Welcome to the Alfa Laval quarter three earnings call. At this time, all participants are in a listen-only mode. Following the presentation, there will be a question-and-answer session, at which time, if you'd like to ask a question, you will need to press star and one on your telephone keypad. I must advise you, this conference is being recorded today on the 28th of October, 2014. With that, I hand over to your speaker today, Mr. Lars Renström. Please go ahead, sir.
Thank you very much, good morning, and most welcome to our presentation. I will start by highlighting three matters. Firstly, order intake in the quarter reached a new record level of SEK 9.7 billion, year-on-year, the growth was 31%. The recently acquired Frank Mohn AS had a very strong quarter and contributed with SEK 1.5 billion. We are pleased to be able to state that we expect demand in the fourth quarter to remain on about the same high level. Secondly, a one-time charge of SEK 260 million was booked for a cost reduction program that, during the fourth quarter 2015, will give annualized savings of SEK 300 million. Finally, sales increased by 29%, and the operating result of SEK 1.55 billion was the best quarter in more than five years. The result of the financial items increased by 16%, excluding the one-time charge for the cost reduction program.
Now we move over to the key figures. There you see that orders received rose 31% to SEK 9.7 billion. Net sales grew 29% to SEK 9.3 billion. Adjusted EBITA increased 29% to SEK 1.55 billion, adjusted EBITA margin reached 16.7%. Year to date, orders received rose 18% to SEK 26.2 billion. Net sales increased 15% to SEK 24.3 billion, adjusted EBITA grew 13% to SEK 4 billion, adjusted EBITA margin reached 16.3%. Moving over to orders received. There you see that we reached on rolling 12 months SEK 34.7 billion, the increase year-on-year was 26%. On the next slide, you see at the order analysis that year-on-year, acquisitions contributed with 20%, organic growth was up 5.7 percentage units. Currency effects were 5.2%, giving a total of 31%. Sequentially, acquisitions contributed with 10.4%, organic growth with -4.5 percentage units, positive currency effects with 2.3%, giving a total of 8%. Next slide.
The EBITA margin reached 16.7%, the operating result of SEK 1.55 billion is the best quarter in more than five years. Now we move over to the highlights in the quarter. In process technology, we booked an order for air heat exchangers to a natural gas liquid export terminal in the U.S. We booked a similar order in the previous quarter, so the U.S. is gearing up for export. We booked another two orders for oil and gas production in the U.S. and Canada. We also booked an order through a Korean EPC contractor for the Middle East, an order for an Indian refinery. In marine and diesel, we booked two very large orders for Framo pumping systems. One for an FPSO to be moored outside Nigeria, one for an oil drilling platform off the Canadian coast.
Demand for PureSOx continued to be good. We booked eight systems for six ships. Since the commercial launch 2012, we have booked 58 systems for 51 ships. Now we continue with the development per segment. In the quarter, we had 6% organic growth year-on-year. You see that all segments in Marine and Diesel Division grew, while it was a mixed picture in Process Technology and Equipment. We are very pleased that the organic growth for service was up 6% with all three service segments contributing. Let's take a closer look at the development per division. Now all comments are sequential. We start with Equipment. Following the all-time high in the previous quarter, all capital sales segments declined while service was unchanged. Industrial Equipment was down due to lower activity in areas requiring refrigeration products.
Sanitary was negatively affected by dairy and the resulting effect from the sanctions against Russia. OEM saw weaker demand from the air condition industry following a relatively cool summer in parts of Europe. Let's move over to Marine and Diesel. Marine and Diesel Equipment showed a modest decline due to slightly lower demand from the shipyards. Marine and Offshore Systems dropped due to non-repeat large boiler orders. We are pleased to see the good development for exhaust gas cleaning systems, and we have recently launched the second generation. Marine and Offshore Pumping Systems had an excellent quarter, boosted by two large offshore orders. We move over to Process Technology. In Energy and Process, Oil and Gas did very well, while Refinery and Petrochemicals declined, resulting in an unchanged order intake. Food and Life Science grew, boosted by Brewery as well as Life Science and Renewable Resources.
