Addtech AB (publ.) ($ADDTB)

[Audio Gap] the Addtech Q4 2025 report presentation. For the first part of the presentation participants will be in listen-only mode. [Operator Instructions] Now I will hand the conference over to CEO, Niklas Stenberg; and CFO, Malin Enarson. Please go ahead.

Thank you, operator, and most welcome, everyone, to Addtech's year-end report presentation. The setup is as usual, Malin and I will use approximately 0.5 hour to summarize and give our comment on the results and then open up for questions. Before we head on to the highlights of the report, just a very quick run through of the key fundamentals of Addtech. We are a group of more than 115 dependent and strictly decentralized companies in 20 countries with a clear business-to-business offering. With our new strengthened organization since the autumn, we operate now in 6 business areas, all with clear strategies and a value proposition centered around niche products and solutions primarily to manufacturing and infrastructure sectors. We have what we call a dual growth ending approach. Our focus is to develop and grow the existing business organically together with our entrepreneurs and then complement and strengthen our strategic niches with acquiring leading companies with a strong offering, and we fund our acquisitions primarily by own cash flow. Size-wise, we have now a turnover for the full year of almost SEK 23 billion. We run the operations with an EBITDA margin at around 16% and deploy around 4,600 employees throughout the organization with a small and efficient central team. So with that said, some quarterly highlights. Despite the increased geopolitical tension, as we all know, we have around us, we ended the year on a good note. Market situation was in general positive with high customer activity and a solid order intake. Net sales increased by 2% during the quarter. And organically, we were in line with last year. The positive EBITDA growth trend continued and with a very strong margin. More details about that later on. cash flow remained at high levels, and we closed in total 6 acquisitions during the quarter, followed by 2 more after closing. Net sales development. The overall business situation, as I said, was good, grew top line 2%. Solid contributions primarily from business areas, Automation, Electrification and Process in the quarter. The FX headwinds continued with the total negative effect in the quarter of 4%. Looking at segment drivers in the quarter, Process -- different process segments, Transport, primarily in railway and Marine and also special vehicles, excluding Construction and forestry machinery were strong drivers and also products and solutions to Electrify equipment in different end market segments. And this growth partly offset weaker sales in the quarter within electrical transmission as well as sawmills. All in all, a solid quarter sales-wise, not least given the FX headwinds that I mentioned. Overall, customer activity was high in the quarter, good order intake and a positive book-to-bill. The intake was broad-based but with a tilt towards the longer end of the book. I will come back with more details about this shortly. [ EBITA ] increased in the quarter with a very solid 15%, where almost half was organic. It's very satisfying to see double-digit growth in 5 out of 6 business areas, with Energy being the exception, primarily due to fewer transmission project rollouts and also very tough comps from last year. We continue to improve gross margins across the board, which is very satisfying. And in Q4, we reported a record high EBITDA margin of 17.3%, which is, however, somewhat bolstered by positive effect from revaluation of purchase considerations, as you can read in the report. But also when adjusting these, we end up at 16.4%, which means that we continue the very positive trend. And this is primarily driven by improved product mix and also acquisitions, but also positive effects from earlier communicated restructuring measures in a handful of companies where we now see good effects. I mentioned also the operative cash flow and the long-term financial target [ R2R 2K ] continues to improve to very good levels, which Malin will come back to later. Heading on to a few comments about each of the 6 business areas development in the quarter. From the top, starting Automation. As you can see in the slide, the business situation clearly improved in the quarter with a broad-based increase in sales with good leverage on both earnings and margins. Also, the market situation remained favorable, now with 4 quarters in a row with a positive order trend. The demand for products and solutions within defense and process industry, primarily food processing OEM was strong. Also, the order intake from OEM supply and engineering was good and medical stable at an aggregated level with customers supplying diagnostic and analytical equipment were on the positive side. Moving on to Electrification, where market situation was very strong with good demand in basically all key segments. Net sales increased 12%, where energy, medical and special vehicles being the key drivers. And all these 3 segments was also fueled by continued positive development within our [ battery ] group that have had a really strong year, I would say. -- also solid contributions from newly acquired companies. So in summary, a very strong quarter for Electrification, broad-based growth and the favorable product mix, leveraging the results. So EBITDA up 31% and a high margin of 16.7. Q4 was on the weak side for business area Energy, as I mentioned in the beginning, Negative effect from a lower order intake in previous quarters and very tough comps related to electrical transmission pushed down sales 7%, as you can see. However, margins remained at high levels, mainly due to an improved product mix and continuous very good cost control. And this temporary shift in order intake and project rollouts in the transmission business is, as we have said many times, due to permit process appeals and capacity restraints on the customer side. and this is part of the business. We have to look at this more on a long-term. And the underlying market situation here is very good, significant investment needs for renovation and expansion of the grids. We have a strong backlog of quotations more than we have had ever before. So this indicates a strong year also ahead, however, tilted towards the second half. Other key segments for Energy, such as niche products for electrical power distribution, power generation, transport sector had a stable market situation where wind and hydropower and also railways sticking out positively. The overall market situation within industry remained positive with increased demand in all segments, special vehicles, data telecom and marine, the will to invest within formal industry remained weak, even though we had a couple of project wins in the quarter. But generally, it's still a weak market. And we also saw, in this quarter, somewhat softening from high levels within subsea. Total net sales decreased 3%, and this is primarily relating to the lower sawmill volumes, effects that we will also see when going into the new fiscal year until that market situation improves. EBIT and margin levels increased from already high levels due to strong product mix and margins in finalized projects during the quarter. And this was strong even when excluding the effects from revaluations of purchase considerations. As you can see in the report, it's quite a lot in the industry here. And this is primarily relating to 1 acquisition that we made in 2023 that has strongly underperformed since we acquired the company. We make a lot of acquisitions, as you know, and sometimes you can really bump into something where we have underestimated and misjudged, especially the people. We also talk -- always talk about it's the culture in the end and the people. And here, we did a mistake that for sure. We have taken a new grip on the company now with new leadership and a new strategic focus. Moving on to business area process, where the overarching market situation was stable in the quarter. Despite the current uncertainty within the shipping industry, we saw a positive project order intake within Marine. Also special vehicles showed continued strength. Engineering and Medical were stable, while Energy and Process were on the weak side, all in all. In general, customer activity is good across the board, but there is still a hesitation and the continued tendency among customers to postpone investment decisions Possibly, this is also fueled by the increased geopolitical tension. The business situation for Process was favorable with double digit sales growth, where marine and product deliveries in process industry were the main drivers. Also, we see an improved product and project mix in the quarter that pushed the margins to new record levels, partly boosted by positive revaluations, but even taking that out, is really good margins. Last but not least, Safety. The demand situation for companies exposed to building an installation remained weak in Q4. We've been waiting now, I would say, for a couple of years for this market to to come back, and we still see that it's a weak market. Medical and Engineering were also on the weak side, but we saw a positive continued trend within defense that we start to see some good markets also for Safety and the bounce back from data centers after a period of more hesitant demand. Also, traffic safety remained at very good levels. And adjusted for FX, net sales were stable and with positive effects from product mix and previous cost-cutting initiatives profitability margins increased in a satisfying way in the quarter. So to sum up then, clear variations in the market situations, both between companies and segments and geographies as well. but we continue to experience a hesitation to invest among customers, while we see good growth in other segments and areas. So we concluded a solid quarter with a positive market situation and a high customer activity all in all. With that said, I'll give the word to you, Malin, for some more details on the quarter.

