Hi, everyone, and welcome to the presentation of the fourth quarter and full year results, 2023 for Alleima. My name is Emelie Alm, and I am Head of Investor Relations. I'm joined here today by Göran Björkman, President and CEO, and by Olof Bengtsson, CFO. So Göran and Olof will take you through the results, and we will then have a Q&A session. You can ask questions through the conference call, and you can also write them in the field below the webcast. You can download the presentation from alleima.com. As always, safety is a top priority for us, and I trust that you know the safety routines of where you are located. So with that, I would like to hand over to you, Göran.
Thank you, Emelie, and also welcome from my side. So let me start by summarizing the full year, 2023. All-time high revenues, close to SEK 20.7 billion, with an organic growth of 8%, and this in a market with mixed demand. But, I think we have a continued tailwind from underlying trends. We have grown our order backlog, and the growth in our prioritized segments was higher than average, increasing their share from 36% from 32% in 2020. We had record high earnings, Adjusted EBIT increasing 27% to more than SEK 2.1 billion, and margin increasing from 9.1% in 2022 to 10.4%. High revenues, improved product mix, price increases are the main reasons for this improved results, and also a strong cash flow for the year.
Proposed dividend of SEK 2 per share. This corresponds to 30% of profit for the period, and it's an increase of 42% versus last year. Some other important highlights during the year, we have strengthened our offering towards sustainable applications. We have also decided on several growth investments and done one acquisition of Söderfors Steel. Some comments on our performance versus financial targets. Important, this is for this two-year period. The targets are set over a longer time period than that. But if we look at organic growth, we grew 8% organically in 2023. We estimate that our serviceable addressable market grew 9%. And remember, we don't want to grow all pockets our SAM. Our four targeted end markets grew 20% in 2023 versus this market growth of approximately 11%.
Over the two-year period, we have had our financial targets. Organic growth was 11% CAGR, and this total serviceable addressable market grew 18, 14% CAGR. Targeted segments over the two-year, 19%, and this is more in line with our, with the, the market or slightly higher than the market growth. Earnings, margin of 10.4 for the year, average of 9.8 for the two-year period, and we had the target, when we've had the target, target is to be above 9% over the cycle. Looking at capital structure, net debt to equity, -0.02, so there's plenty of room. And please note that this 0.3 target is a maximum. And dividend, I already commented on, average 34% over this two-year period.
In line with our strategy, where we are committing to increase profitable growth, we have decided on several growth investments during the year. We look into industrial heating. We decided to increase silicon carbide production capacity in the U.K. We're also increasing capacity of a process gas heaters and modules in Germany. Within medical, several increases of wire capacity, both in the U.S. and in Europe. Within chemical and petrochemical, we are broadening the U.S. product portfolio. We decided on increased capacity and capabilities in China, and we also finalized the investment of a new heat exchanger production line in India. It was inaugurated in quarter four. Earlier, 2023, we finalized the investment of the H&I Tube line in the same site, and that line is now ramping up in a good way.
Looking into the quarter four highlights, we have a continued solid order backlog. Market demand continued to be mixed, some segments softer, while others are strong, and we continue to have support from underlying trends. We have a negative order intake growth, but on high comparables. We have a slight revenue decline, mainly due to low demand in the low-refined, short-cycle business. I think, however, if we look at our backlog, we could have performed slightly better. We had some output issues in some of our units in the quarter that I think we could have been maybe on low single-digit levels, and we came in on -1%. We grew earnings, Adjusted EBIT growth of 5%, and it's positive product mix and price increases that continue to fully offset cost inflation.
Looking in at the sustainability KPIs, and I'll start with safety. During the year, we have reinforced the focus on safety, including increased awareness of our safety principles. I can see that there are more initiatives in the divisions to improve safety, and also improve safety performance versus 2022, and especially in Q4, that ended with a good improvement, with the lowest ever on Lost Time Injuries. Of course, I hope this is a result of our increased focus, but I believe maybe too early to conclude. What is important is that we continue our focus and continue to drive initiatives to improve safety. Recycled steel, we have now for three quarters reduced the amount of recycled steel, and also in this quarter, as in previous quarter, it's due to mix.
