Atlas Copco AB

And a very warm welcome to all of you attending this quarterly EARNs call for the fourth quarter 2025. Before I hand over to Wagner to start the actual presentation, I will already now, as usual, remind you that when the Q&A session starts to just ask one question at a time. Please keep disciplined so everybody has an opportunity to ask their most important question Once we get through the first queue, of course, you can line up again for a second question afterwards, and we'll be happy to answer that. But that being said, no further ado, I'll hand over to Wagner Rego to guide us through the presentation.

Thank you, Peter, and welcome to this conference call. So first, we had in the first picture a wafer, just to remind you that we are exposed to the capex that is relevant for the wafer production. Then if you go to the first slide with the summary of the fourth quarter of 2025, First, we had good organic order growth driven by industrial compressors that went somewhat up. But not only, I think, also gas and process compressors also had delivered a very good quarter. And solid growth as well in vacuum equipment, and I would say including semi-equipment. In the other hand, we had weaker demand for industrial assembly and vision solution, followed by weaker demand on power and flow equipment, where we will go a little bit more in details later on. Once again, it was very good to see that our service divisions continue to deliver a very good result, and we are quite happy about that. Revenues, on the other hand, was unchanged, but we have a quite high level in 2024 as well. I think the level was not bad. and followed by a lower operating profit, mainly driven by negative currency effect, where Peter will come back with more details, followed by negative effect coming from the tariffs and also from acquisitions. In the quarter as well, due to the low demand industrial assembly system that is connected to the automotive business, we also decided to further adapt the organization of industrial technique, and we have booked a provision to make sure we keep at the good profit level. Cash flow was solid and we continue to work on our acquisition pipeline. We have acquired eight companies in Q4. So when it looks to the financials, I think we can see for the group, 4% organic growth that we are happy, driven by two divisions. Once again, organically, it wasn't changed in revenue. When it comes to profit margin, we delivered 20.5 in terms of adjusted profit margin. And we have booked this provision of $261 million to adapt the organization in industrial technique. So basic earnings per share, 1.36 SEC and strong cash flow is still good return on capital employed. If we then look to the summary of the year, and I would not spend too much time here, but we had overall a mixed demand with unchanged basically in terms of orders received and revenues. It was quite similar with some segments improving, some segments going down, but it was a flat year with quite a lot of challenges and had wins in the profitability. I would say. And the good thing, our strategy in our service divisions continue to deliver good profit and good growth, that we are quite happy. And we close the year with 29 acquisitions. And once again, Peter will come back with more details about our ordinary and extra ordinary dividend proposal. So, Once again, if we go to the full year financials, like I mentioned already, it was unchanged. It's more 1% organic growth in orders, 1% organic decline. But of course, we had the acquisitions that came on top of the organic growth. Quite a lot of currency had wind in our result. And with the bottom line of 20.3, if you adjust for the restructuring costs that we have done mainly in industrial technique and vacuum technique, the profitability, the adjusted operating margin was 20.7. Still solid cash flow and return on capital employed. If we then continue with our results, uh working looking more geographically around the world what what has happened if i started with asia we had in the quarter 13 percent growth that was a quite a good development mainly in compressor technique and vacuum technique i would say that was driven this driving this result um So, we end up the quarter with 13%. When it comes to Europe, I think we were quite positive. Happy to see 10% growth in Europe. Basically, all the divisions had positive growth. I think the only exception was industrial technique that was flat. So, all in all, considering the situation of automotive, I think we were happy with what we saw. um in europe but it's also fair to say the comparison based uh was lower but very good to see uh in north america we see eight percent growth and there the acquisition of nte has quite a big impact if you exclude that it's still positive growth of three percent we see a little bit more uh challenging environment in south america with the flat development in Q4 and also challenging in Africa, Middle East. But it's also fair to say, especially on Middle East, 2024 was a great year. So I think the level is good, but the comparison base is quite challenging. Then if we go to the next slide on the sales breach, Then you see the currency headwind that we have had in Q4 amounting 11%. So that was continue headwind coming from currency. I think the structural change that are mainly acquisition had a quite good development in orders. and revenues. Of course, that will later on generate an impact in the profitability as well. But I think the level of the acquisitions are quite good. I mean, we have done some acquisitions like NTE that's quite sizable. Then that means that we had an organic growth of 4% and unchanged organically in revenues. And we end up the year with 2% on