Thank you, Niklas. As you heard, our EBITDA grew and the profit margin improved compared to last year's fourth quarter to a record high level. We delivered strongly despite the market conditions remaining volatile. There are always variations within and between our business areas and they perform with varying strengths from year-to-year. But for the group as a whole, this is the fifth year in a row where we have had a positive development trend of our rolling [ 12 ] EBITDA margin. We are very proud of this outcome, and we see the current rolling [ 12 ] margin as sustainable and of course, as always, with the ambition to increase. We had a quite significant effect from revaluation of earnouts in this quarter. And as Niklas mentioned, it was primarily due to 1 underperforming company in business area Industry, where the earn-out was reversed. Adjusting both years from total revaluation of earnouts, we had an increase in EBITDA margin of 1.5 percentage points and still a record high margin in the quarter. The increase was broad-based and all business areas increased both our gross margin as well as their profit margin during the quarter. For the full year, we had an increase in EBITDA margin of 1 percentage point, thanks to active work to increase the value add in our value proposition, good pricing power and strategically improving our product mix. and not least, good contribution from acquired companies as well as good leverage from organic sales. The impact of revaluations of earn-outs on the development of the operating margin is insignificant for the year. Of course, a firm group of overhead costs is also contributing to the outcome and the restructuring measures taken during the year in businesses with persistent to lower market conditions are starting to have a clear impact now. We can see that the trend line of total cost in relation to sales has a good development. Regarding other operating income and expenses, we had a somewhat less negative currency effects in the fourth quarter regarding revaluation of balance sheet items, while it was in line with last year for the full year. Our cash flow was solid during the quarter and in line with the same quarter last year. Rolling 12, our cash flow from operating activities strengthened from already high levels to almost SEK 3 billion compared to SEK 2.7 billion last year. The change in working capital was relatively weaker compared to the same quarter last year, mainly due to changes in accounts receivable, which are affected by the timing of sales and invoicing during the quarter. Inventory levels continued to decrease organically, even though not to the same extent as during last year. The inventory value remains at satisfactory levels in relation to the order backlog as well as in relation to sales. And all in all, our long-term target, profitable working capital continued to improve and reached 81% in the quarter. Our gearing and leverage are stable at low levels, and our financial position remains very strong. Compared to Q3, we saw a slight increase in leverage due to high acquisition pace, which, in fact, we see as a positive development for the time being. Our financing structure was strengthened through the refinancing of existing credit agreements during the quarter. And in combination with our strong balance sheet, this gives us plenty of room to continue our growth strategy. and continue to invest in attractive companies, which I think you will talk more about now, Niklas. Over to you.

