Konecranes Plc Ord

Good afternoon everyone and welcome to Konecranes Q1 earnings conference. My name is Kiira Fröberi and I'm the head of investor relations at Konecranes. Here with me today I have our president and CEO Anders Svensson and our CFO Teo Ottola. Before we start the actual presentation, I have a bit of commercials here. So I would kind of like to remind you about our Capital Markets Day, which will be arranged in London on May 20. The registration has been opened for the event, and we welcome, of course, all analysts and investors to join us in person in London. The registration for the in-person attendance is still open until next Wednesday, so please go and register yourselves as soon as possible. We look very much forward to the event and welcome everyone there. And now, before going into the numbers and details, the usual disclaimer. Just so you remember, the presentation contains forward-looking statements. Agenda is our usual one. Anders will start by the group figures, after which Teo will talk more about the business area numbers. And then we will of course have the Q&A in the end, as always. And now Anders, please, it's your turn.

Thank you, Kira. And a warm welcome also from my side to this first quarter Webcast 25. We had a good start to the year, and our demand environment held up really well throughout the quarter. Our orders were up 17% year on year, and we saw an order intake improvement in all three business areas. Sales execution was also strong, almost 1 billion euros, and that was up 8% compared to the previous year. The Q1 profitability and that EBITDA margin was 11.1, and that's the same level as we had a year ago, which was then record high. Year-on-year pricing is slightly positive, but execution and sales mix was slightly weaker than the previous year. And profitability improved in industrial service and import solutions, but decreased within industrial equipment. We now look into the market environment, and we start with our industrial segments. And despite the weak macroeconomics and also the geopolitical situations with tariffs, threats, et cetera, our demand environment held up really well, and also we can see that in a strong order intake within the industrial side. Import Solutions continued good activity, and we can see that container throughput index, which is the main indicator here, up 6% year-on-year, signaling quite strong markets. And we can also see that in our order intake and also in our sales funnel and discussions with customers. So continued on a very good level with Import Solutions. If we then look into our order intake a bit further, so we can see that we delivered 1,062,000,000, up 17% versus the previous year. Here we had an increase in all three business areas. And in the geographical markets, we saw an improvement within EMEA and also within the Americas, while we saw a decrease in APAC. Looking at sales, so a strong sales execution continued, 984 million delivered and that's then equivalent to 7.7% improvement over the previous year. And here we saw an improvement within all three business areas and also an improvement within all three regions. Our order book grew for the second quarter in a row and ended the quarter at 2 billion 942 million euros. And even if that's a slight decrease versus the previous year, we believe that it's a very strong order book seen in a longer historical perspective. And if you remember going into 2025, we had roughly 60 million euros less to deliver in the year than we had going into 2024. But with the strong short cyclic orders and service orders, we believe that our financial guidance in this perspective is still very much in line and we are performing well towards that. the group comparable EBITDA. And here we delivered 109 million euros, and that's equivalent then to 11.1% margin, which is very close to what we had in the previous year. Like I said, that was a record year. The margin increased in industrial service and port solutions and decreased in industrial equipment, mainly related then to productivity and also a negative mix. So slight positive addition from pricing in the quarter, but also for the group, then the execution and the sales mix was weaker. Also from a BA perspective, the mix was weaker. And gross margin decreased on a year-on-year comparison. I then move into our progress towards our financial targets. And we did have a good start to the year. And as you can see, all our businesses, including the group, is clearly within the profitability range that we have communicated as the targets. If I start with the group, so we then had a 7.7% growth over the previous year. And that's clearly faster than nominal world GDP growth. So we are in line with our sales growth targets. And as you can see, we had a slight decrease on a 12-month rolling basis to 13%, but still clearly within our target range. And we are confident that we have the activities and the strategy execution in place to continue our journey, which we are on to improving our profitability. Moving them into industrial service, and here we had a growth which was maybe less than we expected, 3-4%. But however, we had a very strong order intake, so that is good for future sales. And as you can see, we improved our profitability here on the rolling 12 basis as well. So industrial service is progressing according to plan. Industrial equipment, more growth in line with the market, as we also target to do. We had a bit weaker profitability in the first quarter than we had in the comparison period. And that was, as mentioned, related to performance and also related to the product mix. But it's nothing that is worrying for the long-term profitability within industrial equipment. Port Solutions, and here we grew very quick. We had a much higher growth than we did in the market, so 17% or so. And that is, of course, a strong delivery from the ports team. And with that stronger delivery, you also get a good margin for the first quarter over the comparison period. And you can now see port is also clearly within the profitability range at 9.6%. Moving into the demand outlook and start with the industrial customer segments. So our demand environment within the industrial customer segments has remained good and continues on a healthy level. That said, the demand related uncertainty and volatility due to geopolitical and trade policy tensions have increased compared to the previous quarters. And the demand here continues to be good, as we saw in the first quarter, and we expect it to continue on that level. We have, however, seen some hesitation on decision-making, a bit like previous, where we had high interest rates, but now also, of course, connected to tariffs, and maybe more geared towards North America than previously. We have a very strong sales funnel. in a historical perspective, and we also see new cases coming into the final at a good pace, even though maybe slightly down year on year, but quarter on quarter up in number of new cases. When it comes to our TrueConnect, our productive measurements of connected equipment, so here we saw some low single digits, lower productivity than in the previous year, but very close to flat. With imports customers, we say that global container throughput continues on a high level and long-term prospects related to global container handling remains good overall. And here we have a very strong order pipeline that we are working on. We know that fluctuating order intake by quarter is the nature of this business since it's very much related to customer decision making time in their projects. But we had a good order intake in the quarter. We have several active discussions on projects of different sizes and that looks good also then going forward for the airports business. Our financial guidance for 2025 is net sales is expected to remain approximately on the same level in 2025 compared to 2024. Comparable EBITDA margin is expected to remain approximately on the same level or to improve in 2025 compared to 2024. And so we had a good start to the year despite the macro economy and the volatility around us. And I think that shows stability from Konecranes. And I think with the execution we are doing in our strategy we are able to continue our journey going forward. And we are happy also that we have the capital markets day on 20 May in in a month from now basically, where we will be able to update you more on the strategy execution in our different businesses. And with that, I will invite our CFO Teotola to dive more into the details of the finance.

