Trelleborg AB (publ)

Thank you, and Peter speaking. I want to start by welcoming all of you to this run-through or presentation of our end of year results with a specific focus on Q4.

And I will start, Peter Nilsson, who is, let's say, the CEO of Trelleborg and also supplemented in this call by Fredrik Nilsson, our Group CFO, and also supporter for us, also Christofer Sjögren, Head of Investor Relations, is also here, if there is any questions which needs his attention. As usual, we have a slide deck on our homepage, and we're going to use that as a guidance through the call, so that is what I'm going to refer to.

So using that as a reference, turning to Page 2, in this slide deck agenda, normal agenda for us, starting with the highlights in the quarter, some highlights for each of our 3 business areas. Fredrik will then guide us through the financials.

And then we are summing up with the summary of the quarter and also some comments on the outlook for the running quarter and then finishing off as already told by the introducer, ending with a Q&A session. So turning then to Page 3 in the deck.

Heading for this quarter, growth with enhanced profitability, a very slim growth, but nevertheless a growth. Sales is increasing in the quarter by 4%.

Organic, ending up slightly better than we kind of anticipated going into the quarter, driven then primarily by increased project sales, as we call, which is, as I say, more onetime projects, some of them bigger, which ended up a little bit higher invoicing than we kind of expected before the quarter -- in the quarter, particularly then related to our business areas, Industrial Solutions. M&A also with satisfaction.

We see that M&A is bringing 3%, and I'll get back to that later as well. And we have been concluding a few bolt-on acquisitions in the quarter, and we see that this is a very good add-on to our existing business, which is already kind of strengthening already strong positions.

Currency, no impact in the quarter on the sales level. EBITA ending up then at almost SEK 1.6 billion and -- which then gives us a margin of 18.1%, which is more than 1 percentage, was up compared to a year ago on basically flat sales, which means that we are happy to see that we're actually running the operations in a better kind of operational way than we did last year.

Items affecting comparability in line with guidance, ending up then at SEK 76 million in the quarter. Very strong cash flow, actually the strongest cash flow quarter ever for us in this structure.

And that is also a satisfaction, well managed by my colleagues in the group. Good management of working capital.

And we have to notice also that this cash flow is being delivered, although we continue to invest on a record high level for Trelleborg. So very happy with the cash flow and very happy with the management of the balance sheet.

The dividend up, increasing the dividend with the same amount as last year, up to SEK 7.50. Also already noted, we also announced a few add-on acquisition, Magee, I'll get back and comment on that, and Mampaey.

And also, we finalized this acquisition of CRC in Alabama in U.S. in Sealing Solutions.

So a great quarter in many ways. It's not a lot of extras in the quarter, if I would say.

But I mean, a good push in sales, good management of the costs, good management also on the margin side in terms of sales and contribution, good management of purchasing. So overall, a very good operational quarter for us, which is creating a great foundation to move on from this level.

Turning to Page 4. Organic sales, as you know, it is kind of mixed.

Europe down in the quarter. I'll get back and comment on that by, let's say, business area and business area, but a little bit challenging in parts of the business in Europe, but we also have to say this is also coming from kind of portfolio actions in order to improve margin and improve long-term positioning.

North and South America, flattish, minus 1%. Also there is mixed, let's say, underlying market overall ending up at minus 1%.

And then a very strong development in Asia for us, which is basically coming from all the major economies, but Japan. So we have strong growth in China, strong growth in India, strong growth in Korea, where Korea then is coming.

We have some semiconductor exposure there, which is delivering well, but primarily also coming from continued build-out on the Marine sector related both to kind of shipbuilding, but also LNG development, which is a lot of that happening in Korea. India, basically all across development, good development in most segments in India.

And all in all, this is, of course, with great satisfaction. We note that we continue to grow in Asia and the share of sales from Asia is increasing in relation to total Trelleborg.

All in all, with this mixed picture of minus 5%, minus 1% and plus 19% ending up with, let's say, plus 1% for the group. Turning then again, Page 5, agenda, business areas.

And then quickly moving to Page 6, where we comment on Industrial Solutions, good growth and higher margins. Good organic sales, 4% up.

M&A also adding another percentage points. Already noted, good project deliveries in Marine segments, spurred by larger projects.

And in this, let's say, Marine definition, there is also a few subsegments of the Marine, which is related to LNG and oil and gas, which is also pushing this segment in a good direction. Continue to struggle in the construction segments.

I mean it might be that it's flattening out in Europe, and we see some kind of down of that cycle. That is what we see.

But we see continued push down in North America, and that is primarily related to an area which we have, we call facade seals, which is kind of basically used when you build the bigger constructions and that is kind of where we see a substantial downturn in North America, which is, of course, hitting us as well. Automotive in a way, I will say, somewhat weaker.

But I mean overall, it's still continuing to be slightly better than we kind of expected. And also here, well managed, and we -- in our niche positions that we have, we continue to grow market share, which is somewhat kind of compensating for the somewhat more challenging overall market related to automotive.

