Metso Corporation Unsponsored ADR

Good afternoon, good morning, everyone. This is Juha from Metso's Investor Relations, and I want to welcome you all to this conference call where we discuss our Fourth Quarter and Full Year 2024 Results which came out earlier this morning.

The results will be presented by: our President and CEO, Sami Takaluoma; and CFO, Eeva Sipilä. And after the presentation, as usual we will have the Q&A session.

Before we get into it, I want to remind you about the forward-looking statements, we will be making in this call. And with these words I'll hand over to Sami.

Please go ahead.

Thank you, Juha, and good afternoon, also from my behalf and welcome to this call where we look at the Q4 performance. Highlights for the quarter: Market activity was very much in line with our expectations, and we continued to have minerals equipment orders coming through from the funnel that we have.

And for the quarter, we were having the healthy adjusted EBITDA margin of 16%. And also, we were delivering strong cash flow from our operations during the quarter.

Looking at that from the figures point of view, so orders received comparing to the 2023 last quarter, they grew by 13% and sales was then declining the 5% from the previous year last quarter mainly because of the order intake slowness in the past. Adjusted EBITA was €203 million that was 10% below the last year number bringing that then to the relative €16.0 million; and operating profit €167 million; and earnings per share from the continuing operations in the quarter four 2024 was €0.13.

Cash flow from the operations that was growing 32% compared to the year before €286 million. That was in the nutshell of the Q4 key figures.

Looking then for our two segments starting from the aggregates, where we were keeping the profitability remaining very healthy level in that sense. Orders received comparing the last year end of the year, more or less the same level €294 million.

We did have one acquisition that we did for this segment and that was giving the support for the order volumes as well. Generally, we do see that the Mobile Equipment market, especially is soft and remains soft at the moment and both equipment orders and services orders were down by 1%.

Sales similar story more or less at the same level than one year ago €290 million now. So services share no changes there either.

So we remain in 35% of the sales coming from the services. Adjusted EBITA despite the lowest cycle of orders we are having €46 million for the quarter.

That is giving us the margin for the segment 16.0%. And this is a result of very active cost management how we have been able to maintain the healthy margin level for the segment aggregates.

Then looking at the Minerals, where we did see the strong equipment orders coming through in the Q4 continuing what we started to see in the Q3 already. So the orders for the quarter close to €1.1 billion, a significant growth for year before.

Heavily this was driven by the copper and gold customers that clearly started to be more active in releasing the orders. Equipment orders grew 40% and the services orders grew 3% in the quarter comparing the previous year.

Sales was €982 million. Services was 4% down from the year before and equipment 11% down.

The share of services, because of the product mix was now then moving to 64% comparing to 62% year before. Adjusted EBITA for the Minerals segment €167 million that gives the margin of 17% exactly the same as it was year before.

Same story here, we have been maintaining the resilience for the quarter margin by having active cost management and also sales mix was supporting this quarter. Worthwhile noticing that, in the Q4, Minerals segment numbers we have a few million additional warranty costs that were identified at the end of the year and these are one-off costs that we now recorded in.

And then, for the proposal that the Board has made is to increase the dividends. It's now 64% of the EPS, from the continuing operations so €0.38 from the €0.36 previous year.

And as normal, we do it in two payments one in May and one in October and the total payout value with this proposal is €314 million. And then, Eeva, if you continue from here.

Thank you, Sami. Good morning.

Good afternoon, to all on my behalf as well. Building on what our CEO already discussed, I'd make a few additional comments on group income statement.

So Metso's operating profit margin for 2024 was 15% so a notch up from the previous year, despite the fourth quarter including some €19 million of non-recurring costs mainly from capacity adjustment costs in Minerals. The net financial expenses continue to be very stable and ended up with exactly the same €80 million figure, as in the previous year.

Our effective tax rate for 2024 was 25%, well in line with our expectations. The earnings per share for 2024 from continuing operations were €0.59.

On a quarterly level the graph on the right illustrates, that the result from the discontinued operation was clearly positive in the fourth quarter, after the big negative in Q3. The businesses under divestment delivered a positive result for the quarter, and that is supporting of course also the result.

