Earnings Call: Q4 2020

Feb 16, 2021

Good afternoon and good morning, everybody. This is Juha from Mettow Autotech Investor Relations, and I want to welcome you all to this conference call where we discuss Mettow Autotech's 4th quarter and full year 2020 results. Results will be presented by our President and CEO, Pekka Kvaoromo and CFO, Eeva Sipila. And after the presentation, we'll have the Q and A session. In this presentation slide deck, we have provided, 1st of all, forward looking statements in slide number 2. And following that, Slide number 3 talks about this financial information, meaning that we have several set of numbers, and this works as a kind of a reading instruction into those different numbers that you will find in our report and presentation. We'll try to limit this conference call to 60 minutes in total, So please keep that in mind. And with these opening remarks, I'll be handing over to President and CEO, Pekka Varva. Pekka, please go ahead. So thank you, Johan. Welcome to this call. Yes, let's move on right away to short comments on Q4. As you have seen on numbers, very strong order intake, and that applies to all of our 3 segments. We'll go them through more indeed later on. Performance, both in Aggregates and Minerals segments, It was healthy. Some issues, though, in Minerals. We'll come back to that one as well later on. Metals, we reported loss already At the quarter 3, we announced that turnaround program will be put in place. It is now in place. And we have started the actions targeting this year to EUR 15,000,000 permanent cost savings. Integration, Progressing well. We are currently at €65,000,000 of synergy costs, that run rate that we have been able to achieve. And the target was €50,000,000 at the end of last year, and we're targeting to be at €120,000,000 mark with the cost synergies at the end of this year. So this target is unchanged from our previous communication. Then we also during the quarter, we had a Capital Markets Day. We published our strategy, published our financial targets, and I will just sort of recap them later on in this presentation. But then looking at the group numbers. 1st, strong orders in all segments, like I said, EUR 1,300,000 And of course, yes, we had very, very strong end of the year, like we were expecting already, already quarter 3 some of these orders. But due to uncertainty, decision making takes longer and it's more difficult to forecast the actual decision making time than on more normal times. But the orders came, and pipeline in all businesses looks healthy at this moment also going forward. Sales, when you look at our sales numbers later on, I mean, please pay attention to the currency The impact, same applies to orders as well. We have a major currency impact on most of those lines. And that is because we do operate in countries with volatile currencies, and a lot of our sales are coming from them. And in days like this, those currencies tend to depreciate strongly, and we have seen that one. We of course, we also have a lot of internal hedging in place, so the impact on bottom line is not as dramatic as it in place, so the impact on bottom line is not as dramatic as it would be on top line. But that is just a note at this moment already. Adjusted EBITDA for the quarter, €103,000,000 10.6 percent of sales, Down from last year, I would say that primarily for COVID related reasons, the Downward trend on this one. EBIT for the full year, €44,000,000 We have, As you can see, a lot of adjustments. We also have the PPA here. That's affecting the bottom line numbers. Very healthy cash flow situation continued during the Q4, EUR 177,000,000 of cash from operations and nearly €600,000,000 cash from the operation in full year. And our board will propose a dividend of €0.20 for 2020, and that would be paid in 2 equal installments and total amount of dividends being €166,000,000 with this proposal. COVID impact, we do see that one still, even though The news on vaccination were positive, and that encouraged customers to take decisions. Finally, on some of the proposals that we had out there, but we are still seeing its impact on sales In all fronts, I would say, more so in Services, there's still access Restrictions in place primarily in North America and South America and parts of Asia, those are suffering most from the access restrictions. But at the same time, sort of ongoing spare parts consumables business, the demand is strong, but customers are hesitant to engage with modifications and upgrades, as has been the picture before as well. We are expecting that one, of course, to go away once the vaccination programs Do progress, and there are, at times, some encouraging signs that things will start to change. But a clear breakthrough in this one is yet to come. Underlying market, as such, It's good, I mean, but decision making continues to be slow. And the bigger The orders are or the more complicated technical things are involved, the more difficult it is to conclude things. Metal prices continue to be strong, and that is, Of course, a very good situation for us to be right now. Aggregate segment, very strong Order intake, especially the 2 last months of the quarter. Quarter, we see really saw really the orders going up. And I think in Q3, we said that we have returned to more sort of a normal level. And now two Last month of the year, we were ways above any normal level. And strong contribution from all our brands, but specifically McCloskey, very good, strong, healthy order intake, which is an indication of upcoming spring season in North America and Northern Hemisphere in general. Sales, €250,000,000 currency impact there, negative 5% And adjusted EBITDA, €31,000,000 margin improved for the segment from last year, which is a good sign and it's also a sign that the business improvement programs that we have in place In aggregates, there's minor impact of synergies as well here also from Autotech Metso Autotech Merger Synergies, but then additional from McCloskey's and Edges that are improving this one, plus the self help from within the aggregates business. So all in all, good healthy development, and we are well on our way towards our targets in the segment here. Minerals, here we see really major currency impact on orders, 9% on sales, minus 8%. So these are just worthwhile to note when you comment these sales figures. But like I said earlier, good internal hedging. We have a lot of production also in the same currency. So the bottom line impact is not quite as dramatic as this top line currency impacts would indicate. But order, euros 730,000,000 slightly up from year before despite of the currency Sales down. We are, of course, delivering the order backlog, which has been reduced and order intake, which was reduced throughout the here. We could say that with the currency