Earnings Call: Q2 2020

Jul 23, 2020

Good afternoon, ladies and gentlemen, and welcome to Valmet's Q2 twenty twenty result publication and webcast. My name is Pekka Roheinen. I'm the Head of Investor Relations here at Valmet. And with me today are Pasi Leine, President and CEO as well as Carre Sarlen, CFO. After the presentations, you will have the chance to ask questions here at Espoo as and over the phone lines as well. But without further ado, Pasi, please go ahead. Thank you, Pekka. So welcome. So our headline is today: Orders received decreased to EUR826 million and comparable EBITDA increased to EUR76 million in the second quarter. So what I will go through today is first a number on the quarter in brief, development of the business lines, a couple words about the share acquisition in Neles, Karri will go through the financial development and I'll come back with the guidance and short term market outlook. First Quarter two twenty twenty in brief. So our orders received decreased in stable business to SEK $426,000,000. In capital business, orders received decreased to €416,000,000 Net sales remained at previous year's level and were $919,000,000 Order backlog was about EUR 3,500,000,000.0 in the end of the quarter. Comparable EBITA increased to EUR 76,000,000 and margin was 8.3%. Gearing was minus 23%. And then Valmeta agreed to acquire 14.9% of shares in Neles in second quarter. So first numbers in brief. Orders received €826,000,000 together. That is of course smaller than a year ago, but it is a good quarter for Valomed. Net sales were $919,000,000 good as well. Comparable EBITA SEK 76,000,000 and comparable EBITA margin 8.3. And I think that was which word I would say? No, it was a good result for the quarter. Backlog EUR 3,500,000,000.0 and we employed about 13,600 people in the end of the quarter. Orders received by business line, there you can see that stable business and capital business were roughly the same, fifty-fifty this time. And in orders received by area, you see that China was again strong. 26% of our orders came from China, 47% from Europe. North America was smaller than normally 14%, but especially China has been active market in the 2020. Orders received trend twelve months curve turned down, so now it's about at EUR 4,000,000,000 level and to six months curve if it were there were billion level. Here you see also that in first half of the year, China has represented 23% of the order intake, so roughly EUR $460,000,000. Chinese market has been active, especially in capital. South America has been active as well, representing 16%. And North America the whole year has been less than normal. So as an average, North America should be about 20% of our order intake. Stable business orders totaled to 1,880,000,000.00 in last four quarters. And here, first time, we have now declining, if I cannot say trend because it's only one quarter. But of course, our goal is and continue has been and continue to be to grow our stable business. So of course, we can't be fully happy with the development. But of course, the times are not normal now. But of course, our intention is to make the best to continue to grow our stable business order intake. Backlog, 3,500,000,000.0, and we are saying that about 70% is coming from capital business and 30% from stable business. And we are saying also that about 45% of the backlog is expected to be realized as net sales during 2020. Last year, the same percentage was 50%. So a little bit smaller percentage, but the number out of which it is calculated is a little bit high as well. So it means that we have good backlog for the rest of the year. Then some words about the business lines. So first, services. So orders received and net sales decreased. So this quarter orders received were EUR $328,000,000 and last year the number was EUR $371,000,000. So of course, there's a decline in the order intake. And mainly, it's the biggest drop has been in North America. And then the drop is now in all the business units, mill improvement, energy environment of fabrics, performance parts and rollers. So all the business lines have had a smaller order intake than a year ago. And of course, the declining production of graphical papers has an impact to us. Then at the same time, one has to remember that pulp production has been reasonable and tissue production has been reasonable and packaging as well. But of course, the decline in graphical papers has been hitting us in order intake. Then if we look at half year order intake numbers, so we are now SEK 3,000,000 behind last year. Of course, in the first quarter, we had some help with the acquisitions, but still now we are EUR 3,000,000 below last year's order intake in Services. In net sales, we are below last year, about €20,000,000 and that's coming from the restriction at the customer sites that we haven't been able to execute all the contracts and all the field services because of the COVID restrictions. In automation, quarter was €98,000,000 and last year 104,000,000 so €6,000,000 down. And then if we look the whole half a year, now we are still €8,000,000 ahead of last year. So automation has been growing totally in first half of the year even if there has been COVID virus. So I think automation organization has been doing good work. Net sales has been growing as well. Here, of course, have difficulties also with some customer site access, but our organization has learned very well to use all the modern tools and customers have been able to provide us even dedicated rooms to work so that we isolated from the production personnel. So all in all, automation organization has been doing good work during this COVID, has been able to grow the business even if times are challenging. Pulp and Energy order intake was