In Europe, current investment cycles are coming to an end, and that caused a minor decline in Water and Waste. Moving over to the next slide. Year-to-date, you see that all Marine and Diesel segments have been growing. The Equipment segments have been stable or growing, while we see a modest decline in the capital sales segments of Process Technology. However, service has grown very well. Now we continue with the geographical development. There you see that year-on-year, North America has grown with 47%, boosted by investments in Oil and Gas Production, Refinery, and Petrochemicals. Asia has grown with 46%, boosted by the recovery in the marine industry and the acquisition of Frank Mohn AS. Western Europe and Nordic have had a moderate growth. Central and Eastern Europe has held up well despite the conflict around Ukraine.
Latin America has declined 20% due to lower activity at Petrobras and lower demand for raw materials impacting the Latin American economies. Now we take a closer look at the development per region. Now all comments are sequential. We start with Asia. Excluding Frank Mohn, orders declined slightly due to non-repeat large projects, but base orders and service did very well. It's interesting to note that China saw a broad-based positive development driven by base business and Marine. However, a wait-and-see mode caused delays in the decisions for large projects. Moving over to Europe. Western Europe declined due to fewer large orders and decline in base business. Mid Europe was negatively affected by sanctions and countermeasures in Russia, as well as lower demand from emerging markets. Central and Eastern Europe showed the same pattern as Western Europe, with fewer large orders and a decline in base business.
In Russia, there were fewer large projects, but base business performed surprisingly well. Customers that rely on public funding are doing well, but those depending on private funding have some difficulties. Moving over to Americas. In North America, we had continued good growth driven by large orders in oil and gas exploration and production, while base business was unchanged. Water and waste did well, thanks to good activity in municipal wastewater. In Latin America, we declined as Brazil saw fewer large orders, but base business in Brazil was still up. Food volumes were also lower in the region. Positive side, we booked oil and gas orders in Peru and Mexico. Next slide. Year to date, Asia stands out, boosted by marine and acquisition of Frank Mohn. North America is boosted by oil and gas exploration and production.
Western Europe has developed well, thanks to some large orders and exhaust gas cleaning. In Central and Eastern Europe, we see the impact from Russia and Turkey, since all other markets have had good growth. The decline in Latin America comes entirely from Brazil. All other markets have delivered growth. Now we come to the next slide. There you see the top 10 markets in 2013. The green bar is whole year 2013, and the yellow bar is last 12 months. There you see that the U.S. continues to grow thanks to an acquisition in oil and gas. China is boosted by marine and a solid broad-based growth. South Korea is boosted by traditional shipbuilding, oil and gas offshore, and the acquisition of Frank Mohn. The decline in Russia is 15%, and the same goes for Brazil. Adriatic and Benelux are boosted by large orders.
Now I hand over to Thomas for the financials.
Good morning, all of you. Let's move right into the sales, as Lars has covered orders received in depth. In the quarter, we realized sales of SEK 9.3 billion, an increase of 29% year-on-year, of which the organic element was 5.3%. On the Quarter 2, we commented that based on having Frank Mohn in the group for the full coming quarter, it's of course reasonable to expect an increase in sales also in Quarter 3. What happened then? Well, in comparison with Quarter 2 of 2014, sales was up 10.1%. However, that was including an organic decline of 2.3%. This decline was partly due to the recovery in Quarter 2 from the delay in invoicing in Quarter 1. In addition to that, normal variations in revenue recognition for contract-based sales.
I think it should be noted that Frank Mohn contributed with sales to the tune of SEK 1.3 billion, a sequential increase of 9%. Of course, Quarter 2 was only six weeks for Frank Mohn, and now we have obviously a full quarter. Moving on to service. The service activities represented 26.4% of total revenues, the same level as in Quarter 3 of last year. I think it should be noted that organically, the relative portion of after sales to total sales increased. Remember, aftermarket revenue in relation to the total for Frank Mohn is lower. Let me come to the first forward-looking statement concerning revenues. We expect that sales will increase, and increase slightly, in Quarter 4 compared to Quarter 4, in accordance with the seasonal pattern. Let's move on to the next graph about gross profit margin.
