Welcome to Sandvik's presentation of the second quarter results 2021. My name is Louise Tjeder, Head of Investor Relations, and beside me, and also presenting the quarterly highlights today is our CEO, Stefan Widing, and our CFO, Tomas Eliasson. Yes, we will start with the presentation, and then we move on to the Q&A session when you have the chance to ask your questions to both Stefan and Tomas. With this short introduction, I hand over the word now to you, Stefan. Thank you, Louise. Also I would like to welcome you to the second quarter report for Sandvik in 2021. We kick things off with a short summary here. We believe this has been a quarter where we show strong execution in what we believe is a high-demand environment. We have an order intake growth of 43% year-over-year in the quarter. We have a strong underlying demand in both the mining and the construction segments, while order intake levels are now continuing well above pre-COVID levels. We also see a robust demand in automotive and general engineering, also now some positive signs of improvement in the aerospace and energy segments. Revenues grew by 22% organically versus last year on the back of strong backlogs and despite some of the supply chain issues that we have managed throughout the quarter. We have a solid earnings performance, a margin of 19.1%, and the third consecutive quarter with margins above 19%. On a rolling 12 months basis, we are now at 18.7%. We had permanent savings in the quarter of SEK 190 million. That was more than offset by reversals of the temporary savings from the same period in last year, and that had a negative impact of SEK 765 million. If we look at this altogether, we can see that the approach and strategy we have had is working. We now are rolling back significantly the temporary savings versus last year. We replaced them with some permanent savings and volume growth, leading to what is essentially record high EBIT margins. We also continue the shift to growth. In the month of June, we had a record month for order intake for battery electric mining vehicles of about SEK 140 million. We also had success with the business model related to battery as a service. It's not only the equipment that is moving, also the business model is gradually being validated, which is very positive. Rock processing has launched a new digital service called SAM by Sandvik, which I will come back to and w e have of course also been very active on the M&A front. We have closed the DSI Underground acquisition on July 7th. From here on, it will be reported in our numbers. We have announced another five acquisitions within or just after the ending of the quarter. Very good progress on that front. If we focus a little bit on some of these acquisitions, we are definitely stepping up also the digital shifts. Two acquisitions in Sandvik Manufacturing Solutions. First one being DWFritz Automation. This is a company with a leading position within the niche of high-speed, in-line contactless metrology. It's a platform acquisition for us in that sensem, it will, in a very good way, complement our metrology software company, and it will give us access to this high-growth niche area. This is a niche with an addressable market of around SEK 6 billion, growing at around 15% CAGR. It essentially doubles our addressable market in the metrology space. Then we have the Cambrio acquisition, one of the leading players within CAM software. They have three different product offerings addressing different segments of that market. A very good entry position for us to fill this strategic gap in our portfolio. Also get into the high single-digit growing business of the CAM market. These two acquisitions in total sum up to about SEK 1.3 billion of revenue in 2020 numbers. It will take Manufacturing Solutions north of SEK 2 billion on a run rate basis this year, means we are well on track to execute on the target to grow Manufacturing Solutions to SEK 4 billion in 2025. I mentioned SAM by Sandvik. This is an exciting new product launched by Rock Processing Solutions. It's basically an Industry 4.0 type product targeted at the people working in the field with our products using the connectivity that we have in our products in the Rock Processing field. We'll give our customers access to data and analytics of the product and the ability to, for example, order spare parts through an e-commerce solution. Another step on the digital shift. If we look then at the market development, year-over-year, everything is more or less up, of course. Europe up 63%, North America up 49%, Asia, a little bit weaker, up 34%, simply because China had recovered significantly already in the second quarter of last year. If you look at the sequential development, you can see that most of the regions are also up. On the segments, mining is staying at a very high-l evel. That's how you should read that sequential trend of being flat. General engineering continues to improve sequentially, especially in North America, which is continuing to pick up. Automotive has been sequentially flattish between Q1 and Q2. Here we had a strong Q1. We entered Q2 in a strong way, then it flattened out due to the component shortages among our customers. It has picked up again towards the end of the quarter and going into July. We will see if that is due to restocking for holidays or if it's a more permanent uptick, but at least a positive trend towards the end of the quarter. In energy, we now see a sequential uptick. It was a step up in Q2, especially driven by North America. It's still at low-l evels, but we saw clear signs of improvement, at least. If you take the SMT perspective here, they continue to see improved order intake also on the umbilical side. Then aerospace, which we still show sequentially flat. We do, however, see continued increased activity. It doesn't impact our business that much yet. If this would be a picture on Europe only, we would say that sequentially it is now improving in Europe, which seems to be leading the other regions in the aerospace recovery. Relatively positive there. However, we don't expect the recovery to be fast in any way. Going down to order intake and revenues, again, 43% up on orders over SEK 25 billion or SEK 25.8 billion, tracking on a run rate basis over SEK 100 billion. 