Thank you Anders. And let's move on to the business areas. And as usual, before going into the business area numbers in more detail, so let's take a look at the comparable EBITDA bridge Q1 2025 versus a year ago. And as Anders was explaining, so the comparable EBITDA margin 11.1 is basically unchanged from the situation a year ago. In euro terms, so in monetary terms, we made some 7 million more profit than what we did a year ago. And when we unpack this difference a little bit, so we can start by discussing the pricing a little bit. So the price increases in a year-on-year comparison are maybe 3% or a little bit more than that. When we take a look at the sales growth with comparable currencies, that was almost 7%. So this obviously gives us a good underlying volume improvement of 3.5 to 4% range. This of course then gives us operating leverage into the P&L as well. Net of inflation pricing impact, so how much positive delta the pricing gave to the margin, as Anders already explained, so it was a positive contribution, but less than during the previous quarters we have had. So pricing was in a way positive in the P&L, but less than it has been in the recent past. Mix impact was slightly negative and also productivity was negative of execution performance, whichever term one wants to use, primarily because of the industrial equipment business. fixed costs actually increased in line with inflation, so they continue to be well under control in the Q&Q comparison. All in all, with all these pluses and minuses, so the end conclusion is that the profit improvement is basically as a result of the operating leverage, so higher volume in Q125 versus a year ago. And then going into the business area, so industrial service first, order intake there 409 million euros. That is a little bit more than 4% higher than a year ago in comparable currencies. We actually had an increase both in field service as well as in parts of the regions. We had increase in the Americas and EMEA, but a decrease in APAC. Taking a look at the agreement base, so we had growth there also 4.9% in a year-on-year comparison. Sales 380 million, that is 2.5% higher than a year ago, and again of the regions we had increase in IMEA as well as in APAC, but a decrease in the Americas. Book to bill for the quarter was actually higher than one, but in a year-on-year comparison order book declined slightly or by 3.5 percent. Comparable EBITDA 20.2%. This is an improvement in a year-on-year comparison despite the somewhat lowish volume in the quarter. The improvement in margin primarily came from pricing, but also the product mix was a little bit better within service now in Q1 2025 as a result of the higher share of spare parts in sales. Then industrial equipment and their order intake, 358 million euros, that is 13.5% higher than a year ago. Of the business units, we had increase in standard grains and process grains in a year-on-year comparison, but the components had a decrease in comparison to the first quarter of last year. Of the regions, increase in IMEA as well as in the Americas, but a decrease in APAC. And then sequential comparison, which is of course interesting and important as well. We had an increase in standard grains as well as in components, but a decrease in process grains when we take a look at the comparison to the fourth quarter of last year. Sales 294 million euros, so this is up 2.9% in a year-on-year comparison. Order book is almost exactly on the same level as it was one year ago. Comparable EBITDA, 13 million euros or 4.6%. There is a clear decline in a year-on-year comparison. So this is attributable to lower productivity and also weaker mix within industrial equipment. With productivity, what we mean is that we had quite good deliveries towards the end of last year. As a result of that, we had a little bit, let's say, capacity utilization issues in the first quarter in some of our locations. And also some of the projects did not go as well as they did one year ago. So it's an overall performance topic that was not on the same level as it was one year ago in Q1. Port solutions, order intake 343 million euros, as much as 37.5% higher than a year ago. We had good order intake in various product categories, actually, mobile harbour cranes, RTGs, automated guided vehicles, also port service. When we take a look at the shorter cycle products, for example, lift trucks, lift trucks were down in a year-on-year