Kalmar Oyj B

Good morning and welcome to Kalmar's Q3 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. Please pay attention to the disclaimer as we will be making forward-looking statements. And now over to you, Sami.

Thank you, Camilla, and good morning, everyone. I'm pleased to be here today to share with you Kalmar's third quarter's performance, which was a solid quarter in many ways. I'll start with highlighting the fact that we delivered a record high comparable operating profit margin of 13.8%, which was driven by services and improved efficiencies. Despite persistent global market uncertainty, indecisiveness and delayed decision-making among some customers, we did ensure a solid performance. The market activity in the quarter was in line with our previous expectations of a slightly softer environment in the second half, especially in the Americas. Orders received declined by 10% to 375 million euros. Services orders increased by 12%, while equipment orders decreased by 20%, which I will cover more in detail in the next slides. With one quarter left in the year, we keep our guidance unchanged, and we expect our comparable operating profit margin to be above 12% in 2025. Moving into orders received. Firstly, zooming out a bit from the quarter and the drop in total orders by 10% compared to last year Q3. I would like to point out that year to date we are at 1.3 billion euros versus 1.2 billion euros last year in orders received. And that is up with 9%. As mentioned, we have a positive momentum in services. Service orders were strong across the portfolio with an increase of 12% while equipment orders decreased by 20% from last year. The decrease in equipment orders was mainly affected by timing of larger orders and delayed decision making. The underlying demand remained mostly stable. However, it was subdued in Americas. Tariffs are causing further uncertainty, and as mentioned, was dampening decision-making, meaning that our customers, especially in the US and Latin America, have remained cautious. The order book remained on a good level. Let's now focus on the regional development. The order development was mixed across different geographical regions and segments. In Europe, the order intake has been strong year-to-date, up 11%. The decline in Q3 was explained by timing of larger orders. In Americas, we saw some growth year on year, despite trade policy related uncertainty. The growth was primarily driven by the distribution and customer segment and can be explained by a weak comparison period 2024. EMEA's order intake year to date has been stable. In regards of our two segments, the services segments orders have been strong across all the regions, which is key for us, of course. Then moving on to our sales performance. Our sales in the third quarter were 436 million euros. The sales continued to grow by 3% and in constant currencies 5%, which is the result of strong operational execution. Sales in equipment was flat and increased in services by 8% from last year. Services share of sales continued to grow and was 34% in the third quarter. Then let me guide you through how our sales has developed in different regions. Geographically in this quarter, there are differences depending on the region and end customer segments as well. The sales overall in Europe was stable, with variations by end customer segment and country. The decrease in sales in Americas continued and is explained by a lower order book in the distribution end customer segment. In EMEA, the sales performance has been strong, especially in the ports and terminals end customer segment. As you well know, we have a well diversified business with our four strong customer segments. And as already covered, the services segment share of sales was 34% in Q3, which is providing resilience to our overall revenue. ECO portfolio share of sales is continuing to develop positively and increased to 46%, which is showing the strong interest towards our sustainable solutions. And on the people side, let me highlight our 5,298 passionate employees and teams worldwide. Together, we are dedicated to managing this dynamic environment while diligently executing our strategy. Let's now look at the whole year 2025 from a macroeconomic standpoint, which is one of the hot topics at the moment. The current macroeconomic uncertainty, driven by geopolitical tensions, leads to increased volatility in economic data, making it difficult to provide long-term forecasts. However, as this data shows, based on external indicators, the market in 2025 has been more resilient than previously anticipated. IMF increased its global GDP forecast again in October compared to July 2025. Drury has again upgraded its container throughput forecast for 2025 to almost 5% and for 2026 to 1.3%. And Oxford Economics has also upgraded the global manufacturing forecast upwards for 2025 and 2026 in June. Then building on the previous slide and looking at the development from a fleet activity point of view. Here we have our fleet activity development of our 14,500 connected equipment around the world. We get a good picture of the activity in the different regions by following this. 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 third quarter. As we see here, the activity in the US has decreased, which is in line with the softer market we have experienced. However, our global footprint is an important driver which provides us resilience in turbulent times. Even though the market might be softer in one part of the world, as we see here, the overall development in the fleet activity is positive and provides us opportunities for the future growth. Our ECO portfolio continues on a positive development trend. The ECO portfolio share of total sales has remained high and increased to 46%. ECO portfolio share of order intake was also high at 43% in Q3, which is demonstrating our customer's strong interest towards electric and hybrid solutions as well as sustainable service solutions. The fully electric machine share of equipment orders for the last 12 months increased to 11%. We continue to see significant potential with electrification and our focus has been on innovations enabling this transition. As an example, we have during the third quarter launched our next generation lithium-ion battery technology for our counterbalanced equipment portfolio. Continuing on the positive side, we have been pleased to announce some orders booked in the third quarter, including the three-year Kalmar Care maintenance contract for Noatum ports Malaga terminal in Spain, five hybrid straddle carriers including my columnar inside performance management tool to Rotterdam short C terminals in Netherlands and 14 hybrids autostrat machines to Patrick terminals in Australia. And then to one of my favorite topics, yet another quarter of good momentum and progress in strategic actions. During Q3, as a few examples, we kicked off the five-year Move to Green program with a successful launch event in our innovation center in Finland. We also commenced with the construction work of our new test center in Ljungby, Sweden. Additionally, we were proud to be awarded with an EcoVadis gold medal, which is placing us in the top 5% of all rated companies in terms of sustainability performance of the company and its supply chains. Additionally, as part of our commitment to sustainability, Bromma has manufactured the world's first crane spreader made from fossil-free steel to be delivered to DP World Sogna in Egypt this fall. And then shortly a few highlights from our business performance before handing over to Sakari. The performance was solid in the third quarter despite continued market uncertainty. The services margin was strong at 18.5%. The equipment margin was at the solid level, however, affected by the product mix and tariff impacts, which Sakari will come back to. The order book is on a good level in both segments. In other words, I think we are well positioned to drive growth and deal with the volatile market environment. On my last slide here, I would like to remind you about our performance targets 2028, which we are fully committed to. Now I will hand over to Sakari. Thank you for now.

