Good morning. Can you hear us? Loud and clear.
Great.
I can see at least Johan showing thumbs up, so that's great. Hopefully everybody is doing well despite we have this early morning pre-silent call this time around.
Okay.
Just allowing a few more moments until we are.
Ready to start. Okay.
It's one part, so I think we can, we can start.
So.
Welcome to Cargotec's pre-silent call today. My name is Aki Vesikallio, Head of IR at Cargotec. Also with me today I have our IR manager Oskar Turnbull and CFO Mikko Puolakka who will first go through a short introduction presentation and then we will open up for Q and A. So for the Q and A, please use raise your hand function and I will also take questions from the telephone line for those of you who have dialed in. But with that, over to you Mikko.
Thank you, Aki.
Also Happy New Year. Also from my side to all participants.
In this call, hopefully you can see my screen and let's get started. So I will cover today the key parameters related to MacGregor sale and the planned steps thereafter.
And then also changes in our financial.
Reporting due to the MacGregor sale. As you have noticed, we have announced on 7th of January the discontinued operations financials, continuing operations financials. So a bit more about that today and then a quick recap about our quarter three. And then last but not least financial.
Reporting schedule for 2025.
And then, like Aki said, we have reserved some time for Q and A. We signed the agreement with Triton for the full sale of MacGregor on November 14 last year. And this basically set in motion the next steps for the standalone Hiab. First of all, we are planning to.
Propose for the AGM to change Cargotec.
Name to Hiab .
The AGM is scheduled for March.
26, 2025, and then the Cargotec name change to Hiab would become effective first of April 2025.
Then basically on the same day, Scott Phillips, the Hiab President, would become.
The CEO of standalone Hiab.
Our current CEO, Cargotec CEO.
Casimir Lindholm would then step down from the Cargotec CEO role.
As a result of these events, the standalone Hiab would start with very strong balance sheet.
You recall already from last year that we have had a negative gearing.
This strong balance sheet will provide.
An excellent foundation for organic and inorganic growth.
And as a result of the MacGregor sale and then backed up by our strong balance sheet.
Also the Board of Directors is evaluating.
An extra dividend for 2025 which would be then payable after the MacGregor.
Sale has taken place.
Then, couple of notes about the MacGregor transaction detail, so MacGregor will be.
Sold with an enterprise value of EUR 480 million.
We expect to book approximately EUR 200 million.
Goodwill impairment related to the sale and.
The cost to separate MacGregor is approximately EUR 25 million.
Part of that has become in 2024 in our finances. Part of that will come still in 2025, and the biggest part of this.
It is related to the IT separation.
We expect to close the MacGregor sale latest by July 1, 2025.
If all the competition authority processes are.
Completed earlier than that, then we close earlier and then as a result of.
Now, this sale to Triton of MacGregor is reported as discontinued operations and.
Like mentioned therefore we have published then on January 7th the Cargotec restated financials for 2023 and year to date September 24th. So MacGregor will be part of Cargotec discontinued operations reporting like we did also for Kalmar earlier in 2024 and Cargotec continuing operations will include now only Hiab and the Hiab related revenues and costs. Also what comes to the group overhead and I would say that it's already now fairly good visibility to the standalone Hiab profitability. We will also remove MacGregor from Cargotec segment reporting like we did for Kalmar earlier in 2024, so that will be visible in the full year reporting and.
When Hiab starts to report its standalone results. Hiab will have in the future two.
Segments, equipment and services, and this will.
Be the reporting segment basically starting from.
The quarter one 2025 interim reporting. So in April this year.
We will also provide Hiab historical segment financials before.
The Q1 interim reporting so early April as well.
Let me then elaborate a bit the difference between the business area.
Or Hiab segment reporting and the standalone Hiab reporting.
The business area Hiab year to date September comparable operating profit was EUR 197 million or 15.9%. These are the numbers what we reported.
In Q3 interim reporting, this business area result includes certain higher business area overheads which will be part of the future Hiab standalone go-to-market costs.
In addition to those business areas.
Overheads we will then add on top of that part of the Cargotec group costs like the treasury or tax function or certain IT functions which have been.
Residing on Cargotec level and earlier have not been allocated to the business area.
