Lassila & Tikanoja Stock

Good morning, and welcome to Luotea's Q4 2025 Results Webcast. Thank you for joining us today. In this session, we will walk through our fourth quarter performance and key financials, review the full year 2025 results and take a look at Luotea's strategic direction going forward. And this time, I have to say that presenting figures is especially difficult because presentation in accordance with IFRS 5 does not reflect the profitability of continuing or discontinued operations as separate legal entities prior to the demerger. The presentation will be delivered by me together with our CFO, Mika Stirkkinen. And throughout the presentation, you can submit questions in the comment field, and we will address them in Q&A session at the end of the webcast.

Let's begin. Let's go first through Q4. Group net sales decreased by 1.2%. And in Finland, sales decreased by 7.8%, partly due to a continued termination of unprofitable contracts, but also because of intensified price competition and low additional sales volumes. Many companies have ongoing cost-saving measures, which affect to our additional sales. We are not engaging in margin undercutting in our contract sales.

Finland's EBITDA declined by EUR 1.6 million, of which half is explained by higher social costs and the rest of it is explained by missing profitable additional sales. In Sweden, net sales increased by 11.5%, supported by stronger additional sales. And in Sweden, economical situation is better than in Finland.

Sweden's adjusted EBITA improved by EUR 0.5 million, reflecting the progress of efficiency actions implemented in line with our playbook. And the group IFRS reported EBITDA was minus EUR 0.3 million compared to EUR 1.4 million in the reference period. And Mika will explain the impact of IFRS 5 regulation on this figure. In Sweden, one large unprofitable contract ended at the end of November, and this will support our turnaround efforts during the year.

And let's go to the 2025. I'm especially proud of the work of all Luotea employees in 2025. We succeeded in improving our employee and customer satisfaction in both countries. And in both countries, EBITDA improved significantly. And in the following slides, I will go through the segment-specific results and their comparisons with last year. And group net sales declined by minus 1% and group cost allocations changed due to IFRS 5, which caused an increase in reported costs. As I told you, Mika explains this. And the Board of Directors proposes a dividend of EUR 0.07 per share. And here is the figures from segments which are comparable to previous reporting.

And I will start from Finland. As I said, net sales in Finland decreased partly due to a termination of unprofitable customers, fierce price competition, especially in cleaning and low level of additional sales due to customers' cost-cutting measures. And Q4 EBIT decreased by EUR 1.5 million due to half due to higher social costs and low add-on sales. And in 2025, we changed the way we accrue social security costs, which led to higher employment site cost in the comparison period. And Q4 also included one-off work accident-related costs, which were higher than in the comparison period.

And the -- but the sales margin in both services remained at a good level, and we continued our efficiency improvement measures in Finland. And we also made a good new contract in Q4, which will start early 2026 and are a proof that our spearhead strategy works. And I will go that customer case through later on in this presentation.

In Sweden, the customer satisfaction improved significantly, which led to better additional service sales, which are profitable in Sweden. And the efficiency improvement measures in line with our playbook continued, which led to a better adjusted operating profit. And full year adjusted EBITDA was EUR 1.1 million. And the significant and profitable customer agreement ended at the turn of November and December, which will help us turn around the result in 2026.

And we were able to extend the contract with Jernhusen, which I will tell you more about in a moment. And in both countries, as I said, we were able to improve profitability, thanks to the efficiency measures. Our playbook is very clear when it comes to improving profitability, clear roles and responsibilities, a weekly management model with the right KPIs and efficient supply chain management.

And in Finland, EBITA is already over our 5% EBITDA target level. And Luotea's adjusted segment operating results improved by EUR 6.3 million, and this is the end result of successful efficiency measures. And we will continue our determined work in both countries in 2026. And in Finland, the focus will be strongly on turning the business into growth and in Sweden on turning the result in accordance with our playbook. We had a clear improvement in our key employees metrics, all remain above industry average. And as I said, all our personnel-related metrics improved.

Our employee satisfaction improved, and we succeeded in reducing our accident frequency by managing determined occupational safety proactive measures. And our staff turnover also dropped significantly, and we are now at the historically low turnover rates. These results are also something to be proud of. And let's go and look forward and look to our strategy.

And this image summarizes Luotea strategy. I will start opening the strategy image from its foundation, our mission and our values. Our mission is to create value for people, companies and society that goes deeper than the surface. It means supporting our customers' businesses by making their everyday operations smoother. All of this is guided by our values, courage, down-to-earth attitude and collaboration. These define how we meet our customers and how we work together every day.

And on the next level of the house are our success factors. We provide a full service offering that makes facility maintenance smooth and cost efficient. Our data-driven services provide real-time insights and help allocate resources precisely where they are needed. Our expertise in sustainability is reflected in our commitment to biodiversity and energy efficiency solutions. In addition, our smart services enables intelligent and climate smart energy management in buildings.

When I move up to the next floor, our 4 strategic focus areas come into play. Succeeding in these areas enables our future success, and I will go through the focus areas in more detail later. And at the top of the house is our vision to navigate the way toward a smarter tomorrow. And this is the direction in which we want to take Luotea. And in the clouds, you can see the major societal shifts that affect our businesses. These large-scale megatrends such as climate change, growing repair depth and urbanization increase the need for predictive maintenance, energy efficiency and intelligent facility management. Our services are designed to address these needs.

And to conclude, Luotea is next-generation facility services company that navigates the way toward a smarter tomorrow. And we build services where technology and human expertise complement one another and make buildings more sustainable, smarter and more functional for their users. We want to make a deeper impact by improving our customers' everyday life. And let's go through our strategic focus areas, and I will briefly walk through this. And these focus areas guide how we allocate resources, how we develop our capabilities and how we execute our strategy.

First one, high-quality and responsible services. This is the engine of our growth. We continue to strengthen our core businesses by delivering high-quality, sustainable services that meet the expectations of our customers and the evolving requirements of the market. Our aim is clear: to consistently deliver the best customer experience in the industry and to secure leadership positions in selected business segments.

Second, maybe my favorite one is the efficient operating models. A major priority for us is improving efficiency, especially in Sweden, where we are executing our turnaround according to a defined playbook. We are focusing on a stronger operational discipline, harmonized ways of working and tighter cost control. These actions support margin improvement and create a scalable foundation for long-term profitability.

Then the third one, we are -- Luotea is a people's business. We have over 5,000 employees, and that's what -- and we want to be the industry's best place to work. And our people are central to our success and building a unified Luotea culture remains our strategic priority. And we are investing in leadership, competence development and embedding our values across the organization. And at the same time, we are strengthening our employer brand to attract and retain the talent we need in our business growth.

And fourth, digital services and AI. Technology is a core part of how we create value. We are expanding the use of AI to support daily work, and we are strengthening our position as a leader in data-driven facility services. Data-driven maintenance, data-driven cleaning, data-driven technical services should become a standard across our operations, enabling us to increase our efficiency, improve our quality and deliver more predictable outcomes for our customers.

These 4 focus areas forms a coherent framework. They guide our decisions and support our ambition to operate more efficiently, grow in a disciplined way and continue leading the development of modern facility services. Let's go to customer cases, and I want to start by highlighting that we are now securing strategically important wins that clearly strengthen our position and validate our direction as a company.

We have launched a comprehensive facility services agreement with covering 20 Scandic hotels which represents about 1/3 of their hotel portfolio in Finland. For us, this is a strategically meaningful win that strengthens our position in an important customer segment and demonstrates the value of our service model -- integrated service model. What makes this partnership especially important is the role of smart, our energy optimation solution. Scandic has already piloted smart with strong results and the new agreement expands its use across much larger share of their properties.

Smart is at the core of our strategy, combining intelligent analytics, real-time energy optimization and data-driven insights to reduce energy consumption, emissions and life cycle costs while improving. This is exactly the kind of impact we aim to deliver for large multisite customers. Through one unified operating model, we will manage facility maintenance, technical services and energy management and indoor conditions for all 20 hotels. And this allows us to harmonize service levels, improve efficiency and bring predictability to day-to-day operations.

For Scandic, the partnership supports their goal to offer a responsible and high-quality guest experience. For us, for Luotea, it enables scale benefits and operational efficiency improvements in our Finnish businesses. Strategically, this agreement shows how our capabilities in digital operations and energy management differentiates us in the Nordic market. And it deepens our collaboration with the major hospitality player, strengthens our technology-driven service offering and supports our long-term growth in integrated facility services.

In summary, the Scandic partnership is a strong example how we combine technology and smart to deliver more sustainable, efficient and high-quality operations. And let me next highlight an important milestone for our Swedish businesses this quarter. We have signed a nationwide partnership with Jernhusen covering 143 properties across 45 municipalities. It is the largest procurement process in Jernhusen's 25 years history and being chosen again, as their long-term partner is a strong acknowledgment of Luotea's capabilities.

For us, this agreement is strategically significant. It strengthens our position in Sweden, supports our growth ambition and directly aligns with our strategy to deliver modern, efficient and sustainable facility services at scale. What makes this partnership especially important is its scope. We will be responsible for a unified operating model that combines maintenance, technical operations and energy optimizations across the entire portfolio, and this plays directly to Luotea's strengths, data-driven operations, energy expertise and the ability to run large national networks with consistent quality.

The agreement also includes ambitious requirements in areas such as circularity, reuse, climate reporting and SBTI aligned targets. These are exactly the capabilities we have been building and they differentiate Luotea clearly in the market. From a business perspective, this is a major step forward for our Swedish operations. It improves scale, strengthens efficiency and supports margin development as we harmonize processes.

In short, this partnership proves that our strategy works. It deepens our presence in a key market and creates a strong platform for long-term profitable growth. And we are proud of this win and it demonstrates the trust major Nordic asset owners place in Luotea's ability to deliver smarter, more sustainable and more efficient operations. And now I will hand over to our CFO, Mika Stirkkinen.

Thank you, Antti, and good morning also from my side. I will give some more details on the financials and the guidance. It's very rare for a CFO to start with his or her presentation stating that the presentation in accordance with IFRS doesn't reflect the profitability of the operations properly. So this is highly unusual.

So if you look at the reported result, which is absolutely high of EUR 161 million in real life, that doesn't reflect any true financial performance, nor does the result for the discontinued operations. The closest resemblance to truth is the EUR 1.2 million, but neither does that tell a true story of the result of Luotea. That is due to the IFRS 5, which resulted in group costs being artificially high in the reported figures. Should you be interested in how we have come up with these figures, please read the notes section in the financial statements release.

Now when you have a look at our -- the breakdown of our results. So the nearest or the best figure to look at our figures, which gives the best picture of the performance is the adjusted EBITDA of the segments of Finland and Sweden together, i.e., EUR 9.9 million. The effect of the IFRS 5 on group costs was EUR 2.9 million. And as stated, that was artificially high. We state that going forward, that figure will be lower. That is forecasted to be lower in '26. If you look at the rest of the result, the PPA amortization, that is -- that will be over by 2028, i.e., the current amortizations.

Then items affecting comparability, those are likely lower in 2026. And then additionally, finance net is forecasted to be lower in 2026 due to the fact that we expect to generate cash flow and our net debt will end being net debt and we turn highly likely to net cash position. When you look at the reported group adjusted EBITDA for the year that we reported EUR 7 million a year ago, that was EUR 1.2 million, the difference being EUR 5.8 million.

As stated earlier, the more realistic figure for the year was EUR 9.9 million, i.e., the sum of segments, Finland and Sweden together. Over there, the improvement was EUR 6.3 million from a year ago, i.e., clear and steady improvement during the year. There was a minor dip in the real performance. That was due to the statutory social costs in Q4. That includes occupational accident insurance impact, and that impact was EUR 0.7 million. That was partly due to the accrual difference during the year.

