Hello everyone, and a warm welcome to Sandvik's presentation of the fourth quarter results 2020. My name is Louise Tjeder, new Head of Investor Relations, and beside me, we have our CEO, Stefan Widing, and our CFO, Tomas Eliasson. We will, as usual, start with a presentation where Stefan and Tomas will take you through the quarterly highlights, and after that we will open up for questions, and those you can ask either via online or via the conference call. With this said, I hand over the word to you, Stefan, please. Thank you, Louise. I would like to welcome you to this fourth quarter result in 2020 for Sandvik. I think it's clear when we summarize the quarter, that we are now gradually shifting back to growth. This was actually the first quarter that we saw a positive order intake of +3%, excluding major orders since quarter one of 2019. We had record order intake in SMRT. We saw a good sequential improvement in SMM, especially driven by automotive. We also had good development in several of SMT segments such as medical, industrial heating, and the consumer-related segments. Of course, we also saw the announcement that we intend to acquire DSI Underground by the end of the quarter, something that we expect to close then around mid-year. We also saw margins at record levels. The adjusted operating profit came in at 20.1% versus 19.1% last year. This is the first time, at least in modern times, that we are able to deliver a margin of over 20% in a quarter. The rolling 12-month result or the annual result, so to say, came in at 17.1%, excluding metal prices, which is how we have defined then our financial target. This is well above our trough margin target of 16%. I think you agree with me that 2020 was definitely a tough year. This is of course driven partly by the recovery in the business, also by very strong savings that we continue to deliver in the quarter. This quarter we had SEK 920 million of savings that we delivered. This also means that we continue to strengthen our balance sheet. We had a cash flow in the period of SEK 5.9 billion, which drove our gearing down to a low 0.04. This includes then three acquisitions also that we closed in the quarter and paid for, not to forget then the strategic one of CGTech, which also had the biggest financial impact from that perspective. Based on this, and looking at where we are with the balance sheet and our business, the board has decided to recommend to the AGM in April to give a dividend of SEK 4.5, as well as an additional dividend of SEK 2 for this year. Last quarter, I showed you our SMRT AutoMine concept loader, fully automated, fully electric. This quarter I would like to show a smaller product, but that will have maybe a much greater financial impact in the next couple of years. This is Coromant that have launched a completely new generation of their steel turning grades, the GC4425 and the GC4415. As you know, Coromant is the market leading brand in the tooling industry, and also by far the biggest brand we have in our portfolio. They are clear market leaders in turning, and it's about 50% of their revenue, so substantial financial impact for the group as a whole. Launching a completely new generation that we have been working on for quite a few years is therefore a big deal. Here we have new coating technology, new substrates, and a new post-treatment procedure that overall enhances the product, in a way that the overall tool life is increasing by an average of 25%. This is exactly what we have done for decades, that we will continue doing to ensure we can continue to be market leaders and price leaders in this industry. Turning is really big in automotive. The fact that we launched this in October, just when automotive were recovering, and also looking for productivity improvements, was very good timing for us. If we look at the market development overall, if you look at the arrows to the bottom and to the right, we have now gone back to showing the sequential development as this quarter versus prior quarter and not the in-quarter development. This is a good sign. It means that the volatility is not as big anymore, so we can compare the quarters instead. As you can see on the regional development, all regions are up sequentially. If we look at the segment view, mining, engineering, and automotive are up sequentially, while energy, construction, aerospace, we continue to really see no improving development at all. If we look at the year-over-year performance instead and take it from a regional perspective, we see Europe being at -2%. Here it's notable that general engineering and automotive are flat, meaning they are back to the levels they were in the prior year. Of course, aerospace continues to be down, which is hitting, for example, France and the U.K., in particular in Europe. North America down 23%. This is where we had the major order in SMT last year. If you take that out, it's down to -6%, so less dramatic than it might look here. Here, also, automotive is flat, so back to the same levels as last year, while general engineering is still down. The recovery in general engineering is lagging a bit in North America compared to Europe. Also here, we should remember that oil and gas and aerospace is a higher portion of our revenues compared to Europe. The fact that they are down, of course, also contributes negatively for North America as a whole. If you look at Asia, we are up 4%. China is actually down 3%, but SMS in China is up 6%, driven in particular then by, for example, automotive and general engineering. The negative number in China is driven by projects in SMT and SMRT. Not a factor in the underlying development there. You can see high growth in Africa, Middle East, and South America, and