Metso Outotec Stock

Hi, everyone. It's Juha from Metso's Investor Relations, and I want to welcome you all to this conference call where we discuss our third quarter '26 results, which were published a few hours ago. Results will be presented by President and CEO, Sami Takaluoma; and CFO, Pasi Kyckling and after the presentation, we'll have Q&A.

We have scheduled 60 minutes for this call. And as a final reminder, we will be making some forward-looking statements, and that's why we have the disclaimer in our presentation deck. With these remarks, I'll be handing over to Sami, please go ahead.

Thank you, Juha, and good afternoon to everybody online. Very happy to present our key figures from the third quarter. A very strong position in the market and the activity from the customers resulted our orders received to go above EUR 1.6 billion, growth in 24% in the constant currencies. Sales was developing according to the plan and EUR 1.4 billion close and the growth of 1% in the constant currencies. And then the drop-through to margins, EUR 230 million in the period, resulting 16.8% margin.

Operating cash flow was EUR 136 million. And in the rolling 12 months, we are now in the EUR 786 million. Cash conversion was 85% for the 12-month period. So this strong order growth and solid profitability was, as mentioned, 24% in the constant currencies. Book-to-bill relation was 1.18 in the period compared to 0.95 a year ago. Minerals equipment orders were strong, 79% growth. And we continue to deliver strong orders in the aftermarket. Now the 11% growth for this quarter.

Backlog has increased 20% and is currently now EUR 3.9 billion. This reports very nicely the future sales and margin generation. Sales, as mentioned, 3% up aftermarket sales, 10% growth in the sales. And now in this period, it represented 57% of the group sales number. Adjusted EBITDA grew by 4% to EUR 230 million, and the margin was 16.8%, notch up from the year before numbers. In the period, we did a good amount of activity for the future success as well.

Regarding the service capacity, we made a decision for the new service center in mining region, Belo Horizonte in Brazil. Buildup is next year and then starting from the beginning of' 28 to serve the customers.

Regarding the technology and developing our offering, a few very important product launches. The Sampo cell flotation, course particle flotation, it's groundbreaking innovation and continue to develop our mobile equipment fleet in the aggregate side with the 2 new products, LT400RS and LT200HPX, which has been taken very positively in the marketplace.

Three AI-enabled mining digital solutions to improve the production performance and safety at the customer sites were launched during the period and then the low emission DRI smelting technology, which is our flagship. You can say, first commercial-scale order was received now in the third quarter.

Regarding the M&A, so acquisition side, we closed an acquisition for the hose and progressive cavity pumps that was closing the technological gap in our pump offering. And then after the period, but announced now recently was the bronze alloy component manufacturer, Italbronze and that's, again, a very strategic acquisition in terms of securing a very important component for our crushing technology, both in aggregate and in minerals markets.

Regarding the outlook, we expect the market activity in both minerals and aggregates to remain at the current level for the next 6-month period. And I hand now to Pasi to go through our financials.

Thank you, Sami, and good day, everyone, also from my side. Let me start with orders and sales bridges. Our orders increased by EUR 350 million or 28% year-on-year, resulting to EUR 1.64 billion. The largest contribution came from Minerals Equipment, adding EUR 258 million. Minerals aftermarket contributed other EUR 44 million, while aggregate also provided a positive contribution from equipment. Currencies had a positive impact of EUR 42 million. Overall, aftermarket orders increased by 9%.

And then looking at sales, our group sales increased by EUR 45 million to EUR 1.37 billion. Largest positive contribution came from Minerals aftermarket, while Minerals equipment sales were below the comparison period. Sequentially, however, Minerals Equipment increased sales by EUR 57 million or 17%. In that comparison, the comparison point is second quarter this year. So we are also seeing a good progress in mineral equipment deliveries and revenue.

Aftermarket sales overall increased by 10%. Overall, third quarter revenue was spot on with our plans and expectations when we entered the quarter in early July this year. I'll come back to the timing of equipment deliveries when we look at Minerals segment more in detail. Let's then turn to our profitability.

Adjusted EBITDA increased by EUR 8 million to EUR 230 million, and the margin improved slightly to 16.8%. Higher volumes contributed positively with EUR 15 million year-on-year. Gross margin, EUR 15 million negative impact, while SG&A had EUR 5 million negative impact. Both gross margin and SG&A were affected by the adjustment items and excluding the adjustments, these developed year-on-year in a more stable way. Earnings per share from continuing operations were EUR 0.15. Overall, profitability remains solid at group level and in both of our reporting segments.

Let's then look at cash flow. Cash flow from operations was EUR 136 million in this quarter. The main year-on-year difference was working capital, which had a negative impact of EUR 140 million. The negative impact in working capital reflects higher customer activity and then the growing order backlog that we have. On a rolling 12-month basis, operating cash flow was EUR 786 million and the cash conversion, 85%. So while working capital increased as the business is growing, cash generation remains healthy over the longer term. Sequentially, capital is split between inventory and payables.

Then if we move on and look at our balance sheet. Overall, the balance sheet remains strong. Our net debt at the end of the period was EUR 1.175 billion and net debt to EBITDA was 1.3x, comfortably below our 1.5x target. At the end of the quarter, we had EUR 445 million of cash and then significant undrawn committed credit facilities. Average interest rate for the period was 3.6%. The balance sheet continues to give us good capacity to execute our strategy and to invest in profitable growth, including both organic and inorganic investments.

Let's then look at our segments, and I'll start from aggregates. Orders increased by 4% to EUR 292 million. That represents 2% organic growth in constant currencies. Orders increased both in North America and Europe, with a stronger growth in Europe coming from the Nordic countries. Orders in rest of the world declined somewhat.

Sales increased by 5% to EUR 324 million. Very importantly, profitability continued to improve and our adjusted EBITDA increased to EUR 53 million. And the margin improved 80 basis points to 16.4%. This was supported by higher sales, combined with solid operational execution. This was another quarter of steady progress in aggregates with order growth both in Europe and North America and further profitability improvement.

Then let's look at minerals. Customer activity overall remained healthy across both equipment and aftermarket. Orders increased by 34% to EUR 1.323 billion or 31% organic growth in constant currencies. Equipment orders increased by 79%. The quarter also included a EUR 90 million copper-related order, but importantly, the growth was very broad-based across our product offering with the strongest growth in grinding and crushing and then the order growth was also broad-based when it comes to geographical point of view.

Small and medium-sized orders also remained at a strong level. Aftermarket orders increased by 11%. This overall resulted to book to bill in Minerals to EUR 1.26 billion. And the order backlog increased by 21% or approximately EUR 580 million to EUR 3.37 billion. This backlog gives us a solid starting point for the coming quarters.

Then looking at the sales. Mineral sales increased by 3% to EUR 1.049 billion and it was stable organically. Aftermarket sales increased 11%, and it represents 64% of our mineral sales in the third quarter. Equipment sales increased by EUR 57 million or 17% [indiscernible] from second quarter this year. So we are seeing good progress in deliveries in sequential comparison.

The year-on-year comparison in minerals equipment is mainly about timing. A year ago, some launch orders progressed faster through customers' investment schedules, while some customer investments are currently progressing more gradually. Further, our order intake second and third quarter last year for equipment was slower. These factors affect the timing of deliveries and the sales recognition now in the third quarter this year.

Looking over a longer period of time, equipment orders have historically translated into sales over several quarters. and around a year can be used as a broad reference point. However, there is no mechanical conversion period as the precise timing of each project depends on progress by customer investments. And just to remind everyone that we apply the project -- 4 projects, we apply the percentage of completion accounting.

With strong equipment order intake and higher backlog, we have a solid foundation for future deliveries and growth. Then looking at our third quarter profitability, the adjusted EBITDA increased to EUR 189 million, and the margin was 18%. The aftermarket share supported profitability. At the same time, aftermarket margins were temporarily affected by a surge in our freight costs following the crisis in the Middle East. We have implemented aftermarket price increases to address this temporary pressure.

Overall, Minerals delivered very strong and broad-based order growth, good sequential progress in equipment deliveries and a significantly higher backlog and solid profitability. With that, I would like to hand over -- hand back to you, Sami, to summarize.

Thank you, Pasi. So summarizing the presentation and our Q3. Customer activity was staying in a very good level, and we were able to convert that into strong orders. Result of that is a growing backlog, and that will support our future sales for the upcoming periods and 2027. Sales was progressing as we expected and solid profitability across both of our segments and we did the investments for our long-term profitable growth to continue this journey. Juha, back to you.

Thank you, gentlemen, for the presentation. And operator, we can now open the lines for questions.

[Operator Instructions]. The next question comes from Chit Sinha from JPMorgan.

A few questions on my side on Minerals, please. First question, just on the order number, I mean, clearly, a very significant increase year-on-year and sequentially stronger on small, medium-sized orders from a very high Q2 level. So how should we think about this kind of base run rate now? And then also maybe if you could touch on the large order pipeline that you're seeing.

Yes. Thank you for that question. The base orders as we talk about now, so they were high on the second quarter order books. And the third quarter was like continuing that one. And for us, that means that we, of course, know the activity level from the customer side to fill in our pipeline and the conversion was very successful in the Q3.

Activity is not showing anything drastic changes as we have also guided in our guidance that the market activities to be remaining. Obviously, it's always on the customer side to make the final decision. So we expect that we will see the base orders to continue to be on a good -- even maybe on a strong level going forward.

The second part of your question was about the larger orders. As we explained today in the third quarter numbers, we do have one of these larger ones, EUR 90 million copper order and the timing of the larger ones is even more difficult maybe sometimes to predict. But from the pipeline perspective, they are there, and they are moving on the customer side, forward, and that makes us to be quite confident that they start to also come in a certain pace.

Is it going to be 1 per quarter or 2 per quarter? That remains to be seen. But for the next 6-month period and also beyond that one. So there's definitely good pipeline of these orders also to start to materialize and convert to the orders.

And then my next question is just regarding deliveries in Minerals. So as you mentioned, there's a bit of timing impact and maybe a reflection of some of the order development this time last year. But it feels like the backlog since then has been growing pretty nicely. So could you maybe give a bit of color in terms of the step-up we should expect in Q4 deliveries?

Yes, that's a good question. Thank you for that. We obviously don't provide guidance on revenue or orders specifically and not for fourth quarter either, but like we said, we are in extremely good position to continue to deliver growth going forward in terms of revenue and the backlog where we have improvement both in the aftermarket side, but then also, especially in the capital side provides a good starting point for that.

You may remember that third -- sorry, fourth quarter last year, we had a relatively high share of equipment in our mix. Let's see how it plays out this year. But there is order book and backlog both from capital and aftermarket side to deliver a good, solid quarter. I think I'll leave it there.

And if I can ask just a final question on pumps and your strategy there. I mean you made an acquisition in the space this quarter. And at the Capital Markets Day, you said that you wanted to get to the #1, #2 position in the vertical. So how many more acquisitions could we expect in this vertical? And would these need to be larger in scale?

Yes, we have a very solid strategy for our pumps business and acquisitions do play a role organic growth plays a role equally importantly there as well. Acquisitions are something that we work on. We have now been able to close on, and it was not the only one that we were working. I would maybe not say that they are super transformative, the ones that we are working, but very important, of course, from our strategy point of view that we are currently going through with the potential target.

So very difficult to guide again anything of the timing and so on. But we have very, very active work ongoing also in this front. And it's not only pumps but pumps, of course, we have highlighted one area that we want to we want to be having inorganic investments done partly to close these technological caps and then grow the business as well.

The next question comes from Christian Hinderaker from Goldman Sachs.

I wanted to start on crushing and grinding demand strength. We've seen 2 strong quarters of that now, a number included in your press releases over the third quarter. I guess trying to understand what proportion of the orders in the last 6 months have included products from other phases of the flow sheet, which don't seem to get mentioned, cyclone screens pumps.

And then just mechanically, when we think about these concentrator expansion customers, how does that flow through into Metso? Is that coming in designated blocks for different product packages? Or is it that the other product packages are being awarded to other suppliers at the same time as you're crushing and grinding wins?

Yes. Thanks for that question. What we said was that it was driven by crushing and grinding. It didn't mean that it was only crushing and grinding as you did not expect either. So there was a good broad-based orders received from all technologies inside the flows from that perspective. But the strong one was where these [indiscernible]. Typically, customers do behave a little bit differently, but one type of progressing with the investment is to start according to the flow sheet where the crushing and grinding is the first step. So that is kind of explaining partly of this development as well. So then the next packages are coming then later.

What's driving that, why crushing and grinding, those are typically the long lead items in the flow [indiscernible] the delivery times are longer than and that could be one rationale for customers to start from there.

So I want to touch then on logistics inflation. Maybe you can help us quantify that? How big are the increases in the costs you're getting quoted from your logistics partners. And then when we think about the basis point impact on your actual margins in the bridge for Minerals, can you help quantify that?

Well, first of all, I mean, if we start from the increases we are seeing. There is a couple of different things driving this starting from the Hormuz and Middle East crisis simply fuel prices have increased quite a bit, and that impacts on logistics. And then the second aspect is that because of the crisis, there is overall tightness in the capacity available for certain routes.

And then when there is sort of a favorable supply-demand situation for the logistic providers, they understandably and take advantage of that and hike prices. We have seen in certain routes, very significant, I mean, doubling in some cases, even triple in container prices. And it's very drastic. Then at the same time, at Metso, we are in a lucky position that overall logistic is a minor part of our cost footprint.

So that's good to remember. And then what we have done is that already when the home started, we have we, of course, understood that logistic costs will increase. We have also some other, but limited cost increases elsewhere, and we have proactively implemented price increases. Now the impact we see in this quarter and then maybe not going to margins, but rather from our point of view, we sort of see mid to high single-digit millions of extra cost because of this. Just to give you an idea of what we are talking about. And then, of course, you can translate that to the margin impact.

Very helpful. And maybe if I can just a third one on your point on tightness in shipping. I mean, has this resulted in the revenue disappointment? Or you said it was in line with your expectations, but obviously, we've had 3 quarters now where revenues have been below market, expectations. So trying to understand if that's the wrong calibration of book-to-bill conversion timings or if there's any sort of shipment issues that have happened in the quarter?

Yes. I mean, again, like I said during the presentation already, we delivered from sort of an internal forecasting point of view, third quarter revenues, exactly like we thought when we started the quarter and the logistic tightness, obviously, is not helping, but I think the teams have been very, very successful on sort of getting goods out.

And the tightness is also -- it's not broad base that every route is impacted, but especially India. India has been impacted and from the availability point of view. And that's, of course, an important manufacturing sourcing destination for us. But there is no -- nothing material that would have the impact on our revenue in this quarter. However, prices like we discussed, we see higher prices.

The next question comes from Antti Kansanen from SEB.

It's Antti from SEB. A couple of questions for me, and I'll start with coming back to the Minerals equipment orders on third quarter. I mean, Sami, you talked about that kind of you haven't seen any drastic changes on the market activity, and that is what you have been guiding. So is this kind of a step-up that we have seen on the base order activity in the past few quarters. Is that decision making? Is there something timing-related that has driven that increases? And can you kind of pinpoint the reason why we've seen such a surge on the smaller orders in the last 6 months?

It's part of this positive cycle that has started some time ago in the minerals processing and these base orders are typically the ones that start to come through first in that type of situation. So we started to see the pipeline increasing last year, and now they have started to convert them to the orders. And that's the main driver of the base order increase in the fuel last quarters.

Maybe I can reflect on this as well. I mean what the base orders topically are and they are either customer replacing something to continue to have operations that they can run in a reliable way going forward or then it is opening a bottleneck in their operation. And I think when we look at the commodity price development, et cetera, that's certainly encouraging also customers to move forward. I mean gold prices also copper prices a really healthy level at this stage.

In long term, in corporate supply demand situation looks very positive, like we have discussed many times. But now also in short term, the prices have increased, and that may be one important consideration of customers to move forward and either open bottlenecks or then replace their existing equipment.

And maybe Antti if I continue one more reminder that when we talk about these base orders, so they are not all brownfield either. Maybe you remember, but there was a greenfield copper case in Sweden, for example, the customer placed the orders in the 2 different batches in the beginning of the year. And then later, the second one, so they kind of like go in the category of this base order now in these discussions, but it was actually a pure greenfield copper case.

Okay. Let's put it in this way. Have you been kind of positively surprised on the levels of the past 6 months? I'm just thinking what would need to happen for you guys to guide for improving demand as I mean, you've been quite optimistic on the larger deals and now there's been this kind of a sequential improvement on the base orders as well.

Well, we are guiding how we see the market activity. And if we look now 2 quarters back, including the one that we just reported today, so activity level is good, and we are able to convert a lot of that to the order. So this is also our guidance, how we see the future that our pipeline tells that it will continue to stay in a good level.

Okay. And then I had a question to passing on the cash flow side. And I didn't fully understand the kind of the negative net working capital impact and you were referring to growth in the business. I would kind of assume that when you are growing on such a good clip on the equipment orders and the book-to-bill on the equipment side is high, kind of the advanced payment balance would kind of support your working capital, well then when maybe at some point when the orders start to maybe fade and you deliver more, then that's a negative for working capital. So -- is this -- are you happy with the working capital levels that we've had this year? And how do you kind of recognize that issue that I saw?

Thanks, Antti, that's a good fair question. And if we got into a couple of pieces. First of all, I mean, our approach on capital orders is exactly the same as earlier. So we recognize the order when we have a PO and then when we have an advanced payment. And this is true also in this quarter.

So on those orders, we have received the advanced payments that we have agreed with the customers. Then what I sort of referred on the timing, et cetera, is sort of the rest of the portfolio. So we have gotten orders, both capital and aftermarket in the earlier periods and sort of pushing those through our funnel continues and that requires working capital. And that's then the sort of timing element of it.

And again, part of that revenue was recognized this quarter. And then we have a lot of backlog and then related activities to deliver and recognize the revenue then in the future periods. But there is those 2 elements. And indeed, with strong order intake, especially in the capital side of business, we have gotten a fair amount of advanced payments and that's included in the numbers we have reported.

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

Two questions from my side. First would be on the aftermarket side of Minerals orders. We've not seen levels of somewhere around EUR 710 million to EUR 740 million over the past quarters. Overall, I would just like to hear from you, how do you see this progressing into coming quarters and what is the main driver? Is it rather coming from the [ spares and wears ] part or rather coming from the upgrades and modernizations?

