Hi everyone, and welcome to the presentation of Alleima's interim report for the third quarter 2025. My name is Andreas Eriksson, Investor Relations Officer. I'm joined today by Göran Björkman, President and CEO, and Johan Eriksson, CFO. Göran and Johan will walk you through the operational and financial highlights of the quarter, and following the presentation, we will open up for a Q&A session. You're welcome to ask questions via the conference call or submit them through the webcast interface, and the presentation materials are available for download at alleima.com. As always, safety is a top priority for us. I trust that you are familiar with the safety procedures at your current location. With that, I'll hand over to you, Göran.
Thank you, Andreas, and hi everyone, and thank you for listening. Let me start with the highlights of the quarter. The geopolitical situation is still turbulent, and we are still seeing a market with continued uncertainties. Customers are prolonging their investment decisions. I would say the overall kind of wait-and-see attitude remains. I think this is particularly visible in Europe, but also in the Americas, where volumes related to the more short-cycle businesses like industrial, chem/petrochem, and also industrial heating are low. Despite this, I think our underlying performance is decent given the challenging environment, and we are clearly benefiting from a diversified exposure. Order intake rolling 12, decline 1% organically, and revenues were flat year-over-year. Our backlog remains solid in important segments like oil and gas, nuclear, and medical, with good product mix and visibility for the near-term future.
As I stated, in the more short-cycle business, and then especially in Europe and the Americas, backlog is weaker. Our adjusted EBIT margin declined year-over-year to 4.7%, and this is clearly below last year and also as we guided for in quarter two. It is in line with what we expected. The main reasons for the softer result are the weak European market, where we have short backlogs, and it's actually impacting revenue, but also the prolonged maintenance shutdown we had during the summer, and of course the FX headwinds. The reasons for the prolonged shutdown were a large maintenance investment replacing the expansion press in the large extrusion, and we have some weeks' delay in the start and ramp-up, while there will be some effects also in the fourth quarter.
Even though we have segments with a strong market, our global footprint helps us to mitigate the more direct impact from tariffs. We don't foresee a fast recovery of the market, or at least we cannot trust that that will happen. Therefore, we are now initiating a number of targeted measures to further strengthen our operational efficiency and, of course, our long-term competitiveness. The majority of these efforts will permanently reduce cost levels, including in restructuring initiatives, while others are, I would say, more a natural part of our ongoing work to align capacity and cost with current market conditions. In total, we expect annual savings of roughly SEK 200 million, coming at a one-off cost of almost SEK 400 million, and a total reduction of about 250 FTEs. I cannot stress enough, in times like these, our balance sheet is a real advantage.
Our financial position enables us to stay with our strategy, where we have several ongoing profitable growth projects. Moving over to sustainability, I've said it many times, we are generating a positive impact both through our own operations and through our product offering. Safety is always a top-priority dilemma, and we are continuously and actively implementing measures to maintain safety as a top priority. I'm happy to say that the development again is trending in the right direction, and the accident frequency is on record low levels. Our share recycled steel remains high and remains over 80% both on a rolling 12-month basis and year-over-year, and I think this is a good figure given our product mix. Also, our CO2 emissions are steadily decreasing, even though we noted a slight uptick in this quarter.
Alleima's largest contribution to sustainability is through our products, where we support our customers in their sustainability journey. That is why we are introducing a new KPI, where we measure the share of products supporting sustainability. This is things like fossil-free energy, renewable nuclear and hydrogen, energy efficiency, electrification, medical, and where the overall target is that this part of our business shall grow faster than Alleima average. As you can see, we have had a good development, but now more flattish. I would say that nuclear, medical, and also energy efficiency through compressed steel are still strong, but we see more headwind in areas like electrification, hydrogen, and renewable energy. Some other sustainability highlights from the quarter. Alleima was once again awarded the EcoVadis Gold Medal for our sustainability performance, placing the company among the top 5% of over 150,000 rated companies globally.
