Earnings Call: Q2 2021

Aug 4, 2021

Good afternoon. Good morning, ladies and gentlemen. This is Juha from Metsautotecayar, and I want to welcome you all to this audio cast and conference call where we discuss our second quarter and half year results for 2021 that we published earlier today. Results will be presented by our President and CEO, Pekka Baurum and CFO, Eeva Sipila. And after the presentation, we'll have time for Q and A as always. We'll try to limit the length of this call into 60 minutes. So please be brief with your questions when you ask them. And as you can see from our presentation, in the first Pages, we have the usual forward looking statements and then some information about the financial data we have put out in terms of both IFRS based numbers and illustrative financial information. Without further ado, we'll kick off the presentation. I'll be handing over to President and CEO, Pekka Barumu. Please go ahead. Thank you, Juha, and thanks for joining this call. And we'll go straight into quarter 2. We saw, as we said in our outlook, a strong market activity during the Q2, and I'm sure you have noticed that in our order announcements that we have made several of them during the quarter. And order intake was really strong in all of our 3 segments. Then when we look at the top lines of segments, aggregates, we saw really Strong order intake, sales and profitability as well. In fact, we are on record level now in aggregates altogether. It's, of course, a good result, but I have to say that it was something that we were expecting to happen now in this kind of market environment. On slight disappointment side is the low sales of Minerals. Good order intake there as well, but low sales, primarily because we are now delivering low order intakes that we did book end of last And we've been saying all the time that one should not expect our top line start to grow before second half of the year, and that is still the outlook on that side. Metals turnaround program This progressing and we were able to show black numbers now. Now those small one, but more important is that we are moving ahead with that plan. And integration as such, we are ahead of the original plan and well on to speed and plan to achieve EUR 120,000,000 cost synergies EUR 120,000,000 cost synergies by the end of the year. And clearly, sustainability is gaining importance, And this is visible in many areas, obviously, in our own operations, but we are seeing it already in our order intake and the type of orders that we are receiving from our customers. Then on the figures, orders received grew by 43%, so good strong performance as we were expecting 2nd quarter to be very positive and favorable. Sales flat, just like we had been saying that we shouldn't expect Top line start to grow before second half of the year. Adjusted EBITDA, slightly below last year's €135,000,000 to €139,000,000 last here. This is primarily because of the sales low sales during the quarter. Operating profit, €97,000,000 last year, €89,000,000 We are seeing now smaller number in our adjustments as we have progressed already quite far in our integration and synergy work. So that is then increasingly that line. Cash flow continues to be on strong side. However, we will see that one going down as we move on and as the top line starts to grow and we start to Thai capital working capital into our supply chain primarily. And in the integration Site cost synergies, we track at €105,000,000 run rate and well on track to achieve €120,000,000 by the end of the year. COVID is still with us, as we all know, and by no means It's not over yet. We see different variants, as we all read about, and 3rd waves and 4th waves coming. We are seeing some domestic traveling recovering. The text says here Australia, but From Australia is that parts of the country is in complete lockdown, so because of the recent cases there. So Situation is still changing. This is affecting primarily our service activity and our Minerals business. Our own operation, as such, have been running well, well with the measures that we have in place and don't we haven't had any major outbreaks of COVID in any of our locations. Then going into segments. Aggregates, really strong order Order performance, EUR 363,000,000 that's nearly 70%, more than a year ago. And it is the infrastructure packages that is encouraging the industry to invest to stand and have the production machinery in good shape for the upcoming projects. Sales, €320,000,000 that's up nearly 30%. And obviously, that is Basically, orders that we did book in the Q4 of last year and beginning of Q1 of this year, and that was the basis for higher sales right now. Adjusted EBITDA, €47,000,000 now. Last year, €34,000,000 record margin level and to great extent. Thanks to volume growth, but also good self help that we have done, implemented the improvement programs and measures during the past 12, 15 months in our aggregates business. Then Minerals order performance was up from last year, 6 45,000,000 last year and now 755,000,000 good performance in that regard. And if you remember reading from our order announcements, some of our orders, They are joint orders for Metals and Minerals, and that type of orders really contributed nicely into Minerals order intake. But good flow of smaller orders, medium sized orders, which is always healthy in the business. And of course, the order line growing so much faster than the sales line, it means that our sales will start to grow as well as we move on. We do have negative currency impact on these top line numbers, but that doesn't really explain The profitability drop as