acquisitions and a total currency headwind of 6%. If we then go to the orders received per BA, you see that very nice to see compressor technique developing with plus 7% organic growth. Very good to see vacuum technique now, plus 13% organic growth, with good contribution from many divisions within vacuum technique. Power technique, a little bit more challenging, but I will come back later when I talk about power technique. And industrial technique, minus 1%, considering the environment. think it was also a good achievement although we don't have organic growth that we'd like to but considering the overall environment i think it was a good achievement in terms of orders received now going more into details of the business areas we can see compressor techniques uh with seven percent organic growth driven by industrial compressors that were up And there we see a little bit more on larger compressors than on the smaller compressors in terms of robot, both with good development. gas and process compressors. But again, it's also fair to say Q4 2024 was also a challenging quarter for gas and process. So they had a low comparison. The service, like I mentioned, continued to grow. We continue to grow with the good profitability. We're quite happy with the development of service in all business areas. Revenue continue to increase, 3% organic growth. We have a good order book in compressor technique that will allow us to continue to deliver good revenue or organic revenue growth. So considering the other book. Profitability was in a good level, 24.3, still a good level if you consider there was impact coming from acquisition, sales, and the trade tariffs. So I think we are quite happy with the development of compressor technique. And also we continue to innovate, delivering new products. Here is just an example of a nitrogen system that is dedicated for laser cutting applications. So completely tailored for this type of application. So if we then move to vacuum technique, we saw good odor growth of 13%. notable growth for semi equipment. And there I think is also fair to say that the comparison was quite low in Q4 2024. So and then we saw, that's why we mentioned notable growth, but it was a low comparison. But anyhow, is good to see the environment. And it's good to see growth in semi-equipment. Solid growth as well in industrial and scientific vacuum and growth in the service. Basically, I think it was a good development in all the divisions of vacuum technique. We still have the challenge with the order book. So revenues were 3% down. I think we still have to overcome that challenge. And operating margin was at 19.2%. So, negatively affected by currency and dilution from acquisitions. So, they also continue to develop the new products, and a new compact product for the semiconductor, this vertical booster that are dedicated for semiconductor was also released. The capital markets, there you also saw some other innovation, and here we continue to come with innovation in vacuum technology. When it comes to industrial technique, then we saw an order decline of 1%, basically driven by automotive, because when we look, to the general industry, we had a good development. Also is where we focus to find some new growth. And I think still quite a lot of transformation that can be done in the general industry. And that's where we focus. Service orders essentially unchanged. And revenues, they also have a challenge. challenges with the order book and the revenues went down 3% organically. The adjusted profitability was 19.8. We want to highlight here the underlying profitability because The profitability was 15.9, of course, affected by the 261 million in provision for the restructuring cost. We still continue to invest in innovation, even in a tough environment that we have now. We continue to release, and we continue to combine the solutions we have with the vision technology that we have in also in the portfolio so i think also here continues very nice innovation so if we then move to power technique we had a ordered drop of six percent and i think it's also fair to say that we had a little bit more than normal cancellations because we had the other book that was a bit too old with old prices and we decided to to to take actions on those orders either the customer would have to take those machines or we will not carry on the orders uh with old prices so it was a little bit proactive from our side, when it when it comes to this, let's say is likely higher than normal orders, but still would be negative, but not as much as 6%. Service business continued to grow. And we saw some challenges in the quarter in our rental business, that all we know also that the drove the revenue down 4%. And the operating profit was at 16% affected by currency, but also by lower utilization of our rental fleet. And I think that's the level of profitability that we are not happy with. Definitely, we'll take some actions to drive the profitability back from the levels we want to have. Anyhow, they continue to innovate. Now, you know, we have invested in several pump assets. This one is more connected to dewatering. So we have a new product that can be used now by our distributors, but also by our own rental companies, because with the acquisition of NTE, we also have now a rental company in the US, rental company in Australia, rental company in Brazil, dedicated for pumps. And we are also supporting them with our own products. So if we then move to the next slide, you see then the profitability, the FTA at 21.4% in the quarter and the profit of, if you don't adjust for the the restructuring cost 19.8. But then perhaps it's time now to pass to you, Peter, that you continue to explain our profit.

