Hi everyone and welcome to the presentation of the second quarter 2025 interim report for Alleima. My name is Emelie Alm and I am Head of Investor Relations. I'm joined by Göran Björkman, President and CEO, and Olof Bengtsson, CFO. As usual, Göran and Olof will take you through the results and then we will have a Q and A session. You can ask questions either in the chat, in the webcast, or on the conference call. As always, safety is our top priority and we trust that you know the safety routines of where you are located. With that, I would like to hand over to you, Göran.
Thank you, Emelie. Hi everyone, and thank you for listening. I'll start with the highlights of the quarter. I think we're performing okay in a challenging market environment with the mixed demand. Our broad exposure reduces volatility, but of course we note a negative organic top-line growth. Our order intake rolling 12 declined 2%, and revenues in the quarter - 4% from high comps last year. A backlog is still good in important segments such as oil and gas, in nuclear, and in medical, a good product mix and visibility for the near-term future. In the more volume business like industrial segment and in chem petro in Europe in particular, the backlog is weaker. Our adjusted EBIT margin declined to year-on-year 9.5%, which I think, considering the lower revenues and a significant FX headwind, shows resilience and a good leverage.
I take this as a proof that we are doing a lot of things right with our strategy. We have a good product mix. Excluding FX, the margin would have been 11.4%, but at the same time there is room for improvement. I think parts of the business is performing well while others clearly have some challenges. We did not have any significant direct effects from tariffs, and we have been successful in passing along these costs to our customers. Even though we have production in the U.S., the pricing has of course increased, which is impacting demand and the ongoing turbulence stemming from tariffs. Trade barriers help be lower than global economic environment and demand, which we now see effects from with an increase in uncertainty and customers postponing their investments. Our financial position enables us to stay with our strategy where we have several ongoing proper growth projects.
At the same time, we are actively reviewing our footprint and capacity, ensuring profitability also moving forward. Moving to sustainability, as I said many times before, we are generating positive impact both through our operations and our product offering. Let us start with operation. Safety is always the top priority in Alleima, and we are continuously and actively implementing measures to maintain safety as a top priority, and the development is again trending in the right direction. The accident frequency is actually now on record low levels, which is something I'm very happy with. Our share recycle still remains high and over 80%. I think that's a good figure given our product mix. CO2 emissions are steadily decreasing both on rolling 12 months basis and year-over-year, and the reduction is 6% and 15% respectively.
The proportion of female managers continues to increase, now to 25.4%, and again, important to recognize this is only one aspect of the broader diversity inclusion initiatives. During the quarter, we announced that Kanthal, together with their strategic partner Danieli, will deliver pilot scale electric process gas heater to [M Steel] DRI plant in Abu Dhabi. This is the first time Kanthal delivers its patented Protal technology for commercial purposes. The heater, which is compatible with hydrogen and natural gas as well as a combination of the two, enables retrofitting and adds flexibility in our customers' choice of technology. The technology as such plays an important role in the transition towards more sustainable steel production and reduces the dependency on fossil fuels. I believe this is an important step in the scale up development of Protal technology.
We will collect data, experience, and know-how, and will serve as a reference point. I would say a proof of concept moving forward. Moving into the market development overall, we continue to see mixed market sentiment, and the macro environment uncertainty has increased. The market sentiment weakened especially in Europe, and demand was in general continued low in North America. In Asia, demand held up better, but also there we noticed some signs of hesitation. We have momentum in several of our key segments, and I will walk you through the development in each segment, starting with oil and gas, and we noted of course the volatility in oil price and the uncertainty has increased. However, we still view the underlying demand on high levels, and the project list of upcoming tenders and potential future order is solid.
Last quarter, we said that the backlog for umbilicals was getting shorter, but we have now booked more orders and we have not consumed backlog. The book to bill was above one in the quarter, and the OCTG backlog remains very strong. Chemical and petrochemical year-on-year down, Europe is down the most while North America more flattish but on low levels. We also see an impact of higher uncertainty in Asia, but still on an okay level. The industrial segment, last quarter we noted an improving year-on-year demand in the industrial segment. This quarter demand is worsening on the low value add products, which is what we normally is done prioritizing when we don't need that volume, and this is especially clear in Europe but also in North America we notice. I mean, in North America we noticed some rebound in quarter 1.
