FLSmidth & Co. A/S (FLS) Earnings Call Transcript & Summary

I would like to welcome you all to FLSmidth [Audio Gap] As a summary, we are posting record profitability in FLSmidth for a long time. It has been a good year despite weak market conditions. And as we promised before, there's no compromise on quality of earnings, no compromise on quality of the order intake. Some of the highlights of the year and the quarter. We highlighted to you all earlier in the year and in the meetings that we have a few areas of focus for growing the business. HPGR, we have a record year in cementing our market-leading position with regard to that technology. We are advancing well with the service contracts and service of the HPGR fleet around the world. Second focus area has been pumps. And in pumps, we have increased market share globally through the conversions. Third focus area, mill liners. Again, mill liner has been fast-growing product in our portfolio. So that is a little bit behind the order intake numbers, annual level, 2% growth, strong quarter, but quarters are different, and therefore, it's best to look at the average of 4 quarters. [Audio Gap] and technology orders that we won. We continued improving our profitability and are posting record profitability in many areas. In Cement business, we are in the middle of the sale process, and we are happy with the order intake for services continue to progress in all our science-based targets. We're also winding down the Non-core activities and discontinue reporting that segment going forward. And that is well ahead of the original plan of winding down in 3 years. We are 1 year ahead of the schedule. If I pick up one area from sustainability, which is most important to me and to our customers, it is safety. We are not yet meeting the targets what we have for safety, but [Audio Gap] improved between '23 and '24. There has been improvement, but that continues to be our focus area going forward. And that is the most important KPI on this chart for me and to our customers. A strong quarter for the order intake in Services. We noted in the last quarter that the quarter 3 this year was slightly weaker. But then of the 4 quarters for the year, we are at the level we planned in the beginning of the year. Very happy with service order intake. Products, we continue to win critical product orders that we want to win, especially in the HPGR space. That has been a big success for the year. If you look at the order intake for the last quarter, just shy of DKK 4 billion, for me, that is a good level. And also mix, it's important to highlight that if you look ahead, mix between service and products, 73%. Optimal for us will be 65% to 70%, but that, of course, depends on [indiscernible] of the capital market. Important that we are back on track in service revenue. A couple of quarters that we are behind. And now the revenue for the DKK 2.8 billion is at a good level. So we are happy with that one. And then product revenues, deliveries reflect basically the backlog and timing of the backlog. But I'm especially happy about the service revenues in this space. Adjusted EBITA margin of 14% for quarter 4. That's for the organization and for myself, it's a tremendous result. Very happy about that one. And then if you look at underneath reported margin [Audio Gap] about 4 percentage points. You don't often see that fast improvement in profitability result. And it's reflecting transition that we do in the company. It is like a train, continuous nice, steady, continuous improvement. We've done it so far and continue to do. A few highlights for Cement. We are in middle of sale process, but the number that you need to look at, which is important for cement is service order intake. DKK 650 million, DKK 700 million anywhere, thereabouts, we are happy. Then it shows that its year-on-year like-for-like, small growth or steady service business with a good profitability. At the same time, we've done portfolio choices for cement that we don't take projects. We focus on service and products reflective in the revenues. So the revenues of the products are going down quite fast, by choice. We don't want to do loss-making bad business in cement. It is good and also mix is getting better. It's 66% service, but it continues to improve going forward. And as I said, service is a key number here to look at both in orders and revenues because of the sale process. I'm also happy to report that Cement has met the long-term EBITA target that we announced in the Capital Market Day, and we are there quite early. And there was a little bit lack of [Audio Gap] of the capital market that we could never reach [Audio Gap] EBITA in cement and now we've done it in 2 years. Also one area we're extremely proud is that we [Audio Gap] record time. It has been internally and externally painful process, but now we are [Audio Gap] and we are moving the remaining tiny backlog to the mining products, Mining capital business. We have a few people remaining just dealing with the backlog-related matters. It's fully provided for. But for all intents and purposes, we are closing down the segment. And that is, I would say, a big achievement from the organization. Then I have the numbers.

