Earnings Call: Q3 2020

Oct 27, 2020

Ladies and gentlemen, welcome to Valmet's Q3 2020 Results Publication Webcast. Valmet's orders through the Q3 decreased, but the comparable EBITDA was one of the best for Valmet. My name is Pekka Rohenen. I'm the Head of Investor Relations here at Valmet. And with me today are Pasileine, Valmet's President and CEO as well as Kari Saarinen, CFO. We will start with presentations. And after the presentation, you will have the chance to ask questions over the phone lines. But without further ado, Pasi, please go ahead. Thank you, Pekka. So Valmet's orders received decreased to €700,000,000 and comparable EBITA increased to €91,000,000 in the 3rd quarter. So today, I will talk briefly about quarter 3, then development of business lines, then some words about Nelles and PMP Group. Financial development will be presented by Kari and then I'll come back to guidance and short term market outlook. So first, quarter 3 in brief. Our orders received decreased in stable business to €369,000,000 In capital business, orders received decreased to €347,000,000 Net sales remained at the previous year's level and were at 832,000,000 Order backlog amounted to SEK 3,300,000,000. EBITA comparable EBITA increased to SEK 91,000,000 and margin was 10.9%. Gearing was 18%. And we agreed during the quarter to acquire PNP Group and we acquired 29.5 percent of Nellet Shares and Vogt. So, first, a couple of words about the numbers. So, orders received, like I said, were SEK 700,000,000 net sales SEK 832,000,000 and comparable EBITDA SEK 91,000,000 and comparable EBITDA SEK 91,000,000 and comparable EBITDA 1,000,000 and comparable EBITDA margin, 10.9%. And backlog were CHF 3,300,000,000 and we employed about CHF 13,400 people. Business wise, by business type, stable was roughly 50% and capital was roughly 50%. Like I'll come back later on, Paper had a strong quarter and Pulp and Energy had a weak quarter. Geographically, order intake was stronger again in China, 27% of new orders came from China. Europe was strong as well and the rest of areas as an average. Orders received decreased to SEK 700,000,000. And here, you see the 12 month curve is now somewhere at SEK 3,700,000,000. Last year, the total year was SEK 4,000,000,000. So, we are below of that speed. If you look at the orders received, totally geographically, China has corresponded to 24% orders received. So, Chinese market has been strong for Valmet and Valmet has been successful in China as well. North America, like you remember, normal year is 20%. So, North America is less than the normal year. South America, because of the big growth in the beginning of the year, is more than average and Asia Pacific close to the average numbers. Then our stable business orders received total to €1,816,000,000 At the High East, that was, if I remember correctly, about €1,950,000,000 so €1,950,000,000 And now the total in 12 months is €1,816,000,000 So the trend is not where we want it to go, but that reflects now the current market situation and I'll come back to that later in the Automation slide and Services slide. Our backlog is still EUR 3,300,000,000 It's at good level, so or more than a good level. So when we were at €2,700,000,000 we were saying as well that our backlog is at healthy level. So, SEK 3,300,000,000 is a level where most of our units are well loaded. They have long workload. And we have a situation that in some cases, we have to say to customers that we our delivery time is longer than what they would expect. So 3.3% is a good number for us. We are also saying that stable business is about 30% of the backlog and 70% is related to our capital business. Then some words about the business lines. So here, services. Orders received and net sales decreased comparing to earlier year. So now, if you looked at the cumulative numbers, our orders received has been about SEK 1,000,000,000 and last year, it was SEK 50,000,000 more. So there is about 5% decline in orders received. Then of course, if you compare 288 against last year, 335, so there is decline. Last year, so was quite active in the end of the year. So I'm not trying to say that it was good number, but I just want to say that look at the bigger picture and the orders received has decreased by 5%. In net sales, we are also behind last year about NOK 49,000,000 and that's due to the COVID restrictions. So we have challenges in implementing some of the mill improvement projects where we need to have access to customer sites, and that hasn't been the case in all the places. So all in all, in services, we see the impact of in order intake and net sales, the impact of COVID in travel restrictions and utilization of graphical paper machines, which have been decreasing. And that has both have had a negative impact, both in orders received and net sales of our services. Automation orders received last year, dollars 304,000,000 and this year, dollars 295,000,000 So we are $9,000,000 behind, so about 3% behind last year's order intake. Quarter 3 was a disappointment to Automation's management. But all in all, we are now, like I said, 3% behind last year's order intake number. In net sales, automation has been performing better. It's easier to get access for automation persons in customer sites compared to the rest of the service personnel. And that's why