Epiroc AB (publ)

Hello, and a warm welcome to the Epiroc Q2 results presentation, and thank you for joining us this very busy reporting day. My name is Karin Larsson, I'm Head of IR and Media here at Epiroc.

And by my side, I have our CEO, Helena Hedblom; and our CFO, Hakan Folin. As always, they will briefly present the results before we do a Q&A session.

You know the drill. Helena, please, the stage is yours.

Thank you, Karin. And also from me, a warm welcome to all of you.

So let me start with the Q2 highlights. So we enjoyed another quarter with high mining demand, supporting the organic growth, both year-on-year and sequentially.

A major highlight on the Equipment side was the largest contract ever for Epiroc, SEK 2.2 billion over 5 years to deliver a fleet of fully autonomous and electric surface mining equipment to Fortescue in Australia. We mentioned this contract already when we reported Q1, but it was signed in April and the first firm order booking was done now in Q2.

The demand for both service and tools was good. We remain focused on delivering profitable growth in the near term and to safeguard agility and deliver towards both shareholders and customers over time.

And I will tell you more about this soon. We had a successful quarter when it comes to innovations.

For example, we have added automation features in our exploration offering, and we have had great success for our BEV trolley truck solution with Boliden, which increases productivity by 23%. So more on these innovations soon.

A few more words on the demand side. In total, our orders declined 7%, which is fully explained by currency.

The FX impact was negative 9% in the quarter. Organically, we achieved 2% growth, driven by mining.

And there is a strong underlying demand and the business cooking looks very good. Our large orders amounted to SEK 500 million versus SEK 950 million last year, and included in these are SEK 100 million from the large contract from Fortescue, and the contract will be booked continuously throughout the 5 years period.

Construction was weak, which impacted demand for attachments. On the infrastructure side, things were moving along well in the quarter, and the projects are normally long term in nature and rather stable.

And then over to the topic of innovation. So with a background in R&D, I feel proud to represent Epiroc when we are bringing leading solutions to the market.

I mentioned initially the success for our electrified ramp haulage solution in the Boliden?' s Kristineberg Mine in Sweden, and it's a result of our collaboration with Boliden and ABB.

And compared to a diesel-driven equivalent, the trolley solution has increased the productivity by 23%. The truck speed up ramp is 50% higher.

The maintenance cost is reduced by 25% and the energy regeneration to the battery when the truck goes downhill or is connected to the pantograph is unlimited. And while on the topic of electrification, in Q3 2022, a fleet of underground BEV machines began production at the Assmang Black Rock Mine in South Africa.

This is the largest BEV underground fleet in the Southern Hemisphere. And since then, tons of ore excavated per hour have increased by 11% and the ventilation need has decreased by 42% and energy cost has decreased by 18% and CO2e savings have exceeded 8,200 tonnes, and this is corresponding to around 2,000 cars with a combustion engine.

And this mine primarily use fossil fuel-generated electricity, demonstrating that Epiroc's battery electric fleet can reduce CO2e emissions even without renewable electricity. Automation is, as you know, another strong trend for our customers as is exploration.

And we have a unique offering within exploration, and we had strong growth in the quarter. In total, our exploration offering represents roughly 5% of our orders.

And within this offering, we have a popular core drilling rig called Diamec. And now we have launched an automated rod magazine for the Diamec product range, which increases safety while boosting productivity.

So let me share a short movie on this.

So the next strategic topic is aftermarket, which amounted to 67% of revenues in the quarter. And again, the demand from mining was high, which led to increased orders and revenues for both tools and service.

Attachments was still weak, even though on the demand side, we noticed a bit mixed picture. In some regions, we do believe that the destocking has come to an end, but please remember that the second half of the year is normally a seasonality weaker period for construction customers.

On operational excellence, we are busier than ever in an ever-changing and volatile world with an increasing level of uncertainty. We work even harder to deliver excellence in everything we do.

And we remain focused on delivering profitable growth, increase agility and improve our global reach in an efficient way. For example, we are consolidating sites, both manufacturing sites and customer centers, such as the move of our tools manufacturing site from Canada to Mexico.

But we're also discontinuing nonstrategic product lines. Also given the current uncertainties around tariffs, we are emphasizing agility and global reach by optimizing logistics and distribution, leveraging global manufacturing and exploring alternative suppliers.