EUR $250,000,000 and then compared to last year, $210,000,000, so roughly at the same level. And then if we look to first half, now order intake has been EUR $591,000,000 and last year EUR $411,000,000. So nice growth compared to last year. And here you see that the twelve months trend is somewhere at EUR1.3 billion level. Net sales has been growing as well to $5.00 €6,000,000 compared to last year $372,000,000 And here COVID has of course created some challenges as well. We have had delays in some progress of some of the projects, mainly in customer part of the projects. So customers have had challenges to execute building or assembly or many installation, many other things, and that has had a small impact to us. But all in all here, our organization has been doing also excellent job in working under these little bit special circumstances. Paper orders received was EUR201 million compared to last year EUR419 million. And like you remember, last year we announced two big orders in second quarter. So this EUR 200,000,000 level is adequate for our paper business. And then if you look at the first half of the year, EUR $522,000,000, then that's already giving a good volume in orders in first half of the year. Net sales has been growing in paper as well. So last year, this year, EUR $472,000,000 and last year, about EUR 40,000,000 less. And the same challenges in paper than in pulp and energy. But in both businesses, we have to say that our own operations have been working well. So our operations here in Nordic countries have been operating all the time. And then in China, our production has catched up all the delays which were caused by the COVID in the beginning of the year. We still have delays in India, in our Indian unit, because of lockdowns. But otherwise the organization has been able to catch up all the delays up to now. So that was the business lines. Then some words about Neles. All in all we are repeating the same messages about Neles, what we have been saying earlier. There hasn't been any decisions, any new decisions, and that's why there won't be any new comments about Nelles. And I know that many of you will make questions about it, but I have to disappoint you already now by saying that there is no news today. And then I know that you tried to ask it in 10 different ways, but the answer will be in the end the same. But let's see how the discussion continues. So we announced the acquisition of 14.9% of the shares in Neles and now we have acquired them in July 22 400,000.0 shares. And the reason is that Neles is a globally leading diversified valve automation and service company. Neles is a good quality global company with a large share of recurring business and strong position in pulp and paper industry. So about 26%, if I remember correctly, are saying themselves of their business is coming from pulp and paper industry. So the same industry where we are strong. Nelles has demonstrated good growth and has potential to grow further, like Nelles has been saying themselves as well. And then we said in June that Valmed's target is to increase ownership when Nelles share price supports additional purchases. That is still a valid comment. And Valmed's goal is to have an active long term role in development of Neles. Then Alfa Laval made a tender offer for Neles shareholders. We are saying that Valmet and Nelles have common heritage. We serve similar global industries and benefit from same global megatrends. We see that there is a lot of value in Nelles in brand, in organization, in market position and in many other things which we respect and of course personnel as well. We want to participate in developing Nelles in long that's why as a Neles shareholder Valmet does not consider Alfa Laval's tender offer to be beneficial for Neles. That's still the same what we said in June about our reasons why we acquired the shares and what we said was it last week on Monday or Tuesday still valid and then there won't be any additional news today. Then Karri can tell news. So he has today an easier job. All right. Thank you, Pasi. And also good afternoon on my behalf as well. So looking at the key figures here at this table, there's only one negative change here. So the orders received for the quarter, they were minus 24% compared to a year ago. Pulp and Energy and Automation business lines, those increased or they were at the same level as last year's, whereas then services and paper business lines, they reduced. China was strong at the quarter with orders and other areas reduced. Then looking at the order backlog. So order backlog was EUR 3,500,000,000.0. That's the second highest quarter end for Valvett. And around 45% of the order backlog will be recognized as revenue for the year in the second half of the year. Net sales for the quarter, $990,000,000. This is plus 2% compared to the year ago. Pulp and energy increased 25% and services reduced by 11%. Automation and paper business lines were at the previous level. Important thing here is that 57% of net sales was capital and 43% was stable business. Last year's quarter's net sales split was 50 one-forty nine capital stable. COVID-nineteen pandemic that impacted quarter's orders and also quarter's net sales With services and automation, access to customer sites was restricted and many customers did not perform manual maintenance activities during the quarter as earlier planned. The access restrictions also impacted the progress of our projects, but only to some extent. Quarter's comparable EBITDA, that was EUR 76,000,000 or 8.3% of net sales. This is above last year's. Quarter's cash flow, 150,000,000. This is almost EUR 200,000,000 higher than a year ago, so extremely good cash flow for the quarter. Cumulatively, our orders were 5% above last