Alleima (Stockholm:ALLEI) Q1 2026 Earnings Call

0:00 Hello, and welcome to Alleima's presentation of the first quarter results 2026. My name is Frieda Adrian, and I am Head of Investor Relations. I'm joined by our President and CEO, Johann Bjorkmann and our CFO, Johan Eliksson. Joran and Johan will take you through the highlights of the quarter. And following the presentation, we will open up for Q and A session. You are welcome to ask questions via the conference call or submit your questions through the webcast interface. All the presentation materials are available for download at leima.com. And as always, safety is a top priority for us, and I trust that you are familiar with the safety procedures at your current location.

0:49 And with that, over to you, Jadam. Thank you, Frieda. Hi, everyone, and thank you for listening. So I'll start with the highlights for the first quarter. While market uncertainty continued throughout the first quarter with the ongoing geopolitical instability reducing our customers' willingness to invest. We also have this situation in The Middle East that has impacted the market and in particular affecting our OCTG business. I will come back to that shortly. But these circumstances continue to impact our short cycle business, which began to experience a slowdown at roughly this time last year. On a positive note, key segments such as Medical and Industrial Heating have contributed favorably, supporting by a strong organic order intake.

1:42 Look at the order intake for the group. Rolling twelve months declined 12% organically. Revenues declined 5% organically, also affected by the short cycle business and OCTG, somewhat mitigated by medical, nuclear and industrial heating. Adjusted EBIT amounted to $386,000,000 and a margin of 8.4%, down from 10.5% last year, but here diluted roughly 150 basis points by FX. We have started to see positive impact from the earlier announced efficiency measures. They cannot, however, yet compensate for the negative currency effects and the lower sales in the quarter.

2:28 But given the market and currency circumstances, I believe we, in a good way, still are protecting our profitability, while our solid balance sheet enables us to stay with our long term strategy. And during this quarter, we opened up two facilities for industrial heating focused in silicon carbide heating elements, one in Perth, The UK, expanding our production capacity on that site and one new service center in Concord, U. S, which expands our reach of silicon carbide heating products and improves our position on the American market. Moving on to sustainability. The sustainability performance remains solid in the quarter with continued progress in safety, high share recycled steel and a record high sustainability product portfolio.

3:19 Safety remains our top priority, and I'm pleased that performance continues to move in the right direction. The measures we have implemented are delivering results, and we will continue to build on that progress. Our Shell recycled steel stayed above 81, both on a rolling twelve month basis and year on year. I think that is a strong outcome, especially considering our product mix with relatively high share of high nickel products. We saw an increase of CO2 emissions in the quarter that was mainly due to the cold winter and also temporary cost driven energy mix effect with somewhat lower share of biogas. And our sustainable product portfolio reached nearly 26% on a rolling twelve months basis, which is a new high.

4:05 Through close cooperation with customers, we help them address technical challenges and support their sustainability and climate goals. Moving on to the our review on the market development. Yeah. Given the situation in The Middle East, market uncertainty has increased. One could argue that high energy prices would be positive for us, and this is to some extent true, but it needs to be high energy prices for the right reasons. And I believe what we see now with oil and gas prices are rather speculative and not driven by increased demand. But we are, of course, monitoring the situation closely and we are ready to act. Overall demand stayed weak in Europe, subdued in North America, while Asia showed strong resilience, but not as strong as last year. And several key segments are performing well, and I will walk you through development in each segment, starting with oil and gas.

5:01 Overall, our review on the underlying demand is still solid, but more so umbilicals where the project list of upcoming tenders and potential orders remain strong. And we have increased production pace during the quarter. For the OCTG business, we flagged a bit weaker outlook already in the Q4 report. And given that a large part of that business is exposed to Middle East, we are, of course, affected by the development while the arrow now is pointing down. Industrial, European demand is still weak. Asia declined, while North America improved on low levels. In German petrochem, we noted some improvement in Europe, but on lower levels, so it's too early to tell, while Asia and Middle East was weaker and North America at low levels.