And while on the tariffs, do they have a financial effect on our results, not significantly, but the cost of the tariffs, the increased workload, the rerouting and the longer lead times come with the price, and there is some effect on EBIT from this in the quarter. We work closely with both our customers and suppliers to find solutions and take mitigating actions.

At Epiroc, we are committed to stability and long-term delivery towards customers and investors. And in times of uncertainty, I would like to widen the perspective and look back and forward.

Historically, since our listing in quarter 2 2018, we have grown our orders with 8% per year, our revenues by 9% and our reported EBIT with 10%. Our annual EPS growth has been 10% and our operating cash flow has grown with 16%.

Onwards, our ambition to continue to create financial outperformance and strong cash generation by being active in attractive niches where we offer our customers the most innovative and productive solutions, including automation, digitalization and electrification. And in addition to this, we will safeguard our customers' operations through precision in our service and aftermarket offerings and deliver excellence in everything we do.

So back to the quarter and moving on to next slide. Another important cornerstone in our strategy is our people, and I'm glad to say that we have further improved our safety KPIs and reduced our total recordable injury frequency rate.

We have increased the proportion of women further, and we are now 20.1% women employees and 25.5% managers. And diversity is one topic that Time Magazine, together with research firm, Statista, evaluated in their list of the World's 500 Most Sustainable Companies, and Epiroc was listed as the 355th most sustainable company in the world.

And we make good progress on the planet side as well. As you know, Scope 3 is where we can make the largest positive difference.

And therefore, my earlier example of the large CO2e savings in South Africa with the BEV fleet despite coal-generated energy is certainly a highlight. But in Scope 1 and 2, which we present on this slide, we have also made progress, and we reduced our CO2e emissions, both from operations and from transport.

And on the distribution side, we are building a state-of-the-art global logistics hub in Orebro, Sweden to replace existing distribution facilities in the same city by 2027. And the new facility will be automated, efficient, safe, have solar panels, energy storage and backup power.

So with this, I leave the word to Hakan to cover the details and the financials.

Thank you, Helena. So our group revenues declined 8% to SEK 15.1 billion, heavily then impacted by currency of minus 9%.

If we look organically, we achieved 1% growth driven by service. And in total, the aftermarket represented 67% of revenues, of which service then was 43%, and this is up slightly versus last year.

Our EBIT decreased SEK 2.8 billion, but corresponding to a margin of 18.7%, which is up from 17.7% last year. And the operating profit, including items affecting comparability of SEK 153 million, mainly related then to actions taken to improve efficiency onwards.

On the margin, we had a small negative organic contribution, mainly then due to the mix within service was slightly negative. This is strategic growth areas, which currently have a lower margin that is outgrowing the higher-margin businesses.

But over time, we view this as positive as it means that we have a stronger relationship with our customer, it will lead to recurring service revenues and also more equipment orders. Currency, on the other hand, contributed positively to the margin, explained mainly then by revaluation on internal profit.

Structure impacted slightly negative. And all in all, we ended up with an adjusted margin of 19.7%, which is just in line with what we had in the previous year.

So if we move on to the segments. For Equipment & Service, orders were heavily negatively impacted by currency with minus 9%.

Organically, however, orders for Equipment & Service increased, up 2% year-on-year, which is the same organic growth as we also see when we look sequentially. The high mining activity is supportive for both Equipment & Service, which are up organically 2% and 3%, respectively.

Our large orders and for us, that is orders which are above SEK 100 million, they totaled SEK 500 million in the quarter. And if we compare that with the same quarter last year, we had SEK 950 million in large orders.

And as we have said many times before, large order are lumpy by nature. Revenues for the Equipment & Service segments were also impacted by FX, minus 9%.

Organically here, revenues increased 1%, driven by service, which grew by 2%. And the split between Equipment & Service was the same as last year, with service representing 56%.

Our EBIT for the segment declined 7% and included items affecting comparability of SEK 49 million, and this SEK 49 million consists of several actions taken basically across to increase our cost efficiency onwards. Adjusted then, the margin ended up at 23.0%, which is down somewhat from last year of 23.2%, and the organic decline is mainly explained then by mix within service.

In the midterm, this mix will remain, but the actions we take aim to compensate for this. If I move on then to the Tools & Attachment segments.

Here, orders received decreased 5% to SEK 3.7 billion, which corresponds to an organic growth of 2% and also here, negative impact from currency of 9%. Acquisitions then on the other hand, which mainly is ACB+ for this segment, impacted positively with 2%.

