Sandvik AB (publ) (SAND) Earnings Call Transcript

Welcome to Alleima's First Capital Markets Day. Thank you all for joining us here in Sandviken today, and thank you all for watching the event online. My name is Emelie Alm, and I am Head of Investor Relations at Alleima, and we're looking forward to spending the next few hours with you. At Alleima, we always put safety first. We always try to make sure that all environments are safe for our employees and our partners. For those of you who are watching online, I trust that you are safe now and that you know the safety returns of where you are located. We just had a safety demonstration here in Sandviken, so we know what to do if something happens here. So now let's continue with today's agenda. We have a full schedule, and you will hear our CEO; CFO; and all our divisional presidents talking about how we are positioned as a company and a lot about our business, of course. We will also do a deep dive on how we aim to capitalize on the opportunities that comes with the energy transition. We will have 2 open Q&A sessions. And if you like to ask a question live here, you can dial in using the telephone number on the website of the event. You can also write your questions in the field below the webcast. After the presentations, we will do -- when we have closed the live stream, we will do guided tours here for our guests at Sandviken. First, we will go and see the steel mill, and then we will go and see the surface technology facilities. We are hosting this event from our industrial site in Sandviken, which is actually one of the Sweden's largest in terms of ground area. And we are here into Mill 98. And about 1 year ago, this was in full production. Here, we produce tubing products like hydraulic and instrumentation, heat exchanger, high temp and fertilizer tubing. As part of our footprint and cost optimization projects, we moved the entire production to mainly our production units in Chomutov in the Czech Republic and also some to Mehsana in India. This included all the equipment and furniture, which is why it's empty here today. And this was done for tube mill 98 and also tube mill 09 a bit further away here on the site. So today's presenters will touch upon what we have done and what we are doing to optimize our footprint and cost structure, and to make us more resilient and reduce earnings volatility. So this will, of course, not be empty like this forever. We are waiting for new external guests to move in. So we have a long history, but we have a new brand name. So please let us introduce ourselves. [Presentation]

So I'm now here with our President and CEO, Goran Bjorkman. Welcome, Goran.

Thank you, Emelie.

So you will now tell us more about Alleima. Please go ahead.

