Operator: Morning, and a warm welcome to today's Q3 presentation with cleantech company Nexam Chemical. Joining us today are CEO Ronnie Törnqvist and CFO Marcus Nyberg, who will take us through key developments and financial performance. Following the presentation, we will also move into a Q&A session where we will be joined by ABG analyst Laura Mohtadi. A quick reminder to everyone watching this morning, you can submit your questions, if you are joining us live, in the chat box, and we will try to get to those at the end of the Q&A session. All right. With that, I will hand it over to you, Ronnie and Marcus. Please go ahead.
Ronnie Törnqvist: Thank you, Joakim. Good morning, everybody. We are here to present our third quarter of Nexam Chemical together, me and Marcus. Brief overview of this quarter is that after the record quarter that we had in the second quarter, Q3 was quite weak on the top line in comparison and in comparison to what we wanted. This was mainly due to low sales in two of our segments, high temperature and lightweight, where there were some, let's say, stock adjustments happening for some of the biggest accounts. However, this quarter was also another really strong quarter in the sales development in recycling, and it was a quarter full of enormously much more activity in terms of business development, as you will see more during this presentation. So everything is running at high rate at Nexam, although this quarter had a little bit lower sales.
Ronnie Törnqvist: But the underlying engine is running at very high RPMs right now. I would like to hand over directly to Marcus for some more financial details. Please, Marcus, go ahead.
Marcus Nyberg: Thank you, Ronnie. As Ronnie mentioned, it was kind of weak on the top line, but we also have some really positive results, and that is also a bit what we will focus on on this presentation. We had a record in gross margin of 49%. We are getting closer and closer to the 50. One thing that is really driving our margin is the recycling business. We have invested many millions in this business in the last year, and this is our growing part of the business and also where we have the highest margins. We had a record in terms of recycling. We had SEK 9.3 million during this quarter. That is compared to the third quarter last year, is 66% higher. And actually, on a rolling 12, we actually doubled the recycling business.
Marcus Nyberg: During the Q3, we have lots of vacation period at our customers. That is a little bit, the seasonality is not in our favor during the Q3. For the Q4, of course, it looks different and much better. We can also mention that our base business, the color masterbatch, is really stable and continues to be so, and that is really good for us. Here you can see a few comments on our four different, let us call it business segments. We have the aesthetics that is very much related to color, to the plastic industry. We have many hundreds of our customers. It is a very stable business. We saw that Eastern Europe is picking up, actually. During the spring, the Nordics were growing, but the Eastern European was a little bit weak. Now we can see that Eastern Europe is picking up.
Marcus Nyberg: For lightweight and high temperature, as Ronnie just mentioned before, we had a kind of weak quarters after our record during spring. Then we had recycling, where we are putting lots of resources. We are out on exhibitions. We are meetings and meetings. This is a truly interesting part of business that we really are focused on, but continue to also run the other parts. Here you can also see what he has mentioned. This is the sales for recycling and the development, and now we are 9.3. Of course, we are looking to come up to a new record for the Q4. There is no doubt what we are aiming for. Also saying that we actually doubled the business on a rolling 12 months in this part. Here are also some more numbers related to this.
Marcus Nyberg: What is happening before we get orders and before we get the revenue. We actually had 86 samples to send out, but these are also samples in the other areas. The majority of those all relate to recycling, and that is where we have lots of interest from our current customers and potential customers. Also that we have been focusing quite a lot on also doing internal trials making this. So we are getting more and more knowledge in what applications our additives should be used in. Then I hand back to you, Ronnie, again.
Ronnie Törnqvist: All right. Thank you, Marcus. I will just stay a little bit on this slide. The number of samples is really a mirror, a KPI, you could say, that tells us how big the interest is from relatively new customers and new application fields. This has increased by 50%, both compared to a year ago and to last quarter. That is truly a signal that we are really out there on the market, and there is a lot of interest, both digitally and physically, from new customers to look into our solutions. The number of internal trials that is much higher than usual is also a signal that we are adapting products, let us say, later on, closer to commercialization into our production. So much more material with customers, more optimizations of recipe, more industrial tests with customers and more results from verification.
