Welcome to Cargotec's Q1 Results Call. My name is Aki Vesikallio. I'm heading Cargotec's investor relations. Today's results will be presented by CEO Mika Vehviläinen and CFO Mikko Puolakka. The presentation will be followed by a Q&A session. In the first quarter, we saw solid profitability despite supply chain challenges. Some of the highlights in the quarter included our refocused strategy, which was announced on third day of March. We aim for higher financial performance through sustainability and profitable growth. In the first quarter, excellent progress in services and in Hiab continued. Although uncertainty on deliveries is expected to continue, please pay attention on the disclaimer in the presentation. Going through the content. First, Mika will cover the group level development and market environment, as well as highlights from the refocused strategy.
Then, Mikko will go through the business areas and the financial development of the group. With that, over to you, Mika.
Thank you, Aki. Good afternoon from my behalf as well, and thank you for joining the Cargotec Q1 2022 call. Q1 2022 was a quarter to remember for us in Cargotec. We saw a terrible war breaking out in Europe. We see the escalating COVID situation in China. We announced the cancellation of merger with Konecranes, and then we announced a new refocused strategy for Cargotec. Against that backdrop, I have to say that I'm quite satisfied with the performance in Cargotec. We had another very strong order quarter, exceeding again EUR 1 billion of orders, and the market remains strong in all of our segments. Our revenues increased by 17% despite the operational challenges that continue in our supply chain. Our comparable operating profit increased by 26%, really driven by the increases in the revenue.
Looking at the activity around the globe through our connected equipment, we saw a very high utilization rates continuing across our different segments and markets. We saw some slowdown in the Hiab sector in the U.S., really driven by the slowdown of the construction activity, although it still remains at the very high level. This is really driven primarily by the capacity limitations regarding the labor availability and the material availability. However, at the same time, we actually saw a record new housing starts in the U.S. markets as well, so the underlying market remains to be strong. Also, we are starting to see the impact of the COVID measures and lockdowns in China as well in equipment utilization. We can get a lot of different insights and sort of information regarding our equipment, and here is another example.
This is looking at the Hiab loader crane operating times versus our expected modeled utilization. We actually have a lot of information available, and we can project where we would expect the utilization rates going. This is indexed information. 100 is actually the expected volume. Interestingly, you can see from the chart that the activity level in Europe has been at the very high level over the sort of projected material, except of course the eastern break that is very visible in the data. In U.S., actually the activity level started somewhat at the slower level, probably due to the issues discussed earlier about the construction activity. We have seen actually the activity level picking up and actually exceeding the projected volumes, and also very visible that very clearly U.S. too eastern is not such a holiday as in Europe.
Market environment continues to be strong in all of our business segments. The container traffic continues to grow. We see continuing sort of difficulties with the congestion in the port, and I'm sure that the current situation in Chinese ports due to the COVID restriction is not helping out the situation moving throughout this year. We see a continuing high level of activity in the construction market. As I already said, we actually saw another record level of U.S. housing starts happening again in the last quarter. In MacGregor, the market also remains to be strong. We have Clarksons is estimating a slight decline from the last year, which was a very high year with over 1,700 vessels. The 1,300 vessels is still about double what we have seen in the previous years as well.
The decline is probably mostly due to shipyard capacity starting to be quite full and the new build prices going up quite strongly as well. It's also good to note that the offshore activity is picking up. Very clearly the change in energy situation in Europe, for example, is seeing increased activity again in oil and gas sector, and of course the renewable sector around offshore wind is remaining very strong. As I said, another very strong order quarter, and in our core businesses in Hiab and Kalmar Mobile Solutions, we saw a further increase in our order intake. The MacGregor orders declined slightly from the previous year. Primarily last year, we had a very strong sort of service project order in there.
However, we see the pipeline to be quite strong and already have seen an increased order activity during the Q2. The strong order activity is obviously visible in our order book that is now exceeding EUR 3 billion. About 80% of that order intake is in our core businesses in Hiab and Kalmar mobile equipment. That of course sets us well for the coming quarters. Our lead time start to be close to 12 months at the moment, and the order backlog now extends beyond 2022. Despite the challenging operational environment, we saw actually revenues increasing and a lot of hard work has gone into that one.
In certain areas, we actually have seen the component situation to sort of lightening up somewhat and a number of critical suppliers for our businesses actually decreased somewhat during the Q1. However, while there is a progress happening in many areas, the war in Ukraine together with the COVID situation in China is casting quite a lot of doubts and uncertainty, and the visibility for the supply situation for the rest of the year is sort of quite difficult, and the situation remains to be quite fragile at the moment.
