FLSmidth Stock

Good morning and good afternoon, everyone, and welcome to the FLS Q2 Investor Call. My name is Toni Laaksonen, and I'll be presenting today with our CFO, Roland Andersen. And we start the presentation with the Q2 highlights.

So first, deep diving to the market and commercial aspects and from there, we can say that with 2 business lines, we saw excellent development in Q2. The Service business line continued their strong commercial performance with their order intake, and we were growing plus 14% organically in Q2, which was excellent development and continued development compared to the previous quarters.

Then with our Pumps, Cyclones & Valves, we demonstrated similar great development, and we were gaining some shares from the market, and grew 18% organically in Q2, which was clearly ahead of the certain peers. Then on the other hand, with our orders, we saw some development now with the bigger, larger orders. And the first one was now awarded during the quarter that came from South Asia for our products business line, and it was around DKK 300 million. And in this case, we were awarded to the supply technologies related to iron ore beneficiation project. So a good order for us and demonstrates that the market activity is building up also with the bigger projects.

Then a few words on the financial highlights. So our revenue development was great throughout the business lines. So all 3 business lines demonstrated excellent revenue conversion in Q2, and we were growing organically by 16%. Then on the other hand, this revenue conversion was showing up in our margins and EBITA margin improved significantly, and we landed at the level of 17.3%. So good development there. So 3 -- sorry, a 2% jump from the previous year. So great development.

Then one of the development areas for us is the cash flow. With our cash flow, we were impacted by our net working capital. So net working capital was building up during the quarter, and therefore, we didn't have positive cash flow, and we will come back to this topic later in the presentation. Then strategic and corporate highlights. There, we are developing well with our share buyback program. So it was launched, and we have been now progressing with the share buybacks according to the original plan. Then on the other hand, we have been developing now the new team set up with FLS. And we made several executive appointments after the quarter.

So 4 positions and nominations were announced. First of all, our General Counsel was nominated. Today, we announced the Chief People Officer nomination, and then we also have a new position within the executive team called Chief Strategy and M&A Officer who will join us next year, and then we as well announced the new President for the Service business line. All these announcements then support our new way forward and our growth plans.

Today, we also informed about certain adjustments to our financial guidance. And we practically narrowed the guidance with our revenue growth, so that we expect to grow between 0% to 4%. Previously, it was minus 1% to 4%, and then with the adjusted EBITA margin, we expect to land between 16% to 16.5%, previously, it was 15.5% to 16.5%. So good development also from the strategic point of view.

Then moving on to the sustainability aspects. Here, we had a positive development with our safety, and we can be very happy about that one. So our injury rate improved during the quarter that we have been seeing continuous positive development this year with our health and safety figures. So that's positive. Then with the other sustainability measures and KPIs, we were not trending that well. So there were slight decline throughout the other KPIs. Some seasonality impacted on this, for instance, related to the water consumption and emissions. And then on the other hand, one update was done with our reporting practices. So the Scope 3 greenhouse emissions were -- are being reported annually from now on. So therefore, we have been taking that off from the quarterly reports.

Then a few words on the market outlook and how we are seeing the mining business development. So as we have been stating previously, we see the same outlook with the bigger mining projects. So most of them are very active at the moment when it comes to our customer base. There's more and more engineering activity and the pipeline is building up. Copper and gold prices are still at relatively high levels, which is then supporting the pipeline. And especially with these commodities, we are seeing a lot of major movement.

And based on this, we still expect that in the end of this year and next year, we are seeing larger greenfield projects being sanctioned. Therefore, we believe that in the end of this year and next year, some of these projects will materialize and will be visible in our orders. So positive development in that sense, and the outlook remains as we have been stating previously. Then on the other hand, with the brownfield sites, we see a positive development. So all the miners are running their sites as fast as possible and trying to develop their efficiency.

From our point of view, this is visible then with the service business line orders and with our Pumps, Cyclones & Valves. So there are smaller replacement investments taking place, upgrades, modernizations, and of course, all these sites require services and maintenance, which is helping us then from the service point of view. So there is a robust outlook for the Services and PCV business lines in this respect. And we expect that the order intake development and revenue conversion continue in a solid manner during the next quarters.

Then when deep diving into the business lines, we start from the Service side. So as mentioned previously in the call, order intake was very positive with our Service business line. So we were up organically plus 14% in the quarter, and then 16% year-on-year. Then on the other hand, we're looking at the longer-term development. The first half was great for the Service business line, so plus 17%, and now we have been having good order intake level throughout the last 3 quarters. So very positive market development there.

And then the revenue conversion improved pretty nicely compared to Q1. So we were up with our revenue pretty significantly compared to Q1 this year, and that demonstrated then that our supply chain worked well during the Q2, and we expect that the same continue within the next quarters. And of course, this revenue conversion has helped us then to reach higher profitability in the quarter. So great development in Q2 with Services.

Then when looking at the margin, the margin was a bit lower in Q1 with our Service business line. But now when the revenue conversion improved ,we jumped to the normal levels with this business line. So a bit over 20%, and as we have been stating, the normalized level with Services is somewhere between 19% to 20%. So this is something that we are expecting from the business lines -- from this business line when moving forward. So a very good quarter for the Service business line all in all.

Then our Products was converting revenue very fast in Q2 and that was a really positive outcome then from the Products side, and they had their product -- project portfolio well under control, and the deliveries were improved so that we were executing faster and faster throughout the quarter, which was then visible in our revenue. So good supply chain management from their side, which was then visible in our revenue figures. So good development all in all, in Q2. And as a result of this, our organic revenue growth is now on the positive side when it comes to the first half figures.

Then with the order intake, we were up compared to last year, slightly up, and then the first half landed a bit lower than last year. But all in all, we are seeing the same development here that we expect that during the end of the year, we are seeing the larger orders. Our products business line is heavily dependent on the larger orders when it comes to the order intake. And therefore, we believe that the order intake will improve in the end of this year and then next year.

Very positive side with the Products business line was the profitability development. So when the revenue conversion improved, we also jumped to the black figures. So now we have the first half results done with the Products and the end result and outcome was that we are a bit above 0, which is an excellent achievement compared to the previous years. So this is excellent development from the Product side. And of course, there are still fluctuation with the quarterly figures, but we are getting more and more towards the situation where we are continuously on the black figures with this product line.

Then the third business line, Pumps, Cyclones & Valves, a very positive quarter over here. So we are gaining the momentum and keeping it up with our orders. So the order intake has been on a very good level and developing positively already throughout the last 3 quarters and excellent development in that sense that we were growing close to 20% in Q2. Also, the revenue conversion improved with PCV compared to Q1, and that was a great achievement from the business line leading to a fact that the organic revenue growth was 8% during the first half of the year. So all in all, a really good start for the PCV business line and the outlook remains very positive here.

Then of course, when the revenue conversion improved, it also helped us with our margins. The margins were in line with the expectations. There were certain mix-related things between our product and aftermarket deliveries, which were impacting on the margin slightly. But all in all, that the margin was at the expected level. So good development in DKK, especially, so the margin in DKK jumped from Q1 quite nicely. So a positive story with the Pumps as well in line with the Services.

And now we move on to the financials, and I hand over to Roland.

Yes. Thank you for that, Toni. And as you say, 14% growth overall in order intake and 17% growth nominally in revenue. And with cost in check, that means we can post an adjusted EBITA margin of 17.3%. And after taxes and financials and a few other bits and pieces, profit for the period of DKK 441 million. Gross margin stayed at a healthy level. There's clearly a positive mix on company level from the product business line still only being about 20% of total revenue, but still a strong and healthy gross margin delivered by all 3 business lines. Our SG&A costs are slightly up in Q2, but as a percentage of revenue, it's down to 17.8% for the quarter.

All this higher revenue trickles through to the 17.3% in EBITA [ margin ] as also Toni touched upon. Our net working capital is up and it's predominantly driven by growth. After 3 quarters of book-to-bill above 100, we're now starting to convert the backlog significantly higher levels to revenue, and that sits in an ongoing deliveries and work in progress and to a certain extent in inventories. If we look at our cash flows, our EBITDA earnings are up but mitigated completely by the change in working capital. That means that our cash flow from operating activities is minus DKK 84 million for the quarter, and adjusting for CapEx and investments and a bit M&A, then our free cash flow is minus DKK 135 million for the quarter.

But that also means that we are keeping our leverage at 0.6x that it has been for a number of quarters now, plus/minus, well below our capital structure target of 2x. We still have a lot of dry powder for M&A, and we continue to deliver on our share buyback program that by the end of close of business yesterday was a bit more than 40% completed. And on the back of highly satisfactory first half, we are adjusting our financial guidance for 2026 a bit, and Toni touched upon this. So we're adjusting our growth margin for the total company from previously minus 1% to 4% to now 0% to 4%.

And we are narrowing the EBITA margin expectations from previously 15.5% to 16.5% to now 16% to 16.5%. If we have a quick look on the bridge, how the 0% to 4% is expected to play out. We now expect the service business to grow 3% to 5%. I think previously we said 2% to 5%. Products unchanged, minus 5% to minus 15%. And our Pumps business is expected to do slightly better instead of 4% to 7%, now 5% to 8% for the full year organic growth.

And our EBITA margin bridge is our adjusted margin, we adjust about 1 percentage point for predominantly ERP-related costs that we are currently rolling out on the negative side. On the positive side, OOI, means other operating income, and this is predominantly the sale of the Valby headquarters in Q1 will leave us to a reported EBITA margin of about 20% to 20.5%.

Then we have just sent out the invite to the Capital Markets Day. It's going to be on the 17th November, as you know, and it will be held here in Copenhagen at our new headquarters. And we expect that to be 4 hours from 1:00 p.m. to 5:00 p.m. And I think the register is open for sign-ups as we speak. So we hope to see a lot of you there.

And with that, I think we give it over to Q&A.

[Operator Instructions]

I have 3, please. My first question is just on the full year guide, where you've only nudged us up slightly towards the top end. Given the strong Q2 results, should we see that there was maybe some early deliveries, which would mean that Q3 might be slightly softer than where we would expected, specifically thinking on Service where you previously communicated a more gradual pickup through the year on sales and margins?

Yes. So if we start with the margins, I think it's still a little wobbly. As you know, our Q4 is typically the strong quarter. And in Q2, we know for a fact that the Product business line will not convert nearly as much revenue as they did in Q2. So it's a little bit swinging. So we expect from the guidance a slightly lower margin in second half from the total business, and it's a bit swinging. Maybe the Pumps will do slightly better, Products will do slightly worse. And then Products will be back in black numbers in Q4 as from Q4 as we have promised before. .

Okay. Very clear. And then my second question is just on net working capital, where I understand there was obviously a build to support the Service and PC&V sales for the remainder of the year. So is it right to assume a strong unwind then in Q3? And then does this show you any expectations for the full year?

Yes. So we're not going to give you a number today, but we won't see an immediate unwind. So there's a significantly higher conversion of the backlog into revenue, and for a while, that will sit in work in progress. I think also the inventory levels are up to a higher level to support both the footprint expansion in the Service business line, but to a certain extent, also the same in our Pumps business. So the unwind of working progress will happen throughout '27.

Okay. And then my final question is just on PC&V. Just wondering if you could provide a bit more color in terms of the OE aftermarket mix in sales this quarter, so we can better understand the margin performance.

Yes. So with PCV, the roughly right split is normally like 30% to 70% as a guideline. So 30% of -- from the equipment business, 70% from the aftermarket. And that was the outcome in Q2. Sometimes, the equipment content is a bit lower. And then, of course, that mix impact then, of course, might impact on our margin as we spoke in the call. So even slight changes there might adjust the margin level, 1% or 2%. So that was visible now with the figures. But all in all, PCV, great results. And now when the equipment business is as well building up, it will generate an aftermarket when moving forward even more.

The next question comes from the line of Ed Hussey from UBS.

Maybe just following up on [indiscernible] question, and asking it a slightly different way. So the midpoint of guidance seems to imply 0% organic revenue growth in H2, and you delivered a book-to-bill of 1.1x in H1. And you've also got elevated backlog and not a particularly tough comp. So I'm just wondering, is that -- is there some other kind of headwind that we should think about revenue growth in H2?

So there was a little bit of a bad connection, but you're talking about growth or margin?

Talking about growth, growth revenue.

Yes. So the product business is going to convert less revenue in Q3 than they did in Q2. So Q2 was a pretty good revenue considering the backlog for the product business is going to be less in Q3 and I think all business lines have a pretty tough comp in Q4. So basically, all business lines delivered revenue in Q4 and especially the Service business line. So I think you need to see if we hit the midpoint, then we have done quite well for Q4 also with the same growth numbers. That's how we think about it. .

That's very helpful. And then maybe just one more. Obviously, some pretty positive commentary on the potential near-term large order FIDs, is there any chance you could maybe just give us a bit more color in terms of regionally where -- what this comment relates to? Is this sort of North and South America and specifically, maybe which countries would be super helpful.

Yes. So maybe geographically, we can talk about the regions. So of course, from our perspective, South America is among the biggest or the biggest region for us. And there we see quite nice activities, especially with the bigger projects and then some activities as well in North America and in Central Asia and Africa, but the majority is definitely coming from the South American side.

Next question comes from the line of Vlad Sergievskii from Barclays.

Yes, gentlemen, I have 3 questions. I'll ask them one by one. Just one on the mining cycle. Look, it was predominantly about brownfield projects up until now. Are you actually seeing a broader appetite for large greenfields across customers from now on? Or we are talking about those 3, 5 big greenfields that we know about for a long time, and finally, they are moving towards FIDs?

Yes. So on the Project side, we are seeing both type of activities with larger orders so that we have brownfield expansions which we almost consider as greenfields when the customers are ramping up like additional lines for their existing mine sites. So these type of activities are taking place. And then as mentioned, especially in South America, we are seeing that there are certain complete like a greenfield projects moving forward and there is now more maybe support from the local governments in those respective countries to promote the mining projects and investments. And that this favorable environment, of course, is helping our customers and at the same time, of course, the price level -- the commodity price level is high. So this combination is pretty good combination when you are making the investment decisions.

That's great. If I can follow up on specifically for South America, are we talking about like 2, 3 large greenfields there that are moving forward now and getting support? Or do you think it's a broader base of greenfield, let's say, mid- to high single-digit number, which is potentially up for FID in the next 2 to 3 years?

I would say that it's a broader thing at the moment. There are several projects under development and under consideration and already in the engineering phases. So of course, any projects which are in the engineering phase, and if we are involved, we have pretty good visibility that what's happening with the project.

That's super helpful. Can I specifically ask also about your product orders. Excluding the largest DKK 300 million order that you booked, smaller base orders appear to be on the lower side this quarter. Is there any particular reason for that?

So like I mentioned, the Products business line is dependent on these bigger orders quite a bit. And practically, it means that the timing of these bigger orders might impact on their top line order intake figure quite notably. So based on our outlook, even though the total order intake wasn't that high. We are confident that there are no issues with this business line as the outlook for the end of the year is rather positive.

Understood. And final question to Roland, please. Can I go back to those work-in-progress assets. I mean it was a very sizable DKK 500 million plus increase this quarter. It equals to what, 12%, 13% of your quarterly sales. Could you give us some idea of what exactly you're building there? I mean DKK 500 million is bigger and perhaps the biggest projects you're working on right now?

Yes. So it's a number of things, well, actually across the 3 business lines. So we have a number of upgrades and repair projects there. And the reason why it sits there because it takes a bit longer to complete than just 4 or 6 weeks. Then there's a few bigger projects under construction, orders that we entered into a year ago, 1.5 years ago. And then to a smaller extent, also a few ongoing things on PCV. So it's a bit across the board. And that's also why I can say with certainty, we're not going to unwind it just in 2 or 3 months. It's going to take time until this is being expedited out of the backlog and then normalizing a bit more.

The next question comes from the line of Tore Fangmann from Bank of America.

Just 2 from my side. First would be on the outlook for the Service margin. You've done a very good job in ramping up your consumable business. Do you see a negative mix impact in the coming quarters when consumables might be growing faster than the modernization step up of your business?

So as mentioned during the presentation, we still believe that with our future mix, we are reaching this 19% to 20% profitability corridor. And of course, quarter-by-quarter, there can be fluctuation and this is then something that we expect to deliver with the full year results from this business line. So even though if the consumables business grows, we don't expect that our margin will slide. And then on the other hand, of course, as you can see from our quarterly figures, if the business goes up, it has a positive leverage impact that as our fixed cost will not go up with that pace.

Understood. And just lastly, more strategic, you now have a Chief M&A Officer. Could you maybe flag a little bit on what is your appetite for M&A going forward? Are you interested in larger transformational M&A? Or will you stick to purely bolt-on?

So we have been building the pipeline this year for the M&A cases, and we are focusing on the bolt-on cases, and we are reviewing them in detail. And let's say, that the pipeline has been developing positively. And Roland mentioned that we still have some dry powder left and available for these M&A cases. So the intention is that when the right target is there that we would move forward. So late this year or next year, we would expect that we have some news around these topics.

The next question comes from the line of Claus Almer from Nordea.

Yes, also a few questions from my side. So the first question goes to this quite impressive order intake you had in Q2 within Service and PC&V. To what extent do you believe this was based on market share gain and also maybe within Service, a result of your investments and initiatives within your Service setup and moving closer to customers, et cetera, et cetera? That will be the first one.

So if I start from PCV, I would say that the growth has been now on a good level, throughout several quarters, and we have been seeing positive order intake, like double-digit order intake continuously. So there, when comparing to the peers, I would say that we have been growing a bit faster. And our organic development plan, which we have for the unit is paying off. So we have been expanding our supply chain with the unit, we have been improving our service coverage with the unit and also expanding our sales network. So all these organic activities are definitely helping us now to gain more order intake. So that has been positive.

Then when it comes to the Service business line, one aspect is that we have been increasing the Service network, getting closer to the customers, that's helping us with our order intake. And then, of course, the one big positive driver there within that unit is the consumables business, which has been performing well, and we have been increasing our order intake relatively fast. And we have a clear plan that how to develop that product area than forward in the coming years.

So then does this mean that all the initiatives you have done so far has been executed, and we should expect more growth in line with the market? Or do you see further potential for the things you have already implemented?

The market development, we expect it to be like positive. The expectation is that the mining market grows something like 3% to 4% somewhere there when looking at the copper demand, for instance, so the copper production is expected to grow with that pace. And of course, if the copper production grows with that pace, it's also helping us from the growth point of view. But then we come to the more detailed forward-looking plans with the unit when we have the Capital Markets Day.

Fair enough. And then my second question goes to the Pump area. With these equipment orders you have received and have grown quite nicely in the last couple of quarters, when should we start to see the aftermarket orders and revenue picking up?

So it depends, of course, on the timing of the installation. But normally, if it's a replacement case, the replacement happens within the next months from the order. And then after a few months, the Pump will then generate aftermarket business for us. If it's part of a larger, like a brownfield expansion, then the delivery time might be a bit longer. But normally, with the Pumps, we are talking about the replacement cases. So then in a few months that the new pump will provide more services to us.

So would it be fair to assume that already in Q3, we start to see this effect and getting even stronger in Q4?

Maybe a bit longer in your spreadsheet there, that would be safe.

That was all and taking down expectations and we're not getting too carried away.

I was clarifying. That was the intention.

The next question comes from the line of William Mackie from Kepler Cheuvreux.

I would like to ask a couple more questions on your outlook again, please. And let's stick with Service. Roughly, I think if my numbers are right, your orders over the last 3 or 4 quarters are up mid-teens in Service. Your backlog is up above 10%. If I take the midpoint of your guidance, for the full year and look at what you've achieved in the first half, you're implying a sort of average low single-digit growth in revenues in the second half, which seems hard to reconcile. So maybe you could put some color on any specific features that would hold back the timing of the book-to-bill conversion and limit the conversion of the backlog and prior quarter order growth into the second half?

Yes, that's a valid point. So we have been commenting this in the previous call as well. But with the Services, we have in the mix, certain bigger upgrades as well and then as well certain like mill liner deliveries. And in these cases, for instance, the lead time is much longer from the order to revenue conversion. So we are talking about, in some cases, like even like 9 months or longer because the customers are ordering the parts for their next shutdown and that the shutdown might be such that it's 6, 9 or even 12 months out because they're advanced ordering. And then it practically means that we are gaining the orders this year, delivery maybe in the end of the year or even early next year. So that's causing some of this timing issue. But of course, when the backlog is building up, we have a pretty solid foundation then to deliver revenue this year and early next year based on that. But we need to remember that there are these bigger cases as well in the Service business line mix.

That's helpful. I guess, again, you could do the same math for both divisions, but I guess the book-to-bill conversion for PC&V is shorter. And again, you've been achieving high teens order growth and the backlog is up again. So to the point that you're implying kind of mid-single digit at the midpoint of second half growth despite the strong momentum we've seen in the backlog, is it the same feature what you would spotlight for PC&V?

Yes. So I think -- this is Roland. Just -- so PC&V also have capital orders that follow the product sales, so to speak, right? So it can be a bit longer for the capital part. So that's one thing, but also mathematically, both on Service and on PC&V, we're up against a relatively high comp in Q4. So it's not just taking the growth numbers from H1 and then applying. It needs to be on top of a relatively high comp just as a reference point.

My last question probably comes back to net working capital and cash flow from operations. I heard you earlier, Roland, but on limiting your guidance around cash flow, but I think in the past, there's been a rough expectation you might come close to DKK 1 billion of cash flow from operations. Clearly, that becomes a very big hurdle after the first half cash generation. Is there anything that could swing contract liabilities in the second half or swing a containment of growth in contract assets that might help the working capital H2?.

There may be a few things, but I think we don't expect it to unwind any time soon. That also means that our CFFO expectedly won't hit DKK 1 billion. I think it will be maximum DKK 700 million or so for the remainder of the year and then the unwind will only be visible sometime next year. So we've been caught surprised a little bit by the high backlog conversion, you can say, which is basically positive but it means that we tie up work in progress for a while longer.

The next question comes from the line of Lars Topholm from DNB Carnegie.

Yes. Also a couple of questions from here. I'm super sorry, but it's also about your revenue guidance. So if I take your full year outlook and deduct your H1 revenue, you have to produce a revenue between DKK 7.4 billion and DKK 8 billion in H2. Last year, you did DKK 7.5 billion. And Roland, I hear what you say about work in progress materializing next year, not this year. But if I look at your backlog, it's up by 8%.

If I look at the percentage of that backlog that you say should be converted into revenue before the end of the year, that is up from 32% last year to 48% this year, which means that backlog conversion should produce DKK 2.1 billion more in revenue this year versus last year if the math is correct. And I also think when work in progress is up by 43%, even if most of that is for next year, that also implies growth. I simply don't understand what I'm missing in this picture. I can't make the numbers stack up. So please help me out.

I think you're right, Lars, that I think you're -- DKK 7.4 billion, up to DKK 7.8 billion or DKK 7.9 billion or so given constant exchange rate for the remainder of the year. But no more than that. And that also means -- so that's going to be the conversion that yields the organic growth guidance. And that means that it will take a while for us to unwind the work in progress. It's not necessarily linked, but in this case it is.

But Roland, if I take your backlog by H1 last year, then 32% of that, which is what you said would be converted before end of the year was DKK 3.4 billion in revenue, which means you produced DKK 4.1 billion in revenue from things that were not in the backlog by the end of H1 last year. [indiscernible] exactly the same calculation for this year, it's DKK 5.5 billion in revenue from conversion of the backlog. So you implicitly only expect to do DKK 2 billion from things outside of the backlog. Why is that revenue production from things that are not in the backlog so dramatically down this year?

Maybe I'll add one thing which relates then to the product business line. Of course, with that business line, as we have been stating, we know the timing quite well. And when the revenue recognition will happen. But of course, there are certain uncertainties as well with the timing of the ramp-ups for individual equipment expansions and replacements. So that's of course, impacting on our revenue guidance and that was visible when we were updating now the business line specific ranges.