That will be part of the standalone Hiab-related costs and these costs will facilitate the standalone Hiab operations as a listed company. During January-September these costs were about 21 million EUR or 1.7% of Hiab's comparable operating profit. So when adding the standalone costs to.
Hiab's P&L in the continuing operations income statement, the comparable operating profit margin is.
14.3% for the first nine months.
That said, this gives a very good estimation already about the standalone Hiab.
Profitability and as mentioned earlier, starting from.
Quarter one 2025 onwards you will see.
The standalone Hiab reporting will have two reporting segments: equipment and services, and on top of these segments you will also see the higher group costs, which are not then allocated to these segments. There were similar ones we had earlier in Cargotec when we used to have three segments: Hiab, Kalmar, and MacGregor, and then the group costs.
So more information about the reclassified Hiab.
Segment financials will then follow later in April.
Then a very quick recap on Hiab's.
Quarter three financial performance, so first starting from the order intake.
EUR 361 million, 16% increase from the previous year. The positive deviation can be mostly attributed.
To a few key accounts, U.S. key accounts and defense logistics orders which were basically postponed from quarter two to quarter three.
So if you calculate a couple of.
Last quarter's average, we are on the EUR 360-370 level. Ordering activity was strong in Americas especially.
In North America.
Europe on the other hand very weak or at least weaker than the Americas area and in Europe especially Germany continues to be a challenging market.
I would say that the order book.
Is now on a normal level, so most of that non-COVID excess order book has now been delivered and our order book represents about four, sorry five months of sales. So this is the level where it has been for the COVID time.
In 2023 and if we look at our revenues, so in 2023 and even in the beginning of 2024 we were still delivering orders from the exceptionally high.
Order book which we have been collecting during the COVID time.
You have seen the year on year.
Decline in sales, and this comes from the fact that we have had quite exceptional order books still in 2023. I would say that by quarter three this excess order book has been mostly consumed, and as mentioned already earlier, now our order book corresponds roughly five months of sales, which used to be the pre-COVID situation.
Despite the 12% decline in sales, we were able to protect our profitability well and actually the comparable operating profit margin.
Improved by 60 basis points despite the sales decline.
The main reasons for this is that we have had a good momentum.
In our strong sourcing and procurement activities to optimize the component costs and also.
The commercial actions to protect sales prices.
Have succeeded well basically these two elements.
Have enabled us basically to protect the.
Sales margins and as a consequence also.
To protect the comparable operating profit margin.
Despite lower sales due to the declining volumes.
We have been able to also release.
Cash from the net working capital like inventories.
Accounts receivable and that have resulted.
In quarter three to EUR 100 million.
Business area of the cash flow. You remember that we communicated Hiab's updated strategy in May 2024 and one element.
In this strategy was to grow organically.
In North America where we already now.
Have a EUR 650 million revenues.
We have been mostly covering the U.S.
Market today with direct sales and part of this growth ambition is to boost the growth by introducing new dealers.
Now we have been successful in.
The latter part of the year introducing number of dealers of which we have here a couple of examples.
So we have signed an agreement with Ring Power Corporation that the company headquartered.
In Florida and the agreement covers basically Lowe's freight distribution and the related services.
As well as the truck mounted equipment.
Related sales and services.
So I would say that this is a very important milestone in the U.S.
For our growth and we will also continue introducing additional new dealers in the coming quarters. So the work does not end here but continues also in the other states. And then our outlook for 2024 as a reminder, as MacGregor is now discontinued.
Operations Cargotec 2024 outlook includes only five.
Year and for the full year we estimate that comparable operating profit margin as a business area to exceed 40%.
And last but not least, our financial calendar for 2025. So our full year results will be.
Published on February 12th.
Our annual report will be published on.
The last week of the and basically the first Hiab standalone interim report, the quarter one report will be published on 30th of April. Quarter two reporting will be quite normally as in your previous year's July 23 and quarter three on October 24 and.
Then, as a reminder, our AGM will.
Be held on March 26, 2020. So that was more or less a.
Short summary from my side and then.
I believe we can move to the Q and A.
Thank you, Mikko. As a reminder, the presentation is also available on our website for those who have dialed in, and I see first hands up. So let's start with please go ahead with your questions.
