Hi everyone. Welcome to highly anticipated Metso's Capital Markets Day 2025. We have pleasure to invite all of you who have joined us at the Helsinki Airport in person today and also warm welcome to everybody participating online. We heard that there were some unpleasant surprises when it comes to flights to Helsinki today, so we're glad that you made it via webcast with us today. In Metso we start with safety. In this room we have emergency exits here on your left hand side near the stage and there in the back. If everything happens we just follow instructions. We don't use elevators and will behave in good order. It'll be all good. Looking at our agenda, we have interesting presentations for you this afternoon. We will momentarily start with our President and CEO Sami Takaluoma talking about our strategy which was published last week.
After him, CFO Pasi Kyckling will talk about financial excellence and after that we will take questions for both Pasi and Sami at the same time. After that we go to our first coffee break for 20 minutes and coming back from the break we start discussing our segments and the segment presentations. First Aggregates and then Minerals will be handled by two people in each. We have Markku Simula who's heading Aggregates Equipment Business, joined by Saso Kitanoski who's Head of Consumables. They talk about Aggregates and Minerals will be presented by Piia Karhu, Head of Minerals Equipment, and then Heikki Metsälä who's heading Services Business Area. You need to remember that both Consumables and Services Business Area, which are our aftermarket businesses, serve both Aggregates and Minerals customers. To be effective we have chosen these pairs to present the segments.
Like I mentioned, after the segment presentations each we take questions as much as we have time, then we go for another break and the final segment of the CMD will be about deep dives into our businesses in Aggregates. We'll be highlighting digital business where we are making difference and have competitive edge. Similarly in Minerals we have strong expertise when it comes to energy efficient comminution. We have Jaakko Huhtapelto discussing digital business in Aggregates and then Giuseppe Campanelli talking about energy efficiency in comminution. After these presentations some closing remarks, final Q&A, then we wrap up and whoever is here in person can continue discussions outside the room and webcast ends about 6:15 P.M. This is our agenda.
We hope you enjoy the show and next we will start walking you through how we go beyond so that our customers and stakeholders can go further so that all of us Metsonites can grow stronger and ultimately world to move forward. With that it's a great pleasure to introduce our President and CEO Sami Takaluoma.
Very, very, very much welcome. Also from my behalf, both the audience, great audience here in Helsinki and also all online. Very exciting day for all of us in Metso and especially the leadership team members here today to be able to finally launch and start to talk about the strategy how we are going to make this very great company even greater when we go forward in time. Let's start a little bit looking at what has happened already and so far so 2020 when Metso Outotec company was created through the merger. We have of course given at that time certain commitments and our journey last four or five years has been very successful. The green bar here is representing our own employee satisfaction and employee engagement.
That was needed step number one to get into new company employees fully engaged for the mission and strategy that we had in place at that time. When that started to happen and satisfaction engagement improved, we saw that the next one that started to improve was customer satisfaction, which makes a lot of sense when you have engaged employees to take care of the customers. The customers do feel that. As a result of happy, loyal, satisfied customers, the red line which is representing our adjusted EBITA started to climb according to our plans. This is very important for us as a foundation. Also when we have started to work with this new chapter of Metso. 59 eNPS is the whole 17,000 employees and we do have a very high response rate. We clock close to 90% of the employees giving their opinion.
The 63 is the pulse survey that we do in between on the full surveys which is for the white collar people. Both 59 and 63 they do represent in this peak on environment top 5% of the industrial companies in the whole. That position is very good and it has already yielded the results as we see from the chart. We also have been giving our previous targets and where are we with those? Most of them we have achieved or are very close to achieve. 2020 we set the target for adjusted EBITA to 15%. When we started to be very close, we have revised that target to 17%. End of last year the number that we actually achieved was 16.5%. Almost there we had a target for maintaining our investment grade and that we have successfully done.
We have had target from the financial perspective to pay out through dividends at least 50% of earnings per share. That has been done every year. Last year the share was actually 63%. Five years ago we committed very strongly to the 1.5 degree plans when it comes to sustainability. We have invested a lot in this progress and we are well on track to achieve those targets as well. In summary, we have been able to communicate what our targets are and also we have a track record to be able to deliver according to the target setting. We have been in a very interesting phase. This day is very special for many of us because this is now revealing the hard work of close to six months that has been ongoing inside the company.
We have involved more than 150 people from Metso in the work of the new strategy. That's much, much more than in previous years. We really wanted to get the insight from all around the organization for this work. It was very clear that we are looking for the future with very positive eyes from the perspective that what our strategy is going to be about, it's going to be a growth strategy that has been one of the building blocks all the time. Not only the top line, but we still have capabilities to continue the EBITA journey as well. We set a very clear target for our strategy work that we want to work around. Being number one, being the leader of the product, leader of the technology, leader of the solution.
Thirdly, we put very high emphasis on making sure that we gear up almost everything that we do in the strategy around the aftermarket intensity and captivity going forward. Not a very novel thing, but we also put from the very first day of the strategy work, customer in center of what we are planning to do. We have two segments, Aggregates and Minerals. We looked at what these customers do need today and especially tomorrow and how we as Metso can be the solution provider and value add provider for these customers going forward. After a lot of work, we are now here. Our strategy has a name, it's we go beyond. That represents a lot of things both inside the company, in our stakeholder groups like customers and shareholders. It is the one umbrella that will connect all the dots in Metso for the next five years.
We have four strategic objectives for this period. We will be the best in the customer experience. That is all the time in our mind and already mentioned the importance of the aftermarket. Higher aftermarket share is one very clear objective that we have set to ourselves in this period. We will be the front runner of both safety and sustainability going forward. As a result, we are delivering financial performance that is in the category of excellence from the perspective of our company. We have three strategic focus areas: growth, excellence, and Metso number one. I will talk about all of these three more in the next slides. We need the enablers. The enablers are exactly what I started this presentation with. They are the people, they are the engaged Metsonites all around the world. We are fostering the customer-centric growth culture.
We need to have very engaged Metsonites also going forward to be successful. We need to hold the industry-leading capabilities, understanding what we have today, where we might have gaps, and how to close those gaps going forward as soon as possible. Let's talk about those focus areas. Starting from the growth, we go beyond is driven by very sharp focus and prioritization. What does this mean? If we take an example of five years ago when the company Metso Outotec at that time was born, we had and still have the widest portfolio of technology solutions in the minerals processing space. I am used to tell it this way, that where Epiroc stops, Metso starts and goes through all the phases all the way to the metal refining. That has been our portfolio and is our portfolio.
Now in this strategy work and now going forward as a Metso that is focused, we have understood more clearly what is the value and position and identity of different technology solutions inside this very wide portfolio. We have solutions that are already today, Metso is number one. We are leading the position game out there in the market. The profitability of those solutions is good or acceptable for the group targets. In there, we want to further strengthen our position as number one. We want to make the gap to number two even wider. That work is then continuing to do a lot that Metso has done before, but in a more fast and fearless way to really strengthen that position. We have the black box there, which is the reaching number one position.
It's a business solutions what we do today, but we are not yet market number one in the world. We see that these businesses and solutions can be high-margin businesses. They have a very good aftermarket intensity and they have been chosen as our accelerated growth areas. We want to invest a lot in these growth drivers. Capital allocation, meaning acquisitions, for example. They will be going for this category, really boosting the growth in the areas where we want to reach the number one or very strong number two position during the strategy period. The third one, improve profitability in select solutions. When we did crunch the numbers in this work from many different angles, we also gain insight ourselves of which technology solutions truly serve already today Metso's targets for the future and which ones are behind.
In this third category, we have those technology solutions that actually need to do more work first to improve the profitability and then start to go after the aggressive growth and plays, of course, a very important role in our profitability journey that continues. This is a significant change to the past. There's very clear identity now for people who work with the certain solutions. They know what is expected and what is going to be the direction of actions going forward. Good. That was the growth part. Excellence is then all about really the customers. There is not an industry leader out there who wouldn't be really excellent in taking care of their customers. This is something that we do well today, but tomorrow we want to go beyond the normal level that we do today. One Metso customer experience is very important for us in this journey now.
There needs to be very professional good feeling for the customers to be dealt with. Metso, despite the location, geographical or business that they want to do with us, industry leading service near customers is going to play a very critical role in the near future that is required by many, if not all, of the customers. There is a global shortage of skilled workforce for mines and aggregate plants, and that increases the demand from OEMs like Metso. Metso's position is excellent. We have the widest service footprint already in place and we are investing more. We have invested in the couple of last years and we will also continue to invest to be close to the customers. I can quote one discussion with the company CEO when we started to discuss ongoing project.
He said that, Sami, we are not looking for this project the lowest possible cost for the equipment package. We are looking for a partner who we can work to get the right package to be delivered during the building of the mine. That partner needs to be with us when we actually run the mine. Because we don't make any money by building a mine. We make all the money when we run the mine. That's where the presence and support staff, local support staff close to the mine, is going to be very critical going forward as well. That links from supplier to the partner. We definitely have value add capabilities towards our customers, and they are then falling into the category of being actually partner, working with the customers much more than the transactional supplier customer base only. We are looking at our go to market models.
We have a lot of different type of customers. They have different type of needs, and Metso is looking to make sure that we are able to provide the excellence throughout our different go to market models as well going forward. The third focus area is Metso number one. We will become the market leader and the first preference. We have two segments, both of them, Metso is going to be the number one. Number one means that we are also number one in new innovation, new products, new improvements created for the industry, and as mentioned, the customer proximity, which is very important to be number one in that one. That makes us the number one choice for our customers and also number one choice for our partners. We also need to take care of the full supply chain.
When we have suppliers as partners, we are going to be the number one choice for them. Very important is the last one, to be the number one choice for current and future Metsonites. We have a lot of skills inside the company today, so we of course want to keep that talent and skill in the company. At the same time, we need to ensure that we are a very attractive employer for the professionals out there, ensuring that we are able to grow and move forward with our agenda. I cannot emphasize enough what is the importance of the people to success of the company in this kind of industrial, aftermarket intensive area. That's why we are also cultivating our culture. As you saw, the satisfaction numbers are high, so we have very good foundation.
To achieve our targets that we are setting to ourselves now, we also need to take a look at how do we shape our culture to fit better for the new next chapter of Metso. We have already cutting edge technology in many of the solutions that we provide to the markets. What we also need to do is to make sure that the customer value is powering and embedded in all of those solutions that we provide in Metso. We have been collaborating and we do collaborate, but now we have a common understanding that we will totally crush the silos, internal silos that we have had inside the company. We work now as one Metso moving forward. Metso has been the last four or five years a very steady and reliable company, delivering as promised. That's good. We want to of course keep that.
On top of that we also need to change our mindset to be fast and fearless. The world around us is changing fast and we don't have any more time to wait in many cases. These are the cultural shifts that we have already started to develop further. The people part, maybe I shared this as well, last week we had an internal launch and for the first time ever in Metso, we organized that so that it was live for all 17,000 employees. We had more than 80 locations where the people gathered to listen to the story, listen to the strategy, and then continue to discuss that going forward. That has been remarkably well received and the organization is very much pumped up to start to deliver the new strategy going forward.
Usually it takes three months to get all the cascading done and get people to understand what the strategy is. Now we got that at the same time for the whole organization. Safety and sustainability. It's very important for us to be the clear frontrunner in both of these areas. Safety goes without saying. Our industries, especially the customer part, are quite risky businesses. Safety is not only important for us from the perspective to keep our own employees safe when they do operate at the customer sites, but it's also to make sure that the customer staff is equally safe when we are around. We take the role to work together with our customers to improve the safety for both of us going forward. Sustainability remains very important for us. You will hear more today about the energy efficient solutions that we have.
That's why it's also one of the very clear factors why new talents join Metso today. There is a clear willingness to be part of the sustainable minerals business in the future through working for Metso. Our KPIs are good or at least okay, so nothing to shame there. Again we want to go beyond, we want to be even better there starting with safety. Going below one in the lost time injury frequency is a very clear target that we have. As said, we have worked relentlessly with our Net Zero journey. We are now 72% down from the baseline 2019. Since three years at least, we have been having a rule that we don't approve any R&D project unless it has a sustainability impact. 97.5% do have that in 2024 projects. Also, in the CO2 we want to go beyond.
The sustainability is so much more than just the CO2 in our industries. For example, the water plays quite an important role. Either you don't have it at all or you need to circulate that or you need to somehow manage that it's in the right places. Sustainability is a lot of things. So is the ESG point of view, the social governance part, because more and more customers are operating in very challenging places and we need to be there with them because that is our strategy. We need to take also these into account and for this we have created the Metso Plus offering, taking into account the sustainability and safety factors and also providing value to the customers through more production or more efficient production. Talking about that digital and AI, you will hear more about that in the deep dive and also in the segment presentations.
It plays a very big role in driving the value and efficiency. We are looking at this from the two angles. There is a customer value that can be created through the data and digital and AI, and there's also internal efficiency value, which actually at this moment in the 2025 October, it's actually even higher, the internal part. That's where we are putting focus for both. We see a lot of areas of creating value and also creating self-help to ourselves through the digital and AI, and with all that packaging together, we have also then revised our financial targets based on this strategy. We have annual sales growth target of beyond 7%.
We have adjusted EBITA margin of beyond 18%, and we are doing this profitable growth so that our net debt to EBITDA is not going above [EUR 1.5 million], and we continue to pay the dividends at least 50% of the earnings per share. These are our new financial targets, and also we are a very attractive investment target as you know. Just highlighting few comments from there, we are in attractive growing end markets, both aggregate and especially mining at the moment is growing, and we have a strong existing position in both of these. We have set the target to be the industry benchmark. That means a lot of things, from technology, R&D, new innovation to how we serve the customers, how we do the sustainability and safety. We have a very focused, sharp strategy.
We know where we are going to be spending our capital to create the value and create the growth that we are looking for. As a result, we have the financial excellence and for that we have revised our financial targets. All that is required to have a set, the strong company culture and very engaged Metsonites. With this package, the shareholder value is coming together. Ladies and gentlemen, we go beyond now. Thank you. Now I will invite the CFO, Pasi Kyckling, to go a little bit more deep dive.
Right.
Good day everyone and welcome. Also on my behalf, as part of my presentation I will focus on financial excellence and discuss that through why at the four targets that we have launched, capital allocation priorities, and how we envision to create shareholder value going forward. Let's get started with the first target, which is about sales growth. Metso hasn't had the sales growth target before, so it's a new thing for us. All our targets are to be reached by year 2028, which is in the middle of our 2026 to 2030 strategy period. We have set ourselves a 7% growth target and we envision that 5%- 6% of that is represented by organic growth and then 1 %- 2% by bolt-on acquisitions. An assumption behind that is that both Aggregates and Minerals segments will face 4% market growth.
When we look at Metso and Outotec history, you have in the chart four quarter rolling average data from the merger till end of second quarter this year. The company has been able to grow from the merger till roughly end of 2023 and the last six quarters or so we have seen stagnation and even some decline in sales. During this period we have grown 5% CAGR and aftermarket has been growing more than that. Worth remembering that during this period we had COVID and Metso, like many other companies, also exited Russia. Russia represented roughly 10% of our business while we started the exit process. Our second target is the profitability target. We have revised that up from previous 17% to 18% and I will soon discuss the measures and the bridge how we plan to get there.
Like you can see from the chart, we have had strong development since the merger till end of 2023. While the company has been growing, we've been also able to realize the synergies and deliver the synergy benefits from the merger. The development has been more stagnated after that. We have shown great margin resilience by delivering roughly 16%, 16%+ margins. The fact that the company has not been growing, many of you have had a question in your mind that how shall we deliver that target? We are approaching this with the waterfall with three main baskets. The first basket is about market growth. Our assumption is, like I said, that we are able to grow or the market is growing roughly 4% per year in both Aggregates and Minerals segment, providing us opportunities to lift the margin.
As part of our strategy, we have made portfolio choices with aftermarket high in the agenda, and via those choices that focus on aftermarket and also solutions where we have higher than average margin potential, we believe that we can lift our margins. Finally, Metso has in the past period done great work with self help, and we have a lot of further potential to do that. I will discuss SG&A more in the next slide, but a couple of other examples: procurement. We have a lot of opportunities there. Hard day-to-day procurement work, consolidating suppliers, taking the scale benefits that we can in the areas where we haven't done it yet, going to best cost countries. We have a global footprint, we have done it in the past, we can do more going forward. A specific example area there is engineering. We are an engineering house.
