Konecranes Plc Ord

Good morning, everyone, and welcome to Conecranes earnings conference. We reported our Q4 earnings and 2024 financial statement release today. My name is Kiira Fröberi and I'm the head of investor relations at Conecranes. And here with me, I have our usual people, president and CEO Anders Svensson and CFO Teo Ottola. Before we start, just a kind reminder, please remember that the presentation includes forward-looking statements. Anders will start and talk about the group level figures, and after that, Teo will focus more on the business segment level numbers. And the presentation is followed by Q&A as usual. You can send your questions either through the chat function or then through the telephone conference. Thanks a lot. Anders, it's your turn now.

Thank you, Keira. And a warm welcome also from my side. So the headline of this quarter is a strong end to an excellent year. And our demand environment held up really well also in the last quarter of the year. It's actually the second highest order intake for a quarter ever, almost at 1.2 billion euros. And we ended up 26% up from the previous year. Our sales execution was also strong in the quarter, and we delivered the highest sales in a single quarter ever, above 1.2 billion euros. And with that strong sales execution, we managed to deliver a new all-time high for a fourth quarter comparable EBITDA margin of 13.2%. Free cash flow was really strong and even excellent in the quarter at 170 million. And the 2024 dividend proposal is 1.65 euros per share. That's 30 cents up from the previous year. I now move into the market environment and I start with the industrial segments. And even though the macro indicators like the manufacturing PMI and the manufacturing capacity utilization are all showing weakness, we managed to deliver a very strong order intake also in our industrial segment. We move into the ports market environment. And here we can see that it's remained high container throughput throughout the year and also in the fourth quarter. And we can see that reflected also in our order funnel within ports and activities there. Up 3% on a year-on-year comparison. I move into the group order intake and net sales. And as I said, very strong order intake, 1,167,000,000, second strongest order intake in a quarter ever, up 26% versus the previous year. And we saw that ports was reporting really strong order intake, followed by also strong order intake in industrial equipment. If we look at the regions, we saw an increase in EMEA and Americas, while we saw a decrease in APAC. Sales execution, as I said, new record for a quarterly sales number at 1,213,000,000. That's up 5.5% versus the previous year. And here we saw improvement in all segments. And when we come to the regions, Americas and APAC were significantly growing while we saw a flattish sales in EMEA versus the previous year. If I then move into our order book, given that we had for a fourth quarter a bit special very similar order intake and sales normally sales is higher in the fourth quarter than order intake so very similar order intake and sales and then if we add on to that our acquisitions pineman the order book there and also the fx effects we actually have a growing order book of 41 million in the quarter If we compare year on year here, we are down 150 million roughly. That's down 5% at the end of the year. But if you look what we will deliver going into 2025 versus what we had in the book for 2024 when we entered into 2024, the difference is 60 million less for the year. So still a very strong order book in historical perspective. I move into our group comparable EBITDA and here we delivered the highest ever at 159.5 million for the quarter. That equals a margin of 13.2% and that's 150 bps up from the previous year. The improvement was mainly driven by volume, good price inflation management and a strong strategy execution. Gross margin improved also year on year. At the end of the year, I think it's appropriate to evaluate our progress towards our financial targets. And I think we can summarize it as a success. I start with the group. And here we had a growth target to grow faster than the market. And the market was defined as nominal world GDP growth. And that was for 24, roughly 4%. And we achieved a 6.9% growth in comparable currencies for the group. And we can also see that our margin of 13.1% for the full year is clearly within the range of 12 to 15%. Looking then at service, and here we also had a target to grow faster than the market, and we achieved that with a 6.2% growth for the full year. And given the volume, the price management and the strategic initiatives, we managed to improve our margins 110 bps here up to 21%. So clearly within our profitability range also here. Moving into industrial equipment and here we had a target to grow in line with the market and we achieved that as well. So we grew 3.1% for the year in industrial equipment. Given the strong strategy execution focusing on profitability and stability we managed to improve together with pricing of course we managed to improve 200 bps in the year from seven percent to nine percent so very strong strategy execution within industrial equipment Then imports, we had a target to also here grow quicker than the market. And we achieved that as well. We grew 10.9% in comparable currencies. And as you can see, we improved 180 bps year on year and ended the year 9.3 for