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Operator: Welcome to the conference call. [Operator Instructions] Now I will hand the conference over to the speakers. Please go ahead. Jonas Gustafsson: Good morning, everyone, and a warm welcome to this 2025 Q3 release call for Hemnet Group. My name is Jonas Gustafsson, and I'm the Group CEO of Hemnet. With me here on my side today at our headquarters in Stockholm, I have our Chief Financial Officer, Anders Omulf; and our Head of Investor Relations, Ludvig Segelmark. As usual, we will go through the presentation that was published on our website this morning during today's session. I will kick it off with a summary of the main highlights during the third quarter and a few exciting updates regarding strategic initiatives and planned product launches soon to come. Thereafter, Anders Omulf will cover the financial details before I will come back in the end to wrap up this session. As always, there will be opportunities to ask questions at the end of the presentation. Today's session will be moderated by our operator, so please follow the operator's instructions to ask questions through the provided dial-in details. So with that, let's get started, and let's move on to the next slide, please. Despite a continued challenging property market, Hemnet demonstrated strong ARPL growth and resilience in the third quarter. Net sales decreased by minus 1.5% on the back of low Q3 listing volumes. ARPL, average revenue per listing grew by 21% in the third quarter, driven by a continued increasing demand for Hemnet's value-added services, where conversion towards Hemnet premium continues to be the main driver. Paid published listings were down with minus 19.2% in Q3, reflecting a challenging Swedish property market with continued high supply levels, extended sales cycles and continued pressure on the housing prices. Around 4 percentage points of the volume decline was attributed to a new business rule introduced in Q1 2025, allowing sellers to change agents without buying a new listing that is impacting the year-on-year comparison negatively. EBITDA declined by minus 5.9% to SEK 195.4 million as the low listing volumes lead to lower net sales and lower fixed cost leverage. Today, we announced new strategic product initiatives to strengthen Hemnet's role throughout the sales process. The aim with these new initiatives, which include a new commercial proposition where you pay only when you sell is to help sellers and agents to fully realize the value of Hemnet, which we think leads to a better chance of a successful property transaction. I will come back to these initiatives later on in the presentation. Now let's turn to Page 3 for a quick look at the financial performance. Net sales amounted to SEK 367 million, down with minus 1.5% compared to the same period last year, driven by a significant decline in listing volumes during the quarter. EBITDA decreased by minus 5.9% to SEK 195 million. The decrease was driven by the lower listing volumes, which drove lower net sales and reduced fixed cost leverage. The EBITDA margin amounted to 53.3%. We are pleased that we're able to deliver a high margin despite low volumes. Anders will break down these profitability dynamics in more details as we move on in the presentation. Now let's turn to Page 4 for a look at the property market and the listing volumes. On the left-hand side on this slide, you see a combined chart showing published listings per quarter and yearly as well as the year-on-year change between quarters. Published listings decreased 19% year-on-year in the third quarter, reflecting a property market with high supply, longer sales cycles and continued price pressure, leaving many customers hesitant to enter the market. The most recent buyer barometer from Hemnet gives further support to the sentiment, indicating that more consumers now expect prices to fall compared with last month. At the same time, lower interest rates, stabilizing inflation and the easing of mortgage regulations planned for April ‘26 could gradually help increase activity. Listing duration, the average time it took for a property to sell on Hemnet during the last 12 months increased by 18% to 52 days compared to 44 days in Q3 last year. Anders will break down the financial effect of the longer listing duration later on in the presentation. Around 4 percentage points of the volume decline was attributed to a new business rule introduced by 1st February 2025. This new business rule allows sellers to change agents without buying a new listing. It's important to remember that our published listing number follows a specific definition and differs from general market numbers. The negative listing development is challenging, but it's more important to remember that property market can be volatile, and we've been through the similar development in the past years. Just look at 2023. Let's move on to the next slide and provide some additional color on the supply situation and how that impacts the current state of the market. We do get a lot of questions on the state of the property market and how new published listings relate to transactions and total supply. Therefore, I wanted to take this opportunity to provide some color on what we are seeing and visualize it in a few graphs to eliminate some misunderstandings. We continue to see a high supply on Hemnet, but the growth rate has started to come down during the past few months. In September, in 2025, our supply grew by 2% year-on-year compared to 22% the same month last year. With that said, we're still at aggregated supply levels on the platform that is 50% higher compared to 3 years ago. The supply of Hemnet and how it moves is a function of a number of different factors. The supply increases with new listings as new listings are down the last 12 months compared to the previous year, that has a negative effect on the supply. The supply decreases with transactions as transactions are up during the same time period, that also has a negative effect on the supply. The supply follows the sales duration as average days on the platform increases, so does total supply. Average listing days on a last 12 months basis in Q3 were 18% higher compared to last year, which obviously has a significant impact. In addition to these fairly straightforward effects, there are other factors like renewals, like relistings and where we are in the new property development cycles that also impacts the overall supply levels. Now let's look a bit on how this has looked over time on the next slide. The number of new listings have exceeded the number of market transactions on Hemnet since 2022, which has built up a large supply of unsold properties during this time, which is visible on the top graph. As you also can tell clearly from the same graph, that trend has started to reverse during 2025. This is a natural correction after a few years of increasing supply. Looking at the history, we've seen the same similar patterns historically. You can also see from the bottom graph that listings and transactions over time follow the same seasonal patterns, but that the relationship between the 2 can differ quite a lot in the short term. To summarize, supply coming down from aggregated levels is positive for the property market. Lower supply signals a more healthy market where more transactions are taking place, while it is also supportive for the price development. Now turning to Page 7 to look at the ARPL development in the third quarter. ARPL grew by 21% in the third quarter. The ARPL growth was mostly driven by a strong demand for our value-added services. The conversion rate to higher tier packages continued to increase during the quarter and 3 out of 4 sellers on Hemnet now shows either Hemnet Plus, Hemnet Premium or Hemnet Max. This highlights the strength of our offering and that our customers see clear value in investing for increased visibility and impact. Our newest package, Hemnet Max, introduced earlier this year is a natural step for sellers seeking maximum exposure. The product is showing strong performance per seller. So let's look a bit on the performance on Hemnet Max. So please move to Slide 8. As mentioned, Hemnet Max continued to show strong product performance, while adoption is still at low levels. In Stockholm County, for example, homes advertised with Hemnet Max that were sold between April and August received more than 70% traffic compared to homes advertised with Hemnet Premium. Moreover, the Hemnet Max homes also got more engagement on the listing and on the average generated a much higher bid premium. We have launched a number of key initiatives to drive Max adoption going forward, including further enhancement of product features and scaling up the marketing of Hemnet Max towards agents and property sellers. We continue to work with the product, and we look forward to it being an important growth driver for Hemnet in the coming quarters and years. Now turning to Page 9 for some other exciting news. Today, we are very happy to be able to announce a set of new strategic product initiatives to help sellers and agents to fully leverage Hemnet's potential. Looking at property transactions in Sweden, we have a large opportunity as Hemnet to increase the value of the Hemnet investment for agents and sellers. We know that ensuring visibility throughout the entire home selling journey is an important part of achieving the best possible outcome. For example, data shows that listings visible on Hemnet from the start of the sales process have a higher chance of a successful sale with homes published as upcoming on Hemnet on average, selling 5 days faster than those listed as directly for sale. To help sellers and agents fully leverage Hemnet's potential, we're announcing 2 strategic initiatives today. First of all, a new success-based product offering. Since 1st of October, we have had a live pilot where we are testing a new commercial model where sellers pay only when a property is sold. Second to that, we're also announcing new strategic partnership with franchisers and brand owners that want to recommend Hemnet as part throughout the entire sales process. Now let's move to Slide 10 to talk a bit more about the ongoing pilot. So we're announcing a new commercial model to further lower the threshold for sellers to list on Hemnet. We launched a pilot test for a new commercial model on 1, October, where sellers pay only when the property is sold. The new model aims to lower the barrier for sellers to advertise on Hemnet from the start and will be a part of our strategic partnerships, and I'll elaborate a bit more on those on the next slide. This is a highly demanded model from both sellers and agents as it becomes a risk-free for the seller and easier for the broker to recommend the most suitable package for the client. We share the risk with the seller to maximize the chances of a successful sale. And we do this because we know that Hemnet works. It is still early, but the initial response and the initial feedback and collected data from the pilot has been very supportive and very strong. with sellers showing increased willingness to list on Hemnet with the new model. We plan to roll out the new model as part of the strategic partnerships during 2026. Now let's move on to Slide 11 to elaborate a bit more on the strategic partnerships. The second exciting announcement that we have to make today is our new strategic partnerships. Hemnet will offer all franchises and brand owners that want to recommend Hemnet as partner throughout the entire sales process, the opportunity to enter into a strategic partnership agreement. The aim of the strategic partnership is to help home sellers and agents to fully realize the value of Hemnet to enhance the chance of a successful property transaction. It is also a way for Hemnet to strengthen the relationship on an HQ level, meaning headquarters. The new commercial model will form a part of this strategic partnership, along with increased visibility, increased brand exposure, increased traffic and increased lead generation and new product features. We very much look forward to being able to speak more about these news and what they will mean for Hemnet and our partners as they are being rolled out over the coming months. Moving on to Slide 12 for some additional launches and product news. We continue to accelerate the pace of our product innovation. Within short, we're launching Hemnet Insights, a new AI-powered analytic tool providing agents with valuable market data as part of their Hemnet business subscription. We're confident that this will be a very useful tool, and extremely appreciated tool for agents across the country, and we're excited about the launch. During the quarter, we improved our CRM functionality, which makes it possible for us to strengthen communication and add more value to both homebuyers and home sellers on the platform. Moreover, by the beginning of next year, we will also launch a new enhanced offering for property developers that is better suited to their needs. We have also launched a marketing partnership with hitta.se, where both our listings and valuation tools are now being integrated. Lastly, our increased marketing investment during the year have begun to show results. We are seeing positive development in key brand metrics with spontaneous brand awareness increasing 11 percentage points year-on-year in Q3. And according to Orvesto survey data covering May to August 2025, Hemnet remains Sweden's third largest commercial website, reaching close to 2 million unique visitors per week with a slight year-on-year increase of 0.4% compared to last year. This is particularly encouraging given the weaker market conditions. All in all, we continue to accelerate product innovation, invest in marketing and build for the future, and it's yielding results. With that, I will hand over to Anders for the financial update, starting with Page 13. Anders, please take it away. Anders Ornulf: Thank you, Jonas. Let's turn to Page 14 directly and the financial summary. Let me begin with an overview of the third quarter of 2025. Net sales for the third quarter were SEK 367 million, a decrease of 1.5% year-over-year. This demonstrates strong resilience. We managed to maintain revenues despite published listings dropping by almost 20% in the quarter. It's a testament to our business model holding up across market conditions, much like we saw in the first half of the year 2023 before bouncing back the second half year. Key driver, of course, sustaining revenue was ARPL growing 21% year-over-year. This was supported by continued strong demand for our value-added services for home sellers, Hemnet Plus, Premium and Max. This underlines the value our platform delivers to home sellers also in a challenging housing market. In addition, our B2B segment had a strong quarter with a growth of 1.5%. We will discuss the B2B segment in more details on the next slide. Another noteworthy point is the average listing time, which on a rolling 12-month basis increased from 44 days in Q3 2024 to 48 days in Q2 2025 and now 52 days in Q3 2025. The year-on-year effect of a longer listing time is negative SEK 9 million in revenue and the sequential effect of 4 additional days from Q2 to Q3 is also SEK 9 million. To smooth out seasonal variations, we recommend tracking ARPL growth on a rolling 12-month basis as shown on Page 4 of the presentation. Turning to profitability. EBITDA came in at SEK 195 million, down 5.9% development in more detail later on. The EBITDA margin for the quarter was 53.3%, which is 2.5 percentage points lower than the margin in Q3 2024. This decline is mainly due to fixed costs that cannot be fully adjusted to offset the 9% drop in listing volumes. One important component in the margin development is compensation to real estate agents. When expressed as a percentage of property seller revenue, this ratio increases quarter-on-quarter from 30.1% in Q2 to 30.9% in Q3, driven by further improvement in both recommendation rates and actual conversion to value-added products. Looking at the effective commission compared to Q3 2024, it rises from 29.4% to 30.9%, higher commission reflecting a substantially stronger underlying improvement of our [ VAS ] products. And as always, the effective commission is a variable component and tends to fluctuate somewhat between quarters, making it more suitable to measure over longer periods. Free cash flow last 12 months was SEK 808 million, a 36% increase year-over-year. This robust cash generation underscores both the scalability of our business model and our strong profitability even in a very soft housing market. Our operations continue to convert a high portion of revenues into cash, highlighting the quality of the earnings. We continue to uphold a strong financial position. Net debt leverage ended the quarter at 0.5, an improvement from 0.6 in Q3 last year. This low leverage provides us with flexibility going forward. The reduction is particularly encouraging given our active capital allocation strategy. As you know by now, we expanded our share buyback program from SEK 450 million to SEK 600 million this year following the mandate approved at the AGM. We have been returning capital to shareholders while still maintaining a conservative balance sheet. At first glance, the headcount increase of 13 may appear notable. However, it is important to take into account the technical nuance that helps explain the development. A higher number of employees were on parental leave during Q3 '25 compared with the same period in 2024. In addition, the organization has been selectively strengthened primarily within product and tech. With that overview, let's turn to the revenues by segment and take a closer look at the Q3 figures. Moving into Slide 15, which breaks down the revenues by customer group. Since we focus the seller -- very much on our seller revenue so far, let's turn the attention to our B2B segment, which grew by 1.5% despite the continued challenging and cautious market environment. Revenues from real estate agents increased by 2% to SEK 26 million and property developers contributed SEK 13 million, up 14% year-on-year. These gains reflect strong engagement for our prioritized customer segment, and it's particularly encouraging to see both an increase in listings and an uptake in VOS products for property developers, leading to a double-digit growth. However, advertising revenues from other advertisers declined by 8% to SEK 16 million, reflecting a softer display advertising market. This was again driven by broader macroeconomic headwinds and lower impressions as a result of reduced listings volumes on the platform. Overall, an uplift for the B2B segment, marking it the strongest quarter this year. With that, let's move to the EBITDA bridge to dive deeper into the Q3 figures. On Slide 16, we show the year-on-year development of EBITDA. We have already covered what has driven the top line for the quarter, so let's turn to costs. As mentioned, EBITDA declined by 5.9% compared to the third quarter of 2024. Agent compensation increased in absolute terms, driven by strong recommendation and commercial levels despite net sales declining by 1.5%. And again, remember, ARPL grew 21% in the quarter. Looking at costs, expenses were higher than last year, mainly driven by increased marketing investments. We continue to raise our ambition in external brand building activities, and we have also increased tactical digital marketing efforts. In addition, higher pace in product development resulted in higher consulting costs. In total, fixed OpEx, excluding personnel costs increased by SEK 9 million. Personnel expenses increased somewhat, reflecting wage inflation and larger headcount. However, this quarter was -- we also benefited from a reversal of a bonus provision, which explains why personnel costs as a total were slightly lower compared to last year. The other cost category remained fairly stable, although slightly higher capitalized development costs reflect the higher product development activity. Overall, the minus SEK 19 million listing effect naturally mirrors our revenue and profit development and puts pressure on the margin. That said, taking a step back, it's encouraging to see the resilience of the underlying earnings capacity. We're not afraid to continue investing in marketing and product development, even though the total cost increase remained relatively modest at around 9%. In total, this adds up to an absolute EBITDA decline of minus SEK 12 million year-on-year. Moving on to Page 17 and some spotlight on the cash flow. Starting on the left-hand side, our rolling 12-month free cash flow continued its upward trend and exceeded SEK 800 million. Cash conversion remains strong, supporting both reinvestments in the business and capital returns to shareholders. In the middle, you can see the development of our share buybacks. During the third quarter, we repurchased shares worth approximately SEK 149 million. In volume terms, we acquired 560,000 shares, reflecting the lower share price during the period. This is part again of the SEK 600 million mandate approved in May. And finally, on the right-hand side, our net debt stood at SEK 427 million, corresponding to 0.5 leverage, well below our target of 2x. In summary, continue to accelerate investments in marketing, product development while delivering strong cash flow, gives us the flexibility to keep executing on our strategic priorities and maintain attractive shareholder returns. With that, I want to hand over to Jonas for a summary on Page 18. Jonas Gustafsson: Thank you, Anders. Let's move to the summary slide on Slide #19. To summarize the third quarter and the news that we announced today. First of all, we saw continued pressure on new published listings in Q3. The weak volumes negatively impacted both net sales and EBITDA. Second to that, we had a strong ARPL growth of 21%, and we continue to show resilience in a difficult property market. Thirdly, we announced 2 new strategic product initiatives that will aim to help sellers and agents to fully leverage Hemnet's potential, and I'm extremely excited about the impact this will have on our business in 2026 and onwards. All in all, we continue to act decisively. We're working faster. We're working smarter, and we're working with a continued focus on innovation. By doing so, we're strengthening Hemnet's position for the benefit of buyers, sellers and agents alike. With that, let's open up for the Q&A. Operator: [Operator Instructions] The next question comes from Will Packer from BNP Exane. William Packer: Three from me, please. Firstly, could you help us think through the strategic rationale of pivoting your revenue model now? You had a very strong track record over the last 5 years. Paying a bit later does bring in new risks such as arguably low inventory quality and revenue recognition headwinds. Can you just help us understand why now? Secondly, thanks for the initial details on the agent partnerships. Would you consider listing exclusivity as a part of that partnership? Or do you think the regulator wouldn't allow it? And then finally, as has been well flagged, inventory is down significantly in the quarter, 19%. Could you help us understand what cyclical market dynamics versus inventory share loss? So for example, Boneo claimed Q3 listings and the market were down high single digit for Q3. What do you think market listings are down? Jonas Gustafsson: So we'll take them one by one. And on the split ship in, and I'll start. So with the sort of the new model from a commercial perspective that we now are piloting, I think this is, to a large extent, based on discussions and feedback that we've had with agents that we've had with sellers. And it's especially sort of important, the reason for testing this out right now is the fact that we have a -- the market dynamics have changed, and we've seen them gradually changing driven by a few different factors. I mean one is related to the high competitive situation that you see on supply. Number two is driven by the fact that you have longer sales periods that we also spoke about. And I think it's one dynamic that is important and that has changed over the last 5 years is that you now see a pattern where a seller of a property typically sell before you buy. That is creating a different market dynamics. What we want to achieve is to ensure that you use the full value of Hemnet. And a way of ensuring this is that we're now testing this new model, and it's conditional to the fact that you would list directly on Hemnet. We know that we have a model that works. We know that we have an extremely efficient platform. We're the market leader. But at the same time, we need to adopt to the changing market conditions. And I think this is something that will be highly appreciated. It will help us to drive volumes. It will help us to strengthen the relationship with the agent industry that is so extremely important. So that's number one. Number two, related to the agent partnerships. We elaborated a bit on the different components as part of these strategic partnerships. And as it goes, by definition, this is a partnership. So obvious when you go into a partnership is that you want to find mutually beneficial wins. So this is a win-win partnership where we see an upside, but we're also going to help our friends out there who wants to be a part of this agreement to help them to sell more properties and help them to gain market share. And when it comes to exclusive listings, I think having exclusive listings totally depends on how you would do it, but it's obviously something where you would need to look at the regulatory dimensions very closely. And that's something that we will explore going forward. Thirdly, when it comes to volumes, so I think -- the sort of -- if you start with the minus 19%, which is our starting point, I think we clearly laid out both in the CEO letter in the presentation that we conducted earlier that parts of this 4% is driven by a business rule change that is impacting the year-on-year figures from a Hemnet perspective negatively in Q3. And it's important to remember that the numbers that was published by Boneo without knowing them in detail, I think if you look at the market and how it defines sort of the volume development, it is not like-for-like compared to Hemnet. The business rule change, I'm pretty sure that the numbers from a market perspective would not capture the relistings and the effect that the 4% had on our numbers. So that is also explaining it. Then I think there's a number of different factors, right? And it is the low demand in general. It is the duration of the sales cycles that is impacting. And also, the way I understand those numbers is not taking into consideration impact from new property developments. So there's a lot of different factors. And the most important thing for Hemnet is to ensure that we remain as the #1 player in Sweden. We want to ensure that the listings end up on Hemnet. And eventually, they do. We've seen that in 2024, and you know the numbers that we published in July, we had 89% market share in 2024. That has moved up and down. In 2023, it was 90%. In '22 and '21, it was 86%. In '20, it was 90%. So market shares tend to move with the market dynamics. So it's difficult to make a full assessment, and there are so many different type of market shares that you could define, whether it's content market share, whether it's new published listing market share, whether it's sold market share. For us, it's most important to ensure that the properties end up [ atonement ] eventually. Anders Ornulf: I can just -- maybe it was a good overview, Jonas. Maybe I can just add that of course, when it comes to our dominant position that we will -- we take that into a very deep consideration before signing any contracts. So as we have always said around that question, it's a very important question it has to be with the position we have. Operator: The next question comes from Yulia Kazakovtseva from UBS. Yulia Kazakovtseva: This is Julia Kazakovtseva from UBS. I have 2 questions, if that's okay. So my first question would be about volumes. So you said that 4 percentage points of the 19% decrease in Q3 was driven by the change in the business terms. Could you please give us the estimate of this impact for Q2? And my second question would be about the new pilot scheme where sellers only pay once the property is sold. So just thinking about the process and the mechanics of this. So if a seller lists their property, but it remains unsold after, let's say, a few months, and they decide to eventually remove it from Hemnet, will they still be required to pay for this listing? And then in this situation, if this happens and then eventually if the property is transacted somewhere outside of Hemnet after this, what's your position here? Would they still need to pay for this or not? Jonas Gustafsson: I'll start off and then Anders, please fill in. So when it comes to the volumes, you're absolutely right, Julia. 4% is connected with the change in terms of the business rule. The 4% that we saw in Q3, if you look at Q2, that number was also 4%. So you should sort of consider the same levels in Q2 as in Q3. So hopefully, that covers the first question. Second to that, when it looks -- when we look at the new product proposition, First of all, we're testing right now. So we don't know the exact scope, the exact terms and conditions of this pilot. We're extremely satisfied with the initial results that we've seen, the reception that we've had from both sellers and especially from agents, it's been very, very positive. When it comes to the specific case that you asked for, obviously, something that we need to detail out. But the current hypothesis and that hypothesis is very strong, is that if you take one listing as an example, you would use this new business opportunity, meaning that, first of all, you would list directly on Hemnet with this new proposition and just play with the thought that it would not be sold for 3 months or whatever period you decide, and it would be taken down. If it's then selling on off Hemnet, if the property has been taken down, you would still need to pay for it. So we will track individual properties and ensure that we get the money for it. The terms and conditions would be that you have used and you have leveraged the marketing power of Hemnet being the most or the leading and the strongest property platform in Sweden. So therefore, you should pay for it. So that's the hypothesis. With that said, it's one of the things that we're testing. But I think otherwise, it would be a way too large risk, and we don't want to cannibalize on our core business. That is a key component in deciding this new proposition. Operator: The next question comes from Georg Attling from Pareto Securities. Georg Attling: I have a couple. So just starting with this new initiative with success-based product offering, how is that going to work with the other product that you have, which is pay when listing is removed because that doesn't seem to make much sense anymore if you go live fully with this. Jonas Gustafsson: Obviously, just repeating the same message that we said before, this is a pilot we're testing. And as part of this pilot and making the full assessment of this new product proposition, we would also look at the totality and the full scope of our portfolio. Current hypothesis is that the pay later if removed, that product would remain. However, and I'm sure there will be questions going forward around this as well, is obviously what price point we would price this new proposition at. And that's something that we're testing and you could expect potentially a differentiation from PL when it comes to the new product. Hopefully, that's helpful, Georg. Georg Attling: Yes, it is. And just second question on the ARPL slowdown here. It's 14 percentage points lower than Q2. if you could just help with the components to this. I mean the price effect should be similar, if not higher than Q2. So I guess mix is really the main reason for the delta helpful for -- with any details would be helpful. Jonas Gustafsson: Please take it. Anders Ornulf: The main explanation is actually tougher comps. So last year, 1st of July, we launched a new compensation model. So a very high uptick to [indiscernible] and now we are lapping and meeting those. So remember, ARPL growth is a growth figure year-on-year, right? So -- and we called out on the call that [indiscernible] is actually growing, continue to grow. So even though we continue to grow, the ARPL growth actually slowed down, as you called out here. So the main reason to answer your question is actually tougher comps. Georg Attling: Yes. And then tougher comps in terms of mix, right, because of the steep increase in premium in Q3 last year. Anders Ornulf: So the uptake between Q2 and Q3 last year was a lot higher than Q2 and Q3 this year. Operator: The next question comes from Giles Thorne from Jefferies. Giles Thorne: The first question was back on the PO sale new commercial model. And the elephant in the room for Hemnet for the past 6 months, maybe 12 months has been buy in the free-to-list model. So it'd be interesting, Jonas, to hear you talk on how the pay on the new commercial model will directly deal with that competitive threat. The second question was a bigger picture question, and it's on agent compensation. And I suppose, Jonas, it'd be useful to hear your case with this new partnership model as to why that amount of capital being allocated to the agency base is still the best thing for Hemnet's long-term interest. I appreciate that's a much bigger, harder question to answer, but it's certainly something on a lot of people's minds. And then the final question was on the open letter that we all saw over the summer from one of your largest shareholders, which called out many things, but in particular, how you're allocating capital your shareholder remuneration. So maybe Anders, some comments on any changes you intend to make on the back of that pressure. Jonas Gustafsson: Thanks, Giles. I'll start, and we'll take them one by one. And Anders, please help me, and I think you are the best one to ask the last question, but let's take it off. So when it comes to this pay on sale, I think the most important reason for us elaborating and testing this pilot now as we speak is that there are -- the market dynamics have changed. And I think I've been repeating this message over the last months since I've had the privilege to be the CEO of this company is that there's a few market dynamics right now where you have an all-time high supply where competition in the supply segment and in the own sales segment is tougher than it's ever been before. Second to that, it takes much longer time to sell a property today than it used to do 3 years ago. If you just look at the average sales duration, that was hovering around 25 days 3 years ago. Now on the last 12-month basis, it is 52 days. That has changed the sales process, the way the agents work and the way the sellers think. Thirdly, which is important is the fact that you now sell before you buy. So what we see right now with the data is that roughly 70% of all property transaction happens in sort of in a way where you sell before you buy. That used to be the opposite. So that used to be 30%. So the market dynamics have changed. This means that we want to ensure that we adopt our product proposition towards the market rather than the competitive situation to ensure that we become relevant, we remain relevant throughout the entire sales process. We know that we have a platform that works. We know that if you list on Hemnet from the beginning, the likelihood of a successful transaction and successful transaction covers everything from finding the right buyers, ensuring that you get reduced sales cycles and maximizing the bidding premium. Those 3 factors are improved when you use Hemnet the entire way. So that is a way -- and that's our hypothesis of using this. And given sort of the market situation, we want to lower the entry barriers for the sellers. We want to help the agents from the beginning. And we think that this product is going to make the difference here. We think it's a very strong proposition that will get listings earlier on Hemnet, more listings and it will help sellers to make better transactions. I think that should cover the first question. When it comes to the second question, it was a bit difficult for me to hear. But I think the question is around agent compensation and how that is related to the new strategic partnerships. But please clarify if I misunderstood it. Giles Thorne: Yes. It was -- it's at heart, a very simple question, albeit probably quite a difficult answer, which is you pay away a lot of your value to this large pool of important stakeholders. And for a very long time, that served you very, very well. But now there are open questions about whether that is the best use of your capital. So it was a question for you, Jonas, to make the case of why this is still the best use of your capital and perhaps use the new strategic partnership as a way of illuminating that case. Hope that's clear. Jonas Gustafsson: Yes. Perfect. So I think when it comes to the agent compensation, I think that has served us well. I think it continues to serve us well. It's strengthening the relationship with our most important ambassadors in the market, and that's individual agents. I think it's fair. And I think I fully understand where you come from, it's a substantial part of our P&L on the cost side that is related to compensation, but it's also helping us to build very strong relationship and mutual beneficial opportunity for both Hemnet and for the agents. When it comes to the way you understand this, Giles, but I think -- I mean, the agent compensation and the compensation model, that is a contractual and transactional relationship between Hemnet and the franchise owners. We see large opportunities of also strengthening our relationship with the HQs, the ones that has a central role and in many cases, a very important influence. And creating opportunities also on HQ level is important. And what we haven't spoken too much today about is also the individual agents. I think Hemnet in the past has been very strong with the franchise owners. We need to remain strong there, but we should also strengthen the relationship with HQs, and we should become better friends and become more supportive to the individual agents. So it's the full slate that we're thinking about. Then thirdly, the open letter from GCQ. Anders, would you like to elaborate around our view when it comes to the capital allocation? Anders Ornulf: Sure. Of course, we saw the letter and the shareholders' input is very important for us. It's one very important piece of the puzzle. But we stick to the current capital allocation strategy that we will continue to distribute excess cash through buybacks on an arm's length basis via Carnegie. On a personal view, I think not, I think it's a good success story for Hemnet since the IPO to be consistent with the buybacks and not taking bets on share price from time to another. So that's the answer. Giles Thorne: So Anders, you won't change the cadence or the pace of buybacks depending on share price moves? Anders Ornulf: No. Operator: The next question comes from Thomas Nilsson from Nordea. Thomas Nilsson: What development do you expect for staff costs and other costs at Hemnet in 2026 and 2027? Jonas Gustafsson: Anders, would you like to take that? Anders Ornulf: Sure. We don't know since we haven't decided, but what we said in the beginning of the year is that we will continue to grow this company. We will invest in marketing and talent and the product, and we will continue with that. Last year, we had a fixed OpEx growth of 30%. We said then that you will not see that this year. And now after 9 months, we are at around 15%. So all else being equal, you should expect us to continue that. But to be fair, the details has not been decided and the best way to look at it is to look at the current run rates. Jonas Gustafsson: And I think just to kick in an open door, we like operational leverage, and that's what we're going to plan for also for the next year and after that. Thomas Nilsson: Okay. And one second final question, if I may. Looking at your growth targets of 15% to 20%, how much do you think this will come from structural price raises and how much will come from promoting higher-priced packages? Jonas Gustafsson: We remain committed, and we think that the growth ambition of 15% to 20% is important. I think what we've said is that in the past, I think the largest price hikes days for Hemnet, those days are over, and we need to work on value-based pricing. And when I talk about value-based pricing, we need to ensure that we deliver products that the customers are willing to pay for. And I think this quarter, Q3, but also what we saw in Q2 and Q1 is a testimony of that. We do see that the product mix and the BOS penetration is the main driver. It is not prices. Operator: The next question comes from Ed Young from Morgan Stanley. Edward Young: Two questions, please. First of all, you've mentioned about further enhancements of Max. Should we read that as small sort of iterative additions to the Max package or perhaps a bit more of a rebalancing of the relative benefits across the package structure, so potentially including elements like free renewals? And then you've also talked about increased Max marketing. How receptive do you think agents have been able to be to these messages about the value of Max in a sort of difficult market backdrop? Or do you think their interest and ability to upsell packages will also be reliant on picking up when the macro also picks up? Jonas Gustafsson: So on the first one, I think when it comes to the enhancement of Max, I mean, Max is still a baby. It's been around for 6 months. So it's still young. We are continuously testing new features. We're elaborating with the price point. We've been running different campaigns. There are campaigns live now in the larger cities to just learn. So we're still in data collection mode. I think we need to look at a few maybe potentially bigger things as well going forward. And per your point, classifieds. So it's all a relative game comparing the features of Max also towards premium and others. But I think -- I mean, I don't think that you should continue to decrease the proposition of premium and Plus. This is all about ensuring that you improve features when it comes to Max. So that's something that we continuously work on. Anders Then I think, would you like to take the second one? Anders Ornulf: I didn't get that to be fair. Jonas Gustafsson: Sorry, can you take it again, Ed? Edward Young: Sure. I was just saying you're talking about increased marketing behind Max. I was just wondering, do you think that agents have been receptive to those messages? Or do you think ultimately that in sort of in the difficult macro backdrop? Or do you think that you need macro to pick up for them to sort of have more space if they're under pressure? Is it really a priority for them to push that? Is the macro impact an important part of the backdrop there? Jonas Gustafsson: Thanks, Ed. I can take it, Anders, and then you can fill in sorry. So I think -- I mean, it's a very good question, Ed. I mean, I think if you look at the actual product performance, and we showed a few highlights with 70% more traffic, 50% higher premiums, 50% more lift, things and engagement up. So I think those are fantastic results. I think that when it comes to Max, obviously, it is priced at a 50% premium versus Hemnet premium. And I think that has been part of the challenge in getting a quick adoption given these current market conditions. The key -- the sort of -- the way this business works to a large extent, is the fact that conversion follows recommendations. So it's all about ensuring that the individual agents recommend Max to a larger extent. That's really the main lever that we have to pull. And I think these marketing investments that we refer to is to a very large extent, B2B marketing, so investing in communication, investing in roadshows, investing in getting the message out there. But I think the sort of the Max adoption to some extent, is held back given the current market conditions. Operator: The next question comes from Eirik Rifdahl from DNB Carnegie. Eirik Rafdal: I got a few at the end here. Just to start on the strategic partnership. Are you configuring or looking to configure the commission model as well to kind of drive more agents to push this offer with pay when sold? Jonas Gustafsson: Simple answer is no. We're not looking to adjust the compensation model. Obviously, kicking an open door, everything, you would understand this. But obviously, I mean, we would pay a commission towards the agent if the property is sold and only so. So that's the part of it. But that's also one thing that we're obviously testing. Eirik Rafdal: That's very clear. And Jonas also you stated that the initial feedback and data from the pilot has been supportive and sellers showing increased willingness to list on Hemnet with the new payment option. Have you also seen increased willingness to jump on Max on the back of this? Jonas Gustafsson: What we've seen is that I wouldn't comment on Max specifically because the numbers are still quite low, but we see that there is a willingness to recommend higher tier products and higher than we have today. So that has been part of the reason why we see a very positive response. Perfect. Eirik Rafdal: And just a final question for me, which is a bit more big picture. What's your overall thoughts right now on AI risk, particularly on the back of the Silo ChatGPT integration announced a couple of weeks back? Jonas Gustafsson: I mean if you look at AI, and I'll take the big picture answer. I mean we're actively looking at how to best integrate AI into our operations to enhance user experience and internal efficiency. Up until today, our efforts internally, we focused a lot on our valuation pool. But obviously, we follow and see what is happening. And I think the -- so and the ChatGPT integration last week are very relevant and interesting. So we continue to look at that, and that's something that the team is looking at it, and we're exploring those opportunities. We want to be part of this when this takes off and when it gets to Europe. Operator: The next question comes from Annabel Hames from Deutsche Bank. Annabel Hames: Just one from me. Can you give more color on why the Max package uptake hasn't accelerated given the data that you have on product performance and investment? Is it purely just a lack of understanding from sellers? Or is it something you eventually consider having part of the commission model for agents to help uplift that uptake? Jonas Gustafsson: I think I mean taking a step back, Hemnet Max is something that would help us in '26, '27 and '28 and will be an important component to continue to drive ARPL growth. We're still in the learning phase. Please remember the last time the Hemnet launched a new product was back in 2019. So this is not something that we do on a sort of on a quarterly basis. And I think -- I mean, sitting here today and being a part of this earnings call, the key driver of what is actually driving ARPL growth in Q3 2025 is Premium and Plus, and that was introduced in 2019. So this is a long-term bet. I think when it comes to why the adoption has not picked up faster, I think parts of it is sort of related to what Ed asked about before. There is tough market conditions right now that I think has been holding back the MAX penetration. That's just a fact. And second to that, I think the awareness, this is the numbers that we show to you guys today are very, very strong. Now it's -- we have a lot of things to be done at our communication department. We need to be out there and spread the dos. Operator: The next question comes from Nicola Kalanoski from ABG Sundal Collier. Nikola Kalanoski: So firstly, interesting news regarding the new model. I appreciate that this is just in pilot mode so far, of course. But just to understand the mechanics of this. Will the cost of the listing ad be automatically deducted during the settlement with the banks when a home transaction closes? Or will the seller have to pay as they've done previously, that is just paying a regular invoice to Hemnet? Jonas Gustafsson: So the simple answer is that what we're testing right now is that the payment method and the payment flow would be very similar to our current products, meaning that would be a separate bill. However, I mean, if you look ahead, and that's a question about product development and integration towards our partners, I think sort of having the Hemnet cost being deducted in the overall settlement, that's also an interesting opportunity. But what we're piloting right now is the first stage. Nikola Kalanoski: Yes, that's crystal clear. And just another thing to clarify. I believe you mentioned earlier during this conference call, some changed market dynamics, which I'm sure we're all familiar with. But I reacted a little bit to you saying that competition in the supply segment and -- or sorry, competition in the on sale segment is tougher than it's ever been before. I just want to make sure, does this refer to there being competition among home sellers trying to sell their home or competition between Hemnet and other marketplaces, right? Jonas Gustafsson: Thanks for allowing me to clarify that if that was unclear. What I meant and clearly meant is that if you look at the on sale segment, supply levels are at record high levels, meaning that if you're a home seller, the competition to sell your property is very, very high. So it's a question about supply/demand to put it simple. Do you follow me, Nikola? Nikola Kalanoski: Yes, absolutely. I was just looking for a clarifying Operator: The next question comes from Julia Kazakovtseva from UBS. Yulia Kazakovtseva: Just one small follow-up for me. What's the current penetration of the pay later feature at the moment? I mean, the number of new listings. Anders Ornulf: It tends to fluctuate a bit, and we've commented before that it's been around 40% to 50% since launch, and it might be -- I haven't looked at it today, but it might be a little bit lower today. Jonas Gustafsson: Hovering around 40% but it goes with seasonality. So around 40% to 50%. Operator: The next question comes from Eirik Rifahl from DNB Carnegie. Eirik Rafdal: It's Eirik again. Just a quick follow-up question because we've been kind of discussing the perception of the max value and the perception of the value you guys create overall. And one thing is the perception that the agents kind of know of your value. But do you have a feeling that they understand the relative value between you and for instance, [indiscernible], I mean, on the numbers we're tracking and looking at, you guys are reporting all-time high time on site today of 52 days, but [indiscernible], at least on our numbers, is north of 120 days, so more than 2x what you guys can deliver. Do you feel that the agents kind of understand this in this market that it doesn't really help them to go there and kind of try to avoid going on Hemnet? I mean I think obviously, it's a mix. I think we have we have more work to be done and continue to educate the market around that. And you're absolutely right. I mean Hemnet is a much more efficient and much stronger property portal when it comes to ensuring that you sell your property quickly and fastly. With that said, I think this is something that we're continuously work on. And I think I've been talking a bit about how we invest in our sales force. The main reason for investing in our sales force is that we need boots on the ground to be out there, help the individual agent to understand the fantastic value that Hemnet is delivering. And also what we did in Q3 was to lift up Marcus to become my management team. And I think becoming closer to the agent, becoming closer to the industry is it's a strong rationale of why we're doing that and not only because Marcus is a fantastic salesperson. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Jonas Gustafsson: Thank you, everyone, for joining the call today and for a lot of good questions. We ran slightly over time. But with that said, we'll conclude today's session, and I wish you a fantastic day. Thanks.
Operator: Good day, and thank you for standing by. Welcome to the SEB Financial Results Q3 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Johan Torgeby. CEO. Please go ahead. Johan Torgeby: Good morning, and I'd like to extend a warm welcome to all of you today for SEB's Q3 financial results. Going to our first page with highlights. We today post a solid financial result in a quarter which is seasonally slower but we've also experienced less volatile and stable financial markets. Noteworthy is that investment banking activity has held up and showed resilience and we saw an increase in capital markets activity to the later half of the quarter. Customer satisfaction and employee engagement continue to show relative strength and it has been decided to continue the SEK 2.5 billion share buyback program per quarter by the Board as we announced today. Flipping to the next page, we have some recent events. And the first one is the infrastructure of payments which is now being disrupted to some degree by new technology coming from blockchain. We have, together with 8 other European banks launched a consortium with an initiative to see if we can launch a euro-denominated stablecoin on the chain and targeting the first half of 2027. Also, AirPlus has now been used as the new brand for our previous Eurocard. And this is an example of the marketing campaign, particularly towards the Scandinavian countries where Eurocard has been a long prevailing brand within the Corporate Card segment. It has now been rebranded under the headline green is the new gold. And if you haven't already, you will soon get an AirPlus instead of your Eurocard in the color scheme represented here on the slide. Turning to Page 4. We have, over the last couple of quarters, updated you on our progress within AI. We have shown you the internal projects that we're running, about 130, which is funneling in, in different categories of areas we think we can improve. But also gone through the recent investment that we've done together with a consortium to get compute capabilities available to us. Today, I'd like to introduce the third corner of this triangle, which is actually SEB not only working with offering better products, integrating it in the products, not only running the bank using AI, but actually enabling banking in the AI community, which is the core business we do. We speak a lot about different business units in the bank, but this is probably one of the lesser known ones. In 2022, we created a business unit called SEB Growth, where we now have an offering tailored for fast-growing companies with high innovative content and companies that plan to raise capital and/or lift or sell themselves in the future. This is an attempt to combine corporate banking with investment banking, with private banking, force entrepreneurs and these fairly young companies as they begin their journey. We've also included a few of the logos which we have recently supported such as Lovable, Sana, Modal and Legora. All these are well-known fast-growing companies in the AI space in Scandinavia. The next page, we can then look at the development of our credit and lending portfolio. As all of you are aware, we've had a little bit of a sideline movement in recent years. However, both last quarter and this quarter, we have some growth, albeit modest. Lending year-on-year for the corporate book is up 4% FX adjusted and the total lending portfolio is up 3% FX adjusted with households and Swedish mortgages just shy with half of that growth in the third quarter year. Looking on the next page on the jaws slide. We can see that the costs -- the trajectory of costs is tailing off. And we are roughly back to trend that we had prior to the elevated profits generated by the interest increase with a CAGR here represented from the time 2016 to 2021. And with that, I'd like to end this part and hand over to the CFO, Christoffer Malmer. Christoffer Malmer: Thank you, Johan. I would now like to turn to financials on the next slide. Operating income for the third quarter declined from the previous quarter, reflecting typical seasonal patterns, notably within net fee and commission income, where the second quarter performance was particularly strong. Net financial income was impacted by market valuations of our strategic holdings during the quarter, which had a positive contribution in the second quarter. This valuation effect accounts to around SEK 500 million of the delta in net financial income between the quarters. Net interest income increased slightly despite continuously downward trending interest rates explained in part by the higher day count in the quarter, some positive effects from FX, slightly lower deposit insurance guarantee fee and a lower short-term funding cost. Operating expenses declined slightly from the previous quarter, also following the usual seasonality. As the Swedish krona has continued to strengthen in the quarter, we are providing an updated FX adjusted cost target for the full year of SEK 32.6 billion compared to the original cost target of SEK 33 billion. We maintain our range of plus/minus SEK 300 million around the cost target level which is primarily related to the ongoing integration of AirPlus. Here, we see some potential scope for possibly accelerating that implementation program a little bit further. As mentioned at the start of this year and reiterated also here in the second quarter, we're now in a phase of consolidating recent years of investment, which is resulting in a lower cost growth. We also maintain our external hiring pause for nonbusiness-critical positions to facilitate this consolidation and to make room for continued investments in selected areas, notably within technology and AI. The full year cost target does imply that there are some effects to expect in the final quarter of the year. Net expected credit losses of around SEK 200 million or 3 basis points reflecting underlying stable asset quality as also reflected in the continuous decline of Stage 3 assets. We added around SEK 100 million to the portfolio overlays in the quarter, and we also had some sizable reversals. Imposed levies came down in the quarter as expected, reflecting the development of our Baltics levies and our full year guidance for imposed levies now also including Riksbank's introduction of the interest-free deposit now amounts to SEK 3.6 billion. So that's up from the SEK 3.5 billion communicated in the second quarter. Tax rate of 21%, in line with guidance. Net profit for the quarter of SEK 7.7 billion and a return on equity at 14%, and we ended the quarter with a CET1 ratio of 18.2%. On the next slide, we turn to the development of the net interest income. On a divisional basis, the NII in Corporate and Investment Banking declined by around SEK 200 million, primarily reflecting a lower net interest income within Investor Services, which was elevated during the second quarter, and that was a dividend season as we mentioned at the time. NII also within our markets business was a little bit lower as customer activity came down for the season. From a volume perspective, lending within CIB declined in the quarter as some of the event-driven financing volumes generated earlier in the year rolled off. And that, together with FX effects, explained the majority of the move in the loan book compared to the second quarter. Now year-on-year, lending to corporates within CIB increased by 3% on an FX-adjusted basis. Within Business & Retail Banking, NII declined by around SEK 100 million compared to the previous quarter, and that's primarily reflecting the impact from lower interest rates on deposit margins. Lending volumes were largely unchanged in the quarter and following 2 strong quarters of market share gains in the Swedish mortgage market, Q3 volumes grew a little bit less than the market. Now year-to-date, our net sales of mortgages represent a market share of around 13% which is in line with our share of the stock. Competition in the market remains firm and mortgage margins moved largely sideways in the quarter, remaining at historically low levels. Within our Baltic banks, net interest income was largely unchanged as the impact from lower interest rates was partly offset by higher lending and deposit volumes across both private and corporate customers. Loan growth in the Baltics remained robust with mortgage growth of around 9% and corporate loan growth at around 8% compared to last year. Within treasury, NII was positively impacted by the yield curve as well as favorable funding conditions within short-term funding. Looking forward, we continue to expect our net interest income to bottom out some 3 to 6 months after the latest or the last rate cut. Bear in mind that, that is based on how our balance sheet looks today. So volume growth and any proactive repricing could impact those dynamics. If we turn to the next slide, and we look at the fee and commission income in the quarter. Total fees and commissions declined by around SEK 400 million compared to the previous quarter. And if we look on a divisional basis, we effectively see 3 developments behind this. Firstly, within Corporate and Investment Banking, fees are seasonally softer in Q3 across most capital markets-related businesses, including issuance of securities and advisory, which was also particularly strong in the second quarter. This is also true for lending fees and combined, these effects accounted for around SEK 400 million in CIB. Nonetheless, CIB generated the highest net commission income on record for a third quarter. The second factor related to card and payment fees within Business & Retail Banking and again, seasonal patterns impacting activity levels primarily within corporate cards and AirPlus and this affects around SEK 100 million compared to the previous quarter. And thirdly, going in the other direction, we saw about SEK 100 million increase in fees and commissions in wealth and asset management as a result of higher assets under management and continued business momentum. Net new money across the group amounted to SEK 8 billion in the quarter. And on fees and commissions, when we close the second quarter, we refer to a more constructive fee environment. And while Q3 will see or should see some usual seasonal patterns, which we've seen, we said that if the market backdrop doesn't change dramatically, Q4 should see a continuation of this more constructive trend. And this comment, we think remains valid, which is encouraging going into the last quarter of the year. If we turn to the next slide, we set out the development of net financial income this quarter, NFI from the divisions was largely unchanged from the previous quarter at SEK 1.9 billion. The decline in the headline, NFI versus the previous quarter is, as I mentioned, largely explained by valuation effects related to our strategic holdings and that's primarily in Euroclear, which also paid a dividend during the second quarter. affecting that comparability. These effects were partly offset by XVA going the other way, and we continue to look at the long-term average of around SEK 2.5 billion per quarter. Turning to the next slide. We'll look at the development of the CET1 ratio in the quarter. We closed the second quarter with a management buffer at 290 basis points. And during the quarter from left to right, as usual, we received an updated SREP, update from our supervisor. And as you will have seen in our separate disclosure on that topic. This resulted in a lower Pillar 2 requirement related to lower capital impact from IRRBB, interest rate risk in the banking book. Then we had 41 basis points, reflecting the net profit in the quarter after deducting our dividend accrual while lower risk REA contributes about 14 basis points reflecting positive risk migration in the book during the quarter. Under REA other, you will find a combination of other developments on the balance sheet. So the FX effect, the overall REA size market risk REA and also a positive impact from us applying the SME factor to some of our CRE exposures. These factors in total added 22 basis points and largely evenly distributed between them. Finally, the decline of 18 basis points reflects the phasing in of the REA increase in the Baltic banks that we announced in the second quarter, and that is related to the ongoing work with our Baltic IRB models. This takes the CET1 buffer to 360 basis points at the end of September. And we also highlight that the remaining impact from the Baltic REA increase is around 70 basis points, so in line with the communication at the time of the second quarter. And we expect to phase this in over the coming 3 quarters. So that means that our buffers in effect on a pro forma basis stands at 290 basis points with the Baltic REA fully phased in. Other effects to bear in mind as we go into the end of the year is the impact from operational risk REA in the fourth quarter when we do review that level. On the next slide, we summarize our capital and liquidity position at the end of the third quarter. Our capital as well as our liquidity measures have all strengthened during the quarter, reflected in rising LCR from 130% to 136% and a higher NSFR from 112% to 116% and the CET ratio, as we just discussed on the previous slide. Finally, I would like to conclude with our financial targets, which remain unchanged, including a 50% payout ratio, a management capital buffer target of 100 to 300 basis points above the regulatory minimum and a return on equity competitive with peers with a long-term aspiration of 15%. Return on equity year-to-date stands at 14.1%. So with that, I hand the word back to you, Johan. Johan Torgeby: Thank you, Christoffer. That ends our prepared remarks, and I'll hand over to you, operator, for the Q&A. Thank you. Operator: [Operator Instructions] We will now take the first question from the line of Namita Samtani from Barclays. Namita Samtani: My first question, what should we think of funding costs related to net interest income going forward because surely, if rate is still coming down or they have come down, which is yet to be factored into our net interest income, this will continue to be a tailwind. And secondly, I just wondered, do you lend to private credit and what percentage of that is part of your book? Christoffer Malmer: Thanks for your question, Christoffer here. I'll take your first question on the net interest income. And you're right to say that we've had a positive effect from funding costs in the quarter, and you saw that also in the breakdown of the NII in treasury. And we estimate that effect to be positive for the quarter of around SEK 100 million or so. Now going forward, we'll continue to reiterate the message on 3- to 6-month lag from the last rate cut for the dynamics to work their way through the balance sheet before the net interest income would trough. So we should expect the net interest income to come down again in the fourth quarter. And then in the first quarter, and then we'll see again what happens to rates, of course, as we go into 2026. Those are broadly the effects that I would bear in mind. Johan, you want to comment on the private credit? Johan Torgeby: Yes, sure. Thank you, Namita. We have no meaningful noticeable exposure direct to any private credit. We do have a very, very small group of private equity firms that also have a private debt arm, but no direct exposure. So it is so small that it's not really noticeable. Operator: We will now take the next question from the line of Magnus Andersson from ABGSC. Magnus Andersson: Two questions, please. First of all, on corporate lending. Last quarter, you said you had an elevated level of activity-based lending. And it comes down a bit now quarter-on-quarter FX adjusted. Could you please tell us how you see the outlook for activity-based lending as transaction activity is undoubtedly picking up now? And also what you think about the more lending for general purposes when you think that will pick up? That's the first question. Secondly, on capital and risk-weighted assets. The level was significantly lower than at least I thought in this quarter, and I see that your -- I mean, risk weight comes down in corporate IRB, for example. Is this -- with the exception of the op risk coming in into Q4, is there anything else here that could be volatile? Or is this a reasonable run rate to use? Because I think you even included SEK 10 billion of the Article 3 announcement as well here. And related to capital, do you know already now if you will continue with the share buyback approval for the full year in the Q4 '25 report? Or if you would consider doing it as you did previously with half in -- half year approvals? Johan Torgeby: Thanks, Magnus. I'll start with the corporate lending. So first, I just note that you did accurately depict what we said and what happened last quarter. Those temporary elevated levels for transaction-based exposures, they have not fallen off. So this quarter with its 4% year-on-year does not have those, let's call it, temporary bridges on as there was very little transactions done into the summer. So this is a much more steady as we go. When it looks going forward, so the pipeline looks unusually strong. That doesn't mean that they naturally materialize for events and the event-driven lending that might come with it. But we did see a pickup in investment banking and also capital markets transactions towards the later half of the third quarter, which is an encouraging sign. And we, of course, always keep a close look as a leading indicator of what the Americans do. And you could see some similar signs or even more pronounced there. But I also want to say that the lending fees this quarter, even though it's a very, very quiet one is still 24% up year-to-date, the lending fees, which is, of course, what you typically -- the majority of what you earn on leases is not NII when it comes to transaction is up 9%, the first 3 quarters this year compared to last. So there is some underlying event-driven momentum, but it's -- I still want to be cautious because a lot of things need to happen, and we don't want any of the risks that have been identified to materialize in Q3 that would create volatility. So if I'm a little bit constructive and hopeful, I think general corporate purposes, that's a longer transition. So we are not seeing this broad-based, let's invest in increased capacity, then you need to borrow to invest further because the first investments, they're always done with the operational capital or cash at hand to meet the demand. So in my mind, I often come back in this discussion around the lack of demand in the economy. Retail sales and consumption in GDP. And that's kind of the last leg that we are looking for really to change the picture. And of course, looking at the economists they are looking pretty constructive for '26 and '27 on this topic, but let's wait and see. Malmer? Christoffer Malmer: Thank you. So Magnus, on the REA. If we look into the fourth quarter, you're right that we expect the op risk effect. We estimate that to around 15 basis point negative impact. The other moving parts that are subject to movements during any quarter is the FX effect, of course, you see that is positive in the quarter. That remains, of course, unknown. It's a REA size, which in this quarter is again positive contribution. And coming to your previous question, of course, I hope that we will see that be moving in the other direction. And the third one is REA asset quality, which, again, in this quarter due to upgrades of risk classes of a number of counterparts also contributed positively. So these are the moving parts and then you go to op risk REA. So when it comes to the buffer, the 360 basis points, and we look at the pro forma effectively the 290, assuming the remaining phasing of the Baltic REA, last year, at this point, we were around 470 basis points. So of course, the situation was very different. But still, there are, to your question, a number of moving parts in the REA that will play out in the fourth quarter. I will come back at that time with comments on future buybacks. Operator: We will now take the next question from the line of Markus Sandgren from Kepler Cheuvreux. Markus Sandgren: I was thinking about -- there is some growth in the Baltic lending business. So I was thinking your ambitions going forward? Do you expect to grow in line with the market given your size? Or is there any reason to believe that you can capture more market shares there? Johan Torgeby: Okay. yes, we are growing clearly higher, and it's not only this quarter, it's been going on for a while. So we are actually accelerating a bit. So we're now looking to 8%, 9% growth in this quarter year-on-year compared to -- if I remember correctly, it was about 6% last quarter. We are maintaining our market share as -- the long-term picture is that it's quite concentrated as you probably know to 2 large institutions, Swedish banks in the Baltics. And there has been, of course, increased demand for higher competition from everyone in the marketplace. But right now, we have an ambition to maintain this position. I wouldn't commit as it is a very high market share we start with. So this is a little bit defend and protect, but we are not going to give it up easily. So be careful in increasing market share, but definitely it's a fast-growing market. I'd also like to point out that it is a higher inflationary market. So in real terms, it is not as impressive as these headline numbers are, and you need to also take that into account because the loan book unless you relever the economy will grow with nominal inflation plus whatever you do. Operator: We will now take the next question from the line of Martin Ekstedt from Handelsbanken. Martin Ekstedt: I wanted to focus a bit on your retail business. Looking at statistics, Sweden data on mortgage lending during first half of '25, you saw quite strong market share of net new lending. I think you took like 16% on new lending against the back book market share of 13%. But as we enter the second half of the year, this trend kind of evaporated, and you took just 1% in July and 3% in August despite similar volumes in the market overall. Is there a story behind this that you could share with us perhaps? And then secondly, on that same topic, with Sven Eggefalk now joining you as a new head of the business line, should we keep hopes up for higher volumes share -- volumes of market shares to return? Christoffer Malmer: Christoffer here, I can comment on this. I think, as I mentioned in the remarks, if we look at our market share year-to-date in net sales and mortgages, that stands around 13%, and that is in line with our historical stock level. So there is, as you point to some movement between the quarters. I think when I look at the focus that we have for winning the mortgage market share business, we think all 3 components, it's the speed, it's the availability and it's the pricing. And it's about us continuously evaluating and making sure that we are competitive along all those 3. And as you will see that we haven't moved pricing much in the last quarter, but we're continuously working around speed and availability. But I would also mention that there is a volume effect into this as well, volumes are still relatively small, which can impact movements in between individual quarters. But year-to-date, broadly in line with the stock market share. Martin Ekstedt: Understood. And then a second question, if I may, and just picking up on Namita's earlier question on private credit. I wanted to just pose this question to you a bit more broadly. I mean, the main focus around the private credit discussion has been centered on the U.S., right? And you said you don't do this yourselves currently to any large extent. But I mean, generally, you stand perhaps as the leading Swedish lender to nonbank financial institutions. So I just wanted to check with you for a Swedish take on this. How widespread is this concept in Sweden? And what are your views on the viability of the model in Sweden and also a bit on the risks perhaps. I mean if you don't do this, who should be doing it or shouldn't we be doing it at all in Sweden, and why not. Johan Torgeby: Okay. Yes, this is a little bit of reasoning. Don't take this as a fact. So first of all, this has been a development very much driven by the U.S. I hear numbers like USD 2,000 billion. It's actually surpassing bank lending if you extrapolate the current trends. It is a very, very significant deep source of debt capital for the American economy. Europe is much, much smaller as a whole. And even the things that are growing fast in Europe is typically more American firms, replicating what they've done in the U.S. rather than European firms. Then you go to the Nordics, it's even more pronounced. So private debt is not a large funding source for the Nordic where we operate. And this is, of course, very much if you look at the classic private debt, private equity firms of Scandinavia, which is our home market, that it looks very, very different in terms of the balance between equities, infrastructure, alternatives versus private debt lending. So my take on this is that, first, the leverage buyout market is very well functioning in Nordics. This means that there's much less of a free lunch to be had sourcing the money that you then refund and redeploy into a leverage buyout type of financing because this is almost like a game between the 2 different products. They are slightly different, but they achieve the same thing for a private equity firm. One is you borrow from a private debt with typically 7% to 9% yield expectations or you borrow from a bank, which in the Nordics, we are very efficient, and we've been able to price the LBOs quite differently. But if you look at the overall market of LBOs, how they're financed, it's clearly in favor of private debt funds. But from the banking system, as far as I know, Nordic is very little -- has very little exposure in the Nordic banks to this. It's other capital providers that have put the money in. Operator: We will now take the next question from the line of Shrey Srivastava from Citi. Shrey Srivastava: My first one is your comments around the pickup towards the end of the quarter in capital markets activity. Of course, this quarter was affected somewhat by sort of lower episodic transactions debt than you'd expect. So I just want to talk about what the pipeline for the fourth quarter, what you've already seen in the fourth quarter and going forward, please? And my second question is going back to your comments on the scope for accelerating the implementation of AirPlus. You've previously, if I'm not mistaken, commented qualitatively about when you expect it to be accretive, excluding and including restructuring costs. Is there anything further you can now provide on that, given you've obviously had an extra quarter seeing the business and integrating it. Johan Torgeby: Sure. I'll start with the pickup. So the circumstances around capital markets and primary deals, M&A and IPOs is quite -- it's very, I would argue, benign. It's a good market. Markets are strong. They're not over -- they might be an all-time high on the stock market, all-time tight on credit -- recent tights in credit markets, lower interest rates and a little bit of European spurring optimism for what is going to come. It's not particularly strong here and now, but it's definitely more optimism around where Europe could go, not at least in Scandinavia and the Baltics, if you look at GDP protect -- projection, consumption, et cetera. And also, I would argue that Germany has had the biggest delta from 1 year ago, where they were very much not in favor. And now it's a little bit of, let's say, interest at least on what could Germany do with all these announcements around fiscal, stimulus, defense, security and resilience. The uptick is exactly what we would have expected. We've actually been a little bit disappointed, I would say, if you compare 1.5 years ago when we saw that the interest rate has peaked, then we had a very quiet couple of years behind us after the record years of the early 2020s. And now it looks quite constructive. And you saw that -- before summer, we did an unusually amount large deals in the Nordics, then, of course, summer dies. And I would say that the pipeline and the amount of discussions for the fall and next year, still indicates that there is a higher level of potential than there was before. Now don't take that too much, but I'll just look at issuance of securities and secondary market and derivatives, which is, of course, it's cut in, in the financial result today, we're up 29% year-to-date compared to last year on issuance and securities and services, M&A and equities. And we have 14% in secondary markets year-to-date. So there is something clearly better already happening compared to last year. And we are just saying that we feel quite constructive. We're not saying that this seems -- there are no indications right now that this would implode tomorrow, rather being quite supported of this could probably continue. Christoffer Malmer: On your second question around AirPlus, a reminder of where we are there. So as we highlighted in the second quarter, the first critical milestones around IT migration, the discontinuation of noncore markets and the rightsizing of the organization has been completed, and this process is on track. The next phase now is to increase pace of implementation between AirPlus and the rest of the SEB Group business. So what we are now reviewing is if there is reasons to try and accelerate that phase. As you will remember, we gave a range around the cost target for 2025 of plus/minus SEK 300 million as we said, largely attributable to the pace of implementation of AirPlus. So it was in that context, I made those comments. Operator: Thank you. We will now take the next question from the line of Johan Ekblom from UBS. Johan Ekblom: Just to come back on some of the comments you made earlier around AI. I guess trying to figure out what AI could mean for your business longer term. There's 2 aspects to it, I guess, that I'm interested in. One is, how do you think about the cost of AI? So we hear a lot of stories about the cost of AI being heavily discounted today and that we should expect cost to increase materially as you get on to kind of normal rate cards for what you're paying. And I guess when do you expect to see concrete benefits in terms of efficiency or revenue opportunities that will be kind of obviously visible in the financials. So that would be the first question. And then secondly, just a bit of a detailed one on asset quality. I mean we had a big green project that went belly up in Sweden earlier this year, and there's another one that's in the press now. Your corporate loan book tends to be very much focused on investment grade. How do you view this potentially higher credit risk project? And how do you manage risk around those? I realize you probably can't comment on individual exposures. But just from a more kind of top-down view. Johan Torgeby: If I start with the last and I'll hand the -- I think you asked mostly for the financial impact, I'll ask Christoffer to reason around on AI. The traditional loan book is investment grade. The really minimum rule of thumb is that you have to have 3 years of good cash flow, that has proven resilient business model, et cetera. So that's what we do. But there are, of course, also a very, very small part of the balance sheet that also gets dedicated to starting up of firms. These -- the ones you mentioned, the larger green ones, they have been unusually very unique that they are of that magnitude, but we have had very, very modest, if I say it that way, exposure that you won't really have seen even though there have been a little bit of actually blowouts in the whole green and clean tech sector as we speak, and it's continuing. The other thing is to see that the capital stack of all these projects, if they are large, are very different from the past. They are namely predominantly government guaranteed, and there are risk and offsets. So the nominal values often, if not always, exaggerate heavily what the banks actually are exposed to. But -- so there are 2 mitigating factors to any worry. And that is that the amount is very small, and it's often guaranteed somewhere between 60% to 85% by a government. Christoffer Malmer: If I reason a little bit around the AI and the financial impact, and you're right that we are at an early stage and trying to assess and quantify the ultimate impact is still difficult. But I'll make a few comments. I think in terms of the benefits that we can already see is there are certainly some areas where we do see tangible efficiency gains and productivity enhancements One is in software development, where we see the use of Copilot increasing developer productivity and output and deploys. Another area is in Wealth and Asset Management, where we can see an increase in the number of outbound customer calls as a result of AI support in documentation. So we see those productivity gains. Now how does that translate into P&L? Well, one of the comments that we made around the hiring pause that we're having consistently asked the question when we do replacement hires, if there is a technology or an AI solution that could be levered for that same activity. So we will see this gradually coming through. In terms of the cost of the actual AI. One of the reasons we decided to team up with a couple of other companies in the Wallenberg sphere to invest in the compute power from NVIDIA here in Sweden is partly to get access to sovereign access to compute, but also to ensure the cost. And to your point, we're buying compute power from the large compute providers around the world is, of course, an exposure that anyone would have if you want to grow and expand in AI. And that is also for us a level of comfort to have that cost under our own control. So those are some comments. But as you point out, it is still early days. But we are following it very closely. And the early signs that we're seeing is constructive productivity enhancements. Operator: We will now take the next question from the line of Sofie Peterzens from Goldman Sachs. Sofie Caroline Peterzens: This is Sofie from Goldman Sachs. So my first question would be on the fee line. The softness that we saw in fees this quarter, was that reflecting margin pressure? Or was it just less volumes than expected. So if you could kind of just discuss a little bit margin pressure compared to the volumes on the fee side? And then my second question would be around kind of capital. What we're seeing is that the fiscal outlook or fiscal spending next year is quite good for Sweden, macro-outlook is improving. Should loan growth pick up for SEB. How do you think about kind of prioritizing growth over shareholder returns. And what kind of takes priority if you look at like growth versus dividends versus share buybacks versus any potential M&A? Christoffer Malmer: Thank you, Sofie. So if I'll start with the fees, the sequential development there is really in 3 areas where we see this. First, within CIB and as Johan alluded to, a little bit, even though activity level is benign in the third quarter, it was very strong in the second quarter. So you see the drop in fees and commissions sequentially of about SEK 400 million being partly attributable to activity levels and fees in CIB. The second component you see is card fees in BRB, particularly on the corporate side. And as you know, we are in our BRB card business more exposed to corporate activity than private activity. And that being slower during the summer month is a second explanation. And the positive effect and partly offsetting this is an increase in fees and commissions on AUM-related fees in wealth and asset management. So there's no margin development impacting sequentially in the quarter, but more how the fees have fallen between Q2 and Q3. Johan Torgeby: Yes. Sofie, and nice to hear that you're back in a different role. So welcome. I would say that the reason for the more optimistic outlook, as you also pointed to, is partly driven by the monetary stimulus that we have already seen, let that bite in the economy monetary policy, typically works with 12- to 18-month lag. But also, as you pointed out, the fiscal stimulus that is expected to come. So those 2, I think, are quite important pillars for economists when they do look at it. Will this increase loan demand? Well, that's the purpose of it, both the monetary policy want the economy to pick up in pace and particularly focused on consumption. Fiscal policy tends to be quite effective on consumption. But the pattern right now is because uncertainties, high risks are very mitigated in my book, but uncertainty is still around. It means that households have been quite keen to save rather than consume. So all this is kind of part of that package to become a little bit more constructive for the future, and it should be supportive of growth. But that prediction I'm not making. I'm just reasoning around it. So it's definitely a part of it. When it comes to priority between growth and shareholder return. I assume you mean shareholder repatriation and not just total shareholder return because I think growth in SEB, having more clients doing more with them is very much aligned with total shareholder return, that's the same thing. But of course, it's not -- you might want to save more capital for the business rather than repatriating it. And there, it's pretty easy. We always try to develop the bank first. I would love to use the capital that we generate to do more business to generate even more, so that's typically not a big conflict. Otherwise, as we've had for many years now, we generate more than we can redeploy and then we'll pay it out to shareholders. Sofie Caroline Peterzens: Okay. That's very clear. And maybe just on the fee side, one follow-up. So in terms of DNB Carnegie, you haven't seen any business opportunities kind of getting any -- being able to take any market share from them? Johan Torgeby: I would say no, but I also want to acknowledge that it's a formidable competitor, and they're very good, and this is not an easy market to win in. And it's getting -- it's tough out there. Operator: We will now take the next question from the line of Tarik El Mejjad from Bank of America. Tarik El Mejjad: I just wanted to come back on Johan Ekblom's question as well on AI from a different angle. The scalability of use of AI and the benefits also, I think, is based on how your core systems can actually be plugged to these AI tools. How do you consider today your IT system ready for this, I would say, evolution in terms of using for AI, especially in your triangle on the parts on integration into the products. And also, I mean, there is a perception that the cost to achieve is actually much lower using AI versus the traditional kind of cost savings measures in the past. Do you -- would you confirm that perception? And just very quickly on the capital part, I mean, Sofie, I think addressed that partly, but the -- I think you commented in the past that to go below the 300 basis point buffer or the high end of the range, that will be used for growth rather than special distribution or buyback. Given the headwinds on CET1 coming -- on RWAs coming in the next quarters from the add-ons on Baltics, should we assume that our priorities for volume growth and the buyback would probably be secondary here? Christoffer Malmer: So if I start with the question on AI, you're right that there is a broader upgrade of core systems in general required to some extent, this reflects our ongoing work with our technology road map that has been in place for some time. But there are also opportunities in multiple areas where AI can be applied without necessarily completing all those upgrades. And there are also ways where we can work with compartmentalizing certain parts of our legacy technology and making APIs available for new applications. And the third option that is also interesting to explore is actually to have some of that legacy code rewritten with the help of AI. So there are ways both in which we can address the challenges with traditional legacy systems, but also where we can proceed without necessarily completing those investments. Now when it comes to the triangle, I think you're right to say that from a product perspective, it's probably where progress has been the least thus far in terms of introducing and implementing AI capabilities in the product. Where we have thus far seen the best impact and the greatest achievements thus far has been in running. And what we're highlighting in this quarter as well is, of course, an interesting opportunity working with a growing and exciting AI community in Sweden and the Nordics. So we'll continue to, of course, monitor this closely, but there are certainly areas where we can accelerate with AI implementation in parallel with legacy upgrades. Johan Torgeby: Yes. And if I just may add, it's interesting, we have the IMF, IAF trip to Washington, where all bankers met last week that it is a clear distinction, the one selling AI capabilities between the ones buying them and selling them and how much value has been created lately. So this third point that Christoffer made, the third leg is actually us banking the AI community, which is doing very, very well. On the capital repatriation preferences, so let's say that if we are above 300 as we have stated target board mandate to be in the range of 100 to 300, we have one type of dialogue, and that is how to best come back to the range where the 300 is the upper end. That's the discussion we've had for 2 -- 3 years when we -- from the day we had to cancel the dividends post COVID. And of course, that's kind of the new now. If we're in the range, we have a more forward-looking discussion in the Board in December, where we typically have room for both. So don't assume that you cannot do a share buyback only because you're in the range. However, there is a different discussion. It's more about lending and if we want to retain it to improve business of over and beyond 15% return on equity. If there is a reasonable degree of probability, we know how to do that in the coming years. We'd like to be able to capitalize on that. If not, then, of course, it becomes more of a question of how to repatriate capital to the shareholders with a base, 50% of profits go in the form of dividend. And as you can see in history, we've used both extra dividend in combination with share buybacks to look at, but that's the forward-looking, and I also would say, just the numbers, you need pretty significant loan growth numbers for this not to be -- for SEB not to be able to do capital repatriation in the combination of 2 or 3 types. So it would be lovely if that would happen, but that's a luxury problem. Operator: We will now take the next question from the line of Nicolas McBeath from DNB Carnegie. Nicolas McBeath: My first question was on the NFI line, which came in a bit below in recent quarters in Q3. So I was wondering how you think about the -- how the lower interest rate environment is impacting this revenue line. With your current macro outlook for 2026, how confident are you that your previous indication of the past 16 quarters average is a good indication where the normalized NFI line should be? And how do you think about that given the ultimate macro outlook for next year with, yes, maybe lower interest rates and possibly also lower volatility than what we've seen in the past few years? Christoffer Malmer: Thank you, Nicolas. I think the -- within that number that you have in the NFI, for us, these are, to a large extent, customer-related income. So taking aside the strategic stakes in the mark-to-market and the valuation gains that we present separately in the XVAs, we have a significant proportion of our FICC business booked within NFI. And within the FICC, we have the fixed income, currencies and commodities. And if I look at the third quarter, we had after the very high level of volatility in the second quarter, a lower level of volatility in the third quarter in FX, which resulted to a somewhat slower activity related to our customer demand. Now within fixed income, on the other hand, activity levels remained high with credit spreads at very low levels, issuance continues, and there was a clear demand to prefund during those favorable conditions. Within commodities, we are, as you know, the one Nordic bank that does offer this, and we have seen that contribution growing. But of course, there's an element of volatility, but we think that the underlying structural development there is also constructed. So as we look forward, there are effects driving this. The volatility in FX space and the demand for FX products will be impacting that part of the FICC booked in NFI. We also have the steepness of the yield curve, which impacts the treatment of the inventory and the mark-to-market of the inventory within the fixed income in NFI as well. But at this point in time, we have our range and I think that remains our best prediction for the future. Nicolas McBeath: And then I had a question on like if you have any general remarks or thoughts how you're reasoning regarding the cost growth into 2026. I mean on one hand, you have lower rates, which are a drag on return on equity. But on the other hand, as you've alluded to in the call, potentially higher activity loan growth, economic recovery during next year. So do you think 2026 is a year to expand and invest more or keep the hiring freeze and try and defend the profitability? Johan Torgeby: I'll start and ask Christoffer to add. So the current, let's call it, plan of attack on cost control is the one that we, I think, launched last quarter or 2 quarters ago, and that is to change the pathway that we've been on for some years now of increasing investments in the bank and to tail that increase off. And as you can see this quarter, it looks to be supportive of actually happening. We are in a different place now where we have a different trajectory. The purpose is to sit when we do our business plan in December and hopefully be in a position where we have freed up some operational costs that we can discuss with the Board and the management team how to redeploy. So it is still a different type of forward outlook now than we've had in the last years, and that is more cost control, be cautious and handle resources a little bit more until we have a clearer look on the income outlook because we really need to have a high return on equity and a low marginal cost of income, so profitability secure if we were to start investing more. And then there are many other things must do investments in banks. So there's no lack of holes to put all this money in order to maintain a good and solid and robust infrastructure. But it is the same tonality we've used now for a couple of quarters. There's no change in that, and that goes beyond year-end. It's actually to have a little bit of extra flexibility going forward. That doesn't mean that the decision in December where we set the cost frame for '26 will be up, flat or down. It just means that there will be a discussion to be had and we'll communicate it as always in conjunction with the Q4 report. Nicolas McBeath: And then just a detailed follow-up question. Could you please give us the AirPlus implementation costs for Q3 and how you think about the implementation costs in 2026? Christoffer Malmer: Yes. The AirPlus implementation cost in the third quarter was around SEK 120 million, which means that we, year-to-date, have taken a little bit less as a run rate, which leaves a little bit more in the fourth quarter. And we have guided to around SEK 700 million in implementation costs for the full year. Nicolas McBeath: And for next year, how do you think about those costs developing? Christoffer Malmer: Well, as I referred to earlier, we are now reviewing whether there are parts of the implementation program that should be accelerated. So we'll be coming back to that together with the cost outlook for 2026 together with our fourth quarter results, Nicolas. Operator: We will now take the next question from the line of Riccardo Rovere from Mediobanca. Riccardo Rovere: Thanks a lot for taking my questions. I have 3, if possible. The first one is on the NII indication, Christoffer, that you provided early in the call, meaning NII to bottom out 3 to 6 months after the last half. Now raising in Euro area should be done, Riksbank has cut 25, okay, I understand the impact on the equity side, but the federal reserve should cut much more aggressively and you have a much larger amount of U.S.-denominated liabilities than assets is SEK 300 billion larger amount of liabilities in dollars. So I was wondering why the rate cuts by the Federal Reserve should not have a mitigating impact or the only 25 basis point rate cut by the Riksbank. And by the way, also this quarter, what you -- this indication should have happened and did not materialize, NIIs is actually up quarter-on-quarter. So I was wondering why you keep reiterating that given the Federal Reserve cut expected in the coming quarters? The second question I have is, on the 290 basis point buffer, if I'm not mistaken, this includes the whole SEK 50 billion of RWA done -- imposed by ECB on your Baltic operations. Just to confirm my understanding correctly. And if I understand it correctly, 290 is already at the top of your range in terms of management buffer. But you are expecting to go back to that level in only 3 months. And because if that is the way I understand, it's just a matter of how you want to return excess capital rather than if you can keep the current capital return. So what is your thinking about that? And then I have a question, a curiosity that's more a curiosity. Overlays go up by SEK 100 million if I'm not mistaken. Some of the Nordic banks have actually reduced them or brought it to 0. They're using it progressively, releasing those. Why are you keep accumulating those overlays? And when do you expect this to come to an end or this to be used at some point or released or allocated. Christoffer Malmer: Thank you for your questions. I'll start, and I'll let Johan contribute as well, and we're just going to make sure we have the questions correctly. So if I start with the overlay, that is an assessment that we do every quarter. And we take into account geopolitical developments, sometimes we change our macro outlook and assumptions and it's a continuous evaluation of our various exposures across our portfolios. And you have also seen in quarters that we have released some of those overlays and in this quarter, we're adding. And it's hard for us, of course, to comment on how other banks are proceeding with this, but that is our process. For the net interest income, you're right, we are reiterating the expectation of a 3- to 6-month lag from the last rate cut until we see the trough. What happened in this quarter were a couple of technicalities that led to an increase in net interest income sequentially. One is the number of days. We also referred to the deposit insurance fee that is booked over the year. That happened to tilt a little bit more favorably for NII in this quarter. We had a positive FX effect. And we also saw some beneficial treasury contributions, partly from the funding cost and what we have been referring to as repricing effects or timing effects. So as we then look forward, we continue to see pressure on deposit margins as the rate cuts will make their way through the balance sheet. And also bearing in mind that some of our transaction accounts both for corporates and households are down to 0, which means that, of course, the further down we come in the rate cycle, the more any incremental cut will have as an impact. And finally, to your comment around the U.S. denominated deposits, those are primarily wholesale deposits. So those are priced off of market rates, and that's effectively a margin that moves with market rates rather than having an impact as they are being discretionary priced, but they are market rate linked. On your question... Riccardo Rovere: This will go down. The Fed will cut, this stuff will go down, the cost of this stuff will go down. If they does, when they cut. Of the wholesale fund -- this wholesale funding, and it's SEK 400 billion. Christoffer Malmer: Correct. And then, of course, the impact will then be on the asset side when Feds are being cut when we have U.S.-denominated loans that they are funded by. Riccardo Rovere: Sure, but it's smaller the amount. The delta is smaller. The liabilities are much, much larger than the assets in dollar, much larger. SEK 300 billion. Christoffer Malmer: Right. And I think what we have also mentioned when it comes to the U.S. denominated deposits is the fund that we're also placing with the Fed. And that is effectively us operating in the U.S. with our balance sheet, and we will collect deposits from U.S. financial institutions and placing with the Fed. And that is effectively a relatively opportunistic business that we have been running there, and that goes to an element of lumpiness between quarters, but that accounts for a sizable part of the U.S.-denominated deposits as well. Riccardo Rovere: But what I see is longer than SEK 188 billion cash at the Federal Reserve, I guess, and you have SEK 409 billion deposits, which you say is wholesale is going to go down. This one number is more than twice the other. So I don't understand how this cannot be positive regardless FX and all the other stuff, calendar days, whatever. Christoffer Malmer: No, I think this is one of many moving parts in the balance sheet. So when we are looking at the impact in totality from rate cuts, there are various dimensions moving in different directions. And this is one impact that we get from the development of the Fed funds. We have other parts of the balance sheet that's impacted by the ECB rate and others from the Riksbank. So it's taking all these into consideration together where we conclude that running this through our balance sheet as it looks today, we expect the trough. It doesn't mean that all the variables go in the same direction. Some, to your point, might be contributing positively, but the net of it all, we expect to result in a trough 3 to 6 months after the last cut. Riccardo Rovere: And on the SEK 290 billion. Johan Torgeby: Yes. Sorry, can you repeat that question, Riccardo? Riccardo Rovere: The question is that SEK 290 billion is already the top of your rating, the top of your management buffer. And that 290 includes the whole SEK 50 billion, which should be, despite, as I remember, phased progressively, not if I'm not mistaken, you got SEK 10 billion this quarter, maybe you will land another SEK 10 billion next quarter, I don't know. But the real number is the SEK 290 billion. So that is already at the top of your buffer. So how do you see this? Is this -- were you expecting it to be already basically at the top of your buffer only with the whole impact of the ECB imposed add-on after only 3 months. Because there has been, let's say, some discussions around the impact of this stuff into -- mostly 2026 is affecting your capital return blah, blah, blah. How do you see that? Johan Torgeby: Yes, I think we understand that. Christoffer Malmer: I can just start, Riccardo, with confirming that we have taken in this quarter the equivalent of 18 basis points or SEK 10 billion phase-in of REA in the Baltics, and we're showing that the remaining, what we estimate to be another 70 basis point impact would take our pro forma buffer to 290 basis points, where we have booked so far in this quarter, SEK 10 billion of that. Johan Torgeby: So just to be clear, that is pro forma today. So I think you're absolutely right. It's the 290 if we would technically have deducted all of it and it would have been over. But as we -- for accounting reasons and other things, couldn't or wouldn't do that. So we just showed it pro forma. Then you have, as I think you alluded to, now capital generation, in the dynamic analysis going forward, we'll, of course, continue to increase this number, everything else being equal. And therefore, I think we will have a better position when we get to Q4, and we will have to look at the current capital position then in a quarter to then for the board deliberations on repatriation. Was that an answer? Riccardo Rovere: Yes, yes, yes, definitely, that's an answer. So 290 before, then you start accruing the dividend, 50% payout or whatever it is. And then the rest, we'll see. But the starting point is 290. Johan Torgeby: Correct. Operator: We will now take the next question, question from Bettina Thurner from BNP Paribas Exane. Bettina Thurner: I would just have 2 clarification questions, please. The first one on NII. So you have been quite helpful over the past 2 quarters to try and isolate the temporary effect on the net interest income base. For this quarter, should we look at the effects in treasury that you mentioned before, of repricing quicker. Is that the SEK 100 million? Or would there be other parts of the NII that you would also expect to get out again or reverse partially in the last quarter of this year or first quarter of next year? And then the second question would be on the dividend. At the start of this year, you said you had the intention to pay out a semi-annual dividend next or in the next year. Is that still the plan? Or are you still deciding on that? If you could just give us more update on that, please? Christoffer Malmer: Thank you, Bettina. So on your first question on net interest income, I think the number that you're referring to, the SEK 100 million or so as a positive impact in Q3 from those timing effects is the number that you should have in mind for that effect going forward. And for the semi-annual dividend, you're right, that is something that we mentioned at the start of the year, and we have ongoing dialogues with our shareholders, and that's something we'll come back to when we report our fourth quarter results and come back to the capital question. Bettina Thurner: If I can just double check. So it's not set in stone yet, let's say, on the semi-annual dividend? Christoffer Malmer: Correct. That's correct. Operator: Thank you. That's all the time we have for questions today. I would like to hand back to Johan Torgeby for closing remarks. Johan Torgeby: I'd just say thank you, everyone, for your participation and your interest in SEB and look forward to seeing you soon. