Good day, and thank you for standing by. Welcome to Alleima's Q3 Interim Report 2026 conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, please press star one one on your telephone. You will then hear an automated message advising your hand is raised. If you join using device audio, please click on the hand raise icon on your screen. To withdraw your question, please press star one one again on your telephone or click on the hand lowered icon. Please also note that today's conference will be recorded. I would now like to hand the conference over to your first speaker, Frida Adrian, Head of Investor Relations. Please go ahead.
Thank you very much, and hello everyone, and a warm welcome to the presentation of Alleima's third quarter 2026 results. My name is Frida Adrian, I am Head of Investor Relations, and joining me today are our President and CEO, Göran Björkman, and our CFO, Johan Eriksson. Göran and Johan will walk you through the results and the key highlights of the quarter, and following the presentation, we will open up the Q&A session and you can ask questions via the conference call just as our operator instructed. The presentation materials will be available to download at alleima.com. As always, safety is our top priority. Please take a moment to ensure that you are familiar with the safety procedures at your current location. With that, I will hand over to you, Göran.
Thank you, Frida, and hello everyone, and thank you for joining us today. Starting with the highlights for the third quarter, and we start with the order intake, which declined organically by 1% on a rolling 12- months basis. The timing of the project business is an important factor in understanding our third quarter performance. As you know, we operate in several project-related segments. Order intake can vary significantly between quarters, and we therefore prefer to assess it external on a 12- months basis rather on isolated quarters. That is to get a clearer picture of the underlying development. On that basis, the declining order intake reflected weak development in OCTG, in Industrial and in the Nuclear segment, while Umbilicals, Industrial Heating, Medical, and Transportation maintain solid momentum.
Overall, market conditions have remained broadly unchanged since quarter two, and it is more the timing effect, and that is also reflected in a couple of good orders booked in both Umbilicals and Nuclear now in October. Our OCTG business has been and still is affected what is ongoing in the Middle East. Our customer has reduced its pace in the region where our CRA tubes are needed, while our specific niche on that market has pretty much come to a standstill. Revenues declined 2% organically, driven by the low pace of OCTG, as well as lower activity in the Chem/Petrochem segment in China, which we flagged for in quarter two. Also on revenues, Industrial Heating and Medical showcased strong growth.
Looking at earnings, negative impact from the volume shortfall related to OSG, the lower invoicing in Chem/Petrochem in China, as well as a slower than planned production pace of steam generator tubes in Tube 12. I will get back to that later. We are again very pleased with the development in Kanthal, who managed to maintain its solid performance in quarter two, also now in quarter three. The targeted measures we communicated a year ago yielded some SEK 40 million. That is according to plan. I am also pleased that we during the quarter announced the next expansion phase of our Tube site in Mehsana in India. An investment of about SEK 220 million, of course, made possible by our strong financial position. We will increase capacity and we will continue to add new capabilities, further strengthening our already strong position in that region.
On that theme, we look forward to, at the end of the year, be increasing capacity for Industrial Heating via our expansion at our existing site in Sakura in Japan. Moving over to sustainability update, where we continue to generate a positive impact through our offers. On a rolling 12 basis, our sustainable product portfolio accounted for 27% of total revenue during the third quarter, up from 23.8%. That is primarily driven by growth in Industrial Heating and in the Medical segments. As always, safety remains our top priority. The total recordable injury frequency rate increased to 5.4 on rolling 12 compared to 5.3, while the quarterly rate increased to 6.9 from 5.9. This is, of course, not a positive development and not good since every incident is one too many. The share of recycled steel increased to 82.3% of rolling 12 from 80.7%.
In the third quarter, it reached 84%, and that is supported by a product mix with a lower share of high-nickel steel. CO2 emissions increased by 7% on a rolling 12 basis. However, quarterly emissions declined 5%, mainly driven by lower energy use in our production. Let us look at the market development. The market is volatile. We have wars, trade policy changes, energy prices, and as of right now, there is no clear end in sight. This is impacting us in several ways, and the impact on OSG being the most obvious one. I will take you through each segment, starting with Oil and Gas. In short, we can say Umbilicals has been very strong and the opposite can be said about OCTG, where it still looks rough. Industrial, Europe is weak. Asia, North America improved somewhat, but from low levels.