5:52 Industrial heating continued to see good growth, mainly driven by Asia and North America, while Europe is still on the weaker side. Subsegments like electronics and semiconductors are the main drivers for the growth. Consumer demand continued to be flat, but on a good level. And in Medical continued good momentum across the product portfolio, and our greenfield investment in Malaysia is going according to plan and will add additional capacity by the end of the year. In Transportation, titanium tubing for aerospace continued to be strong, while marine and automotive is weaker. Mining construction demand was stable overall, driven by the mining industry with somewhat weaker demand related to the construction industry.

6:38 Nuclear continued good activity and a solid backlog, but please remember, it's a business with natural long lead times. And we then take the last one, Hydrogen and Renewable Energy. Hydrogen related business is negative, but we summarized spots in renewable, for instance, for biofuels. So let's look more in detail on the Middle East crisis. I mean, it's not only increasing uncertainty in the market, it's also causing volatility in energy prices, shipping costs, and the risk of inflation has increased. We're monitoring that those areas closely. I understand that there are questions how this crisis is affecting Alleima.

7:26 I think at this stage, it's important to focus on what we know and avoid speculation, whether it's negative or positive. At the same time, we are, of course, working with different scenarios. Our OCTG business, part of the oil and gas segment, is currently affected both direct and indirect exposure to the Middle East region. What we know is that the drilling pace in the region relevant to the OCTG business remains low, And we're working closely with our customers who is currently operating at a lower pace than normal, and they have asked us to hold back, which means that we have reduced output pace for the time being. And we, of course, also know that similar business in the region are also impacted.

8:11 What we don't know yet is how long the situation will last or how much of the oil and gas infrastructure in the region that may be damaged and required repair. And if we look at the OCG business, it's mainly CapEx driven and can naturally vary year from year. And we are expecting lower OCG volumes in 2026, partly due to the weaker market that predates the Middle East crisis. Now it's been about eight weeks since the war in Iran began, so we, like the rest of the world, are working to get a clearer picture on how this is affecting our business. And we are, of course, also closely following the development and noting cautious customer behavior causing tenders and project decision to be postponed.

9:00 So let's look at the order intake and revenue in the quarter. Order intake for the rolling twelve months period amounted to 16,300,000,000, down 12% organically. This is mainly explained by the major order SQTs received in Q1 last year as well as OCTG forms. Adjusting for those two products, order intake would be slightly positive. For this GT business, this is normal given the nature of that business, while the Middle East Crisis is affecting the OCTG business negatively. On the positive side, strong order intake from Qatar both in Medical and Industrial Heating. At the same time, we saw the short cycle business continue to be negatively affected by market uncertainties and lower investments in our value chains.

9:48 Revenue on 4,600,000,000 negative order growth of 5%, where both Kantal and Strip again grew, while Tube declined, affected by the aforementioned short cycle business, but also lower revenues from OCTG in the oil and gas and also some lower in automotive in the transportation segment. Book to bill rolling twelve months was 90%, which is on the low side, but not really surprising given the market development of high comps in the project related business. Book to bill rolling 12% was 100% excluding SGT and OCTG. Moving on to the profit. So adjusted EBIT decline, which, of course, I'm not pleased with. But as I alluded to earlier, I think we are doing an okay job working on what we can affect.

10:35 And given the lower volumes in Industrial and especially the more profitable Chemical and Petrochemical segment, gross profit is lower. We also get lower absorption in some of our factories. Margin was 8.4%, 9.9% if I adjust for FX. The early ramp up issues with expansion PrestaSunvik had only minor impact on performance in the quarter. PrestaS been operating more efficiently than in quarter four and is not anymore restricting production volumes and is expected to be fully operational during the summer. We started to see positive effects from the already announced efficiency measures. They cannot, however, yet compensate for negative currency effects and the lowest sales in the quarter.

11:20 And finally, we had a negative cash flow in the quarter of SEK 65,000,000 due to lower EBITDA and also working capital. And cash flow is normally lower in the first half of the year than the second half. So let's look at the performance of the division, starting with Tube, where we have the largest volumes. I mean Tube has been the division most affected by the market development over the twelve last twelve months. Although some areas are performing well, such as Umbilicus, where we're ramping up output for 2026, also titanium tubing for aerospace and the Asia market. However, overall volumes remain on the low side. Order intake rolling twelve months period declined organically by 19%, and that is on back on the major STG order in Q1 twenty twenty five and somewhat high comps in oil and gas as well as the short cycle business.

