Hi everyone, it seems like most should be on the lines now. Welcome to Kalmar's Q2 Pre-Silent Call. The call will be hosted by our CFO, Sakari Ahdekivi, and there will be a Q&A at the end. So, Sakari.
Thank you, Camilla, and I hope you can hear me well. Welcome to this call. We still have people joining here, so let's slowly get started. I think we will kick off with showing the agenda for today's call. We will recap Q1, where did we leave off at the end of the first quarter, and then we will also review the announced orders and other releases that we have published so far during the second quarter. We will talk a little bit about the current market indicators and what they point us towards when it comes to the current environment and also perhaps a little bit the future environment, and then also recapping on recent comments that we have been making on the market environment relating to the previous point.
Just as a reminder at the end that we have a site visit coming up for analysts and investors on the 17th of September this year in Poland. With that, let's get into recapping Q1. Where did we leave the story at that point? First of all, on the orders front, we saw a second strong quarter. As you remember, Q4 was already strong in terms of orders and clearly stronger than the couple of previous years, quarters before that. We continued on that trend pretty much also in Q1 of 2025, and the year-on-year increase on orders was 20%. Overall, the demand was favorable in the first quarter, pretty much I would say across the board if you consider our divisions, our product areas, our end markets, and also our regions.
I would say almost all of them performed quite well in the first quarter. Of course, then towards the end of the quarter, the uncertainty started to increase, and especially then in the early part of the second quarter with the announcements from the U.S. on tariffs. In Q1, we had a resilient, as we described it, resilient comparable operating profit margin at 12.0%.
We had a strong performance from our service division at 19%, and then we had a fairly reasonable performance from our equipment side, considering that we continued to have a sales decrease in equipment, and we had low sales on the equipment side, clearly lower than what we have seen in some of the earlier quarters, which of course then plays into the margin because you have less margin contribution to cover for your fixed costs, and that was the main reason for slightly lower margin development on the equipment side. We also made an important announcement investing in sustainable innovations. We launched a five-year move to green R&D program, which we are leading, but where the participants are a wide variety of organizations, universities, research centers, and other businesses. More to come from that then as we move forward into the program.
Of course, as I mentioned, the increased level of uncertainties affected by the tariff announcements and the geopolitical tensions started to kick in there towards the end of the first quarter and have, of course, continued until this day. The announced equipment orders, which were booked, which we have said that we booked in the second quarter so far, there are two significant orders, one with 11 hybrid straddle carriers plus Kalmar Insight in France in the port and customer segment. Similarly, also the other orders are within ports. We have 14 hybrid straddle carriers again in France, another significant order, and then four automated straddle carriers to Victoria International Container Terminal in Australia, where the size of the order was described as large.
We have also announced orders beyond this during Q2, but these have been booked earlier, so I won't get into those too much other than to say that they actually represent quite a wide range of our offering, with the first one comprising six reach stackers, three empty container handlers, and six terminal tractors, whereas the second one was about straddle carriers, and the third actually a crane repair project. Very well representing actually almost our complete range of offering. Other releases, importantly during Q2, we have introduced a Kalmar One automation system as a standalone automation solution, and that is clearly signifying the importance of sustainable innovations, not only in electrification, but as well in the automation area.
On our driving excellence side and also supporting our growing services strategic pillar, we announced a relocation and outsourcing of Kalmar's Genuine Parts warehouse from our on-premises in Kansas in connection with our Ottawa plant to Indiana. This is, of course, then moving into a much more modern facility and therefore increasing efficiency and being able to support the growth of the service business in North America. When we talk about the market environment, this is a familiar slide with a few changes from our Q1 release. The global GDP development, of course, is dipping this year. This is known to all, I guess, whereas the global manufacturing and retail output development remains in the 2-3% range. There, of course, on the manufacturing side, the outlook for 2026 is actually only 1.5% before then rebounding to 3%, whereas the retail side is more flat.
Perhaps the most important indicator for Kalmar, which is the global container throughput development, saw temporarily a dip, and we'll show that in the next slide for 2025 into the negative territory, which is very uncommon and happens in fairly exceptional circumstances, but then rebounding to a 2% growth then in the next statistics, which were published then in May. This just shows how quickly the sentiment in the environment can also swing from first negative and then back to more positive. If we look at 2026, there, however, the development has been on a downward trend now for the outlook for a few months. On the running hours of our equipment, they developed or they were globally on a good level in April and May.