year's. Pulp and Energy increased by 44%. Services and Automation were flat and Paper business line reduced by 13%. Orders increased in China. EMEA was flat and the rest of the areas are reduced with orders for cumulatively. Net sales cumulatively 10% higher. Pulp and Energy and Paper business lines increased, so capital increased and then automation and services were flat. Cumulatively, our orders now, after two quarters, they are 16% of net sales. Year to date EBITDA, 128,000,000 or 7.4%. Last year, we were at 117 or 7.3%. And then looking at the cumulative cash flow, that's €324,000,000 and Gearing was negative, minus 23%. Then looking at gross profit and SG and A development. So our sales mix for the quarter, as said, 57% capital, 43% stable. Gross profit was 23%, that's same as a year ago. Last year, sales mix 51%, 49%, capital stable, and this means that currently our capital project portfolio is stronger than a year ago. SG and A's, they reduced during the quarter and were 16% of net sales. Our travel costs were clearly lower than a year ago due to the COVID-nineteen pandemic. We also announced temporary and permanent layoffs during the quarter, but those did not have big impact to Valmet's results during the quarter. Our cash flow. And here we have our EBITA. So cumulatively now, our EBITA is $327,000,000, which turns to 8.8%. So a slight increase from '1. And then also if we look at the situation end of two last year, so then we were cumulatively at 8.7% or €291,000,000 So it gives me rolling twelve months. And then looking at cash flow. So this is the fourth quarter when our cash flow was strong, and it was EUR 151,000,000, driven by strong customer payments and also increased and also then well, payables pretty much remained at the same level. Looking at net working capital. So net working capital was minus EUR $644,000,000, and that turns to minus 16% of rolling twelve months orders received. Normal good level of net working capital is around minus 10%, meaning that our net working capital position was very good at the end of the quarter due to the reduced accounts receivables and also due to high invoicing on projects over revenue recognized. And normal this normal 10% minus 10% net working capital of rolling twelve months orders would mean that net working capital would be around minus EUR $410,000,000, meaning that the difference is more than a bit more than EUR 200,000,000 here. Looking at net debt and gearing. Gearing was minus 23% end of the quarter, and our net debt was minus EUR $223,000,000. This is same level as end of quarter one this year. Year ago, our gearing was 17% or EUR 152,000,000, so meaning that our cash position has now improved EUR $370,000,000 during one year. We paid dividends during the quarter, $0.08 0 per share, and that's EUR 105,000,000. And that means that our equity to asset ratio reduced to 38% from 41% '1 and was pretty much the same level or exactly the same level as a year ago. And then looking at our return on capital employed, so that continues to be good level, 23%. And here, our target remains to be over 20%. So back to you, Pasi. Thank you, Kari. So guidance and short term market outlook. So first of all, we stay in the position that we are not giving the guidance for this year. So Valomed announced on 04/16/2020, that the company withdraws its guidance for 2020 due to the increased uncertainty related to the COVID-nineteen pandemic. We know that in many places pandemic is now a little bit in a more calm situation, but you never know if there is second or third or fourth wave and that's why we feel that it's better not to give a guidance for this year yet. Then short term market outlook. For services, we keep it as satisfactory and weak. And now we maybe more say say last time we were saying it from business unit perspective and now maybe more from the area perspective that that it's a little bit difficult to know how North American situation will come back to the normal. And that's why we are saying that it's weak. Maybe on the other areas one could say that demand is satisfactory And workload goes with the same category size. In automation, the same situation. In couple of the areas, market is satisfactory and some of the areas it's still good. And that's why we keep the same short term market outlook than last year. In pulp, we keep good market outlook. We have good workload. And like you know, we have one letter of INDET with a very big customer here in Finland, and we hope that, that will materialize later on as an order. And that's already that one is a good reason to keep the outlook as good. But then, of course, there are some other smaller projects, but there are projects still in development or sales phase in pulp outside the big ones. In energy, we keep the outlook satisfactory, meaning that our workload is satisfactory. We have some cases developed in sales phase, but total amount means that it's correct to keep it at a satisfactory level. Board and paper. We still have good pipeline of active sales projects and we have good workload and that's why we keep outlook as good. TCU, the same than last time. Order intake has improved a little bit, but we still have a little bit free capacity and the outlook on sales side is such that we still thought that it's correct to give the outlook satisfactory in total. So these are the guidance and short term market outlook. And now I assume Pekka says something next. All right. Thank you, Pasi. I'm aware that we have had some technical issues now during the call, so I hope that they will be solved and we can continue with the international phone call, but apologies for those. We will start with questions here from Kei Lassatama first. If there are questions here, please indicate and you would