12:16 Revenue declined organically by 9%, affected by the aforementioned short cycle business, but also lower revenues from OCGG in the oil and gas and automotive in the transport segment. Book to bill amounted to 85%. Adjusted EBIT margin on eight point nine percent and nine point two percent excluding FX effects of 23,000,000 year over year. And the fact that Tube has the lowest relative FX headwind stems from the fact that Tube has most of the project related business and therefore, biggest hedges, but also the fact that they make the biggest purchases of raw material in U. S. Dollars, which, of course, is mitigating the negative effects. Moving over to Cantal. Cantal continued the positive trends seen over the past few quarters with a broad based growth and a strong performance in the quarter. I think they've done a great achievement.

13:10 Rolling 12 order intake grew organically by 14%, driven by Medical and also Industrial Heating, especially in North America and APAC. Revenues grew 8% organically on the back of Medical, Consumer and Industrial Heating with strong performance in the same regions. And adjusted EBIT margin of 17% or 18.8% adjusted for a negative SEK 41,000,000 coming from FX is a good level coming from a solid product mix. All in all, a really solid performance from Cantal in quarter one. Trip, I think also is doing a lot of good things, for instance, with its channel partner network and also to improve their cost position, aiming to again be a margin contributor to the group.

13:56 Rolling 12 order intake declined organically by 16%, driven by all segments, but this is heavily impacted by the negative development within the Hydrogen business, while we should call it the original strip is still on a good level. Revenues grew 5% organically, driven by especially razor blades and book to bill amounted to 88%. Adjusted EBIT margin was 5.9%, but heavily impacted by FX negative 29,000,000 year over year, and the underlying margin was 12.6%, where the consumer segment was strong across all regions, also solid performance from Strip. With that, over to you, Johan. Thank you, Joran.

14:42 So the financial summary and starting with the table to the right. Order intake for the rolling twelve month period amounted to $16,300,000,000 corresponding to an organic decline of 12%. We had negative impact from currency and alloys of 62% respectively, totaling a growth of minus 19%. The quarterly revenues reached $600,000,000 with a negative organic growth of 5%, including The U. S. Tariffs that is estimated to impact us with plus 70 basis points. Also for revenues, we note a significant impact from FX, primarily from a stronger SEK against the U. S. Dollar, which in total had a negative impact of 6%.

15:31 Alloy effects impacted by minus one on quarterly revenues. And looking at the coming quarter, we see a neutral currency and alloy effect for that time period. We have no contribution from structure, meaning acquisitions or divestments, as our latest acquisition, Endox, now has been with us for the full year and no longer affect comparability. Going back to the big table on the left, where I'll get back to adjusted EBIT in the coming slide, and the reported EBIT declined to $391,000,000 affected negatively by lower revenues, FX and items affecting comparability, while helped somewhat by positive metal price effects and the savings from the targeted measures.

16:25 On the items affecting comparability, we now have in total taken $344,000,000 of the estimated 400,000,000 for the targeted measures that we communicated in the earnings call for the third quarter. The remainder is expected to be taken in the coming three quarters. Net financial items for the quarter amounted to minus $11,000,000 compared to plus $13,000,000 last year. And this is mainly driven by valuation of derivatives. The normalized tax rate came out at 24.5 for the quarter. Free operating cash flow came out at minus CHF65 million in the quarter, which I'll also get back to in the coming slide. And finally, adjusted EPS for the quarter at SEK1.14, impacted negatively by the lower adjusted EBIT.

17:20 So looking at the bridge then for adjusted EBIT, where we start at last year's SEK540 million and a margin of SEK10.5 million compared to this year's SEK386 million with a margin of SEK8.4 million. And like Joram pointed out, FX is big factor behind the development. This quarter dilution was 150 basis points. But of course, we also are affected by the negative organic development stemming from the weaker markets, especially in this short cycle business, and therefore impacted by under absorption effects. Meanwhile, we also had some contribution from the savings related and targeted measures with positive effects of roughly CHF 30,000,000 in the quarter.

