Good afternoon, ladies and gentlemen, welcome to this news conference regarding Cargotec's half year report, January, June 2017. My name is Hanna-Maria Heikkinen. I'm in charge of investor relations. Today our CEO, Mika Vehviläinen, will start with the group level development. Our CFO, Mikko Puolakka, will continue with the business areas and financials. Mika will conclude with the outlook. After the presentation, there is a great possibility to ask questions.
Thank you, Hanna-Maria, and good afternoon from my behalf as well. Welcome to the Q2 conference call. Let's start with the overall developments and highlights of the Q2. I'm very satisfied for the fact that we are continuously able to improve our operating profit. The improvement continued both in Hiab and Kalmar during the Q2, and also very satisfied for the fact that MacGregor has been able to manage the profitability and maintain the profitability at the last year level, despite the still strong decline in revenues. Orders received increased in Hiab quite strongly and declined in MacGregor and Kalmar. I will come back to that one in a moment.
Also happy in the terms of the service and software sales is now actually comprising 31% of our total revenue, and especially satisfied with the strong growth we've shown in software, increase being 26% from the Q2 last year. Few words about the market environment. As we have discussed already earlier this year, the market environment around the global container throughput and world trade has been better than we actually expected till end of the last year. Depending a little bit on the source, volume growth in container output or container traffic is somewhere between 4% and 5%. This is of course good news in a sense that the end market is clearly recovering and strong, relatively strong growth.
Also, the strong interest towards the more efficient solutions in terms of terminal automation continues to be strong. Having said that one, obviously the market environment around the shipping and container terminals is in a great flux at the moment. We see great consolidation, not just in terms of alliances, but actual mergers and acquisitions taking place, and the whole landscape around the shipping lines and container business and the terminal operators is actually changing quite drastically. In the long run, I do believe that the stronger consolidation and better market rationalization will benefit all of the industry players and hopefully lead for better profitability in that business as well.
In the short to medium term, of course, this brings more uncertainty into the market, and it's very visible in terms of our large customers not being ready to take major investment decisions at this stage. The customer decision-making has clearly been quite slow in terms of major investment decisions. We also see the focus more and more increasingly being terminal automation in so-called brownfield, i.e. automating of the current terminals rather than building entirely new ports at this stage. In terms of the construction activity, the market actually has remained strong in U.S. and also showing increasingly good signs in Europe. From Hiab's point of view, that's obviously very visible in the strong order intake we are having. The marine cargo handling equipment market is still weak. We actually saw some sort of positive end market indications during the Q1.
Having looked at the market situation in Q2, we still see quite a bit of softness there in terms of Baltic Dry Index, freight rates, et cetera, and that's also very visible, for example, in MacGregor demand and also demand for MacGregor services at this stage. Moving into the orders, obviously highly satisfied that Hiab is going from strength to strength and a 17% order increase is a good sign of the strong market development. Our orders increased in U.S., in Europe, as well as in Asia Pacific, so all the regions are actually showing strong market development at this stage. In MacGregor's case, market obviously still continues to be weak and we saw a further decline in orders, and Mikko will touch a little bit more in detail in his presentations.
In Kalmar, the orders declined compared to last year. The main driver for that one was clearly that no major investment decisions or no larger projects there awarded for us during the Q2 this year. The order book is declining. One has to be a little bit cautious with this one because obviously our business mix is shaping more towards the strong growth in the short cycle business whereas the long cycle business, Kalmar projects and automation as well as the MacGregor orders have been declining. This is the decline as such is not a very good indicator for the revenues. For example, Hiab is growing strongly, but obviously with the very much shorter cycle, the order book there is proportionally smaller.
Good progress in operating profit, obviously Hiab going from strength to strength and again breaking a new record in terms of profitability, and this was against a very strong Q2 already from last year. Kalmar, despite the decline in revenues, was still able to show a good improvement in operating profit, showing that our profit improvement programs are making progress in there as well, and also very satisfactory performance from MacGregor in terms of managing the profitability level despite the difficult situation in the markets and declining revenues. The main driver for the profit improvement, as we have discussed in the past, is not so much on cost, although obviously we have to be adjusting our cost, especially in MacGregor in the market situation.
