Alleima AB (publ) (ALLEI) Earnings Call Transcript

Hi, everyone, and welcome to the presentation of the Fourth Quarter and Full Year Results 2023 for Alleima. My name is Emelie Alm and I am Head of Investor Relations. I'm joined here today by Goran Bjorkman, President and CEO; and by Olof Bengtsson, CFO. So Goran and Olof will take you through the results, and we will then have a Q&A session. [Operator Instructions] And you can download the presentation from alleima.com. As always, safety is a top priority for us, and I trust that you know the safety routines of where you are located. So with that, I would like to hand over to you, Goran.

Thank you, Emelie, and also welcome from my side. So let me start by summarizing the full year 2023. All-time high revenues, close to SEK 20.7 billion with an organic growth of 8%. And this is in a market with mixed demand, but I think we have a continued tailwind from underlying trends. We have grown our order backlog and the growth in our prioritized segments was higher than average, increasing their share from 36% from 32% in 2020. We had record high earnings, adjusted EBIT increasing 27% to more than SEK 2.1 billion and margin increasing from 9.1% in 2022 to 10.4%. Higher revenues, improved product mix, price increases are the main reasons for this improved results and also a strong cash flow for the year. Proposed dividend of SEK 2 per share. This corresponds to 30% of profit for the period and is an increase of 42% versus last year. Some other important highlights during the year, we have strengthened our offering towards sustainable applications. We have also decided on several growth investments and on one acquisition of Söderfors Steel. Some comments on our performance versus financial targets. An important business for this 2-year period, the targets are set over a longer time period than that. But if we look at organic growth, we grew 8% organically in 2023. We estimate that our serviceable addressable market grew 9%. And remember, we don't want to grow all pockets of our SAM. Our 4 targeted end markets grew 20%, [ 2020 degree ] versus the market growth of approximately 11%. Over the 2-year period, we have had our financial targets. Organic growth was 11% CAGR, and this total serviceable addressable market grew 14% CAGR. Targeted segments over the 2 year, 19% and this is more in line with the market or slightly higher than the market growth. Earnings margin of 10.4 for the year, average of 9.8 for the 2-year period, and we had the target -- when we've had the target -- target is to be above 9% over the cycle. Looking at capital structure, net debt to equity, minus 0.02. So there's plenty of room and please note that this 0.3 target is a maximum. And dividend, I already commented on average 34% over this 2-year period. In line with our strategy, where we are committing to increase profitable growth, we have decided on several growth investments during the year. We look into industrial heating, we decided to increase silicon carbide production capacity in U.K. We're also increasing capacity of processed gas heaters and modules in Germany. Within Medical, several increases of wire capacity both in the U.S. and in Europe. And within chemical and petrochemical, we are broadening the U.S. product portfolio. We decided on increased capacity and capabilities in China. And we also finalized the investment of a new heat exchanger production line in India. It was inaugurated in quarter 4. Earlier 2023, we finalized the investment of the H&I tube line in the same site, and that line is now ramping up in a good way. Looking into the quarter 4 highlights. We have a continued solid order backlog. Market demand continued to be mixed, some segments softer, while others are strong and we continue to have support from underlying trends. We had a negative order intake growth but on high comparables. We have a slight revenue decline mainly due to low demand in the low refined short cycle business. I think, however, if we look at our backlog, we could have performed slightly better. We had some output issues in some of our units in the quarter. I think we could have been maybe on low single-digit levels, and we came in at minus 1%. We grew earnings, adjusted EBIT growth of 5% and its positive product mix and price increases that continue to fully offset cost inflation. Looking at the sustainability KPIs, and I'll start with safety. During the year, we have reinforced the focus on safety, including increased awareness of our safety principles. And I can see that there are more initiatives in the divisions to improve safety. And we also improved safety performance versus 2022 and especially in Q4, that ended with a good improvement with the lowest ever on lost time injury. Of course, I hope this is a result of our increased focus but I believe maybe too early to conclude. What is important is that we continue our focus and continue to drive initiatives to improve safety. Recycled steel, we have now for 3 quarters to reduce the amount