FLIDY (FLIDY) Q2 2026 Earnings Report, Transcript and Summary

Good morning and good afternoon, everyone, and welcome to the FLS Q2 Investor Call. My name is Toni Laaksonen, and I'll be presenting today with our CFO, Roland Andersen. And we start the presentation with the Q2 highlights. So first, deep diving to the market and commercial aspects and from there, we can say that with 2 business lines, we saw excellent development in Q2. The Service business line continued their strong commercial performance with their order intake, and we were growing plus 14% organically in Q2, which was excellent development and continued development compared to the previous quarters. Then with our Pumps, Cyclones & Valves, we demonstrated similar great development, and we were gaining some shares from the market, and grew 18% organically in Q2, which was clearly ahead of the certain peers. Then on the other hand, with our orders, we saw some development now with the bigger, larger orders. And the first one was now awarded during the quarter that came from South Asia for our products business line, and it was around DKK 300 million. And in this case, we were awarded to the supply technologies related to iron ore beneficiation project. So a good order for us and demonstrates that the market activity is building up also with the bigger projects. Then a few words on the financial highlights. So our revenue development was great throughout the business lines. So all 3 business lines demonstrated excellent revenue conversion in Q2, and we were growing organically by 16%. Then on the other hand, this revenue conversion was showing up in our margins and EBITA margin improved significantly, and we landed at the level of 17.3%. So good development there. So 3 -- sorry, a 2% jump from the previous year. So great development. Then one of the development areas for us is the cash flow. With our cash flow, we were impacted by our net working capital. So net working capital was building up during the quarter, and therefore, we didn't have positive cash flow, and we will come back to this topic later in the presentation. Then strategic and corporate highlights. There, we are developing well with our share buyback program. So it was launched, and we have been now progressing with the share buybacks according to the original plan. Then on the other hand, we have been developing now the new team set up with FLS. And we made several executive appointments after the quarter. So 4 positions and nominations were announced. First of all, our General Counsel was nominated. Today, we announced the Chief People Officer nomination, and then we also have a new position within the executive team called Chief Strategy and M&A Officer who will join us next year, and then we as well announced the new President for the Service business line. All these announcements then support our new way forward and our growth plans. Today, we also informed about certain adjustments to our financial guidance. And we practically narrowed the guidance with our revenue growth, so that we expect to grow between 0% to 4%. Previously, it was minus 1% to 4%, and then with the adjusted EBITA margin, we expect to land between 16% to 16.5%, previously, it was 15.5% to 16.5%. So good development also from the strategic point of view. Then moving on to the sustainability aspects. Here, we had a positive development with our safety, and we can be very happy about that one. So our injury rate improved during the quarter that we have been seeing continuous positive development this year with our health and safety figures. So that's positive. Then with the other sustainability measures and KPIs, we were not trending that well. So there were slight decline throughout the other KPIs. Some seasonality impacted on this, for instance, related to the water consumption and emissions. And then on the other hand, one update was done with our reporting practices. So the Scope 3 greenhouse emissions were -- are being reported annually from now on. So therefore, we have been taking that off from the quarterly reports. Then a few words on the market outlook and how we are seeing the mining business development. So as we have been stating previously, we see the same outlook with the bigger mining projects. So most of them are very active at the moment when it comes to our customer base. There's more and more engineering activity and the pipeline is building up. Copper and gold prices are still at relatively high levels, which is then supporting the pipeline. And especially with these commodities, we are seeing a lot of major movement. And based on this, we still expect that in the end of this year and next year, we are seeing larger greenfield projects being sanctioned. Therefore, we believe that in the end of this year and next year, some of these projects will materialize and will be visible in our orders. So positive development in that sense, and the outlook remains as we have been stating previously. Then on the other hand, with the brownfield sites, we see a positive development. So all the miners are running their sites as fast as possible and trying to develop their efficiency. From our point of view, this is visible then with the service business line orders and with our Pumps, Cyclones & Valves. So there are smaller replacement investments taking place, upgrades, modernizations, and of course, all these sites require services and maintenance, which is helping us then from the service point of view. So there is a robust outlook for the Services and PCV business lines in this respect. And we expect that the order intake development and revenue conversion continue in a solid manner during the next quarters. Then when deep diving into the business lines, we start from the Service side. So as mentioned previously in the call, order intake was very positive with our Service business line. So we were up organically plus 14% in the quarter, and then 16% year-on-year. Then on the other hand, we're looking at the longer-term development. The first half was great for the Service business line, so plus 17%, and now we have been having good order intake level throughout the last 3 quarters. So very positive market development there. And then the revenue conversion improved pretty nicely compared to Q1. So we were up with our revenue pretty significantly compared to Q1 this year, and that demonstrated then that our supply chain worked well during the Q2, and we expect that the same continue within the next quarters. And of course, this revenue conversion has helped us then to reach higher profitability in the quarter. So great development in Q2 with Services. Then when looking at the margin, the margin was a bit lower in Q1 with our Service business line. But now when the revenue conversion improved ,we jumped to the normal levels with this business line. So a bit over 20%, and as we have been stating, the normalized level with Services is somewhere between 19% to 20%. So this is something that we are expecting from the business lines -- from this business line when moving forward. So a very good quarter for the Service business line all in all. Then our Products was converting revenue very fast in Q2 and that was a really positive outcome then from the Products side, and they had their product -- project portfolio well under control, and the deliveries were improved so that we were executing faster and faster throughout the quarter, which was then visible in our revenue. So good supply chain management from their side, which was then visible in our revenue figures. So good development all in all, in Q2. And as a result of this, our organic revenue growth is now on the positive side when it comes to the first half figures. Then with the order intake, we were up compared to last year, slightly up, and then the first half landed a bit lower than last year. But all in all, we are seeing the same development here that we expect that during the end of the year, we are seeing the larger orders. Our products business line is heavily dependent on the larger orders when it comes to the order intake. And therefore, we believe that the order intake will improve in the end of this year and then next year. Very positive side with the Products business line was the profitability development. So when the revenue conversion improved, we also jumped to the black figures. So now we have the first half results done with the Products and the end result and outcome was that we are a bit above 0, which is an excellent achievement compared to the previous years. So this is excellent development from the Product side. And of course, there are still fluctuation with the quarterly figures, but we are getting more and more towards the situation where we are continuously on the black figures with this product line. Then the third business line, Pumps, Cyclones & Valves, a very positive quarter over here. So we are gaining the momentum and keeping it up with our orders. So the order intake has been on a very good level and developing positively already throughout the last 3 quarters and excellent development in that sense that we were growing close to 20% in Q2. Also, the revenue conversion improved with PCV compared to Q1, and that was a great achievement from the business line leading to a fact that the organic revenue growth was 8% during the first half of the year. So all in all, a really good start for the PCV business line and the outlook remains very positive here. Then of course, when the revenue conversion improved, it also helped us with our margins. The margins were in line with the expectations. There were certain mix-related things between our product and aftermarket deliveries, which were impacting on the margin slightly. But all in all, that the margin was at the expected level. So good development in DKK, especially, so the margin in DKK jumped from Q1 quite nicely. So a positive story with the Pumps as well in line with the Services. And now we move on to the financials, and I hand over to Roland.

