Sandvik AB (publ) (SAND) Earnings Call Transcript & Summary

All right. We are finally here. And apparently, it's not only us who are eager because you started rushing in without being called for. So we are starting 15 minutes ahead of schedule. Very nice that you are so enthusiastic. But let me start by saying that we are very happy to see so many of you joining us here at Gimo in Sweden for Sandvik's Capital Markets Day 2025. Before I tell you what will happen today, I must say something about this place. We are actually in a cold house, stemming from the early 1800s. How cool is that? And we thought it was a perfect place to be, blending what is our industrial heritage, our long successful history and combined with this interior, symbolizing what is our transformation as a company into a leading industrial technology company and now advancing to 2030. We will now go through the agenda. First of all, you know, as per announced, that we will spend 2 half days together, including the dinner tonight, and we got this great weather, so it's going to be super nice. But the agenda, as you see, there will be presentations from our CEO, from our CFO and from the business areas, and as you see also in this order. And after each business area presentation, we will have a 10-minute Q&A session. We will have 2 longer coffee breaks at 14:15 and 16:20 each. And the idea is, of course, for you to stretch your legs and get some refreshments but obviously, as you see, also visit the exhibition, so the stations down there. And here, we have our Sandvik experts who are more than happy to help you and answer all the questions that you have. So please do take the opportunity. With this, it's time for our first speaker. So Stefan, welcome up on stage.

Thank you, Louise. And also from my side, welcome to our Capital Markets Day here in beautiful Gimo, the home of the world's largest cutting tool manufacturing plant. I will talk to you today about our achievements, our aspirations in the future and also about our business areas. We will then also spend the rest of our time here together going through how some of the things we will show you looks in real life out on the factory floor. This is my third Capital Markets Day with Sandvik. And during the over 5 years I've now been in this role, I have had 2 clear and equally important priorities. The first one has been performance management: to make sure that we perform each and every quarter. And the second one has been business transformation: to reposition the group towards higher structural growth and increased resilience through the economical cycles. How do you think we have performed on these 2 priorities? To me, it's clear, we are halfway through this decade, and I'm proud to say that even though we are far from done, we have transformed into a significantly stronger and future-proof Sandvik. We have successfully executed on our strategy, and we have delivered on the ambitious goals we set almost 5 years ago. We have undergone a significant business transformation towards higher growth and resilience. We have strengthened our market positions in key areas. We have built leading digital platforms, and we have significantly increased the share of aftermarket in our sales. And despite the extremely turbulent times that these years have been, I dare to say that we have delivered almost every quarter. At least the amount of conversations we have with you on the theme of margin resilience has become very rare. But we are not done, and our goal is now to continue to build on the strong platform we have built and our financial strength to continue to advance Sandvik towards 2030. But before I talk about the future, I would like to highlight some of the transformational achievements we have performed during this period. We have divested or spun out businesses with a total turnover of around SEK 30 billion. We have replaced that with businesses totaling about SEK 22 billion. If you combine this, it's almost 50% of the group turnover. This significant business portfolio transformation has increased our margins, increased our share of aftermarket in our sales. It has positioned us for higher growth, and it has allowed us to build leading digital platforms to future-proof our businesses. The share of aftermarket and other recurring revenues has increased during this period from 31% to 44%. This is a huge change for a company the size of Sandvik during this period. And when Cecilia comes on stage later, she will show you what this has meant not only for our margin resilience, but also for our top line resilience. And our digital businesses by the end of last year was over SEK 5 billion. This contributes not only to our recurring revenues, but it has also increased our addressable markets in segments with higher structural growth. When we launched the current strategy back in 2021, we called it the Shift to Growth Strategy because growth had not been a priority for Sandvik for quite some time. We set a growth target of 7% on average through the cycle. And we put a baseline of 2019 because in '21, we were in the middle of the COVID recovery, and we didn't want to inflate our performance because of that period. Since 2019, we have grown on average 7%. We have proven our capability to grow. Of this, 4% -- 3% was organic and 4% inorganic. And to be honest with you, we would have liked to see the organic component be slightly higher. But we have to remember that we are comparing the peak of the cycle in 2019 with a very low point in the cycle end of 2024. So I think it's a sign of strength that we are still able to deliver on the total growth target. And with the cyclical recovery ahead of us, we are confident that we will be able to deliver at this growth level also in the future. We have built a stronger Sandvik, and we are proud of that achievement. But as I said, we are not done, and we now shift our focus towards how we will be advancing to 2030. And we will do that in a slightly updated group structure. This is not a surprise to you. I've been talking about this for quite some time, and now we are ready to take this step as of January 1 in 2026. So what we today call Sandvik Manufacturing and Machining Solutions, or SMM, will be dismantled. And the 2 segments below that, Machining Solutions and Manufacturing Solutions will become their own business areas. This will not change how we work. When Nadine and Mattias comes on stage later, they will show you how our Industrial Hardware and Software businesses work together and leverage from each other. But it will give you the much asked for financial transparency how each of these businesses are performing on their own. We are investing into our Software business, and we will continue to do so. With this change, we will give you the opportunity to judge for yourself if these businesses are creating value for Sandvik in the long term. And you can also see on the slide up here that there is no more SMM, SMS, SMF, SMR or SRP. Do you know how many variants of these abbreviations we get to hear in our engagements with you every quarter? You would not believe. So we decided to do something about it. So going forward, when both of these changes are implemented, with the new names coming into effect already July 1, we will operate Sandvik as 4 business areas: Mining, Rock Processing, Machining and Intelligent Manufacturing. So now when you understand what we do, I suggest you also go and buy some more shares. But focusing on the business areas actually gives the wrong impression because the true heroes of the Sandvik Group is our 23 divisions. They are each world-leading businesses. They are #1 or #2 in the market segments where they are present. They have close customer relationships, know-how and solution offerings that creates sticky customer relationships. They are industrial technology leaders in areas such as advanced materials, automation, digitalization and electrification. They have industry-leading margins through value-based pricing and strong cost focus. And they are governed through a decentralized operating model that facilitates an agile mindset and allows each of them to adjust quickly to changing market dynamics and new customer needs. So what do we mean then when we say a decentralized operating model? Well, it means that each division defines their own strategy and priorities. It means that they are accountable for their own profit and loss on balance sheet. They are incentivized on what creates value, organic growth, profitability and capital efficiency. But they are not isolated islands. They are also expected to collaborate, not because I say so, but because they see value in collaborating in certain areas. And the role of our business areas is to facilitate this collaboration when and where it makes sense. Then, of course, it also has to come together at the top at the Sandvik Group level. And the Sandvik Group is not only the share that you can buy, it is a global business platform from which our divisions can scale and grow their business globally through our financial strength, our globally recognized brand, our deep talent pool and our strong performance culture. And in today's volatile world, these strengths are more important than ever, and they form the pillars for continued growth and profitability. As we now shift our focus towards advancing to 2030, let's start with our financial targets. It's actually quite straightforward because we are reconfirming the same financial targets that we have had in the previous strategy period also until 2030. And I will let Cecilia go through them in more detail when she comes on stage shortly. Those of you that knows us well also saw that the strategy wheel has been slightly updated. We're going from 6 to 5 strategic objectives. Going forward, we will focus on driving growth, empowering high-performing teams, accelerate digital, deliver profitability and efficiency and lead industry innovation. The strategic objective of sustainability has been integrated into these strategic objectives, and you can also see that in the key results also visible on this slide. The key results are the quantifiable targets that we are driving across the group. What we're showing you here are our external targets that we are also reporting on. We also have internal key results. And besides the financial targets, the key results are focusing on safety, engagement of our employees, our digital offerings, capital efficiency, emissions reduction, innovation and sustainable solutions. And for each of these, we have quantifiable targets of where we want to be in 2030. And as we enter each year, we define targets for that given year and sometimes also every quarter. Innovation was one of our strategic objectives. Innovation is key for us to be able to deliver on our financial targets of growth and profitability. But innovation is where Sandvik comes from, and it's deeply ingrained into our culture. Innovation is important for us to maintain our leadership positions to drive organic growth and to enable value-based pricing on the efficiency, productivity and sustainability improvements that we deliver to our customers and which is so crucial for us to be able to maintain our industry-leading margins. Today, we measure this to what we call new innovation sales ratio, and we're currently at 24%. And this means that about 1/4 of the innovations that we sell today, the revenue from those, comes from innovations that we launched in the past 5 years. And we expect to continue to invest about 4% of sales into R&D also going forward. One area that is very important when it comes to innovation is digital, and it will continue to be so also going forward. And this is, of course, an area where we have massively accelerated our progress also through acquisitions. And today, we have leading digital platforms in both mining and industrial manufacturing. The combination of our traditional hardware with software, it's a powerful combination that we are uniquely positioned to create value from. Generic software solutions will only take you so far. The next wave of productivity in the industry will come from combining software and data with hardware and deep application knowledge, be that mining operations or industrial manufacturing. And that is especially true if you want to maximize the impact you can have from AI. We have over 20 years' experience in mining automation and the leading end-to-end platform from mine planning to processing of the rock that comes out of the mine. We have in only a few years, built a leading CAM platform, and we have the leading solution for machining simulation and optimization. In raw numbers, we have gone from less than SEK 1 billion to over SEK 5 billion in turnover, and we are on track to meet our 2025 target of SEK 6.5 billion. And we will continue on this ambitious journey, and the goal is to double that again until 2030 to SEK 13 billion. It's important to emphasize here that the most difficult part of this journey for us is already done, and that is to go from basically nothing to having something. We will now leverage on the platforms we have, and the majority of this growth will be organic, then we will complement it with additional acquisitions. So what will be our inorganic growth priorities going forward? We have a strong financial position, and we intend to use that to complement our organic growth also with inorganic growth. We will continue to expand our presence in regions with higher structural growth, such as China, India and the U.S. In machining, we are now tied for #1 in round tools, and we intend to continue this journey and become a clear leader in round tools. We want to continue also to expand in faster-growing segments such as aerospace, medical, defense and consumer electronics. I already mentioned digital. We have the core platforms in place, but we will continue to build on that also through acquisitions in both mining and intelligent manufacturing. And we continue to see opportunities in Rock Processing, expanding in attractive niches in downstream mining and demolition and recycling. And by complementing our organic growth with these opportunities, we are confident that we will be able to deliver on our growth target also until 2030. We have delivered on our strategy and our financial targets during this period. We have evolved Sandvik's business portfolio and accelerated the transformation of the group. Today, we are a growing industrial technology company comprising of 23 world-leading divisions. And our track record in the past 5 years and the strong group platform we have built makes us confident that we will be able to deliver on these targets also as we advance towards 2030. The profits and the cash that we generate ultimately belongs to you, our shareholders, and we promise to continue with a stringent and value-accretive capital allocation to ensure good shareholder returns. And with that, I think we should continue our agenda, explaining to you how we will be advancing to 2030 in more depth. And I will start by inviting our Chief Financial Officer, Cecilia Felton, up on stage. Welcome, Cecilia.