We also use a lot of engineering suppliers. We have roughly 500,000 engineering hours in house today in India, which has been rapidly growing recently, and there is room to expand that further. Similarly, with our suppliers in that space, there is a significant cost benefit between the western cost levels and, for example, India, which we are leveraging. Logistics is another example. We have a lot of SKUs that we are moving every day. It's a relatively complex network which we are managing, and by simplifying, by going more directly from either our own manufacturing or suppliers to our end customers, it provides an opportunity instead of utilizing an inventory network in between. Aggregates business has done great work during the past period to standardize their offering. There is more content to be covered in that space, and then Minerals can do that as well.
Again, a self help opportunity that we have to drive the company forward. If we then talk specifically about SG&A, here you have again data since the merger till today. Overall, we have been relatively successful on managing our absolute SG&A during the past period. Absolute level has not grown, but because the company has been shrinking a bit, the relative performance has deteriorated, and by bringing our SG&A efficiency in relation to sales back to past spectrum, we have an opportunity to improve. What it requires: it requires cost discipline, it requires dedicated and focused cost takeout actions, it requires also utilizing further the best cost country opportunities that we have within our own network, etc. This is a big, big self help opportunity for us. The third financial target is about our balance sheet healthiness and earlier our target has been to maintain investment grade credit rating.
We have twisted it now to concrete KPI and our target is to remain below 1.5x in net debt to EBITDA. Currently we have a strong balance sheet, investment credit ratings BBB flat from S&P and then Baa2 from Moody's is evidence of that. We have the flexibility in our balance sheet to execute the strategy, execute the strategic actions that we have planned and still remain a healthy balance sheet company with leverage below our target. Let's then spend a small moment with liquidity. End of second quarter we had healthy liquidity position, EUR 430 + million . We have recently refinanced our revolving credit facility for the coming strategy period and then when we look at our maturity profile going forward it is balanced and we have limited short-term maturities, again a good position to be to start a new strategy period. Our fourth and final financial target is about dividend.
Target is unchanged. We try to pay more than 50% of our EPS as dividends. We have done it in the history since the merger. In some years the payout ratio has been relatively high. I would like to also highlight that we've been able to pay continuously increasing dividend, obviously supported by the EPS growth that we have created during the period. Let's then talk about capital allocation. Our priorities going forward are the following. First, we want to pay a dividend in line with the policy, 50% or more of EPS. Second, we want to fund organic growth opportunities. Third, we will fund bolt-on type acquisitions to strengthen the company. Finally, if there is capital available, we are also open to consider additional distributions to our shareholders. Looking at the historical performance here, between 2021 and first quarter this year we have distributed roughly EUR 2 billion.
25% of that has gone to dividend payments, 33% to organic growth and then 12% to M&A. I would like to also use this opportunity to highlight that our asset base is in good shape. We don't have any imminent capital needs in order to grow the company. We have been growing our service network constantly since the previous CMD, roughly two and a half years ago. We have opened or materially expanded six of our service centers. We continue to do that also going forward. Those are relatively low capital need efforts to have service center. What is more important there is the workforce to have skilled people close to our customers to be able to service them. We have also a significant aggregates factory project here in Finland in Tampere, an ongoing EUR 150 million project which is on time and on budget.
When it comes to organic growth, our focus will be based on our strategy choices, those areas where we already have leading market position to protect those, to strengthen those positions, and attend the second category where we are not the market leader today but we see attractive opportunities to gain that position and then allocate capital to reach that. When it comes to M&A, our main focus area there is the category where we don't currently have leading positions but we see attractive opportunities and M&A may be a tool to make a step change and accelerate our position and development in that area. R&D innovation spend continues to be significantly important for us going forward. It is important to maintain our technology leadership in the areas where we operate. During the past period, we have allocated increasing amount of funds to R&D.
During first half, it was EUR 60+ million, 2.6% of turnover, and you can expect us to continue to allocate to 2.5% of sales to R&D going forward. Cash flow generation, during the period since merger, we've been able to create solid cash flow from operations, roughly EUR 600 million per year, 2022 an exception. During this time, a significant working capital buildup has been happening and we recognize that. We've been also recently completing a EUR 200 million program to reduce our inventories. There is more work to be done with our working capital. Overall, we are working with all the components, inventories. We still have slow moving inventory which we want to reduce. There is continuous work with our customers to find right solutions. The same thing with our suppliers.
There is also important elements of prepayments, especially in our Minerals equipment capital business where customers are prepaying us and then we are prepaying to some of our suppliers while making contracts with them. This is the total package that we are optimizing and you can expect us to improve the overall working capital efficiency, that is, working capital over sales going forward. Ladies and gentlemen, let me then summarize with our engaged Metsonites, strong company culture, the strong market growth expectation in both of our segments. Technology leadership, our service network close to customers, and investments to develop the technology and service network going forward. With targeted capital allocation and our new financial targets, we believe that we can create attractive shareholder return, shareholder value also going forward. Thank you very much.
Thank you, Sami. Thank you, Pasi. Now we can take questions to this gentleman. Before we start, let's try and keep the questions at this time on a group level because we will be deep diving into segments and businesses in a moment. Reminder to the online audience, you can write your questions to the chat box and they will pop up on my pad here and I can ask them from Pasi and Sami. There are two mics in the room, so raise your hand when you get the mic. Please introduce yourself and then go ahead with the question. Tom Skogman seems to be the first one here.
Yes, hello, this is Tom Skogman from DNB Carnegie. Can you give some kind of indication how large share of your sales is coming from these kind of three categories? That you mentioned where you have a m arket leading position and the other ones where you want to invest, and the third group where you're focusing on profitability.
Obviously the already position where we are strong, that is high portion, and that is then going to be growing and delivering in the future as well. The highest share currently as per today, the second basket is maybe not the highest, but during the strategy period and looking at the growth numbers, they will be delta day, that basket will definitely be delivering more than 7% annual growth. That's where the growth is coming heavily. As I said, the improved profitability has a significant role today. The growth is then maybe a little bit limited for the first few years and then more accelerated there. More in the first and third and then less in the middle box at the start of the strategy period.
Okay, thank you. Another question. I think you have put yourself a b it in the corner when you have only three years to achieve the targets. We have seen most other companies at least here in field and engineering have five years period. Is this a sign that you are very confident that the sales funnel? Will turn into real orders soon as well?
We are a very ambitious company. Of course, the target of setting three years, we didn't want that to be too far away. In that sense, I have also seen what the other companies have been doing, but we also wanted to have a certain speed and velocity in things that we start to do now. Psychologically, if you have five years' time, you can start slowly and then ramp up a little bit closer to the five-year ending. This is also keeping the whole organization and company in a good move from day one.
Thank you.
Next in the back.
Thank you very much. Vlad Sergievskiy from Barclays. I have questions on growth and on margins. If I can start with growth.
Obviously you are targeting 5%- 6% organic.
That's more or less average through the cycle growth for mining equipment historically. Does it assume that your assumption is conservative in terms of the growth for the market? Because the setup would be that we have seen two years of slower g rowth in Minerals equipment.
You can say two years of a downturn. We have obviously very favorable commodity prices across key commodities, particularly gold. Doesn't it suggest that we will be in the up cycle during this strategy period over the next three years?
I think for this five year period the expectation is clearly that there will be a positive cycle when it comes to the mining equipment. Our target is sales growth. Obviously that requires that the order should be coming in. For that there is still in the world, as we have been communicating, what we see is a certain amount of hesitation. It's not as bad as it was two years ago. There's a change in that. Obviously we have not yet seen any kind of boom of orders either. For your question, yes, we do see that during the five year period there will be a positive cycle for the mining equipment especially.
That's great, Sami, thank you very much. The question on the margin, can you maybe compare what has changed versus the prior target of 17% + through the cycle versus the current target of 18% + in 2028, which perhaps will be closer to the up cycle than not? What are the building blocks from 17% - 18%, and maybe if you can s plit it by division. Which division contributed more to this margin uplift?
Maybe I can take that. If I start from the segment angle, we have set 20% target for Minerals and then 17% target to Aggregates. If you compare that to past performance, there is more improvement need in Minerals and an improvement potential there, whereas Aggregates is currently traveling closer to that 17% target. If you do that comparison, we expect a bit more contribution from Minerals.
Before the next one, I'll take one from online, and this is from Klas Bergelind. He is a bit surprised when it comes to market growth that we are saying that both minerals and aggregates should grow at the same rate of 4%. He says that shouldn't mining or minerals grow faster, and that also comes to the kind of actual 7% growth ta rget for the business.
Yeah, I can take that as well. We've been looking at our intel and concluded on this [4% and 4%] for both segments, making it also transparent to everyone here what our assumption has been. If we deviate from that, then obviously there is more or less opportunities for us. We felt that 4% growth target for both segments at this point of time was a good balanced market growth assumption. Again, your crystal ball is as good as mine. Let's see what happens during this three year period.
Then the next one, C hristian.
Thank you.
Christian Hinderaker from Goldman. I want to start on the working capital if I can. You had EUR 1.8 billion of inventory in Q2. That's an improvement from EUR 1.98 billion last year but still 38% of revenues. As we think about your two primary goals, achieving customer excellence and a higher aftermarket share, should we expect your inventory management to be better or for that inventory number to go higher? I'll come to the second.
Maybe I can take the inventory question. Indeed, we've been working with this hard within the company during the past 12 months or so to deliver that EUR 200 million order of magnitude reduction, and we are not done by that. I think if you look at the history, we invested a lot in working capital, exactly for customer service reasons. We've been successful with that, and now we are optimizing. When I look at the inventory turns, not only the headline number, but more in detail, there is still a chunk which is turning with far too low turnover days. That's our focus. On the flip side, there are also a few areas where we are investing more to make sure that we can service our customers in a good way.
On a net basis, like I said, we see an opportunity and need to improve further when it comes to overall working capital, and also specifically inventory, which is the biggest component within working capital.
Your assumption was right. To be able to do best-in-class customer service, especially in the aftermarket, you need to be able to also serve from the inventory. The question is how do we make sure that we are the smartest, also how to manage the inventories. For that, the data, AI, and other tools that we start to have in place are going to be helping a lot.
Okay, if I can squeeze, can I s queeze the second one in? T he 4% growth rate for the market. Is that volume or it includes price?
Yeah, that includes also price components.
True.
Thank you. I have another one from online. Nick Housden asks, how do you maintain the internal discipline to focus only on the most profitable areas, given the kind of breadth of the product portfolio?
Excellent question. For that reason, exactly as I told, we have involved already in the building phase 150 Metso employees for the work. That means that throughout the last six months it's been very clear many of these are the business leaders for the different businesses and solutions. The other way to do that is that we have a very clear strategy that is understood by the whole organization. For that reason, last week was very important that we started it with the global launch and continued this already with the segment calls, and that will continue for the rest of October. It's our job to keep that as a management so that the focus is there. We have a very rigid measurement system for the execution of this strategy as well, ongoing. That's the way how we ensure.
That's another one from Nick. Does the we go beyond strategy include potential divestments, and if so, what is the criteria?
Yeah, it does. Actually, we kind of took a head start already. One month, we have announced one divestment which is ongoing here in Finland from the Consumables business area. Those were the result of the work that we did, which ones are the core, which ones are something that will benefit for Metso shareholders going further. When we saw that something is off or far away from the core or aftermarket intensity, we look for the alternatives for those ones. Divestments can still be ongoing when we move forward with these solutions going forward.
Thank you.
Just one additional comment on the previous question regarding discipline on capital allocation, et c. It's indeed about processes like Sami said, making sure that we have performance management processes, we have capital allocation processes, et c., which we do. The second thing I want to highlight is from a people point of view, maybe many in the room think that it's cool to be in the areas where we grow, et cetera, which it may be. I argue that the biggest learning opportunities are in the third box where you need to really find ways to improve your current business. It's also good for people. Some of our Metso employees will have great learning opportunities while working with such tasks.
Thank you. Next one, Michael.
Thank you for the presentation, and thank you for taking our questions.
My name is Michael and I work at Morgan Stanley. I just have one on the growth that you see in mining. If you could give us maybe some color on what we should expect in terms of equipment versus aftermarket split, and then in terms of brownfield versus greenfield. If you expect a greenfield uptick or not, that would be really helpful.
Thank you.
Yeah, after the break you will hear even more details from this one. Obviously, when we look at the mining area, there are few commodities that jump out at the moment. Gold is soon hitting EUR 4,000, so clearly the investments are coming from there. At the moment, copper has been already some time and will be the long-term growth driver, meaning the new mines and expansions will be happening, and that's of course a very good position for Metso. The split between the capital and aftermarket we have is very clear, as you have heard, it's part of the company strategy. The focus for the aftermarket and the growth of aftermarket will and needs to happen quarter after quarter and year after year. That's how the mathematics comes together as well. When it comes to the financial performance.
Thank you very much.
Will.
Good afternoon. Thanks for the questions and the presentation. It's Will Mackie from Kepler Cheuvreux. Two questions. First of all, can we go back to your growth strategy within solutions, and can you throw a little more color please on the scope of the categories where you see opportunity to expand towards your number one market position in terms of the level of revenue that may represent or the business categories within either Minerals or Aggregates. The second question is more of an accounting one relating to working capital. Just to come back to a question about the H1, we saw a big jump in contract assets and liabilities versus the end of the year and prior year. It was a real change with regard to the shift in revenue growth.
Maybe you can describe whether that's a business model change or whether that was a real shift in the mix of business you were doing that was driving it, and how should we think it will develop?
You can take the second one. There's more information coming after break for the segments. Let's say that one where Metso is number one is crushing. That's clear for both Aggregates and Minerals. That's the area where we are the world number one, and we want to make the gap even wider. In the growth category, for example, pumps, it's something that we are not number one. There is one that is very dominant in the marketplace, and we want to claim the very strong number two position as fast as possible. Other interesting, but it's a good example of those high-margin attractive areas that we want to go. In the third one, there are some like hydrometallurgy, which is more suffering at the moment from the low volume but still not in line with the profitability, for example.
When it comes to the accounting question, there is no business model change as such. That's just a representation of what has happened with our project accounting during that period. I can check more in detail and maybe we can have a discussion during the break. There is no change in sort of fundamental business models. Those two balance sheet lines are a representation of how the POC accounting moves forward with different primary mineral capital projects that we are executing building.
We still have time to take Anders .
Sure. Yeah.
I was also hoping to get some more examples of the growth areas. You mentioned pumps, and we've seen quite a few software deals from competitors lately. I was just wondering a bit o n your strategy on the M&A side in terms of which areas c ould benefit from having a higher software content, and could you deal with that.
Yeah, you will get some flavor of that in the deep dive. Stay tuned for that one. Software does serve the growth and profitability ambitions, but we take that kind of approach that it's the customer value created also supported by software, not software alone. The same applies to our own work that we see that we can create a lot of value of our own efficiency through the data and the software. The actual growth of the business is something that we do today, but we just will do it much better.
Maybe as a follow up as well, you mentioned a few areas where you w anted to increase your market share on the aftermarket. Could you maybe give a few examples of that? Would that be mainly spare parts, wear p arts, field services or different products?
When we talk about now here, we talk about the solutions, and solution maybe that's for something that I didn't open up in the beginning. Solution is, for example, let's take screening as a solution. It means the screening equipment, screening media, which is the consumables, and screening spare parts and the service. Everything that we do for that technology, this is the approach that we have now looked. When we say that we want to grow in those solutions that have high aftermarket intensity and high margin potential, screening by the way is a good example that belongs to the second category. That means that there is a large amount of aftermarket for one equipment when it's installed, and those we want to sell more screens to be able to harvest the aftermarket later on.
All right, thanks so much. We have run out of time this segment. There are more questions in the room and in the chat. We can come back to those later in the event. Now we go for a break, and we come back with the segment presentation at 20 past the hour. See you then.
