Welcome to Cargotec's 2022 results call. My name is Aki Vesikallio. I'm from Cargotec's IR. Today's results will be presented by our CEO, Mika Vehviläinen, and our CFO, Mikko Puolakka. After the presentation, there will be a Q&A session. Please pay attention to disclaimer in the presentation, as we will be making forward-looking statements. 2022 was a record year for Kalmar and Hiab. Driven by the strong performance of these two Business Areas, we reached all-time high orders, sales, and comparable operating profit. Our service and eco-portfolio sales also reached new records. The year was shut down by MacGregor's results, and rationalization of its portfolio had significant negative impact on our operating profit. With that, over to you, Mika.
Thank you, Aki, good morning from my behalf as well, thank you for joining the Cargotec Q4 2022 webcast. 2022 was an excellent year for our core businesses, Kalmar and Hiab. Together, they generated EUR 3.4 billion in sales, which is actually more than the whole Cargotec in 2021, EUR 388 million of comparable operating profit. Their comparable operating margin for the year 2022 was 11.3%. We are well on the way towards our 12% target for 2025. Driven by the core business performance, we were also first time in Cargotec's history breaking EUR 300 million comparable operating profit and also made a step change in our comparable operating margin, as visible from the slide here.
We were able to leverage our strong order book going into this year, and of course we had in the beginning of 2022, and the demand remained strong throughout the year. Actually, our orders grew by 10%, giving us a very strong starting point for 2023, with the 24% higher order book than we had at the beginning of 2022. Our sales grew by 23%. Especially good to see the good performance in services growing and our services revenue kept on growing well. In the CMD in November, we also first time revealed the profitability of our core business' services, which is very close to 20%. I am especially delighted about the very strong growth in our eco portfolio. Our eco portfolio sales grew by 54%, driven by Kalmar and Hiab.
This comes from the solutions that enable our customers to lower their emissions. Sales of Kalmar's fully electric and hybrid solutions grew by over 50% from year 2021. We saw a huge steps change in comparable operating profit and comparable operating margin, it could have been a better year without the negative results coming from MacGregor. As you know, the conclusion of the strategic evaluation, the board decided in November that MacGregor will not be part of the Cargotec's portfolio going forward. The active sales process has not started yet due to the uncertainty of the financial market and the early phases of MacGregor's profitability turnaround, especially into our offshore division.
If we would exclude the offshore wind segment, which is an attractive and hugely growing business opportunity but requires investments and development of our pioneering technologies, MacGregor comparable operating profit would have been approximately 3%, and 5% without the offshore division overall. This is despite the very low sales volumes still in 2022. We are taking all the measures necessary to execute the MacGregor exit. During the Q4, we made a thorough assessment of MacGregor's portfolio and the projects, this resulted in one-off costs and write-offs for Q4. Mikko will tell you more in detail about the impact of the MacGregor evaluation. As a part of the review, we are planning to rationalize the offshore portfolio, there are more planning regarding significant cost reductions in offshore business as well as the MacGregor overheads.
As a result of these measures, MacGregor will be in significantly better shape for the year 2023. We are already today guiding that MacGregor's comparable operating profit will be positive for year 2023. Looking at the market activity, we saw the high level of activity with a lot of our equipment actually working very close to the capacity continuing, obviously also the sort of sequential seasonal impact with the very high equipment activity in the logistics industries, with the exception of China, where clearly the COVID restrictions still had an impact during the Q4. The market picture, I guess, has turned slightly positive in the last month or so. When we look at the growth at the moment, there are still significant economic uncertainties, of course, in the market as such.
When you look at the container traffic, actually based on the latest estimates, the container traffic actually declined slightly during 2022 but is now expected to grow again with the slight growth during 2023. Construction activity has declined but is still historically at the very high level. It's good to remind ourselves that construction is only one segment of the many in Hiab and also, for example, renovation activity is a very important driver for the Hiab's construction segment activities overall. Regarding the vessel contracting, the vessel contracting declined but is still at the considerably higher level and is expected to be at the considerably higher level than it has been in the previous years prior to 2021, and this bodes well for the MacGregor future development.
