Alleima AB (publ) (ALLEI) Earnings Call Transcript

Hello, everyone, and a warm welcome to the presentation of Alleima Q4 and Full Year 2025 Results. My name is Frida Adrian, and I am Head of Investor Relations. I'm joined by our President and CEO, Goran Bjorkman, and our CFO, Johan Eriksson. Goran and Johan will take you through the highlights of the quarter and the year. And following the presentation, we will open up for a Q&A session. [Operator Instructions] The presentation materials are available for download at our website, alleima.com. As always, safety is a top priority for us, and I trust that you are familiar with the safety procedures at your current location. And with that, over to you, Goran.

Thank you, Frida, and hi, everyone, and thank you for listening. Well, to sum up the full year of 2025, which has been heavily affected by geopolitical tensions, trade barriers, events, all contributed to making a difficult year to navigate overall. The biggest impact we've seen, I mean, it has increased the uncertainty amongst our customers, an investment decision have been pushed into the future as rules of trade has been changing sometimes from 1 day to another. At the same time, I believe we show some strength despite the turbulent environment, we deliver flat organic revenue growth in the year on total SEK 18.6 billion. And we are clearly benefiting from our diverse exposure and the fact that we have strong positions in very niche markets. Our global footprint, including local production in the U.S. has also enabled us to cope with the tariffs themselves by passing along the high cost to our customers. But this means, however, increased cost for our customers, which also have a negative impact on the growth. To continue with some positives. Oil and gas remained solid throughout the year, and we are especially positive towards the umbilical business. Activity level in nuclear was on high levels and Medical continued its strong growth trajectory. Towards the end of the year, we also noted the start of a market turnaround in industrial heating, which has been subdued for almost 24 months. We noted a weaker market for a more short-cycle businesses, mainly the industrial and petrochem segments and especially in Europe and North America. But the backlog is short and it is affecting revenues, also something we noted in previous quarters. Asia showed more resilience. Adjusted EBIT amounted to 1.5 with a margin of 8.3% and is impacted by currency effects of SEK 341 million year-over-year. And if I should exclude FX effect, the adjusted EBIT margin for 2025 would have been 9.8%. Given the weaker climate, which is difficult for us to control, we have actively been working with what we can control. And in quarter 3, we announced a number of targeted measures for increased efficiency and strengthening the company in the long term. Despite all the turbulence, we delivered a free operating cash flow of SEK 1.1 billion, strengthening our balance sheet, which is a prerequisite for us to continue to execute our strategy; we are staying with actively working with our order booking to maintain price leadership while we proceed according to plan, we are capacity expansions. For example, the greenfield investment in Penang, Malaysia for the Medical segment and the capacity increase for nuclear steam generator tubes. Both these initiatives are expected to start deliveries by end of this year 2026. Lastly, the Board proposed a dividend of SEK 2.50 per share, corresponding to 71% of net profits, adjusted for metal price effects and an increase of 9% compared to last year. So let's take a look at the financial targets. I would say in general, we are performing in line with our targets. Starting with organic growth. We have a target to deliver profitable organic revenue growth in line with or above growth in targeted end markets over a business cycle. We grew 0% organically in '25. I think it's important to remind us that we don't want to grow in all pockets or serviceable addressable markets, we are aiming for growth in attractive niches to improve our mix long term. This spans across most of our customer segments where despite it's a bit simplified, but the industrial segment is not a segment where we want to go in line with the market. That's profitability in January is lower in this segment. Over the 4 years, we've had the financial target total organic growth again 5% on average and more than 7%, if I exclude the Industrial segment. Looking at earnings, margin of 8.3% for the year average of 9.5% for the 4 year. We had the target and target is to be above 9% over the cycle. And capital structure, net debt to equity of minus 0.05. And please note that the 0.3x is a maximum target. And dividend, as I just said, the Board proposed a dividend SEK 2.50 per share, corresponding to payout ratio of 71% of net profit adjusted for metal price effects. And average over the 4-year period of 43%. So let's zoom in on the quarter and look at the highlights for the fourth quarter. We are, as I've said, for the full year, we experienced a similar market situation as we did in quarter 3 with a lot of so-called wait-and-see attitude among customers. And it is affecting especially the chem, petrochem segment and the industrial segment. Also the OCTG business declined back on high comparables and order intake role in 12 declined 4% organically. On the brighter side, our