Thank you, Stefan. At Sandvik, we like to set the bar high, and we have set ourselves ambitious financial targets. But during this strategic period, we have been faced with a lot of challenges: from the outbreak of COVID-19 to high inflation, spiking interest rates, supply chain and outbound logistics challenges and also, we have exited Russia and seen a softening in the industrial cycle. Despite this, we have delivered well on our financial targets. And as you know, we have 4 financial targets. The first one is a revenue growth of 7% through a business cycle. And this includes both organic and inorganic growth, but excludes the impact of currency. Then we have our EBITA margin corridor of 20% to 22%. And as you know, this is not an absolute peak to trough, but this is where we are happy with our performance. So what this means is that if we fall below 20%, we will activate our contingency plans and take action to get back into the margin corridor. And if we are above 22%, it should not be seen as sustainable in the long run. And during today, you will also hear from our business area presidents what their respective growth and EBITA margin ambitions are for the next strategic period. Then we have a balance sheet target, financial net debt over EBITDA below 1.5 and a payout ratio of 50%. So let's take a closer look together at how we have delivered on these targets. And as Stefan mentioned, we have a strong growth focus in our divisions, and we have delivered a 7% revenue CAGR versus 2019. And if you look at the graph here, you can see that after the COVID-19 downturn, we had a period of recovery and strong growth. We had growth in 12 consecutive quarters. And of those, we had double-digit growth in 9. But then you can see from the beginning of 2024, we were also impacted by the slowdown in the industrial cycle. But is that the most important thing? To me, what stands out when I look at this graph is the improved top line resilience that we have shown during this period, where we benefit from our higher share of recurring digital software revenues and aftermarket sales. And at Sandvik, we give organic growth the highest priority. And R&D is really part of our DNA. And we continuously invest in innovation and to launch new products to stay competitive in the market. Then we complement this organic growth with acquisitions. And during this strategic period, we have made 46 acquisitions. And together, they add SEK 22 billion of additional revenues to the group. But on top of that, they have also supported us with repositioning Sandvik towards higher structural growth areas, we have built solid digital business platforms and increased our share of aftermarket sales. As Stefan also mentioned, our divisions are industrial technology leaders, and this enables value-based pricing and industry-leading margins. And we are continuously working with optimizing our footprint. And the 2 restructuring programs from 2022 and 2024 generated SEK 2 billion of annualized run rate savings together. And today, in the press release, you saw that we also announced a new restructuring initiative within machining that will generate an additional SEK 1 billion of run rate savings. But I think an area where we, as a company, have really made a step change is in terms of margin resilience. And here, we, of course, benefit from a more resilient top line, but we also have a higher share of variable costs. And we also benefit from the power of having a decentralized organization, which drives agility and speed. And when we're looking at this graph, you can see that excluding SMT, we have had a margin at or above 20% in 2021, 2022 and in 2023. Then last year, we had a margin of 19.2%. And I think this is a great achievement and a real proof of our improved margin resilience. We also have a solid balance sheet for growth. Our financial net debt over EBITDA is currently just above 1. And over time, we would like it to be at around 1 as this gives us a little bit of flexibility to also do slightly larger or midsized bolt-on acquisitions and still be within our financial target. This also means that going forward, our growth initiatives will be financed by the cash flow that we generate. And at Sandvik, we have a strong cash flow generation. But how have we allocated our capital in the past? Well, if we start by looking at the bar charts here, you can see that during the stabilization period of 2016 to 2020, most of the capital was allocated to debt repayments, dividend and CapEx and only a small part was allocated to acquisitions. But then we kicked off our Shift to Growth Strategy. And you can see that from 2021 onwards, we have allocated a much larger proportion to acquisitions. And if you look in the middle here, you can see how we have distributed or how -- what the M&A spend looks like for the different business areas. And you can see that approximately half of the M&A spend has been allocated to Mining and Rock Processing and the other half to Machining and Intelligent Manufacturing. And in terms of our capital allocation priorities going forward, they are the same as when I met you at the last Capital Markets Day. We still give organic growth the highest priority. We need to reinvest in the businesses that we already have, and it's typically the cheapest and the less risky way to grow the business. Then we have our dividend payment. And after that, we see how much headroom we have in our balance sheet for acquisitions. We also have a mandate from the AGM for share buybacks. But at the moment, our focus is to drive value creation through organic and inorganic growth. And at Sandvik, we have a balanced approach for allocating capital between the business areas and our divisions. But what does that mean? Well, it means that we evaluate each acquisition on its own merits and returns. And for instance, a medical round tools acquisition can be a more attractive investment and have a higher return than some mining targets. As Stefan also mentioned, we have a good M&A pipeline across all of our business areas, and you will hear more from our business area presidents during the day today what their focus is in terms of future acquisitions. Then finally, shareholder rewards. We have had a steadily growing dividend since 2018. And on top of that, we have also successfully listed and distributed Alleima, providing good shareholder return. So to summarize, how do you think we have delivered on our financial targets? I think we have done a very good job, especially considering all the geopolitical and macroeconomic challenges that we have been faced with. With a growth of 7% CAGR versus 2019, industry-leading and resilient margins, a solid balance sheet, an average payout ratio of 49% and the distribution of Alleima, I can say that we are proud of what we have achieved during this strategic period. And we are confident that we will continue to deliver on our financial targets as we are advancing to 2030. Thank you. And with that, I will hand back to you, Louise, and we will see what's next up on the agenda.

Thank you. And thank you, Stefan. Thank you, Cecilia. Indeed, great achievements so far and good aspirations ahead. And I must say this on a side note, Olof, where are you? Do you agree that our conversations will go much smoother now when we have changed the BA name, so we don't have to struggle with the SMM, SMS and SMF, all that. I do. I think you still seem awake, but I suggest that we just do a short leg stretcher. I will not suggest dancing moves. But please stand up and just do stretch your legs before we invite Mats for the mining. And just for the sake of it, even if you don't want to, take -- don't move from the seats and go away. And here, you get a little bit of an energy boost in terms of a shot. All right. I think we should start now, and it's time to listen to our first business area, Mining and President of Mining, Mats Eriksson. And last Capital Markets Day, Mat's first sentence entering the stage was, "There's no doubt, it's clear, we are #1 in underground mining." Welcome, Mats.

Thank you, Louise. As said, last time back in 2023, we are #1. And I can tell you, we still are, and we are even better positioned to be #1 in the future than ever. I'm Mats Eriksson, President of Sandvik Mining. I will tell you a bit on our performance for the last 5 years and then have a look in how we are going to perform after that, so taking you from where we started. Back already in 2019, we were a good business, SEK 40 billion, and had a good revenue growth, 10%. Then during the last 5 years, we have had a SEK 65 billion -- or we have a SEK 65 billion business. And we outperformed our targets with an 11% CAGR, very successful 5 years. And if you look at how we ended last year, you can see that we had a healthy EBITDA margin and a very big aftermarket, almost 70%; and the return on capital employed, 22.5%. Good numbers will help us to take us all the way into the future. Let's look at how did we do this, how did we grow during the last 5 years. We invested in the right things. We invested in electrification, automation and digitalization. Those are trends within the mining industry, and we have been investing a lot in them. We are #1 in those 3 areas. And that is a very good base to build on. If you look at the part that has been growing considerably during the last years is digitalization. There, we have done some major and key acquisitions like Deswik. You know that Deswik kind of a standard in the mining industry for underground mining. And new tracks, we talk about collision avoidance. That is something that is being very important for the mining companies. We have that. And of course, AutoMine, we have been developing that for a couple of decades. We are clearly a technology leader in that area. And we have strengthened AutoMine with the latest acquisition, UFR. So we have done the right things. If you look at our financial performance, I told you already, we had good growth, but we also had a very stable EBITDA despite some diluting acquisitions like the DSI, but we have still maintained our margins. And if you look at the first quarter this year, EBITDA margin, 21%; return on capital employed, 24.1%. Good numbers, I'm happy to be here telling these numbers. They don't need much of explanation. So if you then look at where we are today, the SEK 65 billion, what will happen after this? I think that is interesting to each and everyone. We look at the 8% CAGR growth. We will keep EBITDA corridor of 20% to 22%. And it will be, of course, a profitable growth through that. Let's have a look at what is the mining industry, what is the market because that's the fundamental, do we have a market to address. If you look at this, I think if you look at the left graph, every single mining company or every company being in the mining industry is happy about that because it shows a gap. The middle class is growing, the electrification is getting worldwide, more and more implemented in all different applications. And we have a gap in copper. This shows copper, but we have similar things in other commodities. But copper is a very big part of our exposure to commodities. And we have a gap. At the same time, the ore grade is coming down and the mine life is getting shorter. And one additional problem the mining companies are facing is that we have less mining engineers being educated. With this on hand, you need more copper with less ore grade, shorter mine life and less expertise out on the market. You need technology. We can provide that technology. So when we look at what kind of technology is needed, we can look at the future of mining. When you look at this picture, I think some of you or most of you have seen this before, a similar picture. It's an electrified mine. It's autonomous mine. You need less operators, of course, you need less people at the mine. It's more safe. And what is very, very important in today's world is data. We never ever before had as much data available today than what we have now. With that data, you can optimize the operation. You can get it more productive. And that is what we are working on as well. So the future of the mine, the technology Sandvik can provide already is nothing new for us. It's more about the speed of adaptation of that technology. If you look at one area that is interesting to us at the moment for the growth, it's surface. So when we have this technology already available, and we are world leading in the underground mining space, we can take that technology to the surface. Great for us, great for the mining companies, they can benefit from the technology know-how and applications that we already have as standards in the underground mining environment. Talking about autonomous drill rigs, talking about using the data to optimize, making the drill rigs electrified, we can do all of that on the surface as well. We have a great opportunity here. You will hear more about it later on. So we have a strategy. And as you can read from our numbers, we have a strong position in the aftermarket. It's not only the revenue in aftermarket that is very profitable, good. It's also being close to the customer. When we are strong in the aftermarket, we are very close to our customers. Then we can follow what the customers' needs are, and we can provide that kind of solutions to our customers. We have the underground solutions, coming back to that soon, what it means. And we have defined strategic growth areas, surface, automation and mining software, of course. We are really uniquely positioned in that area. And our software is agnostic. So we are even attracting customers that are not using Sandvik equipment today, but I'm sure they will do that tomorrow because we know them. And electrification, we have world-leading technologies in that area. This will be enabled, of course, by continuing to be the customer-first productivity partner. We are already in the underground mining side. And we are focused on performance excellence. We are looking at logistics chains. We are looking at how can we be resilient to all the changes in the world and the footprint and so on to be very efficient in what we are doing. And with the new technology and the new ways of doing mining, you need expertise. We are investing in that. We are investing in our people. It's not only giving the customer new technology, it's also helping them with the new technology. And you will hear about that in a couple of videos soon. I told you about this already. We have a very strong aftermarket. If you look at the growth from about 60% up to 70% of our revenue, at the same time, we have grown the business. So it's a big share in SEK billions, this aftermarket. And it's coming also from recurring revenue in our digital offering. But of course, we have a lot of equipment out there, and we are selling spare parts and services and so on. So I think we have been really successful in this area. We have divisions, not only parts and service that is really focusing on keeping our equipment alive, we also have ground support and Rock Tools, and then we have the whole digitalization set. So we have a lot of offering in this area. We are looking at this as a high single-digit growth. We will leverage on the fleet we have out there. And of course, we have a holistic approach to what we have. So we can offer the services, we can offer what the customer needs. We will continue to focus on the expertise so we can provide the know-how to our customers that are adopting our new technology. We are not forgetting the conventional part. We keep them as close to our heart as the new ones. If you look at being the first productivity partner, we have grown our fleet with more than 45%. We have grown especially in the important areas, big mining houses and with contractors. And the contractors are selling to mining houses, so it's a chain. It's a very good one. So we are growing in the right areas to continue the growth because now we have really captured the underground mining area very well. And we have a unique position with the value -- end-to-end value chain. We can offer all the different pieces that you need in the underground mining and connecting even to another business that Sandvik has the crushing and screening part. So a full offering. Nobody else has it, we have. So coming in one piece like with the loader, we can expand it with software, we can expand it with Rock Tools and drill applications and so on. So we look at a high single-digit growth here as well. And with the holistic solutions, we will grow with the mine owners. I told you we have agnostic offering as well. So we get to know new customers that hasn't traditionally been our customers. And we have seen great opportunities to grow in these areas. One of our strongholds is also electrification. We have the offering for electrification. It's not only battery electric. It's diesel electric. It's trolley solutions. It is hybrids. There are a lot of other ways of electrifying than only having a battery. We are offering those solutions, and we are open for hybrid solutions using other energy sources because we have a modular approach to this. And you can see from 2023 to 2024, we had a 30% growth in installed fleet. South32 is a good example. They bought 22 battery electrics from us just recently. Nobody buys a fleet if they don't trust the OEM selling it. If you don't trust, you buy one and see how it performs. They bought a fleet and they haven't been testing our products before, shows that it's there. Let's look at the video where a couple of our battery electric customers tells. [Presentation]

Good to have happy customers, it makes Sandvik happy as well. Let me now welcome our President for Digital Mining Technologies, Mr. Riku Pulli, that will tell you more about our digitalization.

