Metso Corporation Unsponsored ADR

Rita Uotila – Vice President and Investor Relations Markku TerSsvasara – President and Chief Executive Officer Jari Algars – Chief Financial Officer

Manu Rimpela – Nordea Markets Alexander Virgo – Bank of America Merrill Lynch Tomi – SEB Andrew Wilson – JP Morgan Antti – Danske

Good afternoon, ladies and gentlemen, and welcome to Outotec's Financial Statements Review Briefing. We will hear presentation from President and CEO, Markku TerSsvasara; and CFO, Jari Algars.

And after that, there will be a possibility to ask questions. Now we will start with the full year results presentation by Markku TerSsvasara.

Please go ahead.

Okay. Thank you, Rita, and good afternoon, everyone.

As always, we will start with the safety performance information. Our employees are the biggest asset of the company and, of course, their well-being is most important to us.

Our lost time incident rate stayed on a low level, even improving, dropping means improving towards the end of the year, and it ended up with 1.7, which is a good level. But at the same time, we are not happy before we reach a situation where there is no lost time incidents in the company.

About the market development, market for all the tech products continued developing positive, supported by metal prices and increased production levels. Investments are still very much focusing on brownfield debottlenecking, productivity improvement, getting the efficiencies out doing small modifications, not so much greenfield opportunities yet.

Having said that, I think it's worth mentioning that if you look at our Minerals Processing order intake from that segment, in quarter 4, the order intake was accelerating towards the end of the year in all categories, small or midsized orders and also big orders. And our fourth quarter order intake for Minerals Processing business unit was – you have to go back to 2012, 2013 to find a stronger order intake.

So good achievement. And also, I think we believe that our order intake in that segment was beating the market, which, of course, is a very – in a way, we are satisfied with that.

That brief demand came quite widely from different metals, of course, copper traditionally being very important for Outotec over the years; 30% of our business in average has been in copper. Also, zinc, lead, and gold – of course, copper and gold, one of the big items.

And then also, we saw so-called battery metals, cobalt, lithium and nickel, picking up not only from the metals point of view, but also from geographical point of view, the improvement was pretty widely spread. When it comes to large investments, the activity improved, and we saw even projects coming closer to decision-making and even customers making decisions on metals refining, which typically comes a bit later in the cycle.

So if you summarize 2017, some of the highlights, I think we can conclude the year by saying that we had strong development in many areas. In September, we communicated our new strategy and new vision for the company.

In April – from April 1, we introduced a new service organization, and I think we are encouraged by the results we have achieved during the second part of the year in order intake and also, of course, sales following it up. Our order intake increased 70% and accelerating towards the end of the year, fourth quarter order intake increase was 29%, and it was pulling the sales up, of course, afterwards.

Profitability, there was a clear improvement from 2016, and I think Jari will then, in his presentation, open this up a bit more. Really, of course, we see on both positive sides and then challenges in our profitability improvement.

Clearly driving up was the volume increase. Increased sales generated more profit, and we also were able to control our fixed cost and, actually, achieve a saving there.

So those are the positive contributors. And then on the other hand, we had low workload on MEW that was putting burden on our absorption.

Low utilization of the resource and then the sales mix contributing to the other direction. But as said, Jari will open these up more in detail.

Also, positive pickup a few years, negative cash flow. We had a positive cash flow and actually developing well towards the end of the year.

So even on the fourth quarter, I think it was a very strong cash flow, coming mainly from basically working capital reductions, inventories going up, receivable collection, but also down payments, advanced payments received from the customers for the new orders. So all this supported the cash flow development well.

And then the people side, we also did a lot of training, sales training, service training, leadership training within the company. And on the people point, I think what this has to be mentioned is that our employee satisfaction or employee engagement index, we measure that every year, so that increased 88 percentage points from 2016 to 2017.

And we think it's a really good achievement, and we're happy to see that our employees are actually relating them very well into the new strategy and vision that we have agreed to do in the company. And, of course, we'd like to develop that even further.