Overall, this mixed picture, managed well by our colleagues in Industrial Solutions and this higher sales. And then in combination with continuous never-ending structural improvements is then getting us into, let's say, a better profit and better margin last year.

And we should also in this, even though we don't have any slide, for those of you following Trelleborg knows also that we had some extraordinary good sales a year ago related to this project -- specific project, which we talked about related to Panama Canal. And this is not in the figures this year, and that is also why we are kind of extra satisfactory to see that we can compensate for this, although we do not have the same kind of business this year as a year ago.

Also in the quarter, acquisition, a smaller acquisition of Mampaey, a Dutch company with a very global exposure, which is a nice add-on to us in our, what we call, berthing and mooring operation related to the Marine segment. So that is a nice, very nice add-on, which is strengthening a very strong position and creating some new inroads to some specific end markets where Mampaey is kind of very supplementary to what we already have.

So it's a good delivery on Industrial Solutions, continued good delivery and continued this small uptick in margin, which we have seen for several years now. Turning to Page 7.

Medical Solutions, our kind of newest business area, a big jump in profitability coming then from integration of Baron primarily, but also from a good underlying development. I mean we have to note that this is still very much a business area in construction.

So behind the scenes of this, what you see on this slide, we still have a lot of kind of construction work ongoing. We're creating new positions, and we're building kind of a new structure in order to create kind of a long-term success for these business areas.

But looking at the development in the quarter, organic sales is still flattish, as you see, somewhat better in Europe, somewhat weaker in North America, but honestly, not that much difference. We still note that there are some kind of inventory reduction at some customers and it's kind of a mixed portfolio, looking at the different segments and different customers.

But overall, once again, we're ending up at zero organic growth. We note that Life Science, which is for us in this biopharma segment is somewhat growing.

It's a small part of Medical Solutions as of today, but it is part of Medical Solutions where we see great possibilities. And we -- of course, with that background, satisfactory to see that we see that this segment going up again after being pushed down quite a lot, let's say, post COVID.

But now, we see some signs of bounce up again. EBITA and margin increased, yes, mainly due to the Baron Group, is a substantial add-on.

And we -- once again, satisfactory integration, good synergies and a good structure being put in place to continue to benefit from this also going forward. Also note, which I already started with here, where we have quite a lot of new units coming on stream.

We're investing in capacity in Malta. We're investing in capacity in Switzerland, putting up a new factory in Costa Rica, investing also quite a lot related to biopharma in our, let's say, Boston facility.

So a lot of activity ongoing here behind the scenes in order to develop a structure which once again, we will benefit from long term. And we do -- still do not see in the figures here, the kind of benefit we will have of being a very global supplier in this area.

So a good start of the business area in line with our expectations, but more to come, especially related to sales growth. But with that comment, we must also note that for Q1, running Q1, there will be somewhat, let's say, push down in sales and that is mainly related to Baron exposure, is mainly related to China and Australia.

And for those of you who're aware, then, of course, we have Chinese New Year coming here, which is going to impact the operations in Baron in China. And then we have Australia Day in Australia, which is going to take away another week or something in Australia, so it will be a somewhat lower run rate for Medical Solutions in Q1 compared to Q4.

But let me get back on that, and I can assure that Fredrik can guide you through a little bit more on that one. Turning to Page 8.

Here, we got stable despite challenging markets. We are actually rather satisfied with the development of Sealing Solutions.

There is some of the kind of core segments of sealing, which is still being challenged. Here, we have what we call diversified industry, which is related to off-highway, construction equipment, which is still somewhat depressed in demand and we also here have an impact from the auto decline.

So there is some core segments of this one which have been pushed down, especially in Europe and North America. Here, we're doing good in Asia, which continue to bounce back, and we continue to grow substantially in Asia actually here in the quarter, which is then balancing the somewhat more negative development in Europe and North America.

Aerospace continued to do very well. I mean we know that we had these issues at Boeing, for instance, but we have not really been impacted by that on the sales level, and we continue to have a good order intake and we continue to see good prospects for aerospace here also going into 2025.

All in all, as I said, mixed picture in demand, but well managed also here. I mean credit to our colleagues in Sealing Solutions.

They are managing the somewhat mixed picture in a good way, and we managed to deliver a margin in line with last year with then a slight increase in EBITA. Also in this area, we have to note that we have several greenfield projects ongoing.

We have a high activity level in new factories and expansions, which is also, of course, creating some attention on that one. But nevertheless also, in that aspect, is well managed and we don't really see it in the operational delivery in the business area.

