Alleima AB (publ)

Hello everyone and a warm welcome to the presentation of Alema's Q4 and full year 2025 results. My name is Frida Adrian and I am Head of Investor Relations. I'm joined by our President and CEO Göran Björkman and our CFO Johan Eriksson. Göran and Johan will take you through the highlights of the quarter and the year 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 your questions through the webcast interface. The presentation materials are available for download at our website, elema.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, over to you, Jara.

Thank you, Frida, and hi, everyone, and thank you for listening. Well, to sum up the full year of 2025, which has been heavily affected by geopolitical tensions, trade barriers, events, all contributed to making it difficult here to navigate overall. The biggest impact we've seen, I mean, it has increased the uncertainty amongst our customers, and investment decisions have been pushed into the future. as the rules of trade has been changing sometimes from one day to another. At the same time, I believe we show some strength despite the turbulent environment. We deliver flat organic revenue growth in the year on total 18.6 billion, and we are clearly benefiting from our diverse exposure and the fact that we have strong positions in very niche markets. A global footprint including local production, the U.S. has also enabled us to cope with the tariffs themselves by passing along the high-cost customers. This means, however, increased costs for our customers, which also have a negative impact on their growth. To continue with some positives, oil and gas remain solid throughout the year, and we are especially positive towards the American business. activity level in nuclear was on high levels and medical continued strong growth trajectory it was end of the year also noted the start of a market turnaround in industrial heating which has been subdued for almost 24 months we noted a weaker market for a more short cycle businesses mainly the industrial and chem petrochem segments and especially in europe and north america but the backlog is short and it is affecting revenues, also something we noted in previous quarters. Asia showed more resilience. Adjusted EBIT amounted to $1.5 billion with a margin of 8.3%, and is impacted by currency effects of $341 million year over year. And if I should exclude FX effect, adjusted EBIT margin for 2025 would have been 9.8%. Given the weak climate, which is difficult for us to control, we have actively been working with what we can control. And in quarter three, we announced a number of targeted measures for increased efficiency and strengthen the company long term. Despite all the turbulence, we deliver a free operating cash flow of 1.1 billion sex, strengthening our balance sheet, which is a prerequisite for us to continue to execute our strategy. are staying with actively working without order booking to maintain price leadership while we proceed according to plan where capacity expansions. For example, the greenfield investment in Penang, Malaysia for the medical segment and the capacity increase for nuclear steam energy tubes. Both these initiatives are expected to start deliveries by end of this year, 2026. Lastly, the board proposed a dividend of 250 SEK per share corresponding to 71% of net profits, adjustable method price effects, and an increase of 9% compared to last year. So let's take a look at the financial targets. I would say in general, we are performing in line with our targets. Starting with organic growth, we have a target to deliver profitable organic revenue growth in line with or above growth in targeted end markets over a business cycle. We grew 0% organically in 2025. I think it's important to remind us that we don't want to grow in all pockets or serviceable, addressable markets. We are aiming for growth in attractive niches to improve our mix long-term. This spans across most of our customer segments where, I mean, it's a bit simplified, but the industrial segment is not a segment where we want to go in line with the market. That's profitability in general is lower in this segment. Over the four years we've had the financial target, total organic growth has been 5% on average, and more than 7% if I exclude the industrial segment. Looking at earnings, margin of 8.3 for the year, average of 9.5 for the four-year year we had the target, and target is to be above 9% over the cycle. And capital structure, net debt equity of minus 0.05. And please note that the 0.3 times is the maximum targets. And dividend, as I just said, the board proposed a dividend of 250 per share, corresponding to payout ratio of 71% of net profit adjusted for net price effects, and an average over the four-year period of 43%. So let's zoom in on the quarter and look at the highlights for the fourth quarter. We are, as I've said for the full year, we experienced a similar market situation as we did in quarter three with a lot of so-called wait-and-see attitude among customers. And it is affecting especially the petrochem segment and the industrial segment. Also, the OCTG business declined back on high comparables. and order intake rolling 12 declined 4% organically. On the brightest side, our umbilical business within oil and gas, as well as medical