And then last, but not least, again, on the fifth year in a row, Outotec was selected to be part of the Global 100 list of the most sustainable companies in the world. And this year rating was fifth, which, of course, we are very, very proud of.

And, of course, that comes from our environment-friendly technologies. Customers were able to reduce the CO2 emissions by 6.2 million tonnes basically per year using Outotec technologies, comparing that with an annual baseline and if you try to put that in relation to something that compares the electric consumption of our city with 1 million inhabitants.

So I think it's a major reduction with our technologies. And most of the order intake is representing so-called environment – Environmental Goods and Services.

Looking at order intake for the fourth quarter, you see a lot of copper. So this is, again, a list of orders we received during the fourth quarter, with value over EUR10 million.

And all the other orders, except one which was zinc related, were related to copper. And you see cobalt in DRC order, where we received an order for hydrometallurgical processing technology.

And from the same customer actually, we have already announced a new order for sulfuric acid plant for this year. So same project continues, and we have received more orders from them.

On the low right-hand side corner, we have quarterly development on order intake and, of course, green is representing CapEx orders, and blue is representing service orders. And there's a nice increase on both during last year.

This is telling a little bit the same information, but showing the 2 of the business segments and services separately. Looking at the mining value chain, I think we all have realized that investment starts from the mine site.

So the mining equipments having a shorter life started receiving more orders for us, and then it follows the value chain so that the Minerals Processing, which is the next step and the first step for us to come into the picture that started picking up second half 2016 and continued to go up. And then later on, you see the metals refining following.

And, of course, if you look at the orange line for orders received for Minerals Processing, you have to go back quite far to come to the same level of quarterly order intake. And I think it’s quite embarrassing because this order intake didn’t include many big projects.

This was mainly coming from the smaller size and midsized orders and high activity on those levels. And based on that, I think we also – I also mentioned already that we are quite confident that we were able to beat the market on this segment.

On Metals, Energy & Water, we, of course, started last year with a nice order in the first quarter, but then the new orders were delayed. Now we have another situation.

We see that if you divide our business in six different areas based on our business lines, three business lines in Minerals Processing; three business lines in Metals, Energy & Water, last year we had four of them with high activity and two of them with low activity, and that was the capacity that in our organization was underutilized. We did some reduction cost savings, but then the workload was disappearing as we went on.

Now there is a different situation. We have started receiving orders to these sectors, and we see that the pipeline even there is building up.

So I think we are fairly confident in saying that for Metals, Energy & Water, 2017 was the most difficult year and now we will see an improvement. We also saw an improvement in service quite gradually from already starting again 2016.

And then looking at down right side, you see the split between the recurring services and shutdown and modernization, which are typically one-off, maybe fluctuating a bit from quarter to quarter. I think what was very strong in quarter four is that we had a very high level of recurring services, actually highest since we started making these statistics from 2012.

So in that sense also, a strong contribution. Order backlog stayed – we had – in the fourth quarter, we had book-to-bill over – or backlog stayed fairly stable at EUR1 billion, of which 20% is services, and then roughly EUR750 million of this will be delivered in 2018.

And now some of the – some more of the finances by Jari.

Thank you, Markku. I need to put some numbers behind what Markku was stating.

So obviously, the order intake grew by 20% going from EUR1 billion to EUR1.2 billion. And that impacted already sales, so it improved 8% from 2016 to EUR1,139,000,000.

The service sales improved by 6% to EUR475,000,000, and share of services out of the sales remained at the same 42%. The gross margin improved from 22% to 24%.

I will go more into that on the next page where that development came from. And then adjusted EBIT improved significantly from minus EUR23 million in 2016 to plus EUR32 million in 2017.

And result for the period was slightly positive, plus EUR2 million when it was minus EUR69 million a year before. If you again look at the adjusted EBIT analysis, looking at the minus EUR23 million in 2016, we have to remember that we took quite a significant risk provision in Q4 in Metals, Energy & Water of EUR40 million.

