Good morning and good afternoon, ladies and gentlemen, and welcome to the Cargotec Corporation Q2 2010 interim report conference call. At this time, all participants are in a listen-only mode. Later, we'll come back to question and answer session, and instructions will be given at that time. If anyone should require operator assistance during the conference, press star then zero on your telephone keypad. Just to remind you all that this conference call is being recorded today. I would now like to hand over to your chairperson in Helsinki. Please begin your meeting, and I'll be standing by.
My name is Paula Liimatta, and I'm investor relations manager at Cargotec. Today, we have a live audience here in Helsinki and people on the phone lines as well. We will start with the presentation by our President and CEO, Mikael Mäkinen. After that, we will have time for your questions and then answers. Please, Mikael.
Thank you very much and welcome everybody. I'll spend 15 to 20 minutes on the presentation, and then we, as Paula said, we will have questions after that. If you look at the quarter, of course, it was very good. It was very good in all aspects. You can say that the market has recovered in all segments. I'll come back to it more, a bit more in detail later. That led, of course, to the Q2 order intake, which was 55% higher than on a year-on-year. I think another positive if you look at the highlights is also the industrial and terminal profitability. We have done a huge restructuring, very big changes in that business, and now we can see that it starts to bear fruits.
Of course, the terminal side is still. I'll come back to that in the order intake. That's an area where volumes are still low. Marine, of course, we have to remember in the highlights that the marine profitability and deliveries were excellent during Q2 and has been during the whole beginning of the, of the year. Cash flow also healthy. I'll comment that a bit later. If we look at the market environment, as I said, region to region variations, we see a good pickup on the industrial side, especially in Asia and Americas. Also, Europe starts to pick up. Terminal container handling, there we can see the number of quotations, number of projects going up. We have seen a few bigger orders, but the really big orders and the bigger number of bigger orders, we are still waiting for that.
Marine cargo handling picked up. It said here more than expected. We have to say that the surprise to us was that the shipyards were actually very quick in turning the few cancellations they had into new orders with very short delivery times as well. That's a positive impact on marine. Other reason is that many ships are order right now. I think the concern that everybody had that the marine market will go down, it will stay on a very low level for a long period. We don't have that concern anymore. I think we have moved into a more positive mood in marine, which of course has a small impact on this year, but it has a big impact on the following years.
The scenario that we have had a big downturn in marine in the coming years, we don't see that anymore materializing. Can go down, yes, I'll come back to that a bit later. The scenario when some of the market analysts have that it will go down to EUR 600 million, EUR 500 million next year and then being on a very low level, we don't see that, and we already have orders to be sure about that will not happen. Service market were fairly quiet. We have seen some. Of course, you see a quarter, but we see it week by week. We see that there is recovery in the market, especially in the spare parts, and some visibility of it in the Q2 already.
If, if you look at it even more in detail, we can see that there's a very positive trend. Key figures, orders, EUR 732 million for the first half year, a very good figure. Sales of EUR 638 million, exactly according to our expectations. Operating profit, operating margin on a good level. Cash flow, I would like to say about cash flow, there has also been a concern about cash flow, that when the market recovers, we'll tie a lot of cash into inventory. Half ready goods in transit and so on. No, that has not happened. We have a good cash flow. If the recovery-- when the recovery continues to the second half of the year, I think that the cash flow will be not as good as it's now.
It will be on a good level, but it will not be on this high level. Earnings per share, EUR 0.32, also a very, very good figure. If you go to the industrial and terminal order intake, it grew by 34% year-over-year. You look at the two green ones. I think that worth mentioning is the fact that in Q1, we had this very big $110 million order from US for special handling equipment in Q1 . If you take that out of quarter one, then you can see that there's a really, really a good recovery in the market. Marine order intake, clearly stronger than expected.