the full year. And also here we are within the profitability range communicated. So in general, all our businesses are performing as to our expectations. I'm now moving to the demand outlook. I'll start with our industrial customer segments. So our demand environment within industrial customer segments has remained good and continues on a healthy level. And we can see that that has been true for basically the whole of 2024. And we believe that it will continue also going forward. Interest rates, as we have discussed previously, has caused some delay in decision making at our customers, especially in the larger process crane orders. But during this quarter, we also had some nice conversion into order intake within process cranes. The funnel continues to be good, both in terms of number of cases and in total value. So we see also new cases coming into the funnel in a good pace. So underlying seems to be stable. With import customers, we say that the global container throughput continues on a high level and long-term prospects related to global container handling remains good overall. And we can see here that our order pipeline looks really good, especially in automation cases, but also in other projects. But as we know, order intake within these project businesses are fluctuating and much depending on customer's decision making process. We had some nice conversion in this quarter into order intake. And we also now discussing other projects with our customers. But to estimate if we get order intake in Q1, Q2 or Q3 is very difficult as we have talked about previously. But we have a good funnel that we are working on tightly with our customers. And now moving to the financial guidance for 2025. Net sales is expected to remain approximately on the same level in 2025 compared to 2024. The comparable EBITDA margin is expected to remain approximately on the same level or to improve in 2025 compared to 2024. So as a summary, I think we can say that the fourth quarter was a very good and strong end to an excellent year. And we will continue with our strategy execution in terms of both growth initiatives but also profitability initiatives going forward. And we intend to discuss that and also our targets with you guys and the market during our Capital Markets Day in May this year. I also want to mention, as you have noticed, that I have decided to leave Corner Cranes at the mid of July and the board has immediately initiated the recruitment of a new president and CEO for Corner Cranes. And our company is an excellent position, very strong. We have a clear roadmap and we are executing on our strategy and we have dedicated teams around the world to continue to execute that and follow the journey that we are on. And I'm fully committed until the mid of July to support this and drive this to the best of my abilities. With that, I would like to ask our CFO, Teo Ottala, to come up and talk more about our strengths moving into 2025. Teo.

Thank you Anders. and let's move forward in the presentation. So before we actually go into the segment numbers, let's take a brief look at the comparable EBITDA bridge between Q4 of 24 and Q4 of 23. Here we can see how the numbers look like. So we actually made a 25 million euro improvement in an year-on-year comparison in comparable EBITDA. And we can start unpacking that a little bit with the help of, let's say, net pricing impact and an underlying volume impact as well. So the price increases in comparison to the situation one year ago were roughly 3% on average, and now that our sales increase was 5.4% in a year-on-year comparison, so that gives the underlying volume improvement of roughly 2.5% in the numbers for Q4 in comparison to the situation a year ago. So the impact of operating leverage as a result of the underlying volume and net of inflation pricing were roughly on par with each other now in the fourth quarter. So it was a very balanced situation from that point of view. So price increases were more than inflation. That generated positive delta, but also the volume as a result of the operating leverage gave positive delta roughly in the same amount in the fourth quarter. We did not have any meaningful mixed impact in a year-on-year comparison now in the fourth quarter. Operational efficiency or execution continued to give a positive delta, positive sort of profitability improvement or profit improvement in Q4, even though we did not have a 100% clean quarter from the, let's say, efficiency or operational execution point of view. But still, the overall delta was positive. We can see in the picture that the fixed costs were very well under control. So there was only a very small increase in fixed costs. Of course, one thing worth noting here is that we received an R&D grant in Finland in the amount of three million roughly in the fourth quarter for the costs that we had already spent earlier. So this is, of course, helping the fixed cost comparison. in this picture. Then we can move into the segment data and as usual, let's start with the service business. Service order intake 392 million euros. That is an increase of 3.5% year on year in comparable currencies. We had growth both in field service and parts, we had growth in all regions and we actually also in addition to year-on-year, we also had sequential growth after a little bit lower Q3 order intake. Agreement base also growth there more than six percent in comparable currencies. Sales 