we haven't seen same kind of restriction of the activities in automation services than we have seen in rest of the services. But all in all, COVID has had an impact to order intake and especially in Capital Business Services Business in Automation has been actually performing well also in COVID-nineteen situation. Pulp and Energy, like I said, quarter 3 order intake was only NOK 52,000,000, though it's the lowest we have had in Valmet. There have been 2 similar kind of 3 similar kind of quarters. So it happens in Capital Business that 1 quarter is lowish. Our order intake is now SEK 6 43,000,000 compared to last year at SEK 805,000,000. We have still a good workload in our units. So like you see, the order intake graph has been trend has been over SEK 1,000,000,000 now for almost a year or a little bit more than a year. And that, of course, means that we have good backlog in that unit and we still have plenty of work to be done in Parkland Energy. Net sales were SEK 717,000,000 compared to SEK 604,000,000. And there I have to thank pulp and energy's organization that they have been able to execute the projects very well even if there have been some challenges with COVID restriction in different parts of the world. So, well managed situation all in all in P and E. Paper orders received and net sales increased. So quarter order quarterly order intake for paper was €295,000,000 So it's a strong quarter. And then if you looked at the total year, €818,000,000 against €844,000,000 So there's decline, decrease, but both numbers are big. So of course, if our paper business is getting orders worth of €800,000,000 in 3 quarters, it's a strong market and good market like we have been saying. Net sales has been increasing as well. Last year, SEK 646,000,000 and this year, SEK 713,000,000. And the same comments here then in Palp Panenec that our organization has been managing COVID-nineteen very well both in our own operations, but also at customer sites. So, good development from that perspective in both in paper and pulp and energy. Then ownership in Nelles and the acquisition of BNP Group. Like you all very well know, we have acquired 29.5 percent of Neles shares during quarter 2 and quarter 3. We approached Board of Director of Neles with a proposal to start discussion on a potential statutory merger between the two companies. We were not invited to discuss further merger details with Neles' Board of Directors. But we still see that for Neles' shareholders and Valmet shareholders, a merger between Valmet and Neles would be very good solution. We would see that it would create a Nordic based global leader in many of the segments where it operates. And we believe that in long term, that solution would be very good also for long term investors and long term shareholders of both Valomet and Neles. And we continue to say that as a major shareholder of Neles, Valomet does not support the recommendation of the Board of Directors of Neles to accept Alfa Lavalos tender off. So our position is like it has been the whole time. Then we announced very important acquisition in quarter 3 as well. So we told that we have signed an agreement to acquire BNP Group. Later on in October, we told that we have been finalizing that acquisition as well and that it has started to operate as part of Valmet since beginning of October. BNP is operating on the market where Valmet is not strong or not operating. So, they make small and medium sized new tissue machines. They made rebuilds and machine sections for small to medium paper and board machines. And of course, they have spare parts and services operations. So it's focusing on small and medium sized tissue machines and board machines and. And that's the market where we haven't been active. So, it's very good addition to our offering and we are very happy to have now about 650 professionals from PNP Group joining us. Last year's net sales was about SEK 70,000,000 and the value of acquisition were about SEK 64,000,000. So this is very good addition to our paper and services operation. So, Kari, now it's your turn to go through the financials. Okay. Thank you, Pasi, and also good afternoon on my behalf as well. So as said, so our orders received reduced by 34%. So that's around 360,000,000 Pulp and Energy business line had a very strong quarter 3 last year, and orders alone reduced by EUR 350,000,000 as our pulp and energy customers did not make any major new decision during the quarter. Paper business line increased by 22% to almost €300,000,000 and other business lines reduced services by 14%, automation business line by 25% and pulp and energy 87%. China increased, rest of the geographical areas reduced during the quarter. Our order backlog, euros 3,300,000,000 end of the quarter. So this is around €100,000,000 reduction from year ago and around €200,000,000 reduction from the end of the previous quarter in June. But as said, €3,300,000,000 is a high level for us as a backlog. Our net sales, SEK 832,000,000. Euros This is 3% below last year's. Paper business line increased 13% during the quarter. Rest of the business lines reduced. South America, China and Asia Pacific increased compared to the last year. Our comparable EBITDA, so that increased to €91,000,000 or to 10.9%. Last year, EBITA percent was 9.5%. Earnings per share for the quarter, €0.38 