Alleima AB (publ)

Good day and thank you for standing by. Welcome to the OLEMA's Q3 Interim Report 2026 Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. If you join using device audio, please click on the hand raise icon on your screen. To withdraw your question, please press star one, one again on your telephone or click on the hand lowered icon. Please also note that today's conference will be recorded. I would now like to hand the conference over to your first speaker, Freda Adrian, Head of Investor Relations. Please go ahead.

Thank you very much and hello everyone and a warm welcome to the presentation of Alema's third quarter 2026 results. My name is Frida Adrian, I'm head of investor relations and joining me today are our president and CEO Göran Björkman and our CFO Johan Eriksson. Göran and Johan will walk you through the results and the key highlights of the quarter and following the presentation we will open up a Q&A session and you can ask questions via the conference call just as our operator instructed. The presentation materials will be available to download at aleima.com. And as always, safety is our top priority. Please take a moment to ensure that you're familiar with the safety procedures at your current location. And with that, I will hand over to you, Jara.

Thank you, Frida. And hello, everyone. And thank you for joining us today. So starting with the highlights for the third quarter, and we start with the order intake, which declined organically by 1% on a rolling 12-month basis. The timing of the project business is an important factor in understanding our third quarter performance. As you know, we operate in several project-related segments. Order intake can vary significantly between quarters, and we therefore prefer to assess it externally on a 12-month basis rather than isolated quarters, and that is to get a clearer picture of the underlying development. So on that basis, declining order intake reflected weaker development in the OCTG, in industrial and in the nuclear segment, while umbilicals, industrial heating, medical, and transportation maintained solid momentum. Overall, market conditions have remained broadly unchanged since quarter two, and some more of the timing effect. And that's also reflected in a couple of the good orders booked in both umbilicals and nuclear now in October. Our OCG business has been and still is affected what is ongoing in the Middle East. Our customer have reduced its pace in the region where our C-array tubes are needed, while our specific niche on that market has pretty much come to a standstill. Revenues declined 2% organically driven by the low pace of OCG as well as lower activity in the chem, petrochem segment in China, which we flagged for in quarter two. Also on revenues, industrial heating and medical showcased strong growth. Looking at earnings, negative impact from the volume shortfall related OCG, the lower invoicing in chem, petrochem in China, as well as a slower than planned production pace of steam generated tubes in tube 12. I will get back to that later. But we're again very pleased with the development in Kantal, who managed to maintain its solid performance in quarter two, also now in quarter three. And the targeted measures we communicated a year ago yielded some 40 million, that is according to plan. So I'm also pleased that we during the quarter announced the next expansion phase of our tube site in Messana in India, in investment of about 220 million. of course made possible by our strong financial position, we will increase capacity and we will continue to add new capabilities, further strengthening our already strong position in that region. And on that theme, we look forward to, at the end of DRB, increasing capacity for industrial heating via our expansion at our existing site in Sakura in Japan. Moving over to sustainability update, where we continue to generate a positive impact through our offers. On a rolling 12 basis, our sustainable product portfolio accounted for 27% of total revenue during the third quarter, up on 23.8. That is primarily driven by growth in industrial heating and in the medical segments. As always, safety remains our top priority. The total recorded in-year frequency rate increased to 5.4 on rolling 12 compared to 5.3, while the quarterly rate increased to 6.9 from 5.9. This is, of course, not a positive development and not good since every incident is one too many. The shale recycled steel increased to 82.3 percent on rolling 12 from 80.7. In the third quarter, it reached 84 percent and that is supported by a product mix with a lower share of high nickel steel. And CO2 emissions increased by 7% on rolling 12 bases. However, quarterly emissions declined 5%, mainly driven by lower energy use in our production. So let's look at the market development. Well, the market is volatile. We have wars, trade policy changes, energy prices, And as of right now, there's no clear end in sight. This is impacting us in several ways, and the impact on OCDG being the most obvious one. But I will take you through each segment, starting with oil and gas. And in short, we can say umbilical is still very strong, and the opposite can be said about OCDG, where it still looks rough. Industrial, Europe is weak. Asia and North America improved somewhat, but from low levels. Kemper to Kem Europe and North America grew from low levels, Asia more flat. Industrial heating, Asia and North America continued to drive growth. Europe is still on the lower side, and it's still sub-segments like electronics and semiconductors that are the main drivers. Consumer, flat on an okay level, while medical, strong momentum, no signs whatsoever on a slowdown. Transportation, aerospace and space did strong, marine somewhat slower, and automotive weak. and mining construction stable demand overall. Nuclear, that is project-based and therefore uneven order intake by nature. And we booked several orders now at the beginning of October, both for cladding, nuclear tube and pipe, and also for steam generators. How renewable energy is stable on low levels. So let's discuss