22% up in revenues. This is a book-to-bill of 110%. We continue to build order backlog, and of course, are looking forward to seeing that backlog convert into revenues here going forward. The EBIT development is strong, up 58%, an adjusted margin of 19.1%, and close to SEK 4.5 billion in terms of money. This is a leverage of 50%. We are happy with this leverage. It should be seen in the light of the good mitigation with the same quarter of last year, and it is a better leverage going up, than the leverage we had going down last year. That's good, and we are happy with this, considering the significant FX and reversal of temporary savings that we saw compared to last year. Tomas Eliasson will talk more about the savings as well in his section. Going into the business areas then. Now we start with Mining and Rock Solutions. Another quarter with very high order intake, the second one in a row with order intake of over SEK 10 billion, organically up 31%, equipment up 44%, aftermarket up 22%, so strong performance. One major order. We had more major orders actually last year, so this would have been 38% up if we take away the major orders. We also see the battery electric order here that I mentioned prior. I have to correct myself a little bit here from Q1. I said then that we didn't expect the Q1 order intake levels to be sustainable. It was due to some catch-ups and so on. We have another quarter at this level, and we are now more confident that this is actually an order level that we should see going forward for some time. Good underlying demand, and I think good also execution in the field from our team here. The margins are slightly down versus last year. That is quite easy to explain. It's essentially fully explained by reversals of the temporary savings last year as well as currency. That's essentially the two main, or more or less the only explanation points here for that leverage number. Sequentially, we had higher revenues than Q1. The margin is on par, slightly down with a couple of 20 basis points. This can be explained by mix. We have a positive development on the equipment side that is growing fast. We get a negative mix impact with more equipment and less aftermarket. Of course, very positive for the future since that equipment will eventually or immediately once it's delivered, start to drive the aftermarket business instead. We also have some ramp-up costs. We are now more confident in the outlook. More permanent strong order intake. We are ramping the organization to be able to deliver on the backlog, and avoid extensive lead times for our customers. We are also now investing even more, in some of the technology areas such as electrification and automation. We also have some logistics challenges that we had to manage in the quarter. In particular, in parts and services, in some occasions, we had to fly spare parts to customers to be able to serve them, which increases our cost base. There is a general inflationary pressure here as well. If you take these three, they will explain about SEK 100 million or over 100 basis points on the margin in the quarter sequentially. We have in a good way offset most of the general inflationary pressure, that would be the fourth explanation point here. It's in the order of magnitude of SEK 20 million. Good handling there. Still a little bit to do, which has been addressed also with some price increases as late as June of this year. Some of these things will remain as long as we grow equipment. It will remain, we think logistics, for example, and ramp-up costs will gradually go down as we fill in this new larger costume with revenues. We are positioned to continue to grow this business again with the closure of the DSI Underground acquisition in July, and also the announced acquisition of the smaller but still important Australian rock tools company, Tricon, that we did in the quarter. Rock Processing Solutions, super strong. Order intake up 61%. Equipment orders up 92%, 32% on the aftermarket side. We believe that is driven at least early in the quarter by some continued catch-up effects, but that it is also now driven simply by strong underlying demand. Revenues up 29%, very well executed by the supply chain team here. We have inventories at record low levels. They are working hard to deliver to customers in this environment, but good execution in the quarter. The strong margin, 17%. They have handled the logistics challenges. They have handled the price inflation or the cost inflation through price increases. They have also positive mix impact from more spare parts and more highly profitable products in the portfolio that they have sold in the quarter. Very strong margin at 17% from them. Also here we had an acquisition, Kwatani, in May, that will increase their product portfolio with large screens and feeders, and they are based out of South Africa. Sandvik Manufacturing and Machining