Yes, thank you, Rangar. Net financial items slightly negative, a little bit higher than last year. mostly because of somewhat higher financial exchange rate difference and lower interest income in the company. But we also expect it would be probably on a similar level going forward in the next quarter. Then the income tax expense, which is on the low side, I would say, if we take the effective tax rate of 20.5%, that's definitely... A low number. We are benefiting from all the activities we do around our innovation and the tax relief that we can get there. But we also had quite a couple of positive one-offs throughout the fourth quarter. So that is why we have this low effective tax rate. Then going forward, when we think of the next quarter, then this low effective tax rate is not maintainable, because these one-offs that we benefited from will not repeat themselves, and therefore we expect the tax rates for the first quarter to be at around 22.5%. That is currently our best estimate. If I move then on to slide number 14, where we can dig a little bit deeper into the profit bridge. There's quite a few comments here to be made, how we get from 21.8 to 19.8. There's a minor impact from the share-based LTI programs, as you can see. We had items affecting comparability of 220 million SEC in the bridge. It's a combination of quite many things. Wagner already mentioned the restructuring cost this quarter of 261. million Swedish krona in industrial technique business area and basically the difference between those 261 and the 220 are a list of a number of items that we corrected for last year. leading up to the 220 million and diluting the margin obviously somewhat. Also the acquisition dilute the margin in a similar way as the items affecting comparability. We are in the first year of the acquisition here and of course there's a lot of integration costs while the synergies are not fully maturing yet and that is the reason why we see that lower profitability on the revenue within the acquisitions. Then I guess one item that is requiring the most explanation here is then the currency effect, which has been quite negative, both on the top line as well as on the bottom line. And in fact, if I summarize it fairly simply, I would say we have translation effects, transaction effects, and we have the revaluations of the balance sheet items. And the first two items, translation and transaction effect in terms of margin, basically compensate each other. One is slightly positive from a margin point of view, the other one is slightly negative from a margin point of view and they basically end up to zero. So you could say that the entire difference that we see here is caused by the revaluation of the balance sheet items. And there I would like to remind you that last year in the same quarter we had a huge revaluation positive impact in the income statement. which was mostly linked to vacuum technique at the time, also partly to compressor technique, but mostly to vacuum technique, and led at the time to a very positive currency effect, which of course now in the bridge creates the opposite effect, because we have not repeated the same positive currency revaluation in the balance sheet items. And that is also why you see later on in the next page the very high currency impact on vacuum technique specifically. Then when we then look at the organic development here, I think despite a negative development of the top line, we are actually seeing a positive development on the bottom line. And of course that is more explained if I go to the next slide, 36, if I take it business area by business area, as there are quite a number of different positive aspects that add up to this number. So if we take it business area by business area, then we can start with compressor technique. Acquisitions, dilutive, across all the business areas in fact, somewhat more, somewhat less, depending on the specific business area, but basically all dilutive, generating positive profitability, but not as much as we are used to within the respective business areas, so dilutive effect across the four business areas. The currency impact for compressor technique is, even though negative in absolute terms, in relative terms is quite mild. And then we see a margin organically that is quite in line, slightly higher, but only marginally higher than what we are used to in Q4 2024. And that leads us to the 24.3 result of compressor technique, which I think we continue to consider as a good and healthy level for compressor technique to perform. So here you could say despite also tariff impact and despite acquisitions, we maintain a good level there. On the vacuum technique side, the main detractor by far is the currency. which has a huge impact due to the fact that we had this huge positive last year, which we don't repeat this year. In fact, revaluations across all business areas, but also on the group as a total, is actually quite limited this quarter. Basically not a value to be mentioned in the bigger scheme of things. It was mostly the effect of last year that basically