We have a mix with more all-high alloyed products, where it is somewhat more challenging to find scrap that fits us. CO₂ emissions, we are still below 100,000 tons for our Scope 1 and 2 emissions, but a slight increase versus quarter four last year, and the main reason for that is that we have added a third forge operation. We continue to improve, when it comes to share of female managers. One should remember, this is a very slow KPI, it does not change much between the quarters. I think also we can conclude that to meet our long-term target, we cannot only focus on female managers, we have to increase the share of female employees in total.
So as noted on the previous slide, I'm pretty pleased with our operation improvements on sustainability, but as I have concluded several times, our largest impact on global sustainability is through our product offers, where we can improve customers' processes, products, and applications. And global trends like electrification and the shift to fossil-free energy are trends clearly driving our business opportunities. Nuclear power is carbon-free, and we clearly start to see that investments in nuclear power is increasing. We have had several significant order for steam-generated tubes.
We have a strong and growing order backlog, and let's see how we take decisions going forward, but we have possibilities to ramp up capacity when we see that that is needed. And that will be needed when we see that the order backlog starts to be too long, so we are not flexible taking orders.
So let's comment on the total market development. Overall, as already stated, a continued mixed market sentiment. We did see some stabilization in the short cycle business, but on low levels. In general, softer demand in some custom segments was mitigated by long-term trends and the underlying tailwinds that plays in our favor. Let's start with segments where I previously comment on softer market development. This is mainly our short cycle business and mostly for the low refined products, but also for parts of our application tube business, mainly in North America. So we look at industrial, demand for low refined products grew year-on-year, but from low levels, mainly driven by single major orders. Consumer demand was weaker year-on-year, but there are some signs of a continued stabilization on low levels.
I mean, consumer has been low now for more than a year. Chemical and petrochemical demand remained healthy in Asia. North America has been weak before, and also Europe, slightly weaker year-on-year, a slight decrease on order intake. Industrial heating, slightly weaker demand was noted year-on-year. We received some product orders, mainly for the solar industry, while sales related to maintenance is softer, CapEx still solid. Total order intake remain high. Some other segments that are strong and with a continued positive outlook, start with oil and gas. I mean, we clearly see investment continue to materialize, and the market and the demand is very robust. Several OCTG and umbilical orders in the quarter, of which two major orders in the quarter that we communicated.
Market outlook and project list remain solid, but here we have very high comparable. The order intake quarter four 2022 was really, really high, and that makes order intake down year-on-year. But as I've said before, I'm not at all worried about that. The project lists are very pretty for the year, and we see now some signs that customer inventory levels are now more normalized. Medical, strong, positive, underlying development. We have a strong momentum for the full product portfolio, and successful new product launches are expected to continue to support the growth, growth within this segment. Nuclear, yeah, the market sentiment levels for of customer activity continue to strengthen, and we have had several orders, one major order was received in quarter four. And already this year, now in January, we had yet another one.
And I have to confess, I think demand is increasing faster than we anticipated before. Transportation remained on stable level, high activity in aerospace industry, mainly related to titanium tubing. Hydrogen and renewable energy. We call it flattish, noted. I mean, we have a continued good momentum related to hydrogen refueling stations. We communicated before that some surf tech customers note a slower ramp up. Interesting in this segment is if we look into industrial heating and look at their underlying customer segments, we clearly see also within electrification that it's growing fast into renewable sources like the lithium-ion batteries, solar, for instance. So in summary, mixed picture with good momentum in some of our segments and a bit softer in others. And again, I think this is important.
Our diverse customer segment exposure is the clear strength of Alleima. The order intake and revenue. We had an order intake above SEK 5.1 billion a quarter. This is a good absolute level. Organic order growth was -6% for the rolling twelve-month period and -10% in the quarter. If exclude major orders, it was -4%. Total revenue of SEK 5 billion, organic growth of -1%. Kanthal showed a positive trend, driven by both industrial heating and medical, while Tube and Strip division showed negative organic growth, mainly related to lower volumes in the short cycle, lower refined business in both industrial and the consumer segments, where market conditions have been weaker for some time. But as I think we could have done somewhat better, and we had an order backlog to support that.
