Welcome to Glaston Corp's first half financials broadcast. My name is Pia Posio, and I'm hosting this session today with you, with our CEO, Anders Dahlblom, and our CFO, Päivi Lindqvist. They will share more details behind the second quarter order intake and profitability holding up in this first half of 2023. Before we start the presentation, note that you have the opportunity to ask questions and share those through the chat all the time while we are having the presentation. We have reserved time towards the end to go through them, and I will be hosting that questions and answers part. With that, I would like to welcome our CEO, Anders Dahlblom, to take over and guide us through first the Q2 2023 highlights.
Thank you, Pia. Welcome on behalf of myself. I wanted to start with the first second quarter highlights, and order intake and profitability were holding up in the current environment. The market activity in the architectural segment slowed down a bit. However, we achieved a growth in heat treatment business order intake, and the insulating glass order intake was slightly under pressure. On the automotive and display business area, we had a strong growth in order intake, growing by 32%. The second quarter net sales improved a growth of 3%, and that was mainly due to the good performance in the insulating glass business, but also our automotive and display business saw a growth in terms of net sales.
Profitability-wise, a fairly good achievement, comparable EBITA, reaching EUR 3.4 million, with the margin at 6.2. Our heat treatment and automotive display, both declines, but the insulating glass, EBITA, improved significantly. We also paid, repay the capital repayment of EUR 0.04 per share that was paid in April this year. The big change we are planning is a reorganization that we informed about in June this year. This to accelerate our strategy implementation, to become effective as 1st of October 2023, this year. Let me open up a bit more the key numbers for the second quarter. The order intake, I said, a small decrease of 4.6%. We saw growth in the heat treatment of 1%.
The IG business, we had a decline of 18%. It's worth mentioning that IG is more exposed to the Europe, EMEA region than the other business, and hence, a, a, reverse development here. In automotive, 30% up, this mainly came from U.S. and from the APAC and China. Net sales, the growth came from IG, 70% up. Both the machinery business and service, grow was a two digi- digit number. Heat treatment business, a decline. Two reasons here. One is, some seasonal differences within the summer, quarters, and also the service sales were slightly declining.
Automotive, an improvement, 4%, and the service, in general, a 3% decline, but excluding the upgrade services, looking at our day-to-day service business, we had an increase of 1% in the top line growth. The EBITA have EUR 3.4 million, close to same level as last year. Here, the IG business improved quite significantly. Heat treatment business, small decline, mainly due to the top line decline for the named reasons. The automotive and display business, we saw a clear improvement for the first quarter, but still, slightly down from the quarter two 2022.
Here, it's worth remembering that our ramp-up of the production in China and automotive and display has affected our results, especially in the first quarter, as was mentioned, but to a lesser extent in the second quarter. Things are proceeding there according to our plans. Backlog is healthy. Backlog is 8.7% higher than compared to the previous comparison. Still, even there is a partial cancellation in one of the IG customer orders, totaling EUR 19.4 million that we informed about earlier this year as well during the second quarter. This means our workload in our factories, all our factories, they remain very good. We have most of our operations secured for 2023. I would like to share a bit about the market environment. I would like to start with some general comments here.
Generally, what we are seeing is that EMEA, so Europe mainly, has been softening what comes to new business. Mainly, reasoning behind this is the increased cost of capital and money, then also the construction activities, especially in the new construction business, we see decline in our, in that environment. U.S., on the other hand, has been holding up well, and actually, we have been doing good business there in the second quarter. China market continues, rather soft. What comes to the supply chain challenges that we have been talking about in the past couple of years, those have been improving quite a lot. Still, some, electrical and pneumatic components are a bit, on a delay, but this topic is moving to, to now another phase.
If I go to the EMEA region, our order intake in EMEA, we saw a decline of 9%. This is mainly due to the softening market condition. It's pretty clear there. The residential market is slower currently. Automotive part, that's a smaller market for us in general. This continues on the same level, so it's rather low-ish. Also, what we have seen in the second quarter is that the service business, there's some slowness there, but on the upgrade parts, the positive note here is that we have actually seen now upgrade... that these orders are starting to recover from the lower levels we saw already in Q3 and Q4 last year. This part is growing.