Thank you, Malin. First, some full year highlights. When summarizing the year, we can once again conclude a solid year. It's been a year with clear variations every quarter. very strong development, all in all, within Energy, special vehicles and defense, while formal business and building installation have struggled with more hampered markets. And also, as I've said during the quarter, the CapEx-related investment decisions, we've seen hesitations, especially, I would say, the second half of the year. Despite the partly challenging market, the negative currency effects, the overarching activity for the company has been stable at the high level, and we continue to deliver growth on all lines. a 2% organic, all in all, of course, lower than our long-term financial targets. But again, taking into account the market conditions, we are satisfied with that and solid contributions from 4 out of 6 business areas. EBITDA 12% in the year improved profitability, 16% margin. As Malin said, we are very satisfied with that, of course, and EPS growth of 14%. And again, satisfying to see how well our focus on product mix and active pricing gets the volumes into the results. And as we mentioned, we have improved the gross margins in all 6 business areas, not only through acquisitions but also organically. The cash flow, Marlin mentioned, we strengthened and also kept our return on capital, stable at high levels. During the fiscal year, we acquired 9 companies, all well-run high performers that complement and strengthen our strategic initiatives. We also had a good start the new year with 2 acquisitions. I will come back to that. So summarizing a successful year, where the modest robustness and resilience, again, is proven. On back on our strong positions in supported by structural growth trends, we delivered solid sales and good order intake. The Board proposes a dividend of SEK 3.60 per share, good increase from last year. I would also like to take the opportunity to say just a few words about the accomplishment in each business area also looking at the full year. So starting with Automation then, as we said many times, here, we deliver a lot of OEM-related components and solutions, where mechanical process, medical and defense are the main segments. And worth mentioning when you look at this picture is that defense is reported under other segments and stand for around 15% of total Automation. It's been a challenging year for Automation, characterized by both customer hesitations but also a lot of restructuring measures and cost-cutting initiatives in a number of companies, so high activities there. Order intake has quarter-by-quarter, improved and in the later part now, especially in Q4, we see this in the positive sales trend that we have been waiting for. So with the increased customer activity, active pricing and the effect from these actions, I would say, Automation has a good momentum entering into the new fiscal year. 2 acquisitions made in Automation, a Dutch company, BCK [ Holland and Kramvis ] strengthen our conveyor offering in a very good way with a strong value proposition under own brands. Cubro is an Austrian leading manufacturer of products and solutions for monitoring security and analysis of data networks. So we're very proud to welcome them both to the group, both having accretive margins and strong profitability. [ Business Air ] Electification has primarily a broad value proposition to support customers in most key segments in their electrification transition. All in all, I would say, a solid year for Electrification with high activity across the board. Total net sales increased by 5% with a good mix of organic growth and contributions from acquisitions. We can also conclude and improved profitability and a very good margin increase during the year, not least fueled by the continued positive trend for the battery group and also contributions from acquisitions. Three companies acquired during the fiscal year, 2 German and 1 based in U.K., all 3 are well-run companies that strengthen and complement the Electrification strategies in a very good way. The larger acquisition of German company, [ Ram ], was completed in the fourth quarter, and [ Rami ] is a leading manufacturer of electric motors and generators for maritime electrification and has an annual turnover of approximately EUR 38 million with strong margins and profitability and has started the first couple of months in a very good way in [ Ante ]. And yesterday afternoon, we completed another acquisition in Electrification, the Dutch company, [ Nios ], a supplier of patented system solutions for road and rail construction machinery. A warm welcome also to you to the team. Energy, in summary, a record high year for Energy, very high sales growth in the beginning of the fiscal year, partly offset by tough comps and a somewhat weaker customer activity in the transmission business, affecting sales, the fourth quarter here. But all in all, sales up 5% from very already high levels is important to mention. And basically, all growth here was organic. And the underlying demand remains very good, as I've been talking about. We also have strong positions in other attractive niches. Energy has a lot of different positions here. such as niche products for power distribution towards industrials, railways, renewable power, et cetera; with a solid growth potential going forward. No acquisition in Energy completed during the year, but we have a good pipeline as a good potential for future acquisitions within this area. EBITDA growth of 28% and margin on a very solid 19.2% rolling 12. Industry, a good year despite the very challenging comps that we talked about in the beginning of the year in the [ sawmill ] business. And the weak order intake was in sawmill was clearly offset by a positive trend within both special vehicles, mechanical industry, but also in subsea segment, delivering very strong growth over the year. So we have a very solid 11% sales growth and EBITDA up 15%. And as we can see that we also increased the EBITDA margin from really high levels. In January, Axion, the German company, supplying camera and sensor system for vehicles, primarily within public transports; were welcome to the group. Process. A key driver for this business area is the increased requirements to reduce the industry's environmental impact with key customers within process industry, energy sector and marine. On overarching level, it's been a stable