Trelleborg AB (publ)

Welcome to the Trelleborg Q3 2025 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to CEO Peter Nielsen and CFO Frederick Nielsen. Please go ahead.

Hello everybody, Peter Nilsson speaking. Welcome all of you to this Q3 of 2025 results. We're going to give you some of our, let's say, input on how the quarter developed. And joining me on this call is also Fredrik Nilsson, our group CFO, and also Christopher Sjögren, who is heading our investor relations. So as usual we're going to refer to a slide deck from our web page and then on that turning to page two on that section the agenda slide and the normal starting with some general highlights. some comments on the business areas and then frederick's gonna guide us through the financials and then finishing off with the summary and some comments on the outlook for the running quarter and then finally ending our call with the q a session so that's the the agenda for this call this morning turning down to page three heading of our report organic growth with higher margin so a solid quarter in more or less all aspects a development in the right direction in more or less all aspects sales ending up relatively flat compared to last year in Swedish kronos an increase of one percent but behind this a very solid organic growth plus four percent which is something we have not seen for for quite some time m a also benefiting we have done several acquisitions several smaller bolton acquisitions here in the last 12 months and that is of course also bringing in some sales so that is adding three percent and then we have a currency headwind well known by everybody which is a six percent in the quarter which is then Once again ending up with a 1% on the total sales. EBITDA also up and also with an improved margin which is an all-time high margin and results for a third quarter. We are let's say a notch above 18% EBITDA margin in the quarter. And this is, as I already said, it's a stronger third quarter to date for us, both in terms of profit and margin. So solid. And I mean, the great thing you're going to see later also is coming from all business areas. We have a substantial negative effects on EBITDA, almost 100 million or 90 million Swedish, bringing us in the wrong direction, if you may say. Items affected comparability running as planned relatively high level this year, but also coming from from this rather high number of acquisitions, which is then kind of creating opportunities to improve the structure and then make sure we get all the benefits from these acquisitions as we move forward. Cash flow, very strong. I mean, we have to admit, surprisingly strong ending of the quarter on the cash flow, which of course is going to bounce back a little bit here in Q4. But nevertheless, we are happy to have the money in our pockets instead of sitting somewhere else. So very solid cash flow, which is creating a stronger balance sheet and overall better business. We've done a smaller acquisition, small but important acquisition in Singapore called MasterSeal, which is an acquisition which is strengthening a little bit oil and gas markets and generally in more in the kind of aftermarket related markets. segments of ceiling solutions, which is an area which we are developing at the moment, an area we're growing into kind of a global business for us. Also note continued share buyback on a level slightly north of 500 million Swedish kronor being spent on share buybacks in the quarter. So this is the quarter. This is what it is. And I mean, overall, once again, a solid quarter. So turning then to the next page, page four, where you see... a new slide for us which I hope you will give some more input on the sales split per geography which I'm not going to comment that much on. but we also more importantly here we see organic growth in all three major geographical areas with Europe for us being the softest slightly better in America so five percent organic growth in America which is kind of on a high level driven a little bit by priority deliveries but that's the way it is but nevertheless good solid quarter and a very solid quarter also for Asia and particularly strong in China for us But overall strong in Asia and kind of a little bit bounce back in America and then Europe a little bit softer. So this is in all areas on levels which I mean we have not seen for some time especially if you talk about America and Europe while Asia continues on a good level as you've seen throughout the year for Trello Ball. Turning to page five, the agenda slide, business areas, and then quickly turning to page six with some more detailed comments on industrial solutions, organic growth, and then we say stable margins, slight uptick in margin. Organic says 2%, M&A adding 4%. And then, of course, also as others here, a negative exchange rate of some 6%. Also behind these figures, we see oil and gas product declined in the quarter, sales declined in the quarter. But that is mainly due to a rather tough year-on-year comparison. Overall market still developing well. and a very solid cash flow but that some of these sales is rather project heavy it is that it sometimes goes a little up a little bit and sometimes a bit down and this quarter was a little bit down in the sales but it's not once again it's not a reflection of overall lower activity in this part of the business. Construction industry still muted, but we noted satisfaction that is getting slightly better if you look sequentially, although still, let's say, quite strong decline if we compare year on year. But once again, some some light in the tunnel and some improvements kicking in. Automotive sales increased in the quarter. I mean, it's been a little bit. how should I say, a little bit strange quarter, if I may say, for automotive. Those of you following automotive see that it's still relatively... tough sales in Europe and North America. Well, China was extraordinary in the quarter, which is a 10% plus organic growth. And I mean, the business that we have in industrial solutions has a very good market share in China. And that is where we benefit from this. So we have actually a strong development in automotive within industrial solutions in this quarter. And then EBITDA and margin improves slightly. You know, I mean, industrial solutions is a fairly diverse business and there are some ups and downs always. But overall, we continue to move in the right direction. We continue to improve. It's not major steps. It's a hard work. coming from from kind of operational focus and also some of these structural investments structural improvements kicking in overall a good quarter well managed in more or less all aspects and then we also should note that when we look at the margin here this acquisitions that we've been doing is on a lower margin than the overall and we have some some tens of a percent negative kicking in for that. It could be 0.3, 0.5% on the margin actually coming from kind of this acquisition kicking in and it will take us a year or so before we can get them back to the overall margin of industrial