that is of course, driven by good mid-sized order intake in SMRT. In particular, happy with a automation order in South America of over SEK 100 million, that we have been working on for some time, and that it was good to see coming into our order books. If we summarize this, the order intake is -2%, +3% then excluding the big order in SMT in December last year. Revenue's trailing a bit at -6%. Despite revenues being at -6%, we deliver an EBIT of SEK 4.5 billion or a margin of 20.1% versus 19.1% last year. This would have been 19.5% versus 18.4% then excluding the metal price effect. You can see that the improvements is basically the same, regardless if we look at metal prices or not. It's also worth noting that the decline of 11% in the absolute EBIT figure, is essentially entirely driven by currency. It's a little bit of structure as well, but entirely driven by currency. If we normalize for currency, the EBIT would have been the same. In fact, the organic EBIT development was positive in the quarter. That's why the group leverage is not applicable since we have a drop in top line and improvement in EBIT. Going into the business areas, Sandvik Mining and Rock Technology, again, + 15% order intake and all-time high, driven by equipment orders up 23%, aftermarket up 8%, so strong performance in both areas there. Revenue's -1%. This is against very high comparison Q4 of last year. We are happy to see that number, actually a little bit better than we had expected ourselves. They also deliver a record margin, 21.7% in the quarter, 10 basis points higher than last year. We note here that we have also taken the cost now for the DSI acquisition, but there were other positive year-end effects that offset that. It doesn't impact the margin, but it could just be good to know that we have put that behind us as well. Of course, the acquisition of DSI was a big event for SMRT in Q4. DSI being the world's leader in safety solutions for underground mining and the tunneling industries, a very good complement for the SMR business going forward. It's actually one of the largest acquisitions in Sandvik's history, the second or third largest, depending on how we rank Seco in that context. We expect this deal to close around mid-year, a little bit dependent on how the regulatory processes evolve here going forward. We have Sandvik Manufacturing and Machining Solutions, down - 7% then on the organic side. I think I've talked about most of the regional development already. We note as well that in December, the order intake were down in the negative mid-single digits, and now in January it has started in the negative low single digits. I want to urge you again, though, to be very careful in how you interpret them the first couple of weeks, especially now in January with a lot of holiday days and so on. We continue to see the recovery, but we are in the middle of the second wave of the pandemic. We will have to see how things continue to evolve now in quarter one. Positive to note as well is the strong order development in our tungsten powder business, Wolfram. This is typically a leading indicator, which means that companies are stocking up on powder because they expect a higher demand of products going forward. This is also one of the reasons why we have the differential here between order intake and revenues, because they book orders, and they will deliver them now going into this year. Despite being down 11% on the top line, SMM is delivering a better margin than last year, 21.4% versus 20.3% in prior year. This is, of course, driven both by the savings as well as the recovery in the business, but over half a billion SEK of savings in the quarter alone. They also closed two acquisitions in the quarter, then Miranda Tools, a round tools company in India, as well as a software company, CGTech. We also took a minority stake, as you have seen, in a manufacturing technology company called Oqton, based out of the U.S.,. If we take SMT, a big drop in the orders of 31% in the period. Excluding for the major order, this would have been -7%. Actually, the underlying volume is -4%, if we'd also take away the alloy surcharges we have in that number. Of course, we cannot, for a full year, continue to exclude the material orders because it's supposed to be excluded because it's supposed to be a timing effect. If we don't have them for a full year, then, of course, it will impact the business. The -7 or -4 is really how the underlying short cycle business is doing, and I think that's important to note. We do see continued weakness in oil and gas and aerospace, of course. We do, however, note in the positive sense, some very strong development in some of the short cycle business. Medical, industrial heating, and consumer are all up in the double digits. Those are early cycle businesses in SMT, so that's positive. Also, SMT delivers strong margins in the context of their top line of -10%, an underlying margin of 11.6% versus 12.1% last year. They basically keep their margin level despite double-digit decline on the top line. Of course, you know, early in the quarter, we also announced the intention to continue with the separation process of SMT. With that, I'll hand over to you, Tomas, to take us deeper into the numbers. Thank you, Stefan. Let's move into the numbers now and start with the financial summary as we always do. Let's start with the top line in the upper right-hand corner. The organic growth, as you heard, was -2% for revenues and -6% for orders. Oh, sorry, the other way around, -2% for orders and -6% for revenues. Currency is a headwind, of course, for us now, both on the top line and in the earnings, -9% for both orders and revenues. Structure was -2%. Structure is mainly