Demand from mining customers was strong, leading to a good development for Tool, whereas the demand for construction customer was weak, impacting mainly Attachment. This was anticipated as there has been and still is hesitation among the construction customers.

If we look sequentially, orders received decreased 1% organically for the segment. The revenues for Tools & Attachments decreased 8% with currency again being the main explanation.

Organically, revenues decreased 2%. And then to something real positive here, which is that EBIT increased 33% in this segment to SEK 376 million.

This includes restructuring costs of SEK 98 million. And of these then the largest one we have is SEK 70 million related to the move of Tools production from Canada to Mexico.

The adjusted operating margin was 12.9%, which is up from 11.2% in the previous year, and it's also up from 12.1% in Q1, and this is then supported by the increased efficiency and cost savings measures that we have taken. On the cost side, we have made progress on administration and marketing, which are lower both year-on-year and sequentially.

This is partly explained by the improvements we have made. But when we look year-over-year, of course, also FX has an impact here.

R&D expenses are up slightly. In total of revenues, our admin, marketing and R&D costs are 17.0%, up from 16.6% last year.

But being mindful then, our invoicing is about SEK 1.4 billion lower. And sequentially, we improved from 17.5% down to 17.0%.

Our net financial items were lower at SEK 131 million, partly explained by a lower net interest of SEK 198 million. Tax expense of SEK 597 million, which corresponds then to an effective tax rate of 22.1%.

Move on to the next slide then. Our operating cash flow came in at SEK 1.1 billion, lower than in previous year, but mainly explained by a buildup of working capital and also slightly lower operating profit.

Our cash conversion rate is 94%, which is an increase compared to last year at the same period when we were at 90%. Net working capital then.

Here, we saw a decrease year-over-year of 9% to SEK 22.7 billion. However, before being too cheerful and happy about this, the main explanation here is currency.

If we adjust for FX and acquisitions, we are slightly higher, which is partly explained by the strong equipment order growth we've had in the last few quarters, but also as an effect of the tariff situation. In total, the net working capital ratio was 37.5%, which is down from 37.8% last year.

So finally from me on capital efficiency. We have reduced our net debt to SEK 13.3 billion, which is driven by the strong cash flow generation we have seen in the last year.

And with this, we have a strong financial position with a net debt-to-EBITDA ratio of 0.82. Looking at return on capital employed, it was 20.2%, which is lower than last year, where we have higher intangible assets and also somewhat lower profit explaining this deviation.

And with that, back to you, Helena.

Thank you, Hakan. So when I look back and briefly summarize the quarter, I would like to highlight the high mining demand, our largest contract ever, and the solid order growth for Service and Tools.

We still suffer from the weak demand for Attachments, but within Tools & Attachments, we have done a good job in efficiency and we have increased the margins. So we will continue to focus on profitable growth and deliver innovations for our customers.

And long term, we are committed to stability and long-term delivery. And in the near term, we expect mining demand to remain at a high level, while demand from construction customers is expected to remain weak.

So welcome, Karin.

Thank you. So Helena, Hakan, thank you very much.

A very quick presentation today, and now it's time for the Q&A. If possible, try to keep it short.

And operator, you may please open the line.

I have 3, please. So my first question is on E&S.

So clearly, sequentially, orders received increased 2% organically, and you note the underlying demand is still quite high. Could you please provide detail on the underlying development here, perhaps by commodity?

And do you have any color on the pipeline you see for the remainder of the year?

Yes. So I would say, when I look at the commodity, it's very high activities related to copper and gold, not so much activity related to nickel.

But I would say, copper and gold and iron ore, that's where we see the biggest, I would say, activity level and the strongest demand. Also, when I look at the pipeline, there is a combination of expansion projects.

Several of them are related to copper. It's also gold.

That's where I see as well exploration activities increasing in the quarter towards those commodities and less so then on nickel and I would say, platinum maybe it's also quite slower activity levels. But very strong activity levels and pipeline from both gold as well as copper.

Very clear. And then my second question is on T&A.

So here, the Attachments business has been quite weak for a long time now. Is the mix impact still negative from the business in the quarter?

Yes. So it's still a negative mix effect.

And of course, we -- I think we -- what we see is that we are more coming back to that we get the demand -- the true demand into the factories, which is, of course, helping with our absorption in our factories. So we -- I would say this challenge we have had over the last couple of years with destocking happening in the indirect channels, that is coming to an end, which is good for us.

And so that in combination, I would say, with the efficiency actions we have taken is supporting the margin development here.