created this negative currency effect in the bridge. Otherwise also the acquisitions were dilutive. We also didn't have the items affecting comparability this year that we had last year, which was a one-off that we benefited from at the time. The positive news I would like to add on vacuum technique is the strong development of the margin also here. Negative development on the top line. We just heard from Wagner how the organic growth of vacuum technique on the revenues has developed. But the operating profit on the other hand is positive. And this is thanks to basically the effect that materializes from all the efforts in the business area to restructure, to reorganize, to cut costs in order to adjust the size of the suit to the size of the body. And that's how we end up with the 19.2% here. On industrial technique, 19.4 to 15.9, obviously the restructuring cost is a big item. Wagner mentioned 261 million SEK this year. Last year in the same quarter we also did a round of restructuring for about 134 million SEK, so the net is 127, having a dilutive effect on the margin this year still. Acquisitions were in this case not adding too much from a dilution point of view, but the currency also there had a bigger impact. Although in this case not so much due to the revaluation items, a bit more related to the transaction effect, but in the end a bit negative on the margin. And then finally, I would say from the bottom line perspective also here, a negative development of the top line given the difficult climate in the industry. but no negative impact on the bottom line. So that is also positive that we see that the negative impact doesn't immediately pull down the margin. And of course, with the restructuring we are doing now, we expect to continue to create savings that will support the organic development of the business area. And then last, in the row power technique, Here we dropped the margin from 17.8 to 16.0, as Weiler already implied. Not the level that we are absolutely pleased with. Acquisitions have a moderate dilutive effect here. The currency is also a bit negative, but also organically we are not seeing a positive development. And here it's mostly the utilization of the rental fleet. as well as continued investments in A&M. that we are doing within the business area. We are thinking of, for example, building up customer centers for the industrial flow business. We're also thinking about having dedicated sales people for the portable power and flow business, for example, and also continued investments that we started up in upgrading our ERP platforms across the different divisions that are creating quite a bit of cost investments that are necessary for the future. But with the current business climate of course a bit in conflict with the top line development. When we then look at the foreign exchange development going forward, I would say that we are not at the end of the negative development of the currencies. Both on the top line as well as on the bottom line we foresee still a quite negative development. and estimate that on the bottom line we would see an effect of at least around 1 billion SEC negative impact from currencies in the first quarter 2026. Then I would move to slide number 16 to briefly comment on the balance sheet. In fact, not so much to comment. On the one hand, of course, we've seen currency effects pulling down many of the values. But at the same time, we also see some organic improvements such as in the inventories, for example, which will also be noticeable in the cash flow. And we also see the increase of the rental equipment and the intangible assets, which is both, in fact, mostly linked to the acquisitions we recently added. NTE was already mentioned that of course increased the fleet as well as the intangible assets. I think on the balance on the liability side and equity side there's not so much to mention I think to save time let's say. If we then move on to the cash flow development, we think that the 6.8 billion cash flow that we generated throughout the last quarter of 2025 remains solid, but of course, as you can see, at a lower level than last year. The main reason for this is, I would say, two things. On the one hand, the changing working capital, which actually is still positive with 650 million Swedish kronor, but last year was even much more positive with 2.3 billion. And the second item that of course influences the cash flow negatively here is then the lower operating cash surplus, which goes hand in hand, I would say, with the operating profit development. that we have seen. And those are the two main items that basically pull down the cash flow compared to last year. And then finally maybe just to point out that for the year we concluded with 26.8 billion Swedish Krone, 11.6 billion, let's say 12 billion of which was used to finance our acquisitions, and two-thirds of those were actually taking place in the last quarter with 8 billion Swedish Krone. So with that, I conclude my comments on the financial statements and give back to Wagner to comment on the near-term outlook.