It has been the investment in our technology and R&D that has been driving better products, more competitive cost points, more attractive products, and that together with the better project execution has led to the continuously improving gross margins and gross profit in our business, and that's really driving the main improvements in our profitability. As said, very satisfied with the software sales increasing 26%. The software sales increases is primarily driven by the Navis terminal operating systems for the ports, where we are clear market leader today, and we see the sort of market situation there being a fairly good. Obviously, more and more terminals are today contemplating about the continuation of your in-house systems versus the commercial systems that Navis is the market leader.
Service sales was a disappointment on a headline level, but if I actually break it down and look a little bit underneath that one, there are a few drivers in there. First of all, obviously as described already earlier, due to the difficult market situation in MacGregor shipping lines, the demand for services is still very soft. We stabilized in Q2 in terms of spare parts, but the maintenance revenues declined further 18%. I think this is a sign of either customers delaying maintenance work and at the same time or making sort of more maintenance work in-house in there as well. Kalmar actually had a EUR 23 million large crane upgrade project last year that was booked in orders, and that explains the change in services orders. That project has been sort of continuing, has had some issues.
If you actually exclude the project type services business, Kalmar's core services business, i.e., the spare parts and maintenance, has actually been growing well this year and is actually on the target at the moment. Hiab has been growing year to date during the first six months but did not grow during the Q2. There were certain sort of short-term operational issues in some selected countries, we still see a good growth prospect in Hiab services with all the measures we are taking at this stage. I've said already, overall, the service and software is now about 31% of the group revenues. We launched the sort of eco-efficient product portfolio in connection of our annual general meeting this spring. Very happy to sort of feel clearly get a good traction on this one.
The investments we are doing in our R&D and technology are actually helping us to build a clear competitive advantage around the eco-efficient solutions and products where the demand from our markets is clearly increasing. Very happy for the fact that we have now verified and got the certification for the eco-efficient portfolio from the DNV verification agency. Also very proud of the fact that the leading global rating company, EcoVadis, has awarded us a gold recognition in this category as well. With that one, let's talk about business areas a little bit more specifically, and I'm happy to hand over to Mikko.
Thank you, Mika, and also warmly welcome from my side. If we start with Kalmar, where the quarter two profitability improved despite lower sales. Orders were EUR 386 million, down by 12% from last year's level. We saw an order decline in APAC and in Americas. Actually, the EMEA orders increased slightly. As Mika indicated already earlier, we had a nice development in the software business in Navis, where orders were well up, and but in the large projects in the automation division, we saw a decline. The comparison period includes also the EUR 23 million large upgrade order.
Order book was EUR 926 million, down 8% from last year's level, very much driven by the automation, a large project, order, low orders. Software sales were up by 26%, and service sales were on last year's level. Sales were EUR 403 million, 4% down from last year. Despite lower sales, profitability improved and was EUR 33.2 million or 8.2% of our sales. The profitability was very much driven up by favorable mix, i.e., higher software and service share, as well as improved project execution. Hiab, where the second quarter was superior in many terms. Record high operating profit, also very good development in orders.
As Mika indicated, orders were growing in all three regions. We had a very good development in loader cranes and demountables product groups. Sales were on last year's level, both in services as well as in equipment. Very good operating profit 15.6% for second quarter. Already significant improvement for the already very strong quarter last year. The profitability is very much driven in Hiab by new product launches as well as slightly lower fixed costs in the second quarter. MacGregor second quarter profitability was on last year's level despite the significant decline in sales. Orders increased in EMEA and in Americas and went down in APAC.
There was a 12% increase from the first quarter of this year driven very much by one large order in MacGregor. We saw a growth in orders in offshore solutions as well as in RoRo business. Sales were EUR 160 million, 18% down from last year's second quarter. Profitability remained on last year's level. Basically, with this ongoing and past cost savings programs, we have been able to offset this 18% decline in sales. We have several cost savings programs ongoing and those are proceeding according to the plans. We have the EUR 50 million savings program, which is related to indirect procurement and consolidating a certain support function activities to Bulgaria.