I have to tell you that, if we look at what has happened since quarter two, it's still on a good level. We have actually come from that very low level into the next step in order intake. One must also remember that in many of the segments, we have gained market share in marine. One word about industrial and terminal and the market shares there. We said that after quarter one, that we might have lost market share due to the Machinery Directive, due to our problems in being able to deliver at a short delivery time. We think that period is over. Now we are on delivery time on a good level, and we seem to gain market share there as well.
It was more like a blip in Q1. Marine sales grew, yes. Why didn't terminal, industrial and terminal sales grow during quarter two? It lags. You have to remember that only now we have a good order intake for the products, that recovery will come in the third and Q4. That's especially for industrial. On the terminal side, of course, we haven't seen, as I said earlier, the big orders, that also means that the recovery in terms of sales will come later. Operating margin. I think this is a very important slide for us, that the industrial and terminal is back in black.
This is actually shows that all those efforts, all those changes we have done, they were done at the right time, they were done correctly. Now when we get the help from the market, we can get back into black figures. 2%, are we happy with that? No. I'm very happy with the trend and the fact that now we are back in business in industrial and terminal. Marine profitability, I think it's already a few quarters that we have said that we are now at the peak of the marine profitability. Now I really believe that we are at the peak. Now we can see more and more of those orders that we have received in a normal market condition. I would very much say that there shouldn't be any expectation to go higher.
It could be higher for a month, but not higher for a quarter than this very high figure. We also have to remember that marine has a big order book, very profitable orders. When we're talking about normalizing it, I'm not talking about normalizing it on a eight level of seven or eight or nine. I'm talking about somewhere between 10 to 13. That's the bracket I'm talking about. I'm talking about a very good business that doesn't tie capital, has a good order book, has a good order intake and good deliveries. Fairly positive about that. I think worth by mentioning in marine, the fact that we have a long order book as well. It's nothing that comes and then disappears.
I think we have a much more stable business than most of our analysts anticipate. Marine, we also have the luxury of being in most of the ship types. As I've said earlier, we are not in tankers nor passenger vessels. Rest of the ship types, we can benefit from it. We have now benefited from bulk carriers, from offshore. That was also a concern that people had that, "Hey, now, if the container boom is over, what will marine do then?" Not a big concern for us. We move into bulk carrier deliveries, into offshore. Does it have any impact on offshore, the what has happened with BP and the Gulf of Mexico?
Of course, it makes a turbulence in the short term. People are concerned that on the other hand, the equipment that we have to offshore, they are exactly for the high end of the market, for the complicated installations. For us on longer term is a very good thing that the legal requirements are more strict for offshore applications. A positive sign for us. This a new slide, the gross profit development, of course, most of you have. You can find it in our figures. It's not nothing secret, but I wanted to show to you that here we can see the real recovery, because very often we get the question that how about now when the market is not as high as it was, how is the price competition?
How are you handling your sub suppliers and so on. But I think this shows that we are back in normal business in that sense as well. Cash flow. Net working capital decreased to EUR 96 million from EUR 123 million. Cash flow was healthy, as I said. We have changed the supply footprint, fewer factories, better control of our inventory when you have fewer factories. Yes, we still tie capital because we have the Polish factory is not up and running yet. So we tie capital in two factories. But to me, not a big concern because we know what we are doing, how we are proceeding. Sometimes I've seen also written about the Polish factory that is it behind the ramp up for the Polish factory? No, it's not.
There cannot be any ramp up because the factory is not opened. I think this is also something that we have to remember, that only after the factory is open, there can be a ramp up. The test production that we do there now, the products that we do in the rented facilities, they all show that we are exactly online with our plan. We are very positive about the outcome of our Polish factory, which will be open on the 9th of September, which means that only after that the real ramp up starts. Service, one concern. Service recovery. Slight recovery. Why is service not recovering as much as the equipment order intake? We still have market areas, markets and segments where the utilization rate is lower.