So with Services, we did modifications to the revenue growth guidance and the same with PCV. So there, we are pretty confident that we are improving compared to the original guidance, and we can deliver. But of course, this product side is then causing certain uncertainties related to the timing of the deliveries. On that side, the timing of the deliveries is, to some extent, of course, controlled by our customers. And we didn't change the revenue guidance for the products because of this reason.

But that doesn't really answer the question. So in H2 last year, you generated DKK 4 billion in revenue in addition to the conversion of your backlog. This year, you only guide for DKK 2 billion from that. Why so much less?

So we -- I think I need to look at the [indiscernible] more specifically, Lars, but the delivery cycles are longer this year for SPL and also for PBL. And that's why it sits in work in progress, and that's part of this reason as well. I think that's what you're fishing for.

No. No, not really. I'm just fishing for the proportion of revenue that is not converted from the current backlog. I mean we know your backlog, that's DKK 11.5 billion, say, 48% of that will be converted before the end of the year. That's DKK 5.5 billion. To reach your guidance, you need to make DKK 7.5 billion, so you need to produce DKK 2 billion in revenue outside of the current backlog. Last year, that number was DKK 4 billion. And it's the improvement from DKK 4 billion to DKK 2 billion, I don't understand.

There's longer delivery cycle, right? I'll need to come back to you on this one. So the growth in the bigger upgrades in the Service business line and PCV partly related to that, that just gives us a longer cycle on the backlog conversion.

The backlog conversion, that was a number that was up to DKK 5.5 billion. Its numbers you have disclosed.

Yes, exactly. But it takes longer.

48% of DKK 11.5 billion is DKK 5.5 billion. That's...

Exactly.

Half number, I guess.

Can I have a look at the numbers you're looking for and come back to you, Lars?

That would be amazing. I have a second question that goes to Products and looking further ahead than just this year, how should we think about the margin development if we assume the mining cycle becomes stronger, should we think about it in a way that gross profit will improve in line with order intake and then you will have a relatively fixed OpEx base or what assumptions should I use, if I want to calculate the margin a couple of years out?

So this is definitely a topic which we will address more in detail when we have the Capital Markets Day. But what I can say is that we have continuous improvement initiatives ongoing throughout the business lines to improve our supply chain, cost efficiency and so on.

So -- and this continuous improvement initiatives will hopefully benefit us. And at least I don't expect that our margins would decline as such. But there might be some improvement opportunities through these activities in the long run. But these expectations, we will open up more when we present the Capital Markets Day materials. But then I can ensure that the continuous improvement is happening all the time within all the business lines.

Is the incremental margin in products double digits?

Lars, we will come back to that.

The next question comes from the line of Christian Hinderaker from Goldman Sachs.

I've got 3, if I may. I want to start on the product side and a follow-up to Vlad's question on the DKK 4 million or DKK 2 million base orders. I think that's the lowest level since you introduced your new segment structure. You mentioned in the commentary that the business needs to see more large project activity to grow and I appreciate that point. But I guess, the question is a little bit more strategic and about your positioning in the market, I mean, your nearest peer had very strong base orders in the second quarter.

And I guess trying to understand if that DKK 4 million or DKK 2 million number is then comprised of DKK 4 million or DKK 5 million, shall we say, large package orders or if it's a broader steps. How do we think about the base order math? Are you trying to sell stand-alone equipment units? Or is it more sort of packages you're trying to bring to market?

This is as well among the topics which we will address in detail actually in the Capital Markets Day. So we will elaborate the more detailed plans that how we move forward with the business lines and how we are planning to grow their businesses when moving forward. Offering development definitely is as part of this, and we will outline the plans that -- how we can take forward all the units.

And like I said, at the moment, we are, to some extent, dependent on the larger orders with our Products business, maybe unlike compared to our peers. And then that might be, let's say, a positive development opportunity for us strategically when moving forward. But I would say so that we can comment on this very much in detail when we host the Capital Markets Day. But this is among the topics that we have on the list.

Okay. Maybe then turning to the margin in Products just briefly. I mean, were there any one-off contributors? I think there was some provision release in Q1?

No, not really. This was a pure volume thing. So the revenue number...

Badly...

The level of -- so at that revenue level, the business line is now currently in black numbers.

Very clear. Maybe just finally then on Pumps. Obviously, you've seen the 12% growth last year, high teens this year in order intake. You've said that you're taking share. So I guess, interested to hear regionally, whether there's any concentration to those share wins? And also, I guess, in what form you're taking share? Is that from new projects? Or is that field trials on existing installed base? And then, Toni, you kind of get a steer on the revenue mix in Q2. Perhaps you could just add a comment on the order mix. It sounded like that was more OE weighted than usual.

Yes. So when it comes to the installed base development, we are following that very closely. And mostly, we are seeing these replacement cases. So replacing existing pumps with our products, and that has been really driving and the market development when it comes to the equipment deliveries. And as we are -- we have been seeing this development now throughout the quarters. It also starts building up this aftermarket on top of it. So the more we have installed base, the more there will be aftermarket. So when it comes to the products on the Pump side, it's mostly replacement.

We have certain project deliveries as well in the mix when you look at the order intake in the long run, but the replacement business is the more dominant one. And through that, we are seeing that the install base is developing well and good development, for instance, in North America where we have a strong position through our factories and service centers, the same in South America. So positive development over there. And then we keep expanding in the other territories as well.

In Q2, specifically, we were a bit more equipment heavy and product heavy with our orders, which was demonstrating that we were winning a bit more cases than normally. And again, it should be then visible in the coming quarters in our order intake. Not in Q3, of course, but starting maybe from the end of Q4.

The next question comes from the line of David Farrell from Jefferies.

One question for me. I can understand kind of why my peers are kind of saying that the outlook for the second half is conservative. But if we look out beyond that in 2027 and look at the way that the order book is shaping up, it doesn't look to be down on a year-on-year basis, how much orders you got to execute in '27. So I'm just wondering, in terms of the business lines, is that purely within products? And if that's the case, to what extent can orders secured in the third and probably fourth quarter contribute into '27? Or is there anything within the PC&V and Service market, which is kind of running behind year-on-year?

Sorry, the line was pretty bad. So could you still repeat the key question?

Yes, it's basically kind of I can understand why my peer just saying that your commentary for the second half of this year is conservative based upon your order book and the way that those orders are split. But if you actually look out to 2027, the amount of backlog for execution is below where it was last year. So is there anything in any of the divisions which is looking behind year-on-year as you look into 2027? Or is it all just kind of within the Products division?

Okay. So when it comes to the business lines, of course, the fact is that if we see an uptick with the Product business line, with the larger orders that will as well then drive forward our project type of orders for PCV and Services. And then the timing of the orders will then define that how the revenue mix develops. But of course, if larger orders materialize, it means that there will be more installed base which is eventually driving forward our revenue as well. So then it would have a positive impact throughout the business lines.

But then with most of the product business line orders which are larger ones, the lead times might be even 1 year or longer. And then the revenue impact will not be positive then next year if we capture the orders in the end of this year or early next year. But anyhow, the underlying demand for the brownfield businesses like for the brownfield sites, that remains positive based on our outlook. And then if there are greenfield cases, these larger cases, then that will even accelerate then our business when moving forward. But we don't see a huge jump for next year from the revenue point of view because these larger projects, they take time.

Okay. That's very clear.

The next question comes from the line of Klaus Kehl from Nykredit .

Yes. Hello, gentlemen, can you hear me?

Yes.

Perfect. First of all, we talked a bit about this movement in net working capital, and I understand that it most likely will not decline before '27. But historically, you've been talking about a net working capital sales ratio of around 17%. Should we start to think about a slightly higher number, given the growth you are seeing in your Service business? Or yes, any thoughts on that?

I think we will be more specific on sort of a range number on the Capital Markets Day. But I think 17% is probably in the low end. I'll leave it at that now.

Okay. Great. And then order intake in Service has been quite strong the last 3 quarters. I think you've been hovering around DKK 2.4 billion, DKK 2.5 billion each quarter. And it's actually above that run rate you have been talking about for a while. So any comments on what would be reasonable to expect the coming, let's say, 2 or 3 quarters here? Or have you changed structurally for the better? Any thoughts on that?

I think we'll stick to -- there's been a lot of talk on our growth guidance. Yes, I think we stick to the 3% to 5% growth organically Q-on-Q. So that's going to give you the number you're looking for.

Okay. Okay. And then my final question is, do you have any news to share on this compliance case?

Yes. No updates on that one. We still continue the internal review on that matter. And then later on this year, we will then report the case and provide the materials to the authorities.

This concludes our question-and-answer session. I would like to turn the conference back over to the management for any closing remarks.

Yes. Thank you for joining the call. Great questions today. And we are looking forward to seeing you here in Copenhagen then in November. So you are warmly welcome to the Capital Markets Day and as mentioned today, you will get more information on our future plans then during that day. And our key management will be present then to meet you in person. So warm welcome, and thanks for joining the call.

Good morning, everyone and welcome to the Q1 Investor Call from FLS. My name is Toni Laaksonen, and I will be presenting today with our CFO, Roland Andersen. And we start from the Q1 highlights.

So, first going to the market and commercial highlights. On the service and PCV side, we saw very strong development with our organic growth. So in both business lines, the order intake was growing with double-digit numbers. With services, we captured 19% organic growth compared to last year and with PCV, 16%. So very strong development, which reflects that the market activity remains high at the brownfield sites.

Then with the products, we saw a different development. There, the market is more like subdued, and we didn't capture growth. The order intake was declining compared to last year, but still the underlying market activity remains positive.

Then when going to the revenue figures, our revenue declined organically by 7%, and that was driven by the timing and order mix based on the recent quarters. On the profitability side, we saw positive development compared to Q1 '25. So our EBITA margin percentage increased, and it was 15.2% in Q1, and it was in line with our financial forecast for this year. Then with the cash flow, we saw satisfactory development. So the cash flow improved compared to last year. So, a good year-on-year development, and that was a positive sign for this year.

Then a few strategic and corporate highlights from Q1, and one highlight after the quarter. So the sale of the former corporate headquarter was completed, and we received the cash from the deal, and that was one major milestone for us. Then we had certain changes with our executive leadership team as we are gearing towards the new strategy and new period in the company's development. And then one positive milestone, which is then reflecting the product activities and the underlying market is that we received one repeat order from South Asia for 1 iron ore beneficiation project, and we were awarded this in May 2026. So, good development over there and reflects that there are certain underlying activities within the products market as well.

Then a couple of updates on the ongoing investigation, which we have with the potential non-compliance case related to sanctions. So as announced previously, we have identified a potential sanctions-related compliance matter, and this is part of an ongoing internal investigation and it's related to the pre-contract tender materials, which we have submitted to a limited number of projects in Kazakhstan. And the case is only related to the tender materials. We have not signed any agreements. We have not delivered any equipment or services to these customers. And these customer cases are not part of our sales funnel, financial forecast and neither our estimates for this year. So, they will not impact on our guidance and that there are no material impacts on any of our businesses.

We have informed the U.S. and Danish authorities on the issue and that the process is ongoing, and that the initial information has been shared as we want to be transparent and compliant with the case. And then later on, we will do then the final filing of the case. Due to this, we continue reviewing and strengthening our compliance programs and risk management processes globally. And we want to ensure that we prevent similar actions happening again in the future.

With our key sustainability targets, we were seeing mixed results in Q1. So, certain positive development with our suppliers and Scope 3 emissions. But then on the other hand, as one negative highlight, I must say that on the safety side, we saw a declining development. And that this is definitely something that we wouldn't like to see with our figures. So, safety will be a key focus area for us in the coming quarters and we will strengthen our safety practices, processes and policies when moving forward.

All in all, the market conditions are pretty much unchanged compared to last year in Q1. And as mentioned, we saw positive development with our service and PCV business lines, in line with the market development in Q4. So in Q4, we were seeing uptick with our orders, the same in Q3. And this positive momentum with the brownfield sites is continuing. So, most of the miners are investing in their brownfield operations, which is then visible with our service and PCV business lines.

Then on the other hand, with the products, the market was relatively soft still in Q1. So, no major changes over there. But then as the commodity prices are at the high level, especially copper and gold, it means that the miners are assessing investment activities even to the greenfield sites. And therefore, the underlying demand might pick up in the end of this year or early next year. And that was also visible now when we booked that one order in May with the iron ore project.

Then moving on to the business lines, starting from the services. As mentioned, order intake-wise, very strong development. So the organic growth was extremely strong in Q1. But then on the revenue side, the development was negative and it was primarily driven by the timing of the orders. So, most of the orders we received in the back end of the quarter. And of course, then we couldn't revenue recognize them in Q1, which was impacting on our revenue.

And then on the other hand, there were certain mix-related things also which were impacting on the bookings on the revenue side. But all in all, we see that the positive development with our order intake is then reflected to the revenue in the coming quarters. So, we don't see any major issues here.

When it comes to the profitability, the profitability was lower with our service business line compared to the previous quarters and that was mainly driven by the low revenue figure. So with normal revenue level, we would have had clearly higher profitability. So, that was impacting on us. Then, of course, certain mix-related things impacted the Q1 revenue and margin level and so as well the input cost inflation, which we were seeing. But all in all, the normal level which we have had for the service business line, which is 19% to 20% EBITA, we expect that to continue in the coming quarters. So, this was not a big surprise to us that what was the profitability level. So, this was in line with our budgeted figures.

Then on the product side, the Q1 was low, as described previously. So order intake-wise, we were down and as well as with the revenue. And revenue, of course, is something that we can estimate pretty accurately based on last year's order intake. So the bookings continued in line with our expectations. From the order intake point of view, we saw this uptick already in May with that one booking, and we believe that the underlying demand is such that, especially with the copper and gold projects, we should see some positive development in the back end of this year.

Then with the products margin, we saw positive movement. So, we were at the 0 level practically with the products business line. One big impact was that certain project close-outs were happening, and therefore, we were capable of releasing some provisions related to these projects, and that created positive momentum. But we have been also doing cost initiatives to take the cost level down so that it's in line with the current revenue level, and that's helping us then from the profitability point of view. So, we can be happy with this development with our margin on the product side.

Then with PCV, the strong development continued. So like I said, significant order intake growth. We were definitely gaining some market share with our Pumps, Cyclones & Valves when comparing to the peers. Then with revenue, the development was stable. And also with this business line, the bookings were done in maturity during the back end of the quarter. So, we expect that the following quarters will be a bit better than from the revenue point of view, and we should see solid performance from the business line.

On the margin side, PCV was again very strong. So, continued at the same level with the profitability, and we were really happy about this. So, no issues over here, positive movement, and we expect the similar trend to continue in the end of this year and in the next quarter.

Okay. Thank you for that, Toni.

So the financial performance overview here for Q1 and order intake of DKK 3.9 billion, revenue a little less than DKK 3.3 billion, healthy gross profit and obviously, a very large item here, other operating net income, which is predominantly the sale of our former head office in Valby in Copenhagen. And running through the P&L, that, of course, leaves us with a relatively high profit for the period of DKK 985 million.

The gross margin for the quarter remains healthy. This is predominantly the mix in a period where the product business haven't picked up revenue yet and service business line. And our PC&V business is 80% or plus of our revenue stream, healthy gross margin and an absolute number, lower or lower than last year, predominantly driven by the nominal revenue level.

Our SG&A costs continue to decline slowly but surely. So lower Q-on-Q, but also lower than the same quarter last year. And that is a significant result from our simplification exercise and also the change to our new corporate model that now starts to sit more steady in the numbers. The adjusted EBITA margin is improving to 15.2% compared to the same quarter last year on an adjusted basis. And the nominal number here, of course, impacted by the sale of the Valby office.

Net working capital is driven up this quarter, predominantly by inventories. So, inventories from the relatively high order intake in both service business line and the pumps business. There's a bit of commodity inflation in that as well. And the fact that the orders were back-end loaded in the Q1 means that now sit in inventories and will be delivered over the remaining part of the year. And all this leads to a solid cash flow for the quarter, traditionally a relatively low cash flow quarter, but cleaned for the Valby sale, cash flow from operating activities of DKK 103 million. This means that our leverage continues to be low 0.6x, and that leaves us ample room to do the M&A that we want to do as we move forward.

Our financial guidance for '26 is maintained, and that means an organic revenue growth of minus 1% to plus 4% for the company and an adjusted EBITA margin of 15.5% to 16.5%, and we are on track to deliver on that. The revenue bridge, a bit more stable underlying how to get to minus 1% to plus 4%. Service business line unchanged, expected to deliver 2% to 5% organic growth.

The product business line in revenue terms, minus 5% to minus 15% of organic growth and the pump business, PC&V will deliver 4% to 7% organic growth for the full year. And if we then apply the ForEx rates from the 11th of May for the remainder of the year, by coincidence, our organic growth will equal our reported growth for the full-year 2026. And the EBITA margin bridge here, not so much here, the adjusting items for our PC&V ERP implementation is about 1 percentage point. And other operating income here is the sale of our Valby office that makes up the difference between the adjusted EBITDA margin and the full-year forecasted EBITDA margin.

Then we are ready to invite all of you to our Capital Markets Day. It will be on the 17th of November, and we have decided to welcome you all to our new headquarter offices in Copenhagen, where we think we can host most of you guys. So, we are looking very much forward to that event, and that will be again on the 17th of November 2026.

And with that, I think we can move to Q&A.

[Operator Instructions] The first question we have comes from Chitrita Sinha of JPMorgan.

I have 3 please, but I'll take them one by one. So, first one is just on the service margin. You previously spoke about this 19% to 20% range. So, I guess the 16.6% margin was a bit surprising. Just wanted a bit more color on what drove that big shift in mix? Was it some kind of legacy issue or more consumables? Just trying to understand the swing in margin outside the range and the confidence you have to return back to that range in subsequent quarters.

Yes. Thanks for the question. So, a very valid one. So actually, the service margin was almost completely in line with our budget for this year and with our forecasted model. So the revenue side was, of course, taking the margin down. And then there were certain like bigger cases in the mix, which we had booked last year and we knew that they will impact on the margin. But then it was already taken into account when we did the financial planning for the year. So therefore, this was in the model and we see that the EBITA margin, which we have been promising to the market, which is 19% to 20% will remain as the target.

Okay. And then my second question is just on the product margin. You've talked about kind of reversal of provisions, which supported the margin outside of the cost initiatives that you've taken. What would the margin have been excluding this impact, please? Or maybe another way to phrase it, maybe what's the breakeven rate now? Is it close to the DKK 3 billion rate or DKK 4 billion?

Yes. So the releases, they are not that much, DKK 25 million, maybe DKK 30 million. So it positively impact the margin by 5 percentage points or so.

Was there a second part of the question?

Yes. I just wanted to ask you what the breakeven rate is, DKK 3 billion or DKK 4 billion?

Yes. So the breakeven rate that we're planning for coming out of this year will be a level of DKK 2.8 billion to DKK 3 billion.

Okay. Very clear. And my final question was just on service orders. I believe that some of the consumer products that you sell have a bit of tungsten in it. So, I was just going to ask if there's any pull forward demand that you saw in the service order numbers in the quarter.

Yes. So, you are right there. We have tungsten in our service deliveries. Of course, the price impact was evident. So, we are pricing our products and services accordingly when there are cost changes with the suppliers. So, that we did take into account. And there was some impact from the tungsten market that our customers wanted to maybe order a bit more in advance in Q1, which impacted positively on our order intake. But the impact was not major.

The next question we have comes from Edward Hussey of UBS.

Maybe just a couple from me. So first of all, as you alluded to, obviously, a very strong book-to-bill in PC&V and service. Do you mind just running through the phasing of deliveries through the year? I mean, should we expect a sharp revenue pickup in Q2? Or should it be a bit more towards the back end of the year?

Yes. Thank you for that, Ed. So, I think you need to expect that it will pick up slowly throughout the year, and it will be back-end loaded just like last year. So it will pick up in Q2, come over Q3 and Q4 expected to be the high quarter once again.

Okay. And then maybe just touching on net working capital and the buildup there. Do you mind just kind of fleshing out exactly where net working capital has been building up?

Yes. So, that's predominantly on the inventories. So the inventories have been building up and they will also run off slowly throughout the remainder of the year as we deliver the orders and the year will be back-end loaded. So it's been building up from -- predominantly from the orders in the service business line and in the pump business line. There's an element of commodity inflation. There's an element of pricing from tungsten in that number, and it will run off slowly over the course of the year.

The next question we have comes from Christian Hinderaker of Goldman Sachs.

You mentioned in the report that you've seen some clear market share gains in PCV. I wonder whether you can add some color there in terms of whether there's any specific regional SKU in those share gains or indeed across the 3 product areas, PC&V, whether there's any notable difference? Any color here would be most appreciated.

All right. Okay. Very good. So on the PCV side, of course, we are following closely that what type of numbers our peers are reporting. And based on the reports what we have seen from their side, our estimates say that at the global level and overall, we have been taking market share. And it's evident when looking at our order intake figures. We don't have any specific geographical areas where we see better or worse like development. So it's overall throughout the product categories and throughout the countries where we operate.

And just how do we think about your pricing in this segment as well? Interested in the trends on pricing for PCV.

So from the pricing point of view, what we can say is that when you look into the margins, the margins have been solid quarter-by-quarter. So, no negative development there. So, we are not using the price as the main argument to win business for us.

Understood. And then maybe finally, just on margins, and apologies, Toni, because I know this was the first question, but I didn't quite follow the answer. You're saying that service margins were in line with budget. I understand you said revenue weakness brought that down. Are you saying that effectively gross margins on the revenues delivered were in line with your expectations and that it was the, should we say, revenue timing that was the issue? Or is there also something in terms of the service mix as we think about the basket of consumables, modernizations and things to flag as well? I just didn't quite understand that.

So, both gross margin and EBITA were in line with our expectations. So, we were expecting a bit slower quarter with services in Q1 and are based on the bookings. So some of the bookings, for instance, which we did in Q4 were in the end of December, and we know that we will be delivering them then in Q2, Q3. And this was then in our model, what we developed for this year. So the revenue, the top line was pretty much according to our expectations and we knew that it will impact on our margin. And then it was visible now in the numbers.

But even though Q1 was slower as expected, the whole year has been developed so that we are reaching that 19% to 20% level. So despite of this Q1, we should be in a solid place to deliver the results in the end of this year. Then of course, we knew the margin profile of the deliveries for Q1, and this was also in line with our expectations. So, no big surprises there. So, we knew that this is the level we would be seeing.

[Operator Instructions] The next question we have comes from Tore Fangmann of Bank of America.

Two questions here from my side. First is a follow-up on the PC&V where you're taking market share. Could you let us know if you're taking market share, you think from like smaller players, third-party local players? Or is it something where you are also taking business away from the large players such as Weir and to a lesser concern, Metso?

So, how we see the market is that we have been taking market share across the board. So, there are no specific companies from where we have been gaining market share. So, our estimate is so that it's across the board throughout the companies. Otherwise, we wouldn't see this strong development with PCV quarter-by-quarter.

Okay. So just to clarify, it's not that you go into the mine and you're like replacing Weir's equipment, for example, but it's just like rather you're just growing faster than your peers?

Yes. Correct. So, that's one way for us to grow that we are selling to the brownfield sites and replacing the competitors' pumps or valves or cyclones. So, that's one significant way for us to gain market share.

Understood. And then just secondly, on the -- one follow-up on the reversal in the product segment. I mean, it seems like you're performing better than you would have initially expected here. So, could we see more of these reversals come through in -- basically coming through in the coming quarters? Or is this really one-off in Q1?