Thank you. First of all, also from my side, a warm welcome to Sandviken and our very first Capital Markets Day for Alleima. Also you that is watching online, a very warm welcome to you as well. I think we have a -- I mean, we're finally here, and I think we have an exciting and I think interesting journey ahead, and this is what we're going to share with you today. The main purpose would be to educate you on our offerings, the strategy and how we would move forward as a stand-alone company. But before doing so, just a few words about myself. So I spent 32 years within the Sandvik Group. So I started when I was 8. That's a bad joke, sorry. I spent my first 18 years in SMT, now Alleima, and I started as a production engineer. Actually in the tube mill, you have just close to this one. Several positions, and then I left SMT to another part of Sandvik in 2018. And just before leaving, I was the division president of Primary Products, that was its own division at that time. I spent 9 years in Machining Solution, the last years as global responsibility for SMS oil production. Then I was recruited back to SMT to this position end of 2017. And I think SMT at that time, I think was not maybe in the best shape. We had some tough years mainly due to the oil price crisis '14, '15. I think we improved a lot, both our performance, also how we navigate in a volatile business. So we reduced our volatility. But more of that later on. So let me start. I think first, I'd like to say, we don't view ourselves as a sort of normal steel company. We have completely other offer, high added value products, high cost or price per kilo, advanced stainless steels, super alloy, as well as we have products for industrial heating. We have a strong market position in a number of industry segments. We define our segments as 10, some of the big ones being industrial, oil and gas, industrial heating, chemical, petrochemical; also smaller ones like medical, renewable and hydrogen. But where we see really strong growth potentially going forward. I think one of our core strengths is our fully integrated value chain, where we have our own strong R&D, our own metallurgy. I think that is a must if you want to be the technology leader, and that is what we want to be. Hot rolling, finishing, a lot of finishing mills around the globe. Majority of our sales is through our own organization -- through direct to customers, roughly 80%, and almost all sales is through our own organization. So we have 27 production units around the globe. We serve roughly 90 countries and more than 40 sales offices around the globe. We have 3 divisions, Kanthal, Strip and Tube, and I'll be back on them in a few minutes. If you look at the numbers last year, we invoiced almost 14 billion. The EBIT margin was 7.6%. I think that number is one of the ones that I'm mostly proud of, how we managed to reach that kind of level with the oil business being as such so low levels. But more of that also later on. Most of our products is not sort of just a piece of steel. It's engineered for specific customer applications. And this is to illustrate a few of them. But to mention a few, we have fertilizer through heat exchange for the chemical and petrochemical industry. Of course, you heard about umbilicals, important product for the oil and gas business. Wire and heating elements and heating modules for industrial heating. Medical wire for the medical industry. One of Strip's most important products is compressor steel to be able to produce really energy efficient compressors. So these are just some examples. And this has been the history all over the home engineered products for specific customer application. And that is what we've been doing ever since 1862 when this company was started. So it was 160 years ago. And if we look at the time line here, and I will not promise I do not go through all the dates here, what has been going on all the time is material science and close cooperation with customers to develop their applications. All the time, also mainly direct sales and also through our own sales organization. So some examples, we've been making stainless steels since 1921, so for 100 years. 1997, we made an important acquisition, that was when Kanthal came into the group. And if you look the last 5 years, we continue to improve our portfolio, make a few divestments and also some smaller but important acquisition. I will go through them more important later on. So looking at the 3 divisions, Tube, as you can see, the larger one with roughly 70% of Alleima sales. Tube has roughly 11% market share. And the market or the competitive environment is the number of large players and also many much smaller and even more specialized. Some of the tube make as it sounds, seamless tube and advanced stainless steels and super alloys, also the long products and also the rock drill steel business is organized in the strip in the tube division. Some product to mention, the umbilical titanium tubes for aerospace, steam-generated tubes is a nuclear product. So let's move over to Kanthal. I think many of you heard about Kanthal, but I'm not sure that many of you know what Kanthal really does. They are a global leader for materials and products for electrical heating. So think of a toaster or a hair dryer at home, but much, much more complicated, and also much, much higher temperatures. If you look at the competitive position of Kanthal, there are no real global competitor in the more advanced part of Kanthal, where we have the added value products. Of course, there are strong regional and local competitors, but no really global one. In Kanthal, we also have an interesting medical wire business. All 3 divisions are active in the medical segment, but I think Kanthal is the bigger one with its medical wire. And in looking there at the competitor's position, there are a few large players and a lot of small ones. Last one, Strip, roughly 10% of Alleima sales. Precision Strip for many different products, mainly for the consumer segment. Important product I mentioned before, compressor valve steel. I think you would be surprised if you would know how much of the world's electric energy that is used for cooling of freezers, refrigerator, air conditioners. And to have a very good compressor valve steel means you have energy-efficient compressors and reduce the electricity you need. I said at the beginning, I think one of our core strength is our fully integrated value chain. It gives us a number of advantages. I don't know, obviously, we control the value chain. And we have seen recently in the last couple of years how global value chain can be sensible if you don't control them and we control our value chain. It also enables close customer cooperation. I mean the history of us is that we have many customers where we have long-term relations and we have sort of interactions on different levels. R&D, talk with R&D, top management talk with top management, et cetera. I think that is very much appreciated by our customers. Of course, we have a premium offering. So being in control the value chain also means to have control of the product quality. And last, I think very important. If you want to be, and I think we are and we want to stay in that position, the technology leader, if you're a technology leader, where you invent new materials, you need to have your own metallurgy. So that's why I think this is so important. We have a global footprint, both when it comes to market and also, of course, production. We serve roughly 90 countries, 90 markets and, serve them from 40-plus sales offices around the globe just to be close to the market. 27 production units all across, and all of this gives us I mean it give us proximity to customers. It also brings flexibility, flexibility for different reasons. One could be one unit has an issue, the other one can support. But also for geopolitical reason, trade problems, et cetera. I mean, I can give you 1 example. When United States implemented import duties on steel. Of course, we were affected, but we are the only 1 of our competitors that has an extrusion press in U.S. Of course, we need to import to U.S. then the bar, the low added value product, while competitors, they had to import the high added value products, the tubes. So being in different places is a strength. The largest site of the 27 is here in Sandviken, obviously, around 3,000 people for Alleima work here. This is where we have the larger steel plant. We also have a smaller 1 in Hallstahammar in the Kanthal structure, the rolling mills, the forging and a number of tube finishing factories. This is also where we have the strip precision strip factory, the rock drill steel factory, the surface technology for fuel cells that you were going to visit later this afternoon. This is also where we have the larger part of our R&D, the largest R&D unit. We have 3 more, 1 more in Sweden in Hallstahammar, 1 in China and 1 in India. So let's start talking about our strategy. It's based on 4 pillars: profitable growth, materials innovation and technology leadership, operational and commercial excellence, and industry-leading sustainability. We'll start with profitable growth. I think there are -- first of all, I think we have improved SMT now Alleima to the point where all 3 divisions are at the profit level where growth is the main priority. I will show you soon that a lot of the mega trends play in our favor that will drive growth. And also there's still, in some segments like oil and gas, aerospace that is in transportation, still recovery happening from the downturn due to the pandemic. They are not back to pre-COVID levels, so to say. So a lot of opportunities. Materials innovation and technology leadership continue to be best-in-class in the 2 things that I mentioned before. Material science, innovate new materials and work close with customers to support them and develop products for their applications. Looking at operations and commercial excellence. I think we've done a lot of good things in the last few years. But by definition, you are sort of -- you're never done. You need to continue. So these are things like continuous improvement, footprint changes. I mean we are in tube, in '98 it was not built for what we're doing here today. So this is 1 part of the changes we have done and Emelie explained that. There are still things ongoing. For instance, we are as we speak, closing 2 Kanthal units in U.S., moving into third one. Mix optimization and price leadership is also areas where we have improved, but there's still always potential to do more. I mean many of our parts, we say that we are market leaders. And if you are the market leader, you also need to dare to be the price leader. And in some areas, we have improved there, and there are more potential. Last one, industry-leading sustainability. I will dig more into that later on, and it's much more than climate. But if I should say a few things about the climate anyhow, I mean a lot of people know that steel industry is a huge CO2 polluter. That is true. But if you remelt steel like we do, that is not the case. So our CO2 footprint already today is very small. But I think the largest impact we can have on the climate is through our products and how we support our customers. And then it starts to be interesting because then #1 and #4 is in a way connected. Sustainability is a good engine for growth. So let's look at -- and of course, you know this, but I will look at some of the mega trends and how they play, and I think mainly in our favor. Look at changing demographics, I mean more and more people, of course drives consumption, also drives energy demand. We're also getting older. The share of people on earth, above 60 is expected to grow, and that is a good driver for the health care and the medical business where we have a good position. increasing and changing energy demand, always said that, I mean, today, there is an energy shortage and due to the pandemic parts of it is under invested, so here, investments will happen. And if I look back, I think this week, it's 6 months since the tragic war in Ukraine started. I think that has turned a lot of things upside down. So there's a new trend now when it comes to energy, and that is energy independence, both regional and domestic. And I think that is will also be a driver for the energy business. And of course, probably the most important, the shift towards fossil resources. All of that gives us opportunities. Electrification is obvious. I think most of us know that and, I know that we know, the electrification and transport sector is a strong trend we also dare through our surface technology, but also which is clear also industries are electrified. Industries are moving away, for instance, from fuel -- gas fuel furnaces to electric furnaces. So this is something that plays well for Kanthal. And the last one, growth in emerging markets. We have, as I showed, good global footprint. And I think what we have done in recent years, which is obviously very good is that we -- I mean, if I look at our Asian units, we don't look upon them only as sort of low-cost alternatives. We have the strategy to move the most premium products also to Asia. That has been really successful. So and that has improved the market position in Asia a lot, and it's been driven growth for us. And I think that's an area where we will continue. So we define, as I said, 10 business segments. The market studies that we have done to support an input to the prospectus shows that we expect these segments in average to grow about 5% the next coming 5 years. Of course, some of them will grow more and some of them will grow less. This is how we view the market. And since the strategy is profitable growth, we don't have the same ambition in all of the segments. Segments with lower margins, maybe we will not grow as much, and others where we have a good position or the market growth is strong is where we're going to focus more. So we defined 4 segments where there's a sort of extra focus on growth: They are chemical and petrochemical, medical, hydrogen, renewable and industrial heating. Before moving into them, this is a slide sort of try to illustrate how we view our business portfolio. So we divided it in 3 parts where we see growth in the existing business. And what I mean by the existing is that's the main part of the business. This is oil and gas. This is industrial heating, it's medical, et cetera. Of course, there's a lot of opportunities there, both from organic, but also from inorganic growth. Then we define something we call growth in sort of new business creation. That is where we have sort of almost no business today or it is a very sort of starting point of its development. Those are areas mainly related to renewable hydrogen, also parts of the industrial heating. And where we spend a lot of resources, efforts in business development, in R&D, et cetera, to capture those opportunities. The last one is managing contribution business, so that is the more low-margin part of our business. That is still important. We need that to be flexible for filling the mill, so to say, but you should not do too much of it. But it's an important part of our business. Most of that -- not everything, but a big part of that is within the industrial segment. So based on that, we don't have really high growth ambitions in the Industrial segment. For sure, we will not grow that from a volume point of view, but there is still potential to grow it from a mix and also price point of view. So to manage this puzzle, both strategically but also operation and I think it is one of the sort of clues on how to be successful in our kind of industry. Mix optimization is so important. One day it's the right decision to take an order. A month later, the same order could be the wrong decision. You need to be fully in control of what gross profit do we have in the order backlog, full control of your lead times, where is the market pointing, how should I play this puzzle. I think this is something we improved a lot on. But back to the 4 segments where we have an extra focus, start with chemical and petrochemical. As you can see, we estimate that market growth like 4%. So you could ask why so much focus on that, it's growing less than the average. But that's because we have such a good position here. This is, of course, a typical traditional tube business. As I said before, Tube has done excellent work on improving their Asian factories. They are today in a very good way, producing and selling the premium products. And looking at that segment, the main driving force for that growth is Asia and the largest in China. So using the position we have in Asia will help that. We also see a development for even more, I'd say difficult or high alloy products like high nickel products. So that also increases the addressable market for us. Next one is industrial heating. We define it as the high added value part of the Kanthal business, where it's elements, modules for industrial heating. So the general trend, gas to electric, move away for gas-fueled furnaces to electric furnace plays well in the Kanthal hands, of course. But we also see another development which will sort of increase the addressable market. We see that sort of high power industries like steel, petrochem, cement are also starting to move in this direction, and that will open up much more addressable market for us. So let's move to Medical. Medical is a strong market growth and this is looking forward 5 years, if we look back at has been as strong. And we have grown faster than that. So we have been then basically taking market shares, and that is what we intend to continue to do. We have a good position, I think, in all three divisions, but the strongest one is in Kanthal with the medical wire. And that is applications you see the woman there, she -- what she has on her belly and an arm is a Dexcom, where you measure the glucose content in the blood, and this is an insulin pump. So that's one of the star products in -- where we produce wire for that application. So applications like that, growing fast, we have grown in a very good way. We also made an acquisition last autumn where we sort of improved our market position in Europe. We made an acquisition in Switzerland. Last one, and it's the smallest one from sort of sales today, but it's the largest one from how we assume growth going forward, that is hydrogen and renewable energy. It's a small part of the business today, I would say, just below 1%. We estimate it to grow at a pace of 25%. And here, I think we have -- and we have both already defined ready-to-sell products. We have -- I mean you're going to see the surf tech line today. It's fully industrialized it's sort of the growth will come with that market maturing and growing. Other parts is where we spend time on developing new materials, also looking at new business opportunities. I think in the renewable area, I mean if I would go back 2 years, we didn't see so much potential as we do today where -- I mean, especially the Tube division has studied the value chain of a number of energy sources and found much more potential than we thought before. So I think we have been in a good shape and good opportunities to have this as a growth engine for Alleima. Of course, I cannot be standing here talking about growth without mentioning oil and gas. We're coming from a tough situation in April 2020 when the pandemic really hit the world oil -- global oil consumption went down by roughly 30% since oil is so dependent on the transport sector. We managed -- we had a very good back load, so we managed 2020 with still good revenue, but the order intake sort of disappeared. So starting 2021, I mean, the backlog was almost empty and the business was at a low level. So the revenue from this segment 2021 was record low. It was less than half of the lowest tier in the oil price crisis, '15, '16. But now it's recovering. Maybe I haven't seen the large, huge projects yet, but it's recovering. So I would expect, if I look at the umbilical business, I think we would be pacing end of the year, maybe 80%, 90% of where we were before the drop. And then if we look on this long term, I mean, some people think that this will sort of disappear. I don't think so. I think it is it's fair to believe that long-term oil will have a decline since oil is so dependent on the transport sector and with electrification, the need of combustion engines will go down. So that will have an impact on oil long term. Gas, on the other hand, so when you look at oil and gas long term, you need to look at oil and gas because totally different market dynamics. Gas is mainly used for heating, but also for electricity producing. And the world would need more electricity. So I strongly believe that gas will have a much better future than oil, and will most probably continue to grow. Gas, we can also look at gas as a sort of bridge fuel towards renewable, but moving away from even worse fuels like coal. And I think many of us has been in cities like Beijing or New Delhi. It's not only from the CO2 perspective, it's also from air pollution point of view that you want to move from coal to gas. So we're investing and focusing a lot on the renewable and hydrogen business. But we will, at the same time, defend our market shares and our position in oil and gas. Second pillar in the strategy is materials innovation and technology leadership. Already mentioned 2 important things. One is to be best-in-class, developing new materials, but in parallel, close cooperation with customers, finding products to develop and innovate their applications for their processes. I think that both of them is the strength of us. I mean we have -- looking at our steel plant, maybe not every, but I think we have over 900 active recipes. And we basically -- I think that is pretty unique. In the same metallurgy, we are running carbon steel, which we use for the rock drill business, ferritic steel, mainly for the strip. Normal austenitic and duplex and also special alloys in the same metallurgy. I think that is pretty unique. We have about 850 patents, 230 people are working within R&D. In Alleima we invest about 1.5% of our turnover in R&D. The strategy is based on 3 parts. One is focusing products on sort of growth industries, new things. One example here is megawatt heater. It's a huge gas heater developed by Kanthal for completing new power. Second one, defining then the materials portfolio. So what you can see is the Tubes Sanicro 35. It's the newest, our latest innovation, where we have a material that sort of closes the gap between stainless and high nickel alloys with very high performance but at a lot lower nickel content, meaning lower cost for the customer. So moving over to operations and commercial excellence, I think we've done a good job. We've been focusing to optimize our footprint, both from a market perspective, where we want to sort of be close both with our sales and our production close to customers. We also closed a number of units to increase efficiency. I mean you're sitting in one of the examples here. And of course, this has improved our efficiency. I mentioned before, improved price management and product mix. So what I described, you need to be sort of only to understand what you have in your order backlog. What order should I take, not take to optimize this and also drive price management if you are the market leader, you should be the price leader. I think 1 thing that -- I mean, looking at the quarter 2 report, 1 of the things that was -- I mean the market situation order intake was really good. But I think what I was mostly proud of was how this Alleima organization has managed to increase prices to offset the pretty high inflationary pressure. Also better control of our net working capital, more transparent, looking at supply lines, max stock levels. This is how much we can have if we have too much reduce your flows improving. And I think all of this has led into that we were unable to mitigate the pandemic downturn in a way that I think many would -- did not expect from us. I will come back to that soon. We also worked with our portfolio. During the years, we have divested both welding wire, stainless wire; we divested our share in 50% share in Forged Stainless. We made 5 acquisitions, 2 within the area of industrial heating, 1 in medical, 1 in aerospace. And the last one, the Gerling acquisition was a German engineering company that would give us more added value in the hydrogen business. So coming into the pandemic it took some while because we didn't see much. But I think late quarter 1 or early quarter 2, 2020, we started to understand this will be bad. So we set up our own scenarios, let's guess that -- we will drop this much in order intake in this quarter and that much in the next -- and then we prepared actions. And we run the actions before we saw exactly where we're heading. Of course, we adjusted. And this time, we focus costs. So we did everything to take out cost. We also, of course, reduced the net working capital. We spend less on CapEx. But the majority of efforts was cost, I mean, reduced -- I mean we made redundancies, we reduced the number of temp workers, et cetera. I think all in all, we reduced FTEs were roughly 1,000 people. What we didn't do that I think we have done before, was focusing, fill the mill too much. In recent downturns, we sort of have done everything to keep the production volumes. And what will happen then you force yourself to book the wrong orders at too low price. We didn't do that this time because it will always turn up again. And what happens when business turn up and you have done all the things to sort of fill the mill, what happens when it turns up again, is that you have a very lousy backlog. You have a lot of bad orders in your backlog. That was not what happened this time. So I'm very proud of how we did it. And you can look at sort of our resilience compared to peers. I think this was good performance from Alleima. The last pillar is sustainability. As I said before, we already have a good CO2 footprint if you put CO2 on per revenue. Big part, roughly 90% of our business is also in a [indiscernible]. Today, above 80 -- around 82%. So 82% of the steel were produced is recircled, so only 18% is sort of virgin material. And the taxonomy in the kind of business, we are threshold is 70%. So we're really on the right side of that. We had a tough time when we come to health and safety, during the pandemic. People were -- I mean, the managers was not there, all the things we implemented with the sort of shift meetings that was in a way disappeared. And now we're moving back again. Share of female managers, real improvement sort of last year. But all in all, this is something that takes too long time, and I think we need to improve or come back to that soon. So looking at the goals. Our ambition and goal is to, first, we are today looking at the Scope 3, to understand Scope 3 because we also want to commit to the science-based target. The decision is not taken. I think that will come. Even if our position today is low CO2 footprint, that should be reduced by 50% until 2030. And we will continue to improve circularity. You're going to see the steel plant today, and it looks pretty rough. But imagine that we have -- how we load the furnace, what kind of scrap, what kind of material. We actually use artificial intelligence, machine learning to optimize cost of course, circularity and of course quality. We're going to reduce our accidents, and we have started a cooperation with all Albright Foundation because we need to improve how we attract women to our industry and to our company. But the majority part or I think important, everything is important, but I think the biggest impact we can have on the climate is through our products. We want to be seen as the industry leader in sustainability. Our sustainable products should grow more than average in our business. So to sum up, I think we are already today a world leader in our industry. With this separation and the listing of Alleima, we will have a greater focus. We will have our own board fully focused on us. It will be easier and faster to execute on our strategy. We will be in charge of our own cash and capital allocation. Of course, it will also mean a more fair valuation of Alleima. And what has been obvious because we worked with this for some while, how much energy and pride it has created in the organization. And energy pride is a good start when you want to develop a company. So we're a highly experienced management team. This is the team. We are also the ones who have been driven the improvements last number of years. We're a very decentralized governance model to the 3 divisions operate sort of on their own. Also a highly experienced Board. And our commitment to our development is very strong. So to sum up, I think we have a winning platform to create shareholder value. We have a premium offering with solid market positions in many customer segments. We're fully integrated and our strong R&D, strong metallurgy, strong sales, et cetera. I think we have multiple ways to drive growth, not at least from the energy transition. And last, I think we have a solid financial and attractive situation and I think industry-leading profitability. So that is my last slide. And now I want to introduce my CFO, Olof Bengtsson to go through the numbers a little more in detail. Thank you.