Ronnie Törnqvist: This is actually all the steps that are required in order to grow business in the future, and that is running at high speed. Take a step back, maybe in particular, for people that do not know us so well, what is our role in the circular plastic value chain? We talk a lot about recycling, and we are part of that, but we are not recyclers ourselves. We add value to recycled material by making additives that are added in a small percentage when you do a plastic compound from recycled material, so manufacturing of raw materials from recycled plastics, or when you make components out of such compounds. Around 1% of additives from us can increase the value of that material by a large extent. You can say disproportionate customer value in relation to how much you put inside.
Ronnie Törnqvist: Our customers are not the recyclers themselves, and it is not the end product manufacturers or brand owners. It is the component manufacturing in between, which is our customer base. But of course, we work with the whole value chain. Our category in recycling is Reactive Recycling. When you do mechanical recycling of polymer, that means you get old products, you grind them down, and then you remelt them to make new plastic components. The polymer degrades. You can avoid degradation by doing chemical recycling, but that is, let us say, a new technology which is not used to a high extent yet and is related to a lot of both very high investment levels and also very high energy consumption. It is difficult to scale. The industry has accepted that there is a compromise.
Ronnie Törnqvist: Either you pay a very high add-on to get super clean, chemical recycled material, or you accept poor mechanical properties or poor processing properties from a mechanical recycled materials. What we are trying to do here is to reverse that, to make it possible to use mechanically recycled plastics, but using additives, raise the value of those so they become much closer to a new material. We want to avoid that compromise. Improving both, let us say, technical properties and cost. Customer economics. In an application, this example is PET. PET is used, for example, for those kind of products that are in the picture down there. So packaging, as shown by this egg carton, various wrapping materials, fiber applications such as fleece materials or strap bands, and these kind of products.
Ronnie Törnqvist: If you produce those type of products, you often need to use virgin material combined with high quality, let us call it recycled bottle-grade PET, and to a certain extent, lower cost recycled PET materials, and that gives you a certain material cost. By collaborating with Nexam, you can add a little bit of additive, in this case, approximately 1% or 2% of an additive that we make, and then you can change a large portion of quite expensive, very good bottle-grade plastic and replace that with much lower cost recycled materials, and thereby saving the material cost quite a bit. It is a cost save that is often driving our customers to recycling applications with additives.
Ronnie Törnqvist: When we look at how big can this become, Marcus told you that we had approximately SEK 10 million sales in this area, current run rate, and we are aiming to grow that quite a bit, but we are in that area, SEK 30 to 40 million. So we call it EUR 3, 4 million. When we look at the total addressable market, looking all over the world, all polymers that we have solutions for, all of it would be recycled, and it is EUR 16 billion that we could address, which is then not realistic because not everything will be recycled, and we will not achieve the whole market. But if you look at what will be mechanically recycled, it is several billion still that we could aim for, but it is also not realistic.
Ronnie Törnqvist: We have assumed quite modest market penetration rates, and we think that it is absolutely feasible for us to reach somewhere between EUR 50 and 100 million market in this area. Let us say, in contrast to all our other market areas, the Reactive Recycling area can grow many times over without reaching any kind of, let us say, limitation by the size of the potential market. That is why we put so much effort into developing this technology. We do this project by project with customer by customer, by meeting new prospects, going to trade fairs, by digital presence, being visible on the Internet when people are searching for how to solve their problems.
Ronnie Törnqvist: We follow these projects then from prospects, and then we work together with the customers to discuss about their challenges and so on and send them information, and then typically the sample materials that were mentioned before. Then if that is successful, they go into a proof of concept, start to scale up and industrialize, technical approval at the customer and their customer, and then it goes into commercial serial production. So obviously, quite a complex and long process. The good thing for us is that it is fairly similar every time, and we are working with standard material solutions. So we have this, let us say, under control. But it is true that because we are putting so much more marketing and sales efforts out there, the number of projects are increasing all the time.
Ronnie Törnqvist: It is an everyday battle internally how to handle all of those projects and all of those customers in a very professional way. So we are working a lot on this process. If you look at the number of projects that have passed the, let us say, get to know each other and started by technical discussions, testing samples, and so on, we are up to about 164 such projects that are ongoing. We have 25 that are in this scale-up or industrialization phases, and the 14 that are technically approved but not yet into production, and then commercial production, 31. So we have a fairly substantial pipeline, and that is what is assuring tomorrow's growth. We have been working like this for a long time.