All right. Welcome back from the break. Like I said, now we will be diving into our business segments. We will start with Aggregates, and you know these two gentlemen will really crush it. Welcome Markku Simula and Saso Kitanoski.
Welcome everybody. I'm really excited to see such an audience, and also I have experienced the questions that may come out. Deep dive into the knowledge of Aggregates equipment segment. With me is also Markku.
Welcome. I'm truly excited about our we go beyond strategy. Welcome to listen to us. Number one in Aggregates, and I'm pleased to say that we are actually number one in Aggregates already. It's not a target that we would be starting to reach, but it's something that we want to go beyond. We are actually number one in North America, we are number one in Europe, we are number one in South America, we are number one in Middle East and India, we are number one in China, we are number one also in Africa. Then in kind of Asia Pacific, happens to be one area where we. re not quite number one.
If you look at the size of the slices, we are not that far away from that area in Asia Pacific. To my pleasure, I can actually say also that we've been gaining our market share both in China as well as India, which kind of traditionally has not been quite the strongest or the biggest market for us ourselves. Of course, our stronghold or the goal of the business has been in Europe and North America. There we have been very strong in the past and continue to be strong also in the future. If we look at our customers and customer industry trends, first of all, our customers are facing increasing cost pressures and that, of course, defines what kind of decisions they are making.
They are looking for reducing operational cost, they are looking for expanding the life of our equipment or the equipment they are using, and they are looking to lower total cost of ownership solutions from the suppliers. Those are things that we want to supply to our customers. For their processes, they are looking for productivity, efficiency, know-how, digital channels, and digital solutions, which are something that we are providing for our customers in order to be more productive and more efficient. We want to boost their efficiency, minimizing downtime, reducing maintenance cost of our customers. Recycling is a growing trend. Recycling of the aggregate material, but not only the aggregate material, also other types of materials related to construction. What we have been actually entering into is what we call infra recycling. We have actually made even one acquisition late last year related to infra recycling.
With our Metso Plus offering, we support our customers to achieve their sustainability goals and enable the effective use and reuse of the materials. When looking at the markets, we were already referring earlier that the market growth is there. How I'm looking at the aggregates market right now is actually that if you take a long-term view, there are kind of high cycles and low cycles in the aggregates market. I would say that right now we are actually on a lower cycle. Some of that is very much related to the inventory discussion that was had earlier. What happened after COVID and how the inventories were developing in our customer side as well as our distributors, as well as our own inventories. What we are looking at is something like 3%- 4% growth for the kind of the natural aggregates.
For the aggregate and infrastructure recycling, we are actually looking at higher growth rates, something like 5%- 7% growth rates. How we are looking at that market is that the natural disasters are getting bigger and bigger, and the damage that they are causing is getting bigger and bigger as well. Recently, unfortunately, there have been man-made disasters and man-made conflicts that are causing a lot of needs for fixing the infrastructure as well. What we are really targeting are those type of helping those, let's say, areas that are suffering from those natural as well as man-made disasters in order to rebuild the infrastructure in there. We do see that as a little bit faster growing market. However, I also would like to point out that like I said, right now we are at a low point on market.
There is expected also some bounce back of the market going forward. When does that happen? That we don't know yet. Surely we are expecting that to happen. Obviously, the geopolitical situation has a lot to do with that bounce back timing.
Thank you, Markku. As previously presented by Sami, we also have a number one Aggregates strategy one-pager, which sums up the whole strategy in one. We would go regional, be closer to the customers. When we say we go regional, it's not only through our distribution or direct sales and service operations. It also means our footprint goes more regional, by that de-risking the geopolitical factors for our customers. Also, we would focus on captivity in the aftermarket, something that has a trend already started and we have been successful in that. We will show more details in the next slides, but that will be in the focused area in the Aggregates segment as well. We have classified our focus areas in a few groups. On the left-hand side is the number one inquiries and contractors. They represent a large basket of our business.
They have different dynamics and they have different trends in where they are going today. However, the aftermarket crosses all the Aggregates segment operations and that will be the emphasis across. On the right-hand side is the new developing, faster-growing portion of our business, which is, as Markku rightfully said, in the Aggregates recycling, which is basically generating new materials out of previously waste, which was called demolition waste. Even our customers are calling it demolition material. They have changed the view on it and we have the technologies and we are developing technology to capture that one. The other one is the infra recycling, where we can see the potential, where we have made the first steps actually recently and we can see the growth there. The enablers valid for everything we touch and everything we do are our people. They have the customer-centric growth culture.
We have solid evidence of that. We can see that we are reaching to the customers in levels that we have not seen before. I'm pretty sure the customers have not seen before. Of course, segment focus will bring the end-to-end visibility of our customers looking at us, but also, more importantly, how we understand the values required for the market. Of course, we need to reply to those: technology and digital leadership. We are, how long, we are 200 years maybe in this business. Crushing in Aggregates, crushing in screening in Aggregates, crushing and screening in Minerals, you name it. We are by far the powerhouse when it comes to this business. There are trends that are speeding up the development. Digital is one of them. I'm pretty sure our dear colleague later will open up more what we do in the Aggregates Equipment segment in the digital.
I can proudly say that at this moment we have already a technical capability to deliver an experience to a customer that all of us who drive modern cars experience with our cars as well. That's where we are and that's where we are continuing. If we go to the next slide, we would like to open a bit more in these focus areas that we've mentioned on the previous page. On the top line you see the aftermarket share in the whole revenue of the Aggregates segment. It's 31% comparable to the Minerals . That's lower clearly. We also need to say that aggregates dynamics are different compared to minerals. Normally crushers operate on lower hours. They have more mobility in the contractor's range. There is a different size of aftermarket in the Aggregates segment itself. On the verticals you would see the quarries.
Quarries are predominantly fixed stationary units which operate longer period in one place and deliver wider range of products to the same market. They can be also portable, but they're not really changing the location. They are more operating in the same pit or in the same quarry. They represent 51% of our revenue stream in Aggregates segment. These are also the closest to our Minerals activities, but very different as well. Where are we going to focus here? What we have already good track record is delivering new products. New products that make a serious difference in how this running operations are really going forward. We have digital enhancement performance programs. You would hear also again later about them, which do bring higher productivity but also provide flexibility to the customer in these operations.
Last but not least, we have a very long track record of developing what we call super materials. Different blends of different materials providing higher lifetime but also targeted product production for over a longer period of time for our customers. We will show few examples in the next page. The middle one is the contractor's focus area. It's 43% of our revenue in the Aggregates segment, this is predominantly customers which use truck mounted crushers, wheel mounted crushers, portable units, they frequently change the location, they have a bit unpredictable production at the ahead of them because they don't know what they will produce in three months or six months, et cetera, et cetera. There are different value aspects we need to present to that segment. Here, availability is a key essential, not only in the aftermarket, also for the capital.
That's why the distribution network that we have been investing very heavily in the previous five years, ten years, goes a long way here. It delivers real value for the customers. The mobile equipment innovations are the next one. They are the fastest moving. This is also the customer that depends a lot on the machine itself. Whatever innovation goes into the mobile range has direct impact into what we do. In the contractor segment, on the maintenance, but also digital, we are developing models which are going after predictive maintenance. As I said here, maintenance plays a key role. It's something that can avoid the risk of not delivering that week to your customer. That is how this segment normally thinks. That's why we have that solution in progress. The last one, 6% of our revenue, is actually the newcomer. That's the Aggregates recycling and the infra recycling.
Here we are in a stage where we are productizing the offering. We are making it affordable for a wider range of customers, we are making it reachable to a wider range. Of course, we have to close the range of portfolio to be modern and also use the enablers that Metso has in hand. If we go to the next slide, I would like to invite my colleague to explain what he has done better.
We start looking at the world from a region point of view and from regionality point of view, or not starting only, but we are continuing on the journey. Here what you can see now is our equipment regional product presence today. North America, we are selling 35% of our sales in North America and 50% of the equipment sold in North America is supplied from our local factories in North America. Similarly, in Europe, 30% of sales and 94% of equipment is supplied from local regional factories in Europe. South America, 7% of sales and 89% supplied from local factories. China, 9% of sales, 96%, practically everything is supplied from local factories in China. China for China, basically. India, 8% of sales and all of it, 100%, is supplied from our local factories in India. Of course, that gives us competitiveness.
By the way, rest of the world, 11% of the sales. In other locations, we don't have our factory, so everything is exporting it from other factories. This is actually one of the core reasons why we are competitive in different parts of the world. However, we have to go further. It's not only being present locally, but we are also looking at what should be our product offering for the local market. Today we tend to have too many products that are globally the same products all over the place for all countries. Reality is that the competitive situation in China and in India is actually different than it is in Europe or North America. We have to also be able to regionalize a lot more our offering towards the local needs from technical point of view, but also from cost competitiveness point of view.
On the right side of the picture, you can see also that one sample, or not a sample, but you can see our brands, how we are approaching our customers. We do recognize that our customers have many products, different type of needs, different needs for different customers. What we want to do is to supply different value propositions to different customer needs. For that reason, we have been building our different approaches, different offerings for different customer needs. Some customers are even running 24/7. It's not too many in aggregates world that are running 24/7, but if you are running 24/7 or you are really crushing really hard rock, then you have to be truly reliable and solid equipment for that. On the other hand, we have customers that are running our mobile screens or mobile crushers like 15, 20, 30 hours a week.
Of course, you would rather try to optimize the cost of the equipment rather than the long lifetime of the equipment in that. We have different value propositions for our customers and that we are implementing through our brand offering. I have one deep dive here which is, I would say, the core of the core of our Aggregates Equipment business and it is crushing. Crushing brings us most of our business. It actually brings us 75% of our aggregate sales and it brings us an even bigger share of our profitability. We are truly a technology leader, leader in crushing. We believe that we are three times the closest competitor in terms of the actual crushers manufacturing the actual crusher. We are truly, truly a big boy in this area, in the crushing area. It's a really important part of our monument.
Thinking of the packets that Sami was showing in the presentation, this is c learly k ind of core bucket of that list. Now how do we create our competitiveness in this area also for the future? Innovations are really, really important. Of course, when we are really significantly bigger than others, we have the muscle to make innovations in this area. We have to also remember that when we are introducing new crushers, that actually creates opportunities and secures the captivity of our aftermarket solutions. We have been recently investing a lot of money in order to kind of renew our offering in the crushing in order to improve the captivity. That of course pays back in the long run. It doesn't pay back the next year. It pays back in a much longer run, then harvesting the rewards of regional investment. We have had major investments in India for new factories, major investments also in China for new factories.
Although the investment size has not been significant in China because we have chosen a low-risk way of investing. We actually go for rental premises and kind of reduce our risk there. We have had acquisitions in the U.S. and we are making, currently like mentioned, we are making a big investment in crusher factory here in Finland. Multipranch synergies. A significant contributor to our profitability improvement in the last years has actually been our multipranch synergies. We still see that there is a lot to gain on the multipranch synergies also going forward. We have not exhausted all the multipranch synergies at this moment. Digital, we have Aggregates digital presentation later today. That's really, really important for our development. Our customers also see the excitement, or I can see the excitement on many of our customers on the digital capabilities that they will have.
Aftermarket intensity, really crushing is the most aftermarket intensive area of our business. A really big portion of our aftermarket is actually coming from crushing business as well. When I, by the way, say 75% of Aggregates sales, that includes both aftermarket as well as the capital of the Aggregate. So relate both areas.
I think in the next slide we're going to open a bit of the aftermarket journey we have taken way earlier and what we're going to change, what we're going to do different going forward in the future. Maybe we start with where we are. On the left hand side in the graph you can see that the machines that have remote connectivity and we see the operating hours, they have been actually operating 20% lower number of hours per year compared to 2021. This shows you that actually we are not in the top cycle when it comes to aggregate segment. So 20% less hours means 20% less production, 20% less aftermarket. Our results show that we have not dropped the aftermarket share, neither the volume in the aggregate segment.
Meaning that actually, even with a low market situation, we have been growing the market share from our aftermarket in the Aggregate segment. Why we do it and why we are so confident about it. Number one, it's a scalable model. Whenever the market goes up, we have the captivity. We know how to do it. We have a distribution network, direct sales network. We have the presence in the market and we have the value proposition to the customer. Scalable model that can capture the market whenever it starts. Availability and customer satisfaction are coming from multiple sources in our business. Maybe from the new things, where we are moving towards is the regional network and operational presence. As Markku has shown to the slide before, that was the slide for equipment. We have multiple other operations which are way closer to the customers.
They are important because they deliver the customer service levels to the customers depending on the value proposition that they are looking for. The digital enabled customer experience is something that is the new thing. It's the modern way to do this business. It goes in multiple channels. We have the technical capability to already do it, but I'm sure it will take few years before actually the customers start accepting that as a new way to operate. Maybe we are surprised with the speed we will see, but generally that is the trend where it goes. We can probably say we have the technical capability and we are already going in that journey. What it will bring, it will bring ease of business. Customers would experience the same thing that they experience in their daily life. Potentially savings for the customer.
Meaning that they could avoid multiple technical discussions and whatnot around maintenance, but also will enable Metso to deliver better customer experience and also reduce costs and etc. When we use those data and we use those information. Captivity was mentioned many, many times. We have that embedded in our model. Starting from design of, let's say, crusher all the way to the delivery on an inventory level or service levels that we are looking at here. Implementation of the multibrand. It was started from the aspect of the equipment because there the differentiation in the values has been very obvious. Now we are moving with that type of approach also closer to the customer with the aftermarket, which means yes, we have propositions for different value streams in the customers because they ask for different things as well.
The last vertical is actually expanding market, that is in the third party crushers. It's no secret that many of the sites do have other than Metso crushers, but we are the present one. We are maintaining them and now we are creating. We have already a large offering, but we are creating the rest of the offering to be able to capture that market in the aftermarket and bring it closer to Metso. This is fueled by what we call super materials development, which we already have in hand. It has been already predominantly worked in the crushers, meaning in the wear side of the business. We know and we can see that it has the right trend, it has the right offering for the customers.
On the next slide, I would like then to open up more about the quarries which represent, as you know, 51% of the revenue stream in Aggregates segment. They carry 44% of our aftermarket share within the quarries area. The horizontal green bar shows you the trends that we experience on the customers. From the pressure of how much does a license to operate cost, but also is it available, how close you are to the cities, etc. We see the trend of larger and bigger quarries continuing. China has went huge quarries in the range of Minerals, 70 million tons, 80 million tons per annum. Europe is following. We see the Middle East joining the club, etc. There is a general trend of having larger, bigger capacity quarries in the market. When you produce that much of material, production flexibility is essential.
When we produce in Minerals, we produce gold or copper. Here we are talking about five, 10, 15 different products. Now the trick is in this, five to 1 0 products, not all carry the same value at the same price. Actually, some of them are produced so much on the account of the other. The real value comes from maybe three out of the 10 products on the customer's production, and those are where we need to maximize the production. That's the solution which really pays the bill for the customers. Finally, there is scarcity of people, there is scarcity in the industry in general. There is a pressure to our customers to have an easy, safe operations which is then focused on cost per ton performance. That is where the trend goes in the quarries business. We built on absolutely unmatched experience in the crushing and screening circuit.
Needless to say, being three times bigger in the crushing business does give you that platform, does give you that base. We have screening also in the sentence after the crushing. Screening is the second largest revenue stream. It's also the most important one because whatever you crush, you need to sort out and final product gets outside the screen or after the screen. There is this value stream for the customer which is essentially super important. On the left hand side, on the bottom box, you would see that we have built now and we are still continuing to invest in a future matching screens portfolio which touches both the top end larger capacity screens, but also it touches the UltraFine screening.
UltraFine screening is where we also create additional value for the same product of the customer, but also potentially we avoid water usage inside the quarry itself. These screens are built on a modular design. What that means is that if there is a third party screen instead of a Metso screen, we can simply replace that screen with components of Metso and get it moving with a higher efficiency than the existing one and still fit in the same volume space, fit in the same footprint, which is making the transaction change from anybody's to Metso service way smoother, way easier. We have already a wide offering of screening media. What we have now introduced recently and we continue with that is new materials into the screening media. Here one could say okay, it's about lifetime. No, it's also about flexibility.
