Metso Oyj (METSO) Earnings Call Transcript & Summary

Good afternoon, and good morning, everybody. This is Juha from Metso Outotec's Investor Relations, and I want to welcome you all to this conference call where we discuss Metso Outotec's Fourth Quarter and Full year 2020 Results. Results will be presented by our President and CEO Pekka Vauramo; and CFO, Eeva Sipilä. After the presentation, we'll have the Q&A session. In this presentation slide deck, we have provided, first of all, forward-looking statements in Slide #2. And following that, Slide #3, talks about this financial information, meaning that we have several set of numbers, and this works as a kind of a reading instruction into those different numbers that you will find in our report and presentation. We'll try to limit this conference call to 60 minutes in total. So please keep that in mind. And with these opening remarks, I'll be handing over to President and CEO, Pekka Vauramo. Pekka, please go ahead.

Thank you, Juha. Welcome to this call. Yes, let's move on right away to short comments on fourth quarter. As you have seen on numbers, very strong order intake, and that applies to all of our 3 segments, we'll go them through more in detail later on. Our performance, both in Aggregates and Minerals segment was healthy, some issues though in Minerals. We'll come back to that one as well later on. Metals, we reported loss already at the quarter 3. We announced that turnaround program will be put in place. It is now in place, and we have started -- the actions targeting this year to EUR 15 million permanent cost savings. Integration, progressing well. We are currently at EUR 65 million of synergy costs. So the run rate that we have been able to achieve. And the target was EUR 50 million at the end of last year, and we're targeting to be at EUR 120 million mark with the cost synergies at the end of this year. So this target is unchanged from our previous communication. Then we also during the quarter, we had a Capital Markets Day. We published our strategy, published our financial targets, and I will just sort of break up them later on in this presentation. But then looking at the group numbers. First, strong orders in all segments, like I said, EUR 1.3 million (sic) [ EUR 1.3 billion ] exceeding. And of course, yes, we had a very, very strong end of the year, like we were expecting already quarter 3, some of these orders. But due to uncertainty, decision making takes longer and it's more difficult to forecast the actual decision-making time then on more normal times. But the orders came. And pipeline in all businesses looks healthy at this moment also, going forward. Sales. When you look at our sales numbers later on, I mean, please pay attention to the currency impact. Same applies to orders as well. We have a major currency impact on most of those lines, and that is because we do operate in countries with volatile currencies and a lot of our sales are coming from them. And in days like this, those currencies tend to depreciate strongly, and we have seen that one. We, of course, we also have a lot of internal hedging in place. So the impact on bottom line is not as dramatic as it would be on top line, but that is just a note at this moment already. Adjusted EBITA for the quarter, EUR 103 million, 10.6% of sales, down from last year, I would say that primarily for COVID-related reasons, the downward trend on this one. EBIT for the full year, EUR 44 million. We have, as you can see, a lot of adjustments. We also have the PPA here that's sort of affecting the bottom line numbers. Very healthy cash flow situation continued during the Q4, EUR 177 million of cash from operations, and nearly EUR 600 million cash from the operation in full year. And our Board will propose a dividend of EUR 0.20 for 2020, and that would be paid in 2 equal installments, and total amount of dividends being EUR 166 million with this proposal. COVID impact, we do see that one still, even though the news on vaccination were positive, and that encouraged customers to take decisions finally on some of the proposals that we had out there, but we are still seeing its impact on sales. In all fronts, I would say, more so in services. There's still access restrictions in place, primarily in North America and South America and parts of Asia. Those are suffering most from the access restrictions. But at the same time, sort of ongoing spare parts consumables business, the demand is strong, but customers are hesitant to engage with the