Yes. So these reversals, it's not a reversal for the reversal, right? We will close out the projects when they are ready to close out. And this was part of the plan. But we're just calling it out because we've been talking about us getting the business line back in black on a run-rate basis. And we just want to call out that's not the case for this quarter. So, there may be a few others of this nature and then we'll call it out. But the fact remains that we expect only by Q4 to have it back in black numbers on a run-rate basis.

The next question we have comes from Lars Topholm of DNB Carnegie.

Yes. A couple of questions here. First, on your, what should we say, somewhat muted comments on market activity, which comes on the back of a book-to-bill of 1.2 in both service and PV&C (sic) [ PC&V ], and that just surprises me a little bit. So, is this just your normal conservatism? Or have you, in fact, seen any indications of slowdown maybe in April, maybe as a function of what goes on in the Middle East? That would be my first question.

Yes. Starting from the Middle East, so for us, the market in the Middle East is not a significant one. So, that does not have any major impact on us. Then with both service business line...

I was more thinking maybe it inflicts decision-making among your customers?

No, no, not really. So with service business line and PCV, we are mainly selling to the brownfield existing mine sites. And all those sites are heavily like utilized and that they're running their operations in full speed and they are continuously like investing to improve their operational efficiency. And this uptick, we are definitely seeing with our service business line and PCV and then also the fact that we have been taking maybe some market share on the PCV side from the competition. Then with the products business line, the Q1 was still slow, but we expect that the activity level would improve in the back end of this year and early next year based on the engineering activities, what we are seeing on the customer side.

But still when I read your comments to the demand outlook in service, it seems it's still -- you're still talking about hesitation from customers.

That's related to the products market. So with the service side...

I think you used the phrase muted in services.

With services and PCV, we say that the market continues to be stable or active. And with the products, we see some softness.

That's fair enough. Then it's just me. Then related to what goes on in the Middle East, do you in your supply chain see any beginning bottlenecks, any red flags and maybe also do you begin to see some input cost pressures you will have to deal with?

So, no major red flags and issues with the supply chain as such. So, we haven't seen any delays because of the Middle East situation. Of course, the oil prices are a bit higher than it used to be. So, that might impact on the logistics costs to some extent, but it's not a major cost item for us.

Okay. Then I have another question. And I know, of course, this happened on somebody else's watch, but if you look at FLSmidth, you have done very impressive rightsizing over the years. But now we have an issue with order backlog in products in Q3 and also a sanction issue. Is there any risk that rightsizing has been taken too fast or maybe you're wrong-sized that your overhead functions are not sufficient to, what we say, to deal with the magnitude of your activities?

No, we are not seeing anything like this. And quite opposite, I would say that, for instance, the possible sanctions-related case was identified by our own compliance. So it just also proved the fact that if something is happening, our system and processes work efficiently and we can track down the issues. So on that side, no issues.

And then on the other hand, we have been keeping up with our delivery schedule. So, we don't have anything major ongoing with our supply chain so that we would see any red flags over there. So, we have been keeping up with the targeted delivery time line. So in that sense, the organization should be at the right level at the very moment.

That is very clear. One final question for me. I'd like to know if you can give any news or update on your M&A pipeline? I think after Q4, you indicated that you had some active discussions, which might lead to something before the end of the year. I just wonder if that has changed or is it the same?

Yes. We continue developing the M&A pipeline. And what's then happening is that at the moment, we are preparing our new strategy. And of course, the M&A cases will be then linked to the strategy. And of course, we would like to then introduce already some wins during this year and especially when we start launching the new long-term plan. We have a couple of active cases ongoing and hopefully, further news coming on them in the later part of this year.

The next question we have comes from Vlad Sergievskii of Barclays PLC.

Two questions. First one on service. I know you are saying service margin was in line with your expectations, but I think it was certainly below market expectations. So, my question is what we as a market have underestimated? Have we underestimated the volatility of this business line from quarter-to-quarter? And going forward, there will be quarters with big swings in margins up and down in service? Or there was something very exceptional about this quarter and we should hope for a more consistent performance from now onwards?

Yes. So, thank you for that, Vlad. So the predominant factor why the margin was down is because the revenue level was low. Q1 is a seasonally low quarter and this in particular. And then in combination with a few bigger orders, a little bit with inflation and so on, the margin was slightly suppressed. So going forward, you can count on the service business line being 19% to 20% margin business. There will be slight swings, not big swings around that and we will steer that business through with that margin number.

And now hopefully.

So this quarter, it was a matter of leverage.

Understood. That's helpful. If I can ask about market share gains in pumps. That's obviously a more positive topic over here. Do you see or have any of your proprietary data that confirms market share gains? Or are you just comparing your growth to public disclosure of competitors, including Weir Group to make this conclusion? Also, what are you doing differently to your competitors to win in this market? And is your ambition to continue gaining share from here?

Yes. So, how we see the situation is that we are tracking continuously our installed base when we are winning these deals. And based on that data, we see that we should have been gaining market share. And as mentioned, most of the Pumps, Cyclones & Valves are sold to the brownfield sites. And that the existing operations, the existing mines, they make the decisions mostly based on performance. And we are usually selling based on the performance metrics, and that's then definitely impacting on the decision-making and not like the price level as discussed previously during the call. So, we are winning based on our technical performance. And then, of course, when we gain more installed base, that then impacts positively on the aftermarket on the PCV side.

Can I just clarify this last point? Do you believe, or do you think that indeed FLS now has superior technical offering in pumps compared to some major competitors?

So, of course, like I said, we have the performance benefit clearly when selling to the brownfield sites, and we have been winning based on that. And clearly, there are certain technical advantages, which the customers appreciate because we have been gaining so many orders.

The next question we have comes from David Farrell of Jefferies.

I've only got one, but I contradict one of the previous questions. I actually thought you sounded more positive in terms of the evolution of order intake going forward. I wondered to what degree that is triggered by the levels of order intake we're seeing from the upstream competitors? I think I'm right in saying historically and typically, you'd expect a 6- to 9-month lag between the likes of Epiroc and Sandvik securing orders and then that flowing through downstream. Is that fair? And if that theory is correct, in reality, what's driving that? Is that more ore is going to get reduced, which then needs to be crushed and grinded, et cetera? Or what are the exact dynamics?

Yes. So, you are right there that the upstream players are seeing the order intake uptick first. And of course, it's easier to invest in the mobile equipment than in the processing plants and gain the efficiencies from there because with the processing plants, it takes more time to configurate the new setup and then also implement the greenfield operations. But we are seeing now that the upstream players receiving more orders, which then indicates positive momentum, but it can be more than 1 year before we see the impact on our side. But clearly, the market is picking up already with the upstream players and we have recognized that. And the engineering activity on our side is gaining momentum, which indicates that in the back end of this year or early next year, we should also see positive movement with our products business line.

[Operator Instructions] We have a follow-up question from Christian Hinderaker of Goldman Sachs.

I just want to come back on the shipment phasing issues in the revenue lines. I wonder specifically if there was any impact from delayed deliveries as a function of the events in the Middle East or perhaps as a separate point, there's been a number of specific mine site issues, Indonesia, Boliden, I think, as well has had some challenges. Yes, any specific site issues would be helpful to understand.

No specific site issues as such from our perspective, and the Middle East has not impacted on our deliveries as such. So as mentioned previously in the call, the Middle East market is not a big one for us. And then on the other hand, we don't have any suppliers, any significant suppliers in that territory and that most of our deliveries are then coming from other countries to our main markets. So, no significant issues there. And then with the mine sites, there are certain mines which are like down, for instance, Grasberg. But then during these shutdowns, they are also ordering services, which is then visible on our side with our service business.

The final question we have comes from Klaus Kehl of Nykredit.

Yes. Klaus Kehl from Nykredit. Roland, a question related to your cash flow. Could you update us on your thoughts about cash flow from operations and investments, et cetera? That would be my first question.

Yes. So normally, we guide you a bit on where we think CFFO is going. And so the thinking is that the CFFO for the year will be up to DKK 1 billion. So, that was a short answer.

Yes. Go ahead, Klaus.

Yes. And what about your CapEx level?

CapEx level is around 3% of our revenue.

Okay. And then in this regard, you have announced that you most likely would start a share buyback here in Q2. But do you see financial room for both making a share buyback and at the same time, perhaps carrying out M&A in the second half of the year?

Yes, we do. We think we can do both. So, there's no change in our stance on that.

Ladies and gentlemen, there are no further questions on the conference.

I will now hand back to management for any closing remarks. Please go ahead.

Yes. Thank you for joining the call today. Great questions, and we welcome you to then join the Capital Markets Day in November. So, please save the date and join the event. The invites will follow. Thank you.

Dear shareholders, it is now 4:00 PM. And as Chairman of the Board, it's a pleasure for me to welcome you to this Annual General Meeting of FLSmidth. This is the first time for decades that we are holding our AGM outside our previous headquarters in Valby. We moved away from there earlier this year. We moved into the new offices at Havneholmen, down the street here in Copenhagen. This was also the beginning of a new era for FLSmidth and I'm going to come back to that later on in my report. To take us through this AGM, the Board has selected attorney Louise Korpela. And I give the floor to you, Louise.

Thank you very much. My first job as Chair is to make sure that the meeting has been duly convened and is quorate. There must be minimum 3, maximum 5 weeks' notice via the company's website and by sending notice to those shareholders who have so requested. The convening notice was sent out on the 27th of February, which was within the time line and also in the correct manner. It also contains, as I said, all the information which is required under Danish company law and the company's Articles of Association, and all the information the company is requested or obligated to make available to shareholders has been made available. So the meeting has been duly convened. Behind me, you see the agenda. It contains the usual items that need to be included according to the articles and then we also have proposals from the Board of Directors concerning an updated version of the remuneration policy and also the acquisition of treasury shares and also prolongation of a number of authorizations granted to the Board by the AGM. One requires -- one of these proposals requires a 2/3 majority. All other proposals can be approved by simple majority.

In relation to Item 5, we have the remuneration report that needs to be adopted, but it is only an advisory vote. So I would also inform you that we are quorate in relation to all the business on the agenda. At this meeting, about 68% of the share capital and the voting rights are represented, 98 entry cards have been requested and half has turned up. Some people have also sent postal votes or proxies to the Board in advance and that's what I need to say about this. We will deal with, as usual, Items 1 to 5 in one go, which means that the Chair of the Board will deliver the report that -- and we'll also deal with distribution of profits and also presentation of the remuneration report for the advisory vote. And I will now hand over to Chair of the Board, Mads Nipper.

Thank you, Louise. Now in recent years, we have seen major changes at FLSmidth. In '25, we reached an important milestone. We completed our transition to become a clear supplier of technologies and services for the global mining industry. At the same time, we delivered a solid performance in a market where uncertainty remains high, particularly in regard to the timing of large mining projects. With this transformation, FLSmidth enters now a new phase. Now we are not transforming the company anymore. We have to utilize the strong foundation we have now created. We now have a more focused company. We have a simpler, more scalable operating model. We have a strong financial foundation. This gives us a good basis for creating long-term growth and value for employees, for customers and for shareholders.

In the year under review, as I said, we reached an important milestone when we divested the Cement business. For the company, this has meant that the full attention and the capital allocation can now be directed at our core activities, which is the extraction of important metals and minerals. This is an important step for the company, gives us the possibility to focus fully on the areas where we have our strongest competencies and where we see the biggest long-term options and possibilities. At the same time, we have worked to simplify our organization, and we are strengthening our operational setup. We've consolidated our office structure. We've reduced organic layers and moved a number of support functions to our so-called global business centers. The purpose is simple: reduce complexity; increase efficiency; and create clearer responsibility across the organization. So in the year under review, we also sold our historic headquarters in Valby, where we've been since 1956. We established our global business centers. So this relocation, together with that, is a clear direction of a more modern, flexible organization. This is not just a matter of buildings, it's a matter of creating an organization better adapted to the way that we work today. All in all, these changes have made us more agile as a company. Decision paths have been shortened. There's more transparency. And today, we are in a better shape to prioritize our resources to go for the most attractive opportunities and options across our business. One central goal of the transformation has been to make FLSmidth more robust. In '25, we saw clear results of work. Our service business delivered organic growth in the order intake of 4%. This reflects a ongoing customer demand for solutions that can improve productivity, operating certainty and sustainability in mining operations. The products business, on the other hand, saw lower activity. The order intake fell organically by 5%. This is because of a weak market for bigger projects, but also a deliberate choice to reduce the risk of our product portfolio. We prioritize the quality of the business and long-term value creation rather than short-term volume. The PC&V business, that's Pumps, Cyclones & Valves, where we just call the Pump business delivered a particularly strong organic growth, 12% for the year. We see both stable market conditions and the effect of market targeted investments in our commercial capabilities. We've made those in recent years.

At corporate, we delivered an adjusted EBITA margin of 15.9%. This is the result of a highly disciplined execution, continued efficiency enhancement and a stronger business mix. In our continuing business, so without the loss of the divested Cement business. In '25, we reached a net result of DKK 714 million. There was a negative impact of a reduction of a tax asset of DKK 600 million.

Our free cash flow adjusted for acquisition and divestment activities ended at DKK 640 million. This was much better than the year before. All in all, we are very pleased with our financial results for '25, particularly the growth in services and the PC&V businesses, they contribute to a more stable earnings also in an uncertain market.

In '26, we expect organic growth in revenue in the interval from minus 1% to plus 4%. Organic revenue growth is measured at constant exchange rates and excludes the effect of acquisitions and divestments. So this expectation reflects the following. First of all, we expect organic growth in revenue in the service business of 2% to 5%. This is supported by continued demand for productivity-enhancing solutions that can increase operational efficiency for our customers. We expect an organic growth in the product business of minus 5% to minus 15%. This expectation is based on a reduced order holding. This is because of the cutbacks we've made, the risk reduction of the product portfolio. We've done that in recent years.

Finally, we expect organic revenue growth of 4% to 7% in the PC&V business. This is supported by continued robust and active market conditions. As regard to earnings, we expect an adjusted EBITDA margin in the interval from 15.5% to 16.5%. This reflects an expectation of continued strong, stable earnings margin in the service and PC&V businesses and planned improvements in the product business.

The adjusted EBITDA margin excludes the cost of about DKK 100 million. This is the rollout of our updated ERP platform. It's important to note that the guidance for '26 does not include the gain from the sales of our previous headquarters in Valby, that was about DKK 690 million. It's important for FLSmidth to ensure the best possible value we can offer customers. In '25, we opened or expanded 7 service centers at strategic locations around the world. These facilities directly support our focus and our ambition to drive the growth of the service business. The new facilities will open in Ghana, in Indonesia and Saudi Arabia, while the current activities in Mackay, Australia will be relocating to a bigger facility. We've also planned expansions and extensions in Brazil, Kazakhstan and Mongolia.

With these openings and expansions, we strengthened our service capacity and our first-class service offering to customers. At the same time, we can reduce customers' operating downtime because our service centers are strategically close to mining areas because local customers get better access to spare parts and wearing parts. So quicker service. less downtime and stronger support where customers needed the most.

In '25, our customers and associates once again confirm the strength of our market-leading portfolio and the value we offer, and we've had a number of important commercial victories. In that connection, I really want to emphasize our cooperation with an Indian mining and steel producer. In recent years, this customer, 4 times in a row, has selected FLSmidth to deliver core technologies to what is going to become one of the world's biggest, most efficient and most sustainable iron ore processing plants. In the year under review, FLSmidth has also benefited from increasing metal prices, including the price of gold, which as you know, has gone up very much. This has meant that in December, FLSmidth was selected to deliver all the most important process technologies for the development of a new gold mine project in Ghana. The total value of this order is around DKK 235 million. Every day, we work to become a trusted partner, delivering the most efficient environment-friendly solutions for mining. These orders are clear examples of the customers' trust in us and faith in us. We are very grateful for that.

In June '25, something very important happened. A number of big mile bones -- milestones were reached. We announced that Pacific Avenue Capital Partners had acquired our cement business. The price was about DKK 550 million with a possible long-term deferred cash payment of an additional up to up to DKK 550 again, conditional upon the achievement of certain goals that has not been published between the 2 parties. The sale of the Cement business mark the end of the Cement business. Its long journey with FLSmidth, and the company is continuing its life under the name of Fuller. On the Board of management and Board, I'm very proud of what the Cement business has done in its more than 140 years at FLSmidth. So I'm a bit sad also that this historic business is no longer part of the FLSmidth Group. However, I am convinced that the divestment is an important step, a decisive step in releasing the full potential of our mining and our Cement businesses. We then announced that we had sold our headquarters at Vigerslev Allé in Valby, where the company has been housed since 1899, and the iconic red break buildings drawn by architects Palle Suenson have worked at our headquarters since 1956. We then launched the launch of a share buyback program, total value of DKK 1.4 billion. This was the first share buyback program since 2013, stressed our markedly improved financial position and wish to deliver value to our shareholders.

In November '25, then CEO, Mikko Keto, notified the Board of his decision to leave the company in order to pursue opportunities outside FLSmidth. It was followed by a comprehensive recruitment process, and we were very pleased in early February '26 to be able to inform that Toni Laaksonen would take over as CEO with immediate effect. He is seated up here, but I think you should sort of get up and show yourself to the entire room. A warm welcome.

It's okay to sit down again. Toni is an experienced manager with more than 15 years of international exposure from both the global mining industry and large service and product organizations. He originally joined FLS in June '25 as Head of the important Service section. He has delivered strong results, and he has clear managerial capabilities, strategic insight and the power to execute that we need in order to meet our growth potential. With Toni at the helm, we will ensure strong continuity in strategy and execution. At the same time, as we get renewed focus on our organizational culture, our management efficiency and operational performance. These are areas that will be material in order to create a lasting success in the next phase that we're going through. On behalf of the Board, I'd like to thank Mikko Keto for having taken FLSmidth through a period of comprehensive restructuring in recent years, and I wish him all the best in his future work.

As previously mentioned, we are now in a place where the strategic focus shifts from of the company to utilizing the strong foundation we have created. And this connection, we intend to strengthen our market position by increased focus on both organic growth and selective acquisitions. This would bring us closer to our customers, and it will also expand our position within the processing of minerals and minerals -- and metals. To improve our value offerings to customers, we will further develop our portfolio of equipment and services. We wish to help customers increase productivity in their mining operations and also promote their own sustainability agenda, we will still have strong focus on operational expertise. Accountability, scalability and cost control will make sure that we deliver on -- to our customers and also create stable earnings.

And lastly, we will continue our disciplined capital allocation. We will balance our growth investment and our dividend to shareholders at the same time as we retain financial flexibility. Before going on to introducing our remuneration report, a couple of words about capital allocation. We are constantly focusing on cash flows to make sure that we have a healthy balance. We have maintained a low financial gearing. And at closing, it was 0.8x net interest-bearing debt related to EBITA, which is higher than it was at the end of '24, but still considerably below our target of maximum twice. The Board proposes on the basis of the result for '25 to pay out a dividend of DKK 4 per share or DKK 231 million. As recommended by the committee for good corporate management and referring to the publicly available report, I will now go over and comment on remuneration to Board and management. I wish to establish that in '25, there have been no deviation according to the general guidelines for remuneration adopted by the AGM. Total remuneration to the executive management consisting of the CEO and the CFO registered with the business authorities, was DKK 23.6 million compared to DKK 38.4 million in '24. The reduction from '24 to '25 is due to the fact that Mikko Keto, the former CEO, decided on his own to leave the company and thus waive the right to get -- divide his remuneration. The Board received a total remuneration of DKK 7.3 million in '25 compared with DKK 7 million in '24, the increase being due to an increase in the number of AGM elected Board members. It will appear from Item 3b be on today's agenda that we propose that the remuneration to the Board be maintained in '26. More about this later.

We carry out an annual self-assessment process of the Board to evaluate the individual members' contribution, commitment and competencies. I'm responsible for it. It was a good process and the overall conclusions are satisfactory. The process helps identify focus areas and prioritize our work. Before we open up for the discussion, I have a couple of comments I'd like to make. We have a more focused portfolio. We have a simpler operating model and a strong financial flexibility. So we are headed for the next phase of the FLS development from -- on the basis of a position of strength. In the short term, we expect a certain uncertainty in the market for large mining project, but at the same time, we are encouraged by the strong long-term forces that drive mining. The demand for critical minerals remains high. Mining operations become increasing complex and the need for solutions to improve efficiency and productivity is growing. At the same time, the robustness of our service and PC&V businesses, combined with the initiatives started in the product business provides a solid foundation for continued progress. In the long term prospects for mining remain underpinned by strong structural trends. The global transition towards electrification, continued investments in renewable energy and the fast expansion of data centers are all expected to drive continuous demand for central raw materials, in particular, copper.

With time, these long-term trends will be translated into new investments and projects. And here, our priority is clear. We will continue strengthening our offerings to mining customers and support them with technologies and services to improve productivity, operational reliability and sustainability.

Before I hand back to the Chair of the meeting, I'd like to say thank you very much to all colleagues in FLS. Your commitment, your professionalism are vital to our continued development. And with these words, I'd like to hand over the meeting to the chair.

Thank you, Mads. So you have now heard the report. You've heard about the annual report. Proposal for the appropriation of profit and the remuneration of Board and management in '25 and '26 and the remuneration report here for '25 and '26. So you can -- there are 2 people who ask for the floor right now. First of all, I give the floor to [indiscernible] back from the Danish Shareholders' Association. You have the floor, please. come up here.

Hello. Thank you, and thank you for the report. So as you heard, my name is [indiscernible]. I represent the Danish Shareholders Association here at FLSmidth AGM this afternoon. The Danish Shareholders Association association with about 16,000 members catering for the interest of small- and medium-sized shareholders. We are working to develop a healthy share and investment culture in Denmark. We focus on transparency, decency and skills. Over the last 14 months, FLSmidth has carried out major changes as the Chairman said. The divestment of the Cement division, a new CEO has come on. And you've replaced the Chairman of the Board, I think twice. In the same period, an FLS share has become about 35% to 40% more valuable in today's share price. We are now seeing a company which is smaller. It has a new management and a share, which is relatively expensive in relation to earnings. Now referring to the above and to the annual report from FLS '25 and FLS' strategy for '26, we have the following questions. How does FLS Board and management think that the organic growth will be executed, in which segments does FLSmidth consider acquiring other companies in which segments. And we expect it would be within your known divisions, services, products and Pumps, Cyclones & Valves?

My -- our second question is, how is FLSmidth going to make PC&V and particularly products more profitable in '26? What are you going to do to achieve that?

Question #3. And -- there are other sub questions in that. I'm sorry about that. But what is the reason for the big decline of the value of ongoing works, both on the asset side and the liability side. you could get the impression that the level of activity is going down when you look at the financial statements. Metal prices in the world market must have a big significance for the demand for FLS' products. I think these metal prices, I mean, they're attractive at the moment. So the question is what would calmer world economy mean to the demand in the longer run?

Final question, what is the reason for the increase in debt from DKK 1.508 billion to DKK 2.208 billion. And where do we find the proceeds from the sale of the Cement division? Thank you for your attention.

Thank you, [indiscernible] always qualified questions. And a good ability to cover many questions in one question. I'm going to give a reply to them individually. The first question is, how does FLS' Board and management think that the organic growth will be executed. The organic growth will be driven primarily from a combination of increased activities in the services and aftermarket businesses. The gradual improvement in products. In services and PC&V, we still see good opportunities to increase penetration with existing customers by expanding service agreements and by offering a broader range of solutions relating to optimization of the existing plants that we service. And in products, growth will depend more on normalization of investment activities in the mining industry as a whole. We expect to give our more specific growth initiatives and financial ambitions on our Capital Markets Day, which we planned for the last half of September.

And the second half there, what segments do you -- are you planning to acquire other companies? Will it be within the known division services products and PCV?