Thank you, Sami, and good morning to all of you also from my side. I will start off with our traditional slide on our financial profile and where we are, and a couple of highlights from that. Our financial profile has remained strong, which gives us excellent possibilities to target growth and execute the kind of actions that Sami was mentioning that we have been publishing also during this quarter. If you look at the relationship between the orders and sales, you can see that over the last 12 months, we have booked clearly higher orders than what we have had in terms of sales. So even though we had a slightly weaker quarter in terms of orders in Q3, I think this should be viewed a little bit longer term. That leads us to having an order book at a healthy level of around 1 billion euros. Our business performance has been successful in our comparable operating profit margin for the last 12 months, shows a slight uptick to 12.7% now as a result of the strong performance in Q3. Our leverage continues to be low, And maybe a low light from the financial profile is that our cash conversion now has dropped to below 100% due to the weaker cash flow in Q3 and is now at 75%. Still pretty strong though. I will then go into the segments a little bit more in detail. So as Sami mentioned, the equipment segments orders received decreased by 20% from last year in the quarter. However, when you look at the year-to-date number, it's still showing a healthy growth of 11%. In terms of the order book, that remains on a good level. Sales was flat in the quarter and profitability was at a very good level at 12.7%. And that was of course, sales was on a good level driven by successful project deliveries. We did have a temporary four week delay in forklift deliveries to the US due to the new tariffs announced in August, and also the related documentation requirements, which has some impact on the quarter. However, equipment segments profitability was at a solid level in Q3, 12.7%, supported by our continued solid commercial performance and driving excellence program actions. Although we had some impacts from tariffs and also the product mix impacted the profitability in the quarter to some extent. Through proactive measures, the majority of the tariff impact was mitigated, though with a slight negative impact on the margins in the equipment segment. One of the highlights of the quarter definitely is the services performance overall, with an orders growth of 12% in the quarter, 7% year-to-date, which means we're growing faster than the market in services, strengthened order book, which provides resilience, and sales up 8% in the quarter and 6% year-to-date. And then also the profitability at 18.5% in the quarter. The 18.5% profitability was driven by higher sales and strong commercial performance. The US Spare Parts Distribution Center relocation which had some impact to our Q2 profitability and services is very much on track now and is supporting our services growth now and going forward. Our tariff related mitigation actions taken during the quarter supported the services margin resilience in a good way. And now let's dive into the topic of tariffs. I think the key message here is that the full impact remains unclear and of course we are dependent on the same external information as everyone else, and the trade policy landscape is still fluid. What is clear, though, is that Colmar has taken actions in regards to the tariffs, mitigating the tariff impacts with price increases, supply chain actions, and other operational excellence initiatives, as well as working on fulfilling the documentation requirements. As you know, our U.S. factory in Ottawa, Kansas produces terminal tractors mainly to the U.S. market and then also to Mexico and Canada. And from our Poland factory in Stargardt, Poland, we sell reach stackers, forklifts, and straddle carriers to the U.S. market. It is worth mentioning that, to our knowledge, no player is manufacturing straddle carriers in the US. And our factory in Ipoh, Malaysia, produces Brahma spreaders, which are sold globally. And as you can see from this slide, our factory in Shanghai, China, sells nothing to the US. So that is not impacting. When it comes to the spare parts, components, and steel of Chinese origin, they represent a low double-digit percentage share of Kalmar's total portfolio. I think that's an important thing to note. Then, to our driving excellence program, The execution of our driving excellence initiative is ongoing very well. And as you know, we are planning to reach 50 million euros of gross efficiency improvements by the end of 2026. During the first three quarters of 25, we have progressed with the implementation and a run rate of approximately 24 million euros of annualized gross efficiency improvements have been secured. The majority of the improvements so far originate from commercial excellence actions, primarily around sourcing, but with impacts from operational excellence actions starting to materialize from things like process development. Then to the balance sheet side, Our return on capital employed in the third quarter was 20.8%, so very stable. And as before, it's worth noticing that the items affecting comparability, which mostly are deriving from the demerger and listing process in the previous year, still have an impact on the Q3 ROCE. and the impact is about 1.7 percentage points. So normalized for that, we would be somewhere around 22.5% in ROC. Our leverage is at a strong level of only 0.3 times, and our gearing is around 13%. Then a few words about the cash flow, which was a bit of a low light in the quarter. Of course, cash flow always has some quarterly fluctuations, and this time we hit the number of 26 million euros. This was impacted by increased working capital. This increase was driven by inventories and largely explained by the tariff-related issues as well as our deliberate action to improve spare parts availability, so carrying somewhat higher spare parts inventory. In addition, of course, the high level of HD orders that we've been seeing in the previous quarters is to some extent also impacting work in progress. So all in all, that then resulted in some buildup of working capital in the quarter. And our cash conversion for the last 12 months was at 75%, as stated previously. And then, as Sami already mentioned, our guidance for 2025 remains unchanged, and we expect our comparable operating profit margin to be above 12%. All right, that's all from the presentation side, and I welcome my colleagues back to the stage.