Konecranes Plc Ord

Hello all, and welcome to follow Conecranes' Q2 2025 results webcast. My name is Linda Häkkilä, and I'm the new VP Investor Relations here at Conecranes. With me today as our main speakers, we have our new president and CEO, Marko Tulokas, and our CFO, Teo Ottola. Before we proceed with the presentation, I would like to remind you about the disclaimer as we might be making forward-looking statements. Here you can see our presenters and agenda for today. First, our CEO will give us an update on the market and group performance. After that, our CFO will guide us through the business area performance and balance sheet topics. After that, we are happy to start the Q&A session and answer your questions. But now, without any further comments, I would like to hand over to our CEO.

Thank you, Linda. A warm welcome also on my behalf. It is my great pleasure to deliver the first quarterly report as CEO. I am particularly excited to deliver a report after such a strong quarter of continued Solis performance. As this is my first quarter as the CEO of Konecranes, I would like to say a few words about the big picture and remind you all about our growth focus strategy before I start talking about our strong performance in the second quarter. We hosted our Capital Markets Day in May and we raised our financial targets. We aim to grow our business faster than the market, defined as the nominal GDP growth, and are well positioned in the global landscape with our unique offering. We have three business areas with clear strategic agendas and a strong position in the marketplace, well placed to reach our financial targets. Firstly, we have industrial service with its continued agreement-based growth agenda and inorganic expansion strategy. Secondly, industrial equipment with its efficient and renewing product portfolio sold globally through broad dual-channel go-to-market approach. And thirdly, we have port solutions with its broadest and deepest offering and with significant service automation and electrification opportunities. Our previous EBITDA margin target range was 12 to 15%, but in May CMD, we increased it to 13 to 16%, reflecting our confidence for the future. We aim to reach these targets as soon as possible, but no later than 2029. Now looking at our today's earnings with a record high EBITDA margin of 14.3%, I can say that we are firmly progressing towards our target. But now let's look at the most recent performance. Year 2025 started off well and our performance continued strong in the second quarter. Our demand environment remained good despite all the tariff related uncertainty and macroeconomical volatility. Our orders were up by over 17% year on year in comparable currencies. And our order intake clearly increased in industrial equipment and port solutions, while it decreased in industrial service. And our sales amounted to 1.05 billion euros in the second quarter. This means an increase of over 5% year on year in comparable currencies. And I'm really pleased to present that we reached again the record high EBITDA margin of 14.3% we had last year. And looking at the sequential development, our EBITDA margin clearly increased also from the first quarter of 11.1%. Our profitability in the second quarter was supported by good operating leverage. We continued to benefit from our global business model, which provides us resilience, particularly in this type of market environment. And year on year, we benefited from higher volumes, but there was also somewhat an offsetting impact from weaker mix. Profitability improved industrial service and port solutions, while it decreased in industrial equipment. We will go through those performances per business area later in the presentation. Next, I would like to say a few words about the market environment. Now, let's start with our industrial segments. In general, our demand environment remained good despite somewhat weaker macroeconomical data. The capacity utilization rates are the key macro indicators that best describe the operating conditions of the two industrial business areas. From the data, we can see that some weakening is there year on year, but still our order intake in industrial equipment grew clearly. However, within our industrial customers, we have seen somewhat cautious behavior. both in timing of new orders, as well as delays in project delivery acceptance. Our operating environment continues to be impacted by geopolitical tensions and volatility, especially and obviously related to tariffs. Now, within our port solution segment, we continue to see very good activity. The container throughput index, which is the main indicator here, continued at a very strong level in the second quarter compared to the historical readings. It is up 7% year on year. And as we do say in our demand outlook, the long-term prospects related to global container handling remain good overall. Now, let's then take a closer look at our sales and order intake development in the next slide. In the second quarter, our group order intake grew by 17% year on year in comparable currencies. This was mainly driven by port solutions where our order intake increased by almost 42%. This is a very good achievement, but it's important to keep in mind that quarterly fluctuation is a very normal feature in the port solutions business or in the port segment. Now looking at the geographical markets, we did see some improvement in our order intake in EMEA or Europe, Middle East and Africa region as well as APAC. And we did see some weakening in the Americas. Our sales in the second quarter increased in both reported terms and comparable currencies, as you can see from the slide. The improvement in sales was mainly driven by the excellent