Our orders received increased again across all the businesses. I'm especially delighted to see the very good order intake, close to EUR 1 billion, in MacGregor that will set up us in a very good position for the year 2023, 2024 for MacGregor. The strong order book, as I said, 24% up actually year-on-year. Overall, we have seen a very good market and solid market activity continuing also into this year. Revenue developed well. We are still struggling with the supply chain activities and component shortages, and especially Hiab is also impacted by the shortages of the truck deliveries. However, our teams and operations have worked very hard to enable a higher revenue on that one and that of course then been driving the sales revenue growth, especially in Hiab and Kalmar.
Our core businesses actually reached a revenue of over EUR 1 billion during the Q4, and the operating margin in the core businesses was 11.9% during the Q4. The services performance continued in an excellent way, and we saw another solid growth and a nice growth actually across all the three different businesses in the services. In connection of our Capital Markets Day and the Refocus strategy, we described our strategy going forward. It really is driving our growth coming from the sustainability solutions, solving our customers' emission and sustainability issues. There are four core elements on that strategy: driving fast innovation, delivering new solutions, helping our customers to solve the sustainability challenges, and driving innovation faster than any of our competitors can. Secondly, we are driving for the increased recurring revenues.
A good evidence of course, that one is the great services growth we are seeing, but also further recurring revenues in terms of new solutions combining equipment, services, and digitalization. In addition to the excellent organic growth, we plan to also grow more inorganically. We have had a limited number of acquisitions, one again in during Q4 in Hiab, but we plan to accelerate this pace going forward. Latest, we aim to be the highest standard in ESG in our industries. Evidence of the good progress we are making in our strategy execution is in terms of the innovation. We are now moving in our terminal tractor also beyond the electrification and announced a technology cooperation together with Toyota to develop hydrogen-based terminal tractor solutions for the markets. Secondly, a great growth in our recurring revenues and services.
An example of that one was a five-year agreement with the Swedish steel mill manufacturing there. The value of the contract was about EUR 25 million over the five years. It's also an evidence of when we are moving our Kalmar focus more towards out of the large ports into terminals and logistics and industries, how the service opportunities on those segments are significantly better than they are in the very heavy port segments as such. Again, Hiab concluded one acquisition during the Q4, Olsbergs. This is actually also a technology initiative from our. Olsbergs is a market leader and technology leader in high-performance valves and control systems, and this will be one of the core competitive advantage for Hiab, and Hiab wants to own that technology going forward.
Part of the great initiatives and the work we are doing in ESG, Cargotec is also able to close a financing of about EUR 330 million linked in the revolving credit facilities in the sustainability sort of sector. A reminder of our targets, financial targets that we have set for ourselves, in connection of the November Capital Market Day. We are well on the way in here. Our eco-portfolio grew more than 50% during 2022. Our emission intensity reduced during 2022 regarding the emission and reductions. However, due to the high sales of also traditional equipment, this is a target we need to keep a close eye on.
Obviously, we grew very fast thanks to the excellent performance both in Hiab and Kalmar, and our comparable operating target in our core businesses during the Q4 was already actually 11.9%. With that one, I'd like to hand over to our CFO, Mikko Puolakka. Mikko?
Thank you, Mika. Good morning, also from my side. As usual, let's start with Kalmar, where the solid customer activity continued in quarter four across all Kalmar divisions. With the EUR 1.4 billion order book, we have excellent start for year 2023, EUR 100 million higher than what we had when going into 2022. Despite continuing component shortages, Kalmar had high deliveries during the last quarter. Having said this, it's good to recognize that we have still, for example, couple of hundreds of terminal tractors waiting at our factory yard for missing components. Still quite a lot struggling with the component shortages. Thanks to Kalmar's prudent commercial actions and higher volumes, Kalmar has been able to protect the sales margins and increase profitability in quarter four.
The full year comparable operating profit for Kalmar was EUR 190 million. This is up by 58% or EUR 70 million higher than 2021. The heavy cranes, which we are currently exiting at the moment, made EUR 20 million loss in 2022. For this business, we have still roughly a EUR 50 million order book, of which most of that will be delivered during 2023. We expect that we still have some single-digit million EUR of negative impact in Kalmar's result in 2023. The new Kalmar, excluding heavy cranes, did 12.5% comparable operating profit in quarter four and 11.3% for the full year. This is a clear step change from the past years.
Showing that Kalmar is heading towards the right direction after refocusing its business from projects and mega terminals towards the equipment and services for smaller terminals. Hiab's case, the overall demand, roughly EUR 400 million orders was on a good level in quarter four, and the full year orders in Hiab were up by 5%. In Hiab, we had a very solid start. We will have a very solid start for 2023, EUR 200 million higher order book, compared to what we had, when we started the year 2022. In Hiab, like also in Kalmar, we have still exceptionally high or long lead times.
