Trelleborg Stock

Welcome all of you to this Q2 presentation of Trelleborg in 2026. I'm Peter Nilsson speaking, CEO of Trelleborg and joined here on the call is Fredrik Nilsson, our Group CFO; and also supporting us on the call is Christopher Sjorgen

, our Head of Investor Relations. So a presentation of our Q2 for '26.

As usual, using the presentation, which you can find on our web page, then quickly turning use this presentation, turning to Page 2, agenda slide. Normal setup for us in Trelleborg starting with some general comments and highlights from the quarter. Then also some comments on the business areas individually or 3 business areas. And then also then Fredrik will jump in and guide us through the financials more in detail and then finishing off with a summary from me and also some comments on the outlook for the running quarter and then finishing off with the Q&A session.

So as usual, turning to Page 3. Heading for our report is time strong growth and record high margin. Sales ended up a little bit north of SEK 9 billion, increase of 7% and is the highest sales we have had for a single quarter up-to-date. Organic sales, fairly strong for us at 8%. M&A, adding another 1 percentage point to sales and then currency headwind still of 2%. EBITDA up SEK 17 SEK 61 million which is then, let's say, yes, note will be higher than last year. is also then corresponding to a margin of 19.2%, which is both in terms of absolute EBIT figure and also in terms of margin, the highest we have had for a single quarter so far.

Still some negative currency translation effects on...

The conference call will resume shortly. We have some technical issues. We will be back shortly.

[Technical Difficulty]

We are still live. So you can -- you can please continue the presentation.

We'll start from Slide 1 again, please.

Yes. So sorry for this, all of us, we were not aware that we were out of the call, and we just pick it up. So we start off the full call. So welcome all of you to this Q2 presentation of Trelleborg in 2026. I'm Peter Nilsson speaking, CEO of Trelleborg, and joined here on the call is Fredrik Nilsson, our Group CFO; and also supporting us on the call is Christofer Sjögren, our Head of Investor Relations.

As usual, when we present our quarterly results, we're going to use a slide deck, which has been on our web page for some time or for a few hours. So that is what I'm going to refer to throughout the call. And using that, turning then to Page #2. Agenda. Agenda, Page #2, please. So Page #2 agenda. We'll talk about the highlights, and then commenting on the business areas and commenting on the financials, Fredrik going to guide us through the financial part of the slide deck and then finishing off with a summary and some comments on the outlook for the running quarter and then finishing off with the Q&A as usual.

So then turning to Page #3. Heading for our report this time, strong growth, a record high margin coming sales in the quarter. Ending up a little bit north of SEK 9 billion, which is an increase of 7% compared to a year ago, which is also to be noted, the highest sales we have had to date for a single quarter in Trelleborg. Organic sales in the quarter ending up at a high 8%. M&A adding another 1%. And then currency bringing us down with 2 percentage points. So that is the kind of the sales development. And if you look at the results, EBITDA ending up at SEK 1 761 million which is corresponding to a margin of 19.2%. And both of these, both EBITA and the margin is also the highest to date for a single quarter for Trelleborg.

We have some still some negative currency in elation effects on the EBITDA, which is bringing that down by SEK 24 million going down, but nevertheless negative earnings per share, increasing more than the EBITDA benefiting from improved financial net and actually increasing in the quarter by 18%, of course, also supported by the share buybacks, which I will comment on also a little bit later. Items affecting comparability linked to restructuring and line integration of M&A of some SEK 67 million in cash flow, solid cash flow, good cash flow. A bit north of 1.2, which is up by some 20% compared to a year ago.

Good management of working capital in a growing environment. And I mean on a rolling 12 basis, we keep the operating cash flow Cash conversion above 90%. Share buybacks continue at the same pace as been commented before, a little bit out of SEK 500 million in the quarter and also in the quarter, we announced an acquisition of a company called Gomet, an Italian company -- Italian-based company, focusing on the aftermarket of niche it automotive sealing products called Boots, which is overall, our position within [ Boots ] is strong globally, and this is kind of adding capabilities and adding a product range more focused on the aftermarket. So a very good supplementary acquisition to us, which we're going to benefit from in this niche application and this kind of what we call business unit within Trelleborg.

Turning to Page 4. Commenting a little bit more in detail on the sales development in the quarter. We have, let's say, a fairly solid organic growth in all main geographical markets. Europe growing by 6%, which is substantially higher than a year ago. Americas and Asia, both of them close to or even slightly higher than 10%. And good development in U.S. and Asia, we noted satisfaction as well. We are behind this 10% growth. We have good growth figures, both in India -- in all main markets in Asia, India, China, Japan and Korea. Overall, summering up on 8% organic. So good organic sales development in the quarter, which is fairly equally sprit globally as well.

Page 5, on the agenda slide, commenting on the business areas, quickly turning to Page 6 and commenting on Industrial Solutions, a solid organic growth organic sales up by 4% and M&A adding another 1%. And behind this is still a little bit lower project deliveries in the quarter, which we have announced before, and we keep to that guidance that we -- it was a little bit lower in the quarter, and we do expect that to pick up more here in the second part of this year. We also noted satisfaction that we Construction Industry sales is actually showing some improvements. It's been a fairly bad market for quite some time. And although running substantially below the peak a few years ago, we noted satisfaction that we see the first signs of an improvement.

Also good performance within Aerospace, within Industrial. We have an Aerospace exposure. Within Industrial Solutions, although the biggest aerospace exposure within sealing, solutions, but we also noted satisfaction that I get back to that later, it's developing very nice in Sealing Solutions and developing also nice within Industrial Solutions. Overall, this kind of boils down to an improvement, slight improvement, [indiscernible] EBITA and margin owing to higher sales volume and operating efficiency. And behind this figure is actually slightly better as we see it because also with this mix that we have mixed development within the quarter, we have had a slightly negative mix on the sales development here. So we are let's say, happy with the development of Industrial Solutions in the quarter.

Also here, of course, this acquisition of government is kicking in when that being fully integrated, this government acquisition, which I already commented on. Turning to Page 7. On Trelleborg Medical Solutions, stable organic growth. We are growing by 2%. Some mixed let's say, sales development with a good development in Europe and North America. While Asia was temporarily somewhat lower. Life Science segment, a smaller part smaller part of Medical Solutions, but a focused area for us continue to develop nicely and developing in a very robust way. Slight improvement, basically on par with last year for benefiting from the slightly higher sales, but well managed and good development overall. And we have a slight downturn and that is mainly a mix effect, but no big things here, stable performance and solid performance for Medical Solutions.

Turning to Page 8 and commenting on Trelleborg Sealing Solutions. Yes, we say very strong sales growth and also, let's say, with a nice uptick also in the EBITDA. Good development in most segments within Seal Solutions, good developer industrials generally with especially good performance in Europe and Asia. Automotive actually growing very nicely for us in the quarter. We are benefiting from our global presence, a global balance within this segment and of course, also -- most of you are aware, good development in truck and buses and also a recovery in the aftermarket sales where we've been suffering a little bit the last few quarters, but that bounced back in this quarter.

So a good development overall for us within automotive, aerospace, developing very good growth on a good -- on a global scheme, which is also creating good benefits for us in the quarter. So overall, a very good development in Sealing Solutions, which is then, let's say, delivering very good results. We're good -- very good development EBITDA and good margin development, good performance overall, also creating solid foundation for at least for the rest of the year. Turning to Page 9. A few comments on the sustainability before entering into the financials, continue to bring down our CO2 emissions within the group, down by 19% year-on-year, solid development.

Of course, as it gets lower, it gets more challenging to deliver it further, but the Yes, it is a high priority also going forward, and we are going to continue to improve. But although maybe not with this we have seen in this quarter, same, Page 10, same applies here. We have also another KPI on the next page, Page 10. is then also a share of yes, electricity, which is also a good development here, where we see that we are more or less now up to 100% of all electricity used is coming from renewable or fossil-free electricity.

So -- but as we go close to 100, and then of course, we cannot go above 100%. So you should not expect to big improvements here. We're going to make sure that we keep it on this level and continue to deliver good results also in these aspects. Turning to Page 11. On the agenda slide and financials, turning over to Fredrik, who is then starting on Page 12.

Thank you, Peter. Starting then on Page 12, looking at the sales development. We have reported a 7% increase in sales in the quarter from SEK 8.5 billion to SEK 9.16 billion, which is the highest sales for a quarter. If we look on the right side of the slide, you will see an organic sales growth of 8% in the quarter with growth in all 3 business areas. And there we have 2% negative from currency in the quarter and M&A added 1% growth in the quarter.

Moving on to Page 13. I Here, you can see in the second quarter, we achieved 9% sales growth at constant FX, which is above, you can say, the sales growth target we have over a business cycle. And as you can see here on the chart that it's quite some time ago since we were above that target. So it's nice to see that we are hitting that level. Moving on to Page 14. Looking at quarterly sales for the rolling 12 months for continuing operations. You can see here on the rolling 12 that we reached SEK 34.7 billion in the quarter. Moving on to Page 15, zooming in on the EBITDA and the EBITA margin. If we then start with EBITDA, excluding items affecting comparability, we have a nice increase of 11% to SEK 1,761 billion.

And in the quarter, as Peter mentioned, we have minus SEK 24 million in negative translation effects. If we're then looking on the margin side, you can see a nice increase from 18.6% to 19.2%. And this was the highest margin that we have had for a quarter and the margin improvement was due to, of course, the good organic sales growth, but also continued operational improvements. Moving on to Page 16. Looking at the EBITA and the EBITA margin of rolling 12 months. You can see an EBITA of SEK 6.43 billion. And then we had a margin of 18.5% on a rolling 12-month basis. It's an increase of 3% of the EBITDA over the last 12 months, but you need to have in mind that we have had significant negative translation impact during the last 12 months.

Moving on to some details in the profit and loss statement. Looking into the items I think comparability, we have minus SEK 67 million in the quarter. and that was entirely relating to restructuring projects. Looking at the financial income and expenses, you can see that it was a lowering of from SEK 125 million negative to minus SEK 109 million, so a nice improvement and the tax rate for the quarter at 25%, which is also in line with the earlier communicated guidelines. Moving on to Page 18, looking at earnings per share. And if you're looking at earnings per share, excluding items affecting comparability, a good improvement of SEK 431 million up to SEK 507 million. which was an increase by 18%. And that was, of course, due to the higher EBITDA, improved financial net and the share buybacks.

And then if we include items affecting comparability, it was an improvement from SEK 403 to SEK 485 million. Moving on to next page, Page 19, looking at the cash flow. Improvement of 22% in the quarter from SEK 1 billion to SEK 1.217 million. And then you can see here that the CapEx level is coming down. So there is a nice improvement year-over-year from the net CapEx. And then you can see an increase on the working capital side. That is, of course, partly related to that, you see the good organic sales growth. We are tying up a little bit more in accounts receivables. And we have also temporarily built up some strategic inventory of some important raw materials to secure that we can supply with strong organic growth.

Moving on to Page 20. Looking at the cash flow conversion, and very good cash flow conversion continue. As you can see here, a year ago, we have 87%, and now we are ending the quarter with 96% cash conversion over the last 12 months. Moving on to Page 21, the gearing and the leverage development. We're ending the quarter with a net of SEK 1.031 billion, and that's an increase compared to prior quarter, but please have in mind that we paid out our dividend in late April. We have also done share buybacks of SEK 458 million in the quarter. So then zooming in on the ratios, you can see on the slide, net debt over equity, 27% and net debt over EBITDA has gone up to SEK 1.3 billion. In other words, our balance sheet remains strong.

Page 22, looking at the return on capital employed. You can see here from a year ago, were 11.6%. Now we're at 12.6%. So you can see that the trend from the third quarter in 2025 continue. And the main reason here is the higher profitability that is improving our return on capital employed. Moving on to Page 23, financial guidelines for the full year. It's unchanged compared to what you saw end of first quarter. But looking into the details here. CapEx, SEK 1.450 billion. Restructuring costs, we expect that the year will end around SEK 375 million, amortization of intangible assets, SEK 650 million and the underlying tax rate should stay at current level, up 25%.

By that, I would like to hand back the microphone to Peter.

Thank you. Turning to Page 24. Back to the agenda slide and going for summary and some comments on the running on the outlook for the running quarter. Turning to Page 25. Overall, we see an improved demand in a lot of our end markets and basically struggle to see areas where we see not an improvement. So it's looking good. And we see, once again, most of the areas moving in the right direction. We also have, let's say, wide good development.

All business areas recorded solid organic growth. And we also see that sales in the quarter was also the highest date for a single quarter for us, good demand overall, both running quarter and also the way we look at the future. improved earnings. We also get a reasonable good drop on this one, which is also -- this higher sales is turning into the best EBITDA and the best margin for a single quarter that we had to date. Cash flow following. We are managing -- we feel we're managing the working capital in a good way in this growth environment.

Although, let's say, we are also, of course, cautious here, we have had some uncertainty related. I mean I couldn't say that we have any problems yet at last year, we don't know what's going to happen a little bit some of the raw materials. We'll be a little bit capital. We're building some inventory to make sure we get both availability and also to safeguard a little bit of the pricing. So that has been impacting us. But good management of accounts receivable, good management. And on top of that, that we have been guiding before also CapEx is going down, which is also benefits a good cash flow, good cash conversion above 90%, looking slightly lower in this quarter.

But overall, kind of guidance in relation to share buybacks is the same as before. Turning to Page 26 on the outlook for the running quarter. We should be open here that was a little bit struggled to get it right. We see an improved demand actually quarter-on-quarter but also that we have, let's say, the comparative figures going into Q3 is a little bit more challenging. So you should read this that actually we see that the organic growth figure from 8 might not be 8 in the Q3, it will be a bump down on that, but we will still remain in a very positive territory. So we feel confident on the demand, and we have good order books going into the quarter.

So happy to answer more questions about that. But I mean this is the way we would like to send a message. Demand is solid, demand is good. The money is actually sequentially improving. But as let's say, if you're looking in we do expect the organic growth figures to be down compared to what you saw in Q2. And then, of course, a normal add-on. We are living in a little bit uncertain territory at the moment in terms of political situation, of course, things might change and things might be different, but that is -- cannot do anything about that. We are ready to adjust.

But nevertheless, we need to add this comment to highlight the uncertainty we see around us. Turning then to Page 27 and then Q&A. Quickly turning to Page 28, I guess, and opening up for questions. Please go ahead.

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

I have three, please. Maybe just firstly, on Sealing Solutions. And maybe just commenting on the margin from here. Clearly, a strong development organically year-on-year and a good drop-through. But perhaps if you could just shed a bit more light in terms of how we should think about the margin development as we head into a quarter with tougher comps.

Starting on that one, I don't say tougher comps in that respect for TSS. We still believe we can improve from the running margin. We expect a good demand overall, and we're running with fairly high gross profits here. So if the volume continues as is, we are kind of positive also about the future. Of course, we not talk about another 2 percentage points or whatever up, but are running on a good level, and we expect it to remain at this level or even somewhat better for the second part of the year.

Very clear. And then my second question is just regarding your commentary on the product deliveries. So you pointed to a bit of a sequential increase in deliveries and obviously have communicated a bigger pickup in H2. Just wanted to clarify whether the deliveries in the quarter were in line with expectations. And then how are things developing on the demand side here?

Are you referring now to Industrial Solutions? Is that the question related to -- yes. So I mean, that is a long order. But generally, that business that we referred to is very long orders, and we know that we know the order book well in advance. So it's a very, let's say, low turn in the quarter, if I may say. So that is why we feel confident that these deliveries will be -- is developed as expected and is well in line what we guided for and believed in.

So we don't see any -- you never know, there could be some, let's say, delays in certain areas, but we don't know that at all. So it's not really a problem about availability or lack of orders. It's more a matter that the customers did not ask for the products here in the first part of the year, and we've seen increased project activity here in the second part of the year. So nothing really surprising or not in kind of no challenges as we see it today.

I'm sorry, just on the demand side one...

I mean, if you look at the project business, the demand is still, let's say, flat positive. So we do -- I mean, we are -- I mean, on this project part of Industrial Solutions, the main exposure is not the only one, but if you should pick someone is LNG development and all of that. And then that is kind of still -- so overall, let's say the activity level is high. And then, of course, it's always be bumpy on this kind of big project business. It goes a little bit up and down and there is always a phasing in the projects and all of that. But we are a solid order book. We have a if I may say for that business, an all-time high order book.

And so that is more a matter of executing and making sure. So it looks good, and that's not only for the next quarter, that looks good for kind of the next year plus in that part. But it will be a little bit fluctuations in between quarters since this kind of sizable project deliveries. And my final question is just on pricing. I just wanted to get a bit more color with regard to development in Q2 and then just what you're seeing at the moment as well.