I think this recognition confirms our long-term commitment to responsible production and sustainable development. Another important milestone is that Alleima's climate targets have been validated by the Science Based Targets initiative, ensuring alignment with the latest climate science and international agreements. Together, these achievements mark an important milestone in Alleima's work to increase customer value by reducing climate impact and strengthening sustainability across the value chain. Let's take a closer look at the market development. Market sentiment remains mixed with continued macroeconomic uncertainties. Demand remains notably low in Europe and stays subdued in North America, while Asia continues to show more resilience. We maintain momentum in several key segments, but I will walk you through the development in each segment, starting with oil and gas.
Our view on the underlying demand is still positive, and I would say especially for umbilicals, with the project list of upcoming tenders and potential future orders solid. We are a bit more uncertain in how we're on the mid-term outlook for OCTG. We still have a solid backlog, and we are on historically high levels. Maybe as important is that we have managed to increase our operational efficiency and thereby improve profitability for our OCTG business. We are comfortable in our partnership with Tonnaris also moving forward. Chem/petrochem, Europe is on low levels, same with North America, while Asia remains solid. Industrial, the European demand is worsening on the low value-added products. North America, we noted an increase from low levels, but I have to say much of this is actually tariff-related effects. We see our price increases to compensate for the import tax.
Also here, Asia is on an okay level. Industrial heating, overall, somewhat improving, but still on low levels. Applications like electronics, semicon, and glass are improving. We have been on low levels now for, I think, about 18 months. If this improvement we now see is a turning point, I think that is too early to conclude. Customer demand is still on a good level, mainly driven by the white goods industry in the strip division. However, some customer indication from the U.S. indicated that the market is starting to soften somewhat. Medical market remains strong, driven by multiple factors, and we have a solid momentum across the product portfolio. I also like to mention that the integration of MDOX is going according to plan. Mining construction, flat underlying demand year-over-year. Nuclear, high activity, growing demand, continue to support a solid backlog, providing good visibility going forward.
Transportation, I mean, it's strengthened year-over-year, driven by the titanium tubing for aerospace, which is strong, while automotive is worsened. Aerospace is up, automotive is down, giving a, and that arrow should be flat, sorry. It is on the, okay, I see.
Yeah. Hydrogen and renewable energy, this segment remains mixed with varying performance across this broad range of businesses, but surely there is a headwind in the hydrogen and renewable energy area. Moving over to order intake and revenues, order intake rolling 12 months to SEK 18.7 billion, negative organic growth of 1%. This is mainly coming from the chem/petrochem and industrial segments, especially in Europe. North America is weak, while Asia remains on high levels. Nuclear, medical, and consumer grew, and industrial heating grew from low levels, and we continue to book good umbilical orders in the oil and gas segment. Revenues flat organically, Kanthal and strip grew, while tube declined. Biggest positive impact came from medical, and while we see the weak Europe, that impacted us negatively.
Rolling 12 months book-to-bill on 97%, and our backlog is still healthy levels in key segments like oil and gas, nuclear, and medical, but for the short-cycle business in Europe and America, the backlog is short. Earnings, the adjusted EBIT amounted to SEK 197 million with a margin of 4.7%. I mean, given the weaker market in Europe and Americas with short backlogs for the short-cycle business, the extended maintenance shutdown and the FX headwind, the result came in line with our own expectations. However, costs are clearly lower than last year, and with the market with continued uncertainty, we are now taking the measures to reduce cost and improve operational efficiency. These actions, together with the ongoing growth investments in medical, nuclear, chem/petrochem, will make us stronger going forward. We're staying with our strategy, which also includes our order booking discipline now in downturns.
Free operating cash flow SEK 285 million, lower than last year, mainly impacted by lower operating profit and higher CapEx. Let's look into the divisions, 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 and North America for the regional businesses. Asia continues to develop well. Backlog in key segments like nuclear and oil and gas is still solid, and we maintain a positive view on both those two markets. Organic revenue growth of - 3%, mainly driven by a negative development in chem/petrochem, but also timing of nuclear order that was billed in Q3 last year. Book-to-bill, 93% rolling 12 months.