modifications and upgrades as has been the picture before as well. We are expecting that one, of course, to go away once the vaccination programs do progress. And there are at times some encouraging signs that things will start to change. But the clear breakthrough in this one is yet to come. Underlying market, as such, is good, I mean, but the decision making continues to be slow. And the bigger the orders are or the more complicated technical things are involved, the more difficult it is to conclude things. Metal prices continue to be strong, and that is, of course, a very good situation for us to be right now. Aggregates segment, very strong order intake, especially the 2 last months of the quarter, we really -- saw really the orders going up. And I think in Q3, we said that we have returned to more sort of a normal level. And now 2 last months of the year, we were ways above any normal level. And strong contribution from all our brands, but specifically McCloskey, very good, strong, healthy order intake, which is an indication of upcoming spring season in North America and Northern Hemisphere in general. Sales, EUR 250 million. Currency impact there, negative 5%. And adjusted EBITA EUR 31 million. Margin improved for the segment from last year, which is a good sign, and it's also a sign that the business improvement programs that we have in place in Aggregates. There's minor impact of synergies as well here also from Metso Outotec merger synergies, but then additional from McCloskey synergies that are improving this one, plus the self-help from within the Aggregates business. So all in all, good, healthy development, and we are well on our way towards our targets in the segment here. Minerals. Here, we see really major currency impact on orders, 9% on sales, minus 8%. So these are just worthwhile to note when you comment these sales figures. But like I said earlier, good internal hedging. We have a lot of production also in the same currency. So the bottom line impact is not quite as dramatic as the top line currency impacts would indicate. But orders, EUR 730 million, slightly up from year before, despite of the currency. Sales down. We are, of course, delivering the order backlog, which has been reduced and order intake, which was reduced throughout the year. We could say that with the currency impact, it would be flat development on the sales, but that's what the numbers currently show. Services share was 62%, and also reflecting a little bit of the difficulties in delivering some of the services because of the restrictions. Adjusted EBITA, EUR 85 million. A year ago, EUR 84 million. Margin of 13.3%. So improvement in that one -- in that regard. But we had certain issues primarily in our consumables business. We have made quite many changes in our supply footprint, and we clearly had additional costs and delivery difficulties at the end of the year really in November and December. So these have been mostly sold already. And in January, we saw preliminary already return to more normal level in consumables. Overall, consumables business has developed very well in last year. Unfortunately, the 2 last months of the year were disappointing in that part of the business and affecting the entire segment numbers. Metals segment continues at loss, but orders on high level. It's worthwhile to mention that the orders that we announced in December, they were joint orders for Metals and Minerals. So this is also an indication that there are synergies between these 2 businesses. And most of the orders, they were very close to 50-50 split between Minerals and Metals. So the synergies are major synergies between those, with this measure. Sales, EUR 86 million. This is really a very low number. And with this sort of number, it's difficult to make any sort of positive result with the fixed cost and with the absorption level or under-absorption, which was very high during the quarter. But we are on a turnaround program and progressing with that one as fast as we can. We're targeting EUR 15 million savings for Metals on an annual basis, and we will get to those numbers later in this year. Quarter 3, I would say, we should be on that run rate with Metals. At the same time, we are, of course, delivering our order backlog, and we start to see firming up of the top line. But we need to wait until we see a turnaround of this business to positive numbers, towards end of the year. And then I'll hand it over to Eeva, and then I'll come back later on for the strategy recap.