Pricing, of course, a lot of -- let's say, suppliers indicating, let's say, cost ups and there's also some freight costs going up. But I mean, we are confident in managing that in a good way. We are you kind of resourcing where that is beneficial for us, and we do, of course, also do some pricing. But we believe the acceptance for price increases, well motivated price increases is good in a way. So we don't see a challenge in adapting for this potentially higher raw material pricing.

We should say that most of this raw material price increase has not really kicked in yet, but also [ Nader ] has our price increases. So we feel going forward, we don't feel any kind of -- we don't see that as a risk for us going forward on this cost inflation in relation to price increases. But there, we need to stay close to it and see what happens, and we adjust when we need it -- when we need and we feel confident that we will be able to adjust if needed.

The next question comes from Alex Jones from BofA.

If I can start on the outlook statement for Q3, you're talking about demand sort of an underlying basis sequentially better. Are there particular regions or end markets where you're seeing that? Or is that sort of across the board. And then you're also talking about sort of putting that to one side, the comp impact on Q3 growth. Is there any way to think about the magnitude of that and therefore, the potential step down from the 8% this quarter?

The demand is surprisingly good more or less all over. Of course, you have some automotive pockets, which is weak, if I say that. But overall, the global automotive is good. And also, the said truck and buses is good. We see the aftermarket automotive picking up. So there is, of course, but we don't really have this exposure -- direct exposure to the weak areas of that. But overall, we see aerospace is good semiconductors continue to delivering very well. We have oil and gas, LNG, delivering good. We see also some uptick in this, what we call, industrial automating, robotics and stuff also where we see higher demand.

I mean the area construction industry only commented on that one a lower level. We see slight kind of lights in the tunnel here for both commercial and residential construction. And a big segment for us, which is hydraulic, pneumatic, which is then driven by off-highway and agriculture also where we -- after some kind of challenging quarters, we see also an uptick in this. So I have to say, Alex, that we're looking fairly bright at the moment or wherever you look.

Medical Solutions is the one, but it's really bumpy on say prudently, I should say, the start of programs, and they are a little bit bumpy in the ordering. So that is what we have. And that is also maybe if I say on that, the main one of the main things here again in Q3. If you look at our Q3 figure last year, we had, I think, 13% or something organic growth in Medical Solutions. And we did comment already then that, that was kind of abnormally high and that is where we had to bring with us here now going into this quarter where we have a comp with a fairly, let's say, high. So we talk about a couple of percentage points down from this.

So we still let's say, expected to stay on a very solid number above our kind of long-term guidance of 4%. But then when it ends up, but if I can be very direct, if it ends up 5, 6 or 7, I don't know, but we don't believe it's going to reach 8%, but we neither believe we don't see it going to go buy. So that is kind of the ballpark figure to give some more clear guidance on that, as I understand, there were some confusion also some questions around it.

That's really helpful. And if I can just follow up one more on margins. You're talking the release about pricing and sort of cost efficiency, having covered extra cost due to the geopolitical situation. And I'm aware that you're particularly proactive as a business on those pricing and efficiency points. Was there any benefit in the quarter that you're able to sort of mobilize the company to price and to be more efficient on cost ahead of some of those raw mat inflations hitting the business? Or is it more sort of a neutral effect on margins this quarter?

I would say it was neutral to positive, but a very slim positive if that -- I mean also when you have all of this kind of turbulent situation, I mean, change management gets a little bit easier, you can speed up with actions, you can do the adjustments a little bit quicker. Both in terms of pricing and kind of own cost actions. But I mean, overall, this is not kind of an explanation on the margin. It's not an explanation of growth. And we don't -- I've got some questions also on prebuying. We don't see any sizable prebuying, we don't see really customers protecting themselves on prebuying.

So we cannot -- of course, we're watching it carefully, but we cannot really see that driving sales growth or driving the development in any meaningful way. Then of course, there could be individual cases. But I mean if you look at the overall development, we cannot see that being kind of any kind of meaningful impact in any way.

The next question comes from Ope Otaniyi from GS.

Good afternoon, Peter, Fredrik and Christofer. Two questions for me. Most of my questions have been answered already, but maybe just on medical, so low organic growth there. Could you just maybe talk through what's driving that? I think previously you talked about that being driven by Life Sciences, but sort of any idea what the run rate is maybe from when you speak to customers, especially in light of the fact that you've expanded capacity and it should be supporting organic growth.

It's not -- I know you're looking at the figures in detail, and we do as well. But I mean, this is really a small deviations here and that's a kind of a weekly delivery here and there were people, let's say, fill up their inventory or lowering the inventory. We don't see that as kind of linked to an octave level. And I think it is a little bit bumpy in medical, I must say. And we need to look at the rolling wring more to get the guidance. It will be, let's say, bouncing a little bit in between the quarters.

We still remain in a solid positive territory, and we don't see that changing going forward. Now of course, it gets tough comps in Q3 here as we had a plus or 13 last year. So now -- and that was kind of linked. So maybe we will get into a negative here in Q3. But I mean, that is not going to kind of influence the rolling 12 figure that much. So I cannot really -- sorry that I cannot really give you any more guidance on it. We need to accept that this is the way it is, and we need to look more on the routing 12 figure.

We are not concerned. Sorry, we are not concerned. We see the development. We're keeping the customers. We're keeping the programs. We're growing in the programs, but the customers are ordering a little bit in go a little bit up and down sometimes in orders, which we honestly do not fully understand why.

Great. And maybe just on Sealing Solutions, 12% organic growth is pretty strong, and I know the guide kind of reflects this in the go forward that you never have tough comparables. But could you just give us a sense of if that sort of -- there's any actual pull forward demand and particularly like what effectively weather plus 12% came versus your initial expectations going into the quarter?

I mean let's say the order book supported this going into the quarter, it was slightly -- was a kind of a slight acceleration in the quarter. but not really meaningful. We had a very good order intake in Q1. We have a good order intake in Q2. So we feel confident also going into Q3. There's a few segments pushing. We have aerospace continue developing very nice semiconductors is a lot up as well for us, although a small part of totality, but it's growing rapidly within Sealing Solutions going -- develop in a nice way. if there is anything which is more, let's say, meaningful positive in the quarter is probably the development within this, what we call Hydraulic promatic which is off-highway agriculture, where we see an improvement in the quarter.

Otherwise, it's kind of the same, a little bit slight in automation, robotics, but these two areas by both kind of hydraulics, off-highway and automation has been a little bit negative development in the last quarter. We've been waiting for the uptick in there, and now it's kind of yes, we're seeing it, but it's not kind of dramatic changes. So we see Senior Solutions is very wide in the exposure. So it's a kind of a very wide growth in a lot of segments and also in also a lot of geographies. So it is in a kind of a broad-based growth that we see in ceiling.

Great. And maybe just one last one just on margins. really strong in Sealing Solutions is sort of flattish in Industrials and Medical versus quite strong organic growth. Can you just help us understand sort of why the drop-through was maybe less than expected in those two segments despite decent organic growth.

I commented that the Industrial Solutions likely say, internal, you don't see it, but we guide you on that one. It's a slight negative mix that we have a little bit unbalanced growth in a few years. We do expect it to be better in the second part of the year. But nevertheless, in the quarter, that is why you don't really get the drop-through that we should be getting. But that is the way it is sometimes. In medical, once again, it's a fairly small business. So it's individual orders, individual customers as driving it. And we are kind of happy as long as it stays above 20%, and that is what we're aiming for, and that is what we do.

And we were we were about 20% in this quarter and then whether it's 20.2% or 20.4%, 215 is kind of very similar as we see it. So that -- I don't know if that's enough or you

The next question comes from Forbes Goldman from Pareto Securities.

Just one follow-up on what you said there on the semiconductor exposure. Could you give us any sense of the current revenue run rate? Or share of group sales and give some color on how that is growing and perhaps margins as well would be...

It's a low single digit, let's say, compared to the to the overall group sales. But I mean the growth rate is tens of percent in organic growth. And of course, we're also looking there to be just fully transparent on that one looking also for acquisitions, and we're doing investments. We are building a new we're expanding, for instance, our factory in China in order to support organic growth there. We have recently inaugurated a new facility for semiconductor is also in Malta for Europe. And we're looking also for a setup in U.S. So we are investing into that, and we're looking for continued kind of tens of percent of organic growth for the, let's say, kind of foreseeable future.

So this is going to be a growing part of Trelleborg, of course, we're focusing on organic growth, but also, hopefully, able to support it also with some supplementary acquisitions. So it's a priority segment for us. It's not as big as we wanted in Trelleborg today, but it will be will be a substantially bigger part of Trelleborg, if you look for the next kind of 3, 5 years. So that is kind of the horizon where you're going to see this growing part of Trelleborg.

Great. One more final one for me. On aerospace, the capacity investments you've been doing in Morocco, when do you see those ramping up? And how much capacity are you adding in total?

I mean, on that one, we are not only adding in Morocco is kind of a little bit specific to Airbus and Safran investment here to support them locally. So that is kind of more part of a global supply chain from them and being able to deliver products to them with the same kind of quality systems and same quality control. We are investing in a lot of sites to grow with aerospace activity. I don't really want to give guidance there, but I mean we're also talking here, let's say, 2-digit organic growth for the foreseeable future.

The next question comes from Vivi Midha from Citi.

Thank you very much, I have two questions related to [indiscernible] together just around the Sealing Solutions business. Firstly, on the margins, good incremental margins off the back of the very strong growth, taking to 22.5%, not far off the 23% level you've targeted in the past. Now that's 1 quarter and recognizing the TSS margins typically lower in the second half of the year. So I'm interested in the time line you now see for getting to that 23% level. Would you see that as feasible in 2027, for example? And then a related question, following up on your comments about the Hydraulics segment, the Fluid Power business.

I think my understanding is that you've generally outperformed the broader customer base but be interesting to get an update on where you see yourselves now versus before that market went to slow down? How far away are we from a penny peaks? Or are we now above prior peaks? That would be very helpful.

So starting with Hydraulics, I don't -- I think we are quite some way away from the peak actually. We are not yet -- I mean, agriculture, construction equipment improving, but agriculture, which is another big subsegment. Say, construction equipment and mining is kind of a good level, mining on the top level, if I may say, but construction equipment is still growing and agriculture see down. So I don't see that happening. And also, when you look at these previous peak levels, there is also quite a lot of kind of aftermarket in that part as well.

And we feel that the inventory levels there is still relatively low. So there is kind of a double up, which we do expect to continue for some time. So we are difficult to give a guidance. But I don't feel that we are, let's say, not even close. I don't think we are close to the kind of peak on that one. That's going to take some time before we get that fully into the books. And then talk about the margin in Sealing Solutions, I mean, we have a good development.

We do expect it to continue to improve, as you say, we are not kind of at the peak level here of 22.5%. But then whether to give guidance for individual quarters and stuff is difficult, but we do expect there is improvement possibilities. And of course, if you have over a cycle, that there should be a few quarters, we should be above 23% in order to get into that. As I say, there is some seasonality. There is some differences between quarters and between the businesses. So we are not seeing kind of the ceiling being 23. We need to -- if we get to, let's say, a stable long-term margin of 23%, we will have to have a few quarters, which is above 23%. So I don't know if you want to add something to that. But that I think what -- what I want to say about that one.

The next question comes from Agnieszka Vilela from Nordea.

Hi, Peter, Fredrik and Christopher. Maybe starting with your gross margin. It was record high now in the quarter, 38.5%. And we've seen that you've made very good progress on your kind of fixed cost base and you always address your production footprint. But looking at your OpEx cost, it has been quite sticky at 20% of sales. And my question really is if you're looking into it and especially maybe on the admin side, which is actually higher as a percentage of sales compared to other industrials.

Yes. I mean if you're looking at the quarter, it was a little bit higher -- it was higher year-over-year. But if you look sequentially from Q1 to Q2, it was more on the same level. But of course, that's also dependent on other activities that we are doing, for example, M&A projects and so forth. So that's a little bit ups and downs at [indiscernible] from that point of view, if you're looking at the central costs.

Yes. No, not really central costs, more like your OpEx, so more of the kind of administration costs that you present in your P&L?

I mean -- we have a different setup also you can say with the sealing solution that we are running with a higher gross profit because we have that kind of more solution selling, which is adding more sales and admin costs. So that is part of our business model now creating more margin on the bottom line. So it's difficult to have a view when you benchmark, but of course, we can always improve. And that is what we always doing, you see restructuring cost when we try to get out synergies when we're acquiring companies. So -- but of course, it's different to compare other industrials were running with a different business model.

No, maybe if you can add a comment would be appreciated.

No, no. It's more a matter of a push on that. And I mean, this is part of the way that we are able to get a better gross profit is, of course, we're adding more especially sales cost. We know that we're having quite a lot of application engineering. We are generally bypassing distributor sales, and that means that we need to carry a higher fixed cost, but that getting that back on a higher gross profit. So that is [indiscernible] the balance. If we cannot get the higher gross profit, then we have to lower the administration of all in OpEx. But if we can get it up to higher, we think the overall net is better in this way. But of course, we're looking at it all the time and we're looking at ways to improve it and looking to become more efficient without kind of without bringing down the support to our customers in any way.

Yes. Fair point. And then my last question is on capital allocation. If I look at your M&A activity last year, by this time point, you completed 4 acquisitions. I think running at two now. So can you just maybe talk a bit about your pipeline? What do you see? And what do you expect? Do you expect any deals to happen until the year-end?

Pipeline in M&A is improving. There is a lot of activity at the moment. So we are a debated here before it will be any summer holiday or not for us because there's a lot of activity level. And then, of course, you never know in these acquisitions on whether you're actually able to make the deal at the end. I mean the valuations are, in some areas, quite challenging, and we are not kind of willing to overpay private equities back in the market very eager to make deals. We are, of course, here long term or forever, and we are a little bit more cautious in certain areas than we feel that they are. So we are losing some deals just to be transparent.

But once again, the activity level is high, and we are confident that you're going to see us doing a number of M&A before year-end. Say pipeline is bigger than ever, but it's on kind of a number of projects ongoing at the moment is on a very high level in historic comparisons. And then once again, with that said, you never know if a deal is done until it's actually done.

The next question comes from Hampus Engellau from Handelsbanken.

Two questions from me. I'm sorry, coming back to your outlook. But normally, you guide with the adjustments of seasonal valuations, now you're bringing it in as a reason for somewhat weak demand, but also bringing in that you should probably have some more price contribution in Q3 for compensating for raw material and also that you see better project business. Could you maybe please add some more flavor on this outlook just for me to understand what parties is weaker? Is there an earlier asked about maybe some more business on prebuying in the quarter related to ceiling? Or how should I think about this for [indiscernible].

The guidance is actually, if you look sequentially, the business activity is up. But I mean, if I remember the figure is correct. We had a minus 1% in Q2 organic growth. And then we had a plus 3, plus 4 even in Q3 next year. So this is a 5 percentage point difference. And then if you're adding that to this Then, of course, it gets a very tough. So if you take that 8% and then 5 million in difference is 3. So we actually see it's going to be better than -- so we actually see an increased activity quarter-on-quarter. That is the way we calculate tamper. So if you didn't follow my -- so that is the way we look at this. So just to clarify, we actually see an improvement quarterly quarter-on-quarter, we see an improvement activity, but tougher comps means that we will most likely not be able to deliver 8% in Q3, but it will be, as we see today, very solid organic growth also -- and then, of course, there is some positive there is some negatives.

You're mentioning some positive, maybe a little bit more pricing, maybe a little bit higher project activity. But then we know medical is not going to be that's going to be negative because it's very, very tough comps in there. We have a high activity level in certain parts of Sealing Solutions, which is going to be challenging to actually bring more capacity on stream. So there is some negative, some positive, but it boils down, once again, there is couple of percentage points down on organic growth compared to this quarter. But once again, it's a very solid -- we expect a solid quarter also in Q3.

Fair enough. Maybe the last one question on the auto positive take on the quarter for you guys. At the same time, when I look at the different parts, the OE business generally has been much tougher in Q2 than compared to Q1. So from your perspective, is it -- I mean, trucking is up by now, but is it aftermarket that has stepped up further or what is driving your auto business being broad-based good in the quarter given how OE business has been?

It's say, aftermarket is up, trucking buses is up. And then, of course, we have global exposure. So we still feel that the China -- the Asian market is developing nicely. North America also quite okay more sour in Europe. But overall, I mean, most of our automotive exposure is linked to kind of global technology more than the global platform. So we have a very wide exposure and growing in China, growing in North America, then I mean we grow with that. And then, of course, we absorbed some lowering activity in Europe sometimes. But overall, we feel that it's a global exposure which is fully global exposure, which is benefiting us in terms of, let's say, passenger car automotive. So that is the way.

Are you gaining market share in? Because I mean, the light vehicle production in China is down 8% in the quarter.

