Thank you, good morning, everyone, and welcome to this presentation of the SKF's Q2 results. As usual, we'll start with a presentation by Rickard, our CEO, followed by the numbers from Niclas, our CFO. The presentation part of this event will last some 20-25 minutes, after that, we will move into Q&A, where you can post your questions, either by following the operator's instructions on the chat or by using the call function of a voice. We have a sharp stop at 9:00 A.M. Many of you are waiting for other companies as well, we'll try to stick to that. With that brief intro, I leave the word to Rickard.
Well, good morning, everyone, and warm welcome to this quarterly report presentation. As you may recall, in 2022, we initiated our profitable growth journey based on the Intelligent and Clean strategic framework to become an even more fast-moving, innovative, and customer-centric company. As a starting point, we put in place a strong foundation, where we launched a new operating model with six separate business areas, all with full P&L and balance sheet responsibilities. We strengthened the management team, we enhanced our emphasis on portfolio management. The model is becoming more and more embedded in the organization, our execution capacity is building momentum, this is clearly visible in our Q2 results. In today's presentation, besides sharing insights to the quarterly numbers, I will also provide examples on how we're progressing in the strategic execution in specific areas. First, let's look at our quarterly numbers.
As I mentioned, our strategy execution is gaining momentum, and I'm really pleased to report a record quarter in several dimensions. We saw a strong organic sales growth, 8%, fully in line with our Q2 guidance. This actually representing the ninth consecutive quarter of an organic growth rate above 5%. In absolute terms, we had record sales, north of SEK 27,000 ,000,000 , record adjusted profit of SEK 3,600 ,000,000 , and a net cash flow from operations at SEK 3,700 ,000,000 . Our operating margin came in at 13.3%, significantly up versus 10.5% the same quarter last year, and this is clearly another step towards our 14% margin target. Let me now turn to the performance in our business segments, industrial and automotive, where I will also share more insights on the regional growth development.
Starting with industrial business, representing some 70% of sales and 85% of operating profits. Here, we saw a solid organic growth, just shy of 6%, primarily driven by price mix. If you break it up by region, we saw a limited growth in Americas of roughly 1.6% due to OEM destocking in some industries, agriculture being one example. With that said, there are also industries in Americas that remain on a double-digit growth rate, like railway being a prime example. Organic growth in EMEA was resilient and was up 7%, with very strong growth in aerospace and railway. Organic growth in China and Northeast Asia came in at a moderate 6.4%. Clearly, a weaker market rebound in China than we hoped for when entering the year.
Still solid growth in China, but maybe not as significant as we were hoping when we started the year. We saw good growth in industries relying on domestic demand, like wind and industrial distribution, while export-related businesses were a bit slower. Finally, we saw continued strong momentum in India and Southeast Asia, with an organic growth of just above 11%, mainly from off-highway, material handling, and automation. We continue to drive efficiency and cost competitiveness in our industrial manufacturing footprint, and one example of this is the recent announced intention of ours to consolidate our spherical roller bearing manufacturing in Europe by moving our current production facilities in Luton, or capabilities in Luton, the U.K., to Poznań in Poland. All our industrial business areas continue to drive price, execute cost initiatives, and ensure rigorous portfolio management.
As a result, we report an improved, adjusted operating profit of some SEK 3,000 ,000,000 , a significant uplift versus the same quarter last year that ended at SEK 2,400 ,000,000 . This corresponding to an adjusted operating margin at almost 16%. Turning to automotive. Automotive saw very strong growth of 14% and an adjusted operating margin just above 7%. This is equivalent to an adjusted operating profit of almost SEK 600,000,000 , compared to SEK 100 ,000,000 the same quarter last year. For the good order, the automotive growth rate should be viewed in the light of a rather weak comparison period last year. Nevertheless, the improvement of the automotive profitability is a significant achievement by the team and a clear step up towards our 2025 annual margin target of 8%.