Chem/Petrochem, Europe and North America grew from low levels, Asia more flat. Industrial Heating, Asia, North America continued to drive growth. Europe is still on the lower side and it is still sub-segments like electronics and semiconductors that are the main drivers. Consumer, flat on an okay level, while Medical, strong momentum, no signs whatsoever on a slowdown. Transportation, aerospace, and space, still strong. Marine is somewhat slower and automotive weak. Mining, construction, stable demand overall. Nuclear, that is project-based and therefore uneven order intake by nature. We booked several orders now in the beginning of October, both for cladding, nuclear tube and pipe, and also for steam generators. Renewable energy is stable on low levels. Let us discuss a little about the Middle East.
I mean, that crisis has now been ongoing for eight months, and the OCTG market remains really challenging with the great majority of our OCTG volumes exposed to the Middle East area. Prolonged disruption has resulted in fewer well completions and consequently lower consumption of OCTG tube, contributing to elevated upstream inventories globally. This is, of course, a challenge for us as for other companies active in the OCTG market in the Middle East. Lower volumes had an increasing impact on the Tube division's earnings during the quarter, resulting in a greater under-absorption of fixed costs. The volume declines significantly reduced capacity utilization in the large diameter production flows in Sandviken, particularly in the large pilger mills, but also in the large extrusion press. As these tubes are large diameter, representing also substantial tonnage, the decline also had a negative effect on the primary production flow.
I'd say that the situation remains unstable, and this uncertainty is negative for the market as it affects visibility, customer sentiment, and decision-making. We have said it before, the OCTG business is CapEx-driven . The impact on Alleima's other businesses remains limited, and we are, of course, closely monitoring volatility in energy prices and also on shipping costs. So moving over to order intake and revenues. Order intake rolling 12 is still around SEK 18 billion, however, down 1% organically, negatively affected by the weak OCTG market and a canceled order of SEK 250 million that were booked in quarter two now reported as negative order intake in quarter three. The lower order intake in Industrial and Nuclear also affected negatively. Industrial Heating, Medical, and Transportation contributed positively, and also Chem/Petrochem was growing but from low levels.
Revenue declined 2% organically, where the weak OCTG and Chem/Petrochem in China were the biggest factors, while Industrial Heating and Medical were positive. Book-to-bill rolling 12, 99%. Moving to earnings. Adjusted EBIT amounted to SEK 202 million with a margin of 4.8%, which although it's in line with last year, we should be honest and say that this is a disappointing weak quarter. We are, of course, affected by the OCTG business with loss of volume bringing under-absorption effects. This is something external which is difficult to mitigate fully short term. But there are also things that we could have done better. The slower than anticipated production pace of steam generator tubes in the quarter is one thing. Let me be clear, this is related to Tube 12, so has nothing to do with the mill that we now are ramping up.
It's related to one specific order of a tube dimension we normally don't produce. It's an unusually large size, which made us slower than we planned. This is something we should have done and also will do better moving forward. In terms of positives, Kanthal stands out once again. Volumes in Industrial Heating have returned, and given the mitigating action they took in the downturn, now they get the solid leverage. On a Group level, the target measures yield is on SEK 40 million in the quarter. Minor currency effects, we know SEK 3 million year-over-year, and free operating cash flow of SEK 373 million, which Johan will get back to. So let's look at the division performance during the quarter, starting with Tube. Tube is still a mixed picture where Umbilicals in Oil and Gas is still strong.