such so much because we do have quite a lot of natural hedging in our system. Sales, 578 versus 6 50 last year, and that is just the timing of deliveries and the low orders end of last year. And of course, yes, COVID is affecting our service sales still and we are somewhat behind. And service naturally has bigger lower service sales has naturally a bigger impact on profitability. Adjusted EBITDA down from €110,000,000 to €82,000,000 margin of 14.2 And we have some internal issues relating to our integration and merging of our warehouses and things like that in addition to the issues with global logistics that we all suffer from. In the metal side, orders really grew by from 87,000,000 to 2 and 43, so 3 times more orders roughly now than a year ago. And market activity really is improving. And we saw several orders, medium sized orders in from the pelletizing plants, and that is very positive development overall. Sales, 112, flat compared to year ago. And there as well, timing of deliveries, the big orders that we and large order intake end of last year, we'll only start to realize in the second half and of this year and beginning of next year. Adjusted EBITDA, slightly on Plaque side, euros 2,000,000 important is that turnaround program is going well. And the orders that we booked during the quarter and of course, the major order that we booked after the quarter is contributing really nicely to the possibilities to have a nice turnaround for metals business. Eeva, please. All right. Good morning, good afternoon, on my behalf to everyone as well. 1 year since the closing of the Mets So the tech transaction, our financials are getting easier to read. Similar to Q1, the actual Q2 figures are straightforward, as is any sequential comparison or comparison to year end in the case of, for example, balance sheet numbers. However, please do remember that on the comparison to 20 20 first half or second quarter under IFRS, That year over year comparison is only to Metso Minerals numbers. So for operationally better comparison, I recommend using the illustrative combined figures when it comes to Q2 2020 or first half twenty twenty. Earlier, words of caution still that they do combine the history of 2 separate companies. So they are, as their name says, illustrative. But moving to this sort of income statement. So Metsautotec sales in the second quarter were just over €1,000,000,000 so flat year over year. Sales are, however, over 9% up sequentially. I do appreciate that even if we have highlighted that the backlog composition, especially in Minerals and Metals segments, after several week order especially in Minerals and Metals segments. After several weak order quarters last year in the midst of the COVID-nineteen, It's very second half weighted this year as that backlog only got more support from orders from Q4 last year onwards. This sales number of just over €1,000,000,000 is on the low end of expectations. Only in our Aggregates segment is the revenue more immediate following order intake. And overall, of course, lead times from order to delivery are much shorter in that segment. Now fortunately, this is a timing issue. Our order intake is very encouraging for future revenue growth. However, you should more expect in Minerals and Metals segments the sales growth to start moving up over the coming quarters rather than sort of assume any abrupt leaps. We did face some unplanned delivery issues due to having a few bigger footprint moves in our supply and warehouses coincide with a quarter with overall very challenging global logistics availability. And even small misses get big if the availability and cost of a new routing is far from normal. While it's not a big number in volumes, the fixing was not free either. And hence, gross profit is also slightly impacted and does not really reflect the good work done in most of the company. Nevertheless, €131,000,000 translating into 12.9 percent adjusted EBITA margin is 50 basis points up from Q1. And we are pushing on many fronts, integration and business specific improvement measures, to mention the 2 main drivers to continue towards our margin target of 15%. Adjustments were €13,000,000 in the quarter, mainly from the integration. PPA It was another €13,000,000 and other amortization, €8,000,000 which all then leads to an operating profit of €97,000,000 We have an unchanged guidance for the integration related adjustments for this year. So you can expect some of that still to come through in the second half. But thereafter, you only then need to model the noncash amortization elements. Moving to the P and L elements below operating profit on the next slide. I would perhaps just note that we're delivering integration benefits also in our effective tax rate, which is at a 25% level year to date. Earnings per share for continuing operations were €0.07 for the quarter and €0.15 year to date. Thanks to a small capital gain from our divestment of the aluminum business in April, the year to date EPS, including discontinued operations, is EUR0.02 higher, so EUR0.17 Moving to our balance sheet. So total assets are up some EUR 100,000,000 from the beginning of the year. You still see a modest growth in inventories and receivables, however, clearly indicating the direction we see when you sort of remember the strong order intake in that we've seen in the first half. We were able to pay back debt as well as the first installment of our dividend and still maintain a solid level of liquid funds. A few highlights on our cash flow. Firstly, obviously, very happy to see continued healthy cash flow in the second quarter. Since the merger of