Welcome to
the Alfa Laval Q3 Earnings Call. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. I would now like to hand the conference over to your speaker today Lars Renstrom. Please go ahead, sir.
Thank you very much. Good morning and most welcome to the presentation. I will start by giving you my three highlights. Orders received continued on the higher level established in the Q2, supported by all time high in Process Technology division. And year on year, we were up 2% organically.
The second highlight concerns Asia that grew significantly and China's growth continued due to launch orders and marine. And finally, we are very pleased to report that service grew 10% year on year excluding currency effects. Let's move on to the key figures. Orders received rose 2% to €7,400,000,000 Net sales increased 2% to €7,200,000,000 and adjusted EBITA grew 2% to €1,200,000,000 and the adjusted EBITA margin reached 16.6%. Year to date, orders received declined 4% to EUR 22,200,000,000 net sales dropped 2% to EUR 21,300,000,000 and adjusted EBITDA declined 3% to €3,500,000,000 And finally, adjusted EBITDA margin reached 16.5 percent.
Now we move over to orders received and margins. Orders received on rolling 12 months reached €29,500,000,000 The increase was 4% year on year at constant exchange rates. The somewhat higher order intake that we reached in 2nd quarter also continued in the 3rd. We also expect that to be the case in the 4th quarter as well. Next slide.
From the order analysis, you find that year on year acquisitions contributed with 2.1 percentage units and organic growth was 2.2%. We had negative currency effects of 2.1%, giving a total of +2.2%. Sequentially, negative currency effects of 1.2% contributed to a total of minus 1.5%. On the next slide, we see that the EBITA margin reached 16.6% and the operating result was €1,200,000,000 We have now had 7 consecutive quarters around 16.5%. Moving over to the highlights in the quarter.
Process Technology had a record quarter and we booked an order of €185,000,000 for a petrochemical plant in India. In the U. S, we booked an order of €50,000,000 to a plant processing shale gas. In the food application, we booked €60,000,000 for a brewery in Ireland EUR 70,000,000 for a bedded below plant in Brazil. In marine and diesel, we received an order of EUR 80,000,000 for a waste heat recovery system to diesel power plant in the Middle East.
Moving over to the development per segment. We see that year on year in the quarter, 6 segments grew, 3 were unchanged and only 2 declined. Let's take a closer look at the divisions. Please note that all comments are sequential. We start with the equipment division that was down 4%, partly due to vacation in Europe.
Sanitary was unchanged with good demand for products going to beverage, pharma and personal care. Industrial equipment was affected by drop in demand for refrigeration, whereas HVAC had continuous good demand. And finally, OEM declined due to non repeats. Moving over to the Process Technology division, they delivered an all time high quarter and grew 11%, thanks to several large orders. In Energy and Environment, oil and gas had a continued positive development.
Power had a strong development from pent up demand for nuclear power. Food was down due to non repeats. However, we had growth in brewery and vegetable oil. Process industry was lifted by refinery. And finally, demand for parts and service rose with large orders contributing.
On the next slide, we see that Marine and Diesel was down as expected due to normal repeats for ballast water treatment and SOX systems. The decline was 15%. The diesel power had a strong development following a large order in the Middle East and we had continued good demand for oil boilers. Next slide. Year to date, 4 segments have grown, among them Parts and Service within Process Technology Division, which is one of our most important segments due to size and profitability.
Also Marine and Offshore Systems has grown, driven by exhaust gas cleaning and all boiler systems that come early in the order cycle and has benefited from increased bookings at the yards. Four segments are unchanged and 3 are down mainly due to non repeats. Moving over to the geographical developments. Order intake in the quarter shows that year on year Asia stands out with 20% growth. Latin America grew with 9% and Nordic with 8%.
Central and Eastern Europe was down due to non repeats. It's interesting to notice that Latin America, Asia and Central and Eastern Europe made up 50% of the order intake. We haven't seen that for quite some time. Let's take a closer look at Asia. Asia is up 9% as all three divisions reported growth, lifted by investments in refinery, oil and gas projects, pent up demand for nuclear power as well as rising demand for products to LNG and product carriers.
China had a positive development driven by large projects and marine. The base business decline in China declined somewhat however reflecting a continued wait and see mode. Moving over to Europe. Western Europe, including Nordic, declined due to vacation impact on component businesses. Non repeats contributed to the significant decline in Nordic.