solution. But that is also something that you need to note when you look at the margin development within industrial solutions turning to page seven and Trelleborg medical solutions strong organic sales growth organic sales is up by 13 percent M&A not doing any changes so zero impact from that but we have to note here as well that we have some project deliveries related to one of our major customers, which is, let's say, boosting the sales dramatically in the sales. I mean, if you look underlying and try to kind of neglect these organic sales, I mean, the more correct probably underlying organic sales is more in the kind of the mid single digit. territory. Methex sales we see also Methex sales in Europe developing well. North America we still struggle is the wrong word but we still see some negative development where we still have some inventory issues. We don't see the overall activity going down but we still see our sales is a little bit below where it should be. So we are Pretty certain that we still impacted by inventory reductions in especially North America, which we have been for some time. And we honestly, we believe that it's going to turn the corner, but we see it continues. And it's difficult to really see through exactly when it will turn. But we continue to gain business. We continue to gain orders. And we are overall satisfied with the development, even though the sales, we would like to sell more, of course, in America as well. going forward. Life science which is a kind of the smaller segment of medical is developing if I may say very nice and we are growing that and we are starting we have been investing in that segment with new factories both in North America and in Europe and we with satisfaction we see that these investments is slowly let's say benefiting us and that is in the area also where we see continued growth going forward. EBIT margin up and also let's say in absolute terms we have EBITDA up I mean it's higher volumes as you expect but also continuous structure improvements especially starting to benefit from or continuing to benefit from this acquisition of Baron that was made let's say a year ago now. Turning then to page eight, ceiling solutions. If I may say very solid organic growth in the quarter coming from several areas but I mean if I should highlight something it's really that we have underlying kind of industrials the big kind of industrial segment of TSS is starting to do better we see now growth in Europe kicking in Asia continued on a good level which has been good for us for quite some time we continue to see some weakness in North America but overall this core segment of ceiling solutions improved in the quarter, both with sales and also kind of a higher activity level. Automotive for TSS is still below last year, particularly still impacted by, let's say, very soft development, very soft development in the aftermarket business. And we cannot, I mean, it's not like the aftermarket in itself is... is down it's more that we see very let's say uncertainty especially the north american market this is we see that they are downsizing in stock inventories is down and we do expect it to to kick back but once also here we don't know exactly when but but it is kind of we are supplying substantially below the market demand for a few quarters here. And we do expect that to bounce back eventually. We note in automotive here as well, as we also commented on TSS, very good development in China. We have a good market share for some of the products in TSS, especially that's our shim business, our brake business has a solid market share in China. And of course we are benefiting from that as the Chinese market has been developing very, very good in the quarter. Aerospace, very strong all over. We continue to, let's say, get more orders than we sell. So let's say order book is growing and activity level is growing. Of course, we note, as I trust the ones of you who are following aerospace, that both Airbus and Boeing is very ambitious in the growth plans going forward. And we, of course, do our best to follow that. So good development in aerospace. And overall, this means that EBITDA and margin is improving, higher production volumes kicking in. We have been underproducing for some time and we see also the benefits from the operation improvements. But we also have to note also here we have a negative impact from acquisitions being made and with this kind of the same dimension as we see in industrial solutions from 0.3 0.5 negative impact on the margin if we are we're trying to kind of adjust for the acquisitions but we're doing acquisitions of course because we believe they are good for us and they are improving the business overall but it will take some time to get all these improvements into the margin already comment on the master seal acquisition in singapore that is part of small acquisition but it's part of an overall game plan to strengthen our activity within let's say aftermarket for seals and especially related to oil and gas and mining and other segments which is more kind of project related where you need uh say local presence in order to get this business into our books so that's happy with that and we think it's a good strategic add-on although once again on a very minor level compared to the overall sales of Trellable. Turning to page nine some comments on sustainability continue to improve substantially I mean we say here we are not getting to the end of the game but we are getting down to levels of CO2 emissions from our scope one and scope two, which is kind of becoming very low. We of course are going to continue to improve and continue to do better also in this aspect but I mean do not expect these kind of improvements steps going forward. Next page, page 10 and it's basically the same here. We have a substantial tick up in the share of renewable and fossil free electricity. We are now up to 92%. And I mean, the remainder here is very difficult because in some geographies, you actually cannot get it. And we are getting also here to a situation where we cannot improve that much anymore, to be honest, because we are, let's say, stopped either by very major investments to turn it around or that is simply not available in a few geographies. So very good development. Very happy to... to show this there were continued good developments in sustainability and we are doing good in these aspects and I mean once again the focus we cannot improve on this criteria so the focus going forward will be more smaller steps and more kind of what we call say energy excellence programs we'll be working hard with all the factories in order to improve and to do better in in more minor aspects. So these big steps, you will not see these big steps going forward, but we're getting to a situation, I don't say being perfect, but we're getting to a level where we cannot justify the final steps to get it even better. Turning down to agenda slide again, page 11, financials, and page 12, I'll leave it over to Frederick to guide us through this section. Thank you, Peter.

