Earnings Call: Q1 2021

Apr 28, 2021

Good afternoon, ladies and gentlemen, and welcome to CarGottec's First Quarter 2021 Results Call. Please pay attention to the disclaimer in the presentation. Just a kind reminder that we cannot discuss any merger related topics in this presentation due to the U. S. Securities laws. Carodac's 1st quarter orders were strong. Orders received increased by 43% and also our profitability improved. Service orders received increased by 11%. We also announced during the Q1 that we agreed to sell our Navis Software business for enterprise value of €380,000,000 The transaction is expected to be completed by the end of Q3 this year. Earlier today, we also announced our aim to reduce CO2 emissions in our value chain by 1,000,000 tons by 2024. Today, the earnings will be presented by our CEO, Mikko Wehvi Leinen and CFO, Mikko Boalakko. We will first go through Q1 Q1 'twenty one highlights, followed by market environment and group level development. Then our CFO, Mikko Polakoff, will go through the business areas, finances and the outlook. So Mikko, please go ahead. Thank you, Akim. Good afternoon from my behalf as well, and thank you for joining the Cargo Deck Q1 2021 go. Obviously, the highlight of the Q1 2021 is the strong order intake we had. Orders increased by 43%. The strong demand we have seen starting from the September 2020 onwards in Hayab and Kalmar mobile equipment continued during the 1st part of the 2021. We also see a remarkable improvement in Kalmar Automation as well as in MacGregor demand. In Kalmar Automation, the orders came from the replacement business within the existing customers. The Q1 orders did not yet include any significant automation orders. In MacGregor, improving market sentiment was already slightly visible in the improving order intake in MacGregor both on Q on Q as well as on year on year. Sales decreased by 15%. This was coming almost solely from the fact that as the order intake during the Q2 and most part of the Q3 2020 was low and our cycles mean that we will see then a strong order intake starting really from September 2020 onwards impacting our Q2 and onward revenues for this year. The Q1 revenues did not have any material impact from component shortages or shipping issues. I'm also very happy about the service sales being very resilient, also considering that the comparable period last year did not yet have significant COVID related impact in our operations. The share of our Eco portfolio was 20%, down from the Q4. This was primarily coming from the lower revenues improve despite the lower revenues. This was primarily coming from the good cost control, especially in Haiab and MacGregor, where both results improved. The Kalmar decline in operating profit came from the lower revenues. We continue to follow-up the sort of online real time information we get from our equipment activities and we have really seen the recovery despite the very difficult COVID situation globally continuing In the economic and logistics activities around the world, especially in high up if you compare this one and this is now a comparison towards Q4 last year. And if you remember, Q4 last year, our equipment activity actually started to be at the same level or slightly exceed The pre COVID activity levels of Q1 2020. So these numbers are fairly comparable on year on year basis as well. We have seen a significant improvement in activity in Haiab, 18% up compared to Q4 in Haiab in North America And more than 8% up in European markets. Also in Kalmar Logistics Equipment, we have seen improving activity levels both in North American markets As well as in European markets. The slight decline in China is actually explained by the Chinese New Year during the Q1 this year. Same is obviously visible in most of the economic indicators. The content traffic was growing very strongly in Q1, and I'm share most of you are aware of the logistics and congestion issues in the ports at the moment and that strong growth is expected to continue throughout the whole year. At the same time, we expect the construction activity to actually accelerate both in North American as well as the European markets throughout the years with significant growth numbers in both markets. Also MacGregor market seems to be now Turning, Clarkson has updated their estimates to be about 1,000 ships ordered during the 2021, it's good to remind ourselves that this is still significantly below the average year of about 1700 ships, but a clear improvement obviously from previous year. The ship orders during the Q1 were already exceeding 300 vessels, clearly up from that Q1 last year and the current run rate obviously already is ahead of the Clarksons estimate for this year. There has been an improved activity somewhat in the offshore oil and gas field as well, and we see the strong demand continuing in offshore renewables, The orders increased in all businesses and MacGregor slight increase and it's good to remember that with MacGregor cycles, the