Thank you, Pekka. And good morning, good afternoon on my behalf as well. We closed the year with several sets of numbers as you already saw last year due to the closing of Metso Outotec transaction taking place midyear on June 30, 2020. So whilst for the fourth quarter, the IFRS numbers are what you need, for the full year, the IFRS numbers have some limitations as they ignore the Outotec history of the first half of 2020. The illustrative combined figures give better insight into the performance of Metso Outotec businesses for all of 2020. And then again, they go combine the history of 2 separate companies. So they are, as their name says, illustrative. In this presentation, I will focus on these 2 sets. But in the material published today, you can also find a third set, which are the pro forma figures. They are provided to give you a combined view following the pro forma reporting conventions that will be familiar to many of you. So I'll start with the IFRS figures and the income statement. Q4 figures are clear and describe the business exactly as we are going forward as well. The full year of 2020 incorporates Metso Minerals for the first 6 months, and Metso Outotec combined for the latter 6 months. And the year 2019 in this table is purely Metso Minerals. Now I'll come back to the Q4 comments on the next page. But just briefly on the IFRS 2020 numbers. Sales of EUR 3.3 billion. And an adjusted EBITA of 11.9%. And an operating profit of 7.2%. The difference between these 2 is formed from the adjustments totaling EUR 72 million and amortization of intangible assets of EUR 86 million. You will also note that we report separately the profit for continuing operations at EUR 149 million, and then the profit including discontinued operations. Now whilst the aluminum business announced to be sold to REEL in December was operatively profitable as was the recycling business transitioned here during the fourth quarter, the third leg of the discontinued operations is the previous Outotec energy business, and this business was at a loss, pulling then the total profit for the financial year to EUR 138 million. Now moving forward on, you see the illustrative combined figures, which are really useful when you want to compare the Q4 performance either year-over-year or then against sort of 12-months development. Now the Q4 here is exactly the same as on the previous page. So this column is IFRS reporting. Sales were EUR 977 million, down from EUR 1.087 billion last year due to really 2 factors: COVID-19 impacting orders and hence, sales volumes delivered during the year; and then, as our CEO mentioned, the currency depreciation affected all of our business, but especially the Minerals aftermarket side, where the geographical mix of the business is such that countries that were particularly hit by currency depreciation against euro are really some of the key markets. The currency impact explains 6 percentage points of the total 10% drop in sales volume in the quarter. Now the adjusted EBITA for Q4 was 10.6%, as both the Aggregates and Minerals segments clearly improved their margin. The difference to the 12.7% of the year earlier comes purely from the Metals business delivering a loss in 2020, whereas in the comparison quarter of 2019, the -- at that time, Outotec Metals refining business result was profitable. It did include material positive one-offs, which is good to note. On an annual level, the illustrative combined figures give really the wide scale of our operations today. So the sales of EUR 3.897 billion, excluding the recycling business, which was transferred into discontinued operations during the fourth quarter. The adjustment costs here are higher. They are EUR 97 million compared to the EUR 72 million reported under IFRS, the difference being the part of the transaction costs included in Outotec first half 2020 figures. Now the earnings per share number is, unfortunately, as complex as in Q3. Not only do you need to pay attention to the numerator, also the denominator i.e., the number of shares that is used to calculate the EPS is different under IFRS versus illustrative combined figures. As mentioned, the IFRS numerator is either EUR 149 million or EUR 138 million, depending on whether you want to look at EPS for continued operations or EPS also including discontinued operations. For both, the denominator used is the average number of shares for 2020. Now this is a somewhat fictive number as calculating the average of new shares issued as consideration to Metso shareholders, and the end of year Metso Outotec shares is not really indicative of how many shareholders we have today, the distribute -- to whom we distribute the earnings. Now nevertheless, with these calculations, you get either EUR 0.20 or EUR 0.19. Now personally, I believe the more informative denominator is using the number of shares we had at Metso Outotec from the start, and also at the end of the year. And this number is just under 829 million shares. Now naturally, the EPS is slightly lower with a higher denominator. So we end up at EUR 0.17 of EPS with illustrative combined figures against EUR 0.19 in -- under IFRS. The next slide gives the highlights of our balance sheet. And here, we really have the benefit of having full comparability with the end of December to the end of June figures, both of them illustrating the assets and liabilities of Metso Outotec. Only the end of December 2019 figures are for Metso Minerals only. Now as you can see from comparing the June and December 2020 figures, so very minimal changes during the sort of first 6 months of Metso Outotec, a slight reduction of the total balance sheet to EUR 5.508 billion. Now I'll walk you through the net working capital liquid funds still shortly. But before that, let's look at the cash flow, something I'm pleased with not only for the full year but also for the -- regarding the fourth quarter achievement. Now we discussed profit earlier as well as the higher amortization due to the PPA from the transaction. So I would perhaps just draw your attention to the change in net working capital row here, which shows that we were able to release cash of EUR 193 million for the full year and EUR 81 million for the fourth quarter alone. Now considering the challenging COVID-19 environment, we did well in improving our collection of receivables as well as reducing our inventories. Healthy operative cash flow generation helped us strengthen our balance sheet following, first, the McCloskey acquisition in late 2019, and then the Outotec merger last year. And in this latter deal, we also successfully refinanced significantly during last year to improve the maturity structure and reduce the cost of our debt. Now the healthy cash flow helped the Board in using a more shareholder friendly thinking view on the EPS used as a basis for the dividend proposal. And this view considered the EUR 97 million of transaction and integration-related costs to be one-off in nature. And hence, the underlying operative earnings to be more than EUR 0.12 higher than reported, and this then leading to the proposal of EUR 0.20. Now on this page, you see the waterfall on the main elements of our net working capital, EUR 421 million at the end of the year. And really sort of -- the big blocks are as -- the order of the or the magnitude of the blocks are pretty similar. EUR 1 billion of inventories, AR and AP both around EUR 550 million. But as I said, what is encouraging is that the total amount of net working capital is -- we made progress on that one. My final slide is on our financial position. Our liquidity position is solid. In addition to liquid funds at the end of the year at EUR 537 million, the company has committed an undrawn revolving credit facilities of EUR 790 million. This EUR 790 million consists of a syndicated EUR 600 million revolving credit facility, and then EUR 100 million revolving credit facilities maturing in 2021 and EUR 90 million in 2022. The main achievement on the financing side was the first bond for Metso Outotec, which we launched in November. This was a EUR 300 million bond with a 7.5 year maturity. And this, I believe, were really the highlights from the financials. So I would hand it back to you, Pekka.