18:10 The 6,000,000 contribution in structure comes from an M and A related cost booked last year. Moving over to the balance sheet and capital efficiency, net working capital decreased in absolute terms year over year, mainly due to volume and currency effects, but increased as a percentage of revenues to 35.5 due to lower quarterly sales. The sequential increase of net working capital in the graph can mainly be derived from an increase of accounts receivable given that invoicing was tilted more towards the end of the first quarter. Capital employed excluding cash decreased year over year to $16,200,000,000 mainly driven by lower net working capital.

19:00 The return on capital employed excluding cash based on reported operating profit, that we include metal price effects and items affecting comparability was 5.0 for the rolling twelve month period, down from 11.9% last year, coming from the lower reported operating profit due to the reasons described before. Looking at our free operating cash flow for the quarter, as you can see on the graph to the right, the Q1 cash flow normally is lower than the preceding quarters as per normal seasonality. As we during this quarter start preparing for the Q3 summer shutdown and maintenance.

19:50 Moving over to the table on the left, I think we've touched on the EBIT and EBITDA already. Looking at the non cash items, which most commonly refers to cash or non cash effects from provisions or provision releases. And this year, it's also affected by cash flow effects from the targeted measures, the restructuring activities. So that is about minus SEK20 million from that in this year's cash flow. We note the negative impact from change in working capital, mainly due to higher accounts receivable coming from the strong invoicing at the end of the quarter, but also increased inventory as per normal seasonality.

20:37 The decrease in CapEx year over year mainly comes from timing on the ongoing projects. Amortization of lease liabilities is only slightly higher this year. And all in all, this leaves us with a free operating cash flow of minus 65,000,000. And as I pointed out, this follows seasonality and as cash flow normally is lower the first half of the year when we start to prepare for the upcoming summer stop in the third quarter. And looking at our financial position, it remains strong and we are well below our financial target of a net debt to equity ratio below 0.3 times.

21:23 At the quarter end, we were at the negative 0.04 times. Net pension liabilities decreased to $699,000,000 from last year's $8.39, mainly as a result of higher discount rates. Leasing liabilities are slightly lower than last year. And our cash position continues to be strong, We have a net cash position of five ninety six million, which will come in use as there is a dividend proposal of SEK 2.5 per share for the AGM later this week. So looking at the guidance and how we guided prior to the quarter and the outcome on CapEx, we guide on full year. And so far, the CapEx spend for the first quarter is 160,000,000 And then it's worth noting that normally the second half of the year is the more CapEx heavy part of the year.

22:19 Currency, transaction and translation effects came in at minus 173,000,000, where we estimated for minus $2.40, where the difference mainly is due to a weaker Swedish krona towards the end of the quarter. In the currency effect in the total currency effect, the transaction and translation effects were partly offset by a bridge effect from this year's hedges and revaluations and last year's negative revaluations. So in totaling, giving a bridge effect of plus 80,000,000. So taking the total currency bridge effect on EBIT to minus 93,000,000. Metals affected us positively with 8,000,000, where we guided for minus 50 and the reason is mainly increased metal prices during the quarter.

23:11 Normalized tax rate came in at 24.5 for the quarter, where we were guiding for 23% to 25% for the full year. Moving over to the guidance for the second quarter. So full year CapEx, we keep the full year CapEx guidance of 1,100,000,000 coming from growth projects of for example, steam generated tubing capacity increase in Sun Beacon as well as industrial heating in Japan and medical in Malaysia, and a little less than half of the total is for maintenance. Currency effects for Q2 based on the rates as per April 23, so last Thursday.

23:56 The transaction and translation effects are estimated to minus 60,000,000 on the back of a stronger SIG. Looking at the metal price effects based on metal prices and currency rates also Per the April 23 last Thursday, we anticipate the positive effect of 150,000,000 for quarter two. And here it's worth probably worth reminding about the dynamics that the price increase for nickel or molybdenum or chromium over time leads to more positive metal price effects. While a stronger zinc, for example, against the US dollar has the opposite effect. And the tax rate for the full year 2026, we expect a normalized tax rate in the range of 23% to 25%.