Solutions. I would say good order intake, very good order intake at +44% organically. Revenues up 33% year-over-year. This corresponds to approximately a 3% sequential improvement versus Q1 on the revenue side. We saw automotive staying at good levels but flattening out from a growth perspective versus Q1. As I mentioned, good start of the quarter there, good ending of the quarter there, quite flattish throughout the quarter, you could say. General engineering has continued to improve and is now on robust levels, actually back to pre-pandemic levels. The daily order intake in July started with +20% in the first couple of weeks. We are shifting back now to year-over-year commentary on this because we think that's what is the most relevant. That's how we measure our own business internally. If this would have been a sequential comment, you could say that sequentially, we are continuing on the improvement path that we have been earlier in the year, roughly a 3% sequential improvement. I want to emphasize, as I do every time, that we're giving you a data point here, not a forecast. As you know, Q3 is seasonally very different from other quarters as well, so please bear that in mind. Very good margin levels in SMM, 23.1%, a leverage of over 63%, or at 63%, which considering the very good mitigation they did in the same year of last year, means that they have also structurally done improvements there. You can see that over SEK 100 million in permanent saving coming into this quarter. This gives me very good confidence in what they will achieve going forward, considering we have quite a few segments where there is growth still to come. With these margin levels already, I think we will see some good performance from this business going forward. We have accelerated our M&A journey here, three acquisitions. I have talked about two of them, then yesterday we also signed the acquisition of FANAR, a Polish round tools company of almost SEK 200 million in revenue, based out of Poland. Finally, SMT. Order intake of a very high 74%. Of course, weak compares, but an order intake level of SEK 4 billion in the quarter in absolute terms is a very high- level also historically, especially given that they had no major orders in the quarter. They had umbilical orders of around SEK 200 million. If you compare that to SEK 140 million in Q1, you can see that it's continuing to pick up, but still at low levels. Here we can see most other segments going very strong. Medical wire, heating systems, Application Tubing, to name a few. Strip as well, with their consumer business, giving very good order numbers overall. Here, they see some signs of improvements in the aerospace segments, which is good, but also here, still on low levels. Revenues are still down -4% versus last year. The main shortfall versus last year is that we essentially are not shipping any umbilicals right now. There are some, but it's less than SEK 100 million. What you see here is essentially SMT without umbilicals, and I think that's a pretty impressive performance then on the margin side at 10.4%, excluding metal price effects. They show here that there are other businesses, Kanthal in particular, Strip now as well. The other parts of tube, Application Tubing and Tube Specialized, that can deliver really strong margins also without umbilicals. We have a 200 basis point improvement year-on-year based on the inventory buildup. I want to emphasize, though, that this is a bridge effect. They have built inventory in the way they normally do before the summer, and it was just that we didn't do it last year because of the COVID impact. The margin here is not really boosted by production levels. It's the normal production levels they should have in this season. You might have seen also that Kanthal has made progress on the renewables strategy, having signed an agreement to provide heating elements for HYBRIT here in Sweden. With that, I'll hand over to you, Tomas. Thank you, Stefan. Let's jump into the numbers, the income statement, and the balance sheet. We will, as usual, start with the summary. If you look at the upper right-hand corner, we have the components of the top line for the total group. As you've heard, orders, +43%, and revenues, +22%. That's big numbers, really big numbers. But we must remember that we are comparing now with a quarter a year ago, where we had -23% for orders and -20% for revenues. A big downturn and then a big upturn here as well. In order to understand a little bit more on where we are, we can compare with the second quarter in 2019 instead, which was a more normal quarter pre-COVID, even though we were in a little bit of a business cycle downturn on the short cycle business. If you look at those numbers, we are year-on-year, slightly positive on orders, so we're actually above, and slightly negative on revenues. No big numbers, just single-digit numbers for both orders and revenues. Currency, -6%. We'll come back to that. Structure turns positive now, +1% in the quarter. That's CGTech and Miranda Tools. Of course, for the second half of the year, there is much more to come. As we now have closed DSI, then we have a number of other acquisitions which will close during the next six months. If we look at the income statement, then earnings, close to SEK 4.5 billion, a 58% increase, and a 19.1% margin. We will look at the bridge in just a little bit. The interest net is performing according to plan, and we'll talk about that as well. Tax rate within the range, 22.8%, and working capital is picking up, but still below 25%, and cash flow on the improve. Let's go to the