In MacGregor, we have the EUR 25 million cost savings program also very well progressing, that yielded EUR 7 million savings in the second quarter. Now year to date, we have been able to make EUR 13 million in total from that program as savings. Kalmar's production transfer from Sweden to Poland is progressing according to the plans. As a reminder, we are expecting to yield EUR 13 million savings from 2018 onwards from that. We also continue heavily with the product redesign, especially in the HIAB area, but also in Kalmar and MacGregor, and also in the project management improvements, as we have been already demonstrating in Kalmar's results this year. Few words about the financials in January, June. Mika went already through the top-line numbers.
A couple of items to be noted in the profitability area. Our operating profit, excluding the restructuring charges, was EUR 72.1 million, up by 11% year-on-year. We had quite significant restructuring costs in the second quarter, EUR 11.7 million in total. These are mainly related to MacGregor, ongoing restructuring charges. After these restructuring charges, our reported operating profit was EUR 60.4 million, down by 3% year-on-year. This is also visible in the earnings per share, which was EUR 0.58 for the second quarter. Excluding the restructuring charges, it would be EUR 0.72, +10% year-on-year.
Our cash flow for the second quarter was EUR 40 million, impacted by the lower order intake in the Kalmar and MacGregor project business, and that is reflected then in lower advanced payment. Also, we had significantly, or I would say quite much higher working capital needs in certain Kalmar product categories. As you can remember, we issued two new bonds earlier this year. We have also continued our refinancing. We refinanced EUR 300 million revolving credit facility successfully now in June, by extending it for five years plus an option of two years. This revolving credit facility is fully undrawn at the moment. Our gearing was 42.7% at the end of June compared to 36% at the end of last year. The average interest rate has been declining.
Last year, quarter two, it was 2.4%, now 2.2% as a result of the successful refinance. Our maturity profile is very balanced. No major repayments coming in front of us in the coming years. Looking the longer-term profitability trends, we have a solid profitability improvement track here.
Operating profit, excluding restructuring charge is 8%, Return on Capital Employed 10.2% at the end of June compared to 8.8% end of last year. 2017 outlook, we reiterate our guidance for this year. Operating profit is expected to improve from last year's level, i.e., from EUR 250 b illion . With those words, I hand over back to Hanna- Maria.
Thank you, Mika and Mikko. Now it's a good possibility to ask some questions. We will start with the potential questions from Roiholahti headquarters. Are there any questions?
Hi, good afternoon. It's Jackie from Industria. Actually, I would have three questions if I take them one by one. First, on Kalmar. Do you see any other reasons kind of prohibiting terminal investments, be them financial, environmental, permission related, et cetera, in addition to what you just said?
If I'll take that one first of all. When I look at the different drivers, then market uncertainty is by far the biggest driver. If I look at in the past, of course, the sort of questions around the risk related to the automation project, I think are clearly declining. The automation performance and the terminal performance in automated terminals is clearly improving, and I think the credibility around the systems from technology point of view is increasing. From financial point of view, I only see positive drivers. The business case is overwhelmingly good for the sort of terminal operators. We are looking at then about 40% of your fixed operating costs are labor related, you're able to take more than half of the labor out.
Your payback time for this investment is really a question of only a few years, so it's very attractive in that sense. Obviously, this is an industry that has long traditions, not very high clock speed. The profitability of terminal operators has traditionally been very good. The sort of the real kind of pressure to actually change this is not that as large as it is in some other industries where the efficiency requirements have been probably pushing all those changes quicker. I think with the consolidation of the shipping lines and sort of more pricing pressure coming towards the terminal operators, I would assume that that would even accelerate further the need for efficiency. Environmental issues actually are another positive driver.