Let's then start on page 12, looking at the sales development. Reporting net sales increased by 1% from 8,442,000 to 8,532,000. We have organic sales growth in all three business areas in total 4%. Structural changes added 3% growth in the quarter. And then as Peter mentioned, we have negative translation effects that reduced the growth by 6% during the quarter. If we then move to page 13, showing the historical sales growth. In the third quarter, we were close to our sales growth target, achieving 7% sales growth at constant FX. Looking at page 14, showing the quarterly sales and rolling 12 for continuing operations. The sales in the quarter, as I said, reached 8.5 billion at that rolling 12 months. It's reached 34.7 billion. Moving on to page 15, looking at the EBITDA and the EBITDA margin that continue to improve further. EBITDA exclude items of victim comparability increased by 5% to 1 billion 541 million in the third quarter. We saw profit growth in all three business areas. And looking at, we start with industrial solution, which was up 1% in EBITDA due to operational structure improvements, which was partly offset by negative translation effects. And then medical solution up 10% in the quarter. And then finally, ceiling solution was up 6% in the quarter due to higher production volumes and operational improvements. And model wise, we rose from 17.3 up to 18.1, supported by the organic volume growth and the operational improvements. Looking at the EBITDA and EBITDA margin on a 12-month basis, EBITDA amounted to 6,331,000,000 with a margin of 18.2%. And EBITDA has been growing with 6% during the last 12 months. Moving on to profit and loss statement looking into some more details in the income statements I think affected comparability 72 million in the quarter which was entirely related restructuring cost for adjusting our cost base and due to the recent acquisition. Financial net I would say on par compared to last year 126 million compared to 128 million This is actually despite that the debt level is higher this year. So that is also a good achievement. Tax rate for the quarter excluding items affecting comparability amounted to 26%, a slight increase due to timing. Page 18, earnings per share. Excluding items affecting comparability amounted to 4.20 in the quarter and increased by 11% and that was due to the higher profitability and the effect of the ongoing share buyback program. And for the group including items affecting comparability earnings per share were up 3.94 also 11% up. Moving on to page 19, as Peter mentioned, we have a very strong cash flow in the quarter, which reached 1,741,000,000. On a high level, half of the improvement came from the higher EBDA and the rest from efficient management of the working capital. CapEx is well aligned with the communicated guidelines for the full year, but marginally higher than Q3 last year. Moving on to page 20, the cash flow conversion. The cash flow conversion was 92%, so we continue to deliver a high cash conversion ratio. Moving on, page 21, the gearing and the leverage development. Net depth at the end of the quarter at $8,280,000. Share buyback during the quarter was $554 million. ended the quarter with a debt equity ratio at 22%, so a small improvement compared to Q2, and then net debt in relation to EBITDA, 1.1, which was slightly higher than year-end, but of course we had also paid out the dividend during the second quarter, and we had continued the share-buy-back program. In other words, our balance sheet remains strong. Moving on to page 22, return on capital employed reached 12% for the quarter. And our capital employed has increased compared to last year, mainly due to the acquisitions. But I think also I would like to note that our return on capital employed has sequentially increased from Q2 to Q3. And then finally, the financial guidelines for 2025 unchanged compared to what we communicated after our second quarter. CapEx, 1,650,000,000 for the full year. Restructuring cost around 500 for the full year as well. Amortization of internables, 650,000,000 and underlying tax rate for the full year around 25%. And by that, I would like to hand back the microphone to Peter.