We are pleased to note that the continued strong growth in EVs, vehicle aftermarket, and commercial vehicles, this fully aligned with our ongoing repositioning in our automotive portfolio. Now let's leave the numbers. Let me turn the focus on back to the strategic framework and our execution of it. We continue to embed and execute on all dimensions of our Intelligent and Clean framework. In today's presentation, I will share progress in high growth segments, portfolio management, technology development, and the area that is actually underpinning the entire framework, namely sustainability. Starting with the high growth segments, again, I am happy to report tangible progress amongst most of them.
As you can see on this chart, growth was particularly strong for electric vehicles, up 26% in the quarter. Here we have the exceptionally strong growth in Europe among both pure EVs as well as traditional OEM customers. In high-speed machinery, the slowdown is in line with our expectations, as last year was exceptionally strong due to high incentives in the market. Within agriculture, food, and beverage, we have noted some destocking among OEM customers, primarily in North America, as I mentioned before. The world's transition towards a more sustainable future is naturally a driving force behind the EV growth, but also for other sectors and industries, such as renewable energy and railway. Speaking about railway, a truly global industry where our know-how and technical solutions are in high demand. In one example, we won some sizable contracts in Egypt during the second quarter.
Egypt is currently investing in its rail infrastructure, both for passenger and freight operations. We have secured orders from three large OEMs for various train platforms, where we will provide a broad set of products such as wheelset bearings, axleboxes, gearbox bearings, and sensors. Moving on to our work within portfolio management. As I mentioned during this presentation, all business areas are active, driving a broad set of portfolio management activities. Today, I would like to give you some examples of this, one from our industrial business and one from our automotive business. Starting with industrial and industrial lubrication, where we have decided to focus our core lubrication business, such as automatic lubrication systems, lubricants, and lubrication tools. As a consequence, we have announced the divestments of our business named Spandau Pumpen, our coolant pump manufacturing unit based in Berlin, Germany.
In automotive, we have now completed the previously communicated target to part from roughly SEK 1,200 ,000,000 on unprofitable contracts. In half of these, we have concluded to step out of the business, while in the other half of the contracts, they have been renegotiated at favorable terms. Technology innovation is also an important component in our strategic framework. Today, I would like to share some details related to ceramic bearings. Generally speaking, we notice an increasing demand for our ceramic bearings. There are several benefits with ceramic solutions, such as electrical insulation, higher speed capacity, higher wear resistance, and lower weight. Due to these superior qualities versus traditional bearings, we see a growing ceramic demand in many industries like industrial E-motors and, of course, electrical vehicles. This, despite the rather significant cost differentiator, approximately 4 to 5 times traditional bearings.
In order to meet the growing demand, we are investing in our industrialization and localization of our ceramic supply chain. We have increased our own powder capacity. Many of you may not know that, but since many years, SKF own a world-leading ceramic powder producer. The company is named Vesta, and it's located in a place called Ljungaverk in Sweden. We also recently announced a joint venture with Sinoma Nitride in China to ensure regional supply of high-quality ceramic rolling elements. SKF is, in fact, through the company, Vesta, that I mentioned, already today an established key supplier of silicon powder to Sinoma. We're also seeing signs of increasing demand for ceramic solutions in more demanding applications such as clean tech, hydrogen, and green energy. This brings me on to the sustainability transformation that is ongoing within SKF.
As you can see on this chart, our clean tech solutions are in high demand, and revenues are growing rapidly. We also note that our customers increasingly request bearing product sustainability data. To satisfy our customers' request for reliable, transparent, and comparable sustainability product data, SKF initiated and led the development of Product Category Rules, PCR, a new global standard for the bearing industry. Through PCR, we will enable customers to make more informed choices, promote great transparency and accountability in our customer supply chain, and allow for industry-wide life cycle assessments based on common standard. This is actually something that's already in high demand in certain industries, such like rail and electrical vehicles. In the quarter, we have also made some significant progress in our own net zero journey. In May, we signed a Virtual Power Purchase Agreement, or VPPA, with the energy company, Enel.
