Konecranes Plc Ord

Hello all and welcome to follow Conecranes Q3 2025 results webcast. My name is Linda Häkkilä. I'm the VP investor relations here at Conecranes. And with me today as our main speakers, we have our president and CEO, Marko Tulokas and our CFO, Teo Ottola. Before we proceed, I would like to remind you about the disclaimer, as we might be making forward looking statements. Here you can see our agenda for today. We will first start with a presentation from our CEO and he will give us a market update and guide us through the group performance. After that, our CFO, Teo Ottola, will guide us through the business area performance and talk about the balance sheet topics. Before we start with the Q&As, our CEO will still summarize the main points of the quarter. But now, without any further comments, I would like to hand over to our CEO.

Thank you very much, Linda. I'd like to start by saying that I'm extremely pleased with our performance in quarter three and throughout the year 2025. ConnectGrain's team delivered a very strong quarter in continuation to our solid half year performance under the prevailing market conditions. This is an excellent achievement. This is With this kind of market uncertainty, an order intake growth of 23% year on year is a very good start for the quarter three or is a very good quarter three. Our demand environment has remained stable despite the market uncertainty and our sales teams have been able to close well despite the timing related hesitation. Our orders are up now by 23% year on year in comparable currencies, and our order increased more than 7%, order book increase, sorry. The order intake increased in all business areas. Our sales amounted to nearly 1 billion euros in the third quarter. This means a decrease of 5.5% year on year in comparable currencies. Despite the decrease in sales, we reached a record high EBITDA margin of 16.7%. That is an increase from second quarter level of 14.3%. Our profitability in the third quarter was supported by good execution as well as some one-off items. We will go through the performance per business area later in this presentation. The next, I will again go through some boards to our general market environment. 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 best macro indicators that describe these conditions for industrial business area. And from the data, we can see some weakening year on year. but still our order intake in industrial service and industrial equipment grew in quarter three. That was really driven by good activity in our standard equipment business, as well as some significant modernization and process grain projects. At the same time, within our industrial customers, we have seen somewhat cautious behavior. both in timing of new orders as well as delay in project delivery acceptance. Our operating environment continues to be impacted by geopolitical tensions and volatility, especially related to tariffs. Now let's then talk about the market environment for Ford solutions. And import solutions markets, we continue to see good activity. The container throughput index, which is the main indicator here, continued at a strong level in the third quarter compared to the historical readings. It is now up by 3% year on year. And as we say in our demand outlook, the long-term prospects related to container handling or container traffic remain good overall. We will now next take a look at our sales and order intake development. In the third quarter, the group order intake grew by 23% year on year in comparable currencies, and that is an increase in all three BAs. Looking at geographical markets, we saw some improvement in our order intake in Americas and APEC region, as well as some weakening in EMEA. Our sales in the third quarter decreased both in reported terms and comparable currencies, which was mainly driven by the lower order book in port solutions. And in the third quarter, we saw a decrease in net sales for industrial service and port solutions, but very strong delivery performance in industrial equipment after a less strong quarter two. On a group level, we saw a decrease in net sales in all regions. Moving on to the order book. And our order book reached its highest level since quarter one of 2024 and about it to over three billion euros at the end of the quarter. We saw an increase in industrial equipment and port solutions, while there was a decrease in industrial service. Our book-to-bill has been positive throughout the year. And looking back to our long-term performance, our order book continues to be on a historically good level. And then finally, looking at the EBITDA margin development, which reached also a record high level. In the third quarter, we generated 165 million euros of EBITDA. This translates to very strong EBITDA margin of 16.7%. And this performance came from really solid execution as well as some one-off items. And EBITDA margin increased year on year in all BAs. Industrial equipment reached its all-time high margin of 14.1% in the third quarter. And industrial service and port solutions also had very good margins of 22.7 and 11.8% respectively. Then let's move on to performance towards our financial targets. Last year was very good for us and our performance has continued strong also this year. This graph shows the rolling 12-month figures for our sales and EBITDA margin and progress towards our long-term financial targets. Our group sales remained flat and whilst our comparable EBITDA margin increased, when comparing the last 12 months to full year 2024. The group profitability in the rolling 12 months, we are at the lower end of our profitability target range of 13 to 16%. Of course, we consistently continue to work towards those targets. While increasing our EBITDA margin, we also aim to continue to grow our sales faster than the market. In industrial service, our steady progress over the last five years continues, and the sales in the rolling 12 months remained relatively stable, but our EBITDA margin increased to 21.5%. We are already today well in our Wendel 9 with our target range, but naturally still closer to the lower end of the bracket. And in industrial equipment, sales in the rolling 12 months remained flat, And also our EBT margin for the same period decreased compared to full year 2024. That is mainly due to the weaker H1 and particularly the weaker quarter two. While the quarter two performance for industrial equipment left room for improvement, our performance in quarter three was in turn exceptionally strong. Also here we will continue to work to strengthen the over the cycle performance of the industrial equipment business. Then moving on to the port solutions, we have continuously improved our financial performance during the last three years, as you can see from the graph, and we will also continue to do so in quarter three. Our sales increased in the rolling 12 months compared to 2024, which is already a very good year. And our EBITDA margin for quarter three remained at a high level, which resulted in an EBITDA margin of 10.8% for the rolling 12 months. Needless to say that I'm very pleased with this progress. Now I will hand it over to Teoto, our CFO, for some time, and then I'll return back in a moment.