segment, continued their strong momentum, and while industrial heating continued to show signs of market recovery. Revenues declined organically 5% year-over-year, stemming from poor market in the aforementioned industrial and competitive segments, where order intake affects revenue. Parts of the oil and gas and industrial business were also hit by the delayed ramp-up of the maintenance top in Q3. And we also noted some timing effects in nuclear affecting us negatively. The adjusted EBIT margin declined year-over-year to 8.1%. And, of course, this is not satisfying the development. But it's heavily impacted by a significant FX headwind, diluting the margin with almost 300 basis points, indicating we would be around 11% excluding FX. This is, of course, not an excuse, but it is the main reason for the negative developments. With that said, we are acting and adjusting to current market conditions. In quarter three, we announced a number of targeted measures to further strengthen our operation efficiency and long-term competitiveness. And all of these actions are progressing according to plan so far. Our balance sheet is strong, and we continue to generate a healthy cash flow, enabling us to stay with the strategy also in downturns. And during the quarter, we inaugurated a new production line in Xinjiang, China, further strengthening our local offering of premium tubular products in the region. To give you some more details on the efficiency actions we announced in quarter three and a few reminders of what we will achieve. Firstly, we are consolidating a number of smaller units in Americas and in Europe, where we see the opportunities to better leverage our global footprint. Secondly, we are reducing staff. The permanent staff reductions are mainly targeted towards white-collar. And thirdly, we are adjusting our production capacity according to current market conditions. This will result in annual cost savings of approximately $200 million, with roughly 75% will be permanent savings and 25% more volume-related, all at one of costs of roughly $400 million, of which we book $342 million in Q4. An expected run rate is around 60% savings achieved in the end of Q2 and 100% by end of the year. Moving to sustainability, as safety always is a top priority dilemma, we have for a long time continuously and actively implemented measures to make our workplaces more safe. The developments continue to trend in the right direction. The number of accidents are on record low levels. Shared recycled steel remains high and remains over 80%, both on a rolling 12-month basis and year-over-year, which I think is a high share given the product mix, where we have more and more high-nickel products. Our CO2 emissions are steadily decreasing, even though we noted a slight uptick in the quarter, but we are in line with our targets, and the target is to reduce by 50% from the year 2019 to 2030. And our sustainable product portfolio through almost 25% rolling 12-month basis, which is also an all-time high level. So let's look a little bit deeper into the market development. I mean, the market sentiment remains mixed and, of course, affected by the ongoing macroeconomic uncertainty. Demand stayed weak in Europe and in North America, while Asia showed stronger resilience. And we continue to see solid momentum in several key segments. And I will walk you through the development in each segment, starting with oil and gas. Overall, our view on the underlying demand is solid. More so for Ambelicus, where the product list of upcoming tenders and potential orders remains strong. For OCGG, the outlook is a bit more uncertain, where we see that some projects have pushed a bit forward. where we, to some extent, also are negatively affected by the effects from a competitive point of view. Industrial, the European demand is still weak on low-value ad products. In North America, we noted an increase, but from really low levels, and much of this should be tariff-related effects. Can petrol come? Europe continues to be on low levels, same with North America. Well, Asia is better. Industrial heating, in quarter three, we noted a positive growth from low levels, and that trend has continued into quarter four, and especially in Asia, and it's for sub-segments like electronics, semiconductors, and glass. Consumer demand is still on a good level, mainly driven by the white goods industry in this subdivision. Medical market remains strong, driven by multiple factors. I think we have a solid momentum across the product portfolio and the integration of Endox is going according to plan. Transportation, solid demand driven by titanium fume for aerospace, which is strong. Oil automotive worsened. Mining construction, flat underlying demand year over year. A nuclear really high activity, including also discussion on next generation reactors, but one should remember this is an industry with naturally really long lead times. Hydrogen renewable energy segment remains mixed, but overall negative, and I would say especially in the hydrogen-related businesses. Order intake and revenue, order intake rolling 12 months to 17.7 billion SEC with a negative organic growth of 4%, mainly coming from the OCDGs and oil and gas segment, as well as a negative development in industrial. And looking at it from a geographical