Then on the left-hand side, the IFRS 5 impact was even bigger than a year ago, EUR 0.5 million bigger. So that lowered the reported adjusted EBITDA by EUR 0.5 million. Overall, we can say that the playbook worked during the year. We can say that Sweden improved, but it's clear to all of us that there still is work to be done in Sweden. Going forward, during this year, it is clear that the partial demerger is now finalized. We can forget that. We can focus on the business. That doesn't affect Antti's job. It doesn't affect my job. It doesn't affect the other management team people's daily operations.

Another guidance for the '26 is that the group cost -- reported group costs are forecasted to be lower. And being an independent facility services company clearly has its benefits. We can truly focus on the facility services, not on any other business.

On the capital structure, we -- our capital structure is very strong. Our cash position at the end of the year was EUR 15.7 million. Then we have a bank loan of EUR 5 million and then IFRS 16 interest-bearing liabilities of EUR 14.8 million. Totaling of net debt is EUR 4.1 million. And then when you compare this EUR 4.1 million to our adjusted EBITDA, that gives us the ratio of 0.2 of net debt to adjusted EBITDA. That's a really, really, really strong figure. And then on top of the cash, we have a revolving credit facility of EUR 10 million, which is fully unutilized at the moment.

We are a company with a solid and strong EBITDA. the full year figure was EUR 17.3 million. It improved from last year's EUR 11.8 million. We don't report cash flow figures due to this demerger. But here, you can see an indicative cash flow after investments based on the P&L figures. So our adjusted EBITDA for the year was EUR 17.3 million. Our investments, EUR 1.3 million, naturally negative. Finance net EUR 0.7 million and then tax of EUR 1.1 million. All these sum to indicative cash flow after investments, excluding net working capital impact of EUR 14.2 million.

Here are our financial targets presented in the Capital Markets Day in November. And as you might remember, our dividend policy is to distribute at least half of the net profit as dividends. Our official net result per share was EUR 0.03, and we -- our dividend proposal is EUR 0.07 or the Board's proposal to the AGM. And our guidance states that the adjusted EBITDA in 2026 is expected to be better or materially better than the adjusted EBITDA of EUR 7 million in 2025. Thank you. This was my part of the presentation.

Thank you, Antti and Mika. My name is Minttu Vilander, and I'm the Brand and Communications Director here at Luotea, and I will be asking the questions that you sent online. There are a couple of questions. And firstly, from Waltteri Rossi from Danske Bank asks, do you expect sales to decline in Sweden 2026? And how about in Finland?

In Sweden, I expect the sales to be roughly at the same level. And in Finland, I really believe that we will have increasing sales in Finland.

What can you do to improve profitability this year?

We have a strong focus on the sales margin at a very kind of detailed level in a region-by-region level. We follow that very meticulously. On top of that, we -- one of our objective and key results for the year is the fixed costs. So the fixed costs are under the loop. We follow that very closely. Then another one is the is the customer satisfaction. We see that whenever the customer satisfaction increases, our add-on sales increases, and there are proof of that in Sweden during Q4.

Exactly. And most of the improvement in our profitability will come from Sweden, and we have clear KPIs how we manage the business on a weekly basis.

Thank you. Then there is another question from Waltteri Rossi. How do you know that you were able to maintain the market shares?

We have a rough study of the current market share and how the facility services industry grows in Finland and Sweden. And of course, we know our own growth rate. So that's the way to calculate it.

Thank you. Then there was a topic also about the Jernhusen contract. And there is a question, how much will the contract generate sales?

We won't publish those specific customer sales figures.

Thank you. Then there is a question about the dividend that why is the dividend so low?

We had a thorough discussion in the Board meeting on the dividend. It's a combination because, as I stated earlier, the result or the official result is very weird to be frank. So it's a combination of the being higher than net profit. At the same time, it takes into account the true underlying profitability. But then due to the fact that we didn't post any official net profit, so we needed to take care of the balance sheet as well. So that was one of the underlying factors. So -- but in the end, the EUR 0.07 per share was a kind of a unanimous decision by the Board.

Thank you. Then a question about the revenue. So how much the revenue decline is due to the terminating unprofitable contracts? And also continued question about how big was the loss from the terminated contract in Sweden 2025?

I won't answer that Sweden customer, as I said, we won't publish those figures. But in my section, I said that roughly half of the net sales decline came from the terminating unprofitable customers and half of it by lower additional sales levels. And that's roughly the scale.

Thank you. Then there is a question about the services and especially from the strategy part of the presentation. So according to the report, demand for data-driven cleaning services and AI-assisted energy efficiency services continued to be strong. What are these services in practice? And how do they affect demand for cleaning services or your profitability?

The AI-driven energy management services, energy optimation for customers. We connect customer facilities automation to our energy saving center in Kuopio. Then we have the smart AI machine between those energy management services center and the customers' automation, which tunes the automation thousands of times per day and helps customers to save in energy costs. And roughly, we can save about 20% to 25% of energy expenses from customers. So it's quite good service for the customers.

Then data-driven cleaning, for example, is that we don't clear according to the service instructions, but we clean according how the facility has been used, for example, how meeting rooms has been used and how much toilets have been used and so on. So we can -- the cleaner can do decisions how he cleans on a daily basis with data, and it will save -- it will be -- it is much more efficient, and that's the reason why it's cost saving also to customer.

Thank you. There is also a specific question concerning the same services is that are these innovative services used mainly in Finland?

Yes. At the moment, but we are expanding those services currently to Sweden also. As I -- what I told you about Jernhusen contract, we will expand smart to Jernhusen contract in Sweden in the future.

Thank you. Then there is the last question at least now. According to the report, adjusted EBITDA for 2026 is estimated to grow or increase significantly. What is Luotea's definition of significantly growing guidance ...

We don't disclose those exact euro amounts.

Thank you. That was all the questions that I have. We are ready to close.

Thank you for your questions and for taking the time to join today's webcast. We appreciate your interest in Luotea and your continued engagement with us. Our next webcast will take place in May 2026. And then we will review the first quarter as an independent company following the demerger. And we look forward to updating you then. Thank you, and have a good day.

Good morning, and welcome to Lassila & Tikanoja Capital Markets Day. My name is Eero Hautaniemi, and I'm the President and CEO of Lassila & Tikanoja. Today, we will have 2 sessions in the morning. We will cover new Lassila & Tikanoja. And in the afternoon, we will dive into Late with Antti Niitynpaa and his team.

But first, let's go through the strategic rationale for this proposed demerger. The goal for the demerger is, first of all, to improve the performance of both companies through a stronger management focus, accelerate both organic and inorganic growth through more efficient capital allocation. increase the attractiveness of the companies by improving transparency and therefore, increase the shareholder value. From a shareholders' perspective, it is quite simple. The current shareholders of Lassila & Tikanoja will receive 1 share from Lassila & Tikanoja and 1 share from Luotea. We are here today in the Capital Markets Day. And next week, Thursday, we will hold extraordinary shareholders' meeting where the final decision will be made on this proposed demerger. Then the completion of the demerger will take place last day of this year, obviously, depending on the outcome of the extraordinary shareholders' meeting and then the trading with new shares will start second day of January 2026.

Okay. But as I said, let's focus in the morning on Lassila & Tikanoja circular economy leader in the Nordics. Today, I will have with me presenting Antti Tervo, Senior Vice President, Growth and Operations; and Joni Sorsanen, our CFO. Together with Antti and Joni, we will take you through what Lassila & Tikanoja stands for today and why we think that the demerger will unlock a very exciting pure play circular economy company.

We will spend the first hour on L&T's leadership position in the attractive Nordic markets and our unique platform. Then we will have our first Q&A session. Following this Q&A, we will continue with our growth strategy, our excellent financial track record, and then we will wrap up with final Q&A session. But to get you in the spirit, I'd like to show you a video that captures the vision for new Lassila & Tikanoja, the video, please.

[Presentation]

Few facts. Lassila & Tikanoja is a pure-play circular economy leader in the Nordics. And what do we mean by that? Everything we do is centered around a circular economy. If we look asked by service, waste management and recycling represent about 2/3 of our business. Hazardous Waste and remediation, about 15% and Industrial Services and Water treatment, about 19%. By customer sector, we serve practically all industry sectors, the public sector and households.

Leader in the Nordics means that we have a clear #1 position in Finland. Our market share is approximately 20%, and we have a good foothold in Sweden. In terms of numbers, our net sales 2024 was EUR 424 million, our adjusted EBITDA, EUR 86 million or 20% of sales. Our adjusted EBITA was EUR 44 million or a little over 10% of sales, and our return on capital employed was 14%. So we have a profitable and highly resilient business. We are a crucial part of circular infrastructure by providing essential services for society and industry.

This picture here illustrates some of these essential services within our broad offering. We'll go our service offering more in detail later, but the key common denominators are at the top of the page. We increased recycling rate across industries. Our aim is always to increase the recycling rate of our customers, and we target a recycling rate of 70% by 2030. We produced sustainable raw materials through reuse, recycling and different treatment and processing. We produce valuable materials and products out of waste.

We eliminate harmful materials. There are a lot of harmful materials currently in the value chain that should not be there. We make sure that harmful materials are removed from circulation safely and responsibly. So our services are essential for ensuring circularity. It is also very important how we do it. Our end-to-end offering is unique, and this is a competitive advantage. End-to-end means we cover entire waste-to-value cycle. It all starts with integration into our customers' processes that ensure efficient sorting and treatment at the source. Collection, sorting and recovery, treatment and processing, elimination of harmful materials, recycling and utilization as secondary materials and finally, with best-in-class reporting and advising capabilities that provide crucial transparency for our customers.

Unique in the way that no other player in Finland can offer this comprehensive end-to-end solution. It gives us several advantages, ability to win at the waste stores and hence, secure stable material inflow. Access to waste, which means security of supply through our treatment and recycling processes and ability to optimize the process. We have a balanced portfolio, and we are equally strong at the source in handling and treatment, and we have exits for all of our materials. In summary, we have highly synergistic offering that is valued by our customers and brings us a competitive advantage.

And this takes me to the next slide. As you can see here on the right-hand side, almost all of our top 15 customers use our full service offering. This evidence is the relevance of our full offering and the fact that it is valued by our customers. For us, at the L&T, this means competitive differentiation -- it enables operational efficiency and process optimization and offers us an opportunity to capture the full margin potential in the waste to value chain. Later on in the presentation, we will discuss how we intend to further leverage this full offering of our customer -- entire customer portfolio.

Then let's look at the market. Our market is attractive and supports our strategy well. We have large and growing markets. In the next 3 to 5 years, our addressable market will amount to approximately EUR 10 billion and the market is growing steadily at around 3% per annum. Trend is increasingly to maximize the value of waste through recycling and reuse solutions and minimize incineration and landfill. This is supported by, for example, regulation. There are landfill taxes, and there is a proposed emission trading system for waste-to-energy at EU level by 2028. Resource scarcity and drive for sales efficiency and overall societies push for circular solutions.

All of this is positive for Lassila & Tikanoja as we focus on circular solutions that benefit from these trends. I will come back to this market environment later on in my presentation more in detail. We have a very strong financial track record. Our growth has been resilient over the past 5 years. And this reflects our strong market position, our 2-sided business model. So we earn revenues both in upstream service activities when we receive the waste and then when we sell the recycled materials and products after our treatment activities.

Our profitability is strong, and we have a solid track record of very stable and predictable margins. When we compare ourselves to some Finnish and international peers in the sector, our EBITDA margin of 10.5% in 2024 stands out as one of the best in the sector. Going forward, our target is to accelerate growth further, which brings me to our midterm financial targets. As a pure-play circular economy company following the demerger, we are stepping up our growth ambitions. We are targeting more than 6% average annual sales growth, and we have all it takes to reach this target. We have large and growing markets. We have a unique and very competitive platform, clear growth strategy, strong cash flow and balance sheet enabling growth investments.