Acquisition of Magee, a good acquisition for us, a bolt-on acquisition in aerospace, which is kind of widening our exposure into new subsegments of the kind of aerospace industry, which we also see -- it's not big, but it's a good add-on and it's going to be beneficial for us in several aspects, both in the aftermarket for aerospace, but also in the OE sector of the aerospace. We also have this earlier announced acquisition of CRC finalized in the quarter, which means that we now can push fully to integrate these acquisitions, which are going to strengthen us primarily in the southern part of the U.S.

in the Alabamas, Louisiana and, of course, then you know it's going to be some oil and gas-related activities, but also down there, some kind of subsegments related to that. So that's an area of U.S.

where we have had a little bit sub or, let's say, underrepresentation, and we hope that the CRC -- we firmly believe that CRC will, let's say, create, let's say, better opportunities for them. Turning to Page 9, a few comments on sustainability.

We continue to improve. And as you see, it's a substantial improvement in CO2 emissions year-on-year, slight up on quarter-on-quarter, but that is kind of seasonality related.

And we continue to see good progress on this, and we're actually getting down to fairly low numbers overall for CO2, and we need to -- of course, we will continue to improve. But I mean, of course, we will not be able to see the same steps as we have had before on -- in these aspects.

But high attention, good activities ongoing in a very structural approach to improve it in all parts of Trelleborg. Page 10, major part here as well, where our share of renewable and fossil-free electricity is improving.

We are now up to 88%. Of course, there is some way to go, but we cannot really go 100%.

There's some limitations in a few countries where we actually cannot buy renewable or fossil-free electricity. But we feel certain that we're going to get almost to the maximum here in 2025 and where we can get with the current, let's say, available electricity.

So well managed also in this aspect and we're pushing forward without any kind of cost increase also, we should have that. It is well managed in all aspects also related to this part of Trelleborg.

Turning to Page 11, agenda slide, financials. And then Page 12, and Fredrik's turn to give us some guidance.

Thank you, Peter. Let's then move to Page 12 and look at the sales development.

Organic sales increased by 1%, with organic growth in Industrial Solutions, 4%. As Peter mentioned, a flat development in Medical Solutions and a small decrease of 1% for Sealing Solutions.

If you're then looking at the reported net sales, up 4% from SEK 8.421 billion to SEK 8.783 billion. As just mentioned, organic sales up 1% and structural changes added 3%, and then there was no net impact from currency in the quarter.

If we then look for the full year, we saw a flat sales development year-over-year. Moving on, Page 13, showing the historical sales growth.

You can see that the fourth quarter was below on our sales growth target, but it was another quarter with organic growth. Moving on, Page 14, showing the quarterly sales on a rolling 12 months for continuing operations.

The sales in the quarter reached SEK 8.783 billion, which was the highest ever for a quarter. And if we then look at the full year, we reached SEK 34.2 billion, which was in line with last year.

Moving on, Page 15, looking at the EBITA and the margin. If we start with EBITA, excluding items affecting comparability, it's up 11% from SEK 1.424 billion to SEK 1.587 billion.

We see profit growth in all 3 business areas. If we then start with the Medical Solution where we saw the highest growth, well supported with Baron integration.

And then we have Industrial Solutions up 9% and Sealing Solutions improved by 1%. And there was no net FX impact in the quarter from translations.

Margin-wise, up from 16.9% to 18.1%, so an increase by 1.2 percentage points. EBITA and margin were the highest so far for our fourth quarter.

Moving on to Page 16. On rolling 12 months, EBITA amounted to SEK 6.140 billion with a margin of 18% and we are seeing an EBITA growth of 2% during the last 12 months.

Going into some further details on the income statement on Page 17. Items affecting comparability, minus SEK 76 million in the quarter compared to SEK 260 million, and this was entirely related to restructuring costs for adjusting our cost base.

Financial net, you can see it's going from minus SEK 38 million to minus SEK 86 million in the quarter, and that was due to -- that we were sitting with a net cash position in the corresponding quarter last year. So that year, we had a quite significant interest income that was not repeated in the fourth quarter this year.

Tax rate for the quarter amounted to 26%, which was slightly above our underlying tax rate of 25%, but that was more of a timing issue. The tax rate for the full year was 25%.

Moving on to Page 18, earnings per share. We saw an increase of 4% for -- if we exclude items affecting comparability, an increase from SEK 4.08 up to SEK 4.24.

And for the group, including items affecting comparability, it was up from SEK 3.40 to SEK 3.99. Moving on to Page 19.

As Peter mentioned, a strong cash flow generation in the quarter, starting in Q4 last year of SEK 1.321 billion ended at SEK 1.681 billion and that was due to -- we saw a good improvement in EBITDA, well-managed working capital from our business units. CapEx slightly higher due to all ongoing greenfield projects.

And then leasing was a little bit higher last year, come back to a more normal level. And the unusual high last year was related to one of our greenfield investments.

So overall, a very good operating cash flow for the quarter. Moving on, Page 20, looking at the cash flow conversion, 89% in cash flow conversion for the last 12 months, still a very high cash conversion despite the current high CapEx levels.

Looking at the balance sheet on Page 21 and the gearing and the leverage development. Net debt at the end of the quarter amounted to SEK 6.735 billion.