Hiab's order book covers currently three quarters of sales, and this is a reflection of component shortages as well as the low availability of new trucks. This is not expected to significantly improve in 2023. Despite the supply chain bottlenecks, Hiab was able to increase volumes to a new record quarterly level. High volumes were the main driver for Q4 profitability improvement. In Hiab's case, the full year comparable operating profit was EUR 224 million, EUR 58 million better than 2021. MacGregor had a paradoxical quarter. Very strong order intake in Merchant, as well as in Services. Those two divisions, Merchant and Services, represented almost 90% of MacGregor's full year order intake.
Positive in the order intake is that these orders are coming to the businesses which have been already profitable in 2022. These quarter four orders originate actually from the very strong vessel contracting back in 2021, driven very much by the car carrier vessels. All in all, MacGregor full year orders grew by 50% to almost EUR 1 billion. This is of course a good start also for MacGregor for 2023. On the other hand, MacGregor profitability was very disappointing. Merchant and Service divisions delivered positive result in quarter four and also for the full year. The weak performance in MacGregor comes solely from the offshore wind business. MacGregor's quarter four comparable operating profit includes EUR 24 million costs related to offshore wind new technologies.
These are costs for additional engineering work and also potential project risks. kind of forward-looking risks we have taken into account in the quarter four bookings. Like Mika said, we have also initiated further restructuring measures in MacGregor to make the result more robust in 2023. let me describe those actions a bit more in detail. The MacGregor Merchant and Service divisions delivered a solid performance and clearly comparable positive comparable operating profit last year despite low sales. here we will focus on delivering those orders, what we have been winning during 2022. the sales are expected to improve both for Merchant and Services. In Offshore, we downsize the organization and also rationalize our product portfolio.
We shall exit certain businesses like fishery and research and certain mooring MacGregor mooring solutions. These restructuring actions will deliver on annual basis roughly EUR 19 million cost savings, of which EUR 14 million will be visible already in 2023. For these actions, we booked project costs, like discussed earlier, to cover the project risks for projects containing new technologies. Also due to exiting the certain businesses like the fishery and research, we wrote off EUR 25 million of intangible assets and then did a EUR 63 million goodwill impairment during Q4. These are naturally non-cash items in our cash flow outlook. Looking a couple of highlights from last year.
We start the year 2023 with record high order book, almost EUR 700 million higher order book compared to year ago. In line with our strategy, Eco portfolio sales grew 53%, much faster than the sales for the traditional products, and the majority of our Eco portfolio sales are related to our core businesses, Kalmar and Hiab. Despite the disappointing result of MacGregor, Kalmar and Hiab delivered a strong year, taking the total Cargotec comparable operating profit 43% higher. Core businesses Kalmar and Hiab delivered 11.3% comparable operating profit for the full year and almost 12% for Q4. This is in line with our ambition to take these businesses first to the 12% level and then to 15% by 2030.
A clear disappointment was our net result, which was burdened by the weak MacGregor performance and then one-off costs related to reshaping the business portfolio. In all, the one-off costs were EUR 210 million. It's good to note also that less than half of this is actually cash effective. Our cash flow improved in the second half of 2022, driven by higher profitability as well as reduction in inventories, especially during quarter four. Our total 2022 cash flow was EUR 231 million. This is EUR 62 million better than a year ago. We have a very strong balance sheet.
Gearing continued to improve, driven by higher profitability and cash flow. Our net debt-to-EBITDA is now 1.2, which we consider to be a good level. We do not have any major debt repayments coming up. Approximately EUR 50 million interest-bearing loans are maturing in 2023. Also from that point of view, a good liquidity situation. Our loan portfolio is also very well hedged against the raising interest rates. About 60% of our loan portfolio is with fixed interest rate. When going to the dividend proposal, our Board of Directors is proposing to the annual general meeting a dividend of EUR 1.35 for each of B shares.
This is in line with our dividend policy of 30%-50% payout ratio. When we eliminate the one-off costs from our 2022 results, our EPS would be EUR 3.37, and against that number, the dividend payout would be 40%. Dividend would be payable on April 4th, 2023. Our guidance for 2023. As mentioned earlier, we have a record high order book of EUR 3.5 billion, and this gives a good basis for this year in all our three Business Areas. We have also initiated additional actions in MacGregor to make the offshore business more robust.