of recycled steel. And also in this quarter, as in previous quarter, it's due to mix, we have a mix with more high alloyed products, where it is somewhat more challenging to find scrap that [ fixes ]. CO2 emissions, we are still below 100,000 tonnes for our Scope 1 and 2 emissions at a slight increase versus quarter 4 last year. And the main reason for that is that we have added a Söderfors operation. We continue to improve, when it comes to share of female managers. One should remember this is a very slow KPI that does not change much between the quarters. I think also we can conclude that to meet our long-term target, we cannot only focus on female managers. We have to increase the share of female employees in total. So as noted on the previous slide, I'm pretty pleased with our operational improvements on sustainability. But as I have concluded several times, our largest impact on global sustainability is through our product offers, where we can improve customers' processes, products and applications. And global trends like electrification and the shift to fossil-free energy are trends clearly driving our business opportunities. Nuclear power is carbon-free, and we clearly start to see that investments in nuclear power is increasing. We have had several significant order for steam generator tubes. We have a strong and growing order backlog. And let's see how we take decisions going forward, but we have possibilities to ramp-up capacity when we see that, that is needed. And that will be needed when we see that the order backlog starts to be too long, so we are not flexible in taking orders. So let's comment on the total market development. Overall, as already stated, the continued market sentiment. We did see some stabilization in the short-cycle business, but on low levels. In general, softer demand in some customer segment was mitigated by long-term trends and the underlying tailwinds that plays in our favor. Let's start with segments, where previously commented on softer market development. This is mainly our short-cycle business and mostly for the low refined products, but also for parts of our application to our business mainly in North America. So we look at industrial, demand for low refined products grew year-on-year, but from low levels, mainly driven by single major orders. Consumer demand was weaker year-on-year but there are some signs of continued stabilization on low levels. I mean consumer has been low now for more than a year. Chemical and petrochemical demand remained healthy in Asia, North America has been weak before and also Europe, slightly weaker year-on-year, a slight decrease on order intake. Industrial heating, slightly weaker demand was noted year-on-year. We received some project orders mainly for the solar industry. while sales related to maintenance is softer, CapEx is still solid. Total order intake remain high. Some other segments that are strong and with the continued positive outlook, start with oil and gas. I mean we clearly see investment continue to materialize, and the market and the demand is very robust. Several OCTG and umbilical orders in the quarter, of which 2 major orders in the quarter that we communicated. Market outlook and project list remains solid. But here, we have very high comparable. The order intake quarter 4, 2020 was really, really high. And that makes order intake down year-on-year. But as I've said before, I'm not all worried about that. The project lists are [Technical Difficulty] here. And we see now some signs that customer inventory levels are now more normalized. Medical, a strong positive underlying development. We have a strong momentum for the full product portfolio and successful new product launches are expected to continue to support the growth within this segment. Nuclear, yes, the market sentiment levels for -- of customer activity continued to strengthen. We have had several orders or one, major order was received in quarter 4. And already this year, now in January, we had yet another one and I have to confess, I think demand is increasing faster than we anticipated before. Transportation remained on a stable level, high activity in aerospace industry, mainly related to titanium tubing. Hydrogen and Renewable Energy, we call it flattish noted -- I mean we have a continued good momentum related to hydrogen refueling stations. We communicated before that some serve that customers noted a slower ramp up. Interesting in this segment is, if we look into industrial heating and look at their underlying customer segments, we clearly see also within electrification that it's growing fast into renewable sources like lithium-ion batteries, solar, for instance. So in summary, mixed picture with good momentum in some of our segments and a bit softer in others. And again, I think this is important. Diverse customer say that exposure is a clear strength of Alleima. The order intake and revenue, we had an order intake above SEK 5.1 billion a quarter. This is a good absolute level -- organic order growth