Earnings Call: Q2 2015

Jul 17, 2015

Greetings to you all and welcome to the presentation of Sandvik's results for the Q2 of 2015. As per norm, we'll run through the presentation with our CEO, Olof Alexander and our CFO, Mats Backman, after which we will do a Q and A session. And without further ado, I'll hand over to Olof Alexander to start off the presentation. Thank you very much, Hansi. Welcome everybody here in Stockholm and everybody listening on the web to this presentation for our results for the Q2 2015. To start with to summarize the quarter as a whole, I'd like to point to some things. Firstly, we had a very strong cash flow in the quarter, actually the highest we've had for 5 years in the group. And that is basically based on the fact that we've managed to not increase inventories in the way we normally do seasonally group. So we have good continued focus on our net working capital management. The earnings grew quite significantly compared to last year, a lot of course driven by the strong positive currency effects that we've been seeing now for a couple of quarters. This quarter, we had SEK775,000,000 of positive currency effects affecting the Sami Group. But also, we have good progression on our savings efforts And we had savings in the range of SEK 162,000,000 in this quarter within the Samik Group and all our savings programs and of course the largest one is our supply chain optimization program are running according to plan and delivering the results that we expected to get out of them. The market as such has been quite soft and that more or less goes across the board. Europe has seen maybe a bit better performance than what we've seen in other parts of the world with quite stable demand and some signs of improvement in the Western regions of Europe here. And mainly then I would say in the industrial segments where mining and construction have been areas which have been a bit tougher in Europe, while SMS and SMT have been areas that have seen somewhat better performance. North America comes in on a lower level, but we see a stable development through the quarter. So we don't see any declining trends in North America. So the lower activity level has stabilized at the level that we're seeing right now, so stable at a lower level. And Asia, mainly affected by the developments in the Chinese market where we have seen some significant weakness during the quarter. And that's sort of a bit of a mixed picture in the other regions of Asia where actually India saw some slight growth and Japan has also had a fairly solid performance. Looking at the sectors, automotive and oil and gas stick out in the positive sorry, automotive and aerospace stick out in the positive direction, while oil and gas is a weak market driven by the weakening we've seen in the oil prices. Given this weak macroeconomic environment that we see in the world around us with a bit slower GDP growth in most of the world, It's of course very important that we have a strong product program. So we have a strong offering to reach out to our customers and that we can drive and support our organic development in the markets. And therefore, of course, it's really exciting and positive that we have a record year when it comes to product launch in the Samik Group this year. All our efforts within research and development preceding years have started to bear fruit in 2014 and are now really gaining momentum into 2015. Looking then at the various markets, I mentioned most of this already then. North America, somewhat negative trends compared to the preceding year as well for Asia, we see this negative trend. Europe, stable, some positive signs in the Western part. And even though there are smaller regions for Sandvik, it's quite encouraging to see that both Africa and Australia do see quite positive growth, especially when it comes to order intake for the business. So there we have been successful in booking new orders and mainly related to our mining business here. Looking down at this pie chart with our various segments, the biggest change in here from preceding quarters and we've had quite a few quarters with the orange color for mining. We can see that mining has flattened out and is very close to a zero level when it comes to organic growth. So we seem to clearly have seen even year on year some stabilization now in the mining market. And the mining market continues to develop flat in line with the levels that we're seeing right now. Construction is negative and as well also the energy sector obviously driven by what we do see with the weakness in the oil and gas market. Looking at the demand trends, we continue to see, I would say, strong positive development in the aerospace area and the main area where we see a continued negative trend into the Q2 here is in the energy sector, again driven by the weak oil and gas prices. Looking at the numbers totally for the group, order intake came in at SEK22,700,000,000 negative change by 4% on total for the group. What is positive and encouraging is that we have a neutral book to bill for the mining business. And despite the large order we took within Mining Systems, Mining Systems is below average when it comes to book to bill, so it's weighing down. So the development when it comes to aftermarket and equipment was at or above this neutral book to bill. So, reasonably stable and good market development for the equipment and aftermarket size of the mining business. We continue to see challenging developments in the oil and gas industry and that is one of the main driving factors obviously for the decrease in order intake that we're seeing for the company. And sequentially, this was a decline of 2% compared to the preceding quarter. Invoicing came in at SEK 23,400,000,000 which was a net change in pricevolume terms of 5 percent negative then. And we really see negative organic growth across all BAs driven by the weaker