bridge and look at the organic development here. With 22% in revenue increase year-over-year, we have a leverage of 50%, which gave an accretion of 640 basis points, and we are satisfied with that leverage. Of course, we have to, as Stefan mentioned here, we have to remember that we had a good mitigation in the second quarter last year. We had -37% on a 20% downturn. Now we have a 50% leverage on a 22% upturn here. Of course, when you mitigate, you don't get these, let's say, peaks and troughs in the same way. It becomes more controlled, just the way we want to have it going forward. Currency had a negative impact of SEK 659 million on the EBIT line. I will talk a little bit more about that when we come to the guidance. All in all, from 14% to 19.1% in the quarter. Savings. This is the slide on savings that we have presented to you at every closing or every quarterly call for the last eight quarters. We have the same setup here on this slide as we always have. On the first line, we had the 2019 program that we launched in mid-2019. That is all done now. There are no P&L impacts in the bridge. The cost level is, of course, SEK 1.7 billion down compared to what it was before we started this program. We just put it in here for reference. On the next line, you have the permanent savings program that we launched during last year. We have SEK 190 million in the quarter in positive impact here. You can see the split by business area as well. The annualized run rate on the savings are SEK 760 million. That is 58%, to be exact, delivered. The majority of what remains, up to SEK 1.3 billion, will happen during the second half of the year. There will be a little bit of a spillover to 2022 as planned. Then, of course, there will be year-over-year effects in 2022 as well, just like the tail before i t fades out completely. The little bit more complicated part here is the temporary savings here now. Let me start by saying that for the total group we have, when it comes to work time reduction in quarter, not a bridge, a little bit more than SEK 40 million in savings. That program is basically coming to an end by mid-2021 now. As we had SEK 600 million a year ago in work time reduction savings, you get a negative bridge effect of SEK 560 million. The next line is other temporary savings or discretionary spend, travel fares, trade shows, and so on. That is SEK 300 million s till in quarter. We had SEK 500 million in the second quarter a year ago, so that gives you a negative effect of SEK 205 million. Those two adds up to the SEK -765 million in the bridge. There are still savings in quarter of SEK 350 million. Of course, at some point in time later this year, we have to, let's say, draw a line in the sand here and stop comparing the spend level here to what we had on the pre-COVID situation here. We will not go back to the same spend level as we had before COVID broke out. We're still comparing this, what kind of spend we had before the pandemic, before March, April 2020. The total, anyway, in the bridge is SEK -575 million. Next slide here, net financials. The interesting line here is the first one, the interest net, SEK 88 million in the quarter. We're on track to deliver or to have SEK 400 million in interest net for the quarter and maybe less. Tax rate. We have a reported tax rate of 24.5%. There were some impacts from items affecting comparability, mainly related to the SMT separation and the creation of an SMT subgroup, which is now done legally. If you adjust for that, we have 22.8% in tax rate, which is well within the guidance for 2021, 22%-24%. Working capital is increasing as it should when the business is up. If you sell more, you need to invest more in working capital to cater for the future deliveries, but also to safeguard stock availability as well. You can see that on the right-hand side, that the relative numbers are on the improve for at least two of the business areas. We will see increases in all four business areas going forward. This can be seen clearly also in the cash flow chart here on the left-hand side. If you look at the blue line and the red line here, the blue line, which is the rolling 12-month EBITDA, is now surpassing the 12-month rolling cash flow line, just the way it should be. We grow, w e need to invest more in working capital, so there will be more earnings than cash flow, but we will continue to fight for a good cash conversion. It is right now sitting at 80%, but we expect that to increase quite a bit during the second half of the year. You can also see on the right-hand side, when you look at the components of the cash flow, that we have an increase in earnings, which is quite substantial, but also investments in working capital, and CapEx is basically on the same level. Net debt. By the end of the second quarter, June 30, we have now moved from a net cash position to a net debt position. We are on SEK 3.9 billion in net debt, and there is not much acquisition spend in this development. This is only really the dividend of SEK 8.2 billion, which was paid in May. There will be more acquisition spend during the second half of the year. In these numbers, we don't have the payment for DSI, for example. That actually happened last week, but it ends up in Q3. Then we have Cambrio and we have DW Fritz, and we have FANAR, and hopefully more coming during the second half of the year. From a gearing point of view, we have everything under control. We will be nowhere near our financial target of 0.5x, and we will be nowhere near the rating target of being below 1.5x when it comes to net debt or EBITDA. It all