If this was due to pre-buys is difficult to say as this business been running low for quite some time. The biggest impact on North America we saw in quarter 1 came from oil and gas, nuclear, medical, and those segments are segments where we would not expect such pre-buys, and industrial Asia still on an okay level. Industrial heating flat demand year-over-year and continued hesitance from customers in placing orders, which refers mainly to CapEx related business. For the solar segment especially, we also have high comps from last year. However, demand was continued positive in some applications. For instance, ceramic elements for electronics, both including semiconductors in the glass industry, but weaker in solar and metals. Consumer demand is now on a good level, mainly driven by the white goods industry in the strip division.
Medical continues to be strong with several drivers, and momentum is strong across the product portfolio. Minor construction, flat underlying demand year-over-year. Nuclear, the high activity and growing demand continues where we're building good backlog to execute for a long time. Transportation demand decreased year-over-year. Aerospace has a really long backlog but with some tendency of inventory adjustments among customers. Sorry. Automotive worsen. Hydro renewable energy is still a bit mixed. This is a wider segment where some businesses are doing better than others. We booked orders for carbon capture and storage and for biofuels, but no clear signs that this is taking off quite yet. Looking into order intake and revenue. Order intake rolling 12 amounts to SEK 18.9 billion with a negative organic growth of 2%. This is mainly coming from the chemical and petrochemical and industrial segment, especially in Europe.
North America's weak overall, and Asia noted a slight setback but on high levels. Industrial heating was flat on a continued low level. Nuclear, medical, consumer grew while oil and gas was quite stable, though on a high level. Revenues declined organically 4% with tube and control declined while strip grew. Chemical and petrochemical till Industrial heater noted the biggest declines, where we could see that the weak order backlog for those two segments impacted revenues in the quarter. Rolling 12 months booked to build 97%, building backlog in oil and gas and nuclear while consuming backlog in cam, petro, industrial, and industrial heating. This means that the order backlog is still solid in important segments like oil and gas, in nuclear, and medical. An overall positive product mix, but total volumes in the backlog is on the low side going into quarter three. Let's move it to earnings.
Adjusted EBIT amount of SEK 454 million with a margin of 9.5%, and considering the SEK 150 million negative impact on currencies, meaning that the underlying margin would have been 11.4% adjusted for FX. I think we're performing okay given the lower revenues and the uncertainties in some of the segments. I think this is due to several factors. We are seeing margin contribution from more segments now than in the past, of course medical being the prime example of this, but also in oil and gas and in nuclear, but also the way our Asian business has evolved. We also managed to improve our performance in the OCTG business as well as in the transportation segment, both contributing to the margin resilience. All in all, product mix is solid with higher contribution from highly profitable segments and less deliveries for low refined business, being mainly the industrial segments.
Looking at divisions, I think tube performed well. I think Kanthal continued to mitigate lower volumes in a good way, while strip's performance was not in line with expectation. I will come back to that. Pre operating cash flow of SEK 347 million, lower than last year, impacted by lower operating profit, lower working capital, and higher CapEx. Overall, I'm confident in our long term strategy. We are benefiting from our diverse exposure, and we continue to drive positive product mix or shift mix shift while maintaining our order booking discipline in the weaker market conditions. We also adjusted cost and capacity to mitigate lower volumes, and we prepared to do more if volumes continue to decrease. At the same time, we should stay cool and not make too hasty decisions. We need to be ready to deliver once the market demand and volumes bounce back.
Let's look at the division starting with tube. Tube noted an organic order growth of -6% for the rolling 12-month period where we continue to see a weak Europe with more uncertainties now than a quarter ago. North America still on low levels and a general sense of caution. Asia is still on high levels, although also there we notice a small decline in quarter two. In general, we see customers hesitating taking investment decision which impacts our business. The chemical and petrochemical and industrial segments noted the largest decline. Backlogging key segments like nuclear and oil and gas is still solid, and we maintain our positive view on both those segments. Organic revenue growth of -10% mainly driven by the negative development in chem, petrochem, and the industrial segment, somewhat mitigated by nuclear. Book to bill was 94% r olling 12.
