Engcon Stock

Good morning, and welcome to engcon's Q2 Report Presentation.

My name is Stig Engström, CEO. And with me today, I have our CFO, Marcus Asplund. Let's take a look at what's happening during the quarter. One thing has probably not missed anyone's attention, the CEO change that took place on May 1. My main task is to bring engcon back to the financial targets adopted by the Board, 20% annual growth and 20% EBIT margin. I have begun the journey towards those targets and identified some focus areas. I will go into them later, but it's about optimizing the product around customer needs, focusing on efforts on the right markets and creating the right conditions for the company's core functions and of course, ensuring strong cost discipline throughout the company, including decrease of stock levels. We can conclude that it was a good quarter. Revenue was strong and the margin shows a recovery, also including a SEK 13 million restructuring cost. It's a good result, which shows the strength of our business model.

At the same time, I know we have more to give. Now begins a new chapter in an old story with focus on the core areas that built the company quickly, strongly and profitably back to basic. Let me explain this a little bit more in detail on the next slide. So how will we reach the 20/20 targets? It's never a good idea to do everything at once. It's about doing the right things in the right order. On the journey, I see the following areas as the most critical. We need the right product to the right market. Our most advanced solution in the Series 3 platform for mature markets with hardest competition. Simpler configurations is good enough to open the doors into markets where many customers have not yet bought their first tiltrotator. Growth where the conditions are right. You don't cross the river to fetch water, the same goes for sales.

In the Nordics, where the construction activity will come back from low levels and on the key European markets where awareness is rising, penetration is low, and we already have the competent salespeople that can act. This is where we focus our efforts going forward. At the same time, we must build capacity for the next level in production and purchasing. Strömsund and Poland work well for today's volumes and with smaller investment, we can reach 3x today's level.

The ERP change took a lot of time from all of us, not least within production and purchasing. We can now use that time for process improvements in purchasing and prepare our production facilities. We will look into every part in the organization to prepare the business for the next level. Focus on cost control and capital tied up. Cost control must run through the organization and capital must be directed where it creates the most value. I'm not satisfied with our stock level in certain markets. We have taken actions and we can already see effect. The engcon's spirit has always been the key to our long-term success. And it's about the whole organization, taking responsibility and innovative thinking close to our customers, and that is what we are returning to.

I'm tired of all empty discussions regarding the most important questions for our planet, sustainability and especially CO2 emission. We have started our transformation for decreasing use of fossil energy. We have a clear ambition to step-by-step "turn off the fossil tap", and we have already taken local action in that direction. I hope others, companies and politicians, et cetera, will follow. To make this work, the whole company needs to support what really drives engcon forward, development, marketing and production.

Everything else in the company should make it easy for these functions to do their job. That's how we remove unnecessary complexity and get back to speed. This sounds boring, but it's also everyday industrial life is about. Dig where you stand, a principle that defines both our core product and how we should operate as a company. Let me briefly comment on the quarter. Marcus will deeper from where he stands in number, but this is how I see it. Net sales is increasing with 13%. The growth comes close to home from the Nordics. We also see some support from Europe. It's in these 2 regions I see engcon greatest potential going forward. Order intake, also driven by the Nordics, Europe is weaker. During the quarter, the global situation has not been very helpful, not least given what's happening in the Middle East.

The uncertainty is spilling over to the economy in general and especially oil prices and customers are becoming careful. After conflict comes peace and what has been destroyed must be rebuilt. We expect higher levels over time when the conditions are in place, not least in Europe. Machines from North Europe will be sent out and the prices for used excavators will increase. That's good news for new machine sales in the Nordics and close to 100% of those needs a new tiltrotator.

Gross margin. The gross margin is affected of a large share of sales in the Nordics, where the competition is toughest. We adjusted prices during the second quarter. The main effect will come in the third quarter with some delay due to dealer agreements. We are also reviewing our product portfolio and purchasing R&D processes to improve this level over time. We have, for a long time, sold products with extra everything, but only with the price of a standard. This is sometimes necessary, but we need to find the right balance. EBIT margin. The margin was affected by restructuring costs related to organizational change, improvements that in the right direction, but we have more to give.

The coming changes are intended to lift this level over time and take us towards the 20% target. I have strong hopes that by the end of the year, we will see a clear and stable trend with profitability moving in the right direction. Return on capital employed, 40% is in line with financial targets, and Marcus will talk more about this. Here, we see the development over time. The direction is clear. The bars are moving on the right way, both for order intake and net sales. Net sales reached a record level for the second quarter. Order intake was also at a high level, but leaves a little bit more to wish.

After a good start 2026, it's calmed down again in March. The last 2 quarters were very strong, partly due to prebuying around year-end, which has led to somewhat calmer period now. And as I mentioned earlier, the geopolitical situation has not been very helpful. Both sales and order intake are above SEK 2 billion on a rolling 12-month basis. One quarter can go up or down, that's normal. But over time, this shows the underlying strength of engcon's business. Let's start close to home in the Nordics. Net sales continue to grow strong and we have passed SEK 300 million. The year started with a strong order book, which have we worked through during the spring. Sweden is the strongest right now. Customers and dealers are more positive, which created a strong pre-buying effect at the end of last year.

Excavator sales are increasing clearly around 20% to 40%, depending on model. This is what we now see coming through in our deliveries. In Norway, we have seen increased sales to key dealers, even though the market is fairly weak at the moment. Order intake is not developing at the same pace. Sales have not fully come back everywhere, like in Finland, but there are some positive signals also here. The market in Sweden has become more positive and these are more willing to place orders earlier.

Last year, we did not see the same confidence. Right now, we are still waiting for the start. The quarter is good, but the engine is still not running on all cylinders. In the Nordics, in general, we expect higher construction activity and more machine investment after several weak years. The Finnish economy has been developing weak, and we hope to see a return here. In Denmark, the economy is a lot better, and there is also extra penetration to be captured. We also expect more impact from price increases during the second half of the year. Moving over to Europe. We see a somewhat weaker period in a long trend of positive development. The weaker development in the quarter is partly about timing, no significant orders in the Dutch region, campaigns in earlier quarters making this a little bit slower, some customers waiting for upcoming trade fairs.

The world is uncertain. The situation in the Middle East is making customers more cautious. In the long term, the potential in Europe is huge. Europe has some of the world's largest excavator markets, yet most operators have still not experienced their first tiltrotator. We have spent years creating the conditions to capture this potential through marketing, by training skilled people in our sales companies and by building a strong partnership in the Dutch region. Coming back to dig where you stand, it is on the key markets in Europe, we should focus our efforts going forward.

Benelux, a small region geographically where world travels fast across borders. Penetration is already the highest in Europe. We are close to the point where the growth can accelerate quickly by itself. U.K., a large excavator market with around 20,000 machines per year, partly characterized by large rental fleets and the local quick hitch "pick up the pin" standard. By focusing development on these products, we open up a significant potential market. France, we have done a good job in the North, where penetration is higher. Many customers there understand the tiltrotator concept and our attachments. In the South, there's still a lot of work left to do. DACH: We have a strong partner in SIRIUS degree and OilQuick Germany. Together, we have quickly built momentum in Europe's largest excavator market.

Americas and Asia-Oceania. Sales in stable but low level, reduced expectations for 2026 and 2027. Huge markets, but a lot of work to get volumes and sales and the profitability up, -- focusing now on established stable teams in our sales companies and give support and service to our existing customers. In Japan, we participated in the CSPI-EXPO in June, a lot of tiltrotators in the show and increased awareness. The tariff situation in the U.S. market makes nothing better. We will make some changes in our product portfolio to better up to these virgin markets.

Our good contact with the OEMs will continue, but we also will reduce our stock levels. And with that, I'll leave the word to Marcus to go through the numbers.

Thank you, Stig. We delivered strong net sales in the quarter. This marks a record high revenue level for any second quarter in our history. This record Q2 top line of SEK 594 million was achieved despite the persistent negative currency effect we have become accustomed to talking about in previous quarters, although we're starting to see the currency headwinds diminishing. This is even more true further down in the income statement, where we actually see a small tailwind through positive revaluations of balance sheet items at the closing rate. Gross margin came in at 38.4%. And as Stig mentioned earlier, a large part of the sales increase comes from the Nordics, and that affects the market mix. We make well-funded commercial decisions every day, but at the same time, this is also the region where competition is toughest and that naturally leaves a mark on the margin.

That said, I do believe this is a low level with an upside from here. Last time, I talked about the price increase we have introduced up to 5% on an average order. Since a large share of sales is still going into the Nordic market from a longer order book, we are yet to see the effects from that. Also, the agreements we have with larger dealers should start to show in pricing from July onwards. Selling expenses are SEK 5 million lower than last year despite the higher volume. The main explanation here is trade shows. Bauma, which was in Q2 last year and CONEXPO, our main trade show this year was in Q1. Our administrative expenses rose with SEK 12 million due to decisive corporate restructuring actions implemented to sharpen operational efficiency.

In total, selling, general and admin came in at 19%, and we can see that we're getting some operational leverage from a higher net sales. However, to be fully satisfied, I would like to see this ratio move closer to 15% as a first milestone. The rollout of the third-generation tiltrotators leads to lower level of capitalized R&D expenditure. However, total R&D spend as a percentage of sales remains at the same level as last year, both for the quarter and year-to-date. At the bottom line, EBIT came in at SEK 102 million, corresponding to a margin of 17.2%.