Ronnie Törnqvist: It is just that this year, after we did a capital raise at the end of last year, beginning of this year, we put so much more effort into this. So it is growing a lot. It is obvious when you look at what needs to happen from that you start to know people digitally or in the real world until they actually buy in serial production. There are a lot of things that need to happen. So it has not yet hit the ground, so to say, in the commercial applications. If you look at the development of our activity, we increased quite a lot the number of development projects in the early phases. There is a relatively stable number of scale-up industrialization projects, since some of them that were accelerated this year have not yet reached that stage.
Ronnie Törnqvist: Some of them have moved on into production and some of them have dropped out because we were not successful, or the customer does not need the solution right now, for example. Then we have grown by 3 new customers this last quarter, which is then 10%. The growth in the segment itself was much higher than that, and that has to do with the growth is not only coming from new customers, but also existing customers that are buying more and more materials. So commercial milestones, 3 new customers that have moved them from, call it industrial evaluation to commercial production and serial production. We were at a few expositions and shows this quarter. One was AMI, a compounding and recycling show in Frankfurt, in Germany, where we got extremely many qualified leads that are now moving into the top of the funnel.
Ronnie Törnqvist: We were actually at the second fair, Fakuma, in Germany also, which ends today. So after the quarter then. Also after the quarter, we were at a similar show in Turkey. So we are moving out there and meeting a lot of customers, and we are getting a lot of new contacts. We have broadened our patent base. The polypropylene upgrading recycling patent has been approved in the United States, which is very good because our distributor, Palmer Holland in USA, are pushing more and more the polyolefin usage in USA. In France and Turkey, where we have our 2 new distributors we have spoken about, I believe, already last quarterly presentations, they are getting the first orders, and there is a high activity with them. We have also launched a new homepage, reactiverecycling.com, which is again dedicated towards recycling customers.
Ronnie Törnqvist: You can, of course, go in and check it out if you are interested in our digital presence. So for us, it is all about the process and the activities around activities to drive future growth. So we are looking at these more qualified and more targeted customer projects coming in, let us say, well-controlled process to handle them, making much more industrial validations. We have many such scale-up projects ongoing, and then to reach technical approvals and also find tricks and similarities from project to project and learn from them in order to shorten the lead time between all those steps in that process.
Ronnie Törnqvist: In the end of the day, to get more customers into serial production and then get the customers to really love the use of our products and be a good supplier in order to help them in their business and thereby also extend the collaboration with existing customers, ending up in growth. We can do this, and we can do that in a very ambitious manner because we did the capital raise that we did at the first days of this year. Our ambitions right now is to continue to grow the recycling business at a very high rate, typically doubling year on year. As Marcus said, rolling 12, we were double compared to the rolling 12 before that, and we want to keep that pace for a long time in the future.
Ronnie Törnqvist: Also, our, since long time, outspoken target to reach SEK 300 million, and then beyond that, it remains a target because then we will be properly profitable and we will have a really strong platform for future expansion of the company. So why invest in us like myself and Marcus have done? We have a very interesting specialty chemicals platform, which is based on a stable base business. On top of that, we have a scale-up activity, which is then the recycling business. So we have this stability, but also an enormous future opportunity. The platform that we have in terms of manufacturing, organization, and so on, can handle much higher volumes without having to grow at a very high rate. As we grow beyond SEK 60 million per quarter, we become profitable at quite high rate. So we don't need enormously much more to become profitable.
Ronnie Törnqvist: Large, enormous untapped opportunities in the area of recycling, I would say. No end to the opportunities that we can search for in that market. Of course, each project takes a lot of effort to be successful, but still. It's a differentiating customer value. What we add to our customer costs much less than they gain from it, so to say. We have a really well-funded execution here. We do not need to push on the brake or anything like that because we have capital to continue to work on our scale-up plan. Also we're right in time. There is a new legislation coming up in Europe, which is quite interesting. The PPWR is packaging directive from the European Union with given clear targets of recycling rates. If you're in that business, you know about it, and that will change the landscape of recycling.
Ronnie Törnqvist: A lot of companies will have difficulties to put in enough recycling material just to fulfill the law in 2029, 2030. There we have solutions. If you're in that business and you're struggling with this, come to us and we'll help you. Okay. With that, thank you. We go for the questions.
Operator: All right, great. Thank you for that presentation, Ronnie and Marcus. We are going to head into the Q&A portion of this presentation. Let us move into it. We are joined first by ABG analyst, Laura Muhtadi, who is with us remotely. Can you hear us, Laura?