impact, it would be flat development on the sales, but that's what the numbers currently show. Services share was 62% and also reflecting a little bit a little bit of the difficulties in delivering some of the services because of the restrictions. Adjusted EBITDA, €85,000,000 a year ago, €84,000,000 Margin of 13.3 percent, so improvement in that one in that regard. But we had certain issues, primarily our consumables business, we have made quite many changes in our supply footprint, and we clearly had additional costs and delivery difficulties at the end of the year, really, November December. So these have been Mostly solved already and in January, we saw preliminary already return to more normal level in consumables. Overall, consumables business has developed very well in last year. Unfortunately, the 2 last months of the year We're disappointing in that part of the business and affecting the entire segment numbers. Metal segment continues at loss, but orders on high level. It's worthwhile to mention that The orders that we announced in December, they were joint orders for Metals and Minerals. So this is also an indication that there are synergies between these two businesses. And most of the orders, they were very close to fifty-fifty splits between Minerals and Metals. So the synergies are major synergies between those with this measure. Sales, euros 86,000,000 this is really a very low number. And with this sort of number, it's difficult to make any sort of positive result with the fixed cost and with the absorption level or under absorption, which was very high during the quarter. But we are on a turnaround program and progressing with that one as fast as we can. We're targeting €15,000,000 savings for Metals on an annual basis, and we will get to those numbers later in this year, quarter 3, I would say, we should be where we should be on that run rate with Metals. At the same time, we are, of course, delivering our order backlog, and we start to see firming up of the top line. But we need to wait until we see turnaround of this business to positive numbers towards end of the year. And then I'll hand it over to Eeva, and then I'll come back later on for the strategy recap. Thank you, Pekka, and good morning, good afternoon on my behalf as well. We closed the year with several sets of numbers, as you already saw last year due to the closing of Metsoe Auto Tech transaction taking place midyear on June 30, 2020. So whilst for the Q4, the IFRS numbers are what you need, for the full year, the IFRS numbers have some limitations as they ignore the Outotec The illustrative combined figures give better insight into the performance of Mazzo Titec businesses for all of 2020. Then again, they combined the history of 2 separate companies, so they are, as their names says, illustrative. In this presentation, I will focus on these two sets. But in the material published today, you can also find a 3rd set, which are the pro form a figures. They are provided to give you a combined view following the pro form a reporting conventions that will be familiar to many of you. So I'll start with the IFRS figures and the income statement. Q4 figures are clear and describe the business exactly as we are going forward as well. The full year 2020 incorporates Metso Minerals for the 1st 6 months and Metso Autotech combined for the latter 6 months. And the year 2019 in this table is purely Metso Minerals. Now I'll come back to the Q4 comments on the next page. But just briefly on the IFRS 2020 numbers. Sales of 3,300,000,000 and an adjusted EBITA of 11.9% and an operating profit of 7.2%. The difference between these two is formed from the adjustments totaling €72,000,000 and amortization of intangible assets €86,000,000 You will also note that we report separately the profit for continuing operations at €149,000,000 and then the profit, including discontinued operations. Now whilst the aluminum business announced to be sold to Real in December was operatively profitable as was the recycling business transitioned here during the Q4. The 3rd leg of the discontinued operations is the previous Odotec Energy business, and this business was at a loss, pulling then the total profit for the financial year to EUR 138,000,000. Now moving forward on you see the illustrative combined figures, which are really useful when you want to compare the Q4 performance either year over year or then against sort of 12 months development. Now the Q4 here is exactly the same as on the previous page. So this column is IFRS reporting. Sales were €977,000,000 down from €1,080,700,000,000 last year due to really two factors: COVID-nineteen impacting orders and hence sales volumes delivered during the year. And then as our CEO mentioned, the currency Appreciation affected all of our businesses, but especially the Minerals aftermarket side, where the geographical mix Of the businesses such that countries that were particularly hit by currency depreciation against euro are really some of the key markets. The currency impact explains 6 percentage points of the total, 10% drop in sales volume in the quarter. Now the adjusted EBITA for Q4 was 10.6%. As both the Aggregates and Minerals segments clearly improved their margin, The difference to the 12.7% of a year earlier comes purely from the Metals business delivering a loss in 2020, whereas in the comparison quarter of 2019, the at that time, OTO Tech Metals Refining business result It was profitable. It did include material positive one offs, which is good to note. On an annual level, the illustrative combined figures give really the right scale of our operations today. So The sales of €3,897,000,000 excluding the Recycling business, which was transferred into discontinued operations during the Q4. The adjustment costs here are higher. They are €97,000,000 compared to the €72,000,000 reported under IFRS. The difference being the part of the transaction costs included in Odotec first half twenty twenty figures. Now the earnings per share number is unfortunately as complex as in Q3. Not only do you need to pay attention to the numerator, also the denominator, I. E, the number of shares that is used to calculate the EPS Is different under IFRS versus illustrative combined figures. As mentioned, the IFRS numerator It's either €149,000,000 or €138,000,000 depending on whether you want to look at EPS for continued operations or EPS also including discontinued operations. For both, the denominator used is the average number of shares for 2020. Now this is a somewhat fictive number as calculating the average of new shares issued as consideration to Metso shareholders And the end of year, Metso, OTOTEC shares is not really indicative of the how many shareholders we have today, to whom we distribute the earnings. Now nevertheless, with these calculations, you