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Edited Transcript of ALIG.ST earnings conference call or presentation 21-Aug-19 8:00am GMT

Q2 2019 Alimak Group AB (publ) Earnings Call

STOCKHOLM Aug 26, 2019 (Thomson StreetEvents) -- Edited Transcript of Alimak Group AB (publ) earnings conference call or presentation Wednesday, August 21, 2019 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Tobias Lindquist

Alimak Group AB (publ) - CFO

* Tormod Gunleiksrud

Alimak Group AB (publ) - President & CEO

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Conference Call Participants

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* Johan Dahl

Danske Bank Markets Equity Research - Analyst

* Kenneth Toll Johansson

Carnegie Investment Bank AB, Research Division - Financial Analyst

* Mattias Holmberg

DNB Markets, Research Division - Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the Alimak Group Q2 2019 report. (Operator Instructions) Today, I'm pleased to present Tormod Gunleiksrud, CEO; and Tobias Lindquist, CFO. Speakers, please begin.

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [2]

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Thank you, and welcome to quarter 2 call 2019, and I think we just dive straight into it. So if you go over to Page 2, I think we -- straight into the presentation. And we're saying that the quarter as a whole for the group, I think it was a solid performance. Still with sort of a mixed outcome within the business areas, and I will try to bring some more color to that view.

Starting on the order side. Looking at the order intake, that decreased versus quarter 2 last year. It's mainly coming out of a weaker order intake in construction. But also on the industrial side, I should add that when it comes to orders on what we define as tower internals, i.e., not the elevators themselves, but this overall auxiliary equipment that goes into the tower on the Wind side, also continued sort of a slow development that we saw also coming out of Q1. So I think for those to be [said] on the order side, that is what I refer to when I say mixed outcome. What is very good to see is that we had another all-time high coming out of After Sales on the order side. And I think, we've been talking for quite some time on the opportunities that we believe in on the After Sales related to the BMU business, and we see that also now starting to come true in a more continuous fashion. So there are certain things that I'm quite pleased to see on the order side, but there are also disappointments on the order side. And that is related to Construction and also to the Wind side.

Revenue-wise, what actually went out on the delivery side, I think the organization made a strong effort in the quarter. Very strong revenue growth on the Construction side. And that was also compensating the decrease we saw on Industrial side, mainly coming from the Wind side, again, caused by the lower orders that we saw on tower internals. So all in all, on the revenue side, I think it was still a good quarter.

And then looking at the margin side on how these revenues translated into results. Happy to see margin improvement, both year-over-year and also sequentially for the group, meaning that EBITA margin adjusted ended up at 14.4% on the quarter versus last year 13.4%. So I think we are on a good pace towards the targets that we have set. And it's of course also a good one to see that the earnings per share had an increase of 32 -- 37% versus what we saw in quarter 2 2018. So all in all, I'm still -- I'm pleased to see what was accomplished, but, of course, you're never fully satisfied. So I guess, that is the summary of the quarter.

Moving then to next page, going down into the different business areas. Page 3 starts with Construction Equipment. And here, of course, we'll have to mention on order intake that decreased with 30% organically, meaning that we ended up at SEK 164 million versus last year's -- last year at SEK 226 million. Main decrease here is coming out of Northern Europe and the U.K. What I would add to it is that the pipeline that sort of reflects the projects that we are pursuing within the group on a global basis, that pipeline is not decreasing. But what we see is that from leads actually goes from a lead into materializing into an order, that time is taking longer. What we also saw earlier, if you go a few quarters back, where construction companies and rental companies were buying equipment more on a debt, but the projects will go ahead in their future, so the order could come in with quite a few points in -- or with that certainty that the projects would materialize, that development has turned into more a fashion of frame agreement and then call off against the frame agreement, but only when the project actually has been launched and it really materialized for the construction companies or the rental companies. So I think that is one of the development that we have seen in the past 12 months. But again, there is a pipeline, and we just have to make sure that we are present in all those geographies, continue to work on our distributors and certainly also on our portfolio, so that we do have the most attractive portfolio in the market and work on those things that we really can influence.