comparison, more or less flat in a sequential comparison, and they continue to be, in a historical perspective, on a relatively low level. Port service, on the other hand, did increase in a year-on-year comparison and also in the sequential comparison, almost flat to slightly up. Sales 351 million euros, good deliveries, sales growth as high as 16.5%. The order book is down in a year-on-year comparison, but continues to be on a good level of more than 1.5 billion euros. There is an improvement in EBITDA, 8.3%, and of course this is primarily as a result of the underlying volume improvement, so deliveries were very good, sales was good, and also to some extent as a result of net of inflation pricing. Then some comments on networking capital and cash flow, as well as balance sheet as usually. Networking capital, 372 million euros. This is very much on the same level as it was a year ago. 8.7% of rolling 12-month sales, so slightly better than a year ago. Actually, inventories are now on a lower level than a year ago at the same time, so are advanced payments as well, so that these are balancing each other quite well. Free cash flow was close to 60 million. This is higher than what it was a year ago, but not on the level that we were towards the latter half of last year. But when we take a look at the rolling 12 months free cash flow, so it continues to be on a very good level and the cash conversion on a rolling 12 month basis is still clearly above 100%. Gearing on a low level, 8%, net debt about 141 million euros. This one is of course missing the dividend payment as it took place in the second quarter, but still, even including that, the leverage is on a modest level. Return on capital employed continued to go up, now maybe in the first quarter a little bit more as a result of the lower capital employed than a near improvement in the profitability, but higher than 22% now on a comparable basis at the end of Q1. We actually have usually been going into the Q&A at this point of time already, but now we have one more slide before going into the Q&A, describing a little bit our exposure to US tariffs. So with this slide, we are showing the internal trade flows from China and Europe to the US. And if we focus on the industrial businesses first a little bit, so industrial service and industrial equipment, so basically the annual volume from China to US is very low, only about 5 million annually. The volumes from Europe to the US are significantly higher, so here industrial service we are saying less than 50 million, industrial equipment around 100 million, so anyways clearly above 100 million as a whole, so we are of course having their spare parts, we are having hoists and hoist components. So this is in a way the big volume. Then when we take a look at the ports business, so we have port services there also from Europe to the US, 30 million roughly. So this would be mostly spare parts. And then when we take a look at the port solutions bigger equipment, so we are mainly shipping fully assembled port cranes as well as lift trucks. And there the idea is that primarily and mainly the tariff responsibility would be at the customers. So that's why we have excluded those from this picture. Now what we have done regarding this one is that we have basically increased prices in all of the impacted product categories in the US. For instance, we have included tariff clauses in offers as well as in contracts. We are of course monitoring very closely that what is the customer acceptance to the price increases that we have done. And then obviously we also need to monitor that how the legislation, rules and regulations are changing because they are of course changing as well. Now overall, when you take a look at these flows and given the high volume from Europe or EU to the US, so of course, tariffs between Europe and US are not a good thing. At the same time, if we are comparing ourselves to the competition, we do not think that we would generally be in a weaker situation than our competition. Reason obviously being that other companies do not have a fully US supply base either, so everybody basically needs to import goods. There may be product categories where we are better off than the competition, there may be product categories where we are slightly worse off than the competition, but overall, generally, we don't feel that we would be in a worse situation. With these comments, we are ready for the Q&A.