24:46 So by that, I hand back to you, Johan, for outlook and summary. Thanks Johan. Yes, so the outlook at the start of the second quarter has been influenced by the development in The Middle East, further dampening on an already subdued willingness to invest. But we maintain a solid backlog in several key segments, providing good visibility into near term deliveries, mainly then in umbilical in oil and gas, in industrial heating, medical and in nuclear. Continue to seek challenges in other more short cycle customer segments, which already have affected and is expected to continue to affect short term deliveries. Product mix is anticipated to remain broad in line with the first quarter.

25:33 And finally, cash flow tends to be lower in the first half compared to the second half of the year. So coming to a summary then. Well, market uncertainty increased during the quarter and customers are postponing their investment decision. And I think the visibility for near term deliveries worsen, especially with the OCGG business in The Middle East, also the short cycle business still on low volumes. Meanwhile, key segments and products like medical, umbilicals, nuclear, aerospace and industrial heating have better momentum. Nothing despite the turbulence, I believe, we again showcase an underlying resilience and earnings are therefore on an okay level, partly driven by the positive development in Kantad.

26:21 FX was again a major negative factor in the quarter, And we're confident staying on our long term strategy, investing for the future and mitigating where needed to ensure long term competitiveness enabled by our solid finances. With that, back to you, Frieda. Thank you. We will now begin the Q and A session. Please feel free to ask a question via the webcast or directly through the conference call. Operator, please go ahead. Do we have any questions? Thank you very much. We will now begin the question and answer session. Our first question comes from Caleb Solomon with SEB.

27:21 Please go ahead. Hi, guys, and thank you for taking my questions. First on OCTG, you mentioned that the sort of market conditions currently are mainly impacting oil and gas negatively. And you touched on this, Jaron, and I appreciate this sort of geopolitical turbulence is bad for investment upside overall. But at the same time, I would have thought that higher oil prices, I mean, even if it's for the wrong reasons, should increase rig activity outside of Asia, which should be positive somewhat at least for demand. So are you seeing or expecting to see any positive impact from that at all if prices stay up here for a while? Or do you simply expect a sort of negative impact to outweigh any potential benefits from higher prices?

28:14 Thanks. I kind of expected this question. I think what I've tried to be clear on is because it's easy to start speculating. A long term good high oil price is normally good for us. But I don't want to sort of fall into the trap of saying that, well, now it looks better because we haven't seen an evidence of that so far. What we have seen is that the drilling pace in that region has been reduced. And with that, we have reduced our OCL output. So I mean, I don't want that is my comment. Of course, we have scenarios with a long term higher oil price of what that means for us, but I don't want to speculate on that.

29:06 Is it fair to say drilling activity outside of that region has increased even if it's decreased in that region? Mean the war has been ongoing for eight weeks. The timing and a project like this has a much longer lead time. So we haven't seen anything like that yet. And both you and I can speculate what happens if this is a long term effect, but I don't want to come into that. Umbilicus on the other hand, as I said, we see that as positive, we have increased the pace and umbilical is almost not at all impacted of the Middle East crisis due to this lot of onshore and it's very shallow waters in that region.

29:58 Okay. That's clear. Thank you. And you also mentioned that the production constraints related to the expansion presence in Sandviken became less pronounced during the quarter. But can you clarify what the margin effect was in Q1? It's almost neglectable. But we're running a higher shift than we would need for the volumes. Of course, it's cost for that shift, but that is neglected looking at the large numbers. And of course, it's a double effect here. That the press is working better than before. But of course, we also have a slower market, so the need is also less. So it's you can neglect that impact. Okay. That's clear. Thank you. And sort of a similar question.

30:48 You mentioned that the cost savings program had some effect this quarter. So could you tell us how much that was roughly? And sort of as a follow-up to that, if I recall correctly from last quarter, you said you expect to reach the sort of full effect by Q4 and maybe half of that by Q2. So what's reasonable to assume for Q3? We can start by Q1 then. So that was 30,000,000, three-zero in savings. So I have a Q3 number, but I would take the average of full effect than half effect. Yes. Yes. Okay. That's all for me. Thank you.

