Konecranes Plc Ord

Hello all and welcome to follow Conecranes Q2 2026 results webcast. My name is Linda Hakkila. I'm the VP Investor Relations here at Conecranes. And today with me as our main speakers, we have our CEO Marko Tulokas and our CFO Teo Ottola. Before we continue, I would like to remind you about the disclaimer as we might be making forward looking statements. As per usual, we will first start with a presentation from our CEO, after that our CFO, and then we are happy to answer your questions in the Q&A session. But now, without any further comments, I would like to hand over to our CEO.

Thank you very much, Linda, and good afternoon from my behalf also. I'd like to start with some key topics of the quarter and start with commenting the customer activity and I'm happy to say that we had a continued very strong and good customer activity throughout the quarter that despite the continued geopolitical uncertainty which has resulted some apprehension with customers and the timing of the orders as well as some volatility in supply chain. Regardless of that uncertainty and apprehension, we had good demand, particularly in the ports business segment, as well as in defense, power, and aviation in the industrial side, to name a few. And because of that, our quarter two orders actually were very strong, and that resulted also in the highest order book that we have had in three years. This, of course, is a very good quarter two for us. Now the uncertainty in the environment reflected maybe more on the sales and the delivery side, but our volumes were remaining on the previous year level or actually slightly below. And that is mainly due to the expected timing of the ports order book. Our ability to execute and apply cost control resulted in a solid result, particularly in such a volume environment. And also I'd like to say that I'm really happy and particularly happy that we had good M&A activity in the quarter. So right after the end of the quarter, we were able to announce the recent planned acquisition of 70% majority interest in MFK, which is Mitsubishi Electric Corporation's Virob hoist and geomotor business in Japan. And of course that is a very important milestone for Conecranes and in our expansion plans for our geographical presence. Japan is the third largest crane service and wire-op hoist in the world and of course for our mid to long-term plans this is of course a very significant win. Very happy about that. So now let's move on to the quarter financials. and more specific comments. So we had good orders from all three business areas. Two great orders for port solutions, two larger ones. I'll talk about that a little bit later. Navy order for industrial equipment and the defense segment, as well as solid growth for industrial service, both in the agreement base as well as in the orders. And that resulted in an order intake growth of 13% year on year with comparable currencies. And consequently, to a order book that is 15% higher than the previous year at 3.4 billion euros and the best order book that we have had in three years. And that of course gives us good prospects for the second half. Sales is still behind previous year. That is predominantly a ports deliveries timing issue. But there was also some industrial service and port service related customer apprehension that reflected from the agreement base invoicing and resulting spin. But also we've seen some developments towards the end of the quarter that are improving that development. Too early to say though. Solid margins, particularly if one considers the volume environment, 1.6% behind previous year, that was predominantly impacted by the volume environment. Now moving on to our Demand Environment and if we look at the two key indicators here the capacity utilization and the purchase manager index or the confidence indicators looking at first the two largest and the regions, the EMEA and the EU and US. The capacity utilization has been flat roughly the last 12 months with some slight increase in the previous couple of months. Funnels, our own funnels are solid. Customers are hesitant to some extent, but as I was saying earlier, we do see solid activity in several customer segments in the industrial side. Capacity utilization related apprehension is more maybe visible in the service work and how much service workers customers actually place or order against the order book that we have and hence that reflects somewhat to the delivery side in service. Looking at the manufacturing confidence and the PMI expansion, that shows actually for the second quarter in a row in all four key market areas that we operate expansion. That has not all translated into demand for us yet, but generally speaking, that describes a more positive while still cautious environment. And China, although there is a clear slowing down or decrease in the purchasing margin index, still shows expansion and that for us shows as an active market, although at the same time very intense domestic competition. Now I would next look at the port segment and here the good activity level continues. So when we look at the container throughput index, that continues to be on a very high level historically, and we saw another 3% increase year on year in the container throughput. And of course the long-term drivers, they remain the same. The automation trend that we've seen, the geopolitical trends that drives also new placement of logistic flows and therefore also the ports and terminals. The electrification and sustainability