At the same time, we are committed to maintain our strong profitability and target EBITDA of 11%. Our target is also to maintain a strong balance sheet, and our dividend policy is to pay out at least 50% of our net income. In addition to financial target, sustainability is very important for us. We have an ambitious target to reach net 0 by 2045. And already today, our handprint is positive, meaning we help our customers to reach 440,000 tons less CO2 emissions, and this equals to emissions of 77,000 fins. I'm proud of our very strong management team. We have a great mix of in-house experience and fresh perspectives. We have also a wealth of relevant industry expertise.

In addition to Joni Sorsanen and Antti Tervo, who will be joining with me later today in the stage, we have in the audience, the entire management team. We have Juha Arne, we have Hilado, Jorma Mikko and Edi Sarstrom. People here at the studio, please feel free to catch up with them during the lunch break and hear more from them. In our management team, we have all the ingredients for future success. So I'd like to finalize this first section by summarizing the key highlights while Lassila & Tikanoja has a compelling investment case. We are a leading player in a growing market. We have a unique platform with operations covering the full value chain. We are well positioned for growth with clear strategy, and we have a strong track record of growth, profitability and cash generation.

So this will now take us to the next section, and we will start with the market. In this section, we will go through the market and its growth drivers, our position in the market and required capabilities to be a leader in these markets. As I said a few minutes ago, our markets are large, independent research estimates that the size of our market was about EUR 8.7 billion in 2024. And of this, EUR 2.5 billion was the Finnish market and EUR 6.2 billion the Swedish market. By 2029, the market is estimated to reach EUR 10.3 billion, meaning a growth rate of approximately 3% per annum.

This underlying growth is driven by 3 main things: real GDP and population growth, increase in recycling rates more and more waste volumes will find new life in reuse and recycling applications, which have a higher value than incineration and landfill. And pricing, for example, tightening blending obligation will drive the value of recycled material in the future. This is the base growth of the market. On top of this, there is an additional potential of approximately EUR 3 billion. Through technology and method development, we will see more solutions in waste to material, waste to product, reuse solutions and growth of remediation. There is a clear trend to maximize the value of waste through recycling and reuse solutions and minimize incineration and landfill.

Our solutions are within recycling hazardous waste treatment and remediation. We do not operate in waste-to-energy, while our hazardous waste level landfills remain a part of our entrant offering. All key market trends support our recycling and reuse solutions at the expense of incineration and landfilling. Every fraction of material is valuable for us. There are large future markets in waste to material and waste to product. Currently, incineration represents about 60% of finished waste handling market, but obviously, incineration is not solution for future. On the other hand, our recycling rates are currently about 60%, which is 20 percentage points more than the average recycling rate in Finland with a target of 70%.

And the reason is obvious, there is much more value when we recycle waste of material and waste to product. Perhaps the fastest-growing segment for us at the moment is remediation. Construction on industrial sites is steadily increasing in the larger cities. Regulation is tightening and there is a growing need for 2 properly closed mines, properly closed mines and landfills. There is an increasing need to use remediation of contaminated land to enable future use, for example, in housing reduced the use of natural resources by utilizing industrial and production waste as well as improve biodiversity and create carbon binding solutions. Our ongoing projects and order book are currently worth of tens of millions of euros.

Let's shift gears a little bit and focus on our position in these markets. We have a strong leading position in Finland. We are either #1 or #2 in all of our service lines with market shares between 14% and 23%. Most of our key competitors operate in 1 service line only. So this goes back to my earlier point. We have a unique full offering that is a competitive advantage across service lines, and we will continue to leverage on that. Even though we are #1 or #2, we still have plenty of room to grow and increase our market share in all service lines. Our markets still remain fragmented, and we believe strong players will have an opportunity to take share organically and through acquisitions.

We celebrated this year our 120th anniversary as a company. So we have experienced and credibility that is very hard to match. Our market is difficult to enter and building a strong position requires significant time and expertise. We have built our position over several decades. This includes very established brand -- we are a market leader with this very strong brand, and we have very long customer relationships up to 30 years. It requires technical and regulatory expertise. We have deep expertise in complex and tailored circular solutions. It requires environmental permits. We have permits portfolio of more than 3x of our current waste volumes.

It requires scale. We have nationwide presence with fleet of more than 1,200 vehicles and 58 sites. And it requires capital investments. We have well-invested infrastructure and state-of-the-art ICD systems. So to summarize this section, we operate in large markets with structural growth -- we have a leading position in these fragmented markets. Our industry has high entry barriers and it requires complex capabilities, which we have built over the decades.

And next, I would like to invite Antti Tervo on stage to continue with our unique platform. So welcome, Antti.

Thank you, Eero. Good morning, everyone. My name is Antti Tervo, and I'm heading in at new L&T, the growth and operations. And hey, let's have a deep dive on what we are doing in our operations. Unique platform. What is actually unique in or at L&T. As Eero described earlier, we have a strong position in our markets where we are operating. And very important in our role is that we are closely present at customers' life daily basis. We have more than 140,000 customers in diversified segments. This enables us to have an access to a number of materials we can recycle and treat. We have more than 12 million pickups yearly basis, how we collect the materials. We are then -- we enable recycling.

So more than 1 million tonnes of waste where we have an access to an 80 person, we are recycling or handling today. And again, with the treatment capability and know-how, we have also strong understanding how the recycled materials can be used. And we have already created a number of materials which have an end of waste status, which is actually status for material, which used to be a waste, but it's nowadays a product. So it enables to have multiple sources where it can be used as a material for other use than it used to be before.

But let's have a look more deeply actually what we are having and what are the key cornerstones to create the competitive advantage in our value chain. There are 4 elements: end-to-end portfolio in our offering. Then we have a strong customer base. It's important also that we have the right competencies in developing environment where we are working and then the assets to perform that value chain and succeed on customer front.

We'll start with end-to-end offering. What is very important, as stated earlier, that we are very closely working with our customers, and we are able to understand the different needs in different customer segments. Based on that one, we have actually 3 segments we are serving. So we have a waste management recycling, hazardous waste remediation and then industrial services and water treatment. Why we also look at our services from these 3 angles that all segments have certain specific areas where you need to have a special know-how. For example, in waste management recycling, there is some plastic or cardboard as some traditional waste, whereas in hazardous waste and remediation, you have a more challenging hazardous materials you need to handle, whereas in industrial services and water treatment, you are working very closely with the customers, for example, with water and liquids.

So certain specific knowledge is very important. And how we actually then build and bring these segments together. We actually have the same 2-side business model in all these segments. We are strong on a customer side, providing the services and then we are recycling the materials, and we create also sales out of the materials we are recycling and understanding industry specific needs that customers are also able to fulfill their sustainability targets in the future and of course, today. We are supporting this with our data-driven approach. So we are able to report more than 200 tractions recycling rates and help customers and us to further develop our business together.

On top of that, we have a professional services on all these 3 segments that from early on, when a customer is planning a site of operation, that what should be considered that we will maximize the operation efficiency in regards of recycling or when you are doing that ring operation or even the case when you are ending your operation where, for example, remediation takes place. But let's then have a look more deeply, the waste management and recycling. Actually, this represents around 2/3 of our total business and more than EUR 280 million. Here, especially the maximized recycling is our focus.

So we work very closely on our customer sites, providing the sorting solutions and also towards how we can improve and make sure, of course, that when they are developing their own operation, we are maximizing the recycling. We provide also digital services that we are online able to analyze where we are today, and we have also benchmarks that we can compare where we could be in different sectors. So enable together with customer improvements on those areas. There are a couple of examples of services and activities what we are doing.

And there's, for example, events where we are strong or trade and logistics, which is a strong customer segment in this sector. It's very important to understand how the customers do operate and how they want to operate in the future. We provide strong logistic understanding with those 12 million pickups for those 1,200 vehicles we are having. It's very important that you are optimizing and working closely together on the market areas to optimize the routing and our operation. With that, when we have the materials collected -- we also keep and develop the know-how that we make sure that we will get the best output from the materials we are collecting. If we then have a look the hazardous waste remediation overview.

This represents around EUR 6 million of our net sales. Here, we are coming even closer to customer needs and also we are handling challenging materials, which we actually see as an opportunity. First of all, you need to handle materials like hazardous waste Safeway. And that's very important for us. And we have been developing during the years, a number of solutions in this area. At the same time, we are recycling more than 60% from hazardous waste, which we are proud of, but we are not satisfied. We'll see the further opportunities. Our really aim is here to minimize the environmental impact because in industry or certain sectors, you still need some challenging materials and chemicals that you're able to produce the service of products we can help our customers to minimize the impact.

Especially the complex areas are the ones we like. We will, later on in presentation, see 1 customer example that we old industrial side have been remediated successfully with the customer. But it really means that you need to have a chemical understanding, you need to have operational understanding to make sure that, for example, final industry side can be remediated as safe as possible. Again, some examples on the services, what we are doing and what we can see on these pictures -- it really says that we are close to customers. We have advanced recycling solutions for hazardous waste. We have even done the first landfill projects in Finland. So taking actually raw materials out from once closed landfill, which will see opportunity in the future. Positive is that we have done it, not just thought about it.

Hazardous waste, we'll look at what we are doing in industrial services and water treatment. This is around EUR 80 million of our net sales. Here, the customer environments, again, to differ in subsegment level. Whereas we provide standard services, we also concentrate to create spare head services on subsegments. We understand what happens in forest industry or pulp and paper factory, we understand what happens in the metal industry or what happens, for example, in big infrastructure sites, which are handling, for example, water treatment. We have actually developed methods on this sector. This area still lack of innovations that we can do better cleaning, but also making sure that customer doesn't need to run the operation down, but we are able to help them during the operation.

With that, we also look at carefully and try to understand as best as possible what actually materials customers are handling and doing where they also require cleaning. -- the point of view is that we are doing the cleaning. We are helping the operation to run. And the materials got out from the operation, we know how to recycle and what to do for the materials. Here, especially it's important that you have a fast and nationwide service. When the factory goes down, you need to have the response on nationwide present operation. Another way around when you are having a maintenance breaks, which are very crucial, especially for the process industry, you need to have necessary economies of scale and how to stay right equipments, right place, right time. And that's really important to have the loyal relationship with the customers.

Examples on activities, what we are doing here are really coming close from the customer process, like boiler cleaning, in energy sector, we are having expertise, we have even own developed methods on that sector. We are doing mobile treatment for the water when customer has a challenge is or we are having inspection services to have a look whether the pipelines are in order or whether there is some preventive maintenance, which might be required. Strong support here also from the hazardous waste because we are often dealing with the chemicals, challenging materials. We have a substance our hazardous waste and remediation area. So there is strong actually synergies here also with that business line.

