Trelleborg AB (publ)

Thank you. Peter Nilsson speaking.

And also joining me here on the call is Fredrik Nilsson, our Group CFO; and also eventually also Christopher Sjogren, our Head of Investor Relations. Welcome all of you to this presentation of the Q2 report for Trelleborg of 2025.

As usual, we're going to start off with a presentation and then finishing up with the Q&A session. And also as usual, we're going to use a slide deck which is on our web page to guide us through this call, and I trust all of you has that in front of you.

And if not, you can also follow it here on the call. So using the slide deck and then turning to Page 2 in that one, the agenda slide where we're starting up as usual as well with the highlights and then some individual comments on the business areas.

Fredrik then will guide us through the financials, and then I'll sum it up myself again with a summary and also some comments on the outlook for the running quarter. And then, as I said before, finishing up with the Q&A.

So turning to Page 3, headline of the highlights, improved margin in the tentative market. I will elaborate a little bit more, of course, on this tentative market is actually -- behind this is generally a very good development in the quarter with one exception, and that is automotive, where we're going to comment on later on.

Sales in the quarter at SEK 8.5 billion, a decrease in Swedish kronas by 2%. And behind that, we have organic sales development, minus 1%, M&A adding 6%.

And then we have currency, which is bringing us down another 7%, which is ending up which is 8.5%. EBITA at SEK 1,587 million fairly close to last year, corresponding to a margin of 18.7%, almost a record margin for Trelleborg.

We have 1 quarter before 18.7%. So good margin development, although this is a little slim organic development in the quarter -- organic sales development in the quarter.

We have a substantial negative FX, not unexpected, of a little bit north of SEK 100 million in the quarter. As usual, we continue to improve the structure, and we're investing in improved efficiency overall, SEK 80 million in the quarter, slightly lower than a year ago.

Cash flow at exactly SEK 1 billion and also slightly south of last year, but it's actually a good performance also in terms of cash flow where we had, let's say, good management of working capital and then also continued fairly high CapEx level. It's also basically the impact of a much higher running at the end of the quarter than compared to the beginning of the quarter.

I get back and comment on that a little bit later. We're also happy to continue, to execute acquisitions, smaller acquisitions, but nevertheless, very nice add-on National Gummi in Sweden, Sico in Germany, Czech Republic and then Aero-Plastics in North America.

So it's a good spread among our business units, all of them adding and strengthening our overall position. Also, let's say, here post the ending of quarter 2, also acquired a smaller company in Singapore called Masterseals, which is then adding some capabilities, which we don't have in that region, and that's strengthening our position especially towards the energy sector, oil and gas sector, an area where we are, let's say, improving our presence, not only here.

It's also for those of you following remember also the CRC acquisition in Alabama in U.S., which is basically another strengthening on this as a niche segment within Sealing. Also here post actually earlier today, you also noticed that we continue to run our share buyback program as before.

So overall, a good quarter. And then moving on to Page 4.

Organic sales development biography. And I mean, to starting here with the totality, where you see minus 1.

And actually, all of the negative is, by far, explained by a substantial downturn in our automotive sales where we have, let's say, double-digit negative organic sales, which we a little bit struggle to fully understand, but when we read in, which is the substantial inventory reduction and some hesitation, especially in the aftermarket. If you look at the total organic sales, and we exclude the automotive impact, we are actually firmly positive in organic sales.

So all in all also, I should say, organic sales development, it started up fairly poor for us in April and then with a strong development in May and June. So the run rate going into Q3 is actually substantially better than we saw going into the quarter, and we also see basically improvements in more or less all segments, but automotive again.

But we do read that this automotive downturn, it cannot continue to have this as a double-digit negative organic sales. So we don't really expect that to continue, but we noticed a high uncertainty in that segment and the people are, as we read it, they are, let's say, cutting inventory heavily, and we are -- have been in the quarter quite dramatically actually underdelivered in relation to actual car manufacturing, and that is something, of course, we're watching carefully.