Moving to Americas, order intake here, we also had a decline of 9%. However, the level, if you compare the orders compared to our total orders, the Americas business is growing as a proportion, and the level we achieved in second quarter is actually very good, so we can be satisfied in my mind with that achievement. So this has been the strongest region, clearly, when it comes to absolute numbers, how we are doing. Regarding the IG business, insulating glass, we have been not achieving growth there, so that has been slowish for us. On the other hand, we have had pretty good growth in both the heat treatment business, as well as in the automotive and display. The automotive part has mainly been products for more heavy vehicles and recreational vehicles.
That's the area where the growth has been coming. It's still a pretty good market there in, in that part. The service business, so seeing EMEA being slowish in, in service, actually, Americas, we have seen very strong growth, and that has been in, in our both day-to-day flow business and our spare parts, the growth has been actually pretty strong. Our upgrade part there, we have not been able to grow that business. It has, it has been on a slower phase this year than we saw at first last year in the second quarter. In general, service business, new business in America has been a, a positive one. When we came to APAC, it's a bit two-folded there. The China market continues slow.
It's pretty clear that the market is not recovering very quickly there, that we have not seen in the second quarter. However, we did very well from an order intake, from new business perspective. New business, actually, we saw a growth in the whole APAC region of 19%, whereas China growth was actually 30%. From that perspective, we achieved good numbers, and we can be satisfied with the new business there. The architectural market is continuing rather soft. When we look at the automotive market, the automotive market has been pretty good. We have also achieved good new deals, and obvious as part of that, the whole automotive order intake in the quarter two was had a 30%+ growth.
If we look at the rest of the APAC, as we see, so what comes to new machines, new deals, it was rather slow. There are different developments, different sentiments in different markets there. I would say, in general, the markets are flattish, but we did not get deals closed on a growth pattern. On the other hand, when we look at the service business, so the service business, we actually saw a very strong growth. Service growing, new business has been a bit depressed. I would like to talk a bit about our strategy, where we are with the strategy and also the planned organizational change obviously, has a clear link to strategy implementation. The first point I wanted to talk about is the.
what we announced during June this year, and that's a planned organizational structural change, to take, to be effective, 1st of October this year. Then the question: What do we want to achieve? Why do we want to do this? There are a couple of reasons I want to mention here. The first one is really, strategy implementation, and, and it's about accelerating our strategy execution. We have been doing well. We have achieved a lot of good things. We are exactly on the right track that we said a couple of years back when we launched the strategy. The message is: strategy targets will remain unchanged. We want to execute the strategy implementation in the parts that we have seen is more challenging with the current structure, but continue with the ones that have been working well. That's number one.
The second one is what comes to customer part. We want to enhance customer experience with the life cycle solution. The life cycle solution is something we wanna talk with the customers internally and make sure that the customers really experience a life cycle supplier when they work with Glaston. This part is going to be the emphasized a lot with this new organization change. The other, the other part is improving of our cross-Glaston collaboration and unified ways of working. This is something we have done a lot in the past couple of years. Now we want to take it even further, so even accelerate that to the next level. The last one, which that I want to mention and is very important, obviously, is the operational excellence and efficiency.
We also want to improve this by this planned organizational change. How we are going to structure our, ourselves is the plan is to have two business areas instead of three that we have today, and one of the business area, the bigger one, is planned to be Business Area Architecture. In the architectural business, we are planning to have the, the insulating glass business, the tempering glass business, and the lamination glass business, which comes from the heat treatment part. We are planning to form a new unit with the name Mobility, Display, & Solar, and this business unit would content, would be of the automotive business that we have currently there.
It would be both the pre-processing of that and also the bending re- bending and tempering, what comes to the automotive. The display focus. Display is our strategical growth business. We see great opportunities. We want to make sure that we put even more focus to achieve the growth in this area. The other part is the solar business. That has been part of the heat treatment business so far. We want to also make sure this one gets even more focus because that's the, our strategical area where we want to grow. We see we have great opportunities to continue the growth that we have, have already achieved some solar deals last year. These are the business areas. On top of that, we are planning to, to form two business functions.