market conditions that we've seen. But mining, then these comparable numbers are getting quite small and mining is only minus 2% in price volume terms compared to the preceding year. So clearly stabilization in the mining market from the long period of time of decline that we've seen. EBIT, SEK2.9 billion. We see quite a strong year on year earnings growth. Obviously, currency is the largest effect that we have on our EBIT in the quarter, but also then the good positive effects when it comes from coming from our savings programs. And Mats will touch a bit more on the details per business area how this is coming through in the company. And cash flow, strong cash flow based on good network and capital management, but also good discipline when it comes to our capital expenditures in the company. And we actually revised our guidance down somewhat for the full year when it comes to capital expenditures in the group from being below €5,000,000,000 to be about €4,500,000,000 in the updated guidance now in conjunction with this quarterly report. Comparing to our financial targets, well, we have reasonably strong growth on our top line, but this is obviously a currency effect that we're seeing now that's driving this organic growth or this total absolute growth that we're seeing in the company. We continue to focus on developing our market positions and to support organic growth obviously developing our offering to our customers to really make sure that we have these best solutions out there in the market is absolutely key. And as I said earlier, we have a record high number of product launches, which will really support what we can offer our customers and enhance our abilities to develop positively in the market. Return on capital employed at 12%. Well, we need to continue to focus on reducing our net working capital and then restoring earnings in several parts of the company if we're going to get up to our target long term target of 25% return on capital. And we have programs in all of these areas, which we are driving with full force through the company. Net debt to equity increased somewhat. And the main reason for that was obviously the dividend payment that we did in this quarter. Cash flow, as I said earlier, was very strong. So that's counteracting that somewhat in the company. And the dividend was paid out, and we continue to have a very high dividend payout ratio in the company. And I said earlier, Sandvik has had an uninterrupted dividend since 18/70. And based on the strong cash flows we have and the good developments in terms of our results, we feel that we can continue to support a strong dividend payment to our shareholders. This slide we normally show every quarter here summarizing the main activities that we see in each business area around the company. And to highlight some of the areas where we've made progress in this specific quarter, well, firstly within machining solutions about increasing the pace of product launches. The first wave of the large product launches was in April this year. The second one will be this autumn. So we're making good progress with enhancing our product program, driving our up our new sales ratio in the company to levels where they should be. And we continue to restructure our manufacturing footprint to create a leaner and more efficient company here. Mining is also consolidating its manufacturing footprint and continuing that process. We concluded the negotiations with our unions at our Turku site in Finland and are now progressing with the execution of that closure and the transfers to other sites. And we also initiated the closure of a new site within mining in the quarter. And we have a continued strong focus on growing and developing our aftermarket business, which is obviously the greatest opportunity that we have in this kind of market environment that we're seeing right now. Materials Technology, the main highlight there is that we had good discipline regarding the buildup of inventories. We avoided those in the Q2 ahead of the summer shutdown, and we will continue to focus on our net working capital efficiency in that business area. And construction, I would really like to lift up as a highlight. They've done an excellent job in improving their margins, have a really, really good leverage in the quarter. The cost savings are delivering the effects that we expect, and we see strong development. And construction is actually somewhat ahead when it comes to the savings targets that they gave, amongst other at our Capital Markets Day so far this year. So good progression despite facing a very, very tough market in the world around them. So with that, I'll hand over to Mats to make some comments more about financial numbers and then I'll come back and wrap up the presentation. Thank you, Olav. I will give second quarter highlights in some of our key areas and starting with the development of net working capital. In absolute value, we reduced our net working capital with some SEK 400,000,000 in the quarter, but that was fully due to currency effects. Looking on the volumes, we actually managed to keep it flat from the Q1, which is despite the seasonality we normally have when we are building that working capital in front of the holiday season now in the Q3. Looking specifically on inventories, we managed to keep it flat in the quarter. So we didn't have any significant under or over absorption for any of the business areas looking on the Q2. However, it is important to remember that we had the stock built up last year in 2 out of 5 business areas and that is Materials Technology and Machining Solutions. I think it's important to recognize that when you're making kind of a bridge analysis year on year. Looking on the relative development of net working capital, we have managed to sustain the level we reached in the Q4 of 28% in relative net working capital, which I think is a good development