All right. Thank you, Mats. Good afternoon, everybody. So let's zoom in now a little bit on digital mining technologies. We've been on this journey already for a while. We started off 25 years ago by developing the world's first fully autonomous mining automation system that we then later on started calling AutoMine. It was organic development for a long time and very important for us because it helped us to build a strong core for our digital future business. Then we hit the year 2019, and that's when we did our first acquisition. We acquired a company in Canada, Newtrax. They were specializing on mining IoT, which then, over time, evolved more towards safety solutions, especially for underground mining, collision avoidance technologies and so on. It was a very important milestone for us because that was the first time that we actually entered the OEM agnostic space as well, the first step there. Then the year 2022 was -- it was a massively important year for us, massively important. And the reason is that we acquired Deswik and soon after Polymathian in Australia. This was the time when Sandvik actually decoupled our focus, digital focus, a little bit away from equipment alone. And instead, we started focusing on the full mining process, end-to-end mining process, optimization of customer processes, something that we didn't really do before. Last year, another acquisition. We acquired a company called Universal Field Robots, UFR in Australia again. This was to complement our AutoMine interoperability strategy. After that acquisition, we are now in a position to connect more types of equipment, equipment models into our successful market-leading AutoMine platform, machines that we were not able to do before. So it's been a great journey so far. What makes me particularly excited is that this division has grown now to be a home for about 1,000 digital specialists working for it. We've been profitable already for many years. I'm very happy to tell you also that now today, we are not diluting anymore Sandvik margins. Quite the opposite, actually. We are accretive to it. Future, we've been growing so far. The last 5 years, the CAGR has been about 30%. In the future, we see that we are going to keep on growing double-digit pace. And by the year 2030, I strongly believe that we're going to be 3x bigger. Our business will be triple to the size than what it is today. Why I'm so excited about all this? I mean it's already a great stand-alone business, but it's not all. It is also a big lever for our other Sandvik divisions to grow their business, sell more equipment, sell more parts, sell more services. This combination is what is really a powerful solution for us. Okay. Then if we move on and take a look at what is it that we mean with mining software, where we are today with that -- and again, it's not only about equipment, it's very much to do now with the mining processes itself, end-to-end mining process. We put -- instead of putting brains on equipment, we put the brains on the mine itself. And in practice, what does it mean? So we have now world-leading software solutions available for our customers so that they can better design a mine, build a mine, run the mine and ultimately optimize their whole mining operation. It's a strong platform that we have built. And what is it that we are selling? We are selling software licenses. We have already sold more than 20,000 licenses around the world. It's a subscription-based business model. So it means that also our recurring revenues are very high up. Mining software, we are a market leader underground as well. And we are well on our way to become a market leader with surface applications as well. There is a strong pull from our customers as well. They want to see more and more of these end-to-end software platforms in place because they are struggling. There are so many systems already at the mining sites, how to integrate them, how to optimize it. We can now actually provide a full end-to-end solution, which is the most powerful way of taking the value out of the mine. The future with mining software is really exciting because now we've got the platform. We've got access to a lot of data. You heard Mats already speaking about it. Now it's the time to start rolling out artificial intelligence, AI-based apps and so on. We are doing that already in short term. Exciting announcements coming up as well. That's mining software. Then a little bit about the mining automation as well. So we've been on this journey already for a long time. We've got a comprehensive product range for full autonomy, full autonomy. That's important because that differentiates us also from some other players in these markets. We're not talking about remote controls, tele-remotes and so on. This is mining robots, fully autonomous mining equipment. We've delivered more than 1,000 pieces of this equipment already around the world to all key mining markets. A scalable offering, so we can actually sell systems for smaller mines, mid-tier miners and massive miners as well to their block caves. Speaking about block caves, one of our flagships there, for sure, has already been for a while, Codelco, the state-owned copper producer in Chile. We've been working with their automation journey already for a while. They've invested more than SEK 1 billion on AutoMine alone over these years. And as a result, they have about 50 pieces of equipment, trucks and loaders running underground unmanned today, as we speak. Quite unique new value that they've managed to get with automation is when they actually noticed that they need to leave 1 million tonnes of copper ore behind because it had turned into red mud. And that's way too risky, way too difficult to mine out. So they wanted to actually try to use AutoMine for it, and they've been very successful with that and safely recovered now all of that ore away from the mine. Quite unique and gives you a flavor what are the different opportunities in the future with these type of technologies. But don't just believe what I say, I'm also going to play a video so you're going to have a better picture on how does it actually look at the actual mine site there in Chile when they run the autonomous machines. And with that, I will then hand over back to Mats. [Presentation]

Exciting times with exciting technologies, really like to see customers benefiting from our technology. One area is the surface, I mentioned already as a growth area. We have doubled our revenue in that area during the last 5 years. We are having 40% more installed fleet. We have made very strategic good business with new customers where we are broking in. The customers have seen, when they compare to the current fleet, that our drill rigs are performing better. So a natural step is that when you renew your fleet, what are you going to buy? The better performing order all traditional. I don't need to answer the question. You will see it in our numbers years coming. So we believe in a double-digit growth in this area, bringing our expertise from the underground up to the surface. We can optimize it. We can use the data generated from our drill rigs to optimize their operations. We can make them autonomous. We can electrify them. We have a modular approach. We have a very new set of drill rigs out on the market. With all this, what will Sandvik Mining become? Let me answer the question, SEK 100 billion business. If you look at the graph, very little coming from acquisitions. Naturally, we are open for acquisitions when we find a bolt-on acquisition to what we are offering today. But we believe we can capture SEK 100 billion pretty much organic, through the growth areas, surface, drilling solutions, automation, mining software and electrification. That is where we're ending 2030. So to summarize it, the market is favorable. It's growing by itself. We have a leading position. We have an innovative and very holistic approach to the market. We are the first productivity partner to our customers. We have the real customers that we need to grow. Naturally, it's safe. It can be sustainable as it is, electrification. We have a very strong return on capital employed. We will continue to have it very strong, of course. It's clear, if you look at the numbers, then 8% CAGR within the margin corridor, 20%, 22% and the double-digit growth. It's not easy to be #1. I can jokingly say we are getting used to it. Let me end with a video telling about the future of mining. [Presentation]

Yes, I agree with you, Mats. Exciting times in the mining space. And it's great that we already have solutions and capabilities to make the future of mining happen already today. Great stuff. So now it's actually time for a Q&A session, 10 minutes-ish. And for that, I will invite Riku back on stage. Eager hands already, that's great. Yes, so just to say that it's good that you raise your hand, and we have 3 people coming with the mic. And Daniela was first.

Just one question from me. So you already did 21% margin, and there was the 200 basis points of dilution from DSI. Digital is accretive, and you talked about high single-digit growth. Why -- I mean, if we add the 200 to 21%, we get to 23%, why isn't your margin ambition not even higher than 20% to 22%?

Yes, you could expect it to be higher, of course, when you look at the numbers. But at the same time, we have to invest. We are investing heavily in the new technology. We are investing in having the worldwide leading technology that is needed for a mining company. And ramping up factories also cost money. We are continuously looking at our footprint. Do we have enough capacity for the demand and so on. So we are looking at investing the money wisely, not wrongly in that sense, but in areas where we can see that we will grow beyond 2030.

Was the comment on digital being accretive a gross margin comment then rather than an EBIT margin?

Well, it's on the EBITDA corridor that we have.

All right, Olof.

Yes. One question from me. Can you please elaborate about the penetration in aftermarket? How large share of your addressable market are you touching within the service business?

When we look at aftermarket, it's a set of products, and it's a large set, of course. It's not only spare parts, not only services. It's a combination of recurring software, it is ground support, it's Rock Tools, and the software part is increasing, of course, in the whole picture as well. So we are confident that we can still grow in the aftermarket space. And as I said, we have a high single-digit growth in it. So I think it's extremely important to us to be big in the aftermarket because then we know what is happening at the customer base. We can follow their, let's say, needs, solution, problems, and can provide them with solutions.

But it's not possible to give a figure if you're servicing 50% of the equipment.

No, we don't divide it like that. And it's also something that, as such, is not too important. Are we servicing or not? If you are servicing, we are going to sell parts or we are selling other parts -- other products to the customer. And if you are selling Rock Tools and the rest, the customer is going to ask for service. So it's also changing depending on the customer, and we don't divide it.

It's John from Deutsche Bank. On your SEK 100 billion revenue target, how much of that are you expecting from your new initiatives? So digital, BEV, automation?

Well, the market will show what will be the end result. But let's say, if you take it very -- simplify it very much, I showed you the gap in commodity. There is a gap at the moment, which means that the mining companies will need to invest. And they need to invest either in conventional diesel equipment or hybrid solutions or battery electric, they will decide. We have taken this as an approach that the volume will grow. We have not, in that sense, really pinpointed the different areas. We have said earlier that 50% will be battery electric by 2030. We think, because of a slowdown last year with battery electric adaptation, that it will be beyond now 2030, the 50%.

Okay. And if we look beyond the 2030 time frame and you think about electrification, given what you see in adoption, should we think of the hybrid opportunity as a bigger opportunity than pure electric? Or is it not?

I think it's a stepping stone to be in battery electric. You have a hybrid solution in between. That is very common in certain market areas. But now we have defined what is electric because we have cable electric or tethered electric as well. It's not all battery electric as such. But I don't have a date because the markets will decide what they buy. We have the complete offering. It's up to the customer to decide what they need.

All right. We have a few questions here. Klas?

So I had a question on mixed fleet automation. One of your peers is obviously expanding a lot in this field and think that this is the future. You've been a bit skeptical before in terms of the performance steps not being as high and so forth. You have, however, expanded a bit of sort of Universal Robots, I think, sort of touching that field. But if you could just comment a little bit about how you look at sort of involving third parties and the pros and cons and what you think?

Yes. No, I mean that's the key question when it comes to interoperability and being OEM agnostic. So our history, I mean, as I explained, we've been working with these technologies for a long time. Our heritage and the focus has been very much the combination of Sandvik AutoMine, Sandvik Equipment. And we know that, that's the best possible combination. That's by far the best product -- brings the best productivity to the -- for the customers. At the same time, already years back, we've seen that there are customers who want to have mixed fleet. They want to have different types of equipment, also equipment by our competition on Sandvik machines connected to the same platform. We want to bring that flexibility to these customers as well. We see that it helps us to grow the markets also significantly for these type of solutions. So we are there. We think that still -- I mean, we haven't changed our philosophy there. Sandvik AutoMine, Sandvik Equipment is the best combination but over time, of course, these new technologies with OEM agnostic way will become better and better for sure.

All right. One more there. Yes. Okay.

Could you talk about how big the surface mining business is today? And out of -- going forward in 2030, how big portion out of the SEK 100 billion would you estimate the surface mining business to be? Because I remember you talked a little bit earlier about doubling this business. And where are you on this route right now?

Well, as I said, we have doubled the revenue on surface mining during the last 5 years. We are seeing a double-digit growth in it and a great opportunity. You can calculate from the numbers quite easy with our 8% CAGR and single digit -- high single-digit growth in both aftermarket and underground, what will be the surface part. I think the clear growth area for us is in surface because now we are bringing state-of-the-art technology that we have in underground up to the surface. And we have just seen the beginning of it. So when I say double-digit growth, I'm not saying what are the actual double digits, but it will be a big one.

So you're basically saying that the coming years growth will be better than over the last 5 years. Is that what you're implying?

You have to look at it also from a more complete picture. With surface revenue growth, we get a very good aftermarket growth. One equipment equals 3x the aftermarket of that equipment -- price of the equipment. Then we're adding on software, automation. So we're getting on the surface a broader revenue stream than only the drill rigs. So splitting that out, it's coming through different divisions.

Right. Then it's your turn, James.

Bobby Eubank from Chevy Chase Trust. If I could ask kind of two questions in one. We hear all the time that the age of equipment has been aging. It's been getting older. Is a younger fleet factored into your SEK 100 billion? Or would that be additive if the miners decide to reinvest above depreciation? And then if I could also add in the surface or open pit companies are also talking about growing in underground. They've been doing it for years, but how do you factor in competition?

Well, if I talk about the replacements, we can see the replacement cycle coming up now in the coming years. It's clearly there, because the equipment underground is pretty old. So we do see a great opportunity there with the replacement cycle coming up. Again, we can have a bigger share of that replacement because we already have seen replacement cycles coming up with other OEM equipments, and we are in there with other offering that we are having in our offering. So take, for example, Deswik agnostic software, we know the customers. We already can see when the replacement cycle is coming up, and we can get into that business. If you look at surface, of course, the competition is tough, and I'm happy it's tough because it keeps us on our toes, it keeps us making better products all the time. What I mention here is that we have renewed our offering, a very modular approach and modular set of products on the surface. So drill rigs are modular, which means that you can start with the diesel drill rig and you can convert it to electric one. We have also several customer testimonies now where our drill rigs has performed better than the competition. So this is the window that we are looking at. We have got the first drill rigs into the customer side. They are going to replace the rest of the drill rigs in the coming years. And as I said, which one will they choose? The same as they had before or the more productive new one that we offer. That's where we are at the moment. So we see a very good opportunity to actually capture a bigger market share in the surface.

All right. So we'll take from James and somewhere back there that I don't see. But we start with James, and then we have opportunities to ask questions in the breaks, but also at the end of the day. Please.

I wondered if we could talk about copper and gold CapEx. I mean it's been quite strong for the last few years. When you talk to the majors, your 60% customers, do they give you an indication of the phasing of world copper and gold CapEx over the coming 2 to 3 years? Do you see it as a straight line towards your copper deficit? Or do you see some cyclical choppiness at the moment that has to unwind before reverting to your more academic outlook?

Well, as I mentioned, we have a gap coming up in those commodities, especially copper, and that gap has to be covered in one way or another. And when there is a gap, you can speculate that their commodity price will stay healthy, but that is really after the market. We do see a strong need for new technology to get productive. You heard about what [ Reko ] or Codelco said, they are capturing ore from areas that they can't do without our technology. And we're going to see more of that. We're going to see ore bodies that are so deep, so you can't go with a diesel machine, you need a battery electric to get there. And we're going to see more of that. So I do think we have a great opportunity here because there is a gap in commodities, and that has to be covered in one way or another. At the same time, I cannot tell about the commodity prices and where they are going, but they are on a healthy level at the moment. I have strong belief that we will continue to be on a healthy level, but the market will tell.

All right. Thank you. Let's take the last question.

Anders Roslund, Pareto. I had a question regarding your market position versus one of your major competitors, they are a little bit stronger in drilling and you're in load and haul. Is that something that will remain the fact for the foreseeable future? Or how do you sleep on that?

Well, I'm happy about having competition because then we have something to compare against. On the underground side, we are world leading, both technology-wise, market-wise and so on. We have the best solutions, and we have end-to-end offering. They will take some time for our competition to catch up to have a similar offering that what we have. I'm not seeing that happening rapidly. On the surface side, we have said that we are #2. We don't like to be #2. We would like to be #1. So we have put a lot of R&D, a lot of effort and focus on the surface side, what can we do there, benefiting from our expertise and knowledge underground. I think we are doing very well with the growth we already had and with the customer discussions we have had that they are really seeing us a good choice for the surface drill rigs. We are aiming at being #1 on surface as well.