In this agreed VPPA, we will purchase guarantees of origin for a period of 15 years from Enel's upcoming solar plant in Spain. This will enable us to get access to new renewable energy on a yearly basis, equivalent to one-third of electricity consumed in our European operation in 2022. Clearly, this is an important step towards our target of 100% renewable energy in our own operation by 2030. Another milestone in our net zero journey is the decision to phase out fossil gas used in our own global operation. This is backed by a SEK 3,000 ,000,000 investment frame over six years. The frame will be exclusively used to fund decarbonization projects to remove fossil gas used for process and building heat. We do anticipate that to utilize approximately half a billion or SEK 500 ,000,000 per year until 2029.
Finally, I would like to mention a customer case where SKF actively supporting the emerging transformation of the aviation industry towards a more sustainable future. We have signed an agreement with the company, Lilium, developing the first all-electric vertical take-off and landing jet. For this new application, SKF will provide and design for, electrical or bearings for the electrical motor. The emerging electrical aircraft market has great potential to change the way we look at aviation and logistics, allowing for a more sustainable way of transporting people and goods. We'll be truly happy in SKF to be part of this transition. With these remarks, it's time for me now to hand the clicker over to Niclas and ask him to take you through the numbers in more detail.
Thanks a lot, Rickard. As you heard, we are quite pleased with the progress made in the quarter. With that, let's take a closer look at our financials, starting off with sales. As mentioned, we had strong sales growth, with Q2 sales amounting to a record of SEK 27,100 ,000,000 , which is up from SEK 24,000 ,000,000 a year ago. Our sales grew both sequentially and compared to last year, driven by a broad-based demand from multiple different industries and across multiple product segments. Our total net sales increased by 14.7%, of which organic was 7.9%, the currency effect on sales was a positive 6.8%, with as usually the largest effects coming from the dollar and the euro. All in all, a very good sales momentum in Q2.
In the quarter, we continued to manage our portfolio and increase prices in order to further strengthen our business and market position. These efforts actually worked quite well, resulting in another quarter with a growing positive price mix contribution of SEK 2,100 ,000,000 . With that said, let's take a closer look at our operating profit. In Q2, we delivered a record adjusted operating profit of SEK 3.,600 ,000,000 , and an adjusted operating margin of 13.3%. This was driven by continued work on price, mix, as well as costs. If we look at this step by step, in the quarter, currency and structure only had an immaterial impact on the result. On the other hand, organic growth contributed with SEK 1,900 ,000,000 .
As mentioned, we had a price mix of SEK 2,100 ,000,000 , offsetting that, we had a negative effect of approximately SEK 200 ,000,000 from lower production levels as the teams did a good job reducing finished goods by approximately SEK 1,000 ,000,000 . The impact of cost inflation moderated compared to previous quarters and was negative SEK 800 ,000,000 . The largest cost increase related to salaries and wages. Just for you to note, when you look at the reported operating profit, we had a SEK 400 ,000,000 IAC provision, the majority of which related to the planned closure of the Luton plant that Rickard just mentioned. Moving on to cash flow, we generated a record net operating cash flow of roughly SEK 3,700 ,000,000 in the quarter.
We're quite pleased with this, it's a clear step up compared to Q2 last year, and also sequentially compared to Q1. The driver for the improvement was, besides, of course, the record operating profit, a reduction in working capital. During Q2, we continued our work on reducing, especially inventories, and here the teams did a good job. In particular, as we typically build inventories during Q1 and first half. Looking at overall net working capital as a percentage of sales, it decreased to 32.7%, which is actually down from 35.7% last year. As you can see in the bridge, net working capital had a positive impact of about SEK 130 ,000,000 , mainly due to the good work done on reducing inventories. We continue to work on reducing net working capital, with focus on inventories across all of our businesses.
