markets, where customers remain selective with large investment decisions. At the same time, our business is supported by a large global install base built over decades. So every day, customers rely on Valmet to improve reliability, efficiency, and performance through our services, our upgrades, and our automation. Large purchases remain an important part of our offering, but they are only one part of many ways that we create values for our customers on a daily basis. Net sales increased to 1.2 billion, 9% up organically. Growth was driven by a higher share of capital projects revenue. That sales mix towards capital projects and smaller mill improvement projects did impact our margins. So comparable evidently climbed to 114 million with a margin of 9.2%. Important to note that the negative FX impact was also visible in the comparable EBITDA, and Katja will come back to this in more detail. At the same time, process performance solutions performed strongly. The orders grew faster than the overall market, and comparable EBITDA margin increased to 18.5%. Very strong execution by the team in the process performance solutions. Our strategy is progressing. Last year, we renewed our operating model and made a number of difficult decisions early on, and I'm really pleased to see how these actions continue to deliver tangible benefits to us. Cost savings supported performance across both segments during the quarter. Our comparable SG&A costs are now 66 million lower than in 2024. reflecting the impact of these significant measures that we've taken. In parallel, we continue to advance strategic plans to optimize and simplify our footprint. These actions improve our speed, our responsiveness to customers, while also strengthening cost competitiveness and deliver reliability to our customers. Like you can see on the graph, this one was one of the slower quarters in recent years in terms of orders received. The main driver was low capital profit intake. Furthermore, the comparison period included a large pulp mill rebuilt from North America last year. By material services, the orders declined 7% organically. The service market overall remained soft as customers continued to defer purchases reduce inventories, and prioritize minimal maintenance. In contrast, process performance solutions orders increased 4% organically, reflecting a return to low year-on-year growth after a weaker condition seen in late 2025. This clearly demonstrates the strength of our lifecycle offering and the value that we bring to customers. Next, let's take a closer look at the segments. Starting with process performance solution, this segment serves a broad global customer base across a range of industries. In the first quarter, around 63% of orders came from customers outside pulp and paper. A good example is marine automation, where more than 500 advanced vessels globally rely on Valmet solutions every day. Process performance is also a highly important earning contributor, representing around half of Valmet's comparable EBITDA. in the quarter. This demonstrates both the diversification of our business model and the growing importance of automation and flow control within Boundless. First quarter orders increased 4% organically while similar development in flow and automation solutions. This is a solid result in the current market environment and reflects growth above some of our key peers. Net sales grew 7% organically Comparable EBITDA increased to 63 million and the margin improved to 18.5%. While the improvements were driven by cost savings from operating renewal and supported by elevated product margins during the quarter, it is nonetheless a very strong execution by the team. As communicated earlier, we do expect margins to ease somewhat from these record levels as we invest back into growth. but overall profitability remains very solid. Turning to biomaterial solutions and services, orders decreased mainly due to capital projects timing, especially in pulp, where the comparison period included a large modernization order. Biomaterial services orders declined 7% organically as the soft markets continued. Net sales increased 10% organically, driven by higher revenue recognition in large projects and smaller mill improvements. The Iraq project is proceeding according to schedule and budget, and we're very pleased with the progress so far, with roughly 50% of the project's net sales already booked. So this mixed shift was reflected in the margins, and the comparable EBITDA margin decreased to 7.1%. Importantly, execution on projects remained solid. Cost savings from the operating model renewal did partially offset the mixed impact. With that, I'll give the floor to Kapsi to hear more in detail about our finance for the quarter.