In the quarter, we realized a gross profit margin of 35.3%, representing a decline of 1.4% year-on-year and a decline of 1% sequentially. Again, with Quarter 2 report, I said, in the near term, we do not foresee any material change compared to the outcoming Quarter 2. The actual for Quarter 3 came out, I have to say again, slightly below what we expected, and that is due to the distribution of FX effects between Quarter 3 and Quarter 4. In total, the two main contributors to the lower gross margin sequentially are, firstly, the lower gross profit margin in Frank Mohn having a full quarter effect, and then, as I just mentioned, the negative FX transaction effect to the tune of 0.5%. Obviously, FX was the most sizable of the two.
Let me remind you in this context that as for Frank Mohn, you must remember that the overhead costs are lower than the rest of the group. On an operating margin level, there is a positive effect from Frank Mohn. Let me give you the second forward-looking statement. In the near term, we expect to get a limited positive influence from FX transaction effects. I will specify FX effects further later in this presentation. However, gross profit margin in quarter four will be adversely influenced by the seasonal increase in capital sales. We do not expect any further adverse price mix effects within capital sales. I think that is important to have in mind. Let's move on and look at the overhead cost development. R&D ended at SEK 180 million in the quarter, an increase year-on-year like-for-like of 1.4%.
It's also a reduction sequentially in absolute terms of SEK 20 million. This has been bringing the year-to-date increase down to 7% like-for-like. The high levels of increases in the first couple of quarters is coming down, as I think we've commented earlier this year. Sales and admin amounted to SEK 1.38 billion in the quarter, representing an increase like-for-like year-on-year of 4.9%. Salary inflation and selective increases in resources, of course, the main reasons for the increase. I think it still should be noted that the level of increase like-for-like is lower than in quarter one and quarter two. Really the first sign of our savings initiative. As I just commented, we had adverse FX effects. Total impact net of translation and transaction was only SEK 7 million, but a fairly sizable transaction effect within this net. All in all, as Lars mentioned earlier, an EBITA margin of 16.7%.
As for operating income or EBIT, if you like, there is a non-recurring charge of SEK 260 million included, and I will get back to that in a moment. Profit before tax, following from all what I've said above, ended at SEK 991 million, which is a reduction of 8% over last year. If I allow myself to exclude the non-recurring charge of SEK 260 million, it's actually an increase of 16%. A lot of that, of course, explained by the contribution from Frank Mohn net of financing costs. Before leaving the P&L, taxes came out a bit above the 28% guidance, we maintain our guidance of 28% going forward. EPS, again, if I allow myself to exclude the one-off charge, EPS would have been up 8%.
Finally, return on capital employed and return on equity are, of course, both impacted by the acquisition of Frank Mohn as presented in the report, particularly as the numbers are not presented pro forma. Let's talk a bit about our cost savings program. We did talk about a review of structure and cost with our quarter two report. Let me just give you a few detailed comments about this program. To begin with, it's important to stress that the level of SEK 300 million annualized will be reached during the course of quarter four 2015. In terms of savings realization, to be more specific, SEK 50 million is expected to show up in the P&L this year, SEK 150 million more in the P&L next year, and the final SEK 100 million will show up in the P&L in 2016.
If we look at the expected headcount reduction of 300 employees, approximately 40% are related to cost of goods, the balance is overhead personnel. As for distribution of the savings in the P&L, we foresee that 40% will be showing up in COGS, 20% in R&D, and the balance, the remaining 40%, in sales and admin. Let's move on to divisional performance. Just a few short comments on the operating profits and margin by division. Equipment came out below quarter three of last year and exactly as quarter two of this year in absolute terms. Comparing the margin to quarter three of last year, the decline was mainly due to a negative price mix effect, also increased sales and admin costs and increased sales volume had a limited positive impact on operating profit. Process technology. Operating income was basically unchanged year-on-year.