Even more significant, however in the fourth quarter was that we received confirmation that the Q3 business termination costs are tax deductible. And we booked the full deferred tax asset on it and hence the positive outcome for the discontinued operations.

And this really hence closing partly the gap between the two earnings per share figures for the full year. Regarding our group balance sheet, the total assets at €7 billion were slightly down from the end of September, and €140 million down from a year ago.

Non-current assets are up following investments in both organic and non-organic growth, while current assets are down. Some of you have followed our inventories closely.

So indeed we did deliver a reduction in them, some €50 million during the fourth quarter which equals well to the change from end of 2023 as well. Now considering the need to finance, the business termination of that took place in September we are satisfied that our interest-bearing liabilities or gross debt if you may, was up less than €80 million in the year and down during the fourth quarter.

With the second chunk of the dividend, consuming some €150 million of cash in the fourth quarter the net debt remained flat at €1.2 billion from the end of September. Group cash flow from operating activities, for the fourth quarter was strong at €286 million.

We made half of the 2024 cash flow of €576 million in the final quarter. Continued healthy profitability and a release of cash from net working capital contributed to the outcome.

I would conclude that, delivering clearly better net cash flow from operating activities in 2024 versus 2023 is a good achievement, if you remember the one-off cash flow of €275 million in discontinued operations in the third quarter. Moving to my final slide on our financial position, I already touched on cash and net debt, noting just that liquid funds consisting of cash and cash equivalents amounted to €431 million at the end of December.

And the final thing to mention on the funding side is that during the fourth quarter, we drew half of a new €150 million loan. Our gearing was just below 45% and debt to capital just below 36% at the end of the year.

And with that, I would hand it back to you Sami.

Thank you Eeva. Let's then take a look at the sustainability a little bit of our outlook and the management agenda for the first half of 2025.

Our sustainability KPI dashboard Metso Plus previously known as Planet Positive. Metso Plus is our value-add offering to our customers including the sustainability impact.

Our target there is to grow this portfolio faster than our overall sales. Well, now in 2024 it was not really growing anything and -- as explained and also the product mix that we had was then putting this number to the red in our KPI measurement.

However, I need to mention that the positive order development that we have been reporting here now in the second half of 2024 is changing this KPI back to the green again. The second one is our net zero where we are doing our actions to make our operations net zero by 2030.

We are spot on in the target. We have reduced 72% our CO2 emissions until this date and that's a result of more than 45 CO2 and/or energy savings projects that, we have already completed and we continue these projects during 2025 as well.

Logistics CO2 emissions target is to reach the 20% reduction by 2025 which is this year. We had a good progress during 2024.

But that said, the hockey stick that we need to do during this year is quite significant but we will continue with that one. This is of course the team effort with our logistic partners to get the CO2 emissions down for the logistic supply chain lanes.

And then the spend from the suppliers who are committed to the science-based emission targets. There our target is to reach at the end of this year 30% of our suppliers to be included and I'm happy to report that already at the end of 2024 our achievement is 31.1% which means that we will achieve our target and go beyond.

And during last year we had close to 140 new suppliers that enrolled to the SBT is together with us. From the market outlook perspective, we expect that the market activity in both Minerals and Aggregates will remain at the current level.

And as a reminder, what did we say previously was that both Minerals and Aggregates will remain at the current level. That is our market outlook.

And then for the management agenda for the first half of the year. Obviously, the market is offering some potential and our target is to maximize our share of that potential.

We have seen good development in orders coming from the gold and copper companies in the minerals side and we are working with several projects with the copper and gold customers as well as other commodity customers as well. So that is really where we put our effort now from the management to make sure that we do max out the potential that is out there.

Improving the safety performance is something that we have taken even strongly to our management agenda working to build even stronger safety culture within Metso. And that means that we want to keep our own employees safe.

We want to keep our contractors safe and we also want to keep our customers safe that we work with. That is our mission and clear focus area for the first half going forward.

We continue our work in normalizing the inventory levels. We did see the good development now in the Q4 as expected and we will continue that work as communicated earlier.