umbilical business within oil and gas as well as medical segment continued their strong momentum -- and while industrial heating continued to show signs of market recovery. Revenues declined organically 5% year-over-year, stemming from poor market in the aforementioned industrial and chem, petrochem segments where order intake effects revenue. Parts of the oil and gas and industrial business were also hit by the delayed ramp-up of the maintenance stop in quarter 3. And we also noted some timing effects in nuclear affecting us negatively. The adjusted EBIT margin declined year-over-year to 8.1%. And of course, that is not satisfying development. but it's heavily impacted by a significant FX headwind, diluting the margin with almost 300 basis point, indicating we would be around 11%, excluding FX. This is, of course, not an excuse, but it is the main reason for the negative developments. With that said, we are acting and adjusting to current market condition. In quarter 3, we announced a number of targeted measures to further strengthen our operational efficiency and long-term competitiveness. And all of these actions are progressing according to plan so far. Our balance sheet is strong, and we continue to generate a healthy cash flow, enabling us to stay with the strategy also in downturns. And during the quarter, we inaugurated a new production line in Zhenjiang, China, further strengthening our local-for-local offering of premium tubular products in the region. To give you some more details on the efficiency actions we announced in quarter 3 and a few reminders of what we will achieve. Firstly, we are consolidating a number of smaller units in Americas and in Europe, where we see the opportunities to better leverage our global footprint. Secondly, we are reducing staff. The permanent staff reductions are mainly targeted towards white collar. And thirdly, we are adjusting our production capacity according to current market conditions. This will result in annual cost savings of approximately SEK 200 million, roughly 75% would be permanent savings and 25% more of volume related. All of the one-off costs of roughly SEK 400 million, of which we booked SEK 342 million in quarter 4. An expected run rate is around 7 -- sorry, 60% savings achieved in the end of quarter 2 and 100% by end of the year. Moving to sustainability. As safety always is a top priority at Alleima, we have, for a long time, continuously and actively implement the measures to make our workplaces more safe. The development continued to trend in the right direction. The number of accidents are on record low levels. Share of recycled steel remains high and remains over 80%, both on a rolling 12-month basis and year-over-year. which I think is a high share given the product mix, where we have more and more high nickel products. Our CET emissions are steadily decreasing even though we noted a slight uptick in the quarter, but we are in line with our targets and the target is to reduce by 50% from the year 2019 to 2030. And our sustainable product portfolio grew almost 25% rolling 12-month basis, which is also an all-time high level. So let's look a little bit deeper into the market development. I mean the market sentiment remains mixed and of course, affected by the ongoing macroeconomic uncertainty, demand stayed weak in Europe and in North America, while Asia showed stronger resilience. And we continue to see solid momentum in several key segments, and I'll walk you through the development in each segment, starting with oil and gas. Overall, our view on the underlying demand is solid. More so for umbilicals with the project list of upcoming tenders and potential orders remain strong. for OCTG, the outlook is a bit more uncertain where we see that some projects have pushed a bit forward and where we, to some extent, also are negatively affected by the FX from a competitive point of view. And Industrial, the European demand is still weak on low value-add products. In North America, we noted an increase but from really low levels and much of this should be tariff-related effects. Chem-Petrochem, Europe continued to be on low levels, same with North America, while Asia is better. Industrial heating in quarter 3, we noted a positive growth from lower levels, and that trend has continued into quarter 4 and especially in Asia, and it's for subsegments like electronics, semiconductors and glass. Consumer demand is still on a good level, mainly driven by the white goods industry in the Strip division. Medical. Market remains strong, driven by multiple factors, I think we have solid momentum across the product portfolio and the integration of Endox is going according to plan. Transportation, solid demand driven by Titanium tubing for Aerospace, which is strong, oil automotive worsened. Mining construction flat underlying demand year-over-year. Nuclear, real high activity, including also discussion on next-generation reactors, but 1 should remember, this is an industry with natural really long lead times. Hydrogen and Renewable Energy segment remains mixed, but overall negative, and I would say, especially in the hybrid and related businesses. Order intake and revenue, order intake rolling 12 amounts to SEK 17.7 billion with a negative organic growth of 4% mainly coming from the OCTG in oil and gas segment as well as a negative development in chem, petrochem and Industrial. And looking