Q2 2026 FLSmidth & Co A/S Earnings Call

August 19, 2026

Speaker #1: Good morning and good afternoon, everyone, and welcome to the FLS Q2 Investor Call. My name is Tony Laaksonen, and I'll be presenting today with our CFO, Roland Andersen.

Toni Laaksonen: Good morning and good afternoon, everyone, and welcome to the FLSmidth Q2 investor call. My name is Toni Laaksonen, and I will be presenting today with our CFO, Roland Andersen. We start the presentation with the Q2 highlights. First deep diving to the market and commercial aspects. From there, we can say that with two business lines, we saw excellent development in Q2. The service business line continued their strong commercial performance, with their order intake, and we were growing +14% organically in Q2, which was excellent development and continued development compared to the previous quarters. With our pumps, cyclones, and valves, we demonstrated similar great development, and we were gaining some shares from the market and grew 18% organically in Q2, which was clearly ahead of the certain peers.

Toni Laaksonen: Good morning and good afternoon, everyone, and Welcome to the FLSmidth Q2 Investor Call. My name is Toni Laaksonen, and I will be presenting today with our CFO, Roland Andersen. We start the presentation with the Q2 highlights. First deep diving to the market and commercial aspects. From there, we can say that with two business lines, we saw excellent development in Q2. The service business line continued their strong commercial performance, with their order intake, and we were growing +14% organically in Q2, which was excellent development and continued development compared to the previous quarters. With our pumps, cyclones, and valves, we demonstrated similar great development, and we were gaining some shares from the market and grew 18% organically in Q2, which was clearly ahead of the certain peers.

Speaker #1: We start the presentation with the Q2 highlights. So first, deep diving into the market and commercial aspects, and from there we can say that with two business lines, we saw excellent development in Q2.

Speaker #1: The service business line continued their strong commercial performance with their order intake, and we were growing plus 14% organically in Q2, which was excellent development, and continued development compared to the previous quarters.

Speaker #1: Then with our pump cyclones and valves, we demonstrated similar great development, and we were gaining some shares from the market, and grew 18% organically in Q2, which was clearly ahead of the certain peers.

Speaker #1: Then, on the other hand, with our orders, we saw some development now with the bigger, larger orders. The first one was awarded during the quarter, and that came from South Asia for our Products business line. It was around DKK 300 million, and in this case we were awarded to supply technologies related to an iron ore beneficiation project.

Toni Laaksonen: On the other hand, with our orders, we saw some development now with the bigger, larger orders, and the first one was now awarded during the quarter. That came from South Asia, for our products business line, and it was around DKK 300 million. In this case, we were awarded to the supply technologies related to an iron ore beneficiation project. So a good order for us and demonstrates that the market activity is building up also with the bigger projects. A few words on the financial highlights. Our revenue development was great throughout the business lines. All three business lines demonstrated excellent revenue conversion in Q2, and we were growing organically by 16%. On the other hand, this revenue conversion was showing up in our margins, and EBITA margin improved significantly, and we landed at the level of 17.3.

Speaker #1: So, a good order for us, and it demonstrates that market activity is building up, also with the bigger projects. Then, a few words on the financial highlights.

Speaker #1: Our revenue development was strong across all business lines. All three business lines demonstrated excellent revenue conversion in Q2, and we achieved organic growth of 16%.

Speaker #1: Then, on the other hand, this revenue conversion was showing up in our margins, and EBITDA margin improved significantly. We landed at a level of 17.3.

Speaker #1: So, good development there. So, a 2% jump from the previous year—great development. Then, one of the development areas for us is the cash flow.

Toni Laaksonen: So good development there. So a 2% jump from the previous year. So great development. One of the development areas for us is the cash flow. With our cash flow, we were impacted by our net working capital. So net working capital was building up during the quarter, and therefore, we did not have positive cash flow, and we will come back to this topic later in the presentation. Strategic and corporate highlights. There we are developing well, with our share buyback program. So it was launched, and we have been now progressing with the share buybacks according to the original plan. On the other hand, we have been developing now the new team set up with FLSmidth, and we have made several executive appointments after the quarter. So four positions and nominations were announced. First of all, our general counsel was nominated.

Speaker #1: With our cash flow, we were impacted by our net working capital. So net working capital was building up during the quarter, and therefore we didn't have positive cash flow. We will come back to this topic later in the presentation.

Speaker #1: Then, strategic and corporate highlights. There, we are developing well with our share buyback program. It was launched, and we have now been progressing with the share buybacks according to the original plan.

Speaker #1: Then, on the other hand, we have been developing the new team setup with FLS, and we made several executive appointments after the quarter, so four positions and nominations were announced.

Speaker #1: First of all, our General Counsel was nominated. Today, we announced the Chief People Officer nomination, and then we also have a new position within the executive team called Chief Strategy and M&A Officer.

Toni Laaksonen: Today, we announced the Chief People Officer nomination, and we also have a new position within the executive team called Chief Strategy and M&A Officer, who will join us next year. We as well announced the new President for the service business line. All these announcements then support our new way forward and our growth plans. Today, we also informed about certain adjustments to our financial guidance, and we practically narrowed the guidance with our revenue growth so that we expect to grow between 0% to 4%. Previously, it was -1% to 4%. With the adjusted EBITA margin, we expect to land between 16% to 16.5%. Previously, it was 15.5% to 16.5%. So good development also from the strategic point of view. Moving on to the sustainability aspects.

Speaker #1: Who will join us next year, and then we also announced the new president for the service business line. All these announcements then support our new way forward and our growth plans.

Speaker #1: Today we also informed about certain adjustments to our financial guidance, and we have practically narrowed the guidance for our revenue growth so that we expect to grow between 0% to 4%.

Speaker #1: Previously, it was minus 1% to 4%, and then, with the adjusted EBITDA margin, we expect to land between 16% and 16.5%. Previously, it was 15.5% to 16.5%.

Speaker #1: So, good development also from the strategic point of view. Then, moving on to the sustainability aspects—we had positive development with our safety, and we can be very happy about that one.

Toni Laaksonen: Here we had a positive development with our safety, and we can be very happy about that one. Our injury rate improved during the quarter, and we have been seeing continuous positive development this year with our health and safety figures. That's positive. With the other sustainability measures and KPIs, we were not trending that well, so there were slight decline throughout the other KPIs. Some seasonality impacted on this, for instance, related to the water consumption and emissions. On the other hand, one update was done with our reporting practices, so the Scope 3 greenhouse emissions are being reported annually from now on. Therefore, we have been taking that off from the quarterly reports. A few words on the market outlook and how we are seeing the mining business development.

Speaker #1: Our injury rate improved during the quarter, and we have been seeing continuous positive development this year with our health and safety figures. So that's positive.

Speaker #1: Then, with the other sustainability measures and KPIs, we were not trending that well. So there was a slight decline throughout the other KPIs, with some seasonality impacting this—for instance, related to water consumption and emissions.

Speaker #1: And then, on the other hand, one update was done with our reporting practices, so the Scope 3 greenhouse emissions will be reported annually from now on.

Speaker #1: So, therefore, we have been taking that off from the quarterly reports. Then a few words on the market outlook and how we are seeing the mining business development.

Speaker #1: As we have been stating previously, we see the same outlook with the bigger mining projects. Most of them are very active at the moment.

Toni Laaksonen: As we have been stating previously, we see the same outlook with the bigger mining projects. Most of them are very active at the moment when it comes to our customer base. There's more and more engineering activity, and the pipeline is building up. Copper and gold prices are still at relatively high levels, which is then supporting the pipeline, and especially with these commodities, we are seeing a lot of major movement. Based on this, we still expect that in the end of this year and next year, we are seeing larger greenfield projects being sanctioned. Therefore we believe that in the end of this year and next year, some of these projects will materialize and will be visible in our orders. Positive development in that sense, and the outlook remains as we have been stating previously.

Speaker #1: When it comes to our customer base, there's more and more engineering activity and the pipeline is building up. Copper and gold prices are still at relatively high levels, which is then supporting the pipeline.

Speaker #1: And especially with these commodities, we are seeing a lot of major movement. Based on this, we still expect that at the end of this year and next year, we will see larger greenfield projects being sanctioned.

Speaker #1: And therefore, we believe that at the end of this year and next year, some of these projects will materialize and will be visible in our orders.

Speaker #1: So, positive development in that sense, and the outlook remains as we have been stating previously. Then, on the other hand, with the brownfield sites, we see a positive development.

Toni Laaksonen: On the other hand, with the brownfield sites, we see a positive development. All the miners are running their sites as fast as possible and are trying to develop their efficiency. From our point of view, this is visible then with the service business line orders and with our pumps, cyclones, and valves. There are smaller replacement investments taking place, upgrades, modernizations, and of course, all these sites require services and maintenance, which is helping us then from the service point of view. There is robust outlook for the services and PC&V business lines in this respect. We expect that the order intake development and revenue conversion continue in a solid manner during the next quarters. When deep diving into the business lines, we start from the service side.

Speaker #1: So all the miners are running their sites as fast as possible and trying to develop their efficiency. From our point of view, this is then visible with the service business line orders, and with our pump cycles and valves.

Speaker #1: So there are smaller replacement investments taking place—upgrades, modernizations—and of course, all these sites require services and maintenance, which is helping us from the service point of view.

Speaker #1: So, there is a robust outlook for the Services and PCV business lines in this respect, and we expect that the order intake development and revenue conversion will continue in a solid manner during the next quarters.

Speaker #1: Then, when deep diving into the business lines, we start from the service side. So, as mentioned previously in the call, order intake was very positive with our service business line.

Toni Laaksonen: As mentioned previously in the call, order intake was very positive with our service business line. We were up organically +14% in the quarter and then 16% year on year. On the other hand, we're looking at the longer-term development. The H1 was great for the service business line, so +17%, and now we have been having good order intake level throughout the last three quarters. Very positive market development there. The revenue conversion improved pretty nicely compared to Q1. We were up with our revenue pretty significantly compared to Q1 this year, and that demonstrated then that our supply chain worked well during the Q2, and we expect that the same continue within the next quarters. Of course, this revenue conversion has helped us then to reach higher profitability in the quarter.

Speaker #1: So, we were up organically, plus 14% in the quarter, and then 16% year on year. Then, on the other hand, we're looking at the longer-term development.

Speaker #1: The first half was great for the service business line—so plus 17%. And now, we have been having good order intake levels throughout the last three quarters.

Speaker #1: So, very positive market development there. And then the revenue conversion improved pretty nicely compared to Q1. So we were up with our revenue pretty significantly compared to Q1 this year, and that demonstrated then that our supply chain worked well during Q2, and we expect that the same will continue within the next quarters.