So that is kind of pure, let's say, developed comments on the overall organic growth. And we look at the regions, Asia continuing strong for us.

Most markets in Asia actually developing favorably. And we -- yes, we are satisfied with development and we look forward also to continue good development in this part of the world.

Europe, a little bit hesitated both Europe and North and South America, more impacted by this automotive downturn. But as we see in both of these areas, actually, the underlying PMI and the underlying -- let's say, underlying demand is actually improving.

But once again, we have a dramatic downturn, especially in Europe and North America related to automotive. So that is kind of the overall comment.

Actually -- so in a way, we can say that the quarter has actually been a better quarter than the figure shows when we look at the full quarter with the strengthening of the business throughout the quarter. Turning to Page 5, Business areas, and then quickly turning over to Page 6 and more focused -- comments on Industrial Solutions, Industrial Solutions developed well.

Organic sales positive, less automotive here. And we have also M&A adding strong performance in especially Marine Solutions, LNG projects continuing good, and then water infrastructure is also continued to develop nice.

So basically, development as before. Certain construction segments for us continue to be challenging, especially both residential, actually nonresidential is still continuing a low level.

We saw some signs of improvement in quarter 1 this year, but it's actually turned a little bit more sour again here in Q2, and we -- but we do feel that we are hitting the bottom here, and we hope that it will be going up from this level, it's not continuing down at least overall, if you look on the overall development. But nevertheless, is still challenging, and there is not any kind of certainty that it will improve already in the next quarter.

Sales to aerospace, developing nice, both in industrial and get back to that and comment on Sealing Solutions as well. And we continue to slide upwards here on the margin, well managed throughout the business areas, good cost control, good margin control, good -- good kind of mix control and also benefiting from continued investments in what we call structural improvements.

We continue to structurally improve the cost base in order to become more profitable as well as more competitive. We also here continue to add small acquisitions of National -- National Gummi in Sweden, which is kind of strengthening us within kind of a specialty range of extruded seals.

And Sico, which is then adding some complementary technology mainly related to silicone rubber. And in this aspect, I mean, there is also different kinds of silicone.

We get back to that. As you know, we've been investing in Medical, which is then called liquid silicone, and Sico is basically more focusing on hard silicone.

So slight different segment is also linked to extrusions, it's local look to extrusion sealing, but also some supplementary, what we call hard silicone moulding, which is then adding capabilities, which we did not really have at this level in our portfolio before. So overall, good development, good solid, stable development in Industrial Solutions, good order intake overall as well.

If we look at -- then turning to next page, Page 7, which is then addressing medical solutions. There is also generally a good development.

We have some softening in North American market, but we do read that as a kind of a temporary downturn, and that is pushing organic sales negative. But overall, order intake is good.

And M&A continue, I mean, for another quarter to add. This is basically Baron kicking in, which is showing the year-on-year improvement and we are also noting good development in Europe, where we are substantially smaller in North America.

This globalization of this business is strengthening us in Europe, and we see benefits here, good order intake. And we say in North America and is a little bit volatile, overall development still good.

And as I said, order intake is good. But in this quarter, we had a little bit more negative purchasing from some of the key customers, which we do not expect to continue.

Then we are also -- for those of you following us, we've been focusing on this life science segment, which is basically biopharma focused, which we continue to see a substantially smaller part than the kind of medtech part of the Medical Solutions, but nevertheless, very good development and we're growing in those areas where we would like to grow. EBIT and margin are up, of course, mainly -- or of course, mainly the acquisition integration of Baron will continue to run in a good way.

And we also continue to invest in this. We have Malta production facility inaugurated targeting on this, what we call Life Science segment, inaugurated in the quarter, which is strengthening our presence in this area in Europe.

And we also, outside not commented on the slide is also we continue of this strategically important kind of investment in Costa Rica, where we now keep that fully in line, and we're looking forward to inaugurate that by the end of the year. So overall, good development, although a little bit slower on sales in North America.