point of view, Europe and North America, while Asia remains in better levels. Medical, industrial heating grew, and we continue to book good and in the oil and gas segment. Revenues amounts to 4.5 billion with a negative organic growth of 5%. St. Harlan Street grew and tube declined, where tube was affected by the weaker market in Europe and North America, as well as a delayed ramp-up after the maintenance stop. Biggest positive driver for the group came from the medical segment, where rolling 12 months booked a bill is 95%. So let's take a look at the earnings. Adjusted EBIT amounted to 364 million with a margin of 8.1%. Johan will dive into the EBIT bridge later on, but overall I would say that there are some main reasons for the weaker results. Significant FX headwind impacted margins with 290 basis points, which is difficult to mitigate in the short term. The weaker market is affecting special volumes in industrial and petrochem. This results in reduced cross-profit, especially from the more profitable camp petrogram segment, but also lower absorption in some of our factories. And the delayed ramp also affecting both deliveries and absorption. Pre-operating cash flow of 422 million, higher than last year, impacted by changes in working caps and lower capex. The year one will provide more color on this as well. Then we take a look at the division starting with TUBE. TUBE noted organic growth of minus 7% for the role in a 12-month period. Can petrochemical and industrial in Europe are the main reasons for the development? North America continued low levels and Asia on okay levels. Oil intake was also affected by the OCDG business with oil and gas on high comparables. Back to the nuclear and with oil and gas remain solid. And due to the more positive market in Umbil, because we are now increasing the output pace in the beginning of this year, 2026. Organic revenue growth of minus 11%, mainly driven by a negative development in short cycle business due to weaker markets. Production limitations due to delayed ramp-up effect in industrial and oil and gas, as well as some timing effects in nuclear. Book to build was 93%, rolling 12%. Just an EBIT on 8.4%, affected by already mentioned variables. The weaker markets FX headwind and delayed ramp-up. The FX headwind was 97 million, which implies an exclude in FX. The EBIT margin would have been 11.1%. Cantal. Organic order intake growth for the rolling 12-month period of 9%. Medical is continuing on a strong trajectory and also nice to see that we now again are growing industrial heating, even if it's still from quite low levels. Applications like ceramic elements for electronics, including semiconductors and glass industry, especially in Asia, are strong. And it's with these applications our announced investments in both UK and Japan are related to. Revenues grew organically by 10%, driven by both medical and industrial heating. Book-to-bill grew to 105% rolling 12. Just an even margin was 16.3% in the quarter and 19.7% excluding FX. And this is despite the rather low level volumes we have in industrial heating. Moving to STRIP, STRIP noted organic order intake of minus 11 on the rolling 12-month basis, but the numbers are not really telling the whole truth, as STRIP in quarter four last year received a large order for pre-coated STRIP steel, which interferes then with the comparables. The development for the division's most important product, the compressor valve steel, was positive. Organic revenue growth of 20% in the quarter driven by the consumer, but also the renewable hydrogen segment. Book-to-bill rolling 12, 91%, which is due to some timing effects from orders. I mean, the books are annual orders, and some of that will move from quarter four into quarter one. Just an even margin improves to 9.5%. Despite the occurrence ahead when excluding FX, it would have been 11.5%. So a nice increase from the strict division if we look back a couple of quarters. We mention quite often that with a strong balance sheet that we can stay with our growth initiatives also in more challenging times. To give a short update on what is going on, we show this slide. which comes from the capital markets that we had in November. So to give some examples of what we expect to happen during 2026. With investments we do in the UK and US, we are increasing our capacity of products in silicon carbon, which is a product that has shown growth also during the time industrial heating had a market headwind. And the investment in US will also allow us to offer shorter lead times on the American market. Additional vacuum and melting capacity will allow us to grow more in advanced grades, very often for applications in segments like aerospace and medical. And we've been, during 2026, start ramping up the increased capacity for industrial heating in Japan, which will support the steady growth we've had in that market, especially for subsegments electronics, semicolon and glass. End of the year, we will start ramping up the increased capacity for nuclear steam generator tubes, And of course, very satisfactory that we already today have a good backlog for this investment. And also end of the year, we will ramp up the Malaysian unit for medical wire. And with that, I'll leave over to you. You want to dig deeper into the financials.