was minus 6 for the rolling 12-month period and minus 10 in the quarter. If we exclude major orders, it was minus 4%. Total revenue of SEK 5 billion organic growth of minus 1. Kanthal showed a positive trend driven by both industrial heating and medical while Tube & Strip divisions showed negative organic growth, mainly related to lower volumes in the short cycle, lower refined business in both industrial and the consumer segments, where market conditions have been weaker for some time. But as said, I think we could have done somewhat better and we had an order backlog to support that. We had some temporary output issues related for instance, for replanning of production in oil and gas business, and this was mainly related to too many small orders. I don't see that continuing. Book-to-bill, strong 102% in quarter 4, rolling 12 months 105%. I remember as we have communicated before, we are consuming backlog in some segments, while continue building backlog in some other. And we're still confident about our near-term deliveries, and we have a positive view on revenue going forward. Earnings, we increased adjusted EBIT with 5% to SEK 582 million, giving a margin of 11.6%. This is in line with the development we've had and, of course, on higher levels looking back at history, positive product mix in both in tube and in Kanthal and price increases are the main drivers. We have a currency tailwind of SEK 66 million in the quarter, resulting in low leverage in the quarter. Dilution from under absorption effects from lower volumes, mainly Strip and in North America and Industrial segment and also some productivity issues in Transportation segment too. And as I already commented, we should have invoiced slightly more. Full year leverage is good and Olof will come back to the leverage in the quarter. Strong cash flow of SEK 400 million, strong cash flow also for the full year. So let's look how the divisions are performing and let me start with Tube. Tube had an order growth of minus 4%, excluding major orders and a book-to-bill of 111% for the rolling 12-month period. So a solid backlog, good momentum in oil and gas, and in nuclear. Oil and gas, the order intake was down, but this is on very high comparables market. This is still very strong and the pipeline is promising. Subdued demand in the lower refining industrial, also in chemical and petrochemical in North America. However, order intake up year-over-year for industrial, but from low levels. Revenue growth of minus 1% organically, lower volumes in the industrial. And as I commented before, oil and gas could have invoiced somewhat more. Significant earnings improvement with price increases, which more than compensated cost inflation and a positive mix from the oil and gas segment. Currency had a positive impact of SEK 64 million. And we will -- but here, we will see some headwind from this next quarter, and Olof will come back to that. The temporary productivity issues in the Transportation segment is still there. It will take some more quarters before it is fully flushed out. And we have under absorption effects from lower volumes in the industrial as well as chemical and petrochemical in North America. So let's look at Kanthal. Kanthal had another solid quarter. Growth from underlying tailwinds, Medicine in particular, industrial heating was, however, down year-on-year on high levels with some mixed signals. I think business related to CapEx is still strong, while OpEx is somewhat weaker, and this is not unnormal in an overall softer industrial market. There are companies or customers that are not pushing their maintenance programs. Revenue growth due to the broad-based positive development, record high revenues in Medical. The Medical segment in Kanthal, also the other divisions are in Medical. But in Kanthal is now almost SEK 900 million. The revenues 2022 was SEK 500 million, so a total growth of approximately 70%. Margin of 19.1% is strong, they had actually a currency headwind in the quarter. And excluding currency, they would have been up 20%. Increased revenue, strong product mix and price increases is driving the performance of Kanthal. And last and least Strip had a continued soft market demand and order intake declined mainly in the consumer segment, both weaker market demand, but also stock reductions at customs, and Strip is clearly consuming backlog. There are ups and downs. This will come back. I think that's a question of timing, and we assume that it will look better in the near- to- midterm period. Organic revenue growth of minus 15%, of course, is a result of the lower order intake. Margin of 7.3% with a continued under absorption from lower volumes, and we continue with our mitigation actions to adjust both capacity and reduce costs. Our strategy to be a price leader, and we continue to do so even in this more challenging market. So what I'm saying is that, of course, there are volumes to book if we want to, but not on the price levels we expect. And with that, I leave the word to Olof.

