Sandvik AB (publ)

A warm welcome to Sandvik's presentation of the fourth quarter results 2025. My name is Louise Cheddar, Head of Investor Relations and beside me I have our CEO Stefan Widing and CFO Cecilia Felton. We will start off with the presentation. Stefan and Cecilia will take you through the highlights of the quarter and the remaining time we will spend on the Q&A session. So let's start. The word is yours.

Thank you. And also from my side, of course, a warm welcome to the fourth quarter report in 2025. If we summarize the quarter, we see a strong ending to the year with double digit order intake and revenue growth. We see a strong demand in mining and infrastructure is continuing to improve. There's a mixed demand in cutting tools with strong demand in, for example, aerospace and defense, while automotive remains weak. We also see a strong demand in both software solutions and powder solutions. Total order intake grew by 4% and the organic order intake growth was 15%. Revenue increased totally by 1% and organically by 12%. We also see a stable margin on the significant currency headwinds. Adjusted EBITDA came in at just below 6.4 billion, corresponding to a margin of 19.6%, which is a slight improvement versus last year, even though the figures round to the same number. On the rolling 12-month basis, the margin is 19.3, up from 19.2 in the year before. The savings in the restructuring programs had a positive bridge effect of 131 million in the quarter, and the adjusted profit for the period came in at 4.2 billion, up from 4.1. We also had a strong free operating cash flow of 6.7 billion, corresponding to a cash conversion in the quarter of 110%. A couple of strategic highlights, as always. We continue to see strong momentum for digital solutions in mining. In the quarter, we booked two large automation orders, which were significant. We also see strong growth in our software offering in mine planning. And overall, digital mining technologies booked good double-digit order intake in the quarter. And for the full year, the business also grew in the double digits. In intelligent manufacturing, our Metrologic business unit launched a new version of their software, where we now include our co-pilot AI technology also in this software. They also launched a new machining module. which is important for us because it means that the metrology software will, based on the measurement, recommend machining process updates to ensure that the component is more aligned with the intended design. So we start to connect the loop between metrology and machining. Rock Processing launched a new jaw crusher platform with significant new automation features, also significant productivity gains and longer service life. And this platform also received Sandvik's internal innovation prize award in 2025 because of the significant improvements in the product. If we look at the market development and we start with the geographical perspective, Europe was up 13% and here cutting tools was up in the mid single digits. North America up 9% with cutting tools up in the high single digits. Asia up 14% and China cutting tools up in the double digits. And then mining markets, Africa, Middle East up 5%, Australia up 43%, and South America up 13%. So solid growth across all geographies. If we then go to mining, as I said, we continue to see strong demand basically across the board. General engineering here, underlying, it's stable, but we do see low double-digit growth, driven then by good double-digit growth in China. Europe up low single digits and North America up mid-single digits. In infrastructure, we see continued improvement in particularly driven by North America. But overall on a global scale we still characterize it as a fairly stable development. We also see some signs of improvement in Europe. Automotive is a bit weaker, overall up in the low single digits. Europe is flat, North America up mid-single, and China is down high single digit. Aerospace strong, up in the double digits, and both Europe and North America is up in the double digits, while China was down in the double digits, primarily driven by timing of orders. In the other segments, we are up by single digits. Europe is up by single, driven then in particular by defense. North America is up mid-single, while China is flattish. Summarizing then the order intake and revenues, we book orders in the quarter of $32.7 billion, revenues $32.5 billion. And this is a positive book to bill of 101%, which is fairly unusual in the fourth quarter where we typically have strong deliveries of equipment. But thanks to the strong order intake, we still maintain a positive book to bill also this quarter. Looking at this from another angle, we can see the order intake continues to be strong in the solid double-digit space. We also see revenues picking up, also now in the double digits. And this is, of course, a consequence of that we are also now delivering and invoicing mining equipment at a higher level than before, showing that we have managed to ramp up production to meet demand in a good way. Adjusted EBITDA improved by 1.4% in absolute terms, 6.4 billion almost, up from almost 6.3 last year. This corresponds to a margin of 19.6%. And here we see solid leverage on the higher volumes. We also have good price execution and good savings, but then offset by the strong currency headwinds. The currency impact came in at almost 1.2 billion negative, a dilution of 130 basis points. And as you know, this is a more adverse headwind than we had guided for when the quarter started. Of course, driven by a continued weakness of the US dollar and a continued strengthening of the Swedish SEC. Rolling 12 months, then a margin of 19.3%. Going first into the mining business, we continue to see a strong momentum with strong demand both for our underground and our surface solutions. We see a double-digit organic growth across all our equipment divisions as well as parts and services and digital mining technologies. Total order intake increased by 5%, the organic growth was 17%, and the growth of equipment was up 39%. Excluding major orders, we were growing organically by 12%. The adjusted EBITDA came in at just below 3.8 billion, corresponding to a margin of 21.5%. We have good leverage on the higher volumes, but it is offset by the very negative currency. The operating leverage was 32%, which we are satisfied with in this business. The currency then was negative by over 700 million year on year, corresponding to a dilution of 120 basis points. Rock processing, here we saw order intake in the mining part of the business declining year on year on tough mining comps. The underlying market demand was robust. We saw solid demand in infrastructure, driven in particular by U.S. demolition and recycling, as well as for the first time in a long time, I would say, an improvement in aggregates. And we also see positive signs in Europe. Total order intake declined by 9%, but organically it was a black zero. And excluding major orders, it was an organic growth of 2%. Adjusted EBITDA came in at just below 400 million. This corresponds to a margin of 14.5, slightly down from 14.6. But a strong operating leverage of 41%, with good savings, was offset then by a very negative currency impact. almost 100 million negative impact corresponding to a dilution on the margin of 170 basis points. And then machining and intelligent manufacturing. Of course, the last quarter, we will present this in this form. Going forward, you will see these two businesses being reported separately. We see a mixed demand for cutting tools between the regions and segments. Strong demand in aerospace and defense, as I've said, while demand in general engineering improved, but it was primarily then driven by a strong development in Asia and China. while automotive remained weak across more or less all the regions. Orders in cutting tools overall increased in the high single digits. It's partly due to low comps. Remember, for example, that Boeing was on strike in the fourth quarter of 24, but also positive contribution from price and tariff surcharges. We see a double-digit growth in intelligent manufacturing and also in powder solutions. And total order intake increased by 5%, and the organic increase was 15%. If we look at the start of January, we continue to see a stable development compared to the fourth quarter, if we look at the daily order intake and take normal seasonality into account. The adjusted EBITDA came in at 2.4 billion, corresponding to a margin of 19.7%, which is up from 19.4 in the prior period. We see good price execution, very good savings, and also structure-supporting margins, then partly offset by a negative currency. The savings had a positive effect in the quarter of 103 million. Acquisitions had an accretive effect of 20 basis points, while currency then had a negative impact of 330 million, corresponding to an 80 basis point dilution. With that, I'll hand over to you, Cecilia, to take us through the details.