One is automation and innovation. The automation part is mainly we talk about the software part to our machineries, so the intelligence about that, and how we are harmonizing and making sure we can utilize the concept for the whole company more efficiently with communication of, of, other machineries in the factories. Then also steering the innovation in a more harmonized Glaston way is part of this. The second business function is the sourcing or the supply chain management. Here, we want to make sure we steer and lead our sourcing more globally than we have been doing so far. More efficiency when it comes to sourcing and logistics. Those are the things we want to achieve with the planned organizational change, which is currently ongoing, the planning, detail planning.
The second one regarding the strategy I wanted to mention, is the, the ramp up of the production of our automotive and display in China. This project is ongoing according to plan. We are planning to close the project now in the next month, so this is good part here. On the other hand, the more challenging one has been to localize our supply chain in China, which is a big relation, has to do with the production ramp up there. As said already, last quarter, Q1, was mostly impacted of this strategical investment. Q2, we had already a great progress there, and continuing for the rest of the year, we are planning to have further improvements and be on the targeted level towards the end of the year. That's about the strategy.
The last thing I wanted to mention before moving to the financial parts is then our sustainability. Sustainability is also part of our strategy, has a great roadmap there. We have play a big role in this sustainability society, and a couple of things here, one of is the safety. Safety is something we have put a lot of focus on in the past couple of years. Safety continues to be... We have a target with to have zero lost time accidents. We have been doing many things, a lot of things, to improve the safety culture. We see a lot of good impacts there. One thing that we arranged as a concrete example in April, was the Global Safety Weeks. That was the second time we did it with great achievements.
Unfortunately, the accident frequency has been higher than previous year. We believe strongly that we are going to see improved figures going forward, given we have done a lot and we have a different culture when it comes to safety. When it comes to, the Scope 3, or the emissions, as a strategical target, we have already done a lot on our Scope 1 and Scope 2, meaning reducing our own emissions, but now we are talking about the Scope 3, and now we have calculated the impact of the Scope 3, and we see that from 2022, more than 99% of our emissions are actually related to Scope 3, which means that here is the beef that we want to do a work about.
We have updated this, and where we see an increased number in the terms of the Scope 3 emissions, the main reason here is the solar business. Last year, we were able to enter into the solar business, which is a very positive one for us. At the same time, solar lines, they use five times more energy than other normal tempering lines, and therefore, this. On the other hand, these emissions, they contribute to global emission reductions, because we are reducing fossil energy, or we are actually replacing fossil energy with the solar production. This is a positive thing, but a bit difficult when we talk about the emissions, the mission as far, as such. The other part we have done is that we joined United Nations.
This is a dedication, and we are clearly we want to show the commitment. We want to be part of this more heavily, United Nations, we are here lifting things like human rights, transparency of the information, and the quality of we report about things on the sustainability. Then the last one, which is a big overtaking, is the Science Based Targets initiatives. Here we have delivered our commitment letter, which means that according to the Paris Agreement, we want to commit limiting the global warming to 1.5 degrees.
We see that big part of the scope, our impact is the Scope 3, so we want to make sure here that we can impact the whole value chain when it comes to the glass processing business. With those words, I want to hand over to the financial part and welcome our CFO, Päivi Lindqvist. Welcome.
Thank you, Anders. Hello, everyone behind the screens. My pleasure to go through the financial development in the second quarter and first half. As usual, let's start with the order intake. I think we can describe the order intake as fairly good in this market situation, which has changed to some extent. The order intake total for the group for the second quarter was EUR 53.6 million. This was 5% lower than in the previous year second quarter. If we look at the orders by product area, we can see that in the first half, the automotive and display is really the area where we have experienced growth. The heat treatment technologies have been flat. Insulating glass technologies have declined quite significantly.