If we put that back and also take into account that the volume increased and the margin impact due to that, we end up at a nice number, but then we come to the, let’s say, more negative, sort of, of the year, which was that we actually had a low workload in Metals, Energy & Water. We were running quite empty in two business lines during most of the year.

Despite that, we had good workload situation in smelting and hydro. It was not the case in metals, chemicals processing and energy environment.

And this impacted the result. We also had impact from the sales mix.

And then we had cost overruns in some projects. This was mainly in projects that we announced earlier during the year.

But obviously, they had impact also on Q4 because the margin went lower, and we had some sales coming out of these orders. So it was – there was some impact also in Q4 out of this.

What is positive? We stated when we had the CMD that our target going forward and strategy is that we will grow our sales and keeping the fixed costs flat.

Actually, we were able to save some out of the fixed costs. So therefore, I’m very happy that part of the strategy we actually were able to keep.

So we are going into the right direction. And as we go into the businesses, we will see a little bit more granularity.

As you could see, the order intake increased in Minerals Processing by 16%, which is nice because we had also stong growth the year before, which means we are on – well on the upside growth – on the upside side of the cycle, growing from EUR627 million to 727 EURmillion; sales also growing from the previous year’s and this year’s good order intake from EUR540 million to EUR661 million, or 22%. The service sales increased from EUR283 million to EUR304 million, or 7%.

And this had an impact that our adjusted EBIT went up nicely from EUR37 million to EUR61 million and – which is 9% of the total year. So we are going clearly into the right direction.

And with the increased order intake and – which could lead to an increased sales going forward, keeping the fixed costs flat, we should have a good opportunity of improving this number this year. If you look at Metals, Energy & Water, again, as Markku already pointed out, this, hopefully, was the bottom what we saw of the cycle.

We were able already to increase the order intake by 25% from EUR381 million to EUR478 million. We are probably at some type of changing point here.

In that way, our sales was also EUR478 million for the year-end, exactly the same number, coming down with 8% from EUR518 million the year before. So with the orders we have recently announced here and especially coming into the business lines where we were in urgent need of work, we are going into the right direction.

The adjusted EBIT was minus EUR22 million, an improvement from the year before when it was minus EUR55 million. If we consider the EUR40 million provision we had to do on one project in 2016, this would be EUR50 million.

So you could see the impact from the lowered sales during the year. Now with more even workload, going – having worked for both smelting and hydro where we have a good workload and continue to have a very good workload, also starting to get some workload in metals and chemicals processing, we need more orders that the ones what we see now.

But these are already a good help. And then as Markku stated, the funnel is growing in energy, but we don't see decisions yet.

So we hope to see some orders there soon as well, which will also help the business, as when we have an even workload in all of the different business line, then we are in a much better situation. And just to remember that the orders usually in Metals, Energy and Water are bigger, longer and, therefore, also it takes longer time before we start to see the sales impact.

Usually, we talk about six to eight months, it will help immediately the orders we are getting in the workload side, but the sales effect will come a bit later. So we will only see the impact of the last orders in Q4 and in Q1 what we have announced now in the second half of the year.

So we are going into the right direction, but it still takes some time before we are fully current. Cash flow, very positive in Q4.

We had a total cash flow – free cash flow of the year of EUR28 million, which is a significant increase from last year when we – or the year before when we had minus EUR95 million. And on the fourth quarter, we had a very strong cash flow.

The operating profit was EUR25 million. If we add the depreciation and amortization to that, look at EBITDA, it ends up at EUR65 million.

Working capital, we were slightly negative, minus EUR20 million. And then we had CapEx of EUR19 million, ending up at the free cash flow of EUR28 million.

We also have a very solid cash situation with EUR230 million. And the balance sheet also strengthened slightly.

It started to turn in the right direction. The net interest- bearing debt grew slightly.

Gearing remained the same. Equity-to-assets ratio increased by 1% and is very solid number.

And then we also – as Markku already pointed out, with the new order intake we got, we also were able to increase the advances received from EUR181 million to EUR203 million. And the balance sheet as a total came down from EUR1,427,000,000 to EUR1,346,000,000 coming up, being able to collect some advance receivables and then also we had some inventory changes.