Revenue wise, we've been saying for quite some time that our backlog is strong. And I think we delivered proof of that also in Q2 with a growth of about 47%, 40% organically, ending up at SEK 271 million versus last year SEK 185 million. Good to see that a good portion of that also translated into an improved EBITA -- adjusted improvement. We ended up at SEK 50 million for the quarter versus last year SEK 31 million. And that, again, delivered a margin of 18.5% versus last year 16.5%. So on what actually came through was delivered in the quarter, I'm pleased to see with. And then, of course, it's to make sure that we monitor the order side closely and also make sure that we stay sharp to make sure that we are taking the lion's share of the market that is available to us.

Moving on to next page, Page #4, takes us into Industrial Equipment. 2% increase in order intake was -- that led to 2% down organically, leaving us with SEK 551 million in order intake versus last year at SEK 531 million (sic) [SEK 539 million]. And I already referred to the Wind business, that was main reason for causing that drop in orders. And it really comes out of the tower internals, and it goes back to China and what I would refer to as a stiffer competition on power internals that comes out of China. On what is the elevator part of it and sort of the core with Wind, I still see good development in that one. I think the renewable side and the wind businesses, in general, have fairly strong market for the time being. There's a lot of activities on the global scale. So we have to work on the opportunities that are existing. And of course, on the other businesses within the Industrial, it's good to see that the sort of general industry part coming out of the traditional Alimak business starts to gain momentum with an increased activity level, both on the tower side. It's good to see that we're actually doing well on the Industrial side in China, in tower and cement in particular. We see that mining is coming back. So there are quite a few opportunities to pursue on the Industrial side as well going forward.

Revenue-wise, we had a 7% decrease organically, meaning that we ended up at SEK 493 million versus last year at SEK 523 million. That again is really coming out of what we have seen in the Wind business.

EBITA adjusted SEK 17 million versus last year SEK 14 million. Margin of 3.5%. That is certainly not okay. And that is something that we work on. And that is also coming out of reduced revenues on the Wind side. So we have initiated activities to make sure that we have a cost there that is reflecting the business that we are executing on.

Moving on to next page. Page #5 takes us into After Sales. We had an order intake growth of 8% organically, taking off the base up to all-time high. Again, it's good to see that the BMU refurbishment and service contracts that we are pursuing in that business is gaining momentum. I think I've been addressing that potential for quite a few quarters. And it's always good to see that it is coming through and it is sort of bearing fruit when you've been working on it for quite some time. So I'm quite happy to see the development that takes place on After Sales.

Revenue-wise, we didn't quite manage to get that higher order intake into -- translating into revenues. We had a flatter revenue organically, and that ended up at SEK 331 million versus last year SEK 316 million. And it was a good development on the service side and the refurbishment side while there was less spare parts in the mix. That less spare parts is also to a large extent coming out of a more soft construction market because what we do see is that the utilization of equipment among construction companies and rental companies seem to have gone down, and that has also led to lower purchase of accessories of gates, fences, switches that you would normally see coming out of After Sales. So it is also a direct consequence of what is going on in the construction market. So all in all, and given the fact that there has been even a softening on the construction side, I have to say that order wise, After Sales has held it up quite well. And of course, that order is also eventually due to come out as revenues and finally also as result.

And looking at the results for the quarter, adjusted EBITA adjusted ended up at SEK 90 million. Not quite reach up to last year at SEK 92 million. Still, we ended up on a margin of 27.2% versus last year 29.1%. And I should say that given the mix and where we ended up revenue-wise, I'm still pleased to see what actually came through from After Sales in the quarter.

Moving on to next page, takes us into Rental, that is Page #6. And here, we saw a drop on order intake of 24% organically, meaning that order-wise -- order intake wise, we ended up at SEK 89 million versus last year SEK 114 million. Vast majority of that drop is coming out of Australia. Still, what we see is that we do have a strong backlog, we do have a very high utilization on the fleet. That has also led to the fact that we are a little bit picky in terms of what projects do we pursue. And so far, we had a line of not risking projects with longer duration over projects that are coming up earlier but do have short durations on it. Because for us, the projects that do have a higher duration, those are the ones also contributing to higher utilization overall. And I think with the backlog that we do have, I think we also can allow ourselves a little bit of that luxury just to be a little bit cherry-picking on the projects that we are pursuing.