year with high activity and solid growth numbers, but we clear variations. The first 6 months, the market situation was in general favorable with good order intake, especially companies supplying customers within marine and oil and gas segments. During the second half, we saw a positive sales trend while the market shifted to a more hesitant approach for CapEx-related investments. The activity in the market was relatively good with many ongoing dialogues, but decision-making among customers remain cautious. The project has been postponed. We have not seen basically any cancellations. We talk about the postponement. But the order book for Process is well filled going into the new year. An active year on acquisitions for Process with 3 new companies acquired, our second Canadian company, [ Novatek ], a leading supplier of analytical instrumentation for gases and liquids. We have known the company for many years. Also a Norwegian company, [ Puran Vivo ], supplying solutions for handling harmful and odorous gases; and [ CAP ] closed in February is a Dutch company supplying heat exchange solutions. All 3 companies fit very well into our strategies within proceeds -- Process with good performance so far and increase the margins. Finally, our most recent business area established Safety. All in all, a stable year with positive sales and earnings growth despite the heavy exposure to the hampered segment building installation. As you can see in the picture, more than 1/3 of the sales is related to building and installation. Profitability measures in a number of companies and more solid development in other customer segments, such as traffic safety, defense and data centers have mitigated in a good way with improved profitability and gross margins. The first acquisition for Safety, we did now after closing in the beginning of April with the Dutch company [indiscernible] a company that designs and manufacture customized outdoor installation enclosures. We have an active M&A agenda now in the business area, where we have a as we have been explaining a fairly broad definition of safety. So a lot of good potential here. Moving on to acquisitions. As I said, 9 acquisitions completed during the fiscal year with a strong end. We have acquired according to plan for the full year, adding SEK 1.6 billion in turnover, following our strategy also to acquire niche companies with own products and also accretive margins. Also in line with our strategy, our activities in select markets outside Nordics are accelerating with an increased deal inflow, partly driven by us now being more present in our strategic geographical markets such as U.K., [ DACH ], Benelux and Italy. And as you can read by the flags in the table, all acquired companies, except for [indiscernible], are headquartered outside Nordics. We see plenty of possibilities in our strategic initiatives, and we expect to continue a mix of Nordic and European companies also going forward. with normal size and a few larger companies as well. And on the back of the strong balance sheet, the well-filled pipeline with high-performing companies and also more boots on the ground now with strength in organization, we expect to keep a high acquisition pace also going forward. Before wrapping up, I would like to once again establish that our diversification, both in terms of segments, geographies and customers is a key success factor for us. especially in more uncertain times. And we can again conclude that the distribution between the segments remains quite stable with only minor changes in the picture here year-on-year. We have seen from a [indiscernible] point of view, of course, variations, but more, I would say, relating to the different niche segments than kind of a macro perspective on the geographies. But all in all, the business situation was stable in Norway, weaker in Sweden and Finland and strong in Denmark. And if we look outside the Nordics, our main markets, Germany and U.K., the business situation was very strong and favorable also in most other markets outside Nordics. European market, all in all, now accounts for around 40%, and we continue year-by-year to increase [ press ] outside the Nordics. Also worth mentioning closing the year is, of course, our corporate culture because besides being highly diversified and strong position in the niches, our unique corporate culture based on entrepreneurship and own responsibility and also, of course, the network centered around sharing best practice and using our Addtech tools and benchmarking, et cetera, is really key for our long-term success. So with flexible and adaptable companies with clear mandates to take operative decisions close to the companies give us the ability to handle challenges and capture opportunities is I something that we have seen the last 25 years since we were listed separately. Also, this is key to attract entrepreneurs who see Addtech as an attractive home when considering the future of the company. And of course, this is the best proof of what I've just said. For more than 2 decades, we have exceeded our target of increasing our EBITDA by more than 15%, as you can see an EBITDA growth of 20% on average. Also worth mentioning is that we have achieved this without any capital injections. It's been organically financed by our own capital, supported by traditional bank facilities. And the key is to combine strong, stable organic growth with excellence in capital allocation in our decentralized acquisition process. Our business model is scalable and I see a very good potential for us to continue this successful journey also ahead. Now summarizing I'm pleased with our performance during the fiscal year, not least given the fact that the global situation remains uncertain. With the high activity and solid order intake, we ended the year strongly, and we can summarize and increased profitability and margins at record-high levels. And also, we have acquired according to plan and with a good pipeline. We entered the new fiscal year with, as I've been saying, high customer activity and with a strong order book, that is somewhat tilted towards the longer book. Global situation is, as we all know, uncertain, and it's unclear how this will impact the market conditions going forward. But our companies are generally optimistic and see opportunities, and we have a strong belief in our ability to continue creating long-term value creation. With that said, let's open up for questions.