considering the normal seasonality that we see in the Q1, Q2 and Q3 with net working capital buildups. Looking into the Q3, you can expect destocking in all business areas, and we are actually aiming for sustaining the relative networking capital on 28% also into the Q3, which I think will give a good base for reaching our long term target of 25% and going forward. So all in all, I would say a good development in terms of net working capital. Moving over to our saving programs. We have communicated savings of totally SEK1.9 billion with full run rate end 2016, whereof we have for supply chain optimization SEK1 point 4,000,000,000 the first phase SEK800,000,000 with full run rate this year the second phase with SEK600,000,000 with full run rate and 2016. And we achieved some SEK 500,000,000 in full run rate end of second quarter. And all of that is related to the first phase of the supply chain optimization program. So I would say that we are well on track when it comes to reaching the SEK800 1,000,000 by end of this year. We have also announced the adjustment of our cost base, totally about SEK500 1,000,000 with full run rate annual run rate end 2016. We actually achieved SEK 160,000,000 with run rate with annualized run rate in the Q2. And in total from all the savings program, we are now on the level of SEK660,000,000 when it comes to annualized run rate. So all the ongoing cost savings program is actually running according to plan. Finally, a couple of words about the guidance, but maybe starting with some comments on the currency effect for the Q2. We had a positive currency effect of some SEK775,000,000 in the Q2, which is somewhat lower than the original estimate we had of SEK 900,000,000 for the Q2. But that difference is fully due to a strengthening of the SEK against U. S. Dollar and the Chinese yuan during the quarter, which made the currency impact somewhat lower than estimated. Looking into the Q3 in terms of guidance, we are estimating the currency effect to +500 in the second quarter and that is based on the closing rates of currencies end of June. In terms of the metal price effect, we are estimating that one to minus SEK100 1,000,000 in the Q3 and that is also based on closing rates end June both for metals as well as current system. And looking on the full year guidances, we are as Olof said, we are changing our guidance when it comes to our capital expenditures for the full year to SEK4.5 about SEK4.5 billion compared to below SEK5 billion in the previous estimate. When it comes to net financial item as well as the tax rate, we are keeping the previous guidance in that area. So with that, I leave for Olof to summarize. Thank you, Mats. So looking forward into the future beyond the specific quarter here then, We continue to have a year here then with a record number of product launches and that's of course a key thing to support especially Samik Machining Solutions growth and development going forward that we get this upgrade in the product range here. But also, I would say the good developments that we've had in Samik Mining regarding sales in many areas are a lot supported by new products that we have introduced during last year into the market that are now gaining momentum and generating sales to customers around us around the world. The aftermarket continues to be a key focus area in this environment where the capital expenditure rates are very low in the mining sector. And we're looking at continuously very innovative ways to try to go to the market there, support our customers and create attractive solutions and options for them in the aftermarket. So we have both, as I've showed previously, repair kits where you get the full kit needed for a certain rebuild in a structured way as one order item from us. But we're also looking at kits where we can do certain performance enhancements on, for example, rock drills when you do the maintenance on or the big more major rebuilds on these kind of pieces of equipment. So that makes it an even more attractive proposition for our customers if we can offer those kind of improvements. And we're also looking at price per hour maintenance options. Obviously, our customers are under a lot of pressure to find cost savings and improvements, and we need to find ways to support them in a good way and help them to achieve those savings, but at the same time protect and develop Samvik's business and our margins. And then we are building a linear company. And this is, of course, especially important in this more weak market environment quite slow global GDP rates growth rates that we see around us. We have a strong focus on our cost efficiency programs and make sure that we continuously improve the productivity in the company going forward. So to summarize the Q2 then, we had a very strong cash flow for a second quarter. So I think that's something we can be proud of in the company. We had earnings growth. A lot of that was currency, but we can be happy with the progress on our cost savings measures. The market is soft and obviously, we have negative growth in terms of price volume terms. But we are doing what we can, and we have a lot of new products coming out into the market to continue to support our position in the market and our organic growth rates going forward by a very strong and updated offering to our customers. So with that, Ann Sjaer suggests that we open up for questions. Yes, we do. And we have possibility to ask questions here in the conference room, but also from the telephone lines. Shall we see if there are any questions from the telephone lines to start with please operator? We have a question from Mr. Guillermo Pinha at UBS. Please go ahead. Hi, good morning everyone. Good morning Olof, Mats and C. Just wanted to ask a couple of questions regarding the first SMT, regarding the second half of twenty fifteen. Obviously, you face tough comps in terms of revenue