Good to see so many here today in Sandviken. And a warm welcome to you on the web as well. Yes, I am the CFO. I joined Alleima in December 2019, so I don't share the same length of experience with the company as Goran. My professional experience mainly comes from finance director and CFO positions in other listed companies. And since I joined, I spent a considerable time and effort together with my colleagues and my different teams to set up the structures, policies and procedures to operate as a separately listed company. And now we are fully ready to go. And today, my thinking is to take you on a short financial journey through Alleima to show some of the financial performance and also talk a little bit about some financial specifics in our books. With Alleima, as it looked in 2021, revenues of close to SEK 14 billion, adjusted EBIT margin of 7.6%, free operating cash flow, a little bit more than SEK 1 billion and net debt to equity. That is a very recent number though, post the final capitalization from Sandvik. We had a net debt to equity of very close to 0. Looking at revenues per division, Tube accounted for the most part, 69%; Kanthal, 22%; and Strip, 9% of revenues. And if you look at geographies, Europe, if we see that as 1 market, 51% of our revenues while North America, 23% and Asia 21%. And then we operate in, as Goran said, 90 markets. So of course, there are a few other markets accounting for approximately 4% of our revenues. So that's the high-level picture. If we look at some more specific financials for the past 3.5 years, it looks like this. And if we start with the order intake, coming out of a strong '19 into the pandemic downturn that affected most of us in 2020. Of course, divisions were differently impacted by the downturn. And then seeing a good rebound into 2021, which has continued into 2022. And currently, we are at a 12-month rate of roughly SEK 20 billion. Revenues, not as much affected by the downturn as the order intake. We had a good and solid order backlog coming into 2020. And then coming into 2021, -- we didn't have the same size of order backlog, so a more flattish development between those 2 years and then a good rebound into 2022, SEK 16 billion since the rolling 12-month rate at the moment. That corresponds to an organic growth rate of roughly 13% in the first half and the order intake was up organically by 33%. But I should also say that some segments, some customer segments are not fully back to the pre-COVID levels yet. Looking at the EBIT, this is the adjusted EBIT where we adjust for metal price effects and items affecting comparability, coming down to 7.6%, as Goran mentioned. We took a lot of actions in 2020 to mitigate the downturn, swift actions, temporary work time reductions. We even had to resort to some layoffs. And then discretionary cost savings. So in spite of a loss of a lot of profitable volume, we managed to dampen the fall to 7.6%. And now again, we are in a good rebound this year. 8.7% is the rolling number, 10.4% is the half year number. And one of the things that we have been fairly successful this year, we think, is the pricing strategy. We have managed to compensate for inflation and higher energy costs in a very good way, we think, this year. Finally, cash flow. We are normally fully cash generative in 2020 in the downturn as things slow downed. We managed to release quite a lot of capital from our balance sheet, inventories, accounts receivables, et cetera, but also cutting back on our CapEx to protect the cash flow. And then going into 2020, with increased activity normally means more cash consumption, and the same goes for 2022 when we've also seen very high metal prices, and I will come back to that later, but also longer freight times, of course. And this, of course, ties up more capital. Resilience is something we are focused on quite a lot, and Goran talked about it in his operational and commercial excellence part. And these 2 lines here show the EBIT. The orange line is the reported EBIT. That's the EBIT including the metal price effects and as metal prices swing, so that's EBIT. And the dark red line is the adjusted EBIT. And I think you can see that on both lines, I would say that volatility has decreased. And we've taken a number of actions throughout the year. I'm not going to go into all those actions, but they contain divestments of non-core activities, footprint optimizations, price and mix management and also flexible cost structures. But above all, I think one of the most important learnings that we have is swift action, to act quickly on downturns in order to be able to do all the actions you want to do in good time. So I think resilience has increased. Then if we start looking at the income statement, if we start with the top line, a lot of things moving in the top line. And I've tried to dissect the top line here. If we start with structure, that is normally divestments and acquisitions. Goran showed a few acquisitions that we've done over the past years, been mainly bolt-on acquisitions, small acquisitions, so they haven't moved the top line that much. Alloys, this is a way for us to transfer the cost of the metal to the customer, an alloy surcharge. I will explain it in a few minutes. And that can, of course, vary quite a lot with the metal prices. And here you see the impact over these 3 years up until the first half of 2022. And as you can see, metal prices have increased quite a lot, especially in 2022, and that impacts our top line. And it also dilutes the adjusted EBIT margin, I should say. Currency, yes, we invoiced in many currencies, dollars and euros are main surplus currencies for us, and this year, we have some currency tailwind, as you can see, around 5% positive currency effect on the top line. Organic then that's, so to say, the true growth that we see. And as you see, a fair good recovery into 2022 with a 13% growth. So overall, the top line has actually grown by 34% in the first half, but a lot of it is explained then by the alloys. Going further down the income statement, cost of goods sold contains -- about half of that contains raw material, that is metals for us, consumables and energy. And of course, these costs have a high degree of variability over time. If we stay a little bit on the energy costs in relation to metals, energy costs are not that high, but they are still important, of course. We consume about 800 gigawatt hours every year of electricity, which is by far our most important source of energy. And it's a hot topic nowadays, electricity costs. And what can you do to reduce the impact of our electricity costs? Well, short term, if you have the possibility, you can, of course, temporarily shut down production to avoid the price peaks. But over the long term, of course, you have to pass on this cost to your customers. So we have introduced energy surcharges and we have been quite successful in doing that. And we have also, of course, a hedging strategy for taking care of electricity costs. So we've hedged -- at the moment, we've hedged a little bit more than 80% of our electricity costs for the remainder of this year and for the next year. And then other sources of energy is natural gas and liquid natural gas and also liquid propane. And we have a hedge strategy there as well. Going further down the income statement, sales costs vary a lot with activity levels. Admin costs are more stable. They were at a low in 2020 when we had a lot of work time reductions and so on. and they have increased from a separation and stand up project. We are putting a lot of resources in place. And then R&D costs are fairly stable over time in absolute numbers, of course, we don't move with volume are approximately 1.5% of our revenues. Then going down further down, so to say, going from EBIT to adjusted EBIT, the adjustments we make are mainly impairments, items affecting comparability, which relate mainly to structured projects and the separation project that we have been through. And then we have the metal price effects. I'll come back to them soon. And then going further down from the adjusted EBIT to the adjusted EBITDA, you have to add back the depreciation and amortizations and they're in the range of SEK 750 million to SEK 800 million. So the EBITDA margin comes out somewhere around 13%. The metal price effects then, I have 3 slides here on that, and I'll try to explain what that is about. We have metals in our production, as you know. The main metals are iron, nickel, chrome and molybdenum. We, of course, use more metals than that, but those are the main metals in our basket. Nickel is, from a value perspective, the most important metal, and it's also a metal that varies quite a lot in price. And if we look at the pricing for the customers, there are mainly 3 main approaches to cover the cost of the metal and passing it on to the customer. One is on large project orders. Normally, the price is fixed to the customer. And thereby, we hedge, and therefore, it's very important for us to hedge the metal price or the metal content in the order in order to be able to, from a metal perspective to secure the margin on the order. So there, we use hedging and a fixed price. Then we have smaller orders with a fixed price. Normally, we don't do any hedging here. But of course, we have to make sure that the -- so to say, the base price for the product covers the metal costs. Then we have what we call the alloy surcharge. That is applicable to roughly 40% of our revenues. And so in addition to the base price, we apply an alloy surcharge, and the alloy surcharge is based on official price fixings for the metal in question on the London Metal Exchange. So it's a very transparent and clear way of, so to say, putting a price on the metal. It's well known among our customers, and of course, also used by our competitors. I think it's called the European model, even though it's used in other markets as well. But I say that is the starting point, the alloy surcharge. And when we come to the accounting then, the price to the customer is then based on this alloy surcharge. And it's normally in fairly simple terms, based on the official average price that is fixed in the month before the sale to the customer. So everyone sort of say knows the price when they buy the product. And when we sell the product, of course, we have to recognize the cost for the product in our income statement, in our cost of goods sold, and that cost is based on the actual purchase price for the metal. We use the FIFO principle. So the metal that first comes into our stocks is the first one to leave. And as the normal is a time lag between us purchasing the metal and us pricing the metal to the customer then it will be different, so to say, prices and costs. That means that there will be a result and impact in our P&L, on our EBIT from the metal. It can be positive or it can be negative. And if you look at the table below here on the slide, can see that the metal price effects have been quite substantial over the years. That can vary quite a lot and only 1 out of these 4 periods, we had a negative effect. So in order to summarize the effect on our financial statements of the metal price impact, I've tried to put together this slide. and you have to assume constant volumes, mix and lead time in a rising market price trend, order intake and revenues are normally positively affected, higher prices of course. Profitability is normally positively affected as well as we normally buy the metal for a lower price than we sell it for. So that gives a positive effect. A side effect of this is that we pay tax on our reported profits, so of course, the tax bill will increase as well when you make more money. If you look at the balance sheet then and the inventory, a higher value as we are in the inventory, as we are replacing keep the metal with more expensive metal, we will, of course, over time, tie up much more capital in our inventories. Same goes for accounts receivable. We will tie up more capital in our receivables. Our invoices are bigger. And also the same, of course, goes for the supply invoices, the ones providing the metals. Those will also compensate partly. But overall, normally in a rising metal price trend, we tie up more capital in our working capital, meaning that we have a negative impact on our cash flows. And conversely, in a falling metal price trend, profits are negatively impacted, but cash flow is positively impacted. So that is the metal price effect. It has different effects on the profitability and different effects on the cash flow. So another feature of our business is seasonality. And as we are now in the third quarter and the third quarter will be our first external reported quarter as a separate company. Be aware of the seasonality effect, the third quarter is from a volume and sales point of view, a lower quarter. We have the -- of course, the vacation. We have the summer stops. We normally stop our production for maintenance, which means that we have lower absorption of costs. And if you look at the average of the last year's quarter 3 here, you see that we are just below 5%. That's also a cash flow seasonality. Normally, we have -- we build stocks for the summer stop. So normally, the second quarter is negatively affected by -- on the cash flow side by the buildup of stocks which are then released in the third and fourth quarter. So normally, the cash flow is much stronger towards the second half of the year. A quick overview over our divisions, organic growth on order intake and revenues and also the adjusted EBIT, that is adjusted for the metal price effects, and here, you can see a little bit the impact from the downturn in 2020. Divisions were a little bit differently affected and also recovered at different speeds. One thing that you should note here, and I would like to draw your attention to, is that we also have in addition to the divisions, we have a common segment as well, which are the central cost and for running Alleima. They are roughly 2% of sales and/or our revenue. And as revenue has increased, you don't see the effect on the percentage. But if you look at the absolute numbers, we are a little bit higher on the on the central costs, but that is very much due to the fact that we have been running the separation project. Not all of the costs from the separation projects are on the items affecting comparability line but are taken in, so to say, the normal costs. And those are mainly the standup costs. And we have been running dual structures this year in certain functions. So being both in the Sandvik world and in our own world. But these costs, I expect to come down as soon as we have to say, listed and are a separate listed company. Comparing us then to some peers, I find it always difficult to compare to peers. And there is not an identical peer out there that we can compare us to. And I think if you're going to make comparisons, you have to look at division by division. But here is a try at least. And these are mainly, I think, mainly 2 competitors here, but there are some as one Kanthal I think there's also a Strip competitor. Anyway, so to say, the length of the line here shows the variability of the margin. And these are the EBIT margins. This is not adjusted EBIT margins. I think we are fairly unique in presenting an adjusted EBIT margin. So these are the reported EBIT margins. And as you can see, variability is larger among the competitors and also the average margin, which is then marked by the white dot here is higher than the competitors, yes. At least to try to compare it. But I think our work with the resilience and all the actions that we have taken to reduce our resilience has paid off. We are less volatile than many of our competitors and also on average, have a quite decent margin. A few words about CapEx. CapEx mainly goes into machinery equipment, plant refurbishments in our core production facilities. We had a temporary CapEx reduction in 2020 and 2021. We estimate that we need about SEK 400 million per year to be able to sustain our production capacity and capability. Now we -- CapEx is going back up again. Among other things, we have a big project in India, where we are expanding our capacity and capability on the Tube site in India. And we expect going forward to be around 4% to 5% of revenues on current revenue levels. So that means that, of course, in addition to the maintenance CapEx, we also have some expansion CapEx plans. And for this year, we think we will end up somewhere just below SEK 650 million more CapEx at the second part of the year. Cash flow, I talked about it already. We are normally fairly cash generative. This has been a pressure on the cash flow this year from higher metal prices and also from longer freight times. But I think the takeaway on the cash flow is that when activities reduce, when sort of to say, our activities slow down, normally, cash is released from the balance sheet, so cash comes out. Metal prices also have a big impact on the cash flows. And rising metal prices normally means lower cash flow. And lower metal prices, falling metal prices normally means a better cash flow. But it's so to say, it's the change that impacts the cash flow. Once the prices have stabilized, that the cash flow is not affected per se by the metal prices any longer. So it's the change. It's the rise and the fall. And then we have seasonality as well. So I think you should keep those in mind when looking at our cash flows. There are many impacts. A quick look at the balance sheet, compressed balance sheet, capital employed of SEK 16.6 billion at the end of June. Some components: Goodwill, not a very big item, SEK 1.4 billion. I think it actually dates back to the acquisition of Kanthal once upon a time. Property, plant and equipment, fairly stable, just above SEK 7 billion. And then we have the working capital, SEK 6.6 billion. Obviously, the item in the balance sheet, I think that probably moves the most over time. Looking at financing, we have been capitalized by Sandvik in the spring and we had a net debt or actually a net cash position of SEK 139 million at the end of June. If we adjust for our net pension liability, about SEK 0.5 billion, and also some leases. We have very few leases. We own most of our properties. We end up at roughly SEK 840 million in cash position. And then equity, SEK 15.3 billion, obviously, a result from the capitalization and our earnings. So overall, a very good and strong balance sheet, we think. In terms of financing, we have put in place in the process here of SEK 3 billion multicurrency revolving credit facility with 6 of our core banks. It's a 5-year facility possible to extend 1 plus 1 year, and this is obviously our core backup financing. And in addition to this, we will also of course have bilateral lines with our banks and also put in place a Swedish commercial paper program if we need to, so to say, short-term fund ourselves at good levels. Finally then, some financial targets. We have 3 targets and 1 policy. And the first target then is on the top line, organic growth. Organic revenue growth to deliver a profitable organic revenue growth in line with or above growth in targeted end markets over a business cycle. And Goran talked about it. He showed -- if you remember this slide, he showed a 5% growth on average for the 5 coming years in our core customer segments. And we are not giving a specific number here. As such, but we will be selective. We are not interested in always growing all customer segments like in the industrial segments, we have long products. We find it more interesting maybe to grow the targeted customer segments that Goran talked about. Earnings, adjusted EBIT margin to average above 9% over a business cycle. We think that's a realistic and reachable target. And obviously, based on the performance that we showed in 2021, with a 7.6% margin, we think that this is a good level to be at. Capital structure, net debt that is the total net debt in relation to equity to stable of 0.3x. And as I just mentioned, we have a very strong balance sheet, no debt -- no net debt. And our intention is not to load the balance sheet with a lot of debt as soon as we are on the stock exchange. But it gives us at least some flexibility to use our balance sheet should an interesting opportunity occur. Then finally, on the dividend. Our intention is, on average, the dividend of 50% of the profit for the period. That's the profit after tax more or less. Of course, you have to take into account the impact of metal prices here as they can impact your reported EBIT line quite a lot. And our intention is to pay a stable and rising dividend over time. And this is also in line with what Sandvik has today, I believe, 50% of the net profit. I think that is more or less all from me. I hope I have managed to enlighten you a little bit, and thanks for listening.