Turning to Page 7. Sealing Solutions, organic sales minus 4%, as already commented fully explained by the downturn in automotive, while more or more or less all the other segments actually developing favorably, and we also see with satisfaction that this segment where we've been struggling a little bit, if you say, construction-related segment or hydraulic seals segment is actually improving as well.

So we have good order intake in that area, but of course, not fully, let's say, impacting the sales in this quarter. M&A also adding here.

We have added a few acquisitions last 12 months, and we have a 3 percentage points up there. And as I said, overall, the sales in Industrial segments overall unchanged with strong Asia and slightly lower volumes in Europe and North America.

But overall, industrial segments actually developing favorably in the quarter with a very soft start and, let's say, stronger May and June and also with, let's say, better order intake than we have seen before. Automotive, as expected, dramatically down and primarily growing to aftermarket as well, which is impacting, and we read that, as I said, we substantially under-deliver in relation to the cars manufactured, and we also, as you comment on our sales here is the majority -- vast majority of the sales is actually not linked to any specific car brands or specific car models.

We are generally supplying all over. And that is why we feel fairly confident that this, let's say, low sales in the quarter, it is mainly to inventory reductions and uncertainty where we're kind of the carmakers a little bit uncertain exactly what to believe and how the tariffs will impact, let's say, the cross continent supply, which is then bringing down the inventory from us, of course.

And I mean, also their focus on inventory increasing. So that is something we're watching, but once again, something we feel will improve going forward.

Aerospace continued good. I mean we have high ambitions -- continued high ambitions to our main end customers, Airbus and Boeing, and we don't see kind of any downturn in that, which is then further supported by this, let's say, growth in the more defense- related Aerospace segments.

Although the defense in terms of volume is very small in comparison to the commercial aerospace segments. EBITA and margin slightly lower than a year ago, impacted by lower production, but also by these recent acquisitions, which is initially lower margin, which we then, of course, going to correct, but nevertheless, impacting us in this quarter.

Good acquisition of Aero-Plastics, which is done especially strengthening us in interior seals and interior, let's say, components in aerospace and opening up a new kind of segment within Aerospace for us together with earlier acquisitions from Magee and the German acquisition we did for more window ceiling for aircraft a year or so ago. So that is an area where we now feel that we're developing a leading positions, which we can going to benefit from as the market develops.

And also, as I already commented, we acquired this Masterseals targeting on, let's say, more short cycle or short delivery time seals and more kind of server-related seal market, especially targeting the energy sector, but also some other segments benefiting from short deliveries, which is then also opening up kind of a new segment for us within Sealing Solutions, where we also believe that we're going to be able to continue to deliver. Overall satisfaction we've seen in solutions, a fairly, as you say, sour organic sales, but once again, solely explained by the dramatic -- rather dramatic downturn we have seen in the quarter in the automotive supply.

Then turning to Page 9, a few comments on sustainability. We continue to improve in terms of absolute carbon dioxide emissions, continued focus on that, but we are approaching a level where it kind of will be more challenging to improve.

Of course, we have continued improvement plans. We have already delivered on our kind of long-term objectives here, and we are reviewing and you will see before end of the year that we're going to release new targets for this area.

But once again, we are going down to fairly low levels of impact. Next page, Page 10, is the same here, looking at share of renewable and fossil-free electricity, keeping it on the same level as last year, but also here, we are approaching a level where it doesn't really make sense to improve anymore, and that's, of course, also being targeted.

We still have some ways to improve. But as we are starting at 91%, there is not that much more actually to do on this.

But we keep it under control. We are continuing to be, as I said, a sustainability leader in our industry.

And of course, as part of that, we will continue to improve, although the steps going forward will be slightly less than you have seen in the last few years. Turning to Page 11.

Financials is the next agenda point, and then I'll leave that to Fredrik to guide us through on Page 12 and forward.

Thank you, Peter. Starting with the sales development on Page 12.