the divestment of Varel Oil and Gas, which happened at the end of the first quarter in 2020. We'll have that effect for another quarter before it turns around. Total was -12% and -16%. If we walk down the income statement, the earnings came in at SEK 4.5 billion compared to SEK 5.1 billion a year ago, -11%. Currency had a major impact on this one, I'll get back to the bridge in just a little bit here now. Margin 20.1% versus 19.1%, 100 basis points in margin accretion. Net financials, we'll come to a specification on that as well in just a little bit. Underlying tax rate came in at 24.1%, full year 22.8%. Cash flow was really good, the full year cash flow, free operating cash flow, was SEK 15.4 billion compared to SEK 17 billion a year ago. A really good cash flow year. If we move to the bridge then and look at the margin development here, 19.1% to 20.1%, start with the organic part. The -6% on revenues is corresponding to SEK 1.5 billion on the top line. As you can see here in the bridge, basically no impact at all on earnings. Actually, a little plus, +SEK 35 billion. Of course, if you loose SEK 1.5 billion on the top line and the profit stays the same, it has a massive accretive effect on the margin. 130 basis points up. This is, of course, very much a result of all the savings initiatives and efficiency initiatives that we have launched and executed on during 2020. Currency, -SEK 2 billion on the top line, SEK half a billion on the EBIT line, 20 basis points dilution, metal prices 0.1% dilution, structure +0.1%. All in all, 100 basis points up during the fourth quarter. 21% in the fourth quarter is really, really strong. We've never been on that level before, and especially not in a fourth quarter. Let's move to the savings programs. You're familiar with this slide here. We have on the first line the program that we kicked off mid-2019. The full impact is SEK 1.7 billion annualized. We finished deliveries on this program mid-2020. As this is a bridge analysis, we still have a tail of this program in Q3, Q4, and we will also have a little bit in Q1 next year as well. SEK 180 million in the fourth quarter. The next line is the work time reduction program. This is part of the temporary savings, SEK 200 or SEK 205 million in the fourth quarter. This is coming down now. It's now less than half of what it was when it started. This will continue a little bit into 2021 as well. Eventually it will go away. The third line here is the discretionary spend or other temporary savings, flying, exhibitions, meetings, and what have you. The majority of us are still working from home or working at the sites where we are. Of course, that gives a profound impact on the income statement on the cost levels, SEK 500 million in the fourth quarter in savings. This will continue. At what level we can't say today, but it'll have a decent impact in the first quarter as well until we can start traveling normally again. At the fourth line here, we will start to see now effects from the 2020 Program, and we see effects from the 2020 Program starting to sort of trickle in here a little bit. This would mainly have an effect on 2021 and then into 2022 and onwards. There are some of these initiatives that are already now in the income statement, SEK 35 million all in all. The full impact of all these four programs for the fourth quarter was SEK 920 million. If you recall Q2 and Q3, we had SEK 1.5 billion in Q2, we have SEK 1.4 billion in Q3. We have SEK 900 million now in this quarter. This is SEK 3.8 billion for the full year, which of course, has helped. If you take off SEK 3.8 billion from the SEK 15 billion in earnings we had, we would have had a completely different operating margin in the group. At the very bottom, we have also just repeated the information that you saw in the press release from December, the savings program that will give SEK 1.3 billion annualized, the new one. How is the spread between the business areas? You can see here that the half of it is in SMM, SEK 125 in SMRT, and the remainder mainly in SMT. Sorry, SMRT, SEK 125 SMT, SEK 500 million. If we move forward into what's below the operating earnings, net financials, the interest net came in just below SEK 100 million, SEK 96 million. That's SEK 400 million full year 2020. We'll come to the guidance later here now, we believe that this will be around the same level in 2021, SEK 400 million. Tax rates, the reported tax rate, 22.7%. It was impacted by one-offs and items affecting comparability. The real underlying tax rate was 24.1%. The full year underlying tax rate was 22.8%, just below the range of 23%-25%. We'll come back to the guidance for 2021 in just a little bit here. Into the balance sheet now, working capital, very strong finish of the year, below 25%. You can see on the right-hand side, all three business areas are delivering very well. The cash flow, strong in the fourth quarter. If you look at the right-hand side, you can see that we, of course, we have a bit of a reduction in earnings, but we still have good releases from working capital. We are careful with CapEx, SEK 5.9 billion compared to SEK 6.5 billion a year ago. Very happy with these results. That, of course, has a good impact on the balance sheet. You can see that the gearing now is down to 0.04. The financial net cash position is SEK 8.8 billion. The total net debt is a little bit over SEK 2 billion. Of course, as Stefan mentioned here now, in these numbers, we have three acquisitions that we paid for, but we still managed to improve the situation, the net debt situation for the group. A very healthy and strong balance sheet. Let's look at some of the guidance that we had. We said SEK 350 million on negative currency effects