Följande frågor och svar är endast tillgängliga på engelska.
Organic growth and market conditions
Industry delivered 5% organic growth, while Infrastructure declined by 4%. Several industrial peers have reported solid organic growth for some time. What explains the lag at Group level, and what needs to change for a broader recovery?
The two business areas have different exposures, both geographically and in terms of customer segments. Industry benefited from stronger demand in Sweden and the engineering industry, particularly within Power Transmission. Infrastructure was more affected by lower volumes in Norway and Denmark, including delivery delays and continued weak project activity.
We see a gradual improvement in the market, particularly in Sweden, but the picture is still mixed. Mining has been positive and automotive is gradually improving, while pulp & paper remains subdued. For a broader recovery, we need to see this improvement spread to more customer segments and markets, coupled with an increase in project-related activities. So, the direction is encouraging, but we are not yet seeing the full broad-based recovery.
You now see improving demand across more customer segments. How much reflects stronger underlying demand rather than the timing of maintenance work, and are the early signs of recovery in project sales translating into orders?
It is a combination of factors. We have seen a genuine improvement in demand in several customer segments, particularly in Sweden. Scheduled maintenance shutdowns supported service activity during the quarter but also keep in mind that service is only around 15 per cent of the revenue in the Group so the timing of maintenance work has a limited impact at Group level.
We have noted some early signs of a cautious recovery in project-related activity, but customers are still careful with larger investment decisions. The timing of projects can also vary considerably between quarters. So we see a gradual improvement in underlying activity, but it is still too early to describe it as a broad recovery in project demand.
You saw strength in automotive, but there has been some negative news flow in the Swedish automotive sector recently. Do you expect this to impact your margins negatively in Q4?
We have seen a gradual improvement in demand from the automotive industry during the year, although this is a segment that can be quite volatile between quarters.
We are of course following developments among our customers closely, but our exposure is spread across a broad range of customers and industries. Our companies continuously adapt their operations to changes in demand and focus on maintaining gross margins and cost control.
Was the weakness in Norway demand-related, or was it mainly caused by delivery delays? And are the delayed orders still firm with confirmed delivery dates, and does this relate entirely to Flow Technology?
Demand in Norway was broadly stable, but sales were negatively affected by delays in certain product deliveries, affecting the Flow Technology business in Infrastructure. This has not resulted in a decrease in order stock or cancellations.
Service activity was strong in Q3. How much was driven by planned maintenance, and how should we think about seasonality?
Scheduled maintenance shutdowns supported service activity and capacity utilisation during the quarter, particularly within Technical Solutions, where activity improved gradually. Service operations are generally strongest in Q2 and Q3, when customers schedule maintenance and shutdowns. Activity tends to be lower during the colder seasons when our customers require a high availability due the nature of their business. This creates some quarterly variations, although service operations account for a relatively small share of the Group’s total sales.
Profitability and business areas
EBITA increased by 15% despite only marginal organic growth. What explains the earnings improvement?
It is a combination of factors. Our existing companies maintained good cost discipline and improved gross margins, while the organic sales development was somewhat better, contributing to organic EBITA growth. We also had strong contributions from acquired businesses in both business areas. This is a good illustration of how operational improvements and acquisitions work together in our model.
Gross margins improved despite supplier price increases and a cautious market. What is driving this?
There is no single explanation. Our companies work continuously with purchasing, pricing, customer and product mix, and operational efficiency. We have maintained good delivery capacity and price discipline even as purchase prices for certain products have increased. These are company decisions in line with our decentralised model, made close to customers and suppliers, and they add up across the Group.
Infrastructure reported higher EBITA and a better margin despite declining comparable sales. How should we interpret that?
The lower comparable sales were concentrated in certain markets and operations. At the same time, acquisitions contributed positively, gross margins improved in parts of the business, and cost adjustments in Denmark started to have an effect.
This supported earnings even though the underlying sales development remained challenging. We should also remember that seasonality in our service operations affects margins between quarters, particularly within Infrastructure.
Cash flow and financial position
Operating cash flow improved significantly in Q3. What were the main drivers?
The improvement was supported by stronger earnings and stable working capital. Cash generation is key to us because it gives us flexibility to develop our existing companies and continue making acquisitions.
Acquisitions and capital allocation
How attractive is the Nordic acquisition pipeline today, and how have sellers’ valuation expectations changed? Where do you see the best balance between quality, price and growth potential?
We continue to see a healthy pipeline and a good inflow of opportunities, both through direct discussions with entrepreneurs and through advisers. We have not seen any significant changes in valuation levels or competition for acquisitions. Our focus remains on finding successful specialist companies with strong market positions, good management teams and opportunities for further development.
We do not prioritise one market or segment simply because valuations may be lower. The quality of the business and its long-term potential are more important.
Can you maintain a high M&A pace through 2027?
The pace of acquisitions will always vary between quarters depending on the timing of individual processes. We have good financial capacity and an active pipeline, but we remain disciplined and will not compromise on our acquisition criteria to achieve a certain number of transactions.
Has the uncertain geopolitical and economic environment changed how you approach acquisitions?
We continue to be selective and disciplined. Uncertainty can affect customer investment decisions and individual companies differently, which makes it important to understand each business and its market. Our acquisition model is based on a perpetual ownership perspective and on developing companies over time, not on short-term market movements.
Momentum Group 3.0 and outlook
With the new Group structure from 2027, how do you see the organic growth opportunities, acquisition potential and profitability prospects within each of the three business areas?
The new structure is about creating better conditions to develop our businesses, both organically and through acquisitions. The three business areas have different characteristics and opportunities, and the new structure will allow us to work more actively with those differences.
In Power Transmission, we have an established position and a broad customer base. The focus is on continuing to develop our existing operations through organic growth, operational improvements and acquisitions that strengthen our offering and market position.
In Industrial Solutions, we bring together specialist businesses with different technologies, customer segments and growth opportunities. The aim is to strengthen business development, share experience where relevant and create better conditions for both organic growth and acquisitions.
In Process Technology, we see opportunities to develop our position in specialised process-related applications, both through our existing companies and through acquisitions that complement our offering.
Across all three areas, the ambition is to strengthen profitability through organic growth, operational improvements and disciplined capital allocation.
Will the new structure mean more central costs or less autonomy for the subsidiaries?
No. The principle remains that business decisions should be made as close as possible to the customer. Group level sets direction and the common framework, the business areas support and challenge the companies, and the companies run their businesses. We want to strengthen capabilities and repeatable ways of working without adding unnecessary Group overhead. We will continue to build on the strong decentralisation and entrepreneurship that form the core of our business model.
What is new with the four engines model compared with how you worked before?
They make the way we develop the Group more systematic. The company building engine focuses on continuous improvement in each company; the entrepreneurship engine on developing leaders; the acquisitions engine on making more of the right acquisitions; and the capital engine on allocating capital to the strongest opportunities. Together, they help us build structural capital and make the model more scalable while retaining decentralised responsibility.