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Maria Caneman: Good morning, and thank you for dialing in this morning. I am Maria Caneman, Head of Investor Relations here at Swedbank. Welcome to our third quarter results presentation. With me today is our CEO, Jens Henriksson; and our CFO, Jon Lidefelt. Jens and Jon will start with the presentation, and then there will be an opportunity to ask questions. Jens, I hand over to you. Jens Henriksson: Thank you, Maria. Swedbank has once again delivered a strong result in uncertain times. The geopolitical situation, continued uncertainty about tariffs and trade and the increasing concerns about weak public finances across the world are slowing down global growth. Twice a year, the world's economic policy decision-makers meet at the IMF. The starting point for their discussions is the world economic outlook, which was published a week ago with the headline, "Global economy in flux, prospects remain dim." With that said, our four home markets have healthy fundamentals, strong public finances, low government debt, innovative companies, profitable banks and low interest rates. In Sweden, we see signs of improvement. Our economists forecast growth of 2% next year, while the Swedish government is more optimistic and projects 3%. In Estonia, economic development is still subdued, and we are seeing some recovery in Latvia and the development in Lithuania continues to be strong. In these uncertain times, Swedbank stands strong and is well positioned for sustainable growth and profitability. We can today report a return on equity of 16% and earnings per share of SEK 7.53 for the third quarter. During the quarter, income increased while cost decreased. Our cost-to-income ratio was 0.35. Strict cost control is producing results. We have a conservative and thorough lending process and, during the quarter, we saw credit impairment reversals. We have a robust ability to generate capital, and we have a very strong capital and liquidity position. During the quarter, Standard & Poor's upgraded Swedbank's credit rating. In their decision, they highlight the bank's improved governance, regulatory compliance and risk management. Furthermore, during the quarter, the U.S. authority, SEC, ended its investigation into the bank's historical shortcomings without enforcement. We are delivering according to our plan, Swedbank 15/27. And as you know, it focuses on three areas: strengthen customer interactions, grow volumes and increase efficiency. Our customer focus is producing results. We have further improved our availability during the quarter, and now 70% of incoming calls in Sweden are answered within 3 minutes, and we are thereby getting closer to our target of at least 80%. We consistently work to improve our digital offerings, and we see that more and more customers do their everyday banking through our app or the Internet bank. We have also increased our efficiency. Our employees can spend more time meeting customers and less time on administration using new AI tools, and the number of advisory sessions per employee has increased. During the quarter, we lowered mortgage rates due to lower policy and market rates. Mortgage loans increased by SEK 5.2 billion, and mortgages in Sweden distributed through our own channels accounted for SEK 4.2 billion. Deposits from private customers are stable, and we continue to be close to our customers and give them advice. Strengthening their financial health is an important task for the bank. Savings and pensions continued to develop positively. Swedbank Robur saw a net inflow of SEK 9 billion in our four home markets. As announced in August, we want to acquire the remaining part of Entercard, thereby, Swedbank will have the largest card business in the Nordic-Baltic region. This will develop our business and strengthen our customer offering. In Lithuania, the business climate remains strong. In Sweden, Estonia and Latvia, economic activity is improving, but from low levels. During the quarter, corporate lending increased by SEK 7 billion. Our customers are showing a high demand for sustainable investments. 36% of the bonds arranged by Swedbank during the quarter were classified as sustainable, and our Sustainable Asset Register has now surpassed SEK 150 billion. We now own 20% of the investment bank, SB1 Markets. And during the quarter, they started up in Sweden. It's an important step in further developing our offering to corporate customers. In addition, our customers will get access to an expanded range of equity research. In the Baltic market, we launched the card payment feature, Click to Pay, a secure and convenient service that simplify payments. Jon, it's your turn now to deep dive into the financials. Jon Lidefelt: Thank you, Jens. We delivered a strong result in the third quarter with volume growth across markets and increasing income. We have continued our work with focus on long-term shareholder value through business growth and cost efficiency. Cost-to-income ratio was 35% and return on equity, 16%. Lending volumes grew in the quarter and the increase came mainly from Baltic Banking, where we continue to see solid growth on both the private and corporate side. Mortgage volumes in Sweden sold through our own channels increased by SEK 4.2 billion, while the savings banks reduced their mortgage volumes on our balance sheet by SEK 1.6 billion. We see continued result of our increased efforts on customer interactions and availability as we're capturing a larger share of the market. In August, our front book market share through owned channels was 16.4%, still below the back book market share of 17.8%, but the development continued in the right direction. Also for the corporate business in Sweden, the positive development continued with increasing volumes, though somewhat offset by repayments related to a couple of larger exposures. Customer deposit volumes were stable in the quarter. In Sweden, private deposits decreased somewhat from a high level as the second quarter was impacted by seasonal inflow of tax returns. In Baltic Banking, deposit volumes were overall stable. Net interest income decreased by 0.9% compared to the previous quarter, driven mainly by lower mortgage rates. Lower deposit rates impacted NII in Q3 with a full quarter effect, while lower rates on the lending side were gradually rolled in during the quarter. Higher business volumes had a positive impact of SEK 94 million in the quarter. Wholesale funding costs continued to decrease in the quarter. Liquidity was, however, reallocated from the markets business increasing liability volumes, but also positively impacted Central Bank placements. and, hence, had an overall neutral NII effect. Day count and FX effects impacted NII positively in the quarter. The Swedish Central Bank cut policy rates effective as of the 1st of October and ECB cut rates effectively as of the 11th of June. Hence, there are further repricing dynamics in play. Reminding you that the positive effect on the funding side materialized ahead of the negative effect on the asset side, furthermore, that it takes approximately 3 months in Sweden for a rate cut to roll in and 6 months in the Baltics. We will continue with our pricing strategy on both sides of the balance sheet and maintain focus on the balance between volumes and long-term profitability. Net commission income increased in the quarter, driven mainly by strong asset management commissions. Mutual funds had a net inflow of SEK 9 billion and combined with the positive stock market performance, increased asset under management to SEK 2,471 billion. Card commissions were seasonally higher in the quarter following higher spending abroad during the summer months, while brokerage and corporate finance commissions were seasonally lower. In addition, we saw positive development in commissions from insurance products. Net gains and losses remained at a high level in the quarter and amounted to SEK 847 million. Income was strong, driven by high business activity, mainly within fixed income. Positive revaluations supported the treasury result. Other income increased by 2.7%. Net insurance decreased driven by both normalized levels of claims compared to the low levels we saw in the second quarter and the effects from revaluations of future cash flows. One-off transfer, in connection with the establishment of SB1 Markets on the 1st of September, also contributed. The results from partly owned companies supported as well as increased income from services to the savings banks. As a reminder, our collaboration with the savings banks include cost sharing for IT development and administrative services. The savings banks' share of the cost is included in Swedbank's total cost, and you can see the corresponding income as services to the savings banks here under other income. Total expenses were 1.4% lower. Fewer employees, together with seasonally lower staff costs, IT maintenance and consultancy costs contributed. As announced in conjunction to the Q2 presentation, a VAT recovery of SEK 197 million related to the year 2016 was received in the beginning of the third quarter. In line with previous patterns, costs will be seasonally higher towards the end of the year. Costs for the full year 2025 is expected to be around SEK 25.3 billion at current exchange rates. This includes the already received VAT recoveries related to the year 2016, '17 and '18 amounting to SEK 576 million. It also includes SEK 200 million lower temporary investments this year and an estimated SEK 300 million lower costs due to FX. Asset quality is solid. During the quarter, there were reversals of credit impairments amounting to SEK 398 million, which corresponds to an impairment ratio of minus 8 basis points. The reversals are mainly driven by improved macro scenarios, and we have continued to reduce the post-model adjustment, which now stand at SEK 364 million. Individual assessments resulted in a SEK 568 million increase, driven by a few larger corporate exposures. At the same time, repayments and reversals of previously written-off exposures resulted in a release of SEK 451 million. I feel comfortable with our strict origination standards and the solid collaterals that secure our lending. Our CET1 capital ratio was stable at 19.7%. In the 2025 SREP, our Pillar 2 requirement was lowered by 40 basis points, and our CET1 capital requirement now stands at 14.8%, meaning we have a buffer of around 480 basis points above the requirement. The reduction by the Swedish FSA stems from two parts. Firstly, 20 basis points are related to the new CRR3 risk weights for standardized credit risks. This has an impact on the Pillar 2 add-on that we shall hold until the new Swedish IRB models are approved. Thereby, approximately 20 basis points of the expected capital relief of at least 50 basis points from the new IRB models has now materialized. We continue to expect most of the remaining impact from the IRB model updates to materialize during next year. The Swedish FSA also approved parts of our nonmaturing deposit model, resulting in 20 basis points lower capital requirement for interest rate risk in the banking book. To conclude, we continue to focus on growth and efficiency. We deliver strong profitability while maintaining prudent underwriting standards, strong liquidity and capital positions. Back to you, Jens. Jens Henriksson: So let me now sum up the quarter. Swedbank once again delivered a strong result in uncertain times. Income increased, cost decreased, and we saw credit impairment reversals. Return on equity for the third quarter amounts to 16%, cost-to-income to 0.35. Our credit quality is solid and our capital buffer is very strong at 4.8 percentage points. Swedbank is well positioned for continued sustainable growth and profitability, and we continue to deliver according to our plan, Swedbank 15/27, with a focus on strengthening customer interactions, growing volumes and increasing efficiency. We create value for our customers and our shareholders, and our customers' future is our focus. With that said, back to you, Maria. Maria Caneman: Thank you both very much. We will now begin the Q&A session. A kind reminder to please limit yourself to two questions per turn. Operator, please go ahead. Operator: [Operator Instructions] We have the first question from Martin Ekstedt, Handelsbanken. Martin Ekstedt: Can you hear me? Jens Henriksson: Yes, we can. Martin Ekstedt: Excellent. So could you just give us a bit more on the SB1 Markets initiative? You mentioned it launched in Sweden in the quarter. Is it now fully staffed up on the Swedish side? And are all the business lines up and running? That's the first one. Jens Henriksson: To be honest, I don't know if it's really fully staffed up. A lot of persons have gone over and I think they're doing some great jobs. So I think they're fully running. And the key point is that this is a partnership that offer our corporate customers a strength and offer through access to a larger set of investment banking services and sector expertise. And both corporate and private customers can also benefit from access to a broader range of equity research. So this is great. Martin Ekstedt: Okay, okay. And then second question, if I may then. I'm looking at your NII sensitivity on Page 20 of the presentation deck. So in the past, the NII elasticity, so to speak, or rate shifts have been balanced around plus/minus side. But your calculation example is now tilted towards seeing a larger impact if rates come down than if they go up. And I just wanted to confirm, this is due to some deposit rates now having reached 0 and therefore, are not able -- at least commercially able to go any lower, right, i.e., it's the floor of 0% rates that you mentioned on the page coming into effect. Is that correct? Jon Lidefelt: You're perfectly correct, Martin. That is the reason. Operator: The next question from Magnus Andersson, ABG. Magnus Andersson: My first question is how you view the prospects of potentially being able to increase the thin household mortgage margins in Sweden now that short-term rates are no longer expected to fall? And related to that, what market growth rate you think is necessary for this household mortgage margin pressure to ease? And secondly, just how -- you have lending growth now 4% quarter-on-quarter in the Baltics FX adjusted. How you view the sustainability of lending growth in the Baltics now that the deleveraging that's been going on for nearly 20 years finally seems to be over? And related to that, how you tame the inflationary tendencies, the impact on the cost base there? Jens Henriksson: Thank you for that. Two good questions. First one is, let me say a few words of the overall situation in the mortgage market, and reminding you that we are the market leader in all four home markets. And first, just me repeat that in the Baltics, we see continued strong growth in mortgage volumes. In Sweden, we've seen that the housing market remains muted, although we see some gradual increasing mortgage market growth during 2025 and you see that we're now picking up some momentum. And the reason for that is that we are more active. We have shorter waiting times and quicker to resolve questions. There is a strong competition out there, and we want to grow. And when that competition abates, we do not know. I don't think the competition will go down. I think it will be continued competition there. Then when you move over to the Baltics, we have seen quite a large volume growth in that. Reminding you that these are steady and stable economies, and we now expect Estonia and Latvia to pick off as well, while Lithuania has been doing very good. Magnus Andersson: Okay. So are you saying that you think the household mortgage margins we have in Sweden currently are here to stay? My question was whether you think there will be a potential to increase them going forward and what the trigger would be able to drive how you would be able to achieve that. Because I think it's a concern to all of us. Jens Henriksson: Well, I won't do any forecast on that. There is a tough competition. But I think when you see higher volumes, I think that we can grow in that environment. Magnus Andersson: Okay. And the inflationary impact on costs, in the Baltics? Jon Lidefelt: Magnus, I think as we've talked about before, I mean, in the Baltic Banking, we have lived with higher inflation for many, many years, even before the inflationary shock. So that is something that we are constantly working with to make sure that we can increase our efficiency to mitigate that. If you look at the societies as a whole, then I mean, our concern, as we have been talking about, generally, it's very stable and healthy. But of course, if the salary inflation continues, then that will eventually lead to a problem since it's going to be hard to pick up on the productivity in line with the current salary levels', increased levels. Operator: The next question from Andreas Hakansson, SEB. Andreas Hakansson: So first question on costs. You mentioned the three VAT refunds you had during this year. Could you tell us how many years have we got outstanding? And just to confirm that you don't assume one of those reversals to appear in the fourth quarter. Jon Lidefelt: You're correct. We have assumed no VAT recovery in the SEK 25.3 billion guidance that I gave you. If that will come, it will come as a one-off extraordinary thing that we will not take into account when we run our ordinary business. So no further VAT in the SEK 25.3 billion. We have, as I think I mentioned in the previous quarterly presentation, requested VAT return recovery for year 2019 up until 2023. It's in the hands of the tax authorities, and I have no visibility in the numbers, and we'll not speculate if and when we would get anything more back there. Andreas Hakansson: Are the cases similar? Or I mean, it seems like you won three cases. So are the other cases different? Or wouldn't the outcome be likely to be the same or... Jon Lidefelt: Sorry, I said '19 to '23. I should have said '19 to '24. But it depends a lot on the interest rate levels since this is sort of depending on the turnover that we have in the parts of our business that is non-VAT related and the one that there is VAT, i.e., mainly the leasing business. So it depends a lot on the interest rate levels for the years, and that's why I don't want to speculate in any numbers or if we would get it back before we have the answer from the tax authorities. Andreas Hakansson: All right. That's fine. Then on the Baltic NII, I mean, you talked about the 6 months' time lag. But could you just confirm that when you talk about that NII should trough 6 months after the loss rate cut, that's with a static balance sheet. And we saw already that NII grew Q3 with Q2 on the back of very strong volume. So if volumes continue at the current pace and, if anything, it seems to be picking up. Is there any reason why the NII shouldn't continue to grow even though you have that underlying pressure driven by interest rates? Jon Lidefelt: First of all, yes, you're correct. When I talk about the 3 and 6 months, then I mean the same margins, the same volumes, and then you'll have to make your own assumptions on that as well as some further central bank rate cuts. When it comes to the NII development in the Baltics, it's impacted by FX in this quarter. So underlying, the NII in the Baltics is stable quarter-over-quarter. Andreas Hakansson: With 3% volume growth, right? So those are the two components there, margin pressure and the volume growth. That's up to 0 in this quarter. Jon Lidefelt: Yes. Operator: The next question is from Gulnara Saitkulova, Morgan Stanley. Gulnara Saitkulova: So on capital, given your solid capital buffer, could you remind us of your latest thinking on how to deploy the excess capital between ordinary dividends, special dividends, buybacks or potential M&A? And how should we think about your approach to excess capital in a theoretical scenario where the AML resolution is still delayed by several years? Would you still aim to be around the midpoint of your targeted management buffer range? Or would you adopt a more cautious stance in that case? And if you were to pursue M&A opportunities, which areas or markets would be of the greatest strategic interest for you for potential acquisitions? Jens Henriksson: Well, thank you for that question. Let me be very short here. And that is that we have a capital buffer range between 100 and 300 basis points. In our 15/27 plan, we target the middle of it, i.e., 200 basis points. We now have a buffer of 480 basis points with a dividend policy of 60% to 70%. And the timing of further capital release continues to be a judgment call depending on the many uncertainties, where the long-running U.S. investigations is the largest one. And we have no intention to hold more capital than necessary. When you look into M&A activity, reminding you that we've had seen quite a lot of M&A activity during the last quarter. We want to acquire Stabelo. We want to acquire the remaining part of Entercard, and both those two are still subject to approvals. And then we've gone into SB1 Markets, which was the first question. As a CEO, I always need to look out for new opportunities. Operator: The next question is from Markus Sandgren, Kepler. Markus Sandgren: I was just going to follow up on Gulnara's question when it comes to Entercard. Can you just give some more flavor of your thinking about the acquisition? And what do you think or what's your planning in terms of asset quality for that company? Jens Henriksson: Well, straightforward, we've had a business cooperation with Barclays, and we own roughly 50-50 each. And they wanted to sell it, and we wanted to acquire it. It's that simple. And the reason we want to do that is that we want to become the largest card business in the Nordic-Baltic region with scale benefits and, of course, benefits also from increased efficiency. And I think Jon will get back later when we have more information when that's fulfilled and tell you the effects on the bank at large. What we will do is we'll do a strategic overview. And when we look on Entercard, we've seen that we think that the risk level is a bit too high, and we wanted to reduce it a bit more to a more appropriate level for Swedbank. Markus Sandgren: And what does that reduction mean? Is it getting rid of loans? Or how do you plan to do it? Jens Henriksson: We -- let us get back to that when hopefully, this goes through all the sort of processes. Operator: The next question from Shrey Srivastava, Citi. Shrey Srivastava: It's actually on the 20 basis points benefit to your sort of capital requirements that you've got from being able to model the contractual maturity of nonmaturing deposits. My question is twofold. The first is, is this all we can expect to see in terms of benefit? And secondly, does this open up the possibility of you sort of investing these nonmaturing deposits in potentially sort of high-yielding, long-dated assets going forward? Jon Lidefelt: Thank you, Shrey. First of all, we have gotten a partial approval for our modeling of nonmaturing deposits. So all things equal, if we would get the full approval, that would be a little bit more to come. When it comes to our NII -- or sorry, non-NMD hedging, I have said in previous quarters on questions from you and your colleagues that we have had some hedges. It's been an important tool for us to have in the toolbox. So we wanted to test it and try it out. But it is and has been immaterial from an NII perspective so that you can discard the impact of the hedges that we have in place when you forecast our NII. The approval that we have gotten, it still means, to make it simple, that our liability side is still shorter than our asset side. So if we would add further hedges to prolong our asset side, which is what we want to do in order to smoothen out NII when the timing is right, it would still mean that our capital for IRRBB, our Pillar 2 charge, will go up even with this approval. It might go up a bit smaller than before, but there still will be an increase. We will come back should we do more or should our hedges be material to make sure that we are transparent should that be in the future. Shrey Srivastava: And a very brief follow-up. You said you received partial approval. Should you receive full approval, what sort of capital benefit can we expect there? Jon Lidefelt: Unfortunately, as long as the Swedish FSA do not change their view on this, even a full approval will lead to the same thing, that if we prolong our asset side, our capital charge will still go up. There is a difference between the Swedish FSA's view and the view that banks under ECB supervision have. They can do this hedging much more efficiently than we can do. Shrey Srivastava: And a final one for me. Have you noticed a sort of softening of the Swedish FSA's view? Because it seems sort of that way, looking at the partial approval you received. Or is that inaccurate? Jon Lidefelt: No, I have not. Operator: The next question from Namita Samtani, Barclays. Namita Samtani: My first one, I just wondered what measures you're taking in the Baltics to bulletproof your ROE of above 20%. I saw an announcement that Revolut is now offering mortgage loans or something similar to that in Lithuania. And in time, that will probably become a full offering. And clearly, the deposit rates they offer better than banks. So what initiatives is Swedbank taking to protect itself from competitive threats? And then secondly, I appreciate the 2025 updated cost guidance. But we're almost through 2025. Could you please qualitatively talk us through the main moving parts of costs going forward or what we should think about going into 2026? Jens Henriksson: Well, the key thing about Estonia, Latvia, Lithuania, these are growing economies, and when compared to Sweden, they will grow with, let's say, 1%, 1.5% more. So it's a very attractive market. And it's also a market that doesn't have the same financial inclusion as there is in Sweden. So that means that we see many possibilities. And I think we went through very much this when we had Swedbank 15/27. In the end, it's about being close to our customers. We are the most loved brand in the Baltic region for the seventh year in a row. We want to grow volumes, continue to grow with the countries. We want to increase financial inclusion. We want to be -- have more customer interactions and want to make sure that we keep costs contained and work in an efficient way. So in that sense, it's not different from the other markets. Is the competition tough? Yes, it is tough. Will it be tougher? Yes. But that's life. Keep on and be close to your customers. Do you want to say a few things about the costs? Jon Lidefelt: I think your question was about 2026 costs, and we will come back in conjunction to the Q4 presentation on that. But principally, we tried to explain how we work with cost efficiency with the headwind and investment and so forth when we had the 15/25 presentation. But more details, I'll come back with when we present the Q4 results. Operator: The next question is from Tarik El Mejjad, Bank of America. Tarik El Mejjad: Just quick two questions, please. First, on costs. I mean you had quite impressive, good cost control here with cost/income really at very low levels. I just questioning the strategy of sustained hiring freeze, which -- how long that you can be sustained and especially in the context of potentially a recovery of growth. But also, we just had a call with one of your competitors and the approach is this hiring freeze or control could be sustained as long as we invest in AI and technology and be able to question each time, can we replace or hire or invest in some technologies that would be more cost efficient? Where are you in this thinking and these investments in AI and technology? And the second question is on the U.S. on money laundering litigation. I mean I've been following those with the German, French banks and so on in the past with the OFAC. How the conclusion from the SEC, you think are correlated to what would come for DOJ? Or is it -- because usually it's bundled within one decision. How do you read that? Are you more optimistic about the outcome? Jens Henriksson: Well, thank you. Two important questions. The first one when it comes to the personnel, we steer the bank on costs, not on FTEs. But what happened a year ago was that we saw that FTEs increased too much due to change of churn. And what we did then was that we implemented an external hiring freeze but sort of possibility for people to make exceptions. I gave quite a few exceptions but it worked. And then last quarter, we decided to take that away. And we now have a process where Jon take that sort of those kind of decisions together with the Head of HR. So we do not have a hiring freeze anymore. That's the first thing to say. The other thing is to say that we see quite a lot of use of AI. We work it both on the individual level and on a structure level. We work with AI for a very long time. And what we want to do is we want to decrease administration so that we can see more time with our customers. So to give you an example is that right now, we are seeing that the waiting lines or sort of the time waiting, if you call into a Swedish customer center, it's much shorter than before. So we've reached 70% of the call answered within 3 minutes. Why? New technology. And then we can use call summary, so that means you can have more time to meet the customers rather to do the administration, and we can do more things like that. When it comes to the U.S. investigation, first thing to say is that when it came to OFAC, that was closed quite a while ago. And as I said in my introduction, during the quarter, SEC decided to close their investigation without any further actions. That said, still have two other investigations by U.S. authorities. And now I need to sort of repeat myself. But I've told you many times when I was new as CEO, I met and called around and talked with colleagues that have been in similar circumstances. And they told me that a process like this usually takes 3 to 5 years. Now more than 6 years have passed, but the time line is fully owned by the U.S. authorities. I can just repeat what I say, and that is I still do not know whether we will get any fines. And if we do get the fines, I cannot estimate the size of those. And we've been as transparent as possible during this long-running process. And when something material happens, we'll continue to adhere to that principle. Thank you. Operator: The next question is from Nicolas McBeath, DNB Carnegie. Nicolas McBeath: I had a question on the deposit volumes. So after the most recent rate cut in Sweden, your deposit rates on some of your most popular savings account like eSavings have been cut to 0. So I was wondering how are deposit volumes behaving on these accounts. Have you seen any increased tendency of withdrawals since the rates were introduced, either to your own Swedbank players or migrations to competitors' deposits with above 0 rates? That's my first question. Jon Lidefelt: Well, thank you, Nicolas. The volume or the mix has been stable in that sense. So we have not seen any mix shift. And over time, the deposit beta has been around 1 on accounts with interest rate and where the sort of distance to 0 has been enough to reduce it. So then as we have talked about before, sometimes, we have for business reasons, taking a little bit of time lag between doing different rate changes. But over time, it has been one, and we have not seen mix shifts lately. Nicolas McBeath: All right. And then I had a question on levies for next year. What's your expectation there? And could you confirm whether the cost for interest-free deposits at Riksbank, will those be taken on the levies line or reduced NII? Jens Henriksson: Well, let me start with saying that if you see overall loan demand in Sweden from both corporate and private customers is subdued. In the Baltic, demand is stronger. And just to be blunt here, but we have an appetite for healthy loan growth while sticking to our conservative lending standards and focusing on profitability. You want to follow up, Jon? Jon Lidefelt: On your question on the Swedish Riksbank, we will have to deposit SEK 6 billion for which we will not get an interest rate for now for 9 months, I think it is. I think the jury is still somewhat out on exactly how to account for that. But my assumption or belief is that, yes, it will be under the bank tax row. And then the discussion is will it be a one-off now in Q4 or will it be spread out for the period? But most likely under the bank tax rule. Yes, I think that was the answer, right? Nicolas McBeath: Yes. And then just also if you could comment what your expectations for bank taxes are for 2026? Jens Henriksson: Bank taxes, don't get me started. But let me say a few words. And then as always, I want you to remind you that banks are an important part of our societies. What we do is we channel our customers' hard-earned deposits to lending, thus empowering people and businesses to create a sustainable future. And to do that, we need to be profitable. And a sustainable bank is a profitable bank. And we are proud taxpayers that contribute to the financing of welfare and security in our home markets. What we do not like are sector-specific taxes, retroactive measures and an unpredictable regulatory environment. What we do like is equal treatment, a rule-based system and an investment climate that fosters growth, financial stability and sustainable transformation. With that said, I need to say that. Then let me do a quick tour across our four home markets. First, Estonia, general corporate taxes are increasing as we see, but there is a political debate on that. In Lithuania, corporate taxes are also up. And then remind you that on top of this, since 2020, there is a 5% extra tax on banks, and the extra investor tax on NII further on top will be phased out during the year. In Latvia, we will have 3 years with a similar investor tax. There are some discussions on excluding new lending from the tax. If that would materialize, it would be positive for the Latvian economy. In Sweden, the government has proposed a base deduction to the bank tax while delivering the same tax revenues. And the tax rate is therefore proposed to be raised from 6 to 7 basis points in 2026. And now there is a government inquiry of some kind that will look into the specifics. And then as Jon talked about, let's call it what it is, it's another tax on the banking system, is that the Riksbank has decided that credit institutions from the end of October this year will need to place an interest-free deposit with them. And as Jon said, it amounts to around SEK 6 billion that will earn 0 interest. Operator: The next question from Sofie Peterzens, Goldman Sachs. Sofie Caroline Peterzens: Here is Sofie from Goldman Sachs. So my first question would be on net interest income. When do you expect net interest income to trough? One of your competitors this morning said that it will be 3 to 6 months after the last rate cut? Do you think that's kind of fair? Or do you have a different view to this? And then my second question would be on the VAT refund that you continue to get. It was SEK 197 million now in third quarter and SEK 174 million, sorry, in the previous quarter. Like when should we expect these VAT refunds to come to an end? Or should we expect still some VAT recoveries in 2026? Jon Lidefelt: Thank you, Sofie. If I start with the NII, then if we assume no further rate cuts, to make it a bit simple, then ECB did their last one. It was effective on the 11th of June; and the Swedish Riksbank, it was effective as of 1st of October. And then if you take 3 months roughly in Sweden and 6 months roughly in the Baltics, that means that around year-end these rate cuts will be priced in, and the first quarter next year then will be the first quarter where you have a full quarter effect. Then as I've said before, you'll have to add your own assumptions on potential further rate cuts from the central banks, volume growth and margin development. When it comes to the VAT, then I don't know. There is a discussion from the Swedish government to change the VAT legislation. And everything around the VAT recoveries is due to that there has been a clash between the Swedish VAT law and the European regulation around that. So I would expect in a couple of years that there will be a new Swedish law in place. I don't know how fast or when it will come or what it will mean. So I don't -- we don't know. We'll have to see what happens. But we have so far then asked back for '19 to '23. Now it's clear '23, I've been a bit back and forth on it. But '19 to '23, we have asked recoveries for. And then let's see for the years after how things play out. Operator: [Operator Instructions] The next question from Riccardo Rovere, Mediobanca. Riccardo Rovere: Just a quick follow-up, again, on NII. Do you think that the pickup in lending volumes in general, and also deposits could somehow offset the last leg of pricing that you've just mentioned, 3 months in Sweden, 6 months in the Baltics. It should be visible by the end of the year, the same volumes can offset that? Jens Henriksson: We lost you. But thank you, Riccardo. Riccardo Rovere: Can you hear me? Jens Henriksson: Okay. Sorry. Now we can. Do you want to... Riccardo Rovere: Can you hear me now? Jon Lidefelt: Yes. Jens Henriksson: Yes. We hear you. Okay, please repeat. Riccardo Rovere: Okay, fine. Just wondering whether you think the volume growth, deposits and loans could somehow offset the last legacy repricing that you've just mentioned, 3 months in Sweden, 6 months in the Baltics, so to say that the last cuts done should be visible by the end of the year because that is the margin part of the equation in NII. I was wondering whether the volume side of the equation can somehow offset it. Jon Lidefelt: Thank you, Riccardo. Yes, I mean you're perfectly right, but I do not sort of forecast the NII. So I can leave that to you to do your own assumptions on volume growth, margin development and so forth. But of course, there is an offsetting effect on this. I said that in this quarter, higher volumes has had a positive impact of SEK 94 million on the NII. So of course, growth do offset. But I'll leave you to do your own assumptions on how that will develop going further. Operator: This was the last question. I would like to turn the conference back over to Maria Caneman for any closing remarks. Jens Henriksson: Well, I'll take that, Maria, if it's okay with you. So thank you for calling in, and thank you for always asking tough and knowledgeable questions. I now look forward to meeting you and many of your colleagues in our dialogue on Swedbank. Thank you for calling in. Bye.
Operator: " Nikolaj Sørensen: " Frederik Jarrsten: " Edward Kim: " Samir Devani: " Rx Securities Limited, Research Division Klas Palin: " DNB Carnegie Commissioned research Operator: Welcome to the conference call. [Operator Instructions] Now I will hand the conference over to the speakers. Please go ahead. Nikolaj Sørensen: Thank you very much, and welcome to this third quarter call for Orexo. It has indeed been a transformative quarter in many ways for the company, in particular, in our R&D departments where we have made very good progress in 2 projects, and I will come back to that a little later. Today, I'm Nikolaj Sorensen, and I will be joined by Fredrik Jarrsten, our CFO; and this time, also Ed Kim, our Chief Medical Officer, who I believe will be new to many of you, but Ed Kim will talk a little bit more about our OX390 project and why we think this is an important project, both for Orexo, but also for the U.S. We will go through the business update. I will take that. And as I said, it will come in the -- on the products under development, focusing on OX390. Fredrik will take us through the financials before I will close out with the legal update and some approach for expansion for where we think we have some future value drivers. Starting with a brief overview of the quarter. As I said in the introduction here, we have made some great progress in our pipeline, in particular, with our GLP-1 agonist or project that we have OX472, where we showed some very promising in vivo data. And also, we received a BARDA fund, which initially is worth $8 million, but could be all the way up to $51 million, where BARDA will finance the majority of our OX390 project. During the quarter, our work with IZIPRY, formerly known as OX124 has proceeded well, and we are now starting the reliability and stability testing that was required by FDA more or less on time. With regards to OX640, we have -- during the quarter, we have manufactured the first batches of AmorphOX powder with epinephrine at commercial scale. And we have continued partner discussions, but we have also, as I wrote in the CEO comments, seen some increased uncertainty around the market in the U.S. We believe that is something that will be solved, and I will come back to that a little later. Looking at the revenues. Clearly, in the Swedish krona, the dollar-Swedish exchange rate has had a strong headwind during the quarter for the company that impacted with nearly SEK 11 million, which is kind of close to 10%. But we have also seen during the quarter that the wholesaler inventory has declined in the U.S., which explains a lot of the development compared to last year. Then on EBITDA, we have a negative EBITDA, which was not entirely according to our plans, but that is very much associated with the increased value of the share price during the quarter where we are reserving for provisions for the -- for taxes and particularly around the social securities in Sweden, which is impacting negatively in the quarter, but not from a cash flow perspective, but from a P&L perspective. Fredrik will come back to that a little later. Looking at the outlook, we reaffirm the 2025 outlook. And what's worth noting is that we still believe that it's possible for us to reach our positive EBITDA number for the full year. Moving into our U.S. commercial update. We are seeing the buprenorphine and naloxone market is picking up a little pace, getting closer to 5%, but 4% growth year-over-year. And also, over the last quarter, we saw a -- a slight increase with 1%. This is particular now which is interesting is behind the scene is that the market has really been driven by the commercial segment, which is now basically on the edge of surpassing Medicaid as the largest segment in the U.S. That is important for us because of 2 reasons. First of all, the commercial segment has a lower rebate, so it's more valuable. Each patient within the commercial segment is worth much more cost than a patient with Medicaid. But also, we have and we maintain into next year unrestricted access to nearly the entire market with 99% of the volume today sitting with payers where we have no limitations in access for Zubsolv. And we have no changes expected for next year. In the public segment, we have seen Medicaid decline. This quarter actually increased a little, but at a much slower pace than the commercial segment. And we have seen in both Medicaid and Medicare that our access is nearly unchanged. There's a small, small [flat] where we've got some restrictions for 2026, but it's not really material for the company. One thing that is interesting in this space is particularly where we see our largest account is with Humana Medicare and Humana Medicare for a Zubsolv perspective, had a significant impact of two reasons. So the one is that we have seen Humana Medicare declining because they had new restrictions for certain part of their patient populations, but also that the rebate increased for that particular account. So we [cannot] -- both at lower prices, but also we saw negative volumes, which have had an impact on the company year-over-year, which is actually the main explanation behind the year-over-year negative development. From a quarter-over-quarter perspective, we're actually from a pure demand perspective, we have no major changes. We are quite stable in both Medicaid and Open and actually grow a little in some of the segments, but we do still have some negative impact from Humana and to a less extent of the UnitedHealth Group. For those of you who are new to the companies, these were the formerly exclusive contracts where Orexo had nearly the entire volumes within these accounts. But after the introduction of generics in 2019, we have seen a steady decline in the two accounts. One thing that I have shown before is a little around the inventory and this because we have a strong expectation of a buildup here in Q4. And to validate that a little, I just want to show some more interesting data here. So one is looking at the sales to pharmacies. That means that the wholesaler sales to the pharmacies is down about 1% compared to last year. Some of that is, of course, pricing when you compare to our net sales in these numbers, we also have a 4% price increase in the start of the year, but that's also something we anticipate would happen next year. From a gross sales perspective, we are also stable despite the volatility you can see here on the dark line. And we're down about 1% year-to-date. And that is despite the destocking we have seen. And I'm just looking a little closer on the inventory levels at wholesalers. This is a new picture for all of you, I believe. You can see these two peaks that are in the picture, they're both in the end of the year 2023 and also 2024. And if you look at the level of inventory when we entered 2025, it was 60% above the inventory that we have today in the end of Q3. But even just looking into the inventory in the end of Q2, it was actually 30% higher than where we are now in the end of Q3. So there has been an inventory decline, and it follows the same pattern that we've seen in previous years. So we are now expecting to see the Q4 that there will be some inventory build, which help us when we reiterate our guidance for the year that we actually believe we can hit the sales numbers that are in here and also overall for the company, hit the positive EBITDA number. Coming in under products under development, first area I will go a little into depth with is we did show some promising data in semaglutide, where we have done a nasal administration. And for most of you should be aware, and I'm sure you're following the pharmaceutical industry that this anti-obesity medications, which kind of a collective name for these GLP-1s is growing substantially. One is within obesity and diabetes, but also looking forward, there are a lot of expectations in more neurodegenerative diseases such as Alzheimer's and Parkinson's. We also see that there are areas within addiction where these have shown promising data. So it's really, you can say in one way, a drug with a very wide range of applications and where we see some of these patient segments would have benefit from a new administration form. On top of that, we also see with our dry powder formulation, we can add a lot of stability to the products. So what are some of the reasons why we believe? It's, of course, compared -- it's a small needle today that you need to take subcutaneous for most of the GLP-1s. Most of them only have an injectable [HQM] pipeline and there are a couple who also have an oral formulation, but with very poor performance in terms of bioavailability. But taking it into the nose, it's quite easy to self-administer. It's, of course, needle-free. It's a noninvasive route of administration. It will bypass the first past metabolism where you would normally, and that's why we see this low bioavailability of GLP-1 medications when they're taken orally in the GI tract. We don't see any need for refrigeration. We have data for 6 months of semaglutide in our formulation. And during those 6 months in 40 degrees heat, we have basically not seen any degradation of the active substance. So we think there are a lot of advantages coming in with the powder formulation, both from a patient perspective, from a stability perspective, and we think that can help also with improved adherence for the patients. With the data that we presented, this is a preclinical in vivo study. So I will say this is very early stage. We think semaglutide is the perfect model substance, but this could probably be applied to other peptides used with GLP-1s. Semaglutide is a very difficult peptide in the sense it's a very large peptide, but we're still showing this quite impressive uptake when we compare to the oral formulation of semaglutide with basically up to about 7x higher bioavailability using the nasal route of administration in the studies. We -- as I said before, we have continued to do stability studies, and we see minimum degradations after 6 months. And what we're doing now is that based on the learnings from this study, we will continue working on the formulation because the study was in 7 milligram --we know that 7-milligram of Rybelsus. We know some of the obesity data that we've seen from Novo Nordisk is up at 25 milligram for obesity. So we probably have to work a little on the formulation to increase the dosing also. The aim is, of course, to take this into a human trial, but we will have to look at the timeline. So it's a little early for us to commit to a timeline, but this is, of course, the ambition that we're working towards is to show that this -- we can replicate the data we've seen in dogs also in humans with improved bioavailability over the oral formulation. Then I will invite Ed into the conference, and Ed will talk a little about our OX390 project and why we think this is so important for the U.S. So Ed, the word is yours. Edward Kim: Okay. Thank you very much, Nikolaj here, and good morning, good afternoon to everybody. For those of you who may not recall, it was in April of 2023 that the White House declared fentanyl xylazine mixtures as an emerging public health threat. So that was about 2.5 years ago. And in the latest DEA National Drug Threat Assessment, which goes back over the past 3 years, the prevalence of xylazine in illicit opioid samples that are confiscated by the DEA has increased over 4x. And it's no longer a problem just in the Northeast, but it's spreading. And certainly, if you look at this heat map, has already reached significant numbers on the West Coast and it's been identified in all 50 states. Now -- it's not just how common it is now. But what we see here is that the deaths due to xylazine fentanyl overdoses continue to rise. This is a paper that analyze CDC data, which currently only goes to 2023. Now if you recall, 2023 was the first year where the total number of overdose deaths started decreasing. What you see here, though, is that in 2023, the number of xylazine fentanyl overdose deaths continued to increase. So we're also -- we're hearing this from market research as well as informal discussions that we have with colleagues and customers in the substance use disorder space that this really is a problem. And in the last 2 to 3 years, there's been emerging animal data suggesting that while xylazine is an FDA-approved veterinary product that is safe and effective when used appropriately in animals, when xylazine and fentanyl is given to these animals, in this case, usually mice or rats, it actually increases and sometimes multiplies the lethality and the opioid-induced respiratory depression. There is a paper published in 2023. It's the title on the left, which identified -- it didn't measure respiration but identified that a moderate dose of xylazine increased the lethality of fentanyl by over 100 times. So it took 1/100th the dose to kill 50% of the animals. So we believe that this is truly a public health threat, and it is growing over time. Now the BARDA partnership that we recently announced is a true partnership with this agency that is part of the Department of Health and Human Services. They're not only contributing a substantial amount of financial support, but BARDA has technical experts in all phases of drug development and public health who are at our disposal to continue to consult with us, advise us and advocate for the continued development of OX390. You heard Nikolaj mentioned that the total value is up $51 million. The current base period is going to be dedicated to the IND-enabling toxicity studies, formulation development and in-house manufacturing capabilities, and that totals $8.5 million. Based on achieving certain regulatory, manufacturing, clinical milestones, there are 4 option periods to continue the development. And these are negotiated with BARDA at each stage so that this is a staged approach to manage the risk of this program because, as you know, drug development always carries some degree of technical risk. The goal is to develop an intranasal rescue medication for use by lay persons or first responders in the community where these overdoses are happening. It will be developed on Orexo's own AmorphOX platform that you know so much about. And it will continue to leverage the existing manufacturing supply chain that we've already developed for OX124 and OX640. Back to you. Nikolaj Sørensen: Thank you very much, Ed. And maybe worth noting also is we received -- the grant was signed in the last 2 days of September, and that's also the last few days of Q2. We have not included any effect of this grant into the Q3 numbers. So you will start to see some effect in the Q4 numbers and of course, continuing into next year. What it is, is it's a cost covering. So we will basically invoice for the expenses running the project and then BARDA will cover the majority of the expenses for the project upon invoice. And the cost coverage will be recognized as other income by the company. So going on to IZIPRY. IZIPRY is, of course, you intimately connected to the same issue Ed was just talking about. Here, we have basically proceeded according to plan with our upscaling of the manufacturing. We have had some good dialogue with FDA also around the nasal device where we can now use the new nasal device without any further studies. We would say that looking at the entire market for naloxone, it's very highly competitive, and that's something we're taking into account when we're looking at the launch strategy. So we are reviewing how we can put this to the market with the least amount of financial risk to the company based on a more competitive market in the U.S. and also the need for financing some of these other projects we just talked about. We do see that the product as such and getting it approved is something that's highly valuable for the entire value chain. Every partner we're talking to is talking about the commercialization. And for those of you in Sweden, have probably seen some of our colleagues in the industry just recently have had issues with manufacturing. So manufacturing is central and I would say, the number one cause of delays of many approval processes. So that we can have a product that has been approved on a supply chain, I think, is immensely valuable for other discussions and other projects. But actually, even also some of the exceptions that we -- unique exceptions we're using for AmorphOX is something with an approved product that is also supportive evidence for some of the other products that we have in pipeline. So in many ways, I think IZIPRY is paving the way for a lot of other products moving forward. And one of them is, of course, OX640. And with OX640, we have continued to do the upscaling. We have manufactured the first batches of powder, which are now being analyzed. We have had some partnering discussions, but I will say that the data we received from the first launch of a nasal product in the U.S. and even in Europe, that launch has gone somewhat slower than some of our partners had anticipated and that have had a negative impact on these discussions where there's a little more -- let's see how the market evolves over the next quarter or two. But from an Orexo perspective, when we look at this market, we see the first product has come out with a strong growth. And we actually see from a financial perspective, some investors are seeing it's performing above expectations. But some of the industry players, maybe based on some early expectations from the company launching the product in the U.S., U.S. pharmaceuticals they find that this is somewhat slower than what they have seen. And when we are looking into this space, we're seeing it's around physicians' hesitance to prescribe before that they see real-world data supporting that a nasal delivery as -- as effective as an injectable. We know that patients in the U.S. who have allergies have quite infrequent interactions with health care. A lot of them don't see an issue in the daily day. So it's the annual meeting with the allergists, which is the time when you can get a new product. But also, from a more market perspective and something pushback is around the first ANDA that was filed in August by Lupin Pharmaceuticals on this product. So that has created some uncertainty. But if you look at the expectations by the investors, we see that the valuations are still significant. Our competitor, AIS Pharmaceuticals, actually according to the Wall Street Journal Markets have a buy rating by all analysts. We have some of the largest investors in AIS Pharmaceuticals have just continued financing with up to $250 million in the launch of neffy in the U.S. So for those who are close to the company, there's clearly an expectation that this market will go through. And from Orexo perspective, we still believe that OX640 has significant opportunity. Looking at the naloxone market, which we know very well, we saw that it didn't really take off before after 18 months. And we saw exactly the same concerns by physicians and patients. But today, I don't think anyone in the U.S. question the benefits of a nasal administration, which is probably a lead for some of the decline we have seen a number of people dying from overdose in the U.S. And we also believe that coming in with OX640, we're actually looking competitively, and we have done some market research. We know some of our potential partners have done some market research and all of that confirms that we have a very competitive product in the U.S. We still have IP until 2044, but to continue understanding the market and to get more evidence, we have started a market research using some external experts running the study in the U.S. that will be concluded during Q4 to ensure that we’re actually focused on the right market differentiating parameters of OX640 when we proceed and to confirm the attractiveness of the market. So OX640, we continue with the development. We have seen some, you can say, delay in the partnering discussions. And also there's a concern from Orexo is the attractiveness with the uncertainty of some of these partnering opportunities where if you go a little further, get more certainty around the market, we see that could be a significant value inflection for a potential partnership. Moving into the financial section, I will invite Fredrik to talk a little bit about our financial results. Frederik Jarrsten: Thanks, Nikolaj. So on Page 22, looking at revenues, if we start looking on the top part of this page, you can see that our total Q3 revenue for the Group was SEK 119 million. And the vast majority of that SEK 114 million or 96% came from Zubsolv in our U.S. commercial business. Now that's down about SEK 17 million year-over-year, mainly driven by negative SEK 11 million FX impact. But we also had lower demand in net revenue terms, primarily from the previously exclusive contracts within UnitedHealth Group and Humana. So that was about a 3% demand reduction year-over-year. Now partly offsetting this, we had a lower destocking effect versus last year that contributed to a positive SEK 2 million. In local currency Zubsolv revenue declined 4.8% year-over-year. Looking at other revenues within HQM pipeline, Abstral royalties were higher, but that's largely because Q3 last year included the negative adjustment to historic reported royalties. Edluar royalties were stable, but Zubsolv ex U.S. revenues were lower, mainly because that didn't have any tablet sales to our partner, Core Healthcare this quarter. That's following the onetime inventory build earlier this year ahead of Accord starting manufacturing in Europe. Now if we switch to the quarter-over-quarter view for Zubsolv revenue, the waterfall chart on the bottom part of the page shows that opposite to the year-over-year trend, reported net revenues in local currency increased slightly in Q3 by approximately 2% versus reported Q2 numbers that though include the nonrecurring rebate payment we had in Q2 of SEK 9 million. In SEK terms, with a negative FX impact of SEK 1.5 million, quarter-over-quarter net revenue shows only a very marginal growth, reflecting a broadly stable demand picture in the quarter, as shown in the first three bars of the chart. And working against the gross growth was also a sizable negative inventory destocking effect of SEK 6 million during the quarter, as Nikolaj previously talked about. Moving on to the next page, the P&L. We already touched on our net revenues total of SEK 990 million. FX effect was a negative SEK 12 million year-over-year. But the weakening of the U.S. dollar year-over-year has, of course, also had a positive effect on our USD-denominated costs, which account for approximately 65% of total expenses. The decline in COGS, as you can see this quarter is driven largely by this favorable FX effect within U.S. Commercial, and that was about SEK 6 million. Also improved production costs for Zubsolv. So as a result, gross margin increased from 85% in Q3 last year to 94%. On operating expenses in Q3, which landed at SEK 133 million, we're pleased to see that's down 4% compared to last year, although about SEK 12 million is coming from the weaker U.S. dollar. But we also saw lower costs from a performance perspective with lower selling expenses in our U.S. operations in relation to staffing as well as lower marketing-related costs for IZIPRY. We also had lower admin costs, mainly from reduced legal fees. R&D costs, on the other hand, though, were higher, mostly related to high costs for OX640 upscaling of manufacturing. And then we had these costs of SEK 13 million for the long-term incentive programs. Mainly related to provision for social security fees following the sharp increase in our share price during the quarter. EBITDA was negative for the quarter by minus SEK 9.8 million. And that, though, include this SEK 13 million negative LTIP impact. So if you would exclude those costs, EBITDA would be positive SEK 3 million instead. If you look at the U.S. business specifically, EBIT was an impressive SEK 38 million for the quarter, and that's up from SEK 25 million a year ago. So that's an EBIT margin of 34% and an improvement from 19% last year. Let's move to next page, cash flow. We reported negative cash flow of negative SEK 15 million for the period. After adjusting for a negative FX effect of SEK 0.8 million that resulted in a decrease in cash and cash equivalents of SEK 16 million in the quarter. Operating cash flow was negative, and that's mainly due to negative operating earnings and interest paid on the bond. Adjustments for noncash items had a positive effect, especially from the provisions related to timing of rebate payments and also from adding back these noncash LTIP-related costs we had this quarter. So by the end of Q3, cash and cash equivalents were approximately SEK 106 million. And just a reminder, at the end of Q3, we still held SEK 20 million in our own bond, which could serve as an additional funding going forward. And then we're looking at the next page, our financial outlook for 2025. These metrics are reaffirmed and specifically, EBITDA guidance remains unchanged, driven by expectations of a positive inventory impact for Zubsolv in Q4 as well as stable demand. Continued strong cost control is also expected to have a positive effect, and then we should probably also see positive impact with the BARDA award and the covering of incurred costs in Q4. However, the EBITDA outlook is related to some increased risk due to impact from non-budgeted onetime items such as the nonrecurring rebate payment we had in Q2 of SEK 9 million. Also provisions we talked about associated with LTIP program and also significant exchange rate fluctuations. With that, back to you. Nikolaj Sørensen: Thank you. Maybe a word also on the BARDA contract and OX390 million is that the -- it's covering also our internal expenses and particularly in the first phases of the project, it's really our existing staff that is working on the project. So we will have covering of salaries that we would otherwise have to finance ourselves. Among others, Ed Kim, part of Ed Kim’s salary that you listened to him earlier today is also covered partly by this award by BARDA. So a short legal update, the one process we still have ongoing, never ending is the Department of Justice, where we have not really any material movement during the quarter. What is worth saying is the U.S. system with U.S. prosecutors, which are the one leading these processes, that's political appointers on the U.S. prosecutors are political appointees. And that process has been going on during the quarter, and that actually was a change of the appointed U.S. prosecutor in the district that we worked with. And they really need to be confirmed before we think we can make any movements here. This is of course a process that is taking unnecessary time and also money, and it's something we would like to resolve, but we would need to have a U.S. prosecutor in place to have that discussion. So looking at the future, we can say we have three buckets that we really focus on. One is our commercial assets where, of course, we have some of the revenue of royalty-generating assets like Abstral, Edluar, which are still there even though on a low level. But the most important is Zubsolv, where we are continuing to work on how can we optimize the value contribution to Zubsolv long-term. On top of that, we, of course, have IZIPRY, which we're now putting into the semi-commercial space here as we are making good progress towards a -- an approval. So where we would then look at what is the right go-to-market strategy, both looking at the market potential and the amount of expenses needed. But really value optimizing those are important to enable the next areas, which is running our own projects, which today consists of 3 projects, one is OX390 that you heard, one is OX472 and GLP-1s and the last one is OX640. On top of that, we have the AmorphOX technology and how we can apply that to other -- in partnerships and to other companies' APIs. And really with the goal to become the partner of choice in nasal powder delivery technology, we believe today, we have the world's leading nasal powder delivery. We think the powder has a lot of advantages over a liquid nasal delivery, and this is something we working to apply together to -- on partners, in particular, in large molecules where we think this can move from injectables to nasal delivery, among others to vaccines, which is in our partnership with Abera. And we also have other nondisclosed partnerships where we're testing on larger molecules using our technology. With that, I will open up for Q&A. Operator: [Operator Instructions] The next question comes from Samir Devani from Rx Securities. Samir Devani: Probably easier if I just give them to you one at a time. So I guess kicking off on a couple of the positive developments that we've seen over the quarter. On OX390, the $8 million initial period, how long will that cover? And can you make any further comment on how 390 will be differentiated from existing rescue medications? I don't think you've disclosed yet the active and maybe when we might hear about that. Nikolaj Sørensen: So I will take the first and then Ed can answer your second question around the differentiation and difference. So, the $8 million is lasting until the first gateway, and that is right now planned to be in the first half of 2027. So this will cover the expenses until the first half of 2027. With regards to the differentiation, Ed, could you give a little comment on how this is different than other naloxone and nalmefene rescue medications? Edward Kim: Sure. Thanks, Nikolaj. Thanks for the question. So what the preclinical evidence shows is that naloxone does not have a beneficial effect on the respiratory depression associated with xylazine. So there is nothing else available. This will be specifically targeted to reverse the toxic negative effects of Xylazine and drugs like it. So it will be a first-in-class. Samir Devani: And when do you think you'll be in a position to tell us what that active is? Edward Kim: I'll leave that to Nikolaj. I think he's going -- we're not prepared certainly today to disclose specifics around the API. Nikolaj Sørensen: So, Samir I think we will do that in relatively soon, but I would say, in the start of next year. It's a little around the supply chain. It's around the IP and others that we want to get control of before we will disclose the details. Samir Devani: Okay. That's totally fair enough. And then just maybe moving on to semaglutide. Obviously, this is a noncore area for you. And I'm just, again, thinking about -- obviously, you've got OX640 on the sort of partnering table. When do you think you'll have enough -- or what further investment do you need to make before you think you could be in a position to partner this? Nikolaj Sørensen: So I think [indiscernible] OX472 or semaglutide is an interesting one because it's -- we see it as a two -- I can say, two-legged opportunity. One is, of course, semaglutide as a product, where that one will -- before you can get to market will be subject to semaglutide API patents, which I believe some of the large market is in the early 30s before they go. So there is an opportunity in semaglutide. And before you get to a partnering around that, I think there could be opportunities short-term, but really to get through human data, I think, will be an important milestone to have the first human data showing that it actually works not only in vivo in animal testing, but also in humans. I think that would be a great value inflection point and I also think the expenses to take us to that level is not that high. On the other leg, which is more other GLP-1s where you know today, Novo Nordisk and Eli Lilly, they have an oral formulation. There are some of the other, but not a lot who have oral formulations, but there are basically a large number of companies who have peptides for GLP-1s, which don't have access to an oral or nasal formulation. And that could give an opportunity which is coming much faster to test whether GLP -- we could have the product tested on that GLP-1, which, of course, then in that end, you would have to decide whether you can run both legs or you will have to decide which one you're going on. But we really think from a partnering with a pharmaceutical company with semaglutide, the real value inflection point is likely to come with the first human study. The other ones could come earlier than that. Samir Devani: Okay. That's great. And then just on my final question, just on IZIPRY. I just wanted to double check that nothing has changed since we last spoke in terms of the likely time line for the FDA filing, which you've said is mid-2026. Just wanted to confirm that's your current expectation. Nikolaj Sørensen: That is still our current expectation. Operator: The next question comes from Klas Palin from DNB Carnegie. Klas Palin: The first one relates to OX390. And I wonder if you are perhaps willing to share some further details about the clinical program needed to get an approval for this, what you have had kind of discussions with the FDA and the scope of such trials perhaps? Nikolaj Sørensen: I will refer that to Ed with keeping the communication line as we have discussed, that we can't go into too much details, but on a high level, Ed, you can maybe answer this. Edward Kim: Sure. Thanks, Nikolaj. Yes, good questions. We are -- because OX390 is a new chemical entity, we are going through the IND-enabling studies currently. So our initial conversations with the FDA are going to be around getting to first in-human. So the clinical program and the pathway to developing this important rescue medication, those conversations need to be had once we're getting closer to our first-in-human studies. Klas Palin: Okay. And just to confirm, the device that you are intend to use there, is this very similar to the one for IZIPRY? Edward Kim: Yes, that's the plan. Klas Palin: Okay. Perfect. And then just jump to OX640. You are sort of downplaying the expectations of a near-term partnership, at least what I'm hearing. And just wonder, is the negotiations on pause awaiting this market research analysis or what's going on? Nikolaj Sørensen: So there's a limit to how much I can go into individual discussions, but we still have ongoing discussions with interested parties. I think some of the opportunities, there's a question mark from us whether the attractiveness of entering a partnership with that market uncertainty is attractive or we would have more value to take this a step further while monitoring the market development. So there's a little on the value that you can get from the product partnering today, but there is still companies interested in the game with different setups. So there are still opportunities for partnership in relatively short-term, but I think the company needs to decide on what level of risk are we willing to take because we think there could be more value taking this a step further if we believe the market development is in line with some of the valuation indications for AIS Pharmaceuticals and some of their larger investors believe how this will evolve. Klas Palin: Great and then my last question is about OX472 then. You talked about perhaps conducting a human trial before partnering. Is it possible to provide some sort of time frame when you perhaps could enter clinical trials with this compound? Nikolaj Sørensen: I think we -- so this has gone very, very fast for us. Of course, we've been working on the formulation and it has been even in the pattern since quite some years back, but the real work started this year. And what we are discussing internally and we are looking into the market opportunities is what is the target profile that we're looking for. For example, is the dosing that you need for obesity is likely to be higher than what you need for some of the other indications. But that also increase the risk in the study if you have to go very high in dose, then that could lead to more frequent dosing through the nose and that comes with some other potential issues that we don't know. So there's a discussion where we're leading and that comes from two sides. One is to understand the market and the clinical profile that we think is desirable. And the other one is purely formulation to say how can we work on excipients and how much can we get into one dose of the nasal spray. So there is some formulation work that we would like to conduct, probably followed up with some in vivo study before we move into humans with what you can say, a targeted formulation. So we will have to wait a little to see where that is going. But it is to run this first exploratory clinical study in humans is not a large study, and it's not something that's going to be quite -- very time consuming. So we could make a decision and we could run it relatively fast. As you might know, we have manufacturing capacity for clinical trial material internally. So we don't have to wait for slot times at a [indiscernible] manufacturer. Klas Palin: Okay thank you so much, that’s what is all for me. Nikolaj Sørensen: Thank you. And I believe we have received some questions on the telephone conference here. So I will go through those here. So have you applied or intend to apply for these FDA vouchers giving the company much shorter time line. So one to two months of approval for drugs of importance for the U.S., for example, OX390 and OX124. For OX124, we have tested to see if we could get accelerated approval. We think we came in a little late because there are other alternatives on the market. So we didn't have that pathway available. For OX390, that could be a possibility. And that, of course, is something we're exploring. What's worth noting here is, as said, BARDA is not only a financing. They are an active part in the development. BARDA is part of the HHS in the U.S., which is under the same department as the FDA. So I think even here, there are opportunities for us to work with BARDA to find the most optimal pathway to approval in the U.S. So that is something we expect. Then there's a question whether OX390 will be a single-agent product or we could combine it with naloxone together with an alpha-2 receptor antagonist. So alpha-2 is the target for xylazine for those of you who don't know that. And the use of a combination product in the U.S. is from FDA perspective, it's a hard sell. It requires quite a lot of data to combine the two products. Often, it will be easier to have some kind of combination package or you will have work with pharmacies to make a combination of the two agents. We will have to see how we would -- what is kind of the emergency steps you would take when you see someone who is potentially overdosed with an – with xylazine or similar agent and then decide what is the best distribution way. But to combine it in one nasal spray, we believe will be a very complicated process from an FDA perspective. Then we have a question here, which is around whether we think inhaled semaglutide would be a better solution than the oral products in clinical trials given -- or production in clinical trials given higher toxicology discontinuations seen in trials such as those led by Viking, which is another company just for those of you who don't know who works with a GLP-1. Do you see interest from new investors, including international investors, given potentially huge market opportunity coming from that product. We think there's a lot of advantages of using a nasal delivery of a GLP-1. Working with inhaled could be, but in my -- and here, I'm not a physician. It is, of course. So Ed, maybe I will take it to you later. But I would just say, in general, I have seen that inhaled products come with more tox stories, at least historically than what we have seen with others because you get it into the lung and the long-term toxicology effect of that is difficult to predict. And I at least have been part of withdrawing a product from the market because of late coming toxic indications when from real-world data. The nasal distribution or nasal, at least with our powder formulation with a 7x higher uptake to the nose without the issues that you have with using an oral tablet, what we've seen with Rybelsus is very low bioavailability and also high variability among the individuals who receive Rybelsus and taking it through the nose, at least in our in vivo study, we saw much more consistent data from the nasal delivery than the oral delivery. So we think there could be a great advantage from a nasal delivery over the oral on the inhaled, I'm not that sure. I don't know, Ed, if you have any thinking around inhaled semaglutide. Edward Kim: Yes, Nikolaj, I think you've stated it all that the inhaled route of administration carries some risks. And what we want to focus on is derisking as much as we can the development of novel formulations. And we believe that the intranasal derisks it the most. Nikolaj Sørensen: And then there was a second part of the question, which is around whether we have seen interest from new investors, including international investors, given potentially huge market opportunity. What I can see is that our share price have increased, even though today it probably came with some disappointment. I can understand from the commentaries, it's a lot of that is related to OX640, where we, of course, also had hoped and had some qualified expectations that we could have come to an agreement this autumn. But I would say that the quarterly data and also the patent litigation that [indiscernible] ended up with came as a surprise to both us and at least the lead potential partner that we have during the summer. But looking at what has happened after the GLP-1 announcement and also OX390, which one of them is driving, it's a little hard, but I actually think they might are very complementary with the GLP-1s having a huge market potential and OX390 actually give us some financial stability in the company by supporting a development program with a lot of the staff that we're working with, we are a small company, of course, the same people who have to work on both the GLP-1s and also on the OX390. And what we have seen is increased, significantly increased volumes. We have seen more block trades in the stock than we have seen recently. Some of the block trades are managed by international banks or banks which are at least a part of the banks not present in Sweden. And that indicates in my view that it's either some very affluent private individuals or more likely it's an institutional investor that is buying the share. We have not seen that in our statistics. And I think that is due to many international investors don't disclose their holdings. So we just see that we have an international custodian bank that hold an additional amount of shares. Then we normally would see that there are -- some of these investors will call us and ask for individual presentations. And I will say that we have had more inbound interest in the company after the GLP-1s from international investors than we have seen for quite a while. So that's maybe different indications that the hypothesis presented here in the question that we have new investors and that there has been an increasing interest is correct. And then we have another question, which is, I think, came before the conference, which is around whether Orexo is involved in Abera's long-term study for its influenza vaccine? What data was presented quite recently, which was quite promising? The short answer is no. We were not part of this long-term study. But I also think looking at how you design these studies, it would be natural for Abera to actually focus on the delivery method with the least noise, and that is probably working with an injectable or the way of delivering the product that they have done for most of their studies. That said, we still have an intimate dialogue with Abera. We have discussions about future studies that we could conduct together. So this is just supportive of Abera's vaccine that they have some great data that they could show. For us, that is very good news because it, of course, help us in the discussion with Abera for where the powder could add value to Abera's vaccine candidate. So -- but we have not been involved in the study. With that, I believe we have no further questions. And I would thank all of you that you listened in. I hope this is a new partner we work with for the conference call from our side. It seems to have been worked very well. I hope it's the same for you. So thank you so much for your time, and you're welcome to reach out to Orexo if you have any further questions. Thank you. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Nikolaj Sørensen: Thank you so much.
Operator: Good morning, and thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kerry Group Third Quarter 2025 Results Webcast. [Operator Instructions] I would now like to turn the conference over to William Lynch, Head of Investor Relations. Please go ahead. William Lynch: Thank you, operator. Good morning, and welcome to our Q3 2025 trading update call. I'm joined on the call by our CEO, Edmond Scanlon; and our CFO, Marguerite Larkin. As usual, Edmond and Marguerite will take you through our presentation, and we will then open the lines up for your questions. Before we begin, please note the usual disclaimer on our presentation regarding forward-looking statements. I will now hand over to Edmond. Edmond Scanlon: Thanks, William, and good morning, everyone, and thank you for joining our call. So moving first to Slide 4 and my overview comments. We delivered a good performance across the first 9 months of the year with volume growth well ahead of our markets, combined with strong EBITDA margin expansion. Beginning with revenue, volume growth for Q3 and year-to-date was 3%, which represented a strong end market outperformance. Looking at this firstly by region, we achieved good growth in the Americas, supported by new product launch activity with both Europe and APMEA delivering sequential volume growth improvements in the third quarter. From a channel perspective, foodservice growth of 4.1% was driven by good innovation activity across new menu items, seasonal launches and LTOs. Growth in the retail channel was supported by increased retailer brand innovation and nutritional enhancement renovation. And by technology, we had strong performances across savory taste and Tastesense Salt and sugar reduction technologies as well as enzymes, natural extracts and proactive health technologies. Moving to margins. We delivered strong EBITDA margin expansion of 90 basis points in the period, primarily driven by Accelerate Operational Excellence, and we continue to see good margin expansion opportunity in front of us. On guidance, we remain on track to deliver our full year guidance. And finally, before we move to the performance review, I'd just like to update you on a few key strategic developments during the period. In recent weeks, we opened our new state-of-the-art Biotechnology Centre in Leipzig, Germany, which will play an important role in supporting future, fermentation and biotransformation innovation for the food and beverage industry. In the period, we initiated our Accelerate 2.0 program, which will focus on footprint optimization and enabling digital excellence across the organization. And we also continued to invest and develop our footprints, capacity and capabilities across our regions through the period. I'll now hand you over to Marguerite for the business review. Marguerite Larkin: Thanks, Edmond, and good morning, everyone. Moving to Slide 5 and the business review. Firstly, volume growth in the period of 3% represented continued strong end market outperformance, as Edmond mentioned. Pricing of 0.2% reflected overall input cost inflation. On the EBITDA margins, we delivered strong margin progression of 90 basis points in the period and 80 basis points in the quarter, primarily driven by cost efficiency, operating leverage and product mix, along with the contribution from acquisitions and disposals. Growth in our end-use markets was led by the Bakery, Snacks and Dairy end markets. Foodservice delivered growth of 4.1% despite soft traffic in places. Retail performed well overall, given increased customer focus on improving the nutritional profiles of their products. And volumes in emerging markets increased by 5.3% in the period, led by a strong performance in Southeast Asia. Turning to Slide 6 now and our performance by region. Firstly, in the Americas, where we had good performance across the region with volume growth of 3.6% year-to-date and 3.5% in the third quarter. Within North America, growth was led by snacks through Kerry's range of savory taste profiles and Tastesense Salt reduction technology. Growth in the retail channel was supported by renovation activity across global, regional and retailer brands with growth in foodservice led by good innovation activity with quick service and fast casual restaurants. And in LatAm, we had strong growth in Brazil and Central America, led by snacks. In Europe, volume growth was 0.7% in the third quarter, 0.4% year-to-date. This included a good performance in foodservice through seasonal and new launch activity with retail volumes reflecting soft market dynamics in Western Europe. Growth in the region was led by beverage through Kerry's integrated taste technologies and proactive health ingredients. Turning to APMEA, where our volume growth was 4.1% in the third quarter. This was primarily driven by strong growth in Southeast Asia with solid growth in the Middle East and Africa and volumes in China remaining challenged. Foodservice delivered strong volume growth with coffee chains and quick service restaurants and retail channel volume growth was driven by Kerry's authentic savory taste profile. Growth in our end market was led by bakery through food protection and preservation systems as well as reformulation activity in areas, including cocoa. Turning to the components of our reported year-to-date revenue bridge on Slide 7. Volume growth, as I mentioned, was 3%, with pricing up 0.2%. Transaction currency was favorable 0.2%. Translation currency was adverse 3.6% given the movements in the U.S. dollar and emerging market currencies versus the euro. And the acquisitions net of disposals was a net decrease of 0.8% in the period. Finally, to cover off a number of other matters on Slide 8. Net debt at the end of the period was EUR 2.2 billion, reflecting cash generation, capital investments and the share buyback program. We initiated Accelerate 2.0 as planned during the period, and we are pleased with the progress made. Firstly, in executing the footprint optimization strategy across Europe and North America, including the commencement of some site closures and the disposal of some associated business activities. And secondly, we have started the rollout of a number of digital initiatives we have been piloting over the last 18 months within our manufacturing operations and commercial activities. On input costs, while there is overall variation within our input cost basket, we are currently looking at limited input cost inflation for the full year. On currency, our outlook remains unchanged for a 4% to 5% translation currency headwind in the full year. To summarize, we delivered a good overall financial performance in the period with volume growth combined with strong margin expansion. And with that, I'll pass you back to Edmond. Edmond Scanlon: Thanks, Marguerite. So moving to our full year outlook on Slide 9. Our strong end market volume outperformance in the period demonstrates the strength of our strategic positioning across our markets, channels and customer base. And looking to the remainder of the year, while recognizing a heightened level of market uncertainty, we remain well positioned for volume growth and strong margin expansion as we continue to support our customers as an innovation and renovation partner. As I noted earlier, we're maintaining our full year adjusted earnings per share guidance of 7% to 11% constant currency growth. And with that, I'll now hand you back to the operator, and we look forward to taking your questions. Operator: [Operator Instructions] Your first question comes from the line of Patrick Higgins with Goodbody. Patrick Higgins: A couple of questions, if that's okay. Firstly, just in terms of, I guess, guidance, obviously, you reiterated the 7% to 11% on EPS. But just in terms of volumes, I think at H1, you said around 3%. Is that kind of reiterated as well? And I guess following on from that, at the H1 point, you noted end markets were broadly expected to be broadly flat this year. How has that developed since then? Could you maybe talk through the moving parts by region? And then my next question is just around the innovation pipeline. Obviously, you've been pretty consistent about the strength of that through this year. How has that developed since H1? Have you seen any delays or kind of smaller-than-expected launches just given the challenging kind of consumer backdrop? I'll leave it there. Edmond Scanlon: Thanks, Patrick. Firstly, on the volume outlook for the remaining of the year, no change to what we said at the half year. So we're expecting volume growth to be circa 3% in the full year. In terms of, let's say, market kind of, let's say, conditions or kind of what we're seeing by region maybe. The reality is there is a lot of variability out there at the moment. North America, the consumer backdrop has remained challenging. And I think we can all see that from different kind of market data out there or traffic data on the foodservice channel being slightly back year-on-year. In LatAm, the market in Brazil has improved versus last year, but we've seen the opposite in Mexico. And in the APMEA region, market demand in Southeast Asia has been healthy for us. I think it's fair to say Indonesia has been the standout performer for us. But when we look right across Southeast Asia, it's been quite strong, maybe the only exception being Vietnam. And I think what's really important for us is our ability to be able to pivot resources at pace and at scale. Then in terms of innovation, I guess, look, we called out a year ago that penetration opportunity and the scale of that penetration opportunity is quite significant. And as we look at the progression of our project pipeline between then and now, we've seen the impact of that penetration opportunity really, I suppose, contributing to our pipeline and contributing to the increase in scale in our pipeline over the course of the last 12 months. There has been quite a bit of launch activity in Q3, that will continue into Q4. Some of the performance of that launch activity in the market has been mixed in places. But overall, I would say the level of innovation that we have seen come through both on the retail channel and the foodservice channel is quite strong overall. The main driver being the penetration opportunity, but we've also seen customers, let's say, for instance in foodservice, be it the larger players or the smaller players step up the level of innovation with the larger players more focused on protecting market share and securing market share and bringing innovation to the menu to do that, whereas the smaller players have been, let's say, more into the zone of scaling their businesses and expanding their businesses through store openings. And on the retail side, we've seen significant step-up in activity on private label, which drives, I guess, the local and regional customer segment within our customer segmentation overall. Operator: Your next question comes from the line of Alex Sloane with Barclays. Alexander Sloane: Two questions from me, if that's okay. Clearly, it's too early to talk about '26 precisely. But relative to where we are today, would it be fair to assume that APMEA growth next year can be closer to the medium-term target if China improves? And perhaps you could give a bit more color on the trends and outlook that you're seeing in China, obviously, still challenged in quarter 3. The second one, in quarter 3, you had sort of more balanced growth between foodservice, which obviously slowed a touch on the traffic, but improved growth in retail. Would you expect that sort of balance to remain the case for the remainder of the year and into '26? Or should we expect foodservice to resume its historical outperformance? Edmond Scanlon: Maybe taking the second part of your question first. As you say, let's say, the performance across foodservice and retail has been, let's say, foodservice is slightly ahead of retail as we sit here at the moment. But as we look out, we would feel that foodservice will still continue to outperform retail like it has in the past. I guess the headlines that we're seeing maybe coming from the larger players or the traffic doesn't reflect the level of activity that's going on within the channel. I would say, from an innovation perspective, whether it's LTO, seasonal offerings, whether it's new taste profiles being launched onto the menus, a lot of innovation around chicken and pork, let's say, the whole poultry category, beverage continuing to be quite strong. Yes, the message really on foodservice is the headlines probably doesn't just capture the level of activity that's going on right across the channel. Then maybe on APMEA for a minute. Look, our expectations here going forward over the coming, let's say, quarters and over the medium term is that the APMEA region will continue -- our expectation is that the APMEA region will continue to be in that high single-digit volume growth zone. Obviously, we're not there at the moment but we do remain very positive on the region. We have developed our business significantly there in recent years, particularly in the Middle East and Africa. We continue to invest in that region with new capacity coming on in Jeddah. We brought new ground in the manufacturing facility in Turkey. We're opening a new state-of-the-art technology and innovation center in Dubai. And that's really our expected standout performer here going out into the future in the Middle East and Africa. China has been more challenging in recent times. Absolutely no doubt about that. We have, let's say, slightly adjusted our strategy in China in that we have seen some of our customer base in China look more to regions outside of China to grow their business. So we have made a slight pivot there from a personnel perspective and from a strategic customer engagement perspective, bringing them proactive concepts whereby they can target regions outside of China to grow their business and specifically develop products for, let's say, Southeast Asia and the Middle East and Africa, albeit these products will be produced in China. So a slight pivot there. We're not sitting back waiting for the market to change in China. We're being very proactive really to try and drive our business forward there and to get as proactive as we possibly can with our customer base. Operator: [Operator Instructions] Our next question comes from the line of Ed Hockin with JPMorgan. Edward Hockin: I've got 2, please. My first one is on Europe. So you saw a bit of an improvement in volumes growth in Q3, whether you could outline what drove that uptick and how durable it is as we think about Q4 and next year? And also with the appointment of Marcelo as the Head of that region, what is it do you think needs to be changed or developed or fixed within the region to get it on a more sustainable growth footing, after a couple of years that have been close to flat? And my second question, at the group level, as we think about 2026, and obviously, it's early days to be talking about. But in the absence of an end market improvement, supposing end markets remain flat, what kind of levers do you see or what kind of areas to draw our attention to that could drive growth improvement versus this year? Or is it your view that in a flat market then a circa 3% is the right level for 2026 volumes as well? Edmond Scanlon: Yes. Maybe first on the Europe question. I would say, look, our expectations for Europe and bear in mind, when we talk about Europe, we're talking about the developed Europe situation. Basically, our expectation is to be in that 1% to 2% volume growth range. And we are -- and we will progress towards that range in the, let's say, upcoming quarters. It's going to be a slow burn in Europe, though, nonetheless. I mean the market is, let's say, fairly challenged. It is a market that we're expecting to have a more proactive approach in that market. We've always been proactive in Europe, but we're expecting Marcelo to bring that level of pro-activity that we would typically have in emerging markets into Europe and to build on the good work that's already been going on in Europe. We're not calling out any change in strategy in Europe. It's a continuation of the strategy. We believe we have absolutely the right strategy for our customer base in Europe and to grow our business in Europe. It's about, let's say, doing a refresh in terms of our approach to the market, bringing that emerging market mindset of intense productivity to the customer base. Then in terms of maybe the outlook, I would go back to the point, Ed of, let's say, the market is going to do what the market is going to do. I guess we're really focused on driving our business forward. When I look at the scale of our pipeline versus where it was a year ago, it is significantly ahead of where it was a year ago. And I would call out maybe 3 big areas. The penetration opportunity that I've talked about many times in the past, that reformulation from a nutrition perspective, from a cost perspective and even from a sustainability perspective, these are all factors that are driving our business forward. There are challenges around availability of raw materials, et cetera, et cetera. All these things are driving our business forward, driving penetration, contributing to the growth that we're getting in the business. And the major, I suppose, reformulation opportunities, specifically in North America are in front of us. The entire discussion around, I would say, the [ maha ] or the potential front-to-pack labeling or let's see how things play out in North America. But that's still very much in front of us. States are doing their own things, but there hasn't been a federal intervention yet in North America in terms of exactly the direction of travel. If and when that happens, we feel that's a further underpin of growth and a further underpin of opportunity for us going forward into the future. Foodservice, there's -- we've seen a significant step-up in the level of value offerings and value meals and just our customer base being hyper focused and they're doing that through the lens of new launches, be it LTOs or seasonal offerings, but they've also stepped up their value offerings. And we expect that to continue over the coming quarters, and we're extremely well positioned as it relates to that channel. And the third area I'd call out is, let's say, that private label opportunity, whereby retailers are being quite aggressive in terms of trying to bring new products to the market that are not just national brand equivalents. They are trying to bring high-quality products to the market to grow categories. So I guess as we look out into the future, we feel that despite the challenging market, there are several factors there that we feel quite good about as we look out into the quarters in front of us. Operator: Your next question comes from the line of Fulvio Cazzol with Berenberg. Fulvio Cazzol: My question is really on the EBITDA margin, which is up 90 basis points in the first 9 months, up 80 basis points for the third quarter. So my question around that is, well clearly, it's developing probably better than what you would have anticipated at the start of the year, whether you can confirm that? And if that's the case, could you maybe just highlight for us what's driving this? Is it that you're seeing incremental cost-saving opportunities that you're unlocking? Or are you just executing faster some of the efficiencies? In other words, the 19% to 20% target that you've got for 2028, are you likely to achieve that earlier? Or is there going to be a bigger potential upside on the EBITDA margins? Marguerite Larkin: Maybe I'll take that question. So firstly, we are pleased with the strong margin expansion of 80 basis points in the quarter. In terms of the stronger performance in the quarter, it's mainly due to the phasing of benefits from Accelerate Operational Excellence and portfolio developments, so slightly ahead of our expectation. I would say, though, there is no change to the full year expectation for margin expansion of 70 basis points or greater. We are well on track to deliver that margin expansion in the current year. And then in terms of the -- looking forward to the margin expansion over the next number of years, we are happy that we have outlined a clear margin target of 19% to 20% by 2028. We have a clear pathway in terms of delivery of that target, and we're pleased with the progress that we've made in terms of commencing the Accelerate 2.0 program, which will be a strong underpin of delivery of that margin expansion over the next couple of years as well as continued expansion from mix and operating leverage. Operator: Our final question comes from the line of Cathal Kenny with Davy, Research. Cathal Kenny: Two questions from my side. Firstly, just going back to private label, Edmond. Just want to delve into that a little bit more. Which region are you seeing most activity on innovation? And which region are you best placed to execute on that opportunity? And then the second one is just on enzymes. I see it comes up in the press release a couple of times. Just wondering in terms of the end market applications you're focused on in terms of bringing that technology to bear. Edmond Scanlon: Maybe talking about enzymes first. I mean I think the 2 end-use markets that we are seeing, I would say, performance that is maybe even slightly ahead of expectations is on dairy and bakery. Firstly, on dairy, we have quite a strong offering into the dairy channel, let's say, historically, but lactose intolerance is a growing kind of need out there in the market, and we are extremely well positioned to be able to take advantage of that opportunity, and that opportunity is quite global. The second area is in bakery, whereby enzymes and our enzyme capability is a key tool to the toolbox, in our toolbox in terms of freshness and food protection and preservation. And again, that is a demand from our customer base across both foodservice and retail channels. And that is about basically bringing freshness and food protection and preservation in a clean label way to the bakery end-use market. And yes, we recently announced a new Biotechnology Centre in Leipzig, Germany, and we're expanding our footprint in Ireland as it relates to manufacturing enzymes, both on the fermentation side and on the packaging side. Then on private label. Private label is not new to us here in Europe or, let's say, in Ireland and the U.K. We have, let's say, a strong track record in private label, let's say, emanating from this region. And we have, I suppose, with that level of experience we have and expertise that we have in private label, we've deployed those capabilities into North America. It is in North America that we have seen a step change in terms of engagement with retailers around targeting certain categories where actually they want to take a leadership position in certain categories where they feel there's been a lack of innovation in recent years and they feel that there's, let's say, plenty of scope from a pricing perspective to bring really high-quality clean label, more nutritious food and beverage products into categories that they want to lead, and we're very well positioned to be able to actually enable them. From an overall, I suppose, business model perspective, it is quite similar in terms of approach as we take for foodservice. So we feel well positioned to be able to take advantage of this opportunity and expect that private label performance and private label, I suppose, market expansion will continue in North America. And yes, we feel good about that as we look forward into the coming quarters. Operator: And that concludes the question-and-answer session. I would like to turn the call back over to Kerry for closing remarks. William Lynch: Thank you, everyone, for joining us on the call today. If you do have any follow-ups, please do reach out, and we just want to wish you a good day.