increasing order activity vessels should be visible in MacGregor equipment order in roughly 6 to 12 months after the ship order and then the related revenue another 6 to 12 months after So increasing vessel activity should actually start to be visible in MacGregor on the 2nd part of this year. And then the revenues should be then impacted favorably from 2022 onwards. A strong order intake coming from Kalmar Mobile Equipment and So we saw a strong order recovery in automation and project business coming, as I already said, primarily from the renewing replacement business within the existing customers. And the higher border intake was another record, this time actually without any significant government related orders as We saw in Q4 coming really from multiple deals and strong activity across all the customers. I think it's also very quite likely that there is an element of catch up in order intake during the Q1 as well as The pre buy element of that one coming really from two factors. We have done a number of significant pricing increases in the beginning of the year. And that's probably running causing some pre buy as well as obviously customers' concerns related to supply chain difficulties are visible across the different industries at the moment. However, the underlying market is solid. And as already discussed, many of the economic indicators still look very favorable. The ordering book increased by 22% and actually the combined Kalmar and Hayab order book is at the record high at the moment. Obviously, MacGregor is very far away from the Sort of strong years it has seen in the past in higher cycles, but order book is now heading to the right direction. And this was the first positive book to bill quarter for Matrigor since 2019. Sales really were burdened by the low order intake we saw in Q2 and most part of the Q3. And due to the production cycles we have, We were expecting lower revenue in Q1. The Q1 revenues were not materially impacted by component shortages or shipment issues. However, we obviously see risks related to those issues when we move towards the rest of the year. Also very satisfied with Services performances. And again, let's remember that comparison period did not have material COVID related impact in our key markets. Despite that one, both the Kalmar as well as the high up were actually able to increase slightly, the services revenues. MacGregor services revenues were down quite clearly and this was driven by the Sort of low activity in drydocking, again caused by the COVID pandemic situation in many of the developing markets. Also good to see that the order intake was actually strong up already during the Q1, also including the MacGregor Services order intake. The And as a part of our annual cycle, Caglidec has also refined its vision and its strategy. Our breakthrough objectives are sustainability and profitable growth. Our vision is to be the global leader in sustainable cargo flow. In concrete terms, Cargo Deck aims to reduce our CO2 footprint or emissions in our total value chain by 1,000,000 by 2024. This reduction would be, of course, very significant considering our global footprint today and at the same time, a fantastic business opportunity for us answering to the customer challenges regarding sustainability. The success of our strategy execution is measured by our financial reporting, leadership index and Eco portfolio sale of sales, we have already reported in our reporting in the past as well. And in the future, we will also report CO2 emission reductions as well as our customer Net Promoter Score Development. With that one, I'd like to hand over to our CFO, Mikko Polaka, who will discuss the business areas in detail. Thank you. Thank you, Mika, and good afternoon also from my side. Let's start with Kalmar, where we had an excellent quarter from the order intake point of view, strong growth in orders in mobile equipment across all product categories as well as in all geographical regions. Also good demand for services. Orders for cranes like straddle carriers were also increasing in quarter 1. So like Mikael indicated, this kind of replacement type of investment market picking up. We did not have any bigger orders in quarter 1. And then when looking at the sales, sales were down by 20%. The sales for mobile equipment and also larger cranes crane revenues declined in total 29%, and this is stemming from the very low order levels in quarter 2 and quarter 3 2020. The supply chain related constraints did not affect our deliveries in quarter 1. But like Mikael also said that there can be certain risks in the upcoming quarters As we experienced, for example, semiconductor related bottlenecks as well as transportation related bottlenecks. The service sales were up by 5%, and this was very much driven by the various services for especially for the cranes. Almir profitability declined and the decline was very much driven by the lower sales. We have reduced somewhat our costs, but for example, we have kept our R and D