So if we summarize our end-to-end offering, we have spare head services to all 3 segments and even the sub segments. Compare for example, that industrial combinate, there are differences between combination, whether it's a metal or process industry. You need to know detail what happens in these different industry sectors. Or retail, there is no 1 retail shop. There are different chains, and they have a little bit different demands. You need to have, of course, standard service, but you need to customize the service and develop your service towards those demands. Then we have a strong nationwide network, which creates operational efficiency. I mentioned the example just that how, for example, industrial and water do work together with Hazardous waste and remediation. Same way, for example, if we think about hazardous waste. When you do recycling of hazardous waste, you might get out, for example, plastic. And then we have actually our traditional waste management, which is then having a channels and treatment methods how to recycle plastics. So these elements do support each other. And as I said earlier also, yes, we have a number of customers which are using more than 1 service, but there are actually a number of customers who are just using a small part of certain service. So we have possibilities to also expand our portfolio towards customers. So doing this, it's also enabled us to capture the full margin potential. Having offering and trying to understand customer, of course, it's important that we know the customers and who they are. Coming to diversified portfolio. It's actually very wide for new LT we have a very balanced portfolio of different segments. And as I said earlier, very important, we have an understanding of subsegments. There is no 1 retail or 1 industry. And if we have a look, for example, customer examples, we have a number of customer examples from diversified segments. But very important is that we have also the necessary services, especially but certain subsegments do need. And also in the future, our target is that we serve multiple segments as well. So that gives us very good balanced portfolio towards the future as well. Among with those 140,000 customers. Just Top 20 are taking 25% of the net sales. And also reflects or combined with the diversified segments we are working gives a good base that we have a number of customers we are working with. On the right-hand side, we can see that we have customers even 35 years of experience how to say it with us and a number of customers more than 20 years. And our target is that all of these customers would be 35 years and even the oldest ones would be then 50 years in next 15 years. For us, it tells that if waste management industry has started there that you collected waste and you put it in the landfill. Nowadays, we are recycling. We are very close to operation on daily basis. We have been part of that track and role with our customers. That's why -- it's very important that we develop our actions also in the future. So we will be also next many years with our key customers. We ask feedback and have a close discussion with our customers. Our Net Promoter Score was 46 million this year, and which is nice that we have seen a good development there. Where actually then customers see us succeeding or doing well, we can highlight 3 areas, especially the transparency and reporting. There is not any more information or work, which is not documented. So when we do that together with the customers, we are able to react and improve and face and also recognize challenges. Then reliability and sustainability are having also strong overview and how the state results from the customer point of view. So that's very important. And with service offering and quality, we are also doing strong. And of course, our target is even be stronger in the future. But with this, we are very humble -- and that's why we are doing this feedback, how to say, continuous basis, we are asking from the customers. With customer satisfaction and close relationship, we have been able to also have actually strong recurring contract base with our customers, which has been also developing in last years. Our average contract duration is 6 years. Today, there are 70% of the customers who are using actually more than 1 service line, which tells us also that it's not just the 1 service line, which is strong. There's also a strong amount of customers, which are using more than 11 service line. What is important today as well that why we have a lot of fluctuation in the market and changes up and coming. -- our contract base is also inflation protected. So we are able to also contract wise and also contract structure-wise impact and also have a look if inflation will negatively impact to us to pull that on contracts as well. Then the real customers, of course, tell us -- to tell us how we perform. And here, we have 3 examples -- and these represent examples of nationwide service, diversified areas of business that we are able to provide for example, in retail, Proman Group 41 stores served in Finland.

And that really tells that nationwide, we are able to provide standard operation with strong service offering. Hartela construction industry, very long relationship from 2005. Today, recycling rate 70 and even targets to reach more. Again, every construction site or area might be a little bit different, and we are able to still have a strong recycling rate there, and we are actually trying to reach together higher rates in the future. Industrial side relationship more than 15 years, more than 20 locations served. As an example, industry, when you look at it, 1 side what might be built on 20,101st slides in this industry case have been built in 1930s. So you're able to operate and find solutions with the customer in changing environments.

We are -- and looking at that, what kind of team of professionals new L&T is having. We have today more than 2,000 professionals, almost 200, 300 professionals working at new L&T. We have a strong eNPS, -- so Employees Net Promoter score. And this is very important for us because we are working closely with our customers daily pages. We have a lot of, how to say, we are meeting customers every day. And also looking at that capabilities to meet the challenges in the future. And 2,000 training days here, it's really important for us that we make sure that the capabilities are also developing. Our professionals are not just one area of competence we are actually requiring. We have today chemistry, we have biologies that we are able to provide to diversity solutions. We have logistics experts and so on.

So there's a really cross-functional companies you need because when you are doing recycling, you are actually dealing with contaminated material. So you need to have a cross-functional understanding. Our average employment duration is almost 10 years. That we respect, but with the continuous training and understanding of the market, we, of course, try to have it even higher in the future. Safety is the 1 key measure for us. We are dealing with hazardous materials. We are active player in traffic with our strong logistics network. We are today above the industry average, but our target is 0.

With 25,000 preventive actions, we try to early recognize the challenges and also improve our activities in safety. That, we are able to also make sure that our operational model works very well and it's transparent. We have data-driven operational model, which is just recently renewed. To keep the customers satisfied and of course, our own employees to manage the operation, we have went through more than 160 processes during last year's to understand that our operation model is as efficient as possible. But we have defined 8 key processes, which especially are important for us across the businesses, whether we are doing remediation, which is kind of project business or we are doing recycling, which is logistics and treatment.

We have an IT infrastructure and operational model, which supports that. We have actually invested more than EUR 20 million to cloud-based IT infra, which is a platform towards future. And with that, it's main aim, of course, that we are able to also respond. The customers' needs also do the strong operational efficiency in the future, help us in the decision-making, having a transparent operations and of course, increased scalability in case of, for example, thinking inorganic cases. As earlier stated, it's very important that also IT and operation model creates advantages for us.

Here, we have a couple of examples how we have created advantage for ourselves with the operational model and IT. If we have a look at how the orders are coming in to us, we have an own tool for customers, they can use 24/7 anytime anywhere, 50% of our orders are coming in from there. And this is integrated to our operational model. Customers are interested today, especially that when there is a pickup or when they have a change in our operation, so they can change the times when the pickup should take place and so on. We have more than 10,000 B2B customers using our solutions there. Recycling rates development. It's important that you understand that what you should improve. We provide online reporting to our customers with our impersonate solution, where you can actually see where you are today yourself with 200 fractions Yes, long variety of fractions when we take all of these arduous waste and traditional waste materials.

You can see the development of the waste from that one too. and even including industrial benchmarks, so customers can compare how they are compared with others. And this we use together also that how we can improve recycling. From operational model, let's jump to our infrastructure. You have looked at it at who we are and how we operate. But it's very important to have the tools and resources to perform the operation. The nationwide presence close to customers is not just employees. It's also 500 vehicles, 170,000 collection points. We have treatment facilities all over Finland, and we have more than 50 environmental permits.

If we have a look at those challenging materials, harmful materials, we have 5 hazardous level landfills, which are actually fulfilling the demand in whole Finland. Why the permits are important is that this environmental business requires license to play. First of all, you need to follow the rules and regulations, but also enables to perform the operations and recycling you need. This is licensed work, how to say. And all over 40 cities we have sites today with 2,000,900 tonnes -- almost 3 million tons of permits. It tells us that we have a capacity to grow. Let's have a look at 3 examples. First, from the fleet how to make sure that the fleet also corresponds to requirements in the future. Then we look at a little bit our treatment capacity and then we look at some experiences and real-life examples from the treatment.

As we have a big fleet. It's also important to understand that the power sources for fleet usage are changing. You used to have a detail Nowadays, you have electricity, you might have a gas. We have been 1 of those front runners who have been investing on this that we know that how the different technologies to develop and we understand the life cycle, how it works, that we have efficient operations. So as I said, even today, 11 of our fleet is low in electricity or gas, as an example. Our investments, there's even already 1/3 we are putting on these new technologies. When we have the fleet, which is still using diesel, we are actually using more than 3 million liters of HVO renewable oil.

And we can say we are one of the biggest ones in Nordics. So this really helps us to face in the future when there is a growing demand to have a lower emissions. We have a road map actually towards 2045, like Eero presented earlier that we actually are emission-free. And we are now well on track on that. 58 sites today, we are working with Nationwide, making sure that when we have those 12 million pickups, we have the infrastructure to take the volume in and create materials out of those. Then when it comes to permits, I said we have a capacity 3x more handling than we have today. And this is not just which happens in one or overnight or couple of months how you develop the permit infrastructure and your site infrastructure.

As an example, in Northern Finland, where we created a new treatment center it took 14 years to have the treatment site in place. So again, we have a capacity to take more materials in, we have a strong portfolio for different waste types, it's not just the one, we have 200 tractions we are treating today. And then the payments do not restrict our growth. Having a strong permit base and, of course, the facilities for the treatment and strong logistics network with the fleet. Of course, the thing is how you utilize the network that you will create value out of the materials.

Here are examples from 3 different sectors. For example, plastics, L&T has a strong and long history to recycled plastics. We have in Mercada we are planned, and we are -- the B2B sector very strong in recycling plastic. Here also, together with understand that there is not just the 1 plastic, but there are a number of fractions for example, which are coming in. So what you try to get it as pure as possible with our sorting solutions together with the customers, you still need to understand that how to get it clean and how to create a material to customers. There is not just 1 how to say, plastic you provide to customer. We provide more than 100 tractions to resell for plastic industry. And that's the 1 competitive advantage what we are having.

Hazardous waste, 60% of recycling, we can say that we are one of the front runners here. We have been developing this recycling long time. We have 3 strong sites, which are doing recycling, and we have a number of examples where we have created actually for hazardous waste value after treatment. We are getting industry as an example, where we are creating new products for industry. We are taking the cool and fluids where we are creating marketing materials for forest industry, which are safe to use there. These are just a couple of examples we are having. When we look at the recycling, the first thing would be reuse. Reuse is one of the elements we have been developing lately. We have had a strong operation. We did an inorganic move during last summer that we expanded our operation.

And today, we are handling more than 4 million pallets. Strong relates to package recycling, which is increasing, and there's also regulatory demands to increase that one. And we are already involved there. We have 4 sites today. And just imagine in the past, when you just throw up the pallet away, we are today able to recycle 10x. We keep it in a circle together with our customers. So to summarize. To have a unique platform requires unique elements. And we have four areas where we have a competitive advantage. We have a strong offering, which we are developing all the time, and we have a spare hedge for stock segments to succeed in a number of segments.

We have a loyal customers and diversified contract base. Today, 2,300 professionals with developing capabilities and has been able to do in the past, and that's we see in the future as well. We have also a new operational model, which provides us a platform to also develop and making sure that we are able to show our results to customer and develop together. This is then enabled with a strong network, which enables us to grow and develop.

Thank you for your attention, and I think we have a next session Q&A together with Eero.

Thank you, Antti. Now we are ready for your questions, and Lilia will join us on the stage, and she will go through the questions we get online.

Nick, go ahead.

Nikko Ruokangas from SCB. Thank you for the presentation so far. I have a couple of questions related to the growth you are targeting. So first of all, do your growth targets include also acquisitions. And then if they do, could you kind of discuss a bit how much of organic growth are you assuming there?

That's an excellent question, Nikko, and I will cover that in the next session. If you are patient. So in the last last session today, we will go deeper into the growth. And maybe if I don't answer to your question then, we can come back to this in the last Q&A session. Is that okay?

Yes, that sounds good. I will have also a couple of other questions also related to the maybe acquisitions and so on, but then save those later stage. Then maybe on kind of -- you discussed the things you were kind of going through the more than 100 processes when you discussed about the IT infrastructure and how you can improve the efficiency. So how have they been already visible in your numbers? And do you see kind of room to get bigger benefits out of the improved efficiency going forward?

Yes. Very good question. If I first reply on high level and then Antti will go more into details as he knows them better. But on a high level, the big project has been very visible, especially in 2025, when we have had the rollout. So we had in waste management and recycling and for hazardous waste, we had 4 waves of rollout and then for process cleaning and environmental services, we had 2 waves.

Three waves.

Three waves, yes. And we had extra costs in 2025. And we had to have extra resources. And obviously, this type of huge rollout requires some extra help from consultants as well as our partners. But obviously, that was not the end goal for this. So there are many benefits that we expect to see in the future. Many are around sort of how we can better service our customers, but also we expect to see increased efficiency gradually now starting onwards. But maybe, Antii, if you can open a little bit more in detail sort of what does it mean in practice going forward?

Yes. Maybe as Eero said, so while we have a different waves. We have also approached the operation model starts where we have a logistic and treatment business. and where we have Avon project business. We have a certain segments in our operation model, which especially support these different subsegments what we are actually operating. We have a common platform, but then we have how to say, industry-specific activities where we, of course, target to also create operational excellence. -- both, of course, that we are more cost efficient, and we are using our resources as efficient as possible.

But again, which is also very important that we are working closely with the customer that we are creating advantage that we are, together with the customer able to react that they are able to improve their operational efficiency. So that way, improve our own service pricing and also able to serve for them. So 2 angles, cost efficiency, but also the better customer service output.

And perhaps 1 final thing is, as Antti showed in the picture, we have 1 data platform from which we can now extract data and it is with those tools that we have already in place. And hopefully, we have even better tools going forward, we can really provide very transparent reporting. -- for our customers. And no one else in the industry have such capabilities as we do now.