When you have a flexible screening media, the clogging, the stopping of passing of material is prevented. That is something that we are really mastering today with multiple materials. The middle box is the aftermarket focus on optimizing operations. This is where the customers are having difficulties. The answers are actually in our house. We have the full circuit experience and expertise. If we take an example on the crusher wears, in the modern world, you can buy a scanner already on your phone, you can copy the profile, and you can say, okay, I can produce this with the same geometry. Potentially, also, you can re-engineer the material which was used. None of that is valid because none of that brings you the knowledge. Why is it like that and when do you need to stop using it?
This is because our profiling and our offering, which is also productized and already on the market, does bring two main points. It increases the lifetime, and the second one does keep the profile to produce the maximum product value that the customer is asking for. That expertise is very rare in this business. The last one is again the digital enablement. Here we are more talking about predictive maintenance to try to avoid the stops. When we say predictive maintenance, it's not just about stops. We talked about the screen media. If the screen media is broken, then the customer gets waste, meaning material that is blended between different products. That is not good. That is actually the highest expense for our customers. We have solutions that can observe that and also on time predict the next maintenance requirements so that that doesn't happen.
The last box on the right-hand side on the bottom speaks about innovation powerhouse. Having the size, having the knowledge and expertise puts us in that position. We have been heavily investing in new products. We have seen a lot of new products to market. I think there is no, we will not stop, we'll just increase the speed forward. One example I have taken here is the 3rd generation of what we call MX. MX stands for multiple material blends for the crusher wears. Let me repeat myself. 3rd generation. On the first one, we made a lot of mistakes. We learned from the second one, was better. The third one is fantastic, and every step goes further and further into the lifetime but also brings this other value. Needless to say, the small secret. We'll call them Super MX crusher wears because they deliver super performance.
The third-party crusher spares and wears. There is a lot of pirates that can say, okay, we can deliver for Metso, we can deliver for this and that. Fine, what's the value? It can be only price, cheaper price. Do they really deliver what the customer wants, what the customer is targeting? That can come only from expertise. We have been now building for a very long period of time that expertise also for third party suppliers. We have been already seeing the first experience. Crash wears is already there. We are now moving very fast into the spares business, and I think we can deliver a fantastic experience for our customers here that range. Last but not least, here we are talking about enhancement of production with digital. You will see a very good graph by Jaakko later. What does this mean?
We have a system in the behind which is not asking for the operator to do anything, it does itself, but increases capacity and again matched with the preventive maintenance. This gives a huge jump for the customer forward. This is what we want to do in the quarry segment potentially very soon.
Good. We jump a little bit on R&D. R&D is a big focus area for us. You can see that since 2016, 2017 we have been increasing our R&D spending every year. Even throughout the COVID years we were increasing our R&D spending. It is important to remember that the R&D spending doesn't create the kind of result, sales result immediately on the next year. There is always a kind of lag before the customers start to adopt the new products. In a way, this trend of R&D expenditure is actually creating potential sales value for the coming years. That's basically the point here. Where are we? Where are we actually? What are we developing? Electrical hybrid range of our mobile equipment. Crusher as an example, HP crushers, which is our highest selling product. We have actually renewed that crusher range just recently.
Some sizes are still ongoing, but that increases the capacity of our highest range, highest selling crusher range. Super materials, as Saso was already explaining. Digital and automation as well as recycling are focus areas for our R&D. Looking at our Aggregates journey on improving the profitability, from first half of this year our profitability has been 15%. Our peak profitability was a little bit more than 17%. I think 2023, it was 17.2%, and now we are setting that our target will be more than 17%. How to get there? Market growth will help us. That bounce back in the market will help us. We have our growth actions and we have generally our growth actions deliver higher profitability than our kind of current business. We have self-help opportunities where I believe the most important ones would be pricing.
Pricing, I think, we have current market situation is not allowing us to have the best, most effective pricing policies in place. The second one is our supply chain. I think we have a lot of things that we can still improve in our supply chain and we have ongoing investments or very recent investments in our supply chain as explained earlier. Our multi-branch synergies, we have definitely not exhausted all of our multi-branch synergies yet. We have still opportunities in there. There is even a component coming from our digital developments that we believe that we can actually improve our cost structures with our digital tools that we are developing. Altogether, I'm actually very confident that with this 2028 target, more than 17% is totally a reachable target. Metso number one. We are looking for some growth as well.
We have stated that it's 7% and I can say that we are committed to make that 7% growth annually going forward.
Of course, 17% and beyond that is the 2028. That's how we can foresee the Aggregates Equipment segment performing. Thank you.
Thank you.
Thank you, gentlemen, for warming up with the questions. I'll take a couple from the chat. There's been a few which discuss kind of aftermarket share of Aggregates revenue. Do you have a target in mind or such a level that you would wish aftermarket would go thanks to your focus on it going forward?
We will do everything possible to maximize it and boost it. It's a cyclical business, so it depends a lot on how the year would look like if the business goes forward. Both go forward, both capital and aftermarket. Definitely the attention will be to maximize it.
I guess we are more focused on the euro growth rather than the share growth.
All right. One more quickly from Ed Hussey. Do the margins differ in natural aggregates and infrastructure recycling part of the business?
I would say that if you look at our different parts of our business, like I said, the crushing is the most important part or most money generating part of our business, and where the crushing is kind of most. Where the most part of crushing is is actually quarry business. The most profitable business for us is our quarry business in that sense.
All right, then let's take Antti first. Mics coming from left and right. There we go.
Thank you very much. Antti Kansanen and SEB, two questions. I'll start with pricing, which you mentioned is a big part of the self-help component. Could you provide a little bit more color on what are the improvements on pricing that you see versus what the situation is in today?
I would say that if we go back a few years, the pricing situation was just unbelievable, that there was a shortage of just about everything in the world. Then pricing capability was very high for ourselves as well as our competitors. Within the last couple of years, the market has been relatively tough, competition has been relatively tough, and it has not been optimal for pricing position. In the last couple of years, we are expecting that the market will be turning, and we are expecting some uplift of the market, and that will enable us to be more active on the pricing activities as well. I think that's the color that. I would give there.
I think it's also the value selling. I think we are now with the multi-brand approach. We identified what values do really tick for which customer levels, and from an aftermarket perspective, we have a lot of new things that are new to the market as well. That pricing, let's say power, if I may call it, when you have something innovative, something new, does come in place now.
Makes sense.
The second question is on the footprint in North America. I mean, I think if I remember correctly, it had 50% share of locally produced, and I guess your main site is in Canada, not in the U.S. where I would assume that the majority of the sales is. What is, looking forward, what are your plans of your, let's say, production supply chain footprint in North America Aggregates equipment, especially?
If you look at first our current sales in North America, or let's say U.S., like you said, biggest factor is actually in Canada. However, we are still looking at North America as a single market from the point of view that the equipment that we are manufacturing in Canada are actually tariff free, mostly almost all of it is tariff free, coming to U.S. In a sense, we don't see tariffs whether we are manufacturing in the U.S. or in Canada. In that sense, it's kind of similar. Looking forward for the future, I mean, currently I would say that right now is way too early to make any kind of investment decisions for the U.S. market, but I guess long term, who knows what will happen.
Maybe to add on the equipment, but also maybe still on the equipment the screens. We already established assembly shop inside U.S., which means we have already moved into the North American market with equipment assemblies, and we call them ATPs, assembly test painting shops, which do answer also another thing, they answer to the regional technical requirements way better than previously, and that makes a difference.
Last year we acquired two businesses, both having a factory in the U.S. We have an older factory in the U.S., and we have the big factory in Canada. We actually have a relatively big footprint already in the U.S. as well.
I'll take a couple of quick ones from the chat from Chitrita Sinha. What are the M&A priorities in Aggregates?
We have started the journey with the latest announcement in the screens portion. We have acquired a company in China, which is, I don't know, China has who knows how many producers of screens by number, but it's definitely the top five. What we have done actually is not only that we have our entrance into the Chinese market, which is in the aggregates segment the largest in the world, we also got technologies which expand our portfolio to the super large quarries and UltraFine screens with it. From an aftermarket perspective, one of the focused areas and growth areas will be actually the screens as they sit in the middle box of reaching the number one position. Also, in the minerals side, they come also with additional product range which is universal for any producer of the screens that has a screening media.
They come also with pretty good high margins, which, with the service network, with the presence we have, with the distribution we have, do provide us a super good platform to move forward. That will be a typical case of how we would go forward in the screen side. I think for the rest of the aftermarket offering, we have our power plants. They're very regionalized because this is actually a very regional market, and many of the targets, or I don't know how to name them right, but let's say potential targets is maybe the right word, would need to fit in both a technological advancement but also to original supply, original specifications to that specific ones. Those two are priorities more on the aftermarket and screens.
Maybe to add to that, we have basically two big areas where we think that we can make money in the future. One being anything that has a high content on the aftermarket, and then another one is that anything where we can see a significant multi-branch synergy opportunity. Those would be our kind of main areas.
Quick one, Saso. How much the third party equipment to your service in Aggregates aftermarket at the moment?
That's a difficult question to answer because what is third party equipment is also questionable. Being 200 years in this business, we have created maybe many of it in the past. We call them classics and some others call them differently. I don't know the number on spot globally, but I can say for example in Europe around 25% of our revenue comes from third- party crushers already.
All right, sorry.
We have used that time reserved for Aggregates at this stage. We can come back to the questions later. Thank you Saso and Markku. We need to move on, and next we will discuss the Minerals segment. Ladies and gentlemen, this next duo is as strong as the previous one, I would say. Here they come, Piia Karhu and Heikki Metsälä.
Good afternoon. My name is Heikki Metsälä and I'm truly delighted to have this golden opportunity to share you our Minerals strategy with my colleague Piia Karhu.
Good afternoon. Also on my behalf, we are excited to tell you how we go beyond on the Minerals segment as well. In Minerals, when we look at the market globally today, we are number one already globally. As part of our strategy, it is really go beyond, and we do believe that we can be even stronger number one on the Minerals segment. From a financial targets perspective, our target is to reach above 20% adjusted EBITA. Of course, we also need to significantly contribute to the target of growth above 7%. That's what we are committed to, and that's what the strategy is built for. If we do look at our track record as Minerals segment since the merger in 2020, our adjusted EBITA was 14.5%. We've been able to grow that by 3 percentage points. Last year, we reached 17.5% adjusted EBITA.
Also, on the growth side, we have been successful: EUR 2.5 billion sales in 2020, and last year we reached EUR 3.7 billion. In terms of sales, I think that shows that we can deliver our plans that we have put together. That's what we are planning to do also with this go beyond strategy. Let's start with our unique portfolio of solutions to the market. What you see on this slide is a very simplified picture of a minerals processing plant, and what is the unique portfolio of solutions that we actually do offer to this market. Each one of these solutions actually consists of both our equipment and aftermarket offerings, so spares and services that we deliver to our customers. How do we see our position today when we combine the solutions together? As you can see, we are number one globally on many of the areas here already.
Crushing, grinding, separation, and filtration are areas where we are number one. However, we do see a lot of potential for us to create more value for customers also in these areas and continue our growth journey, even though we are number one already today. You also see here that there are areas where we are not number one yet, and those are the areas where we will work a bit differently to actually work towards number one or two position globally on the market. Those would be screening, pumps, and tailings management as areas. Of course, that will require that we will actually focus our capital a bit more on those areas and also work a bit differently to reach number one or two position in our portfolio. We have also metals refining process solutions, so hydrometallurgy and smelt solutions on those areas as well.
We are number one globally today. On those areas we will focus on copper and gold, which very nicely complement our strengths on those two minerals areas. Few words about also our current sales breakdown. These are based on last year's sales numbers. 55% of our business is coming from the comminution part, consisting of crushing, grinding, and screening technologies and solutions for our customers. This is a very important area for us. The beneficiation part, separation, tailings, pumps, dewatering, is about a third of our sales last year, and the rest constitutes the rest. As you can see, aftermarket share is 66%, so already quite high. Of course, our aim is to continue that journey. We can create even more value from the aftermarket perspective and grow in all of these areas with our aftermarket offering. Little bit about our commodity mix.
More than 40% of our sales is coming from copper. Then iron or gold are the next biggest ones, together about 30% of our sales at the moment. There is a number of other minerals and metals that we deliver our solutions to. As has been discussed today, the growth drivers for copper are very good at the moment. Electrification drives copper demand, but also data centers have become a significant driver for copper growth in recent years. Ore grade depletion is something that is driving the need to actually crush and process more material. That is also growing the need for our equipment and our solutions. What we also see is the geopolitical factors influencing the fact that many of our customers in certain geographic areas want to become more independent with minerals and metals.
Little bit more about the growth outlook for the biggest minerals and metals that we work with on the market. As you can see, until 2030, copper processing ore, so processing of ore leading to copper, is expected to grow about 100 million tons a year. That basically means more than one big greenfield plant in the world needs to come live every year in order for us to reach this forecast. What is interesting here as well is that iron ore is growing almost with the same amount. It is a high volume mineral, so almost close to 100 million tons as well. Great outlook for both of these minerals. At this moment we are discussing with a number of greenfield plants, but also a number of brownfield plants, how can they increase capacity during this period?
If we look at our aftermarket and how we've been performing, looking back since the merger of the two great companies, Metso and Outotec, we've performed quite nicely. We have seen that we have taken our aftermarket business from EUR 1.6 billion to EUR 2.4 billion, roughly a 9% annual growth rate in this space. This has been a consistent result for us, and this is what we are looking forward to growing even further. How are we doing this? What is the foundation of our aftermarket growth? It of course starts with our extensive installed base out there in the market. That's what we are serving all the time. You can see that there's more than 20,000 crushers and screens out there in the market, Metso crushers and screens, more than 8,000 grinding mills, more than 5,000 filters, more than 15,000 deliveries of flotation equipment.
All of those equipment needs to be maintained, upgraded, and modernized. This is the foundation block of our aftermarket business. On top of this, of course, my dear colleague is selling new capital equipment all the time, which creates more additional installed base for us to service in the aftermarket space. This is exactly one of the other growth areas. You saw that the numbers are picking up when it comes to copper, gold, and iron, and that creates new installed base for us to service in the future. On top of that, we are looking at the third party installed base. We have a lot of value-adding solutions, Metso capabilities, and competencies so we can serve the third party aftermarkets.
We have the crusher wears, we have the mill linings, we have the upgrades and modernization that we can do on the third party equipment, and that is also installed base that we can service in the future. If we look at it, one of our core strategic advantages and differentiators from our competitors is our global service presence. We have strategically chosen to be there close to our customers, serving our customers. This is the value that we bring to the table. As Metso, every day of the week you can see that we have impressive numbers: 3,500 service experts out there, we are present in more than 50 countries with our field and expert services, and we have more than 500 lifecycle service contracts.
Lifecycle service contracts are service contracts that span over 12 months or more, and then we typically combine our labor efforts with our part sales in these contracts. We have more than 500 of those providing us recurring revenue streams. You can see as well that we are continuously investing into the presence close to our customers. Since the last CMD , I think Pasi was referring to this in his presentation as well. The black dots represent the investments that we've done since the last CMD . We are there close to our customers. We have already invested more and we will continue investing more to be there close to our customers, serving our customers, helping them to achieve their targets. Looking at our minerals one pager, we want to be number one in minerals.
We are already number one, but we want to be the industry benchmark number one, everyone looking up to us, looking at the strategic priority areas that we're working with. We're well positioned in copper, as Piia was stating, already gold, all the energy transition minerals, and we want to be the undisputed number one in the energy transition minerals going forward. That is where we are investing heavily. We are also working to serve our value-driven customers. Everyone always asks, okay, what does value-driven mean in this case? We provide equipment reliability, uptime, production performance in terms of capacity, end product quality, safety, and strong sustainability to our customers. Those are the values we bring to the table every day of the week. That's what our customers are asking from us.
High aftermarket intensity is the core of the Metso strategy as well as in the minerals strategy, making sure that we are investing into the technologies, focusing on those technologies that bring us high recurring revenues in the future. Sami has already talked about the focus areas that we have, so strengthened number one position. This is the core, the bedrock that we have today. These are solution areas, technology areas where we are already number one in the world, and these technologies and solutions are providing us the desired profitability level. We will continue investing into the absolute technology leadership and making sure that we defend and grow our business in this focus area. The second point, as you have seen, we have the reaching number one to two positions, so really investing for expedited growth. This is where our M&A money will be diverted to.