Also, titanium tubing for aerospace and space within the transportation segment is solid. The main issue is the aforementioned OCTG business in all aspects, affecting order intake, revenues, and earnings. Some bright spots in the Chem/Petrochem segment, but I think it is too early yet to see since the volumes are low. Rolling 12 order intake declined 8% affected by OCTG and Nuclear, but we are happy to see that orders we receive now in the beginning of October further strengthen our view on the Nuclear segment going forward. Revenues declined 6% organically, mainly related to OCTGs, but also Chem/Petrochem in China. Book-to-bill rolling 12 on 96%. Earnings were affected negatively by three major variables. Under absorption stemming from the OCTGs. Slower-than-planned production of steam generator tubes in the old mill, as well as ramp-up costs related to the new mill.
Ramp-ups will not be material in Q4. Also weaker Tube in China, which we still believe is a temporary slowdown. This offsets the positive effects from the targeted measures, as well as a strong performance in Umbilicals. Tube had an FX headwind of SEK 7 million year- over- year. Let us move to Kanthal. Kanthal delivered yet another strong quarter, double-digit top-line growth. I would like once again to take the opportunity to congratulate and thank the entire global Kanthal team for a very well job done. Thank you. Rolling 12 order intake grew organically with 18% when Medical, Industrial Heating segments were the main drivers. Revenues grew 10% organically, also on the back of Medical and Industrial Heating. Strong performance in North America and the APAC regions. Rolling 12, book-to-bill on 109%.
The adjusted EBIT margin 19.4% is a solid level supported by the target measures, higher volumes in Industrial Heating, as well as the continued solid development in Medical. FX had a positive effect of SEK 5 million year- over- year. Strip had another challenging quarter and has continued to work to strengthen its cost position with ongoing mitigation actions. Some of those actions are related to investments in increased productivity, so that one needs to understand takes some time. Rolling 12 order intake declined organically with 15% with negative development in all segments, but especially within the hydrogen business. Revenues declined 10% organically, negatively impacted by the Transportation and the Industrial segments. Book-to-bill 93% and adjusted EBIT margin on -4.3%, impacted by FX SEK -4 million year-over-year and the underlying margin was -3.1%. All in all, a tough quarter for Strip.
With that, Johan, I would like to hand over to you.
Thank you, Göran. If we start from the right-hand side, order intake for the rolling 12-month period amounted to almost SEK 18 billion , corresponding to an organic growth of -1%. We had some negative impact from FX of 4% and a neutral effect from alloys, indicating a total growth of -4%. Quarterly revenues reached almost SEK 4.3 billion, with a negative organic growth of 2% and positive impact from FX and alloys of 1% and 2% respectively, indicating a total growth of 1%. We now move to the table on the left-hand side, and I will get back to adjusted EBIT in a coming slide. The reported EBIT increased to SEK 315 million, and the increase is mainly coming from positive metal price effects of SEK 107 million. Items affecting comparability amounted to SEK +5 million, mainly coming from positive effects on net pension liabilities in connection to a site closure.
The net financial items for the quarter amounted to SEK -18 million compared to SEK +6 million last year, mainly driven by revaluation of derivatives. The reported tax rate was 30.9% for the quarter, while the normalized year-to-date figure was 23.6%. The free operating cash flow came in at SEK 373 million in the quarter, and we will get back to that in a later slide. Finally, adjusted EPS decreased slightly compared with the same quarter last year to SEK 0.46 . Looking at the EBIT bridge. The adjusted EBIT bridge, as you can see, the net effects are quite modest. We made SEK 197 million in quarter three last year with a margin of 4.7%. For Q3 this year, we had a SEK +7 million in organic development despite the organic revenue decline.
From currency, we had some minor FX headwind of SEK 3 million and a minor M&A cost last year, resulting in SEK 1 million of structure in the bridge. This takes us to SEK 202 million and a margin of 4.8%. As Göran touched on, Kanthal is the main positive driver with another solid performance. In addition to that, the targeted measures continue to deliver approximately SEK 40 million in savings during the quarter. That brings the permanent part of the activities that we announced last year to their full-year savings run rate already now. This was offset by effects in Tube, coming mainly from the under-absorption relating to lower OCTG volumes and the slower-than-planned production pace for the steam generator tubing in the old mill.