Yes. I think we do that somewhat that we are in certain areas growing in that activity. So that is -- but it is the ops. That is the way we can explain it -- so we can only explain how the market is up, but we see also our kind of sales to brake systems and this content will also join and all of that, that is actually -- it is improving in the quarter. There is some kind of probably market share gains. But overall, we feel the market is fairly high activity in most of the areas within automotive. That is the way we look at it.

The next question comes from Timothy Lee from Barclays.

Actually, my first question a bit follow-up on the question before on the automotive recovery and also related to the recovery on construction TIS that you also mentioned in the slides. So this segment has been weak for a while, and then we are seeing some improvement. So how do you see the sustainability of the recovery based on what you discussed with your customers, how do you think segments will continue to be kind of improving next couple of quarters?

Yes. You say the construction segment, I mean, I don't know if you're following the is Sweden, there is this company, Invivo, which is kind of the biggest window door maker, which recorded a record-high order intake actually was yesterday or something, which is well in line. We see an uptick in that one. We see an uptick on the in the kind of house construction, especially residential construction. And that is -- because that's the main exposure we have within TIS is actually ceiling profiles for windows and doors. And that is where we see an uptick from low levels, but nevertheless an uptick on that one.

Overall, construction, infrastructure construction, if you may say that, has been on a high level for some time. We have rail expansions. We have tunnels. We have [ harbors]. So that part of the industry has not really been down, so that is kind of developing nicely. I think that that's automotive team, what you wanted more on that one? Or what do you what do you want to ask about automotive development, if I got it right from you.

Yes. I mean, I was just wondering how sustainable for this kind of recovery will be based on what you discussed with your customers because these segments have been weak for a while, right?

But I think automotive could potentially be, if I may say that there was an uptick because we were boosted in the quarter by some aftermarket pickup truck and buses in that segment is kind of looking solid also going forward. But it could be that it was, let's say, overly positive link to this aftermarket bounce back. But it's not a major part of Trelleborg anymore. And that is less, very small part of our exposure. But it could be that this kind of good development. I don't know, Christofer, you want to add something as well.

Yes. Well, Tim, you know that last year in Q2, we felt quite significantly in the aftermarket on our brakes due to the tariffs basically. And then the market has slowly come back in Q3, Q4, Q1 and now also in Q2. So we are basically back where we started in the aftermarket. So it's more a situation where we took a big hit last summer and now are back to normal.

A little bit follow-up on the organic growth expectation as well. So first of all, regarding the PIS delayed projects, which is going to deliver in the second half. Do you have a sense of what it will be more in the third quarter or in the fourth quarter, given that you're expecting the organic growth in the quarter to be slightly lower quarter-on-quarter because of base obviously, but does that imply that just likely for the delayed project delivery to be more towards the fourth quarter?

We don't want to split there. We say -- I mean, sorry that we need to let say that we see an improvement on that one, but it's not really major is an important part, but it is not kind of explanatory part of TIS, it will improve, and it will be creating some positives, but not really any major difference to the overall figures. So that is -- yes, I think the way I want to -- to comment on that one.

The next question comes from Ope Otaniyi from GS.

I do apologize on my question has already been answered. So I'll go back to [indiscernible].

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

Thank you. Thanks to all of you for listening in, and thanks again for your continued interest in Trelleborg. Happy to support you with further comments Christopher main contact point and he's happy to take your calls and take your questions. And of course, Fredrik and myself, happy and eager to support as well if needed and if we can kind of be helpful as it to contact us. So do [indiscernible] and speak to you soon, all of you. Thank you.

Welcome to the Trelleborg Q1 2026 Report Presentation. [Operator Instructions] Now I will hand the conference over to CEO, Peter Nilsson; and CFO, Fredrik Nilsson. Please go ahead.

Thank you, and welcome to all of you for listening in to this presentation of the first 3 months of 2026 for Trelleborg. As usual, I, Peter Nilsson, will start, and then I will also supplemented by Fredrik Nilsson, our CFO. And also on the call here is also Christofer Sjogren, our Head of IR. And as usual, you're going to use the slide deck, which has been on our web page for some time and use that to guide us through the call. And then we move to then Page 1 on that one and quickly moving to Page #2 with the agenda slide, as usual, starting with some highlights, general highlights for the group and then also comment individually on our 3 business areas. And Fredrik will guide us through the financials, and I will then be joining you again for a summary and some comments on the outlook for the running quarter and then finishing off with a Q&A at the end of the call.

Turning to Page 3. A good start of the year, solid start in multiple aspects. Sales ended up at slight north of SEK 8.6 billion, a decrease in Swedish krona by 3%. And behind that is a fairly solid organic sales growth of 4%. M&A is also adding another 2%. And then as most companies or every company reporting in Swedish krona, we have a fairly strong headwind from the currency, bringing down the sales in Swedish krona by 9%. EBITA is at slightly shy of SEK 1.6 billion, which is slightly down compared to a year ago, but fully then explained by also the currency effects, ending up at a margin of 18.4%, which is slightly higher than last year and also the highest to date -- highest margin to date for us for the first quarter. I already commented on currency translation, fairly solid, bringing down to SEK 132 million compared to currency rates a year ago.

Earnings per share is then up by 5%. We're benefiting from a better financial net, which is down and also from buybacks of shares, of course. We have, as usual, some items affecting comparability relating to ongoing restructuring program, slightly lower than a year ago and ending up at minus SEK 42 million. Strong cash flow for the first quarter, good cash generation and good management working capital and also benefiting from slightly lower CapEx in line with guidance.

And we also, which I already commented on, we continue to do share buybacks and it actually ended up at exactly SEK 500 million in the quarter, which is a little bit odd, but nevertheless, it's perfectly SEK 500 million. We also know to continue to do bolt-on acquisitions, and we acquired Nexus Elastomer Molds, which is then being added on to Sealing Solutions, a company actually a little bit different acquisition compared to we did before. This is more kind of a technical acquisition for us, which is benefiting us in the manufacturing processes and adding tooling and automation expertise very much in the core of what we do.

Turning to Page 4, some commenting on the sales growth, solid organic growth in Europe. Also solid organic growth in Americas and Asia and the rest of the world and then slightly negative. But all in all, as already commented, turning up to a solid organic growth of 4%, which is quite an improvement compared to a year ago and also improvement compared to last quarter.

Page 5, agenda again. Business areas. Turning quickly to Page #6 and starting with Industrial Solutions, a slight organic growth. I mean, organic sales ended up slightly positive. M&A adding another 3%. But of course, also here the reporting is in Swedish krona. We also have a headwind here coming from the negative currency translation rate, which is then bringing down the absolute figures lower than a year ago. And also, if you look on this one, we already commented on that, which is kind of in line what we have commented before.

We continue to have slightly lower project delivery, as said, but also with that comment is also a good order book related to this. So we are not concerned for the full year impact from this. We also note that, I mean, as most segments are improving, we don't see really any improvement yet on the construction industry. So that is still very much down compared to, if you call it, the normal level or the way it was a few years ago. Very good performance in aerospace, which is benefiting us. And all in all, we are slightly down on the margin here due to sales mix, and we do expect that to get back to more on par year-on-year following -- going into next quarter -- sort of going into the running quarter, we should say.

Page 7. Solid organic sales growth. Medical Solutions organic sales is up by 5%, a strong quarter. Solid sales growth, both in MedTech in Europe and North America, while Asia was a bit more sluggish for us in this quarter, also linked a little bit to different kind of start-up and different variety of inventory buildup among our customers. Life science segment, although small in totality, but we continue to deliver strong sales growth. And if you look at the EBITA, we keep the margin, but I mean, the absolute EBITA is down a little bit also here, impacted heavily by currency translation effects.

Turning then to Page 8. On Trelleborg Sealing Solutions, same heading here for our Medical Solutions, solid organic sales growth, organic sales up by 6% and another 2% added by M&A. Sales is actually quite good all across the regions in the Industrial segment and then most of our subsegments also in this industrial space is developing nice in the quarter. Automotive segment declining a little bit for us, and that is -- we continue to have a little bit challenge in the aftermarket. Sales, it's our sales. I mean, that is where we are waiting a little bit for a bounce back in that.

Aerospace segment continue to have very robust global growth, benefiting overall for the business area. Margin is then also up on the basis of this fairly solid organic growth, and we are up by, yes, 1.6 percentage points compared to a year ago. And that is on the back of these higher volumes, but also operational improvements kicking in. And then we should say especially on the absolute EBITA figure, of course, we're impacted also by the -- as on all of the business impacted by the negative FX translation effects. Acquisition of Nexus, I already commented on that, which is kind of a technical acquisition adding to more operational improvements and actual sales improvements.

Turning to Page 9, commenting a little bit on sustainability. We're actually flattish year-on-year. We are getting to levels where it's getting more challenging to improve and it's actually not that much in absolute figures anymore. We are, of course, working further, and we do expect continued improvements, but there is not a lot to do anymore in this. And the same applies if you turn to the next page, Page 10, is also that we're running on a very high level on renewable and fossil-free electricity, although up by 1 percentage point year-on-year, but the final percentage here is more challenging to improve further. But once again, of course, we're working with it, and we do expect a slight improvement also going forward in this aspect.

Turning to Page 11, agenda again, financials and then turning to Page 12 and handing over to Fredrik.

Thank you, Peter. Let's then move to Page 12, starting looking at sales development. Reported net sales declined by 3% in the quarter from SEK 8.866 billion to SEK 8.606 billion. As Peter mentioned, there was a significant negative translation effect in the quarter of 9%. We had good organic sales growth of 4%, and then Structure added 2% in the quarter.

Moving on to Page 13, looking at the sales growth trend. In the first quarter, we had a good 6% at constant FX. So a really good and strong sales growth trend in the quarter.

Moving on, Page 14, showing the quarterly sales in the rolling 12 months for continuing operations. As I said, SEK 8.6 billion in sales. And if we're looking at the rolling 12 months basis, it was SEK 34.1 billion in sales.

Page 15, looking at the EBITA, excluding items affecting comparability, down 2% to SEK 1.586 billion. In the quarter, there was also a significant negative translation effect of SEK 132 million in the quarter. And at fixed FX, EBITA improved by 6%. And then looking at the EBITA margin, up from 18.2% to 18.4%, which is actually the highest margin for first quarter ever. And the margin improvement was due to the organic sales growth and continued operational improvements.

Moving on, Page 16, looking at EBITA and EBITA margin on rolling 12. Here, you can see that the rolling 12, it was SEK 6.256 billion and a margin of 18.4%. And you can also see in the chart here that it was -- EBITA has been flat during the last 12 months, but we have had a material negative FX impact during this period.

Moving on to Page 17, looking into some more details in the income statement. Looking at items affecting comparability in the quarter, minus SEK 42 million, which was related to restructuring. Then as also Peter mentioned, looking into the financial net, there was a good improvement from minus SEK 144 million to minus SEK 102 million, and that was due to lower interest costs. And then on the tax rate, 25% in the quarter, which was in line with the communicated guidance for the full year as well.

Moving on, Page 18, earnings per share, a good improvement of 5% in the quarter from SEK 4.28 to SEK 4.50 when we're looking at excluding items affecting comparability. And the main reason here for the improvement was, of course, the lower financial net, the ongoing share buyback program, which was then partly offset by some negative translation effects. And then if we look for the group, including items affecting comparability, we have an improvement of 7% in the quarter.

Turning to the next page, looking at the cash flow. Good cash flow in the quarter, up 14%. And if you're looking then at the chart on the left side of the slide, you will see there was a good improvement in working capital. And as always, we have a negative working capital in the first quarter due to normal seasonality. And then also on the -- looking at the CapEx, good improvement of SEK 100 million in the quarter between '26 and '25.

Going to Page 20. Cash conversion increased to 95%, and we have a good high cash conversion ratio in the quarter. Moving on to Page 21, gearing and leverage development. Net debt at the end of the quarter amounted to SEK 7.8 billion. Share buyback of SEK 500 million in the quarter, as Peter mentioned. We have a debt-to-equity ratio of 21% and net debt in relation to EBITDA ended at 1.1x. In other words, our balance sheet continues to remain very strong.

Moving on, Page 22, return on capital employed. You can see it ended at 12.3%. We have had a flat capital employed compared to prior year. But the good thing is that the rocket trend continued from Q3 2025 and continue to gradually improve upwards.

And then finally, moving over to Page 23, looking at the financial guidance, which is unchanged compared to what we communicated in January. But just to repeat, CapEx estimated for the full year to be SEK 1.450 billion, restructuring cost of SEK 375 million, amortization of intangibles, SEK 650 million and underlying tax rate of 25%.

And by that, I would like to hand back the microphone to you, Peter.

Thank you. And turning then to Page 24, agenda slide again. And moving to the next section of the presentation, summary and outlook. Turning to Page 25. Good start of the year. That is the way we look at this. We have an improved demand seeing across multiple segments, while recognizing that we have a turbulent world and some big things happening in a lot of areas, which will impact the economies. But we -- honestly, we don't see it really in our businesses. We have better order intake. We have a positive book-to-bill in the quarter, and we, therefore, also get back to the guidance on the next page. But then we see actually an improvement here also quarter-on-quarter.

On top of that, margin improvement, I mean, it's not some big steps, but we continue to improve the margin and we continue to push it towards our long-term objectives. We also note we have, let's say, a quite heavy adverse currency impact in the quarter. I cannot really remember when we had similar headwind from currency before. I mean, 9% is big figures and SEK 130 million also on the EBITA, but nevertheless, managing it in a good way.

And I think it also shows when you look at the margin in combination with the currency impact that we don't really have any kind of transactional -- meaningful transactional exposure. So it's a pure translational exposure that we are exposed to. And we also note that we continue to do share buybacks. We bought, as I said before, we actually hit exactly SEK 500 million in the quarter, and we're going to continue with the same pace. And here also, hopefully, very likely here in the next few hours, we will have our Annual General Meeting, and then we'll get the mandate to continue with these buybacks.

Turning then to Page 26 to comment a little bit on the running quarter. I already see that this -- we believe -- on the backing of the good development in the first quarter, we believe that we're going to have actually an improvement here quarter-on-quarter. And I also want to comment on this also, we really in the quarter, we don't see any prebuying coming from these extra costs are going to hit us in multiple areas. So we don't see that impacting us in March. And honestly, we don't see it in the order book either happening really in Q2 yet, but let's see what happens.

But once again, on the backing of a good development and improved demand in most industrial segments, continued good demand in aerospace, also automotive, although a mixed picture, but we don't really see any downturn there either. It's a bit bumpy in the medical area, the customers is ordering in, let's say, big bulks. But also here, we have had a solid order intake, and we also look positive going into the running quarter. Of course, all of this is commented on, we already said, there is a challenging geopolitical situation in several parts of the world. And who knows what impact that will bring us if it escalate in different areas, could be positive, could be negative. But nevertheless, we recognize that this is a higher uncertainty than usual.

So then turning to next page, Page 27 and quickly turning to Page 28 as well and opening up for questions. So please go ahead.

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

I have 2, please. My first question is just on the price volume development that you saw in the quarter, especially in Sealing Solutions, which clearly saw a very strong increase in the margin.

Fredrik, do you want to go?

Yes, we normally don't split that out the price volume. But as always, I mean, there is a price component, but there was a solid volume development in the quarter. I think that is as much as I can say.

Yes. And it was a higher -- better volume growth in the quarter than we've seen for some time, and that is the main benefit of the margin. With that said, of course, we are adjusting pricing. We are, let's say, adjusting for increased costs going forward, but we cannot see that we've seen that in the figures yet.

Very helpful. And then you've already touched on this, but just drilling a bit down into the Q2 demand guide. Which end markets, in particular, are you incrementally more positive on or where you're seeing more positive demand? And then also, obviously, what's driving the confidence behind this guidance given the uncertainty?

As I said already, most of the segments doing good. We have what we call in the Sealing, we have Hydraulics, which is big going into construction equipment and mining and also partly actually first signs of some positives also in the ag sector. So that is benefiting. But also we see semiconductors developing well. We see aerospace developing well, and we see also automotive actually improving from a fairly soft start of the year, we have seen improvement here during Q3. So I'd say it's a broad-based improvement, and we have to kind of struggle to identify areas where it's actually getting worse.

With that said, we still did expect -- I mean, not everything is bright blue. I mean we did -- let's say, we are waiting still for an uptick in the construction industry, and that is where we are a little bit concerned. It's bumpy in the oil and gas, but we also see there LNG and oil and gas, I mean, projects are continuing. So I mean, honestly, it's kind of a very broad-based improvement, and we struggle to see areas where it's not improving or at least moving flat.

The next question comes from Opeyemi Otaniyi from Goldman Sachs.

Maybe 2 questions from me, just on the Middle East and then visibility on LNG and maybe an uplift there. But can you just talk to sort of any revenue impacts and sort of cost impacts you saw from the Middle East crisis? And then on energy, could you just update us on visibility of sort of project delivery improving in sort of Q2 and H2 as well?