I see it as a filing up potential for us. I don't think we have lost service or spare parts deliveries. It's only the fact that many, for example, ship owners, they have postponed the service first because of the downturn, then because the market picks up, so they didn't have time to do the service. The same on terminal side and on industrial spare parts. Again, here, slight recovery, good recovery. We see that we have the right possibilities to grow that market as well. Earnings per share, here divided by half here. You can see that now we start to be on a better level. It's not as good as it should be. Goes hand in hand with the result.
In the market situation or market condition where we are now and bearing in mind the huge changes that we have done in the company, I think that this is a fairly good improvement. If you remember a few years back, we were talking about that we have to be more equally distributed worldwide. Now you can see that APAC is almost the same size as EMEA, European area, and the fact that we are growing in Americas as well. I think this starts to be a very balanced picture. Yes, it's true that the biggest part of marine is in Asia, and that changes the picture a bit. Still, I think that we are in a very good situation concerning Asia as a part of our business. Key priorities 2010.
We haven't changed them from Q1. Preparing for the growth, looking at the strategy, how can we grow, how can we develop this business? Very much focus on research and development, service concept development, and of course, last but not least, the efficiency targets that we have set to be 100% sure that we can fulfill them. More than ever, we are confident that these key priorities are the right ones. They are the ones that we have to follow this year. This is a busy slide, elements of the operating profit improvement in 2010. I wanted to have the slide so that we can look at the various areas here. Let's look at what has improved our. What will improve our 2010. The cost savings, of course.
The cost saving program is going exactly according to our plan. Good positive impact for this year's result. Increased volume. As I said, now the order intake is coming industrial, in the industrial it will affect the result. Profitability in marine projects, as we have said earlier. Higher corporate costs year-over-year. Why is that? We sometimes get the question of, "Hey, you have more people in the corporate now, you have reduced by 3,200. How can you have so many more people in on the corporate, on the headquarter or corporate?" That's because we have taken people from the business, centralized it, so that we can centralize those areas. The bigger cost addition is actually our ERP system.
Those of you who have seen ERP system knows that we are talking about fairly big amounts of money there, but we need a new ERP system. We have a good system. We are quite confident, We are, oh, we are very confident in our reporting, but it's still very time-consuming, very very, How should I say? Not this based system. It's gonna be a big. It's a multi tens of million EUR investment in ERP system, and that's what you see in the figure of the corporate costs. Production ramp-up early in the year. You remember also Q1, I told that we have had some problem with the production ramp-up. It didn't go as smooth as we thought. We couldn't get components. We had problems in different areas.
That's over now. It had an impact of how much profit we could have made this year, 2010. Slow recovery in service. It will recover, it won't have a huge impact on the result year 2010. Price development in the market, as I said, quite neutral. We think that we have been holding up fairly well, both on the cost side and on the price side. Currencies for us that operate in so many countries, in so many different currencies, it's not neutral, it's nothing that we use as an excuse for making a bad result or an explanation for a good result. This is something that we have to handle. Let's have a look at the outlook for 2010. We have kept the outlook.
Sales will be on 2009 level and operating profit to exceed EUR 100 million. As said, industrial is recovering. We feel that the sales of terminal will fall short of 2009. That's exactly we haven't seen the big projects coming. We have seen a good recovery in industrial that will take care of the difference between industrial and terminal. Also we have to remember that the healthy situation in marine. We have also said that the sales in marine will reach 2000 or 2009 level. I mean, for me, the estimate outlook for this year is the same as before. The distribution between the segment is a bit different.
It's something that we are more than 100% sure to reach. That's actually the end of my presentation. Good quarter on all levels. We feel that we have the organization. We feel that we are on a right track. We have many things to do, many things that can make this company even better in the future. We are ready for the market recovery, and I don't see any big hurdles or obstacles for reaching our target, neither 2010 nor 2011. Thank you.
Okay, ladies and gentlemen, now we are ready for your questions. We will start the questions here in Helsinki. Then we will take the questions from the conference call participants. Here in Helsinki, please state your name and ask for a microphone before asking a question. In addition to Mikael, we have our COO, Pekka Vauramo, and our CFO, Eeva Sipilä, to answer your questions. Please, you can start.