Metsautotec, we have delivered solid cash flow in every quarter, which has helped to quickly strengthen our balance sheet. As we move forward, we do expect sales growth to affect our working capital increasingly. But similar to Q2, where in addition to profit from continuing operations. We saw a positive contribution from divestments under discontinued operations. We do expect to see further support on that row so in the second half from the divestment announced. Looking then at our net working capital by item, the balance of the items is really similar to earlier. Inventories stood at 1,000,000,000 €4,000,000 at the end of June. Trade payables continued to exceed trade receivables. Also in Q2, We've seen the advances increase slightly as we've booked some bigger orders where they typically form a part of the payment structure. Lastly, on our financial position. As mentioned, healthy cash flow has improved our balance sheet KPIs since the merger. During the Q2, we canceled 2 revolving facilities, which would have become short term and were signed when the COVID-nineteen uncertainty was to the highest. And we didn't feel we would need them anymore. The base revolver of €600,000,000 is more than sufficient for our needs. Also, we had a strong cash position. As we had a strong cash position, we made an early repayment of €50,000,000 on our term loan. So net debt totaled €686,000,000 at the end of June, And our debt to capital was 33.4%. And with that, I would hand it back to our President and CEO, Hoepp Jacob, please. So thank you, Eva. A few words on integration and strategy before we go into outlook and Q and A. Like mentioned already, I mean, run rate basis, the cost synergies we track at €105,000,000 Now this means that our original plan that we announced at the time when this transaction Metsoto de transaction was announced was €100,000,000 So We are ahead of that plan both time wise and in total already. And 120 remains the target at the end of the year. The remaining work is primarily in the area of IT and procurement for the rest of the year. Restructuring of the organization is almost completed now. And but we have enough work and enough sort of programs that will contribute to the 100 and towards 120 by the end of the year. Then the sales revenue synergies, we have reported in our current sales line year to date of €40,000,000 of revenue synergies and this additional €91,000,000 that we have in our order backlog. So that number is starting to be already sort of meaningful, So that number is starting to be already sort of meaningful number and is closer getting closer to the to our target, which is €150,000,000 by the end of next year. And the estimated restructuring cost integration cost It's €75,000,000 And so far, we have booked €51,000,000 of that one. Then I mentioned earlier on that to sustainability. We are seeing sustainability already in our order bookings. We are developing a measurement, which we will be able to track in future. Future, we're not able to do it yet, but we already know that Share of planet positive products and technologies is increasing, and it's really coming a criteria for customers when they take decisions and part of justification of projects and investment cases. We are committed to 1.5 MAX global warming, And we have the science based targets established for that one. We are tracking well in achieving those science based targets. We are, in fact, well ahead in some of those lines, but this is also volume related issue, especially the emission side of it. And currently, we are going through a low volume period, and therefore, we are slightly ahead of those targets at this moment. We will sort of get closer to these ones once the volumes get normalized later on. And we are engaging our suppliers as well into this work. We have set They target the 30% of supplier spend by 2025 need to have science based targets and that work has started. And we launched, yes, the planet positive product portfolio, and that is really to make easy for customers to make the right ecological choices or the best ecological choices and to make it easy also for external world to track our performance in sustainability. And then in other fronts of ESG safety work that we have been doing very consistently by addressing things that are not moving in the right direction and addressing those locations where we may have had issues. It's really bearing fruit now. We are year to date on year to date basis on LTIF on record low level at 0.6. And just to mention, in the month of June, we didn't have any lost time injuries with our own employees and only one with our contractors. So good improvement and first time for Metso Autotech to be on monthly basis that low level. But the work continues. Any incident or injury is unnecessary, and we keep on working with that one. Planet positive is visible in orders. Pelet plants, Several orders as we have booked them, they all contribute towards lower emissions in in steel production. The lightweight Metso Autotech truck bodies that we are selling and still in the launching phase of that one, but we are starting to have a very good footprint already globally on with those ones. And if you recall, the lightweight truck body It means that any ore that is hold with it requires 10% less fuel and reduces to 10% emissions. And yes, we have some process plants, precious metals recycling plant and lithium plant orders that we have booked, and they are naturally in this area. On highlights, Really, the major one is the €360,000,000 order, which we booked after closing of the second quarter. So this number will be reported in the 3rd quarter