Denise Reyes: Good morning, everyone, and welcome to Nemak's Third Quarter 2025 Earnings Webcast. I am Denise Reyes, Nemak's Investor Relations Officer, and I am pleased to host today's call along with Armando Tamez, Nemak's CEO; and Alberto Sada, CFO, who are here this morning to discuss the company's business performance and answer any questions that you may have. As a reminder, today's event is being recorded and will be available on the company's Investor Relations website. Armando Tamez, our CEO, will lead off today's call by providing an overview of business and financial highlights for the quarter. Alberto Sada, our CFO, will then discuss our financial results in more detail. Afterwards, we'll open for a Q&A session, which participants may join live or submit written questions via the Q&A function. Before we get started, let me remind you that information discussed on today's call may include forward-looking statements regarding the company's future financial performance and prospects, which are subject to risks and uncertainties. Actual results may differ materially, and the company cautions you not to place undue reliance on these forward-looking statements. Nemak undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise. I will now turn the call over to Armando Tamez. Armando Tamez Martínez: Thank you, Denise. Hello, everyone, and welcome to Nemak's Third Quarter 2025 Earnings Webcast. This quarter, our top line remained stable compared to the same period of last year, supported by the continued resilience of the automotive industry. EBITDA declined 15% year-over-year, ending the quarter at $143 million. This change is primarily explained by a high comparison basis in the same quarter of last year when we benefited from one-time commercial adjustments as well as the typical seasonality of the third quarter, when summer shutdowns and major maintenance activity take place. While these dynamics were particular to this quarter, for the full year, we expect to achieve the high end of our EBITDA guidance, at $600 million with capital expenditures totaling $290 million. Our focus remains firmly on executing our strategic priorities and positioning the company for long-term value creation. In line with this commitment, we recently announced the agreement to acquire the Georg Fischer Casting Solutions' automotive business, a milestone that will mark an important step forward in strengthening Nemak's capabilities and a significant advancement in our strategic journey. Georg Fischer is an outstanding player in the industry and its capabilities are expected to be highly complementary to Nemak. This transaction is well aligned with our strategic focus and technical strengths in lightweighting. It will enhance our business profile and be accretive from both a commercial and operational standpoint. It will also expand our innovation platform and extend our reach in R&D, particularly in high-pressure die casting technology. Additionally, we will be able to broaden our product offering, particularly in high complex aluminum and magnesium parts for the e-mobility, structure and chassis application segment, which continues to offer ample potential for future growth. From a geographic perspective, the integration of Georg Fischer Casting Solutions will increase our footprint in Europe and China. The transaction perimeter includes: 2 manufacturing plants in Austria, 2 in Romania, a tool shop in Germany, an R&D center in Switzerland, 3 plants and a tooling shop in China and 1 facility currently under construction in the United States. This new plant will be dedicated to highly engineered structural components, and it is expected to begin operations during the second half of 2026. In addition to footprint diversification, this transaction will provide a valuable entry point to serve important Chinese OEMs, including BYD, Denza, Geely, Hongqi, Li Auto, Nio, Xpeng and Zeekr among others. Beyond the opportunities with new Chinese customers, this acquisition will also positively impact business with our existing Western customers. This includes Audi, BMW, Jaguar-Land Rover, Mercedes Benz, Porsche, Stellantis, Volkswagen and Volvo, among others, reinforcing our commitment to serve a diverse and globally-recognized customer base. As part of this transition process, we're eager to welcome a highly skilled and experienced management team, along with a dedicated workforce of approximately 2,500 employees. We look forward to the integration phase ahead and the opportunity to combine the strengths of 2 competitive and complementary cultures. The transaction remains subject to customary regulatory approvals across the various regions involved. While we expect to close by the end of the year, the timeline continues to follow the procedures established by the respective regulatory bodies. Moving on to commercial activity. During 2025, we have secured $250 million in awarded business across all our regions, 80% in the ICE powertrain segment and the remainder in the e-mobility, structure and chassis applications segment. These new programs will mostly reuse existing assets, deploying capital efficiently while continuing to deliver high-quality, cost-effective solutions to our customers. The new contracts also highlight the ongoing relevance of the ICE powertrain segment, whose lifecycle has been extended due to the current electric vehicle adoption trends. In line with this, we have also experienced robust demand for V8 and I-6 engines in North America. In other recent developments, I am proud to share that 4 of the 10 vehicles recognized in the 2025 Wards Auto Best Engines & Propulsion Systems include components manufactured by Nemak. This recognition reflects the trust that leading OEMs place in our technology as well as our ongoing contribution to efficient, high-performance propulsion systems. Notably, this year, hybrid powertrains dominated the list, underscoring the growing relevance of electrified solutions. Moving on to innovation. The integration of artificial intelligence is becoming increasingly essential to our efforts in this area. At Nemak, we are successfully embedding AI into our business practices to enhance decision-making and operational efficiency. A clear example of this is the evolution of our patented NORIS system, which stands for Nemak Online Realtime Information System. This system has been running successfully for over a decade as [indiscernible] information system. Recently, we introduced NORIS GPT, a new AI-powered layer that significantly enhance the system capabilities. Our manufacturing processes involve managing a wide array of variables and parameters. NORIS GPT enable us to quickly turn data into actionable insights, combining this enhanced information with domain expertise to deliver real business outcomes. This advancement reflects our ongoing commitment to innovation and our ability to leverage cutting-edge technologies to heighten our competitive position. Turning to our sustainability agenda. We continue to make meaningful progress in advancing responsible practices across our operations. Our commitment to the Aluminium Stewardship Initiative remains strong. And this quarter, we achieved 2 additional certifications under the performance standard at sites in Europe. In addition, our melting center in Mexico was certified under the Chain of Custody Standard. This is a key milestone in producing certified alloys for our casting facilities in the country. These milestones demonstrate our continuous commitment to integrating sustainability across our value chain. Moving forward, we plan to have the majority of our sites certified in the near future. This concludes my remarks. Thank you for your attention. I will now hand the call over to Alberto. Alberto Sada Medina: Thank you, Armando. Good morning, everyone. I will begin with an industry overview of the regions where we operate, followed by a discussion of our consolidated and regional financial results for the third quarter of '25. During the third quarter, the top line remained stable at $1.2 billion, on the back of sustained pricing and a favorable product mix. EBITDA decreased by 15% due to the effect from commercial negotiations in the third quarter of 2024, which elevated the comparison basis and extraordinary expenses during the period. During the quarter, we generated positive free cash flow on the back of operating results and a prudent approach to capital expenditures. In turn, this allowed us to maintain our net debt-to-EBITDA ratio at 2.5x. Turning to the automotive industry. During the third quarter, light vehicle sales in the United States showed a 5% year-over-year increase on a SAAR basis to 16.4 million units. This was mainly due to a pull-ahead effect prior to the phase out of the Inflation Reduction Act EV incentives and tariff potential impacts. Light vehicle production grew 3% year-over-year to 3.9 million units, driven by sustained demand. On a SAAR basis, light vehicle sales in Europe grew 2% year-over-year to 15.7 million units. OEMs continue to introduce less expensive trims, therefore, improving affordability. Light vehicle production in the region remain at 3.4 million units, similar to the same period of last year. In China, light vehicle sales on a SAAR basis increased 7% year-over-year to 28.6 million units, propelled by trade-in programs and government incentives. Light vehicle production increased 2% year-over-year to 7.4 million units, driven by stable domestic sales. In Brazil, light vehicle sales decreased 1% year-over-year and production increased by 3%, driven by export activity. Moving to Nemak's results. During the third quarter, Nemak's volume was 9.6 million equivalent units, in line with the same period of last year. Volume was driven by stronger production in North America and partially offset by lower production in Europe. Revenue was $1.23 billion, stable when compared to the same period of last year as updated pricing and the appreciation of the euro offset the absence of the one-off effect from commercial negotiations in '24. During the quarter, EBITDA was $143 million, a 15% decline year-over-year. This was due to the lack of commercial negotiations versus the same period of last year and launching expenses associated with the ramp-up of volumes and mix changes in certain platforms. In turn, the unitary EBITDA margin was $15 per equivalent unit. Operating income decreased to $26 million from $73 million in the same period of last year. The decline was mainly attributable to lower EBITDA and impairment charges of $17 million related to non-operating assets, primarily in North America. Net income increased to $25 million from $5 million in the same period of last year, reflecting lower net financing expenses and a favorable tax effect from foreign exchange movements, particularly the appreciation of the Mexican peso against the U.S. dollar, which more than compensated for lower operating income. The combined effect of disciplined execution and reduced financial expenses and capital expenditures allowed us to generate during the quarter, a free cash flow of $18 million. This is aligned with the business seasonality and our expectations for the year, and places us in a good position to continue reducing our leverage. In turn, by the end of September, net debt was $1.59 billion, $173 million lower than in the same period of last year. This is a testament to our disciplined capital allocation and operating efficiency, which more than offset the foreign exchange impact on our balance sheet from euro-denominated liabilities. Looking forward, debt reduction remains a key priority. At quarter end, the net debt-to-EBITDA ratio was 2.5x compared to 2.9x at the end of the third quarter of last year. Conversely, the interest coverage ratio was 4.9x compared to 5.0x in the same period of 2024. Our cash position at the end of September was $328 million. Capital expenditures during the quarter totaled $70 million, 27% lower than the same period of last year, in line with our disciplined investment strategy that prioritizes projects with adequate profitability. Moving on to the regional results. In North America, revenue rose 2% year-over-year to $651 million, supported by higher volumes. EBITDA decreased 14% to $67 million, mainly due to the absence of prior year commercial negotiations and additional costs associated with the volume ramp-up of specific platforms. In Europe, lower volume drove the 4% decline in revenue to $401 million. This decrease was partly offset by improved pricing and depreciation of the euro. In turn, EBITDA decreased by 26% to $50 million, mainly due to the lower volume and the absence of one-off customer payments following commercial negotiations on inflation compensations in 2024, which more than offset the benefit from the appreciation of the euro. In the Rest of the World, revenue increased by 3% to $175 million as lower volume was more than offset by an improved product mix. EBITDA of $26 million was 11% higher, driven by performance and product mix improvements. In relation to the acquisition of Georg Fischer Casting Solutions' Automotive Business, the enterprise value is $336 million. At closing, we will cover a payment of $160 million with existing cash. The remaining of the enterprise value is structured through a combination of holdbacks not related to performance, but subject to the absence of contingencies as well as a portion of assumed operating and financial liabilities. This portion of the transaction will be funded by a vendor-financing agreement. Overall, we continue to focus on maintaining profitability even when facing a very dynamic landscape in the automotive industry. We believe the diversification and potential synergies of the Georg Fischer acquisition will lead us to strengthen our value proposition. In conjunction with our customary disciplined execution, we believe these measures will enhance our business profile, delivering value to our stakeholders as we continue to make strides in our commitment to deleverage and create sustainable value for the future. I will now turn the call back over to Denise. Denise Reyes: Thank you, Alberto. We are now ready to move on to the Q&A portion of the event. Denise Reyes: [Operator Instructions] The first question is from Jonathan Koutras from JPMorgan. Jonathan Koutras: So, I have 2 questions on my side. The first one is on the recent developments on the supply chain side. There was the fire at the Novelis aluminum plant in New York last month, impacting Ford, which is an important client for Nemak. The question is, if you expect any impact or headwind in the fourth quarter volumes stemming from this aside from the typical seasonality? And the second question, Alberto flagged on the $17 million impairment in non-operating assets in the quarter. So just wondering if this is still related to the recent investments on the EV side and if we should expect a similar impairment in terms of magnitude during the fourth quarter or not? Armando Tamez Martínez: I will answer the first question related to the Novelis fire. Certainly, we have been in conversations with most of our customers that were, let's say, supplying metal sheet, aluminum metal sheet from Novelis. So far, we have not seen any volume reduction that has affected us. Actually, we continue with very strong volumes in North America. Our customers, in conversations with them, are telling us that they have other sources. Novelis is a supplier of the Detroit 3 and other OEMs. They told us, in the conversations that we have had with them that they have other suppliers and that they are looking how to expedite also the rebuild of the facility that was affected by this fire in the New York state where the plant of Novelis was located. But so far, we have not seen any effect. We will monitor this very closely. And in the event that we see any type of volume reductions, certainly, we will take the necessary steps to align our cost structure. Alberto Sada Medina: And related to your second question, Jonathan, related to the impairments. Yes, as you correctly pointed out, these impairments are related to assets, most of them associated with projects on the EV side that have not been used to the extent possible. And going forward, I mean, we will continue reviewing our asset base to make sure that we have the right accounting for all the assets that are currently being used. And those that will have no use would certainly be written off as we negotiate with our customers for compensations in that case. We review that, I mean, all the time. So, we will report in due course if we have more impairments to do in the fourth quarter. Denise Reyes: We have another question from Stefan Styk from Barclays. Stefan Styk: This is Stefan from Barclays. I have a few, if you don't mind. First one is, can you quantify the specific EBITDA impact this quarter from last year's commercial negotiations that you didn't have this quarter? Alberto Sada Medina: Well, yes, as highlighted, last year, particularly the second half was heavily influenced with commercial negotiations. And as we discussed, I mean, those were very intense processes with our customers that we concluded along the year. So, part of that was reflected on the third quarter of last year. Unfortunately, we cannot provide specific numbers on the potential benefit from those claims as those were confidential negotiations with our customers. But I can tell you, as indicated that -- yes, a portion of the difference between last year and this year is associated to that comparable that is favorably reflected on the third quarter of last year. We also experienced a little bit of additional costs in certain operations, particularly in North America, which also explains part of that difference. Stefan Styk: Okay. On the acquisitions front, just curious how you're thinking about the EBITDA contribution on a run rate basis after you close? I think you disclosed historical EBITDA figure with the purchase memo. But should we expect it to be above or below this? And what sort of ramp-up period are you expecting for integration after closing? Armando Tamez Martínez: Yes. Thank you, Stefan. As we have indicated already, we're in the process of getting all the necessary approvals by the different antitrust places. And once we get the full approval, which is expected to be at the end of this year, and this is what we are getting from our legal staff, once we have this -- let's say, complete approval on this acquisition, we will provide a guidance of the combined 2 companies, the Nemak and the new Georg Fischer acquisition. We expect to have that one, let's say, available to share during the first conference call that we will have scheduled for January. Stefan Styk: Okay. And then if I could just sneak in one more. On the new business that you disclosed, the $250 million in annual revenue going forward, can you give a bit more color on the contract structure on the volumes there and the length of the contracts? And then that's all for me. Armando Tamez Martínez: Yes. Approximately out of this $250 million worth of new business, 80% is related to extensions and new contracts or volume increases on the ICE or internal combustion engine platform. Those are very interesting contracts. And the interesting part is that we will use existing assets to produce these parts. And this is related, Stefan, to the change, especially here in North America related to the slowdown of the electric vehicle adoption. And some of our customers are increasing, let's say, production of big ICE and hybrid vehicles, and this is why we're getting additional volumes. And as I indicated, the beauty of this is that most of that will be absorbed with existing assets without any additional CapEx. And in the contracts, certainly, we're signing an extension and also with the new pricing that will be beneficial for Nemak. Denise Reyes: The next question is from Alfonso Salazar from Scotiabank. We'll move on with the next question. The next question is from Alejandro Azar from GBM. Alejandro Azar Wabi: I think I have 3 or 2 if I may. On the transaction with GF Castings, if you can give us a little bit more color on the contingencies, after you mentioned you are going to pay $160 million when the transaction closes and the rest over a 5-year period related to some contingencies. If you can give us more color on those related to what is? And my second question is also on GF Castings. If you can -- if the contracts that you're acquiring from this company have similar terms to the ones that you have in Nemak, I mean, pass-through, et cetera? And the third one would be, with this transaction, how does your capital allocation priorities change, thinking specifically on the refinancing or the maturing of the bond, if I'm not mistaken, that you have in 2028? And those are my 3 questions. Armando Tamez Martínez: Let me respond to first question, Alex, related to the structure of the acquisition of Georg Fischer. As you correctly pointed out, and as I indicated before, we are due to pay $160 million upon closing, upon getting the approvals from the regulatory agencies. And after that, we have a combination of -- a structure, which is a combination of holdbacks, vendor financing and assumed liabilities from the operation. So, it's a combination from all of those elements. I cannot disclose you all the elements because of confidentiality restrictions with the seller. But what I can tell you is that related to those contingencies, those are the type of elements that you normally have on an agreement, which have to do with unknown items or things that have not been adequately reflected on the structure or on the due diligence that may pop up in the future. So, I would say it's nothing different than what you would expect. And the structure certainly allows us to do an efficient execution of any contingency if they materialize. Alejandro Azar Wabi: And those contingencies have a 5-year, let's say, period? Alberto Sada Medina: Yes, what we have is 5 years. If any of the identified, let's say, conceptual contingencies materialize in the 5 years, we will deduct part of that from the pending payment. If they do not materialize, we'll pay them back to the seller. Armando Tamez Martínez: Related to the contracts, as it's normal practice when we're making an acquisition is that we are not allowed by the antitrust authorities to take a deep look at the contracts. However, in conversations with the management team from Georg Fischer, certainly what they are indicating is that they have similar contracts to the ones that we have in which they are getting the contracts for the lifetime of the vehicle line on the products that they are getting and also normal payment terms, not only in Europe, but also in China. This is what they have shared with us without getting into any specifics. Once we get, let's say, the approvals, certainly, we will take a look at all the specific commercial contracts and compare those against us. And certainly, if we see any difference, we will address those directly with the customers. Alejandro Azar Wabi: Okay. My worry was actually on China. Armando Tamez Martínez: Normally, in China, for the benefit of all the entire supplier base is that the Chinese government implemented a new policy in which the maximum payment terms now stands at 45 days, which is normal for China. As you know, we have already operations in China, and these are the normal payment terms that we have. And even with the Chinese customers, they have, let's say, similar contracts to the ones that we have with Western customers. Alejandro Azar Wabi: Okay. And on the capital allocation priorities? Armando Tamez Martínez: On the capital allocation, one of the things that we are expecting, Alex, is that since the 2 combined companies, once we get the approvals from the regulatory authorities is that we will use existing assets to reduce significantly the CapEx going forward. And in some of the due diligence that we have made, we have seen already the opportunities that eventually once we get the approval, we will capitalize in reusing existing assets and try to go forward, at least in our projections to reduce significantly the CapEx going forward, so that the company will generate higher free cash flow and we will be able to reduce our leverage sooner than originally expected. Alejandro Azar Wabi: Okay. Can I make one more question? Armando Tamez Martínez: Yes. Alejandro Azar Wabi: From your press release, you mentioned, if I'm not mistaken, it was 2024 or 2023 that Georg Fischer generated $91 million in EBITDA terms. I'm just curious, I understand that that $91 million does not include some plants in the U.S. So, is there any way that you can share with us that plant, how much of the production of Georg Fischer represents? Or I'm trying to get the potential from that point, let's say, like that. Armando Tamez Martínez: Yes. Just clarifying, Alex. Today, Georg Fischer is building a new facility in the state of Georgia. This is a state-of-the-art facility. Actually, we have visited all the facilities, and we were very impressed. This is a brand-new greenfield facility built in the state of Georgia to support one very important German OEM. And certainly, that facility will be operational in the second half of 2026. In this transaction, we excluded, or they excluded out of the deal a few facilities, 1 iron casting that was located in Germany that is not part of the deal and 2 small plants located in Italy that were for a different industry that -- those were not part of the transaction. Once we get the approvals from the regulatory bodies, we will be able to share exactly what is the projection on the EBITDA of the combined companies, Alex. Denise Reyes: There are no more live questions. We will now move on to the written question. We have 2 questions from Alfonso Salazar from Scotiabank. First, how do you see the outlook for Europe in 2026? And second, given the risk of a strict control of rare earth exports from China, how is Nemak and its main customers preparing for potential bottlenecks? Armando Tamez Martínez: Yes. Thank you, Alfonso. Certainly, this is new information that our customers are trying to, again, understand if there is any potential implications. I think they are trying also, as we speak, to look for alternatives for these semiconductors. And so far, I think that we have not seen a major effect related to this at this point in time. But certainly, we will monitor this very closely. And as always, part of our operational model, in the event that we start seeing a decline in volumes, we will immediately align with the normal cost reduction activities that we have as part of our business model. Denise Reyes: Thank you, Armando. There are no further questions at this time. And with that, we conclude today's event. I would just like to take this opportunity to thank everyone for participating. Please feel free to contact us if you have any follow-up questions or comments. This does conclude today's earnings webcast. Have a good day.
Operator: Good day, and thank you for standing by. Welcome to PLS September 2025 Quarterly Activities Report. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, PLS Managing Director and CEO, Dale Henderson. Please go ahead. Dale Henderson: Thank you, Maggie. Good morning, and good evening. Thank you for joining us today. I'd like to begin by acknowledging the traditional owners on the land in which PLS operates. Here in Perth, we acknowledge the Whadjuk people of the Noongar Nation. And we also recognize the Nyamal and Kariyarra people on whose land our Australian operation is located in the Pilbara region. We pay our respects to their elders, past and present. Joining me today is Flavio Garofalo, our Interim CFO; and Brett McFadgen, our Chief Operating Officer. We are also joined by other members of our senior team. This call will run for approximately an hour. We'll begin with the presentation on our September quarter performance, then move through market commentary before finishing with Q&A. We'll address questions submitted via the webcast at the end of the session. Now starting with some opening commentary. The September quarter delivered a strong start to FY '26, demonstrating the benefits of our expanded operating platform and our contact ore focused operating strategy. We've continued to build on the momentum from a transformational FY '25, demonstrating resilience and operating discipline through stable production of just under 225,000 tonnes of spodumene concentrate, improvement in lithium recovery to deliver a record quarterly average of 78% lithium and a 13% reduction in unit costs to $540 per tonne FOB. These results highlight the continued optimization of the P850 operating model and the benefits of our deliberate strategy to increase contact ore feed to maximize unit cost reductions. They also affirmed that the Pilgan Plant is now operating in steady state, delivering the scale, efficiency and cost performance we envisaged when we embarked on our expansion journey. Pricing conditions improved materially with a 20% uplift on the prior quarter, contributing to a 30% increase in revenue to $251 million. As the largest 100% owned and operated hard-rock lithium producer, every price improvement flows directly to PLS' bottom line, providing strong leverage to any recovery in lithium pricing and reinforcing our position as a sector's pure-play leader. Underlying operating cash flow remained positive after adjusting for customer receipt timing, and we closed the quarter with $852 million in cash, maintaining a strong balance sheet and significant flexibility to invest through the cycle. Now let's please turn to Slide 2. Beginning with a reminder of our strategy. Our strategy is underpinned by a clear vision to create sustainable value for our shareholders while strengthening PLS' position as a leading long-life and low-cost producer in the global lithium supply chain. Turning to Slide 3. PLS is the world's largest independent hard-rock lithium producer. That independence remains one of our greatest strengths, giving us agility and responsiveness needed in a fast-changing global market. Our foundation asset is a high-quality, long-life Pilgangoora operation in Western Australia. Through our P680 and P1000 expansions, we've established a leading low-cost processing platform that delivers greater scale, efficiency and operational flexibility, firmly positioning PLS at the lower end of the global cost curve. Beyond, beyond Pilgangoora, we are continuing to build a truly diversified growth platform with downstream exposure through our POSCO joint venture in South Korea and early-stage international optionality through the Colina project in Brazil. Importantly, our balance sheet remains exceptionally strong with $852 million in cash and $625 million in undrawn cash (sic) [ credit ] facilities, providing the flexibility and confidence to invest, grow and lead through all stages of the lithium cycle. Turning to Slide 4. Some of the key highlights for the quarter include production of 224,800 tonnes, up 2% quarter-on-quarter, reflecting strong operational recovery and consistent plant performance as we operate the expanded Pilgan Plant at a steady state. Unit operating costs, as mentioned, a 13% reduction to $540 per tonne FOB, delivering clear cost leadership and highlighting the operational leverage of our optimized production platform. As it relates to pricing, a 20% uplift in realized pricing and a 30% increase in revenue, resulting in positive cash margin even as we continue to make modest investment in our growth and improvement programs. Importantly, this performance marks a disciplined and confident start to FY '26, validating our strategy of building scale, efficiency and flexibility to capture margins through the cycle. Now with that, I'll now hand over to Brett to take a deeper look at the operation. Brett McFadgen: Thank you, Dale. If we move to Slide 5. Starting with safety, our 12-month rolling TRIFR was 3.08 at the end of the September quarter. We also achieved 2.95 quality safety interactions completed per 1,000 hours worked, well above our target of 1.6, demonstrating strong leadership engagement in promoting a positive safety culture. This outcome reflects the ongoing work we're doing to build and strengthen our safety culture across the site. While this improvement is encouraging, we recognize there's always more work to do to ensure every team member goes home safe and well after every swing. Moving to Slide 6. The September quarter delivered strong disciplined operational outcomes across mining, processing, cost and sales performance. Total material moved increased due to improved operational efficiencies. The transition of the mining fleet to the owner-operator model is ongoing, supporting greater cost control and flexibility. Processing. Lithium recovery of approximately 78% demonstrates the sustained benefits of the P1000 expansion and the reliability of our processing platform. Our operating strategy of maximizing contact ore feed through effective utilization of the ore sorting capability is delivering expected unit cost benefits. The proportion of contact ore processed will be progressively increased over the remainder of FY '26 to leverage our ore sorting capability and maximize unit cost reductions. Together, these initiatives across mining and processing continue to unlock more capital efficiencies and lower unit operating costs. A unit FOB cost of USD 540 a tonne or USD 353 a tonne delivers a 13% reduction on the June quarter, a significant improvement driven by scale, efficiency and our optimized operating model. While the Pilgan plant now operating in steady state, we've delivered on our vision of a larger, more efficient and lower cost operation. The expanded platform provides us with a greater operational flexibility, improved resource utilization and the ability to adapt to changing market conditions. Most importantly, this transformation positions us to capture margin through the cycle, enabled by industry-leading ore sorting technology, improved efficiency and strong cost discipline. Thank you. I'll now hand back to Dale. Dale Henderson: Thanks, Brett. Moving now to Slide 7. PLS has built a portfolio of strategic growth options designed to drive long-term shareholder value through flexibility, diversification and market responsiveness. The Ngungaju processing plant remains in care and maintenance for FY '26, providing immediate low capital restart capability when market conditions improve. This is a unique source of latent capacity and optionality within our portfolio. Our P2000 feasibility study is progressing well, assessing the potential to expand Pilgangoora's production capacity to more than 2 million tonnes per annum. Study outcomes are expected in FY '27 with the development timing dependent on successful technical results, funding readiness and, of course, a sustained improvement in lithium pricing. In Brazil, drilling continues and study optimization work is advancing with outcomes targeted for the June quarter '26. This program will help define the development pathway for the Colina project and strengthen our presence in one of the world's most prospective emerging lithium provinces. Together, these initiatives demonstrate a balanced portfolio-based approach to growth, leveraging Tier 1 assets, global reach and disciplined capital allocation to create value and optionality through the cycle. Moving now to Slide 8. Our chemical strategy continues to advance, providing exposure to value-added lithium chemical products and enhanced supply chain diversification. As it relates to P-PLS, our joint venture continues to make steady progress with customer certifications. Production has temporarily moderated to batch processing, reflecting near-term softness in the South Korean battery sector following reduced U.S. EV incentives and higher tariffs during the quarter. Encouragingly, P-PLS, our joint venture, is receiving interest from a number of new customers across existing and additional geographic regions, particularly those seeking to diversify lithium chemical and battery supply chains outside of China for EV mobility and energy storage applications over the medium term. Moving to midstream. Construction of our Mid-Stream Demonstration Plant remains on schedule with completion target for the December quarter this year. This project will provide valuable technical data and commercial insight to inform future midstream participation opportunities. Lastly, relating to our Ganfeng partnership, work on the joint -- downstream partnering study with Ganfeng has progressed during the quarter. More than 1,000 industrial sites have now been assessed with detailed evaluation continuing on a select few. We are in discussion with Ganfeng to extend the agreement's sunset date to December '27, providing additional time to assess market conditions, shortlist sites and the overall investment case. Together, these initiatives demonstrate a measured capital disciplined approach to downstream integration, building capability and partnerships today that will position PLS for greater diversification and value capture across the lithium supply chain in the future. Now with that, I'll now hand over to Flavio for an overview of our financial performance. Flavio Garofalo: Thank you, Dale. Good morning, and good evening to everyone joining us today. Please turn to Slide 10 for a summary of the group's key financial metrics for the quarter ended 30 September 2025. The September quarter delivered strong financial results, demonstrating the operational leverage of our optimized Pilgan plant across all key metrics. Group revenue of $251 million was 30% higher quarter-on-quarter, driven by a 24% increase in average realized price to USD 742 per tonne for SC5.3% and stable sales volumes. This demonstrates our ability to capture improved market pricing while maintaining operational consistency. On the cost side, FOB unit operating costs decreased 13% to $540 per tonne, with CIF unit cost also down 11% to $645 per tonne. This improvement reflects the benefits of higher production volume and scale efficiencies delivered through our expanded platform, along with ongoing optimization initiatives. Our cost reduction focus is now embedded in the culture at PLS and is driving strong performance across all areas. We closed the quarter with a cash balance of $852 million, providing financial flexibility for strategic opportunities and maintaining our balance sheet resilience. Turning to Slide 11. Slide 11 shows a cash flow bridge for the September quarter. During the September quarter, our cash balance declined by $122 million from $974 million to $852 million. This reduction was primarily driven by capital expenditure of $78 million and working capital time effects. Working capital movements included approximately $50 million in customer receipts due in the early December quarter and $32 million in final pricing adjustments on the June quarter shipments. Cash margin from operations of $8 million was supported by improved pricing, but impacted by these timing effects. Cash margin from operations less mine development costs and sustaining CapEx was negative $19 million. The capital expenditure was $78 million on a cash basis and $55 million on an accrual basis, comprising infrastructure and projects of approximately $28 million, mine development of $20 million and sustaining capital of $7 million. Despite these working capital impacts, our balance sheet remains robust with total liquidity of $1.5 billion, positioning us well to navigate the current market conditions and invest strategically through the cycle. I'll now hand back to Dale. Dale Henderson: Thanks, Flavio. Turning to Slide 13. Global geopolitical dynamics continue to highlight the strategic importance of secure and resilient critical mineral supply chains. PLS is actively contributing to the policy discussions, from recent participation in the Austrade Critical Minerals Delegation trip to the U.S. to consultations on the proposed strategic reserve and through direct engagement with policymakers in Canberra. Next week, I'll represent PLS at the APEC CEO Summit in South Korea. This is another opportunity to help position Australia as a reliable low-cost supply of critical minerals to global markets. We welcome the Commonwealth government's continued commitment to developing Australia's critical minerals sector and will contribute to -- and we will continue to contribute to the policy discussions shaping its long-term success. Australia has an incredible opportunity to expand its role in the global lithium and energy transition supply chain. But the race for market share is well underway. Other jurisdictions are moving fast with coordinated policy and public investment to attract capital and downstream manufacturing. To remain competitive, Australia must match that ambition through targeted investment and shared infrastructure that lowers the cost for all across the industry and helps secure our position in this global race. Turning to pricing. Conditions remain volatile but improved from the prior quarter with both spodumene and lithium carbonate spot prices recording double-digit gains. During my recent visit to China last month, every one of our customers reiterated confidence in the long-term outlook and expressed strong interest in securing additional supply from PLS. That continued demand and engagement underscore confidence in the sector's fundamentals and the prospectivity of our product supply. Moving to Slide 14. Now turning to demand. Lithium fundamentals remain robust. Global EV sales continue to expand, up around 9% quarter-on-quarter and 26% year-to-date, with penetration now approaching 30% globally and more than half of all new vehicles in China being EVs. Battery energy storage installations are also accelerating, up nearly 40% year-on-year, strongly supported by China's rapid renewable energy build-out. From a policy perspective, China's supportive regulatory framework continues to underpin domestic storage growth. While recent U.S. tax credit changes may create short-term noise, this doesn't alter the long-term global demand trajectory. In short, the demand story remains intact and PLS with its 100% ownership model and strong balance sheet is positioned to capture full benefit as markets recover. Moving to Slide 15. Battery energy storage is now the fastest-growing segment and lithium demand rising just 3% of total consumption in 2020 and around 17% today according to BMI. BMI's latest forecast projects about 323 gigawatts of new BESS installations in calendar year '25, 50% growth year-on-year. If achieved, this is an extraordinary growth rate. China remains the main catalyst. In September, the National Development and Reform Commission released a major action plan targeting 180 gigawatts of a new type of energy storage by '27. This represents more than USD 30 billion in new investment and 140% increase from China's installed base at the end of calendar year '24. At the same time, a second demand driver is emerging, the rapid build-out of AI and data center infrastructure. These facilities require large-scale instantaneous power support, making grid-connected BESS a critical enabler of reliable infrastructure. Recent announcements from Google, NVIDIA and Meta illustrate this trend with each committing tens to hundreds of billions of dollars to new AI-driven data center capacity. McKinsey & Company recently projected that global data center investment will reach nearly USD 7 trillion by 2030 with more than USD 4 trillion allocated to computing hardware. That level of capacity -- sorry, that level of capital intensity underscores how central data center resilience and therefore, dependable power and storage is becoming to the global economy. Together, policy-driven renewable storage expansion and the digital infrastructure boom are expected to contribute significantly to continued growth in lithium demand, a dynamic that reinforces PLS' long-term opportunity to supply and partner across the global energy storage value chain. In summary, BESS or B-E-S-S demand is being driven by 2 significant emerging drivers: one, aggressive renewable energy storage policy, particularly in China; and two, the rapid expansion of digital infrastructure. Together, these forces are reshaping the energy and technology landscape, underpinned by strong long-term fundamentals for sustained lithium demand. The broader lithium market continues to demonstrate resilience and depth with total demand growing at around 30% CAGR since 2020. This, of course, is driven by accelerating electrification across mobility, energy storage and emerging technology sectors. While regional policy changes may create short-term noise, the global trajectory remains firmly positive. For PLS, this environment reinforces the strength of our strategic positioning and customer relationships across key markets, giving us the agility and confidence to navigate near-term volatility while capturing long-term value as the industry expands. Lastly, for my closing comments, I'd like to leave you with a few key reflections. The September quarter marked a strong and disciplined start to FY '26, confirming that the expanded Pilgan plant is operating in steady state with improved efficiency, lower cost and consistent performance. Financially, the business remains robust. Underlying operating cash flow was positive after adjusting for sales timing impacts, demonstrating our ability to generate cash even in a volatile pricing environment. We remain on track to deliver our FY '26 guidance, reflecting the strength and resilience of the platform we've built. Near-term pricing remains volatile, but the long-term fundamentals are unchanged. Structural growth drivers from electrical vehicles to stationary energy storage continue to strengthen and current prices are not -- and current lithium prices, I should say, are not incentivizing new supply, which suggests tighter markets ahead. With a scalable technology-enabled operating base, a strong balance sheet and a globally diversified growth portfolio, PLS is well positioned to lead through the cycle and capture value as market conditions improve. As the largest 100% owned and operated hard-rock lithium producer, every price improvement flows directly to our bottom line, providing strong leverage to any recovery in lithium pricing. Our confidence is anchored in what we can control, disciplined execution, operational excellence and strategic agility, the hallmark that define PLS and make us a partner of choice in global supply chains. Now with that, I'll hand back to Maggie to open the floor for questions. Thank you, Maggie. Operator: [Operator Instructions] Our first question comes from the line of Jon Sharp from CLSA. Jonathon Sharp: First question is just on the uplift in recoveries. You averaged -- in FY '25, you averaged 72% this quarter. We saw quite an uplift to 78%. You've recently commissioned the ore sorters. Can you just quantify how much of that improvement was directly attributed to the ore sorters versus anything else? And do you expect recoveries to continue to rise potentially into the 80s percent as you sort of iron out any issues with those ore sorters? Brett McFadgen: Yes. Thanks, John. It's Brett here to answer that question. And yes, the recoveries have been attributed to the work that we did with the P1000 and the P680. So ore sorting plays a tremendous part in that, but it's not limited just to the ore sorting. That's been the big lever, but the site team and corporate technical team have been working on a range of initiatives through the rest of the circuit there that are working in combination with the ore sorting. What we will be doing, though, in the next quarter and then in the next half is increasing our contact ore ratio and really leveraging the ore sorting circuit just to try to flex that cost in the mine right through to the mill and get those cost efficiencies. So recoveries are always a big focus of us, but I wouldn't be expecting them to get into the 80s we are getting closer. And certainly, with our geometallurgy work, we're well on track to make the most out of our recovery circuit. Jonathon Sharp: Okay. Just second question, I know you've answered this before, just on Ngungaju. And I know you've said that you expected to remain in care and maintenance in FY '26. But can you just remind us of what price signal or duration of price strength would trigger a restart there? Dale Henderson: Yes, John, thanks for revisiting that one. So we haven't given a price guidance around that. But really, the way we -- what we need to see is obviously a considerable lift from current pricing, probably something north of USD 1,200 per tonne. But more importantly, we want to make sure that, that's sustained. But as I say, we haven't picked a threshold value on that. Operator: Next question comes from Hayden Bairstow from Argonaut. Hayden Bairstow: Great operating result. I just wanted to touch on the ore sorter a bit more. Can you sort of give us some rough metrics when you run 1 million tonnes through that, are you getting a modest grade uplift as well into the process plant. So what does that -- what does the 1 million tonnes through the ore sorter provide you with feed for the actual mill? Dale Henderson: Yes. Thanks, Hayden. That's a -- yes, that's quite a complex question that I could sort of say depending on what we're feeding it. But that is a large part of the work that we're doing with the geometallurgy to make sure that we're getting that blend right. So we're maximizing those ore sorters, and we're getting the cleanest feed that we can through to the plant. So it's not always a strict percentage, but what we're doing is really looking at what's coming out in the mine plan, how do we optimize that through the ore sorters and make the best feed for the plant. Hayden Bairstow: Yes. Okay. Brilliant. And then just on the product grades moving around a bit. Just keen to sort of understand who's taking all the product at the moment. I presume there's a little bit of spot sales going on. But is the movements in the grade reflecting who you're selling it to each quarter? Or is it just more what's coming out of the back end of the plant? Dale Henderson: Yes. It's more of the latter. It's not related to customer requirements. And as it relates to where is the flow of sales going to. At this moment in time, it's largely offtake, while we had a little bit of spot, but not a lot. But yes, the grade fluctuations are not driven by customer requirements. Operator: Next, we have Rahul Anand from Morgan Stanley. Rahul Anand: I've got 2 questions. Look, the first one is on POSCO and your P-PLS JV. Obviously, you've pared back some of the volumes going into that contract to [ 150 ] this year, just given the ramp-up in demand for hydroxide, as you've mentioned in the release. That contract sits at over [ 300 ] going into future periods, [ 315 ] to be precise. So just wanted to understand the makeup of that contract. Is that take-or-pay? Is there flexibility within that? And I mean, how are you thinking about that option that you have coming up to buy into that plant? That's the first one. I'll come back with the second. Dale Henderson: Yes. Thanks, Rahul. So as it relates to the offtake requirements, we -- and across all of our offtakes, we finalize sort of the year ahead in advance of the year we're heading into. So we do that across the board, including with our joint venture partner: P-PLS. So -- as sort of outlined in the release, so we've adjusted those volumes for the year ahead. And of course, bearing in mind that there's sort of 2 things at play. This is about bringing online and introducing a whole new chemical facility in a new market. So as per our releases, there's been a lot of development around qualifications, which a lot of that is sort of serving into new growth markets, in particular, the U.S., that's part of it. The other part, which is less of a bearing is obviously ramp-up progress, which we're quite comfortable with. But it's really those 2 things which are guiding volumes. The team is in the thick of the planning process right now for the budgets and outlook for next year. So there could be some further adjustment to come. As it relates to the equity election option that we have coming up to go from 18% to 30%, the timing of that is not due until July next year, which in the lithium industry is a very long time away. So between now and then, we'll continue to monitor the market and take a view of what we want to do close to the time. Rahul Anand: Got it. Okay. Look, -- and just on the second one, I wanted to touch a bit more on the recoveries. I guess, the missing piece of the puzzle here is obviously the head grade that went into the plant for ore processing, and I think that's what Hayden was alluding to as well in terms of his question. Are you able to give a bit of a color perhaps on how that plant grade changed given the elevated recoveries because obviously, just trying to figure out sort of how the recovery performance goes for the rest of the year. You flagged that recoveries will reduce. So I just wanted to kind of square that circle, if that's possible. Brett McFadgen: Yes, sure. The head grade, we weren't high grading, just to make that clear that, that was not an intentional high grading of the mill feed. Mill feed was no different to it has been and also just part of the mine plan. The recoveries will take a slight impact, but mainly for the -- more of the contact ore that we're intending to feed over the next quarter. We really need to maximize those ore sorters to take as much of the contact ore around the main ore body as we go through our mine rather than stockpiling it and rehandling it later. So that's the bigger impact to the recoveries. Dale Henderson: I might just add to Brett's commentary in the space. Look, obviously, an absolutely cracking lithium recovery result. And as mentioned, a record for us. And as to how that got achieved, there's actually multiple processing levers, which have been worked on simultaneously by Brett's team. And across several, we've had fantastic progress. And it's a real credit to Brett, his team, the operating team and the projects team. And just to rattle off a few, as it relates to the processing plant, the ore sorting, of course, gets a lot of focus, but it's not just that. There's a series of online analyzers at the front of the circuit, the back of the circuit. Separate to that, the team has been working on different reagent regimes. There's also different monitoring systems in the float circuit, some optical type gear, which has been deployed. There's been further work around tying mineral variation, in particular, crystal size and grind size in the circuit and a new level of sophistication has entered the operating strategy. So the sum of all of these things is contributing to the improved results that you see. And if I just circle back to the idea of to what extent did you scale up contact or not, that answer is complicated, and it depends where you're at in the mine plan. It also depends what stockpiles are available or not available. So in short, it's a complex equation with a lot of subcomponents summing through to the result that you see. So I appreciate that's a longer explanation, but this is the art and the science that the team have been working on for years. Operator: Next, we have Austin Yun from Macquarie. Austin Yun: Really good operational results against the backdrop of a tightening lithium market. Just a follow-up question on the Ngungaju plant. In update, you expect the plant to remain in care and maintenance in the financial year '26. I'm just keen to understand the rationale and thinking behind it. Does that mean you don't believe the price is going high up and fast enough in the next 9 months. So the base case is care maintenance? Or it's actually because you believe you can squeeze a bit more from the current Pilgan plant given the good performance and also really well. I'll circle back. Dale Henderson: Sure. Thanks, Austin. Thanks for your question. And the short answer is no. I wouldn't read through. That's our view of the market outlook. Austin, as you know, lithium market has got an ability to surprise is what we've seen historically. Given these incredible growth rates, we could well see a pull-through and a rapid turn. All of that's possible. We've seen it before. In which case, we will respond accordingly. So if the market turns rapidly and we think it's game on, well, of course, we'll flick the switch. We'll bring Ngungaju back to life, and our shareholders will enjoy the benefit of that. So yes, so don't take a read through in terms of that type of guidance. Austin Yun: The second one, just a quick one. It seems like lithium is a hot topic and part of the critical minerals discussion. And do you as Pilbara Minerals expect any support funding or other forms from the U.S. or anything you could share on your recent trip to White House? Dale Henderson: Yes. So as it relates to our engagement and as I mentioned in our notes, we have been contributing inputting into a number of processes, and we'll continue to do that to support the government's thinking. But it's too early to take any view of where that all heads. Yes, a number of the avenues federal government is exploring. I think they're still really at the early stages of working through what type of support they would like to deploy. But certainly, PLS is at the table and contributing to that. And [ as Brett ] noted, we're at pains to reinforce the need for shared infrastructure. We think this is utterly critical for Australia to become more competitive. When I say shared infrastructure, it's about shared port facilities, shared by all to lower the cost for all. It's about shared power, network power to lower the cost for all. Putting in place these types of infrastructure, that's the role of government. That's what we need to do. So that's top of the list as we advocate the government about the right types of support. Operator: Next, we have Hugo Nicolaci from Goldman Sachs. Hugo Nicolaci: Thanks for the update. Obviously, great to see some of the early efficiencies of the mine coming through. I won't belabor the point on the feed grade. I assume that's just going to average down with the mine grade and contact ore strategy. But if I can pick up the P-PLS points, what are you now budgeting in terms of FY '26 hydroxide production relative to that offtake revision? Is it sort of 40% to 50% utilization going forward? Dale Henderson: Yes. We'll be able to give you a clear answer on that next quarterly update because the refinement of the calendar year plan for next year, the teams and the thick of it. But you can take an assumption based on what we've committed in the release of the 155,000 tonnes. Hugo Nicolaci: Got it. So in terms of any further losses in the JV or further contributions into it to consider, that's probably something for next quarter as well? Dale Henderson: Yes, correct. That will flow from the budget process. And look, as it relates to the medium- to long-term outlook, we are very happy about the strategic rationale and our sort of positioning with that hydroxide facility. And you can appreciate, particularly given the rise of our almost aspiration for critical mineral security, we think our joint venture with POSCO puts us in a very, very unique position. So in terms of where we're at today, we're very comfortable about that strategic positioning. And of course, we've got some good runway just to see how the next 6 to 9 months go. So very happy with our involvement there with P-PLS. Hugo Nicolaci: Yes, makes sense. And then maybe just one on -- given the price volatility in the quarter, how should we think about any provisional pricing impacts that come through this quarter? Dale Henderson: Do you want to take that? Flavio Garofalo: Yes, I'll take that. Yes, in terms of -- we've obviously seen an uplift in pricing in that September quarter. We will expect to see some gains, which will flow through to the December quarter, which obviously we'll benefit from. During the September quarter, as mentioned, we took a $32 million hit, which was provided for in the June accounts. So we had that number there. So moving forward, I think we want to see some benefits coming through. Hugo Nicolaci: Got it. So in terms of just the timing of when that price peak, you don't have some unwind of that going forward? Flavio Garofalo: No, we'll expect to see some of that come through in the December quarter. But yes, essentially, most of that will crystallize in the early part. Operator: Next, we have Levi Spry from UBS. Levi Spry: Can I just explore these many discussions you're having with government bodies and things like that on strategic reserves and potential government support. What role, if any, do you think floor pricing could play? Obviously, the context is MP and that obviously seems to be getting a bit more airtime. But in your discussions, what role do you think it could play? Dale Henderson: Yes, Levi. So at this stage, we've just been inputting our ideas to government and in particular, the group task with thinking through the strategic reserves. So they're very much in input mode. And of course, they're taking views around for pricing and what could that mean and the pros and cons. And as to yes, the idea around full pricing. Look, devil is in the detail. And I think if deployed the right way, there could be positives, but equally, there could be bad unintended consequences if not rolled out the right way. And I appreciate there's others in the market who have been vocal about that. And of course, that's all going into the thinking though as government considers what support they'd like to deploy. But as I say, for us, we've been very much advocating for the shared infrastructure aspect. We think that's a very clear cut, sensible investment case and hard to dispute. Levi Spry: Yes. Okay. And maybe I should know this, but what's the timing of all this coming to a head. Dale Henderson: That's in the government's hands. They haven't provided publicly an outline as to their timing. So we'll wait and see. We're not holding our breath. Levi Spry: And just the last one, just to come all the way back to recoveries. Previously, you said mid-70s haven't used. So isn't this a material step up? How should we consider -- think about the long-term number in our models? Should I be tweaking it up a couple of points? Brett McFadgen: Yes, the life of mine recoveries, their levies are in the mid-70s. We've in this quarter, corresponding quarter in FY '25 is also in 75s. So we're always going to be trying to push the recoveries. It's the best lever that we have. But at the moment with all of the good work that we've done that Dale touched on, and we're continuing to lever the contact ore. That's the main variable that is going to change for the next quarter and half year. Dale Henderson: And, Levi, I'd just to add, look, maximizing lithium recoveries, this is what the team is here to do. And I love the idea that if we could eke up that long-term average expectation, that would be obviously incredible in terms of value lift and we'll be able to reset the reserve and a whole bunch of flow-ons would flow from that. So that, of course, remains the central aim. But what we need to do is we're really into the process of really starting to sweat and leverage the full power of this new platform we've built. And yes, early signs are really positive. But we're really going to get more runs on the board and get more data processed and -- but yes, it will be fantastic as we've got more runs on the board to look at resetting those long-run expectations, but too early to do that. Operator: Next, we have Glyn Lawcock from Barrenjoey. Glyn Lawcock: Two questions. Just -- maybe just on offtake and price floors. What about industry discussions? Is there any probability of price flows with industry participants rather than government? And we've seen that in the past in the lithium industry, just if they want new supply non-China, is that an alternative? Dale Henderson: But to date, I haven't heard much about around that in terms of coming together for a shared approach. Obviously, any of those discussions would have to be handled, obviously, with a great gear given various anticompetition laws depending where in the world those groups or domicile. But I'm not aware of any of those types of discussions. But I'd also add that in terms of the structure of the market today, it is very much a global market. You've got some supply from all continents in different forms. I think the probability of alignment across that supply is pretty unlikely, but you never know. Glyn Lawcock: So you don't think you could see a price floor to get Ngungaju restarted with a car manufacturer or a battery manufacturer. That's not something you contemplate. Dale Henderson: No, we would -- the door is open for that. But yes, if a buyer would like to do that, and there has been overtures of that. But I'll believe it when I see it, but the door is open. Glyn Lawcock: Okay. And then maybe just staying on Ngungaju. With all the benefits you've now seen through ore sorting, contact ore, everything for Pilgan, how much of that can you translate through to Ngungaju? Like would it be a bit of capital you need to spend? Or can -- what you've got benefit Ngungaju when you do finally come to turn it on? Just trying to think about all your learnings that you've got now, how we could do a lot better with the Ngungaju plant, get the cost down, volume up? Dale Henderson: Great question. Let me start and Brett, you might want to follow in on this one. Yes, the short answer is, yes, we are considering what knowledge transfer we could go from the Pilgan to Ngungaju plant. And we have been sort of waiting to sort of ramp up the Pilgan and start to sort of sweat the asset for the purpose of really being able to have confidence in what the benefit delta is. And so we're increasingly moving to a position where we can start to do the evaluation on the investment case at Ngungaju. But given those units and the materials handling complexity, it's not straightforward to augment that into an existing circuit. There's a lot to sort of work through. So it's complex and there's capital intensity involved. So there's a fair bit to work through to work out, is it worth the investment? Glyn Lawcock: Yes. Is there a time line. Dale Henderson: There's not a time line at the moment. But the other thing, Glyn is that a lot of the downstream benefits that we're seeing with the ore mineralogy and the flotation chemistry is directly applicable to Ngungaju. And so we can transfer that knowledge straight in there and obtain the benefits. And that's the beauty about having the 2 plants side by side is that we can leverage what we learned in one take directly into the other. And yes, we certainly -- there'll be some significant benefits that we can directly transfer from the Pilgan expansion. Operator: Our next question comes from the line of Daniel Roden from Jefferies. Daniel Roden: Just wanted to, come back to the recoveries. And I think I just wanted to labor the point and clarify that the recovery that you're reporting doesn't account for the ore sorting losses or rejects. And I guess, how should we be thinking about accounting for this? So if I look at your numbers, if I'm just taking your reported mines and your reported mills, if I forecast that out and take your numbers into -- over the next -- into perpetuity, would there be a disconnect there? And I just see my, I guess, ROM stockpiles build because it's not accounting for, I guess, the ore sorting losses. And so, I guess, where I'm trying to get at is the ore sort of? What's the reject recovery factor that we need to be? What are the guardrails that we need to be assuming there? Brett McFadgen: Yes. Thanks, Daniel. The -- I guess, those guardrails are ever changing at the moment as we're leveraging up the contact ore. So the level of rejection is highly dependent on what level of that contact ore that we put in the front end of the ore sorters. That material actually goes back to -- into the mine. So it's prior to the crushed ore stockpile. So the feed grade that we report there is from the crushed ore feed grade forward. So it's pretty hard to kind of give a number at the moment, particularly since we're ramping up the contact ore. So it's -- yes, it's a bit of work in progress at the moment? Dale Henderson: Yes. So just to clarify, so there is -- from a financial modeling perspective, the lithium recovery is what we've been able to recover from the mine of what's in situ. Now the fact that we've added ore sorting or various other process leaders does not change that methodology. And the whole idea of ore sorting is it's really for 2 aims, just enable more extraction and enable more concentration to maximize lithium recoveries. So yes, is there some additional exit streams? Yes, but this is all for one aim is actually to improve that value. So you don't need to allow for any additional complexity in terms of how the mine was modeled pre-ore sorting. Hopefully, that clarifies. Daniel? Daniel Roden: No, definitely. Just -- I think I'm just being conscious that we're not on a forecasting perspective over accounting for [ ROM stockpile ] build is kind of where I'm coming from. But maybe just bringing it back to you, you kind of mentioned that, I guess, from next quarter, you're going to start increasing that contact ore feed. How should we think about that in terms of, I guess, fresh ore mining volumes? Are you going to be leveraging your stockpiles a bit more and decreasing, I guess, mining activity from next quarter? Or is that more contact from the fresh ore feed that you're going to leverage on? Dale Henderson: Yes, it's more of the contact ore from the fresh feed around the peripheries. So as we get further down in the central pit over in our East pit, we start to get more of that contact ore. So rather than stockpiling it, we're intending to use it, which will allow us to get the economies through the mining fleet as well. Daniel Roden: Okay. Perfect. And if I can, just one more for me. But with regards to the P-PLS, what's the utilization being there? And I guess if you run it at full noise, like how close to nameplate would you be running out? Dale Henderson: So from memory, Daniel, on that one, the first train that brought up on has been brought up to close to full utilization and whereas the second train that have been purposely moderating it as a function of the sales changes. So I have to double check on this. I'm pretty sure both in terms of the sort of throughput rate of being run up to full throughput. But as I say, the utilization levels are just different at the moment. Operator: Last question from the audio before we move on to the webcast. We have Matthew Frydman from MST Financials. Matthew Frydman: Can I ask a question on the cash burn during the quarter? Obviously, you ran ahead of guidance in the quarter, but you're highlighting that you're expecting upward unit cost pressure from here. And obviously, the cash position went backwards. So just wondering if there's any further step change necessary in your view to stem that cash burn outside of waiting for prices to improve, whether that maybe looks like a further change to the P850 operating model, whether there's any sort of discretionary CapEx that you can take out across the various project streams? Or are you happy to operate at kind of steady state as you've outlined and use your cash balance and your debt liquidity as required to continue funding operations? Flavio Garofalo: Matthew, thanks for your question. Look, the cash burn for the period was really a function of cash flow timing. As I pointed out, we had some provisional pricing adjustments, which we actually booked $40 million for in the year-end accounts. We crystallized $32 million of that in the September quarter. And then we had high receivables at the end, which didn't come through of $50 million. So it was purely a timing impact for the period of the September quarter. Moving forward, we don't expect any material changes. So it's just purely a function of timing between the quarters. Matthew Frydman: Yes. Okay. I mean your cash margin from operations was negative, understanding that there were some receivables, but you're going to get receivable movements from quarter-to-quarter. And obviously, there was growth capital spend, interest and leases and other spend, which obviously weighed on that cash balance to bring it down by $122 million quarter-on-quarter. So it's not necessarily a problem that isn't going to repeat in future quarters outside of price. So just wondering if you guys are happy for that situation in terms of continuing to lean on your existing balance sheet and liquidity or whether there's any other further step changes operationally to deliver? Flavio Garofalo: Yes. I think just to add to that, obviously, as part of our cost smart measures, we'll have further cost discipline and cost reductions moving forward. And we'll be very disciplined in terms of managing our cash balance as part of maintaining our strong balance sheet moving forward. And there are some other opportunities in terms of timing from a capital perspective that we will look at. And we'll obviously look at this through the lens of the lithium price as we move forward through to the December quarter as well. Dale Henderson: And Matthew, probably just add a few points a good one and although there's some enthusiasm returned to the sector of late, at the end of the day, the price appreciation we've seen is still well below the long-run requirements of the industry. And so depending on which analyst you choose, that range is from USD 1,000 per tonne to USD 1,600 per tonne with an average of about USD 1,300 or so. Of course, the prevailing price is well below that at this time. So for PLS, what we've done is we set the business up for this low-cost environment. So to your question, we're comfortable with the way we've configured the business. We've optimized for lowest cash burn here maximizing contact ore. We've got a very strong balance sheet, et cetera, et cetera. We are set up to last a longer storm if that is to eventuate. However, of course, given the strong growth signals, et cetera, et cetera, where this tightness is coming, and that's what really sets up what we think is the big opportunity for our shareholders. Operator: Now I'll pass to James for webcast questions. James Fuller: Okay. Thank you. Dale, some questions online here. Does collaborating with Ganfeng for the study on downstream processing rule out the U.S. as a possible site for projects? Dale Henderson: The short answer is no. As a large operator with an incredible unallocated profile ahead across our Australian asset and Brazil asset, we're able to do multiple downstream collaborations if that's what makes most sense to our shareholders. And we're not ruling out any jurisdiction or counterparty. James Fuller: Dale, what is your response to Trump's Critical Minerals deal with Albanese? Could it help sustain Australia's position long term as the world's largest lithium producer? Or are there still challenges to that? Dale Henderson: Look, I think the announcements that we're seeing between the President and our Prime Minister are incredibly encouraging. At the end of the day, the lithium industry is still young. It needs to grow significantly to support the growth needs globally. And therefore, multiple supply chains need to be built out to serve the world. So this type of government-to-government collaboration is fantastic to see, and we need more of it to not only for lithium, but other key critical minerals. James Fuller: Okay. Dale, what do you mean by targeted investment is needed by government? How would you like that investment to be targeted? I think that's referencing infrastructure. Dale Henderson: That's right. Targeted is not a polite way of saying, don't blow money on the wrong things. So for us, it's about investing in shared infrastructure to lower the cost for all, which makes Team Australia more competitive on the global stage. James Fuller: Okay. In regards to Ganfeng JV, what possible countries that we're looking at and any idea on ballpark capacity? Dale Henderson: So as it relates to what possible countries, of course, we've got a view around what's near the top of the pile. And within that, there is some Asian countries, some Middle East. But I would also say that other parts of the world may welcome into the picture depending on whether the government comes through with larger support or not. So for this reason, we've been deliberately not guiding one area over another because as you've seen in the media, it's a bit of a moving feast. Different support regimes are coming in, and that could really tip the scales from one prospect to another. James Fuller: Okay. Great. With consistent requests from customers to secure additional supply and a strong demand going forward, is PLS considering more sales on a spot market? Dale Henderson: Yes. So in terms of our realized price, in terms of the market structure today, I think we're achieving the best of both worlds. And the offtakes, of course, provide long-term security, but the pricing that's used to derive those sales actually comes essentially from the spot market. But we also sell spot sales. And the reason we do that is that supports price discovery. So one supports the other effectively. And we've taken a portfolio approach there where we're largely weighted to offtake, which gives us security with the strongest in the supply chain, whilst also doing a little bit of spot for price discovery. James Fuller: Okay. Is there any serious threat from African supply? Dale Henderson: The jury is not out on that. Look, there's a big game being talked from certain areas. In terms of the work we've done understanding that area, the low-cost operations are few and far between would be our view. But further, there is an overlay of risk depending on which country you're speaking to. And we've seen time and time again, different impediments arise, which debilitate those operations and really jeopardize some of those investments and continuity of those operations. And it's for these reasons, we've not sought to look in that direction in terms of our own growth profile. But bringing back to home. At the end of the day, we view this market as a globally competitive market. What we keep focused on is making sure we continue to improve such that we move to the left of the cost curve and position ourselves as one of the best in the business. James Fuller: Okay. Thank you, Dale. That's the last of the questions. Just a reminder that the presentation is available on our website, and the webcast recording will be available via our website within a few hours. Dale Henderson: Great. Well, thank you, everyone, for dialing in today. The September quarter was an incredibly strong start to this financial year, building on the FY '25 year, which was obviously a transformational year for the business. We look forward to updating you again next quarter. Thank you for your time. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Martin Carlesund: Good morning, everyone. Welcome to the presentation of Evolution's report for the third quarter of 2025. My name is Martin Carlesund, and I'm the CEO of Evolution. With me, I have our CFO, Joakim Andersson. As always, we will start with some comments on our performance in the quarter and then I will hand over to Joakim for a closer look at our financials. After that, I will conclude with an outlook and then we will open up for your questions. Next slide, please. So let's start with the financial and operational highlights in the quarter. And I would like to start by taking the bull by the horns and address the bad performance in Asia. This has been a recurring theme over the past quarters. But unfortunately, this time, it looks a bit worse. We were, as you remember, very cautiously optimistic about the remainder of the year in the last report. And there's really nothing that doesn't say that Q4 could be better. However, we are experiencing a lot of volatility, which makes the near-term performance hard to predict. At this stage, we want to be realistic and keep expectations low. So what are the main reasons behind the Asian development. First is the cybercrime activity that continues to hurt us. Every day and around the clock, we do everything that we can to mitigate the issues. However, some measures do impact also the end users, and this is what makes it tricky. At the point in time, within the quarter, we did too much, causing loss in revenue. On the other hand, if we do too little, we lose to the pilots. Towards the end of the quarter, we found a better balance, but it's still volatile. And we are -- we do constant security updates to our core to increase protection. We will continue to adapt the changes that are working, and to fine-tune the methods that are working well and explore completely new actions as well. I ask for continued patience on this, but rest assured that is a top priority. Additionally, in Asia, the newly regulated markets, Philippines is volatile, which often is the case when operators and players adapt to the new framework. There are also other markets, such as India, that show signs of moving towards regulation, which creates a higher level of uncertainty than before. And to clarify, with showing signs, I mean that the current heated debate and quick and not widely acknowledged political decisions is something that we often see in the very beginning of potential regulation. Over a longer period of time, it will likely not be noticeable, but on a quarterly basis, it will cause variations like the one we see now. With the context of Asia in mind, let's look at the overall numbers. Net revenue came in at EUR 507.1 million, corresponding to a year-on-year decline of 2.4%. EBITDA amounted to EUR 336.9 million, and the EBITDA margin came in at 66.4%, which is within the range of our full year margin target of 66% to 68%. What stands out as positive in the quarter is the performance in Europe, which is back to growth quarter-on-quarter compared to the first half of the year. We saw the full effect of our protective ring fencing measures in the second quarter, and this provided a new foundation for growth. Worth mentioning is also that we got recognition for our ring fencing from one of the largest regulators in Europe, where we were pointed out as one of the best B2B suppliers. I'm happy with the progress in Europe in this quarter. North America also performed decently, and Latin America is stronger than what we have seen earlier this year. Our Live revenue declined by 3.4% to EUR 431.7 million, while RNG increased by [ 4.2% ] to EUR 75.5 million. It is actually the first time that RNG outperformed Live in terms of growth. Our studios have worked hard and especially Nolimit City has performed great in this quarter. To further strengthen our portfolio, we have launched a completely new brand, Sneaky Slots from scratch, and it will be very exciting to follow that progress going forward. On Live, growth is held back by Asia, but we continue to see good growth in the rest of the world. In both North America and Latin America, Live is still in early days and gains considerable attention from operators and players alike. The opening of our new studio in Brazil has been a true success. On the game side, our highly anticipated Ice Fishing title has finally seen the light, and reception has been great across our market. It is mirroring the trend of faster and shorter forms of entertainment that are widely consumer channels like TikTok and Reels. And it is needed -- is indeed a much faster experience than, for example, Crazy Time. Another great thing is that expansion of Ice Fishing to other studios will be fast compared to the more massive games like Lightning Storm. With its success, we will definitely explore more opportunities in the speed game show arena going forward. To conclude the quarter, overall revenue is not where I want it to be. But when opening the lead, it's clear that the development comes from 1 out of 4 regions. The development in Europe, North America and Latin America is overall good and also supports the margin together with our clear focus on cost efficiency. Next slide, please. If we then move to our operational KPIs, consisting of head count and game round index. On head count, we are growing 4.2% on a year-on-year basis, but we have actually decreased 2.7% quarter-on-quarter. The slowdown is, to some extent, reflected in the revenue. We don't hire unless we grow, but looking at recruitment base within full year, there are sometimes fluctuation based on temporarily slower high pace in recruitment. As we plan for more studio expansion over the next years, the long-term trend is that we will see continued increase in the number of Evolutioneers. The game round index can be seen as a general indicator of activity throughout the network over time, as you know. And for an individual quarter, it can be -- can vary quite a lot and does not always correlate with the revenue development. However, as you also can see this quarter, this actually shows a decrease. Next slide, please. Innovation and quality will always be our signature when it comes to our game portfolio. And I am ever so proud of the continued delivery on our product road map for 2025. During the quarter, we released Ice Fishing, which I have already talked about, and also Dragon Tiger Phoenix, SuperSpeed Dragon Tiger, both the latter are based on a popular Dragon Tiger, a straightforward car game that now has been elevated with the new excitement. Rules are simple and gameplay is quick. In Dragon Tiger Phoenix, the Phoenix is introduced as the third legendary car and the players simply bet on which car that will win or if it will be a tie. Another very exciting release is the Sneaky Slots brand, which joins our portfolio that already includes Nolimit City, Red Tiger, NetEnt, and Big Time Gaming. We have created Sneaky Slots from scratch, leveraging all our know-how that we have within RNG and using our one-stop shop and global sales network to further boost its launch. Sneaky Slots will fill a gap between Nolimit City and NetEnt in terms of game style. And selected releases will use ex mechanics from Nolimit City that we know that the players love. First title was released -- was NetEnt, which will be followed by the new title every month until year-end. Among upcoming releases, we have Red Baron, a mix of Live and RNG where the goal is to cash out before the Red Baron flies away. The longer you wait, the higher the potential. Another release is Insurance Baccarat, which is an exciting variation of the classic Baccarat that adds a unique insurance feature to protect the space. While summarizing the year, we look back at over 110 releases, which is a truly great achievement. And as time flies, there's now only 3 months left until [ Ice ] where we, as always, will showcase the most exciting titles for 2026. I can promise that Todd and his team are ready to take entertainment to yet another level. Next slide, please. Okay. Let's look at the geographical breakdown. As already highlighted, I'm pleased to see that Europe growth quarter-on-quarter, with revenue amounted to EUR 182.2 million. We have talked a lot about ring fencing this year, and you probably remember that the effects on revenues were a bit larger than we had anticipated. It is a price that we have to pay to stay ahead of the regulatory curve. But with that said, we have a new base to grow from. And despite the summer without any major sports event, development has been overall good. I should also mention the dialogue with the U.K. Gaming Commission, which continued, and we are yet to receive the conclusion of its review. What I believe is important to note is that we have been very cooperative and also responsive to various requirements that the Gaming Commission has put upon us. We still have to wait for the outcome, but I truly believe that we have the most sophisticated compliance framework among all providers targeting the U.K. Moving on to Asia, where I have already provided the context for the bad development and revenue decline of 9.6% quarter-on-quarter. Even though the market in Philippines has been volatile, our newly opened studio has been off to a great start. A while ago, there were some media noise on our studio partner losing its B2C license, but it has nothing to do with us or our studio. Everything is working as it should. We did, however, suffer some building damage in the 6.9 magnitude earthquake that struck Cebu in the beginning of October, but to our great relief, no employee was hurt and operations continued, even though that is secondary when people's lives are on the line. Next slide, please. On the contrary from Asia, North America is, thanks to its regulation, more predictable and stable. Quarter-on-quarter growth is modest, but on the positive side, it is -- on the positive side, the operators continue to invest heavily in Live casino solutions and environment. Year-on-year growth is 14.5%. To meet the demand, we have launched our second Live studio brand, Ezugi, just around the end of the quarter, and we are planning to open a second studio in Michigan during the first half of 2026. I would also like to highlight that we, after the quarter, have launched Crazy Time in Connecticut. Great. Very, very good. Also, while speaking on North America, I would like to mention something on Sweepstakes as it has been a topic of discussion during the quarter. Sweepstakes is a popular product in the U.S., and we offer it in states where it's not prohibited or in any way under regulatory scrutiny. Sweepstakes is a very small part of our total revenue, but we believe it has some potential. And as you know, as the market leader, we'll want to offer a great variety of content. In the quarter, a city attorney in Los Angeles made a personal interpretation of the California law, and as our strategy is that we don't offer Sweepstakes where there are regulatory uncertainties, we pulled it from the market, simple as that. I'm also quite certain that you will ask us about the completion of the Galaxy Gaming acquisition. We are still awaiting some regulatory approvals, but believe me, we will be able to -- but we believe we'll be able to close the transaction before year-end. However, it's a regulatory process. It's not completely in our hands. Moving on to Latin America, where growth is picking up with 6.4% year-on-year and 5.9% quarter-on-quarter. The new regulation in Brazil seems to be done with its initial [ teething ] problems, and operator and players are becoming more active. Our new studio in Sao Paulo, Brazil has developed nicely during the quarter and will expand as we move forward. Now I will hand over to Joakim for a closer look at our financials. Next slide, please. Joakim Andersson: Great. Thank you, Martin, and good morning. As usual, I will now zoom in on some of the financial highlights this quarter. Let's start on Slide 7, where we have the financial development of the last 14 quarters. For the ones that are following us and are used to our format, you will note that we have added the revenue split by regulated and unregulated on this slide. Let's start there. As you can see on the line, regulated revenue is up to 46% of the total this quarter. And even if this will fluctuate between quarters as revenue mix shifts, the longer trend is clear. The portion of regulated revenue will continue to go up. To the left, as mentioned by Martin earlier, we had net revenue of EUR 507.1 million this quarter, and EBITDA margin of 66.4%. What is not shown on this graph is that we, now year-to-date, are at 66.7% in EBITDA margin, making it within the expected range of 66% to 68% for the full year. As you can see from the chart, our growth has clearly tapered off and even become negative, and this is not something we are happy about, and we can assure you that we are doing whatever we can to reverse that trend. Let's go to the next slide. And here, we had our profit and loss statement. A lot of numbers on this slide, so I have highlighted the key takeaways, and I will comment on them one by one. So firstly, again, we had net revenues of EUR 507.1 million, which is down 2.4% year-on-year and down by 3.3% quarter-on-quarter. Secondly, total operating expenses amounted to EUR 210.5 million, which is 5% higher than last -- higher than Q3 last year, but more importantly, down 3.4% from last quarter, which is good evidence of our efforts adjusting the cost base to the weaker revenue momentum. We are not only trying to work smarter and be more efficient optimizing how we use our studios and tables, but we are also taking some broad-based cost-cutting measures, which will continue for the rest of the year and into 2026. Thirdly, our operating profit amounted to EUR 296.6 million in the third quarter. And finally, EPS after dilution amounted to EUR 1.25. To be noted, the profit for 2024 includes EUR 59.7 million of other operating revenue related to reversal of earn-out liability. And so to make it comparable with this year, you should probably adjust for that. Let's move on to the next slide, where I'm going to show you the development of our cash flow. First, to the right, our capital expenditures. And as can be seen in the graph, we are down quarter-on-quarter, the total CapEx related to tangible and intangible assets of EUR 29.8 million. With that, we are likely going to be slightly lower than the full year forecast of EUR 140 million that we announced in the beginning of the year. If we then look left, our operating cash flow after investments amounted to EUR 342.1 million in the quarter, which corresponds to a cash conversion of 83%. With that, we are back on track after a seasonally and unusually weak second quarter. The change in working capital was positive EUR 35.2 million this quarter, meaning a swing back from the weaker number last quarter, which is good and in line with our expectations. Then finally for me, some brief comments on our financial position on the next page. On this page, you will find our summary of the balance sheet for the third quarter compared to what it looked like at the end of last year. The main items that I usually highlight, which are all signs of our financial strength, are the value of the bond portfolio of EUR 103.2 million, our total cash balance that amounted to EUR 656.4 million and the equity position at the end of the quarter, which amounts to EUR 3.8 billion. We have continued with the buybacks in the third quarter. And in total, we invested EUR 187 million and bought back 2.5 million shares. In total, we have now used EUR 406.5 million of this year's mandate from the Board of EUR 500 million. And following the release of the Q3 report today, we'll be back in the market with an aim to use the full mandate before the year ends. With that, I will hand back to Martin for his closing remarks. Martin Carlesund: Thank you, Joakim. So let's summarize the quarter and then move to the Q&A. Performance in Asia was bad and left a negative impact on the group revenues as a total. But with that said, the rest of the world is doing decent to good, and we are determined to get Asia back on track. I understand that it causes some frustration, especially since we actually saw some signs of improvement in the second quarter. And believe me, I'm frustrated, too. I can only repeat that it requires patience while being a top priority. I'm happy to see that the margin has improved compared to the first half of the year, and we don't see any reason why -- for it not to stay within our target range of 66% to 68% for the remainder of the year. Cost efficiency is something that I feel strong about as it's part of our roots as an entrepreneurial company. We never spend a penny unless it provides value to the business in terms of growth. This presentation is about the financial performance in Q3. We don't have a separate slide on the movement in the ongoing deformation litigation in the U.S. We have -- where we have for 4 years finally received information on who was behind the [ false ] report. This process will continue in court, and I will not make any comments about its future development. What I can say is that we believe in fair competition, where innovation and excellent operations count. When a competitor decides not to play by these rules, it hurts not -- it hurts not only us, but the industry as a whole. With that said, with a little bit more than 2 months left of 2025, we will continue to run, adapt and improve. When we summarize the year from a financial perspective, it will have been a bumpy ride, but from an operational perspective, a very strong and important period for Evolution. With that, we'll open up for questions. Next slide. Operator: [Operator Instructions] The next question comes from Martin Arnell from DNB Carnegie. Martin Arnell: My first question is on -- if we could discuss the Asia situation just a little bit more. I think you mentioned it remains volatile and you, of course, the ambition is to get it back on track. And my question would be, are there any signs that it has bottomed out because the counter measurements, that's in your control, right? So if you have been too stringent, you can adapt. But the regulatory situation and the effect from that is more -- is not in your hands. Is that a correct interpretation? Martin Carlesund: We are doing everything we can with the countermeasures. And as I said, we did a little bit too much, and we have to do a little bit less, and we'll find the balance. And I think that we are on to it and we're doing the right things. And it's also natural that there will be a situation where you do a little bit too much because otherwise, you won't know where the borders are. When it comes to the dynamic and the regulatory situation in the region, there's a lot of countries. And right now, there's volatility in some of the regions, some of the countries and that affects us as well. I can't predict much more than that. Martin Arnell: And my second question would be, first on Europe, return to growth quarter-on-quarter there. Is that because players finding their way back after the ring fencing through regulated alternatives, do you think? Martin Carlesund: That's a very good question. And I -- yes, I believe that players in some markets find their way back and want to play a regulated and good compound. So that's probably part of it. And we see good development in total. And I'm actually happy with the development in Europe. Martin Arnell: Okay. And final question is just on investments. I mean is there any investment that you could accelerate to improve this current situation in Asia? You've always commented that you will prio growth over margins. Martin Carlesund: It's -- there is no -- it's not -- if I could throw more money at the problem and I would get a quicker solution, I would do that. I don't see that it's a money issue. We invest and we put the resources -- topnotch resources in the world to do whatever we can. And there is actually -- but don't quote me on that, please, but there is no limitation when it comes to that money. We put revenue and market share before cost, but we also need to adapt to the situation we have. So that's what we're doing right now. Operator: The next question comes from Ed Young from Morgan Stanley. Edward Young: My first question is on North America. It's showing the best growth across your geographies, but it's still behind market growth. Could you give us an update on the drivers there? What's going well? What's going less well? And do you expect any material change in the growth rate into next year? The second is on Asia. It sounds like it's a reasonable conclusion from your comments around countermeasures, Martin, you may never be able to fully deal with these issues. So put another way, should we be rebasing fundamentally our Asia revenue and growth expectations? Or on what sort of time line do you have optimism over market growth and market share gains in Asia? And then finally, I'll ask it. I appreciate giving your very final comment. You may not want to answer, but what are you looking for as an outcome from your legal action? Are you seeking maximum financial damages? You expecting regulators to review your competitors' license suitability? What are you looking for? And what sort of time line do you expect this to play out? Martin Carlesund: Thanks. I got it. So when it comes to growth in U.S., Live is doing really well. We have a couple of fluctuations, maybe we didn't have the best quarter when it comes to RNG. There are a little bit fluctuations over the quarters, I'm happy with the development. I look forward to the future in U.S. That's the situation in the U.S. When it comes to Asia, to address this problem, it's technically difficult. It's very advanced, and we're doing it. And we're tuning and we're finding. My belief is over time, that we will find the right balance and the right solutions and continuously enhance and protect our product to make it even better. So in the longer perspective, I look at a very good situation in the Asian market. Now I don't have any -- I can't share any sort of time frame on that right now. I'm a bit more cautious with that. When it comes to the outcome of the litigation process in U.S., I mean I look for fairness, justice. I think that it's horrible to do what has happened to us. Someone is hiding between layers of companies and hiding the true identity and writing false -- a number of false statements in the report to us. It's unfair. We are protecting the shareholder value of Evolution. The company, as such, defending ourselves from our employees. And the first thing that we look for is some kind of justice, I would say. Operator: The next question comes from Ben Shelley from UBS. Benjamin Shelley: I've just -- I've got 3, if that's okay. On Asia, could you talk a bit more about the developments in India in more detail? What exactly is happening on the ground? And how should we expect this to develop over the coming quarters? My second question is on North America. Could you talk more about your Sweepstake exposure in the U.S. and how meaningful that is versus your North American revenues? And three, I was wondering if you could -- if you had any early thoughts on capital allocation for 2026? Do you think EUR 500 million is the right starting point for share buyback expectations for next year? Martin Carlesund: So the situation on the market in Asia, is a lot of different countries. We point out, Philippines is very volatile right now. There's things happening in India, but there's also other countries that are fluctuating and things are happening there as well. India is a large country. There are regions that have portions regulated when it comes to sports. There's a desire in some regions to regulate. Now there are suggestions on a sort of federal level to take a few steps towards blocking online gaming. These type of movements we often see, when there is talks and happenings about regulation, it opens up for different routes forward. It could go into regulation, it could settle down or it could go to somewhere else. We can't speculate on that. We just see that it's affecting us to a certain level right now. North America, I think that you asked about Sweepstakes, and Sweepstakes is -- we provide to the Sweepstakes market, where there are no regulatory problems or any legal problems. And we are very lean. We talked to regulators. And if there would be a letter or someone, a regulator or an authority stating, don't do it here, we would immediately go away. U.S. had the history of river boats that, from the beginning, travel on the river, down to only shore and they have to have the engine running and then they didn't have them, and then it was [indiscernible]. These type of movements have been -- prediction gaming could be one of these. But these type of movements have been there. And we want to supply to them as long as there is no regulatory or authorities saying no. So we did that. In the case of California, it's a state attorney in Los Angeles that made a personal lawsuit, and that's okay. And immediately when that happen, we withdraw from that. So that we -- okay, if that's what you want, then we will withdraw from that. So that's the Sweepstakes situation. Capital allocation, I don't want to comment on that. It's, in the end of the day, an AGM decision and a Board proposal. We are acting on the capital allocation that we have. And you also have the capital policy that we published last year, and I'm sure that the Board will continue following that. Operator: The next question comes from Pravin Gondhale from Barclays. Pravin Gondhale: Firstly, on Asia cyber attacks, so yes, we are seeing that. It sort of continues to be a drag on your performance. But do you see any risk of spreading these cyber attacks to your other markets like Latin America, where black market continues to be big? And then in Europe, can you just give us a sense that between Live and RNG, which have been the key drivers of your European growth on a sequential basis, and any sort of steer on how do you expect European revenues to grow from here? Martin Carlesund: The protection measures that we add to our core is valid for the whole core, meaning supply to all parts of the world. So one of the upsides in doing what we're doing now with advanced technology and AI and everything is that it also protects our core in other markets and all over the world. So I would almost say that it becomes a competitive advantage where we increase the gap to competition. And eventually, we make it so hard to steal our products. So if you want to steal the product, you have to go to someone else. So it's protecting everything. So any measure we take in Asia will be accommodated in all of the core. So that's that. And when it comes to the split in the growth, I mean, we're doing very well right now, momentarily very well, maybe not even showing in the figures in the right way. But when it comes to RNG, we're happy with the development. Nolimit City is delivering great games. And of course, it's contributing in a good way to the total revenue in Europe. Now it's still a smaller part. So Live is the big part. So don't forget that. I mean, it doesn't matter if it does tremendously well. It doesn't affect the figures that much. Operator: The next question comes from Monique Pollard from Citi. Monique Pollard: Three from me, if I can, as well. The first was just on the regulated revenue increase we saw in the quarter. And you talk about the sort of direction of travel. Just trying to understand whether that increase in the regulated revenues is driven by the fact that North America and regulated territories performing better than Asia or whether there were some new markets that regulated in the quarter that also added to that progression? The second question was just on the U.K. Gambling Commission review. You mentioned in the presentation that there's no new news, but also in the report, you say you're expecting a conclusion by the end of the year. So I just wondered what gives you confidence in that time line of end of year, please? And then the final question is in relation to the news we had a couple of days ago on Playtech Black Cube. I appreciate you don't want to get into the details of the types of damages being sought, et cetera. But it would be really helpful if you could give us some indication of how you look to assess the damages. So is the starting point for assessing damages based on market cap movement on the day that these bits of news became public? Or are there other sort of processes you use when you're thinking about the damages that have been caused by these reports? Martin Carlesund: The regulatory percentage, 46% in the quarter, good development. We're moving in that direction. That's nice. That comes out of, of course, that the regulated markets are outperforming the nonregulated, and it's affected, of course, by the situation in Asia. So more and more gets to be regulated. And I might remind you that as soon as it tips over to 50% and if the revenue grows equally, it will continue to increase more and more. So we're in a good position with that. When it comes to the U.K. Gaming Commission time line, unfortunately, I don't have any other information than what -- it's in the hands of the regulator, and we have been -- our estimation is that it will be by the end of this year. I have no further information. That's what it is. For me, when it comes to the Playtech situation, I mean -- I will say about the same things all over again, but -- when someone behaves in that way, [ hypes ] in -- during 4 years doing this type of action with that type of company that the Black Cube using, Juda as a PR company, it takes a bit away from my belief in humanity and fair play and in ethics and moral. Exactly how we will assess the damages, that's a later question, but it's a severe amount. Operator: The next question comes from Adrien de Saint Hilaire from Bank of America. Adrien de Saint Hilaire: So first of all, on Asia, again, it's been a volatile region now for a while. I'm just curious, high level, if there is a point where you might draw a line in your commitment towards that region and refocus towards other markets? Secondly, you touched on this, but cost of employee was down quarter-on-quarter. Can you explain a bit what's going on there and the sustainability of that? And then, sorry, this is a bit like technical perhaps, but there's been quite a switch between current liabilities and other noncurrent liabilities in the quarter. Can you explain a bit what's going on there, please? Martin Carlesund: Okay. I will start with the first 2, and then I will, with warmth, hand over the last one to Joakim. So we look forward and we are engaged, and we actually think it's intriguing, even if it's tough, to find a solution to protect our product in Asia. But I think it will become more and more important also for other markets if we look in a longer time perspective. So we don't have any line that we will draw against Asia. We'll continue to fight that. And as I stated before, it's not about money. It's not a cost that is the problem. It's to find real good solutions on the level for that. When it comes to cost per employee and the cost base, we have talked about all since actually July 2024, where we have the strike in Georgia in that situation and the cost mix and we had to shift a little bit. So we had an unfavorable cost mix. Now we're starting to be able to shift that, which is what we have talked about during the quarters that we need to have a better and favorable cost mix. It's not like we're cutting delivery right now. It's -- we are putting the delivery in the studios, which are good. So that's the reason why we come to that. And then I will hand over to you, Joakim. Joakim Andersson: Of course, the balance sheet question. It's simply a reclassification of earn-out bilities that we have moved from long -- being long term to short term in this quarter as they indeed are shorter than a year. I think that's the one that you are referring to. Well spotted, by the way. Operator: The next question comes from Raymond Ke from Nordea. Raymond Ke: A couple of questions from me. I'll take them one by one, starting with no surprise maybe at Asia as well. Compared to, say, Q2, how much of the decline here that we saw in Q3, which is due to cyber attacks, and how much is from regulations and changes in geographies like Philippines and India, would you estimate? Martin Carlesund: I don't split that out. There are sort of 3 components in the situation. One is cyber attacks, and the cyber attacks is, of course, the constant level of it, but also our action that was a little bit too tough and then we had to retract. And then there is unstability in the region when it comes to regulatory situation. And here, we point out India and Philippines as 2 of those, but there are also others. So unfortunately, I don't want to go into exactly where in detail, and it's also very hard to see that. Raymond Ke: Got it. And then regarding sort of the regulatory situation in not just Philippines and India, I understand it. But how many months of impact would you estimate that we have seen here in Q3? If we compare it sort of to ring fencing back in Q1, do we have the full effect? How much should we expect ahead? It would be really helpful to understand. Martin Carlesund: No, I understand. I assume that you're talking about Asia, right? Raymond Ke: Yes, that's right. Martin Carlesund: So I think that there is a difference between the situation in Europe and Asia, so to speak, but the ring fencing has a little bit of a tail. I think that in Asia, the situation is more momentarily, okay, this is where we are right now, and we need to take it from there. And then we need to see that we do the right things in the coming quarter and see to find the balance. Raymond Ke: Got it. And then on North America, your sequential sales growth was flat here in Q3. You had momentum going into Q2 where it added EUR 2 million on top line. How much of the trend here in Q3 would you say is due to withdrawing from California stake? Is it the majority here? Or is there other explanations? Martin Carlesund: I wouldn't say that, that affects significantly. Raymond Ke: And finally, just one more, if I may. Could you maybe help us get a better understanding of how you intend to reach your margin target with the revenue we see here in Q2? How much should come from, say, revenue growth? How much should come from additional cost savings? Is it sort of equal, equal? Or how should we think about that? Joakim Andersson: No. If I jump in and take that. I mean in Q3, clearly, we are within, right? It has a separate quarter, 66.4% this quarter. And also, as we said, year-to-date, 66.0%. So if we just repeat what we now delivered in Q3, we are there, right? So it doesn't take a lot to make it for the full year, and we are quite confident that we will make it for the full year. Operator: The next question comes from Rasmus Engberg from Kepler Cheuvreux. Rasmus Engberg: Cheuvreux that is. Do you anticipate that India could potentially have an impact also in the fourth quarter? So that's the first question. Martin Carlesund: I can't comment on that. I don't -- I look at Asia right now, and I'm cautious when I make any predictions due to the situation that it's so volatile. Rasmus Engberg: Fair enough. Can you explain the next step in your legal battle with regards to Playtech? What happens next? And could you also perhaps give us an indication of what the run rate of costs that you're incurring, if possible? Martin Carlesund: The first question I can answer. It's like -- the thing that happened this week is actually a non -- it's not an action that affects Evolution in any way. When we initiated the litigation, it was with a fake name, [ Joe Roe ], and that was Playtech, but we just didn't know that it was Playtech. So right now, that is just exchanged for Playtech because we finally got the name. So that's what happened. That's -- and then we gave you, to the market, all the information we had relating to that, and that's it. So from our perspective, and the next thing is that there are a number of depositions and potential information that should be shared, and the legal process will continue just like it had been. When it is -- when it relates to the cost, it's naturally very expensive to do this type of exercises. We do it to protect the shareholders. We do the value for the shareholders. We do to protect the company. We think it's unfair. It's unheard of. It's a behavior that we just don't understand. Now we won't split it out right now, maybe in the future to come, we will look into it. But right now, we don't comment on the exact cost. Operator: The next question comes from Jack Cummings from Berenberg. Jack Cummings: Two questions, please. The first is just on the ring fencing in Europe. Is there any more that you still have to do? Or is all of the European ring fencing now completed? And then just on my second question, I appreciate it's a little bit early than when you normally talk about full year '26. Based upon your comments on cost shift and cost mix, would you expect to see EBITDA margins expand in full year '26 or full year '25? Martin Carlesund: When I look at ring fencing, I think that we are in a very good position right now in Europe. Things can happen in both directions, but I don't know any other actions that are ahead of us right now. When it comes to EBITDA margin, we have full focus on 2025 to deliver the 66% to 68%. And we look forward to do that. And then I assume somewhere on a release to Q1 report -- the Q4 report, sorry for that, I'm a little bit ahead of the curve, then we will guide you for 2026. [indiscernible] is positive. Operator: The next question comes from Karan Puri from JPMorgan. Karan Puri: Most of my questions are actually answered. Just one on Europe, I guess, wondering how should we be thinking about a more normalized growth profile in '26 onwards once you sort of lapped the ring fencing adjustments. If you could share a bit on that, would be great. Martin Carlesund: The answer to that -- I don't guide on the future, but historically, over the time, Europe is the most mature market, and we had a pace of growing 9%, 10%, quite consistently over a number of years. That's the best knowledge we have of the situation. And right now, we are ring-fenced, and we are starting to see a little bit of growth from that. Operator: The next question comes from Andrew Tam from Rothschild & Co Redburn. Andrew Tam: Just one question from me. Can I just clarify just your position on India. You talk about the regulatory volatility there. I just wanted to just fully understand what that means. Obviously, you've seen in recent weeks, one of your largest customers globally, decide to exit that market entirely with the real money gambling band. Are you saying that, that is a market that you would look to ring fence as well, should you get some more regulatory clarity going the other way against you? Martin Carlesund: Ring fencing has to be done in relation to regulation and what is there. We are watching it closely right now, and there are volatility in India, as you understand. At the time, if there would be a ring fencing, that will be later down the road. Andrew Tam: Okay. So no plans to ring fence in future in India? Martin Carlesund: We're watching it carefully right now and see what will be there. Operator: The next question comes from Martin Arnell from DNB Carnegie. Martin Arnell: Yes, I just had a follow-up question on RNG, actually because I saw that you had growth improvement there. And could you just say, is it because Nolimit City has a strong edge in the market? Or do you see the market for RNG has improved? Martin Carlesund: We are doing better and better, slowly, bit by bit when it comes to our RNG offering. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Martin Carlesund: Thank you very much for participating, listening to us. I really look forward to seeing you in a quarter. Thank you.