So this is over to Markku then. Thank you.

Thank you, Jari. And then about the market outlook, going forward what we see is that market activity continues to improve.

I think we have repeated that a couple of times, still up until last year, very much brownfield with smaller projects, smaller modifications. But there is, of course, at some point, where there is a deficit in metals production, need to start investing in the new capacity as well and we expect that to start increasing going forward.

From Outotec point of view, I think what is also good – I think the challenges our customers are having at the moment with energy, with water resources and with more complex ore and decreasing rates, I think they are all, in a way, even though they are challenges for our customers, they are good opportunities for Outotec because we are very well equipped to help our customers with energy efficiency throughout our solutions, but also through our metallurgical expertise to extract metals from more complex ores and also using as little resources as possible when it comes to water, but also when it goes to tailings treatments. And, of course, there is several methods that are active at the moment.

There is a lot of discussion on electric vehicles and then wirings of battery metals [indiscernible]. Did we lose the line?

You see if we lost the line. Or maybe I'll just continue.

Okay. Yes, there was a disturbance.

Someone said that we lost the lines. But anyway, of course, these battery metals, lithium, cobalt and nickel, we are involved in most of the projects when it comes to those metals.

Also, copper continued to develop well and gold. So I think from that point of view, it's - there is continuous good opportunities for the technologies and then, also, in the - geographically, I think we will have even distribution even going forward.

And then we believe that service will continue to give us more opportunities, and I think you all remember our service presentation on the Capital Markets Day having annual growth of 10% or more. We see that there is clear opportunities to achieve that this year, and we will continue with those activities.

Our financial guidance for 2018. Sales are expected to be approximately between EUR1.2 billion and EUR1.3 billion, and our adjusted EBIT is expected to be approximately between 5% and 7%.

And then, of course, the question is, how do we bridge that from the today's or from the last year's results going forward. Of course, there is a number of components which we are working on.

First, [Indiscernible] sales growth. We expect our sales to continue to grow and follow the increased order intake.

And as we discussed and also Jari mentioned already, we plan to keep our fixed costs flat, so we will have a better leverage against the fixed costs when our sales will continue to go up. Our service is coming in at higher margins.

That we expect to continue to grow supporting this. With these new orders that we have received on Metals, Energy and Water, they are coming in to the product areas where we have had low utilization of capacity.

So we see that we have – we will have improved under absorption in – or improve absorption in those areas and then we will focus very much on project execution and best-cost country sourcing and developing that forward. So increasing sales, improving our margins and then pricing – using pricing component and controlling our cost, these are the things that we are going to use to bridge that difference.

And of course, we have separate programs for that. Addressing the topics, we introduced this must-win battle concept in our Capital Markets Day and very much in line with what I said in the guidance slide.

The topics that we have – we are running under these programs are addressing our improvement in [Indiscernible] and margin. And I think, Jari touched upon that totally, as we are going up, then we will see that our result improvement in second half of the year will be increasing.

So I think this [Indiscernible] former, but anyway. So we will be focusing on these activities to develop our company further.

Thank you.

Good afternoon. It's Manu Rimpela from Nordea Markets.

My first question would be on the order backlog for delivery that you for this year. I think it's pretty much on the same level as it was at the end of the previous year, but you are still expecting to a significant boost to your sales compared to the 2017 reported number.

So I'm just – could you just elaborate on how – where do you see the kind of sales growth coming from the announced – or the orders that you're taking during the quarter and the year because, obviously, the sales you have for 2018 is not higher in the backlog than it was at the start of previous year?

Yes. Obviously, as you could see also from the order intake we had in 2016 and where we ended up in 2017, I think you can see the impact that we have now from having orders in Minerals Processing more than service.

So a bigger share of our orders is coming from there, and the turnaround time is faster. So it's – the order intake is moving more faster into sales.

So some of the growth we are seeing and expected to see, we think, will faster turn into sales. Obviously, then Metals, Energy & Water, the larger orders that we are getting, we still assume that they will move on a slower pace.