Adjusted EBIT margin of 3.6%, and this was dampened by the weak Europe as well as the higher than normal under-absorption effects due to the prolonged maintenance shutdown, where we replaced expansion press in the large extrusion. As I mentioned, we've had some weeks' delay in the start and ramp-up, and we will have a negative impact also in the fourth quarter. We will, however, be able to catch up some of these effects, but due to the large backlog we have in the large flow like OCTG, that will take until mid-2026. Tube had an FX headwind of - SEK 16 million year-over-year. Moving over to Kanthal, organic order intake growth for the rolling 12-month period of 9%, which is a good growth, but still on relatively low comparables in the heating part.
Medical is strong, and we noticed some rebound in industrial heating, where applications like ceramic elements for electronics, including semiconductors and glass industry, stood out positively. It is also in these applications our announced investments in Japan and in Scotland are related to. If this is a real start of a real rebound, I think that is too early to conclude. Medical segment continued to show strong momentum with growing order intake and revenue and a solid backlog. Booked to bill, 104% rolling 12. Adjusted EBIT margin was 16.1% in the quarter, which, considering the rather low volumes in the heating part, the division, the FX headwind, and also some costs related to preparations for ramp-up of investments, I think it's an okay result.
Strip continued to grow its top line with an organic order intake growth of 24% on a rolling 12-month basis, with growth in all segments, of course, and the consumer segment being the main driver. Organic revenue growth of 5% in the quarter, all major segments contributing to that. Booked to bill rolling 12, 112%. Strip came in on an adjusted EBIT margin of - 4.2%. There is a continued negative impact from the weak fuel cell business, but also the precision strip part is not performing in line with last year, despite the positive growth. Strip, with most of its operations in Sweden, normally has a seasonally weak quarter three, and they also had continued FX headwind. There are also efficiency problems where I would say quality and yield had a negative impact.
Strip has not been performing well the last quarter, despite their positive markets, and the operational problems they addressed, and they showed a clear improvement in the end of quarter three. I am positive that quarter four will show an improved performance. With that, over to you, Johan, for some numbers.
Thank you, Göran. Before we move into the financials on this page, I'd just like to highlight that the targeted measures that Göran mentioned are expected to result in an item affecting comparability charge on the P&L of approximately SEK 400 million in the fourth quarter. However, please note that the cash impact, which is roughly half of the SEK 400 million, primarily will occur during the first half of 2026. On the savings side, we can say that the run rate savings will be achieved, half of it, about 50% by the end of quarter two next year, and full effect by the end of the year. Let's jump into the bridge on the right-hand side. Order intake for the rolling 12-month period amounted to SEK 18.7 billion, corresponding to an organic decline of 1%.
Total growth was - 5%, impacted by currency and alloy effects, with a stronger SEK and lower metal prices accounting for four percentage points each. Quarterly revenues reached SEK 4.2 billion with a flat organic growth, of which we actually had 100 basis points coming from tariffs, the U.S. tariffs. The revenues were held back by weak market conditions in Europe and North America, just like Göran pointed out. Currency effects, primarily from stronger SEK against the U.S. dollar, had a negative impact of - 4%. Alloy effects impacted by - 2% on quarterly revenues, and we see, looking into the fourth quarter, a continued negative year-over-year effect from alloys. We expect the rolling 12-month order intake to be at around - 2% from alloys, and the quarterly revenues at - 1%.
In structure, as Göran also pointed out, we have some positive contribution from MDOX, even now it's rounded off to zero, and the integration is going according to plan. Moving over to the left-hand side, adjusted EBIT I'll get back to in a coming slide, so we'll get onto the reported EBIT, where the margin declined to 3% from 6.5% last year, impacted by negative metal price effects of SEK 70 million compared to SEK- 24 million last year, as the trend for metal prices and the U.S. dollar have continued to be more negative this year compared to last year. The net financial items for the quarter amounted to SEK 6 million compared to zero last year, and one of the items in the financial net is the positive interest net on our cash balances, and in the quarter, they were yielding approximately 1.98%.
The normalized tax rate came out at 25.8% for the quarter, while the reported tax rate amounted to 36%. The reported rate is impacted by a couple of prior period adjustments. Free operating cash flow came out at SEK 285 million, and I'll get back to that in a later slide as well. Finally, adjusted EPS for the quarter came out at SEK 0.56 per share, impacted negatively from the lower adjusted EBIT. Looking at the adjusted EBIT and the bridge, going from last year's SEK 314 million or 7% to this year's SEK 197 million or 4.7%, we note an organic decline on EBIT of SEK 78 million, resulting in a negative organic leverage.