All right. So thank you, Stefan, and [ Henrik ], and for all good questions. It's now time for our first longer coffee break, and it's around 30 minutes, and it's not only for you to take refreshments, healthy and unhealthy fika. It's also for you to, again, visit the stations at the back of this house at the exhibition area and speak to our enthusiastic Sandvik experts. So you know a lot and they can tell a lot. So please do that, and then we will call for you when we start again.

All right. We're back again and I hope that you are filled with some energy and of course, some knowledge because now we are to listen to the President of Rock Processing, Richard Harris. The stage is yours.

You might think that rock processing is about taking large rocks and then making them into small ones. But for us at Rock Processing, it's about eco efficiency in the hands of our customers, in an industry that uses 6% energy globally. I'm Richard Harris, very proud to be standing in front of you and leading Sandvik Rock Processing. Let me start with our strategy. We're a relatively newly formed business area from 2021. Back then, we had a scale of around SEK 7.6 billion. We focused very much on structure and efficiency. And at that point, we also acquired Kwatani mining screens in South Africa. A short space of time after that, we expanded quite a lot with the acquisition of Schenck Process Mining. That only -- not only changed the scale of our business to around SEK 11 billion, but it also changed our product lineup and our access to mining in high-capacity screens. It also complemented our geographic footprint and allowed us to further enhance the efficiency of mines with our offer. From 2019, we've grown 6% per annum. And going forward, we seek to grow further at 9% per annum. Recently, we've also announced the intention to acquire OSA, which is an important step in our strategy for demolition and recycling, which I will come on to. Indeed, Schenck Process has been a successful story for us. You can see on the right of the screen, our screens proudly showing the Sandvik brand. We have spent the last couple of years integrating Schenck. We committed to EUR 150 million in synergies. And to date, we have accomplished EUR 60 million in synergies. And that by cross-selling crushers and screens to our respective former customers as we go forward. Maybe one of the most important things is that as Sandvik Rock Processing, our proportion of mining business from 2019 has grown from 34% to 56%. And also our revenue in aftermarket has grown to 60% plus, very much in line with our capacity. So far, so good with the Schenck acquisition. We've delivered quite solidly when it comes to profitability. One thing that I'm particularly happy and proud about is the fact that we have managed the downturn in the infrastructure sector quite well over the last couple of years, settling on an EBITA of approximately 15% and with a return on capital employed of 12.3%. Going forward with an increase in aftermarket, where we see higher profitability, particularly in mining and also with a recovery in infrastructure, we see profitability between 17% and 19%. We also see a leverage on incremental volume of 25%. And we will improve our return on capital employed as we realize more synergies from the Schenck Mining business and also we normalize our net working capital levels. Our new targets to 2030 are therefore 9% growth, 65% to 70% relatively in aftermarket as a proportion of our business. And as I said, an adjusted EBITA of 17% to 19%. So how will we get there? Well, we see expansion in attractive segments to a scale of SEK 18 billion. And you can see on the right a stacked bar, the bar shows an indicative proportion of business between Mining & Minerals, Demolition & Recycling and Quarrying & Aggregates for 2024 and the future in 2030. For mining, we see a growth of 3% in the market. And here, given our strong position with our equipment and our know-how, we target 3x market growth. For Demolition & Recycling, we see an even stronger market of 5% to 6%. And here, we target a growth of 5x the market. Today, we are relatively small. We will take our place, and we will grow organically and by acquisition. And in Quarrying & Aggregates, we see growth of around 3%, and our plan is to grow with that market and use the technology we have available from mining, which is applicable in that sector. So we will continue to expand in mining, strengthen our position in mining with the full crushing and screening offer that we now have. And in fact, there are more deals to compete on. So now we have crushing and screening. We offer both or separately depends on the deal, which has opened up a much wider set of deals for us. And I will come on to how we intend to increase our aftermarket capture going forward. One thing we love is our crushing technology. And here, we will continue to leverage our crushing technology. Remember, I said at the beginning, world energy usage around 6% in mining operations. 40% of that 60% is in the grinding operation alone. And that's why it makes sense to crush more and grind less. And when we have installed that technology in our customers, we have seen an impressive outcome, efficiency gains between 10% and 20%, the value of which, of course, is very important for our customers. We have 600 mines in which to apply that technology and the different concepts that we have. And one important step for us is previously, we had announced the 800i series of crushers. And in general, it's very important for mines to have the right technology to be able to crush smaller and to save energy. We're pretty proud to say that in the last 12 months, we have doubled the sales -- sorry, the order intake of those crushers in the marketplace, a very strong step in the right direction. We will also expand from our solid position in aftermarket. We have a lot more equipment now in the mining industry. We, of course, took in Schenck Process Mining, Kwatani, and we've grown the number of crushers we also have in the mining space. We continue to add to our value-adding service for aftermarket, and we will look for acquisitions that make sense in this space as well. We add value to our customers in a number of different ways. First and foremost, with people and our competence in describing the right flow sheet to make sure we have the best tonnes per hour, the best efficiency, the best outcome for our customers. This for brownfield applications where the circuit already exists and also where a mine is being designed. Secondly, we continue to have the best of original equipment spares and wear parts that we distribute through our global network. And we repair, renew and replace based on customer requirements. In addition, our digital offer is very much about solving real-world problems. On the screen to the right, you see an application called WearApp, which is also showcased actually at the bottom of the building if you didn't have a chance to take a look already. In the marketplace today, it's commonplace that people climb over screens to measure the wear of panels on a screen before they decide what needs to be replaced. So the analysis is very much manual. This application takes a dirty and dusty environment and takes a picture of what we need to do and then gives advice on what to change and how to change it. Very much helpful in terms of time, accuracy, efficiency and safety. One specific area in which we plan to advance even further is in screening media. To the far right, you see a picture of one of our screens with 2 decks. And in each deck, you see an orange panel. That's actually a surface made up of the far right exchangeable panels, which are around 1 foot square. Those panels wear as the abrasive rock rolls over and through as the material is screened. We have been expanding the numbers of people we have in the marketplace, technical experts. We have also been expanding the number of machines and operations we have close to customers. And one thing we know about is what's important to customers. So if you see the words to the right from a very important customer of ours, their challenge was they needed to replace panels every 6 weeks, so they only planned to shut the mine for maintenance every 12 weeks. With our knowledge, our expertise and our product, we are able now to keep them running between shutdowns. And anyone who runs a continuous process operation understands the value of keeping running between planned downtime. That is the kind of value we add to our customers. Turning to our digital offer as a whole. We now have the same level of automation on screens as we do on crushers, one thing we've been working on since the Schenck acquisition. An important development for us is in the middle of the picture, which is wireless energy harvesting sensors. Why is that important? Well, a real-world problem is in a dusty, dirty and often dangerous environment, up to 12 sensors are attached to a screen and the batteries need to be replaced in order for data to be supplied from the equipment for analysis. With this system, no battery is required, no change is needed, data continuously sent from the screen and indeed the crusher through to our sound system, but also to a customer control system or SCADA system and also in the hands of technicians at the mine and our technicians remotely. So what's this all about? This is all about efficiency, keeping running, ensuring we understand the condition of the equipment in operation and that we are ready to replace ahead of a breakdown. And what's in it for us? Well, of course, aftermarket business because the system points us to the items we need to replace and to help us capture aftermarket. But don't take my word for it. Please, again, at the bottom of the hall, this is showcased. Please ask any questions you have as detailed as you wish. We also have a great opportunity in Demolition & Recycling. And in this space, there are a lot of trends that help us. First of all, there's urbanization, and that grows over time. We see that legislation demands that we recycle more and we behave in a certain way. Society demands that of us also. Raw material becomes more expensive and technology advances. So all of these things contribute to growth. And we have a good place to start from organically, and we will also continue to look for companies to acquire along the way. Along the bottom of the screen, you can see the value-added chain for demolition and recycling. We have an offer that covers everything from material strip-out, primary and secondary demolition, crushing screening, separation classification and site preparation. So other than reforming, repurposing and construction itself, we have an offer for the marketplace. And as I said, we expect the market to grow 5% to 6%. But where should we play? Well, really, it's where 2 things combine. It's where we already have a great network of dealers out there in the world for the Rammer hydraulic hammer product and also where we see significant growth opportunity. And for us, that's North America, it's Europe and it's Australia. Very much in line with our strategy, we announced our intention very recently to acquire OSA. OSA is an Italian business. It produces attachments that cover all of the value chain that I showed on the previous slide. They have in-house capacity and very much focused on solving problems for customers and developing new offers, very similar to our way of seeing the world. They also have a shared view of how we can grow together in the future. So a very important step forward in expanding our offer in demolition and recycling. So we plan to make a significant step in the size of our business from SEK 11 billion to SEK 18 billion in 2030. And we will do that, we believe, by a combination of 50% organic and 50% acquisition. And as I said, acquisitions previously would be downstream in mining, in demolition and recycling as well. So then to summarize, leveraging our strong position that we have in mining and the untapped opportunity that we have in improving mine efficiency and expanding our aftermarket in the way and one example I've shared with you and continue to expand in niches downstream in mining and also in demolition and recycling where we see a faster growth. We will deliver 9% year-on-year growth to 2030. We will increase our aftermarket proportion from -- in the region -- range -- in the region of 65% to 70% and our earnings in the corridor 17% to 19%. And one final thing. Remember, rock process it's not just about taking big rocks and make it into small rocks. It's about eco-efficiency in the hands of our customers. Thank you.

Thank you, Richard. Crystal clear, I think. But let's see now if we have a few questions to you. So are we ready with the mics? Yes. All right. We have a question from Anders here.

Anders Idborg from ABG. So 2 to 4 percentage point margin lift up, that seems -- that's very ambitious and particularly when the mix that you have already now between equipment and aftermarket seems pretty strong compared to history anyway. So when do you expect to be in that margin range? And what needs to happen? And I'm thinking also with the dilution that you might incur.

Yes. As I said earlier, I think we've done pretty well, and we're pretty happy with how we've coped with a lower volume than we may have expected because of infrastructure. So it stands to reason that we need some recovery in infrastructure over a few quarters to take the benefit actually of the lower cost base that we have delivered over the last few quarters.

Okay. Any point in time you'd care to share?

Yes. There, I would be predicting the future of demand in infrastructure, and I haven't been able to do that yet. So I'm not going to attempt to do that here and there.

All right. We have Daniela here.

Given it sounds like the main inorganic opportunities in demolition, can you tell us a little bit about the structure of the market there? Is it a very consolidated, very fragmented market? Are there large M&A opportunities or is it more bolt-ons?

I think it's a fragmented market. I think there are many smaller players when it comes to attachments. So there are opportunities for bolt-ons for sure, of different sizes and different natures. Some are vertically integrated, which we tend to prefer with our own in-house development and product range manufactured by themselves. And there are others that are much more a supply chain type of organization. So yes, it is fragmented.

Is it already margin accretive to demolition? Or how does it play into the margin target?

It's around the same level, yes.

Richard, for the demolition and recycling market, would you expect to stay in rocks and concrete? Or would you expand into metals recovery?

It will be mostly rocks and concrete. And of course, to a degree, there's metal recovery when you take a building down with rebar and so on. But in general, it's rock-based, yes.

Here, we have a question. Jonathan, yes.

Just coming back on the margin improvement. So is the majority of it -- would you expect the majority of it to come from market recovery as opposed to increased aftermarket growth mix?

It's a combination over time.

Are you able to give us a sense of what that -- how that combination might work?

It's difficult to know what happens first in all honesty. So recovery in infrastructure, as I said earlier, I'm not sure when that will come. But maybe that's around 1/3 of it. The rest of it will come from our programs when it comes to increasing aftermarket and increasing in the demolition and recycling business, which in itself, of course, is linked to infrastructure. So it's difficult to say when, but in proportion, roughly equal proportions.

All right. Are there any more questions? Yes, we do have one in the back from James.

I wondered if you could talk about the profitability between aftermarket and equipment. And specifically the gap, has that gap closed or widened over time? And as you think about your margin trajectory and being 1/3 coming from the aftermarket, does the gap basically stay static through the next 4, 5 years? Or is -- are you expecting a greater margin expansion in aftermarket margins versus equipment margins or the other way around?

That's a number of questions, I think. So the first one is, do we see the gap between margins in aftermarket and equipment remaining around the same? And I would say, yes. So one of the ways that we improve our profit levels is we increase the proportion of aftermarket business. That's the simplest way I can answer.

Simple is good. All right. Any more questions? Please do take the opportunity. We have a few minutes more in this Q&A session. Good. Sebastian, yes.

Yes. Just wondering how these targets feed into your compensation at the end of the year and assuming you're still around working for Sandvik in 2030. So how will this be reflected?

I'm not sure that's a matter for me to answer about how much...

In your current contracts.