Thank you, Thomas, and good morning, everyone. I will cover the group level development of key financials in my part, and let's start with the net sales and comparable every day. Net sales increased 5% year on year, or 9% organically, and net sales grew in both of the segments. FX had a big negative impact of approximately 44 million, and the biggest factor was the weakening of US dollar to euro compared with the first quarter last year. Comparable epithet was 114 million with a margin of 9.2%. Sales nickshifted towards large projects and smaller mill improvements. Despite higher net sales and cost savings, profitability decline due to the lower gross margin. Furthermore, FX had a significant negative impact on the comparable EBITDA. And it is good to note that with current FX rates, we estimate that the impact will be smaller during the remainder of the year. The sequential decrease in both net sales and profits from Q4 follows a normal seasonal pattern and was as expected. Let's then look at how our cost base has developed in the recent years. The operating model renewal implemented last year is clearly visible in the cost base. And on the last 12 months basis, comparable SG&A expenses are now 66 million lower than what they were in 2024. And that is almost one percentage point compared with net sales. While the operating model renewal brings savings, it is fundamentally aimed to improve the customer experience through the lifecycle focus, which is particularly important in the current market environment. Order backlog stood at 4.2 billion at the end of the first quarter, and this provides good visibility for deliveries and net sales going forward, with around 2.8 billion expected to convert into revenue during 2026 based on current schedules. While slightly lower than year end, the backlog remains at a healthy level and our focus is on disciplined execution, profitability and cash flow. Let's now turn to a cash flow development. Cash flow from operating activities decreased to 35 million in the first quarter, and this decrease was mainly related to an increase in the networking capital. The reported networking capital of minus 131 million includes a 249 million dividend liability, which doesn't have a cash flow impact. Excluding the dividend liability, networking capital increased by 89 million from year end, and this was mainly driven by project phasing and timing effects. It is important to bear in mind that quarterly fluctuations in cash flow are typical for Valmet, and we continue to expect cash conversion this year to be in line with our historical average of over 90%. Balance sheet remained strong. Gearing was 37% at the end of the first quarter and well below our 50% target. Net debt to EPI GA stood at 1.45 and liquidity remains healthy. We expect to close the Severn acquisition towards the end of the second quarter and this will have an approximately 15 percentage point impact to gearing. And we are comfortable with that level given the strong cash conversion ratio our business inherently has. Contra Bull Rosi improved to 13.4%. And as shown in the graph, capital employed decreased by around 230 million compared with 2024, which supported the returns. Our long-term target is 20% by 2030 to be driven by profitable growth, higher comparable everyday margins and disciplined value creating capital allocation. Adjusted EPS declined, and this was primarily due to items affecting comparability, which were related to planned strategic footprint measures. This slide gives you a snapshot of all of our figures at once, many of which we have already covered in detail. From this table, I would like to highlight the items affecting comparability, which amounted to minus 32 million, again related to strategic footprint measures in Sweden and in Poland. The effective tax rate was 23.6%. and this is below our long-term average of 25%, which we expect also going forward. The deviation in the tax rate in the first quarter from that 25 was due to timing effects. In summary, net sales increased, but the mix impacted our results. Furthermore, we had further headwinds from FX, which we do not expect to burden our Q2 results, to the same extent given the current FX rates. We expect the cash conversion ratio to remain at a solid level, also full year 2026, and look forward to starting the integration of Severn into Valmet towards the end of the second quarter. With that, I hand it over to Tomas to go over the guidance.

Thank you very much, Katja. We reiterate our guidance for 2026 issued in February 6th this year. So net sales are expected to remain at previous year's level and comparable EBITDA is expected to remain at previous year's level or increase. The guidance is supported by our further cost actions announced this morning as well as smaller negative impacts from FX assuming the rates remain at the current levels. In terms of the short-term market outlook, we were pleased that the process performance solution markets have returned to low year-on-year growth. This development was in line with our expectations communicated in the Q4 call as well. Fire materials solutions and services should improve slightly as a whole. However, this reflects the very low project activities in Q1. which serves as the baseline for this outlook. The market for biomaterial services is expected to remain soft in the next two quarters, and customers are likely to remain selective in their investment decisions. At the same time, geopolitical uncertainty has increased. Direct impacts on bandwidth are limited. A bit over 1% of our net sales come from the affected Middle East region, last year and very little own footprint, personnel or suppliers. The main impact relates to logistic cost and general economic sentiment and how that impacts our customers' demand. These are industry-wide and managed also through commercial actions to mitigate the inflationary impact. So to wrap up things before opening the lines for questions and answering, first of all, strategy execution progressed and our early cost action continued to support our performance. Also here in Q1, sales mix did impact Q1 margins, but our guidance remained unchanged. The guidance is supported by further cost actions, including the $8 million additional short-term savings we announced today. Also, Assuming current FX rates, the impact from currencies during the rest of the year, as Katja alluded to, is expected to be smaller than during Q1. I do remain confident and also excited about the path that we're taking Valmet on and have full confidence in the Valmet team to deliver the 5 plus 15 equals 20. by 2020-30 or 2030 by bringing long-lasting lifecycle value to our customers globally. So with that, I will hand over to Pekka.