Yes. Minerals aftermarket is developing exactly as we want. And it's driven mainly by the spares and wears. That said, we also knew that there is going to be up and modernizations and that conversion has also happened during this year that the pipeline, which was starting to grow quite high last year, and then it started to convert all sort of the orders.

But we see that the drivers are, of course, customers want to operate trouble-free. So that's driving our activity on the customer side to ensure that the production continues. And preventive maintenance is done on time and the shutdowns are planned properly and all that. So -- we see our large installed base that we have out there is very much in operation, and that gives the good potential also for the upcoming quarters and upcoming years.

Now we have seen just if I think about especially the spares and wears part, I suppose, highly correlated to the utilization rates of your customers. Now we've seen already utilization rates very high in '25. They've been seemingly even higher now in '26. So how much more incremental growth into like '27, '28, can we actually see here from utilization increasing further? Or what would be the drivers of [indiscernible] growth?

Yes. I think the utilization levels, of course, there is a story for each of the mining side, but they are relatively a good level, which is, of course, what our customers want to achieve. But that said, there is a continuous need for the spare part replacements. And of course, the consumables part is very clear that when you utilize with the high rates of your equipment, you need to ensure that you have a consumable parts that are doing their part in the process.

So in that sense, there is a potential. It's not related so much of the utilization rates to increase. It's more about customers caring about the future production as well, which they are now doing. They want to be able to produce '27 as [indiscernible] as possible, and that is one of the main drivers for our business.

And of course, one more area is that the capital equipment delivery start to happen. So the new installed base is also getting online, and that is always then especially from the greenfield part creating new additional installed base, which is the source for the aftermarket.

I would like to add 2 points on this. The first one is on upgrades and modernization. So we continue to see those orders coming in at a good level. It's not main part of the aftermarket, but it's an important part. And the pipeline there is also good going forward. And then when we talk about mining side, specifically, there has been a couple of large mining sites not operating or not operating in an optimal way during the year. And certainly, we have important installed base in some of those, and that provides also opportunities in '26 to '27 type comparison.

Perfect. Understood. And then just my second question would be on revenue recognition or like revenue outlook within the capital part of the Minerals business. Just wondering here. We obviously now have a very strong backlog that would provide for like a couple of years of very strong revenue growth. How do you think about the needed capital basically capital spend to increase your own production facilities? Secondly, would you see a risk that lead times will just be elongating going forward, and we will not be sticking to the traditional 12 months around about?

Yes. That's, of course, something that we started to see the signs of this positive cycle, and we have done those preactions already 2 years ago and continue to do so. Where we are today is quite a good situation. We have higher order intakes and grown backlog. But as we are today, we don't see any big troubles from that perspective, 12 months, is that kind of like it depends so much on the product. So we have lead times from 6 months to 18 months.

And from that perspective, currently, things are looking normal. Of course, if this is accelerated during '27, '28, then even our work that we have done to ensure that we are able to deliver for our customers is going to be tested once again. But for that, we are also then preparing to do some actions. It's not so much of our own investment. As such, it's more like our supply chain organizations to work very perfectly in their own operations.

The next question comes from Nick Housden from RBC Capital Markets.

First one is just a clarification about the logistics inflation and the -- your intention to raise prices to offset that. Will you be able to raise prices quickly enough that it will offset the headwind in Q4? Or do we still expect to see some near-term pressure then?

Thanks, Nick. That's a good question. I mean, we started to work with our pricing right after Hormuz soon 6 months ago. So in that regard, I think the sort of orders received since then will start to gradually convert then where we don't have full visibility, obviously, is that what happens with the freight costs going forward. I mean, currently, it looks that we have reached a certain level, and there is potentially some stability. But again, we read every day new developments in Middle East and oil, around 110, at least over 100. So let's see how it develops. But we feel that if we stay at sort of current cost levels, we are relatively well positioned going forward.

Great. And then my second one is on India. Could you give us an update on how much of your manufacturing these days is actually in India? And what's the impact of the depreciation in the Indian rupee? I mean, if you're international contracts are in dollars and your costs are in rupees. I could imagine that, that would be good fuel margins. But just curious to hear your thoughts on that.

Yes, very good question. Thank you. I mean, India is important for us at least via 3 different lens. The first 1 is what we are discussing here sort of manufacturing hub, both. We have some in-house manufacturing there, but then also third-party suppliers. Then the second lens is simply India being a large market.

And then the third lens is the sort of capability and competence that India can offer to us. And we are obviously tapping on all those 3 areas and developing it. Then India is on top of China, the sort of, let's call it, the best cost country where we have manufacturing. And China is today still more important than India, but India is increasingly important.

Well, we talk about several hundreds of millions of our supply chain on an annual basis out from there. And then on the currency, so indeed, the depreciation of rupee at least in short term seems to be positive, and that then provides even lower cost base for us at this stage.

The next question comes from William Mackie from Kepler Cheuvreux.

Maybe the first question Sami, to the bigger picture on minerals and minerals orders. I mean it's been quite an exceptional step-up in OE orders in Q2 and Q3, while the aftermarket is growing steadily. I mean just to understand how you're looking at this, what do you see that would signal that this is going to be the beginning of a long and sustained cyclical upturn in mining CapEx as opposed to a cluster of project awards that have come through and will pass perhaps in mid-'27 '28?

And I suppose it ties into the earlier questions about your need to raise capacity. So how are you beginning to think about the durability of the cycle? And what sort of signals would you expect from your customers that would you give you confidence in the longevity of what you're looking at?

Yes, excellent question. Thank you for that. This positive cycle started already '25. It was driven quite a lot by gold in the beginning, and then the copper was kind of like still taking some time before it started to be visible in order books. But the pipeline perspective, it's been there.

So my view and our view is that this cycle is started, and it has fundamentals that are quite solid and tangible. Electrification still urbanization is driving that. And then on top of these things has came the data centers as such. So from that perspective, the fundaments have strengthened here month by month and quarter by quarter.

And our view is that we do see quite a good-looking long-lasting positive cycle here. And it's not a burst of certain things from the pipeline to be turned to the orders because the pipeline is also getting new content in every month. So from that perspective, this looks very positive. We have been able to convert a lot of that market potential to our orders. We are planning to continue to do so. And when it comes to the capacity question. So of course, this is something that company like Metso has been thinking already has been done investments. And as I said, we are preparing ourselves for this positive cycle to continue in many different ways.

And maybe building on this last 2 quarters of order intake and growth in backlog. I mean what can you give us in terms of an understanding of whether you're building a more profitable backlog rather than just simply a larger backlog with regard to visibility.

So how do you see aspects such as pricing expected project returns or shifts in the way that you're managing contract risk or payment terms into new orders as they flow into the backlog that would also be suggestive of a very favorable supply-demand balance in the industry?

Yes, excellent point. And we definitely have taken this very much into account in our own processes in our own [indiscernible] and in our own planning. So we are in a good position. We have already a good backlog to be delivered. So we are not kind of like a short of work in different parts of the company. And that's, of course, reflecting also the in our pricing and the discipline that we have in our pricing when it comes to the capital cases as well.

We are very firm believer from the customer feedback as well that we do deliver excellent value for them, not only from the capital, but the combination of our capital and then the superior aftermarket services and products. And this is something that we take into account when we set our own criteria of so-called minimum limits. And we stay very firm for those principles that we have set to ourselves.

Maybe the last question for Pasi relates to cash conversion. I mean, we've touched on the inventory buildup and the Q2 cash development. But when you look at it, I understand you're building a service network and maintaining improved service levels for your customers. But when you look across the various elements of the net working capital, how much should we think is recoverable in Q4 as you go into the year-end? And is there typically a seasonal flowback, which will support your cash for the year-end numbers?

Thanks, Will, for that. And if you start from the sort of seasonal buildup of our cash flow, so simply looking a couple of years back, it seems that the data suggest that second half and especially Q4 have been the strong gas quarters. And that's the way how we are also planning for this year. Then obviously, I mean, cash flow is sort of a result of, in a way, one balance sheet date. So let's see how things turn around.

When you talk about sort of recovery, we rather look at from the [ DIO, DPO, DSO ] lens and what we have said earlier and continue to think is that those KPIs should not deteriorate. There may be, of course, single quarters when they move. But when we look at a bit longer trends, they should be stable and in some of them, we have room for improvement. And then when the business is growing, so it may mean that in absolute terms, we need more working capital.

But those are the metrics we are looking on top of then also the simply working capital over sales, which is also a metric that we use in our quarterly report. But that's a little bit how we are thinking about it.

The next question comes from Panu Laitinmäki from Danske Bank.

I have 2. Firstly, on the aggregates outlook. So is it better than it was at the time of Q2 since you are no longer flagging that European customers would be impacted by the fuel cost and the service growth showed improving trends. So what is the outlook there? And what would you need to see to actually guide for improvement in that market?

Yes. Aggregate market cycles are faster than in the mining and also they are very regional. So very good news was that in Europe level, we started to see activity also outside the Eastern European countries, which were a driver for 1 year, almost [ here ] for the European aggregate business.

That said, it's not yet putting the Europe to the level where it could be or has been in the -- back in the days. And then U.S., which is the largest market at the moment continues to stay in a good level. There is a very good understanding now that quite a good amount of the business drivers for our customers in the U.S. side has been the data center business actually.

And that is something that maybe continues a long time or has something slowdowns and that kind of like gives a little bit of these elements that are unknown. But overall, fundamental is that the markets are solid and they continue to provide good amount of business also going forward.

Okay. Then secondly, I wanted to ask about the Minerals equipment orders. So how is the pricing of new orders developing? And is it possible to quantify are the margins in new orders are higher than they were 1 year or 2 years ago, if you think about kind of comparable equipment for example, crushing and grinding equipment. So basically, are you able to get the margins up in orders because the market is so good?

We do for certain amount. Maybe a reminder that we kind of have organized our capital business since the Metso Outotec company was born 6 years ago, and we kind of continue from that path. And already, that means that before we had quite a clear principles how do we set the pricing. But of course, this type of demand and also our good success in the marketplace, meaning that the customers do trust our technology to be the best, especially combined with the aftermarket is reflected in our pricing principles and in our pricing discipline as we are now.

All right. Since we don't seem to have further questions, it's time to thank you for participation and discussion. These [ reps ] are Third Quarter '26 results conference call. It will be almost 4 months before we are next time discussing our results. So in the meantime, I'm sure we are going to see you -- see many of you on the road and looking forward to that. But this is it for this time and take care. Goodbye. Thank you.

Good afternoon, and good morning, everyone. This is Juha from Metso's Investor Relations, and it's my pleasure to welcome you to this conference call where we review our second quarter '26 results. We'll begin with the presentation given by our CEO, Sami Takaluoma; and CFO, Pasi Kyckling, after which we'll be taking your questions. And as a reminder, the length of this call is 60 minutes, and we will be making some forward-looking statements, and that's why we have the disclaimer in the presentation deck. But with these short remarks, let's kick off, and I'll be handing over to Sami. Please go ahead.

Thank you, Juha. Good afternoon, good morning also from my behalf. The key message today is that the second quarter was a strong quarter for Metso. Orders, sales, profitability all improved year-on-year, and our cash generation also strengthened. The strongest momentum was in Minerals, where customer activity remained healthy across both equipment and aftermarket.

First, I will summarize the Q2 performance and the main business drivers. Then I will touch our strategy execution and market outlook. After that, CFO, Pasi Kyckling, will cover the financials, cash flow, balance sheet and the segments. Finally, we will then move to the Q&A. In this presentation, we will also address several topics that have been active in the sector recently, including the mining demand, aftermarket trends, aggregate development margins, and the cash conversation.

Let's start with the Q2 performance. Overall, the quarter confirmed that the customer activity remains healthy and particularly in the Minerals segment. We saw strong order growth, continued aftermarket momentum, higher sales and improved profitability. Importantly, the order growth in Minerals was broad-based and driven by both equipment and aftermarket, not by one single, large project.

The key figures here summarize the quarter quite well. Orders increased by 18%, corresponding 16% in constant currencies. Sales also increased by 6% and 5% of that organically. Adjusted EBITA, EUR 221 million and the adjusted EBITA margin improved to 16.6%. Operating cash flow was EUR 206 million, and the rolling 12-month cash flow from operations was EUR 915 million, corresponding 98% cash conversion rate. The main driver was Minerals, where both equipment and aftermarket orders grew at double-digit rates.

And here on this slide, you can see the longer time frame showing that the orders increased. Now the book and bill was 1.1. The order backlog was also increased by 13%, being now EUR 3.7 billion, which gives us a good visibility for the future revenues. Sales grew by 6% and aftermarket represented now 57% of the group sales, 54% 1 year ago. Adjusted EBITA, as said, margin expanded to 16.6% with both segments improving year-on-year.

I think the important message is also that the cycle is now translating to more clearly into our numbers. In Q1, the discussion we had was partly about the timing and conversion. And now in the second quarter, we have seen the strong order growth, improved sales and also the higher margin and healthy cash flow.

During the quarter, we have continued to execute our "We Go Beyond" strategy and to invest in capabilities that support our long-term strategic targets. Customers are a very important part of our strategy and proximity to customers remains as one key factor in the success. We have now expanded our presence in San Juan in Argentina, the country that is developing in the future as one of the main mining countries. And we have also had a grand opening in our expanded service center and new training center, the largest in Metso in U.S., Mesa in Arizona.

And we also strengthened our presence and footprint close to the customers in Western Canadian service center opening. And in Finland, here, we have also made a decision in the second quarter to strengthen further the aggregates technology center in Tampere and the second phase was kicked off during the second quarter. These are not, as such, isolated investments. They do support the same structural themes that we see across the market. Customers, they want availability, they want productivity. They need life cycle support, and they definitely need a fast local service response.

We have also strengthened our technology portfolio with launches of the new product. And we have also been focusing for the lithium carbonate process developments. These innovations support our role across the minerals downstream processing, and they will help our customers to improve their own productivity, resource efficiency, and sustainability.

And save the date here in the slide, is a reminder for all of you that September 10, we will have Metso Summit, where we will talk through a lot of these innovations in a very professional way. So recommendation is strong to book the date to your calendars and join the event.

As it comes to outlook, our market outlook is unchanged. We expect the market activity in both Minerals and aggregates to remain at the current level as it has been in the second quarter. It is important to note that our outlook is defined. It describes what is expected for the next 6 months, and it's adjusted for seasonality. And with this, I pass the microphone to CFO, Pasi.

Thank you, Sami, and good day, everyone, from my side. I will now go through the financials more in detail. Let's start with orders and revenues. The order bridge shows clearly where the order growth came from. The strongest contribution was from Minerals Equipment, followed by Minerals Aftermarket. Aggregates order intake was stable. Overall, group orders increased 18% to EUR 1.462 billion.

In Minerals, equipment orders increased by 50%, driven specifically by grinding and crushing solutions. North America performed strongly from a market area point of view. The increase was driven by a broad flow of small- and medium-sized orders up to EUR 20 million across commodities and geographies. Aftermarket orders increased by 13%, reflecting healthy activity across our installed base.

In the sales bridge, Minerals aftermarket was the main positive driver of sales growth. The Minerals equipment sales were lower year-on-year due to timing of customer projects. Mix improvement in Minerals supported profitability as aftermarket share increased by 17% and represented 68% of segment sales. Aggregate sales increased 7%, driven by equipment. Overall, our order backlog increased 13% year-on-year or more than EUR 400 million.

Let's then move to our result bridge. Adjusted EBITA increased from EUR 183 million to EUR 221 million, reflecting adjusted EBITDA margin of 16.6%. The improvement was driven by higher volumes and improved gross margin, partly offset by higher selling, general and administrative expenses and other items. The mix was supportive for the EBITA development. Gross margin improved by almost 200 basis points to 33.3%, and it reflects a combination of volume growth, favorable mix, and specifically the increase in Minerals Aftermarket share and overall solid operational execution.

Both Aggregates and Minerals improved adjusted EBITA margins year-over-year.

EPS from continuing operations increased to EUR 0.15. Operating profit was EUR 185 million compared to EUR 178 million a year ago with operating margin of 13.9%. I'd like to also remind all of us that a year ago, we had a positive larger one-off benefit EUR 27 million from the revaluation of STM shares in our second quarter results.

Let's then move forward and look at our cash flow generation. On a rolling 12-month basis, cash generation continues to be healthy. During the second quarter, cash flow from operations improved to EUR 206 million compared to EUR 147 million a year ago. The main driver for that was higher profitability, while the change in net working capital was slightly positive compared to a year ago. On a rolling 12-month basis, the cash flow from operations was EUR 915 million, corresponding to cash conversion rate of 98%.

As said earlier, we increased our order backlog year-on-year by EUR 400 million, and the book-to-bill during the second quarter was 1.1, and then that is also reflecting our working capital needs. Let's then move and look at our balance sheet. Our balance sheet continues to be strong. Net debt to EBITDA at the end of second quarter was 1.3x, and that's below the ceiling of 1.5x that we have set as a target.

Cash and cash equivalents at the end of the quarter were EUR 383 million, and we have EUR 700 million revolving credit facility fully undrawn. During the quarter, we exercised the first option to extend the RCF by 1 year, and it is now maturing in 2031. We also maintain an investment-grade credit profile and have the Baa2 rating from Moody's with positive outlook. Overall, our balance sheet continues to be strong, and it gives us flexibility to execute our strategy. We can continue to invest in our service capability technology, local presence, and selected growth initiatives while at the same time, maintaining disciplined capital allocation.

Let's then look at our segments and start with Aggregates. The Aggregates orders were EUR 333 million during the quarter, broadly stable year-over-year, corresponding to 1% organic growth in constant currencies. In Aggregates, demand remained very strong in North America, while Europe was somewhat softer. In Europe, the Iran war and increased diesel costs specifically impacted negatively the aggregate demand. Equipment orders declined by 1%, while aftermarket orders increased by 6%.

From sales point of view, we reported 8% organic growth in constant currencies. Equipment sales increased 12% and aftermarket sales declined 4%. The aftermarket comparison here is affected by the calculation change we implemented in the beginning of the year. And under that, certain products were reclassified from aftermarket to equipment. The impact in second quarter was EUR 8 million in orders and EUR 9 million in sales.