Thank you, Stefan. Hi, everyone. All right. So as usual, then, let's start with the growth table on the right-hand side here. As Stefan mentioned, we had very strong organic growth. Orders grew by 15% and revenues by 12%. Structure was neutral on both orders and revenue, while currency had a significant negative impact, minus 12% on orders and minus 11% on revenues. All in all, though, a total order growth of 4% and a revenue growth of 1%. Adjusted EBITDA increased year over year to 6.4 billion, corresponding to a resilient margin of 19.6%. Net financial items continued to trend downwards year over year. I will show you a few more details around that in a few minutes. The tax rate excluding items affecting comparability and also on a normalized basis was 24.4%, so within our guided range. Networking capital also continued to gradually trend downwards. We ended the year on a 12-month rolling basis at 28.7%, so an improvement of 1.2 percentage points compared to last year. As Stefan mentioned, strong cash flow in the quarter, 6.7 billion, corresponding to a cash conversion of 110%. Returns improved year-over-year, and adjusted EPS grew to 3.38 SEC. If we then continue with the bridge, and as usual, starting with the organic column, you can see that revenues grew by 3.9 billion, and that generated an EBITDA of 1.2 billion, so a solid leverage of 31%, which was accretive to the margin by 1.3 percentage points. Significant currency headwind, both in absolute numbers, as you can see here, and a delusion to the margin of 1.3 percentage points. And structure was slightly accretive. But all in all, resilient margin and good development considering the currency headwind. If we then continue down the P&L, looking at the finance net, it came down year over year, and this is mainly driven by the lower interest net. You can see it on the first row here, and that's a result of both lower yield cost, but also lower borrowed volumes. Reported tax rate came in at 24.5%. Items affecting comparability had a small impact in the quarter. So excluding items affecting comparability and also on a normalized basis, the tax rate was 24.4%. So within the guided range. As I said, working capital continued to trend downwards, an improvement of 1.2 percentage points on a 12-month rolling basis. So a good achievement this year, but also a continued focus area for us across the group. And on the right, you can see that the networking capital improvement was driven by mining and rock processing. In the bars, you can see that it was a strong cash flow quarter, as we said, 110% cash conversion. In the trend line, you can also see that for the full year, we had a cash conversion of 95%. If we then look at the year-over-year development, earnings adjusted for non-cash was higher. CapEx was a little bit lower, and the positive impact from networking capital was also a little bit lower compared to last year. But all in all, then, an increase in free operating cash flow to $6.7 billion. The positive cash flow also resulted in a reduction in financial net debt, which came in at 27 billion. And in relation to 12 months rolling EBITDA, we're now at 0.9. Capitalized leases and the pension liability came down a little bit sequentially, which resulted then in a net debt of 34 billion. Looking at outcome versus guidance, currency, as Stefan mentioned, came in at 1.2 billion, a bit higher than our guidance of 1 billion. That was based on the rates at the end of September. CapEx for the full year a bit lower than guidance. This is partly driven by currency, but also timing of some projects and initiatives. The interest net and the normalized tax rate came in in line with the guidance. And looking ahead then at the first quarter and the full year, if we start with currency, here we expect the significant currency headwind to continue into the first quarter, both on top line and also on EBITDA. And as you know, from a seasonality point of view, Q1 is also typically a low invoicing quarter. Nevertheless, unexpected negative currency impact of minus 1.4 billion, and this is now based on the currency rates as of the 23rd of January. Then if we look at full year, we estimate CapEx to come in at between 4 and 4.5 billion. We expect the interest net to continue to trend downwards with a guidance of 0.6 billion. And for the tax rate, we have left the guidance unchanged. And with that, I will hand back over to you, Stefan.