Reported net sales declined by 2% in the quarter from SEK 8.711 billion to SEK 8.551 billion. And as Peter mentioned earlier, it's mainly driven by negative translation effects impacting sales negatively by 7%.

M&A added 6% in the quarter. And then we have organic sales decreased by 1% with organic growth in Industrial Solutions, where the other 2 business areas, Medical Solution and Sealing Solution showed a decline.

Moving on to Page 13, showing the historical sales growth. The second quarter was somewhat behind our [indiscernible] sales growth target, but 5% sales growth at constant FX in the quarter.

Moving on to Page 14, showing the rolling 12 months for continuing operations. We have a sales of SEK 34.6 billion in the quarter on the rolling 12-month basis.

Moving on to Page 15, looking into the EBITA which, as Peter mentioned, decreased slightly, but we saw improved margin. So we have an EBITA of SEK 1.587 billion in the quarter.

But have in mind that we have negative translation effects of SEK 104 million this quarter compared to the corresponding period last year. Industrial Solutions, was up 1% despite negative translation effects in the quarter, and Medical Solutions showed strong profit growth due to the acquisition and integration of the Baron Group, and then as Peter also mentioned, the sealing solution decreased, and that was mainly due to the negative translation effects and the lower sales.

Margin wise, this was the second best quarter at 18.6% compared to 18.4% last year, and that was supported by good pricing and continued operational improvements. Looking at Page 16, the more long-term trend.

And then you can see on the rolling 12 months basis, EBITA amounted to SEK 6,254 billion with a margin of 18.1%. And there has been an EBITA growth of 4% during the last 12 months.

Moving on to Page 17. The profit and loss statement, looking into some more details.

We have items affecting comparability for the quarter of minus SEK 80 million, which was entirely related to restructuring costs for adjusting our cost base. Financial net increased from minus SEK 63 million to minus SEK 125 million.

And then it's important to have in mind that last year, part of the quarter, we were sitting with a net cash position, which was generating an interest income of SEK 59 million. This year, we have a higher net debt.

So that has also resulted in an increased interest expense in the second quarter. Tax rate for items -- excluding items affecting comparability amounted to 25%, which was in line with our underlying tax rate.

Moving on to Page 18, earnings per share. Excluding items affecting comparability amounted to SEK 4.31 million, which was a decrease of 4% and that is mainly due to the higher financial net that I just explained, and the negatory translation effects that has also impacted the net result.

For the Group, including items affecting comparability earnings per share reached [Audio Gap] SEK 4.03. Moving on to Page 19, the cash flow.

The operating cash flow for the quarter amounted to exactly SEK 1 billion. And here, you can see that we have a little bit of a negative outflow from working capital but as Peter said, we saw an uptick in sales during the second half of the quarter, which has impacted then our accounts receivables.

Otherwise, you can see that it's only smaller movements between the 2 quarters. Moving on, Page 20, cash conversion still running at a high and good cash conversion of 87% on a roll 12-month basis compared to 88%.

Moving on to Page 21, the gearing and the leverage development. We ended the quarter with a net debt of SEK 8.937 billion.

We have done share buyback of [ SEK 577 million ] during the second quarter. Looking at the debt/equity ratio, we are at 24% and the net debt in relation to EBITDA was 1.2%.

So that was slightly higher than year-end, but we have also paid out the dividend in this quarter. In other words, our balance sheet remains strong.

Moving on to Page 22, return on capital employed. Its amount ended up at 11.6% compared to 12.7% last year.

And the main reason here is that the capital added from the acquisition made over the last 12 months. Page 23, looking at the guidance for the full year.

CapEx unchanged SEK 1.650 billion. Restructuring costs increased from SEK 300 million to SEK 500 million and the increase is entirely related to accelerated activities to optimize our cost base.

Amortization of intangibles, unchanged SEK 650 million and underlying tax rate also unchanged at 25%. By that, I would like to hand back the microphone to Peter.