growth and obviously margins as well, especially in the 3Q last year. And I was wondering if you could guide us as to how to forecast under absorption, if any, or underlying drop through or flow to margins just to get an idea of how you're going to perform in SMT towards the second half of 'fifteen? Thank you. In the Q3, we normally have a drop in EBIT margin of in the range to 3% to 4%. We will have a normal seasonality in S and T, but then somewhat negatively enhanced by the weaker developments we see in the oil and gas sector. So you should assume something towards the upper end of that range looking at the Q3 of this year. And then a second question regarding construction. When you look at North America and Australia, it was a great performance and there's no large orders. So I wanted to get some color on how your business is doing there and why is it growing so much? Thank you. Well, North America, I would say generally good development for us in the market. And actually mobile crushers, which has been a problem area for us, has had a fairly good sales development in the quarter in North America. Looking at Australia, we did actually have one larger contract, doesn't qualify as a major order from a Sandvik perspective, but in terms of crushers to a specific customer in Australia. But then we have also a general good activity level. And looking into Q3, I would say Australia is maybe the region where we see the most attractive opportunities right now where we're negotiating several large possible contracts coming now into the 3rd quarter. Thank you. I'll stay back in line. Thank you. And we have one question here in the room, please, Anders. Yes. Anders Sussler on the Swedbank. Regarding Machining Solutions, how do the short term outlook fairly stable fairly stable developments in the Q2, some signs of strength in the Western part of Europe. And that's mainly driven by, I would say, the Aerospace and Automotive segments that have been strong there. North America did weaken compared to last year, but we've not seen any negative trends, so quite a stable level there. And I would say also fairly stable level where we're at in Asia as well. So looking at the insert sales for that's what that's worth these 1st couple of weeks and summer period here, we see a stable level at the rate that we've seen during the activity levels we've seen in Q2 going into Q3 here. Okay. Thank you. Okay. Then operator, we'll continue with a question from the telephone conference please. We have a question from Mr. Sebastian Groote at Exane. Please go ahead. Yes. Good morning. One question on Machining Solutions and networking capital has gone up. I was just wondering if you are entering Q3 with a bit too much inventory for that division and what does it mean for the margin in Q3, margin outlook in Q3? I will have a follow-up question. No, I don't think we are kind of overstocked when it comes to Machine and Solutions going into the Q3. And in terms of under absorption in the Q3, I think you can assume the same pattern as we saw last year in terms of the margin impact between the second and third quarter. So, as good control as previous year, I would say. Okay. And a follow-up on Machining Solutions. The currency impact was much lower than expected in Q2 than I Were there any particular reason, were there a reclassification between the corporate line and Machining Solutions? No, not at all. I mean, we had some difference in inflows in the Q2. And secondly, when we're looking on the development of the U. S. Dollar in particular throughout the quarter, it's the highest impact I would say on Machine Solutions. So a little bit of a difference in flow, but no kind of reclassification, no. Okay. Thank you. And do we have the next question from the telephone conference please, operator? The next question comes from Mr. Andreas Willi at JPMorgan. Please go ahead. Yes, good morning. My question is on Machining Solutions and the growth profile there. Global industrial production was up about 2.5% year on year in the first half of this year and your business was down 2.5% despite the product introductions. Could you maybe break down the performance as you see it relative to market share and market growth? And what is due to some destocking in the channel that may drive down your sales, which historically have been more correlated with IP than we have seen in the recent periods? Thank you. I mean, when we look at what's available in terms of market share data, we do not believe that we've had any market share losses in the business. And I would say also that the new product introductions unfortunately in terms of sales during Q2 have had very limited impact as the first wave of those introductions really came in April. It does take some time until they build momentum. But obviously our customers are planning their inventories up and down. And if they lower their production rates to adapt inventories, then that has obviously a very direct effect on Samik Machining Solutions. Thank you. And we also see the same pattern across all our 3 brands in market. So you cannot say that I mean we're losing share on one of the brands or so. I mean, we have a very, very broad market exposure in the business. So this is in line with the activity levels that you've seen in the sectors that we are touching with Machining Solutions. The production obviously production rates in these sectors. Thank you. Okay. Thank you. We go to the next question please operator. The next question comes from Peter Trillen at Handelsbanken Capital Markets. Please go ahead. Yes. Good morning, Olof, Matsa and Annecy. I have a lot of questions, but I get back in line after my usual two ones. My first one regards the drop through in the SMS business. It's quite big drop through and you mentioned that you have not sort of punished that much on the margin on the net working capital on that specific