Hiab Oyj Unsp/Adr

My name is Aki Vesikallio. I'm from Cargotex Investor Relations. Today's results will be presented by our CEO, Mika Vehviläinen, and our CFO, Mikko Puolakka. This call is about to discuss Cargotex results, and please pay attention to the disclaimer in the presentation, as we will be making forward-looking statements. With that, over to you, Mika.

Thank you, Aki. Good afternoon from my behalf as well, and thank you for joining the Cargodeck Q4 and 2021 results. A couple of highlights first from the year. It was another exciting year for Cargodeck, really characterized by a strong demand in all of our main market segments, delivering strong record orders and a very strong order backlog. It was also a record year for our services business that developed very well. However, the results were affected really by two factors. First of all, the supply chain difficulties and related logistic issues reduced our revenue potential during the Q4 by approximately 80 million euros, having about 24 million impact on our revenues. Furthermore, we had an offshore related one-off project, sort of a write-off in MacGregor, that had a result impact of approximately 27 million euros, and those two factors negatively impacted our Q4 profitability. Also after the Kalmar Q4 announcement related to the electric portfolio, I'm very happy and proud for the fact that Cargotech can now offer an electric product in all of our product categories across the whole company. In today's presentations, I will cover some of the 2021 highlights, discuss the market environment that we see in front of us, take up some of the group level developments, and then our CFO Mikko Puolakka will cover the business areas and the financial results, as well as the outlook for 2022. As I said, strong demand actually really crossed all of our business segments delivering a very strong order intake, record order intake and record order backlog for us. Orders increased by actually 42% and it was obviously a clear improvement in all of our main product and business areas. Sales, however, increased only by two percentage points, and that was really caused by two different factors. Revenues declined both in McGregor as well as in Kalmar project and automation business, and this was due to the fact that 2020 order intake in those businesses was clearly lower, and that, of course, with the long cycle nature of the businesses, resulted to a lower revenue in 2021 as expected. In Kalmar Mobile Equipment, the revenue increased, but the increase was limited by the supply chain bottlenecks that actually intensified towards the second half of the year. The comparable operating profit improved. We declined about 6 million euros in Kalmar. Without the Navis impact, the Kalmar profitability would have been roughly at the same level as in 2020. Hayab was able to leverage the good market environment and the sales increase drove a 37 million euro improvement in the profitability. McGregor actually made good progress pretty much almost in all of its product areas, and despite the lower revenues in 2021, improved its profitability in the merchant business as well as in services. However, unfortunately, in one of the business lines in offshore segment and the offshore wind related programs, a new project implementation with new technology resulted in the implementation challenges and 27 million write-off in project profitability. We see this as a one-time charge against the difficult technical issues we have had in that project. If I look at overall the picture, our equipment utilization and market activity within our customers continued at the high level during the Q4. We saw clear improvement in equipment activity further sequentially from Q3 to Q4 and also on year-on-year basis, both in HAJAB as well as in Kalmar mobile equipment space. Overall, the market environment continues to be strong. The container traffic grew by roughly seven percent from 20 to 21 and is expected to grow somewhat over five percent also from 21 to 22, really by the strong global trading and sort of merchant activity as well. Also in construction, which is one of the main drivers for HIAB, we saw again a sort of increasing activity, for example in building permits in US towards the end of the year, and also the European construction activity is at the high level. The growth is really limited primarily by the material availability and the workforce limitations at the moment. Also in shipping, 21 was a very encouraging year, where we saw the ship contracting going up significantly. We saw some softness towards right at the end of the year and early this year, but this is, to our opinion, really sort of caused by the fact that the shipyard capacity starts to be full. New build prices have gone up quite significantly. We still see the sort of long-term prospects for the shipbuilding to continue at the strong level moving into the 22. As said, record high orders, especially driven by the strong activity in Kalmar mobile equipment, as well as in Hajab, and a very strong order intake growth and record orders in those businesses. This obviously