Cavotec Group AB

Welcome to KavoTech Q3 Report 2025. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to CEO David Pagels and CFO Joakim Wolquist. Please go ahead.

Good morning and welcome to Kabatek's third quarter presentation. I am David Pogels, the CEO of Kabatek, and together with me today, I have, as usual, Joakim Wahlqvist, Kabatek's CFO. I would like to start with a short introduction of Cavitech for those of you who are not familiar with us. Cavitech was founded 50 years ago by three entrepreneurs in Sweden. Since the foundation, Cavitech has focused on developing technical solutions to improve efficiency and electrify processes in areas such as ports and other industries where electrical cable reels and or radio remote controls are needed. As part of this global expansion, Cavitec moved to Switzerland in 2007. This year, however, we have taken an important step by returning back to our roots in Sweden. These moves brings us closer to our shareholders base, which is in Sweden, and also enable us to become more efficient and agile. We're very excited about that. As you know, we report two business segments. Our service offering is reported into those two segments. Ports and Maritime provides world leading solutions for ports, ships and other marine applications. We have a unique systems, for example, automated mooring, moor master. We have shore power, cranial electrification and connections and charging systems. All these solutions contribute significantly to improved environments and working conditions in ports worldwide. Our customer includes ship owners and operators, ports and terminals, port equipment manufacturers and shipyards. Ports and Maritime is our largest segment and represents the majority of the group's sales and EBITDA. The industry segment is the other one, and its unique selling point here is our ability to drive productivity and contribute to the customer's operational efficiency, electrification as well as occupational health and safety. The products include motorized cable and hose reels, radio remote controls, power connectors, spring driven cable and hose reels. We have customers in a wide variety of industrial sectors such as cranes, energy, processing and transportation, surface and underground mining and tunneling. As a service, as I mentioned, is an integrated part of our business segments and we have service engineers across the globe. They work either from our service centers or are based at our customers' premises. The service offering includes system integration, maintenance, sales of spare parts of course, inspections, refurbishment, as well as round-the-clock service agreements. As you have seen in the report, we have also this quarter been impacted by the continued uncertainty among our customers and the product driven nature of our business with long delivery times or lead times. However, our underlying market remains strong, driven by the need to reduce greenhouse gas emissions, improve ports environments and increase customer efficiency. This in turn is driven by the strong mega trend to electrify society, which we all are aware of. At the same time, we have seen an increasing awareness globally to reduce noise levels in, for example, ports. The need to electrify society and improve environments, for example, in ports also manifests in regulations and governmental requirements that affect our customers and drive their demand. Over our 50 years, we have built a strong expertise and experience in these areas and have a strong and attractive offering based on leading technologies. This gives us the ability to grow in both new and existing customers, thereby expanding our installed base. The installed base, of course, is important because it provides us an opportunity to offer our comprehensive range of service activities. So, looking into some of the figures before I hand over a little bit later on to Joakim to explain a little bit more detail. Order intake increased 0.5% to 36.3 million euros in the quarter, driven by the demand for shore power and more master systems. Our order backlog increased 14% to 126 million euros, which is reflecting the order intake in Ports of Maritime where we have very long lead times in the product business. We have communicated a range of significant orders in the past 10 months in Ports of Maritime. However, this is a product driven business and most of the deliveries will not start until next year. Revenue decreased slightly with 18.8% to 35.8 million due to the certain delays in planned deliveries of shore power systems. A shift in delivery plans from the customers. Lower volumes due to the ports and maritime long lead times and continuing caution among certain customers have led to us reporting a slightly negative EBIT this quarter. Before moving on, I would like to point out the improved profitability in the industry segment. Our work within industry to increase our market presence, attract new customer has led to more opportunities for us that we are very hopeful about going forward. In industry, the businesses consist of many smaller but recurring orders, which balances the Ports of Maritime product driven business. We have recently communicated several significant orders for shore power systems. Two orders with a total value of 9.35 million euros include shore power for new built and existing container vessels. The Kamath Custom is a leading global container shipping company that earlier this year signed an order for 8.1 million euros for shore power. This is a good mark of our delivery and product quality with a leading player in industry gives us this increased confidence. A large part of the latest orders involve retrofitting of shore power system on existing vessels. This means that we will install our solutions on the vessels when they are in operations between Asia, America and Europe. They could either be in dry dock or we can do it during the savings. These are without doubt challenging projects that require a lot of logistics and technical know-how. We are proud to have the competence and experience to be able to do so. Deliveries will continue throughout 2026. The second agreement we have communicated involves delivering of the first shore power systems in Maldives. We expect the system to become important reference in the regions and may create opportunities for more projects in the nearby areas in South Asia. We'll begin deliveries of those equipment in the first quarter of 2026. We have also recently announced an order with construction and engineering company Sivmek for motorized cable reels for installations in Port Headland in Western Australia, which is one of the world's largest iron ore export ports. This is a significant agreement and it's our first major collaborations with Sivmek and strengthen our presence in Australia mining and bulk handling sector. delivery scale for the third quarter in 2026. By this, I will hand over to Joakim for a little bit more deep dive into the financial figures.