works out well. Balance sheet continues to be strong and will help us to continue our M&A agenda. Let's look at the guidance, what we said and what we delivered. Maybe the first line is the most interesting one here. We guided on SEK 350 million on underlying currency effect, and that is translation effect and transaction effect. We ended with SEK 632 million. That's quite a difference. The difference is it's not translation, the difference is transactional currency flows. If you look at the opening and the closing exchange rate between the Swedish krona and mainly the U.S. dollar, it doesn't look that much. What has happened during the quarter is that the krona has been quite strong before it weakened again. Transactional currency effects happens as it goes, so to say. You would have to more look at the average exchange rate during the quarters in Q2, and this is exactly what has happened. You have the whole explanation sitting in that transaction effects for U.S. dollars in April, May, and June. Total currency effect was SEK 659 million. Not many revaluations of derivatives and working capital. Metal prices came in on guidance. CapEx and interest net continues as previous, just below SEK 1 billion for CapEx and just below SEK 100 million on the interest net. The tax rate, as I mentioned, on 22.8%. If we finish off then with the guidance, the CapEx guidance is a full-year guidance, and we have said less than SEK 4 billion. That is still valid. Currency impact for the third quarter, given the exchange rate by the end of June, we estimate to be around zero. The metal price effect, we estimate at SEK 200 million positive. Interest net, we don't change that, SEK 400 million. The tax rate we keep on 22%-24%. As we have discussed previously on these calls, we have lowered the tax rate guidance basically every year since 2016. We don't see any, let's say, more room for a lowering of that guidance. The tax rate will most likely sit on this level for the coming years. 22%-24% will stay. With that, I'll hand back to you, Stefan, for conclusions and summary. Thank you, Tomas. We are continuing our shift to growth. That's both a market and business comment as well as a strategy comment. The overall demand is solid. We see a strong and broad-based demand for our products and services. Order intake levels in especially mining and construction are above pre-COVID levels. We expect them to remain robust. We also see a good demand from most of our short-cycle businesses. We have global supply chain challenges that we have managed well in the quarter, although it have had some impact on our operations, as I explained. We have solid profitability levels and now three consecutive quarters with margins above 19%. We continue to see and believe in an economic recovery and a high market activity. The commodity metal prices are staying at a high level, and the global industry production is on a positive trajectory. We do see signs of improvements in the energy and aerospace segments. Again, we will continue to live with some uncertainties in the global supply chain and their constraints, but we believe they will be handled. We will continue to execute on our strategy. We have accelerated our M&A activities with five signed acquisitions during and after the quarter. We have a good pipeline. I expect this to continue in a strong way. We are continuing to take important steps in expanding our digital offering. We continue to have a high pace in innovation on the mining side, with accelerated interest from especially our battery electric mining vehicles. Overall, we believe this has been a good quarter, and we're looking forward for this to continue. Thank you. Let's take some questions. Thank you, Stefan and Tomas. We don't have any questions yet, at least online here, so we will open up for questions on the conference call. Operator, please. Thank you. Our first question come from the line of Klas Bergelind from Citi. Please go ahead. Your line is open. Thank you. Hi, Stefan and Tomas. Klas at Citi. I will squeeze in one quickly. We have other companies reporting right now. First on autos, I actually thought it would be worse. It can in better than I expected in SMM, flattish sequentially despite bottlenecks at the OEMs, and with battery penetration surprising positively in Europe, which is a big market for you. Did you outperform autos production adjusted for geographical exposure, do you think? I'm also surprised, Stefan, that we didn't see more of a negative impact from battery, or is that yet to come? Because the penetration numbers coming out are actually quite high. Thank you. You're probably right that our numbers are stronger than expected if you correlate to the production numbers. I think I've commented this before. I think the correlation seems to be a little bit more out of sync than maybe historically. We were trailing a bit in the fall. I think we were overachieving in Q1, and maybe we have seen less of an impact now from the various parameters you mentioned. We are not seeing really an impact that is beyond what we have calculated with, so to say, from the EV aspects that you mentioned either. We are quite happy with those numbers. That's very good. Okay. Thank you. Do we have any more questions? Okay. Our next question comes from the line of Lars Brorson from Barclays. Please go ahead. Your line is open. Oh, hey. Hi. Thanks. Good morning, Stefan. If I can follow up on that question and then also ask a second question on mining. Can you frame for us what the message is around China, specifically for SMM, on short cycle? It sounds like you're