Speaker #1: And of course, this revenue conversion helped us then to reach higher profitability in the quarter. So, great development in Q2 with services. Then we're looking at the margin.

Toni Laaksonen: So great development in Q2 with services. The margin was a bit lower in Q1 with our service business line, but now when the revenue conversion improved, we jumped to the normal levels with this business line. So a bit over 20%, and as we have been stating, the normalized level with services is somewhere between 19% to 20%. So this is something that we are expecting from this business line when moving forward. So a very good quarter for the service business line, all in all. Our products was converting revenue very fast in Q2, and that was a really positive outcome from the products side. And they had their project portfolio well under control, and the deliveries were improved so that we were executing faster and faster throughout the quarter, which was then visible in our revenue.

Speaker #1: The margin was a bit lower in Q1 with our service business line, but now, when the revenue conversion improved, we jumped to the normal levels with this business line.

Speaker #1: So, a bit over 20%, and as we have been stating, the normalized level with Services is somewhere between 19% to 20%. So this is something that we are expecting from the business line when moving forward.

Speaker #1: So, a very good quarter for the service business line all in all. Then our products were converting revenue very fast in Q2, and that was a really positive outcome from the products side. They had their project portfolio well under control, and the deliveries were improved.

Speaker #1: So, we were executing faster and faster throughout the quarter, which was then visible in our revenue. So, good supply chain management from their side, which was then visible in our revenue figures.

Toni Laaksonen: Good supply chain management from their side, which was then visible in our revenue figures. So good development all in all in Q2, and as a result of this, our organic revenue growth is now on the positive side when it comes to the H1 figures. With the order intake, we were up compared to last year, slightly up, and the H1 landed a bit lower than last year. But all in all, we are seeing the same development here that we expect that during the end of the year, we are seeing the larger orders. Our products business line is heavily dependent on the larger orders when it comes to the order intake, and therefore, we believe that the order intake will improve in the end of this year and then next year.

Speaker #1: So, good development all in all in Q2, and as a result of this, our organic revenue growth is now on the positive side when it comes to the first half figures.

Speaker #1: Then with the order intake, we were up compared to last year—slightly up—and then the first half landed a bit lower than last year.

Speaker #1: But all in all, we are seeing the same development here that we expect; that during the end of the year, we are seeing the larger orders. Our Products business line is heavily dependent on the larger orders.

Speaker #1: When it comes to the order intake, we believe that the order intake will improve at the end of this year and then again next year.

Toni Laaksonen: A very positive side with the products business line was the profitability development. So when the revenue conversion improved, we also jumped to the black figures. So now we have the H1 results done with the products, and the end result and outcome was that we are a bit above zero, which is an excellent achievement compared to the previous years. So this is excellent development from the product side. And of course, there are still fluctuation with the quarterly figures, but we are getting more and more towards the situation where we are continuously on the black figures with this product line. The third business line, pumps, cyclones, and valves. A very positive quarter over here. So we are gaining the momentum and keeping it up with our orders.

Speaker #1: A very positive aspect for the Products business line was the development of profitability. As revenue conversion improved, we also moved into positive figures.

Speaker #1: So now we have the first half results done, with the products, and the end result and outcome was that we are a bit above zero, which is an excellent achievement compared to previous years.

Speaker #1: So this is excellent development from the product side, and of course, there are still fluctuations with the quarterly figures, but we are getting more and more towards the situation where we are continuously in the black figures.

Speaker #1: With this product line. Then the third business line: pump cycles and valves. A very positive quarter over here, so we are gaining momentum and keeping it up with our orders.

Speaker #1: So, the order intake has been at a very good level, and developing positively already throughout the last three quarters. An excellent development in that sense, as we were growing close to 20% in Q2.

Toni Laaksonen: The order intake has been on a very good level and developing positively already throughout the last three quarters. And excellent development in that sense that we were growing close to 20% in Q2. Also, the revenue conversion improved with PCV compared to Q1, and that was a great achievement from the business line, leading to a fact that the organic revenue growth was 8% during the H1 of the year. So all in all, a really good start for the PCV business line, and the outlook remains very positive here. Of course, when the revenue conversion improved, it also helped us with our margins. The margins were in line with the expectations. There were certain mix-related things between our product and aftermarket deliveries, which were impacting on the margin slightly. But all in all, the margin was at the expected level.

Speaker #1: Also, the revenue conversion improved with PCV compared to Q1, and that was a great achievement from the business line, leading to the fact that the organic revenue growth was 8% during the first half of the year.

Speaker #1: So, all in all, a really good start for the PCV business line, and the outlook remains very positive here. Then, of course, when the revenue conversion improved, it also helped us with our margins.

Speaker #1: The margins were in line with expectations. There were certain mix-related things between our product and aftermarket deliveries which were impacting the margin slightly, but all in all, the margin was at the expected level.

Toni Laaksonen: There were certain mix-related things between our product and aftermarket deliveries, which were impacting on the margin slightly. But all in all, the margin was at the expected level. So good development in DKK, especially. The margin in DKK jumped from Q1 quite nicely. So a positive story with the pumps as well, in line with the services. Now we move on to the financials, and I hand over to Roland.

Speaker #1: So, good development in DKK especially. The margin in DKK jumped from Q1 quite nicely, so a positive story with the pumps as well, in line with the services.

Toni Laaksonen: So good development in DKK, especially. The margin in DKK jumped from Q1 quite nicely. So a positive story with the pumps as well, in line with the services. Now we move on to the financials, and I hand over to Roland.

Speaker #1: Now we move on to the financials, and I hand over to Roland.

Speaker #2: Yeah, thank you for that, Tony. And as you say, 14% growth overall in order intake and 17% growth nominally in revenue. And with cost in check, that means we can post an adjusted EBITDA margin of 17.3%.

Roland M. Andersen: Yeah. Thank you for that, Toni. As you say, 14% growth overall in order intake and 17% growth nominally in revenue. With cost in check, that means we can post an adjusted EBITA margin of 17.3%. After taxes and financials and a few other bits and pieces, profit for the period of DKK 441 million. Gross margin stayed at a healthy level. There is clearly a positive mix on company level from the product business line still only being about 20% of total revenue, but still a strong and healthy gross margin delivered by all three business lines. Our SG&A costs are slightly up in Q2, but as a percentage of revenue, it is down to 17.8% for the quarter. All this higher revenue triggers through to the 17.3% EBITA margin, as also Toni touched upon.

Roland Andersen: Yeah. Thank you for that, Toni. As you say, 14% growth overall in order intake and 17% growth nominally in revenue. With cost in check, that means we can post an adjusted EBITA margin of 17.3%. After taxes and financials and a few other bits and pieces, profit for the period of DKK 441 million. Gross margin stayed at a healthy level. There is clearly a positive mix on company level from the product business line still only being about 20% of total revenue, but still a strong and healthy gross margin delivered by all three business lines. Our SG&A costs are slightly up in Q2, but as a percentage of revenue, it is down to 17.8% for the quarter. All this higher revenue triggers through to the 17.3% EBITA margin, as also Toni touched upon.

Speaker #2: And after taxes and finances and a few other bits and pieces, profit for the period of 441 million. Gross margin stayed at a healthy level, as clearly a positive mix on company level from the product business line, still only being about 20% of total revenue.

Speaker #2: But still, a strong and healthy gross margin was delivered by all three business lines. Our SG&A costs are slightly up in Q2, but as a percentage of revenue, it's down to 17.8% for the quarter.

Speaker #2: All this higher revenue flows through to the 17.3% EBITDA margin, as Tony also touched upon. Our net working capital is up, and it's predominantly driven by growth after three quarters of book-to-bill above 100.

Roland M. Andersen: Our net working capital is up, and it is predominantly driven by growth after three quarters of book-to-bill above 100. We are now starting to convert the backlog significantly higher levels to revenue, and that sits in an ongoing deliveries and work in progress and to a certain extent in inventories. If we look at our cash flows, our EBITA earnings are up but mitigated completely by the change in working capital. That means that our CFFO is minus DKK 84 for the quarter. Adjusting for CapEx and investments and a bit M&A, then our free cash flow is minus DKK 135 for the quarter. But that also means that we are keeping our leverage at 0.6x, that it has been for a number of quarters now, plus minus, well below our capital structure target of 2x.

Roland Andersen: Our net working capital is up, and it is predominantly driven by growth after three quarters of book-to-bill above 100. We are now starting to convert the backlog significantly higher levels to revenue, and that sits in an ongoing deliveries and work in progress and to a certain extent in inventories. If we look at our cash flows, our EBITA earnings are up but mitigated completely by the change in working capital. That means that our CFFO is minus DKK 84 for the quarter. Adjusting for CapEx and investments and a bit M&A, then our free cash flow is minus DKK 135 for the quarter. But that also means that we are keeping our leverage at 0.6x, that it has been for a number of quarters now, plus minus, well below our capital structure target of 2x.

Speaker #2: We are now starting to convert the backlog at significantly higher levels to revenue, and that sits in ongoing delivery and work in progress, and to a certain extent, in inventories.

Speaker #2: If we look at our cash flows, our EBITDA earnings are up, but mitigated completely by the change in working capital. That means that our cash flow from operating activities is minus 84 for the quarter.

Speaker #2: And adjusting for Capex and investments and a bit of M&A, then our free cash flow is minus 135 for the quarter. But that also means that we are keeping our leverage at 0.6x, as it has been for a number of quarters now, plus or minus, well below our capital structure target of 2x.

Speaker #2: We still have a lot of dry powder for M&A, and we continue to deliver on our share buyback program, which by the close of business yesterday was a bit more than 40% completed.

Roland M. Andersen: We still have a lot of dry powder for M&A, and we continue to deliver on our share buyback program that by the end of close of business yesterday was a bit more than 40% completed. On the back of a highly satisfactory H1, we are adjusting our financial guidance for 2026 a bit, and Toni touched upon this. So we are adjusting our growth margin for the total company from previously minus 1% to 4% to now 0% to 4%, and we are narrowing the EBITA margin expectations from previously 15.5% to 16.5% to now 16% to 16.5%. If you have a quick look on the bridge, how the 0% to 4% is expected to play out. We now expect the service business to grow 3% to 5%. I think previously we said 2% to 5%. Products unchanged, minus 5% to minus 15%.

Roland Andersen: We still have a lot of dry powder for M&A, and we continue to deliver on our share buyback program that by the end of close of business yesterday was a bit more than 40% completed. On the back of a highly satisfactory H1, we are adjusting our financial guidance for 2026 a bit, and Toni touched upon this. So we are adjusting our growth margin for the total company from previously minus 1% to 4% to now 0% to 4%, and we are narrowing the EBITA margin expectations from previously 15.5% to 16.5% to now 16% to 16.5%. If you have a quick look on the bridge, how the 0% to 4% is expected to play out. We now expect the service business to grow 3% to 5%. I think previously we said 2% to 5%. Products unchanged, minus 5% to minus 15%.