Thank you, Eeva. And I will sort of move on to the integration strategy and our outlook as we see the situation right now. But integration really progressing well and as per plan. We had plenty of time for integration planning while the authorities were doing their work before approving the combination, and we've been just diligently executing those plans. Some minor changes we have made because we have learned more. We have maybe found some new items, some of the items we quite were not able to get to the point where we originally thought. But in a big picture, we are progressing very well, very rapidly. And we are EUR 15 million ahead of the plan at the end of the year. And the target at the end of year is -- this year is EUR 120 million run rate, and we're confident that we're going to get there. Main source of these synergies in the first part always comes from reorganizing the company and reducing the overlaps and doing things like that. And this is what we did. By the end of October, early November, we had done that one. We have still some work left that we needed for local -- because of local regulations. We needed to extend processes in a couple of countries into this year, but there is maybe 300, 350 more people to -- reductions expected out of these actions later in this year. Revenue synergies is, of course, becoming a focus. And we have already in our order books such revenues that we can call synergistic, and this number is growing. This, of course, the revenue synergies, they need to be developed through our proposal pipeline and therefore, it takes a longer time before they start to be visible, but we already have good number of synergies in our order backlog, which we start to then report once they turn into sales. We also revised the one-off adjustments, the costs relating to realization of synergies. Originally, we said that there will be EUR 100 million of one-off costs. And now the current forecast is EUR 75 million. And out of this, EUR 33 million were booked in 2020, and majority of the rest will be booked during this year. So EUR 25 million reduction expected with the current scope of the synergy work. Market outlook. With metal prices being on a very high level, iron ore, extremely high level, maybe coming slightly down, but still remaining according to forecast on a high level. Copper, on high level. Precious metals, on high level. Improvement in many battery metals. This really makes us believe that the mining and metal markets activity will improve. And we have seen already improvement in Aggregates market. So therefore, we concluded that we expect market activity overall to improve. And of course, we need to be -- we need to remember that pandemic is still with us, and we might see terms that are unexpected or not foreseeable as we have seen so many of them. But of course, vaccination programs progressing as they are, we feel that it gives us bases to expect markets to improve. Our strategy, which we published in -- during the fourth quarter, we discussed about our purpose statement, enabling sustainable modern life. Our vision statement, we discussed the megatrends and how we concluded what our tier 1 priorities would be for this strategy period, and we concluded them into 4. Integration of financial performance, which we are, of course, reviewing and communicating to the market as well on quarterly basis. Customer centricity, which we wanted to elevate to a different level. Sustainability, both in our operations and what we can deliver to our customers. And then culture for the new Metso, to the company, which we call performance culture, which is being developed in connection of launching our values and our strategic targets for the organization. So this is perhaps one page of our strategy. The financial targets and strategic targets that we published in the Capital Markets Day, we said that adjusted EBITA over the cycle should exceed 15%. We want to maintain investment-grade rating, and dividend payout should be at least 50% of earnings per share. And we commit ourselves on actions and we have the plans to maximum 1.5 degree global warming. We have science-based targets approved for that one. And we have taken several actions to -- that will contribute into that journey. The sustainability highlights. From last year already, first of all, the commitment to 1.5-degree journey with science-based targets backing up that one. We have taken steps on CO2 emissions already, which means that in our operation, we will get 60% reduction in CO2. This is because we have moved into renewable energy, to wind and solar power in our foundries and other factories. And we have also seen 29% reduction in CO2 in customer logistics, which is fairly complicated in our company, having so many factories and operating globally in tens of countries. And our handprint, which is the other side, that is what our offering can do for our customers. We saw a reduction of 1 million ton of CO2. And if you sort of quantify what 1 million tons of CO2 can mean value to our customers. Customers that translates into EUR 20 million based on emission trade of price of EUR 20 per ton. And then a major achievement is also our listing on Global 100, #8 company globally. It is a high position. We don't see any of our competitors on that list on top 100. We see very few customers there. They're only on the list. We don't see any of our peers on that list either. So we are very uniquely positioned on that one. And we feel that we have good action plans. We have given the commitments backed up by externally approved targets, and we aim to stay well positioned on the list, realizing, though, that there is tough competition for those top positions on the list. But with this one, I think it's time to move on to the Q&A part.