per share and cash flow was €94,000,000 gearing 18%. Cumulatively, our orders are now 9% below last year's. Paper business line, the same as last year. Services business line was minus 5%. Automation reduced by 10% and Pulp and Energy by 20%. COVID-nineteen, that has caused access restrictions. Also, mill maintenance projects are done with a much more restricted scope. And also, pulp and energy marine scrubber market is quite low at the moment. Our cumulative net sales, those were 5% above last year's. Capital Business had strong sales. Pulp and Energy, 19% above cumulatively. And Paper Business Line is 10% above cumulatively. Automation at last year's level and services are 5% below. Cumulative EBITDA was €208,000,000 or 8.5%. Last year, we were at 8.1%. Cumulative cash flow, SEK 418,000,000 on a actually very good level and clearly exceeding last year's. Then looking at gross profit and also SG and A Development. So quarter's gross profit, 25%. This is the same as last year. Also, cumulatively, gross profit percent stayed at the same level as last year's. Split between stable and capital sales, So that was 46% stable, 54% capital. Last year, it was 48%, 52%. Percent. We are quite happy with the quality of our backlog at the moment. SG and A, those reduced 6% and were 16% of net sales. Our comparable SG and A is reduced by 8%. Travel cost, well over than last year. And we also had some impact of the headcount reductions that were announced during quarter 2, both permanent and also temporary. And at the moment, we also have multiple development activities ongoing, impacting SG and As, for instance, ERP project as well as data harmonization and industrial Internet projects. Our comparable EBITDA. So rolling 12 months EBITDA increased to 9.1% and is €336,000,000 This is the 2nd time that we have reached this 9.1% And this is high EBITDA for us. And we are, of course, happy of very happy of this development. Our cash flow. So our cash flow actually continued now for a 5th quarter in a row being strong. EBITDA and cash flow were almost equal. So that means that actually our cash conversion was at quite good for the quarter. CapExes were 21,000,000 euros and net working capital did not change very much and stayed at the low level as we can see here. So our net working capital, it was minus 17% of rolling 12 months orders, which is actually in an all time low level. Normal good level is between minus 10%, minus 12%. Trade receivables reduced, and we also have a very small number of overdues over 60 days. Project portfolio, that was strong and our projects typically have positive cash flow during the or through the whole lifetime of the project. Net debt. Net debt increased to SEK 184,000,000 and gearing was 18%. The acquisition of the Nelesh shares, they're close to 30% showed here, And it's quite visible that the balance sheet as well that we have used a bit more than €450,000,000 for the shares. Equity to asset ratio was 38%. That's the same as year ago. And then return on capital employed. So that capital employed increased around €250,000,000 end of the compared to the end of the previous quarter. We had some new loans and also equity increased as well. And then if we look at the return on capital employed, so that's 22%, which is within our target range. So back to you, Pasi. So, guidance on short term market outlook. So, our guidance is that Valmet estimates that net sales in 2020 will remain at previous year's level in comparison with 20 19. And comparable EBITDA in 2020 will increase in comparison with 2019. So, then short term market outlook. Joint Services, we keep the same outlook, satisfactory and weak. So one can think of it geographically or business unit wise. And I would say that the mill improvement, the market is weak and the rest, actually, it's satisfactory. Geographically, most challenging area is North America and the best is China. In automation, it's good and satisfactory. And here we can say that services in automation is good and the capital is satisfactory. In pulp, we have, like I said, we have had good quarters, many of many good quarters behind us and our backlog is good. And we still have sales activity, including, of course, one big letter of intent. And that's why we are saying that the pulp outlook is good. But the outlook is not depending only on one project I just mentioned. Energy, we have had satisfactory situation and the big impact has been on the marine market, where in marine business, we don't see any activity currently. And last year, orders received totaled to SEK 90,000,000, if I remember correctly. And now there is very little activity in marine market. Board and paper, like you saw, order intake was good. And we still have good pipeline of sales cases in Board and Paper. And this year satisfactory continues. So, we have had we have one project and there are still projects in pipeline as well. So, that's maybe in borderline between crude and satisfactory, but we decided still to keep it on a satisfactory level. So no change in short term market outlook in any of the businesses. Okay. Thank you for the presentations. And now we will continue with the questions. And as we don't have physical audience here at KLA SATAMA today, we will go directly to the questions over the phone lines. So operator, I hand over to you. Thank