We had some temporary output issues related, for instance, for replanning of production in oil and gas business, and this was mainly related to too many small orders. I don't see that continuing. Book to bill strong, 102% in quarter four, rolling twelve months, 105%. And as we have communicated before, we are consuming backlog in some segments, while continue building backlog in some other. And we're still confident about our near-term deliveries, and we have a positive view on revenue going forward. Earnings, we increase adjusted EBIT with the 5% to SEK 582 million, giving a margin on 11.6%. This is in line with the development we've had, and, and of course, on higher levels, looking back at history.
Positive product mix in both Tube and Kanthal, and price increases are the main drivers. We have a currency tailwind of SEK 66 million in the quarter, resulting in low leverage in the quarter. Dilution from under absorption effects, from lower volumes, mainly Strip and in North America, in industrial segment, and also some productivity issues in transportation segment, Tube. As I already commented, we should have invoiced slightly more. Full year leverage is good, and Olof will come back to the leverage in the quarter. Strong cash flow of SEK 400 million, strong cash flow also for the full year. So let's look how the divisions are performing, and let me start with Tube. Tube had an order growth of -4%, excluding major orders, and a book to bill on 111% for the rolling twelve-month period.
So a solid backlog. Good momentum in oil and gas and in nuclear. Oil and gas, the order intake was down, but this is on very high comparables. Market is still very strong, and the pipeline is promising. Subdued demand in the lower refined industrial, also in chemical and petrochemical in North America. However, order intake up year-over-year for industrial, but from low levels. Revenue growth of -1% organically, lower volumes in the industrial, and as I commented before, oil and gas could have invoiced somewhat more. Significant earnings improvement with price increases, which more than compensated cost inflation and a positive mix from the oil and gas segment.
Currency had a positive impact on SEK 64 million, and we will but here we will see some headwind from this next quarter, and Olof will come back to that. The temporary productivity issues in transportation segment is still there. It will take some more quarters before it is fully flushed out. And we have under absorption effects from lower volumes in the industrial, as well as chemical and petrochemical in North America. So let's look at Kanthal. Kanthal had another solid quarter, growth from underlying tailwinds, medical in particular. Industrial heating was, however, down year-over-year on high levels, with some mixed signals. I think business related to CapEx is still strong, while OpEx is somewhat weaker, and this is not unnormal in a overall softer industrial market. There are companies or customers that are not pushing their maintenance programs.
Revenue growth due to the broad-based positive development, record high revenues in medical. The medical segment in Kanthal, also the other divisions are in, in the medical, but in Kanthal, is now almost SEK 900 million. The revenues in 2022 was SEK 500 million, so total growth approximately 70%. Margin on 19.1% is strong. They had actually a currency headwind in the quarter, and excluding currency, they would have been on 20%. Increased revenue, strong product mix, and price increase is driving the performance of Kanthal. And last but not least, Strip had a continued soft market demand and order intake decline, mainly in the consumer segment, both weaker market demand, but also stock reductions at customers. And Strip is clearly consuming backlog. There are ups and downs, this will come back.
I think that's a question of timing, and we assume that it will look better in the near to midterm period. Organic revenue growth of -15%, of course, is a result of the lower order intake. Margin on 7.3% with a continued under absorption from lower volumes, and we continue with our mitigation actions to adjust both capacity and reduce cost. Our strategy to be price leader, and we continue to do so even in this more challenging market. So what I'm saying is that, of course, there are volumes to book if we want to, but not on the price levels we expect. And with that, I'll leave the word to you, Olof.
Thank you, Göran. Starting then with some numbers here, and we start in the upper right corner. We see a total change of -12% on the order intake and minus one. Sorry, minus two on the revenues, and we're off minus 10 on the organic side, on the order intake, and minus one on the revenues. And if we adjust the order intake for the large or major orders that received both this quarter, the last quarter of 2023 and the last quarter of 2022, we come out at negative 4% on the order intake.