As said earlier, there's no quick fixes. We are pleased to show tangible results in Q2. All in all, a very strong cash flow in the quarter. What comes to our balance sheet continues to be strong and our liquidity to be solid. The net financial debt amounted to approximately SEK 11,800 ,000,000 , which was a slight decrease versus Q1, driven by the strong operating cash flow. What comes to Return on Capital Employed, we saw a positive development in the quarter, with 12-month rolling Return on Capital Employed, improving to 14.1% as our profit increased. With that, I hand back to you, Rickard.
Excellent. Thank you, Niclas. Before I do the wrap up, I just want to comment on the background picture. You may wonder why we have, you know, a youth playing football. This week, the world's largest youth football tournament is taking place here in Gothenburg, and since many years back, SKF is the main sponsor of this event. This picture is actually recently taken, just I think it was yesterday. The games are ongoing, and I personally had the joy of attending the opening ceremony on Monday evening. It's astonishing to see, you know, some 50,000 youngsters from across the world coming together to celebrate the joy of playing football together and build bridges between countries and cultures. I think that's something the world actually needs in these times. An exciting time to visit Gothenburg if you have a chance.
With that said, let's wrap up this quarter. I'd like to say and stress that it is a strong quarter, where almost all our financial metrics are increasing or improving significantly versus the same quarter last year. As you heard, both me and Niclas mention, there are a number of in absolute terms, records in our numbers related to sales, adjusted operating profit, and cash flow. These results, they are not generated by coincidence. They come from our dedicated work and the built-up momentum in our strategic transformation. I hope we're able to explain to you that we continue to grow profitably in our targeted segments. We do see that our activities related to price and portfolio management is paying dividend.
We do see progress in our cost efficiency efforts and our regionalization efforts. I also see internally a stronger commitment and accountability to our numbers from our different business areas. We're also excited within SKF to see the power of sustainability, not just what we do internally, but how we can support our customers in their journeys towards a more sustainable future. That is a main driver behind our organic growth in areas such as EVs, rail, wind, renewable energy, and so forth. Something really to build for into the future. Going now into the second half of the year, we expect the normal third quarter seasonality pattern in our results. We also expect a continued volatility and geopolitical uncertainty impact in the market in which we operate.
Looking into the 3rd quarter for 2023, we expect a mid-single-digit organic sales growth. For the full year, we maintain our outlook of high single-digit organic sales growth compared to 2022. With that, I think it's time to wrap up the formal presentation part, hand back to Patrik and Alex to help facilitate the Q&A session.
Thank you, Rickard and Niclas, for the presentation. With that said, we are happy to go into the Q&A session. Operator, please, can we have the first set of questions?
Thank you. Our first question for today comes from Sebastian Kuenne from RBC Capital Markets. Sebastian, your line is now open, please go ahead.
Yeah, good morning, gentlemen. I have a few questions. One is on automotive. You have the SEK 1,200 ,000,000 exit and or renegotiation of contracts. Was this already in early Q2 so that we already see the full margin impact now? Because the margin was quite strong. Do you think that this exit is now leading to a structurally higher margin, maybe even at the level that we currently see? That would be my first question. Secondly, in the BEV business and the BEV powertrain business, you again report some 25%-26% growth. I wonder, you know, the ceramic bearing content is also increasing there, and what is currently the volume change in that business? Maybe you can give us also an idea of what you see in BEV for Q3.
That's all for now. Thank you very much.
Okay. Good morning, Sebastian. I'll try to address your question. Starting with the SEK 1,200 ,000,000 of portfolio pruning that we now say that are completed. It's partially reflected in our second quarter numbers. A lot of these negotiations have now been completed. Some of these contracts will take some time before they actually yield out or we do have a chance to exit. A number of those price increases that we have negotiated at favorable terms, they are, of course, already starting to have an impact. It's a mix. Not all the, you know, impact from the SEK 1,200 ,000,000 is yet visible, but a sizable chunk is already visible in our numbers.