underlying. That's translation and transaction effects. We came in at SEK 536. Swedish krona continues to strengthen. The total currency effect was SEK 494. Metal prices SEK 129+ instead of SEK +50. CapEx SEK 1.1. Interest net, we've talked about SEK 96 million, and the tax rate, 24.1%. To finish-- Sorry, not to finish off. Let's look at the dividend proposal here as well. We, as you have read in the report, have a proposal from the board to give a total dividend of SEK 6.50. It's one decision, one dividend, SEK 6.50, but it should be seen as an ordinary dividend of SEK 4.50, and then an extra or additional of SEK 2. That would mean an adjusted payout ratio of 75% going forward. The target remains that over time, over a business cycle, we intend to have a payout ratio of 50% on adjusted earnings per share or adjusted net income. To finish off with the guidance for 2021, new year, new guidance, CapEx. CapEx came down in 2020. We normally are around SEK 4 billion. It came down to SEK 3.2 billion for the full year 2020. As we are in a gradual recovery, we will see CapEx coming back now, maybe not to SEK 4 billion, but something below or just below SEK 4 billion. That's our new guidance for 2021. Currency has a negative impact on the earnings, SEK 500 million in the fourth quarter. We expect SEK 750 million, quite a big number for the first quarter 2021. Metal prices, we believe, will be [SEK+60] for the first quarter. The interest net, as I mentioned, we believe will be SEK 400 million for the full year 2021. Now, tax rate. We have taken down the guidance for the tax rate gradually over the last five, six years, starting on 27% or in the neighborhood. We have had up until now a guidance of 23%-25%. We ended the year on 22.8%, just below that range. We will now take down the guidance to 22%-24%. This is driven by the fact that in the countries where we are big, the tax rates tend to sort of consolidate around 20% right now, like in India, Czechia, Finland, Sweden, the United States. Of course, if we have that kind of tax rate in the countries where we are big and have big earnings, of course it takes the tax rate down. Then there are always a bunch of adjustments, of course, non-deductible expenses, et cetera, which picks it up. 22%-24%, we believe is a sustainable level on the tax rate, not just for 2021. We believe that will stay for the next two or three years going forward. With that, I'll hand back to you again, Stefan, for conclusions and summary. Thank you, Tomas. As we said in the beginning, we are now moving into a phase where we are gradually shifting back to growth. We see a continued recovery, and we are able to deliver record margins in this quarter. The recovery is driven by solid demand in mining and a sequential recovery in the short cycle business such as automotive. If we look ahead, we believe in a continued recovery, but we are cautious with the fact that we are in the middle of the second wave of the pandemic. We have seen in the past that there are delays from underlying demand to our business. Whether we will be impacted by the second wave or not, that remains to be seen. A little bit mid to long term, we also are optimistic, but of course, it will also be dependent on how the pandemic is handled and various economic policy decisions. We will focus on the things we can impact. Right now, we have a strong focus on this shift from temporary to permanent savings that have already started and been planned for quite some time, and that we will now gradually see in this year. It's also important to say that as we have defined our strategy for handling this pandemic in 2020, we always had top of mind that we also need to quickly be able to ramp up when the economy recovers, and that we have done. Now it will also be a focus on ramping back up and capturing the organic growth opportunities that will come with this recovery. We closed three acquisitions in the quarter. We announced the significant acquisition of DSI, and thanks to our good, strong balance sheet, we will continue to have an active M&A agenda also going forward. Thank you for listening. Now let's move into the Q&A, Louise. Yes. Thank you, Stefan and Tomas. It's now time to open up the Q&A session. Before we open up for questions on telephone, we will have two questions from online, and that's from Rizk Maidi at Jefferies, and relates to SMRT and what have we seen in terms of, have we seen a catch up on SMRT as repairs has been pushed out from Q3? Sorry, what did you say? As? As repairs. Repairs? Yes. I don't think we would say we are seeing any catch-ups in that sense. Maybe there are here and there, but we don't think that's an underlying driver for the development in the quarter. Okay, for SMM, can you comment anything about the distributor's inventory levels? We often get that question. It's very difficult to answer. There might be some catch up, some restocking, but it's not something we have seen as material either driving anything in the quarter. Okay. Thank you. We open up for questions on the telephone, please, operator. Thank you. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad now. If you wish to withdraw your question, you may do so by pressing zero two to cancel. That is zero one to register for a question. Our first question comes from the line of Magnus Kruber from UBS. Please go ahead. Your line is open. Hi, Stefan, Tomas, Louise. A couple of questions from me, starting with SMS. What organic growth rate did you see on the automotive business in the quarter? I think in Q3, you mentioned low teens decline slightly below core production numbers. How did you fare that there in Q4? Overall, it was slightly up. Let's say growth in the low single digits. Perfect. Thank you so much. On continuing with SMS, have you seen an impact so far in the automotive from bottlenecks in the automotive supply chain in the first quarter? No, I should say. At the same time, this goes back to my comment that we have seen in 2020, there is a lag in the supply chain up to a month, maybe six weeks sometimes. That's why I think we should be cautious with outlook for Q1. It might still come. We really don't know at this point. We haven't really seen anything as of now. Perfect. Thank you so much. I guess the final one, I think you saw the incremental margins adjusted for savings take a slight step down in Q4 and SMS compared to the prior three quarters. Can you help us a bit with the reason for that and what we should expect into 2021? That would be very helpful. From my perspective, I don't really look at how the business is performing without savings because we are doing the savings for the reason to maintain the margins. Yeah, I don't really have a good answer to that other than that. Yeah. Okay. When we lose sales, we lose gross contribution, you lose absorption, et cetera. We do things to compensate for that efficiency, various parts of savings program. For us, that's not an important KPI to adjust the incremental margin for savings. Okay, got it. Into next year, what do you see there? Similar level to this year or? Sorry, what was the fundamental question? What about next year? Yeah, on incremental margins for 2021, should we expect it to remain on a similar level as 2020 or? We don't give guidance going forward, but of course it would be disappointing meeting a COVID trough year if we couldn't improve margins in SMS this year. Okay. No, I was just thinking what the incremental margin, the drop through, not absolute margins, but the incremental margins from the growth. No, I think on drop-through and leverage, we have seen a very good leverage going down now because we have done the savings. Of course, some of these savings are temporary, so we have to count on that some of these temporary savings will be reversed, which will initially also means a lower leverage going up until we're back on a normal level. If we have growth beyond that, then we can see the normal strong leverage that we usually see in SMS. Okay. Thank you so much. Thank you. Our next question comes from the line of Max Yates from Credit Suisse. Please go ahead. Thank you. Tomas, I just wanted to ask if you could help us a little bit with the temporary cost savings. You've talked about a number of impacts, travel, discretionary savings, but is it possible to put the SEK 3 billion tailwind into the major buckets of temporary savings and potentially how much they were for SEK 3 billion? It can help us assess going into next year what might be more sustainable and what may come back into the business as things open up. Is there any way to do that? You mean the total of SEK 3.8 billion or? The total temporary cost savings that you had this year. Yeah. Okay. Work time reduction will continue for a while, but on a much smaller scale into 2021. Depends on how the business recovers. Discretionary spend has been around SEK half a billion every quarter. We believe this to a great extent will continue into the first quarter. As soon as we get back to normal, that will also start to fade off. This is like three buckets here. We have temporary savings that will continue for a while. We have permanent savings that are coming in into 2021, the SEK 1.3 billion program. The difference between all of this is the expected recovery of the economy. Of course, if that doesn't happen, we need to do other things. Stefan, maybe you want to comment on? I think the way we have seen it and the way I think you should think about it is that we have done the permanent activities that we're now starting to implement to a level where to offset the temporary savings we would have needed otherwise. The delta there should be business growth, overall protecting the margins. Okay. That I think is the generic answer. Tomas says these temporary savings, they will be there as long as we are in this situation in the world helping us. Of course, the negative will come on the top line instead. It's all connected moving pieces, so I think that's how you need to see it. I guess, or maybe Tomas, of that SEK 500 million discretionary, how much of that came from travel, for example? I guess there are things that going forward everyone will do a bit differently. Was travel half, more than 1/2 of that 500? Just trying to understand how big a component that was. We don't have that breakup as such. Of course, the biggest part of discretionary spend saving comes from the sales cost, of course. Sales cost, of course, being one of the biggest cost components, and where a majority of the discretionary spend is really. We don't have a breakup of that. Not really. Okay. No. Maybe just quick follow-up. Would you be able to comment on the different performance between what will become the rock processing division within mining and then the remaining drill rigs business? How those two businesses performed relative to each other and whether one was disproportionately stronger within the quarter? You will get, before the next report, a full restated results view of that. In general, we can say that the rock processing part, which has a higher exposure to construction, has had a tougher year than what will be Mining and Rock Technology. That's how you can see it. It's the underground and surface drilling part has been stronger, relatively speaking, than the rock processing part. Also the case in Q4, I assume? Yeah, throughout since the pandemic hit. Okay. Thank you very much. Our next question comes from the line of Daniela Costa