Thank you. Agenda slide summary and outlook. Quickly turning to page 25. Looking at the quarter, organic growth with higher margins. Good quarter overall, but it picked out a few highlights. We see in the quarter in improved, generally in improved demand. higher activity levels or continued high activity level in some areas. We see an improvement in that. And we also note with satisfaction, of course, that all our three business areas recorded organic growth in the quarter, which has been quite some time since we saw that the last time. So overall better activity, although not the kind of a big jump upwards, but nevertheless improvements in most areas. We also note that these higher sales is also improving our margins. We have a fairly sizable uptick in margin year on year. And it then boils down to the strongest quarter, strongest third quarter to date, both in terms of profit and margin. We also note that we continue to do value, what we call value adding M&A, although impact, this is our 10th bolt-on acquisition since Q3 last year. And of course, this is high activity level in DS. It is that we said before, it's impacting our margin. negatively in ceiling solutions and industrial solutions but we are at the same time improving our overall positions and we are very certain that this when they're fully integrated there will not be a drain on the margin or rather the opposite but it takes some time to get there and we also note that continued buybacks we continue to have a solid balance sheet which is let's say allowing us both to continue on high capex level continue to do M&A continue to absorb the growth which is in the quarter in terms of working capital but also on top of that also continue to do share buybacks So that was the summary for the last quarter and then turning to phase 26 and some outlook. We expect the demand to remain on this level. For those of you who have read the report, see that we have these extraordinary sales, project sales within medical. We're not going to kick in. So with this outlook, you should read it that the continued overall demand we might be we don't know exactly as we otherwise we wouldn't sitting exactly where we end up but of course we we believe that this is probably not going to be north of four in the next quarter but it could be a one percentage point or some lower lower than four but we believe it's going to be on a similar level and i mean if this continued higher activity level remain then we will look with more positivism on the future but with this comment of course also we know all now there is a big still a big what we call a geopolitical situation or geopolitical challenges out there and things might happen which could impact the demand short term So that is, of course, with this comment on a continued good market, it comes with this kind of comment. Turning to page 27 agenda and to the final agenda point and turning to page 28 and opening up for questions.

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 Alexander Jones from BOFA. Please go ahead.

Great. Good morning. Thank you very much for taking my questions. If I can have two, please. The first on ceiling solutions and specifically the industrial business within that. You talked about higher growth this quarter. Could you help us understand was that broad-based or were the particular end markets within industrial driving that? And to what extent was that the end market improving or more market share gains and innovation success that you've had as Trelleborg? And then the second question, if I can, just on the medical business, can I clarify on the one-off project sales? this quarter. Is there any element there of pull forward that will be reversed in future quarters, or is that just sort of one-off extra sales that we should not extrapolate in our future numbers? Thank you.