Based on this, we estimate the core businesses, meaning Kalmar and Hiab, to improve comparable operating profit from EUR 384 million in 2022. Furthermore, we estimate MacGregor's 2023 comparable operating profit to be positive. MacGregor's sales is also expected to increase, driven by the strong order intake in 2022. Please note that we change also our comparable operating profit definition for 2023. We include the PPA amortization in comparable operating profit like we had it in 2020 before the intended merger with Konecranes. The impact of PPA was EUR 4 million in core businesses last year and approximately EUR 12 million in MacGregor. We will publish our restated 2022 figures, meaning this PPA change before our Q1 2023 results.
I hand it over back to Aki.
Thank you, Mikko, and thank you, Mika, for the presentation. With that, we are ready for the Q&A. Operator.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. If you are using speakerphone, please make sure your mute function is turned off. Voice prompt on phone line will indicate when your line is open. Please state your name before your question. The next question comes from Massimiliano Severi from Credit Suisse. Please go ahead.
Yeah, hi. Hi, everyone. A couple of questions for me. The first one would be clearly on MacGregor. We had talked before about the offshore project and the restructuring costs that was related to restructuring costs of last year to be delivered in late 2022, early 2023. I was wondering, do you have an updated schedule for for the commissioning of this offshore project on which that there have been quite a lot of cost overruns?
Thank you, Massimiliano, for the question. The largest offshore projects which we are currently delivering, they are, I would say 90% ready from the kind of construction point of view. The installation for that project will happen during this year, and the sea trials will take place in the beginning of 2024.
Okay, thank you. My second question would be maybe on the sales growth. I was wondering if you can help us understand in Hiab and Kalmar more or less, what is price versus volume in terms of sales growth? How much is left in terms of higher prices in the order book versus what we are seeing now in the top line?
Good question. Not that simple. I'm oversimplifying maybe on my own answer. Overall, when I look at the price levels that the customers were able to buy new equipment at the Q4 2022, they were roughly 20% higher than they were at the beginning of 2021. Obviously, with the long lead times, the price realization comes in slower than one would expect. I would say a rough number perhaps for the sales growth coming from the pricing would be around 10% for 2022. It's good to note that a significant part of the equipment that was ordered at the 20% price increase is to be delivered actually only during 2023.
Okay, thank you. Very clear. Just related to that, a quick follow-up. Do you expect to be able to pass on even higher prices in 2023? Have you gone ahead with your usual price increases at the beginning of the year? You expect to keep prices stable or maybe decreasing them on new orders?
We still see the inflationary pressures actually coming through in the component level. We know that some of the raw material and steel qualities are actually having lower prices for 2023 than they had in 2022. Overall, I would say that the inflationary pressure is still in the product cost coming from the component pricing as well, and then of course from the labor inflation and energy, although the energy is not directly a big item for us, but for some of our suppliers it is. Overall, I think there is still pressure for pricing increases there. Having said that one, it's very clear that in our last pricing increase in October, there was probably more pushback on the pricing that we have seen in the past.
We are still planning or already have partly started to execute into pricing increases now in the beginning of this year.
Very clear. Thank you very much.
Thank you.
The next question comes from Antti Kansanen from SEB. Please go ahead.
Yeah. Hi, guys. It's Antti from SEB. Maybe a follow-up on the previous question and looking at the guidance for the core divisions on earnings growth. Could you maybe talk a little bit how do you see kind of that split into delivery volume growth, pricing growth, and perhaps kind of a margin expansion that you have in the backlog? What's really driving earnings growth on Kalmar and Hiab in 2023?
The primary driver would be the increased deliveries and revenue growth coming of course partly for the built-in pricing increases in the backlog. I would not bet at this stage, and we are not counting on the potential margin expansion on that one. I mean, it's still very hard to predict on the component and product cost pricing, even though we've seen some pricing relief in some of the steel qualities, as I said. At this stage, the pricing pressures and inflationary pressures clearly continue throughout the whole second half and Q4 as well. We are not making any assumptions yet on capability actually for margin expansion at this stage.
Maybe if we think about kind of the order growth on Q4 on those divisions, obviously kind of the volumes are down as you have made price increases. Just thinking you have your workload covered for the first three quarters, but how should we be concerned about kind of if the volumes continue to trend down that this at end of this year, there will be kind of a negative impact on your fixed cost absorption or kind of overheads of the factory floor and so forth? How would you kind of assess what type of a demand decrease can you handle and maintain kind of a strong earnings in the back half of this year?