The area to perhaps focus on is the U.S., whereas the general demand environment has remained similar to Q1. In the U.S., there is more uncertainty, which is impacting customer decision-making. That's also clear. Elsewhere, I would say that it is similar to first quarter. A few words about the tariff impacts. First, as a reminder, here in this first quarter of 2025, 21% of our Kalmar Group sales came from the U.S. This figure has been coming down and was 26% in 2024. That's the size of the significance of the U.S. market for our company. In terms of the U.S. sales, the largest product category, as you well know, is the terminal tractors, and they are locally produced in our Ottawa, Kansas factory.
If you combine the terminal tractor sales with our service sales, which of course includes both maintenance work, which is performed locally by local people, as well as the spare parts, some of which are imported, then you already account for the vast majority of our U.S. business. Of course, the tariffs have triggered us to also react in terms of price increases. We have, and this is specifically for the U.S., implemented tariff-related price increases of between 5-10% as a result or in reaction to the tariff announcements. Elsewhere, I would say that price increases have been more normal throughout the early part of this year.
As I mentioned already in the beginning, we have a site visit planned for analysts and investors on the 17th of September at our largest factory site, which is Stargard in Poland, and you are welcome to register via the link shown in the presentation, which you can find on our website. I guess with that short introduction, we are open to questions.
Yes, Panu.
Yeah, thank you. I have two questions. First one is on the kind of Q2 order intake. We have seen a few bigger announcements, and I think in Q1 you did not announce much. Can we read something about kind of the order intake in Q2, or is it so that most of these are unannounced anyway?
I think, Panu, you shouldn't read too much into the announcements. As you remember, both in Q4 and in Q1, we reported that we had several larger orders that, on top of the pretty good demand situation, of course, then further boosted the orders. I don't think you should read too much into the individual announcements.
Okay, thanks. Then secondly, on the tariffs, you mentioned the 5-10% price hikes. How have those been received, and do you expect there will be kind of a temporary negative earnings impact before you can mitigate with price hikes?
I would say that, of course, I don't see the price hikes, especially when it comes to the spare parts side, really impacting the demand as such. What is, of course, important to understand is that price hikes are not effective immediately, so there's a little bit of a time lag before they actually come into force. That may have some impact.
Okay, thank you.
Antti.
Yeah, hi. Thanks for taking my questions. I wanted to follow up, Panu, on the price hike theme and just kind of the feedback that you have received from your clients. Do you feel that that's representative of the price hikes that your competitors are doing as well, that the industry prices are going up roughly that amount? You mentioned a little bit kind of the timing of the price increases. In your business, is there kind of a phenomena of clients buying ahead of price increases, kind of like a pre-buying before they take full force?
Maybe I'll answer your second question first. No, we don't see a strong pre-buying behavior in our business. On the first question on competitors, of course, it depends really a lot on where you are producing, who's the competitor, where they are buying their components, how much their input costs are impacted, and how they react to that. I would say that generally, of course, most people are trying to pass on the increased cost impact.
Okay. Maybe a question on kind of your clients, like you mentioned in the U.S., slower decision-making or a bit of hesitancy, and obviously understandable, but any more color on where do you particularly see it in your different client segments, the industrials, distribution, ports, and so forth? Is the uncertainty more that your clients are waiting to see perhaps a level that the tariffs are stabilizing to, or perhaps more caution on their own businesses and the overall economy in the U.S.?
Yeah, I would say it's probably more the latter. It's more where is the economy headed? Do I want to invest now, or shall I wait and see how the economy develops rather than how will the tariffs develop? Because that is such a, how would I say, volatile discussion from day to day that I think it's more the macro uncertainty. Of course, the end user or end customer segments are different because if we consider the ports, the investment cycles are much longer, and the customers don't change course so quickly when they have multi-year investment programs, where it is more visible than the uncertainty is in the distribution segment.
The last one from me is kind of the US clients. Would you say that it's been slower than what the Q1 ended? Like the last part of Q1, I would imagine, was already quite heavily impacted by the overall tariff discussion. Has it kind of intensified during the second quarter?
I would say it's a continuation of what happened towards the end.
Okay. Thank you very much.
You're welcome.
Do we have any more questions? If not, then thank you all for joining today, and we will see you on the 25th of July when we publish our Q2 results. Thank you.
Thank you. Thanks for joining. Have a good day.