Yes, acquisitions will be made within existing divisions. We have no ambitions to move outside our current footprint. We will focus on acquisitions that can strengthen our existing functions, increasing our capacities, our services, our aftermarket services or increasing our scale and efficiencies in areas where we are already present.

Question two. What is FLS planning to do to make PCV, in particularly, the products division more profitable in '26? Let me start by saying that we are pleased with the current profitability in the PC&V business. It's actually the most profitable business that we have. Our focus here is primarily on maintaining current margins at the same time as investing in additional growth because we do see long-term potential for growth in PCV in products. We agree that the current profitability is not satisfactory. Improvement will focus on a number of specific areas Historically, the cost base has simply been too high, particularly in engineering work and IT costs. They have -- these have already been reduced. And we are working on a targeted fashion to reduce product costs through strengthening purchasing initiatives and better scaling of initiatives. We also expect these measures to gradually improve earnings in the Products division. Product structurally will have a lower margin than services and PCV. This is because it's a product and equipment supplier, right? But it allows a subsequent service activities, right? And this is the same thing in many industries where the service business is the most profitable part.

The first half of question three, what is the reason for the big decline in the value of ongoing works? Metal prices in the world market must have a great significance for the demand for FLS' products and I think they're attractive at the moment. That was your question. And the answer, yes, the decline in value of ongoing works, this is because of the lower order intake in the products business. And ongoing works, this is the execution of orders we have previously concluded. So there will be a gradually reduced product portfolio. So there will be less work in progress as we go forward. It is true that higher raw material prices support higher investments. But in the current cycle, it's been mainly a matter of investing in existing mines rather than new products -- projects. So activities happen mainly in services and PCV, while the demand for bigger products -- projects, well, that demand has still been subdued. We are convinced that there will be more momentum in the coming years.

The second half of the question 3 was a calmer world economy. What's that's going to mean for the demand? It's quite clear that a more stable global situation overall will be positive. It will reduce uncertainty and support the desire of mining operators to invest, and this will obviously increase the demand for new equipment. Stable operations in mind also supports growth in services and PCV, minor or smaller geopolitical pressure. We'll make growth more stable, but also less cyclical and less boom -- less characterized by booms.

Question 4, what was the increase in debt from DKK 1.5 billion to about DKK 2.2 billion. This is clearly the share buyback program that it is a -- this is a debt that finances some of what we pay back to our shareholders.

So the last question is, what are the proceeds from the sale of the Cement business? Well, the proceeds from the sale has not been indicated particularly in Note 211 on Page 149, you can see that the total net cash proceeds from the divestments of sales and activities is about DKK 146 million. This covers a number of different transactions, including the Cement business. As we communicated when we divested the cement business, the expectation was that the proceeds from Cement business would be limited.

The second speaker on my list is a representative of the Staff Association. It's traditionally an item on the agenda, but this is read out by me because they were unable to attend.

Dear Board and management, dear shareholders and dear colleagues. This speech is read out on behalf of the Danish Staff Association and hence, the Danish employees. It is customary for a representative of the company's employees to be invited to make a speech at the AGM. Unfortunately, we are prevented from attending this year, so this speech is read out. The recent year has once again been characterized by deep structural changes in FLS, changes that were already underway have been accelerated divestments reorganizations and unfortunately, also redundancies have become a more regular part of our everyday lives than we could -- would wish. At the same time, we have seen a market relocation of functions from central staffs, which means that assignments that were previously compiled in clusters are now operated in parallel and more separate business units. This has changed both cooperation patterns and responsibilities and required a lot of adaptive ability on behalf of employees. In times where practically everything is in movement, continuity becomes more valuable than ever, continuity in process, in competencies, in management and Board and employee representation and change has been characteristic of FLS for several years and '25 was certainly no exception. A kaizen point is the employees' own representation here on the company Board. There was -- there are 3 employees that I elected to the Board by the -- and 2 of these 3 have been replaced since last year's meeting. That in itself is typical of the high level of mobility, but also the large responsibility that rests upon the shoulders of those who continue. Let's take a look at FLS over the last 10 years. Revenue has basically been unchanged, but the number of employees have fallen to almost half. And that tells us 2 stories in one go, an impressive rationalization and increasing efficiencies in the company and a huge pressure on the remaining employees that now perform jobs that just 10 years ago were performed by double the number of employees. And it's important to emphasize that this development is not exclusively attributable to the divestment of Cement. Recent years decline in the number of employees in Europe have also had a very specific consequence. We no longer have a group forum. Our version of the European Works Council, where employees in European multinational businesses are generally informed and heard in case of transboundary matters. This makes the importance of a local dialogue, transparency and enrollment even larger. The composition of our employees today is more global and diverse than ever before. Just a handful of nationalities account for 5% to 10% of the total number of staff. No nationality represents more than 10%. The remaining 80% are distributed upon 50 nationalities. This is a strength, but also a challenge to cohesion. When both organization, locations and functions are fragmented, we need to take extra good care of the joint identity. So our clear call to the management is, give a sense of priority to sense of belonging, make sure that employees no matter where they come from their function and their business unit feel that they belong in the FLS that is characteristic of the future. The new headquarters in Copenhagen [indiscernible] now provide a framework for the remaining 120 employees in Denmark is modern, it's well functioning and it makes us hope that it can become a venue for a new beginning after a period with a lot of replacement or at all levels. We hope that this house will become a place for stability and a sense of community. We will also say, bring greetings to our former colleagues and [indiscernible] and Fuller technologies. Congratulations with your new independent businesses. We wish you all the best. And then Mads Nipper.

Thank you, Louise. There are no representatives of the Staff Association present, but I still wish to make some comments to their presentation because I think it's a very good illustration of the dialogue and the honesty of the dialogue between employees and management. There is a great deal of concern. It's obvious that it has been tough 3 years for the employees, but we believe that the restructurings were necessary, they were difficult and a lot of change was required, but we felt that everyone knows that we now have an FLS, which is in a much better place. But it's also important, as I said in my presentation, that FLS is embarking upon a new era. We have talked to management, not least with Toni as a new CEO that building a company culture for the future is important. We want once again to become a company that is not characterized by restructuring and reorganization, but that works for growth and for its employees so that we can build a good and interesting company culture, which works at the global level where our customers are but definitely also where our remaining Danish employees are because we are a company based in Denmark. Thank you.

I'd like to hear if there are other comments or questions. Two items 1 to 5 on the agenda. Does not seem to be the case. So we can move on to the formal adoption of the individual items.

Under Item 1, the Board has suggested that the AGM should take note of the report. This has been duly adopted. This is been taken note of. Item 2, the Board has suggested that there is an auditor's report on Pages 193 to 195. It is an unqualified -- you can read it if you want. I'm not going to read it out here, but this concerns the approval of the annual report. This also a statement concerned the sustainability report is also part of the annual report. You can find that on Pages 196 to 197. Are there questions or queries concerning that? If not, I consider the annual report have been duly adopted. Thank you.

Under Item 3a, the Board has suggested that the remuneration for the Board be finally approved. It was preapproved last year at the AGM. And as stated by the Chair of the Board, the basis fee is DKK 775,000, twice that of the deputy and 3x to the Chairman. In addition, for participating committees, DKK 125,000 and DKK 250, 000 for the person in charge, and DKK 300,000 extra for the Audit, Risk and ESG committees. DKK 7.3 million was the total amount for the Board of Directors. Any questions or queries. If not, I consider that have been duly approved.

That brings us to item 3b, which is the fee for '26 and the Board proposes that the fee should be the same as you have just approved in '25. The final fee will be submitted to the AGM next year for final approval. Any questions of queries. If not, this has been duly adopted. Thank you.

Under Item 4 on the agenda, the Board is proposing a dividend of DKK 4 per share, DKK 231 million all in all. Are there any questions or queries? You cannot suggest a higher dividend, I have to add. No comment. So this has been duly adopted.

Under Item 5, the Board is proposing that the remuneration report for '25 should be approved by an advisory vote. It's been prepared in accordance with the rules of the company's act. It has an overview of the fees for Board and management and what they have owing to them for the same period. It's been available on the company's website since the date of the convening notices. Are the questions or comments? If not, it has been duly approved, duly approved.

Brings us to Item 6 on the agenda, election of members, 2 of the company's Board of Directors. They are -- the Board members are elected for a period of 1 year at a time, can be reelected. I give the floor to Mads Nipper.

Thank you. In recent years, FLS has successfully carried out a comprehensive strategic transformation and operational change. As previously stated, we have divested the historic Cement business. We are now a pure supplier of technologies and services to the global mining industry with a good operating culture. This has resulted in a strategic focused and much more profitable business. FLS is now, as previously stated, going into its next strategic phase where we will try to accelerate growth.

We have recently announced that we have appointed Toni Laaksonen as new CEO with a clear mandate to accelerate developments and to further develop our portfolio offerings to customers. We are well underway already to look into the next strategic phase. We expect to introduce it later this year, more specifically in December. We have had a strategic transformation in recent years that required a lot of resources by the Board. In future, we will have a different process of the Board. We are a smaller, more focused company and this should also be reflected by the composition and focus of the Board. We, therefore, proposes to reduce the number of AGM elected Board members. We propose the reelection of the candidates up here Anne Louise Eberhard and Anna Hyvönen, Rune Wichmann and Lars Engström, whereas myself, and 2 other Board members do not seek reelection on the Board. I would like to say thank you to my 2 colleagues on the Board for their work on the Board and wish them all the best in future. They are both present here today. And then we propose that a new member be elected to the Board of Directors, Lene Skole. She has comprehensive managerial and Board work experience from large, both listed and unlisted companies. She is experienced with working with different types of ownership, both private companies, state-owned businesses and she has a financial and strategic background. She has been through turnarounds. And I also wish to point out that I know he work very well and I give her my full support. Thank you.

Thank you. For the sake of order, let me just say that a full description of the managerial positions and so on of the nominated members has -- this description has been available as Appendix 2. Are there any questions Appendix 2 of the convening notice. Are there any questions or queries? If not, this has been duly adopted.

So I conclude that Lene Skole has been elected as a new Board member, Rune Wichmann, Anna Hyvönen, Lars Engström and Anne Eberhard have been reelected. Congratulations. In addition, I can state that the Board also consists of Henrik Jørgensen, Saleh Kamal and Nour Amrani, they are employee-elected members. You can see the new Board up here on the slide, beside me.

That brings us to Item 7 of the agenda, and that's the election of company auditor.

And the Board has suggested that we elect Ernst & Young as the company's auditor also in regard to -- both in regard to finances and sustainability. And this proposal is in accordance with the recommendation from the Audit Committee, and the Audit Committee has not been influenced by any third parties and not been subject to any agreement with third parties that reduce the AGM's abilities to reelect Ernst & Young. So duly reelected. Ernst & Young have been reelected. Congratulations to you also.

That brings us to Item 8 on the agenda. There are 5 proposals from the Board here. The first concerns 8.1, this is the approval of the updated remuneration policy. The update includes an extension of the possibility to grant share-based incentive pay to the management. It's an obligation for the CEO to acquire shares, 50% of the basic pay within 3 years and the Board can have assistance with various other elements. So this suggested remuneration policy has also been available on the company's website. same day as the convening notice as Appendix 3. No questions or queries? Duly approved.

Brings us to 8.2. This is where the Board has proposed that the company should introduce an indemnification scheme for Board and registered management like most other big companies have in the C25 Index.

The indemnification scheme should cover losses that people suffer as a result of their work for FLSmidth, if this is not covered by other insurance. And it is said that it should be part of the articles as Item 16 and the remuneration policy as Item 4. The full wording of this proposal has been available in the convening notes also in Appendix 3. Appendix 3 of the convening notice. Any questions or queries. If not, this has been duly approved, duly approved.

This brings us to item 8.3 of the agenda. This is where the Board is proposing that the board should be authorized to acquire treasury shares until next year's AGM of up to 10% of the company's share capital, but the company cannot hold more than 10%. This is the holding limit. The price for these shares may not deviate more than 10% from the price of the share at the stock exchange at the time. Any questions or queries? If not, this has been duly approved, duly approved.

Now 8.4. This is the reduction of the company's share capital from DKK 1.153 billion to DKK 115,300,000 by reducing the nominal value of each share. No shares will be canceled, but simply that you reduce the nominal value of the company's shares from DKK 1 to DKK 0.10 because the company's shares are traded in bundles of DKK 20. So after the capital reduction, the nominal value, it will be DKK 20, right? So this is just over DKK 1 billion. This amount will be transferred to a special reserve. This is going to be an accounting readjustment. The capital reduction, if adopted, will be registered in the systems of the Danish Business Authority and will be completed after a 4-week period. Creditor notice period. Any comments or queries? No? Duly approved.

That brings us to item 8.5. And this is an extension to the existing authorization in 4a to increase the company's share capital. The Board is proposing to extend that by 1 year until the 24th of March, 2031. This 10% of the share capital, the company holds after the completion of the capital increase. So any questions or queries? If not, this has been duly adopted. So duly adopted. Right.

That brings us the last item on the agenda, any other business. You cannot make any decisions but you can give a final comment, if somebody wishes to have the floor. Not the case. So I give the floor to Mads Nipper, the Chair of the Board for a final comment.

Thank you very much, Louise, and thank you for having acted as Chair of the meeting. You've done well. And to shareholders, thank you to those of you who turned up in person today, and thank you to those of you who decided to join us by means of the digital solution. Looking ahead, is done nowadays from a much stronger point of departure than just a few years ago. We have been through a considerable transformation. We have simplified our business. We have sharpened our strategic focus. We've created a more robust foundation for the future, and we are in an industry where the long-term driving forces remain strong. The need for metals and minerals will only grow going forward, and that makes a lot of demand to technologies and solutions that will make mining more efficient, more safe and more sustainable. And here, we have a very important role to play. We built upon more than 140 years of history, and through generations we have developed in step with the world around us. The strength we have is not only based in technology or in business, but in the human beings, the employees know-how and commitment in our relations to customers and the trust that shareholders and partners have shown us through many years. And that's a combination that makes us so special, and that's the combination that will take us forward in the future. By way of conclusion, I'd like to wish the coming Chair and the rest of the Board and the companies and its employees good luck.

FLS is a company with a strong history, a solid foundation, look well after the business and carry on the good values that have been so prominent and have helped shaped it for many years. This applies not least to the focus on accountability, long-term value creation and respect for people who help operate the business every day. Looking well after FLS is actually about all this, building on the basis created by generations and also having the courage to develop the business and step with the opportunities and challenges ahead.

We done here. Look -- go outside and enjoy the nice spring and enjoy yourselves tonight. The meeting is adjourned.

Good morning, everyone, and welcome to the annual report release call. And today here with me is presenting Roland Andersen, our Chief Financial Officer; and I'm the new CEO for FLSmidth, Toni Laaksonen.

Briefly about my background, I have a 20-year industrial background from different companies and most of that from the mining industry. And before joining the group, I was the CEO of a stock-listed company in Finland.

Before the CEO position, I was with the service business line in FLS and spent like 8 months over here, leading service team and now taking over the CEO position. I'm very excited to start working with the entire group across the world.

Then a few strategic highlights from last year. 2025 was the big milestone in the FLS history. One big transformation in the company was the divestment of the cement business. We became a pure-play mining supplier for technologies and services, which is a huge milestone for the whole company.

Then on the other hand, at the same time, we were strengthening our offering commercially both with our service business line and products, cyclones and valves. With both businesses, we saw solid organic growth throughout the year, which was then strengthened in Q3 and Q4.

Then on the other hand, with the products business, we see -- saw an uptick during the Q4. But otherwise, the market was pretty soft during the year and subdued. We saw certain engineering activities, but it was not steady market as such, which we had with services and PCV. Therefore, we continue to derisk the products business, and now we are more focused on the product side, and we are not anymore as a project supplier as such.

Then on the other hand, from the financial point of view, we had a very solid EBITDA margin. We continue to improve that compared to last year's. We hit almost 16% as a total for the full year. And then from the free cash flow point of view, excluding the M&A activities, we had a strong year, hitting DKK 640 million. So solid financial results as such.

Then on the other hand, we introduced the share buyback program last year, which is also a big milestone for the company. It was in total DKK 1.4 billion, which is a very big commitment from the company to support the shareholder value. So several strategic highlights throughout the year and milestones for the company.

Then from the sustainability point of view, we had good success in many fronts. And to take a few highlights from the picture, I would say that we still have improvement opportunities with our safety. We are aiming for 0 harm that we still had 2.3 as an average injury rate, which is too high. We are making all the proactive actions to take the number down continuously, which we are driving to get to the 0 harm level.

Then on the other hand, 1 improvement area is definitely the Scope 3, where we are doing a lot of work with our equipment and technology range to make improvements. But then the other aspects, I would say that we were developing well throughout the year. And now for this year, we will have a new baseline when the cement business has been divested and we are just fully focusing on the mining technologies.

Then a few words on the market conditions. As mentioned about the products, the market has been subdued. We have been derisking and focusing more on the project -- sorry, on the products business instead of the full-blown big projects. And that's, of course, impacting us. But then on the other hand, with the services and PCV, we have been seeing stable development and we see that, that development continues this year.

The commodity prices have been increasing, especially copper and gold. Copper is being very high. But then still, that's not impacting on the customer decision-making in the short term. Of course, the long-term decision-making might be impacted but that's not meaning that they would release any large-scale mining projects in the short front.

The engineering activity has been very high in some countries. But of course, that means that the engineering activity covers both brownfield and greenfield sites and majority of the activities are with the brownfield operations at the moment. That the customers are, therefore, they are not sanctioning the greenfield projects as fast as maybe people would like to see from the market point of view. And we believe that in Q4 in '27, we would see more action related to the project business.

On the gold side, we have been seeing certain smaller projects being activated due to the high gold price. And there, we see certain potential, especially with the smaller equipment deliveries, although the gold sites do not consist of major projects as such.

Then deep diving into the business lines and starting from the services. The Q4 results were very strong with service order intake up plus 14% organically compared to last year and then revenue up plus 15% compared to 24%. So a very solid quarter. And there, with services, we were gaining back backlog which was not delivered in Q3. So Q4 was catching up with our supply chain and catching up with the backlog, which resulted in very healthy revenue level in Q4.

Then when looking at the total year, the organic growth of plus 4%, which was the normal level, I would say, in that sense, that's something that we expect as a yearly development for the business. Revenue-wise, we were up plus 9% as a total. So healthy results from the revenue and order intake point of view. Growth markets were specifically South America and Africa.

Then from the margin point of view, an excellent end for the year, driven by the high revenue results we achieved more than 20% EBITDA, adjusted EBITDA margin, which is on the high end, I would say, for the service business line. So a clear uptick there and the revenue level was supporting it.

From the product point of view, the year was subdued, as mentioned previously, so order intake organically declined for the full year minus 5%, certain uptick was visible in Q4 where we were gaining a few orders more than in a normal quarter. But then when balancing out the quarters, the organic growth was negative.

From the revenue point of view, we were declining minus 28%, which also demonstrates that the market activity is not the highest at the moment.

From the profitability point of view, good development in Q4 as we were gaining up with our deliveries and increasing our revenue that resulted in a healthy result compared to the previous quarters we were on the black numbers. So this was an extremely positive quarter in that sense. But then when balancing out the full year, we were still in negative figures. So there is still room to develop on the product side.

With pumps, cyclones and valves, an excellent year from the growth point of view, plus 12% order intake growth organically and the same with revenue. So we were driving consistently the business up, and that was also helping us with the results. And we have been seeing continuous growth with the PCV business throughout the quarters. So very healthy activity over here. And of course, the deliveries are smaller focused on the mine improvements and replacements and therefore, this business has been more active during last year and this year.

Also the profitability remain at a very good level with PCV. So 25% was the end result in Q4 with our margin level, which was then a bit above compared to the previous quarters. So on average, very good development with our margins with pumps, cyclones and valves.

And then I hand over to Roland.

Thank you for that, Toni. So let's just have a quick glance of the consolidated financials revenue of a bit more than DKK 4 billion gross profit at 34.6% and with a significant reduction in SG&A, we end up with an adjusted EBITDA margin for the group of 18%.

Below the line, we decided to take an impairment charge on our deferred tax assets in Denmark. This is predominantly due to the macroeconomic and geopolitical developments around the world. And it's a pure accounting noncash impairment charge to our P&L. The tax losses live indefinitely and are in no shape or form lost.

And when also finalizing discontinued activities in connection with the handover of our cement business, profit for that period was minus DKK 282 million.

Our gross margin remained high through 2025, predominantly as a result of mix. Service and PCV business was a relatively high part of our revenue throughout the year. So a healthy end to the year of 34.6% gross margin.

SG&A costs for Q4 is 19% down on the same period last year, both a drop in Danish kroner, but also reduction in SG&A as a percentage of revenue. And that indicates that we are moving forward on rightsizing our organization and moving into our new operating model. Most of the last savings have been taken in the support functions. And then we have ramped up and invested a little bit in the commercial front and both in our PCV business, but also bits and pieces in the service business.

And adding all that up, a relatively high revenue quarter in Q4, healthy gross margin, SG&A at a lower level, means an 18% adjusted EBITDA margin for that quarter. This is by no means a run rate number. It's an exceptionally good quarter for us. And of course, a home run in terms of ending 2025.

The higher revenue in -- towards the end of the year and in Q4 also means that we were invoicing and had a relatively higher trade receivables level in New Year's Eve product business line with a higher revenue, we're finalizing a few projects, and that means that we reduce our prepayments from customers and also a bit on work in progress, all in all means that our working capital for -- in Q4 compared to Q3 went up by DKK 573 million.

And despite a relatively high EBITDA, that's partly offset by the uptick in net working capital, leaving us with a modest cash flow from operating activities of plus DKK 3 million for Q4 and the free cash flow adjusted for M&A activities was plus DKK 70 million.

Just a quick recap of the P&L, so DKK 14.6 billion revenue, adjusted EBITDA margin for the year 15.9% and a modest profit for the year of DKK 8 million which reflects that we have lost a bit more than DKK 700 million on discontinued activities. So the cement business that is now finally out of FLSmidth and also the tax impairment charge of DKK 600 million.

Cash flow from operating activities for the year ended just shy of DKK 1 billion, roughly in line with what we had expected.

Our share buyback program that we launched last year is about to come to an end. By the end of Q4, we had a leverage ratio of 0.8x.

And just last night, we announced an intention to launch a new share buyback program given we get the authorization from the AGM by end of March, then we intend to launch it after we have printed our Q1 results in May. And that also means that we are returning quite a fair bit to the shareholders in 2026. In 2025, dividends -- ordinary dividends of DKK 461 million and the share buyback of DKK 1.4 billion. This year, we will propose ordinary dividend of DKK 231 million and a share buyback program of DKK 1 billion.

This year, we have introduced a new way of guiding. We are done with the transformation and no longer see the need for directly guiding on our revenue in terms of Danish kroner. So we will convert to guiding on organic revenue growth, organic means fixed currencies. And for the group, we're guiding 2026 at minus 1% to plus 4% organic revenue growth, and we expect to post an adjusted EBITDA margin of between 15.5% and 16.5%.

A little bit of underlying flavor or assumptions or to that guidance underlying, we expect the service business line to grow 2% to 5% organically. The products business line will decline by minus 5% to minus 15%. Sounds like a wide range, but it is really plus/minus DKK 150 or so, and that can easily happen when you execute larger product bundles or smaller projects, either because of delays on our side or changes in scope and time line and so on, on the customer side. So hence, why that span.

And then we expect our pumps business to post say an organic growth rate of 4% to 7% and that gives us the full guidance of minus 1% to 4%.

