Alleima AB (publ)

Hi, everyone, and welcome to the presentation of Alema's interim report for the third quarter 2025. My name is Andreas Eriksson, investor relations officer. I'm joined today by Göran Björkman, president and CEO, and Johan Eriksson, CFO. Göran and Johan will walk you through the operational and financial highlights of the quarter. And following the presentation, we will open up for a Q&A session. You're welcome to ask questions via the conference call or submit them through the webcast interface. And the presentation materials are available for download at aleima.com. As always, safety is a top priority for us. And I trust that you are familiar with the safety procedures at your current location. And with that, I'll hand over to you, Jörg.

Thank you, Andreas. And hi, everyone. And thank you for listening. Let me start with the highlights of the quarter. The geopolitical situation is still turbulent and we are still seeing a market with continued uncertainties. Customers are prolonging their investment decision and I would say the overall kind of wait and see attitude remains. And I think this is particularly visible in Europe, but also in Americas, where volumes related to the more short cycle businesses like industrial, chem, petrochem, and also industrial heating are low. Despite this, I think our underlying performance is decent, given the challenging environment, and we are clearly benefiting from a diversified exposure. Order intake rolling 12, declined 1% organically, and revenues were flat year over year. Backlog remains solid in important segments like oil and gas, nuclear and medical, with good product mix and visibility for the near-term future. But as I stated in the more short-cycle business and done especially in Europe and America, the backlog is weaker. Our adjusted EBIT margin declined year-over-year to 4.7%, and this is clearly below last year and also as we guided for in Q2. But it is in line with what we expected. Main reasons for the softer result are the weak European market, where we have short backlogs and it's actually impacting revenue, but also the prolonged maintenance stop we had during the summer and, of course, the FX headwind. The reasons for the prolonged stop was a large maintenance investment replacing the expansion press in the large extrusion. And we have some weeks delay in the start and ramp up, while there will be some effects also in the fourth quarter. Even though we have segments with strong market, our global footprint that helps us to mitigate the more direct impact from tariffs, we don't foresee a fast recovery of the market, or at least we cannot trust that that will happen. Therefore, we are now initiating a number of targeted measures to further strengthen our operation efficiency and, of course, our long-term competitiveness. The majority of these efforts will permanently reduce cost levels, including in restructuring initiatives, while others are, I would say, more a natural part of our ongoing work to align capacity and cost with current market conditions. In total, we expect annual savings of roughly 200 million, coming at a one-off cost of almost 400 million, and a total reduction of about 250 FTEs. And I cannot stress enough, in times like these, our balance sheet is a real advantage. Our financial position enabled us to stay with our strategy, where we have several ongoing profitable growth projects. Moving over to sustainability, as I said many times, we are generating a positive impact, both through our own operations and through our product offerings. Safety is always a top priority dilemma, and we are continuously and actively implementing measures to maintain safety as a top priority. And I'm happy to say that the development again is trending in the right direction, and the accident frequency is on record low levels. Our share recycle ceiling remains high and remains over 80%, both on a rolling 12-month basis and year-over-year. And I think this is a good figure given our product mix. Also, our CO2 emissions are steadily decreasing, even though we noted a slight uptick in this quarter. Lema's largest contribution to sustainability is through our products, where we support our customers in their sustainability journey. That is why we are introducing a new KPI, where we measure the share of products supporting sustainability. This is Things like fossil-free energy, renewable nuclear and hydrogen, energy efficiency, electrification, medical. And where the overall target is that this part of our business should grow faster than a lame average. And as you can see, we have had a good development, but now more flattish. I would say that nuclear, medical and also energy efficiency through compressor steel is still strong, but we see more headwind in areas like electrification, hydrogen and renewable energy. Some other sustainability highlights from the quarter. Elema was once again awarded the Ecovades Gold Medal for our sustainability performance, placing the company among the top 5% of over 150,000 rated companies globally. I think this recognition confirms our long-term commitment to responsible production and sustainable development. Another important milestone is that Elema Leymah's climate targets have been validated by the science-based target initiative, ensuring alignment with the latest climate science and international agreements. Together, these achievements mark an important milestone in Leymah's work to increase customer value by reducing climate impact and strengthening sustainability across the value chain. So let's take a closer look at the market development. Market sentiment remains mixed with continued macroeconomic uncertainties. Demand remained notably low in Europe and stayed subdued in North America, while Asia continues to show more resilience. And we maintain momentum in several key segments. But I will walk you through the development in each segment, starting with oil and gas. Our view on the underlying demand is still positive. And I would say, especially from Bill, because with the project list of upcoming tenders and potential future order is solid. We are a bit more uncertain, however, on the mid-term outlook for OCTG. We still have a solid backlog and we are on historically high levels. And maybe as important is that we have managed to increase our operation efficiency and thereby improve profitability for our OCTG business. And we are comfortable in our partnership with Tenaris also moving forward. Chem and