Good afternoon, everyone, both here in Helsinki and virtually across the globe. Warmly welcome to Kalmar's Capital Markets Day 2026, and great to have you all here. Over the course of today's program, you will hear our leadership team members presenting our strategy, our targets, and how we are accelerating our growth path and value creation. The central theme today is making every move count. For us, that is far more than a corporate headline. It is about how we, as a global leader, are geared for sustainable and profitable growth. At the same time, it reflects how our industry and customers are driving the entire world forward with enhanced efficiency, safety, and maximum uptime. It also reflects how electric and autonomous solutions translate directly into customer demand and lifetime value. Please note that safety is our top priority.
We ask all of you in the room to follow the venue safety instructions, and virtual attendees to ensure yourself a safe working environment. As always, please pay attention to our disclaimer regarding our forward-looking statements. Before we dive into our first strategic section, a quick word on today's housekeeping. Firstly, on the Q and A structure. We have built in two dedicated sessions. The first will follow our investment case and our market update, and the second will close our strategy update and financial roadmap. A few words about submitting the questions. For those on the webcast, you can type your questions directly into the platform tool at any time during the presentations, and we will queue them up for our Q and A session.
Today, we will cover the following topics you can see here on the agenda, and we will shed some light on further growth and value creation. CMD is all about teamwork. Today, my colleagues are here with us to discuss how we are making every move count and how we will accelerate sustainable and profitable growth. You will be hearing more from them across the sessions today. Every day, our customers keep the world moving. Ports that never sleep, supply chains that feed the economies, operations that cannot stand still, and every move they make carries more pressure than ever to be safer, faster, smarter, more sustainable, and future-ready. That takes more than equipment. It takes long-term partnership across the whole operation. At Kalmar, this is the role we play. To begin our first conversation, I am pleased to welcome our President and CEO, Sami Niiranen, to the stage.
Welcome.
Thank you, Carina.
Happy to be here with you. We were here about, or in another location two years ago. If you compare from today to that, how does it feel?
It feels great. It feels great today. It felt extremely good two years ago, two and a half years ago as well. I am as inspired, excited, passionate, and proud to be here today compared to 2024. Before we get into the further questions, also on my behalf, I would like to wish everybody here in the room, in person, as well as through online, most welcome to our Capital Markets Day 2026 here in Helsinki. Fantastic to have you here together with us.
Okay. Let us start from our, actually, the promise that we have made, our brand promise, making every move count, and also our vision to be the forerunner in sustainable and intelligent heavy material handling solutions. What do these mean for you and in practice?
They are one of my favorites, which I use on a daily basis, at least on a weekly basis in different situations with customers, with our colleagues as well. I think the combination is extremely strong. Making every move count, what it means to me, what it means to Kalmar as a company, is that we are here to create value for all of our stakeholders. Basically, stakeholders like, of course, customers, shareholders, employees, investors, many of you sitting here, analysts, partners, societies as a whole. So that is our brand promise, making every move count. Once we keep it clear in our head every day when we work with our stakeholders, I think then the end result will be good. That combined with our ambitious vision to be the forerunner in intelligent and sustainable heavy material handling, as we put it today.
It was a little bit differently phrased in the previous strategy, so we did not have the intelligence there, and then we specified Equipment and Services. The scope is the same, but now we are even more clear with this heavy material handling there. The key emphasis is on the word of forerunner. We want to be leading this intelligence and sustainability transformation in our industry. We do not want to be sitting in the backseat. We want to be in the front seat. That kind of mindset, forerunner mindset, growth mindset, as we will talk about a lot today, is so important for Kalmar.
Since every move is so important, if you look back, what do you think are the crucial or important achievements that we have made during the past two years?
There are plenty of them, of course, but if I pick something from our foundation, people, customers, financial profile, and so forth, I think we have done a lot with our team, 5,300 passionate Kalmar people everywhere in the world, basically. I think the team engagement, how we have raised to the next level, basically, and as a publicly listed company, of course, earlier we were one business area out of three, of course it requires a lot. I think we have a great base with our people who are our greatest asset, as we always say. Then with customers as well, I think we are much more customer-focused. We are more decentralized as well. We have empowered and will empower our local teams all over the world as well. That is the foundational part.
When it comes to, let us say, a little bit harder KPIs, we have grown. We have grown around 6% since 2024 in a flattish market, as we used to call it two years ago or two and a half years ago. The growth is there, and we have created the base. I think we have established a resilient profitability and a robust cash position as well. That is, of course, a fantastic base for further growth in the company. Then, I would say last but not least, is the service-driven culture, service mindset overall, of course. We are well underway with our mindset to become more like a service-driven company. Okay, we are maybe in the halfway there. I am happy with the progress what we have had so far, but much more to be done in the future.
Actually, that's great. What do we expect going forward on Services?
On Services, yes, I think we have seen a bit of growth in Services as well, 10% since 2023. That's good. Of course, you always wish to grow even more. Profitability has been lagging a little bit, so probably those two areas definitely will be the key. We don't only want growing services, but accelerating the growth of services, and we have fantastic plans and strategies in place for that. Then, of course, bring the profitability to a higher level as well. Now we are even year to date, and this year we are below our last year profitability numbers. So, of course, more to be done there, but also keeping the focus and keeping the focus on our customers. I would like to emphasize that. So, being proactive and predictable.
Before you start talking through the entire strategy here, I think it's good to When we meet with investors, they think that our strategy is good, but they want more clarity on the growth, and I think that's exactly what you are going to be talking about going forward. With that, I would like to hand over the stage to you. Why should one invest in Kalmar?
Super. Thank you, Carina. Okay, to understand Kalmar as an opportunity, you first need to understand where we are today and how we got here. There's a bit of summary of the last two and a half years in our journey. Two years ago, we stood here just before the stock listing, a newly independent company, and with an exciting future in front of us. That differs quite a lot actually from today's CMD. Today, we are an established forerunner in heavy material handling with the track record to show for it. The foundation is in place, and the next chapter is about building on it and accelerating growth. Let me start with a quick reminder of who we are at Kalmar.
We at Kalmar are a business of real scale with an order intake and sales of more than EUR 1.8 billion, showing a sales growth of approximately 6% since 2024. Despite a volatile and challenging market, we have been able to maintain a solid profitability, which is a proof of our resilience. On top of that, ROCE, return on capital employed, is on a very good level at 22.4%, and eco portfolio has reached 45% of sales, meaning that almost half of our revenue is coming from environmentally friendly solutions. As you know, we are also a truly global company with around 5,300 employees, including more than 1,500 service technicians. We have a vast installed base of around 70,000 equipment that demonstrate the real breadth and give us a fantastic growth opportunity in services.
Last but not least, our successful independent journey is also visible in the total shareholder return. This leads to the next slide, which is about our world-class solutions. Here you can see how we are positioned in the market across our core products. We have a strong position in reach stackers, terminal tractors, straddle carriers, and also spreaders. Medium and heavy forklift trucks is definitely a focus area where we intend to grow further. The same applies to automation and electrification, where we see lots of opportunities to grow further. Overall, the addressable market is EUR 9 billion as of today, and our revenue about EUR 1.8 billion, which means that our market share in a simple form is 15%-20%. There is a lot of growth potential to capture in the future.
But we are not only focusing on equipment, but combining them with technologies and services, selling solutions to our customers. That is what we do already as of today. More increasingly in the future. This is how we keep the forerunner position also in the future. As I mentioned, this is delivered through a sales and service network that is truly global. Our global footprint and operating model as such is definitely one of our key strengths. It is based on the principle of global scale and regional and local execution, which means that we want to be located close to our customers. To deliver on this, we have sales in over 120 countries, combined with manufacturing in four countries. The factories, they are located in Poland, U.S., Malaysia, and China, and they are seamlessly supported by our world-class innovation centers in Finland as well as in Sweden.
Our 1,500 + superior service technicians, together with our dealers who brought 29% of the sales last year, demonstrating a strong sales network and proximity to customers regardless of their location, making sure our customers' machines are up and running days and nights. Let us talk about who those customers are. Our customers operate at the business critical points of the supply chain, and here you can see the split of our four main customer segments, including now also the actual sales percentages, which you have not seen before. Earlier we have talked about the addressable market, including light forklift trucks. This is very interesting information. Ports and terminals is our largest sector, which in 2025 consisted more than a half of our revenue. So much more than our earlier indicated addressable market, which is around 35%, including the light forklift trucks.
And in that segment, all kinds of Kalmar equipment can be used. Then we have a distribution segment, which was 19% of the sales, and very much dominated by the North American customers and the terminal tractor business. Heavy logistics is a broad segment, and there is definitely further growth potential in heavy logistics. This was 12% of our sales, and the same applies to manufacturing, which was 7% of our sales last year. Services as such are critical in every segment, which is delivered through spare parts, maintenance, life cycle, and digital solutions. And the service penetration, that is around a third of sales in ports and terminals, around a fifth in distribution and heavy logistics, and half in manufacturing. And automation and electrification will provide us with further service opportunities and stickiness with our customers.
So four diversified segments, a vast installed base to serve, and all moving towards intelligent solutions. That's who we serve. Now let me show you what we have delivered since we last stood here in 2024. Two years ago, we set out a clear strategy, and we have delivered on it. One of our strategic pillars was investing in sustainable innovations. We have been accelerating our R&D through partnerships such as Move2Green program, investing in eco portfolio, which has increased from 37% to 45% of sales, including fully electric equipment being 11% of the Equipment orders. Second has been growing Services and a shift towards a service-driven company. In this area, our share of sales is up 5 percentage points, supported by a growth in technicians from 1,300 to over 1,500, with many of them having a high voltage EV maintenance capability.
There is still a lot more to capture, and that is a clear focus area in the future. And the third area was driving excellence by building a platform for growth with a high focus on sourcing, process development, and operating model. There we have gained EUR 54 million of gross efficiency improvements, and ROCE is on a good level. So a great progress in all areas, but even more to capture in the future. But what I can say is that our house, Kalmar house, is in order, and the foundation is solid. And next you can see that the delivery comes also true in the numbers. We have grown steadily over the cycle with consistent profitability and showed a great resilience during a turbulent and uncertain market in the last two years. In 2024, we said the market would be flattish, with growth returning from 2026 this year.