get either €0.20 or €0.19 Now personally, I believe the more informative denominator is using the number of shares we had at Metso Autotech from the start and also at the end of the year. And this number is just under 829,000,000 shares. Now naturally, the EPS is slightly lower with a higher denominator. So we end up at €0.17 of EPS with illustrative combined figures against €0.19 in under IFRS. The next slide gives the highlights of our balance sheet. And here, we really have the benefit of having full comparability with the end of December to the end of June figures, both of them illustrating the assets and liabilities of Metso Autotech. Only the end of December 2019 figures are for Metso Minerals only. Now as you can see from comparing the June And December 2020 figures, so very minimal changes during the sort of 1st 6 months of Metso Autotech, a slight reduction of the total balance sheet to EUR 5,508,000,000. Now I'll walk you through the net working capital liquid funds still shortly. But before that, let's look at the cash flow, something I'm pleased with not only for the full year but also for the regarding the Q4 achievement. Now we discussed profit earlier as well as the higher amortization due to the PPA from the transaction. So I would perhaps just draw your attention to the Change in net working capital row here, which shows that we were able to release cash of €193,000,000 for the full year and €81,000,000 for the 4th quarter alone. Now considering the challenging COVID-nineteen environment, we did well in improving our collection of receivables as well as reducing our inventories. Healthy operative cash flow generation helped us strengthen our balance sheet, following first the McCloskey acquisition in late 2019 and then the Ottotec merger last year. And in this latter deal, we also successfully refinanced significantly during last year to improve the maturity and reduce the cost of our debt. Now the healthy cash flow helped the board in using a more Shareholder friendly thinking view on the EPS used as a basis for the dividend proposal. And this view considered the €97,000,000 of transaction and integration related costs to be one off in nature And hence, the underlying operative earnings to be more than €0.12 higher than reported. And this then leading to the proposal of Now on this page, you see the waterfall on the main elements of our net working capital, euros 421,000,000 at the end of the year And really sort of the big blocks are as the order of the magnitude of the blocks So are pretty similar, SEK 1,000,000,000 of inventories. AR and AP, both around SEK 5.50 million. But as said, what is encouraging is that the total amount of net working capital is we made progress on that one. My final slide is on our financial position. Our liquidity position is solid. In addition to liquid funds, at the end of the year at €537,000,000 The company has committed an undrawn revolving credit facilities of SEK 790,000,000. The SEK 790,000,000 consists Saba syndicated SEK 600,000,000 revolving credit facility and then SEK 100,000,000 revolving credit The main achievement on the financing side was the first bond for Matsodotec, which we launched in November. This was a €300,000,000 bond with a 7.5 year And this, I believe, will really be the highlights from the financials. So I would hand it back to you, Pekka. Thank you, Eeva. And I will sort of move on to integration strategy and our outlook as such as we see the situation right now. But integration really progressing well and as per plan. We had plenty of time for integration planning while the authorities were doing their work before We're approving the combination, and we've been just diligently executing those plans. Some minor changes we have made because we have learned more. We have maybe found some new items. Some of the items we quite were not able to get to the point where we originally thought. But in the big picture, we are progressing very well, very rapidly, And we are €15,000,000 ahead of the plan at the end of the year. And the target at the end of year is this year is €120,000,000 run rate, We're confident that we're going to get there. Main source of these synergies in the first part always comes from reorganizing the company and reducing the overlaps and doing things like that. And this is what we did by the end of October, early November, we had done that one. We have still some work left that we needed for local because of local regulations. We needed to extend processes in a couple of countries into this year, but there is maybe 300, 350 More people to reductions expected out of these actions later in this year. Revenue synergies is, of course, becoming a focus, And we have already in our order books such revenues that we can call synergistic, and this number It's growing. This, of course, the revenue synergies, they need to be developed through our proposal pipeline, and therefore, It takes a longer time before they start to be visible, but we already have good number of synergies in our order backlog, we start to then report once they turn into sales. We also revised the one off Adjustments, the costs relating to realization of synergies. Originally, we said that there will be €100,000,000 of 1 off costs, and now the current forecast is €75,000,000 And out of this, 33 were booked in 2020, and majority of the rest will We'll be booked during this year. So €25,000,000 reduction in expected with the current scope of the synergy work. Market outlook, with metal prices being on very high level, iron Extremely high level, maybe coming slightly down, but still remaining according to forecast on high level copper, on high level Precious Metals on high level improvement in many battery metals, this really makes us believe that the Mining and Metal Markets activity will improve. And we have seen already improvement in aggregates market. So therefore, we concluded that we expect market activity overall to improve. And of course, we need to be we need to remember that pandemic is still with us, And we might see turns that are unexpected or not foreseeable as such as we have seen so many of them. But of course, vaccination programs progressing as they are, We feel that it gives us basis to expect markets to improve. Our strategy, which we published in during the Q4, we discussed about our purpose statement, Enabling Sustainable Modern Life, our vision statement. We discussed the megatrends and how we concluded what our Tier 1 priorities would be for this strategy period, and we concluded them into 4: integration and financial performance, which we are, of course, reviewing and communicating to the market as well on quarterly basis. Customer centricity, which we wanted to elevate to a different level, sustainability, both in our operations and what we can deliver to our customers