The operating margin was burdened by a negative price mix effect as well as increased sales and admin, partly compensated by higher sales. Marine was benefiting from sales increases from Frank Mohn as well as organically adversely impacted mainly by the increase in step-up amortization, as well as sales and admin costs and price mix. Sequentially, Marine was adversely impacted by step-up amortization and FX. Let's move on to a few details on our funding. As you may have noted from an earlier press release, the bridge funding put in place in connection with the acquisition of Frank Mohn has been replaced in its entirety. The main element of this long-term funding is the issue of Eurobonds, with maturities of five years for EUR 300 million and eight years for EUR 500 million.
This was earlier complemented with additional loans from the European Investment Bank, the Swedish Export Credit Corporation, and also to some extent from our bank syndicate. Overall, I should say we're very satisfied with the terms achieved for funding this acquisition. As you may have seen, the very good cash flow in recent months has already reduced our debt level from where we were after the Frank Mohn acquisition. Let me just point out at this juncture as well that, with the current level of gross debt, we anticipate interest net to be SEK 90 million per quarter. Of course, we expect that to gradually decline as indebtedness goes down. Let's get to the cash flow statement. Cash flow from operations amounted to SEK 1.67 billion, well above Q3 of last year, as well as Q2 of this year.
The main contributor, of course, being a reduction of working capital to the tune of SEK 600 million. Free cash flow, SEK 1.26 billion. That is to be compared with less than SEK 0.9 billion a year ago. Some of the improvement in cash flow from operations was obviously consumed by increased financial costs. Let me also state that Frank Mohn, of course, contributed to the cash flow generation. I think it's fair to say that we're truly happy with the development of cash flows. Let's get onto FX. As I mentioned before, the net was a negative SEK 7 million in the quarter, but again, note that transaction effects, they were negative to the tune of 0.5% in relation to sales. We've updated the forecast for the full year, an improvement of SEK 15 million compared to the last report. Finally, we have updated our expectations for 2015.
Given stability in the exchange rates at current levels, we foresee positive effects of totally SEK 250 million in 2015. Let's look at our order backlog. We had a total order backlog as per end of September of SEK 22.4 billion. The backlog was representing 6.4 months of LTM sales, that is, if I exclude Frank Mohn. If I include Frank Mohn, the backlog we estimate represents about seven and a half months of sales, so an even longer backlog for the Frank Mohn activities. On a like-for-like basis, the order backlog to be shipped in the current year, and this is really important for your full-year forecast. Like-for-like, the order backlog to be shipped this year is about SEK 100 million below the situation a year ago, so SEK 100 million less like-for-like to ship in Q4 compared to last year.
Including Frank Mohn, as you can see from the slide, the backlog for shipment in Q4 is about SEK 700 million above September last year, but that is, of course, including Frank Mohn. Having said that, let's move on to the bridge sales 2013 to 2014. The numbers, I can say immediately, they are the same as last time. We start off with SEK 29.8 billion. Order backlog going into this year was down SEK 200 million compared to the year before. FX translation, still positive with SEK half a billion. The acquisitions, Niagara and Frank Mohn in combination, adding SEK 3 billion, giving a subtotal of SEK 33.1 billion. Of course, you need to think about the implications of demand for orders in for out as well as price effects. With that, I hand over to Lars for the outlook and the closing remarks.
The outlook is as follows. We expect that demand during the fourth quarter will be on about the same level as in the third quarter. For each division, our demand expectations for the fourth quarter are as follows. Process technology to increase somewhat due to large contracts. Marine and diesel to decline, following ship contracting development earlier in the year, and a strong third quarter for Frank Mohn Offshore. Finally, equipment to be unchanged. That completes our presentation, and I will hand over to the operator for the Q&A session.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. Once again, that's star and one on your telephone keypad to ask a question. Your first question comes from the line of Lars Braathen from Barclays in London. Please ask your question.