Revenue-wise, we came true with an 11% organic growth for the quarter. And that led to revenue of about SEK 99 million versus last year SEK 87 million. So all in all, it was still a strong quarter revenue-wise. And in terms of results, that ended up at EBITA adjusted of SEK 15 million versus last year SEK 12 million. And with an EBITA margin of 14.8% versus last year 14%.

So all in all, I am quite happy also with what came through on the rental side. It's good to see that backlog is still there, strong backlog, and we have project in there for young duration. So all in all, I'm quite pleased what -- with what came through in second quarter also on the Rental side.

I think then I've tried to give a flavor on what it looks like on the different business areas. And I think I should hand over to Tobias Lindquist, our CFO, and he will go slightly deeper into the financial details on the quarter. So Tobias, please go ahead.

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Tobias Lindquist, Alimak Group AB (publ) - CFO [3]

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Thank you, Tormod. So let's turn page to Page #7, earnings summary.

We have results for the quarter of SEK 108 million, which was an increase of SEK 29 million compared to last year. SEK 23 million of that came out of improved EBITA adjusted result, the vast majority from Construction Equipment. The costs for items affecting comparability and amortization reduced by SEK 13 million and SEK 5 million, respectively, also supporting the improvement in the result.

Our financial net of minus SEK 17 million was minus SEK 8 million worse than last year. SEK 1 million of that came from changes in IFRS accounting and the remaining portion of higher interest costs and unrealized currency changes, due to a higher portion of loans in foreign currencies. So overall, we had, as Tormod mentioned, a good development in the result with an EBITA adjustment up 16% versus last year, and the result for the period up 37%.

If we turn page to Page 8, tax expense. We have the results before taxes of SEK 145 million in the quarter and tax expense of SEK 36 million, resulting in a tax rate of 25%, which could be compared to 29% last year and 24% Q1 this year.

In Q4 last year, we had a realization of tax -- deferred tax assets of SEK 47 million. We have had no material changes of the tax assets during the first half of the year, and we don't expect any in the latter part of the year either. Looking ahead, we expect to take the tax rate to be around 23% to 25% for the remainder of the year.

If we turn page to Page 9, result for the period and EPS. So with a result of SEK 108 million, we had an earnings per share of SEK 2. As mentioned, an improvement then by 37%. Looking for the first 6 months, we are up 57%. So good performance -- development in earnings also had a direct impact on earnings per share.

Page 10, cash flow and net debt. When it comes to cash flow, we had a good development from operating cash flow. It was SEK 106 million in the quarter versus 14 -- negative SEK 14 million last year. The improved result combined with lower increase in working capital was the reason behind the improvement. Our working capital increased by SEK 59 million during the quarter, as an effect of combination of lower operating liabilities, but also a reduction in inventories and trade receivables, both stemming from the lower volumes in the Wind business.

Our net debt was SEK 1.3 billion by end of June, which compared to SEK 867 million by end of December. Major factors impacting our net debt was the changes in IFRS 16 lease accounting, which has had an impact of SEK 327 million compared to December last year. And we also had a dividend payment in the second quarter of SEK 149 million.

Our leverage for -- by Q2 was 1.9, a slight improvement from 1.95 we had in Q1. Comparing to end of December last year, then it was 1.55. But if excluding the impact of the IFRS, it would have been 1.44. So that is more comparable to the 1.55. And the improvement is, to a large extent, driven by the improved EBITDA result. In July, we extended the credit facility with Handelsbanken that we have in place with 1 more year. So overall, we are having a good financial situation in terms of cash flow and net debt and financing.

Turn page to Page 11, midterm financial targets. Our revenue growth target is 6% annual organic growth. We were on 9% in 2017 and flat in 2018. However, the last half of 2018, we had a growth of 4.9% in Q3 and 4.3% in Q4. This year, we had an increase of 13% in Q1 and 3% in Q2. So combined, an 8% growth.