But as we know, the market growth has delayed a bit. However, we have been able to grow in both Equipment and Services segments since 2024, and at the same time protected the profitability and invested in the future. We have delivered comparable operating profit of EUR 229 million over the last 12 months, corresponding a clear increase against EUR 219 million in 2024. Services profit has increased from EUR 98 million to EUR 104 million, but the margin, as mentioned, has not improved at the same pace. Equipment profit has remained steady at around EUR 150 million, with a margin of slightly below 13%. Additionally, we have grown the installed base and connectivity, increased the service share, and built customer trust. So these all together will give us a fantastic foundation to build further.
So going forward, we will focus even more on specific growth regions and segments, increase service value of total offering, and enhance greater speed in execution with the growth mindset. Which brings me to why we are here today. The next chapter of Kalmar will be about accelerating growth and driving value creation. Investing in sustainable innovations remains unchanged. It is at the core of what we do, including automation, electrification, digitalization, AI-assisted features on our equipment and services. Growing services becomes accelerating services and customer lifetime value, because this is what drives recurring revenue and strengthens customer relations. Driving growth is now a focus of its own. Driving Excellence is still important, but embedded now in a strong foundation that we have. All of this sits on our foundation of customer proximity, talent and culture, an attractive market, and a strong financial profile.
And now, today, we show this as a circle rather than pillars, because it is a loop. Innovation strengthens our services and customer lifetime value, which drives growth, which funds further innovation, and it does not start or stop anywhere, actually. At the center, as you can see, sits our culture and our people, making every move count. This is why we are holding this Capital Markets Day today. The foundations have been set, and the next phase is about the growth. Our refocused strategy enables us to deliver accelerated growth and value creation. By investing in sustainable innovations, we will be the global leader in an attractive market with clear regional growth opportunities. We want to be the long-term partner of choice for our customers, making the industry more electrified, intelligent, and sustainable.
By accelerating our services, we will capture value through data-driven lifetime solutions, and realize upside also from our installed base of 70,000 equipment all around the world. As uptime for customers is increasingly critical, we need to be where they are, leveraging intelligent Insight to anticipate their issues before they occur. This, in turn, will drive growth through a strong financial profile and asset-light global manufacturing footprint, enabling investment in growth and efficiency. This will be supplemented further through targeted M&A. So a refocused strategy built on a solid foundation, enabling accelerated growth and value creation. This results in a clear set of performance targets for 2030. The core elements are the same. However, several of these are upgraded, and they cover three things. First of all, sales growth above 8% a year over the cycle, and Services sales of EUR 800 million.
Secondly, comparable operating profit margin of 16%, ROCE above 25%, and EUR 50 million of cost efficiency improvement by the end of 2030. Finally, enhanced sustainability with an eco portfolio above 50% of the sales. We are committed to achieving this together with the wider sustainability agenda. These are growth targets built on a foundation we have already proven. As always, delivering them comes down to people, where we have a team of about 5,300 passionate employees supporting our customers around the world. The leadership team here in the picture has been carefully selected to drive this business into the next chapter, combining Kalmar experience with fresh outside perspective and diversity. Most importantly, they have a thorough understanding of our customers' needs and what it takes to deliver on them. Let me close this section by bringing it all together.
Kalmar today, 2026, is built on a solid foundation, geared for accelerated growth and value creation. We have a clear customer-centric operating model focused on delivering a premium customer experience with improved performance and safety. We have a track record of consistent profitability and strong financial profile, demonstrating the resilience of this business against the headwinds this market has been facing. We have clear levers for growth, focused on expanding regions, growing services, driving innovation, and delivering targeted M&A. That is the Kalmar investment case, and that is what the rest of today is about. With that, Carina, back to you.
Thank you, Sami. Let's put it very simple. What is really changing in the new strategy?
I think the overall, the growth ambition, of course, we talk about 8% annual growth over the cycle, definitely. If you look at the strategic pillars or the loop today itself, of course, driving growth is a pillar of its own. Then we have broadened the services pillar there to lifetime solutions and customer value creation as well. Also, of course, we have quantified the Services to grow up to EUR 800 million by 2030. Then, of course, on the other KPIs, 16% comparable operating profit target by 2030, eco portfolio above 50% as well. I think those are the main changes there.
They've been done in an era of turbulence, a lot of macroeconomic uncertainty. How well do you think we have handled the headwinds?
You can count my gray hair here, how well we have counted. At least there has been a lot of hard work with the team, and I must say that I'm proud of what we have done in the last couple of years, definitely. With those headwinds and navigating and the stormy waters and so forth, I think we have been doing well overall there, of course. The journey continues. We don't expect that, okay, tomorrow after this Capital Markets Day, it's very predictable, calm world. No. We need to keep navigating, of course. But we have great processes in place, we have great team in place, and the ways of working. I think it has been going well. It's also proven by our resilient profitability, if you look at that parameter, as well as robust cash position.
I think it's a job well done so far, but it's a very dynamic, fluid situation at some point.
The dynamic fluid situation and the market dynamics and the team you talked about, I think it's time to shift towards the industrial landscape. With that, I would like to invite two of our colleagues here to the stage, Tommi Pettersson and Katri Hokkanen, our new CFO. Very welcome to the stage. Thank you very much for joining us, and it's great actually to have you here, Katri, in the Kalmar team. You're a familiar face to many, but those that don't know you, who is Katri Hokkanen?
Thank you, Carina. Very good question. I'm the new CFO of Kalmar, so I have been in the role now for one month. It's been a bit of a hectic journey so far, but it's been my pure pleasure to be here. Prior joining Kalmar, I actually spent my entire working career in a Finnish stock-listed company called Valmet, and there I was a CFO for four and a half years prior coming here.
Okay, but the first impressions about Kalmar, what are they?
Actually, probably the first thing is this customer-centric, very customer-oriented company. That was something that Sami already promised me when we were doing the recruitment process, but it is very visible here. The second thing has been the culture. It has been really easy to come in, and also some similarities to my previous career. For example, when visiting Tampere office, there are lots of engineers who have light in their eyes, and they are super excited about all the things that they can do. Those are probably the two key observations.
Okay, you mentioned Tampere. I think we need to switch to customer needs and our operating environment. Tommi, starting with you, if you look at the operating environment, what do you think are the biggest changes in 2024? You are a Tampere guy, so that is why the logic shift here to Tampere.
Okay. Nice segue to the question. Yeah, the big changes, they are of course a technology shift. That is reality. That is the big change. We talked about the automation, we talked about the electrification, we talked about the digitalization, but it is really accelerating now. If I need to pick one, it is the digitalization and AI related to that, because that is what our customers are now looking on, what it means to their business, and that is where we need to help them.
Yeah. Our customers. Sami, I know you love to meet customers. What do you hear from them when you meet out in the regions?
I would say across the board, in different customer segments, smaller or larger customers, we talk a lot about partnership, collaboration, because nobody can do this journey alone. I think it's on that level basically. Our customers, they are seeking trusted partners like Kalmar, to help them to become more productive and, of course, help them grow accordingly. I think it's a lot about partnership. But then if we think about the a little bit, let's say, harder facts, for instance, of course, reliability, uptime of the equipment, performance, productivity, that sort of discussion points are very visible in the meetings. More increasingly in the last one to two years, I would say the TCO, total cost of ownership. So, who are the ones able to provide the best possible TCO? It's not only about the upfront price that we talk about.
Of course, lead times and pricing is important, but I think TCO, the lifetime value and lifetime savings of the machine are super critical. Service and support, of course. That is always a topic.
Yeah. When we look at the macroeconomic environment, there has been a lot of things changing during the past years. Katri, from your perspective, all the different changes here, how is it affecting the environment?
I think the thing is that we just have to be prepared for it. We have to be a resilient company who can tackle those challenges. But I think for us in Kalmar, it also means that we have to increase the clock speed. We have to be really, really agile.
Being agile, increasing the clock speed, the industrial landscape. I know, Tommi, you have a lot of interesting information to share with us, and how they translate into growth drivers. Please, Tommi, take the stage.
Thank you.
Thank you.
Thank you.
Sami and Katri.
Thank you.
Okay, welcome from my behalf as well. I am Tommi, heading the Strategy, Sustainability, and Technology at Kalmar. I have been with the business since 2014, and I am driving our automation and digitalization initiatives in the past and also currently. My job today is to look ahead and understand where our customers' world is going, and how can we make sure that we get there first. In this industry, it has often led where the others have followed. As you have heard, Kalmar is very much the forerunner in markets which is increasingly relying on digitalization, as I mentioned in the question as well. Over the next 15 minutes, there are three things I would like you to take away. First is that we are operating an increasingly electric and intelligent market, where the uptime and performance of the machines, that is the key.
The second one is that our market is large and it is growing 6% a year, as you heard from Sami. Every external indicator we track is pointing up, so it is a good business foundation for us moving forward. Finally, the growth is across all our segments and in the regions we have clear focus on. We are not depending on one region, one segment only. Sami has already spoken about who we are, so I will go straight to what is shaping our customers' world. Our market is shaped by both global megatrends and industry expectations. In the middle, you can see here our segments, ports and terminals, distribution, manufacturing, and heavy logistics. Our customers, they are affected by megatrends, but also their customer expectations, so they are squeezed from two dimensions.
Uptime and reliability in changing logistic landscape, they are critical in the world of labor shortages and digital revolution. While these challenges grow, customers, they demand productivity, increased safety, ease of doing business with. That is key for them. These pressures, they are actually stronger today than in our last Capital Markets Day. They reward exactly what we do. We do smart, data-driven, reliable solutions which are backed by services close to our customers. How big is the market that these forces are shaping? That was already said by Sami as well, but it is large. We have a EUR 9 billion market that is set to grow around 6% a year towards 2030. Please note, compared to the previous CMD, we do not count the very crowded and low-margin forklift truck market into the addressable market anymore.
That is the difference between these numbers and what we showed you in the last Capital Markets Day. Growth is driven by the cyclical upcycle, electrification, automation, and regional and segment logistic landscape changes. Equipment remains a very attractive market, and we are well-placed to win in that market. Today, many customers service their own diesel machines, or that is done by small local companies. They cannot do the same with high-voltage electric machines or intelligent machines which have a lot of software, a lot of computers in. They need us to do that for them. As the installed base electrifies and gets more intelligence, services will shift to specialists like us. We expect to outgrow the service market as a whole. That gives us headroom. It underpins the targets you will hear later today. What are the near-term indicators we follow?