The reason for us making these adjustments is that to make the underlying development in the quarters comparable, as a single order can distort the numbers quite a lot. The alloy effect continues to be negative in the quarter, as it also was in the second and third quarter. This, of course, comes from mainly the lower nickel prices, and based on the current metal price levels in the beginning of January, this effect is expected to continue into this year, 2024, as well. On currencies, no big effects on the top line or the order intake in the quarter.
Looking at the big table then, starting with the quarter, we see the adjusted EBIT, and that is adjusted for the metal price effects then, improving to SEK 582 million or 11.6% adjusted EBIT margin. An improvement from 10.8% in the same quarter in 2022. Price increases compensating for inflation and also a good product mix helps, however, also some good tailwinds from currencies, and I'll come back to that in a minute. Tube and Kanthal both contributes to the good development. Strip is down, as Göran has explained, and we also have lower central or common costs in the quarter. Metal price effects are slightly below last year or 2022 in the quarter.
Reported EBIT, and that includes the metal price effects, comes out at 8.8% in the quarter versus 7%, last year. So improvement also there. If we then turn to the full year numbers, we see 2023 ending at a good 10.4% in margin, increasing from 9.1% in 2022. Also good contributions and margin expansions coming in both Tube and Kanthal, and also significantly lower central costs, as 2022 was burdened by cost for the separation project. Strip division is lower, as Göran has already explained, from the slow consumer segments and the low volumes. Metal prices, a SEK -95 million for the full year, versus a SEK +695 million in 2022.
So a huge swing in metal prices between the years. And please remember that the metal price effect that we calculate comes from timing differences, and it's to measure the effect how metal price changes affects us as we buy the metal at a different price, and we sell it for parts of our revenues. Going back to the quarter, looking at the finance net, positive SEK 80 million, and that's a big impact, again, from revaluations of financial instruments. We apply hedge accounting starting in 2022. We have gradually introduced it, but there are still some instruments that not fully qualify for this, and that affects the finance net in the period.
Of course, finance net also contains the interest net, and cost of pension liability and leasing interest costs, and also some income from our cash position, of course. We currently earn around 3.9% on our deposits. Looking at the finance net for the full year, it comes out at a SEK +28 million, a considerable change from 2022. The tax rate, going further down in the table, 24.2% for the full year. I prefer to look at the full year because the quarter can swing quite a lot. That is very close to 2022 outcome. This is also very in line with our guidance. A good free operating cash flow in the quarter, SEK 400 million.
That is lower than last year, but last year was very, sort of backloaded with a lot of cash coming in the last quarter. We had quite big impacts from high metal prices in 2022, which you also see on the full year cash flow, which has improved substantially, close to SEK 1.7 billion in free operating cash flow, compared to SEK 505 million in 2022. The adjusted earnings per share, fully diluted, also improved substantially. If we look at the full year numbers, they come out at 6.56, versus 4.46, and that's a 47% increase. And that, of course, comes from the improved adjusted EBIT, but also from the much improved finance debt.
If we go to the next slide, that is the bridge, where we can see our operating leverage. And here I've taken both the quarterly development and the full year development. And as I mentioned, I think I mentioned it in the third quarter call, it's sometimes better to look at the full year numbers when you look at the operating leverage. Quarterly numbers can swing quite a lot. If you remember, I think the operating leverage in the third quarter was around 80%. And that is, of course, very much impacted by, for instance, like low revenues in the quarter. And as a fairly small result item can impact the leverage quite a lot.
And the base you're comparing to is also important, and, and with a very strong ending in, in the last quarter of 2022, this also has an impact, of course, when, when looking at the leverage. However, if we look at the quarter, we have an adjusted EBIT increase of SEK 27 million net, and this is to a large extent explained by the positive currencies. But we have also managed well to compensate for the inflation, the higher inflation that we- we've seen during 2023. Structure, that is an impact from our acquisitions, and this is, we are still ramping up our latest acquisition.