Looking at the balance sheet and our capital efficiency, the net working capital increased in both absolute terms year-over-year and as a percentage of revenues, mainly due to higher metal prices affecting inventory and currency. The sequential decrease of net working capital in the graph can be derived from its normal seasonality, I would say. Capital employed excluding cash increased year-over-year to SEK 16.8 billion, mainly driven by higher net working capital. While the return on capital employed excluding cash, based on reported operating profit, was 8.8% for the rolling 12-month period, up from 8.1% last year, coming from a higher rolling 12-month reported operating profit. Looking at the cash flow, the free operating cash flow amounted to SEK 373 million coming from a higher EBITDA, including the positive metal price effects.
We have SEK +170 million of those this year versus SEK -70 million last year. The non-cash items, which most commonly refers to cash or non-cash effects from provision or provision releases, was this year affected by cash flow effects from the ongoing restructuring activities. The changes in net working capital during the quarter contributed positively, and that is normal seasonality in the third quarter. The CapEx was slightly lower than last year. On the other hand, amortization of lease liabilities was slightly higher this year. All in all, this leaves us with a very healthy free operating cash flow of SEK 373 million . From that, we then turn to the financial position, and it continues to be very solid. We are well below our financial target of a net debt-to-equity ratio below 0.3x . At the quarter end, we were at a - 0.03x .
The net pension liabilities decreased to SEK 566 million from last year's SEK 735 million, mainly as a result of higher discount rates. The leasing liabilities are somewhat lower than last year, and our cash position continues to be strong, and that gives us room to operate and execute growth investments like the next phase of our investment in Mehsana in India that we announced in the quarter. Let's have a look at the guidance we gave prior to the quarter and the outcome of that. On CapEx, we guide on full year, and so far, the year-to-date CapEx spend is SEK 658 million. Normally, the second half of the year is more CapEx heavy. Currency transaction and translation effects came in at SEK 1 million, where we guided for a neutral effect.
In the total currency effect, the total bridge effect, which also then includes bridge effects from this year's hedges and revaluations and last year's revaluations, the total currency effect was SEK -3 million . Metals affected us positively with SEK 107 million, where we guided for SEK 100 million . The normalized tax rate year to date is at 23.6%, where we're guiding for the range of 23%-25% for the full year. As for the guidance for the fourth quarter, we slightly lower the full-year CapEx to SEK 1 billion, down from SEK 1.1 billion due to the timing of our CapEx projects.
Currencies based on the rates per October 21st, we expect a positive transaction and translation effect on EBIT of about SEK 100 million for the fourth quarter, while on the metal prices, also based on October 21st values, we anticipate a neutral effect on EBIT in the fourth quarter. The normalized tax guidance is left unchanged at 23%-25% for the full year. By that, I hand back to you, Göran.
Thank you, Johan. Outlook, looking ahead to Q4, we are expecting continued mixed market activity. Umbilicals, Industrial Heating, Medical, Nuclear, and Aerospace are strong with solid backlog and have good momentum going forward, while we in other segments are running shorter backlogs, for instance, in OCTG, also in Industrial and in Chem/Petrochem, where we expect lower volumes and therefore some under-absorption effects in Tube also in Q4. For nuclear, we expect a negative impact also in Q4 from the lower-than-planned production phase as we complete that order due in the quarter. To sum up this challenging quarter, market conditions remain mixed, and we experience some uneven order intake, although we secured some good orders now early in quarter four, this resulting in negative order intake for the third quarter rolling 12 months.
We saw continued good momentum with profitable growth in Kanthal, driven by the Medical Industrial Heating segments. Within Oil and Gas, the Umbilical business was still positive while OCTG was weak, and this is negatively impacting Tube. We also saw a slowdown in Chem/Petrochem in China. These volumes and invoicing shortfall also impacting earnings alongside a slower-than-planned steam generator tubing production pace. Targeted measures are progressing according to plan, and as always, we are continuously reviewing and measures to adjust capacity and cost to the current market conditions. We have a stable financial position. We continue to execute our long-term strategy focus on attractive niches and a strong product mix. With that, back to you, Frida.