Starting with the medical one I mean that is really a startup of the new program for one of our customers which is a one-off delivery so it's not really about impacting the future so it's not kind of a pull from any future sales it's simply sales in the quarter due to the link or they starting a new program so that is kind of the way it is sometimes but it's not kind of any forward buying or something it's simply a one-off sales so so nothing really that we need we don't expect it to yeah to impact the sales going forward so that's it and then if you talk about industrial I mean one thing is also on the industrial sales of ceiling which you've seen in the quarter I mean we have been for quite a few quarters talking about the stocking in this activity. So one of the impacts in the quarter is no more the stocking and we are kind of supplying in line with the underlying demand. I mean, so that is one of the impacts, but we don't see steel as an inventory built up, but we still believe that there is But we are not kind of oversupplying in the way that they are building stock. And the core driver for this is kind of the biggest sub-segment, if I say in ceiling, which is more hydraulics, machinery, and this kind of core industrial business. That is where we see the improvements. So we are not surprised. I shouldn't say we're surprised because it's been undersupplying for a few quarters and now we feel that we're supplying in line with the overall demand. So I don't know whether that is enough for you. Yeah, that's very helpful. Thank you.

The next question comes from Agnieszka Valela from Nordia. Please go ahead.

Thank you and good morning gentlemen. So I have a few questions maybe starting with the first one on the growth trajectory in the quarter if you could share any flavor how was development in September and then also how is it progressing in October and then also Peter I think before you used to refer to your order intake so how is that developing right now for you?

when it was an improvement throughout the quarter, but also the trick on Q3, September is always important, since the other two months is a little bit impacted by vacation period. So it was kind of an acceleration in the quarter. So stronger ending than beginning in the quarter. But we don't put too much emphasis on that one. But it is kind of an improvement in the quarter, if I may say. And October, I mean, we don't see any kind of differences and we don't really want to comment on it. So it's really overall guidance remained that we believe is going to be Same growth in Q4 with, let's say, some adjustments coming from these extraordinary sales in medical. So my read is, I mean, it might not be four, it might be three. But, I mean, we don't really know. We have an overall good order intake. We have an overall good activity level. I mean, we should say book to bill in the quarter is positive. We have booked more orders in Q3 than we have been selling. So we are growing the order book. But we also remain a little bit cautious on this because we know there is inventory focus, cash flow focus on some customers. So we don't really want to read too much into it. But if we simply did the Excel sheet calculation, then of course, we will be more positive than negative in that one. I don't know whether that is enough, Agnieszka, for you.

Yeah, absolutely. But then maybe if you could give us some color on the regional development as well. Obviously, you have had very strong development in Asia, now followed by America, Europe also now slightly positive. In the next few quarters, do you expect any changes to this order like any other, you know, any region taking over?

No, I mean, I think Asia a little bit has been a little bit extraordinarily strong, especially in automotive, since we have this big boost. I can't remember exactly, but I think production levels in China for automotive was up by some 12, 13 percent. So that's, of course, since we have a high, good position with a few of our automotive segment that is benefiting us, but also the overall industrial growth. industrial development in Asia, especially in China, has been good for us. Somewhat difficult to fully understand, to be honest, but it's been ongoing for quite a few quarters, and we do not expect that to be... Of course, comms getting more difficult going forward, but nevertheless, a good development in there. Europe is probably more tricky, in a way, to read... But we will see, I mean, in the core, as I commented before, the core industrial segments of TSS is improving and that is more, part of it is a reflection that no more the stocking and more of kind of delivery in line with underlying demand. We do not see any kind of... inventory build that at the moment and that is of course if it turns more positive we will see that as well so we've been undersupplying for a few quarters we do expect as the markets if the markets turn more positive that we will be oversupplying but we don't really see that happening short term but if we go into early next year and this development continues we're probably gonna have some of that U.S. is probably for us a little bit more positive than it should be because we have a few priority deliveries in U.S. which is going to be impacting the sales there. But nevertheless, let's say for us in a good positive territory also coming there from kind of the hydraulics and pneumatic segments, which is also part of our core business in North America for sealing and

um i said yes that that is i don't know if i had to keep on elaborating i think that is kind of just to be a little bit more colorful on that development that's that's very helpful and then the last one uh from me i i noticed that you didn't really mention the tariff impact um in your report or on your in your presentation Was there any kind of growth tariffs now affecting you in the quarter?