Thank you. Thank you, Olof. Now I would like to welcome Goran Bjorkman up on stage as well. So we can start our first Q&A session.

[Operator Instructions] But however, we will start with questions from the audience. So do we have any questions? Right there.

Yes. [indiscernible] I have a question relating to your margin target and the outlook. You're targeting 9% over a cycle adjusted EBIT and looking at the past 3 years, you're essentially already there. If you push through a mix shift from contribution products, which I would assume is 20%, 25% of your volumes to more high value-added products, could you quantify what the potential margin pickup in that would be and the top line potential that I hope in terms of value-added products?

Thanks for that question. I mean it's true that the contribution business is set at the size that you say. And it's true that, that is sort of a very low margin, I think around 0 but of course, giving contribution. The 9%, I mean, we are right now in an upgoing trend. From that perspective you could have use on the 9%. If you look at our track record back, we have never been in 9% over a business cycle. And part of what I've shown, part of the way to drive Alleima is to work with the mix. But it takes -- it's not very fast shifted. So it would improve, but don't think I should come to a number. Sorry, but it's an important part of the strategy, obviously.

Yes, fully understand. Could I have a follow-up then if you look at the backlog, and you're not going to give me a gross margin number on the backlog, I guess, but it has been a quite steep increase recently. It's mostly the 2 business where I guess you have most of the contribution product, is the backlog filled of contribution products, or is it filled with higher-margin products? So how should we look at that once that filters through to revenues in the next year or 2?

I think we have a solid backlog. It's high. We don't disclose the size of it. If I compare the backlog, I'm going to give you a long answer. I don't answer your question, but if I look at the backlog prior to the downturn, in average, it was more oil and gas in that backlog than it is today. What we have seen is that both Kanthal and Strip that are sort of normal have much shorter lead times from taking orders to revenue has also increased their backlog. So it's more an average of the total business than it was some years ago. And I would say it's not filled with contribution business. I think we have a healthy backlog. And if business, for some reason, macro would go down, I think one of the strengths we have is a very solid backlog at the moment.

Markus Almerud at Erik Penser Bank. To continue a little bit on the margin question. So looking at the average adjusted EBIT margin trend over time, it seems you've not actually increased the lower end of the adjusted margin trend looking back to 2012, '13, '14, whereas the reported margin has gone up, the lows are higher than they were before. So it just has to do with the contribution from metal prices. But does that has to do with the umbilical tubing being lower? And how would you expect for that margin trend to change once oil and gas actually comes back?

I think that the -- I mean, the oil and gas business is normally a fairly good business. So you should see a I think you should see it come back. But I would refrain from giving any specific numbers on the margin itself. But I think there is potential.

I would not give you the number, but I could give some more flesh on the bone still. I think 2021 was at the level of oil and gas business that we never ever thought out when we made worst case continues scenarios, it was really, really low. It was as I said -- I think I said before, less than half of the lowest volume we had in the oil and gas downturn in '15, '16, so really bad, and now it's coming up. And as I said, we are pacing, I don't know, maybe 80%, 90% of a top year end of this year. And of course, that will improve our margins.

That's the pace, so to say.

That's the pace, yes, it's pretty long contracts.

Okay, my second question is on M&A, and maybe we'll come back to that, but you haven't spoken much about the M&A strategy if you have not spoken strategy on the M&A.

I think if you look at our growth targets, the majority of them will come from organic growth. So that is still the nature of our business. We have made 5 acquisitions the 5 last years. And before that, I think it was a 10-year period where SMT did not do any acquisitions. And we will continue to have an M&A strategy. I don't think that pace should go down. And the M&A strategy is to make sort of selective acquisitions within the segments where we want to grow. And I think that has been the case in the last number of years as well because what you see what we've done 1 in hydrogen, 2 in industrial heating, 1 in medical and 1 in aerospace. So I think you could expect sort of the same kind of acquisitions and foresee not at a lower pace. And if you look at the financial targets, you could calculate backwards. And there is a room for making acquisitions, at least on the pace we have done before.

Gustaf Schwerin, Handelsbanken. I have 2 questions related to capacity. If we start with the rolling lines and the finishing lines, what kind of utilization levels are we running at? And with the backlog that you have now, would you see this as any kind of bottleneck over the next years as you're ramping up? Yes, I'll start with that.

I mean we don't disclose capacity utilization, not that I couldn't tell you, but I don't want my competitors to know the capacity utilization. If you look at sort of where we are at the bottleneck, I mean I think the pacemaker, if I put it that way, that is hot working. But the largest capacity potential we have is within the contribution business, where we could reduce that a little bit and take a more high premium product, and that's sort of always ongoing. And looking at the numbers in our internal targets, we assume to have a negative growth in tonnage a big part of the contribution business, and that is a way to release more capacity.

Yes, okay, because the second point that at least my own assumptions, if you look at the melting side, if you say that volumes grow 3%, 4% over the next decade, then you'll be running pretty much flat out. So the solution then is you take out contribution volumes rather than having someone else do the melting for you. How should you do that? Is there any point to actually see you guys adding more melting capacity within the foreseeable future?

Not in the big step. We have remelting capacity where we remelt some of the high nickel and super alloys. There can see us increase capacity, but that's sort of still low CapEx. In the big plant, I don't see us increasing capacity. And I think you answered your question in a way yourself.

We have a question here.

Thank you very much. So on energy costs, just so I understood you correctly. Have you hedged that at SEK 400 million? Is that the running cost base? And also on the energy surcharges that you're about to implement. Does that effectively mean that you will have a positive impact from rising energy prices in the second half and 2023?

If you answer the first part, I can answer the second part.

No, we are at SEK 400 million plus. We are a little bit above that with the current levels of say, hedges roll in, but it's not far away.

It was more risk mitigation not to end up in a really poor situation during the winter.

We initiated hedging fairly early on.

And to your second question, I mean, if I look at the 3 divisions, I think all 3 of them has made sort of really good job when it comes to mitigate inflation. They've done it a little bit separately. It's Tube that has implemented clear and transparent energy surcharges. Kanthal has of course used the higher energy cost to improve the prices, but they have done it on base prices. So in the energy surcharge models that Tube has implemented, both electricity, it's LPG and LNG, and you have the correct me if there is something more. But it's a transparent model. We don't see ourselves sort of being clever and hedging and then have them pay for it. So it's transparent price.

And then maybe a follow-up on that, but you showed a slide where you showed , let's say, greenhouse gas intensity compared to peers. Would you say that it's a fair assumption that this also is reflective for the energy intensity so that you may be going to get a competitive advantage, cost advantage to other producers?

I think it's -- part of it -- it's not that straightforward. If we look at our energy part, I think we -- I mean, we consume the most electric energy in Sweden, where we have the smelters. Sweden is a good country if you want to buy fossil free energy. Pricing is going up as everyone knows. So it's a good place to be in Sweden. And so some of the customers, I guess, have more sort of fossil-free in their Scope 2. But I think this is an area where benchmarking needs to improve all these numbers when we look at the competitors they are not that transparent. And yes, they think we're not too transparent as well. But overall, the lower you are, that's also an evidence of energy prices, of course, or energy costs.

And just a final one, maybe you touched upon it. But in the umbilicals business, you said 80%, 90% of a good year by year-end.

The pace, not the average for the year, but the pace.

The pace, yes. So would you be able to give us the figure where you stand as of Q2?

I think Q2 -- this year, first 2 quarters, we invoiced roughly as much as we did the full last year.

That's correct.

Now we have the data -- now we can connect them.

We have 1 question from the webcast here and it comes from Magnus Kruber UBS. So in terms of if we stay with the electricity and gas for a while, so what was the split in COGS between electricity and gas for 2021 approximately. And then a follow-up, so how a large portion of these costs are incurred in Europe.

Okay, we have about -- I mean, -- if you look at the cost of energy, 70% is electricity. I believe, around 16%, 17% is liquid natural gas and the rest is propane, 13% of the energy costs. Sorry, what was the follow-up?

The split geographically.

I think that if you look at electricity, I mean, we consume 800 gigawatt hours. 600 is consumed in Sweden. And 150 gigawatt hours of natural gas as well, and most of the propane is consumed here. And there's, in general, very little natural gas outside of Sweden. Most of that comes from China, India and U.S. Is that a good enough answer?