We have started our strategy process and we will run that throughout the first half that will pave the road for the Metso's success then in the future years. And as communicated earlier this year, we will have a CFO transition.

This is Eeva's last call here with me and we will then make sure that it is seamless and effective transition when Pasi Kyckling will take over the CFO role in Metso. And I cannot emphasize enough the importance of the company culture, which is in a very good shape, but there is always areas to focus on and further strengthen the great culture that is delivering then the results for the customers and for the company's results as well.

Thanks Sami. Thanks, Eeva.

Before we jump into Q&A, let me share some save-the-date information. So, we will have Capital Markets this year.

Like Sami said, the first half, we will spend in going through our strategy. And then we will discuss the outcome of that process in our Capital Markets Day which is planned to be arranged on October 2 this year.

Location will be Clarion Hotel at Helsinki Airport. So, it's a good site for both our local audience, as well as for anybody who's going to travel from abroad.

So, this is Save the Date, so please mark in your diaries and we'll follow up with more information in due course. But now we are ready for the Q&A.

So operator, please open the lines.

Hi guys. Thanks for taking my questions.

I have 3 please. So firstly, it's just on the Minerals market given the very strong Q4 orders.

Can you please comment on how the underlying pipeline is looking versus say three or six months ago? Is the pipeline now stronger?

Or is it that you're just seeing the orders finally coming through from the pipeline?

Yes. Thank you for the question.

The pipeline is strong as has been communicated. These orders that we have been now receiving both in Q3 and Q4, they are of course coming from that pipeline.

And while they are removed from the pipeline, there are new opportunities that come into the pipeline. So, more or less, I would say that the pipeline remains the same despite these orders now released from the pipeline.

Perfect. Thank you.

And on my second question, just on Mineral services. So there's obviously still weakness in rebuild and modernization.

Do you still expect this slow decision-making to persist in 2025? Or like equipment do you see orders starting to pick up?

Yes, there is a certain cycle with these ones always and it's also linked to the mining customers not wanting to have the extra shutdown to install the upgrades. So from that perspective, when the spot prices of gold especially, but also copper are quite strong.

So certain amount of hesitation will continue when the customers calculate the right time to make these installations and that is then reflected for the order situation. But then on the other hand, there is already kind of like a buildup for the backlog for those.

So the expectation is that 2025, we do see those orders coming in as well.

Thank you. Very clear.

And my final question is just on the contribution of acquisitions in -- on orders in Aggregates. So the contribution was around €18 million this quarter.

And can we expect this level of orders for the coming three quarters? Or was there some seasonality in the acquired businesses?

Thanks, Chitrita. The – obviously the acquired businesses such kind of are similar to what we have and hence there are certain seasonality patterns.

Now perhaps just one note that the Infrastructure Recycling business is one where also sort of natural hazards have their play. So there was some benefit in the order intake due to the hurricane season in the US.

And those of course we cannot really predict but typically are more in the – we would expect perhaps less of them in the Q1. But then the – otherwise the seasonal uptick should be quite similar.

So that would – yes, that's how I'd answer.

Thank you very much, both. And good luck, Eeva.

Hello. Thank you for taking question and thank you for the presentation.

I have just one. In the press release you made this comments on the market activity for aggregates remaining at the level of the previous quarter and you say that you have not seen yet the anticipated positive impact of the spring season.

I was wondering if you could give us a little bit more color on that why this is the case? And if we should expect an improvement later in the year?

Thank you.

Yes. Thank you.

That's how it is. And normally the seasonality would be starting to be visible now at the end of the Q4.

And this year, it did not come visible for us. And there is a reason for that that there is certain amount of inventory in our distributors that are taking the first wave of the seasonality orders.

So that's the reason why we do not see that seasonality in Metso yet.

Thank you very much.

Thanks for taking my questions. So the first question is just on the large order you received from the gold processing plant in Turkey for €70 million.

Could you just confirm whether this was booked as an order in December or whether it's going to be booked in January?

Yes, Edward, that was booked in December.

Okay. Thank you.

And then secondly just on the – and there's a fire at the Gresik smelter in Indonesia. Can you just let us know what has been the outcome of this and whether there are any potential liabilities?