performance of the board solutions. The regional sales development followed the same pattern as the order intake, with EMEA and APAC outperforming the Americas. In the end of the quarter, our order book amounted to 2.9 billion euros at the end of the quarter and remains on a good level. We did see some weakening in year on year reported terms, but in comparable currencies, a slight increase. Industrial equipment remained flat while there was a decrease in industrial service and port solutions. And our book to build has been positive throughout the year 2025. Looking at things from a longer term perspective, our order book continues to be on a good level historically. And now let's then take a look at our comparable EBITDA margin development, which yet again reached a record high level. In the second quarter, we generated 150 million euros of EBITDA. This translates into an EBITDA margin of 14.3% and that good operating leverage from higher volumes was supporting our profitability while our mix was somewhat weaker. EBITDA margin increased year on year in industrial service and port solutions and decreased in industrial equipment. Due to the excellent performance, Port Solutions EBITDA margin reached its highest quarterly level ever and amounted to 12.6% in the second quarter. And industrial service also delivered a very good EBITDA margin of 22.6%. And then let's move to the next slide into our performance towards our financial targets. The year 2024 was a very good year and our performance has continued strong also during this year. This graph shows the rolling 12-month figures for our sales and EBITDA margin and progress towards our financial targets. Our group sales continued to grow, the last 12 months being higher than the full year of 2024. And then we look at looking at our group profitability in the rolling 12 months. We are at the moment at the lower end of our updated new target range of 13 to 16%. And despite the slight decrease in the rolling 12 months, we firmly continue to work towards our target. While increasing the everyday margin, we also aim to grow our sales faster than the market. Now looking at the different business areas separately, industrial service, we see a very nice positive development with both our sales and EBITDA margin in the recent last five years. Our sales in the rolling 12 months remained relatively stable, but our EBITDA margin increased to 21.2%. We are already today well in line with our updated target range, but naturally closer still to the lower end of that range. In industrial equipment, sales in the rolling 12 months slightly decreased. Also, our EBITDA decreased to 7.7%, and that was driven by the lower volumes. We have seen some cautious behavior within our industrial customers, particularly in the Americas, and that is also reflected in these figures. Our target EBITDA margin range for this business is 8% to 11%, and I'm confident that we will reach this target without strategic actions within the indicated timeframe by 2029. The long-term profitability outlook for industrial equipment is positive, and that is one of the reasons why the target level was increased in the CMD, Capital Markets Day. Order intake for industrial equipment was strong in the second quarter and we received multiple large equipment orders from the aviation and aerospace, energy and metal sectors in all regions, while our component business remained stable. Then moving on to DuPont solutions. Board Solutions was the highlight of the quarter. We have continuously improved our financial performance during the last three years. And as you will see from the graph here, our sales has increased in the rolling 12 months compared to 2024, which was already a very good year for Board Solutions. And our EBITDA margin continued to improve and reached its highest level ever. This resulted in an EBITDA margin of 10.1% in the rolling 12 months. And our EBITDA margin target range for this business is 9% to 11%. And we are well in line with that already now. Now we're moving on to the demand outlook. And our demand outlook within the industrial customers segments has remained good and continues on a healthy However, that demand related uncertainty and volatility due to the geopolitical trade policy tensions remain, particularly in North America. This translates into higher uncertainty in the timing of orders and with some postponement of maintenance activities with industrial customers. All sales funnels remain on a stronger level and funnel development during the quarter was stable. comparing against the previous quarter, the number of new sales case is slightly down. And then to the port customers, the global container throughput continued on a high level, and long-term prospects related to the global container handling remain good overall. Our pipeline of orders is solid and good, and it contains projects of many different sizes. And then I'll move on to my last slide. I will reiterate our financial guidance for this year. Our net sales are expected to remain approximately on the same level in 2025 compared to 2024. And the comparable EBITDA margin is expected to remain approximately on the same level or to improve in 2025 compared to 2024. Our performance in the first half of the year has been good, despite the prevailing uncertainty related to current geopolitical situation and tariffs. And before I hand over to our CFO, Teo Ottola, I would like to say that Konecranes is well positioned in the current global landscape with its clear competitive advantages. We have an excellent team in place. Our strong balance sheet provides financial flexibility. And the market continues to provide opportunities for expansion and growth. So thank you very much. And Teo, over to you.