Yes. Thank you, Pekka. Thank you, Eeva. And operator, we can now open the conference call lines for questions.

[Operator Instructions] Our first question comes from the line of Klas Bergelind from Citi.

Yes. It's Klas at Citi. The first one I had is on the Metals business. So in the second half, we had a EUR 10 million loss in the third quarter and EUR 9 million loss in the fourth quarter. How much of these losses were project-related costs, which will likely reverse now when demand is said to be stronger? I'm trying to understand the clean starting point for the EUR 15 million of savings that you have announced? And finally, linked to that, when do you think, Pekka, a 10% margin is achievable for the Metals business? Is 2022 a realistic time frame if demand is accelerating like we see today? I will start there.

Maybe I'll take the latter part, Eeva will answer the first part of it. But what we have done in Metals now, we have broken the business, reorganized it into 4 business lines. And we are now looking at 4 business lines within Metals segments individually. They all have their own turnaround plans, and they all have their target of achieving 10% EBITA or adjusted EBITA. And those business lines, they also include now services related to that business line. And that 10% is the criteria that we will use when we then look at our portfolio in our Metals business. And those businesses that will reach or have potential to reach the 10%, we will maintain. And then we look at further actions on those ones that will not do. Some of the business lines will be able to make it. And they will be there by 2022. Some of them, hopefully, by the end of the year already, at least on a run rate basis. And then the rest, we then draw conclusions later. Eeva, please?