and then culture for the new Metso Autotech company, which we call performance culture, which is being developed in connection of launching our values and our strategic targets for the organization. So this as a one page, the of our strategy. The financial targets And strategic targets that we published then in the Capital Markets Day, we said that adjusted EBITDA over the cycle Should exceed 15%. We want to maintain investment grade rating, and dividend payout should be at least 50% of earnings per share. And we commit ourselves on actions, and we have the plans to maximum 1.5 degree global warming. We have science based targets approved for that one, and we have Taken several actions to that will contribute into that journey. The sustainability highlights from last year already, 1st of all, the commitment to 1.5 Degree Journey with Science Based Targets backing up that one. We have taken steps on CO2 emissions already, which mean that in our operation, we will get 60% reduction in CO2. This is because we have moved into renewable energy, to wind and solar power in our foundries and other factories. And we have also seen 29% reduction in to in customer logistics, which is fairly complicated in our company, having so many factories and operating globally in tens of countries. Our handprint, which is the other side, that is what our offering can do for our customers. We saw a reduction of 1,000,000 ton of CO2. And if you sort of quantify what 1,000,000 tons of CO2 can mean value to our customers, Customers, that translates into €20,000,000 based on emission trade of a price of €20,000,000 per ton. And then a major achievement is also Our listing on Global 100, number 8 company globally. It is a high position. We don't see Any of our competitors on that list, on top 100, we see very few customers They're only on the list. We don't see any of our peers on that list either. So we are very uniquely positioned on that one, and we feel that we have Good action plans. We have given the commitments backed up by externally approved targets, and we aim to stay well positioned on the list, realizing though that there is Tough competition for those top positions on the list. But with these ones, I think it's time to move on to the Q and A part. Yes. Thank you, Pekka. Thank you, Eeva. And operator, we can now open the conference call lines for questions. Thank Our first question comes from the line of Klas Bergelin from Citi. Please go ahead. Yes. Hi, Pekken here. It's Klas at Citi. The first one I had is on the metals business. In the second half, we had a SEK 10,000,000 loss in the 3rd quarter and SEK 9,000,000 loss in the 4th quarter. How much of these losses were project related costs, Which will likely reverse now when demand is set to be stronger. I'm trying to understand the keen starting point for the EUR 15,000,000 of savings that you have announced. And finally, Linked to that, when do you think, Pekka, a 10% margin is achievable for the metals business? Is 2022 a realistic time frame If demand is accelerating like we see today, I will start there. Maybe I'll take the latter part. Eeva will answer the first part of it. What we have done in metals now, we have programmed the business, reorganized it into 4 business lines. And we are now looking at 4 business lines within metal segments individually. They all have their own turnaround plans, and They all have their target of achieving 10% EBITDA or adjusted EBITDA. And those business lines, they also include now services related to that business line. And that 10% is the criteria that we will use when we then look at our portfolio in our Metals business. And those businesses that will reach or have potential to reach the 10% we will maintain. And then we look at further actions on those ones that we'll not do. Some of the business lines will be able to make it, and they will be there by 2022, some of them hopefully by the end of the year already, at least on run rate basis. And then the rest, we then draw conclusions later. Emma, please. Yes. Hi, Klas. On your first question. So yes, maybe sort of the order Backlog qualities is leave some room for improvement. Then, of course, the fact in these COVID circumstances is that if you have a challenging project, it gets more challenging in COVID times because of the limited access Two sides. But I would say that roughly sort of maybe 40% of the loss in both Q3 and Q4 were related to Project lead related things, which sort of, hopefully, as we progress, will, of course, Diminishing and certainly would be helped by sort of better accessibility. The rest is really then the structural issue of having too high fixed Cost for the volume the business has, but that, of course, is being addressed by the turnaround. So in that sense, We're working on both fronts in a way to make sure that we get the business back into black. Thank you. That's great color. Then my second one is on Minerals and the Short term negative impact on the consumable side. Short term, it feels like you think this is going away already now from Jan and Feb, and so just to confirm that. And have you, Petr, identified any similar risk to performance as we go through this year? You obviously had done synergies and looking to the impact and the payback is improving. But Just curious if there is anything else in terms of integration that you see as a risk as we go through 2021? Nothing major, of course, minor things here and there to happen, also positive things that are offsetting each others. But we were relocating some of the machinery to from an old plant to a new plant in a different country. And of course, during the COVID days, when Assembling and installing the machinery and start up procedures, they took longer than we expected and had difficulties in that one. And there were lots of additional costs relating to that kind of activity, And then we missed some of the deliveries. So those were really the reasons for consumables. Those particular issues are now over. We do have further program ongoing, and we, of course, take learnings out of this one. And we will be a bit more cautious in ramping down and ramping up. We have a couple of Other sort of transfers in our plan for this year as well, and we'll just take a bit more precautionary actions there to eliminate any top line and margin issues coming out of them. Very good. My very final one is on the Service Business in Minerals. So orders flattish ex currency Year over year, that's a solid improvement versus the last quarter, but still held back by COVID constraints. So I wanted to ask, At what capacity is services running now relative to normal conditions? Tayo, what would the growth have been if we didn't have the COVID restrictions in place? And also Interested in your comments there on commissioning of larger projects being delayed