Adjusted EBIT margin amounted to 11.2%, which is a good level given the lower revenues as we continue to utilize our capacity in a good way by priority pricing more profitable orders. As mentioned, the product mix was solid and we have a positive contribution from performance improvements in oil and gas. The OCTG business has improved well both commercially and operationally. Also, the business within the transportation segment where we have had problems has improved well. Those had some positive one-off effects like, for example, inventory build-up during the first half of the year ahead of this year's maintenance stop during the summer, which will be somewhat longer than normal. In one of the larger factories in Sandvika, we will be replacing the expansion press in the largest extrusion press.
This is a maintenance investment replacing a + 60-year-old machine, but it will also bring advantages with a higher level of automation generating increased productivity and also safety for operators. This brings some positive cost of shoulder effects both in quarter one and in quarter two, which will reverse in quarter three. The lower volumes from mainly chemical and petrochemical, low refined products to the industrial segment, both Europe and North America, had negative impact and we are expecting these low volumes to have an even more visible impact in quarter three as volumes and absorption of cost is low anyhow, for normal seasonality reasons. [FX headwind] of -SEK 81 million, second meaning that the underlying margin was strong, 13.6% in the quarter, we considered to be on the weaker side.
Moving over to Kanthal, organic order intake growth for the rolling 12 months period of 1%, still on low comparables. Medical is strong and industrial heating remains soft. This demand was still positive in some applications for ceramic elements for electronics, including semiconductors and glass industry, and the previously announced investment in both Sakura in Japan and Perth in Scotland are both related to those customer segments and is part of our ceramic heating elements offering. The medical segment is maintaining a strong momentum, growing in order intake and maintaining a good revenue level, and backlog remains solid, booked a bill of 102% rolling 12. This is partly due to the negative revenue growth but also an increase in the medical backlog.
Kanthal has for some quarters now been affected by lower volumes from the industrial heating, a segment with several end markets and development difference between these end markets and regions where Europe is the weakest. In general, customers are hesitant to make CapEx related investment decision, and it's difficult to foresee when that demand will turn positive again. The sentiment is not getting worse. The [SSD] EBIT margin was 16.7% in the quarter, which is solid considering development, industrial heating, and an FX headwind of SEK 29 million. Underlying margin adjusted for FX would have been 19.6%. I think Kanthal's proven ability to adjust capacity and reduce costs when needed, which is why margin levels are maintained. I'm confident they will continue to do some more moving forward as well if that will be needed.
Short term, due to low volumes and with expected FX headwind, we expect some temporary under-absorption effects hitting the margins in quarter three. Move on to strip, facing low comparable, strip continue to grow its top line with organic order intake and revenue growth in all segments. Organic order intake grew 30% on a rolling 12 months basis with growth in all segments. The consumer segment is the main rival where the main product is compressible steel for bio goods and air conditioners. Organic revenue growth of 19% in the quarter, all segments contributing, and with that a book to bill rolling [12 of 40%]. A djusted EBIT more than 2.4%, and I have for several quarters now made comments related to that strip is consolidating the pre-coated strip steel for fuel cells and that that business due to low volumes has a negative impact on strip margins.
This is also true in this quarter. However, this is not the main reason for the low margin in strip. The underlying strip performance is not in line with expectations. Main reason are production efficiency issues, poor mix in the Sandvika site, and some inventory write-downs. They also had an FX effect headwind and in that case -SEK 9 million. Mitigating activities are ongoing, and we expect an improvement during the second half of the year. Since strip's production is located in Sweden, they normally have significant impact from under-absorption of cost in quarter three due to the maintenance stop during the summer. We expect that to be the case also this year and that performance improvements will be more visible in quarter four. With that, over to you Olof.
Thank you, Göran. Let's go to the financial summary for the quarter and half year. If we look to the right to the bridge there, you can see that the order intake amounts to SEK 18.9 billion on a rolling 12-month basis. That corresponds to an organic growth of -2%. We show a total growth on the rolling 12-month order intake of -6%, where in total 4 percentage points of those come from currencies and alloys, with a stronger Swedish krona and lower metal prices impacting. Quarterly revenues, just below SEK 4.8 billion, with a 4% negative organic growth coming mainly down from the slower European and North American markets. Revenue also affected by the stronger Swedish krona, mainly against the U.S. dollar, with total currency effect of -4%. Alloys, some negative alloy effects on orders, -2% on the rolling 12-month basis and -3% on the quarterly revenues.
