Kalmar Oyj B

Good morning, everyone, and welcome to Kalmar's Q2 results webcast. My name is Kamilla Maikola, and I'm from Kalmar's Investor Relations. Today's results will be presented by our president and CEO, Sami Niiranen, and CFO, Sakari Ahdekivi. The presentation will be followed by a Q&A. And please pay attention to the disclaimer, as we will be making forward-looking statements. And now, over to you, Sami.

Thank you very much, Camilla, and good morning, everyone. I'm proud to share with you Kalmar's second quarter's performance, showing a continued strong order intake and a steady progress in our key strategic initiatives. We managed to generate stable revenues and a resilient margin by successfully leveraging Kalmar's leading position in the market and driving excellence in our operations. Our orders received increased by 20% from last year and overall demand was favorable in Q2. Sales returned to modest growth and increased by 1%. We delivered a resilient profitability of 13.1%, which was supported by the strong equipment profitability. However, there is an increased level of market uncertainties today affected by, for example, new tariff announcements and geopolitical tensions, which is posing a potential risk of slower global growth in the second half of 2025. We keep our guidance unchanged and we expect our comparable operating profit margin to be above 12% in 2025. As mentioned, our orders received in the second quarter increased by 20% compared to last year and totaled 450 million euros, reflecting positive activity and growth in both equipment and services. The order book remained on a good level. Despite prevailing uncertainties, the demand picture overall was favorable during the quarter. In ports and terminals, the demand remained strong globally and was reflected in some larger equipment orders, such as straddle carriers. Overall, we saw strong growth in Europe and solid performance in EMEA. However, the U.S. distribution and customer segment demand was hampered by increased market uncertainty. Then moving on to our sales performance. Our sales in the second quarter were 420 million euros. The sales returned to modest growth and was 1% and in constant currencies 3%. The softness in the Americas was visible in sales and Europe was clearly the largest region, representing 44% of the sales. The book to bill was positive in both Europe and EMEA. Moving on, this slide provides us an overview of our well-diversified business with four strong customer segments. The services segment share of sales was 34% in Q2, which is providing resilience to our overall revenue. Equo portfolio share of sales remained high at 44%, which is showing the strong interest towards our sustainable solutions. With an installed base of 68,000 machines globally and a strong presence in over 120 countries for sales and services, our extensive reach remains a significant asset. This robust foundation fuels our active acceleration of future service growth through innovative offerings and digital solutions. As a highlight and in line with Kalmar's strategy of growing services, we have invested in relocating and outsourcing its genuine parts warehouse from Ottawa, Kansas to Greenwood, Indiana. In addition to the relocation of the US distribution center, we have decided to relocate our European distribution center to a new facility in Metz, France. Both these relocations will consolidate operations, improve efficiency and support our long-term service growth. And today we have over 1,400 own service technicians around the globe and four factories, which are located in Poland, the US, China and Malaysia. While the Q2 performance was strong, the global landscape continues to be volatile. The world today presents an increased level of uncertainties related to tariffs, ongoing geopolitical tensions and the global growth outlook. It's still difficult to draw definite conclusions on how these factors will affect our industry, the demand environment and global trade. However, we are monitoring the situation closely and have implemented tariff surcharges or tariff related price adjustments across divisions to a majority of our customers. We are prepared to continue to act swiftly if needed. Due to the uncertainties, the market environment is currently expected to be more subdued in the second half of the year. So let's then take a closer look at our large base of over 14,500 connected equipment around the world. By following the activity of the connected fleet, we get a good view of the activity and demand in different regions. Overall, we see a positive development trend both year on year and quarter on quarter, which is indicating increased activity at our customer sites during the second quarter. However, at the same time, we have to remember that there are now more uncertainties in the market, and the softness in the US can also be seen in the connected fleet activity in North America compared to last year, Q2. The ECO portfolio share of total sales has remained high and increased to 44%. ECO Portfolio's share of order intake was also 44% in Q2, which is demonstrating our customers' strong interest towards electrical and hybrid solutions as well as sustainable service solutions. The fully electric machine's share of equipment orders for the last 12 months remained flat at 10%. Despite a slightly sluggish development, we continue to see significant potential with electrification. We have announced five orders booked in Q2, including eight heavy terminal tractors to Kaliari RoRo terminal in Italy, two empty container handlers to Depot Management in Finland, 11 hybrid straddle carriers and MyCalmar inside to SeaYard in France, 14 hybrid straddle carriers to Hanseatic Global Terminals in France, and four hybrid automated straddle carriers to Victoria International Container Terminal in Australia. We have been pleased to announce some steps towards sustainable growth during the quarter. We have further expanded our automation offering by continuing to develop new and advanced automation solutions. An example of this is Automation as a Service, a subscription-based model designed to ensure successful and efficient deployment of automation in marine container terminals and intermodal sites. We also introduced a flexible and scalable Kalmar One automation system as a standalone solution. With this, Kalmar is responding to the increasing demand from customers for a modular OEM and equipment type agnostic fleet management solution that allows them to choose what to automate in their terminal operations and how to do it. We have also launched a digital application on the MyCalmar customer platform called Inspector, which helps to streamline daily equipment inspections. The application is compatible with both Calmar and third-party equipment. In addition, we were proud to announce that the Science-Based Targets initiative has approved Calmar's near- and long-term science-based emissions reduction targets, verifying our net zero target by 2045. These ambitious targets align with the Paris Agreement, solidifying Kalmar's commitment to limiting global temperature rise to 1.5 degrees. Our business performance was good in the second quarter. The equipment margin was strong. The services margin was burdened by temporary impacts, which Sakari will come back to. And the order book has strengthened in both segments. On my last slide, I would like to remind you about our performance targets 2028, which we are fully committed to. So thank you all for now, and next I will hand over to Sakari.