We have a few individual businesses where we need to kind of redo the supply chain and working with that. But I mean, overall, it's kind of minor activity. So that is why we don't see that as a kind of impacting us. We have a very regional setup. We have manufacturing in Asia, we have manufacturing in Europe, we have manufacturing in the U.S., And we don't really have a lot of these flows going across. I mean, the challenge here is more the metal content where we need to find out. We have a few products where we have metal content and that is something where we need to work. And that is also a question going forward on these tariffs in Europe because some of the export business from Europe into other territories might be impacted by that. But it kind of remains an action point and that is something we're working on. But overall, on group level, We don't see this as any topic in a way, to be honest. Underlying demand could be impacted, I mean, to say, but I mean, for our trading and margins, it's not really something that we discuss too much.

Understood. Thank you. The next question comes from Forbes Goldman from Pareto Securities. Please go ahead.

Yeah, good morning. One question on the TSS margin which was quite strong here in the quarter. Is this the start of a sustained recovery there? And how are you thinking about the 23% target from here? What do you sort of need to reach it?

No, I mean, it is a solid, let's say, step in the right direction. Looking at the margin, of course, once again, you need to remind yourself as well that we have also a negative impact from the acquisitions. Of course, it is a step up compared to last year. And we have always said that we're going to get this back to our levels. And this is kind of... step in that direction and then I don't want to guide exactly what kind of quarter but it is coming as expected as planned if I may say this margin expansion coming from a little bit bounce back in our core segments of TSS I mean that is what we've been waiting for once again we refer to this kind of fluid power hydraulics pneumatics that segment which is the major major part of of ceiling solutions and that is the area which is going to drive this improvement by extra volumes and also in that extra volumes in the right areas if i may say because it's also driving a kind of a positive mix within ceiling solutions so this is a step in the right direction and we still have the kind of overall objective to to get back to this say 22 23 24 i mean that is where we want it to be And we are fairly certain that we are moving in that direction.

Great. I have a follow up on that. TSS margins are typically seasonally weaker during the second half of the year. So could you maybe just say anything directionally about Q4?

We don't want to do. I mean, we are moving in the right direction. We are. Of course, I mean, TSS is more, what should I say, consumable, where we supply into the supply chains of a large number of industrial customers. And I mean, there is always Christmas breaks and all of that. So it's always a bit softer by the end of the year, depending on the activity level they're planning for Christmas. after the holidays and that is the same seasonality as we always have. So it's I don't know if you can comment any more on that. I don't think so. I mean, that is the way it is.

Yeah, final follow up on the restructuring costs looks like quite big step up here into Q4. Anything in particular happening there?

No, nothing really. It's more a timing. So there are some projects that we have worked with for a while and that will be booked as we structure in course during the fourth quarter.

All right. Great quarter. Thank you. Bye. Thank you. Thank you.

The next question comes from Hampus Engelau from Handelsbanken. Please go ahead.

Thank you very much. Could we discuss organic growth on the group level and I guess also in ceiling solutions if you would remove automotive just to get a sense on how the underlying X autos is moving given that we have an opinion on autos going forward. Thank you.

automotive in ceiling solutions was not positive. So that is something where we, because they are severely hit, but they are hit by especially this aftermarket drop for our brake business. So that is kind of negative. So, I mean, if you neglect for the automotive in ceiling solutions, it's actually going to be even better. So that is the one. We are benefiting from the China market. OE sales but that is in no way compensating for the drop in the aftermarket business but for for TS I mean it's not a major impact campus to be honest but where there is a slight positive in industrial solutions in this what you call our boots business where we have a very strong market share in China as well so that is where you are benefiting but I mean it's neglectable in a way if you look at industry, because it's not a major business of industrial solutions, but it is positive. So that's the one. So the underlying kind of non-automotive organic growth in sealing solutions is actually slightly better.

Excellent. And do you dare giving some indications on how you see the water-parting sealing maybe for Q4? I guess you're looking at the S&P numbers and also have an opinion on the aftermarket. On the aftermarket? Sorry, you're... Yeah, I guess I'm fetching for it if you're expecting some positive contribution in Q4.