However, year on year, we achieved growth, which is more relevant. We had continued growth in Mid Europe and UK was boosted by large projects in brewery and process industries. In Central and Eastern Europe, the drop is explained by decreasing base business and non repeats. Russia reported good growth, especially for equipment division. And service business developed well all over the region.
Moving over to North America. In North America, the continued growth in the U. S. Was mitigated by a decline in Canada. And we are pleased that both base and service business grew.
Food Technology did well, and but strongest development was in energy and environment where oil and gas grew despite the continued lack of resources in the industry. In Latin America, Brazil and Mexico had a very strong development. Brazil was boosted by large contracts for oil and gas, marine and vegetable oil. And service developed well throughout the region. Next slide.
Year to date, Latin America has grown with 6%. The rest of the regions have been unchanged or had a modest growth, except Central and Eastern Europe, where we have non repeats in Russia. And we have to bear in mind that Russia had an exceptional growth last year. On the next slide, you see our top 10 markets 2012 and how they have developed. The yellow bar is LTM and the green bar is whole year 2012.
And we can see that the U. S. Has continued to grow, thanks to acquisitions. China is almost keeping up with last year after a strong recovery. South Korea has declined due to lower activity at the Korean EPC contractors.
The growth in Mid Europe reflects the good development in Germany. Russia is down, but I expect Russia to reduce the gap in the Q4. And remember last year was exceptionally good. Adriatic should have recognition for the growth supported by successful Italian contractors on exports. And finally, Canada's GAAP is caused by 2 large oil and gas non repeats.
And it's interesting to notice that 7 out of the 10 markets were unchanged or grew. And now I hand over to Thomas for the financials.
Good morning all of you. So let's dive a bit deeper into the financials then. We move on to the next slide. Lars has covered orders in detail. So let's talk a bit about sales.
In the quarter, we realized sales of €7,200,000,000 And let me already now confirm that that was marginally below our own expectations, largely due to phasing of revenue recognition in the Process Technology division. If we look at the statistics, sales was up 2.4% organically compared to last year. Acquisitions added 2%. And then of course, we continue to have substantial adverse translation effects. In the quarter, we had 2.2% negative.
This is of course due to not least the development of the Japanese yen and the Indian rupee generating substantial elements of these translation effects. In absolute terms, sales were though up 2.2% year on year, sequentially a reduction of 3.3 percent. Looking at parts and service revenues, they represented 26.2 percent of the total in the quarter against 27.2% a year ago, so slide to decline. Parts and service represented however 27.2% during the 1st 9 months which is an increase of 0.3% against last year. If we then move on to gross profit margin, we ended the quarter with 36.7 percent gross profit margin.
This represents a decline of 0.3% year on year and a reduction of 1.2% sequentially. Let me then remind you what I said with the quarter 2 report. I said, in the near term, we expect a slight negative mix effect. FX transaction effects are expected to be limited, but negative. We do not foresee any material changes to load or factory results.
And finally,
the just
reported. The actual for Q3 came out slightly below our expectations sequentially. The main reasons being a somewhat larger than expected adverse mix effect and a seasonal load impact in manufacturing, of course, due to the fact that we have a substantial amount of value delivered out of West European factories with a vacation period in the 3rd quarter. So sequentially an impact. Compared to last year, a decline of 0.3% and this boils down to a negative FX and a tiny adverse mix effect.
So let me then get on to the first forward looking statements. In the near term, we expect again a negative mix effect mainly from an increase in capital sales. FX transaction effects are expected to be negative. And then finally, we do not foresee any material changes to load or factory results. With that, let's look further down the P and L account and look at the overheads on the next slide.
R and D ended at $177,000,000 in the quarter, which is an increase year on year of 8.9%. R and D spend representing 2.5% of sales for the 1st 9 months, again in line with our guidance for R and D spend. Sales and admin amounted to €1,220,000,000 in quarter, representing a like for like increase of 3.7% year on year. This effectively means that full effect from the savings program initiated late 2011 was reached in quarter 2 And that salary inflation and the selective increases of resources to increase presence is behind the increase now in quarter 3. We had adverse effects from FX of totally €47,000,000 So all in all, that gave us an EBITA margin of 16.6%.