What are they telling us? Headline is that the market is trending in our favor. Our segments serve different industries, so they run on different cycles as well. We are not dependent on any single one. On top of these indicators, we and many of you follow also the Cass Freight Index. It covers North America and one segment distribution. That is where our terminal tractor business is, so it really matters to us. It has been fairly weak in the recent years, and that is one of the reasons our growth there has been slower than we would been wanting to. On top of the external indicators, we also have more than 19,000 connected machines, which are providing us data every day, every hour, every minute.
So that gives us a great visibility on the customer activity, and we actually see a clear upward trend in the activity as well. That will lead us to more demand in the services, which will then follow increase in the equipment demand. The picture is based on growth across the world and across all the segments, not to bet on one market or one cycle only. With that growth, one part is moving faster than any other, and that is electrification. Electrification, that is the fastest-growing part of our market, and where it has conferred us, we do lead. Here, the numbers are strong. The fully electric market growing to EUR 2.8 billion by 2030, and that is 23% a year. On the right is our position. To be clear, these percentages are our own order intake growth per year.
They are not the growth numbers of the overall market. But in EMEA, with the reachstackers and heavy forklift trucks, we lead. Terminal tractors, we are in a scale-up phase. We launched latest evolution of our terminal tractors, fully electric terminal tractor, around a year ago, and the orders are now up 18% a year. This is where we have the things to improve, but there we see a lot of potential. In straddle carriers and spreaders, where the market has electrified furthest, we are the global leader. Being strongest where the electrification is the most advanced tells you that we know how to do this. Every electric machine we sell, it adds to the installed base that we and very few others can service. But the biggest reason we win is that we bring more than just a machine. We bring intelligence with the machine.
Automation is where we are strongest in the world. It is spreading from ports and terminals into the other segments today, and we see automated container terminal capacity growing around 7% a year, with fully automated capacity growing even faster. Driver behind this is the ones we showed you earlier: labor shortage, productivity needs, and safety. We have led port automation for well over a decade, and that technology is now spreading to distribution, then manufacturing, and in manufacturing, it probably starts with the driver assistance. Intelligence starts with connectivity, and electric machines, they are always connected, which ties customers even more closely to us for the service. When you combine electrification with automation, that is where we become the winners, and we can take our leadership in ports into the every segment we serve.
Now, a lot of you may be wondering that if the market is growing so fast, why us? Why not, for example, the Chinese competitors or other competitors? Let me answer that. Customers choose us because of the cost of running a machine over its life matters more than the initial price of buying the machine. But from the competitive picture, it is more nuanced, it looks from the outside. At our last Capital Markets Day, many competitors, they did not have the full electric offering at all. Now they do, so this is more normal competitive environment. But there are couple of things which set us apart from the competitors. First of all, the global support network, which is close to the customers. Today, we have close to 200 qualified high-voltage service technicians who are ready to serve our customers when they buy the electric machine.
A customer, they can change the oil on a diesel machine, but they can't service a high-voltage system that easily. Secondly, our technical advantage is high uptime, partnerships, for example, with charging providers, and advanced connectivity and analytics of the customer's operation. We have the operator-focused design, which is built around safety and ergonomics. Lastly, the quality. Quality with no compromises, high reliability, high uptime, which ensures that we address the customer and industry expectations of productivity, safety, combined with the ease of doing business with. Simply put, proven Nordic engineering and a lower total cost of ownership. As a reminder, price can win a tender once. Uptime and closeness to the customers, that will win the customer for the life of the fleet and beyond. All of this opens up an attractive market.
Ports and terminals is our core, but the biggest growth opportunities are beyond ports and terminals. On the left is our addressable market by customer segment, and on the right, as a comparison, our own sales. You'll notice that it's remarkably similar as they are, and you can see that we are strong where the market is largest, and manufacturing is the biggest gap we can close and a significant opportunity for us. Let me take through each of the segments, starting with ports and terminals. This market is all about efficiency, getting more volume through the same footprint. Global trade volume keeps increasing, so terminals need more capacity. The capacity expansion needs large investments, so of course, the customers, they want the most first from the footprint and assets they already have.
Uptime is essential, and any equipment failures, it causes congestion, delays, and even reputational damages to our customers. That's why we lead in this sector. The potential for automation and intelligent Insight is high, which is why this is one of the first sectors to run automated fleets. An automated fleet, as you know, it can run 24/7 without any breaks, without the work shift changes, so the output is very reliable and most of all, predictable. Our integrated smart solutions, which are backed by our service, help customers get more out of every square meter, every machine, with maximum uptime and predictability. From the ports, the goods move to inland, into the distribution, which is our next largest sector. Distribution is the link between the manufacturers, retailers, and consumers, and it's all about speed and visibility.
Larger warehouses and distribution centers are being built, and more capacity is in the dense areas. Every move in the distribution must be fast and trackable, so our customers can plan their logistics and have full operational visibility. The megatrends, like driver shortages, make that harder, which is pushing terminal tractor fleets towards electrification and automation, and that's our sweet spot. Our automation solutions and the driverless terminal tractor prototypes we are delivering already today are already getting a very positive response from our customers. Together with the services that keep our operations running, we are a key part of the solution. As a result, it's projected to be our fastest-growing segment, 14.3% a year. Heavy logistics, that's quite different. It's driven by the megatrends and by the investment cycles of our customers are riding.
Our customers, they benefit from investments in renewable energy, wind infrastructure, data centers, mining, defense investments. Much of this work is done by the customers, and it is project-based business. This is likely to be the last segment to be automated. Because every project is different and equipment often has to work in remote, hard-to-reach locations, they cannot take the gamble on the unreliable, cheap equipment. So uptime and reliability, they are critical, as is a robust service network, which Kalmar can provide. Finally, manufacturing. While this is our smallest segment today, we believe it is our biggest opportunity to grow. It is 7% of the sales today, but it is 16% of the market. There are initiatives like Build America, Buy America, tariffs in the U.S., security concerns in Europe, which are key growth drivers for this market. Production is recovering and reshoring, springing capacity closer to home.
Fleet replacement is accelerating, and new fleets need to be connected, electric, with driver assistant features, reliable, smart, providing proven performance. As a result, these customers, they are more likely to outsource to us. If you think about the paper mill, for example, the core process and core business is paper machine and making the paper. Steel plants, they want to make steel. But moving the materials is still essential, so it has to be done, but they turn to us for reliable machines, service contracts, spare parts, and in time, running the fleet itself. Solutions for these segments are where the Equipment and Services, they are nicely integrated, and where we are well-placed to deliver seamless solutions and close the gap. That is how we operate by segment. Now let us look at where we operate by geography.
We do focus on the regions where there is the highest growth potential. The Americas is the largest region with highest growth, so that is where we are. Services are bigger share here, simply because of the installed base of terminal tractors, for example, and the robust dealer network we have in place. Today, much of that fleet is diesel and serviced locally, but as it electrifies, customers will need us and specialist service, and that is where the opportunity is for us. EMEA is the region where we started to sell our electric machines, and we are well-positioned to continue and outgrow the overall market. These are also the regions where our service and spare part delivery network is the strongest, which is a real advantage against newer price-led competitors.
Quickly on APAC, which is obviously still a very large region, but we are not ignoring it, but we are being selective. We focus on the markets that value high technology, like Japan, South Korea, Singapore, Malaysia, Australia, New Zealand. So, we are in the right markets. Staying focused on them is the right strategy for us. So, let me bring all of this together. We are in a large market that is growing ahead of GDP, and the growth is not tied to one cycle. Supporting macro environment is demanding more electric and intelligent solutions, which is where we already lead. That know-how is now spreading into distribution and manufacturing. We win on the life of the machine, not the price of the tender, and that is supported by service close to our customers.
When I joined 2014, Kalmar was already working on the future, and that future is now arriving across all our segments, and we are well-placed to lead it.
Thank you. Thank you, Tommi. I would like to welcome back Sami and Katri on the stage too.
Thank you.
All right. What stands out is that we have a very attractive market that is growing at 6%, and the electrification and the intelligent solutions are really driving the growth. Sami, what do you think is the biggest change in 2024, if you look at how the market has developed?
Yeah. I think Tommi mentioned earlier technology, AI, and so forth. I think that combined with geopolitics and macroeconomics, we cannot ignore that. I think 2024, we were anticipating some kind of uncertainties and turbulence, and we had some crisis, conflicts ongoing already, but I think it has been multiplied during the last couple of years. I think that is a big change. Then on the other hand, if I think a little bit broader and recapping on Tommi's presentation and the four customer and customer segments there, I am also impressed how different industries, ports and terminals, first and foremost, how resilient they have been during these years. I think our customers and the industries, they have been doing well despite quite a lot of uncertainties around.
Yeah. Despite the uncertainty with very resilient customers, the obvious question, I think, in the room and on the lines is about the competitive landscape that you actually touched upon. What has changed in the competitive landscape during the past years?
As I mentioned in the presentation, electrification is there to stay, and we have a lot of competitors who already have electric machines, and I also explained why we lead in that game. The other thing is that there are smaller companies trying to enter the business and the different segments with software-based solutions, with AI, with new technologies. That is what we see. But we are well-placed because we know how to do this. We know how to implement the new technologies in our machines.
In a let's say holistically and in a big picture, if I think about my start two and a half, three years ago or so, there was not huge change. I think the main global players, they are pretty much the same. But of course, what Tommi mentioned about the little bit smaller fully electric machine manufacturer, of course, they are around nowadays.
Where is the competition the toughest?
Everywhere. It is tough everywhere, and we are happy with our competitive landscape or the competitors as well because it keeps us on our toes. Compared to my previous life in another company, for instance, we had a handful of competitors, and now it is, I do not know how many hands I need, but we have plenty of more competitors. They are giving us a good challenge here and there. Of course, if you talk about more into pricing competition, of course, it is the emerging markets and countries like China or the surrounding countries there in Asia.
You mentioned it, the Chinese competition. That is one of the most frequently asked questions in all our different meetings. How do you tackle the Chinese competition?