I know Freeport said in the earnings call in Q3 that it should be covered by insurance but I just wanted to confirm if this is the case.

Yes. Obviously, we leave that to the customer to comment.

But indeed, we're sort of working very closely with Freeport on the case to ensure as fast as a ramp-up as possible. We obviously need to replace some of the equipment that was impacted and we're working very hard to speed up all of that work.

And yes, indeed, just to sort of – everybody is better off if they are able to ramp up very quickly.

Great. Thank you.

And then just final question. You mentioned the warranty costs relating to certain consumables deliveries within Minerals.

Is this simply just a standard warranty provision that you booked? And could we take this to mean that you've had a good quarter when it comes to consumables deliveries and that you've basically reduced consumables inventories, which has clearly been one of the sticking points with your inventories in recent quarters?

No. Unfortunately, these costs are sort of real warranty costs.

We had a few cases where we had to recall because of insufficient quality and then sort of replace with the correct quality. And these sort of recall cases are typically sort of from our point of view kind of out of the ordinary so to say.

And obviously one-off by nature in a way and those costs then impacted the result. In the underlying business, there were no sort of specific adjustments like that.

So this is really, a few specific cases unfortunately, that materialized.

Okay. That's very helpful.

And actually, sorry, just one final one. I know, I've taken a lot of questions already.

But just the reduction you've had in inventory so far, I think you mentioned kind of €200 million-ish as a short-term target. In light of how you've performed this quarter, is there any change to the sort of short-term target?

Do you think perhaps, you could actually get an even greater decrease in inventories?

No, change. This is the program that we are running and these were the results in the Q4, and we continue that program to the finish line.

Great. Thanks so much for taking my questions.

Thank you. Hi Sami and Eeva, Klas at Citi.

So first on the inventory reduction, which is good to see. Can I ask you for the volume number, i.e.

ex M&A and FX? Because, I assume it was larger than the reported number in the balance sheet that you had M&A adding to it.

And just on the previous question, there target still €200 million. It looks like you're annualizing around €300 million.

So just to confirm as well, that this is more supply chain improvement, warehouse optimization, driving this rather than any production cuts? I'll start there.

Thank you.

Yes. Sure, Klas.

So indeed the couple of acquisitions in the fourth quarter that basically, we closed in early October. So their impact in the Aggregates inventories was some €24 million.

So in that sense, the real inventory reduction is indeed sort of the 50-ish plus that. And yes, the currencies had a negative impact on several lines not least on orders and sales so sort of a bit of that.

But they of course, they come and go. So, I think the sort of -- maybe the real way to look at it, is just looking at the change and then the sort of nonorganic addition, which you rightly point out.

Now, then on to sort of your second question, obviously, it will depend on the market environment. We've been quite clear to say that, despite the sort of slower start on the execution of the actions in roughly a year back or summer last year, that now we're very focused to deliver on this program by the second quarter, and then in a way to see where the especially in Aggregates the cycle turns, because if we would there is a positive scenario where the US market starts to pick up and that of course then could sort of impact a bit on what we can and should be doing.

But these are really related to so-called Excess, if you may and kind of just us ensuring that we don't have unnecessary buffer stocks, and cleaning them sort of through the sort of normal sales.

Okay. No, that's good.

My second one is on Minerals, service orders. Can we talk about the moving parts here, behind the mid-single-digit growth ex-currency?

We're seeing production at miners increasing a lot at the moment, on the copper side. Are you seeing spares wears consumables picking up versus sort of shutdown services, still being slow to come through?

So shutdown is then going to add to it basically, just to confirm the moving parts.

Yes, that's quite a good analysis of the market situation. So, there is a good activity of running the crushers mills and the processes and that requires the standard amount of wear parts consumables, and then also the standard spare parts, if you put it so.

And then, on top of this, day-to-day services sales there are these larger upgrades and modernizations that come to the question.

Good. My final one, promise to be quick, is on the aggregate side and the seasonality sort of taking up by the dealer inventory first.

When you look at dealer inventories particularly in North America, speaking to others at least, they're saying that we're coming towards an end, towards not at an end, do you see that as well? How many more quarters of destocking do you think we should expect there?