I mean, of course, we have incentive based on our performance, and it's incremental every year. So every year, we have to improve, and it will no doubt form part of the way that would be calculated. But the exact numbers, I can't give you because I don't have them.

And would you say you have these growth targets, you have EBITA targets?

Yes.

You can buy growth, you can buy EBITA. Would you think this is a bit of a soft target in the end?

No, we have balanced targets. So our targets are typically balanced between growth, profitability and net working capital or use of cash.

Olof and then Andreas.

Can you say something about multiples for the targets that you're looking for in -- of demolition?

It's specifically not. They vary quite a lot. As I said, there are bigger companies that have different ownership structures. There are smaller companies that are privately owned. And I guess, as you would expect, that gives a wide range of multiples when we look at the possibilities for acquisition.

Andreas Koski from BNP Paribas over here to your left. Just on your growth target of 9%. Can you split that into acquired growth and organic growth? How much do you think you will need to acquire to reach...

It's around 50-50, yes. It's 50-50, yes.

And in terms of your product portfolio today, do you feel that you are strong enough in crushing and screening versus your larger competitors? Or would you like to make a lot of acquisitions there as well?

I would say so in general, there are always parts where we would like to develop a little bit more for specific niches and for specific reasons -- regions. But there's nothing in the crushing and screening necessarily that I would say is a big missing piece.

All right. Thank you, Richard. So now to a topic I know that many of you are interested to understand more and hear more about and regarding progress, collaboration and opportunities. And this will be listened to now by the soon-to-be separate business areas, Intelligent Manufacturing and Machining and from Mattias and Nadine, please.

A warm welcome from both of us with Mattias Nilsson, President of Intelligent Manufacturing and myself; Nadine Crauwels, President of Machining. We will elaborate this session a little bit more exactly on our collaboration, our common goals, but also our common progress. Before we start, I would like you to listen to the voices of our customers. [Presentation]

Clearly, what our customers are saying is that they are looking for a true partner, a technology partner to go on this common journey. And that is a great segue into the fact that we have a unique position and a unique offer in the manufacturing industry. Our unique position in this industry comes truly from the fact that we have both hardware and software solutions under one roof. There is no other company that can deliver this. What we have here on one hand is 80-plus years experience in the manufacturing industry, delivering our customers with innovation, efficiency and productivity. On top of that, we are part of the industry we serve. We deliver it with great trust and credibility. On the other hand, we have world-leading software solutions that are really covering the full value chain of our customers with the opportunity to create digital threats. Now the competitive edge is truly coming from putting those two together because the piece that makes the difference is the data advantage. The data and how we apply it into the different solutions makes our customers one step ahead. These solutions are going to drive the industry further, even thinking in the next-generation thoughts of including as well AI. All these offers are applicable for the broad audience of customers, not only the enterprise customers, but also the small and medium-sized ones. So a truly unique position to change the manufacturing industry. How does this offer then look like? Well, today, we have through the full value chain, an offer that is represented in every vertical of the value chain. This portfolio has been growing in the last strategic period, both in an organic way, but also through acquisitions. This full flow of opportunities gives us also the chance to by step-by-step connecting all those pieces of the value chain together. On the other hand, it also creates still flexibility for our customers because they can enter in whatever vertical there is on this part. Their pain point is going to be the guidance for us on where to start the journey and build from there on further. We don't only have the offer, but also world-leading positions in several places. We are the cutting tool leader, #1. We are #2 in the CAM software when we look to our end-user payments base. And we are #2 in the agnostic metrology software business. With this great offer, what are we then solving? What are the customer needs? Well, let's start from the trends we see in the market. The components to produce become more and more complex. The time for our customers to get those components out, the time to market for them is getting shorter. It needs to go faster. At the same time, there is an increasing skills gap that needs to be bridged. That is where we come in and we can support our customers by creating efficiency, productivity, but also an increased support and services. The different types of customers might demand a different approach. Enterprise customers, they likely have technology teams that want to partner up with us to really focus on end-to-end solutions. The small and medium-sized customer where it is likely that one person, maybe the owner is taking the decision and they want to go for a clear turnkey solution. So this is the way how we can approach them, but where are they on their automation journey?

As Nadine just mentioned, today's complexity and the increasing skills gap will drive automation. From a recent customer study, it stands clear that most of our customers today are still operating their process on a fairly low level of automation. When looking at this model for assessing the automation level in a factory, Level 3 -- level 1 to 3 indicate a process where the human operator is in control of the different steps of the value chain and only using software for the sake of monitoring or getting input for decision-making or maybe using robotics for heavy lifting. 2/3 of our customers say that they are on these levels today. Only 1/3 of the customers are on Level 4 or 5, where the humans are focusing on developing or improving the process with cells of several machines being fully connected and highly automated. Almost no customer in our industry can run their process fully autonomous or unmanned. That is, for instance, the case in the process industry. Tomorrow, you will have the opportunity to experience our factory here in Gimo awarded by the World Economic Forum as one of the first lighthouse factories in the world connected to Industry 4.0. They are running their operation on Level 4 and 5. So what are the customers saying about where to be in 2030? Well, more than 80% of our customers say that by then, they will have significantly increased their level of automation with more than 2/3 being highly automated, leaving the remaining less than 1/3 on largely manual processes. They will do this to reduce repetitive and manual tasks, and they will do it by applying modern technology like digital thread, cloud and artificial intelligence. I think what's good to know is that Sandvik, we can serve our customers already today on any given maturity level where they are at. And what's even better to know is that with our unique position, we have a very important role to play when it comes to helping them on their automation journey. And then the question is there, why is the manufacturing industry so slow in fully utilizing digitalization? Well, manufacturing is a complex environment with limited integrations of the different hardware and software systems that we have in the different steps of the value chain. Today, the work and the work tasks are typically carried out by an expert in their domain, doing their work with their tools using their sets of data standards, then transferring the work to the next step in the value chain with file transfers, where the next expert takes on using their tools and their sets of data standards. This way of operating causes data silos, slow information flows and the need for manual interventions and not seldom the risk of errors. Optimization typically tends to take place in each of these different steps with very few examples today of feedback loops to make corrections for mistakes or to improve a process. But in the manufacturing workflow of tomorrow, if we look at that, the digitally planned manufacturing process and the actual physical manufacturing process will come together to a common digital thread, fully connected. That will enable continuous automation, simplified and more efficient production and sometimes that will happen automatically. With our different positions in this value chain, we will be able to create digital twins of material, of cutting tools, of machines, of machining and inspection processes. And with all of this coming together, we will have a virtual representation of the entire process that can be used in the customers' digital thread for them to simulate or optimize the process before any actual production occurs. By also then applying AI agents and training them on our proprietary knowledge, we can give the customer a unique experience from design to finished component and helping them to accelerate their automation journey.

Absolutely, Mattias. And that brings us to the point what are then truly the benefits for both our customers and ourselves. First of all, we need to state that every customer that goes on this digitalization journey will have benefits whoever they will partner up with. And those more generic advantages will be faster time to market, more data insights. But of course, it is more important here and now for us to emphasize the advantages or benefits they get by collaborating with us at Sandvik. We have here a few ones listed up there. One of them is the opportunity for the customer to work with multi-entry points. As we said, every customer has their own pain points, has their own area where they can start and feel that they need to improve their efficiency and productivity. We can start at any part of the value chain and work [ on cells ] through step-by-step and connecting the dots. At the same time, we also are part of the industry we serve. It is great to be here in Gimo, and you will see tomorrow as well that we are showing the way by applying it ourselves in our own production, again, creating credibility and trust in the solutions. Last but not least, we talk about data, reliable data available. When we think around our manufacturing industry and the long experience, we are sitting with data richness in tooling data, material data, machining data, all of that together to give a competitive edge and an advantage on how this creates our customer benefits. At the end, it also create benefits for us at Sandvik because we, as having a unique offer of all this hardware and software, we create an attractiveness position. At the same time, there is also a stickiness by linking it both to the hardware and the software. And it gives the opportunity to work with new business models in the future. Then you might ask where are we then? What are the proof points of our collaboration so far? Well, we can highlight a few ones. The most mature and the one that has a significant impact already today for both of us is the lead generation program from Sandvik Coromant and Vericut. The Sandvik Coromant salespeople create leads to really secure that our customers have then the tools, but then also the Vericut software that combines in this mutual advantage. We see these results both in Intelligent Manufacturing as 7% of the new sales software, including also the recurring and the expansion revenue is coming from these leads. But also on the cutting tool side, at these customers where we have this combined view then, we see an increase of tool sales of 10%. The other examples here on this list are ones that we implemented already today, and I would be really looking forward to be able to quantify the results at the next Capital Markets Day. We implemented as well tool recommendation and purchase opportunity in CAM. We are working on the channel partners that have been acquired to also secure we can increase our market share on the tooling side. And last but not least, we talk about the enterprise customers. An enterprise program can be started by either of us. Some of them approaches intelligent manufacturing. Some of them are knocking on our door into the machining, but we can, from both sides, start a journey of the digitalization.

So by collaborating together across our different businesses and with our customers in manufacturing, we will be able to realize synergies that drives revenue growth above market level in the years to come. We will do that by offering unique solution, enabling our customers to automate their processes to maximize cross-selling opportunities across our wide customer base and strengthen our role as a partner to large enterprise customers.

And we are able to quantify these for the next coming period. We will, for instance, on the machining side, 15% of our organic growth will come from our collaboration and synergies. On the Intelligent Manufacturing side, 25% of the organic growth is going to be from this collaboration. When we look to our growth -- our CAGR growth over the next strategic period together, Intelligent Manufacturing and Machining, that is adding up to a 5%. By that, I must say our customers told us in the beginning, they are looking for a partner. They are looking for a technology partner on this digitalization journey. We, as Sandvik have a common offer, a unique offer through which we will change the manufacturing industry. Thank you.

Thank you very much.

Thank you, Nadine and Mattias. So in fact, it's actually time for a break again, the last one for today. And if it was not clear in the beginning, we will have a Q&A session with Mattias and Nadine after their respective presentations of the separate business area to be. So we will call for you if needed. You seem to be very eager to come back, but I see that you need some coffee. So fill it up. And last opportunity also to visit our Sandvik experts. Sorry for repeating myself. Okay. [Break]

Welcome back. As you heard before the break, we will deliver on synergies by collaborating together, machining and intelligent manufacturing. I will continue to expand on that, but also talk a little bit about how intelligent manufacturing also on our own can generate customer and shareholder value. First, let's take a look at where we stand today. Sandvik has already Sandvik an Intelligent Manufacturing has already established a strong manufacturing software platform, well positioned for growth. In the last 12 months, end of Q1, we had generated SEK 3.1 billion in revenues, trending towards our long-term target set for this year at SEK 4 billion, including organic and inorganic growth. 60% of these revenues were recurring, providing us with a stable revenue platform for the future. And more than 95% of our revenues is coming from software business. These software businesses did generate an adjusted EBITA margin of over 25% during this period, with the BA business area coming in at 22%, on par with our set long-term target for 2025. The difference between the 2 are investments that we are doing in new technology and business development activities that will generate significant growth mid- to long term. In this period, we have also delivered a return on capital employed at 8% with a positive trend with the Q1 of this year coming in at 10%. So what more can we refer to when we're saying that we are a strong platform for growth and strong manufacturing software platform. Well, we have built a strong position in our markets. We are #2 in computer-aided manufacturing or CAM, and also agnostic 3D metrology software. Looking at the CAM market in the upper part on this slide, this market is fairly consolidated, carrying a potential of SEK 30 billion, expected to grow 6% to 7% per year in the coming years until 2030 and where we have a particularly strong position with small and medium-sized machine shops. Here, we offer CAM and verification software for all types of applications in machining and in nesting. When we then look at the 3D metrology software market in the lower part of the slide, this is a more fragmented market. And it has a potential of SEK 18 billion expected to grow 6% year-on-year until 2030. That it is fragmented is because you have a mix of OEM manufacturers producing equipment for quality inspection, but also developing their own software that needs to go with that equipment. Along with that, you have the agnostic software providers like Sandvik, among which we are #2. And here, we are particularly strong with the aerospace and automotive segments as these demanding customers need agnostic providers and software that works on any technical platform. Zooming in on the CAM market again, Sandvik has been growing faster than the market since the acquisitions of these business units we have. Looking at the CIM market analysis report from last year, it was estimated that we would be growing faster than the other companies among the top 5 vendors in this industry. So how are we doing this? Let's look at a couple of examples. Starting with Mastercam. Since the acquisition of Mastercam in 2021, they have been growing their revenues organically by 7%, as you can see to the -- in the left graph. Since then, we have invested in product integrations and development that already today generate unique experiences for the users of the software. But also from the mid of this year and in the next couple of years, our customers will have an exceptionally significant productivity improvement, both for the CAM programming, but also for the machining part. Mastercam has also started to acquire channel partners, resellers in particular in the U.S. market, where they so far have acquired territories covering 50% of the addressable customer base. All of this together has made them to grow 16% year-on-year during this period. But also, as you see in the center of the slide, increased their EBITA margin with high single-digit numbers. Another good example you have already heard about, Nadine talked about the collaboration with Vericut and Sandvik Coromant. With the lead referral program that they have engaged in since the last couple of years, in 2024 the leads generated by the sales team in Sandvik Coromant accounted for 7% of the software license sales in Vericut. But this is just the beginning. With any license sold comes also recurring revenue from maintenance contracts that we can enjoy in the years to come. And we've also sold software add-on modules to these customers. Some of them has also invited us to other production units in their organization that generated additional revenues. So with the aftermarket sales from the leads generated by Sandvik Coromant, we did more than double the initial revenues that we got. So these are a couple of examples showing that we are already today providing customer and shareholder value. Now let's take a look into the future and what we're aiming for by 2030. Starting with our financial targets for 2030. Here, we have the ambition to have a total revenue growth of 15% year-on-year during the strategy period, to increase our share of recurring revenue to 80% and to deliver an adjusted EBITA margin of 25%. So how will we do that? To understand our path forward, we need to go back to what Nadine was talking about before the break and the pain points of the customers with the complexity of the production of the components and the skills gap. It's not just driving the need for automation, it is also changing the buying patterns of the customers. For example, 2/3 of our customers say that they prefer to buy software as bundled or turnkey solutions, meaning they're seeking fewer partners with a broader range of products. 75% say that they want to buy their software through face-to-face meetings, meaning we need to stay close to our customers with our application expertise. And 44% say that they prefer better access to technical expertise to resolve urgent issues. Here, we have the opportunity to explore how we can use new technology like AI to provide completely new and relevant customer experiences. With these customer insights in mind, it stands clear to us that we need to continue to evolve as an end-to-end solution provider, staying close to our customers. We've, therefore, formulated 3 desired future positions. First, to have leading solutions with seamless integration. Here, we want to continue to expand our product portfolio along the customers' value chain and to unite our businesses in a common mission around simplifying manufacturing with common theme should be seamless integration. Second, to be the leader in the market for small- and medium-sized machine shops. And here, we want to leverage our strong brands, but also to increase our share of our direct sales channel and through that, expand share of wallet by cross-selling. And then third, to be the preferred end-to-end solution partner to large multinational enterprise customers, selected customers, I should say. Here, we can build on our value proposition of our total software portfolio, along with the machining knowledge and the vast customer footprint that we have with this category of customers in the machining area. Let's take a look at these 3, starting with leading solutions. And maybe first a reminder of what solutions are we talking about. [Presentation]