[Operator Instructions] The next question comes from [indiscernible] from GS.

Maybe 2 questions to me and then 1 housekeeping one, maybe more for Allan. But just the first 1 on growth and just in energy. Do you mind just talking to sort of visibility to sort of order conversion and especially in H2. I appreciate you mentioned sort of higher quotation activity, but sort of any comments just guiding us to what you've seen in that market would be helpful.

Yes. As I've been saying, I mean, we have had now a couple of really, really strong years. And the underlying demand is very good. When we talk about quotations, we can see that on all markets where we are present, that we have very high quotation backlog. The order intake here on projects has been a little bit slower. We had a little bit uptick in Q3. In the Q4, we had a couple of projects that were postponed due to what I've been saying, I mean, it's a lot of challenges when you have the permit processes, et cetera. So that has been postponed. What we see now going forward, we faced tough comps, especially in the Q1. But all in all, when we are when we -- what we see during the year that we enter into now that we see -- we will have a growth also on the transmission side, but it will be tilted more towards the second half. So that is what we can see in looking at both the order book and the quotations.

Super. That's very helpful. And maybe the second question just on margins sort of the has been quite strong in the quarter, but just through the year, I know there are several things driving that. But do you mind just giving us a sense of like when sort of thinking of margins for 2027, 2028, the buckets that you saw driving margin in 2026? Which of those are likely to sort of be trying -- effectively driving margins in future years?

Yes. I mean, Again, as we've been mentioning, we've seen strong growth development on basically all sites here, and that is broad-based. There are -- as always, I mean, we have a big portfolio of companies, and we have everything in the book. We've been talking about automation for quite some time. That automation should come back to a better level, which we see now in the quarter when we get the effects from sales. The year that have ended now, of course, there are something boosting the margins a little bit. I mean, look at Energy. In Q3, we had a boost on the margin there. But all in all, we have a strong role in 12. So I mean looking into the coming year, as Malin mentioned, we see the rolling 12 as sustainable also going forward. And we always have -- as you mentioned, we've been growing the margin for many, many years. And that is still our ambition. But of course, it will vary a bit between the business areas. But it's a matter of product mix. It's a matter of buying the right companies, adding to the margins. It's about working a lot with pricing initiatives, taking the right projects, not going for volumes, but going for the projects that really generate good margins. So it's a mix of all of these factors.

Okay. That's very helpful. And maybe just a housekeeping one, sort of revaluation was a bit higher this quarter and the year. Just wondering how we should think of that going forward. Was that just due to -- what was driving it higher? And how should we think of that going forward?

Yes. I think I was quite clear. I mean we always have revaluations on -- and it can go both ways, as you know, in the different quarters. And now it was primarily driven by one company in -- a U.K.-based company that we bought a few years back. And so that is what is picking out this quarter.

The next question comes from Max Bacco from [ Seb ].

Niklas. So perhaps starting on a group level, very nice profitability improvement here in the quarter, and you pointed to both strength and product mix, acquisitions, but also a positive effect then from previous restructuring measures. But looking at the report, it seems like the acquisitions, at least on a full year basis, were quite neutral in terms of profitability. So is it possible to quantify how much each component contributed with, if you have any thoughts on that? How much mix, acquisitions and then, of course, the restructuring measures?