This is mainly driven by the weaker markets in Europe and North America, and the higher than normal under-absorption and maintenance effects, primarily in tube, and as Göran pointed out, the yield and productivity issues in strip. It's worth noting, though, that we've been able to compensate for the U.S. tariffs, making it EBIT neutral in the quarter. The currency headwind continued, and we were impacted by the strengthened SEK, mainly versus the U.S. dollar. The total effect corresponds to a margin dilution of 70 basis points in the quarter. Structure, again, is the contribution from our acquisition of MDOX that Kanthal made early at the beginning of the year.
Looking at the balance sheet and capital efficiency, net working capital decreased in absolute terms year-over-year, mainly due to currency effects and lower metal prices, but increased as a percentage of revenues to 39.5%, and that's due to our lower quarterly sales. Continuing into inventories, they are lower in value both sequentially, as per normal seasonality, and year-over-year, coming from both lower volumes in inventory and lower metal prices. We continue to have a lot of focus on this in the divisions. Capital employed, excluding cash, increased year-over-year to SEK 16.3 billion, mainly driven by the higher CapEx levels. The return on capital employed, excluding cash, based on operating profit, including metal effects, was 8.1% for the rolling 12-month period, down from 9.9% last year.
Looking at cash flow, the free operating cash flow amounted to SEK 285 million, which is lower than last year. The EBITDA is impacted by the negative metal price effects and currency headwind, as well as the operational effects that we explained earlier. The non-cash items were slightly more positive this year. This refers, for example, to provision or provision releases in the operating result that had no cash flow impact. The positive impact from lower working capital mainly comes from accounts receivable and inventory. An increase in CapEx comes both from our prolonged maintenance stop and increased growth CapEx.
If we look on the graph on the right-hand side, we can note that we continue to deliver a healthy cash flow, although in the last two years, we had effects from the ongoing growth investments, which, may I remind you, are in segments that are more profitable and less capital intense and will start yielding in the coming years. Overall, and as Göran also pointed out, our financial position remains strong, where we are well below our financial target of a net debt-to-equity ratio below 0.3 times. At the quarter end, we were at - 0.02 times. The net pension liabilities decreased year-over-year to 735 million from last year's 938, mainly as a result from higher discount rate and value increase of the pension assets. Leasing liabilities were on par with last year.
Again, our cash position continues to be strong, and we have a net debt, or rather a net cash position of 362 million and a 3 billion unutilized revolving credit facility on top of that. Looking at the guidance we gave ahead of the quarter and the outcome for CapEx, the outcome is that we are now at 745 million year to date. We guided for 1.2 billion for the full year, so I would say that we're well in line with that guidance. The currency, the transaction and translation effects came out at - 113. We guided for 115 million, - 115, so well in line there as well. The total bridge effect, including the hedges and revaluations, was - 41. Metal prices affected us negatively with 70 million, where we guided for - 150.
Here, the deviation comes from several methods, but mainly from the development of molybdenum in the quarter. Normalized tax rate was year to date 24.1%, where our guidance is in the range of 23% - 25%. For the quarter, the normalized tax rate was on the higher side at 25.8%, mainly due to the country mix for the profits in the quarter. Looking at the guidance for the fourth quarter, we maintain our guidance of 1.2 billion of CapEx for the full year. The currency effects, we estimate for the transaction and translation to about - 150, 150 on the back of the stronger SEK, of which I would say that half will be mitigated by hedges, roughly half. Metal price effects based on end of September metal prices and currency rates, particularly nickel and U.S. dollars, we anticipate a neutral effect for quarter four.
The tax rate for the full year 2025, we expect a normalized tax rate in the range of 23% - 25%. By that, I hand back to you, Göran, for the outlook and summary.