investments in Kalmar on last year's level in the spirit of supporting our long term strategy for more sustainable solutions like electrified and fully automated mobile equipment. We signed the Navis divestment agreement in March, Then looking high up where we had basically with all parameters a very good quarter. Very strong demand in all product categories as well as in services across all regions. Like Mikael also said earlier, here in high up, we anticipate that there is certain pent up demand coming up from the low orders or investment activity in the middle of last year and then some pre buying ahead of price increases as well as anticipation of certain component availability. We did not book any bigger orders in high up for quarter 1. Sales were down by 5%, and this is, like in Karlmar's case, very much coming from the low orders in quarter 2 and quarter Despite 5% lower sales, we were able to improve significantly the comparable operating profit. And this is coming from the strong cost management and the productivity measures, which have been taken in high up. So overall, a very good performance for quarter 1. In MacGregor, the improving market activity is also visible in orders. We had €100,000,000 of orders in quarter last year, now €161,000,000 coming to a great extent from the merchant vessel market as well as from services. So we booked, for example, good spare parts service orders as well as certain other services like the Cargo Boost, vessel optimization services. Quarter 1 sales were impacted by the low order intake in 2020. Services sales were down by 18% due to the low drydocking activity. Despite the sales decline, we were able to improve the profitability from minus €2,000,000 to plus €3,000,000 now in quarter 1. And this is coming from 2 drivers. Firstly, from the cost restructuring and integration of the TTS and Offshore Businesses. And then we have had a very smooth project execution during quarter 1, supporting also the profitability. Despite a strong cost reduction, we also continue with the cost savings actions also in 2021 and our target is to reduce fixed costs in MacGregor by €13,000,000 compare to last year's level. A few words about our financials overall in quarter 1. So despite our sales decline by 15%, we have been able to improve the Carval operating profit by 14% from €45,000,000 €52,000,000 And also the operating profit margin has improved by 180 basis points. There were basically 2 drivers for this positive development in comparable operating profit. Firstly, our gross profit percentage improved from 22% to 25%, and this comes from the better mix. So we had higher portion of Kalmar mobile equipment and higher sales as well as services being 40% of the total revenues. And we have done material cost savings and also in all areas, basically price increases already last year, which now start to become visible. The second reason is that our costs have decreased By €16,000,000 and this is coming pretty much from 2 areas. Firstly, we have implemented permanent cost savings. So our headcount has reduced from last year's level. And then we still have some temporary cost savings active, like for example, traveling is currently still on a very, very low level. We had €27,000,000 of items affecting comparability. The biggest items here were the €13,000,000 cost bookings, which we took to establish a new joint venture for MacGregor in China with the world's largest shipbuilder, see SSC. And this is a very positive development for Magregor because this will strengthen Magregor's address all market and operations also in the coming quarters in China. Also related to Magruder, we had a positive onetime booking of €7,000,000 and this is related to the TTS final purchase price settlement in the beginning of the quarter. We booked in total approximately €8,000,000 sir, integration related costs concerning the Carcoteconecrails merger, and then we had approximately €10,000,000 of restructuring costs, mainly in MacGregor and in high up. Our cash flow improved from last year's level, being €51,000,000 and the main driver for this was the improved net working capital efficiency. Our inventory days were approximately 3 days better or lower than last year, And this contributes approximately to €25,000,000 in our cash flow. Carcoteq's financial position is very strong. Our gearing was 59% at the end of quarter 1, and it has increased from quarter 4. And the main reason for the increase was the €70,000,000 dividend payment, which we booked at the end of March. Without IFRS 16 lease liabilities, gearing was 45%. Liquidity is on a good level or strong level, €864,000,000 and we do not have any major debt repayments come back to the upcoming this year. And then last but not least, our outlook for 2021. We confirm reconfirm our guidance for this year and expect the comparable operating profit to improve from last year's level when it was €227,000,000 and with those words, I would then hand over back to Akki for further questions. Thank