Yes. Thank you for that, Toni. And as you say, 14% growth overall in order intake and 17% growth nominally in revenue. And with cost in check, that means we can post an adjusted EBITA margin of 17.3%. And after taxes and financials and a few other bits and pieces, profit for the period of DKK 441 million. Gross margin stayed at a healthy level. There's clearly a positive mix on company level from the product business line still only being about 20% of total revenue, but still a strong and healthy gross margin delivered by all 3 business lines. Our SG&A costs are slightly up in Q2, but as a percentage of revenue, it's down to 17.8% for the quarter. All this higher revenue trickles through to the 17.3% in EBITA [ margin ] as also Toni touched upon. Our net working capital is up and it's predominantly driven by growth. After 3 quarters of book-to-bill above 100, we're now starting to convert the backlog significantly higher levels to revenue, and that sits in an ongoing deliveries and work in progress and to a certain extent in inventories. If we look at our cash flows, our EBITDA earnings are up but mitigated completely by the change in working capital. That means that our cash flow from operating activities is minus DKK 84 million for the quarter, and adjusting for CapEx and investments and a bit M&A, then our free cash flow is minus DKK 135 million for the quarter. But that also means that we are keeping our leverage at 0.6x that it has been for a number of quarters now, plus/minus, well below our capital structure target of 2x. We still have a lot of dry powder for M&A, and we continue to deliver on our share buyback program that by the end of close of business yesterday was a bit more than 40% completed. And on the back of highly satisfactory first half, we are adjusting our financial guidance for 2026 a bit, and Toni touched upon this. So we're adjusting our growth margin for the total company from previously minus 1% to 4% to now 0% to 4%. And we are narrowing the EBITA margin expectations from previously 15.5% to 16.5% to now 16% to 16.5%. If we have a quick look on the bridge, how the 0% to 4% is expected to play out. We now expect the service business to grow 3% to 5%. I think previously we said 2% to 5%. Products unchanged, minus 5% to minus 15%. And our Pumps business is expected to do slightly better instead of 4% to 7%, now 5% to 8% for the full year organic growth. And our EBITA margin bridge is our adjusted margin, we adjust about 1 percentage point for predominantly ERP-related costs that we are currently rolling out on the negative side. On the positive side, OOI, means other operating income, and this is predominantly the sale of the Valby headquarters in Q1 will leave us to a reported EBITA margin of about 20% to 20.5%. Then we have just sent out the invite to the Capital Markets Day. It's going to be on the 17th November, as you know, and it will be held here in Copenhagen at our new headquarters. And we expect that to be 4 hours from 1:00 p.m. to 5:00 p.m. And I think the register is open for sign-ups as we speak. So we hope to see a lot of you there. And with that, I think we give it over to Q&A.