419 million euros, 3.7% improvement or increase in an year-on-year comparison in comparable currencies. Also there, increase both in field service and parts. No significant mix impact in an year-on-year comparison. And then we had also here increase in all regions. So quite balanced from the volume point of view. Order book for 436 million euros, a slight decrease in a year-on-year comparison. Comparable EBIT A, 20.6%. This is 0.4 percentage point improvement in an year-on-year comparison. Of course, attributable to pricing, also higher volume and cross margin increased in service business as well. So overall, a very stable, good performance, excellent performance actually in the fourth quarter, as well as for the whole year of 24, obviously. Industrial equipment order intake 357 million euros. That is almost 28 percent increase in comparable currencies when we take a look at the external orders year on year. This increase is of course supported by one bigger deal that we already announced earlier in the fourth quarter in the heavy end, so that the process grains were impacted positively by that one. But when we take a look at the other two business units, so standard grains and components, so we actually had year-on-year order intake growth in those as well. So the order intake was good overall across the business units. Of the regions, we had increase in EMEA and Americas, but a decrease in Asia Pacific. And then again, sequential comparison is exciting as well when we take a look at that one. So of course, the process grains increased sequentially as a result of the bigger deal that we reported separately. Standard grains were more or less flat in a sequential comparison, but components, which is maybe the, let's say, fastest reacting, was actually growing also sequentially from the third quarter. Sales 6.6 percent higher than a year ago. We had a good delivery quarter in the industrial equipment also. And then when we take a look at the order book, 893 million euros, which is almost exactly on the same level as we had one year ago. Comparable EBITDA 9.7%, as much as 2.7 percentage point higher than a year ago. Excellent, excellent improvement. Of course, the underlying volume growth was good. So that was supporting it. The R&D grant that I already mentioned was mostly impacting industrial equipment. So that is, of course, helping there as well. And then also the optimization program that we have been having ongoing has continued to yield results in this quarter as well. Then ports, moving on there, order intake 461 million euros. This is an excellent level, of course, more than 50% increase in an year on year comparison. When we again take a look at the business units a little bit, we had excellent orders in RTGs. We had very good orders in straddle carriers and port service as well. And overall, one could say that we had a good flow of mid-sized orders in the fourth quarter in the ports business. When we take a look at more early cyclical business units, lift trucks, for example, now in ports case, so lift truck order intake was flattish both year on year and Q&Q, but still on a relatively low level. Sales growth was around 6% and we had a good delivery quarter in ports business as well. But from the order book point of view, of course, we are behind the situation a year ago, almost 9%. The good order intake in the fourth quarter was not enough to compensate for the decline from the earlier quarters, as we have, of course, seen this kind of a development already in the earlier quarters. Comparable EBIT A, 9.7% here as well as in the industrial equipment. Also here a good improvement, 1.7 percentage points or a very good improvement actually due to pricing, underlying volume improvement and also good strategy execution, meaning that in ports the performance, the operational execution was good in the fourth quarter. Before getting into the Q&A, a couple of comments on the cash flow as well as the balance sheet situation. Actually, networking capital, if we start with that one, continued to develop well. 380 million euros, 9% of rolling 12-month sales. This is very well in line with our target setting of being below 12% of rolling 12-month sales. And also, networking capital is lower than what it was at the end of Q3 and of course quite naturally the accounts receivable are more than what they were at the end of Q3 but inventory significantly less as a result of the good deliveries that we did during the fourth quarter. Networking capital as well as the profitability are then of course reflected in the free cash flow. Anders already mentioned this having continued to be on a very good level in the fourth quarter. And the full year number is 427 million euros free cash flow. This is clearly above let's say cash conversion of 100% this year also. So very good from that point of view. And then when we take a look at the gearing and net debt, net debt continued to decrease from the end of the third quarter, even if we made the acquisition that Anders also mentioned. And gearing level is now only 10% at the end of the year. And then also delightfully, when we take a look at the right side of the slide, return on capital employed, now this comparable return on capital employed 20.8%, but even if we take the official reported number, so we are above 20%. So good development also on that side. That slide actually concludes the presentation, and then we can go into the Q&A.