order intake. It is a joint order between metals and minerals, about 80% is metals and 20% minerals. It is a massive project as a such copper smelter, well known technology. We have delivered flash smelting technology based copper smelters, more than 50, five-zero pieces to different parts of the world. And therefore, we don't feel that this includes any technological risk as such. So very, very happy about that one. That is a project that has been discussed and deepated in Indonesia, possibly for 10, 15, maybe 20 years. And now Finally, then the parties decided to progress with that one. Then we just announced signing of the agreement with Alstom Capital to divest waste recycling. We expect that one to close during the Q4 of the year, and the metals recycling Divestment is in progress and hopefully, we'll hear something about that one by the end of the The market outlook, we are on sort of on relatively high level as our order intake is also indicating that one. We're expecting the high and strong current level to continue and remain. COVID is, of course, around us, as we all know, and we will see still impact of that one and especially the changes and the new variants of virus will cause sort of unexpected events in near future as well. But I would say that in a big picture, our industry has Sean, that it's very resilient against this kind of pandemic, but it does cause some operational issues, which is slightly our numbers as well. But we expect, in general, the environment to remain at the current strong level. Thank you. All right. Thank you, Pekka. Thank you, Eeva. And now it's time to open the lines for questions. Thank Our first question comes from the line of Magnus Kruber at UBS. Please go ahead. Your line is open. Hi, Pekka, Eva. Juha, minus UBS. A couple of questions from me. I guess, first, I'll start for you and then, Pekka, On the outlook, I would like to hear what you're thinking about the outlook statements in terms of the different business areas. I mean, you shifted from improving to the current strong leverage. Is there sort of an element here of sustained momentum in mining offset perhaps By a slight tempering or a cool down in aggregate as we go into the second half? Or how do you think about the different business areas in the context of the updated outlook? That will be very Yes, I think it's a very well sort of thought by you. I mean, our aggregates business is seasonally lower in the second half of the year. And that is, of course, reflected here in the statement as well. Then on the other hand, We are on high level in our order bookings, both in Metals and Minerals. So now it's time really to deliver and execute to the order book. We will see nice orders going forward as well, but very difficult with the COVID situation to say that we would go much higher than where we are at this moment. In order to climb higher level, at this moment, we really would have to clear the pandemic first. That's very helpful. Actually, just continuing on that point. I mean, if you could talk a little bit about your pipeline for the year end in mining overall. Do you have anything similar in the nature of the recent freeboard order? Maybe and also if you could discuss if there's any Differences between the Minerals and the Metals that were most interesting. Obviously, the Metals market seems to be heating up quite a bit now. Yes, that's right. I would say that Minerals market is heating up as well, but the nature of Minerals business is different. There are project orders as well in Minerals, but they are smaller orders. Metals orders tend to be bigger ones. And because the business is somewhat lower, it makes the business A bit more difficult to forecast the metal side and then makes it to look also very lumpy, especially the order intake. But we like how the way how Minerals currently is that the orders are smaller in size. They are well manageable as such. And risk profile is something lower than typically in our Metals businesses. Got it. And in the metals and specifically, do you have anything in the pipeline that's sort of similar to the freeboard order? I mean, I know there's a Swedish company building something in Norway that's pretty big. Yes, that's right. But I mean, anything that would start with 3. No, we don't. Okay, got it. Thank you so much. Thank you. Our next question comes from the line of Klas Bergelind of Citi. Please go ahead. Your line is open. Thank you. Hi, Pekka and Jeva. It's Klas at Citi. So my first question I had is on the margin drag from the Supply chain issues in Minerals and part of this relates to the integration of Metso and Autotech. So firstly, what impact was this On the margin in Minerals, and do you think this effect will last into year end? And I would also assume that the listing of the mobility restrictions eventually should help Service business quite a bit into the second half. So if you could perhaps help us also with the pent up effect there, how much below normal levels is to Service business. So several questions in 1, sorry for that, but impact first of the margin pressure because of the integration, Will it stay until year end and then likely pent up effect in Services? Thanks, Claus. If I Try to answer that. I mean, we're not talking about a huge number per se from the as a drag from the actions. Now clearly, Souda, we have had challenges in being on time in some of our supply units. And hence, then we've had to use airfreight, for instance, to compensate, to kind of catch up to make it still on time or less late to the customer and these type of things. Now obviously, we wouldn't be talking about them if