Thank you, Goran. And starting then with some numbers here. And we start in the upper right corner, we see a total change of 12% negative on the order intake and minus 1%, sorry, minus 2% on the revenues and aware of minus 10% on the organic side on the order intake and minus 1% on the revenues. And if we adjust the [ order intake ] for the large or major orders that we received both this quarter, the last quarter of 2023 and the last quarter of 2022 will come out at a negative of 4% on the order intake. And the reason for us in making these adjustments is that -- to make the underlying development in the quarter is comparable as a single order can distort the numbers quite a lot. Alloy effect continues to be negative in the quarter as it also was in the second and third quarter. This, of course, comes from mainly the lower nickel prices. And based on the current metal price levels in the beginning of January, this effect is expected to continue into this year 2024 as well. On currencies, no big effects on the top line already order intake in the quarter. Looking at the B table then, starting with the quarter, we see the adjusted EBIT and that is adjusted for the metal price effects then improving to SEK 582 million, so we're 11.6% in adjusted EBIT margin, an improvement from 10.8 in the same quarter 2022. Price increases compensating for inflation and also a good product mix helps, however, also some good tailwinds from currencies, and I'll come back to that in a minute. Tube and Kanthal both contribute still good development. The Strip is down, as Goran has explained. And we also have lower central or common costs in the quarter. Metal price effects slightly below last year or 2022 in the quarter and reported EBIT, and that includes the metal price effects comes out at 8.8% in the quarter versus last year. So the improvement also there. And if we then turn to the full year numbers, we see 2023 ending at a good 10.4% in margin, increasing from 9.1% in 2022. Also good contributions and margin expansions coming both Tube and Kanthal and also significantly lower central costs as 2022 was burdened by cost for the separation project. Strip condition is lower as Goran has already explained from the slow consumer segments and the low volumes. Metal prices a negative SEK 95 million for the full year versus a positive SEK 695 million in 2022. So a huge swing in metal prices between the years. And please remember that the metal price effect that we calculate comes from timing differences, and it's a measured effect on metal price changes affects us as we buy the metal at a different price and we sell it for parts of our revenues. Going back to the quarter and looking at the finance net, positive SEK 80 million, and there's a big impact again from revaluations of financial instruments. We apply hedge accounting starting in 2022. We have gradually introduced it, but there are still some instruments that not fully qualify for this and that affects the finance net in the period. And of course, clients that also contains the interest net and cost of pension liability and leasing interest costs and also some income from our cash position, of course, that we currently earn around 8.9% on our deposits. Looking at the finance debt for the full year, it comes out at a positive SEK 28 million, a considerable change from 2022. The tax rates going further down in the table, 24.2 for the full year. I prefer to look at the full year because the quarter can swing quite a lot, and that is very close to 2022 outcome. And this is also well in line with our guidance. A good free operating cash flow in the quarter, SEK 400 million, that is lower than last year, but last year was a very -- so to say, back loaded with a lot of cash coming in the last quarter. We had quite big impacts from high metal prices in [ 2023 ], which you also see on the full year cash flow, which has improved substantially, close to SEK 1.7 billion in free operating cash flow compared to SEK 505 million in 2022. The adjusted earnings per share fully diluted also improved substantially. If we look at the full year numbers, they come out at SEK 6.56 versus SEK 4.46 and that's a [ 47% ] increase. And that, of course, comes from the improved adjusted EBIT but also from the much improved finance debt. If we go to the next slide, that is the bridge where we can see our operating leverage. And here, I've taken both the quarter development and the full year development. And as I mentioned -- I think I mentioned it in the third quarter call, it's sometimes better to look at the full year numbers, when you look at the operating leverage. Quarter numbers can swing quite a lot. If you remember the -- I think the operating leverage in the third quarter was around 80%. And that is, of course, very much impacted by, for instance, like low revenues in the quarter and as a fairly small result item can impact the leverage quite a lot. And the base you're comparing to is also important. And with a very strong ending in the last quarter of 2022. This also has an impact, of course, when looking at the leverage. However, if we look at the quarter, we have an adjusted EBIT increase of SEK 27 million net, and this is, to a large extent, explained by the positive currencies. But we have also managed well to compensate for the inflation, and the higher inflation that we've seen during 2023. Structure, that is an impact from our acquisitions, and this is -- we are still ramping up our latest acquisition. And another comment on the currencies, the plus 66, considering the strengthening of the of the Swedish krona. It might seem strange with a big positive effect there, but this is a bridge. And last year, in the same quarter, we had actually a negative currency effect as well. So that means that in the bridge it will come out on a positive number. And I think Goran has also already mentioned's some temporary performance issues in the transportation segment. That has, of course, affected the organic development in the quarter and also lower volumes means normally lower absorption of fixed costs. So that's also a