because of restrictions. It sounds like there is also pent up demand also on the equipment side. Yes. We do have some project activity in Services as well. We have so called engineered to Order modifications and upgrades, and that is the part of the business that has suffered most. That is activity that requires Fairly intensive work together with customers, sometimes with other external parties as well. And as you might imagine, there's been limitations in doing that one. Now the pipeline is firming up, but Then, yes, field service, where there's been access limitations, that is somewhat down. Now we are, of course, at the in the beginning of the year, where which is in some parts of of Southern Hemisphere or January was in Southern Hemisphere like a holiday season, and it's difficult to draw the What was the holiday impact and what was COVID impact, but we are getting closer to normal levels now. In field service, I would say 80% of the normal would be a good number to be used, but very much sort of the underutilization coming from the Americas and, to some extent, Asia. Thank you. And the next question comes from the Yes, but I want to just continue that spare parts and consumables, They have continued more or less as normal from the demand side, and that has supported, of course, the sort of business and turned out to be very resilient part of the service. Thank you, Pekka. And the next question comes from the line of Magnus Kruber from UBS. Please go ahead. Hi, Pekka, Eva Juer, Magnus here from UBS. A couple of ones from me as well. Just a follow-up on Klas' question there on the mining margins. Could you comment a bit on the magnitude of the impact Associated with the consumables footprint issue on sales and EBITDA, if that's possible. Yes. We, of course, don't comment the numbers, but We're talking about fairly close to the numbers that if you have access to consensus numbers, so and our adjusted EBITA performance. So that's the ballpark where we that we talk about from the 2 months. Okay, perfect. That's good. And second, on the synergy savings, you exceeded the €50,000,000 target by quite a margin, obviously. But could you help us To understand the sort of the phasing of that how that came through and what was the sort of in quarter impact from the savings in Q4. Sure, Magnus. So we sort of went through the sort of item by item. And I would say that in sort of visible in the P and L that we published today would be around €36,000,000 of 65,000,000. So that's kind of gives you a sort of indication. And obviously, it was very much headcount driven. We had a good start on Facilities and IT cost synergies in the 4th quarter. But obviously, they are still sort of only we're talking about sort of some sort of altogether sort of Less than €10,000,000 for that group. So the really majority is headcount. And then it was really phased through sort of as people left the organization. Perfect. Very good. And then finally, on Metals. Based on the orders you booked in Q4, How fast should we expect to see them offset the under absorption in the business? And is there any part of the business now where you still are lacking work? And Also finally, on that point, when do you expect to start to invoice on these projects? Yes. We, of course, do POC on revenue recognition on project business and with the very thin workload that we had, I We will start to see start to recognize revenue immediately. You cannot sort of take sort of a Straight line sort of revenue recognition from the beginning because we always have some preparatory work, some engineering work, Work and the most part of the revenues will only come when we are delivering into the project. So it's helping immediately. But with the turnaround program, like I commented earlier on, some of the business lines, we Are expecting them to return to clear profitability on run rate basis already in this year. This year. And then 'twenty two, we expect to be in position to report clearly positive result for metals. That is, of course, subject to us succeeding then with potential divestments in case we and up doing those. Perfect. Thank you so much. And the next question comes from the line of Artem Topherinckow from Credit Suisse. Please go ahead. Yes, good morning. Thank you very much for taking my questions. My first one is around the EBIT bridge for 2021. Could you maybe talk and help us quantify some of the major moving parts like incremental P and L synergies you expect? And also maybe talk a little bit about the mix headwinds you would expect from higher share of capital business and maybe also how should we think about the underlying cost inflation and raw material inflation? Sure. So We've obviously repeated today the earlier statement that we expect to achieve EUR 120,000,000 of cost synergies from the Metso Autotech integration as a run rate by the end of this year. And we sort of we were tracking at 65%. So that's Really, that difference is what you should expect to see coming through. I would say that sort of with the visibility we have today, we expect to sort of It comes rather similarly to what we saw in the sort of that rather that we move we make progress every quarter, so to And rather linear. Of course, it's sort of time will tell exactly, but that's probably, for your estimates, a sort of good enough view. You are right on the fact that if one looks at the sort of now the as such, not a surprising sort of Cyclical recovery in a way that we would typically see sort of equipment. When things start to improve, the equipment orders Exceed that from the aftermarket side. Then again, the sort of equipment deliveries, Excluding aggregates, we talk about sort of 1.5 years, 2 years spectrum. So obviously, Whatever we booked in Minerals and Metals in Q4, it is sort of a big chunk also goes into 2022. So If the COVID situation improves, I think the sort of there is all the possibility for service still to sort of pick up And make a sort of make catch up into 2021 revenue, but that, of course, will be dependent on how the pandemic situation Then the third point is very much what you mentioned as well on the Inflationary side, I mean, in sort of still sort of in the midst of this pandemic, clearly, So what's is a sort of new phenomenon is sort of the Price increases in some of the commodities and also then the raw materials that we use for our deliveries. And it remains to be seen how sort of is this now a bit of a sort of Quick catch up on something or how that will evolve. We've certainly seen pressure on logistics cost in Q4 already. The global imbalances in trade have clearly led to a situation where containers are very expensive from certain locations than very cheap from other locations. And I think this is, again, all the sort of the sort of unplanned Consequences of the pandemic, which we