For those of you that'd like to do the reported revenue growth in Danish kroner, we can say that with the FX effects as per Monday, 16th of February, our DKK revenue growth would be about minus 2% to plus 3% growth. On the margin side, we came out of this year, 15.9%. We'll guide next year, 15.5% to 16.5% EBITDA margin. We'll adjust for about DKK 100 million equal to around the percentage around it, one-off items predominantly related to our ERP implementation and principal company model. And on the other hand, as some of you recall, we are selling our corporate -- former corporate headquarters in Denmark, and that cash comes in as extraordinary other operating income in Q1, and that means an extra plus 5% that we also adjust for. And that means when we do that, the expected reported EBITDA margin will be around 19% to 20% margin.

And with that, I'll give it back for a few comments to Toni.

Thanks, Roland. Excellent results, I would say, last year. And I also want to use this opportunity to thank our employees for their reports, great contribution for the results. And then also our customers, I want to thank them for their collaboration with us. So good year indeed for FLS.

Then a few words on this year and the way forward. So -- of course, we are now in a good position from the company point of view, we have cash, credit limits available. Financially, we are in a strong position, which then means that we can start investing in the growth journey. So we are looking for organic expansion opportunities actively. But on top of that, there are selective M&A cases, which we would like to explore this year, we have been actively developing our pipeline. Through this, we want to be closer to the customers to support them even more in the future and help them to improve their operations.

Then at the same time, we continue improving our customer offering. So we are looking into the portfolio that we can drive that forward so that the miners can improve their productivity, reliability and sustainability by utilizing our technologies and services.

Then on the other hand, it's super important that our supply chain and delivery experience is great for the customers. And therefore, we are continuously driving forward with our supply chain improvements, accountability within the organization. But at the same time, securing that when doing the exercise and securing that the cost level remains competitive throughout the organization. Through that, we want to ensure that the margin stays at the same level or even higher when moving forward based on our forecast. And then, of course, we want to ensure that the growth journey continues from here. Then we, of course, want to balance the investments and so that we are utilizing a certain amount of money into our internal and external growth opportunities. But at the same time, we want to have the shareholder returns secured so that we have the combined financial flexibility for both company and the shareholder purposes.

So those are the key themes when moving forward. And then, of course, we are continuing to do the strategic planning for the company so that we have the long-term plan available also for the external markets. And based on our current expectations, we will host the Capital Markets Day in September when we would then release the full strategy for the coming years.

And now it would be time for the questions.

[Operator Instructions] Your first question comes from Chitrita Sinha with JPMorgan.

Congratulations on new role, Toni. I have 3, please. Maybe firstly, if I could just start on the products margin. Clearly, a very strong result in the quarter. And I know there have been initiatives that have been implemented to reduce the breakeven point in the business to DKK 3 billion. I guess how much of this benefit came through in the quarter? And how much is left to do? I'm just trying to understand what we can expect for next year, especially as volumes will be down.

Thank you for the question, and thanks for the congratulations. So when looking at the quarterly figures, of course, the products volume was high in Q4. That was higher than maybe the normal quarter, and that was a big part of the profitability improvement. So we still have work to do to improve the profitability level. We have taken many actions last year to improve the margin level, but still work remains to be done this year to get to that overall black figures. But the volume impact in Q4 was significant with the products, and that was driving up the profitability level.

Understood. My second question is just on, I guess, the outlook in products. Two large orders were booked in the quarter, but then you've obviously mentioned there's hesitancy in customers allocating capital to these larger projects. So I mean, how -- what is the catalyst for these customers to make this decision? And then is it possible to increase the small, medium-sized orders given where we are with commodity prices? Or should we continue to expect that DKK 400 million to DKK 700 million run rate?

Yes. So with the projects, I would say that the engineering activities have continued active. But then, of course, the customers are thinking about their risk level when doing the investments. The greenfield cases, the bigger cases involve more risks and that's one factor, which has been like delaying those cases and delaying the sanctioning of the project. Many of the customers they have been seeking for improvement opportunities with their current operations that we have been also seeing M&A activity within the miners. And through the M&A, they have been improving their performance within selected sites, and they have such plans in place for the future.

So we believe that based on the engineering activities, we would see more maybe sanctioning next year and probably in the end of the year. But short term, I wouldn't say that there is too much like big projects being sanctioned.

Then as mentioned in the presentation, with the gold projects, we have been seeing more activities and smaller cases and the customers are actively seeking for improvement opportunities with their current operations and possibly some smaller mines. And of course, we are in those discussions actively, and we are participating in them through all the business lines. Some of the impacts are then visible [Technical Difficulty] line, some with services where we have upgrades and modernizations. And then, of course, this will, to a certain extent, help products from the order intake point of view. But then when looking at the revenue, normally, it takes a bit longer for the products business revenue to come through the profit and loss statement.

Final question just on capital allocation. So obviously, you've spoken about this as one of the priorities for next year. But just trying to understand maybe in order in terms of what your priorities will be given you've announced the share buyback this year, but maybe the dividend was lower than what we saw last year.

Thank you for that one. So obviously, our dividend policy say that we will distribute in dividend 30% to 50% of our net profits and net profits were close to 0. So we chose a number of dividend that was slightly outside that range and then a share buyback of DKK 1 billion. And then we have an M&A pipeline that we are currently developing. And I think we expect maybe 1 or 2 of the targets in that pipeline to come through in 2026. That's never certain, but that's what we expect. So we have balanced sort of what we may need in terms of M&A, what we could return to shareholders. And then at the same time, thinking about that our leverage ratio can be slightly higher than the 0.8x we came out of 2025 with.

Your next question comes from the line of Christian Hinderaker with Goldman Sachs.

Welcome, Toni. I want to start and apologies for a bit of reiteration of the last question. But if we think about the ex large order numbers, OE was down in organic terms quite considerably, and you had about [ 515 ] of underlying orders. I guess if we map the comments in your release and also from peers that are reported in terms of decision-making on large projects being subdued, but smaller product activity-related investments continuing. That narrative, frankly, is just at odds with the Q4 numbers, which are obviously driven by large order growth. You've also seen the BHP Vicuna investment. I guess that was yesterday or earlier this week. I guess -- what are we missing here in terms of that dislocation because the numbers tell a different story to the narrative?

Yes. Maybe some clarification on that one. So if you look into our numbers last year, there was also maybe a certain shift between the quarters. So Q2, Q3 were not that strong with the products. And then for certain reasons, some of the customers wanted to just sign the deals just before the year-end. So some of the signings were postponed throughout the year. We were seeing pretty low quarters and then the order intake went up in Q4 because of the fact that the customers were signing those delayed cases. They just wanted to finish the year so that they have a clear way forward. So if you then balance out the order intake between the quarters, that gives maybe a more stable and clear impression on the situation.

Maybe secondly, on the exit margin in products in the fourth quarter. You'd said at the 3Q results that the segment would likely be loss making until we were exiting 2026. Clearly, you're running well ahead of that. I guess, curious about the phasing of profitability through the quarter. I appreciate you had a good delivery period in 4Q '25. Should we think about that being an implied volume threshold for being breakeven within products? How do we think about the phasing in 2026?

Yes. Thank you for that question. I think we are not really running ahead of ourself. I think I understand that Q4, it looks like a significant home run. But it's -- we always said it's volatile, both the order intake, but really also the execution of the backlog. And a few things were finalized in Q4, and that meant a higher revenue and the contribution margin gross profit was flowing through to the bottom line. So our Q3 was not particularly great as we can all remember. And the -- I won't say restructuring, but the adjustments we do in the product business line continue and we still expect to spend most of this year doing that so that the product business line around DKK 1 billion -- DKK 3 billion in revenue, DKK 2.83 billion needs to be breakeven on a run rate basis in Q4 next year. So that's still the thinking. There has been no change in that. And yes, so that's how it is.

Understood. And maybe finally, as we think about the order intake, but maybe also the revenue delivery, how is pricing developing and what are your expectations for the year ahead? This is on product.

Yes. So thanks for that. So from the pricing point of view, I would say that the market remains at a stable level. So the stable development, which we are seeing from the sales development perspective with PCV with our pumps, cyclones, and valves and with services, similar development is visible in pricing. So we are not seeing any major fluctuation due to the like material costs or so on. So pretty stable development there due to the activity level.

Your next question comes from Claus Almer with Nordea.

And also from my side, first and foremost, a very warm welcome to you, Toni. I have 2 questions. And the first 1 is also about the order intake in Q4. And you said that weak Q2, Q3 and then a lot of that came in Q4 instead. Is there also a negative read into Q1 '26? So your pipeline has been more or less been used and you need '26 to build a new pipeline. That will be the first one.

I would say that that's not the case in this situation. So in many industries, we are seeing similar development at the customers are utilizing their CapEx budget, which they have for the year in Q4. And then that means in several cases that there's more activity. That was also visible in our figures. Quite often, there is some sort of an uptick with the Q4 figures, that's normal in many businesses. We didn't like front load in this case, anything for Q4. So we should see pretty stable development in Q1.

Sounds great. And then a second question regarding the order intake and compared to your internal, let's call it, [indiscernible] KPIs, order intake missed expectations set out in the start of '25. Was that broad-based? Or was it product or where did you see the miss?

Yes. So I think the Board had high expectation to Mikko and myself. So that target was set pretty high. And then it was set in Danish kroner. And so we have had considerable FX headwind. And I understand, Claus, you've read the magic pace in the remuneration committee, which is where you pick that up. So that's the reason.

Right. Okay. And then just a final question regarding your 2026 guidance. This, you could call broad revenue growth guidance of 5 percentage points, but the margin is only 1 percentage point. So is that really the possible difference between ending in the upper and the lower end of the revenue growth guidance.

Yes, Claus. So there's only 1 answer to that, and that is yes, right? But I was trying to explain that we need a little bit of a band in the product business line. Because execution can swing a bit month by month, Q-by-Q due to our own way of executing, but also very much due to the customers' decisions to either change or delay or rescope or things will happen. Then I think both in pumps business and also in our service business line, we have a number of initiatives coming up, and we are actually a little uncertain how fast can we make the rubber hit the ground, so to speak. Pumps have done a lot of good jobs and a very good job in 2025, and that can't continue. So we're looking at the whole thing for the pump business saying 4% to 7%, I think that's also even by comparing to peers and so on, a good ambition. And then I'll let Toni maybe comment a little bit on the service business line where we are closer to the same level as we saw in 2025.

Absolutely. So the range is now between 2% to 5%. Of course, with services, our baseline is a bit higher than with the pumps, and then it means that in percentage, it gets more difficult to grow the business faster. But then in DKK, of course, the growth is high, even if we reach like a 4% level as like last year. So the comparable let's say, level from last year is the full year figure about 4%. And based on that, we see that similar development would happen this year within the range of 2% to 5%. And we have a solid plan in place that's how to make it happen by using our resources and investments.

Your next question comes from Alex Jones with Bank of America.

Two, if I can. Maybe first, Toni, as you step into the CEO role and based on your experience at FLS for the past 8 months, could you outline a little bit where you'd like to put a particular focus as you step up on improvement or other efforts and any changes of emphasis you'd already like to highlight for us at this early stage?

Yes. Thanks for that. So one of activity, of course, which is visible in the plans and which is also closely related to my background is M&A. So I have been doing a lot of M&A activities in the past in my previous roles and maybe that's one flavor, which I'm bringing now in. That's, of course, then part of the journey this year and will be then part of the plan, which we will then release as part of the Capital Markets Day. So that's definitely one focus area. Now the transition of the company into a pure-play mining allows us to do that. We are in a financial healthy position, and we have made the divestments and now there's the timing. The timing is right now to make the M&A activities active and start executing them. So therefore, that will be one big part. And then, of course, I have certain products background from the past and one part of our journey needs to be that we get the products business to the black figures. And of course, I will be working with our products business line team to make that happen then and supporting them.

Excellent. And maybe a second question to follow up on the M&A. You talked about 1 to 2 targets potentially converting this year. Are there particular areas of the business where you're seeing strong opportunities or progress on those targets? Or is it really broad across the different areas you previously highlighted?

So at the moment, we are screening the targets, I would say, across the business lines. So all business lines are active and evaluating opportunities from the marketplace. And then we have quite many opportunities in the pipeline in different phases. And based on the pipeline activity, we assume that a couple of cases could land this year. But as Roland mentioned previously, of course, there is uncertainty always with the M&A cases but the activity level is rather good, I would say. And based on that, we believe that some cases will take place by the end of the year.

Your next question comes from the line of Lars Topholm with DNB Carnegie.

And also from my side, welcome, Toni, looking forward. A couple of questions from me also. So Roland, you made some comments on the net working capital and certain of the moving parts being affected by the high revenue in Q4. I wonder if you can give some outlook on the expected net working capital development in 2026.

Yes. Thank you for that, Lars. So how we see it play out is, of course, the Q1 will be an aggressive collection month. So that's one thing. And then secondly, both the service business line, but also the pump business have plans to build up in a disciplined way, inventories as we move forward. So that's true opposite, moving parts in the net working capital. Work in progress and prepayment for customers are a little bit depending on when, how we get orders in and how they are structured and so on. But I think guidance wise, you should expect that, that net working capital is on a new level now around to DKK 2.4 billion as we move through 2026.

Okay. And then I had a question about CapEx guidance.

Yes. So internally, we are trying to lower the level a little bit. But you should expect 2% to 3% of revenue in CapEx.

That is very clear. Then I had a question to the service order intake in Q4 because less than 8 quarters, and of course, I know there's also volatility here. But I wonder what's driving it is it new customers? Is it increased scope on existing service contracts? I know what you put into the order intake is the expected revenue generated on a contract in the next 12 months. So I wanted some color on that. And maybe if you could also comment on whether this improvement is a step change or just a blip?

Yes. So as discussed previously, in the core, we would still continue to highlight the fact that it was just an individual quarter where we saw the jump and that there was transitioning of the orders between the quarters, that's for sure. And then we received a bit more bookings due to the year-end activities, which the customers were having. And then, of course, when the average level is calculated, that's then a balanced view and around DKK 2.2 billion. So again, we would highlight the fact that it's good to compare the average level to our forecast for this year, and not looking at the individual quarter because especially the bigger project cases might go back and forth between the quarters, and there's uncertainty with them and the bookings are not that clear and stable as with the service business. Then on the other hand, we're looking at the service side of it with the orders there, we might have some individual [Technical Difficulty] also cause some fluctuation between the quarters.

Sorry to interrupt, sir. We had lost...

[indiscernible] is definitely there. PCV, the pumps business where the order intake is at a stable level and has been growing quarter-by-quarter. But all this fluctuation caused by the bigger cases, bigger modernizations, upgrades that then sometimes visible, especially in the year-end.

That's good. Then a final question, if I may. I don't know to what extent you can answer it. But [indiscernible] made a revised feasibility study, of course, ahead of that asset being created just at the end of last year. I know in the original feasibility study, FLSmidth was listed as supplier of all the equipment for the concentrator. Is that also the case in the revised outcome?

I think we can't comment on that, Lars. We can't comment on that.

That's fair enough. I had to try to ask.

Your next question comes from the line of Kristian Tornøe with SEB.

Yes. A couple of questions from my side as well. So first question on the SG&A cost. If we look at SG&A cost before transformation and separation cost, it's been fairly stable for the past 3 quarters. Should we expect this run rate going forward as well? Or is there a potential for another leg down on the SG&A cost?

Yes. So thank you for that question. I think we should expect a bit further cost out. But the last bits and pieces will come a bit slower. So towards the end of this year, then we're done.

Okay. So you would say a slight decline throughout the year, what are you saying?

Yes. Slight one, yes.

Understood. The second question is just on your amortizations in the quarter. You are writing down projects no longer in use. Can you elaborate on what these projects were?

That's a little bit of a cleanup. So we had different IT projects and so on. So in connection with the SG&A reductions we have done, there has been bits and pieces in the balance sheet also that we are writing down. So it's small stuff cleanup type of thing.

Fair enough. And then just my last question. So previously, Roland, you have been kind to help us a bit on your cash flow from operations expectations. So where do you roughly expect that for '26?

So roughly, the cash flow from operations we'd say between DKK 700 million up to DKK 1 billion. That's a good starting point.

The next question comes from Casper Blom with Danske Bank.

And also welcome Toni from my side. Most of my questions have been answered, but just one left here regarding the impairment on the tax asset. Maybe 1 for you, Roland. Could the DKK 600 million that you impair on the tax asset, can you talk a bit about to what degree this is due to a lower expectation of earnings for the next 5 years? Or is it more due to a lower expectation of being able to transfer tax payments to Denmark? And as a second to that one, if you could talk a little bit about your journey on bringing down your tax rate over the coming years.

Yes. Thanks, Casper. So it's a number of things, right? So first of all, of course, the macroeconomic and geopolitical uncertainty. And then secondly, it's also so that the European stock market authority have -- actually this year, sort of emphasized that we should double click on the usability of our tax assets. So we have done that. And then thirdly, we internally are moving or redirecting our principal company a little bit because U.S. is currently imposing tariffs on everything that comes into U.S. So if we are selling it via Denmark and then over to U.S., it may not be the smartest thing to do. So for a few operational reasons, things are being slightly delayed in combination with the authority sort of, what shall I say, indication that it would be a good opportunity to revisit this. We have taken the decision to take this impairment now. Our plans, otherwise, ERP principal company model and so on are moving forward. Our ETR will continue to go down as we have expected. And we still expect it to be below 30% in '27 and onwards. So there's no change to that. And then, of course, this is an accounting impairment. The underlying tax assets or deficits live forever. They are eternal, and there's no cash impact to this one.

Understood. Just to be crystal clear, can you sort of confirm that the tax asset impairment is not related to you having lower expectations of activity for the next 5 years?

Yes.

Your next question comes from William Mackie with Kepler Cheuvreux.

Yes. Welcome, Toni. Thank you for making the time. As per the last comment, I think you pretty much ticked every box on my Q&A list. Maybe with the exception of organic growth drivers as you move the business to focus on growth and away from transformation. You've touched a little on inorganic and stepping up the M&A machine. But when you look across the business, I think when I look at your service growth target for this year, it doesn't look very ambitious if I incorporate some pricing assumption. So maybe more detail on how you build up the organic growth assumption there similar for pumps, cyclones, valves. And perhaps overall, how do you see your future prioritization of corporate resource to drive the organic growth?

All right. Thanks for that, Will. So from the service point of view, I would comment that the major difference compared to PCV, our pumps, cyclones, and valves is that the service business line consists of different mix of activities. Like I said, we have upgrades, modernizations over there, site services and spare parts, consumables and so on. So it might be so that some of them are growing at a bit, let's say, faster rate than the others. And then the mix is around the forecast, which we were providing out. Like mentioned in the call, with the upgrades, we are seeing much more like fluctuation. They are more like a product business. And therefore, this impact, of course, needs to be taken into account. Then as you have been seeing, we have been taking down and divesting certain businesses and descaling the products side and derisking it. So of course, that's to some extent impacting on certain site services, which we are not doing anymore.

So when taking all these aspects into account, we see the stable growth continuing in line with last year and the average should be very much in line with the last year's figure. And more details, of course, about the growth plans we will provide in the CMD presentations, then later on this year, but of course, in general, I can say that it -- this year, we are doing resourcing, facility investments and so on, which will then help the service business to be closer to the customer and to be faster with our service support.

Your next question comes from David Farrell with Jefferies.

Hopefully, you can hear me. My first question is around the ERP implementation that you've highlighted for this year, DKK 100 million cost. Is there any risk to your operational delivery of that ERP system being implemented this year? Clearly, we've seen it across a number of companies where ERP implementation has created a knock-on effect in terms of their capability to deliver.

I think that -- so our approach is that we go very focused ahead and we built a pilot implementation. We tested out before we move on to the next one. So that will -- there may be disruptions here and there, but it will never impact the full business line. Then it will be -- we'll find out and then we back off and use whatever we have until it's fixed. So it's not the intention to do a massive rollout and we would also be spending more than DKK 100 million per year if we rolled out an entire region in one big bang and so on. So we're moving forward a bit more controlled exactly to avoid any operational disruptions.

Okay. Wonderful. And then a follow-up question, just in terms of your R&D spend, that looks to have fallen from DKK 273 million down to DKK 184 million. Are you just being more focused in terms of where you're spending R&D now?

Yes. So of course, we continue developing our products some of the -- and services. Some of the work is happening actually as part of the customer deliveries. So that's not classified as R&D, which is, of course, impacting on the budget. Then on the other hand, as you have been seeing, we have been divesting quite many, many businesses. That's also impacting on our R&D budget when moving forward. And then what we have been found like very useful is that when we do this collaboration with the customers in the customer interface and then developing the service solutions or the technologies in connection with them, not as a separate R&D project that has been very powerful. So a lot of cost is then allocated also to the projects and service deliveries, which we are then providing to our customer base. So maybe that explains some of the differences. Well, one example is that the major Indian project, which we are doing, there, we are operating this way when developing the solution to the end customer.

The next question comes from Klaus Kehl with Nykredit.

Yes. Klaus Kehl from Nykredit. First of all, also welcome to you, Toni, and welcome to FLS and Denmark. And then a couple of perhaps borrowing financial questions to Roland. First of all, if you look at the discontinued operations, there's a big loss here in Q4 and also for the full year due to the divestment of cement. But just to be clear, is it reasonable to expect the deadline in [Technical Difficulty].

Sorry to interrupt.

Are you there, Klaus? Can you hear me? Okay. Thank you for that, Klaus. I'll just rephrase the question, as I think I heard it. So you're asking whether the loss on discontinued business means that we are now done with that, and there won't be any noise in the numbers in 2026. Is that the question?

That's the question, yes.

Yes. So that's the intention. That's the intention. So we have provided for what we think is going to be the final settlement with the buyer and we have also provided for the so-called transfer service agreement we have with the supplier in terms of running the IT platform until they can take over and so on. And that is expected to be roughly what we need. If there are small bits and pieces here, then most likely we'll take it in the continued business and it won't be disruptive in any shape or form. That's the intention.

Okay. Perfect. And then you mentioned that you would expect a tax rate -- effective tax rate below 30% in '27. Do you have any comments about the tax rate here in '26?

No. So I refrain on that. But last year, it was 34% and then we have 33%, right, and then it's coming down to below 30% in '27. So let's see where we go. They won't be below 30% in '26.

Your next follow-up question comes from the line of Lars Topholm with DNB Carnegie.

Yes, I have a very quick one. So Roland, you talked about cash flow from operations this year, DKK 700 million to DKK 1 billion. Just to make clear, does that include the gain from the sale of the head office?

No. It doesn't.

As there are no further questions, I would like to turn the conference back over to management for any closing remarks.

All right. Thanks for everyone for joining the call. It was a pleasure having you with us today. And a few closing remarks from our perspective. So as mentioned, we have a very solid year behind us. The company has been doing several strategic improvements. And based on them, we are now in a very good position to start the growth journey in the company's new phase of working. So now entering in this year, we have a very solid chance to gain more business, especially with our PCV service business line and then get to the black numbers with our products business. So all in all, a good situation for FLS, and we are looking for the growth journey. Thank you for joining us.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning from Copenhagen and welcome to the FLS Quarter 3 Earnings Call. I'm extremely upbeat about the IFRS result and where we are at the moment. And if we really reflect where we are coming from, we are fairly close to completing the major transformation of the company. And I'm especially happy about service and PCV performance, which are now at a good level, 80% of the business. 80% of the business is high margin, low risk recurring with a fantastic growth potential. Also another major milestone has been closing of the cement sale. So that is a major milestone for the FLS.

For the quarter, we are extremely proud about the service development. Service orders increased organically 10% and the positive market momentum will continue. And we're also looking at this positive development would continue in quarter 4. And then also that we will highlight our growth ambitions in service in our Capital Market Day in quarter 1. When we look at the product business, we've done lots of portfolio pruning over the last 2, 3 years. We stopped taking material handling orders. We closed down the business. We don't do any conveyors. So we focus only on high-technology products with the big aftermarket potential. It has been quiet on that side in terms of orders, but we are extremely busy with the engineering orders and engineering work that we do for the future orders.