I guess that shows how hard manufacturing can be, right? You need to do twice to have the sound on, too. But I think it's -- what is clear here, when we are addressing the customers' need to automate, our focus has so far been on trying to integrate these different steps in the customer value chain that you saw in the animation. For instance, by having the tool data and the machining know-how and the recommendations from Sandvik Coromant, more available and easy accessible in the CAM software. If we're now looking forward, our aim is to focus on helping customers enabling their digital thread, but also providing feedback loops where the customers can, for instance, use real actual machining data or data from the quality inspection upstream to, for instance, improve a design or improve a machining process. And going beyond 2030, when we can see that data can be seamlessly transferred across the value chain and when we can see that maybe design improvements and machining process improvements can be done automatically, that's when we are moving towards closed-loop manufacturing. To improve the user experience, we have also started to infuse generative AI into our products. Sandvik was first in the CAM market to offer this technology to our customers when we released our manufacturing copilot in several of our products last year. This already gives the customers exceptional productivity gains. For example, having machining recommendations from an AI analyzing a design file or user guidance any given time that gives you a 30% productivity improvement on the programming or being able to control what the software shall do just by using your voice or even as much up to 70% automation of all the programming work. These are game changers. And moving forward, we see a new era of manufacturing software, where we, with Sandvik and our unique position have the opportunity to digitize our know-how, offering digital application experts trained on our proprietary data around tooling and machining processes and with AI agents specialized in optimizing machining processes, making the life for the CAM programmer and the machine operators much easier than before. We are also investing in other technologies. For instance, a new CAM kernel and a metrology platform, focusing on applying cloud and AI, of course, and this will reinvent the way customers manufacture or inspect components in the future, much more seamlessly. To enable all of this, we're also setting up a new innovation hub in India, where we will benefit from a well-educated young talent pool and having these teams coming under the same roof, sharing collective intelligence. Let's take a look at our second desired position, being the leader in our main markets for small and midsized customers, and let's listen first to a typical customer. [Presentation]

What this customer confirms are that customers want fewer partners with leading solutions and do what their know-how close to them. With this in mind, Mastercam embarked on a journey last year to acquire resellers, as mentioned previously. They started in the U.S. market. So far, they've covered 50% of the territories with addressable customer base, and that has made them doubling the revenues up to SEK 500 million with accretive margins and at attractive multiples for the acquisitions. Now having direct access to this customer base, we will start to promote other software offerings from the Sandvik portfolio to these customers with an addressable potential of SEK 200 million more in these territories. These customers also, as we have estimated, spend about SEK 3 billion on cutting tools, some with Sandvik, most with other suppliers. Here, we have a great opportunity to explore new ways of expanding our market share through a channel like this. We're now expanding this globally out of the U.S., where we see huge upside potential not yet quantified. Then we come to the third desired position. Here, we want to develop a strategic partnership program, building on being an end-to-end solution provider and our unique position in Sandvik by having an agnostic software portfolio that can be integrated anywhere along the customers' value chain. With this program, we will identify new customer opportunities, and this should then generate additional revenues. In the first quarter of this year, we signed our first partnership agreement with Schaeffler Group, a market-leading motion technology company. So let's listen to what the... [Presentation]

So to assume our 3 desired positions, we have a very exciting journey ahead of us. And we will meet inspiring and achievable financial targets by 2030. We will achieve them by capitalizing on our unique position with our manufacturing knowledge and our software capabilities, to expand our share of wallet through SME market leadership and scaling our enterprise partnership program. We will drive a total growth of 15% year-on-year, where over half will be organic growth and where the inorganic part will be a mix of bolt-on acquisitions at attractive returns and a few strategic investments to enhance our product offering. All of this together will continuously drive improvement of our return on capital employed in the years to come. So we are going to continue to deliver customer and shareholder value within Intelligent Manufacturing, but of course, also to collaborate with you, Nadine, and with Machining. Welcome on stage.

Thank you, Mattias. Happy to present now as a last business area of today, and I hope you still have the energy to take a deep dive into the Machining world. We are a trusted market leader. We are #1 in inserts. And I'm happy to say that since 2024, we have a tight #1 position as well in the round tools. At the same time, we continue to have a high focus on innovation and invest 4% in R&D with result that every fifth product in our portfolio and in sales is younger than 5 years. What I am most proud about what we achieved in this last strategic period is 2 main shifts. One is around we repositioned ourselves towards growth areas on region, on product and on segment base through 16 acquisitions we did during that period. The second shift we did is putting us together as well with Intelligent Manufacturing and our own solutions in the forefront of digitizing our customers. And this, we are not doing only with within the Sandvik Group, but also leveraging the partners externally. When we continue now, let's first look at the market. Cutting tools is a growing market. When we look to the long-term market growth, we see that from 2011 to 2030, we have a growth of 1%. At the same time, we also see that there is a slight gap between the industrial production and the gross domestic product and our cutting tool growth. So the market gap growth there is coming mainly from a shift in the mix towards more services as well by enhanced cutting tool performance and there is also less Machining content in the manufacturing goods. Looking then into the gray zone ahead between 2024 and 2030. There we can see that the market has a growth of 1.2%. Taking this long-term market growth of 1% in consideration, you can see that there is, in this period ahead of us, a recovery calculated. How did we then perform in this last strategic period? Looking at this bridge, we can see that the underexposure in China has been almost fully compensated by market share gain. This market share gain came, majority-wise, from U.S. and Europe business. In the same period, we exited Russia, which makes this organic growth bridge complete. Through a very strong acquisition focus in the last 5 years, we have been growing faster and outpacing the market. In total, a 1.3% growth versus the 0.9% of the market. Double-clicking on this one, where we can see in this chart with the bars, our performance, in the dash line, the market development. We talk about long-term market growth, but you can also see that there has been very strong top cycle performances in the market in '17 and '18. After that period, it is also where China has started to grow more fastly. You see from '22 onwards where this acquisitive growth has been putting us ahead of the market growth. This is not only important versus our results then in that strategic period, but also because this is a repositioning towards faster growth segments. So not only outperforming in that period, but also creating the enabler for the next strategic period. Through that, we see a total growth of 3% in the next period ahead of us. I talk a lot about repositioning. How can we show some proof points of that? We can show it in 2 areas that we have been repositioning ourselves towards higher growth, both from a product and from a region perspective. On the product side, we know that round tools is growing faster than inserts. Here, we see that in the last strategic period, our relative mix changed for round tools from 19% to 24%, a significant change. Secondly, when we look at the regions, we can see that the faster-growing regions being Americas and Asia, both of them has increased mixed shares. If we put both of them together, we are surpassing 50% of the total. What is not visible on this chart, what I still also want to mention is that with these changes and repositioning, we also increased and strengthened our supply chain, because we became a more stronger regional resilient supply chain provider. Going then back to the future and doing another bridge of the coming years. Well, starting from this long-term market growth of 1% with this recovery of 0.2% that will happen over this next period, we can see our true market share gain outpacing the organic growth with mainly 2 big initiatives. One, going back to leverage from this repositioning towards these faster-growing segments and areas. The other one, building on the synergies we have talked about before together with intelligent manufacturing. On top of that, we will continue our acquisitive agenda. And both, together, will leave us with a minimum of 3% growth over the period. Shifting from growth towards profitability. We are very proud to say that we are having market-leading EBITDA margins. And this is something to be really proud about seeing also the macroeconomic development in the last period. If we think around the fact that we have a rolling 12 margin of 20.2% in Q1 2025, a strong performance showing high resilience, with the ability to deliver normalized leverage of around 40%. At the same time, a strong cash flow generation with a cash flow margin since 2019 of around 20%. What is this adding up to? Our target for the next strategic period is a growth of 3% CAGR and with a targeted EBITDA corridor of 22% to 24%. This, we are going to achieve with 5 main goals and activities. Three of them on the above line are going to drive our organic growth and outpacing the market there, building on our repositioning towards growth areas and segments, continuing on our high pace of innovation as well as building solutions for our customers with our own offer, combined with Intelligent Manufacturing and with other partners in our industry. As I told, on top of that, we are going to continue our strategic acquisitive agenda. And last but not least, we are going to continuously optimize our footprint and our operations. Taking now one by one, and starting on our growth areas. Here, we can clearly see the 3 areas highlighted with a higher market growth than average. In these 3 areas, we are also well positioned and will deliver a growth that is twice as high as their respective markets. In the Americas, for example, we are well positioned since we acquired a company, GWS, that is a complementary offer with customized solutions towards the strong presence we already had. We heard at the same time from Intelligent Manufacturing, they have many of their successful businesses with a strong footprint and their headquarters in the U.S. where we can leverage from the reach. And last but not least, also our supply chain optimization through the acquisition of BTI. Moving to Asia, excluding India, we acquired Suzhou Ahno, a top 5 player, where we are able now to combine local premium with also our international businesses. And in India, we already have a market-leading position with all our multi-brand setups, but still also acquiring, for instance, like Miranda Tools to also expand our product portfolio. Shifting then to faster-growing products and segments. I highlighted already a few times around round tools. Round tools is growing faster and through acquisitions, we changed our position and are now Type 1 leader in this part. We talked about aerospace and medical in the last Capital Markets Day. Those are growing segments where we are well positioned either through extremely strong relationship with our customers and a premium offer or as well in medical, where we did several acquisitions to strengthen our product portfolio, but also our end-to-end solutions. The new one here on this slide is defense, and that has been accelerating in the last period. But as you can see, our performance in the past years has also been succeeding the market growth. Well positioning there because it is often related to high quality and to a premium offer and very close related to many of the aerospace customers. On the automotive EV, we continue to grow and position ourselves into this area. We started from a low base as we acquired in the last period as well, several offers in all the different regions where we now have this to be able to grow further in the next time period. Talking about aerospace, talking about customers, let's listen to one of our... [Presentation]

As we heard, they want to be at their best every day. And that is a good segue into this second growth area around innovation. As we said, we are innovating continuously and putting our products to the next level. A few examples you see here on this slide. On the left, you see an exchangeable-tip drill, a tool we didn't have in our portfolio until now. So true market share gain moving ahead. The 2 middle pictures is really showing in practice more what we also talked about and what also Mattias was talking about on combining the hardware and the software because the hardware tools are developed for the next step and deliver better quality. At the same time, the tool path, how to use these tools makes a huge difference. And these tool paths are implemented in the CAM, available at the fingertips of our customers. And on the most out right side, you can see Toolhive. Toolhive is our new cloud-based software that is valuable for our customers in their tool management systems. Our tools have a lot of data during their lifetime going to different positions in the factory. To really capture that brings value to our customers. Hopefully, you visited it in the exhibition. If not and you're interested, you can always come back and ask more about that. The last point of our organic growth is related to what we call knowledge applied. As we have said several times, we are having many years of experience and knowledge. We have also a richness of data at our hands. That means that we can create built-in knowledge into our products, in our tools, but also in our advice and in our services. This through all the great multi-brand strong components we have in our package, addition with all the brands that Mattias was talking about in the Intelligent Manufacturing and on top of that, the external partners in the world. One element I would like to highlight here as well is that also the buying behavior of our customers is changing. Some customers want to have efficiency. Other need high quality. Others want to see their CO2 emission getting lower. By giving them the transparency on the data, they can have all of these different viewpoints at their fingertips. So that transparency and service level is also a high added value that we can deliver combinedly. This is really driving towards end-to-end solutions. And I would like you now to listen to one of our customers, [indiscernible] Matthew, in the medical segment, one of the fast growing, who have been and is on the journey together with us. [Presentation]