be given the microphone. Seems that there are no questions here at the moment, so we go to the international phone call. So, operator, I hand over to you now. And your first question comes from the line of Antti from SEB. Your line is open. Please ask your question. Hi. It's Antti from from SEB. A few questions. First one, on the cost side where there was a substantial decrease in the SG and A costs. And Karri, you mentioned that the temporary layoffs and such didn't really impact the second quarter. So how should we think about Q3 and Q4 on the cost line? And are there some structural savings that you have found? Or is this just a temporary COVID related dip in those, please? Well, it's now so that the travel specifically the travel costs were down in quarter two because of the reduced activity. But then if we now look at then going forward, so that we have done some structural changes, we have done some permanent layoffs as well. So that means that there will be some lower level of costs as well. But then on the other hand, when the once the travel activity and the business activity picks up, that means that then we also have additional travel costs there as well going to the normal level. Okay. But just thinking about about the rest of the year, if there is not, let's say, a substantial increase in the business activity or traveling, one might expect that there's even more savings coming up for those quarters. And are they substantial? Well, of course, it also depends on how this pandemic situation continues. And of course, we all hope that the business levels go to normal as soon as possible. Okay. Thanks. Then on the guidance, kind of you felt didn't felt confident enough to say that your sales is increasing for the full year despite a very strong start for the year. So I perhaps missed the part when you talked about Service. So when do you actually see the main risks now going into second half? If we look at the comparison period, for example, in Services, you're not foreseeing any, let's say, catch up revenues on second half? Is there a potential for accelerating sales decline? Or how should we think about the decision not to give a sales guidance? Or we would have been giving sales and profit guidance. We felt that now there is so much uncertainty that it's better not to give it because, of course, none of us knows if there's a big lockdown coming in third quarter and then we would be in very embarrassing situation that we just have given a new guidance and then we take it away again. We thought that it's better not to give it now. Okay. Fair enough. And then last question would be on the traditional paper side. I mean, there's been a big decline during the pandemic, and if we assume that much of that demand is not coming back. So could you remind what's your actual exposure, not talking about the Capital division, but then on the services side? So how much revenue is at risk? And do you see any worries over that aftermarket side? We haven't disclosed how much services is coming from paper and how much from the other areas. So I think you see now the impact of current situation. And then there are, of course, estimates that the production volume will not come back, but of course, the production of graphical papers will continue. I think partly the second quarter order intake decline was because of the graphical paper decline, but then partly it was also because customers were postponing all the maintenance type of activities from second quarter to coming quarter. So but the exact number, I cannot tell. Okay. And on the same theme, have you seen any increased, let's say, discussions on conversions now that the outlook in paper looks a bit weaker? Actually, the conversion market has been last year active as well. So we have booked many conversions and rebuilds. So that market continues to be active. I think now it's a little bit too early to say anything, but I would assume that in coming year, year and a half, many customers are thinking whether they're accelerating their conversion programs, but no real activity yet. Okay. Thank you. That's all from my side. And your next question comes from the line of Johan Eliason from Kepler. Your line is open. Please ask your question. Yeah. Hi. This is Johan Eliason. Just a question on on your comment about the gross margin improvement for your capital business in the quarter. Would you say that is more from a pricing point of view, execution, I. E, quality costs? Or is there a mix in that improvement? Well, it's coming from both. So that the pricing our technology is very good and that means that there's certain pricing power with us. And then also the project execution now during the first half and specifically second quarter has been very good. And how would you say it looks in the backlog then? Is pricing as good for the backlog as it was now in Q2 or even better or worse? Well, of course, if we look at the sizes of the projects, in some cases, it is so that if we have very big projects, the margins tend to be a bit lower than with the smaller projects and some of the big projects have only started. Okay. Thank you very And your next question comes from the line of Felix Henriksen from Nordea. Your line is open. Please ask your question. Hi, Jose. Calling. It's Felix from Nordea. Could you perhaps comment on the services month over month development during q two? And how do you expect Q3 and the second half of the year to play out in terms of potential easing of movement restrictions and maintenance shutdowns by your customer being postponed from H1 to H2? Yes. So month by month, we saw more activity towards end of the second quarter in Services business. So it was clear that the slowest months were April and May and then June was better