at it from a geographical point of view, Europe and North America weak, while Asia remains in better levels. Medical, industrial heating grew, and we continue to book good umbilical orders in the oil and gas segment. Revenues amount to SEK 4.5 billion with a negative organic growth of 5%. Kanthal and Strip grew and Tube declined, where tube was affected by the weaker market in Europe and North America as well as a delayed ramp-up after the maintenance stop. Biggest positive driver for the group came from the Medical segment. Rolling 12 months book-to-bill is 95%. So let's take a look at the earnings. Adjusted EBIT amounted to SEK 364 million with a margin of 8.1%. And Johan will dive into the EBIT bridge later on. But overall, I would say that there are some main reasons for the weaker results. Significant FX headwind impacted margins with 290 basis points, which is difficult to mitigate in the short term. The weaker market is affecting special volumes in industrial and chem-petrochem. This result in reduced gross profit, especially from the more profitable chem-petrochem segment, but also lower absorption in some of our factories and the delayed ramp also affecting both deliveries and absorption. Free operating cash flow of SEK 422 million, higher than last year, impacted by changes in working capital and lower CapEx, and Johan will provide more color on this as well. If we take a look at the divisions, starting with Tube. Tube, noted organic growth of minus 7% for the rolling 12-month period. Chem-petrochem and Industrial and Europe are the main reasons for the development. North America continued low levels and Asia on okay levels. Order intake was also affected by the OCTG business within oil and gas on high comparables. Backlog for nuclear and umbilical within oil and gas remains solid. And due to the more positive market in umbilicals, we are now increasing the output pace in the beginning of this year 2026. Organic revenue growth of minus 11%, mainly driven by a negative development in short-cycle business due to weaker markets, production limitations to the delayed ramp-up affecting industrial and oil and gas as well as some timing effects in nuclear. Book-to-bill was 93% rolling 12. Adjusted EBIT on 8.4%, affected by already mentioned variables, the weaker markets, FX headwind and delayed rampup. The FX headwind was SEK 97 million, which implies that excluding FX, the EBIT margin would have been 11.1%. Kanthal. Organic order intake growth for the rolling 12 months period of 9%. Medical is continuing on a strong trajectory and also nice to see that we now, again, are growing industrial heating. Even if it's still from quite low levels. Applications like ceramic elements for electronics, including semiconductors and glass industries, especially in Asia, are strong and it is for these applications, our announced investments in both U.K. and Japan are related to. Revenues grew organically by 10%, driven by both medical and industrial heating. Book-to-bill grew to 105% rolling 12. Adjusted EBIT margin was 16.3% in the quarter and 19.7% excluding FX. And this is despite the rather low level of volumes we have in Industrial Heating. Moving to Strip. Strip noted organic order intake of minus 11% on the rolling 12 months basis. But the numbers are not really telling the whole truth as Strip in quarter 4 last year received a large order for pre-coated strip steel, which interferes then with the comparables. The development for the division's most important product, the compressor valves steel was positive. Organic revenue growth of 20% in the quarter, driven by the consumer, but also the renewable hydrogen segment. Book-to-bill rolling 12, 91%, which is due to some timing effects from orders. I mean they have -- I mean, did book sort of annual orders and some of that will move from quarter 4 into quarter 1. Adjusted EBIT margin improves to 9.5% despite the currency headwind. Excluding FX, it would have been 11.5%. So a nice increase from the Strip division if we look back a couple of quarters. We mentioned quite often that with a strong balance sheet that we can stay with our growth initiatives also in more challenging times. To give a short update on what is going on, we showed this slide, which comes from the Capital Markets Day we had in November. So to give some examples of what we expect to happen during 2026. With the investments we do in U.K. and U.S., we are increasing our capacity of products in silicon carbide, which is a product that has shown growth also during the time industrial heating had a market headwind. And the investment in U.S. will also allow us to offer shorter lead times on the American market. Additional vacuum remelting capacity will allow us to grow more in advanced grades, very often for application in segments like aerospace and medical. And we will during 2026, start ramping up the increased capacity for industrial heating in Japan, which will support the steady growth we've had in that market, especially for subsegments, electronics, semicon and glass. End of the year, we will start ramping up the increased capacity of nuclear steam generator tubes. And of course, very satisfactory that we already today have a good backlog for this investment. And also end of the year, we will ramp up the Malaysian unit for medical wire. And with that, I'll leave over to you, Johan, to dig deeper into the financials.