Thank you Sami, and good morning also from my side. I will start with our traditional slide on our financial profile. Financial profile has remained strong and this gives us excellent possibilities for future growth. The highlight I would like to point out is the last 12 months orders received, which is now at 1.8 billion euros. And we have a significant positive book to bill ratio if you compare that to our sales on the back of the three strong order quarters that we have had. So our order book has significantly strengthened from the level that we had one year ago. Our profitability, when looking at it through both gross profit and comparable operating profit margin, is on a good level, 12.7% now on an LTM basis for the comparable operating profit margin. Our balance sheet continues to be strong with a leverage of 0.4 times EBITDA and our return on capital employed is now at 20.7%. Cash conversion slightly below 100% at 95% now for the LTM period. Then diving into the segments a little bit more in detail. On the equipment side, all of our equipment divisions performed well in terms of orders received in the second quarter. Our equipment segment orders increased by 28% compared to the same quarter last year. The global overall demand environment remained good, however, somewhat subdued in the Americas towards the end of the quarter especially. And as Sami mentioned, the global landscape continues to be volatile and there is an increased level of uncertainties going forward. The profitability of the equipment segment was very strong in Q2 at 13.9%. We have seen continued solid commercial performance with stable gross margins in equipment And our driving excellence program is supporting the margin development in the equipment segment, especially. On the services side, we saw an orders growth of 7%. So services continues to be on a good growth track. And this is driven by, especially by smaller contracts and also our spare parts. There are, of course, some variations across the regions related to the trade tensions and the US market is a bit softer at the moment and this is also impacting our service segment. When we look at the profitability, as Sami mentioned, this was burdened in the quarter by a couple of things to be mentioned here. One was the impact of tariffs whereas we did of course implement the price increases and adjustments related to the tariffs. There is a time lag in implementing those and that impacted about half of the second quarter before the price adjustments actually came into force. The other thing we did in the second quarter is we have relocated and outsourced our warehouse activity of our spare parts in the U.S., and this had some impact on our operations during the second quarter, but these are of temporary nature. I would say that when combining the impacts of these two mentioned things to the profitability of service, we are talking about slightly over one percentage point of margin. The execution of our driving excellence initiatives is ongoing and we are planning to reach 50 million euros of gross efficiency improvements by the end of 2026. During the first half of 2025, we have progressed with the implementation and a run rate of approximately 60 million euros has been reached in terms of annualized gross efficiency improvements. To date, the majority of the improvements originate from successful sourcing activities, and in addition to that, certain efficiency activities in process development in our functions. Our return on capital employed in the second quarter increased to 20.7%. Again, as before, it's worth noticing that the items affecting comparability, especially deriving from the demerger and listing process last year, have an impact on the 12-month rolling ROCE number. This impact is about 2.2 percentage points, so the normalized level would be at around 22%. Our leverage is at a strong level at only 0.4 times EBITDA and our gearing is approximately 15%. To be noted is that of course during the second quarter we paid out dividends of 64 million euros which impacts the net debt position in the second quarter. Our maturity profile, you can see there on the right hand side of the page, no major maturities in 2025. Our cash flow was not particularly strong in the second quarter, only 22 million of cash flow from operations before finance items and taxes. We have had a very strong cash flow in the previous three quarters. And of course, there are always some timing impacts from larger orders, the advances received and how the working capital is built up as a result of starting to execute those orders. But over a 12-month period, our cash conversion is still very strong at 95%. So this is more timing related when looking at one single quarter. And then I will finish off. Sami already mentioned this, but our guidance for 2025 remains unchanged. We expect our comparable operating profit margin to be above 12% in 2025. Thank you. And that concludes the presentation.