Profitability in Aggregates improved clearly. Adjusted EBITA increased by EUR 11 million to EUR 56 million, and the margin improved more than 200 basis points to 16.3%, supported by higher volumes, strong execution, and overall cost discipline. Let's then look at our Minerals segment and Minerals delivered a strong quarter. Orders increased to EUR 1.129 billion, corresponding 21% organic growth.

Equipment orders increased by 50%, driven particularly by crushing and grinding solutions and aftermarket orders increased 13% and this reflects healthy activity across the installed base in spares and wears as well as in upgrades and modernizations. Book-to-bill was 1.14 and the backlog increased year-over-year 13% to more than EUR 3.1 billion. Sales increased to EUR 992 million, representing 4% organic growth. The sales growth was aftermarket-led with aftermarket sales increasing 14% and representing 68% of Minerals segment sales.

Adjusted EBITA also increased and came in with EUR 182 million, representing 18.3% margin. Here also more -- close to 200 basis points improvement year-over-year. Higher volumes, improved mix, and strong execution overall supported the profitability. With that, I'd like to hand back to you, Sami, for a summary.

Thank you, Pasi. So to summarize, strong minerals demand drove the orders growth in the second quarter. Healthy pipeline in Minerals also continues. We delivered margin improvement in both of our segments and remained strong in the cash conversation at 98%. And we have continued to invest for our future growth.

So to summarize all that, I think the second quarter demonstrates that the positive market drivers in the Minerals, especially, are now translating into stronger orders and higher aftermarket business, resulting improved margins and also healthier cash generation for Metso. And with that, back to you, Juha.

Yes. Thank you, Sami. Thank you, Pasi. We are done with the presentation and can open lines for Q&A.

[Operator Instructions] The next question comes from Edward Hussey from UBS.

Just a couple for me. So the first one is you talked about the new service center in Argentina and an expansion of the service center in Arizona. Obviously, there are some big copper projects expected to FID in these 2 regions fairly soon. So should we see these investments in service centers as a potential lead indicator that you might be winning some of these orders?

Thank you, Ed. Excellent question and excellent logic. Obviously, we wouldn't be doing investments in this scale if we wouldn't be knowing that there's going to be a good usage of those resources and facilities in the future. So this is in line with our expectation of the future orders when it comes to the new projects.

Okay. That's very helpful. And then maybe just one other. So obviously, very strong underlying growth rate in equipment orders. Do you sort of have a number that we should think about as the sort of underlying run rate of equipment orders going forward? I mean, for example, should we now think that EUR 400 million, excluding any large orders, is the sort of number we should pencil into our models going forward?

Yes, thanks for that. And I mean, if we first look at second quarter a little bit more in detail. So indeed, we had very strong sort of what we call the base business. So orders in value below EUR 5 million, and we had also very strong in the sort of a basket from EUR 5 million to EUR 15 million. And if I look at '25 and first quarter of this year, this was the strongest quarter in these baskets. I wouldn't directly draw a conclusion that we continue quarter after quarter at this level. Even in the smaller ones, it will be somewhat lumpy.

However, what we take internally from this is that the underlying demand is there. Like I said, it's broad-based. We also, this time highlighted our stronghold, I mean, crushing and grinding. Many of these orders came from that. But again, just penciling the same going forward wouldn't be the right logic. Market activities there, et cetera, but we expect to see some volatility also in these smaller orders going forward.

The next question comes from Christian Hinderaker from Goldman Sachs.

I want to start on the crushing and grinding orders in Minerals OE. When we think about those as base orders or small or mid-size, is that replacement? Is that expansion? It's obviously brownfield. And then when we think about the scope, i.e., the broader comminution circuit and sort of downstream equipment classes, should we read this as being customers upgrading specific pockets of their process? Or are they upgrading the whole setup and that you've just won share, particularly in those product areas and somebody else has been winning elsewhere? That's the first one.

Yes. It's a combination. Of course, they are brownfield, majority of them, and both replacement and then capacity increasements by debottlenecking. Typically, flow sheet starts from the crushing and screening. And that's the first place that certain investments start to happen when there is a need to stabilize the production levels to the new levels or making sure that the future production is trouble-free.

So in that sense, I don't draw that kind of conclusion, as you suggested, that we have been winning this part and somebody else has been winning the rest because those discussions continue with some of them with these same customers.

Okay. Understood. And can I ask then what we should think about in terms of the aggregates business? We had a pre-buy effect that you flagged in the context of the Section 232 tariffs in Q1. You're suggesting that growth in North America was actually coming through in the second quarter still, but the weakness was on Europe, which I presume is then negative. What's happening in the U.S., I guess, in particular? How should we think about that through the back half?

Yes. U.S. has remained a good market. There are also good, positive signals in the air for U.S. in the future as well. There is a Highway Bill moving as we speak in the house, and that typically has been then creating in a mid-term future also activity in the aggregate side. So some amount of work for U.S.-based customers has been also coming from the data center work. So in that sense, the activity level remains good in the U.S. side.

And then the Europe, as you reflected, has okay level, but it was impacted mostly for the increased fuel prices as contractor type of customers in Europe started to struggle with the profitability with the high level. So that was slowing down the investment decisions than in this quarter.

And then maybe just finally, pumps. Did that grow double digit?

Sorry, Christian, say it again, I didn't hear you well.

If we think outside of the demand on crushing and grinding to areas like pumps, did they see double-digit growth as well? Or it was really all from crushing and grinding?

No, it's not absolutely all from crushing and grinding also, for example, pumps where you referred to, we continue to see a good growth, and that continues to be a focus area. So it's not only crushing and grinding, but crushing and grinding was specifically strong compared to some of the earlier periods here. But it's certainly pumps. It's also other parts of the flow sheet where the orders came in.

The next question comes from Klas Bergelind from Citi.

My first question is on the sales outlook in Minerals. And this is the second quarter now where we have weaker equipment revenues versus expectations. And if we do the dip in orders and revenues over 6 months, then we should have EUR 300 million more backlog, but the backlog moved up by less than EUR 100 million since end of December. I'm trying to understand if there are any cancellations versus delivery delays, if this is Reko Diq or any other project, because I'm not sure how it can be linked to your divestments as your numbers have been restated.

And then moving over to the service growth and the deliveries of the modernization orders. To what extent should we see a sales acceleration here from current level? I'm trying to sort of see into the second half, a bit weaker equipment versus accelerating service. And sorry, one more on the equipment side. These equipment orders that are small and mid-sized, can this improve the equipment revenue run rate already into the second half?

Yes. So thanks, Klas. That was 3 good questions. And if I may start from the last one. So I mean, there, we see the typical turnaround times. But indeed, some of those we expect will result to revenue already late this year, not so much maybe third quarter, but fourth quarter, some of those orders that we got now will start to generate revenue. And then there is some longer lead items as well where it clearly goes to 2027.

Then your question on backlog is excellent, and I heard you also discussed this with Juha earlier. We are looking at that. What I can say you right now is that, I mean, we haven't had any larger cancellations.

So that's not the factor. Obviously, in business, orders get canceled. But during first half of this year, we haven't had any larger ones there. I mean, we have had one customer bankruptcy case where also backlog has been impacted. But there, we talk about a couple of tens of millions. And then, the delta that you are highlighting is larger than that. This specific case where we have the customer bankruptcy, the order is not received any time recently. It is closer to the merger than today. So it has been in the backlog already for a good period of time. And now we cleaned it when the customer went through the bankruptcy process.

Then -- and we need to get back to you on this backlog development because there is clearly a discontinuation, the sort of basic logic has a relatively big gap. Obviously, part of that is FX, et cetera, but we need to look at that, and we'll come back to you.

Then finally, you had a question on upgrades and modernizations. There, I mean, we continue to see a good amount of orders coming in. Those orders are typically in service portfolio or aftermarket portfolio, the ones which take a bit longer to translate to revenue. But if we think from activity and order intake level, they continue sort of a similar healthy level as a couple of previous quarters. And then the orders that we started to receive, basically, a year ago, they start to contribute to our revenue now and then even more second half of this year.

Very quick, final one, on inventories. Inventory days continue to increase happened in the first quarter and now again in the second quarter. Did the margin benefit from any overproduction? And how should we think about the days as we go through into the second half?

No. I mean, margins did not benefit from the overproduction. However, where we benefited from the margin is good capacity utilization. So the absorption that we have from our own operation was well managed and some of our own manufacturing is running flat out, which is, of course, good from the overall cost performance point of view. And then you're right, inventories continue to trend up, and that is very much in line with the backlog that we have and working with future deliveries.

And when we zoom into different inventory categories, the work in progress inventories is the one where we see most of the increase. And then when it comes to DIO, our intention is not to sort of increase the inventory and increase the DIO going forward, but it will fluctuate based on the delivery needs that we have for different customer projects.

The next question comes from Max Yates from Morgan Stanley.

Just my question is around margins in the Minerals division. You've obviously had a kind of nice step-up year-over-year but against an easy comp. Some of that is obviously mix, which is favorable in the quarter. I guess, my fundamental question is, when you look at the margin improvement and kind of around that 18% level, is that a fair reflection of the improvements that you've made in the business, the journey to 20% margins? Or is this really just a sort of very strong mix quarter and we shouldn't kind of extrapolate that too much? So maybe I'll just start there. How many of these -- how much of this sort of margin improvement being kind of in that, yes, 18-plus range is the structural improvements versus just mix?

Yes. first of all, you are right that it's a soft comparison. Of course, we had a weaker quarter a year ago, and then we absolutely wanted and needed to show a strong improvement from there. And you remember that we had a couple of extraordinary items there last year, which are obviously not repeating. And one item that has been corrected to sort of a normal -- more normal level is the mix. And we are not thinking that this mix was extraordinarily good, but rather sort of normal.

And you may remember that in our strategy overall objective is to grow after market, many reasons behind that. And then the other thing that impacted is simply volumes. Volumes help and like we discussed just with Klas, the absorption in this quarter was lower. Our facilities are running full, and that is good for our cost performance. So that's the way how we think about it. And again, more normalization rather than anything else. And when we look forward, the order book is there. We expect that we can run flat out also during the coming period, thanks to the order book, and that should support margin development also going forward.

Okay. And maybe just a quick follow-up on the Minerals aftermarket piece. So another quarter of 10% order growth. I mean, clearly, for most players in the industry, Sandvik as well, we're seeing kind of outsized aftermarket growth rates versus what we would maybe consider normal, whether that's a kind of high single-digit number. I guess could you maybe just walk us through what you think is happening in the industry that's allowing this? Is it that you're getting a bit more price? Is it the rebuilds? Or maybe to what extent, is it some of your own initiatives, whether that's kind of penetration attached, attachment rates, or higher value of service per machine? Just trying to trade off how much are we relying on the market? Can that continue versus some of your own initiatives around aftermarket?

Yes. Thank you. Maybe I can shed some light for that question. So first of all, this one as well, it's a combination, of course. Pricing is one element. And and we have been enjoying good pricing strategy and execution as well. So it has a certain impact. But I would highlight that in our aftermarket growth journey and story that it's very much the centerpiece of the strategy that we launched third quarter last year, meaning that we have also done inside Metso, certain changes in the focus areas we have put investments in and the customer base, of course, is also in a good condition, meaning the market is positive for our customers. They want to invest for the aftermarket, and this is also one element that is creating this growth. In our thinking, we are targeting for those strong single-digit growth, but I don't complain that we have been going a little bit beyond that one now in the last 3 quarters.

The next question comes from Vlad Sergievskii from Barclays.

A few questions, please, and starting with new equipment orders. How should we think about this very big number of underlying orders this quarter? It is about EUR 400 million. It's twice what it's historically been for some time. What triggered this base to actually double all of a sudden in Q2? Is it like a significant part of your pipeline that quickly converted? And why we shouldn't consider this EUR 400 million as perhaps a new level at least for a few quarters?

Thank you, Vlad. It's reflecting the good, strong pipeline that has been there and which we have been working very actively with the customers. And we are very happy that this work that we are doing all over the world in different countries for these cases is yielding the results. And then especially now in the second quarter, it was very successful to close those deals.

As Pasi was, already in an earlier question outlining, we do see very healthy pipeline also for the future. Capital equipment business is always having certain elements that the decision-making is sometimes very fast for this replacement and sometimes when everything is clear, it can still take some time. So I think the good way of thinking is that there is a good pipeline. Metso is doing good work with the customers and it's definitely seen as a quality supplier for these needs, and we continue our work on our side with the customers.

That's great, Sami. I really appreciate the color. Can I follow up on this and just say, if you think about the very near-term pipeline, something which you think is very realistically come through quickly, is the pipeline reduced after this quarter? Or it's still as good as it was when you were entering Q2?

Well, of course, from the pipeline, we have converted the orders, those ones that you also mentioned. At the same time every week, every month, there is new opportunities starting to develop in different stages. So in that sense, pipeline remains very good looking and healthy good looking for going forward as well despite that we converted very nice amount from the pipeline to the orders in the second quarter.

That's great. I really appreciate it. And final one for me. There was a sizable capacity adjustment cost in Minerals. Could you give us some color what it was linked to?

Yes. Thank you, Vlad. So indeed, as adjustment items, we reported some costs, and it basically links to 2 items. The first one is that we are doing some efficiency work internally that resulted to sort of one-off type implementation costs that is reported there. And then the second one is that we have, in our backlog, still a couple of legacy projects in solutions that we have disposed and there was some costs related to those. So that is basically what we had in -- well, Minerals and that represents also the group level adjustments in the second quarter.

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

Two questions from my side. One, on the orders again. I appreciate EUR 400 million is a decent level underlying. But I was wondering how do you think from here about the large orders coming through? Is there still the expectation for this that like towards end of this year, early '27, we should see like larger projects coming through for you as well? And then I'll take the second afterwards.

Yes. Thank you for that question. The large projects are developing all the time. There is some news also in the public domains available all the time. So there is no fundamental change in that picture. We also know that these large orders, they are kind of lumpy ones, and they come when they come. And what we do in Metso is to focus of these small, medium-sized because that's kind of like how the business model is built up. And then we work at the same time for the large ones.

Timing of those looks okay. Second half of '26 is definitely seeing something from that area as well and then the strong pipeline that is building there. So it creates good-looking opportunities from the order perspective for the several quarters ongoing here.

Okay. I mean, second half is any day now. It sounds good. So second question on revenues. It sounded a little bit like we should not see too much acceleration of the OE revenues already in the second half, maybe sticking to around about the level where we are at right now, and then we should see a larger OE revenue growth from '27 onwards. But on the other side, we should see some aftermarket acceleration to the second half given the strong modernization, but also like spare parts orders we've seen in first half and end of last year. Is this the right perception? Or am I getting something mixed up here?

Thanks, Tore. And I think directionally, you are getting it right. And if I provide a little bit more color on the OE side of things. So some of the larger orders that we have gotten during the previous -- more distant previous periods, they are coming -- they have come to the sort of end of those project deliveries.

And then the new larger orders that we recorded very late last year, first quarter this year, they start to gradually ramp up to the revenue. And I'm referring to Birla and Ar Rjum, and then the Tia Maria order that we got in Q1. And with that dynamic, the way how you were sort of thinking is logical. And then when it comes to aftermarket, so indeed, there, we have been constantly growing the backlog.

Most of the backlog growth is in the aftermarket side of things. And that is gradually turning to revenue, helping us to sort of work with our overall mix. And then obviously, we all know that aftermarket is the sort of better part of the business from a profitability point of view. Then when it comes to aggregates -- and I think your question was mainly Minerals focused, but in aggregates, the order intake first half of this year in the equipment side has been really, really solid. And we obviously will deliver a significant part of that during the second half of the year.

Okay. Understood. And just following up on the Minerals part. And then sorry, one follow-up on aggregates as well. But briefly on the Minerals part, a follow-up. We did second half of last year on the revenue side, we saw very strong revenue growth here. So this creates somewhat of a tougher comp second half versus what you see in the first half. Any thoughts from you about this?

Well, it's a factual comment that it is indeed, like you said, tougher comps, and we'll be against that then when we have a discussion in late October when it comes to third quarter and then in January when we -- or early February when we talk about fourth quarter. But I don't know if I have any other thoughts on that.

Appreciate it. And then just lastly, you mentioned on the aggregates. You had very strong orders in Q1, partially maybe driven by pre-buying. Do you see a risk of H2 somewhat activity coming down further than in usual years where we should see like sequentially the decrease in H2 that it's even like more pronounced this year given some of the demand might have been pulled forward already?

Aggregate has much faster cycles than the minerals in a typical way and also aggregate has this seasonality. How it looks that 2026 is looking solid from the seasonality point of view. Typically, there is a good high activity in the orders in the first quarter and then declining to the second and third and then picking up again for the Q4 when the year-end decisions are made. So kind of expecting a similar kind of performance of the market now in this year as we have been used to in the past.

The next question comes from William Mackie from Kepler Cheuvreux.

A few questions from my side. Minerals, please. First, can we just dive into the order intake one last time and to review perhaps in a bit more detail how you would describe the regional development of the EUR 400 million and perhaps alongside that, the technologies beyond crushing that you've called out, just when you look at the pipeline, are you seeing a similar sort of technology development in terms of the demand profile? I'll take them one by one. I have a couple more.

No. Thank you, Will, for that. And I think during my presentation, I already, from a regional point of view, called out North America as sort of stronger than last year and maybe stronger than a couple of previous quarters here. And when we look at the regional pipeline going forward, obviously, all the -- we are organized in 7 market areas, so all of them have a lot of activities. But I would say that North America, we expect to continue very, very strong. In the other areas, I don't know if there is anything specific to call out from regional point of view.

Then you had a question, and we discussed it a bit earlier in the call also when it comes to different business lines or products. And yes, indeed, crushing and grinding, we have highlighted here. We already discussed that our pump growth remains intact. We are growing with double digits, clear double digits there, and that has been the trend already for some time. The same goes for our screening business, also good growth there. And the pipeline varies between different products, but we expect based on the activity level that there is with customers, relatively good activity across the flow sheet offering that we have going forward. And now I'm talking about the small and medium-sized orders, sort of the base business.

That's very helpful. Across your business, you've seen developments of input cost or cost changes and also tariff changes. So can you then comment with regard to the backlog and the order intake bookings, how pricing is evolving and how you would describe the evolution of backlog or project margins over the last quarter in comparison to the prior year?