Thank you. Mikko, can you hear me? Yes, yes. First, starting from the balance sheet figures, what will the end 2024 balance sheet look like in terms of discontinued operations, assets and liabilities? You have not disclosed this yet?
Yeah, we will report basically the discontinued operations related balance sheet items as a one separate line in assets as well as in liabilities.
Not separating it line by line, but as a one line item when we publish our full year results in early February. But the comparables will not be disclosed before that. Am I right? That's correct, yes.
Not before that.
Okay.
And then just a couple of housekeeping questions. Were there any postponed deliveries from Q3 to Q4?
You indicated that there were not much. You mean?
Okay, there were postponed deliveries from Q2.
To Q3 last year, but were there any from Q3 to Q4?
At least to my knowledge, no major. No major delays like I was referring earlier. We had some order delays from quarter two to quarter three, but in my understanding we have not had necessarily that kind of pattern in quarter four.
Okay. And then finally, could you just describe the pricing impact in Q4 both in terms of orders and revenue like discussed earlier.
I mean, we have had good success already in quarter three in commercial actions and also in the sourcing procurement actions.
Very similar pattern, I would say, has been also important for.
Yeah, I was referring to your own.
Pricing, your own product pricing.
Yeah, we have not. I mean in general we are continuously reviewing pricing.
Like also in quarter three, we have had some price reductions, but also price increases.
So if we look our product portfolio as a total, we still see a positive net price development both in quarter three and also in quarter four.
Okay, that's all for me for now. Thanks.
Thanks, Erkki. Next, we have a hand up from Johan Eliason. Please go ahead.
Yeah, hi. I hope you can hear me.
Yes, yes, good.
I was just wondering a closing one background. You told the forecast of July when I remember you bought TTS, I think the Chinese authorities took almost two years. Are these guys involved at all this time around? And if so, why? Do you think it will close faster?
Yes, we need to seek approval from.
In certain jurisdictions like EU China as an example.
It's good to remember that now the buyer does not have same kind of business in their portfolio.
So Triton.
Triton is not the kind of competitor.
In the market.
Before this transaction.
So from that point of view, it's more.
We consider that this is more rather.
Kind of a common idea rather than a topic where the competition authorities need.
To review a lot the market sizes.
Okay, good.
And then on the U.S., I mean.
Even though you've highlighted there's a potential.
Extra dividend coming. You've also highlighted you.
Want to do M and A.
What sort of, what type of sizes of acquisition potentials are there? I guess mainly in the U.S. where.
You are targeting the growth overall very.
Many opportunities, what we have been building.
The pipeline, those are kind of built.
On type of acquisitions ranging from. What would I say?
I mean, Effer has been one of.
Our largest acquisitions in the past and.
That was a bit north of EUR 100 million. So we have targets which are, I would say from EUR 50 billion to EUR 200 billion, the kind of typical size.
Are there also targets outside of North America that you're looking at?
I would say that Europe, both Americas, South and North, are the main kind of markets to look at from our side.
Yeah, excellent. Thank you very much.
Thank you. Johan, do we have any questions from the telephone lines at this stage? Quite silent, so I don't see any hands up. So we have still an opportunity to take questions. And now I see that Tomi Railo has raised his hand. So Tomi, please go ahead.
Hi and good morning, it's Tomi from DNB. A couple of questions. Firstly, maybe just to recap or in terms of demand conditions in the fourth quarter compared to third quarter, is it kind of stable levels what you see or anywhere any improvement, any worsening? What's the best indication?
I would say that the customer behavior has been in quarter four, very similar to quarter three.
And also the market geographical market patterns.
Have been very similar.
We have really not seen any change in the customer behavior.
There are still, especially among the smaller.
Customers' expectations about interest rates coming down. We see that perhaps it's easier for the bigger customers with more financing power to make investment decisions rather than for smaller ones, which might be staller. Kind of looking at the optimization of the monthly leasing fee and hoping for a bit lower interest rates.
Very similar pattern in.
Quarter four compared to quarter three.
And what's the sentiment out there for 25? Do you see that customers are starting to make decisions, U.S. elections done, etc.? Or are you feeling optimistic?
Courses?
We are at the moment still.