Thank you, Teo. Thank you, Anders, as well. We could now start the Q&A, and we have received some feedback sometimes that not everyone has the opportunity to ask the questions. So I would now kindly ask you to limit the number of questions to two, so that as many analysts as possible has the opportunity to ask the questions via the line. And then you can, of course, always go back to the line. And if we have time, we will, of course, take then additional questions. We have also received some questions through the chat function, so please keep them coming. I'll ask them a little bit later. But now, operator, let's please open the line.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Daniela Costa from Goldman Sachs. Please go ahead.

hi good afternoon hope you can hear me um i have two questions i'll ask them one at a time thank you very much for slide 20 i wanted to to start in there and just um clarify what you said sort of regarding port solutions particularly understand that the customers are responsible for the tariffs but how much is actually the volume that goes there from china or is this volume mainly from Finland that goes there just wanted to understand that and related to that have you seen given so many of your competitors are Chinese any shifts in terms of the competitive landscape and willingness of from customers of where they're buying and placing orders now I can start

So we have a quite flexible supply chain when it comes to our port equipment. We can supply mainly from China. We can supply from India and we can supply from other Asian countries. We can also supply from Eastern Europe. So we believe with that setup, we are at an advantage versus competition, which you rightly say is mainly Chinese. So that would put us generally in a better position than competition within the port side. And as we have communicated previously, we're also building a supply network within China. the US to be able to supply most of the cranes within the US itself should that be the requirement going forward. So we believe that we are in a good position when it comes to the ports equipment and what Theo is referring to is that we are not sort of having the internal shipments of components to build something in ports So we are then having completely finished equipment that we put on the ship and then ship over to the customers where, as Theo rightly said, often the shipping and the tariffs are on the customer side.

And the customer is not hesitating due to that.

Sorry, we couldn't really hear you now, so could you please repeat that now?

One part of my question was, has anything changed in terms of the customers? Because they have to pay a huge tariff, even on your equipment, I guess.

If we supply from China, they need to pay the same tariff as if it was a Chinese manufacturer. But of course, we can also supply it from other regions, as I said, which then has much lower tariffs than China. However, we need to remember that these tariffs were implemented like three weeks ago. So it hasn't really stabilized and we don't know where this will end up either.

Got it. And my second question was related to, I guess it's linked to tariffs, but it's really pricing. I guess we have still tariffs that are in place right now in the U.S. that in general, you commented that you had in the quarter around 3% price, but as you look ahead and how you're thinking about your pricing, what should we expect?

Yeah, so we are completely compensated for the tariff effects for us as a company in all our new quotes and all our new business that we make with customers. So we are completely compensated for that. Which means, of course, that the pricing component will be much larger going forward should the situation remain the same as it is currently or even escalate.

Sorry? No lag that still is getting the tariff now, but you have stuff in your orders with other prices and there is going to be no lag, no gap.

You always have some gap somewhere, right? But in general, I would say that we are compensated very quickly. We were on the ball far before this actually happened. So we were very quick on compensating. But you're another 100% compensator, right?

Thank you.

Maybe building on a little bit on the first part of the question, what Anders already said, and regarding the product categories. So as we have been discussing, so ship-to-shore grains are also, in our case, they have traditionally been shipped from China. And this is maybe the, let's say, the slowest product to move to be supplied from some other places. We have been talking about the US supply chain, as was already mentioned as well. But regarding the other product categories, we have supply networks elsewhere as well, for example in Eastern Europe, that could support in this one. Regarding the big grains, it is probably obvious that we have less China content than our biggest competitors. When it comes to lift trucks, situation may be a little bit different. So there we do not have direct assembly capacity in the US. We are exporting either from Europe or China, in practice, of course, from Europe.