they weren't 1,000,000, but it's still a sort of a more single €1,000,000 issue. We tried to sort of estimate kind of how much sales we lost on the aftermarket side from the hassle and in the consolidation actions. We basically been moving consolidating inventories from several locations to fewer locations and kind of gearing up in the new location then the operations is where we've sort of Had the issues. Maybe it's around sort of roughly €15,000,000 of sales. So it's, of course, money in the quarter, But I think the sort of big perhaps bigger impact really to the sort of consensus sales was really from the Klagen. We were just not clear enough in our communication on the sort of order backlog composition perhaps earlier. Then the actions are now complete. I mean, sort of we are in the locations we want to be and ramping up operations. So in that sense, We're well on track. Of course, it takes a bit of time to catch up, but we're not really expecting or planning for disturbances in the second half. We do need to sort of just fix the issues and, in that sense, sort of move forward. Then you had a question on the mobility. Yes, that's, of course, when sort of the news is daily changing on what restriction one has and where, Difficult to answer. But as we write in the report, when the restrictions have eased, we have sort of seen then the possibility and the willingness from customers to meet us at site and get kind of a bit back to normal. But of course, it is subject to the abrupt changes back to restriction mode as well. So it's I think that is something that I assume we'll see for the rest of the year. It's partly, of course, we're learning to move around it, but there's just the element of things that actually have to happen on the site and hence sort of that it will just need to sort of follow sort of where the pandemic takes us. Have you done anything ever in terms of looking at how much pent up it could be once restrictions are lifted for services? Because I would assume that we're trailing the very strong activity as from a mobility point of view. Well, obviously, you kind of look at the installed base and sort of average consumption and average demand and these type of indicators and, of course, sort of plan together with our customers. I mean, clearly, sort of the challenge for both of us will then be that if Then sort of demand leaps, the availability question will come. We now see the availability problems already in components and in many fronts, not only in our industry. And of course, that's something that we together need to manage and prepare with our customers. And I think kind of We've been trying to sort of caution on that, that not then everybody can move at the same time, and that's something. But really, sort of as said, when there's so many moving elements now on, as said, on a daily basis in some countries, it's super difficult to be boom or sort of quantify it more. Fair enough. Year to date, I would assume that we are maybe 10% below in our service, excluding really the consumables. That has sort of gone almost like normal now. But in the rest of the services, we are probably 10% behind and with the volume. And I would estimate that this volume comes back at one point. Thank you very much. My very final one is on the mix Between equipment and services, now when equipment will be a bigger part of sales into the second half, and I'm referring to Minerals here. Do you think, Pekka, you have enough self help efforts to lift the gross margin in equipment or shall we expect a big negative effect from higher equipment sales into the second half. I know that this is a difficult guide on magnitude, but we have inefficiencies because of supply chain a little bit. And then obviously, The question is, will we have another impact on the margin as we invoice out more from the backlog? We also need to remember that we do who suffer from under absorption at this moment. And with the higher volumes in equipment side, that will reduce and that will sort of mitigate the impact of margin and the mix impact in that regard. I'm expecting our services to recover. Like I said, I mean, we are about 10% below where we should be in a normal sort of course of a year. And once that returns, So I'm not too concerned about that we would see margin drop. That would be too dramatic in that one. We see also volume growth at the same time. Yes, very clear. Thank you. Thank you. Our next question comes from the line of Arsen Tocopchenko of Credit Suisse. Please go ahead. Your line is open. Good afternoon. Thank you very much for taking my questions. That's Arsen from Credit Suisse. I have 3, please. My first question is about synergies. Could you help us understand what was the P and L contribution In H1 and with the faster delivery, what should we expect in terms of P and L contribution for H2, please? Sure, Artem. So we tried to clarify it in our report. Now we made reference to Q3 and Q2 Specifically, but there basically, so I would say that the if you use the run rate number we have given out in at the end of every quarter. And then as it is an annual number, you kind of divide it by 4 to get the impact on the next quarter. So now we were at €105,000,000 So we're Going on roughly €26,000,000 impact for Q3, we were at just above €8,000,000 in end of March, And hence, it was around 24% for Q2. And I believe we were at 60% ish at year end. So again, that will be then sort of 15 roughly for Q1. So it's kind of the speed here. You sort of you the progress has been adding roughly SEK 5,000,000 sequentially from quarter to another. Thank you very much. My second question is