Thank you, Jara. And before we move into the details on this slide, I just want to comment on the targeted measures that Göran mentioned and that we communicated in our previous report. Of the expected items affecting comparability cost of approximately 400 million, we have charged 342 million in the P&L in the fourth quarter, and the remainder will come in 2026. and the cash impact which is roughly half of the 400 million will be quite evenly distributed across the quarters during 2026 and for the savings we've realized 10 million already in this quarter in quarter four 2025 and we believe that we will be at 60 percent of the savings run rate at end of quarter two and have the full run rate effect realized from quarter four of 2026. um so now let's talk through the bridge to the right order intake for the rolling 12-month period amounted to 17.7 billion corresponding to an organic decline of four percent total growth was minus nine percent impacted by currency and alloy effects with a stronger sake and a lower metal prices accounting for six percentage points Quarterly revenues reached 4.4 billion with a negative organic growth of 5%, and that includes a positive 90 basis points from U.S. tariffs. The revenues were held back by weak market conditions in Europe and North America, as well as delayed ramp-up affecting parts of the oil and gas and industrial segments. Currency effects, primarily from a stronger stake against the U.S. dollar, had a negative impact of 6%. On the alloys, alloy effect impacted by minus 2 on quarterly revenues. Based on metal prices and currencies at the end of December, we see a continued negative alloy effect in the coming quarter, both on rolling 12-month order intake at minus 2 and quarterly revenues at minus 1. Here it's worth noting that the recent trend of increasing nickel prices can of course have an opposite effect, but that on the other hand is offset by the trend of a stronger silk. So, well, making those two notes as well. On structure, we have some positive contribution from MDOX, although here it's rounded off to zero. And the integration is going according to plan. And this was the last quarter that MDOX affected comparability. And I'll get back to adjusted EBIT in a short while. But the reported EBIT declined to 15 million. And here we see the effects from the items affecting comparability of 342 million. And we are also impacted by the lower revenues and the delayed ramp up. And net financial items for the quarter amounted to minus 1 million compared to minus 22 million last year, mainly driven by valuation of derivatives. Normalized tax rate ended up at 24.9 for the quarter, while the reported tax rate amounted to 185.5. And that is, of course, affected by some non-deductibles, and that's amplified by the low reported profit. Free operating cash flow ended up at 522 million SIC in the quarter, which I'll get back to in a coming slide. And finally, adjusted EPS for the quarter ended up at 1.06. SEC impacted negatively from the lower adjusted EBIT. So looking at the bridge and starting with the graph to the left showing adjusted EBIT bridge for the quarter, it decreased 220 million compared to last year. The biggest variable here is being a significant FX headwind. as Göran pointed out. But of course also a negative organic development coming from absorption effects, both from the mentioned weaker market and from the delayed ramp up. But let me give you some more flavor on the FX effect by putting it basically into three buckets. First we have the translation of local results, so profits made in other currencies than SEK. Here we have had almost minus 40 million. Secondly, we have the transaction effect, so transactions in other currencies than in foreign currencies. And the transaction effects are netted off by some hedges, almost 40 percent was netted off by hedges, and ended up at minus 90 million, nine zeros. And finally, we had minus 35 million in bridge effects from revaluations of open position in foreign currency at the end of the quarter. And we got minus 23 million of that in the P&L for this quarter. And for the same quarter last year, it was plus 12%. And this minus 23 is due to the strengthening of the CX late in the quarter. And this is something that we actually could have done a bit better, I think. And on a year-on-year comparison, then, excluding the FX margin, we would have been at 11% EBIT margin. The organic development was particularly noticeable in tube, while all three divisions are impacted by FX, and that in particular for Cantal. Structure refers to NDOCS, and that is reported in Cantal. The operating leverage in the quarter was minus 24%, which is quite decent level given the challenges that we've mentioned. And for the full year that you have on the right-hand side, The development is mainly explained by FX headwind, but also the weaker short-cycle business and the delayed ramp-up affecting revenues and earnings, where margin declines in total from 9.9 to 8.3, but would have been 9.8 if we exclude the FX effect. Moving over then to the balance sheet, the net working capital decreased in absolute terms year over year, mainly due to volume and currency effects, but increased as a percentage of revenues to 35.5 due to lower quarterly sales. To continue on inventory, they are lower in value both sequentially, which is per normal seasonality, and year over year, coming from both lower volumes in inventory and lower metal prices, and that's influenced by currency as well. Capital employed excluding cash decreased year-over-year to 15.7 billion, mainly driven by lower net working capital. And the return on capital employed excluding cash which is based on reported operating profit, including then metal prices and items affecting comparability, just to be clear, was 5.8% for the rolling 12-month period, down from 9.5% last year, coming from the lower reported operating profit due to the aforementioned reasons. Looking at cash flow, the free operating cash flow amounted to $422 million. which is higher than last year and that comes mainly from the lower networking capital and a slightly lower capex than compared to last year the non-cash items that typically refers to for example provisional provision releases in the operating result that have no cash flow impact and in this case it's offsetting the item's effect and comparability that we have in the EBITDA positive impact from lower working capital, mainly from lower accounts receivable and inventory. And on the capex side, as I said, we had a lower capex spend in this quarter compared to the quite high quarter last year. And we were expecting to be lower than the comparable quarter, but we also had some project delays and some positive effect from sales of asset in this quarter. And the amortization of lease liabilities is slightly more negative this year. If we look on the graph on the right-hand side, we can note a healthy cash flow from the last two years while running more growth investment, like Jørgen pointed out, and which I might remind you that these investments are in segments that are more profitable and less capital in terms and will start to yield in the coming years. So 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 0.05 times. Net pension liabilities decreased to 589 million from last year's 820, mainly as a result of higher discount rates. and the leasing liabilities was on par with last year. So our cash position continues to be strong, and we have a net cash position of $864 million, which will come in handy as the board proposed a dividend of $2.56 per share to the AGM in April. So looking at the guidance we gave ahead of the quarter, FX for the full year came out at 1.1 billion. and the pull year guidance was 1.2. Currency transaction and translation effects came out at 182, minus 182 million in the quarter, where we guided for minus 150. And the total bridge effects, which I alluded to earlier, including then hedges and revaluations, was minus 163. And the main reasons for the fairly high effects is, of course, the stronger SEC and the revaluation effects due to SEC movements late in the quarter. And metal prices affected us negatively with 8 million, which is very close to the neutral effect we guided for. And normalized tax rates came out at 23.9 for the full year, well in line with the guidance of 23 to 25%. So looking at the guidance for quarter one and full year 2026, and I feel I need to comment that a few of these key metrics are quite volatile at the moment, which makes it difficult to give guidance. But we will continue to give it based on the rates and prices at the closing of the latest quarter. So please have that in mind. So the full year capex we maintain at the level that we came out of 2025 with, meaning 1.1 billion also for 2026. And in that we deliver on the projects of steam generated tubing capacity increase in Sandviken as well as industrial heating capacity in Japan and medical capacity in Malaysia. On the currency for Q1 2026, based on the rates per end of 2025, the transaction and translation effects are estimated to minus 240 million on the back of the stronger SINIC. On the metal price side, also at the end of December, metal prices and currency rate, particularly nickel and U.S. dollars. We have anticipated actually a negative effect of 50 million for quarter one. Here it's worth reminding about the dynamics that the price increase for nickel, or even for molybdenum or chromium, but nickel being the most significant one, over time this leads to positive metal price effects, so a price increase in those. While a stronger CEQ, which we are seeing now against the US dollar, has the opposite effect, so please bear that in mind. So tax rate for the full year 2026, we expect the normalized tax to stay in the range of 23 to 25%, just like we had said before. So by that, I hand back to you, Göran, for outlook and summary.