Yes. Klas, on your first question. So yes, maybe it's sort of the order backlog quality leaves some room for improvement. Then of course, the fact that in these COVID circumstances is that if you have a challenging project, it gets more challenging in COVID times because of the limited access to sites. But I would say that roughly sort of maybe 40% of the loss in both Q3 and Q4 were related to project-related things, which sort of, hopefully, as we progress, will, of course, diminish and certainly would be helped by sort of better accessibility. The rest is really then the structural issue of having too high fixed costs for the volume the business has. But that, of course, is being addressed by the turnaround. So in that sense, we're working on both fronts in a way to make sure that we get the business back into black.

That's great color. Then my second one is on Minerals and the short-term negative impact on the consumable side. Short-term feels like you think this is going away already now from Jan and Feb. And -- so just to confirm that. And have you, Pekka, identified any similar risk to performance as we go through this year? You obviously have done synergies and looking to -- and the payback is improving. But just curious if there is anything else in terms of integration that you see as a risk as we go through 2021?

Nothing major, of course. Minor things here and there do happen, also positive things that are offsetting each other. But we were relocating some of the machinery to -- from an old plant to a new plant in a different country. And of course, during the COVID days, when assembling and installing the machinery and start-up procedures, they took longer than we expected, and have difficulties in that one. And there were lots of additional costs relating to that kind of activity. And then we missed some of the deliveries. So those were really the reasons for consumables. Those particular issues are now over. We do have further program ongoing. And we, of course, take learnings out of this one. And we will be a bit more cautious in ramping down and ramping up. We have a couple of other sort of transfers in our plan for this year as well, and we'll just take a bit more precautionary actions there to eliminate any top line and margin issues coming out of them.

Very good. My very final one is on the service business in Minerals. So orders flattish ex-currency year-over-year. That's a solid improvement versus the last quarter, but still held back by COVID constraints. I want to ask, at what capacity is services running now relative to normal conditions i.e., what would the growth have been if we didn't have the COVID restrictions in place? And also interested in your comments there on commissioning of larger projects being delayed because of restrictions. So it sounds like there is also pent-up demand also on the equipment side.

Yes. We do have some project activity in services as well. We have so-called engineered-to-order modifications and upgrades. And that is the part of the business that has suffered most. That is activity that requires fairly intensive work together with customers, sometimes with other external parties as well. And as you might imagine, there's been limitations in doing that one. Now the pipeline is firming up. But before that turns into orders and deliveries, it takes some time, that one. So that is the activity that has mostly been affected. Then yes, field service, where there's been access limitations, that is somewhat down. Now we are, of course, active in the beginning of the year where -- which is in some parts of Southern Hemisphere -- or January was in Southern Hemisphere like a holiday season, and it's difficult to draw the conclusion, what was the holiday impact and what was COVID impact. But we are getting closer to normal levels now. In field service, I would say, 80% of the normal would be a good number to be used, but very much sort of the underutilization coming from the Americas and, to some extent, Asia. Spare parts and consumables -- yes, I want to just continue. The spare parts and consumables, they have continued more or less as normal from the demand side. And that has supported, of course, this sort of business and turned out to be a very resilient part of the service.

And the next question comes from the line of Magnus Kruber from UBS.

Magnus Kruber from UBS. A couple of ones from me as well. Just a follow-up on Klas' question there on the mining margins. Could you comment a bit on the magnitude of the impact associated with the consumables footprint issue on sales and EBITA, if that's possible?

No, we, of course, don't comment the numbers. But we're talking about fairly close to the numbers that if you have access to consensus numbers, so -- and our adjusted EBITA performance. So that's the ballpark where we -- that we talk about from the 2 months.

Okay. Perfect. That's good. And second, on the synergy savings. You exceeded the EUR 50 million target by quite a margin, obviously. But could you help us understand the sort of the phasing of that, how that came through? And what was the sort of in-quarter impact from the savings in Q4?