Thank you, Johan. When the general economic environment was continued uncertain during the third quarter, and we expect that to linger into the fourth, at least we don't trust it will improve much. One-off cost of about SEK 400 million related to restructuring activities is expected to affect fourth quarter results. We also expect some diluting effects related to the delayed ramp-up from the installation of expansion press, and that will have some impact on the profitability of the fourth quarter. We maintain a solid backlog in several key segments, providing good visibility into near-term deliveries. However, we are seeing challenges in other customer segments, particularly in Europe and North America, which already have affected and is expected to continue to affect short-term deliveries. Product mix is anticipated to be mainly broadly in line with third quarter, and we also expect currency headwind in the fourth quarter.
Cash flow tends to be strong in the second half of the year compared with the first. That brings me to the summary, so let me summarize. We are affected by a continued uncertainty due to the geopolitical turbulence, but we still have good backlog and momentum in key segments like oil and gas, in nuclear, and in medical. Revenues flat organically where Kanthal and strip grew, while tube declined. Biggest positive impact from the medical segment, while a weak Europe impacted us negatively. Adjusted EBIT margin declined year-over-year, mainly due to the weak Europe, the FX headwind, and the prolonged maintenance shutdown. Therefore, we are initiating a number of targeted measures to further strengthen our operational efficiency and long-term competitiveness.
The majority of these efforts will permanently reduce cost levels, including restructuring initiatives, while others are a natural part of our always ongoing work to align capacity and cost with current market conditions. Our financial position remains strong, which will enable us to continue to execute on our strategic agenda, where we now are driving several growth initiatives to strengthen us long-term, while we stay with our order booking discipline also in downturns. With that, back to you, Andreas.
Thank you, Göran. We will now begin the Q&A session. Please feel free to ask your questions via the webcast or directly through the conference call. 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 their 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 Kaleb Solomon from SEB. Please go ahead.
Hi, guys. Thank you. Just three questions from my end. On the effects from the sort of delayed ramp-up following the maintenance shutdown, could you maybe put a rough figure on what the impact will be in Q4?
At group level, maybe 80 basis points in the fourth quarter. As I said, I think roughly half of that we will catch up, but that positive effect will remain until, I would say, mid next year.
On the SEK 200 million sort of annual cost savings you expect to achieve from the measures, did I interpret you correctly, Johan, that we'll start seeing half of that run rate effect in Q2 next year for the first time? Will those sort of cost savings be fairly evenly distributed throughout the quarters?
Half of it from quarter two and full effect by the end of the year in run rate.
Okay, that's clear. On the sort of topic of tariffs and general uncertainty in Q2, you mentioned June was significantly worse than the rest of the months. I know you say customers sort of continue to be cautious, but based on your Q3 orders, it at least seems like things have gotten a bit better since June, at least. Can you maybe give us some color on that and what you have been seeing in Q4 so far?
The comment I made regarding June, that was in Americas, and June stood out as very negative. That came out better in July, and I think it's been kind of flattish. It looks number-wise more positive, but that is due to that, I mean, we bring up prices due to the tariffs, and I think it's more or less a stable development. June was not, I mean, that stood out as negative. After that, more flat. Once again, I mean, we compensate for tariffs. I think the main issue is all the uncertainties, and even if there is now a deal in Europe and America, even though the new things come every week, remember that deal does not include tariffs on steel imports to the U.S. That is still to be solved, hopefully through quotas, which I think would be the best idea.
Could you maybe say something about how competitors who ship more finished products and kind of lack the local processing capacity have managed to handle tariffs? Have they been able to pass on costs to the same extent, or?
I don't know, honestly. We have not seen any big movements on the competitiveness situation in the Americas. My assumption, but this is just a guess, is that some of our competitors that don't have so much added value in the U.S. perhaps take a hit on, I mean, maybe they take some of the costs for the imports themselves, but I don't know that. That's just speculation.
Okay, that's clear. Thank you.
The next 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 the savings program. Can you go a bit more into specifics? Is that localized to a specific segment or geography, or will it sort of be spread out over your entire business?
Okay, first of all, we see that the majority will be permanent. I think we estimate roughly 75% of the SEK 200 million will be permanent, so if volumes go up, that will still be a saving. In respect to the ones that will be, where things will happen, I cannot communicate this in this kind of meeting. It's in several countries, including Sweden, and it's a combination of sort of staff reduction. There are also some expected closures, but I cannot go into more details because I want my personnel to hear it from us, not through this kind of call, if you're okay.