Thank you, Johan. So outlook for the first quarter. I mean, the general economic environment was continuing uncertain during the fourth quarter. And also given the recent development, we don't see that that will change during quarter one. But we maintain a solid backlog in several key segments, which provides good visibility into near-term deliveries, mainly in umbilicals in oil and gas, nuclear in the medical. But we also see challenges in the more short cycle across from second, particularly in Europe and North America, which already have affected and expected to continue to affect short-term deliveries. We expect some dilution effects related to delayed ramp-up to affect also first quarter profitability, even though that equipment performs much better in the end of quarter four, but still some effects also in quarter one. Product mixes anticipated remain broadly in line with the fourth quarter. And as Johan just explained, we expect a significant currency headwind also in the first quarter. And finally, cash flow tends to be lower in the first half to the second half of the year. Which moves us into the summary. I mean, we are affected by the continued uncertainty stemming from geopolitical turbulence. Customers are postponing their investment decisions. But in all of these turbines, I believe we are clearly benefiting from the worst exposure in global footprint. Revenues were flat organically for the full year 2025, but the short cycle business was weak, mainly for petrochemical and industrial segments, while segments like medical, nuclear, parts oil and gas remained strong. Earnings were affected by significant effects, such as absorption effects from weaker markets, as well as the delayed ramp-up. Despite this being a difficulty to navigate, it is a strength that we continue to generate healthy cash flows. That combined with our strong balance sheet creates foundation for continuous threat execution, and I'm confident that will make Alema more resilient and more profitable company long-term. And with that, I hand it back to you, Frida.