I mean it's been extraordinary in terms of the preordering or the overordering if you like and then the very, very long destocking. Final demand U.S.

construction doesn't seem to be a big problem. So, when the destocking ends there could be quite a lot of growth there.

I'm just curious on the timing. Thank you.

Yes, I think we've sort of guided earlier Klas that kind of we would think that as kind of needs to run the sort of first months of the year in a way to get the seasonal impact a bit kicking in and then towards the second quarter on the optimistic scenario, you could see -- start to see an impact of that. And then the sort of more cautious scenario is that it goes into the sort of second half.

So, I think it's moving along those lines. I mean and sort of the -- we have certainly seen some -- the inventories move in the right direction in early part of this year.

But still of course as you will appreciate there's a lot happening in the U.S. currently on a daily basis.

So, the sort of we would sort of shy on giving much sort of estimates on that.

Make sense. Thank you.

Yes, good morning Sami, good morning Eeva. I wanted to ask about the Minerals business.

Aftermarket was 66% of the revenue mix in 2024, but you had a pretty strong equipment order print for Q4 meaning that aftermarket was just 53% of the orders in the quarter. If we see that sort of 50%, 55% service mix continue given the strength of potentially an OE upcycle, do you think that can limit the margin expansion potential for Minerals?

Or do you think that margins can continue to rise?

Well, I think the quarterly numbers are quite volatile in a way. And as you've seen so we indeed had a very, very good quarter on the equipment.

Now, obviously, the margins are higher on the aftermarket side. Then again just having enough volume sort of coming through from a leverage point of view is not something to ignore on the equipment side either.

So, I would -- I think our sort of base case is an expectation to start to see the services side pickup and it was a bit worse hit by the currencies as well. So, the underlying number is more flattish than anything else.

But yes, so I wouldn't sort of still say that we're in for a scenario of 50/50 business but even despite this one quarter.

Okay. Maybe just moving to inventory €1.9 billion in euro terms 143 days.

Can you just help us around the thinking here? I know you've got basically this €200 million efficiency target and that's 50/50 split across the two segments.

But how do we think about that inventory days figure across the two businesses Aggregates and Minerals? And then how should we think about the sort of structural potential for inventories in the long-term?

Well, because of the rather sharp decline in Aggregate sales if one compares sort of 2023 to 2024 obviously the days look a lot worse in Aggregates and Minerals, which is impacted as well. But -- and hence the sort of the -- kind of the signal value of the days of inventory is somewhat sort of affected really by that sort of these big swings and our program what we're driving is therefore really based on absolute sort of stock amounts and focused actions on that.

And just to sort of avoid any doubt on that -- because of course what we consider excess from a supply chain point of view, it doesn't immediately change even if the sales pick up and the days would certainly look better. We might actually look at more need to then think of prepping up on the component side and then work in progress obviously could will -- then follow.

So, that's maybe on that. But maybe sort of, Sami, you want to comment on the sort of structural potential from your point of view?

Obviously, the strategy work is ongoing in a way and this will be one of the angles to look at.

Correct, Eeva. So we are working with the strategy.

We are looking, obviously, the growth opportunities and the road map for that. And then inventory plays a big role in our business development in many ways, because we are in the business where especially, the services that does require the inventory and it needs to be the right inventory in the right location.

And the same applies also very much for the Aggregate Equipment as well that the speed of deliveries in certain time of the business cycle is critical. And that's why it's going to be part of our strategy work in very much for the future.

Okay. Understood.

Maybe just a final one, if I can squeeze it in. Are you able to quantify the magnitude of the warranty impact in the quarter?

And then just opine on why it wasn't treated as a one-off?

Well, personally, quality issues can happen in a business as part of -- no, it's not something we like and not something we plan for but I still would have a high bar in sort of labeling them nonrecurring in a way. We focus on the nonrecurring really on capacity adjustments real sort of bigger changes in the business model or how we do.

So to me, it's very obvious that they are part of the normal cost. And it's -- we're talking roughly around about €5 million impact.

Thank you very much.

Hi, guys. It's Antti from SEB.