Thank you for that, Mikko. So having a look at the quarter's consolidated financial performance, a revenue of DKK 5.3 billion with a gross profit margin of 30%, SG&A of a bit more than DKK 1 billion and an adjusted EBITA margin of 12% and after tax and financial costs, a profit and loss for the group of DKK 360 million. If we have a look at the gross margin, I think I'll just spend 2 minutes explaining a reclassification we have done. So we have decided to reclassify IT-related costs from SG&A to gross profit. And the reason why we're doing it is that it follows typically the staff related -- it's staff-related IT costs means that we get swings in the SG&A [indiscernible] move in and out of the P&L. And secondly, it belongs more rightfully on the production cost. The way we have done it, we have reclassified 2023 DKK 127 million of IT costs from SG&A to profit, and we have put it all in Q4 2023. So that's negatively impacted by this reclassification. Similarly, we have reclassified DKK 127 million for the year 2024, and we have put it all in Q4 2024, so negatively impacting gross margin in Q4. It's a pure incidence that it's DKK 127 million for both years. So if you look at the gross, it's basically like-for-like that the gross profit from Q4 last year to Q4 this year is increasing significantly. And gross profit is increasing both in Mining and Cement and even NCA had positive gross profit this time as we're closing out the last business pieces before virtually shutting that segment down. And that moves us to SG&A, where we have the same reclassification. This is obviously negatively impacting this sorry, positively impacting this one as costs are taken out and moved to production cost. And hereafter, we have DKK 1.085 billion in Q4 '24. DKK 51 million of those are correlation and separation costs. And then we have restructuring provisions in that quarter also predominantly severance in both Mining and Cement, DKK 200 million. Group EBITA, as Mikko also went over, we also moved forward to an adjusted EBITA of DKK 12.1% and reported group EBITA margin of 11.1%. And on the right-hand side, our traditional margin bridge. So taking integration costs out from last year brings us to an adjusted group of 9.2%. Then we have less revenue now in NCA out and capital revenue down in Mining and a bit also in Cement. Gross significantly improved and then negative flow in SG&A and others leaves group EBITA margin of 12.1% transformation and separation cost of 1%, and that gives us a group EBITA margin of Q4 of 11.1%. Slightly better in Q4 than Q3, predominantly driven by significant trade receivables collections and then a few other bits and pieces moving work in progress and offset by trade payables increase. If we then look at the combined cash flow, that gives us a CFFO of DKK 621 million for the quarter and deducting CFFI including acquisitions and leaves us with a free cash flow for the quarter of DKK 422 million. Then we spend on reducing our debt, and that means that we come up with a leverage ratio of 0.4x and NIBD of DKK 847 mill. Then we are ready with the new full year guidance for the year 2025, and we expect Mining to deliver a revenue of DKK 15 billion plus/minus and an adjusted EBITA margin of 13.5% to 14%. And we'll be calling out one-off cost to transformation and separation of about DKK 200 million as one-off cost for the full year 2025. In Cement, we will be guiding revenue of about DKK 4 billion and an adjusted EBITA margin of 9% to 9.5% and DKK 50 million for transformation and separation costs and adding that up, the Group will deliver revenue of DKK 19 billion and an adjusted EBITA margin of 12.5% to 13% and a reported EBITA margin of 11% to 11.5%. Our transformation work streams are progressing quite well. We still have some simplification to do and the operating model also needs to fall in place during the course of 2025, moving predominantly support functions to global business service centers and a few other adjustments. We will continue to follow that closely. Commercial investments and is basically done. It's not like we won't do it anymore. We're working on it as a strategic initiative. This is now fully ingrained as part of doing business with FLSmidth. And similarly, for Cement risk management and de-risking is fully implemented and also the is roughly done. So we will stop reporting on. And that means that this follow-up side here will be a bit simpler as we move forward. NCA is virtually done and will exit the P&L as from '25 onwards most likely. And there back to Mikko.

Just highlighting some of the key priorities for 2025. Just as a reminder on the map we launched in the Capital Market Day, where we defined the core stream the portfolio volume and so forth. [Audio Gap] last year of major transformation. Of course, every transformation in a bit pushing forward. But often the most of the big-ticket items are done this year completed, and therefore, we are creating foundation for and why do I say foundation? As I said, we make no compromises on order intake quality and quality of the earnings. So there will be no nasties when the growth comes up, comes back from the backlog. So we want to have a clean, good backlog to execute when the market is back. So the focus areas today is that we see lots of volatility in the supply chain, and we still can improve the supply chain a lot markets. And of course, geopolitics is creating new dynamics for that market. And sometimes there are also opportunities advantage of in this instance. So we continue to optimize supply chain, logistics for improved efficiency and reliability. We are also looking to expand our market presence. We still have a few white spots in the market that we don't cover well enough, and then we will be driving sales excellence. During 2025, we will have new initiatives, how we deepen customer intimacy and create stronger relationships. We will have some ideas that we believe that nobody else is doing in the market that we can take customers business planning, customers operations typically is done. So we are launching those initiatives. And we continue to drive product innovation and first market references. And that's why, for example, the one in India for the Lloyds was particularly important because that is the biggest, largest modern HPGR in the market. And then is setting us apart from anybody else in the market. So we are by far the largest player in HPGR market. And at the same time, we have the largest ones that will be in operation in India. We continue to transform the company, OneMining, which is simple business, simplifying operations at principal company model. And we talked earlier about new [Audio Gap] means that we will have a lean and mean head office model and resources are close to customers, part of the business lines and regions or then in setup in our global business in Mexico, Romania and India. And that will generate us efficiency, not only cost savings, but efficiency and scalability when the market will come back. And we are, of course, middle of the disposal of the cement asset. And then we go to the Q&A.