Thank you both very much, and we will now move over to the Q&A session. As you know, you can ask your question directly via the conference call. Operator, could you please open the line for the first question?
Thank you. As a reminder, to ask a question, please press star one one on your telephone, or if you have joined via the device, please click on the raise hand button and wait for your name to be announced. To withdraw your question, please press star one one again, or click on the lower hand button. Thank you. We are now going to proceed with our first question, and the questions come from the line of Kaleb Solomon from SEB. Please ask a question.
Hi, guys, and thank you for taking my questions. You described some timing effects and say several orders sort of moved into October. Can you give us a rough magnitude of how much of the decline was simply due to timing? I guess that implies some of it should reverse next quarter.
Difficult to say. I think the cancellation is a bridge effect on SEK 500 million between the quarters. We were expecting some Umbilicals order in quarter three, which did not come through there. That market is still very positive. I would say the main effect between quarter two and quarter three are the timing effects, and then OCTG is weak. I am not sure I can tell you number-wise.
Okay, thank you. Last quarter, you also mentioned roughly SEK 20 million in quarterly ramp-up costs for the new steam generator factory, and you sort of clarified that the slower nuclear production is a separate issue. Can you give us a rough sense of how much that impacted earnings in Q3 on top of the planned ramp-up cost? As a follow-up to that, how big do you expect that impact to be in Q4?
First of all, ramping up is in the new mill and the problems is in the old mill, so they have nothing to do with each other. The ramping up is cost we have before we start full absorption effects in the new mill, and we do not expect any of those costs during quarter four. So that is something we are through then, because we have now started to pack in the new mill. The problems are fully related to the old mill, and I have been along so long. This is a very unusual tube size. I think it is the third or fourth time we have done it in more than 35 years. It is bigger, and we have had problems to come up in pace. We have new bottlenecks. It is not what I expected. I think it is a real performance issue.
But it is isolated to this individual order of a very unusual size, and that will be done in just a couple of weeks. So that is the good part of that story. How much it is, I am going to say, I think Johan touched upon it. I cannot give you the exact number, but if you look, we are pretty flat year-over-year on adjusted EBIT. If you take the good things, Kanthal and the target measures, I think they bring up the results almost 200 basis points. Then we have two main issues. One is the under-absorption due to OCTG, and the other is these issues in the steam generator factory. Those are roughly - 200 basis points. I would say, to give you some more, with the market conditions we have, I am not pleased with the results. We should have been close to 6% margin.
Okay, that is helpful. Thank you. You have taken on more contribution business to support utilization. With OCTG weakening further and the canceled orders you mentioned, or the canceled order that was scheduled for Q4 production, do you expect to increase the contribution part more in Q4? Can you give us a rough sense of any additional margin dilution compared to Q3?
Good question. We report that the industrial segment is pretty weak in Europe, so it is not that easy, and there is a limit for how much we should price ourselves to that. So far, it looks like the worst under-absorption will come from the cold work, from the pilger mills. I think extrusion and upstream is still okay-ish in the fourth quarter. It is there we have the opportunity to take other orders. In the pilger mills, these big tubes, we have no other product to put there. So it is more in the cold flow.
Okay, that is helpful. Thank you. Just lastly, on cost savings, you delivered roughly SEK 40 million this quarter compared to SEK 45 million in Q2. Can you explain that decrease and give us a rough sense of any additional benefit we should expect in Q4 as you reach the full run rate?
That is a bridge effect too.
No, I think what we alluded to in this is the permanent savings, so at SEK 40 million. So it is the same. When you add the volume part, we get to SEK 45 million. So it is the same level. What I pointed out was the SEK 40 million for the permanent savings. So we are continuing at that pace, and now we are, on the permanent part, at the targeted savings rate.