petrochem, Europe is on low levels, same with North America, while Asia remains solid. Industrial, the European demand is worsening on the low value-added products. North America, we noted an increase from low levels. But I have to say, much of this is actually tariff-related effects. And that is, we see our price increases to compensate for the import tax. But also here, Asia is on an okay level. Industrial heating overall somewhat improving, but still on low levels. Applications like electronics, Semicon and glass are improving. And we have been on low levels now for, I think, about 18 months. And if this improvement we now see is a turning point, I think that is too early to conclude. Customer demand. Demand is still on a good level, mainly driven by the white goods industry in the strip division. However, some customer indication from U.S. indicated the market is starting to soften somewhat. Medical market remains strong, driven by multiple factors, and we have a solid momentum across the product portfolio. And I also like to mention that the integration of Endox is going according to plan. Minor construction, flat underlying demand year over year. Nuclear. high activity growing demand continue to support the solid backlog providing good visibility going forward transportation i mean it's strengthened year-over-year driven by the titanium tubing for aerospace which is strong while automotive is worsened so aerospace is up uh automotive is down giving a that arrow should be flat sorry it is on the accuracy yeah Hydrogen and renewable energy, the segment remains mixed with varying performance across this broad range of businesses, but surely there is a headwind in the hydrogen renewable energy area. Moving on to oil intake and revenues. Order intake rolling 12 months to 18.7 billion sec, negative organic growth of 1%. This is mainly coming from the petrochem and industrial segments, especially in Europe. North America is weak, while Asia remains on high levels. Nuclear, medical, and consumer grew, and industrial heating grew from low levels, and we continue to book good umbilical orders in the oil and gas segment. Revenues flat organically, Cantal and Strip grew while Tube declined. Biggest positive impact came from medical, and while we see the weak Europe, that impacted us negatively. Rolling 12 months booked a bill on 97%, and our backlog is still healthy levels in key segments of oil and gas, nuclear and medical, but for the short cycle business in Europe and America, the backlog is short. Earnings, the adjusted EBIT amounted 197 million with a margin of 4.7%. Given the weaker market in Europe and America with short backlogs for the short-circuit business, the extended maintenance shutdown and the FX headwind, the result came in line with our own expectations. However, costs are clearly lower than last year. And with the market with continued uncertainty, we are now taking the measures to reduce cost and improve operation efficiency. These actions, together with the ongoing growth investments in medical, nuclear, petrochem, will make us stronger going forward. And we're staying with our strategy, which also includes our order booking discipline now in downturns. Pre-operating cash flow 285 million, lower than last year, mainly impacted by lower operating profit and higher capex. So let's look into the divisions, starting with Tube. Tube noted an organic order growth of minus 6% for the rolling 12-month period, where we continue to see a weak Europe and North America for the regional businesses. Asia continues to develop well. Backlogging key segments like nuclear and oil and gas, still solid, and we maintain a positive view on both those two markets. Organic revenue growth of minus 3%, mainly driven by a negative development in chem, petrochem, but also timing of nuclear order that was billed in Q3 last year. Book to bill, 93% rolling 12 months. Just a little bit more than 3.6%, and this was dampened by the weak Europe, as well as the high than normal under-absorption effects due to the prolonged maintenance stop, where we replaced expansion press in the locked extrusion. And as I mentioned, we've had some weeks delay in the start and ramp up, and we will have a negative impact also in the fourth quarter. We will, however, be able to catch up some of these effects, but due to the large backlog we have in the large flow like OCDG, that will take until mid-2026. Two-betting FX headwind of minus 16 million year-over-year. Moving over to Cantal, organic order take growth for the rolling 12-month period of 9%, which is a good growth. but still relatively low comparables in the heating part. Medically strong, and we noticed some rebound in industrial heating, where applications like ceramic elements for electronics, including semiconductors and glass industries, stood out positively. And it's also in these applications our announced investments in Japan and in Scotland are related to. If this is a real start of a real rebound, I think that is too early to conclude. Medical segment continued to show strong momentum with growing order intake and revenue and a solid backlog. Book-to-bill, 104%, rolling 12%. Adjusted VBIT margin was 16.1% in the quarter, which considering the rather low volumes in the heating part, the division, the FX headwind, and also some costs related to preparations for ramp-up of investments, I think it's an okay result. So Strip. Strip continued to grow its top line with an organic order intake growth of 24% on a rolling 12-month basis with growth in all segments, of course, and the consumer segment being the main driver. Organic revenue growth of 5% in the quarter, all major segments contributing to that. Book-to-bill rolling 12, 112%. STRIP came in on an adjusted EBIT margin of minus 4.2%. There is a continued negative impact from the weak fuel cell business, but also the precision STRIP part is not performing in line with last year, despite the positive growth. STRIP, with most of its operations in Sweden, normally has a seasonal weak quarter three, and they also had continued FX headwinds. But there is also efficiency problems where I would say quality and yield had a negative impact. Strip has not been performing well the last quarter despite the positive market. And the operational problems, they are addressed. And they showed a clear improvement in the end of quarter three. Why I am positive that quarter four will show an improved performance. And with that, over to you, Johan, for some numbers.