around your comments in the report around supply chain and logistics costs. I guess, could you maybe talk a little bit about whether that's something temporary or whether that's more structural like your supply chain raising prices, cost inflation, etcetera. Yes. There's 2 things. I'm logistics is one area. And yes, we have seen freight charges going up. Just I read a report of a shipping company, and they said that their container charges have gone up by 59%, if I call correctly the number from a year ago. And of course, we are seeing this cost. We are carrying some of it and some of it our customers are carrying, of course. So that is one part of it. Then inflation, we do see the inflation, Of course, but we have taken different mitigation actions in that one. We have the synergy work ongoing in the procurement area where we combining the volumes of the past 2 companies, and we have gained benefits out of that program. And then, of course, we have been very active in our pricing. And I would still say that most of the inflation is still in the supply chain, But most of the price increases are in our order backlogs at this moment. But inflation is there, and it's Sort of a reason to be cautious about that one, but not overly concerned. Our customers are also enjoying good business as metals are contributing quite a lot to this inflationary picture, and it makes them Makes it easier for them to justify new investments and new expenditure. Thank you. And my last question, maybe could you help us quantify how much of that inflation we've seen in the quarter in terms of the EBIT bridge? And as a follow-up as a quick follow-up to this question, I guess, in terms of the contracts which you already have in your backlog, do you have any price escalators Which would allow you to pass over some of that inflation or contract prices, I firmly said. Thank you very much. Well, I think the majority of the inflationary impact, Artem, is actually on the balance sheet. I mean, the inventory value, of course, is based on sort of the Sort of prices at which goods have come in due to the sort of rapid change really and how quickly. Then sort of certain component prices have changed. Haven't really drilled through the P and L much in the and The logistics Pekka mentioned, of course, that comes more immediately, but what comes to these other areas? So that's something we kind of Expect to see I mean, we've been very actively managing prices because, of course, this is an environment this is No news to the customers, no news to us and kind of preparing in that sense. That's, of course, how we should sort of prepare for it and balance There are cases where the sort of it makes sense for both parties really to have at certain sort of index close on that. But of course, the sort of less typical in product type of business where it is a customer is kind of agreeing on the price at the time of purchase, and then it's for us to manage the from order to delivery period as kind of normal course of business. Something to Certainly, sort of be attentive to and some not an easy fight, but I would still say that it's a positive channel positive challenge to have the because we also have Metsoda that do benefit from the inflation, as Pekka mentioned. Thank you. Thank you. And our next question comes from the line of Nick Alston at RBC Capital Markets. Please go ahead. Your line is open. Yes. Hi, everyone. Thank you for taking my questions. My first one is about the revenue synergies that you mentioned of €40,000,000 so far with more in the backlog. Is this all from cross selling products? Or has any of this come from increasing the service penetration of the old Vutitek business, which obviously had a much lower penetration level then the Meso business. I'll start there. Thanks. There's both of it, yes. I don't have a breakdown for that one, but there's quite a number of consumables that go into grinding mills and really sort of aftermarket consumable deliveries and which Autotech wasn't really participating at all. But then cross selling is there as well, pumps typically that Autotech sourced from other than Metsau. And now, of course, we are supplying to most of the cases and offering very sort of actively Metsau pumps into the in new proposals. But there's both cross selling and really new areas as well. Okay, great. And my second question is about the large Acquisition that one of your peers announced last week of a well known European Mining Equipment Business. And I'm just wondering how you see that and how it affects the competitive landscape from your standpoint? Yes. Well, I was asked the same question in our employee meeting this morning. And I described what we've been through since we announced Metsautotec. That was 2 years 1 month ago. And it's quite a journey that we've made, and they have that journey ahead of them. And we still have Some distance left of our journey. So I think in that regard, they will be busy with many things. I'll leave it there. Okay. Thanks very much. Thank you. And our next question comes from the line of Tommy Reilong of BNP. Please go ahead. Your line is open. Hi, this is Tomi from BNB. Just to clarify a little bit on the sales impact due to Diblays. Did you €50,000,000 for services and bigger, let's say, maybe €50,000,000 for the equipment side from the backlog. Yes. My answer to Klas' question was that around €50,000,000 probably was kind of revenue That could have landed in the services into the quarter but got delayed, yes. And higher impact from the backlog. So comparing We're referring to the consensus, yes. And obviously, the sort of There was a wide range