I think it's a bit tricky to answer that in detail. I would say that when it comes to the acquisitions, they have contributed with -- well, I think organic -- and I think maybe also you mentioned that, that organically and through the acquisitions, it's more or less half and half. And then, of course, from the upside of these restructuring measures, we can see that it has affected maybe mainly in Automation and then also, of course, Safety. Yes. I think you mentioned it as well. So exactly how much is each component, very hard to say.

Understood. And I respect for that, of course...

Yes. A reminder on -- when you look at the margins in the acquisitions, as you can see them in the report, it's important to remember that, that is the EBIT, the profit margin that you see there. So you have to maybe consider the depreciations and such to make sure to get the margins right on the overall acquisitions.

Yes. Understood. And then the strength and product mix that you point to, would you say that, that is mainly driven by customer behavior? Or is it more due to internal efforts from your side?

Yes, I would say both -- I mean, it's both relating to partly due to segments. I mean, we have good development in a couple of segments with generally higher margins. But I would say that it's primarily due to our internal work. I mean we have a number of companies where we are constantly talking about the fact that we are driven by earnings growth and not volumes. So there are a number of companies where we have strategically decided to quit some business that have had the hampered effect, of course, on the top line, but has increased the margins. So I would say that these kind of activities that we -- a typical [indiscernible] classical way of looking at the business, focusing on where we really earn the money. So nothing new, but we have seen this year, maybe a bit more effect of that.

Okay. Understood. And yes, it sounds very familiar. And then turning to the Industry segment and as you mentioned and as Slide 4 before, continued weakness in the sawmill exposure. But despite that, very satisfying profitability. What's your thinking on profitability going ahead, given that the sawmill weakness seems to continue in the coming quarters as well, at least?

Yes, I mean, of course, we are taking actions in some of the companies that are focusing on the sawmill market since it is a slower market. So we are doing some activities to protect our margins. Maybe we will do even more there. I mean we -- again, as I've said many times, during the year, we have really strong quotation backlog here. And there are a few projects coming out. But of course, we are waiting for it to really come back. So we do, of course, actions to protect the margins. But of course, going ahead, we have had good margins in the sawmill product. We saw that in this in this quarter as well, the products we finalized strong margins. So looking ahead, until this market comes back, of course, it will be difficult for [ Industry ] to keep up this really high level of margins. We don't see any drastic changes here. We will be able to protect the margin in a good way anyway because we have good development, both from acquisitions but also in other higher-profit areas, So some effect on the margins have until that market comes back, but no dramatic changes.

Okay. Understood. And then the final question. I mean it seems like that those markets that are [ currently ] is struggling a bit more is more of a CapEx nature at least, that's the exposure you have towards those customers. Is it possible on a group level to quantify -- I guess, a bit trickier once again. But how much of Addtech's total sales is linked to CapEx decisions among customers?

Yes. I mean that's really difficult. It's something that doesn't really measure that. And it's difficult to say because also, I mean, where do you draw the line? We have a lot of product-related business. So actually, it's not possible to say. I mean it's primarily, I would say, the process business area where we have the highest exposure on that. And so in Process, it's a quite large part of that business that are affected by that. So I think that's -- yes, it's difficult to give any clear figures

The next question comes from Karl Bokvist from ABG Sundal Collier.

My first one was more of a clarification. Niklas, regarding something you said at the beginning regarding backlog or orders. Was that just referring to the Energy division or for Addtech as a group?

It's actually something we can see in more business areas than -- it is in Energy, but it's also in in some of the other business areas. So looking at the order backlog in the short period, so the coming quarter is more kind of stable. But we have -- we see more tilted backlog in, let's say, yes, 3 to 6 to 9 months. So it's a bit more longer projects, and that is in -- yes, in a number of areas. It's both in defense, it's in telecom, it's in energy sector. So it's a little bit broad-based.

Understood. And then just when looking at where you disclose the figures, at least [ forest ] and Process sales are up 12% year-over-year. And I understand comments regarding the sawmill business, and that's not something it's not anything new, we've heard it before. But I was just curious if you think that is it the process part of the forest in process that is driving the growth here? Or are there other areas in what you define as forest related that maybe could help in compensating for the sawmill project activity?

No, it is -- I mean, all in all, if we look at the year, the kind of forest side of -- forest and process has declined the year and primarily due to sawmill business. But generally, that has declined. So the growth comes from the process industry side. And also here, we have quite a lot of acquisition effects in those figures as well.