We're really looking at how do we expedite, having a different playbook compared to the bucket number one in this case. The third one is the improved profitability and reinforce position. Here we can actually be number one, but we are not yet yielding the profits that we would like to yield out of these solutions and technologies. This is actually a major contributor to our self help potential as well. We have a lot of good action plans ongoing to make sure that we can lift our profitability and retain that number one position. Looking at the enabler side of our business, customer centric growth culture, I typically say this, that we are, as Metso, we are the university of minerals processing. We bring the talent in, we can train our talent, we expand our talent to the world.
We are a powerhouse in mineral processing and we aim to be that. We are really focused on bringing that customer value to life. This segment focus enables us to really look at the customer's end-to-end value chain, starting from the large investment process all the way to the optimized operations. This is exactly what we as Metso will bring to the table, and this is the value that we bring to our customers, as Sami was stating in his presentation already. Of course, we are a technology company. We invest to be the absolute technology leader, and we are also heavily investing into digital. We will hear a bit more of that later on in this presentation. We are really striving to be the technology and digital leader in the field of mineral processing.
Let's then deep dive a bit more into how we are actually going to do the strategy execution and what are the most important activities that we will drive forward. Starting with the left-hand side box, crushing and grinding, what we're going to do there on those areas, we are number one already and as you saw a bit earlier, they form a significant part of our sales today. We do see that there's definitely potential to grow more, add more value for customers, and therefore be even more strongly number one in different parts of the world and different parts of customer segments. An important area for us is to grow in crushing, so grow in our primary territories, core crushers, also mobile stations, and in-pit crushing and conveying systems will be part of our growth. Naturally, also the wares and spares, we want to grow with our customers.
In the grinding part, we will focus on energy efficient grinding. You'll hear a bit more about that today. At the core of that is stirred mills, growing in that area, both on the capital side and aftermarket side. We also want to drive growth with our HPGR portfolio. Expanding in the premium aftermarket will be the focus area here. What it means is that we want to capture the aftermarket of all of the equipment greenfield plants that we have sold to our customers and delivered. We want to make sure that we cover greatly the installed base that Heikki was speaking about a bit earlier. We will also go after third-party installed base even more rigorously in this area. We will continue to launch new products. We have been active in bringing new products to the market in this area.
We do see that since we are a technology leader, it's also our responsibility to continuously listen to customers, address customer needs, and bring new products to the market. If we look at the screening and pumps area, where we are not number one today, in screening we are number two or three globally, and in pumps we are maybe number three or four globally in the minerals processing side. In this area, as discussed today, our target is to become number one or two. That does require a bit different actions than what we are doing on the red box in a way, because we really have to be clearly, clearly, clearly doing things differently than what we have been doing so far. Here we will need to expand our product portfolio from what it is today.
Selm acquisition was already discussed today as an example on the screen side, how we are expanding our product portfolio. With Selm we got, for example, UltraFine screens to our portfolio that we can now then utilize also on the minerals side. There will be more that we need to do on expanding the product portfolio side, both for screening and pumps. Definitely we will go after growing our market share. It does require investments and those activities are already ongoing. A third important topic is actually a regional approach to our operations. This business is more regional than some of the other businesses on the minerals processing side. Therefore, we need to cater for that need in the market and our approach to the operations will be more regional in this area than what it has been in the past.
Let's move on to the beneficiation part of the flow sheet and our solutions, consisting of separation, filtration, thickening, and also tailings management. Here we are in a very good position to grow in all of these areas. In separation, filtration, and thickening we are known for really good recovery of minerals and also very good performance on the dewatering side. When we look at our geographical presence at the moment, we do have room to grow in certain areas. That will be the big focus area here. In this area also we have been active on the R&D side and we have recently launched our flotation technology for the UltraFine materials, and that has been a great success. We continue to, of course, grow in that area.
What we are also very excited about is that during next year we will launch our coarse flotation technology to market, something that has been, let's say, long looked at in the industry because this is targeted for the more coarse materials and also means that there's then less grinding required from a customer base perspective. We've been working on this area for years already. We've been doing intensive testing during the recent year and more, and the results are very good. We are looking forward to launching this product next year. Tailings management is an area where we are maybe number one, number two at the moment. Here we see potential for growth for us also in certain market areas. We do also see a clear pickup for the business in this area.
We will focus here more on the small and medium size tailings operations because there we think that our kind of value add is best for the customers. Furthermore, industrial filters is an area that we see great potential for us to grow. Industrial filters market is about EUR 5 billion a year. We do see that we definitely have room to take our share, bigger share of that market. Of course, expanding on the aftermarket side is something that we do believe that we can do here. With the great global presence that Heikki was talking about, there's room to capture more modernizations. Upgrades is something that are important part of our growth in this area. Like already said, we also have hydrometallurgy and smelting process solutions in our portfolio. Here the focus is on copper and gold.
These technologies very nicely complement our full offering for the copper and gold customers and very nice pipeline of opportunities at the moment, particularly on these areas. There is room to increase productization so that we will focus on. Definitely also there's room to grow aftermarket. Make sure that the large installed base that we have today, that we will cover that with our existing home aftermarket services. Technology leadership. Let's talk about that one a bit more. Annually on the Minerals segment we invest about EUR 75 million on R&D. This is consisting of our technology investments, exploration work and then also our digital services. Of course what I want to address here is the changing world of mining, how we enable sustainable, sustainable modern life.
We have a very intense discussion with our customers on their needs and what do they see as areas where they would need even better solutions from us. Those customer needs are ranging from improved safety of the operations and improved serviceability of the operations. Energy efficiency will continue to be a big topic in this industry. Separation efficiency, a lot of money on that for our customers. Also pre-concentration efficiency which then kind of enables that the processing need is less for the customers. Tailings management continues to be a big topic in our industry. Water circularity and then also interesting area secondary processing, either of e- scrap as an example or then also tailings bond between tailings materials. We just thought that it's always nice to highlight some of the R&D work that we have been doing.
A few examples of that we are really proud of and that are getting traction in the marketplace. A good example is the HPe cone crusher series that we launched earlier this year: [HP600e, 800, and 900]. We are looking beyond that as well. Very well perceived by the marketplace, and we are expecting good success for this range. On the crusher wear side, the MX crusher wares have been a great success. The wear life is basically double with this wear, so of course the value proposition for the customers is great. On the grinding side, our big focus is on the stirred mills technology. The Vertimill 7000 is an example of that range. It's the biggest machine in our stirred mills range. We do see that customers are demanding bigger and bigger machines in the stirred milling area.
Also, super materials. hat this means for us is that the wares and spares that we offer for our customers have a longer lifetime. Therefore, of course, a very important area for us and customers, and we do have research ongoing in this area. The coarse particle flotation I already mentioned, so I'll skip over that. The 3712 tailings filter is particularly targeted for the tailings management side. A good fit-for-purpose product, particularly for the tailings operations. Still, maybe shortly about the secondary metals refining. We do see a clear growth in terms of discussions with our customers about how they can actually extract copper and other precious minerals from e-scrap and, of course, batteries. Recycling is another area where we have technology, and then also old tailings, where there is a business case to actually extract minerals out of the tailings.
Definitely a growing area, and the amount of discussions is picking up. We have great process solutions for this area also.
Okay, we promised to come back to you a bit on the digital and automation side of it. We have basically two kind of horizons that we are looking at here. First of all, creating new customer value. We're looking at improving our internal efficiencies with the data points here as well. We start from really creating the customer value and automation is a big topic for us. Definitely as an example, analyzer. Our courier analyzers are the industry benchmark. They are by far the most known product in this field and they are the industry benchmark. All of the, let's say, high value customers really strive to have those analyzers in their processes. This is something that we have invested quite heavily.
When we come to start mixing up the kind of the improve internal efficiency, creating new customer value, process performance and equipment performance, those are key areas for us looking at holistic processes, but also then a single equipment and how can we make the most out of it with the digital solutions, how can we help our customers? I'll actually deep dive into the equipment performance a bit more and then we have strictly what we call business enablement as well. That is where we are working with the data that we receive. What can we do within our internal processes to make ourselves more efficient in the future? Making sure that we get the maximum streamlined, harmonized processes, use the value of the data to our own benefit in our internal process.
If we jump into the equipment performance, we are really pushing towards the data driven optimized performance and services. You can see that it is already available for a variety of technologies. Crushing, screens, grinding mills, pumps, analyzers, flotation, filtration as an example. We have really productized it in a way that we can bring customer value to their reach. It starts with the technical support. The traditional way has been that the customer calls us and then there's a lot of time and effort being spent that okay, what actually went wrong? How can we help? Do we even understand the facts that what happened? In this case, if we have connected equipment, we can remotely look at it with our expertise immediately. We can actually spot sometimes in advance these cases already. We have all the data available to support the customer in their need immediately.
We have the expert online supporting the customer. That's the baseline. What we have is the technical support. The second level is the data-driven condition monitoring, so we are really extracting the running data of the pieces of equipment, and we have created AI-powered predictive maintenance procedures that can forecast the upcoming failures in the piece of equipment. This enables us to proactively be in contact with our customers, telling them that, hey, you are going to see an event happening soon, you should get prepared. You can do preemptive works to make sure that you maximize the uptime and reliability of your crusher or a mill or a pump or a screen in this case. The furthest here is the performance monitoring.
We start looking into the feed material, the output of the equipment, the operating parameters, and we can see that if there's deficiencies on how the customer is operating the piece of equipment, we can provide them support help on how to get the most out of it. These are the three different levels that we are doing on the equipment performance. In this year 2025, we have really seen a pickup on this. It's a kind of a turning point. Now this year we're seeing that we have quadrupled the amount of connected equipment in the mineral space.
Moving forward to the self- help topic that Pasi was talking about a bit earlier on this event. On the Minerals segment, we do believe that with the self help initiatives we can generate more than 1 percentage point increase to our adjusted EBITA. Highlighting five areas on the self help potential for the Minerals segment. First of all, we have now a very focused portfolio. As you have seen throughout the presentations today, we know what we are focusing on and also what the targets are for the three buckets of our solutions, what we are working on. We have also made decisions to divest some part of our businesses, loading and hauling as an example from this year. That also just confirms that we will be very focused with our portfolio moving forward.
Supply chain and logistics continues to be an area where we can drive savings and efficiencies. Pasi talked about that one quite a lot already, but maybe I'll add to that talk also that in some areas we have also increased our in-house manufacturing capabilities. For example, this year we have invested in our Romanian screen media factory and then also for our Mexico factory for the filter plates. Those are also examples of how we can improve our efficiency in this area. Heikki spoke about what all we are doing on data and AI- driven productivity. Our team of Metsonites is super excited to innovate how their work can be much easier with the use of data and AI, and we have a long list of use cases that we are working to bring to life.
Maybe a few examples from this area more: for example, on the proposal making, we are already using AI- driven solutions that will bring speed to our proposal making and also kind of reduce the time that we spend, for example, with technical questions coming from our customers. Very simple but really driving efficiency. Also, for our field service agents, we are using data based services and AI to actually help them pre-prepare the tasks that they are going after, very well perceived by our people and simplifying the preparation work for them for the site visits. We are also looking for possibilities on flowsheet development, procurement, etc. The possibilities are vast in our business. Also, design for manufacturing, what this does mean is that with product design we can still drive efficiencies on the manufacturing side so that it's easy to manufacture, the lead times are better, etc.
Here we have good potential both on the capital and aftermarket side, and also the fact that the process itself from design to manufacturing is super efficient here. This is also a big self help improvement area for us. Fifthly, I would like to highlight the quality management, where we are driving for even more rigorous process on how we take learnings from potential quality events related to, let's call it, product quality, process quality, delivery quality, and by having a good learning loop from quality issues, we can actually then learn and make sure that overall the defects are less in the future.
If we look at our EBITA bridge, looking at the first half of 2025, we have produced 16.9% of adjusted EBITA, and we are looking at a similar bridge that we have already shown both at our Metso level as well as in the Aggregates Equipment segment. Of course, market growth will provide us an uptick on the profitability. That's driven by the fact that we have a scalable operating model, so when the market picks up, we can scale up. That will yield us more bottom line. We have specific growth actions, especially in those where we are already number one or we want to reach number one or two positions, and there we have healthy profits on those solutions levels, and we have growth actions driving that. The center there and then a big part of us is the self help.
Piia already addressed quite a bit of them, but there is a lot more that we can do, especially this AI digital driven stuff. How can we make sure that our processes are efficient? There is one additional topic that really gives us a good foundation for the future to build more self help and really materialize those benefits. The fact is that Metso and Outotec merged in 2020, and we were actually really good at delivering the synergies and materializing the synergies out of that merger. The reality is that up to this year, we have been actually operating in two different ERP systems. This year, we are consolidating our ERP systems. We are getting into one modern platform from the 21st century, and this allows us to drive efficiencies in the future within our strategy period.
We're confident that by 2028, we can make more than 20% adjusted EBITA in the Minerals Equipment segment. Looking at all of this that we have presented today, really strategic actions for us are that we are well positioned to be the number one in energy transition. Minerals, copper being the biggest driver in this space. We are pushing. Today we are at 66% in our aftermarket. We are really pushing for the aftermarket intensive products, not at the expense of our capital sales. We want to grow further on the aftermarket side of it, and we want to reach 70% share of aftermarket in the space of minerals. As just explained, we are really committed to delivering that above 20% adjusted EBITA in the Minerals Equipment segment. Thank you.
Thank you.
Thank you, Piia. Thank you. Heikki, we start questions, and maybe we need to, Panu, do you have a question? Because you were waiting for a long time already, you need to be the first.
My question was on Aggregates Equipment. That wasn't an, but actually something I was wondering on. You gave thanks for giving the update on the sales split by Minerals, but that's including aftermarket on products you sold earlier. How would that look for the new equipment orders that you are taking in?
You mean basically the split that we were showing, the 55% for the comminution, etc.
I meant copper, gold and those.
Ah, okay. Okay. So basically per commodity, I don't have the exact numbers here right now, but the mix is pretty much similar, particularly if you take a couple of years average. The picture is pretty much similar.
Okay, if I can squeeze another one. Do you think M&A is needed to get you to number one to two in those areas that you identified?
Definitely M&A is part of our playbook moving forward. We have a good list of opportunities, and also some discussions ongoing at the moment. We do see that in order to grow, M&A needs to be part of the playbook.
Thank you.
Next one, let's take from the back. Vlad.
Thanks very much. Vlad from Barclays.
Can I ask two questions? First of all, on the commodity split that you provide, would you be able to disclose your total exposure to bulk commodities and not just to iron ore? That's the first question. The second question, the 40% exposure to gold, is there any room to grow it?
Sorry, your first question was about b ulk?
Was exposure to bulk commodities, meaning i ron ore and coal together.
As we saw on the graph, basically the gold and iron ore together for us is 30% sales last year. That's our exposure at the moment, consisting of capital and aftermarket solutions.
Sorry, if I understood correct. So iron, ore, and cole, y ou meant?
Coal, sorry.
Coal is only 1% or 2% of our revenues in this space. It's not a significant player. Some of the equipment is suitable for coal operations. We service them still.
Great, thanks very much. The other question I had was on whether you can grow the exposure to gold from the current 14% that you have.
Yeah, at the moment gold investments are moving forward very fast. What we see is that number of active discussions with potential new gold greenfield plants, but also on the brownfield side. We do see that, particularly at this moment. I think we all know the reasons why the gold investments are lucrative and they move forward at a fast speed. Of course, the commodity mix is consisting of the equipment and aftermarket. The equipment turns to aftermarket a bit with delay. Yes, there's potential that the gold is even more important for us, at least in the near future.
That's great. Final question on HPGR, would you be able to share your view of what's the role of HPGR going forward? Of course, you have a couple of competitors that were quite vocal about this technology for a long time now. I don't think there is a lot of evidence that it's actually materialized into material and market opportunity yet.