Chinese or any competition, because of course, we have so many skilled competitors around the world. I think it is about a combination of our people, products, technologies, footprint, and services. I think it is around those five areas. We try to have that in perspective and in our mind when we are offering our solutions. We try to combine our strengths.
Katri, now when you have had a chance to look into the Kalmar industrial landscape, what is your take on it?
The key take is that it is very diversified. We are in different customer industries. There is good potential for equipment growth. Sami, you mentioned that you, did you say love or like competition? I love services, so there is good potential also for the Services business.
I think that is actually a great segue to the first Q and A session. I would actually ask here in the room that you wait for the microphone before you ask the question, that we get the questions also online. In that way, we can open up for any of the questions that you, from this section, that you think that you would like to have shed some more light on. I actually see already one great question while you are kind of raise your hand so we know where to pass the microphone. I already have a great question from online here. How do you see Kalmar in 50 years?
Oh. 50 , you mean?
Yes, 50.
No, but I think we have a successful history going back to 1940, 77 years, if I am not mistaken, today. We continue with the same mindset. We see Kalmar as a forerunner in our industry, in our specified industry. Today, it is intelligent and sustainable heavy material handling. So, definitely, we will keep our position.
We will keep our position. That is Sami's promise. I see here already a couple of hands there. Antti there in the back row. Please go ahead.
Thank you. Antti Kansanen, SEB. A couple of questions from me, and I will start with the Service business regarding high-voltage EV machines. If you think about your clients, what options do they have when you sell EVs in terms of them keeping the warranties? What kind of options they can do on how much services they take from you, take from somebody else, do in-house? Could you maybe talk about that in a bit more in detail? What I am trying to get here is that I am sure that there is a multi-brand EV fleet among your clients' operations, a lot of different technologies. So, can you serve other brands than Kalmar? Can somebody else go in there and serve also your equipment? So, maybe a bit more color on that.
Yeah.
Yeah.
Maybe I will take that first. If you are referring to not only the warranty, but also in general that who can serve. What do you need to do if you have electric machine? You need to understand the electrics, high voltage electrics. Then you need to understand the software and the computers which are in there. It is very hard for anyone else than Kalmar to go and serve the machine, because you need to know what is the software version, what is then the you need to have the high voltage skills and all of that. I would say it is very tough that anyone else would go and service our machines or Kalmar machines.
We will go more into detail into services still in the afternoon here, but anything that you would like to add or?
No, I think if we now maybe don't talk about the EVs particularly, but otherwise, we have service capabilities to, of course, help our customers with the other brand equipment as well. We do it today, but of course, our core focus is on Kalmar equipment, 70,000 machines.
Okay. The second question was on kind of the pricing. You mentioned that a lot of the competitors have brought in their EV capabilities up in the past few years. You talk about kind of the lifetime value and the lifetime cost. So, how much you reckon kind of the initial purchase price is of the lifetime value of your equipment? Have the increased competition brought down the price points that you can sell in the initial tendering phases?
Yeah. If I start with the latter question, of course, two and a half years ago in the CMD 2024, we talked about machine prices, EV prices being up to 2x higher than the diesel machines. We are not there any longer. The price point has come down. Now we say maybe 10%-50% range depending on the equipment type, for instance. That's where we are. Then I think we need to come back to you maybe with more specific lifetime value. What we have seen in different parts of the world where we have been winning EV businesses and combining it with TCO is that we talk about quite high numbers actually in TCO over the lifetime of the machines.
What we have visualized in the past is the percentages, that if you have a diesel machine and now we have an EV operating and based on the current electricity price and so forth, we see up to 20%-30% lower TCO over the next five years of operation. That tells quite a lot as well.
Do you have any kind of price points on what type of a price premiums have you been able to achieve on those tendering phases from the lifetime kind of savings?
Yeah. Let's say we can say maybe the range can vary from 5% to 30% or something like that, I would say.
Thank you.
Thank you.
Thank you. Then we have more questions.
Yeah, thank you. I mean, can you talk about your market position in semi-automated or fully automated terminals compared to manual terminals?
That's a topic that we will come back to later on, but Tommi, do you want to start?
Yeah. Automation in general, as you said, it's semi-automated with the driver assistant features, then there's the fully automated, and then there is process automation offering, which we also have. Each of these, they vary. For example, in the straddle carrier automation, full automation, we are number one. We have close to 100% market share there. So, it varies.
Do you believe you can keep that market share if there's more automation in place in terminals?
Yeah. Let's say what is our ambition, of course. If you look at our portfolio, and we need to look at it holistically, different kind of equipment. There are terminal tractors where automation is coming up as well. Of course, we try to be and aim to be the leader within our portfolio, basically. If you talk about 100% market share, which is a nice number, of course, always you win and lose. But we try to be the forerunners. Forerunner means market leaders. I cannot avoid highlighting one of the references that we have in North America, on the West Coast of U.S., the Long Beach port operations there, where we have 134 fully automated straddle carriers in a nice operation together with our customer. They're making their operations much safer as well as much more productive as well.
All right. We have many questions here in the audience.
Yes, hello. This is Tom Skogman from DNB Carnegie. What is your market forecast for the share of the market that will be electric machines? You earlier said that by 2028, 40% will be. That was a data point from your previous Capital Markets Day.
Yeah. We included the light forklift trucks there in that number. Now we talk about, it will be in the coming slides or in the presentation, but now we talk about around 20% annual growth in electrification. So, from EUR 1 billion to this EUR 2.8 billion, what Tommi showed.
Okay. Can you disclose what you see as your main competitors in electric machines today?
Yeah. I think we can talk broadly about our global competitors. We have Konecranes, Hyster, Taylor, Orange EV, SANY, ZPMC. I think everybody, all our main competitors are focusing on electrification as well.
Is it very similar kind of market shares as in fossil machines, or is it different that the Chinese would have much larger in electric?
No, I think what we talked about already is about the smaller Chinese equipment manufacturers, EV manufacturers, of course, they are there. But what I mentioned is the largest competitors there. But overall, as we aim to be the forerunner, we aim to be the forerunner in electrification as well. You could see some of the percentages that we visualized now, first time actually.
I think maybe to add on that, you have the regional differences, depends on which region you are competing in. Also, the competitors varies a lot there. That's one-
Sure
important element to add.
That was a global number that you showed, right?
Yes.
Yeah. Then finally about your new margin target. Could you kind of build some kind of a bridge? Also I wonder why did you raise the target when you have not reached the 2028 target of 15%? Is it more about Equipment or Service improving? Get some more granularity on this.
Maybe as a teaser that it will be coming from both. We are looking for growth in Equipment as well as in Services. Part of the bridge is also the Driving Excellence, so getting the benefits and efficiency out. I promise that I will come back to it a bit later today.
Okay. Thank you.
2028 is in two years' time, so we are not there yet.
We have time for a couple of more questions. There is one from the line. "I presume that electric demands less service as diesel engine." That's also a topic that we will come back to in the afternoon session. There is one question in the back row there.
Thank you. Panu Laitinmäki, Danske Bank. I have two questions. Firstly, on the terminal tractor market position. You now wrote one to two, it used to be one. Which regions, where has the market share changed and what do you think it is in the U.S. currently?
Yeah. We are the market leader in North American market, that definitely, but we are not the market leader in Europe, so we need to be mindful of that, and therefore we have one to two there.
Okay, thanks. Then the gross margin in electric and diesel products. If you sell the same product in electric or diesel, do you get the same gross margin or is it lower or higher?
I would say pretty much the same. It differs between different product types and it differs between different regions sometimes as well, as we have discussed already. But overall, if we zoom out and then put it on the Kalmar level, pretty much similar margins.
Okay. Thank you.
Okay. Thank you for all the questions. I think there are more questions in line, but we will have an additional Q and A towards the end of the session. By now, I would like to thank you for the Q and A session. It is time to move to our next session. Thank you.
Thank you.
Thank you.
Now we will actually pivot from our operating environment to the operational engine of Kalmar, our divisions, and how we go about enhancing customer lifecycle value. To kick things off, we actually have a quick video from one of our own people, Mette, and what she and our teams are seeing on the ground with our customers.
[Presentation]
[Presentation]
What is great about that video is that it shows how much of a difference our solutions make to our customers and the dependency they put on us to succeed. With over 70,000 machines that you heard and 19,000 of them connected, we still have a lot of potential to untap. To discuss this more in detail and actually also to dive into some of the questions that we already got here, I would like to invite Tamara, Thor, and Arto, our President for the different divisions, to discuss these topics with us. Please welcome. All safely seated? All right. Okay. Before we go into the discussions here, I think it would be great if you could shortly introduce yourselves, and if we start with Thor in the other end.
Sure. Thor Brenden. I am leading the Terminal Tractors division. I have been with Kalmar for three years. I am heading over to counterbalanced from January. Looking forward to continue journey in Kalmar. Prior to Kalmar, I spent 25 years in commercial vehicles with Scania, mainly in services.
Sure.
Tamara de Gruyter. I joined Kalmar exactly two months ago, 1st of September , and I am heading the Services division. I came to Kalmar after an almost 30 years career with another Finnish stock-listed company, Wärtsilä. Also extensive experience in services in Wärtsilä.
Hello. My name is Arto Keskinen. I have been in the company now exactly 14. 5 Years, mainly in service. I am currently heading the Horizontal division, and from January 1st, heading the new Horizontal Transportation and Terminal Tractor division and Automation. That is my background.
All right, interesting. If we will start with the customer first approach, Tamara, as a newcomer, what do you hear from the customers? Why are they choosing Kalmar?
I have been visiting a lot of customers in these two months, and I think one topic comes back all the time, and that is keep the equipment running. So it is uptime.
Uptime. Arto, what are they telling you?
Yeah, of course, the uptime is very, very important. I would also add one thing, that it's the trusted partner. I mean, especially in today's world and especially in the automation segment, I mean, you need a partner who you can trust and who is also there with you and developing things together. I would bring that one up.
Trust, uptime. Thor.
I would continue on the trust topic, because that's the main thing when I talk to customers. They trust our equipment to be reliable. They trust our service organization, our product support organization to support them and keep those machines running for years, keep on moving goods. That's the key thing here. Looking at customers that keep on buying from us year after year, month after month, they keep on coming back. That shows that they trust us.