Seco has evolved through a strategic engineering partner. Until now, we talked about the organic growth. To continue to be a partner, we also want to grow our portfolio moving ahead, and that brings us to the next point of continuing our acquisitive agenda. In the last period, we did 16 acquisitions. So through that, we can see that we are an experienced and attractive serial acquirer. At the same time, we also created a very structured approach to all the different phases being transaction, integration and value creation. Our focus in the 2030 strategy period will be on attracting targets that are in our growth areas. We continue to build towards growth for the future, in products, in segments, in regions. At the same time, we are focusing on returns. We want to approach customers that have a high return on capital, a good cash flow generation. But at the same time, we also secure that we are paying disciplined multiples. Last but not least, acquiring partners, acquiring companies is, of course, giving us the strength to develop this full solution that our customers are looking for by connecting their offers together and give our customers the opportunity to tap in all of them. Summarizing then, we would say that besides growth, we also need continuously to challenge our operations. Optimizing operations has been part of who we are. We have been working on that for many years and will continue also in the next period. We have been working together with our different brands and divisions, of course, treasuring their uniqueness and also their market position. We see truly the opportunity to increase our balanced footprint to secure that we have a regional strength where we need to be, but also, at the same time, create cost efficiency and driving down our working capital. We will also look into a strengthened supply chain that is also sustainable. And here, I want to highlight our tungsten supply and the strong recycling and reconditioning program we have. To really support these restructuring efforts, we will have a SEK 3 billion spend in the next strategic period that will deliver an annual run rate saving of SEK 1 billion by the end of the period. All in all together, we will deliver 3% growth with a targeted EBITDA corridor of 22% to 24%. I would like to highlight here that we will deliver an organic growth outpacing the market with a good operational leverage. At the same time, we will deliver market-leading and industry-leading margins. We will have a strong cash flow generation so we can continue our acquisitive journey. We are on a path together with our customers, as you heard, and we are evolving into being strategic engineering partners to them. At the same time, we will have a growth outpacing organically the market and market-leading EBITDA, delivering value for all you as shareholders. Thank you very much for your attention.

Thank you, Nadine and Matthias. We will now have a -- many hands -- maybe not-so-short, Q&A session. And reminding you again that we will also, after that, invite Stefan, Cecilia, Mats Erik and Richard for a last Q&A if you have questions to Stefan and Cecilia or any remaining to the others. So yes, many hands. And yes, let's start here, Gustav and then Klas.

Thank you very much, Gustav [indiscernible] with Handelsbanken. Can I ask a question to both of you on the 15% to 25% synergies that you expect to achieve over the organic growth? I think you have some pretty promising examples. What we have heard previously, though, is that you have not sort of fully integrated these businesses, especially on the sales side, arguing that it's quite important to keep it agnostic, hard from a complexity standpoint to integrate this as well. So what I'm trying to understand is, has something actually changed in terms of strategy going to the market? Or are you just now more confident that you get the benefit from your cutting customer tools to the software and vice versa?

Should I start? Long question, sorry. I think, first of all, we have started small with -- you saw the example of VERICUT and Sandvik Coromant. It took some time to get that program up in place, learning from it, scaling it and to get it to where it is now. Now we're ready to expand that, and we are expanding it between other businesses, software to software, hardware to software, and that is taking place as we speak. So I think you will see significant synergies coming out of this. We have also mentioned the enterprise program here today. That's also in its vicinity with our first customer sign that should also add additional revenues where we also already collaborate together with Schaeffler between our different businesses.

I think it's very clear what you say, Mattias, as well. We have multiple proof points where the journey started and where we see really opportunity to expand and to repeat that towards other customers. So that is where also the growth is then coming from.

Yes. And then -- okay.

Klas at Citi. So I want to come back to Slide 105 when you show this growth leakage relative to industrial production. And obviously, it's more service, you have the lower content. And then also when you have -- and this is at least how I have understood it. If you have a 50% more productive insert, you're not raising prices all the way 100% to compensate, maybe 80%, leave some on the table for the customer. Within that 1.2% growth recovery, which is 1% market and 0.2% recovery, like how do you look at those headwinds, Nadine and Mattias, in terms of stabilizing? Or are they still there? And then basically, there is a market recovery within that? So I just want to understand the mix between sort of GDP recovery and that headwind. So a long question, but relevant.

Yes, a long question. Maybe we can elaborate. I try to -- first of all, the 1% is the long-term market. We are now -- and that is why we are seeing this recovery we are seeing in 2024 has been going slightly down. So the long term until 2030 is still 1%, and this recovery is what we see to end up by the end and still a 1% overall growth. So there is a slightly recovery from a dip that we see at this point in time. On the headwinds, of course, when you look at the bridge and we talk about organic growth where we say that we are going to outpace the market, of course, we still have today, when you look to the market composition and our exposure, we have still an underexposure. But also there, in that bridge, it was not detailed, but we are also having, of course, very good, from our innovations, ability to really create growth and also from adjacent businesses. So that is a little bit on how to understand the underexposure that will be recovered or covered up by these initiatives. And then on top, we talk about those 2 big elements to outpace the market.

My second one is on capital allocation. Obviously, the group has added in Europe a big part of this, SEK 22 billion of sales. It's been expensive. If I look at Intelligent Manufacturing, market growth, high single, then you get the cross-selling should get a low double, if I look at the 25% contribution of the growth, and that will leave 4%, 5% of M&A to get to 15%. So there is still an M&A component. And a lot of investors are concerned that you will overpay again for expensive software and automation, et cetera. If you could sort of describe a little bit about the M&A angle and the multiples that.

I think we've set a good platform now with the strategic acquisitions we've done in the CAM area and in the metrology area. And we see that they can grow organically and that we see -- starting to see effect also from synergies, business to business, software to software, software to hardware. What we are doing now is to look into bolt-on acquisitions. We are acquiring resellers, as you heard today. That comes with a good accretive margin. It comes with good multiples. So the overall business case becomes quite attractive and will be good for our ROCE going forward. So we are currently focusing mainly on the bolt-on acquisitions to strengthen our offering, getting closer to customers through these reseller acquisitions.

That's good to hear.

All right. Then we have Seb.

Yes, a question to Nadine. In your presentation, you discussed the end markets that are growing strongly. At the same time, you see an overall growth of 1.5%. You didn't, therefore, mention any markets that are structurally shrinking, maybe particularly conventional automotive. I would like to know what you see in the next 5, 6 years on that side. And similarly, on the regions, you flagged 3 markets that are growing and where you want to outgrow the market. You didn't even mention Europe. So I was wondering what you see in those markets.

Yes. Maybe first, starting with automotive. When we previously, we explained that our view on the 2030 that it was still by the end of 2030, as we communicated in the last Capital Markets Day, are still on an equal cutting tool potential. And that was indicated with an EV evolution that we talked about last time, but also explaining that we are having a big share in our heavy trucks and less in the light vehicles, what positions ourselves in a better way in the transition. Now when we update basically on what happened now in this last strategic period, that was rather a slowdown of EVs and still a strength of hybrids. So the whole automotive shift is delivering a slightly more positive, not big changes, but slightly more positive versus what we previously said for the 2030 outlook at the last Capital Markets Day.

[indiscernible]

At -- currently, when we look, of course, and you highlighted one yourself as well, on Europe, we are, of course, seeing that Europe is struggling and has been decreasing. And that, of course, is a big part of our exposure, and that is a lot related to automotive. And in general, it is automotive, general engineering, where, of course, the biggest headwind is at current situation.

I'm Olof from Danske. A question to Nadine. Can you please elaborate a bit on the Tungsten, Wolfram mine in Austria? I guess that China is a fairly large supplier of Tungsten and Wolfram globally, and there have been some export restriction. Have you seen any benefit from higher volumes from customers in Europe, U.S.? And it seems like Tungsten's price have moved up quite a lot. Is that anything that have benefited your business?

In general, I talked about the strengthened supply chain. And of course, that is very much linked to Tungsten. And Wolfram, you mentioned, yes, is in Austria, and they, of course, are really feeding all our premium brands and international brands with the right powder to really be independent of what happens in the market. We recently acquired the BTI in U.S. And that, of course, makes us regionally independent, what gives us in the current circumstances also a very strong position. The only one that we have in our portfolio that is acquiring powder from outside of Wolfram is our recent acquisitions in China. What, of course, is also very normal because that is a local premium and delivers really local in the local country.

Yes. External customers, is that a large share buying from you?

We always keep it balanced, first of all, to secure that we are having enough own supply, but there is a high demand. And I think you all know the geopolitical situation. So the demand or the questions we get is increasing, but we, of course, try to manage that business in the right level so that we are securing first our Sandvik needs and then our customers.

All right. Magnus?

Magnus here, Nordea. A question to Matthias. With respect to this bolt-on strategy you have with the resellers, how long time do you think it will take for that to be fully penetrated, shall I say?

It's hard to say, I think, to give an exact time plan. But we do have a program in place. We do know how to do it and how to do it effectively, and we have a plan going forward. So what you will see in the coming year or so will be a lot going into that.

So more like a 5-year journey than a 10-year journey?

I'm not going to speculate about the time it will take. We also need to accept the sellers' wish in these cases. It's always a business between 2 parties.

For sure. And just a number, 8% return on capital employed. What is that? Ex goodwill?

I beg your pardon?

Ex goodwill, the returns that you print now?

That's based on the EBITDA.

All right. We will take one question from Daniela and Andreas. And then we will -- we can continue with a big Q&A.

It's Daniela from Goldman Sachs. One question for Nadine. Just to better understand on the -- moving from 20% margin to the 22% to 24%. If we take the costs are fully net, it's about 2 percentage points, the cost saving basically. You don't have very high organic growth. So how do you get into the middle to upper end of the target potentially? Is that the acquisitions are coming at a much higher margin? And if so, how do you have to pay -- how much do you pay for these acquisitions?

Yes, there are a few different components. Of course, we will continuously work on our efficiency, also restructuring. At the same time, the focus on our acquisitive agenda is towards really companies also with high margins and who are really supportive in that area. On the other hand, it is also for us, important to say that this 22% to 24% is like a targeted corridor. We know we are not there. And it is, of course, also clear that to get there, we also need some market growth again.

And the multiples for the acquisitions, if they are higher margin, I think we shared some views on the multiples for the distribution acquisitions. So wondering on the ones on machining.

We will have a bit of a mix because in one way, when we do this roll up, we will have, of course, also still acquisitions in mid-markets in certain countries with very reasonable multiples. Otherwise, when we really are looking for high technology contributing customers, then it is with the value creation also interesting targets and pay still disciplined multiples, but then maybe slightly higher.

Yes. Just another one on China. I mean, even with the Suzhou acquisition, I guess you're still much below where the market is in terms of exposure. Is there a path to drastically increase your proportion to China? Or is that not possible? Or is it not desirable or...

We already have, I would say, a very attractive offer. We have our international brands. We have a premium footprint. We have a mid-market not only with Suzhou Ahno, but also Yongpu. So we have multiple players there that are addressing the complementary business. Here with Arno, I also want to say that they have a very successful business that they have been driving for many years because that's also why they are a top 5 player. But recently now in April, we really launched a new insert range for them. So that also means that we are going to expand the portfolio. So there are definitely points in our strategic agenda that will increase our opportunity to grow with the composition and the elements we have in our portfolio.

Andreas?

Matthias, a question for you. Industry 4.0 is at least 10 years old now, yet you showed a slide that 2/3 of your customers still have very little automation. When you go out there and meet them, I'm sure they say, yes, we'd love to adopt more automation, but here's 15 different headwinds to doing it. Why is adoption not happening faster? And where do you see that slide when you update at CMG 2030?

I think you will see -- tomorrow, you will see good examples of what we are actually doing in a world-class factory here in GMO, which is a very highly automated factory. But there are still gaps and there are still silos in the process. Just the fact of transferring data across and making it available in this complex system of various software, various hardware and making that seamless, that is the key to automate the whole thing. We will get there, but it will take time. So we're definitely looking beyond 2030 to see that happen.

Two questions for Nadine. Firstly, on pricing, what kind of price increases have you assumed with that organic growth target of 1.5%? Is it close to that then volumes will be flattish until 2030?

We are continuing on the same value-based pricing principles as before. So we are not changing our strategy there. So we will continue on that same path as we have done, but we are not detailing exactly on how much.

Okay. But if we look back, pricing has been around 1% in the past or...