Operator: Welcome to Vitrolife Q3 2025 Earnings Call. [Operator Instructions] Now I will hand the conference over to CEO, Bronwyn Brophy, and Par Ihrskog. Please go ahead. Bronwyn Brophy: Good morning, everyone. I would like to welcome you to the Vitrolife Group Q3 2025 Earnings Report. My name is Bronwyn O'Connor, and I'm joined this morning by our new CFO, Par Ihrskog. So I will now move you on to the first slide with our Q3 2025 highlights. I would like to start by highlighting three key achievements during the quarter. The first highlight is that we delivered 5% organic growth in local currencies, excluding discontinued business, despite the fact that the reproductive health industry as a whole has continued to face substantial macroeconomic and geopolitical challenges during the quarter. The second highlight I would like to bring to your attention is our growth in Americas. Sales increased by 11% in local currencies with strong growth across the entire portfolio and in all markets in the regions. And finally, we delivered strong operating cash flow of SEK 255 million related to positive contributions from our net working capital. I'll now move to the key financial highlights. So starting with the market. Conditions remain challenging in some of the key markets in the IVF industry. However, we did see some small and early signs of recovery in Americas. In EMEA, Western Europe is performing well. However, the market in the Middle East remains impacted by the geopolitical situation. APAC also shows some signs of recovery with the exception of China. Cycle growth in APAC overall remains below the other regions. Sales. So sales in the quarter amounted to SEK 835 million, an increase of 5% in local currencies, excluding discontinued business and minus 4% in SEK, impacted by minus 7% due to currency effects. Gross margin, stable, in fact, slightly positive at 58.9% and EBITDA was SEK 253 million in the quarter, an EBITDA margin of 30.3%. This was also impacted by a negative currency impact. And then strong operating cash flow of SEK 255 million from our net working capital, as I mentioned previously. We will now move on and take a look at our sales and growth per geographic segment. We're very pleased, in fact, with our sales performance in Americas, delivering 11% growth. And even more pleasingly is we saw growth across the entire portfolio and in all markets. So just bear in mind, Americas is the U.S., North America, and also South America. IVF cycle growth is showing early signs of recovery in the U.S. However, share gains drove our growth rates above the market growth rates. Growth in EMEA was 4%, excluding discontinued business. Once again, we delivered strong growth in consumables as a result of share gains in key markets in Western Europe. The geopolitical situation in the Middle East has impacted the region overall, but all other markets in EMEA remained strong for the Vitrolife Group. Sales in APAC increased by 1%, the first positive quarter for the Vitrolife Group year-to-date. We delivered strong growth across all markets in the APAC region with the exception of China, where cycles remain depressed despite improved reimbursement. And then another point that I think is critical to point out is the healthy regional revenue contribution of our company. This has been instrumental in helping us navigate the challenging economic environment. So if you look at our share of total sales, we now have 33% coming from Americas, 37% coming from EMEA, and 30% coming from APAC. Okay. We'll now move into markets region EMEA and take a closer look. So EMEA remains our largest region, delivering sales of SEK 309 million in the quarter and an organic growth of 4% in local currencies. Again, this quarter, sales in consumables were strong, plus 7% in local currencies, excluding discontinued business due to share gains in key focus markets in media and disposable devices. Sales in technologies, plus 6% in local currencies, driven mainly by customer wins for our lab control solutions, which is really nice to see. We are seeing demand steadily increase for our witnessing solution, and customers also really like the integrated EmbryoScope and eWitness solution. Genetics performance was negatively impacted by the Middle East. However, a strong performance by our Genetics business in Western Europe. Okay. We'll now move on to market region Americas. A very strong quarter in our Americas region despite the fact that cycles have not fully recovered in the United States. With an organic growth of 11% and strong growth across the entire portfolio in all markets in the region, we believe we are fully leveraging our relevance to our customers. The strategic investments that we have made in sales and marketing in the U.S. resulted in us delivering our strongest quarter in 11 quarters, with share gains in key parts of the portfolio. Strong growth in technologies driven by increased adoption of EmbryoScope across the region, which is great to see. This has been a key focus area for us, as many of you will know. And we are also starting to build a healthy pipeline of customers seeking to install our witnessing solution. So the combined offering of EmbryoScope and witnessing is also starting to gain traction in North America, as we are experiencing in this quarter in EMEA. Okay. And then our market region, APAC. APAC, the first positive quarter of the year-to-date. So APAC delivered an organic growth of 1%, with strong growth in all markets across APAC, with one exception, that exception being China. We delivered share gains in disposable devices, and our media market position remains very strong across the region. Coming back then to China, despite the increasing reimbursement, we don't yet see an uplift in cycles. Consumer confidence, we expect, is also impacting the timing of patients presenting for IVF. I do want to point out that we are focusing on other key markets in the region where the Vitrolife Group holds strong positions and cycle growth is increasing. I will now hand over to Par, and he will take you through our geographical segments. Par Ihrskog: Thank you, Bronwyn. We are now on Page 9, where I will provide some more details of the geographical segments, America, EMEA, and APAC. On Americas, sales amounted to SEK 276 million, reflecting an 11% organic growth in local currencies and 1% growth in SEK, negatively impacted by currencies. The strong growth can be seen across the portfolio. Gross income amounted to SEK 149 million with a gross margin of 54%. This compares to the last year's gross income of SEK 144 million and a margin of 52.7%, an improvement of 1.3% points compared to previous quarter, mainly driven by product mix. Selling expenses for the quarter rose from SEK 69 million to SEK 77 million, reflecting ongoing investments in sales and marketing in the U.S. as previously announced. The market contribution margin for the quarter was 26.0% compared to 27.5% last year, impacted by the increased investment into sales and marketing capabilities in Americas. Moving to EMEA. Sales declined by 2% in local currencies and by 6% in SEK, totaling to SEK 309 million. The sales were negative, impacted by currency of minus 4%. Sales declined by 2% in local currencies and by 6% in SEK, totaling to SEK 309 million. The sales were negative, impacted by currency of minus 4%. Excluding the discontinued business, sales increased by 7% in local currencies. Gross income was SEK 192 million with a gross margin of 62.0%, compared to SEK 198 million and a margin of 60.4% last year, also here mainly driven by the product mix. The selling expenses decreased from SEK 73 million to SEK 68 million. The market contribution margin for the quarter was 39.9% compared to 38.1%, explained by an improved gross margin and lower selling expenses. In APAC, sales amounted to SEK 250 million, reflecting an increase by 1% organic growth in local currencies, but a 6% decrease in SEK, negatively impacted by currency. Gross income was SEK 151 million with a gross margin of 60.4%, which is lower than previous year's gross income of SEK 167 million and a gross margin of 62.8%, a decline of 2.4 percentage points compared to previous quarter, negatively impacted by currency and negative product and market mix within APAC. Selling expenses decreased from SEK 48 million to SEK 46 million. The market contribution for the quarter was SEK 42.1 million, down from SEK 44.7 million last year. Let's move to the next slide. So then, Q3 financial highlights. As earlier mentioned, the sales amounted to SEK 835 million compared to previous year with a sales of SEK 867 million, corresponding to 3% growth in local currencies and a 4% decrease in SEK and 5% increase in local currency, excluding discontinued business. The gross income amounted to SEK 492 million compared to SEK 508 million previous year, corresponding to a gross margin of 58.9%, margin up from 58.6% previous year. The margin improved from a positive product mix despite the negative impact from the currencies. In the third quarter, the increase in operating expenses was mainly driven by investment in capabilities, especially within IT and digitalization. All-in-all, that gives us an EBITDA of SEK 253 million compared to SEK 289 million previous year, which gives us an EBITDA margin of 30.3% compared to 33.4%. The decrease in margin is mainly impacted by currency fluctuation as well as an increase in investment in capabilities, especially within IT and digitalization. Let's move on to the next slide. Some comments about the operating expenses. In Q3, our operating expenses were SEK 20 million lower than Q2 this year, but compared to Q3 last year, OpEx was SEK 40 million higher, though last year's Q3 was lower than normal levels. Overall, Q3 aligns well with our average OpEx level over the past seven quarters, reflecting a consistent and stable cost trend. On the selling expenses, we had higher selling expenses in the U.S. due to the investment in sales and marketing, but it was offset by lower costs in the other regions, so it stayed stable. On administrative expenses, it was increased by the strategic investment in IT and digitalization. Our R&D expenses slightly decreased year-over-year, mainly due to timing. And then on other operating expenses, this is mainly related to currency fluctuations. Next slide, please. And then finally, I will look -- we will comment upon the year-to-date numbers. Sales for the first 9 months amounted to SEK 2.5 billion, corresponding to 1% growth in local currencies, a 4% decrease in SEK, and a positive 4% growth increase in local currencies, excluding discontinued business. The gross margin decreased from 58.6% to 58.1% mainly due to currency fluctuations. The EBITDA amounted to SEK 253 million compared to SEK 888 million, corresponding to an EBITDA margin of 29.5% versus 33.5% previous year. The decrease in margin is heavily impacted by currency effects driven by a strengthened SEK against other currencies. The margin was also negatively affected by the increased selling expenses of SEK 577 million in the U.S., but also negatively by the product and market mix. Net income amounted to SEK 301 million compared to SEK 375 million previous year, heavily impacted by currency fluctuations, which gives earnings per share of SEK 2.23 compared to SEK 2.76 previous year. Our operating cash flow amounted to SEK 475 million for the first 9 months compared to SEK 640 million previous years, whereof SEK 255 million came from Q3. Changes in working capital had a negative effect of SEK 97 million this year compared to SEK 97 million last year. Our leverage, net debt to EBITDA, improved to 0.7 compared to 0.8 previous year by the end of the quarter. And by that, I will now hand over to you again, Bronwyn. Bronwyn Brophy: Thank you, Par. So you will have seen me present this slide several times. And what I would like to highlight is that we are delivering on our commitments and doing what we say we will do. So this slide I have presented, I think this is my third time to present it. It highlights what the focus areas were for 2025 and beyond: growth, innovation, and operational excellence. So just if we take a look at growth, continue to drive share gain in key markets, leveraging the full breadth of the portfolio. This is exactly what we are doing in Americas, as an example. So we're doing what we say we will do: accelerate the penetration of our combined EmbryoScope and lab control solutions. This is what we're doing in EMEA. You can see it in the quarterly results. When it comes to innovation, if I could highlight strengthen market access capabilities to bring new products to market faster. We have launched Ultra RapidWarm Blast. We received regulatory approval for EmbryoCath in Europe and the United States this quarter. So again, here, we are doing what we say we will do. On the operational piece, automated manufacturing to increase capacity of key growth drivers. We have significantly increased capacity at one of our sites in the United States due to automation. And then the macroeconomic environment. Well, I think we would all agree, it's been a challenging year for the med tech industry as a whole. It's been a particularly challenging year for the reproductive health industry. We continue to assess multiple parameters, not least of which is the impact of the U.S. presidential IVF announcement, the most recent one on the 16th of October 2025. And of course, we continue to monitor the development of the situation in the Middle East and the impact that the recent peace agreement may have on IVF cycles in the region. Before we open up for questions, I would like to thank the exceptional team at the Vitrolife Group for all of your hard work and dedication. I would also like to thank our shareholders for your support and your belief in the Vitrolife Group. Thanks, Micah, thank you very much, and we will now open up for Q&A. Operator: [Operator Instructions] The next question comes from Ulrik Trattner from DNB Carnegie. Ulrik Trattner: I have kind of broad-based questions regarding consumables in the different geographies. So just looking at consumables in Americas, what continues to drive your market share gains? And the same question goes for EMEA. And I guess for EMEA, it's more on the case of one of your competitors at being in a restructuring phase. Just trying to figure out how long this sort of gains could last for? And as for APAC, I hear all what you're saying in terms of demographical challenges, once policy having its effect. But don't you believe that this is more of a consumer confidence kind of issue? I guess sort of the demographic changes in APAC has not really changed since the 2019 or pre-pandemic, while the sort of general economic health of China has. That would be my first question, please. Bronwyn Brophy: Okay. Thank you for your question, Ulrik. Yes. So the performance of the consumables in all our regions, as you -- well, it's positive. It's positive everywhere. I would say that in 2024, we took a lot of media share. We are now leveraging that even stronger media position to take share across the rest of the portfolio. I can't tell you who we're taking share from because we have one competitor who reports externally, but we don't get a breakdown, and the other large competitor, as you know, is privately held. But what we do know is that our growth is significantly up versus the cycle growth that our customers tell us across the various regions that they are experiencing. So I can't say who we're taking share from, but we are firmly of the belief that we're taking share with the growth rates that we experience in the different regions. And what we see from our own numbers is it's across the entire consumables portfolio now, Ulrik. Then your question on APAC, we think it's a combination. So yes, obviously, we have the endemic issues in APAC in terms of desire to have children and low fertility rates. But we do believe that the macroeconomic conditions in China are exacerbating the situation. As we know, reimbursement has improved in the country, but we haven't yet seen an uptick in cycles. So it's likely multifactorial. I think what's interesting to note, and you'll see that in my CEO comments, is we do see growth across the rest of the region. So China is becoming an outlier in APAC in terms of the growth that we can deliver for our company. So hopefully, that helps to answer your questions, Ulrik. Ulrik Trattner: Yes. And a follow-up, like a year ago, a year and a half ago, a lot of talk about the Indian market. So the Indian underlying market growing at a very rapid pace, you tagging along with that market. And it's been quite silent sort of ever sort of in the last few quarters. Can you provide us with some type of update on what's happening in India? Bronwyn Brophy: Yes. So that's intentional. It's intentional because this market has become increasingly competitive, and everybody wants to know where the growth and profitability is. So that's why we don't break down our APAC numbers; so we don't give additional detail. I'm sure we would have some very interested competitors probably listening in this morning, wondering what the India breakdown is. India is a very large market, of course, with a lot of potential. Usually, in medical devices, it's also a low-priced market. So while it may have high growth potential, it doesn't always have high growth that's profitable or at least profitable to the levels that we would need at the Vitrolife Group. But it is clearly a driver. It does form part of our APAC region, but it's not the largest market in APAC for us. So that's probably about as much detail as I would like to give on India for obvious reasons. Operator: The next question comes from Suzanna Queckborner from Handelsbanken. Suzanna Queckbörner: I have a more broad question. I'd like to get your opinion on how or where you see Vitrolife going with future M&A agenda and whether your stance has changed regarding this recently? Bronwyn Brophy: Yes. Great question. Thank you, Suzanna. So I guess, like all companies in the space, we are monitoring potential acquisitions. I think with the consolidation that has happened in more recent times, a lot of the larger-scale acquisitions are off the table now. And for us, I think as we've always said, we have a very clear strategy in terms of building an end-to-end platform. So any of the targets that we are looking at would need to be synergistic with that strategy. They would also need to be able preferably to deliver accretive growth. And then the profitability needs to be broadly in line with our profitability levels, which are typically significantly higher than most of the other players. So I'm not saying there's nothing for us to buy. They clearly are. But of course, those targets need to satisfy our key M&A criteria, and they also need to be available at the right price. Multiples have come down a lot in MedTech. So yes, I guess, from an industry perspective, it's probably a good moment to buy, but still, it has to be the right company at the right price with the right fit for the Vitrolife Group. So that's probably as much as I can say right now, Suzanna. Suzanna Queckbörner: And just to quickly follow up on that. Are there any areas that you're particularly interested in more than others? Bronwyn Brophy: Yes. I would say there are one and two areas which I'm not going to divulge, which would be of more interest. I mean we have a broad portfolio now. We have a lot of differentiation. It's really -- a lot of it is about bolstering the position that we have and staying ahead technologically. But there are a couple of -- yes, I guess, what I would call tuck-ins, potential tuck-ins from a portfolio standpoint. Suzanna Queckbörner: And then as a second question, with regard to your strategy in the U.S., we now see that you have 11% organic growth. You've made some investments in sales and marketing. How should we think about that going forward? Bronwyn Brophy: Yes. So from an expense perspective, I think sales and marketing line for Americas will be stable. We are -- sorry to use an American phrase, but we're kind of fully loaded for now. The investments that we made are -- they're driving the growth that we saw in the quarter. So we probably don't need to do anything additional for now. Obviously, we have to very closely monitor the effect of the announcement on the 16th of October and see what that means as we head into 2026. But for now, I think it's sort of steady as she goes on the sales and marketing investments in North America. Operator: The next question comes from Johan Unnerus from SB1 Markets. Johan Unnerus: Could you provide perhaps a bit further insight into the gross margin? It's pretty impressive or strong given the circumstances, FX headwinds, different product solution mix, and presumably some tariffs as well. Bronwyn Brophy: Yes. So Johan, thank you for the question. Yes, there are multiple factors in there. So it's mix for sure. So product mix and regional mix. I think our team has done a really excellent job in terms of managing the tariff impact. So we did mention during our previous earnings that we did have to increase our prices to help mitigate against that tariff impact. And the team in North America, in particular, did a superb job there. So that largely helped to insulate us from that. And then I guess we're being more strategic in terms of where we're doubling down from a portfolio standpoint. So all of these factors are playing a role there. I don't know, Par, if there's anything that I've missed. Par Ihrskog: No. But on the currency part there, we see on top line negative 7%. It's very much driven by the strength of SEK towards U.S. and euro, but of course, all currencies. And that, of course, flows through the whole income statement down to the bottom line, the impact of the currency. Johan Unnerus: And yes, a follow-up on the U.S. side. It's pretty healthy your performance in the U.S. this quarter. Of course, there are quarterly variations, but also you're putting in effort to go-to-market investment in OpEx. What is the dynamic here? How much is sort of natural variations, your early traction from your early traction from improved go-to-market strategy or something else? Bronwyn Brophy: Yes. So I think it's a couple of things. First of all, thank you for the question. I think it's a couple of things. I think it's the increased investment. I think it's the adjustments that we've made to our go-to-market model. We've ramped up our marketing, which has increased our awareness. We've sharpened our branding. I mean the Vitrolife Group is synonymous with quality and service. And Americans like high quality, and they like best-in-class service, and that is synonymous with our company. So I think it's a combination. I think it's the investments, the go-to-market, the high-quality products, the really good service, all of these things are leading to share gains and wins in key accounts across the United States and Canada, it has to be said as well. And in fact, well, I should also call out -- I mean, Americas, it's Canada, as I said, U.S., and LatAm. We have growth across all of the markets and all of the portfolio. So big brother is U.S., but the other markets are also performing nicely for the company. Johan Unnerus: Excellent. And congratulations, a pretty good quarter given the circumstances. Bronwyn Brophy: Thank you, Johan. We won't get ahead of ourselves, but it's a good quarter, yes. Thank you. Operator: The next question comes from Jakob Lembke from SEB. Jakob Lembke: I also have a question on the U.S. and Americas. And my question is, do you expect that the strong market share gains you're currently seeing that they are sort of on a similar level as recent quarters? Or are they accelerating? And also if you think that this momentum will continue into next year, also considering that you mentioned that you expect to invest less in the U.S. commercially here going forward? Bronwyn Brophy: Yes. So thank you for the question, Jakob. I think they're accelerating because, obviously, we see the breakdown by product. We don't report that externally. So we can see in some of our key product groups, if we look at the rolling 12, that it's actually accelerating. And we think this is a return on the investments that we've made there. How sustainable is that going forward? Well, I mean, if you look at our five-year strategy, our #1 double-down focus market is the United States. If we are going to win and deliver on our mission of becoming the leading global player here, we're going to need to keep this type of momentum up in North America. I'm sure our competitors will have something to say about that, but we're not going to have it all our own way. Nobody does. But we are -- certainly, our ambition is to keep this momentum up. Where can it accelerate, and where are we going to become increasingly challenged? Technologies, EmbryoScope with witnessing, that's a key differentiator for our company. And I think we should be able to gain increasing traction there. On the consumable side, continuing to take this level of share, we're going to have a battle on our hands, but we have to be ready for that, and we have to back ourselves. So I mean, this is the plan. What you're seeing in this quarter is -- what you're starting to see, again, I don't want us to get too ahead of ourselves. It's very important not to be complacent, especially in America. But what you're seeing in this quarter is a return on the investments that we've made, staying focused on our strategy despite the fact that we had to navigate some fairly bumpy quarters as an industry. And then I think the team, the team that we have on the ground there, we've recruited top industry talent and complemented it with a lot of in-house experience that had been built up in the company over many years. So it's a lot of different factors, Jakob. But I think the key thing here is not to be complacent. It's a good quarter. We need to keep up the momentum. We need to stay focused, don't get distracted, and stay the course. That's the plan. Jakob Lembke: Okay. And then just a follow-up also on the U.S. genetics business. I mean it seems to be developing quite nicely. Would you say that you have finally now turned that around and that you're confident that you can also take market share there going into next year and increase profitability? Bronwyn Brophy: Yes. So Genetics had actually had an excellent quarter in North America, Genetic Services. So obviously, in Genetic Services, we have the services business and we have the kits. The services part is doing extremely well. Can we continue this momentum in North America into next year? Yes, we should be able to because we have some large network wins there. So we have some good tailwinds. Yes, what I would say is that the Genetics business has been impacted in the Middle East. So you can see that in our EMEA numbers. We do have -- not very large, but a sizable genetic services business in the Middle East. That has been impacted. But broadly, services -- the genetic services side is -- yes, it's pretty steady and holding up a lot better than it has in previous quarters. I never like to get ahead of myself and say we're going to shoot out the lights, but it's certainly looking a lot more stable than it has certainly in the couple of years that I've been the CEO of the company. So yes, hopefully, that answers your question, Jakob. Operator: The next question comes from Ludvig Lundgren from Nordea. Ludvig Lundgren: So continuing on the U.S. and Americas. So you highlighted that cycle growth like recovered late in Q3 at the second part of the Q3. So then I assume the exit rate was a bit higher than the average or total growth rate in the quarter. So just to set some reasonable expectations here for market development heading into Q4 and '26. Are you able to share how much difference we have seen throughout the quarter in cycle growth? Bronwyn Brophy: Yes. So first of all, thank you for your question. I can't share exact percentages, but we did start to see a pickup. It was really just in the last month of the quarter, to be honest, the first two months of the quarter, we didn't see a pickup, but there is also a seasonal effect there, which can impact that. Despite the fact that we saw a pickup, we still don't believe that cycles have fully recovered in the U.S. So it remains to be seen what the impact of the announcement on the 16th of October will be. But it was more a case of a slow, steady increase in the last month of the quarter. There was no explosion of pent-up demand or anything like that. I mean it wasn't -- we're not talking about a very sizable jump, more slow, steady flow of IVF patients coming back to the clinics. Ludvig Lundgren: Okay. Understood. So, a slight improvement, then I suppose in Q4. But then just a follow-up on the IVF announcement last week. So do you expect this to yield any significant change in either cycles or like IVF insurance coverage maybe into '26 or yes ahead? Bronwyn Brophy: Yes. So I have the White House statement here in front of me. You can actually print it -- you can print it off, anybody can access it. Look, this is good news for the IVF industry. It's not brilliant news, okay? But it is good news. So if you remove a lot of the hype and you get down into the facts, what does this actually mean? What it actually means is a reduction in the price of the drugs, of the fertility drugs for patients. If you look at the White House fact sheet, there's talk of estimates, women, and I quote, women can save up to $2,200 per cycle of fertility drugs. In the United States, nobody pays list price for drugs. So I think that's the maximum amount that a patient would expect to save. Nonetheless, it is a saving. So it's a saving. It's not huge, but it is a saving. So that's a good thing. The insurance piece is more complicated, but it is positive. So essentially, what happens with the way the insurance piece is now designed is you have -- typically in the United States, you have healthcare coverage. And then usually, people will have additional or supplemental things like dental, it can be dental, can be hearing. And now there will be the opportunity to have supplemental fertility coverage. That is also a good thing, but that's going to take time. It will take time for that to come through the system. So what we are expecting, our interpretation, okay, and there can be various interpretations, is, yes, it's positive. Are we going to see an explosion in pent-up demand and suddenly, employers all over the U.S. will grant coverage, fertility coverage to their employees? No. It's more likely to be a slow, steady improvement in terms of fertility coverage for employees. So good news, more likely to lead to slow, steady improvement as opposed to a very significant pickup. I guess my own personal assessment is at least we now have clarity because what we had in quarter two and in -- yes, for most of quarter three was uncertainty. Are we getting an announcement? Are we not getting an announcement? What is it going to entail? What is it not going to entail? The really good thing to come out of all of this from the 16th of October is patients now have clarity and they can decide how they want to time their IVF treatment. So personally, I see this as the biggest advantage of all. So yes, hopefully, that helps to answer your question a little bit. There's a lot to unpeel in that announcement. If you separate the hype from the facts and the 2,320% reduction, this is essentially what it means. Yes. Ludvig Lundgren: And then I just wanted to squeeze in one more for Par on operating expenses, up 4% year-over-year. And I think it's mainly explained by these IT investments in admin. So just if you could give some flavor on these investments, like is it up from Q2? And how should we expect this to develop in Q4 and into '26? Par Ihrskog: Yes. As I explained, it's the investment in IT and digitalization across the company in various functions in manufacturing in admin, and so on. We have invested in the last couple of quarters somewhat more on IT and digitalization, and the increase compared to last quarter -- the quarter last year is not only IT digitalization, but it's a big part of that increase. But compared to Q2 and Q1, it's more or less in line, slightly higher perhaps, but more or less in line. Operator: The next question comes from Ulrik Trattner from DNB Carnegie. Ulrik Trattner: A little bit different angle here, sentiment for genetics and predominantly PGT-A. I note from a lot of focus on STRA and ASRM on workflow protocols, how to manage sort of PGT-A workflows. So where is sort of the customer sentiment, and where are we at in terms of your commercial traction in -- both in EMEA and in the U.S. I know that you're saying that you're having a bit of struggle in the Middle Eastern part, but good traction in the Western Europe and U.S. is obviously doing quite well. So where are we at segment-wise? Bronwyn Brophy: Yes. So thank you for the question, Ulrik. PGT-A, it's accelerating for our company. We're doing very well. And when I say PGT-A, you know this, Ulrik, I mean the PGT-A family of family of test, PGT-A and PGT-M. The growth is more than robust. It's very strong in North America, and it's also strong in EMEA and in Western Europe. I do agree with you on the workflow piece in terms of guidelines and bringing more consistency and standardization to that workflow. But we see that as a positive thing. Standardization is good. Guidelines are good. We welcome that, and it tends to positively impact us as opposed to negatively. So yes, I mean, the PGT-A family of test is a key growth driver. And for us in our key markets, it's very healthy. Ulrik Trattner: And how about the Embrace test and essentially your entire noninvasive family of tests? How are those received, and how is that looking? Bronwyn Brophy: So also very well received, high growth, albeit from a much lower base, very strong growth for Embrace, actually. So yes, it's -- noninvasive is, I suppose, in many ways, the future. But a lot of people like the standard tests as well. But if you look at our portfolio, the noninvasive piece in general, the growth rates from lower base are significantly above the growth rates across the rest of the genetics portfolio. So you're selling on there. Ulrik Trattner: Yes. And would you say that customers have overcome sort of the issues with potential maternal cell contamination of noninvasive PGT-A? Or has that been lesser of an issue in reality versus what was implied technically? Bronwyn Brophy: Yes. I think it's less of an issue because there's much more education around that now. So we -- I mean, initially, clinics would put push back, Ulrik, on the contamination piece because they didn't understand it. Now I think with increased education and understanding, they appreciate the benefits of the contamination factor now. So it isn't -- it's not so much an issue anymore at all, really. Yes. Ulrik Trattner: And an additional follow-up on that because this leads into potentially sort of the million-dollar question on your end. When can we expect a combination of a noninvasive PGT-A test and error test, and time lapse or your EmbryoScope on the U.S. market? Bronwyn Brophy: Well, that's a million-dollar question or a billion-dollar question, which I could never reveal because it's such a source of strategic and competitive advantage to our company. But we have our R&D programs, and we're working on them steadily. And most of them are on track or slightly ahead of schedule. And that's about as much as I would like to say on that topic. Ulrik Trattner: And last question on my end. And since we have Par on board, I need to -- looking at the balance sheet and potentially another direction beyond M&A, I guess you're happy with your current portfolio, could add a few product X, Cryo, Genetics, but I guess platform acquisitions are out of the picture. How about not just exploiting the option of doing buybacks? Par Ihrskog: Yes. Thank you. That's a good question. Yes, we are looking into different alternatives, what to do with the excess cash. And we will, of course, have our view and recommendation to the Board. But ultimately, this is, of course, a Board decision. Ulrik Trattner: But you have suggested Board of Directors. Par Ihrskog: I have not suggested anything yet. I'm only three weeks in here. But we are looking into that. And down the road, we will suggest our proposals to the Board. But ultimately, that is a Board decision. Operator: The next question comes from Suzanna Queckbörner from Handelsbanken. Suzanna Queckbörner: Just one more question relating to the U.S. share gains. So you said that you've been taking share gains across the entire portfolio. I was wondering if, within Genetics, there's been the long-term ambition to sell more high-margin tests versus low-margin tests. Can you maybe talk a bit about this dynamic in terms of the lab testing companies, and yes, whether you've been able to make that transition? Bronwyn Brophy: Yes. Fantastic question. Thank you, Suzanna. So within our PGT-A family of tests, we do have levels of differentiation. So obviously, I mean, you know this very well with your background. We have PGT-A. We have PGT-A+. And some of those tests, I won't reveal which, but some of those tests have a higher margin profile. So what we are doing is obviously focusing our efforts on the more differentiated, higher-margin tests in order to improve the profitability. Essentially, we're doing exactly what you're asking in your question. How do we go about that? It's doubling down on the differentiated areas where we can command a premium price because of the level of differentiation that could be that can be slow, it can be feed, the various different elements in there. Does that answer your question, Suzanna? Suzanna Queckbörner: Yes, I think it does. Operator: The next question comes from Jakob Lembke from SEB. Jakob Lembke: I have two further questions. Firstly, on APAC, I mean, 1% growth here in the quarter, and you say that regions outside of China going well. So I guess we could almost infer them that China is declining. So given this, could you maybe break down your expectations for APAC growth next year, sort of what you see in China and outside of China? Bronwyn Brophy: Yes. Thank you for the question, Jakob. So yes, I mean, China has -- the entire IVF industry in China is impacted, as we know. And obviously, we have a lot of conversations with our colleagues in the drug company. So they're seeing the same dynamic. But what's interesting is the rest of APAC is performing pretty robustly, at least it is for us. So the key question for everyone is, when does China start to improve? When do the improved reimbursement, when or do the improved reimbursement conditions start to kick in? I think to one of the earlier questions, how much of this is linked to macroeconomic sentiment, there is an element of that. So it's complicated, Jakob, to sort of assess when does China turn. I think what's key for us is that we hold our very strong position in China, like we have market leadership positions in certain key categories, very strategic and important ones. So making sure that we continue to hold very firmly there, and we are. And then accelerating our growth across the rest of the region, and we're also doing that. I mean, as I'm speaking to you, I can see our growth rates in the other markets across the region. So it's really a case of holding our position firmly and strongly in China, as hopefully, market conditions improve there and then accelerating our growth across the rest of the region and reducing our reliance on China. And that's how we've been able to turn APAC positive this quarter. Hopefully, that answers your question, Jakob. I need to be rather circumspect in terms of the level of detail I give on APAC. Jakob Lembke: Yes, I understand. That's fine. My second question is sort of a follow-up to the admin costs, which has been surprisingly high this year, both here in Q3, you mentioned IT investments, and they were also quite high in Q2. So just if you can give any thoughts on admin costs for 2026, if they will continue to expand or sort of normalize, or yes, maybe decline. Yes. Par Ihrskog: Yes. No, as I said, the Q3 operating expense aligned well with our average OpEx level over the past seven quarters. So we see it as a consistent and stable cost trend, and we don't have any plans to increase that from this level. Of course, we are exposed to inflation and stuff like that, that we will have to handle, but we don't have any major plans to increase. But of course, our strategic investments in IT and digitalization is important for us, and we will continue to further develop our capabilities in that area. Yes. Bronwyn Brophy: Yes. If I would add, I think the OpEx, to Par's point, has been very stable for seven quarters. What has changed is the mix. So obviously, we've been trying and have very tight cost control measures throughout the year. And so we do see some areas coming down, but other areas where we're strategically investing in a very premeditated way, and IT and digitalization is key there. So yes, hopefully, that helps to answer your question, Jakob. Jakob Lembke: Yes. And maybe if I can take a short final question just on technologies, it was a very strong quarter Q4 last year, and what you see there for Q4 this year. Bronwyn Brophy: Yes, it was. It was a huge quarter. Typically, it is our largest quarter of the year. The comps will be challenging. So there's kind of pros and cons on this one. Challenging comps, that's a headwind. But typically, Q4 is the strongest quarter. So that's a tailwind. We do have a very good pipeline, very robust pipeline. And as I mentioned earlier, the combined EmbryoScope and eWitness is starting to gain traction. So that's a tailwind. But throughout this year, I think across the entire med tech industry, capital purchases have been delayed and postponed. We ourselves see that the selling time of EmbryoScope has lengthened. We do very tight funnel management using Salesforce across all of our regions on EmbryoScope. So we can see the metrics, and we know it takes longer for the deals to come in. But we don't see cancellations of orders, and we don't see needs dropping out of that funnel. So yes, I think there are pros and cons going into quarter four. The team are very focused on driving that. Yes, I guess that's about as much as we can say for now. Operator: The next question comes from Ludvig Lundgren from Nordea. Ludvig Lundgren: So just a very quick question, a follow-up to Jakob's question there. So yes, quite stable OpEx year-over-year, but you also should have some headwinds on the OpEx side from FX. Like looking at OpEx to sales, you're up a bit year-over-year, right? So then I just wondered like, yes, for us modeling, is it possible to share an organic like OpEx increase year-over-year, and how that has developed here in Q3 specifically? Par Ihrskog: Sorry, can you clarify that question again, please? Ludvig Lundgren: Yes. So basically, what I'm requesting is if you have an organic like operating expense increase because we saw a 4% increase reported, but you probably have some tailwind on the cost side from FX. Bronwyn Brophy: Yes. Par Ihrskog: Yes, we have, of course, that as well. So yes, and we have an organic increase partly offset with the currency impact, of course. Ludvig Lundgren: Okay. So is the organic number closer to 10% or like just to get a sense of how much costs are growing here into Q4? Par Ihrskog: Yes. We don't disclose that number exactly, but it's, of course, is higher than 4% and closer to 10%. That's a good estimate. Bronwyn Brophy: But you are correct, Ludvig. There is obviously a currency element in there. There's currency element everywhere. It's flowing through all of the financials, as you can see. Okay. I think we need to finish up there. Thank you all for your time, your attention, your engagement, and your questions.
Operator: Ladies and gentlemen, welcome to the Q3 Results 2025 Conference Call of Beiersdorf AG. I'm Moritz, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. The presentation will be followed by a question-and-answer session. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christopher Sheldon, Head of Investor Relations. Please go ahead, sir. Christopher Sheldon: Good morning, everyone, and thank you for joining us for our third quarter conference call. I'm here with our CEO, Vincent Warnery; and our CFO, Astrid Hermann. As always, we will start with the presentation of our sales performance of the quarter and the first 9 months of the year, followed by a Q&A session. And with that, I'd like to hand over to Vincent. Vincent Warnery: Thank you, Christopher, and good morning, everyone. Thank you for joining our conference call. Astrid and I will provide an overview of our sales performance and key developments of the third quarter and the first 9 months of the year. The third quarter continued to be impacted by a very challenging market environment. Despite the headwinds, Beiersdorf was able to improve its performance versus the prior quarter. Our Derma business continues to outperform, delivering outstanding double-digit growth and winning market shares across regions. In September, we kicked off 2 major NIVEA launches. In our face care franchise, we roll out our breakthrough ingredient Epicelline. In our deodorant range, we launched the new Derma control line. While the initial impact on Q3 was limited due to timing, these launches are a key building block for our performance in Q4. We've also initiated a strategic rebalancing of the NIVEA core portfolio by broadening our efforts beyond face care to other skin care categories and reinforcing high potential categories like deodorants. And finally, in a continued challenging market, La Prairie returned to growth in Q3, supported by improved momentum in China. Let's take a closer look at how these developments are shaping our recent performance. The third quarter showed signs of gradual improvement, while we continue to see volatility across key markets. NIVEA continues to face pressure from an even weaker mass market environment especially in emerging markets, resulting in an organic sales decline of 0.4%. The major launches initiated in September only had a limited impact on Q3. Excluding the strategic repositioning in China, which is now completed, NIVEA's organic sales growth would have been positive. Our Derma business, with Eucerin and Aquaphor, once again delivered strong double-digit growth of 12.4%, reaffirming its role as a key growth driver in our portfolio. Our Health Care business, which includes the Hansaplast and Elastoplast brands outstanding growth of 9.8%, still supported by the successful rollout of our Second Skin plaster innovation. And despite ongoing market volatility, La Prairie continued its sequential quarterly improvement as planned, turning to positive organic sales growth of plus 1.6% in Q3. Overall, our Consumer Business recorded organic sales growth of 2.1% in the third quarter. Let me point out that our skin care organic sales growth increased to 4% in Q3 compared to 2.6% in the first half of the year. Beiersdorf's performance in the third quarter was flat, in line with our expectations and impacted by the difficult environment in the automotive industry. The Electronics segment, on the other hand, delivered a positive contribution, driven by a strong performance in Asia. Overall, this results in group organic sales growth of 1.7% in Q3. Looking at our Derma business in more detail. Once again, we delivered double-digit growth of 12.4% in the third quarter, a fantastic results on top of the tough 2024 comparison base when we first launched Epicelline. This underlines the strength of our innovation pipeline and our ability to identify and capture white space opportunities. It proves that we can deliver outstanding results and outperform competition even in markets that have slowed down substantially compared to previous years. Innovation remains the cornerstone of our success. This applies both to breakthrough ingredients and to the regular relaunches across our portfolio. Epicelline launched just a year ago, continues its successful rollout and remains a key growth driver in our Derma portfolio. And Thiamidol, which has been on the market for 7 years, continues to grow double digits. At Europe's leading dermatology congress EADV, Thiamidol was recognized as the only Derma-cosmetic active ingredient delivering effective treatment of hyperpigmentation at the root cause. This was endorsed by a newly established global consensus for the treatment of hyperpigmentation, a powerful validation of our science-led approach. But innovation doesn't stop with our hero ingredients. We continue to invest in regular relaunches across our portfolio. With our new Eucerin DERMOPURE Clinical range, for example, we are not simply introducing a new product line. We are delivering science-based solutions for acne, a skin concern that affects up to 85% of people globally. Acne is a leading reason for dermatological consultation and one of the fastest-growing categories in skin care. Our Derma business is not only performing across categories, it's also delivering across regions. In North America, our largest market for Derma, we achieved outstanding growth of plus 56% in the Eucerin Face category despite the slow overall market. The launch of the Eucerin Radiant Tone range with Thiamidol earlier this year, is showing excellent traction. In Europe, we are excited to report double-digit growth of plus 10%. This was fueled by the continued success of Epicelline, which is reinforcing our innovation leadership in the region. Looking at Northeast Asia, the entry of Eucerin into the domestic market in China has exceeded expectations with exceptional organic sales growth of plus 86% in the third quarter. Following the official approval of our patented ingredient Thiamidol last year, we are already seeing early success in the market. The Eucerin Thiamidol serum has already achieved a double-digit market share making it the #1 derma anti-pigment serum in China. And last but not least, we'll be launching Eucerin Japan, another white space next month. With NIVEA, we successfully started the launch of our breakthrough ingredient Epicelline in September. Building on the strong results achieved with Eucerin, we are now scaling this innovation into the mass market. This is the biggest NIVEA launch of all times. While the impact on our Q3 figures were still limited due to timing of the launch, the first week has already performed above our expectations. We are seeing strong early traction, including #1 category positions across key European markets. In France, for example, the NIVEA Epigenetics Serum reached the #1 position in hygiene and beauty products. And in Germany and Austria, we secured the #1 face care position at dm, the region's largest drugstore retailer. The initial strong launch performance is also visible in our September net sales figures for NIVEA with organic sales growth of plus 7.8%. A key driver of this momentum alongside the very recent NIVEA Epicelline launch, has been our NIVEA Derma Control Deodorant range. This is where our skin care expertise meets the high performance of personal care, the skinification of deodorants. While our recent launches are encouraging, we acknowledge that NIVEA's overall performance has fallen short of our initial expectations this year, particularly in the second quarter. So let me remind you of the journey we are on. Four years ago, we put a strategic focus on skin care, our core strength. We are committed to innovation, expanding into white spaces guided by our belief that beauty is global and offer-driven. This strategy has delivered outstanding results since 2022, 2023 and 2024, NIVEA achieved exceptional growth in some cases even double digit. That success gives us confidence in the path that we have chosen. Now to ensure that NIVEA continues on the strong growth trajectory we are making targeted adjustments with a proactive rebalancing of our portfolio. What does it mean? We are broadening our focus within skin care. While face care remains a key category, we are balancing our R&D and marketing investments across other skin care segments. We're also reinforcing deodorants as a strategic growth pillar, a category where NIVEA has a strong right to win through innovation. NIVEA is a value for money brand and stands for affordable prices, and that remains unchanged. While we see customers' willingness to pay for breakthrough innovations like Thiamidol and Epicelline, most of our portfolio continues to be priced at accessible price ranges. We know there is work ahead, but we also know that we are capable of, and we are taking action to bring NIVEA back to stronger growth and continue building on its legacy as 1 of the world's most trusted skin care brand. And let's not forget, as we have always said, even a brand has established as NIVEA still offers significant white space opportunities. A great example is India, where we launched NIVEA Face earlier this year and are continuing our double-digit trajectory. We are equally excited about the potential of NIVEA Thiamidol in China, where we are just beginning to build momentum. This leads me to our NIVEA repositioning efforts in China, which were completed at the end of Q3. Performance has stabilized, and NIVEA in China is already back to growth in October setting the stage for acceleration in the remaining fourth quarter. Our strategy in China is clear. We aim to win through innovation in skin care. With Thiamidol as our hero ingredient, we are confident that it provides a distinct competitive edge in this highly dynamic market. China remains a key opportunity for us in the mid- to long term. It's a demanding environment, but with the right portfolio and continued innovation, we are convinced that NIVEA is well positioned to compete even against strong local brands. Coming to La Prairie, which is back to growth. While the market environment remains volatile, La Prairie delivered a solid Q3 performance with growth of plus 1.6%. This was driven in part by continued momentum in China, which achieved growth of 3% and an outstanding double-digit sellout. I'm also pleased to announce a major milestone in our global expansion strategy. After successfully establishing NIVEA Face and Eucerin in India, we've now expanded our premium portfolio with the launch of La Prairie, exclusively on Nykaa. This marks our entry into 1 of the world's most dynamic and fast-growing beauty markets, an important step in strengthening our global footprint. Before I hand over to Astrid, let me turn to our e-commerce performance. E-commerce continues to be a key growth driver for Beiersdorf. In the first 9 months, we achieved organic sales growth of 16.6% with Q3 accelerating to 19.2%. We are gaining market share everywhere, with particularly strong momentum in emerging markets in Europe. Our Luxury e-commerce business continues to grow, fueled by targeting online activations, while our Derma portfolio shows global trends delivering double-digit growth across all regions. Astrid will now take us through the tesa results and our financial performance in more detail. Astrid Hermann: Thank you, Vincent. Now let us review tesa's business performance for the first 9 months of 2025. Despite ongoing market challenges, tesa delivered 2.0% organic sales growth year-to-date, rising uncertainty and the potential impact of U.S. tariffs continue to affect demand, particularly in Europe and North America, while Asia continues to be a strong growth contributor. Our Electronics business was a key growth driver, supported by strong demand for major customers, particularly in Asia. The automotive segment continues to navigate a complex and volatile market environment. Despite the challenges, the segment showed resilience and delivered growth in some regions, particularly in Asia Pacific, where we are winning new customer projects. tesa's consumer segment remains under pressure, especially in Europe, Nevertheless, it achieved growth over the first 9 months, supported by a solid performance in the third quarter. Finally, I'd like to highlight a leadership change Dr. Kourosh Bahrami, has succeeded Dr. Norman Goldberg as CEO of tesa, with over 30 years of international leadership in the adhesive industry, Dr. Bahrami brings strong leadership and a clear commitment to drive customer value and sustainable growth. We thank Dr. Goldberg for his transformative leadership and look forward to continuing tesa's successful course under Dr. Bahrami's direction. Now let's continue with our 9-month sales performance in more detail. In the first 9 months of 2025 Beiersdorf Consumer division grew by 2.0% organically. Due to unfavorable foreign exchange effects, nominal sales declined slightly to EUR 6.25 billion. The tesa division reported solid organic growth of 2.0% for the same period. In nominal terms, net sales remained flat at EUR 1.29 billion. Overall, the group generated EUR 7.5 billion net sales in the first 9 months of 2025, translating into 2.0% organic sales growth. Now let's take a closer look at the performance of our brands within the Consumer Business segment. Vincent has already provided an overview of the third quarter sales results. So I will focus on a summary of our brand's performance in the first 9 months of this year. In a persistently challenging market environment, NIVEA delivered modest growth of 0.6% in the first 9 months. Our performance was further impacted by higher competition from local brands and the strategic repositioning in China, which we successfully completed at the end of Q3. In addition, our innovation pipeline was weighted towards the second half of the year, especially Q4. Key launches, including Epicelline and Deo Derma Control, were launched in September and only had a minor effect on Q3. They are expected to be a strong pillar of our growth in Q4. Derma sustained its strong momentum with an outstanding performance over the first 9 months, achieving 12.3% sales growth, clearly outperforming the market and our peers. Eucerin Face delivered exceptional results driven by the successful rollout of Epicelline and the launch of Thiamidol in the U.S. Growth was further supported by the remarkable success in Latin America, particularly in Brazil and Mexico, as well as the successful launch of Eucerin in domestic China and India. Building on the strong momentum from the first half of the year, Health Care continued to reinforce its market position in Q3, delivering a remarkable 8.8% sales growth for the first 9 months. Australia and Indonesia delivered double-digit growth, both in Q3 and across the 9-months period, while Germany also accelerated to double-digit growth in Q3. For La Prairie, we have seen a gradual improvement quarter-by-quarter, resulting in a return to growth in the third quarter. This recovery was supported by an improving performance in China, particularly a strong e-commerce business during Q2 and Q3. Let's take a closer look at the organic sales growth of our Consumer Business in the first 9 months across regions. In Europe, we grew by 1.2% with Western Europe growing 1.7% and Eastern Europe slightly declining with 0.7%. Western Europe was negatively impacted by the global luxury travel retail business, particularly during the beginning of the year. Eastern Europe faced pressure from a broader market slowdown and retailer conflicts, particularly in the first half. The Americas region concluded the first 9 months with a robust growth of 2.2%. North America showed a mixed performance with excellent results in Derma, driven by the Thiamidol launch in the U.S. while facing some headwinds in the mass business and with Coppertone in the tough sun care market. Latin America grew by 2.0%, also reflecting a mixed performance. Eucerin delivered strong double-digit growth with outstanding results in key markets such as Mexico and Brazil while our NIVEA business was impacted by general market slowdown, particularly in the deo category and by increased competition from local brands. The Africa, Asia, Australia region delivered solid sales growth of 2.9% despite a negative impact from the ongoing NIVEA portfolio cleanup in China, which was successfully concluded by the end of Q3 as planned. Strong growth was recorded in markets such as India and Japan. With that, I would like to hand over to Vincent, who will provide the outlook for the rest of the year. Vincent Warnery: Thank you, Astrid. Let us conclude with our guidance for the rest of the year 2025. The Consumer Business delivered plus 2% organic sales growth over the first 9 months with an improvement visible in Q3. At the same time, we saw a further deterioration of the market in the third quarter, especially in emerging markets, which is affecting the core of our mass market business. As a result, we are adjusting our full year guidance to around 2.5% organic sales growth for consumer. Our expected growth for the fourth quarter is based on the following pillars. NIVEA is entering the final quarter with a strong innovation pipeline. We recently launched Epicelline, our breakthrough innovation in skin care along with our new derma control deodorant. These launches are still in the early stage and are expected to gain traction and visibility throughout the fourth quarter. Early indicators and the September performance are positive as highlighted in our presentation. The remainder of the year will be driven by the performance of these launches as well as the strengthening of Nivea core business to support both we have implemented targeted rebalancing measures to reinforce our core categories, while at the same time, supporting the successful rollout of our innovations. In China, the strategic repositioning of Nivea, which had a negative effect on our performance during the first 9 months has now been completed and will no longer weigh on our results going forward. Our luxury business with La Prairie is beginning to show encouraging signs of improvement, the return to growth in the third quarter. Finally, our Derma segment continues to perform strongly. We expect double-digit growth over the full year while Q4 is expected to remain below the 9 months performance due to an exceptionally strong fourth quarter in 2024 when Epicelline was rolled out initially. We still confirm our EBIT margin guidance with an improvement of 20 basis points, excluding special factor in the Consumer segment for the full year. In the tesa Business Segment, we confirm our guidance of 1% to 3% organic sales net growth and an EBIT margin, excluding special factors, at around 16%. At group level, we expect organic sales growth of around 2.5% with the EBIT margin, excluding special factors, slightly above last year's level. We continue to be committed to outperforming the market over mid-term, driven by innovation and strategic expansion into white spaces. On profitability, as we have stated in the past, will not sacrifice long-term value creation potential over short-term margin optimization. Nevertheless, we remain committed to profitable growth with EBIT growing at least as fast as the top line. We'll provide further guidance for 2026 and beyond in our full year 2025 call. Now over to you, Christopher for the Q&A. Christopher Sheldon: [Operator Instructions] And we will start with Patrick Folan of Barclays this morning. Patrick Folan: Just 2 questions for me. Maybe focusing on NIVEA first. You had a strong September performance. Was this mainly due to the Epicelline sell-in here and your Derma deo performance? Or was there a wider recovery in the core portfolio here? And my second question is that you talk about value for money for the NIVEA brand, are there any changes you are making to the current pricing strategy with NIVEA in any of your markets? And in terms of the Epicelline price point in Europe, are you still targeting a EUR 25 to EUR 30 pricing? Vincent Warnery: Patrick. On your first question, yes, absolutely, the success of the month of September is mostly due to the launch of Epicelline, NIVEA Epicelline and Derma Control, as the core business, the core market has been in line with Q2. Epicelline is really doing extremely well. I receive every day very good sell-out results. I mentioned, #1 hygiene and beauty product in France. I mentioned also Germany. I was looking also at Italy. This is already the #1 serum in Italy. This is the #1 serum in Netherlands. This is the #1 face care product in Switzerland, in Belgium, in Spain, in Portugal. So clearly, it was already by far the best ever launched Epicelline, but we clearly sell out going in the right direction. Derma Control, we launched it a bit later. We are doing extremely well. I mean, Romania, we are back to the best ever market share in deo. We are regaining market share in deo in Germany. So I feel also very positive about that. On your question about the value for money, I think you have to really to remember that there are only 2 expensive products in the range of NIVEA, which are the Epicelline and the Thiamidol launch. The rest of the product are priced between EUR 2 and EUR 4. So there is no issue of price positioning. This being said, we are currently launching Epicelline. And the way the business is managed, we have some promotions. So for example, if you go to the U.K. that [ Bucci ] is promoting the product at GBP 24, for example, versus a normal price at GBP 29. We have also some promotions. So we will fine-tune the -- we'll see a little bit of the first months are working. And if we feel the need to go below EUR 29, could be EUR 28, EUR 27. We'll do it just to be sure that we have absolutely the right price elasticity. On Derma Control, we had EUR 2.80, so absolutely no issue. So the only open question and again, we'll have the market results soon is do we decrease the price of Epicelline by EUR 1 or EUR 2 in Europe, knowing that, as you might remember, in emerging markets, we are pricing Epicelline below. We are at EUR 22, having also a specific packaging, which allows to keep the same margin, but at a lower price. Patrick Folan: Okay. Just to clarify one thing there. Just on pricing, so you feel comfortable with the price points you have in your current portfolio as we go into next year? Vincent Warnery: Absolutely. I mean the prices are between EUR 2 and EUR 4. What we are clearly trying to do is to reduce the price increase we do next year. You might remember that we were the only brand doing a price increase in 2025, which created some customer retaliations. We try to minimize that next year, focusing really on the products and the innovation where we are bringing a real added value to consumers. Christopher Sheldon: The next question is from Celine Pannuti of JPMorgan. Celine Pannuti: My first question is on the market growth. Vincent, you said that the market has decelerated, especially in emerging markets, and you adjusted your guide for that. How do you feel the company can deliver as you look into 2026? So also given that you're talking about the rebalancing of investment for NIVEA, I wonder as well if you can provide on how you feel in terms of your new level of investment in the deodorant and personal care part and whether for 2026, we should expect that you have -- you need this extra investment and maybe a limited margin expansion? That's my first question. I'll give you the second one after. Vincent Warnery: On your first question, Celine, so what we clearly see, and I mentioned that in my speech that the market -- the skin care market is difficult. And we have -- if you look at the year-to-date figures, we are more -- we are around 0.5%, 1% growth on the market with, of course, different dynamics in mass market, we are around 5%. Derma, this is the news, we are more into the 3%, 4% and luxury is still at minus 5%. So this is a market which is not growing as much as expected. We are expecting a small recovery in the months to come. We see, for example, that the derma market in the U.S. is doing better, and we are over performing this market. We see also luxury, I was mentioning China, but also saw some good figures in luxury going in the same direction. So overall, for the market growth this year between 1% and 2%, and we believe that we go slightly above next year. What we are -- what is making us optimistic in a way is that the worst market dynamics is the derma market. And this is a market which really used to be growing at double digit. And we are now into a market dynamics, which is around 3%, 4%. And this is a market where we are overperforming by a factor to between 2 and 3x the market because we are coming with innovation and because we are supporting those innovation. And this is why when I look at the dynamics next year, on NIVEA. I feel a little bit better than I would say, in 2025 because we have the launches that we are doing right now, and I mentioned Epicelline and Derma Control, but we have also a launch plan, which is much more -- much better balanced next year with more launches in the first semester versus this year and something where we can really have a more balanced dynamics launches versus core. And we are indeed, thanks also to the courageous decisions we have taken on prices, we are able to manage a pretty good gross margin, allowing us to invest -- to continue to invest on those launches. So we will rebalance a little bit the investment between the face care premium product, and we had to launch both Thiamidol and Epicelline in 2025. So rebalance this money into not only other skin care categories, also on more affordable face care proposal, for example, in emerging market, but also on the other end. So with the current P&L equation, we can increase the marketing spendings beyond NIVEA. And of course, on Derma, there is no question, we will continue to invest more. Celine Pannuti: All right. Just maybe to follow up on that, asking whether the 50 basis points plus margin expansion that's your midterm target, how you feel about it going into '26. So that's my follow-up. And then my second question, Astrid now. Can you provide a bit more details about Europe, which really came back to good growth at 3%. Was there a travel retail impact there? If you can tell us what quantify this? And how do you feel about the overall consumer and retail environment? Of course, you have the benefit of the sellout and sell-in of Epicelline. But overall, how you feel the European market is developing as we look into the quarters to come. Vincent Warnery: On your first question, so we will not give a guidance for 2026, and we'll give that in 2025, but we maintain the idea that we have to overperform the market and continue to grow profitably. So we'll come back to that in 3 months. On your question about Europe, yes, travel retail has an impact on the performance of Europe. This is a 40 basis point impact because we are overperforming this market with La Prairie, but this is a double-digit negative market. So this has an impact on Europe. When you look at the question sell-in versus sell-out, the fact that we see some improvement in deo, for example, which was really the biggest market share loss in 2025 in Europe is making us more optimistic. Even if you look at Germany, which is by far our biggest deo market we have been gaining market share over the last 3 months in a row, which is a good news. We see also that the outstanding success of the sun season in Europe, we grew 12% in a market which was growing double digit, but this is really one of the best performance in Sun is also giving us some good momentum. So deo, I would say we feel positive. Sun care is positive. The question is face care. As I said, the sellout results we are getting from specific retailers is promising. But you remember my story, sell-in is one thing, sell-out is another thing. Repurchase is absolutely essential, and this is what we'll be able to measure in the first quarter. So not to -- neither optimistic nor pessimistic, but some good signals that will -- should give us some better performance in Europe next year. Christopher Sheldon: The next question is from Jeremy Fialko of HSBC. Jeremy Fialko: So a couple of questions from me. First one, just to go into the Eastern Europe region that was kind of pretty negative within the period. So just what's going on there? And then the second question is just on kind of capital return. Now you've done the EUR 500 million share buyback for the last couple of years. Do you think -- what do you think the potential would there be to increase that in 2026, given where the share price is [indiscernible] given the kind of existing authority that you have got, if that's something you think would be on your agenda to bring on a board? Vincent Warnery: First question, yes, indeed. Eastern European used to grow double digit. The market was really booming. It suddenly decelerated vigorously and moving from a plus 12% to plus 2%, plus 3%. There's also interesting competitive environment, which has changed. If you look at a country like Poland, 100% of the growth is coming through Korean brands and not really big Korean brands, but Korean brands are there for 6 months and then replaced by others. So all of us, all the global brands are suffering from that. What also worsened the situation are a few customer issues that we have been able to solve. So that's something where we should have a positive momentum in 2026. But the key question is, and this is where obviously rebalancing the portfolio for us is to be sure that we are not only investing on Epicelline and Thiamidol, but we have also a strong action on deodorants. This is by far our biggest market in Eastern Europe. So that's what we are doing right now. And I mentioned the example of Romania, for example, where we reached our best ever market share in deo. That's something which is giving us some hope. On your question about share buyback, we just closed, the second time we did share buyback. So you have to allow us to discuss with the Supervisory Board at the end of the year what we want to do. What is essential? You remember that in terms of priority, we know that we have too much cash available and the priority should and will continue to be M&A. Christopher Sheldon: The next question would be from Guillaume Delmas from UBS. Guillaume Gerard Delmas: Two questions for me, please. The first one on the 2025 revised outlook. I mean, still trying to reconcile this updated guidance of around 2.5% for Consumer. That seems to imply a little bit more than 4% organic sales growth in Q4, but you also had that very strong momentum of NIVEA in September, growing nearly 8%. So why -- wondering why you would expect such a sequential slowdown between September and the fourth quarter? And then my second question, it's on the changes you are making to your strategy, particularly that stronger support behind more skin care categories and deo. I mean, I guess, first, when do you think we should start seeing some benefits from this? I mean, could it be immediate? Or is it more of a slow burn? And secondly, given that your margin guidance for the year for 2025 for Consumer is unchanged, would it be fair to assume that at this stage, it's much more about reallocation of resources rather than an overall increase in your marketing budget? Vincent Warnery: Guillaume, on your first question, you should not forget that, obviously, when you launch a new -- I mean, the biggest launch ever on Epicelline and NIVEA plus a range of 6 or 7 SKUs of deo in September, you cannot continue the same momentum for the next 3 months. So you will have -- the pipeline effect will be, I would say, September, October. And then you have the sellout. So this is why we have indeed planned the growth with the full success of those launches, but a core business, which will not improve dramatically. So that's the assumption of the Q4. This is why we wanted to come with a more realistic assumption for Q4, which is, by the way, consistent with what all of you thought. On the rebalancing, no, I mean, the reason why we came with Q2 and we decided to change the guidance on EBIT moving from plus 50 basis points to plus 20 basis points is simply because we knew that those big launches were coming in Q4, and we knew that it would have been a shame not to support them just because we wanted to deliver in a kind of dogmatic way the first guidance we gave on EBIT. So the 20 basis points that we -- the 30 basis points that we decided to allocate to marketing budget are exactly the money we're going to spend in Q4, and we have the biggest ever spending on the face care launch on NIVEA and the biggest ever spending on the deo launch on NIVEA on top of, of course, continuing to support the launch of all the launches and the activity of Derma and the bigger mission in China with 11/11. So no change in the media strategy, just using the 30 basis points that we freed in the Q2 to support those big launches in the weeks to come. Christopher Sheldon: The next question is from like Ulrike Dauer from Dow Jones. Ulrike Dauer: I hope you can hear me. I don't have much of a voice today. Sorry. I'd like to ask a question about the U.S. import tariffs after the failed tariff deal between Switzerland and U.S., the import tariffs are now 39%, which are affecting La Prairie. And I was just wondering, will you be able to pass on the additional cost to customers? How much more expensive will be even already expensive products deal? And is that still not enough for a strategy change? Or do you consider maybe producing more in the U.S. now like many other companies more or less voluntarily are planning to do? Also, the overall import tariff exposure, you said that a lot of the products for the U.S. market are produced in Mexico or other countries. Can you quantify additional costs related to those new import tariffs by quarter, by full year? Is there any additional information you might be able to provide? I have some other question about Kering. Maybe you can answer that question later. Vincent Warnery: Your question about La Prairie. So yes, indeed, the Swiss government has not yet been able to negotiate a reduced tax level tariff increase with the U.S. So we have indeed this extremely difficult situation. We have been, of course, anticipating the change of service. So we are covered, I would say, in terms of stocks in the U.S. For the time being, we are waiting -- wait and see in a way. We do not believe today that it will be wise to implement immediately the tariff increase on the La Prairie prices, which, as you mentioned, are already very high. You imagine that in percentage is high, but in absolute value, it's extremely high for La Prairie. So we are not planning to do that. You can imagine that we have anyway a gross margin, which is pretty comfortable on La Prairie. We will see the way other competitors are acting. What is absolutely out of the question is to produce in the U.S. because the strength of La Prairie is made in Switzerland. That's the story of the brand. So we'll absolutely not produce in the U.S. We'll continue to produce in Switzerland. On your second question, you rightly mentioned that we are in a way, lucky because we have one -- a big part of the production that we are selling in the U.S. is produced in the U.S. and the other big part is in Mexico, where there was no additional tariffs. So we have today an economic equation, which is pretty good for our business. Yes, we have a few products produced in Europe. So they will be affected by the 15% tariff increase, but it's really a minor, minor part of the range, and we'll be able to absorb that either through small price increases or just by managing value engineering projects. So all in all, yes, La Prairie is an issue, but it's a small part of the business in the U.S. The rest of the range is in a way, protected. Ulrike Dauer: May I ask one more question about the Kering brands that were up for sale. Have you looked at them and considered or don't they really match your portfolio strategy? Vincent Warnery: Ulrike, we are good in 1 category, which is skin care, skin care, skin care, and we are lucky enough that this is by far the biggest beauty category in the world. We have no expertise in perfume. So it would have been a mistake to enter this field without any expertise, so we did not even look at the project. Christopher Sheldon: And the next question is from Bernadette Hogg of Reuters. Bernadette Hogg: I'm sorry. I was still in mute. So it's a bit of a recap question on the slowdown of the market -- in the emerging markets for skin care. So do you see these factors as temporary? Or is it more structural? And how long do you anticipate it lasting? And what are the major causes of the slowdown? Vincent Warnery: A clear deceleration. We used to have an emerging markets, skin care growing double digit. We end up to a level which is close to low single digit, even negative in some countries. There are a few phenomenons which are taking place. Obviously, Latin America is hit by the -- not only the political uncertainties, but also all the discussions about U.S. tariffs, not U.S. tariffs and Mexico is a country where obviously, we -- the market was suffering with that. We see in other countries, the development of simplified routines. People -- this is what they call the skinimalism trend where people are buying less product and some of that cheaper. So the only solution, and this is what we are doing pretty successfully with Derma is to come with innovation. In fact, the worst market dynamics in emerging market is the derma market, and we are growing extremely high with double-digit growth in each and every market. We gained market share everywhere. So the recipe that we have been using successfully with Eucerin, we are using it now with NIVEA with also some changes and some rebalancing. For example, I mentioned already the fact that we -- it's the first time we are launching the same global product Epicelline with 2 different packaging proposal, so one allowing us to sell it at below EUR 22 in emerging markets, and that's much cheaper than the EUR 29 we have in Europe. We are also putting a lot of focus on products like NIVEA Soft in India, which is a fantastic accessible product, but also Facial in Brazil, which has a 30% market share in skin care. We are rebalancing our investment also on deo. I mentioned Derma Control, which is a global launch that we are launching everywhere. So we are not optimistic on the development of the emerging market dynamics. We'll see what happens. But clearly, we are coming with a much stronger innovation portfolio and -- I would say, much more -- much better adapted launch portfolio to emerging markets. So we hope to see some good figures in the months to come. Christopher Sheldon: The next question is from Anna Westkämper of Handelsblatt. Anna Westkämper: I have 2 questions regarding tesa. First of all, how dependent are you on the recovery of the automotive sector here? And second of all, are you looking into expanding into other industries like defense with tesa? Astrid Hermann: Thank you so much, Anna, for your questions. So look, automotive is a big part of the tesa business. Between automotive and electronics, they're really the pillars of what tesa has established. The nice thing about tesa is that they continue to make progress in each of the industries, in automotive as well. So while the market certainly was challenged in Europe and North America, the projects it gained, particularly in Asia Pacific, have really helped kind of balance that impact. so again, not an easy market and certainly not a huge growth driver for tesa year-to-date, but 1 that is also not a huge drag, which is very, very helpful. And yes, tesa has really invested if you followed some of our commentary also in previous calls. They've really invested over the last few years significantly into innovation and business development, and that is really to go beyond these 2 industries as well and significantly drive more business in other industries. Christopher Sheldon: And the next question is from Olivier Nicolai of Goldman Sachs. Jean-Olivier Nicolai: Just very 2 quick follow-ups. First, on NIVEA Epicelline, you obviously have it in Europe and a few other countries. But are you planning to roll this brand out across your whole geographic footprint in next year? And then secondly, on tesa, just a quick follow-up. In the context of obviously what we just discussed about the automotive market, should we expect most of the growth for tesa for next year to come from Electronics? Vincent Warnery: Thanks for your question. Yes, absolutely, NIVEA Epicelline will be launched and is launched absolutely everywhere. So obviously, not yet in China because we are focusing all our energies in Thiamidol. But this is -- the objective is to launch it in most of our NIVEA countries in the next 6 months. We have already covered Europe. We are starting now in Q4 to launch it in some emerging markets, but this is clearly a very big priority for NIVEA globally. On tesa, Astrid? Astrid Hermann: Yes. Thank you for your question on tesa. Look, we -- the tesa business absolutely wants to continue to grow in electronics. As you know, a lot of the Electronics business is a project business. So we need to win projects every single year, for example, also with the big device manufacturer. So absolutely, we continue to look for growth in the electronics business as well. Christopher Sheldon: Next question is from Mikheil Omanadze from BNP Paribas. Mikheil Omanadze: The first one would be on NIVEA. So if September was so strong, it would imply quite a sluggish delivery in July, August. Would you please be able to provide some color by categories within NIVEA, which were particularly weak in July, August? And my second question is on Chantecaille and Coppertone. How did both brands do in Q3? Vincent Warnery: On your question about the NIVEA, yes, July, August was well low also because, obviously, we had 0 launches at the time. We had also no effect on any price increase. So we did a minus single digit, I think, on NIVEA, if I remember well, on July, August, compensated by the figures of September, I was just sharing. You have also to keep in mind that's important also to mention that, that the Chinese relaunch has changed -- has obviously impacted strongly the development of NIVEA. If you look at the first 9 months, if we didn't have that this revamping of the Chinese business, NIVEA will be growing plus 1.3%. So that's also something which obviously we decided to do. We are hoping at the time to have a better NIVEA business, but it has obviously impacted the situation. The second question, Mikheil was? Mikheil Omanadze: It was on Coppertone, Chantecaille. Vincent Warnery: Coppertone, Chantecaille, yes. Coppertone, the only good news on Coppertone is that we finally found our way. We clearly have tried a lot of things with Coppertone, trying to launch in face care, trying to launch in spray, trying to develop the brand in a lot of directions. If you know a little bit the U.S. market, we have refocused on sport. We took a very famous rugby -- female rugby player. We are gaining market share on sport. It's not enough to compensate the loss of the rest of the categories. But at least we will continue to support that. We'll focus all our investment on sport, which is the legacy, the origin of the brand and try to gain market share in this category. Chantecaille, we had a very good first semester with also the launch of China, which impacted the figures. Q3 was a little bit more difficult because we suffered from the slow development of the U.S. luxury market, and we are very dependent on the luxury market. And we have not yet been able to open the stores we wanted to open. They are more coming in the fourth quarter and the first quarter. So all in all, we grow at 7%, 6.8%, which is good, but I was hoping to do better. And we'll see really the way the Chinese business, but also the Indian market, and we are launching in India will also complement hopefully, a better U.S. business in the months to come. Christopher Sheldon: And then we have Tom Sykes next in line. Tom Sykes: Just, I guess, some -- a couple of follow-ups on questions already been asked. But in terms of the rollout or level of innovation in full year '26, excluding the sort of country rollouts of Epicelline, then what's the level of that in full year '26 compared to '25? Because you obviously had theoretically a large upgrade of many products in NIVEA? And how would you view that being phased H1 versus H2? And just on pricing, I don't know whether you've given the -- I don't think you've given the commentary on sort of pricing versus volume at all at the moment. But any view on commentary you can give on that? And to what degree do you need to push price to maintain gross margins given that FX has moved from where we were, please? Vincent Warnery: Tom, on the rollout, yes, absolutely. We have a better launch plan for next year, better in 2 directions. First, balance between H1 and H2. I mean, one of the difficulties that we had this year was the fact that we had almost no launches on NIVEA in the first semester. One of the reasons being that I didn't want to launch NIVEA Epicelline too early after the launch of Eucerin Epicelline. So it has clearly created a first semester with a very low level of innovation. Next year, we have a big plan in the first semester, where clearly it's really 50-50 in terms of new launches, H1 versus H2. The second difference also it's also a wider plan in the sense that most of the initiatives in 2025 were in face care and Derma Control deo at the end of the year. We have next year some very good launches on body, on deo, on lip, on sun care. And on face care, which is interesting, not only the, I would say, the usual suspects, the premium product, Epicelline and Thiamidol, but also a very big ambition also on some more accessible offer, NIVEA Q10, NIVEA Soft, facial in Brazil in order to be sure that also in face care, we maintain this good value for money dimension. On pricing, I always say that the objective is clearly to have a dynamic which is more 2/3 volume, 1/3 price. What I find interesting in the third quarter is, in fact, this is a quarter which is purely driven by volumes. And this is the first time because obviously, the price effect was in Q1 and Q2, which I find interesting because it proved that this is one of the best performance in volume we had since a lot of quarter. We are able to regain this volume growth and also to recruit new consumers. So next year, will be surgical. We'll not do price increase over the board. We'll be surgical. We'll do it only when we are obliged indeed to do it because we want to protect the gross margin. And we are also willing to be much more demanding in terms of cost of goods increase. We are challenging our suppliers. We are moving also from a high dependency on single sourcing to a much better multi-sourcing in order to make some negotiation on the cost of goods. And we'll show that we do price increase where we have to protect the gross margin and/or where we are coming with an innovation or innovation was a true added value in the eyes of retailers, but also in the eyes of consumers. So the level of price increase will be strongly, dramatically below the one we had in the years before. Christopher Sheldon: And it looks like we have one follow-up question from Celine. Celine Pannuti: What China did in the third quarter, it seems that it was negative for NIVEA. But overall, if you can talk about how comfortable you feel about the reacceleration in the fourth quarter? And if you could comment as well on La Prairie. Vincent Warnery: I must say, Celine, I feel well with China. Let me start with the absolutely obvious success. We have Eucerin, which is growing 83% in Northeast Asia, which means that we are growing 150% in China. We have the anti-pigment serum of Eucerin, which is today the #1 anti-pigment serum in China. So we are beating not only the global competitors, but also local competitors. And the first 11/11 figures, so it's only 30% of the time, but we are growing in sell-out by 83% versus last year. So pretty, pretty happy with Eucerin. We have a great story. We have this unique ingredient, which is exactly what you need to succeed in China. So more to come, but an outstanding performance in 2025 and 2026. The second element, which is making us optimistic is La Prairie. I mentioned the fact that we are growing in net sales by 3%. But if you look at sellout, we are growing at 10% and with e-commerce growing at 30%, and that's really something that we did not experience in China since a long time. So La Prairie, good dynamics, compensating -- more than compensating the difficulty of Hainan, which was always small for us. I think the job which has been done by the new CEO and the team is starting to pay off. And the fact that we discovered late, but clearly, with a great execution, e-commerce is doing well. Last but not least, NIVEA, this is a question. What I can tell you that when you look at the face care business over the last quarter, we have been growing step by step. If you look at sellout quarter 2 plus 18%, quarter 3 plus 36%. Again, if I look at my 11/11 first figures, again, 30% of the time, we are growing plus 30%. I also believe that this Thiamidol story with, of course, a better price is an asset for NIVEA. And again, we are also using Eucerin to make some -- to create some awareness on Thiamidol. So I would not open champagne, but I think when I look at the 3 major brands in China, we have pretty good signals and more to come in Q4, which will be extremely strong for China. Christopher Sheldon: Thank you. That was the last question. This concludes our conference call. Beiersdorf's next Investor Relations event will be the release of our full year results on March 3, 2026. We appreciate your interest in Beiersdorf and look forward to seeing you back here again in the new year. Thank you very much. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Unknown Executive: Good morning, and welcome to TGS Q3 2025 presentation. My name is Bård Stenberg, Vice President, Investor Relations and Business Intelligence in TGS. Today's presentation will be given by CEO, Kristian Johansen; and CFO, Sven Børre Larsen. Before we start, I would like to draw your attention to the cautionary statement showing on the screen and available in today's earnings release and presentation. For those of you on the webcast, you can start typing in questions during the presentation, and we will address those after management's concluding remarks. So with that, I give the word to you, Kristian. Kristian Johansen: Thank you, Bård, and welcome, everyone. So I'll start with the Q3 highlights. And before I go through the numbers, I just want to say I'm very pleased that we have a solid recovery after a very weak Q2, and I want to thank all our employees for pursuing sales opportunities aggressively in a challenging market and at the same time, being extremely focused on our cost base, which you will see from the numbers that we have a solid beat on EBITDA and EBIT due to lower cost in the quarter. So starting with the numbers on the top line, we had revenues of $388 million. That compares to $308 million in the second quarter of this year. So sequentially, that's a 26% increase. As I said, our EBITDA was strong at $242 million. That's a 62% profit margin and again, driven by a very strong cost focus of the organization. We had a Q3 EBIT of $105 million. So it's the first time in several quarters that we're over $100 million in EBIT, and that represents a 27% profit margin. We had an order inflow of $436 million, and that takes our total order backlog up to $479 million -- sorry, total order backlog of $473 million at the end of Q3. Our cash flow was strong, and that means that with a free cash flow of $81 million and $30 million dividend payment, we managed to reduce our net debt from $432 million or down to $432 million, and this compares to $479 million in Q2 of 2025. We're maintaining our dividend of $0.155 per share, and we have also adjusted our CapEx guidance down. So that's been reduced to $110 million versus previously $135 million. So overall, strong numbers and strong -- slightly stronger than we expected for Q3, which is always good after, as I said, a very disappointing Q2. On the business update, and I'm not going to cover all the projects that we had in the quarter, but what you can see here is that Q3 is usually dominated by a strong North Sea season. So we have almost half of our assets working in the North Sea during the summer season and into Q3. You see we had 2 vessels in Brazil, and we're probably going to keep vessels in Brazil for the time being due to strong interest for data acquisition and even our existing data library. We also have OBN operations, so 2 OBN operations in the U.S. Gulf. And then you see we have 1 vessel in Egypt and 1 vessel in India during Q3 of 2025. I'll also cover the business units. So starting with multi-client. We had multi-client sales of $226 million in the quarter that compares to $277 million in Q3 of 2024. And the difference there is pretty much explained by higher transfer fees in Q3 that we -- in last year than we had in Q3 this year. Multi-client investments of $86 million this quarter compared to $129 million in the same quarter of last year. And again, that corresponds to a sales to investment for the last 12 months of 2.1. That's similar to what we had last year. But again, it's above the historical average of about 1.9. So very pleased about continued strong sales investments of our multi-client data. In terms of new awards and key projects that we were executing in Q3, we had PAMA Phase II offshore Brazil. This is a streamer survey in the Equatorial margin area. And then we had another project in the same area called Megabar Extension Phase I. And it was a pleasure for us and for TGS, Petrobras and Brazil to see that Petrobras finally got environmental approval to start drilling in this area. And this is an area where TGS has been acquiring lots of data over the past 12 to 18 months. So again, extremely excited to see that things are moving on. And for those of you who remember the last lease sale in Brazil, you also saw companies such as Chevron and Exxon picking up blocks in that area. So this is a --probably one of the last frontiers and one of the most exciting frontiers in Brazil for sure. So great interest from clients on both surveys that we've been carrying out for, yes, over the past 18 months. Then last but not least, we had a project called Amendment West 1 in the Gulf of America in the quarter. So this is an ultra-long offset OBN survey over legacy streamer data, and this is a TGS-only project with no partners. If we move on to the historical multi-client performance, just to put the quarter in the perspective, and this looks at -- last 12-month sale is a light blue and then dark blue is investments. And then the line there, the gray line is last 12 months sales over investments. And you see it's coming up from about 1.9 in the previous quarter to about 2.1 now. So really where we want to be in terms of profitability of our multi-client business, which historically has been yielding returns of somewhere between 1.9 and 2.0. Our internal goal when we start a new multi-client project is always around 2. Marine Data acquisition, relatively weak quarter as we expected, and we guided the market after Q2 that Q3 would be relatively low in terms of activity level, and then we came in slightly above what we expected. We had contract revenues for OBN of $87 million versus $127 million last year. Our streamer contract revenues in the quarter were $127 million, and we had total gross revenues of $215 million. And as you see, a strong EBITDA margin of about 36% for our assets in Q3. In terms of new awards and key projects executed during the quarter, we had -- we were awarded a streamer contract in the Mediterranean, as you all know, commenced acquisition of that in Q3. And then we have secured a large streamer contract offshore Indonesia in the quarter, and this is scheduled to start in Q4, has a duration of 8 months. It's a big contract. And again, it's mostly 3D, but the last month of the 8 months is going to be a 4D over some existing production. We've also been awarded a streamer acquisition contract in Africa. So this is a Q4 start, and it has a duration of about 50 days with some options to extend. And then we have an OBN contract in the Gulf of America. This is also due to commence in Q4, and it has a duration of 4.5 months, a quite large contract for our OBN crew in the Gulf of America. In terms of our new Energy Solutions business, we had contract revenues of $18 million. It's up from $16 million in the same quarter of last year. Multi-client revenues of $5 million versus $3 million last year. So total revenues of $23 million, which is up from $19 million in Q3 of 2024. And again, as with the other business units, a stronger EBITDA margin year-on-year as compared to Q3 of 2024. We've been awarded a UHR-3D contract offshore Norway. This commenced acquisition in early July, and we were acquiring that data going into Q3. We acquired also a CCS contract offshore Norway. And then we continue our collaboration with Equinor through our --subsidiary, Prediktor through something called Prediktor Data Gateway solution, and this is delivered to Equinor's Empire Wind Project. Also happy to see that Imaging & Technology continues a strong growth with good margins. So on the gross imaging revenues, we're $32 million versus $26 million last year. But if you look at the external imaging revenues, they are about $20 million. So it's a doubling of revenues compared to last year. And you've seen that we've been on that kind of growth track for quite some time. We have a -- yes, $20 million this quarter. We're going to be slightly short of $80 million for the year. And again, next year, our goal is for imaging to be above $100 million in external revenues with strong EBITDA margins. So we continue to take market share in the Imaging & Technology space. And part of that -- part of the reason for that is a strong strategic focus on the external market. TGS used to be more focused on the internal market and processing of multi-client projects. But now we made a strategic choice that we're going to go after the external imaging market, and you see the results of that with significant growth and good margins. We see a significant reduction of HPC costs from added scale. So TGS is a big customer of the big cloud compute providers such as Google, AWS, et cetera. And we see obviously great benefits and synergies from the combination of TGS and PGS in that regard. So again, as I said, we expect continued growth in external imaging revenues, and you've already seen a substantial margin improvement on the imaging side. With that, I'm going to hand it over to Sven Børre, and then I will be back talking about the outlook shortly. Thank you very much. Sven Larsen: Thank you, Kristian. Good morning, everyone. It's always a pleasure to report strong financial numbers. So although the revenue numbers are not that strong in a historical perspective, highlighting the upside potential in the longer term, they are quite strong in a relative perspective and relative to where we've been in -- particularly in Q2, of course. But more importantly, we have a very strong performance on all other parameters, including cost and cash flow parameters. So we are very, very pleased about that. So let me take you quickly through the numbers. On the revenue side, we came in at $388 million. That consisted of $217 million of multi-client revenues and $171 million of contract revenues. The multi-client revenues were particularly strong in the quarter, mainly driven by strong sales from the Vintage library. The prefunding of new projects were actually lower this quarter than we have seen in some of the previous quarters. So library sales, very strong in the quarter. Then going to net operating expenses. I'll come -- go into more detail on that on a later page here. So let me just mention that the net operating expenses were $147 million versus $221 million in the same quarter of last year. So a significant reduction there, of course. Depreciation and amortization. Depreciation, $61 million continues to be reasonably stable, around plus/minus $60 million, as you can see on a quarterly basis. Amortization was quite low in the quarter. The straight-line amortization is stable, whereas the accelerated amortization is quite low in the quarter. That's partially explained by the lower prefunding rate, as I talked about, but I'll -- and also, of course, explained by the mix of the different types of projects that we have in the portfolio right now. This gave us an EBIT of $105 million in this quarter, corresponding to an EBIT margin of 27%, slightly ahead of the operating result in the same quarter of last year despite having significantly higher revenues last year. Then as I promised, I'll go -- in more detail through the cost base and how the cost has developed during the quarter and how it is likely to develop going forward. On the chart here on the left-hand side, you see Q3 specifically, this Q3 compared to the Q3 of 2024. So as you can see on the left-hand bar in both those 2 charts, you see the gross operating expenses. And you can see it's at $217 million is significantly down compared to the $289 million we had last year. It's -- the decline is particularly visible, obviously, on cost of sales. And it has to do with several factors. First of all, of course, we have gone through, as we have talked about in previous presentations as well, we've gone through quite a bit of efficiency -- efficiency projects internally. We have realized a lot of cost synergies, of course. And also, after the integration project has been more or less completed, we have continued to look at different efficiency gains, and we've been quite successful in that. But I also have to admit it's also, of course, partially related to lower activity, particularly on the OBN side, where utilization of the crews that we got is a bit lower in this Q3 relative to the Q3 of last year. And finally, there is also some, call it, nonrecurring items in the quarter, which reduced the cost of sales by a little bit more than $10 million. It's probably-- it's not genuinely nonrecurring items. They are nonrecurring in this quarter, but it's -- most of it is a reversal of costs that have been expensed previously. So over time, it's not a nonrecurring cost, but in this particular quarter, it is nonrecurring. And as you can see, if you compare to the same parameters of last year, we are significantly down even when adjusting for the one-off costs we had related to the merger integration process in last year. So you see that last year, we had $162 million of cost of sales. There were no merger integration costs in that number. On personnel cost, we had $95 million, where we had $11 million approximately of merger integration-related costs. So the underlying costs in that quarter were $84 million, still well -- still well above the $69 million we have in this quarter. And on other operating costs, we had approximately $5 million of -- or $6 million of merger integration-related costs. So the underlying cost there was $25 million in the previous quarter. So we're actually a little bit up this quarter compared to last quarter on an underlying basis, and that has to do with compute. We are using more high-performance compute resources now than we did last year. And that obviously has to do with higher imaging activity and more use of AI and machine learning and algorithms that require more high-performance computing, and that's an -- a deliberate development, of course. If you look at the right-hand chart or the right-hand side of the page, you see a chart showing the cost development on a last 12-month basis over time here. And as you can see, the last 12 months as of end of Q3, we had $982 million of gross cost. Our guidance remains firm at -- around $950 million for the year as a whole. So you see the trend there. We have come significantly down, and we expect to come further down in -- when we report Q3 -- Q4. In fact, we -- if anything, we expect to be below $950 million and not above. So we're quite happy with the development on the cost side, and you can also see the evolution of our guidance through the year on the right-hand side of the chart there with the dark bar where we have -- where we're down basically $100 million relative to the original gross cost guidance. So we have done a lot on the cost side, which is obviously helping us quite a bit in terms of delivering a strong EBITDA in this quarter. Looking at the profit and loss statement, we had $388 million of total revenues consisting of $217 million of multi-client revenues and $171 million of contract revenues. I've talked about cost of sales, personnel costs and other operating costs, which already. This gave us an EBITDA of $242 million compared to $280 million in the same quarter of last year. Straight-line amortization was $60.5 million, where its roughly where it has been on the --on the previous quarters. As I mentioned, accelerated amortization, quite low this quarter related to the mix of projects we were doing and a lower prefunding rate. We had a small impairment on one of the multiclient projects that we do. That's not uncommon. As you can see, we had something similar in the same quarter of last year. And depreciation of $61 million, which gave us this operating profit of $105 million. We had financial income of $4.3 same level as last year. We had financial expenses of $19.4 million, which is slightly above last year, which may surprise people because we did a refinancing that reduced the interest cost quite significantly in Q4 of last year. However, bear in mind that we took a lot of that interest saving in the PPA. So we wrote up the PGS debt in the PPA, which reduced the interest charge in the PPL -- P&L already ahead of the refinancing. So that's the main explanation for that, call it, not so intuitive development. And this gave us a result before taxes of $85 million compared to $97 million in the same quarter of last year. Cash flow, as Kristian alluded to, quite strong in the quarter. We had cash flow from operations of $242 million in the quarter, almost the same level as the $265 million we had last year when you subtract the multi-client investment and CapEx and adjust for timing and working capital movements. We had cash flow from investment activities negative by $94 million compared to $59 million in the same quarter of last year. And then -- if you then subtract the cash flow items related to financing of $97 million, we end up with a net change in cash and cash equivalents of $50 million in this quarter compared to $82.6 million -- or $83 million in the same quarter of last year. So looking at cash flow in a slightly different way, looking at the evolution of our net debt, you can see that we reduced that quite significantly in this quarter. So the cash flow before dividend, which is a key measure that we are looking at internally was $77 million in this quarter. We paid the dividend of $30 million, which helped us reduce net debt from $479 million to $432 million at the end of the quarter. Let me -- and this is to be compared with our net debt target of $250 million to $350 million. That's the range we are aiming at, and we're getting down there. It takes a little bit longer time than we initially planned for, and that has to do with the market development, but we are still firm in our belief that we will get there in -- in due course. Let me also mention that in Q4, you should expect a somewhat negative development in net working capital items. So it's a seasonal thing. And so you shouldn't expect the cash flow after net working capital adjustments to be as strong in Q4. Balance sheet, not many significant developments worth mentioning here. The only thing I'm going to mention is the goodwill. You can see that it's down by $4 million. That has to do with the PPA adjustments that we did. So when you do an acquisition as we did with PGS, you can do PPA adjustments up until 12 months after the acquisition closed. And -- and what we have done here is that -- we have increased our long-term receivables by $4 million and reduced the goodwill by a corresponding number. And apart from that, the balance sheet, of course, remains very strong and even stronger than it was at the end of Q2, given the net debt development. This allows us to continue to pay a dividend of USD 0.155 per share, corresponding to NOK 1.56 per share in this quarter. The ex-date is 1 week from now on the 30th of October, and we will pay the dividend to the shareholders on the 13th of November. So by that, I'll hand the word back to you, Kristian. Kristian Johansen: Thank you, Sven, and we're going to touch on the outlook, and I'll start with a slide that we find very interesting, but it's a bit challenging to understand. So I'll take you through it very slowly. But if you start on the left-hand side, you see the chart there, you see that the light gray color shows the current decline curve. So that is debated whether it's 8% as we show here, and these are numbers from IEA or whether it's 15%, which is Exxon's number that they publicly state that the real decline curve is. But anyway, if you use 8%, 8% is then equivalent to losing more than the current production from Brazil and Norway every year for the next 10 years. It's quite steep even at 8%. But then in order to satisfy demand going forward, then the big question is how much do we need to invest and how much does the E&P sector need to invest? So if I take you to the right-hand side and you go all the way to 2025, you see that we as an industry or the E&P industry globally invest around $600 billion in CapEx. That's a total CapEx of the entire industry. And that's been pretty much the average. It's just -- right now, it's about $575 million, and it's been $600 million pretty much on average for the past 3 or 4 years. If you take that information, the $600 billion and you take it back again to the left-hand side, you see that $600 billion is the second blue color from the top. That's where it's going to take us in terms of continuing to invest at today's level, which basically is flat. It's a flat demand compared to today. So today's or the current investments are probably going to satisfy a flat demand development going forward. But if you think that demand for oil and gas is going to continue to grow in the future, we need to invest more. And we actually need to invest probably somewhere around $750 million because that takes us up to the expected demand going forward. So it's a very powerful slide in terms of understanding that today's investment level is not sufficient to satisfy any growth in demand. And I think most of you and most other readers would argue that there will be growth. There will be continued growth in demand. We've seen that, and we've been wrong several times. Demand has surprised on the upside, and it will continue to do so. So again, today's investment level from the industry is not sufficient in terms of satisfying any demand growth going forward. And that is further backed by the second slide we have. So last week, I attended something called Energy Intelligence Forum in London. And I think 8 out of the 10 -- 8 CEOs of the 10 largest oil companies in the world were there. And I just included some quotes from 4 of the CEOs that were there and attended the conference. And the first one from Darren Woods who said that the oil market oversupply is likely to be short term with demand from emerging economies set to make meeting global energy demand more challenging in the medium to longer term. I mean, Nasser was very clear that we had a decade where people didn't explore. It's going to have an impact. If it doesn't happen, there will be a supply crunch. And then Patrick Pouyanné from TotalEnergies, this non-OPEC supply, which today is impacting the market from Brazil, Guyana and shale oil will plateau. There is a limit to this growth. And then finally, Vicki Hollub from Occi said that discoveries have gone way down. Investment in exploration has gone way down, but it's not just investment that's a problem. We just aren't finding big resources anymore. So very much backing the statement that we had on the first slide that the industry needs to invest more if you believe in demand growth for oil and gas and I think most of us are now convinced that there will be continued growth in demand for both oil and gas. Going more to the micro level in terms of streamer contract tenders, it's down, and it's down for 2 reasons, mainly the fact that there's been quite a few awards recently. So TGS has been awarded a couple of streamer contracts quite recently. And also on the OBN side, we have announced 2 contracts recently. But the market is not great. There is nothing that indicates that 2026 is going to be a great year for contract tenders. I have to be honest and state that. But keep in mind that this does not include multi-client. And we have big projects in Brazil. As I said, we have 2 vessels in Brazil as we speak, probably going to keep those 2 vessels there for the time being. And we have -- we see great -- or a great uptick in activity in Africa in terms of multi-client. So the fact that multi-client is not part of this means that this slide gives a very skewed picture in terms of how the market for TGS actually is. So I feel like with the recent increase you've seen in our order backlog, which is mainly and very much driven by multi-client prefunding, I think we see a future that is far brighter than this slide will indicate. On the OBN market development, 2025 will be back to 2023 level in terms of activities or total revenues for this sector or segment, and that is down from 2024. So that significant growth trajection that we saw in 3 years that has stopped and has come down slightly. This is partly due to some big projects in Brazil that have been awarded, but they have not been acquired yet. So they haven't started yet. And these are big projects that TGS was unsuccessful in winning and some smaller competitors won big projects in Brazil that again has not yet started. So we’ll wish them good luck on that. In terms of the guidance for the 2025, obviously we're entering the last quarter of the year. So our multi-client investments, we keep our guidance of $425 million to $475 million. We're probably going to be in that kind of mid-range of that investment guidance. We're going to have approximately 70% of the investment expected to be acquired with our own capacity. In terms of CapEx, as we've said a couple of times today, we're reducing our CapEx guidance from $135 million to $110 million. And on the gross operating cost, we again target $950 million for the year. So that's unchanged from the previous quarter. In terms of utilization, we expect improved utilization year-on-year of our 3D streamer fleet and again, partly helped by multi-client. And then we expect lower OBN acquisition activity, which you have seen, especially over the past quarter or so. So that will be down compared to 2024. And to give you slightly more flavor on that, so we'll start with the order backlog and inflow. So again, as you see, the order inflow was strong this quarter at $430 million -- or above $430 million and that leads to a backlog of $473 million. Again, very weak numbers in Q2 this year, but a relatively solid comeback in Q3, where you see quite significant growth in the order inflow with the resulting increase in the total order backlog. And then you see on the right-hand side, you see the pie chart, and you're obviously familiar to that, and it gives you some guidance in terms of expected timing of recognizing this backlog as revenues. We also provide you with a summary of our booked positions. So basically, this is where our fleet and OBN crews are booked for the next 2 quarters. So you see on the streamer side, you see that we have about 16 months booked for Q4 and you see the composition of contract versus multi-client. And again, as I alluded to you see more multi-client there than contract. And again, if I look into the 2026, that's probably going to be the case. It's going to be more than 50% as we can tell today on multi-client because of good prefunding and a healthy backlog in terms of some of our big multi-client projects, particularly in Brazil. And then on the OBN schedule, you see that we're just short of 2 crews working for Q4, and it's going to be approximately the same for Q1, and it's pretty much 1 crew for multiclient and 1 crew for contract, and it's close to being fully utilized for 1 quarter. In terms of geomarkets, we're going to have contract work for our streamer fleet in Africa, Asia and then multi-client in Brazil. For the OBN, we're going to have contract work in Gulf of America and we're also going to have 1 crew working multiclient in the Gulf of America. We expect total multiclient investments in Q4 of $120 million and utilization, as I said on the left-hand side, you see pretty much how it's going to be for the next quarter. And then obviously, there is still time to book more capacity for Q1 of 2026. So with that, I'm ready to summarize the presentations. Again, pleased to announce solid performance on financial key figures. We had net debt reduced to $432 million based on a free cash flow of about $80 million and $30 million paid in dividends. We've been very disciplined in terms of cash outflow, meaning that we're reducing our 2025 CapEx by $25 million, and this has been reduced several times during the year. So the latest number now is about $110 million for the full year. Obviously, there is -- the short-term market development is sensitive to oil price, but the long-term market outlook, as you've seen from this presentation, remains very positive. And we're maintaining a dividend of $0.155 per share. With that, I want to bring Sven up here and the Bård is going to take you -- take us through some Q&As, and we'll take it from there. Thank you very much. Unknown Executive: Thank you, Kristian. We have a nice audience here in Oslo. So we can start with questions from the audience. Yes, John? Unknown Analyst: Yes. May I ask a little bit of detail on Sven Børre on the OpEx. You mentioned that the gross OpEx is $217 million was $217 million in Q3. And if I add the $10 million that you mentioned as nonrecurring, it will be $227 million. But what did you say -- were there any merger costs included in that $227 million? Sven Larsen: No, no. The merger costs I talked about were just for the comparable ‘24 number. Kristian Johansen: Right. Unknown Analyst: And going forward, what's still the running quarterly cost base in TGS? Is it $227 million? Sven Larsen: I mean we've guided for $950 million annualized. Unknown Analyst: That includes higher OpEx in the first quarter. What's the running on the quarterly basis? Sven Larsen: Yes, it's a bit lower than that. And it will depend a little bit on the activity level. But if you take a little bit lower than $950 million and divide by 4, you should be at an approximately right level. Unknown Analyst: It's not too far away from $227 million then? Sven Larsen: No, it should be reasonably representative. Unknown Analyst: And then a question on multi-client sales in the quarter. You want to specify or give an indication of the transfer fee? Did you book a transfer fee for the Chevron Hess deal in Q3? Kristian Johansen: No, we're not allowed to be specific on which transfer fees we booked, but I think the market has been pretty right in terms of there were a big transfer fee this quarter, and that was related to one transaction. We probably had 2 or 3. We have transfer fees in every given quarter, but there was one that was particularly large. I think the market has speculated that in total, we had transfer fees around $25 million, $30 million. So that's pretty much where it was. Unknown Analyst: And that means that other late sales were probably not too bad either. So I just wonder the key driver -- I assume one of the key drivers in Q3 was the U.S. Gulf -- the American -- the Gulf of America lease round in December. Is that correct? And also more specifically, did you see all the sales that you expect or most of the sales that you -- late sales that you expect in connection with the December round, did they come in Q3? And was there a significant impact on that? Or will you also see it in Q4? Kristian Johansen: Yes. There were a couple of drivers. And number one, you're right. I mean, our late sales was pretty strong regardless of whether you adjust for transfer fees or not. And our transfer fees were far lower in Q3 this year than they were last year, where the transfer fee was very high. I think one driver of the strong late sales in Q3 was a weak late sales in Q2. And I think that's a reminder to the market that when you looked at it, particularly late sales, but overall, the multi-client performance of TGS, you probably have to look at it in a slightly longer perspective. So if you look at the average of Q2 and Q3, you're more back to normalized level and Q2 was embarrassingly low and Q3 is back where we should be. So that was one driver is that Q2 was very low. Transfer fees, we've been discussing that. And the third one, yes, we had impact from the lease sale in the U.S. go that is coming up in Q4. Was that significant? Not really. I mean we're talking 10 to 20 rather than 40 to 60, right? Is there more to be sold? Absolutely. But we don't know when that's going to happen, and we don't know if it's going to happen. I mean it's obviously uncertainty around that. Sven Larsen: What we can say to add to that is that in the licensing round in '23, most of the sales related to that round happen after the round. So the dynamic around this is a bit uncertain, of course. Kristian Johansen: And we have talked about that multiple times that the licensing round, particularly in the U.S. haven't really had the same impact as it used to have. So now we do more of the sales beforehand. So we have much higher prefunding of the surveys that we do in the U.S. GOM today than we used to have historically. And then as Sven Børre said, we have some of our sales after the round is taking place rather than lining up for the licensing round. So it's probably more evenly distributed now than it used to be. In the past, it was always you shot without prefunding and then you had a significant kicker at the -- before the licensing round. And then after that, there was nothing. Unknown Analyst: And my final question before I give the word to somebody else. You mentioned that it's too early to expect a great year for contracted streamers in '26. What do you think it will take? What kind of oil price levels do we need to see to see a great year for streamers in seismic? Kristian Johansen: We've been doing some internal analysis in that regard and looking at the dilemma of an oil company today or an energy company today is that they have this dividend obligations, they have buyback obligations and then they have CapEx and seismic is obviously part of that discretionary CapEx. And with the oil price dropping from $70 and down to $60, although it's higher today, then you obviously put a lot of strain on that kind of dilemma. So are they going to cut the dividend? Probably not. Are they going to cut back on the buybacks? Potentially, yes. Total has already announced that. Are they going to start spending more on exploration? Well, if you listen to what they say and if you listen to what they told me last week, they are, but we haven't seen it yet. And I think with the current oil price, we should be a bit cautious expecting that to kick off in 2026. So we're planning for a market that is going to continue to be quite challenging in that regard. But saying that, when we talk about the contract market, and it is important to say that we should be using at least 50%, perhaps up to 70% of our fleet on multi-client projects. And that's where I'm probably more optimistic today than I was 3 months ago in terms of the backlog that we see building up on the multi-client side. So we're not too concerned about the utilization of our fleet in 2026. But obviously, if you look at the contract market per se, it's not great. There is no reason to question that. Unknown Analyst: And what oil price is needed to change that? Kristian Johansen: We've been saying that you probably need somewhere between $70 to $75 to see a significant increase in exploration. But again, back to what I heard from the CEOs last week and the oil price was $60 at the time. They're saying that we have -- we've been -- we've done a terrible job in terms of exploration, and we need to get better and we need to spend more. Yes Lukas. Unknown Analyst: You said that multi-client performed better than what you expected in Q3. So I guess you had a view on the transfer fees. So what exactly was better than what you expected? Kristian Johansen: You know how it is when you get really beaten up like we did in Q2, you set expectations slightly lower for Q3 and I think that was partly what happened. And we pretty much knew the range of the transfer fee at the time. And obviously, there are always tough discussions on -- and it goes back and forth in many, many iterations before you end up with a number. But that pretty much came in as we expected. I think the market probably estimated that to be bigger or more significant than it was, but we pretty much came in where we thought we would be. Unknown Analyst: And what are your expectations related to the licensing round in Brazil? Kristian Johansen: Yes, there was one yesterday with five-blocks where we had data in most of those areas. And obviously, we see some opportunities related to that. I think the news of the environmental permit to Petrobras is very good for TGS. I mean this has been the area where we have invested more than anywhere else in the world over the past 18 months. Obviously, we've taken some risk on that environmental assessment. And obviously, it's great to see that, that had a positive outcome. So I think -- yes, I think that's as specific as I can be. Okay. Unknown Analyst: And your EBITDA margin on the contract business was nicely up. Is that better pricing, lower costs? Sven Larsen: Yes. We probably don't see better pricing. I think that's fair to say. It's not significantly down either, but it's not kind of the right environment to increase pricing to put it that way. So it's cost control and cost efficiency and obviously also partially these reversals that I talked about in this particular quarter. But that has to be seen over time where it's basically mostly related to costs that have been charged previously. Unknown Analyst: And you are cutting your other CapEx guidance with $25 million. What is that... Sven Larsen: No, we've been working constantly on our cost base and our cash outflow base, so to speak, during this year. And CapEx obviously has been under a lot of scrutiny to try to work that down. At the same time, we need to invest in the business, and we need to be maintaining our fleet well and keep it up to the highest standards, and we need to replace streamers. But we have worked on that streamer replacement program and how we can maintain the current streamers in a better manner and keep them longer and or push or spend more time on that replacement program than we initially planned for. That's essentially what's doing it. And of course, there are a lot of -- we are cautious on all other types of CapEx spending for the time being. Kristian Johansen: There's not a lot of peers to TGS in the streamer space. But if you look at the peer or peers, you will see that our CapEx is far higher. And it's been a reason for that. But of course, there are things we can do in terms of getting that down, and that's what we've done. Unknown Analyst: And if you break down the $110 million between streamers, computing power, vessel maintenance and other, what would the split be? Kristian Johansen: Almost half is related -- purely related to streamers. Unknown Analyst: Can I ask on the CapEx? What should we expect going to '26? Is it fair to assume the same level? Sven Larsen: Yes, we will come back to that when we guide in February. But our ambition is to continue to keep that at a lower -- significantly lower level than what we initially guided for this year, of course. Unknown Analyst: Yes. And did I see an offshore wind contract that you're going to do in July? What vessel will you use for that? Is Ramform Vanguard still going to be stacked? Or do you think you will take that out to do that work? Kristian Johansen: Yes. We haven't made that decision. And again, we stacked it and we're going to stack it and keep it stacked until we see improvements in the market, and we have 6 vessels who can do the job if we need to. But that's something we consider at any point of time, and we're not ready to make that decision today. Unknown Analyst: And one last technicality about how you allocate your streamer vessels. You talked about at least 50% doing multi-client and then also maybe up to like 17%. If you can help us a little bit in '26. What’s… Kristian Johansen: It's too early. What I mean by saying that is that we have that flexibility, and we're not totally dependent on the contract marketing for our fleet. We should be in a position to use at least 50% to 75% on multi-client. We will guide you on -- on a rolling basis for two quarters going forward, but we're not going to give you any more clarity than that. Unknown Executive: Okay. We have a couple of questions from other people on the web. Jørgen Lande in Danske Bank. You mentioned prefunding was a bit lower. Do you expect prefunding levels to trend downwards compared to what you have indicated? Sven Larsen: Probably not a trend, but we are -- we have had, call it, quite high prefunding levels over the past quarters, and it's probably almost naturally high for -- some periods. So I would think that we're -- yes, we think it will be at that 80% to 90% level over time, give or take, but it may vary from quarter-to-quarter depending on the mix of the different projects that we're doing. Kristian Johansen: It also has a lot to do with how much risk do we want to take in terms of if we believe that we're at the bottom of the cycle, and we believe that these CEOs who talk about the need for more exploration. Is this the time to go out and do some frontier work with lower prefunding. I mean that's discussions that we have with the Board at any point of time. And similar discussion to what all companies have in terms of are they going to invest more in exploration for the long-term. Yes. So we have those discussions, and that will obviously have an impact on the prefunding rate. But there is no indication in the market that it's harder to get prefunding than it's been before. Not at all. Unknown Executive: And we have a question from Mick Pickup in Barclays. You talk of advanced multi-client levels, yet consensus that you supplied has investments down in '26 versus '25. This doesn't seem consistent. So without giving guidance, can you talk directionally about '26 multi-client investment levels? Kristian Johansen: Yes. I'm not going to do that. But of course, the consensus is not -- we don't make consensus. We just collect consensus. So if consensus is lower in '26 than it's '25, it doesn't necessarily represent what we plan to do. But it's too early for us to say what we're going to invest for '26. We're in that period right now where we're looking at our investment level. I would be very surprised if it differs significantly from what it does this year. And especially on the downside, I would be very disappointed if we see a much lower number. Unknown Executive: Next question comes from Ole Martin Rødland in Pareto Securities. While order intake was good this quarter, backlog is still at low levels. Based on best expectations, do you assume lower external streamer and OBN revenues in 2026? And will that possibly be offset by higher multi-client investments and revenues? Kristian Johansen: Yes, it's too early to say. What we have been saying today is that we have that flexibility, and we can do it -- if we need to. And the beauty of our business model and the beauty about being fully integrated as we are, and we're the only company in our space that can claim that is that we have the flexibility at any point of time to switch between contracts and multi-client. And there's been speculation as to our price is down in the contract market, how bad is the contract market, et cetera. Well, if it is bad and if pricing is down, then we just do multi-client if we can get funding for multi-client projects. And I think we've delivered today, and we've shown you today, and we even showed you in the past four or five quarters that we generate a return of 2x on our multi-client project. So if pricing is low and if we see that we sacrifice too much on our margins by doing some of those contracts, we don't do that. Sven Larsen: And another point to bear in mind in our multi-client investments in 2025, we have – we still have quite a bit of external investments where we're using external vessels and external providers. It takes -- following the merger, it takes a little bit of time to in-source everything. So you should probably expect more or less 100% of the capacity that we source to be internal in '26. So even if you, for the sake of argument, assumed flat multi-client investments, you could see higher utilization of our own assets on multi-client. Unknown Executive: Okay. Then we have another question from Steffen Evjen in DNB Carnegie. Do you have any leads to sign more OBN contract work over the winter season on top of the current book positions that you disclosed today? Kristian Johansen: Yes. I mean the sales cycles in OBN are longer than streamer. We like to say they're typically 5 or 6 months at least. So that gives you an indication in terms of when you will see new contracts. We have a number of leads. Some of these leads are related to single contracts and some of the leads are related to what we call capacity agreements or bigger long-term agreements with some of our customers. So there are negotiations going on. And obviously, we're going to announce that to the market as soon as we have contracts to announce. Unknown Executive: We don't have any further questions from the web. Any last questions from the people here in Oslo? If not, that concludes the Q&A session. So I give the word to you, Kristian, for your concluding remarks. Kristian Johansen: Yes. Thank you very much for your attention today. And again, as I said initially, it was a relief to come back with better numbers than we had in Q2. We were obviously as surprised and disappointed as you were in Q2, and it's good to see not only that we have a revenue growth of 26% compared to the last quarter, but we see a very strong profitability and all key metrics are very positive compared to previous quarters. So I wish you all the best and looking forward to see you at our Q4 presentation. Thank you very much.
Operator: Hello, and welcome to Inchcape's 2025 Q3 Trading Update. We are now joined by -- today by Duncan Tait, Group Chief Executive; Adrian Lewis, Group Chief Financial Officer; and Rob Gurner, Head of Investor Relations. [Operator Instructions] I would now like to hand the call over to Duncan. Please go ahead. Duncan Tait: Very good. Thank you, [ Sergey ], and good morning, everyone, and thank you for joining us. I'm here with our CFO, Adrian Lewis; and our Head of Investor Relations, Rob Gurner. I'll give an overview of trading and strategic execution during the quarter before handing over to Adrian for more detail on our regional performance and the outlook, which has remained unchanged since March. We'll then take your questions. Our performance in Q3 was supported by market growth, distribution contract wins and ongoing product launches. However, headwinds remain in Asia. We delivered strong organic revenue growth in the third quarter of 8% and reported growth of 7% against softer comparators and in the context of a market growth of 5%. This reflects the underlying strength and diversification of our business as well as consistent operational execution by our teams. We also continue to make progress against our Accelerate+ strategy. We further scaled the group through the acquisition of Askja in Iceland, an exciting new market for Inchcape, where we are now the market leader. This bolt-on acquisition also helps to further strengthen and diversify our global portfolio of OEMs. Our progress in optimizing our business is perhaps most evidenced with the disposal of a retail-only business in Australia, which generated annualized revenue of around GBP 100 million. As we have said before, optimizing our retail network is a core pillar of how we operate as a distributor in providing the most efficient route to market. Our execution against Accelerate+ is also highlighted by our successful track record in winning distribution contracts, including the recent addition of GAC AION in Greece. We're also continuing to optimize our distribution contract portfolio. And in this quarter, we have, in collaboration with our OEM partners, decided to exit 4 immaterial contracts in certain small Americas markets, which are unlikely to provide the opportunity for mutually viable commercial operation. So to sum up, Inchcape's performance during the third quarter was in line with our expectations and demonstrates our ability to execute against our Accelerate+ strategy. This supports our confidence for another year of growth in 2025, in line with our medium-term target to deliver EPS CAGR of more than 10%. And with that, I'll hand over to Adrian. Adrian Lewis: Thank you, Duncan, and good morning, everyone. During the period, the group generated revenue of GBP 2.3 billion, up in Q3, 7% in constant currency and on a reported basis. Reversing out the impact of disposed noncore retail assets and the impact of recently acquired businesses, organic revenue was up 8%, with distribution contract wins contributing around 1/3 of this organic revenue growth. Before looking at the regional detail, at a headline level, the market trends were as expected. Underlying Inchcape TIV was up 5% compared to the first half of the year where industry volumes in our markets were down 2%. This is in part due to softer comparators in Q3, but also a continuation of the improving trends we have seen in the Americas and a strengthening rate of growth in Europe. We outperformed the market with our volumes up 13% to around 91,000 cars in the quarter. And we spoke earlier in the year about the need to see a step-up in volumes in H2 versus H1 as well as improved growth rates. This is a good indicator of the step-up in absolute performance as we anticipated. Summarizing the regions, starting in the Americas, the market environment continues to improve with our performance ahead of the market. Colombia and Peru continue to see very strong growth and Chile, on an underlying basis, is showing positive trends. And it is worth noting that in Chile in September, we saw a very strong market due to regulatory changes, pulling demand forward. This will normalize in Q4. Some markets like Costa Rica remained weaker. We are seeing the usual seasonality in the region this year with our performance underpinned by new product launches and contract wins. Turning to APAC. The macro and competitive dynamics that proved to be a headwind for us in H1 continued with the premium segment remaining weak. The Singapore market continues along the certificate of entitlement up cycle, but remains a highly competitive market as does Hong Kong. Australia returned to growth in the quarter. Our performance in the region is supported by new product launches, such as the Subaru Forester in Australia and a number of Toyota products in key markets. Demand for these is on track, and we expect this to be supportive of an improving performance in comparison to H1. And finally, our business in Europe and Africa continues to show positive momentum and market outperformance, especially so in Romania and Bulgaria, where we have seen strong growth. Growth was enhanced by the contribution from the contracts announced in recent years across the region as well as a first contribution from our Icelandic operation. While only a revenue update, as expected, we have seen reducing inventory levels since the position at the end of June. And as Duncan mentioned, we have maintained our disciplined approach to capital allocation. And alongside the acquisition of Askja, we have now acquired approximately GBP 200 million of our own shares, equating to 8% of the shares in issue as part of our GBP 250 million share buyback program that will be supportive of EPS growth. In relation to acquisitions, we see these as a crucial part of our growth strategy, and we remain disciplined on valuation as we look across a healthy pipeline of bolt-on acquisitions. And finally, on to outlook. Reiterating our position through the year, we have -- we continue to expect another year of growth at prevailing currency rates, including the impact of tariffs. Our outlook for this year is based on our expectation for a stronger second half of the year compared to half 1, and our performance in Q3 is supportive of this. Our performance in the second half continues to be driven by product launches in a number of markets. And so far, these are progressing in line with our expectations. Additionally, we continue to manage costs, inventory and working capital, and you have seen us take further steps in the optimization of our retail network. We continue -- we expect to deliver a higher rate of EPS growth relative to profit growth this year, driven by our operating performance and capital allocation and in line with our medium-term target of greater than 10% compound annual growth rate. So now let's take your questions. Operator: [Operator Instructions] First question is from Arthur Truslove from Citi. Arthur Truslove: First question just on capital allocation. Can you just remind us how you think about the scenario in which there would be another buyback at full year? And second question from me, obviously, your price mix element is slightly sort of negative 5% or thereabouts in the quarter. Are you able to just talk about how that likely impacts margin and things like -- how the price mix likely impacts margin, please? I know that's something that has been a concern to people in the run-up to this. Duncan Tait: Good morning, Arthur. Adrian, over to you both, please. Adrian Lewis: Thank you, Duncan. Thanks, Arthur, for the questions. So I'll start with capital allocation. And I think our policy, Arthur, is really clear. What we said in our medium-term guidance that was issued in March is that on the back of a very highly cash-generative business, turning profit after tax into cash at around 100%, we'll pay dividends with 40% of EPS, and then we will do share buybacks and M&A. And the balance between those 2 with the cash that we generate will be around -- will be decided based on a disciplined approach to valuation, and that's in the context of our own shares and a very healthy pipeline of bolt-on acquisitions. As I said in my words, we are super excited about expanding the scale of this group. We were very pleased to find value in the Askja deal and continue to look at a pipeline of bolt-ons that were very -- that I think can add scale to this group. But as we have done this year, you can expect us to be disciplined about how we do that in 2026. On price mix, what you've seen -- and absolutely, you've got it right. So look, 13% volume growth in the context of a market growth of 5% and an organic revenue growth of 8%. So what you're seeing there and that delta between the 13% and the 8%, is really about a faster-growing Americas region, a faster-growing Europe and Africa region, where we play in segments that have a lower average selling price in comparison to Asia, which in proportion to the rest of the group is smaller in proportion than it was in previous years. 1/3 of our Americas business is Chinese brands, and 1/3 of our growth rate this year has come from new contract wins, which, as you know, is skewed towards Chinese brands. What that's doing is bringing down the average selling price. We've been pretty consistent around our view on margin and how we think about margin as we look forward at around circa 6%. And I wouldn't -- and I don't think you should think about that price mix and changing mix within the business as a headwind to margin. We're about driving scale through this organization, leveraging our overhead, and that's what's going to underpin margins as we look into the medium term. Arthur Truslove: Just one follow-up. Obviously, about 18 months -- well, 12 to 18 months ago, you presented some data on the profit progression in new contracts. Is it reasonable to think that these contracts that are growing very nicely are progressing in line with what you presented that in the Driving Seat episode? I think it was in May 2024, if I remember correctly. Adrian Lewis: Yes. I think Arthur, great question. I'll take this one, Duncan, if I may. Yes, look, you started to see us disclose the contribution that they are making to our overall growth. It's around 1/3 of the 8% has come from contracts that have been signed over the recent few years. And I think net-net, we're at about 50 contracts in aggregate that we've signed over the last few years. And the vast majority of them are still in year 1 and year 2. And that 5-year time line that we presented back in that in the Driving Seat webinar, how the average contract evolves, I think we're still pretty consistent with, and we're seeing those 2022 and 2023 contracts starting to climb up that curve. I'd say one thing we have noticed it sometimes takes us a little to get from the moment of signing through to products in the market. Sometimes it's getting through homologation process, getting all the right vehicle specification documents into local governments where we're working with brands that aren't necessarily used to working in export markets and international markets. That's taking us a little bit longer to get out of the blocks perhaps, but the trajectory of maturity continues to be on that archetype as we presented in May last year. Operator: Our next question is from Abi Bell from UBS. Abi Bell: Just wanted to ask 2 questions about the growth building blocks. So firstly, your comment that 1/3 of the growth was from contract wins, so this is about 2.7% of organic revenue growth. Should we assume that is the rough contribution you'd expect in Q4 and at the start of next year? And you've won a lot [Technical Difficulty] you mentioned. So any help on timing of the ramp-up, that would be [Technical Difficulty]. And then secondly, your markets were clearly strong this quarter. I mentioned there were some markets like Chile, and it sounds like you expect Q4 to be slightly softer, but the contract wins and end markets, do you expect Q4 to see positive growth at this stage? Duncan Tait: Thank you so much, Abi. Adrian, you again. Adrian Lewis: Yes, so 1/3 of our growth absolute [Technical Difficulty] contracts, we're really pleased with that. Those contracts, which I referred to earlier as sort of 2022 and 2023 beginning to hit their straps as we expected to, as we -- when we look at the maturity curve that we expect to see. We expect them to provide a contribution into Q4. And I think I'd point you to our medium-term guidance framework, which talks about a market outperformance. Market is growing at around 1% to 2%, 2% to 3% outperformance to give a 3% to 5% volume growth. That's the sort of framework and how you should think about rolling forward, the contribution from these contracts that we've been running over recent years. As I said, a lot of them are still in the foothills of their growth maturity curve, and we've got work to do to make sure that they contribute as we expect them to over the '26, '27 and '28 time period. On growth rates, looking into Q4, as we've said in the statements and in our words, Q3 had some softer comps. So I would expect Q4 to be a growth quarter for us, but I wouldn't expect it necessarily to be as strong as we have seen in Q3, in part due to the comparators. Duncan Tait: Is that helpful, Abi? Abi Bell: Yes, that's great. Just a quick follow-up. Do you think you'll be disclosing the contract contributions going forward in your remarks or materials? Adrian Lewis: I think we've heard investors and our analyst community loud and clear that a greater level of disclosure in this regard is helpful. So you should expect to see us to start to talk about how it contributes to the group, both strategically and in the near-term results. Operator: We'll now take our next question from David Brockton from Deutsche Numis. David Brockton: I also have 2 questions as well. Firstly, could I just return to the price/mix headwind from the first question. I guess one element there that's been contributing has been a softer premium market, particularly in Asia. And as you look towards next year for the business, can you just comment on whether those pressures should ease as you lap this year? Or is that on a worsening trend in that segment, please? The second question relates to Australia. Just a clarification for me. Can you confirm you're now completely out of retail activity in Australia? And is the sort of strategy evolved there? Or am I missing something because I thought there was a benefit to the partially integrated model there? Duncan Tait: Very good. Thank you, David. Look, I'll take those. So specifically about Asia, look, we we've seen 2 dynamics in Asia this year. One is more pressure on the premium segment, and we've seen those declines, which we referred to at our interims of a 40% decline in the premium market in Indonesia as an example. And then generally across Asia, it's a really, really competitive environment. Do I expect 2026 to see a big step-up or an improvement in that environment in Asia? Look, I think our teams are executing pretty well. But we -- do I expect the premium segment to bounce upwards or for the competition and the competitive environment to reduce? No, I don't. So I think we will continue to execute well, but Asia is super competitive and the premium segment is still quiet. But what I would say going back to the way Adrian is encouraging us to think about 2026 is we should apply our medium-term growth framework to how we think about 2026. Then just in terms of Australia and retail, so let's be clear about what we're trying to do. We have had a program over the last half a decade or so of reducing our exposure to pure retail. So like the U.K. business where we don't have distribution contracts, but we had end retail, and in Australia, what you see us do is take those dealerships in Brisbane, which are supporting OEMs where we're not the distribution partner, that is the business we've sold. So it's exactly like you've seen us do in the U.K., the way you saw us exit Russia and other businesses in that regard. In terms of our distribution business, retail is super important. We don't need to own and control all of it. And in fact, in Australia, we own about 20% of the retail, physical retail that supports our distribution contracts in that country. And I would remind you, we've just launched Foton in Australia also. Operator: Our next question is from Akshat Kacker from JPMorgan. Akshat Kacker: A couple of questions, please. The first one is on the mutual exits from the small contracts in Americas that you've talked about. I see that 3 of them are with Geely. And obviously, this comes on the back of the exit from Chile at the end of last year as well. And I do remember that you have a global cooperation agreement with Chile -- with Geely, sorry. So just a question on Geely still is an important distribution partner and how are your discussions actually evolving with them? If you could just share some more details, that will be helpful. The second one is on Asia, and I appreciate it's a Q3 trading call. You've talked about a very competitive environment. There are continuous headwinds. Could you talk about the margin recovery potential for that region going into the second half, please? We've obviously come down from the 8% to 9% margins in the last few years to 6.5% in the first half, but now we have higher volume contribution and positive momentum from product launches. Could you just talk about Asia margins, please? Duncan Tait: Yes, sure. Akshat, let me clarify your second question. Are you talking about the Americas region? Akshat Kacker: Asia. Duncan Tait: It's Asia, okay. Very good. Thank you very much. I do want to clarify that. Look, I'll take the first question and Adrian on the second. So look, let's put this in context. We've won over 50 contracts over the last few years, many of them in our Americas business, with OEMs from Europe, from Japan and from China. And we did sign a global relationship with Geely just a few years ago. So if you look at the Geely brand itself, yes, we have now exited the contracts that we signed in the Americas. We have done so in a highly collaborative basis with our OEM partner. And we genuinely wish them all the very best as those contracts move to other third parties. But actually, let's not forget, we've also signed a whole bunch of contracts with smart, which is a Geely joint venture with Mercedes. We have our Volvo business also in the Americas, and I'd hope that we would have some more Volvo businesses over time. So in terms of our relationship with Geely group, I think that's in super shape. And those particular brands that we've exited, look, they're better off with other parties running those distribution contracts in those small markets in Central America. Adrian Lewis: And in respect of margins, Akshat, and you took the words right out of my mouth. This is a trading update, so I won't comment very specifically. Safe to say, you're absolutely right. This descaling effect we saw in the first half of the second half skew of volumes weighed on margins. We've seen that scale come back in the third quarter and expect to do so with product launches in the fourth quarter. We launched Subaru Forester into Australia. We've got some product going into Singapore and Hong Kong, EV going into Hong Kong with the bZ3X started this month. And we've got some -- the Noah product going into Singapore. They play in certain segments, which will be helpful to us, particularly in MPV, fleet and taxi. So we should see the -- we expect to see the rescaling effect in Asia. Save to say that, that premium segment continues to be weak. And referring to Duncan's comments around it being a very competitive environment. We've seen an improved performance in Q3 in the context of a market that is now flat and in the context of our half 1 performance. But I want you to sort of hear the words of caution of Asia being a difficult environment for us, but that rescaling effect will be supportive of a better margin profile in half 2. Operator: Our next question is from Andrew Nussey from Peel Hunt. Andrew Nussey: A couple of questions from me as well. First of all, given the significance of the new contracts in terms of the growth profile, can you just give some color around the pipeline in terms of signing up new contracts, whether that's sort of OEM or region? And secondly, we cast our minds back to the disposal of the U.K. retail operations. I think from recollection, you retained some of the liabilities from any potential misselling of consumer products and commissions and what have you. Given the recent FCA paper, do you see any exposure for the group there in terms of that historic disposal, please? Duncan Tait: Very good. Andrew, I'll take one. Adrian will follow up on number two. So in terms of contracts, so we've won a lot, as I keep on saying on this call and in our previous engagements, and they're starting to come through in our revenue growth in the second half, which I am pleased about. And generally, I've said this group will win somewhere around high single into double digits contracts annually. This year, so far, gross number is 9. Do I think we'll sign a few more contracts before the end of the year? Most likely. And then, look, are we going to hit 10-ish every year? This is a bit of a lumpy business in terms of contract wins. But the teams are doing well, and we're talking to key OEM partners across our 3 regions. So in summary, you should expect us to sign a few more before the end of the year. Adrian Lewis: And Andrew, in relation to the U.K. retail disposal, your recollection is absolutely correct. We did provide an indemnity in certain circumstances where that FCA investigation was going to come back to us as was appropriate at the time. Now the FCA is in their redress scheme, is in a consultation period. So it wouldn't be appropriate for me to comment on how that would conclude before that does conclude. And I'd just point you back to what we said in our half year statements, we had an unquantified contingent liability set in our disclosure schedules, and we'll have to reconsider our position post the consultation period as that plays through for consumers through the third and fourth quarter, and you'll see more in our full year financial statements in the spring. Operator: [Operator Instructions] And we will now take our last question today from Sanjay Vidyarthi from Panmure Liberum. Sanjay Vidyarthi: Just one for me. I'm just looking at the TIV data that you provided. Just a couple of ones that I'd like to go on, Hong Kong. Is there anything in terms of phasing there in that being up 43% in Q3? And then just across Europe, there's been remarkable strength, double-digit growth across most of the markets. What's driving that? Duncan Tait: Good morning, Sanjay. Over to Adrian for both. Adrian Lewis: So Hong Kong data, yes, look, you remember last year, we talked about tough comps in the first half and weaker comps in the second half. And what you see in Hong Kong data was a little bit of that playing through. Hong Kong is 10,000 units, 10,000 to 11,000 units a quarter business. We're lapping an 8,000 unit quarter in Q3. And that's because there was a pull forward into Q1 last year -- sorry, Q2 last year with some regulatory changes where they changed the taxation rates applied to EVs on imports. That's what skewed the market. 12,000 cars in the quarter is a pretty decent quarter in what is a highly competitive market. There's nothing in this year's phasing that would indicate that's a pull forward, but we see that market as being a broadly 40,000 unit market and pretty stable at that level through the year. In relation to Europe, yes, look, absolutely, we've seen a very strong market performance. There are some nuances in there, both slightly weaker comp, and you can see that in the historics. Romania has a slight inflated number, I would say, because of some -- again, some regulatory changes there. We expect that to level out a bit into the fourth quarter, and you can see some fairly spiky quarterly data in Romania, big negative, big positive. I'd encourage you in the circumstance for Europe to look at a full year rate of growth for the market as a barometer for momentum in the region. David Brockton: Okay. Understood. Is there any kind of distortion there from EV sales? Or is there anything to think about on that not just Romania but across Europe? Duncan Tait: I would point to Bulgaria -- sorry, Belgium and Luxembourg as being a market that is shifting towards EV very quickly in relation to some taxation changes that came into effect at the start of this year, and that's a market that is shifting quite quickly to EV and BYD, where we're distributing for them has been -- we've been real winner in that space in that regard. And that's -- when we talk about some of the momentum we're seeing in those contracts, that BYD Belgium contract is one of those early ones that where we're seeing that business gather pace. That's the only EV point I would make. And obviously, you can see the market data there was fairly flat, but it is a market that's shifting to EV. I wouldn't read the other market growth rates as an indicator of an accelerated curve. Operator: It appears there are currently no further questions. With this, I'd like to hand over back over to Duncan for closing remarks. Over to you, sir. Duncan Tait: Thanks very much, [ Sergey ]. So thank you for joining us this morning, everyone. To summarize, our performance in Q3 was supported by market growth, distribution contract wins and ongoing product launches, while headwinds remain in Asia. We reiterate our outlook for 2025, and we remain well placed to deliver on our target of greater than 10% EPS growth over the medium term. That's it from us. Please get in touch as well if you'd like to follow-up on anything we discussed today. Bye.
Essi Lipponen: Hello, and welcome to Fiskars Group's Q3 Results Webcast. My name is Essi Lipponen, and I'm the Director of Investor Relations. I'm here with our President and CEO, Jyri Luomakoski; and our CFO, Jussi Siitonen. Jussi Siitonen: Hello. Essi Lipponen: Here is our agenda for this webcast. Jyri will start with key takeaways of the quarter. After that, Jussi will walk us through the financials and then back to Jyri for business area specific performance and guidance. After the presentation, we will have plenty of time for your questions. We will take questions both through the phone line and through the chat. You can type in your questions in the chat already during the presentation. Before diving deeper into Q3, I still wanted to highlight the news that we shared last week. Jyri Luomakoski has been appointed as the President and CEO of Fiskars Corporation following his interim role in the same position. But with this piece of information, I will hand over to you, Jyri. Jyri Luomakoski: Thank you, Essi. It's a pleasure being here. If the numbers would be better, the pleasure would be even bigger. But let's go into the quarter. Key takeaways, some things went well and some clearly less good. And if we start with the positive ones, our net sales turned to growth, and this was very much driven by several of our Vita brands, actually, most of our Vita brands. And Vita grew in Q3 in the magnitude of 8%. The other positive thing is that we had actually a solid growth in the U.S. The market, which has been in some kind of a turmoil as a consequence of the tariffs, consumers becoming uncertain what's happening there, it seems that our value proposition to the consumers has been such that it's continued to appeal and we've had good development there. What didn't go well is certainly the decline of our comparable EBIT in the quarter. And this is much driven by our additional costs in the supply chain and many of them are self-inflicted. Why? Last year, the inventories started to grow, and that was still happening in the beginning of this year in our BA Vita. And we started very determined actions to take down the inventory levels by curtailing production. As a consequence, when you curtail production, your supply chain costs are partly fixed and there is less volume to absorb those costs. So it was a kind of a premeditated action from our side to prefer cash flow and go into '26 without too much of excess baggage from the inventories. What I will soon come back when we get to the BA updates, but in our Fiskars business area, the innovation pipeline actually over the last 1.5 years or so has been more than doubled. And that's very important to stay relevant to the consumers, but soon getting back to that. And then as a consequence of this, we specified actually our guidance. Comparable EBIT range was narrowed to EUR 90 million to EUR 100 million from the EUR 90 million to EUR 110 million. And currently, as we see the market picture, that is pointing us to the lower end of that range for the comparable EBIT for 2025. Turning over to Jussi, please. Jussi Siitonen: Thank you, Jyri, and hello, everyone. So I continue with this positive news what we had in Q3, i.e., top line growth, solid 4.1% growth, so that Vita was up 8.2%, then Fiskars BA came down slightly, 0.9% negative there. Actually, this is the first quarter since Q2 2022 that we were able to deliver this kind of mid-single digit solid growth. There are a couple of good news also where this growth is coming. So the fundamentals are in place. It was very broad-based. If we take our top 15 countries, which represent more than 90% of our sales, 12 out of 15 countries were growing in Q3. Also same for brands. If we take our top 12 brands, 97% of sales, 10 out of 12 brands were also growing in Q3. So it was very broad-based. EBIT, EUR 13.9 million came down EUR 10.4 million from last year for 2 main reasons. Jyri already mentioned the supply chain issue, what we have there of under-absorption of fixed cost when it comes to our production volumes. Another one is our SG&A cost. When it comes to SG&A part, it's mainly phasing between Q3 and Q4. On gross margin, EUR 46.7 million. It was down 140 basis points from last year, so that Vita was down 380 basis points, 3.8 percentage points there. And Fiskars BA was actually up 110 basis points. On cash flow and I will go a bit deeper to that after a couple of slides, it was up from last year, around EUR 7 million, but still negative of EUR 10 million. If we dive a bit deeper about this EBIT bridge here and where the difference versus last year were coming from. So as said, group was down this EUR 10.4 million, so that Vita was down EUR 7.5 million and Fiskars was down EUR 1 million. The rest is from other operations there. Focusing first, what we have here on the right, i.e., Fiskars BA. So you can see that underlying gross margin was quite significantly up there and only partially offset by tariffs. For the actions we have put in place there, as we said after Q2, are now impacting positive results there and are mitigating the tariff impacts in Fiskars BA. Same what I mentioned already about SG&A, you can see here. So Fiskars BA, SG&A slightly up versus last year, but that's also mainly phasing. On the middle, you can see Vita bridge, which is down to EUR 7.5 million, as I said. Here, you can see the impact of the supply chain challenge, what Jyri explained. So that was one biggest -- big driver there. And also in Vita, it's mainly SG&A phasing what we have there, showing quite strong negative numbers in Q3, but we assume based on what we have seen that that will be somewhat offset in Q4. Overall, when we are talking about SG&A here, I would say that year-to-date SG&A, which is flat versus last year, it's a better proxy for full year than just looking our Q3 numbers. And then, of course, the group as a summary of those 2 BAs down this EUR 10.4 million so that even at the group level, our underlying gross margin was improving. But then as a total, it was more than offset by those tariffs. Moving then to cash flow. As I said, cash flow was negative EUR 10.2 million here. Even though it improved from last year, it was still negative. And of course, this is the topic we are not very happy with. The actions we have been put in place or already put in place or Jyri also explained here are the ones we are focusing now also for the rest of the year 2026 to get cash flow back on track. Here, you can see the impact. I would focus more on year-to-date cash flow here to avoid this kind of seasonal volatility. The challenge what we have is well illustrated here. Inventory is up some EUR 46 million, whilst last year for the same first 9 months period, it was down similar type of number. So we had significant delta, negative delta there when it comes to our inventory situation. And then quite naturally being a component of net debt and EBITDA, the net debt continued increasing due to this negative cash flow as a main single reason there and then that we are behind last year with EBITDA. The fact is that net debt EBITDA went up from last year being now 3.7x. Our target maximum 2.5x is still valid and we remain committed to this target. And therefore, this is one example why we have initiated those actions to mitigate inventory inflow and make sure that actually we get back on track with this net debt EBITDA. But with that, giving back to you, Jyri, on BAs. Jyri Luomakoski: Thank you, Jussi. And briefly on our 2 business areas, starting with Vita, which is approaching its annual high season, which is the fourth quarter. And here, we've seen, as earlier mentioned, a broad-based net sales growth. So if 10 out of the 12 top brands are growing, that I think we can call a broad-based and geographically also broad-based. It's not just one market which is booming and the others not performing. And the inventory-related actions, we've touched quite much upon. And when we look at the growth, and Jussi mentioned, it's several years back when the group was reporting this magnitude of growth numbers and I think it's over 2 years you need to look back till you saw a growth quarter in Vita. And this is extremely important for us driving our performance that we have the underlying growth, have used the kind of a comparison or parallel to steer a ship that does not have any propulsion is very difficult. And the same applies to company growth being kind of the propulsion for the business too. Actions that we started to look upon in the summer already recognizing the inventory levels that the only way to solve the 2 big inventory issue is really to curtail the inflow and, of course, start to boost the outflow. When you look at the comparable EBIT margin, really the big delta is coming from the supply chain aspect and the phasing-related SG&A. The underlying -- preempting maybe a very logical question that would be arising out of the numbers, the underlying gross margin or in terms of pricing, we do not see anything that would be alarming us, and that's extremely important. So when we have the propulsion, i.e., growth and the brands are loved by the consumers, then I think we have the ingredients to improve our position. And that's what the guidance also implies. A few highlights, leveraging our assets -- production assets in the more complicated glass production, which economically industrial logic is more of a process industry logic. Royal Copenhagen, one of our biggest brands, very successful brand has now actually next to the hand-painted porcelain launched also high-end glassware with crystal and mouthblown glass. And those are manufactured in our crystal factory in Rogaska in Slovenia and in our Iittala factory in Finland. So good both for the supply and complementing the offering towards our consumers to have a complete Royal Copenhagen tableware and glassware set. Iittala has expanded now to the scented candles. And when you look at those before you even light them up, you see a form or shape that we all can recognize. So it's the Aalto silhouette. And this is something that appeals as a decoration item and now getting into the darker, less light time of the year, what is then nicer to than have a beautiful scented candle lighted up and you can enjoy all the effects. And actually, the fire is bringing one of those, it's the elements of glass that are the 3 scents, water and sand and air that are in this offering. When we talk about desirable brands, you might recall that historically and I still read in many reports about luxury. We have actively dropped the word luxury. We recognize that to be luxury, there are certain characteristics that many of our brands actually would fulfill, but not all of them. But our brands are very desirable. And one of the kind of manifests to that desirability, Moomin Day in the early August time frame. It was a few days -- a few hours online. We actually sold out the Moomin Day celebration mug. When the sales started, there were about 50,000 people queuing online. And interesting, when I bypassed our store at the Helsinki Airport at the Schengen side, the store opens at 5:00 a.m. Normally, our stores open at 9:00. And at 5:00 a.m., according to our colleagues there, actually there was a queue outside of that. So there were some happy ones who got 4 hours before others their Moomin Day mug. So I think that's a clear manifest to the desirability of a brand, but describes what we have in many of our brands. Moving over to Fiskars business area, relatively stable top line. And as you saw in the bridges, EBIT bridges Jussi just showed, the gross margin improvement and the tariff cost, the incremental tariff costs have been pretty well matching each other, which is a remarkable achievement by the team in terms of managing the situation, which is complicated. It's still fluid situation, as we know. Tariff announcements are still in the air and how those -- some of them will settle, we don't know yet. But a decrease of 0.9%. And when I look at many peer companies who have recently published their numbers, I think we've been weathering this storm extremely well and implicitly indicates -- and I don't have the proof in any formal statistics, but indicates that we've been actually able to capture some market share and have remained definitely relevant to our consumers. In terms of how to capture the market share, there are a few keys, but one of them is also continued distribution gains, which we also see that we still have a clear pipeline of distribution gains coming for this business. Looking at the highlights, many know Fiskars as either the scissor or the axe, or the garden business. Now here highlighting the latest generation, the Fiskars Ultra axe range, which is, again, how the world's best axes have been made even better. And there is a established heritage and know-how and this is a product family now we all are proud of having been able to launch it. Innovation focus. As I mentioned earlier, our Fiskars business area has more than doubled its innovation pipeline in the last 20 months. And this is not only nice picture and promises on November 11, actually, we are arranging for institutional investors and analysts an investor event that will be then broadcast or webcasted, get to know business area, Fiskars. Last spring, we had a similar event in Copenhagen for our BA Vita and the feedback from analysts covering us, some fund managers attending that was very positive that we really show what we are doing, who is doing it, and we are proud to show what will be there available soon also in the stores coming out of the innovation pipeline. So it's not only talk, but there will be a chance to get a look and feel and the touch of these new products that are coming partly later this year, partly in the coming year. Our sustainability targets, we take them extremely serious and continue our commitment there. And when we look at certain environmental criteria, circular products and services, we've been able to grow the share by 300 basis points from last year's September level of last year's first 9 months, but there is still a way to go towards our 2030 target that half of our sales comes from circular products and services. What might not look too ambitious currently is when we have reached minus 61% on our Scope 1 and 2 emissions from our own operations, 7 percentage points improvement year-on-year. The target was 60. So it looks quite favorable that we are reaching -- actually have now reached that target. Then how to tackle our -- the fact that our Scope 3 emissions is defined by us as a percentage of suppliers spend, how many percent have spent to vendors who have committed to science-based targets. And there we've been moving sideways and still have some way to go towards our target. So we are currently at 65%. And in our H1 reporting, in that context, we also flagged out that the rebasing of some of the sourcing for our U.S. business might actually take us a small step back short term before the new vendors can be qualified and submit their science-based targets. But it's not a target that we want to give away. On the social side, the zero harm target remains in force. We have 3.5 as our lost time accident frequency per million hours worked. It is a notch up from a number of a year ago, which is very unfortunate, but the work continues. Health and safety of our people is extremely important to us. And then finally, inclusion experience. We have a target in a comparison with global high-performing companies of 80 and we are currently kind of moving sideways, just shy of that 80 at 77. So not yet there. The split of our businesses, our BA, so separation into subsidiaries is advancing. The legal entity structure will be in our current assessment, finalized by the end of first quarter '26. The operational structure has been in force since last spring, but that's kind of the relatively easy part of it. We are operating in about 30 countries, have had more than 30 legal entities and then having those split and put under basically subgroups for the Fiskars BA and for the Vita BA under the holding company, which is Fiskars Corporation, i.e., the parent company. So that work is ongoing. We had the first wave of a number of countries that went well because that has to do also with IP things, et cetera. The next one is beginning of November. And this step by step, we will get there by the end of the first quarter. What do we want to achieve with this separation? Of course, full business accountability. So we have 2 colleagues who are running these 2 business areas and they have operational end-to-end accountability for their business. So there is no scapegoat of a group supply chain. They could say that, yes, we would have sold, but the factories didn't deliver, et cetera. So it's all under one hat, which improves flexibility. It improves the speed of decision-making. The closer to the consumer we are making decisions, I think the more relevant they are and more timely they are. The independent legal entities as subgroups under the holding company, that's very self-evident. Then when we talk about the transparency and measurability, once this is completed, we have already committed to the financial markets that we can provide and we will provide more transparency into the numbers. Currently, we have the income statement pretty well already covered by BA, but not the entire balance sheet. So there is potential. And by transparency, we hope that these individual businesses are also getting with their different type of characteristics in terms of financial dynamics and asset utilization, et cetera, the fair valuation, which then is reflected into the aggregate, basically some of the parts as Fiskars Group's valuation. And when we have this structure, there is definitely a different level of dedication and this is to accelerate, of course, to tap to the growth opportunities into which these 2 businesses have available to them. In terms of the guidance, already addressed it in the very beginning, we narrowed down the range. And also openly pointed out that we have the most important quarter of the year ahead of us and the current visibility indicates more towards the lower end of the range. I know that many analysts have calculated what does it imply in terms of growth in the fourth quarter that is needed to achieve these numbers. And I'm happy to share that while we do not share regularly kind of mid-quarter or monthly business updates or anything like that, but as of today, having the visibility, how sales has progressed also in October, i.e., the fourth quarter has started, that has been well consistent with the expectations and projections that are needed to get there. Consumers make the decision. And actually, it will be after New Year's Eve when we close the stores, when we actually will, in the end, know how the fourth quarter been. Our D2C share increased a notch in the third quarter. And traditionally, the fourth quarter is more direct-to-consumer heavy. So both our own e-com and our stores play a relatively seen bigger role, which means that the visibility is really at the point of sale that takes place. We have in the background, certain assumptions and definitely actions also and those relate to the supply chain variances, which we have addressed. Those 2 published factory curtailments or mothballing as somebody would call them, are both related to 90 days furloughs and that means that they will span also into the fourth quarter. The tariff impacts, direct tariff impacts are way easier to calculate. Of course, the indirect impacts on demand is very much then visible again on the point of sale. And we expect this Vita's positive net sales trend to continue in the fourth quarter. And as I mentioned, we are on track on that. And the tariff mitigation efforts continue as some parts of the tariff landscape are still effectively open. So in brief summary, what is really delightful here is that we've returned back to growth. Especially the Vita part and this is the year -- time of the year where that growth is relevant and super-needed. And the U.S., where we've had certainly many aches and pains with the very volatile tariff situation, we've remained relevant and been able to remain relevant also to our customers, i.e., the distribution and gain some more traction on that side. The actions to reduce inventories, they continue. It is not acceptable from my perspective to see inventory numbers as we currently have and that's something we need to fix. Innovation pipeline, more on that in a few weeks and guidance I already touched. And relating to a guidance longer-term topic, last spring when I took over as interim CEO, there was a date penciled into the calendar in this autumn for a Capital Markets Day. We all know that our long-term financial targets are basically expiring end of this year. That's clearly recognized. But at that time, I personally felt that it would not be right to go out and make promises about the future and then somebody else might be then bailing out those promises. That's not the style we want to kind of enforce in our company. In H1 '26, we will arrange a Capital Markets Day. The timing is still open. And in that connection, we also plan to issue then our new long-term financial targets. So this as a promise and now being able to bail out those promises, it feels way better to be standing here and announcing this and we will be back on the timing of this. That concludes my part of the presentation. So thank you for your attention so far and we are shifting to the Q&A session, I guess. Essi Lipponen: Yes. And let's first take questions through the phone line. But if you want to ask questions through the chat, just please write your questions in and we will take them afterwards. But let's see if we have any questions through the phone line. Operator: [Operator Instructions] The next question comes from Calle Loikkanen from Danske Bank. Calle Loikkanen: And first off, congrats, Jyri, on the new appointment. Then starting on few questions, if I take them one by one. First, in Vita, the inventory-related actions and the scaling down of production, for how long will this continue to impact profitability? Jyri Luomakoski: As I said, the current announced furloughs are 90 days furloughs. And with regards to Barlaston, that's a 90-day block kind of a mono block, I would say. And with respect to Iittala, it's phased and part of that is in '25 and part of that will be in the winter season of '26. And we are, of course, continuously looking at do we see the development. We had a notch of inventory reduction now in Vita already in Q3 with the bigger demand anticipated in Q4. Of course, we expect more. And it is very much a steering where we want to clear the baggage from the past, have a clear slate forward for the business and manage the cash flow and implicitly through that also the indebtedness or the net debt position. So timing, difficult to say, but it's not ending in Q4 already based on what we have announced with respect to Iittala. Calle Loikkanen: Okay. But you're not expecting a similar kind of impact on EBIT anymore from these actions as we saw in Q3? Jyri Luomakoski: Into our guidance, we have certainly factored in what we know for the actions for this current year. And at this stage, we are not yet going to guide any income statement or any other element of '26. So we are managing that situation diligently and carefully balancing between the cash flow optimization. And of course, we are in the business of making profits and delivering profits and that's even our legal obligation to do that and manage the situation between these 2 aspects. Calle Loikkanen: Yes. Okay. Got it. And then secondly, I mean, now looking at year-to-date adjusted EBIT, EUR 46 million roughly. So you need about EUR 44 million in Q4 to reach the lower end of the guidance. And last year, you did EUR 43 million of EBIT in Q4. So in practice, you need EUR 3 million more now in Q4. And so I was just wondering, I mean, you mentioned that you expect Vita to continue to grow top line in Q4, which should, of course, help. And -- but I was wondering, I mean, if you have these -- still these kind of inventory-related actions ongoing, probably a bit of negative EBIT coming in from those then or at least negative impact on EBIT. So can you elaborate a bit perhaps more in details on what levers there are for you to grow EBIT in Q4 to really reach the guidance? Jyri Luomakoski: Two critical aspects. Of course, the top line growth, as indicated, is vital for that. That's the prerequisite. With respect to the cost side, SG&A, where we had a uplift in Q3, which relates to phasing relates to some accruals. So they were accrued last year comparing year-on-year and some accruals when like with respect to variable compensation, short-term incentives, et cetera, apparently, and I was not there in this role, but as a former audit committee chair, you remember some of the facts from the history when the visibility went a bit sour last year, some of those were reversed, creating a benefit into last year's Q3, which makes the current comparison also somewhat unfair in terms of the Vita Q3 EBIT performance and that type of a ugly comparison doesn't reoccur in Q4. So that's -- so it's revenues and costs, which I know sounds like a very simplistic answer, but there are very targeted items. And of course, we are careful and very cautious in terms of other costs and expenditures in the fourth quarter. Calle Loikkanen: Okay. That's very helpful. And then lastly, before handing over to others. And I know there's still plenty to do this year, but what sort of initial thoughts do you have for 2026? Anything that you kind of are looking forward to or expecting from next year? Jyri Luomakoski: Next year, we hope that there will be a kind of stabilization of the tariff situation because now it's been waking up in the morning and checking the social media, what is the new situation, and that's been keeping our organization extremely busy. That's also time off the consumers and customers. It's time that has been spent in rebasing our sourcing and relates now to the U.S. Fiskars business predominantly. The team has done a tremendous job in terms of finding new sources, qualifying them, testing them and negotiating that we can move and base our sourcing into already settled down tariff environments and so forth. So that's the only part actually, given that we will issue our '26 guidance in early February in connection with our Q4 full year reporting that I can share at this stage. But that remains like a wish that we could concentrate on some more productive or progressive topics instead of fighting the situation here. Operator: The next question comes from Maria Wikstrom from SEB. Maria Wikstrom: Yes. Maybe continue a bit with the soft topic that Calle raised as well. So I mean, just getting a little bit of more color, I mean, as Q4, I mean your guidance, I mean, reaching the low end of the range indicates that you need to record some 8% growth in the EBIT, which in light of, I mean, today's results, I mean, something needs to change. But I mean, is the thinking right that, I mean, given that it seems that in the Fiskars BA, I mean, you have been able to get these price increases through and the EBIT is stabilizing -- more stabilizing year-over-year so the lift that we are going to see -- we would need to see is coming from the Vita segment? And then here, I mean, you think that the Q3 was somewhat extraordinary, so it should be better in the high season. Is that, I mean, rightly summed up? Jussi Siitonen: So Calle's math worked well. So if you take our year-to-date numbers here, you can see that we are EUR 25 million behind last year when it comes to EBIT on the first 9 months, making our guidance, we need to be roughly EUR 5 million better than last year in Q4. What I said in my part here is that we have some technical tailwind there coming from SG&A phasing. So therefore, I would say year-to-date change in EBITDA would be better proxy to give direction there for full year SG&A. So you can figure out how much upside we -- technical upside we are expecting there. And then exactly like Jyri said here, we do need demand, which as of today looks pretty good there for Vita that we are following the plans what we had in place. And then when we are prioritizing the cash flow here, so the decisions are very much ours here, what to do with production to ensure that we can continue improving cash flow. So these are the items what we have in place. This time, Q4 is a bit different from last year. So you might remember last year, we were struggling with demand when it comes to Q4. I would say, at the very moment, we have one problem less versus last year. And then we have this kind of technical tailwinds. But as said, all this needs to work very much with in plans what we currently have to make a guidance. Jyri Luomakoski: And your analysis on BA Fiskars' role in the fourth quarter is also correct. It's not really the gardening season. Yes, some craft things happen for the holiday season. And of course, from our perspective, we wish a lot of snow to the Nordic countries. The snow season is always something we are cheering while the traffic in the cities is kind of not happy about snow. Maria Wikstrom: Perfect. This is very helpful. And then wanted to touch upon -- on the geographical sales development as it seems that, I mean, the demand is better in Americas as well as in the Asia segment versus, I mean, Europe is still lagging behind. Is there any like lead indicators or some bright spots, which would indicate that Europe would join the crowd what comes to the demand? Or do you see that Europe is likely to remain muted also for the last quarter? Jyri Luomakoski: Of world economy, Europe does not currently have a big contributing factor to world economic growth and consumers in Europe are typically more cautious than in many other geographies. In the Nordics, we've had good tailwinds with our Vita business. So when we commented broad-based, both brands and market-wise. So Nordics, we have been able to remain very relevant and very much a desired way to bring some joy and making the everyday extraordinary with our products. But your analysis is correct that it's both North America, U.S., especially and Asia where the consumers are more happy to consume. Maria Wikstrom: And then finally, touching upon the tariff situation and your mitigating actions. I mean, personally, I was very surprised, I mean, how well, I mean, you were able to, I mean, to get the price increases through for the Fiskars segment, I mean, during the Q3. So would you say that, I mean, the tariff risk has now winded down? Or is there still, I mean, many unknowns that we should consider as a risk going forward? Jussi Siitonen: Yes, we are very pleased with the Fiskars BA team here, how they have succeeded to mitigate those tariffs. As you might remember, we got some extra burden there late August when those steel tariffs came in and we are still -- we are still mitigating also those there. We are now leaving the last 2 weeks, if I'm right, this last 90-day extensions, which is given to Chinese tariff. So let's see where it goes after 8th of November there. So no one knows at the moment. So we are, as Jyri mentioned, following on a daily basis what's the current mood when it comes to tariffs and trying to tackle it. More fundamental-based, the actions we have put in place, price increases are only part of the story, mainly focusing on our own footprint, what we have in sourcing there to find alternatives for those high tariff countries, how we are able to make some re-footprinting in that sense. So can't promise that we have tackled all the problems because we don't know them. But as the ones we know at the very moment, we are very pleased with our BA Fiskars execution capability. Jyri Luomakoski: And with respect to the re-footprinting that implies basically products that we have historically sourced out of China, we have qualified suppliers, brought tooling into some of the neighboring countries, which already have settled down tariff deals with the United States. And those tariffs are clearly at a lower level than the current China tariffs are and gives a kind of a planning horizon for us going forward. Maria Wikstrom: And then I had one more question in mind, which reflects to the Gerber division as I recall that Gerber was the one that had faced some difficulties or faced lower demand during the summer period. So what are currently the trends you are specifically seeing for the Gerber brand in the U.S.? Jyri Luomakoski: Gerber has been hit in some geographies by restrictions, whether you can advertise knives or multitools, which are then qualified also as knives because they are in some jurisdictions like weapons. And from that perspective, the push towards the consumers has been a more difficult struggle. Our efforts, and I visited in the summer Portland and the Gerber team, similarly as in the rest of Fiskars BA, innovation and remaining relevant to the consumer is extremely important. And I think it's fair to say that we have neglected that. It's been a few years where we haven't had too much of innovation flow, new products and happy to see that that pipeline is also well equipped with new ways to charm the consumer, to have the outdoor people, the fishermen and the women and the hunters and campers and all those with new need stuff equipped and that is the key to tackle this issue. So what we can't advertise in public or what needs to go beyond a locked cabinet in a outdoor store in some states in the U.S., we have now other ways in the pipeline to make us relevant and again, wanted. Jussi Siitonen: Yes. Maria, when I said that 10 out of 12 brands were growing in Q3, Gerber was one of the growing ones there in Q3. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Essi Lipponen: Yes, we do have questions in the chat. Thank you, Calle and Maria, for the questions through the phone. But maybe if we start with the question related to top line. And Jyri, if you take this one. Was there any impact of timing between quarters supporting the top line development in Q3? Jyri Luomakoski: Not that I'm aware. We have potentially between Q2 and Q3, we have the load-ins for the back-to-school season in North America. That's traditionally been something that either happens last week of June or first weeks of July and then you get big swings. But we are not here in that type of phasing the holiday season load-ins, which holiday season as reminding for Vita, less than half of our sales is through distribution, more than half, clearly more than half is through our D2C channels. Those load-ins are happening now in October anyhow. So those have not been moved forward to September. No signs of that. Essi Lipponen: Great. Let's see what we have next. Related to production, maybe Jyri, if you can continue. Given the current demand situation and production curtailments, how do you view the current production footprint, especially in Vita? Are you considering any adjustments? Jyri Luomakoski: A prudent and careful manager of a business always considers adjustments. I know this is kind of a rounded answer, but that's our obligation to see how we can best perform and serve our customers and in the end, make money for the company. Those always being in the background, but now here in terms of some concrete that there is a site that we would need to kind of permanently mothball or so, such plans are currently not on the table. And of course, demand situation is dictating. We are here for the customers, for the consumers. That's dictating in the end the footprint, how we are set up and how we operate that. Essi Lipponen: Thank you. Maybe, Jussi, related to working capital and inventories. How large working capital release are you expecting in Q4? Have you considered other actions than reducing inventories? Jussi Siitonen: Yes. Well, following our historical pattern, what we typically have had in Q4 is that working capital is coming down. And typically, cash flow has been improving versus Q3 and Q4 is happening now, we can't confirm it yet. The actions we have put in place at the moment are exactly ones Jyri already explained there with a high priority target of continue reducing inventories. This inventory challenge is very much on Vita side, less on Fiskars side. Essi Lipponen: Yes. And maybe to both of you, but maybe if Jyri starts. When comparing Q4 and Q3, are you expecting higher under-absorption of fixed costs in Vita related to the inventory? Jyri Luomakoski: We have implicitly guided for Q4, the EBIT or comparable EBIT number, not individual line items and not individual line items within our cost of goods sold where the supply chain variances would be ending. Certainly, we have our plans how and we will operate our different production sites during the fourth quarter. And based on that calculated and factored in into the mathematics, how we have arrived at our forecast, which are supportive of our guidance. Essi Lipponen: Great. Then about tariffs. And Jussi, if you start. Given the U.S. tariffs and additional steel tariffs, how much headwind are you expecting for 2026? And how much of these have you been able to mitigate as of now? Jussi Siitonen: Yes. Steel tariffs, as said, is something new there started or announced in late August. So there the steel tariff impact is mainly in 2026, whilst the other tariffs what we have for country-specific, they have been already since April this year. So there, this kind of year-on-year change is not expected to be significant. So it's mainly the new one, i.e., steel tariffs impacting more in 2026 than in 2025. We haven't announced any specific numbers how much they are impacting, what's the direct impact of tariffs on our gross margin, only say that when it comes to direct impacts there, we do have toolbox to mitigate them, including this re-footprinting what we are referring prices and the likes. And of course, we are now looking for category expansions there when it comes to offering what we have, which will also help to create new demand and therefore, tackling it not only by cutting costs, but also expanding our portfolio and top line there. So toolbox is quite broad. How much still left for 2026, that we haven't yet commented. Essi Lipponen: Yes. We still have a couple of questions and let's see if there are any new ones coming. It might be that we have already covered this, but maybe just to remind, how quickly can inventory levels in Vita be normalized? If you want to comment on that? Jyri Luomakoski: It is not a sprint. It consists of 2 factors. One is the one which is more really in our control, and that's curtailing the supply or the input into the inventories, both relating to sourced items and own manufacturing. And those we can tackle and those we have started to tackle very clearly. At the same time, the output from inventories, so clearance sales type of topics, that's also needed. Now we are heading to the seasons where you have, as we know, the Black Fridays of this world, they are, to some extent, also created for clearing some inventories and -- but it's definitely not done in the fourth quarter of this year. It's -- if not a marathon, but it's still long distance activity that we have there. So working on both ends, input and the output. And as we progress, the output, of course, requires always the willing purchaser, consumer or distributor. And once we have more to share on that front too, not only those actions that are under our control, we will, of course, be back and updating on those. Essi Lipponen: Thank you. And then maybe the final question for Jussi. With net debt at over EUR 600 million and leverage at 3.7x, what is the deleveraging plan for 2026? Jussi Siitonen: Very good point. First of all, it's just an outcome, what Jyri just explained. So that's the main driver there what we have on short term and then I'm moving to 2026. Typically, historically, we have come down when it comes to net EBITDA towards the end of the year after Q3. So that's our historical pattern there. More important than how much we are now coming down is to turn the trend. So we need to get a declining trend there when it comes to our net debt EBITDA and then impacting on both components there, net debt and then improving our EBITDA. I'm not expecting any rapid overnight improvement there. As I said, more important is now to have fundamentals in place to turn the trend, getting it on the lowering trend there. And then what we said that this max 2.5x net debt to EBITDA remains our target. It might take a bit more time than probably someone might expect to get it there, but it clearly remains our target. Jyri Luomakoski: And we work in a very determined way on both elements of this EBITDA -- Jussi Siitonen: Yes. Yes. Jyri Luomakoski: -- and the net debt where really the main lever is inventories. Jussi Siitonen: Yes. Essi Lipponen: Thank you. It seems that we are out of questions. So thank you for the active participation, and I wish you all a nice end of the week. Jyri Luomakoski: Thank you very much for joining, and happy shopping in the year-end holiday and gifting season. Jussi Siitonen: Thank you.