Thank you, Goran. And before we move into the details on this slide, I just want to comment on the targeted measures that Goran mentioned and that we communicated in our previous report of the expected items affecting comparability cost of approximately SEK 400 million. we have charged SEK 342 million in the P&L in the fourth quarter, and the remainder will come in 2026. The cash impact, which is roughly half of the SEK 400 million will be quite evenly distributed across the quarters during 2026. And for the savings, we have realized SEK 10 million already in this quarter, in quarter 4 2025, and we believe that we will be at 60% of the savings run rate at end of quarter 2 and have the full run rate effect realized from quarter 4 of 2026. So now let's talk through the bridge to the right. Order intake for the rolling 12-month period amounted to SEK 17.7 billion, corresponding to an organic decline of 4%. Total growth was minus 9%, impacted by currency and alloy effects with a stronger SEK and lower metal prices accounting for 6 percentage points. Quarterly revenues reached SEK 4.4 billion with a negative organic growth of 5%, and that includes a positive 90 basis points from U.S. tariffs. The revenues were held back by weak market conditions in Europe and North America as well as delayed ramp-up affecting parts of the oil and gas and industrial segments. Currency effects, primarily from a stronger SEK against the U.S. dollar had a negative impact of 6%. On the alloys, alloy effect impacted by minus 2% on quarterly revenues. Based on metal prices and currencies at the end of December, we see a continued negative alloy effect in the coming quarter, both on rolling 12-month order intake at minus 2% and quarterly revenues at minus 1%. But here, it's worth noting that the recent trend of increasing nickel prices can, of course, have an opposite effect. But that on the other hand, is offset by the trend of a stronger SEK. So making those 2 noughts. On structure, we have some positive contribution from Endox, although here it's rounded off to 0 and the integration is going according to plan. And this was the last quarter that Endox affected comparability. I'll get back to adjusted EBIT in a short while, but the reported EBIT declined to SEK 15 million. And here, we see the effects from the items affecting comparability of SEK 342 million. And we are also impacted by the lower revenues and the delayed rampup. Net financial items for the quarter amounted to minus SEK 1 million compared to minus SEK 22 million last year, mainly driven by valuation of derivatives. Normalized tax rate ended up at 24.9% for the quarter, while the reported tax rate amounted to 185.5%. And that is, of course, affected by the -- some nondeductibles and that's amplified by the low reported profit. Free operating cash flow ended up at SEK 522 million sec [ SEK 422 million ] in the quarter, which I'll get back to in the coming slide. And finally, adjusted EPS for the quarter ended up at SEK 1.06, impacted negatively from the lower adjusted EBIT. So looking at the bridge, starting with the graph to the left, showing adjusted EBIT bridge for the quarter. It decreased SEK 220 million compared to last year. The biggest variable here is being a significant FX headwind, as Johan pointed out. But of course, also a negative organic development coming from absorption effects, both from the mentioned weaker market and from the delayed ramp up. But let me give you some more flavor on the FX effect by putting it basically into 3 buckets. First, we have the translation of local results, so profits made in other currencies than SEK. Here, we have had almost minus SEK 40 million. Secondly, we have the transaction effect, so transactions in other currencies than in foreign currencies. And the transaction effects are netted off by some hedges, almost 40% was netted off by hedges and ended up at minus SEK 90 million. And finally, we had minus SEK 35 million in bridge effects from revaluations of open positions in foreign currency at the end of the quarter. And we got minus SEK 23 million of that in the P&L for this quarter and for the same quarter last year, it was plus 12%. And this minus SEK 23 million is due to the strengthening of the SEK late in the quarter, and this is something that we actually could have done a bit better, I think. And on a year-on-year comparison then, excluding the FX margin, we would have been at 11% EBIT margin. The organic development was particularly noticeable in Tube while all 3 divisions are impacted by FX and that in particular for Kanthal. Structure refers to Endox and that is reported in Kanthal. The operating leverage in the quarter was minus 24%, which is quite decent level given the challenges that we've mentioned. And for the full year that you have on the right-hand side, the development is mainly explained by FX headwind but also the weaker short-cycle business and the delayed ramp-up affecting revenues and earnings, where margin declines from -- in total from 9.9% to 8.3%, but would have been 9.8% if we exclude the FX effects. Moving over then to the balance sheet. The net working capital decreased in absolute terms year-over-year, mainly due to volume and currency effects, but increased as a percentage of revenues to 35.5% due to lower quarterly sales. To continue on inventory, they are lower in value, both sequentially, which is as per normal seasonality and year-over-year coming from both lower volumes in inventory and lower metal prices, and that's influenced by currency as well. Capital employed, excluding cash, decreased year-over-year to SEK 15.7 billion, mainly driven by lower net working capital and the return on capital employed, excluding cash, which is based then on reported operating profit, including the metal prices and items affecting comparability. Just to be clear, was 5.8% for the rolling 12-month period, down from 9.5% last year coming from the lower reported operating profit due to the aforementioned reasons. Looking at cash flow. The free operating cash flow amounted to SEK 422 million which is higher than last year, and that comes mainly from the lower net working capital and a slightly lower CapEx spend compared to last year. The noncash items that typically refers to, for example, provision or provision releases in the operating result that have no cash flow impact. And in this case, is offsetting the items affecting comparability that we have in the EBITDA. Positive impact from lower working capital, mainly from lower accounts receivable and inventory. And on the CapEx side, as I said, we had a lower CapEx spend in this quarter compared to the quite high quarter last year. And we were expecting to be lower than the comparable quarter, but we also had some project delays and some positive effect from sales of assets in this quarter, and the amortization of lease liabilities is slightly more negative this year. If we look on the graph on the right-hand side, we can note a healthy cash flow in the last 2 years while running more growth investment, like Johan pointed out and which I might remind you that these are -- these investments are in segments that are more profitable and less capital intense and will to yield in the coming years. So overall, and as Goran also pointed out, our financial position remains strong, where we are well below our financial target of a net debt to equity rates below 0.3x. At the quarter end, we were at negative 0.05x. Net pension liabilities decreased to SEK 589 million from last year's SEK 820 million mainly as a result of higher discount rates and the leasing liabilities was on par with last year. So our cash position continues to be strong, and we have a net cash position of SEK 864 million, which will come in handy as the Board proposed a dividend of SEK 2.50 per share through the AGM in April. So looking at the guidance we gave ahead of the quarter. CapEx for the full year came out at SEK 1.1 billion and the full year guidance was SEK 1.2 billion. Currency transaction and translation effects came out at SEK 182 million -- minus SEK 182 million in the quarter, where we guided for minus SEK 150 million. And the total bridge effects, which I alluded to earlier, including the hedges and revaluations was minus SEK 163 million. And the main reasons for the fairly high effect is, of course, the stronger SEK and the revaluation effects due to SEK movements late in the quarter. Metal prices affected us negatively with SEK 8 million, which is very close to the neutral effect we guided for. And normalized tax rate came out at 23.9% for the full year, well in line with the guidance of 23% to 25%. So looking at the guidance for quarter 1 and full year 2026. And I'm -- I feel I need to comment that a few of these key metrics are quite volatile at the moment, which makes it difficult to give guidance but we will continue to give it based on the rates and prices at the closing of the latest quarter. So please have that in mind. So the full year CapEx, we maintain at the level that we came out of 2025 with meaning SEK 1.1 billion also for 2026. And in that, we deliver on the projects of steam generated tubing capacity increase in Sandviken as well as industrial heating capacity in Japan and medical capacity in Malaysia. On the currency, for Q1 2026, based on the rates per end of 2025, the transaction and translation effects are estimated to be minus SEK 240 million on the back of the stronger SEK. On the metal price side, based also at the end of December metal prices and currency rate, particularly nickel and U.S. dollars, now we have anticipated actually a negative effect of SEK 50 million for quarter 1. Here, it's worth reminding about the dynamics that the price increase for nickel or even for molybdenum and chromium, but nickel being the most significant one, over time, this leads to positive metal price effects, so a price increase in those. While a stronger SEK, which we are seeing now against the U.S. dollar has the opposite effect. So please bear that in mind. So tax rate for the full year 2026, we expect the normalized tax to stay in the range of 23% to 25%, just like we had said before. So by that, I hand back to you, Goran, for outlook and summary.