trend as well as the demographics which drive both automation and the outsourcing trends. More on a current note, particularly if you look at the current geopolitical environment and particularly this situation or crisis in the Middle East, the impact of that is somewhat but in a smaller way in the sales side and in the sales delays. But when we look at the demand environment, in fact, that is in the short and mid-term also having some potential positive effects. Marko Äkräs may result particularly in this industry. And also the other thing is that our customers in this industry, the shipping lines and terminal operators, they are doing financially very well and very much continue their consolidation and investment into the terminals in this business. And that of course is a positive driver for us. Now, looking still a bit more in detail to the volume development, as I said, orders were solid from all three VAs, and particularly in port solutions, we saw good order intake increase. We had two large orders, one from Hillport, which was announced, and the other one was an unannounced larger order. But besides that, we also had decent order intake in port solutions in the other segments too. In the industrial equipment side, one large defense segment Navy order in the United States, but I can also say that we have continued to see solid component distribution business development also in the second quarter. And in the industrial service side, 5% growth in orders and 4% in agreement base, which of course is a positive thing. We see an increase in Americas and Asia Pacific, but some decrease still in EMEA that maybe reflects the demand environment too. And on the sales side, industrial equipment saw actually growth, and the slowness has been in industrial service side, particularly in EMEA and in Asia Pacific. And of course, as I said already a couple of times, the port solutions, it's the timing of deliveries issues, and most of that, of course, is planned and well known in advance. These volumes, of course, they resulted in the clearly higher order book compared to the previous quarter and what we had last year. So we have a 15% higher order book than previous year at the same time. That's best in three years. All business areas increased. And of course, we have a confidence building order book for second half delivery since we have 200 million euro higher order book for the second half of this year compared to the previous year at the same time. And on this section, finally, I can touch upon our progression towards the financial targets. We saw a slight decline in the 12-month rolling comparable EBITDA development in industrial service, both solutions and the group volume, whereas industrial equipment continued to gradually improve. What I can, of course, say is that we are well within the target range that we have set up for ourselves until 2029, as also communicated earlier. Now at this stage I'd like to turn over to Teo and then I'll come back a bit later also for two more things or three more things actually.

Thank you, Marko. Thank you. And let's move more into the numbers. And let's start with the group profitability slide. So as we already saw, we had a decline in the group comparable EBITDA of 1.6 percentage points to 12.7 now in the second quarter of 2016. When we take a look at it by BA, so we had actually an improvement in industrial equipment. We had a decline in port solutions and service. And when we take a look at the business areas where we had a decline, so the main reason for the decline was the underlying volume development, which was downwards. If we unpack the EBIT-A a little bit more with the help of the EBIT-A bridge on the right hand side. So first of all, we know that the decline in euros was 20 million. Thank you very much. Thank you very much. Then when we take a look at the inflation, so actually the inflation was roughly in line with the price increases that we had, so somewhere between 2 and 3 percent on a weighted average basis. And we did not now in this quarter have a really net of inflation gain or loss. So we were basically able to cover the inflation with the price increases, but not really more than that. This is as such okay, but it is of course a little bit different than what we have been having in the previous quarters because we have had quite many quarters where we have had a net of inflation pricing gain. And this time that was not the case. When we then take a look at the other elements, so mixed impact was not really meaningfully big, so it was a fairly small one. Thank you very much. and the other topics are then more or less netting each other out. So it's the underlying volume development which is behind the profitability development. Then when we move into the businesses and start with the service, so the order intake was roughly 400 million euros. That is an increase of a little bit more than 5% in comparable currencies. We had increase both in field service as well as in parts. When we take a look at the regions, we had an increase in the Americas and EMEA, but a decrease in APAC. Again, taking a look at the regions, one can say that the Americas region order intake was very strong now in the second quarter. Then the agreement base continued to grow again, higher than 4% growth year on year in comparable currencies. Very good news there. And then the order book is higher than a year ago. It's also higher than at the end of the first quarter. So both sequential and year on year growth from the