Speaker #2: And on the back of a highly satisfactory first half, we are adjusting our financial guidance for 2026 a bit. And Tony touched upon it. So we are adjusting our growth margin for the total company from previously minus 1 to 4, to now 0 to 4.

Speaker #2: And we are narrowing the EBITDA margin expectations from previously 15.5 to 16.5, to now 16 to 16.5. And if we have a quick look at the bridge for how the 0 to 4% is expected to play out, we now expect the service business to grow 3 to 5%. I think previously we said 2 to 5%.

Speaker #2: Products unchanged, minus 5% to minus 15%. And our pumps business is expected to do slightly better—instead of 4% to 7%, now 5% to 8% for the full-year organic growth.

Roland M. Andersen: Our pumps business is expected to do slightly better instead of 4% to 7% now, 5% to 8% for the full-year organic growth. Our EBITA margin bridge is our adjusted margin. We adjust about 1 percentage point for predominantly ERP-related costs that we are currently rolling out on the negative side. On the positive side, OOI means other operating income, and this is predominantly the sale of the Valby headquarters in Q1 will leave us to a reported EBITA margin of about 20% to 20.5%. We have just sent out the invite to the Capital Markets Day. It is going to be on 17 November, as you know, and it will be held here in Copenhagen at our new headquarters. We expect that to be 4 hours from 1:00 PM to 5:00 PM. I think the register is open for sign-ups as we speak.

Roland Andersen: Our pumps business is expected to do slightly better instead of 4% to 7% now, 5% to 8% for the full-year organic growth. Our EBITA margin bridge is our adjusted margin. We adjust about 1 percentage point for predominantly ERP-related costs that we are currently rolling out on the negative side. On the positive side, OOI means other operating income, and this is predominantly the sale of the Valby headquarters in Q1 will leave us to a reported EBITA margin of about 20% to 20.5%.

Speaker #2: And our EBITDA margin bridge is our adjusted margin; we adjust about a percentage point for predominantly ERP-related costs that we are currently rolling out.

Speaker #2: On the negative side, and on the positive side, OOI means other operating income, and this is predominantly the sale of the Valby headquarters in Q1, which will lead us to a reported EBITDA margin of about 20% to 20.5%.

Speaker #2: We have just sent out the invite to the Capital Markets Day. It's going to be on 17 November, as you know, and it will be held here in Copenhagen at our new headquarters.

Roland Andersen: We have just sent out the invite to the Capital Markets Day. It is going to be on 17 November, as you know, and it will be held here in Copenhagen at our new headquarters. We expect that to be 4 hours from 1:00 PM to 5:00 PM. I think the register is open for sign-ups as we speak. We hope to see a lot of you there. With that, I think we give it over to Q&A.

Speaker #2: And we expect that to be four hours, from 1:00 p.m. to 5:00 p.m. And I think the registers are open for sign-ups as we speak.

Speaker #2: So we hope to see a lot of you there. And with that, I think we’ll hand it over to Q&A.

Roland M. Andersen: We hope to see a lot of you there. With that, I think we give it over to Q&A.

Speaker #1: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handsets before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

Speaker #1: To withdraw your question, please press Start, then 2. At this time, we will pause momentarily to assemble our roster.

Chip: Hi, Toni, Roland. Thank you for taking my questions. I have three, please. My first question is just on the full year guide where you have only nudged it up slightly towards the top end. Given the strong Q2 results, should we see that there are maybe some early deliveries, which would mean that Q2 might be slightly softer than where we had expected? Specifically thinking on service, where you had previously communicated a more gradual pickup through the year on sales and margins. Thank you.

[Unknown Analyst]: Hi, Toni, Roland. Thank you for taking my questions. I have three, please. My first question is just on the full year guide where you have only nudged it up slightly towards the top end. Given the strong Q2 results, should we see that there are maybe some early deliveries, which would mean that Q2 might be slightly softer than where we had expected? Specifically thinking on service, where you had previously communicated a more gradual pickup through the year on sales and margins. Thank you.

Speaker #3: Hi, Tony Roland. Thank you for taking my questions. I have three, please. My first question is just on the full-year guide, where you've only nudged us up slightly towards the top end.

Speaker #3: Given the strong Q2 results, should we see that there were maybe some early deliveries, which would mean that Q3 might be slightly softer than where we would expect?

Speaker #3: Specifically regarding service, you had previously communicated a more gradual pickup throughout the year in terms of sales and margins. Thank you.

Speaker #2: Yes, so if we start with the margins, I think it's still a little wobbly. As you know, our Q4 is typically the strong quarter.

Roland M. Andersen: Yeah. If we start with the margins, I think it is still a little wobbly. As you know, our Q4 is typically the strong quarter. In Q2, we know for a fact that the product business line will not convert nearly as much revenue as they did in Q2. So it is a little bit swingy. We expect from the guidance a slightly lower margin in the second half from the total business, and it is a bit swingy. Maybe the pumps will do slightly better, products will do slightly worse, and then products will be back in black numbers as from Q4 as we have promised before.

Roland Andersen: Yeah. If we start with the margins, I think it is still a little wobbly. As you know, our Q4 is typically the strong quarter. In Q2, we know for a fact that the product business line will not convert nearly as much revenue as they did in Q2. So it is a little bit swingy. We expect from the guidance a slightly lower margin in the second half from the total business, and it is a bit swingy. Maybe the pumps will do slightly better, products will do slightly worse, and then products will be back in black numbers as from Q4 as we have promised before.

Speaker #2: And in Q3, we know for a fact that the product business line will not convert nearly as much revenue as they did in Q2.

Speaker #2: So it's a little bit swinging. So we expect, from the guidance, slightly lower margin in the second half from the total business. And it's a bit swinging—maybe the pumps will do slightly better, products will do slightly worse.

Speaker #2: And then products will be back in black numbers in Q4, as we have promised before.

Speaker #3: Okay, very clear. And then my second question, my second question is just on the net working capital, where I understand that there was obviously a build to support the service and PC&V sales for the remainder of the year.

Chip: Okay, very clear. My second question is just on net working capital, where I understand that there was obviously a build to support the service and PCV sales for the remainder of the year. Is it right to assume a strong unwind then in Q3? Does this show any expectations for the full year?

[Unknown Analyst]: Okay, very clear. My second question is just on net working capital, where I understand that there was obviously a build to support the service and PCV sales for the remainder of the year. Is it right to assume a strong unwind then in Q3? Does this show any expectations for the full year?

Speaker #3: So, is it right to assume a strong unwind then in Q3? And does this change any expectations for the full year?

Speaker #2: Yes, so we're not going to give you a number today, but we won't see an immediate unwind. There's a significantly higher conversion of the backlog into revenue, and for a while, that will sit in work in progress.

Roland M. Andersen: Yeah. We are not going to give you a number today, but we will not see an immediate unwind. There is a significantly higher conversion of the backlog into revenue, and for a while, that will sit in work in progress. I think also the inventory levels are up to a higher level to support both the footprint expansion in the service business line, but to a certain extent, also the same in our pumps business. The unwind of work in progress will happen throughout 2027.

Roland Andersen: Yeah. We are not going to give you a number today, but we will not see an immediate unwind. There is a significantly higher conversion of the backlog into revenue, and for a while, that will sit in work in progress. I think also the inventory levels are up to a higher level to support both the footprint expansion in the service business line, but to a certain extent, also the same in our pumps business. The unwind of work in progress will happen throughout 2027.

Speaker #2: I think also the inventory levels are up to a higher level to support both the footprint expansion and the service business line, but to a certain extent also the same in our pumps business.

Speaker #2: So the unwind of work in progress will happen throughout '27.

Speaker #3: Okay, thank you. And then my final question is just on PC and V. I was just wondering if you could provide a bit more color in terms of the OE and aftermarket mix in sales this quarter.

Chip: Okay. Thank you. My final question is just on PCV. Just wondering if you could provide a bit more color in terms of the OE aftermarket mix in sales this quarter so we can better understand the margin performance.

[Unknown Analyst]: Okay. Thank you. My final question is just on PCV. Just wondering if you could provide a bit more color in terms of the OE aftermarket mix in sales this quarter so we can better understand the margin performance.

Speaker #3: So we can better understand the margin performance.

Speaker #4: Yes, so with PCV, they're roughly right. The split is normally around 30% to 70% as a guideline, so 30% from the equipment business and 70% from the aftermarket.

Toni Laaksonen: Yeah. With PC&V, the roughly right split is normally 30% to 70% as a guideline. So 30% from the equipment business, 70% from the aftermarket. That was the outcome in Q2. Sometimes the equipment content is a bit lower, and then, of course, that mix impact then, of course, might impact on our margin as we spoke in the call. So even slight changes there might adjust then the margin level 1% or 2%. That was visible now with the figures. But all in all, PC&V, great results. Now when the equipment business is as well building up, it will generate an aftermarket when moving forward even more.

Speaker #4: And that was the outcome in Q2. Sometimes the equipment content is a bit lower and then, of course, that mix impact then, of course, might impact our margin, as we spoke about in the call.

Speaker #4: So even a slight change might adjust the margin level by one or two percent. So that was visible now with the figures.

Speaker #4: But all in all, PCV—great results. And now, when the equipment business is also building up, it will generate aftermarket as we move forward, even more.

Speaker #3: Thank you very much.

Chip: Thank you very much.

[Unknown Analyst]: Thank you very much.

Speaker #1: The next question comes from the line of Ed Hassi from UBS. Please go ahead.

Operator: The next question comes from the line of Ed Hussey from UBS. Please go ahead.

Speaker #5: Hi Tony and Roland, thanks for taking my question. Maybe just following up on Chet's question and asking it a slightly different way: the midpoint of guidance seems to imply 0% organic revenue growth in H2.

Ed Hussey: Hi, Toni and Roland. Thanks for taking my question. Maybe just following up on Chip's question and asking it a slightly different way. The midpoint of guidance seems to imply 0% organic revenue growth in H2, and you delivered a book-to-bill of 1.1 times in H1, and you have also got an elevated backlog and not a particularly tough comp. I am just wondering, is there some other kind of headwind that we should think about revenue growth in H2?

Speaker #5: And you delivered a book-to-bill of 1.1 times in H1, and you've also got an elevated backlog and not a particularly tough comp.

Speaker #5: So I'm just wondering, is there— is there not some other kind of headwind that we should think about to revenue growth in H2?