I think so, yes. Any further questions from the audience? No? So we have 2 more minutes or perhaps easy going question here from the webcast. So where does the name Alleima come from? What does it mean?

Alleima means alloy, that's alloy, and it's material. So it's alloyed material. I think that is exactly what we have been doing for a long time.

So no further questions from the audience, then I think we can...

Just a quick 1 on R&D. So you spent about 1.5%, if I remember correctly on R&D. How has that changed? If you look further back before 2019, how much do you spend then? And what are your plans R&D? Is this a current -- is it a level we should expect, or do you expect to ramp it up?

First of all, you should be careful on only using the percentage. I mean right now, revenue go up due to metal prices, and we don't recruit more engineers due to metal prices. Historically, I need to come back. I don't see us -- I think we have what we need to stay in the position that we want to be. So I don't see us expanding that a lot. And I think at least the last 3, 4 years, it has been at that level. One more thing on that. When -- I mean, when you start to benchmark R&D costs, that is not always that scientific. I think some companies, they include quality organization. We don't do that. We have process engineers that work with improvements in the production that they are not -- they are in the COGS, they are not in the R&D as well. So there's sort of more pure R&D that we talked about.

Okay, and we have time for 1 quick question from the webcast, and it says outlook for Alleima CapEx to sales ratio 4% to 5% appears a bit lower than historical levels for the last 10 to 15 years. So what's keeping the ratio structurally lower levels into the future years?

I think we are more -- I think we're more prudent with our CapEx. We are more -- making sure that the CapEx really is profitable, so to say. Of course, we have the maintenance CapEx and growth CapEx, but we will, of course, be very careful with where we put our money. I would say that's I would think that, that will be the main reason without having the history, to say, but that's what I think.

All right, super. So thank you, Olof and Goran. Now it's time for -- thank you for all the questions. Now it's time for lunch break. So see you at the webcast again at quarter to 1PM CET. [Break]

Hello, and welcome back. We are now ready to hear our divisional presidents talk about their divisions. And first up is Michael Andersson, President of Tube.

Hello. I hope you have had a good lunch. I have been working for this company for 20 years in numerous leadership positions, mostly within the Tube division, but also for group functions at SMT previously, and for the Strip division. But since 2014, I have been leading the Tubular division within Alleima. Today, I have the opportunity to speak to you a little bit more about our division and our position as the world leader when it comes to production of tubes, pipes and other alloys and stainless steels. The Tube division offers a wide portfolio of seamless tubes, long products to interesting segments like industrial segment, oil and gas and other related energy segments, chemical, petrochemical, automotive and aerospace. We operate in a very narrow niche, a very specialized space. It's a super, super small piece of the total stainless steel market. We focus on the most critical applications for the niche end users in those segments. We obtained a premium from the market we serve, thanks to contributing to efficiency and reliability in industrial processes through the world-leading metallurgy and manufacturing technology. In numbers from 2021, we had a top line of SEK 9.5 billion at an adjusted EBIT margin of 7.4%. Our sales distribution, you see it at the bottom of the slide, that shows a strong European home market, but also with a clear growth agenda, both for North America and for Asia with ongoing capacity investments in both India and United States. I think I was a bit quick there. Aside our quality and closeness to end users, one strength versus our competitors is our global reach and presence. Over the last 5 years, we have optimized our regional footprint, with the intention to create robustness both for resilience to the increased amount of trade barriers, but also to drive cost efficiency. This exercise has really provided us with top-class cost positions for the different regional markets. And as well, it has helped us to develop capabilities for regional and local product adaptation to end users' needs, which varies in the different regions. We estimate ourselves to hold an 11% market share on our serviceable addressable market. And by that, we are the leading actor in our market. Followed by main competitors such as Nippon Steel, Japanese company; Tubacex, Spanish company; and Ju Li, Chinese company. A historical glance at our financials reveals a near past of recovery from the pandemic. If we take a look at the year step by step here, 2020, we saw a decline in both order intake and revenue from the COVID breakout. However, and this is important when it comes to understanding the Tubular division, with approximately 60% of our business being larger and longer-term CapEx-driven projects. Many projects from the pre-COVID time were still in our backlog when the pandemic hit. And that partly protected us especially from a top line point of view and an EBIT margin point of view in that year, and that is easily seen on the picture. This is an important characteristic of our business. One, in this case, you need to understand the dynamic, the time lag between order intake and top line realization for the Tube division. In 2021, however, the effects from the pandemic shock the year before started to result in significantly lower top line and production volumes. We found ourselves and Goran has already mentioned this, we find ourselves running the Tube business on record low levels of high-margin business from the oil and gas segment. However, and this has also already been covered by Olof, I believe, we took very swift prompt and strong actions to mitigate to handle that situation and the resilience to our profit margins could be achieved and was very clear. This is a major step of improvement for the Tube division. We do not thank the pandemic, but at least it gave us a good chance to exercise in a very sharp situation, and I think we proved to succeed with that. In the end of 2020, we also saw some of our key segments coming back again, recovering. If you take a look at the 2022 half year so far, this rebound has continued, and it has also materialized for the important oil and gas segment, and not the least also for the Aerospace segment, which is important for the Tube division. That, in combination with sharp increases in raw material prices, has led to a first half with record high order intake, upturning top line and recovered margin development. You have already heard Goran speaking about the 10 important segments of Alleima. I will speak about 5, the top ones of that 10 for a Tube perspective. These represent approximately 90% of our business. We start with the Industrial segment, the biggest, the broadest and the most general one. Products we offer here are typically hollow bars, bars and billets. From that, you hear they are the least refined products. We have heard some comments and questions referring to contribution business, slightly lower margin business, typically to the industrial segment. These products at our customer will undergo milling, machining to become components, shafts, valve houses and different components further on. But we also have products such as high-pressure tubing for water jet cutting in industrial processes. The second largest of our segments is the chemical and petrochemical segment. Some of those products are fertilizer tubing, hydraulic and instrumentation tubing, tubing for higher-temperature applications. These are all highly specialized products used in critical production processes, such as urea production, ethylene cracking, steam cracking, you might have heard about that; PTA production, which is, I would say, the largest commodity used for production of different plastics as well as sophisticated control and measurement systems for all those industries. The third largest segment for Tube is the oil and gas segment. Our 3 main products in this segment are umbilical tubing, control lines, corrosion-resistant production tubing sometimes also referred to as OCTG tubing, Oil Country Tubular Goods. The applications for those products are, for example, the high integrity hydraulic systems for subsea infrastructure control, but also downhole production and casing tubes to extract the hydrocarbons, the oil or the gas from the well up to the surface or to the bottom of the seafloor, et cetera. Our fourth largest segment is mining and construction. The main product here is not a traditional stainless tube but the hot-rolled rock drill steel for mechanical or handheld top hammer drilling. We hold a leading position in the world as the main supplier to the largest actor in the industry -- actors in the industry, sorry there. Last but not least, our fifth segment is the nuclear power generation segment. Today, we offer 3 product categories into this segment, cladding tubes, steam generator tubes and nuclear tubing pipe. These products goes to applications such as fuel and control rod support in the nuclear reactor, as well as the primary circuit heat exchanging for steel production to the turbines in a nuclear power plant. In the previous picture, I shared the top 5 segments for Tube. Let us now focus on where we will concentrate our efforts, our sales, our R&D and our technology development going forward. Internally, we call these 5 areas, the 2 growth pillars. They are the areas where we foresee the main growth to come for the next coming 5 years from a tube perspective, I will briefly present them, and then I will make a small deep dive like an example on a few of them. We start with the first one, sustainable energy. This is a promising challenge. We have heard a bit about it already. It's happening now, and we are well positioned to become the leader for this industry when it comes to high integrity fluid solutions. We see double-digit growth rates, and our ambition is, of course, to capture a significant portion of that growth. To back this up, we have established a global cross-functional renewable segment initiative. We address 6 specific key technologies that are relevant for our capabilities for our business. And in these 6 technologies, we will exploit growth. We also look at nuclear power as an important component in the future fossil-free regime. And our successful history and our very, very strong position when it comes to nuclear power is also a part. And because of that, we include expansion of nuclear power as a vital part when we speak about sustainable energy. It's a very small business. So one could wonder why is that the growth pillar. We believe just supported by the mega trends a growing and aging world population will fuel this market to high growth. And our ambition is to grow by new product development and focused sales initiatives. Medical is also one of the segments where we actively search to expand our addressable market through M&A. Aerospace. Aerospace has taken some really big hits during the pandemic, but we see a steady rebound now. And our long-term work, which has been going on for quite some while, with production footprint -- and also with product development, has established us now as what we believe is a customer first choice position when it comes both to titanium where we already today has the #1 position in the world, but as well for stainless steel tubes. Chemical and petrochemical. What about that? Our largest opportunity, I would say. We already now have a very strong position in this market with our application tubing offer, but also with a long product offer, Bars. All the things we have prepared and worked on the last 5 years when it comes to footprint optimization. That together with the addition of high nickel alloys, which are necessary for the most demanding applications in that segment. That has really helped us. The regionalization of the footprint has also followed by the regionalization of the market strategy. In all, this has given us great opportunities in a big and growing market. The greatest growth bet for Tube. Oil and gas, what about oil and gas. It might stick out for some of you, not all, that oil and gas after all, isn't it a bit old fashioned. Isn't it actually even something you should start the plan to kind of leave. We think totally different. In reality, this is an energy source that you and I are totally dependent on as the rest of the world for many years to come. Eventually, we all hope, I support -- believe that the world will find green solutions, alternatives to fossil energy. But until then, we are committed to stay in the leading position, serving our customers in this very important segment, just by the sheer size of the oil and gas business. Personally, I look at this as the main asset in the transition for us to a new energy regime where we are a main supplier to renewable technologies. Now let me share some of the work going into these growth pillars. Both new innovations and new insights about current markets. We are truly a broad player, and we have segments with many opportunities. Let me start with renewable energy and hydrogen. We are well positioned. I've already said, to become a leader in this industry, especially when it comes to high integrity fluid solutions. One example is our work on hydrogen. Hydrogen itself, but you know, it's not really an energy source -- is it -- but it's a great candidate, a promising candidate to become the bridge between renewable energy sources and practical use as a form to carry energy and to store energy. Tube division recently developed a tailored system for installation of hydrogen refueling stations with the forecasted exponential growth of hydrogen vehicles. The installation of new hydrogen refueling stations is believed to follow the same pattern. In close cooperation with main market actors, we have developed a mobile tube supply system where the installation at site, imagine you're going to install a refueling station in the corner in a city center. Having this support system that we have developed that can really gain improvements for the installer in cost efficiency, in safety, in logistics and sustainability. And it all fits into 1 container just like the one you saw at the entrance there. It's actually one of them. The concept includes both the sales -- the product sales of high-pressure tubes, but it also contains a service component of the customer, the installation company renting the system. It has shown great success in Europe, and we recently acquired the German engineering company, Gerling, to enable scale-up and logistic support for this growing business. The mobile tube production concept, that is not only -- the only work stream we are focusing on when it comes to hydrogen. We concurrently work with other innovative solutions, providing advantages for hydrogen applications such as specialized heat exchangers, but also tailored alloys, materials that are suitable for hydrogen exposure. Also here, we work very close together with market leaders in the different industries in the development process and in the verification process. On the right-hand side of this slide, I cover some of all the other parts included in our renewable initiative. I mentioned 6 key technologies. I will not dwell into them. But later on today, you will hear from one of my colleagues, Mr. Phil Cherrie, he is responsible for strategy and business development at the Tube division. He will talk more about it. But there is a wide range of applicable technologies where we see opportunities for growth for the Tube division. I will finish off this growth pillar with maybe not such an obvious case. To finish off, solar power photovoltaic, solar panels. That might not pick for you as an applicable focus for a tube producer. There are quite limited amounts of tubes in the solar panel. But mapping, which we have done for all these technologies. In detail, mapping the full supply chain, that has shown we are well established into that supply chain and revenue stream as well. Solar panels are produced by ultra-purified polysilicon. And in the chemical purification process, high-performing specialty tubes are needed. We have an established business in Asia for this application, and we foresee that this business will continue to grow as solar power through photovoltaic continue to expand. Let me move on to this growth pillar, chemical and petrochemical. I want to tell you a bit about our successful strategy in APAC region. You are untouched upon that. The importance of a successful APAC strategy when it comes to heat exchangers, it's quite obvious. The APAC region represents 70% and of the global heat exchanger market for the chemical and petrochemical industry. So you need to succeed in APAC, right. We have had a good development in this segment over the last 5 years and we continue our expansion of both product offer and capacity going forward. And the direction is maybe easiest explained by us, 3 activities: first, we direct investment spend in steps to expand capacity. In India, in our Indian facility, both from a capability and a capacity point of view. And when time allow, we're looking at China as well. Today, it's rather monitoring considering the geopolitical situation there. Secondly, we work intensively with marketing and positioning towards new applications in the chemical and petrochemical segment. This require in-depth know-how, not only about our materials, but of course, about the processes as well. That's why we put a lot of effort in the technical marketing. And third and lastly, we expand our product portfolio with new materials that expands our addressable market. The most important being development of high nickel materials as well as super austenitic. You heard about the Sanicro 35 launch quite recently, for example. On the right-hand side here on this slide, I'll try to visualize just the portfolio expansion over the years with new alloys, but I also want to give a good example of what such expansion could lead to. Material expertise and local technical marketing and coming back to local technical marketing is our way of selling new products for these niche segments. This is one of numerous examples of how we grow our chemicals segment, thanks to new products as well as new capabilities. C276. It's a super alloy and it was added to the Alleima portfolio just a year ago. In this example, we showcased an award for an application in the biodiesel refinery. And this is also learning how business is covered. Development capability, technical knowledge addressing to the end user and the fabricator, project is won in India, production goes to India, and customer in U.S. producing biodiesel. So that's a typical situation, what could happen. And it's all a result of intensive development work and efforts put into new products. Our oil and gas, this is about maintaining leadership. It's a highly profitable segment where we have 2 strategically important products, the OCTG products, the oil country tubular goods and the well-known umbilical tubing. As I said, I look at this business also as a way to take part in the transition into renewable energy solutions. We will expand our capacity for OCTG products. And together with new development, we see that, that will also be a bridge to a few of the renewable technologies as well as the supporting technologies for a sustainable world. And by that time, I mean, carbon capture and storage, and I think of geothermal energy. For the umbilical tubing, we are now developing the next generation of materials. This next generation is lighter or read stronger, and it will meet even the highest demands in the subsea markets. The next generation of umbilical is truly a result of close cooperation with our customers, and that will continue to be the way we keep the market leadership and how we strengthen the market position. The last example from our growth pillars is nuclear. We see nuclear power as one important component in the future fossil-free energy system. And here, we're already now ready to leverage on a quite likely nuclear renaissance. We are one of the world's largest suppliers of steam-generator tubing. And we are the only independent supplier of cladding tubes for fuel rods. Now we foresee an exciting future with new product developments, and next-generation accident-tolerant fuels as well as steam-generator tubing for the new generations of reactor technologies, fourth generation and small modular reactors. Here in Sandviken, actually, just next to our building, the building we're sitting in now, we are ready to expand our steam-generator tubing business. In a 3-phased expansion, we have the potential to double the current capacity. So let me try to summarize the tube division. First, the Alleima Tube division, we are a niche market player with highly specialized portfolio. We are a market leader in our key segments: industrial, chemical and petrochemical, oil and gas, mining and construction and nuclear power. We have, in the recent past, proven our margin resilience also in the swings we have seen in the oil and gas segment. We have a growth agenda focusing on 5 distinct areas where we will develop -- where we have also a very well-developed execution strategy. And last, we are very well positioned for the ongoing transformation of the global energy system. Thank you very much for paying attention, and I will now introduce the next speaker and that is the President of the Kanthal division, Anders Bjorklund. Welcome up.