Operator: Good day, and thank you for standing by. Welcome to the SEB Financial Results Q3 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Johan Torgeby. CEO. Please go ahead. Johan Torgeby: Good morning, and I'd like to extend a warm welcome to all of you today for SEB's Q3 financial results. Going to our first page with highlights. We today post a solid financial result in a quarter which is seasonally slower but we've also experienced less volatile and stable financial markets. Noteworthy is that investment banking activity has held up and showed resilience and we saw an increase in capital markets activity to the later half of the quarter. Customer satisfaction and employee engagement continue to show relative strength and it has been decided to continue the SEK 2.5 billion share buyback program per quarter by the Board as we announced today. Flipping to the next page, we have some recent events. And the first one is the infrastructure of payments which is now being disrupted to some degree by new technology coming from blockchain. We have, together with 8 other European banks launched a consortium with an initiative to see if we can launch a euro-denominated stablecoin on the chain and targeting the first half of 2027. Also, AirPlus has now been used as the new brand for our previous Eurocard. And this is an example of the marketing campaign, particularly towards the Scandinavian countries where Eurocard has been a long prevailing brand within the Corporate Card segment. It has now been rebranded under the headline green is the new gold. And if you haven't already, you will soon get an AirPlus instead of your Eurocard in the color scheme represented here on the slide. Turning to Page 4. We have, over the last couple of quarters, updated you on our progress within AI. We have shown you the internal projects that we're running, about 130, which is funneling in, in different categories of areas we think we can improve. But also gone through the recent investment that we've done together with a consortium to get compute capabilities available to us. Today, I'd like to introduce the third corner of this triangle, which is actually SEB not only working with offering better products, integrating it in the products, not only running the bank using AI, but actually enabling banking in the AI community, which is the core business we do. We speak a lot about different business units in the bank, but this is probably one of the lesser known ones. In 2022, we created a business unit called SEB Growth, where we now have an offering tailored for fast-growing companies with high innovative content and companies that plan to raise capital and/or lift or sell themselves in the future. This is an attempt to combine corporate banking with investment banking, with private banking, force entrepreneurs and these fairly young companies as they begin their journey. We've also included a few of the logos which we have recently supported such as Lovable, Sana, Modal and Legora. All these are well-known fast-growing companies in the AI space in Scandinavia. The next page, we can then look at the development of our credit and lending portfolio. As all of you are aware, we've had a little bit of a sideline movement in recent years. However, both last quarter and this quarter, we have some growth, albeit modest. Lending year-on-year for the corporate book is up 4% FX adjusted and the total lending portfolio is up 3% FX adjusted with households and Swedish mortgages just shy with half of that growth in the third quarter year. Looking on the next page on the jaws slide. We can see that the costs -- the trajectory of costs is tailing off. And we are roughly back to trend that we had prior to the elevated profits generated by the interest increase with a CAGR here represented from the time 2016 to 2021. And with that, I'd like to end this part and hand over to the CFO, Christoffer Malmer. Christoffer Malmer: Thank you, Johan. I would now like to turn to financials on the next slide. Operating income for the third quarter declined from the previous quarter, reflecting typical seasonal patterns, notably within net fee and commission income, where the second quarter performance was particularly strong. Net financial income was impacted by market valuations of our strategic holdings during the quarter, which had a positive contribution in the second quarter. This valuation effect accounts to around SEK 500 million of the delta in net financial income between the quarters. Net interest income increased slightly despite continuously downward trending interest rates explained in part by the higher day count in the quarter, some positive effects from FX, slightly lower deposit insurance guarantee fee and a lower short-term funding cost. Operating expenses declined slightly from the previous quarter, also following the usual seasonality. As the Swedish krona has continued to strengthen in the quarter, we are providing an updated FX adjusted cost target for the full year of SEK 32.6 billion compared to the original cost target of SEK 33 billion. We maintain our range of plus/minus SEK 300 million around the cost target level which is primarily related to the ongoing integration of AirPlus. Here, we see some potential scope for possibly accelerating that implementation program a little bit further. As mentioned at the start of this year and reiterated also here in the second quarter, we're now in a phase of consolidating recent years of investment, which is resulting in a lower cost growth. We also maintain our external hiring pause for nonbusiness-critical positions to facilitate this consolidation and to make room for continued investments in selected areas, notably within technology and AI. The full year cost target does imply that there are some effects to expect in the final quarter of the year. Net expected credit losses of around SEK 200 million or 3 basis points reflecting underlying stable asset quality as also reflected in the continuous decline of Stage 3 assets. We added around SEK 100 million to the portfolio overlays in the quarter, and we also had some sizable reversals. Imposed levies came down in the quarter as expected, reflecting the development of our Baltics levies and our full year guidance for imposed levies now also including Riksbank's introduction of the interest-free deposit now amounts to SEK 3.6 billion. So that's up from the SEK 3.5 billion communicated in the second quarter. Tax rate of 21%, in line with guidance. Net profit for the quarter of SEK 7.7 billion and a return on equity at 14%, and we ended the quarter with a CET1 ratio of 18.2%. On the next slide, we turn to the development of the net interest income. On a divisional basis, the NII in Corporate and Investment Banking declined by around SEK 200 million, primarily reflecting a lower net interest income within Investor Services, which was elevated during the second quarter, and that was a dividend season as we mentioned at the time. NII also within our markets business was a little bit lower as customer activity came down for the season. From a volume perspective, lending within CIB declined in the quarter as some of the event-driven financing volumes generated earlier in the year rolled off. And that, together with FX effects, explained the majority of the move in the loan book compared to the second quarter. Now year-on-year, lending to corporates within CIB increased by 3% on an FX-adjusted basis. Within Business & Retail Banking, NII declined by around SEK 100 million compared to the previous quarter, and that's primarily reflecting the impact from lower interest rates on deposit margins. Lending volumes were largely unchanged in the quarter and following 2 strong quarters of market share gains in the Swedish mortgage market, Q3 volumes grew a little bit less than the market. Now year-to-date, our net sales of mortgages represent a market share of around 13% which is in line with our share of the stock. Competition in the market remains firm and mortgage margins moved largely sideways in the quarter, remaining at historically low levels. Within our Baltic banks, net interest income was largely unchanged as the impact from lower interest rates was partly offset by higher lending and deposit volumes across both private and corporate customers. Loan growth in the Baltics remained robust with mortgage growth of around 9% and corporate loan growth at around 8% compared to last year. Within treasury, NII was positively impacted by the yield curve as well as favorable funding conditions within short-term funding. Looking forward, we continue to expect our net interest income to bottom out some 3 to 6 months after the latest or the last rate cut. Bear in mind that, that is based on how our balance sheet looks today. So volume growth and any proactive repricing could impact those dynamics. If we turn to the next slide, and we look at the fee and commission income in the quarter. Total fees and commissions declined by around SEK 400 million compared to the previous quarter. And if we look on a divisional basis, we effectively see 3 developments behind this. Firstly, within Corporate and Investment Banking, fees are seasonally softer in Q3 across most capital markets-related businesses, including issuance of securities and advisory, which was also particularly strong in the second quarter. This is also true for lending fees and combined, these effects accounted for around SEK 400 million in CIB. Nonetheless, CIB generated the highest net commission income on record for a third quarter. The second factor related to card and payment fees within Business & Retail Banking and again, seasonal patterns impacting activity levels primarily within corporate cards and AirPlus and this affects around SEK 100 million compared to the previous quarter. And thirdly, going in the other direction, we saw about SEK 100 million increase in fees and commissions in wealth and asset management as a result of higher assets under management and continued business momentum. Net new money across the group amounted to SEK 8 billion in the quarter. And on fees and commissions, when we close the second quarter, we refer to a more constructive fee environment. And while Q3 will see or should see some usual seasonal patterns, which we've seen, we said that if the market backdrop doesn't change dramatically, Q4 should see a continuation of this more constructive trend. And this comment, we think remains valid, which is encouraging going into the last quarter of the year. If we turn to the next slide, we set out the development of net financial income this quarter, NFI from the divisions was largely unchanged from the previous quarter at SEK 1.9 billion. The decline in the headline, NFI versus the previous quarter is, as I mentioned, largely explained by valuation effects related to our strategic holdings and that's primarily in Euroclear, which also paid a dividend during the second quarter. affecting that comparability. These effects were partly offset by XVA going the other way, and we continue to look at the long-term average of around SEK 2.5 billion per quarter. Turning to the next slide. We'll look at the development of the CET1 ratio in the quarter. We closed the second quarter with a management buffer at 290 basis points. And during the quarter from left to right, as usual, we received an updated SREP, update from our supervisor. And as you will have seen in our separate disclosure on that topic. This resulted in a lower Pillar 2 requirement related to lower capital impact from IRRBB, interest rate risk in the banking book. Then we had 41 basis points, reflecting the net profit in the quarter after deducting our dividend accrual while lower risk REA contributes about 14 basis points reflecting positive risk migration in the book during the quarter. Under REA other, you will find a combination of other developments on the balance sheet. So the FX effect, the overall REA size market risk REA and also a positive impact from us applying the SME factor to some of our CRE exposures. These factors in total added 22 basis points and largely evenly distributed between them. Finally, the decline of 18 basis points reflects the phasing in of the REA increase in the Baltic banks that we announced in the second quarter, and that is related to the ongoing work with our Baltic IRB models. This takes the CET1 buffer to 360 basis points at the end of September. And we also highlight that the remaining impact from the Baltic REA increase is around 70 basis points, so in line with the communication at the time of the second quarter. And we expect to phase this in over the coming 3 quarters. So that means that our buffers in effect on a pro forma basis stands at 290 basis points with the Baltic REA fully phased in. Other effects to bear in mind as we go into the end of the year is the impact from operational risk REA in the fourth quarter when we do review that level. On the next slide, we summarize our capital and liquidity position at the end of the third quarter. Our capital as well as our liquidity measures have all strengthened during the quarter, reflected in rising LCR from 130% to 136% and a higher NSFR from 112% to 116% and the CET ratio, as we just discussed on the previous slide. Finally, I would like to conclude with our financial targets, which remain unchanged, including a 50% payout ratio, a management capital buffer target of 100 to 300 basis points above the regulatory minimum and a return on equity competitive with peers with a long-term aspiration of 15%. Return on equity year-to-date stands at 14.1%. So with that, I hand the word back to you, Johan. Johan Torgeby: Thank you, Christoffer. That ends our prepared remarks, and I'll hand over to you, operator, for the Q&A. Thank you. Operator: [Operator Instructions] We will now take the first question from the line of Namita Samtani from Barclays. Namita Samtani: My first question, what should we think of funding costs related to net interest income going forward because surely, if rate is still coming down or they have come down, which is yet to be factored into our net interest income, this will continue to be a tailwind. And secondly, I just wondered, do you lend to private credit and what percentage of that is part of your book? Christoffer Malmer: Thanks for your question, Christoffer here. I'll take your first question on the net interest income. And you're right to say that we've had a positive effect from funding costs in the quarter, and you saw that also in the breakdown of the NII in treasury. And we estimate that effect to be positive for the quarter of around SEK 100 million or so. Now going forward, we'll continue to reiterate the message on 3- to 6-month lag from the last rate cut for the dynamics to work their way through the balance sheet before the net interest income would trough. So we should expect the net interest income to come down again in the fourth quarter. And then in the first quarter, and then we'll see again what happens to rates, of course, as we go into 2026. Those are broadly the effects that I would bear in mind. Johan, you want to comment on the private credit? Johan Torgeby: Yes, sure. Thank you, Namita. We have no meaningful noticeable exposure direct to any private credit. We do have a very, very small group of private equity firms that also have a private debt arm, but no direct exposure. So it is so small that it's not really noticeable. Operator: We will now take the next question from the line of Magnus Andersson from ABGSC. Magnus Andersson: Two questions, please. First of all, on corporate lending. Last quarter, you said you had an elevated level of activity-based lending. And it comes down a bit now quarter-on-quarter FX adjusted. Could you please tell us how you see the outlook for activity-based lending as transaction activity is undoubtedly picking up now? And also what you think about the more lending for general purposes when you think that will pick up? That's the first question. Secondly, on capital and risk-weighted assets. The level was significantly lower than at least I thought in this quarter, and I see that your -- I mean, risk weight comes down in corporate IRB, for example. Is this -- with the exception of the op risk coming in into Q4, is there anything else here that could be volatile? Or is this a reasonable run rate to use? Because I think you even included SEK 10 billion of the Article 3 announcement as well here. And related to capital, do you know already now if you will continue with the share buyback approval for the full year in the Q4 '25 report? Or if you would consider doing it as you did previously with half in -- half year approvals? Johan Torgeby: Thanks, Magnus. I'll start with the corporate lending. So first, I just note that you did accurately depict what we said and what happened last quarter. Those temporary elevated levels for transaction-based exposures, they have not fallen off. So this quarter with its 4% year-on-year does not have those, let's call it, temporary bridges on as there was very little transactions done into the summer. So this is a much more steady as we go. When it looks going forward, so the pipeline looks unusually strong. That doesn't mean that they naturally materialize for events and the event-driven lending that might come with it. But we did see a pickup in investment banking and also capital markets transactions towards the later half of the third quarter, which is an encouraging sign. And we, of course, always keep a close look as a leading indicator of what the Americans do. And you could see some similar signs or even more pronounced there. But I also want to say that the lending fees this quarter, even though it's a very, very quiet one is still 24% up year-to-date, the lending fees, which is, of course, what you typically -- the majority of what you earn on leases is not NII when it comes to transaction is up 9%, the first 3 quarters this year compared to last. So there is some underlying event-driven momentum, but it's -- I still want to be cautious because a lot of things need to happen, and we don't want any of the risks that have been identified to materialize in Q3 that would create volatility. So if I'm a little bit constructive and hopeful, I think general corporate purposes, that's a longer transition. So we are not seeing this broad-based, let's invest in increased capacity, then you need to borrow to invest further because the first investments, they're always done with the operational capital or cash at hand to meet the demand. So in my mind, I often come back in this discussion around the lack of demand in the economy. Retail sales and consumption in GDP. And that's kind of the last leg that we are looking for really to change the picture. And of course, looking at the economists they are looking pretty constructive for '26 and '27 on this topic, but let's wait and see. Malmer? Christoffer Malmer: Thank you. So Magnus, on the REA. If we look into the fourth quarter, you're right that we expect the op risk effect. We estimate that to around 15 basis point negative impact. The other moving parts that are subject to movements during any quarter is the FX effect, of course, you see that is positive in the quarter. That remains, of course, unknown. It's a REA size, which in this quarter is again positive contribution. And coming to your previous question, of course, I hope that we will see that be moving in the other direction. And the third one is REA asset quality, which, again, in this quarter due to upgrades of risk classes of a number of counterparts also contributed positively. So these are the moving parts and then you go to op risk REA. So when it comes to the buffer, the 360 basis points, and we look at the pro forma effectively the 290, assuming the remaining phasing of the Baltic REA, last year, at this point, we were around 470 basis points. So of course, the situation was very different. But still, there are, to your question, a number of moving parts in the REA that will play out in the fourth quarter. I will come back at that time with comments on future buybacks. Operator: We will now take the next question from the line of Markus Sandgren from Kepler Cheuvreux. Markus Sandgren: I was thinking about -- there is some growth in the Baltic lending business. So I was thinking your ambitions going forward? Do you expect to grow in line with the market given your size? Or is there any reason to believe that you can capture more market shares there? Johan Torgeby: Okay. yes, we are growing clearly higher, and it's not only this quarter, it's been going on for a while. So we are actually accelerating a bit. So we're now looking to 8%, 9% growth in this quarter year-on-year compared to -- if I remember correctly, it was about 6% last quarter. We are maintaining our market share as -- the long-term picture is that it's quite concentrated as you probably know to 2 large institutions, Swedish banks in the Baltics. And there has been, of course, increased demand for higher competition from everyone in the marketplace. But right now, we have an ambition to maintain this position. I wouldn't commit as it is a very high market share we start with. So this is a little bit defend and protect, but we are not going to give it up easily. So be careful in increasing market share, but definitely it's a fast-growing market. I'd also like to point out that it is a higher inflationary market. So in real terms, it is not as impressive as these headline numbers are, and you need to also take that into account because the loan book unless you relever the economy will grow with nominal inflation plus whatever you do. Operator: We will now take the next question from the line of Martin Ekstedt from Handelsbanken. Martin Ekstedt: I wanted to focus a bit on your retail business. Looking at statistics, Sweden data on mortgage lending during first half of '25, you saw quite strong market share of net new lending. I think you took like 16% on new lending against the back book market share of 13%. But as we enter the second half of the year, this trend kind of evaporated, and you took just 1% in July and 3% in August despite similar volumes in the market overall. Is there a story behind this that you could share with us perhaps? And then secondly, on that same topic, with Sven Eggefalk now joining you as a new head of the business line, should we keep hopes up for higher volumes share -- volumes of market shares to return? Christoffer Malmer: Christoffer here, I can comment on this. I think, as I mentioned in the remarks, if we look at our market share year-to-date in net sales and mortgages, that stands around 13%, and that is in line with our historical stock level. So there is, as you point to some movement between the quarters. I think when I look at the focus that we have for winning the mortgage market share business, we think all 3 components, it's the speed, it's the availability and it's the pricing. And it's about us continuously evaluating and making sure that we are competitive along all those 3. And as you will see that we haven't moved pricing much in the last quarter, but we're continuously working around speed and availability. But I would also mention that there is a volume effect into this as well, volumes are still relatively small, which can impact movements in between individual quarters. But year-to-date, broadly in line with the stock market share. Martin Ekstedt: Understood. And then a second question, if I may, and just picking up on Namita's earlier question on private credit. I wanted to just pose this question to you a bit more broadly. I mean, the main focus around the private credit discussion has been centered on the U.S., right? And you said you don't do this yourselves currently to any large extent. But I mean, generally, you stand perhaps as the leading Swedish lender to nonbank financial institutions. So I just wanted to check with you for a Swedish take on this. How widespread is this concept in Sweden? And what are your views on the viability of the model in Sweden and also a bit on the risks perhaps. I mean if you don't do this, who should be doing it or shouldn't we be doing it at all in Sweden, and why not. Johan Torgeby: Okay. Yes, this is a little bit of reasoning. Don't take this as a fact. So first of all, this has been a development very much driven by the U.S. I hear numbers like USD 2,000 billion. It's actually surpassing bank lending if you extrapolate the current trends. It is a very, very significant deep source of debt capital for the American economy. Europe is much, much smaller as a whole. And even the things that are growing fast in Europe is typically more American firms, replicating what they've done in the U.S. rather than European firms. Then you go to the Nordics, it's even more pronounced. So private debt is not a large funding source for the Nordic where we operate. And this is, of course, very much if you look at the classic private debt, private equity firms of Scandinavia, which is our home market, that it looks very, very different in terms of the balance between equities, infrastructure, alternatives versus private debt lending. So my take on this is that, first, the leverage buyout market is very well functioning in Nordics. This means that there's much less of a free lunch to be had sourcing the money that you then refund and redeploy into a leverage buyout type of financing because this is almost like a game between the 2 different products. They are slightly different, but they achieve the same thing for a private equity firm. One is you borrow from a private debt with typically 7% to 9% yield expectations or you borrow from a bank, which in the Nordics, we are very efficient, and we've been able to price the LBOs quite differently. But if you look at the overall market of LBOs, how they're financed, it's clearly in favor of private debt funds. But from the banking system, as far as I know, Nordic is very little -- has very little exposure in the Nordic banks to this. It's other capital providers that have put the money in. Operator: We will now take the next question from the line of Shrey Srivastava from Citi. Shrey Srivastava: My first one is your comments around the pickup towards the end of the quarter in capital markets activity. Of course, this quarter was affected somewhat by sort of lower episodic transactions debt than you'd expect. So I just want to talk about what the pipeline for the fourth quarter, what you've already seen in the fourth quarter and going forward, please? And my second question is going back to your comments on the scope for accelerating the implementation of AirPlus. You've previously, if I'm not mistaken, commented qualitatively about when you expect it to be accretive, excluding and including restructuring costs. Is there anything further you can now provide on that, given you've obviously had an extra quarter seeing the business and integrating it. Johan Torgeby: Sure. I'll start with the pickup. So the circumstances around capital markets and primary deals, M&A and IPOs is quite -- it's very, I would argue, benign. It's a good market. Markets are strong. They're not over -- they might be an all-time high on the stock market, all-time tight on credit -- recent tights in credit markets, lower interest rates and a little bit of European spurring optimism for what is going to come. It's not particularly strong here and now, but it's definitely more optimism around where Europe could go, not at least in Scandinavia and the Baltics, if you look at GDP protect -- projection, consumption, et cetera. And also, I would argue that Germany has had the biggest delta from 1 year ago, where they were very much not in favor. And now it's a little bit of, let's say, interest at least on what could Germany do with all these announcements around fiscal, stimulus, defense, security and resilience. The uptick is exactly what we would have expected. We've actually been a little bit disappointed, I would say, if you compare 1.5 years ago when we saw that the interest rate has peaked, then we had a very quiet couple of years behind us after the record years of the early 2020s. And now it looks quite constructive. And you saw that -- before summer, we did an unusually amount large deals in the Nordics, then, of course, summer dies. And I would say that the pipeline and the amount of discussions for the fall and next year, still indicates that there is a higher level of potential than there was before. Now don't take that too much, but I'll just look at issuance of securities and secondary market and derivatives, which is, of course, it's cut in, in the financial result today, we're up 29% year-to-date compared to last year on issuance and securities and services, M&A and equities. And we have 14% in secondary markets year-to-date. So there is something clearly better already happening compared to last year. And we are just saying that we feel quite constructive. We're not saying that this seems -- there are no indications right now that this would implode tomorrow, rather being quite supported of this could probably continue. Christoffer Malmer: On your second question around AirPlus, a reminder of where we are there. So as we highlighted in the second quarter, the first critical milestones around IT migration, the discontinuation of noncore markets and the rightsizing of the organization has been completed, and this process is on track. The next phase now is to increase pace of implementation between AirPlus and the rest of the SEB Group business. So what we are now reviewing is if there is reasons to try and accelerate that phase. As you will remember, we gave a range around the cost target for 2025 of plus/minus SEK 300 million as we said, largely attributable to the pace of implementation of AirPlus. So it was in that context, I made those comments. Operator: Thank you. We will now take the next question from the line of Johan Ekblom from UBS. Johan Ekblom: Just to come back on some of the comments you made earlier around AI. I guess trying to figure out what AI could mean for your business longer term. There's 2 aspects to it, I guess, that I'm interested in. One is, how do you think about the cost of AI? So we hear a lot of stories about the cost of AI being heavily discounted today and that we should expect cost to increase materially as you get on to kind of normal rate cards for what you're paying. And I guess when do you expect to see concrete benefits in terms of efficiency or revenue opportunities that will be kind of obviously visible in the financials. So that would be the first question. And then secondly, just a bit of a detailed one on asset quality. I mean we had a big green project that went belly up in Sweden earlier this year, and there's another one that's in the press now. Your corporate loan book tends to be very much focused on investment grade. How do you view this potentially higher credit risk project? And how do you manage risk around those? I realize you probably can't comment on individual exposures. But just from a more kind of top-down view. Johan Torgeby: If I start with the last and I'll hand the -- I think you asked mostly for the financial impact, I'll ask Christoffer to reason around on AI. The traditional loan book is investment grade. The really minimum rule of thumb is that you have to have 3 years of good cash flow, that has proven resilient business model, et cetera. So that's what we do. But there are, of course, also a very, very small part of the balance sheet that also gets dedicated to starting up of firms. These -- the ones you mentioned, the larger green ones, they have been unusually very unique that they are of that magnitude, but we have had very, very modest, if I say it that way, exposure that you won't really have seen even though there have been a little bit of actually blowouts in the whole green and clean tech sector as we speak, and it's continuing. The other thing is to see that the capital stack of all these projects, if they are large, are very different from the past. They are namely predominantly government guaranteed, and there are risk and offsets. So the nominal values often, if not always, exaggerate heavily what the banks actually are exposed to. But -- so there are 2 mitigating factors to any worry. And that is that the amount is very small, and it's often guaranteed somewhere between 60% to 85% by a government. Christoffer Malmer: If I reason a little bit around the AI and the financial impact, and you're right that we are at an early stage and trying to assess and quantify the ultimate impact is still difficult. But I'll make a few comments. I think in terms of the benefits that we can already see is there are certainly some areas where we do see tangible efficiency gains and productivity enhancements One is in software development, where we see the use of Copilot increasing developer productivity and output and deploys. Another area is in Wealth and Asset Management, where we can see an increase in the number of outbound customer calls as a result of AI support in documentation. So we see those productivity gains. Now how does that translate into P&L? Well, one of the comments that we made around the hiring pause that we're having consistently asked the question when we do replacement hires, if there is a technology or an AI solution that could be levered for that same activity. So we will see this gradually coming through. In terms of the cost of the actual AI. One of the reasons we decided to team up with a couple of other companies in the Wallenberg sphere to invest in the compute power from NVIDIA here in Sweden is partly to get access to sovereign access to compute, but also to ensure the cost. And to your point, we're buying compute power from the large compute providers around the world is, of course, an exposure that anyone would have if you want to grow and expand in AI. And that is also for us a level of comfort to have that cost under our own control. So those are some comments. But as you point out, it is still early days. But we are following it very closely. And the early signs that we're seeing is constructive productivity enhancements. Operator: We will now take the next question from the line of Sofie Peterzens from Goldman Sachs. Sofie Caroline Peterzens: This is Sofie from Goldman Sachs. So my first question would be on the fee line. The softness that we saw in fees this quarter, was that reflecting margin pressure? Or was it just less volumes than expected. So if you could kind of just discuss a little bit margin pressure compared to the volumes on the fee side? And then my second question would be around kind of capital. What we're seeing is that the fiscal outlook or fiscal spending next year is quite good for Sweden, macro-outlook is improving. Should loan growth pick up for SEB. How do you think about kind of prioritizing growth over shareholder returns. And what kind of takes priority if you look at like growth versus dividends versus share buybacks versus any potential M&A? Christoffer Malmer: Thank you, Sofie. So if I'll start with the fees, the sequential development there is really in 3 areas where we see this. First, within CIB and as Johan alluded to, a little bit, even though activity level is benign in the third quarter, it was very strong in the second quarter. So you see the drop in fees and commissions sequentially of about SEK 400 million being partly attributable to activity levels and fees in CIB. The second component you see is card fees in BRB, particularly on the corporate side. And as you know, we are in our BRB card business more exposed to corporate activity than private activity. And that being slower during the summer month is a second explanation. And the positive effect and partly offsetting this is an increase in fees and commissions on AUM-related fees in wealth and asset management. So there's no margin development impacting sequentially in the quarter, but more how the fees have fallen between Q2 and Q3. Johan Torgeby: Yes. Sofie, and nice to hear that you're back in a different role. So welcome. I would say that the reason for the more optimistic outlook, as you also pointed to, is partly driven by the monetary stimulus that we have already seen, let that bite in the economy monetary policy, typically works with 12- to 18-month lag. But also, as you pointed out, the fiscal stimulus that is expected to come. So those 2, I think, are quite important pillars for economists when they do look at it. Will this increase loan demand? Well, that's the purpose of it, both the monetary policy want the economy to pick up in pace and particularly focused on consumption. Fiscal policy tends to be quite effective on consumption. But the pattern right now is because uncertainties, high risks are very mitigated in my book, but uncertainty is still around. It means that households have been quite keen to save rather than consume. So all this is kind of part of that package to become a little bit more constructive for the future, and it should be supportive of growth. But that prediction I'm not making. I'm just reasoning around it. So it's definitely a part of it. When it comes to priority between growth and shareholder return. I assume you mean shareholder repatriation and not just total shareholder return because I think growth in SEB, having more clients doing more with them is very much aligned with total shareholder return, that's the same thing. But of course, it's not -- you might want to save more capital for the business rather than repatriating it. And there, it's pretty easy. We always try to develop the bank first. I would love to use the capital that we generate to do more business to generate even more, so that's typically not a big conflict. Otherwise, as we've had for many years now, we generate more than we can redeploy and then we'll pay it out to shareholders. Sofie Caroline Peterzens: Okay. That's very clear. And maybe just on the fee side, one follow-up. So in terms of DNB Carnegie, you haven't seen any business opportunities kind of getting any -- being able to take any market share from them? Johan Torgeby: I would say no, but I also want to acknowledge that it's a formidable competitor, and they're very good, and this is not an easy market to win in. And it's getting -- it's tough out there. Operator: We will now take the next question from the line of Tarik El Mejjad from Bank of America. Tarik El Mejjad: I just wanted to come back on Johan Ekblom's question as well on AI from a different angle. The scalability of use of AI and the benefits also, I think, is based on how your core systems can actually be plugged to these AI tools. How do you consider today your IT system ready for this, I would say, evolution in terms of using for AI, especially in your triangle on the parts on integration into the products. And also, I mean, there is a perception that the cost to achieve is actually much lower using AI versus the traditional kind of cost savings measures in the past. Do you -- would you confirm that perception? And just very quickly on the capital part, I mean, Sofie, I think addressed that partly, but the -- I think you commented in the past that to go below the 300 basis point buffer or the high end of the range, that will be used for growth rather than special distribution or buyback. Given the headwinds on CET1 coming -- on RWAs coming in the next quarters from the add-ons on Baltics, should we assume that our priorities for volume growth and the buyback would probably be secondary here? Christoffer Malmer: So if I start with the question on AI, you're right that there is a broader upgrade of core systems in general required to some extent, this reflects our ongoing work with our technology road map that has been in place for some time. But there are also opportunities in multiple areas where AI can be applied without necessarily completing all those upgrades. And there are also ways where we can work with compartmentalizing certain parts of our legacy technology and making APIs available for new applications. And the third option that is also interesting to explore is actually to have some of that legacy code rewritten with the help of AI. So there are ways both in which we can address the challenges with traditional legacy systems, but also where we can proceed without necessarily completing those investments. Now when it comes to the triangle, I think you're right to say that from a product perspective, it's probably where progress has been the least thus far in terms of introducing and implementing AI capabilities in the product. Where we have thus far seen the best impact and the greatest achievements thus far has been in running. And what we're highlighting in this quarter as well is, of course, an interesting opportunity working with a growing and exciting AI community in Sweden and the Nordics. So we'll continue to, of course, monitor this closely, but there are certainly areas where we can accelerate with AI implementation in parallel with legacy upgrades. Johan Torgeby: Yes. And if I just may add, it's interesting, we have the IMF, IAF trip to Washington, where all bankers met last week that it is a clear distinction, the one selling AI capabilities between the ones buying them and selling them and how much value has been created lately. So this third point that Christoffer made, the third leg is actually us banking the AI community, which is doing very, very well. On the capital repatriation preferences, so let's say that if we are above 300 as we have stated target board mandate to be in the range of 100 to 300, we have one type of dialogue, and that is how to best come back to the range where the 300 is the upper end. That's the discussion we've had for 2 -- 3 years when we -- from the day we had to cancel the dividends post COVID. And of course, that's kind of the new now. If we're in the range, we have a more forward-looking discussion in the Board in December, where we typically have room for both. So don't assume that you cannot do a share buyback only because you're in the range. However, there is a different discussion. It's more about lending and if we want to retain it to improve business of over and beyond 15% return on equity. If there is a reasonable degree of probability, we know how to do that in the coming years. We'd like to be able to capitalize on that. If not, then, of course, it becomes more of a question of how to repatriate capital to the shareholders with a base, 50% of profits go in the form of dividend. And as you can see in history, we've used both extra dividend in combination with share buybacks to look at, but that's the forward-looking, and I also would say, just the numbers, you need pretty significant loan growth numbers for this not to be -- for SEB not to be able to do capital repatriation in the combination of 2 or 3 types. So it would be lovely if that would happen, but that's a luxury problem. Operator: We will now take the next question from the line of Nicolas McBeath from DNB Carnegie. Nicolas McBeath: My first question was on the NFI line, which came in a bit below in recent quarters in Q3. So I was wondering how you think about the -- how the lower interest rate environment is impacting this revenue line. With your current macro outlook for 2026, how confident are you that your previous indication of the past 16 quarters average is a good indication where the normalized NFI line should be? And how do you think about that given the ultimate macro outlook for next year with, yes, maybe lower interest rates and possibly also lower volatility than what we've seen in the past few years? Christoffer Malmer: Thank you, Nicolas. I think the -- within that number that you have in the NFI, for us, these are, to a large extent, customer-related income. So taking aside the strategic stakes in the mark-to-market and the valuation gains that we present separately in the XVAs, we have a significant proportion of our FICC business booked within NFI. And within the FICC, we have the fixed income, currencies and commodities. And if I look at the third quarter, we had after the very high level of volatility in the second quarter, a lower level of volatility in the third quarter in FX, which resulted to a somewhat slower activity related to our customer demand. Now within fixed income, on the other hand, activity levels remained high with credit spreads at very low levels, issuance continues, and there was a clear demand to prefund during those favorable conditions. Within commodities, we are, as you know, the one Nordic bank that does offer this, and we have seen that contribution growing. But of course, there's an element of volatility, but we think that the underlying structural development there is also constructed. So as we look forward, there are effects driving this. The volatility in FX space and the demand for FX products will be impacting that part of the FICC booked in NFI. We also have the steepness of the yield curve, which impacts the treatment of the inventory and the mark-to-market of the inventory within the fixed income in NFI as well. But at this point in time, we have our range and I think that remains our best prediction for the future. Nicolas McBeath: And then I had a question on like if you have any general remarks or thoughts how you're reasoning regarding the cost growth into 2026. I mean on one hand, you have lower rates, which are a drag on return on equity. But on the other hand, as you've alluded to in the call, potentially higher activity loan growth, economic recovery during next year. So do you think 2026 is a year to expand and invest more or keep the hiring freeze and try and defend the profitability? Johan Torgeby: I'll start and ask Christoffer to add. So the current, let's call it, plan of attack on cost control is the one that we, I think, launched last quarter or 2 quarters ago, and that is to change the pathway that we've been on for some years now of increasing investments in the bank and to tail that increase off. And as you can see this quarter, it looks to be supportive of actually happening. We are in a different place now where we have a different trajectory. The purpose is to sit when we do our business plan in December and hopefully be in a position where we have freed up some operational costs that we can discuss with the Board and the management team how to redeploy. So it is still a different type of forward outlook now than we've had in the last years, and that is more cost control, be cautious and handle resources a little bit more until we have a clearer look on the income outlook because we really need to have a high return on equity and a low marginal cost of income, so profitability secure if we were to start investing more. And then there are many other things must do investments in banks. So there's no lack of holes to put all this money in order to maintain a good and solid and robust infrastructure. But it is the same tonality we've used now for a couple of quarters. There's no change in that, and that goes beyond year-end. It's actually to have a little bit of extra flexibility going forward. That doesn't mean that the decision in December where we set the cost frame for '26 will be up, flat or down. It just means that there will be a discussion to be had and we'll communicate it as always in conjunction with the Q4 report. Nicolas McBeath: And then just a detailed follow-up question. Could you please give us the AirPlus implementation costs for Q3 and how you think about the implementation costs in 2026? Christoffer Malmer: Yes. The AirPlus implementation cost in the third quarter was around SEK 120 million, which means that we, year-to-date, have taken a little bit less as a run rate, which leaves a little bit more in the fourth quarter. And we have guided to around SEK 700 million in implementation costs for the full year. Nicolas McBeath: And for next year, how do you think about those costs developing? Christoffer Malmer: Well, as I referred to earlier, we are now reviewing whether there are parts of the implementation program that should be accelerated. So we'll be coming back to that together with the cost outlook for 2026 together with our fourth quarter results, Nicolas. Operator: We will now take the next question from the line of Riccardo Rovere from Mediobanca. Riccardo Rovere: Thanks a lot for taking my questions. I have 3, if possible. The first one is on the NII indication, Christoffer, that you provided early in the call, meaning NII to bottom out 3 to 6 months after the last half. Now raising in Euro area should be done, Riksbank has cut 25, okay, I understand the impact on the equity side, but the federal reserve should cut much more aggressively and you have a much larger amount of U.S.-denominated liabilities than assets is SEK 300 billion larger amount of liabilities in dollars. So I was wondering why the rate cuts by the Federal Reserve should not have a mitigating impact or the only 25 basis point rate cut by the Riksbank. And by the way, also this quarter, what you -- this indication should have happened and did not materialize, NIIs is actually up quarter-on-quarter. So I was wondering why you keep reiterating that given the Federal Reserve cut expected in the coming quarters? The second question I have is, on the 290 basis point buffer, if I'm not mistaken, this includes the whole SEK 50 billion of RWA done -- imposed by ECB on your Baltic operations. Just to confirm my understanding correctly. And if I understand it correctly, 290 is already at the top of your range in terms of management buffer. But you are expecting to go back to that level in only 3 months. And because if that is the way I understand, it's just a matter of how you want to return excess capital rather than if you can keep the current capital return. So what is your thinking about that? And then I have a question, a curiosity that's more a curiosity. Overlays go up by SEK 100 million if I'm not mistaken. Some of the Nordic banks have actually reduced them or brought it to 0. They're using it progressively, releasing those. Why are you keep accumulating those overlays? And when do you expect this to come to an end or this to be used at some point or released or allocated. Christoffer Malmer: Thank you for your questions. I'll start, and I'll let Johan contribute as well, and we're just going to make sure we have the questions correctly. So if I start with the overlay, that is an assessment that we do every quarter. And we take into account geopolitical developments, sometimes we change our macro outlook and assumptions and it's a continuous evaluation of our various exposures across our portfolios. And you have also seen in quarters that we have released some of those overlays and in this quarter, we're adding. And it's hard for us, of course, to comment on how other banks are proceeding with this, but that is our process. For the net interest income, you're right, we are reiterating the expectation of a 3- to 6-month lag from the last rate cut until we see the trough. What happened in this quarter were a couple of technicalities that led to an increase in net interest income sequentially. One is the number of days. We also referred to the deposit insurance fee that is booked over the year. That happened to tilt a little bit more favorably for NII in this quarter. We had a positive FX effect. And we also saw some beneficial treasury contributions, partly from the funding cost and what we have been referring to as repricing effects or timing effects. So as we then look forward, we continue to see pressure on deposit margins as the rate cuts will make their way through the balance sheet. And also bearing in mind that some of our transaction accounts both for corporates and households are down to 0, which means that, of course, the further down we come in the rate cycle, the more any incremental cut will have as an impact. And finally, to your comment around the U.S. denominated deposits, those are primarily wholesale deposits. So those are priced off of market rates, and that's effectively a margin that moves with market rates rather than having an impact as they are being discretionary priced, but they are market rate linked. On your question... Riccardo Rovere: This will go down. The Fed will cut, this stuff will go down, the cost of this stuff will go down. If they does, when they cut. Of the wholesale fund -- this wholesale funding, and it's SEK 400 billion. Christoffer Malmer: Correct. And then, of course, the impact will then be on the asset side when Feds are being cut when we have U.S.-denominated loans that they are funded by. Riccardo Rovere: Sure, but it's smaller the amount. The delta is smaller. The liabilities are much, much larger than the assets in dollar, much larger. SEK 300 billion. Christoffer Malmer: Right. And I think what we have also mentioned when it comes to the U.S. denominated deposits is the fund that we're also placing with the Fed. And that is effectively us operating in the U.S. with our balance sheet, and we will collect deposits from U.S. financial institutions and placing with the Fed. And that is effectively a relatively opportunistic business that we have been running there, and that goes to an element of lumpiness between quarters, but that accounts for a sizable part of the U.S.-denominated deposits as well. Riccardo Rovere: But what I see is longer than SEK 188 billion cash at the Federal Reserve, I guess, and you have SEK 409 billion deposits, which you say is wholesale is going to go down. This one number is more than twice the other. So I don't understand how this cannot be positive regardless FX and all the other stuff, calendar days, whatever. Christoffer Malmer: No, I think this is one of many moving parts in the balance sheet. So when we are looking at the impact in totality from rate cuts, there are various dimensions moving in different directions. And this is one impact that we get from the development of the Fed funds. We have other parts of the balance sheet that's impacted by the ECB rate and others from the Riksbank. So it's taking all these into consideration together where we conclude that running this through our balance sheet as it looks today, we expect the trough. It doesn't mean that all the variables go in the same direction. Some, to your point, might be contributing positively, but the net of it all, we expect to result in a trough 3 to 6 months after the last cut. Riccardo Rovere: And on the SEK 290 billion. Johan Torgeby: Yes. Sorry, can you repeat that question, Riccardo? Riccardo Rovere: The question is that SEK 290 billion is already the top of your rating, the top of your management buffer. And that 290 includes the whole SEK 50 billion, which should be, despite, as I remember, phased progressively, not if I'm not mistaken, you got SEK 10 billion this quarter, maybe you will land another SEK 10 billion next quarter, I don't know. But the real number is the SEK 290 billion. So that is already at the top of your buffer. So how do you see this? Is this -- were you expecting it to be already basically at the top of your buffer only with the whole impact of the ECB imposed add-on after only 3 months. Because there has been, let's say, some discussions around the impact of this stuff into -- mostly 2026 is affecting your capital return blah, blah, blah. How do you see that? Johan Torgeby: Yes, I think we understand that. Christoffer Malmer: I can just start, Riccardo, with confirming that we have taken in this quarter the equivalent of 18 basis points or SEK 10 billion phase-in of REA in the Baltics, and we're showing that the remaining, what we estimate to be another 70 basis point impact would take our pro forma buffer to 290 basis points, where we have booked so far in this quarter, SEK 10 billion of that. Johan Torgeby: So just to be clear, that is pro forma today. So I think you're absolutely right. It's the 290 if we would technically have deducted all of it and it would have been over. But as we -- for accounting reasons and other things, couldn't or wouldn't do that. So we just showed it pro forma. Then you have, as I think you alluded to, now capital generation, in the dynamic analysis going forward, we'll, of course, continue to increase this number, everything else being equal. And therefore, I think we will have a better position when we get to Q4, and we will have to look at the current capital position then in a quarter to then for the board deliberations on repatriation. Was that an answer? Riccardo Rovere: Yes, yes, yes, definitely, that's an answer. So 290 before, then you start accruing the dividend, 50% payout or whatever it is. And then the rest, we'll see. But the starting point is 290. Johan Torgeby: Correct. Operator: We will now take the next question, question from Bettina Thurner from BNP Paribas Exane. Bettina Thurner: I would just have 2 clarification questions, please. The first one on NII. So you have been quite helpful over the past 2 quarters to try and isolate the temporary effect on the net interest income base. For this quarter, should we look at the effects in treasury that you mentioned before, of repricing quicker. Is that the SEK 100 million? Or would there be other parts of the NII that you would also expect to get out again or reverse partially in the last quarter of this year or first quarter of next year? And then the second question would be on the dividend. At the start of this year, you said you had the intention to pay out a semi-annual dividend next or in the next year. Is that still the plan? Or are you still deciding on that? If you could just give us more update on that, please? Christoffer Malmer: Thank you, Bettina. So on your first question on net interest income, I think the number that you're referring to, the SEK 100 million or so as a positive impact in Q3 from those timing effects is the number that you should have in mind for that effect going forward. And for the semi-annual dividend, you're right, that is something that we mentioned at the start of the year, and we have ongoing dialogues with our shareholders, and that's something we'll come back to when we report our fourth quarter results and come back to the capital question. Bettina Thurner: If I can just double check. So it's not set in stone yet, let's say, on the semi-annual dividend? Christoffer Malmer: Correct. That's correct. Operator: Thank you. That's all the time we have for questions today. I would like to hand back to Johan Torgeby for closing remarks. Johan Torgeby: I'd just say thank you, everyone, for your participation and your interest in SEB and look forward to seeing you soon. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Welcome, everyone, to Telia Company's Q3 2025 Results Presentation. And with that, I will now hand it over to Telia Company's Head of Investor Relations, Erik Strandin Pers. Please go ahead. The floor is yours. Erik Pers Berglund: Thank you, Jen. Welcome, everyone, to the call. We have our CEO, Patrik Hofbauer; and our CFO, Eric Hageman, in the room, and I hand over the word to Patrik. Please go ahead. Patrik Hofbauer: Thank you, Erik, and good morning. Q3 was, in many ways, an important quarter as it confirms that we are doing the right things for our customers. Our group-wide NPS, so Net Promoter Score, continued to improve and has trended positively all quarters this year. Telia Sweden again won a clear majority of awards in the customer satisfaction survey by SKI. And in both Finland and Norway, we had strong outcomes in the EPSI surveys on our customer satisfaction. We also continue to deliver on the value creation plan that we laid out in Q3 last year with EBITDA growth supported by profitable growth in service revenues as well as cost efficiencies. This helped drive an increase in free cash flow, which again more than covered our SEK 2 billion dividend for the quarter. And as we talked about already 3 months ago, it was an eventful M&A quarter. The closing of TV and Media transaction strengthened our balance sheet further. In July, we also signed a memorandum of understanding with our partner in Latvia, and we are now working hard to ensure that both parties fulfill the commitment to sign a share purchase agreement before year-end. We have also launched a formal offer to buy Bredband2, which will strengthen our consumer business in Sweden. And finally, we are upgrading our full year outlook for the free cash flow to around SEK 8 billion from SEK 7.5 billion before, reflecting, among other things, strong CapEx discipline. And we are also now changing our full year outlook for booked CapEx from SEK 14 billion to around SEK 13 billion. Now let's go into the financial highlights. Service revenue growth continued to be good in Sweden and the Baltics, but partly offset by decline in Norway, meaning overall growth of 1%. EBITDA growth of 4.4% was as expected, a bit below the ambition for the full year, but not too much, and with both Sweden and Finland continued to perform well. CapEx continued to be well below our SEK 14 billion limit. And even though we expect a seasonal pickup in Q4, we are already comfortable -- we are very comfortable, sorry, to lower the full year outlook to around SEK 13 billion. Free cash flow will continue to be strong, driven by higher EBITDA, lower interest payments and positive working capital movements. This, together with growth in EBITDA and proceeds from the TV and Media divestment resulted in a lower leverage, and we ended the quarter at 1.93x. Moving now to Sweden that is performing well on customer metrics. We had a strong outcome in the 2025 SKI survey. For example, Telia won the award for most satisfied enterprise mobile customers. And in consumer, Telia again had the happiest customers among the mobile main brands and fellow came out well among sub-brands. Telia's TV service also had the most satisfied TV customers. More importantly, new customers signing up across mobile, broadband and TV, as you can see here, the broadband intake stands out as it actually is a result of 2 good quarters rather than one since around 10,000 new customers in Q2 were registered in Q3. The late registration was related to our transition into a new system. In Enterprise, we signed a long-term partnership with Sweden's largest train operator, SJ, to deliver high-quality communication for the entire train fleet. Financially, Sweden is well on track to reach the full year plan with service revenue growth at 2%, driven mainly by broadband and TV. As a reminder, revenue growth on a quarterly basis is affected by project-based revenues, which is lumpier than subscription-based revenues. In Q4, we expect more project-based revenues than we had in Q3. And EBITDA growth was again strong on the back of profitable growth and cost savings driven by the Change Program. Let's now move east to Finland. That came out as the #1 in the EPSI's survey on customer satisfaction in both Consumer and Enterprise. This is promising and shows that we have good foundation in Finland to build on. Mobile net adds improved, and we did not lose any mobile handset customer this quarter. The net loss was due to mobile broadband, where the market is declining. Our SME base grew as did the number of consumer handset customers for the first time in a very, very long time. ARPU grew at the same time by 4%. On fiber, we are also adding customers not least from being a service provider in our Valokuitunen JV network. Financially, we saw a slight improvement in service revenue trends with growth in Consumer and a decline in Enterprise, driven in part by our choices to discontinue noncore activities and in part by a weak market. And finally, the strong execution of the Change Program continued to give tangible savings and resulted in EBITDA growth at high single digits with a margin climbing to 34.6% versus 32.5% one year ago. So in summary, we are making progress on all 3 of our midterm ambitions for Finland that we presented 1 year ago, stabilization of the mobile market share, improvement in SME and improved profitability. Now moving west to Norway, which is, as expected, saw another challenging quarter with both service revenue and EBITDA growth clearly in negative territory due to lower mobile wholesale revenue and headwinds in the broadband and TV. Like for Sweden and Finland, Norway came out well in customer satisfaction surveys with Phonero winning the EPSI survey for the fourth consecutive year in the B2B category. We expect to have reached the low point when it comes to service revenue, although not yet when it comes to EBITDA because of the timing of OpEx. So EBITDA decline in Q4 is currently expected to remain similar to the levels we have seen in Q2 and Q3. The reason for headwinds in Norway are well known, and the mobile wholesale decline is expected to be around SEK 95 million in the fourth quarter. The other part, a weak performance in our fixed business is something we are addressing very actively. And on the next slide, I want to share some more information about this development. So we have now launched a new value proposition in all segments, modernized our TV platform, modernized our installed base of CPEs, signed future-proof new content agreements and created a dedicated organization for fixed consumer services. Network quality has improved. And as you saw, we added TV and broadband customers in this quarter. At our investor update 1 year ago, we talked about our backbone of our network being already fully fiberized and around 50% of our broadband customers were on fiber or fixed wireless access connections. Today, the share is around 55%. And as we have said before, this is too slow. And from next year, we will see a clear acceleration in the coax to fiber upgrades, in line with the commitment we made last year to invest more. This will be done within our existing CapEx frame. Now moving on to Lithuania, which had a solid quarter with healthy service revenue growth supported by both mobile and fixed, something that together with continued efficiencies resulted in an EBITDA growth of 9% and EBITDA minus CapEx that remained at a record high level of SEK 1.6 billion on a rolling 12-month basis. At the end of the quarter, Lithuania successfully launched Telia Safe, a security add-on, and it's also completed an IT transformation within B2C, 2 achievements which will help our growth journey going forward. Now let's move to Estonia. That saw both service revenue and EBITDA growth accelerating following great momentum in especially the public sector and good work on generating efficiencies. And like for Lithuania, cash conversion remained at record levels. And with that, I hand over to Eric before I come back to summarize the quarter. Eric Hageman: Thank you, Patrik. Let me now go through the financial development of the quarter, starting as usual with service revenue and EBITDA. In the quarter, service revenue growth remained at 1% as stable or improved performance in Sweden, Finland and the Baltics was offset by pressure in Norway, predominantly driven by lower wholesale revenue. In Finland, we also continue to simplify our product portfolio, and we are now getting close to the end of the ramp down of the e-invoicing business. Year-to-date, we are at 1.3% service revenue growth. And looking into the last quarter of 2025, we expect an improvement related to pricing, growth in Enterprise and public sector contracts and less revenue decline in Norway. Moving to EBITDA. Growth in Q3 was somewhat below the 5% ambition for the year as we flagged 3 months ago, with all markets except Norway growing on the back of higher service revenue growth and efficiencies created by the Change Program. We're also encouraged to see that our EBITDA margin was 140 basis points higher than in the same quarter last year, in line with our margin expansion promise at the investor update September last year. As mentioned, we expect improvement in service revenue growth in Q4. For EBITDA, we currently expect growth in Q4 to be approximately similar to the growth rate we saw in Q3, penciling in a modest increase in sales and marketing costs, both in Norway and Finland. Moving now to OpEx and CapEx. As we can see on the left-hand side of this page, continued cost discipline and the positive impact of our Change Program continues to drive down resource costs. Our operating expenses declined by 2.9%. This more than compensated for an increased level of marketing spend across the Nordic markets as well as higher pricing from IT vendors. OpEx as a percentage of service revenue continued to trend down this quarter, this time by 120 basis points to 28.4%. We increasingly managed to do more with less and have only just started on this journey to become more efficient. We also remain very committed to being disciplined on our capital expenditures. As you can see from the middle graph, we ended the quarter with CapEx of SEK 12.5 billion on a 12-month rolling basis, more than SEK 2 billion less than 24 months ago. This shows how being focused and having clear priorities can be translated into better capital efficiencies. CapEx spend is expected to increase somewhat in the last quarter of the year, in line with normal telco seasonality. But overall, we don't expect the current run rate to change much, which is why we today lowered our expectations for the full year to around SEK 13 billion. Finally, as you can see on the right-hand side, growing EBITDA and lowering CapEx resulted in EBITDA minus CapEx comfortably above the SEK 19 billion on a 12-month basis. This equals a step-up of 9% versus a year ago and also resulted in a much improved cash conversion, which is now 61% on a rolling 12-month basis, up from 58% a year ago. Let's now have a look at the free cash flow for the quarter. Free cash flow improved by SEK 1.5 billion compared to the corresponding quarter last year. And as for several quarters now, the key building block is our profitable growth. Cash CapEx increased by SEK 300 million, which was driven by phasing in payments and a rebalancing of the vendor financing program, the latter, however, having an equal positive contribution to working capital. Interest payments declined by SEK 300 million due to lower debt and partly also because last year's number was rather unusual high due to phasing of interest between Q2 and Q3. Working capital was, as you can see, marginally positive, which was a significant improvement versus last year as the number then was impacted by the rightsizing we did of our vendor financing program. Finally, we saw a SEK 200 million higher outflow of minority dividends in Q3 related to a catch-up dividend paid to our co-owner of our mobile business in Latvia. Overall, with SEK 6.9 billion free cash flow delivered in the first 9 months of the year and the clear belief that the cash flow generation will remain strong also in Q4, we raised the outlook today for the full year from around SEK 7.5 billion to now around SEK 8 billion. Let's now briefly look at our net debt and leverage development. As you can see on the right-hand side, our net debt decreased by SEK 7.1 billion in the quarter as free cash flow more than covered our quarterly dividend payment, and we also received the proceeds from the divestment of TV and Media. The combination of lower debt and growing EBITDA reduced leverage to 1.93x compared to 2.09x at the end of last quarter. Looking at the longer-term trend on the bottom of the left of this page, we can clearly see that leverage has come down over the last 2 years as we have grown EBITDA and used the cash proceeds from our divestments to improve our balance sheet. This now puts us in a very good position to further strengthen our business, like, for example, the last quarter, we announced SEK 3 billion acquisition of Bredband2 in Sweden. The phase 2 investigation of Bredband2 has now started. And as said before, we expect to close the transaction in Q1 next year. Finally, before I hand over to Patrik, I would like to say a few words on some of the milestones we have achieved in the third quarter and how that resonates with our value creation agenda laid out at the investor update about a year ago. As you may remember, we laid out a clear agenda at the investor update on how we aim to create shareholder value. And I believe we continue to make good progress on it. Firstly, free cash flow has covered our dividends for the first 9 months of the year. And as you have seen in our updated outlook, we expect that also to be the case for the full year. 2025 is the first time in quite a number of years where our free cash flow generation covers our dividend commitment without the recourse to growing vendor financing. Largely, this free cash flow uplift is driven by our profitable growth trajectory and CapEx discipline, the latter which we also upgraded today. Secondly, on active portfolio management, we closed the TV and Media transaction this quarter and are making a bolt-on acquisition to further strengthen our core business in Sweden, while we are working hard on securing the full exit for Latvia. Thirdly, our balance sheet continues to strengthen. Liquidity is strong. And after closing the TV and Media divestment, we are below the 2 to 2.5x net debt-to-EBITDA range. Fourthly, we paid another quarterly dividend to our shareholders, and we remain committed to deliver on a progressive dividend policy. And finally, at the CMD last year, we set out a plan to return to an all-in free cash flow covering our dividend commitment. Our free cash flow guidance upgrade today means we will be covering the dividend despite the absence of the free cash flow from our TV and Media business. See this as another proof point that we are very serious about delivering on our commitment to shareholders. With that, I hand back to you, Patrik. Patrik Hofbauer: Thank you, Eric. Before I summarize the quarter, I want to reflect on what has taken place since we launched our change program last year and how we are taking steps toward a simpler, faster and more efficient Telia. The number of employees and resource consultants in Telia is now almost 25% fewer than it was in the start -- or at the start of 2024 after our Change Program and the exit from TV and Media. Central resources are down by half. We also have half as many products and half as many IT systems managed centrally compared to the start of last year. Many have been moved and are now managed by the country organizations who are closer to the customers and some have been closed down. We are encouraged by the results so far. Network incidents have continued to become fewer and so has incoming calls from customers who are contacting us with issues and questions. This means both better customer satisfaction and material monetary savings. Meanwhile, employee engagement is up and our people see that barriers to execution are being removed, collaboration and decision-making is improving and of course, EBITDA growth has improved. This is a promising start of first few steps, but we intend to do more on all parts of our agenda. We can still become much simpler, faster and more efficient than we are today. And then on the summary of the quarter, which was overall in line with our own internal expectations, we continued a healthy group EBITDA development, supported by profitable growth and efficiencies from the Change Program. And we continue to see clear signs that customers appreciate our high-quality services and see the benefit from how those improve their everyday lives. We continue to execute on our agenda, and we can now upgrade our free cash flow from outlook to fully cover our dividend, as Eric said, which is a key milestone for us. And with that, I will open up for questions. Thank you. Operator: [Operator Instructions] Our first question comes from Owen McGiveron with Bank of America. Owen McGiveron: It's Owen McGiveron from Bank of America. So on your upgraded guidance, how should we think about 2026 and 2027 CapEx within the frame of your medium-term ambitions? Should we expect similar levels versus 2025 or more moderation? And how does the additional investment in Norway play into this? Just wanted a few more details on the moving parts. Patrik Hofbauer: I can start. It's Patrik here. First of all, we are not guiding yet on '26 and '27. We will come back to that in January. But I can say we have worked hard and actively to improve, I would say, the discipline when it comes to cost and also how we use the capital. That discipline will not be less next year or the coming year. So we continue to see how we can use the capital much more efficient than we are today, and that will continue. But we will come back in January with the guidance or update or whatever in January -- in that call. So Eric, do you want to add something? Eric Hageman: Yes. I mean that would -- just my simple observation that it doesn't change so much from one moment to the next. And with regards to Norway, it's part of that. So the slide that Patrik talked about where we say we want to accelerate the rollout of fiber. That part is at the SEK 1 billion that we already talked about in the investor update last year. Part of that money is being invested this year. Part of it will be invested in the coming couple of years, but it's firmly part of that CapEx guidance that we have just talked about. Operator: Our next question comes from Andreas Joelsson with DNB Carnegie. Andreas Joelsson: Just to follow up on your comment on further efficiency gains. Could you perhaps describe how you view the cost base currently and what else you can do? From the last slide, it seems like you have been able to do this Change Program without any basic negative effects. So are you encouraged to do more? Do you think you can do more on the cost side in order to get these efficiency gains? Blurry question, but I hope you understand. Patrik Hofbauer: Andreas, I understand your question very well. It was not blurry at all. So first of all, the Change Program went obviously very well. We have delivered on basically all parameters, and we see that the operations is really much more stable, which we had, of course, the concerns about when we do this big change that we did last year. But so far, everything is running very well. Then remember, last year, we had this investor update, we gave out a 3-year plan with a CAGR on service revenues around 2%, EBITDA at 4% and then a free cash flow above SEK 10 billion in -- or at least SEK 10 billion in 2027. And that requires to continuously work with efficiency to deliver on that plan. And we are fully committed to deliver on the plan that we have put in place, which means that we will actively, of course, to improve the operations from year-to-year. So I think that is a clear answer on your question where we are heading. Well, I hope at least. Andreas Joelsson: Yes, absolutely. Less blurrier than the question. Patrik Hofbauer: Thank you. Operator: Our next question comes from Andrew Lee from Goldman Sachs. Andrew Lee: So I have a question each on Finland and Norway, which are 2 of the areas where investors had a bit less certainty recently. Just on Finland, there's some improving -- slightly improving service revenue growth trend today and also sub-trends. Could you just talk about how you're achieving that? And also how you're thinking about the balance of not disrupting the market too much, given we've had one of your competitors basically disappointed fairly materially on their mobile service revenue growth outlook in the near term. Just comments around kind of how you're improving and how you don't disrupt the market too much would be helpful. And then secondly, on Norway, there are quite a few tailwinds or easier comps as we go into Q4. One of the ones that's harder for us to judge is the price rises that have been put through in Norway in September. I wonder if you could just talk about how you see the competitive environment and price rises boosting growth from Q4 onwards. Patrik Hofbauer: Andrew, thanks for the questions. I can start with Finland. I think, Eric, you can take Norway then, so we divide a little bit here. Starting off with Finland first. I mean, the most important part is actually the customer satisfaction, which we have been invested quite heavily in. So we have upgraded our network and then several activities that we're now seeing is paying off. Then on top, we also had some good execution here, especially in the consumer side to turn these trends around. And we are not at all disrupting the market. I don't know what that is coming from. We are very disciplined, but we have good offers in the market together with a good network and good services overall. And then we have also a consumer operation that is more efficient every day. And remember, we have said clearly that we are accepted to lose market shares in Finland for too many years now. And we said clearly, we want to stabilize that, and that is what we're doing. So we see good development in Finland when it comes to the consumer business. Still, we have a lot more to do. And then also on the SME side, on the small and medium enterprise segment, where we have a clear underrepresentation versus our total market share, where we are focused on and having good also development on. So I think this is not -- I think it's a healthy operation. We are improving, and we will continue to improve during 2026 as well actually to defend and stabilize our market share. That's actually what we're doing. So I think good done by the whole team in Finland. Eric Hageman: Yes. With regards to Norway, so very encouraged by preliminary results of those price rises. Obviously, the market is, as per your Finland question, is never to disrupt, but certainly to defend our position. So let's see what that does to our churn numbers. I think the main thing when it comes to Norway is, as we said last quarter, it will take some time for this to turn around. One, we haven't quite lapsed the wholesale loss, that ICE revenue was an impact of SEK 150 million on our revenue in the quarter. So we're working on that. We've made some management changes in the organization. We're fixing fixed, as Patrik just talked to in this slide, and that will take a bit of time. So we guided again for what is likely to be another soft EBITDA quarter for Norway, but hopefully slightly better on the service revenue because they are slightly easier comps. Operator: Our next question comes from Fredrik Lithell with SHAB. Fredrik Lithell: I have two of them. You have, on earlier calls, talked about that service revenue should be a bit slower, both in Q2 and Q3 and then to reaccelerate a little bit in Q4. And I think, Eric, you alluded to that in your part of the presentation. If you could sort of stack up and rank the important part for the improved service revenue growth in Q4, that would be interesting to hear. And then also the CapEx, the lower CapEx from SEK 14 billion to SEK 13 billion on a booked level versus your raised free cash flow of SEK 1 billion down and SEK 0.5 billion up. Could you sort of walk us through a little bit what movements you have that support your free cash flow raised guidance would be interesting. Patrik Hofbauer: I can start with a comment on the service revenue. And right, you said that we said that Q2 and Q3 will be a bit softer, but then we'll see an improved situation in Q4. And we do expect better growth in Q4 than in Q3 with especially Sweden to continue to look solid, and we expect more project-based revenues to step up here in Q4, and that is the main reason. Erik Pers Berglund: It's mission-critical, as I said a few times. Eric Hageman: Yes, on CapEx, it's very simple. We sort of never felt we're going to do the SEK 14 billion, right, when we guided for less. We're very happy with the progress that we've made as an organization on a profitable growth, which ultimately drives our free cash flow growth. And then when you go through 9 months of the year, where you then feel is this the moment where we have that visibility. It's pretty clear when you do almost SEK 7 billion of free cash flow that an upgrade was necessary. And on the CapEx, yes, we have good visibility for where we will land for the year and also where that will trend going forward as per the first question we got. So very happy with how that goes through. And yes, let's see where we land for the full year when it comes to free cash flow. Patrik Hofbauer: If I may add a clarification, Fredrik. We never plan to invest SEK 14 billion. It was always below, right? So it's not a SEK 1 billion downgrade as such, but yes. Operator: Our next question comes from Erik Lindholm with SEB. Erik Lindholm-Rojestal: So maybe a follow-up to Andreas' very clearly worded question. Just thinking of the current trends here, it looks like you will exit the year at about 4.5% perhaps EBITDA growth rate approximately and the comparisons seem to get a lot tougher from Q1 and onwards. I'm just thinking of the outlook here for '26 and beyond. I mean, do you think you need to clearly accelerate cost savings to reach your targeted EBITDA CAGR of 4% between '25 and '27? Patrik Hofbauer: I think the answer will be pretty much in line with Andreas' question. So we -- I mean, when we set the plan, the 3-year plan of the 2% and the 4% then related to EBITDA, as you know, we were clear on that, okay, this is a rightsizing that we did with Project Sprint. It was an internal name on it that we did last year, the minus 3,000, and we executed on them. And then we need to continue to take out cost, and that will be in every aspect and every area of the cost base. So this is work ongoing. So I don't -- and I don't want to be more specific on how we'll do that, but we will show you quarter-by-quarter that we are able to take out cost to defend because we want to -- we are fully committed again to deliver on the 4% CAGR growth on EBITDA. Then we need to -- because that's a combination of service revenue growth and cost out to be more efficient. Eric Hageman: Yes. Maybe to add from my perspective is, as time goes on, now having done 9 months, SEK 7 billion of free cash flow, the upgrade that you've seen, it gives us more confidence as a management team that we are on the right path to deliver what we promised, not just the 2% service revenue and the 4% EBITDA in the coming years, but also the free cash flow that we've promised for 2027 of at least SEK 10 billion, right? The combination of profitable growth, good CapEx discipline leads to better free cash flow. The visibility that we have gives us confidence that we're on the right path to deliver on that promise of SEK 10 billion plus by 2027. Operator: Our next question comes from Maurice Patrick with Barclays. Maurice Patrick: For me, just a question on Sweden, please. So yesterday, it was interesting to hear Tele2 talking strongly about the increase in pricing or cost of the open fiber networks, the dissatisfaction about delays on regulation. Just curious for your insights in terms of these kind of key trends, the increase in wholesale pricing on open networks, upcoming regulatory changes and delays and how that impacts you. I was intrigued that Tele2 sort of talked about how they were going to push fixed wireless access more, which sounds probably more like grabbing headlines than reality. But again, curious for your insights in terms of how you see that in the context also of you delivering a pretty solid broadband number this quarter and last. Patrik Hofbauer: Yes. I mean, coming back then to the access cost for local networks. I mean, we have seen the high cost for the local networks access for several years. It's nothing new. So -- and that is driven basically by ourselves growing service provider in these local networks and then also higher access prices. So we haven't seen any recently that increase. This has been going on for a while. So I don't know exactly what happened there. And so yes, and also on our own networks, we have made very modest increase in our [indiscernible] business, a couple of percentage points only. So I'm not -- I don't recognize really the whole situation from a new thing. This has been going on for many years. So that, yes, around regulation... Erik Pers Berglund: Yes, regulation has been postponed as you know again -- so we'll see what happens when we eventually get there. But I think you're right, that's probably what brought the topic up this quarter. Eric Hageman: But maybe overall on Sweden, we are incredibly happy with the performance there. As you saw, very good service revenue growth, perspective of even more service revenue in Q4, as we indicated, very strong cost control leading to good EBITDA growth. So yes, we hear what others are saying, but we are very happy with our developments in the Swedish market. Erik Pers Berglund: And I think you also mentioned the broadband intake, Maurice. It's a good work over a couple of quarters. As we mentioned, this is some delayed registrations from last quarter as well. Good anti-churn measures after the price increases we did in the beginning of the year. So that's working. And so overall, we're happy with that. Patrik Hofbauer: And continues to perform -- TV continues to perform well and not a surprise. I mean, we have the best product in the market. And obviously, customers are appreciating it. And for the fourth year now, we have got the best feedback from the customer surveys on TV. So all in all, happy with the performance. And again, remember that we have seen a more household perspective on the consumer market in Sweden rather than looking each for the products because our easiest win here is actually to sell more products to existing customers, and that is actually paying off in the strategy. Operator: Our next question comes from Ajay Soni with JPMorgan. Ajay Soni: My one is just around leverage and shareholder returns. So obviously, you're below your target at the moment. We have some acquisitions coming maybe in the next few months. But it feels like you'll still end up below your target range of 2 to 2.5x. Do you see an opportunity to maybe distribute some of the proceeds from the TV and Media sale as buybacks or extraordinary returns? And if so, when would this -- when would you approach this decision with the Board? Eric Hageman: Thank you. Good question. We're very happy with the direction of travel. As a team, we've worked very hard because it's one of the building blocks of the value creation plan is having a healthier balance sheet, one, because we pay less interest than on the debt that we have outstanding, which helps our free cash flow growth, which is the other pillar of our value creation. So that's a benefit from that. Secondly, we are a simpler organization to run based on all these divestments. We're very happy with the progress that we're making. We have that final building block, which is doing, as I said earlier today, coming right on progressively growing dividend, next year is when we'll come back to that. And the beginning of the year is when we will set out our store with regards to the guidance is when we have our conversations with the Board. So we will come back to that. Maybe the last point is, we obviously also use our balance sheet to strengthen our business. We've done the announcement of Bredband [indiscernible]. So it's important for us that we have the flexibility to be able to do that as well. So -- but we know it's an important pillar of our value creation plan, and we'll come back to that at the beginning of next year. Operator: Our next question comes from [indiscernible] from BNP Paribas. Unknown Analyst: I had a question, please, on Finland, where you've delivered strong EBITDA improvement over the last sort of 3 to 4 quarters. You're now talking about how you're seeing underlying improvements in your commercial trends as well. Could you maybe share some thoughts on how you see your Finnish profitability evolving over the next couple of years, say? And then just a quick clarification around the Norway CapEx, I'm sorry if I missed this. Does this at all change your thinking around the FY '27 free cash flow target of SEK 10 billion plus? Or is that reflected in this? Patrik Hofbauer: So I can start with the later one with the CapEx. No, it's reflected in the figures and will not impact our 2027 target. So to be super clear, it's in the envelope of that. And then Finland? Eric Hageman: Yes, with Finland, maybe a step back, a big part, and we talked about it today in the voice over as well of the analyst presentation, which is margin expansion was a very important part of what we talked about in the investor update last year for all countries. If you look at the Q3 results, you see that apart from Norway because of the loss of the wholesale contract, but all other countries, you see the margin expansion coming through. And what is that? It is our discipline around the programs of doing more with fewer people, but also the ancillary costs that we have. We have a very, very clear plan, and that underpins that delta between the 2% service revenue and the 4% EBITDA growth that Patrik mentioned earlier in his answer to the first question. That is still very, very high on the agenda. So you should expect more margin expansion, including in a market like Finland in the coming years. Patrik Hofbauer: Can I just add also Finland? And don't -- to build on what Eric said, don't also forget to look into the ARPU development that we have in Finland, which is 4% up on the mobile postpaid, which is also very positive. And that has been driving the agenda to run price increases, but also a better mix in the portfolio. So all these activities are actually paying off at the moment. But we're still a way to go to be where we want to be in Finland, to be clear. Operator: Our next question comes from Keval Khiroya with Deutsche Bank. Keval Khiroya: I've got two questions, please. So at the CMD, you showed a target for mission-critical revenues to more than double from '23 to '27. You've been quite clear on this as a source of support for Q4. But can you comment on how we should think about the mission-critical growth in '26 compared to the growth in '25? It's obviously a bit difficult for us to model. And then secondly, on Norway, you've talked quite clearly about the moving parts. But can you comment on when you actually expect Norway to stabilize EBITDA? Patrik Hofbauer: Yes. I'm not sure I understood the first question on mission critical. But I can give you -- I mean, we have a clear -- I mean, we said it will double rightly, as you said, for the coming years, and we see that it's coming into now to our books and orders and also that's the reason why we will see a comfortable increase in Q4 in Sweden. So that's part of it. And this will continue, but they are a bit more lumpier, these revenues. So we will see it continue in the coming years as well. But we have not been explicit more than say that we will double from where we came from. And we will still stand with that. We are delivering on what we have said and on the expectations. So no surprises coming in. Eric Hageman: Yes. With regard to Norway and sort of the negative EBITDA that we've seen, we've guided already for that for Q4, as you heard earlier today, that will take a couple of quarters. We're still not quite out of the impact of the wholesale revenue. We've seen some increase in energy costs there. We typically have salary inflation in our countries as well that we have to work with. So we do see great opportunities to turn around that business, fixing fixed, making sure we stem the losses we have on mobile. TV is back on after the outage that we had, but it takes us a couple of quarters. So as we said last -- at the half year results, we need a bit of patience before we also, from an EBITDA perspective, turn around this business. Operator: Our next question comes from Viktor Hogberg with Danske Bank. Viktor Högberg: So just a question on the new free cash flow guide. Just a clarification maybe. Given the assumption of SEK 650 million in spectrum CapEx annually included in the guide for this year, would you say that you still expect the real free cash flow that is including the higher spectrum CapEx to still cover the dividend this year as we're getting close to the FY results? Just want to make sure that we're all speaking the same language. That's the first question. Erik Pers Berglund: Thanks, Viktor. It's Erik here at IR. We don't guide for free cash flow, including the real spectrum cost as you might understand, simply because we're not able or allowed to speak about spectrum CapEx ahead of the auction. So we have to stick to the normalized spectrum when we talk about free cash flow guidance. But maybe it's worthwhile to add a comment to that. So SEK 650 million is kind of a rough average for what it's been over a decade. Last year was lower than SEK 650 million. This year, we know it will be higher because we have already the SEK 780 million from the 2023 auction to pay plus, let's see about the SEK 1,800 million in Sweden. Next year, we don't have any big auctions coming up. So it goes up and down. But yes, that's where we are. Viktor Högberg: Okay. Fair enough. On the second question, just another clarification, maybe if you were talking about the group or just Norway on Q4 group EBITDA growth, the trend being in line with Q3. Was that for the group or for Norway, so below 5% that is for Q4. Patrik Hofbauer: So Eric said in his presentation that the EBITDA growth for the group is expected to be roughly the same in Q4 as in Q3. So that's for the group. And for Norway, we expect EBITDA improvement to take a couple of quarters, as Eric said. So we need some more patience for Norway specifically. Operator: Our final question comes from Siyi He with Citigroup. Siyi He: I have two actually. And my first question is on Finland. I mean, the ARPU development is quite encouraging. I'm just wondering if you can share with us how you think about your price increase strategy because I think you so far haven't really followed the security added tariff changes that put through by 2 of your competitors in Finland. And my second question is on service revenue growth in Sweden. And I just want to ask about how we think about 2026 and '27, given that the price is still doing quite well and have lower legacy drags and mission-critical revenues should also come through. Do you think it's fair to assume that the top line trend is next year and year after could be better than what we have witnessed this year so far? Patrik Hofbauer: So I can take the first question on Finland. I'm a bit surprised that we get the question all over and over again regarding the package, the security package. Look back in Finland, we have been driving the price increase raise there and the value creation agenda for many, many years. And remember, our position, we are the #3 mobile operator in the market. And if we look at the ARPU levels, they are very similar to each other. And we should be the challenger in the market, not the responsible leader in the market. So look at our position, I think, we are looking into different ways of driving price increases, i.e., ARPU increases. And we don't need to follow what our competitors are doing all the time. We have our own agenda that we are running and that we're looking into to make sure that we continue to grow and defend the position that we have in the market. And that you will see going forward as well. And I don't want to go into commenting on every package and price, et cetera. So we have our agenda. We are running that. We are #3 in the market. We should be the challenger. We have been too much more -- too responsible as a #3 player and acting like we were the incumbent almost in Finland or the leader. So I think we are well positioned. We have done a good quarter and good improvement during the year, and that will continue. I expect that will continue in the next year as well. Erik Pers Berglund: And to add a little bit, I think that our main way to drive ARPU is probably not that different from the competition. We look at the subscriber base cohort by cohort as certain cohorts exit a certain tariff or contract, then we can move them up to a higher value, higher price level, and that's how you work through the subscriber base with different prices. And that's giving the results. You can see there. I think the 4% is roughly in line with the competition. So even though we don't do exactly the same thing on security add-ons. Eric Hageman: Yes. With regards to Sweden or specifically service revenue in Sweden, very encouraged by what we saw in Q3, the first 9 months performance and what we're expecting for the full year. A little bit like our answer on CapEx, that's not something that changes overnight, right, when you have certain momentum. And clearly, we're guiding for a stronger Q4, driven by what we're doing in mission-critical, particularly, but also just the underlying business in broadband, in TV, the convergence play is really working well for us. And on top of that, some price increases. So we expect that momentum to continue. Said in a slightly different way, if you think about a medium-term guidance, the 2% and the 4%, that would not be possible without Sweden delivering that, right, because it's roughly half of our business. So again, we feel comfortable with that medium-term guidance, and we're very encouraged by the performance that we're seeing in Sweden. Operator: There are no further questions. Erik Pers Berglund: All right. Thank you very much, everybody, for calling in. Many good questions, and we look forward to continuing the discussions over the next quarter. Thank you, and goodbye.