from Goldman Sachs. Please go ahead. Hi. Good morning. Happy New Year. I have three quick questions, please. I wanted to ask regarding your Mining margins, which are already at a very high level and you've progressed a lot. Now the orders are also going up significantly. As we look forward, how shall we think about those margins? Is there further potential upside there or we've reached a peak there? The second question relates to your comment on ramp-up that you've mentioned now, we're on a ramp-up phase and into recovery. How should we think about working capital for 2021 and your needs to match the recovery there? The third point, if you can comment on pricing outlook. I guess there's been this bit of reflation going across many raw materials and components, but there's also growth recovering as you've mentioned. How shall we think about pricing? Thank you. On SMRT or SMR going forward, we are never happy. We will always work trying to improve margins, especially if we grow the business. Of course, they have also had short-term savings in 2020. They need some growth to offset that, as that comes back. SMRT has basically had very little temporary savings in Q4, though, that they went back already back at the end of Q3. We should also note that as they grow in the way they do with orders on the equipment side, there's a negative mix impact from higher equipment sales versus aftermarket. The gap is smaller than it maybe has been in the past, but there's still an element of a negative mix impact there. Working capital, yes, we expect to need to add some money back into working capital this year as we now would expect to grow. We don't have a specific guidance on that, but we have, let's say, an informal target, as you know, to keep net working capital below 25%. That we aim to continue. If we grow, of course, it will still be more money in absolute terms. Pricing has been positive in Q4. We don't really have an outlook or any guidance going forward on that. There is no change in the strategy we have. We will continue to work actively with pricing. Thank you. Thanks. Our next question comes from the line of Lars Brorson from Barclays. Please go ahead. Thank you. Good morning, Stefan and Tomas. If I can stay with the topic of ramping up, Stefan, I'm just curious as to your more general comments around potential constraints or challenges in scaling up the organization and indeed the broader supply chain after what has been a very challenging year last year. Do you see any obvious bottlenecks? Obviously, the question earlier on SMM on the auto side related to, I think, semiconductor shortages with regards to auto production. More broadly across the business, do you see areas in SMM upstream, for example, in Wolfram or in SMRT around ramping up your foundries on the rock tool side? Any obvious things that you're concerned about as you look into this year on ramping up? No, not really. It doesn't mean that the organization will have to do a lot of hard work. As I said in the presentation, this time, compared to maybe during the financial crisis 10 years ago, we have been very deliberate already back in March when we planned the activities to handle this crisis, that we will already plan for how to ramp back up, and done it in a way so that we should be able to do that quickly so we don't lose business opportunity and market share on the upswing again. I think it's going to be tough for the organization, but I don't really see any major issues. You mentioned Wolfram, for example. They are ready for higher volumes as well as an example. Of course here, the high vertical integration of SMS is coming back in our favor. It tends to be good coming back up and tough for us coming down. Indeed. Perhaps the possible converse on SMRT, thank you. That's a helpful answer. Can I secondly just ask to SMS in China, I appreciate you flagging + 6% organic growth in the fourth quarter. Still looks a little bit underwhelming to me, given the broader momentum, not least in automotive. Of course, your Chinese business for SMS doesn't have the drag, particularly on aerospace that the North American business does. Can you help us understand a little bit better, at least in my uptake, driving that slightly underwhelming growth? Is that primarily a function of the exposure to larger, more global accounts via your Coromant brand and less mid-market or McCormick? Is there anything you can point to from an end market standpoint or region in China that seem to be dragging down growth there? No, the domestic market in China is what is driving the growth. We have global accounts that is more export oriented, and especially in some segments they are still lagging behind. There are no end markets that stand out for you that are particularly challenged. It's more a matter of having a bigger exposure to the global accounts? Yeah, of course, the global accounts are typically related, in this case, then to some end markets like aerospace, which is still down. Understood. Thank you. Thanks. Our next question comes from the line of Gael De Bray from Deutsche Bank. Please go ahead. Thanks very much. Good morning and happy New Year, everybody. I'd like to better understand the dynamics for SMT, going into 2021 now. Is it fair to say that the oil and gas business accounted for the vast majority of profit in 2020? As the backlog for umbilicals in particular is now likely exhausted, do you still expect to make a profit, in oil and gas this year? Overall, would it make sense to see margins coming back to perhaps nearing zero in 2021 before they recover in 2022? We expect SMT to definitely be profitable in 2021, even if we also expect it to be a very tough year for oil and gas. We have backlog that basically