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

Thank you very much. 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. Our first question comes from Adrian Gilani with ABG. Please go ahead.

Yes, hello. A couple of effects I wanted to ask about regarding Q1 specifically. First of all, you mentioned the ramp-up delays after maintenance stops. If I remember correctly, you had previously guided that those stops would have 80 basis point margin impact in Q4. Are you able to give some similar quantifying metrics for Q1 as to how much that will impact?

I will not give you a number, but I will try to explain the situation of why that is a bit difficult. Yeah, it's right that we gave you a guidance on 80 basis point for the quarter four. I think we came in Maybe in line with that, I think maybe even a little bit worse. But it's one of the biggest impacts it has is that it has a negative absorption effect in some of the factories. And absorption effect, it's sometimes difficult to see if it comes from this problem or that we in some of the cases have lower volumes due to the market. So it's a combined absorption effect. Sorry, you won't have a number, but I would say that it is at least 50% of what it really happened in quarter four, because the machine is working much better now, but not perfectly.

Okay, thanks. That's helpful. And then also on Q1 and the FX guidance, which I appreciate is especially hard to give now, but 240 at Q4 and rates. Again, I remember you said that for Q4, you had roughly half of that being hedged, but is that the case going into Q1 as well, that the 240 is excluding hedges? So on the end of Q4 rates, it would be 120 actual effect. Is that fair? Yeah.

it's uh it's no it's it's not that uh by hedge effects i mean the hedge effect sort of is falling off as as we uh quarter by quarter so so um and as if you recall what i i said when i tried to explain the the effects then on the transaction side we were able to offset in quarter four, it ended up to be about 40% of the transaction effects we managed to offset. And I think that effect sort of falls off for every quarter.

Okay, understood. Then on a more general note, I mean, two orders continue to sort of come down and previously you've been fairly confident that you can that you can still or that the backlog in oil and gas has supported solid growth ahead despite that would you say that that's the case still or is the oil and gas backlog starting to become thinner now it's a yes on both questions I think umbilical we are very positive on uh

not that the backlog is extremist between two and three quarters uh but that also makes us flexible to book more orders and we're at least so positive for the rest of the year on americans that we are increasing the production pace and the output pace now in the beginning of the year uh so confident there ocgg we have backlog maybe three quarters uh I think the order booking is a little bit slower than we want, so there might be a risk for an OCG end of the year, but there are still some big contracts out there. I mentioned in my comments I mean, the main competitor cells have their cost in Japanese gen. So, of course, that has an impact on sort of our competitiveness in the OCTG.