It's Erik Dahlberg with Mark. It's three questions actually, if you don't get mad at me. I would like to start with the orders in Q2. You ordered actually increased both in the industrial and on terminal size of the division in Q2. Here is the first one.
The answer is yes, but more on the industrial side.
About the guidance, you said that the new orders in industrial terminal will not affect much your second half sales. Does this indicate that you expect orders also on the terminal side still to be up in second half year end and versus first half?
Yes.
Very straightforward.
Yeah, well, good question.
The last one, this goes to Eeva Sipilä. You have a fairly big tax loss carry-forward. How much of that do you expect to be used in 2010? What's the kind of implied group tax rate for this year?
Difficult to give an exact answer. We, and we now have some of the countries where we recorded tax losses last year now making a profit. We, of course, hope to have a few countries still turn into the black this year to use that. I would say that on the group level, while we still stick to our sort of earlier view that longer term a 30% tax rate is probably the right one to use in your estimates this year will be clearly below. Where exactly is, as I said, a bit dependent on the mix in the second half.
I guess between 16 and 20, is that way off the mark?
Well, maybe your lower range is quite low.
Just if you could comment on the order intake, region by region?
Of course. First of all, you have to remember that the marine is, I mean, we sell to shipyards. The shipyards are in China, Korea and Japan, and that's it. If you then take industrial and terminal, I would say that it's stronger, it's stronger in Americas and Asia and then weaker in Europe. That's it.
Do we have any more questions here in Helsinki? If not, we can take questions from the people on the phone lines, please.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad, and if you would like to cancel your question, press the hash or the pound key. We will take a short silence while participants register for questions. The first question comes from line of Lauri Leino from ICE Capital Markets. Please go ahead. The line is open.
Hello, good afternoon. It's Lauri Leino from ICE Capital Markets. Just one question regarding marine and the order intake. Once again, we see so the level of order intake, going up and you mentioned that you were kind of surprised by it. Is this new level reached now on a sustainable level?
I don't think we will see all quarters being on this high level that. Let's see. I could say that I would say that it will be somewhere between the previous quarter and this quarter. It's a question of. You know that they are fairly big orders, so some of them can come and some of them postponed into the next. That's a kind of a guideline. That's an area where we are.
Okay. Okay. Between last quarter and this quarter is the sustainable level that you can see based on the current market going forward.
That's how we see. That's for the current market situation, yes.
If you could elaborate a bit on the how much did the ramping up eat away your potential deliveries from H1 in industrial and terminal, just to get a view on how much you could have delivered without the component problems and so on?
Actually it's not that simple because it's so that because we had a longer delivery time, so partly we lost market share.
Okay.
I mean, it's not so that how much more. Yeah, okay. If you calculate the other way, how much could we have delivered more? I don't know. Pekka, do you have a?
Yeah, sorry. Very difficult to give an exact number for that one. Like Mikael said, there's two things in that one. One is that we just didn't have the goods and or components to build. Secondly, some of the delivery times got so long that we lost some of the orders because of that one. We are not talking about tens of percents or volume anyway, I mean, it has an impact still.
Okay. That's all from me at this point.
Your next question comes from the line of [inaudible] from ABG. Please go ahead. The line is open.
Hi. Firstly, a question on the Polish factory that you haven't started yet. Since you say in the report that you reached the EUR 150 million cost savings target, what do you think you will save additionally from this Polish factory when it's up and running?
Of course, when we consolidate it, so part of it is calculated into this EUR 150 that we have, that you save on kind of overheads. The volume related, we haven't guided on that. There is additional saving. Depends how much the volume goes up. For every piece of equipment there is a good saving when it comes out of the Polish factories instead of one of our North European factories. We haven't guided on a figure.
Second one is on, on, on the operational leverage, if you can maybe give some, some color on that, on, in the industrial and terminal business , since , you have taken out quite much fixed costs from the business, how, how the operational leverage will play out now when, when, when it's, when it's back to growth again?