All right. And my final one is just think we've talked about this before, but now we've seen a couple of quarters where operating margins are up and the gross margins are up even more than that. I know that we have talked about the kind of -- there can be differences in which line item you allocate the cost too. But is there anything else in terms of how we should think about the future expansion or if it will come from gross margins or if it's going to be from OpEx efficiency or a combination of the two?

A combination of the two, I would say. I mean, of course, it's very important with increasing the gross margins and to continue actively working with pricing. But then again, OpEx efficiency is, of course, also very important, especially in some of the companies. But -- so I would say a mix of the two, definitely. Yes, .

The next question comes from Zeno England Richie from Handelsbanken.

Also starting with just a clarification from me on the order intake, you said on Energy. When you say second half of the year, you mean the fiscal year, right, and not the calendar year?

Yes, exactly.

Clear. And then a question on the margin. As you say now and said before that the good starting point is the rolling 12. But when we're looking at Automation and Safety you've got then what looks like a successful restructuring measures through. So I'm just thinking about the margin that we're seeing now in these two segments, would you say that they are what they are now more representative of what the current underlying structure is, given the demand? Or were either of them seeing maybe a bit more positive things in the quarter?

Yes. I mean if you look at Automation, of course, the rolling 12 margin is too low. For sure, I think it's 11.5 or something like that rolling 12. So that's, of course, too low. So rather look a little bit of where we are at this point rather than looking at the rolling 12. In Safety, yes, maybe somewhere in between, if I put it that way. It was really a very strong margin in Q4 in rolling 12, maybe a bit on the lower side. So on both of these business areas, we've seen the sequential improvement, thanks to the restructuring measures.

The next question comes from Johan Lanciundian from DNB Carnegie.

First question from my side is going back to the gross margin development. And you have talked about it throughout the call, just another clarification. We saw similar patterns with boosted margins due to high gross margin in the Energy segment in Q3. Then you said that it may be a little bit ice into a specific quarter. How much of the kind of strength in this quarter should we be there to extrapolate going forward, with this also another kind of isolated effect in Q4?

I don't think we have any sort of one-off effects in Q4 as we saw, especially in Energy, as you mentioned in Q3. I would say that even looking at the gross margins, we are believing they should be sustainable going forward as well, actually, even though -- yes, I mean, of course, always better to look at the full year than look at a single quarter. But the improvement over time is sustainable, I would say.

That's very clear. And just thinking about the kind of turbulence you've seen on the political scene throughout the spring and potential or accelerating inflation coming through the value chain, have you witnessed any kind of preordering activity? Have you seen -- start to do some kind of early price hikes to kind of offset the potential raw material inflation coming through your kind of own value chain towards the summer and the fall?

Yes. I mean, of course, these effects as we talk about, increased prices on raw materials, aluminum, plastic, et cetera. These are things that will, of course, affect our value chain as well. Talking about preordering, I mean we have a couple of companies in the group that have mentioned that, that they might have seen some effect of that. But all in all, we don't see that in the quarter that we were in now that, that has had any significant effect on the group as a whole. And when it comes about pricing, as always, we have everything in the group. We have a number of companies that have taken efforts that maybe have given them a little bit boost now being very proactive. On the other side, we have some of our companies that are -- have had some price increase, but are stuck in fixed prices that they are not able to change their prices until, for instance, first of July. So we have, again, everything in the book. So our conclusion is that seen as a total, we don't see that we have had any significant effect.

And looking forward the next 2, 3 quarters, any bias to the positive or negative side on these elements regarding preordering or kind of inflation versus [ try ] tax?

You mean if we foresee and the negative effects of that?

Yes or if you see that as a potential positive effect that the preordering element -- inventory levels are more client is low and they are building up inventory that could boost your demand, et cetera?

I would say it's it's so unclear right now what will happen. I mean if -- whatever decisions that are made in the White House, et cetera, I mean, of course, that is affecting day by day. It's it's difficult to say. I mean we have the year against the ground here, of course. And we follow what happens on raw material prices, et cetera, and all of our companies are taking active measures. But it's very difficult to say now what effect it will have.

I think some of our companies will absolutely have increased order intake from customers wanting to make sure that they will have products going forward. But I think for the time being, it's not significant for -- on group level at all, even though it's there.

Makes sense. Then one question on Energy and one on Process. Starting with Energy. You mentioned the kind of quotation profile for the next fiscal year and talk about maybe a back-end loaded year. How kind of -- how big shifts should we anticipate during the year is the kind of exit rate from your fiscal Q4 represents the number for what to expect in starting next fiscal year and then it's gradually kind of accelerating? Or should you be back at, say, flattish organic growth in the Energy segment already in Q1?