order book point of view. Sales minus 1.7% in comparison to the situation a year ago. Now, despite the fairly good order intake, so we have some slowness in the sales. And like Marko already pointed out, so it comes partially from the maybe a bit lower than expected invoicing regarding the agreement base. and also then that our order book is now a little bit higher than what it has been. So part of it is in the order book in a way and part is in the slower than let's say normal invoicing from the agreement days. We however feel that this is primarily a timing topic and the sales performance will recover going forward to the second half. Then when taking a look at the comparable EBITDA margin, 21.2%, this is a decline of 1.4 percentage point year on year. Here the reason is the same as for the whole group, so it is basically the underlying volume which is causing the decline in the service EBITDA margin. Industrial equipment then, very good order intake in the second quarter, more than 18% growth in a year-on-year comparison. So we had good growth in components, we also had good growth in process grains, but a slight decline in standard grains in a year-on-year comparison. And then again taking a look at the regions so Americas was strong here also like in service as well also APEC grew but EMEA was more or less stable in a year-on-year comparison. Then of course the sequential comparison is interesting and important as well and there we had a decline in standard cranes as well as in components. but process cranes were more or less flat in a sequential comparison. It's worth noting that component order intake, despite declining a little bit in a sequential comparison, still continued to be on a very good level. Here too, the order book increased both in a near-on-ear comparison as well as in the sequential comparison. Net sales grew by 8.6% in year-on-year comparison. We actually here had a growth in all business units. Some delays from the customer deliveries point of view, but nothing major, and sales growth is there. So then when we take a look at the comparable EBITDA margin, 6.9%, 0.6 percentage point improvement, So this is, of course, then a different story than in the service. For example, volume increased and supported the EBITDA. Also, pricing gave a small positive here within industrial equipment. But then on the negative side, on the other hand, we have the effects. So euro dollar in particular, which is impacting us. which is in a worse position from our point of view than a year ago and then also from the execution point of view it was not a completely clean quarter so there was a little bit of that also included in the numbers. Then, port solutions also here, actually excellent order intake, the growth 17% year-on-year. Like Marko already pointed out, we had two large orders that were received in the second quarter. Activity overall was good in RTGs, lift trucks, also port service in an year-on-year comparison. Then, when we take a look at the sales, we have a clear decline, almost 13% in an year-on-year comparison. Again, repeating what Marko already mentioned, so this is primarily an order book timing topic, so the deliveries are scheduled for a later time. This was the main reason. A couple of deliveries probably could have been going within the Q2 and slipped to Q3. Additionally, unfortunately, we were not able to deliver the pending Middle East case that was pending already at the end of Q1. So that was a little bit less than 15 million impact. But like I said, this we had already at the end of Q1. But we haven't really seen any major new delays as a result of the conflict in the Middle East. Then when we take a look at the comparable EV day, 10.8%, 1.9% point down in an year-on-year comparison. So of course the decline is primarily as a result of the lower volume. The profit was supported a little bit by a US tariff refund. So we have applied for refunds, we have received refunds. Also refund, it was a little bit less than 2 million for port solutions in this quarter and this was a tariff that we actually originally paid last year and now that we have got a refund so it is of course helping our Q2 result then this year. Then a couple of comments on the balance sheet and cash flow. And here on the networking capital side, we have actually now for the first time in two years, we have a situation that we are on the wrong side. Thank you very much. to compensate for the build-up in the work in progress or the contract assets that we now have there. And this is, of course, also a timing topic, but we are, like I said, on the wrong side of our own target in this quarter. This then, of course, impacts our free cash flow as well. So the second quarter free cash flow was not good, not a negative. and when we take a look at it on a rolling 12-month basis so we are now very close to a situation that we have cash conversion at about 100% at the end of the Q2 on a rolling 12-month basis. The cash flow is then of course reflected on this slide, so on the right hand side we can see the net debt, so net working capital development has impacted this one. A bigger impact however comes of course from the dividend payment that was taken care of in the second quarter and now we are in a small net debt situation at the end of the second quarter. When taking a look at the rolling 12 months rosy, so we are there 22 and a half with on a comparable return on capital employed basis. With these comments, I will then hand over back to Marko. Thank you, Teo.