Very helpful. And then my final question is just on the efficiency measures that you booked in the quarter.

So it seems like 2/3 were in T&A and then 1/3 in E&S. Could you please provide maybe more color on how much more you anticipate to do in both of these segments?

So we have activities. We do this step by step.

And if I look on what we did now in the quarter, the biggest one is the closure of the Langley facility, which is in T&A and consolidating that site with Mexico, but there are also smaller efficiency activities ongoing in some of the acquired companies as well as in our customer centers across. So we are quite precise in what we're doing, and we will continue to do that.

We have not really -- it will not be a material restructuring cost. But I think you can also expect some in the coming quarters because we continue to focus on getting back to profitable growth.

Helena, Hakan, Klas at Citi. My first one is on the service mix in E&S.

There are obviously many moving parts here, but it looks like the mix worsened quarter-on-quarter when I look at the sequential organic drop-through. Did software and rebuilds grew even faster against parts and kits still flattish?

And I assume that this is the level that we should expect for the rest of the year. If we back out currency, then expectations in the market looks like they have an improved drop-through in the second half.

So I'm just curious, and I think it's important to understand if you think that the current mix here will stay for the next couple of quarters.

I think mix will stay, but we're also taking quite a lot of efficiency measures in the, say, the service business, including the digital business. So if you look on the restructuring costs we took in the quarter, it's very much related to mitigate that mix effect that we have seen for some quarter here.

But that is geared more to T&A? Or is it also -- yes, did you quantify exactly how much...

It's bigger in absolute terms in T&A because you have this closure of one production site in Canada. So therefore, the total amount is bigger in T&A, but there is definitely also actions ongoing in Equipment & Service, but more smaller -- several smaller ones spread across rather than one specific large one as you have in T&A.

Got it. My second one is on your parts and kits business, which grew mid-teens from 2021 to '23 as per your Capital Markets Day slides from September, and then slowed sharply in 2024.

If you look at the parts business here at your key peer that has been growing high single digits for several quarters, I'm only talking about parts and kits. I'm not talking about ground support, rock tools, only the parts and kits business.

So I'm trying to understand this better. The miners that you are exposed to, did they overorder more parts?

Do they still have too much inventories? Because when we see all these copper mines now being commissioned and we see others growing this business, I'm just curious when can Epiroc start to grow its parts and kits business again?

Because I think that, that can be very helpful for the mix within services.

I wouldn't say that it's -- of course, there are some customers that has been actually quite large customers that have had some challenges, I would say, in the last 2 quarters. If we take the DRC, we mentioned here, I think in the previous quarter, there are some -- we had a large contract in [ Panama ], for example, and that mine closed.

So I think, of course, it could be a bit specific to a couple of customers that impacts it, I would say, in the short term, if we look on a quarter. But I would say long term, this is what we have a large fleet out there.

We have a systematic approach, but it can vary, I would say, between quarters. And I think that is -- but this, I would say, very much we have it in our own hand to work and step-by-step increase our customer share of parts and kits.

So I wouldn't say -- I wouldn't blame I would say, the external factors here. It's -- I would say we have it in our own hand.

And of course, we need to have a value proposition that is better than the small players because they are the ones eating this for us in some parts of the world, of course. We still say that we have a little bit more than 50% customer share when it comes to parts.

Quick final one on larger orders. They are lumpy by nature, as you say, Helena.

But if demand is so strong, some might basically say that we go through another commodity super cycle at the moment. Why are we not seeing more large orders coming through?

Do you see any market share movements explaining this at the moment? Is it tariffs?

Are we getting pushouts? Because we see so much large orders being announced elsewhere.

So I'm a little bit curious to hear what you think.

I would say, it's timing. There is -- if you take the Fortescue, for example, it's our largest order ever or that contract that we signed now in April.

When I look at the pipeline, I shared with you that there is a lot of business out there for the coming years. I spent last week in South America, for example, going through all the plants there in the countries related to copper, related to gold.

There are a lot of opportunities in the coming years. But of course, timing-wise, if you look in a quarter, it can always -- when they are lumpy in nature.

I want to start with the comment about the 5% order contribution from exploration. Is that specific to the quarter or a through-cycle number?

And how do we think about the broader order mix in terms of brownfield, greenfield and replacement, which your peer has helped us with in the past?

I think exploration is -- of course, if we go back to 2011, '12 when it peaked, it was at one level. From there, and it fell, it has been steadily coming up to a level that is more, I would say, a stable level.