Looking at profit before tax, we ended up EUR 10,075,000,000 against last year EUR 1,230,000,000 in
the quarter. This is a
decline of 13% over last year. This, however, includes a difference in financial net due to exchange differences of 266,000,000 euros a positive €233,000,000 last year, a negative €33,000,000 this year. If I allow myself for a moment to exclude the effects of FX differences in the financial net, profit before tax was actually EUR 111,000,000 higher as far as the underlying business is concerned. That is compared to last year. Before leaving the P and L, taxes ended with a charge of 250 €3,000,000 This is clearly lower than the guidance of 28% of profit before tax.
The background is, of course, the reduction in corporate income tax in Sweden, but also the fact that we've made a detailed review of deferred tax accounting for pension amortization in the United States following from acquisitions. This gave a nonrecurring effect to the tune of €30 plus 1,000,000 in the quarter. Year to date, we're at about 27.5% tax on profit before tax. And again, let me confirm that going forward our guidance for tax is 28% of profit before tax. EPS for the quarter €195,000,000 €215,000,000 excluding step up amortization, a slight decline compared to last year, again broadly explained by the FX inferences in the financial net, as I commented on before.
With regard to returns, return on capital employed 26.1 percent by September 30, return on equity 21.4%. Limited changes from quarter 2 as far as these return numbers are concerned. If we move on to the cash flow statement, I think we can summarize the cash flow statement as follows. Cash flow from operations ended on the same high level as quarter 3 of last year almost EUR 1,000,000,000 Lower tax payments in the quarter supported this year's outcome. Free cash flow reached €850,000,000 compared with €912,000,000 last year.
The decline is basically explained by differences in the financial net. I've said it on many instances before and I can say it again now, I think we had another really good quarter in terms of cash generation. Let's move on to foreign exchange then. As we commented already, FX effect in the quarter were negative EUR 47,000,000 mainly coming from translation. We've updated our forecast for the full year on the back of not least, as mentioned earlier, a weaker Japanese yen and Indian rupee.
With the assumed rates for eurodollar and eurosec as stated on the slide and applying the closing rates as per end of September for the remaining currencies, we expect net FX effects of a negative EUR 265,000,000 and then again mainly coming from translation. I think it's important to point out in this context that the big reductions for the Indian rupee and Japanese gen are not expected to generate any material transaction effects due to the fact that we do have not only imports to the 2 countries, but we do also have substantial exports in the case of India manufacturing of own products in the case of Japan exports of own products as well as procurement of not leased titanium. Applying the same rates into 2014, we expect an adverse transaction backlog. As per the end of September, we had a backlog of almost €15,100,000,000 representing 6.1 months of LTM sales. If we look at the backlog development by division, we've seen an increase in the backlog for all three divisions.
You find that book to bill has been above 1 in Process Technology and Marine and Diesel and 0.97 in equipment in the quarter. And let me stress that we had another quarter of book to bill above 1% in Marine and Diesel. I think that confirms our projection of hitting the trough in Marine as far as revenues are concerned in the mid-twenty 13. Looking at the backlog to be shipped during 2013, it amounted to €6,700,000,000 almost the same as last year. And that is including acquisitions, of course, but also including a substantial adverse translation effect.
So like for like, it's actually up a mere 0.2%. Having said all that, let's move on to the bridge from whole year sales 2012 to whole year sales 2013. We started this year off with a backlog for shipment in the current year about 100 €1,000,000 below the level going into 2012, so a negative €100,000,000 Based on the closing exchange rates as per September 30, we expect a negative translation of some €1,400,000,000 this year. This is an increase of EUR 500,000,000 compared to the last report. The acquisitions completed in 20122013, we estimate will generate additional sales of €800,000,000 an increase of €100,000,000 compared to the estimate after quarter 2.
This gives a sum total for the known parameters of €29,100,000,000 a reduction from the situation after quarter 2 of €400,000,000 entirely due to the increase in translation effects. Then finally, the unknowns. As always, it's up to you to form an opinion about demand. Please remember that the opportunity to land orders in quarter 4 for shipment before year end is largely limited to the aftermarket and the equipment division. With regard to prices, again, we made minor adjustments at the beginning of the year for standard products.
So with that, I give the word back to Lars for the outlook and closing remarks.