We've also had a kind of smaller decline in the whole services business, which is very much driven by the lower demand for upgrades. If we look at the quarterly figures by product area, it is quite similar picture, except for the heat treatment technologies, where the kind of a declining order intake in the first quarter was then turned to positive growth in the second quarter. In heat treatment technologies, we had a good quarter now the most recently, whereas then the insulating glass technologies, the decline even steepened to 28%. automotive and display had over 100% growth. automotive and display technologies, so the machine side, had more than 100% growth in the second quarter.
Services, as a whole, declined 9%, also that very much driven by the upgrades. Then if we take a similar type of approach to net sales, in the second quarter, we have 3% growth in net sales, and very much driven by the insulating glass segment. Both machines and services had a growth in that segment. Then the other segments had more challenging development in the quarter. In the first half, taking both quarters into consideration, insulating glass technologies is the growing area, so it is quite different from how the order, order intake developed now this year. There we have 9% growth, and the other machines area, heat treatment technologies, 3% lower.
Automotive display technology is 15% lower because of very weak first quarter, then services, 3% lower. If we next take a look at the regional split of our net sales, EMEA is and continues to be the clearly the biggest of our regions, with 51% share in the first half. Americas has been increasing its share and is now, in the six months, 36%. EMEA declined in the first half, but it actually turned to growth of 5% in the second quarter. First quarter was clearly weaker. Americas has been steadily growing in the first half and actually even accelerating in the second quarter.
Then on the other hand, the APAC has been the, the region where we have seen the most net sales decline, 33%, both in the first half and in the second quarter. This is very much driven by China, where the order intake in the past quarters has been weak. China's share of net sales has declined from 14% to 6%, both in the first half and also in the second quarter, we had similar figures. The positive news is that the order intake in China increased over 30% in the second quarter, so it is now going to the right direction. Of the regions, then next one would be profitability. Here, I think we can be reasonably happy with the profitability level as a whole for the, for the group.
In the quarter, EUR 3.4 million, almost the same level as we had in second quarter 2022. 6.2% margin, which was slightly lower than 2022, when it was 6.6%. Of our segments, insulating glass was the segment that improved its profitability, and then the other segments went down. I will go through the segments in more detail next. Let's start with heat treatment, and the orders, like I said, order intake in the second quarter was good, and which was very nice to see, especially after the first quarter, which was clearly a weaker quarter in terms of order intake. 14% increase in machines orders, and especially Americas, region, very strong here.
On the other hand, services order intake went down by 23%, and here also, upgrades in a strong role driving this lower. If we look at net sales, which decreased by 11% in the quarter, and this happened both in the machines area and also in services. In machines, there is a kind of a quite different way how the second and third quarter have turned out now this year compared to last year. Last year, the second quarter was very strong, and the revenue recognition from ongoing projects, and kind of the timing of when we received the components was more before kind of the summer holiday period in Finland. Whereas then this year, it's more evenly during the summer and more towards the, the third quarter.
The kind of, the quarters, will be quite different. Last year, we had a very strong, second quarter and weaker third quarter in this business, and now this year, the second quarter is not having that kind of very positive impact that we had last year. The services net sales went down by 16%, and here again, the main reason is the, the upgrade order intake being lower in the earlier quarters. If we look at the profitability, it went down by 26%, and second quarter EBITA margin was 6.6%, which is a good level for the business, but especially because of the above-mentioned reasons, last year was very strong, close to 8%, so it came down.
It would have been quite a bit lower if there had not been this very strong improvement in the machines' margin. There has been very good progress in gross margins in the machines area, which is quite a lot softening this negative impact from the volume, and also the fact that the fixed costs were higher. The following segment is insulating glass, like said, this was the strong performer in the quarter in terms of net sales and profit. Orders were under pressure, like Anders said, our insulating glass business is quite dependent on the European kind of region or EMEA region, as the market has been somewhat softer, it has also impacted our order intake.