Here again, I don't think that we have given any or do you have, Eeva, anything that we could. I wonder how we could. Sorry. Yes, as Eeva said, it exists. That's definitely the case. We have, of course, lowered the break-even point of all our segments and businesses considerably.
Okay. Thank you very much.
Thanks.
Next question comes from the line of Sebastian Hellmann from UBS. Please go ahead, the line is open.
Yeah, thank you. Good afternoon. Just two questions remained left over. Can you remind us about the lagging when you receive the orders from the shipyards versus, say, engine manufacturers such as Wärtsilä, which receives the order since compared to their order momentum in Q2, your numbers still look a bit low, and I would rather guess that marine orders should improve further quarter and quarter also in the Q3. Is that the view you would share with us? Secondly, can you remind us on the split in your On the Move program, how much of the cost savings were fixed cost savings without any impact of volumes? I remember something like EUR 100 million and additional EUR 50 million from related volumes. Thank you.
Thank you. If we look at first or Eeva Sipilä you can think about the second. If you look at the marine order intake and the fact that, in a normal market condition, the ship is ordered four months to six months later, or fairly soon after that the engines are ordered, and four months to six months after that, equipment like the marine equipment are ordered. To make it more complicated, now we have received, quite a number of orders where the ship has been changed. It means that it was a tanker, ordered as a tanker, and it converted into a bulker. Actually we get an order, and then it's a very quick delivery time.
We are talking about delivery time six months to nine months from order to delivery. Maybe the engine was already booked years back. Third thing that we have to bear in mind is, yes, shipbuilding is now on a good level. I think that I don't remember how many. What did Wärtsilä say? 100 ships per month they're ordered at that. Comparing us to Wärtsilä or MAN, one always has to remember that for us different ship types give different part types of revenue. For example, we have, for us bulk carriers is a very interesting market, which is maybe not for the, at least not for all the engine manufacturers. It's good to compare. We are behind that.
Ships are ordered at a good level. I think that, maybe one also could say that to a certain degree, our business is more sustainable than an engine manufacturer's. We have these segments where we have an order intake that is fairly high per ship. Confusing answer, you have to analyze it.
Okay.
Eewa.
Thank you.
To your second part of your question on the cost savings. What we've said earlier is that the EUR 150 million cost savings target, which we also said in conjunction with the Q1, that we have achieved the target. That was all non-volume related savings, so fixed cost savings purely. What was said earlier that there was an element in the original On the Move program that talked about also volume related savings, and the figure that was used then EUR 40 million-EUR 50 million. However, we haven't really been talking about that too much now since our guidance for this year has been flat for quite a few quarters.
It's more then related to the previous analyst question on ramping up Poland and seeing the market volume really coming through in our numbers then next year.
Okay. Thank you.
Next question comes from the line of Timo Pirskanen from Deutsche Bank. Please go ahead with your question.
Yeah. Thanks. I would have one clarifying question actually regarding the industrial and terminal division's profitability in the Q2. True, it went back on black numbers, but, you know, I was just wondering that did this ramping up capacity costs still continue in the Q2, which materialized in the Q1?
Not very much in the Q2. What we are suffering still in the Q2 is the fact that the terminal order intake has been on a so low level. We have, we of course, have quite a number of costs related to that. Because we are confident that the market will come back, so.
Basically you were still burdened by the low delivery volumes and the kind of underutilized capacity in the Q2. Do you share this view?
Yes, that is exactly correct. It has nothing to do. It's nothing, it's not ramp-up cost because our problem with ramp-up is the fact that you have nothing to ramp up.
Yeah, yeah, surely. This was the case in the Q1 that in your supplier exchange, so.
Yes.
Okay. Thanks a lot.
The next question comes from the line of Johan Eliason from Cheuvreux. Please go ahead. The line is open.