All things considered on an okay level, yet the result clearly influenced by the strong sales growth in the Nordic as well as the restructuring measure carried out during the quarter. To see our true operational momentum, we look at the normalized margin. Adjusted for the SEK 13 million in one-off restructuring costs, we achieved 19.4%, proving we are steadily closing the gap to our long-term financial targets. Putting this into perspective, I think this is a solid result. We are up 8% compared with the previous year. And even with the restructuring costs included, we are still ahead of most quarters along the way. To me, that says a lot about the strength of engcon's business model and our products. And as Stig's road map is gradually rolled out, I also feel positive about the profitability development going forward.

Cash flow from operating activities improved, driven primarily by higher operating profits and positive changes in net working capital, for example, inventory. We began seeing the positive effect of improved net working capital management towards the end of the quarter, as Stig mentioned earlier. Following that, the return on capital employed reached our long-term sustainable target coming in at 40.1% and 41.6% adjusted. And on that note, I'll pass it back to you, Stig, to summarize and give us the outlook.

Thank you, Marcus. Even if we can do so many things better, we still deliver on an okay level. My and our main job is to clean up in our processes and not expand more than our resources. The Nordic market is a mature market, and here, we have to fight for market share with our top-level products. The tiltrotator market will follow excavator sales to almost 100%. But I'm very positive to a recovery after several years with low investments and that the housebuilding business is coming back. On top of that, we have a great opportunity to sell used machines, including tiltrotators to East Europe when that time comes.

In the rest of Europe, the penetration is low. So here, we can increase our business regardless level of excavator sales if we do the right things. Besides the market and sales, we have to come back to the internal engcon's spirit, a flat organization, delegated responsibility, a big portion common sense and most of all, having fun. This has worked for 30 years and will work also in the future.

Together with this, we will set up a concrete target for our sustainability work that everyone can understand and accept. Small steps for mankind, but a big step for the (climate). Dig where you stand makes efficiency and cost savings with a tiltrotator and for engcon. And with that, I leave the word to the operator to start the Q&A.

[Operator Instructions]

The next question comes from Agnieszka Vilela from Nordea.

Stig, you mentioned some hesitance in the market demand due to the oil prices and the Middle East conflict, which affected your orders in Q2. Can you tell us what kind of orders growth do you expect now in H2 in the second half of the year? And also what you see so far in July?

We have a wet blanket on the market because I think under everything, this is really positive signal from most of the Nordic and European markets, but something is holding them back. And I'm quite sure, I can't tell you when it's going to happen, but it will absolutely be better when the time comes and the East and the West crazy guys have stopped shooting at each other. That's the problem. And I think if the oil price will be stable, and we can have a better situation there. I think they will open up for us, definitely.

And you think that it will benefit both your trend in Europe and in the Nordics when that happens, yes?

Absolutely. In the Nordic, I see we are talking a lot of house building companies, and they are really positive, but we have not seen it on the machine investment. And we know also that the machine investments have been low for 3 years. And normally, these customers, they want to buy the new machines. So they are waiting. And from the exhibition, I also visiting this summer and this autumn, this spring, I mean, I also heard a lot that half of the dealers, they think that it's already coming the boom, but some are waiting for the boom. So I'm certainly positive for the Nordic market. And as I also said, in the European market, we have so much to do besides the new sales. We have so much machines that not have been come together with the first tiltrotator yet.

Yes. And then maybe just on your strategy, like it looks like you maybe deprioritize a bit Asia and Americas. What should we expect in terms of your orders development there in the coming kind of midterm? Do you think that you have enough presence still in these markets to still be able to drive positive order growth?

I think we will have a flat development in these markets for the next coming 2 years. Don't expect an increase, but not in decrease either. I think they will be flat.

Perfect. Thank you for the color. And then last question to Marcus rather, just a clarification. The restructuring costs for the quarter was included in your administrative expenses. Is that correct?

Yes, SEK 12 million out of SEK 13 million is in admin, yes.

So actually, if you look at your admin and selling, that's already running at about, say, 17% of sales. And the question really is like should we expect this kind of same similar selling admin costs on absolute level in the coming quarters? And also, just if you could tell us if you do expect any more restructuring costs to happen?

Not in the near future, at least, not any planned. But we will work on, as Stig was into also the cost discipline. There is more to be done here, definitely, but not as any big, it's more of a an ongoing thing here.

And as I said also, I think that the ratio for the SG&A, I would like to see it come down to at least as a first milestone to 15%. Of course, we need the top line there to make that happen also. But we are putting pressure on our costs as well going forward here in H2 by end of year.

These were my questions.

Thank you.

The next question comes from Marcus Develius from DNB Carnegie.

I just have one follow-up question here.

Do you have any effects of tariff repayments in the U.S. in this quarter? Or do you expect any of that in the coming quarters ahead?

Can you repeat that? You're coming in a bit low. Any effects from something in U.S., I heard, but what?

From tariffs repayments, if you can hear me now in the U.S.

Yes. We have actually already gotten -- it's not a big one. I mean the big one for us has been the steel and aluminum tariffs and so forth. But on the other hand, we have already some ( USD ) 100,000 coming in July -- beginning of July here. So -- and there will be some more coming in as well.

So -- but that's not the big for us, and it's also time bound to a specific period here. So we didn't send so much during that period as we did, for example, last year or before the tariffs actually came in, so to say so. Yes, we have seen some, but not a big amount.

Okay. That was my question.

Thank you.

[Operator Instructions]

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

So we only want to wish you a nice summer, and thank you for participating in this presentation. Thank you.

Thank you.

Good morning, and welcome to engcon's Q1 report presentation. My name is Krister Blomgren. And with me today, as usual, I have our CFO, Marcus Asplund. And today, we also have our next CEO, largest shareholder, Board member and Founder, Stig Engström with us. We will guide you through our Q1 report and also answer questions in the Q&A afterwards. With that, we're going into the presentation.

Starting with the business highlights, and we are off to a flying start in 2026 with a strong growth in both order intake and net sales. Europe continues to be our key growth region going forward. And in Q1, we reached a new record level for order intake in the region. The Nordic region, which made a strong comeback in 2025, is still performing well and delivering solid sales growth. At the same time, margin pressure remains and continues into 2026. So, despite higher sales, we are not yet seeing the operating leverage we want. We will talk more about that later on.

During the quarter, we launched our new 1-2-3 Series for tiltrotators. This is a new way of grouping, packaging our products into clear performance steps, making it easier for customers to choose the right solution. As a part of this shift and to support margin improvement, we have also updated our pricing to better reflect both customer value and today's cost environment, and we expect to see the full effect of that in Q3.

We have also been active in the market in North America, while the U.S. market is currently moving sideways due to tariffs and uncertainty, we remain confident in the long term. During the quarter, we participated in the Conexpo in Las Vegas, a key industry event for building awareness, relationships and showcasing the value of our solutions. Closer to home, we carried out a roadshow in Norway together with Volvo CE, where we met customers and partners to demonstrate how our new Series 3 improved productivity, safety and efficiency.

And we're going over to the numbers. And net sales continue to grow quarter-by-quarter with an organic growth coming in at 27% in Q1. What's encouraging is that both our key markets, the Nordics and Europe are moving in the same direction. In Europe, we see stable growth even if we also see that it's not all markets that's performing strong every quarter. And I will come back to that when we go through the regions.

Order intake. Organic order growth was 10% for the quarter. Order intake remains at the high level overall with a strong trend in both the Nordics and Europe. We are very pleased with where we are. We have to go back to 2022 to see similar levels.

Gross margin. We continue to see margin pressure with the gross margin coming in at 38% for the quarter. As in previous quarters, this is driven by a combination of factors, including a stronger Swedish krona, a volume mix more towards the Nordics and the ongoing production ramp-up. Marcus will also talk more about this shortly.

During the quarter, we also implemented the price adjustments to better reflect the value we deliver to customers and the current cost environment. Over time, we expect this to support margins as it gradually takes effect since we have different notice period on the agreements with the dealers regarding price changes.

EBIT margin came in at 16% for the quarter. Despite strong net sales growth, we are not seeing the full operating leverage yet. That's partly due to the margin pressure that we have discussed, but also due to higher costs in the quarter, including our participation in Conexpo in Las Vegas, which is a key industry event for us, as I mentioned earlier.

We also had ERP project-related costs impacting in the quarter then. And ROCE, the lower profitability level is also reflecting growth for the quarter. And more details will Marcus go through when we guide us through the financials in a short moment.

Moving over then to order intake and net sales. Order intake has now increased for three consecutive quarters, which is a good sign that the positive momentum is continuing. We're seeing solid trends in both the Nordics and Europe, and it's really these two regions that are driving this development while the other regions remain more flat. In the quarter, order intake increased by 6%, corresponding to 10% organic growth with a negative currency impact of SEK 21 million.

Net sales show an even stronger development. Sales increased by 21% in total or 27% organically, also impacted by negative currency effect of SEK 26 million. Overall, we continue to see strong underlying growth in both order intake and net sales supported by good demand in our core markets.

If we're then going over to our regions, and we start with the Nordics then. We have had a strong start to the digging season, driven by continued infrastructure investments and underlying renewal needs, although the recovery across the region remains somewhat uneven. Order intake increased by 18% organically during the quarter, while net sales grew even stronger at 33% organically, reflecting a solid demand and a good execution by us.

In the Nordics, development is primarily driven by the Swedish market, where we continue to see strong momentum. If we're looking at the rolling 12 months, it's clear that the region has delivered a solid performance over the past year. During the quarter, we also carried out a roadshow in Norway together with Volvo CE, where we engaged closely with customers and partners and demonstrated the value of our new 3 Series.

Then going over to Europe. And in Europe, we are coming into the year with a strong momentum. Order intake grew 10% organically, reaching a record high level of SEK 240 million. At the same time, net sales increased 26% organically, a clear sign that the demand remains strong and that we are executing well in Europe also.