Thank you, Peter. As you know, the near-term outlook is not a guidance for the orders received. It's just how we see the sequential development of our customer activity level. But then, we still continue to have a mixed picture. If I qualified a little bit more this mixed picture, on the positive side, we see a bit more vivid and active semiconductor market when we speak to our customers. And that does not mean that we will see orders coming in Q1. But there are more interactions ongoing with our customers. We also know that this is hard for us to predict because it's a key account business. Decisions can take quite fast. So in talking about quite large amounts so it's difficult to predict if this we will see some reaction in the q1 orders received but there there are more activities on let's say wouldn't say more activity but there has more interactions with our customers So on the last positive side, we still see challenges in automotive, especially in industrial technique, and that's the reason why we also have decided to further adjust the organization. So it's a more challenging environment. And then when we look to the industrial segments, and we talk about industrial pumps, industrial compressors, general industry for industrial technique, I think we still see hesitance. It is still a challenging environment, full of uncertainties. We have seen how the year has started, how many developments so far, and we are still in January. And that's why with this mixed picture, that's why if we combine all this, we believe that the overall demand for the group remains at the current level. So, moving back to you, Peter, then.

Yes, I will just round off this presentation by informing you about the proposal that the Board has made to bring to the Annual General Meeting of Shareholders. And the intention is that a proposal will be made to offer an ordinary dividend of 3 Swedish Krone per share, topped up by an additional distribution to the shareholders of 2 Swedish Krone per share, adding up to a total of 5. And that five Swedish kronor will be paid in two equal installments, one in the course of April and one later in the year, in October. So, I think with that, we are at the end of the presentation. And before giving the floor to all of you, asking your questions, I just want to remind you, please, stick to one question at a time, so everybody has an opportunity to raise their question. Thank you.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Alex Jones from BOFA. Please go ahead.

Great. Thank you. Good afternoon. Maybe I can follow up on vacuum technique, and it would be really helpful if you could expand a little bit on the comments you made with regards to the outlook. especially thinking about Q4, how much of that acceleration in semis orders was easy comps, given you said you're not necessarily expecting that acceleration in conversations to feed through in Q1. And that acceleration in conversations, is there any difference between different geographies, thinking about China compared to the rest of Asia, compared to the Americas? That would be very helpful. Thank you.

Yeah, so definitely we see, if we look to Q4, it was indeed lower comps. I think Q4 2024, it was not a great year in terms of great worker in terms of orders received for vacuum. But anyhow, there is always a little bit of seasonality. But I think we are happy with the development of the order in the semiconductor. Although we had low cons, but going forward, we see a bit more interactions with our customer doesn't mean that we like i said we will see the orders in q1 but we we get more questions uh when we say just to qualify a little bit when we say more interactions more vivid and active uh let's say activity what we mean we get now more questions are you prepared to increase volumes And I think that that's more what we hear, this type of discussions. And again, and we haven't seen, we cannot say that the orders will come in Q1. But there are more discussions in that line. But that is more, you know, the majority of the production of chips are coming from Asia. That means there are a lot of interactions in that region overall.

Thanks. The next question comes from John Kim from Deutsche Bank. Please go ahead.

Hi. Good afternoon. Thanks for the opportunity. Following up on Alex's question, can you give us a little bit of color on the Q4 order intake as to whether this is going newer facilities or is it refreshing or expanding production at existing fabs for your semiconductor clients?

I think it's always a combination of both. But, you know, depending on the players. I think they don't need to build new farms. They have different strategies. Some they don't need to build new farms. They have a space where they can populate with more equipment. I would say we have seen more of that. And there are also players that are building new fabs to populate later. So I think there is both some that was built in the past and now are populating, are being populated, and there are semi-players where they can rearrange the current facility to increase production, and then we got some good orders in Q4.

All right. Thank you.

The next question comes from Rory Smith from OXGAP. Please go ahead.

Good afternoon. It's Rory from OXGAP. Thank you for taking my question. It's just on the order intake in compressor technique. I think you called out significant increase in gas and process. from several different customer segments. Really keen to just know what those segments were in a bit more detail, if that's possible. Thank you.

Yeah, there are several market segments that perform very well. Sometimes we get a little bit more orders from LNG, for instance, because the nature of the business, when they decided to place orders, you talk about 10 ships or 20 ships, which was not the case. We got a couple of orders for LNG, but we also had orders for gas processing equipment. I think we still see quite a lot of opportunity around gas processing, fuel gas boosters that goes together with the gas turbines. If you want to generate, if you want to have a gas-fired power plant, you have the turbine, and the turbine needs a fewer gas booster. We got some orders from that. Also, air separation units was also okay, and a little bit for chemical and petrochemical. It was quite balanced, I would say, this quarter, more than previous quarters, I would say.