31:35 Thank you. The next question comes from Adrian Gilani with ABG. Please go ahead. Hi, good afternoon. Just to start off a follow-up on the oil and gas outlook. When you talk about the weakness on OCTG, you mentioned both the direct and an indirect effect. The direct effect, I understand. But what is the indirect effect that is impacting OCTG, but not umbilicals? I think what we I'm not sure what is indirect and indirect. What we see is that simply said, our customer and the customer's customer is not right now in the need as much tubes as we originally thought.

32:25 And that is why we have reduced our output for the time being. How long we will do it, I don't know. Then of course, there is a business outside Middle East. And we are impacted in the same way as our main competitors, of course. So the fight of contracts outside Middle East has, of course, increased. I think that is what we mean with indirect effect. Okay. I understand. And then I guess on a similar note with to oil prices, have the higher natural gas prices had any immediate impact on demand in the industrial heating segment as well? Not that I can say. I think it was so clear what is driving the increase is more the digitalization and the semi con, the electronics, long term industrial heating will benefit for higher gas prices of course, but that is too early to see.

33:32 Okay. I understand. And then a question on the outlook in the Industrial segment. You choose to have the arrow pointing down still in Industrial. I think that's a bit surprising since we've PMIs both in The U. S. And The EU bouncing in recent months. So shouldn't this mean you should see some improvement on the short cyclical sales? You asked me to speculate. I think at some point, you reach the bottom. And of course, moving into second quarter, it was the second quarter last year where we started to be impacted by the tariffs and the uncertainties.

34:17 So from that point of view, we will meet sort of weaker comps. And from that sense, I think your question is very rational. Okay. I understand. And then a final one from me, more a mechanical question on the FX impact. When you guide for SEK 60,000,000 headwind in Q2, can you tell us anything about how much of that do you expect to mitigate with hedges as well? I mean, I think it's with minus 60,000,000 I think the hedge effect will be very limited.

35:03 So that would in this time, it let me think we had about well, no, I think minus 60 is fairly fair. We will probably have some hedge effects, but they will be fairly low in the grand scheme of things. Yes, that's clear enough. Thank you. So that's all for me. Thank you. The next question comes from Anders Akerblom with Nordea. Please go ahead. Yes.

35:49 Thank you. Good afternoon. I wanted to ask firstly about Nuclear. So as you've said many times, long lead times, of course, but not really something new. So I was wondering if you're seeing anything in particular in the project pipeline that's sort of prompting your downgrade of the outlook in this market. It's not downgraded, it's more flattish on a good level. There is a project list as we normally say both in Europe, Americas and Asia. I'm positive on that, but I've also been around for so long.

36:35 So a quarter is a very short time period in that business. So we still want to see the decisions coming through. Yes. And sorry, maybe I'm reading it incorrectly, but the aero, so to speak, that you used to be up and now it was sort of, as you say, flattish, but between that, a downgrade. So that's sort of more how I meant. But so basically, you want to see orders come in. We continue to see it as very good. Okay. And then in tube, I was wondering if you could give some more details on the ramp up in umbilicals and then sort of what that will imply for overall production capacity?

37:22 We increased capacity. There is not one number because it part of the factory is sort of the cost driver is meters, in some part of the factory cost drivers is sort of volume. But I would say between 1015% increase depending on the sort of the size mix of the product, 10 to 15% is a good number to use. Okay. Thank you. And following up on the previous question with regards to sort of the short cycle business and improving PMIs. Could you give any sort of just general reflection about sort of the trends during the quarters, what you've seen into early Q2? That would be very helpful.

38:17 What we have seen in the quarter, one important segment is, for instance, Chem and Petrica. We started to see some growth in Europe. I think that's very promising. It's on low levels still. I think it's fair to here comes the speculation. It's fair to believe that at some point, I think a lot of the chem, petrochemical industry in Europe is sort of maintenance driven. At some point, you start having maintenance step and they start to need to invest. I'm not sure that's the case, but I think that's a good estimation. Asia, a little bit lower than before, but one should understand that, that comes from very high levels. We've had a couple of years where especially fertilizer has been extremely strong.