To be honest on that hand, we are a little bit surprised that it continued on this low level. It's not that people are kind of changing less brakes. And the only thing we can read into this, that there is where we have some tariffs, we have some metal content in those, and some of our... aftermarket customers are kind of reluctant to build. Also, when they order from us in Europe and we're sending to the US, it takes six to eight weeks. And it seems like they are not buying, they are not speculating. But of course, their stock is going down and eventually they need to fill it up. So that is, I mean, well, we are a little bit surprised, to be honest, about this rather dramatic drop in the aftermarket. Which is not, I mean, it's not that they can buy from anybody else. They need to buy from us because we are specified and we are kind of original equipment suppliers. And so that is a kind of a strange thing. a strange, which we have now seen for two, three quarters, two, three quarters. So that is something where we don't fully understand. I mean, sometimes you try to understand, but sometimes you can't get the right answers. But it cannot continue on that. I mean, let's put it, it cannot continue on that level. Yeah. Unless people are neglecting, yeah, not changing brakes anymore. Thank you very much.

The next question comes from Timothy Lee from Barclays. Please go ahead.

Hi. Hi, thanks for taking my questions. I have a follow-up question on launch. For ceiling solution, there's definitely a very good margin development in the quarter. Can I also say that it is implying some synergies that you get finally from the previous acquisition of MRP? Is it something that kind of kicking in the quarter? And also in terms of your previous targets of the 20% one-way EBITDA margin by the end of this fiscal year, is that still something you are looking for?

To talk about synergies, of course, I mean, we have always said on MRP that some of the major impact is coming from this hydraulic fluid power segment and as that now we see finally some improvements in that of course we're getting some some benefits from that that into the uh into the figures but i mean it's mrp is getting more into normal business for us so it's not really synergy as such it is more that the market segments which was strengthened by the MRP has been very soft and now we see these markets getting back and then of course we get the benefits into the figure but we are not at the end of that that one because it still has to go up by it should be still I don't know exactly the figures but we are probably still some 15 percent or something below kind of the levels where we believed it should be in that particular segment. So that is still at a low activity. And especially you look at what the farming in the US, you look at the construction equipment, which is still, especially the agriculture looks still very soft. And that's, of course, where starting, if you talk to the new administration in the US, I don't know. It's difficult to kind of guess where they're heading, but one of the areas which I have not been kind of supporting yet and which has been suffering is of course the farmers in the US. So if something comes into that area we should see even better improvements especially in that segment. About 20 percent is still within reach but I mean it's going to be tough to get there. I mean to be very open to get to that level here already in Q4 but we are moving in the right direction and we still see that within reach in a not too distant future but I mean I shouldn't sit here and say that we get to 20 in Q4 because that has been some market development we know the tariff situation we know the geopolitical areas and we know this kind of softness still in the construction and let's say still yeah quite some some some some distance to go but before we are back to normal especially in this fluid power which is once again the major segment of of ceiling solutions i know it's very helpful thank you and i my another question would be on your

M&A potential. So Continental actually previously mentioned they could probably look for the divestment of their ContiTech business. I'm not sure whether you can comment on this or whether it is something that you may see interest or increasing to your M&A portfolio.

Yeah, I mean the overall Contitech is definitely not of interest for us because the majority of the Contitech business has no... Okay, we are in the same overall segment, but if you look at their conveyor belts or timing belts or also these what I call surface solutions, I mean it's nothing to do with that. We have some overlap. in terms of non-automotive anti-vibration and some fluid or hoses which of course we will be interested if we could cherry pick but I don't think there will be any kind of cherry pick possibilities so I mean we're watching it and we're looking at it but overall Contitech is not of interest for us.

Thank you very much.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you, and thanks for listening in our quarterly call. Summary, a good quarter for us, good organic growth, good module development, and improved demand throughout the quarter. We still note that there is still a lot of uncertainty in the global arena. And that is, of course, something we're watching, but we feel confident that we're going to continue to improve Trelleborg and continue to build a better Trelleborg with ambition, of course, to deliver even better figures going forward. So thanks to all of you, and I'm happy to support you in individual calls. Kristoffer, always available, and so are Frederik and myself. if you want any follow-up discussions or get some clarity on other issues not covered in the call. So thanks again and see you soon and do take care.