Thank you. So if we go into the conclusion, we see a strong financial performance both in the fourth quarter and in 2025 overall. In the fourth quarter, we have double-digit organic growth in orders and revenue and improved margin and strong cash conversion. For the full year, the organic order intake and revenues increased by 11.5% respectively. And the margin came in for the full year at 19.3%, despite tariffs and significant currency headwinds. We also continue to make good progress in our strategic priority areas. We have a continued good innovation pace and we welcome several new companies into the group. We see strong progress in our digital offerings, strong growth in both intelligent manufacturing and digital mining technologies. And in my view, this has been the strongest year we have had when it comes to the development of our digital businesses, both in terms of financial performance and the strategic progress we have made. We also continue to make successful traction in the surface mining business. And we see strong growth in important regions in machining, such as India and the local premium segment in China. And for us, this is not only the last quarter of the year, it's also the last quarter of our five-year strategy period. the shift to growth strategy period. And if we summarize this period, we see a strong and good financial performance throughout the period with strategic progress despite the significant macro and geopolitical challenges that we have managed throughout the period. We have strengthened our offerings, we have gained traction in important growth areas and also introduced many leading solutions. So overall, we go now into the new strategic period, advancing to 2030 as a stronger group. Thank you. Let's go to Q&A.

Thank you, Stefan and Cecilia. Yes, it's time to move on to the Q&A session. So, operator, please, we can take the first question.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star N1 on their touchtone telephone. you will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time. The first question comes from Gustav Schwerin from Handelsbanken. Please go ahead.

Yes, morning. I have a question on the cutting tool growth. The positive trend you're calling out for general engineering in Asia, is that mainly an effect of pre-buys in China on the tungsten prices? And secondly, given the spike now in price, do you have any evidence at all that customers in other markets have been building inventory as well? Thank you.

On China cutting tools, it's a combination. We see an underlying growth in the demand picture, but we also see an effect from pre-buying, not because we are raising prices sort of here and now, but because of the increased tungsten prices, some customers are buying or they're increasing their inventory levels basically because they anticipate some level of price increase. We are not seeing it anywhere else. It's a dynamic we have seen in China specifically.

Okay, thank you.

The next question comes from Chitrita Sinha from J&P Morgan. Please go ahead.

Good morning, Stefan and Cecilia. Thank you for taking my questions. I have three, please. My first question is just on mining demand. So 17% organic growth is obviously a very strong result. But could you provide more colour on the demand by commodity and whether you're seeing anything incrementally different given where gold and copper prices have got to at the start of this year? Thank you.

I wouldn't say we have seen any specific change throughout sort of the past quarters. Of course, gold and copper are key drivers. They remain above 60% of our total exposure. But, of course, we are also seeing many other commodities, silver, palladium, et cetera, that are strong. So, yes, maybe lead by gold and copper, but a strong demand across the board.

Very helpful. Thank you. And then my second question is just on the margin in mining. So operating leverage was obviously very strong this quarter. But how should we think about the margin heading into 2026, especially if we expect equipment deliveries to pick up?