The trust and the uptime. Tommi was talking here about the market, how it moves forward. Also, we had the video from Mette about the TCO and the importance of that. However, the initial expenditure is higher on the electric equipment. Arto, how do you, when you talk with the customers about that, what are the savings and why are customers going into electric and autonomous?
If we think about electric, for example, of course, there we see that the TCO and the kind of it is more attractive than diesel in certain applications. Of course, that kind of is easy then to translate to money when it comes to customer decisions. From that angle, it's quite straightforward thinking.
A practical example?
Yeah, I think now we have a good example here in front of us to talk about automation and how do we build kind of a value to our customers through that, and how do we innovate together. Here we have our example from Australia, Victoria International Container Terminal, where we actually built an automated terminal around 10 years ago. Of course, been collaborating with them during the years, but lately they had an issue with their operations that they were actually forced to use two straddle carriers to pick twin lift containers. Basically, what we mean by twin lift is that you have two 20 ft containers and you pick them up with one machine. But because in Australia you have a lot of containers which weigh more than 25 tons per piece, and the limit of the machine is 50 tons.
We have a cap there, and then they were forced to use two machines to lift them up, deliver those either to the ASC blocks or to the STS cranes. By collaborating with our customer and really finding the ways to improve their performance, we ended up in a solution where we actually can now have a 60-ton machine, so you can use that one machine only to lift those two boxes. That clearly then immediately improves their operational performance. We talk about 10% improvement, of course, in the pure performance. When you add to that energy consumption, wear and tear of components, I mean, we are talking more than that. That's a great example of how do we jointly deliver the TCO to our customers.
If you plug the service capability into that, what would that mean, Tamara?
I think it's very important to co-create with the customers. I was actually last week in the U.S.A. visiting a big container terminal. I think also there they said almost literally what our brand promise is, every move counts for them. The question they asked me, "What can we do together to make more moves?" Because for them, a move is money. So what can we do in the productivity, both from the design of the equipment, but also on the services, how to keep them running, how to also provide retrofits to make sure that the equipment is more reliable. It's really about co-creating with the customers, and actually that's win-win for both. They make more moves, make more money, we actually get more service revenue.
Making more moves, making more money. Is the dynamic the same, Thor, for example, in the distribution end customer segment? Arto was talking here about an example from the ports.
Yeah, I think the distribution segment, there we move trailers and not containers, but the dynamic is pretty much the same. I think the technology shift will really happen in that segment as well with increased electrification, and then in the years to come, automation, which I think will be the big thing for the distribution segment. That will change that industry over the next decade.
Talk a lot about the shift towards the future, but what about safety now and going forward?
I think safety is very important. I think it's also very important to our customers. If you have a terminal, and it was really nice visiting some of our customers, it is a very busy environment. A lot of things are moving, so it's also easy to have a collision. So one of the customers I visited last week, they really were afraid, or they had even happened some collisions. It's a lot of money that they actually have to spend. It could be personal damage, but also it means some part of the terminal is temporarily out of operation, which is a lot of money for them because the ships come and they have to be unloaded. So there we found a kind of anti-collision system opportunity, and we retrofitted that to all their 270 straddle carriers that were driving around.
So great opportunity for us, customer very happy, and it also gives us a solution that we now can deploy to other customer terminals who have obviously same problems. So safety is important for our customers, and it's also something we can really monetize.
Safety on a terminal tractor.
Yeah, but it's pretty much the same. It's a busy environment that the customers are operating in, and a lot of other vehicles, machines moving. To help just the first level of autonomy or automation is to have enhanced visibility and situational awareness around the machine. That is value to the customers.
We talk about the value for the customers and the importance of uptime, and also about the service capabilities and full kind of solutions of services extending the lifetime. What is the kind of benefit for the customer when you go there with both the machine, but the service?
I think one of the other customers I visited said it very clear. He says, "I bought this cheap machine. It was somewhere in the corner, but there was no one coming to service it. Or they came to service it, and they didn't solve the problem." He says, "Yes, we bought this cheaper machine, but it's somewhere in the corner because it's not usable." I think what really struck me is that customers really need this service capability close to where they operate. They cannot simply wait one day, two day, three days for the equipment to be back up and running. It is important to have this service capability, right quality and right speed, clock speed. That's what Katri said. Very important.
This just shows, we sell production equipment, basically. They are going to use this on a daily basis to produce moves. Downtime is very costly, so just keep the machines running. That is the key here, and we do that.
One thing I want to add, and that is getting more and more important when we talk to customers, is the intelligence. If you can look into the machine and you can see that, "Hey, I need to do some preventive maintenance," and you can inform the customers, you can prevent a breakdown. I think we also really see that the connected machines is giving us information. We combine that with the whole fleet, and basically we can give more recommendations to our customers. In the end, we win as well because we actually see we sell way more parts with customers that have connected machines because they look more at it from a preventative rather than it breaks down and it needs to be fixed now.
I just have to ask you, Arto, since Tamara is talking about longevity here and how much kind of we extend the lifetime of the machine, does not that actually cannibalize an equipment sales?
Yes, it is a good question, but if you think about the cannibalizing, I would say that that is an irrelevant question to Kalmar. Of course, we are offering and we are delivering customer value. If you are able to have a lifetime extension in your offering, it places you in a totally different position when we are then talking about the replacement equipment. Therefore, I see that is a great opportunity for us because then, again, we are the trusted partner who can deliver the customer value.
Trusted partner, and when we are talking about now the shift from diesel to EVs and what the kind of potential is there, also from the questions from the audience about the regional differences, is the appetite different depending on the region? Can you see a difference between the customers?
For electrification?
Electrification.
There are regional differences, but there is also differences within the regions, down to country level. If I talk North America, it is down to different states. So it is different appetite. You have, let us call it pockets, where it is happening, the transition is happening very quickly. Then you have others, they are a little bit more traditional. But as Arto said also before, in more and more segments, the TCO case for electric vehicles is getting better and better as technology and price levels come down. So it makes sense for most segments to electrify over the coming years.
Okay. From an investor perspective, the value creation and the efficiency from a customer point of view is only meaningful if Kalmar can capture a share of that value created. How does that play out actually for Kalmar? Any thoughts around that?
If I add, of course, the kind of value what we can bring to them, and of course, by bringing it back to Kalmar, it is of course from that with this kind of continuation and the co-develop with our customers, it brings us the bigger share of the wallet as well. Of course, with the intelligent kind of solutions, we bring the whole discussion to another level. I mean, then we are having a bigger share. Definitely then on the services side, I mean, there is plenty of things what we can do to make sure that customers get that uptime, and by that, increasing the share of wallet.
I would also say the intimacy, that is actually also bringing business back to us. I was recently visiting a customer in Germany that every morning when he got to the work, 6:30 A.M., he opened our Insight digital tool, looked what is the status of the equipment is. Actually our field service engineer would come at 6:30 A.M. as well, and they would sit together and say, "Hey, what is the problem? Do we need to fix something? Do I need to send a technician? Do you need spare parts?" So, this intimacy is also giving us more spare part sales because we are there with the customer. We are their trusted partner. We are almost part of the same company. We make sure they keep running, and we do that together.
Services is a key value driver also for Kalmar as a company. Since you are already kind of heading in that direction, I think we will let you kind of shed some more light on Services, Tamara. Thank you, Thor and Arto, for now.
Thank you.
Thank you. Thank you, Carina. As already mentioned, I am a new joiner to Wärtsilä, sorry, to Wärtsilä, to Kalmar. I am a long Wärtsilían, but a new Kalmar. After two months, there are two things that really struck me. I think, first of all, how mission critical our equipment is for our customers. For some customers, if our one equipment stops working, their whole operation stops working. So, it is super mission critical. That also gives us a great opportunity to sell our Services business, because being so critical, the customer sees us as a partner, as a trusted partner to work with, and that means we can have value for both sides. So, there is much more to capture.
We have a profitable service business already today, and we actually today capture more from every machine than we did five years ago. If you look on the slides, you can see that half of our service business is parts, and that is the most profitable service line, and that is where we are very strong. Actually, 36% is maintenance. That can be under a contract maintenance, but it can also be on-demand maintenance. 15% is refurbishments and upgrades, and when you look at this mix, that is actually quite typical for our industry, so the shape of the business is right. On the right side, you see the capture rate. To put it simply, what is capture rate? It is actually all the parts that you could sell in the lifetime of an equipment, and then what you actually sold around that.
You see that has stepped up from 24% to 30%, and it has held there already. So, we have a really strong and stable foundation, but again, there is also really a lot of headroom to grow, and especially being a closer partner with our customers. One of the biggest enablers, and I already alluded a bit to in the Q and A, is digital, and that is where we are making really good progress. Digital is already changing the way how we work together with our customers, and the example I gave is one of them. We sit together every morning, we look at the dashboards, and we see what needs to be done. Our first connected machines came around 2017, but today, every machine that leaves the factory has connectivity on it. Our connected fleet has grown from 11,600 in 2022 to 19,000 in this year.
It is up 14% a year, and that will actually continue to grow while actually the fleet renews. We are also very happy that our e-commerce, our spare parts sales, that is going through the digital channel, and that is also up 32%, actually, from 2019. When we talk to our dealers, it is already maybe like 80%, 90%, so dealer interactions are very efficient through the global channel. I think, why is this e-commerce important? Because you could say, "Yes, okay, it maybe reduces your cost to serve," but it does much more. It helps us to upsell. For the customer, there is a lot of AI in the e-commerce, so basically the customer can check, "If I order this part, is it compatible with that specific machine I have?" So, it kind of reduces the risk for the customer to buy the wrong part.
It also gives "I recommend." It recommends the customer based upon what they buy, that actually you should maybe buy these other parts as well. It gives us an opportunity to upsell. You could say, "Upsell and spend more with us." With around 70,000 machines in our installed base, as already said by Sami and also by Tommi, and machines lasting anywhere between 8-15 years, you could say the connected share of our fleet also will keep growing. More machines coming in, more connected fleet. But it brings me to a question that I think has already been asked. What about the fleet when actually we have more electric equipment into the fleet? Actually, I would say electric creates new opportunities for us.