Maybe I start with the one cost item that actually has been sort of hitting us actually throughout the whole year, and that's the indirect cost. Because of the large supply chain challenges at the moment. Our production is not sort of running very smoothly at the moment, and we are sort of forced to take, you know, almost sort of ready equipment out of the line, waiting outside for additional lacking components, bringing them back online again, et cetera. Actually, if we assume that the market starts to sort of slow down slightly and the supply situation starts to stabilize, there are real opportunities to actually take out some of the cost that is coming from the sort of very unbalanced situation at the moment.
That will certainly help us. But, overall, I would say that the what we see from our equipment activity, what we see our pipelines, we do not see necessarily indications on any slowdown on the market. However, it's also clear that the today's situation is not healthy. The fact that customers are forced to place orders sort of 12 months ahead is not a situation I think that can sort of stay there. It's very clear that the If you look at the truck deliveries and Hiab deliveries, typically before the COVID and supply chain constraints, we were talking about two to three months delivery note. At some stage, we need to be able to stabilize the situation that we get back to that kind of more reasonable and healthy lead times, and same is true for the Kalmar equipment.
I do expect at some stage that the book-to-bill would need to be negative for that situation to start to stabilize as well. We see no signs of any particular weakening in the market at this stage.
I would add there that.
All right.
Yeah, I would add there that, like we discussed in the Capital Markets Day, we have done now so a lot of activities in order to improve our resilience and agility, what comes to the cost base as well. From that point of view, we are also well-equipped in this kind of environment.
Okay. Then maybe a bit on MacGregor in a sense that, how should we kind of... Is the guidance of positive earnings very back-end loaded in the sense that the savings will most likely kick in late in the year? Could you talk about little how you expect to convert the container backlog into revenues through the year, kind of H1 versus H2, how the dynamics will work?
I would say that the services, first of all, the underlying performance is excellent, and that will continue for fairly steady throughout the year. We've been building up a significant backlog on the Merchant side. I would expect that start to deliver already better results early part of the year, but again, probably a little bit more back-loaded on that one. After the measures we have now taken in the in the offshore segment and some of the overheads in MacGregor, overall, I do expect actually that the offshore should turn to the more healthy numbers fairly early overall. I do not sort of...
I would expect that we will enter the year already at a pretty good situation, but I would still say that the results are probably more back-weighted in terms of that you should see a continuous improvement throughout the year.
Okay. Just a short specification on the EUR 14 million of annualized savings for 2023. This is not the run rate number. This is kind of an actual year-to-year EBIT bridge improvement.
Yes, correct. That EUR 14 million relates to costs this year versus costs last year. The EUR 19 million means that additional EUR 5 million would come in 2024 still.
Okay. Great. Thanks, guys.
Thank you.
The next question comes from Panu Laitinmäki from Danske Bank. Please go ahead.
Yes. Thank you. I had a couple of questions maybe on the same lines that were already asked. Just on MacGregor, you're guiding for positive EBIT and consensus was expecting for margin of 4.6% for this year. I mean, it's a bit of a range if it's like zero or is it almost five. Can you kind of give any indications what are your expectations? Do you think like MacGregor could go to 3%? What do you, what you commented was the underlying without these losses or any comments on what should we expect?
Well, I don't think we are only gonna give any particular number here, but it's obvious that the willingness to guide for positive results usually, we would take a certain safety or cautionary measures to make sure that we are able to deliver to that number.
Okay. Did I understand your previous comments, kind of correctly that you would see break even already from the beginning of the year?
We'd like to be in a positive side as soon as possible. Let's see how that pans out. That really depends, the biggest winner in a way is the merchant ship equipment deliveries because of the strong backlog. That's the sort of, how much of those deliveries we are able to get out on Q1 versus the rest of the year is still a question mark.
Okay. Thanks. On demand, you already commented on that, you said that you see no signs of any particular weakening in the market at this stage. Was this referring to Hiab or both Hiab and Kalmar?
Both Hiab and Kalmar at the moment. If you look at the sales pipe, you would say that in volume terms, actually the, especially in Hiab, actually the market is stabilizing already. In volume terms, the 2022 in Hiab is actually is sort of even or slightly down from 2021 numbers already. The pricing is gonna be a relevant factor moving into the 2023. We don't see a particular weakening. The demand, underlying demand and activity both in Kalmar and Hiab as well as the sales funnel we are seeing are looking very solid.