will which I sort of do believe will balance out. But of course, these are the type of surprises that we can perhaps still need to expect to see during the year and hence the overall focus we Have sort of started actions on price increases on our products as well because we clearly do see the world moving into that direction. And much remains on which is then dependent on how sort of well we can balance and, as And how much unexpected things happens versus how much is perhaps a more sort of cyclical development that we've So seen in earlier years when things have started to pick up. Thank you very much for an extended answer. I guess a follow-up to this question. Could you help us to quantify the negative mix impact in Minerals business in Q4, Maybe on year over year or sequential basis. And thinking about 2021 based on your order backlog, do you expect a broadly similar mix to Q4 or further Well, I think what I tried to just reply is that It is a bit difficult to quantify or even predict the mix of for 2021 because of the shorter lead time in services. So if things would start to recover on the services side, it can still meaningfully change the mix for 2021. But obviously, sort of you should look at the sort of when we publish both the mix in our orders as well as in our sales And that development really to sort of those numbers are really the kind of best advice to use in your models to kind of You get a sense, I mean, these things don't, of course, overnight don't change dramatically. We're talking about a few percentage points. But on the margin level, of course, it's still a meaningful impact of some 1,000,000. So that's It's worthwhile to note. But I think, yes, very will be very interesting to see now how that do we start to see an easening in the So that we would get certain sort of service activity ramped up. Thank you very much. And last question on aggregates, euros 360,000,000 of orders in Q4. Could you maybe talk a little bit about whether you saw some pent Demand from weaker Q2 and Q3 and how should we think about sustainability of those orders? And maybe give us some color about how this year has Got it, Eirabits. Yes. Of course, it was something extraordinary that we saw in, I would say December November, we saw some signs already that things are warming up, but which we cannot expect fairly just similar order intakes in January or February of this year. Then March normally is the time when things start to really get And currently, it looks like that, that is the case. But there were some year end orders that dealers Did place on us and McCloskey as well. And we normally tend to put price increases through around that time and effective in the beginning of the year, and that may have impacted a little bit on the actual numbers order numbers, but it took us by surprise how active the ordering was in both of this month, November December. We are expecting a strong season. There is some to some extent, rebound from last year's activity, which basically the summer season was almost nonexistent because of corona primarily. And there's some backlog with customers that they need to replace the machinery. Plus, they are clearly preparing for all kinds of funding that is coming In different parts of the world, North America, Europe as well, China, very active at this moment. So this is what we see happening right now. Right now, it looks very promising. Thank you very much. And the next question comes from the line of Mandeep Singh from Bank of America. Please go ahead. Yes, hi. Thanks for taking my question. Just a couple of them. Can you quantify the revenue synergies you realized in Q4? Because it feels like potential here is a lot more than €150,000,000 you have given as long term target or guidance. And Associated with that, would you consider upgrading the synergy targets overall, including revenue and cost synergies? That's the first question. Sure. So then on the revenue synergy side, now because of the sort of COVID situation still sort of impacting the order intake in Q3 quite a bit. So obviously, before the order turns into revenue, There is a certain sort of a lag. And hence, the actual revenue synergies in the 2020 numbers We're 1,000,000, but not it wasn't a very big number and not sort of perhaps that significant. The order pipeline It was certainly better, and that, of course, is what we are now working on in a way to then ensure that we would start to see sort of recognition of revenue towards the sort of second half of this year and then 2022 as well. Your other part of the question on whether we're looking to upgrade, I think that We're certainly sort of working hard, and we're still sort of I mean, in sort of a heavy, heavy part of integration sort of 7 months into the process. So right now, €120,000,000 seems like a very challenging target and still work to be done. I think we've sort of We're clearly on the right track, so comfortable with that, but wouldn't sort of At this point on any new targets, I think we still have sort of 11 months to go on to reach these targets. Continue on the revenue synergy side. If you think about that, all the revenue synergies that we finally then invoice To customers, they need to go through also our proposal pipeline, and we were able to make joint offers and joint bids only beginning of July, so 6 months in last year. And in average, I think our proposals Our several months out there before they are decided, so that's why the slow buildup of revenue synergies is a reality. But in the backlog, we have them already now a meaningful number, and we will be then reporting once we are delivering those. So I actually did need to ask about the synergy on the order level as well. So the orders you have received already, you said that almost 50% of them are joint bids. So if you could quantify that, that would be quite helpful. We will really be reporting on the revenue synergies, so that once they recognize this revenue. Okay. So then just to follow-up on the previous questions around the impact on retail from the consumable related disruptions. Is the loss which you suffered during Q4, is that a permanent loss because of these disruptions? Or It was similar to the order issues you had in Q3, which then eventually got booked in the Q4. How should we think about the impact in Q1, from that example, whether we are going to expect some should we expect some recovery in Q1? Not really. I mean, as I said, it is some things taking a bit more time or us Having to sort of run test runs of production at the new site that are not typically not sellable product, So the cost of that is in a way kind of it's a sunk cost. It's the sort of benefit, of course, is that you have to sort of Build the competence in a way then to start sort of ramping up and now we're in that process, but I don't really see us