talking about a slowdown on the media call earlier. I wonder whether that sort of sequential re-acceleration you're talking about as you exited the second quarter also goes for automotive and also includes China. I just wonder whether that low- single-digit up sequentially so far in July, is that how you see the quarter pan out? I know you don't give a guidance, obviously, but it's above normal seasonality, which typically is down mid-single-digit versus the second quarter. Obviously, August is a slower month. Do you see if auto does re-accelerate or is included in that view on July or numbers in July? Do you see Q3 overall track in line with what you've seen month to date? Sorry to be a bit long-winded, but I'd be keen on some color there, please. If we start with China year-over-year is actually, in SMM, slightly down -2%. But that is because they were at a high- level last year, and in a catch-up mode after their pandemic lockdown. Sequentially, yes, you could say, when we say a slowdown, it's really that it has stopped sequentially growing, so it has flattened out. It is definitely driven by that same trend in automotive in China. When we say we saw things picking up a bit again now in the end of the quarter, it is related partly to automotive, but more to North America than China from a geographical perspective. In terms of the commentary for the start of the month, I don't have that much more to add other than we just tell you what we see, so to say. The start of the month has been a slight sequential uptick. That includes auto, where things will continue beyond the holiday period and so on is very difficult to predict. This is, I would say, for us, the most difficult period, because it all depends on how September comes out. It's very difficult to say at this point in time. Understood. Secondly, if I can ask to mining margins in the quarter. I wonder whether you're able to give us some numbers around the impact from the key items that you flag, including mix, ramp-up cost, and logistics. Then perhaps more importantly, as we look into the second half, delivery times are extending, price increases being put through now, I guess, will hit you next year. There won't be a huge amount of impact on the equipment business, I would have thought second half. Wonder whether you can talk a little about price, cost, and the cadence into the second half, and maybe talk a little about the margin trajectory from the levels you've seen in the first half. Thank you. If we start with the points we explained regarding the margin in mining. The first one is mix. As I said, more equipment, less aftermarket. A good thing, I think. We're growing equipment strongly. It will lead to aftermarket. We have the ramp-up costs. We have the logistics challenges. Those three are the main- The numbers on those? Yeah. Those three together are roughly SEK 100 million in the quarter. You could say 120 basis points roughly. You have slightly, on top of that then, some cost inflation that we didn't manage to offset, in particular, more on the Rock Tool side. That's what we see. Some of that will stay, some of that will fade away as we grow i nto that higher volume. I believe personally that the logistics things will remain to some extent, but also that we will be able to manage it even better going forward. When from a P&L standpoint. Sorry, go on. Sorry. Yeah. On the pricing side and so on, I think on the consumable side or spare parts and so on, we have done a good job, I think, to mitigate that. As I said, slightly behind on the Rock Tool side. On the equipment side, we have done price adjustments already. As you say, there is lead times here. It's always difficult to fully predict when you set the price for something you will deliver nine months in advance. There has been price adjustments done also on the equipment side to anticipate this going forward. Whether we are perfect, whether we are overdoing it or underdoing it slightly, it's difficult to predict, but we are trying to mitigate it fully. I would say we have done that in Rock Processing on the crusher side already. They have shorter lead times, and they have done a good job there. Do you think, sorry, finally, in the conclusion, can you lift margin sequentially in SMR in the second half versus first half, do you think? Without giving too much of a guidance, so to say, historically, if you look at our margin profile, it is like a sawtooth shape. It goes up sequentially across the year because volume tends to go up towards the second half of the year. I guess some of the disappointment now was that it didn't do that this quarter for the reason I explained. We should be able to go back to more normal performance eventually, I think. Understood. Thank you. Thank you. Our next question comes from the line of Philip Lowe from Goldman Sachs. Please go ahead. Your line is open. Hi. Thank you for taking my question. Just on your M&A strategy, you've had a high level of activity recently, and you mentioned there's more to come in the second half. What is exactly the strategy going forward? Should we expect a similar space? What is the amount of deals you're planning to do in the second half? In what areas mainly? Are you still comfortable paying software multiples in full S&M specifically? As I'm sure you know, we cannot plan when the M&A activities actually land. Now we had five coming in a short time span. It's a little bit of a catch-up effect. We have a continued, I would say, strong activity level. Then we will see when things will actually land, if it's now second half of the year and how much. This