For mining, we have a margin corridor of 20 to 22%, and we also have a normal leverage of around 30%. So that gives a rough framework of what we are aiming for in terms of the margin. When it comes to higher equipment growth, there you need to look at the incremental leverage of those additional equipment sales. So even if you look at the full margin of equipment versus aftermarket, of course, equipment has a lower margin. But the incremental margin that we get on additional equipment sales should not be dilutive.

And just to add to that, I mean, this is something we have been talking about for a few years based mainly on comments from others in the industry. If you want proof that what you say is correct, then just look at Q4. We had significant increase in equipment deliveries and we see a solid operating leverage. So no negative mix impact.

Perfect. Very helpful. And then my final question is just in machining and intelligent manufacturing. So comps were slightly easier in Q4 than in Q3, especially in software and error, as mentioned. Can you please explain the moving parts heading into Q1, and is there any easy or tough comps to be aware of? Thank you.

I think the main thing that impacted sort of from a COMP's point of view was that we had a dip in aerospace in Q4 in 24. As I said, there were strikes in the U.S. in particular. And then there were maybe a few other segments that were on the weaker side. The fall of 24 was a little bit weaker. It jumped up a little bit in Q1, so sequentially, so to say, on a daily perspective. But that's the only thing I would call out.

Perfect. Thank you very much.

The next question comes from Edward Hussey from UBS. Please go ahead.

Hi, Stefan and Cecilia. Thanks for seeing my questions. Maybe just a couple, if I may. So, Just firstly on the organic drop-through in machining and intelligent manufacturing of 28%, I mean, clearly a strong drop-through. However, my understanding was that when volumes returned in metal cutting, we could be looking at a drop-through closer to 40% or 50%. Could you maybe just talk through the delta between the two? I mean, is 40% or 50% organic drop-through an unrealistic expectation, or has tungsten been a headwind to you achieving that level? Thank you.

No, we still stick with the assumption that around 40% is a realistic leverage for the machining business long term. Now, in this quarter, a lot of the growth was driven by price to offset inflation. We have tariff surcharges and so on. And when you have a very high price, component of the growth driven by price then to mitigate these type of effects then we are protecting our margin we're not expecting an incremental margin of that on that type of growth so that's why it's a little bit lower in in the quarter yeah that's that's very helpful thanks and then just maybe i mean you might not be able to answer this but i mean do you have any concerns around the thompson price i mean do you see any risks that it might pull back this year i mean for example if new supply is brought online

if the pre-buying stops or if China relax export restrictions? I mean, what's your kind of base case at the moment into 2026?

I can start with that. No, but I mean, there are several dynamics driving this. One, as you say, is sort of some type of constraint of supply from China. That is, of course, possible that it's being reversed quickly, and then that can have an impact on the prices. There are other dynamics as well, such as the growth in the defense industry, which is also driving demand for tungsten. And then you have tariffs and so on that comes into the picture as well. So it is a complex picture. Tungsten historically has been volatile. So we are prepared for all. sort of eventualities and scenarios. But yeah, currently the momentum is positive at least. I don't know if you want to add.

No, I think you summarized it well.

Great. Thanks a lot. Appreciate that.

The next question comes from Alex Jones from Bank of America. Please go ahead.

Great. Good morning. Thanks for taking my questions. Two, if I can. The first, just on the capacity ramp-up in mining, as you start to deliver more equipment, clearly strong revenue growth this quarter. Could you just give us an update on that capacity ramp-up and whether you've encountered any bottlenecks or it's all going smoothly so far?

Yeah, I think it's going well and very happy with the strong deliveries in the quarter, which I think is a testament that, I mean, when we invoice, it means we have produced them maybe three, four, five months earlier. And then it takes a while to get them to customers and do local adaptations and so on. So this shows that a while back, mid-year, production levels were starting to ramp up and reach higher levels, and then it has now taken a while to get it out to customers. And of course, now we have a continuous feed of new equipment on its way to customers. We are continuing to do adjustments to the production plans and so on as we speak, but I think the step change has been managed. And we can also see it on the lead times that we are managing to keep the lead times under control despite the high order intake. which I've said has been a high priority for us because we have seen in prior upturns that if the lead times becomes too long, you start to lose business on lead time, and we have really wanted to minimize the risk of that. Then, of course, as Cecilia mentioned, we have a bit of seasonality in the business, as you know, with Q1 being typically a little bit lower invoicing simply because you have the southern hemisphere with countries being on holiday in the beginning of the quarter. But, yeah, I'm happy with the ramp-up and cannot say there's anything I would like us to have done differently or more.