We see a continued negative alloy effect both on the rolling 12-month order intake and revenues going into the next quarter. On structure, we have our latest acquisition of Endox in Kanthal. It's fairly small, so it doesn't show up in the table, but it's contributing positively to both order intake and revenues in the quarter. Going to the big table on the left, I'll come back to the adjusted EBIT in a minute. If we talk about the reported EBIT, the margin decreased to 5.9% compared to 12.8% last year. This is impacted by the low revenues, currency headwind, and by the negative metal price effects amounting to a negative SEK 171 million this year. Last year, we had a positive effect of +SEK 96 million, so quite a big swing that line. Metal prices have come down year-over-year in U.S. dollar terms.
They have been fairly stable quarter by quarter. In addition to the prices in dollars, we also have a strong Swedish krona that impacts all Swedish krona metal price effect. Net financial items in the quarter amounted to a +SEK 18 million compared to the +SEK 137 million last year. The finance net consists of the positive interest net on our cash balances in the quarter, yielding approximately 2.2%, but also of interest charges on leases, pension liability, and bank charges. In addition to this, also revaluations from derivatives not qualifying for hedge accounting, and that gives a positive effect this quarter. Last year, the high positive number was affected by accounting adjustments in the hedge reserve. We had total positive effects of SEK 125 million from this in that quarter.
Last year the normalized tax rate comes out at 24.1% in the quarter, 29% with the guidance, while the reported rate, it's not in the table, but the reported rate was 32.2%, which is a high number. That high number comes from one-off items, in this case a non-deductible withholding tax on an internal dividend. Free operating cash flow was SEK 347 million in the quarter. I'll get back to that as well soon. Finally, adjusted earnings per share in the quarter, SEK 1.35 per share, impacted negatively from the lower adjusted EBIT, the high tax rate, and the lower [FX ]. Going down to the bridge on adjusted EBIT, going from last year's SEK 592 million or 11.1% to this year's SEK 454 million or 9.5%. We note an organic decline of SEK 26 million in the quarter.
That gives an operating leverage of 12% on lower revenues. We find that to be a fairly good outcome in this foreign revenue scenario. We mitigated the lower volumes in a good way, we think, in the divisions. Main impact in the quarter comes from currencies, where we're impacted by the strength in Swedish krona mainly against the U.S. dollar, but also, for instance, against the Chinese yuan. The split between transaction and translation is about 50/50 in that number. This corresponds to a margin dilution of 1.9%. Structure as the acquisition of Endox that is contributing to our earnings. We go to capital efficiency. Looking at the balance sheet, net working capital lower than last year in absolute terms, coming mainly then from currency effects and lower metal prices. It's higher as a percentage of revenues at 36.1% compared to 32.7% last year.
This comes mainly from the lower quarterly revenues. That is after calculation. The sequential decrease is mainly driven by currencies, decrease of accounts receivables, and inventories. To continue on inventories, they are lower in both value, both sequentially and year-over-year, coming from both lower volumes in inventory and lower metal prices. We have a lot of focus in our [audio distortion] on controlling the physics of the inventory. Despite the fact that this year we had extra inventory volumes for the [Shillong] summer stock, we are lower both in tonnes and value compared to last year. Year-over-year, capital employed excluding cash increased to SEK 16.4 billion from SEK 15.8 billion last year. This increase comes partly from our increased CapEx levels, adding to the fixed assets and then looking at return on capital employed excluding cash. This is done based on the operating profit including the metal price effect.
It was 9.2 in the quarter based on going 12 months and roughly at the same level as [last year's] 9.3. Cash flow then amounting to the free operating cash flow amounting to SEK 347 million. That is lower than last year, coming mainly from the lower earnings including the negative metal price effects. Non-cash items refer to, for example, provision releases in the operating result that have no cash flow impact. We have a positive impact from lower working capital in the quarter. It is mainly lower accounts receivable and inventory. The CapEx increase comes from our growth CapEx projects. If you look at the year-to-date number, the extra cash flow impact from CapEx is about SEK 100 million compared to the same period last year. Next line, amortization of lease liabilities on par with last year.