recovering those costs that have that more materialized in late last year. And last one from me. How much of the orders booked in Q4 were kind of spillover from the Q3 orders? Because I just want to understand the underlying, Let's say, run rate for the orders in Q4 because I mean, would it be fair for us to assume that the same order growth continues in Q1? That's the question. Well, you have seen our order announcements, the press releases. And If you take the total of them, I would say that there you see the underlying order activity pretty well. Or what do you say, Eeva? Yes. I think it's too big. The big projects are the one where they can land in 1 quarter or the other, very much based on what just what sort of customer decision making process, whereas the underlying business that we don't sort of specify on an individual level is More sort of the kind of goes in a sort of in a different cycle. So that spillover, if you want to use that term, is really related to these big ones. And of course, in this type of business, you will always see that things moving from one quarter to the other. What made the last year particularly Challenging to estimate on was really the pandemic as that had some unexpected and unintended consequences on the decision making process. One indication of that one is if you look at our order backlog, which we are reporting. So that order backlog bottomed out sometime in October last year, and these big orders only came in December. So the Underlying ordering activity exceeded our sales already in October, November time. Great. Thank you very much. And the next question comes from the line of Robert Davies from Morgan Stanley. Please go ahead. Yes. Thank you for taking my questions. My first one was just maybe you could give us a little more color on some of the regional trends you're seeing in the aggregates market, just whether you're seeing any sort of particular strength in one region or the other and what's going on there. That was my first question, please. Yes, China is booming, as we have discussed before. The stimulus package has been very effectively used. At the same time, China is building these Superquari is where the background is that the regulations have changed and sort of a Smaller local quarries that were operated in sort of all traditional means, they are not anymore allowed to operate in China, and they are going into bigger units. And their Customers are really keen to invest, in many cases, on most efficient and equipment and latest technology. So that is what we see in China. We see also contractors and small acquirers going into mobile equipment in China, And we are well positioned with that one. And we've seen really great success with our local branch, Charruy, Earlier, a joint venture company, and we acquired the shares of minority shareholder beginning of last year. Last year, and timing was perfect for this growth that we saw there. So China, doing extremely well. North American market and European market clearly is preparing for a proper summer season now or spring season, which we didn't see last year at all. We've seen some statistics. They are, I would say, global statistics, Aggregates investments will sort of be, say, 15% to 20% higher now than this year than last year, And we are clearly seeing that activity in our ordering activity. What is still a little bit Down from previous year's level is Indian market. We see, at times, some light there in the market, but And at times, it seems to slow down again. So that is a market where we're expecting or where we hope to see recovery sometimes in this year, but not very confident that it will happen. All other markets are doing fine. And then my second question is just around your services business, I guess, Both across aggregates and mining. You mentioned a couple of times site access and field service in particular being disrupted. Can you just remind us across the different divisions what the proportion of field services and spare parts and wear parts are as a proportion of the overall Divisional sales, is there a significant difference in terms of field service contribution across the 3 different divisions? Thank you. Yes, yes, there are. And It's mainly because of the business model that we have. Minerals, we go mostly directly to And we carry out most of the service work by ourselves. We do have used some dealers and distributors in that part of the business, but that is an exception to the rule, while then in aggregates business, A bit more than half of our sales takes place through dealers and distributors and service is their activity field service is their activity. So It's really minor part of the business, the field service as such in aggregates. And then in metals business, It's yet again more of an upgrade modification type of activity that we do and very much a project based service activity rather than ongoing field service work that we do out there. Understood. Okay. Great. Thank you. And the next Question comes from the line of Tommi Ryll from DNB. Please go ahead. Yes. Good afternoon. Tommi from DNB. Maybe a question on the Minerals pipeline. Given the High metal prices, you referred to, for example. Have you seen any new projects coming to the pipeline, which, of course, you sort of Hopefully not tempted after the big orders booked for the Q4, but how has the Pipeline developed in the Minerals business. I think really the new projects, there are some, But we haven't seen really massive flow of them coming online. Many of these orders that we do, they are, in fact, expansions or typical brownfields modifications because of environmental Sustainability issues and things like that at this moment. But of course, we can expect also the greenfields to come on stream. Maybe a bit more greenfields on gold side, gold rather than any other metal at this moment. Gold price has Been firmer a bit longer than the others. And then you mentioned the price hikes in aggregate. Can you quantify what sort of price hikes are we talking about? There have been these are, of course, aggregates business is always very local business, local business. And therefore, The sort of averages do not really make too much sense to analyze it. But what we can see from the statistics is that aggregates prices are really on good level, both In North America and in Western Europe, the little visibility that we have on China, there also aggregates Prices are on sort of good level. Where we see these prices going up and down of aggregates, this is now really our Customers' Products Aggregates, not our equipment, not to just to make sure that I'm not talking about our pricing. It's There, we've seen fluctuations in the statistics quite a much, and that's very much supports the view on Indian market as well that at times, it seems that things are taking off, but