Okay, thank you. And then one just on capital allocation. Could you give us any color or update on sort of the pipeline for bottom opportunities in the various areas you outlined as strategic priorities of the capital markets there last year? Thank you.

Yeah, I mean, if we start with, I mean, as we have seen here, the cash flow is strong and the net debt to EBITDA is coming down. We have always said we want to be, you know, maybe slightly below one, and that's where we are now. It also means that we have given green light since a while back to most of our divisions to pursue M&A in the strategic areas. It takes a while once you have taken a little bit of a pause to get back and sort of make the pipeline active again. But I would say across the areas we did identify, we have ongoing conversations. Then it's always a matter of, you know, right price, right timing. But we have an active pipeline and I would expect more M&A to come in this year than in 2024 and 2025. Thank you.

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

Thank you. Hi. My first question is on the growth in cap increase of 8%. How much was pure pricing out of the 8% growth? The mock tariff fell short of 1.4%. I would assume that you would push prices further. You are, I think, correct me if I'm wrong, but I think that you are 15 to 20% self-sufficient on things then. So, obviously, the cost should grow. So, I would assume that the pure price component should move up even more into the third quarter. Interested in the dynamic there. Thank you.

Do you want to take price first?

Yes, when it comes to pricing for the cutting tools, we don't give a detailed breakdown in terms of the specifics. We had slight volume growth and then surcharges related to tariff and the rest is price, but we cannot unfortunately be more specific than that.

Then it was a little bit difficult to hear you, but were you talking about the pricing dynamics coming into 2026?

Yes, on the back of that, obviously you have your own mind, but you're not that self-sufficient, right?

Yeah, I mean, okay, so I mean, tungsten prices, of course, have continued to go up. Scrap as well, which means there will be a continued price dynamic here. On the powder itself, we are adjusting prices on a regular basis, basically on a monthly basis, depending on the latest APT notation. And then when it comes to our other products, cutting tools or drill bits and so on, then of course we adjust prices when needed to compensate for the increased raw material cost. But I cannot give more specifics other than that we are, if tungsten prices continue up, we will of course have to continue to do price adjustments for that.

My second one, and I hope you can hear me, is on the demand in Europe. If you look at construction, you're saying that there are positive signs, but you didn't move the arrow upwards on infrastructure in Europe. And then if you can comment on general industrial demand in Europe through the quarter, it seems like there is a little bit of sort of green shift. across what products and countries that you see this development. Thank you.

Yeah. Well, you're right on infrastructure. We say there are positive signs, but it hasn't really translated into, you know, order intake increasing to a level where we put our arrow up. But we are positive. We are seeing a little bit more activity, you know, quoting. stock levels coming down and so on. So it is a positive trend, but not yet visible in our order intake in Q4. Of course, Q1 will be important. As you know, it's the order where you typically get the orders for the summer season, construction season. So we will have to see in Q1 if we can continue with this trend. For general engineering, yeah, we say in Europe it's stable. You're right. I would also say that there is a little bit of also positive sentiment in some areas, in particular certain countries where maybe we have seen a little bit more positive development, some of the larger continental European countries. But also here, not something we can really claim is visible in the numbers. And the PMI is hovering around the 50. There is still uncertainty. So I would say the jury is still out on a sort of more broad-based recovery.

Thank you. Thank you.

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

Good morning. Thanks for the opportunity. A couple questions, if I may. Staying on the topic of visibility and demand, what are you seeing, if anything, from stimulus programs, particularly in Europe? Were any early signs there?

um no i wouldn't say i mean some of this infrastructure sort of positive sentiment is of course also coming in germany where where there is a big package and even if it hasn't sort of come through yet uh it means that some you know dealers or customers are maybe preparing for higher demand pictures so in that sense indirectly it might impact but Otherwise, I cannot point to any specific sort of stimulus outcomes. Unless you count – sorry, unless you count defense into the stimulus package, of course, but that's – I put that in a different category. In defense, we indeed see, of course, significantly increased demand.

Okay. And if we zero in on the SRP division, the comments indicated that you saw some good activity in demolition. I'm wondering if you could give us some color here whether that's for infrastructure or construction related.

So demolition and recycling for us, that's our attachment tools. And they go into things like, you know, civil construction projects, also infrastructure projects. So it's a mix. We also say we see an improvement in aggregates, which is more kind of infrastructure, road building and so on. So I would say if you look at the U.S., we are positive in infrastructure more generically right now. We did get, you know, for a couple of years, we haven't really seen sort of dealer orders coming in in anticipation of the summer season. But in Q4, we started to get some dealer orders for that, which is a good sign. We'll see if it continues into Q1.