In total, we have a lower free operating cash flow compared to last year. The lower earnings are, from a cash flow point of view, compensated for by a working capital release from the lower invoice volumes and metal prices in the quarter. If you take this in round terms, looking at the total cash flow, the business has generated about SEK 400 million including finance net items in the quarter. We pay taxes and dividends in total approximately SEK 800 million. That gives a net change of approximately SEK 400 million on our cash balance compared to last quarter. This is due to the strong financial position. It remains strong. We are well below our targets. Our financial target net debt to equity of being below 0.3, we are actually at 0 at the quarter end.
If you prefer to use the net debt to adjusted EBITDA, it also comes out at very close to zero. Looking at the components of the net debt, the net pension liabilities increased from SEK 761 million last year to SEK 813 million this year, coming mainly from lower discount rates compared to a year ago. Leasing liabilities SEK 462 million, more or less on par with last year's SEK 457 million. Cash position remains strong. This year we have spent SEK 130 million on an acquisition and paid the dividend in May of SEK 577 million. Still, we have a cash position of SEK 1.3 billion and a net debt position of SEK 33 million with such a net cash position. We also have, of course, our unutilized SEK 3 billion revolving credit facility. We have a very strong financial position in total.
This gives us room to execute and operate on our strategy of profitable growth. Looking then at how well we managed to guide you ahead of this quarter or the last quarter. Year -to- date CapEx of SEK 456 million. We're guiding for a full year of SEK 1.2 billion. I would say we are well in that range as we normally have more CapEx in the second half of the year. Currency transaction and translation effects at SEK 123 million in the quarter, fairly close to the guidance of SEK 130 million. If you look at the total currency effect, we came out at SEK 115 million in the quarter. Metal prices affected us negatively with SEK 171 million in the quarter. We guided for negative SEK 150 million.
I think the main difference here is that the strong Swedish krona gave an extra effect here on the metal price effect. Normalized tax rate 23.8%. Our guidance is 23%- 25%. That's the year -to- date rate, the 23.8%. In the lower part of the range of attribute value, close to the middle for the quarter, the normalized tax rate was 24.1%. Looking at the guidance for the coming quarter, we guide for a full year CapEx of SEK 1.2 billion. We're staying at that guidance. As I just mentioned, we are normally having more CapEx in the second half of the year.
Currency effects still quite considerable, SEK 150 million for Q3 for transaction and translation, and then for the metal price effect with the strong Swedish krona and the metal prices at the end of June, we think that we will be around -SEK 150 million on that line. Tax guidance remains at 23%- 25% for the full year 2025. I would like to hand back to you, Göran, for the outlook.
Yes, before I do that, I think I was wrong on two numbers. The margin excluding FX should be 30.1 in tube and 18.3 in Kanthal. Nothing else. Outlook for the third quarter, I would say the general economic environment weakened during the second quarter, and considering the changing global trade policy situation, the uncertainty concerning future development has increased. Backlog is solid in several key segments where we have good visibility in the near-term deliveries. At the same time, challenges were noted in other customer segments, particularly in Europe and North America, which may impact near-term deliveries. Order intake, revenues, and adjusted EBIT margin are normally lower during the third quarter compared with the second quarter due to seasonal variations stemming from maintenance stoppage during summer and stoppage in one of the larger production sites in Sandvika.
This year is planned to last slightly longer than last year, which is expected to lead to temporarily higher than normal under-absorption effects in the third quarter. Product mix is expected to be similar to the second quarter, and we continue to expect a currency headwind in the third quarter. Cash flow is normally high in the second half of the year compared to the first half. With that, to summarize overall, we showed continued earnings resilience. The company is in good shape, and we deliver on our financial and strategic targets. In quarter two, we noted a continued mixed market sentiment with weakened demand, especially in Europe. North America remains soft, and what we see is delays in some customer investment decisions. The near-term future is difficult to foresee a s for the turbulence in the market related to trade barriers and geopolitics.
In key segments like oil and gas, nuclear, medical, continued good momentum, and I think our diversified exposure to customer segments, different stages of the business cycle, as well as our strategy to grow within more profitable, less cyclical niches, have proven to be successful. Revenues declined organically in the quarter mainly on the back of weak development in chem and petrochemical, industrial, and industrial heating segments. EBIT margin declined year-over-year mainly due to FX. Adjusted FX margin grew year-over-year, and this shows how we long term have driven a positive product mix and maintained our order booking discipline in weaker market conditions, thus able to maintain profitability. We need to continue to stay agile and adjust costing capacity where we have a weaker backlog.