in the analyst estimates, but just referring to the consensus average in a way, clearly, that even if you add that, Our sales were on the low end of the average on the consensus. So really, that was the backlog. Backlog, I think, was this area where we sort of we could have done a better job in the communication. Good. Thank you. And the second question on the quoting new sales proposals, as you say in the report that it continued during second question. How do you see July August early August developing? Yes. Basically no change in that one other than, Of course, in our aggregates because it's seasonal business and seasonally second half being the slower ones, there we see some decline. But just ongoing trading, trading for aggregates, July was strongest July ever for us. So in that regard that even though we're heading slow season, we're still seeing relatively strong months. And thirdly, a quick one, if I may. Synergies processing ahead of the plan, do you see any upside for the EUR 120,000,000 target? We are working on new items continuously, But we of course, we want to deliver what we've said and we stay with the stick with the 120,000,000 target. And inflationary environment hasn't made it easy for as to sort of be more bullish with that target. But we have been able to generate new items so that we can fulfill the Thank you very much. Thank you. The last question in the queue so far comes from the line of Robert Davies at Morgan Stanley, please go ahead. Your line is open. Yes, thank you for taking my questions. I had a couple. One was just around the sort of, I guess, bigger projects that you're managing. You sort of highlighted the one that you had post the close. Just from a risk management project, can Can you just walk us through what's sort of different now to maybe the way, Outotec used to manage those businesses as a standalone entity? I know that you I mentioned a year or so ago you sort of seen some of the processes, just be keen to hear if given this is a good example of a bigger project, What was sort of different to maybe how that project would have been signed? Or how are you going to deal with that over the next year or so? Thank you. Yes, thanks. Really good question. As such, we need to sort of remember that the Previous project of that size was booked really long, long time ago, nearly, what, 7, 8 years ago, altogether. And Ottotec already, before merger, had upgraded the risk management and the risk analysis part and mitigation actions as such. And we have, of course, continued along the same path. We have certain decision making, grid and matrix, and we are reviewing The offer and contracts of this size, we are reviewing very thoroughly, just, I would say, almost like minutes before signing for any changes. So We are on the pulse of what is happening. And then, of course, we do have ongoing project reporting and review of the projects on monthly basis in the management and our audit committee is looking into these projects on quarterly basis, how we're tracking on bigger ones and major ones. And that is the visibility that we do have. We have upgraded also and changed also how we behave at the work site. We are now accumulating documentation in a different way than what was done in the past. And this is always important in projects because there is tendency that towards end of the project then all the things will be reviewed and revised And potentially, claims will be presented both ways, and we are now much better equipped for that one than we used to be. Maybe to add, Robert, to that and in this specific case. So it's as you may note, it's a pure engineering design, really, licensing contract. So It is there is nothing on the construction or kind of any EPC elements. It's really pure engineering. And of course, That's at the core of our competence area. It clearly happens to be a big engineering project. And the other thing I would highlight that it is very known technology. If anything, really, copper smelting is something that has been sort of well proven Over the past, I believe this was there's more than 50 sort of copper smelters delivered by Odotec in the past. And of course, that's something that Was another main sort of criteria kind of ticked our sort of risk management box that we can assume that this is There will be no surprises. But obviously, like Pekka said, it's really on the focus on the execution is always crucial and continues to be so. Yes. We took a position in Metsautotec that we are not accepting and participating EPC contracts anymore. And now 13 months into Metsautotec, we have not booked a single EPC contract. And I don't feel that we have lost too much we haven't lost single order because of that one. Some of the orders have turned into smaller by volume. But at the Same time, when volume goes down, our margin levels do go up and our risk exposure reduces. So this is what we have been doing and this is what we will continue to do with regards to projects. Thank you. And then my second question was just around the order progression within the Minerals business. You've obviously seen 3 or 4 quarters now improving momentum. Just be keen to hear what your view there is to the back half of the year. I know you mentioned There was a couple of questions earlier talking about a potential catch up effect. I guess, is it possible or do you think it's reasonable to To more than double digit growth in that business through the second half of the year. I realize that maybe the comps are becoming less weak as we get towards the tail end of the year. I'd just be curious The cadence of growth profile in aftermarket specifically