When we look at the activity levels, given all the plans and expansion plans, both brownfield as well as greenfield, there is an improvement in demand. We have a large offering when it comes to exploration.

So we both have the consumables. We also have a full set of products towards -- on the equipment side.

So I would say that I see this happening and also the contractors involved in exploration are preparing for more projects given also the -- I think the geopolitical challenges in the world also actually helps driving the demand for exploration.

And can you help with the comment on brownfield versus greenfield today?

It has still been -- still, I would say it's more brownfield exploration than greenfield exploration. So it's not the juniors that are super active.

It's more the mining houses expanding than close by. But I would say also from a from a greenfield perspective, we start to hear more and more discussions.

If I -- now when I talk business cooking, I talk maybe 18 months, if you move that horizon, a couple of years away, there is more greenfields in the pipeline, clearly.

And then secondly, I just want to ask in your comments in response to Klas' question on the E&S service mix. You talked about some efficiency measures in digital.

In the report, you touched on discontinuation of some nonstrategic areas. I wonder what that refers to.

Does that include digital? Or is that more product based?

No, it's product-based. So it's the water well product line that we were serving the U.S.

market. So it's not digital.

But efficiency measures are happening across. So that's -- but discontinuation of a product line that was the water well in U.S.

It's Rory Smith from Oxcap. I've got 2, if I can.

Just coming back to that point on Equipment & Service. Would you be able to disclose the growth in parts and services versus the growth in Digital Solutions?

Or asking that question in a slightly different way, what is the size of the telematics-enabled fleet today? And my second question is on the working capital build.

Should we think about this as Epiroc building a sort of safety buffer of components, maybe ahead of any potential tariff impacts? Or within your inventories, are there an increased number of, let's say, finished goods ready for shipment in Q3?

How should we think about that net working capital into the next sort of quarter or 2 quarters? Those are my questions.

So in the quarter, if we look on orders, we are mid-single digit in parts and service, positive, but we actually have a negative organic growth in digital in the quarter. But then in total, it adds up to what the number you see.

If I look on the size of the telematics, that continues to grow. So we are in the range of 15,000 connected machines, giving us data then and intelligence when it comes to both driving customer share, but also, of course, to work with our customers on productivity.

The net working capital buildup in the quarter, it's -- we have a component there when it comes to receivables because we had quite good output here in the last month. So that's one part.

Of course, the tariffs creates some net working capital or I would say, inventory buildup when we shift from supplying from U.S. to Canada, for example, now we supply it from India to Canada.

So of course, it has an impact, but I would say a smaller impact. We also have quite a lot of equipment on its way out from our factories.

So that also after the growth in equipment for quite some quarters. It's time to deliver those equipment, and it's on its way out.

So that is also one of the buildup in inventory in the quarter.

We haven't specifically -- the tariff does have an impact, just like Helena said, because we are rerouting things, but we haven't specifically shipped a lot of things into the U.S. or out of the U.S.

ahead of tariffs, given that at least we don't think that we know exactly how it's going to be in the end.

Can I just follow up on that very, very briefly on sort of rerouting of goods around tariffs in North America. I think you mentioned that there was an impact on EBIT in the quarter, but I wasn't sure if you'd quantified that.

We didn't quantify it in numbers. We said it does have some impact.

It's not significant and material, but it's slightly negative to the result. Just the example Helena mentioned, we are moving production from U.S.

and producing in India instead in order to ship to Canada. And of course, instead of shipping from the U.S.

to Canada, it will cost more when we ship things from India into Canada, but it's less than otherwise paying the 25% import duties on that material.

Helena and Hakan, just one for me. So looking at the equipment backlog cover, I calculated that it is at the lowest level since 2019.

And you clearly saw negative growth in organic equipment revenue growth this quarter. I'm just wondering, are you concerned about the outlook for organic revenue growth development in the coming quarters?

No, I'm not that worried, as I said, because we have quite a lot in the pipeline and it's always a timing thing as well when you invoice equipment. And especially if we have the big machines, which are -- it's a high value in each and one of them.

Yes. Can I ask another one on mining demand, Helena.

Your comments around increasing willingness to invest here. If I look at the equipment orders, ex large orders, they look to be at similar levels as we saw in the first quarter.

So should we read this comment as near-term pipeline for small and medium-sized orders actually looking stronger than what you're running, I think, Q2? That's the first one.