Very happy with our services business that continues to go from strength to strength, and we had another great quarter, almost at the record level at the moment, and services actually improved and grew in all of our businesses all together by 12% being 33% of our total revenues. Few words about refocus strategy that we announced at the end of March. This is a great start for the new refocus strategy. In our new core focus businesses, our revenues actually increased by 23%, and we had a comparable operating margin exceeding 10% in those businesses also during Q1. As said, we will be focusing on higher financial performance, faster growth, leveraging our capabilities in sustainability and services.
Our strategic direction remains the same, aiming for profitable growth and improving the sustainability into logistics industries. Again, to recap the strategy, we will further aim to accelerate the growth in Hiab. In Kalmar, we will be focusing towards the mobile solutions and selective number of product groups and will exit the heavy port crane business. We have also announced that we are now starting the evaluation of strategic options for MacGregor. Our business will highly be focused on customers supporting their operations through improving lifecycle services. We have significant opportunities to drive further growth in our services business, both in terms of quite clear self-help measures such as spare part capture rates, maintenance contract capture rates, et cetera, as well as more and more advanced services based on our technology and digitalization.
We have a great starting point. Our market positions are very strong. We are either number 1 or very strong number 2 in all of the core business areas. We have an excellent, sort of, high-value brands in those areas, and our technology position remains to be very strong. We keep on investing, and again, this quarter we increased our investments in our R&D, leveraging our capabilities and driving for electrification, robotics, and digitalization. The demand for eco-friendly and sustainable products is clearly increasing, and a good example of that one was the 38% growth in our eco portfolio during the Q1. Actually, if you would exclude the Navis numbers from the Q1 last year, which is also classified as an eco portfolio, the growth in our eco portfolio during Q1 would have exceeded 60%. What's happening next?
Again, the strategic evaluation of MacGregor business has started. We have appointed an investment bank to help us evaluating the different options, and we plan to exit the heavy crane business in Kalmar. We have put the business on hold now. We are not taking any further orders, and we expect to come to a conclusion regarding which is the best way to exit that business by Q3 this year. We keep on reviewing the operational models to support the refocused group and what's the best way of setting up our operations, for example, in group level to enable that one. Our capital allocation priorities are around accelerating our M&A pipeline even further, continuing investing in R&D around electrification, robotics, and digitalization, and maintaining a strong focus on mission climate actions. Our current strategy is clearly getting traction.
We are growing in adjacent businesses and markets, and as I already said, the eco portfolio grew by 38% during the Q1, and overall, our core businesses grew by about 23% in Q1. We will be solving our customers' problems around sustainability. Another good example of that one is the announcement of the first in the world, reach stacker, electrified reach stacker coming out of Kalmar, and we already see a strong demand for that solution as well. We are investing further in that one. Again, in our electrified range is expanding continuously.
We've been first in the world in terms of bringing into market truck-mounted electric forklifts and we already have a third product coming out of that one, and one good example of the actual demand for that one, we announced a new record order for electric MOFFETT truck-mounted forklifts in Europe, value of about EUR 5 million. Very clearly we see across the board a strong demand towards more sustainable solutions, and we are in very strong position to fulfill that demand as well through our technology offering and development. With that one, I'd like to hand over to Mikko Puolakka, who will cover the business areas. Thank you.
Thank you, Mika, and good afternoon also from my side. Let's start with Kalmar, where we had quite a nice development in the order intake. The core businesses, meaning the mobile equipment and the straddle carriers as well as services, order intake increased compared to last year. The heavy cranes, like Mika said, we have not been taking any new orders recently, and the heavy cranes orders declined compared to last year. It's also good to remember that we had Navis still in quarter one last year, and excluding Navi's orders from the comparison period, actually, Kalmar orders would have been on last year's level. Like Mika said, we have had good traction in the environmentally friendly solutions.
30% of our forklift orders were coming from the fully electric versions, and we now sold also the world's first fully electric reach stacker to Norway. As you can see from our order book, we are accumulating the order book due to the fact that the component availability in various component categories is very poor, and this is leading to extremely long lead times extending beyond 12 months, especially in the terminal tractors. Our sales growth is coming from mobile equipment and services, and like in orders, also in sales, Navis was approximately EUR 25 million in Q1, and excluding Navis, the Kalmar sales growth would have been 24%.