is the level we expect going forward. Maybe, we will not buy software/technology companies in the way we have done now every quarter, of course. The pace in general, I think, is where we want to be, if you take a year-to-date perspective, I think. In terms of multiples, yeah, for a company like Cambrio or CGTech last year, the multiples are at a high-l evel. We believe they are worth it based on what we can do with the companies, how they fit into our strategy, the synergies we can extract, and it will be value-creating if you have a five-year horizon. These are not major companies either in a sense, so we think we can handle this, and it will be value-adding to our business. Maybe if I can add a little bit here now. Let's say from a funding point of view, we don't just buy by random. We, of course, have a plan. We have a long-term planning scenario where we look at what kind of companies do we want to buy, what kind of multiples can we afford, and how much firepower do we have in the balance sheet. It all works out in the end to support the growth strategy that we have. We are tracking according to that plan. Thank you. Thank you. Our next question comes from the line of Magnus Kruber from UBS. Please go ahead. Your line is open. Stefan, Tomas. This is Magnus from UBS. A couple of questions from my and want to start with SMS. And I think, between your comments earlier, the incremental margins there were quite good and a big step up from the prior quarter. So I think actually if you adjust for the savings and reversals, I think the incremental margins are even closer to 80%. And I just wanted to get your thoughts on why they are so much higher than what you typically guided for? And so how you think they will sort of gradually revert to what should be considered normal? I think oner of the reasons, as you say, if you take away the offset from the temporary things, it is because they have now for two years, been working with their cost base, not on a temporary level, but with structural activities. They have taken out a lot of costs. If you look at the amount of people they have, it's a big difference. This goes for production, so gross profit-supporting activities. It goes for SG&A cost type of activities as well. I think the answer is simply that they are a leaner and more efficient organization today than they were two years ago. Got it. Is there any sort of structural shifts in the fixed versus variable cost here? No. Not really. No structural shifts, no. We're just driving efficiency, productivity. Yeah. Consolidating production units and support staff and back line and stuff like that. Got it. Thank you very much. Secondly, could you comment a bit on how you see your production levels into Q3 and SMS compared to sales? Do you expect to follow normal seasonal patterns here into Q3, or does the market activity warrant something different this year? We expect normal seasonality. We will have the units closed as per a normal year, so to say. They managed to increase their inventories reasonably well in Q2. They are, in all divisions except one, I should say, they are confident that they can handle the vacation period and meet demand in September. One of them are slightly behind, but they're working through to try to mitigate that because they were hit more by COVID closures and so on in Brazil and the Czech Republic earlier in the year. I would expect normal seasonal patterns on the production levels. Brilliant. On the pricing side, I think you commented hike of some 1% in Q1. Do you see something similar in Q2? If you can say anything about Q3, obviously that would be helpful. We don't see any difference on the pricing activity throughout the year. Most of the adjustments are done early in the year. We think it will continue as it has, so to say. Perfect. Thank you very much. Can I just ask one last one on automotive. Could you help us a bit what the organic sales growth was in SMS Automotive in Q2? Oh, you mean versus prior year? Yes, exactly. I think. I don't have that figure. Maybe Louise can get back to you on that. Yep. I'm sure it was a huge number. I don't have it. We'll get back to you. Thank you so much. Yep. Brilliant. Thank you very much. Thank you. Thank you. Our next question comes from the line of Max Yates from Credit Suisse. Please go ahead, your line is open. Thank you. Good afternoon. Could I just ask on how you're seeing temporary versus permanent savings going into Q3? Is it reasonable to assume that we'll have a similar dynamic with the headwind from temporary cost savings and then the level of permanent savings as we go into next quarter? Do you see any reason that would be markedly different in Q3? If you look at the temporary savings we had last year in Q3, you can more or less do that analysis because we will have a little bit more permanent savings in Q3 as some additional programs kick in versus this quarter. I will guess that it will be a little bit higher spend next quarter. I am sure some travel will come back in September. We had less permanent savings in Q3 last year than in Q2, on the other hand. The bridge effect, I do not have a straight answer, but with those sort of directions, I think you can do a pretty good model on that. Yeah. The temporary savings were quite similar in Q2 and Q3, but in Q4 it started to unwind. Exactly. Yeah. Okay. Just my second question is on the battery electric vehicles orders that you mentioned. Could you give a little bit more color on whether these are retrofits, whether it's new equipment? Is it going into an existing mine? Is it a sort of fully electric