Our first question is from Antti Kansanen from SEB. Please go ahead. Hi. Thanks for taking my questions. The first one would be on service and kind of if we're looking at the year on year declines that we see in orders and sales, how much would you put it on the Graphical Paper side? And how much of this is kind of permanent closure, something that is not expected to come back in 2021 2022? So any numbers on this would be highly appreciated. And also then on the mill improvement side, is it just a function of COVID impacts? Or are you seeing something else in that market? First, it's Mill. I think it's COVID impact. So we haven't seen any other reasons. So now it's customers are, of course, very careful with extra personnel getting to their sites and meals. And then it's difficult execute any projects. So that's the main reason why the market is not active. In graphical paper, I don't have the numbers there. But internally and now externally, I would say that this is nothing unexpected for us that graphical paper demand is decreasing. We have had that development going on for several years or one decade already. Maybe the exception has been last year that there weren't actually too many closures in the graphical papers. And now we are, in a way, jumping to the future somewhere in year 2023, 2024. So we assume that there is small bounce back from the lowest level in the services for and consumption of graphical papers. But then it will not come back to the levels where it was early. And we have been living with this kind of development earlier. Earlier, we were saying that roughly CHF 10,000,000 to CHF 20,000,000 of our orders received is disappearing because of the closures of the geographical paper machines. And that's now the case as well, maybe a little bit more year than in an average year. But then how big part of this 5% decline is coming direct from traffic papers, I don't have the number. Okay. Thanks. And then secondly, on the profitability, the gross margin was quite strong in the quarter. So is there something specific that you would want to highlight within especially on the Capital division, extraordinary good project execution? Or is it just a favorable pricing from the backlog? Or anything specific around there? Well, of course, this is like good margin. If we talk about the margin, it's a mixture of multiple things. But we have relatively good order backlogs and project backlog at the moment and also the what Pasi was already saying that the capital business, both pulp and energy and paper, they have actually managed their business now well. And we haven't had any major interruptions and works has performed as normally as possible. And then on top of that, we have been pushing gross profit up for many years and that has continued. So COVID hasn't been any reason why not to push gross profit up. And then, of course, like Kari was in his part of the presentation saying that now SG and As are down because of COVID, because people are not traveling, but then we have taken also actions to reduce our cost level. And those starts to show impact in our profitability as well. Okay. Thanks. And then lastly for me on the backlog. Can you provide a figure on how much do you expect to book as revenues before end of 'twenty one? And how much is kind of stretching for 'twenty two and beyond? We haven't published that number, but our tradition has been that we'll tell that number in Q4 session. Okay. Let's wait for that. That's all from me. And our next question is from Sven Veyer from UBS. Please go ahead. The first one is also on the business side. I've seen a lot of the pulp and paper companies have delayed the maintenance shutdown to Q4. So wouldn't that actually benefit you guys then in terms of your service activity? That's the first one. Thanks. It's maybe the best model is that Berg shutdowns, which were planned to take place in quarter 2, took place in quarter 3 and 4. So in quarter 4, there will be shutdowns as well, but not extraordinary much because customers are, of course, now trying to shift shutdowns. And then there are limited resources as well. So we don't see that there will be one boom quarter when a lot of shutdowns will take place. Okay. Understood on that one. And the other question I had was just on Nelles. I was just wondering, obviously, do you have the client by the end of the week? And if I understand you correctly, there are currently no more talks between Nellus and yourself. And you said you're not going to tender your share to Alfa, which I guess is a statement towards the current tender. But is that statement also holding true that, let's say, Alfa succeeds with the 50%? Is that also a statement you would make for after the tender, right, that you will also not sell or tender your shares to Alfa afterwards? So we are saying what we have been saying all the time that Valmet is here long term. We have now 29.5%. We see that for Nelesc shareholders, where 71% are the same or out of Neles shareholders, 71%, including ourselves, are such that they are Valmet shareholders as well. And we see that this merger is the long term financially the best solution for both companies. And we hope that many shareholders take this into account when thinking about their actions during this week. Okay. Thank you. And our next question is from Anthony