We have done share buybacks of SEK 1.349 billion during the fourth quarter, slightly higher than the guidance of SEK 1 billion per quarter. But please remember that we, on the other hand, was a little bit lower during the third quarter this year.

And net debt in relation to EBITDA, 0.9. In other words, our balance sheet remains strong.

Moving on to Page 22. Return on capital employed ended at 12% and capital employed increased in the quarter due to the acquisitions and the continued high pace from our greenfield investments.

Some guidelines for the financial year of 2025. CapEx, SEK 1.650 billion.

Restructuring costs, we expect to be around SEK 300 million. Amortization of intangibles, SEK 650 million for the full year.

And underlying tax rate of 25% for the year. By that, I would like to hand back the microphone to you, Peter.

Great. Thank you, Fredrik.

Turning to Page 24, agenda, again, summary and outlook. Turning to Page 25.

Looking at this, I mean, I think this is another quarter in our development of better Trelleborg. I mean we -- our core of Trelleborg is to create and maintain and develop the leading positions in this niche, let's say, very selected areas where we want to play.

And I think this is a result of that. I mean we are doing this with continued focus on, what we call, speedboat areas.

We are very kind of focused on where we want to grow and where we want to improve our positions. We are investing more than ever, both to kind of create new strengths and leading positions, but also establishing ourselves in a quick way in new geographies in order to become this really global supporter of our customers and be able to globally support our customers as they grow.

Supplementing this with M&A, bolt-on acquisitions, smaller supplementary M&As, which is kind of improving already strong positions. But of course, the quarter is also a reflection of what we feel that our colleagues has a very good operational control.

We're focusing on the contribution, pricing and the continuous, let's say, portfolio improvements. Factory efficiency is very important.

Cost control and, of course, daily excellence efforts in this to focus on never ending, let's say, focus on manufacturing, purchasing, whatever it might be to improve daily. And also, which we have noted a few things also, we think is a reflection also for well-managed working capital.

We are not sliding in any way in this working capital. We are not overproducing and we made sure our customers pay on time.

So it's also a reflection, you see that in a very good cash flow. Also on top of this, which Fredrik highlighted, we also feel that -- we continue to have a strong balance sheet.

We're going to continue to run buybacks. And we can do the buybacks, although we continue to invest on a high level, and we continue to do M&As.

So this is -- there is no magic in these figures. This is, let's say, a reflection of no big moves.

This is a reflection of this better Trelleborg as we're building step by step in order to, at the end, deliver -- or not at the end, but in order to reach the financial objectives that we have already communicated since some time. Strong quarter.

And as we now move on to Page 26 and look at the outlook for the running quarter, our best estimate, I mean, we all know that there's kind of a little bit uncertainty in certain aspects of the world. And of course, this is driven with some kind of -- how should I say, some kind of reflection also on the political situation.

We don't know where it's going in all aspects. But overall, we feel that Trelleborg, we are well positioned in all the 3 major parts of the world, and we think we will continue to be well positioned in order to manage this increased uncertainty in a good way.

And looking overall, we do believe that the running quarter will be on par with kind of the quarter we left, which means that we're flattish, let's say, between 0 or a slight growth in the quarter. That is what we see in front of us.

And that is the way we are, let's say, preparing ourselves in order to be ready to continue to -- yes, to make this step-wise improvement of Trelleborg also as we go into 2025. Now with that, I think we'll move on to the next page, agenda again, Q&A and then quickly opening up for Q&A on Page 28.

So please go ahead, those of you who want to send us some questions.

I have 2 questions. First one on all the investments you're doing, greenfields, brownfields, et cetera.

What do you see in terms of margin impact, as some of these come on stream now in '25? Will there be dilution from depreciation coming up quite a bit initially before you get good load?

Or any other impact we should think about? And then the second question in industrial, the good project business you had there in Marine in the quarter.

Did that come with positive margin mix as well? And as an extension of that, we've seen industrial surprising on the upside more often than not for quite some time.

And you've said that it's been perhaps a bit too good. So the division tracking sort of ahead of its target margin trajectory.

But maybe that target is a bit too cautious?

Starting on the first one is absolutely -- of course, it will be when we actually kick off the investments and we go ahead, there will be, let's say, initial, let's say, push down. But we don't see that as being as major as we've seen on group margin.

There will be some challenges in some business units, yes. But we feel that we have these projects fairly good loader from the beginning.

But with that said, I mean, we are not naive. We know that there's going to be some operational issues from day 1, but we believe it's going to be a very short period of impact.

And once again, on the overall level, it's not going to be seen. It's not at all on that dimension, but there might be 0.1, 0.2 or something on individual units, but not really on group level.

We don't see that as any kind of major impact. We are fairly confident that these projects that we are starting that they will start to bring benefits already from day 1.

I mean the bigger projects here, we already have them fairly good loaded already from day 1. But once again, we would be naive if we didn't -- if we did expect them to perform excellent from day 1.