We are seeing a real boost in net sales from a solid underlying momentum in the European market. There is a good pace across the business with our markets taking turns driving growth, which tells us we haven't yet seen the full upside of all markets firing at the same time. So overall, this is a business region moving clearly in the right direction with multiple growth drivers in play. And if we take a look at the rolling 12 months, the picture is very clear. This is a strong and consistent growth journey.

We're going over to Americas. In the quarter, order intake decreased by 12% organically, reflecting a more cautious market environment. At the same time, net sales increased by 28% organically with a significant part of that growth driven by the pricing. The demand in the U.S. remains relatively flat impacted by ongoing uncertainty around tariffs and their interpretation which continues to slow down the market activity.

That said, we remain focused on building the market over time. During the quarter, we strengthened our presence at Conexpo in Las Vegas, an important platform to increase awareness and demonstrate the value of our solutions. We continue to invest in building awareness and knowledge in the market to drive long-term demand. This is a gradual process, but a critical part of our strategy, and we remain committed to educating customers expanding the market over time.

And we're going over then to our last region, Asia-Oceania. Order intake decreased by 5% organically during the quarter, while net sales declined by 3% organically. The region continues to be characterized by significant fluctuations between the quarters, which is reflected in the current performance. Asia-Oceania remains relatively flat overall.

In Australia, our key market in the region, activity has been somewhat slow at the start of the year. We expect the Diesel Dirt & Turf Exhibition in April to help reenergize the market and support activity going forward.

Similar to North America, our focus remains on building the awareness and increasing knowledge of the benefit of our solutions. This is essential to driving the long-term demand, and we will continue to invest in these efforts over time.

With that, I hand it over to Marcus to guide us through the financial development. Please go ahead, Marcus.

Thank you, Krister. Net sales amounted to SEK 539 million, representing strong organic growth of 27%. As Krister mentioned, strong levels are achieved as both the Nordics and Europe delivering at high levels.

The gross margin has experienced a clear decline compared to the previous year when we had an exceptionally high level. This is driven by a combination of compounding factors. Although we have seen the Swedish krona give back some of its previous gains, we still see currency headwinds in the quarter-on-quarter comparison.

The higher share of EC compared with spare parts sales dilutes the margin somewhat due to less favorable product mix. We also see negative price and market effects. The Nordics are coming back strongly with Sweden leading the way. As we have discussed previously, this region is more competitive, which also reflects the gross margin.

As we grow, we have also invested in our production capacity. This ramp-up phase has temporarily pressured our margins as these costs have increased ahead of our current production volume. This is mainly seen in the beginning of the quarter.

To counter the negative margin development we have seen recently, at the turn of the quarter, we introduced a price increase in connection with the launch of the 1-2-3 Series. We estimate the impact on an average EC order to be around 5%, and we expect to see the full effect in the third quarter. As several dealers, especially in the Nordics, have notice periods of 60 to 90 days ahead of price changes as well as orders prior to the price increase will be delivered in the coming months.

Looking closer at OpEx, we see some leverage from our net sales despite higher trade show costs in the period related to Conexpo in the U.S. In 2025, trade shows costs were mainly concentrated to Q2 with Bauma in Munich.

We also continue to see higher administrative costs related to IT and the finalizing of the ERP change. Naturally, we expect these elevated IT costs to subside during coming quarters. On the bottom line, we can conclude that earnings leverage from higher net sales has not materialized, as a result of weaker margins and temporary higher cost pressure.

Let's take a look at the EBIT development. EBIT amounted to SEK 84 million, which is aligned with Q1 2025. We're also seeing -- we're not seeing earnings leverage from the strong net sales growth due to weaker gross margins and higher operating expenses with IT costs peaking in Q1 and costs for trade shows. The higher net sales and unchanged EBIT levels means that the EBIT margin declined from 18.8% to 15.7%.

This also affects the cash flow. Although we see an improvement, the cash flow is hampered by higher net working capital as we are in the middle of busy season in the Nordics and Europe with high deliveries and the ramp up of production capacity. The same story applies for return on capital employed, not enough leverage on top line due to currency headwinds and increase in net working capital pull ROCE below where we sustainably should be.

And on that note, I'll pass it back to you, Krister, to summarize the quarter.

Thank you, Marcus. I will try to summarize the quarter then, as you said. We had a strong start to the year with a solid growth in both order intake and net sales, driven primarily by our core markets in Europe and the Nordics. Europe continues to be the key growth engine, reaching record levels in the order intake, while the Nordic maintained good momentum, particularly in Sweden.

Overall, business shows a clear positive trend, supported by a strong rolling 12-month development. At the same time, performance varies across the regions. North America and Asia-Oceania remain more cautious, impacted by the external factors such as tariffs uncertainty and slower market activity. In these regions, our focus remains on building a long-term demand through increased awareness and the customer education.

Margins continue to be under pressure despite higher sales, driven by a combination of currency effects, product and market mix, ramping up costs and last part of the ERP implementation. Actions such as pricing adjustments have been implemented and are expected to support margins over time.

During the quarter, we continue to invest in market presence and customer engagement, including participation in Conexpo in the U.S. and the road shows in Europe. We have also launched our new 1-2-3 product series, simplifying our offering and strengthening customer value. Overall, the business is moving in the right direction with a strong underlying demand, continued market expansion to drive long-term profitability growth.

And to summarize a little bit of my time here then. After 18 years at engcon, including 15 years as Group CEO, I had a meeting with the Board and what was agreed is that it's time for me to step down from my role. It's, of course, something I have mixed emotions about, but also have a great sense of pride in what we have achieved together.

With these years, we have built engcon into the world's leading manufacturer of tiltrotators with a 49% market share and a strong global brand. We have gone from a clear Nordic base to being present in 17 markets today, while delivering a strong growth journey and a significant improving profitability along the way.

I'm also very proud that we took engcon public and on to the large cap list, an important milestone that has strengthened our visibility and created even better conditions for the future. Most importantly, I want to extend a sincere thank you to all our employees, customers and partners who have made this journey possible. I leave with a great confidence that we have the right people and the right culture in place to continue creating value through profitable growth.

And speaking about the right people, now I will hand it over to Stig Engström before we go over to the Q&A. So please go ahead, Stig.

Thank you, Krister. Good morning, everybody. I will give you a short introduction now of me a little bit and also about the current situation in the company. And please feel free after the presentation of the report questions to me or the others.

My name is Stig Engström, and I'm the founder of engcon. I started in 1990 together with my brother, and I was the only one on the pay list for the first three years. Krister came to the company and joined me from 2008. We came together in the toughest time for the company so far. The Lehman Brothers crisis and all that impact on our and other businesses was dramatical. 

During six months in 2008, we reduced employees from 100 to 50 persons and the turnover went down from SEK 500 million to SEK 240 million, all that in just six months. 2009 was a lost year for us, where Krister and I started a cleaning up process with selling out or closing down a number of companies where engcon was -- has become part owners over time. It was a really hard period for us, both, but we learned a lot and especially stand with your core business is one of the most important examples. 

Krister took over the CEO role in 2010, as I said. And from that day, we started a long and successful journey together. After my decision to take engcon to the stock market in 2021, Krister did a fantastic job. In less than 12 months, engcon went from a private owned company to a public company listed on NASDAQ. And that's in time where war was coming up in Europe and Sweden was entering NATO. It was a special time. 

Before we entered the stock market, I met a number of investors and welcome them to be a part of our future success. I also promised them that the financial targets for engcon will be a growth of 20% per year and 20% on the bottom line. And engcon has been on the NASDAQ since June 2022. But everything comes to an end and also the cooperation between Krister and engcon.

The Board, including myself, have agreed together with Krister to change the CEO in engcon. I -- as a person, I've got a verified diagnosis an entrepreneur, a doer without any limit and my patient is close to zero, that's Krister's word. I'm allergic for a complicated process, and I can't see any problems at all.

And from my vision in the Board, I have seen the steps we have taken according to our business plan in the company. But unfortunately, I can also see that the world around us also take steps and maybe bigger steps than ourselves. If we don't speed up now, I'm afraid that engcon will lose the pole position.

Our vision to change the world of digging is already ongoing out there, and we need to work harder with marketing, with R&D, with production and organization if we will remain #1. So therefore, with the Board's request, I will take Krister's place as the CEO from the 1st of May. It's now the third time for me to be CEO in engcon, but I promise you that will absolutely be the last time. 

And what will happen now then? My goal is to come back to what I promised four years ago, growth of 20% a year with a margin of 20% in the bottom line. I have no economic education, but I've learned the last 40 years that increase the income and reduce the cost gives a better margin, and that's exactly what we're going to do that.

So, and how will I do it? Our products are used in the mud and in the dirt. And therefore, it is also very important for the organization to come back to the earth. We have to go back to our core business as we learned in 2008. It will be the old-fashioned boring industrial hard work. 

I have no plans for big change in the strategy, but we need to look in the organization, of course. We have to focus more on our most important customers, tighten up our geographic focus areas. And for now, it's pre on the Nordics and Europe, tightening the product portfolio and more practical sales out in the field. And also in the sustainability part, I have some ideas to do something and not just talk about it, but we will be back in that part later. 

But, at last, thank you, Krister, for all your time together with us in the company. We have really tough days. We have also happy days, a lot of laugh and lot of crying together. I learned a lot of you and hopefully, vice versa. Myself, the Board and the whole company owes you a big thank you for your efforts. Thanks a lot. Thank you, Krister .

Thank you, Stig. Okay. That was everything we had for today's presentation. Now we're happy to open up for your questions and feel free to jump in the telephone conference. So operator, when you are ready, please bring in the first question.

[Operator Instructions] The next question comes from Agnieszka Vilela from Nordea.