I think pipeline looks strong. If I zoom out, now I'm talking more like from a historical level, I think pipeline looks strong.

I also -- and I think the combination of that together with the underlying demand. If we look on this quarter, for example, it's SEK 500 million in large orders and still, it's solid level.

So the underlying activity levels when it comes to customers replacing 5 machines or putting an order in for 4, 5 machines that is happening across the different regions as well. And of course, together with the age of the fleet, which it is on an all-time high level.

And that is also -- that, of course, is good for us because eventually that will translate into replacement orders for us.

Okay. But just to be very clear, would you say that you saw an increasing interest in small, medium-sized orders or pipeline conversion or whatever throughout Q2?

No, I would say no, and that's not really how it works. It's not changing in a quarter.

What I do see is that due to the geopolitical situation in the world, more and more countries are looking into their own assets. And I think U.S.

is an example of that, of course, pushing then local copper projects or other projects. But it's the same discussion ongoing in quite many parts of the world.

I think that has maybe increased, I would say, the focus on the need to actually explore greenfields and to push expansion projects in many parts of the world. When it comes to say, okay, the commodity prices are at a good level.

And I think the long-term plan is there always for the mining houses. But I think this geopolitical situation we are in right now, if anything, is then pushing -- hopefully creating some speed on some of the decisions and permitting needed in some parts of the world to get new projects on board as well.

All right. Secondly, the attachment demand coming down quarter-over-quarter, would you say that's a reflection of the lower inventory levels and the market being back to more normal seasonality?

Or is there an element here of markets deteriorating further in Q2?

No, I would say this is more the normal seasonality. I wouldn't say we don't see any change in the actual demand.

So I think the good thing here is that it seems like the destocking is coming to an end, which is good, and we have better load in our factories. And that supports, of course, the results moving forward as well.

Just lastly related to that, do you see any signs of potential inventory build in H2, late 2025?

Buildup of -- in attachment or...

Yes, exactly.

You mean, with the dealers and distributors, I guess.

Yes, exactly with the dealers.

No, I wouldn't say that.

And I think most -- we have quite short lead times. So I think they will be very cautious in terms of building inventory.

On the other hand, like Helena said before, the destocking phase is over, so -- or more or less over. So I think we will not see any further destocking, but I doubt that we will see any inventory buildup.

They will be cautious.

A couple of questions. First, on your invoicing in the quarter, it was a bit lower than I had expected.

So I just wonder, did you have any delivery disturbances in the quarter that should be solved in Q3?

I wouldn't say that we have had challenges to deliver. It's more our output in the factories, maybe that we ramp -- I think we had a higher volume outcome in the factories in the end of the -- towards the end of the quarter.

So I think that will, of course, support revenue in Q3. But it's always so from a seasonality standpoint that usually Q3 is lower.

But we have -- I'm not happy with the output of revenue in the quarter. So we had -- we could have done better on the revenue side, especially, I would say, on equipment, of course, equipment, it's big value.

So of course, that -- if we lose a couple of machines, that could be quite big numbers.

Yes. But it sounds like we should still expect the normal sort of the normal seasonality in Q3.

And then quickly on your outlook. I saw that you have changed the wording a bit.

So you're not splitting your outlook for mining into equipment and aftermarket. Should we read anything into that, i.e., that you might expect weakness in any of the 2?

Or why did you decide to take that away?

No. So we see the same demand pattern in -- when it comes to mining, it's the same trend and demand picture for Equipment as well as for parts and service as well as for the consumables for the tools.

So that's actually why we brought it together into one. We see the same.

And also when we look at the, I would say, the activity levels and the impact we see, we see a similar picture for all of us. We have decided not to split it to make it easier.

Okay. Understood.

And then on cost savings and efficiency measures, any chance to quantify them in Q2 and what to expect going forward? Will we see a meaningful incremental step-up in cost savings in the coming quarters compared to what we saw in Q2?

So we have not quantified it and share those numbers. But I think we have -- as you know, we have taken a number of cost saving initiatives, the last, I would say, year.

I'm pleased to see that it's -- we have managed to turn Tools & Attachments into a better position, and we continue to work on that. I'm also pleased to see Stanley developing in a good direction now.

And we will continue to do this until we are happy with where we are. And back to profitable growth.

If you look at it by segment, we started first in the Tools & Attachments segment, given that's where we had the issues first. And then we talked a bit about Equipment & Service before.