Thank you. Page 24, summary and outlook is the next action point -- item point on the agenda.

Turning to Page 25 and get back to where we started, the improved margin in the tentative market as I -- or Fredrik myself elaborated a few times. We actually see this as a quarter very much in the right direction.

We are see more or less all our markets developing favorably. We see also an improvement in PMI.

One exception is actually automotive where we see a dramatic downturn in the quarter, a little bit surprising, to be honest, when we went into the quarter, we didn't fully expect that. We will see, let's say, a very short buying from our customers, and we see some hesitation in the aftermarket, and we see also some hesitation on some of the OEs.

And overall, we see this -- we're reading this as we are substantially delivering below the production rates, and we are for sure not losing market share. I mean, our products is in the -- the vast majority of them is kind of let's say, supply -- generic supply that goes into all automotive manufacturers.

So it's not really related to 2 individual OEs. So we believe in a bounce back there, but nevertheless, let's say, a double-digit negative organic growth in our Automotive business in the quarter, and that is pushing down overall organic sales into negative territory.

But with this, let's say, lower volumes. We feel we manage that in a good way, very good cost control, good margin control, good control of the cash, in the quarter, solid cash flow [Audio Gap] alone on, let's say, bad receivables or anything.

So this is simply a working capital issue which will get back. Continued acquisitions, smaller bolt-on acquisition, feel confident integrating them.

We know what we're going to do with them. And we, of course, know why we buy them.

And we feel confident that that's going to continue to speed up the focus on developing better and stronger Trelleborg, and also some post Q2 and being actions here, just to highlight, with Masterseals in Singapore and also a continuation of our decision to continue to -- with a buyback on the current levels. Turning to Page 26, a few comments on the outlook.

We do expect the outlook [indiscernible] demand to be somewhat higher in the running quarter compared to the current quarter. There is, of course, continued this geopolitical situation with the tariffs and everything.

But we do feel confident that we're going to see a better in terms of organic growth, a better Q3 than we saw Q2 for Trelleborg. And we also feel confident that we will continue to be able to manage our cost base and our, let's say, mix in a very good way to continue to develop a solid performance also going forward.

So that is kind of the way we look at it. And then turning to Page 27.

Next, agenda point Q&A and then quickly turning to Page 28 and opening up for the Q&A. So please go ahead.

Those of you who wants to address some questions.

I have 3 questions. So the first one is on the -- your announcement about the buybacks.

We do not [Technical Difficulty] I can hear you.

Can you hear me? Yes.

No, we can. Could you repeat the first question Agnieszka.

We cannot hear, sorry.

Can you hear me now?

Yes. We hear you now.

Can you hear me?

Yes. Please go ahead.

Yes, I can hear you, yes. Perfect.

Yes. So on the news about the buybacks, we do notice that you basically have that [Technical Difficulty] can you hear me.

Okay. On the buybacks, you reduced the pace of the buybacks by half basically.

And can you tell us what are the main drivers behind, do you want to change the balance between the buybacks and the dividends? Or should we expect a higher acquisition pace?

No, I mean, I think it will be continued -- I mean, correct. I mean, we are having it compared to last year, but it's the same pace that we had last quarter.

So it's not really -- and we see the leverage is slightly up. We want to have room for acquisitions.

We believe we are at 1.2%, I guess now in the quarter. And so that is kind of some cautiousness, but by still continuing.

I mean we run rate of SEK 2 billion, which is still 3%, 4% of our market cap. And I mean that is the way a level that we believe is correct.

So that is the way -- I mean, there is no other -- no specific other reason for it. So we believe this is the right level for the time being at least.

Thank you very much, everyone. Can you hear me well?

Yes. We hear you excellent.

I have 2, if I may. The first is just a quick clarification around what's your thinking for the guidance.

Should we interpret when you say somewhat higher that could mean potentially something like low single-digit organic growth for Q3. And given that you saw that improving trend over the course of the quarter, -- was that something you were already seeing in June, all in, including the automotive business?