Yes. Thank you, Will. Again, a very good question. If I start from just discussing how we see cost inflation generally. So obviously, the crisis in the Middle East have created cost inflation. The way it is visible for us is via the fossil materials, and it is impacting our logistics. It is impacting energy cost at our foundries. That being said, those sort of energy-related cost items are not a big cost bucket for us. Logistics is, of course, important.

Then, I mean, early on when the crisis broke out, when we started to see those inflationary elements, we've been very actively managing our pricing with our customers. Let's see how it plays out. It's, of course, a long game. But so far, we are quite happy where we are. And then when it comes to backlog, obviously, we have certain open exposures there, but I would say that relatively limited. And the way how we work with, for example, the larger minerals capital deals, we basically do back-to-back deals when we nail a deal with our customer, then we do the same with our supplier and sort of the main inflammatory risk is sort of mitigated.

During the second quarter, I would say that we didn't see anything specific from the sort of margin -- backlog margin conversion point of view. And that tells that in this inflammatory environment, so far, we have managed the situation relatively well as a company. But obviously, this continues. I think today, we see again oil prices above $100 per barrel and so forth. So this is every day bread and butter for our teams, procurement teams, quotation teams, and others. And this is not the first time we do it. We have learned quite a bit during the COVID times when there was a broad-based inflation.

And maybe to continue, one more element is that in the quotations, the price validity. So that is, of course, with the current environment of the whole world. So they are quite short, and then we requote based on when the project starts to be alive and when that first validation has been expired.

If I could just move on to aggregates briefly. When I look at -- at least the way I was modeling Q2, your contribution margin was very strong. And I guess the Q2 '25 had a number of costs in there, including your ERP implementation. Is it possible to just sort of frame how you would describe contribution margins or what was in aggregates that led to such a solid profit performance in Q2 compared to the prior year?

Yes. Thanks, Will. In aggregates, we also had a part of those extra costs that we called out a year ago. Then another factor in aggregates is this factory utilization. So thanks to, obviously, very strong order intake first quarter this year, decent order intake late last year, we are busy, and that is a good situation from the capacity utilization and then cost performance and via that gross margin or contribution margin point of view.

And last year also this time of the year, we were ramping up the operations again. You may remember that we had laid off some of our people because lack of work and so forth, and they were back in business, and that also caused some extra costs during the comparison period. But now we are in full swing with good order backlog and full execution, and that helps with margins and cost performance.

Super. One strategic question. Capital allocation, balance sheet strength is there, good cash flow. You called out opportunity to allocate to service technology and local presence. How would you describe your thinking around M&A, bolt-on acquisition, or larger acquisition opportunities to expand and further your current strategy, please?

Yes. As explained when we launched the strategy as well. So one part of the growth is planned to be inorganic, and we have a very clear M&A strategy that we are executing. So that means that several interesting discussions are ongoing with the potential targets, and we are executing that part of the strategy all the time as well.

[Operator Instructions] The next question comes from Andreas Koski from BNP Paribas.

It will be a couple of follow-up questions, starting with service orders in Minerals, which grew strongly year-over-year, and the sequential development was better than I had expected. I mean in recent years, Q2 service orders have been down quite meaningfully from Q1, but that was not the case this year. So I wonder, did you have any larger service orders in Q2 and how to think about the sequential development going into Q3?

Andreas, thanks for the question. I mean, no, we did not have any sort of larger single orders this quarter. What we had was a very solid sort of a parts order intake and then also a continuous good order intake when it comes to our upgrades and modernizations. But again, that was sort of a similar level as some of the previous quarters. Those are typically a bit bigger ticket items, could be double-digit millions, et cetera. But that's not really -- that hasn't changed from Q1, from Q4, and would not explain the positive development.

Our own read on this, Andreas, is that now, it's really the demand-driven increase and our customers, they want to operate their gold assets, they are copper assets with high utilization and that requires then the services, the aftermarket support that we provide, and it's a reflection of that healthy market activity.

Yes. And I would also maybe add one more thing. Once again, aftermarket is a centerpiece in our strategy. We have a lot of execution around this, meaning that the focus inside the company is different than in the past. Not saying that it was not in the agenda also in the previous years being one that led those businesses. But now it's kind of stronger than before. And I am convinced that the results that we have seen now in the second quarter for the orders are because of the very good market out there, our position, and then our focus for the aftermarket.

And if I may still complement, if you -- and we discussed briefly about capital allocation, but like we also showcased in this report, we have invested in our aftermarket presence. And it's not only this quarter. Now we highlighted a couple of service centers, et cetera. But if we look at past 12, 18 months, there is a number of -- I mean, not very large individual, but number of smaller investments that we have done. And that's, of course, is helping the growth as well.

Understood. And then coming back to the backlog phasing. So your total backlog is up by 13% year-over-year. Do you see that the backlog for delivery let's say, within the next 6 months in H2 is also up by around 13% year-over-year? Or is -- or has the backlog become larger -- longer, sorry?

A good question, but also a difficult one. I would say that there are certain elements that have given the sort of execution time of backlog a bit longer. And here, I refer, for example, in the aftermarket size for the upgrades and modernizations, they take longer time to deliver. They are good business for us, but the turnaround time is a bit longer. And that backlog compared to a year ago has grown more than our backlog in average.

But overall, I wouldn't say that there is sort of a significant change. One aspect also is that we are we are busy in part of our aftermarket system. And then in some limited areas that results to somewhat extended delivery times, but again, not a big item as such.

So we should expect quite nice revenue growth year-over-year based because of the backlog expansion that we have seen.

Yes. Let's see how the execution goes forward. But I mean, the backlog growth certainly helps us to deliver future revenues. So...

Understood. And then the last question, you're talking a positive market cycle and that is now leading to a better order conversion. I'm just a bit curious why you decided to continue to guide for stable market activity over the next 6 months. Are you now seeing that the cycle is stagnating? Or why did you decide to not, yes, make your outlook a bit more optimistic?

Yes. I think -- thank you for that question. Market outlook reflects for the next 6 months compared to where we are today, and we have seen good market activity in the second quarter, and we expect to see a similar kind of good market activity going forward. We are not in a position to see that there would be a significant ramp-up from the good level that we are kind of like already been seeing.

All right. We are coming up to the hour and need to wrap up this call. Thanks for listening. Thanks for participating. Before we go, just a reminder of the Metso Summit event on September 10. It's a fully virtual event showcasing a lot of new technologies, new solutions that we have invented for our customers, and I'm sure will be worthwhile everybody's time. Next time we'll talk about our numbers will be October 22, but I'm sure we'll see many of you before that. So thanks for this, and bye-bye.

Good afternoon, good morning, everyone. This is Juha from Metso's Investor Relations, and a warm welcome to our first quarter '26 results conference call where we have our President and CEO, Sami Takaluoma; and CFO, Pasi Kyckling, briefing you about the results. Sami will start with some of the highlights and then Pasi will walk you through our financials and cash flows in more detail. And after that, we are taking your questions.

Before we start, a couple of reminders. First of all, we will have our forward-looking statements disclaimer in the presentation deck and today is our AGM. So it's a busy day, and that's why we are going to limit this call to 50 minutes. So please take that into account and ask as briefly as you can. We would appreciate that.

With these words, Sami, over to you.

Thank you, Juha, and good afternoon also from my behalf to everybody. Let's go through the Q1 performance. In a nutshell, strong orders and delivered solid margin during the first quarter of this year. Our orders received amounted EUR 1.555 billion. This is 6% growth year-on-year. And in organic constant currencies, it's 10%. Sales was EUR 1.252 billion, and this was also growth from last year, 3% or in organic constant currencies, 5%. Adjusted EBITDA EUR 203 million, growth 5% year-on-year and representing 16.2% margin relatively. Operating cash flow for the quarter was EUR 78 million. And in the rolling 12 months, it's representing EUR 856 million of operating cash flow.

So as I said, the order intake for the year was strong and kicked off our year very well and nicely. Our book-to-bill for the period is 1.24, improvement from the last year when it was 1.21. Order growth was strongest in the Aggregates equipment and Minerals aftermarket. Our backlog went up by 6%, and this was heavily driven by the aftermarket in our backlog now.

Sales growth that we delivered that was mainly led by the Minerals equipment where we continued to finish the projects and Minerals segment was the main contributor to adjusted EBITDA growth that we delivered in Q1.

Our strategy, we go beyond that we launched Q4 last year and now under execution. It is focusing on the high-value growth elements. We are doing the investment in our rubber products plant in China. During the period, we also completed the acquisition of MRA Automation, Australian-based automation and software company. And one, I really want to highlight here is the partnership with Loesche, and we are introducing the vertical roller mill dry-grinding technology, ground breaking with a very efficient way of doing the grinding in the future.

Completion of our divestments, both the Ferrous and our Loading and Hauling businesses, they were completed as planned during the period and creating further strength for our strategy execution, focusing on the right topics.

We have also completed the ERP renewal project. Rollout is done. We have now a state-of-the-art software in use for the whole company the same way and the next phase is then to get the benefits of this investment in the coming quarters and years ahead of us. And also, I want to highlight that record-high engagement score and also noteworthy, the active co-creation that is strengthening the growth culture that we have. We are measuring the employee engagement 4 times a year, and it was a pleasure to see the all-time high scores now in the Q1 round.

Regarding the outlook, we keep the outlook unchanged. We do see the market as a positive, meaning that it stays in the stable good activity level. Market activity in both Minerals and Aggregates are expected to remain at the current level. And I want to highlight also in the statement as well that the geopolitical turbulence could potentially affect the global economic growth and, therefore, also the market activity in our segments.

And now if I give the microphone to Pasi to walk through the financials and the cash flow topics.

Thank you, Sami, and good day, everyone, also on my behalf. Let's start by looking at our orders and revenue development. Order intake at EUR 1.555 billion, representing 6% year-on-year growth or 10% growth in constant currencies. The equipment side of the business grew 8% or 12% in constant currencies and aftermarket orders by 4% or 8% in constant currencies. And the order performance was especially good in Aggregate capital side and then Minerals aftermarket business. Aftermarket part of the overall orders was 66%.

In this quarter, we also won the EUR 100 million greenfield copper project in Peru. And in the comparison period, we had EUR 60 million order from Almalyk project in Uzbekistan included. The order book at the end of Q1 totaled to EUR 3.6 billion, it's roughly 6% up year-on-year, and all that increase comes from Minerals aftermarket business. Then our revenue at EUR 1.252 billion was 3% up or 5% in constant currencies and it was driven by Equipment aftermarket was 1% down. And aftermarket represented 55% of our sales.

Let's then look at our EBITDA development and earnings per share. Our EBITDA increased to EUR 203 million and then from a margin point of view, the increase was 0.3 margin points from 15.9% to 16.2%. The higher volumes contributed with EUR 13 million in a positive way and the gross margin increased by EUR 25 million or by 2 margin points.

Then on the headwind side, we have increase in our SG&A by EUR 12 million. And then under other items, it's primarily currency where we had last year some tailwind and this year, some headwind and this relates primarily to hedges that we don't hedge, account and we need to mark to market at the end of each quarter.

Overall, in Q1, both equipment businesses in Aggregates and in Minerals continued to deliver healthy margin levels. Then EPS is unchanged from a year ago at EUR 0.14.

If we then move to our cash flow and cash flow from operations was lower than in comparison period at EUR 78 million. This was mainly due to inventory buildup and timing of the cash flows in our mineral capital project deliveries. In inventory, it's primarily work in progress inventory and it is in both Aggregate capital and then Minerals aftermarket. In Minerals aftermarket, it is especially upgrades and modernizations where we have had good order intake during last year and are now in the middle of delivering many of those activities. In Aggregates, it is Aggregates capital. It's more seasonal. We are preparing for the stronger equipment delivery season during the European or Northern Hemisphere summer period.

Looking at the rolling 12-month cash flow from operations and then the cash conversion, we continue to be at a healthy level, and we expect to deliver also healthy cash flow throughout 2026.

If we then move to our balance sheet and balance sheet continues to be strong and support fully our strategy execution. Net debt to EBITDA is unchanged at 1.2x. We continue to have Baa2, a long-term credit rating with positive outlook from Moody's and that continues to be a good support for us while we execute our strategy.

Let's then look at our segments and start with Aggregates where we have all-time high order intake at EUR 440 million. And it's noteworthy that in this order intake, we see a clear pattern that some of the orders are placed not only for the second quarter, but also for the second half of the year. So sort of a pre-buying phenomenon visible in that regard. The equipment orders represent 20% growth and aftermarket is 14% down. Regarding the aftermarket development, I just want to highlight that we have done a minor adjustment in our presentation between capital and aftermarket when it comes to screens and that has a slight negative impact on the reported growth numbers in the aftermarket part, both in orders and revenue, and we have not adjusted the comparison periods. Then EBITDA in Aggregates was EUR 1 million down at EUR 48 million, with solid 16% margin and continued healthy margins in the equipment side of the business.

If we then look at our Minerals, there, the orders increased by 5% or 8% in constant currencies to slightly above EUR 1.1 billion. Equipment orders were flat or 3% up in constant currencies. And again, I just want to highlight the major order that we won from Southern Peru Copper Corporation regarding their greenfield copper projects in Peru. Small- and medium-sized orders were at a good level and in average at the same level that we had during 2025. Then aftermarket orders increased 7% in reported currencies or reported numbers and 10% in constant currencies. And the upgrade and modernization part of the business from order point of view is up 14% year-on-year. So we continue to see a very healthy development there. And then spares and consumables are supported by the good high utilization in our existing customer mines. Aftermarket share of the total orders was 66%. Then sales increased 5% to EUR 953 million representing 6% organic growth. We had 3% currency impact and then also 2% positive impact from acquisitions that were concluded after the previous period. Equipment sales up 14% and aftermarket up 1%. And again, we continue to have a very strong order backlog when it comes to aftermarket and expect that to deliver also revenues during the coming quarters. Adjusted EBITDA at EUR 168 million with solid 17.6% margin, and this was supported by overall sales increase and then healthy profitability in our equipment part of the Minerals business.

With that, I would like to hand back to Sami to summarize our quarter.

Thank you, Pasi. As said already, a very solid start for the year and strong orders, creating a very good healthy backlog. We do see the heightened geopolitical uncertainty remaining as a risk and then our strategy execution is progressing very well at the moment.

With that, to you, Juha.

Thank you, gentlemen. And operator, now it's time to open the Q&A lines.

[Operator Instructions] The next question comes from Chitrita Sinha from JPMorgan.

I have 3, please. Just firstly, to ask on the phasing of the aftermarket deliveries this year. I mean if I look at kind of the average orders over the last few quarters, it's been above 650, but then Q1 deliveries was weaker, it was below 600. So can we expect to pick up from Q2? How are you thinking about it?

Yes. Thank you. Good question, and your logic is correct. So we do see that we have this good backlog that has been built up and the deliveries are starting from the Q2 onwards then. And that is something that you can expect to see from the Q2 sales point of view.

Great. And then my second question is just if you could provide a bit more color on kind of the demand backdrop in Minerals. We've clearly seen a significant amount of volatility in commodity prices this year. Maybe by commodity would be really helpful.

Yes. We have highlighted this also in the report that we do see this as a risk. We all remember what was the year '25 and how tariffs did impact partly for that demand. However, the indications of any major delays or postponing or even canceling the decision of the new capital projects are not really here. So we don't hear that from those customers that we discussed at the moment. But it's very clear that especially the energy price cost and how does the future look like is having an impact, and it needs to be calculated in for those projects.

So that's why we do keep that as a potential risk at the moment.

Just adding a little bit color from a commodity point of view. So like we have seen during the course of last year and early this year, we still continue to see high amount of activity in copper and gold driven projects. So don't see that those demand drivers have changed by any means. So it's the same market where we continue to operate.

Okay. And then final question is just on the inventory buildup this quarter. I know you've provided a bit more color in terms of why that happened. But maybe if you could give a bit more detail in terms of what kind of range should we be thinking about? I mean, previously, we've spoken about maybe going towards the [ EUR 1,800 ] level. And now if I look at the Q1 inventory level, it's gone up back towards the [ EUR 2 billion ]. Is there maybe a range that we should be thinking about when looking at inventories?

Yes. Thank you for that. And a fair question. At the same time, we're not -- we will not provide you sort of a range, but rather think that way that over time, the inventory efficiency. And as a matter of activity, working capital efficiency overall should not deteriorate. And while we don't have a formal target -- a financial target on working capital and inventory to be more specific, we see opportunities to improve the efficiency. And obviously, first quarter was not a proof point of that, but it's only one balance sheet point. And we are working with the underlying drivers there to improve the overall efficiency and then provide solid cash conversion. And when I talk about efficiencies, I'm referring to working capital over sales or then DIO, DSO, DPO type relative indicators.

The next question comes from Klas Bergelind from Citi.

So my first one is on Section 232 and the changes to steel, aluminum and copper from April 6. I'm trying to understand the extent you're impacted. Will this increase your effective tariff rate and by how much? And can you remind us of the import share to the U.S. for the group and for the 2 divisions? And how much today of COGS is steel, aluminum and copper? I have a 50% input share for the group and about high single-digit share of COGS being raw mats, but any more sort of color here would be very, very helpful.

Yes. Thanks, Klas, and good and current one. I'm not sure if I can provide all that detail to you. But if we start from the helicopter point of view, so Aggregate business continues to be excluded from 232 and we indeed recently saw the change in 232 when it comes to sort of the calculation basis for that earlier. It was the steel, aluminum content. And now it seems to be the total tariff value of the equipment in question. And then obviously, that's driving the tariff base up. From our point of view, we continue to work with the same approach as we have done during the course of last year. So we work with our customers with surcharges and the new surcharges based on this initial period seem to be higher, which makes sense from the calculation logic point of view, and that is what we are charging from our customers. So again, we are not making money out of those, but we are not suffering from those either. That's the approach we have taken and will continue to take on this.

You are -- you're basically seeing the reciprocal tariff, basically, you're not seeing anything on steel, aluminum and copper from Section 232 impacting the Aggregates business just to confirm if that's...

That's correct. So to be more specific on Aggregates, and maybe I said it already, but screens and crushers are excluded from this tariff. And there was a speculation late last year that the exclusion would come to an end, but we haven't seen that happening, which is obviously positive.