Sure, Magnus. So we sort of went through it as sort of item by item. And I would say that in sort of visible in the P&L that we published today would be around EUR 36 million of the EUR 65 million. So that's kind of gives you a sort of indication. And obviously, it was very much head count driven. And we had a good start on facilities and IT cost synergies in the fourth quarter. But obviously, they are still sort of only -- we're talking about sort of -- some sort of -- altogether sort of less than EUR 10 million for that group. So the really majority is head count. And then it was really phased through sort of as people left the organization.

Perfect. Very good. And then finally, on Metals. Based on the orders you booked in Q4, how fast should we expect to see them offset the under-absorption in the business? And is there any part of the business now where you're still unlocking work? And also finally, on that point, when do you expect to start to invoice on these projects?

Yes. We, of course, do POC on revenue recognition on project business. And with the very thin workload that we had, I mean, we will start to see -- start to recognize revenue immediately. You cannot sort of take sort of a straight line sort of revenue recognition from the beginning because we always have some preparatory works, some engineering work, and the most part of the revenues will only come when we are delivering into the project. So it's helping immediately. But with the turnaround program, like I commented earlier on, some of the business lines, we are expecting them to return to clear profitability on run rate basis already in this year. And then '22, we expect to be in position to report clearly positive result for Metals. That is, of course, subject to us succeeding then with potential divestments in case we end up doing those.

And the next question comes from the line of Artem Tokarenko from Crédit Suisse.

My first one is around the EBIT bridge for 2021. Could you maybe talk and help us quantify some of the major moving parts like incremental P&L synergies you expect? And also maybe talk a little bit about the mix headwinds you would expect from higher share of capital business? And maybe also, how should we think about the underlying cost inflation and raw material inflation?

Sure. So we've obviously repeated today the earlier statement that we expect to achieve EUR 120 million of cost synergies from the Metso Outotec integration as a run rate by the end of this year. And we sort of -- we were tracking at 65%. So that's really -- that difference is what you should expect to see coming through. I would say that sort of with the visibility we have today, we expect to sort of it comes rather similarly to what we saw in the sort of the -- that we move -- we make progress every quarter, so to say, and rather linear. Of course, it's sort of time will tell exactly, but that's probably for your estimates a sort of a good enough view. You are right on the fact that if one looks at the sort of now the -- as such, not a surprising sort of cyclical recovery in a way that we would typically see sort of equipment, when things start to improve, the equipment orders exceed that from the aftermarket side. Then again, the sort of equipment deliveries, excluding Aggregates, we talk about sort of 1.5 years, 2 years spectrum. So obviously, whatever we booked in Minerals and Metals in Q4, sort of a big chunk also goes into '22. So if this COVID situation improves, I think the sort of there's all the possibility for service still to sort of pick up and make a sort of make catch up into 2021 revenue. But that, of course, will be dependent on how the pandemic situation evolves. Then the third point is very much what you mentioned as well on the inflationary side, I mean, in sort of -- still sort of in the midst of this pandemic, clearly, what's -- is a sort of new phenomenon is sort of the price increases in some of the commodities and also then the raw materials that we use for our deliveries. And it remains to be seen how sort of -- is this now a bit of a sort of quick catch up on something or how that will evolve. We've certainly seen pressure on logistics cost in Q4 already. The global imbalances in trade have clearly led to a situation where containers are very expensive from certain locations, and then very cheap from other locations. And I think this is, again, all the sort of the sort of unplanned consequences of the pandemic, which we will -- which I sort of do believe will balance out. But of course, these are the type of surprises that we can perhaps still need to expect to see during the year. And hence, the overall focus we have sort of started actions on price increases on our products as well because we clearly do see the world moving into that direction, and much remains on -- much is then dependent on how sort of well we can balance, and as I said, how much unexpected things happen versus how much is perhaps a more sort of cyclical development that we've also seen in earlier years when things have started to pick up.