Now we -- that is correct. I mean we're talking, let's say, solid organic -- positive organic growth.

I mean, that means that maybe not 5, but at least it's low single digits to say, that is what we see at the moment. We are not really seeing kind of an improvement in order intake in automotive, but we do expect kind of what to say, in quarter conversion is going to go up, that is our expectation.

So we do expect automotive continued to be kind of in a negative territory, but we do expect it not to be at all as high as we saw in Q2. And at the same time, we continue -- or we believe also that other kind of core industrial segments will improve on the back of good order intake in Q2.

So overall, it's kind of a mix. Still, we feel a bit cautious to be honest.

But I mean, the uncertainty is there, and we do expect some continued hiccups in terms of some communication happening in the quarter. But we feel on the back of -- we do not believe automotive cannot -- I mean, cannot continue on this level.

And once again, on the back of a solid order book in the kind of other industrial segments and continued good development in LNG, in semiconductors and in aerospace. So overall, we feel confident with this guidance.

My second question is on the TSS margin. It sounds like you saw an unexpected drop-off in automotive demand, but you still manage to keep the TSS margin stable sequentially.

So could you mind elaborating on how you managed to do that? Should we think of this is a mix effect given lower margins in automotive?

Or was there something where you thought you could do an even better margin and you came in lower because of the automotive drop off?

There is a slight positive mix effect, but that is kind of not the beneficial here. The beneficial is that we continue to improve.

We are integrating acquisitions. We are driving kind of better efficiency coming from the integration of the acquisitions.

So coming a lot from operational improvement, continued good kind of mix and price management. So there is a lot of kind of not in that toolbox, which is pushing us in the right direction, but we don't get the volume.

Is it correct that you say that we are losing volume, and that is why we feel say, more and more confident, if you now see a better industrial -- core industrial demand, fluid power pneumatic, and we don't see this kind of dramatic downturn in automotive, where we are starting to be more positive that we're going to see, let's say, Sealing Solutions moving in the right direction. It's good execution overall.

So we feel -- once again, we feel actually, it's a quarter moving Sealing Solutions in the right direction. And as I said, with this kind of negative surprise coming from the automotive demand.

Three questions. First one on Medical -- Medical Solutions.

I guess organically, you're on about the same level as you were 2 years ago. So no sign of all of those structural drivers you've been talking about.

What's missing and what needs to change for Medical to start showing some positive growth there?

Yes. I mean there's a lot of signs.

There is -- I don't want to -- we see, overall, we're getting, let's say, the inflow of new inquiries is coming. It's a fairly long startup and I mean on new projects, and we are a little bit exposed to the volatility of the customers here.

We do feel firmly that we're moving in the right direction. We're getting the inflow.

We did expect, as you say, maybe slightly better organic growth, but we do see activity levels up, quoting level is up and overall demand is up. We are getting benefits from being kind of the most global kind of liquid silicone supplier.

So we are getting more and more global contracts. We firmly believe overall, is moving in the right direction.

There is bigger batches being bought. I mean, we had -- if I remember correctly, we were plus 5% organically in Q1 and now it's minus 3%, and maybe we have to see it over a few more quarters.

They're not buying weekly. Some of these customers is buying more kind of sporadic, if I may say.

And there is a little bit push overall, good order intake in the quarter, and we feel that we are overall moving in the right direction. I don't not have the, let's say, the overall trend as you're referring to, Erik.

But I mean, I think we will get to -- I don't know, Christofer, if you have a better view on the longer-term trends on this one?

Yes. Well, when we had the capital markets dated back in '23, we said that this area was growing somewhere between 5% and 10%, and we still stand by that.

But what has happened Erik, as you know, all the similar kind of companies we are facing in the market, and you know the names yourselves, but they have been experiencing negative organic numbers for the past 2 years, and that is all due to the stock reduction. Now we have actually outperformed all the others basically.