I mean the limited, let's say, business impact. We have some project sales in Middle East, but it's not really stopped to be honest. It's continuing. We have some projects ongoing that are continuing, and we have some repair projects kicking in as well now following this, let's say, what has been happening there. So far, we don't really have an impact on the actual sales. We do expect the energy pricing going up, and we do expect that to kick in on the raw material, but that is something as usual in Trelleborg, we're going to adjust to that, and we are not kind of overly concerned. It's extra job and this is something which is maybe not, let's say, value-adding long term.

But I mean that is something we manage and something we do. So the impact from the Middle East so far is mainly that we do expect going forward some raw material pricing and some freight and all of that going up. But that is kind of basic business and something we're adjusting for. On the project business, I mean, we have a solid order book and overall, both in kind of tunnels and marine tendering and also some oil and gas in general. So this project business has a solid order book, but it's been -- there's a little bit ups and downs depending on when projects are being delivered and being installed. So that is kind of normal, and we have a good visibility on it. We have guided from last quarter, this quarter is going to be a little bit softer. Now we do expect it to improve somewhat in terms of deliveries for the rest of the year. So we are not kind of concerned and the visibility on that part of the business is very good.

The next question comes from Alex Jones from Bank of America.

Two, if I can as well, please. First, just a follow-up on your comments on not seeing any prebuying. Can you just expand a little bit on how you reach that conclusion and make sure that customers aren't precautionarily stocking up across different end markets ahead of potential price increases or supply chain impacts. For example, did you see growth improving linearly across the quarter? Or was it very concentrated in March and the start of April? And then secondly, just on raw materials, following up on the previous questions. Are you able to give any color on sort of the magnitude of price increases that you're talking about with customers so far and whether that will already have a positive impact on the organic sales growth line in Q2?

First on the prebuying, I mean, generally, we are not kind of getting orders one day and shipments next day. I mean we are getting, let's say, a little bit longer ordering times and longer shipment times. So that means that we have not really seen it happening. Of course, it could be some of the orders going forward, there could be some prebuying, but we don't see kind of any bigger magnitudes, and we don't see any customers doing rush orders and stuff. So they are continuing as usual, but we have plenty of orders, it could be some of it. But we don't, I mean, see any kind of change in pattern or change in anything in a way.

March was, let's say, a bigger month than the other ones, but it's also more, let's say, working days and it's normal that you have a soft start in January and then it picks up in February and March. So of course, it was a good ending of the quarter, but that was also kind of as expected. So -- but in short, there could be coming some prebuying now as the price increases is kicking in. But we have -- honestly, we are not seeing it really in the order books or in our kind of discussions or talks with our customers.

Second question on magnitude of price increases. It varies a lot across what kind of raw materials you're talking. You have these very basic raw materials for us in the rubber, carbon black or SBR and of course, freight is also something. So the products which are exposed to these areas, then we probably talk kind of probably double-digit, let's say, price increases. But for the majority of the raw materials, it's kind of difficult -- the vast majority, we are very little exposed to this kind of, if I may say, the basic, let's say, rubber polymer materials.

We are more in specialty materials and our pricing or the costing for our suppliers is more linked to capacity utilization than actually underlying price increases. But with that said and done, I mean, I don't really want to comment, Alex. We are in the middle of that at the moment, and we are working on it. There will be price increases. I do not expect the price increases to kick in that much during Q2. So it's probably going to be more going into the second part of the year.

But exactly how much and we -- honestly, I mean, we don't have the full map yet. We are working on it, and we are implementing in some areas. But I mean, also it's not happening overnight. So that is going to be step-by-step kicking in during Q2 and then probably more visible going into the second part of the year. That's what I can say, Alex, trying to be fully transparent.

The next question comes from Agnieszka Vilela from Nordea.

I have a question on the acquisition impact. It is fading away a bit now, 2% in the quarter. And according to my calculations, unless you release any new kind of acquisitions information, it will come down to 1%. So can you just comment, Peter, on the M&A landscape right now? And should we expect any more deals in the near term from you?

It's always challenging. We're working on deals, let's put it like that. We have several discussions going. Exactly -- and we are -- let's say, firmly believe that we're going to do more deals this year. But I mean, exactly when they kick in and when they will be done, it's difficult to comment. But I mean, I would be disappointed if we're sitting here by the end of the year and we have not done a couple of more deals, but you never know until it's signed and communicated. But the activity level is high. There is plenty of prospects.

I think it's actually the increased activity levels we see private equity guys coming in, trying to sell, of course, with quite demanding valuations. I mean it should be honest to say that we stepped away from a few processes lately where we lost the case mainly against private equity guys, which is now starting to pay up again, and we are, as usual, careful on that one. But it's very difficult to give a figure on this, Agnieszka. But I mean, we will do more deals and there will be more deals communicated. And you're probably correct, by the way, on this on the 2% to 1%. That is probably a good estimate.

Okay. Perfect. And then I have a question to Fredrik as well. You still keep your CapEx guidance at SEK 1.45 billion for the year, but your running rate right now for CapEx is below SEK 300 million per quarter. So do you foresee any significant CapEx investments ahead of you?

No. But I mean it's always a little bit of timing. So I know we started the year a little bit lower, Agnieszka, but we still feel based on what we have in the -- our strategic plans, and there is also a couple of greenfields that will be going on for 2026. So we expect that we will reach that level that according to our guidelines.

We have 2 big ones in India kicking in now. I don't know which other ones do we have.

And we are finishing off, of course, the one in Morocco, we're finishing off one in the U.S. So we expect that we will end the year at the level we have communicated even if the year has started a little bit on the lower side.

The next question comes from Timothy Lee from Barclays.

So I have 2 questions. The first one, again, about the second quarter guidance. Can you also clarify a little bit whether this expectation of better demand in the second quarter? This also sit on the fact that last year second quarter was a bit low in terms of organic sales. So we had a higher -- we had a lower comparison than last year. So that's the first question.

Yes. I mean I don't really -- we are only commenting on sequential, and we don't really -- I cannot really develop it any further. I mean we have a good order intake. We have solid development in all areas, and we do expect this improvement from the run rate in this quarter to improve. I mean we're not really comparing with a year ago, we're comparing quarter-on-quarter here sequentially. So that is, I think, what I can say on that. I don't know if anybody else want to add anything. Is that okay, Tim?

Yes, sure. So yes, the second one is about the Industrial Solutions. Can you also please quantify a little bit of the impact of project delays in terms of deliveries? I think that you're expecting sales to increase in the second half and margin to improve this next quarter. How much of the organic sales growth can we expect incrementally from these deliveries and what kind of margin improvement...

Sorry, I don't really want to give a guidance, let's say, business area and business areas. But as rightly said, we do expect it to improve going forward. And of course, I mean, then it will be an improvement, but I cannot really give dimension on that one. And even though we say the kind of project sales is improving. But with that one, we look at that for the full remainder of the year.

But honestly, also there, I mean, some of these projects, we don't know whether it's going to kick in, in Q2 or Q3 or Q4, but we do see that it's going to improve. I mean we have a few projects which has been a little bit slow, somebody holding back. But of course, we know the order book and we know when the customer is asking for the products, but it's still a little bit uncertain exactly what month it will be invoiced. But if you look at the full year, we do expect it to bounce back a little bit compared to what we have seen in the last few -- the last 2 quarters on Industrial Solutions.

Got it. Very helpful. Can I just follow up a little bit on -- can you also tell us about your book-to-bill for the group or for each segment, if you can?

I don't really want to give, let's say, these, we are not reporting that. And I mean, we are -- but it is higher -- of course, I mean, as we are guiding for a higher organic growth in Q2, it is higher than the sales. So it's higher than the sales growth. But I mean, we don't really want to -- we have decided not to release that figure, but you have to, I think, expect the comment that it's higher than the sales growth.

The next question comes from Hampus Engellau from Handelsbanken.

Two questions from me. Firstly, if we could drill a bit on the automotive demand during the quarter, you see a sequential improvement. But also interesting to hear how this part that is impacted by the tariffs is developing and how do you see that going forward? And then the second question is related to Asia. If you kind of remove medical from that, I know, for instance, that Sealing is doing very well in China. Could you maybe talk a little bit about China and Asia ex medical, what you see and how that is trending?

On the automotive tariffs, I mean, it might be that there is -- we have a good development in North America, and I don't know whether that is. But there's also a lot of new models being launched in U.S. this year, maybe coming also from the tariffs, but more from a model change perspective in U.S. and that is always with the model changes, there is some prebuying and some inventory buildup.

We had a very soft start of the year in automotive, but that's been improving step by step. I don't know whether there's a reaction or a very careful start of the year. And I mean it's really difficult to find the exact drivers for it. But China continues in a positive way and Americas doing better. Europe a little bit softer. But overall, all 3 areas is actually improving sequentially, to be honest. So it is kind of an improvement, which is a little bit surprisingly good, to be honest, of course. But I mean that is kind of -- we have to trust the fact and that is the way it looks, both in terms of sales and order intake.

And then the second question was about Asia. I mean also when we say when we report Asia, it's also rest of the world. So we are -- that is also something we get back to this project deliveries. We have good project deliveries in Australia a year ago. There were also some in Southeast Asia. We had a Taiwanese order. So it's a little bit bad comps in a way, which is pulling it down. So the core kind of industrial sales in Asia is developing quite okay. I mean we are growing semiconductor sales.

We are growing kind of hydraulics, let's say, construction equipment-related sales. India also doing solid. So I mean, it's not really the majority -- the main explanation on this, let's say, negative 1 organic growth in Asia is actually related to fairly challenging comps related to project sales and the majority -- I mean the majority of that -- I mean Asian sales in it, but there's also some Australian sales in it and some African projects and stuff. But that is -- this kind of -- this also, unfortunately, this varies a little bit in between the quarter. So the core sales, if I may, core industrial sales in Asia is still developing in a favorable way.

The next question comes from Mats Liss from Kepler.

Three, I think. First, I mean, you talked about the pretty slow start of the year and improving momentum in March there. Is it fair to say that you were sort of on average 6% for the quarter reached some 10% plus in March?

I don't want to comment on that, Mats, sorry. I mean we're commenting on the quarter. It is, let's say, improvement -- as you say, it's improvement throughout the quarter, but it was a soft start in January and then February and March better. So that is probably the same. But it's also -- if you look individually in March, of course, it was also higher invoicing days. So of course, naturally, it was a good month, but it was also, let's say, by day -- business day [indiscernible] well. It was okay, but it was not extraordinary.

And well, number two then, well, could you just remind me, I guess, everyone else knows about this. But in Industrial Solutions, you have this project. I mean, raw material prices have come up a bit. Do you hedge them fully, so there is no risk there for you?

Generally not. But -- generally, we do not. There is individual projects where we do it, but we are kind of also prebuying a little bit there. So it's a balance of prebuying -- hedging is generally quite expensive. So the way to hedge it is to prebuy or pre-agree, but we don't do that generally. So it's more a matter if it's a high kind of raw, which is generally not the case, but there is any case where we have high raw material content, we are looking for ways of securing. I mean with that said, we don't expect that we will, let's say, lose any margin on this kind of higher raw materials. So we will sort that out and we will manage it. So you will not have as much complaining about that in the next few months that high raw material prices is pushing down the margin. This will not happen.

Okay. Sounds very sure. And then restructuring, I guess it was a bit lower than last year. Is this the new level? Or is it sort of quarter-by-quarter you make this...

It varies depending. I mean most of it is related to factory closures and that is kind of long going plans. And I mean that sometimes we plan them several years ahead, and that is more individually hitting. So I think you have to look at this not as an individual quarter, but as a kind of a rolling 12 figure. I don't know, Fredrik, do you want to...

No, I mean the guidance that we have on the SEK 375 million, Mats, that is what you should expect for the full year. And then it can be a little bit bumpy between the quarters. But looking for the full year, it's SEK 375 million that is the level you should have in mind.

Great. And finally, just coming back to Agnieszka's question there about M&A there. I mean, is it fair to assume that these medium-sized acquisitions that you have of '25 and '26 like Nexus, is that the size to be expected going forward?

Yes. I mean we say generally, it's between kind of EUR 10 million and EUR 50 million, that is a typical size. And then probably the deal size is similar or slightly higher. So that is kind of typically the cases we're looking at because if we go bigger, they are generally not as focused. And if we buy something, we want to have really a focused acquisition, which is benefiting us in a specific geography or a specific technology or specific kind of business. So it's not really that we're looking for these bigger general acquisitions, which contains a lot of different businesses. We are looking to buy very focused businesses, which is kind of a very nice bolt-on to something which is already existing and already well positioned.

[Operator Instructions] The next question comes from [ Bowen Thacker ] from Bloomberg Intelligence.

I just had one on Sealing business margin. What should we think about the cadence of the margin of this business going forward given the significant improvement you've seen this quarter? Should this improvement kind of hold? That's my question.

No, of course, we're aiming higher. And we are always commenting on Sealing. It's running with fairly good gross profit, fairly good contribution margin. So if we see volumes continuing or even improving, then we should see actually continued improvement in the margin as well here. And that is kind of what we're looking at and what we have been commenting for quite some time that when or if volume kicks into Sealing Solutions, especially, we will see an improved margin in that business. And that is something we still believe in.

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

Thank you. And thanks all of you for listening in, and thanks for your interest in Trelleborg. I mean we're happy to support you further. Feel free to contact me and contact Fredrik and especially contact Christofer if you have any follow-up questions or any kind of further input. So do take care, meet you soon and all the best.

Well, good afternoon, everyone, and welcome to the summary call we do each quarter just before we enter our silent period. And you all know the purpose of this call is to make sure you are all aware of what we have communicated throughout the quarter, especially trends we see in our organic sales. And for those of you who have called in before, you know the premise in this call, I will not give out any news or figures that we have not previously communicated at conferences and seminars and other events throughout the period.

And you also all know that as the quarter ends later next week, you should also be aware that I'm not privy to the full quarter developments. And while I've seen the performance in January and February, the full March numbers will not be available until a week into the new quarter. Obviously, in today's call, I cannot go into in fine details in all subsegments. So I will, as per usual, paint with broad strokes and save the detail for when we report our results on the 23rd of April.

So let's begin, as we always start this call, and that is our guidance for Q1, which we said in our Q4 report. And in late January in connection with our Q4 report, we said that we expected the demand trends for our products and solutions to be more or less developed sideways in Q1. And as a reminder, the group organic growth in Q4 was plus 1%. And that number was dampened by the pushbacks of the project orders in Industrial Solutions.

So despite all the world events that are happening around us, we stand by this guidance. And moving on to the business areas, we'll start with Industrial Solutions. In Q4, Industrial Solutions had an organic sales decline of 3% with a margin of 16.5%. And the decline we said was all related to project delivery pushbacks due to customers working at full capacity.

In Q1, we still see that the project sales are not really picking up from Q1 and the trend is similar, i.e., everything but the project sales are doing pretty good, but hampered by these pushbacks. Now if I should just mention some highlights among the segments I've seen so far, I can say that aerospace is doing very, very well. Automotive for this business area is actually doing okay. And then we have very solid development for our water infrastructure, which is, by the way, a new business unit in Industrial. It's been carved out and stands on its own legs in Industrial Solutions. So we'll talk more about water infrastructure in the coming quarters. Again, the decline is then coming from project sales within gas in commercial construction or infrastructure construction, which is down and that is very much due to what I mentioned already, i.e., our customers are working flat out and cannot take -- accept more deliveries from us until they have pushed out their own sales through the factories. That goes also for port and marine projects.

So all in all, I can say that some of these projects are quite profitable. And since we have a little bit of a worst mix here, I expect the sales -- the organic sales to be similar to what we saw in Q1, which was negative 3%, but could be slightly better. I don't know yet. But that's my feeling now. And the margin will probably come down due to the sales mix, i.e., we have some high-margin project sales, which we expected to deliver in Q1, but it looks as if it's going to be pushed back.

I cannot, at this point, say exactly when we will deliver these pushback projects, but it will take place this year at least. So it shouldn't have any impact on the year as a whole. It's just variations between the quarters, if you will. I should also mention that we have a really good book-to-bill in the quarter so far in Industrial Solutions, which then goes to show that it's not the underlying markets that are deteriorating. On the contrary, we are on very solid ground here.

So if anyone has any particular questions that I may be able to answer, please raise your hand, and I'll see if there's any questions on industrial. Yes, Vivek.

My question is just around the growth dynamics. You highlighted we still got these pushbacks impacting you. The comp is slightly easier in the quarter. You have about 2 percentage points easier comp. And so just thinking about that, you're saying that the book-to-bill is developing well. But in terms of your underlying deliveries, I mean, is the underlying level of deliveries slightly weaker in Q1, just given that you have the easier comp?

