Konecranes Plc Ord

Here with me today, I have our president and CEO Anders Svensson and our CFO Teo Ottola. Before we start, a kind reminder, this presentation contains forward-looking statements. Next, Anders and Teo will walk you through our Q2 results. Anders will start with the group numbers, after which Teo will focus on the business segments. The presentation is followed by Q&A as usual. But now, Anders, the stage is yours.

Thank you, Keira, and welcome also from my side to this webcast for the result of the second quarter. The headline of the quarter is record high comparable EBITDA margin in all business segments. The demand environment remained healthy during the second quarter, even if it was down 11% on a strong comparable in the previous year. Sales execution was strong and we delivered above one billion of sales, up 13% versus the previous year. And that gave us record high comparable EBITDA margins of 14.3% and it was actually all time high in all business segments. And the profitability improvement was mainly driven by higher volumes and also by price inflation management and a strong strategy execution. I'll move into the market environment and start with our industrial customer segment. If you look at the manufacturing capacity utilization rate starting in the EU, it was down sequentially and also down on a year-on-year comparison with 2.3 percentage points. In the US, however, sequentially it was up, and if you look on a year-on-year comparison, it's actually quite flat. If we then move into the global manufacturing PMI, that was in expansion. However, if you look at the Eurozone, still in contraction, while US, China, India, and Brazil, clearly in expansion. I move over to our port solution customer segments. And here we normally look at the global container throughput index. And if you look at this, it continued on a high level. And on a year-on-year comparison, it's up 6%. And that should talk about a strong market climate for our port solution customers. I'm moving into the group order intake and net sales. Starting with order intake, we had a healthy order intake of 968 million, and that was down 11.5% versus a strong comparable in the previous year. However, the order intake is the strongest we have had in the last four quarters. And if you look into the different segments, so in service, we had an all-time high order intake. In industrial equipment, we were above the 300 and on the same level as in Q1 and actually ahead of the Q3 and Q4 of the previous year. And then you look into ports also here above the 300 million and the strongest order intake in the last four quarters. However, in the comparable one year ago, there were two significant order intakes. The first one was, and the largest one, was to Porto, Virginia, 36 automatic stacking cranes at the value of above 130 million euros. And there was also another one to Copenhagen Malmö Port. Our net sales execution was strong. We delivered 1 billion 32 million and that was up 13% versus previous year. We had an increase in all three segments. Geographical wise, we had an increase in EMEA and in the Americas and a decrease then in APAC. And the mix for the group was slightly positive for the quarter. Moving into the group order book. And here, our book to build for the quarter was slightly below one, thanks to the strong sales execution. And if you compare it to the previous year, we are 12% down versus Q2 23. And as you can see, that was a bit of a peak in the order book. Since then we have improved our delivery capabilities and also reduced lead times to customers. So going into the second half here with almost 3 billion order book is a strong position. Then I move into our group comparable EBITDA and here we delivered 147 million euros and that was 50% up on the previous year where we did 98 and that gave us a margin of 14.3% for the quarter that was up 350 basis point versus the previous year. And the comparable EBITDA margin increased in all segments and we're all time high then in all segments as well. And as I said in the beginning, driven by volume leverage, price inflation management and strong strategy execution. If you look at the gross margin, it also improved on a year on year comparison. Now we normally look at our financial target and our performance towards our financial targets. So if you look at the quarter isolated, it's very strong of course, both the group and all the segments are within the profitability range and actually in the top half of the profitability corridor. You can't look at one quarter isolated, of course. So when we look at rolling 12 instead, we can see that group are now within the profitability corridor at 12.3% in the rolling 12 basis. Service as well, 20.8. And you can see a strong performance also from industrial equipment and port solutions getting quite close to their profitability corridors as well. So that looks very good. If we instead then also cover sales growth target, which was to grow above nominal world GDP. If you look at the previous year, 23, we had a growth of 20.5% in comparable currencies versus 22. And so far this year, we are running at 7.8% growth in comparable currencies. So also here, I think we are delivering on our target. outlook and within our industrial customer segments we say that our demand environment within industrial customer segments has remained good and continues on a healthy level and we have seen that during 23 and also the first half year here of 24 the demand environment has remained good and we don't have we are not saying that there is no uncertainty anymore in the market of course there is but we see it as quite stable on a good and healthy level within the industrial segment interest rates are of course impacting customers negatively in the decision making process not that they cancel or discontinue projects, more that they take longer time on decisions when it comes to the larger projects such as process cranes, not affecting standard crane and component deliveries in the same way. Funnel continues to be strong, also containing process cranes to a large extent, and we see a good inflow of new cases also into the funnel. Then if I move to the port customer segment, we say that global container throughput continues on a high level and long term prospects related to global container handling remains good overall. And if we look at the pipeline here, it's also in a very good state. Short cycle products, projects of different sizes, And you know as well as we do that this is a project business fluctuating mainly depending on timing of decision making in larger customer projects. We haven't had a really big project in the last couple of quarters, as you are aware. I think delivering 300 million plus without those kind of projects is a very good level for us. And now we see, if we look at the second half, that there are some projects that come more into a decision-making process with customers. So we're looking positively towards that. Then I go into the financial guidance for 2024, starting with net sales expected to remain approximately on the same level or to increase in 2024 compared to 2023. And then we say that comparable EBITDA margin is expected to improve in 2024 compared to 2023. And as you know, we upgraded this statement in June. So with that, I would like to summarize that we are very happy with our performance in the second quarter and also in the first half of the year. We're looking forward to the second half of the year. And with that, I would like to invite our CFO, Mr. Teo Ottola, to dive a little bit more into our financial numbers. So go ahead, Teo.