Thank you very much. Good morning, Lars. Morning, Thomas. A couple of questions from my side. Just on the divisional outlook for Marine, I was curious as to the thoughts on base order trends versus large orders going into Q4. Obviously, Frank Mohn saw a couple of very large orders in Q3. Is it the view there that that's seeing the deterioration going into Q4? Or are you seeing broad-based weakness across your Aalborg and legacy Alfa product portfolio as well, in terms of the outlook? Secondly, just Thomas, to the cost reduction program, if I could ask to give a little more granularity there divisionally, and also whether the headcount reduction includes the 90 headcount reduction that was announced early in the quarter from Aalborg Industries, in its Danish manufacturing site. Thanks.
Well, when it comes to Marine, we expect a modest decline. When it comes to large orders, those come in a bit lumpy. To answer you on the base business, a modest decline.
Your questions about the cost reduction program, as we were quite explicit about already with the quarter 2 report, we made a review across all parts of the organization. The savings program will have an impact, in all of the divisions as well as I pointed out, cost of goods and R&D. For the Aalborg closing, whether that was included in terms of headcount reduction. Yes. Remember, 90 is the gross impact in that particular project. The net impact is well below half of the 90. In relation to 300, you should only think about something like 30 to 40 people in the Aalborg project.
Understood. Thanks.
The next question comes from the line of Max Yates from Credit Suisse, London. Please ask your question. The HO line is open. Please unmute your line and ask your question. Okay, no response. We'll move to the next question, which comes from the line of Ben Uglow from Bank of America. Please ask your question.
Thank you. Morning, Lars. Morning, Thomas. Just on the weaker ship contracting comment that you make. Can you just give us a bit more granularity on where you see that? Is that in Framo or is that in the traditional business? Is it in certain segments? Maybe cut what you see in terms of merchant offshore and then liquid fuels. That's the first question. Just a question on oil and gas markets generally. We've seen the oil price come down. Would you expect any negative impact on your business, going forward? Are there any big differences you see by region or in terms of upstream and downstream markets? Thank you.
I can start with your last question. We had a very strong order intake in oil and gas in the third quarter. What we can see is that there is a slightly lower tendering activity, but you can differentiate it when it comes to the U.S., we see that it is continued very strong, and there we have shale oil and shale gas continuous in a very strong mode. Of course, in a longer perspective that there will be an impact from lower oil and gas prices, but the lead times on these projects are very long.
Coming to the lower ship contracting and more granularity on that. Let me start off by reminding you that we are exposed to every segment of this market. If you look at the total statistics for contracting from the beginning of this year, you have seen a decline and obviously that is the reference point for our expectation. You know, there is a lag of everything between a few months and up to nine months for different types of products in our portfolio. You may Report of Wärtsilä a few days ago, that they had quite a positive outlook as far as their marine division is concerned. Our conclusion from that is that there is a difference in mix between us and Wärtsilä that makes this difference.
I think as far as we're concerned, you can just look at the statistics from the beginning of this year and the evolution of a decline. Again, we are exposed to all the different types, of course, with the difference that Frank Mohn is only chemical tankers and product tankers.
Got it. Okay. Thanks, Lars. Thanks, Thomas.
Your next question comes from the line of Sven Weier from UBS Frankfurt. Please ask your question.
Yeah, good morning. A couple of questions from my side, please. I'm just curious, when you did see the marine business starting to go down in the quarter, was it just in September? Maybe you can give us some additional details on that. Then also on marine services, we've been having Rolls-Royce mentioning some weakness starting into the second half. It seems that you didn't see that weakness. Is that also because of a broader positioning that you have in the marine market? Thank you.
Well, it can. Marine services have had an excellent development. We have seen marine services accelerate year-on-year, during the last three quarters. Our conclusion is that because we've had few years with very modest growth when it comes to service in marine, and that is because ship owners have been holding back due to the low freight rates. Our conclusion is that they've reached a point where they have to make their service and their retrofits. In fact, we had a very good development in the third quarter, year-on-year, when it comes to marine service. Then, I think your first question, Sven, was about when did marine start to go down? Sven, I think we have to refer back to quarter two.