you, Mikka, and thank you, Mikka. Just a reminder that we are not we don't take any merger related questions in this Q and A. With that, operator, we are ready for the Q and A. Thank And we'll now take our first question. Please go ahead. Your line is open. Good afternoon. That's Artham from My first question is about your comments and reports on some pent up demand in Q1. I just wanted to kindly check if that's only related to Chiyap or that's also fair for Kalmar. And maybe you could also try and quantify The impact in Q1, and I appreciate this could be very hard for you to do, but maybe you could talk about what you've seen so far in Q2 On a sequential basis in terms of the magnitude of maybe moderation in demand, that's my first question. Thank you for that. If I take that one. First of all, obviously, we see the Underlying market demand to be very solid if you look at the economic indicators and also the customer activities, also visible in our equipment activity. There is probably an element of that pent up demand both in higher as well as in Kalmar Mobile Equipment, less so obviously in the automation and project related, which has its own set of dynamics. The other issue we have had is that we introduced a number of pricing increases In early part of this year that are coming into force now. And that together with the potential concern of the deliveries because, of course, everybody is aware of the supply chain issues in industries. There could be an element of sort of pre buy on that one, but I would say that the underlying market demand and the activity remains to be strong as well, but there is probably some hike in exceptionally good orders in Q1, But it's really hard to quantify that in detail. Sure. But I mean, at least in April, Already seen maybe your daily or weekly orders starting to moderate versus Q1 or that's not yet what you see at the moment? We'll then take our next question. I'm Jarmico Akihmann here from UBS. A couple of So could you comment a bit on the mix in Kalmar and how much headwinds on the margins you saw there? I think you mentioned a couple of percentage points in prior quarters. Was that the same still? And now obviously a very strong pickup in the mobile equipment. Do you expect these 2 percentage points that we talked about sort of to reverse Through the course of this year, is that sort of the quantum we can expect to step up from mix in 2021? Mikko, would you like to take that? Yes. In Kalmar if we look Kalmar quarter 1, so we had actually more favorable mix already in quarter 1 due to the have fairly low automation deliveries due to the low order intake last year. But That kind of mix was not more favorable mix was offset still by the quite significant sales decline in the mobile Which we kind of consciously did not fully offset with the cost reduction, as I mentioned, that we continue to invest, for example, in the R and D activities to support our strategy. Yes. For the upcoming quarters, we saw good order mix is from stable to slightly favorable for the rest of the year. Okay. But you're not willing to quantify anything around that regarding the step up as we saw sort of adverse in this year in 2 percentage points? No, we don't see an adverse effect coming from that one this year. Okay. And also could you help us put some color on how much impact Should see an EBIT bridge in Q2 from the reversal of temporary cost measures taken last year. Any color on that would be very helpful. In general, I would say that I mean, last year, we implemented the temporary cost savings and those generate approximately or generated approximately €10,000,000 monthly cost savings. And our ambition last year has been to compensate most of those this year, at least to a great extent with permanent savings. And then we have still, as I mentioned earlier, we have some temporary savings ongoing. I would estimate that perhaps from those temporary savings last year, approximately 50% are still in quarter 1 temporarily enter other 50% we have kind of implemented permanent savings. Okay. Okay. So you don't expect any sort of meaningful reversal into Q2 that will come later when traveling comes back and so forth in that case? Yes, I mean, traveling most probably will continue still despite the vaccinations, traveling continues to be most probably still on a fairly low level also in quarter 2, more perhaps service related traveling, but other parts still on a fairly low level. Okay. Got it. Thank you. We'll now take our next question. It's Aurelio from Morgan Stanley. For taking my questions. I've got 2 and I'll take them one at a time if possible. I guess the first question is, can I ask you mentioned that The underlying demand in Kalmar or the order intake in Kalmar was mainly driven by mobile equipment and replacement in automation projects? We've obviously seen CapEx announcements from some of the port operators, DP World among others, and basically going for a strong increase in CapEx in 2021. I guess Are you seeing that in the market