Thank you Tomas. We'll now move to the Q&A and as usual, you have the chance to ask questions in a written format through the online platform as well or then with the telephone a little bit later. So we have now received a few questions here in the platform, so I suggest we take them first. The first one being on the Middle East crisis. So how does the Middle East crisis impact Walnet?

Yeah, thanks, Pekka. Clearly, you need to sort of look at the Middle East crisis from two angles. There is, like I just alluded to, the direct part, roughly 1% of sales last year, Similar levels on our OR, not that many people there, less than 100, so that impact is, of course, relatively limited. However, the indirect impact, which is also hard to measure, is there, right? We see supply chain impacts in terms of the energy costs, the logistic costs, the overall inflationary pressure coming out of that conflict, then the whole economic uncertainty which drive both consumer confidence and therefore consumer spending, our customers' demand or the demand for our customers' product, which then lead to sort of deferred investments and also savings programs with some of our customers. So the indirect is bigger than the direct, but harder to measure.

Thank you. Then a question on the biomaterial solutions and services segment. Why did the margin in Q1 decrease?

Yeah, like we said, a lot of mixed impact, both in terms of this bit between projects, which actually proceeded really well. I'm very happy with the Aramco project, how that is progressing. More than 50% of the sales is recognized now. That also gave a bit of a spike in Q1. So that mix between projects and service is off, or it has changed. But also the mix within services towards more improvement projects, has impacted them. And then as Katja alluded to, there's also a little bit of FX impact.

All right, good. Then those were the questions at my iPad so far, and use that also going forward if you want to use that platform. But we'll now go to the telephone lines, so please.

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 six on your telephone keypad. The next question comes from Auntie Kansanen from Seb. Please go ahead.

Hi, guys. A few questions for me, please. I'll take them one by one, and I will follow up on the margin questions on the biomaterial side, and I mean, I think looking sequentially versus Q4, there's a bit of a step down in terms of margins. And just a question that I guess you guided that the Arauco contribution run rate would be fairly similar, let's say start of this year versus last year, or at least on a full year basis. So was there a big change on the revenue recognition from that project? And do I understand correctly that in a sense, it's a normal profitability considering the mix and from here onwards, the mix improvement would be the primary driver for any margin change. Just a little bit more color on that one.

Good question, Dante. Yes, ROC will continue, as we said, in Q4. However, we did fast-forward some of the things in order to also mitigate some of the impact from the Middle East crisis to make sure that we actually have things on site. So that was just sort of us speeding up certain things. We then led to a bit more revenue recognition. than originally fully planned for Q1. Then you're absolutely right. I mean, if you think, if it really is back to two parts on the buyer margin is that, you know, we have more project sales with lower margin. That means also proportionally less service sales. In the service sales, there was a proportion, bigger proportion of improvement projects, which you also remember back in 2009, Q3 and 4, that's actually where a lot of the orders were coming in on, which we talked about back then. So that gave a bit of a mixed swing within the service side of things. What I'm very happy about is that the customers are coming to us. I mean, given the whole situation, they actually continue to invest into these improvement projects to be more competitive in their markets. And that's what we're trying to help them with, even though if that impacts our margin negatively overall.

And may I still have one comment regarding the Arauco? So the revenue recognition for the first quarter was about 170 million, and for the full year we are expecting roughly this 400 million, so no changes in that. It was a bit more tilted towards the Q1.