Another comment on the currencies, the SEK +66 , considering the strengthening of the Swedish krona, it might seem strange with a big positive effect there, but the. This is a bridge. And last year, in the same quarter, we had actually a negative currency effect as well. So that means that the, in the bridge, we come out on a positive number. And yeah, I think Johannes also already mentioned some temporary performance issues in the transportation segment. That has, of course, affected the organic development in the quarter, and also lower volumes means normally lower absorption of fixed costs. That's also a factor to consider.
Looking then at the full-year bridge, we have a good 22% positive leverage coming from both Tube and Kanthal, plus right this down. And we also, of course, have the impact of the lower common costs. We consider a good leverage to be in the range of 20%-25%. So we think this is a good year when it comes to leverage. And we also get, of course, some tailwind from the currencies. And again, acquisitions are impacting negatively. And in this number, the structure number, you also, we also have some acquisition-related costs, not only the result of the acquisitions.
Going to the balance sheet, capital efficiency, net working capital in the left-hand side graph, slightly above last year, in the black bars, and slightly down sequentially, in the quarter. No big changes in the net working capital in the quarter, though, even though currencies, of course, has an impact when making the consolidation. And I think this follows the normal pattern that you see- you should see in Alleima with net working capital released in the second half of the year. And we released, if you remember, quite a lot of net working capital in the third quarter, so a more limited release in the fourth quarter, but overall, a second-half release.
If we look at the development over the full year, we see on the inventories that we are down in volumes or tons almost to all-time lows in all divisions. So very, very good and focused efforts by all divisions to reduce here. But despite the lower metal prices and currencies and the lower volumes, the value is fairly even over the years. And this comes from what we have talked about, a more positive product mix in our revenues, and that is also, of course, reflected in our inventories. So a more expensive inventory on our books compared to before.
Capital employed, the graph to the right, decreased sequentially a little bit from currencies, and also from the development on the net working capital that I just explained. But if we look at the full year, the net working capital decrease also comes from lower fixed assets on the books compared to the start of the year. ROCE, return on capital employed, and we measure it excluding cash, comes on a full year basis out at 12.9 in the quarter, and that is lower than last year, 14.2. And the difference comes mainly from that we had a lower assets, so lower capital employed in there in 2022.
Looking at the cash flow then, already mentioned, we had SEK 400 million in cash flow in the quarter, and that's lower than last year, but last year was a bit extraordinary, with a lot of cash coming at the end of the year from the higher metal prices that we had for most of the year. CapEx is higher compared to last year. We're coming back to more normal levels, I would say, on the CapEx. And for the full year, we see the same development on the CapEx, increasing to SEK 815 million-SEK 850 million from SEK 656 million.
A much lower development of the working capital, and as I mentioned several times, in 2022, but SEK -1.6 billion in change in working capital, with a large impact from the higher metal prices. Increase in amortization of lease liabilities comes mainly from acquisitions, where we have acquired lease premises. In total, we come out for the full year at the cash conversion of close to 80%, so a considerable improvement compared to 2022. Capital structure, we continue to be well below our max financial target. It's not a target to be on open 3x, it's the max.
We're coming out of the quarter at -0.02x, more or less the same level as in the third quarter, and better than the beginning of the year, where we were at zero. If we measure net debt to adjusted EBITDA, we come out at 0.0x negative, so very low gearing. If we look at the parts of the net debt, starting to the left, net pension liabilities has increased. A main impact here comes from lower discount rate, discount rates at the end of 2023, and the impact is mainly on the Swedish pension debt. Leasing liabilities increasing, mainly coming from renewed leasing contracts and acquisitions. Looking at the cash position, cash has increased more than SEK 700 million during the year.
But over the year, we also paid dividend of SEK 350 million and made an acquisition in Tube, so a good improvement in our cash position. So overall, coming out in an even stronger financial position with a net debt or actually a net cash position of SEK 242 million, and an unutilized revolving credit facility of SEK 3 billion. Looking at how well we guided you for the last quarter, if we start with CapEx, the outcome was, for the full year, SEK 815 million, and we guided for SEK 800 million, so fairly close. Currency translation, we guided for 0, we come out at -2 on the transaction and translation. Total currency effect comes out as +66 in the fourth quarter.