Okay. Now we're going to talk about Kanthal, a world-leading provider for heating materials and heating systems to the industry. We are also the world leader actually in ultrafine wire production for the medical applications. Personally, I've been working for Kanthal for 2.5 years. I've been with SMT or Alleima for 4 years, and I have a history within Sandvik of 10-plus years in total. Looking on Kanthal in brief. As I said, we are a world-leading brand for electrical heating. We also provide services in the area of the electrical heating, and we are very strong in the medical segment. We are divided into 3 different business units depending on both the market or the customers but also on the production, how it looks like, so to speak. If we start with the business unit heating materials, that is the origin of Kanthal. That is where Hans von Kantzow started Kanthal 91 years ago in Hallstahammar making resistant materials for like Goran said, toasters, hair dryers and so on. Today, we are in a completely different scope of settings, but I will come back to that later. If we look on heating materials, 30% of the volume production is actually sold internally to the next business unit, which is business unit heating systems, which takes the material, refine it, put it into modules, put in other control systems, et cetera, and make solutions for furnace industry or other industrial customers. The last business unit is the medical fine wire production. And here, we do extremely fine wires and even components to the medical industry. If we look on the size on these 3 business units, heating systems and heating materials are approximately the same size. Looking at medical, it's a little bit smaller, but it is a highly profitable business. 2021, we ended up at SEK 3 billion approximately in turnover with a margin of 14.8%. We are a little bit more than 1,000 employees globally. And if you look on how we sell our products, you can see that we are quite evenly spread over the regions, Europe, North America and Asia. If we drill down and look on the different business unit. The picture is a little bit different. For the heating materials business, North America and Europe are the home markets. For heating systems, it's actually Europe and Asia. And for the medical business, that is primarily today the North American market. Goran told you earlier today that we did an acquisition in October last year, the Accuratech Group with head office in Switzerland. So now we have a good and solid footprint for the medical business also in Europe. And that is something that we will continue to build from going forward. Looking on our locations, our head office origin is Hallstahammar, which is 120 kilometers west of Stockholm. In Hallstahammar, we have a full value chain. We have everything from melting to actually a ready heating system. This is actually very unique in the industry. No one of our competitors in the heating industry has a full value chain. The strength of having the value chain is actually that we have control of the quality because this is an area where quality matters really, really much. So this is a real strength for us to have the full value chain. And we, also in Hallstahammar, have an extensive R&D department focusing on both having labs for testing, having research, but also having application knowledge and application development present close to our production facilities. The prime location for the medical business. It's not Hallstahammar. It is actually Palm Coast in Florida, a very nice place, I can tell you. There, we have both R&D for the medical business but we also have the full supply chain for wire drawing and some component manufacturing. So that is the prime location for the medical business. We have a market share of 18% in how we have defined the market. We are the #1 leader in the industrial heating area. And in the medical area, we are #2. So looking at the historical performance, 2020 to 2019 or 2019 to 2020, we had, of course, a drop due to the pandemic. It was primarily in the heating area and the consumer segment. It was compensated a bit due to a positive development within the medical area. But we still manage quite well to keep up the profit margin because we had a very strong focus on productivity improvements. If you compare 2020 to 2021, we have had a very strong order intake and invoicing in all areas, actually, and we improved the margins even further, primarily driven by volume, of course, but also by price and mix management. Because we have a portfolio with really, really nice areas of profitability, which we need to maneuver in. And of course, we continue the journey with the productivity improvements. Looking for 2022 now compared to last year, we are pretty much on the same level, but we are also investing into the future now for future growth, which I will come back to in a minute. Looking at the segments, we have 10 within Alleima, and I'm going to talk about 3. We have the industrial heating, which for Kanthal is around 60%. Both heating materials and heating systems are present in that area, but it is primarily heating system working in this area. We go to market under the brand name of Kanthal, a very well-recognized brand in the industry. That -- pretty much due to that we actually invented the industry 91 years ago. Example of products, you can see here, it's metallic elements and modules. We take the elements from the heating materials, and we build it into different kind of modules. It's not only metallics that we are working with. We also have production capabilities and capacities for ceramics. So if we would like to go to higher temperatures, we go into the ceramic area. And then you have the heating tubes and the Tubothal, which you can see actually out here in the showroom just before your enter in here. A Tubothal is a very efficient way of actually running your operations in terms of electrical heating. Applications for our products within the heating systems area could be heat treatment furnaces in the steel industry. It could be glass industry, both window glasses, but also these gorilla glasses that you have on your smartphones or tablets. It could be melting furnaces. It could be continuous furnaces like in the automotive industry, when you're going to dry paint in the painting line, there, you can use our products. Our second biggest segment is the consumer segment. Primarily, it is heating material studies present in this area. We go to market under the brand name of Kanthal, and prime products here is wire and strip products. And example of products here could be appliance wire for home appliances like tumble dryers and things like that. Our last segment is the Medical segment. And here, we actually go on to the market under the brand name Exera. This is an Alleima brand. but we are using that in our go-to-market model. We produce ultrafine wires and what is an ultrafine wire. Yes, it is actually wire, which has a diameter from 0.01-millimeter up to 10 millimeters. And if you look on your hair, hair is around 0.02 millimeters. So it is extremely thin wires that we are producing. We can also do components. We can coat wires. We can coat with plastics like PTFE or we can coat with gold, platinum or silver depending on what the customer wants. We are also making micro tubes used for medical applications. And example of product areas or applications that our products go into is -- or could be cochlear devices for hearing. It could be continuous glucose monitoring for people with diabetes. It could be different kinds of heart failure devices, pacemaker leads. So there is a big variety of different application areas for our products. And I should also say that our customers in the medical area is primarily to the OEMs. So we never go to the end customers. We go to OEMs or sometimes to the Tier 1 to the OEMs. If we dig a little bit deeper into the electrical heating and talk a little bit about future potentials for us. This graph is the global CO2 emissions from energy combustion and industrial processes. As you can see, 2021 was actually the highest year ever since the industrial revolution of emitting CO2 36.1 gigaton. There are a lot of different pledges and commitments from institutes, countries, companies and so on to reduce the CO2 emissions. And if you look on an industrial footprint, one of the biggest contributor is actually industrial heating today because 75% of all industrial heating in the world is actually fossil fuel, and only 25% is electrical heated. So this is an opportunity for us. This could be a little bit of a complex picture. But as you can see from left to right here on the bar, you have different areas of temperature ranges. We, as Kanthal, we are operating in the temperature range of like 400 up to 1850 degrees. But today, as you see, we are operating in lower effects. We are operating in the kilowatt area. And there, we have existing good technology and products to serve the market. But if the customers of us and the industries going forward are going to address what you saw in the picture before. They need to also attack the larger effects or the larger polluters in the industry. And then we need to go into what we call the megawatt area. So it's a completely different range of effects. This will also open up a new opportunity for us. There is no available technology today. We are in collaboration with several different customers in different segments like steel and petrochemical, developing new technologies to solve these problems. So this will leverage our future market quite substantially going forward. If we do a deep dive in the customer case and how we are working within Kanthal, this is an example of actually our heating systems business that was approached by a customer in the semiconductor industry. It was a wafer manufacturer. They wanted to increase their productivity and you increase the wafer productivity by increasing the size of the wafer. There was some complications because the heating was not good in a thermodynamic way and the elements were bending. So heating systems then turned to heating materials and our R&D department. And together with the customer, there was a development of the new alloy, a powder-based alloy that we call Kanthal APM, which actually solved the problem for the customer. And this APM alloy is now starting to become the standard -- industry standard in the wafer manufacturing. So this is the way how we are working together in the heating area, where heating materials are one of the enablers to actually be successful in the heating systems area. Looking at another customer case, we are supporting a lot of different metal industries in the world. I would say, we are supporting all the major like steel suppliers in the world or in the steel industry. And supporting these kind of industries, it's a twofold type of industry: first, we have the project when we do the electrification of the furnaces that they want to, to reduce the CO2 emissions, but whereas you have actually done the electrification. This is consumable -- is maybe a strong word, but there is an OpEx business afterwards because depending on how the customer is running their furnace, they always need to change the elements between 1 to up to 5 years in average, depending on how they run their operations. So when we have done a project then we can also get some more business in the future from the operations that they are running. As an example of a customer, Ovako, a Swedish -- Japanese customer here in Sweden wanted to reduce their CO2 and NOX emissions. They contacted us and they wanted us to convert 14 roller heart furnaces. We took on the challenge, and we sold 86 Tubothal elements, the elements that you can see outside here, a little bit bigger though to each furnace. So that is a good business. And this helped Ovako to actually save 28,000 tons of CO2 emissions per annum. So this is how we are working together with our customers to help them perform better in terms of CO2 emissions, but also to run an electric furnace. There you have an efficiency rate or a yield of 90%. If you go to a gas-heated furnace, the yield or the efficiency rate is around 50%. And you can also sit with an electric furnace in the control room and steer all the elements. While if you have a traditional gas-heated one, then you need to have maintenance people out running, adjusting the furnace. Going into the medical area, a very interesting area. We are supporting deliveries and materials to over 10 different subsegments of sensing and stimulating applications. It could be within the cardiovascular, neurovascular or remote patient monitoring area. As I said before, our key customers is primarily the OEMs. Sometimes it is the Tier 1 to the OEM. And we are serving more than 100 different customers in this area. The life cycles are very long in this business that we have. Normally, it is 10 -- it could even be 10-plus years for a product. The qualification times are also quite long, 1 to 2 years for qualification where we work very, very close together with the customer in improving and qualifying our solutions to them. So I would say that in terms of wire forming, we have a unique position, and we have a very strong brand name, well known for quality and reliability. So one of the areas that we are delivering to and Goran showed it before on the picture, that is continuous glucose monitoring. When you have a little piece of thing on your body, you can see in your smartphone, how your blood sugar is developing. One of our customers that we have been delivering to for many years have been approved and competitive in the diabetes type 1 area, which is, as you can see on the slide, 14% of the total market. Now when they go for the next generation, they will be approved for type 2 diabetes, which is a substantially larger potential for us going forward. So we see a lot of opportunities in the area of medical business within Kanthal. So what are we aiming for as our strategy, heating materials is a profitable business today. It is not our growth case. It is an enabler for the other businesses. So going forward, we will continue to work with performance management and footprint, optimize that one, continue to work with operational excellence that Goran has described before and actually also work with mix and price management because we have pockets of really, really profitable product as well within the heating materials area. So we have some more opportunities to grasp going forward. Looking at heating system, that is our growth case. This is a highly profitable area already today. So here, we need to expand and grow our continued or our existing offering. We also need to grasp the opportunities that we can see in the megawatt area, in the steel, in the petrochemical, in the cement industry. We also see that here we have an area that we actually can do acquisitions for specific niches, capabilities or covering areas where we are not present today to strengthen our customer offering. For medical, that is also a true growth case with very nice profitability. We need to continue to develop our component capabilities. We need to fortify and grow our forming capabilities. We also need to secure the raw material supply, but we also need to look for niches and capabilities and applications that we could lack if we would like to take a little bit of a step forward to become even more of a component supplier than just a wire manufacturer. So here is also an area that is relevant for new acquisitions to add to the portfolio. So to summarize Kanthal, I think we have a unique product offering. I think we have a very strong position in niche markets. We have a strong customer stickiness, especially in the heating systems and the medical area. We also have, if we should call it, aftermarket sales or spare part sales in the heating systems area. I believe that we have a very strong sustainability profile. We have an attractive profile from a financial perspective. We are running on good profit margins, and we see that we have a good growth potential also going forward. And we can do that through adding new companies in specific niches into our portfolio. And we have a very strong and well invested R&D portfolio and R&D organization. So that was all for Kanthal. Now I will introduce the next speaker, which is the President of the Strip division, Claes Akerblom.