Generally, there is a increasing requirements for the ports in terms of the environmental impact, noise pollution, CO2, and an automated terminal is just able to operate from environmental point of view considerably better. Then you raise the permissions. The issue of course is that in, for example, in U.S. West Coast, there is a great pressure for more environmental operation, which would encourage more automation. The permits related to port development can be actually a long time coming as well. They can easily take quite a lot of time at the moment. I would say talking to the customers, the main issue really is just an overall uncertainty about the industry consolidation. As I said, really the landscape is actually changing quite fast and drastically.
In addition to the alliance development this year, we have seen quite a few major M&A moves now taking place. Really, if you look at the traffic, for example, between Europe and Asia at the moment, that business is consolidating at a very fast rate. I would make some sort of comparisons for the U.S. airline industry there. We saw after many years of losses, strong consolidation that has resulted into the more profitability in the business. We potentially are starting to sort of witness similar development here, which I think in the long run of course is good news for the industry, but it's not helping in the short-term decision-making.
Okay. A quarter ago, you were quite as optimistic about orders starting or decisions starting to be made during the latter half of this year. Do you still stick to that view?
We have a number of active negotiations going on, but obviously the timing of those ones is not entirely in our hands at the moment. There is quite a bit happening in the industry and overall, obviously, we will sort of probably update more on the overall landscape in the connection of the Capital Markets Day in September as well. There are number of active discussions and negotiations going on, and we will have to see whether they will land in within this year or early next year.
Okay, thanks. On a brief one on Hiab, what's your comment on the margin sustainability where we stand now?
I think overall, we are tracking well. It's obviously supported by the volumes, but very much driven by the sort of product designs. We are still introducing new products all the time and the good market demand, I think is helping in terms of the competitive pressures as well. A word of caution, of course, when you look at the last year as well, that Q2 is seasonally the strongest always. The Q3 is seasonally the weakest. If you look at the development, If I remember correctly, we made more profit on first half of last year than we did in second half, and I would assume the same thing happening again this year. You will see the Hiab margins drop in the Q3. It's just usually the weakest quarter we will have there.
Again, I would make the comparison of looking at the development from last year, quarter-on-quarter, you would probably see the similar kind of pattern happening this year as well.
Okay, thanks. finally on MacGregor. Do you see or foresee shipyards starting to receive orders that would be more favorable for MacGregor product, MacGregor spare parts and onboard cranes and so forth?
Yeah, and of course.
Overall.
Yeah. I mean, first of all, I'm happy for the fact that this is now a third quarter. We are increasing sequentially, but we are still down in year-over-year. Some of these orders are not necessarily in the core of that one. The demand, especially around the general cargo ships and the interest is clearly up at the moment and there are more inquiries, more activity on that one, and that will ultimately turn into orders, but the speed of those orders is still a question mark. It's absolutely right that in terms of the sort of hatch covers, cranes, et cetera, the market has been very weak. We see the end markets recovering. We see the number of inquiries going up, but the timing of those orders is still a bit of a question mark.
Thank you very much.
Thank you. Do we have further questions here in Roiholahti? If not, then we will continue with the international questions.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, please press star one to ask a question. Our first question comes from the line of Manu Rimpelä . Your line's open. Please go ahead.
Good afternoon. My first question would be on the services business. Could you just help us understand a bit better the lack of growth we're seeing now in Q1 and in Q2 if you look at the service business and what are you doing to address this? I remember you have been kind of focusing on that service business and hoping to get that pick up. Are you seeing any issues there and that you need to address? Is it just more related to some temporary factors? Can you just elaborate on that, please?
Yeah. Good afternoon, Manu. Services, the first issue we of course have in services is the situation around MacGregor and especially merchant area where shipping lines clearly are saving at the moment. There is a delay in dry docking as much as possible. There is increase in scrapping that leads to the cannibalization of spare parts. More in-house maintenance is done versus outsourced maintenance, the market remains soft. That's of course visible in the MacGregor services and really driven primarily by the market there. As I already said, spare parts we are kind of seeing settling down or leveling out, but the maintenance demand was still down by 18%, if I remember correctly, on Q2.