Huttelin from Danske Bank. Please go ahead. Hello. Thank you. Just on the profitability, which was the beating item in this report, if we look it by segment, I understood from your previous comments that it would be pulp and energy and paper that stand for the improvement versus year ago. Is that correct? And how has the profitability development been in Services and Automation if we compare year over year? Well, of course, one thing that we need to remember here that we are one reporting segment. And but then if we just look some ingredients here, so we've been saying now sometime that we are quite happy of the order backlog, what we are having. So that refers to the capital business. And then also, we were happy with the performance there. And regardless, that the share of the capital business of net sales has increased. So of course, that means that if the capital businesses share of the net sales increases and we improve the profitability, So that means that there's positive development there, but it doesn't mean that there was no positive development at stable business lines as well. So I think that overall, there was a lot of good performance at the organization this time. Okay. Good to hear. And then the temporary cost impact, how much would you assess that, that would be, meaning that if COVID went away, how much would your cost base increase? Well, one thing, of course, is that once the COVID is around, so the business activity like travel point of view has reduced. And of course, we have had some reduction on the travel costs. And there's one way is that our personnel and also customers have changed their way of working, but then business is still done face to face kind of meetings. And then also, our people would need to travel to a customer site in order to perform the So some of this cost is also then has a relation to sales increase. And then some of the costs are just like related to like other business activity, sales costs. And so I think that it's fair to say that there would be some permanent reduction out of this because the ways of working have changed. But at the moment, it's quite difficult to evaluate how much that is. And then if we look at the temporary cost reductions and levers, what we have done, so of course, we hope that, that cost comes back because that means that then we go back to the normal business levels. And our next question is from Robert Davies from Morgan Stanley. Please go ahead. Yes. Thank you for taking my questions. My first one was just around the outlook for the larger project business. I know in the past you've mentioned a couple of times the number of largest set of projects you're expecting to come in any one year. Just I guess kind of looking into 2021, do you have any feel at the moment for a number of projects out in the pipeline and how that compares to 2020? That was my first question, please. So the guidance we give is for or the outlook we give for 6 months. And in that 6 months, in capital business, like I said, in pulp, we see that activity is good. Then if I go there more in details, then of course, we have had now 1.5 years time when there have been a lot of big pulp decisions. And usually, after that kind of very active pulp market, there will be a while where there are no big pulp decisions. And I think that's maybe the time after coming 6 months. But we see already some or we don't see we participate already in some active discussions about next big pulp mill project. So, will they start to materialize in 2021 or more in 2022? I don't know yet. But there are discussions already with customers. In paper, the decisions are coming a little bit faster. And there, we still see, like I said, in the 6 months outlook, we see good sales activity. And in tissue satisfactory where I said that it could turn to the good as well. But that's maybe what I have to add to that. Kari, do you want to add something more? Well, not very much to add. I think that was the point. Okay. And then my second question was just on the Automation business. Just wondered if you could give us a little bit more color in terms of where you're seeing the sort of strongest or weakest areas of interest in your product areas. I guess once if and when we get sort of through the COVID disruptions, which bits of that business is showing the sort of strongest growth segments I guess, or the kind of biggest update from customers? Where I see the strongest let's put it a little bit the other way around. So we are a small player in DCS, digital distributed control system market. But in pulp and paper and the segments where we are, we are strong player. Now we have introduced new features and totally new technologies in our DCS like we announced this year or was it end of last year, the new user interface for DCS. So in long run, I'm sure that we start to gain market share in DCS because of our new technology. Then I think in quality control systems, which are the systems which are measuring quality in the end of paper machine or pulp dryer or tissue machines. We have been developing the offering all the time and services and I would be quite confident that we continue to increase market share there as well. Then in analysis, we are so strong that it's difficult to increase the market share. But of course, we try to influence customers as much as