Metal price effect, SEK -138 million, and versus SEK -200 million. Difference here coming from higher nickel prices and also higher prices for chromium. Tax rate, 24.2%, so at the lower end of the guidance. Looking into next year or this year, the first quarter, we estimate an increase in our CapEx, and this comes from various projects, growth-related projects. We have our previously announced investment in China. We also have announced investment in Kanthal on the silicon carbide, and also some ERP upgrades that we are right now doing. Approximately SEK 400 million of this is maintenance-related CapEx, and the rest is for improvement and growth. So a clear focus on growth in our CapEx increase.
Currencies, based on currencies at year-end, and the currencies, they are constantly moving, of course, so the effect might be higher or lower. But, based on the rates back then, we are estimating to have a SEK - 60 million impact from currencies on our operating profit in the first quarter. Metal prices, metal prices are low, and even lower since year-end, and we are estimating around SEK 300 million impact on as a metal price effect in the first quarter. And tax rate, we keep our guidance to be in the 24%-26% range. All from me. Back to you, Göran.
Thank you, Olof. So let's look at the outlook for the first quarter. I would say despite mixed demand in our markets during the quarter, I think underlying megatrends are expected to continue to mitigate the impact of any uncertainties in the macroeconomic environment for the coming year. We have our solid order backlog, and we have good, good visibility in our near-term deliveries. And of course, we are continuously taking measures to mitigate potential impact from cost inflation and under absorption of cost from the lower production volumes in certain segments. Product mix is expected to be similar to the one of the fourth quarter. And normally, cash flow is lower in the first half of the year than in the second half of the year. Please also remember the FX guidance that Olof just mentioned. So let's summarize.
Overall, I am pleased with our performance this year, with record high revenues and earnings, and I think also quarter four was okay, but a bit mixed. Our backlog remains solid, but of course, there are differences between the segments, where we are building backlog in some segments, but consuming backlog in some other. We have good momentum from underlying tailwinds in many customer segments. Energy has such a strong oil and gas, and also nuclear becoming really strong, also renewables, electrification, medical, and we continue to see a good development in Asia. While market conditions are still soft in some segments with lower production volume as a consequence, I think overall, our diverse exposure is a clear benefit to Alleima, makes us less volatile.
Yet we had significant earnings improvement due to strong mix and price increases, which compensated for cost inflation and despite lower volumes in parts of our operations. And with our solid backlog, we are confident about future deliveries, and even though we had some effect that might dilute margins a bit going forward, such as FX headwind and some other absorption, the mix is, with us, though. And we are continuing to execute on our strategy, and I think we are clearly heading in the right direction. Thank you.
All right. Thank you, Göran, and thank you, Olof. So it's now time to start the Q&A session. And again, you can write your questions in the webcast, and you can also ask them on the conference call. 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 their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question, may press star and one at this time. Our first question comes from Victor Trollsten from Danske Bank. Please go ahead.
Thank you, operator, and hi, Göran and Olof. A couple of questions on my side, please. Firstly, perhaps on the Kanthal growth prospects for 2024. Just trying to, you know, sort of understand the book-to-bill in Q4 around 0.9x while you're, you know, investing quite heavily in both industrial heating and medical. So could you just, you know, try to help us to understand, sort of, if you still see that Kanthal could grow revenues in 2024 over 2023? That's my first, please.
But the simple answer on that is yes, they have capacity to grow. I think as I communicated, the weaker book-to-bill is mainly related to, I would say, the OpEx part of the heating business within Kanthal. And of course, order intake growth in Q4 was impacted by the big order we had in Q4 2022. So I think that there are no sort of main capacity restrictions in Kanthal. If we have the market with us, we will continue to grow Kanthal, and that is also our ambition.
And that's your sort of, you know, feeling from the Q4 report, that you are, you sound quite confident, at least.
Yeah, I mean, we comment on what we see, and I mean, we saw a year-over-year order intake, negative order intake growth in the heating part of Kanthal, related mainly to the OpEx business. But I am still confident that we will continue to grow Kanthal.
Okay, super. And then secondly, on nuclear, which you speak definitely more about, and as you pointed out, you have optionality to increase capacity in Sandviken. So just firstly, to my understanding, you know, that could, you know, potentially double capacity for nuclear. Is that about right, or what's the magnitude here?