Which means that the shipping lines are saving in maintenance, either doing it in-house or in some cases just sort of pushing back the maintenance. As that is very much a market driven, there are a number of things we are of course doing in MacGregor to enhance and accelerate our services business. You operate with the very sort of headwinds in terms of market. If I look at then the Kalmar numbers, as I said, this is a little bit distorted by this project type of service business, especially the large EUR 23 million large crane upgrade that we recorded in Q2 last year, and that is winding down now.
If I look at the core Kalmar services business, which is very much in our focus area, which is the combination of spare parts and related maintenance, that's actually showing a good growth year-on-year, both in Q1 and Q2 at the moment. We are hitting our plans on that one. Hiab services was growing in year-to-date, the Q2 was leveling out a little bit. It was a disappointment. We looked into this one quite a bit in detail. There were certain issues related to logistics and delivery of spare parts that were actually prohibited by this cyberattack with some of our logistics service providers. We had certain issues with the tools deployment in certain countries when we are upgrading the systems and processes. Bits and pieces in there that actually sort of slowed down the development.
Overall, I'm still optimistic and positive about the good work we are doing in Hiab services. Despite the headline number not showing, particularly good numbers, I'm still pretty happy when I look at overall the progress we are making. We are making the right measures, and it's mostly visible also in our numbers at the moment.
Okay. Thank you. Another question, moving to Kalmar. How do you see the, obviously talk about already the bigger automation orders and those being postponed, and, we hope to see them for the maybe for some 12 months now. How do you see if you look at the underlying business, the, excluding these larger orders, so what kind of direction is it taking? This is the kind of more the traditional mobile equipment. Are you seeing any acceleration in that as the kind of underlying environment seems to still be improving?
I would say that it's mostly stable at the moment. When I look at our sort of sales funnel, and we have a very good sort of deployment of sales force now in place in Kalmar, we see the sales funnel to remain strong. I don't think it's necessarily increased from the last quarter as such, but it remains stable in there. It didn't show any particular strengths as well. Very clearly, when you look at the Q2 numbers, it's a lack of major orders and then sort of leveling out of the, and none of the other businesses sort of showed any particular sign of strength either, that didn't help.
In, in mobile equipment, when you look at the Kalmar revenues then as well and, and Mikko already sort of hinted in that one, we did have some delivery issues there that partly led to a sort of sales decline there. I think as we have described in the past, ramping up the Polish factory and the combination of bringing the volumes from Sweden to Poland has not been without certain operative issues. We were not able to execute on all the deliveries at the end of the Q2. That was somewhat visible on the, on the Kalmar softer sales. That also actually impacted negatively the cash flow, as Mikko was saying. Our inventory levels for
For the end of the quarter were higher than we'd typically see on that one. That was really our own goal, so to say not to do anything with the market.
Okay. Final question may be more directed to Mikko. The cost savings program slides. With these three ongoing programs. Can you just give us a phasing of how do you see the kind of PNL impact of those cost savings, coming in over the next, three years?
Well, I would say that if we think the first one, the EUR 50 million cost savings, the majority of that will start to be visible from 2020 onwards. I hope that we can see some millions during this year already from the indirect procurement part, and that will then accelerate in 2018 and 2019. For what comes to the business services operations, I would say that there the main weight would be in towards 2019, 2020. For MacGregor, basically this EUR 25 million is fully visible during this year, then the Kalmar's EUR 13 million would be visible from 2018 onwards.
Just to clarify the MacGregor and the Kalmar's of the PNL impact of the run rate of the cost savings will be achieved by the end of 2017. Will they still kind of have a positive contribution in 2018 as well?
Uh, well.
Cost basis.
Well, basically, yeah. Basically, the run rate savings should be visible already. If you compare 2017 MacGregor fixed costs to 2016, this EUR 25 million is fully visible in 2017. The run rate, if we compare now the run rate for the first six months of 2017, that is EUR 13 million lower compared to the cost run rate of 2016, January, June.