Despite the sales growth, Kalmar deliveries are still very much constrained by the limited availability of different components. Just to mention few examples like axles, hydraulics, electrical components, wire harnesses. Volume growth was the primary driver for Kalmar's profitability improvement, and if we look the core profitability of Kalmar, i.e. excluding the heavy cranes, the profitability would have been above 10%, slightly above 10% in quarter one. Moving to Hiab, where we had an excellent performance in all financial parameters. We had a couple of larger orders in quarter one, like the EUR 25 million truck-mounted forklift order in the U.S., as well as some orders coming from the German Rheinmetall deal, which we did a couple of years ago.
Sustainability is very strongly on our customers' agenda also in Hiab, like in Kalmar's case, and an example there are those fully electric truck-mounted forklift orders, including a 5-year service contract. Service sales grew across all product categories, but especially in the loader cranes and demountables, as well as in services. However, like in Kalmar, also in Hiab, the component shortages, as well as lack of truck chassis are limiting our delivery capabilities and also leading in Hiab to extraordinarily high lead times and high order book. Looking at Hiab's profitability, that improved significantly, and this is coming very much from the volume growth, but also Hiab has executed a very rigorous cost control during quarter one.
When looking at MacGregor, despite the improved vessel contracting activity, the orders declined slightly. Some merchant vessel orders were postponed from quarter one to quarter two. We saw improvement in ro-ro or merchant vessel orders, however, especially in the ro-ro segment, but then the offshore and services orders declined. Service order decline was because of the quite sizable one-off type of service modernization orders won in quarter one last year. MacGregor sales growth is very much driven by services as well as then the delivery of merchant vessel orders, which we have won during 2021. Profitability for MacGregor was low at break-even. The merchant vessel profitability as well as services improved in this year's quarter one, but unfortunately, still the offshore projects were making losses in quarter one.
When looking at the overall picture, like Mika already illustrated, we have a very high order book, extraordinarily high order book. The book-to-bill has been for Kalmar Mobile equipment as well as for Hiab already for several quarters, more than one. When we look at the profitability, nice improvement in comparable operating profit, from EUR 52 million to EUR 65 million, primarily driven by higher sales. We had EUR 28 million items affecting comparability. The biggest items here are the EUR 9 million related to the merger. Then we did a EUR 10 million impairment for Russian business-related assets in quarter one. The full kind of reported operating profit was EUR 37 million, a 53% improvement. We doubled our net income during quarter one from last year's level.
Cash flow was disappointing. The reasons are quite explainable. The negative cash flow of EUR 70 million is coming from the increase in inventories, mainly work in progress in Kalmar and in Hiab, due to the component availability. We have been increasing also our spare parts inventories in order to support growth in orders and sales, what you have seen. Our balance sheet has remained strong. Gearing was 38%, that has increased by 11 percentage points from last year's level. Half of that increase is coming from the dividend payment, EUR 70 million, what we did in March. The other half is coming from the working capital increase, primarily inventories.
Our so-called committed liquidity is EUR 650 million, and on top of that, we have EUR 260 million credit facilities coming from commercial paper programs and overdraft. Our overall liquidity is EUR 900 million, of course, giving a nice possibility for executing acquisitions if such become available. We don't have any major debt repayments coming before mid-2023. Our guidance for 2022 is unchanged. We estimate the comparable operating profit to increase from last year's EUR 232 million. That concludes the presentation, and we can move then to Q&A.
Thank you, Mikko, and thank you, Mika. Operator, we are ready for the questions.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press 0 and 1 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 0 2 to cancel. There will be a brief pause while questions are being registered. We have our first question from Massimiliano Severi from Credit Suisse. Please go ahead.
Yeah. Hi, it's Massimiliano from Credit Suisse. Thanks for taking my question. My first one would be on the margin in Hiab, clearly quite strong in Q1. I was wondering, do you think that you can keep the margin stable or even maybe expand them year-on-year in 2022? Also, because from Q2 onwards, you will have the price increases that you did in July kicking in while you will need to renew contracts with suppliers. How should I think about margins in Hiab for 2022?
I think the margin development in Hiab overall has been quite steady. We had a little misstep, if I use that word, on Q4, where we were expecting to be able to deliver more, and we ramped up some of the related cost, and that bit a little bit on the Q4 margin. If you look at the actually Q1 to Q3 last year and then look at this, I think that gives a better reflection of the underlying performance for the Hiab. It is true that the pricing increases are sort of coming through now, when we move into the second half. Obviously, the question mark at the moment is that the inflationary environment still remains there.