Thank you, Marko. And let's move on. Actually, before going into the business area numbers in more detail, let's take a look at the comparable EBITDA bridge between Q2 of this year and Q2 of 2024. So the improvement from a year ago Q2 versus Q2 was in monetary terms 3 million euros and in margin there was basically no change as Marko already pointed out as well. There are more differences within the BEAs and we can take a look at those after a while but before that we can maybe unpack a little bit the group level EBITDA bridge. So the pricing impact in an year-on-year comparison was roughly 3%. And when we take into consideration that our sales grew more than 5% with comparable currencies, so we actually had underlying volume improvement, creating operating leverage and supporting our profits. Net of inflation pricing continued to be slightly positive, like in Q1 as well, but less than, for example, one year ago, but still a positive impact, whereas mix impact was clearly negative in the comparison to the one year ago. When we take a look at the fixed costs, they have been very well under control. And this increase of fixed cost of 3 million that we can see here, so it is actually less than the inflation. So this has been done very well. On the other hand, then now the FX changes are very big in a quarterly comparison and the translation impact. is creating a big negative variation from the Euro terms into our profits in a year-on-year comparison. So to sum up, the underlying volume has been up, which has created positive operating leverage. That has been largely offset by the effect changes, so strengthening euro, that is. The net of inflation pricing has been slightly positive, but that has been more or less sort of impacted then negatively by the product mix. And then fixed costs under control. So this is basically the summary of the EVIT-A bridge. Then on the business areas themselves, so now particularly regarding industrial service and industrial equipment, so the stronger euro has created big differences between comparable currencies and reported currency numbers, so that's why we are talking maybe even more than usually of the comparable numbers in the report, particularly regarding service and industrial equipment. But starting with industrial service, our order intake was 381 million euro. That is down 1.7% year on year with comparable currencies. We had actually declined both in field service as well as in parts of the regions. APAC did well, there was growth, but when we take a look at the Americas and EMEA, the order intake volumes came down. Agreement base continued to grow by 4.5% in a year-on-year comparison with comparable currencies. Order book had a decline also with comparable currencies. Then sales 386 million euros, that is up 2.1% in comparable currencies, but a decline with reported currencies. And if we take a look at the situation with reported currencies, we had a decrease in field service and in parts of the regions, the volumes were flat in Europe, but we had a decrease both in the Americas as well as in APEC. It's good to remember that now that when we take a look at the growth of 2.1%, so it is actually less than the price increases have been. So in service business, the underlying volume was slightly down in a year on year comparison. Comparable EBITDA margin, 22.6%. This is an improvement of half a percentage point, which is a very good achievement given that the underlying volume has been down. The profitability has been positively impacted by pricing, net of inflation pricing, but also good cost management. And cross-margin in a year-on-year comparison was more or less flat in the second quarter. Then moving into the industrial equipment. So here we had order intake of 318 million euros. That is up almost 9% year on year. And when we take a look at that by business units, so we had in an year on year comparison increase in process grains as well as components. but the standard grain orders declined in a near-and-near comparison. Of the regions, EMEA and APEC saw increasing volumes, whereas Americas was down. And then in the sequential comparison, so in comparison to the first quarter, we had a decline both in standard grains as well as in components, whereas process grains were roughly on the same level and even a little bit higher than what we had the volume in the first quarter. Order book is more or less flat with reported currencies and when we take a look at the book to bill so it continues to be above one also for the second quote. Sales 300 million and this one is down by almost 5% in a year-on-year comparison. We had decrease basically in all of the main business units. We also had a decrease in all of the regions. We have continued to have delivery challenges there, so that we have been having delays in deliveries. These have largely been as a result of the customer delays, so customer sites have not been ready. But there are also some topics that have been up to our own performance. Comparable EBITDA margin was 6.3%. This is clearly down in a year-on-year comparison, of course, primarily driven by the underlying volume decline, but also the performance or execution was not necessarily exactly as smooth as it was one year ago in the second quarter. Cross-margin, naturally down with this profitability from the situation one year ago. Then boat solutions, excellent set of numbers, like Marko already pointed out. Our order intake was 436 million euros. That is more than 40% growth year on year. We had good order intake across different product categories. Automation related RTHGs, mobile harbour cranes had good order intake in the second quarter. Of the regions, Americas and EMEA improved. Asia Pacific was down. When taking a look at the so-called short cyclical business units like lift trucks, we had an order intake increase both year-on-year as well as Q&Q. Then when we take a look at port service, the volume was more or less flat in an year-on-year comparison and somewhat declining in a Q&Q comparison. Sales also very good, 408 million euros. That is 18% growth in a year-on-year comparison. The deliveries went very well during the second quarter in the ports business. Comparable EBITDA margin on a very strong level, 12.6%, more than 2 percentage points higher than a year ago. Excellent profitability. Of course, primarily driven by the underlying volume improvement as a result of the operating leverage. But we also had good execution across the business units within both solutions. And gross margin here, flat in a year-on-year comparison. And then when we go into the balance sheet and cash flow topics, let's start with the networking capital as we usually have done. So networking capital at the end of the second quarter was 354 million euro. This is 8.2% of rolling 12-month sales, well in line with our new target of being below 10% of the rolling 12-month sales. And as you can see, the trend also has been quite good the previous quarters. Now regarding the second quarter, one has to note that that quite a lot of that is as a result of the currency changes. And then on the other hand also from the liability side, so actually accounts receivable and inventories were a little bit higher than what they were at the end of Q1. But the cash flow nevertheless was very good in the second quarter, 180 million, and the rolling 12 months number is high, and our cash conversion continues to be nicely above 100%. And then as a last slide before the Q&A, gearing and return on capital employed. So our net debt amounted to 166 million at the end of the second quarter. It's a gearing of only 9%, which is in line with the numbers that we have been having during the past couple of quarters. And return on capital employed also actually more or less in line with the Q1 number at about 22%. And with these comments, we can then move into the Q&A.