Okay. That is clear. Thank you for taking my questions.
We are now going to proceed with our next question. The question comes from the line of Anders Åkerblom from Nordea. Please ask your question.
Yeah. Hi, Johan and Göran. Thanks for taking my questions as well. I wanted to ask firstly on OCTG and just how we should think about the order book quality in OCTG. Could you give us any indication on how much of the Middle East linked volumes remain in the backlog?
Yeah, it is low, Anders. That is the development or lack of development in quarter three is the problem related to Middle East because nothing has changed, and there is still a war ongoing. Right now, at the limited pace we are running, because we are running right now at a lower pace than normal because we need to help our customer not to be overstocked due to the low pace. I would say we have roughly four months of backlog at the lower pace.
Okay. Very clear. Thank you, Göran, for that answer. I wanted to ask also in Tube, you were through this on the past couple of questions, so apologies if I did not get that. But even if we adjust for savings and last year's production stoppage, obviously it was quite meaningfully weaker year-over-year. I would just appreciate if you could just help us a bit and size respectively where the margin decline in Tube came from under-absorption to, from OCTG, nuclear production, ramp-up respectively. So how should we just think about those respective buckets, so to speak?
Then I will repeat. I think there are, to simplify, two positive bringing up the margin in the quarter. One is Kanthal performance, because they are performing better this quarter than quarter three last year. I think this is not what you asked for, but I think the biggest positive actually comes from the heating part of the Kanthal, which I think is facing now they can continue strong as well. The savings, those together is almost +200 basis points. On the negative side, it is the OCTG and steam generator tube. The ramp-up and the problems with the lower pace, the ramp-up is the lower part of that, and that is negative about 200 basis points.
Okay. Then I understand. Thanks. It was about Tube specifically, but you answered there at the end. Thank you. I wanted to ask finally on Kanthal, if we just look at organic operating leverage in Kanthal, it was quite healthy, almost 50%. Could you help explain a bit what drove this apart from the cost out measures you have taken? How should we think about that sort of level of organic operating leverage going forward as you also ramp-up new production?
I think first of all, Kanthal is delivering a really strong quarter, but I have to say it is nothing strange. It is no specific one-offs. It is sort of the level that you could expect. Of course, they have some savings from what we presented last year as well. But I think an important part of the Kanthal result is when they were coming in the heating part from lower volumes 2023 and 2024, 2024 and 2025 maybe. They did it good from a mitigation point of view to took out cost. Now when volumes are coming back and they are not adding back all the resources and the cost, they get a very healthy leverage on the results, especially in the heating business.
I think it is roughly a year ago when we started to see growth in Industrial Heating. I was not sure we could claim growth, but it was and we see no signs of the market not continuing strong. Then numbers-wise, percentage-wise, it will be not as strong growth-wise because they are meeting higher costs. But I think it is what I am saying. I think one could expect Kanthal to deliver on these levels.
Yeah. Very clear. Thank you a lot, Göran and Johan. Have a continued good day.
Thank you.
We are now going to proceed with our next question. The questions come from the line of Johannes Grunselius from SB1 Markets. Please ask your question.
Yes, hello everyone. This is Johannes Grunselius, SB1. I have two questions, more general questions. The first one is what you see in oil investment in projects offshore, given obviously much higher oil prices. Has this started to impact activity among your clients? I am thinking particular on the Umbilical business.
Hey, Johannes. I honestly don't know. I think first of all, the investment timing is not very fast. It's big projects. How much of this is related to even higher oil prices than it was before the crisis, I don't know that, but I can conclude that the project list is very strong. We have a very positive view on Umbilicals going forward, but I cannot state if it's due to these extremely high oil prices or not.
Sure. I understand it's a big picture question, but I appreciate your answer there anyway or your view, your thoughts. On Middle East specifically, assuming we will have a peace situation, do you think activity will start there immediately or will there be a lot of hesitation? It depends on what kind of peace and what have you, but in your talks with your customers, do you think they can sort of start off immediately in case of a peace situation?