There will, of course, be challenges. But once again, it will not -- you will not hear us, Erik, complaining about that in the next few quarters about the projects coming on stream and therefore, we are pushing down the margin.

So that is not going to be, let's say, an explanation that it's going to come up on that one. On the margin -- sorry, follow up on that one?

No, no.

And then on the margin mix, I should say the project business is not better in a way in terms of overall margin. But of course, it comes on top.

So it's more kind of a full contribution, if you may say. So when the project comes in, of course, the benefits a good drop-through, but the overall business is not kind of better.

So I cannot say looking at Fredrik, but it's not really a margin push on that one. This is underlying improvement, which is going.

And as we said, on Industrial Solutions, I mean, this is -- it is an extra business. We know that.

I mean there will be a shifting a little bit, but so now it's mainly the Marine area, which is quite a lot ones related to LNG as well. I mean if you build a very -- most of the -- I would say, complicated big ports in the world being constructed at the moment is related to LNG.

And then it might be they are used to other stuff as well. But I mean, one of the primary drivers is that.

So we do see that, that's going to be a continued good push in that area, but there is kind of a lack of capacity in that one. I mean we know the shipyards in Korea is full and that the construction workers doing LNG offloading stations or whatever it might be, they are also fully loaded.

So of course, there is kind of a plateau being kind of established in that area on a high level. But I mean, the order books are good and the order book looks good, but we don't expect that to generate kind of extra sales simply because there is not kind of a capacity around to continue to grow it, although there is kind of a very good underlying demand.

And of course, now we have the new administration in the U.S., which is going to push even further into this area. There is plenty of projects on the planning for this activity, both in U.S.

and elsewhere. But I mean, from planning to execution, it's easily a few years down the road.

But we still do feel that, that segment is going to be good for us. And of course, Industrial Solutions is going to benefit from that.

But Industrial Solutions is a mixed bag of businesses. I mean we must forget -- we must not forget also there's parts of Industrial Solutions, which is bad.

We didn't talk a lot about the industrial -- call it, core industrial sales in Europe is not that good either. And I mean the construction is not that good either.

So it is a mix. And therefore, we need to be cautious when extrapolating any kind of continued improvement in Industrial Solutions.

Of course, we try to improve. We will continue to try to improve.

But I think our overall guidance of at least 0.5 percentage point a year is probably very much valid for Industrial Solutions.

Then just one follow-up on CapEx. You're seeing another high investment level this year.

Am I not wrong? Or have you not talked about the investment level starting to come down?

Correct. That's correct.

And you can see a small decrease here going into 2025. But of course, if you sum up all the already communicated greenfields, that is a consequence that it will maybe be a little bit higher than we earlier communicated a year or 1.5 years ago.

But the intention here is, of course, that they will be higher in 2025, but then start to drop off a little bit more.

There's fine-tuning in this. But I think we have accelerated a few projects and pulled them basically from '26 to '25.

So that is where we believe that '25 will still be on a, let's say, high level compared to historical levels, but we will then see a downturn in '26. So it's more, let's say, transfer, let's say, between '26 and '25.

And then we do feel as well that, I mean, we have the balance sheet. So if we see opportunities, of course, if we invest another SEK 100 million or something to create growth, that is the level we're talking about.

So it's not really kind of any major money when we look at the kind of total picture.

So the first one, can you also elaborate a bit more about the underlying activities in the market for now? Are you feeling some, say, prebuy activities ahead of any potential tariffs that are happening in the market?

And also in China, I think you also mentioned about quite a strong growth in China. Can you talk about what's probably the growth rate in China in the fourth quarter?

And is there any benefits from the stimulus or the growth is coming from your market share gain? Just would like to have a little bit more color about the underlying activities in the market.

And the second question is about margin. So I think you have a very strong margin development in the fourth quarter, especially for the Medical Solutions business.

I think it reached the benchmark 20% EBITA margin just in 2 quarters of consolidation. Is there any further upside potential from here, say, from the synergies from Baron Group further from the current level?

And also the synergies from MRP, when do we expect to come in the TSS segment, please?

No, let's try to follow. Prebuys, we don't see any kind of prebuy activity.

We don't know if any customers is doing that. But I mean, we don't really see that as a drive and there's no customers talking about that, and we don't see any kind of strange upticks in individual customers.

So we cannot say -- no, we cannot say that we see any prebuys in anticipation of potential tariffs. So that is a clear no.

China, I mean, we don't really want to comment on individual territories. But I mean, if you see that we're growing in Asia and China is the biggest market for us in Asia.

So of course, there is a reflection on that. But we don't really want to go down and show we have a good growth, as I said, both in China, Korea and India.

Japan, if you take the fourth economy here, is actually slightly negative. I can share that with you.

But overall, we have a strong growth in Asia. And I mean, once again, strong growth both in China, Korea and India.

That I don't want to comment on that. And also on the margin upside on -- and call it, integration of Baron Medical.

I mean we don't see really synergies going forward to be that much on the margin side. We do expect that we're going to get some sales synergies here by being able to offer kind of global support to the customers.