We are not happy with the margin in Equipment & Service either. We think there's possibility to do better there.

And therefore, we are taking a lot of actions there as well. So first, resort in Tools & Attachments, over time, we should be able to see it and just like Helena said, get back to the profitable growth that we are used to.

And then lastly, on the destocking within Attachments, I mean when the destocking is going on, the demand for your products doesn't really reflect the end market demand because the dealers are destocking. And now you are saying that the destocking has sort of come to an end.

Would you say that the order intake in Q3 -- or Q2, sorry, reflected end market demand? Or did you see destocking in Q2 and then in Q3, we will see a step-up towards the end market demand situation?

I wouldn't say -- I don't -- I think the destocking has happened for quite some quarters now. So I think the demand we see, then, of course, it varies between where you have more components in this than only dealers.

We also sell to OEMs, for example. So it depends also on the order stock from some of the excavators OEMs on Attachments.

But when it comes to the dealers, we step-by-step, we have seen that this destocking has come to an end and that we get, let's say, the true demand into the factories. So I would say that hopefully, we are in a more normalized level when it comes to demand, and it's not this bullwhip effect that is causing a challenge for us in our production sites.

I wonder if we could talk a little bit about tariffs. If you think about the measures you've had to take here, whether it's inventory location levels, transport, do the Q2 results reflect that?

Or is that journey continuing?

So as we said, we had some smaller impact in Q2 from a results standpoint. There is a lot of activities that has been ongoing from an operational standpoint in the organization.

But we continue to work on this because I think in the end, this is trying to mitigate as much as possible of this to help our customers also to stay competitive long term. So we do this together both with our suppliers because our suppliers is -- they are also producing in many parts of the world, and we're doing it together with our customers because we can always find ways of lowering the cost.

In the end, it's the lowest total cost of ownership that will be the most important thing for our customers. So we're doing this together with our stakeholders, both on the customer side as well as on the supplier side.

And a quick follow-up to that, if I may. My understanding is that some of the larger miners were having a bit of difficulty on price acceptance on tariff-led increases.

I'm just wondering where you are on that?

Yes. So I think to my previous comment here, this is where we work because there is, of course, a lot of things we can do together with our customers, and we work very closely to the large mining houses in finding ways of avoiding these tariffs in some way.

And that could be changing sourcing from one, if I take an example, it could be changing the sourcing from China parts that we traditionally sourced in China. We can change that to something from Europe or it's using the complete footprint of both of our suppliers, our own manufacturing setup.

But then also, of course, there could be other ways of lowering the cost. But we stay -- it's very precise and down to the different components of -- if you take engines, for example, or you take hydraulic pumps, et cetera.

So it's down on that level, the type of discussion we're having with our customers.

Just one question left from my side. You had organic revenue decline in T&A, but organic improvement in the profitability in the segment.

Could you maybe give us a split between the volume drag on the profitability, but the efficiency support so we can maybe make some assumptions about what could happen to -- if volumes come back, basically that we can scope a little bit the upside to margins that we can see from here following your efficiency improvements?

Do we have that? Can we share it?

We don't really go into the level of details in our bridge, but it's a good observation, which again proves that the measures we have taken are actually yielding good result as we had an organic revenue decline, but actually managed to improve profitability. But I'm sorry, we don't go into more details than that.

But I think maybe one thing to share is that we have taken out a big portion of the people we have taken out during last year as well as this year, those restructuring has happened in the Tools & Attachments segment. And this is starting to give results, and it's shown in the bottom line.

Yes. I'll start with demand picture and order intake.

I mean it looks like demand picture is very solid, right? Very strong growth in gold CapEx.

Copper is on a good level, improving outlook for exploration. I know you highlighted headwinds in PGMs and nickel, but obviously, those are small commodities.

And yet your growth in both new equipment and aftermarket orders are below trend and potentially materially below trend. So my question is whether those order numbers this quarter are reflective of this good underlying demand picture?

Or there was something specific thinking come through, et cetera, that actually lowered those orders now in this quarter?

I would say it's more timing -- the timing of orders. The way we do it, it's -- if you take, for example, the Fortescue, which is the largest.

We book it when we have the -- we book it as we get the confirmation and the purchase order. So -- and that's how we do it for -- if it's very large deals.

So I would say if you look on the activity level now, we are up 2% on equipment in a quarter, which is roughly half in large equipment order compared to the previous year. So underlying, when I look at this, the underlying activity level is there, but also the pipeline when it comes to larger project, it's there.