Could I just squeeze in a quick follow-up on that? What percentage was gas in process of the Q4 orders versus industrial in Q4 in compressor technique? Thank you.

I think we don't disclose that figure at divisional level. Over time, it has been around 10% of the compressor technique business area.

Okay. Thanks very much.

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

Hi, Wagner and Peter, Klaus at Citi. So I just had a question on the larger industrial compressor orders. They are up year over year against an easy comp, but some debate today around that they're down quarter on quarter. But isn't that just seasonality? Are you down fourth over third, at least according to my model? You don't see any underlying weakness, right, Wagner, on the larger side in compressors? I think you said. last quarter in october that orders um in ct started to come back in europe but that china was still weak i was keen to understand the quarter-on-quarter underlying trends on the larger side thank you i think it's still challenging in china i would say

giving a little bit more color, I think we were positive about Europe and happy, to be honest. And we saw a little bit less growth in North America, but still positive development, if that can help you a little bit more.

All right, thank you.

The next question comes from Sebastian Kuhn from RBC Capital. Please go ahead.

Thank you for taking my question. Regarding compressor business again, couldn't you tell us a little bit about the market and pricing situation in the U.S., specifically for the compressors that you have to import from Belgium, and given that you have local competition like Ingosol, who can maybe outbid you on pricing, maybe can give a bit more color on the situation there. Thank you.

Thank you for the question. Yes, indeed, I think we do have the tariffs, but it's fair to say not everything that we sell in the US is imported. We also have local production. I don't disclose the number of how much is local, but there is quite a good portion. We are increasing the content of local production. That will come step by step. But it's fair to say that the main driver is price and we are increasing our list price and is a balance act because we also want to keep or even increase our market share. So I think that is the balance we do now, while we increase the list price of different product lines, we also keep fighting to increase our market, not even to maintain, but to increase our market share. We do have the impact like Peter, I have already mentioned. But I'm quite happy with the development, to be honest, on the market share. Not all the product lines are doing well, but some are even increasing the market share. That was quite encouraging to see. Under such a tough situation, we can further increase. And when it comes to competition, it's difficult for me to talk about any competitors, but many of them also have a lot of important items as well.

Thank you very much.

The next question comes from Max Yates from Morgan Stanley. Please go ahead.

Hi. Good afternoon. Just my question was on your exposure within the vacuum business. Obviously, over the past few years, you've kind of expanded in China. You've built up a facility in the U.S. And I guess essentially my question is when we looked last year, your business, kind of underperformed wafer fab equipment spending. And I guess what I'd like to understand is given we're seeing kind of disproportionate price increases across memory, maybe some of the customers like Intel, maybe their CapEx is growing slower than the overall kind of pie. So just trying to really understand kind of any nuances in your exposure and any reason when you look today at your kind of key accounts and your exposures to them as to why you would outperform or underperform way for fab equipment spending as we go into 2026 in your vacuum business. Thank you.

Yeah, I think we have explained in the capital markets, perhaps it's good to go back to that meeting where we said that the WFE now have different components and the components that is correlated to advanced packaging is growing quite fast because of AI. And that creates a bit of unbalance between if you want to compare the vacuum result with WFE. On top of that, when you go to lower nodes, you have some different process steps that are not exposed to vacuum. I think that definitely creates a little bit of unbalance. I think when it comes to the CAPEX that is important for us, all the CAPEX CapEx utilized for the production of wafer, I think that is the CapEx that we should consider. I think it's not always available, but that is the one that can define if we are performing well or not. And we feel very comfortable with our performance or with our product portfolio today and going forward. Going back again to the capital markets day, we have shown a new UV system that we have released beginning of 2025. I think we're very well positioned there. We also have shown a new platform for the semi market that we call Ganymede. that we are introducing step by step, that is quite relevant for us. I think that is the most important, because that will allow us to stay competitive in these markets, even delivering more value for our customers. I think that is the most important, in my opinion.

Okay, thank you.

The next question comes from Daniela Costa from Goldman Sachs. Please go ahead.