I understand that. On industrial heating, you sounded a bit more optimistic, I think, than you did a quarter ago. Can you expand a bit on what you sort of base that on? Is it the current trading in Q4 that is pointing up a bit, or what is that optimism based on?
I was trying to play it down a little bit. I mean, it's the numbers, actually. On the heating system, which is the more added value part of the industrial heating business, there was a positive uptake in the quarter. What I'm saying is, I mean, I have all the hopes that that is an improvement in the market, but hope is not a good strategy. I'm carefully optimistic, maybe, but there are small movements in the right direction, but from low levels.
Okay, understood. Do you have any view on the, you talked a bit about tariffs in the U.S. before, but Europe's proposed steel safeguard package? I understand that for your more specialized products, a tariff on the raw material doesn't have a massive impact, but for your less specialized products in Europe, is this something that's going to have an impact, you think, on you?
Yes, I think it will have a positive impact, how much we are trying to understand. You're right. I think there are other steel companies here that this is much more important for, the more sort of standardized carbon steel producer. I think the commission has taken a wise decision. I think this is good because, I mean, it's huge overcapacity in China. They are subsidized, and in a way, they export unemployment. I think this is the right thing to do. If it has any impact on us, it's on, I would say, on the more less special part of our portfolio, but I cannot quantify it at this moment.
Yeah, no, I understand it's difficult to quantify the impact, but could you talk a bit about sort of what products perhaps where you are seeing high import pressure?
I mean, it's mainly tube, I would say. The pipe business, for instance, ABN instruments, H&I tubes, but it's mainly in tube.
Okay, understood. A final, just very quick one, just to check that I heard you correctly. Did you say half of the forecasted FX headwind for Q4 will be mitigated by hedges?
Yes, yes, that's correct.
Okay, perfect.
That's estimated.
Understood. Perfect. In that case, that's all for me. Thank you.
The next question comes from the line of Anders Åkerblom from Nordea. Please go ahead.
Thank you very much for taking my questions. Just to follow up on the previous sort of topics, not discussing specifically the import volumes to the U.S. among your competitors, but rather kind of domestic capacity. Following these tariff announcements, are you seeing any indications of incremental capacity additions in the U.S.?
No, we don't see that. I don't see any of our, at least larger competitors, are moving forward with any kind of investments that I am aware of. No.
Okay. In terms of the cost-out measures, you touched upon this previously, but I'd just like a bit of a clarification in terms of, I mean, is this predominantly driven by you seeing sort of clear efficiency improvement opportunities, or that there's some aspect here as well of kind of positioning for potentially lower demand from some of the key segments than if this would be in tube, say, or similar?
I'm not sure how I should answer that question. I think we've seen a weaker market for some time, especially in Europe. At some point, probably that will turn back again, but we cannot trust that that just will happen. We have to take measures. It's more from that point of view. It's more the view we have on the market right now. No speculation it will go in any direction going forward.
Okay. That makes sense. Finally, on the FX impact that you guided for previously for Q3, I mean, adjusted for this and the final outcome, I guess results were a bit weaker than expected. Could you elaborate a bit on sort of the kind of greater than expected organic under-absorption in Q3? You mentioned 80 basis points impact in Q4, but what was it that mainly drove this in Q3? Was the production stop longer than expected, or from what you said previously?
No, I mean, the stop was according to our plan in quarter three. If you remember, in quarter two, we guided for a quite weak quarter three, and it came in roughly as we expected. The longer summer stop that we refer to in third quarter is that we were doing quite a large investment, and it's the ramp-up of that machine that is causing some delays that now is also impacting quarter four.
Okay. Makes sense. Thank you. Thank you for taking my questions. I'll get back in line.
Thanks, Anders.
The next question comes from the line of Igor Tubic from DNB Carnegie. Please go ahead.
Hello. Thank you, operator. Hi, team. I just have one follow-up question. Can you give us some sort of update on your upcoming projects the coming years, where we are in terms of timeline, and when the projects are expected to start to ramp up if they haven't yet? Thank you.