factor to consider. Looking then at the full year bridge, we have a good 22% positive leverage coming from both the Tube and Kanthal, our [ Strip ] is down. And we also, of course, have the impact of the lower common costs. We consider a good leverage to be in the range of 20% to 25%. So I think -- we think this is a good year when it comes to leverage. And we also get, of course, some tailwind from the currencies. And again, acquisitions are impacting negatively. And in this number, the structure number, you also -- we also have some acquisition-related costs, not only the result of the acquisitions. Going to the balance sheet, capital efficiency. Net working capital in the left-hand side graph, slightly above last year. the black bars and slightly down sequentially in the quarter. No big changes in the net working capital in the quarter, though, even though currencies, of course, has an impact when making the consolidation. And I think this follows the normal pattern that you see -- which you'd see in Alleima with net working capital released in the second half of the year. And we released, if you remember, quite a lot of net working capital in the third quarter, so a more limited release in the fourth quarter, but overall a second half release. If we look at the development over the full year, we see on the inventories that we are down in volumes or tons, more or less to all-time lows seen in all divisions. So very good and focused efforts by all divisions to reduce here. But despite the lower metal prices and currencies and the volumes, the value is fairly even over the years, and this comes from what we have talked about a more positive product mix in our revenues, and that is also, of course, reflected in our inventories. So a more expensive inventory on our books compared to before. Capital employed, the graph to the right decreased sequentially a little bit from currencies and also from the development on the net working capital that I just explained. But if we look at the full year, the net working capital decrease also comes from lower fixed assets on average compared to the start of the year. ROCE, Return On Capital Employed, and we measure it excluding cash, comes on a full year basis at 12.9% in the quarter, and that is lower than last year, 14.2%, and the difference comes mainly from -- that we had lower assets or lower capital employed in there in 2022. Looking at the cash flow then. Goran already mentioned, we had SEK 400 million in cash flow in the quarter. That's lower than last year, but last year was a bit extraordinary with a lot of cash coming at the end of the year. From the higher metal prices that we had for most of the year. CapEx is higher compared to last year and we're coming back to more normal levels, I would say, on the CapEx. And for the full year, we see the same development on the CapEx increasing to [ 8.15 ], 8.5% from 6.6%, a much lower development of the working capital, and as I mentioned several times in 2022 minus SEK 1.6 billion in change in working capital with a large impact from the higher metal prices. Increase in amortization of lease liabilities comes mainly from acquisitions where we have acquired leased premises. And in total, we'll come out for the full year at a cash conversion of close to 80%. So a considerable improvement compared to 2022. Capital structure will continue to be well below our max financial target. It's not a target to be a 0.3x, it's the max. We are coming out of the quarter at minus 0.02x, more or less the same level as in the third quarter and better than the beginning of the year, where we were at 0. Information net debt to adjusted EBITDA, we come out at 0.0x negative. So very low [indiscernible]. If we look at the parts of the net debt, starting to the left, net pension liabilities has increased. And main impact here comes from lower discount rates at the end of 2023. And the impact is mainly on the Swedish pension debts. Leasing liabilities increasing, mainly coming from renewed leasing contracts and acquisitions. Looking at the cash position. Cash has increased more than SEK 700 million during the year. But over the year, we also paid a dividend of SEK 350 million, and we made an acquisition in Tube. So a good improvement in the cash position. So overall, coming out in an even stronger financial position with a net debt or actually a net cash position of SEK 242 million and an unutilized and revolovin credit facility of SEK 3 billion. Looking at how well we guided you for the last quarter. If we start with CapEx, the outcome was for the full year, SEK 815 million, and we guided for SEK 800 million, so fairly close. Currency translation, we guided for 0, we come out at minus 2 on the transactional translation. Total currency effect comes out at a positive SEK 66 million in the fourth quarter. Metal price effects, minus SEK 138 million and versus minus SEK 200 million, difference here coming from higher nickel prices and also higher prices for Chromium. Tax rate 24.2%, so at the lower end of the guidance. And looking into next year or this year, the first quarter, we estimate an increase in our CapEx, and this comes from various projects, growth-related projects. We have our previously announced investment in China. We also have announced investment in Kanthal on the silicon carbide. And also some ERP upgrades that we are right now doing. Approximately SEK 400 million of this is maintenance relating CapEx and the rest is for improvement and growth. So a clear focus on growth in our CapEx increase. Currencies based on currencies at the year-end, and the currencies, they are constantly moving, of course, so the effect might be higher or lower. But based on the rates back then, we are estimating to have a negative SEK 60 million impact from currencies on our operating profit in the first quarter. Metal prices, metal prices are low and even lower since year-end, and we are estimating around SEK 300 million impact on the metal price effect in the first quarter. And tax rate, we keep our guidance to be in the 24% to 26% range. Hold for me and back to you, Goran.