Okay, great. Last question, if I may. Any color on the CapEx focus for this year?

On CAPEX focus, well, we gave the guidance. Typically for us, the largest share of our CAPEX is maintenance or replacement CAPEX. But then, of course, we also have expansionary CAPEX built in there. And that's mainly for the mining business.

Okay. Thank you.

The next question comes from from . Please go ahead.

Good morning, it's Rory from Oxgap. Hopefully you can hear me okay. My first question is just on the breakdown of order intake in mining between brownfield, greenfield replacement or cutting it a different way between surface and underground. Is that something you could comment on?

Yeah, if we start with the first one, it was pretty similar to prior quarter. And also the sort of the full year picture, meaning brownfield is the majority, so slightly over 50%. Replacements about a third, and then the remaining being greenfield. And that's been fairly consistent besides certain quarters when we have received a large greenfield order, such as the second quarter. But that's a general trend, I would say, that's been there for a couple of years. Which actually means, if you look at the growth, that it is a broad-based growth, because that of course means that everything is growing, since the ratio is the same. On underground versus surface, I would say, and as I mentioned earlier, we see solid double-digit growth in all equipment divisions, meaning both surface and underground. If you take more specifically, for example, the rotary business, I would say we see growth that is higher than the average for our business. But in general, surface and underground are equally strong.

Great. Thank you very much. And then my second question, and apologies, this is quite short term in nature, but just looking at 1Q26, is there any reason to believe that that that operating leverage in machining is going to be any different to the sort of 28%, 30% level seen in Q4?

I mean, we cannot say too much, but I think the main driver for it being higher than around 20, 30% now, it would be if we would have a volume recovery. And that is, of course, something we do not give guidance on. We said that Q1 started at a stable level compared to Q4.

I understand. That's helpful. Thank you. And then just finally from me. Maybe I've misunderstood this, but I was given the tungsten price action last year and the rule from mine that you own. Maybe I've misunderstood this, but I was sort of expecting to see slightly better margins in rock processing. So I was just wondering if there was, A, have I misunderstood that, or if there's any sort of comment you could give around the breakdown of the margin outcome in rock processing. Thank you.

Yeah, the tungsten prices don't really impact the rock processing business. When we look at the margin development for this year, it's driven by a positive price versus inflation. Last year, we had a weak comparable. We had some price pressure in wear parts last year. Then we have good leverage on the higher volumes. We have the positive impact from savings, but then a significant currency headwind of 1.7 percentage points. So those are the main components for the margin development within rock processing.

The tungsten dynamics will be in the machining business. That's where we have it. That's very good. Thanks for taking my question.

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

Yes, good morning. Thanks very much for taking my three questions. I'll ask them one by one. First one, could you give us an idea on what was the share of gold projects in the new equipment mining orders specifically? I suspect the share of total orders that you provide also includes aftermarket, which is, of course, the reflection of the historical installed base. What would be interesting is to see the proportion of new mining demand coming from cold customers specifically.

Yeah, I mean, you will get an updated figure with the annual report, but I don't think we give quarterly breakdown per commodity.

I look at you, Louise. No, I think we can wait.

What I can say is that, of course, copper and gold have been a bit stronger than the average that you will see in 2024. But as I also said, it is a broad-based demand picture. I mean, we have a good business within silver, palladium, and so on as well. So slightly higher than the historic average, but... Yeah, not materially higher.

I think it's a fair reflection that the quarter looks quite similar on a full year basis.

Understood. That's very helpful. Also, is there a reason why orders from mining customers in the rock processing were down? Is it a function of commodity mix over there compared to your main mining business or something else?

Now, actually, the main reason this quarter was high comps. They had some larger orders and a strong demand in Q4 of 24. The underlying demand, as we see, is unchanged. Then, of course, if you compare to our mining business area, they don't have the same dynamics in the sense that their largest commodity exposure is to iron ore, where you have a lot of crushing and screening. And iron ore, of course, is at decent levels, but it's not at the gold, copper, silver type dynamics there. And then finally, downstreams mining have a slightly different cycle than upstreams mining. It tends to be a little bit more late cycle. You know, you need to first ramp up production enough to hit your thresholds for the processing plant capacity before you do additional investments there. So it is a little bit of different dynamic. But overall, the mining demand in Q4 also for oak processing was robust.

Excellent. My final one would be on cutting tools. You mentioned some pre-buying effects in China because of the tungsten price. Why do you think you are not seeing those pre-buying effects outside of China? I assume your customers can see what's happening to tungsten price and can anticipate what will happen to cutting tools price later on.