an average over the whole globe. Then we, of course, have seen that customers have been postponing their shutdowns. Now some shutdowns which were planned to be in second quarter are planned to take place on third quarter, and the ones which have been planned for third quarter will be postponed maybe the fourth quarter. I think there's that kind of chain reaction and not so that there's too much shutdowns at any point of time because, of course, our capacity is limited and customers' capacity are limited and also other sub suppliers' capacity is limited. So we will not see too high volume of shutdowns on any quote. Did I miss did you have a third point as well? Maybe no. Hello, Philip. We can't hear you well. Or we can't hear anything? Yes. Is there are there still questions? Or can you ask the operator? Yes, sir. Your next question comes from the line of Tommy Rylo from DNB. Your line is open. Please ask your question. Yes. Hello, everyone. It's Tommy calling from D and B. Extremely bad line here, unfortunately. So so difficult is to to follow-up. But still on the the, let's say, guidance which you don't have, but originally had for sales and the clean EBITDA improvement. Now you are tracking above for the first half. Back to the earlier question, any risks or any reasons to believe that that the second half earnings could not be beaten? Any elements you would highlight that we should be keeping in mind that earnings could be under pressure? I think the general answer is luckily COVID, so none of us knows if there will be more lockdowns in economy. Let's hope there won't be. Otherwise customer activity as well, not only lockdowns, but if economy is slowing down, then it is slowing down. But from your own point of view, is it fair to assume that you will have as good as the or deliveries, let's say, catch up from the deal in the second half? And as you said, that, month by month, there is more services activity, and you have earlier said that you expect that, let's say, new improvements to to come back relatively quickly after the lockdowns are over? It's very difficult to answer now somehow. Kari, can But you maybe, Tomi, if you just like if we look at back now quarter two and so our manufacturing has been working pretty much full capacity and there has been no stops there except some in India. Then also if we look at the sub suppliers, really no major shortages. And also then project execution has worked quite well, or I could say even well. So overall, like what's in our own hands, things actually have progressed quite well. We've also we've reacted so with temporary layoffs. We also have done some like permanent kind of structural changes. So we've been also quite agile here. So things that are in our own hands actually have worked. We are quite happy with the activity that our organization has taken. Exactly. And the question is more that you don't expect any major reversal for that trend in the second half year. But it's very difficult to say like we had less net sales in services now than last year and then nobody knows or of course, we have estimates, but can we are we now so confident that we could give a guidance? We thought that we cannot. Okay. And then a question on Mailask. Have you been buying more shares in the recent days or weeks after that trade that you announced when you flagged your No, we flagged. And then next flagging limit is at 20%. So there between, we cannot give any comments to any directs. Okay. Thank you. Thanks, Tommy. Once again, if you wish to ask a question, please press star and one in telephone and wait for a name to be announced. If you wish to cancel your request, please press the hash key. As your next question comes from the line of Thomas Brainer from Lazard. Your line is open. Please ask your question. Yes. Hi. Good afternoon. I'm sorry. I'll ask a question about Neles because it's been quite an important topic for the company. Just on the official statements that you've made with the current stake that you have, I guess everyone agrees that Neles is a good business, a good company with good opportunities. Could you help us understand how with a 15% stake and sit on the board, how Valmet would make it a better company and how you think you can help them? Second question is I've seen concerns from analysts that with Vamed involved in Neles, they could lose customers like Android or VoIP. Could you see how you see this point as well? Thank you. To this question about losing customers, it's very easy to answer because I have been running the business myself for eight years. And we never lost deals because of that to hundreds. So in Praxis, we are buying some products from hundreds and hundreds is buying some products from us and if they are good products then why not to buy it from each other. And that's not the reason at all and I have my own long experience with that. And then how we can help? We are an industrial company. We know how to manage industrial companies. We know one very good segment of Nellis very well: pulp and paper. We have good track record of developing company long term and that's what we can offer also to Neles. Okay. Thank you. Next question comes from the line of Vincent Normand from Pascal. Your line is open. Please ask your question. Vincent Normand, your line is open. Please ask your question. Yes. Sorry, I was on mute. Yes. Hello, gentlemen. Just a quick question, a quick follow-up on the margin for Q2. And so you said you had very good activity in Q2 for capital business. Could you maybe elaborate a bit more? Would you say that capacity was nearly 90%, 95%? And how you see that evolving in the near future, especially for the pulp business? Because you are starting this very large project in South America. So it would be