Thank you. Very helpful.

Let's now take the next question, please.

The next question comes from Ponu Leighton-Maki from Danske Bank. Please go ahead.

Thank you. I have two questions. First one is on the ports outlook, especially in the U.S. So you saw it quite possibly in the market comment. I mean, because with the U.S. customers and now there's a government that has an agenda that seems to kind of They want to reduce the volume of things being shipped into the country. So do you kind of feel that the investment plans longer term of US ports could be lower than expected?

I wouldn't say that it's affecting the U.S. ports to make lower investments. Of course, U.S. will continue to be a strong economy unless the whole world goes into recession here, which is unlikely. But I think we are in a good position to supply from friendly countries also to the U.S., meaning Europe, and also we can supply from India. Mainly all equipment we can supply from outside China with a well-built-up supply base, excluding then, like Theo mentioned, ship-to-shore cranes, which has primarily been built in Europe. the steel structures primarily being built in China. However, we build, like Theo mentioned also, all the other key components of these big ship-to-shore cranes, which is a large part of the value of the crane we build in Finland, for example, and Eastern Europe. So we are not exposed in the same way as competition from that perspective, which makes our competitive position stronger than the Chinese competition. You should remember that in some of these equipments, the Chinese competition have 75% market share. So if they are out, then the other suppliers, like us, have a good position going forward. And even though, as it's said by Theo, shifts in this business takes quite some time, because an order takes three years to deliver from order, if you order a ship to shore crane, roughly. and building capacity etc for that takes time and US market is maybe 10 to 20 ship to shore cranes per year so yeah it takes time to change that but you know these large ports have investment plans which are taken on a much longer horizon than a four-year term of precedent or so so they are investing like Georgia Port Authority, which we have been working on for a very long time, are investing on very long-term horizons. So it's not based on the current situation or so. And this situation also then might imply that smaller ports need to invest in increased capacity in the U.S., which is another opportunity for mobile harbor cranes or other types of equipment. So we don't see that the U.S. market within the port side will disappear or shrink dramatically.

Thank you. My follow-up was actually that have you already seen kind of improved market share in the US and was this reflected in the Q1 orders?

I would say that we have seen improved market share over the last couple of years within the port side. But if you look at what happens within one quarter or even less than that, if you see the situation that has changed, of course, making these large investments by a port is not done within a month or two. It takes a long time for these projects to run through the whole funnel in decision making. But since Kalmar exited the yard crane market, we have taken for sure market share from there. So we are growing in terms of market share within the ports equipment in the U.S. And of course, a tariff situation that would put us in an advantage over Chinese competition, which are the largest competitors, would of course continue to put us in an even more advantage position. Okay, thank you.

Thank you, Banu. Let's now take the next question, please.

The next question comes from Antti Kansenen from SEB. Please go ahead.

Hi guys, Antti from SCB. Two questions for me as well. Let's start with the tariff theme this time on the industrial equipment side. Could you maybe comment a little bit on how did you see kind of business evolving, let's say during March and April? Was there any kind of a major impact on the volume demand, whether it be pre-buying or a very quiet period during early April or Anything that would really kind of stand out from your client activity perspective?

So I wouldn't say that we have seen a lot of pre-buying. We can't say that there hasn't been any pre-buying, but we wouldn't have seen a lot of pre-buying. What we have seen in terms of the demand situation in the US is that it has become more hesitant after the decision. So the decision-making time has become longer. It's not like the market has disappeared or so. It's pretty much in line with the demand outlook we just talked about previously. But we can see a bit more hesitation on decision-making in the U.S. specifically. On the other side, we see somewhat improvement in EMEA and Europe on the market side there. It is being more positive than it was a quarter ago or so. And in the 8-pack, it's quite flat versus where it's been. On a relatively low level, we must say, for us. But we haven't seen dramatic differences so far.