Exactly. All right, that makes sense. But a bit of a follow-up on that one, and regarding kind of the Arauco, deal and kind of where you would be exposed to any cost inflation regarding logistics or anything else? So kind of risks going forward, how well do you think you are mitigated by those factors that are not necessarily covered by clauses or agreements with the customer or suppliers? I mean, logistics comes to mind first.

Yes. We've been very upfront early on on securing both the freight cost and actually freight capacity as well. So overall and doing all the procurement of, you know, very early on in the project, also what's going to be delivered later during this year. So I'm quite confident of the overall delivery of this and also that we should not see, as we see it now, any negative margin impact compared to what we – or to any – you know, compared to plan.

All right, and then the second follow-up was then on the services side going forward. I mean, you kind of repeat the demand guidance that you have on the previous quarter, so it remains soft. Is there any kind of incremental change that you see in the pace of recovery, and how should we then think about the mix within services going forward regarding kind of this impact that you had on Q1?

Yeah. It's, of course, that's sort of a little bit of a, as we said, Softer market, clearly, you know, we've seen a lot of our customers are struggling in this lower demand situation that also the Middle East is impacting on. So they're taking short-term savings actions, which means they're reducing inventories, they do minimal maintenance, right? They're deferring investments unless they're very short payback times. So that's what we're sort of trying to help them with to do the right things, given the difficult situation they're in. And then for us, of course, there's a volume and mix impact, so that also means that the mix impact we talked about, but also the volume, the last euros sold in the service business have already been covering all the costs and the fixed costs, so there's a high drop-down rate to the bottom line.

Okay, and then lastly on the full-year sales guidance, if you look at the backlog, I guess you had it on the presentation, that it's a little bit lower deliveries for this year versus where we were a year ago, and then a bit muted service market still and low growth for automation. So, what are the opportunities to grow sales and kind of offset the negative factors that you are facing for the full year?

Yeah, so that's, of course, there's a lot of focus wholesale side right now, making sure that we do get a good or deliver our book to build so that we can actually invoice that in the second, particularly in the second half of this year.

Okay.

So, Antti, to add the kind of impact from the net sales that Q1 impacted, minus 44 million in the net sales side, and if the FX rates stay at the current levels, then that impact will be smaller going forward.

That's a good point. Thank you.

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

Thank you. Maybe I could just start with a brief follow-up on the question about the service or the aftermarket business for Popcom paper, if you could get a bit more. General areas in terms of the region is what you see out there. I think the operating rates, perhaps the U.S. looks a bit stronger than Europe. What about Asia? You could talk a bit about that. And also, I mean, if you look at this business historically and in the historic cycles, it doesn't tend to decline for that many quarters in a row usually. Just wondering if there's anything in this cycle that you would point to that should make us think differently this time around. Thank you.

Thanks, Michael. It's clear that there are regional differences, as you alluded to, also coming a bit from the operating rates, which means that North America is actually not doing too bad. Of course, we have the FX impact in the Q1 from the U.S. dollar there, but that market is progressing quite well. High operating rates as well. Strong focus on improving the relatively old asset base that is there. So also on the improvement projects, that is an important market where we help our customers a lot. And then clearly lower operating rates in China, where also the overcapacity mainly is to be found, right? So that's, of course, on the other end of the spectrum in terms of demand. Then a bit on the future, it is clear that this you know, Middle East crisis are throwing sort of clouds over what's the economic development in the world, how does consumers start, you know, how are they buying or spending and how does that then impact the packaging market and therefore our customers there, which is a little bit hard to really sort of predict going forward.

Okay. If I can just ask on the project business going forward. I mean, yes, you mentioned that Q1 was fairly thin on the project overall. You expect to see a bit of a pickup there. Maybe you could talk a bit about the pipeline you see out there. I mean, particularly if there's anything you could say about the bigger greenfield projects, especially in Latin America, but also what you're seeing in China. I think you mentioned, for example, in China having multiple projects in the pipeline. Previously, are those still there? Are they being postponed? Will you talk a bit about the project pipeline? It would be great. Thank you.