Thank you. Thank you, Marko. And let's move on in the presentation. Actually, before going into the business area numbers, so let's take a look at the comparable EBITDA bridge between Q3 of this year and Q3 of last year. As we have seen, the margin improvement is large in a year-on-year comparison. And when we take a look at the Euros, so this turns into 22 million Euro improvement. And if we unpack this next a little bit. So first, starting with pricing. So our prices were somewhere between two to three percent higher than a year ago, maybe closer to three than two. But nevertheless, this improvement or increase in prices is somewhat less than what we have been having in the beginning of 25. When we combine this price increase to the fact that our sales declined more than 5% in a year-on-year comparison, so actually we are looking at quite a significant underlying volume decline in the third quarter in comparison to the situation a year ago. This of course creates a negative operating leverage impacting the profits as well. But there are then several positive things supporting our profits. First of all, net of inflation pricing. That was slightly positive. in an year-on-year comparison, even though the positive impact comes primarily as a result of tariff-related price increases. So we have increased prices in line with the tariffs, but then as a result of the inventory turns being slow, so actually the benefit comes first and then the cost will be flowing in a little bit later in terms of material consumption. In addition to that one, we had a clearly better mix now than a year ago. But the biggest explanation of all is very good execution that we had. So the performance of the business was excellent, particularly in the project execution, which is visible primarily in the ports, but also in the other business areas. When we combine into this one that our fixed costs actually were lower than what they were a year ago, we were able to create this improvement in the EBIT-A despite lower sales. When we take a look at the performance a little bit more in detail, so we can note that our performance this time was helped by some one-off type of levers things. One of them was that we actually received a R&D grant in Finland in the amount of roughly 4 million that was booked in the third quarter. This is of course visible in the fixed cost and that is one of the reasons why fixed costs are now lower than what they were a year ago. I already mentioned the tariff-related price increases and the tailwind that we got there. So that was less than 5 million, but several millions anyway. And then we had also some provision releases within the industrial businesses. And altogether these are, let's say, roughly 10 million euros or so. Then the next one I'm going to discuss is not like a one-off topic, it's normal business practice, but as a result of the good project execution within Port Solutions in particular, we were able to release provisions and that impacted positively our result in the third quarter. So normal business as such, but this quarter was better than average, definitely from that point of view. So there are some of the topics explaining the profitability and the profits within the third quarter. Let's then move into the businesses and start with service as usual. Maybe here worth noting that exactly as in the second quarter, so also here, the FX impact is quite big. So let's more focus on the numbers with the comparable currencies. In service order intake grew by almost 9%, 8.7%. This is clearly higher growth than we have had in the first half of 25. This growth was actually supported by some large modernization orders that were already mentioned by Marko as well. But even if we excluded those ones or the delta as a result of the modernizations, we still would be having growth, even if the majority of the growth is created by these modernization orders. When we take a look at the field service, so actually our order intake declined in an year-on-year comparison and in parts it was an increase. Then taking a look at the regions, we had increase in the Americas and EMEA, but a decrease in APAC. And it's worth noting that the modernization deals took place primarily in the Americas. Agreement base continued to grow more than 5% with comparable currencies and order book was slightly lower than what we had a year ago. Net sales grew only by 1.2%. And this is, of course, less than the price increases have been. So the underlying volume actually was lower than what we had a year ago. There, the reason is basically the slowness of order intake in the field service. And we had a decline in sales in field service within the service. Spare parts were basically stable in a year-on-year comparison. And then from the region point of view, stable in IMEA, whereas decrease in the Americas and Asia Pacific. Comparable EBITDA margin improved by more than 1 percentage point to 22.7%. Despite the somewhat sluggish sales development, this was primarily driven by very good cost management within the service business, but to some extent also by pricing, which was partially in relation to these tariff-related price increases and the timing tailwind there. So then industrial equipment, very good order intake, close to 350 million euros. That is as much as 26% growth in external orders when comparable currencies. When we take a look at this by the business units, so we had actually growth in process grains and components, but we had a decline in standard grains. And then of the regions, decrease in EMEA, whereas the other two regions saw growth. Then the sequential picture, which is important as well. So in comparison to the second quarter, actually