[Operator Instructions] First question is from Kristian Torne, SEB.

A couple of questions from my side. So maybe just first of all, on your market view, has anything changed? I recall, Mikko, you've said that you sort of hope mining product orders could start to pick up towards the end of the year into the beginning of next year.

My view is we discussed last time, the level of activity low. So we see no improvement in '25. So it's at historically very low level. But we are hoping the pickup in '26. And we referred to the activity in EPCMS regarding study work. But we don't see those activities turning into projects in '25. So of course, there is activity in '25, but it's going to be another slow year for capital business. Service is stable but there's a price pressure around capital and service. Heavy capital equipment, we will see deflation in absolute prices means that when we are getting savings in procurement, will be handed over to the customer in form of the price reduction. So we've seen deflation in heavy capital equipment in '24. And I think we continue to see that the capital equipment prices are going down in absolute terms, which are then compensated by the procurement savings.

Understood. Second question is on the transformation and separation costs of DKK 200 million you expect for mining in 2025. Can you maybe just elaborate exactly what this goes to? And more specifically, do you expect of such cost in 2026 as well?

Yes. So thank you, Christian. There will be cost a few sites we have the legal entities and so on. We're not 100% carve-out of Cement and also from certain of our countries to global business centers will require transformational cost in nature. OneMining, there will be cost that we will capitalize and there will be a part of this one-off that also goes to that. And there will also be some in 2026, whether we call it out or not, that we have not decided yet. But even if we call it out, we are still having our long-term target of 13% to 15% as a reported EBITA number.

Understood. If I may, just the very last one here. On this reclassification of the IT, why do you do the reclassification in thinking ahead when we get the Q1 numbers, will we then [Audio Gap] SG&A for Mining where it's reclassified for '25 and not reclassified in Q1?

Do like-for-like from Q1 and onwards. When you do a reclassification, there's also some audit requirements. I cannot just do a quarter of it and then reopen historical quarters. So we had to do it the way we did it. And I appreciate it's not super pretty. But from Q1, we will make sure we do like-for-like comparisons. And for your forward-looking analytics and so on, you just use the DKK 127 million divided by 4 per quarter. That will be reflective.

Next question is from Claus Almer, Nordea.

Yes. Also a few questions. But first of all, congratulations with a very strong performance in '24 and not least in Q4. You mentioned this divestment of Cement that you wouldn't give a lot of color. But could you possible say a little bit about timing? Is it first half? Is it second half? Is it dragging out? That would be very helpful if you could give some more details. That will be the first one.

Thank you for that, Claus. So as Mikko says, the cement process, we're in the middle of selling the cement. We're in the middle of the process. And I think politely, we will say that we don't have any more comments to that for now. So as soon we will disclose it to the stock exchange.

Fair enough. Hopefully, you're not in the middle, but in the end of the process.

Hopefully, exactly. Important to say we will sell the Cement business. So it's still intention to sell the Cement business.

Perfect. And going to the Mining, to what degree have you included an impact from the added salespeople and also the investments in service announced yesterday?

So in the guidance, it's fully included.

So what have you included? Is there an impact?

Impact have been included. These service centers are not that heavy on manpower. We started service centers up in '24 once we announced yesterday is sort of a continuation. These are not huge factories with hundreds and hundreds of employees, but running cost in 2025.

Where Claus, we've been adding people is Pumps, Cyclones, and Valves business, and we see the payback from that investment in '24. So we are increasing our share in pumps. And how we measure the market share is that conversions, how many competitors we are converting out and what's the kind of competition balance. So we see actually that investment front end is paying off.

I was also more thinking about the revenue impact. I know there will be some costs, but do you also see a revenue impact already in 2025? That was actually the question.