[Operator Instructions]

I have 3, please. My first question is just on the full year guide, where you've only nudged us up slightly towards the top end. Given the strong Q2 results, should we see that there was maybe some early deliveries, which would mean that Q3 might be slightly softer than where we would expected, specifically thinking on Service where you previously communicated a more gradual pickup through the year on sales and margins?

Yes. So if we start with the margins, I think it's still a little wobbly. As you know, our Q4 is typically the strong quarter. And in Q2, we know for a fact that the Product business line will not convert nearly as much revenue as they did in Q2. So it's a little bit swinging. So we expect from the guidance a slightly lower margin in second half from the total business, and it's a bit swinging. Maybe the Pumps will do slightly better, Products will do slightly worse. And then Products will be back in black numbers in Q4 as from Q4 as we have promised before. .

Okay. Very clear. And then my second question is just on net working capital, where I understand there was obviously a build to support the Service and PC&V sales for the remainder of the year. So is it right to assume a strong unwind then in Q3? And then does this show you any expectations for the full year?

Yes. So we're not going to give you a number today, but we won't see an immediate unwind. So there's a significantly higher conversion of the backlog into revenue, and for a while, that will sit in work in progress. I think also the inventory levels are up to a higher level to support both the footprint expansion in the Service business line, but to a certain extent, also the same in our Pumps business. So the unwind of working progress will happen throughout '27.

Okay. And then my final question is just on PC&V. Just wondering if you could provide a bit more color in terms of the OE aftermarket mix in sales this quarter, so we can better understand the margin performance.

Yes. So with PCV, the roughly right split is normally like 30% to 70% as a guideline. So 30% of -- from the equipment business, 70% from the aftermarket. And that was the outcome in Q2. Sometimes, the equipment content is a bit lower. And then, of course, that mix impact then, of course, might impact on our margin as we spoke in the call. So even slight changes there might adjust the margin level, 1% or 2%. So that was visible now with the figures. But all in all, PCV, great results. And now when the equipment business is as well building up, it will generate an aftermarket when moving forward even more.

The next question comes from the line of Ed Hussey from UBS.

Maybe just following up on [indiscernible] question, and asking it a slightly different way. So the midpoint of guidance seems to imply 0% organic revenue growth in H2, and you delivered a book-to-bill of 1.1x in H1. And you've also got elevated backlog and not a particularly tough comp. So I'm just wondering, is that -- is there some other kind of headwind that we should think about revenue growth in H2?

So there was a little bit of a bad connection, but you're talking about growth or margin?

Talking about growth, growth revenue.