Laura Mohtadi: Yes, I can.
Operator: Great. Well, please go ahead with your questions.
Laura Mohtadi: Yes, thank you very much. Just a couple of questions from my end. You now describe that the recycling ambition, which was typically doubles year-on-year, you measure it now on a rolling 12-month basis. In Q1, you said that the ambition was to sort of double the recycling sales for calendar 2026. That is 2025. Would you say that that calendar year target still is in place? If so, what sort of Q4 recycling sales would that require? Also, does this doubling ambition also apply for 2027 and 2028?
Marcus Nyberg: Yes, sure. Our ambition stays. Of course, we know that it will be a big challenge for us to reach it during Q4. We are looking forward to we see at least a record quarter for us in Q4, but our ambition and goal stays the same for this year and the coming years. But we know it will be a challenge, but that's what we work on every single day to reach these objectives.
Ronnie Törnqvist: Indeed, I just agree with Marcus. Analytically, it needs to be super high sales in Reactive Recycling Q4 to hit exactly that quarter. But generally, we're continuing to target 100% year-on-year at least. This quarter it was only 66%, but it's also quite a good number, I think. And we continue to fight for that all the time, and that remains the ambition, absolutely. As Marcus said, we're definitely aiming for a record quarter in Reactive Recycling in this current quarter.
Laura Mohtadi: Thank you. You sort of point to some seasonality here, and your US customer moved to a higher run rate from Q2. I'm talking about recycling still now. Two additional customers also entered the commercial production over the summer. Is the US customer still running at around, what was it you said, SEK 11 million run rates annualized? Also, are you seeing any volumes from the Canadian and European customers?
Marcus Nyberg: What we can say is that we see that there's a big interest for them to increase the volumes, meaning that they can use it in more applications, and that's related to the US customer. So we are very optimistic in terms of growing with existing customers, because once we are in, it's much easier to expand in that area. But for the other one, Sven, you have a much more in-depth detail.
Ronnie Törnqvist: Yes. It's difficult to comment on single customers like this. We're trying to handle it more and more as a process. It becomes, let's say, a little bit like we have it in the aesthetics market, where we have very many hundreds of customers, and we are trying to handle it as a process, being in good supply to all of them. We are intending to, and so far managing also, to do the same thing in recycling. There is growth in both Canadian, US, and European customers that are existing. We don't see many customers that are receding in terms of usage, but we do have a couple of them that are, let's say, struggling on their sales side.
Ronnie Törnqvist: But many of them are increasing the usage, including the big US customer. I think I know which ones you mean in Europe and Canada, Laura, and they are also growing quite well.
Marcus Nyberg: They are part of the growth that we see in this quarter, and also what we are looking for in the coming quarters. We think there's-
Ronnie Törnqvist: Even more
Marcus Nyberg: there's more potential in existing customers as well.
Ronnie Törnqvist: Yep.
Laura Mohtadi: Well, both lightweight and high temperature primarily was affected by stock adjustments among some of your bigger customers. Is it the same customer that you've been talking about? What gives you the confidence that the adjustments will be completed by year-end, as you stated in your report?
Ronnie Törnqvist: Yes. Okay. High temperature first. Yes, it's the same customer. Yes, we know more or less their needs for next year, and we know that the exact level they will land on next year, we do not exactly know yet. We'll come back to that when we know more. But we know that it will not be at this low level that we currently have. So that's on the high temperature. On the lightweight segment, it is the same as we have had for years or a decade, that the order sizes in that segment are quite large. Every single order is quite a large order, and then, therefore, whether an order lands right before or after the change of a quarter changes quite a lot on the full quarter for us.
Ronnie Törnqvist: This has been the case, and I would say, looking back now, probably one or two of those large orders that were placed in Q2 could have been in Q3, let's say, and then it would have looked more even between the quarters.
Laura Mohtadi: Mm-hmm. Beyond the stock adjustments in lightweight, was there also some underlying weakness, would you say, that is attributable to maybe some specific applications or end markets?
Ronnie Törnqvist: No. I think, let's say, the sum of deliveries into lightweight this year, it is certainly a weakness in that market compared to how it looked some years ago. Definitely. But it is not so that it changes abruptly between the quarters within this year. It is not even stock adjustments. It has happened to be deliveries in Q2 or Q3 or Q4 on some of these big orders. So it is more like that. I would say that they are in this new mode of lower volumes in the sum for us. That has been our reality for more than a year now, and we are at that level. We do not see further deterioration, but we do also not see a big incline back up into the high numbers that we had a few years ago, not within short anyways.