That's not something to comment on from my side. We -- what's more important is the value-based pricing we do when we are introducing new products and of course, looking at inflation.

Okay. And then on capital allocation, you will spend 4% in R&D, and I think machining has 5% to 6% CapEx to sales. So it's quite high numbers, I think, for a business that is barely growing. How are you thinking about that? What are the returns on the investments that you are making and that you are looking for?

But here, I also want to emphasize that R&D, when we talk about solutions and all the things we are mentioning here, the R&D, of course, is a full bucket of everything we do to deliver on our innovation, on our products, but also, of course, the repositioning that we are doing as a solution provider. So you need to take that in a bigger context also for the future.

And if you would stop R&D, do you think the business would decline drastically or lower the R&D?

When we look into what our premium customers, and we listen to a few of them where we, each time, need to deliver more efficiency, also more ability to apply the tool path and the things we want really to differentiate in combination with software, we need to take it each time to another edge. So yes, we will need to keep on developing further in our product, hardware offer as well.

All right. A lot of questions, you can continue. But now I think it's time to -- yes, James, I see you. It's time to invite Stefan and Cecilia, Mats and Richard. So they're all here for you now, and we can continue. And I think the next question will be from James.

Maybe I could ask a little bit about the return on capital for IM, Intelligent Manufacturing. On my calculations, you spent about SEK 16 billion on creating the business. And you talk about SEK 3 billion of revenue and half your growth coming from organic, so 7.5%. If we compound that up, it would be 4.8 billion at the end of the decade and a 25% margin. That is about SEK 1.2 billion, if we tax that SEK 800 million, which is about 5% on the money spent to build the business. When you think about the return on capital, do you agree with those numbers? And how do you rationalize the money spent so far? And how do you think about the further strategic deals that you're signaling that you might do some of in that context?

Do you want to comment first, Cecilia, on the calculation, and then I can come to the strategic part?

I can start. Not necessarily agreeing with your end conclusion, your number there. I think we have done -- we have, like Matthias said, in Intelligent Manufacturing now done the core acquisitions that we need to build the core platform that we need. I think a lot of the capital that is getting allocated now to acquisitions are mainly in the reseller segment, which comes with very attractive multiples. And it's a cheap way, I think, of acquiring software revenue with high-growth and high-margin potential. And then when we said -- I think you said in your slide, Matthias, that you will also do some strategic acquisitions. In the Sandvik context, they are still bolt-on acquisitions, although they are strategically important for you in SMS.

Yes. I think -- so we will continue on this path that we shared here, getting closer to customer, the business case will be good, and I think we will see a continuous improvement of the return on capital employed going forward.

Yes?

Can I just ask on the 4 to 6x multiple on the CAM resellers. I imagine once you've made the acquisition, you're going to have to cancel some of the intercompany sales. So is that 4 to 6x based on post acquisition or pre-acquisition?

I can answer that...

I don't think you heard the question. No, I mean these resellers are essentially 100% selling our own solutions already. So there is no loss. There's no dis-synergy from the acquisition. Is that what you meant?

Well, yes, kind of. I mean if they're selling your stuff already, then you've got -- you've made a sale on the stuff that you sold to the resellers and then you're combining. So you have to cancel the...

No, the multiple is on the incremental margin.

All right. We have 1 more, 2 more. Okay. Let's start there in the back.

I'm Gustav from Nordea Fonder. Maybe just trying to understand the priorities on the M&A agenda in Manufacturing Intelligence. If you, for some reason, saw that sort of temporarily, there would be -- you wouldn't be able to reach those 7%, 8% coming from the resellers. I mean, what's the priority here? Will you be willing to take some lower growth contribution for a time? Or how should we think about the priority there?

We're driving for growth. And I think as we have shared here today, our aim is to get closer to our customers. That's why we're rolling up these resellers to have a platform where we have the IP and the product, the brands and to push those into a channel when we get closer to the customer. That will be a big, good business case. It will drive growth organically, inorganically, and that will be our focus. Then over time, yes, we will complement our product portfolio a bit by bit, but it should always be at good margin and good growth opportunities, good -- simply good shareholder value.

If I can complement that, and this goes across the board for all the growth targets, there is an inorganic component. We try to be transparent with each business area, what the proportions are. We will not go for just acquiring growth just to meet some kind of growth target. It needs to be good acquisitions. Otherwise, we would rather come back and say that we didn't find the right things and allocate the capital differently.

All right. We have a question from Gustav.

Yes. Just be curious to understand what kind of growth assumptions you have put in for Europe assets, I think, 50% of machining sales. I think one could argue that the drop we've seen in automotive production in Europe is probably not coming back. So I'm interested to hear if you sort of pencil that in for the future as well. And also if you see negative effects moving into the subsupplies for European industrial production.

The numbers that we have been showing here for our growth is, of course, building on what we explained in the beginning, how the cutting tool market is developing versus the CDP and the industrial production. So based on this long-term 1% growth, that is, of course, used into our calculations. Europe is, at the moment, on a low, and I think that everyone knows and also related then to the mainly the segments, automotive and general engineering. How this will develop, we don't have a crystal ball. We can only recommend that you, as we do as well, follow the best possible indicators like the PMI indexes and so on.

I want to add something here. When it comes to the market growth for machining, when we came out of the Capital Markets Day in Tampere 1.5 years ago, we realized one thing, and that is several of you said, we don't really understand the history. So it's very difficult to understand what you say about the future. It makes sense what you say, but we don't understand the past. So we cannot really judge the future either. I would say we have been on the most ambitious business intelligence projects I've been in when it comes to understand a market. We have used external resources as well. We have had a lot of people in team experts coming to these numbers, and it's with multiple approaches. It's using GDP, industrial production data by region with various kind of, let's say, adjustments depending on various dynamics. On the other dimension is going industry segment by industry segments, automotive, aerospace, rail, ship, everything, bringing that up as well and then finding ways to reconcile this and getting to this number. And I'm not a data analytics professor, but I trust the number that has come out of this, and I can tell you, we have spent so much time on it. So from our point of view, you might have different numbers. You're welcome to challenge the numbers, of course, the more we can learn the better. But for me, this is the truth now. The 1%, I trust it, that's the market growth. That's what we're going to judge ourselves against going forward.

Stefan, to your point, I think it's less that we are challenging the 1% or 1.5% growth. It's more that we also want to know how you address markets that are not running in your favor that are not growing, where you have to cut capacities or move capacities. And it would be helpful, I think, to see how you address the difficult markets. It's easy to address growing markets you just add people and capacity. it's much more difficult to address declining -- structurally declining markets. And in this setting here would be good to hear a bit how you approach that.

I can start and then you can add. First of all, you have to realize that -- I mean, let's take an example of one of these challenging markets. Of course, ICE automotive in Europe is one of these markets. Of course, it's challenged. In the total, as Nadine said, we did explain the dynamic for the automotive segment for us on the previous Capital Markets Day. But if you look at the subsegment of ICE in Europe, of course, it's not a good market. But from a footprint production efficiency point of view, the products and insert, whether they are going to make the engine block for a diesel engine or a fan for a jet engine, they are being produced in the same factory. So it's not like we have to manage the decline specifically in that segment, but it goes into the general volume challenge, of course. But that we are continuing to handle as Nadine presented, we're going to have continued efficiency programs to handle this in the business. And that's why we wanted to be transparent. It's quite unusual to go out with this 5-year SEK 3 billion cost without specifying more at this point, but we read at least some of your analyst report. And some of you have been fearing that it's going to be even more and so on. So we want to, let's say, cap that risk and say, we think we're going to have to spend SEK 3 billion in the next 5 years to manage the volume challenges in this business, but that's it. So if you want to, you can reduce 1 percentage point on the margin target because that's going to go into this program. The reason we have decided to do it like this and that it will be part of the items affecting comparability once we announce the programs is because they will not be even. It will not be the same cost every quarter. So to not have noise in the quarterly reporting, we prefer to be transparent with the total amount, but it will be an item affecting comparability in a given quarter to not have this year-on-year ups and downs. Do you want to add something?

Yes. No, I think, of course, you touched on automotive. One of the other segments is very much related to it, and that is the general engineering part. And that, of course, is also something that, of course, we know and that we are also repositioning ourselves with mid-market brands that we are acquiring and also focusing on other segments that are faster growing. So that is part of the repositioning. So the general engineering is also affected by automotive as kind of the next step in the value chain, so to say.

Yes?

Michael from Morgan Stanley. If I may ask a very short-term question. Since you published the results, things have moved quite a lot in terms of tariffs. So if you could update us on how that has impacted trading in the recent weeks? And then more specifically on the machining business, are we seeing volumes come from China to Europe that previously were not coming from China to Europe? And how are things going in the U.S. against your largest competitor?

First, on current trading, of course, we cannot comment. We can just say on the tariffs, the only thing that has changed regarding tariffs is, of course, the deescalation between U.S. and China, which, to begin with, was not a big impact for us. But of course, that's more in the positive direction to the extent there is an impact. Other than that, we have really nothing more to say than what we said during Q1 report because situation is pretty much the same. On the China and Europe, do you want to say something?

Yes. It's not new that when we look to China, China is still a very dynamic and fragmented market, but there is also already -- previous to tariffs -- there has been movement of China suppliers that go in Asia and also towards Mexico, for instance. So those are areas or channels we see moving forward. And of course, with the whole change and geopolitical decisions, it will be, for us as well, always kind of screening and looking at where are the different suppliers going and is there a shift of market for sure.

And just to comment also on the -- you asked about the U.S. competitor. You can look at their own Q1 report. They actually transparently there say that their exposure, when it comes to tariffs, meaning importing goods into the U.S., is actually higher than ours.

All right. Two last quick questions over here.

Just a very quick one, following up on the cost of the restructuring plans. We have seen several restructuring plans over the years. It looks like this is a 3x the cost versus payout. The prior one was 2x the cost versus payout. Is it becoming more and more expensive? How should we think about that when we think about cash conversion?

I can take that one. This one is really about addressing our footprint structural changes. And that tends to be a bit more expensive when you shut down things and move them. The others have been -- especially the first one -- was more of a volume challenge program, which is, let's say, more cost efficient versus the savings. But it's also more short-term savings in that case. This is really structural savings, but they cost a little bit more.

Tom from Wellington. Could you take a step back and talk a bit about how the M&A engine works? Do the 23 different businesses upstream cash to the group and then the group sets budgets for where they want to grow? Or are the acquisitions sourced by the 23 business leaders? And then who's in charge of the integration?

Yes. The acquisitions and the agenda is driven by our 23 divisions, of course, let's say, governed also by the business areas, but the acquisitions are being done by the divisions. The business owner and the pipelines are sitting with the divisions. Then, of course, there is an approval process all the way up to the Board once they want to do an acquisition. From a capital allocation point of view, now when we present these targets to you, we have been working with the business areas and the divisions for a capital allocation plan, meaning how much will it cost you to achieve this target with assumptions on multiples and everything. So we are confident that we can deliver on this plan provided we find the attractive targets that we want to have. But that's sort of an initial strategic allocation of the capital. And that is to make sure that each of the business areas know that if everything goes as planned, they will have that capital once they find the targets. But then as Cecilia said earlier today, we will evaluate each target on its own merit. It's not because you were allocated capital No, you can do what you want. Then we will come into the specific case. Is this creating value? Is it aligned with the strategy? Is it aligned with what we have told the community here, what we're going to do, et cetera. And then the integration is owned by the business once it's being done.

All right. Thank you very much. I cheated on the time a lot, so no. But you cheated on the starting time actually. So yes, we're even, and don't be mad at me. Anyway, the conversation is not ending because this part is ending. Most of us will have a dinner tonight, so you can press them further. But now I think we should give all of these good people a warm applause before they leave the stage. All right. No, no, no, no. Don't sit. So you can leave, and I will hand the word over to Stefan for some concluding remarks, and don't leave after that either because I have some more information to give you.

All right. You have now listened to our business areas. And based on what you have heard, I hope you agree with me what I said in the beginning that we have successfully built a stronger and more future-proof Sandvik. I hope you agree with me based on what you have seen that we have successfully executed on our strategy in this period and delivered on the targets we communicated almost 5 years ago. It's been a significant business portfolio transformation where we have repositioned the company for higher growth and increased resilience. We have built leading digital platforms. We have increased share of aftermarket sales among many other things. But as we also said, we are not done here. We are now shifting the focus towards the new strategy period and how we will be advancing to 2030. You have heard our business areas explain what their targets are and how they aim to deliver them. Mining with a revenue growth target of 8% and the margin between 20% and 22%; Rock Processing, growth of 9%, margin 17% to 19%; Machining, 3%; margin 22% to 24%; Intelligent Manufacturing, growth of 15%, margin 25%. Achieving these targets also means achieving the group target of 7% growth, a margin of 20% to 22%, a healthy balance sheet with a net debt-to-EBITDA ratio below 1.5 or rather around 1, as Cecilia said, informal target, and a dividend payout ratio of around 50%. Achieving these financial targets, in combination with a continued disciplined value accretive capital allocation will mean good shareholder returns.