I'm looking at you, Johan. They are all in line with what we've communicated before. For instance, I mean, tube 168 or tube 26, as we call the nuclear, will start up end of next year. I will be in China in a few weeks to do the inauguration of the new tube plant in China. That is two. The other ones are also on time.
Should we expect a Chinese ramp-up to start here in Q1, or how should we think about that?
Yeah, in a way. I mean, when we make a decision like this, of course, we look long-term at the market development, and we have had a fantastic development in China if we go back a decade or a little bit less than a decade. If that would continue, we would run out of capacity, and we expect the market overall to continue to develop well. We had to add capacity. That's the background for the decision. When machines are in place and we have people running it, of course the ramp-up will be dependent on the market situation right at that point. We will have machine capacity by the end of this year, and then we can take more orders.
Okay, that's clear. Can I just ask you, have you started already to take on some orders for this new capacity, or are you planning to do that once everything is clear?
That's the detail I cannot answer, but since I'm going to be there mid-November, I was surprised if, I guess, everything is up and in a way running already now, and if there are orders to book, I guess they book them. Igor, I don't know that detail.
Okay, great. That was all for me. Thank you.
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 Viktor Trosllsten from Danske. Please go ahead.
Yes, thank you, operator, and hello, Göran and team. I had to call in a little bit late, so sorry if you have answered some of these. Firstly, on Kanthal and the industrial heating, if we should say outlook, is that driven by the CapEx side of demand, or is it OpEx driven? That's my first.
I'm not sure I can answer that, but I guess more CapEx. I mean, we see it in semicon, we see it in electronics, we see it in glass. How much of that is to add new capacity and some of that that they already have? I cannot really judge, but it's clearly in those parts of the subsegments of industrial heating we see improvements.
Okay. As a reminder, could you help us, you know, how much of industrial heating is today CapEx driven sales, and how much is OpEx?
Is it basically 50/50, or?
Yeah, that's what we normally judge, yes. Semicon normally is CapEx driven, so at least that should be like that.
Okay. No, fair enough. On the currency in the quarter, and again, sorry if I called in a little bit later, what's the difference between the transaction and translation impact of SEK 113 million, basically what you guided for, and the total currency effect of SEK 41 million? Is that hedges, or?
Yes. Between that and the total effect, there comes hedges and revaluations of bank accounts and AR/AP.
Okay. Was there any particular division that was more or less impacted?
We had a fairly similar impact on Kanthal and tube, I would say. Yeah.
Okay. Yeah. That's clear. And then just finally on my side, on the oil and gas business, I mean, oil prices coming down quite a lot. Just, you know, obviously, you keep your arrow flat, so to speak. If you could remind us, you know, where are you in terms of capacity utilization now in that business? Is that running, you know, at 100%? What's the overall feeling in the industry? You know, your five cents on it would be fantastic.
I'm not sure that you're aware here, Viktor, when I went through the arrows. I think overall we judge oil and gas flat on a good level. I think we're a little bit more optimistic on the umbilical side than on the OCTG side. Both of them have good backlogs.
Since you asked the way you ask, I mean, we have actually been running umbilicals not at 100% capacity utilization this year. It has not been visible because the pricing has been so good. From a value point of view, it's been high. There's a lot of potential orders to win, and we think we're going to be successful. We are actually planning for a slight increase of pace of umbilicals, maybe around the end of this year, beginning of next year. I think we will increase output in umbilicals if things go as we wish. That's our plan.
Good. Good caller in light of what we see in the oil price, etc. It doesn't seem like you doesn't sound too concerned then.
No, I mean, oil price, it's always volatile. If you go back half a year or maybe more, it's been between SEK 60 and SEK 70 and SEK 60.
SEK 60 is still a good price. We have to remind ourselves, it's not only oil business, it's also gas.
Fair point. Fair point. No, that's super. That's all for me. Thank you very much.
Thanks, Viktor.
There are no more questions from the phone at this time.
All right. Thank you. I think we will conclude this call. Thank you for all your questions and for joining us today.
Thank you.
Thank you.