Okay, thank you. No further questions.
Our next question comes from the line of Kepler Cheuvreux. Johan Eliassen. Your line is open. Please go ahead.
Yeah. Hi, this is Johan. Just a question on Kalmar and the service development there. You say it is related to this port crane refurbishment big project you had last year. Is that just a revenue issue or did I understand there were some sort of margin issues with this type of refurbishment or crane upgrades?
It's a primarily revenue issue, but related to this one large order it certainly didn't help in terms of margin either. It has not been the most successful project we've been running either. Not a significant impact, but it certainly had a deteriorating effect.
That should help the margin then going forward if it's now finished or ...
It's not finished. That will actually I think we plan to target is to end that towards the end of this year.
Oh, okay. On Hiab, you continues to exceed everybody's expectations, and you continue to sort of try to reduce our expectations. You talked about when the margins were good, in Q1 that you want to expand that business now more into emerging markets, and that would entail some costs associated to that. Have we seen anything from that yet or?
No, I would say that stay tuned on that one. We are working actively on that one.
We should expect those activities to start to potentially impact the margins more towards the second half of this year or is it into next year?
The mostly this is sort of, we do inorganic acts, we are looking at inorganic growth. You know, they will always take time in terms of closing, et cetera.
Ah.
You should be primarily looking at 2018 numbers.
Okay, good. Just in this quarter you don't update us on this EUR 60 million-EUR 100 million profit improvement target for Kalmar. How's your view on that one right now?
Well, I mean, in a way that's visible in the numbers if you look at the Kalmar improvement as well. I think we will give you a bit more detailed update on that one in connection of the Capital Markets Day in September.
Okay, good. Those were my question. Thank you.
Thank you. Thank you, Johan.
Our next question comes from the line of HSBC, Philippe Saliba. Your line is open. Please go ahead.
Hi. Just a few questions left from my side, one being related to restructuring costs. Could you maybe tell us what we should expect in H2? First question. Secondly, you've talked about some inquiries for MacGregor. We see now an uptick already in H1 in terms of orders. When would you expect orders to be placed potentially at MacGregor? Is it still the usual delay of, let's say six months after the ship has been ordered? Also, if we look particularly at the segment which is relevant for your containers, what have you seen there most recently?
If Mikko you take the restructure, I can talk about the MacGregor then. Okay. Cumulatively, we have incurred now in the first half of this year approximately EUR 40 million restructuring charges. For the full year I would say that if you use EUR 20 million as a number, I guess that's a good enough proxy for this year's restructuring charges.
EUR 40 million year-to-date and for full year 2025.
Mm-hmm.
MacGregor, if I start with the container ships first, at that market, I think there has been a number of these large container ships ordered that are being delivered. Some of them are deliveries have been postponed due to the consolidation of the shipping line. We see the demand shifting to our so-called feeder vessel, i.e., smaller container vessels. If you look at the number of ships ordered, that looks still pretty good, but one has to remember that the value by ship is actually declining pretty rapidly. I would say that the outlook on the container side is not particularly rosy.
The market segment that is obviously doing well for us still is the RoRo and car ferries and remains to be strong and where we see the best opportunities to recover at this stage is so-called general cargo ships. The area where there are active projects and inquiries taking place. The timing, actual timing of the orders is obviously a little bit uncertain. As we have very often said in MacGregor, it's a long cycle business. Roughly speaking, from ship order to our equipment order, it's about six months, and then it's another six- 18 months from that into our deliveries. Obviously, with the demand being cut down so drastically now, the throughput times in a shipyard, for example, are likely to be faster.
Some of this actually might come through faster than we have seen in last few years, but that's a little bit early still to say. The opportunities for faster realization of orders and revenues is still. Effectively, you know, anything that you look at in terms of the ship order towards the end of this year is more likely to then result the revenue in MacGregor in 2019 rather than 2018.
Okay, thank you very much.
Thank you.
Our next question comes from the line of Danske Bank, Antti Suttelin. The line is open. Please go ahead.