We see some, that's not a lot. That will come gradually.

And then just my final question, cash flow and cash flow, but in past calls, you have given some color to what we should expect. And given the cash flow should be pretty solid. So could you give a bit help on what we should expect for '25?

Yes. So we expect to improve '25 over '24, but you should not expect it to come higher than DKK 1 billion.

Next question is from William Mackie, Kepler Cheuvreux.

First question relates to mining service conceptual. But when we think about your products, you've called out your focus on building pumps and valves and GP capture rates. But how would you describe your capture rates across the service business to the installed base? And what is the opportunity across some of those categories? I'll follow up with the second one.

So the highest in our pumps business because we have a design in the pumps, which is a little bit more difficult to copy. So it's extremely high in pumps. So oversimplifying, if we get the pump in, we get the aftermarket or service as a result. In HPGR, it has been improving. Thyssenkrupp before our acquisition lost some business to third parties. And we've been gradually steadily, gradually we've signed kind of long-term HPGR service contracts in quarter 4, for example, with an important customer and it's still too low, but we see significant recovery in HPGR aftermarket. But of course, we have a good success in the equipment sales as well. So that continues to be one of our focus areas.

Staying with mining, the second question relates to the OE business. You talked about a rising level of project preparation activity. Maybe you could speak to which parts of the world are beginning to see a pickup around perhaps critical mineral strategy. And then more specifically, you called out deflation in heavy capital equipment. I mean why something to do with an increased competitive tension? Or is there a separate factor?

We see the pickup first will be in the copper and expanding existing operation. We see very little greenfield activity. And of course, greenfield is dependent on licensing. And we don't know yet what's going to happen in U.S., but it's -- the area which will pick up soon is this copper expansions, South America and then a few important copper assets elsewhere. So that's where we see the quickest recovery. Of course, gold record high. But of course, when the price is super high, then all the gold producers don't want to interrupt. They just want to get everything out what they can as long as it's $2,900 or so. But copper, South America will be first one to pick up and then others will follow later. [Audio Gap] has been good or it was okay last year, but we've seen some pickup in the beginning of the year. And of course, if that continues throughout the year, that should kind of support the sentiment to kind of release some of the work or turn studies into projects. And deflation, it has to do with the -- when I talk about capital, when I talk about heavy capital with the large castings, material cost is very significant. So we've seen competition in the market. And in order to kind of compete successfully different sources, developing new suppliers. So, as a result, the market has seen reduction in heavy capital equipment prices, but we've been able to compensate that in our savings in our procurement. But of course, in the [indiscernible], it goes fully to the customer instead of us making higher margins. So we see margins kind of stable, small downside in heavy capital equipment, but the absolute prices, there's a deflation in the market.

Thank you very much Mikko. The final one, in this fast-changing world with regard to tariffs, I just wonder if you can speak to how the operational structure of the company cross-border flows, particularly in North America or the U.S.A., and what you are exposed to in the event that some of these worst-case scenarios unfold.

We run the U.S. and I think if I look at mining supply market, I think our position is quite good because we do have a significant operations inside United States options for components from other markets. So it's a very dynamic market. Nobody knows what's going to happen in 1 weeks of time, but we've done all the analytics where we source components and products from and we have alternatives. So I think -- and also that we have a significant manufacturing operation inside the U.S. for [Audio Gap] we have operation of mill liners inside the United States. So we do have actually operations therefore everybody will be impacted, but I think in relative terms, we should be quite okay. And of course, in kind of where the product lines are also focused, most of our product lines are based in Salt Lake City, United States. So we're actually quite U.S.-centric in our mining operations.

Next question is from Chitrita Sinha, JPMorgan.

My first one is on the mining OE side, just on the base equipment level. Previously, I think it was said that about DKK 500 million to DKK 800 million, but obviously, in Q4, it was slightly better than this. So with the commentary that you've given for 2025, what kind of run rate should we expect for base OE levels?

We're maintaining what we said also for '24. So base level, DKK 500 million to DKK 800 million and then our bigger orders come when they come, that's a bit more erratic.

Okay. And my second question is on provisions. I know this time last year, you were guiding to provisions coming down both on the restructuring side and then the other basket. How should we model this going forward into 2025 from here?