PCV, fantastic performance year-to-date, 9 months. not so high on the quarter because of lack of the project orders. But one of the best developments in PCV has been that we are converting a lot, we continue to be successful converting brownfield third-party installed base out and replacing third-party pumps for the FLSmidth KREBS pumps. So that is a big success in that part of the business. We are in the low end of the guidance in terms of revenue for the year, but we will deliver EBITDA result that we promised to the market. There are also positives regarding cash flow that Roland will highlight that has been asked about some of you in the past. Good progression in all sustainability targets. And you also see a highlight, which is part of our product strategy. We sold the largest filter tailing system in the world during the quarter. And that also plays our product strategy that we want to be a leader in all core products, typical large heavy equipment for the big mines because they generate a big aftermarket for us. So that is one example that -- of the big wins, which on the headline number is not so significant, but then huge generation of the aftermarket in the coming years.

Overall market is same as in the previous quarter. We see both service and PCV market remaining stable, and we can continue growth in both of those segments, incremental growth in the coming quarter and then hopefully then also in the next year. But we will highlight the growth strategy for those in the Capital Market Day. Engineering activities higher than maybe for a very long time. We have engineering orders for projects that have not been sanctioned. In practice means, that we know that what product orders we will get in -- when the project is sanctioned, but it also means that we don't know exactly timing because it depends on customer releasing the project. Still a good level of activity in gold and -- but the headline value of a small coal project is always smaller so that it's $10 million, $20 million type of business there. We've turned the corner in service. And now we start to see growth in service and we continue building on that one. We've done lots of changes to the service business this year. And we expect that there will be a big payback now that start to be visible then in the future.

But times are that the updated organization and the improvement in many areas starts to pay off. So we see order intake growth despite -- there has been no project-related orders because if you get project-related orders, it means that you sell project spare parts, wear parts, we haven't had any support from that one. So it's really organic through service growth for the existing installed base. And therefore, I'm really happy about that one. Service profitability. It's a bit on the low side because of the lower revenue months, but a good baseline for services in around 20% EBITDA. And then there will be slight variations, as we discussed last time, depending on volume, low volume, high volume type of quarter. So there will be some variation. But for me, the baseline for FLSmidth service is around 20%. We talk about that product market activity is slow at the moment. But of course, there's a big, big underlying trend in critical minerals. There will be a shortage of copper in the coming years, and we see a fantastic potential for this business when the market will come back. And we have a good position in -- especially in big copper plants. If you think about copper market in the world, about 20 mines, we generate about 40% of the world copper.

And then if you turn that what it means to us, it means that roughly 70% of the world copper goes through our gyratory crushers. And we will be giving some of the more data on this one than in the Capital Market Day. But big copper critical minerals is where we play. And when that market will come back, you will see trend changing in the product business. But you need to also bear in mind that we focus on quality of the order intake means that , we don't do third-party content through our books. We don't do EPC. We don't do any loss-making material handling business. We don't do conveyors, we don't do stackers. We don't do reclaimers, all that is gone because that is bad business and no aftermarket. So everything what we have in the order intake of products is there to generate aftermarket. And again, relationship between product business and then service and PCV is about 20% product business, 80% high-profit low-risk recurring business in our books. This will be still a swing in the coming quarters. But we've done a cost out in product business line. We rightsized the organization. We are taking about 250 to 300 people out from the organization. but we focus on having core engineering capability to support all our important products.

Because of low volume, this will be swinging, but the target is that this business will be breakeven on a steady state towards end of next year. As I said earlier, the organization is super busy. They are doing engineering orders, engineering for future projects. So we know that there will be what we described, catch-up bottle impact at some point of the future, maybe towards end of next year when we start to see the new capital orders coming in, projects being released sanctioned by the customers. PCV is our best business. This is the most valuable part of FLSmidth. And how we are running PCV is that it's a stand-alone business, high level of independence, go to market is independent from the rest. Synergy element in FLS is that we can sell pump cycles valves as a part of the project bundles and then sometimes sharing the service facilities between the service business line. But it is a very independent business. So it's independent go-to market, independent support, independent manufacturing customer support and sales. And if you look at -- despite the slowest quarter, if you look at the year-to-date performance, 9% organic, we're actually doing really well here. This I'm really, really proud of this business.

Now I have a live feed from head of this business pattern. Whenever we are converting out significant competitors, I always get a Whatsapp message from him. And we in the head office and also in the PCV, we always celebrate this conversions because that is meaning that we are gaining market share. We don't see any prospect of significant variation going forward in PCV, EBITDA margin, it's stable and it's all about how fast we can grow the business. low-risk, high-profit business. And these numbers, including both capital products and also service. Then handing over to Roland for more detailed financials.

Thank you for that, Mikko. And adding up the 3 business lines, which is now our continued business, yields revenue of DKK 3.4 billion, almost DKK 3.5 billion, 34.7% in gross margin. And netting out our operating income and also our transformation separation cost is with one-off nature. Our adjusted EBITDA equals DKK 530 million and an adjusted EBITDA margin of 15.3%. Profit and loss from our continuing operations after tax and finance is then DKK 298 million adding discontinued total profit for the period for the group is DKK 394 million. Our gross margin compared to same quarter last year is up. It's driven by better mix, obviously, also a better mix within the business lines and also compared to last -- same quarter last year, our noncore activity segment is obviously out of the numbers.

SG&A cost is on a good trend downwards as we have talked about for a while now. Now it sits in the numbers and the total DKK 664 million in the continuing business includes our transformation and separation costs of DKK 52 million in Q3. All that means that our underlying earnings in combination continues. So we are now at 15.3% EBITDA margin for the quarter, absolutely in line with our expectations. Our net working capital is flattish Q-on-Q. We have had a good one on trade receivables collections, and we have, so to speak, spent that in building inventory up, especially in the service business line, but also a bit in the PCV and we expect that most likely to continue in Q4. So our net working capital ratio on the continuing business of 12.4%.

Also, again, in Q3, we had a healthy cash flow. Cash flow from operating activity is DKK 478 million and netting of investments, a free cash flow of DKK 358 million, so a couple of good quarters, cash flow-wise, the last 2 quarters. That means that our leverage remains low, 0.6x like we had it last quarter. And at the same time, our share buyback program is progressing well. We are bit more than half done yesterday, and we will continue steaming forward with that .

As Mikko mentioned, we have adjusted our guidance to the lower end of our previous guided interval on revenue. So previously, we guided DKK 14.5 million to DKK 15.0 billion, and we are now saying we will be in the lower end of that range, so around DKK 14.5 billion. The adjusted EBITDA margin of 15.0% to 15.5% remains unchanged. And when we talk about adjusted EBITDA, we are excluding transformation and separation costs of around DKK 200 million for the full year in '25, and we are also taking out what we call the operating net income of one-off nature. And this year, this has been sell-off of a few sites and service center in small site in Turkey and a few other bits and pieces we took over from Teekay that is now starting to leave the balance sheet. And with that, I'll give it over to Q&A.

[Operator Instructions]

Our first question comes from Chitrita Sinha with JPMorgan.

I have 3 questions, please. My first question is just regarding the comments and release on execution in the quarter. And just wondering what level of confidence you have for Q4 deliveries and then 2026 as well.

The -- you mean release basically revenue, how well we do revenue in the fourth quarter.

Yes, exactly, yes.

We expect that service to improve. It was a low revenue quarter for service, and we were building backlog book-to-bill and we are expecting service to improve in revenue and PCV to do well as well. So normalize that there wouldn't be built up on the book-to-bill so much on fourth quarter.

Okay. Understood. And then my second question is just on the product orders. I mean -- of course, it can be quite lumpy and talking about some softness there. But even taking into account the India order, I guess, the underlying order intake was weaker than the DKK 500 million to DKK 800 million that you've previously spoken about. I mean looking into Q4, maybe even into '26, I mean, is the DKK 500 million to DKK 800 million still the ballpark that we should be thinking about? Or perhaps could the range be a bit lower?

Yes. Thank you for that. I think that range was before the business line split right. So that included the capital part that now sits in PCV. So I think it's important to remember that DKK 100 million to DKK 200 million sits in PCV on a quarterly basis roughly. And that means that DKK 500 million to DKK 800 million is now maybe closer to DKK 400 million to DKK 700 million or so.

Okay. Really clear. And then my final question is just on the pump cycles and bulk business. Just could you give the magnitude of the order in this comparison period just so we can understand the underlying development?

Yes. I think that's a rough guess, right. So we have included comparison numbers to the extent that we can. But maybe DKK 100 million that is of large nature or so.

So service and conversions continue at a good rate, and we were missing a bit of that boost from projects where PCV is part of the bundle.

Our next question comes from Christian Hinderaker with Goldman Sachs.

My first question is on modernization where you've talked about -- talked about some adverse timing effects. I guess first off, can you remind us the scale of that within service over a typical year? And then do those third quarter effects in any way relate to some of the product production issues that are facing customers Grasberg, QB, Cobre Panama, et cetera. I guess just curious why growth there is soft when your nearest peers growing double digits in that area and calling out quite a strong backdrop.

I think how we do the services that we don't have a multiyear contracts in our books. So we like the kind of steady going. So as I said earlier, how we book things is transactional. We don't like to book kind of multiyear contracts at [indiscernible] because then it creates a kind of fluctuation in order intake. So our business is mostly spare parts, wear parts, and then there has been modernization like kind of modernization of mill, for example, that we are doing in South America replacing kind of critical parts of the mill sales and that of things.

So it's -- so how we do things is that we try to kind of keep it steady rather than kind of a booking multiyear contracts at 1 go because we -- service would be stable. So that's one thing regarding our philosophy of bookings. But the business is wear parts and spare parts. And of course, a big part of the spare parts, there's element which goes to modernization and typically that part of the spare part, what we call capital spares, because you are refurbishing upgrading mill maybe once in every 10, 15 years, not more often. So in spare parts, recurring is, in rough terms, maybe 70% and the capital spares, which are often part the modernization is 30%. So that is viable part of the service business.

So regarding the sites, Corporate Panam was biggest PCV customer in our books. So that was -- when a site is still not active, I think for 2 years or more, it was a big loss for PCV, but we have recovered that one. So that, of course, year-on-year comparison, no impact anymore. Then Grasberg is customer wow, so that will impact our service and PCV business in '26, but we are -- we believe that we can compensate Grasberg kind of lack of business because of the disaster they at the site. And then QB2, we actually very active at the site, helping customers to kind of fix some of the underlying issues. So we actually do a lot of work for QB2 in helping customer to resolve the technical challenges, what they had at the site.

So maybe only one which is Anakam, which is HPGR customer, it has a less of an impact because it's HPGR service site for us. So it's mainly the biggest impact is Grasberg, and we believe that in APAC area, we are able to compensate for the increasing other businesses in the region.

You mentioned success in the pump field trial conversions. I just wonder if you can elaborate on that in terms of the composition of those wins in terms of regional mix or metals exposure.

I think we are typically working in the major sites. So our strong presence is in the large kind of typically most common is copper site in South America, that's the most. And we are focused on converting large pumps where our performance basically is superior against the other competition. So we have quite a good success for the mill discharge pumps which is the large pump part after the mill, which is highway rate, higher aftermarket. So we are focusing on kind of high-value conversions. So it's typically where we are strong. Otherwise, we have a good presence at the site, which is a big copper.

And maybe just some extension there. Obviously, PCV, you've made a lot of progress in terms of improving that product in recent years and obviously seeing some wins, which is nice. I guess just curious about as you seek to grow that business and indeed, maybe other peers have sort of followed suit in terms of strategy? How do we think about pricing in that segment going forward?

Don't see any pricing pressure because conversions are always technical decisions. It's never a price decision because for the mining side, it's not a big kind of CapEx or item to replace the pump and you can convert it to OpEx as well. So it's -- we don't have any pricing pressure on the conversions. Pricing prices only if the pumps are part of the project bundle and there's a pricing pressure for the full bundle. So that's the only case where there's pressure.

And regarding our go-to-market, I think it's different from the competition because, as I said, it's -- you can think almost as an independent business is the most valuable part of FLS. We run it independently with the synergy in capital sales, in the project sales, [indiscernible] sometimes sharing same service asset as the rest of the service. But if you look at the pumps, it's independent business, and that's how you should run it we'll soon see in capital sales as soon as sharing some of the assets. But you can look at it as an independent business.

Next question comes from Christian Thalin with SEB.

Yes Mikko, you mentioned that the service revenue was low in Q3 and you expect that to pick up. So again, we see service orders up quarter-on-quarter, but revenue down. Can you just elaborate a bit on what's slowing it down in the third quarter?

We made a massive transfer of the current resources to the shared service locations and there was a little bit longer time in certain admin part of the business, so executing orders. So it's something that we knew this is going to happen, but it's -- but it's nothing significant. So underlying business in terms of supply chain performs well in terms of our sub-suppliers or for supply chain. And I would say the slowness in internal order execution some impact, but it's -- we knew that when you change the operation model, there's always a small slowness there, but it has been fixed. And therefore, there's nothing underlying issues in execution of a service in terms of revenues.

Okay. So here in the beginning of Q4, you were back at sort of a normalized execution level again?

Yes, we expect that we recover. I don't have an exact number in my mind. And of course, we don't even know it, but we don't have a kind of significant -- we don't have underlying execution issues in service. So the supply chain is in a good shape.

Fair enough. And then my other question was just on the impact of high gold and copper prices. So just curious whether this increased cash flow to your customers is having any impact on your direct dialogue with customers. And equally, you mentioned this record high engineering activity, to what extent do you think that's influenced by very high measure prices?

So inside our baseline numbers, if you look at the full year, and we don't announce smaller contracts, there's quite a lot of activity in gold. And one area where we see is Africa and Central Asia, which are kind of -- where more and more small gold mines are developed. And of course, then the CapEx for smaller gold mines is always less, but we have good position there. So we have number of totally new customers in Central Asia. And in those customers, typically that if you help them to build a plant, then it supports the kind of healthy aftermarket in the coming years.

So behind the kind of slowness in copper, which is the big numbers. We've seen healthy activity in gold, and there are new gold mines popping up here and there. And typically, licensing is easier because the footprint is smaller. And now they are coming up in the regions where the licensing is faster and permitting is faster. That's why we're highlighting the Central Asia as a region and Africa where the activity is high.

Well, copper is still in waiting, and we are a leader. That's a sweet spot to us. Pickup, as I said, if you would calculate how much of the world copper goes through our equipment and our kind of crushing and milling, we have outsized market share there compared to the rest of the kind of mining. And when the copper will come back, we have a huge benefit that we are incumbent existing supplier to most of the big copper mines. So typically have a significant benefit and high chance of winning expansion if your existing supplier to the kind of previous 2 lines. So and most of the engineering activity costs for the -- at the moment where we are really busy is copper plant expansions, adding a line, adding capacity. So that's where the activity is high at the moment. But we don't know when customers will sanction release the projects, there has been continuous delays.

But typically mining industry, everybody does it at the same time. When it starts to happen, then that's why this part is super cyclical. But in the meanwhile, we focus on 80% of the business, which is service and PCV. And we are adjusting our cost base. So we are not actually dependent in our performance too much on the capital cycle. And that has been the whole idea that service PCV is 80% high profit recurring, growing and then the extra bonus is that when copper cycle will come back and we get new installed base that we can service. So it's the whole business model is like that.

Our next question comes from Casper Blom with Danske Bank.

Thank you very much. Most of all, actually a couple of follow-ups. You just touched upon legal that it take some time a bit longer to execute orders given your inherent, is that also the comment that you give in the introduction to the quarterly report where you, well, you say that you recognize that you need to do more to strengthen more execution. Is that specifically that? Or is there other areas also where you think that execution is not good enough yet. That's the first question.

So in terms of order execution and revenue, we've been improving our supply chain a lot, meaning that concentrating a few critical suppliers, helping them to improve the performance, and also streamlining our internal operations and because historically, we've had not super efficient internally. So now quicker wins in order execution is actually in our hands, so it's FLS internal kind of how we process orders, how we do all that. So it's continuously improving and still not where it should be but it's all right. And then regarding capital business, order execution, we are in better control of the backlog than ever before in the history of this company. So the kind of risky stuff is out. We know exactly what's going on. So there's more predictability now in the product business for the revenue.

So I think -- and also that maybe highlight is that we've done the new ERP system in PCV operations, and you haven't seen any negative impact from that one. So we are slowly but carefully improving the internal operations that ensure execution. So PCV with the biggest pump factory what we have in the world as a new ERP system that they'd be running and we haven't really seen significant issues during that transition to ERP. So I think I'm confident that this low-risk approach to the internal processes that we improvements in the way that it doesn't upset the company in terms of operation. I don't know if we answered your question, but...

Probably as far as we can take it. Then a second follow-up on the comment that Roland gave about what to expect on product orders, you mentioned DKK 400 million to DKK 700 million per quarter in product orders. I suppose that's only until you expect that we see some sort of turnaround at some point and if and when that turnaround hopefully comes in towards the end of '26, any kind of idea of how fast we could see it improve and to what kind of levels? I mean are we talking about are doubling? Or can you give any kind of indication?

Yes. I think we addressed that in the Capital Market Day more in detail because I think we are in the low end of the cycle. And we are super, super disciplined what we are taking in because in the low end of the cycle, you have a -- we promise action to the market because I remember when we started transformation, said that somebody asked, "Hey, if there's going to be a low end of the cycle, do you have a kind of a stomach that take only good orders in and don't take anything that you regret later." And I think we'd be super disciplined in our portfolio and what orders we take in making sure that when the business will turn, we only have a high-quality backlog.

But we will detail those estimates, what would that be in the high end of the cycle. Now we are looking at the low end of the cycle and then we will show you some estimates of what it could be, but it's -- we don't want to do that before the CMD.

Fair enough. But if I may just follow up, Mikko, when you say you've been disciplined and full respect for that, I think it's the right thing to do. but I think also maybe we came to a point where we were a little bit too disciplined. With the new heads in service and products, are you now sort of taking the orders that you should? Or are you still missing out on something where you may be a little bit too conservative?

I don't think so. And I think now we turn the corner in service as well that if you remember that we exited basically labor so that services also is basically spare parts and wear parts to 80%. And then, of course, that's all high-profit, low-risk business and a part of those spare parts to go to the upgrades refurbishment. So -- and if you look at the world market, I think what has been moving is actually small mines and kind of maybe not -- and the reasons that are not in our sweet spot. As I said, our sweet spot is critical minerals, copper in particular.

And when the South America, North America copper is quiet then you see that one because we are dominating the market in largest of the equipment, largest mills, large HPGRs, all that to things. That's where we -- when that market will come back, then that's where we are dominant. So it depends also on which part of the world, which segment is moving. And if you look at then the demand estimates for the copper in the future, you can see that current capacity in the world is not able to fulfill the demand. Short-term customers are focused on maximizing profitability, dividends, share buyback, but the CapEx will come back to copper and there are lots of plans in South America for expansions. But when they are released, we don't know exactly.

The next question comes from Claus Almer with Nordea.

Also a few questions from my side. But first of all, congratulations with the strong margin you again achieved in the quarter. The first question goes to the PCV and the order intake. It is a bit difficult to compare momentum given how strong Q3 last year was. So how did Q3 actually develop compared to your own expectations? That would be the first one.

It was in line with the expectation because the project activity was slow. And I think now with the low -- smaller reporting segments, I think look at quite a lot kind of rolling average is year-to-date over 2 or 3, 4 quarters. So that will tell a story. I think because of the size of reporting segments, there's more variability. But if you look at the -- year-to-date development, organic 9% is, I think it's fantastic. I don't think anybody is growing faster, the pumps market. And we expect that to continue at a good level.

So we -- and also that we have plans to more boast even further the PCV sales. And as I said, it's quite independent business. And if you look at it, it's underlying profitability of the business, how steady it is really, really valuable part of FLS. But we are investing to that business as we speak. We are taking cost out from other parts of the business. We are investing, as Roland has highlighted quite a few times that we are investing in the front line to make sure that we are close enough to the customers. So yes, it's a fantastic business, and it's -- we expect to continue to grow that. But look at it a little bit over the quarters, 1 quarter is just kind of a snapshot of the business.

Sure. Okay. And then my second question goes to the backlog as we have heard about or learned about it during this year. So the project that has been delayed from this year, what drives the delay? And secondly, has a new delivery date being agreed with the customers?

So I think in the projects, there has been some discuss with the customers, for example, they didn't want to receive the equipment so early and that type of thing. So it's more customer related in the projects. And in service is okay, the revenues, but it could be higher in the quarter. So in services is more internal, not supply chain related that we are in the process of fixing. And then in project business in the capital. Usually, it's more customer dependent that customer wants us to delay something or we have -- we are trying to resolve some of the issues related to that particular project. So it's -- but I don't really have a concern for the revenues and order execution.

But you are right that we need to get back on track in service so that we can estimate better and generate more revenues. But there's no big underlying issue. As I said, supply chain works, we are getting orders and it's more the internal products and admin that has caused some small delay. But it's not massively big, but it's having some impact.

Sure. But maybe to -- I know the change of your revenue guidance has been both impacted by these delays, but also FX. So it's a little bit difficult from the outside to know what is what. But I guess, what I don't know, DKK 0.5 billion to DKK 1 billion of revenue that has been delayed for 2025 into the future. Should we expect that to come in '26 instead? Or is it even far out before the revenue recognition will happen?

Yes. So Claus, we expect that to come in '26. Now what happens to FX is a different thing. But the delays that we talked about in the products business, and also us getting in place in the global business centers, order execution and so on and service business line, that will slowly improve and improve revenues in Q4 and also first half of next year. So it's not lost.

The next question comes from Tore Fangmann with Bank of America.

Just one more from me. You flagged the near-term demand from the small gold projects. Could you maybe elaborate a little bit on the size of potential orders and basically, what does near term actually mean for you? Is it something that we will see in the next 1 or 2 quarters already or just something maybe into '26?

The gold are so small, so that they are part of the baseline that we don't announce. So as we said a few times, we don't have so many day-to-day small products and orders there. So everything is related to expansion or then new CapEx or new project. And those baseline figures, if you look this year, they include the gold projects. So they are below our reporting threshold typically. So in that sense, it's part of the baseline business. So you will not see any massively big orders in that business because most of the new plants are smallest and the CapEx is small. But it's still a good business for us, and we have a good position there.

The next question comes from Lars Topholm with DNB Carnegie.

Yes. A couple of questions from me. First, a household question to the order backlog in products which is up from DKK 4.9 billion to DKK 5.1 billion, even though your revenue is DKK 300 million higher than your order intake. I just wonder how that can happen?

That I have to come back on, Lars. That I have to come back on.

That's okay. Then a second question, Mikko, you mentioned in PCV, there's a capital business and the service business. And now, of course, we guess the capital business is somewhat subdued for all the reasons you have mentioned. I just wonder if there's a difference in the margin between those 2 parts of the PCV business? And if there's say any implication for your ability to defend current margins into an upturn.

So the margin in the service side, which is most -- or our aftermarket, it's most of the business, let's say, depending on the quarter, let's speak 70%, 75%. That is very steady and good in terms of margins. And only margin differences are in the product -- let's say, that the product part of the business is 25% or 30%. So within that mix, if we sell product as a part of the project, then it's much lower margin, than if we sell the conversion because conversion product is a technical decision by the site, price doesn't matter if the product performs.

So in that sense, it's a small impact, but then you're talking about within that 25% that there's a difference that if it's project order for product and it's lower margin and then if it's a conversion, then it's higher. So it's -- we can defend the margins. So vulnerability is so small, but it's all in that kind of, let's say, 25% bucket and a mix between project-related orders and conversions.

Okay. That's very good. Then a question on the cash flow. So you have a lower use of supply chain financing. I guess that hurts your cash flow. So I wonder if you sort of neutralize that, what would the cash flow impact be?