I think we were quite explicit after quarter two, that quarter two was really extraordinary, particularly when it comes to the boiler product range. We have seen a continued, I would say, quite strong orders received for the division as a whole, supported by offshore. Again, you know very well what I mentioned on Ben's question, there is a lag. We started to see a decline. Of course, that is in contracting, and that is gradually kicking in. Depending on product line, it comes earlier or somewhat later, within a frame of a few months to nine months.
Understood. Thank you.
Your next question comes from the line of Nick Wilson from Berenberg in London. Please ask your question.
Good morning. Two questions, please. With apologies, just trying to get to the bottom of the gross margin. I know you gave the moving parts. Also, I guess you will have some benefit, in terms of maybe some COGS savings, although it will be fairly small. My simple question is, do you think the gross margin of 35.3% will prove to be the low? Then we start to move forward from there. Then linked to that as well, please, R&D. Again, I know it's part of your cost savings program going forwards. Obviously, it's been quite lumpy so far this year. How should we think about the level of R&D spend going forwards? Given obviously your target to reduce it by, I think you were saying, or maybe 20% of the cost restructuring program, was aligned to R&D. Thank you.
Let's start off with the first question about gross profit margin. Yes, the impact from the savings program will clearly be very low, if any at all, during the rest of this year. Then, of course, as the changes in structure are kicking in, there will be an impact that totally, as I mentioned before, will represent, we estimate about 40% of the total savings. As far as gross margin in general is concerned, I think I was quite explicit in the presentation. For quarter four, we will have this seasonal increase in capital sales that will have an adverse effect because of a different mix between capital and aftermarket. What I was also quite explicit about is that we do not foresee any further adverse price mix effect within capital number of quarters. Then, of course, FX will eventually start to turn positive.
We will get benefits from the stronger US dollar, the stronger EUR in the quarters to come. For R&D, the R&D is inevitably lumpy in nature. We do not capitalize any R&D costs, given the lifetime and our assessment of the individual projects and the size of them. It is inevitably lumpy, because as we are developing and producing new tools, first sets of tools, and the first prototypes of the products, they incur costs that cause the lumpiness. There is an underlying quite stable level of resources for R&D, mostly in-house, but to some extent, external. We do expect, and we do have in mind to reduce the total R&D spend going forward, because we believe that we can better optimize from R&D into introduction to the market and payoff from customers by a slight reduction.
That's the reason why we're cutting back on R&D to a limited extent.
To add, we have, during several years, increased our investments significantly in R&D. Even when we have had previous cost-saving programs running, we have spared R&D and continued to invest. Therefore, we feel quite confident that we can make a reduction of 10% and still be very successful.
Thank you.
Your next question comes from the line of Colin Gibson from HSBC, London. Please ask your question.
Hi. Good morning, gentlemen. It's Colin from HSBC. Two questions, please. The first, anything at all you can do to help us just to understand the organic profitability trend in marine and diesel? Obviously, Frank Mohn coming in in the quarter and making a big impact, both on top line and I guess on the margin as well. Any help you can give us in terms of trying to disentangle all of that versus the organic business? Secondly, we saw very strong cash flow in the quarter. We also saw a weaker margin in the equipment division than the market was expecting. Are we seeing deliberate destocking from EDD in the quarter? If so, could you comment a bit around that? Thank you very much.
Okay, Colin. Well, when it comes to profitability trends, we think it is fair to state that Frank Mohn is contributing positively to our operating margin. We do not go beyond that because of agreements with the sellers of the business, among other. As far as the divisional profitability is concerned, we are not prepared to go below the level of disclosure that we have in the report. Looking at the equipment division profits as well as profit margin, yes, we have a lower profit margin at this juncture, but there is a significant change in, among other, the approach to market, where there is an increase of distributor sales. There is a launch of web tools to increase our presence with end customers. We're totally convinced that this is the right approach to improve presence with customers, to increase volume as well as profitability going forward.