Yes. So the product business is going to convert less revenue in Q3 than they did in Q2. So Q2 was a pretty good revenue considering the backlog for the product business is going to be less in Q3 and I think all business lines have a pretty tough comp in Q4. So basically, all business lines delivered revenue in Q4 and especially the Service business line. So I think you need to see if we hit the midpoint, then we have done quite well for Q4 also with the same growth numbers. That's how we think about it. .

That's very helpful. And then maybe just one more. Obviously, some pretty positive commentary on the potential near-term large order FIDs, is there any chance you could maybe just give us a bit more color in terms of regionally where -- what this comment relates to? Is this sort of North and South America and specifically, maybe which countries would be super helpful.

Yes. So maybe geographically, we can talk about the regions. So of course, from our perspective, South America is among the biggest or the biggest region for us. And there we see quite nice activities, especially with the bigger projects and then some activities as well in North America and in Central Asia and Africa, but the majority is definitely coming from the South American side.

Next question comes from the line of Vlad Sergievskii from Barclays.

Yes, gentlemen, I have 3 questions. I'll ask them one by one. Just one on the mining cycle. Look, it was predominantly about brownfield projects up until now. Are you actually seeing a broader appetite for large greenfields across customers from now on? Or we are talking about those 3, 5 big greenfields that we know about for a long time, and finally, they are moving towards FIDs?

Yes. So on the Project side, we are seeing both type of activities with larger orders so that we have brownfield expansions which we almost consider as greenfields when the customers are ramping up like additional lines for their existing mine sites. So these type of activities are taking place. And then as mentioned, especially in South America, we are seeing that there are certain complete like a greenfield projects moving forward and there is now more maybe support from the local governments in those respective countries to promote the mining projects and investments. And that this favorable environment, of course, is helping our customers and at the same time, of course, the price level -- the commodity price level is high. So this combination is pretty good combination when you are making the investment decisions.

That's great. If I can follow up on specifically for South America, are we talking about like 2, 3 large greenfields there that are moving forward now and getting support? Or do you think it's a broader base of greenfield, let's say, mid- to high single-digit number, which is potentially up for FID in the next 2 to 3 years?

I would say that it's a broader thing at the moment. There are several projects under development and under consideration and already in the engineering phases. So of course, any projects which are in the engineering phase, and if we are involved, we have pretty good visibility that what's happening with the project.

That's super helpful. Can I specifically ask also about your product orders. Excluding the largest DKK 300 million order that you booked, smaller base orders appear to be on the lower side this quarter. Is there any particular reason for that?

So like I mentioned, the Products business line is dependent on these bigger orders quite a bit. And practically, it means that the timing of these bigger orders might impact on their top line order intake figure quite notably. So based on our outlook, even though the total order intake wasn't that high. We are confident that there are no issues with this business line as the outlook for the end of the year is rather positive.

Understood. And final question to Roland, please. Can I go back to those work-in-progress assets. I mean it was a very sizable DKK 500 million plus increase this quarter. It equals to what, 12%, 13% of your quarterly sales. Could you give us some idea of what exactly you're building there? I mean DKK 500 million is bigger and perhaps the biggest projects you're working on right now?

Yes. So it's a number of things, well, actually across the 3 business lines. So we have a number of upgrades and repair projects there. And the reason why it sits there because it takes a bit longer to complete than just 4 or 6 weeks. Then there's a few bigger projects under construction, orders that we entered into a year ago, 1.5 years ago. And then to a smaller extent, also a few ongoing things on PCV. So it's a bit across the board. And that's also why I can say with certainty, we're not going to unwind it just in 2 or 3 months. It's going to take time until this is being expedited out of the backlog and then normalizing a bit more.

The next question comes from the line of Tore Fangmann from Bank of America.

Just 2 from my side. First would be on the outlook for the Service margin. You've done a very good job in ramping up your consumable business. Do you see a negative mix impact in the coming quarters when consumables might be growing faster than the modernization step up of your business?

So as mentioned during the presentation, we still believe that with our future mix, we are reaching this 19% to 20% profitability corridor. And of course, quarter-by-quarter, there can be fluctuation and this is then something that we expect to deliver with the full year results from this business line. So even though if the consumables business grows, we don't expect that our margin will slide. And then on the other hand, of course, as you can see from our quarterly figures, if the business goes up, it has a positive leverage impact that as our fixed cost will not go up with that pace.