Thank you, Jeroen. So, before we move into the financials on this page, I'd just like to highlight that the targeted measures that Jeroen mentioned, and it's expected to result in an item affecting comparability charge on the P&L of approximately 400 million in the fourth quarter. However, please note that the cash impact, which is roughly half of the 400 million, primarily will occur during the first half of 2026. And on the savings side, then, we can say that the run rate savings will be achieved, half of it, about 50% by the end of quarter two next year and full effect by the end of the year. So now let's jump into the bridge on the right-hand side. So order intake for the rolling 12-month period amounted to 18.7 billion, corresponding to an organic decline of 1%. Total growth was minus 5%. impacted by currency and alloy effects, with the stronger sake and lower metal prices accounting for four percentage points to each. Quarterly revenues reached 4.2 billion with a flat organic growth, of which we actually had 100 basis points coming from tariffs, the US tariffs. The revenues were held back by weak market conditions in Europe and North America, just like Joram pointed out. Currency effects, primarily from stronger SEC against the US dollar, had a negative impact of minus four. Alloy effects impacted by minus two on quarterly revenues. And we see, looking into the fourth quarter, a continued negative year-over-year effect from alloys. And we expect the rolling 12-month order intake to have around minus 2% from alloys and the quarterly revenues at minus one. And in structure, as Göran also pointed out, we have some positive contribution from Endox, even now it's rounded off to zero and the integration is going according to plan. Moving on to the left-hand side, adjusted EBIT, I'll get back to in a coming slide. So we'll get on to the reported EBIT, where the margin declined from 2-3% from 6.5%. metal price effects of 70 million compared to minus 24 last year. As the trend for metal prices and the US dollar have continued to be more negative this year compared to last year. The net financial items for the quarter amounted to 6 million compared to zero last year. And one of the items in the financial net is the positive interest net on our cash balances. And in the quarter, they were yielding approximately 1.98%. The normalized tax rate came out at 25.8 for the quarter, while the reported tax rate amounted to 36%. The reported rate is impacted by a couple of prior period adjustments. Free operating cash flow came out at 285 million SEC, and I'll get back to that in the later slide as well. And finally, adjusted EPS for the quarter came out at 0.56 per share, impacted negatively from the lower adjusted EBIT. Looking at the adjusted EBIT and the bridge. going from last year's 314 million or 7% to this year's 197 or 4.7%. And we note an organic decline on EBIT of 78 million, resulting in a negative organic leverage. This is mainly driven by the weaker markets in Europe and North America and the higher than normal under-absorption and maintenance effects primarily in tube dam. And as Göran pointed out, the yield and productivity issues in STRIP It's worth noting, though, that we've been able to compensate for the U.S. tariffs, making it EBIT neutral in the quarter. The currency headwind continued, and we were impacted by the strength and seek mainly versus the U.S. dollar. The total effect corresponds to a margin dilution of 70 basis points in the quarter. And structure, again, it's the contribution from our acquisition of MDOX that Kantal made early at the beginning of the year. Looking at the balance sheet and capital efficiency, networking capital decreased in absolute terms year over year, mainly due to currency effects and lower metal prices, but increased as a percentage of revenues to 39.5%. And that's due to our lower quarterly sales. Continuing into inventories, they are lower in value both sequentially as per normal seasonality and year-over-year, coming from both lower volumes in inventory and lower metal prices. And we continue to have a lot of focus on this in the divisions. Capital employed excluding cash increased year-over-year to 16.3 billion, mainly driven by the higher CapEx levels. And the return on capital employed excluding cash based on operating profit, including metal effects, was 8.1% for the rolling 12-month period, down from 9.9% last year. Looking at cash flow, the free operating cash flow amounted to 285 million, which is lower than last year. The EBITDA is impacted by the negative metal price effects and currency headwind, as well as the operational effects that we explained earlier. The non-cash items were slightly more positive this year. This refers, for example, to provision or provision releases in the operating result that have no cash flow impact. The positive impact from lower working capital mainly comes from accounts receivable and inventory. An increase in capex comes both from our prolonged maintenance stop and increased growth capex. And if we look on the graph on the right-hand side, we can note that we continue to deliver a healthy cash flow, although in the last two years we have effects from the ongoing growth investments, which, may I remind you, are in segments that are more profitable and less capital-intense and will start yielding in the coming years. And overall, and as Göran also pointed out, our financial position remains strong, where we are well below our financial target of a net debt to equity ratio below 0.3 times. At the quarter end, we were at negative 0.02 times. The net pension liabilities decreased year over year to 735 million from last year's 938. mainly as a result from higher discount rate and value increase of the pension assets. Leasing liabilities was on par with last year. And again, our cash position continues to be strong. And we have a net debt or rather a net cash position of 362 million and 3 billion unutilized revolving credit facility on top of Looking at the guidance we gave ahead of the quarter and the outcome, for CapEx, the outcome is that we are now at 745 million year-to-date. We guided for 1.2 billion for the full year, so I would say that we're well in line with that guidance. The currency, the transaction and translation effects is... Came out at minus 113. We guided for 115 million, negative 115. So well in line there as well. And the total bridge effect, including the hedges and revaluations, was negative 41. This affected us negatively with 70 million, where we guided for negative 150. Here, the deviation comes from several metals, but mainly from the development of molybdenum in the quarters. Normalized tax rate was, year-to-date, 24.1%, where our guidance is in the range of 23% to 25%. For the quarter, the normalized tax rate was on the higher side at 25.8, mainly due to the country mix for the profits in the quarter. And then looking at the guidance for the fourth quarter, we maintain our guidance of 1.2 billion of CapEx for the full year. The currency effects... We estimate for the transaction and translation to about minus 150, 150 on the back of the stronger SEC, of which I would say that half will be mitigated by hedges, roughly half. Metal price effects based on end of September metal prices and currency rates, particularly nickel and US dollars. We anticipate a neutral effect for quarter four. And the tax rate for the full year 2025, we expect a normalized tax rate in the range of 23 to 25 percent. And by that, I hand back to you, Joran, for the outlook and summary.