I only had one follow-up question on the previous one on the Minerals sales mix and sales levels in 2025. I mean backlog is fairly flattish and equipment orders as well on 2024 but quite back-end loaded.

So how is the revenue contribution from Equipment side? Is it more tilted towards, let's say, this year's back half and going into 2026?

Or how does it contribute on the sales line on Minerals?

Thank you, Antti. You are right.

It goes to the second half of 2025 and quite many of these orders also go for the first half of 2026.

All right. And then the second follow-up was actually on the inventory side and maybe seasonality.

I mean, I see that you cleared inventories on the second half but is there kind of a seasonal support also from the aftermarket business in a sense that you maybe order more on the first half and then deliver on the second half? And if we go into first half of this year will that curtail a little bit of the working capital improvements and inventory reductions on the Minerals consumable parts side?

Well, I don't think we -- as I said, when our activities are really based on sort of -- a rather sort of deep bottom-up work on ensuring availability and then defining excess and working on those areas specifically, they're not so impacted by seasonality. Where I see seasonality having impact is really in Aggregates where, as discussed earlier, it -- obviously, we had some limitations on how much we could reduce inventories in the slow months of September-October-November when the just demand overall is on a lower level.

Now we clearly sort of made starting to see a bit more progress. So that -- but that's really on the Minerals aftermarket based on kind of where our actions are on.

If I continue a little bit of the Aggregate base…

Okay.

If I continue a little bit of the Aggregate segment, services, inventory. So yes, the high season in the Northern Hemisphere being the summer months then there is a need for consumables and spare parts.

But then there is also the off-season when there is a lot of maintaining of the equipment by the customers happening. So that's reducing the seasonality if we compare to the Aggregate equipment.

Okay. And then this year on the Aggregates equipment side, it would be more like Q2, which would then enable you to clear a little bit of that equipment inventory if the Q1 is still kind of driven by dealer destocking?

Indeed, yes.

Okay. Thank you.

Good morning. Thank you for the question.

I wanted to have another go at the Minerals margin question that you asked earlier, because there is clearly a bit of a potential shift in terms of the OE versus aftermarket. So I mean as we look into 2025 and 2026 and you think about potentially some small shifts in mix, but there will be some what you're looking to do in terms of inventory management.

Can you just talk through how we should be thinking about the margin situation in Minerals in particular as we look over the next couple of years and the puts and the takes around that? Thank you.

Well, I think one angle, which maybe sort of I didn't answer properly in the first time and then just referring to the second question. So if you are looking at sales and then sales margin for 2025, it is really good to bear in mind that the revenue recognition of these capital equipment that has now been coming a bit in a bigger wave in the second half of last year their impact, nevertheless, is really over many, many quarters and into 2026 like Sami said earlier.

So I wouldn't just pick that if we have a quarter where in order intake the balance is more 50/50, I wouldn't use that as a proxy for sales mix because indeed the aftermarket is really -- and can and will act quicker. So that's maybe a comment on just this year if you're thinking of sales margins in 2025.

On that and then, obviously, as I said if we there is an element of aftermarket also moving forward if these bigger projects start to move, there's also an aftermarket element. So what I think what we've been missing really is this modernization and a slightly bigger project type of aftermarket work for the reasons discussed earlier.

And in a way there is no reason why we wouldn't start to see an improvement in them in 2025. And that, of course, then can quickly balance this question of mix if we think about 2026 mix.

Obviously at this point very early to have a view on the mix of 2026. But as I said I think it will be more balanced than it now looks based on this quarter.

So I wouldn't draw too many conclusions.

Okay. Fine.

But then if we think about the margin overall outside of mix, can you talk a little bit about the dynamics over the next couple of years within Minerals and what we should be thinking about obviously outside of mix that you've just commented on?

Yeah. We have very clear initiatives and road maps already in place, which we have been conducting.

So we are looking to create internal efficiency in the capital side by pre-engineering and productizing more the work there and same way then making sure that we remove all kind of waste in the internal processes and make sure that we are very valid in the marketplace when it comes to the pricing. So from that perspective, the outlook for the future is that we will continue the work in the Minerals segment as well when it comes to the profitability.