Magnus Kruber on behalf of Agnieszka. So, first of all, Stig, could you expand a little bit on what you said about focusing on the Nordics and Europe and tighten up geographic footprint? And what does that involve more specifically?

We have a limited amount of resources, and we need to keep them where we can do the best business for the moment. And we have to be more close where we have the markets now. You know the problems having U.S., for example, we have other business around the globe, and it's rather difficult to do it with for the moment. So therefore, I want to keep it as lean as possible, and we have to be closer to our core markets. So that's for the moment, Nordic and West Europe.

Okay. Got it. Then, separately on the cost ramp that you have for the additional production here in the early part of the quarter, is that kind of behind us? Or is that a bigger ramp that we should expect to sort of weigh on profitability in the coming quarters as well? Or when would you kind of balance the volume with the cost expansion on that part?

Maybe I'll take this one. No, I see that most of it was behind us here in that sense. We already saw in March here coming down. So, I feel confident that these exact things at least, we have left behind us for this time.

Okay. Perfect. And then separately on the cost for Conexpo and Bauma and so on, are those costs kind of comparable in level you had in Q2 last year and Q1 this year, but do they kind of net out on a full-year basis?

They are more or less netting out, and Conexpo is a little bit more expensive one in that way. Everything in the U.S. is more expensive. So, it's a bit less than last year in Q2 with Bauma.

Got it. And then finally, there have also been changes to the Section 232 impacting some companies negatively, some companies positively. Is that something you have accounted for in your price hikes now? Or how do you see the sort of impact from those changes in the coming quarters?

We have adjusted and we're on the ball all the time with the changes and so forth, and we are in a good position as it stands right now. Of course, there is still things happening on which will be the leading one here going forward, and what will be taken out and not. But we are in a good position there, fully compensated right now.

The next question comes from Anna Widstrom from DNB Carnegie.

Firstly, congratulations on the job, well done, Krister, and welcome back, Stig. So, my first question is if you could give us some idea of how the price increases have affected order intake already in this quarter. You've talked about it being sort of gradually implemented, but could you give us some rough idea of how we should think about price versus volumes in this quarter?

It's hard to say if there is any preordering. We were pretty late giving the notice about it in the quarter, and then just not getting the preordering effect in that way. So, I think it's pretty solid order intake for the quarter in that way.

You mean that most of it is volume when we read into the order intake growth?

Yes, it would have come even without the price adjustments or anything like that. So, it's a growth that is a real growth in that way.

Okay. And then my second question is on legal costs, given that the thing has been dismissed now. Did you have any legal costs in the first quarter as well?

Not any bigger numbers, but we have had some legal costs for it. But I don't know, Marcus, if you have the number.

Yes, much less than the comparison quarter 2025, at least when the first decision on the cost came. So yes, it's far less if you want to have the comparison.

Okay. Perfect.

And mainly in Q4.

Yes. Okay. Perfect. We've heard from a lot of other companies much talk about weather conditions, mainly in January, February, actually both in Europe and in North America. Did you notice any impact from this in either of the regions?

I can't say that we see it as a big problem, but it's been colder. There's been more snow and so on. But that's normal, a little bit of digging season path. We are stronger in the northern part of the U.S. and Canada, and the northern part of the U.S., of course, has been affected by the stronger winter. But I can't say that it was any specific thing there. And in the Nordics, it's pretty common that it's in that way. So, I wouldn't say that we were specifically impacted by that.

Okay. Perfect. And then just a final one on how the other countries in the Nordics are doing. You highlighted that Sweden continues to showcase the best trend and momentum, but how are the other countries doing?

It's Sweden that, as you mentioned, is doing the strongest. And maybe that's no surprise as we talked about earlier, Finland being the toughest in that way because of the financial situation that are current in Finland. So, Denmark and Norway are doing a little bit in the middle there then.

[Operator Instructions] The next question comes from Zino Engdalen Ricciuti from Handelsbanken.

Sorry, I joined the call a bit late if you have elaborated a bit on the questions. But I'll start with the comments you made regarding if engcon doesn't speed up, you may not be on the pole. Can you elaborate a bit more on what it is that you're seeing out there?

We have technical threats coming up from others. We have competitors ramping up. And we have, of course, also geographical problems with what's happening in different countries. So, we absolutely have to be on our toes and be aware of what's going on out there. So absolutely, we have enormous potential, but we also have to penetrate it and do it now.

And these -- the competitors, is it mainly existing? Or are you seeing new ones entering the market?

No, it's existing, especially.

Very clear. And I'd also like to know further on the profitability side of the ambition to reach the financial goal. Of course, you have, I would say, one-offs affecting the quarter, but do you have any time frame on when you wish to -- or when you expect to see profitability, which comes closer in line to the target?

Hopefully, we'll see some results by the end of this year. But if it comes from actions now or if it's from actions earlier, I don't know, but we have -- at least hopefully, we have something in the end of this year.

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

Okay. Thanks again for tuning in today. And take care. And again, thank you for this time and also for the four years that we've been talking to each other there. Have a good day. Bye-bye.

Good morning, and welcome to engcon's Q4 report presentation. We're also going to have a short review of 2025. My name is Krister Blomgren, and I'm the CEO here at engcon. And with me today, as usual, I have our CFO, Marcus Asplund. We will guide you through our Q4 report and 2025 review also, and also answer questions in the Q&A afterwards.

Let's go into the presentation. 2025 has been a year of clear highs and lows across the global economy, and engcon has experienced a similar dynamic, navigating market volatility while continuing to strengthen its strategic position, operational efficiency and long-term growth potential for shareholders. If we take a look at the bigger developments for engcon during the year, it's clear that 2025 has brought both ups and downs. So let's take a review of 2025.

We launched engcon's Generation 3 that brings faster hydraulics, smoother precision and smarter efficiency to make every excavator job feel easier and more controlled. Engcon also took the step into the large cap segment, an important milestone that strengthens our visibility, broadens our investor base and supports our continued growth journey. And we established our sales company in Japan during the year and supported by government subsidies, we have achieved a solid start, laying a strong foundation for long-term growth in an important strategic market.

The so-called Liberation Day led to a period of more cautious behavior across the global markets. And during the year, we also faced challenges from tariffs and strengthening Swedish krona, factors that have influenced demand and currency dynamics.

Our participation in Bauma, the world's leading construction exhibition, where tiltrotators were visible everywhere, and engcon stood out as a clear reference brand. The strong presence confirms that OEMs are accelerating their integration efforts, and we see a growing interest and traction in the German market as awareness and adoption continue to build. We are now beginning to see the results of the long-term work we have done together with OEMs as more excavators are being prepared for tiltrotators from the factory, an encouraging sign that our efforts are translating into real market progress.

We have also started to establish a presence in Italy, the third largest excavator market in Europe, through a collaboration with TM Benne, an important first step that allows us to enter the market in a focused and capital-efficient way while building a long-term growth opportunities.

Stig Engstrom, Founder of engcon, was honored with an Entrepreneur of the Year award during the year, well-deserved recognition of the long-term vision and entrepreneurial drive that laid the foundation for the company's success and still continues to inspire its development today. We also won in the second instance in our patent dispute with Rototilt during the spring regarding alleged patent infringement. But however, we were later subject to a new lawsuit in the autumn concerning the same patent. So it's an ongoing matter that we continue to handle with confidence and a structured legal approach.

Recent market study by Strategy& show that engcon has increased its market share by 5 percentage points, reaching now 49% market share. That's a strong indication that our long-term investments and focused execution continue to strengthen our leading position in the market.

With this broader review of 2025 in mind, we will now turn our attention to the fourth quarter and take a closer look at the developments during the final part of the year. The fourth quarter was characterized by strong growth with support from all regions. Net sales for the quarter amounted to SEK 498 million, an organic increase of 34% compared with the same period last year. Order intake increased organically by 12% from SEK 506 million to SEK 539 million, with the Swedish market making a particularly strong contribution, driven in part by a significant share of preorders. And we also saw some preorders from European markets like Netherlands and France.

Gross margin in the quarter amounted to 40%, down from 43% last year. This was mainly due to negative currency effects and a less favorable market mix. The operating margin was 15%, slightly lower than the previous year, impacted by the lower gross margin, a stronger Swedish krona and increased administrative costs related to IT and legal services.

Over the last couple of years, we have taken an important step in how engcon operates as a group. As part of our long-term strategy, all engcon companies are now working within one common ERP system. And bringing an entire organization onto a single platform is not just a technical change. It is a transformation. During the implementation phase, this has naturally meant higher costs. We have invested money and time in systems integration, harmonizing processes, training our people and adapting the organization. These efforts have increased our costs, but they are laying a stronger foundation for the future. We can now have a focus on our core business and improve even more from there.

If taking a look on the numbers then. Net sales, we ended the year really strong with a 34% organic net sales increase, SEK 498 million is a high level for fourth quarter, and we need to go back to 2022 to see a higher level. Order intake, we have a 12% organic increase in order intake compared to the previous year, and I will come back to talk more about that when we're also going through the regions then. The gross margin amounts to 40% and is squeezed from several directions. For example, net sales are impacted mainly by the strong Swedish krona and at the same time, a negative market mix as growth is occurring in markets with lower margins like Sweden. The EBIT margin amounts to 15%, which is low provided the strong revenue. The margin is affected by a negative cocktail with the main ingredients that are the weaker gross profit, revaluations of balance sheet items linked to a stronger Swedish krona and higher costs related to IT and legal services.