Yeah, as we also alluded to when we reiterated our guidance and the short-term market outlook is that we do expect the project business to pick a little bit up after this quite slow quarter. Of course, as you know, China is one of the markets where this is happening, despite that's also where the biggest overcapacity actually is, but there's some, you know, room for more efficient capacity and therefore also taking less efficient local capacity out in the Chinese market. I think the important part here is, you know, how we actually also using that project resource, that capability, technical capability, both in buyer but also in our PPS business to really help our customers in their old install base to be more effective and more efficient in that and therefore more competitive in their market. So we saw that also in the PPS there was more service than project this quarter, which also helped improve or impacted positively on our margin actually in that segment. a lot of effort shifting from the greenfield to actually the brownfield, small or larger, right, modernization or improvement projects.

So that's also why this is an interesting... Okay, just a brief follow-up on that.

Yeah, go ahead, Michael.

So just conceptually, I mean, how do you look at the market currently? Because what we have seen here is that There's been a lot of investments in China. They continue to invest. It's more integrated capacity on the bulk side of things. Do you see that sustained going forward as well, you know, discussing with your customers and their plans? And how do you see that impact in the planned investments in Latin America? Should we expect those to kind of fade now given the trend here? Maybe just some thoughts around that.

Yeah, I think... Clearly, I think this year we'll see a lot of integrated or new projects that develop integrated mills in China where it really is about driving that integration efficiency out of an overall mill and production within the China market. So that, I think, will continue throughout this year. And that's also what we say a little bit about this improved capital business. Then when it comes to Latin America, it's clear that they are still the lowest cost producer of pulp. So they still have a competitive advantage there across all markets, I would say. However, of course, the world is not as predictable as it used to be. So that's, of course, putting a little bit of additional decision-making time on the individual approaches. So it's very hard to predict. when a project will be decided or not decided, right? But I think it goes back to Latin America is still the lowest cost producer of pulp, or at least Brazil is, and that will give them advantage also going forward. Okay. Well, that's good. Thank you very much.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Tom Skagman from BNB Carnegie. Please go ahead.

Yes, hi, this is Tom from BNB Carnegie. I would like to focus a bit on your profitability guidance. Does this kind of include a pickup in the service business? As you know, I've had like three slow quarters in orders.

Thanks, or tjena, Tom. I'm not sure, but I think it's just on the guidance if we get back to that. I think, you know, as we said, we continue to expect that the service market will be soft for the next two quarters. We also said the outlook is more cloudy than it was when we actually gave out the original guidance back on February 6th. Hence, we are taking actions to further support that guidance, which, of course, a lot of that impact will come in the third quarter. So, it really is about that we make sure that we take the right actions to create this strong development going forward, making sure that we balance the cost savings, but also making sure that we continuously have the capabilities that can actually deliver the demand that our customers are coming up with also a little bit on the longer scale. But clearly, you know, we do expect that the second half will be better than, in a stronger second half than what we saw last year.

Yeah. I understand that because, I mean, customers cannot take production rates, you know, forever, of course. Of course, they cannot produce inventories either forever. Yeah. And then if you look at the biomaterials margin, so I'm still a bit puzzled here because actually equipment deliveries were very strong, which should mean, you know, good operating leverage. So this low margin, I mean, service used to be, like I reported, quite stable, you know, it could go down, you know, one or two percentage points when it was that time. But now it looks like either the equipment margins and the orders you have taken the last years are on a very, very low margin, even loss-making or badly loss-making even, or then the service margin has collapsed. And I just wonder what's going on. I mean, you should be able to take out costs in service as well if it's just relating to low sales in service.

Yeah, I think I understand your question, Tom. There really is three parts you need to think about. One, you know, be happy with how the projects are performing. Albright, a lot of it comes from Arauco's. Katja also just alluded to how much sales actually coming from that project as well. That's tracking very well. But that also means that the project part of the overall biomaterial business has increased, then the overall service, or when you then look at the mix within the service, then improvement projects are a much higher part of that, which also impacts the margins negatively as well. And then that overall gives this low bio margin. Then on top of that, there's a volume impact. And it's back to, you alluded to a little bit, you know, We still want to have the sales force out there, you know, talking to the customers. We don't want to cut those because then we're sort of shooting ourselves in the foot. So we want to keep that. That also means that if you get the volumes up, then the drop-down rate of that additional volume is pretty big. So the swing factor of the last 50 million of service sales is pretty big on that one. Yeah, I understand that.