Yes. So I think utilization of the supply chain financing out of the quarter was about DKK 300 million, right? And the DKK 100 million belongs to cement. So the continued business would have DKK 200 million left and we roughly say that half of that is improving net working capital.

On cash flow is actually a notch better than what we can see in the raw numbers.

Yes, you can say that excluding the supply chain, yes. 1/3 of that supply chain is disappearing with the Cement business. There's a lot of the cement customers on that, and we have been unwinding that over the last 6 months or so.

Then one final question. How should I think about absolute SG&A costs going forward? I'm thinking Q4 and 2026 versus the current run rate?

Yes. So SG&A costs will come down from where they are today. And then there are some FX back and forth in that, of course, but we are still not done taking costs out.

And Lars, the whole idea is that we make a platform that is totally scalable, both in service products and PC so that we have a kind of corporates and lean SG&A and then we can scale with the volume. So we are still addressing the kind of support function costs pushing activities out from expensive countries to cheaper countries and getting efficiencies. So as I said, products business line have taken out 250 to 300 people, and it's not sitting in yet for the SG&A reduction. Of course, there's some inflation always in the labor cost as well.

But you will see improvement in absolute terms. And also that the full benefit is visible when the market will come back and we keep it the same. So it's -- we are becoming a highly scalable platform for the future growth.

That is very, very clear. Final question on my side. You have previously mentioned that to close the margin gap to Metso you needed to be 1/3 larger and you needed to do M&A. I just wonder, is that still your view? Are you actively looking at anything? Should we expect bolt-on acquisition, say on the end of 2026, what's the status there?

So we have a number of bolt-ons in the pipeline. Of course, timing is a little bit difficult to say. But we have -- and now when we are -- we'll be focused on selling and shutting down the bad businesses, kind of exiting cement, selling the -- getting rid of the material handling businesses. So it's -- we will actually -- we don't know when those will kick in, but we do have an active pipeline, and we will detail in CMD to your disappointment based on some of the earlier comment that we are limber, but we have a good pipeline. And now we are focused instead of selling, we are focused on buying.

The next question comes from William Mackie with Kepler Cheuvreux.

A couple of questions, 3 actually areas. So firstly, sticking with products, Mikko. You've talked about lowering the structural cost base and reaching a breakeven by the end of 2026. Ccould you just share some of the core assumptions about reaching breakeven? And with regard to -- are you thinking volumes flat and you brought the cost base down to reach breakeven? Or are there some assumptions for growth embedded in your '26? And at what point should the products area start to reach a kind of normalized margin through cycle margin flight path. That's the first question.

So we don't expect growth in '26 yet. And we are building the baseline based on the kind of steady volumes and then to be close to breakeven end of the year. So and then we are taking cost out where we can. And at the same time, we need to have enough engineering capacity because we are winning future orders now because engineering activity is ongoing. But we are kind of -- all the initiatives to bring the cost level down is completed over the next 6 to 9 months, and then the full benefits should kick in before end of the year.

But then it's just kind of a headline estimate so that whether it's 0 or plus 1 or minus 1, it's just kind of thereabout. But we want to make it scalable so that when the market will come back, and we will estimate what is the upside in the kind of peak market that we can support the business for the same SG&A and then just scaling the engineering resources or what we have in India. But I think we'll gain detail that. We are actioning as we speak, but we will detail the impact then in CMD.

Following on from that and the discussion about cleaning the product portfolio, to what extent should we look at the '25 numbers as having -- as you having fully exited the nonattractive conveyors, material handling and other areas that you've mentioned as lower margin and less attractive. Has that all left the portfolio or is there more of a transition effect that will take place this year and into next year?

No more transition effect. And if you look at the business today, most of the business is coming from 9 to 10 core product areas. And those 9 to 10 core product areas generate most of the aftermarket. So it is complete. And the portfolio what we have is basically -- yes, that portfolio change is complete now.

The second question area was related to service. Perhaps you would just run through the major changes you've made to the reorganization, which we've touched on a couple of times and the verticals, either regional or the verticals you're now focused on, but perhaps more specifically in relation to working capital, are you happy with the footprint? And I saw you've invested in inventories to raise service levels this quarter. Is that process now over? Or should we expect further growth in inventory days?

So first about footprint, we still have some white spots in the market. If we look at the global market in where we are less present. So we will continue increasing coverage, either more targeted acquisitions, or then investing our own resources. So we still need to continue that work. And the business is basically what is called [indiscernible] model, the commercial is driven by the global business line and product lines. And then the sales front is, of course, in front of the customer. And we are investing a lot to sales excellence.

We're upping the organization -- has been not commercial enough in the front end and that kind of organization update continues. But operation model more or less is what we want to have, it's working well. And now it's more about people getting right people in the right places, inventories continue to increase. And I think Roland the kind of network capital continue to go up. And if you look at the peer group it will be 4 percentage points possibly to that.

Yes. So thank you for that. So as I said, we will continue to invest in inventories, right? And the 12% may be going up from here and also on the Capital Markets Day, we'll give you more longer-term numbers on that. But the intention is to sort both the PCV business and the SBL business, with inventories a bit closer to customers, not dramatically up from where we are today, but more proximity.

The last question area related to PCV again. Great that you have an open Whatsapp line for product wins on your pumping business. What happens if you lose a competition? Do you also get a Red WhatsApp line? So seriously...

Yes, we do actually follow the -- what is called competition balance, what we are losing what we are winning, but it's quite evident looking at the losses and wins that it's mainly winning. But of course, you lose something every now and then as well. So it's -- but it's very positive what we see. And it's building the confidence that we have a best product in the market. Traditional footprint hasn't been wide enough.

Our local presence has not been wide enough. So it has been not about product in the past, but it has been more about operational model. And that's why running it independently, having dedicated PCV resources, close to customers at sites, assembly repair facilities, near the sites. So that has been product. We knew that we have a winning product, but we haven't had a winning kind of presence in front of the customers. And now when we are improving presence, then it seems that we are winning the business because technical, the product is really good.

I mean there's one very large competitor in the market and one of your German competitors gave a CMD and called out a #2 position. How would you describe your market share in pumps? And where could it go?

I think we are #2 in the market. And of course, if you start including water pumps and something that nobody should be interested in because there's no aftermarket, you can have a different market shares. But if you look at what is really going to hardcore mining, which is mill discharge pumps and slurry pumps at the mining side, we know that we are #2 in the market. And the pump market as a whole is huge. You have a world full of water pumps. But of course, you know that if you are at home that you don't need to replace them ever and they last forever. So it's -- that is not our business. But in the core mining, we know that we are #2.

Our next question comes from Klaus Kehl with Nykredit.

There's been quite a few questions about this ongoing cost out program. But you didn't really answer the questions about the absolute cost reductions there going forward. And perhaps that's fair enough. But did you say that you have taken out 250 people, which is not reflected in your SG&A right now, and therefore, yes, I can see that the cost saving in the P&L. That would be my first question.

So that exercise is ongoing in the product business line. And they are not all SG&A resources. There will be resources also on the cost of goods sold. So it sits in the gross margin. So you can't move it directly one to one. But you will see the head counts changing over the next couple of quarters.

But we are really pushing hard for the absolute DKK cost targets internally, but we don't communicate the absolute target externally, but we have -- we continue. And I think once we are out of it, I think -- despite a decrease in the volume, which is because of portfolio changes, there was a concern that we will take bad business in just to kind of justify SG&A. So we haven't done that. When we kind of trim the portfolio to have the right products in the portfolio. We are rather taking cost out than taking bad business in to justify higher SG&A. So we have a really, really aggressive cost target internally and sometimes you get to 80% of your aggressive cost target. So that's why we don't communicate externally. But you can continue to follow the absolute number in the SG&A line, and you can see that trending down.

Okay. But did you say 250 people? Or did I...

Yes, that's the part is COGS and SG&A people. So we are -- because sometimes you need to look at both. You have inefficiency both in COGS and SG&A. So it's -- we are looking at -- because it's just a different line item, but it's still a cost.

Got it. And then my second question is that, yes, we talked quite a lot about gold, but what about silver, the silver price has also been skyrocketing here in '25. So any comments to that? Or is it a -- is it a very small market for you guys?

It's a smaller market. We have some activity. We are working with a couple of silver customers who are looking at new investments. So there's activity, but as a market is small, but we have a good position in silver. So it's -- just if you look at the size of the market, copper is biggest, gold is second biggest that's why we talk more about that. And then you have a whole host of other commodities. But yes, there's some activity in silver, and we are working with a couple of cases there as well.

Our next question comes from David Farrell with Jefferies.

I've got 2 quick ones. Firstly, just can you talk about cash flow from operations, clearly performing very well in the quarter. You've previously given guidance that this wouldn't exceed DKK 1 billion for the year, but it's on trend to do so. So maybe you might like to clarify that guidance around CFFO for the year, please?

Yes. Thank you for that one. And we still expect a positive CFFO in Q4. So I think we'll have to say that CFFO for the year will be slightly above DKK 1 billion.

And my second question just comes back to kind of the dynamics between PCMV and the products business in terms of thinking about some of these major tenders you've got going forward. How likely is it that kind of you would combine your teams to kind of tender together for a project and not allow the PCMV business to operate wholly independently in that tendering process?

So basically, we have a capital sales team, which is project sales. and they are pulling together kind of portfolio from different parts of the organization, something from also from service, some are first-time spares, some wear parts and they do also include the pumps. And regarding that big India case that we had, iron ore in the first part of the year, we got all the pumps to that site. So all parts of the process. And so it is independent. And that's why I said, synergy areas for PCVs projects sales. They are included in the bundle.

PCV gives a price and the kind of -- but it's part of the bundle, but it's a sales channel for PCV in major capital opportunities. But if you look at then the conversions at the site, it is totally independent. Of course, there's synergy that we have service present at the site and PCV, so we are more present as a company, but that is totally PCV independent and then services independent. So we know that we get more out of the business if we run it kind of stand-alone, fully focused. But of course, the team is using capital sales or project sales as one channel to get into the bundles. But the numbers are totally different. So if it's part of the bundle, there's incentive for the project sales team to sell those, but then the number still sits for the PCV.

The last question comes from Xin Wang with Barclays.

I'll be quick. The first one is adjusted EBITDA margin in the quarter. Is there any one-off in any disposal impacts or provision release?

Yes. So provision release, not so much. But what we have had, we've sold a few summer houses. So that's an income. And then we have our transformation and -- transformation and separation costs. So both are netted off and it's DKK 52 million in costs and its DKK 22 million in income. So net-net, DKK 30 million out.

That's very clear. My second question is on HPGR. has recently decided to reenter the mining market through its cement arm that will offer a suite of products, including HPGR. Do you think they will be able to capture more market share improvement or recruit some of the installed base in aftermarket?

Absolutely not because we have all the service facilities close to the mining side. And we have a much better supply chain. We have a total different supply can to what it's much better in terms of the cost. We have service repair centers around the world. So they may make noise, but we have 0 concern about them. I think they are not capable of entering mining market. It's just kind of -- so it's -- we are not really concerned at all. And I think we've done so many improvements since we took over the business.

Great. My last question maybe is a follow-up on the service business. I think you've given the vast splits of the business being 80% spare parts. Can you maybe give us a rough idea of the relative profitability of different types of service orders as well?

I think typically we don't give the details, but if you -- that 80%, if it's wear part and the spare parts. So the spare part is higher than wear parts, but we don't give for competitive reasons, we don't give the details. But basically, within that 80% spare wear mix, spare is higher, wear parts is lower, but for -- as I said, for competitive reasons, we cannot give more detail.

The last question comes from with Hanneke.

Yes. Just one topic I want to take up Mikko, did I just hear you right that you're not planning for a higher product rate in 2026.

So talk about the product versus service mix?

No. If I heard you right on the profitability improvement in products. I think you just said on a previous question that you're not really planning for higher volumes year-over-year. Did I get that right?

Yes. So if I look at the market, there's a market estimate that we expect '26 to be still flattish market. And then we are expecting pickup towards end of the '26 and in '27. So that's how it looks. You are right. So the don't plan for growth in '26. We might see the pickup towards the end of '26. It's basically the same what we saw last year. And we have -- we are super appreciate with all engineering orders and engineering. And we expect that we see more and more kind of sanctioning of the expansions and projects then towards end of the year. So you are spot on.

Then the final one because that's relevant. I mean I know we're 1 quarter away from talking about 2026. But if I try and discuss the trajectory here a bit, your run rate gross margin is now sitting around 35%, maybe a bit higher with time, but then it's hard to see a big negative mix shift next year given what you said on products and the fact that PCMV orders have been growing faster than service year-to-date. With the SG&A pace that we are seeing now and what you have previously communicated on [indiscernible] mathematically, we could get to a pretty high margin number for next year. So I'm just curious if we're missing something in this reasoning if you can share some thoughts.

I think you're missing a number of things, Gustav. First of all, we can't discuss the '26 guidance here. But the service business this year is not growing -- is not growing in nominal terms, and we have significant FX headwinds. And then when there's no reason to believe we will be a bigger company next year when we look at the order intake. And then it will take a little longer to get to the percentages that may have been indicated earlier on SG&A out of revenue. So I think we will talk a bit more about this in the Capital Market Day and how it's going to play out going forward.

And I think, of course, you are looking at full potential of the business, which is really good. But then also that we will need to get a little bit more support from volumes as well. And we are highlighting growth ambition in service and PCV in CMD. And I think based on that one, then you can better estimate kind of what numbers we can hit and when. And as we indicated, service EBITDA is kind of steady, hovering around 20%. And then PCVs same at what is today and turning around the capital business.

Okay. I will just try to bridge it before I let you go because even without sort of estimating any big change here, I mean I don't see a mix shift next year. If you take the current gross margin and you assume that at some point, the one-off costs will end. That takes you to a significantly higher level than what we're seeing right now. So yes, I guess that's my question/statement.

Gustav, I think you're fishing for guidance for '26, we're not going to engage. On a one-on-one basis, I'm happy to take you through whatever assumptions you have made and how it may or may not stack up. And I think we should do that. We cannot have a guiding statements here now, and we will have a lot more about this in the CMD.

Ladies and gentlemen, this was our last question. I would now like to turn the conference back over to the management for any closing remarks.

Yes. Thanks very much for the call. And I think we have a really good situation at the moment. We completed the portfolio changes what we needed to complete. We are today, 80% service and PCV, high margin, low risk recurring business for the growth potential and also that we are sitting in a good position long term being a leader in critical minerals copper in particular. So I think I'm quite upbeat about longer-term performance of FLS and we continue to build on this one. Thank you very much for your time.

I would like to welcome everybody to FLS' earnings call for quarter 2 and first half of the year. It's 20th of August, and I'm in the studio celebrating my birthday with Roland and we are going through the numbers.

There has been a lot of changes in how we are reporting. And the reason for that is that Cement is now a discontinued business. So what we decided to do, we are actually opening up as requested by you and the market, to give a little bit more visibility for the performance of different businesses. And the split is Service business line, Products and Pumps, Cyclones & Valves. Pumps, Cyclones & Valves includes both capital business and service business. In typical steady state, it's 25-75.

It's very simple if you think about our business model, we sell products to sell spare parts and wear parts. We focus on excellent lifetime service to our customers. And we want to be a technology leader in our products.

And if you look at the Pumps, Cyclones & Valves, you see the picture 25-75. But you can also plot the same combination looking at Products and Service. It means that we sell products that are service-intensive. And in this quarter, around DKK 0.7 billion Products and then about DKK 2 billion service. So it looks a bit similar to Pumps, Cyclones & Valves.

And in terms of overall performance, PCV business line is our internal benchmark for high performance: high performance for growth, high performance for profitability and we try to replicate that in the Service business.

And if you are looking at the picture, I was trying to think how to describe it to you. And one word came to my mind, which is money tree. '25 capital with a higher aftermarket intensive service business. It's sort of money tree for investors.

Some of the highlights are that we have a continued disciplined execution of our priorities. And it's also that we are able to execute, get stuff done.

We've been also talking over the last few quarters about SG&A and need to reduce SG&A., and now you can see that the fixed costs is coming down in absolute terms. What it means that we are aiming to have a lean support functions, lean head office and scalable business. Scalable business means that we have a fixed cost, which is steady over the cycles. And then the cycle returns, upmarket turns, it's totally scalable.

We have extremely good order intake in PCV area. Product is good, but of course, the comparison point is low. Organic service order intake was only minus 1%, and that's mainly due to low order intake in North America.

Cash is good. And Cement disposal continues exactly as planned. And we have a firm agreement, unconditional agreement, to sell the headquarters in Copenhagen, so we get cash in from that sale as well.

Out of this chart, all KPIs are green. And my personal main focus is safety. Safety is the fundamental -- of fundamental importance in mining and in mining operations. It's still not at good enough level, but I'm happy that it's positively developing.

Then if we think about market a bit. Service is stable. There is no big change in the market. But the market activity in Products, and Products means heavy capital equipment in our terminology, it continued to be soft and we are still expecting market recovery in the latter part of '26.

And I would like to also remind that our strongest market is South America. Big copper plants, big equipment, and that is still slow. And when that market will return, you will see good growth in the Products area. So that is our sweet spot.

PCV, impressive development both in terms of growth and profitability. And the biggest improvement or big area where we are excelling is also conversions at the brownfield sites. We have quite a few nice big pump conversions from third-party equipment, total pumps in different parts of the world.

Then if you think about Service. Organic order intake, minus 1%; and reported minus 8%, so it was a low quarter. I highlighted in the beginning of the year after the first quarter that we have a weakness in North America. That weakness continued and it's in the area of retrofits and upgrades. That has been slow in North America, in U.S. in particular. All the other markets are doing fine. And we have plans in place how we can turn around North America in terms of order intake. We have target measures in place.

And if you look at the book-to-bill at the moment, it's around 1. So we are able to deliver and execute. And now we can focus on growth. So what I highlighted sometime in the past that we need to have improvements in the supply chain and supply chain performance, our execution works and now it's more part order intake and getting more orders in.

If you think about Service EBITA, 19.9%; adjusted, around 20%. For me, it's reasonably good and we focus on high profit mix and that will support profitability long term. So our mix in Service is dominant spare parts and selected consumables. We don't want to go all -- into all consumables because it's very low -- some parts of consumables business, very low margin. So we are selective there. We don't do basic labor services anymore. So it means that the mix is good and it will support long-term profitability.

Product markets continued to be soft. The comparison point last year was low. So therefore, there's a fairly significant percentage growth. The market is still slow. In the first quarter, we saw orders from India, large HPGRs and 18 vertical mills, and that's why the quarter 1 was good for us.

So the baseline business, what we have, is quite slow. And it also has to do with the portfolio of what we have. We have market-leading position in large mining equipment, HPGR, gyratory crushers, and they are not volume products. They are one-off products, one year you sell 8, another year 1. It might be a year that you don't sell any. So the demand pattern for those orders is very lumpy.

And then if you think about EBITA, you might be surprised that is negative and that has to do the lack of volume, and lack of volume both in orders and revenues. But we promised to you that we will not fill up the capital volume for the third-party products.

So we are very disciplined. We don't take third-party products into our order intake because there's no aftermarket business. We don't want to do extended scope because there's no aftermarket for that one. And we'll be reducing risk. So the backlog and the business is low risk. And the margin on the Product -- Product margin is actually all right. So we are lacking volumes, and when volume will come back this goes into positive territory.

In the meanwhile, we are streamlining our Product business operations in a way that it becomes totally scalable because we are focused on products, technology and not in engineering, not material handling. So it means that the platform, what we will create for Service -- sorry, for capital business is totally scalable. We will have product lines, which can support the same number of resources. In low end of cycle and high end of cycle it will be totally scalable. So that is action that is ongoing by Julian who is heading this business.

Well, I think PCV business is quite easy to comment. I would say it's an in-house performance benchmark, both in terms of growth and profitability. And this is evidence that our investment to PCV business is paying off. We invested to the front end of the business. We invested by separating this from rest of the businesses. So those two decisions have resulted in continued growth of the business. And we are trying to repeat this success also in the Services, but this is an internal benchmark.

And then if you think about profitability. Historical profitability, there's variation. But at steady-state with a steady mix, it should be around 24%, 25% EBITA business if you are doing things all right. Anything lower is not really -- then you are not really managing this business too well. It means that it's a very good business, and underlying profitability in this space would be around 24%, 25%.

And Roland, I think you will go through numbers in a little bit more detail.

Yes. Thank you for that. So looking at the consolidated financial performance. Now the continued business is our Mining business. Orders up by 3%. And another good quarter gross profit margin-wise, north of 35%. And that means that we are delivering an adjusted EBITA of 15.2% and a reported EBITA margin of 15.5%. And the profit and loss from our continuing operations then yield DKK 260 million.

Cement has been moved below the line as a discontinued operations. And in that connection, the activities and the liabilities sold have been impaired and the sales proceeds deducted and that leads to a total loss of minus DKK 715 million, fully in line with what we communicated when we disclosed the Cement sale and financial impacts to the company.

And that means that the profit for the period for the group in this quarter equals minus DKK 455 million.

Gross margin, still improving to the north of 35%, driven by revenue mix. Still relatively low revenue from the Product business line, but Service and the PCV business lines are pulling the relatively higher gross margin forward.

SG&A costs continued the traction down in nominal terms and now also as a percentage of revenue. This bucket here includes DKK 50 million of transformation and separation costs in Q2.

So the higher gross margin combined with continued lower SG&A leads us to improve EBITA margin, and therefore, an adjusted EBITA margin now of 15.2%. And that compares to 10.3% last year in Q2, admittedly with the NCA in that number. And without NCA in that number, we would be around 13% versus now 15.2%. So still good progression forward on this metric.

Net working capital is improving significantly this quarter. It's a mixed bag of Cement net working capital moving out. Also having a relatively good quarter in collecting receivables and also reducing our work in progress and then currency tailwinds. The effect from the Cement move-out here is around DKK 145 million.

And all that leads us to strong cash flow from operating activities, DKK 527 million for the quarter. This includes the group's combined cash flows, including Cement. And a free cash flow of DKK 309 million and adjusted for small stuff M&A and a free cash flow of DKK 332 million for the quarter.

And Q2 was the quarter where we started our share buyback program. We didn't do a lot of it, started only late June. And we also paid almost DKK 460 million out in dividends to shareholders, but we still keep our leverage ratio of 0.6x, comfortably below our target of around 2 through the cycle.

And the 15.2% margin in Q2 and also a good margin in Q1 led us to revisit the full year guidance, and we announced that last week. For our revenue guidance that used to be DKK 15 billion, we, last week, adjusted it to DKK 14.5 billion to DKK 15 billion, predominantly because of the relatively low intake in Product business line and slightly slower execution there than we had expected.

And the EBITA margin for the full year for the continuing business were previously 14% to 14.5%, and we last week adjusted that up to 15% to 15.5%. And let's just recall that adjusted means that we are deducting the transformation cost and the separation costs that we have announced since the beginning of the year of DKK 200 million. But we're also now excluding other operating net income, this is sales of bits and pieces, summer houses and a few other real estates. And for the first half this year, that has equaled an income of DKK 77 million. So it's a true adjusted EBITA margin that reflects the underlying business performance.

And then we will ask all of you that are interested to save the date, 11th of March, as you know, we're spending some time updating our strategy as we speak and we'd like to tell all of you more about that on the 11th of March, where we will invite for our Capital Markets Day and deep dive a bit further on what we have to come up with.

And with that, we move to questions and answers.

[Operator Instructions] The first question is from Chitrita Sinha with JPMorgan.

I have three questions, if I may. So my first question is on the margin on the Product segment. This has clearly been volatile in recent quarters, and as you said, it's linked to the low volumes. What is the best way to think about the margin going forward? Is it simply that as volumes come back, this will get into positive territory? And then is The Product margin in the PCV business positive or at a similar level?