Yeah, you're right about that one. Our estimate on the HPGR total market is about EUR 100 million. On the big scale of comminution, it's not huge. We do see that over the years moving forward. We do forecast that that market will grow, but still, let's say the other technologies will play a significant role there as well. When it comes to our kind of HPGR portfolio, we will actually talk about it a bit more this afternoon as well. I think we are very well positioned to continue our journey. Really the strength of Metso is that we have within our portfolio. When customers are designing a flow sheet, they can actually select the best suitable equipment for their need. That of course is driven with the ore, the end product, the kind of the real estate that they have, where they actually put into plant, etc.
Typically, we are seen as the best partner when customers really want to optimize their flow sheet. We also have the best process knowledge, which means that we are not promoting one particular technology, be it stirred mills or HPGR or, you know, horizontal grinding mill, but we have a portfolio that we can actually help customers to choose the best potential equipment for their particular needs.
Mika.
Mika Doepel, Nordea, couple of questions on the aftermarket business. You showed the chart there where y ou had or a picture where you had t he install base across the product.
What is your current coverage of your install base in terms of your aftermarket business? How big part of that do you c over today and where do you see?
That going in the future? It's a number that we don't disclose, but we are working all the time to improve it. Some of the installed base is quite old for us as well. It means in some cases we haven't actually supported some pieces of those equipment, but actually we are bringing them back up. I think my dear friend Saso was mentioning about these classics and even sometimes we call Jurassic equipment that we have operating there. We have really picked up on kind of materializing the aftermarket to ourselves in that space. We don't disclose what we have there, but we are actually working heavily with our digital efforts to really make sure that we would have the concrete information on when we are capturing the aftermarket and which space.
Okay, and then just a similar question on the connected units naturally, if you can answer that either. How big part of your install is currently connected?
All the new equipment, we have actually made the decision that we will equip the new technologies where we have the solutions ready. We will equip them to be prepared to be connected. Of course, it needs the approval of the customers because at the end it's their operational data that we are tapping into. We are now all the new piece of equipment at the same time, the digital portfolio is done in such a way that we can retrofit that to existing piece of equipment and it's not going to be a major cost. When we upgrade or modernize something, we can retrofit the capabilities of condition monitoring in that space.
Okay, thank you very much.
I need to shoot a pump question here because the chat is full of them. Let's discuss all of them at the same time. How can you capture pump market share, and is M&A playing a role there?
I think obvious is that M&A is playing a role there. I think we've been active in the market. We've shown that we have already made some acquisitions in that space and we are looking further in that space. Also, of course, with the new capital equipment, we're also always trying to capture the new pump cases at the same time. We have really good technologies. On those specific areas, we are also looking at replacing competitors' pumps in the existing flowsheet. It's not just new equipment. You know, sometimes pumps are, how should I say this, more like self-destroying pieces of equipment. We can actually replace the existing vendor there in the side as well. We have really good technologies in this space.
All right, maybe one more before we go to break. Will.
I'll pass on the pump question. Conceptually, just for people's thinking and mine, can you just talk to how you expect the growth of OE and aftermarket to develop within the strategic time frame? You're looking for market share gains in aftermarket. Is that to grow faster than your OE business? That's the first question. The second, maybe again more conceptual in service. If I look at the inventory levels, at the group level, inventory days are about 200, which suggests you've got inventories which are sitting there for more than a year and then some which are less. When you think in principle about your service business and your need to serve your customer, how long is your inventory? What is your typical turn?
What is it that's sitting out there for so long, and is there scope for you to shorten those through technology or better organization, better ERP, those sort of factors?
If I start with the first one, we talk about targets to 2028, which is a relatively short period in this kind of business. We strive for good growth in both of the areas, capital and aftermarket. As you well know, one or two bigger capital equipment projects can shift the mix a little bit, maybe more on the order intake side than on the sales side. We do see growth in both areas during this period.
Yeah.
Talking about the inventory side of it here, let's split the inventory into a bit of pieces. If we look at our inventories, we have, of course, our finished good inventories. We also have what we call work in progress, which is already sold, but we have it in our inventory because we are planning to deliver it to our customers. We have quite a bit of raw materials in our manufacturing units as well. If we focus on the finished good inventories, we do categorize them as fast, medium, slow moving, and excess inventories. In that sense, our focus definitely has been to reduce the excess inventories. We need to have the healthy level of fast moving items. What you mentioned, we are driving to use the digital information, those capabilities to plan our inventories better.
If we can proactively see what is the demand coming from the piece of equipment, we can equip our supply chain to better serve that, maybe reduce the inventory levels and be just on time, better on that space. That is definitely on the development cards for us and a big self help potential also from the balance sheet perspective.
All right, thank you. We need to pause here for a while. We go to our second break. Break will be over at the hour, so 5:00 P.M. local time here, and when we come back it's a deep dive into segments. See you in a bit.
Thank you.
Thank you.
All right. Welcome back from the break. This final segment of this event, like I said, discusses a couple of special areas in our businesses. Areas where we think we currently have and in the future will even more so have a competitive edge and differentiate from competitors and as such make a lot of customer value. We start from Aggregates digital business presented by Jaakko Huhtapelto.
All right. Good afternoon, ladies and gentlemen. It's a pleasure to be here with you today. I hope you're ready to geek out a little bit about technology next. Yes, good.
Perhaps we will talk a little bit about the impact of digital business to Metso as well. My name is Jaakko Huhtapelto. I'm heading our Technology and Digital Business Operations for the Aggregates segment. It's a true pleasure to be here with you today. Talk a bit about our transformation journey so far, the products we built for our customers, and also what we are envisioning for the future. Before we get going, there are a couple of messages that I would like to highlight to you today. First, the products and services we are about to talk in a few moments, they are indeed in production, so they are not some plans for the future. They are something our customers can buy. Second, we have built them to scale, so we are indeed looking for a meaningful impact to Metso during the next strategy period with these products.
Last, we have crystal clear thought on how we are going to capture the value, how we are going to monetize the technologies for Metso and measure the success along the way. With these words, let's hit the road. The North Star for us is of course the customer, and we focus on solving our customers' biggest challenges. These are very practical in nature in the Aggregates segment, and we believe and we have seen that we can solve these using technology. These three areas are the ones that we focus on. This is our agenda. First, keeping the equipment up and running, improving the uptime. This is where we infuse the traditional aftermarket business with modern technologies, state-of-the-art technologies to indeed talk about that. AI-powered predictive maintenance, this is the holy grail for any OEM aftermarket out there.
Today I can gladly report that we have found the recipe on how to scale this service. This will be in the core of the aftermarket going forward. The second area is for our customers to get the most out of the assets, improve production performance. Here we have some really cool pure software technology that can actually autonomously balance the production for our customers and give them more throughput. Here you can actually see that on the right-hand side in the image, the software and the technology in action. From our customer's office standpoint, this is a service that we sell through a subscription model, recurring revenue model. Finally, for us it's super important to make things as easy as possible for our customers to improve their productivity, save time. This is what we do through the digital experience.
We serve a lot of very small entrepreneurs in the Aggregates equipment segment and they spend their day during a site like this, and when they go home in the evening, that's when they take out the parts books and start making requests for quotes for the next week's operations. This is, of course, the time we want them to be able to spend with their families and, for example, make part ordering something they don't even need to think about. This deep dive will now be focusing on three individual areas. I will be giving you practical examples of what they mean. We've talked today a lot about the aftermarket and the share of it and the importance of it and how we are going to grow it. This is the holy grail of it: AI-powered predictive maintenance. This topic is really close to my heart.
I spent half a decade in the aftermarket business and I understand how complex this problem is to solve, and I'm really happy to be here today to showcase what we have done. We have cracked the code on how to do this in a scalable way. I talk a lot about scale because in the Aggregates equipment segment that's a must-have. We serve more than 20,000 customers in the segment. For that to be sustainable, it needs to scale and scale end to end, to be more precise. What do I mean with end-to-end scalability? I mean that once we have equipped the assets when they leave the factory, we understand and we can see what's going on with them. What's the performance like, what's the asset health like. We take that information into our AI platform, we do our magic there.
We enrich the content with contextual understanding, we enrich it with product information, part information. We enrich it with our OEM recommendations to be a package, and then we deliver that to our customers and distributors, to their preferred device with no human interaction. This is what I mean with end-to-end automation. This is what we are doing. This is pretty fantastic. Actually, on the back you can see the experience layer. This is really important from the value capture point of view because right when a customer receives that maintenance notification, just next to it you can see the add to cart button. This is how we capture the value. We grow the aftermarket business by being closer to the customer, giving them better experience, better service. This will then help us grow. It doesn't stop here.
This whole maintenance phenomenon is not only about understanding what to maintain, but in that function there's also a time dimension which is caused by our inventory network, us knowing what's in our stock, what's in the distributor stock, what's the lead time for those products. For you to be able to tell the customer that now you need to buy the product, it's not that you can see that it's about to break, but it's an equation of us then delivering the part. Here we even start to talk about connected enterprise. We work with best partners, we have partnered with a company called Palantir here and we are making some really exciting stuff. This is what lights my eyes in the morning, when I wake up and go to work. Let's move on to discuss the production performance.
As I mentioned, here we have built a pure software product that balances the production to our customers, giving them more throughput. Our customers typically run these mobile equipment in a train formation, two, three, or four equipment in a row. What this software does is that it actually makes the equipment recognize each other, understand that, yes, I'm number one, I'm number two, I'm number three in the row. They understand how the production is behaving. If there's bottleneck piling up, they know that, and they can balance the setting of the train to balance the production and give more throughput. This is fantastic stuff. You can actually see some of the results we've been able to demonstrate with our customers that are pretty significant: 80% reduction in deviation in the process and up to 10% increase in throughput.
This is some really serious money to our customers. I also want to call out the manpower challenge which is very present in the industry. In the past, when our customers didn't have this technology, the excavator operator needed to jump down from the excavator, run down the rock pile all the way to the crusher and either stop it or then change the settings from there. Actually, one of our customers broke a leg doing this a few years back. It's unsafe, it's uncomfortable when it's rain and miserable. Now with this product, the customers can do all of that from the comfort of the excavator cabin, which is really significant for them because that's the way they can lure in the manpower they need to run these operations. Of course, for me the key question is how long will these guys and girls be in the excavator cabin?
That's the question I'm thinking about. What do we do as a company to address that point? This example is also a good demonstration from a scalability standpoint because we can turn this off or on whenever we like when the customer decides to buy it. We have equipped this mobile equipment already in the factory when they leave with relevant hardware and instrumentation. When our customer decides to buy that subscription, we can turn it on, which is pretty significant. This is a demonstration of how we built in the scalability into the products and services we are doing. This example was from the mobile contractor customer point of view. I think Saso pointed out that we have actually pretty cool stuff coming out for our quarry customers as well. Perhaps we talk about that the next time.
Finally, the experience and what we like to call the digital channel to our customers and distributors. We have done a significant transformation in this space during the past couple of years where we have completely renewed the technology stack which we run on now. It's completely scalable and it's scalable and future proof. Why is this important? It's important because we want to infuse the whole customer interface with agentic technologies that can give better service to our customers faster with the lower cost footprint. Now our architecture is fully aligned with that strategy. We've done some experimentations in the past when this wasn't the case and it ended up being expensive and slow. We are future proof.
This is the window to our products and services we sell to our aggregates customers, be it predictive maintenance, be it the subscription models, or the core products which are equipment and aftermarket. Today we are doing somewhere between EUR 250 million, EUR 300 million annually through the channel, which is a significant part of the aggregates segment model, an inherently more profitable business. This is the third leg and this is where it all comes together. Before moving on to the key takeaways, I wanted to say a few words about the picture people behind this because they are truly exceptional. We look at this competence and capability area as strategic, which means that we need to own these capabilities. We need to own them to be in the driver's seat, but also to be cost efficient with the development.
During the past couple of years, we have been very consistent in building this much muscle internally. Today, we can truly say that we are in the driver's seat with all of the products, technologies, and services you've seen so few words for. In conclusion, we have very clear priorities in what we do, and we have a very clear strategy on how we capture the value and monetize them. Second, we are future priority proof with our technologies, and we have inbuilt the AI in all of the areas that we've talked about: LLMs, business automation, machine vision in the performance services, as well as the agentic technologies for the experience. They are all already there being built. It is not like we are figuring out what to do. It's there, and it will be there for the future.
Lastly, the store is open, the products are available for our customers, and this is how we drive profitable growth from our end. I hope I managed to excite you as much as I am excited about this business space. We can now continue the discussion and perhaps you take it from here.
Thanks very much, Jaakko. Let's warm up with the question from the chat. This is from Ed Hussey. Could predictive maintenance cannibalize aftermarket sales? Fewer equipment breakdowns means lower traditional aftermarket market content needed?
Definitely not. I think we are the one that needs to cannibalize, if any. It's not like we have 100% market share in the segment, so there's plenty of room to grow.
All right then, questions from the room, Christian.
Thank you. Christian from Goldman Sachs, you talked about the built-in hardware for Aggregates digitalization. In terms of the machine sales today, what proportion of customers are actually taking that up on outbound sales? If that's a low percentage, should we see a margin drag if that takes time for customers to convert?
We have been equipping the equipment for a couple of years already, so it's basically a pretty insignificant number. We are adding value to the customers that have been already using the connected devices with completely new services. I don't see a margin impact there.
Will.
Yeah, thanks for the presentation. The question, I guess, is how is your, another question on your vision for how to capture value from what you're offering. I mean, you can offer software, subscription services, a certain fee, you can achieve greater stickiness or connectivity to your customer and then get them to come back and buy off a web portal, you know. I'm just sort of thinking longer term, is this just an additional sales feature that you need to offer, that you're giving away the software to connect them to make the sale, or do you have a vision how this grows into a more valuable proposition?
Yeah, I think it's fair to say that we are in the beginning of this predictive maintenance, and over time I can envision a price tag for certain elements of it, be it on the availability side, be it somewhere else. I feel that we are at the point where we are still enriching the algorithms, and we don't want to make a bottleneck of that to us. We want the service to scale, we want the adoption rate to be high for us to continue learning, continue developing the algorithms, and perhaps over time when we can deliver even more value, there can be a separate price tag next to it. This is how we go to market now.
Just in terms of serving the market, you put up a number of EUR 250 million of sales through your web portal, and those are now, I guess, a direct sales customer from you to the customer. Have you got to invest in new distribution centers and routes to market to fulfill that demand y ou're creating?
Actually, the number is for our distributors. The number, and as you can, like, draw the conclusion from the services I demonstrated, they are directed to the end customers. This will be now the completely new area for us to grow. We have direct markets where we sell through Metso salespeople, so that's clearly an area where we can launch this. In the distributor markets, the distributors are the ones that are closing the sale with the customer. There we will deliver a certain part of this digital service to distributors. If there are requests for quotes, we will pass them on as leads to our distributors, and then the distributors are the ones that close the sale. This is, by the way, a good demonstration of the scalable platform, because the distributors are already in the same platform lead passing measurement.
And us driving the success there is now in our hands and is completely scalable.
More questions, if not at this stage. Thanks very much, Jaakko. We can continue discussions afterwards. Now it's the time for our second deep dive, which as a theme is at least as exciting as we had in Aggregates. From Minerals side, talking about improving energy efficiency in comminution, it'll be Giuseppe Campanelli.
All right, good afternoon, everyone. I guess I'm the last presenter of the day. Between you and the cocktails outside, I'll try to make it engaging and maybe a good discussion topic when we're out there. Just a few words before I get into the presentation. I thought maybe I could bring a little bit of perspective on energy efficiency in comminution. It's estimated that roughly 5% of the total world energy is consumed by the comminution process in the mining industry. You can only imagine how important a topic it is. It's important for all of us, of course, every day, and you can imagine how important it is for our customers every day. Above and beyond just the energy consumption and what it means to their cost base, it can have also for our customers a much bigger implication.
Once a year, the Prospectors and Developers Association holds a conference in Toronto. If any of you have been there or not been there, I welcome you to participate. It's a very exciting event that happens. At that event you can see a tremendous amount of customers that want to develop a project from a deposit. It's very interesting because it's global, they're from all over the world. You notice some themes as you walk through the corridors at that event and realize that all these guys have fantastic deposits, great deposits, but in very difficult locations, making it extremely challenging for them to get their projects up and running. One of the elements that makes it so difficult is, of course, access to energy. In these remote locations, it's difficult for them or even impossible for them to ever be connected to a grid.