The outlook for the Q4 is as follows. We expect that demand during the Q4 will be on about the same level as in the 3rd, which means that it will be somewhat higher than the same quarter the previous year. For each division, our demand expectation for the Q4 is as follows: Process Technology unchanged due to continued high activity level for large orders and brisk tendering activity. Equipment, unchanged. And finally, marine and diesel somewhat higher, thanks to expected development for exhaust gas cleaning.
And that completes our presentation. And now we hand over to the operator for the Q and A session.
Thank
And your first question comes from the line of Peter Frohnen. Please ask your question.
Yes, good morning, gentlemen. This is Peter Frohnen from Handelsbanken. My first question relates to the outlook, Lars and Thomas. You mentioned, Thomas, that there were some seasonality affecting especially the short cycle business of equipment? Are you talking about sort of daily rates when you talk about the outlook?
That's my first question. The second question relates to the savings program, which now has got the full impact during the summer. And I mean, we're not seeing demand falling, but still, I guess, there are some efficiency opportunities in the group. What do you say about the need for another sort of program to be launched? That's my 2 first questions.
Thank you.
Could you clarify your first question, Peter?
Yes. Lars, the outlook, you mentioned or Thomas mentioned that seasonality, I mean, the summer shutdowns affected the equipment division somewhat. Is your outlook based on daily activities? Or should we expect somewhat better seasonality Q on Q and Q4 on top of the flat outlook so to speak?
Well, Janelle, my comment was relating to the factory load or the factory outlook as we have a vacation period in quarter 3. Of course, there was an adverse impact as opposed to quarter 2. And then year on year there will be no difference in quarter 4. It was not at all relating to equipment or any specific division. It was generally for the operations division.
Okay. But in the comment on the equipment division on OE and Industrial Equipment, it was down around 4% mainly due to seasonality effect was the comment during the presentation.
Yes. Well, it was yes, it was seasonality in Europe and also lower demand for refrigeration. And we expect that we will be on the same rates for the rest of the year.
Okay. Thank you.
Then I think you had a second question relating to the need of another savings program, I guess, you were touching upon. And if we look at the load year to date for the operations division, we are at a somewhat higher rate than last year. So if we look at that as a measure, no. And again, let me remind you that the operations division is on a weekly basis watching the load and adjusting capacity overhead resources, we take every measure we can to rationalize where we judge that feasible in order to accommodate revenue investments, more resources in faster growing areas.
Okay. That's very clear. Thank you. I'll get back in line.
Thank you, Peter.
Your next question comes from the line of Sven Vaija. Please ask your question.
Yes, good morning. A couple of questions from my side. First on the P and L, you kind of compensated the decline of the gross margin by the other expense line, which decreased quite a bit to SEK 100 and 36,000,000. I was just wondering what was behind that reduction. The second question relates to your guidance.
If you say stable demand, does that include everything, so also including big tickets and currency? And then thirdly, when I look at the marine order intake sequentially down €270,000,000 which was quite a bit more than the change in the big tickets, I'm a bit surprised by that given that shipyard orders were still rising in the months during Q3. So was there an effect from lower power plant demand? Or how would you explain that sequential change? Thank you.
Should I start off with the first question maybe? Yes, a better outcome on other and other cost and other income is exactly that other cost and project initiatives that come and disappear. We, of course, have commissions royalties to third parties where we can have swings depending on individual contracts. So no particular item to really comment on. You will inevitably have swings on this line.
I think if you look over a longer period of time, you tend to see a net of others in the order of SEK 100,000,000.
And then Sven, your question about we our outlook is that the demand will be on about the same level. Then of course, I mean, we don't give an outlook for the currency. That comes on top. We only talk about the demand as such.
And your third question was really about marine and the sequential development. And on top of the big tickets that you can, of course, calculate as a deviation, We had underlying a lower order inflow for ballast water treatment systems from quarter 2 to quarter 3 substantially lower. So in our internal vocabulary large orders about €500,000 but not €5,000,000 items. So ballast water was really a main explanatory factor for the balance.
And do you see anything specific behind that? Or is it just
No. Those I mean both SOx and ballast water, they come in a bit lumpy. So it's nothing particularly behind it. As for example, when it comes to SOX, we are expecting good order intake in the Q4.
And maybe just finally a follow-up question on the marine margin sequentially, which were down. You've been mentioning mix. Has that to do with a greater share in the revenues from environmental products? Or how should we look at the mix impacts sequentially?