Speaker #2: So there was a bit of a bad connection, but you’re talking about growth or margin? Yeah.

Roland M. Andersen: There was a little bit of a bad connection, but you are talking about growth or margin?

Roland Andersen: There was a little bit of a bad connection, but you are talking about growth or margin?

Ed Hussey: Talking about growth.

Speaker #5: Revenue growth.

Roland M. Andersen: Yeah.

Roland Andersen: Yeah.

Ed Hussey: Revenue growth.

Speaker #2: Yeah. So the Product business is going to convert less revenue in Q3 than they did in Q2. So Q2 was pretty good revenue, considering the backlog for the Product business is going to be less in Q3.

Roland M. Andersen: Well, the product business is going to convert less revenue in Q3 than it did in Q2. So Q2 was a pretty good revenue considering the backlog for the product business is going to be less in Q3. I think all business lines have a pretty tough comp in Q4. So basically all business lines delivered well revenue in Q4 and especially the service business line. So I think you need to see if we hit the midpoint, then we have done quite well for Q4, also with the same growth numbers. That is how we think about it.

Roland Andersen: Well, the product business is going to convert less revenue in Q3 than it did in Q2. So Q2 was a pretty good revenue considering the backlog for the product business is going to be less in Q3. I think all business lines have a pretty tough comp in Q4. So basically all business lines delivered well revenue in Q4 and especially the service business line. So I think you need to see if we hit the midpoint, then we have done quite well for Q4, also with the same growth numbers. That is how we think about it.

Speaker #2: And I think all business lines have a pretty tough comp in Q4. So basically, all business lines delivered well on revenue in Q4, and especially the service business line.

Speaker #2: So, I think if we hit the midpoint, then we have done quite well for Q4, also with the same growth numbers.

Speaker #2: That's how we think about it.

Speaker #5: Okay, that's very helpful, thanks. And then maybe just one more — obviously, some pretty positive commentary on the potential near-term large order FIDs. Is there any chance you could maybe just give us a bit more color in terms of regionally where this comment relates to?

Ed Hussey: Okay. That is very helpful. Thanks. Then maybe just one more. Obviously some pretty positive commentary on the potential near-term large order FIDs. Is there any chance you could maybe just give us a bit more color in terms of regionally what this comment relates to? Is this North and South America and specifically, maybe which countries would be super helpful?

Speaker #5: Is this in North and South America, and specifically, maybe which countries would be super helpful?

Speaker #4: Yeah, so maybe geographically, we can talk about the regions. So, of course, from our perspective, South America is among the biggest, or the biggest, region for us.

Toni Laaksonen: Yeah. So maybe geographically, we can talk about the regions. Of course, from our perspective, South America is among the biggest or the biggest region for us, and there we see quite nice activities, especially with the bigger projects. Then some activities as well in North America and in Central Asia and Africa. But the majority is definitely coming from the South American side.

Speaker #4: And there we see quite nice activities, especially with the bigger projects. And then some activities as well in North America, and in Central Asia and Africa.

Speaker #4: But the majority is definitely coming from the South American side.

Speaker #5: Okay, that's very helpful. Thank you.

Ed Hussey: Okay. That is very helpful. Thank you.

Speaker #1: The next question comes from the line of Vlad Sergeevsky from Barclays. Please go ahead.

Operator: The next question comes from the line of Vlad Martynyuk from Barclays. Please go ahead.

Speaker #3: Yeah, gentlemen, good morning. Thank you very much. I'll have three questions, and I'll ask them one by one. First of all, on the mining cycle—look, it was predominantly about brownfield projects up until now.

Vlad Martynyuk: Yes, gentlemen. Good morning. Thank you very much. I have got 3 questions. I will ask them one by one. First one, on the mining cycle. Look, it was predominantly about brownfield projects up until now. Are you actually seeing a broader appetite for larger greenfields across customers from now on? Or we are talking about those 3, 5 big greenfields that we know about for a long time, and finally, they are moving towards FID?

Speaker #3: Are you actually seeing a broader appetite for larger greenfields across customers from now on, or are we talking about those three to five big greenfields that we've known about for a long time and are finally moving towards FID?

Speaker #4: Yeah, so on the project side, we are seeing both types of activities with larger orders. We have brownfield expansions, which we almost consider as greenfields when customers are ramping up, like adding additional lines for their existing mine sites.

Toni Laaksonen: Yeah. On the project side, we are seeing both type of activities with larger orders, so that we have a brownfield expansions, which we almost consider as greenfields when the customers are ramping up additional lines for their existing mine sites. So these type of activities are taking place. Then, as mentioned, especially in South America, we are seeing that there are certain complete greenfield projects moving forward, and there is now more maybe support from the local governments in those respective countries to promote the mining projects and investments. And that this favorable environment of course, is helping our customers and at the same time, of course, the commodity price level is high. So this combination is a pretty good combination when you are making the investment decisions.

Speaker #4: So these types of activities are taking place. And then, as mentioned, especially in South America, we are seeing that there are certain complete, like greenfield projects, moving forward.

Speaker #4: And there is now more, maybe, support from the local governments in those respective countries to promote the mining projects and investments. And this favorable environment, of course, is helping our customers. At the same time, of course, the commodity price level is high.

Speaker #4: So, this combination is a pretty good combination when you are making investment decisions.

Speaker #3: That's great. If I can follow up on that—specifically for South America—are we talking about, like, two or three large greenfields there that are moving forward now and getting support?

Vlad Martynyuk: That is great. If I can follow up on this, specifically for South America. Are we talking about 2, 3 large greenfields there that are moving forward now and getting support? Or do you think it is a broader base of greenfields, let us say, mid to high single digit number, which is potentially up for FID in the next 2 to 3 years?

Speaker #3: Or do you think it's a broader base of greenfields—let's say a mid- to high-single-digit number—which is potentially up for FID in the next two to three years?

Toni Laaksonen: I would say that it is a broader thing at the moment. There are several projects under development and under consideration and already in the engineering phases. And of course, any projects which are in the engineering phase, and if we are involved, we have pretty good visibility at what is happening with the project.

Speaker #4: I would say that it's a broader thing at the moment. There are several projects under development and under consideration, and already in the engineering phases.

Speaker #4: So, of course, any projects which are in the engineering phase, and if we are involved, we have pretty good visibility into what's happening with the project.

Speaker #3: Perfect. That's super helpful. Can I specifically ask also about your product orders? Excluding the largest $300 million order that you booked, smaller base orders appear to be on the lower side this quarter.

Vlad Martynyuk: Perfect. That's super helpful. Can I specifically ask also about your product orders? Excluding the largest DKK 300 million order that you booked, smaller base orders appear to be on the lower side this quarter. Is there any particular reason for that?

Speaker #3: Is there any particular reason for that?

Speaker #4: So, like mentioned, the Products business line is dependent on these bigger orders quite a bit. And practically, it means that the timing of these bigger orders might impact their top-line order intake figure quite notably.

Toni Laaksonen: So, like mentioned, the products business line is dependent on these bigger orders quite a bit. Practically, it means that the timing of these bigger orders might impact on their top-line order intake figure quite notably. Based on our outlook, even though the total order intake wasn't that high, we are confident that there are no issues with this business line as the outlook for the end of the year is rather positive.

Speaker #4: So, based on our outlook, even though the total order intake wasn't that high, we are confident that there are no issues with this business line, as the outlook for the end of the year is rather positive.

Speaker #3: Understood. Thank you very much. And final question to Roland, please. Can I go back to those work-in-progress assets? I mean, it was a very sizable, 500-million-plus increase this quarter.

Vlad Martynyuk: Understood. Thank you very much. Final question to Roland, please. Can I go back to those work in progress assets? I mean, it was a very sizable DKK 500 million-plus increase this quarter. It equaled to what? 12%, 13% of your quarterly sales. Could you give us some idea of what exactly you're building there? I mean, DKK 500 million is bigger than perhaps the biggest project you're working on right now.

Speaker #3: It equals to what—12, 13 percent of your quarterly sales? Could you give us some idea of what exactly you are building there? I mean, $500 million is bigger than perhaps the biggest project you're working on right now.

Speaker #2: Yeah, so it's a number of things. Well, actually, across the three business lines. So, we have a number of upgrades and repair projects there.

Roland M. Andersen: Yeah. It's a number of things across the three business lines. We have a number of upgrades and repair projects there, and the reason why it sits there, because it takes a bit longer to complete than just the four or six weeks. Then there's a few bigger projects under construction orders that we entered into a year ago, a year and a half ago. Then to a smaller extent, also a few ongoing things on PCV. So it's a bit across the board, and that's also why I can say with certainty we're not going to unwind it just in two or three months. It's going to take time until this is being expedited out of the backlog and then normalizing a bit more.

Roland Andersen: Yeah. It's a number of things across the three business lines. We have a number of upgrades and repair projects there, and the reason why it sits there, because it takes a bit longer to complete than just the four or six weeks. Then there's a few bigger projects under construction orders that we entered into a year ago, a year and a half ago. Then to a smaller extent, also a few ongoing things on PCV. So it's a bit across the board, and that's also why I can say with certainty we're not going to unwind it just in two or three months. It's going to take time until this is being expedited out of the backlog and then normalizing a bit more.

Speaker #2: And the reason why it sits there is because it takes a bit longer to complete than just the four or six weeks. Then there's a few bigger projects on the construction orders that we entered into a year ago, or a year and a half ago.

Speaker #2: And then, to a smaller extent, also a few ongoing things on PCV. So it's a bit across the board. And that's also why I can say with certainty we're not going to unwind it just in two or three months.

Speaker #2: It's going to take some time until this is expedited out of the backlog, and then we expect things to normalize a bit more.

Speaker #3: Super helpful. Thank you very much, gentlemen.

Vlad Martynyuk: Super helpful. Thank you very much, gentlemen.

Speaker #1: The next question comes from the line of Thor Fangman from Bank of America. Please go ahead.

Operator: The next question comes from the line of Tore Fangmann from Bank of America. Please go ahead.

Speaker #5: Good afternoon, and thank you for taking my question. I have two from my side. First would be on the outlook for the service margin. You’ve done a very good job in ramping up your consumables business.

Tore Fangmann: Good afternoon. Thank you for taking my question. Just two from my side. First would be on the outlook for the service margin. You have done a very good job in ramping up your consumables business. Do you see a negative mix impact in the coming quarters when consumables might be growing faster than the modernization spare part of your business. Thank you.

Speaker #5: Do you see a negative mix impact in the coming quarters when consumables might be growing faster than the modernization and spare parts of your business?

Speaker #5: Thank you.