Understood. And just lastly, more strategic, you now have a Chief M&A Officer. Could you maybe flag a little bit on what is your appetite for M&A going forward? Are you interested in larger transformational M&A? Or will you stick to purely bolt-on?

So we have been building the pipeline this year for the M&A cases, and we are focusing on the bolt-on cases, and we are reviewing them in detail. And let's say, that the pipeline has been developing positively. And Roland mentioned that we still have some dry powder left and available for these M&A cases. So the intention is that when the right target is there that we would move forward. So late this year or next year, we would expect that we have some news around these topics.

The next question comes from the line of Claus Almer from Nordea.

Yes, also a few questions from my side. So the first question goes to this quite impressive order intake you had in Q2 within Service and PC&V. To what extent do you believe this was based on market share gain and also maybe within Service, a result of your investments and initiatives within your Service setup and moving closer to customers, et cetera, et cetera? That will be the first one.

So if I start from PCV, I would say that the growth has been now on a good level, throughout several quarters, and we have been seeing positive order intake, like double-digit order intake continuously. So there, when comparing to the peers, I would say that we have been growing a bit faster. And our organic development plan, which we have for the unit is paying off. So we have been expanding our supply chain with the unit, we have been improving our service coverage with the unit and also expanding our sales network. So all these organic activities are definitely helping us now to gain more order intake. So that has been positive. Then when it comes to the Service business line, one aspect is that we have been increasing the Service network, getting closer to the customers, that's helping us with our order intake. And then, of course, the one big positive driver there within that unit is the consumables business, which has been performing well, and we have been increasing our order intake relatively fast. And we have a clear plan that how to develop that product area than forward in the coming years.

So then does this mean that all the initiatives you have done so far has been executed, and we should expect more growth in line with the market? Or do you see further potential for the things you have already implemented?

The market development, we expect it to be like positive. The expectation is that the mining market grows something like 3% to 4% somewhere there when looking at the copper demand, for instance, so the copper production is expected to grow with that pace. And of course, if the copper production grows with that pace, it's also helping us from the growth point of view. But then we come to the more detailed forward-looking plans with the unit when we have the Capital Markets Day.

Fair enough. And then my second question goes to the Pump area. With these equipment orders you have received and have grown quite nicely in the last couple of quarters, when should we start to see the aftermarket orders and revenue picking up?

So it depends, of course, on the timing of the installation. But normally, if it's a replacement case, the replacement happens within the next months from the order. And then after a few months, the Pump will then generate aftermarket business for us. If it's part of a larger, like a brownfield expansion, then the delivery time might be a bit longer. But normally, with the Pumps, we are talking about the replacement cases. So then in a few months that the new pump will provide more services to us.

So would it be fair to assume that already in Q3, we start to see this effect and getting even stronger in Q4?

Maybe a bit longer in your spreadsheet there, that would be safe.

That was all and taking down expectations and we're not getting too carried away.

I was clarifying. That was the intention.

The next question comes from the line of William Mackie from Kepler Cheuvreux.

I would like to ask a couple more questions on your outlook again, please. And let's stick with Service. Roughly, I think if my numbers are right, your orders over the last 3 or 4 quarters are up mid-teens in Service. Your backlog is up above 10%. If I take the midpoint of your guidance, for the full year and look at what you've achieved in the first half, you're implying a sort of average low single-digit growth in revenues in the second half, which seems hard to reconcile. So maybe you could put some color on any specific features that would hold back the timing of the book-to-bill conversion and limit the conversion of the backlog and prior quarter order growth into the second half?

Yes, that's a valid point. So we have been commenting this in the previous call as well. But with the Services, we have in the mix, certain bigger upgrades as well and then as well certain like mill liner deliveries. And in these cases, for instance, the lead time is much longer from the order to revenue conversion. So we are talking about, in some cases, like even like 9 months or longer because the customers are ordering the parts for their next shutdown and that the shutdown might be such that it's 6, 9 or even 12 months out because they're advanced ordering. And then it practically means that we are gaining the orders this year, delivery maybe in the end of the year or even early next year. So that's causing some of this timing issue. But of course, when the backlog is building up, we have a pretty solid foundation then to deliver revenue this year and early next year based on that. But we need to remember that there are these bigger cases as well in the Service business line mix.