It's more a timing issue when we get the agreement signed and purchase orders delivered.

There wasn't any very large specific items in the quarter that kind of impacted. One that we have that we mentioned is the seismic activities to our largest customer in DRC, where we sell both, we've sold equipment before, we sell parts and service.

We also sell consumables, and that does have an impact, but it's not super large. So no one thing that really distorted comparables more timing issue.

That's clear. And the second question is on perhaps some self-help actions, which you are implementing.

Obviously, you have been highlighting for some time that you think there is potential for improvement in profitability versus current levels. Returns have been trending down for quite some time as well.

Would you be able to talk about some mitigating actions to that? What specifically you are doing?

And what kind of magnitude of impact and timing of the impact and urgency on those actions that you're expecting?

So on the efficiency side, so we're taking a number of different type of actions. As we have communicated, consolidating manufacturing sites.

That's one of them. But we're also doing activities when it comes to creating regions in the way we go to market.

So we have, in the quarter, for example, created a number of larger regions, but also integrating the acquired entities because we have acquired a lot of companies the last couple of years and integrating them and making sure that we can get the efficiency there on the back office, for example, when it comes to transactional HR and finance, it's a lot of activities, making sure that we bring them -- we integrate them and get the cost benefits as well being part of a larger group. So those are a couple of examples of the type of initiatives that we have ongoing.

I've got 2, if I could. On service orders, Helena, you mentioned mid-single-digit in parts and negative in digital.

Could you mention the speed of contract growth and the speed of midlife upgrade growth? And is that negative in digital going to persist in orders in the second half, do you think, on what you know today?

I think on the digital side, it's -- this is also very project specific. If we take -- it's very much that if you take a customer or not, if you win that deal or not.

So it's difficult to say how that will play out in -- during the second half. But if I look -- we have had a couple of quarters with continued good growth on midlife rebuilds, on service contracts, which, of course, in the long run, serves us well because this is recurring revenue streams.

So I think we try to do both, of course, grow parts, but also grow the recurring piece of the service and then work on the efficiency to compensate for the, I would say, the margin difference there between the different components in the service business.

Okay. And if I could follow up on Andreas and Vlad's question about savings.

If you took everything that you've announced so far, which there's been quite a lot over the last couple of years, including that, that you talk about today, but totally ignoring any future actions, and I understand this is always ongoing. But of the total Swedish krona of savings that we've seen since the supply chain crisis, which was the starting point of some of these actions.

What percentage of those savings has already landed in the P&L by the end of the second quarter? And what percentage is still to come?

I'm just trying to understand the intensity of savings going forward, which is still not clear on.

Yes. So if we look on, for example, if we take the closure of [ Essen ], for example, which is one of the factories that we announced last year, the savings from that, okay, we see maybe a small part is in the books, but that will happen during the second half.

The physical move is ongoing right now, and that's when you start to see the impact, of course. When it comes to closure of factories, it's normally you have a time lag maybe there on 1 year, 1.25 years before you start to see the savings in the P&L.

When it is, let's say, the -- on the -- then, of course, we are specific in some service contracts and there, you get, I would say, immediate impact when you take out cost. And during last year, we did quite a lot of that.

What we're doing right now, the efficiency measures that we took both in Q1 as well as in Q2 are more related to back office, looking into the structure, which is addressing it in a different way. So it's more on the white collar side.

Okay. That's very helpful qualitatively.

But if we think quantitatively, we had peak -- or do we think peak savings are ahead of us as a proportion of revenue? In terms of like the margin bp impact, do you think it accelerates, stays the same or deteriorates from the margin bp impact of savings in the quarter we just reported?

If I look on the quarter, if I look on the EBIT margin, I'm still not happy. And as long as I'm not happy, we will continue to take actions.

But -- so we are -- that's what we stay very focused on because I say, I want to get back to profitable growth. And you can trust me that we stay focused on that until I say that I start to be happy again.

So it's a lot of hard work, of course, but that's what we are focused at.

Thank you, everyone, for asking good questions. Me again.

We will summarize this quarter now, and I know you're eager to see the results of our [ Big Brother ] coming in, in about a minute. To those of you that did not have time to ask questions, I will call you soon.

Thank you very much, everyone. And if you need anything, we're here to help you, and we wish you a nice summer or winter if you're in the southern hemisphere, and we wish you successful investments.

Thank you very much.

Thank you.

Bye-bye.