we were delivering from until the end of last year, and a little bit now into Q1. We need also new orders to have things to deliver in 2021. We expect orders, typically maybe of smaller nature than the big ones. That is now also required to have a business in oil and gas or umbilicals in 2021. We are not talking about profit and margins per segment in that way. It's not like all profits in SMT are coming from oil and gas. We have now, I would say, a well-performing business also, for example, in Kanthal with industrial heating and medical as an example. It's a very important, the most important profit driver in SMT, but it's not all. We must look at SMT now as being a very different company compared to the previous trough, which was mid-2017. We are now on the same levels as we were then, and then we lost money. We don't do that now. SMT is in much, much better shape with a better cost base. Okay. Thanks very much. Our next question comes from the line of Madhu Singh from Bank of America. Please go ahead. Hi, thank you for the call. Two questions. Firstly, on SMS side, if you could give details around, given how much pressure has been seen on the aerospace side, if you were to look at the SMS orders excluding aerospace, then how was it looking and how is it trending? If you could give some color on that will be very helpful. Secondly, on the SMT outlook, given a big chunk of the beat does come from the metal pricing side. Given that this is going to be set for divestment as well, also the orders within the SMT are looking quite weak still. I'm just wondering, what do you think SMT order outlook is looking like? Is there a good chance of, let's say, maintaining the absolute level of orders or revenue base for the coming year? The concern is that if we don't get orders coming back soon, then maybe the base we have for 2021 is actually quite high. If I start with the last one, SMT, currently what we see in the reported order figures, there are no major orders from oil and gas. From that perspective, and again, the short cycle businesses have started to improve. Overall, I would say I don't really see that the current baseline is not sustainable. It's rather to start to wait for an uptick going forward. That would be my general comment. Sorry. I meant was the revenue base compared to the order run rate. Yeah. On the revenue side, of course, in 2020, we have delivered from backlog. We're going to be challenged in 2021 on the revenue compare year-over-year, simply because in 2020, we held revenues higher than orders because of the backlog deliveries. Yeah. On SMS, we don't really have the figures reported in a way where we exclude a certain segment like aerospace like that. I don't dare answer that question. Just roughly, if you were to think about that, would you think that growth would look a lot better if aerospace were to be excluded from the mix? Because that one segment seems to be lagging and continue to lag for some time. Absolutely. Orders would definitely be better without aerospace. It's the biggest anchor we have in that order figure. Mm-hmm. The number which is reported for fourth quarter, aerospace contribution of around 5% at the group level, right? Yeah. You have to increase. For SMS, aerospace is more around 15%. 15%? Yeah. Is it still around 15%? Okay. Fair point. 2019, it's around 15%. We will have to get back to that. That's a fair point. Okay. Yes. Yeah. Okay. Thank you. Our next question comes from the line of Alasdair Leslie from Societe Generale. Please go ahead. Your line is open. Oh, yeah. Hi, good morning. It was a follow-up on autos within SMS, and you called out more positive sentiment in North American autos. I was just kind of wondering how much that had already benefited, if any, in Q4, the sort of headline order decline of -17% for North American SMS still stands out, really is quite weak, even accounting for kind of aero and energy weakness. I was just wondering if the autos and maybe even general engineering as well in North America is one area that's supporting that further sequential improvement that you've seen between December and the start of January into Q1. That's my first question. Thank you. On the auto side, there is not a big difference between North America and Europe. The main difference is general engineering, where in Europe, we are back on par with prior year, while in North America, it's lagging. The recovery is lagging in general engineering. That's one big factor, and then the other one is simply the higher mix of aerospace and oil and gas in North America. Okay. If I could have a follow-up question, please, just on SMT. It looks like the separation costs there have been really on a declining trend since the first quarter of 2020. Should we expect those costs really to be negligible in 2021? Maybe at the same time, if you could also update us on the next steps, and maybe the timeline ahead of the spin in 2022. A sort of final question, if I can, I suppose as part of the separation of SMT, I was just wondering whether you also maybe used that as a kind of an opportunity to untangle elements of SMS and SMRT as well from each other, perhaps giving you a bit more strategic flexibility going forward. Thank you. Do you want to comment on the cost? I can comment on the cost. Yes, of course. The costs, up until we were done with the internal separation, mid-2020, of course, we had some costs. After that, we've sort of hibernated the project a little bit now. After the decision to continue with the separation here now, as the board took some time ago, we are sort of ramping up the project again. What you will see during 2021 is an increase in costs for SMT. Firstly, a little bit careful, but more and more as we