Yes. So there was a little noise on the line, but I think you were asking about the margin in the Product business line. And the intention here is that we are restructuring that business line a bit on the cost side. And then also once volume comes a bit back in that business line, it has to go into positive territory.

But we're not guiding on margin by segment this time, but this we can say, on a normalized volume, that business line should be positive.

I'm sorry. The second part of that question was what the Product margin is in PCV. Is it at a similar level or positive at the moment?

So Product margin, you mean in PCV in the Product business?

Yes, exactly. Yes.

Yes. I think it is -- if you look back when we said that the business is capital business is not high margin but positive territory, that was a combination of PCV products and heavy capital equipment.

Now they are separate. So PCV definitely is better because that combination when we said commentary in the past that is around kind of breakeven or low profit. So that was a combination of both. So it depends on the volume, but it's definitely better than heavy capital equipment, which is describing maybe the Product business line.

Very clear. My next question is just on the gross margin. So about 35% -- or 35.5% actually in Q2, this is higher than the rate you previously gave for Mining. So is this the new gross margin range now slightly higher? Or how should we think about that?

No. So we still say that through the cycle the gross margin, you should expect 31% to 33%. But obviously, for a while now, at least for the next 2 quarters and part of the guidance, is that the Product business line won't get significantly higher seen from the order intake. So that means that the mix will still be in favor -- the combined mix will be in favor as Service and PCV will have a relatively larger share than hopefully further on where the Product business line will have higher volumes.

Perfect. And then my final question is just on the delays you're seeing from customers and deliveries. I mean, how many of these orders were already H2 weighted? And how much of it is due to the pushout from Q2 into H2?

So if I think about the -- if the order question more about orders, not revenue, so that if I comment the orders first, so we've seen continued delays in customers deciding. Last time we discussed about high level of activity by the engineering companies in the main engineering centers both Vancouver and then Santiago, but it seems that customers are delaying sanctioning a lot of capital projects. So typically, expansion. So of course, there's activity ongoing as we speak.

But if I think about South America, in particular, things have been delayed. We know it will come, but now that's why we're expecting regarding order intake for the capital business, heavy capital equipment products to pick up towards end of '26, that's how we see it at the moment. And remember that our sweet spot is the HPGRs, large gyratory, large equipment, South America and copper. So when that market will come back, then you see that in numbers.

The next question comes from Christian Hinderaker with Goldman Sachs.

Happy birthday from me as well. I wanted to start on the Products margins, if I can, but maybe tackle it from another direction. I guess, just curious how we think about the sort of SG&A for this business structurally versus the other parts of the portfolio.

Maybe there's two parts to it. Is there a higher SG&A burden today versus those other segments? And how do you see that evolving? That's the first one.

So we've been very transparent about the structure of the business. So we are saying that the 3 business lines have kind of 95% control of the P&L and it means also the fixed cost. And we don't move too much kind of cost around between the businesses. It means that at the of the cycle, it's quite clear that our fixed cost, fixed SG&A, fixed COGS, is too high in the Product business line. And then we knew it and now it's transparent. And of course, we are now looking at rightsizing, streamlining how we do business in non-volume product area.

And our aim is that we can get -- we do the kind of rightsizing and focus on core competencies, what we need to keep in-house, core technical competencies and make it scalable meaning that the idea is that in the future, even at the low end of the cycle, it should be closer to breakeven. And then, of course, then when the volumes will come back it will be a positive territory.

And we make it scalable, meaning that the fixed cost SG&A is same whether you have a DKK 3 billion volume or DKK 5 billion volume. So it should not vary. So fixed cost can't be 100% scalable in that business.

And there are some -- then we will scale the business for the -- we have a good engineering center in India. So we will scale in the upmarket that for our [ COGS ] engineering resources in India. So it would mean that the fixed cost of that business along in the cycle should be closer to the breakeven and then pushing to positive territory when the market will come back. But as you see from the number, we are not there yet. But we wanted to be transparent of this transformation.

And Christian, also other thing is that we focus on the products that generate significant aftermarket. That what I was referring to as a money tree kind of business model. And then we took out the material handling, third-party staff, steel structures, all that sorts of things which would actually help to pay for the SG&A. But then you are kind of fooling yourself kind of that you take bad business in just to pay for the fixed cost.

So we decided we don't do any of that. We are super strict with the order intake. We rather rightsize, streamline the operation to reflect the volume because then it's the kind of clear link that these are the products we get in. We get significant aftermarket kicks then once those are installed in operations. So that's the logic. So we didn't want to do anything so low the quality standard because it's quiet at the moment.

Understood, Mikko. I wanted to then ask on the second one, you're talking about South America strength. And obviously, as well in North America, you have quite a strong presence in terms of footprint. I just want to understand maybe on the sort of country level basis, how we think about your positioning in terms of competitive strength?

I mean, is that more led by where your footprint is? Or is it more led by, say, strength of relationships with given customers? I'm sort of thinking if we should think of certain parts of South America as better -- sorry, is FLS being better positioned in certain parts of South America, for example?

If I pick one country, which is the most important country to us and then our market share is the highest is Chile. Chile is still producing 50% of the copper in the world, and we are leading in Chilean market if I look at the installed base today. And typically, mining companies are quite conservative so that if you do an expansion, incumbency gives you an advantage because of the conservative nature of the customer base. And also that if you have another line with a similar equipment, you tend to kind of use the same piece of equipment for the extension.

It's not guaranteed, but it's quite common. So it means that when that market will come back, and it will, we don't know exactly when, I think we would be in a good position.

Of course, Peru is a strong market for us as well and then U.S. But if I need to pick one country, I would say Chile, 50% of the world copper supply, we are a leader there in terms of installed base and market presence.

The next question is from Claus Almer of Nordea.

And also from my side, Mikko, congratulations for your birthday.

Thank you very much.

The first question goes to -- you in the report were mentioning that you would do some initiatives to make the Service division more resilient. Which initiatives are you talking about? That will be the first one.

I think what we see in the Service is that technically, we are very strong. And sometimes when we looked at our organization, kind of commercial acumen wasn't strong enough in some parts of the world and in some parts of the world where we're too much office based. So we are basically improving our commercial skills of our sales force and also kicking people out from the offices. So we do not have any service salespeople sitting in the office because customers are the site.

So we emptied the office and sent people to the sites, and then at the same time, improved the commercial skill sets. It is actually quite simple, still takes time to do it. And I think that's the area where we can actually improve. So we do some changes in North America, Australia, a few other places just to strengthen our kind of customer interface and presence at the sites.

I guess this has been an ongoing process for the last quarters or maybe longer than that. How far are you with this? Is this in the 20, in the 50?

Regarding the whole change of the company, you mean?

No, all these initiatives to become more commercial.

I think that is actually -- so we see differences in different parts of the world. So the commercial excellence, as I said, we have a benchmark inside the company, which is PCV, high growth, kind of high profitability. And for example, we are rotating some people out from PCV into other areas just to kind of speed up the kind of that best practice sharing.

So I think you will see improvements in Service soon. But yes, I can't tell you exactly when, but I'm confident that we can replicate PCV success. That's why I say that we have a benchmark in-house. We need to be able to leverage that one and take learnings to the other businesses.

Okay. Makes sense. Then my second question goes to the PCV segment. The order growth we are seeing or the order growth potential, given all these initiatives you have done, the added salespeople and so on, should we expect a more stable growth going forward? Or could there also be even an acceleration in the growth?

I think, Claus, that's a good question, right? PCV should definitely grow, but we are not guiding on growth now. So the 13% organic growth we had in Q2, I think, is a good quarter for us, but we are not guiding. PCV is definitely set to go. So I'll leave it at that.

That's why I didn't ask for exact number, it was more about the momentum or the direction of the growth.

There will be opt-outs. But 13% is definitely a good quarter. So I'm not going to quantify it more than that. We are -- there's a reason we have separated out PCV. We have strengthened the commercial front end. It looks like it works for that business line now. There will be more momentum, but Q2, albeit was a good quarter.

The next question is from Casper Blom of Danske Bank.

And obviously also a happy birthday from my side. First of all, I would like to ask, given your new updated business split into the 3 divisions, Mikko, could you comment what split you would like to see longer term between Service and Products. Taking away the PCV business, is it the Service to have double the order intake of Products? Is that a guiding star?

So of course, it's so cyclical, the Product business. And so it's difficult. But I think 70-30, 67-33. So I think I'd like to see it kind of Service be above 60% of that split, but it's highly volatile because Product order intake is highly volatile, but -- well, it's -- yes, I think -- so that's why we are not concerned that if the Product business is not growing. As fast as long as we are picking up our markets and we are picking up the right orders, that is more important than the volume of the Product business. So that we pick up the kind of high aftermarket-intensive product orders. But I would say, maybe ideally, 70-30, but there will be high end of the cycle where we see more capital order intake and revenue coming in as well.

But Pumps, which is more steady business, of course, there's variation in the Pumps as well, now it's around 25-75. But that's more steady because the fluctuation in the capital business is less in pumps, but that's why I said that if we create a similar picture that in the Pumps Product and Service together, even though we are running it as two different businesses yes, 70-30 would be optimal, but you will see times when order intake and revenue for products will be higher.

That's very helpful. Then secondly, you mentioned now, Mikko, that you expect to see an improvement in the market. I think, first, in the call, you said second half '26 and then you said late '26, something like that. Is there any, how could you say, tangible evidence that sort of allows you to now put, yes, maybe a little bit more precise timing on it than it's been before?

I think until now, it's been a lot that you saw things happening, but you couldn't really say when it would pick up. Now at least you're saying a year from now. Has something happened? Or is it discussions have become more precise or tangible with customers?

Typically, what happens, why we see, let's say, maybe 9 months ahead more or 6 months because then the EPCMs, they've done -- 3/4 of the cases, EPCMs are running the process of expansion. So they are kind of fronting suppliers together with the customer. So typically, we've been working with the EPCMs, specifying, doing engineering for the process line and so forth. And then we've given budgetary prices for the kind of -- for the flow sheet and the products.

And then typically, then EPCMs are waiting for customers to sanction the project. Once their [ Board ] will sanction it, then typical suppliers give final prices because we don't know the cost base today what it is in one year's of time. And therefore, typically, once it's sanctioned, they come back to suppliers and say, now you need to quote firm prices for all of this equipment and then there's a kind of commercial technical selection process.

And typically, that would mean that if we have -- if you give now the firm prices, then we are hoping to get some decisions by the customers 6, 9 months later. So there are not so many cases yet, which would ask for the firm prices. So they are still stuck in the previous phase that plans are done based on budgetary prices. And in many cases, customers who could have decided already technically this year, it's quite clear some of those cases will be decided next year.

So it's really, I would say, this boardroom dynamics of the mining companies when they will release those projects. So sorry not to be more specific, but if we would be in the kind of bidding phase of many of these -- final bidding phase of many of the cases, I would say it's imminent, but I think it's still a little bit more further out.

Okay. So they're in the sanctioning process still...

Yes. And of course, there are something always moving. So we got India orders for HPGRs and vertical. But what I'm thinking about, volume of activity is still low in relative terms. If I look, for example, 3 years ago, '22 was kind of mini peak in our business. And since '22, it has been declining up to this point. And I think it stays at the low point also in '26.

All right. That's very helpful to understand the process. And my last question, you've previously expressed your appetite to do M&A and basically grow the company to have a larger size. And obviously, you're still left with a strong balance sheet and you will also get money from the sale of the headquarter next year. Any comments on those processes? When we could or should expect announcements from the M&A scene of larger sizes, obviously.

Yes. Thank you for that, Casper. So there's nothing imminent on that. We have a short list that we are working with -- working on. But there's nothing imminent. So that's where that is. We have allocated resources. We're starting to spend a lot more time on this now, but it's not forthcoming any -- within the next month or so.

The next question comes from Kristian Tornøe with SEB.

Yes. If I can just pick up on your commentary, Mikko, on market recovery by the end of next year. Just curious sort of the increased customer hesitations you've seen here in Q2. You're not concerned that, that will continue and postpone the recovery further out?

Actually, I'm not concerned because of our business model, meaning that if you look at what we spoke in the beginning of my presentation that Pumps, Cyclones & valves business because there's so much brownfield conversions and which is more like customers' point of view is more OpEx business than CapEx business, that activity is good. And also our business model that we are reducing our SG&A, leaning out the companies so that we can ride kind of well across different cycles.

So I'm hoping that it will come back. It will make life easier. It will make everything better, but I'm not concerned because of our business model. So we are not dependent on volume at all. We continue to improve our profitability regardless of whether capital market is active or not. And that's why I like a model of what we have that we focus on the products with the high aftermarket potential, but at the same time, our fixed cost in the corporate center and support functions will be extremely lean and also now we are kind of reorganizing the Product business so that it can sustain different phase of cycles.

So I'm actually not concerned because, as a company, that's why I used like a money tree comparison in the beginning that, I mean, we should do well over the cycles and we are not volume dependent. But when the volume will come back, of course, then if you have a lean cost base, then you're a little bit riding on the wave when the volume will come back.

Okay. That's quite clear. So I assume that you are right, that the Product demand will improve towards the end of next year. Is it then realistic that your Product division can reach breakeven by 2027?

We are not guiding on that front, but I'm expecting that we will be in the future profitable over the cycles. So that as you see that now the loss-making, 10%, is actually we have a fixed cost, a volume issue. It's not a Product margin issue what we have. So order intake, what we get in, we get with a decent margin. So it's more the fixed cost that is too high at the moment.

Okay. And that actually leads into my last question because we cannot see the gross margin on your new segment here. Can you give any sort of indications on where the levels are so we can sort of get the mix effects thought into our modeling?

Kristian, thank you for that one. So we won't do that. I think you will not be surprised to hear that it somewhat follows the EBITA margin, right? So -- but we're not going to give granularity on this for now.

The next question is from William Mackie of Kepler Cheuvreux.

Happy birthday. So I'd just like to come back, firstly, conceptually to the margins. You've talked about the operating margin in Products being positive through the cycle and you've given a structure to the midterm margin potential, I think, for PC&V, which you talked about 24% to 25%. Can you just round that off with conceptually where you would expect service margin to trend midterm or at least to touch on each of those areas? That's the first question.

The second is relating to your simplification of the business. You've talked about the SG&A having reduced significantly. But can you just describe or provide some more color on where you are on that journey? Where we should ultimately see the SG&A come down to? And to that extent or the enablers for that, will the transformation costs continue into 2026 now if we think about the additional restructuring?

Maybe I start and Roland will cover the SG&A a bit. So when I'm saying that if I look at the Pumps, Cyclones & Valves business, remember that there's now more granularity than before and it means that there's a little bit more variation than before between the quarters, depending on the mix and a few other items. So that -- but I would say that 24%, 25% is sustainable in Pumps, Cyclones & Valves. And that's just inherent in what you should do in that business. And I think if you don't, then you have kind of other challenges.

Service, I would expect it to be stable around 20%. One reason is that we focus on growth, and then different categories have different margin profiles. So of course, spare parts being highest, and consumables is kind of tricky because some areas of consumables is high margin, some is really low. So we are very selective where we -- what business we do there because we don't want to enter into metallic mill lining, which is really bad business. And so then we need to kind of pick and choose carefully what we do in consumables as we are doing. But I would say is stable. We don't guide, but I would say stable 20%. And hopefully, we can then focus on the growth.

But then in Products, we will push through the transformational activities in terms of how we operate the fixed cost base and that I don't know exactly where we end up, but of course, when we get volume, it will help us, but we also have a -- we have a fixed cost issue in that area. And we don't guide. But of course, we would like to be on the kind of -- at the low end of the cycle or close to around breakeven and then and when you get the volume push for the positive territory.

We discussed in some of the previous calls about order intake margin and in Products business, it has been stable. So order intake margin is not an issue. It's basically the fixed cost and lack of volume. And then you have SG&A, Roland.

I think there was a question to SG&A. So the SG&A cost-out and us converting to the newer operating model with a lot of our transactional business with the global business centers will continue for 3, maybe 4 quarters more. We also have a bit of stranded costs from when Cement leaves the company hopefully during second half year. And that means that there will be more work to do at least until summer next year and then hopefully, famous last words, but hopefully, we are about to be done by the end of 2026.

Now whether we will have call-outs of adjustment as extraordinary costs, transformational costs next year, we've not decided yet. But if we will, we will still be able to deliver the 13% to 15% reported margin as we have promised. So if they are there, that just means that the adjusted margin will be equally higher.

And how we operate internally is that we have really ambitious targets for different areas like fixed costs. And then typically, let's say that you make 70%, 80% of that stretch target. So that's why we don't want to commit to a certain number in fixed costs, but we have aggressive targets, and we rather tell you about progress what we are able to kind of achieve rather than kind of blue sky, high sky kind of promises. So -- but we have aggressive targets, and hopefully, we can report continued progress in that area.

Two quick follow-ups, if I may. The first one relates to tax. You have a substantial deferred tax asset, which you're carrying on the asset side of the balance sheet. Any sort of color on utilization levels?

And perhaps more longer term as you move towards the simplified corporate structure, what is the pathway to reducing your tax or optimizing your tax to perhaps a lower -- much lower target level?

And then the second relates perhaps to capital allocation. I heard what you said you just started looking, but can you give us a little flavor of the sorts of areas that you might prioritize as you start the hunt?

Yes. Thank you for that. As you may recall, we've been talking about moving into a so-called principal company model. And we are in the process of doing that and that means that a lot of the core decisions will be made from the principal. And in this case, the principal will be Denmark and most of the deferred tax asset sits in Denmark. And that means as we progress and move, the core decisions and the core transactions via the principal in Denmark, more and more of that tax asset will be utilized.

So it's clearly the expectation that we can utilize the timing in terms of 1, 2, 3 or 4 years is a bit more -- is a bit more uncertain. It depends on how fast we can do it, but that will definitely be utilized. And it will also be a trigger for us bringing our effective tax rate below 30% after '26, as we have indicated we will do.

With regards to our tax -- our cash capital allocation policy, we continue to pay out in dividend 50% of our net profits. Then we will look at the M&A track or options that we have near to midterm and sort of keep some dry powder. And then if there's anything in excess, we will move to share buyback as we have done this year.

So we think we have the cash either available or expectedly generating it from the cash flow from operations that continues to improve as we move forward. We are currently executing a share buyback program. And there's also more debt capacity in our balance sheet, as you can see. So that is the thinking on the capital allocation.

The next question is from Nick Housden of RBC.

Happy birthday, Mikko. My first question is on the PCV margin. You've mentioned the 24% or 25% steady-state. That is quite a bit higher than what we see at your big competitor here. And I'm certainly not asking you to comment on the competitive cost structure. But are there any structural differences between the two businesses that you can identify that might explain at least some of that margin difference?

So of course, I cannot comment the competition and peer group, but basically, our structure delivers basically that in a sustainable manner over the cycles. If you look at a little bit back the EBITA profile that is in the deck, you've seen it being also above 25%, but in the past, maybe our cost allocation in the corporate is less accurate because we restated the numbers for the past quarters. But it has been at a higher level with us.

I think at least our structure delivers that, I don't say easy, I never say easy, but I think it's sustainable 25%, I think, is what we can do. And then because it's sustainable 25%, it can go up or down a bit because of the mix. Therefore, we can focus on growth rather than kind of -- like in some other areas where we have a margin and EBITA issue. So then the focus is all in for growing and supporting our customers.

Great. And then my second one is just a follow-up on the capital allocation regarding CapEx because it's DKK 145 million in Q2, that looked like quite a high level. So I was just wondering if you could talk about that and maybe some of the expectations going forward.

Yes. So we thought about that. We have a bit of carry in CapEx. But the intention is that CapEx should be around 2% of revenue in peak 3. So 2 is sort of the -- the goal of 2% to 3% of revenue you can count on.

Next question is from Xin Wang of Barclays.

I only have two very quick follow-ups. The first one is I want to know if Q2 is a clean quarter or if there is any special items that helped margins? For example, did you have any risk provision release?

Yes. I think -- thank you for that. It's a clean quarter. It's a clean quarter. The gross margin has held up by mix, so a relatively low revenue level in the Product business line. And the minus 10% in the Product business line is a volume and a little bit of cost structure thing. There's no special items at all actually.

Okay, good to hear. And then -- yes, so maybe a follow-up on that is, obviously, you made lots of provisions over the past few years. Can you maybe remind us of the expected utilization and associated cash outflow for the remainder of the year again?

Yes. So as you see now, of course, a few of them have left with Cement. And also, we have spent some of the restructuring bucket. So that has come down as well. And the so-called other provision, which is the bucket that's a little uncertain, has come down to about DKK 1 billion now. That bucket is a bucket of stuff that can take 2, 3, 4 years. We just last quarter had a settlement from 2011.

So it's very unpredictable to say when that turns to cash. It will rather be longer than shorter. So what we say for your cash planning purposes, to be safe, assume that it is cut in half over 3 years.

That's very clear. And then maybe very quickly with Cement now gone, how should we think about a new sustainable net working capital ratio?

That's a really good question. So this quarter, we are at 12%. And I'm not going to give you a new long-term guidance, but I would expect that it should not go above 15% for the remainder of this year.

So the net working capital in this quarter is a little bit of a tailwind from currency, the dollar and also the Chilean peso and so on may bounce back a bit. And we also had a few good collections this quarter and so on.

So all in all, it shouldn't go back to more than 15% plus/minus. That's the indication for the remainder of the year.

The next question is from Klaus Kehl of Nykredit.

Klaus Kehl from Nykredit. Most of the interesting questions have already been asked. So I will ask some of the boring questions. If we start with your cash flow then, I noticed a pretty solid cash flow here in the quarter and also actually in the first half of the year and especially before tax is paid. But anyway, could you update us on your thoughts about the cash flow for the full year? That would be my first question.

Yes. So we guided for the full year that operational cash flow would be more than last year, which was a bit more than DKK 600 million, but not more than DKK 1 billion. And that target still stands. So we will expect for the full year to generate an operational cash flow between DKK 600 million and DKK 1 billion.

And just to be clear, when you say that, is that including or excluding taxes paid?

That's cash flow from operations with us is after taxes paid.

Okay. Great. That's very helpful. Yes. And then obviously, there's a lot of one-offs in this quarter due to the deconsolidation of Cement, that's fair enough. But how should we think about one-offs related to the Cement divestment going forward? Should we expect further one-offs? Or yes, any thoughts on this? And obviously, I'm asking about the big picture. I'm not asking whether it will be plus or minus DKK 10 million in the next quarter, but big picture.

Okay. Thank you for clarifying that, Klaus. And you would not expect anything else because the way it works is that you do an impairment test and then you dump the whole thing, pardon my French, in Q2. And then depending on when there is closing, there will be closing adjustments and a little bit back and forth and here and there. So if that takes 5 months, there may be a bit more adjustments. If it closes next month, we are close to where we should be.

So the majority of the adjustments that need to be done below the line under discontinued operations have been done. And may I just remind you that the impairment charge is a noncash item.

Yes, I know that. And could they, in any circumstance, become positive one-offs in second half of the year when you do all the closing?

Yes, they could go both ways. They could go both ways.

The next question is from Lorenzo Di Patrizi of Bank of America.

I think this is a mistake because the questions that I had to ask have already been asked. But thank you anyway, and happy birthday.

Okay, thank you very much for that.

This was the last question. Yes, please?

About to start closing, but I think you might want to say the same thing. So I'd like to thank the callers and the questions. And I think it's an exciting time for us because we give you more transparency to the business than ever before. And I think we like the transparency. It creates a performance pressure for us, but I think it also makes the dialogue more fruitful between you and us.

And we continue to execute the strategy what we have. And then in the Capital Markets, we'll detail how we're going to grow the business in the coming years. Thanks very much for your time.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.