As I mentioned earlier, the cost of getting all companies to the same ERP system is the biggest part of those costs. At the same time, we have also faced extraordinary costs outside our day-to-day operations. Rototilt have sued us again for the same patent as mentioned earlier. These costs have, therefore, also contributed to higher expenses for the group. When we look at these 2 topics together, they explain a lot why costs have been elevated during the period. But now when we have the largest part of the ERP behind us and profitability is currently below our target levels, we are, therefore, looking to implement targeted measures to ensure continued profitability growth with a strong focus on strategic priorities, pricing and product packaging and an increased cost discipline. And our ROCE amounts to 36%. That's also below our target of 40% and is affected by the lower profitability level and higher inventory levels we have seen during the year. And Marcus will talk more about these financial developments a little bit later on in the presentation.

If we go into the order intake and net sales then and took a look at the fourth quarter as a whole, both net sales and order intake are at high levels. Order intake increased by 12% organically. Net sales increased by 34% organically. This is a strong performance, driven primarily by solid demand in Europe and the Nordics, even though the conditions have been more challenging in the America and Asia-Oceania regions. As we expected, order intake in Q4 was supported by preordering effects like last year, mainly from the Nordic region, but also Europe. These signals higher excavator sales and growing optimism among customers and dealers, an outlook that is also supported by reports from the construction equipment market. Overall, this gives us a positive picture. It shows that Europe and the Nordic continue to perform well and are the key contributors to our growth and results.

Now I will go over to each region to describe that a little bit more, and we start with the Nordics. The Nordic region ended 2025 with a continued robust recovery. Order intake increased by 35% and net sales grew by 37% during the quarter. We're seeing clear signs of improving end market demand. Recent reports from Volvo CE indicate higher excavator sales, supporting our view that activity levels are gradually normalizing. Residential construction is recovering from historically low levels, while overall sentiment is increasingly supported by infrastructure-driven investments. Together, these factors are contributing to a more constructive demand and environment across our core markets.

If you're looking ahead, we expect this gradual recovery to continue, supported by infrastructure pipelines, improving financing conditions and stabilizing dealer inventories. While short-term volatility may persist, the underlying demand drivers in our key regions remain intact. In the fourth quarter, the Nordic region narrowly surpassed Europe to become our largest region once again.

We're going over to Europe. Europe showed a strong recovery during the fourth quarter with organic net sales growth of 39%, an increase in order intake of 9%. In France, our collaboration with Beauloc marks an important strategic milestone. France is a key market for us and gaining traction within the rental segment, traditionally more conservative in adopting new technologies, is a strong validation of both our product offering and long-term market potential. Increased penetration in rental increased the visibility, accelerates fleet exposure and supports structural adoption over time.

In Netherlands, we are seeing encouraging momentum with customers placing preorders in a way that increasingly resembles to the Nordic markets. This signals growing confidence in the tiltrotators as a standard solution rather than an optional add-on. Customers are planning ahead and committing earlier, which indicates maturing demand and improving predictability. The fourth quarter reached a record high level for a fourth quarter in Europe. Importantly, this performance helps mitigate traditional seasonality effects related to the excavation cycle. It demonstrates greater stability in our revenue base and a broader market acceptance of our solution.

Order intake in Europe is also stronger than it may initially appear. Our German partners would typically place larger less frequent orders did not place an order this quarter due to timing as they prepare to move into a new facility expected to be completed in the beginning of March. So we view this as a temporary effect rather than a change in underlying demand in Germany.

Looking ahead here in Europe, we see continued growth potential in Europe, driven by increasing penetration, stronger OEM collaboration and expanding rental exposure. While quarterly order patterns may fluctuate, the structural adoption trend remains intact, and we expect Europe to continue playing a central role in our long-term growth strategy.

Moving over to Americas. In the Americas, the performance during the year was weaker than expected, primarily due to the tariffs introduced in April. Increased uncertainty has dampened the investment appetite in the industry as a clear long-term conditions are still lacking. Despite this, net sales increased organically by 7%, mainly as a result of price adjustments. Order intake, however, declined by 13%, clearly reflecting the cautious market environment. We remain confident in the long-term potential of the U.S. tiltrotator market.

The structural opportunity is significant, supported by the productivity gains and efficiency improvements that are increasingly relevant to contractors facing labor constraints and higher operating costs. That said, the introduction of the tariffs has added uncertainty and may delay the pace of market adoption in the near term. We expect the development in the U.S. to take time, particularly as customers navigate pricing dynamics and investment decisions in the current environment. However, we see this as a timing factor rather than a structural limitation. The underlying value proposition of tiltrotators remains strong in the long term in U.S. We also have CONEXPO in Las Vegas that will be an important exhibition for us. It will provide a valuable opportunity to assess how far the market has progressed in terms of our awareness and understanding of tiltrotator solutions. We see not only as a commercial platform, but also a strategic checkpoint for measuring adoption readiness in the U.S. market. Over time, we believe the U.S. represents one of our most significant growth opportunities even if the ramp-up will be gradual.

In Asia-Oceania, we expect Japan to remain the primary growth engine within the region. The market fundamentals are supportive, particularly given ongoing government initiatives, including the programs led by MLIT and SME-related incentives that are aimed to encouraging investments in increased efficiency technologies. These incentive structures align well with our value proposition as tiltrotators directly contribute to productivity gains and improved capital efficiency. As we previously communicated, the region is characterized by significant quarter-to-quarter volatility. In the fourth quarter, net sales increased organically by 33%, while order intake declined by 32%, clearly illustrating the timing effects that can occur in this market. A good example of this is the Kobelco order received in the third quarter and invoiced in the fourth quarter. This type of timing difference contributes to quarterly fluctuations rather than reflecting any structural change in underlying demand.

Kobelco, our earlier partner there, has also taken proactive steps to support adoption by developing a dedicated catalog aligned with SME subsidies program. This catalog then simplifies the process for end customer and increases confidence that incentives will be secured, lowering the barriers to investment and supporting a more predictable uptake over time.

In Asia-Oceania region, the development remains gradual, but strategically important. Awareness is increasing, although the penetration remains at an early stage. We continue to focus on the education and dealer partnerships and building references cases to strengthen long-term demand. If we're looking ahead here, the 2032 Olympic games in Brisbane are expected to act as a meaningful infrastructure catalyst. Large-scale infrastructure and construction projects linked to the games are likely to support equipment demand and create a favorable environment for productivity increasing solutions.

Overall, we expect Japan to drive near-term growth in the region, while the rest of the region represents a long-term opportunity, supported by infrastructure investment and increasing adoption. Although we will continue to see quarterly volatility in the region, the structural drivers across Asia-Oceania are intact and supported of sustained expansion over time.

With that, I will hand it over to Marcus that will guide you through the financial developments.

Thank you, Krister. Good morning. EBIT landed on SEK 72 million for the quarter, an increase of around 15%. Our operating margin stands at 14.5%, which is below expectations. Although Q4 is typically a weaker quarter, our strong net sales are translating into bottom line growth. We are seeing margin compression at both the gross and operating levels due to several negative factors that are preventing us from achieving leverage in this quarter.

Now let's go through the P&L in more detail. Revenues came in strong this quarter at SEK 498 million, representing a solid 34% organic increase year-on-year. The momentum is driven primarily by the Nordics with our home market, Sweden, leading the way, and we've also been able to release the European backlog that held down revenues last quarter. Overall, we are pleased with this level. At 40.2%, gross margin finishes below last year's level. This contraction is the result of a couple of headwinds converging simultaneously, which have collectively diluted our profitability this quarter. We're seeing a less favorable market mix as the Swedish home market has rebounded more strongly than expected. This is one of our most mature markets, which naturally comes with higher competitive pressure. In addition, the margin is being weighed down by a few deals with rental companies and bigger dealers and continued currency headwinds persist.

When we get to the OpEx, we can see that we are benefiting from operating leverage as a result of the higher revenues. However, administrative expenses are somewhat burdened this quarter by IT and consultancy-related costs, which is a natural consequence of the intensive work required to bring all our companies into one ERP system. On top of this, the ongoing lawsuit with Rototilt is also adding costs related to legal advisory.

Looking at other operating income and expenses, we can also see the impact of the Swedish krona here, a hit of roughly SEK 6 million related to the revaluation of balance sheet items. When everything lands on the bottom line, EBIT comes in at SEK 72 million, corresponding to a margin just above 14.5%. We can conclude that we are benefiting somewhat from a stronger revenue level, although the stronger Swedish krona and higher costs offsets part of that effect. All in all, EBIT is partly affected by external factors and could have been stronger, but it's a reality we must navigate. We are fully committed to active margin improvement and value-driven initiatives, such as a review of our pricing and product packaging as well as our strategic priorities, as Krister mentioned.

Looking at the cash flow from operating activities before changes in working capital, it actually improved full year-on-year, mainly due to higher operating profit. This is, however, offset by increase in working capital, mainly inventory. Inventories have been increased to shorten lead times during the [indiscernible] Nordics and Europe. Hence, inventories are expected to decrease during the first half of this year. [indiscernible] return on capital employed. Not enough leverage on currency headwinds and increase in net working capital pulls below where we sustainably should be.

To summarize, looking at our financials, while the organic net sales growth is strong, the EBIT level is not where we want it to be. And as was mentioned [indiscernible] with extra costs connected to one-offs pulls us down. As both I and Krister has been into, we are addressing these challenges. These challenges, together with higher inventory, also weighs on the capital efficiency. Capital structure, however, continues to be at a satisfactory level. The Board of Directors proposes a dividend of SEK 1 per share to be paid in 2 equal installments.

And with that, I hand it over back to Krister to summarize it all.

Thank you, Marcus. I will try to summarize the presentation then. And we have a great quarter if we look at the net sales and order intake, and it's our key regions, Nordic and Europe, that delivers. Europe's order intake is better than what it looks, as I mentioned earlier, since our partners in Germany didn't place any bigger order this quarter since the extension will not be ready until the beginning of March. We see and hear positive signs about that excavator sales is picking up in whole Europe, including the Nordics. And this pickup is from low levels, so it's a lot of growth left.