possible that they would increase upgrade their fleet of analyzers and then increase the fleet of analyzers in places they need. So, I actually see that there's growth potential in all the segments where we operate in auto mesh. Thank you. And then my final one is just around, I guess, the service opportunity. When you look across your suite of installed base globally, where do you see the biggest prospects for kind of growth over the next sort of few years coming from? And I guess within that, how would you contextualize the age of your installed base over time? Is there any sort of particular regions or product lines that are kind of particularly old relative to anything else? Is there any potential kick off from an upgrade or replacement cycle coming? Or is it just kind of more steady as it goes? So I think, first of all, the new installed base has been growing during last years in all geographies, not only in Asia or Latin America and China. So geographically, I see that there's opportunity to grow in all regions. Of course, the growth should be higher in China, Asia Pacific and Latin America than in Europe and North America. But Europe and North America have to grow as well. And then in how to grow, we have still quite many customers who are buying one product of our services, offering 2 products, but not a total offering. So, I think the growth will come from us penetrating more and more with the total offering, bigger and bigger part of our installed base and then, of course, competition's installed base as well. And then as a new interesting market with the acquisition we just made in Poland, we will get access also to the markets of medium and small machines where we haven't been early at all. So that adds one new market segment where to grow in services. I see. Thank you very much. Okay. Our next question is from Tom Skougmann from Carnegie. Yes, hello. Thank you for taking my question. So I just wonder first about the order trend. It's quite easy to understand that you need to have people out traveling and seeing clients to book orders. And now Q2 orders were smaller than Q1 and Q3 are smaller than Q2. Should we be afraid of the same in Q4 if you exclude the large metta project that can be booked in Q4? Is it just so that the sales funnel is getting weaker based on less traveling late? Thanks, Tom. That was a good question. So we have been building our regional and area organization now last 8 years, and that's now paying off. So, we have actually quite strong teams in most of the markets. And now the practice has started to develop in that kind of direction that earlier quite many of us were traveling and visiting customers and closing the deals. And now the local teams are playing more important role and the local teams are then supported from here, from either from head office or offices from the business lines or business units. So we have all the time active sales negotiations, even if we can't travel from here to see our customers. It's something new what we have to learn to live with. But that's the same for customers. But now everybody who wants to make a decision, they have the only option is that we all work in a new way. And that has been actually working reasonably well. Then, of course, some of the customers have been saying that it's different than when we are talking over Teams or Zoom meetings compared to a situation that we can stay together for a longer time in same meeting room and discuss in a longer term. So, it's not the same, but sales is not stopping because of us from Nordic not traveling. All right. And then a bit about the synergies between your Automation business and Neles. So, I think this is an interest of all shareholders to really understand what this is about. And would this be at risk if Alfa Laval gets control of Neles? Could you lose a lot of sales in your Automation business as a consequence? That? So first question to the first answer to the last question, no, we will not lose. We will lose an opportunity, but it's not a threat to us in automation business. Then synergy. In automation, the synergy would be in, first of all, in R and D. So, Neles has an intelligent positioner called ND9000. And then we have DCS and they communicate with each other. And then there are different kinds of software by which to utilize the features of both systems. And that would be very straightforward development action. We could just continue with Nellis if we were in the same company. Then, of course, sales together for energy and hydrocarbon customers or sales together to energy customers would be opportunity. And then, of course, for Pulp and Paper customers, so selling the total automation package, including the control valves and systems, so that could be one synergy source. And then like earlier on, we have been saying then a big part of the synergy would be coming in including Nellis valves in our port machine offering and tissue machine offering. Numbers, I can't unfortunately tell. I think it's also in the interest of all shareholders to understand what you can do to protect shareholder value in Valmet if Alfa Laval will get an acceptance exceeding 50%. What does the Lord protect you with? And what can you do in that scenario? So we are saying now that we see that there is more value in Valmet and Neles together, and we hope