Speaker #4: As mentioned during the presentation, we still believe that with our future mix, we are reaching this 19 to 20 percent profitability corridor. Of course, quarter by quarter there can be fluctuations, and this is something that we expect to deliver with the full-year results from this business line.

Toni Laaksonen: As mentioned during the presentation, we still believe that with our future mix, we are reaching this 19% to 20% profitability corridor. Of course, quarter by quarter, there can be fluctuation, and this is then something that we expect to deliver with the full year results from this business line. Even though if the consumables business grows, we do not expect that our margin will slide. On the other hand, of course, as you can see from our quarterly figures, if the business goes up, it has a positive leverage impact that as our fixed costs will not go up with that base.

Speaker #4: So even though the consumables business grows, we don't expect that our margin will slide. And then, on the other hand, of course, as you can see from our quarterly figures, if the business goes up, it has a positive leverage impact, as our fixed costs will not go up with that base.

Speaker #5: Understood, thank you. And just lastly, a more strategic question: you now have achieved M&A officer status. Could you maybe elaborate a little bit on what is your appetite for M&A going forward?

Tore Fangmann: Understood. Thank you. Lastly, more strategic. You now have a Chief M&A Officer. Could you maybe flag a little bit on what is your appetite for M&A going forward? Are you interested in larger transformational M&A, or will you stick to purely bolt-on? Thank you.

Speaker #5: Are you interested in larger, transformational M&A, or will you stick to purely bolt-on? Thank you.

Speaker #4: So, we have been building the pipeline this year for the M&A cases, and we are focusing on the bolt-on cases. We are reviewing them in detail.

Toni Laaksonen: We have been building the pipeline this year for the M&A cases, and we are focusing on the bolt-on cases, and we are reviewing them in detail. Let's say that the pipeline has been developing positively. Roland mentioned that we still have some dry power left and available for these M&A cases. The intention is that when the right target is there, we would move forward. Late this year or next year, we would expect that we have some news around these topics.

Speaker #4: And let's say that the pipeline has been developing positively. And Roland mentioned that we still have some dry powder left and available for these M&A cases.

Speaker #4: So the intention is that when the right target is there, we would move forward. So, late this year or next year, we would expect to have some news around these topics.

Speaker #5: Okay. Thank you.

Tore Fangmann: Okay. Thank you.

Speaker #1: The next question comes from the line of Klaus Almer from Nordea. Please go ahead.

Operator: The next question comes from the line of Claus Almer from Nordea. Please go ahead.

Speaker #6: Thank you. Yeah, I also have a few questions from my side. So, the first question goes to this quite impressive order intake you had in Q2.

Claus Almer: Thank you. Also a few questions from my side. The first question goes to this quite impressive order intake you had in Q2 within service and PCV. To what extent do you believe this was based on market share gain and also maybe within service, a result of your investments and initiatives within your service setup and moving closer to customers, et cetera? That would be the first one.

Speaker #6: We've been seeing growth in service and PCV. To what extent do you believe this was based on market share gain, and also, maybe within service, a result of your investments and initiatives within your service setup and moving closer to customers, etc., etc.?

Speaker #6: That would be the first one.

Speaker #4: So, if I start from PCV, I would say that the growth has now been at a good level throughout several quarters. And we have been seeing positive order intake, like double-digit order intake, continuously.

Toni Laaksonen: If I start from PCV, I would say that the growth has been now on a good level throughout several quarters, and we have been seeing positive order intake, like double-digit order intake, continuously. So there, when comparing to the peers, I would say that we have been growing a bit faster, and our organic development plan, which we have for the unit, is paying off. So we have been expanding our supply chain with the unit. We have been improving our service coverage with the unit and also expanding our sales network. So all these organic activities are definitely helping us now to gain more order intake. That has been positive. Then when it comes to the service business line, one aspect is that we have been increasing the service network, getting closer to the customers. That is helping us with our order intake.

Speaker #4: So there, when comparing to the peers, I would say that we have been growing a bit faster. And our organic development plan, which we have for the unit, is paying off.

Speaker #4: We have been expanding our supply chain with the unit, improving our service coverage with the unit, and also expanding our sales network.

Speaker #4: So, all these organic activities are definitely helping us now to gain more order intake, so that has been positive. Then, when it comes to the service business line, one aspect is that we have been increasing the service network, getting closer to the customers.

Toni Laaksonen: Then when it comes to the service business line, one aspect is that we have been increasing the service network, getting closer to the customers. That is helping us with our order intake. Then, of course, the one big positive driver there within that unit is the consumables business, which has been performing well, and we have been increasing our order intake relatively fast. We have a clear plan how to develop that product area then forward in the coming years.

Speaker #4: That's helping us with our order intake. And then, of course, the one big positive driver there within that unit is the consumables business, which has been performing well.

Toni Laaksonen: Then, of course, the one big positive driver there within that unit is the consumables business, which has been performing well, and we have been increasing our order intake relatively fast. We have a clear plan how to develop that product area then forward in the coming years.

Speaker #4: And we have been increasing our order intake relatively fast. And we have a clear plan for how to develop that product area further in the coming years.

Speaker #6: So, just to clarify: me and all the initiatives you have done so far have been executed, and we should expect more growth in line with the market?

Claus Almer: Tom, does this mean that all the initiatives you have done so far has been executed and we should expect more a growth in line with the market, or do you see further potential for the things you have already implemented?

Speaker #6: Or do you see further potential for other things you have already implemented?

Speaker #4: The market development we expect to be positive. The expectation is that the mining market grows something like 3% to 4%, somewhere there. We're looking at the copper demand, for instance.

Toni Laaksonen: The market development, we expect it to be positive. The expectation is that the mining market grows something like 3% to 4%, somewhere there, when looking at the copper demand, for instance. The copper production is expected to grow with that pace. If the copper production grows with that pace, it is also helping us from the growth point of view. Then we come to the more detailed forward-looking plans with the unit when we have the Capital Markets Day.

Speaker #4: So, the copper production is expected to grow from that base. And of course, if the copper production grows from that base, it's also helping us from a growth point of view.

Speaker #4: But then we come to the more detailed, forward-looking plans with the unit when we have the Capital Markets Day.

Claus Almer: Fair enough. My second question goes to the pump area. With these equipment orders you have received and have grown quite nicely in the last couple of quarters, when should we start to see the aftermarket orders and revenue picking up?

Speaker #6: Fair enough. And then my second question goes to the pump area. With these equipment orders you have received and that have been growing quite nicely in the last couple of quarters, when should we start to see the aftermarket orders and revenue picking up?

Speaker #4: So it depends, of course, on the timing of the installation. But normally, if it's a replacement case, the replacement happens within the next months from the order.

Toni Laaksonen: It depends, of course, on the timing of the installation. Normally, if it is a replacement case, the replacement happens within the next months from the order, and then after a few months, the pump will then generate the aftermarket business for us. If it is part of a larger brownfield expansion, then the delivery time might be a bit longer. Normally with the pumps, we are talking about the replacement cases, so then in a few months, the new pump will provide more services to us.

Speaker #4: And then after a few months, the pump will then generate aftermarket business for us. If it's a part of a larger, like a brownfield expansion, then the delivery time might be a bit longer.

Speaker #4: But normally with the pumps, we are talking about the replacement cases. So then, in a few months, the new pump will provide more services to us.

Speaker #6: So, would it be fair to assume that already in Q3 we start to see this effect, and it gets even stronger in Q4?

Claus Almer: Would it be fair to assume that already in Q3, we start to see this effect and getting even stronger in Q4?

Speaker #2: Maybe a bit longer in your spreadsheet there. They will be safe.

Roland M. Andersen: Maybe a bit longer in your spreadsheet there, that would be safe.

Roland Andersen: Maybe a bit longer in your spreadsheet there, that would be safe.

Speaker #6: That was Roland talking down expectations. And we're not getting too carried away, are we?

Claus Almer: That was more than talking down expectations and we are not getting too carried away or

Speaker #2: I was clarifying—that was the intention.

Roland M. Andersen: I was clarifying. That was the intention.

Roland Andersen: I was clarifying. That was the intention.

Speaker #6: Fair enough. Thank you so much.

Claus Almer: Fair enough. Thank you so much.

Speaker #1: The next question comes from the line of William Mackey from Kepler Cheuvreux. Please go ahead.

Operator: The next question comes from the line of William Mackie from Kepler Cheuvreux. Please go ahead.

Speaker #3: Yeah, good morning. Thanks for the time. I would like to ask a couple more questions on your outlook again, please. And let's stick with service.

William Mackie: Yeah, good morning. Thanks for the time. I would like to ask a couple more questions on your outlook again, please. Let's stick with service. Roughly, I think if my numbers are right, your orders over the last three or four quarters are up mid-teens in service. Your backlog is up above 10%. If I take the midpoint of your guidance for the full year and look at what you've achieved in H1, you're implying a sort of average in a low single-digit growth in revenues in H2, which it seems hard to reconcile. Maybe you could put some color on any specific features that would hold back the timing of the book-to-bill conversion and limit the conversion of the backlog and prior quarter order growth into H2.

Speaker #3: Roughly, I think, if my numbers are right, your orders over the last three or four quarters are up mid-teens in service. Your backlog is up above 10%.

Speaker #3: If I take the midpoint of your guidance for the full year and look at what you've achieved in the first half, you're implying a sort of average low single-digit growth in revenues in the second half, which seems hard to reconcile.

Speaker #3: So, maybe you could put some color on any specific features that would hold back the timing of the book-to-bill conversion and limit the conversion of the backlog and prior quarter order growth into the second half.

Speaker #4: Yeah, that's a valid point. So, we have been commenting on this in the previous call as well, but with the services we have in the mix, there are certain bigger upgrades as well.

Toni Laaksonen: Yeah, that's a valid point. We have been commenting this in the previous call as well. But with the services we have in the mix certain bigger upgrades as well, and then as well certain like mill liner deliveries. In these cases, for instance, the lead time is much longer from the order to revenue conversion. We are talking about, in some cases, even 9 months or longer because the customers are ordering the parts for their next shutdown, and that the shutdown might be such that it's 6, 9, or even 12 months out because they are advanced ordering. Then it practically means that we are gaining the orders this year, delivery maybe in the end of the year or even early next year. That's causing some of this timing issue.

Speaker #4: And then as well, certain mill liner deliveries. And in these cases, for instance, the lead time is much longer from the order to revenue conversion.

Speaker #4: So, we are talking about, in some cases, even nine months or longer, because the customers are ordering the parts for their next shutdown.

Speaker #4: And the shutdown might be such that it's six, nine, or even twelve months out because they're advance ordering. And then it practically means that we are gaining the orders this year, delivering maybe at the end of the year or even early next year.