The first thing I maybe want to say is that a lot of people assume that when actually we go electric, that actually the service and the parts are reducing. But we should not forget that around 70% of the spare parts, they are not related to the drivetrain, they are related to the load handling part of the equipment. So, it is the parts that lift and move the load. That is not changing, only the drivetrain is changing. So moving from diesel to electric, 70% of our spare parts business is still the same if you would have a diesel and electric. 30% is different because it is basically then the drivetrain. But customers are less familiar with the high voltage, and Tommi already explained it. There is software, it is not only the electric batteries, but it is software. So it is getting more complicated, and we see that that plays to our strengths.
We can already see that what we call the contract attachment rate, so how many equipment do we sell with a contract, is actually double of that of diesel machines, because customers, they really trust on us to help them with their issue on the electric equipment. So with that foundation in place, what are we doing to accelerate? We have four action to accelerate our service growth. One is design for service in the next generation, making sure that when we design new equipment, we build in the serviceability from the start. That is our biggest lever. It is a little bit more long to medium term, because you have to make your new design, but that is a very important element to make sure that we build it in, we capture it, so that customers have more difficulty going somewhere else.
The second thing, that is a more short-term action, is making sure that we offer in every quote for new equipment also services and parts, like the service contract attachment rate, a parts agreement. There must be something in every sold equipment that is related to the services to capture it. The third thing is really about our digital solutions, our data-driven digital solutions. We call it Insight, where the customer can look into the machines, look at preventive maintenance, do troubleshooting, also digitally order a new technician, and also other solutions that we are developing, like Inspector, where we help the customer do the preventive maintenance according to digital checklists. The fourth thing, and also important, is extending the equipment life cycle. As Thor already said, is this cannibalized? Or sorry, Arto said, cannibalizing? No, it is actually an important part of our business as well.
Not every customer wants or can afford a new machine, so we also have to make sure we provide a second life for it. Refurbishment, but also the upgrades, as I said, the anti-collision upgrade. All these type of upgrades are helping the customer use their equipment longer and bring value to Kalmar. It is about trust and customer intimacy, as we already said. Every action, every co-design, every spare part delivery, every service visit is bringing us closer to the customer. Today, we already deliver a strong offering, EUR 621 million of sales, higher capture rates, and our digital really gaining traction. There is so much more to go. Electrification works on our favor because of the complexity, and we have clear actions towards the EUR 800 million of service growth.
That is how we make every move count for our customers across the whole life cycle of the equipment. Thank you, and back to you, Carina.
Thank you, Tamara. She is really ready to sell services, as you can see. I think it is now, you have got a lot of information here, so I think everybody is ready for a break and to digest everything that we have heard, and to get a cup of coffee. Enjoy your break, and I am just taking a look at the time here. It is 14:30 P.M. in Helsinki, so I would say let us be back at 10 to, so there is a 20-minute coffee break right now. Thank you for listening.
[Break]
Welcome back from the break. I hope you all feel refreshed and ready to continue. We have heard about Kalmar's investment case, industry trend, and market tailwinds, and learned about Kalmar's service potential and our operational strengths.
Now I think it is time to shift focus from today's value creation more to look at tomorrow's growth opportunities, and also take a look at where our next generation equipment are born. Let us tune into a short video with Henrik from our newly opened innovation center in Ljungby, and to see how we are pioneering sustainable material handling solutions for the future.
[Presentation]
Thank you, Henrik. Now I have to welcome, or it's my pleasure actually, to welcome back my panelists here, Tamara, Thor, Arto, and also Tommi, to join the next part of the discussion. All seated, safe and sound. Okay. As Henrik showed us, the pioneering breakthrough technology is the core on how we deliver long-term value to our customers. Now, when we are shifting the focus more towards from the sustainable innovations and the R&D to how we deploy this to our customers across the different markets. Since, Tommi, you were already heading into the future here previously, so, which major shifts do you actually see in the technology having a huge impact on the customer's operations?
Yeah. You see the technology shifts there, which are something we have identified, electrification, automation, digitalization. Also in the slide, you see that the electrification is a normal business already. Automation is accelerating and moving to the other areas. But then the digitalization, if I would need to pick one which is impacting our customers, as I said earlier, it's digitalization combined with AI. When you have the machine data, when we have the machine data, how can we actually utilize that and create the new businesses out of that? Customers are thinking about the same.
Digitalization and AI, actually, Tamara also alluded to that previously. How is that impacting services?
I think when you look at digitalization, you can look at it from two angles. One is what Tommi said, taking the customer data, making sure that we really learn about that AI, what different business model can we help the customer with, and maybe at some point even outcome-based. I think there's another element of digitalization is how to make sure that we get more out of our, you could say, technicians. We actually recently also launched our TechSight. Basically, you could say our field service engineers could prompt troubleshooting, and that also means that we can solve or improve the first time right. That's actually saving us money, it's making the customer happy.
It's both, how to use digitalization for new business models with our customers, for new solutions, and how can we be more effective using it for our own purposes.
Using it for our own purposes, but also for the customer's purposes. We've been talking a lot about horizontal transportation and the automation here. If you combined AI with that, could you give us a glimpse of what that looks from a customer perspective?
Yeah. Of course, it's an area where we see a lot of opportunities with AI. Of course, already today, we have what we call hardware-in-the-loop simulators. We will have software-in-the-loop simulators, which actually then make us the kind of the partner who can do and predict things early enough, and we can co-develop things and faster turn them around to real solutions and functionalities. That brings the kind of technological advantage in that front and making our kind of development speed much faster.
You have practical examples, and Sami already mentioned the L.A. case. Can you walk us through the L.A. a little bit?
Yeah. We have huge operations, or our customers are having huge operations in Los Angeles, where we have 130 + straddle carriers working automatically there days and nights. Of course, in that environment where you have to deliver goods 24/7 basis, you need the reliable system, which also then is scalable. For sure, we have proven that with that many machines. Basically, we deliver automatically from the ship to the truck, everything automatic, and vice versa from truck to the ship, everything automatically. Handling the truck lanes automatically, and then also serving the ship-to-shore cranes. Of course, it's impressive when you see it live. You can see videos as well. Of course, the local news call them dancing robots. It is a really, really nice kind of a reference to us.
Dancing. Arto is having dancing robots here. Thor, what do you have in automation and terminal tractors?
Maybe not dancing robots, and I don't want to dance here, but I can share with you what we're doing in terms of automation. We have. If you look at the distribution centers and the terminal tractor, it makes a lot of sense to automate. The warehouses, the distribution centers, they are highly automated on the inside, and it now makes sense to automate the yard. We have really exciting things in the pipeline. We have prototypes. This is done together with one of our partners. Then we have prototypes running, moving trailers fully autonomously today. It's prototypes, but it's working. We have strong interest from distribution customers, retail players, to start to deploy this at scale in the near future.
You actually mentioned the partnerships here, and now when we are talking about quite big moves, making every move count there. But then if we look at kind of partnerships in the R&D setting, maybe Tommi, what is the role of partnerships here?
Yeah. As we say, and we have a bit more than 3% out of the revenues go to the R&D. That is a lot, but we have to be very focused because we cannot cover every possible area in the technology with 3%, which means that we need to have partners who complement our technology. So we have the core technologies which are important to us, automation, electrification, digitalization, but we have to add there a lot of other things which are then making the solution. There are sensors and computers and all of that. So there we use the partnerships a lot. Then we have, of course, partnerships with the customers, which Arto can talk a bit more about.
Yeah, I think one good example is Kempower. Most of you most probably know that company. So what we have done together with them, we have delivered first megawatt charging system to London Gateway Terminal. Of course, that is one example of that kind of a partnership when you develop and deliver something together. But it is not only that. We are also using their knowledge and, of course, our application knowledge, where we consult our customers that, okay, where do you actually place your chargers to really make it efficient when it comes to the operations? You do not put them in the corner where it is very difficult to access. You put them there where you need them, which is easy from the operational point of view to do the charging. So that is one of the examples how we are using those partnerships.
I think there the digitalization comes in, because from the connected machines, we can see how the equipment is operating across the site. So then you kind of, what you said, you can calculate where should you put the chargers, where is most downtime. Actually, even digital solutions can help our customers. We recently even saw the set of data where a customer says, "We have to think where we are going to strengthen the asphalt, so can we get your data? Because then we can see where most of the driving is being done." So this digital, this connected machine, this data gives us a lot of opportunities to help the customer optimize.
When we talk about total cost of ownership, we actually talked during the break a little bit that it is hard to grasp, but what is kind of the upside from the total cost of ownership? What kind of a discussion is it with the customers when you talk about total cost of ownership?
I think the angles are different, of course, between the customers. But typically, it is, especially in the automation field, it is about the life cycle of that whole terminal. It is definitely something to do with the infrastructure because you have, you know, putting the money to the ground, it is something what they do not want to do. So if you have any ways to avoid that to happen, like we have in our automated system, so the routing is done so that you actually shift it every week so that you actually wear the platforms in an even way. So that gives immediate money back to a customer. So it is many times you think that TCO is only about spare parts and service. It is all around, actually, what we talk when we are, especially in the automation field.
Yeah. Again, the strength that we have is that we have the data. So we can have a discussion with the customers on the TCO thing based on facts. That is the starting point that my experience really leads to the right discussion on what is relevant for that customer in that setting.
Relevant for the customers, when we talk, for example, about North America, how are we able to grow with all these new technologies in an area where we are already a market leader, for example, in the distribution and customer segment?
We can definitely grow further in the distribution segment, and by being, I would say, first to be the forerunner in deploying new technology, we want to secure the position we have, and we can further strengthen it. That's very clear to me.
Are there any other areas of expansion, adjacent equipment, or so forth, anything that you think of growing in this area?
If we think about from the technology perspective, we have technology in automation, electrification, and digitalization connectivity, and those are technologies which we can basically copy and reuse in any type of machines. Good example is automation, which is now spreading to distribution, and then driver assistance features, which are in the manufacturing segment. Whatever there is, we can utilize the new technologies depending on the customer needs.
Yeah, maybe add to that is, of course, our footprint in manufacturing. Of course, those processes, we can also then add more to that and find the synergies.
Yeah. We have been talking about, well, synergies, we have been talking about automation, about dancing robots. Tamara, you mentioned skills here quite early in the discussion. How will, for example, service skills change now when we go to work with these dancing robots?