Yes. So I think warranty is a relatively stable thing, right? Some slides out, some comes in. On restructuring, obviously, we have taken restructuring in Q4, and they should be expected to turn to cash 12 months or so. These are predominantly severance charges, both in Cement, but predominantly also in Mining. So they will turn [indiscernible], that should go to zero. So when we stop restructuring, that would be a zero thing. Then the other bucket, that is things from the NCA, things from -- we inherited from TK and so on. And some of that will have to be reduced over the next 2 to 3 years. And what we said earlier said that, that should be cut in half, and that will still be my best guess over the next 2 to 3 years. That's a hard one to predict because when we do the settlements on individual projects, there's a few legal cases as well as bits and pieces and that we solve as we go. There hasn't been flow this year, surprisingly, actually. So I think over the next couple of years, we will probably expect...

Next question from Lars Topholm, Carnegie Investment Bank.

Also congrats with a solid quarter, very well done. I have a couple of questions. Firstly, I'm trying to figure out the underlying run rate of OpEx in mining. And of course, I understand now you took DKK 721 million as OpEx in Q4. And then I add the DKK 110 million and deduct DKK 28 million, [indiscernible] we say, a number where reclassification of cost is sort of probably annualized. So that's a run rate of DKK 800 million. But then as you say, there has been significant provisions in Q4 that you have charged. I just want to specify the level of provisions in mining in Q4 so we can get the underlying cost run rate. That was question number one.

Yes. So we're doing the DKK 200 million in Q4 on group level, right? And the majority of that is mining. There's not an exact number for that, but the majority of that is mining. And I think it's a difficult one to break, I understand what you want to do, Lars. So we have provided a lot of severance that means that over the next 3 to 6 months. So expectedly SG&A will start to come down Q-by-Q [Audio Gap] other hand, Q4 is a little bit of a seasonal low SG&A bonuses and other stuff comes out in Q1 and a bit also in Q2. So that will be slightly [Audio Gap] All in all, run rate will start to come [Audio Gap] course of 2025. That's what I'm going to give you, right? And also, we are guiding towards the long-term targets next year. We're also guiding on the gross profit, and that means that residual that I think you call OpEx will lead you to 13% to 15% reported.

And also that when cement is out, I think we have a better visibility for stranded cost as well because we simply a buyer, then we have service level agreements and they cover part of the cost. So we don't have the exact number for the stranded cost at the point of semi departure yet.

But what I'm trying to [Audio Gap] DKK 15 billion in revenue with a 32% gross margin, let's say, that's a gross profit of DKK 4.8 billion. You guide an adjusted EBITDA of DKK 2 billion to DKK 2.1 billion sort of in round numbers. And that means your cost run rate should be around DKK 700 million. But if you have significant provisions in 2024 and don't have significant provisions in '25, doesn't that actually imply decrease in 2025 or where -- are my calculations wrong?

No, I think that the way you should [Audio Gap] we will come in and maybe have a high Q1 and then it will start to drop over the course of the year. That's how you should think about it. The guidance is not too low, if that was the question.

Okay. Yes. Then a separate question on your net working capital and your capital employed. So on group level, you have 10.4% in net working capital. I wonder if you can give the stand-alone number for mining. And also you have DKK 17.8 billion in capital employed. I wonder also that is mining?

By far, the most -- I'm not exact number because we are in the middle of carving out and bits and pieces can change. But by far, most of the working capital, most of it is mining by far. And precise numbers, Lars, but we are not ready to give that until in a month or 2...

This is a fine answer. Thank you. That was actually all I had. Again, congrats with the solid Q4.

Next question is from Tore Fangmann, Bank of America.

My first question would be on -- could you just specify a bit more what has been the big driver of the margin improvements in Q4 and especially the driver in the gross margin improvement? And just going forward, how sustainable is it? And then how much of SG&A savings we actually can expect going into '25 and '26? Thank you.

I'll start by commenting the kind of product margins. We see them remaining stable in service. Even though it's the stable and unstable market, we expect that to remain at this level what we have. And then in the capital business, heavy capital equipment, occasionally, we see small downside, small reduction in order intake margins, but we've been able to compensate that mainly with the program and savings. So starting really from the top, which is order intake, product margin, that being stable in the kind of coming year kind of change one way or the other there. And I think, Roland, you can go further down in the kind of line items.

Yes. So I understand the question and we're a little bit positively impacted, of course, by positive split service compared to our OE business. And I think going forward, what we're saying is that our gross profit will be between 31% and 33%, and that you can count on for '25 and also into '26. And then we are guiding our EBITA of 13.5% to 14%. I understand you want the run rate on SG&A being specific on that, that also Lars was asking about, but that adds up to our EBITA guidance. And eventually, we will deliver targets, which is 13% to 15% reported next year.