Toni Laaksonen: Then it practically means that we are gaining the orders this year, delivery maybe in the end of the year or even early next year. That's causing some of this timing issue. But of course, when the backlog is building up, we have a pretty solid foundation then to deliver revenue this year and early next year based on that. But we need to remember that there are these bigger cases as well in the service business line mix.

Speaker #4: So that's causing some of these timing issues. But of course, when the backlog is building up, we have a pretty solid foundation then to deliver revenue this year and early next year based on that.

Toni Laaksonen: But of course, when the backlog is building up, we have a pretty solid foundation then to deliver revenue this year and early next year based on that. But we need to remember that there are these bigger cases as well in the service business line mix.

Speaker #4: But we need to remember that there are these bigger cases as well in the service business line mix.

Speaker #3: Thank you, that's helpful. I guess, again, you could do the same math for both divisions, but I suppose the book-to-bill conversion for PC and V is shorter.

William Mackie: Thank you. That's helpful. I guess, again, you could do the same math for both divisions, but I guess the book-to-bill conversion for PC&V is shorter. Again, you've been achieving high teens order growth, and the backlog is up again. To the point that you're implying kind of mid-single digit at the midpoint of H2 growth, despite the strong momentum we've seen in the backlog, is it the same feature, what you would spotlight for PC&V?

Speaker #3: And again, you've been achieving high-teens order growth and the backlog is up again. So to the point that you're implying kind of mid-single-digit at the midpoint of second-half growth, despite the strong momentum we've seen in the backlog, is it the same feature that you would spotlight for PC and V?

Speaker #2: Yeah, so I think this is Roland. Just so PC and V also have capital orders that follow the product sales, so to speak, right?

Roland M. Andersen: Yeah. I think this is Roland. PC&V also have capital orders that follow the product sales, so to speak, right? It can be a bit longer for the capital part. That's one thing. Mathematically, both on service and on PC&V, we're up against a relatively high comp in Q4. It's not just taking the growth numbers from H1 and then applying. It needs to be on top of a relatively high comp, just as a reference point.

Roland Andersen: Yeah. I think this is Roland. PC&V also have capital orders that follow the product sales, so to speak, right? It can be a bit longer for the capital part. That's one thing. Mathematically, both on service and on PC&V, we're up against a relatively high comp in Q4. It's not just taking the growth numbers from H1 and then applying. It needs to be on top of a relatively high comp, just as a reference point.

Speaker #2: So, it can be a bit longer for the capital part. So that's one thing. But also, mathematically, both on service and on PCV, we are up against a relatively high comp in Q4.

Speaker #2: So, it's not just taking the growth numbers from H1 and then applying them. It needs to be on top of a relatively high comp, just as a reference point.

William Mackie: Thank you. Thank you very much. My last question probably comes back to net working capital and CFFO. I heard you earlier, Roland, on limiting your guidance around cash flow. I think in the past, there's been a rough expectation you might come close to DKK 1 billion of cash flow from operation. Clearly, that becomes a very big hurdle after the first half cash generation. Is there anything that could swing contract liabilities in H2 or swing a containment of growth in contract assets that might help the working capital H2?

Speaker #3: Thank you. Thank you very much. My last question probably comes back to network and capital and cash flow from operations. I heard you earlier, Roland, but—

Speaker #3: On limiting your guidance around cash flow—but I think, in the past, there's been a rough expectation that you might come close to $1 billion of cash flow from operations.

Speaker #3: Clearly, that becomes a very big hurdle after the first-half cash generation. Is there anything that could swing contract liabilities in the second half, or swing a containment of growth in contract assets, that might help the working capital in H2?

Roland M. Andersen: There may be a few things, but I think we don't expect it to unwind anytime soon. That also means that our CFFO expected we won't hit DKK 1 billion. I think it'll be maximum DKK 700 million or so for the remainder of the year, and then the unwind will only be visible sometime next year. We've been caught surprised a little bit by the high backlog conversion, you can say, which is basically positive, but it means that we tie up work in progress for a while longer.

Roland Andersen: There may be a few things, but I think we don't expect it to unwind anytime soon. That also means that our CFFO expected we won't hit DKK 1 billion. I think it'll be maximum DKK 700 million or so for the remainder of the year, and then the unwind will only be visible sometime next year. We've been caught surprised a little bit by the high backlog conversion, you can say, which is basically positive, but it means that we tie up work in progress for a while longer.

Speaker #2: There may be a few things, but I think we don't expect it to unwind anytime soon. That also means that our CFFO, expectedly, won't hit $1 billion.

Speaker #2: I think it will be a maximum of 700 million or so for the remainder of the year, and then the unwind will only be visible sometime next year.

Speaker #2: So we've been quite surprised a little bit by the high backlog conversion, you can say, which is basically positive. But it means that we tie up work in progress for a while longer.

Speaker #3: Great. Thank you very much.

William Mackie: Great. Thank you very much.

Speaker #1: The next question comes from the line of Lars Topholm from DNB Carnegie. Please go ahead.

Operator: The next question comes from the line of Lars Topholm from DNB Carnegie. Please go ahead.

Speaker #3: Yes, thank you. Also, a couple of questions from him. I'm super sorry, but it's also about your revenue guidance. So, if I take your full year outlook and deduct your H1 revenue, you have to produce a revenue between DKK 7.4 and 8 billion in H2.

Lars Topholm: Yes. Thank you. Also, a couple of questions from him. I am super sorry, but it is also about your revenue guidance. If I take your full year outlook and deduct your H1 revenue, you have to produce a revenue between DKK 7.4 billion and DKK 8 billion in H2. Last year, you did DKK 7.5 billion. Roland, I hear what you say about work in progress materializing next year and not this year. If I look at your backlog, it is up by 8%. If I look at the percentage of that backlog that you say should be converted into revenue before the end of the year, that is up from 32% last year to 48% this year, which means that backlog conversion should produce DKK 2.1 billion more in revenue this year versus last year, if the math is correct.

Speaker #3: Last year, you did $7.5 billion. And Roland, I hear what you say about work in progress materializing next year, not this year. But if I look at your backlog, it's up by 8 percent.

Speaker #3: If I look at the percentage of that backlog that you say should be converted into revenue before the end of the year, that is up from 32% last year to 48% this year, which means that backlog conversion should produce $2.1 billion more in revenue this year versus last year.

Lars Topholm: If I look at the percentage of that backlog that you say should be converted into revenue before the end of the year, that is up from 32% last year to 48% this year, which means that backlog conversion should produce DKK 2.1 billion more in revenue this year versus last year, if the math is correct. I also think when work in progress is up by 43%, even if most of that is for next year, that also implies growth. I simply do not understand what I am missing in this picture. I cannot make the numbers stack up, so please help me out.

Speaker #3: If the math is correct—and also, think about when work in progress is up by 43 percent, even if most of that is for next year—that also implies growth.

Lars Topholm: I also think when work in progress is up by 43%, even if most of that is for next year, that also implies growth. I simply do not understand what I am missing in this picture. I cannot make the numbers stack up, so please help me out.

Speaker #3: I simply don't understand what I'm missing in this picture. I can't make the numbers back up, so please help me out.

Speaker #2: I think you're right, Lars. I think the 7.4 up to 7.8 or 7.9 or so, given constant exchange rates for the remainder of the year.

Roland M. Andersen: I think you are right, Lars, that I think you are 7.4 up to 7.8 or nine or so, given constant exchange rate for the remainder of the year. No more than that. So that is going to be the conversion that yields the organic growth guidance, and that means that it will take a while for us to unwind the work in progress. It is not necessarily linked, but in this case, it is.

Roland Andersen: I think you are right, Lars, that I think you are 7.4 up to 7.8 or nine or so, given constant exchange rate for the remainder of the year. No more than that. So that is going to be the conversion that yields the organic growth guidance, and that means that it will take a while for us to unwind the work in progress. It is not necessarily linked, but in this case, it is.

Speaker #2: But no more than that. And that also means that's going to be the conversion that yields the organic growth guidance. And that means it will take a while for us to unwind the work in progress.

Speaker #2: It's not necessarily linked, but in this case, it is.

Lars Topholm: Roland, if I take your backlog by H1 last year, then 32% of that, which is what you said would be converted before the end of the year, was DKK 3.4 billion in revenue, which means you produced DKK 4.1 billion in revenue from things that were not in the backlog by the end of H1 last year. Doing exactly the same calculation for this year, it is DKK 5.5 billion in revenue from conversion of the backlog. So you implicitly only expect to do DKK 2 billion from things outside of the backlog. Why is that revenue production from things that are not in the backlog so dramatically down this year?

Speaker #3: But Roland, if I take your backlog by H1 last year, then 32 percent of that—which is what you said would be converted before the end of the year—was $3.4 billion in revenue, which means you produced $4.1 billion in revenue from things that were not in the backlog by the end of H1 last year.

Speaker #3: Exactly the same calculation for this year: it's $5.5 billion in revenue from conversion of the backlog. So you implicitly only expect to do $2 billion from things outside of the backlog.

Speaker #3: Why is the revenue production from things that are not in the backlog so dramatically down this year?

Toni Laaksonen: Maybe I will add one thing, which relates then to the products business line. Of course, with that business line, as we have been stating, we know the timing quite well and when the revenue recognition will happen. But of course, there are certain uncertainties as well with the timing of the ramp-ups for individual equipment expansions and replacements. So that is, of course, impacting on our revenue guidance, and that was visible when we were updating now the business line specific ranges. So with services, we did modifications to the revenue growth guidance, and the same with PCV. So there we are pretty confident that we are improving compared to the original guidance, and we can deliver. But of course, this product side is then causing certain uncertainties related to the timing of the deliveries.

Speaker #4: Maybe I'll add one thing, which relates then to the product business line. Of course, with that business line, as we have been stating, we know the timing quite well.

Speaker #4: And when the revenue recognition will happen. But, of course, there are certain uncertainties as well with the timing of the ramp-ups for individual equipment expansions and replacements.

Speaker #4: So that's, of course, impacting our revenue guidance, and that was visible when we were updating the business line-specific ranges. So, with Services, we made modifications to the revenue growth guidance.

Speaker #4: And the same with PCV. So there, we are pretty confident that we are improving compared to the original guidance, and we can deliver. But of course, this product side is then causing certain uncertainties related to the timing of the deliveries.

Toni Laaksonen: But of course, this product side is then causing certain uncertainties related to the timing of the deliveries. On that side, the timing of the deliveries is to some extent, of course, controlled by our customers. We did not change the revenue guidance for the products because of this reason.

Speaker #4: And on that side, the timing of the deliveries is, to some extent, of course, controlled by our customers. And we didn't change the revenue guidance for the products because of this reason.