Okay. No, that's good to hear. My second very quick one. I know we're only allowed to ask one question, but this is super quick. Just on aggregate, you're talking about pull forward of orders. Can we talk a little bit about like the reasons where there is some pull forward in? Because people were thinking that this could be a change for tariffs. Was this North America led? And also in Europe, are you seeing some hesitation? Obviously, Aggregates is -- and construction is quite sensitive to inflation rates and so forth, it's early days, but are we seeing any sort of customer discussions showing some hesitations in Europe? Just to get some more color on this pull forward and also European commentary.

Yes. Thanks, Klas. So what we did see was this orders in U.S. for the Aggregates with the requested delivery date, not immediately, but later on the year. So we took that as a positive signal that the customers and our distributors do see the market as a very good and looking good also going forward. And these have been then reflecting these orders, the situation in the market.

When it comes to the Europe, it still remains kind of like not one rule to apply for the whole continent, and it's more like a country-based approaches. We see activity in Southern and Eastern European side and then remain still quite slow from the perspective of so-called maybe even more traditional aggregate countries. And from that point of view, do we see elevated level of hesitation discussions? Not maybe really, Klas. So it's unchanged from the end of the year when it comes to the European side.

Maybe then just from order book, Klas, still from order book point of view, I mean both Europe and North America had a healthy order growth. So this growth is coming from both of our main markets.

The next question comes from Christian Hinderaker from Goldman Sachs.

I want to start on the Middle East, if I may. Can you just confirm your percent sales exposure to the region maybe highlight any single country, context worth discussing? And then you mentioned in the release targeted measures to manage supply chain and operational risks. I appreciate it's fluid, but what's your current base case for the direct and indirect cost effects?

Yes. To start from the region. So it represents something like 3% of the whole company sales. So that's the exposure. And of course, the situation has created certain activities also on our side, logistics is one clear one we have been quite good situation because many of our supply routes have already been going around Africa before the incident started. So from that perspective, the countries in question, obviously, Saudi is a big one for us. We got at the end of last year, the gold plant order, as an example. And then also, Oman has been a country that we have a lot of activity at the moment.

As it is today, operations continue. Our work continues, but we, of course, need to very carefully all the time observe the situation and how it develops. But this is how we see the Middle East situation at the moment.

Maybe still just to add a color. Obviously, logistics costs are up. We see some fossil fuel-related inflation. And the way we are approaching this is similar that we did during the COVID time. So playing inflation game in a way in both end of the supply chain in one hand with our suppliers and then in the other hand with customers to manage it -- manage it well. But just to confirm that we obviously see also some of those inflationary pressures that have surfaced after the crisis.

Can I just come back to the Section 232 and also your comments on aggregates pre-buy. If a customer is ordering now, are they affected by the tariff, if it changes later, do you think the pre-buys are about that tariff's concern? Or do you think it's more about hopes for a demand improvement?

Christian, it's a very good question. And when it comes to tariff speculation, obviously, should there be tariffs, we don't know how they are implemented, whether they are implemented on sort of new deliveries or everything that crosses the border after a certain point and so forth. So that's difficult to say. Our read is more that that's a sign of confidence to longer-term market development in the U.S. and sort of our partners, distributors, customers preparing for that, not only in imminent short term, but also looking towards the second half of the year.

The next question comes from Antti Kansanen from SEB.

A few questions from me as well. I'll start with the demand on the Minerals aftermarket side. And I mean, good growth that you have had now 4 quarters of decent growth in the business. So could you maybe remind a little bit on kind of the growth potential going forward, the comparison, the timing of kind of when you started to see the modernization and retrofit business increasing. I mean, is it reasonable to now assume a bit of a normalization of the growth? Or do you think you can still accelerate on that one?

Thanks, Antti. For the Minerals aftermarket side, it's one of those centerpieces of this growth strategy, and we do see potential to continue to deliver growth. And actually, the target as well is that we see the aftermarket products demand very, very good at the moment, market as well, and that makes us to see that strong single-digit growth numbers to be delivered also in the future. You know very well. And a reminder that we are having the widest portfolio of the technologies in the downstream of the minerals processing and that gives us a very good potential for the growth going forward as well.

Modernization and upgrades, they are the one that have a certain cyclicity. And from that perspective, as Pasi was stating, we have seen good amount of these orders coming in the past few quarters already. How that looks going forward is that the funnel -- the pipeline for new orders is looking good. And then it's about the timing issue of the customers to make the actual decision to move forward with these opportunities.

Okay. Great. And then maybe a follow-up on the things that you said on what you expect from the decision-making and kind of the geopolitical uncertainties. So I just wanted to make sure because you've been quite optimistic on certain large orders and investment decisions. Have you seen any concrete evidence kind of in March or early April that some of your clients have been maybe slowing down some of the processes or are asking to recalculate some of the project items because of inflation? Or is this just a kind of a cautionary statement if the war lingers on and will have an additional impact?

Yes, we have -- as I said already, many of the customers that we have discussions in a certain phase, they have not indicated any change of the time tables. But then on the other hand, yes, we do see also a recalculation need also coming to our direction to check certain project elements and the timing of them and also the price from our side of them. So it's an indication that the recalculation, it is happening. And for me, it makes sense also to do that, of course. But this is why we remain a little bit cautious of that, what will be the true impact of this for this greenfield and large brownfield projects going forward during this year.

Okay. And the very last for me is your exposure to LNG availability and prices through your foundry setup. Could you comment if there's any substantial risk that you see because of the...

Yes, and that's coming mainly from the India side where the LNG was and is the main energy source. Yes, we did see the risks, especially in the beginning of the escalation of the situation and the incident in Qatar. So what we have seen is that the prices have increased, which is natural. But the biggest risk that we had in our hands was that do we have enough LNG to run the operations. That has not materialized. So we have been able to operate normally. But the cost level has increased and also our suppliers have been seeing the same and adjusting the prices. So as Pasi was saying, this is what we see logistics side and also then the component and supplier side.

And this will lead to price increases from your end going forward.

This is the normal way to handle this. So as I said, we have taken this into account in our price increases that have been introduced in April and first of May, the next batch.

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

Just 2 questions left for me, both on the aggregates side of the business. First one would be, so we do see now and for a while, a pickup in the equipment demand in aggregates. On the other side, the service part, the aftermarket side of things remains fairly low and weak. Could you just help me square this together? So there's need from customers for new equipment, but on the other side, the utilization still remains low.

Yes. For the aftermarket question, so it is exactly, as you said, when the utilization of the machines is low. So then the demand and need for the aftermarket products is also low, and that's the reason for our aftermarket not yet in a growth mode in the aggregate side. And then our capital equipment business in aggregate is going through the distribution, especially in the U.S. And then the equipment is ordered and delivered and they don't always go directly for the end customers to use to generate the aftermarket either because during the '25, the distributor stock levels normalized, meaning that every month, they were in lower and lower levels. So now there is a need for restocking and having the machines available for the work for the end customers with the coming months and quarters.

Okay. I understand. Then maybe just a follow-up on this one. So when utilization is still low, it seems like the overall end market demand has still not really picked up. So the current growth in equipment and you also mentioned some prebuying already for the second half of the year. So is this all just distributor driven? Or is this actually end market demand driven the pickup that you see?

I think the pickup is the end market driven, but you need to remember that this is very regional or let's say, even local business. So as an example, from the Europe, there might be good activity both in the new equipment orders and also utilization of the existing equipment in the country. And then the neighboring country might be on the quite opposite way. So this is what is highlighting also the dynamics of the aggregate industry in general.

Okay. Understood. And then just one last, just to understand the strength in Europe is largely driven by the Eastern European countries. Any sense around Germany or other Western European countries picking up again? Any impact from the infrastructure package from Germany? There's something you can share.

Yes, there's a so-called traditional good market for us like Germany, France and so on. So they are not zero, but on a low-ish level and for the Germany-specific question. So our customers do not see yet any impact of that stimulus package that was announced. So that's why they have not been activating themselves either when it comes to the orders.

The next question comes from William Mackie from Kepler Cheuvreux.

My first maybe was to go back to the question about Minerals aftermarket and just dive into the discussion about the disconnect between the order intake and the revenue booking. Can you maybe provide a bit more color on what it is that has caused the lumpiness of orders and the disconnect for the revenue booking in aftermarket Minerals? And when we look into the Q2 to Q4 acceleration of revenue bookings, I mean, can you give a little flavor as to either the regions or the product segments which you expect to lead to that upturn in aftermarket, please?

Yes, Will, thank you very much. A good question. I mean if we start from a lumpiness point of view, so especially the orders, we believe we have seen sort of a solid healthy, high single-digit growth from period to period like we saw also now. Maybe if you refer to with lumpiness to the revenue side. So indeed, the growth has not yet picked up in revenue. And that is simply a timing question for us. So the backlog is healthy. We discussed the upgrades, modernizations, retrofits, delivery times there are longer than in the transactional part of the business.

Then you were also asking about regions. I don't know if we can point out a specific region. I mean, it's generally the mining regions. One area to highlight when it comes to upgrades and modernizations is, of course, Australia and the iron ore related modernization cycle that needs to happen and is happening there. But it's not only that. It's also in the other mining regions.

Again, we believe we are in a very good position with the order book. Like I said, the full backlog growth is from Minerals aftermarket, order of magnitude, EUR 200 million year-on-year growth there, and that will realize the revenues during the coming quarters.

Maybe the second or follow-up was that I wanted to go back to your medium-term goal of 20% margins in Minerals. I mean, if we look, you've made a great step forward to the 17.6%, but it's still 240 bps below your target and equipment seems to be rising as a share of mix, which is normally something of a headwind. So perhaps you could walk through, again, the levers to get us back to the -- or get to the 20% with regard to pricing or aftermarket efficiencies? And what sort of time frame to get there?

If we start from the time frame, so our target is to deliver those margins, both in Minerals, Aggregates and as Metso by 2028. So that's the timing we are looking. Then when it comes to levers, it's about growth and specifically in aftermarket. We recognize that in capital side, it may be lumpier, especially orders to some extent, also revenue recognition, but even the big projects, the revenue spans over 6, 8, in some cases, even in 10 quarters. And then we'll -- to the point you are raising regarding the business mix between capital and aftermarket, not at all a major concern for us. And the reason is simply that the margins are good to start with. We have healthy capital business in Minerals. And if we see volumes going up, which we, by the way, don't currently see because the order book has been built with aftermarket focus, that will give us volume leverage. And then we are also working with the portfolio optimization to sort of grow the higher margin solutions or businesses that we have within Minerals and then improve profitability in the areas where we lack behind our targets. Finally, self-help is also something we are doing. And again, none of us will make miracles overnight. But the time horizon we have in mind is to deliver in line with these targets by 2028.

The next question comes from Panu Laitinmaki from Danske Bank.

I wanted to ask about SG&A costs. What was behind the increase we saw in Q1? And how should we think about ERP costs? So are the kind ERP implementation costs over? And should you actually get the benefit from the new ERP system going forward?

Thank you, Panu. And the costs are up, order of magnitude, 3% in line with the inflation. Obviously, something we are not happy with. Our ambition is to offset the inflation. And then when it comes to -- and inflation is the main driver in the cost increases that we saw Q1 year-on-year.

And then ERP specifically, like Sami said, as part of his summary, the implementation is over. We have closed the implementation projects. So the specific costs related to implementation. We had some still in Q1 second quarter, we will not have those anymore. So going forward, we have a clean ride from that point of view. And now is the time to start harvesting benefits from the investment. And it has been a massive project. It's a big change to our teams but we see those efficiencies coming through. But again, will not happen overnight. It requires dedicated work. Provides also opportunities to apply more new technologies and everybody is talking about AI. We are also thinking and working with AI, it relates to ERP, but it relates to other things as well. So a big investment. And indeed, you are right, we need payback for that.

Can I just ask -- can you quantify what was the ERP implementation cost in Q1?

Well, I mean, in Q1, we talked about single-digit millions like we have had throughout the implementation phase. Second quarter last year, you may remember, we had a bit accelerated or increased cost because that was the biggest sort of a go-live that we had. But other than that single-digit millions that we have had in P&L from that better quarter.

The next question comes from David Farrell from Jefferies.

I just wanted to circle back to one of the highlights of the period, which was the partnership with Loesche and the VRM product that you are pursuing there. Can you just give us a bit of an extra detail around that, kind of what is it looking to replace kind of what kind of market share? Do you think that kind of gives you -- just any extra color around that would be great, please?

Thank you for that question. It's a very new technology for the mining circuit, but we chose to partner with the market leader in other industry, mainly in cement, the Loesche. So what is this technology doing? First of all, it is dry grinding and we all know that the new greenfield locations, they are quite challenging locations, not only with the infrastructure, but also when it comes to the supply of water and in that sense, this is going to be helping a lot for those future flow sheets in terms of not needing to have that amount of water in the mining -- minerals processing processes.

Second clear benefit is that this is energy-efficient way of doing the grinding. We talk about 40% less compared to the conventional grinding operations. And then as a cherry on the cake, you can also optimize the flow sheet. So actually less equipment is going to be needed when the dry grinding is fully implemented in the flow sheet. So we see a lot of positive elements here for making a difference in the mining operations.

And just as a follow-up. When do you think we could perhaps see the first one of these orders be received by Metso?

It's an excellent question. This typically is a slow process from the perspective. Of course, we are more than happy to take the orders immediately. We are ready for that. But it's a slow process because it first needs to get into the flow sheet and then the process starts from the customer side to develop the project, get the financing, get the cost base and so forth. So typically, it is some time from this kind of launch that we start to see the first orders. But the teams are very engaged and there is a good interest towards this technology. So we are waiting eagerly to see when we start to get the benefit of orders.

The next question comes from Mikael Doepel from Nordea.

Very briefly coming back to working capital. Just one question on that. So you talked about the reasons for the buildup there, but I'm just wondering if you have any comments on the full year? Do you expect that to reverse in the second half?

Thank you, Mikael. And like I said, in relative terms, we have an ambition to be in par or improve our performance over time on sort of a rolling basis and not to repeat the working capital investment that we did in Q1. Then again, if the business continues to grow in a significant way, it may be that in absolute terms, we need to invest more. I guess that's really what we can say at this stage.

All right. Thank you, everybody. As a final question, I have received a question from Ed Hussey of UBS by e-mail, Ed is offline, but he wants to ask about operational leverage. So he says that Metso delivered strong drop-through margin in Q1 despite equipment being a bit higher in the mix. So what was the main driver of improvement in gross margins and what kind of drop-through should we think about going forward, specifically in Minerals?

Okay. Thanks, Ed, for the question. I think we partly discussed this during one of the earlier questions, but the starting point is that we have healthy equipment margins. We had healthy equipment margins also in Q1. And even with this business mix, we're able to deliver a solid Minerals margin. The gross margin uplift there is, of course, a function of price work, cost work, and that continues. We don't guide on margins, so I can't give you an exact number there. But what we expect, like we have also discussed is the aftermarket order backlog to realize the revenues and aftermarket continues to have higher margin than the capital. So that will also support us going forward.

All right. Thank you, and we have spent exactly 50 minutes. So thanks for being efficient. Thanks for your questions. Thanks for participating. We conclude here. And just a reminder that half year review will be out on July 24, but we hope to see many of you in the meantime in various events. So thanks again, and goodbye.

Thank you.

Thank you.

Good afternoon, good morning, everyone. This is Juha from Metso's Investor Relations, and I want to welcome you all to this conference call where we discuss our fourth quarter and full year results, which were published earlier this morning. Results will be presented by our President and CEO, Sami Takaluoma; and CFO, Pasi Kyckling. And after the presentation, we'll have normally Q&A.

And please note that we have reserved 1 hour for this call. And also a reminder of the forward-looking statements that will be used in this presentation.

With these words, we are ready to start, and I'll hand over to Sami. Please go ahead.

Thank you, Juha, and good afternoon also from my behalf. Happy to talk through the highlights of the last quarter of 2025. We saw the market activity to be very much in line with our expectations that also resulted then for our orders to grow in a healthy way, including also then at the end of the year, being able to finalize the 2 larger orders from the Minerals capital side. Sales growth was good and that also drove then the increase in our adjusted EBITA euros. And worthwhile mentioning here in this page, definitely is the strong cash generation that the businesses did in the Q4.

Looking from the figures point of view, orders received EUR 1.5 billion for the quarter, growth by 2% compared to the comparison, and worthwhile also here mentioning that the currencies did have an impact, so organic growth is higher. And sales was EUR 1.4 billion, growth from the period 11%, and exactly same growth percent for our adjusted EBITA euros. And from the relative EBITA perspective, same delivery as year before, so 16.1. Earnings per share was EUR 0.14, improvement from the year before. And then as mentioned, the cash was strong compared to the comparison period.

Looking at our segments. Aggregates have been performing throughout the year and in the last quarter, strong orders and performance was recorded. Orders received, growth was to EUR 307 million from the EUR 294 million. This is double-digit growth in the constant currencies. Growth was driven mainly by the European market, which has been showing the pickup throughout the whole year already. Equipment orders growth was 7% and the aftermarket was 1%.

Sales side, also growth, so EUR 330 million for the period. Year before, it was EUR 290 million. Equipment growth in the sales was significant, 23%, and the aftermarket was reflecting the previous period, so that declined by 3%. Aftermarket share now from the sales perspective is 30% compared to the 35% a year before. And then the adjusted EBITA for the Aggregates segment, EUR 53 million growth from the EUR 46 million year before, and the margin also improved from 16.0% to 16.2%. Strong sales growth was supported both adjusted EBITA and the profitability development.

On the Minerals side, orders, EUR 1.194 billion growth from the year before, and that's reflecting 5% growth in the constant currencies. Aftermarket orders grew by 5%, and if taken the currency into account, that was a strong single-digit growth in the aftermarket for the quarter. And as mentioned and as published, there was 2 major equipment orders, copper smelter and also then the gold processing plant. Sales for the period, EUR 1,113 million, and that was also growth from the previous period. Aftermarket in this was flat and the equipment had a very good period, finishing the projects and creating also, from our perspective, the capacity for the for the new orders and deliveries. Aftermarket share of the sales, 57% for the period. Adjusted EBITA, EUR 190 million, growth from the EUR 173 million year before. And margin point of view, same 17.1% as the year before. Adjusted EBITA was driven by the higher sales and equipment heavy mix kept margin still flat for the comparison period a year before.