Okay. And I would have just one follow-up question on the pricing comment around the made. To me, at least this was news that we see negative pricing in mining right now. When has this started? And do you see the same? Like is it for every competitor basically? Or is it just something that currently you do to win more orders?

I think what we see, of course, is that because it's so slow the capital market and of course, the few ones which are moving, the case is, of course, customers are taking advantage of the kind of everybody fighting. And that competitive has, I think, are pushing down the prices. And I may talk about the heavy capital equipment because it means that the big stuff, I think lot of steel and sort of things. But then at the same time, of course, we are looking at savings procurement cost around the world. So -- but in absolute terms -- so it has been going on now maybe for 6 months, 9 months and then also -- and we expect to continue still throughout the year because it's a bit -- the market is quite weak. But it's more the -- it's a little bit of the cost game in product cost that you need to find new source of supply, develop suppliers, sub-suppliers and get better costing. But it's -- but prices are going down. And -- but also at the same time, we've been focusing on high-quality orders. So we are not go after the -- because earlier, there was when we started transformation does -- can hold your nerve when the market is quiet and take material handling business in, which is extremely low margin and high risk. So we are true to our commitment for earnings. So we are selective. We are picking up the auto win and also that -- which has significant return through the aftermarket. But it's -- there's deflation in heavy capital equipment for the last, I would say, 9 months.

Next question is from Christian Hinderaker, Goldman Sachs. Please go ahead.

I want to start on the SG&A cost, if I may, DKK 4.2 billion for the year, DKK 3 billion in 2023. But then you've reduced the number at the firm quite significantly, down around 1,600 people or 17.5% of the count. I appreciate you've got slightly lower revenues and how it is that SG&A costs are only down modestly relative to that shift in headcount. Maybe we can start there.

Yes. Thank you for that, Christian. So '24 have been, again, a restructuring year, right, where we have made people redundant to a large extent. We have also been closing down sites and offices moved to bigger sites, but fewer of them. And that has an underlying -- that has an employee or some of the employees that we reduced are blue-collar workers that's among others, why we have SG&A here, so that part follows the blue collar on the production cost. And lastly, we've also outsourced a bit, and that is pulling down the headcount, but not necessarily cost in the outset. Sourcing only came -- come over the course of the years as we progress both on IT, on finance and other operational back office support. So that's why we don't see SG&A come down significantly yet coming out of 2024.

And maybe a bit of a niche one here, but can you give us a bit more colour on the deferred tax asset that you've got in Note 4.3, it's 2.1 million incurred on a net basis. That's about 10.5% the tax you paid last year. I just want to think about how we can think about the potential release of that could have on future profitability?

Yes. So the tax assets predominantly sit in Denmark. So we have tax assets in US, a bit in Chile and a bit in a few other countries. So the faster we move our principal company model to the right structure where most of the handling and the substance and the decisions are made in Denmark, we will make use of that tax asset. And that's how we're going to get to a more normalized effective tax rate as we progress beyond 2026. I think we are releasing -- or I don't think I know we're releasing a tax [indiscernible]

Thank you. Maybe just a quick final one. I don't know if you've given a number there in terms of -- we talked about the potential SG&A implications -- sorry, cost implications in the round. Do you have an indication of what the CapEx spend might be, what time frame?

That's not going to be a lot. That's going to be less -- am I going to say a number here, less than DKK 30 million. That's not a lot over the next 18 months or so.

And we also -- some of the service centres, we are building it up over the time so that we start a little bit with the more asset-light and then we are building as the business coming in. So it's not a massive number, but it's more the presence and then as the business is growing in those service centres, and we are also adding more type of equipment in the shops.

I think things already started, right? So some of the CapEx sits already then we hit the ground running over '25.

This concludes our question-and-answer session. I would like to turn the conference back over to the speakers for any closing remarks.

So I'd like to thank you for your time. And as I said in the beginning, we feel that this has been a good year for FLS in a kind of weak market. And of course, the whole idea is that, as I said earlier, that we return to growth in the coming years, but it is still creating foundations for the future growth and then back, we are ready for that market. And then we have a quite scalable SG&A, quite scalable with our new operational model. So we are able to take full market recovery. So we are optimistic about the future and happy about '24. And as I said earlier, using a train, we hope to be like a train that we continuously kind of continue our kind of profitability journey and performance improvement with no nasty surprises. And that's why we are extremely focused on quality of the order intake, quality of the backlog, not having any nasties coming up later. Thank you very much for your time.