Quarter three is seasonally a weaker quarter due to maintenance stops during the summer, and we expect some margin dilution from under-absorption of costs as we have a longer than normal stock plan for this summer in the larger extrusion plus. In addition, volumes are low in segments like chem and petrochem and industrial, mainly Europe and North America, and we also expect FX to remain headwind in the near term. We have several ongoing growth initiatives which will strengthen the company in the long term. Our strategy has always been to have global footprints, meaning production close by customers, and all the announced investments are strengthening this further, and they are progressing according to plan. Financial position remains strong, which will enable us to continue to execute on our strategic agenda. I hand back to you, Emelie.
Thank you Göran and Olof. It's now time to start the Q&A session, so operator please go ahead.
We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the telephone. If you wish to remove yourself from the question queue, you may press Star and two. Anyone who has a question may press Star and one at this time. The first question comes from the line of Adrian Gilani from ABG. Please go ahead.
Yes, hello, I'd like to start off with a question on tube where I see the book to bill fell quite sharply compared to Q1. Of course, you mentioned this is to an extent driven by the short cyclical industrial orders. I guess is there a component here also of order backlog in oil and gas starting to come down? Are you still as confident in the oil and gas outlook for the coming two to three quarters, let's say?
We are quite positive on the oil and gas outlook. On umbilicals, the order backlog grew slightly, and there is quite a lot of projects still out there. No, oil and gas was not the main reason for that.
Okay, understood. A bit of a similar question in Kanthal here. Rather, the book to bill came up a bit. Is that entirely driven by medical, or are you seeing an increase also in industrial heating orders?
I think, as I said, the two reasons why book to bill went up , one is lower revenues, and then medical has a good development. It's mainly medical.
Okay. Understoo d. In strip, the organic EBIT is down $21 million in this bridge that you show while organic revenues are up 8%. It seems the cost efficiency has gotten significantly worse compared to last year. Can you explain what drove that?
Yeah, I tried to do that in my presentation, I think. I mean, first of all, we're not pleased with that. To be clear, there is a number of reasons. One is production efficiency reasons due to where strip is coming from with lower volumes before that is still orders that we i nvoice. There is a time, takes some time to flush through the poor production efficiency we had before and it will be better going forward. Another reason is that we have had some bottlenecks issues. The most profitable products produced in the big production site have had bottlenecks problems. The invoice mix compared to quarter two last year is much worse. That is, I would say, the main effect. Then there is some inventory write-downs due to yield issues.
Okay. [Crosstalk] Sorry, did you specify the amount on the write-downs as well?
10 million I think it was.
Okay, perfect.
All of these .
I guess one more. Yeah, go ahead.
All the issues are addressed and actions are ongoing.
Okay, perfect, that's helpful. I guess a final one for me for Q3 specifically, you first of all have the SEK 115 million FX headwind and I guess that in isolation would take you to around SEK 200 million on adjusted EBIT. When you mentioned sort of longer than usual maintenance shutdowns and greater under-absorption, I take that as sort of soft guidance that organic EBIT will also be negative year-on-year. Am I sort of assuming that correctly? Because that would take you somewhere below SEK 200 million on Q3 EBIT.
That's , I mean that calculation makes sense.
Okay, thank you. In that case, that's all for me.
We have now a question from the line of Viktor Trollsten from Danske Bank. Please go ahead.
Thank you, operator, and good afternoon everyone. Firstly, on the Q3 guidance and under-absorption that you flag, just wondering from a broader sort of perspective, how much of a one-off is this in business and how we broadly should treat it beyond, is this something that we should count on happening quite a number of quarters or is it truly a one-off? I'm sorry.
That's the one off.
Yeah, that's clear. Second, I guess it's quite volatile and [physical] times, of course. In the context of some of your industrial peers talking about signs or the start of some sort of short cycle recovery and volumes finally turning slightly positive, I do say that [it's interesting]. Could you s peak a little bit more around how the quarter has developed in a month to month, perhaps if there's any difference from your, you know, CapEx customers to OpEx customers? I'm just trying to understand here, you know, why you don't see the signs that some of the others are seeing into Q3.