Our profitability remains below target, and we are not pleased with that, and we need to plan for actions like reviewing pricing, the product packaging, strategic priorities for improved profitability and reinforced cost discipline. After a major transformation like the ERP implementation, it's easy for a higher cost base to become the new normal. As we move forward, we are sharpening our cost discipline and reinforcing the entrepreneurial mindset that continues to define our culture. This means maintaining tight control over expenses while ensuring we remain adaptive and focus on long-term value creation.

So we also have the second largest exhibition in our industry in Las Vegas in the beginning of March, CONEXPO. And it will be interesting to see, as I mentioned earlier, to see the knowledge level where it is right now then in the Americas. I would also like to extend my sincere thanks to our employees and partners around the world. Your commitment and dedication are the foundation of our success with the year marked by strong growth and increased market presence and a deepened partnership. We continue to strengthen our position as a global market leader now with a market share of 49%. Despite an uncertain external environment, we have established a stable and sustainable foundation for continued profitability growth. Together, we will continue to change the world of digging and create value for our customers, partners and shareholders.

That was everything we had for today's presentation. And now we're happy to open up for your questions. So feel free to jump in through the telephone conference.

So operator, whenever you are ready, please bring in the first question.

The next question comes from Zino Engdalen Ricciuti from Handelsbanken.

Starting off on the order intake side in Europe, you mentioned now that you didn't get this order from one of your partners. Could you elaborate a bit on the consequence or the scale of it?

I mean Germany is one of our biggest market in total then. So absolutely -- that is important for us. And I don't know if we communicate exactly how much they normally place or anything like that, but they place fewer orders and pretty large orders in that way, but it didn't come because they are building a new assembly factory for tiltrotators and that was not ready yet, and they were now using other places for keeping the stock and so on. So they wanted to wait to place it later when they knew that the new facility would be ready. So they're keeping pretty large stocks, of course, also normally, but now they try to slim it down a little bit. They are in an important market. So it would have been an important add-on for us on the order intake in Europe.

And if it's possible to say, is it to -- for your partner, are they increasing capacity with the new factory or anything like that?

Yes. There is a new factory that they are -- earlier, they've been having the assembling part of the tiltrotators in their old factory. Now they're building a totally new factory and demo area for a total of EUR 25 million. So there are -- I don't remember exactly the size of it, but it's more than double up what they're having in capacity in that way. So it's a big investment they're doing and they're doing because they believe in the tiltrotators in the DACH region.

Very, very interesting. I'm also wondering a bit on the gross margin. You mentioned that Sweden had negative pressure, but there are -- I guess then that since Germany maybe didn't get [indiscernible]. No, that was on order front. What I'm wondering is, did the higher deliveries to Europe because they were a bit lower last quarter, did that have a negative effect on the gross margin in this quarter?

No. Europe is normally a good gross margin country for us. Of course, it's been a little bit lower with the currency effects and so on. But as Marcus there and I also mentioned, the rental fleet there with Beauloc, it's always a little bit squeezed orders that you're getting like that and so on. But otherwise, they are normally good getting orders to the European market. It might be depending, of course, a little bit like we're also having in Netherlands, we're having the local coupler there where you're getting a little bit less margin thatn normally. But I would say, Europe is good for us to get orders to.

And I'll also ask on the IT costs, what we should expect ahead? How much of it has been taken? And maybe also elaborate a bit on the positive effects you expect to see from this implementation.

We expect, I would say, Marcus, that we will still have cost during Q1 because it's been like Hypercare and so on during the Q1. And then from Q2, we would see that our cost for the ERP system would go down in a bigger way than compared to. Q1 will still be higher and Q2 was supposed to be much lower than coming on that.

Yes. I mean, the project phase of it all ending, of course, that will take down some of the extra consultancy costs that we had connected to this, of course. And then some of the other legacy systems with licenses and so forth will come down as well. But we will see this trend more clearly in the Q2 for the IT, I would say. And then continue to come down after that with improvements that we make in the new whole setup as well.

And then that will also hopefully then -- for safety reasons, we've also been having higher stock for not running into problems or anything like with that. So -- but that will also work with that.

The next question comes from Agnieszka Vilela from Nordea.

I have a few questions. Maybe starting with order intake in Q4 and also your expectations for Q1. I can see that in the past 2 years, usually, the Q1 orders in absolute terms were flat compared to Q4. Now we had this dynamic in Q4 that you had some preordering, but also lower orders from Germany. So putting it all together, what do you think will happen in Q1 for you in terms of orders? Do you see a risk for any setback? Or do you think that you can kind of carry this solid momentum into Q1?

The feeling we're having as a current presentation is that we are optimistic about the outlook for our key markets, Europe and the Nordics, where we see positive trends, and we expect Q1 to be good in order intake for both Europe and the Nordics. Americas, it's hard to tell. It's depending a little bit what happens with the CONEXPO and stuff like that, if we can expect anything particular from there. Asia-Oceania is a little bit fluctuation all the time regarding what happens and so on. But I would say our expectations is to be keeping the momentum and being better each quarter than what it was last year.

Perfect. And maybe a question to Marcus really. Looking at 2026, what tailwinds and what headwinds do you see for your profitability? And maybe also if you could quantify the IT costs that you had in total for 2025.

Quantifying the IT, I'm not prepared to say any specific figures there. But talking about, I mean, a tailwind there, it will be a tailwind on the IT side, as we said, but starting to show in Q2, mainly before that, I think we still have to -- we have a higher level than we should have on a normal operational level. Tailwind from currency, I'm not expecting. But then, of course, we will look at, as Krister and I was into regarding the pricing and packaging, product packaging part. I think that will bring us back to a better position, especially coming into the second half of the year. So yes, as I said, there are some challenges, and we really need to address them, and we are, I believe. So this is my expectations at least.

But we also think we can get some tailwind from the volume, like we expect to keep growing and that will, of course, help us on the profitability level, the more volume we get.

Yes. Definitely, definitely.

Yes. So just maybe to end my questions here, you ended 2025 with 17% EBIT margin. So what measures really can you, as a company yourself, take now to push the margins towards 20% target? And do you think that it could be feasible to reaching that already in '26?

We're at least aiming at that. We believe that with the packaging and then the price adapting to the package and so on, we believe we can get the margins up and also the volume. And also then as we talked about that we not will have the cost for the ERP system change then at least after Q2 -- or sorry, after Q1, I think we will work our margin up. If we manage to reach 20% or more, that will be, of course, a challenge depending on now the Swedish krona has been kept on strengthening itself. But if we don't count on any help from that part, of course, we will have a challenge to reach it, but we still think it's possible to do it. We are not saying that we will not reach it, but we need to make some actions as we have mentioned during this call that we will launch pretty soon than what we need to do.

The next question comes from Anna Widstrom from DNB Carnegie.

So my first one is on how we should think about the preordering in the Nordics and Netherlands. Is there a substantial part of the ordering that we should rather expect to be delivered in Q2 than Q1?

Yes. It's like last year, it's probably spread out in that way, both Q1 and Q2. We had a pretty good preordering effect last year, not from Europe, but then from the Nordics. So I would consider it to be similar to that, like last year. It's spread out both Q1 and Q2.

Perfect. And then on the demand situation in the other Nordic countries, how is it in comparison to Sweden? And is Sweden expected to be sort of the main driver for the upcoming year in the Nordics?

Sweden is the country where we have seen the upturn or coming back the longest, I would say, at least. But we see also positive signs in the other -- maybe not Finland, Finland's economy is not that strong, but Finland normally delivers pretty good anyway then, but we will see there. But we believe that the rest of the Nordic countries will come back also this year. So we expect a pretty good growth in the Nordics together with Europe then. Also, if you're looking on the excavator sales there on Volvo CE reports, even if you don't see the Nordics separate, but you see that there a big increase of excavator sales in Europe then.

Great. And do you have any plans on increasing capacity in production and sales in any of the regions from today's level during the upcoming year?

Yes, we are working with changing a little bit where we are improving our possibilities of producing more in the same facilities like that. So there are no really big changes that we see right now than at least not in Stromsund. In Poland, we're talking about extension and so on, finding more space there because we will need that, especially since Europe is going good, and we're also selling more and more tools and so on there.

And could you give us some idea of how the EBIT margin would look if we were to exclude the Americas?

Excuse me, exclude what?

Americas.

No, we don't have a profit and loss on regions, then we would report each region in that way also.

Okay. But we could sort of assume that the cost levels should remain steady or maybe even increase from current levels given that we still have the positive view of the long-term possibilities in the region, even as it's quite uncertain in the near term?

I wouldn't say the cost level to increase since -- as we said, long term, we believe in it. But short term, it's more of a wait-and-see game and presence. So I would not -- shouldn't expect any increase in the cost base in the Americas.

No, I mean that's part of the strategic priorities that we need to look at where we believe we can get the most bang for the buck. That's part of the -- what we need to look into, and that's where we should invest more money in that case.

[Operator Instructions]

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

Thank you again for tuning in today, and we really look forward to seeing you all again soon. Take care, and have a good day. Thank you.

Thank you.

Good morning, and welcome to Engcon's Q3 report presentation. My name is Krister Blomgren, and I'm the CEO here at Engcon. And with me today, as usual, I have our CFO, Marcus Asplund. We will guide you through our Q3 report and also answer questions in the Q&A afterwards. With that, we jump into the presentation.