That's helpful. I guess, again, you could do the same math for both divisions, but I guess the book-to-bill conversion for PC&V is shorter. And again, you've been achieving high teens order growth and the backlog is up again. So to the point that you're implying kind of mid-single digit at the midpoint of second half growth despite the strong momentum we've seen in the backlog, is it the same feature what you would spotlight for PC&V?

Yes. So I think -- this is Roland. Just -- so PC&V also have capital orders that follow the product sales, so to speak, right? So it can be a bit longer for the capital part. So that's one thing, but also mathematically, both on Service and on PC&V, we're up against a relatively high comp in Q4. So it's not just taking the growth numbers from H1 and then applying. It needs to be on top of a relatively high comp just as a reference point.

My last question probably comes back to net working capital and cash flow from operations. I heard you earlier, Roland, but on limiting your guidance around cash flow, but I think in the past, there's been a rough expectation you might come close to DKK 1 billion of cash flow from operations. Clearly, that becomes a very big hurdle after the first half cash generation. Is there anything that could swing contract liabilities in the second half or swing a containment of growth in contract assets that might help the working capital H2?.

There may be a few things, but I think we don't expect it to unwind any time soon. That also means that our CFFO expectedly won't hit DKK 1 billion. I think it will be maximum DKK 700 million or so for the remainder of the year and then the unwind will only be visible sometime next year. So we've been caught surprised a little bit by the high backlog conversion, you can say, which is basically positive but it means that we tie up work in progress for a while longer.

The next question comes from the line of Lars Topholm from DNB Carnegie.

Yes. Also a couple of questions from here. I'm super sorry, but it's also about your revenue guidance. So if I take your full year outlook and deduct your H1 revenue, you have to produce a revenue between DKK 7.4 billion and DKK 8 billion in H2. Last year, you did DKK 7.5 billion. And Roland, I hear what you say about work in progress materializing next year, not this year. But if I look at your backlog, it's up by 8%. If I look at the percentage of that backlog that you say should be converted into revenue before the end of the year, that is up from 32% last year to 48% this year, which means that backlog conversion should produce DKK 2.1 billion more in revenue this year versus last year if the math is correct. And I also think when work in progress is up by 43%, even if most of that is for next year, that also implies growth. I simply don't understand what I'm missing in this picture. I can't make the numbers stack up. So please help me out.

I think you're right, Lars, that I think you're -- DKK 7.4 billion, up to DKK 7.8 billion or DKK 7.9 billion or so given constant exchange rate for the remainder of the year. But no more than that. And that also means -- so that's going to be the conversion that yields the organic growth guidance. And that means that it will take a while for us to unwind the work in progress. It's not necessarily linked, but in this case it is.

But Roland, if I take your backlog by H1 last year, then 32% of that, which is what you said would be converted before end of the year was DKK 3.4 billion in revenue, which means you produced DKK 4.1 billion in revenue from things that were not in the backlog by the end of H1 last year. [indiscernible] exactly the same calculation for this year, it's DKK 5.5 billion in revenue from conversion of the backlog. So you implicitly only expect to do DKK 2 billion from things outside of the backlog. Why is that revenue production from things that are not in the backlog so dramatically down this year?

Maybe I'll add one thing which relates then to the product business line. Of course, with that business line, as we have been stating, we know the timing quite well. And when the revenue recognition will happen. But of course, there are certain uncertainties as well with the timing of the ramp-ups for individual equipment expansions and replacements. So that's of course, impacting on our revenue guidance and that was visible when we were updating now the business line specific ranges. So with Services, we did modifications to the revenue growth guidance and the same with PCV. So there, we are pretty confident that we are improving compared to the original guidance, and we can deliver. But of course, this product side is then causing certain uncertainties related to the timing of the deliveries. On that side, the timing of the deliveries is, to some extent, of course, controlled by our customers. And we didn't change the revenue guidance for the products because of this reason.

But that doesn't really answer the question. So in H2 last year, you generated DKK 4 billion in revenue in addition to the conversion of your backlog. This year, you only guide for DKK 2 billion from that. Why so much less?