I can start and you can see if you want to add something. Of course, we don't have a straight answer to why we see a different dynamic. But one reason is that the pricing dynamics in China is different. In China, the pricing for cutting tools are also more directly linked to the tungsten price, while in the rest of the world, it is sort of embedded into a normal list price. So I think the visibility is much higher. And also, you know, I think the way they operate is a little bit different as well. But it's difficult to say. But that would be my speculation.

And maybe also another factor that could have an impact is that we haven't had price increases in China for a very long time. So this is a little bit of a new phenomenon. I think in the rest of the world, Europe, U.S., we have had continuous price increases for a long time now. So I think that could also feature into the dynamic.

I think it's a very good comment. I mean, we have had many years in China where price increases have been off the table completely. Now also our local competitors, which have been operating at very low margins, have to raise prices in line with the Tangsten increase, which maybe creates a broader market dynamic anticipating this phenomenon, so to say.

It's all very helpful content. Thank you very much.

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

Hi, good morning. Thanks for taking my questions. I have two. One is a follow-up on this Tungstan debate. When we think about the technologies it gets used on, is there any potential substitution? Have you seen that in the past when Tungstan prices went up a lot, or is it just simply not possible and customers are just going to have to eventually weather the full price increase? That's my first question. I'll ask the second once you answer this.

There is, to my knowledge, no substitute unless you go to even more advanced materials such as diamond-based materials and so on, which is even more expensive.

Got it. And then one other thing I guess that we have sort of started to hear about is more and more sort of memory chip shortages, I guess, you know, throughout your portfolio, be it in metrology or in some of the automation that you have on mining, I'm not sure. Can you talk through like how significant a user you are of these and whether you see any tightness or how are you prepared for potential tightness there?

We see no impact from that. I mean, overall, we have, of course, it's high mix, low volume products that we have in this area. So our volumes are, we tend to not feel this kind of dynamics since we can always, worst case, find things on the spot market since our volumes are so low.

Got it.

Thank you very much.

Thank you.

The next question comes from Sebastian Kuhne from RBC. Please go ahead.

Thank you for taking my two remaining questions. One again on tungsten. You've got your own mine, as mentioned. Can you confirm that it has about 1,000 tons of tungsten output per year? And then I would like to know if your priority is to maintain the margin in the tooling business or to kind of take a little bit of market share because you can be less aggressive on the full price increases, or if you go with the same price increases as your competitors and therefore take a bit more profit. I would just like to understand a little bit more your thinking here.

I think the last question, I think we got it last time as well, and my answer is the same. I mean, this is, let's call it a business tactics or business secret. We will not give that away to the audience. So we will manage that tactically as we feel gives the most value to the business.

I think you mentioned earlier something like flat margin if, If volumes are not increasing, if volumes were to increase, you get some operating leverage in the tooling business.

Yes, that would come with, yeah, just because we would have better cost absorption with higher volumes, that is what would drive a higher, a more normal leverage around 40%, as opposed to the 28, 30 we're seeing at the moment.

On the mine output, I don't have a ton for you, but what we can say is that in terms of the overall production of powder, the mine is roughly or just over 10% of our supply. And then 55% roughly is recycled material from buyback programs, and the rest is sourced from other sources to make sure we have a diverse supply base.

And then my second question is on mining OE. You mentioned that you plan to increase capacity this year for obvious reasons. In what areas do you see bottlenecks, specifically on the supply chain?

I mean, historically, we have typically seen bottlenecks with major components, such as engines or certain drivetrain components. We worked fairly diligently about a year ago to get ahead of that this time. So at the moment, I mean, we can produce as we have planned to produce, no specific bottlenecks. We have, of course, been helped, A, by the fact that we were early out here, and secondly, that we don't – I mean, in general, we don't see this type of – let's say, increase in production in adjacent industries. So we can get what we want, so to say, for the moment. When it comes to assembly and these kind of things, we can scale fairly straightforward with partners, our own people, and also the fact that we have said before that we have also new sites coming online in Asia, both in India and Malaysia. So we can produce what we want to produce right now.

Understood. Thank you very much. Thank you.

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

Thank you and good morning. Just two quick questions from me. Just the first one is on the aftermarket side of mining. I guess we're kind of used to these businesses growing mid to high single digits and some people would make the case that given the commodity price backdrop there's a huge amount of incentivization to get stuff out of the mines by the customers but that's also been happening already. So I guess my question is simply kind of from those sort of 8% growth rates that we're seeing now, is it actually possible for the business to grow much faster than that given volume production rates, what the customers are doing already? Or would we think, you know, that is a very good growth rate historically and therefore kind of any acceleration or meaningful kind of next step up has to come from the brownfield and greenfield? Thank you.