And looking then the dividend part as the year is in that point. So the Board proposes an increase in the dividend paid by Metso, proposed dividend is now 69% of the EPS from the continuing operations calculation, standard way as we have been doing that in the past year, so 2 payments, one in May and one in October. Total payout will be with this proposal of EUR 331 million.

Then I'll let Pasi to walk through the numbers a little bit more into detail.

Thank you, Sami, and good day, everyone, also on my behalf. Let's start with our profit and loss statement, where the Q4 sales increased 11% to EUR 1,443 million. And this was driven by successful progression of several mineral equipment projects as well as good equipment delivery in our Aggregates segment during Q4.

Equipment sale was exceptionally high in the revenue mix and represented 49% of turnover, while aftermarket was 51%. On a full year basis, we increased the sales by 4% to EUR 5,240 million. And then there, aftermarket represented 54% and equipment, 46% of sales. Adjusted EBITA was up EUR 22 million in the quarter to EUR 232 million, and the margin was flat at 16.1%. On a full year basis, our EBITA margin was 15.8%.

In Q4, the equipment business profitability was at a good level, both in Aggregates and Minerals supported by high volumes, whereas aftermarket profitability was at normal level. In Q4, we also recorded EUR 27 million of adjustment items and the makeup is basically 3 main components. First, we accounted provisions related to our Minerals restructuring that was announced earlier in 2025. Then we incurred Haggblom divestment-related losses during the quarter. And additionally, we had costs regarding one legacy project that we have still in our pipeline, and which we are looking to complete during the year 2026.

Additionally, in the discontinued operations, where we presented our Ferrous business, we accounted the final losses from that divestiture. And it's worth noting that early 2026, both the Ferrous divestment as well as the Haggblom divestment have been completed.

Income tax rate for the quarter -- for the year was 24%, quite normal for our profit mix. In Q4 the tax rate was low at 21% due to the country result mix that we had during this quarter. EPS from continued operations was EUR 0.14, which is EUR 0.01 up from a comparison period.

Let's then look at our financial position and balance sheet where the overall position remains very healthy. Net debt end of the period was EUR 1.1 billion and net debt-to-EBITDA KPI at 1.2x, well below our 1.5x targets. And the evidence of the healthy situation is that Moody's in December changed our outlook from stable to positive while maintaining the Baa2 long-term credit rating that we have.

Let me then close my part by a brief look at our cash flow, and cash flow, like Sami already said, was certainly one of the highlights of our quarter. During Q4, we delivered strong cash flow from operations of EUR 365 million, and this was supported by working capital release of EUR 130 million during the quarter. Looking at the full year 2025, we delivered EUR 974 million cash flow from operations, and I take this from the free cash flow basis, deducting CapEx and acquisitions from the operating cash flow and comparing that to revenue, we delivered 13% free cash flow margin, which is something we are happy with.

With that, I would like to hand over back to Sami to talk about our strategy execution and outlook.

Thank you, Pasi. From the strategy point of view, We go beyond strategy was launched in the Q4, and happy to report that the execution has started well and one good indication is also that we measure our own employee satisfaction and one question there is about the strategy. And we did see very high engagement level overall and also very high improvement in the strategy question, meaning that we have a full energized organization to deliver.

And certain things are already moving according to the strategy. From the acquisition point of view, it happened after the Q4 closing of MRA Automation, it's Multiskilled Resources Australia company. This was a very good addition to the strategy road map that we have built, the company is a leading provider of automation and software solution for the ports and terminals worldwide. And now proudly, employees are Metsonites, and we are working for the synergies and growth through this acquisition.

And then as mentioned, the divestment side, making the portfolio ready for the future. So we have completed the Ferrous business divestment and also the Loading and Hauling business, meaning Haggblom. Investment side, one thing to report here is that we are building a new rubber products plant in China to be a relevant player for this very fastly growing business inside China. And then also good to report the new sustainability targets that we got in the very early days of the year approved by the SBTi, and they are good ambitious targets and the most ambitious ones in the industry. So we continue in that sense as well as promised in our strategy.

Then looking at the market outlook. We are expecting that the market activity in both Minerals and Aggregates will remain at the current level for the next 2 quarters. Reminder that tariff related balances could potentially affect the global economic growth and especially the certainty level of that one can have an impact on the market activity. And in our previously published outlook, the expectation was that it also remains at the same level. So we are expecting to see similar kind of activity from the market as we did see for the Q4.

Thank you, Sami. Thank you, Pasi, for the presentation. And operator, we can now open lines for questions and answers.

[Operator Instructions] The next question comes from Chitrita Sinha from JPMorgan. Chitrita, your line is now unmuted. Please go ahead.

The next question comes from Christian Hinderaker from Goldman Sachs.

I want to start with the Minerals OE development. I appreciate there's the 2 big orders in the books for the quarter, which is nice to see. But if we strip those out, I get to EUR 220 million of OE in terms of order intake, that's down 22% Q-on-Q and 30% year-on-year. And I got to go back quite some quarters to get to -- at that low level. I'm just curious what's behind that? Is there a specific commodity weakness? Is it a timing effect that maybe you've alluded to on Page 7 of the release? It seems a little bit at odds with the strong commodity price unlocking permitting process and broader confidence in the turn you've had in recent months. I'll start there.

Thank you. A relevant question, and there is no real link for the commodity prices as such throughout the 2025 when it comes to the Minerals capital side. So we have been receiving a good amount of small replacement orders and smaller projects as well. And this is -- no change in that. They do fluctuate based on the month, and also the quarter in question had a lower amount of these ones coming in, but there is no real change in the actual demand of that. And looking at the pipeline and also looking to at the start of the year, they are having the normal volume, but there were less of these into Q4, as you also pointed out.

And Christian, just complementing. When we look more in detail where the delta comes from, it comes from the sort of medium-sized orders in our order intake, the sort of base business smaller orders that is at a very normal level. But in the sort of medium size of orders, we see this decline that you pointed out.

Maybe turning to the working capital dynamic. I think customer advances have been about 10% of revenue at least in the first 3 quarters. How do we think that working capital item evolves? You've seen a step up in large orders. Do you require a larger level of advanced payments on those large orders versus the midsized ones?

Thanks for that one. And indeed, on those 2 large orders that we have announced, we have also, during the quarter, received the prepayments, and the prepayment size is sort of similar to other orders. So it's not larger than in other orders. And yes, it has a positive impact of some tens of millions in our fourth quarter cash flow, but not more than that.

And then maybe just finally, in the service business again within Minerals. Were there any revenue gaps in the year as a whole, either as a result of customers moving to care and maintenance, say, in the nickel market or perhaps due to site specific issues? We know there's been a lot of productivity challenges. So I just wonder if there's any gap during the year.

Nothing significant that would have affected Metso service numbers as such. Of course, these are never good ones when there has been a lot of challenges in certain customers, but we have not had that kind of stake of service business that would have been creating any real impact for our situation.

But 2 main incidents of customer side, [indiscernible], those are there, but they are nothing new. They have been there already for some time.

The next question comes from Edward Hussey from UBS.

Just the first one, the drop-through of 17% in the Minerals business, which given only equipment revenues grew, it implied that this is the drop-through on equipment revenues. Is this the sort of normalized drop-through we should think about going forward? Or maybe put it another way, is 17% roughly what the equipment gross margins are?

Yes, maybe I can take that, Edward. Thanks. And when we look at the numbers, we see the higher revenue impacting positively the capital margins. And if you think about our margins in Minerals capital overall, a drop to a level, they are higher than 70%. So sales margins are greater than that.

Okay. That's helpful. And then just maybe just one further question. Just on the -- within the release, you talk about mining FIDs being slow. I mean is the implication that the pipeline remains very strong? And is there any sense that these FIDs might accelerate into 2026?

Yes. We have seen already the [ change ] like coming to the end of the '25 that there is more -- activity remains high, but there is more closer to the final kind of situation in the negotiation and also from the customer side, readiness to start to move and place the orders. And we see no change in this when looking now Q1 and then the rest of the '26 at this moment.

The next question comes from Chitrita Sinha from JPMorgan.

Sir, can you hear me?

Yes, we can.

Amazing. I have two, please. Maybe if I could just follow up on the Minerals margin. I mean here, clearly, the equipment mix was negative in the quarter. But I mean, going forward, how should we think about the past towards your 20% margin target should mix continue to be a negative?

Yes. I mean thanks for the question, and great that you got also through the line. We have, obviously, in our strategy to target to grow this share of aftermarket. And I think you can appreciate based on the numbers and looking at the history that we were extremely successful in Q4 in terms of recognizing revenue from those OE projects, which resulted to unusual profit mix.

What I take as encouragement is that despite that mix, we were able to deliver okay numbers in Minerals, and that's a proof point that the system works. But of course, going forward, we are not looking to have, over time, this kind of mix, but rather higher share of aftermarket in line with strategy. And then with that also, turning towards the 20% Minerals margin by 2028.

Very clear. And then maybe if I could just ask on the Aggregates margin. I mean here, the margin improved quite nicely in the quarter, and you were saying that you were bringing back temporary workers, I think, back into Q2, do you think you'll need more people capacity if demand continues to be strong in H1? How should we think about this?

I think that is a very positive problem if that comes because that means that the main markets are active and the orders are coming in. And definitely, we have capability for that, and that's not going to be a challenge for us in that sense.

Right now, we are in a good situation. We have a good capacity in the factories and the work is happening and people are working for the current level of business. But as I said, we, of course, have all the readiness for also increasing the product production.

If you look at what happened in Aggregates during 2025, a lot of equipment was delivered from inventory. So the finished goods inventory during the year went quite a bit down in Aggregates, which was, of course, a positive news. But then the consequence is that to deliver, for example, the same amount of equipment in 2026, we need to manufacture significantly more, which is positive. We need our people to do that. And the teams are now back in work since the spring time.

The next question comes from Klas Bergelind from Citi.

Sami and Pasi, Klas from Citi. So first, I want to come back to large orders versus underlying. I think you said before, Sami, that we can't have both larger orders and underlying orders improving at the same time. One of the reasons why underlying orders were solid from mid-'24 was because of a relatively slow decision making on the larger side. Now we see the large orders coming through in a big way, but small and medium-sized are down year-over-year. So should we then assume that the current level of underlying of some EUR 200 million, around EUR 800 million annualized is the right level right now and then add new larger orders on top? I was just interested in your thoughts on the dynamic there.

Klas, I don't fully recall that what quote you are referring to because these 2 are not really fully aligned in that sense that, let's say, underlying small, medium-sized projects, they live their own life and they have their own drivers. And then these larger ones, they have different dynamics and approval process and so on. So they are not connected in that sense.

And what I was now in this call saying is that there is a fluctuation. It's not constant month-by-month when it comes to these smaller ones, which are very important for us. And in Q4, we had 2 months with a lower amount. That's not so much to do with the large orders coming in it. It was more about those 2 months had less orders coming in and already reflected at the beginning of the year seems to have a normal level, if I call something normal.

Got it. We had the discussion in November when we met, but yes. All good. Then my second question, coming back to the mix in Minerals. If I add back the warranty cost of EUR 5 million from last year, the margin in Minerals is down from 16.5% to 16.1%. And during the CMD, I think the message was that mix shouldn't be an issue for you to get to at least 20% margin.

So obviously, as you said, Pasi, it's a pretty extreme quarter. But when you look at other peers, particularly upstream, think about Sandvik here. They have very strong equipment deliveries, no mix issue.

So 2 questions on this topic. Do you expect the equipment margin to improve already in next couple of quarters? And when do you look to see your modernization orders with higher margin sort of going through the backlog and then boosting the mix? Just to understand the dynamic when this mix can sort of start to improve?

Maybe, Klas -- and thanks for that. Starting from the upgrades and modernizations, which are aftermarket business for us. So there, the dynamic changed during 2025 when we started to receive those orders and have a good amount of those in the pipeline to be delivered now during 2026. And the expectation is that we continue to see some of those orders coming in during '26, and that is based on -- simply based on the customer fleet that is out there. And from a timing point of view, requires those activities.

Then when it comes to the drop-through, my take on Q4 is that it's encouragement that the capital business is healthy and can deliver. And like I already said, and you also reported or said as part of your question, it's not the normal mix. And we should not expect that we have this kind of a mix on a rolling basis going forward. We will continue to see the steady growth in our aftermarket business and then that will be complemented by healthy capital business.

Okay. My final question is on free cash flow. You're now at an all-in free cash margin, not operating, but all-in free cash margin around 12% for the year. So I just want to assume the underlying working capital ex the prepayments, receivables are up 2 percentage points to sales. Inventories are down by around the same amount. But payables and other liabilities are going up and creating -- it looks like they're creating a boost.

I'm trying to understand if this is sustainable, i.e. better payment terms with your suppliers and what's going on, they're looking at other liabilities? I appreciate that, that was a very low level last year. But just to understand the dynamic on working capital, Pasi, would be very, very good.

Yes. Thank you. And if I quickly talk through all the 3 or 4 main components starting from the prepayments, which we already discussed here. So yes, the prepayments from those 2 larger orders had an impact on our fourth quarter cash flow and the impact was some tens of millions. So of course, significant, but I mean that's not sort of on its own behind the strong cash flow that we created. And on those projects, we continue to operate so that we run them on a cash positive basis throughout the project execution.

Then if you look at inventories, that has been a focus area for us for some time. Now when you look at Q4 inventory numbers, I just want to highlight that the MCP business back to continuing operations has impact on inventories as well. We talk about some EUR 50 million worth of inventory. And if you do the comparison, for example, to the balance sheet, end of 2024, so that is just something to be noted.

When it comes to payables, you are indeed right that we have gained some traction there. I wouldn't think that this is one-off activity. It's rather thanks to the work that our procurement people are doing to work with our suppliers and bring the payment times up in the discussions agreements that we have with our supplier partners.

And then finally, receivables, I mean nothing extraordinary, ordinary there. Continues to be a focus area to sort of make sure that our customers pay on time and in line with the terms that we have agreed with them. No material issues there to report, which is, of course, a good position to be.

The next question comes from Antti Kansanen from SEB.

It's Antti from SEB. A couple of questions from me as well. And coming back to the Minerals sales mix discussion. I mean if we look at kind of the equipment orders in Minerals in the past couple of years have been EUR 1.5 billion, EUR 1.6 billion, and that's the level of sales that you also delivered in '21. And the service book-to-bill is obviously better. So I just wanted to maybe understand better how do you expect that equipment backlog to convert into sales during this year '26? Is the backlog longer, shorter than what it has been? And is there still kind of a contribution from early orders that could drive that top line into growth in latter parts of this year on equipment specifically in Minerals?

Thanks, Antti, for that. And from -- if we start from the backlog number point of view, the backlog in equipment is in substance the same as it was when we started year 2025 where the backlog improvement is coming from -- is from our aftermarket business, which is good because now we have significantly more, so it's starting point '26 compared to the starting point we had for 2025.

Then if we think about the projects that in Minerals capital side that we will recognize during 2026, it's, of course, first to sort of bread and butter business, the small ones, which turn as they come. And then I mean, none of the bigger projects that we announced in late 2024 are fully complete. Yes, we have started to recognize the revenue, but they will contribute to '26 still. In some cases, it will go up to 2027. And if we think then about the new ones, I mean the smelter project and then the modern [indiscernible] gold plant.

So there, the revenue recognition will start potentially something H1 this year, but then towards end of the year when we get the underlying works with our teams, with suppliers, with customer moving. So that's a little bit the dynamics. And I think it's quite typical with these larger ones that it takes 6, 8, 10 quarters to deliver those. They are big projects. And when we do POC accounting on them, this is the outcome from a revenue point of view.

And I guess you're seeing fairly stable outlook for, let's say, the smaller ones. So the ones that you would book this year and would still contribute in a meaningful manner on revenues. So one would assume that the sales mix improves actually year-over-year, driven by kind of service growth and flattish equipment, or is that a bit of a stretch?

That's good thinking, Antti, as stated. So we see good amount in our pipeline of those small and medium-sized ones. And 2025 showed that we are winning also a lot of those opportunities.

Okay. And then the second one was on the Aggregate side. And I mean, it's a good order growth end of '25, I guess, positive indication now that we are heading into the summer season. Do you want to talk anything about how you're seeing kind of the European demand trending early this year? I mean you talked about that kind of there's a sentiment improvement throughout '25, but maybe not much happening on the utilization rates or the work situation for your end customers? So are you seeing kind of an improvement on that front? And are you seeing kind of volume pickup that would, let's say, compensate or more than compensate on the increased cost base that you have on the European production setup?

Yes, from the European market first. So yes, 2025 was already the year of the pickup. And it came from, let's say, Eastern European countries, if I put it this way. At the same time, we also had low hours coming to the machines located in other countries. So kind of like not creating the aftermarket potential. But from the new equipment point of view, there was a clear pickup and we see that the pickup is to stay. So there is a continuous request for quotes and also then winning the orders from the European countries.

If you look at the distributor inventories, that continues to be an encouraging data for us. The decline started spring 2025 and continues to be at sort of a level where we expect it to be supportive for our business in the short-term outlook.

Is it too early to comment anything on the potential summer season or the bigger Central European regions that have been historically big markets for you, the Germany and the France, countries like that?

Yes. I think that Germany, which was somehow may be impacting also the pickup of the Europe last year, the Germany stimulus package, which maybe have not creating so much of business coming from the actual Germany yet. So that is a little bit positive upside potential that when that governmental money actually is flowing down for the provinces and for the actual infrastructure projects, so that could be creating that normal seasonality in that sense, but no real signs of that yet.

The next question comes from Vlad Sergievskii from Barclays.

I'll start with commodity mix, please. Could you talk about the difference in demand levels between gold customers and industrial metal customers? Is there a notable difference in urgency to take investment decisions for those group of customers? Also, could you provide an update of what your exposure to gold customers was in 2025, and whether it could grow in 2026?

Vlad, good to hear you. Yes, the gold customers have had much faster decision-making process than the so-called traditional commodity metal customers. And of course, it has been driven by the very high record high prices of the gold and not waiting to get orders in and also the execution of the delivery projects moving forward. So that has been one area that we did see already '25 and seems to continue at the moment.