Okay. Thank you. I'll touch upon acquisitions slightly, as you mentioned, the Pallet business acquisition this year. So you can discuss about this and also more generally -- could you talk about how do you run those integration processes when according to this kind of businesses? And then also, how do you make sure that you get everything out of the acquisition in terms of synergies?

That's a very good question. As L&T has done acquisitions in the past as well, so we have actually processed how we do the integration. And we follow the process we are having. And of course, the one thing that we will take the operation on hand very well and keep the customer satisfied. But then we have also planned together that how we can improve the operations in the future to create the value add on the market. And for example, a pallet business, where we are today, we'll see opportunities in the future.

So it's how we with combined actually efforts, we can be strong in a customer front. But also have cost synergies, which is clearly the case in many of our acquisitions because we -- recently, we have done, let's say, smaller bolt-on type of acquisitions that then enable future growth. And it is by design like that, because the integration for us is quite easy. And in the future, even more easy with our new IT platform. And we quite often if not always look for companies where we can have synergies when we integrate them into our operations.

There is one question online. How much can you grow in each service line without investment to capacity? What is the investment pipeline horizon?

Yes. We will come back to that later in the presentation, but maybe a high-level answer. So our overall growth ambition is more than 6%. And in all of these areas, we believe we can grow more than 6%. And the investments required, obviously, organically, if we just think of sort of replacement type of investments, it is not huge. It is less than our depreciation. But obviously, we want to, on top of that, make sort of organic growth investments, and I will come back to that later in the presentation. And then acquisitions. So it can vary depending on whether we are successful on 1 year in an investment or whether we can or we do a bigger sort of organic growth investment on a certain year.

No more questions online.

Harman from OP Marcus. I have few questions. Firstly, about the 11% EBITDA target for the new L&T. One could argue that the target is not very ambitious if compared to your historical performance and also considering that you have been operating in very low or very weak macro environment. So can you give us any color of setting that level of profit margin target?

Yes. Excellent question. Thank you. So it needs to be looked at in combination with our growth targets. So as we said, we have been able to reach almost that level of profitability already in not so good market. But at the same time, we are now targeting to grow twice the market sort of growth -- underlying growth. And obviously, that will require investments into people, into sort of operations and our facilities and potentially acquisitions as well. And they will not immediately yield benefits for us. And therefore, together, more than 6% growth and 11% adjusted EBITA target, I think, is a pretty reasonable target for any company.

Thank you for the very good breakdown of the structure of your different business lines. But you mentioned that you have broad presence in both downstream and upstream. But could you summarize as kind of the sales structure in different parts of the value chain? How large share of revenues come from upstream and also from the downstream?

I'll let Antti to take a crack on that. We do not have exact figures, but maybe Antti can give some light on that here.

Well, as Eero said it, so we don't open that in detail. But of course, how we see that where we are going and we have seen actually recent years that where we have a strong presence in service, more actually important is coming the reselling and the treatment element. And also when we are coming to remediation we actually -- you are actually not just providing the remediation service, you are providing the recycling of the materials from the remediation side. So it's part of the project itself. So that's increasing. So coming more and more actually significant in the future.

Then third one from me, coming a bit from the long-term outlook to shorter period. We know that the municipalization of the waste collection is coming. And I think you have commented earlier that it will bring some headwinds in '26 and '27. But do you have any comments on -- from this perspective?

Yes. It's not coming. It is affecting already, and it has been affecting us I'd say, more for the past 2 years already, it will impact our operations '26, '27 and perhaps even '28. What is then the impact it is difficult to say because it is negative that we know. But how much negative it is, we don't know exactly because it very much depends on how successful we are in those tenders for the municipal sort of logistics contracts, but also the dynamic impact it has to the market. We have already seen this year increasingly that small players are exiting the market, and there is a consolidation happening. So the market is shifting as we speak.

So very difficult to say what is the exact impact. It is definitely going to be negative for the coming years, but not hugely negative, and we can to a large extent, offset that with cost efficiency measures.

There's first at the back.

Antti Goscor from Danske. Maybe a more general question about the market growth and what that means for you guys. I mean, obviously, at least some part of that is increasing recycling, less incineration, which I believe probably means that the kind of marginal cost of the last material or taking that away from the streams is going to be higher than for the existing materials. Does it mean that there is also more value for you guys in those, say, new streams in a way? And does it require more CapEx for that growth?

Yes. I'll say high level first and then you can complement. So there is perhaps a little bit more cost, but I'd say the more important fact is that our customers request us to take more value out of the material. And that is what Antti was talking pretty well about. So we really need to understand the -- our customers' processes and their needs. And yes, it will require perhaps more investments in our treatment facilities.

But at the same time, it is kind of a market demand that we have to meet. But Antti, if you continue.

Yes, yes, please. Well, if we take from there that there's one thing is that you are able to recycle more and get more out of the material. So one thing that you of course, trying to get as pure as possible at source. That's very important, where we provide solutions. Then you maximize the capability to use it different places at the end of the chain, so resell for a number of places. Element of the value is also developing that we have a look at how the industry is developing. So you need to use more and more recyclable materials in your final products. So that's the one what we see that in the future, if we look at towards years ahead. So even increasing demand for recycled materials, which then also probably increases the value as well for the recycled material.

So we'll keep the materials on the cycle more and more in the future.

Maybe what I'm trying to get that is that when the task gets more challenging, do you see better margin for you?

Yes. We do, and we don't. So it depends on the traction. But there is what we believe in and some of there still needs to be sort of proven to be a fact that there is going to be increasing blending obligations for various raw materials. And then there will be more value in the recycled material. In recycled plastics, so the prices have gone up and down, and it really depends very much on kind of how much supply is there from virgin material. And nowadays, the prices from our perspective, could be higher than what they are right now. They're still okay, but they could and should be higher.

Rauli from Inderes. A couple of questions from me as well. Firstly, you mentioned you want to increase cross-selling. I was just wondering how does it look from your customers perspective across your service lines that, kind of, are they the same or different people or departments buying, I would imagine that normal based on hazardous waste could be the same, but maybe in Industrial Services is being bought by somebody else in the company. So how does that impact your cross-selling efforts?

Yes. Excellent question. If we look at that -- yes, that's right, regionally, if you look at traditional hazardous waste yes. But when you're actually suing or you're having need for sanction. That's also waste actually. And you need to report. And then actually, there is not any more waste you shouldn't report as to a customer. So actually, when we come to remediation and site streams, they are also waste, how to say that source. So you are able to provide the whole. So that's the idea of our end-to-end offering that we are actually knowing the source and actually what to do and treat. And that's why we are also having a number of industrial customers, which are actually -- we have cases where they are using basically all our service lines today.

And of course, where we address now that we will expand the portfolio more subsegments of the customer to reach better cross-selling in the future.

But maybe if you answer kind of how we have restructured our sales and sort of from that perspective, I think that what you were after? Yes. Maybe that is well from the customers' perspective also from your.

Yes. Yes. So coming to that, that if we have the offering in place, we support that with actually our sales. So we have segment sales. So when we look at the process industry, when we look at trade and logistics, when we look at construction, so we have actually one sales, which is providing actually the sales towards these segments. But maybe what saying that I said there's a 2-sided point of view that you need to have offering also to enable sales. But that's the way we are doing from both angles.

Okay. Okay, clear. And then secondly, you often mentioned that the regulation is driving the kind of growth in the market and increasing demand, which I believe, of course, true. But is there any kind of game changers in the pipeline and the regulations since your market growth estimate is still like quite steady 3% per annum. That doesn't look like there is any big changes as such coming. So is there anything potentially coming from the regulation side that could impact the market growth outlook?

Yes. I don't think there is a single game changer that is coming. But all the sort of new regulation is by large, favorable for us. And sort of the big things are this blending obligation, the emission trading team -- like now, we're receiving a lot of waste in Finland from Italy and some other Southern European countries because Germany put a tax on incineration of waste to energy. So Finland starts to be the last sort of tax haven in Europe for waste-to-energy. And probably that will end at some point, even in Finland at the latest '28 when we are sort of part of the sort of EU regulation in this. So there are things all the time.

And obviously, the next version of our national waste law is under preparation and at the moment, we are optimistic that there are a number of things that will also sort of make it more clear what is sort of the free market and what is the household waste that belongs to the municipal waste companies.

There's still one question here.

Nikko Ruokangas from SEB. One follow-up on the profitability question and targets you already discussed -- so as said, you have almost already reached the profitability target, but the growth investments are now kind of reason why you are not targeting for higher. So how much do the growth and profitability target go hand in hand, meaning that do the -- to reach the profitability target do you also need to reach the sales growth target?

Not necessarily, but we need to grow to be able to maintain this high profitability. That's clear. We don't need absolutely grow more than 6% every year to get 11% EBITDA. so -- but we can -- and we will increase our cost efficiency going forward as well. But there is a limit how much cost you can squeeze out of the operations. So growth -- top line growth is really essential for us going forward. It's been a difficult period for us. This past couple of years when the market has been flat or even declining.

So it's -- this is not the way to go forward. Okay. No more questions there online. Did we have a coffee break?

Yes.

Okay. Good. Thank you. Let's have a coffee break and continue after that.

[Break]

Welcome back. Hopefully, you had some coffee also there behind the lines. This section is about growth. We have 3 pillars for growth. And first one is -- First one is about strengthening our position in current services market. This means that we are aiming to do more cross-selling and upselling. Second one is to do geographical expansion in Sweden. As I said earlier, the Swedish market is more than double the size of the finish market and hence, offers a great growth opportunities for us. And the third area, as discussed earlier, waste material and waste to product solutions mean much higher value for us. And therefore, that is a big opportunity for us going forward.

In this pillar, we also look into the possibilities of remediation. To reach our targeted growth more than 6%, we need to support these 3 growth pillars with organic investments and selective acquisitions. So our unique service offering enables great upselling and cross-selling opportunities. Even though almost all of our largest customers use our full service portfolio, that is not yet the case in small and medium-sized segment. As you can see from this picture, almost 80% of our current customers do not use all of our services to the extent possible. As Antti said earlier, they're using maybe 2 of our service lines, but they do not use to the extent they could.

We have very strong presence with our industrial customers. They predominantly use our full service portfolio. And as I said, at the same time, this is not the case with many of the other customer segments. If we look at construction, currently, about 75% of our sales to construction sector is around waste management and recycling. And only 25% around remediation of process cleaning and water handling. There are currently huge land masters handled in construction, and we have capabilities and facilities to do much more like storaging and mixing various types of masses and very efficient solutions to remediate even very highly contaminated soil. Our small and medium-sized customers do not use our services as much as they could because they are very focused on buying a single transactions. So we can do much better work in educating them of all of our different services. But more importantly, we need to make it as easy as possible for our small- and medium-sized customers to buy more from us by digitalizing the ordering and customer service processes even more going forward.

As Antti showed, we have already very good systems, but there is a clearly improvements that we can make for them going forward based on our data platform and our new ICT solutions. A concrete example of upselling and cross-selling is our process cleaning business. Obviously, we have years of experience of very high quality and safe solutions for several different customer segments like metal, forest, chemical, energy construction and infrastructure industry. And our know-how and equipment in high-pressure cleaning and sun blasting are state-of-the-art but we are investing increasingly in the service method development like blast cleaning, Noman entry solutions like robotics and drones and new and more safe and efficient ways meeting the ever-increasing customer needs.

So second, growth pillar. We entered the Swedish market early 2022 by acquiring 70% of SBB. Since then, we have, together with our colleagues in SBB grown the operations organically and with bolt-on investment to more than double -- we are roughly around EUR 20 million now in Sweden. But as I said, the market in Sweden more than double compared to Finland. And in coming years, we'd like to continue to grow our operations. Our plan is to continue to leverage our know-how in special methods like blast cleaning and support the growth with expertise sharing between Finland and Sweden.