we saw sequentially a significant increase in process grain orders. Components were more or less flat in a sequential comparison and standard grains declined slightly. Order book is higher, clearly higher than what we had at the same time one year ago. Sales grew very nicely, 6.3%, again with external sales in comparable currencies. After a little bit, let's say lower first half, we had increase in standard crane component sales, but a decrease in process grains, which then also at the same time meant that the product mix was somewhat better than a year ago. Then when taking a look at the margin, so excellent EBITDA margin, 14.1%, a very big improvement in an year-on-year comparison. Of course, driven partially by volume, so the underlying volume improved here in industrial equipment quite a bit. There were also some of the one-off items that we already discussed. For example, the R&D grant is mostly visible in the industrial equipment, but then also good execution otherwise, as well as the optimization program that we have been running has been giving benefits also for this quarter. And the mix also was slightly better than a year ago. Both solutions, good order intake or excellent order intake here as well. More than 450 million euros, that is 36% growth in an year-on-year comparison. We had very good order intake in yard grains. This would mean primarily RTGs and ASCs. If we take a look at the regions, Americas and APAC improvement, IMEA a decline. And here also again taking a look at the little bit of the sequential topic, but also the so-called short cycle product categories within port solutions. So lift trucks, there we had year-on-year growth in the order intake, but sequentially down. And then from the port service point of view, we had growth both year-on-year as well as sequentially. Sales was clearly down by almost 19%. This was, of course, known from the point of view that the order book was lower for the third quarter than a year ago. So order book overall is in good shape, 10% higher than a year ago. But the same thing continues now for the fourth quarter as we had for the third quarter as well. So we have less order book for the fourth quarter now than what we had one year ago for the fourth quarter. So the order book is more beyond this year or beyond the current year than what we had the situation one year ago. Comparable EBITDA margin developed very well, 11.8%, 2.2% improvement. This is obviously not driven by volume because the volume declined very much, but primarily because of the very good execution supported by some of the provision releases, like I said. And then also the product mix, particularly import solutions, was clearly better than a year ago. Then next a couple of comments on the the networking capital cash flow. We actually had networking capital of only 285 million euros at the end of the third quarter. That's only 6.7 percent of rolling 12-month sales. This is very well in line with our target of being below 10 percent. If we take a look at the delta to the situation a year ago, it is primarily inventories where the decline has come, and then in sequential comparison, it's maybe more accounts receivable. This networking capital development together, of course, with the good result meant very good free cash flow on record levels, this one as well, more than 200 million euros. which is then, of course, consequently leading to this slide, where we now actually during the third quarter have moved from being in net debt situation to being in net cash position. Not much, but negative gearing anyways at the end of the third quarter. On the right hand side, we can then see the return on capital employed, which is 21.7 percent. And this is a comparable number, but also the reported number is more than 20 percent. We have added actually a slide on the US tariffs as well, because that, of course, continues to be a relevant discussion topic. On the right hand side of the slide, we have the Connecranes exposure. So these are the numbers that we have already given earlier. So the internal volumes from Europe to the US is 180 million or less than 180 million. And then on top of this internal volume, we obviously then also have deliveries of fully assembled port cranes and lift trucks. We are of course subject to the normal reciprocal tariffs of 15% for example in the complete cranes. But then many of our components, particularly spare parts, are also subject to so-called steel derivatives, where we are then subject to a 50% tariff. And also the tariff codes added now to the steel categories in August was impacting us as well, so that we have now more components and parts within the 50% category than what the situation was before. What we have done is that we have increased prices more or less in line with the tariffs. We are of course monitoring the situation, we are monitoring what the competitors are doing, how the customer demand is developing. We are discussing with the suppliers to be able to define the steel content of the components, because of course that can help us to in a way get the tariffs, particularly the steel derivative tariffs, on the right level, if we can prove what is the share of actual steel in the components. So all in all, we have been able to manage the pricing well. This most likely will become somewhat more challenging going forward. so that maybe not all of the tariff increases are possible to put into the customer prices. We do not expect this to be having any major impact on the margins, but the situation may be in the future a little bit more tighter than what it has been so far. This actually was the last slide that I had, and now I invite Marko back to the stage.