Your question about, you know, what we think about the margins for automotive going forward, the best answer I can give you is that we have said that by 2025, we are aiming for an 8% annual margin in automotive. I take our Q2 progress as a proof point that that target will be within our reach to establish a, you know, our automotive business at a higher level going forward. On the, your question on EV growth and the percentage or how much of that is also coming from our ceramics? You're right. Ceramic bearings are an important piece to, especially the E-powertrain, and it's in high demand among many of the pure EV players and also traditional OEMs for their electrical platforms.
Not all bearings in an E-powertrain needs to have a ceramic solution, but there are some critical, you know, positions that where they are superior, and that's also where we see the growth. To give you an exact number and the percentage is not something that we do disclose. We anticipate that our strong position in the EV market is a rather sustained one, and that will continue also as we move into the coming quarters.
Yeah. Maybe just to follow up on this. If you run the numbers, assuming you had a 5% ceramic bearing content for the powertrain so far, if this moves to 10%, right, at a much higher price point, it would explain the entire 26% year-on-year growth. I was just wondering if there's any volume growth for the powertrain business at the moment, or whether the 26% is simply reflecting higher ceramic content. Maybe that is a bit more precise.
I mean, there is, Sebastian, there is volume as well.
Yes.
We just don't split it out, but there's clearly volume growth. Also I think it's important to remember, speaking about the 14% growth rate, as I mentioned, we also need to put that in perspective. It was for automotive industry in general, Q2 last year was a weak quarter, with China experiencing a close down in April and May, and many OEMs globally were struggling with their supply chains, impacting their production levels. The comparison period is rather weak.
Yeah, understood. Thank you very much.
Thank you.
Thank you. Our next question comes from Klas Bergelind, from Citi. Your line is now open. Please go ahead.
Thank you. Hi, Rick and Niclas, Klas at Citi. My first one is on the guidance into the third quarter, the mid-single-digit growth. It feels like this is largely price mix again, but just on the volume side, do you expect, Rick, volumes to be down a bit year-over-year? You have a tougher comp in China, and the destocking you see there in North America is, it's pretty early days, I would have thought. I'm wondering if you think that is expected to continue here into the third quarter.
Well, to answer your question, I'd like to start by putting into perspective. When we entered into this year, we did anticipate the first half of 2023 to be stronger from a, you know, organic growth point of view versus the second half. It seems that that kind of prognosis were correct, and that's also what we see, and that's how we continue to guide. Our guidance has not really changed. You're right in the sense that a large portion of the organic growth that we have delivered so far comes from price mix, and I'm absolutely convinced that that's gonna be the backbone of the growth also in Q3, where in certain geographies, yes, there will be probably negative volumes, while in other geographies there will still be volume growth as well.
Yeah, no, it's clear. I guess the destocking element in North America, Rikke, Yeah, I mean, what are the signs right now on the industrial side? Do you expect that to get worse in the third quarter, what you can see right now? Or is it too early days to comment on that?
It's hard to give an answer to that one. What I can say, though, is that still our industrial or distribution business in North America is holding up well. The destocking is primarily noticed in certain, among certain OEMs in some industries. That is clear, a clear trend, and that is something that we've seen now for a couple of quarters, to be honest.
Thank you. My second one is on price cost, solid development, price versus cost this quarter. I mean, cost inflation outside wages is now rapidly softening year-over-year. You still have carryover from pricing, but are you noticing any increased pushback from customers as you try and push through further price increases while wages are still increasing? I mean, it could happen obviously, as energy, raw materials, logistics are now less of a headwind.
Yeah, you're right. I mean, as discussed, in connection with the bridge, the inflation component has clearly gone down compared to previous quarters and is now primarily coming from wages and salaries, while the other components, logistics, energy, components, and so on, are at last year's level or even below. On the pushback, I mean, again, we, as said, we continue to work with pricing in Q2, and we intend to continue to work with pricing in Q3 as well. Of course, it's never easy, but don't see a major change there going forward. I mean, our path is pretty clear. We'll continue to work on pricing.