This was a good quarter for us. In fact, our order intake reached record levels. We have never seen this kind of performance in the third quarter before, which is fantastic. Europe really stood out, matching its own peak at SEK 206 million. What is great is that it wasn't just one country driving the results. Several of our key markets performed well at the same time, which shows the strength of our overall position in the region. Asia-Oceania also had a really strong quarter. We secured major orders in Japan and the overall momentum in the region continues to look very encouraging. And even though the big orders will be delivered into the market in 2026 and therefore, impact the early 2026 order intake in Japan, we still expect demand to strengthen further as the government incentive programs get underway after the turn of the year.

On the operations side, we faced some challenges with scaling our output and managing supply chains. We held back a bit our delivery potential, especially in Europe. However, we have made a solid progress, and we are now fully focused on strengthening our operations so we can turn our growing order backlog into actual sales and keep our customers happy. Strategically, we made some really important moves this quarter. We entered into a partnership with 2 major excavator manufacturers, Hitachi Construction Machinery and Develon. With Hitachi, we are now one of the preferred suppliers in the European dealer network, which is a big step for us. And with Develon, the 9 series excavators will come out tiltrotator-ready right from the factory, which will really improve efficiency and make installations much faster.

Finally, an updated market study conducted by Strategy& confirms we have strengthened our market position and continue to gain market share. Even more exciting, there's still huge untapped potential out there in the tiltrotator market.

So now I will show you some highlights from the market study that Strategy& have updated for us until 2030. This slide shows how market shares have shifted among the key players in our industry over the past few years. What really stands out is that Engcon isn't just holding the #1 position, we are strengthening it. Since 2019, we have expanded our lead by roughly 5 percentage points. In other words, we are clearly the winner in this market landscape. At the same time, we see that not everyone has been able to keep up with the overall growth in the market, and that's why our lead continues to increase. Of course, market dynamics vary from country to country, but the overall direction is unmistakable. We are growing faster than the market, and we are widening the gap to the competition. We are really proud of this development. It proves that our strategy is working and that we are growing faster than the market, which is exactly what we have set out to do.

So, on this slide, Strategy& have forecasted the growth for tiltrotators and even with everything we have achieved so far, it's clear that the biggest opportunities are still ahead of us. The tiltrotator market continues to show incredible strong growth potential. It's expected to expand by around 20% per year all the way through 2030. By then, the market is projected to exceed SEK 6 billion, and that's just the tiltrotator segment alone, not counting in the broader attachments or aftermarket opportunities that come with it. This shows just how much room there still is for us to grow, both by increasing our penetration in existing markets and by expanding into new regions. So, while we are proud of how far we have come, we are even more excited about what lies ahead. The long-term outlook for Engcon and for the entire tiltrotator industry remains extremely strong.

This slide from the market study takes a closer look at the market penetration, how tiltrotators are adopted in the regions where we are active and how that's expected to develop through 2030. What's really exciting here is that there is still a huge potential ahead even in the markets where we already have a strong footprint. The biggest expected growth will come from Europe outside the Nordics then, which is projected to account for about 60% of total unit growth between 2024 and 2030. Germany and UK stand out as the 2 largest excavator markets in Europe, both showing strong expected penetration growth. By 2030, we also expect France and Germany to reach the tipping point, where the tiltrotator starts to be seen as a standard piece of equipment, not just an optional add-on. What's less visible in the chart are the smaller percentage increases in large markets like North America and Japan. Both those movements are extremely important. Even a small shift, say, from below 1% to around 4% will have a massive impact on total tiltrotator sales.

Japan, in particular, is moving quickly. The adoption there is really standing out, helped by strong government incentives. Altogether, this journey will almost triple the size of the tiltrotator market by 2030, which is fantastic news for us and as the clear market leader. But what's even more remarkable is that even at that point, year 2030, about 93% of the global excavator market will still be unpenetrated. So, our journey doesn't stop there 2030. We are still really just at the beginning. Our growth story will continue for many, many more years to come then.

If we're moving back into the report then and taking a look at the key figures for the quarter. Net sales were roughly flat compared to last year. We are seeing a very strong demand, especially in Europe, but some of those orders have been held up in production. We haven't reached our full delivery potential in Europe yet, partly because some of our capacity has been tied up in the Nordics and for overseas markets. Those markets tend to plan further ahead, while Europe typically has more short notice on-demand orders, which makes production planning more challenging. On top of that, we have had some disturbance with component availability, which reduced our capacity slightly during the quarter. At the same time, we have been ramping up inventory and focusing on deliveries to overseas markets, which has also put some short-term pressure on Europe. The good news is that the order intake remains strong across all the regions, up 31%, in fact, this was our best third quarter ever, and Europe matched its all-time high for the quarter.

Our gross margin came in at a solid 43%, a level we are comfortable maintaining over long-term. EBIT margin landed at 17% and rose at 40%, which shows that we are continuing to deliver strong profitability and efficiency. And Marcus will guide you through the financial in more detail shortly. 

So now when we have been covering the KPIs, let's take a step back and look at the bigger picture, how our order intake and net sales are developing. Order intake came in at SEK 467 million, which is actually the strongest third quarter we have ever had, as I said. Demand remains very solid across all regions. Net sales landed at SEK 450 million, so essentially flat compared to the previous year. And if we look at the graph, it's clear that we are not yet seeing the full impact in deliveries. Some of the order intake, particularly from Europe, is still sitting in the order book, waiting to be delivered, and we are now fully focused on ramping up operations to turn our growing order backlog into actual sales and to keep our customers happy, as I mentioned earlier. 

So, with that, let's dive into the regional performance and see what's behind these numbers. Let's start with the Nordics, which continued to perform strongly in the third quarter, both in terms of order intake and deliveries. We are seeing a clear improvement compared to last year, driven by a few positive factors. It's lower interest rates that are boosting investment appetite. The excavator market is recovering, something we can also see reflected in Volvo CE's report. And among dealers, inventory levels have now returned to more normal levels. 

On top of that, we have had some individual deals and slightly higher volumes spread across the region, which have added to the momentum. That said, the higher volumes are coming from markets with slightly lower average margin, which gives us a bit of negative mix effect compared to last year. Marcus will guide you more regarding that later on. Looking ahead, we expect the Nordics to grow in line with the excavator market. 

Turning to Europe. We had a really strong quarter in terms of order intake, matching our previous record of SEK 200 million for a quarter. What's encouraging is that this strength is broad-based. We are seeing solid performance across most of our key markets, even though the construction sector remains relatively weak, and there are some political instability in parts of the region. Despite that, demand for our products continues to grow. During the quarter, we have been very active, participating in several local trade fairs and visiting customers, and we are clearly seeing the result of that. 

As our market penetration increases, demand continues to build. Europe's order intake is very strong, but net sales are slightly behind. That mainly comes down to timing. In the Nordics, customers plan early ahead of the season. In overseas market, we build inventory first before those products reach end customers. But in Europe, orders come on much shorter notice, which is great for demand, but harder to plan capacity for in short-term. And the rise for our largest region, as we talked about in the beginning of the year, is still very much on. Looking at the rolling 12-month order intake, Europe has now overtaken the Nordics as our biggest region. 

Given our strong position in Europe and the fact that this is where the greatest growth is expected through 2030, we feel very confident about the long-term outlook for Europe. If you take a look at the Americas, we are seeing an increase in order intake from low levels. The levels are partly boosted by the tariffs imposed on the price. Challenges in the market persists. As things stand, there's a significant uncertainty, primarily related to tariffs, but also concerning the broader economic outlook. 

This creates a cautious market and as a result, of slower demand for construction equipment. It's a wait and see, both for our customers and us right now. But we are ready when the market turns around. We have strong confidence in this market long-term. It's a large excavator market with low current penetration, and that gives us significant growth potential ahead. 

Now over to Asia-Oceania. And here, we are seeing a very strong order growth in the quarter. This region naturally shows bigger swings from quarter-to-quarter simply because of the baseline is still relatively small. That means individual deals can really move the needle, and that's exactly what we have seen this time with large block orders in Japan driving the performance. We feel confident about the Japanese market. There are strong government support in place for investments in productivity through the MLIT and SME programs as we talked about on earlier calls. The update here is that the program starts has been pushed to January 2026. 

Japan is the world's third largest excavator market. So even a small penetration gain translates into meaningful growth for us. We expect the market to develop in line with our long-term company targets, though not at the exceptional level we saw this quarter. With this, I will hand it over to Marcus that will guide us through the financial development.

Thank you, Krister. Looking at an overview of the profitability trend. EBIT amounts to SEK 70 million for the quarter, corresponding to an operating margin of 16.9%. This is below our financial targets, and profitability is mainly held back by net sales not reaching its full potential in Europe, as Krister described earlier. We are also facing a tough comparison against Q3 previous year when results were boosted by a very high gross profit.

Having a closer look at the income statement to give a sense of how profitability has evolved during the quarter and what's driving the numbers. Starting at the top line, we are seeing a relatively flat development in net sales compared to last year. Naturally, the stronger Swedish krona plays a role here, but more importantly, deliveries to Europe haven't quite reached their full potential, as mentioned before. 

Moving down to the gross margin, that lands on 42.6%. A margin around 43% is generally a healthy level, one we aim to maintain over time. That said, it does look a bit tail in comparison to 2024 when we were on a significantly higher level. Those who listened in last year remember that I mentioned back then that the stars were aligned. Today, the stars have shifted into new positions. As an example, the currency tailwind last year has shifted to a headwind and building on what Krister mentioned on in the regions, we have seen a shift towards the Nordics as a share of revenue, which gives us a slightly weaker market mix from a margin perspective. 