So finally, it's my time to shine here then. Of course, smaller division have not had the chance really to be as visualized as we're able to be today. So very happy then to be able to present the Strip division for you. We are a world-leading supplier of precision strip material and coating of strip steel. But before we go into that, a little bit short about myself, I also have a long Sandvik career. It's 20 years plus, working across the Sandvik Group in many different positions in Sweden, but also spent 4 years in Asia. And prior to taking on this role in 2019, I was actually the CFO of Alleima. So if we then -- I do -- my own clicking, yes -- if we then move on to the brief Strip and you recognize the structure as now after the other 2 divisions then. So we are the global market leader for highly niched material. And we consist of actually the 2 different businesses: Surface Technology and Precision Strip. If I start with the Surface Technology, that is our ultra modern facility, which you will get to see later on when you are out on the mill tour, where we put the functional coating upon a steel substrate. But you will hear more about that also in the next session. The main part of our division is the precision strip part. And that might also need a little bit of a definition because, of course, I know that you're very, very familiar with others steel suppliers, maybe there in the region. But to put things in perspective, I mean we do steel coils that are maximum 400 millimeters in width. And I will use actually the same parallel as Anders even though we didn't rehearse that. And down to a thickness which is almost half of our human hair, so around 15 micrometers. So we're talking about extreme highly niched material. So mainly supplying then into consumer segments within white goods, shaving as well as industrial, and we'll have a look at that later. Our main production facilities are based here in Sweden. But also for the Precision Strip industry part, we do have a service center strategy, which means that we cater to the local markets, being close to our customers, mainly in China, U.S. and in Japan. 2021, we landed the result at SEK 1.3 billion and around 12.7% in EBIT. We are around 508 FTEs. If you look at the revenues by geography, you can see that they are heavily influenced by Europe and Asia. But if you take a sort of a next step and looking to where our customers actually operate, they are all over the globe. But the main production facilities where we sell into, where our orders go to is in Europe and Asia. And this has not always been the case. This has changed over the years. But right now, this is the way it looks for the current products that we have today. Looking at the competitive landscape, we have a market share of our defined market, which is 28%. We believe ourselves to be the #1 prize global market leader. However, it is a fierce competition in our defined area segment. And main competition comes out of Japan, Hitachi and also Voestalpine in Austria. They have just as we have the benefit of having fully integrated mills. We do have some more competitors also worth mentioning. But these are our main competitors, and they have basically the same setups with the fully integrated R&D, et cetera, like we do. They are just not as good. Historical financial performance. So I think this is, of course, no news to any one of you, but 2020 was a year, which was heavily affected by the pandemic. But you cannot really see that just by looking at the numbers because the 2020 first part of the year started are really good. And then during Quarter 2 and Quarter 3, we -- it heavily dropped by -- but also we saw a very quick recovery in the end of the year. So the year ended quite good then even if you look at sort of the historical performance, but it did affect the revenues in 2020, but you can also see the kind of effect it had on 2021. So the recovery has been incredible. So the order intake was at record high levels here in 2021. The market was really favorable. And what I'm also really proud to say that we were able really to capitalize on this good market situation. So we've been driving price and mix improvement during 2021 really well, which also led to the highest revenue ever in this division's history and also the highest margin that we've ever seen in this division. Quarter 2 2022 or this first half year, we continued sort of the journey on price and mix improvement. But as everyone knows, we've also been heavily affected then by increased inflation and cost, which we have plans for, and we've been able sort of to keep at the level ground. But we did have even higher hopes, of course before all of this hit us. So what do we do then? I said before that we sort of are into extreme niches, but these are some examples then of our customer segments. And you can see that the consumer segment is by far the largest one, followed then by industrial, transport, and then you have medical and hydrogen and renewable energy. And of course, the last 2 piece are strategic focus areas going forward. This is where we want to put a lot of effort into growing. And I'll come back to that in our strategic direction going forward. Now if you look at the example products, they are -- look fairly similar to the untrained eye here. So in every customer segment, they look very similar. But behind the scene, we do not really have a standard product within the Strip division. Every product and every customer basically have their own specification. So we -- that is the way that we lock in our customers. We're making sure that we know and understand really our customers and our customers' operations in order for our material to work the best. Because a competitor when you're doing this high sort of value-added products, competitor can on paper have a very similar product, but it behaves differently in the customers' operation. So that's why it's so important for us and our sales and marketing guys and R&D guys when they're out to really understand the operations of our customers because then we can adjust our products, just slightly. It could be anything from the width, thickness, which oil we use, which oil we don't use, packaging, et cetera. And this is the lock-in effect, and that's why we are a little bit unique. That's why we've been able to keep this good customer base. And a lot of these customers that we have in our customer portfolio are actually customers that existed over decades and some actually even more than that. But in order to do that, you need to be innovative. You need to come with new materials the whole time. If we look at the some examples of our product, I think that will stay in the consumer part of it. I think that's where you are most familiar as well. We do deliver to all of the major brands, the high-end major brands within the razorblade industry and of course, the electrical shaving parts as well. Knife steel is a huge sort of thing for the Strip division, mainly because of marketing. I think around 90% to 95% of the hits that we get the Strip division Internet, they're looking for Sandvik steel today. So that's why it's so important for us now going forward in the new company name here, making sure that everyone understands that after the name change, Alleima steel means, at least, the same quality as Sandvik steel means today. And last, on the example of products, which I will bring up now is the compressor valve steel. This is our little jewel and I will do a little bit of a deep dive into this and why this is so interesting. I mean, this is a product, and you saw that in the exhibition out there. It's a small application, but that also requires a lot of things. So there are extreme tolerances that is needed and extreme demand some cleanliness. And this is not something that someone can do. We are definitely the world-leading supplier then of compressor stainless steel. And if you look at what the customers are demanding, and this is fairly simple to understand. Of course, this little material goes into a compressor. I think Goran described that before. Compressors are used in basically everything that's creating heat or cooling. So our main sort of focus area is the refrigerator industry and also the AC industry. And this is a product that's definitely driven by the global megatrends. So increasing population, increasing demand on new efficient solutions for energy and sustainability. And all of this is, of course, what our customers are asking for right now. They want us and they do develop together with us, how do we design a compressor that increases the efficiency, that improves the lifetime reliability and also noise reduction. It's a very important part of it, actually. And anyone that slept close to a refrigerator, which has an old compressor knows probably what I am talking about. So this is what is driving the materials evolution for the Strip division into this area segment. So actually, it's a little bit horrible to say, but the global warming is actually also helping this product in many different directions. So we launched the latest product in our portfolio here in 2021. We call it Freeflex. And I hope if you have the opportunity to go by that little town, you can actually see some of our marketing promotion material on the iPad next to the examples of the flapper valves. I also brought with me an example. So over the last decade, the energy efficiency within the compressors have improved with around 18%. And that is due to improved materials basically and improved designs. So -- which then helps, of course, the mechanical properties. And the 18% energy efficiency is over 10 years corresponding to the power output from 5 modern nuclear plants yearly. So it has a significant effect. These small things can make a big effect. So what have we been doing these last years? How have we improved profitability the way that we've done. We have focused a lot and Goran mentioned that earlier on. I mean, we have focused on commercial and operational excellence. So we have a very interesting customer base, we can grow with them. They are actually driving us towards the new future. Being close to that consumer industry is really good for a company because it puts a lot of pressure on sustainability and becoming an even better company and this has helped us. So going forward, we will continue to build on the strategy execution that we had over the last years. Price and mix management. We've said for a long time that we are price and market leaders, but we have not really utilized it the way. We have not really understood the value of our products. And I believe we're getting better and better there. There's still a lot to do. Ongoing improvements in productivity and quality. This is extremely important for a division like the Strip division because when you're doing high value add, when you buy something fairly cheap and sell it for many thousand percents more expensive in the end, of course, every kilo that you drop along the way is a loss. So there's a lot of money to gain from improving the process and the output quality in the end. Digitalization has something that we really haven't been focusing on. But over this last year, we've made significant improvements in the digitalization. And of course, that helps a lot the commercial and operational excellence. When you were able to really measure each point in the production and really understand where you have your problems and where you need to do something about it. Existing offering in growth there is very important. As I said, I mean, the customer base that we have and have had for a few years, they are driving growth. And they're driving growth way above the GDPs that you can see. So it is really important for us to continue and protect our core business. If you are the leading manufacturer in the compressor valve industry, you want to stay there, and then you need to come up with new materials, plus like we're doing, and we actually have new materials lining up as well to stay ahead of the competition. So R&D, very important for us. Improved environmental offering. This is what sort of a big thing for us. Of course, stainless steel is 100% recyclable. And this is something which I think the whole steel industry will benefit from going forward. There's a lot more knowledge now in the market of what they need to do, and everyone needs new material in order to improve from where they are today. So very important for us to continue and grow with the current business that we have. But we're not happy there. We are trying to grow -- outgrow and find new markets. And specifically, just like the other divisions, we're focusing in on a couple of segments. Medical, I don't know if you quickly saw the segments or consumer segments that I showed before, we are present in the Medical segment. So we already have a name. Our material is sort of acknowledged by FDA and all of those things. We have a possibility to grow this to a different. And of course, maybe utilizing Kanthal as a support in this and all of Alleima. So medical is definitely something that we will grow into. We might need to develop some new materials in order to be there, and that, of course, needs some new capabilities. So these are the focus areas that we're looking into, how do we do that and how do we do that in a quick way. And then another development area is, of course, the new Hydrogen society. As I said, we'll talk more about that when we get into the surface technology part, but also for the Precision Strip business, that's an industry that we are looking into, how can we be relevant in that. So these are our 2 main focus areas on top of the normal organic growth, so to say. So in summary, Strip division. We have a unique and highly specialized product portfolio, and we have customer relationships that have existed over years. And these are customers that we would like to continue and keep with and continue to work with. Global mega trends are definitely working in our favor. Very happy to be able to say that we have a proven strategy execution over the last years with a much improved profitability. And it wasn't mentioned here, but over the last 5 years, we have more than doubled the profitability for this division. We continue them on the journey that we are on. It's been a success so far. We will definitely continue on that road, improving profitability and making sure that we are the market leaders and that everyone knows that. And then as last I said, we need to develop new offering and expand our target markets, which actually means lowering our market size. That is where I would like to sort of to end. Thank you very much for your attention.