Laura Mohtadi: Okay. On your gross margin, you reached 49%. That was very strong. How much of that improvement would you say is mix maybe from recycling, or is it maybe pricing or costs in other segments?
Marcus Nyberg: This is related to product mix. Our margins in recycling, it is 50% plus, and the higher portion that that margin takes of the overall business, the higher margins we will get. So this is product mix related. So we are aiming for the 50% and the 50% plus. Of course, we are aiming for this every single quarter to improve this, but this is product mix related.
Ronnie Törnqvist: Definitely.
Laura Mohtadi: Okay. Also on approved projects, you said you have, I think you have 14 projects that are technically approved and not in production. What is holding them back? When do you expect them to start? What is the sort of revenue potential?
Ronnie Törnqvist: Yes. Interesting question, Laura. All 14 are individual projects with various customers and in various market areas or application fields in different countries. It is very difficult to give a generic answer on that without talking about each and every one of them, which is too detailed, of course, for this forum. I would say some of them, there is a solution developed that is currently not yet approved or, let's say, needed or introduced on the market. So there are, let's say, applications in waiting to be started into production. Some of them are waiting because there is not yet a need for it, or let's say that the customer has approved to use this in order to be able to use lower cost raw material, but currently have other sources of low-cost raw material that does not require our additive, for example.
Ronnie Törnqvist: Or there could be many different reasons for why they are not yet into the launch phase. Some of them are still there because they are, so to say, just recently got approval. A few of them have moved from that segment, so we have some moving in and some moving out of that phase in the product life, let's say. So it is a little bit different, a little bit everywhere.
Laura Mohtadi: The ones that are in scale-up, I think you said 25. What is typically the lead time from that to serial production?
Ronnie Törnqvist: So different. Some projects pass that phase in no time, or just a couple of months. Some are there for a couple of years. It depends a lot on how and to which extent the project is dependent on, for example, customer approval of, let's say, that you make a component and it is part of a system, then the whole system might need to have approval by the customer. So even further down the process chain. So it is really a wide range there. The only thing what we do now is try to learn from past projects and try to see what would have been possible to do, knowing what we know afterwards, in order to accelerate that project to be out on the market quicker, and how can we therefore change our way of handling other projects in order to accelerate, so to say.
Ronnie Törnqvist: That is a little bit how we are working with it right now, to try to make it faster.
Laura Mohtadi: I also was thinking a bit about the price spreads or sensitivities, because the customer case in PET is driven by replacing bottle-grade recycled PET with lower cost recycled material. How sensitive is that to this price spread between maybe virgin or bottle-grade and low-grade recycled PET? If that spread narrows, does demand for your additives slow down?
Ronnie Törnqvist: I don't know. That would require to. We, of course, read a lot of these analyses that are made of these markets, how that is developing. But it is always kind of speculation looking into the future. It depends on the development of, let's say, oil price. That would affect the virgin price. It would, let's say, recycling behavior of the bottle community changes the availability of bottle grade for other application areas. The growth of recycling capacity and capability in, let's say, lower cost PET recycling will also change that. So it is very complex, but I don't know.
Ronnie Törnqvist: Right now it seems like there is a big cost spread, and it will remain so for quite some time between the, let's say, bottle-approved rPET from bottles and the, call it more generic PET scrap that is food approved, and even more so to the regenerated PET that is not food approved.
Laura Mohtadi: Okay.
Marcus Nyberg: But I guess the key message here is that our customers, they use our additives to save money and to become green.
Ronnie Törnqvist: Yeah.
Marcus Nyberg: That's a little bit and they are saving money on using our additives. That is the driver and becoming green. That is both. So when we say that it changes both, this is what we mean. You save money and you become green.
Ronnie Törnqvist: Yes.
Marcus Nyberg: And that's important to keep that in mind.
Laura Mohtadi: Okay. You also mentioned the financial ambition to reach an annual sales run rate of SEK 300 million. Just to clarify, is that for the recycling or for the whole group?
Marcus Nyberg: For the whole group.
Laura Mohtadi: For the whole group?
Marcus Nyberg: Yeah.