a little about the Middle East. I mean, that crisis has now been ongoing for eight months. and the OCDG market remains really challenging with the great majority of our OCDG volumes exposed to the Middle East area. Prolonged disruption has resulted in few well completions and consequently lower consumption of OCDG tubing, contributing to elevated upstream inventories globally. And this is, of course, a challenge for us as for other companies active in the OCDG market in the Middle East. LOWER VOLUMES HAD AN INCREASING IMPACT ON THE TUBE DIVISION'S EARNINGS DURING THE QUARTER, RESULTING IN A GREATER UNDER ABSORPTION OF FIXED COSTS. AND THE VOLUME DECLINES REDUCED CAPACITY UTILIZATION IN THE LARGE DIAMETER PRODUCTION FLOWS IN SANDVIKEN, PARTICULARLY IN THE LARGE PILIGAMINS, BUT ALSO IN THE LARGE EXTRUSION PRESS. and as these tubes are large diameter representing also substantial tonnage, the decline also has negative effect on the primary production flow. Let's say that the situation remains unstable and this uncertainty is negative for the market as it affects visibility, customer sentiment, and decision making. And we have said it before, the OCG business is capex driven. The impact on other businesses remains limited and we of course close the monitoring volatility in energy prices and also on shipping costs. So moving over to order intake and revenues. Order intake rolling 12 is still around 18 billion, however down 1% organically. Negatively affected by the weak OECD market. and a canceled order of 250 million that were booked in quarter two, now reported as negative order intake in quarter three. And the lower order intake in industrial nuclear also affected negatively. Industrial heating, medical, and transportation contributed positively, and also chem, petrochem was growing, but from low levels. Revenue declined 2% organically, where the weak OCDG and chem, petrochem in China were the biggest factors, while industrial heating and medical were positive. Book-to-bill rolling 12.99%. Moving to earnings. Adjusted EBIT amounted to 202 million with a margin of 4.8%, which although it's in line with last year, we should be honest and say that this is a disappointing weak quarter. We are, of course, affected by the OCG business with loss of volume bringing under-absorption effects. This is something external, which is difficult to mitigate fully short-term. But there are also things that we could have done better. The slower than anticipated production pace of steam-generated tubes in the quarter is one thing. Let me be clear, this is related to Tuber 2012, so it has nothing to do with the mill that we now are ramping up. And it's related to one specific order of a tube dimension we normally don't produce. It's an unusual large size. which made us slower than we planned. And this is something we should have done, and also will do better moving forward. In terms of positives, Cantal stands out once again. Volumes in industrial heating have returned, and given the mitigating action they took in the downturn, now they get the solid leverage. On a group level, the target measures yielded some 40 million in the quarter. Mineral effects were 3 million year-over-year. and free operating cash flow of 373 million, which you are willing to get back to. So let's look at the division performance during the quarter, starting with Tuber. Tuber is still a mixed picture where umbilicals in oil and gas is still strong. Also titanium tubing for aerospace and space within the transportation segment is solid. The main issue is the aforementioned OCG business in all aspects. affecting order intake, revenues, and earnings. Some bright spots in the Camp Petrochem segment, but I think it's too early yet to see since the volumes are low. Rolling 12 order intake declined 8% affected by OCDG and nuclear, but we're happy to see that orders we received now in the beginning of October further strengthen our view on the nuclear segment going forward. Revenues declined 6% organically mainly rated OCDGs, but also Camp Petrochem in China. book-to-bill rolling 12 on 96%. Earnings were affected negatively by three major variables. Underabsorption stemming from the OCGGs, slower than planned production of steam generated tubes in the old mill, as well as ramp-up costs related to the new mill. And ramp-ups will not be material in Q4. And also weaker tube in China, which we still believe is a temporary slowdown. And this offsets the positive effects from the targeted measures, as well as the strong performance in umbilicals. Tuber and FX had the win of 7 million year over year. So let's move to Cantal. Cantal delivered yet another strong quarter, double-digit top-line growth. And I would like once again to take the opportunity to congratulate and thank the entire global Cantal team for a very well job done. Thank you. Rolling 12 order intake grew organically with 18% when medical industrial heating segments were the main drivers. Revenues grew 10% organically also on the back of medical and industrial heating. Strong performance in North America at the APEC regions. Rolling 12 booked a bill on 109%. And the adjusted EBIT margin 19.4 is a solid level supported by the target measures. Higher volumes in industrial heating as well as the continued solid development in medical. FX had a positive effect of 5 million year-over-year. And as DRIP had another challenging quarter and has continued to work to strengthen its cost position with ongoing mitigation actions. Some of those actions are related to investments in increased productivity, so that one needs to understand takes some time. Rolling 12 order intake declined organically with 15% with negative development in all segments, but especially within the hydrogen business. Revenues declined 10% organically, negatively impacted by the transportation and the industrial segments. Book-to-bill 93%, and adjusted even margin on mine is 4.3%, impacted by FX negative 4 million year-over-year, and the underlying margin on mine at 3.1. All in all, a tough quarter for STRIP. And with that, Johan, I'd like to hand over to you. Thank you, Joran.