Thank you, Claes. So the green transaction -- the green transaction is happening as we speak. And as you heard today, we are well positioned to capture opportunities that comes with this. And to tell you more about it, I would like to welcome some of my colleagues for the deep dive section. [Presentation]

So now I'm here with a few friends. So we have Goran Bjorkman, President and CEO. We have Eva Lindh-Ulmgren, Head of R&D at Tube. We have Phil Cherrie, Head of Strategy at Tube, and we have Anders Bjorklund, President of Kanthal, and we have Mikael Blazquez, Head of Group Strategy and also Head of the Surface Technology business. So perhaps we can start with you, Goran. So can you share your thoughts on this topic?

Sure. Thank you, Emelie. And I think we have multiple opportunities to grow in this area. In some cases, like SurfTech, we have a fully industrialized setup, where it's all about ramping up. And other parts has been described a bit -- now been described even deeper. We're entering into close cooperation with customers, looking at the full value chain to develop new applications. And in some cases, it's about inventing new materials. There are some new challenges. I mean in the hydrogen parts and hydrogen embrittlement, higher temperatures, corrosion challenges, et cetera. So when we've been going through now. I mean, Tube, Michael showed it, and Phil will go through it, lot of different opportunities looking, we're at the value chain. Kanthal deep into the electrification and strip with the Surface Technology. I have to say, I mean, this year, I'm much more excited by all the opportunities we have in this area than I'm worried about sort of the future downturn in the oil industry. So Eva, maybe you should start then, describing what we do on sort of in the R&D area.

Absolutely. I will give some examples from our strategic research portfolio. And I will start with hydrogen and the foreseen hydrogen society. We see that many nations around the world, they come up with road maps, how to implement large-scale introduction of hydrogen. And we see that hydrogen will be used in so many different applications. And all these applications will require different materials. And hydrogen can be very detrimental for metallic materials, can cause embrittlement and catastrophic failures. But we do have materials that I feel safe to use in hydrogen already today. We have heard Michael talking about the Tube business. But we also see a demand from customers to have even more high-performance materials that are safe to use in hydrogen. So we are working to develop materials that have higher strength, and that can enable lightweight solutions because mobility will be important for hydrogen. So the aim is to have a portfolio with different materials that are suitable for different applications in -- for the hydrogen society. So we see a business for all the divisions within Alleima. So hydrogen is really interesting. And all these applications will, of course, require much hydrogen. And of course, it's green hydrogen that we are aiming for. The process to produce green hydrogen is by electrolysis. That is when you use green electricity to just split the water into its basic ingredients like hydrogen and oxygen. And we do have materials today for bipolar plates. That is an important part from the electrolyzer, but from the research side, we are also working on increasing the service life for the materials for the electrolyzer. Because we see that the cost for green hydrogen must come down in order to compete with the gray fossil-based hydrogen. So we're working. Longer service life is one important development, but we also have, looking into the next-generation materials where we'll use less scarce and the less costly materials to drastically reduce the cost for the electrolysis process. So those 2 examples was from hydrogen. And my next example is from green energy production because we will see that the world will need very much green electricity. So I select the example from geothermal. And geothermal, it's used already today, like in Iceland, in New Zealand, California, where you have volcanic activity. But we also see that geothermal will be expanded into new regions. And the trend is to drill deeper to increase the efficiency for this kind of process. And geothermal is extremely challenging for the materials. The brine is hot and saline and it contains a lot of nasty elements that affects the material. So we are working on cost-efficient materials that can withstand this type of environments. So that is a really interesting development work that we are doing. And my next example is from energy storage. We know that several of these renewable power sources like sun and wind, they need to be stored because the sun is not always shining and the wind is not always blowing. So efficient ways to store energy is extremely important. And one such example is that when you use molten salts, and that can be used, for example, in concentrated solar power plants where you use the salt to store the energy overnight. And the trend is to develop new salts that can withstand higher temperature because then you have a more efficient storage process. And this new type of salt can be chlorine based. They are extremely aggressive for the materials. So we have ongoing projects together with technology providers where we look into the materials to see how they behave and also to understand these new type of salts, which kind of materials they will need. And my last example is from use of green electricity. We have heard from Kanthal about the heating technology that is electric heating. And from the research side, we are looking into the next generation powder-based materials. So being able to tailor materials for customer demands is one important development, but we're also looking into the possibility by process development to make thin wall tubing that is needed for higher process efficiency, but it's also very interesting for next-generation nuclear when you can have these accident-tolerant fuels. So that's also important research that we are doing. So next slide, Emelie. So our approach in this area, we feel that it's a lot of emerging technologies at the same time. So it's extremely important to be participate in early demonstration projects. So we do work with potential customers and technology providers. And we help them to select materials and we have a lot of knowledge by doing that, about the materials, how they behave and also ideas how to develop the next-generation materials. And of course, if we have a positive outcome from that kind of collaboration, we also have a very good chance to set the industry standard because when you're doing the ramp-up of the technology, you would like to use materials that you know that do work in a good way. And in general, you can say that most of these technologies, they are still too costly to be competitive, but we also see that materials can really be enablers. So for Alleima, it's really good that this technology will require high-performance materials. So with high temperatures, higher pressures that can enable higher process efficiency, and also by longer service life of the materials can also lower the cost, of course. And since it's a lot of new technologies, and we don't know which technology that will win, we have to work in a very agile way because the technology can ramp up suddenly. And we have a very good setup for that because R&D is a very integral part of our value chain. So we have a chance to work very close to our marketing and salespeople as we have a lot of insight from customers, and we also have collaboration directly with customers to develop new materials. And also, of course, they have very deep insight into the production. So the materials that we don't develop can be possible to produce in our production routes. That is also like extremely important. So if we look into the budget that we are spending into the renewable segment, we can see that we have a large and also increasing share towards renewables. So like 2 years ago, we spent around 45%. And today, it's almost 70%. So it's increasing. So I will say we see so many different opportunities in this segment. We do have materials already that we can supply but we also have several very exciting and promising projects into our pipeline. So over to you, Emelie.

So Phil, how are you working with this in the Tube division?

Yes. Thank you. Thanks, Emelie. Thanks, Eva. The wind is always blowing in Scotland, so fill it with wind turbines. How do we translate to the research and innovation, the development that you've heard into commercialization within the Tube division. First of all, I think it's important to understand the context. And I think you've heard that today, there is a dual narrative play. We are seeing a strong rebound in the oil and gas market, not least, the current macro environment, but also many years of underinvestment in that segment. And you've heard from Michael and from Göran how important that is for us. But this is not an either/or scenario. We have the rebound in the oil and gas segment, but all forecasts show that global demand for energy in absolute terms is increasing, and we need new sources of that energy. And as you've heard from my colleagues, we see a very strong opportunity within the renewable segment. There's a number of reasons why we believe within Tube, we can capitalize on the opportunities that we see within the renewables segment. One is that our existing customer base, which today could be the international oil companies, they themselves are transitioning their business to become a more integrated energy company. I think that's a well-described story. I won't mention names, but I think you know who they are. But another important feature is that our existing product portfolio is often very applicable to many of the applications within our renewable energy context. We do have a slightly ironic example within the Tube division that the Sandvik proprietary grade that we developed Sanicro 25, which was developed for ultra supercritical coal-fired power generation has found a nice home within bioenergy and biofuel application. Now that is only possible because of the strength of R&D that you've heard from Eva where we can test materials and show the suitability of materials in certain environments and in certain applications. So you've heard a number of times already today about these 6 prioritized segments within the Tube division. Why these 6 segments? I think you heard very clearly from Michael that we operate in a niche environment. We operate where there are big material challenges. And in these segments, there's varied material challenges. It could be high pressure. It could be high temperature. It could be environmental challenges, things that drive corrosion and they are applicable to one or all of these segments. You will, of course, notice, and I think you've heard that already today, they're not all renewable energy generation per se. I'm thinking particularly of carbon capture and storage, which is very much a bridge really to facilitate us moving from a fossil fuel economy to a more green economy in the future, but it will be the case that there are certain processes, industrial processes where fossil fuels continue to have to be used. And with carbon capture and storage, there's an opportunity to decarbonize those processes and yet continue to use fossil fuel. And you've heard about our OCTG portfolio. And oftentimes, carbon will be stored perhaps in depleted oil and gas fields. And the need for downhole tubing and casing will be there, and we see opportunities already today in carbon capture and storage. Biopower, biofuels, it's a very diverse segment. There's a number of areas from waste to energy, to sustainable fuels. Often it's analogist to the chemical -- petrochemical segment that you've heard about. So product form in terms of heat exchange of tubing, that kind of things very applicable in this segment. And we believe we've a leading portfolio and the portfolio to win there and you've heard of a number of areas where we're securing business today within that segment. I'll just mention, finally, hydrogen. Maybe we've overloaded with hydrogen. But you've seen one example today of translating not just our product capability, but our solution capability. And I heard the container running at lunch time. So some of you have seen the opportunity that we believe is there for us, and we've proven within Europe and need to extend to the other regions of bringing solutions to our customers to production on-site blending, our experience in terms of tubular production with a solutions-oriented approach on our customer side and the acquisition of Gerling that you've heard about last year is helping us to ramp up that business and grow it globally, which we're very excited about. And so we see these 6 areas. They may transition over time as the industry evolves, but we believe with our research and development, our sales and marketing and our product portfolio and capability, that we're in this market to win and we see the opportunities for the Tube division. Thanks, Emelie.

Thank you, Phil. And Anders, you already talked about how Kanthal is benefiting from the need for electrifying industries. So any further insights you can share?