Maybe adding to this one, I mean, if we take a look at the big picture, and I think that it kind of came out in Andres' presentation already, so when we take a look at the overall sales funnel, so the funnel of opportunities, so those continue to be in good shape. So there is not a significant difference there. The number of new cases, as Anders pointed out, maybe has been a little bit on the downward trend. But when we take a look at the number of cases that are coming in, so in a historical perspective, the number, the amount is good. And then, of course, there is this slowness in decision making that was also mentioned.

And if your comments on US specifically, this number of new cases a bit down and slowness on decision making?

Yeah, that's mainly related to the US, not to the rest of the world.

Okay, good. Then the second question, I guess more of a technical nature regarding port solutions and sales. I mean, earlier you talked a little bit about that start of the year is usually seasonally a little bit slower in terms of deliveries and your backlog is down year over year, especially on the port side. But then again, if we look at now the Q1 sales, it's a big growth year-over-year. So I just wanted to understand better, looking at the full-year sales, how should we think about cadence from the backlog and deliveries in coming quarters versus what you did on first quarter?

So what we have said, and I also said it when I talked about the order backlog slide, that we were roughly 60 million behind last year coming in for orders to be delivered within the year than we had going into 2024. But we have seen, like you said, a good order intake on the short cyclic products, which can be delivered within this year, and on the service side, both on industrial and port service. So that should give us a good opportunity to deliver, at least in line with the previous year, in terms of sales.

Maybe taking a look at the sales numbers a little bit. So if you take a look at industrial service, so the growth of 2.5% is actually less than price increases. So it was a relatively slow start for service from the delivery point of view. Profitability improved regardless, which is a good thing. In industrial equipment 2.9%, so this is roughly in line with the inflation, maybe slightly more than that actually, but it was a relatively slow start there as well, as we already are referring to when we are explaining why the EBITDA margin dropped from the situation a year ago. Ports had a very good delivery quarter, very high sales, and that of course drives the group sales number as well up. And of course it is good that we have been able to do that. But it is of course from the same order book that we had at the end of the year as well. Now the good thing is that orders in Q1 were also good. And the pipeline for the future is there as well. So no issue from that point of view, but these different business areas have been in a way from the delivery point of view in a fairly different situation in Q1 in comparison to each other.

No yeah I only kind of was a bit surprised at the Ford's sales levels and I mean I'd imagine that the lift truck business orders are not great so I guess that's the one that you would deliver this year. I guess the Q1 order strength would be more like a 26 delivery so I was just wondering are we going to see kind of Ford sales starting to sequentially because you're not really guiding for sales growth this year. Maybe that's a bit too technical.

You should also remember that we have port service, which is above 20% of port sales. And if you combine that with lift trucks, that's a significant part also of the port's revenue that we can affect within the year. And also some mobile harbour cranes we can deliver within one year as well. So it's not only lift trucks that are within one year.

All right, fair enough. Thank you very much.

Thank you, Antti. And now let's take the next question again, please.

The next question comes from Johan Eliasson from Kepler-Tuvriax. Please go ahead.

Yeah, hi. Just a question on what's happened since Independence Day in April over March. You talked about the hesitation of non-signing boards, et cetera. But do you see anything in your connected equipment numbers sort of April so far versus March level?

So we haven't seen any direct effect on the connected equipment changes in utilization or so. So the operations are ongoing, but customers are hesitating to make new investment decisions, basically, so far. And we will see in the next couple of weeks and months how that will develop, of course.

Yeah, and then just on the ship to shore, I think if I recall it, you have maybe delivered five ship to shore cranes a year, and now you talk about the U.S. being a 10 to 20 type of volume market per year. How long would it take for you to sort of be able to supply half of this U.S. demand on ship to shore cranes, you think?

since we have a very outsourced strategy we don't make these in-house we make the key component in-house but the outsourcing strategy makes us very flexible in terms of where we have our supply network if we have it in China other Asian countries or Eastern Europe or even then in North America. So that makes us very flexible. However these projects are with a delivery time of roughly three years from order. So this is how the customers are planning for these deliveries as well. So the effect you would see maybe in three years from now should we get the order in the second quarter. So it's not an immediate effect on our top line or our bottom line with the ship to shore crane activity changes. But we could then, given that we have a flexible supply network we could ramp up that within the those three years delivery time of course it's quite easy for us to ramp up capacity but the delivery time is still three years away okay excellent thank you very much thank you thank you johan and now again let's take next question from the line please the next question comes from mikhail doppel from nordia please go ahead

Thank you, and good afternoon, everybody. I also have two questions. So, firstly, on the guidance, so basically, as you mentioned yourself, the EBITDA margin was essentially flat year-by-year in Q1, and you're guiding for flat improving margins. I was wondering, you know, what will drive the margin improvement in the coming quarters to reach the guidance? Is it the question about mix? Is it the question about the better margin backlog or something else?