And as you recall, we had a 5% organic growth in Q1. Now it's down 3%.

So it's very volatile currently. But we feel looking at the order intake, which doesn't necessarily translate into much better in Q3, but a little bit further ahead.

We have quite good order intake now for this business area. So we are very confident that we will reach this 5% to 10% growth in the coming years.

So we are still very happy with this development, and we're still happy with development. We recognize the volatility.

We recognize that we would like it to be more stable and hopefully, or the aim is, of course, to get there by growing it and by being a little bit more spread out on different customers and different geographies. But the proof is in the pudding.

We will recognize that. But we are, once again, as Christofer said, and I'm saying we are confident that we are moving in the right direction.

Second question, on Sealing Solutions and the margin trend there, unless I'm mistaken, it's been coming down now more or less every quarter for a couple of years. And I guess, I mean, there's volume behind that, and there's some acquisition diluting it.

But at what point do you feel you need to do something structurally on the cost side to stabilize the margin in Sealing?

We have a stable -- I mean we are at the same margin now. I mean compared to a few years ago, and then we have made some sizable acquisitions, integrating with substantially lower margins than overall.

And we feel generally okay. We were running it north of 20%.

We want to get closer to 25% than 20%. And as we said for many quarters now, you will need some, let's say, solid organic growth in order to make that happen.

And we feel now for the first time in -- yes, in some years, but in several quarters, at least, we see now that underlying -- let's say, sentiment is improving and we hopefully will then see that kind of translation into rather better volumes. And then we feel confident that we are kind of going to get a very good leverage.

We are working. Contribution margin is up.

Gross profit is up. We keep the cost under control.

So I mean, you said we have not been doing -- we have been doing a lot of things. We are closing factories.

We are moving manufacturing. So of course, I mean, you are to keep this margin about 20% is actually also, I mean, of course, difficult, but easy to -- in comparison with our competitors, actually a fairly good development.

So we feel also that we have this very much under control. And once again, we need some volumes in order to get this leverage.

Let's say, this improved drop-through by the bigger volumes. But I mean we feel also here that it's moving in the right direction, and we're keeping stable, good cash.

So it's actually still a very good performing business area.

And then the final question, and I want to come back to -- I think it was the first question on buybacks and your priorities going forward. And I was cut out there from the answer.

So SEK 2 billion in run rate. Is that now -- I mean when you first started and said SEK 4 billion, and that was the level that was going to hold until you -- is SEK 2 billion is that the sort of the new normal where we think it should be on an annual basis ahead?

That is what we run at the moment. That is where we will be happy at the moment.

And I think also fair to say, Erik, that we have already bought back 16 -- almost 16% of all shares since we started the share buyback program.

I think -- I don't know the figure here, but it's SEK 20 billion, SEK 22 billion or something like that in share buyback.

It's 15.9% to be very correct that we have bought.

Number of shares.

Fom the start.

So we feel and we feel it's, let's say, important for us to keep it going and keep it running. And now we feel it's a more -- we still continue, as you say, SEK 2 billion run rate.

And then, I mean, we are still having room then to continue to make acquisitions and to be able to invest and to bring it better. So we feel this is a long-term effort.

And of course, whether it's SEK 2 billion or SEK 4 billion, that's, of course, the difference. But nevertheless, I think the importance for us that we continue to do buybacks, and we continue to do that with a long-term view in focus.

Can you hear me?

Yes.

Excellent. I mean 2 questions from my side.

Just a clarification on the more positive outlook. Would it be possible for you to have some more flavor on what parts has become sequentially, maybe end markets and also geographies.

And then on the auto side, have you come to a point where you're starting to do some capacity adjustments, headcount, et cetera, there? Or are you seeing some of improvement?

I mean we basically see improvements in all geographies and in all segments, but automotive to simplify. Then, of course, you have some negatives in terms of some specific order intake for rail, specific order intake for oil houses or stuff.