Now you're asking me to speculate, Johannes. I think we are not the only ones suffering here. Our customers do that, and the Oil and Gas producers do that. There are no LNG ferries coming from Qatar into Europe, so I think Europe will have problems with energy prices. I think everyone, including ourselves, are eager to start when there is a peace. But as you say, depends on what that peace looks like. The parties involved are not always very specific, so I will not speculate on that. The other part is what and how much is destroyed that needs to be rebuilt? That's a question that I frequently ask, and I think it's still an unclear situation, but if it is peace and no other problems, of course, all kind of business will start up as much as they can.
Sure. My final question is on nuclear. It's obviously big project related to big projects. It's going to not move in the first few months, but when do you expect your big orders being visible in the invoicing on Nuclear specifically? Will that be in the first part of next year, or does it take longer?
Do you know, [inaudible] will start up now, won't they? I think the biggest change, Johannes, is the ramp-up of the new steam generator mill.
Yes.
I saw that we have packed the first tubes now, so that is ramping up, and that should be at full pace end of the year.
Yeah. Okay. Could you give us an idea on the sort of invoicing or the sales now when you move into next year compared to what you have executed on over the last few quarters? Because you have freed up a lot of more capacity, obviously. Can you help us with that part?
The new mill will roughly add 60% capacity to steam generator tubes. Steam generators are a little bit more than half of our Nuclear business, and then you can do the math.
Okay. That's helpful. Exactly what I was after. Thank you.
As a reminder to ask a question, please press star one one on your telephone, or if you've joined via device audio, please click on the raise- hand button and wait for your name to be announced. To withdraw your question, please either press star one one again on your telephone or click on the lower hand button. Thank you. We are now going to proceed with our next question. The questions come from the line of Adrian Gilani from ABG Sundal Collier. Please ask your question.
Yes, hello. I had to join the call a bit late, so apologies if I ask something that has been covered already. But since you mentioned the nuclear production issues are tied, as I understand, to a specific unusual order, do you have any similar orders in the backlog that could cause similar sort of issues in the production at some point in the future?
No.
Okay. Very clear. If the OCTG and steam generator tubes were 200 basis point negative impact on the margin, should we expect that the steam generator tubes at least will be a lesser impact in Q4, even if the OCTG issues remain fully? Is that a reasonable assumption?
That's a reasonable assumption. We're still packing that order, and any day now, 1/3 of quarter four is done. That order will be done sometime in November, so not the same impact as in quarter three, but some impact.
Okay. Understood. Then in a sort of longer term sense, how do you handle your OCTG production footprint if that market remains weaker for a while, which given the situation looks like it could be possible. Are there opportunities to significantly increase costs going forward there, or perhaps gear production towards other types of products? Is that possible?
In the upstream system, there are alternatives. In the cold system, we don't have many opportunities, and I think it's a huge strategic question you ask, Adrian, and it's a fair question. I don't have an answer on that. Of course, it's a problem when quite a big volume kind of disappears, and I think extrusion-wise and pilger-wise, it will have some effect, but it's the cold flows that is difficult. The only thing we can do short-term, of course, to mitigate variable cost, and that we do.
Yeah. Understand. Am I right to assume, I don't know these products inside out, but as I understand the OCTG tubes, they are physically a lot bigger than most of your products. Is it more or less impossible to gear the downstream production of OCTG tubes towards something else, even in the medium term?
It is. In the two largest pilger mills, we have hardly no alternative.
Okay. Understand. In that case, that is all from me. Thank you.
Thank you. We have no further questions at this time, so I will now hand back to you for closing remarks.
Perfect. Thank you very much. We would like to thank all of you for joining us today, and as always, for your thoughtful questions. This concludes our third quarter earnings call, and we wish you all a great day. Thank you very much.
This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Speakers, please stand by. Thank you.