at the moment? When should we expect to see new bigger brownfield projects being sign off or maybe even some greenfield projects out there. We clearly have seen an increased activity. And typically, as we have discussed in the past, The sort of stronger traffic growth is usually followed by the 12 to 18 months from the increase in CapEx as well. And we have increased planning activities around that one, but it's really difficult to forecast the exact timing of those potential orders. There will be some probably some of them landing already in this year, but the exact timing is still uncertain. The brownfield opportunities what we see even though when fully kind of automating the terminal, Those could be €100,000,000 plus of transactions. These brownfield investments are done in bits and pieces, meaning that those could be some tens of 1,000,000 of euros when customers make their decisions. Okay. That's helpful. And I guess in terms of your cash generation this quarter It was very good. And I think you mentioned that you had a positive impact from, I think, inventories that you reduced days by 3 days. I guess Question is, given that you have obviously seen a very, very big increase in with especially in high up and columnar mobile equipment, which is more in for out Then maybe some of the projects. I guess my question is if this type of working capital is sustainable or we should expect some natural Build up over the year as you prepare for, I guess, a heavy delivery schedule in the latter part of the year. Yes. Like you saw from our order book, we have €2,200,000,000 order book, which we aim at deliver prudently during this the remaining part of this year to great extent. And that requires, of course, some increase in the net working capital in inventories, for example, but we continuously so in absolute terms, the net working capital is expected to increase in anticipation of the upcoming revenues. But then we continue to improve the relative performance. So continuously working, for example, with the suppliers to minimize the inventory days at our end. If I compare the situation where we saw the last demand peak was in 2017, 2018, especially in higher band and compared to current status, our internal processes have clearly and significantly improved regarding our own in house and factory related processes and also our kind of interaction and process development together with our suppliers has also significantly improved. It doesn't mean that we would not change sort of face some of the challenges. But overall, I would say our capabilities are in a much better shape than the last time we experienced such a peak in orders. Okay. That's helpful. Thank you very much. I will go back to the key. And we'll now take our next question. Please go ahead. Your line is open. Yes. It's Antti from SEB. A couple of questions from me. Firstly, would it be our backlog situation and lead time in higher than Commer mobile equipment? I mean, you'll see now Quite robust recovery and very high levels of backlog. So what are the lead times currently? And if we kind of reflect your delivery capabilities, Should the previous speaks be a good comparison point? Mikael, I guess you mentioned that your processes have improved, but on the other hand, you have also cut costs. So how should we think about the revenue recognition out of backlog? Yes. The cost cuts have not been primarily around our production capacity or Factors, those have been more temporary. And obviously, we are sort of drawing back those in terms of the temporary labor or short term weeks I would say at the moment, our capability to ramp up our own production is pretty good. The question mark is obviously still around component shortages. My main concerns would be around higher specification diesel engines where the microchip It might impact that one as well, and those would probably be visible summed in Q2, but probably also very much and maybe The sort of single largest challenges around the Q3 this year. We have not yet We've seen significant sort of lengthening of the lead times typically again in high up there around that sort of 6 months And in Kalmar Grombale, equipment 6 to 12 months and the potential lead time changes are primarily will be primarily coming from then Okay. That's fair. And then secondly, I mean, you've been active on price increases. And I guess now you're seeing kind of component shortage Some raw mat inflation. So how should we think about the gross margin? What do you have in backlog and orders going forward? Are you seeing kind of more and more pressure from the cost side? Or is the Price hike trend still continuing. We are clearly seeing more pressure from cost side. The shipping costs have actually have a significant Obviously, a lot of our customers are doing better as a result of that one, but it's visible in our cost level. Obviously, the raw material component pricing is also facing pricing pressures. Against that one, we have done a number of pricing changes in most of