And perhaps just a bit more, you know, short-term about the biomaterials equipment phase funnel. What do you see? I guess, I mean, you have a funnel, but how do you see things moving, you know, ahead?

Yeah, so, I mean, we do, of course, we see the funnel. Some of it has also been a little bit delayed, which we expected to happen here in Q1, but now being pushed into Q2. As Michael also alluded to from there, clearly there's quite some activity in the Chinese market as well. So I think we'll do it, as we said, expect a better next six months versus what we saw in Q1. However, I think we also need to see this as The really important part is, and that's why we should not be sad about, even though it impacts the margin, the service makes that we have more improvement approach, it is super important that we do help our customers with improving the efficiency of their older assets so that they can compete in the market and also have better margins themselves and therefore they have better cash flow to invest as well. So it really is important. That's also why we're keeping the capabilities on the engineering and so on to be able to to support our customers with the improvements, the rebuilds, the modernizations.

And perhaps you could just continue then finally a bit about kind of the strategy for biomaterials. Because I think, you know, just from our kind of financial perspective, you can start to question, you know, whether it makes sense to book large bulk meal orders. Of course, long-term, it's good for service, et cetera. you know, it's just when you look at the valuation, you know, it's like it really seems to hold down the valuation of Valmet that you still try to win orders in a very, very slow market. I mean, could we see Valmet making more radical changes to its strategy somehow, you know, and, you know, just tell customers that, you know, yeah, we can perhaps deliver some board machines and some puzzles in the future, but the scope will be smaller and that We will have a very limited capacity for the foreseeable future, basically, or something like that. Could you divest some parts, do business differently, and possibly just deliver core components and not take EPC responsibility? I mean, are there things you are working on to change the scope to get up your valuation multiple?

I don't really think we have a scope issue as such, Tom. I mean, with you know, we see the Arauco, that's an EPC, goes really well. We're progressing well with that project. But, of course, it is about making sure that we have a supply chain that is geared towards a, or have a capacity that is leveraged more towards doing more improvement projects, more rebuilds, more brownfields, and less greenfields. Because the important part, as you allude to, really is about how do we help our customers optimize their install base. That's where we bring value to the table, but that's also where the valuation is, right? So clearly, I mean, a more aftermarket focus is where we are taking the company. That's also why you see that we took these supply chain actions of actually closing some capacity in Sweden and Poland. Of course, it takes a little bit of time to ramp it down, and also the existing production that is actually there potentially move some equipment to other places so that we can continue performing certain tasks. But that is, you know, I think that's where you can see part of the strategy, making sure we have a much more resilient supply chain that is also more geared towards service, including improvements and modernization, brownfield stuff. But I like your thinking.

Yeah, okay, thank you.

There are no more questions at this time, so I hand the conference back to the speakers.

Oh, I guess they're indicating there is one more question, so we'll take that question still, please.

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

Yeah, thank you. It's Michael here again. Just a brief follow-up. I was just wondering... in terms of the server acquisition, I think you said back in Q4 it's not included in the guidance. Is that still the case, just to make sure? Yes.

That's the short answer. It's not included in the guidance.

All right. Thank you.

Okay, thank you, thank you. So I guess it's now time to conclude today's event. So one Q2 report will be published on 24th of July. But now handing over to Thomas for the closing remarks.

Thank you, Pekka, and thank you everyone for joining us today for a good discussion. I do actually really want to also thank our customers and shareholders for your continued trust I mean, at Valmet, we remain focused on improving the performance of our customers' initial assets across the lifecycle, which we just talked a lot about, especially in the Q&A. We are also taking decisive action to build a stronger and more resilient company. We believe we're well-positioned, despite the current market backdrop and the sort of overall challenging situation. But thank you all again, and I'm looking forward to speaking with many of you over the coming weeks, and have a very good day. Thanks.