I think, of course, the service skills have maybe been traditionally, also at our customers, been mechanics who know a lot about diesel. I think that will be continuously evolving to more electric, battery knowledge, electrification knowledge. Most important is digital skills. Whether you use tools ourselves that we have developed to be faster and do first-time right problem-solving, but also how to help our customers with this Insight. I think our skill set, we have to upskill our service and engineers, our technicians, to be more digital and help the customer on their journey.
Upskilling, I just have to ask you, Thor, how are you upskilling yourself with the digital AI and the future world?
I try. I experiment, maybe is the right word, trying to explore the area. I also like to spend time, and I do spend time with my team, to see what can we do across not only AI, but technology in general, to be very near to what is going on and to understand our challenges, but also our opportunities in this field. Reflecting a bit on where do I spend my time on a typical month, all the things that I do, and let us say innovation, probably the area where I spend most time. That includes upskilling myself, but also being on the floor in the prototype shop, seeing what is going on, talking to the guys, what can we do, how can we accelerate things.
You spend your time there. I know, Arto, you have been spending a lot of time now on combining two divisions and the skilling and the R&D. So, any comments from what does that look like and what are we trying to gain?
It actually looks pretty good right now. Of course, from my point of view, we have a lot to gain in that R&D spectrum. Of course, what makes it different is that we are building a team with our future capabilities. Of course, all these technological changes, they give us a chance to be faster and be more efficient when we are doing the R&D. Of course, it is not ready from day one. We need to do some, let us say, upskilling there as well. Definitely, it will be one of those key elements for our future success. I put a lot of effort to that to make sure that it happens.
All right. I think we are approaching the end of the panel. I would like to hear if there is one thing to refer the audience to remember from this panel, and with one word, what would that be? I will go to Tommi first.
I use two words, technology leadership.
Thor?
Strong combination of internal capabilities and customer proximity.
Tamara?
Yeah, it's difficult one word, so I'm again saying digitalization is key.
Well, I need to reference to Katri and say the clock speed. But, of course, our people. I think we have a lot of good people who make it happen.
Thank you. I think they have a hard time calculating to one, but I think thank you very much, and we'll continue with the discussion with the audience here later on in the Q and A. But thank you to the panelists.
Thank you.
Thank you.
All right. To summarize, it is all about intelligent solution and how they directly help our customers to grow and solving the problems and hurdles while we are unlocking higher lifetime value and expanding our recurring service margin. We have heard about industry trends, learned about Kalmar service potential, and our operational strengths and innovation capabilities. Now, with that foundation in place, I think let us turn to the pathway towards 2030 and our strategy. Sami and Katri, please join me on the stage. Okay, Sami, you listened to our colleagues here talking about accelerated growth and from the future solutions. What is the core that we have been building on and established for the two years that really will take us to the next level?
Yeah, that is a good question. Of course, a lot happened in technology and on the technology side, definitely. But I think if I summarize it or simplify it in a way, by using the principle what I like and use quite a lot as well, it is about stability, profitability, and growth. Those three words. Basically, we definitely, we have become a stable company, absolutely. Then we have already talked about resilient profitability, so we have passed that phase as well, and now it is about the growth. I think we have a great foundation, great base for our future growth. Then we have a very good understanding of the market as well.
Becoming a service-driven company has been your kind of tagline for the entire kind of two and a half years here. Why is it so important?
I think if we start from the customer side, of course, services. Our services can really create value for our customers. You have heard many things already from the team here today. When creating value for our customers, of course, hopefully that improves the customer satisfaction on us. When the customers are happier and more satisfied on Kalmar, hopefully there will be the second machine that we can sell as well, and hopefully there will be even more services business as well. So, at the end of the day, it will enable our growth. As we all know, of course, services business, aftermarket business in general, it's a good business to have during the turbulent times, throughout different business cycles as well. Therefore, it gives us our resilience.
Gives us resilience. Katri, when you listen to our colleagues here, what's your takeaway from the panel from a growth perspective?
Probably I'm repeating myself a bit, but it's that we have lots of potential. You can look at it from a customer perspective, you can look at it from people perspective, regional perspective. So there are so many different or even technology leadership perspective. Then I love what I'm hearing about services. So, definitely lots of potential.
We have many people that love services here now. I think it is time to let Sami and Katri talk to our growth plan and the strategy 2030. Please.
Super. Thank you. All right. Let me bring together what you have heard so far today. We operate in an attractive EUR 9 billion market, growing around 6% a year and becoming more electric and more intelligent, which is exactly where we lead. We have built a strong foundation and showed great resilience during the last two years. Our Kalmar house is solid. Now it is about turning that into growth. Let me take you through our growth plan and our journey towards 2030. As I mentioned earlier, our strategy is a loop, and every part of it strengthens the other, with our mission at the center, making every move count, creating value to all of our stakeholders. That is what it means. We have three clear focus areas: investing in sustainable innovations, accelerating services and customer lifetime value, and driving growth.
Innovation makes our machines better performing and more valuable. Services capture that value over the life of every machine. Growth funds the next round of innovation. All of this sits on our foundations, customer proximity, dynamic talent, and a growth-driven culture, attractive market, strong financial profile, and Driving Excellence. What does it mean for Kalmar by 2030 then? Our focus is on accelerating profitable and sustainable growth. There are five growth levers driving this, targeting under-penetrated customer segments and regions, capturing EV and automation growth by taking advantage of those macro trends you have heard about throughout the day. We will deliver more value through our installed base and service network, and this will be bolstered through targeted acquisitions in attractive niches, all of which is underpinned by a simplified operating model to accelerate growth. A richer mix means more recurring revenue and higher margins.
More of every euro of growth comes down to profit. Let me take each of those engines in turn, starting with the Equipment. The Equipment, they have absorbed the downturn, driven mainly by North American distribution end customer segment, and innovation will lead it back to growth. By 2030, three drivers take us back to growth. Firstly, ICE and hybrid. Customers need to replace and expand their fleets, and our next generation range is ready for them. Secondly, automation and EV. A pivotal shift is emerging, and we have expanded and strengthened our automation offering alongside a next-generation EV range. Thirdly, geographical expansion, with the fit-for-market offering for under-penetrated regions and segments, and our eco portfolio grows from 45% today to more than 50% of the sales.
Also, every machine we sell becomes a source of service revenue for years to come, which brings me to Services. Services is our most predictable growth engine, and we are taking it to EUR 800 million by 2030. Service sales has grown 10% from 2023 in a rather difficult market, we can say. That came from a mix of higher parts capture rates and upgrade projects and refurbishments. By 2030, there are three main drivers behind the service growth. Transactional services, meaning spare parts, on-demand and contract maintenance, driven by our large installed base of 70,000 equipment. Data-driven solutions, meaning e-commerce, fleet management, predictive analysis, machine inspections that we have talked about today, which is scalable, recurring, and high-margin business. Upgrade projects and refurbishment, used equipment, rental modernization, and upgrades, extending the life of every machine and capturing its full service potential. That is what it means.
This delivers recurring high-margin revenue from an installed base of 70,000 equipment, and the value we capture from each machine is already rising. You can see here. Every machine we sell is worth more than ever before. Revenue per unit sold is up 56% since 2016, 10 years ago, excluding heavy cranes and Navis businesses that we used to have. There are three things driving that. Growth in service solutions that create value for our customers. More technological sophistication, such as high-voltage EV drivelines and designs built for each application. More intelligence, more automation, AI, connectivity, and driver assistance systems. Our growth does not depend on volume alone. We grow by selling more value with every unit. Where shall we focus that growth then? We are putting our resources in the regions where the growth is.
As mentioned earlier, the Americas is our biggest opportunity, with an addressable market growing at 7.2% from 2025 to 2030. EMEA and Oceania growing at 4.8%. Together, these are our strategic key regions. In Asia, growing at 4.6%, we will retain our market position and capture opportunities as they come in the areas that value technology and quality over price. We have clear choices on where we invest, focused on the regions with the highest service growth potential. We already have the footprint to design, build, and serve them, with the target to build in the regions where we sell, meaning close to our customers. We can grow from a footprint that already exists, which keeps us asset-light. To make it even more efficient, we are also simplifying our operating model. We are simplifying it towards an operating model that enhances growth and customer focus.
Through simplification, we will unify our two Equipment divisions into one, ensuring speed and efficiency of decision-making and execution. We are amplifying our focus on a dedicated service organization, as we want to keep pushing and developing this business, which our customers clearly value. We will continue to enhance our way of working through lean operations and simpler processes. Together, that delivers EUR 10 million of cost savings at the full run rate by the end of 2027. Faster decisions, more focused innovations, closer to the customer, and savings that help fund our growth. That is our growth plan. Equipment to grow, Services up to EUR 800 million, focused on the right regions, and customer segments run by a simpler organization. With that, let me hand over to Katri to shed more light on the numbers.
Thank you, Sami. Our financial framework is built around one clear goal, that is driving sustainable value creation. It actually anchors our 2030 targets pretty well. We are accelerating sales growth to above 8% over the cycle, which means that we are doubling our past momentum, and that is supported by M&A. We are also expanding our comparable operating profit margin to 16%, and at the same time maintain an industry-leading ROCE target of above 25%. We aim to deliver these numbers through three disciplined priorities. First, focused capital allocation towards the highest return opportunities. Second is agile execution with tight margin and pricing discipline in the field. Then the third, which is structural efficiency. We are simplifying our processes, maintaining working capital discipline, and running lean. Let's look at how our two reporting segments, Equipment and Services, drive this execution.
Our growth is backed by two strong, highly complementary engines, Equipment and Services. As you can see from our figures, we already have a healthy baseline across both of these segments. Equipment brings scale and expands our installed base with close to EUR 1.2 billion in sales over the last 12 months and 12.8% comparable operating margin. At the same time, Services acts our higher margin growth accelerator, generating over EUR 600 million with 16.7% margin, with a clear ambition to reach EUR 800 million. Why do we like this combination? Because it creates a self-reinforcing wheel. The equipment we sell today brings in Services revenue up to 15 years. It gives us both growth momentum, but also resilience over the market cycles. Now let's look at how these two engines combine into a clear roadmap to expand our margin to 16%.