I think if you look at 2016 order intake backlog and look at how we ended up 2017, I think very much the same picture.

Okay. That's clear.

And can you just talk about the Metals, Energy & Water then? How do you see the utilization rate and the backlog converting into sales?

Because I think your order intake in this year was equal to your sales, but I guess that it will take some time before those orders really turn into sales and some gets postponed into 2019 potentially. But do you expect to be able to increase your sales in Metals, Energy & Water in 2018, if you think about the equipment part of the business?

Let's say so that we are, obviously, not guiding for this separately. But what were a big problem during 2017 was that we were very uneven in our workload.

In smelting and hydro, we had very good work situation. It was very high workload.

But then in metals and chemicals processing as well as in energy and environment, we had very little work. And that means that the margins you get in smelting and hydro is used to pay salaries in the two other business lines.

And this is not a good situation. You rather want to see more even workload in all three of them.

That would be a much more preferred situation. And this is what we expect will happen this year that we will see more order intake in the metals and chemical and in the energy side, and that will then help us by having more even workload, which was really one of the big problems out of last year and which impacted our results.

Okay. And then on the operational leverage that you have in the metals and energy water divisions, I mean, your sales were EUR140 million in this Q4, and it was clearly up compared to the third quarter, for instance, with the higher services content, but still the EBIT was unchanged.

So why didn't we see any fixed cost leverage in the quarter compared to Q3?

Actually, coming from the same explanation as I already did, we were kind of going into deeper and deeper situation in metals and chemicals and energy and environment as we did not get enough orders. So let's say, the problems deepened towards the end of the year.

So despite smelting and hydro was improving, also we got into a tougher situation. What was helping that a bit was, we were cutting costs throughout the year, but kind of we were chasing this problem throughout the whole year that our – we have problems with recoveries and the under absorption.

And now it’s really, really a good help that we start to see some orders. We need more orders than one we have announced, but it will be a great help because what it means is that salaries what have been paid out of the fixed costs now can be paid by the customers.

So it will be a good help each and every order we are getting in these two business lines. For the sake of clarity, I think these two orders that we have actually announced this year, EUR32 million extension to DRC and then what we announced today, the pelletizing plant to China, they were both going into the metals and chemicals business lines.

So work directly where we had an under absorption.

Okay. That is clear.

Then the final question. Can you just talk about the – how do you see the Minerals Processing?

Are you seeing that the demand is currently driven by replacements? And are we seeing that the replacement kind of order intake has reached – or can you compare where we stand against the previous peak, for instance, because we’ve seen some of the other competitors in the underground space talking about that we are starting to near kind of very high levels of replacement demand and that could actually start shrinking.

So are you seeing any similar type of challenges in the replacement part of your business?

What we see is that it will continue on a higher level. If you look at Minerals Processing order intake last year, quarter-by-quarter it increased in most – all categories.

Of course, if you look at the announced big orders, they are a bit swingers between the quarter. So it’s somewhat difficult to compare quarter-to-quarter.

But what was underneath non-announced orders, midsize and smaller, they actually continued to increase throughout the year. And we see a good outlook for those orders going forward, but we also see that there is bigger orders in the pipeline for 2018.

Thanks very much. Good morning everybody Alexander Virgo, Bank of America Merrill Lynch.

I just wanted to ask about consumables pricing and the competitor dynamics. We just heard one of your key competitors talking about how they walked away from business because pricing was too unfavorable for them.

So in a number of instances on the mineral side, I’m just wondering if you could comment anything that you’ve seen and the competitor dynamics that you’re seeing in Minerals Processing in particular. Thank you.

Of course, there is always competition and high competition on the market, but we didn’t see any extraordinary. We actually were able to increase our pricing during 2017 on the spare parts and ware parts on that segment.

So don’t want to comment on other company’s result or achievement. But from our point of view, we didn’t see that the competition was increased in 2017.

I think we had even some room for price increase.

Okay. That’s helpful.