that shareholders are taking that into account when making their decisions. And what is the reason that you don't come out now with a merger proposal with some numbers then that people could compare? We told that when we came out with the merger proposal, we said that the PTO would only trigger a bidding war where the ones who would be benefiting would be the shareholders of Neles who want to just get the money and invest somewhere else. And the ones who would be losing would be Nela shareholders and Valmet shareholders who would stay in the system. Then to make a to give a number for a merger needs discussion with the Board of Neles. It's impossible to give the number just on our own. And like you know, Neles board has made that kind of contract and that's public knowledge that they can't discuss with other parties without the bankers' approval, lawyer approval and Alfa Laval's approval. So it's very difficult for us to have meaningful discussion with Neles and think about Neles board and think about good solution for the merger. So we would like to discuss that, but in practice, it's very difficult. Now, then can we tell alone what would be the best solution? Of course, we could tell something, but then that wouldn't be supported by anybody else. And I'm not sure that it's interest of Valomet or Nellet shareholders that there would be a proposal without pre approval of Neles Board for that proposal. But the risk of Alfa Laval bidding against you 2 years down the road is as high as bidding today. So I mean, if you just this situation might just continue as I see it. And what was the answer on how do you protect shareholder in the scenario that Alfa Laval would gain majority? I mean, you have invested a huge amount of money into this now. Is it only about negotiating with Alfa Laval and hoping for a good deal basically then? Or Like I said, we are in long term in Neles and I just said what is our opinion of Neles' future. And our next question is from Andy Kanserman from SEB. Please go ahead. Hi. Thanks for taking my follow-up. Just kind of returning to the backlog and workload situation, and you mentioned that kind of new orders are stretching the delivery times. How should we think about the revenue bookings going forward? Is it possible to achieve, let's say, on the paper side, substantially higher revenues that you are doing now? Or is the capacity kind of filled? And same with the pulp side, if you now add the Mehta project going for the next years and then you have a couple of bigger ones, how would that kind of impact the annual revenues that you booked from these projects? Any color on that? Of course. Okay. Not going to the revenue of any particular project. But if you take the graphs, what we have here for the different business lines, then you see that the pulp and energy revenue has been varying between $800,000,000 and a little bit more than $1,000,000,000 $1,050,000,000 maybe. And is it a is that our maximum? No, it's not. But that has been the volume which has been needed to deliver the projects. In Pulp and Energy, we have quite much outsourced model and we can increase the revenue if needed from that level what we have had. Then in paper side, you see that the net sales trend is going upward. So we are now somewhere between NOK900,000,000 and starts to be close to NOK 1,000,000,000. Yes. Close to NOK 1,000,000,000 now. So 2 years ago, I would have said that we can't reach SEK 1,000,000,000 net sales and now we have it. And now, of course, our organization has learned to be more effective. And then we have, of course, PMP Group on top of what we had earlier as capacity. So from that perspective, this SEK 1,000,000,000 is not the maximum. But of course, it can be that SEK 1,000,000,000 is maximum from market perspective. Okay. And then kind of other side of the coin, if we now see a bit of a weaker potentially weaker orders going forward, what type of kind of annual run rate orders or backlog levels would you be comfortable regarding kind of reaching your financial targets and improving profitability? Or is it more about the services coming back to normal growth? So in Capital Markets Day, Jari and Bartel both have showed that what has been the capacity cost against net sales in both capital businesses. And I don't remember now the numbers by heart, But in practice, in paper, without the acquisition we just made, we haven't been increasing our capacity cost at all, even if the volume has gone up. And that's to make sure that if and when the volume goes down, that we don't have immediately a profitability challenge. And the same applies to Pulp and Energy as well, that Pulp and Energy has been very, very careful not to increase our own costs now when the business has been active. So to maybe to elaborate still on that. So we actually cut down a lot of capacity here, 2013 2014. And since that, we haven't really increased our own capacity. It's been done in some other ways. Okay. Thanks. And we currently have no further audio questions. So I will hand the word back to the speakers. Thank you for the questions, And we will then continue on the 4th February with our Q4 results. But before that, we will have an interesting webinar relating to our Papua Energy business. So that will be on November 19. Hope to see many of you there. But thank you, everybody.