Look, I mean, the comp is not always related to the project sales, of course, it's the full business area. So I couldn't really say anything about that at this point. But if you read between the lines, I said, we had a negative 3% in Q4. And I expect similar, but I also alluded to the fact it could be slightly better. It's still negative, but we're talking about small numbers here from that for that point of view.

It might just wasn't clear. Do you mind just explaining the margin expectations just for the quarter? Is it sort of a negative mix from the LNG projects and, therefore, potentially lower margins in the quarter?

Yes, a little bit -- I expect a little bit lower margins, and that is something we have said throughout the quarter at seminars and conferences also. So we mentioned it also at the conference we attended last week in London. So a little bit lower margin. But again, this will then be all related to some high-margin project pushbacks. And this is for -- just to make clear, this is just for this business area.

Any further questions on Industrial?

Okay. I'll move on then to Medical Solutions. And in Q4, i.e., in January, we said that -- we saw that Medical Solutions had an organic sales of very solid 5%, had a record margin of 21.9%. And in Q1 so far, these are some of the trends that we have noted. The Medical Device North America, i.e., the largest business unit is still -- is growing slightly, but still sees softer demand compared to Medical Device in Europe, which is smaller, but is growing at a very nice clip currently. And then we have the small -- the smallest third part of this business area, which is the Life Science segment and that explains about some 15% of the business area, and that is enjoying very strong growth currently.

So I would say that this solid growth of 5% we have in Q4, the development we've seen so far is very similar to what we saw in Q4, i.e., I would expect the growth to be similar in Q1 as compared to Q4. However, I also have explained many times that we are focusing on a relatively few number of customers in the MedTech and Life Science segments, i.e., we are focusing on the 70 largest customers. And if we compare that with Sealing Solutions, which has more than 10,000 customers, then, of course, there are variations between the quarters. But the underlying growth we've said for this business area should be around 5% plus and that is what we expect for this quarter as well.

Now in terms of margin, I believe there will be slightly lower than the record high 21.9% we saw in Q4. That was abnormally high, to be honest, I believe at this stage. We have also some factory openings that we are ramping up during the course of this year. For instance, we opened up -- inaugurated Costa Rica in December, so the ramp-up will take place during 2026. Not a major impact on the margin, but on balance, it's a little bit dampening.

Now still good track or clip in terms of growth for this business area. And we have -- as we've said many, many times, we have quite big ambitions with Medical Solutions, i.e., we want to keep the margin above 20% and we want to grow this at a clip of more than 5%. And we are on course to achieve that also in this quarter.

So any quick questions on Medical. And again, I cannot go into more details really until we release the report. This is just a summary of what we've said so far this quarter. Any Medical Solutions, questions, raise your hand if you have it.

Okay. Doesn't appear to be any questions on Medical Solutions. Hopefully, everything is clear.

So I move on to our largest business area, which is Sealing Solutions. And in Sealing Solutions in Q4, it had an organic growth of 5% with a margin of 20.2%. And what I've seen so far in Q1 is that the Industrial segment is improving a little bit. And that is -- if I break it down on the regions, I do see that it's growing basically organically in all 3 major regions. In EMEA, though, this small growth we see in EMEA is driven by price increases rather than volume. Volume looks to be flattish. And in Industrial APAC, organic is actually growing due to higher sales volumes. So we see a real pickup there.

Now in Industrial Americas, it's actually on a positive trend here with -- due to price increases and slightly higher volume also. So from the Industrial segment, yes, it looks good. The automotive segment, our second largest explaining about 28% of the business area. That is weaker, and this is due to the weak -- especially the weak aftermarket sales for damping, which we've been talking a lot about. We are producing those in Kalmar in Sweden. And then we -- it's one of the very few products we actually ship across the Atlantic or to Asia. And due to the tariffs, we've lost some business there. So it's the same story as in the previous quarter. And this is a high-margin product. So of course, that has a little bit of an impact on the margin due to its being down.

Is it worse than in Q4? No, it's probably a little bit better, but it's still negative. And then we come down to the aerospace segment, and we see very strong sales in aerospace and both organically, but we have also made some acquisitions here. We have done some price increases, and we see higher sales volumes across all segments. And this then boils down to for the business area that we see an organic sales growth similar to Q4 when it was 5%. And we also see due to the mix with a very strong aerospace segment, slightly higher margins in Q1 compared to Q4. Also here, I should mention that the book-to-bill is strong.

Now any questions on Sealing Solutions. Please raise your hand if you have any.

Well, good. So let me then summarize on the group level. Yes, from an order book perspective, we continue to grow the order book. The book-to-bill is good. We have a strong base going into 2026. What's happening in the war in Iran and the situation Hormuz, we don't really see any direct impact on us. But it could very likely dampen customers' order pattern if the war is dragged out. So of course, we are not immune to the situation, but we don't see any real impact -- direct impact on us.

As you hopefully know, we are very local to local, which means we also source locally. And I would say, from a group perspective, our local sourcing is probably out there at 85%, 90% of everything we source comes from our local markets. If we summarize what I've said about the business areas, I believe you will find an organic sales development in Q1, which is very similar to Q4. I also believe that we will have slightly lower margins due to the project sales pushbacks that we achieved in Q1.

So that's the overall view. And of course, I haven't seen the latest situation or the last 2 weeks now in March and the coming week in March. So there could be some variations on what I've seen -- to what I've said today compared to what we will see in a couple of weeks' time when I get the final numbers. But I hopefully have given you enough feedback so that we can do your calculations correctly.

So any -- last chance now to ask any questions. We have an AGM coming up, by the way. We do expect the AGM to approve of continued buybacks and to the tune of what we've said before. Okay. We have some questions here. Vivek again.

I had a question about the broader impact of the Middle East situation, thinking about raw materials, oils and so on. Oil is an input into polymers and so the potential cost impact there. Also, when we try and do screens around different companies' energy usage, I guess, the energy intensity of your production maybe towards a higher end of some of the [ cap goods ] companies. So I was just wondering if you might be able to give us some thoughts around what potential cost scenarios we can work with? Any -- what sort of lead times do you have before we can get price increases through? How should we think about those as gross and net impacts?

Yes. So I can divulge that our energy cost is around EUR 50 million, which is quite limited. So I'm not really sure if it's much bigger than anyone else. On the contrary, it's actually lower according to what I've seen. And so it's very manageable. Yes, of course, it's not good if the prices go up very much. But as you know, Vivek, our very strong positions in these small niches where we operate and the fact that we don't have any list prices that are revised every 6 months, we -- as soon as we see prices go up, inflation go up on raw materials, then we pick up the phone and call our customers. And very, very often, if not always, we are able to push that increase on to our customers. So that is why we don't see any major impact from the energy cost.

Then, of course, transportation and so forth, yes, shipping, et cetera. But I think considering that we are local for local, we don't ship much on ships from one continent to the next. I think we are relatively unharmed by the much higher cost. Then, of course, you have cost for trucks, for diesel and fuel and so forth. And that is something that we are pushing on to our customers.

So yes, that's what I mean by not having seen much impact from the situation so far. We are more wary about how it will affect the mood of our customers, i.e., indirect impact going forward if this war is dragged out. So minimal impact so far, but yes, we are wary, it could impact our customers' order pattern going forward. You had some additional question also, I believe. Yes, you mentioned the oil -- synthetic rubbers and so forth are oil derivatives, but this is raw material increases. We -- the amount we purchase of synthetic rubber is quite limited in relation to our total COGS. So it's actually less than -- we have so many different prices to watch, hundreds of different materials that we buy in, chemicals, textiles, metals and so forth. And I wouldn't say that the synthetic rubber stands out in terms of -- in weight of our total cost, if you will, for COGS. So yes, we have not lost sleep over this situation because we know from experience that we are able to push on higher raw material prices on to our customers.

Now some of you know, we've said it many, many years that we actually prefer when raw materials go up because we are priced at a very high level, premium price compared to competition, which means that the competition when the raw mats go up, they are forced from a percentage point of view to raise their prices more than we do. So very often, we benefit from rising raw material prices. And it also gives us more of a good motive to raise our own prices. I hope that's a way.

Agnieszka?

So maybe I didn't catch you on Sealing Solutions, if you can repeat what you expect in terms of organic growth in Q1? Will it be at, if you think, similar level in Q4 or is there any reason that it shouldn't be as good?

No. We expect similar. So I could say, actually, just to summarize again that we -- from Industrial Solutions, we expect similar growth, i.e., negative, but perhaps slightly better, but I still don't know because deliveries of projects. It was negative 3%, we expect similar, could be slightly better. In Medical, we had 5% in Q4 organic and we expect the same in Q1. In Sealing Solutions, we grew organically by 5%, and we expect similar in Q1, which then gives us this overall guidance of having a similar development for the group in Q1 as we had in Q4.

Correct. And then also on Sealing with that growth -- organic growth that you do see and expect now, why shouldn't we expect a bit maybe better conversion on margins and improvement in margins?

Well, I did say that we expect the margins to improve a little bit in Q1.

Ope, your hand is raised.

I think Vivek kind of covered my question, but just to check, any price increases you saw in the quarter, does that kind of relate to any inflation you're already seeing? Or that was just...

Yes. I mean that is, of course, to cover for some inflation we've seen in some energy prices in some raw materials. So we are covering ourselves. And perhaps then some in a few business units. But I cannot really give any more clues on that. We'll have to wait until the 23rd of April.

Yes. Vivek, you still have your hand up.

Apologies.

Okay. All right. Then I'll try to sum this up. Of course, I will be much more available and discuss much deeper once we have reported, and I just want to give you some flavor of what we have communicated at conferences and seminars. And I thank you all for your attention, and have a great weekend. Thank you.

Welcome to the Trelleborg Q4 2025 Report Presentation. [Operator Instructions]

Now I will hand the conference over to CEO, Peter Nilsson; and CFO, Fredrik Nilsson. Please go ahead.

Thank you. Welcome to all of you to our, let's say, Q4 call of 2025. Peter Nilsson speaking and joined on the call also by Fredrik Nilsson, our CFO; and also supporting us here in the call is also Christofer Sjogren, our Head of Investor Relations.

And as usual, we're going to use the slide deck, which has been on our webpage for some time now for some hours, and use this as guiding us through. And as usual, I'll kick off by some overall comments and commenting for our business areas and business sustainability before turning over to Fredrik to guide us through the figures and then summing up with a summary and then ending up with the Q&A session.

So once again, back to the slide deck, turning to Page 2, the agenda, highlights, starting in the business areas, financials, summary outlook and Q&A. Quickly turning to Page 3. We see, let's say, we say continued margin improvement in the quarter. And we can say the quarter overall is actually somewhat better than it looks when you're looking at the figures, and I'll get back to that and commenting on that as we move along.

Sales in the quarter, slim organic sales growth, slightly shy of our expectations, but it doesn't really mean that the business actually was worse. It's actually a slide in a few project deliveries in Industrial Solutions, which is pushing down the organic sales somewhat, but that's going to come back. I'm going to comment on that later as well.

M&A adding 3%. And then, of course, like most companies reporting in Swedish krona, so a fairly heavy wind against us then from currency, which is pushing down the reported sales in Swedish krona by 9%. EBITA, well managed. We are delivering a record high margin in the quarter, 18.4%, which is best ever for us for Q4. Let's say, a result of good control, let's say, a good mix and yes good overall cost control and good overall price control. So we're fairly happy with the margin in the quarter. Also here, of course, we will have, let's say, substantial currency translation effect of minus SEK 140 million, which fully explains the -- let's say, absolute figure deviation compared to a year ago.

We have items affecting comparability, SEK 176 million higher than last year, but in line with guidance. Cash flow, very strong, strong ending of the quarter in terms of cash, which we also see as a quality item for overall. We managed the cash good, I mean, which is both in terms of CapEx, working capital, so good delivery of cash, which, of course, is something we are happy with. Share buybacks continue same pace as before, roughly SEK 0.5 billion a quarter. And on top of that, the Board is also proposing an increase of the dividend from SEK 7.50 to SEK 8, which then going to be confirmed at the upcoming AGM in April.

And you also note the acquisition here happening just after the ending of Q4. We're buying a smaller but important business for us in Austria, which is focusing actually to improve our efficiency and technology in manufacturing more than adding kind of, yes, external sales, but that is also something we're going to create some foundation for improved efficiency as we move along both in Sealing Solutions as well as in Medical Solutions. So this is, let's say, the overall headline.

So turning to the page. Next page, Page 4, commenting organic sales. And here is the one that actually looks -- it is slightly better than it looks. I mean, Europe continuing. I mean we've seen, let's say, improvement in organic sales throughout the year, starting with a fairly solid minus in Q1 and then step-by-step in moving. And then we are up to plus 4% organically in Europe in the quarter. Americas continuing in a good way in a way and a solid positive. And then we have Asia and Rest of the World turning negative. But I mean, the explanation is here, which is linked also to Industrial Solutions is actually a result of lower project deliveries in a few countries here, if I may say, some odd countries like Taiwan, Malaysia, with Australia orders, Morocco, which is pushing it down, while we continue to deliver a solid organic positive growth in the main markets, China and India. So overall, it's actually a better development than the, let's say, reported figure here, minus 4% shows.

Turning to next page, back to the agenda. And quickly turning to Page 6 and commenting on the business areas. Industrial Solutions, I've already been touching on that for a few times here, lower project sales, and that is not really a result of lower order intake. I mean, we have a good order intake. We continue to build the order book, but there's been a few bigger projects which has been delayed. And it's not really delayed causing by problems. It's more that some of these projects related to LNG and temporary also to construction tunnel seals and stuff like that, the projects has been a bit delayed. It's actually full in the pipeline there and order books for us and for the market is good.

But nevertheless, in the quarter, we impacted. And we already commented on that. We do not expect that to really bounce back already in Q1. We will see in Q4 and on -- Q2 next year and onwards what we're going to see. So we are not concerned about the full year of '26, but it will be a little bit soft ending, a little bit soft start of '26. But overall, once again, I want to say on this lower project deliveries is actually deliveries. It's not order intake. Order intake is still strong, and we continue to build order book in this segment.

Continuing to see in varying sales what we call diversified industrials, we're exposed to variety of segments here and also within construction, we see kind of the more, say, window related, if I may say, windows and facade sales, which is still a little bit depressed, while other segments in construction like water infrastructure is actually performing better. So there is, let's say, a mix within this. But overall, once again, positive actually in this area and all of the business area is being pulled down by this kind of lower sales, lower deliveries in the quarter related to the project-related part of the business area.

Automotive stable, good performance, small aerospace sales in Industrial Solutions, but that's developing nicely in the quarter. And we see actually a smaller decrease in EBITA, which is fully -- let's say, explained by negative currency translation rate effects because overall, the margin is improving. We continue to invest in structural improvement here. We get the more efficiency in the structure.

And then we have a slight, let's say, sales mix negative here well -- sorry, sales mix positive in the quarter, which is also pushing it up a little bit. But overall, better than it looks, that is kind of the overall message that we want to send in relation to Industrial Solutions. We also note in Industrial Solutions, there's also been quite a lot of acquisitions throughout the year, and they are being integrated in a successful way, and we see kind of also improvements as these businesses are getting even more, let's say, included in our daily operations.

So moving then to the next page, Page 7. Comments on Medical Solutions, organic sales growth margins up. And if you say a slight negative, let's say, development within these -- within Industrial Solutions, we say Medical was slightly better than we expected by some extra orders in the quarter from some of our key customers, which then pushed organic sales up to plus 5%.

Solid sales growth in Europe and Asia, while North America still, we think we call it sluggish, which is still a little bit up and down. It is a little bit volatile, more volatile than we kind of should be. Our customers a little bit ordering in, let's say, uneven way. So this is something that we continue to monitor overall, still positive in medtech, but once again, good development in Europe, while still North America can be improved.

Life science, although small in the business area, but continue to deliver strong growth and continue to look very positive. And also here, we have EBITA down, but also fully explained by the exchange rate effect. As you see, the margin is actually up year-on-year, supported then by these higher volumes, but also in this area, we are initiating some efficiency improvements. We have some restructuring within the business area, which is going to improve the overall efficiency, and we see the first improvements in this quarter.

We also note with it, let's say, with a great satisfaction that we now have a factory in Costa Rica up and running, although at very small volumes to start with, but that is kind of offering new opportunities for us to both on the local market in Costa Rica, but also as a very efficient facility able to support our overall business in North America. So overall, good development in Medical Solutions and we're definitely moving in the right direction.

Then turning to Page 8. Sealing Solutions, solid organic growth. We see an improvement that we see here. And we have, say, also, even though we have a -- let's say, solid organic improvement, we continue to build the order book. We continue to see a good demand going forward. And also here, adding M&A to improve it -- improve sales even further. And we see that actually industrial segments all over the world is improving.