Thank you, Johan. So outlook for the first quarter. I mean, the general economic environment was continued to be uncertain during the fourth quarter. And also given the recent development, we don't see that, that will change during quarter 1. But we maintain a solid backlog in several key segments, which provides good visibility into near-term deliveries, mainly in umbilicals and oil and gas, nuclear and medical. But we also see challenges in the more short cycle customer segment, customer segment, particularly in Europe and North America, which already have affected and expected to continue to affect short-term deliveries. We expect some dilution effects related to delayed ramp-up to affect also first quarter profitability, even though that equipment performs much better in the end of quarter 4, but still some effects also in quarter 1. Product mix is anticipated to remain broadly in line with the fourth quarter. And as Johan just explained, we expect a significant currency headwind also in the first quarter. And finally, cash flow tends to be lower in the first half compared to the second half of the year, which moves us into the summary. I mean -- we are affected by the continued uncertainty stemming from geopolitical turbulence. Customers are postponing their investment decisions. But in all of these turbulence, I believe we are clearly benefiting from our diverse exposure and global footprint. Revenues were flat organically for the full year 2025, but the short-cycle business was weak, mainly for chem, petrochem and Industrial segment, while segments like medical, nuclear [ part ] , oil and gas remained strong. Earnings were affected by the significant FX headwind and absorption effects from weaker markets as well as the delayed ramp-up. Despite this being a difficult year to navigate, it is a strength that we continue to generate healthy cash flows that combined with our strong balance sheet creates foundation for continued strategy execution. And I'm confident that will make Alleima more resilient and more profitable company long term. And with that, I hand it back to you, Frida.