I mean, look at the medical industry, there is a few very big medical companies, which is kind of capturing a larger and larger share of the global market in medical equipment. And these are our target customers.

And as we are now, yes, basically in our sub niche, if I may say, very focused niche of liquid silicone, we are the only global company. And we do expect that, let's say, global footprint and the global capabilities to bring us synergy in terms of sales.

There is a lot of discussions ongoing with these big customers, and we do expect them to give us new business. But that is something which is not starting overnight and that is kind of a transition into kind of new platforms.

But so the synergies in Medical will not primarily come from further margin improvement, but more from better sales growth. So that is also our target.

And we do not really -- I shouldn't say we do not want margin expansion, but we are investing. I highlighted before, we are investing in Medical Solutions in order to be able to support our customers globally.

So behind the scenes here on the margin, there is actually a substantial cost increase in certain areas where we do not yet see any benefit. So we are investing in this area.

But once again, the target going forward is not really to push the margin up, it's more to improve the sales. MRP and TSS Sealing Solutions, I mean, that is happening.

We've now fully integrated it, and we are kind of splitting now, of course, between Medical and the Sealing Solutions. So this is the kind of pure synergy tracking, is getting, let's say, challenging.

But we do see synergies in terms of sales where we have kind of created more cost synergies and then we kind of was aiming for when we started this project, but we do still wait for kind of sales synergies. And that is where we have to be a little bit challenged, and we already commented a little bit challenged on some of the core segments here being construction segment in U.S.

and off-road segment in U.S. where we don't really yet see the sales synergies.

We are developing a good platform presence, but I mean the platforms used by the customers needs to start to go up. So we feel very confident that if or when this market actually go more north and south, then we will see a good drop-through and then we'll have a rapid margin expansion in Sealing Solutions once again when the volume starts to get back because we need to remember that we are exposed to, yes, as I say, rather big negative volumes in some of the core segments here of Sealing Solutions and MRP and Minnesota Rubber.

And that is something we do expect a bounce back. And when the bounce back will come, they will come with good gross profits and good contribution margin, which means that the drop-through will be seen in the overall margin of Sealing Solutions as well.

So that is what we are aiming for and that is what we are or planning for.

Great. Just a follow-up on what you just said there on the TSS margin.

So you mainly expect to get back to the 23% run rate. That's like mainly a result of demand improving in your key markets rather than synergies then coming in from previous M&A.

And then the second one is on M&A. And if you could talk about -- give some color on the bolt-ons, what sort of valuation multiples you are seeing there?

And what sort of profitability those companies you recently acquired have once they are entering your group?

Correct. I mean there will be some improvement on the margin as volumes kick in.

But of course, we continue -- I mean, maybe I underestimated, of course, there are still some synergies that is being executed and synergies, which is not kind of seen until volumes is getting back. We have been rebuilding the structure a little bit in MRP and others and, let's say, create some factory changes and stuff.

So of course, there's synergies being executed and being pushed through. But I mean, we are happy with the, call it, let's say, gross margin that we see on the sales that we expect to increase.

And we see it's better benefit -- more beneficial for us to wait for the volume to kick in than to chase new kind of minor improvements. And of course, I mean, behind the scene, we are still running in that 20%.

So it's not kind of a bad business. It's more than, of course, we're aiming for more.

And this more will primarily come from extra. We will fine-tune and we could, let's say, still expand on the current volumes.

But I mean the major uptick will come as we see kind of the core industrial markets getting back and improving somewhat. I mean we have to recognize that the core segments, once again, if you take this, we call, fluid power segment of TSS has been challenged a lot in '24.

And I mean, we -- although with this main market being challenged, we still continue to, we feel, manage it in a good way. And if this core market is getting back, then, of course, we will see, let's say, firm benefits in the figures.

So that is -- I don't think I can -- I'm looking at Fredrik and Christofer, there's nobody more really to comment on this, I guess.

Let's put it this way that we have maintained the margin for Sealing Solutions, while -- which is no surprise, the volumes have been down. And the volumes have been down for quite some time, all through '24.

And yet we still maintain the margins. So of course, when the market is normalizing, the profitability will come back also.

And while -- we should note that while benefiting, we haven't made an entry. So semiconductor is benefiting from.

We are growing the aerospace. Of course, there is parts of Sealing Solutions, which has kind of compensated for this -- yes, lower demand in once again in the core industrial segment.

So that is, I think, as much as we -- yes, we can elaborate more on that in a separate call, but that is the way we look at it. What was the second question, Forbes, I can't remember.

It was regarding the bolt-on, the valuation multiples.

Bolt-on and the valuation, I mean, we -- generally, when we talk, let's say, the single digit, let's say, EBITA multiples. And then on top of that, of course, we have synergies.

Generally, as you say, the bolt-ons comes in with a lower margin than our overall margin. But I mean, on top of that, we have synergies.