Thank you, Olof. So let's look at the outlook for the first quarter. I would say despite mixed demand in our markets during the quarter, I think underlying megatrends are expected to continue to mitigate the impact of any uncertainties in the macroeconomic environment for the coming year. We our solid order backlog, and we had good visibility in our near-term deliveries. And of course, we are continuously taking measures to mitigate potential impact from cost inflation and under absorption of costs moved from the lower production volumes in certain segments. Product mix is expected to be similar to that one of the fourth quarter. And normally, cash flow is lower in the first half of the year than in the second half of the year. And please also remember the FX guidance that Olof just mentioned. So let's summarize. Overall, I am pleased with our performance this year with record high revenues and earnings. And I think also quarter 4 was okay, but a bit mixed. Our backlog remains solid but of course, there are differences between the segments, where we are building backlog in some segments, but consumer backlog in some other. We have good momentum from underlying tailwinds in many customer segments. Energy has such a strong oil and gas and also nuclear becoming really strong, also renewables, electrification, medical and we continue to see a good development in Asia, while market conditions is still soft in some segments with lower production volume as a consequence. I think overall, our diverse exposure is a clear benefit to Alleima makes us less volatile. Yet we had significant earnings improvement due to strong mix and price increases, which compensated for cost inflation and despite lower volumes in parts of our operations. And with our solid backlog, we are confident about future deliveries. And even though we had some effect that might dilute margins a bit going forward, such as FX headwind and some under absorption, the mix is with us, though. And we are continuing to execute on the strategy, and I think we are clearly heading in the right direction. Thank you.