I guess a follow-up to this question, could you help us to quantify the negative mix impact in Minerals business in Q4, maybe on a year-over-year or sequential basis? And thinking about 2021, based on your order backlog, do you expect a broadly similar mix to Q4 or further worsening?

Well, I think what I tried to just reply is that it is a bit difficult to quantify or even predict the mix for 2021 because of the shorter lead time in services. So if things would start to recover on the services side, it can still meaningfully change the mix for 2021. But obviously, so that you should look at the sort of when we publish both the mix in our orders as well as in our sales, and that development really to sort of -- those numbers are really the kind of best advice to use in your models to kind of get a sense. I mean these things don't, of course, overnight, they don't change dramatically. We're talking about a few percentage points. But on the margin level, of course, it's still a meaningful impact of some millions. So that's worth to note. But I think, yes, they will be very interesting to see now how that do we start to see a easing in the restrictions so that we would get certain service activity ramped up.

And last question on Aggregates. On EUR 360 million of orders in Q4, could you maybe talk a little bit about whether you saw some pent-up demand from weaker Q2 and Q3? And how should we think about sustainability of those orders? And maybe give us some color about how this year has started in Aggregates.

Yes. Of course, it was something extraordinary that we saw in, I would say, December. November, we saw some signs already that things are warming up but -- which we cannot expect such similar order intakes in January or February of this year. Then March normally is the time when things start to really get hot again. And currently, it looks like that is the case. But there were some year-end orders that dealers did place on us, and McCloskey as well. And we normally tend to put price increases through around that time and effective in the beginning of the year, and that may have impacted a little bit on the actual numbers -- order numbers. But it took us by surprise how active the ordering was in both of these months, November and December. We are expecting a strong season. There is some, to some extent, rebound from last year's activity, which basically the summer season was almost nonexistent because of corona primarily and there's some backlog with customers that they need to replace the machinery, plus they are clearly preparing for all kinds of funding that is coming on for infrastructure in different parts of the world. North America, Europe as well, China, very active at this moment. So this is what we see happening right now. Right now, it looks very promising.

And the next question comes from the line of Maddy Singh from Bank of America.

Just a couple of them. Can you quantify the revenue synergies you realized in Q4? Because it feels like potential here is a lot more than EUR 150 million you have given as a long-term target or guidance. And associated with that, would you consider upgrading the synergy targets overall, including revenue and cost synergies? That's the first question.

Sure. So on the revenue synergy side, now because of the sort of COVID situation still sort of impacting the order intake in Q3 quite a bit, so obviously, before the order turns into revenue, there is a certain sort of a lag. And hence, the actual revenue synergies in the 2020 numbers were millions, but not -- it wasn't a very big number and not sort of -- perhaps that significant. The order pipeline was certainly better. And that, of course, is what we are now working on in a way to then ensure that we would start to see sort of recognition of revenue towards the sort of second half of this year and then 2022 as well. Your other part of the question on whether we're looking to upgrade. I think that we're certainly sort of working hard, and we're still sort of -- I mean, in sort of a heavy part of integration sort of 7 months into the process. So right now, EUR 120 million seems like a very challenging target, and still work to be done. I think we're sort of -- we're clearly on the right track. So comfortable with that. But wouldn't sort of speculate at this point on any new targets. I think we still have sort of 11 months to go to reach these targets.

I'll continue on the revenue synergy side. If you think about that, all the revenue synergies that we finally then invoice to customers, they need to go through also our proposal pipeline, and we were able to make joint offers and joint bids only beginning of July, so 6 months in last year. And in average, I think our proposals are several months out there before they are decided. So that's why the slow buildup of revenue synergies is a reality. But in the backlog, we have them already now a meaningful number, and we will be then reporting once we are delivering those.

So I actually did need to ask about the synergy on the order level as well. So the orders you have received already, you said that almost 50% of them are joint bids. So if you could quantify that, that would be quite helpful.

We will really be reporting on the revenue synergies so that -- once they recognize this revenue.