division. How should we see that going forward, Jopsu? Is that negatively effective, all else equal, by the start of the product launches? Well, could you please elaborate a bit about the drop through here? I mean, obviously, minus 72% leverage is not what we would normally expect to see. It's very much on the high end there. In part, I mean, we have been planning and driving for a stronger development in the economy around us and what we've actually seen in the quarter. So there is a need to look at tighter cost control in the business area based on the organic growth rates that we are seeing right now. And to a certain extent, I mean, the product launches have had some impact, but not major. And then we're obviously not happy with the minus 72% in Machine Solutions for the quarter. That's very clear. Could I also ask you general questions on price and mix I would say mix in SMS and the pure price contribution in mining would be nice to hear about. For the group, we had about 1% positive net price change and 4 out of 5 business areas had a positive price development. The exception is Sandvik Venture where we actually saw some deterioration of prices based on what's happening mainly in the oil and gas sector here. So mining and SMS were in positive territory. Obviously, the mining market is very tough and it's only very small price positive price developments that we can achieve there. But it's still in positive territory. And I'd say construction maybe you could say neutral development is slightly, slightly positive. Just a quick one, sorry, Mats. The savings of €162,000,000 should I add to that the sort of other savings that we debated last year in the U. S. About HR, IT outsourcing, all of that, is this pure saving from sort of the scope programs? It's fewer from the scope programs, yes. Thank you. I'll get back in line. Thank you. Operator, you can put through the next question please. The next question comes from Mr. Alexander Vorga of Nomura. Please go ahead. Hi, good morning, gentlemen. Hamzah, thank you for taking my call. I had two questions, please. One, I just wondered whether you could talk about the impact of the oil and gas slowdown on SMS. I know you talk about it or refer to it in the text in the report. And I just wondered whether you could perhaps try and give us an indication of how much of an impact it's having on general the general engineering segment? And then the second question related to oil and gas. With oil and gas, I mean, obviously, one of the main drivers for weakness in North America is oil and gas sector. And as you say, our direct exposure is quite small to oil and gas from an SMS perspective. But a lot of our customers that we classify as general engineering are supplying products that then end up or are driven by the oil and gas sector. Exactly what percentage that is, is of course very difficult for us to calculate exactly. It will be an enormous work to do that. But clearly, that has been one driver for the weakness that SMS has seen in the Q2 in North America. Okay. Thank you. And just on, I guess, the second question on oil and gas. I wondered if you can perhaps quantify as how much of a drop we've seen you've seen in Varel and whether you can give us indication of the target savings you have for the restructuring actions you've initiated there? Well, we don't specifically talk about results sub the segments that we report in our report. But we've quite taken I mean the drop has been quite significant for Varel due to especially the lower activity in address the situation in the markets, downsizing our personnel, furlough programs, other cost saving initiatives. And you can see that in part in the operating leverage for venture, which actually is fairly good for the quarter here. So a lot of activities going on there, but we have not we've chosen not to quantify on more specific units in our business area level in the company. Okay. Thank you. Thank you. Do we have any questions here from the Stockholm? No? In that case, we continue with the conference call. Please could you put the next question through please operator? The next question comes from Mr. Graham Phillips at Jefferies. Please go ahead. Yes, good morning. Thanks for taking my call. The question really was about Machine Solutions and this market share issue. We can only look at another company, Cammetel. It looks like you were doing slightly better than originally. And now one wonders what is the general market share position that we can look at for that division? And what are you specifically doing around solid carbide products in that area? Well, to start with market share, I mean, we don't lose market share over a couple of quarters across 3 brands in the company. So when I look at Serco, Coromant, Walter, etcetera, specific performance, you can see the same trends across all the different brands. So, I feel confident in saying that we are not losing any market share in that business. When it comes to solid carbon products, they are part now of what used to be hard materials now called Sandvik Hyperion and which is a part of Venture then. So they're reported in that part of the business within the Sandvik Group. Is that likely to remain? I mean, is that not a substitute product for the traditional SMS areas? Okay. Interpreted I mean, all our inserts more or less that we produce and sell in Sandvik are within SMS are solid carbide. Okay. Then you have also high speed steel to certain applications, but that's a minor, minor part of the business. So solid carbide is a base, the material that we use across the very, very vast majority of SMS business. But then we also make larger and other items in solid carbon and that's how I interpreted your question there. Pieces for drill bits, diaper cutters, dies for wire drawing in the steel industry, etcetera. And that business is part of the enzyme cap here in the invention. So that's not