Great. We will now begin the Q&A session. Please feel free to ask the questions via the webcast or directly through the conference call. Operator, please go ahead.

[Operator Instructions] Our first question comes from Adrian Gilani with ABG.

Yes. So a couple of effects I wanted to ask about regarding Q1. Specifically, first of all, you mentioned the ramp-up delays after maintenance stops. If I remember correctly, you had previously guided that those stops would have 80 basis point margin impact in Q4. Are you able to give some similar quantifying metrics for Q1 as to how much that will impact.

I will not give you a number, but I will try to explain the situation of why that is a bit difficult. Yes, it's right that we gave you a guidance of 80 for the quarter 4. I think we came in maybe in line with that, I think maybe even a little bit worse, but it's one of the biggest impacts it has is that it has a negative absorption effect in some of our factories and absorption effect, it's sometimes difficult to see if it comes from this problem or that we, in some of the cases, have lower volumes due to the market. So it's a combined absorption effect. So you won't have a number, but I would say it is at least 50% of what really happened in quarter 4 because the machine is working much better now, but not perfectly.

Okay. That's helpful. And then also on Q1 and the FX guidance, which I appreciate is especially hard to give now. But at Q4 and rates. Again, I remember you said that for Q4, you had roughly half of that being hedged, but is that the case going into Q1 as well that the SEK minus 240 million is excluding hedges. So on the end of Q4 rates, it would be SEK minus 120 million actual effect. Is that fair?

It's -- no, it's not that high hedge effect. I mean the hedge effect sort of is falling off as we -- quarter-by-quarter. So -- and if you recall what I said when I tried to explain the FX then on the transaction side, we were able to offset in quarter 4, it ended up to be about 40% of the transaction effects we managed to offset and I think that effect sort of falls off for every quarter going forward.

Okay. Understood. Then on a more general note, I mean, 2 orders continued to sort of come down. And previously, you've been fairly confident that you can that you can still -- or that the backlog in oil and gas has supported a solid growth ahead despite that. Would you say that that's the case still? Or is the oil and gas backlog starting to become thinner now?

It's yes on both questions. I think umbilical, we are very positive on, not that the backlog is extremely between 2 and 3 quarters, but that also makes us flexible to book more orders. And we're at least so positive for the rest of the year on umbilicals that we are increasing the production pace and the output pace now in the beginning of the year. So confident there. OCTG, we have backlog maybe 3 quarters. I think the order booking is a little bit slower than we want. So there might be a risk on OCTG end of the year, but there are still some big contracts out there. I mentioned in my comments also FX. I mean the main competitor sells -- have their cost in Japanese yen. So of course, that has an impact on sort of our competitiveness in the oil and the OCTG.

Okay. Understood. And one final question on Kanthal regarding industrial heating, where you saw more positive on the outlook and the arrow even points up now in your arrow slide. What has really changed there? Because overall industrial activity remains fairly subdued. Is it a specific end markets driving that improvement?