Thank you, everyone. When the general economic environment was continued uncertain during the third quarter, we expect that to linger into the fourth. At least we don't bust it too much. One of cost of about 400 million related to restructuring activities is expected to affect fourth quarter results. We also expect some diluting effects related to delay ramp up from the installation of expansion press, and that will have some impact on the profitability of the fourth quarter. We maintain a solid backlog in several key segments, providing good visibility into near-term deliveries. However, we are seeing challenges to other customer segments, particularly in Europe and North America, which already have affected and is expected to continue to affect short-term deliveries. Product mix anticipated to be remaining broadly in line with third quarter, and we also expect currency headwind in the fourth quarter. And finally, cash flow tends to be strong in the second half of the year compared with the first. And that brings me to the summary. So let me summarize. We are affected by a continued uncertainty due to the geopolitical turbulence. But we still have good backlog and momentum in key segments like oil and gas, in nuclear and medical sectors. Revenues flat organically where Cantal and Stripe grew while Tube declined. Biggest positive impact from the medical segment while a weak Europe impacted us negatively. EBIT margin declined year-over-year mainly due to the weak Europe, the FX headwind and the prolonged maintenance stop. And therefore, we are initiating a number of targeted measures to further strengthen our operation efficiency and long-term competitiveness. Majority of these efforts will permanently reduce cost levels, including restructuring initiatives, while others are a natural part of our always ongoing work to align capacity and cost with current market conditions. Our financial position remains strong, which will enable us to continue to execute on a strategic agenda, where we now are driving several growth initiatives to strengthen us long-term, while we stay with our order booking discipline also in downturns. And with that, back to you, Andreas.