Laura Mohtadi: Okay.
Marcus Nyberg: That is the strategy.
Laura Mohtadi: What sort of time frame do you have in mind for that, and how much of that do you expect to be from recycling?
Marcus Nyberg: I guess the answer to that one is as soon as possible. So this is what we do on everything. We do not have a specific target, but of course we are not happy with this quarter, and we like to improve that. But this will come stepwise, and we really think that recycling will have a quite big portion of the 300. That is where we see the growth, and if we are saying that we are doubling year on year, it is pretty easy to do the maths, I think. So.
Laura Mohtadi: Mm-hmm. It is pretty easy to do the maths, but what sort of profitability should we expect at this level?
Marcus Nyberg: At the 300 level?
Laura Mohtadi: Yeah.
Marcus Nyberg: Yeah. One thing to. The maths are really simple as well. We are really scalable. We have the overhead in place. We have the management in different positions. We do not need to invest in new capacity. What you are not seeing on the figures is that on a monthly basis, we can be on a run rate for 300 million. That we can do with existing organizations, with existing infrastructure, and all. So what we are saying from the SEK 50 million or the SEK 200 million, if we add another SEK 100 million to that one third would be shown on the bottom line. That is what to be expected.
Ronnie Törnqvist: On the EBITDA level?
Marcus Nyberg: All the way down to the smallest.
Ronnie Törnqvist: Yeah.
Marcus Nyberg: We are a typical industrial company where we had the economies of scale to come, and we see that actually on an individual month. We might need to add another operator or two, but that is it, to be honest.
Laura Mohtadi: Okay. That was very clear. Well, I think that was all from my end. Thank you very much.
Ronnie Törnqvist: Thank you, Laura.
Marcus Nyberg: Thank you.
Operator: Okay. Thank you so much, Laura Muhtadi. We got some questions in advance, but I think we covered a lot of them already. I was thinking about something that you mentioned during the presentation, Ronnie, that there is some new EU legislation coming.
Ronnie Törnqvist: Yeah.
Operator: Do you want to explore that a little bit? What kind of timeframe are we looking at here?
Operator: That could be a potential trigger for your business.
Ronnie Törnqvist: Yes. The PPWR is a packaging legislation in the European Union, which is handling recyclability and recycle rates of packaging.
Operator: Yeah.
Ronnie Törnqvist: It has already come into validity, which has a certain impact already today on how packaging is to be designed so that it can be recycled in the future. Those are the main requirements right now.
Ronnie Törnqvist: Not mix too much material systems and so on in order to make it easier to
Operator: Right
Ronnie Törnqvist: recycle the plastics or the glass or the paper or whatever the packaging is made of, which I think it is a good thing for
Ronnie Törnqvist: of course, sustainability and so to say, in our packaging system. Then, coming in 2030, so needs to be implied in 2029, is minimum recycled content rate for various types of packaging, and it is very detailed, and it is a jungle to understand all of that.
Operator: Right.
Ronnie Törnqvist: But in overall scene, the amount required to be used, recycled material to be used inside new packages produced in 2029, 2030, 2031, is very high. Much higher than today. So it will increase the pressure of the whole plastic industry that are producing packaging must then adapt to this and start to implement that.
Operator: Right.
Ronnie Törnqvist: So that will put an enormous pressure. There is a lot of discussions ongoing right now in the business of plastic.
Operator: So we are talking about.
Ronnie Törnqvist: manufacturing
Operator: For five years, that this will be implemented as you are.
Ronnie Törnqvist: Yeah. 3, 4 years.
Operator: Yeah.
Ronnie Törnqvist: It needs to be applied in 2029 in order to be functional and rolling in 2030. Many of the larger companies have already started this implementation, and we are doing a lot of our, let's say, early phase project is to support those kind of applications, of course.
Operator: Yeah.
Ronnie Törnqvist: Because if in some applications it is only possible with, let's say, not doing anything special to add 10% of recycled material, but if it is required to be 35% or 40% by legislation in 2030, someone needs to do something technically different.
Operator: Yeah.
Ronnie Törnqvist: Changes in their machine or in the recipes, and we have a lot of solutions that can fit right in there.
Operator: No, exactly. Because in Sweden, we are all very good at recycling.
Operator: There is a lot of other EU countries where that is not happening to that extent.
Ronnie Törnqvist: Many are good. Western Europe is typically quite good.