Hi, good afternoon. Thank you for taking my question. I wanted to ask you a little bit to talk through sort of the restructuring and how you view that going forward. I believe at the CMD you've mentioned that the actions were mostly done and the benefits would sort of come. So do you expect the headwinds on margin and on cash that we've had in 25 from restructuring to maybe more normalized or be significantly lower going forward? Where do you stand in that process?

I think, Daniela, we will continue to monitor the situation. I think it's difficult to say. If we feel the need that we need to adapt here and there, I think we will do. We're still harvesting. I think Peter, when he was presenting the bridge, I think he also mentioned that we already harvest, but that Q4 was a good example in ITBA and in industrial technique and vacuum technique, where they did benefit. But we still need to do a little bit more in industrial technique because of the outlook. And again, we will continue to monitor. Of course, this restructuring cost that we have just booked in Q4, we have benefited slightly in Q4, and that will come step by step in 2026. Got it.

Thank you.

The next question comes from Vlad Sergievsky from Barclays. Please go ahead.

Yeah, good afternoon. Thanks for the opportunity. Could you provide outlook for your compressor business for Q1 or near term, similar to what you have done for vacuum and for industrial technique, just directionally, following Chelsea's 7% only growth last quarter, of course?

I think what we mentioned, Vlad, is that the demand will stay, the activity level will stay flat. I think that is valid for compressor technique as well, that is exposed. to several industries. I mean, I think you see that the market still has some uncertainty. Globally, there might be positives here, there, but if I look to China, the demand is still challenging. You don't have triggers from the consumer demands. Some pockets of growth here and there, but the underlying demand is not as strong as it used to be. So I think that's why I think you should consider what we have said, that the activity level will remain the same.

Okay. Thanks very much.

The next question comes from Andreas Koski from BNP Paribas. Please go ahead.

Thank you and good afternoon. Could you give us an idea what impact the tariffs had on the margin in the quarter and if you still expect to be able to cover that by pricing, rerouting, et cetera, in 2026. Thank you.

Thank you, Andreas, for your question. When we look at the current quarter, I think last time at the end of Q3, we said that the third quarter only had partial impact from the changes in tariffs like 232, et cetera, so that we haven't seen the full impact yet. While at the same time, we were, of course, implementing a number of mitigating actions, And I would say that over Q4, the impact of the tariffs was basically similar as what we saw in Q3. And so that even though the impact in absolute terms was maybe higher considering it was a full quarter, that on the other hand, the mitigating actions also partly took effect. That being said, we also admit, let's say, that the competitive situation in the market is of course there. Demand is not always as vibrant in some areas and as a result, of course, everybody fights for the orders, us included, and like Fagner already indicated as well. We are not willing to let go of our market share. So you would say in a nutshell, the result is that we are not fully able at this point in time to compensate for the tariffs. That the effect was similar as what we have seen in Q3 from a margin point of view. But that we expect to continue to work hard to mitigate. through price increases, through logistic flows or assembly in the US, for example, other type of activities. And that this combination of all these activities over the next several quarters should ultimately lead to being able to compensate for the tariffs. But at this point in time, we are not fully able to do so.

But it's only a tenth of a percentage point or so that the impact is. It's not...

Well, I mean, because only measuring it is already quite a challenge to see all the different aspects of it. But, I mean, it's definitely less than 1% on the margin. Understood. Okay. Thank you very much, Peter. You're welcome, Andreas.

The next question comes from Phil Buller from J.P. Morgan. Please go ahead.

Thanks for taking the question. Phil had to jump onto the other line. It's Jeremy from JP. On the topic of capital returns, it's good to see the special dividend when operating cash was a little bit lower year on year. I'm wondering, is there anything we should or should not infer from this? I mean, on M&A, maybe the pipeline is a bit lower in 2026, and maybe you should see capital surplus, or is it just a reflection of growing confidence and markets improving i.e. cash should be better this year?