As far as we're concerned, we are happy with the steps and the measures taken in equipment.
Thank you.
As a reminder, ladies and gentlemen, it's star and one on your telephone keypad to ask a question. Your next question comes from the line of Peter Frölund from Handelsbanken. Please ask your question.
Yes. Good morning, Lars and Thomas. A couple of quick ones to begin with. Thomas, you mentioned savings this year by SEK 50 million. What have you seen so far this year, if any, and implicitly what we could expect in the fourth quarter? Also on the FX, given your hedges and your FX guidance on the total earnings effect for 2015, could you help us to understand how the pattern will look like by quarter? My question, to come back on service, sorry for this, but if we look at the entire company, not only the marine side, we have seen a strong service growth year-on-year, but a slight decline quarter-on-quarter. Is there any seasonality here on a group level to take into account?
Given the installed base, you might could expect continuous growth of the service, at least on a year-on-year basis going forward.
I can take the last one first. Why we had a sequential decline in service was due to some exceptionally large orders that we booked in the second quarter.
If you look here, over time, you will continue to see a continued growth year-on-year for service. We are quite confident that the activities that we put in place, that they will continue to generate a very good development. You can see year-on-year, we are up about 6%.
Yeah. That is very clear. Yeah. Thank you.
Okay. Coming on to your first two questions. As far as savings this year are concerned, remember I said total effect this year, SEK 50 million in the P&L. Well below half of that was the effect in quarter three. When it comes to effect next year, a total of SEK 250 million positive. Of course, as far as translation is concerned, the bulk of that will be kicking in during the first half. As far as transaction effects are concerned, they will be coming in rather towards the latter part of the year.
The net of those two? Is it flat the year or it's back end loaded?
Peter, I think we have to get closer to next year before we get into the details by quarter. As far as we're concerned now, translation will come earlier, transaction will come later, and we'll get back to more details in the coming quarters.
Thank you, gentlemen. I'll get back in line.
Thank you.
ladies and gentlemen, as a final reminder, it's star and one on your telephone keypad to ask a question. It's star and one to ask a question. Got a follow-up question from Peter Frölund from Handelsbanken. Please ask your question.
Yes, thank you. On your outlook, you've been quite sort of open with the divisional sort of arrows going into Q4. On a total group number, we have seen large orders being very, very strong. You're talking about service continue to grow. At the same time, marine is expected to come down. Your outlook, is that with normal large size order or is it a total order number?
As you rightly say, Peter, we've had a really strong quarter in terms of large orders, and I would like to remind you of Lars's qualification for process technology.
Process technology is expected to increase somewhat due to large contracts. Of course, if these expected large contracts do not materialize, of course, that will, we believe, have an impact on total incoming orders in Q4.
Okay. Thank you.
Yeah. Thank you, Peter.
Your next question comes from the line of Lars Braathen from Barclays, London. Please ask your question.
Thanks. Just a quick one from my side. How many scrubber systems did you book in Q3, and what are the thoughts and expectations here for Q4? Thanks.
We booked 6 ships in the 3rd quarter, with in total, 8 scrubbers.
Can I just be clear, you booked 27 systems in the 1st half of 2014, is that right?
Yeah, let's see. I have to dig up my statistics. If you hold a second. Yes. Let's see here. The number of scrubbers, we booked 27 in the 1st 6 months. Yes.
The Q4 outlook?
We see that there is a continued good demand for scrubbers, and we are quite busy taking orders, booking orders, and receiving down payments. We definitely believe that order intake will be higher in 2015 than what it has been in 2014.
Sure. Thanks.
There are no further questions at this time.
Thank you very much. Thank you very much for your attendance and contribution, and we wish you a continued good day. Thank you.
Ladies and gentlemen, that concludes today's conference. Thank you for participating. You may disconnect.