Excellent. Sami, if I can ask you about one specific project as well. It's the Reko Diq project, which obviously, you won some nice orders previously. What's the security situation over there right now? Because as you probably have seen, Barrick has put this project under review given the security concerns, I think it was last week. Would you give us some idea of what your backlog exposed to this project? And what's your view actually from a Metso perspective on what's going on?

So let's start for the very important one, which is the security of the people, and that has been on a very high security level from the beginning, and that was also something that we worked on together with Barrick to ensure that their people and our people have the maximum security all the time. So there has been no real issues that -- or incidents or anything like that.

And then from the perspective of Barrick making the moves, we have, of course, taken a lot of these things into account between the contract between Barrick and Metso. And in that sense, there is no real issues for Metso at this point. Backlog situation, I don't remember the numbers myself.

So if we start from the orders that we have reported, so second half of 2024, we recorded roughly EUR 150 million worth of recorded orders. And certainly, back to earlier discussion that we have here, some of those have been delivered or are in delivery as we speak. But I guess we will not go to sort of exactly there, how much has been delivered and how much is still in the backlog. But as a starting point, from H2 '24, we have that EUR 150 million-ish order intake from Reko Diq.

Excellent. And just to clarify, you continue to work on this project as normal? There is no like schedule adjustments or anything like that?

As per today, we act normally together with Barrick.

The next question comes from [ Alex Jones ] from BofA.

Just one following up on the question earlier about Aggregates demand in Europe. Could you expand a little bit what you're seeing in other regions of the world and whether you've seen any changes in any of those into 2026?

Let's start by 3 baskets we normally talk about, so U.S., Europe and then the rest of the world. And maybe this time, I can start from the rest of the world. And there we have seen quite a good activity level last few months. Obviously, this third basket is the smallest of these 3. But nevertheless, we are happy that our truly global exposure also for the Aggregate business is yielding results. So we have a good growth numbers coming from many countries in that basket. And Europe, we discussed.

And then U.S., which normalized quite well during 2025 to the normal levels. So there we have also this positive signal to our direction, what Pasi was saying that we do see that the distributor inventories have been developing positively from our perspective that distributors have been able to move the machines to the customers, and that gives a good normal situation for us for the beginning of 2026 situation.

The next question comes from Andreas Koski from BNP Paribas.

First, if I can come back to the order intake in Minerals, it's been a lot of discussions about large orders versus small and midsized orders. And in Q4, as you pointed out, you have had 2 large orders. And on top of that, you had the Almalyk order as well. I understand that the pipeline remains strong, but to repeat this kind of order level, EUR 1.1 billion, EUR 1.2 billion in the Minerals segment, do you think that we need to see large orders coming through also in the coming quarters? Or is it possible that we could expect a bounce in the small and mid-sized orders?

Yes. Thanks, Andreas. As said, we do see that the activity for the small and midsized stays in a good level. And then it's about the timing, timing question that when they actually come as a [ PO. ]

But for your question. So obviously, it helps when we get the larger ones. And as our market outlook statement also says, we expect to remain on the same level as in the Q4 when we did see that these larger ones started to come, and we do know that we are having discussions with the customers with the so-called final stage. So the expectation is about the same that we had during the Q4 that expecting the larger ones to come Q1, H1. So there is nothing at the moment saying that, that wouldn't happen. And to get those quarterly order intake numbers together, it is the mix of the larger ones, the mid ones, and then good strongly single-digit development in the aftermarket.

Understood. Very clear. And then secondly, on Aggregates, maybe a bit short term. But in Q4, you had very strong deliveries. Usually, we see somewhat stronger deliveries in Q1 than in Q4. Is that what we sort of should expect also going into 2026?

Yes, I think you spot it nicely, that one. So we did have a good amount of deliveries in the Q4, and that is making us to think that then the normal situation, as you were referring that stronger in Q1 than Q4, maybe it's not the case in this quarter now. So it's going to be good delivery, but not maybe stronger than Q4.

Yes. Understood. And then lastly, if I look at the P&L, the admin cost line increased a lot. Is that more or less only related to the one-offs or capacity adjustment charges that you took in the quarter? Or is it something else?

Yes. Thank you, Andreas. It's primarily those items impacting there. We have also some other variations, typical year-end stuff, but nothing material there. The bigger change is those one-off type items.

The next question comes from William Mackie from Kepler Cheuvreux.

A couple, please. First of all, with regard to the Americas or North America, could you comment a little on any impact potentially from your customers on Section 232 and how the situation sits between your Canadian operations and sell-in into the U.S.A.?

And then on a regional basis, the question is more around Minerals. When I look at the regional sales, I know there's a lot of FX effects in there. But South America seems to have come down a little and North America flat. I wonder if you'd comment on how the order versus revenue development has been in the Americas, South and North, and what your outlook is, particularly in South America?

Yes. Maybe, William, I'll start from the Section 232. So when it comes to Minerals, this has been in place since it was introduced. I don't remember the exact month, but during the autumn August 2025 or if I was wrong, apologies for that, but that time frame anyway. And our approach, like with other tariffs has been that we price this into our customer deliveries and then that has been successful. It looks that this is the approach the industry has also taken.

Then when it comes to Aggregate, the situation is a bit different. So you may, William, remember that this steel and aluminum derivatives discussion has been ongoing for some time. And when it comes to crushers and screens, the primary aggregate equipment, they are still excluded from Section 232. And there was speculation that this would change already late last year. We haven't seen that. And let's see if they continue to be excluded for good or if there is a change in this regard.

And then for your second question, of course, we can maybe comment about the FX. But that's, of course, living its own life. But when it comes to the Americas, both North and South, so for obvious reasons, they are the 2 largest regions that we do business in. And looking at the pipeline, so that is strong in both. So we are truly a global company, and so it's especially the Minerals business. But obviously, we have quite a lot of current opportunities in both of these continents, and that then has the impact for the FX later on or not, it depends on how the world is at that moment.

And then William, when it comes to currencies. So I think we have seen throughout 2025 sort of appreciation of euro against most currencies that are relevant for us, and that impact is then similar in the orders and revenue. So that shouldn't -- the FX, of course, impacts the sort of total levels, pushing euro level slightly down, but the impact is similar to orders and revenue.

A short follow-up, if I might. With regard to your strategy execution, great cash inflow, strengthened balance sheet recognized by the agencies. You clearly have more flexibility on capital allocation. You've made a couple of disposals. Are there more? But more importantly, what is the environment like for M&A additions? And what should we expect with regard to your acquisition-based strategy this year?

Yes. Thank you for that question. As we stated in the Capital Market Day, this is a growth strategy. And we know that by focusing, we are able to grow organically. But in the growth part of the success of the strategy is also the inorganic part. And we are having quite a good amount of interesting targets, if we put it this way. How is the environment, environment is quite normal in many sentences. Obviously, we are looking for those kind of targets that are clearly supporting our strategy and filling in either the technology gaps that we have or creating us synergies to really accelerate our growth initiatives. So ew are active in that front as well, as you saw that we just closed one in Australia.

And then when it comes to the other side of the portfolio, divestitures. So the Ferrous, Heat Transfer business and Loading, Hauling just completed. We don't have anything else ongoing in that side. So looking for growth for now.

The next question comes from Edward Hussey from UBS.

One more question for me. I just wanted to ask about -- so I mean, clearly, a strong Minerals equipment sales growth in the quarter. I'm just trying to sort of work out how this is going to translate to aftermarket in the coming quarters. I mean do you mind just to give me a sense of what the usual lag is between equipment installation and when it comes to an aftermarket? And also sort of what kind of level of aftermarket sort of take up can we expect? I mean what's the sort of aftermarket intensity on these sort of large projects that you're installing?

Thank you very much. That is always good when we get the new installed base out there in operation. The business that starts immediately is the consumables business and then also the expert services in the field. When it comes to the spare part business, that typically takes a few years before there starts to be significant amount of that type of business coming out of the newly installed base.

But all in all, it starts immediately with the consumables side and then the big kind of like upgrade potentials typically then come some equipment at the year 5 and most of them at the year 10. So this is like a long-term game in that sense to create a large installed base for the future aftermarket growth.

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

All right. Thanks very much for your participation and for questions and discussions. We conclude this conference call here. We will be back on April 22 for first quarter results. And before that, we are looking ahead for quite an active conference and road showing season. So looking forward to see many of you in the next coming weeks face to face. But this concludes this call. Thanks again, and goodbye.

Thank you.

Thank you.

Good afternoon, good morning, everyone. This is Juha from Metso's Investor Relations. And it's my pleasure to welcome you to this conference call, where we discuss our third quarter 2025 results that were published earlier this morning. The results will be presented by our President and CEO, Sami Takaluoma; and CFO, Pasi Kyckling. And after that, we will have a Q&A session. And as usually, we try and limit the length of this call to 60 minutes.

Before we go, I want to remind about forward-looking statements that will be made in this call. And I think without further ado, it's time to hand over to President and CEO, Sami Takaluoma. Sami, please go ahead.

Thank you, Juha, and good morning, good afternoon also from my side. Without further ado, let's start to look for the Q3 highlights. The market activity was very much in line with our expectations, and that also resulted us then to deliver healthy order growth. We had also strong sales growth for the quarter, and our adjusted EBITA was good, normal strong. And for this quarter, cash generation was very solid and gave us quite a clean sheet for the Q3.

Looking more than from the group perspective of the key figures. So orders received growth compared to the previous Q3 last year was 2%. And as we have highlighted in the Q3 '24, we did have significant large minerals CapEx orders that we did not have in the Q3 '25. Sales growth was then 10% compared to the previous quarter last year. And adjusted EBITA grew by 9%. All in all, the EBITA as the second quarter was having this dip, so we are now back in the normal Metso EBITA numbers.

Looking for our 2 segments, let's start from the Aggregates. We had healthy orders growth coming in the quarter, EUR 280 million. That is 13% in constant currencies. This growth was mainly driven by the normalized market in North America and then the pickup that we have seen coming from the Europe. Equipment orders did represent growth of 11% and the aftermarket, 2% of the order growth. Sales was also stronger than a year ago. Equipment sales growth was 14% and aftermarket 1%. Aftermarket share now with these numbers was then 32% compared to 35% that it was 1 year ago. And adjusted EBITA improvement by EUR 3 million, so EUR 48 million for the quarter, and that represents then 15.6% margin for the segment.

And Minerals had a very solid quarter in many ways. Orders grew 5% in the constant currencies, and aftermarket orders growth was now 12%. We saw in the CapEx side, very solid order intake when it comes to the small and midsized equipment orders. And in the aftermarket side, increase of the upgrades and modernizations as we have commented that they are in the pipeline.

Regarding the sales, EUR 1 billion plus compared to the EUR 928 million a year before. Aftermarket was delivering 4% growth and the equipment side was now a 19% growth for the quarter. Aftermarket share of the sales in this quarter was 60%, and the adjusted EBITA EUR 184 million was reported, and that gives the margin of 18.0%, which is pretty much in line from the last year, 18.1%.

And now Pasi, the CFO, will go more in detail the financial aspects.

Thank you, Sami, and good day, everyone, on my behalf. I would like to start by reminding that we have restated our comparative figures for 24 quarters and first 2 quarters this year regarding the Metals & Chemical processing business that we decided to retain. And consequently, we have reclassified the comparative information. Let's then look at our group income statement more in details. I mean, sales increased 12% in constant currencies from the comparative period to EUR 1,328 million. Adjusted EBITA, EUR 222 million, which is EUR 18 million or 9% improvement from the comparison period.

Net financials slightly up, reflecting the higher debt load that we have in our balance sheet. And income tax rate for the quarter, 24%, and then for the first 9 months or 3 quarters this year, 25%, so very much a standard -- within the standard range that we expect. Earnings per share from continuing operations, EUR 0.17, up by EUR 0.01 from the comparative period.

If we then look at our financial position. The average interest rate for the period was 3.4%. Our net debt, roughly EUR 1.1 billion. Liquid funds continue to be solid, EUR 460 million is end of September. And our net debt-to-EBITDA KPI when using rolling 12 months in EBITDA was 1.3x which is below our 1.5x target and also down from 1.5 that we had end of second quarter, thanks to good earnings in the quarter as well as strong cash flow during the third quarter.

When it comes to available credit facilities, our position is unchanged. We have our fully undrawn RCF. And then we have also a CP program, which is currently not in use. And then our ratings also, no changes. So a BBB flat from S&P and Baa2 from Moody's.

If we then move to the cash flow. So we delivered a healthy cash flow during the quarter, the strongest quarterly cash flow this year, EUR 266 million from operations. And overall, we have delivered during the first 9 months, EUR 609 million. A positive note is that working capital is not a drag for us anymore. Of course, the release, EUR 12 million is small. But given that we -- that the business growth was solid, we are quite happy with this and continue to work with further working capital efficiency improvements.

With that, I would like to hand back to Sami to talk about our strategy execution and outlook.

Thank you, Pasi. So in Q3, we also launched our new strategy. We go beyond. We are very happy of the launch, both internally and also externally. And in a nutshell, we are striving for being the best in the customer experience in our industries. We are working for the higher and higher aftermarket share of our businesses, and we also set a target for ourselves to be the frontrunners when it comes to sustainability and safety. And all this combined will then also ensure that we do deliver the financial excellence.

This is a growth strategy. We have set the target for ourselves for annual growth, and excellence means everything that Metso does, and that will be resulting then that Metso will be the #1 in our selected areas. We do count a lot to our very engaged employees, Metsonites out there. So the customer-centric growth culture is one of the key success factors and also ensuring that we do have the industry-leading capabilities in our organization to help our customers for the upcoming years.

I'm talking about the revised financial targets, just a reminder here. So annual sales growth target is 7%. And, well, starting point now looking for the year-to-date '25 numbers. So 2% we have been able to do. So this is clearly the ambition to accelerate this growth. Adjusted EBITA margin, we upgraded that to 18% from the 17% previously divided by the segments so that Aggregates to deliver more than 17% and Minerals more than 20%. And year-to-date so far, we are in 15.7%.

Net debt-to-EBITDA, the target for ourselves is that we will be below 1.5x. And that one currently, we are well on track already, and we are targeting to keep that, that way. And regarding the dividends, so the payout is going to be at least 50% of the earnings per share. And as you all remember, 2024, that was 63%.

The strategy execution is already ongoing. We have done investments, acquisitions to improve our selected areas. Screening business, Saimu, was acquired in China that made Metso to be in top 3 in the Chinese market for this business. And then 2 smaller ones, TL Solution, which is sustainability-related, mill liner recycling technology company. And then Q&R Industrial Hoses, which is linked to our pump businesses where we are also having accelerated growth targets.

We are currently reviewing some of our businesses. One of them is the loading and hauling business and looking for the next strategic steps regarding that business. Investments we have done already during the last year, some investments, especially to support our intentions to grow our aftermarket share, and one of them, the latest one is screening manufacturing center that we are currently building up in Romania.

And when it comes to the market outlook, we expect that the market activity in both of our segments, Minerals and Aggregates, will remain at the current level. And we also want to highlight in this context now that the tariff-related turbulence is not over. We do hear this from our customers, and there is potentially effect then for the global economic growth and also the market activity.

All right. Thank you, gentlemen, for the presentation. And operator, we are now ready for Q&A.

[Operator Instructions] The next question comes from Michael Harleaux from Morgan Stanley.

I have two, if I may. The first one would be on your impressive aftermarket order growth. If you could help us unpack what's underlying and if there are any one-offs in that, that would be very helpful. And then regarding the Aggregates segment, one of your competitors mentioned dealer restocking. So I was wondering if you could tell us if you are seeing any of that happening?

Excellent questions. Regarding the aftermarket growth in orders especially so, we have commented in these calls earlier that one element of the aftermarket portfolio that we have is the upgrades and modernizations. They do have a small cyclic element, and that has affected them so that the comparison period, especially last year, did not see almost any of those coming through.

And then our pipeline has been quite solid at the funnel. We know that the cases are there. There has been slight hesitation from the customers to make the decision, the timing of the decision. And now in Q3, they started to come through from the funnel as an order. So that was in line of our expectation in that sense.

When it comes to the Aggregates, the distributor network in -- especially in the U.S. had a situation that 2024, the end customers did not purchase machines at a normal pace, and that created the situation that the distributor stocks were quite full. What we have seen from our side is that the normalization of the U.S. market started to happen at the end of last year, beginning of this year, and that's visible for us when we look at the stock levels of our distributors. They have gradually month after month coming down from the very high levels that they were at the mid '24. So from that perspective, there is element of distributor stock has an impact also to our numbers, but we also see that the market has normalized from that behavior during this year.

The next question comes from Edward Hussey from UBS.

The next question comes from Christian Hinderaker from Goldman Sachs.

I want to start on Aggregates. At the CMD, you mentioned equipment utilization was down 20% or so from the year before. Obviously, interested then in the OE order growth in that segment at 11% and some of the comments in the release that you're seeing a better demand environment in both North America and Europe. What's driving that? And also, I wonder if you could perhaps give an indication on the average age of the installed fleet on that side of the business?

Yes. So the running hours is having an impact mainly for the aftermarket demand. Then the new equipment need is not always clearly linked for this because the new technology will enable more cost-efficient operation for the customers. So the renewal of fleet is depending on customers' own behavior in his or hers business case.

So from that perspective, it varies based on the customer, normal age, we have a very wide portfolio and deliveries every year, and that makes that there is also second owner or even third owner for the equipment normally. So this is how the aggregate mobile equipment business works. And the typical full lifetime, if well maintained, is between 15 and 20 years when the life is fully ended.

That's helpful. Maybe we can turn to working capital. At the CMD, you set out ambitions to take share in the aftermarket. I guess, keen to understand if we should think about this requiring higher inventory levels over the coming years, either in euro million terms or in percent of sales, or whether you think you can unlock some efficiencies that mean you can grow the top line whilst improving that inventory number?

Thanks, Christian, excellent question. And indeed, one of our pillars -- main pillars in the strategy is to grow the aftermarket business. And I mean, it's not a straightforward question to answer. But of course, if we grow the business in absolute terms, it will require more inventory. But then what we also believe is that in relative terms, when it comes to inventory turns or inventory in comparison to our top line. And there is room for improvement across the board, but then also in the aftermarket part of the business. So that's how we are looking at that.