Well, I think what you should say is that we have we are at the trough as far as we see it and our expectations when it comes to revenues. So there is a leverage element if you look at the operating margin obviously. Thank you. Thank you, Sven.
Your next question comes from the line of Ben Maslin. Please ask your question.
Yes. Thank you. Good morning, everyone. Just a quick question on pricing, if I could. If you could just give some color on how you see the pricing environment overall and maybe where in your portfolio is pricing toughest?
And then maybe just a follow-up on Sven's question. I think your comments on the Marine margin talk about price and mix being negative. A specific reference to the pricing environment in Marine and whether this is just weaker orders in the backlog flowing in and things are better going forward or whether there is a new price level in Marine which is just tougher? Thank you. [SPEAKER
JEAN LOUIS SERVRANCKX:] Okay. If we look at pricing overall, I think if we look at products that are considered to be more of a standard nature, of course, there is a more severe price pressure. And of course, that is to some degree supported by the declining metal prices that we've seen some time ago. But for contract orders no change in say the pricing environment. Then you had a particular question about marine and prices.
And we've talked about the normalization of the price levels for products to the shipbuilding industry for a couple of years already. We were at an extraordinary level if we go back to the peak and we've seen a gradual decline of price is over the last few years. Our belief is that we have found this normalized level now. So this is the base level for now as far as we can judge and as far as our colleagues being close to this market can judge.
Got it. Thank you very much.
Your next question comes from the line of Andre Kukhnin. Please ask your question.
Good morning. Thanks for taking my questions. It's just a couple of quick follow ups. Firstly, on the Marine margin, what you were just talking about, the normalization and reaching the finally normalized level. So should we think about 15% as normalized given the sort of that revenue level of activity of EUR 1,500,000,000?
Or was there anything of sort of one off nature in the maybe a seasonal manufacturing load or something like that? And then just on the other line, sorry to labor that, but I mean was there anything in there that the IT spend leveling off that points to that other line running at a lower level than lower run rate than in previous quarters on more sustainable basis? Or should we just model it as before at around sort of 1.72% of sales and stick with that? If you could give us some help going forward on that that would be great. Thank you.
Marine, when I say normalized, I said I refer to price level. I think that is important to note. You were talking about the 15% operating margin. And there I commented that, of course, we have an adverse leverage effect As sales, as revenues have been declining, we have less of revenue, less of gross profit margin to cover the overheads. We've seen overheads come down.
They have done savings. They have implemented savings in marine. But at this what we expect to be trough there is not enough of volume to sort of generate the kind of margins that we've seen if we go back a year or so of 20%. So in order to get to higher levels of operating margin, Of course, a larger volume is required. And remember, book to bill has been above 1 for the last couple of quarters.
So there is a trend in the right direction. Then other cost and income, no special items to comment about. And going forward, again, I mentioned on Sven's question, we've been at about $100,000,000 as an average per quarter over a number of years. And that's the kind of level that I think you should model with going forward as well.
Got
it. Thank And your next question comes from the line of Ben Maslin. Please ask your question.
Yes. Thank you. Just a follow-up please on oil and gas markets. I think you said at Q2 there were delays that were stopping the orders coming through. And I guess that seems to your commentary suggests that's reversed a little bit in Q3.
Maybe just a little bit more color on what you are seeing in oil and gas markets? And how bigger kind of pipeline or pent up level of work do you see in those markets that could be executed if resources became available in the industry? Thank you.
We see a good we see a very good activity level in the U. S. Coming from shale oil and shale gas and both for to prepare for the export of the shale gas and also for refining the products. And we see a good very good activity level offshore for the North Sea for instance. And so in general, we see a good demand.
And let's and somehow it seems that the industry manages to launch a number of projects even though they are, let's say, they are using their full capacity.
Yes. Okay. Thanks very much.
Your next question comes from the line of Peter Frohnen. Please ask your question.
Yes. Thank you. You mentioned Asia now together with the other emerging markets being half of the order intake. And Asia in particular were quite strong, I guess, due to large orders. How should we see upon Asia and maybe China in particular ahead as the base business is somewhat on a wait and see mode?
Do you expect sort of this to come back, the base business to reaccelerate? There's a certain hesitation going on that will ease a bit. Are you sensing that? Or is it more that you expect continuous good large orders and sort of the base business to be running at this level?