Yes, there are many drivers for that. And as we said, we are flat in the first quarter. Second quarter last year was a very strong quarter for us, the strongest in history at 14.3% margin. We are not expecting to deliver on a 14.3% margin in the second quarter of this year. However, then that would mean that the second half of the year would be stronger than the previous year. Otherwise, our guidance wouldn't work, right? And here we see that... We have volume, we have a positive mix at the end of the year, so we expect that service would be flattish mix, industrial equipment, flat, maybe slightly negative mix, and then port solutions, positive mix due to the quick growth of port service. And given the growth of the service side, it would also be a positive BA mix for the group. So the mix would also be positive. And then we have the optimization program within industrial equipment that will continue. We estimate that that will give us an additional 10 million euro benefit in this year. And on top of that, we have all the other strategic initiatives that we are executing on that would also continue to give us benefits over the previous year. So that's how we see it.

Okay, that's fair. And then just another question on the service, industrial service business, particularly maybe that one. I guess when we look at, as you showed yourself, the industrial utilization rates have been coming down and being quite low. Still, you've been able to grow your orders. here in this business. I'm just wondering, you know, looking ahead, what is going to drive that growth in the coming quarters? What levers to grow the business do you have and what's the level of confidence?

So we have a market share of roughly 10% within service side. So we can definitely grow by taking more customers. This is what we do when we do make bolt-on acquisitions. That is basically how we acquire a customer base, service technicians, and we can then strip out the overhead cost of that company that we buy. We can implement them in our tools and systems to get productivity up. So, those kind of bolt-on acquisitions are sort of an engine in itself within the service side. Then we can, of course, do it also organically, where we have mapped a lot of installed equipment, both our own and also competitive equipment on how important this installed base is for the customer, is it the main process for the customer, et cetera. And then we can, with our salespeople and service technicians, then target where we believe that we can add the most values for customers and where the customer also is ready to pay for a high level of uptime, et cetera, and value our services. So we can do it both. organically, but also inorganic. And there is a lot of room to continue to grow in terms of market share. And we should remember our biggest competitor is not someone else, a global company like us. It is insourcing within the customer itself in a maintenance department. And the more sort of digital solution, automated solutions there is in content that we have sold or someone else has sold, the more difficult that is to maintain with your own maintenance department. And then you're more prone to an efficient outsourcing solution. There are also other drivers for that, and that's the age structure of maintenance departments in general with customers. So when there is a generation shift in those employees, They tend to look more at outsourcing because it's the most stable solution. If someone goes home sick or something, we can send another technician to make sure that the operations is up and running for our customers all the time. So there are many drivers that will help us to grow our service sales.

Okay, that's very clear. Thank you. Thank you, Mikael.

I think that we can now take a couple of questions from the chat. A few of them have been actually replied already, but there is one question related to the Capital Markets Day. So, could you share any extra light on what's the content of the CMD? Kind of an odd timing considering the CEO is on the way out, says the question.

Should the outgoing CEO answer?

Or the IR.

Maybe I'll let the outgoing CEO take this one first. I can then compliment.

This was of course a discussion when we decided to continue with the Capital Markets Day. We believe we have new management team members, Thomas Mynty in ports and Marco Tolokas in industrial equipment. They have formed their sort of teams and they are forming their strategies going forward. So we believe that it's important for them to be able to talk where are we in the strategy execution part of of the journeys within the different business areas. And, of course, Fabio will also be there to talk about the service side and what we are doing to improve productivity, improve efficiency, et cetera. And my role will be more of summarizing of maybe what we have done so far in the strategies since I joined the company and our journey the last sort of three years or so. And then the focus will be then mainly on, Oteo, you will talk a bit about the future maybe. And then the primarily focus is to give a business update from our business areas and for investors and analysts to be able to meet our business leaders.