greenfield mine? Also maybe talk a little bit around, I think this is one of the first times we've heard you talk about battery as a service. Maybe if you could talk a little bit about how that contract is structured and exactly what you're providing, that would be great. Thank you. Yeah. It's not a new mine. It's not a greenfield, it's an existing mine. I honestly don't know if they will be classified as replacements or if it's an expansion order. It's brand-new vehicles. We don't do retrofits, so to say. These are our Z50 battery electric trucks out of Artisan, and then I think it was the LH518B truck out of Tampere, or loader out of Tampere. These are pure BEVs purpose-built to BEVs. We usually talk about we build Teslas while others are still doing the old type of electric vehicles where you take a diesel car and put in an electric engine. Yeah, that's that for the equipment. The battery as a service, yeah, we are probably not as good in marketing as some others. We tend to do things first instead. This is not our first battery as a service contract, but this is the first major one. All this equipment is supported by battery as a service contracts. It's typically a three to five-y ear contract where we essentially provide, you could say, we provide the energy to the customer. We own the battery, we own any replacement batteries, its charging equipment, and some other things needed in the mine. We do maintenance and repairs and so on on that battery. The customer essentially buys the equipment excluding energy. We make sure the equipment has energy. It's energy as a service almost. That's how the business model works, and for that they pay then a yearly fee. Okay, great. That's helpful. Thank you very much. Thank you. Our next question comes from the line of Ben Uglow from Morgan Stanley. Please go ahead, your line is open Good afternoon, everyone, and thank you for taking the question. Stefan, sorry to labor the point, but carrying on, I mean, from Lars' question earlier, I wanted to make sure we properly understood what you were saying about China. My impression, having written it down, is that the China business, which was down 2% year-over-year, and when I look at the APAC orders, they're -6% sequentially, was significantly impacted by automotive. Is it all auto or is it a bit more broad based? Finally, I didn't understand the point on whether China was re-accelerating or not during the quarter. Can you just clarify those points, please? On the final question, the answer is no. When we talk about an uptick at the end of the quarter, it's primarily a comment related to North America from a regional basis and automotive from a segment basis. If there is one intersection between the geographies and segments where we see a more clear downturn sequentially, it is automotive in China. That was sequentially down. Sorry. Understood. Maybe I can just step back and ask your opinion, certainly not a forecast or anything like that. The question we're trying to figure out is, look, China was First In and First Out, we're beginning to see this leveling off in a number of the China businesses, not Sandvik or auto, whatever. I guess my question is, you see an acceleration in Europe and North America that's clearly different from what's happening in China at the moment. Can you just bridge between those two? Why do you feel so confident that we're not simply one quarter behind the same trend as we're seeing in China? What are the indications that mean that Europe and North America are going to be accelerating in the second half? What do we see on the ground? We are, of course, looking at this from a Sandvik business perspective. What makes us confident going forward is in our long cycle businesses, we have a strong order backlog. We will ramp up and deliver on that into next year. That's one basis for this optimism, if you will. If you take the more short cycle, if we look at the various segments, we see in automotive that the industry is hit by the component shortages. We see the underlying demand being higher than production levels. My read of that is that we will have another step up eventually when these imbalances are corrected. Whether that's in 2022 or earlier, I don't know, but that at least makes me more optimistic there. Aerospace and oil and gas is not going to get any worse. I'm pretty confident in that. We have adjusted to the level we are at, and from here on, I just see things improving in those segments. I guess my answer then becomes, I don't really see what will go down from our business perspective, but of course, anything can happen. That's a reason for our optimism, I think. Yeah. That's super helpful. Thank you for the clarification. I appreciate that. Thank you. We will end with a question online. If you could briefly just comment on the progress of the SMT separation. Sure. Continues as planned, I would say. Full activities, as Tomas mentioned, we have, for example, and you can see it in the report if you read the notes carefully. Small print. We have now put in place the full legal structure in terms of a new group, essentially, that is wholly owned currently by Sandvik. The plan is now that Q4 will be a dry run for them, basically operating as their own entity. If that works well, we hope to run Q1 as an audit quarter. We'll come back with a formal decision. The plan is that we will continue towards a listing next year. Okay. Thank you, Stefan. We close the Q&A session now, and if you have any further questions, don't hesitate to contact IR at any time. We wish you a very nice summer, and thank you for calling in.