[SPEAKER JEAN FRANCOIS
VAN BOXMEER:] If we go 1 year back in time, China was moving sideways when it came toward intake for quite a number of quarters. Then we had in the Q2 this year, we had double digit growth in China. So there was an uptick. And we could see also now in the Q3 that the growth that started in the second, it continued at a good rate also in the Q3 boosted by large orders and marine. And when it comes to marine, we expect continued good demand based on the good order intake to the yards.
And your question regarding base business, base business was up in the Q2 and it was down in the 3rd now. So it reflects a wait and see mode. And but in general, we are we have a positive view on Asia and on China.
Okay. Thank you for that.
Your next question comes from the line of Lars Brorson. Please ask your question.
Yes. Thank you very much. A couple of questions last time if I could. First of all, interested to understand the dynamics by segment within your Marine and Diesel division. Am I right in understanding that all of the decline sequentially is really in the environmental segment?
Or are you seeing softness in particularly your shipbuilding and your diesel segment sequentially?
[SPEAKER KARL HENRIK
SUNDSTROM:] When it comes to diesel has been slow for quite some time. And the diesel end customers, the diesel power plant end customers, they have been cautious in making investments and that has held back the demand. And but when it comes to the diesel power plants, we have this good order intake, this launch order in the Q2. And we see that there are some potential projects that could come in also going further. And when it comes to the decline in the Marine and Diesel division, you can say it's basically coming from non repeat large orders in ballast water treatment that is booked under the equipment segment and the marine equipment segment and the SOX plants that are booked in the Marine Systems
segment. So your Shipbuilding and Offshore segment is growing sequentially and by what order of magnitude?
It varies between the products. But if you take for instance the marine, the oil boilers that come early in the ordering cycle, they started to go up in the second quarter and we had a very strong third quarter for the marine boilers. So it's so we see that the good order intake to the yards there we have benefited from it and we expect to see positive effects from the order intake to the yards also in the coming quarters.
That's clear last second. If I can just ask to some granularity on your divisional outlook for PT. What is that predicated on in terms of the base order business in emerging markets ex China? You talk about large orders coming through expectedly in Q4. But if you look at your [SPEAKER KARL HENRIK SUNDSTROM:] Well, we can see.
Yes, it's a mixed picture.
Well, we can see it. It's a mixed picture. We could see in Russia, we had we saw good order intake and also for the base business. And whereas if you take India, it's struggling a bit. And so it varies.
You cannot say you cannot simply answer with one general question. But Russia, fine. India, struggling. Brazil looked fine in the Q3. And China there we said that base business was declining, but large orders in marine gave us good growth.
So it's a varying picture.
Thanks. Your next question comes from the line of Arren Ibbotson. Please ask your question.
Hi, there. Good morning. Thanks for taking my question. Lars, I've got 2 slightly bigger picture questions, if that's okay with you. And the first one is just looking at environmental marine regulations, so ballast water and SOX NOX regulation.
I know that on the Capital Markets Day and maybe a year or so ago, we were all calculating number of ships times unit price, etcetera, and got to quite large numbers and spread out over the next few years. How are you feeling about this opportunity if you think sort of going into 2014, 2015, 2016? Do you see this as a meaningful and with that, I mean, taking up sort of maybe a third or a quarter of your total Marine division sales over the next few years? Or should we more think about this as the occasional order that's sort of dripping in over the next 2 to 5 years? And my second question, if I may, actually just relates to the sort of general demand level.
If I sort of organic link your order intake back since 2007, we're still hovering around sort of 10% below the demand level you saw pre crisis. And this is a good 6 years ago now. So I'm just thinking, do you think when you talk to your customers, when you talk to industrial customers, both outside and the marine and within the marine environment, do you think 2014, 2016, you will actually start to see some decent growth? Or should we expect to see sort of continued or do you expect to see continued more or less flat lining of demand? Thank you.
When it comes to 2014 2015, we don't give any forecast.
I think, Aaron, there is one important or a couple of important elements to remember if you look at the peak in 2,008. If we look at metal prices, we were at a situation where for instance nickel was priced at $55,000 a ton. We are now at 13,000,000 13.5 percent. And of course, that combined with copper being at $9,000 plus a ton against say $6,000,000 or something right now. That had a fundamental impact on say the monetary volume.