our businesses now in the early part of this year. And our at the moment is that overall, the impact would be neutral. So we would not see a reduction, but nor would we see Expanding gross margin as a combination of those two factors. The gross margin changes will probably primarily come from a more favorable mix. Okay. That's clear. And then lastly from me regarding Kalmar and the demand there. How is kind of the extraordinary port congestion that we are seeing globally impacting your customers' decision making and your demand? I mean they have a handful of bottlenecks right now. So is this kind of postponing longer term planning and bigger investment decisions? On the other hand, does it support the short cycle mobile And the mobile equipment really, of course, is driven a lot by strongly increasing logistics activities actually in all of our key markets. And then obviously, the increase in traffic in ports and the port congestion will lead into the further CapEx investments as we already discussed on that one. Although right now in Q1, pretty much all the large sort of automation related and project related orders were actually Replacement orders for existing port capacity. So we have not seen the expansions orders coming in yet. All right. Thanks so much. All from me. We'll now take our next question. Please go ahead. Your line is open. Yes. Hi, Pammi from BND. Still coming back to the pent up demand and I tried to ask it another way. Have you seen an improvement In the pipeline, in other words, what orders have you been booking? Have those been in a way exceeded What you have been stating in as new quotes? Yes. I mean, this has been visible actually since really from the September onwards, Sam, both in terms of the actual orders, but also if I look at out of 90 days or 3 60 days sales pipeline in Businesses and we've seen the expansion in the pipeline. And we have actually still today, when you look at that one, is the pipeline remains strong. And we'll now take our next question. Please go ahead. Your line is open. Hi, Micha and Mikko. This is from Idris. One from me and this one goes to Mikko. About €10,000,000 savings per month in 2020, So €30,000,000 per quarter and fifty-fifty temporary and permanent. Am I right that this still applied in Q1 this year? And going forward, does the 15% I. E. €15,000,000 savings per quarter, that should be permanent also in Q2, Q3, Q4 this year? Yes. Like I said, roughly 50% of last year's €10,000,000 temporary savings have been converted to permanent and then the other 50% depends very much on how the societies are opening and how do we kind of increase the, for example, the traveling activity. It's very safe to assume that in Q2 So EUR 15,000,000 So €15,000,000 per quarter would be permanent, Approximately, yes. So like I showed in the previous slides, we have reduced approximately 16 €1,000,000 costs now in quarter 1 and a good part of that is permanent as we did not have in quarter 1 last year yet temporary cost savings in place. Those started in April. Okay. Thank you so much. And we'll now take our next question. Please go ahead. Your line is open. Hi, this is Johan at Kepler Cheuvreux. I'm just a bit curious on NavVis. A few years ago, you said the business was at breakeven because you were investing in Software development, but in 2 to 3 years, it should be sort of at the normal software margin of 20% to 30%. Is that where you arrived at this year for Navi? The Navi Sees has been and is a slightly profitable business for us. Again, you have to remember that, that includes PPA as well. So the EBITDA level on Navis has actually been in a pretty good level and Mr. Raul Dispen. Okay, good. And then you're obviously getting A fair share of cash for this now at an EBIT to sales multiple, which basically was I can see well above your group Valuations. Now ahead of the merger, that basically means you're entering the merger with a significant more cash Then investors knew about when the merger was announced. And we know that Konecranes shareholders get compensated for So that they give market cap at a time by an extra dividend. Shouldn't Parvatek shareholders get some extra dividends as well ahead of the merger? None has been planned. Obviously, we have made a decision regarding the dividends for 2021. And Obviously, a new company would then decide on the dividend policy, assuming that we close at the beginning of Or close at the end of this year and start as a new company. It will be the new board that would make the decision regarding the dividends for the new company for 'twenty two then. But this strong balance sheet, of course, puts us in a good position to sort of drive for further growth, both in terms of investments in the New technologies as well as then inorganic growth as well. But no value creation extra for the I mean the parameters of the merger, of course, have already been decided and agreed within the parties. Excellent. Many thanks. And we'll now take our next question. Please go