Operator: Good day, and welcome to the Core Laboratories Q3 2025 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Larry Bruno, Chairman and CEO. Please go ahead. Lawrence Bruno: Thanks, Danielle. Good morning in the Americas, good afternoon in Europe, Africa and the Middle East, and good evening in Asia Pacific. We'd like to welcome all of our shareholders, analysts and most importantly, our employees to Core Laboratories Third Quarter 2025 Earnings Call. This morning, I'm joined by Chris Hill, Core's Chief Financial Officer; and Gwen Gresham, Core's Senior Vice President and Head of Investor Relations. The call will be divided into 6 segments. Gwen will start by making remarks regarding forward-looking statements. We'll then have some opening comments, including a high-level review of important factors in Core's Q3 performance. In addition, we'll review Core's strategies and the 3 financial tenets that Core employs to build long-term shareholder value. Chris will then give a detailed financial overview and have additional comments regarding shareholder value. Following Chris, Gwen will provide some comments on the company's outlook and guidance. I'll then review Core's 2 operating segments, detailing our progress and discussing the continued successful introduction and deployment of Core Lab's technologies as well as highlighting some of Core's operations, recent client interactions and major projects worldwide. Then we'll open the phones for a Q&A session. I'll now turn the call over to Gwen for remarks on forward-looking statements. Gwendolyn Schreffler: Before we start the conference this morning, I'll mention that some of the statements that we make during this call may include projections, estimates and other forward-looking information. This would include any discussion of the company's business outlook. These types of forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to materially differ from our forward-looking statements. These risks and uncertainties are discussed in our most recent annual report on Form 10-K as well as other reports and registration statements filed by us with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Our comments also include non-GAAP financial measures. Reconciliation to the most directly comparable GAAP financial measures is included in the press release announcing our third quarter results. Those non-GAAP measures can also be found on our website. With that said, I'll pass the discussion back to Larry. Lawrence Bruno: Thanks, Gwen. Moving now to some high-level comments about our third quarter 2025 results. Core continued to execute its strategic plan of technology investments targeted to both solve client problems and capitalize on Core's technical and geographic opportunities. Third quarter 2025 revenue was up over 3% compared to Q2 and Core achieved nice sequential improvement in operating income, operating margins and earnings per share. Looking at Reservoir Description in more detail, revenue in the third quarter was up over 2% compared to Q2. For the third quarter, ex items, operating margins in Reservoir Description were 13%. The segment's financial performance in the third quarter reflects continued demand for rock and fluid analysis across the company's global laboratory network. Demand for laboratory services tied to the assay of crude oil and derived products remained steady as trading patterns somewhat improved following disruptions caused by sanctions. There is still uncertainty in the demand for these assay services due to ongoing international geopolitical conflicts and evolving sanctions. In addition, pending tariffs and supply-demand balance concerns continue to generate volatility in commodity prices. In Production Enhancement, third quarter revenue was up 6% compared to Q2. Ex items, third quarter 2025 operating margins were 11%, up from 9% in Q2. This sequential improvement in margins reflects continued demand for completion diagnostic services, both onshore and offshore, along with improved international product sales. In addition to our quarterly dividend, Core Lab returned excess free cash to our shareholders by repurchasing more than 462,000 shares of company stock during the third quarter, equating to approximately 1% of Core's outstanding share count and representing a value of $5 million. Looking forward, Core intends to use free cash to fund our quarterly dividend, pursue growth opportunities and improve shareholder value through opportunistic share repurchases. As we look ahead, Core will continue to execute on its key strategic objectives by: one, introducing new product and service offerings in key geographic markets; two, maintaining a lean and focused organization; and three, maintaining our commitments to returning excess free cash to our shareholders and strengthening the company's balance sheet. Now to review Core Lab's strategies and the financial tenets that the company has used to build shareholder value over our nearly 30-year history as a publicly traded company. The interest of our shareholders, clients and employees will always be well served by Core Lab's resilient culture, which relies on innovation, leveraging technology to solve problems and dedicated customer service. I'll talk more about some of our latest innovations in the operational review section of this call. While we continue to pursue growth opportunities, the company will remain focused on its 3 long-standing, long-term financial tenets, those being to maximize free cash flow, maximize return on invested capital and returning excess free cash to our shareholders. I'll now turn it over to Chris for the detailed financial review. Chris Hill: Thanks, Larry. Before we review the financial performance for the quarter, the guidance we gave on our last call and past calls specifically excluded the impact of any FX gains or losses and assumed an effective tax rate of 25%. So accordingly, our discussion today excludes any foreign exchange gain or loss for current and prior periods. Additionally, adjustments, which net to a gain of $4.6 million have been excluded from today's discussion of the third quarter 2025 financial results. You can find a summary of those items in the tables attached to our press release for the third quarter of 2025. Now looking at the income statement. Revenue was $134.5 million in the third quarter, up $4.4 million or over 3% compared to the prior quarter and flat year-over-year. The sequential improvement is primarily associated with increased demand for our laboratory analytical services and completion diagnostic services in international regions. Of this revenue, service revenue, which is more international, was $101.1 million for the quarter, up 5% sequentially and up over 2% year-over-year. As mentioned earlier, sequentially, we saw an increase in international service revenue for both our laboratory analytical services and our completion diagnostic services when compared to the second quarter. For the U.S., service revenue remained flat sequentially and was down almost 4% from last year. Product sales, which is more equally tied to North America and international activity, were $33.4 million for the quarter, down slightly from last quarter and down 6% year-over-year. Our international product sales are typically larger bulk orders and can vary from one quarter to another and were up nicely in the third quarter when compared to the second quarter. However, laboratory instrumentation sales decreased in the third quarter, but coming off a very strong second quarter. Looking at year-over-year, the decrease in product sales was primarily due to the lower levels of completion activity in the U.S. onshore market. Moving on to cost of services, ex items for the quarter was 74% of service revenue, improving from 77% in the prior quarter and from 76% in the same quarter last year. The year-over-year and sequential improvements in cost of services was primarily due to cost efficiencies and reductions in overall compensation costs associated with actions taken earlier this year. Cost of sales ex items in the third quarter was 88% of revenue compared to 85% last quarter and flat compared to last year. The sequential increase was due to higher absorption of fixed costs on a slightly lower revenue base in the quarter as well as an increase in the cost of imported steel due to tariffs. As we continue to focus on cost efficiencies, we anticipate the manufacturing absorption rate in future quarters will be in line with projected product sales. G&A ex items for the quarter was $10.7 million, a slight increase from $10.5 million in the prior quarter and $10 million in the same quarter of the prior year. For 2025, we expect G&A ex items to be approximately $42 million to $44 million. Depreciation and amortization for the quarter was $3.6 million, decreased slightly compared to $3.7 million in the last quarter and the same quarter in the prior year. EBIT ex items for the quarter was $16.6 million, up $2.1 million from $14.5 million last quarter, yielding an EBIT margin over 12% and expanding 120 basis points sequentially. Our EBIT for the quarter on a GAAP basis was $20.9 million, which includes a gain of approximately $5.2 million associated with the final settlement of insurance claim for our U.K. facility that was damaged by fire. Interest expense of $2.7 million remained flat compared to the prior quarter and decreased from $3.1 million last year. The decrease in interest expense from last year is due to a lower average borrowings on the credit facility in 2025. Income tax expense at an effective rate of 25% and ex items was $3.5 million for the quarter. On a GAAP basis, we recorded tax expense of $3.8 million for the quarter at an effective rate of 21%. The effective tax rate will continue to be somewhat sensitive to the geographic mix of earnings across the globe and the impact of items discrete to each quarter. We continue to project the company's effective tax rate to be approximately 25% for 2025. Net income ex items for the quarter was $10.2 million, an increase of over 15% sequentially, but down almost 14% from the same quarter last year. On a GAAP basis, we had net income of $14.2 million for the quarter. Earnings per diluted share ex items was $0.22 for the quarter, an increase from $0.19 in the prior quarter and a decrease from $0.25 last year. On a GAAP basis, EPS was $0.30 for the third quarter of 2025. Turning to the balance sheet. Receivables were $110.3 million and decreased approximately $3.6 million from the prior quarter. Our DSOs for the third quarter improved to 71 days from 75 days last quarter. Inventory at September 30, 2025, was $58.2 million, down $1.5 million from last quarter end. Inventory turns for the quarter improved to 2.0, up from 1.9 in the prior quarter. We continue to focus on managing our inventory to lower levels with improved returns and anticipate inventory turns will gradually improve over time. And now to the liability side of the balance sheet. Our long-term debt was $117 million as of September 30, 2025, and considering cash of $25.6 million, net debt was $91.4 million, which decreased $3.4 million from last quarter. Our leverage ratio was reduced to 1.1 at September 30, down from 1.27 last quarter end. As of September 30, 2025, our debt was comprised of $110 million in senior notes and $7 million outstanding under our bank credit facility. As Larry stated earlier, the company will remain focused on executing its strategic business initiatives while maintaining a healthy balance sheet. Looking at cash flow. For the third quarter of 2025, cash flow from operating activities was approximately $8.5 million. And after paying $2 million of CapEx for operations, our free cash flow for the quarter was $6.5 million. As discussed in prior quarters, the capital expenditures associated with rebuilding our U.K. facility, which was damaged by fire in February 2024, are covered by the company's property and casualty insurance and have been excluded in the calculation of free cash flow. Additionally, we expect CapEx to remain aligned with activity levels. And for the full year 2025, we expect capital expenditures for operations to be in the range of $11 million to $13 million. The forecast for capital expenditures excludes CapEx associated with rebuilding the U.K. facility. Core Lab will continue its strict capital discipline and asset-light business model with capital expenditures primarily targeted at growth opportunities. Core Lab's operational leverage continues to provide the ability to grow revenue and profitability with minimal capital requirements. Capital expenditures have historically ranged from 2.5% to 4% of revenue even during periods of significant growth. That same level of laboratory infrastructure, intellectual property and leverage exists in the business today. We believe evaluating a company's ability to generate free cash flow and free cash flow yield is an important metric for shareholders when comparing and projecting company's financial results, particularly for those shareholders who utilize discounted cash flow models to assess valuations. I will now turn it over to Gwen for an update on our guidance and outlook. Gwendolyn Schreffler: Thank you, Chris. Turning to Core Lab's outlook for the fourth quarter. The IEA, the EIA and OPEC+ continue to forecast growth in crude oil demand between 700,000 and 1.3 million barrels per day in 2025 with a similar level of incremental growth projected for 2026. This growth continues to drive primarily by demand from non-OECD countries, including Asia, India and emerging markets across the Middle East and Africa. As noted in the IEA's report published September 16, 2025, crude oil field data shows the natural decline in existing producing fields is accelerating globally and now represents a major long-term supply risk. Addressing steeper decline rates and bringing new fields online will be central to ensuring energy security and maintaining market stability. As such, according to the IEA, significant annual investment in oil and gas resource development will be required for many years to come. Core Lab's Reservoir Description and Production Enhancement technologies are directly aligned with these investment imperatives. In the near term, potential tariff headwinds, combined with OPEC+ decisions to increase production levels are contributing to market volatility and lower commodity prices. Despite the current softness and long-term crude oil demand fundamentals remain intact. Core Lab maintains its constructive outlook and continues to see steady activity across committed long-cycle projects, including deepwater along the South Atlantic margin, North and West Africa, Norway, the Middle East and certain areas of Asia Pacific. These projects by nature of their scale and planning cycles tend to be less reactive to near-term commodity price fluctuations. Core Lab's revenue opportunity on awarded projects will remain somewhat dependent on our clients' geological success rates. Activity tied to smaller scale short-cycle crude oil development projects are expected to remain more sensitive to changes in commodity prices. As a result, changes in crude oil prices are anticipated to have a more immediate impact on drilling and completion activity in the U.S. onshore market. Geopolitical conflicts, evolving trade and tariff dynamics and volatile commodity prices continue to create uncertainty in demand for laboratory services tied to the maritime transportation and trade of crude oil and derived products. Despite these headwinds, Core Lab projects Reservoir Description's fourth quarter revenue to be up sequentially. The U.S. frac spread count continues to trend lower, and the company anticipates the typical year-end seasonal decline in U.S. onshore completion activity. However, growth in demand for Core's diagnostic services and energetic system product sales in both international and offshore markets may somewhat offset the decline in U.S. onshore activity. As such, Core projects Production Enhancement to be down slightly sequentially. Core believes that the tariff measures under consideration will not apply to the vast majority of service revenue and product sales provided by the company. Core services account for over 75% of the company's total revenue and are currently not subject to tariffs. Core's product sales have been less than 25% of total revenue and are primarily manufactured in the U.S. Tariffs on exported products would not apply to approximately 50% of these product sales as they are consumed in the U.S. drilling and completion market. Certain raw materials imported and consumed in production enhancements, U.S. product manufacturing and service businesses are attracting import tariffs. We continue to take steps to mitigate the impact of tariffs. In summary, Reservoir Description’s production -- Reservoir Description's fourth quarter revenue is projected to range from $88 million to $90 million with operating income of $11 million to $12.3 million. Production Enhancement's fourth quarter revenue is estimated to range from $44 million to $46 million, with operating income of $2.9 million to $3.7 million. Core's fourth quarter 2025 revenue is projected to range from $132 million to $136 million with operating income of $14 million to $16.1 million, yielding operating margins of approximately 11%. EPS for the fourth quarter is expected to range from $0.18 to $0.22. The company's fourth quarter 2025 guidance is based on projections for underlying operations and excludes gains and losses in foreign exchange. Our fourth quarter guidance assumes an effective tax rate of 25%. With that, I'll turn it back over to Larry. Lawrence Bruno: Thanks, Gwen. First, I'd like to thank our global team of employees for providing innovative solutions, integrity and superior service to our clients. The team's collective dedication to servicing our clients is the foundation of Core Lab's success. Looking at the macro, as Gwen mentioned, even after assessing current and near-term economic headwinds, the IEA, EIA and OPEC projections continue to point to growth in global crude oil demand in 2025 and beyond. The various estimates show growth in demand of between 0.7 million barrels per day and 1.3 million barrels per day for 2025 with similar additional demand growth projected for 2026. In addition to the forecasted growth in demand, new production will need to be brought online to offset the natural decline from existing producing fields. Combined, these trends will require continued investment in the development of onshore and offshore crude oil fields. U.S. tight oil production has been by far the largest component of non-OPEC oil production growth since 2010. Continued growth in global oil demand, combined with constrained incremental U.S. oil production growth supports the thesis that the balance of future supply growth must increasingly rely on discoveries and field developments outside the U.S. In summary, the current forecast suggests a multiyear cycle in which U.S. onshore production growth slows and future growth in global supply will be driven by capital investment in international conventional offshore fields and unconventional opportunities in the Middle East. These trends support increased demand for Core Lab services across the globe, particularly for Reservoir Description. The most recent EIA short-term energy outlook for U.S. oil production is 13.5 million barrels per day in 2025, and the agency currently projects production to remain essentially flat in 2026 with only nominal growth in U.S. production over this time frame. Of particular note, during the third quarter, the IEA pivoted from earlier projections on the need for investment in new oil and gas production, stating that in addition to continued investment in existing fields, more than 45 million barrels of oil production from new conventional oil fields must be added by 2050 just to maintain current production levels. Any growth in demand would add to that number. The IEA now states that significant annual investment in oil and gas resource development will be required for many years to come as the natural decline in existing producing fields is accelerating globally. The new IEA analysis published in September, the agency's global field-by-field data show that steeper natural declines now dominate supply risk. The IEA quantified this risk, stating that oil output would fall approximately 8% per year from natural decline. Nearly 90% of upstream CapEx since 2019 has gone just to offset declines, not to meet continuing demand growth. Additionally, the IEA sees 20-year average project lead times, and they conclude that delayed or inefficient development of new production will further compound the supply risk. Directionally, these IEA revisions and the need for increased investment in oil and gas projects align with Core Lab's long-standing view that the decline curve never sleeps and always wins. Along with new exploration, appraisal and development programs, disciplined data-driven optimization of existing reservoirs is the fastest, lowest risk path to supply reliability and operator returns, a scenario that Core Lab is uniquely positioned to deliver through its Reservoir Description and Production Enhancement Technologies. With Core Lab's expanding opportunities across international markets, such as with unconventional plays in the Middle East and emerging onshore and offshore deepwater conventional plays in a number of regions, including along the South Atlantic margin, the company continues to enhance its portfolio of innovative offerings for our growing global client base. Now let's review the third quarter performance of our 2 business segments, turning first to Reservoir Description. For the third quarter of 2025, revenue came in at $88.2 million, up over 2% compared to Q2. For Q3, operating income for Reservoir Description ex items was $11.6 million, up from $10.8 million in Q2, yielding operating margins of 13% with incremental margins of 41%. While demand for Reservoir Description lab services remained strong in several regions across our global network, ongoing international geopolitical conflicts, along with sanctions, continue to produce headwinds that impact the demand for laboratory services tied to the trade and transportation of crude oil and derived products. The demand for these services did rebound some in the third quarter as trading patterns continue to realign. Now for some operational highlights from Reservoir Description. In the third quarter of 2025, Core Lab completed phase 1 of a major reservoir fluid study in the Middle East. This analytical program addressed the critical challenge of crude oil stability by determining how natural pressure depletion impacts asphaltene behavior. As pressure drops across producing reservoirs, asphaltene can precipitate from some crude oils. These solid particles can then plug pore-throats, impair permeability and even obstruct production tubulars. Consequently, asphaltene precipitation has significant implications for both production efficiency and infrastructure integrity. As reservoirs mature, a decline in pressure will destabilize the delicate balance of pressure, volume and temperature, or PVT, that governs the thermodynamic behavior of the crude oil. This disruption can cause costly formation damage in the subsurface, leading to reduced production rates and other operational issues. The operator engaged Core Lab to deploy its proprietary full visualization PVT laboratory technologies alongside Core's advanced near infrared and high-pressure microscopy detection techniques. Combined, these technologies enabled precise measurement of asphaltene onset pressures and depositional behaviors under a range of reservoir and production conditions. Concurrently, Core Lab designed and executed advanced laboratory Core flood experiments to quantify permeability impairment as the laboratory system pressure was reduced to below critical asphaltene precipitation thresholds. These laboratory results form the essential hard data inputs into dynamic reservoir models that will allow the client to mitigate risk as they develop pressure maintenance strategies for the field. This project is now progressing into phase 2, which will assess the feasibility of pressure maintenance and solvent injection programs aimed at permeability restoration and reducing formation damage. Throughout the life cycle of oilfields, Core Laboratories measurements and interpretations help our clients maximize hydrocarbon production from their assets. Moving now to Production Enhancement, where Core Lab's technologies continue to help our clients maximize their well completions and improve production. Revenue for Production Enhancement for Q3 came in at $46.3 million, up 6% compared to Q2. Third quarter operating income for Production Enhancement, ex items was $4.9 million, yielding operating margins of 11%, up from 9% in Q2. In the U.S., Diagnostic services benefited from increasing demand as complex U.S. land completion designs like trimulfrac and extended lateral length horizontal wells become more and more common. Core's expansive portfolio of completion products also saw increased demand in international markets. Now for some operational highlights from Production Enhancement. In the third quarter of 2025, a national oil company engaged Core Lab's production enhancement team after experiencing nearly 2 months of costly downtime due to a stuck, heavyweight drill pipe in a well from offshore West Africa. The operator deployed Core's proprietary dual-end severing tool, which is engineered for high-efficiency pipe recovery operations, particularly in scenarios where conventional drill pipe and casing cutters are not up to the task. Core Lab provided the operator with extensive assembly and field application procedures and training and real-time guidance to determine the optimal deployment position within the wellbore for maximum effectiveness. Core's proprietary tool works by using precisely timed energetic events that are sequenced to generate two equal and opposing shock fronts. This technology focuses the energy outward towards the drill string and severs the drill collar. As a result of Core Lab's proprietary technologies and unmatched client service, the drill pipe was successfully recovered and well operations were restored. Also in the third quarter, one of Canada's most active heavy oil operators needed to identify which bore holes in the multilateral wells were contributing the most oil to overall production. This is a key challenge in optimizing completions in low-temperature heavy oil reservoirs. Having successfully used Core Lab's SPECTRACHEM Water Tracers in previous multistage fracturing operations, the operator again turned to Core's engineering team for a solution using chemical tracers to assess oil production from these challenging complex wells. The operator deployed Core's unique FLOWPROFILER Engineered Delivery System, or EDS. These oil tracers were placed into each lateral leg, allowing the operator to monitor produced oil concentrations and generate a precise production contribution profile. The operator found the diagnostic results to be of high value and is now including Core's FLOWPROFILER EDS oil tracers as a standard evaluation technology for future projects. That concludes our operational review. We appreciate your participation, and Danielle will now open the call for questions. Operator: [Operator Instructions] The first question comes from John Daniel from Daniel Energy Partners. John Daniel: Hopefully, you can hear me okay. Well, first question is on the transaction you all just did. If you could elaborate on maybe what some of the opportunities might be for similar sized transactions globally? And this is a sidebar, I thought it was an interesting way you structured the purchase price where a lot of it's on the back end in terms of earnout, it's pretty new way to do that. So just any color on those opportunities. Lawrence Bruno: I'll let Chris fill in a lot of the sort of the details on that, but just a little background there, John. So I think you know, I came to Core Lab now 26 or so years ago through a similar sort of tuck-in technology acquisition. And so have a pretty good model for that. Core Lab did a series of those private company acquisitions. They offer technological advantages. They offer geographic advantages. And as you and some of the other folks have heard us say before, everybody has got hockey stick projections on how their business is going to play out over the next few years. Well, we think it's a good approach to have them participate, in that the need to deliver that hockey stick if they're going to be rewarded for that hockey stick. So yes, so I think that approach make sense. And I think we'll look at -- we're always looking at similar acquisitions. And Chris, any color you might want to add on the Solintec acquisition? Chris Hill: No. I think the way we did structure that may be a little unique from what you normally see. We would love to structure most transactions like that, but it takes two parties to agree on what those terms look like. So we are very happy with the acquisition and then it's kind of a win-win if we end up paying that earn-out, for both the seller and us. Lawrence Bruno: And I think I would add to that, that Solintec has a long multi-decade history in Brazil, and we are really glad to have them part of the Core Lab family. John Daniel: Okay. I guess just my follow-up question, a bit unrelated to the M&A market, but you guys do a really good job of kind of traveling the globe and seeing your customers, and I think you alluded to going to Asia Pac in the third quarter. I'm curious when you sit down and talk with those folks, obviously, don't name me names, but like when they look into their crystal ball, 2 to 3 to 4 years from now, are they suggesting to you higher activity, lower activity? Any color would be appreciated. Lawrence Bruno: Yes, higher activity, and it's across the board. I'd say it's Middle East still leading the pack, South Atlantic margin and West Africa, I would say, are in the second position. And then recently here in Asia Pac, we're seeing some sort of, I'll call it, they've been on the drawing board for a while, but finally getting -- closer to getting kinetic, if you will, on some exploration programs. And with those, for us, there's some work tied to exploration, but we really hope our clients are geologically successful because it's when they get into appraisal and development, that's really kind of the wheelhouse, particularly for Reservoir Description. And then eventually, it's production, and that plays out into our Production Enhancement Group. But it's clearly rising in our perspective here, that activity levels over the next few years should be going up. And I think there's -- we have even more confidence into the trends that we've been describing over the last year or so saying that, "Hey, there is a wave coming of more international investment." And I think it's tied to a realization that the production from U.S. land has largely absorbed the rest of the world from having to bring new production on and that, that phase at 15-year cycle from 2010 to 2025, look, there's still going to be a lot of oil and gas produced in the U.S., but the growth that has covered a lot of the decline around the rest of the world, that's starting to come to an end. John Daniel: Okay. That's very helpful. Thank you for including me. Lawrence Bruno: Yes. Thanks, John. I appreciate the call. Operator: [Operator Instructions] Seeing that there are no further questions, I would like to turn the conference back over to Larry Bruno for closing remarks. Lawrence Bruno: Okay. Thanks, Danielle. We'll wrap up here. I think we've got a pretty busy earnings release morning going on here, so probably a little bit of people juggling phones. In summary, Core's operational leadership continues to position the company for improving client activity levels in the coming quarters and years. We have never been better operationally or technologically positioned to help our global client base optimize their reservoirs and to address their evolving needs. We remain uniquely focused and are the most technologically advanced, client-focused reservoir optimization company in the oilfield service sector. The company will remain focused on maximizing free cash and returns on invested capital. In addition to our quarterly dividend, we'll bring value to our shareholders via growth opportunities, driven by both the introduction of problem-solving technologies and new market penetration. In the near term, Core will continue to use free cash to repurchase shares and strengthen its balance sheet while always investing in growth opportunities and evaluating various methods to increase shareholder value. So in closing, we thank and appreciate all of our shareholders and the analysts that cover Core Lab. The executive management team and the Board of Core Laboratories give a special thanks to our worldwide employees that have made these results possible. We're proud to be associated with their continuing achievements. So thanks for spending time with us, and we look forward to our next update. Goodbye for now. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, and welcome to the investor and analyst call for LSEG's Third Quarter 2025 Trading Update. [Operator Instructions] I would like to remind all participants that this call is being recorded. I will now hand over to David Schwimmer, CEO of LSEG, to open the presentation. Please go ahead. David Schwimmer: Good morning, everyone. Thanks for joining the call. I'm here with MAP and Peregrine as usual, and we are also joined by Daniel Maguire, our Head of Markets, to talk about the Post Trade transaction that we announced this morning. For this quarter, we're going to take a slightly different approach from a normal Q3 given the intense debate in recent months around our business and AI. I'll cover some key aspects of our AI strategy and the excitement we have about the current opportunities, before MAP goes through the Q3 numbers, and Dan covers the Post Trade transaction. Then, of course, we'll be happy to take your questions. It has been a really busy quarter with great progress on several fronts. Group organic growth continues to be very healthy at 6.4%, with D&A growing at 4.9%, similar to the first half. ASV growth came in at 5.6%, a little better than expected, and we anticipate it being better again in Q4. We're raising our margin guidance to the top of the original range at around 100 basis points of improvement, reflecting strong operating leverage and cost control. As you may have seen, we've launched a number of AI-related partnerships involving our data, which is valued and relied on by partners old and new as industry standard. We've announced an important transaction today that creates a strong partnership and aligned incentives for the adoption of Post Trade Solutions while also increasing our revenue share from SwapClear and extending the profit-sharing arrangement with our partner banks by 10 years. More on this in a few minutes. And on the share buyback that we announced at our half year results, the original intention was to complete that by mid-December, but we've taken advantage of a lower share price and accelerated the GBP 1 billion buyback to finish by the end of this month. And we're today announcing a further GBP 1 billion buyback to be completed by our full year results in February of next year. Our strong cash generation gives us the firepower and the flexibility to invest organically to make important strategic moves and to be active in returning cash to our shareholders. On the next slide, we have summarized our LSEG Everywhere AI strategy under 3 key pillars: trusted data, transformative products and intelligent enterprise. We'll talk more about those second 2 at the Innovation Forum in November. But let me take a minute or 2 to dive into our data and the critical and valuable role it plays now and will play in an AI-rich world. The easiest way to think about our data is that the content itself and access to it is effectively financial markets infrastructure, something we know a lot about. It is industry standard, deeply trusted, embedded in highly regulated customer workflows and supported by processes and infrastructure that are extremely hard to replicate. And we are and always have been open. We deliver data to wherever our customers want it, their screens, their servers, their cloud and, of course, through third-party providers. Let's unpack this over the next few slides. Data & Feeds accounts for a little over 1/5 of group revenues. On this slide, we've broken down these by data type. But before we get into that, I want to remind you of the scale of our data. It is the largest pool in the industry, both in terms of breadth and depth. We have over 33 petabytes of data. That is over 3x the so-called common crawl, the data set formed from the public Internet, which is used to train many LLMs. Let's begin with the 45% of our Data & Feeds revenue derived from real time. This is a business built on physics, not probability. We've built connections to 575 exchanges and execution venues globally with our own infrastructure. In the blink of an eye, we standardize and translate the exchange outputs into a single common language and deliver them directly into the world's financial institutions. Millions of hard facts per second, not probabilistic algorithms. In a nutshell, AI cannot replicate or replace our real-time data. Then we have 25% of our Data & Feeds revenue, which is specialized and enhanced by our own enrichment. By specialized, we mean proprietary. Think Tradeweb fixed income pricing or exclusive like the Reuters News agreement or contributed like our deals database. So an LLM could not access these data sets through public sources. And then on top of that, we are enriching this data with value-added enhancements and augmentation by our data experts. That is our additional value add. And then that all comes with the LSEG curation standards, accuracy, normalization and tagging. So think of this data as protected by 3 moats. It is either proprietary or exclusive. It is enriched by our own intellectual property, and it is curated, applying the LSEG standards, which have often become the industry standard. Let me give you an example to bring this to life. Our deals league tables are highly valuable to banks, advisers and law firms. These league tables are widely considered the industry standard with LSEG data obtained daily from thousands of sources co-mingled with data sourced from nearly 2,000 financial and legal advisers actively contributing their deal flow. We get up to 25,000 of these contributions per month. This input, which is from humans, is crucial to the quality, accuracy and completeness of this data. These contributions clarify and correct deal details that appear in the press. They also add additional information to public deals and supply information on other deals that are not reported anywhere. So a data set built solely on public disclosures would be both inaccurate and incomplete. We further enrich this data with our proprietary calculation of rank value, which sets the standard for deal comps, market share and pitchbooks around the world. We refine this methodology each year through roundtables with advisory firms. So in case anyone is missing the point, no LLM can gather this data from public sources, 3 moats, LSEG proprietary or exclusive data, enriched by LSEG IP and curated by LSEG, applying the LSEG standards. Let's move on to the next bucket, representing 10% of Data & Feeds revenues. It is almost exactly identical to the previous bucket. It is specialized data, proprietary, exclusive or contributed, with LSEG standards applied. So not accessible by an LLM through public sources, our aftermarket research, for example. And to carry on the analogy with the moats, this is data protected by 2 powerful moats. Next is another 10% of revenue from data that is indeed public, but to which we apply our enrichment and analysis, similar to what I was talking about with customer contributions on the league tables. And we also applied the LSEG curation standards. Examples here would be earnings estimates and sentiment analytics applied to earnings calls and other sources. So can an LLM access it? Yes, but the data will be incomplete. Here, it is 2 moats applied on public data. So 90% of our revenue is from data that is nonreplicable by an LLM. That leaves us with the last 10% of Data & Feeds revenue, which represents the data derived from public sources for which we apply LSEG curation standards, data like company filings or economic metrics. This data is rarely sold on a stand-alone basis. Here, there is still one moat, a powerful and important one, and that is our standards, which I will cover on the next slide. Now that we've established that 90% of Data & Feeds revenue is from data that is simply out of reach or inaccessible to an AI model trawling for public data. Let me take a minute to explain very concretely what I mean by that third moat, the LSEG data curation standards. There are 5 major processes in the curation of LSEG's high-quality trusted data, which are simply nonnegotiable for our customers in regulated activities. These 5 processes are the foundations of what we call the LSEG standards. Let's look at them in a little bit more detail. We do not build our data sets on probabilistic models. We have constructed them from decades of hard data, much of which is no longer retrievable. We source them from our customer community with over 40,000 customers contributing regularly. And in many cases, our own analysts and experts generate them internally. So that is sourcing. We then extensively cleanse and validate this data to ensure quality, for example, verifying its accuracy and completeness. Publicly sourced data is not reliable without this step. The third step, normalizing and mastering means creating a single source of the truth, consistent from year-to-year and from security to security, factoring in corporate actions, for example, or restatements or perimeter changes. And then concordance and tagging, which is a critical and differentiated step. This is where the universal symbology of the RIC or Reuters Instrument Codes and our use of perm IDs to tag each piece of data are so powerful. They allow full interoperability across the data estate and create logical semantic relationships between related data, for example, between a company and its directors or a bond it has issued. And the fifth step, distribution. Irrespective of technology platform, data format or channel, the data we distribute to customers is consistent and authoritative. I'll talk more about our distribution strategy in a couple of minutes. So to summarize, for those who think AI models can scoop up so-called public data from the Internet and displace us, that just does not reflect how this industry works and fundamentally ignores the nonreplicable nature of the vast majority of our data. There's also been a lot of focus on our Workflows business. We have driven a lot of change here over the last 4 years and now have our customers on a modern, modular, customizable platform where we enhance functionality week in and week out, and we're doing more and more. As we said at H1, it is not AI or a desktop. It is AI in the desktop, fully embedded in financial markets workflow. Workspace is now integrated with Microsoft Teams. We'll be launching Open Directory in the coming weeks and the full Workspace AI platform in the first half of '26, with Agentic tools coming as well. You'll see all of this at the Innovation Forum in a couple of weeks. So let's look at our Workflows revenue, the same way we did for Data & Feeds. 50% of workflows revenue comes from traders who are deeply engaged with the platform to execute their roles. They need real-time data, a network community and integration with a range of pre- and post-trade tools. Further 20% of Workflows revenue comes from ancillary trading services, such as trade routing and order execution and management. Another 15% comes from investment banking, where we have specialized content across deals, corporate actions and research, as well as integrated productivity tools. That leaves 5% of Workflows revenue from wealth and 10% from investment management. These customers benefit from our unrivaled data, exclusive Reuters News and portfolio analytics. But in these groups, there are lighter users who are mainly doing desktop research and basic charting, perhaps like many people on this call. Whether someone is a power user deep in trading workflow or a lighter user, all Workspace users will benefit from the significant AI and collaboration enhancements coming over the next few months. They will have the full functionality of some of the newer applications out there, but embedded in their existing workflow and based on data they can trust. Now over the last couple of months, you can see the pace of execution on LSEG Everywhere, delivering our data to where our customers are working as the partner of choice for financial markets data. This is no change in strategy. We have long provided data to and distributed data through our customers -- I'm sorry, our competitors and partners. For example, we are the #1 data provider to Aladdin. The industry now has new entrants, building new applications and functionality, which we believe can expand our reach and drive additional consumption of our trusted high-quality data. The economics of these deals support our growth aspirations through data licensing, new channels and the potential for usage-based revenue over time. Rogo is a specialist provider of applications to investment banking and private equity. Customers with Workspace licenses can access certain LSEG data sets through Rogo. The construct with Databricks is similar. These are attractive new distribution channels for our data. Just last week, we took a major step forward in our partnership with Microsoft, introducing certain data sets into Copilot for any Copilot subscriber, and more valuable data sets, both into Copilot and Copilot Studio for LSEG licensees. This will allow customers to build their own agents working with our data. You should expect the list of partners to continue to grow as we look to distribute our data through other major channels. That's the fundamental premise of LSEG Everywhere. A key part of many of these partnerships has been our ongoing build-out of MCP servers as we make more and more data sets available over time. Before I hand over to MAP, it has also been a very busy quarter in other parts of our business. Just to highlight a couple of significant developments. With Microsoft, we have fully replatformed our trade routing network, Autex, in Azure with Autex now connecting 1,600 brokers and asset managers via the cloud. As a result, it's faster, has much greater capacity and is even more resilient. And we have executed the first transaction on our Digital Markets Infrastructure, which is positioned to become an important new capability for trading and settlement. We're preparing to launch our Private Securities Market. More on that at the Innovation Forum. And in Risk Intelligence, we have launched World-Check On Demand with all our critical data and insight now updated in real time. That takes me appropriately to our innovation forum in a couple of weeks. In the first part of the event, MAP and I will cover our unique positioning, our end markets and execution to date. Irfan Hussain, our CIO; and Emily Prince, our Head of AI, will cover our AI strategy and engineering transformation. And then Ron Lefferts and Gianluca Biagini will talk about product strategy and monetization in DNA. We'll then have specific product walk-throughs and demos across the group. We're looking forward to showing you both the present and the future. And just to be clear, this is not a traditional Capital Markets Day. Don't expect any new guidance or anything along those lines. So with that, let me hand it over to MAP to talk about our Q3 performance in more detail. Michel-Alain Proch: Thanks, David. So just a few words on our financial performance. We have delivered another quarter of strong growth across the group. Organic growth for the quarter was 6.4% with all divisions contributing well. We had a benefit of 30 bps from the ICD acquisition of last year and a headwind of 190 bps from FX, which together translates into our reported growth of 4.8%. Within D&A growth of 4.9%, Workflows and Data & Feeds saw very similar growth to Q2 with only a slight impact from the new UBS contract that I mentioned at the H1 results. Analytics continued to grow strongly. The competitive environment is stable, and we are excited about the product pipeline. Our expectation for pricing into 2026 is for the yield to be similar to the last 3 years in the 3.5% range. FTSE Russell, as I indicated at H1, saw slightly slower growth in subscriptions with fewer account reviews in the period. But on the other hand, asset-based fee growth was strong as we lap the loss of a contract last year. Risk Intelligence had another strong quarter, driven by both World-Check and Digital Identity & Fraud. So overall, the subscription businesses delivered 6.5% growth in Q3, ahead of our expectation of 6% for the second half of the year. ASV growth came in at 5.6%, a bit ahead of the 5.4% we had anticipated. Good sales momentum partially offset the expected impact of the final Credit Suisse impact wrapped into the new long-term partnership with UBS. As I have said before, I expect this to pick up again to 5.8% as we exit the year. The Markets business continued to grow well, though at a slightly slower pace than H1 as volatility was lower and comps got tougher. Looking at the 2 main lines, OTC derivative was up 9.2%, driven by continued strength in client clearing volumes in SwapClear, and fixed income was up 9.9% as Tradeweb continued to drive growth through its innovative trading protocols and an uncertain macroeconomic outlook. Elsewhere, we have seen the IPO pipeline pick up in the Equities business with more to come heading into 2026. And we are seeing the final headwinds to growth in Securities & Reporting from the Euronext exit. Moving now to our delivery against guidance. We are absolutely on track and in some respects, ahead of our original plan. Year-to-date organic growth is 7.3%, comfortably within our guidance range, and this remains unchanged. On margin, the natural operating leverage in our business gives us confidence to raise our margin guidance to the top of the range at around 100 bps improvement year-on-year. This is a big step-up for a GBP 9 billion revenue business, and it factors significant ongoing investment in AI and new products. We are very confident of hitting our 2026 guidance of 250 bps over 3 years, taking us to 50% plus, obviously, before the impact of the Post Trade transaction, which I will cover in a moment. On CapEx, we will invest at a rate of 10% of revenue this year as planned and expect that intensity to come down in future years. One or 2 in the market have asked whether we will need to invest more in an AI future. The answer is clearly no. We have been investing at a double-digit CapEx intensity for several years, and we are now switching the mix over time from technology debt payback towards more investment for growth, obviously, including AI. And finally, we have good visibility of hitting our free cash flow guidance of at least GBP 2.4 billion. And finally, let's look at how we are allocating this cash flow. Overall, we are deploying more this year than what we are generating. That reflects the opportunities we see in front of us. So we expect to spend around GBP 3.5 billion versus free cash flow of GBP 2.4 billion. We are financing the difference with new borrowings of GBP 1.1 billion. Total dividends for the year are just over GBP 700 million, representing a 35% payout of adjusted earnings. In addition, we are deploying GBP 700 million net on the Post Trade transaction announced today, where we expect returns to be very attractive. And finally, as David mentioned, you may have noticed that over recent weeks, we significantly accelerated the GBP 1 billion buyback announced with the H1 results, and we have nearly completed it. Given our strong cash generation, low leverage and the enhanced returns we believe we will generate at this share price level, we are today committing to a further GBP 1 billion. This will start shortly and complete by the full year result in February 2026. We plan to execute GBP 500 million of this GBP 1 billion in year. This is a further demonstration of the flexibility and optionality our strong cash flow generation gives us and our very active capital allocation decision-making. Taking all this together, our leverage at the end of this year should be around 1.9x EBITDA, so in the middle of our 1.5x to 2.5x net debt-to-EBITDA range. Let's now look at the rationale of the transaction in our Post Trade business that we announced this morning. First, a group of 11 leading global banks is taking a 20% stake in our Post Trade Solutions business. The perimeter of PTS includes the recent acquisition, Quantile and Acadia, plus businesses we have grown organically, mainly SwapAgent. This transaction deepens our partnership with institutions that can benefit significantly from PTS services and allows them to help share its future and share in its growth. Second, we have agreed to alter the terms of the revenue share paid to the partner banks from SwapClear. Historically and up to 2024, this sat at 30%, reflected in our cost of sales. We are taking this down to 15% for 2025, applied across the whole year and 10% for 2026 and beyond. And finally, we are extending it from 2035 to 2045. Again, this is strategically important, and it improves our economics at a fair valuation and extends the deep relationship with our partner banks into the long term. Daniel will cover the strategic value in more detail in a moment. But the financial effects of this transaction are very positive. The impact of reducing the revenue share from 30% to 15%, which again is retroactive across the whole of 2025, will add around 250 bps to the Markets' divisional EBITDA margin and 100 bps to the group margin this year. While obviously, there are some financing costs, overall, this transaction is 2% to 3% accretive to EPS this year onwards. But beyond these financials and even more importantly, we expect this transaction to accelerate the long-term growth in PTS. Let me hand over to Daniel to recap on the playbook that has been so successful. Daniel Maguire: Thank you, MAP. So I just want to take a couple of minutes now to highlight how and why SwapClear has grown over the last 15 years, and touch on the opportunity we see forward in Post Trade Solutions. So through partnership, both through the shareholdings a number of our key members have held in LCH and the revenue share in SwapClear that continues, we have built a deep and wide global network that delivers significant value to all of its constituents. The scale shift in 15 years is extraordinary. The number of members, i.e., the banks has increased by 3.5x and the number of clients, i.e., the buy-side firms has increased by 200-fold, clearly demonstrating the network effect. Notional value registered per annum is up 10x at nearly GBP 2,000 trillion. And we have become the global destination of choice for interest rate swaps in all currencies for clearing. And this is why we are now inviting our partners into Post Trade Solutions, because we believe we can do the same again, but for the uncleared market. We built a near GBP 1 billion annual revenue business based on cleared OTC instruments across SwapClear, ForexClear and CDSClear, all of which are leaders in their markets and all of which are built on the strong foundations and the model of industry partnership. The uncleared opportunity is basically the same size as the cleared space. Our members and our clients want to manage the whole book in one place, bringing efficiency to their capital, the margin requirements and materially simplifying and standardizing processes. We are uniquely placed to do that given the assets that we've built and brought together under one roof and with our proven track record of delivering real value through long-term partnership. Acadia and Quantile give us collateral and margin workflow tools and compression tools, respectively. And SwapAgent and TradeAgent, both developed in-house, complete the current suite of services we call Post Trade Solutions. And we've got very good momentum to build on. Revenue in PTS is growing at double-digit pace. Volumes are up 70%, and the network is expanding at pace. So bringing these 11 major partners closer and giving them a role in shaping the business as well as a share in its growth sets us up for long-term success. I'll now hand back to David. David Schwimmer: Thanks, Dan. So just to recap, we have had another strong quarter of growth with year-to-date organic growth at 7.3% and all of our businesses performing well. We're executing at pace on our AI strategy of LSEG Everywhere as the AI partner of choice for financial markets data. And we are allocating capital effectively and proactively with an attractive strategic deal in Post Trade and a further big step-up in our buyback program. And now MAP, Dan, and I are happy to take your questions. Peregrine? Peregrine Riviere: Thanks, David. [Operator Instructions] And with that, I'll hand over to Pauly to manage the queue. Operator: Thank you, Peregrine. [Operator Instructions] And your first question comes from the line of Arnaud Giblat of BNP Paribas. Arnaud Giblat: Could I start with the Post Trade Solutions? So banks are paying over 50x EBITDA, 9x sales for their stake. Clearly, as you said, that comes with a significant commitment to put more business through that division. I'm just wondering, I mean, you gave a bit of detail, but if you could flesh out a bit more what sort of commitments, the time frames, what specific milestones we should be looking at for that business to grow, and what perhaps give us an indication of the potential size of that business in the medium term, from a revenue perspective? And my follow-up would be on the distribution agreements with third-party providers. Quite a lot going on there. I'm just wondering how we should think about this? Because clearly, there is a bit of a usage model you've talked about. So probably this increases significant usage and therefore, gives revenue upside. At the same time, if clients are accessing your data through a third-party vendor, then how does pricing in the long term look like if you're being -- I mean, if it interfaces somebody else? David Schwimmer: Thanks, Arnaud. Let me turn it over to Dan to answer the aspects of your first question. We're not going to get into a lot of detail on what the revenue looks like over the medium or longer term, but you can talk a little bit about how we're thinking about the construct. And then I'm happy to talk about the distribution agreements. Daniel Maguire: Okay. Yes. Thanks, Arnaud. Look, we're very strong believers in the industry partnership model, as you know. We've been using that, building that for a number of years on different services, and I think you can see the outcomes of that. Ultimately, we build core critical infrastructure for our major customers here over a long-term basis and around the basis of trust. So we're very, very pleased that we've got our major partners around the table with us and aligned not just on economics, but also on the product road map, the governance and the product adoption, of which we have a pretty high rate of adoption for all the products we build because of this model. I can't really be drawn on revenues. What I can point to is when you look at the -- which we shared in the slide that the gross market values, which essentially is a proxy for the scale of market risk and derivatives, if you look at the -- these numbers come from the BIS independent annual surveys, the gross market value is about [ USD 17.6 trillion ] and just over half of that is in the cleared space, but over half of that is in the uncleared space. So if you think about the level of risk of derivatives being transacted and risk transferred, they are very similar size. So we see the size of this opportunity very similarly as a result of that. And then in terms of milestones, we've got, as you can see from the press release, 11 major firms and important people at those firms making clear commitments to work with us to build out and deliver and adopt those services. So I can't be drawn on specific road maps and revenues today, but very confident that we've got the right support from the right firms and the right people. And the network is much bigger than those 11, and we've already got very good momentum in that. So pretty confident on that. David Schwimmer: And then your question around these partnerships or distribution arrangements. And the first point to make is that we've been doing this for years. And we have been providing our data through partners, and in some cases, as I mentioned, competitors for many, many years. And it's key when we do that, and this is a practice that we will, of course, maintain is that we protect our own relationships with our customers. And so in these kinds of partnerships, basically, the way they work is that although the initial origination of the relationship might come through one of the partners, the customer is then directed to us to establish the direct customer relationship with us. And we do that in a number of different situations and circumstances. So that protects us from being disintermediated through these kinds of arrangements. The other really important aspect that we're very focused on in these kinds of partnerships and distribution arrangements is protecting our data and making sure that our rights, our IP are protected even through any of these distribution channels. So obviously, the AI world is a little bit different, but we're still in a position to protect our data. And let me just give you one specific, I'll say, technical example. When we're distributing our data through an MCP server, because of that construct, we can control and monitor the access to our data. So in that construct, we're not at risk of a customer downloading all of our data, training their models on our data and then not needing us anymore. This MCP server construct allows us to control that in a very successful manner. So maintaining the relationship, protecting our data and data integrity, these are the kinds of relationships that we have managed very successfully for a long time, and it's great to see these new entrants and these new ecosystems, because we think it will actually expand the market and the customer base that we will be able to access our data. So we're really looking forward to this and excited about it. Operator: Your next question comes from the line of Andrew Lowe at Citi. Andrew Lowe: Thanks very much for the color on the revenue split by product in Workflow and Feeds. My question is on the Data & Feeds business. Specifically, how much of the historical revenue growth has been driven by pricing versus volume? Could you please also comment on the historical pricing trends across these different groups? So for example, it would be great to know how pricing growth in real-time data compares to the other segments, including the 10% from public data sources. And it would be great if we could hear a bit more about how much visibility you have on future pricing? And I've got a follow-up, but I'll wait until you've answered. David Schwimmer: Yes. Thanks, Andrew. So I'm not going to break it down product by product. But as we've been pretty clear over the last few years, you've seen our pricing yield on an annual basis be in that sort of 3% to 3.5% zone. And then you've seen our Data & Feeds business grow usually more than twice that. So that gives you a sense of what's going on here in terms of pricing relative to just volume growth. And we've been doing a lot of innovation in this area as well in terms of new products, new distribution channels as well. But hopefully, that gives you a sense on that. Andrew Lowe: Great. Okay. And then as maybe a follow-up to that. So are you seeing a pickup in demand for your tick history now that you've got sort of LLMs which are cheaper and more widespread? And how important is that when you're sort of selling your forward-looking real-time pricing data? David Schwimmer: So interesting question. and tick history, for everyone's benefit, is a great data set that we have that goes back to the '90s and has tick-by-tick history for millions and millions of securities and no one else has it. It was all public data when it was released by the exchanges, but we are the only ones who have stored it, maintained it and made it easily consumable. I would say the technological changes make it easier to consume and access now than it has been over the last 20-plus years. And we certainly expect to continue to see it being a very valuable content set. Historically, it has been mostly used by quant shops back testing their algorithms. But your question is a good one in terms of recognizing that with these models, you could see a lot more potential users accessing this huge data set to look for historical correlations and help that inform their trading on a go-forward basis. Operator: Your next question is from the line of Russell Quelch of Rothschild. Russell Quelch: I'd also like to focus these questions on the Data & Feeds business. Thanks for the extra disclosure on the revenue breakdown. So you disclosed that 55% of the Data & Feeds revenues come from pricing and reference services. And I believe you've gone from #6 player there to #3 player in the last couple of years, just behind ICE and Bloomberg. So my questions are, firstly, number one, how have you done that? And what's your view on the main points of differentiation in your offering, which is helping you to take share? My second question is, do you believe you can be a #2 player here? And if so, how? And the third question is a bit of a follow-on from Arnaud's question, but asked in a bit more of a direct way. Can you talk to your expectations of the size and cadence of the growth uplift from the recent and future data distribution partnerships that you mentioned relating to LSEG Everywhere? David Schwimmer: Sorry, can you say the third part again? Russell Quelch: Yes. Sorry, a bit of a mouthful. So I was thinking about the data distribution partnerships relating to LSEG Everywhere, both the current ones you disclosed and then you said about future partnerships. So I was wondering how we should think about the size and the cadence of the growth uplift that comes from those partnerships, both the ones that have been announced and potential future ones. David Schwimmer: Got it. Okay. So your first question, how have we moved from #6 to #3. It is investing in our content and investing in our distribution. And you have seen us over the last few years do a number of, I would say, pretty significant steps in a number of different areas. So for example, when we took on the Refinitiv business several years ago, it was very clear to us that, for example, talking to customers, they made it clear, fixed income evaluated pricing was a weak area. Corporate actions was a weak area. We have invested meaningfully in both of those areas and addressed those gaps, and we're now highly competitive in those areas. And so that has helped us move up the ranks. We have added new content in terms of a number of different areas, ranging from -- I guess, a good example is our inclusion of Dow Jones content alongside our exclusive Reuters News alongside thousands of other news sources. So constantly investing in content in a number of different areas. And then on the distribution side, over the last few years, we have made our content available through a number of different distribution channels. And whether that's in different cloud providers, whether that is -- there are some of our data sets, for example, they were only available in the U.S. for technology reasons. And we have now made those available on a global basis. So it's a number of things like that. But really, if I boil it down, content and distribution. Could we be #2? Sure. And we aim not to stop there. We're continuing to invest in this business. We have great data, great content, adding to that content, expanding our distribution capabilities. And then in terms of -- I'm not in a position to give you any specific guidance on the growth uplift. What I can say is that we're not done yet in terms of the different partnership arrangements. We think this is a really exciting time in terms of new ecosystems, new AI functionality that will provide lots of distribution opportunities for us. And as I mentioned earlier, into customer segments that might not have otherwise accessed our data. And for those customers that have historically accessed our data, this AI functionality enables them to access it in a, I'll say, a much deeper way. I mentioned earlier the 33 petabytes of data that we have. Historically, our customers have really only scratched the surface of the data and the content that we have. And the AI functionality is much more powerful in really consuming substantial amounts of our data. And then as we shift further down this road, we've talked in the past about evolving our model more towards usage-based and consumption-based pricing. So you put all that together, we are excited about what this opportunity holds. Russell Quelch: Okay. And maybe just as a follow-up to that, you've just seen S&P buy With Intelligence. You've seen BlackRock buy Preqin. You've seen MSCI buy Burgiss. So just wondering how you're thinking about your competitive position in private markets data? And is this something you might look to add inorganically to the offering? David Schwimmer: Yes. So we already have a lot of private market data, and that includes what we have ingested organically. It includes what we provide from Dun & Bradstreet. The Dun & Bradstreet data, by the way, currently available on the Workspace platform, but soon will be available through a feed, which I think is unique in the industry. We have our partnership with StepStone, which is enabling us to create, again, unique private asset product in our index business. And maybe the last thing I would say is we are not done in this space, and there's more to come in terms of our ability to provide incremental value-add and, in some cases, unique private markets data. So I can comfortably say watch this space. Operator: Your next question is from the line of Ian White of Autonomous Research. Ian White: Well, there's been a lot of discussion around the accuracy of general intelligence LLMs in financial services applications. And I guess sort of what advantage can you derive here from your privileged access to your own data when it comes to the training and development of more accurate models? Or kind of put differently, is it realistic that general intelligence tool can match a model that has been trained on your specific data set when it comes to generating accurate results derived from your data? That's essentially my main question. And just as a follow-up, on the Workspace rollout, which is now complete, what's the latest evidence you have regarding levels of customer satisfaction with Workspace versus the legacy desktop products, please? David Schwimmer: Yes. Thanks, Ian. So on the accuracy question, there has been a lot of discussion in the industry about a bunch of the product that is out there really maybe having some nice user interface, but not being remotely close to what this industry demands in terms of accuracy. And so I think that's probably right at this point for a bunch of the products that are out there that we have seen. We expect them to get better over time. I think in terms of our own approach, the advantage that we have is that we have the data. We have the highest quality and broadest data set that allows us to do the necessary training. It is scrubbed data. We're not training our capabilities on the Internet. And so we avoid the garbage in, garbage out problem that you see with a lot of these other models. And this gets back to the point I was making earlier that through the MCP server construct, we are able to control the access to our data. So we sometimes get questions from people worried about the fact that our data will be made too available and others will be able to, without compensating us, train their models on our data. That's not the case in terms of the way that we make this data available for AI usage or AI consumption. In terms of the Workspace rollout, we are very pleased with the outcome there, and this was a big exercise over the past couple of years. So we are seeing really good views on the simplicity, on the kind of change in the user interface, on the speed. And there are some aspects in terms of making some of the charting even better. There are a few different things that we're continuing to work on, as I mentioned earlier, sort of week in, week out. And this is going to continue. And it's one of the advantages of this product and the technology stack that we have moved on to. We've talked about how we've implemented 500 or so changes in each of the last 2 years, and that pace is continuing. So even though we have basically completed the migration, we still have more releases coming. I think we have 2 more releases coming, big broad releases coming this year. Yes, more coming early next year. So it's a continuous improvement exercise, which I think is a great opportunity to continue serving our customers better and better and better. Ian White: Got it. If I could just sort of playback and make sure I understood the first point. If anybody wants to sort of train a model on your data, that's kind of a licensable activity that you can kind of control through MCP and a model that's not trained on your data specifically probably won't be very effective or will be less effective than something that's been specifically curated for that purpose. Is that a fair reflection? David Schwimmer: I think that's fair. I don't want to claim that we have exclusive financial sector -- in other words, I don't want to claim that in the financial markets, we're the only ones who have financial markets data. There is other data available out there. Ours is the broadest, the deepest, the highest quality. And so we are in an advantaged position. But you've seen companies train their models on public data coming off the Internet. That's on the other end of the spectrum in terms of quality and accuracy. And then there are other data sets out there that you can use. They're just not as extensive and high quality as ours. Operator: Your next question is from the line of Mike Werner of UBS. Michael Werner: And just 2 questions here, one main one and then one follow-up, please. I was just wondering, I mean, you talked a lot today and very helpfully about the new partnerships and LSEG Everywhere. Just stepping back and when we think about the partnership with Microsoft and OpenAI and what you guys are doing there, what's the level of that engagement today versus 12 months ago? I think you used to talk about the number of software engineers that were operating on site on LSEG's premises that came from Microsoft. I was just wondering if you can give us an update there. And then as a follow-on to a couple of my colleagues' questions. When we think about these partnerships, particularly with the new ones with the AI engines and AI partners, is there any delta or any difference in how you think about the pricing? I know you said you protect the IP, but when you're thinking about these new partnerships, is there any change in the way that users who want to consume that data, would they see any difference in pricing than your traditional customers? David Schwimmer: Yes. Got it. Thanks, Mike. So in terms of our partnership with Microsoft, if anything, the level of engagement is higher, and I would say meaningfully higher today relative to where we were a year ago. I know what you're referring to. We've talked in the past about having hundreds of our people embedded with their teams and vice versa. That continues and, if anything, higher level of engagement. And we talked today about a few other things that the market hasn't really focused on, but that we're building with Microsoft, our Autex Routing Network, our Digital Market Infrastructure. These are not the areas that the market has really focused on, but we are actively building them with Microsoft. And then, of course, our Data as a Service, our analytics, Workspace being embedded in Teams, all the interoperability with Excel and PowerPoint. We have lots of teams working across a lot of different areas with the Microsoft team. So couldn't be happier about the level of engagement there. And then just with respect to the pricing, in some cases, it's really simple. So for example, we talked about the partnership with Rogo. If you want to access our data in Rogo, you have a Workspace license. It's very straightforward. It can be a little less straightforward if we are providing our data sets, our Data & Feeds data sets through some of these channels, but we have standard pricing for a lot of these. There may always be some negotiations around particular data sets or things like that, but we have standard contractual arrangements for these and standardized pricing for these. Operator: [Operator Instructions] And your next question comes from the line of Hubert Lam from Bank of America. Hubert Lam: I've got a couple of questions. Firstly, on D&A, how should we think about revenue acceleration in the next year? So just given the upward momentum on ASV, should we think 6% or more could be achievable for revenue growth in D&A next year? Second question is, I guess, last results, there was concerns about intensifying pricing competition from a couple of your biggest competitors. Just wondering if you've seen any normalization in terms of pricing? Or was the competition we saw a few months ago a bit of a one-off? David Schwimmer: Sure. MAP, why don't you take the first question? I'm happy to take the second one. Michel-Alain Proch: Yes, sure. So on D&A, we indeed forecast a revenue acceleration next year. We haven't given precise numbers, but we have given one precise number, which is for our subscription business altogether, reaching 6.5% -- circa 6.5% next year. And obviously, D&A in this number is playing its part, and it will be accelerating '26 and '25. David Schwimmer: And then on your second question, Hubert, first, just to remind people, when we talked about some of the competition dynamics at the half year, that was a very small number of cases, a couple in each of the different business areas. And I would say where we are today, we're not seeing that kind of dynamic. It feels a very stable market environment at this point from a competition perspective. Operator: Your next question is from the line of Ben Bathurst of RBC Capital Markets. Benjamin Bathurst: My questions are on Post Trade. Firstly, could you help us better understand how interrelated the 2 transactions announced this morning are, if at all? For instance, how different is the list of the founding members of SwapClear from the investing banks in Post Trade Solutions? And then secondly, how significant is the decision to extend the revenue surplus share from 2035 to 2045? Was there always a presumption that, that would be extended? Or was that kind of an incremental sweetness in the deal? Daniel Maguire: Thank you. Yes. So in terms of the construct of the overall deal, there are 13 banks involved in the swap business today. And in the investment in PTS, there are 11 investing banks, just to be clear around that. Decisions to invest in the new business ventures very much down to sort of individual circumstances of each of the banks there. So not really appropriate to speak on behalf of those in the 13 that aren't in the 11. But what I'll say is super strong engagement across the industry, level of participation in this and interest is very material from all the material players there. So we're very, very happy with that. And in terms of the extension that you asked about, yes, I think may be different opinions on whether that would have been extended or not, but the fundamental point is this is something that's been in place since 2001. We're here in 2025. It was rolling to 2035. And as part of the overall structure, those 11 banks that are investing in PTS will be extended for a further 10 years to 2045. So a 44-year enduring partnership between the major players in the OTC derivatives space on the sell side with ourselves there. So I think it's part of the overall construct rather than breaking it down into the exact sort of elements of the negotiation. Benjamin Bathurst: Okay. Great. So if I understand it rightly, it's just those that are participating in Post Trade Solutions that will have the extension for 2035 to 2045? David Schwimmer: That's correct. Daniel Maguire: And just to be clear, '25 to '35 remains already existing 13. So existing 13 until the maturity of the existing arrangement and the extension of 10 years is to the 11 that are also investing in the Post Trade Solutions franchise business. Operator: Your next question is from the line of Julian Dobrovolschi of ABN AMRO. Julian Dobrovolschi: I have 2. Maybe the first one regarding the Microsoft product development such as Open Directory and Analytics API and some other things that you're trying to roll out together with Microsoft. Just wondering, are they offered broadly across all the tiers or restricted to premium users and as such as an upsell vector? And then the follow-up is on ASV growth. Just wondering how confident are you regarding the, let's say, reacceleration of this in the Q4? I think you've been hitting towards 5.8%. And can you please elaborate on the impact of the UBS multiyear contracts and the Credit Suisse revenue crystallization? And perhaps if you can see some leading indicators suggesting a bit of a rebound in ASV growth in the Q4. David Schwimmer: Thanks, Julian. So I'll take your first question, and MAP can touch on your question on ASV. So on each of these different products, some of them -- the different products that we have built in partnership with Microsoft, some of them are separate products that have separate pricing, separate licenses, separate arrangements. Some of them are embedded in existing products. And so if we talk about Open Directory and we talk about what's coming in Workspace, you'll see us charge for that over time really through price realization in the core product. I think then in some of the products that we have rolled out in analytics, the Analytics API, for example, that's a new product, and there's separate charging for that. And we've seen some of that in the uptick in the growth rates in analytics, for example. And let me just -- I'll mention one other example where you can see this very clearly. The arrangement that we announced with Microsoft 1.5 weeks, 2 weeks or so ago, where we are making our data -- we are making some of our data sets available to all users of Microsoft Copilot. So if you have a Copilot license, you can be outside the financial services sector, you have a Copilot license and you're doing something in Copilot, you will get access to certain of our data sets. And that's an arrangement that we have with Microsoft. And then we have other data sets that you can license directly with LSEG and then have access to them through Microsoft Copilot and Copilot Studio, if you are building, for example, agents using our data. So that gives you an example where some of them are embedded -- some of the pricing arrangements are embedded in existing products. Some of them are new, and we are charging incrementally for them. Let me turn it over to you, MAP. Michel-Alain Proch: Yes, sure. So first of all, before addressing your question, I'd like to point out that we have outperformed our previous guidance on ASV. And remember, in H1, we were expecting that the Q3 ASV would fall to 5.4% with 40 bps of impact of UBS. So excluding UBS 5.8%, so comparable to Q2, and we posted 5.8% in Q2, 5.4% was what we were expecting in Q3. We actually outperformed this to 5.6%. So ex UBS, 6%, an acceleration from the 5.8% we were at the end of Q2. And when I look forward for the end of this year, we're very confident into accelerating again to 5.8%. And here, it's the same thing. It's 5.8%, including of the 40 bps for UBS. So actually, excluding it, 6.2%. So 5.8%, 6%, 6.2%. That's basically the message today. Operator: Your next question is from the line of Enrico Bolzoni of JPMorgan. Enrico Bolzoni: I wanted to ask you, you now revised your EBITDA guidance a couple of times, even excluding the newly announced deal. So I just wanted to ask you, what are you doing particularly well or better than you expected that basically drove the consecutive revision in guidance? So that's my first question. And partially related to that, just some small clarification. So one, you are clearly now spending just over GBP 1 billion to in-source this additional revenue from SwapClear. Can you just clarify whether this will be capitalized and whether the amortization of that will be above or below the line? So that's one question. And another related question to numbers. You're clearly issuing some debt, you're guiding for EPS accretion in 2025. What about 2026? I know you talked about margin expansion for EBITDA in 2026. Can we say that we will also see a similar EPS uplift for next year? Michel-Alain Proch: All right. So I begin with EBITDA margin. So yes, just to remember for maybe those of you who didn't see it, we began with 50 to 100 bps of EBITDA margin guidance for this year, we then improved it to 75 to 100 bps. And finally, we are now confident to reach 100 bps. It's really an acceleration. So what we have implemented in the last 2 years at LSEG is a full cockpit of cost discipline, addressing all the different components of our cost base. So mostly people, we're talking a lot of people, obviously, but it's true for cloud costs, on-premise costs, travel expense and so forth and so on. And basically, this acceleration is coming from the fact that what we have put in place is more efficient and is producing more results and quicker, if you want, than what I expected at the beginning of the year. The second reason, which is maybe -- so that's an acceleration. Second reason which is more structural is -- and maybe you remember what I was telling you at the earnings of 2024, the different automation solution that we have put in place at different places in the company. So in QAS, meaning our customer service, in our content ingestion, we were putting it in place, and I was expecting to see the first materialization into savings next year. And actually, it's happening as early as this year. So that's the combination of the 2. Now to answer your second question about the GBP 1.15 billion, that represents the alteration of the SwapClear revenue share. So we're considering this as an acquisition. So we are creating an intangible asset exactly as we would do as a traditional acquisition. And we are going to amortize it over 10 years below the line as the rest of our acquisition. And then your final question, which is the accretion. So accretion of 2% to 3% in 2025, because I want to be clear on the fact -- I hope I was clear in my script that this revenue share alteration is retrospective to the 1st of January of '25, okay? So it means that we benefit from the full accretion in terms of EBITDA margin that I have mentioned of 100%. And in terms of EPS taking into account the financing cost. We said 2% to 3% in '25, and we'll have pretty much the same thing, 2% to 3% in '26. Operator: And your next question is from the line of Tom Mills of Jefferies. Thomas Mills: I think we've skirted around it a few times on the call. I just wanted to clarify that you are sort of reiterating you're expecting to deliver around 3.5% price increase on the 1st of January is kind of [indiscernible]. Michel-Alain Proch: Absolutely. Absolutely. We've just sent -- the price letter was sent in September. On the basis of the first reaction from this price letter and our experience, we are confident we will derive the same type of yield around 3.5% in '26 as the one we had this year in 2025. Operator: And your next question is from the line of Oliver Carruthers of Goldman Sachs. Oliver Carruthers: Oliver Carruthers from Goldman Sachs. Thanks for a lot of the incremental KPIs around D&A. I just have one quick modeling question on the FTSE Russell subscription revenues. I think you're calling out the more modest growth in subscription growth here in Q3 was to do with this mandate renewal cycle that you think is going to normalize next year. So just what's reasonable to assume in terms of the pickup in growth rate? I think you're running at around 5% on a constant currency basis year-over-year for Q3. And the reason I ask is if we go back to 2024 levels of around 10%, on my math, this adds something like 70 basis points to your ASV. So just any parameterizing of that would be very helpful. David Schwimmer: Yes. Thanks, Oliver. So you're right. This year, a much quieter period in terms of renewals during which we would typically see incremental revenue associated with either regular price rises or bigger, broader business relationships and broader engagement. I think hard to give you specific numbers as to what that's going to look like in '26 and beyond. You've seen how this business has performed in years past in that kind of higher than mid-single-digit zone. So I think I'm probably pretty comfortable, and MAP, feel free to weigh in here as well. I think we're pretty comfortable in that zone, but I don't want to be giving you any sort of specific guidance on what that looks like at this point. Operator: And there are no further questions on the conference line. I will now hand the presentation back to David Schwimmer, CEO of LSEG, for closing remarks. David Schwimmer: Great. Well, thank you all. Thanks for joining us today. As I said upfront, a little bit more substance in this one rather than a typical Q3 update. We hope you all have found it useful. And if you have any questions, you certainly know where we are. We'd be happy to take any further questions through Peregrine and the team. Thanks again.