We have executed now or are in a process of executing another price increase now in April, and it's quite likely that we would do another price increase later this year to try to keep up with them or exceed the inflationary expectations. Again, as we discussed, the environment is, and the visibility is pretty poor, and the situation is quite fragile. Obviously, we were hoping that we can maintain this level despite the uncertainties there.
Sure. Thanks. My second question would be on the perhaps delayed sales or delayed revenue recognition due to supply chain issues. Maybe both in terms of components and availability issues and the difficulty in shipping products due to ship availability. Can you help us quantify how much these were across the divisions in Q1?
Yeah. In general, these delays have been, I would say more or less on the similar kind of level what we experienced in quarter four last year. We have not given a specific number, but definitely we had delays, especially in Kalmar mobile equipment as well as in Hiab during quarter one. The limiting factors are, like you said, multiple components, and then also the availability of transportation and the long delivery times.
Also between the split between Kalmar and Hiab would be largely stable versus Q4?
More or less. More or less.
Okay, perfect. Thank you very much.
We have another question from Magnus Kruber from UBS. Please go ahead.
Hi Mika, Mikko. Okay. Magnus here from UBS. A couple of questions from me as well. I think in the last quarter you seemed a bit comfortable about your timing between price hikes and cost impact. Do you feel the same confidence now after the surge we have seen in, I think in particular steel prices in Q1? Could you comment a bit on the adjusted gross margin development in Q1 this year compared to last year in Kalmar and Hiab please? What to expect into Q2 there.
Yeah. I mean, the component shortages are very similar. I mean, the sources or the component categories are very similar to what we saw last quarter. Just to be quite open, like Mika said, the supply situation is very fragile at the moment. The Ukrainian war, I would say for many companies including ourselves, has not yet been that visible in the supply chain in quarter one. We are of course working very kind of rigorously in the coming quarters to compensate any missing components due to this event, including also the Chinese COVID situation where basically the Shanghai port area, for example, is hugely congested at the moment.
It's difficult to estimate what kind of impacts that would have for the coming quarters component availability. When it comes to the margin development in Kalmar, it's very much coming from the higher revenues. We have grown our investments in R&D to support the sustainable solutions. The main driver for the profitability growth is coming from higher volumes.
Okay. When you say they're coming from higher volumes, is it fair to say then that the price cost impact in Q1 was largely neutral on the margins for both Kalmar and Hiab? Is that fair to say?
That's probably an optimistic view on that one. Closer to neutral in Hiab. In Kalmar, Q1 was quite difficult in a sense that the cost came in faster than the pricing implementation overall on that one. We expect that situation to start to neutralize as we move towards Q3 now. The situation will be slightly better in Q2 than it was in Q1, and then should be better again on Q3. As you raised yourself, the question right now is around the inflationary pressures coming from the war in Ukraine. I think we are still to be seeing the impacts that the Chinese COVID lockdown and the eventual spreading of the COVID in China will have there as well. There is a delay on that one.
The overall Ukrainian war situation of course has a primary impact on steel components. Overall it has fairly limited impact on our businesses. The impact will only become visible during the Q2 and onwards. When it comes to the Chinese COVID situation, most of the impact for us will be probably indirect, not directly from our sourcing in China, which is somewhat limited in our manufacturing operations in Europe and in North America. But more likely coming through from our suppliers, supplies being impacted on that one. My sense would be that estimate will be more visible during the Q3 and Q4 rather than earlier.
Okay. Got it. Thanks so much, that's useful. Then also on Hiab, very solid orders again in the quarter. I think you commented that you held back on taking some orders there into or through Q4 there, the lack of visibility on the cost side and availability of components. I suspect that was not the case maybe in the first quarter. Has there been an impact from any pre-buys or anything like that with respect to potential or planned price increases as you talked about?
Those-
If you have any comment on how April started, it's pretty useful.
Yeah. I think first of all, I don't think. I mean, I always had this expectation throughout the whole last year that the pre-buy. Every time we increase the prices, the next week and next month come and orders remain at a robust level as such. I think the one advantage we have had has been that we were fairly early to react compared to some of our key competitors, and we did a number of more incremental price changes throughout the last year. I think the situation with some of our competitors is that they are now forced to contemplate considerably higher pricing increases in the short term, that puts them in a disadvantage in the eyes of the customers as well.