In terms of the EBITA margin target of 15%, we were at 12.8% in 2017, 12.8% also in '18. Also here in the latter part of the year, we saw an improvement in the underlying margin for the business areas. Q1 we're at 13.2%, and we are now 14.4% in Q2. For leverage, as mentioned, we were at 1.9 at end of Q2, would have been 1.44 excluding the IFRS impact. And we have been performing better than our target for the majority of the last 2 years. So overall, we are working towards and trending towards our midterm financial targets.

With that, I hand over -- back over to Tormod to summarize the quarter.

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [4]

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Thank you for that, Tobias. If you now turn to Page 12, so I should give my summary view on the quarter. And I think I would repeat what I've stated in the first slide, saying that it is a solid group performance and I'm, of course, also happy to see that the EBITA margin -- the adjusted EBITA margin did strengthen during the quarter, and we are on sort of a good trajectory towards our target. Still, there were mixed outcomes in the different business areas, and I was referring to Construction and part of the Wind business that was weak on the order side for the quarter. However, very happy to see the strong order intake on the After Sales side, and that tells me that we are on a good direction.

Also on the general industry result from the traditional Alimak business, happy to see that there is an increased activity level going on in the traditional verticals out there. I was referring to the power side, mining, cement, it's good to see that some of these markets are coming back. Still, there is, in my view, market uncertainty, and that has certainly spilled over on the Construction side. I think the situation we have in U.K. with the Brexit has increased some of the uncertainty. There are uncertainties also in other parts of Europe. I mean I think Italy is one of them and so Northern Italy you see -- or sort of Northern Europe, we have also seen some downturn in the construction sector. So add to that also the tension between China and the U.S. I think there are sentiments that do have a spillover also on the businesses, I think that is fair to say.

Already mentioned the Wind side that are facing some stiff price competition from China on tower internals. We work on what we can influence, that is our cost level, that is our size on the organization. So we have to make sure that we are adapting and doing the right things, both when it comes to having the right size on the organization, having the right products. That is our focus. Again, very happy to see the BMU After Sales potential starting to materialize. I think there is so much more to do in that area.

And if we take a view on our financial targets. Year-to-date, we have an organic revenue growth of 8%. And it's, of course, good to see that we are tracking on the targets that we have set. When it comes to the earnings target, which we have said that it's 15% EBITA margin, and we have said that we expect to reach that on Q4 2019, that also stays, given the still solid backlog that we have. And there is still so much taking place out in the market, lots of opportunities there. So that is still our aim.

So with that, I think I should conclude our quarter 2 presentation 2019. And I think we are good to go with questions and hopefully, we also have some good answers to those questions. So thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from the line of Johan Dahl of Danske Bank.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [2]

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The question on the cost levels. You talked about some -- how much cost out are you actually targeting going forward? Is it possible to mention any sort of magnitude on those initiatives for the remainder of the year and next?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [3]

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No, I don't think I should be specific on that. I think we have set a target, we have set a target on the EBITA margin. And each one of the businesses have to deliver up to a certain level in order to reach that. And if we don't see that volume in -- the forecasted volumes in a given part of our geographical operations, it's not able to reach that. I mean we will put measures in place that are compensating for what we would see as a shortfall on the volume side. So it would be very geographical, dependent on the -- I don't think it would be right for me to go out on any numbers that are related to the cost side. But if there are significant drops on the volume side in certain operations, then costs will be taken out accordingly.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [4]

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Okay. And secondly, on Industrial Equipment, I guess, the current financial year is possibly not panning out exactly the way everyone had expected. But there seemed to be lots of moving parts. I mean you've got wind clearly having an impact. But if you look on the sort of growth deltas in the earnings for Industrial Equipment such as synergies from acquisitions, foreign exchange impact, et cetera, how would you say that they are developing?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [5]

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No, I think the synergies have actually developed quite well. I think it's -- the margin that we achieved in the quarter, that is not something that we like to see. And we were pushing ahead with some, yes, how should I put this, reductions on the cost side in April when we started to see the development on the wind side. So the margin level that we have seen is not something that we expect going forward and something that we are pleased with. So that has our full attention.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [6]