really the metal cutting part here that I was referring to. Okay. Thanks for taking that out. And also just with the new Chairman, Molen, arrived, what meetings have you had with him? And how do you think he'll differ with his view of the company compared to the previous chair? Well, I mean, it's early days for you. 1 has just started, but he's really engaging with full energy into the company. We're running an introduction program for us through outstanding for him. He's meeting our business areas, looking at our strategy. We've only had one board meeting so far. But I think Johan brings with him a fantastic industrial experience and a lot of good thoughts on how we can continue to improve semi going forward. Okay. Thank you. Thank you. And I believe one further question from the telephone conference please, operator. We have a question from Mr. Peter Frieden at Handelsbanken Capital Markets. Please go ahead. Yes. Thank you for taking my question. You mentioned all of the importance of driving the aftermarket in mining and you gave us some concrete examples how. Could you please share with us some empiric evidence? You normally help us with sales mix for that specific division. So to give us the mix of the quarter? 59% aftermarket in the quarter, 21% equipment and 20% mining systems in Q2 for the group, yes for the mining business area. Yes. That's fair. And on my previous price question, positive for mining. If you look at the aftermarket in per se, is that positive also? Is it more or less than for the division as a whole? It is positive, but we are seeing I mean, there's an enormous price pressure from the mining companies on the aftermarket business. And I would say, it's very strong in the rock tools business, which is tough has a tougher pricing environment than the parts and service part of the business. That is what we're experiencing right now. That's very clear. Could I also ask on the that's more to Mats though. On the FX, there seems to be quite big positive on the group to get to the 775 total. How are you thinking about that when you guide for the Q3? And another nitty gritty one, we talked about a one off structure effect on assets within the bridge of 2.70 on a EBIT, of which I guess I hate is the nickel. What's the rest? Is that profits coming out of the divestments or what's the rest there? Thank you. Starting with the currencies, I mean, when you are talking about that kind of effect, it's a bridge effect between the years. And we had a rather negative impact last year in the Q2 when it comes to Group Common related to the strategic hedge. That is much less looking on the Q2 this year. So that is more of a kind of a bridge effect. I'm not anticipating any kind of big effects on group going into the Q2 when it comes to currencies. That's clear. And the second one, can you repeat that one, please? No, that's the on the bridge for SMT, the structure and one off sort of factor as minus €260,000,000 on top line and minus €270,000,000 on the EBIT. Could you please give us the component on the EBIT there? I guess is one of them, but what's the rest? I mean, we're talking about the divestments also, I guess, of the distribution business and so forth in the Q4. But I think looking on the bridge and specifically looking on Materials Technology, it's also important to remember over absorption in the Q2 2014, because I think we had an effect of approx SEK70 1,000,000 meaning 2% on the 2% units on the EBIT margin in the Q2 last year. And that also has an effect when you're looking year on year in terms of a bridge effect. But that's you can't call that structure one off. No, no. No. It's not. It's in the inorganic, but I think it's important to remember that. When it comes to structure, it's the divestment. You clarify then. The EBIT year on year bridge of minus SEK 270, SEK 80,000,000 rest is divestment more or less? Yes. Okay. Thank you. Thank you. Do we have any final questions? Yes, we do. Here in the front. Thank you. Yes. Anders Joosland again. A little bit about the structural measures in construction seems to be going very well. So you stick to your old target of reaching 6% 8% at the end of the year? And in mining, will we look for 2016 before seeing margins coming up? Or is it a trend we will see also in this year? Mining has come up a lot since last year. So, I mean, mining is biting sequentially. Well mining sequentially had slight negative currency effects. Some things moving between quarters, but mining is stepping up. And if you look at the bridge on the operating leverage, they're actually up €80,000,000 on profit and despite underlying down €150,000,000 on the top line. So mining is transforming itself. I feel very happy with the progression that we're seeing in mining. And as said, in the aftermarket, a lot of good things are happening and we're driving that with full force. And on the equipment side, we are upgrading our product portfolio. We're driving sales hard here. So there I think we also have a good development both of growing the market and taking out costs and creating efficiencies. Construction, well rounded. They're actually at 7% if you go with 1 digit. We said 7% to 8% in the Capital Markets Day last year. So construction is doing well. They are exceeding their cost reduction targets. We really need top line to really get that business performing well. But we're going to continue to drive hard. And I think DJ and his team are doing a really good job in what is a has been was a very challenging starting point with construction, and they've not had any help in the market in terms of market recovery to achieve the performance improvements that they've got. So I think they've done an excellent job there. Okay. Thanks. Thank you. And that said, there are no further questions. So we conclude this session. And we wish you a good summer and a happy holiday when you get one. Thank you. Thanks very much.