We don't expect them to kind of push down the overall margin over -- if you look, let's say, beyond a few quarters. So we don't -- and we don't expect them.

I mean they are not on the size that are going to be kind of impacting the overall margin. Once we have integrated them and ones we have them in, then there will not be any kind of margin deterioration coming from.

But once they come in immediately when they come in, more or less all of them is coming in with kind of a lower margin than our average margin. And that is, unfortunately, we are not to highlight ourselves too much, but I mean, we are more profitable than most of our competitors and that is also, of course, reflected when we make the acquisitions.

Two questions from me. Coming back to Sealing Solutions, you highlighted off-highway construction still being weak.

Where do you think you are in that cycle? We're starting to -- from the OEM side, starting to see some pickup and improvement.

Is there a lag between your development towards this? And how should we think about that?

Second question is more related to the outlook for Q1, a small increase. Could you maybe share some light on which parts or slightly better sequentially?

Looking at the off-highway, I think there is underproduction. I think several of the big OEs are clearly telling that underproducing and they're cutting inventories.

And so from -- although I don't expect kind of the overall market for construction equipment to improve short term, I think our deliveries will improve. So we are kind of at the low end of the cycle because this quarter and the last few quarters, we've been kind of double hit by, let's say, a little bit lower underlying demand and on top of that, underproduction at some of the major customers.

For the overall kind of construction, residential construction or commercial construction, it's kind of difficult, but we do see that for parts of the -- how should I say, the part of the residential in Europe, I mean, looking at a little bit in a positive way, we do feel that we may be at the end of the cycle. But I mean, it's not easy to really see through that.

We are mainly exposed in that area in Europe to kind of window manufacturing where we do see that some of the bigger window manufacturer -- we have another one in South Sweden, where I think it's turning a little bit positive on that one. So there is there is momentum.

And then, of course, we have also in that area, also an exposure to pipe seals, which is kind of sewage pipe, water pipes, where we also see the continued fairly high investment levels. So we do feel that, that segment is probably going up.

And then the other one in North America, we are more exposed to more -- what is called, facade seals, which is kind of more bigger house construction, sky rises, there is more challenging, and we do not see any kind of uptick on that one. So it's a mixed bag in these segments, which is negative.

But overall, we do not see them at least going south anymore. So we do expect them to move up from this level, but maybe not already in Q1.

But at least, we don't see them continuing down. Then about the demand there, I didn't really follow your...

No, it was more...

Flattish because our guidance is flattish and not to grow.

No, exactly. But I think you guided down ahead of Q3, so there's more change on the positive side and then perhaps...

Yes. I mean the small positive area is I think we said already that, that is, what we call this, LNG marine construction is slightly better.

But I mean, it's -- at the end of the day, Hampus, to be honest, it's fine-tuning. I mean we talked 1 or 2 percentage points here and there.

And I mean, it's not really a major thing for us, to be honest. I mean this is kind of flattish for us, whether it's 0 or plus 1% or even minus 1%.

I think this is some tens of percentage points when you round it up. So that is not really, let's say, a big thing for us.

I think our guidance is flattish with this, and that means plus/minus 1% or something, which is difficult to really do the full judgment. I mean maybe I should -- I mean, I was getting a little bit -- how should I say, a little bit complicated.

But nevertheless, I mean, because I mean, the uncertainty here for us, to be very transparent on that one. And we look, of course, order bookings going into a quarter.

Historically, you've been -- quite a lot of order in quarter -- for sales in the quarter. Let's say, now post COVID and following that due to uncertainties in global supply chains, it has been -- let's say, the increasing number of orders before the quarter going in, let's say, executed in sales less in-quarter sales.

Now as the supply chain is getting more stable, it's getting better, we see a reversing trend again. And that is where it makes a little bit analysis for us more difficult.

I mean you follow what I mean, Hampus. So that is where we have -- see a growth in in-quarter sales, but we are still not at the level which we had in kind of '18 and '19.

But before '18, '19, '20, then it was kind of still even more in-quarter orders for sales in the quarter. And that is kind of our uncertainty.

And that is why our guidance gets a little bit tricky at the moment since we see that the ordering pattern of some of our customers is actually changing, because if we go back to what we have in '18, '19, then, of course, it will create a very strong growth in Q1, but we do not expect that to happen yet. And so that is kind of uncertainty simply to be very transparent on that, Hampus, and that is why we are a little bit hesitant on the guidance in certain aspects.

This is Magnus here on behalf of Agnieszka. A couple of questions from our side.

First, on the order growth or the revenue growth momentum in aerospace. You weathered the Boeing issues very well, apparently.

Could you sort of give some clarity around how you managed that in such a good manner? And separately, could you also talk a little bit about the overall momentum you've seen in aerospace in this year?

And if you have any color on next year, that would be very helpful.

Overall, is still very positive. Overall, there is order growth for the customers and that means order growth for us as well.