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But the problems you had on the BMU side last year, for example, have they sort of rectified itself this year?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [7]

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Well, what I can tell is that nothing rectifies itself, but we have certainly been working on fixing. And first of all, keeping the commitments that we've made to the customers that when we have entered into a contract that -- to deliver a solution that should they work with, I think we have been able to contain or I don't think -- I feel quite comfortable that we have been able to contain the problems. We are still having machines that are under warranty on some of these projects where we had technical issues. I can probably also say that some of the cost related to actually the commissioning and the start of some of these projects probably costed up a little bit more than we expected. But I actually feel that we are on a -- I think we are in a solid way of seeing improvement coming through in that business. That is also what I would say going forward. And of course, it is also now very good to see that the After Sales is able to pick up a good portion of what are sitting downstream of those installations. So all in all, I'm, of course, happy to see that we are moving in the right direction. But there have been challenges.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [8]

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Just a final question before getting back in line. How would you say that the weakening sort of global cycle is affecting your strategic agenda in terms of growing Alimak via acquisitions, et cetera?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [9]

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I mean -- I think it will offer opportunities in many ways. I mean one thing that I would expect to see coming through is that people's expectations are -- expectations of the value of their companies is coming down. So there are also a good stuff to that. So I think it would offer opportunities that are cheaper than we just saw a few months back. But still, there are expectations out there that is not truly sort of calibrated with maybe what is the business sentiment today. So all in all, I think it will provide challenges and it will provide opportunities. And as I said earlier, it's all about also making sure that you are fit when it comes to portfolio that we take to the market and that you do have the sharpest portfolio of the players in the market. So I think we are in good shape to lead that development.

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Operator [10]

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And our next question comes from the line of Kenneth Toll of Carnegie.

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Kenneth Toll Johansson, Carnegie Investment Bank AB, Research Division - Financial Analyst [11]

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First a question on the wind power. You talk about the price pressure in China and an increased competition. But aren't you afraid that this would spread to other regions as well, that the Chinese players will start approaching customers also in Europe and the U.S.?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [12]

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I think on tower internals, that we have seen for a while because quite a few of these OEMs, they are international players and they order and they purchase for global projects. So that is not a new situation. And you still have to remember, we are competing -- we are still competing with our Chinese organization. So we are competing with Chinese in China with our own Chinese organization. Still, we see some -- we don't always understand the sort of levels that -- and I should probably underline that we're talking new entrants here. So whether that is very strategically pricing that remains to see. But when we see that some players are coming in below our own cost level, then we maybe believe that they have not quite fully understood the ramifications of what they are supposed to deliver, but that remains to see.

I mean we are taking a judgment out of pure business view on the whole thing. And for us, nothing is so strategically that we would like to move forward with extremely thin margins on this. So I guess, we'll leave it for someone to burn their fingers. And we've already seen situations where others have been awarded contracts, not being able to deliver and come back to us. And you have to see how this pan out. We can only work on [re-cost], make sure that we have a decent margin on that. And I am at least happy to see that when it comes to the elevator side, that is still what is valid. So that is basically how we deal with the situation.

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Kenneth Toll Johansson, Carnegie Investment Bank AB, Research Division - Financial Analyst [13]

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Okay. And then going back a little bit to Johan's questions about the BMU side. I remember when you acquired that business, you showed some statistics about high rises growing some 10% per year globally pretty stably, and the business you acquired had also shown good growth. Now last year, when you ran into some contract difficulties, you became tougher on accepting new orders and sort of changed the way you accept orders and so on. But now are you seeing that the -- that you are back on the growth phase again for that business? And have customers accepted your tougher contracts and so on?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [14]

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Yes. I think we are still having a quite firm regime in place when it comes to actually accepting orders. So that is absolutely still in place. And I think this is also -- it is, of course, you cannot dictate the customer. So you have to try to educate the market and the customer side and address the issues that we see. I mean we are completely -- we are a listed company. We have a completely different responsibility for our shareholders compared to many of those that we are competing with. We can only address those things that we are saying that we are absolutely not entering into contractual conditions like this.