Toni Laaksonen: On that side, the timing of the deliveries is to some extent, of course, controlled by our customers. We did not change the revenue guidance for the products because of this reason.

Speaker #3: But that doesn't really answer the question. So, in H2 last year, you generated $4 billion in revenue, in addition to the conversion of your backlog.

Lars Topholm: But that doesn't really answer the question. In H2 last year, you generate DKK 4 billion in revenue, in addition to the conversion of your backlog. This year, you only guide for DKK 2 billion from that. Why so much less?

Speaker #3: This year, you only guide for $2 billion from that. Why so much less?

Speaker #2: So, I think I need to look at this more specifically. Last, the delivery cycles are longer this year for SBL and also for PBL.

Roland M. Andersen: Well, I think I need to look at the numbers more specifically, Lars, but the delivery cycles are longer this year for SPL and also for PBL, and that's why it sits in work in progress, and that's part of this reason as well. I think that's what you're fishing for.

Roland Andersen: Well, I think I need to look at the numbers more specifically, Lars, but the delivery cycles are longer this year for SPL and also for PBL, and that's why it sits in work in progress, and that's part of this reason as well. I think that's what you're fishing for.

Speaker #2: And that's why it sits in work in progress, and that's part of this reason as well. I think that's what you're fishing for.

Speaker #3: No, yeah. No, not really. I'm just fishing for the proportion of revenue that is not converted from the current backlog. I mean, we know your backlog.

Lars Topholm: No, not really. I'm just fishing for the proportion of revenue that is not converted from the current backlog. We know your backlog, that's DKK 11.5 billion. You say 48% of that will be converted before the end of the year. That's DKK 5.5 billion. To reach your guidance, you need to make DKK 7.5 billion, so you need to produce DKK 2 billion in revenue outside of the current backlog. Last year, that number was DKK 4 billion. It's the movement from DKK 4 billion to DKK 2 billion, I don't understand.

Speaker #3: That's $11.5 billion. You say 48 percent of that will be converted before the end of the year. That's $5.5 billion. To reach your guidance, you need to make $7.5 billion.

Speaker #3: So you need to produce $2 billion in revenue outside of the current backlog. Last year, that number was $4 billion. And it's the movement from $4 billion to $2 billion.

Speaker #3: I don't understand.

Speaker #2: Right, there are longer delivery cycles, right? I'll need to come back to you on this one. So, the growth in the bigger upgrades in the service business line, and PCV partly related to that, just gives us a longer cycle on the backlog conversion.

Roland M. Andersen: Right. There's longer delivery cycles, right? I'll need to come back to you on this one. The growth in the bigger upgrades in the service business line, and PCV partly related to that just gives us a longer cycle on the backlog conversion.

Roland Andersen: Right. There's longer delivery cycles, right? I'll need to come back to you on this one. The growth in the bigger upgrades in the service business line, and PCV partly related to that just gives us a longer cycle on the backlog conversion.

Speaker #3: So, by the backlog conversion, that was the number that was up to $5.5 billion. Each number you disclose, Roland.

Lars Topholm: Then I, no, but the backlog conversion, that was the number that was up to DKK 5.5 billion. It is numbers you disclose all on.

Speaker #2: Yeah, yeah. Exactly. But it takes longer.

Roland M. Andersen: Yeah, exactly, but it takes longer.

Roland Andersen: Yeah, exactly, but it takes longer.

Speaker #3: Or the extent of $11.5 billion to $5.5 billion. That's a hard number, I guess.

Lars Topholm: Only percent of DKK 11.5 billion.

Roland M. Andersen: Yeah

Roland Andersen: Yeah

Lars Topholm: Is DKK 5.5 billion. That is.

Roland M. Andersen: Exactly

Roland Andersen: Exactly

Lars Topholm: a hard number, I guess.

Speaker #2: Exactly. Can I have a look at the numbers you're looking for and come back to you, Lars?

Roland M. Andersen: Can I have a look at the numbers you are looking for and come back to you, Lars?

Roland Andersen: Can I have a look at the numbers you are looking for and come back to you, Lars?

Speaker #3: That would be amazing. I have a second question that relates to products and looks further ahead than just this year. How should we think about margin development if we assume the mining cycle becomes stronger?

Lars Topholm: That would be amazing. I have a second question that goes to products and looking further ahead than just this year. How should we think about the margin development if we assume the mining cycle becomes stronger? Should we think about it in a way that gross profit will improve in line with order intake, and then you will have a relatively fixed OpEx base? Or what assumptions should I use if I want to calculate the margin a couple of years out?

Speaker #3: Should we think about it in a way that gross profit will improve in line with order intake, and then you'll have a relatively fixed OPEX base? Or what assumptions should I use if I want to calculate the margin a couple of years out?

Speaker #4: This is definitely a topic that we will address in more detail at the Capital Markets Day. What I can say is that we have continuous improvement initiatives ongoing throughout the business lines.

Toni Laaksonen: This is definitely a topic which we will address more in detail when we have the Capital Markets Day. But what I can say is that we have continuous improvement initiatives ongoing throughout the business lines, to improve our supply chain, cost efficiency, and so on. These continuous improvement initiatives will hopefully benefit us. At least I do not expect that our margins would decline as such, but there might be some improvement opportunities through these activities in the long run. But these expectations, we will open up more when we present the Capital Markets Day materials. But that I can ensure that continuous improvement is happening all the time within all the business lines.

Speaker #4: To improve our supply chain, cost efficiency, and so on. So these continuous improvement initiatives will hopefully benefit us. At least, I don't expect that our margins would decline as such.

Speaker #4: There might be some improvement opportunities through these activities in the long run. These expectations will be clarified further when we present the Capital Markets Day materials.

Speaker #4: But I can ensure that continuous improvement is happening all the time within all the business lines.

Lars Topholm: Is the incremental margin in products double digits?

Speaker #3: Is the incremental margin in Products double digits?

Speaker #2: Lars, we will come back to that.

Roland M. Andersen: Lars, we will come back to that.

Roland Andersen: Lars, we will come back to that.

Speaker #4: Yes. Yeah.

Toni Laaksonen: Yes. Yeah.

Speaker #3: Okay, fair enough, guys. Thanks for taking my questions.

Lars Topholm: Okay. Fair enough. Thanks for taking my questions.

Speaker #1: The next question comes from the line of Christian Hinderaker from Goldman Sachs. Please go ahead.

Operator: The next question comes from the line of Christian Hinderaker from Goldman Sachs. Please go ahead.

Speaker #3: Hello, Tony. Hello, Roland. Thanks for the time. I've got three, if I may. I want to start on the product side and follow up on Vlad's question on the DKK 402 million of base orders.

Christian Hinderaker: Hello, Toni. Hello, Roland. Thanks for the time. I have three, if I may. I want to start on the product side and a follow-up to Vlad's question on the DKK 402 million of base orders. I think that is the lowest level since you introduced your new segment structure. You mentioned in the commentary that the business needs to see more large project activity to grow, and I appreciate that point. I guess the question is a little bit more strategic and about your positioning in the market. Your nearest peer had very strong base orders in Q2, and I guess trying to understand if that 402 number is then comprised of four or five, shall we say, large package orders, or if it is a broader set. How do we think about the base order math?

Speaker #3: I think that's the lowest level since you introduced your new segment structure. You mentioned in the commentary that the business needs to see more large project activity to grow, and I appreciate that point.

Speaker #3: But I guess the question is a little bit more strategic, and about your positioning in the market. I mean, your nearest peer had very strong base orders in the second quarter.

Christian Hinderaker: Your nearest peer had very strong base orders in Q2, and I guess trying to understand if that 402 number is then comprised of four or five, shall we say, large package orders, or if it is a broader set. How do we think about the base order math? Are you trying to sell standalone equipment units or is it more sort of packages you are trying to bring to market?

Speaker #3: And I guess I'm trying to understand if that 402 number is then comprised of 405, shall we say, large package orders, or if it's a broader set.

Speaker #3: How should we think about the base order math? Are you aiming to sell standalone equipment units, or is it more about packages you're trying to bring to market?

Christian Hinderaker: Are you trying to sell standalone equipment units or is it more sort of packages you are trying to bring to market?

Toni Laaksonen: This is as well among the topics which we will address in detail, actually, in the Capital Markets Day. We will elaborate the more detailed plans that how we move forward with the business lines and how we are planning to grow their businesses when moving forward. Offering development definitely is as part of this, and we will outline the plans that how we can take forward all the units. Like I said, at the moment, we are to some extent dependent on the larger orders with our products business, maybe unlike compared to our peers. That might be, let us say, a positive development opportunity for us strategically when moving forward. I would say so that we can comment on this very much in detail when we host the Capital Markets Day. This is among the topics that we have on the list.

Speaker #4: This is also among the topics that we will address in detail, actually. In the Capital Markets Day, we will elaborate on the more detailed plans of how we move forward.

Speaker #4: With the business lines, and how we are planning to grow their business moving forward, offering development definitely is part of this. And we will outline the plans—how we can take forward all the units. And, like I said, at the moment, we are to some extent dependent on the larger orders.

Speaker #4: With our products business, maybe unlike compared to our peers, that might be, let's say, a positive development opportunity for us strategically when moving forward.

Speaker #4: But I would say that we can comment on this in much more detail when we host the Capital Markets Day. But this is among the topics that we have on the list.

Speaker #3: Okay, maybe then turning to the margin in products, just briefly. Were there any one-off contributors? I think there was some provision release in Q1.

Christian Hinderaker: Okay. Maybe then turning to the margin in products just briefly. Were there any one-off contributors? I think there was some provision lease in Q1.

Speaker #2: No, not really. This was a pure volume thing, so the revenue number.

Roland M. Andersen: No, not really. This was a pure volume thing. The revenue number-

Roland Andersen: No, not really. This was a pure volume thing. The revenue number-

Speaker #3: Yeah, definitely.

Speaker #2: So, at that revenue level, the business line is now currently in black numbers.

Christian Hinderaker: And then that is partly-

Roland M. Andersen: The level of. So at that revenue level, the business line is now currently in black numbers.

Roland Andersen: The level of. So at that revenue level, the business line is now currently in black numbers.

Speaker #3: Very clear. Maybe just finally then, on pumps: obviously, you've seen the 12% growth last year and high teens this year in order intake. You've said that you're taking share.

Christian Hinderaker: Very clear. Maybe just finally then on pumps. Obviously, you have seen the 12% growth last year, high teens this year in order intake. You have said that you are taking share. I guess interested to hear regionally whether there is any concentration to those share wins, and also, I guess in what form you are taking share. Is that from new projects or is that field trials on existing installed base? Toni, you kind of gave the steer on the revenue mix in Q2. Perhaps you could just add a comment on the order mix. It sounded like that was more overweighted than usual.