39:14 Now when I met with customers in November, they were sort of saying that they're not sure they're going to keep that pace for the next year. So I think we see a I think we see this sort of maybe a couple of quarters slow down, but on good levels. What I said on the industrial before, I think sooner or later you meet very low comps and then probably you'll reach the bottom. Yes. Thanks, Jan. We like to hear your speculation. So I appreciate you. Very good. Thank you.

40:09 The next question comes from Victor Trolsten with Danske. Please go ahead. Yes. Thank you, operator. Hi, Jaron and Tim. Perhaps firstly, just so I read your comments correctly, Jaron, but for the outlook for the second quarter, you mentioned that, call it, the general economic climate has weakened during the first quarter. Could you relate that to the cadence of your orders? I guess what I'm after is that all else equal, does this mean that Q2 orders will be lower than Q1? Or what does that mean in terms of orders? That's my first question. Thank you. That is not necessarily what we mean. I I can I understand that you could read it? I think what you should read into it is that the overall geopolitics with Middle East is sort of the added on uncertainty.

41:08 If this lasts long and we have a global energy crisis inflation, that will not be good for Alleima, it will not be good for most companies. I think that is what you should read, not necessarily that we view sort of direct orders on a lower level. I think OCGG is reasonable. We believe it will be lower. And how much of total sales is that now basically? I don't want to give 10% or? No, it's less than 10%. I don't want to give you that number because it varies from year to year. This is project So they can vary between the years, but now it's less than 10 this year. Okay. No, that's clear. But then it sounds like more like what's the it's not like you have filled them so much into your actual order numbers more than O2 to deal. That is more like a warning that inflation, etcetera, is not wouldn't help you?

42:15 I think I've said this before, it's more difficult than ever to predict the future. I think I mean, The Middle East, if that continues, it's not good. On the other hand, I mean, I'm really pleased that we see strong growth in the Industrial Heating, for instance. Metal continue good. Aerospace continue good. We have a good view on umbilical. So there are a lot of big parts of business that we could be very positive as well. That's super. And then perhaps to my second question, because once upon a time, we received the organic order growth on quarterly basis, and now we get it on the twelve months basis with the argument that that's the sort of best indicator for organic sales growth, if I'm not mistaken. And I know that you have a lot of different lead times within the business, of course. But just to hear your thoughts how we should think about it that last twelve month book to bill below 0.9, what does that mean for organic sales growth? I have, if you could help us because there's a lot of moving parts there.

43:38 What do you say, Johan? I mean, I think one thing you could read into then, and we have been clear ever since quarter two last year, is that the order backlog in the short cycle has been short for a long time. That has been affecting the revenue and it will continue to affect the revenue until it goes up again. That is mathematically, comps will be lower, but that's sort of math. Then industrial heating, I mean, that is pretty short cycle as well, at least part of it. So there, I think one could be more optimistic going forward.

44:32 The STG SGT and OCTG adjusted part, we could talk about that. Yes. But if you if we exclude STG with its really high comps in the first quarter and the OCG with the issues we see right now, if you summarize all other segments, it's slightly positive on rolling twelve months. Exactly. Okay. No, that's very helpful, actually. Super. I appreciate that. And then just finally, and perhaps I missed it, but on The U. S. Tariffs, which actually mentioned is a 70 bps positive contribution. I missed what was that? Should we expect that in the coming quarters also year over year?

45:21 I mean, this is basically I mean, of course, we don't know if tariffs change, etcetera. But this is the last quarter where we clearly have a difference between the comparison period and the current period. So the 70 basis points positive that we had on top line from tariffs is while meeting sort of before the updated tariffs in The U. S. So in the next But is it basically pricing or? Yes, yes, yes. It's pushing the tariffs forward to the customer. So the tariffs that we carry when we import the material, we then put on the price to the customer.

46:09 Super, super. Many thanks. I appreciate it. Yes. There are no more questions over the phone. Very good. Then we say thank you all for calling in and for really good questions as usual. This concludes the call, and we're wishing you all a very good day. Thank you. Thank you. Thanks.