So we -- I think I need to look at the [indiscernible] more specifically, Lars, but the delivery cycles are longer this year for SPL and also for PBL. And that's why it sits in work in progress, and that's part of this reason as well. I think that's what you're fishing for.

No. No, not really. I'm just fishing for the proportion of revenue that is not converted from the current backlog. I mean we know your backlog, that's DKK 11.5 billion, say, 48% of that will be converted before the end of the year. That's DKK 5.5 billion. To reach your guidance, you need to make DKK 7.5 billion, so you need to produce DKK 2 billion in revenue outside of the current backlog. Last year, that number was DKK 4 billion. And it's the improvement from DKK 4 billion to DKK 2 billion, I don't understand.

There's longer delivery cycle, right? I'll need to come back to you on this one. So the growth in the bigger upgrades in the Service business line and PCV partly related to that, that just gives us a longer cycle on the backlog conversion.

The backlog conversion, that was a number that was up to DKK 5.5 billion. Its numbers you have disclosed.

Yes, exactly. But it takes longer.

48% of DKK 11.5 billion is DKK 5.5 billion. That's...

Exactly.

Half number, I guess.

Can I have a look at the numbers you're looking for and come back to you, Lars?

That would be amazing. I have a second question that goes to Products and looking further ahead than just this year, how should we think about the margin development if we assume the mining cycle becomes stronger, should we think about it in a way that gross profit will improve in line with order intake and then you will have a relatively fixed OpEx base or what assumptions should I use, if I want to calculate the margin a couple of years out?

So this is definitely a topic which we will address more in detail when we have the Capital Markets Day. But what I can say is that we have continuous improvement initiatives ongoing throughout the business lines to improve our supply chain, cost efficiency and so on. So -- and this continuous improvement initiatives will hopefully benefit us. And at least I don't expect that our margins would decline as such. But there might be some improvement opportunities through these activities in the long run. But these expectations, we will open up more when we present the Capital Markets Day materials. But then I can ensure that the continuous improvement is happening all the time within all the business lines.

Is the incremental margin in products double digits?

Lars, we will come back to that.

The next question comes from the line of Christian Hinderaker from Goldman Sachs.

I've got 3, if I may. I want to start on the product side and a follow-up to Vlad's question on the DKK 4 million or DKK 2 million base orders. I think that's the lowest level since you introduced your new segment structure. You mentioned in the commentary that the business needs to see more large project activity to grow and I appreciate that point. But I guess, the question is a little bit more strategic and about your positioning in the market, I mean, your nearest peer had very strong base orders in the second quarter. And I guess trying to understand if that DKK 4 million or DKK 2 million number is then comprised of DKK 4 million or DKK 5 million, shall we say, large package orders or if it's a broader steps. How do we think about the base order math? Are you trying to sell stand-alone equipment units? Or is it more sort of packages you're trying to bring to market?

This is as well among the topics which we will address in detail actually in the Capital Markets Day. So we will elaborate the more detailed plans that how we move forward with the business lines and how we are planning to grow their businesses when moving forward. Offering development definitely is as part of this, and we will outline the plans that -- how we can take forward all the units. And like I said, at the moment, we are, to some extent, dependent on the larger orders with our Products business, maybe unlike compared to our peers. And then that might be, let's say, a positive development opportunity for us strategically when moving forward. But I would say so that we can comment on this very much in detail when we host the Capital Markets Day. But this is among the topics that we have on the list.

Okay. Maybe then turning to the margin in Products just briefly. I mean, were there any one-off contributors? I think there was some provision release in Q1?

No, not really. This was a pure volume thing. So the revenue number...

Badly...

The level of -- so at that revenue level, the business line is now currently in black numbers.

Very clear. Maybe just finally then on Pumps. Obviously, you've seen the 12% growth last year, high teens this year in order intake. You've said that you're taking share. So I guess, interested to hear regionally, whether there's any concentration to those share wins? And also, I guess, in what form you're taking share? Is that from new projects? Or is that field trials on existing installed base? And then, Toni, you kind of get a steer on the revenue mix in Q2. Perhaps you could just add a comment on the order mix. It sounded like that was more OE weighted than usual.