I think that in that sense that puts us in a fairly strong position in the market as well.
It's good to remember, as said, we had in quarter one in Hiab a couple of large orders like the U.S. EUR 25 million order and in Europe, for example, the Rheinmetall framework related orders.
Perfect. Thank you so much.
We have another question from Aurelio Calderon Tejedor from Morgan Stanley. Please go ahead.
Hi, it's Aurelio from Morgan Stanley. Thanks for taking my questions. I've got three, if I may. I'll take them one at a time. The first one is around MacGregor, and I think you mentioned that you still have the offshore business is still making losses. Have you booked any special provisions in this quarter as you did last quarter for those offshore projects? What should we expect in terms of performance for that business going forward?
Was it around the heavy crane?
No, the MacGregor offshore.
Oh, MacGregor.
Yeah.
Maybe do you want to take it?
Yeah. We booked a couple of million EUR extra costs on certain offshore related projects in quarter one.
Okay, perfect. Maybe, stepping back for that business, do you think. Given obviously that you have this process going on in the background, do you think a sale is likely in this environment? Or do you need to see an improvement in margins before you can sell this business to someone? Just curious to know what your potential avenues for exit of this business could be.
Yeah, I think it's too early in the process to actually draw any conclusions on that one. We are just about to start the process, and obviously we need to evaluate the outlook and the different options we have. This is something that I think we need to get back to you later in this year.
But at this, uh-
Okay
The low MacGregor profitability is very isolated to a certain product category offshore wind-related product. So it's not across the business. The merchant business, like I said, has improved, as well as the services.
Okay, great. Just one last question from my side. Obviously just touching again on the higher margins, which were quite strong. Have you had any positive benefit from USD revaluation or USD strength this quarter, or has that not been a major driver of the profit improvement, and it's all been driven by volumes?
We have had some positive tailwind from the stronger US dollar. It's good to remember still that we have a fairly high or very high order book, and the hedges are based on these historical orders. We see the appreciation of the US dollar with some delay as the lead times are quite long. If you look overall Cargotec with the kind of comparable currencies at US dollar and other currencies, appreciation has had roughly a 2.5% positive impact on sales and orders.
Great. Thank you very much.
We have another question from Johan Eliason from Kepler Cheuvreux. Please go ahead.
Yeah. Hi, it's Johan here. Just a question on your eco portfolio in Kalmar Mobile and Hiab. How does the margin profile look for these newer products versus your traditional, let's say hybrid or fully diesel powered equipment that you sell?
It obviously varies from the product to product, as the eco portfolio includes other sort of sustainable solutions than the just electrified portfolio. Generally, if I talk about electrified equipment, the price of the equipment is higher, so in some cases considerably higher than in the similar diesel equipment, and obviously depends a little bit how much sort of battery power one puts into there. I would not say that the gross margins in terms of percentages are any better, but obviously when you are dealing with the higher value of equipment, your absolute gross margin per product is typically higher than it would be in a similar diesel equipment.
Okay. I mean, aftermarket is a core part of your profitability in what is your core business going forward. I suppose these electrically powered products would typically generate less of a service opportunity going forward. How do you see that developing?
Yeah. You're right in a sense that obviously less spare parts and generally less wear and tear on those ones. There are also new requirements coming with the electrified portfolio. If you saw the announcement about the EUR 5 million order intake for example truck-mounted forklift, it included a full service coverage for those ones as well. There are actually certain just practical issues there as well because the high-powered electrified equipment requires certain qualifications and training as well. Not everybody is able to maintain those vehicles on their own. That, at least in the short term, is an opportunity. Overall, if you still look at our services business, our capture rates are relatively low still.
We strongly believe that with the introduction of the electric equipment and general different technology, we can actually drive a higher capture rate in those equipment. As such, it shouldn't impact as negatively the services business as one would expect. It's good to remember that some of the diesel-powered equipment spare parts actually are quite widely available, you know, from a number of different OEMs as well. That's not necessarily the case when you move towards electricity.
Okay, excellent. Many thanks.
We have no further question. As a reminder, ladies and gentlemen, if you wish to ask a question, please dial 0 and 1 on your telephone keypad. We have another question from Magnus Kruber from UBS. Please go ahead.
Yeah, thanks for taking my follow-up. Yes, wanted to probe a little bit around the inventory level you talked about. How do you see that pan out to the balance of the year?