Therefore, for these guys, for these projects, energy efficiency can be the difference between whether you actually have a mine or you don't have a mine. If we think of a mine, say in the Arctic, in northern—I’m from Canada and I think of these projects in northern Canada, the Arctic—they need to barge diesel fuel up north through a transport season which is roughly one or two months long. Now they need to transport all the diesel that they need to consume in one year over this period of time and then store it there. Whether you're going to have three, four, or five generators to operate your mine might make the difference as to whether you even have a mine. It's not true anymore only for remote operating mines. I live in Montreal, in Quebec, where 95% of the power is hydroelectric.
Today there are more projects than available electricity. Even if you can connect to the grid, you're not necessarily going to have access to the grid. The right to have access to the grid is going to be whether or not you can demonstrate that you have an energy efficient project. You can tell that for these projects it's a lot more than just energy saving. For some of them it's whether I'm going to have a project or not. Let's get into a little more about the actual energy consumption of a combination circuit. Thought I'd give a little perspective. What does it mean for a customer to save energy? Just a quick example, if we were to take a 100,000 ton per day processing plant, why did we choose 100,000 ton per day? We mentioned before, our largest consumer is copper.
Considering today's grades, roughly 100,000 ton per day is what you need to have as throughput to make that processing plant economically viable. Very common size plant for today's grades. If we were to take a 100,000 ton per day copper or plant, let's say running, doesn't need to be copper, 5% reduction in total comminution energy means roughly EUR 3 million- EUR 5 million a year of savings. When we think of some of the technologies, we can actually achieve a lot more than 5% energy savings. It really means so much for these guys. If we take just a deeper dive in the flowsheet and look at it from three different stages, we have crushing stage, grinding stage, and then tertiary regrind stage. The vast majority of the energy consumed is in the grinding stage. The red line will show you traditional grinding circuit separated in two different grinding steps.
The first step, primary grinding, traditional equipment, SAG milling or AG milling. In the secondary grinding stage, horizontal ball mills. When we think of energy efficient equipment we mentioned before, in the primary stage, HPGR and roll crushing has been getting a lot of the limelight because as you can see, primary grinding is where the most energy consumption occurs. In HPGR technology, Metso has fantastic HPGR technology. We have the largest operating HPGR in the world. We have introduced HPGR optimization technology which today all HPGRs are using, or most anyway, which is the flange technology. When we consider 2025 projects that hit the go button that use HPGRs, Metso has won the vast majority of them. Including today, we've announced in a press release that Metso has won a project in Brazil which includes HPGR and stirred milling. Very proud of that project and our Brazilian team.
That's primary grinding. You can see the green line is the energy efficiency savings if you were to go from SAG milling to HPGR technology. Quite often, we neglect the energy consumption in the secondary grinding, which is almost equally as important as the primary grinding. The reason for that is the only available technology was horizontal milling.
Vertical Milling, stirred milling has always been an option. In secondary grinding, however, it has been volume limited. In order to meet the volume of the horizontal grinding mills, you needed to have too many of these Vertimills. Vertimill technology is quickly getting better, is quickly getting bigger, and is allowing us to use Vertimill technology in more mainstream, larger flow circuits. Larger circuits. Combined HPGR and secondary grinding, Vertimill third milling, we can have massive energy consumption drops. In the tertiary regrind, tertiary regrinding, we have again our vertical stirred mill technology and also our HIGm ill.
Which is technology from Swiss Tower Mills that Metso has acquired this year. So combined Vertimill and HIGmill technology. Metso is by far the largest supplier and industry leader in stirred mill technology. Why isn't every circuit designed with an HPGR and vertical mills? Unfortunately, that's not the way life works. Ores are very different, vastly different from one place to another, and it all depends on the characterization. Sometimes it works, sometimes it doesn't. As Piia mentioned before, just as important is to have versatility in our ability to design flow sheets that match the ore that's being fed to the plant. That's where Metso has in totality a very versatile portfolio. If we can fit an HPGR and vertical milling, then of course that would be the best option because operating costs will be the lowest. For many reasons, as Piia mentioned, sometimes it just doesn't work.
Could it be real estate? Sometimes the ore characterization just doesn't work for HPGR. Then we need to revert to traditional technology. A few examples of the versatility of our portfolio, and I thought maybe we can demonstrate by real life scale production sites. On the far my right, your left, HPGR to ball mill in copper ore. Here's where we have our HRC 3000, largest roll crusher in the world. SAG or AG mill straight into Vertimill. This was a gold operation. 6 m SAG mill to VTM 4500. We also have, as in the project like I mentioned was sold this morning, and this one here, roll crushing right into Vertimill technology. Very efficient circuit, and also some versatility in the regrind where we can mix both Vertimill and HIGmill.
The reason for that is that the Vertimill is usually used for the larger fraction, whereas the HIGmill is usually used for the smaller fraction. We have a full range of comminution solutions. If we look on the right here, we can see that our flow sheet covers very well all the different size combination sizes, and in some instances with some overlap. Actually, if we look at the finer grinding, quite a bit of overlap. This allows a lot of versatility when designing flow sheets. You can see in this vertical milling, which is the second to the top, and then the HIGmilling, which is the top, we truly own a vast majority of the market. When you look at the total install base of our vertical milling technology, which would be HIGmill and Vertimills, we have 920, nearly 1000 units installed globally.
Just to bring a little perspective to what that means, almost a thousand units combined, roughly 800 MW of saved installed power. From an annual consumption perspective, for the number 2.7 million MWh saved per year, just in layman's terms, roughly 25% of all the homes in Finland could be powered by that much energy saved every year.
M etso has really reduced the amount of energy consumption globally through its comminution equipment. That was all about developing a new flow sheet, developing a new mine. When you need to choose equipment, how do we select the most energy efficient comminution circuit? The fact of the matter is that the vast majority of the plants are built with the traditional technology that I showed before. Mining equipment lasts for a very, very long time and in the past that was the only technology that was available. We need to also support those customers that do have the traditional flow sheet. I'm not going to get into all the details here because I think Heikki did a fantastic job at describing all the things that we can do in the aftermarket side.
Here Metso does have a wide variety of upgrades and services that we offer to our customers to help them improve on an everyday basis. Access to, you know, top comminution experts that help them look at their overall process and try to improve them on a daily basis. Great products like process solutions that help and tools like the Courier like Heikki showed. Of course, we have our digital solutions collecting data and helping our customers improve on a regular basis. Very quickly here, summarizing, why would our customer choose Metso? I believe we do have the best technology as it comes to unit technologies. The versatility in our portfolio allows our customer to really build these most efficient flow sheets. In addition to the equipment I described before to improve energy efficiency, we're also doing a lot of our research and development on early waste rejection.
This is early on into the mine where we try to get the gangue out earlier. Also in the coarse particle flotation, I know Piia mentioned it fairly quickly, but coarse particle flotation is going to allow a tremendous amount of energy reduction in the grinding stage. We're doing a lot of work there to help our customers with that energy efficient flow sheet. That's equipment that we can add to existing flow sheets. Our track record in innovating, we continuously develop equipment, we have a really strong record in developing new equipment. The fact that the vast majority of the equipment out there is Metso installed base. Yeah, that's it.
Thank you.
Thanks so much Giuseppe for the insight and a few questions for you. We're starting from the chat. Chitrita Sinha asks about potential cannibalization if HPGRs are replacing traditional milling equipment.
I don't think there'll be any cannibalization because we're happy to supply HPGRs, and HPGRs are also a strong aftermarket equipment. I mean, let's be honest, if there's a customer that's running a mill with a SAG mill, they're not going to remove the SAG mill to put an HPGR. That's not going to happen in new flow sheets. We're happy to supply HPGR, which is a very profitable product and technology. Technology continues to develop.
Can you maybe discuss a little bit why does it not happen that HPGR would replace SAG mill or traditional mill out there?
It can. Oh, you mean on an existing mine?
Yeah, existing.
It's just too capital intensive. It will never happen. It's way too capital intensive and maybe they don't have, and most likely they don't have the real estate, and the return on investment wouldn't be there from how big of a project that would be.
All right, questions from the room.
Thank you very much. You've got the technology, the value proposition is clear. Just can you scope for us when you look around the world in the different sort of characterizations of mines and materials that you can apply the technology to? How big is this market in terms of number of units a year or total value?
Yeah, that's a good question. I'm not sure I know. Piia is all the way in the back there. She probably knows that number a little more than I do. I can just tell you that whenever we work with our customers quite early on in their process, when they're exploring, when they're developing the flow sheet for certain minerals, our first option is always to try to fit an HPGR for them because again from the energy efficiency perspective. Then come the trade off studies.
Do they have the real estate, the capital intensity of such a project, of such equipment? The trade off studies will tell them whether or not that technology can work. Still, we're selling SAG mills, there's a reason why we're doing that. Or AG milling maybe. Piia, you know the size of the market roughly.
Yeah, maybe I just comment on that one. Clearly, the major part of the market today is about the traditional grinding mills, so horizontal grinding mills. We do see the stirred mills market growing, but it's still much below half of the market at the moment. When we look at the growth next 10 years, for sure the role of stirred milling will be bigger.
Tom?
Yes, this is Tom from DNB Carnegie.
Perhaps just a bit of clarity on the capital cost for the customer with HPGR instead of the grinding kind of flow sheet.
The capital costs, you need to really factor in not just the cost of the equipment. You really need to look at the overall real estate. HPGR requires a lot of real estate and how you get the ore in and out relative to the SAG mill. Also, from a maintenance perspective, these HPGRs use very big heavy rolls and you need to either move them to a service center such as Metso's, but you normally don't have most mines. You have to build the infrastructure to be able to pick those up and move them and bring them somewhere, or you build your own capabilities. All of that is a massive cost. Whereas a SAG mill, while the maintenance costs are, of course, you have mill linings that you need to replace, you don't have the capital intensity to be able to need to maintain a SAG mill.
Again, trade off, it's very, very different depending on the location, the country, your construction costs, whether you have access to real estate or not. If you think of a mine that's being built 4,000 m above sea level, real estate is a big deal.
Basically, the CapEx cost is higher and y ou have more maintenance costs, but you h ave big energy savings. That's kind of the calculation?
You have more energy savings for sure. The capital cost is normally higher, but the maintenance costs are not necessarily higher. That's very relative to where you are and the ore type and so forth. SAG mills also have high maintenance cost. They consume a lot of energy, they consume grinding media. I wish I could stand here and tell you what the answer is. There's a reason why our customers hire engineering companies to do this type of trade-off studies and analysis for them. It's very, very different per mine by different ore type.
Okay, thank you.
I'd just like to follow up on the competitive landscape in relation to what we're discussing here. How would you characterize Metso's leadership position and ability to offer a complete solution compared to what else is actually out there for customers to consider?
I think we definitely are number one to be able to offer the full scope. I think we definitely have the best technology in the stirred milling and I don't think anyone comes close in all the different size fractions. From the biggest to the smallest size fraction, that's for stirred milling. In the HPGR, I think we have the best technology as well and we've proven that by increasing our sales this year and we're growing our install base. I believe we're number one position for both those technologies.
More questions, if not directly to this topic. Thank you, Giuseppe. We still have, before we need to close the whole event, some time to take questions that you might have in mind for basically all the presenters. I would ask Sami and Pasi maybe to join me on the stage, and if the presenters can be available there to answer certain dedicated questions. Maybe I'll scroll back to the beginning, and there were a few questions not answered yet about the kind of group presentations. I'll take Chitrita Sinha's question that when one of the strategic pillars is the growth of aftermarket, how do you anticipate the counteract with the potential mix headwind we expect to see if equipment business grows faster than aftermarket in the cycle.
Yes, this is very well calculated in our analysis for them for the strategy period. Typically if we take like a full delivery of gold plant, for example, large gold plant, that is something like EUR 150 million, it's a large project for us in the capital equipment point of view. True aftermarket margins are better than the capital equipment margins. Although capital equipment, we have also very good clear double digit numbers there as well. The revenue recognition of the capital project order is booked for one quarter, but then the revenue recognition happens for the next five, sometimes six or seven quarters going forward.
Meanwhile, as we have the aftermarket focus, it means that the aftermarket is going to be growing basically quarter after quarter, and that is then offsetting this potential risk in the margin. We don't see that happening because of this fact.
Klas Bergelind asks that. He first states that you are saying that you have involved 150 Metso employees in the strategy work and there's a lot of engagement. Will you change incentives in the organization to support targets, especially given that targets are now three years out?
Yes.
Okay. On the M&A strategy, you are saying that 1% or 2% of the sales growth would come from acquired growth and net debt to EBITDA target, that said before, below 1.5 x. Does that mean that you are not looking at any larger deals?
We are definitely open for larger deals. I think the strategy work has been more focused on having those so-called bolt-ons. They can be significant in size as well. It's not saying that we wouldn't be at all interested to look at the interesting alternatives. I think we have, like McCloskey is a larger deal that we did five, six years ago, and it's a great success. These type of targets are definitely also in our funnel.
Maybe Pasi, another one from Klas. You know, we know the balance sheet target margin set to improve, and there's more to do on working capital at the same time Metso wants to grow. Any more clarity you can give about kind of cash flow generation going forward? Maybe, you know, working capital to sales or CapEx to sales kind of ratios.
Yeah, thank you Klas for that question. I mean cash flow and working capital will be high on our agenda. We haven't set the specific targets on those. Maybe the performance first half of this year is an example. We've been able to release working capital, we've been able to create healthy cash flow, and I think that's a sign of any quality company, and via that we are able to make sure that we can maintain our leverage target or live within it and then have room to grow. I had some historical numbers in my presentation, so maybe that serves a little bit as a guidance regarding the overall capital allocation. More than 50% has gone to dividends, then 1/3 roughly to CapEx type investments, and then the rest in M&A. I think this is a good proxy when you look slightly longer period also going forward. In specific sort of periods it may of course vary.
Another one that needs to be asked from CFO, and this is from Tore Fangmann. Could you put more numbers on the actual expected savings from various self help measures?
I mean what we have done today is that we have provided insights of the areas where we are working and the impact on the margin growth trajectory or waterfall. I think the area where we were more specific is the SG&A area. Other than that unfortunately we are not putting specific numbers or specific targets out there, but there is work ongoing with all the areas that we have mentioned today and the potential is there.
Maybe I can continue that. We have four years we have been running now what we call APP, it's the annual productivity plan, and that is for the whole organization. The whole organization knows about this, and the target for that is technically to offset the salary increases that happen every year, to find productivity improvement from the organization. This is now something, this is the platform that we already have in place, and the idea for now for this strategy period is to use this platform to identify and execute those self help initiatives also from the organization.
To quantify the impact of the APP , our annual salary bill is roughly EUR 1 billion. We operate across the globe with different inflation levels, but you can calculate with a certain inflation % what has been in the past periods, the target which we have reached on different annual APPs.
Thank you, Tom.
Again, it's Tom. I would like to discuss you k now your view on the market a b it more, and you mentioned that you e xpect the market bounce.
Let's start with Aggregates. You show the picture where utilization ratios f or customers are down 20%, and you s till talk about the market bounce. I guess this needs to be a bit of clarification.
Markku.
Yeah, I guess the point of the 20% reduction on the customer machine utilization is actually it proves the fact that customers are not using the machines with high intensity right now. It means that our customers' business is lower than it was two years ago. We don't expect that to continue forever. Surely at some point of time their machine use rates will go up. That means immediately higher aftermarket sales and then the machines start to wear down and they need to be replaced as well. It means more replacement of machines. Traditionally, our business has been cyclical on the equipment side and it is right now a low cycle. Surely there is some level of bounce back.
This means that the optimism is kind of based on, let's say, Germany's infrastructure bill and, you know, something similar in t he U.S. and that will filter through. That is kind of the reason to the optimism.
Yes.