Thank you. Just a final one, if I may. On the, like, FX impact or US dollar in Hiab, I think we have previously discussed that you should get some margin benefit going into 2023. Do you still see this happening, given what has happened in the FX rates?
Yeah, I would say that definitely in 2022 we did not get the significant tailwind, but in 2023, now that we are able to deliver that kind of order book which has been hedged earlier in 2022, we expect that there should be some tailwind there. Of course, we cannot predict the FX rates any better than the others, but assuming the current environment, there could be a small tailwind.
Okay. Thank you.
Thank you.
The next question comes from Axel Ekros from ABG Sundal Collier. Please go ahead.
Hi. Axel from ABG Sundal Collier. I have two questions. The first one is: how do you think this spare part capture rate will change when you sell more electrical equipment in Hiab and Kalmar?
Obviously less spares, but we expect that our kind of capture rates are significantly higher in there. The way we approach the technology and sort of deployment in the electric vehicles is consisting of number of components that we are putting together, and there are two factors. First of all, in terms of the availability of those components compared to, say, a diesel engine. If you use today a Cummins or Volvo diesel engine, which of course has a multiple different ways of getting the spare parts, there will be a more restrictive sort of supply of those ones. Secondly then again, in terms of installation and service actually, the high-voltage electric equipment requires specific certification as well.
For the services capture rate as well, we expect that we will be at a considerably higher level than we have been in the traditional equipment. We expect that to then offset the sort of the actual spare part demand by vehicle. The other thing, of course, it's good to put this, despite the very strong growth we are seeing in there, we have a huge installed base of tens of thousands of equipment, and before that transferring to the electric equipment will take, you know, that one should expect about a 10-year sort of lead time before it will be significantly visible in the spare part demand.
Okay. All right. Thank you. The second one is, do you see any risk of order cancellation in Hiab or especially Hiab when you have such a large order book?
We see no signs of that one. First of all, of course, because of the inflationary equipment and people like to hold on to the orders because they know that if they come back to the market and reorder, you have to do it at a higher rate. Hiab overall is in a very particular situation because the primary driver for Hiab deliveries and lead times is actually not the Hiab's own manufacturing, it's truck lead times. The 2022 was a very tough year for the truck deliveries, and that has sort of built up the lead times in Hiab as well. For Hiab to be able to sort of claw back some of the lead times, et cetera, that requires that the truck manufacturing and situation improves.
Okay. Yeah. Thank you. That's all from me.
The next question comes from Tomi Railo from DNB. Please go ahead.
Hi. This is Tomi from DNB. Question on Hiab. The orders are down 2%, probably volume terms closer to 10%. Can you just little bit talk about the regional or geographical performance? Where did you see most of the weakness? Maybe also from the end market point of view, construction, logistics, recycling, military to start with.
Start maybe with military. We see a lot of activity coming up there. It's not yet particularly visible in our numbers. As you know, the military procurement and sort of the cycle times are relatively long. In terms of the actual activity and upcoming procurement, we see a kind of very significant sort of opportunities coming through from the military's side of that one. I think we Overall, the military revenue for 2022 was only about EUR 100 million as such, I think there's significant upsides on that one going forward. Again, the cycle times are quite long. In terms of the other specific segments, we haven't seen a particular softening on any of the segments.
Of course, sometimes slightly difficult to also directly read on those ones because the truck might be deployed in multiple segments. Overall, the U.S. activity has remained at a good level at the moment, and we see from key accounts and others the demand continuing. The weakest spot maybe we saw in the European market was France during 2022, and I can't exactly sort of explain that at this stage. Again, a lot of the other Middle European countries continued at a good level.
Okay. That's fine. Thank you.
The next question comes from Tom Skogman from Carnegie. Please go ahead.
Good morning. Yeah, I have two questions. First of all, I wonder about the risk level in the Kalmar heavy cranes order book. Secondly, I wonder whether you have some kind of discussions, you know, regarding the divestment of MacGregor at the moment, or is everything kind of postponed one year as you highlight that the margin kind of improvement will come in the second half of 2023 in MacGregor?
Maybe you take the first one.