Yeah. Hi, it's Johan here. I have once another question on these marine orders coming back to that. As I understood it, you said something about that you do not really see now that will be a prolonged period with very low order level on that side. Then you kind of specified the sort of normalized order intake to be between, well, EUR 180 million and EUR 300 million per quarter or so. That is pretty much, almost, you know, a book-to-build 0.1. How should we look at the revenue development for the marine business?
Is that implying that not only this year, is likely to be flat, but, potentially also next year and then, well, the coming three years, maybe then we will have to wait for more orders? Is that fair assumptions as of today?
Of course, with the order intake, the order intake base that we have today, with the order book that we have on hand and bearing in mind what I just said about the time from order to delivery, it makes us, of course, fairly confident about 2011. I mean, it's too early to talk about 2012.
Yeah. Okay, great. That's, that's it. Thank you.
The next question comes from the line of Tom Skogman from Handelsbanken. Please go ahead with your question.
Yes. Hi, this is Tom Skogman from Handelsbanken. You have moved people from the manufacturing divisions to internal. I just wanna make sure this has not had any impact on the gross margin that seems to be recovering very nice. Given your comments on the future profitability on marine, I guess this signals that the old gross margin roof of 22% will be clearly beaten quite soon. Is this right?
Pekka or Eeva, do you want to comment?
I think most of the people you probably mean that have been moved to common functions are more admin type of people within information management, finance, communications. Their costs would not be part of gross profit, rather operating profit of our segments. As such then to your question on the sort of gross profit potential, I think that obviously the sort of where we are now, we're not necessarily. This is not the sort of end of our own internal targets. As was obvious from what Mikael said, it's obviously a combination of some component prices, pricing generally in the market and then our own internal actions. We haven't specifically guided on that, rather guided on the EBIT level.
Okay. Thank you. On, on the, on the guidance, now your first six months EBIT adjusted for some very small restriction charges is EUR 55 million. In history, as far as I remember, only in 2008, the H1 profits have been bigger than the H2 profits. You're guiding now for EBIT to exceed EUR 100 million. This to me sounds very cautious. What are the key uncertainties that you see for the second half of the year? What could go wrong so you don't clearly beat this guidance?
This I mean, as I said, we will reach the EUR 100 million, but if you don't talk about that, it's not very optimistic. What are the uncertainties? One big uncertainty is actually deliveries of marine projects. There's a huge number of deliveries still in the second half or the second part of December month. If the shipyard doesn't open the LC, we are not going to deliver. That's maybe the biggest single uncertainty. This we will know after the Q3 or around that Q3 we will know how that. Those are the uncertainties. Of course, we have also counted on further improvement on the terminal side.
These are the type of uncertainties that you have here in the prediction.
Then finally, could you elaborate a bit about, you said the quote, number of quotations are up significantly in terminal. Could you open up this box a bit more? What do you really see happening here? Do we really see that big projects in Europe or Asia or in the Americas are coming back soon, or do we have to wait and see as we have done the last 24 months while still you believe? Are there really orders soon to be booked that could boost sales already from the beginning of 2011 in terminal?
I'll turn over to Pekka here.
Yes, that is a correct assumption that you make there. We have seen the increase in number of quotations over the past couple of months, and this indicates that we will be booking some orders already in this year. Of course, all the deliveries, we more or less, they will be next year's deliveries that we are talking about. The improvement in sales will be visible most likely in next year. However, we're saying the terminal side is slow, has been slow when it comes to orders.
You have to remember that we are selling quite a lot of smaller products to terminals like Terminal Tractors and Reachstackers and with these products, we have had very good order intake in this year. The problem really has been in the heavier side, which once again comes from the fact that there's very little of greenfield investment projects going on currently. Now it seems to be time that our customers are taking their old plans from their files and wiping some dust out of them and seeing whether they are viable, and that's where the ordering or quotation activity is coming from.
Okay. Thank you.
Once again, ladies and gentlemen, that's star one to register a question. The next question comes from the line of Sasu Ristimäki from Carnegie. Please go ahead. Your line is open.