resulted to a record high order book as well. So we go into the 22 with an extremely favorable order backlog. Obviously, within the order backlog, we also have started to see the sort of the pricing increases that we actually implemented multiple times during the 21 to start to have a more positive impact on the margin when we move throughout the 22. The sales were growing more modestly, and as I already said, really caused primarily by the expected decline in McGregor and Kalmar project businesses because of the low oil intake in 22, then affecting the revenues in 21. And with the strong market demand in Hajab and Kalmar mobile equipment, the limiting factor really was the supply chain and logistic issues in there that limited the growth in that one. The impact was very strong during the Q4. We estimate that the impact for the revenue was roughly 80 million euros negative on that one. very satisfied with our performance in the services business. Another record year for that one, 7% growth in revenues and roughly 18% growth in orders in services and really growing in all of our business segments. McGregor sales revenue was somewhat lower and this was really primarily driven by the very high activity in the shipping. They're obviously with the sort of very positive and profitable sort of environment for the ship owners are reluctant to put the ships up for maintenance and servicing work with the highly favorable market conditions at the moment. But considering that the COVID restrictions are still somewhat limiting the services activities, a very good performance from all of our services businesses. We are also very satisfied with the work we are doing with our strategy implementation, aim to be the global leader in sustainable cargo flow with the key targets around sustainability impact we can have in our own operations, but especially to our customer operations and then the profitable growth. Good examples on concrete actions we were able to deliver during 2021 and during the Q4 in our strategy implementation. In HIAP, we are continuing to grow both organically and inorganically, and acquired GulfUp, one of the leaders in the demountable market space in USA. And we see good opportunities in HIAP to continue both organic growth as well as multiple opportunities to also grow inorganically, looking at adjacent businesses and local champion type of companies such as GulfUp. also very proud about the fact that we have now launched the full electric portfolio and in Cargotech all of our product categories are now available also as an electric solutions and we expect a lot of sort of demand going into electric portfolio moving forward also throughout the 2022 We also keep on investing, in addition to electric, to our robotics and automation solutions. One example of that one was the Cargotec investment and Kalmari investment in the Coast Automative Inc., a startup company that is helping us to sort of develop further our robotic and autonomous operations in our mobile equipment space. And again, very satisfied with our performance in services with the strong growth in the business segments. With that one, I'd like to hand over to Mikko Puolakka, who will cover the business areas.

Thank you, Mika, and good afternoon, ladies and gentlemen, also from my side. Let's start first with Kalmar business area, where we had strong orders, the strong market demand continued, and we had also very good performance in service delivery during quarter four. When we look at the orders, the large grain replacement market continued to be active. also in mobile equipment as well as in services. However, large automation activity has remained fairly low during 2021, and we got only one automation order during the year earlier in 2021. Now, when we look at our order book, 1.3 billion euros, we start the year with a sizeable order book. It's good to remember, however, that the delivery times are longer than usual. In Kalmar mobile equipment, for example, we have approximately 12 months delivery times at the moment. Our sales were 430 million euros. This was up by 5%. We were able to grow the sales despite the component shortages in the mobile equipment. Service sales were up by 7% year on year. The large grain sales declined due to the low order intake back in 2020. We had approximately 30 million euros mobile equipment deliveries postponed from quarter four to 2022 due to missing components. Kalmar profitability improved by 19 percent, even when we did not have any more in Q4 the NAVIS results part of the Kalmar business area. Growth in profitability is coming from higher sales as well as good large grains project execution. NAVIS impacted or the divestment of NAVIS had roughly 7 million euros profit impact in quarter four. So in quarter 420, NAVIS contributed roughly 7 million euros to our profitability. And this previously mentioned 30 million euros delays in our deliveries had approximately 9 million euro impact on Kalmar profitability. With those 30 million euros we could have made approximately 9 million euros more operating profit. Then looking high up. In high up we had