Okay. Understood. And one final question on Cantal regarding industrial heating, where you sound more positive on the outlook, and the arrow even points up now in your arrow slide. What has really changed there? Because overall industrial activity remains fairly subdued. Is it a specific end market driving that improvement?

Yeah, I think it's... Good reflection. I think, first of all, it's both end markets, but it's also geographical. It's really Asia supporting this. Europe is still soft, and it is segments like electronics and glass. Glass is also very much related to electronics. So it's those segments, and it's mainly Asia. Okay, understood.

In that case, that's all for me, so thank you.

Our next question comes from Caleb Soliman with SEB. Please go ahead.

Hi guys, thank you. Just a few questions for me. You mentioned that timing-related effects in nuclear contributed negatively during this quarter and that some of that should sort of spill into Q1 instead. Can you give us a rough figure of how big that effect should be?

I'm looking at you, Juan, if he has the numbers, but I can start to explain what it is, because we are so positive in nuclear, and then we come and say it's negative timing effects. Of course, that could always happen, since this is normally large contracts, and they don't sort of invoice every week. But I think the main effect we saw in Q4 is that in some cases, in some contracts, because this is a very long internal value chain, we have the possibility to invoice before the tubes are ready for shipping. So we have some steps in the value chain where we can invoice. And that we had such a contract last year, we didn't have that this year. So there was some invoicing from intermediate tubes last year that we don't have this year. That's the main reason.

Okay, that's clear. Thank you. And maybe another question on the oil and gas part. You said some of the outcome during this quarter was sort of due to production limitations from the delayed ramp-up. Can you maybe split how much was due to that versus the sort of overall weakness within OCTG, meaning how much should we sort of extrapolate going forward?

I think all the impact we saw in 44 was related to the delayed ramp-up because we have... We had to load a book for two or three quarters. So it was a lack of supply of extruded hollows to the cold working operations. So all impact came from that.

Okay, thank you. And is there anything you can say about the sort of timeline on reopening the Sandviken plant and how soon can we sort of expect to see any sort of contribution from the increased nuclear capacity there?

We said end of the year. I think what sort of stipulates the timing is lead times of equipment. I was there Walking through the factory a couple of weeks before the end of the year, and now I think everything is up. Most things are supplied, and now it starts to build up. So I don't think we're changing the timing. It will be end of the year. If any of the production could start a little bit earlier, I think that's too soon to conclude. But we do what we can to start as soon as possible.

Great. And just one last one. You very briefly touched on pricing, how potential price hikes and how that sort of impacts your customers. Can you maybe comment on how much, if any, of the sort of order decrease was pricing related?

No, I cannot do that. That's a good question, but that would be to speculate too much. But I think... Think about it. I think I've been quite transparent before, at least when it comes to the tube flow. And of course, this depends on what grade it is. But on a cold working product, we've said that price increases needed is around 10 to 15% to compensate for the 50% tax, because it is a tax we pay on the imported bar. And of course, 10 to 15% price increase That's a lot, but I cannot speculate the percentage how much that impacted. Sorry. Okay. Thank you.

That's all from me.

The next question comes from Anders Akerblom with Nordea. Please go ahead.

Yes. Hello. Thank you. So, firstly, I was wondering about just high level. I mean, previously you've mentioned maintaining order booking discipline several times. now with book to bell below 0.9 and a quarter. Could you quantify a bit more how much volume you're actually walking away from to preserve pricing?

I understand how you ask the question, Anders. I cannot tell you that because you never know until... Because if we lower prices, maybe the others also lower prices. You don't know where you end up. So I don't want to speculate on that. But of course, we can put our funds into the steel plot. I think I would say right now we are... I mean, now it's been down for some while. Some of the factories are running on a bit lower volumes. This is the time when it hurts the most to have this strategy. But if it starts to move in the other direction, we have short backlog, prices will be better. So I think now it's sort of very important to stay with the strategy we have. Also saying, of course, this is not binary. It's, of course, a book some order sometime. But I cannot give you a number, but I can say we're running... I don't have the latest updates of looking at the table. I think we communicated before that we're running roughly the steel plant at 20% lower volumes than we did in 2019. That does not imply that we could book 20% more. But I think, as I said, this is right now is when it hurts the most. But now we need to be cool and keep on our strategy. We don't want to be up. price wars to get some low value add products.