On Kalmar Heavy Cranes, actually delivery is last year. Kalmar Heavy Cranes margin has remained very stable, actually improved in 2022 compared to 2021. I said earlier that Kalmar Heavy Cranes made roughly EUR 20 million losses, this loss is more or less on the 2021 level due to the fact that the delivery volumes have been fairly small. Overall, the project execution has progressed well, as you saw, we have booked in Q2 and Q3 roughly EUR 35 million of exit, Kalmar Heavy Cranes exit-related project risk reservations for the event that there would be some hiccups in the project. So far it has been progressing well.
In terms of the question on MacGregor, there are no active discussions going on at the moment, and we actually have not initiated the process as such. Two things really we'd like to see happening. The first one is the capital market and the financing situation to ease off. Effectively, kind of to put it straightforward, we'd like to see that the private equity has a better access for capital and can be part of the equation in terms of starting the process. Secondly, of course, we would like to be show that there is a clear track record of the MacGregor measures that we are now taking to deliver the profitability during this year.
Does that mean that we should not expect the divestment this year? It's rather like in 2024, to be fair then. I mean, not to have wrong expectations.
I think it's good to not to have the expectations that anything happens, at least at the early part of the year. I think we probably want to create the track record and then sort of monitor the financial market. Unless there are any surprises, I would not expect that process to be sort of initiated until towards the earliest, towards the end of this year.
Okay. Thank you.
The next question comes from Antti Kansanen from SEB. Please go ahead.
Yeah, hi. Two follow-ups. First to Mikko, and perhaps you already mentioned this earlier, but regarding cash flow into 2023 and especially working capital, where you have been kind of tying up money for two years, what should we expect from that in 2023?
We have guided, first of all, we have guided improving results in the core businesses as well as in MacGregor. The expectation is that the EBITDA should contribute positively to this year's cash flow. Secondly, like you said also, we have been tying up basically now during two years, quite significant amounts in our networking capital, especially in inventories. Our inventory days have been roughly 130 during 2022. This is highly dependent actually on the supply chain development. Should the supply chain get a bit more normal, for example, from truck availability point of view, for example, in the second half of this year, then we could also start to release some cash from the networking capital.
Highly dependent on the supply chain development, still the networking capital.
Okay. The second was a follow-up on the MacGregor divestment question from Tom. You've been talking about kind of the external conditions and the M&A market and private equity not being as active. To be fair, how much do you think it's due to the fact that MacGregor is not profitable? I mean, if you would be making, let's say 3%-5% EBIT margin today or late last year, would the situation be notably different? I mean, is it just more about turning it around and waiting for external issues to improve?
I think it's really both, and it's not either/or because the combination really, especially at the moment is tricky. You have a lower performing business and higher sort of risk attached to the financing at the moment. If the business would be higher performing, probably the financial financing wouldn't be not as such an issue. Again, if the financing would be easier, maybe the performance wouldn't be such an issue. It's really the combination of those two at the moment that it's making it difficult. Our view is that in order to try to maximize the value, we'd like to see both of those develop into the favorable direction.
In a sense, you kind of doing the dirty work now with the restructuring and the write-offs and things like that should kind of improve the situation, right? Make it easier to divest.
Yeah. Absolutely. I mean, we are taking very harsh measures at the moment that of course unfortunately was very visible in the Q4 result as well. Those measures will now be starting to deliver very clear financial impact on MacGregor already during the 2023.
All right. Thank you.
The next question comes from Massimiliano Severi from Credit Suisse. Please go ahead.
Quick follow-up for me. You mentioned that, the projects in Kalmar and cranes, the execution is going well. Do you expect, even where you are now to maybe be able to release some provisions, during 2023? Is it very much in line with what you expected when you took the provisions in the first place?
At the moment, I would say that it's too early to say. Like I said, we have roughly EUR 50 million order book, EUR 47 million to be exact, and most of that will be delivered by the end of this year. Towards the end of the year, we should have then better visibility about the final project execution. Of course, we can review also the remaining provisions what have been made for this exit.
Overall, I mean, what we did in Q4 that was, of course, visible was there that we went very thoroughly through the whole kind of existing project portfolio. As a result of that one, we sort of took a further sort of reserves and cost increases on some of those projects to be able to make sure that we are conservative enough in terms of the sort of expectation for the ongoing project implementation.
In MacGregor.
Okay. Clear.
Yeah.
Clear. Thank you.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Thank you for the great questions and for the great answers. Our first quarter results in 2023 will be released on 27th of April. See you then.