Okay. Thank you.

Yes. Hi, everyone.

Thanks for taking my question. I just have one left and it's about the market outlook for Aggregates in North America.

And I noted that one of your big competitors specifically called out improving sentiment in US infrastructure a couple of weeks ago. So I'm just wondering if you're seeing a similar trend there?

Thanks.

I think the optimistic view indeed is that. And I think we clearly saw the impact of the uncertainty around the election impacting in the second half of last year, and now that as things start to clarify and certain initiatives and programs move forward.

The underlying economy is, obviously, showing also quite a bit of strength. And as the demand -- end customer demand is there.

But yeah, as I said it's been a sort of turbulent few weeks. So just maybe being a bit shy on trying to sort of portray as experts on the US economy.

But yes.

Thanks, very much.

Yes. Thanks very much.

I have a few questions if I can start with demand. You obviously see a stable demand.

And I was just wondering, is it across commodities? Is it gold stable, copper stable, iron ore stable?

Or there are certain variations between all of them? And in particular, I'm interested if you are seeing any signs of this current very favorable gold prices and gold profits actually starting to translate into more orders and more business for Metso?

Yeah. I think that's correct.

Market outlook means that there is an activity level within the customers in those commodities you just mentioned, and we do see that that will remain on the same level as we have seen now in the Q4 for example.

Understood. That's helpful.

If I can ask another question on inventories apologies for that. Can you specifically let us know whether this reduction in inventories was at least partially driven by finished goods inventories?

Where do you see specifically finished goods inventories versus the levels you actually want to get to? And whether there are more finished goods inventories in Aggregates Minerals or both?

Indeed, our actions Vlad are very focused on the finished good inventories, and hence that's -- yes that's really what we're following and that's where the change was evident. Then Minerals as a business has -- on the capital side has very little inventory as such.

It's really in mining in the aftermarket where the requirements obviously also from the customers are such that that exists whereas in Aggregates the inventories are on both the capital and the aftermarket side. So that obviously that sort of structural difference is not going away and is hence why we mainly talk about Minerals aftermarket and Aggregates equipment when we -- or Aggregates as a total when we talk about the inventory issue.

Understood. Thank you.

My last one would be a housekeeping one. Obviously solid free cash flow in Q4.

To some extent it was assisted by this €54 million inflow from discontinued operations. What's the nature of this €54 million?

Because obviously it's a big number for the scale of this discontinued operation?

Yeah. I touched it Vlad in -- earlier in my presentation and there was cash flow-related items.

The businesses were in positive territory. And then the bigger impact was really a deferred tax asset booking of the Q3 business termination cost.

And that, of course, is not fully cash although it meant that already immediately in the fourth quarter, we were paying less taxes in the US. But obviously that sort of amount will be consumed over the over a longer period and then support cash flow in the coming quarters as well.

That's super helpful. And sorry then final clarification one on this.

Should we expect a meaningful positive free cash flow from discontinued operations through 2025 as well given what you just suggested there?

No. I think we're very focused on hopefully concluding the divestments and then having that sort of row hopefully disappear from the books totally.

But then otherwise in a way the time they are in I think we're doing our best to run the businesses with a small profit as you -- but now I think this really this third quarter fourth quarter results are somewhat specific and this magnitude will not repeat itself. This is really specific now on the termination cost.

Very helpful. Thanks very much.

Hi. Thanks.

I have two questions. First on Aggregates.

So what if there will be end of war in Ukraine, what kind of impact could that have on the Aggregates demand? And what kind of exposure do you have in that region?

Yes. Obviously, the rebuild of Ukraine is by all sources.

It's going to be one of the largest infrastructure project in the whole Europe after second world war. So there is definitely a demand for recycled Aggregates, and also all type of Aggregates to be rebuilding the buildings and roads and airports and so on.

So that is offering quite a lot of work for Aggregate equipment and operators.

Thanks. Then secondly, on the discontinued operations, can you update us on the kind of process to divest those?

So it's been a while when you decided that you could divest the former Metals businesses but when could you actually do that?