We will also evaluate possibilities to enter hazardous waste and remediation and waste management and recycling markets at some point in the future in Sweden. Third pillar is how do we integrate further in the value chain. As we have gone through, we have approximately 1 million tons of material going through our hands every year. And our goal is to get much more value out of this material flow. At the same time, technology development is not straightforward, and it's sometimes very complex and requires time. Most recently, we have investigated chemical recycling of plastics and biochar, both of which we think have huge potential going forward.

But as of now, we have not found yet a sort of industrial scale solutions that would be viable for us. But this is an area we are continuing to invest in and expect to be able to publish concrete development in the coming years. Another example of integration further in the value chain is our remediation business. There is an increasing need for remediation of more and more polluted sites as urbanization continues. And industrial sites and power plants are making space for housing in the city centers, in the growth areas like Helsinki region, [indiscernible], Turku, et cetera.

Antti already mentioned this, and I think this is a great example of what we can do. This is a very reason what -- example of what we have successfully done in the area of remediation. We just finished a very large project in [ Baja ] for our customer [ Kemira ]. We remediated contaminated soil of an old factory area and restored the side landfill to meet the very strict environmental safety standards. As per Kemira's request, we created a meadow on the restored landfill. In our R&D study done together with research institutions, the meadow was evaluated to have high ecological state. This serves as an example of how biodiversity actions can be incorporated into the industrial environment. very big project with very good outcomes.

Our growth ambitions will be supported with a selected and targeted acquisitions. We have a solid track record in executing successfully acquisitions that offer a basis for further organic growth -- most recently, we have discussed about this SVB already and then the pallet recycling business acquisition in Finland. These kind of bolt-on acquisitions are very good for us because we have a long experience in integrating acquisitions -- and we have a very good platform to integrate these into.

So as a summary, we have a very large market with healthy underlying growth. We have a unique end-to-end service offering and leading position in this fragmented market on top of which we have identified 3 clear growth pillars, upselling and cross-selling, expanding our operations in very large Swedish markets, and integration further in the value chain with waste value solutions and remediation. And all of this will be supported with organic and inorganic growth investments. So that was the end of growth section. And now I'd like to hand over to Joni, and he will go through the financials. Welcome, Tony.

Thank you, Eero. Thank you, and good morning, everyone. My name is Joni Sorsanen, and I work as a CFO at the current L&T Group. It is my pleasure to present you the key financial highlights of new L&T, together with how we drive financial excellence going forward. In this presentation, I will also tell you about our high-level profit growth plan, and I will end this session by repeating our midterm strategic targets. So our carve-out financials for the past 3 years demonstrate stable net sales development with solid profitability. The company generates net sales around EUR 420 million with around 10% adjusted EBITA margin. Our EBITDA stands at around EUR 86 million of which around 45% can be translated into free cash flow. I will tell you more about our cash flow profile later in the presentation.

Another key financial highlight I would like to emphasize is our decent 14% return on capital employed in 2024. So let's start by looking at our revenue streams. We provide mission-critical services that can withstand economic fluctuations. 68% of our revenue comes from long-term contracts. And within this category, we have, for example, our long-term contracts in waste management, hazardous waste and sewer maintenance services. 16% of our sales come from so-called add-on sales, which are also recurring in nature. This category is or this category includes, for example, our process cleaning services. And finally, the remainder comes from, for example, remediation projects as well as sale of recycling equipment and sale of recycled materials.

What is interesting about L&T's net sales profile is that we have both sides of the trade. So our position allows us to generate revenue in upstream through collection and treatment of waste and also in downstream through sale of recycled materials. Another way to look at net sales is by service type. So 66% or 2/3 of our net sales come from waste management and recycling services. 15% comes from hazardous waste and remediation services and the rest 19% from industrial services and water treatment services. If we look at our net sales growth in the past 3 years, we can say that it has been somewhat moderate, however, if we look at growth within these different service lines, we can see that, for example, hazardous waste and remediation services as well as industrial services have grown on a decent pace around 3% to 5% annually.

However, within waste management and recycling services, we've been affected by municipalization of the residential waste collection, which, by the way, nowadays represent less than 10% of our net sales. However, within the waste management services, we have seen decent growth within our B2B customers as well as within the producer responsibility organizations. So now having completed the revenue deep dives, let's turn our focus on cost base.

So obviously, we know very well our cost structure, and we know how to drive cost efficiency going forward. The single most important cost category for us is the employee benefit expenses around EUR 140 million annually. So this includes both variable and fixed costs and if we look at our employee base, we have around 2,300 employees, 600 of which are white collar employees and 1,700 of which are blue collar employees. The second largest category is materials and services, which is variable in nature completely. This includes, for example, materials, subcontracting services and waste treatment fees.

And finally, our other operating expenses has various line items, the most important of which are related to our fleet, for example, fuel expenses EUR 23 million annually and repair and maintenance expenses, EUR 22 million annually. Overall, we believe we are in a good position to leverage operating leverage when the market starts to support us in the future. And this is especially true for the construction industry, which is at the moment on a very low level in Finland. Overall, we have a strong track record of well-protected margins. Here, we have presented you the carve-out numbers for the past 3 financial years. But those of you who have followed us for a longer period of time, would remember that if we would include here, for example, 2020, when the COVID-19 pandemic broke out this picture would not change dramatically, which showcases the strong profitable business we have.

However, even though we think that we are among the most profitable ones in the industry and within our peer group, we still believe we have room for improvement. So how are we going to do it? In this picture, I would like to draw your attention first to the growth plan, which is set to provide the strongest absolute profit growth for us going forward. Era just presented you with the 3-pillar growth plan. But also within this growth plan category, we have operating leverage -- so we think that we have the capacity to take in more revenue without increasing our fixed cost. And this will support us when the market starts to recover. Also important for us is to have tangible operational excellence actions in place to offset some of the headwinds already mentioned here, for example, municipalization, demerger, dis-synergies as well as increasing ERP or increased ERP costs and amortization.

But within operational excellence, we have tangible actions. For example, within procurement, we have a strong procurement team working with annual spend of EUR 200 million to EUR 250 million every day working towards achieving savings for the company. So moving on to capital expenditure then. The company has a fairly stable need for maintenance -- annual maintenance capital expenditure ranging between EUR 20 million to EUR 25 million annually. And these relate mostly to our fleet, but also to our facilities.

If you look at the graph here, we can see that the dark blue bar has been fairly stable, representing the annual maintenance CapEx need. What has happened in 2023 and '24, we have invested in our state-of-the-art IT system around EUR 20 million and also included in the light blue bars, we have investments in special municipal contract-related fleet. So now we have talked about revenue, costs and capital expenditure. So let's have a look at what this all means in terms of cash flow.

So here, we have provided you with an illustration of how our EBITDA translates into free cash flow. So if we start from EBITDA of EUR 86 million in 2024, we deduct our maintenance CapEx of EUR 20 million to EUR 25 million our annual lease expenditure of EUR 15 million, then we hopefully add a change in net working capital. So we seek to release net working capital on an annual basis, and then we deduct interest expenses and taxes, we end up having around 45% of our EBITDA. So in absolute terms, EUR 40 million as free cash flow. And this is the amount we can invest in growth, both organic and inorganic growth, but also we can use this to distribute funds to our shareholders.

And this EUR 40 million, we can invest without increasing our leverage. And obviously, when we think about different growth initiatives, we need to make sure that these initiatives meet our internal hurdle rates so that we make sure that we create shareholder value in the long term.

So moving on to return on capital, which is a really important KPI for us internally. So L&T is a fairly capital-intensive business. In 2024, we employed around EUR 320 million. But just as we have presented stable profit development, we can also report stable returns on capital, ranging between 12% to 14%. Our return on equity on a pro forma basis at the end of September, amount an aspect that has not been touched so far in this CMD is our joint venture, [indiscernible], which is 55% owned by us. And if we look at financial year 2024, our share of [indiscernible] net profit was EUR 3.6 million, which in relation to the book value of our investment was around 20% return.

So the book value of [indiscernible] shares is around [Technical Difficulty] We believe we have a strong balance sheet that gives us strategic flexibility going forward. After completing the refinancing in June '25, we have no immediate refinancing needs. So our financial debt consists of 2 elements. Our outstanding notes of EUR 75 million which is due in 2028 and then our bank loan of EUR 50 million, which is due in 2030, assuming the utilization of 2-year extension option. Overall, through our stable and resilient track record in financials, we believe we have strong debt capacity to execute on our growth strategy.

And also, we believe we are eligible for financing in the eyes of the debt investors. So this all means that we can -- in addition to this EUR 40 million free cash flow, we can also put our balance sheet in use when driving our growth initiatives -- to conclude this section, I would like to repeat our midterm strategic goals. So as already has been discussed our target to grow is our target is to grow more than 6% on an annual basis in the midterm, which we think is 3 to 5 years. And in combination with the growth target, we would -- we are set to reach EBITDA margin of 11%. We want to keep our balance sheet healthy, and we -- our leverage ratio is -- we want that to maintain between 1.5 and 2.5.

And before moving to the Q&A session, I would like to point out our dividend policy, which is to distribute more than -- or at least 50% of our net income as dividends. Thank you.

Thank you, Joni. And as in the previous session, Lilia has the online questions, but let's start the questions you may have here locally.

Nikko Ruokangas from SEB again. I have a couple of questions, and I'll go one by one. And starting with the acquisitions, I already -- almost asked about earlier. So could discuss a bit. Do you see that it is easier for you to make acquisitions or focus on acquisitions as pure circular?

I hope so. At least, we have a much clear focus now, and we have a process how we screen potential acquisition targets. We have internally a team that is actively working on that. So the sort of the focus will help us to screen more targets. And now that we can allocate all of our also resources from a balance sheet perspective to these acquisitions, I believe we will be able to accelerate our growth through M&A as well.

But obviously, like always the case with M&A, you need a seller and you need a buyer and you need price for that to happen. So -- no guarantees, but at least now it feels good. So we have screened a lot of companies already this fall, and we have a sort of healthy funnel of potential targets.

Okay. Sounds good. Then the other source of growth or where do you see market share gains of upselling and cross-selling. How much have those actions contributed to our sales or sales growth in the past couple of years. And now as you are kind of including those as one of your growth pillars. So are you expecting the pace of cross-selling and upselling to remain the same as earlier? Or are you expecting acceleration in those actions?

I'm expecting acceleration, but Antti can answer this. He has to deliver...

Yes. Maybe related to response earlier the question a little bit the same topic that as I said, we have offering those different segments. We have a segment sales where we concentrate on these segments and especially subsegments. What we have also proved lately that we work closely with our Swedish operation as well. So we have certain common customers in Finland and Sweden. We have been able to bring actually services from Finland, like the blast cleaning services, where we help the boilers to recover faster than ever, how to say it. So that's what we are doing.

But again, there is an opportunity there -- what is also element of the cross-selling that 1 we have now the 1 sales approach towards the different segments and subsegments, we are able to better transform our, of course, own knowledge, but also develop the activities towards the customer demand. So like this blast cleaning. Another example, I would take, for example, water treatment. So we have more demanding requirements in Sweden today, for example, how you need to clean the water and we have experience there in a mobile treatment. We have brought that competence to Finland. So we are able to provide that service in Finland today. So how to say we support each other.

Okay. And then last one for me related to costs. Joni already touched this a bit, but what is the costs you expect to see from operating as independent company compared to time of -- before this demerger project. And thus, your profitability target and kind of this demerger mean that we should see at least lower or even lower profitability next year and then kind of accelerating after that.

Well, obviously, running to independent listed companies is more expensive than running one. So there will be certain demerger dis-synergies. However, also, we can see that now that we have 2 separate businesses, we can tailor our administration to serve both in a sort of so to speak, fit-for-purpose way. So we are quite confident we can mitigate the demergers dis-synergies through efficiency measures going forward. So I would not expect the cost base to increase as a result.

All right. Thank you. That's all from me.