Thank you, David, and good morning, everyone. I'll start with the order intake, and the order intake was in line with the same period last year. However, we report an increase in order intake for ports and maritime of 4%, while we see a small decline in industry. Thanks to the order intake in ports and maritime, our order backlog grew with 14% to almost 126 million euros. As David said, we have had significant orders over the past 10 months in portion maritime. However, a large portion of them is up for delivery in 2026 and forward. If we look at the revenue, So although the underlying markets remain strong, we can see a decline in revenue with almost 19% compared to the same period last year. This has mainly three explanations. Number one is the continued macroeconomic uncertainty that results in postponed decision making with our customers, especially for deals with shorter lead times that would generate revenue within the year. We also had a Q3 last year that was not that strong on the ports and maritime side, and that have impacted also the revenue in 2025 as lead times are about a year before they turn into revenue in that business segment. On top of this, you might remember that we had a very big Q4 2024. And part of that was planned to be delivered now in Q3 this year. But we have experienced, as David mentioned earlier, certain delays and this further impacts the revenue in the quarter. On top of this, we had some slight negative impact from currency of minus 1%. And with that, I will move over to our EBIT. As you can see, profitability was impacted and mainly by our lower volumes, but also partly by the ramp up in preparations for upcoming deliveries in the ports and maritime segment. As a consequence of this, we are showing a slightly negative EBIT in the quarter with minus 0.2 million euros. Having said that, We still continue to see improving margins on an aggregated level in the business and we do deliver a result. This is a result from continuous efforts on both our cost out work from our engineering team, productivity improvements in our factories and also from procurement savings. EBIT has been adjusted in the third quarter for non-recurring costs of Euro 0.3 million related to the relocation of the registered office to Sweden. And I'm very pleased to have completed this move. And this is the first quarterly report that we are publishing in both English and Swedish and fully based then on Swedish reporting standards. Moving to the net result, net profit declined to a loss of minus 1.7 million compared to 1 million last year, and earnings per share fell too slightly. Again, this is mainly a result then of the lower revenues in the quarter. Cash flow. Our operating cash flow increased to Euro 2.8 million in the quarter due to mainly advanced payments from shore power orders. At the same time, we are a bit affected by these delays that we have talked about on our working capital, and we're tying a bit more capital in work in progress for the upcoming shore power deliveries. Net debt continues to improve, though, from 13.3 million down to 13.3 million from 15.3 million. Leverage ratios still quite okay at 1.44 compared to last year where we had 0.85, which was still very good. All this together though means that we still have a solid financial position despite two softer quarters this year. And let us now look in a bit more to the two different segments to understand the financials there. Starting with ports and maritime, which is the largest segment. As I said earlier, order intake increased over 4% to 21.9 million, and the order backlog grew by 16.4%, exceeding 103 million. This is reflecting the continued demand for shore power solutions and also our more master systems. Ports of Maritime's project-driven nature with long lead times impact our performance this year, as we last year had a weaker first three months, three quarters of the year, as you might remember, and a very strong Q4 2024. As earlier said, there has also been certain delays in planned deliveries of offshore powered systems in Q3. Moving on to the industry segment. In the industry segment, the order intake declined slightly by 4.7%, reflecting the increased caution among customers. That said, the order backlog grew by 4% versus the same period last year. Revenue improved slightly also from the same period last year. And it's really good to see that the sales push, cost savings and efficiency measures that have been going on for the last one and a half years are really improving the EBITDA margin that we can see here is close to doubling versus the same quarter last year. We still have more work to do to be done here in the industry segment, but we are very pleased with this development and we continue to see a big market potential in this segment. With that, I will hand over to David for some final remarks.