then there's 2 steps back later on. And finally, did you mention that you would expect synergy P and L impact of €65,000,000 for 2021? The difference between EUR 120,000,000 EUR 65,000,000,000, I believe, Tom, is the if you can And that is a run rate number. Yes. Thank you. And the next question comes from the line of Karl Borklis from ABG. Please go ahead. Yes. Hi, Pekka. Hi, Eva. My first question on Metals there. Just wanted to clarify some comments you made there, Yes. In terms of just looking at metals, the way it looks today, if you foresee on an adjusted EBITA level, Will losses continue towards the end of 2021 if things continue the way they look Today, excluding any future divestments. And my follow-up also, the savings of €50,000,000 that you target, Are they contingent at all on changes in volumes than on the upside primarily? The €15,000,000 that we announced, we will sort of implement those regardless of the volume, if that was the Question, they are actions that we are taking already right now. And the orders that we have, we will be able to work on those ones with the sort of reduced cost level. The restructuring of metals, we are taking major Actions the biggest part of actions in Germany, and there, the process is lengthy, longest one of the 3 or 4 countries where we are taking actions, actions we've already gone through the formal process In Finland, in Sweden, we have initiated it. In Germany, we have initiated it. And It takes easily 6 months in Germany once we've done those things, and we just need to be patient. And 6 months from here, it Takes us to the into the Q3, and then we need to wait a little bit until we can start to recognize More revenues from these recent orders, and that's the time when we see then the recovery and turnaround coming into our numbers. Thank you, Fred. And then you have a bit more technical questions But discontinued earnings in this quarter, they were negative SEK 9,000,000. Could you give any indication of when we add all these Different discontinued operations together, how we should think about quarterly earnings or losses throughout 2021? Sure. Well, as said, operatively, the aluminum and recycling businesses are sort of generating an operating sort of a positive EBITA, and I would certainly expect that to continue. The Energy business is a business where We're really sort of handling certain legacy project issues, which are sort of Take a bit longer to solve in a way, and there's very little upside in them. It's just a question of how many months does it take to get them to completion. And again, unfortunately, COVID has, of course, delayed some of the actions on finishing some of the planned activities. But anyway, I think we're sort of we're going We are making progress. Then of course, it depends on that we're obviously now announced already on aluminum. We do hope that We sort of post Q1 that would sort of exit the so it does depend a bit on when we exit and how And with the timing of the exit on recycling as well as energy, that kind of what's the impact. But certainly, I was kind of Working towards that, we have some healthy businesses, and then we're trying to ramp down sort of the loss making projects on the energy side as quickly as we can. All right. And my final one is on PTA. Run rate for Q3 and Q4 is around €120,000,000 on an annual basis. How do you think we should Look at PPA for 2021, 2022 and 2023. Yes. Well, we're already at closing of the Metsautoteca Merger, we announced that the first half will be first half, I. E, the sort of first 6 months or the Second half of twenty twenty will be sort of heavier on the PPA related to Metso Autotech, and we that was €59,000,000 then for the second half. And as said, we already then announced that we'll kind of the number will drop as we enter 2021 into an annual level of €38,000,000 roughly. And that will be the similar then for 2022, 2023 for the whole time period in your question. Now naturally good to remember that on top of the Metso Autotech related PPA, there is some PPA related to McCloskey and a few other smaller acquisitions made earlier. But you get a pretty good proxy for That sort of run rate by looking at the first half of twenty twenty, and it will still run through 2021 And towards 2022, yes, still. But then, of course, they typically have quicker or sort of Shorter sort of amortization periods, but still in the region of 5 years, so they're with us for a while. But whereas in for the Metso Autotech, some of the sort of parts do go clearly into sort of 10 years and above. So It will be clearly less this year, but there will still be a combo of Metsotto Tech and these earlier acquisitions. Understood. Thank you. And the next question comes from the line of Erkki Vesula from Indorex. Please go ahead. Hi, Pekka and Eva. About your SG and A savings, how big would you say that your COVID linked Savings there were in Q4. And to what extent do you expect these savings to revert in Q1 or Q2 this year? I'm talking particularly about the sales and marketing expenses. That's a good question. We really haven't in the new organization, obviously, yet had a quarter where we would have trade fairs or traveling. So for sure, it's There are sort of a real savings from the fact that nobody travels, and there are no trade fairs or conventions organized. And we don't see them happening in the first half of this year, at least, if at all, during this year on the trade event side. So I think we'll sort of see benefits continuing for until really the sort of we're at a very different level. I mean, that would be the we would hope to start visiting customer Sites, but we don't plan to visit trade fairs very quickly because that's without vaccines and proper safety measures, that obviously wouldn't be the thing to do. But I wouldn't be able to give you a sort of exact figure on that, but It's money, for sure. It's a very speculative number as well because it's really difficult to say that How does travel how do we get back to travel? I mean, for sure, we will not travel in the Same way, we will not participate in all the events in the same way. We've learned many, many other people. Our customers have learned to work differently. So we might be comparing with the past, but it's not a fair comparison into the future. Fair enough. Thank you. And as there are no further questions, I'll hand it back to the speakers closing remarks. All right. This concludes our conference call for Q4 and full year 2020 results. Thanks for your questions. Thanks for participating. We will be back with results on April 23, And then it's Q1 of this year, 2021, and same day, we will have our Annual General Meeting. So that's a big day, but it's a couple of months out. So in the meantime, we hope to speak with you soon all again, and thanks for this, and goodbye.