All right. Thank you, Goran, and thank you, Olof. So it's now time to start the Q&A session. [Operator Instructions]. So operator, please go ahead.

We will now begin the question and answer session. [Operator Instructions] Our first question comes from Viktor Trollsten from Danske Bank.

Goran and Olof. A couple of questions on my side, please. Firstly, perhaps on the Kanthal growth prospects for 2024. Just trying to sort of understand the book-to-bill in Q4 around 0.9x, while you're investing quite heavily in both industrial heating and Medical. So could you just try to help us to understand sort of if you still see that Kanthal could grow revenues in 2024 over 2023? That's my first place.

I mean the simple answer to that is, it is yes, they have capacity to grow. I think as I communicated the weaker book-to-bill is mainly related to, I would say, the OpEx part of the heating business within Kanthal. And of course, order intake growth in Q4 was impacted by the big order we had in Q4 2022. So I think that there are no, so mainly capacit restrictions in Kanthal if we have the market with us, we will continue to grow Kanthal and that is also our ambition.

And that's you're sort of filing from the Q4 report that you sound quite confident at this?

Yes. I mean, we comment on what we see. We saw a year-over-year order intake -- a negative order intake growth in the heating part of Kanthal related to -- mainly to the OpEx business. But I am still confident that we will continue to grow Kanthal.

Okay, super. And then secondly, on nuclear, which you speak definitely more about and as you pointed out, you have the optionality to increase capacity in some [indiscernible]. So just firstly, to my understanding, that could potentially double capacity for nuclear. Is that about right? Or what's the magnitude here?

I don't want to share numbers as such. But I mean we had kind of a spare factory after the Fukushima accident, we closed and mothball, the one of the factories in Sandvik and it been has been now for roughly a decade. There are no other real operations at that -- in that unit. We are reviewing if and when we should open that again, the decision is not yet taken. I think what we are looking at is -- I mean we have a solid order backlog in nuclear. And of course, with the orders we just have recently it is growing. But I think what we need to look at is the project list and how much we potentially will continue to book. And at what stage would the order backlog be too long, meaning we are unflexible to take our new orders. And in parallel, we are looking at the old factory, of course, there would be some equipment that we need to change, and there will be some equipment that we need to sort of refurbish and sort of the cost for that is what we're looking at. But I would say a probable decision on that sometime during the year. And I'm not saying it will be double is one more factor, but of course, it's a substantial increase if we would open that one. We also look at maybe open it in steps to start with sort of start with debottlenecking the current factory.

Okay. That's clear. And then perhaps finally, on my side, but on the short cycle business, at least from my perspective, you post quite impressive margins despite the under-absorption from volumes due to short cycle. But now you mentioned that short cycles are actually growing a bit year-over-year despite from very low levels. But could you help us perhaps quantify the effect on a little bit from under-absorption? And are we sort on the bottom here in terms of their absorption or how does the backlog look for the coming quarters, close?

I can comment on what happened in quarter 4. First, yes, we -- first, when I look at the Industrial segment, it is slightly positive. I think it's still important to note that we are dependent on a few sort of larger customers. So it's still I think, it's maybe still too early to say that it's over and we will grow again, but Q4 looked good. I think the total under absorption effect and that both comes from in several divisions totally around 200 basis points in the quarter, total under absorption effects.

Okay. And just to try to -- what was the under absorption in Q3, for example. I guess just what I'm of to is, how much of that under absorption is now in figures and how could that develop into 2024?

I mean in quarter 3, the other absorbent effect was lower. But remember, quarter 3 is a special quarter where we stopped production. I think volumes was roughly on the same level. And I mean, Strip is lower Tube America is lower, we're not running the steel plant at all at maximum capacity. And I think I think it's important to note that, of course, we could book more orders, but we clearly want to be price leaders, and it's important that we continue to have higher prices. And the industrial, it was the order intake growth in revenue did not grow yet.

Our next question comes from Fredrik Agardh from SEB.

Starting with a question on the CapEx, SEK 950 million. Going forward, you say that you have SEK 400 million in maintenance and then some growth on top of that, which I guess makes sense and probably inflation. Is this a new number that we should extrapolate beyond 2024 as well? Or are you going to go back to the 800 sort of that you had as a guidance when you were spun off?

I hope that it's a new level because most of it now, we are pushing much more growth investments and the company is growing. You need to probably look at growth versus revenue. And I think it's also important to state that the majority of the growth investments are in the sort of final stage of production, the finishing units, it's not much in the back end. On the other hand, in the back end more of the reinvestments, but that is not new. So I cannot say, but actually, Fredrik, that would be good because then we have even more growth opportunities.

All right. And if you just look at it, well that's a change since a year back. And I -- well, I mean, you announced the -- well, some in Kanthal and some in obviously living in China, the finishing line. What else is there if we extrapolated where are the better growth opportunities that you see?

It's in -- I mean if you look at segments, I mean, the answer on Viktor's question nuclear be one area. We are also investing -- we don't communicate that because every investment is created low, but we continue to invest in medical for instance. I don't think this was the last investment then at all from a growth perspective, but I don't want to go into too many details, but in the segments where we want to grow.