I don't want to share numbers as such, but, I mean, we have kind of a spare factory. After the Fukushima accident, we closed and mothballed one of the factories in Sandviken. It has been—this has been now for roughly a decade. There are no other real operations at that, in that unit. We are reviewing if and when we should open that again, the decision is not yet taken. I think what we are looking at is. I mean, we have a solid order backlog in nuclear, and of course, with the orders we just have recently, it is growing.
But I think what we need to look at is the project list, and how much we potentially will continue to book, and at what stage would the order backlog be too long, meaning we are inflexible to take on new orders. And in parallel, we are looking at the old factory. Of course, there would be some equipment that we need to change, and there will be some equipment that we need to sort of refurbish, and sort of the cost for that is what we're looking at. But I would say a proper decision on that sometime during the year. And I'm not saying it would be double, it's one more factor, but of course it's a substantial increase if we would open that one.
We also look at maybe open it in steps, to start with, sort of, start with debottlenecking the current factory.
And okay, that's clear. And then perhaps finally on my side, but on the short cycle business, at least from my perspective, you post quite impressive margins despite the, you know, under absorption from volumes due to short cycle. But could you help us perhaps quantify the effect on it a bit from under absorption? And, you know, are we sort of on the bottom here in terms of under absorption, or how does the backlog look for the coming quarters?
I can comment on what happened in quarter four. First, when I look at the industrial segment, it is slightly positive. I think it's still important to note that we are dependent on a few sort of larger customers. So it's still, I think it's maybe still too early to say that it's over and we will grow again, but Q4 looked good. I think the total under absorption effect, and that both comes from in several divisions, totally around 200 basis points in the quarter, total under absorption effect.
Okay, and you know, just, just to try to understand how what was the under absorption in Q3, for example? I guess, just what I'm after is how much of that under absorption is now in figures, and how could that develop into 2024?
I mean, in quarter three, the under absorption effect was lower, but remember, quarter three is a special quarter where we stopped production.
Mm.
I think volumes was-
Yeah
roughly on the same level. I mean, strip is lower, Tube America is lower. We're not running the steel plant at all at maximum capacity. I think it's important to note that, of course, we could book more orders, but we clearly want to be price leaders, and it's important that we continue to have higher prices. The industrial, it was the order intake growth in revenue, did not grow yet.
Okay. No, that, that makes sense. Thank you so much, Thank you.
Thank you, Victor.
Our next question comes from Fredrik Agardh from SEB. Please go ahead.
Yeah, thank you very much. Starting with a question on the CapEx, SEK 950 million going forward, you say that you have SEK 400 million in maintenance and then some growth on top of that, which I guess makes sense and probably inflation. Is this a new number that we should extrapolate beyond 2024 as well? Or are you going to go back to the SEK 800 million, sort of, that you had as a guidance when you were spun off?
I hope that it's a new level, because most of it now, we're pushing much more growth investments and the company is growing. You need to probably look at growth versus revenue. And I think it's also important to state that the majority of the growth investments are in the sort of final stage of production, the finishing units. It's not much in the back end. On the other hand, in back end, they're more of the reinvestments, but that is not new. So I cannot say, but actually, Fredrik, that would be good because then we have even more growth opportunities.
All right. And if you just look at it, then, because that's a change since a year back, and I.. Well, I mean, you announced the, well, something Kanthal and some obviously then in China, the finishing line. What else is there if we extrapolate it? Where are the better growth opportunities that you see?
It's in, I mean, if you look at segments, I mean, the answer of Victor's question, nuclear could be one area. We are also investing. We don't communicate that because every investment is pretty low, but we continue to invest in medical, for instance. I don't think this was the last investment in Kanthal from a growth perspective, but I don't want to go into too many details for that. I think the segments where we want to grow.
Yeah, sure. That makes sense. Can I just jump to the dividend then? Because the capital allocation here, I guess, would be a bit of a surprise, given that you reiterated your financial targets just two months ago, and now paying out sort of a third rather than half of the dividends, and your net cash, what's either that suggests that you think you're sort of in a cyclical peak, and see earnings roll over, or there is a sort of capital allocation surprise down the road. What's the line of thinking on the low dividend?