ahead. Your line is open. Yes, it's Artem from Credit Suisse. For some reason, the operator uses my line before I finished asking the questions. But thank you for taking my follow ups. So the first one which I have is on Volvo diesel engines. Could you help us to quantify how many days of production do you have covered with your existing backlog of diesel engines? And then maybe what share of your products use those engines in Kalmar? That's my first question. Wow. First of all, we use different diesel engines in different products. And The diesel engine in question where the microchip production has the biggest impact, the so called Stage 5 diesel engine. Now not all of our products use a Stage 5 diesel engine depending on the end market. So I don't know honestly the details. Its primary concern is around the Stage 5 at the moment, and it's a certain part of the production, but not all of the production at all. And as I said, a lot of that depends now, of course, on the KV ramp up. It will not necessarily have a significant impact for us on Q2, but I think the risks are higher depending how the pivotals regarding Q3 deliveries on that specific engine time. Sorry, just to clarify. So that comment in terms of no specific, no significant impact in Q2, That's basically incorporates the 2 to 4 week shutdown at Volvo. And then If there is a longer shutdown at Volvo, then your Q3 will be impacted. Is it the right way to interpret this? Yes. There are many parameters, and it's maybe too early yet to Later on the Q3, it's also good to note that we are not a sole supply situation with Volvo. We have also other manufacturers, diesel engines we use as well. Okay. That's very clear. My second question was around McGregor Services. When would you expect that business to come back to a stronger growth? Well, the order intake was up, Mikko. How much was it again? 11%, if I read. 11%, yes. 11% up on services in MacGregor. So overall, it looks promising. But obviously, the concern is still around the situation in many of the markets that there which are the primary destinations for dry docking. And looking at the situation, that's probably going to continue for Sam, while at the same time, as you know, the shipping market as such at the moment is doing very well and the usage is fairly high. Also the customers are actually quite profitable at the moment. So I'm sure that will favor the impact the fact that you're able to sort of invest in the maintenance again. Obviously, higher use This means more utilization, more spare parts, wear and tear. So I'd say that overall, we would see a favorable market on that one, but Mark remains on how long will be the drydocking market. It will be limited on that one. Have also other services like not only spare parts, like I mentioned, for example, Cargo Boost, which enables the customers increase the capacity of an existing vessel can be a fast solution in case customer needs more capacity without ordering a new ship. Understood. And my last question is about Automation and specifically retrofit and automation. I've been reading looking at interesting products, which You're introduced a couple of years ago by some of your competitors, which essentially allowed to very cheaply automate terminal tractors with a payback of Literally 1 year. I guess two questions. Firstly, do you think that there are now more incentives Or it makes more economic sense at the moment to retrofit automation than maybe a couple of years ago with all those new products? And secondly, what are the major products you're developing to maybe make retrofitting automation more accessible and attractive? Thank you. Yes. That's a good question. If you look at the sort of a port yard, the most common automation is around the stacking area. Even there, the penetration is still relatively low. And I'm sure the sort of automated stacking cranes will be taking more and more share of that one as it's relatively well, simple would be maybe relatively easy Automated terminal tractors relates what's called horizontal transportation. That's when you take the container From the key crane next to the ship into the stacking area, there are a number of alternatives there. The so called AGV market has been active for a number of years. Today we see actually increasing interest towards automated travel carriers, which has a benefit of actually being more flexible as a configuration on architecture And then we will also see, I think, the automated terminal tractors taking part of that Margit, automated terminal tractors fit to a certain configurations and certain conditions, but and I'm sure they will also play your part on that one. Obviously, we are the market leader in terminal tractor market and automating those terminal tractors is obviously in our focus Okay. Thank you very much. We have no further questions at this time. Okay. Thank you for good questions and good answers, Mikael and Mikko. So our Q2 results will be published on 28th July. See you then. Thank you. Thank you.