Operator: Yeah.
Ronnie Törnqvist: It is becoming better and better in Eastern Europe. The thing is that until now, I have not personally not seen so many, let us say, packaging producers that are trying to push the envelope and go outside of what is easily attainable in terms of recycled material content.
Operator: Right.
Ronnie Törnqvist: You often see these packages, 50% recycled material inside this and this. It is easy. But 70% would be pushing the envelope or 80%.
Operator: Right. Got it.
Ronnie Törnqvist: They need to move there.
Operator: Which countries then, which EU regions do you see the biggest potential for your particular product?
Ronnie Törnqvist: Of course, you could say DACH and Benelux is a really strong player here. A lot of market, a lot of producers, a lot of also recycling volumes, of course. Southwestern Europe, Spain, along the coast in Spain, Mediterranean coast especially in Spain and France, especially northeastern France close to Belgium and Switzerland and so on. Poland is moving really fast in this direction as well.
Operator: Okay.
Ronnie Törnqvist: It is a very interesting market for us, and we are working a lot. We have a subsidiary in Poland.
Operator: Yes. You mentioned you were at this German trade show as well.
Ronnie Törnqvist: Yes.
Operator: You work in that market, so that is interesting.
Ronnie Törnqvist: Yeah.
Operator: We are almost out of time here.
Operator: I also wanted to get into the future prospects a little bit because we talked a lot about Q3, but we are already far into Q4 here.
Ronnie Törnqvist: Yes.
Operator: Do you want to detail perhaps what you are seeing so far in terms of demand and customer activity here during the fourth quarter?
Ronnie Törnqvist: I will start, and then you can finish, Marcus.
Operator: Yeah.
Ronnie Törnqvist: What we see is continued stability and good development of the aesthetics business, the colors for plastics, both in the Nordic countries and in Eastern Europe. Eastern Europe was a bit weak earlier around the summer, but they are now coming back into action, and we feel that it is going really well there. We have very many happy customers and are developing in that field. Recycling continues to grow, both with additional customers coming into production also this quarter, and growth at the existing ones is something that we expect and start to see. Then I think we will continue to see stock adjustments in the high temperature segment, or we know we will. Lightweight is more difficult to predict today.
Operator: Yep.
Ronnie Törnqvist: But maybe Marcus Nyberg wants to add a little bit on that.
Marcus Nyberg: Yeah, a little bit, because what happened after the summer, in general, we see July as the summer month, for many of our customers they actually have August. So there has been a quite slow activity during July, August, but in September it is really picking up, meaning that we are traveling more, more exhibitions. So we really hope to see it in the numbers this quarter, but on an activity level, it is record high.
Ronnie Törnqvist: Yeah.
Marcus Nyberg: Because when we are focused, and we really focus on what we can do and how we can push it, but there also needs to be decisions taken by our customers, and that is like an internal meeting when they say, "Should we go or not go or put on hold?" So we are focusing on what we can do and to really push, push.
Ronnie Törnqvist: Yes.
Marcus Nyberg: Putting all our energy into this.
Ronnie Törnqvist: Yeah.
Marcus Nyberg: That is the-
Marcus Nyberg: Maybe one thing to add in.
Marcus Nyberg: Yeah.
Marcus Nyberg: We continue to work on this, let's say, project process optimization this quarter, both in terms of how we follow it up, what we do in there, how we learn from the past, and also increase our capacity to take care of more of these requests.
Operator: Yeah.
Ronnie Törnqvist: Absolutely.
Operator: Okay, great. So final question then. If you look even further into 2027 and beyond, where do you see the main growth coming from? Is it existing customer, new customer projects, or new applications?
Ronnie Törnqvist: All of those, where we-
Operator: All of the above.
Ronnie Törnqvist: Yeah, all of the above, especially within recycling.
Operator: Yeah.
Ronnie Törnqvist: I think we will, next year, continue to be quite strong in the aesthetics field, and we will do everything we can to support our good customers that we have in the lightweight and high temperature fields. We will, I think, continue to broaden in the recycling area, both with existing new customers, existing application fields, new application fields. It is quite dynamic in that area.
Operator: Okay.
Operator: Well, I think that about brings us to the end of this presentation. Thank you, Ronnie, Marcus, and also to Laura Muhtadi, who joined us remotely, and not least all of you who watched this. Thank you, have a great day, and we will see you next time.