The next question comes from Chitrita Sinha from JPMorgan.

Congrats on a strong set of results. I have two, please. So my first one is just on the Minerals margin, which was broadly flat at 18% despite the aftermarket mix. Could you provide more color on the organic development here?

Yes. I think 18% is something that at this point, we are happy. It's okay. It's in line of our expectation. As we build the road map in the Capital Market Day that how we are going to be reaching the 20% targeted number for the strategy period, so there are several elements. And in this quarter, the aftermarket was having a good contribution for that one. There is a need for the capital equipment sales to be higher in terms of leveraging that part as well, and then we continue to work with our self-help initiatives, and as 75% of the company is Minerals segment, the impact will be mostly seen there when we do company-wide actions.

Sami, I would like to complete or complement a bit. I think what you have also seen or what we have experienced in the third quarter is the strength of our capital business. I mean, relative share of the capital increase overall, but especially in the Minerals. And we have a good healthy business there and then it supports also delivering this kind of margins, and we are quite satisfied with that.

Great, very clear. So my second question is on the Aggregates margin where you've brought back some costs, I think, in Q2 in anticipation for a ramp. So what is the best way to think about the volume threshold where you can comfortably achieve more than 16% again? I'm trying to drive whether we should expect to pick up in Q4? Will it be more 2026?

Yes. So first of all, this cost that we have taken gradually back in Aggregate refers to our Finnish operations there and the fact that the local legislation here enables laying people off on a temporary basis. And during this low period, we have used that opportunity and are now during first half of this year when our order books have been strengthening, we have taken people back to work, and they are busy, currently working with the order book that we have.

Then I'm afraid we are not in a position to give you exact volume guidance on when certain thresholds when it comes to margins are reached, but overall, I mean, we delivered a few percentage points below 16% now in the third quarter. And this is also a volume gain. So there is still capacity in the system to deliver higher volumes without, for example, increasing manpower and then the drop-through from additional business comes with significantly higher margins.

The next question comes from Vivek Mehta from Citi.

I hope you can hear me well. It's Vivek on behalf of Klas. First question is around the restatement of the Minerals EBITA from discontinued operations. That impact grew in the second quarter. And curious to know what was the uplift to the Minerals EBITA from this in the third quarter? Was it similar to the second quarter? I appreciate that it doesn't impact the organic growth in margin. Just curious about the absolute impact.

Yes. No, thanks, Vivek, for that, and we published the restated numbers with quarterly breakup of '24 and first half of '26 earlier this month. And while we will not provide a specific third quarter numbers and then going forward, we'll not comment specific business lines, what we can say is that the impact was sort of a similar in third quarter as we experienced in average during these periods that we have restated. And I know that in the second quarter with these numbers, it was slightly higher than in average. But what we had was sort of the average from these restated periods.

Understood. My second question is just following up on the outlook and your comments around tariff uncertainty and so on. We're seeing very good growth in Minerals, excluding the larger orders. Appreciate maybe the Section 232 and tariff concerns might be more applicable to Aggregates. So curious, given the strong commodity price backdrop, why you've not potentially raised that Minerals outlook?

Yes. It's true that the tariff situation has impact on both of our segments, but it's also true that the impact potentially is higher for the Aggregate. So, tariff, in Minerals side is a little bit related to the U.S.-based customers and projects. And then generally, globally, the uncertainty, which is not helping making the significant decisions of the investments of multibillion for the new projects. But that, hopefully, is stabilizing and not having impact on that side.

And then in the Aggregates, it's really all about how the U.S. market will be reacting because the tariff situation is having an impact on, for example, what is the end customer pricing and these kind of elements. So that might slow down the U.S. now normalized the market from that perspective, potentially.

And also when it comes to Aggregates, and you made a reference to this Section 232. So the cross advance screens have been something that have been earlier excluded. Now it seems that they will be included in the tariff. And then certainly, it will have some impact on Aggregates market in the U.S. going forward.

The next question comes from Panu Laitinmäki from Danske Bank.

I have a couple of questions. Firstly, on the Minerals market outlook, how do you see the kind of likelihood of receiving very large orders still in this year? We haven't seen any so far, and it's a bit more than 2 months left. So do you think it's still likely or is it more like 2016? And maybe related to that, what is the kind of pipeline or sales funnel for these large projects now compared to what it was like a year ago, for example?

Yes. Thank you. A very good question. And this is something that we also are very interested to get the answers, but unchanged situation, how we read the customer negotiations and discussions, meaning that there are these projects, they are there, they are having a lot more tangible way of discussing, meaning that there is already customer organizations for the greenfield projects and so forth. And that's answer maybe for your second question, that this is something that we see as a difference for 1 year or 2 years ago that there is more concrete, tangible actions happening already on the customer side.

And then we remain in the same view that we have had, 2026 is almost like guaranteed that these orders start to come through and still staying on a positive that one, two might be even coming at the end of this year, but as you said, the clock is ticking, and there is 2 months to go. So that remains to be seen. But then beginning of '26, definitely.

From a commodity split point of view, these are gold and copper projects that are more advanced in our pipeline.

Okay. Let's hope for that. So secondly, I wanted to ask about the Aggregates and the European outlook. So you talk about European recovery. Can you talk a bit more about like what you see, which countries are driving this? Is it the German infra package already? Or what is driving this?

Yes. We believe that the German infra package actually had an impact. The orders that we have been receiving in the last 2 quarters, they are not so much from the Germany. But that decision created the trust in the European countries close by for the future. So the orders are coming from multiple countries into Europe and they are related to infrastructure projects in those countries moving forward and then the customers making the equipment orders to be ready to serve what they have promised to serve.

Okay. I have a third one, if I may. On Minerals aftermarket, so really good growth in orders, obviously, from the service projects. But if you take that out, how has the kind of underlying spare parts. Spare parts business growth developed? Is it like at the same level? Or has that accelerated significantly?

No major changes there. We have seen already a long time, solid, good single-digit growth for that, what we call day-to-day spare parts and consumer pools and service orders. So that continues the same way also in the Q3.

The next question comes from David Farrell from Jefferies.

I'll go one at a time. First question relates to Aggregates. I was wondering in terms of the 9% organic order intake growth, what percentage of that is related to tariff-related surcharges on your U.S. business? Can you kind of unpick that element for us, please.

Thanks, David, very, very good question. I mean a small part is from that factor. But I mean, it's not very material. I mean, I'm afraid I can't -- we can't quantify it, but that's the way to look at it.

Okay. And then my second question relates to the Minerals margin. It looks kind of -- by the increase in OE revenue and the impact that has on absorbing fixed costs probably played quite an important role in driving the margin up. Yet, if I look at the book-to-bill for OE so far this year, we're below 1x. Is there a risk that, that is a bit of a headwind as we think about 2026 margins that you simply don't have the OE levels that you had this year, and therefore, margins will face an incremental headwind?

David, good question there. I mean we are not thinking that way. I think when it comes to Minerals capital, book-to-bill, we have basically sold similar amount as we have gotten orders this year. And obviously, some of the orders that we are receiving now in the fourth quarter, they will still play a role also in 2026 sales delivery. But under the assumption that we continue to get healthy order book build during the fourth quarter, maybe some of those larger projects moving forward that we discussed earlier. So we don't see that situation.

And then obviously, already this year and also going forward, when we look at, within Minerals, there is quite different situation in the underlying business lines. Some of them are more busy than the others. And that's also the reason you may have seen that we announced and started some labor discussions earlier this month just to adjust our capacity in some of the business lines where we have less work currently.

The next question comes from Vlad Sergievskii from Barclays.

Yes. It's Vlad from Barclays. I'll ask 3 questions, if I may, and go one by one. Firstly, could you give us some maybe initial idea what directional sales growth outlook could we have for 2026. On one hand, commodity prices are super supportive. But on the other, book-to-bill slightly below 1 this quarter, backlog broadly flat. Do you think you could grow next year top line in line with strategic targets, which you recently released or it will be some kind of different phasing here?

Yes, Vlad. Excellent question. And you know also that we are not in a position to give such guidance. However, what we can confirm is that our target is to grow 7% CAGR going forward. And with that clock starts ticking 1 January next year, and we are working hard day in and day out to make sure that we can grow. And if I look at across the portfolio from 1 January onwards to end of September, our order book has increased by EUR 200 million, so -- or EUR 180 million to be specific. So that gives us a much stronger starting point for next year compared to the starting point that we had when we entered 2025.

Excellent, and that's great to hear. And if I could ask you on the consolidation point that you -- the changes you have made this quarter. I appreciate you are not giving the precise numbers for Q3. Would you be able to go to give us some idea what was the impact on the orders because orders for this business that you are consolidating has been super volatile. I think in the comparative quarter, it was almost no orders Q3 last year. Any color you can give us here would be very helpful.

Yes, I can comment on that order specifically. So it was a very low order number also in the third quarter this year. So the order growth is certainly not driven by this MCP business.

Excellent. And the final one from me. On the inventories, trade receivables, obviously, they are optically up sequentially this quarter compared to what we saw before. Is it largely driven by the gain, the consolidation scope that you've done? Or there are some underlying changes there as well?

Yes. Thanks, Vlad. And the consolidation change, for example, in inventory terms has some tens of millions impact on our inventories, i.e., increasing when we brought the MCP business back from discontinued to be part of the normal business, so to say. And then what we see overall happening in the underlying inventories is that we continue to decline the Finnish product inventories. And if I look one level below the balance sheet that we published, the Finnish products have continued to decline from end of June to end of September, order of magnitude EUR 50 million. And then we see a bit growth in the other areas, which is work in process and then raw materials. And you may remember that this EUR 200 million inventory program that we completed by end of June this year, that was really focused on Finnish goods. And then we continue on that journey. And overall, both inventory, trade receivables, but then over the larger working capital continues to be a focus area going forward.

The next question comes from William Mackie from Kepler Cheuvreux.

A couple of questions. Firstly, could you perhaps talk a little about the pricing environment and the price realization you've achieved across Minerals and Aggregates in Q3 in your efforts to fully offset any other remaining inflationary pressures?

And secondly, against the review in Minerals of the backlog up and the orders strong in the smaller and conversion business, can you talk a little to the seasonality of the business revenue realization in the fourth quarter? Historically, there has been seasonality. What should we think about the Q4 versus Q3 in this year regarding your bookings and realization of revenues off backlog?

Thank you, William. I can take the pricing one. Two segments. In the Minerals side, we see a very little pushback for our pricing. So we use our pricing power where we see that applicable. And that part is working okay. There is some discussions with the customers when they are not sure when they will be ready to release the orders for the capital side to get the price validity longer than we usually do. And so far, we have not gone that route.

Then in the Aggregates side, it is a little bit more the current situation in the markets under pressure. So there, it's difficult to use our normal way, the pricing power, and that is quite obvious at the moment in the Aggregate market.

And then, William, when it comes to Minerals seasonality. Overall, in Aggregates, we see clear seasonality, for example, third quarter, also this year was a slower period compared to some of the other quarters. In Minerals, we see much less of that. And we are delivering, we are completing the projects from our backlog also during the fourth quarter normally. So we don't expect anything specific there. Then of course, if I compare to third quarter, for example, there is Christmas and there is holiday seasons, and that may have some limited impact, but that's how we see it.

One follow-up, if I may. Building on the earlier question regarding the order pipeline in Minerals. Can you talk a little to the discussion around the upgrades and modernization pipeline rather than large, normally highlighted projects? Do you see the ongoing trend that we've seen in Q3 with exceptional strength continuing in the fourth quarter?

Yes, that's an excellent question. And as you might remember, I was responsible of this business area. And typically, we had the funnel of these upgrades and modernizations, 6 months ago, it was the largest ever in the euro value. So a lot of projects in a very good state of the discussions with the customer. And now we have started to see that they are released. And typically, I'm now referring what has happened in the past. They tend to then follow for 1, 2, 3 quarters in a row as a cycle when the customers make these orders. So expectation is that we do see also those orders coming in the Q4 and maybe also Q1.

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

The next question comes from Mikael Doepel from Nordea.

I have a few questions. I can take them one by one. So just firstly on the Aggregates business and what you see there, particularly in the U.S. If I hear you correctly, you seem to expect Europe to continue to recover into the fourth quarter, but I didn't really catch your views in the U.S. market clearly. So is it so that you see distributor inventory levels currently at normal levels? Or do you also expect some restocking effects there? Have you seen any negative impact of tariffs thus far? Or is it just an expectation that it must come? Just a bit of a clarification on how do you see the demand in the U.S.

I'll try to open that a little bit up. We have not seen yet, but what we look is the distributor inventory levels. And from that perspective, it supports that the business that we see coming from the U.S. would be the normal as the levels are not over high as they used to be 1 year ago, for example.

Then on the other hand, there is a risk that the new tariff included price levels of equipment and also parts might have an impact on how the end customers are evaluating their investment timing. Are they doing it now or expecting to look a little bit later. And even might have some challenges to fulfill the business plans with the new pricing coming through.

So these 2 are both there and giving this a little bit uncertain situation, if I put it this way. The other one is supporting that the business continues normally and the other one is putting a little bit of the dark clouds out there.

Okay. No, that's helpful. And then second question relates to the mining business and maybe the project pipeline you're talking about. Just wondering, if I'm not wrongly remembering things, I think there should be a bit of a tail still left, for example, from the Uzbekistan, fairly large copper smelting order you got back in 2024. There might also be some other tails from other bigger projects. I assume when you talk about larger projects, you are not referring to these ones, but if you could maybe just give an update on the ones that you have won but haven't yet gotten all the orders from, the bigger ones.

Yes. So first of all, Mikael, you have understood it the right way. So when we spoke earlier about the larger projects, so we were talking about future orders, which we have not yet seen and our expectation when they will realize, et cetera. Then when it comes to sort of existing pipeline, you are indeed correct that there is the Uzbekistan project, Almalyk, which is ongoing. And then there is also a number of other not only tails, but activities from the past, which are under delivery, and they are moving forward as per the plans. And then from financial statements point of view, we recognize revenue based on the percentage of completion.

And typically it takes quite some time from the order until we start deliveries because of either engineering needs to go forward or if that is done, then just manufacturing activities with some of these equipment takes quite some time. And then the local construction projects, also, they are not small by nature. So it could be 24, 36 months from the order until we are complete with our deliveries. But yes, that's part of the backlog realization that we see every quarter.

That's fair. And maybe just a follow-up on that. So what is the reason? I mean, why the tails from Uzbekistan is not coming through? It's a question about the progress on site, which is slow? Or is it financing? Or is it anything else? Just wondering enough when we should expect that one to go through?

Mikael, which way are you thinking? Because I mean, the project execution is moving forward, and we are realizing revenue and so forth, or how are you thinking about this?

No, I think there should be still some order value less from project. Have you already received everything?

No. I mean, there is further potential on this and some of the other cases, but we cannot really comment single customer cases in such manner.

The next question comes from Edward Hussey from UBS.

Sami and Psi, can you hear me now?

Yes, Edward, we can hear you.

Okay, cool. Sorry about earlier. Just sticking to the rebuild and modernization theme. So first question is just on the order side. My understanding is that the comps in Q4 were also extremely weak. So should we expect to see a similar growth rate on the rebuild and modernization side in Q4?

Yes. I said that these ones are those aftermarket orders that are not super critical from the timing perspective. And that's also the reason why they have this cyclic element. So we do have -- now we got the orders. We are happy of those. They were expected that they start to come during this year. We also expect that we see some of a similar way coming through in the Q4, but fully to be able to estimate or quantify the amount is challenging because they do not have this criticality the same way as other aftermarket products.

And you are right that it's a -- sorry, you are right that it's a weak comparison point in the Q4. We did not see these orders last year in Q4.

Okay. And then maybe just thinking about the mix in orders. I mean, is it -- when you think about these rebuild modernization orders, do they make up a sort of normalized mix in Q3? Or are they still below what you'd consider a normalized mix?

I would say that when looking at the backlog, for example, so they look normal, and then orders that we are expecting once again, difficult to really estimate very accurate way that how much we will get those. But I would say that they are normal, if something.

Okay. That's very helpful. And then final question just on the theme is just on the revenue side. Clearly, it seems to be margin accretive from the aftermarket business. In terms of the revenue mix, the rebuild modernizations, are these at normalized levels now? Or is there -- I mean could we potentially see a sort of acceleration in rebuild modernization revenues in Q4, and therefore, support from a margin perspective?

Generally, I can comment that much that upgrades and modernizations for us, they are good and very healthy business when it comes to the margins. So they are in a good level from our sales mix perspective.

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

Sorry, can you hear me now?

Yes, we can.

Perfect. Sorry for before. A little bit of tech issues and cut out sometimes. So excuse me if this was asked before. Just one more question from my side. The Aggregates margin has recovered quite nicely quarter-on-quarter despite the lower revenues total and also like in equipment itself. I was expecting before that the main kicker for a margin improvement would be basically the volumes coming back for the cost absorption. So what would you say is the reason now quarter-on-quarter with the margin recovery that we've seen?

Yes, it's a good question. And Tore, you may remember that, overall, we had some extra costs in the second quarter. And while, of course, Minerals is the one carrying larger share, Aggregate was also impacted. And from that angle, situation has normalized. And overall, not only in Aggregates, but generally, we had sort of a good cost control quarter, and that helped also Aggregate to deliver the margins they did.

Okay. Then just as a brief follow-up, if I remember correctly, then the main part that could have impacted aside from the ramp-up of the production cost would have been the ERP system rollout in Q2? Or am I missing out something here? And then when you say good cost control, is this something that you would then expect to continue into Q4? Is it like basically structurally now better cost control? Or is it a little bit more by circumstance that we have better cost control in Q3?

I mean, I was mainly referring to the extra costs, i.e., ERP that we had in the second quarter, and like we said 3 months ago, that was one-off costs. Those have not repeated third quarter. And from a cost performance point of view, our expectation is to remain in a similar position going forward.

All right. There seems to be no further questions. So we are able to wrap up this conference call well in time. Thanks again for listening. Thanks again for asking questions. We will be back with our fourth quarter and full year results on February 12 next year. But in the meantime, we are sure to meet many of you on the road in different events during the remainder of this year. Looking forward to that. And now we say thanks again, and goodbye.

Thank you.

Thank you.