Thank you, Göran. We will now begin the Q&A session. Please feel free to ask your questions via the webcast or directly through the conference call. Operator, please go ahead.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. If you wish to remove yourself from the question queue, you may press star and two. Anyone who has a question may press star and one at this time. The first question comes from the line of Caleb Solomon from SEB. Please go ahead.

Hi, guys. Thank you. Just three questions from my end. On the effects from the sort of delayed ramp-up following the maintenance stoppage, could you maybe put a rough figure on what the impact will be in Q4?

On group level, maybe 80 basis points in fourth quarter. And as I said, I think Roughly half of that we will catch up, but that positive effect will remain until, I would say, mid next year.

Okay, and on the 200 million in sort of annual cost savings you expect to achieve from the measures, did I interpret you correctly, Johan, that we'll start seeing half of that run rate effect in Q2 next year for the first time? And will those sort of cost savings be fairly evenly distributed throughout the quarters?

Yes, so half of it from quarter to full effect by the end of the year in run rate, that.

Okay, that's clear. And on the sort of topic of tariffs and general uncertainty in Q2, you mentioned June was significantly worse than the rest of the month. And I know you say customers sort of continue to be cautious, but based on your Q3 orders, it at least seems like things have gotten a bit better since June at least. Can you maybe give us some color on that and what you have been seeing in Q4 so far?

And the comment I made regarding June, that was in America, and June stood out as very negative. That came out better in July. And I think it's been kind of flabbergasted. It looks number-wise more positive, but that is due to that... I mean, we bring up prices due to the tariffs, and I think it's more or less a stable development. June was not, I mean, that stood out as negative. After that, more flat. And once again, we compensate for tariffs, I think. The main issue is all the uncertainties. And even if there is now a deal, Europe and America, even though new things come every week, remember that deal does not include tariffs on steel imports to the U.S. That is still to be solved. Hopefully through quotas, which I think would be the best idea.

And just a short follow-up, could you maybe say something about how competitors who ship more finished products and kind of lack the local processing capacity have managed to handle tariffs? Have they been able to pass on costs to the same extent?

That I don't know, honestly. We have not seen any big movements on sort of the competitiveness situation in Americas. My assumption, but this is just a good guess, is that some of our competitors that don't have so much added value in the U.S. perhaps take a hit on, maybe they take some of the cost for the imports themselves. But I don't know that. That's just speculation. Okay, that's clear. Thank you.

The next question comes from the line of Adrian Gilani from ABG. Please go ahead.

Yes, hello. I'd like to start off with a question on the savings program. I guess, can you go a bit more into specifics? Is that localized to a specific segment or geography, or will it sort of be spread out over your entire business?