Then again, we had an extraordinary cycle. Generally speaking, we can leave that aside, but we had an extraordinary cycle in marine with contracting to the tune of 5,500 ships. And we said that and we said it then and we've said it ever since. It was extraordinary and should not be expected to come back. But for the rest, there is not a vast difference in terms of, for instance, tons of stainless steel sold to make it very simple.
So I think it's a bit dangerous to look at it the way you just did.
But Thomas, just to clarify, I'm not talking about your profitability. I'm just talking about your organic volume order intake.
I was as well, Aaron. And orders and sales was inflated with, for instance the metal prices and most certainly the extraordinary peak in marine. And that as again it starts with orders and continues with sales. And then eventually of course it had an impact further down the P and L as well. But I think it's very important to have in mind.
If we measure it in terms of tonnes of steel, there is not a vast difference. Then coming back to your questions about the environmental regulations in marine and what to expect. Let me remind you all that when we had our Capital Markets Day almost a year ago, what we tried to provide to you was on the one side what are the regulations that will kick in or are expected to kick in eventually as far as ballast water is concerned. We painted our picture of what we thought the market was. For ballast water, we said 30,000 ships, which is less than half of the total number of ocean going ships.
We talked about a few 1,000 as the total opportunity for SOX cleaning for instance. We were talking about the opportunity. We outlined the guidelines as they are to be applied, but we did not sort of commit to any specific revenue number as far as we're concerned. I think the general experience is that new markets they evolve at a somewhat slower rate than well, you would like to see and we would like to see, but the opportunity is there. And coming back to last questions about quarter 4, we have a good we have some expectation that we will see orders in SOX in quarter 4.
So it will be lumpy. The opportunity is there. But the time line is maybe not what you would have expected
and what we would have liked to see. But it's important to stress the trend is positive. So it's on its way.
Okay. Thank you.
Your next question comes from the line of Daniel Schmidt. Please ask your question.
Hi, there guys. My question has already been answered actually just a minute ago.
All
right. Okay.
Okay. Your next question comes from the line of Andre Kukhnmann. Please ask your question.
Hi. It's Andre from Credit Suisse again. Just a couple more questions, please. Firstly, on the factory load comment into Q4, you said you don't expect significant change. Should we think about it as kind of adjusted for seasonality that was a negative in Q3?
And secondly, on the gross margin comment that you're seeing no significant change coming through from backlog at the group level, would you say that's true for the Marine division as well Marine and Diesel division?
[SPEAKER STEPHEN ROBERT
BINNIE:] My short answer to both of these questions would be yes. Yes, the factory load no major change, of course, considering seasonality and backlog margin, no material difference that applies for all of the 3 divisions.
Great. And can I just one final question? On the new product momentum in the Marine and Diesel division, if we exclude the environmental product portfolio and pure dry and look at it as sort of as a kind of standard product or standard product basis, how would you characterize the new product momentum in that currently or say this year compared to a year before or 3 years before that? Are you launching more or less kind of more standard products apart from the environmental portfolio and pure dry?
In the product development, we are focusing on products that either increase environmental challenge for the ship owner. And I would say that we have a higher rate of we have more new products introduced today than what we had 3 years ago. And that also goes for products outside socks and ballast water. So we are constantly renewing our product portfolio. And for instance, increasing the efficiency of the fuel line for the shipowner.
Got it. Thank you. Appreciate your
time. So I think it's I think we have to round off now because we are off for some other meetings. So should we have one final question and that's it?
No problem. Your next question comes from the line of Anders Ibborg. Please ask your question.
Morning. Yeah, Just quickly finally perhaps on services, pretty good momentum. Any particular efforts you've made or areas of improvement that you've seen in parts and service? And do you expect this double digit rate to be sustainable over the next couple of quarters?
Quarters? [SPEAKER JEAN FRANCOIS VAN BOXMEER:] This it was unusually good, the 10%. And we had a couple of we were very successful landing launch orders for the Process Technology Division. So it's a but we are we have a focus to we want to increase our focus on the aftermarket. And we have during the last 6 years increased our service centers with 50% number of service centers with 50%.
So we are slowly steadily improving the growth of the aftermarket. But you can say the 10% that was unusually good due to large orders.
Okay.
Thanks. Okay. So thank you very much for your attention and wishing you a good day. Thank you and goodbye.
That does conclude our conference for today. Thank you for participating. You may now all disconnect.