Yeah. Thank you. My quick, very final one is from China. It seems like it's only food and beverage agriculture off-highway that is a bit softer. Can we talk about what happened, Rikke, through the quarter? Because our understanding was that it was a strong start, but it softened through the quarter. If you could just comment on that, would be really helpful.
If I isolate China for a second, it's still a strong growth in China. We're talking, close to 10% organic growth in China. A lot of that driven by, volume still, not just price mix. It's still growth, but if I compare that number with what I was hoping for, maybe starting in this year, it's somewhat shy of my or our expectations. Looking into the quarter in isolation to answer your question, we had a rather strong development in April and May, and somewhat weaker in June, but that's natural. Again, last year, we need to remember what we compare against. Last year, Shanghai was in lockdown in April and May, we saw a very strong rebound in June 2022.
When you compare then, you know, for the entire quarter, still strong growth, but the month of June in isolation had a very tough comparison period.
Thank you.
Thank you. As a reminder, if you'd like to ask a question, you can press star followed by one on your telephone keypad. You can also submit your question via the webcast. Please limit yourselves to one question only. Thank you. Our next question for today comes from Max Yates of Morgan Stanley. Max, your line is now open. Please go ahead.
Thank you. Good morning, everyone. Could I just ask on the cost inflation slide that you have in your presentation? If I look at the cumulative cost inflation that you've had since the second quarter of 2021, it's about SEK 3,500 ,000,000 . If I look at the sort of cumulative cost inflation for Q3, it was running at about SEK 4,000 ,000,000 . It looks like kind of we should be starting to see a year-on-year tailwind in your cost line in the EBIT bridge in the second half of somewhere in the region of kind of SEK 500 ,000,000 , all else being equal. Would you agree with that kind of that price or that cost inflation number actually turns into a positive in your bridge in the second half?
How should we best think about kind of that cost line for the second half in the bridge?
Yeah. Hi, Max. It's a good question, as you know, we don't give an exact guidance on cost for the 3rd quarter. Of course, what you say is directionally what should be expected, again, not the number per se, but last year in 2nd half, we had a steep inflation, so the comparison numbers are quite high. We saw that now in Q2, that, you know, the year-on-year inflationary impact moderated a lot. With these sort of cost levels, one should expect that to continue.
Okay, understood. I'll leave it there. Thank you.
Thanks.
Thank you. Our next question comes from Daniela Costa of Goldman Sachs. Daniela, your line is now open. Please go ahead.
Hi. Good morning. Thanks for taking my question. I'll have 2. I'll ask two parts on this talking. Obviously, you spoke about this talking, for example, in ag. I wonder if you could talk about in other end markets, where do you think the risks are bigger and where they're smaller within industrials? Maybe you can also follow up on your own inventories. Obviously, you did quite well this quarter. We are still above your target, should we expect throughout the second half, similar magnitude of your own list stocking? Just maybe an update on the aerospace strategic review and when shall we hear from that? Thank you.
Thank you, Daniela, good morning to you. I'll try to answer the aerospace question, also a little bit about the destocking when it comes to our own inventories, and Niclas will take that. I don't dare to speculate where we might see more kind of destocking at the OEM levels, besides what we have already presented. Of course, what we have seen so far is a maybe stronger resilience in Europe and European OEMs than anticipated. That might be an area where to watch out for. I don't have any proof points of that, but at least it's something that, you know, we think about internally. Still, again, you know, we do see strong underlying growth in most of our geographies still.
As I mentioned, our outlook remains intact. We haven't changed our views for 2023 and the full year organic growth target. When it comes to aerospace, we are progressing it well internally with thorough analysis and discussions on how we see this and where are we gonna land with this strategic review. I'm gonna reiterate what I said before, we're not yet ready to re-reveal or conclude, and but you should expect us to come back to you sometime during 2023 with a firm conclusion of our strategic review and our recommendation on how to move forward in that space. I leave it as such and keep that cliffhanger hanging for a while sometime during 2023.