And then secondly, just – the line cut out for a fair period of time, I’m afraid. So perhaps you answered this, but we were unable to hear.

But I’m just wondering if you can explain the EBIT margin deterioration in Q4, again, if you did.

For some – one of the business units or for the segment

I guess, overall, generally. But if I look at your EBIT bridge, you call out low workload in MEW, so I understand that.

Just wondering if you could talk a little bit more perhaps about the cost overruns maybe and whether or not those have been resolved now in terms of, I guess, whether or not you think that’s something we need to bear in mind when we look at next year.

We were already announcing in some of the earlier quarters that we had these cost overruns. There were none – nothing to mention as such in Q4.

It’s more that the same orders continued to progress, and we got sales out of them. And as they had had cost overruns before, that sales came in with some lower gross margin.

That had some impact on Q4. But more object, let’s say, the gross margin changes itself happened in the previous quarters.

And these were related to – we had some new businesses, new technologies what we started to sell beginning of the year, and we were actually quite successful. We got a number of orders and then we learned that we had some extra costs in those deliveries.

And as there were a number of orders, they were not a lot of costs, but some cost increase in a number of orders actually led to that. It had impact on the year result.

And this is why we felt we needed to tell that. I think, in those ones, we believe we’ve learned our lessons and changed the pricing accordingly.

And – but to always mention, we are in the project business, and there is always an element of risk in projects compared to selling a spare part. On that note, I think also you noted that we have a program, must- win battle, which is called Project excellence.

So I think from that you can also read that we are seeking to improve how we can do our projects also going forward.

Okay. Understood, thanks very much.

Very helpful.

Hello, this is Tomi from SEB. I just noticed that you have removed sort of usual comment that you have difficulties to foresee timing of booking larger orders.

Can I just get the comment does it reflect your confidence getting larger orders from the pipeline?

Of course, at the end of the day, it’s always – you could always have that comment or always take it away. We can never 100% surely know exactly when things are moving.

But we do feel that there is a more positive development on the market when it comes to bigger projects and that’s why we consider that we take it away. In foreseeable future, there will be more decisions on bigger projects and that was the reason why we took the comment away.

Well, understood. Secondly, just if you could comment the pricing of your new orders what you are taking in.

Is it improving steadily or can you comment on that?

Yes. What – it’s always difficult because this individual projects and cases, they are priced individually.

So at the end of the day, what we’ve said, one of the levers in the profitability is the mix, what kind of orders you get in. But having said that, we – on the other side, we do not see an increased pricing pressure.

So I think we are able to maintain pricing and in some areas even increase. I think that is what we do, and we are definitely not interested of taking business with lower margins at this stage.

And if I may ask on the AMG lithium project. If you could comment just whether it’s still in the pipeline or has it gone someone else to your competitor?

We usually don’t want to address these type of questions. I think then you will see it when AMG will announce at that time.

But so far, I think they have not announced anything.

But can you comment, are you still working on the possible project or have sort of – has that slipped away from your radar?

No. We got the pre-engineering contract end of last last year, which they announced, and we said, yes, we have it, and we are still working on that pre- engineering contract.

So I don’t want to state any more on that one, but we are still working on finalizing the pre-engineering.

Okay. Thank you.

Andrew Wilson from JP Morgan. I’ve got 3 questions, please.

On the service levels in terms of orders, and I guess, sales as well in the Q4, is there any seasonality to think about in terms of order development? And kind of how does that – how should we think about is a runway as we kind of look through in Q1, Q2 and 2018?

Is it fair to assume that you can maintain, I guess, orders and sales at the same kind of level we saw in Q4?

There is always some seasonality and, particularly, when it comes to these kind of one-offs when it comes to shutdown services and bigger modifications. They are not coming equally in every quarter.

And that is – same is valid for the spare and ware parts and other services. Normally, quarter 4, when you are closing the year, is a strong quarter.

So there will be some quarterly fluctuation for us vis-a-vis we aim at, and we believe we can grow – steadily grow service business going forward with the rate we announced last year saying overall in average more than 10% per annum.