On the machines area, the orders declined 28%, but on the other hand, the services orders grew 8% globally, so we saw quite good development there. Good to mention also the fact that the order book was adjusted during this quarter by the partial cancellation of orders by one customer. This is not expected to have any negative or positive material impacts on the, on the, on the net sales or profit this year, so it's more like kind of canceling orders that were supposed to be delivered next year or 2025 and is then only having impact later. If we look at net sales, both machines and services were growing nicely, machines by 19% and services by 14%.
Volume and margin both actually supported the profitability performance as well, and EBITA margin improved from 6.6% to 7.8%. This kind of fully compensated and more than compensated the, the negative impact that we had from a higher fixed cost and lower other operating income. Then the final segment, which is automotive and display. This was the segment that was creating the most headache for us in the first quarter, with quite heavy loss. I think the main thing here is that now we were able to achieve break-even result in the second quarter.
If we first look at the, the order intake, there is a very nice growth in the orders, and, of course, the, the, in a way, the comparison period was quite low as well, but still 32% increase in orders. Like I said earlier, the machine orders in this area more than doubled. Service orders declined by 9% because the spare parts business was a bit under pressure. Net sales increased by 4%, and machines, in machines, the increase was 12%, so that was really driving the net sales growth. Services was down 8%, mainly the spare parts business being the reason for that. Profitability, like I said, was break even, whereas last year in the second quarter, we had a small profit there.
This kind of year-on-year development is driven by this kind of production ramp-up in automotive standard preprocessing lines in China. Like I said, this is now getting to a lot better situation than it was in the first quarter, so the quarter-on-quarter development in the profitability is the positive direction. Actually, the machine margins in this business developed very favorably in the quarter. The regional mix of the projects in revenue recognition was good. Then that compensated for the kind of lower performance in services and also the fixed cost increase. All right, this was the segments, then finally, as usual, let's end with the cash flow.
Cash flow in the quarter was very small positive figure, and there was working capital increase in the quarter. The order intake as a whole is lower that, than it has been in, in the earlier quarters, which is then putting pressure on working capital, and that is seen in the numbers. Also, we had, in the second quarter, the capital return payment, and also we repaid some debt, and these all together were more than EUR 5 million, and this then impacted also the, the total cash flow and then, of course, for the capital return part, also the net debt. Net debt in net gearing increased to 32%, so it has increased from the year-end level.
Usually, the year-end figure is the lowest one, and then it, it increases from there for a few quarters, and then usually, at the end of the year, then we, we, we get it down again. Now, at the end of second quarter, it was still kind of below the level of the second quarter of last year. This was my last slide, and then I would like Anders to continue with the outlook.
Thank you, Päivi. Let me then finalize this presentation with the outlook for 2023. Given the strong and healthy order backlog, we have a growth of 8.7% compared to the previous comparison period. We have a healthy workload in all our factories, broadly speaking, we have the production fully booked for the 2023. What leaves us then is the service business, where we don't have an order backlog normally more than days, that's something that has been, this year, starting up slower than we anticipated. The other part that is worth mentioning is also there are a couple of things that affected our result negatively in Q1 and Q2, as, as you have heard today, one being the supply chain localization in China. There are some differences between quarters in heat treatment, Q2 through Q3.
There is a lot of good development that our team has accomplished that is partly not visible in, in our numbers. Therefore, we have specified the outlook here. We are guiding that our net sales will increase in 2023 from the levels reported of 2022, and we specify our outlook for the comparable EBITA, which we estimate to increase to a range of EUR 13.7 million-EUR 15.7 million. Last year, our sales totaled EUR 213.5 million, and comparable EBITA was EUR 13.6. This was the presentation of today, the first half of 2023, and now I welcome Päivi back up, and we are ready for any potential questions.
Yes. Thank you for the presentation, Anders, and thank you, Päivi. Let's start with some regional point of views on the, on the question side. Can you discuss the expectations related to Q2 in insulating glass orders from Americas? You note project shifts to later quarters of the year, so what are the key reasons for the longer sales cycles, and what are the current ambitions and outlook in terms of winning market share in Americas?
... For IG business in specifically?