Continue to be struggles in the supply chain, and that is where the Boeing impact was probably -- let's say, less than you could have believed from the outside. But because Boeing still had shortage of some components and they will continue to order to fill up some gaps in their supply chain in order to create more security for them going forward.

And we were kind of lucky or fortunate in that one that our products, they wanted more of those products, they wanted to fill up. They wanted to fill up in order to be ready to manufacture.

And I mean, now I think continued guidance, honestly, they're moving -- changing it all the time. But I mean, Boeing still having the plans substantial growth for the number of the 737s being manufactured every month, whether they will be able to execute, the demand is there.

So it's not going to -- it's going to be more related to that all these -- I don't know, 100,000 suppliers will be, that they are able to cope with this and they're able to kind of deliver their part of the airplane. So the underlying demand is there.

The order intake is there. And then whether the actual supply will happen, that has to be more related to the kind of the execution or the running of factories in Boeing and Airbus, of course, as well is the same.

So both of them are more challenged but a very high demand actually than anything else. So that is more for everybody.

I shouldn't put blames on them, but it means also that there are several suppliers, including us in certain segments, you still have substantial ramp-ups. And it's not easy to, let's say, grow by 15% or something, whatever it might be.

But still -- we still look at the aerospace as a very good one. And on top of that, of course, also you have a military ramp-up in certain areas, although that must be very, let's say -- must look at that with some caution because, I mean, the military demand which some people speak about is still a very, very minor part of the overall aerospace demand.

I mean the aerospace demand is still primarily driven by the manufacturing or deliveries of 737s and 320 -- I mean, Airbus A320 and Boeing 737. I mean these 2 platforms, I don't know if it's 80% or something like that, 80% of the overall aerospace segment.

So these are the 2 platforms and the 2 models that needs to be tracked. And I mean both Boeing and A320 are giving kind of updates on how many deliveries they've done every month.

So that is something -- and both of them have very ambitious plan to make more aircraft, let's say, during 20 -- substantially more aircraft during '25 compared to '24. And then whether they will be able to do it, let's see.

They've had these ambitious plans before and then they've been challenged by strikes or a lot of issues in order not to be able to deliver. But order intake is not a problem.

They have still orders for 5 years plus ahead.

And then we, of course, also a customer speaking here, we also made more inroads into the aftermarket of aerospace also, for instance, represented by the latest acquisition of Magee. So that brings additional growth for us.

Because that is also when we look at the aerospace, I don't know how aerospace industry, because this lack of ability to deliver new aircraft means also that they are -- we see more kind of renovation upgrades of existing aircraft simply because they recognize that they need to run them a few more years than originally planned because they cannot get the new aircraft. So we -- in our strategy, we have good positions with Boeing.

We have good position with Airbus. We're going to grow with them for 727 and 320 as they are, let's say, ramping up.

But the third kind of big growth engine for Trelleborg is that we have these entrances into the aftermarket, which is offering -- honestly, both good margins, but also offering, let's say, good growth opportunities. So the share of the overall aerospace market related to aftermarket is growing.

I think if you look 10 years back, it's been more or less doubled on the totality there, simply because the inability of the big suppliers to satisfy the demand for new aircraft. So overall, we are confident on the aerospace.

We are building good positions. We have a global presence.

So we feel confident that we're going to benefit from the aerospace growth for several years to come.

Perfect. That's very clear.

Can I just squeeze one final question? Is there any possibility you can give some indication of how or what the impact was on the top line from the large orders in the quarter?

Is that a meaningful way of looking at it? Anything would be helpful.

Sorry, good question again. Christofer, maybe you want to take it.

I assume you're talking about the Industrial Solutions orders. We were talking about the marine projects.

Yes, exactly.

Yes. Well, Peter addressed that.

The margin per se is not necessarily higher than the underlying business. It's just that we have good volume and good execution in the factories, which brings obviously a good drop-through also.

But that is kind of similar as the aerospace. The demand is there.

The order book is there, but there's simply a lot of lack of overall capacity to satisfy. It is heavily increasing demand short term.

So also there, we feel confident that, that's going to be a good market for us.a few years to go. But I mean, overall, as a quarter-on-quarter uptick is going to be challenging because we are not the only supplier, there are plenty of suppliers in that and there kind of full, if you take the Korean shipyards, the Chinese shipyards, so they are full.

They cannot manufacture any more LNG carriers at the moment. So that is kind of the one.

There is a lot of import and export terminals being, let's say, planned for LNG. And we're going to be in all of them.

But these projects, we know from history is going to take time. And that is why we see that there is projects already now.

We know it's going to happen in 5 years. I mean we don't have the orders yet, but we know we're going to get the orders.

So we feel confident that, that's going to be also a good market for us for several years to come.

Great. Thanks to all of you for listening in on this, and thanks for your continued interest in Trelleborg.

If you have any follow-up questions or any further comments, of course, as usual, Christofer is always available and Fredrik and myself are also almost always available. And hope to catch up with you, and do take care and keep up the good work.

Thank you. Bye.