Have courses, and that's why we have.
Implemented the EUR 20 million cost savings.
Program to make sure that if the.
Markets are not improving, we can deliver.
Also steady profitability in 2025. If the markets turn up, then of course it's a positive challenge. But at least it's at the moment.
It's not yet at least visible that.
The first half would be very different compared to 2024.
And while we are on 25 in terms of guidance, would you say that you continue to guide profitability and not sales for 25 or?
We do not anticipate to dramatically change.
The kind of way how we have been guiding the outlook. We will come, of course, with the household spend on relative to it when we announce the full year results.
And if I may continue, last year's fourth quarter clean EBIT included items for the cost action and also investments, growth investments. Can you confirm just that kind of? The comparison as such is looking relatively low because clean EBIT included those costs. But based on my notes, those were EUR 16 million together.
Is that the correct assumption?
That's a correct assumption.
We will have some one-off cost.
Related to this 20 million EUR cost savings program also in 2024.
But we will disclose those also separately in our full year results.
And you mentioned that part of the EUR 25 million MacGregor discontinuation is booked already. 24 is the kind of. Is it low single digit millions or what should we expect for the fourth quarter?
Maybe there is also good to remember that it will be part of the discontinued.
Discontinued. Okay, so it's not.
It's not part of the.
Yeah, it's part of basically the discontinued operation.
But it's, you know, half and half.
I would say 24, 25.
Okay, that's everything for me. Thanks.
Thanks a lot.
Thanks.
Tomi. Do we have any question from the Swedish telephone line? We can take that.
Yes, you do.
Good morning, it's Andreas Koski from BNP Paribas Exane. Two questions first. Could you just remind us if you have any seasonality between Q3 and Q4?
Typically, quarter three is a bit.
Yeah, typically quarter three is a bit lower quarter for us, especially from the delivery point of view because that's a.
Holiday season in the northern hemisphere in Scandinavia and partially in the U.S. or North American market.
So typically we have there somewhat lower.
Lower revenues compared to, for example, quarter two.
Yeah, great, thank you. And the second one in Q3 you had a few major orders and I think the one you disclosed, they sum up to 64 million EUR. How do they compare to say a historical average number of large orders in a quarter or was that an exceptionally high level or is it a normal level or how to think about the large orders in Q3 and they will be repeated in Q4?
Yeah, the quarter three orders were perhaps a bit kind of. We had quite many there because part of those were kind of performance from quarter two.
So from our point of view it's.
Actually it would be good actually to.
Calculate a, let's say two, three-fourths kind.
Above average in the orders because.
There are every now and then this.
Kind of either U.S. key account orders, Home Depot, ABC, Lowe's type of customers, or then Defense Logistics orders, which might cause quarterly fluctuations, but it's difficult to, let's say, sometimes to predict exactly to which quarter those will land. They don't come every quarter.
Yeah, understood, thank you. Then last question. I think your order backlog will be down by around 200 million EUR in 2024 and that's because you have had stronger sales than your order intake. Looking into 2025 now with an order backlog that has I guess sort of normalized, do you think you will be still able to deliver or release a large part of your backlog also in 2025 or to maintain sales, say flat in 2025, do we need an order intake more in line with your revenue levels? I hope that was clear enough.
Otherwise I can further explain what I meant.
Yeah.
What I mentioned earlier is that especially in the early part of this year, we were still benefiting from the kind.
Of excess order books, so abnormally high order book. So we have been delivering, let's say more from our order book than what we have received orders. If you look our order intake, if.
You look our order intake development since.
first quarter of 2022. So we have had a fairly flat order intake, roughly.
EUR 370 million per.
Quarter.
And if the order intake would continue on this kind of level, it would.
Be more or less an indication for the next six months revenue development. If the markets pick up and we.
Start to see again a positive box.
Of bill, then we can have an increase in our next year's top line.
But, like I said also earlier, at.
least at the moment, we have not.
Seen any changes in the market trends, and that's why we have implemented the.
EUR 20 million cost saving to protect also 2025 profitability.
Understood. Thank you very much.
Thank you. Andreas, with the next question we have, please go ahead.
Yeah, thank you.