No, I think what I've been saying now during the call is that, I mean, we have had a lower order intake for some time here. And again, I always point out, we have to see this market from a longer perspective. But at this point, we see a lower order intake for the shorter term, and we have really tough comps in Q1 on the transmission side. That's -- I think that I'll stop there.

I appreciate that comment. And on Process, just a more kind of color on your comment regarding the greater hesitation among your clients. will -- do you think it will be possible to grow organically in H1 in the upcoming fiscal year, given what you see in your client dialogues?

I would say, again, it's really difficult to say because we have such a broad-based mix here. I mean, we have -- again, we have part of process is relating to this, and we can see we have a strong order book of projects that has been postponed going into the new year. We saw in the beginning of the fourth quarter, we had a little feeling that it opened up a little bit. I think I mentioned that also in the Q3 report presentation. But then it -- we have the feeling that the customers took a step back again. So it could be so we could have a good uptick here. But it's really, really difficult to say. Also, what happens with the other part of process, the underlying business would that be able to mitigate if this hesitation continues. So yes, it's difficult to say actually.

But if you put the question this way, we are end of May now 2 months into your have the hesitation remained in April and May? Or has the opening up element that you saw in beginning of Q4 come now in April, May?

No, I would say no significant change.

That's clear. Just a final question on Energy, if I may. We're seeing a lot -- I acknowledge your comment on bottlenecks, et cetera. But we're seeing most players in the kind of transmission values in talking of very strong demand. And we are not seeing that for you. should we -- were there some element of market share losses that is tracking in here?

No. We don't see that at all, actually. That's not what we talk about here. And I think maybe I'm not sure which companies you refer to when you say that other companies don't see the bottlenecks, but strong demand. Maybe it's relating to where you are in the project, what kind of products you deliver in the project. I mean we are quite early in the project and what we talk about here is the transmission, so quite big projects, high medium voltage projects. And so maybe that is part of the explanation. I mean when we talk about building installation, we can see on the other or at the same time, some positive signals from some other players on the building installation sector, we are a bit later in those projects. So if we don't see any positive development yet in our order intake, that might be because we are a bit later on. So maybe that's part of the explanation. But it's not that we lose market share.

And geographically, if the kind of bottleneck situation widespread in various geographies as you are present in quite a few markets in Europe? Or is it one single market that is worse than any other?

It differs from market to market, but it's mostly clear in Sweden.

The next question comes from [ Victor Force ] from SB1 Market.

Thank you for taking my questions. Just 2 for me, please. So on the book-to-bill at the group level in Q3, I think you said that out of 6 segments had a positive book-to-bill. And I think you said plus that it was well above 1. Just wondering if you could give us some more commentary on the sort of breadth you're seeing here in Q4.

Yes. Yes, is still broad-based, I would say, if you look over the different business areas. -- and it's also again clearly above 1 in -- but again, as I mentioned, it's a bit more tilted on the longer order book. So in a number of the business areas, we have some project order intake that is rather filtered to the end of the year. But it's all in all, it is broad-based towards -- or over the business areas.

Makes sense. And just a follow-up on that. Are the longer projects sort of are they what you say. I mean do you see longer lead times in the shorter project as well throughout the group? Or are the longer project just longer projects and have always been, if you understand what I mean?

I'm not sure I heard your whole question. But when we talk -- we don't see any kind of changes in the behavior or in the kind of I mean if it's longer, if your question if it relates to longer lead times in the value chain and things like that, I mean there are a number of components and products like some electrical components, for instance, with a little bit longer lead times. But all in all, looking at Asias a group, it's nothing that affects kind of the shorter business. This is what we talk about here, it is projects that merely have longer lead times. It's about delivering further on. So it's more relating to the type of projects. yes, if that answers your question.

Yes, it did. And then just a final question on a follow-up on mix. So on the segments that benefited from the positive mix here in this quarter, do you see I'm...

I'm sorry, I don't know if you have a bad line, but it's very difficult to hear. try like this instead. Is it better now? So do you hear me now? No, it's still very vague.. Let's see. A follow-up on the mix. So on the segments that benefited from the positive mix in this quarter. I'm really sorry, but right now, we can't hear you at all.

Maybe it's your ear phone or if it's on our side. I don't know.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. .

Yes. Okay. So we lost you there in the end. You can call us up after the meeting and ask your questions, Ian. We don't have any written questions. Do we No. So with that said, thank you very much for listening in, and have a good day. .

Thank you. .