Thank you, Anders. And before actually going into the business segment numbers, so we could take a brief look at the group profitability bridge. So this is the comparable EBITDA bridge between Q2 24 and Q2 23. Of course, this one looks very good. So the year on year improvement now is 49 million euros. As a comparison, of course, if we take a look at the first quarter, so there the year on year improvement was only 6 million euros. Now this is a clear step forward, obviously, in this respect. improvement year on year and of course also Q&Q basically comes mainly from two aspects. One of them is the underlying volume and the other one is net of inflation pricing. So as Anders mentioned, our sales are 13%. The price impact in a year-on-year comparison is around 5%, maybe a little bit more. But this gives us a very good underlying volume improvement in a year-on-year comparison, which obviously is visible in the operating average of the company in the second quarter. Then if we take a look at the price impact, so this 5% price increase in comparison to the situation a year ago, so it is more than inflation. So this is giving us a net of inflation pricing benefit in a year on year comparison. In comparison to the Q1, so we didn't basically have any underlying volume improvement in Q1 in a year-on-year comparison, because the sales was not that high. We did have net of inflation pricing impact also in Q1, but in the second quarter it was somewhat more. So then when we take a look at this Q2 versus Q2 again, so fixed costs continued to be well in control. And this, of course, emphasized the impact of operating leverage. Also the execution as a whole. So efficiency of the operations was very good. And this is also a positive delta in comparison to the previous year. We had good execution in Q1 as well in a year-on-year comparison, so this is maybe not a difference from a sequential point of view, but definitely on a year-on-year basis. So underlying volume improvement, net of inflation pricing and good execution overall throughout the company contributed to the big delta that we have in Q2 versus the situation one year ago. Then if we move into the segment level, start with service as usually, order intake 406 million euros. This is a growth of 8.5% with comparable currencies year on year. We had growth both in field services as well as in parts of the regions. We had growth in the Americas and EMEA, but a decrease in APEC. Agreement base grew also 5.7% year-on-year. Sales, 396 million euros, that is 8.8%, higher than a year ago in comparable currencies. Again, growth both in field service as well as parts, and also from the regional perspective, so all regions actually increased in sales in Q2 versus a year ago. order book basically on the same level as we were one year ago. Then EBIT A on an extremely good level, 87 million euros or 22.1%. A good improvement even by the pricing impact as discussed. Of course, underlying volume improvement. And also from the execution point of view, the quarter was good. And all of those contributed nicely to the profit improvement. Industrial equipment, their ordering cost 305 million euros. Decline in external orders of approximately 11% in an year-on-year comparison, again with comparable currency. We had year-on-year growth in standard grains as well as in components, but we had a clear decline in process grains. So the process grain funnels have continued to be good, but as Anders mentioned, the decision-making time times have become longer. And as a result of that, the process grain order intake was lower than what we had a year ago. Then again, in a sequential comparison, if we take a look at that one, so standard grains actually increased in order intake. In components, we had a decline. Sequentially, process grains were more or less on the same level as they were in Q1. The component order intake decline is primarily as a result of the price increases that we made in Q1. And usually there is pre-buying as a result of that. That was the case now as well. And Q2 orders were lower, exactly the same as we had one year ago also. Sales, 327 million euros. That is from the external sales point of view up 6.8%. We had growth in all major business units and of the regions in EMEA and Americas, whereas decline in Asia Pacific. Order book by some 5.8% in a year-on-year comparison. Then to the EBITDA, excellent result here. 32 million euros, 9.8%. This is almost four percentage point improvement year on year. Of course, driven by volume here as well, but primarily actually strategy execution. So for example, the optimization program that we have been running for industrial businesses, impacting mostly industrial equipment has been generating benefits. We also had one time positives in the amount of roughly 4 million here as a result of the project settlements that we did during the second quarter. Then on the port solutions side, we have order intake of €300 million. That is a decline of 27% in comparable currencies year on year. We had very good order intake in mobile harbor cranes as well as in straddle carriers. of the regions, if you take a look at that one. So we had actually growth in APAC, whereas we had a decline in the other two regions. And again, sequentially, order intake actually increased as a result of the same business units as we had in an year-on-year comparison as well. So, for instance, trail carriers. And then if we take a look at the early cyclical product groups like lift trucks, growth year-on-year, sequentially a slight decline. From port service, also important one. So there we had year-on-year more or less flat-ish situation, Q2 we had growth. Sales were on a very good level. This is a very high growth of 25% year on year, 348 million euros. We had very good deliveries in RTGs. We also had very good sales in port service, which of course is supporting the mix going forward or now as well. And then when we take a look at the EBIT, 36 million euros, 10.5% here. Also, like in industrial equipment, an improvement of almost four percentage points. Of course, driven by the underlying very big volume improvement, but also definitely price. And then mix was particularly good for pot solutions in this quarter as a result of the high share of service and, for example, RTGs.