as you go into the back half of the year. Yes. In a way, as Pekka mentioned, the sort of wear parts, consumer was, of course, been steadier because it's so product sort of production rates related. And I think we're at sort of have been sort of customers have been running flat out now for a few quarters, so hard to push for more. But certainly, in the services, I think that sort of opportunity is there. We would be a bit sort of cautious on sort of calling and sort of giving sort of confirming any Specific number for you because it's just that there is just this uncertainty around the sort of to COVID-nineteen situation that can easily sort of change it. But clearly, as you see also from the specifically the sort of mineral Services order growth number, it is we things have improved. And in that sense, We would sort of expect to see that trend continue in the second half. Thank you. And then my final one is more of a big picture question really on in terms of some of these orders in minerals that we've seen in the last year or 2, Different companies have talked about seeing bigger projects sort of cut up into smaller pieces. When you look in sort of total across these projects that have been broken up into smaller pieces. Do you feel like you're still able to get as much value out of them? Is pricing more difficult when they're sort of So granular and sub segmented into little bit, is it easier to push pricing more aggressively if you have a sort of large encompassing project? Or is it a More easy to get pricing when they come in bit parts, sort of smaller and medium sized pieces. Just kind of curious in terms pricing on the sort of smaller and medium versus the sort of bigger projects you historically had. Thank you. We are very comfortable with the way our business is going in that We like the small orders rather than big lumpy ones. Okay. Thank you very much. That was all my questions. Thank you. We have a follow-up from Magnus Kruber at UBS. Please go ahead. Your line is open. Hi, thanks also for taking my follow-up. I just wanted to ask you Following on Artyn's question on pricing and raw material headwinds. So which quarter do you see as the peak headwind Quarter as we stand now, obviously, things can change, but as we stand now, which is the peak headwind quarter. And also On Minerals and Aggregates separately, are you sort of pricing ahead or sort of In line with inflation or you're sort of lagging on the pricing side, if there's a difference in the phasing of those pricing versus the cost would be interesting to hear. We do pricing, of course, differently in different businesses. In projects, we our aim is to fix our costs at the time when we book our project orders. And then do we like to have cost escalation clauses in those ones where we sort of time wise cannot lock them. LOCKTEAM and recently, we have been very successful in doing so. Then the product businesses, which is spare parts, consumables, to aggregates. We, of course, work with the price lists, and that is more sort of working ahead of the curve. Okay. So it's fair to say that you believe you're sort of ahead overall on pricing in these two business areas into the second half. That's a difficult topic always to comment on pricing. Fair enough. Thank you so much. Thank you. And we have one final question in the queue. That's from the line of Antti Kanselman of SEB. Please go ahead. Your line is open. Yes. Hi, it's Antti from SEB. Thanks for taking my question. It's on the Minerals Equipment sales Saad. And I mean, you are on a SEK 250,000,000 to SEK 260,000,000 level pre pandemic and obviously now a bit below that. But if the growth is heating up, kind of do you see Skov for more? And where do you see kind of the bottlenecks right now? Is it supplier capacity? Is it your on assembly capacity and so forth if we see the continuous growth on the terminals equipment side going into 'twenty two and onwards. I think we our current our order book is really in, I would say, hectic engineering phase, both in Metals and Minerals Minerals businesses. And that is the phase when where the revenue recognition is fairly low. We have A smaller number of actual deliveries in this one, but as we move on and deliver The order book we get into different phase where bulk of the revenues will really come from deliveries. So That's where the growth then comes into picture. Yes. I was more thinking about that. Is there starting to be at some point that this that's kind of their strong order intake only leads to a prolonged and prolonged delivery times and kind of you are struggling to Get the deliveries out of the backlog or how should we think about this going forward? Yes. Of course, in businesses where we have clearly products. Then at times like this, we are selling longer delivery times. And in Project Businesses, we, of course, are dependent on the capability of our supply chain to keep their promise on deliveries, but that's how we work. We work both, I mean, in pricing side and in delivery wise, together with our suppliers. And we, of course, want to Align and streamline those things have back to back agreements 100%. So that's how we work. Fact of life is that in days like this, delivery times do get longer without them being delayed, in fact. All right. Thank you. Thank you. And as there are no further questions, I'll hand back to our speakers for the closing comments. All right, ladies and gentlemen, we are at the hour, so it's a good time to wrap up this second quarter results conference call. We are looking forward to speaking with you very soon again. And in the meantime, enjoy your summer. Bye bye.