Hey, Daniela, on inventories and our own work there, it's actually pleasing to see the progress made. Just to give you a flavor, I mean, we work with, I mean, inventories is a topic across all of our business areas, all of our business areas work with it. We are still at elevated levels, even if we did, you know, the progression in Q2 was great. We still expect, and that's our aim and target, for actually all business areas to reduce inventory levels. Exactly how much and when-
Okay.
Yep. Daniela, go ahead.
No, I thought you had... You were done. I was just gonna ask a follow-up on Rikard, 'cause I wanted to make sure, and I got it right, but I don't know if you're, if you were actually done or I interrupted you.
No, just to give you a kind of a figure, I mean, the own inventories, 20%, 22% is what we should get to. We are still above that. Then we have an ambition even beyond that. All business areas working on it. We expect progress also in the coming quarters.
I understand that. I just wanted to follow up on when Rickard mentioned OEMs. Just wanna make sure, was this, you were mentioning auto OEMs? 'Cause I was wondering more broadly across the industrials. You do mention the stocking on agriculture, and I was wondering if you could sort of give some color on other segments, you know, energy, rail, distribution, et cetera. I'm not sure if you mentioned OEMs as being just you were talking about autos, or you were talking about just industrial OEMs.
Sorry, it was more kind of a general comment. I can't give you any insights to any other particular industry where we do see or expect a significant destocking besides what we already talked about. I don't really have any additional information to share with you there, Daniela.
Got it. Okay, thank you.
Thank you.
Thank you. Our next question comes from Andreas Koski of BNP Paribas. Andreas, your line is now open, please go ahead.
Thank you. Good morning. Two quick questions. Firstly, on pricing and price mix, how much of that SEK 2,100 ,000,000 that you had in total price mix sits within automotive, and how much is in industrial? Just to get an understanding of what sort of the price increases have been in automotive and industrials. Thank you.
Yeah. I mean, maybe to give you a rough idea, quite, you know, evenly split in relation to sales for both.
Okay, That means the same kind of growth impact from pricing for both industrial and automotive?
Yeah. Yep, yep. Roughly speaking.
Yep. Okay. Yeah, yeah. The second one, I want to test Rickard here on the aerospace comment that you made, because reading the report, you are saying that demand was particularly strong in several of our targeted high-growth segments, for example, aerospace. According to that sentence, you view aerospace as a high-growth segment that you target, and that, in my view, implies that you will keep it. What's your comment on that?
My comment is, you have to rest your case until we come out with a formal and final conclusion. Aerospace is growing nicely.
Okay.
With strong rebound after a couple of very, very difficult years due to COVID. Sorry, you have to rest your case for a while.
Okay, it is a targeted high-growth segment for you?
It is a growing segment, and, once we have concluded the strategic review, I can be more specific.
Okay. Thank you very much.
Thank you.
Thank you all for posting your questions. We are at our finishing point of this event. We have a hard stop at nine. I know there are other events lined up, so high competition for airtime this particular day. I also realize that there are some of you that have not been able to post your questions. For those, we are happy to respond after this call. Please contact either of us throughout the day. With that, perhaps a finishing word or two from Rickard.
Yes, thank you very much, and thanks for your attention, and thanks for joining us this morning on a very busy day for you, as well. As my kind of close remarks would be that, you know, based on this quarter, we are all aware that we're not done yet. We have a lot of work ahead of us, but we are pleased with the trajectory and the progress we make, and we believe that we are, and can see, that we are now having some traction towards our 14% operating margin target. We take this quarter with us as a proof point that we are on the right path, and, but, humble to know that still a lot of work ahead of us. With that, I thank you, and I wish you all a very, very nice summer.
Thank you for joining us.