Some of the customers, they actually -- they accept it because we have had the same kind of discussions actually on the construction side because the company that are purchasing on behalf of the real estate owner, they are also the one that are constructing the buildings. So in many cases, we have the -- we are dealing with the same customers on the construction side as we are dealing on BMU side. So there we have an easier inroad, while others are still to be worked on. But I think we have had so much education within the organization, so we have shifted the focus a little bit from, let's -- I mean, it's still all about containing the issues that we have done, making sure that, that is not repeating itself. But we do also phase into a more aggressive approach towards the market on how do we make sure that we close these orders. So I'm quite optimistic.

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Operator [15]

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And the next question comes from the line of Mattias Holmberg of DNB Markets.

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Mattias Holmberg, DNB Markets, Research Division - Analyst [16]

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Tormod, you mentioned in the report here and also during the call that the more cautious customers in construction may lead to increased lumpiness of order intake in this business going forward. Could you please elaborate a bit on what you mean by the increase here, because based on my opinion, it seems looking in the past that the order intake has already been quite lumpy.

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [17]

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Yes, well, I guess, it's all depending on where you are coming from. I think what I'm trying to say is that, yes, you saw earlier, quite a few large order that, obviously, also can be seen as lumpiness because you have some really, really big ones that came through. But still, there was sort of a constant flow of orders on the construction side. I think it is tightening up even more. We had quite a few customers who just knew that there were projects coming up. There was no supply in the market to serve the demand. So quite a few players, whether that being construction companies or rental companies, they purchased, invested in equipment to make sure that they have the equipment ready when projects were coming up and were awarded. I think what we will see is that companies will not invest in new equipment until they actually have firm and fixed contracts. So I think that it's -- it will be more driven towards when projects actually being launched or kicked off on the construction side itself. So it will be more dependent on those days or those time periods, and it will not be as spread out as you saw earlier, that is basically frontline.

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Mattias Holmberg, DNB Markets, Research Division - Analyst [18]

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Great. That's helpful. Another question, getting back to the wind business and tower internals, more specifically. I mean to me, it seems like this is not really core given your elevator focus and you've talked about some cost measures in this area. But if you take a bit more longer strategic perspective, is this really a business that you should be in? Or are you considering any other, say, strategic initiatives in relation to the tower internals?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [19]

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No, I think it's a valid comment, a good question that you're asking. And I think we don't have any view that we should constrain any of the business that we're in. We should always evaluate where we should be active and where we would have our strength. And it is, of course, as you're saying, it is a more commoditized business, the tower internals, but it is also very much that -- a number of the components are the same as we are using on the elevators because a lot is coming from the ladder side of it, because we are supplying special ladders that are used as guides for our service elevators. So it was sort of a natural add-on to service that market for tower internals because this is being used as cable trays and platforms and quite a few components. But yes, it is more commoditized, much more -- it's completely different product. It has no intelligence, it has a lot less safety built into it as protective measures for people and surrounding. So it is a different type of product or a different type of component. So that is, of course, something that we will look at. And if it is not carrying the margins that we expect to get out of that business, then, of course, that's a consideration that we also have to look into and see how we deal with it. And still, there are geographical differences to this. So it's, of course, something that we will have a look at from a strategic point of view as well.

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Mattias Holmberg, DNB Markets, Research Division - Analyst [20]

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Interesting. And just a follow-up on that. Is it -- is the sales usually bundled when you sell your wind elevators? Or do you -- is it necessary to have the tower internals to sell the elevators? Or are the 2 usually sold separately?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [21]

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No, it's sold separately. It would normally be different contracts on these 2.

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Operator [22]

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(Operator Instructions) As there are no further questions coming for at this time, I'll hand back to our speakers for the closing comments.

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [23]

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Thank you for that. And with that, I think it remains for us only to say thank you to all of you that dialed in to listen to the quarter 2 conference call from Alimak Group. And with that, I can only wish you all a good day, and looking forward to see you again, here again soon. Thank you.