I can say it is... First of all, we see the majority will be permanent. I think we estimate roughly 75% of the 200 million will be permanent. So if volumes go up, that will still be a saving. And in respect to the ones that will be, where things will happen, I cannot communicate this in this kind of meeting. It's in several countries, including Sweden, and it's a combination of sort of staff reduction, there are also some expected closures, but I cannot go into more details because I want my personnel to hear it from us, not through this kind of call, if you're okay.

I understand that. Then on industrial heating, you sounded a bit more optimistic, I think, than you did a quarter ago. Can you expand a bit on what you base that on? Is it the current trading in Q4 that is pointing up a bit or what is that optimism based on?

So you heard that. I was trying to play it down a little bit. I mean, it's the numbers actually. On the heating system, which is the more added value part of the industrial heating business, there was a positive uptake in the quarter. But what I'm saying is, I mean, I have all the hopes not a good strategy. So I'm carefully optimistic maybe, but there are small movements in the right direction, but from low levels.

Okay. And then, I mean, do you have any view on, you talked a bit about tariffs in the US before, but Europe's proposed steel safeguard package, I understand that for your more specialized products, a tariff on the raw material doesn't have a massive impact, but for your less specialized products in Europe. Is this something that's going to have an impact, do you think, on you?

Yes, I think it will have a positive impact, how much we are trying to understand. But you're right, I think there are other steel companies in Europe that this is much more important for, the more sort of standardized carbon steel producers. And I think the Commission has taken a wise decision. I think this is good. Because, I mean, it's huge overcapacity in China. They are subsidized and in a way they export unemployment. So I think this is the right thing to do. If it has any impact on us, it's on, I would say, on the more less special part of our portfolio. But I cannot quantify it at this moment.

Yeah, I understand it's difficult to quantify the impact. But could you talk a bit about sort of what's what products perhaps where you are seeing high import pressure. I mean, we can understand.

It's mainly in tube, I would say. The pipe business, for instance, they've been in HMI tubes, but it's mainly in tube.

Okay, understood. And a final, just very quick one. Just to check that I heard you correctly, did you say half of the forecasted FX headwind for Q4 will be mitigated by hedges?

Yes, yes, that's correct.

Okay, perfect. That's estimated, yes. Understood, perfect. In that case, that's all for me, so thank you.

The next question comes from the line of Anders Akerbom from Nordia. Please go ahead.

Yeah, thank you very much for taking my questions. So just to follow up on the previous sort of topics, not discussing specifically the import volumes to the US among your competitors, but rather kind of domestic capacity. Following these tariff announcements, are you seeing any indications of sort of incremental capacity additions in the US?

No, we don't see that. I don't see any of our, at least larger competitors, are moving forward with any kind of investments that I am aware of now.

Okay. And in terms of the cost-out measures, you touched upon this previously, but I'd just like a bit of a clarification in terms of, I mean... Is this predominantly driven by you seeing sort of clear efficiency improvement opportunities or that there's some aspect here as well of kind of positioning for potentially lower demand from some of the key segments than if this would be in tubes, say, or similar?

I'm not sure how I should answer that question. I mean, we've seen a weaker market for some time, especially in Europe. At some point, probably that will come back again. But we cannot trust that we have to take measures. It's more from that point of view. It's more the view we have on the market right now. No speculation. It will go in any direction going forward.

Okay. That makes sense. And finally, on the FX impact that you guided for previously for Q3, I mean, adjusted for this and the final outcome, I guess results were a bit weaker than expected. So could you elaborate a bit on sort of the kind of greater than expected organic under-absorption in Q3? And you mentioned 80 basis points impact in Q4. But what was it that mainly drove this kind of in Q3? Was the production stop longer than expected or from what you said previously?

No, the stop was according to our plan in Q3. And if you remember in Q2, we guided for a quite week in Q3 and it came in roughly as we expected. But the longer summer stop that we refer to in third quarter is that we were doing quite a large investment. And it's the ramp up of that machine that is causing some delays that now is also impacting quarter four.

Okay. Makes sense. Thank you. Thank you for taking my questions. I'll get back in line. Thanks, Anders.

The next question comes from the line of Zubik Igor from DNB Canergy. Please go ahead.

Hello. Thank you, operator. Hi, team. I just have one follow-up question. Can you give us some sort of update on your upcoming projects, the coming years, where we are in terms of timeline and when the projects are expected to start to ramp up if they haven't yet. Thank you.