Maybe with addition to what Joni said. So there is going to be a transition period around right 6 months, maximum where we will see clearly additional cost when we -- before we have sort of fully independent sort of systems, especially in the area of finance where we're going to have some of these transitional services. They are not huge. But there will be some costs in the first months of '26.

[indiscernible] from OP again. You have quite ambitious growth targets. So I would like to ask, what do you see as kind of the main risks of not reaching that target? And secondly, is there any headroom for disappointments? And I mean do you kind of need to tick all the boxes to reach the 6% growth?

Let's say, the biggest risk, at least from my perspective is the macro economic environment. So if the market in Finland and in Sweden remains as tough as it has been last year and this year, it will be challenging. No question about that. So we are assuming that the market will normalize, and there will be at least sort of 1% to 2% GDP growth in the market. And we do expect the construction sector to sort of get back alive because right now, especially in sort of the housing area, nothing is happening.

So on the other hand, infrastructure market is very hot, and we can see that in our remediation business, but that is not enough to offset the huge drop in the construction. So there is a certain assumption of sort of more normal GDP growth behind this 6% growth target.

Antti [indiscernible] from Danske. You showed the 3 business units or segments and the growth in 2022 to 2024, could you a little bit discuss about the profitability in those 3 segments. I'm not asking for a number, but just get an idea if there's a big differences.

Well, I would just as you can probably imagine, we do not disclose the exact profitability figures, but the differences between the service lines are not too big. So the basically, the financial profiles of all of these 3 segments are more or less the same. And we have internal exactly the same targets internally for all of these service lines.

All right. That's clear. Then second one on capital allocation. Could you give us kind of an idea how you think about M&A growth investments and dividends. What's the kind of rough split in your minds for the coming 3 years or whatever?

Yes. Well, if I start with dividends, so the target is to pay at least 50% of the net profit. And if the sort of past performance is sort of indication of future, then obviously, that would mean around EUR 20 million or a little less would go to dividends. So that leaves million for growth investments, either organic or inorganic. And both of them are very interesting. We have interesting projects around the sort of further integration in the value chain. But also we have a healthy funnel of potential acquisition targets. So both of them are going to require funds for us to be able to execute them. I don't know, Antti, if you want to add.

Well, I think you more or less said and then especially when we look at the -- of course, the organic projects, that's how they will improve our capacity and also our capability. We both look at with inorganic cases as well. And for example, the case example related to Sweden. So West Test was how to say that expansion in Sweden, but it also brought us competent certain treatment areas. -- which we are now scaling in Finland. And other way around, we are scaling from Finland, boiler and knowledge and know-how, what we are doing. So that's maybe the angle what we analyzed as well.

But obviously, these kind of new technologies like chemical recycling of plastics is you can't do that with single millions, but it requires more like tens of millions if and when we decide to go that route. So there may be years when we invest much more than sort of the free cash flow. But on average, we -- that is kind of the split we are thinking.

You discussed already 2 years ago in the CMD a lot about kind of looking into the new fractions and increasing the waste-to-value business. And nothing concrete really happened since. Has that been a disappointment to you? Is this lower approaches progress than you have expected? And what are the main hurdles you have face that you kind of had led to maybe discontinue some of the streams you have had.

Well, maybe we have not discontinued the streams, but certainly, the sort of maturity of the technology was and is not where we would like it to be. So the industrial scale solutions just don't exist at the moment. So and we are not a sort of a technology start-up. So we will not take something to try if it works. We want to see that it works, and then we can buy the technology and use it. But we are not a start-up. I don't know, Antti, what's your thinking.

Well, likewise, and then maybe add on there that once we also look at the technologies, we look at the source as well to ensure that you have a the material because this is recycling is kind of small-scale process industry. So that's to understand the same way. And it's important that you do the pilots and look at it together with the customers as well. Maybe 1 thing to do, if we look at 2 years past and like Eero said it earlier today, that actually in the remediation business, which is also kind of recycling element because we are resizing the soils and and we have created the biodiversity service around that one.

So there we have been actually growing. So segments actually, where we have had these economic challenges in Finland and Sweden. we have found out also segments where there's a growth and then we have invested and we have also succeeded on those sectors.

Online questions. There are a couple. Are you happy with the NPS of 46? Is that a problem concerning growth? And how is it going to be improved?

Maybe Antti, you can answer that.

Yes. Well, First of all, excellent question. And our ultimate goal is, of course, that would be 100%, of course. We have a variance there. So we have customers who are extreme satisfied on our service. And we have areas that we have some room to improve. But average, of course, close to 50%. It's on a good level, but we are not satisfied. We try to improve it. And especially, of course, we address areas where you see some levels which are below the average. So we will approach those personally and manage those and of course, where we have a higher than average. So our aim is to keep it. Our long-term target is actually around 60% what we are looking at in the next year. So we are not there yet.

And what is your competitive advantage in the Swedish market? How is the competitive landscape?

Well, Actually, we have a couple of advantages. So first of all, the areas where we operate, we are strong, and we are able to serve the customers on those geographical areas. Then we have a strong understanding of the heavy industry and process industry in Sweden today. So we are able to serve the customers, and we know their environment. And then we are able to support from Finland with our method and product development, our operation there. Another way around, they are able to support us, like I mentioned, the mobile water, where the Swedish market is further than Finland.

So actually, those 3 elements what we are having. So geographical method and of course, the customer knowledge as well. So 3 areas where we are, where it's good to build also the future because the 1 aim why we went to the process cleaning, and then we have brought some new services there that we are close to the customer. So it enables us in the future when we are looking at the market development and our presence there that we are already close to customers.

And I have to say that [indiscernible], who is heading our Swedish operations, he really knows the business. I mean he was -- this fall, he was few nights. He was doing high-pressure cleaning himself. So he's an expert. So he really knows what it means to do it well and what the needs are there. So customer intimacy at the highest level, I would say.

One more. How does inflation affect the growth figures?

Well, that's a good question. I think the future projections are around 2% inflation, also in line with the European Union or the Central Bank's target. So obviously, that will -- if it turns out to be 2%, that will, of course, drive our sales growth at the same pace. Do you have something to add?

No more from online.

Okay. More questions here? If not, then we want to thank you for listening in, and thank you for very good questions. And also thank for Antti and Joni. So with this, we'll now go for lunch break. Thank you very much. Thank you. Bye-bye.

Thank you. Bye.

Good morning, and welcome to Lassila & Tikanoja Q3 2025 Interim Report Webcast. I have here today with me our CFO, Joni Sorsanen, and he will go deeper into the financials, but I will first go through how did we performed in our businesses.

First, a few highlights for first 9 months of 2025. Overall, profitability in Facility Services improved significantly. And I'd say the big news for this Q3 report is that Sweden returned to black figures in Q3. In Circular Economy businesses, we had a solid performance despite the quite challenging market environment. And in Q3, our net sales overall grew by 3.8%.

And speaking of net sales, when we look at by the segment in Circular Economy business, we also saw a 5% growth over comparison period. And year-to-date, we are still slightly behind but catching up now towards the end of the year. In Facility Services Finland, still slightly below last year's net sales, but the decrease was less in Q3 than what it has been for the first half of 2025. In Sweden, solid growth. Net sales growth continued even though it was aided by a stronger Swedish krona, still there is a very healthy underlying growth in our Swedish Facility Services business.

Adjusted operating profit on par compared to the previous year in Q3. And first 9 months, we are exactly EUR 5 million ahead of last year's levels. In Circular Economy business, we were a little over EUR 1 million behind. And in Facility Services Finland, at the same level as previous year. But as I said, in Facility Services Sweden, we saw EUR 100,000 positive adjusted operating profit in Q3. Overall, I'm quite pleased with the performance of all of our businesses in Q3.

If we look at our performance through kind of Circular Economy business and Facility Services business lens, we can see that very stable and solid performance continued in Circular Economy business. And adjusted EBITDA was at the same level as it was a year before, and this is year-to-date figures now, EUR 86 million and adjusted EBIT was slightly below EUR 41 million, but still on a very good level.

We tied up a little more net working capital in our Circular Economy business this year than we did last year, and Joni will go into the reasons later in the presentation. In Facility Services businesses, the profitability overall has improved. Adjusted EBITDA percent is now almost 6% and adjusted EBIT percent 2.7%. And obviously, this is due to the good improvement in Sweden, but the solid performance in Finland as well.

Then let's go a little deeper into the Circular Economy business. Relative profitability remained stable, and this is due to the successful efficiency improvement measures that we have continued overall in the group, but especially in the Circular Economy businesses. Very solid quarter again in process cleaning business. Staffing was successful and demand for our services was on a very good level.

In hazardous waste business, we saw a very steady demand for our services and profitability remained on a very good level. In environmental construction, there is a lot of demand. Overall, there is a good demand for infrastructure projects, and we have a special niche where we work and our order book is full. So we are working with maximum capacity now in environmental construction business, which is obviously a very positive sign.

In waste management, net sales and profitability are a little bit under pressure. And there are sort of overall macroeconomic reasons for this because as we all know, construction has still not recovered. And right now, it looks like it won't recover this year, maybe towards summer '26, we will see an improvement in construction sector. But also an interesting piece of information is I saw recently some statistics that in retail in general, even though the euros are stable, the volumes under these euros are pretty much at the same level as they were 7 years ago, 2018. So overall activity in Finnish society is on very low level. And this is reflected especially in the waste management part of our business.

Also, a more positive thing is that, that we have completed our rollout of our ERP system. This project has been ongoing for 6 to 7 years. So it's been a very big undertaking. And I'm pleased to say that the last rollout wave went very well. And overall, the project has been very successful, and we will be seeing the benefits of this state-of-the-art cloud-based system in the coming quarters and years, once we have sort of fine-tuned the operations to get everything out of this new system. But our people have done really good work in this very comprehensive project.

In Facility Services Finland, the good performance continued and adjusted operating profit percent was 6.5%, which is overall on really good level. So the efficiency measures that we have done for a few years now are now finally visible in our numbers as well. And obviously, now the next thing is then to focus more on growth once we have the operations in order.

And operations are in order, not only in terms of profitability, but also the quality overall has improved quite a bit in our operations and also KPIs like work safety and personal satisfaction, eNPS have improved and that sort of is a sort of positive spiral that hopefully will yield even better results in coming years.

In Sweden, we are behind Finland, but we are doing similar efficiency measures as we have been successfully done in Finland. And now we can see that they are working. There's still a lot of work ahead of us because 1 quarter doesn't make it where it should be, but it is a very positive sign that we have and are able to report a positive adjusted operating profit for Q3. Also, adjusted EBITDA for the first 9 months of 2025 is positive in Sweden, another good indication that the turnaround is happening. But as I said, a lot of systematic work needs to be done for the rest of this year, but also next year to get the profitability in Sweden also to the same levels as the Finnish profitabilities, but I have full confidence on our management and team that we will see that improvement in the coming quarters.

I already referred to these efficiency measures, and they are and have been across the board and when we compare '24 to '23, we can see that there was about EUR 5 million improvement. Now in '25, so far in the first 9 months, we have been able to improve by EUR 2 million, but this is affected by this rollout of our ERP system. And we have estimated that the negative impact for this rollout is about EUR 800,000. So kind of on a comparable basis, we have improved about EUR 1 million per quarter still in '25, our efficiency.

From sustainability front, a lot of positive development here, but maybe one highlight is that our Scope 1 and 2 carbon footprint has decreased by 19%, and this is not by accident, but it is because of the systematic persistent work that we have done for several years now. And we are gradually replacing our old fleet with a new fleet that is much more environmentally friendly. And also, we consistently use more and more biodiesel or HVO diesel, and this obviously has an impact to our own carbon footprint.

In this spring, we, for the last time, measured our NPS and it was on record high level, 41. We obviously will have results of the fall period then once we release our full year results of 2025. Then a few words about the demerger. Everything is progressing according to the plan. It's been a lot of work, but I'm happy to say that things are very much on track. And as a result of this demerger, we would have 2nd of January 2026 Lassila & Tikanoja or new Lassila & Tikanoja and Luotea listed in the Helsinki Stock Exchange. Obviously, this still requires the approval of extraordinary shareholders' meeting, and that is planned to take place on 4th of December.