Automotive segment is down, mainly in Europe and somewhat we call sluggish here as well. So sometimes varying also in other areas and especially we are continue to be hurt a little bit in the aftermarket of automotive, where we have this as a brake-related businesses, which is still challenged a little bit, and that is where we are also, which is driving a little bit negative mix actually if you look at the overall and which explains a little bit why we are not getting kind of the add-ons here by the higher volumes to push up the margin.

Aerospace continued to develop very well. Good order intake, order intake well above sales and continue to build a good order book. Also here, of course, the let's say, the supply chain is fully loaded. And I mean, although the ambitions for Boeing and Airbus is high, we don't expect them really to deliver as they are guiding. But nevertheless, we continue to see a very good development within Aerospace. EBITA, a little bit up, margin a little bit up. And then also here, we have also, of course, like every else, a substantial negative, let's say, currency impact. And we also note, I mean, we are, of course, as you know, aiming for an improvement here in the margin, and we are very certain that it's going to happen. But in this quarter, we are slightly hurt with these acquired businesses also here, which is coming in with a slightly lower margin. And also, as I already mentioned, a slight thin, let's say, also sales mix negative effect on the margin. So overall, good development and Sealing Solutions moving in the right direction and the markets are kind of supporting us going forward here as well.

Turning to Page 9. A few comments on sustainability. We continue to improve, and we're getting to a level where, yes, almost as far as we can go on this. We've done a good job in this in many -- for many years, continue to improve year-on-year, 28% down in CO2. And looking at the next page, where we talk -- also share of renewable and fossil-free electricity, we're actually approaching 100% here, up at 98%. And I mean, as you know, you cannot really improve a lot from this level. So this is more a challenge to maintain on this level. So good development in CO2 and good development in renewable and fossil-free electricity, which we are very satisfied with.

So with that, turning to Page 8, agenda and then turning over to Fredrik on the financials. Turning to Page 12, I guess, Fredrik, and then your turn.

Thank you so much, Peter. Let's start looking into the sales developments. Reported net sales decreased by 5% and amounted to SEK 8,380 million in the quarter. We have negative translation effects by 9% in the quarter. As Peter mentioned, we had an organic sales growth of 1%. And then we saw both Sealing Solutions and Medical Solutions growing 5% organically, while Industrial Solutions decreased by 3%. Structural changes added 3% growth of sales in the quarter.

Moving on to Page 13, showing a more historical sales growth over some quarters. And if you look at the fourth quarter, we achieved 4% sales growth at constant FX.

Moving on to Page 14, showing the quarter sales and the rolling 12 months. Looking for the full year of 2025, we have sales amounting to SEK 34.7 billion, which was flat versus last year. Looking for the full year, we have an organic sales growth of 1%. Structural changes added 5%, which was then offset by negative translation effects of 6%.

Moving on to Page 15, looking at the EBITA and looking at EBITA, excluding items affecting comparability, down 3% to SEK 1.542 billion. In the quarter, we have SEK 140 million in negative translation effects. So if we look at EBITA at fixed FX, it was up 6%. And then on the margin side, up from 18.1% to 18.4%, and that was the highest margin for fourth quarter.

Moving on to Page 16. Looking at the full year, we saw an increase by 2% and got an EBITA for the full year of SEK 6,286 million. And here, we also have a substantial negative FX impact of SEK 329 million for the full year. And looking at the margin for the full year of 2025, we have 18.3%, which was the highest to-date for a full year.

Moving on to Page 17, looking at some details into the income statement. We have items affecting comparability, minus SEK 176 million in the quarter. Then we have SEK 222 million that were relating to restructuring.

And then we have a positive effect of SEK 46 million, which was revaluation of an additional purchase payment recorded earlier as a liability. Financial net minus SEK 111 million in the quarter, slightly higher than last year, but that is mainly due to a higher debt compared to Q4 last year. Tax rate for the quarter, 25%, well in line with communicated guidance for the full year.

Moving on then to earnings per share. On Page 18, if we look at earnings per share, excluding items affecting comparability, up from SEK 4.24 to SEK 4.30, increased by 1%, and that is mainly due to higher profitability and the effect of the ongoing share buyback, which then has been offset by negative translation effects. If we look at fixed FX, earnings per share has been up 10%.

Moving on to Page 19. Looking at the cash flow. As Peter also mentioned, we had a really good cash flow in the fourth quarter, up 3%, giving us a cash flow of SEK 1.726 billion. And to summarize it on a high level, we have a little bit lower capital expenditure that had a positive impact, and we continued also to generate a positive working capital movement in the quarter.

Page 20, cash conversion, up from 89% to 93% on a rolling 12-month basis. And in other words, we continue to deliver a high cash conversion ratio despite that we have invested on a high level through the year.

Moving then on to the gearing and leverage development. We ended the quarter with a net debt of SEK 7.216 billion. We have done share buyback of SEK 508 million during the quarter. And looking at the debt-to-equity ratio, ended the year at 20% and our net debt in relation to EBITDA was 1. In other words, our balance sheet remains very strong.

Moving on to Page 22, looking at the return on capital employed, excluding items affecting comparability, 12.1% for the fourth quarter. And here, you can actually see that we are now having a couple of quarters with a sequential improvement from Q2 to Q3 and now also from Q3 to Q4.

And then looking into 2026, some guidance for 2026. CapEx, SEK 1.450 billion for the full year. Restructuring cost expectation is SEK 375 million for the full year, amortization of intangibles, SEK 650 million and underlying tax rate, 25%.

And by that, I would like to hand back the microphone to Peter.

Great. Next Page 24, then agenda, summary and outlook and quickly then to Page 27. A quarter organic growth still, although slim, but where we've been able to good cost control and good sales, focus deliver a higher margin. And we actually see in the quarter, what I started with, it's basically underlying slightly better than maybe the report looks from the first view on it, where we see an improved demand in the quarter. We see that especially TSS and TMS and Medical and Sealing is delivering good organic growth in the quarter, and we also with a good order intake. And also actually within Industrial Solutions, we also have a good order intake. But they have been impacted, what I said, let's say, lower project deliveries in the quarter. We have some odd projects last year, same quarter, which we didn't have this quarter. We have once again a good order book, and we see we are not kind of concerned about the full year of '26, but it will be a little bit slow start also in '26 as we see it today within Industrial Solutions.

But overall, once again, the message is that we see an improved demand in more or less all areas. We continue to see a margin improvement. We are step-by-step pushing up the margin. And as the volumes will kick in here during '26, we do expect a continued margin improvement if you look at the full year, if we now get the volumes as we see in the order books at the moment. We have substantial, as a lot of other companies, an adverse currency impact that we're reporting in Swedish kronas. Nothing strange with this, but it's something that we cannot really influence short-term.

And we also note that we continue to do share buybacks at a level of roughly SEK 0.5 billion a quarter. So this is kind of the overall message for us from Q4 2025. And if we're then looking at the outlook in Page 26, we guide for kind of a similar demand in the first quarter of '26. Underlying, actually, we do expect continued good order intake, but we continue the deliveries in Industrial Solutions to be somewhat muted, which is then, let's say, bringing us up to that. It doesn't mean that it could be still a few percentage points up. But I mean, it means that we still believe, let's say, the organic growth in Q1 to be low single digit. And so that is kind of what we want to -- the message we want to send this.

And then, of course, we all know that there is still somewhat turbulent geopolitical situation, which could influence this if something happens. But I mean, we cannot really prepare for that, but we are, of course, aware that there is kind of a little bit higher uncertainty than usual in the global arena at the moment.

Turning to Page 27, agenda, Q&A and then quickly turning to Page 28 and opening up for questions.

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

I have 2, please. So my first one is just on Industrial Solutions. I wanted to clarify on the underlying development given your comments on order intake being positive. So excluding the impact of the project deliveries, would the development in the quarter have been positive or still negative?

It's been a positive. I mean we have a rather substantial effect from the project deliveries. And just to elaborate a little bit on that is also that we had a few -- we have actually a good order book, especially for LNG, but also for construction. But I mean the pipeline there is full. I mean the shipyards are full and they are kind of being delayed on a few of their projects, and that is impacting us that we cannot really get the deliveries as expected. I mean, going into the quarter, we had kind of deliveries, but then the customers wanted this to push us. And so we are not -- it's a tricky communication, of course. We still believe it's good markets, good order intake, good projects, but we see that a bit slow from the customers kind of accepting the orders. So if you exclude kind of LNG, this what we call infrastructure construction, harbors, tunnels in that segment, overall development is, let's say, clearly in the positive territory.

My second question is on the Sealing Solutions margin. So the margin declined obviously versus the Q3. So could you please just explain the moving parts sequentially? Was it primarily the mix? And then perhaps how you're thinking about reaching the 23% target from here?

That is primarily, let's say, mix, to be honest, and especially driven that we have a slower sales in this, what we call the automotive aftermarket, which is kind of a high-margin business for us. And then we shouldn't neglect also we have M&A also kicking in. And then usually -- almost all the time, when we buy something, it's lower profitability than us, and it takes some time to get that to the right figures. And we -- I said it before, and of course, I understand the proof is in the pudding. But if we continue to deliver on organic growth levels as we've seen in this quarter, we will be seeing a fairly, let's say, quick upturn in the margin here. And we are confident going into '26 with the current order book and the growth we see in the order book and the growth in some of the more depressed segments like, let's say, construction equipment.

We also have semiconductors, which is performing very well. I guess that is the main segments actually driving the positives here, while we're still -- surprisingly, we say, on the negative side, we are still automation, which will be slower than we kind of expected. But I mean, since this hydraulic what we call, let's say, fluid power segment is kind of the biggest in Sealing Solutions, and that segment is actually showing substantial positive growth in all geographical areas you say as well. And we must not neglect also in Sealing Solutions that we have continued very good development in aerospace. But also there, order intake is, if I say, substantially higher than the underlying sales. So that is we're building an order book and there will be an uptick, but then it's difficult to say exactly how much. The ambitions are very high on the customer side, but also there, we need to look at some carefulness, whether actually it will happen, but it will be a substantial growth in aerospace. It's more a matter of how much.

The next question comes from Vivek Midha from Citi.

My first question is on the TIS margin, quite solid despite the weaker organic growth. And you highlighted within that the positive mix effect. Historically, the project deliveries were perhaps a higher-margin business. Would you maybe be able to elaborate on what drove the positive mix effect in the quarter?

I think -- I don't think overall, as a project business is higher deliveries. It's more that the cream -- with the cream on the top, if you say to that. So it's adding gross profit on top of everything. But overall, gross profit margin in that business is somewhat lower than the rest. So that is kind of also driving a positive mix in the quarter, you say a little bit lower project deliveries and higher in other areas.

But also in Industrial Solutions, we've been investing quite a lot in the structure. We're moving factories, creating more efficiencies. So this is something which has always been happening in Industrial Solutions, and we continue to deliver an overall kind of cost improvement, which we now also -- so I say this improved margin is coming from efficiency improvements as a base. And then on top of that comes also some mix, which is basically higher sales in non-project-related businesses. But I mean, if we now -- with the current base, if you get project business on top of this, then, of course, we'll also drive the margin. But if you have, let's say, since the sales mix is changing somewhat, there is a positive driver in the margin. You follow me, Vivek? You follow the...

I do. I do. Understood. My second question is just going by region. You've highlighted European organic order growth improved relative to the third quarter. And we can see that in TIS, for example, in your commentary. It would be great to get some color on maybe the verticals which you're seeing improving within Europe. Is there anything you'd like to highlight?

No. I mean I highlighted the biggest impact for us is this kind of construction equipment and Sealing Solutions, where we see an improvement, which is kind of more, yes, construction equipment a little bit actually surprisingly slightly better also in agriculture. We don't think that's going to continue really. I mean -- and also, of course, we need to note also in this overall kind of diversified industrial segments, we believe we've been exposed to some inventory downs throughout the year, and that is flattening.

So we see the underlying demand is actually kicking in without any kind of inventory reductions on top of that. So that is also something that we are seeing and that is valid in most industrial segments in Europe, to be honest, where we see -- we don't see really. What we're waiting for is an uptick in residential construction, which is very much depressed. I don't say it's continuing down, but it's not really, let's say, moving upwards. So -- but overall, once again, the biggest -- if I should pick one segment looking at Fredrik, I think pick one segment, I think, is this construction equipment, fluid power, where we see an improvements coming both once again from a better underlying demand, but also from, let's say, no more inventory reductions.

The next question comes from Alex Jones from BofA.

Maybe first, just to follow-up on your answer on Europe. Do you see any subsegments where there's actually now restocking momentum? And or as you said, it's sort of just destocking has ended and you're now in line with underlying demand?

We don't really see that at the moment, but we do kind of expect it. So that is also creating some confidence going into '26. We do believe, even though we don't really have a proof, I mean, we're following this VDMA, I trust you will look at the same. And if you referring VDMA, it's been kind of flattish now in inventory for a few months. And I mean, if the demand is picking up, which we do believe, then, of course, they're going to be a double up as there have been a double down. But we don't really see that -- we cannot see that -- we see that in the order book at the moment, but we kind of do expect it to happen throughout '26.

And then just on capital allocation, there were recently some press reports about a potentially larger deal in Italy. Can you just remind us how your pipeline looks and whether you feel ready for potentially another larger deal? Now it's a few years since Minnesota Rubber, if the right opportunity arose?

Yes. But if you look at this Italian opportunity, which I mean talk bluntly, I mean, which is ALFAGOMMA. ALFAGOMMA is not of interest for us. That is a different segment, and we are not involved in that what they call hydraulic hoses, and we are not looking at that, just to be clear. So that is kind of not on our agenda. So we are still not looking at -- and it's also -- I mean, some of you asked about ContiTech it's neither, let's say, on our target list at all. So just to clarify that, we are not looking at that kind of deals. You're going to see us continuing to work on bolt-ons, which is kind of strengthening already strong positions. So we are not looking for any kind of new positions at the moment. We have plenty of opportunities within our current scope, which is kind of where you're going to see us spending both money and spending our efforts going forward.

The next question comes from Agnieszka Vilela from Nordea.

I have 3 questions. The first one to maybe both Peter and Fredrik, actually. Can you talk about the development in your operating costs in the quarter? If we look at the gross margins, you had a fantastic performance with gross margin improving actually by 2.5 percentage points, but then much of that benefit almost disappeared in the OpEx line. So maybe you can discuss what was driving the admin cost expansion and other operating cost expansion?

Fredrik, yes, please.

Yes. No, but it's right that we have a good development on the gross profit. But then also there was, of course, some accruals needed for variable salaries and so forth throughout the end of the quarter here when we saw the performance. So -- and also, I mean, coming in some of the acquisitions that coming in come in with a little bit higher admin cost as well. So I think that's the 2 main explanations Agnieszka. But what you're pushing here Agnieszka is actually creating a solid foundation for us going forward. I mean this is kind of one of the -- how should I say, confidence factors that you see here that we're pushing up. We managed to increase both the contribution margin and the gross profits, which, of course, is much easier to cut cost and to increase pricing, to be honest. So that is of course something which is on our agenda.

And then, Peter, maybe a bit on that topic. I mean, you guide for flattish sequential demand development in Q1 specifically, and you also allude to Industrial Solutions here. But overall, when you look at 2026 and your priorities as a CEO, would you say that you kind of try to position the company now for more growth or still kind of more stability and cost containment as you look at 2026 in total?

It's, of course, never one priority, Agnieszka. It's several priorities. But I mean, we create -- we have a good platform. You said we're moving the gross profits up. We are getting an improved mix. There is still something to do with the cost, but we have the structure in place. So of course, we are gearing up to absorb more growth, and we do expect that to kick in '26. I mean we do expect kind of a better second part of '26 than the first part of '26 on the backing of good order intake and good activity with the customers. And we do have solid cost control. We do have, let's say, good activities ongoing to further address this, what we call more the fixed cost part of it. So overall, it's a combination of maintaining cost control, getting more efficiency. But most important probably is -- most important is to continue to get into a growth mode and absorb this kind of high order book as we move throughout '26.

And then the last one for me on Medical specifically. So your Medical business grew organically by 6% in '25. Can you give us any kind of expectations or flavor on the expected growth in '26 also considering that now you have more capacity in Costa Rica that you could use. So could you comment on that and maybe also on any puts and outs when it comes to profitability for Medical in '26?

I mean we have, let's say, it's still -- I mean, how do I say? It's still a smaller part of Trelleborg and it's still, let's say, a little bit volatile. So you say -- and we're looking at the rolling 12, we are happy with the 6% if you look at the full year. Still might be a little bit bumpy. We don't take that as a guidance that we expect it to really go down, but it might be bumpy still in between the different quarters because we are exposed to some bigger deliveries and the customers are somewhat, how should I say, the volatility in the ordering is still there. But overall, we have said, let's say, this 5% give, let's say, plus/minus. I mean that is where we feel this business will continue to grow, and that is where we do expect to grow. We have a better setup. Costa Rica will create benefits. But I mean, not really the biggest benefits of that will not happen in '26. It's probably beyond '26.