Yeah. Thanks for the good question, and it's a really good question. It depends very much, of course, now from the coming months and quarters, supply subcontractor supply availability. Like we discussed earlier, for example, the Shanghai port congestion, what kind of impacts that has. If the situation would remain stable, I believe we could improve to certain extent the inventory turnovers. There are quite many moving components at the moment in the supply chain. One could say that in quarter one, we still were able to deliver quite nicely with that capacity which was in the kind of pipeline in the supply chain or even in our factories.
Now in the coming quarters, we need to see that how the deliveries are coming in from the various global supply chain networks.
Got it. That's very helpful. I wanna talk a little bit about the offshore project in MacGregor. Could you be a little more specific on how much headwind you had from that, and when, assuming everything goes to plan, that project will be wrapped up or finalized?
Yeah. The biggest offshore project we are planning to kind of deliver very late this year, and the tests will happen early next year. So basically throughout the whole year is the kind of execution phase of that project still.
The year-over-year weakness that we saw in the quarter was basically down to this project since the commercial vessels were pretty much improving. Is this fair to assume?
Yeah, I mean, the profitability margin for this and a few other projects are on a very low level and when we are recognizing revenue for this kind of low margin projects, that's kind of burdening the offshore division profitability until the project has been completed. That completion based on the current estimation will happen early next year.
Okay. Thank you. Then just the final one on this, overhang of equipment that was not able to be delivered due to supply chain constraints or component shortages. You said it was sort of similar to Q4. That means that you haven't really been building anything additional. It's just sort of the situation is the same and the overhang remains the same sequentially.
All in all, of course, let's say, the situation is changing on, I would say, almost on a daily basis. The visibility to some suppliers' ability to deliver is fairly short. It can happen in some month that some delivery batches don't get the needed components, and then it postponed to the following month. That can happen even within this quarter. Like Mika said, a very fragile situation still.
Got it. Perfect. Thanks a lot. That's all for me.
We have another question from Massimiliano Severi from Credit Suisse. Please go ahead.
Yeah. Hi. Thanks for taking my follow-up. My first follow-up would be on MacGregor orders. I was wondering if you could maybe comment on why the lag between the container ship orders and MacGregor orders is currently being wider than usual. Usually we spoke about around nine months. We are seeing a little bit more than that. If you could maybe comment on this.
Yeah, it's a good question. You generally say that it's 6-12 months, and it looks like that's a lot closer to 12 months. Could be a number of different reasons. The shipyard capacity at the moment, I think in China especially, if the ships are built there are, you know, obviously the COVID issues that are restricting the activity at the moment. We have seen, as Mikko has pointed out, the pipeline to increase and actually see already some solid evidence about the order development getting stronger during the Q2. We would expect this to be more visible during the Q2 already.
Okay. Thanks. My final one would be very shortly on the component availability issue. What you have seen so far in April versus Q1, if it's stable or whether China has already started to be seen and it's getting slightly worse than during Q1?
Yeah. I think the usual suspects are still continuing to be there. The wire harnesses, some of the electric and hydraulic components as well. I would say that overall, if you look at the situation during 2021 and look at that list of the suppliers, the number of the critical suppliers has actually come down. We have seen slight improvement happening overall in the supply chain within the traditional channels, if I use that word. I think the uncertainty comes now partly from Ukraine, although that impact will be quite limited to certain product areas in Cargotec, and I do not expect that to have a sort of huge impact overall for us.
The big question mark personally for me at the moment is the developing situation in China. There are some components we are getting directly to our supply chain into our manufacturing units in U.S. and in Europe from China. The bigger uncertainty relates to our suppliers' availability of their components coming from China, and I think those impacts probably will be more visible during the second half. At this stage, it's just very difficult to predict how that situation will develop.
It's mainly because you already have the inventory that you need to produce in Q2. This is more or less the idea.
Yeah, to a great extent we have components available, but of course we do not have everything yet.
Yeah
... quarter two delivery. I mean, if you miss some critical component in an equipment, we can't deliver it to customer. It's not safe. It cannot be used. This is the challenge we are dealing with at the moment.
Yeah, of course. Thank you very much.
There are no further questions at this time.
Okay.
I give the floor back. Okay. Thank you.
Thank you. Thank you for the great questions and great answers. If you noticed, we actually published updated financial calendar, and we will publish our second quarter results already on twentieth of July, so stay tuned.