The IG business, we have been, as a share of the total, business, we are lower in IG than in the heat treatment business. There we have it's one of our strategical must-wins to grow the, the business there as well. That requires also some development parts, so our solutions to the customers, which we are working with. This will not happen overnight. That's, that's one part that we have there. Please, can you repeat the, the, the part, part there?
Is, the, the shifting project to later quarters, what are the key reasons for the longer sales cycles?
Now we talk about Americas?
Yes-
We talk-
We are, we are in Americas.
I think in general, what-
Am-
... whatever comes to the shift in production is-
Mm-hmm
... that the market situation is such that, that the new residential business is decreasing a bit. It's the bigger effect is in Europe than we see in Americas, in the whole architectural market. This is one reason, and the other one is the cost of capital being increased. For a customer like ours, who are producers of glass, it's easier today to postpone the decision with a month, than, than it was maybe when the situation was a bit different. That's what I believe is the reason for the shifting.
Päivi is nodding.
Yeah, agree.
Anything to add here?
Yeah, no, no, I, I, I, I agree. I, I think it is when the customer's capacity utilization is not necessarily, you know, full, and at the same time, the interest rates are clearly higher than they used to be. maybe the investment decisions that they have had in the pipeline and the calculations they have done earlier, they might not be kind of accurate anymore. it means that they have to kind of use more time than they usually do in order to make the decisions.
There is actually a question related to machinery utilization, but before... We enter there, can you, can you describe, a little bit broadly, outside Americas also, the regional market prospects?
The market prospects, as said, Europe is the one where we see the maybe slowest with what comes to new business decision. However, we did pretty well in this market man, environment. We had a 9% decrease in new orders, which is fairly well in this business, in the current setup. I think Europe is going to be on a slower path for some while, but I think I also believe we are we will be able to, to do reasonable business in this current environment. Americas, we talked about there, we have seen the, the strong growth, the strong part, which we believe will continue for, for some but while. The APAC is a bit twofold. China market situation is soft there. We see some positive signs. We have made...
Actually achieved good new orders in the second quarter. The rest of the APAC, I think it has been very slow, what comes to new, bigger decisions there, we see growth in the service business. Actually, we see also good prospects there. It looks reasonable, okay, is the APAC market in the, in the current business environment.
Can you discuss the decline in customer machinery utilization, and how leading indicator that is to your services activity?
Well, I think it's, it's very difficult for us to have clear figures what are our customers' ut- capacity utilization. Those are company secrets, so we would. They are not sharing, and, you know, people are not sharing this broadly. I think it's clear, we, we see the decline in the new construction, especially in the residential part, partly also in the commercial, depending on the regions. It, it's clear that, being last year at the level where people were considering investment, investing in new capacity, the current decline, is making some questions in the decision timing here, and combined with the cost of capital. I don't want to speculate what our customers' -
Mm-hmm
utilization rate. It varies between companies a lot.
Mm-hmm.
Let's say if you were close to the limit, now maybe you are two-digit number lower or so.
The time of lower cap, kind of, capacity utilization can also be a good time to do service work and kind of maintenance that would otherwise take the machine out from production. This is also an opportunity for the customers to think about that. Can you discuss the working capital and increasing inventories during Q2? Should we expect similar trend in the second half due to the reserved commentary on the general market activity?
Well, the biggest inventory component for us is the ongoing pro- projects, or you could say the kind of... In this percentage of completion method, it's a little bit different terminology, but in, in true life, it is this ongoing projects.
Of course, you know, there is a certain time, how long they are in the inventory, and then if the order intake is going down, then it takes some time when it starts to show also in the inventory. I, to me, at least, you know, maybe the inventory figure as such is not the main thing. The main thing is how do the inventory change and then the advance payments change, how are they together? There we saw in the net increase in the second quarter, because the inventories increased more than the advance payments. The advance payments then are coming a little bit earlier in the time frame.
And, and the new order intake declining is then, is then kind of, impacting that to some extent. The whole picture, I think, depends quite a lot on the new orders.
Right. Let's move to profitability part. You re-reiterate your 10% adjusted EBITDA margin target for 2025, latest, discussing the reorganization accelerating plant improvement. Can you discuss how meaningful and how fast impact should be expected from the reorganization?