But there is kind of solid foundation for growth both in Asia, in North America and Central America. And I mean, to be very open and blunt, I mean we'll be looking for how to get more also into Europe in this. So that is really the target today. We have a good Asian footprint with Australia, China, primarily looking a little bit to Southeast Asia, whether we need a satellite plant there also to support our customers in that part of the world. Americas is great. The Americas has a good footprint. So we feel confident that the kind of overall positioning of Medical Solutions is good, and we do expect that to continue to deliver good growth for several years to come.

The next question comes from Hampus Engellau from Handelsbanken.

Two questions for me. Just on Sealing Solutions, I was a bit curious here. You have 5% organic growth, and you've been searching for growth to like extrapolate synergies with Minnesota. Are Minnesota now not diluting the business area's margin and much of that kind of hampered leverage during the quarter. Is that related to what you highlighted, the negative sales mix within automotive aftermarket business? Or how should I think about that?

I mean it's still -- I mean, the North American business is slightly lower than European to be overall, but I mean, it's not really deteriorating to the overall Americas business. As U.S. is getting a little bit bigger. There is a slight negative mix still even kind of beyond the integration of Minnesota. But now as we do expect volume to kick in, we do expect the margin there to improve. But I cannot say that Minnesota is kind of, in itself, is the main explanation on kind of pushing down the margin in any way. It's been integrated and we're now starting to see the benefits in the order book, and it will get better as the volumes kick in. I don't know whether that, Hampus is clarifying or...

Yes, yes. I think that's a more flavor for my modeling. And then on Industrial, the project business, is -- do you dare to say like when that should kick in? Should we expect like a catch-up effect like Q3, Q4? Or are you still like waiting to see when that will materialize?

We expect -- I shouldn't say there's been a disaster in Q1, but I mean it's not going to kick in. We do expect it to kick in, in Q2, Q3, Q4. Once again, it's backed by a solid order book, and we are not kind of concerned about it. It's more that -- of course, I understand you're looking at individual quarters. But for us, honestly, whether the deliveries is in March or April, I mean, we don't really care because we are -- we want it as early as possible, but important for us is to get the orders and to get that into when we have a solid order book, and we are also, I should say, pushing the margin up. So we are confident that it's more a matter of when the delivery actually will take place. So we are more, let's say, confident on this one. I mean -- but it will be a kind of a solid second half of the year compared to the first half of the year. That is the way we look at it at the moment.

While then commenting on that, I mean, it's still a relatively small part of Industrial Solutions. So the overall Industrial Solutions will continue to perform well and some of that will benefit from this overall, let's say, improved industrial demand as well.

The next question comes from Timothy Lee from Barclays.

My first question is again on the order intake. When you say you are building order book, can you give us a little bit color on what's the book-to-bill that you're achieving in the fourth quarter and especially for the Industrial Solutions segment?

We don't want to give any -- we have decided not to report order book, but I mean it's, let's say -- how should I put it? I mean it's still, let's say, mid-single digit, let's say, above. So let's say, we talk about this, let's say, above 100%, mid-single-digit growth on the order book compared to the sales.

And then when you comment on the first quarter outlook, when you said about the low single-digit organic growth, is it something that you have already factoring in the Industrial Solutions for what that you just comment the delivery is probably not going to happen in the first quarter?

[indiscernible] do you mean that I mean for Industrial Solutions in Q1? Is that what your question is?

You mentioned about the first quarter organic growth is probably at a low single digit, right?

Yes.

And is that...

Overall. Overall, yes, overall for the group.

Yes.

Not specifically for Industrial, we're not guiding --

Yes.

-- let's say, any kind of organic growth per business area really.

Yes. Yes, that's right. But then that number is already factoring in the fact that the delivery in the Industrial Solution is not going to happen?

Yes. Yes, correct. Correct. I mean if that's the case. So we gave a guidance is for the overall Trelleborg and not for the individuals. So it still might be -- if you may say, it still might be negative in Industrial Solutions, but then that's going to be, let's say, covered by continued good growth in other areas.

Yes. Understood. Very clear. And I have one more question on share buyback. I think last year, we have a share buyback program, which is a scaled down from the previous buyback level, about SEK 500 million per quarter under the current program. Do you have any color at this point in time regarding what to do with this buyback program when it comes to renewal probably in April this year?

Yes. I mean, the current guidance is to continue in the same way. There's no thoughts on changing it. So the current kind of guidance or the current decision, which will also -- yes, most likely will be the proposal for the AGM is that continues in the same way.

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

Thank you. Thanks all of us for listening in. Let's say, a solid quarter for us, it looks actually slightly better than maybe the figure shows, good order intake and solid cost control and then a solid foundation for '26 as we see it. So keep in touch and speak to you soon and see you in various -- or see and meet in various ways. So do take care. See you soon.

Welcome to the Trelleborg Q3 2025 report presentation. [Operator Instructions]

Now I will hand the conference over to CEO, Peter Nilsson; and CFO, Fredrik Nilsson. Please go ahead.

Hello, everybody. Peter Nilsson speaking. Welcome all of you to this Q3 of 2025 results. What we're going to give you some of our, let's say, input on how the quarter developed. Joining me on this call is also Fredrik Nilsson, our Group CFO; and also Christofer Sjögren, who is heading our Investor Relations.

So as usual, we're going to refer to a slide deck from our web page. And then on that, turning to Page 2 on that section, the agenda slide and a normal starting with some general highlights, some comments on the business areas, and then Fredrik's going to guide us through the financials and then finishing off with a summary and some comments on the outlook for the running quarter.

And then finally, ending our call with a Q&A session. So that's the agenda for this call this morning. Turning then to Page 3. Heading of our report, organic growth with higher margin. So a solid quarter in more or less all aspects, the development in the right direction in more or less all aspects, sales ending up relatively flat compared to last year in Swedish krona, an increase of 1%.

But behind this, a very solid organic growth, plus 4%, which is something we have not seen for quite some time. M&A also benefiting. We have done several acquisitions, several smaller bolt-on acquisitions here in the last 12 months. And that is, of course, also bringing in some sales. So that is adding 3%. And then we have a currency headwind, well known by everybody, which is 6% in the quarter, which is then once again ending up with a 1% on the total sales.

EBITDA also up and also with an improved margin, which is an all-time high margin and results for the third quarter. We are, let's say, a notch above 18% EBITDA margin in the quarter. And this is, as I already said, it's a stronger third quarter to date for us, both in terms of profit and margins. So solid. And I mean, the great thing, you're going to see later also is coming from all business areas. We have a substantial negative FX on EBITDA, almost SEK 100 million or SEK 90 million, bringing us in the wrong direction, if you may say.

Items affecting comparability running as planned, relatively high level this year, but also coming from this rather high number of acquisitions, which is then kind of creating opportunities to improve the structure and then make sure we get all the benefits from these acquisitions as we move forward.

Cash flow, very strong. I mean, we have to admit, surprisingly strong ending of the quarter on the cash flow, which, of course, is going to bounce back a little bit here in Q4. But nevertheless, we are happy to have the money in our pockets instead of sitting somewhere else. So very solid cash flow, which is, of course, yes, creating a stronger balance sheet and overall, a better business.

We've done a smaller acquisition, small but important acquisition in Singapore called Masterseals, which is an acquisition which is strengthening a little bit, oil and gas markets and generally more in the kind of aftermarket-related segments of Sealing Solutions, which is an area which we are developing at the moment, an area we're growing into kind of a global business for us. Also note, continued share buyback on a level slightly north of SEK 500 million being spent on share buybacks in the quarter. So this is the quarter. This is what it is. And I mean, overall, once again, a solid quarter.

So turning then to the next page, Page 4, where you see new slide for us, which I hope you will give some more input on the sales split per geography, which I don't going to comment that much on. But we also, more importantly, we see organic growth in all 3 major geographical areas, with Europe for us being the softest, slightly better in Americas, 5% organic growth in Americas, which is kind of on a high level, driven a little bit by project deliveries, but that's the way it is. But nevertheless, good solid quarter and a very solid quarter also for Asia, then particularly strong in China for us.

But overall, strong in Asia and kind of a little bit bounce back in Americas and then Europe a little bit softer. So this is the -- and in all areas or levels, which, I mean, we have not seen for some time, especially if you talk both Americas and Europe while Asia continues on a good level, as you've seen throughout the year for Trelleborg.

Turning to Page 5, the agenda slide, business areas and then quickly turning to Page 6 with some more detailed comments on Industrial Solutions, organic growth and we say stable margin, a slight uptick in margin. Organic sales 2%; M&A, adding 4%. And then, of course, also, as others here, a negative exchange rate of some 6%. Also behind these figures, we see oil and gas project declined in the quarter, sales declined in the quarter, but that is mainly due to a rather tough year-on-year comparison. Overall market still developing well and a very solid cash flow. But some of these sales is rather project heavy.

It is that it sometimes goes a little up a little bit and sometimes it will be down and this quarter was a little bit down in the sales, but it's not -- once again, it's not a reflection of overall lower activity in this part of the business. Construction industry is still muted but we noted satisfaction that is getting slightly better if you look sequentially, although still, let's say, quite strong decline if we compare year-on-year.

But once again, some light in the tunnel and some improvements kicking in. Automotive sales increased in the quarter. I mean it's been a little bit -- how should I say a little bit strange quarter, if I may say, for automotive. Those of you following automotive, you see that it's still relatively tough sales in Europe and North America, while China was extraordinary in the quarter, which as I said, 10% plus organic growth. And I mean, the business that we have in Industrial Solutions has a very good market share in China. And that is where we benefit from this.

So we have actually a strong development in automotive within Industrial Solutions in this quarter. And then EBITDA and margin improved slightly. I mean Industrial Solutions is a fairly diverse business, and there are some ups and downs always. But overall, we continue to move in the right direction.

We continue to improve. It's not major steps. It's a hard work coming from kind of operational focus and also some of the structural investment, structural improvements kicking in. Overall, a good quarter, well managed in more or less all aspects. And then we also should note that when we look at the margin here, this acquisitions that we've been doing is on a lower margin than the overall, and we have some tens of a percent negative kicking in for that. It could be -- I don't know, looking at Fredrik, 0.3%, 0.5% on the margin actually coming from kind of this acquisition kicking in and it will take us a year or so before we can get them back to the overall margin of Industrial Solutions. But that is also something that you need to note when you look at the margin development within Industrial Solutions.

Turning to Page 7. Trelleborg Medical Solutions, strong organic sales growth. Organic sales is up by 13%. M&A, not doing any changes, so 0 impact from that. But we have to note here as well that we have some project deliveries related to one of our major customers, which is, let's say, boosting the sales dramatically -- in the sales. I mean, if you look underlying and try to kind of neglect these organic sales, I mean the more correct probably underlying organic sales is more in the kind of mid-single-digit territory.

Medtech sales, we see also medtech sales in Europe developing well. North America, where we still -- struggle is the wrong word, but we still see some negative development where we still have some inventory issues. We don't see the overall activity going down, but we still see our sales is a little bit below where it should be.

So we are pretty certain that we're still impacted by inventory reductions especially in North America, which we have been for some time, and we honestly, we believe that it's going to turn the corner, but we see it continuous. It is difficult to really see through exactly when it will turn, but we continue to gain business. We continue to gain orders, and we are overall satisfied with the development, even though the sales, we would like to sell more, of course, in Americas as well going forward.

Life Science, which is kind of the smaller segment of medical, is developing, if I may say, very nice, and we are growing that. And we are starting -- we have been investing in that segment with new factories, both in North America and in Europe, and with satisfaction, we see that these investments is slowly, let's say, benefiting us, and that is an area also where we see continued growth going forward. EBIT margin up and also, let's say, in absolute terms, we have EBITDA up. I mean there's higher volumes, as you expect, but also continuous structure improvements, especially starting to benefit from -- continuing to benefit from this acquisition of Baron that was made, let's say, a year ago now.

Turning then to Page 8, Sealing Solutions. If I may say, very solid organic growth in the quarter coming from several areas. But I mean, if I should highlight something, it's really that we have underlying kind of industrials, the big kind of industrial segment of TSS is starting to do better. We see now growth in Europe kicking in.

Asia continued on a good level, which has been good for us for quite some time. We continue to see some weakness in North America. But overall, these core segments of Sealing Solutions improved in the quarter. Both in sales and also kind of a higher activity level. Automotive for TSS is still below last year, particularly still impacted by, let's say, very soft development, very soft development in the aftermarket business.

And we cannot -- I mean, it's not like the aftermarket in itself is down. It's more that we see very, let's say, uncertainty, especially in the North American market, this is -- we see that they are downsizing. In stock, inventories is down, and we do expect it to kick back. But also here, we don't know exactly when, but it is kind of we are supplying substantially below the market demand for a few quarters here, and we do expect that to bounce back eventually.

We note in automotive here as well as we also commented on TSS, a very good development in China. We have a good market share for some of the products, in TSS, especially that's our shim business, our brake business has a solid market share in China. And of course, we are benefiting from that as the Chinese market has been developing very, very good in the quarter.

Aerospace, very strong all over. We continue to, let's say, get more orders than we sell. So let's say, order book is growing and the activity level is growing. Of course, we note, as a trusted -- the ones of you was following aerospace that's about Airbus and Boeing is very ambitious in the growth plans going forward, and we, of course, do our best to follow that.

So good development in aerospace. And overall, this means that EBITDA and margin is improving, higher production volumes kicking in. We have been underproducing for some time. And we see also the benefits from the operational improvements, but we also have to note also here we have a negative impact from acquisitions being made, which is kind of the same dimension as we see in Industrial Solutions, some 0.3%, 0.5% negative impact on the margin if we were trying to kind of adjust for the acquisitions.

But we're doing the acquisitions, of course, because we believe they are good for us and they are improving the business overall, but it will take some time to get all business improvements into the margin. Already commented on the Masterseals acquisition in Singapore that is part of small acquisition, but it's part of an overall game plan to strengthen our activity within, let's say, aftermarket for seals and especially related to oil and gas and mining and other segments, which is more kind of project-related where you need, to say, local presence in order to get this business into our books.

So that's -- we're happy to be that, and we think it's a good strategic add-on, although once again on a very minor level compared to the overall sales of Trelleborg. Turning to Page 9, some comments on sustainability, continue to improve substantially. I mean, we say here, we are not getting to the end of the game, but we are getting down to levels of CO2 emissions from our Scope 1 and Scope 2, which is kind of becoming very low. We're, of course, going to continue to improve. We continue to do better also in this aspect. But I mean, do not expect these kind of improvements steps going forward.

Next page, Page 10 and it's basically the same here, where we have a substantial tick up in share of renewable and fossil-free electricity. We are now up to 92%. And I mean the remainder here is very difficult because in some geographies, you actually cannot get it, and we are getting also here to a situation where we cannot improve that much anymore to you on this because we are, let's say, stopped either but by very major investments to turn it around or that is simply not available in a few geographies.

So very good development, very happy to show this. There was continued good development in sustainability, and we are doing good in these aspects. And I mean, once again, the focus -- we cannot improve on this criteria. So the focus going forward will be more smaller steps and more kind of what we call say, energy excellence programs.

We'll be working hard with all the factories in order to improve and to do better in more minor aspects. So these big steps, you will not see these big steps going forward, but we're getting to a situation. I don't say it being perfect, but we're getting to a level where we cannot justify the final steps to get it even better.

Turning then to agenda slide again, Page 11, financials on Page 12. I'll leave it over to Fredrik to guide us through this section.

Thank you, Peter. Let's then start on Page 12, looking at the sales development. Reported net sales increased by 1% from SEK 8.442 billion to EUR 8.532 billion. We have organic sales growth in all 3 business areas in total 4%. Structural changes added 3% growth in the quarter. And then as Peter mentioned, we have negative translation effects that reduced growth by 6% during the quarter.

If we then move to Page 13, showing historical sales growth. In the third quarter, we were close to our sales growth targets, achieving 7% sales growth at constant FX. Looking at Page 14, showing the quarterly sales and rolling 12 for continuing operations. The sales in the quarter, as I said, reached SEK 8.5 billion at net rolling 12 months, it's reached SEK 34.7 billion.

Moving on to Page 15, looking at the EBITA and the EBITA margin, that continued to improve further. EBITA excluding items affecting comparability, increased by 5% to SEK 1.541 billion in the third quarter. We saw profit growth in all 3 business areas. And looking at -- we start with Industrial Solutions, which was up 1% in EBITA due to operational structure improvements, which was partly offset by negative translation effects. And then Medical Solutions, up 10% in the quarter. And then finally, Sealing Solutions was up 6% in the quarter due to higher production volumes and operational improvements.