Yes, I think that's a good answer. And then maybe kind of what we have also said when meeting with investors, so we are not renewing our strategy. So that's not the idea of arranging the CMD. And probably many of you who have followed us or been our shareholders for a longer time, remember that we had a pretty long break here for a few years ago in between the CMDs. And I guess that the original reason for the big break was that there was a CEO change and we canceled the then CMD. And then there was the COVID and we canceled again another CMD. And then there was the planned merger with Cargotech, which was later canceled. And there were several years when we didn't basically give any, let's say, good update for the markets on what the company was doing. And we received quite a lot of criticism back then. So we are not willing to create this kind of a bad circle. Is that the correct word in English this time around? So rather give regular updates about our business and where we are as a company. So welcome everyone to London or to follow the event through the webcast send. Then we have another question, or we have actually a few questions related to the port cranes. I think we have taken a couple of them. There's one related to the made-in-US cranes, referring to BAPA-compliant cranes. I guess made-in-US is maybe a better terminology nowadays. So could you update us on your plans to build BAPA-compliant or made-in-US cranes in the US, especially given the recent USTR announcements on ship-to-shore cranes and cargo handling equipment?

So our plan is, I think we touched it a bit, it is to primarily then focus on not having Chinese content in the cranes going into the US and then we have the first step is basically that we build sort of the intelligent boxes that goes together with these large steel constructions to build those in the US and then being able to attach those to the larger steel structures that may come from India or Eastern Europe or wherever and then as the final step it will be then to localize the large steel structures but that is of course a dramatic price difference to do that in the US compared to do it in other parts of Asia for example or in Eastern Europe so this is a several step plan but we are confident that we are able to fulfill the Made in America levels required for our customers. So I think BABA compliant is no longer a term that should be used. Now it's Made in America.

Thank you. I believe we still have one person in the line. So now we could take the questions from the line then, please.

The next question comes from Ponu Leighton-Maki from Danske Bank. Please go ahead.

Thank you for taking my follow-up question. I just wanted to ask about the port solution still. I mean, it is obvious that you will benefit in market share terms in the US, but how do you see the rest of the world Chinese competition doesn't have tariffs outside US and they might kind of need to sell their products somewhere. And could you also remind how big part of the US is out of the port solutions sales?

Do you want to take this?

If we take a look at the rest of the world, and there are no tariffs one way or the other, so then of course the competitive situation continues as it has been continuing now. And if there is for example an issue with the, let's say, Chinese STS capacity not being able to ship to the US. So of course, I mean, the Chinese vendors have been having a very high market share on a global scale as well. So the US market share and global market share are not necessarily very different from each other. So it does not necessarily significantly change that picture. Sorry, now I forgot, what was the other part of your question?

It was how big the US is out of total port solutions sales.

Yeah, and we have not in a way been discussing this particularly ports business of or any, but particularly ports because the volatility, so that we have projects in one year and maybe not in the other year. But the US as a market as a whole is around 30% or was around 30% of our business in 24.

For the whole group?

For the whole group, not ports, but for the whole group.

An industrial service was the biggest and port solutions was the second biggest and then industrial equipment the third one. So we are not giving kind of figures for the business areas but industrial service is the biggest.

And maybe one to complement. If the first question was in relation to are we at risk of losing our ship-to-shore crane sales in other areas than in the US? So the simple answer is that we have mainly sold ship-to-shore cranes to the US and to some customers in Europe that prefer to have corner crane solutions. So we don't have a strong market share at all in the rest of the world when it comes to ship-to-shore cranes. So there we don't see that we have a position to lose. We are strong globally in the other yard cranes, but ship-to-shore cranes, we don't see a risk of losing any market share elsewhere, basically. Okay, thank you.

Thank you. Hey, I think that now it's time to conclude the conference again, so time starts to be up, so to say. So thank you everyone, Anders, Teo, and all the analysts online for the active participation. And as a reminder, Konecranes Q2 report, or the half-year financial report, will be out on July 24. So that is then the next time when Konecranes will be giving an earnings update. Thank you.

Thank you. Bye-bye.