a mixed code. The customer activity continued at a good level. Orders were 384 million euros. Like in Kalmar's case also in HIAP, the year starts with extraordinary high order book. And in HIAP's case, we are talking even up to nine months delivery times at the moment due to the component shortages. In high up, we had a good growth in sales, sales were up by 15%. However, I would say that the quarter 420 sales were still to certain extent impacted by the low order intake from early part of 2020. So perhaps the comparison point is also not entirely kind of apples to apples. In HIAP, we had a very good performance in services, in spare parts, in installations, as well as in maintenance. In HIAP's case, we had approximately 50 million euros deliveries postponed from quarter four to 2022. And this is very much coming from also missing components, as well as availability of truck chassis. HIAP's full-year profit was 166 million euros, or 13.3%, a very nice 29% improvement year on year. However, the Q4 profit declined slightly, and one of the reasons for this is the 50 million euros delays in deliveries. That caused lower productivity, 50 million euros delays had approximately 15 million euros impact on operating profit. In HIAP's case we have also added certain costs in selected areas to support the growth in services, mergers and acquisitions as well as in our assembly operations. Then in McGregor, I would say that otherwise good development, but we had significant cost overruns in the offshore wind product line. The order intake growth in McGregor was very much driven by the merchant and service divisions. Order book has continued also to improve. Roughly 75% of our McGregor order book is merchant related and 25% offshore. Sales declined by 16%. This was more or less expected due to the low order intake back in year 2020. Service sales were up by 15%. McGregor's quarter four profitability was disappointing. The key driver, as described earlier by Mika, is the 27 million euros cost overruns in our offshore wind projects. This is first of its kind technology. We have needed to do more extensive design for the project. Also, the manufacturing of components is more expensive. Good to remember that in quarter four, as well as on full year level, the merchant and service divisions have improved profitability in MAC record. And the TTS integration is progressing according to the plans. We have made approximately 13 million euros savings in 2021. Then a few words about our key figures. We start the year with 2.8 billion euros order book, roughly 1 billion euros higher than a year ago. Good to remember, like said also earlier, the delivery times are substantially longer than in a normal supply chain situation. Comparable operating profit was 232 million euros and below that we had 124 million euros positive items affecting comparability. Here the largest positive item was the Navis divestment, 230 million euros sales gain. And then we had the merger related costs, 50 million euros as a negative item. The other restructuring costs have declined from 2020. Earnings per share were 3.82 euros and if we eliminate the positive items affecting comparability, EPS would have been 2.37 euros. Our ROC is now 14.5% and Navis had a big contribution to this improvement. Looking at the cash flow, quarter four and full year 2021 cash flow was weaker than in previous year. The key driver here is the inventory increase, and this inventory increase comes from missing components. We have more semi-finished goods currently in our stocks. Our inventories have grown 36%, while sales grew only 2%. Despite the lower cash flow, our balance sheet has continued strengthening during 2021. Our gearing was 27%, and excluding the IFRS 16 lease liabilities, it was 16%. We have also prepaid a €150 million bond, which would have matured in Q1 this year, but we prepaid that in December 2021. and basically now we do not have any major debt maturities coming until mid 2023, so in the next 18 months. So we are in a very good position to support both organic and inorganic growth from our balance sheet point of view. Our board is proposing a dividend of 1.08 euros for each B share. This is the same as in 2020. This dividend payment amounts approximately to 70 million euros, And this is in line with the combination agreement between Cargotech and Conecranes signed back in 2020. This 1.08 euros for each B share is approximately 28% dividend payout ratio. Excluding the one of items, it would be 46%. Our dividend policy is to pay 30 to 50 percent payout ratio, and the dividend payment would be made on 28th of March 2022. And then the guidance for this year, as discussed earlier, we start the year with a high order book. However, the operating environment is still volatile. The COVID restrictions may impact us and our suppliers, and also the component availability is going to be a constraint throughout the year 2022. Based on these assumptions we estimate that the 2022 comparable operating profit improves from 2021 and thus is higher than 232 million euros. With those words, I would then hand over back to Aki.