Speaker #3: So, I guess I'm interested to hear, regionally, whether there's any concentration to those share wins, and also, I guess, in what form you're taking share.

Speaker #3: Is that for new projects, or is that field trials on existing installed base? And then, Tony, you kind of gave a steer on the revenue mix in Q2.

Speaker #3: Perhaps you could just add a comment on the order mix. It sounded like that was more overweighted than usual.

Speaker #4: Yeah. So, when it comes to the installed base development, we are following that very closely. Mostly, we are seeing these replacement cases—so, replacing existing pumps with our products.

Toni Laaksonen: Yeah. When it comes to the install base development, we are following that very closely, and mostly we are seeing these replacement cases. So replacing existing pumps with our products, and that has been really driving then the market development when it comes to the equipment deliveries. As we have been seeing this development now throughout the quarters, it also starts building up this aftermarket on top of it. So the more we have install base, the more there will be aftermarket. When it comes to the products on the pump side, it is mostly replacement. We have certain project deliveries as well in the mix when you look at the order intake in the long run, but the replacement business is the more dominant one.

Speaker #4: And that has been really driving, then, the market development when it comes to the equipment deliveries. And as we are, we have been seeing this development now throughout the quarters.

Speaker #4: It also starts building up this aftermarket on top of it. So the more we have installed base, the more there will be aftermarket. So when it comes to the products on the pump side, it's mostly replacement.

Speaker #4: We have certain project deliveries as well in the mix when you look at the order intake in the long run, but the replacement business is the more dominant one.

Speaker #4: And through that, we are seeing that the installed base is developing well. And there is good development, for instance, in North America, where we have a strong position through our factories and service centers.

Toni Laaksonen: Through that, we are seeing that the install base is developing well, and good development, for instance, in North America, where we have a strong position through our factories and service centers. The same in South America. So positive development over there. Then we keep expanding in the other territories as well. In Q2 specifically, we were a bit more equipment-heavy and product-heavy with our orders, which was demonstrating that we were winning a bit more cases than normally. Again, it should be then visible in the coming quarters in our order intake. Not in Q3, of course, but starting maybe from the end of Q4.

Speaker #4: The same in South America, so positive development over there. And then, we keep expanding in the other territories as well. In Q2 specifically, we were a bit more equipment-heavy and product-heavy with our orders.

Speaker #4: This was demonstrating that we were winning a bit more cases than normal. And again, it should then be visible in the coming quarters in our order intake.

Speaker #4: Not in Q3, of course, but starting maybe from the end of Q4.

Speaker #3: Thank you.

Christian Hinderaker: Thank you.

Speaker #1: The next question comes from the line of David Farrell from Delphos. Please go ahead.

Operator: The next question comes from the line of David Farrell from Jefferies. Please go ahead.

Speaker #3: Yeah, morning, both. One question from me. I can understand, kind of, why my peers are saying that the outlook for the second half is conservative.

David Farrell: Yeah. Morning, both. One question from me. I can understand why my peers are saying that the outlook for the H2 is conservative. But if we look out beyond that to 2027, and look at the way that the order book is shaping up, it does look to be down on a year-on-year basis how much orders you got to execute in 2027. So I am just wondering, in terms of the business lines, is that purely within products? If that is the case, to what extent can orders secured in the Q3 and probably Q4 contribute into 2027? Or is there anything within the PCV and service market which is running behind year on year?

Speaker #3: But if we look out beyond that to 2027 and look at the way that the order book is shaping up, it does look to be down on a year-on-year basis. How much orders do you have to execute in 2027?

Speaker #3: So I'm just wondering, in terms of the business lines, is that purely within Products? And if that's the case, to what extent can orders secured in the third and probably fourth quarter contribute into 2027?

Speaker #3: Or is there anything within the PC and VM service market which is kind of running behind year-on-year?

Toni Laaksonen: Sorry, the line was pretty bad, so could you still repeat the key question?

Speaker #4: Sorry, the line was pretty bad. Could you still repeat the key question?

Speaker #3: Yeah, it's basically—kind of—I can understand why my peers are saying that your commentary for the second half of this year is conservative, based upon your order book.

David Farrell: Yeah. It is basically I can understand why my peers are saying that your commentary for the H2 of this year is conservative based upon your order book and the way that those orders are split. But if you actually look out to 2027, the amount of backlog for execution is below where it was last year. So, is there anything in any of the divisions which is looking behind year on year as you look into 2027? Or is it all just within the products division?

Speaker #3: And the way that those orders are split. But if you actually look out to 2027, the amount of backlog for execution is below where it was last year.

Speaker #3: So, is there anything in any of the divisions which is lagging year-on-year as you look into 2027? Or is it all just kind of within the products division?

Speaker #4: Okay. So, when it comes to the business lines, of course, the fact is that if we see an uptick with the product business line— with the larger orders — that will, as well, then drive forward our project-type orders for PCV and services.

Toni Laaksonen: Okay. When it comes to the business lines, of course, the fact is that if we see an uptick with the product business line with the larger orders, that will as well then drive forward our project type of orders for PCV and services. The timing of the orders will then define how the revenue mix develops. Of course, if larger orders materialize, it means that there will be more install base, which is eventually driving forward our revenue as well. It would have a positive impact throughout the business lines. With most of the product business line orders, which are larger ones, the lead times might be even one year or longer. The revenue impact will not be positive next year if we capture the orders in the end of this year or early next year.

Speaker #4: And then the timing of the orders will define how the revenue mix develops. But of course, if larger orders materialize, it means that there will be more installed base, which is eventually driving forward our revenue as well.

Speaker #4: So then it would have a positive impact throughout the business lines. But then, with most of the product business line orders—which are larger ones—the lead times might be even one year or longer.

Speaker #4: And then the revenue impact will not be positive next year if we capture the orders at the end of this year or early next year.

Speaker #4: But anyhow, the underlying demand for the brownfield businesses, like for the brownfield sites, that remains positive based on our outlook. And then, if there are greenfield cases—these larger cases—then that will even accelerate our business moving forward.

Toni Laaksonen: Anyhow, the underlying demand for the brownfield businesses, like for the brownfield sites, that remains positive based on our outlook. If there are greenfield cases, these larger cases, that will even accelerate our business when moving forward. We don't see a huge jump for next year from the revenue point of view because these larger projects, they take time.

Speaker #4: But we don't see a huge jump for next year from the revenue point of view, because these larger projects take time.

Speaker #3: Okay, that's very clear. Thank you for that.

David Farrell: Okay. That's very clear. Thank you for that.

Speaker #1: The next question comes from the line of Klaus Kehl from Necredit. Please go ahead.

Operator: The next question comes from the line of Klaus Kehl from Nykredit. Please go ahead.

Speaker #3: Yeah. Hello, gentlemen. Can you hear me?

Klaus Kehl: Yeah. Hello, gentlemen. Can you hear me?

Speaker #2: Yes.

Toni Laaksonen: Yes.

Speaker #4: Yes.

Toni Laaksonen: Yes.

Speaker #3: Perfect. First of all, we talked a bit about this movement in net working capital, and I understand that it most likely will not decline before 2027.

Klaus Kehl: Perfect. First of all, we talked a bit about this movement in the net working capital, and I understand that it most likely will not decline before 2027. Historically, you have been talking about a net working capital sales ratio of around 17%. Should we start to think about a slightly higher number given the growth you are seeing in your service business? Any thoughts on that?

Speaker #3: But historically, you've been talking about a net working capital to sales ratio of around 17%. Should we start to think about a slightly higher number, given the growth you are seeing in your service business?

Speaker #3: Or, yeah, any thoughts on that?

Speaker #2: Yeah, I think we will be more specific on sort of a range number at the Capital Markets Day. But I think 17 is probably on the low end.

Roland M. Andersen: I think we will be more specific on a range number on the Capital Markets Day. I think 17% is probably in the low end. I will leave it at that now.

Roland Andersen: I think we will be more specific on a range number on the Capital Markets Day. I think 17% is probably in the low end. I will leave it at that now.

Speaker #2: I'll leave it at that for now.

Speaker #3: Okay, great. And then order intake in Service has been quite strong the last three quarters. I think you've been hovering around $2.4 to $2.5 billion each quarter.

Klaus Kehl: Okay, great. Order intake in service has been quite strong the last three quarters. I think you have been hovering around DKK 2.4 billion, DKK 2.5 billion each quarter. It is actually above that run rate you have been talking about for a while. Any comments on what would be reasonable to expect the coming, let us say, two or three quarters here? Have you changed structurally for the better? Any thoughts on that?

Speaker #3: And it's actually above that one rate you have been talking about for a while. So, any comments on what would be reasonable to expect in the coming, let's say, two or three quarters here?

Speaker #3: Or have you, yeah, changed structurally for the better? Any thoughts on that?

Speaker #2: I think we'll stick to—there's been a lot of talk on our growth guidance. Yeah, I think we stick to the 3–5% growth organically.

Roland M. Andersen: I think we will stick to, there has been a lot of talk on our growth guidance. I think we stick to the 3% to 5% growth organically Q on Q. That is going to give you the number you are looking for.

Roland Andersen: I think we will stick to, there has been a lot of talk on our growth guidance. I think we stick to the 3% to 5% growth organically Q on Q. That is going to give you the number you are looking for.

Speaker #2: Q1. So that's going to give you the number you're looking for.

Speaker #3: Okay, okay. And then my final question is: do you have any news to share on this compliance case?

Klaus Kehl: Okay. My final question is, do you have any news to share on this compliance case?

Speaker #4: Oh, yeah. No updates on that one. We're still continuing the internal review on that matter. Later on this year, we will then report the case and provide the materials to the authorities.

Toni Laaksonen: Yeah. No updates on that one. We still continue the internal review on that matter, then later on this year, we will then report the case and provide the materials to the authorities.

Speaker #3: Okay. Okay. Great. Thank you very much.

Klaus Kehl: Okay, great. Thank you very much.

Speaker #1: This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference back over to the management for any closing remarks.

Speaker #4: Yeah. Thank you for joining the call. Great questions today. And we are looking forward to seeing you here in Copenhagen in November. You are warmly welcome to the Capital Markets Day.

Toni Laaksonen: Yeah. Thank you for joining the call. Great questions today. We are looking forward to seeing you here in Copenhagen in November. You are warmly welcome to the Capital Markets Day. As mentioned today, you will get more information on our future plans during that day. Our key management will be present to meet you in person. So warm welcome, and thanks for joining the call.

Speaker #4: And as mentioned today, you will get more information about our future plans during that day. Our key management will also be present to meet you in person.