Yeah, I also see in the others, since I don't know their business in detail, I cannot comment on that. What we see in the quarter, when the quarter started stronger than it ended, we need to look at the quarter and exclude bigger orders like we, for instance, had for good order intake end of the month for medical and we have some umbilicals. If I look at sort of the more volume related business, I'll say the second half of the quarter is worse than the first half of the quarter. Even though we compensate for tariffs, we saw a change in the Americas when tariff is suddenly moved from 25% to 50%. Even if we have quite a lot of production in the U.S., there's a significant price increase for the customers and that has made the market so uncertain and they postpone their investments.
Okay. It's interesting times at the moment. Let's see what happens.
It's a lot of uncertainty. If you don't know if the tariffs are going up or down, when will there be trading agreements? All of that creates a lot of uncertainty. When there are high tariffs, I think quite a number of customers speculate that it will go down. If they don't need steel at the moment, they wait with a purchase.
Yeah, no, that's really interesting. I guess you are mostly CapEx driven, correct? It's, you know, not that much OpEx driven demand typically for you. I'm thinking there's a difference between the CapEx programs that you can sort of delay, and OpEx is more, you know, you need to run the business.
Yeah, we have quite a long value chain, so it's not always easy to see where our stuff is ending up. We don't see oil and gas, we don't see nuclear impact. If you can delay a month or so, I think they are willing to do that even if it's CapEx related. I mean, I know how I would react if terrorists suddenly went from 25% to 50%.
No, fair. Fair point. That's all from it. Thank you very much, guys. Thank you.
Thanks, Viktor.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from the line of Igor Tubic, DNB. Please go ahead.
Thank you, operator, and thank you, team. I just have a couple of follow-ups here. Can you please quantify in some way about the under-absorption in the Q3? I mean, what should we expect on the cost base if we start there? The second question is, do you see any difference in the chemical versus the petrochemical business in terms of demand, or is it relatively weak? Similar weakness in both, so to say. I'll start there.
I'll start with the last question now. We don't see any difference. I'm not sure I know that actually, and it's somewhat mixed now. I cannot say that there is a difference regarding the extra stock. I mean, we estimate a little bit less than 100 basis points impacting quarter three.
Thank you. Also the last one, do you see any, I don't know if you are looking at the size of the orders, or are you still receiving a number of smaller sized orders and the larger ones are not as common as before, or can you comment anything about that?
Don't think we see any pattern like that, to be fair. I mean, in some of the segments like oil and gas and nuclear, it's more what kind of product it is. No, we don't see any pattern like that.
Okay. The decline in chemical and petrochemical, was that related to any larger orders, or is it overall compared to Q1?
I'd say it's overall. W hat is a large order? I think we see it both in heat exchanger, we see it in its meditation and hydraulic tubes. From a patent point of view, it's more geographically than order size. Europe is sort of the one that's done combine most. On the other hand, North America was really low from the start.
Okay, I see. The last one, sorry, but do you see, have you lost any orders due to the [FX], would you say? Or is it an overall market thing that the volumes are down?
It's impossible to answer that directly. We don't see that, at least not clear because there are so many orders and we don't know what they are not buying. That's not what we see. What we see is a very uncertain market with a lot of hesitance to even place orders. Of course, I cannot be sure of that. If you take U.S. for instance, there is not much local competition and I haven't seen, I mean, I don't have reports from sales organizations saying, okay, we are increasing price and that's why we're losing orders. That is not what we see. We see market waiting.
Okay. Yeah, I see. Okay, that was all for me. Thank you very much.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Emelie Alm for any closing remarks. Please go ahead.
Thank you, operator. Yes, that concludes the Q& A session. Back to you, Göran.
Before ending today's session, I would like to take the opportunity to thank Olof and Emelie, since this is actually your last quarter report for Alleima. Olof is retiring and Emelie is moving on to new challenges. Both of you have been strong contributors to the successful listing and the positive development of Alleima. I would like to thank you both. I will miss you both a lot. This of course means that next quarter will be myself, a new one, and someone from Investor Relations.
Thank you, Göran. It's been a pleasure.
Thank you, Göran. All the best, Olof. Also, a big thank you to all our analysts and investors for a good collaboration. That concludes today's call. We wish you all a good summer.