I'm looking at you, Juan. They are all in line with what we've communicated before. So, for instance, I mean, 2068 or 2026 that we call the nuclear will start up end of next year. I will be in China in a few weeks to do the inauguration of the new tube plant in China. That is two. The other ones are also on time.

Should we expect the Chinese ramp-up to start here in Q1, or how should we think about that?

Yeah, in a way. I mean, when we make a decision like this, we look long-term at the market development, and we have had a fantastic development in China, if we go back. a decade or a little bit less than a decade. And if that would continue, we would run out of capacity. And we expect the market overall to continue to develop well. And then we have to add capacity. That's the background for the decision. Then when machines are in place and we have people running it, then of course the ramp up will depend on the market situation right at that point. But we will have machine capacity by the end of this year and then we can take more orders.

Okay, that's clear. And can I just ask you, have you started already to take on some orders for this new capacity, or are you planning to do that once everything is clear?

That's a detail that I cannot answer, but since I'm going to be there mid-November, I would be surprised if I guess everything is up and in a way running already now, and if there are orders to book, I guess they book them. But Igor, I don't know that detail. Okay, great.

That was all for me. Thank you.

As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from the line of Victor Trostem from Danske. Please, go ahead.

Yes, thank you, Peter, and hello, Göran and team. I had to call in a little bit late, so sorry if you have answered some of these. But firstly, on Cantal and the industrial heating issue, if we can say, outlook. Is that driven by the CapEx side of the model, or is it OpEx driven? That's my first.

I'm not sure I can answer that, but I... Yes, more capex. We see it in STEMICON, we see it in electronics, we see it in glass. How much of that is to add new capacity and some of that, I cannot really judge, but it's clearly in those part of the sub-segments of industrial heating we see improvements.

Okay. And just as a reminder, could you help us, you know, how much of industrial heating is today, capex-driven cells, and how much is open? Is it basically 50-50?

Yeah, that's what we normally judge, yes. Semicon normally is capex-driven, so at least that's what should be like that.

Okay. Fair enough. And then on the currency in in the quarter, and again, sorry if I call in a little bit later, but what's the difference between the transaction and translation impact of 113, basically what you're guided for, and the total currency effect of 41 million? Is that hedges or...?

Yeah, yes, so between that and the total effect, there comes hedges and revaluations of... bank accounts and ARAP.

Okay. And was there any particular division that was more or less impacted?

We had a fairly similar impact on Kantal and Tube, I would say. So, yeah.

Okay. Yeah. Okay. That's clear. And then just finally on my side, on the oil and gas business, I mean, oil prices coming down quite a lot. So just, you know, obviously keep your arrow flat, so to speak. But if you could remind us, you know, where are you in terms of capacity utilization now in that business that's running, you know, at 100%? What's the overall feeling in the industry you know, your five cents on it would be fantastic.

I'm sure that you were there here, Victor, when I went through the arrows. I think overall we judge oil and gas on a good level. I think we're a little bit more optimistic on the umbilical side than on the OCTG side. Both of them have good backlogs. But since you ask the way you ask, I mean, we have actually been running umbilicals not at 100% capacity utilization this year. Then it has not been visible because the pricing has been so good. So from a value point of view, it's been high. And we've, I mean, there's a lot of potential orders to win and we think we're going to be successful. So we are actually planning for a slight increase of pace of umbilicus maybe around end of this year, beginning of next year. So I think we will increase output in umbilicus if things go as we wish. So that's our plan.

Very good caller. Good caller in light of... or what we see in the oil price, et cetera. It doesn't sound like you. You don't sound too concerned.

No, I mean, an oil price, it's always volatile. But if you go back half a year or maybe more, it's been between 60 and 70 and 60. 60 is still a good price. And then we have to remind ourselves, it's not only oil business, it's also gas.

Mm-hmm. Fair point. No, that's super. That's all from me. Thank you very much. Thanks, Victor.

There are no more questions from the phone at this time.

All right. Thank you. Then I think we will conclude this call. Thank you for all your questions and for joining us today. Thank you. Thank you.