Yes, thank you. It's about the Kalmar. I would just be interested to know how much were this kind of big orders that now we're lacking a year ago, just to get a feel of how the underlying business went?
Mikko, you want to take it or? I think the only big order that we announced in Q2 was the EUR 23 million...
Yeah.
crane upgrade. There were a number of sort of medium-sized projects that were not reported separately. I would say that if you take out the project business, the rest of the business was sort of, pretty much on the sort of.
Last year's level.
Last year's level overall. Didn't go show any growth either.
If I take off the EUR 23 million, I still get 7% annual decrease in the order volume for Kalmar.
Yeah. There were a number of these, what we call, horizontal transport, there's larger RTG and shuttle orders that sort of there in the EUR millions or lower EUR tens of millions numbers that they were also lacking this year. These were not necessarily reported separately or announced separately. Yeah.
Okay. I see. Would you say that customers are currently postponing expansion projects or even replacement projects, as they think what to do?
I think if you see kind of general hesitation, in there. Then one behavior maybe we could point out that we're now seeing is that they actually are splitting to orders in the smaller pieces. If I use one example here with this deal that we announced, which was for the Virginia port, and the one that Konecranes had a large automatic stacking crane order. We actually won the horizontal transportation part of them with the new hybrid technology shuttles. The way the order actually landed is that they ordered, was it 10 machines, if I remember correctly, as a first phase. The value of that order was EUR 13 million. Then we had an options for another 40 machines.
Overall, if you look at that one, it was about close to a EUR 50 million order, but only EUR 10 million of that one or EUR 13 million landed in the Q2. I was maybe a little bit trying to hint towards that direction as well. When we look at these automation projects that we are now looking into, many of them are to our so-called brownfield operators, where actually we expect customers to start to then replace or refurbish part of the port bit by bit. It wouldn't surprise to me that if some of these automation orders coming in would also land actually at the smaller, one of one-time sort of orders rather than the bigger ones.
We already seen that, for example, if you look at the London Gateway or Los Angeles Port TraPac, which both are multi-hundred of million EUR businesses for us, but we generally don't record that sort of orders in our books on that one. I guess that's maybe a sign of the customers being careful as well, that we have seen sort of smaller one-time orders coming for potentially larger deployments as well.
Yeah. Just on the overall situation at ports, we see currently, as you also point out, increase in container throughput, which should be positive for capacity utilization.
Yeah, does it mean that we are not quite there where customers would have to invest in the capacity expansion in terms of capacity utilization?
Yeah, it's a very good point. I mean, if you look at underlying drivers, I would say if anything, they are stronger now. The, as you said yourself, the volume growth is there. The new larger ships are arriving and more and more of them will come through TraPac. That will, as we know, in the course of the logistics industry, of course, is that it's not the overall capacity, but it's the peak capacity that drives the investment. These larger ships require 30% increase in yard capacity. That's happening as we speak. The outside pressures that they're already part of the earlier question in terms of the environment and others. I don't see that any of the drivers that would push for these investments have gone away rather vice versa at this stage.
it's very clear is that the uncertainty around the industrial landscape is slowing down the decision-making now.
Yeah. There is no market share changes like the Chinese becoming stronger in automation and that impacting your orders.
Not outside China. We are aware of one or two automation projects going on in China. We have a fairly good visibility on those one because we are still providing the automated terminal operating system even into those projects. They are, how would I say, very well-protected in investments and our capability to try to participate those deals is not particularly good. If you take those ones in, you could of course say that right now we have that sort of the market share. I would say overall in automation product projects and business where you have the sort of ones and twos is talking about market shares at this stage is not particularly accurate or productive.
Yes. Okay. Thank you.
Yeah.
It seems like that there are.
There are no further questions. I will back the call over to our speaker. Please go ahead.
Thank you. It seems like that there are no additional questions. I'd like to remind you of our Capital Markets Day, which will be on September 12th in London. Let's meet there then. Thank you.
Thank you.
Thank you.
This concludes today's call. Thank you for your participation. You may now disconnect.