Well, I think when we launched the strategy in 2021, we started with a profitability of 4.6% EBITA. We made a lot of strategic action plans, which we have actually been fulfilling, and we have executed them. Currently, we are up at the profitability north of 6% when we look at the full year 2022. What we wanna do now is... I think what we have achieved in the past couple of years is a lot. On the other hand, we have also been preparing for future growth, we have invested a bit upfront.
If we were to say market conditions would be same as when we prepared the strategy two years back, with actions now that we are planning to accelerate, which comes to operational excellence and efficiency, and also the life cycle approach from the customer perspective and other parts as well, and the China automotive move there, we have a plan that this would take us roughly to the strategical result level. However, we know now currently the market situation, it's somewhat softer than it was two years ago or last year. Obviously, the volume effect from the market situation is, of course, linked with our capability of achieving the 10% EBITA. Action-wise, we believe this, with the expected volumes, will lead to this.
The speed of it, it's... I don't wanna lay out clear details here. I think we have achieved in the first couple of... We have now worked 2.5 years with the strategy, now we are continuing, things will happen in the coming, coming two years, with the effects pretty, I would say, evenly in there all the time.
Thank you. Let's then have two questions related to specified EBITDA range. Can you discuss a little about the potential factors impacting where in this range you estimate to land?
I think when we look at the order backlog and the workload situation, this, as said today, we are broadly there. We have the order backlog for, for this year's operations. We have seen this year, the service has been slow, especially in Europe and in China, and positive in, in the U.S. and in Norway, but also on a positive note during the second quarter. We do not have normally an order backlog for the service business, and this is something that, for us, is very difficult to sense and see, how the second half will really come out. This has a clear impact on the range, whether we will be lower or upper on the range.
Okay. There was also just more specified as to what are the biggest uncertainties. You mentioned services, is there something else also to take into account?
Well, I think there are, to my mind, there are not any particular one of things that, that could be, would be. The service is the biggest one. Of course, the normal capability of executing, day-to-day matters and have no surprises that normally is not foreseeable. I think the service is the biggest part there.
Anything to mention related to the broadness of this EBITDA growth range for the second half? Why is it so?
I think the services is also here the main reason, that, as most of the net sales uncertainty is related to services, which usually have a very high margin, then it means that it results into then potentially higher range for EBITA as well.
So far, it seems that we are reaching our last question. There is still some time in the audience if you wish to share some. If we now take a little bit longer perspective, and then having the, the current situation as it, as described, how realistic do you consider it is to reach this 10% comparable EBITA target by 2025, which is the strategic target range, time-wise?
Well, I think that was partly a question earlier today.
Mm-hmm.
I think the, the actions we have been doing currently, I think there is a lot of great work that is not fully visible in the, in the figures when we compare them quarter on quarter or year on year yet. And doing now the next step reorganization, focusing on operational excellence and other things that we have mentioned here today, I feel we are addressing and executing in all these areas that we believe will bring us to the targeted level. I said, the market development, that's something we cannot affect. We can affect our own actions, and if the market situation is weaker than we said when we planned, that will obviously have an effect that I am not able to calculate what is the magnitude of that.
Action-wise, we believe we are on the right track, which means we believe we are able to reach the 10% margin, but of course, the market situation, mm, is also crucial to that achievement.
Yes. Ongoing consideration and reacting to that is, of course, on the table. Like you said, Glaston has not changed the strategic KPIs for the strategy period.
They remain unchanged. We believe they are the right-
Exactly
... ones. As we heard about sustainability parts, Scope 3 emission is something that becomes part of the strategical targets that were not in the original ones we, we launched 2.5 years ago.
With that, I would like to thank you, Anders Dahlblom and Päivi Lindqvist, and welcome our audience to join us again, 26th of October, when we are ready to publish the, Q3 2023 results.
Mm-hmm.
Thank you for this, and thank you for taking the time, and we look forward to seeing and hearing you again. Thank you.
Thank you.
Thank you!