I mean, we stick to what we have said in terms of long-term growth rates should be high single digits. Now in this quarter and some quarters in 2025, we have been in the double digits. And that is maybe a bit of an acceleration driven by the commodity prices and the fact that customers want to push even harder. But I think the long-term trend, we believe it should be high single digits. And it's driven by a number of factors. Our fleet size continues to grow. That obviously drives aftermarket growth. The fleet is still very old in relation to historic fleet age. That also drives aftermarket. The technology content in each machine we deliver is increasing constantly, which both means you need more service and parts, different type of parts as well, sensors and so on. It also increases our aftermarket capture rate because the more advanced the machine is, the more difficult it is for a third party or local service workshop to do the service. So all of these things are combining into the dynamic that we are seeing, this healthy growth in the aftermarket business.

Okay. And maybe just a follow-up. Obviously, if you kind of go back a few years, there were a lot of discussions around – well, at least from the sort of investment community about sort of potentially separation of Sandvik into the machining business and the mining business. We're continuing to see kind of businesses simplify, you know, across industrials. I guess your share price in multiple would kind of vindicate your decision for not doing that at Sandvik given it's clearly been a great run for the share price. I guess my question is to what extent do you still discuss this internally and And is there any consideration on this debate as to, you know, it matters where, you know, machining is in its cycle, and if we get to a more sort of mid-cycle level in demand and margins, then that decision comes more back on the table? Or given where the multiple is, you know, versus the peers, which looks very healthy and looks like, you know, there's no major discount versus the peers, you know, is that discussion really internally kind of off the table for now? Just for the latest thinking around that would be helpful. Thank you.

I mean, our approach to this has always been that you have to have a very long-term perspective. We have obviously explained before how we believe we can be value-accretive to our shareholders based on the strategy and execution that we have had or have. And we are, of course, very happy that we feel we have gotten recognition for that in the past years. Yeah, 12 months or so. And if the discussion would be there in any way, it would never be around tactics, around share price or cycles or anything like that. Because if you do it, you do it once and for eternity, so to say. So it has to be driven by other fundamental reasons. And we believe, as we have said, that Sandvik is a great group. We have 23 market-leading divisions. And based on the strategy and operational performance, we should be able to create value. And we have created value now in the current group structure.

Very clear. Thank you very much.

Okay, so we have a few minutes left and three in line, so I ask you to keep your Qs and As short.

The next question comes from James Moore from . Please go ahead.

Yeah, good morning. Thanks for the time. I'll try and make it shorter. If cutting tools were high single, machining overall 15, it would suggest 80% for power and software. Could I assume triple-digit powder in 2030 software? And I'll give all three together at the same time. And on whatever the tungsten and tariff price impact is to the whole of machining in orders in the fourth quarter, is that the peak, or would you expect that impact as a percentage contribution to growth to increase going forward? And finally, on the mining aftermarket side, you said high single, I think. Did you say the number? Did you say if it was seven or eight? And how are rock tools and ground support doing? Are they flat or down, and what's happening there?

Okay.

That was record long, but okay.

If we start with the growth in machining, I mean, as we said, software is growing double digits. Now, it's not in the 20% to 30% range. And if you wait a little bit, you will soon get the broken out intelligent manufacturing restated figures. As you know, since we will start to report it separately. So then you will get even more, or you will get the exact figures. But it's below 20%, let's say that. I'll jump to your third question on...

Rock tools and ground support.

Rock tools and ground support, yes. Yes, so I mean, if parts and services are growing double and aftermarket is high single, you can see that they are a little bit dilutive. That is, I would say, normal. All the dynamics I mentioned around... The growth dynamic around service and parts, all of them are, of course, not relevant for rock tools and ground support. They are more purely production driven. So you have a little bit of a lower overall market growth there. On tungsten, I'm not sure we can say about that.

I think, well, it was a question on tungsten and tariff, and this is reaching the peak now in terms of the PV impact. I think here there will be some dynamic system. We will start to have these effects also in our comps from the second quarter onwards. That's, of course, important. limiting the impact when you look at the year-over-year development. But I think in terms of are we at the peak or not is very hard to say. Both how Tungsten or ATP prices will develop, also with tariffs. There were some discussions, as you know, between U.S. and Europe, again, just a couple of weeks back, about additional tariffs. So very hard to say, I think, how this will develop in 26. Yeah.

All right, the time is out. The idea was good, but we don't manage now to take any more questions. But please reach out to Investor Relations and we can help you further. And with this, we thank you for calling in and, as usual, for good questions. Thank you.