That's where we base our optimism for the overall market growth. We have already seen the impact of those things, not basically into Germany as such, because these are politics decisions, but they play a role. They create the confidence for the surrounding markets like this in case the Europe. After that announcement from Germany, there was some more unified leadership shown from the European leaders as well. That might be the confidence factor. After those events, the Europe market for the capital equipment, which was completely almost dead for two years, started to pick up and normalize after those ones. Those are the elements that are needed, and the whole world is having all of those elements. Because not only is the Aggregates equipment business cyclical, it's also very regional. The drivers are always regional. Like China has own drivers and then Africa has own drivers and so forth.
Maybe just to give a little bit of background still on that. For example, in Scandinavia, Nordic countries in 2022, when the war started in Ukraine, our equipment business went down by 80%. That's not normal level. At some point of time it will bounce back.
Exactly.
Is there an element of replacement age? I don't know how many years these machines last. I mean that.
Yeah, of course that varies heavily depending on how well they are maintained and how many hours there have been clocked in. Definitely, when there has been this kind of situation that in Nordic countries new equipment sales drop by 80%, it doesn't mean that there would be no aggregate production happening in these countries. They are done with the old equipment. Of course, it increases the need at some point to make the replacement investment for the capital equipment. That's what we see as a bounce back.
Okay, so then moving over to the M inerals side, the second same kind of discussion. There are many special reasons. If we start with Argentina, you know, where you have the rigid build there, the deadline to start is July next year.
It can be postponed one year. When would you know you order t he equipment for if you decide to g o ahead, according to the ready bill by July next year?
Yeah, it's not really if we decide to go ahead, it's our customers who need to make a decision to go ahead. These projects are serious projects. They have organization, they have appointed CEOs for the new companies that have been established in Argentina. Everything is there predicting that 2026 things start to move when it comes to the equipment orders as well. We also need to think very carefully how the world will look after October. I think now it's the midterm elections in Argentina and it will pave a little bit of road of the confidence. All in all, those projects look to be very serious and customers are developing them.
Your type of equipment is kind of among the first that you would order then. Is that right? It takes many years to build a mine.
Yeah, it takes several years. If you think that these deposits are located in the mountains of the Andes, 3,400 m, 4,000 m above sea level, there is currently no roads, there is currently no infrastructure at all. I think the first orders will come from the Aggregates side of Metso, that somebody needs to build first infrastructure to get something there and then starts the build of the actual mining site. Our Minerals processing equipment is the heart and soul of the mining site. Without those you are not able to produce anything. Are they going to be the first ones that start to get the orders? No. On the other hand, they have quite a long lead time. That's also something that the customers in question need to keep in mind, that at which point they start to release these orders.
Is the optimism mainly in gold and copper? Do you want to highlight s ome new things, some areas? What countries are most promising at the moment?
I think you mentioned already the Argentina, but then we have the traditional countries where we are already today. [bik] Chile is going to be growing us thanks to President Trump. There are 20 mining sites that are declared critical for the country. They are promised fast tracking in all kinds of permitting and so on. I don't think that the geographies as such are so important. I think the commodity demand is driving more at the moment and commodity demand in the future. That's where the gold right now, as Piia was explaining, they move really fast through our funnel. Customers want to get as soon as possible the benefit of close to [EUR 4,000] spot price. Copper is seen as the metal that will be having not enough production in the future.
Expectation most likely is that the price levels will be increasing even more and that will be very beneficial. The race for the copper is ongoing in that sense. Iron ore, which is very important for us, is 15%, 16% of our business, heavily driven by the steel demand. That is a little bit of. We don't see that that's going to be booming like it had in some times in the past decade, but there is going to be a constant demand. That's going to be a good generation of good business for us, especially from the aftermarket point of view where we are already present. From the market point of view, I think the other battery metals than copper. Copper is one of the battery metals, but it has so many other drivers as well.
Right now we don't see in the close term that there is a super need of increasing the capacity. Lithium, nickel, both of them have quite a low price point at the moment and there is capacity in the world, even more coming online. These two, we don't expect to see massive amount of new orders in the 2026.
Thank you. Antti Kansanen at SEB. I have a question on the Minerals 20% margin target, which obviously is not a new target, and kind of the road there, the growth actions, and self help. I mean, 2028 is not far away given your lead times. A lot of the actions have to be done already in 2027 for them to be visible.
I wanted to better understand on t he timing of it, which of the things that we've been discussing today are something that you're actually quite far ahead already, that the building blocks have been placed already during the previous strategy period, and which are the ones that have the biggest urgency now to get done in the next one to two years, and a little bit of a cadence how we are going to see the margin improvement filtering through.
Obviously, one big driver is the aftermarket, and there the lead times are shorter. Orders in 2027 and still at the beginning of 2028 will yield the results for the 2028 numbers, and then the capital equipment side. Rightly said, Antti, that we have already done quite a lot of things, and for example, the deliveries that are currently in the backlog to be delivered in 2026, for example. We know that they are de-risked with how Metso, when Metso Outotec was created, started to look for the capital projects as well. We have all the self-help opportunities that, as you saw, and then if you looked, what was the size of that bar. That was quick, and they don't take a decade to run them through because we know what they are and how to get the benefit out of those.
In that sense, it's not maybe a new target, it's an official target now. That means that we have also done all the work how to get there to bridge point of view just.
To complement that, something that has been done during the previous strategy period is to expand, for example, the service network. There are quite a few initiatives, and some of them are coming to an end now, providing us an opportunity to continue to leverage on those. Digitalization is the same as Piia and Heikki discussed. We see a clear step change in that, and it will yield opportunities now in the early part of the coming strategy period.
Historically, in previous years we've been talking more about modularization and less customization, and maybe also in the supply chain. Is it now more about being more commercial? I mean, you're more selective on things that you want to push and maybe less end-to-end thinking and more kind of product leadership thinking. Or am I thinking it wrong?
Maybe not so black and white. There's much more of that commercial side now and focused roads that we are going to be walking now with the certain investments and making the results from there. We are not giving away anything that was still in undone category from the supply chain point of view or productization of the standardization of the product. We have so good examples from the Aggregates equipment side that what is the power of that. That work needs to be finished in the Minerals equipment side as well.
Hi, Christian Hinderaker from Goldman again. Can I ask a question about pumps? Obviously an area where you're third or fourth currently. Could you just flesh out a little bit more what it is you're seeking to do to expand that share position? Is it about price, is it about proposition, is it about go to market? I'll start there.
Thank you, Saso.
Thank you. If you're wondering pumps in the Consumables, BA that's why I took the m icrophone.
Maybe to state few facts first. First, we already have a very serious wide range of pumps which are directly focused on the grinding circuit, which is also where the biggest impact for the customers is when we speak about pumps. What we're going to do more or what we're going to do different, we have been now investing close to five years, quite a lot of resources into bringing that portfolio, renewing it, and bringing it to scale, including the footprint, which is already built. In few of the slides, you have read about regional presence and regional support. Actually, in all main minerals relevant regions, we already have the local footprint, which does provide the product next door to the customer.
The next step is to really engage into the performance contracts and to really get the customer through our service network to really exchange other suppliers' pumps on the basis of value proposition. I think we have everything we need to do that.
If I summarize that now, the pumps, it's been discussed with you as well in the past. What is different now is a fully holistic view and understanding that what has not been successful in the past and what is not now going to be the case, Saso is it's under Saso's business area. One of the findings, for example, was that yes, we have the pumps, but we didn't have the so-called full portfolio, so we have now filled that one so that we are really capable of serving the customers with the needs, not only the pump and the spare part needed for there, and now it's in that famous middle basket. Meaning that the mindset is really to go after that, the mandate is to go after that.
Saso has been acting today really calmly, but instead, inside the company, everybody knows that pumps is the way we go now, and we will go and win this race. In that sense, that's the difference for the past.
Thank you. Can I ask maybe a follow-up? On the working capital side, as we think about that ratio where maybe we're not going to get a target level, how do we think about the numbers for Aggregates versus Minerals? If we're forecasting growth, I'm just curious what we should expect, how we frame our modeling. In essence, anything you can help with would be great. Thanks.
Yeah. I think we need to start from the fact that the business models are very different. In Aggregates we have in-house manufacturing factories, et c., and all the working capital around that. Whereas in Minerals capital we have very limited in-house activity. We work with our supply chain, we work also with our customers, with prepayments, prepayments to suppliers, and so forth. While we target to grow in both areas, of course the absolute numbers, if and when we are able to grow, that will tie more working capital, but then the relative performance should go down. I don't think I can give you an exact sort of split how it will happen between the segments, but it's a focus area for both and we are driving efficiency improvements there.
Thank you very much. Two questions on profitability targets if I may. First one on the Aggregates 17% margin, you've been there before in early 2010s during the period as you described of a very favorable price. Do you need the same favorable pricing again, or actually you will need just a small improvement in pricing and other self help measures will contribute as well?
No, I mean we don't need the same pricing environment to reach our target. Of course, if we get there it helps a lot. We are confident that with the market growth, where pricing is a small element, then our own actions and self help, we can drive Aggregates to 17% and beyond.
Excellent. A broader question on the 18% target for the group: how do you see the progress towards this target through the coming years? Is it more or less continuous, even steps, as they have obviously a lot of measures in action, or not?
Yeah, that's a tricky one because we don't know exactly what will happen during the coming years. I think optimal would be, and we are driving towards step-by-step improvement in the margin, but that's of course conditional on the marketplace, what's happening there. I think the history also that I have as part of my presentation shows that during the time we've been able to grow the company, we have been also able to more significantly improve the margins. Those go hand by hand, and optimal would be a more stable journey. Let's see how the journey from here to 2028 and towards 18% will be excellent.
Thank you very much.
Could I just ask you, in Q2 we had this extra cost for the ERP implementation. Could you just update us on, you know, whether this is all water under the bridge and what potential benefits y ou might have from this investment.
Yeah, first of all, I mean ERP costs, indeed we had second quarter some EUR 10 million of extra costs from there. They are not repeating. We have moved forward with the implementation as such. There is one more phase to go. We have roughly 20% of our business that will go live with the new ERP now during the fourth quarter, and then a couple of South American countries very early next year. All good with that, not foreseeing extra costs. I think it's a significant part, and it was Heikki talking about it. Significant part of our self-help opportunity to streamline the processes. Just to remind us that this is the last material step from the merger and synergies, replacing two aging legacy systems with one modern platform.
All the opportunities that it brings internally has been, of course, a lot of effort to drive this forward, and many people are sort of waiting that we get the implementation done. Will take a few more months from my point of view, and from our point of view, then only the real work starts. This is an investment for the coming decade at minimum and will help us to drive process efficiencies, for example in finance, but then also in many other areas. Will help us to use data more efficiently, deploy AI robotic solutions to drive the automation, et cetera. It's a significant opportunity for us, and it fits well with our also 2028 horizon. During that horizon, we will see benefits realizing from the investment.
Big portion of the work when you are implementing the new ERP is that you really go through your data. You need to have cleansed data that goes into the new system. What you heard from Jaakko today and also from the Minerals when it comes to the digital capabilities is that clean data that we have now this year because of the implementation is going to be the benefit for us going forward. We have a very good foundation to build all kinds of AI powered solutions to our own needs and what the customer needs.
In addition to the extra [EUR 10 million], would you estimate how much it has cost over the past year and a half in terms of P&L impact?
Yeah, I mean we are not disclosing the number as such, but what I can say is that it has been a material effort, direct costs big. Part of the extra cost we had in the second quarter was external supporting us to get going with the main phase. It has not been only past year or so. It has been a multiple year journey. First, you know, design, build and then go forward and part of the cost has also been capitalized. Designing, building part we are capitalizing and the other parts we are putting through P&L.
You are right that, you know, going from 2025 to 2026 we will see a bit of P&L relief because those costs that we have had this year will not repeat next year.
I'll take my one from the chat because this is about smelting. One smelting question is more than appropriate. If the U.S. invests in more copper mines, who will smelt this copper? They hardly ship it to China to be smelted.
This is very, very good and it's very interesting, these dynamics with the smelting business. Many of the smelting operations today are on red numbers or bleeding. From our perspective, the smelting is a good business for Metso. There are several customers actually who are in a discussion with us at the moment to build the smelting capacity. They come from interesting countries, if I put it this way. When asked that, you know, where are you going to get the copper concentrate, they are highlighting the fact that they are in a logistic perfect place for several of the copper mines to be the one who actually smelts. This is an interesting business model that is building at the moment. Very much specific question about the U.S., excellent question.
I don't think that they will ship it to China, but we will see how the whole smelting industry will be developing.
Now another quick one from Ed Hussey. You talked about your strengths being having a broad product offering that allows you to optimize customer flow sheets. Is this more relevant in greenfield cases, or has there been kind of success in capturing also kind of brownfield share when it comes to flowsheet optimization?
I think there is a lot of benefits coming from the fact that, as I said, where Epiroc stops, we start, and we have the full flow sheet with different options even inside. That gives, first of all, us the competitive advantage as a company because we do know how the process flows. It's a competitive advantage for the aftermarket support for optimizing, and then a specific part of the flow sheet when that's in the question of either upgrading or building a second line, for example. This full portfolio gives us a lot of benefits from the perspective of the expertise.
Good stuff. There were questions. William Mackie.
Thank you. I'll have another go at Aggregates if I may. You know, if I go back to 2023, you know, the volume was at record levels, the distributors were stocking alongside the price comment earlier and you just made your 17%. I think we've heard over the last few quarters that you've brought back capacity into Finland in production. We've had an on-off discussion about distributor stock levels, and you've shown us today that utilization rates on the machines are still 20% off, perhaps where they could be. How would you characterize the pace or cadence of the recovery? Where are you, where are you investing? When we come to the markets that you're serving, where are they versus the peak level? Are we down 20%, 30%? We heard a brief comment there about 80 %.
Again, Markku can continue, but 2023 and now I need to think about the U.S. market because the regionalization means that you need a little bit focus on one market only. The U.S. market was hot, as you said, so there was good sales to the end customers. The distributors were also then ordering replenishment machines. 2024 came as a little bit surprise that it slowed. The end customers didn't buy the machines anymore. They did rent them for a long time. That year created the situation that the distributor stocks, Metso distributors and most likely the other brands available as well, they went up and they stayed up throughout the whole year of 2024 because of very low sales to the end customers. The normalization started in U.S. already in December, after the presidential election was clear.
We started to see that the distribution stock levels gradually started to decline, so they were again able to sell to the end customer. I would call it more like a normalization of the market as such in U.S. and what is then the expectation for the future? We stay optimistic that, you know, this 4% global growth will be happening. Is it coming from the U.S., is it coming from Europe? This is a little bit that it's a benefit that Metso is actually truly global in the aggregate. As Markku and Saso were showing the chart that where are we in a good position already? These regional cycles, they happen very quickly to both directions. They can go down in 1, 2 months and then they can come back after a few months of lowdown very quickly as well.
Very well said. Maybe a couple of things to add: if we look at our quarry market, the quarry market is not actually at a low point at this point of time, though the contractor market is at a low point, and we can see that also from our kind of major competitors that are strong in the mobile equipment. Their sales tend to be relatively low as well. At current levels, the competitors that would be big in the quarry side of the market, their sales are maybe dropping not quite as much as the contractor side of the business. We have also been studying our competitors and their backyards, and their backyards were equally full of machines as our backyards were some time ago. Everybody's backyards tend to be a little bit lower right now than they were a few months ago.
Thanks very much. We are close to 6:15 P.M. when it's time to wrap up our webcast. Before we go, maybe Sami, a couple of closing remarks.
Thank you very much. Thank you very much for the relevant questions. It's very nice to work with the investors who actually understand our business and ask this type of questions. It gives pleasure. Also, on this side of the table, we have today gone through and opened up what our we go beyond strategy has inside. We have gone through what it means for the Aggregates, what it means for the Minerals. We have discussed about our financial targets and then even a couple of deep dive for interesting areas where we truly have in the future competitive advantage. With that, remembering that our focus areas are to grow both top line and especially consistent, continue the journey in the bottom line to be excellent with our customers. All is boiling down for Metso to be number one out there.
Metso is continuing to be the number one investment also for the shareholders.
All right, thank you, Sami. This concludes our webcast. Thanks so much for participating online. Thanks for asking questions. Hope you enjoyed and we see you next time.
Thank you.