I don't think anybody needs to read too much into this. I think it's not the first time that we have this kind of extraordinary or additional distribution, even though we did it in a kind of different shape or form in the past, but now this is in this way. It doesn't have any impact with regard to our acquisition pipeline or whether we have or have not any good projects in the pipeline. I think when it comes to acquisitions, the key is always, is this the right fit for the company, for the growth of the future, to create value for the shareholders? And I think even with the additional capital distribution, I think we still have quite sufficient firepower to acquire both small but also bigger targets, should we feel that they are the right fit for the group.

Thank you.

You're welcome.

The next question comes from Anders Idborg from AVG Sundal Collier. Please go ahead.

Good afternoon. Just a question on the vacuum margin, the way I interpret you, Peter, is that the 19.2% that you have now, that's a pretty clean margin and representative of the current, basically interest, sorry, currency rates, et cetera. How should we think about the drop through when volumes start to come through as they probably do in 2026, given the footprint optimizations that we've done? That's the question, yeah.

Thank you Anders for your question. As always, very difficult to give a very precise answer to this. What we have said when we discussed the different restructuring measures that we have taken with the business area, was that we were targeting mostly indirect functions, tried to limit as much as possible the impact, to try to prune a little bit, let's say, the management structure to become more efficient. And that over time should, of course, when volume comes back, generate leverage from a margin point of view. Of course, once the volume goes up, we do expect that we will need to increase maybe some variable costs in line with the volume increase. I mean, that's only normal, but how much exactly the leverage effect will be is hard to say at this point in time. It will depend a lot on what kind of volume growth we might be able to harvest. But that is definitely the idea with the actions we have taken to create leverage on the margin once the volume kicks in again.

The next question comes from Risk Mighty from Jefferies. Please go ahead.

Good afternoon. Thank you for taking the question. I just wanted to double-click on the North American order growth. I think you said it was 8%, but only plus 3% ex-acquisition. It doesn't feel that it's a high number given the amount of pricing that you need to go through there. Just perhaps if we could just double-click on this, especially on compressor and industrial technique. Are you guys not pushing pricing as much or are the volumes, you know, quite weak in the region? Thank you.

Thank you for the question, Rizk. If you take, there are different colors, of course. We have been performing very well in compressors. I mean, that is the component of price, indeed. We saw there, perhaps, I think, to give you a little bit more color, the cars and process business was more flattish in North America. That might help you, while industrial compressors in general was positive. So in industrial technique, there we have a little bit more headwinds in Q4. But I must say as well that 2025 North America was a great year for industrial technique. I mean, we had quite a lot of project was good, good development. And Q4 was weaker. Definitely there. And I mentioned about portable that we had some cancellations was mostly related to North America. So some orders that we, all the orders from large rental companies that were in our books for some time, and they were not taking the equipment, we decided to cancel these orders because the price was a bit behind what we would like to. And I think when you combine that, you have the 3% growth.

Okay, thank you.

The next question comes from John Kim from Deutsche Bank. Please go ahead.

All right. Sorry. My question was asked.

Okay. Thank you, John. And we have one last question.

The next question comes from Sebastian Kuhn from RBC Capital. Please go ahead.

Yeah, thank you for taking my follow-up. Just on power technique, I think you mentioned earlier that you're not happy with the rental rates and the uptake on orders in North America. Did I hear you correctly that you mentioned that you may need to have further adjustments there for capacity, or did I understand that wrong when we discussed it earlier?

Yeah, but maybe to give you a little bit more color, I think the main problem is in rental, I think Peter already mentioned, the rental utilization was a little bit lower than what we would like to. And we had lower activity level, and Europe and Asia for the rental business. And that's where we will concentrate our efforts. But it's not only about restructuring, it's also about activities finding new customers because we had some traditional customers that where the demand is not there today and we have to repurpose the fleet and and do some sales activity to bend the trends Oh high operating cost or some time to find new customers Yeah, I think when it comes to power technique, if we feel the need to adjust, we will adjust. But we will concentrate the efforts on the rental business for the time being.

Very helpful. Thank you very much. Okay, thank you Sebastian for that last question. Time is unfortunately up. But of course if you have any further follow-up questions, our IR department will be very glad to assist you in providing any further clarifications. With that I would like to thank you all for attending the call and wish you a great rest of the day. Thank you very much. Bye-bye.