But I mean, overall, we see the sentiment is improving more or less everywhere. We do not see really firmly in the construction -- residential construction or commercial construction, but that's kind of a small segment of ours.

But on the other side, we don't see a deterioration at least anymore there. So overall, I mean, the simple question and honest question is that we see improvement in all geographies and we see improvements in all segments but automotive.

Automotive has been strange and we are, of course, adjusting short term by, let's say, phasing out and adjusting the -- or I should say, the capacity in various ways. We are not at the moment kind of addressing it structurally, if you say, by looking at factory closures and looking at kind of some structural changes.

So we are adjusting this with short term in order to kind of manage this dramatic downturn that we've seen here in the, let's say, last few months, actually. And once again, we do not see this being possible that we continue to do north of 10% negative organic growth or organic sales when there, let's say, car manufacturing is continuing with -- I don't know exactly the latest data, but a flattish or slight negative.

So we do see this as -- we firmly believe that this is kind of inventory reductions and that it cannot continue to reduce inventory with this kind of pace. But with that said, we see that the order intake in automotive is very short.

And we don't really have customers ordering, let's say, for the next 6, 9, 12 months that we had historically. So the order book, although substantially smaller, but it's also substantially shorter.

So that is why the uncertainty is, of course, still around, but we do -- overall, looking at it, our estimation is that it cannot continue on the current kind of negative development.

My first question is about pricing. So can you please comment a little bit about any price actions that you've made after the tariffs?

And do you see other competitors are doing any pricing activities?

Generally, we'll be happy -- I mean, as you know, Trelleborg in the vast majority of our sales, we are single source for that specific applications, and we are generally also a very small part of the total cost for the manufacturers. So with that in mind, we have adjusted basically fully for the tariffs impact.

There is a few very single -- very small exceptions where it cannot be done due to contractual or project-related sales. But overall, we feel that we have not absorbed any tariffs ourselves.

And we have also benefited a little bit from this that we have been -- since we have a more regional setup and we have regional manufacturing, we have actually been benefiting a few areas on that where our competitor has been impacted by the tariffs. So overall, we do not see any tariff impact on the pricing.

Overall, I would say, pricing environment is still relatively good. I mean the customer is cautious and I don't really investing a lot in switching suppliers and in getting new approvals.

Inflation is also generally on a fairly low level in terms of raw material, salary inflation and stuff is getting more stable. So overall, we have kind of improved what we say, our gross profit and our contribution margins.

So pricing is kind of not really an issue for us, to be honest, Timothy.

Understood. Very helpful.

And my second question is about your margin target. So I think in the first 2 quarters, we were around 18% plus, that kind of adjusted EBITDA margin.

And I think if you are going to reach your 20% target, it means we need a fairly substantial improvement in terms of margin in the next couple of quarters. So how do you feel this margin target to be a realistic one by the end of this year?

No, no, it is very much in range. And I mean, we feel that we're getting a little bit -- we don't need a dramatic higher volumes, but a little bit -- some more higher volumes, especially in the core segments of TSS, then we will get there.

And I mean, we also want to -- as to say, when we're talking about the run rate for the margin is not the full year -- full year margin for '25, and we still feel is within range. It will require that the kind of core industrial markets improved here, second part of the year, but we still feel that's possible.

And if it happens, then we very much feel that the margin target is within range. I mean when we talk about a few percentage points up here in the right segments and then we're going to get there.

So we -- of course, we have our kind of estimates and the way we calculate, and we have not been -- we are not giving up yet. But once again, it will require that we get in -- get us the organic sales into positive territory again.

Yes. Thanks to all of you for listening in.

And of course, we are, of course, available for follow-up questions, both myself and Fredrik and especially Christofer. So if you have any, let's say, remaining questions or any new questions pop up, then please make contact, and we will be happy to support you in any way we can.

And with that, let's say, have a nice continuation of the European summer and then enjoy and yes, speak and meet you soon. Take care.

Thank you.