The limitations in volume to Europe, thereby has a bit of a negative impact on margins. If we go further down and look at the cost, we are in line with last year and according to our scalable business model, we adjust our cost to match volume. One thing worth noting is the increase in R&D expenses. This is tied to us nearing the final phase of the third-generation development project, meaning we are capitalizing less R&D spend, hence, expensing a larger share directly. The total R&D spend is amounting to SEK 14 million, the exact same amount as Q3 last year. And finally, the result drops down to -- the EBIT line lands at SEK 170 million, corresponding to the margin of 16.9%, driven by lower gross margin and R&D expenses. So, if the stars were aligned Q3 last year, they have been knocked somewhat out of place this year.

Let's review cash movements and cash flow from our operating activities for the quarter. When we look at the movement of cash, 2 factors dominate EBIT and inventory. Starting at the top, lower EBIT had a direct negative impact on the cash flow and naturally acts as a drag on our operating -- operational cash generation. Regarding the working capital, the inventory buildup is twofold. It involves necessary stock replenishment, but crucially, it's also supporting our overseas sales pipeline. In contrast, our accounts receivables remain stable, consistent with our flat revenue disciplined collection efforts. The net result of this from EBIT and the decision to invest in inventory to fuel future growth brings our final cash flow from operating activities to SEK 42 million.

ROCE comes down slightly, mainly driven by EBIT and increased inventory levels. However, it has improved compared to last year and is in line with our financial targets. To summarize, looking at our financial targets. Due to the reason Krister went through, the net sales growth is not where we want to be nor where we expect to be, neither is the EBIT level. Capital efficiency and capital structure, however, continues to be at the satisfactory level.

And with that, I hand it back to Krister to summarize it all.

Thank you, Marcus, for guiding us through the financials. I will try to wrap it up then and starting with the summary and update. So, starting with our order intake, it continues to be strong across all regions confirming the high demand we are seeing globally. In Europe, in particular, both the strong order intake and our solid order book signal a really promising development ahead. Our updated market study also gives us even more confidence. It shows that the potential is still huge with 93% of the market yet to be penetrated even after 2030. So, there's a lot of room for growth.

So, when we take a step back and look at the full picture, our strengthened market position, the enormous growth potential ahead and the clear trends in adoption, it's obvious we are in a great position. We have proven that we can grow faster than the market, and we have done it by staying true to what makes Engcon special, innovation, quality and a genuine understanding of our customers' needs. But we are not slowing down.

The opportunities in front of us are bigger than ever, and we are ready to seize them by continuing to lead the way, developing smarter solutions and expanding into new markets. And the best part, we are still just getting started. Our journey ahead is full of possibilities. And together, we will keep driving change in this industry, one tiltrotator at the time.

And before we move on, I also want to highlight something we are especially proud of Stig Engström, our founder and majority shareholder being named Arets Foretagare i Sverige 2025, Entrepreneur of the Year in Sweden 2025. It's a fantastic recognition that reflects not just his vision, but the innovation and commitment that define Engcon as a company.

And if we're moving over to the last slide in the presentation, where we're looking ahead to next quarter, we're expecting a stable demand, mainly driven by the Nordics and Europe. In the Nordics, we are now seeing a return to normal seasonal buying behavior. Customers are placing orders earlier again to prepare for the digging season. That gives us a better forward visibility and more efficient planning. In Europe, demand remains strong. That's supported by mainly 2 things: continued market penetration. We are winning more customers quarter-by-quarter. And we also have a solid order book that we're carrying over from recent quarters. So overall, the outlook is stable, steady demand and good underlying momentum in our 2 most important regions.

So that was everything we had for today's presentation. Now we are happy to open up for your questions. So, feel free to jump in.

[Operator Instructions] The next question comes from Agnieszka Vilela from Nordea.

Maybe I can start with the momentum that you see in order intake in October, if you can elaborate on that. And I think also, Krister, you mentioned some prebuying. So how should we think about that happening? And if you look at the prebuy orders, can you tell us what is usually the timing of delivering on such orders?

Yes. We still have a good momentum in -- right now then. And we're talking about prebuy. We expect it to be some prebuy effects this year. We didn't expect it last year, but we got some prebuying then in December. And since the Nordics are more coming back to normal behavior of purchasing, we expect them to place orders in November, December for being delivered in Q1 and Q2 then.

We are having -- we might see some from the European region also especially the Netherlands that have been coming higher up on the tipping point and know that a lot of machines will be equipped with tiltrotators. And also, maybe because of that, we have seen a bit longer lead times that they are seeing the need of putting the preorders in. I don't know if I answered all your questions there Agnieszka.

Yes, that Sounds good. Thank you for the color. And then a question maybe to Marcus on profitability. And I understand the fact that Q3 last year was very strong. But still, when I look at your gross and EBIT margins, they did decline by 3 to 5 percentage points in the quarter year-on-year. Can you elaborate on the primary drivers behind the margin compression? And also, are you taking any specific own actions to restore margins towards your targets? Or do you believe that the margin will recover once we see better deliveries and volumes?

Yes. I truly believe that it will recover. But if we go back to last year, then exceptional gross margin started that. As I said, the stars were aligned. There was the tailwind from currency, for example, that has shifted into a headwind that took a knock off 1% or roughly. And then the market mix was more favorable at that time with less to lower margin markets at that point, which we have now more to in this quarter. So I believe that we see now also when we said that we squeezed Europe a little bit in this quarter that I expect it to come up from where we are right now.

And then the last question for me. I appreciate the fact that you shared with us the market study. But with that said, I was a bit surprised on the expectations for Japan given all the subsidies and projects that are in place. So only 4% penetration by 2030. Do you see that there could be any upside to that? And why don't you think that the market could move towards higher penetration faster?

This is a study that they have made. And I mean, 4% of 55,000 units, it's a lot of tiltrotators then coming into the market. So, it's always hard to predict how fast it will go. Some people, when we talk to them in Japan saying that when they start realizing these things, it moves fast, and some saying that they are slower in that way. So, I think there's still some -- the OEMs are on the train, but some of them still want to stand there and watch a little bit. So, there's still some resistance from the OEMs also to join forces on this because it will, of course, affect a little bit how many machines they will sell in Japan and so on in that way. So, a little bit too early to say. If we're sitting here next year, we may be there to be more optimistic or maybe pessimistic, but I hope we will be more optimistic.

The next question comes from Anna Widstrom from DNB Carnegie.

So firstly, I just want to start on the block orders in Japan. So given the solid block orders, what does that mean timing-wise for deliveries?

Yes. That's -- all the bets are on that right now. It's sold to our old distributor then in Japan. So as soon as it arrives and passes custom in Japan, it will be revenue for us in that way. So, it will be hard for us to know exactly. It will be a border line then in that way if it will be Q4 or if it will be Q1. It depends on the wins and everything like that on the sea then.

And given that we have a very solid order intake in Japan, how much of group orders does Japan stand for now in this quarter?

I don't have that percentage. It's, of course, still low numbers we're starting on in Japan, but we can take a look on that later on and see how it looks like. But we're starting from really low numbers, but it's a big increase there then.

The next question on the less favorable market mix for margins. How does this look for the order intake? Should we have a similar assumption that the market mix will be less favorable looking on how the order intake is looking?

Normally, like Europe is a better mix for us. The more we can have, as you could see from last year on the deliveries, we had pretty good deliveries then in Europe. So, for us, that's one key. Americas have normally been good, but it's slowed down. And then in the Nordics, it's not as easy to say the whole Nordics because it's a little bit different within the Nordics also on the margins and so on. And for this quarter, we had a stronger deliveries to our 2 weaker countries or markets in the Nordics then. So, it's hard to predict just by reading the order intake in that way exactly if you don't know exactly how the orders are looking.

So finally, from my side, just looking on the Americas, the ordering was positive, sharp shift from Q2. Could you just give us some sense of the underlying volume growth and how much your sense is that order has been delayed into Q3 from Q2?

Sorry there. Was it Europe you talked about there or?

No, the Americas, given that the order intake has taken a sharp shift from Q2. So firstly, how the underlying volume growth is as you have price increases? And if you think that part of the order intake is delayed orders from Q2?

I mean Q2 was like a wet blanket over that in total. So yes, maybe a few delayed orders, but I don't think it's that much. It was more like business were starting to happen again and those that have been thinking about it decided to go for it. And it's not a big order increase compared to last year since we have been putting out the tariffs in the price in that way.

So, volumes are rather flat year-over-year in the order intake. Is that how I should understand?

On Q3 level, at least, then I think order intake might be a little bit down in total.

The next question comes from Zino Engdalen Ricciuti from Handelsbanken.

Starting off with the strong order book you highlight, particularly in Europe. How do you expect it to convert in Q4 if you feel that you have both the capacity and also the supply chain to convert it?

European orders are -- normally, they want to have it as fast as possible, as I mentioned earlier. So, our expectation is that what we have in the order book for Europe should be delivered in Q4. There is some orders in the Nordics that are for after the end of the year, but the majority of that is also wanted to go out in Q4.

Very clear. And also, you mentioned Volvo Construction Equipment briefly, and they highlighted particularly order intake for excavators in Europe, given that their order book is a bit longer than yours. How do you feel the setup for 2026 from an underlying market point of view?

We see it's a market recovery. In that way, Volvo is -- if you're looking on the Volvo's reports that they're having a much higher order intake, and they also had higher deliveries in Europe now in Q3. So, with that, it feels like we've been in the bottom regarding excavator sales. We've also seen that U.K. that was probably hit the hardest last year, have also seen a recovery this year on approximately 9% up on year to September -- for the full year until September. So, we started seeing a small market recovery in excavator sales.

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

Thank you so much, everyone, for all the good questions. And if anything else pops up, don't hesitate to reach out to us. We're always happy to try to help you. Thanks again for tuning in today, and we really look forward to seeing you all again soon. Take care and thank you.

Thank you.