And margin-wise, we rose from 17.3% up to 18.1%, supported by the organic volume growth and the operational improvements. Looking at then the EBITA and EBITA margin on a rolling 12 months basis. EBITA amounted to SEK 6.331 billion with a margin of 18.2% and EBITA has been growing with 6% during the last 12 months.

Moving on to profit and loss statement. Looking into some more details in the income statements, items that are affecting comparability, SEK 72 million in the quarter, which was entirely related to restructuring costs for adjusting our cost base and due to the recent acquisition. Financial net I would say, on par compared to last year, SEK 126 million compared to SEK 128 million. This is actually despite that the debt level is higher this year. So that is also a good achievement. Tax rate for the quarter, excluding items affecting comparability, amounted to 26%, a slight increase due to timing.

Page 18, earnings per share, excluding items affecting comparability, amounted to SEK 4.20 in the quarter and increased by 11%, and that was due to the higher profitability and the effect of the ongoing share buyback program. And for the group, including items affecting comparability, earnings per share were up SEK 3.94, also 11% up.

Moving on to Page 19. As Peter mentioned, we have a very strong cash flow in the quarter, which reached SEK 1.741 billion. On a high level, half of the improvement came from the higher EBITDA and the rest from efficient management of the working capital. CapEx is well aligned with the communicated guidelines for the full year but marginally higher than Q3 last year.

Moving on to Page 20, the cash flow conversion. The cash flow conversion was 92%. So we continue to deliver a high cash conversion ratio. Moving on Page 21, the gearing and the leverage development. Net debt at the end of the quarter at SEK 8.280 billion. Share buyback during the quarter was SEK 554 million, ended the quarter with a debt-to-equity ratio at 22%. So small improvement compared to Q2. And then net debt in relation to EBITDA, 1.1, which was slightly higher than year-end. But of course, we have also paid out a dividend during the second quarter, and we have continued the share buyback program. In other words, our balance sheet remains strong.

Moving on to Page 22, return on capital employed reached 12% for the quarter, and our capital employed has increased compared to last year mainly due to the acquisitions, but I think also I would like to note that our return on capital employed has sequentially increased for Q2 to Q3.

And then finally, the financial guidelines for 2025, unchanged compared to what we communicated after our second quarter CapEx, SEK 1.650 billion for the full year, restructuring costs around SEK 500 million for the full year as well. Amortization of intangibles, SEK 650 million and underlying tax rate for the full year around 25%. And by that, I would like to hand back the microphone to Peter.

Thank you. Agenda slide, summary and outlook. Quickly turning to Page 25. Looking at the quarter, organic growth with higher margins, good quarter overall, but it picked out a few highlights. We see in the quarter in improved -- generally an improved demand, higher activity levels or continued high activity level in some areas. We see an improvement in that. And we also note with satisfaction, of course, that all our 3 business areas recorded organic growth in the quarter, which has been quite some time since we saw that the last time.

So overall, better activity, although not kind of a big jump upwards. But nevertheless, improvements in most areas. We also note that these higher sales is also improving our margins. We have a fairly sizable uptick in the margin year-on-year. And it then boils down to the strongest quarter -- strongest third quarter to date, both in terms of profit and margin.

We also note that we continue to do value -- what we call value-adding M&A, although impact, this is our 10th bolt-on acquisitions since Q3 last year. And of course, this is a high activity level in [indiscernible] we said before, is impacting our margin negatively in Sealing Solutions and Industrial Solutions, but we are, at the same time, improving our overall positions, and we are very certain that this -- when that's fully integrated, there will not be a drain on the margin or rather the opposite, but it takes some time to get there.

And we also note that continue buybacks, we continue to have a solid balance sheet, which is, let's say, allowing us both to continue on high CapEx level, continue to do M&A, continue to absorb the growth, which is in the quarter in terms of working capital, but also on top of that, we also continue to do share buybacks.

So that was the summary and then turning to -- for the last quarter and then turning to Page 26 and some outlook. We expect the demand to remain on this level. For those of you who have read the reports see that we have this extraordinary sales or project sales within medical, we were not going to kick in.

So with this outlook, you should read it that the continued overall demand, we might be -- we don't know exactly, as we otherwise were sitting exactly where we end up. But of course, we believe that this is probably not going to be of north of 4% in the next quarter, but we could be a 1 percentage point or some lower than 4%, but we believe it's going to be on a similar level.

And I mean if this continued higher activity level, remain, then we will look with more positivism on the future. But with this comment, of course, also, we all know there is a big year -- still a big, what we call political situation or geopolitical challenges out there and things might happen, which could impact the demand short term.

So that is, of course, with this comment on the continued good market, it comes with this kind of comment. And then turning to Page 27 agenda and into the final agenda point and turning to Page 28 and opening up for questions.

[Operator Instructions]

The next question comes from Alexander Jones from BofA.

If I can have two please. The first on Sealing Solutions and specifically the Industrial business within that, you talked about higher growth this quarter. Could you help us understand was that broad-based or the particular end markets within Industrial driving that? And to what extent was that the end market improving or more market share gains and innovation success that you've had as Trelleborg?

And then the second question, if I can, just on the Medical business. Can I clarify on the one-off project sales this quarter. Is there any element there have pulled forward that will be reversed in future quarters? Or is that just sort of one-off extra sales that we should not extrapolate in our future numbers?

Alexander, talking -- starting with the medical one, I mean that is really a startup of a new program for one of our customers, which is a one-off delivery. So it's not really about impacting the future. So it's not kind of a pull from any future sales. It's simply sales in the quarter due to the [indiscernible] starting new programs. So that is kind of the way it is sometimes, but it's not kind of any forward buying or something, it's simply a one-off sales. So nothing really that we need -- we don't expect it to -- yes, to impact the sales going forward. So that's it.

And then if you talk about Industrial, I mean, one thing is also on the industrial sales of Sealing, which you've seen in the quarter, I mean we have been, for quite a few quarters, talking about destocking in these activities. So one of the impacts in the quarter is no more destocking, and we are kind of supplying in line with underlying demand. I mean, so that is one of the impacts. But we don't see still as an inventory buildup, but we still believe that there is supplying. But we are not kind of oversupplying in the way that they are building stock.

And I mean -- and the core driver for this is kind of the biggest subsegment, if I say in Sealing, which is more hydraulics, machinery and this kind of core industrial business. That is where we see the improvements. So we're not surprised, I shouldn't say we're surprised because it's been undersupplying for a few quarters. And now we feel that we're supplying in line with the overall demand. So I don't know whether that is enough for you.

Yes, that's very helpful. .

The next question comes from Agnieszka Vilela from Nordea.

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

I mean there was an improvement throughout the quarter, but also the trick on Q3 September is always important. Since the other 2 months is a little bit impacted by vacation period. So it was kind of an acceleration in the quarter, so a stronger ending than beginning in the quarter, but we don't, let's say, put too much emphasis on that one.

But it is kind of an improvement in the quarter, if I may say. And October, I mean, we don't see any kind of differences and we don't really want to comment on it. So it's really overall guidance remains that we believe is going to be same growth in Q4 with, let's say, some adjustments coming from this extraordinary sales in Medical. So my read this, I mean it might be 4, it might be 3. But I mean, we don't really know. We have an overall good order intake.

We have overall good activity level. I mean, we should say book-to-bill in the quarter is positive. We have booked more orders in Q3 than we have been selling. So we are growing the order book. But we also remain a little bit cautious on this because we know there is inventory focus, cash flow focus on some customers. So we don't really want to read too much into it. But if we simply did the Excel sheet calculation, then of course, we will, let's say, be more positive than negative in that one. I don't know whether that is enough, Agnieszka.

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

No. I mean I think Asia, little bit, has been a little bit extraordinary strong, especially in automotive since we have this big boost. I can't remember exactly, but I think production levels in China for automotive was up by some 12%, 13%. So that's, of course, since we have a high -- good position with a few of our automotive segment, that is benefiting us, but also the overall industrial development in Asia, especially in China has been good for us, somewhat difficult to fully understand, to be honest, but it's been ongoing for quite a few quarters, and we do not expect that to be -- of course, comps getting more difficult going forward. But nevertheless, a good development in there.

Europe is probably more tricky in a way to read. But we see -- I mean, in the core, as I commented before, the core Industrial segments of TSS is improving. And that is more -- part of it is a reflection that no more destocking and more of kind of delivery in line with underlying demand. We do not see any kind of inventory buildup at the moment, and that is, of course, if it turns more positive, we will see that as well.

So we've been undersupplying for a few quarters. We do expect as the market -- if the markets turn more positive that we will be oversupplying. But we don't really see that happening short term. But if you go into early next year and this development continues, we're probably going to have some of that. U.S. is probably, for us, a little bit more positive than it should be because we have a few project deliveries in U.S., which is kind of impacting the sales there. But nevertheless, let's say, for us, a good positive territory also coming there from kind of hydraulics and the pneumatic segments, which is also a part of our core business in North America for Sealing. I guess that is -- I don't know, Fredrik, if you want to elaborate. I think that is kind of just to be a little bit more color for that development.

That's very helpful. And then the last one from me. I noticed that you didn't really mention the tariff impact in your report or in your presentation. Was there any kind of growth tariffs now affecting you in the quarter and how are you mitigating those?

We have a few individual businesses where we need to kind of redo the supply chain and working with that. But I mean, overall, this kind of minor activity. So that is why we don't see that as a kind of impacting us. We have a very regional setup. We have as I said, manufacturing in Asia, we have manufacturing in Europe, we have manufacturing in the U.S., and we don't really have a lot of these flows going across.

I mean, the challenge here is more the metal content where we need to find out. We have a few products, but we have metal content, and that is something where we need to work. And that is also our question going forward on these tariffs in Europe because some of the export business from Europe into other territories might be impacted by that. But it kind of remains an action point and that is something we're working on.

But overall, on a group level, we don't see this at any topic in a way, to be honest. Underlying demand could be impacted, I mean to say. But I mean for our trading and margins, it's not really something that we discuss too much.

The next question comes from Forbes Goldman from Pareto Securities.

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

No. I mean it is a solid, let's say, step in the right direction. Looking at the margin, of course, once again, you need to remind yourself as well that we have also a negative impact from the acquisitions. Of course, it is a step up compared to last year. And we have always said that we're going to get this back to our levels and is kind of step in that direction.

And then I don't want to guide exactly what kind of quarter, but it is coming as expected, as planned, if I may say, this margin expansion coming from a little bit bounce back in our core segments of TSS. I mean that is what we've been waiting for. Once again, we refer to this kind of fluid power, hydraulics, pneumatics, that segment, which is the major part of Sealing Solutions, and that is the area which is going to drive this improvement by extra volumes. And also in that extra volumes in the right areas, if I may say, because it's also driving kind of a positive mix within Sealing Solutions.

So this is a step in the right direction, and we still have the kind of overall objective to get back to this, say, '22, '23, '24. I mean that is where we want it to be. And we are fairly certain that we are moving in that direction.

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

No, we don't want to do. I mean, we are moving in the right direction, and we are -- of course. I mean TSS is more, should I say, consumable where we supply into the supply chains of a large number of industrial customers. And I mean there is always Christmas breaks and all of that. So it's always a bit softer by the end of the year depending on the activity level that they're planning for after the holidays. And that is the same seasonality as we always have. So it's -- I don't know if we can comment any more on that. I don't think so. I mean that is the way it is.

Final follow-up. On the restructuring cost, it looks like quite a big step-up here into Q4. Anything in particular happening there?

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

The next question comes from Hampus Engellau from Handelsbanken.

Could we discuss organic growth on the group level and I guess also in Sealing Solutions, if you would remove Automotive, just to get a sense on how the underlying ex autos is moving, given that we have an opinion on autos going forward?

Automotive in Sealing Solutions was not positive. So that is something where we -- because they are severely hit, but they are hit by specialist aftermarket dropped for our brake business. So that is kind of negative. So I mean, if you neglect for Automotive, in Sealing Solutions, is actually going to be even better.

So that is the one. We are benefiting from the China OE sales, but that is in no way compensating for the drop in the aftermarket business. But for TSS, I mean it's not a major impact, to be honest, but there is a slight positive in Industrial Solutions in this -- what we call our boots business, where we have a very strong market share in China as well. So that is where we are benefiting. But I mean it's neglectable in a way if you look at Industrial because it's not a major business of Industrial Solutions, but it is positive. So that's one. So the underlying kind of non-automotive organic growth in Sealing Solutions is actually slightly better.

Excellent. And do you bear giving some indications on how you see autos -- autos part in Sealing maybe for Q4. I guess you presume you're looking at the S&P numbers and also have an opinion on aftermarket?

On the aftermarket -- sorry, your...

Yes. I guess on fetching for if you're expecting some contribution in Q4.

To be honest on that, we are a little bit surprised that it continued on this low level. It's not that people are kind of changing less brakes. And the only thing we can read into this that there is where we have some carriers, we have some metal content in those and some of our aftermarket customers are kind of reluctant to build. Also, when they order from us in Europe, and we are sending to U.S., it takes 6 to 8 weeks. And it seems like they are not buying, they're not speculating.

But of course, the stock is going down and eventually, they need to fill it up. So that is -- I mean, where we are a little bit surprised, to be honest, about this rather dramatic drop in aftermarket, which is not -- I mean, it's not that either that they can buy from anybody else. They need to buy from us and because we are specified and we are kind of regional equipment suppliers, and so that is kind of a strange, which we have now seen for 2, 3 quarters -- 2, 3 quarters. So that is something where we don't fully understand. I mean sometimes you try to understand, but sometimes you cannot get the right answers, but it cannot continue on that. I mean, let's put it, you cannot continue on that level, unless people are neglecting, not changing brakes anymore.

The next question comes from Timothy Lee from Barclays.

I have a follow-up question on margin. So for Sealing Solutions, there's definitely a very good margin development in the quarter. Can I also say that it is implying some synergies that you get finally from the previous acquisition of MRP. Is it something that kicking in the quarter. And also in terms of the -- your previous target of the 20% run rate EBITDA -- EBITA margin by the end of this fiscal year. Is that still something you are looking for?

To talk about synergies, of course. I mean we have always said on MRP that I mean some of the major impact is coming from the hydraulics fluid power segment. And as that now we see finally some improvements in that. Of course, we're getting some benefits from that into the figures. But I mean it's -- MRP is getting more into normal business for us. So it's not really synergies as such. It's more that the market segments, which was strengthened by the MRP has been very soft. And now we see these markets getting back.

And then, of course, we get the benefit into the figure. But we are not at the end of that one because it still has to go up. It should still -- I don't know exactly the figures, but we are probably still some 15% or something below kind of the levels where we believe it should be in that particular segment.

So that is still at a low activity and especially you're talking about the farming in U.S., you look at little bit construction equipment, which is still, especially the agriculture looks still very soft. And that, of course, we're starting -- if you talk to the new administration in the U.S., I don't know -- it's difficult to kind of guess where they're heading. But one of the areas which I have not been kind of supporting yet and which have been suffering is, of course, the farmers in U.S.

So if something comes into that area, we should see even better improvements, especially in that segment. About 20% is still within reach, but I mean it's going to be tough to get there, I mean, to be very open to get to that level here already in Q4, but we are moving in the right direction.

And we still see that with the reach in a not-too-distant future. But I mean I shouldn't sit here and say that we can get to 20% in Q4, because that has been -- there has been some market development. We know the tariff situation. We know the geopolitical areas and we know this kind of softness still in the construction and, let's say, still -- yes, quite some distance to go before we are back to normal, especially in this fluid power, which is once again the major segment of Sealing Solutions.

Understood. Very helpful. And my another question would be on your M&A potential. So Continental actually previously mentioned, they could probably look for the divestments of the ContiTech business. I'm not sure whether you can comment on this or whether it is something that you may see interest or if it's in your M&A portfolio?

Yes. I mean the overall ContiTech is definitely a lot of interest for us because the majority of the ContiTech business has no -- I would say, we are in the same overall segment. But if you look at their conveyer belts or timing belts or also this what I call surface solutions. I mean it's nothing to do with that. We have some overlap in terms of nonautomotive anti-vibration and some fluid or [indiscernible], which, of course, we will be interested if we could cherry-pick, but I don't think there will be any kind of cherry-pick possibilities. So I mean, we're watching it. We're looking at it. But overall, ContiTech is a not of interest for us.

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

Thank you. And thanks for listening in our quarterly call. And summary of a good quarter for us, a good organic growth, good margin development and an improved demand throughout the quarter. We still note that there is still a lot of uncertainty in the, let's say, the global arena. And that is, of course, something we're watching, but we feel confident that we're going to continue to improve Trelleborg, and continue to build a better Trelleborg with ambition, of course, to deliver even better figures going forward.

So thanks to all of you, and I am happy to support you in individual calls. Christofer is always available and so are Fredrik and myself, if you want any follow-up discussions or get some clarity on other issues not covered in the call. So thanks again, and see you soon and do take care.