And in terms of to clarify on Alex’s earlier question on the kind of pricing dynamics in consumable. To what extent you offsetting – if you kind of compare prices to cost, are you more than offsetting any raw material headwinds you’ve seen in the year, so when you’re putting prices through, are they offsetting – more than offsetting the cost inflation?

Of course. So it’s – we should note then it’s difficult to forecast going forward what will happen with raw material costs.

So – but if looking back and looking 2017 outcome, there was a contribution from our price increase. So we definitely can say that price increase has exceeded the cost increase.

Okay. And just trying to get some in 2010 in terms of margin development.

I don’t know if you said this in as you were summarizing because the line got cut off. But if we kind of think about sort of bridging 2018 versus 2017, is there a simple as additional volume improved execution?

And then, I guess, probably some incremental cost savings you see continue to drive efficiencies in the business? I mean, is it as simple as that in terms of how to think about kind of the outcome for 2017 and then if we need to get to the, for example, the midpoint of the 2018 guidance?

It was a pity the line was cut off because that was explained when we were discussing about the guidance, but I’m happy to repeat what we said. There is a number of elements in that.

Of course, sales growth, we expect the sales to continue to grow and follow the order intake that is increasing. And our aim, as we have also communicated earlier, is to do that without increasing the fixed cost.

So there you have one component. We expect our service business, which comes in at the higher margin, continue to grow.

We’ll have or we believe we will have improved absorption on MEW. They have had very low workload in some of the business lines in 2017.

Now we have already received new orders for those business lines, and we expect to receive more. So that will help.

Jari mentioned project execution, really making sure that we don’t have – even when it comes to new technologies and new products to be launched that there is no margin erosion. And then, of course, last, but not least, continual efforts in best- cost country sourcing and taking cost away from our purchasing basket.

Okay. That’s very helpful.

Maybe just to clarify then on one of the points you made. The anticipation is that you would have a positive mix in 2018 [indiscernible]

I’m sorry, the line was breaking. But could you repeat, please?

This is me, Antti from Danske. I wonder why did large orders delay.

That's what you say in the presentation. And why is it that you now expect that you’ll get them in 2018?

So what's driving that?

I think why they are delayed and then, of course, maybe that is a question to our customers rather than to us. Of course, we would like to have them earlier.

The confidence that we have in receiving more of them now is simply where we are with the negotiations with some of the projects. And also, there is, as I said, or we both said, we have already received orders this year for these business lines with lower order intake.

So just purely seeing what projects are in the pipeline, where are we in the negotiations. But then at the end of the day, it is decided by the customer when they will accept that they will place the order.

And can you give us any flavor of what are we talking about? Is it – did you say that we get – or you get EUR500 million big orders this year?

Or are we talking about double-digit EUR50 million here and there? What's the scale we should be thinking of?

We’re not guiding our order intake, as you know.

Okay, thank you.

Hi gentlemen. Just a quick follow-up on the first question that was asked about backlog for 2018.

Am I right in thinking that the midpoint of the guidance implies transactional business in a year or something north of EUR500 million, which would be another sort of 30%-odd growth on the number you delivered in 2017 which I think was more about EUR400 million, if I compare it to the backlog for delivery in the next 12 months this time last year. Just can you explain to me what you think is driving that?

Is that purely just the service business growth or there must be more in there? Is there anything you can talk about?

Yes, there is – of course, growing services is one element, but maybe the line was cut off already by then. I think Jari explained that as well when we see our back order list going forward, there is orders that we receive.

In Minerals Processing, they are converting in the sales faster than MEW orders, which normally takes longer time. Projects are bigger, and it takes longer time to complete.

So we – the remaining balance will come from the new orders, mainly for service and for Minerals Processing. Of course, some early orders on MEW received during the first quarter and early part of second will also contribute, depending on what kind of orders we receive.

But I think the simple answer is, yes, its new orders coming in this year.

Okay thank you.

Okay. Thank you, operator.

That was all the questions this time. So thank you for participating.

Thank you, and have a good day.