Yeah, thanks. Just two clarification. One is still on the marine orders. Can you give us a breakdown now in the Q2, first half? What have you seen in terms of split between merchant vessel-driven orders and offshore-driven? The second question is just to clarify from the presentations slide 13, i.e., the services slide, the bubble says orders received increased by a quarter year-on-year. Can you just clarify what exactly does this refer to in numbers? Thanks.
Eeva, do you wanna start with that?
Yeah, we don't separately re-report order intake within services. It is part of the order intake in our two segments. But we wanted to highlight with this a quarter increase, i.e., 25% increase quarter year-over-year, the fact that the activity in the services has really picked up more than is visible in the sales development of the Q2.
Eeva, do you remember the split between the...
The breakdown of merchant offshore. The majority of marine order book is definitely merchant ships, there, the biggest segment is bulk. When we talk about offshore for us is between 10% and 20% of the order book.
Has there been any change to this kind of, how do you say, order book split in the order intake that you've seen in the 2010 period so far?
The big changes is the a huge increase in bulk ship orders, which I think is a very similar message you get from shipyards, but it also very visible in our marine equipment orders.
Great. Thank you.
You have a follow-up question from the line of Sebastian Hellmann. Please go ahead.
Yes. Thank you. One follow-up question in with regards to the terminal solutions. Do you see also increasing quotes for automation solution in the European or in the US area rather than greenfield activities? In terms of additional businesses, do you still have, well, plans for the scanning devices? How is the situation there? Last but least, in the industrial segment, can you please comment on the development of heavy forklifts? Thank you.
First question relating automation, it's the same picture what I mentioned earlier, that we see more activity in that one. The projects that we are talking about, they are primarily projects that we have known from the past and now some increased activity by our customers in these projects. That keeps us, let's say, fairly busy at this moment with the automation side of it.
Oh, okay.
Second part, scanning, port security, yes, that is still in development phase, the whole business as such. The US regulation that originally was by 2012, all the containers should be scanned at the port of origin. That has been put to a later date now. Now it's now in 2014. I think that was already known a quarter ago. It means that there is more time for us to develop and look into our offering what we do in that area. Truly, we need that time, but so I think needs everyone else 'cause this is a very new business.
I don't think it means too much of a delay in actual business that comes. We are better prepared by then. We are also seeing now different applications for our port security technology. We are seeing some smaller products as well being introduced in that area, which means that we can start to create some sales and cash flow and some profits sooner with the smaller products out of that area.
There are different kind of scanning devices that can be put on board, like for example, pilot boats that patrol the harbor area and scan all the traffic that operates over there or that can be put on vehicle like a car, for example, and that drives around the terminal area and does scanning of the container yards over there.
Okay. Thank you. Maybe one follow-up question with regards to container volumes. We have seen some of the Asian ports already reporting above peak volumes in terms of containers handled. Do you see there, well, a much quicker than expected the recovery of volumes which could lead then also to somewhat earlier spendings from the ports? Thank you.
The current increase is really it's a good increase that we have seen and that seems to be boosting investment. Replacement type of investments, which for us translates into orders for smaller equipment to terminals. The increase which is in sort of a 10% to 15% range represents more or less the same number what was the decline. It still doesn't justify the new investments, new green fields, and that is slowing down than the actual terminal projects business still. We need to see another incremental increase so that we get back on the same growth level of container traffic as we saw in the past before the investments really start to happen.
Okay, thank you. We do not have any further questions from our telephone participants.
Do we have any more questions from the live audience?
Okay. Yeah. Just a quick one on this marine orders that we've been talking about a lot. If I remember correctly, the scene was one published with the value attached to it, but it was like EUR 20 million. Was there any other perhaps not published orders or not disclosed the value of that could, would have been bigger than the EUR 20 million given?
There were a few of the same magnitude, yes. If the customer don't allow us to publish, then they are not published.
Actually, in the report, we have 3x EUR 20 million mentioned.
Okay.
No more questions? If not, I will thank you all and wish you all a good day.