Indeed, it's been a much lengthier process than we hoped or planned but we are in sort of very sort of I would say intense discussions and do hope to have kind of a partial outcome at least in the very, very -- nearest future let's put it this way. But, yeah, we've had a few twists and turns and disappointments on the way but now we do feel that we are quite advanced.

Okay. Thank you.

Thank you, and good afternoon, everybody. I wanted to briefly touch on potential tariffs and how you are positioned there.

I mean, if you think about Canada, if you think about Mexico, if you think about Europe how would you describe your positioning there? How will it impact your operations and your competitive position?

Yeah. I think the challenge is obviously sort of it's a broad topic and we don't really know where they could come or will come in a way.

But if we now speak of the sort of the ones that are in the air that is tariffs into US from Canada and Mexico. So there the impact is rather limited.

We have a consumables factory in Mexico, which we have used to support our US customers, but we're talking about sort of $20 million-ish of sales. So it's not a huge number.

Then on the Canadian side, we have on the Aggregates McCloskey brand we have a factory in Canada that has been serving our US customers. We can serve the US customers from Northern Ireland.

So from a customer point of view it's not an issue. And actually same thing on the consumables we'll just ship somewhere else.

But in that case it will be more difficult to find new markets for the Canadian McCloskey factory than it will be for the Mexican rubber factory. So if those do materialize we will have some challenges from an absorption point of view in that.

But again, we're not talking about huge numbers in the Metso context.

Okay. And then a different question on pricing overall.

So, how would you -- how do you see your pricing trending now into 2025 in terms of selling prices? Would you say that it's still moving up?

Is it flattish? And also combined with that how do you see your underlying costs developing into the New Year?

Let's take the pricing first. So we have several different type of products.

Some of them require more labor to produce. Some of them require more raw materials.

So the pricing is reflecting really our quite a good work in understanding that what is not only the cost today, but what is going to be the cost tomorrow, and then reflecting that for our sales prices. And from the cost point of view, a similar way we have quite a global supply footprint meaning that we are sourcing materials from several countries and also manufacturing in several countries.

And this is the way to keep the cost under control and make also the decisions then based on this what Eeva was just going through from the tariffs. These are then the external things that have an impact on where do we produce and where do we ship to different countries.

But when they are not in the question then we are able to utilize our capabilities with the global supply footprint.

Okay. No that's clear.

Then just finally coming back to the warranty cost about €5 million, which you mentioned that you booked in the quarter. Just wanted to check when was the last time you booked similar kind of warranty costs just to understand -- how usually you book this kind of cost?

Well these recalls are quite rare. I don't now remember which year it was, but certainly in my nine years at Metso we had a few cases but these are not annual.

So I mean, we will have occasional, sort of, issues of course that are more and/or a part of the ordinary course of business. But this type of recall that's why we mentioned it separately.

I mean otherwise we wouldn't raise the topic but we knew that it was something that slightly sort of from the comparison point for you and your colleagues in a way was important information to understand the -- perhaps the more underlying operational level at Minerals.

Okay. No, that’s fair.

Thank you very much.

Hi. Thanks.

Just a quick follow-up to my previous question. So on Ukraine, did you have operations in the country at the moment?

And is this sizable operation?

We had before the war. Yes, we -- and obviously still people in the country, but also partially of course outside of the country as well.

Okay. Thank you.

Yes. Hello.

I just have a question regarding your financial targets for the divisions. You still remain with the sort of, 15% for Aggregates and 20% for Minerals and you very well passed the one in Aggregates and you are still behind in Minerals.

What sort of time frame do we talk about regarding the Minerals achievement?

Yes there is -- we have not updated the financial targets of the whole company for 17 and then the segments as you described. And we are taking a look of that in conjunction of this strategy process that we are conducting as we speak.

Okay. So that will be something coming in the CMD maybe or earlier than that?

CMD is a very good time.

Excellent. That’s all questions for me, please.

Thank you.

All right. We are at the hour.

So we are going to wrap- this call now and we thank you for your participation. We thank you for your discussions.

A reminder that the first quarter 20 results will be out April 24. But of course looking forward to speak with many of you and seeing many of you before that.

So that's it for now and we say thank you and goodbye.