No, makes sense. Makes sense. I really appreciate that answer. Makes sense. I would also like to know a bit with regards to then obviously industrial and chemical and petrochemical. Could you share anything in terms of how confidently you are in sort of a demand recovery trajectory in 2026 for these markets?

What I just said was that, I mean, Sometimes you could argue if it's the segments or the sort of geographical market. It's these segments that hurts the most in Europe and North America would claim that it's mainly Europe that is weak and that industrial investments are sort of lagging. That is, I think, what is happening. uh and i think even even since quarter two we have seen that sort of order intake is low and it affects revenue and it happens again and it would have been nice to say i think those times are over they are not uh we will see this also in quarter one then of course mathematically we will start to sort of meet lower comparables. But that is more mathematical than sort of dollars. Yeah. I don't see a turnaround, short term.

Right. And I appreciate that. I didn't mean that you had to repeat yourself. I was more... wondering about, because you did not really touch previously upon the CBAM or tariffs that the EU is implementing. I mean, some in the market are discussing that. What's your view of that for your business?

I would say that overall, I think, EU is taking a good decision, even though we are both a company and a country that prefer sort of free trade. But you cannot sort of stay with that politics if others don't do that. So I think it's good that Europe is taking that decision. That is sort of to... secure that we will have a steel industry in europe with that said i think it's much more related to let me call it bulk steel industry in europe swedish steel industry has since a pretty long time become very more specialized so i think we are less impacted in a positive way than others with that said i think we also have some uh more some of the more low added value products for instance in tube i think on the margin it will be positive for them but it's more for for sort of the other part of the european steel industry but for europe i think it's a wise decision but you don't want to quantify that impact for for your part now uh i can i can guarantee you that i've asked you the exact same question and they cannot quantify it But it's not big. Okay.

Okay. Thank you. That's all the questions from my end. Thank you.

The last question comes from Igor with D&B. Please go ahead.

Thank you. First of all, I just want to confirm. Did you, Göran, said that the lead times for the umbilical business is two to three quarters or two to three months?

Backlog is, maybe I said that was a mistake. It's two to three quarters. Backlog.

Okay, so it's two to three backlogs for umbilical and three quarters for the OCTG business.

Yes.

Okay, thank you. And then I just want to, if you can give us some sort of, you know, to better understand the tube division that declined recently. Yeah, 11% organic clean revenues, and order intake was down 7%. Were there any larger orders in Q4 last year, or can you say anything how we should think about that, the coming workers as well?

I'll say that there are some, I'll say mainly that there are some tough comparables on OCTG. There's tough comparables on nuclear, because they booked steam-generated tubes for 2024, and then the impact by the weaker market, and especially Europe, but also North America.

Okay. Okay. I see. And in Q1, yeah, this year or last year, are there any, should we take into account any significant or large orders there as well, or how should we think about that?

Not sure we have any, not sure. Yeah, we had nuclear in the quarter one last year. Yeah, we had a big nuclear order quarter one 2025.

Okay. Yes, thank you.

And in terms of... It was over 500 million, that order.

Okay, thank you. And in terms of chemical and petrochemical, do you have any view when this segment is starting to, you know, have easier or lower comparables?

What's that would start to mean, lower comparables? You too. I think mathematically it will start to look better, but I think we need to see a turnaround on industrial investments in Europe and also in North America. Okay.

Thank you. That was all for me.

Do we have any further questions?

We don't have any further questions over the phone.

Thank you very much. Thank you all for calling in, and thank you for very good questions. This concludes the call. Thank you very much, and have a good day.

Thank you. Bye-bye. Thank you.