Yes. It's good reflection. I think first of all, it's both end markets, but it's also geographical. It's really Asia supporting this. Europe is still soft and it is segments like electronic, semicon and glass; glass also very much related to electronics. So it's those segments, and it's mainly Asia.

Our next question comes from Kaleb Solomon with SEB.

Just a few questions from me. You mentioned that timing related effects in nuclear contributed negatively during this quarter, and that -- some of that should sort of spill into Q1 instead. Can you give us a rough figure of how that -- how big that effect should be?

I'm looking at Johan if he has the numbers, but I can start to explain what it is, because we are so positive in nuclear and then we come and say it's negative timing effects. Of course, that could always happen since this is normally large contracts and they don't sort of invoice every week. But I think the main effect we saw in quarter 4 is that in some cases, in some contracts because this is a very long internal value chain, we have the possibility to invoice before sort of the tubes are ready for shipping. So we can -- we have some steps in the value chain where we can invoice. And that we had such a contract last year. We didn't have that this year. So there was some invoicing from sort of intermediate tubes last year that we don't have this year. That's the main reason.

Okay. That's clear. And maybe another question on the oil and gas part. You said some of the outcome during this quarter was sort of due to production limitations from the delayed ramp-up. Can you maybe split how much was due to that versus the sort of overall weakness within OCTG, meaning how much should we sort of extrapolate going forward?

I think all the impact we saw in quarter 4 was related to the delayed ramp-up because we have full order book for 2, 3 quarters. So it was a lack of supply of extruded hollows to the cold-working operations. So all impact came from that.

Okay. And is there anything you can say about the sort of time line on reopening the Sandviken plant? And how soon can we sort of expect to see any sort of contribution from increased nuclear capacity there?

We said end of the year, I think what sort of stipulates the timing is lead times of equipment. I Was there walking through the factory a couple of weeks before end of the year. And now I think everything is -- about most things are supplied and now it starts to be built up. So I don't think we're changing the timing. It will be end of the year. If any of the production could start a little bit earlier, I think that's too soon to conclude. But we do what we can to start as soon as possible.

Great. And just 1 last one. You very briefly touched on pricing, how potential price hikes and how that sort of impacts your customers. Can you maybe comment on how much, if any, of the sort of order decrease was pricing related?

No, I cannot do that, but that would -- that's a good question, but that would be to speculate too much. I think -- but think about it. I think I've been quite transparent before, at least when it comes to the tube flow. And of course, this depends on what grade it is. But on a cold-working product, we've said that price increases needed is around 10%, 15% to compensate for the 50% tax because it is a tax we pay on the imported bar. And of course, 10% to 15% price increase, that's a lot. But I cannot speculate in percentage how much that impacted, sorry.

The next question comes from Anders Akerblom with Nordea.

Yes. So firstly, I was wondering about just high level. I mean, previously, you've mentioned maintaining order booking discipline several times. Now with book-to-bill below 0.9 in the quarter. Could you quantify a bit more how much volume you're actually walking away from to preserve pricing?

I understand how you ask the question, Anders. I cannot tell you that because you never know until -- because if we lower prices, maybe the others also lower prices, you don't know where you end up. So I cannot -- I don't want to speculate on that. But of course, we can book tons into the steel plant. I think I would say we -- right now, we are -- I mean, now it's been down for some while. Some of the factories are running on a bit lower volumes. This is the time when it hurts the most to have this strategy. But if it starts to move in the other direction, we have short backlog, prices will be better. So I think now it's sort of very important to stay with the strategy we have. Also say, of course, this is not binary. It's, of course, they book some orders sometime. But I cannot give you -- I cannot give you a number. But I can say we're running -- I don't have the latest updates, looking at table. I think we communicated before that we're running roughly the steel plant at 20% lower volumes than we did in 2019. That does not imply that we could book 20% more. But I think, as I said, this is -- right now is when it hurts the most, but now we need to be cool and keep on our strategy. We don't want to have price wars to get some low value-add products.

No, makes sense. Makes sense. I really appreciate that answer. Makes sense. I would also like to know a bit with regards to then, obviously, industrial and chemical and petrochemical. Could you share anything in terms of how confident you are in sort of a demand recovery trajectory in 2026 for these markets?