go through the year. To be listed, to get a listing contract with Nasdaq, you need to have a stand-up period first before you get a listing contract. We are aiming to move SMT into a stand-up situation here towards the end of the year. That's the plan. The costs will go up, especially towards the end of the year, but we don't have a number for you for that, but they will increase again now. On the timeline, we don't have a more firm timeline than we have said 2022, or later, if for some reason that would not be possible. The project is planned so that we should be able to take the decision at the AGM in April. If for some reason we decide to delay it, we can also do that. That is sort of how the project is executing. That's the timeline they are working against. We will have to come back, obviously, with a final timeline when we are a little bit closer and know more. Your third question, I guess the answer is no, not really. We have done now the split of SMRT into two natural parts. We have done a segment split between machining and manufacturing solutions. I don't really foresee any more sort of untangling in that sense. Things evolve, so we will see. Okay. Thank you very much. Thanks. Our next question comes from the line of Andreas Koski from Nordea. Please go ahead. Thank you. Most of my questions have already been answered. I have one question on the strong aftermarket growth in SMRT of 8%. Do you think that is mainly driven by an underlying market growth, or do you feel that you are gaining market shares and that we can expect continued strong growth rate for the coming years for SMRT's aftermarket business? I've learned not to comment on market share questions until all the cards are on the table. Okay. No, I think, to be frank, I don't think that's the reason in that sense. I think we have a well-performing aftermarket team, and we are sort of taking our fair share of what we should have there. If we continue to drive equipment sales and increase the equipment volumes, that should also help the aftermarket, of course. Yeah. Thanks. Can I also try on the temporary savings, especially on the discretionary savings, because it sounds like you expect all of the temporary workforce reduction savings to come back in H1 or so. Let's say, when we are back to a normal situation, do you think that you can still keep around 50% of the discretionary savings because you will do more digital meetings, et cetera? Do you think all of the discretionary savings will come back when we are back to normal? Thank you. Well, if I start. Of course, we have learned a lot of things during this, let's say, different period, to use a diplomatic word. We have learned how to do things in a more efficient way. We have learned to use digital meetings and work remote, and et cetera. We don't believe that we will, in some areas, let's say within administration, within finance, within HR, those functions, we will not travel as much and spend as much money as we did before. One mustn't forget that the biggest cost area or the biggest cost bucket here is actually sales, and we need to meet our customers. We need to travel and see our customers. We need to be present on exhibitions. We need to go to trade fairs, et cetera. We need to do that to keep the business running. It's just a fact. To send around technicians and what have you. I wouldn't think that 100% of that saving would come back, let's say, to cost. We don't have a number for it, but the bulk of it will for sure come back, I think, without giving too much guidance. Stefan? No, I agree. I think this is going to be a learning as well, I think, when things open up again. There might even be a surge initially as everyone is. There's a pent-up demand to meet. Then I think it will go back to a long-term improvement trend as we take the learnings and so on. We are not really counting on that much improvement beyond this, let's call it pandemic phase. There will be improvements. Very helpful. Yeah. Sorry if I missed it, do you have the organic growth number for SMS in North America in the beginning of January? Is that also single digit now, or are we still at double-digit declines in North America in the beginning of January? I don't have that figure. Sorry. We only have- No worries. Okay. Thank you very much. Thanks. Thank you. We take a final question from online, Johan Sjöberg from Danske Bank. Can you comment, Tomas, on how much inventory changes has impacted the margins for 2020, and if not for full year, then maybe on the Q4, please? Yes, I can do that. Inventory changes. What really impacts the margin is over and under absorption in the production rates. If your production rate is according to what you have set up your production units for. In the fourth quarter, production rates were not, let's say, off track. They were as we had planned. Of course, the demand was a little bit stronger than expected, that's why the inventory came down a bit. The production rates were as we had planned, we had no under absorption to speak of in the fourth quarter. We did have that in Q4 2019, where we had an urgent need to take down inventories, where we closed some of our major manufacturing units during the fourth quarter for one or two weeks. That gave an under absorption, which we don't have today. From a technical point of view, in a bridge from Q4 2019 to Q4 2020, there is 100 basis points for SMM and 40, 50 for the full group. In quarter, if you use that word, it's zero. If that answer is sufficient. Yeah. Thank you. We thereby close the Q&A session. Should you have any more questions later on, please do not hesitate to contact IR, Emelie Alm, or myself at any time. With this, we thank you for calling in and wish you a very nice day.