I have three questions. The first one is actually a follow-up to the previous one. So I mean, can you remind us on the delivery times? So is it like a six-month lag? So if you would like, for example, see Q2 orders being very strong, would that already impact 2025 revenues meaningfully?
Yeah, I would say that in.
If we get the, I mean definitely orders.
Orders, what we are getting in the first half of the year.
Can deliver during 2024-2025. And I would say that in our tail lifts business we have the fastest delivery times. So if we get orders in the early quarter four, we can deliver those orders still in 2025. I would say orders which are coming in the first three quarters we can mostly deliver still within that year.
The DFS business, we might have longer lead times compared to commercial businesses.
Okay, thanks. Secondly, just on the margins going to 25%. So are there any other drivers that we should know in addition to the volumes and then the EUR 20 million cost.
Savings that you are making.
Those are the main top line under the savings program. Then of course overall sales margin development.
We continue our actions also in the component cost reduction and then also in the commercial actions.
So also protecting the sales prices and then making sure that we can continue on component cost savings. Those are the main actions for next year.
Do you think that the 20 million will be enough to create margin flat given what you know about the order book and likely revenues?
That has been our assumption to basically.
Protect the margin as the kind of.
Excess order book has been consumed.
So, to be prepared for this kind of top line, what the current rolling order intake never would suggest.
All right, then maybe a final one on the acquisitions and the timing of deals. So from the earlier discussions I've understood that you are busy with the IT separation of MacGregor and maybe something with Hiab. So is it correct to assume that you won't do anything big in the near term and it would be more like second half thing or how should we think about this?
The bulk of MacGregor's separation activities will.
Takes place still in quarter one and.
Perhaps April may even.
But before that, we do not necessarily want to take extra kind of challenges.
By trying to integrate something from the.
M&A point of view. So if anything we are working on M&A pipeline and discussing with potential targets. But necessarily closing that kind of transactions before MacGregor exit is not doable.
Okay, thank you.
Thank you.
Manu, do we have any questions from the telephone lines before we take a follow up from Johan? Silence, so Johan, please go ahead.
Yeah, just a minor follow up here considering that MacGregor was sort of China and Asia type of operations. If you go look forward at how Hiab will look like, will there be a significant change in the tax rates you will be paying going forward?
Not necessarily. But as a Cargotec we have.
Been a bit having disadvantage in having.
MacGregor in our portfolio because MacGregor has been loss making and we have not been booking different tax assets from all MacGregor related losses.
So that has been taking our tax rate up as we have not been benefiting from those tax.
Tax losses higher, being profitable and most.
Of our revenues coming in, let's say.
In a profitable manner.
Manner. So I believe that that can have a positive impact on our tax rate going forward.
So should we assume sort of rather typical 21%-22% going forward?
If that's what you're saying, it will.
Be a bit higher because of course we are generating revenues in countries where there might be north of 30% tax rate.
But.
I would say 25, 26 would be a kind of good proxy in a medium term.
Y eah.
Excellent, and these tax losses, they leave with MacGregor.
So that's not something we would gather.
Yes, they are in MacGregor legal entities.
And they will live with MacGregor.
Okay. Okay, thank you.
Okay, thank you. I don't see any further hands up. So I would like to thank you for participating the call today. Maybe we have a quick one from Erkki. You have time for one question before we conclude the call?
Yeah, thank you for the final one.
Just regarding this EUR 20 million cost savings. When will this be recognized in your EBIT? What's the timeline for those?
We have basically put those actions already in motion. So those ones which are not personnel related, those will kick in already from the beginning of the year.
There are some personnel related actions which.
Will take more time and those will.
Be fully visible by the end of.
Sorry, by the mid of 2025, so I would say that.
Most of that 20 million kind of.
Run rate we have reached somewhere around mid next year or mid this year. 2025.
Okay.
But none of this was visible in Q4 last year, correct?
Yes.
Okay, thank you.
Okay, thank you. And just a reminder, we start soon collecting the contents. Also, it's only for the continuing operations in the fourth quarter. We will only have one reporting segment, Hiab, and then Cargotec group operations as in the restated financials. So the full will be out soon and the results will be published 12th of February. So stay tuned and have a happy new year.
Thank you.
Thank you.
Thank you.