Before that, we will release the listing prospectus on November 20, so about 3 weeks from now. And then right after that, we will host a Capital Markets Day where we will open more the sort of business logic and also the future plans for both Lassila & Tikanoja, new Lassila & Tikanoja and Luotea. And obviously, you are very welcome to participate that event either live or through the webcast that we will have from that event.

Good. But now I'm handing over to Joni, and he will dive deeper into the financials.

Thank you, Eero, and good morning, everyone. As usual, I will start this section by highlighting some of the key events during the review period. And first of all, we can see a strong earnings per share growth in January, September. So in the review period, earnings per share was EUR 0.63 compared to EUR 0.51 in the comparison period, and this means EPS growth of 23%. Also at the reporting date, so the last day of September, we can see a solid financial position and a decreasing interest-bearing liabilities year-on-year.

And as part of the partial demerger preparations, we initiated in the beginning of August, a written procedure for our outstanding bond, and we can report that the process was successful, which means that this bond will be exclusively transferred to new L&T, which will become the new issuer of the notes in the event of partial demerger.

As Eero already mentioned, our net working capital development was not as strong as in the comparison period. So at the end of the reporting period, net working capital minus EUR 15 million compared to minus EUR 30 million, which means that working capital has been tied up by EUR 14 million, and this solely comes from the circular economy business, where we have 3 specific reasons for the development.

And in the order of significance, the first one is project-driven business mix in environmental construction. So in terms of net working capital, it is more favorable to the company to receive material in the treatment centers compared to project business. And as Eero mentioned, we have had strong demand for environmental construction businesses, and this is partially now impacting our net working capital development.

Secondly, we saw an active Q3 in process cleaning business. And this year, the invoicing of annual maintenance breaks took place at the end of the quarter, which means that much of this revenue generated in Q3 was tied up in receivables at the time of reporting. Obviously, we expect this to be released then towards the end of the year.

And finally, as Eero also noted, we have had a successful ICT or ERP renewal. However, we still need to do fine-tuning and performance enhancements to reap all the efficiency benefits we have targeted ourselves, and this has also impacted our invoicing. And that's why we have had some invoicing delays, which we also expect to sort out in the coming months.

In the Facility Services businesses, the net working capital development has been fairly stable year-on-year. And also looking at the graphs, we can see that seasonally, Q3 or end of Q3 is the worst quarter end during the financial year, which means that we also expect to see the similar type of net working capital release towards the end of the financial year.

Capital expenditure was below previous year, so EUR 26 million in the first 9 months compared to EUR 30 million, which is a decrease of approximately 12% year-on-year. Here, you can see that the acquisition of Stena Recycling's pallet business was completed during Q2, and this amounted to approximately EUR 8 million. If we look at the organic capital expenditure, we can see a decrease of approximately EUR 10 million. However, this is basically attributable to ICT-related investments. So CapEx in machinery and equipment has been almost in line with previous year.

Then as a final comment, if you look at in P&L depreciation and amortization, we can see an increase of EUR 1 million, which is almost totally attributable to new ERP amortization that was commenced in the second quarter of this year.

Then looking at cash flow, we have here illustrated the rolling 12-month cash flow. Obviously, the net working capital development is negatively impacting the operating cash flow development. However, improvement in cash flow from investments results in almost stable free cash flow development in the first 9 months. And One comparison point when analyzing this operating cash flow is to compare it to EBITDA development, and we can see that the cash conversion rate has been 72% in the last 12 months. And normally, L&T has posted cash conversion rates between 80% and 90%, and this highlights the timing issues in net working capital in the review period.

As I already said, financial position at the end of the quarter remains strong. Gearing almost 79% compared to EUR 0.77 -- sorry, 77% in the comparison period and also stable development in equity ratio in the Q3. Liquid funds amounted to EUR 36 million at the end of Q3 and all the committed credit facilities were unused at the end of the period.

Then if we look at the maturity structure of our interest-bearing debt, we can see that at the end of the September, we had EUR 10 million of commercial papers. These no longer exist in the balance sheet. These were repaid in the beginning of October. So at the moment, we have outstanding notes, which are due in 2028. And then we have a bank loan of EUR 55 million, which is set to mature in '28, but with assuming 2-year extension option utilized to the full, the due date is in summer 2030. So no major refinancing that taking place in the coming years.

And then if we already look at the coming partial demerger, these interest-bearing liabilities will be split between the 2 companies as follows. So the bank loan of EUR 55 million will be divided so that EUR 5 million of the loan will be carried by Luotea and EUR 50 million will be carried by new L&T. And as I already mentioned, we successfully solicitated consents from bondholders in August, which means that new L&T will become the new issuer of the bond and the bond will be, therefore, exclusively transferred to new L&T in the demerger. And here, I would like to again thank our bondholders for unwavering support in the process in August, supporting our demerger proposal.

Then moving on to return on capital. And if you look at the reported return on capital figures, we can see that at the end of September on a rolling 12-month basis, 4.4%, burdened by one-off items, especially booked at the end of '24. On an adjusted basis, 11.4% return on capital compared to 11.1% at the end of financial year '24. In circular economy, return on capital improved to 13.5%. And in Facility Services Finland, we continue to report strong -- very strong return on capital, almost 75% compared to 34% in the comparison period.

However, return on capital was negatively impacted by our joint venture, Laania and the share of profit from joint venture in January-September was EUR 1 million compared to EUR 2.3 million in the comparison period. And the reason for the decline in profits is for the most part, due to weakened demand for energy wood as a result of the exceptionally warm spring.

Then finally, and as already mentioned, strong EPS growth in the first 9 months, so EUR 0.63 compared to EUR 0.51. And then looking at free cash flow per share, almost at the level of previous year, EUR 0.30 compared to EUR 0.32, negatively impacted by tied up capital, but on the other hand, positively impacted by strengthening operating profitability.

Then as you most likely have noticed, we specified our outlook 2 weeks ago, so on October 15. And now we estimate that net sales in this financial year will be at the same level as in previous year, while adjusted operating profit is estimated to be in the range of EUR 44 million to EUR 48 million.

And this concludes the financial section. And we are ready for your questions, and I will ask Eero to join me for the Q&A session.

The next question comes from Nikko Ruokangas from SEB.

This is Nikko Ruokangas from SEB. I have a couple of questions, and I'll go one by one. I'm starting with Facility Services feed where you showed flat numbers and clear improvement. And then you also mentioned that there is still work to be done. But was there something extraordinary? Or did the Q3 development reflect your current phase in the turnaround?

There wasn't anything extraordinary in Q3. So it sort of reflects normally seasonally good quarter Q3, but also the improved profitability.

Okay. That's good to hear. Great. Then Facility Services moving to Finland. You mentioned that you have now fixed the profitability there and the next phase is growth. So what are the key tools to generate growth while maintaining still the high profitability?

We will go deeper into this in the Capital Markets Day, but maybe with a few words. We have worked a lot on development of our sort of spearhead services, one of which is our Smartti energy efficiency system, and that is sort of provided or that has provided very good results for our customers in terms of sort of their energy savings. Then we have data-driven cleaning. And then we have sustainability consulting or advisory services. But also one factor is that, as I mentioned already during the presentation, the overall quality of our services has improved. And hopefully, once the sort of economic situation gets better or improves, we will see a higher demand for additional services in facility services. But this sort of spearhead services is a very important factor in getting the growth and new customers but also keeping the existing customers.

Okay. I understand. Then on the guidance, which you narrowed a couple of weeks back. So now looking at the Q3 year-to-date numbers. So you are EUR 5 million ahead of last year in adjusted EBIT, as you mentioned, but the guidance now indicates flat or declining adjusted EBIT in Q4. So can you a bit kind of open that process for the updated guidance and how it reflects the year-to-date numbers?

Yes. There are a couple of factors that affect our outlook for, in a way, Q4 because, obviously, we have now published first 3 quarters of the year. And first thing is the fact that I mentioned when I spoke about the circular economy business, still the demand for our services is at a low level. And there are market-driven things that are behind this low demand, construction, retail, restaurants, hotels, overall activity in Finnish economy is on very low level, and that sort of impacts the demand for waste management services.

Then second thing is the timing of these planned maintenance breaks. Now we have seen most of the maintenance breaks in Q2 and Q3, and that will have an impact to the demand of process cleaning services. And then a third thing is also something I already went through in this presentation, and that is the ERP rollout. We still need to have some extra staff to sort of get through the impact of this rollout and get sort of our invoicing and all of the tickets handled and sort of at normal level, and that will burden a little bit the Q4 performance in circular economy.

In Facility Services, obviously, the comparison period was already pretty good in last year. So we don't think we can see a huge improvement compared to our '24 numbers in Facility Services Finland, obviously, in Sweden, we expect improvement.

All right. I understand. So that you despite kind of guiding flat EBIT at best. So you have not kind of seen underlying weakening there, but this is just explained by those factors.

Yes.

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

Okay. There were no more questions. So...

I think there is...

There is. Okay, sorry. Good.

Online questions. Rauli Juva from Inderes. You have earlier indicated that the waste law changes will have a negative impact for your circular economy business in 2026. Can you specify does that impact hit from the beginning of '26? Or what is the specific timing by quarter?

Yes, it is a relevant question, and I understand the reason for asking that question, but we will not give outlook for 2026 at this stage, but we will return back to that once we release our numbers for full year 2025.

Yes. Another question from Rauli Juva in Inderes. Your guidance indicates Q4 adjusted EBIT to be flat or down. Given the turnaround in Sweden, what would drive the group EBIT down in Q4?

I think I answered to that question, which is also a very relevant question when I answered Nikko's question a few minutes ago. So I have nothing to add to what I just said.

Okay. There is Sergi Suades from Aguja Capital. Regarding the circular economy business, could electronics and battery waste management be a growth opportunity for L&T? Are there other areas where you see growth potential?

Good question. Thank you. We have investigated the sort of recycling of batteries, and it requires quite a bit of scale and pretty big investments. And Finnish market is a pretty limited market in general. And at this point, we don't think recycling of batteries is something we would invest into in the near future. However, we have a number of growth areas that we are planning to invest in. And for the sake of time, I will not go deeper into these right now, but I welcome you to participate our Capital Markets Day on 26th of November, where we will go deeper in our sort of growth plans overall.

And again, Sergi Suades from Aguja Capital. How do you see the competitive landscape in the circular economy business? How difficult is it currently to get permits in Finland for new incineration plants or recycling facilities?

Yes. Good question. The competition is tough, but I think every company is saying the same thing. So overall, I'm sort of confident that we are -- we have strengths, and we will be able to handle the competition. When it comes to the incinerators, there is currently quite significant overcapacity of incineration in Finland and most of the incinerators in Finland are owned by municipal district heating companies. And there are estimates that the overcapacity is in the range of 30% to 40% in the coming years. And this is due to the fact that there has been too many incinerators that have been built too late, too big. And when the recycling gets further and once we get the materials cleaner from our customers, there is less and less demand for incineration. So I would be very surprised if there was new incinerators built in Finland ever, I would say, in the future.

When it comes to the permits of other sort of handling centers, it depends very much on what kind of material you're planning to handle. When it comes to the hazardous waste, the permits are very hard to come by, and it requires sort of proven track record of ability or capabilities of handling such materials. When it comes to sort of small capacity sort of regional areas, then it's easier to get the permits from the municipalities. But in scale of like our operations, we have a sufficient number of treatment centers and facilities for all kinds of materials, and we are in good shape. And from that perspective, I think we have a competitive advantage.

No more questions online.

Thank you. Very good questions. And as I said, we welcome you all to participate the Capital Markets Day and wish you a very nice continuation of the day and the week. Thank you. Bye-bye.

Thank you. Bye.