So it's low, but, I mean, last year, because we had a similar question last year, then we said that we just started as an independent company. I think that is still the case. We wanted to start on the conservative side. We did that last year, we're doing that now. I think we learned from 2022 the swings in cash flow due to metal prices. So we want to be, you could call it a little bit careful. I still think—Instead, I think you could focus on the increase. We are increasing the dividend with more than 40% compared to the year before. But yes, somewhat on the conservative side.
Yeah, but I mean, the increase, but you, you have a target to grow quite significantly, and as you say, you're investing for growth in, in sort of highly profitable areas with less swings and less standard products. And you're a net cash-
I think-
Yeah.
Yeah, I think the main focus is that we want to. I mean, we recalibrate quite a lot this year with the 42% increase. Maybe the year before was on the low side. And I think we want to continue to grow the dividend through a cycle, and let's see, when we end up on the 50%.
All right, so you see it as growing dividends from here rather than, sort of 50%?
Yeah. That is our ambition and target. Yes.
Okay. Well, thank you very much. That's, that's it for me for now.
Thanks, Frederick.
As a reminder, if you wish to get a follow question, you may press star and one. Our next question comes from Igor Tubic from Carnegie. Please go ahead.
Thank you, operator, and thank you for a good presentation, team. I just have a question in terms of chemical and petrochemical. Can you say anything about the split there in terms of geographically? Or, are you more exposed to North America or, or Asia, or Europe, or is it pretty fair, even, so to say? Thank you.
I think if we look at from a growth perspective, clearly Asia is growing faster than the other two regions. Europe is still large. That was a little bit slower, and it has been lower in North America for some while. But right now, we're growing much faster in Asia than the other region. And if you look at the market, the market growth in this segment is also higher in Asia than in the other regions. That is why it's so important for us to have both good capacity and capability in Asia to capture this growth. And that is also the reason why we, before, has taken the decision to invest in India, where we now are ramping up, and also the decision to invest in China. Those are mainly for that segment.
Okay, thank you. And another question in terms of North America. Are you still seeing a continuing weaker demand or is it starting to trough, or can you say anything about that?
When we talk about North America, it's important to, because it's mainly related to the tube division, and I think, when we communicate the slower North America, that excludes aerospace and it excludes energy, which is more sort of global business, and sometimes we have a large customer in North America, now the time it's in another region. But the sort of more normal business in tube is weaker. It has been weak for a long time. It's still negative order growth in the quarter, but not to the extent that it was before. So, I mean, we should not share any forecast here, but we—at some point, this needs to bottom out, and we are sort of a little bit more positive for the year that is coming.
Thank you. And the final question, I know you don't want to talk that much about volumes, but on an overall view, can you say anything about volumes, if they are continuing to decline for you on a group level, or is it starting to bottoming out there as well?
Volumes is a tricky thing, even though we are partly a steel company. I think, if I look in our back-end system, volumes is lower. We don't focus volume that much. We focus sort of price and mix and value, but volume is slightly lower. On the other hand, mix is then slightly better. But we are running, for instance, the steel plant far lower than maximum capacity. So volume is slightly lower, and it's still mix and price that is keeping it up.
Okay, thank you. That was it for me.
There are no more questions over the call.
We have one question from the webcast, and it's from Alexandra Pareto. So you mentioned that you could have sold more in Q4. To what magnitude?
Yeah, I mean, I cannot share what we forecast, but the thing is, when you run, I mean, it was several units. I think oil and gas unit was where we lost most. And when you're running 24/7, if you lose an output, it's difficult to regain it. We were aiming for low single digit plus, so not a big difference, but it's the biggest difference between the minus and the plus, I think. But it would have been positive. And we had the backlog to support that.
Yes. All right. I think that's it. So, thank you, Göran and Olof, and thank you for joining the call and for all your questions. And, we look forward to meeting some of you in our upcoming roadshow. So with that, thank you and goodbye.
Thank you.
Thank you.