surprising to see the capacity capacity level going down in the near future? We had good capacity utilization in our capital businesses in the second quarter. Now like you have seen, our backlog is good, and we are saying that sales activity is still good. We have good utilization. Of course, we have some units where we are even maybe overloaded. In some units, maybe there's still a little bit lack of work. As an average, the utilization is good. And the backlog gives reasons to believe that the utilization in the third quarter will be good as well. Okay. So there is no reason for the gross margin to decrease, I mean the gross margin of the capital business in the near future? No, that may be something what I didn't say, but Karri can try to answer to that. Well, of course, Vincent, of course that depends a lot on project mix what we are having. But quarter two was good, so we had a very like higher than usual share of capital pieces, 57%. Typically, it's fifty-fifty. And but of course, like depends on the quarter. But quarter two projects the progress with the projects was extremely good. And then maybe also other thing that we need to remember that our order backlog was the second highest ever in any of the quarters, so that we are in a kind of quite high level of the business regardless of pandemic. Okay, thanks. And your next question comes from the line of Johan Eliason from Kepler. Your line is open. Please ask your question. Yes. Hi. It's Johan here again. Just a question on this good gross margin in your capital business, and then you said project developments were really good during the quarter. But isn't it so that one of the effects from COVID-nineteen on your project business is that you couldn't really do the final installations at the customer sites. So the revenues and and those the earnings you you sort of recognized during the quarter were basically only impacted by all the things you could in in impact internally. Now going forward, as I suppose you will have to do physical installations again, isn't the risk on the capital business margin increasing going forward in that case? No, because we are, of course, booking cost to cost. So we are not booking extra margin in manufacturing and then less margin somewhere else. So it's with the same margin for the whole project. And then of course, if there are delays caused by customers, then we have to discuss about the cost compensation if there are delays by COVID. But then of course in some of the projects where we are in charge of installation, then of course it might be that we have challenges with the cost management because of the COVID, but we try to manage that. And maybe you want to add on here, what Pasi was saying, so that we recognize revenue based on the gross profit or the project margin of the project. This final assembly typically is quite small amount of the final revenue. And so it's all included in the cost estimation, meaning that something would need to go badly wrong if we would need to book some additional costs on top of what we have estimated. Okay. Excellent. Thank you very much. Next question comes from the line of Sven Weyer from UBS. Your line is open. Please ask your question. Yeah. Good afternoon. Just one question on Neelis again. I was just wondering in terms of your observation of your shareholder base and their support for the deal. I mean, obviously, we could see that when you announced to buy the 15%, the share price was going down. When you announced to step up the stake, the share price was going down quite a bit. And today, when you repeat your commitment to it, it's going down again. So does that play a role in your next steps? Or what is the kind of feedback you have received more directly from your shareholder base and not via maybe the share price reaction? Of course, now we have had period when we haven't had the possibility to talk with investors a lot. So we will get more feedback, direct feedback in coming weeks. And but do you take that into consideration what happens to your share price on the days when you announce something related to Nevis? Or do you simply assume that's not representative of how your shareholders think about it? We are not reacting to any daily reactions. We work here in Valemet long term and we work to increase our shareholders' value in the company long term. Sometimes even after the quarter results, the share price goes down and then it might be that after a couple of weeks it's at the same level where it was originally. So one cannot make long term management decisions based on a couple of percentage daily changes in the share price. But of course, the whole idea of management and the board and the company is to work to create shareholder value. And that of course is one of the basic thoughts we keep in mind when thinking about Neles, of course. Okay. Thanks. Once again, if you wish to ask a question, please press star and 1. Next question comes from the line of Marius Erickson from ABG. Your line is open. Please ask your question. Why did you buy more shares in Nellix after Alfa Laval made their tender offer? Thank you. Like we said in the announcement that we buy shares when we see that it's beneficial for Valmed. And why is it beneficial to buy above the offer price in Alfa Laval for Valmed? That's how we have analyzed the situation. Thank you. Once again, if you wish to ask a question, please press star and 1. There are no further questions at this time. Please continue. Okay. Thank you, operator. And Arthur, some questions here at Gaelsatammastil. If you want to ask questions, please indicate. If not, this then concludes today's event. So the q three result publication will take place on the twenty seventh of of October. So see you all then again. Thank you.