Yes. So when it comes to the installed base development, we are following that very closely. And mostly, we are seeing these replacement cases. So replacing existing pumps with our products, and that has been really driving and the market development when it comes to the equipment deliveries. And as we are -- we have been seeing this development now throughout the quarters. It also starts building up this aftermarket on top of it. So the more we have installed base, the more there will be aftermarket. So when it comes to the products on the Pump side, it's mostly replacement. We have certain project deliveries as well in the mix when you look at the order intake in the long run, but the replacement business is the more dominant one. And through that, we are seeing that the install base is developing well and good development, for instance, in North America where we have a strong position through our factories and service centers, the same in South America. So positive development over there. And then we keep expanding in the other territories as well. In Q2, specifically, we were a bit more equipment heavy and product heavy with our orders, which was demonstrating that we were winning a bit more cases than normally. And again, it should be then visible in the coming quarters in our order intake. Not in Q3, of course, but starting maybe from the end of Q4.

The next question comes from the line of David Farrell from Jefferies.

One question for me. I can understand kind of why my peers are kind of saying that the outlook for the second half is conservative. But if we look out beyond that in 2027 and look at the way that the order book is shaping up, it doesn't look to be down on a year-on-year basis, how much orders you got to execute in '27. So I'm just wondering, in terms of the business lines, is that purely within products? And if that's the case, to what extent can orders secured in the third and probably fourth quarter contribute into '27? Or is there anything within the PC&V and Service market, which is kind of running behind year-on-year?

Sorry, the line was pretty bad. So could you still repeat the key question?

Yes, it's basically kind of I can understand why my peer just saying that your commentary for the second half of this year is conservative based upon your order book and the way that those orders are split. But if you actually look out to 2027, the amount of backlog for execution is below where it was last year. So is there anything in any of the divisions which is looking behind year-on-year as you look into 2027? Or is it all just kind of within the Products division?

Okay. So when it comes to the business lines, of course, the fact is that if we see an uptick with the Product business line, with the larger orders that will as well then drive forward our project type of orders for PCV and Services. And then the timing of the orders will then define that how the revenue mix develops. But of course, if larger orders materialize, it means that there will be more installed base which is eventually driving forward our revenue as well. So then it would have a positive impact throughout the business lines. But then with most of the product business line orders which are larger ones, the lead times might be even 1 year or longer. And then the revenue impact will not be positive then next year if we capture the orders in the end of this year or early next year. But anyhow, the underlying demand for the brownfield businesses like for the brownfield sites, that remains positive based on our outlook. And then if there are greenfield cases, these larger cases, then that will even accelerate then our business when moving forward. But we don't see a huge jump for next year from the revenue point of view because these larger projects, they take time.

Okay. That's very clear.

The next question comes from the line of Klaus Kehl from Nykredit .

Yes. Hello, gentlemen, can you hear me?

Yes.

Perfect. First of all, we talked a bit about this movement in net working capital, and I understand that it most likely will not decline before '27. But historically, you've been talking about a net working capital sales ratio of around 17%. Should we start to think about a slightly higher number, given the growth you are seeing in your Service business? Or yes, any thoughts on that?

I think we will be more specific on sort of a range number on the Capital Markets Day. But I think 17% is probably in the low end. I'll leave it at that now.

Okay. Great. And then order intake in Service has been quite strong the last 3 quarters. I think you've been hovering around DKK 2.4 billion, DKK 2.5 billion each quarter. And it's actually above that run rate you have been talking about for a while. So any comments on what would be reasonable to expect the coming, let's say, 2 or 3 quarters here? Or have you changed structurally for the better? Any thoughts on that?

I think we'll stick to -- there's been a lot of talk on our growth guidance. Yes, I think we stick to the 3% to 5% growth organically Q-on-Q. So that's going to give you the number you're looking for.

Okay. Okay. And then my final question is, do you have any news to share on this compliance case?

Yes. No updates on that one. We still continue the internal review on that matter. And then later on this year, we will then report the case and provide the materials to the authorities.

This concludes our question-and-answer session. I would like to turn the conference back over to the management for any closing remarks.

Yes. Thank you for joining the call. Great questions today. And we are looking forward to seeing you here in Copenhagen then in November. So you are warmly welcome to the Capital Markets Day and as mentioned today, you will get more information on our future plans then during that day. And our key management will be present then to meet you in person. So warm welcome, and thanks for joining the call.