Torbjorn Skold: Welcome, everyone, to BONESUPPORT's Q3 2025 Results Call. My name is Torbjorn Skold, and since September 1, I'm the CEO of BONESUPPORT. With me here today is our CFO, Hakan Johansson. And together, the 2 of us will use the next 25 minutes to guide you through the Q2 report and then open the line for any questions. Before starting the presentation, I would like to draw your attention to the disclaimers covering any forward-looking statements that we will make today. Next slide, please. So let's look at the financial and operational highlights from the quarter. Q3 was another strong quarter with solid execution across the business. Net sales came in at SEK 294 million, corresponding to a growth of 24% versus Q3 2024. Sales growth at constant exchange rate was 34%, showing that there is continued strong currency impact on our figures for the quarter. Our operating results, excluding incentive program effects, was SEK 79 million, corresponding to an adjusted operating margin of 27%. Reported operating results was SEK 65 million, and we saw strong cash generation with operating cash flow reaching SEK 71 million, leading to a cash position at the end of the quarter of SEK 379 million. One highlight in the quarter was the publication of the long-awaited CeraHip study, which now kicks off our market penetration efforts in this market segment, revision arthroplasty. We will look deeper into this later in the presentation. We continue to see strong traction for CERAMENT G in the U.S., where both new accounts and increased use among current users contributed to the strong progress. CERAMENT G sales in the U.S. reached SEK 192 million for the quarter. Furthermore, the proposed NTAP for CERAMENT G in open trauma has now been decided upon as well as a 6% general increase in CERAMENT relevant DRG codes by CMS for orthopedics. So all in all, an eventful and successful quarter. As I've transitioned into my new role and reflect on the business, I find our strategy sound and that the business develops very well. What really stands out is the solid evidence base supporting the CERAMENT platform and the significant long-term opportunity of CERAMENT globally in several clinical segments. This spring, we're planning to host a Capital Markets Day, where we'll share a structured overview of our key initiatives and our path forward. We'll follow up with more details on the official dates later. Operator: This is the moderator speaking. We are having some technical issues, but we are going to try to get the speakers back as soon as possible. [Technical Difficulty] Håkan Johansson: So the speakers have connected again. Can the moderator please confirm whether the sound and technology is up again. Operator: Yes, everything is great. Håkan Johansson: Thank you very much. Torbjorn Skold: Thank you, moderator. Moderator, can you please inform us how long did you listen to us? Operator: We came to -- you were at like the third slide in the third quarter report. Torbjorn Skold: Okay. I assume that we have gone through Slide 3, and we move over to the sales development. This chart shows the last 12-month sales in Swedish krona by quarter since 2019 in stacked bars by region, by product category. As you can see, the launch momentum for CERAMENT G in the U.S. is exceptionally strong. However, in the last 2 quarters, we've seen strong influence from the U.S. dollar to Swedish krona depreciation. Last 12 months growth in Q3 of 37% in the graph corresponds to an even stronger 41% at constant exchange rates. So most of this quarter-over-quarter slowdown in last 12 months' sales is due to the strong currency impact. CERAMENT BVF last 12 months dropped 2% year-over-year in constant currency. In total, antibiotic eluting CERAMENT grew with 59% last 12 months in the quarter in constant currency. Next slide, please. In U.S., sales amounted to SEK 246 million, representing a growth of 40% at constant exchange rates. There was some general variability during the quarter due to the usual stop and go dynamics, a reflection of the strong pace of new customer recruitment over the past 6 to 8 months. As part of our mission to modernize an outdated standard of care in the U.S., we have successfully opened one market segment after another. We started with foot and ankle, then we followed with trauma, and now we're moving into revision arthroplasty. Revision arthroplasty and the subsegment of periprosthetic joint infections are areas we have not specifically focused on in the past. Each year, approximately 1.5 million primary joint replacements are performed in the U.S. with just over 70,000 revision procedures requiring bone graft. The CeraHip results are groundbreaking. Although the study is not very large, patients have been followed for an average of 3.3 years with no infections reported. I'll speak more about CeraHip on the next slide. We have expanded our U.S. organization, and we plan to recruit additional team members with specialized expertise in revision arthroplasty to support the market entry and the medical education programs. We are expanding our presence in the market to introduce CERAMENT BVF for use in spinal procedures in Q4 2025. Several distributors are now in place to begin engaging with spine surgeons. Some of these distributors are already our partners today on the extremity side, while others represent new collaborations. The spine segment is new for us, and we will begin generating clinical data during 2026 to establish a foundation for further market penetration. We have also made strong progress in evaluating and preparing the regulatory pathway for introducing CERAMENT G into the spine segment. We have reached a stage where guidance from the FDA on the regulatory path is required. We plan to meet with the FDA at the beginning of 2026. The path forward will be shared and communicated at the Capital Markets Day this spring in 2026. The team have been working diligently with assembling data in reply to FDA's question on CERAMENT V, and we expect to send in the supplementary data pack in November. The material relates mostly to clarifications and making sure that the evidence is presented in the way that FDA wants to have it. Being a pioneer technology, there is no template as how to bring forward the evidence. The thoroughness of the process testifies to the rigor of solid data required to qualify a product into the unique category of antibiotic eluting bone graft. And we should remember that this category is defined by another CERAMENT product, namely CERAMENT G. So let's turn to Europe. Next slide, please. Sales performance in Europe continues to be influenced by the same dynamics observed in Q2. The third quarter typically shows some volatility due to seasonal factors. Additionally, the contraction and disruption in Germany have persisted as anticipated. Sales in EUROW came in at SEK 48 million, representing 5% year-over-year growth and 7% at constant exchange rates. Hybrid markets in Southern Europe, Australia and Canada are performing strongly. We're beginning to see positive traction from the investments made during the first half of 2025, reflected in improved sales performance. In the U.K., the previously announced prioritization of hip and knee surgeries is gradually restoring procedure volumes, which bodes well for the future of BONESUPPORT in U.K. However, the pace of recovery varies by region and is largely dependent on staffing levels. During the quarter, the European Bone and Joint Infection Society held its annual meeting. Several podium presentations and posters highlighted the efficacy of CERAMENT G and CERAMENT V in single-stage procedures and demonstrated improvements in patient outcomes. A poster presentation by Dr. Meller from Charite showcasing results from the CeraHip study attracted significant interest and a large audience. We'll review the detailed findings from the now published study on the next slide. Also, Professor Ferreira from University Hospital, Stellenbosch presented results from his study involving 103 trauma patients with bone infections. These patients were treated with a single-stage procedure using CERAMENT G or CERAMENT V. After an average follow-up of 11 months, 96% remained infection-free and no amputations done. [Technical Difficulty] Operator: Sorry for having some technical issues again. The speakers will be back as soon as possible. Torbjorn Skold: Annual Meeting of the American Association of Hip and Knee Surgeons, AAHKS in Texas, which last year attracted over 5,100 participants. In fact, our U.S. team is actively preparing for the event at this very moment as it kicks off today. Now I'll leave a deep dive into the numbers to Hakan. Hakan, please. Håkan Johansson: Thank you, Torbjorn. And again, sorry for what seems to be a day of technical disruptions and hopefully, now the -- everything stabilizes. So into the financials. Well, net sales improved from SEK 237 million to SEK 294 million, equaling a growth of 24% reported sales growth of 34% in constant exchange rate. Torbjorn has already spoken about the solid performance in especially the U.S. and the major drivers behind the sales growth, but as the weak U.S. dollar somewhat hides a continued strong trajectory in the U.S., I would like to share the U.S. sales performance in U.S. dollar. This slide shows the quarterly sales in the U.S. and U.S. dollar with continued solid performance quarter-to-quarter. The growth in dollar in the quarter of 40% should be viewed in perspective of volatility on BVF sales being 1.7% below same quarter last year, whilst CERAMENT G continued to show solid performance with a growth of 59.2%. The contribution from the U.S. segment improved with SEK 31.9 million and amounted to SEK 111.2 million. The improved contribution relates to increased sales after the effect from increased costs. Sales and marketing expenses during the quarter amounted to SEK 123.6 million compared with SEK 102.6 million previous year, of which sales commissions to distributors and fees amounted to SEK 84.2 million compared with SEK 65 million in the same quarter last year. From the lower graph showing net sales as bars and gross margin as the orange marker, it can be noted that the gross margin remained stable and strong around 95%. In Europe and Rest of World, a contribution of SEK 12.5 million was reported to be compared with SEK 15.6 million previous year. Sales and marketing expenses increased with SEK 4.6 million, including SEK 2 million related to the previously communicated commercial investment in the EUROW booster program. From the lower graph and orange marker, the minor drop in gross margin is noted mainly impacted by market mix. The flat selling expenses compared with the same quarter previous year is due to a depreciated U.S. dollar, but also an effect of seasonality. As mentioned previously, the quarter also included SEK 2 million related to the EUROW booster program. R&D remained focused on the execution of strategic initiatives such as the application studies in spine procedures and the market authorization submission for CERAMENT V in the U.S. These initiatives have been progressing well during the quarter and, among others, leading up to the launch of our product, CERAMENT BVF in spine later this year. And administration expenses, excluding the effects from the long-term incentive programs, remain on a stable level. The reported operating result amounted to SEK 65.4 million despite unfavorable currency effects totaling SEK 5.7 million, and I will come back to this in a following slide. The newly introduced tariffs in the United States are not expected to have a material impact on cost in 2025 due to high safety inventories. The full effect of the current 15% tariff equals a 0.8% impact on U.S. gross margins and will come gradually with full effect from 2027. The difference between adjusted and reported operating results are costs regarding the long-term incentive programs amounting to an expense of SEK 13.2 million in the quarter compared with SEK 7.3 million previous year, as you could see from the previous slide. Cash conversion remains solid with a fifth consecutive quarter with strong cash flow and an increase in cash during the period with SEK 69.3 million. Despite unfavorable currency effect with this report with a strong adjusted operating result and a solid cash flow, we continue to confirm a strong operating leverage and the business scalability. During the period, the Swedish krona has continued to strengthen against the U.S. dollar. Other operating income and expenses, therefore, contain foreign exchange gains and losses from the translation of the group's assets and liabilities in foreign currency, amounting to a negative SEK 5.7 million. Simply put, the negative SEK 5.7 million is mainly driven by the operating assets in the U.S. such as inventories and trade receivables. These are originally valued in U.S. dollars and at quarter end translated into a much stronger Swedish currency versus last quarter. The graph on this slide shows with the gray bars how the relationship between the U.S. dollar closing rate and the Swedish krona has varied over time. This is read out on the right Y-axis. The blue dotted line read out to the left axis shows reported adjusted operating results. The adjusted operating result, excluding translation exchange effects is the orange line. To explain this, in Q4 2024, the U.S. dollar to SEK was above SEK 11, which gave a positive effect of SEK 20 million in the quarter. And therefore, the blue dotted line is above the orange line. In Q1 2025, the U.S. dollar to SEK rate was SEK 10.02, creating a negative impact of SEK 30 million. In Q2, the U.S. dropped down to SEK 9.49, creating a negative impact of SEK 11 million and in Q3, continuing down to SEK 9.41 with a negative impact of SEK 5.7 million, meaning that the blue dotted line dropped below the orange line for these 3 quarters. The orange line eliminates the translation exchange effects and gives a more comparable view of the underlying trend in operating profit. In the table below the graph, you can see the FX adjusted operating margin of close to 29% in the period compared with 23% in the same quarter last year. And with this, I hand back to you, Torbjorn. Torbjorn Skold: Thank you, Hakan. And if we take the last slide, so to summarize Q3 2025 for BONESUPPORT, sales grew 34% in constant currency, reflecting steady and consistent progress. Adjusted operating margin reached 27%. Cash flow remains robust, underscoring the health of the business and its scalability. With the publication of the CeraHip study, strong endorsement from leading surgeons at Charite and detailed procedural guidance for using CERAMENT in revision arthroplasty, we're unlocking a new avenue for market expansion. This marks a significant step forward in our ongoing mission to transform the standard of care. We maintain our guidance on sales growth above 40% in constant exchange rates for full year 2025. And to conclude, my first period at BONESUPPORT has been as rewarding as it has been intense. I'm convinced that the most exciting part of our journey still lies ahead. And as I said, to provide a clearer view of what that journey will look like, we will host a Capital Markets Day in the spring of 2026. Lastly, again, apologies for the technical issues that we've had during the call, but now we're happy to open the line for any questions that you might have. Thank you. Operator: [Operator Instructions] The next question comes from Erik Cassel from Danske Bank. Erik Cassel: Yes. So India has probably cut out 70% of what you said. So you have to excuse us if we repeat some stuff. But first, I just want to confirm the sales level for CERAMENT G in the U.S. Was that USD 19.9 million in, 59% organic growth? Or is it a completely different figure? Håkan Johansson: Again, as commented, CERAMENT G reported a 59% growth. Erik Cassel: Okay. Good. First, I then want to ask, what are you seeing for trauma now during the initial 3 weeks of NTAP for CERAMENT G in the U.S. Håkan Johansson: Again, as communicated previously, what we see is a slightly different market dynamics than what we experienced launching into when there is a bone infection. So when there is a bone infection, the surgeon was looking for treatment options and CERAMENT G fitted very well. With trauma surgeons, it's a bit of a timing issue. We meet the trauma surgeon and the trauma surgeon haven't had a patient coming back with a bone infection during the latest weeks or months, et cetera. It's a harder call to convince the surgeon to try a new product. However, if the surgeon had had a bone infection lately, it's an easier call to convince the surgeon to start trying. So what we see confirms what's been previously communicated. It's a big market potential in trauma, but market penetration to start with will be somewhat slower than when there is a bone infection. Erik Cassel: Okay. But just specifically on the NTAP, you haven't seen that in and of itself accelerate uptake anything? Håkan Johansson: Again, the NTAP, Erik, is valid from 1st of October. So it's too early to see whether this has any impact in the penetration of the trauma segment. Erik Cassel: Okay. And then U.K. down 5.5% year-over-year. Germany, you said was worse. Is it possible to give any sort of more specific numbers on how bad Germany is doing and sort of how much that represents of the European sales? Håkan Johansson: Again, we have always been precautious to disclose exact numbers on geographic level. But again, if there are structural challenges... Operator: Speakers have been disconnected again, but if you have to stay on the line, I hope they will. Erik Cassel: The speakers was not disconnected. We heard them. Håkan Johansson: So do you hear us now, Erik? Erik Cassel: Yes, I hear you loud and clear. Håkan Johansson: Thank you. So again, some of the challenges [Technical Difficulty] Erik Cassel: Okay. Now I don't hear the speakers. Operator: Yes, a second, we're trying to fix the connection problems. Håkan Johansson: So dear moderator, where are we now in terms of technology? Because it feels like things are going silent. Operator: Yes. Now you came back. So maybe, Erik, can you repeat your last question, so we can go back from there. Erik Cassel: Yes, sure. It was on Germany. U.K. down 5.5%. You said Germany was worse. And I asked for if we could add any more color on Germany. How much is it down? And how big is Germany in terms of Europe sales? Håkan Johansson: Well, Germany is our second biggest market. So of course, when we have a setting in a market like Germany, it impacts on the totals. Erik Cassel: Okay. And then just lastly, do you have any visibility on U.K. and Germany coming back? You're saying that you're seeing a gradual, say, recovery in the U.K., but when can you be back to sort of normal levels or normal growth rates in those markets, do you think? Håkan Johansson: Again, what is impacting in the U.K. is that U.K. is a market where a substantial health care backlog is impacting hospital priorities. Already before the pandemic, there was patients -- 5.5 million patients in queue that has increased to 8 million patients. And the political priorities has started to recruit or reduce that queue, but still from a very high level. So again, we will be fighting against hospital priorities from time to time. But in the environment, we start to see that patients that have been waiting for surgeries where CERAMENT G is a good fit are gradually coming back. But as Torbjorn said in the call, it will probably be a slow process for the market to return into a normal and steady situation. Operator: The next question comes from Viktor Sundberg from Nordea. Viktor Sundberg: I have 2. So I guess it's not your main product in the U.S., but I just wanted to dig into the BVF product in the U.S. a bit. We've seen a negative trend in the U.S. for that product here for a couple of quarters. I just wanted to understand a bit more what is driving that and how to extrapolate that negative growth we see at the moment into the coming quarters and into 2026. And then I have another question. Håkan Johansson: Again, I think that it's 2. Again, as you said, we've seen that the BVF has been soft in the latest quarters, but also then showing volatility with a few quarters where we have good BVF sales. And we see that when we look at sales and hospital levels that there is an underlying volatility in the volumes. What we also see, and this is important for the longer term is that with the extending customer base and with surgeons recruited thanks to CERAMENT V, we also see these surgeons starting to use BVF in such cases where there is a controlled infection risk, et cetera. So we remain with a belief that all the time, BVF will stabilize and BVF will, like we've seen in Europe, deliver a small organic growth, but the main driver will be our antibiotic eluting products. Viktor Sundberg: Okay. And just looking into 2026, if we see substantial cuts to Medicaid as part of the One Big Beautiful Bill Act, even if you're not particularly relying on Medicaid directly, I guess, hospitals could see an increase in uncompensated care and maybe strained overall budgets due to this. What's your thinking around how hospitals will look at CERAMENT G as it carries a bigger upfront costs? Our feedback just by speaking to some orthopedic surgeons is that price is the main barrier for wider adoption of CERAMENT G in the U.S. And I'm just thinking that if major cuts to Medicaid will materialize in 2026, hospitals might focus even more on price next year. But I just wanted to understand how you plan to mitigate some of those budget headwinds, I guess, for next year. Torbjorn Skold: Yes. No, I'll start and then Hakan can fill in. So I think the plan to mitigate that is just to follow the BONESUPPORT strategy where we focus on evidence. And I think it was very interesting to listen in on what was discussed and presented at European Bone and Joint Infection Society. And it's very clear from those presentations and the discussions that are ongoing, and it's similar also at OTA that happened last week, which is a big trauma meeting in the U.S. is that it's very clear that there is a paradigm shift in the market in orthopedics going from long systemic antibiotic regimes in orthopedic surgeries to move to shorter, if any, systemic antibiotic regimes and combining that with local antibiotics with, for example, CERAMENT. So that paradigm shift is happening. There is clear evidence already now on the market. The topic is clearly highlighted. And more evidence will come in the future, partly by BONESUPPORT and CERAMENT and partly because the market moves in this direction. So I think it's nothing new really. It's something that has been happening. It will continue and our plan to address this is just to focus on the strategy, continue to build really, really strong clinical and health economic evidence and make sure that, that evidence is right and center, not just in front of orthopedic surgeons, but also the other decision-makers that play a role in those conversations. Anything to add, Hakan? Håkan Johansson: No, I think you covered it quite well. And again, the pricing is something we meet as part of the dynamics that we have referred to. And we have hospitals that are becoming frequent users and hospital administration noticing that this drives a certain level of costs. But so far in those discussions, when we come with strong clinical evidence and health economic evidence, this is discussions that we're able to handle through. So we're confident in the evidence around the technology and the difference to standard of care it represents. Operator: The next question comes from Mattias Vadsten from SEB. Mattias Vadsten: I have 3 questions. I think I'll take them one by one. First, I think quite confident wording around Q4, if I read it correctly. You also reiterate guidance of at least 40% sales growth. This require a quite strong finish to the year, I guess, very close to 40% organic sales growth at least and an acceleration quarter-over-quarter. So just what brings this confidence? And yes, if you have any further color on sort of how the start of Q4 have looked for you? That's the first question. Torbjorn Skold: Sure. I'll start with that more from a, let's say, tactical operational side and then Hakan can hopefully back it up in the numbers. So as we reviewed both the U.S. business and as we've reviewed the EUROW business in detail and the outlook for the quarter, the fundamentals look very strong from my view in terms of the number of accounts that we have, the penetration in the accounts whether we are increasing penetration or losing penetration. So I feel very confident in the numbers on an account level and regional level that we've gone through. I think also very high level, and Hakan will speak to this also, if you look at the comparables Q3 versus Q4, that also gives me more comfort in the numbers. So yes, I feel pretty confident in hitting that guidance that we've provided with 40% sales growth above prior year on a full year basis in constant currencies. Hakan? Håkan Johansson: Again, I think you covered this quite well, Torbjorn. And again, to bear in mind that if we look at the U.S. dollar -- sales in U.S. dollars, for instance, in the U.S. Q3 to Q4 last year, Q4 was a bit soft after a strong Q3 and then followed by a strong Q1, et cetera. And with the momentum that we have and again, we believe that Q3 somehow gives us a lot of confirmation in that underlying momentum, we are confident that we [Technical Difficulty] Mattias Vadsten: I can't hear Torbjorn or Hakan anymore. Operator: Yes, just a second. We're trying to fix the issue here. I hope they will be back at us soon. Håkan Johansson: Moderator, do you hear us now over a mobile line instead of over the Internet? Operator: Yes, now I can hear you. Mattias Vadsten: I can hear you, Hakan. I heard the full answer from Torbjorn and I heard, I don't know, the first sentences from you, Hakan. Håkan Johansson: Okay. So what I said is that when we look at, for instance, the U.S. in U.S. dollars, last year, Q3 was strong and Q4 was a bit soft. And with the underlying momentum we see in the U.S., we see good opportunities to be well in line with the target we have set for the full year. Mattias Vadsten: Okay. That's perfectly clear. Then I have 2 more. So the next one is the revision arthroplasty segment. I mean, as you said, quite supportive data to say the least. Sort of what are the sales volumes of CERAMENT in this segment today? And could you talk about what you think is required to sort of achieve a meaningful uptake in this segment? Torbjorn Skold: Sure. So I think it's fair to say that currently, this is a segment that where CERAMENT, we've had -- it's been on label. It's been on label in the U.S., and it's been on label in Europe. But at the same time, without clinical evidence, very few orthopedic surgeons will pick it up. That's just how orthopedics works. Now over the last couple of years, the team has worked with Charite, which is, I would argue, top 3, top 5 hospitals in the world when it comes to revision arthroplasty. They've done a study and to be frank, the results could not have been better. So that's the first important step. But to answer your question, our sales in this segment, I would argue it is very, very limited. There is some, but very limited. And I think the potential, if we look at the number of procedures that are done in revision arthroplasty in general and specifically in periprosthetic joint infection, which is going to be our primary focus area. Those are pretty considerable volume numbers that we have at hand. And what is required is, of course, that we have a sales force that is in front of the customers that are in the ORs talking about this and that we promote the evidence and the application techniques that we already have today. But also, let's be frank, we will continue to invest in education. We will continue to invest in further evidence in this space. And this is work that we've kicked off, and that's something that I foresee will continue for several years ahead because this is such an interesting and important segment for us strategically for many years. Mattias Vadsten: Very clear. Then I have a final one. I think it will be quite quick. If you take away the effects of incentive program and sales commission costs, the OpEx look a bit low, I would say. I know quite substantial FX effects year-on-year, but I think down SEK 5 million versus Q2. So question is, is this just usual seasonality? Or is it anything you would mention here, Hakan? Håkan Johansson: It's primarily that relates to normal seasonality in outside the U.S., people tend to have vacation and during vacation period, there's a lower level of activities, et cetera. So just normal seasonality. Operator: The next question comes from Kristofer Liljeberg from Carnegie. Kristofer Liljeberg-Svensson: Three questions. First, just a follow-up on the previous one on implant revision. Is this something you think will start to generate revenues for you already in 2026? Or will that be later? Torbjorn Skold: On revision arthroplasty? Kristofer Liljeberg-Svensson: Yes. Torbjorn Skold: Yes. I mean it will generate revenue in Q4 this year. And it will, for sure, generate revenue in 2026. If it doesn't, then we do something fundamentally wrong. Kristofer Liljeberg-Svensson: Okay. So -- but do you think you could see a faster uptake in this indication than for open fracture trauma, for example? Torbjorn Skold: So really good question. And I don't have any solid data points on that because of my somewhat limited history in BONESUPPORT. But if you think about the segments and how surgeons generally work and how they take decisions and you compare revision arthroplasty, which is an elective procedure and trauma and especially open trauma, which is acute trauma. So it's not an elective procedure. It's always easier to sell into a segment where you have elective procedures. So only looking at those sort of characteristics, you could argue that, well, it should be easier and faster to enter revision arthroplasty than it is trauma. So I think there's something in that, that you're absolutely right on, but I have a hard time quantifying it, to be perfectly honest. Kristofer Liljeberg-Svensson: Okay. And then I don't know whether we missed that due to the technical problems, but did you say anything about expected launch timing for CERAMENT V in the U.S. Torbjorn Skold: So CERAMENT V in the U.S., we follow the plans. So we deliver on the plans and the plans that were previously communicated was that we submit additional data to the FDA in November, that is according to plan. And then we feel comfortable that we have the right data in place and expect a positive outcome of that review with the FDA. Exactly when FDA will come with an answer, it's hard for us to predict. But typically, historically, what we've seen is that there's a 90-day period following the submission of the supplemental data until an FDA decision is taken. So that's typically the guidance that we give on the CERAMENT G for the U.S. Kristofer Liljeberg-Svensson: Great. And then finally, just on R&D costs, should we expect that to be more stable now quarter-over-quarter or year-over-year before you start the CERAMENT G spine study? Håkan Johansson: Yes. I think that's a fair comment. And again, you've seen quite a solid stable level over the last year, et cetera. And it's a fair estimate to assume that, that level continues. High activity level remains, but there is no true acceleration until we would start a clinical study preparing for getting CERAMENT G approvals. Operator: The next question comes from Sten Gustafsson from ABG Sundal Collier. Sten Gustafsson: I think most of it has been covered already, even though there were some technical issues here. So I just want to confirm that I heard it correctly. Did you say that you had CERAMENT G sales in the U.S. of -- was it $19.9 million in the quarter? Håkan Johansson: We did not confirm the dollar amount, but we say that we confirm that the growth in constant exchange rate was 59%. Sten Gustafsson: Okay. That's good. And then the number of procedures in the U.S. related to this hip joint infection category. Did I hear it right, 70,000 or... Torbjorn Skold: So what we say is that the number of primary hip and knee arthroplasty as per previously communicated data from BONESUPPORT is estimated to 1.5 million. So that's the number of primary arthroplasty. Revision arthroplasty is a smaller number, of course. But the initial focus that we have on revision arthroplasty is the subsegment that is called periprosthetic joint infection. The previous numbers from BONESUPPORT that has been communicated related to the size of that segment is 70,000 for U.S. only. So those were the numbers that we refer to. So we're not communicating any new numbers on this call compared to what's been communicated earlier. Sten Gustafsson: And that was 17, 1-7? Torbjorn Skold: No, 70. And the 70,000, just for absolute clarity, those are revision arthroplasties with bone infection where a bone graft is needed. Sten Gustafsson: Okay. Excellent. And then on NTAP finally, and I heard it, I think correctly that you expect the trauma NTAP will be more challenging than when you got it initially on osteomyelitis, which makes perfect sense. But do you think that the net impact here short term with the sort of -- will be then a negative driver? Or do you expect the underlying osteomyelitis procedures to carry on even though you don't have the NTAP on those particular procedures? Håkan Johansson: Well, sorry, I think that to clarify, I think we were talking about what the market dynamics and the differences between there is a bone infection and in trauma. When we talk the value of the NTAP specifically, I think that it showed to not have so much impact when penetrating the market when there is a bone infection, et cetera. But when we are talking trauma, open trauma and the surgeon has the patient in front of him, there's always a consideration between risks and costs. And here, the NTAP is taking away the cost aspect. So potentially, the NTAP for open trauma has a bigger value. But again, it remains to be seen over time. So it's been valid from 1st of October, so that after Q3, and we don't have the data to back that up. But we honestly believe that it has the potential of having a bigger impact than for bone infection. Operator: The next question comes from Maria Vara from Stifel. Maria Vara Fernandez: Just a couple of them. I think we, of course, see extremities as the near-term opportunity, what's going to be driving growth for the company for many years. But of course, I think we haven't dedicated much time to the opportunity in spine during the Q&A session. So I just wanted to maybe get some thoughts on how this recruitment of sales reps is going? And any kind of guidance on contribution we could see from the first quarter launch as well as from 2026? Torbjorn Skold: Yes. No, good question. And I think to put spine in perspective, spine is clearly a very interesting area for BONESUPPORT for the long term, but we also want to be realistic in the short term, we will likely see much bigger uptake from revision arthroplasty than we will see in spine. But spine is an important strategically and large opportunity for us. The approach that we take is that we first launched spine with CERAMENT BVF to build the market. So we are going to have a relatively focused launch. So we're not going to go fully and nationwide to all the accounts everywhere at the same time. We want to take a focused approach with certain distributors that we already work with, some new distributors that are specialized in spine. And we want to make sure that we build the right clinical evidence and the right and validated surgical techniques over time. And then, of course, the big strategic play for us is to go into spine with CERAMENT G. But that, of course, requires a market approval. But we see a couple of good scenarios ahead of us. So the question is not if, it's about how and when. And that's why we engage with a discussion with FDA in the near term to make sure that we feel comfortable on the right way to market and that we are also able to execute on that. Maria Vara Fernandez: Okay. That's helpful. And then if we think about the profile of the sales commissions in the U.S. we see a little bit of an increase with respect to the U.S. revenue for Q3, if I'm not wrong, 35% with respect to the U.S. sales. How should we think about this percentage changing over time, especially as of the U.S. launch in spine? I mean, there's not much of an investment there, but still with something. So if you can guide whether we could think about the same range with respect to revenue or any major changes here will be appreciated. Håkan Johansson: Well, thank you, Maria. And again, in the short to midterm, you can expect the increase in Q3 is mainly related to short-term volatility, the commission level remains stable. There is no change in commission levels. There are a few performance-related aspects in the commission structure, and that's why it can be some volatility between quarters. But in general, it should keep itself the commissions plus other fees that is involved around -- I mean, between 34% and 35% over time. And we don't see the inroads into spine with BVF changing that structure. Operator: The next question comes from Oscar Bergman from Redeye. Oscar Bergman: Torbjorn and Hakan, I know you've answered a lot of questions, but I only have a few more to you guys. So first off, on your current base of U.S. CERAMENT G users, is there any noteworthy crossover to spine surgery among these? Håkan Johansson: Very limited type of sales. Of course, when we have hospital accounts where ultimately you have both surgeons on the extremity side and on the spine side. Torbjorn Skold: Yes, but it's very... Håkan Johansson: Yes. And again, coming back to as we communicated, our strategy of launching into spine will be very focused. We have a list of hospitals and list or surgeons that we are addressing so that we reach the right surgeons to build additional clinical data and validation, et cetera, before we go wider. So with that, we also work very focused with what distributors and what sales reps we're contracting. Oscar Bergman: Okay. And just wondering if you can elaborate a bit more on the situation on eventual pushback on price, both for customers in the bone infection segment and in trauma. Has this been sort of a driver of customers either not signing up or perhaps even signing off during this quarter? Håkan Johansson: Well, Oscar, price is always a discussion. We're living in a commercial environment and so on. And -- but so far, it has had no impact in terms of listing and continued growth of listed hospitals. We meet that also, as I mentioned in the call, as part of go stop go, we have hospitals where we have surgeons becoming frequent and high users and not seldom, there is a reaction from hospital administration where we have them to involve with our med and health economic specialists to help explaining the data that is backing up the price level and the savings that is enabled by the clinical and health economic benefits by using CERAMENT G. So of course, that's part of daily life. But so far, we don't see a general pushback on price. Oscar Bergman: Okay. So those efforts in training and education on the health economic benefits, they are holding back customers from perhaps signing off them essentially? Håkan Johansson: As for now, and again, that's also the reason why we're confident with the approach that we're using, and that's why we also will continue to invest in additional med and health economic resources. Oscar Bergman: All right. And what do you say in terms of user rate at the existing customers? Are they at desirable levels in bone infection? Or is there still plenty of room to grow in the existing number of CERAMENT G surgeons? Torbjorn Skold: From my perspective, what I see is that there's plenty of room to grow in current markets, in current products, in current clinical indications. Now I might be wrong on that, but all the data that I've seen so far after a couple of weeks indicate that we're just scratching the surface on these 3 main segments that we prioritize short term, which is foot and ankle, trauma and revision arthroplasty. And then, of course, longer term, we're entering spine. So I think there's plenty of room to grow going forward. Oscar Bergman: All right. Just 2 more quick questions. I suspect you're in a hurry. The geographic reach in the U.S., are you at a good capacity already in the different key regions? Or are there any initiatives that you will accelerate on? Torbjorn Skold: I mean the U.S., as you well know, that's our most important market, both from a growth and profitability point of view. So it has priority #1. I think we have good coverage, but that doesn't mean that we will not continue to invest. We're investing in Q3. We will continue to invest because if we're not investing, we're not taking advantage of the potential that we have. So I don't think it's a coverage issue. It's about making sure we invest to address the potential we have in terms of increasing the penetration. Oscar Bergman: Okay. So there's no specific region in the U.S. where you feel like, okay, we should really focus on this specific region. Torbjorn Skold: I mean, when we look at the map, of course, we have certain regions where we think our penetration/market share is lower, but that's not something that we disclose on this call. But on a high level, we will continue to invest to make sure that we increase the penetration in the U.S. and certain regions have higher priority than others. Oscar Bergman: Okay. This is my final question. You are quickly accumulating a lot of cash over SEK 220 million since Q3 last year. Will you perhaps present some sort of plan on how you aim to deploy this growing amount of cash in your CMD in the spring? Håkan Johansson: Oscar, I think that, as Torbjorn mentioned during the call, and sorry for all the technical breakout is that, that's an area where we own the market, some clearer communication and the Capital Markets Day in spring time is a good opportunity to do that. In the shorter term, again, this gives us the comfort of continue to investing in the business. We believe in the business. We think we do the right things. We see strong confirmations also in the Q3 report on the work that we're doing and the cash just helps us to continue investing in this. Torbjorn Skold: And gives us the freedom to operate in a way to take advantage of all of the opportunities that we see in the 3 priority segments plus spine as well as on more longer-term strategic initiatives and scenarios that we, of course, also work on. But more on that in the Capital Markets Day this spring. So unfortunately, now we have to close this call. We're coming to an end. Again, thank you all for attending. And also from our side, we apologize for the technical issues that you guys have experienced, and we thank you for your patience with us. Thank you.
Ulrika Hallengren: Welcome to the presentation of Wihlborgs' 9-Month Report 2025. There's an old saying when you think you can see the light at the end of the tunnel, beware, it could be an oncoming train. We never know what will happen ahead, and we try to be prepared for whatever we can think of. But let us be clear, we see some glimmer here and there, maybe not the full ray of light yet, but nice glitters in the horizon. It's a very busy report week for all of you, so I will try to be short and precise. That means standard procedure about the last results of our continued growth and some new records, but also some figures regarding loyalty among our customers, how we can calculate retention rates and not at least our view on future occupancy. We start with a summary of the quarter, July to September. Rental income up 6%, a new record at SEK 1.101 billion; income from property management, plus 11%; net letting positive at SEK 6 million; net EBIT to EBITDA at 10.3x, good access to financing. And as said many times before, but this still stands, demand remains for good quality in good location, and we are proud to be able to continue with the project investment that gives continued good potential for growth. Looking at the whole period, first 9 months, rental income up to SEK 3.243 billion, plus 4%. The operating surplus increased to SEK 2.334 billion and income from property management increased by 12% to SEK 1.482 billion. The result for the period amounts to SEK 1.370 billion, corresponding to SEK 4.46 per share and EPRA NRV has increased by 10% to SEK 96.23 per share adjusted for paid dividend. A comparison of the rental income first 9 months '24 and first 9 months '25. Indexation gives plus SEK 30 million; acquisition, plus SEK 90 million; currency effect, minus SEK 21 million; additional charges, plus SEK 21 million; and completed projects, new leases and renegotiation plus SEK 8 million. And here is also a new higher property tax of approximately SEK 15 million included. So higher vacancy today than a year ago, but small improvement since last report and during 2026, the improvement from new leases will show. And the streak of positive net letting continues, plus SEK 6 million in the quarter, plus SEK 65 million for the period and in total, new leases at a yearly value of SEK 300 million signed in the period. For the third quarter, the volume of new leases of SEK 66 million is good. And maybe I expected the net letting to be a bit better than SEK 6 million, but we got a late termination of SEK 16 million from a tenant who I'm not sure if they really want to move or just renegotiate. Discussions are ongoing, but the total termination is registered. So a possible upside ahead, 42 quarters in a row with positive net letting. Here are some of the tenants that we have signed during Q3, a combination of expanding tenants and new tenants from many industries, health care, insurance, biomaterials and a company that manufactures equipment for land-based fish farms as examples. And here, we have the net letting in a historical perspective, lettings in green, termination in light blue and dark blue stacks are the net letting. And as mentioned, quite high volume of new leases for being a third quarter. And the list of our 10 largest tenants in alphabetic order, strong customers, and they contribute with 20% of our rental income. 7 out of 10 are governmental tenants and the public sector contributes with 23% of total rental income. Rental value as of 1st of October is SEK 4.889 billion per year, plus 7.2% and rental income, SEK 4.379 billion, plus 4.6%. Effects from acquisition, indexation and higher willingness to pay for the right quality. Looking at like-for-like figures, all the properties we owned a year ago, excluding projects compared with updated figures, we can see that rental value is up 2.4% and rental income is down 0.8%. The growth in the rental market is supported by indexation of 1.6% in Sweden and approximately 1% in Denmark last year. Indexation ahead in Denmark expects to be a bit higher, and that will be reflected in the rental levels for 2026. I think the September number was 2.3% or something. Lower rental income in like-for-like is an effect of higher vacancy than a year ago. And at least, it's encouraging to see that vacancy appears to have bottomed out in several areas. More on that topic later. Changes in the market value of our properties. We started the year with SEK 59.168 billion in accordance with the external valuation of 100% of our portfolio. We have made acquisition, which adds on SEK 2.552 billion; in investment, SEK 1.911 billion; divestment, minus SEK 114 million; changes in valuation, plus SEK 450 million. And together with currency translations of minus SEK 500 million, that summarizes to a value of SEK 63.457 billion. The valuation this quarter have no changes in valuation yields, indexation or other underlying parameters. Expectation ahead is more likely to be positive, if I may guess. These figures, the running yield show how we actually perform in relation to the valuation, so not the valuation yield. For the whole portfolio, the occupancy rate is 90%, excluding projects and land and with an operating surplus of SEK 3.326 billion, that gives a running yield of 5.6%. Fully let, the portfolio would give a running yield of 6.4%. Good earnings capacity in relation to the value of the portfolio and good cash flow generation is the foundation also ahead. Occupancy is slightly up looking at the decimals since the last quarter and at least that is in the right direction. In the office portfolio, the market value is SEK 50.394 billion with an occupancy rate of 91%, 92% in Malmö, improved to 90% in Helsingborg, 90% in Lund and 92% in Copenhagen. The improvement has started and will be clearer during 2026. Operating surplus from offices summarized to SEK 2.755 billion and running yield of 5.5%, 6.2% fully let. The demand for logistics and production continues to be good in Malmö with an occupancy of 93%, lower occupancy in Helsingborg at 83%, 91% in Lund with a small portfolio and 96% in Copenhagen. 87% occupancy rate as a whole with a running yield of 6.4%, 7.5% fully let at a total value of SEK 8.988 billion. As mentioned before, we continue to see harder competition in the third-party Logistics segment with very quick changes in needs. That also means that occupancy can improve quickly when the market changes. But I assume that vacancy in the southern parts of Helsingborg will be a bit sticky since the area will go through a makeover that would take a number of years. But as mentioned before, still a decent running yield of 6.4% even with the high vacancy and the market as such continues to be interesting. The development of our total portfolio running yield, 5.6% brings stability, not least since the portfolio overall has a high quality and good location. As noticed before, a high increase of the running yield since 2021. Some sustainability highlights from Q3. We have been appointed as Global Sector Leader by GRESB, completed a battery storage in Lund and actually one in Helsingborg as well. We have signed more sustainable -- sustainability-linked loans, also including Scope 3 carbon dioxide performance, and we continue to reduce our energy consumption. As a new example, we have reduced the electricity used for heating and cooling by 50% at Ideon Gateway in Lund, including both offices and hotel. New cooling technology and of course, the Janne solution is the answer. And something about what our customers think about us. Our latest customer satisfaction index from now in September shows an index of 79 and a loyalty score of 82, very high numbers. Tenants are especially happy with our personal service with 88% satisfaction, our competence scoring 86 and accessibility score 85. Let me just say that I totally agree with our customers. I'm also very satisfied with my competent and service-minded colleagues. I give them 100 out of 100. A catalog of our value and properties in our 4 cities in Q3, 39% of the value in Malmö, 23% in Helsingborg, 17% in Lund and 20% in Copenhagen. The region and especially these 4 cities continues to be of high interest for future growth, both in population growth forecast, which will otherwise be a challenge in many places and in a number of new workplaces. And time for financials. Over to you, Arvid. Arvid Liepe: Thank you very much, Ulrika. Looking at the income statement for the third quarter isolated. Are we on the right slide? There we are. Thanks. Rental income grew by 6% to SEK 1.101 billion, and operating surplus increased by 4% to SEK 790 million. There are a couple of things to bear in mind looking at those 2 numbers. First of all, we've been through a new property taxation, and we got the new taxation values this summer. The taxation values are higher, which means that the property tax also is higher. The property tax -- the new property tax is applicable from 1st of January. So we have, you could say, a catch-up effect. So we -- the changes for all 3 quarters are accounted for in the third quarter numbers. That means that on the rental income line, as Ulrika mentioned, that has been affected with plus SEK 15 million from increased property tax, and on the operating cost side, our operating surplus has been affected with minus SEK 20 million from the increased property tax for the first 3 quarters during this year. So the ongoing -- or the future effect of the increased property tax will be smaller on a quarterly basis than you can see in the Q3 numbers. It's also important to bear in mind that on the rental income line, we've had a negative effect from currencies of minus SEK 7 million, and that same currency effect on the operating surplus line has been minus SEK 5 million. The income from property management amounted to SEK 495 million. We've had a small positive impact there from FX since we borrow a lot in Danish kroner as well. Income from property management up 11% versus the same quarter in 2024. We had positive value changes in the quarter of SEK 103 million. And all in all, a profit for the period of SEK 487 million. Looking at the balance sheet. The value of our property portfolio is now SEK 63.5 billion, up SEK 5.6 billion versus 12 months previously. Equity stands at SEK 23.5 billion, up SEK 1.2 billion versus 12 months previously. And during that time, we have, as you know, also paid approximately SEK 1 billion in dividends to our shareholders. And our borrowings are SEK 33.2 billion, SEK 3.5 billion higher than 12 months previously. Translating that into key numbers, our equity assets ratio now stands at 36.2%. The LTV has gone down from the last quarter to 52.3% and the interest cover ratio for the period stands at 2.8x. Looking at some per share numbers, I'd just like to highlight the EPRA NRV value at SEK 96.23 per share, which is up 10% adjusted for dividends versus 12 months previously. On the next slide, you can see the historic development of EPRA NRV, a stable growth over many years and the average annual growth adjusted for dividend is actually 15%. Moving on to the historical development of our financial ratios. The equity assets ratio at 36.2%, as you can see, is well above the 30% that we have set as the minimum level for ourselves and also on decent levels in a long-term historical perspective. The loan-to-value in the perspective of approximately 10 years has come down from around 60% now to 52.3%. And the interest cover ratio, as we've talked about before, has been very variable, especially during the special period when we had almost 0 interest rates when we had an extremely strong interest cover ratio. The rate is now stabilized and 2.8x is a quite decent level to be at. On the next slide, you see the net debt in relation to EBITDA, also that's in a long-term historical perspective. The ratio stands at 10.3x. It varies with a couple of decimals up and down, but being at 10.3x is a comfortable level for us. Looking at our sources of financing, we still have approximately half of our loans from bilateral bank agreements with Nordic banks, about 1/3 from the Danish rail mortgage system and 17% from the bond market. I would say that the banks are definitely more proactive in their lending efforts than they have been for many years actually. And we do see bank margins gradually moving downwards. The bond market has also -- as we noted already in the Q2 report, the bond market is a lot stronger than it was a year ago, and we can issue unsecured bonds at quite attractive levels in this market. The structure of our interest rate portfolio, you can see on this slide. The average interest rate is 3.29%, 3.33% if you include costs for unutilized credit facilities. We have both in the past quarter, but also if you look over the coming couple of years, we will have some effects of attractive interest rate swaps expiring, but we also see an effect of the margins that we pay to banks and in the bond market coming down somewhat. So overall, over the coming few quarters, I would expect the average interest rate to be reasonably flat. And yes, we can move to the next slide and see the development of the fixed interest period, which has gone up a touch in the quarter. It's now 2.7 years. And the average loan maturity in the loan portfolio is 4.8 years. And lastly, from my side, looking at available funds, we have unutilized credit facilities plus liquid funds of SEK 2.9 billion at the end of the third quarter, which gives us, in our view, enough financial flexibility to manage operations and seize opportunities in a good way. With that, I hand the word back to you, Ulrika. Ulrika Hallengren: Thank you. And an update on our investment in progress and a quick overview of our largest project. During the period, we have invested SEK 1.911 billion, and it remains SEK 2.730 billion to invest in approved projects, good volume in all our cities, a reasonable yield on cost with 6% or a bit above 6% for new build offices and 7% or a bit above that for industrial and a good mix of refurbishment and new build in the portfolio. Let's start in Copenhagen with our project at Ejby Industrivej 41 in the beginning, planned as and decided for a multi-tenant transformation, but with a 15-year lease with Per Aarsleff turned into a single-tenant building. 24,000 square meters, investment SEK 231 million and yield on cost a bit above 6%. Completion is planned to February 2026. The large project at Amphitrite 1 in Malmö has started off really well, a bit about 20,000 square meters for Malmö University at a 10-year lease. We have started at site with deconstruction. And during September, we got the building permission from the municipality. Completion is planned to Q4 '27 and procurement will be completed shortly. In Malmö and Hyllie, we continue with Bläckhornet 1 VISTA, an SEK 884 million investment. The mobility hub has already been completed and the office will be completed in Q1 '26 and during '26. Yield on cost, 6.2% and today, approximately 40% pre-let. The best possible product and low competition from new build in the area, but we still need more activity and more decisiveness from our customers before we are satisfied. An example of top-level refurbishment in Malmö is Börshuset 1. This is an almost iconic building right beside the train station, 6,000 square meters, offices, restaurant and co-working and absolutely top rents in a Malmö perspective. Completion in Q1 '26 and moving in will continue during '26. Pre-let, 95%. At Kranen 7 in Malmö, we will invest approximately SEK 136 million in a preschool for the municipality, 2,900 square meter zoning plan approved and completion is expected to Q3 '27. Public procurement act starts now. And at Sunnanå 12:54, 17,000 square meter logistics, 100% pre-let in a 15-year lease will be completed 1st of December '25, SEK 280 million investment and yield on cost close to 7%. In Lund, we are building a new modern office right beside the Central Station, Posthornet, phase 2, 10,100 square meter, yield on cost, 6.5% and completion Q2 '26. Pre-let, a bit above 40% today. But together with ongoing discussions, I believe we can reach approximately 70% before year-end, keep our fingers crossed, and very attractive product. And at Vätet 1, also in Lund, we continue with refurbishment and adding on areas for our new tenant, Arm, 5,700 square meters and a 7-year lease, investment SEK 145 million, excluding value of the land, and yield on cost a bit above 10% and over 6.6% yield on cost, including ingoing property value. In the southern part of Lund, we continue to develop of Tomaten. This product for BPC, completion Q2 '26 and investment SEK 79 million, 3,600 square meters and yield on cost 7%. Next to that, at former Stora Råby 32:22, now named as Surkålen 1, we have been able to improve since the project started. Tenants will be both Note and Lund University. So well-used land area and long leases. In total, 14,500 square meter completion in Q2 for Note and Q4 '26 for Lund University. Investment, SEK 260 million and yield on cost 9.2%. In Hörsholm, Copenhagen, we invest in a new school for NGG, 25-year lease, 11,600 square meter and investment SEK 390 million. Completion in Q1 '26. And at Giroströget in Höje Taastrup, the refurbishment for Novo continues, 62,000 square meters. Our investment is limited to SEK 423 million and completion is expected in Q1 '26, but Novo also pays rent during the refurbishment period. That was some of the ongoing project and just to touch on future possibilities as a repetition. 4 possible projects in Lund and Helsingborg, where we can develop some 70,000 square meters in the future. Zoning plans are approved for the first few projects and ongoing at Västerbro in Lund and some of the office possibilities in Malmö in the area of Nyhamnen and Dockan. High interest for the future, of course. If you should ask me which projects of these will be the next one, my best guess today is that will be none of these. The Ideon site in Lund is developing very well, and we have building rights there that might be of high interest for the growing defense and tech industries. Early volume studies have started, but nothing I can show yet. And the summary of Q3 again. Rental income up 6%; income from property management, plus 11%; net letting positive, net debt to EBITDA at 10.3x and good access to financing. And we will continue with a focus on cash earnings and future growth. We have been able to grow every year during different economic environment since 2005. We know how to adapt, find new ways and we will continue with this knowledge and ambition. Growth and cash flow is our passion and the compound interest effect of stable growth is hard to beat from SEK 7 billion to SEK 63.5 billion without any new equity from our shareholders. We have been able to grow, thanks to continued investments. They contribute to upgraded attractiveness and new demands and what comes first, higher rents or investments, have no answer, but these factors have a relation. Here is a graph showing the market rents for prime offices in Malmö and our quarterly investments during the same period from 2010 to present. The green bars represent our investment and the green line represent rent levels. And finally, a market outlook. Employment growth in our region continues. Office rents show long-term growth. Wihlborgs' project investment increase over time. Tenants on average, stay in the premises for 14 years, which support the strong customer satisfaction score. And if we just take the largest leases we have signed, we have a volume of some SEK 320 million moving in from now until end '27 and during the same period, terminations of some SEK 190 million, a good gap. So possibilities for growth is in sight. And with that, we are open for questions. Operator: [Operator Instructions] The next question comes from Oscar Lindquist from ABG Sundal Collier. Oscar Lindquist: So firstly, on projects. The 2 projects completed in the quarter, Galoppen and Kranen, how much did they contribute in the quarter? And how much should we expect into Q4? Ulrika Hallengren: They didn't contribute in the quarter, but will contribute for the full Q4. Oscar Lindquist: And then on the Sunnanå project, from when should we expect contribution from that project? Ulrika Hallengren: Also from 1st of October. No, 1st of December, sorry. Oscar Lindquist: 1st of December. Okay. And then the Börshuset project was moved to Q1. What's the reasoning? Ulrika Hallengren: The tenant will start moving in there. So there's no delay in the project, but it's a difference between when the building is completed and when tenants moving in. So I think the -- we will have a ceremony there in February, but the rent will be started to pay in Q1. Arvid Liepe: However, everybody does not move in Q1 of the signed leases. Ulrika Hallengren: Correct. we have moving in during the whole '26. Oscar Lindquist: Yes. And then if we move over to net letting, you mentioned a late termination of SEK 16 million in the quarter. When do you think you will know if they terminate or extend their contract? Ulrika Hallengren: We have calculated as terminated and discussions are ongoing. So I guess now during Q4, there will be a decision if they stay or... Oscar Lindquist: Yes. And if they terminate the impact would be in 9 to 12 months or what's fair to expect there? Ulrika Hallengren: Just a minute. 2027, from 1st of January 2027. Oscar Lindquist: Okay. And then -- so if we adjust for that termination, net letting was positive SEK 22 million. What's the mix here between projects and existing properties? Ulrika Hallengren: In the quarter, I don't have that figure right away. But I think actually that the existing portfolio contributed very well this year and also in the quarter and also good contribution from all our cities, at least for the 9-month period. So I would say that we see positive signals in all our 4 cities. Oscar Lindquist: Okay. So effectively [indiscernible] Arvid Liepe: It's -- in the quarter, I would say, without -- I don't have the exact figure either, but I would say that more existing properties than projects during this quarter in the net lettings. Oscar Lindquist: Okay. Perfect. And then if we look on the Bläckhornet project and the Posthornet project, how is discussions going there? You improved the occupancy slightly in Bläckhornet now in the quarter. What's your sort of ambitions closing in on completion? Ulrika Hallengren: Our ambition is to improve, of course. It's a very good product. And -- but the volume is quite large. So something tends to take longer time when you can choose of good things in many levels, so to speak. So I can't give a figure when I think it's -- but I think we will continue with the work for letting also during 2026. That's reasonable to think that. But let me also mention that we see a good -- we have signed new leases in [indiscernible] in the same area. And also, actually, we -- the portfolio we bought 1st of April, there was some vacancy at [indiscernible], for example. And that is now, I think, 20%, 30% vacancy, and that is now fully let. So there is definitely activity out there. Oscar Lindquist: And would you say sort of the outlook or discussions with the tenants has improved in the quarter and going into Q4 or... Ulrika Hallengren: Yes, I think so. But it depends. One day, you think it's slow and one day you think it's very active. So -- but overall, I would say that there's more positivism out there. Oscar Lindquist: Yes. And then on occupancy, it's essentially flat Q-on-Q, and you sort of alluded or guided to improving occupancy in the second half. Could you quantify what you expect in -- or what we could expect in Q4? Ulrika Hallengren: I especially guided on occupancy in offices in Helsingborg, and that have improved 2% during the year. And otherwise, I think that we will continue to have some improvements, but not quick improvements since we also have -- I mean, for example, SAAB will move out the 1st of January '26, and that will take some time before we have entering new tenants there. But a very good example of that is that we have already signed new leases for that building with new tenant moving in a year. So only 9 months for refurbishment. And I... Arvid Liepe: For part of the building. Ulrika Hallengren: Yes, for part of the building. So they take -- yes, [ they'll likely ] take one part of the building, and we also have good discussions for more areas there which might also end up in moving in, yes, I mean, October next year or so. So quite quick period between moving out and new tenants moving in. And not for the total volume, but at a good part of it. So... Operator: The next question comes from Eleanor Frew from Barclays. Eleanor Frew: Just one question from me. So on rental growth, your chart clearly shows there's prime rental growth, but can you comment on the more secondary assets? What's the rental growth you're seeing there? And is there any negative re-leasing on those poorer-quality assets? Ulrika Hallengren: I mean, of course, when you look into the absolutely best location and top rent levels, that is one area. If you just take a small step from that and still good location and good quality, the rent levels continue to develop well. If you go to more poorer area, we have not a large amount of equity there. So I can't really give a good guidance. But of course, it's harder to find higher levels of rents in poorer area. There will be a larger difference there in the market as it is today. Operator: The next question comes from Lars Norrby from SEB. Lars Norrby: I'm a bit late into the call. So cut me off if I ask a question that somebody else has already asked. But I have a follow-up on a question I heard, and that was about the occupancy rate, once again, flat in the quarter. Just to be clear, I mean, you have some 6 projects or so being completed in the first quarter of '26 and then you talked about that SAAB moving out. But based on what you know today, has the occupancy rate bottomed out? And at what point in time do you expect it to improve, at what stage in '26? Ulrika Hallengren: I would say that for the whole portfolio, I think the vacancy has bottomed out, but we can see for a shorter time or period, higher vacancy in some areas, for example, when SAAB moves out and before we have new tenants in place. But we meet that well with new rental agreements. So yes, I think we have bottomed out and will improve, but the improvement isn't a quick shift. It will take some time. And especially during 2026 and end of 2026, as mentioned before, we have a quite large volume coming in. But also now in Q4, we have good volumes coming in from Galoppen and Sunnanå, for example. So yes. Of course, we want the occupancy to be even higher, but still, it's good to see that we have flattened out and are on the up-going way on the occupancy again. Lars Norrby: Second and final question. 2025 has been a year where you're growing through projects, but also through a quite substantial acquisition. Looking ahead, '26, '27, is it very much all about projects? Or are you considering adding additional size of any magnitude through acquisition as well? Ulrika Hallengren: I expect that we will see a combination. It's good with the project volume because you can manage that and plan for that. And acquisition is harder to plan for. But we continue to be active and trying to find the best premises for us. And of course, it's an interesting period we're in. Lars Norrby: And just a quick follow-up on that. In what geographic area? Are we talking primarily about Copenhagen then? Or is it more likely to be in Sweden? Ulrika Hallengren: I think there is interesting things going on both in Sweden and Denmark. So we try to be active on both places, both countries. And as mentioned, I mean, you can't plan for transaction if you want them to be the best things for you. So of course, you can be aggressive and try to buy whatever, but we will continue to be picky on what we want to go into, of course. Lars Norrby: Sounds good. I hope you don't buy whatever. Ulrika Hallengren: We will not. Operator: The next question comes from Oscar Lindquist from ABG Sundal Collier. Oscar Lindquist: So I just had a follow-up question on the property tax you mentioned weighing on the NOI margin. So the effect in this quarter was SEK 5 million, as I understand it. Is that correct? Arvid Liepe: On the operating surplus line, yes. A negative effect of SEK 5 million. Oscar Lindquist: Yes. But going forward, will you be able to sort of pass on the full increase in property tax to tenants? Arvid Liepe: Not 100%, but the very largest part. I mean, we do have some vacancies, for example, and we have a very small proportion, but still a few inclusive contracts, so to speak. Oscar Lindquist: But then significantly lower than the SEK 5 million we saw this quarter? Arvid Liepe: Yes. Operator: [Operator Instructions] There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments. Ulrika Hallengren: Perfect. Thank you. Have we got any written questions as you can... Arvid Liepe: Let me double check. Not that I can find. No. Ulrika Hallengren: No? okay. So of course, you're welcome to come back to us whenever with whatever asked questions. Thank you for this. Arvid Liepe: Maybe we should conclude. This may actually have been a record quick presentation. Ulrika Hallengren: Definitely, 42 minutes. It's our quickest [ version ] , I think. We try to be precise and quick, but that was part of it. Arvid Liepe: Thank you, everyone, for listening in. Ulrika Hallengren: Thank you.
Kati Kaksone: Good morning, everybody, and welcome to Terveystalo's Q3 Results Call and Webcast. My name is Kati Kaksonen. I'm responsible for Investor Relations and Sustainability here at Terveystalo. As usual, we'll go through the result highlights with our CEO, Ville Iho; and our CFO, Juuso Pajunen. And after the presentation, you will have a chance to ask questions. I will take the questions from the phone lines, as well as through the webcast, after the presentation. Without further ado, over to you, Ville. Ville Iho: Thank you, Kati, and good morning from my behalf. Let's dive directly into Q3 highlights. As you can see from the numbers, this quarter 3 was a quarter of margin improvement amid a revenue headwind. So the EBIT -- adjusted EBIT margin developed positively; very strong operating cash flow; EPS developing positively as expected; very high NPS, taking all-time highs all the time; but then with a decline of some 5% top line, adjusted EBIT in absolute terms slightly down. Double-clicking into different P&Ls and their role in the business, how they are contributing and continue contributing in the future, starting from Sweden. Just as a reminder, Sweden is in a phase still of turnaround. We have been adamant in the fact that we continue focusing only on turnaround and profitability improvement. Sweden is getting -- our Sweden team is getting the results. The underlying efficiency is continuously improving. The results continue to improve. The market being fairly muted at this stage still, we are not making proper profits yet. But looking at next year, volume development looks positive, and we start making results, and then it's time to focus on growth. Portfolio Businesses, quite the same story. The profitability turnaround has for large parts happened. Some minor fixes in smaller businesses, but the bigger businesses are doing fine and developing positively. Now, it's time to grow, and we are eyeing specifically in 2 different segments, as we have said before, dental and then opening public market. Healthcare Services, our biggest business, margin on a very, very high level, really strong, starting from a very strong position. Now, our eyes and focus turn into volume growth, and we continue to boost that one with selective specialties-driven M&A, and then investments in digital delivery and capabilities. Further double-clicking into the strategic agenda, as I said, Sweden profitability improvement program, [ Gamma ], almost done and dusted. Efficiency in all-time high level. Now, looking at organic and potentially inorganic growth there on a solid base. Portfolio Businesses, as I said, profitability improvement done and dusted. Now, organic growth in dental and also inorganic growth in dental and public partnership being relevant in the opening market when health care counties are actually starting buying, where we have seen positive signs already. Inside Healthcare Services, we are seeing very strong development in our consumer-driven businesses. We continue boosting that one, Kela 65 being a prime example of sort of a positive drive. Also in insurance business, our position continues to be strong and developing nicely; out-of-pocket in good place and developing positively against the low morbidity. We have reorganized our operations and our delivery model so that there's clearly separate brick-and-mortar delivery through our health care services or hospital network, and then, now, forcefully and decisively scaling up the digital health 10x, where we are eyeing at major leaps in efficiency, in transactions, more intellect in our patient and customer steering, and then finally, truly scaling up truly digital health care services, tech-based services, nurse services and in very near future also, AI-supported health services. Among all the positive developments, the challenge currently, which we'll further discuss is in occupational health care. We know exactly where we are. We know how to turn around the negative development. There we have a program called [indiscernible], led by new SVP, Occupational Health care or Corporate Health, Laura Karotie, and that one will be discussed in more detail. So, all in all, agenda, very clear, sort of 9 out of 10 moving very fast to the positive territory, more focus needed for occupational health care, which will be fixed. Looking at the volume development and our sort of view on markets in near term, next 12 months, starting from the smallest, Sweden, as we have communicated many times, the market has been very soft. Swedish economy has driven the demand for occupational health care services very low. Now, looking forward, both the market seems to be picking up. Sweden economy is doing better next year. But more importantly, looking at our internal view on the sales funnel, commercial activities, sales funnel looks positive. And when we are able to do, in next year, more volume on higher operating leverage, of course, then we'll start making money. Portfolio Businesses, public business, as all know, has been very, very slow in buying. Health care counties are only sort of picking up the buying activities. What we see in large tenders and also in smaller tenders is increased activity. And looking at the next 12 months, we see the market developing positively. Same goes with the consumer business. It has been fairly muted due to low confidence of consumers. We have seen already some positive signs, specifically in the dental services, which typically is the most sensitive for consumer behavior, and we expect the positive drive and vibe to continue for next 12 months. In public business, when we jump over to Healthcare Services, in public services produced by health care services units, it has come down and it has brought -- or contributed to lower volumes in Healthcare Services. We see that one bottoming out, and next 12 months should be more positive. Consumer business, even though our own position has been strengthening, has been fairly flat due to low morbidity. But with the sort of normalized view on that one, our strong drive in Kela 65 and insurance business, we see that one developing positively also going forward. Insurance business, equally, it has actually been the growth driver inside Healthcare Services, continues to be so. Number of insured persons in Finland continues to slowly pick up, and use of services is on a high level. Occupational health care, finally, so we'll double-click on the development, what has contributed to lower volumes in Q3, but very shortly, it's number of connected employees, sort of thinner scopes in the agreements by the corporate clients, and then inside those agreement scopes, lower use of services. All of these are slightly negative from our business point of view. It's been negative. It's going to stabilize. But specifically, number of connected employees will not be sort of turned around in 1 quarter. We'll turn that one around, but it will take a couple of quarters to get to -- again to all-time highs. If we dive deeper into this phenomena, as you can see, and it's good to remember the phases that we have seen in the development over the last couple of years and quarters. In '22 and '23, in the number of connected employees, we were pushing all-time highs. At the same time, as you remember, the profitability of this business was really, really low. And we struggled with the low contribution to rest of the business and hence, the Alpha program. With the Alpha program, we totally turned around the profitability of not only occupational health care, but the company. With that one, of course, the -- some of the less profitable agreements went out. And now, we see also some unintended tail effects of the Alpha period. Now what we are doing is, of course, we are rebalancing products, pricing, offering, and it's not going to be either or. It's going to be both, so both profitability and volumes. Occupational health care, as I said, is the biggest focus area in our agenda currently. It will be turned around with our program. It's a comprehensive exercise of renewing, partly even transforming sales and account management, our product offering to become more relevant and according to expectations by ever-demanding customers. And then, finally, digital front renewal, which we now can accelerate and fast track with our MedHelp joint venture. And our customers will see tangible results already from Q1 onwards on this area. Positive thing -- a very, very positive thing in our portfolio is consumer side, so combined insurance, Kela 65, out-of-pocket area. Our brand is doing fine. And that's, of course, one of the basic building blocks for boosting this business. We are the most preferred brand when we look at the brand preference development. We have been so. But now, we are all-time high. Also in top of mind, the company, health care services company that Finnish consumers think about them when they wake up in the morning, that's now Terveystalo for the first time. And that itself gives a very solid base for further improvement in this business. We have invested heavily in services. We invested heavily in digital engagement with our consumer customers. We have invested in Kela 65. And in that particular new segment, we are a clear leader in that developing market. Finally, Juuso will explain in detail the strength of our finances, the profitability, cash flow and balance sheet. We continue increasing our investments in our digital capabilities. It's an ever-increasing value driver in our business model. And we have some key focus points and developments in that digital ecosystem. For the professionals, we have launched the Ella user interface and digital front door and continue scaling that one up. And that's going to bring tangible efficiency improvements during next year in our sort of traditional brick-and-mortar appointment activities. For individual care, looking at -- looking from a customer's point of view, as I said, it's very much in the core of our 10x agenda. We are making leaps in efficiency, in transactions related to our incoming traffic and customer contacts. We are going to further improve the leading capabilities that we today already have in patient steering and customer steering. And then, finally, we'll make efficiency leaps in text-based appointments, text-based digital appointments, nurse services and introduce first AI-supported health services in very near future. In occupational health, as I said already, we are now in a very good position to migrate our occupational health capabilities, digital capabilities into new MedHelp environment. It's best-in-class in Europe. And our customers, as I said, they will see tangible results and fully a new view and sort of better control on their own people, own organization, sick leaves, workability, starting from Q1 next year when we start deploying new system to first customers. All in all, we are, in this digital journey, in very strong, very good place. Our architecture is where it should be. Our initiatives, projects create value, not in years, but rather in months, and we are confident in investing more and getting more yield out of the digital engine. With that one, over to you, Juuso. Juuso Pajunen: Thank you, Ville. So good morning all. I'm Juuso Pajunen, CFO of Terveystalo, and let's talk about the financial performance in the third quarter. So first of all, if we look at the whole group, we have the positive margin development continued despite the revenue headwinds. This was, in relative terms, the second best Q3 during the group's history, and the best one was during the COVID times. So what I want to highlight is that our efficiency is in place, our machine is [ ticking ]. But also having said that one, we do know that we can't be happy on the growth and especially the revenue development when it comes to occupational health care. So if we look at the big picture, portfolios in Sweden improved both in relative and absolute profitability, while they are still facing anticipated negative growth. So portfolios in the outsourcing businesses in Sweden, we are still coming from the efficiency hunt and now going for the growth mode. And then, with Healthcare Services, we have the strong margin, but the headwinds in the occupational health and the morbidity have been pushing the growth negative, like Ville also explained a bit on the occupational health part. So then, if we look first on the Healthcare Services, I will double-click in the next slide on the growth, especially what comes to visit growth. So let's park that question. But all in all, the performance, what comes to the relative profitability, it was really solid. We had the decline in revenues, headwind in the markets. And despite those ones, we were able, through solid cost control and our flexible operating model, to keep our profitability in a good place, especially remembering that this is the low season Q3. And for the growth, we have a strong plan. And in the longer perspective, I still remind you that the megatrends will continue to support our long-term outlook [ what ] comes to the growth. So then, let's see the visits. Let's address the elephant in the room. So basically, we can split our visits growth. So now, we are talking about the volume. We can split it into different type of buckets. First of all, we have the morbidity. So, that one is basically seasonal. We have no control over that one. And we had plenty fewer visits compared to previous year. And this is part of normal seasonal variation, and it changes annually. We have -- then if we go into the occupational health care, we have different factors behind the decline. We have basically macro-driven components. So the general employment in Finland is lower than earlier, and we have a sluggish economy, and that one also then impacts on the employers' behavior. So basically, they are implementing cost reduction initiatives due to own economic pressures and push, and that one impacts on our demand also. So, a concrete example on that one would be narrowing down the contract scopes on what they offer to their employees. Then we have the third component, which goes into more on what we have done ourselves. As Ville explained, how our profit improvement program has been progressing and how the -- despite having very high amount of connected employees, our occupational health business was not super profitable. Now, we have very efficient machine, profitable business, and we need to load further volume on that one and get then the benefit of the operating leverage. And for that part, we have a solid strong program ongoing, like Ville mentioned. The name is [indiscernible]. And we are confident that by implementing that program, we will address the weaknesses we have had, and we would expect to see growth in the number of connected employees in the coming year. In public sector, especially the capacity sales, which is a minor part in the Healthcare Services segment, but it is in a very low level due to the wellbeing county setups and all of that one. But now we have seen that the sales pipeline is opening up and the market is little by little finding its form. And then, we have the positive momentum, Kela 65 consumer insurance market where we have been growing and we have been able to capture positive momentum. And that one, we will obviously continue pushing. The experiences from Kela 65 are very positive from the patient perspective and also from our perspective. So with all of this one, there are various factors impacting our growth, and we will address especially the occupational health part decisively when going forward. Then if we go into the Portfolio Businesses, we have clear improvement in profitability. We have been able to improve the EBIT margins continuously, 2.2 percentage points up compared to previous year. And then, we have the momentum in especially public sector business. Outsourcing, we have been guiding you that it will most likely decline EUR 30 million this year, and we are on that trend, on that pattern and continuing on that one. On staffing, we started to have revenue headwinds during roughly a year ago, and now those ones are stabilizing out. And part of that one was also our own selection on how we address the market. But now little by little, the positives are coming, markets are opening up. Wellbeing counties are more and more capable of also buying and willing to buy. So this market momentum is little by little turning. And then, we have the consumer part that is growing. It is performing positively, and we will obviously continue to push on that part. So solid performance improvement in the portfolios when it comes to profitability. Then in Sweden, we are also improving both absolute EBIT and relative EBIT. We are still showing heftily negative numbers in a very seasonally low quarter. So Q3 is always difficult and weak in Sweden due to how the offering behaves during vacation period. In here, what I'm really proud is that our efficiency continues to ramp up. We have -- we continuously see, on our KPIs, positive development what comes to occupancy rates, but also we start to see that one on a monthly gross margin levels going up. So we are now getting into an efficiency place, and we will load further volumes on top of that one. We have a solid sales pipeline that supports us getting back on track and on heftily numbers. So program is in plan. Improvements are now continuously more visible also in the backward-looking income statement, and we will push forward. However, there is a weak market environment still in Sweden as a totality. So the macro has not recovered yet to the full extent. But despite macro, we are able to push Sweden back to good numbers in the coming year. Then, if we look at our investments, we've been continuously investing in technology. We have been stating since the Capital Markets Day last year that we will land somewhere between 4% to 5% of revenues in the longer perspective on the investments. Now, we are at 3.4%. We are heavy in digital. We have been talking about Ella, our professional user interface and related flows. You have seen, during the quarter, investments in MedHelp, the joint venture, which will be the digital front door in our occupational health. And then, some may have seen that we have deepening our collaboration with Gosta in the artificial intelligence and ambient scribing, further improving our tools. We have a good momentum. We have solid technology road map, and we have capability to invest. So we will continue on doing on that one. And then, in inorganic growth, the market is there, and we are evaluating different type of opportunities. And for those opportunities, we had a solid quarter for cash flow. We are now in the green bucket again. As was the [ negative part ] normal seasonality, so is this one. Our cash profile has not materially changed, and there is no reason to believe it materially changes either, so normal volatility. We are the Swiss clock we have been. We tick, tick, tick cash. And then, our leverage ratios, 2.1 at the moment, so we have powder to continue investing. So positive financial position, and we can definitely do organic and inorganic investments. Then, if we look for our guidance, basically this is unchanged. So despite some market headwinds, we reiterate our guidance after the second best third quarter ever. So we are expecting our adjusted EBIT to be between EUR 155 million and EUR 165 million. These are based on the current demand environment, employment levels and morbidity rates. So normal disclaimers, nothing new on that one. What is good to note maybe that the implied range for Q4 seems highish compared to previous year Q4. But then, you need to look back on your notes and remember that in previous year Q4, we had especially personnel-related items that we don't have this quarter -- this year in Q4. So the baseline adjusting needs to be a bit taken to understand our Q4 performance. So all in all, I'm happy to reiterate our guidance, EUR 155 million to EUR 165 million in total. With these words, let's invite Kati on stage and let's have a Q&A. Kati Kaksone: Thanks, Juuso. I think we are ready to take questions from the phone lines. Operator: [Operator Instructions] The next question comes from Anssi Raussi from SEB. Anssi Raussi: Maybe I'll start with your guidance as you mentioned that as the last item here. So you already said that there were some special items in your comparison period. But how should we think about underlying assumptions here? Like, does it require any improvement in the market sentiment or something you are not seeing yet to reach your lower end of the guidance range? Juuso Pajunen: I think that's a very relevant question. So, at the moment, the guidance is based on the current market environment and the current morbidity rates. So it already factors in, like always when issuing the guidance, everything we know up to yesterday evening. So the current guidance assumes lowish morbidity rates and the occupational health market in the conditions we know at the moment. Anssi Raussi: Got it. That's clear then. And maybe the second question about your occupational health care. So I think you said that maybe you lost some connected employees due to your profit improvement program. So do you think that it's possible to increase the number of employees or connected employees without sacrificing some of your profitability gains in this program? Ville Iho: Yes. Again, a good question. So, as I said during the presentation, it is not going to be either or, so either volume or profitability. It's going to be both going forward. It requires some balancing in our sort of offering and pricing, but we are not going to sacrifice the profitability just for the sake of absolute volume. Anssi Raussi: Okay. So maybe continuing on that one. So when we look at your -- of course, you showed your appointment volumes and the impact of prices. So how should we think about the pricing going forward in the coming quarters or years? Ville Iho: So, of course, the cycle is very much different than it was, let's say, 2, 3 years ago. The pressure on the -- contracts pressure on prices is, of course, higher post inflation cycle. And we should not -- or you should not expect as sort of a rapid price development going forward. Now, it's more on the how we package our products, what is the mix in our sort of agreement portfolio, and how efficient are we under the hood in delivering those services. And then, final component is the volume. So the growth cannot be, for example, next year, driven so much by the price increases as we have seen during last -- or past 2 years. Operator: There are no more questions at this time. So I hand the conference back to the speakers. Kati Kaksone: All right. It's a busy results day today. I think there are some 30 companies today. There's one question in the webcast currently from DNB Carnegie from Iiris; two parts. Regarding the plan to address the revenue headwind, can we talk about when do we actually expect to see these measures to become visible in the top line and whether we plan to provide any financial estimates of the sales or earnings impact of those actions? Juuso Pajunen: If I start, like I actually hinted a bit, or not even hinted, written out loud in the bridge that we would expect the connected employees' impact to be visible in '26. And that's obviously coming from the nature that if you today win something before it's visible and the connected employees are part of our portfolio, that, especially in the big cases, is a matter of months rather than anything else. So we would expect on '26 the impact. And at the moment, obviously, our financial guidance relates to Q4 and full year '25, and we will come back for the total guidance for '26 along with Q4 publication. Ville Iho: Yes. Again, the only caveat is sort of with what Juuso said, this is that -- as I said before, we are not hunting the volume with the price of profitability. So it is going to be both profitability and revenue and also volumes. So we are not repeating the mistakes that the company did some 6, 7 -- or 5, 6, 7 years ago. Kati Kaksone: Maybe then, continuing on that one, a follow-up question from Iiris. We talked about an update to our product offering in the occupational health to make it more relevant for our customers. Can we give some examples on what that means in practical terms and where we expect to see the largest positive impact? Ville Iho: It's down to the segmentation of different needs amongst our customers. Of course, we are serving 30,000 -- roughly 30,000 different companies in Finland. And there's a wide spectrum of different type of needs and appetites also to pay for the services. Now, when we are talking about sort of transforming or renewing the products, typically, it concerns the sort of customers who are more sort of keen on looking at the price and value for money type of sort of comparisons. And there, we do have strong means inside the company to steer the services across our vast network. We have not used them to the full extent. So what I mean is that if there's a company whose main focus is to get things to a certain level and then look at the spend after that one, we have means to serve that type of customer. If there's a customer that wants to maximize the services to the employees, then we can serve that type of customer. If there's a product, which is priced with a fixed contract, we have means to control both the profitability, delivery and cost for that type of customers. And that type of steering capabilities will be sort of utilized to full extent now going forward. So we have the flexibility. We have different type of delivery models, and we are also renewing sort of commercial packaging of these type of different models. Kati Kaksone: Yes. And of course, MedHelp is a concrete example of the value increase that we can show to our customers in a relatively short term as well. Ville Iho: Absolutely. It's going to be the next level. Kati Kaksone: Good. Then, a question on the public outsourcing tenders and the outlook there. Besides the tender of Pirkanmaa wellbeing services county, which was won by our peer yesterday, are there any larger tenders opening up at the moment? Ville Iho: Well, there's one other which we know of. And then, I think what's going to happen is that health care counties are watching very closely each other. And when somebody is opening a path, then the rest will follow, specifically if there's a successful implementation of a certain model. So we believe that this is only a first step, this [ Pirka ], and congrats to Pihlajalinna for good competition and a nice win in there. Kati Kaksone: Yes, indeed. Then maybe a question to both of you. Can we talk about the M&A pipeline? How does it look at the moment? Juuso Pajunen: Yes, if I start, so basically, it is fair to say that M&A opportunities are now little by little emerging in different type of segments. And we are, as we have said, happy to do disciplined M&A when we see an opportunity to fill a blank, whether it's a technology bank, offering blank or other blank. So, that market is little by little activating, and we are and we will be active in that one. Ville Iho: Yes. There's -- just looking from sort of a short history perspective, where we have been and where we are now and potentially will be, the activity on our desk is way higher than it has been for 5 years or so -- 5, 6 years, sort of post-COVID or during COVID times. This is sort of an all-time high activity. And there are sort of real potentials out there. Of course, you always need to get to the -- get over the sort of finish line to get something materialized. But the funnel is there, and it's strongest that it has ever been during my term in Terveystalo. Kati Kaksone: Yes, definitely signs of picking up there. Then a couple of questions from Matti Kaurola, OP. We mentioned that the insurance business is growing fast. Are there any possibilities to take more market share from other players in that segment? Ville Iho: Well, I would say, it's not growing fast. It's growing steadily. So it's -- coverage of insurances in Finland has been developing positively, and then use of services have been developing positively. We have gained market share over the 2 last years. And then, further gaining market share, of course, requires also new means and new type of value creation for insurance companies. I think we have a strong plan there, which we continue implementing. The bigger moves, in my view, will happen only in 2027. Next year will be more like a steady progress in this segment. Kati Kaksone: Of course, we have a clear attack plan for 2027 to deepen the cooperation with the insurance companies. Then, maybe continuing on the outsourcing market and the well-being services counties, how do we look at the public outsourcing market in general in the future? Is it attractive? And is it a part of our core offering and our business going forward? Ville Iho: Well, we explicitly said earlier that we are interested in this new type of outsourcing deals. We were part of [ Pirka tender ]. And one can say looking now in hindsight, the competition and the outcome that each and every out of 3 main players were on the ball in sort of pricing and offering the package. So very close margins who won and who did not win. When it comes to profitability, of course, this would have not been sort of the richest agreement, but still value-creating, EPS enhancing, which is the key for our business model. So when this type of tenders come to the market, we are interested. Kati Kaksone: Indeed. At the moment, we don't -- we have one more question from the phone lines. Let's take it now. Operator: The next question comes from Anssi Raussi from SEB. Anssi Raussi: One follow-up from me. So you also mentioned these somewhat extraordinary costs last year in Q4 and that there were some one-offs related to employee expenses. But can you remind us like what kind of amount we are talking about that you consider one-offs in Q4 last year? Juuso Pajunen: Yes. So basically, compared to baseline in last year, if you go into the details, you remember that we paid EUR 500 per employee to all employees an extra bonus. And based on the CLA, there was EUR 500 per employee fall all under CLA. So that's the personnel expenses I referred to. And then, if you go into a bit deeper, you see that there was a bit of accelerated amortizations and depreciations in the income statement in Q4 last year. So, that one you need to put your finger into yourself, but normally, forecasting depreciation and amortization is not super difficult. Kati Kaksone: Thanks. With that, I believe we don't have any further questions on the phone lines or from the webcast. So any closing words? Over to you, Ville. Ville Iho: Well, as discussed earlier, a quarter of improving margins with revenue headwind; strong agenda to further accelerate the areas where we are progressing well and to tackle the headwind in occupational health care; investments with the dry powder provided by [indiscernible], used more and more to digital offering, where the agenda is -- strong architecture is there and delivering tangible results. Kati Kaksone: Great. With that, we thank you for your time, and have a great rest of the week. Juuso Pajunen: Thank you. Ville Iho: Thank you.