We have a clear roadmap to expand our comparable operating margin from today's 12.5% to 16% by the end of 2030. There are three levers behind this target. The first one is related to equipment growth, and this is a volume growth story. Our asset-light manufacturing model gives us high operating leverage. The higher volume combined with the intelligent features and sourcing optimization drops straight to the bottom line. Second is the Services growth, and we capture more parts and service work from our expanding and more intelligent installed base. The higher volume and operational efficiency drive our earnings expansion. Then the third element here is productivity and excellence, and this is overarching for the entire Kalmar. We are streamlining our core customer-centric operating model and keeping SG&A lean. The takeaway here is pretty simple.
This 3.5 percentage point margin bridge is not just based on market tailwinds or hope. It comes from very concrete operational levers that are under our own direct control. Now, let's look at how our Driving Excellence program supports each of these building blocks. For us, efficiency is not just a one-off project. It is a continuous operational mindset to protect and grow our profitability. Over the last two years, our Driving Excellence program has proven its worth. We have expanded comparable operating profit per FTE by 1.8%, and at the same time, we have reduced SG&A cost per FTE by 4.5%. Now, looking ahead, Driving Excellence remains a foundational thing for our strategy. We are targeting a further EUR 50 million in gross efficiency improvements by 2030, and this is driven by sourcing optimization and improvements, process development, and commercial excellence.
We will protect our profitability even in challenging market environment, and we accelerate expansion as the volumes scale. Operational excellence expands our margins, but equally important is how efficiently that profit turns into cash. Our asset-light business model converts profitability into cash well, and this is backed by a very strict working capital discipline. For the last 12 months, our cash flow from operation reached EUR 343 million, delivering an industry-leading cash conversion rate of 121%. Even across varying and more challenging market conditions over the last five years, our conversion has remained above 85%. Let's look at our return on capital employed next. Our ROCE is at top-tier level, and this is driven by our comparable operating profit improvements on one side and our asset-light balance sheet on the other. Our financial target is to have ROCE above 25%.
Now, let's dive into our capital allocation framework and how we put the cash and the capital into work. Our new capital allocation framework provides complete transparency and discipline, and the key change in the framework is that we're uplifting M&A in the new strategy. First, we continue investing for organic growth, and historically, we have been spending approximately 2% in CapEx and approximately 3% in R&D. Second, in the framework, we have shareholder return, and we maintain a dividend payout ratio of 30% - 50% of net income, which can be complemented by possible share buybacks. Last year, we paid out 43% in dividends. Third, we have targeted and disciplined M&A. To support this, we have increased our leverage target to 2.5 x net debt to EBITDA, up from the previous 2x target. Today, we are in a net cash position.
Let's dive straight into our M&A strategy and the criteria we apply. M&A is a growth accelerator for us. It's not a necessity, so we're not just buying growth for scale. We have a clear framework with three focus areas. To start with, reinforcing our core business. For example, accelerating our services business and services growth. Next, adding businesses that are adjacent to our core, and this could mean new complementary equipment with similar technology or key component manufacturing. Lastly, strengthening the offering with new verticals. For example, adding IP, further automation capabilities, or new technology into our portfolio. To qualify, any target must meet four key principles. First, focusing strictly on attractive and growing markets where we already have an edge. Second, of course, targets must support our financial targets. Third, there must be a strategic fit and operational match with our business.
Fourth, supporting our sustainability agenda and also our customers' decarbonization and electrification journey. I also want to manage expectations here today. Building a high-quality pipeline and finding the right targets takes time, and we want to be patient and disciplined. With that, I will hand back to Sami for closing remarks.
Perfect. Thank you, Katri. This brings us to the end of our Capital Markets Day today. Everything we do at Kalmar is focused on making every move count for our customers. We have the equipment and solutions. We have the service support network. Through our solid foundations in people, global footprint, and innovation, we will drive growth into the future and beyond. Thank you.
Thank you, Sami, and thank you, Katri. As Sami said, we are heading towards now we are saying heading in the wrong direction. We are kind of heading towards the end and drawing the formal presentations to a close. Now we are ready for our final Q and A session here also. I would like to invite back all the speakers on the stage here, and then we will be ready to take the questions from the audience, whether you are here live in Helsinki or participating via the webcast platform. Let's see if we
I don't want to
start here from the webcast platform. There is actually one question here. Has listing affected positively on Kalmar? Can you give concrete examples of how and why? Sami.
Yeah, if I start, of course, already in the beginning of presentation, we talked about total shareholder return. That is related to the share price. I think that is one value driver, definitely. We have been, during the first two and a half years journey here, we have been able to create value for our shareholders, definitely. There are multiple examples from the customer side. I think referring back to the automation example from Long Beach in U.S., for instance, you can read from the public article how much safety has improved there, how much productivity has improved there. I think those are a couple of examples, I would say, that are related to our focus on standalone Kalmar.
The transparency around our business. I think there are a lot of investors and also other stakeholders that understands more about Kalmar today than going two and a half years back. There is more transparency around what we are doing. I would maybe take that as a second one. Do we have any questions from the audience? All right, many hands here already.
Thank you. Antti Kansanen, SEB. Two questions from me. First is on the growth targets, and you mentioned here that you are targeting under-penetrated customer segments and geographic areas, but your focus remains on Americas and EMEA, which are kind of the strongholds. Could you maybe point out something where you feel that you are regional in a sense that, for example, the manufacturing, is that a regional business that you now try to expand within these regions, or other concrete examples?
Yeah, two examples are that the terminal tractors in Europe, we have room to grow there, definitely. The other example is counterbalanced machines in U.S., where we have a huge potential to grow. So that's what we mean on getting into the, let's say, covering the white spots.
Okay. The second question is on the margin targets and on the targeted savings. When I am listening you, it feels like in the past strategy period, you had to build some foundations in order to grow, and you have reinvested some of the previous gross savings program back to the business. Maybe a color on what has those reinvestments been? Have they been only on internal capabilities or also product affordability? Should we expect that you will retain more of those gross savings as net savings going forward?
Yeah, that is a good question. Of course, we have talked about investing back to R&D, investing back to services. I think as an example, of course, expanding from 1,300 service technicians up to 1,500 + today. Those are definitely, it is definitely one area where we have invested. R&D, we talked about already, we have different kind of partnerships and so forth. That kind of funding the growth type of mindset will continue even with the new program. I would use the same type of mindset or sentiment for the new program, of course. Of course, we do not know exactly how the market will look like and whether there are uncertainties or unpredictabilities more or less compared to last two years. Of course, some of the efficiency gains we have lost in dilution because of tariffs and so forth as well.
It is a gross program. It is important that we use it as a tool to fund our future growth.
Okay, thank you.
Thank you.
Any further questions from the audience? I think, yeah.
Thanks. Panu Laitinmäki, Danske Bank. Just on the EBIT margin target, how do you think it will look divisionally if you will get to your group target?
Yes, we do have the numbers per division, absolutely, which we are not disclosing here because we report two segments, basically. Equipment, which is a combination of those machine divisions, and then we have the Services. But what we try to achieve up until today and in the future as well, of course, we want to be healthy with our margin each and every division because we are working in a decentralized way already as of today. So of course, every division needs to drive their respective businesses as good as possible.
And maybe just to build on that, both segments are there for the growth, then you get the efficiency out from the machine. So in that sense, profitability improvement is potential for both of these segments.
Okay, thanks. Secondly, on capital allocation, just on the M&A kind of timing, Katri downplayed expectations. So, should we understand that you are now trying to build a pipeline, or do you already have some kind of a wish list of what to execute? Maybe continuing on that, could we expect share buybacks if you don't find anything reasonable?
Yeah. Katri can tackle the share buybacks. If I start with M&A, what we have said so far, we have been quite clear on our organic strategy so far. We have said at the same time that we have maintained our capabilities, and we have kept our eyes open. If I put it in a simple way, now we will develop our capabilities, and we open our ears as well. So, then we have eyes and ears open. So basically, M&A, it's not a quick fix. Definitely not, because we need to build the process, we need to build the resources, even though we have something existing and different kind of phases in the M&A. Of course, must be considered pipeline strategy and so forth. So, that's where we are. Difficult to talk about timing, of course.
Mm-hmm. Maybe then on the share buybacks, that it's one tool in the toolbox, but then something that the Board decides. So, that's good to remember, but it is there.
Okay, thank you.
There is actually, if I take a question from online, it has to do with targets also. Which of the 2030 targets, including ROCE above 25%, rely on acquisitions, and which hold on an organic basis?
I would say that everything starts with the organic growth. That's the main thing, and that's what we have been learning or hearing a lot today. M&A is in addition to that.
Then, of course, ROCE, that's the most important thing, at least for a CFO. So, very, very important thing to watch and make sure that it also improves according to our targets. Anything to add from the team?
No, I think you said it well.
Yeah. I think, Tamara, here is one question regarding the spare parts sales, as it is such a big part of the Service business. How are you planning to increase the spare parts capture rate? The web shop development could increase it to some level, but what other actions are there?
I think it is a very good question, and of course, web shop development is definitely one angle. I think another angle, it is also availability, especially because it is so mission critical. If you have it on the shelf and the customer calls, then of course, it is much easier to sell. If you do not have it, the customer is going to shop around, maybe find it somewhere else. So, it is very much about availability, world-class logistic process, making sure we have a hell of an e-commerce, and then also the design for service in the future, where basically we have more IP on our parts.
Thank you. From the audience here in the room.
Yeah, if I can ask about the design for service. Sorry, it's Timo Heinonen at Handelsbanken. Design for service, where are you at the moment? How much, or how long we have to wait until you have renewed the whole portfolio and we really start to see the higher capture rate?
If I take this one, design for service, that's not a new thing to us. Of course, we have always thought about that. Concrete things we have done during the past two years is that it's strictly in our processes now. We have to do every new design with the design for service in mind. Of course, when we get a new product, then you'll see the impact there.
Yeah, innovation is also an iterative process where we make improvements all the time, and you will gradually see this giving more impact on the equipment.
But if we say that, Epiroc is 100, where is Kalmar at the moment? Is it 10, 20, 30?
Yeah, I don't know if anybody is at 100, but the nice example you are pulling out here. I think we would like to look forward, of course, 80/20, that's our basic principle. Of course, we haven't done everything right in the past. Or maybe we have done right, but okay, there has been a lot of focus on the equipment instead of thinking about the service. Back to your original question about when can we see something, you will see something within this strategy period up until 2030. There are fantastic next-generation portfolios, products in the pipeline for different divisions who these people are representing here.
While we are passing the microphone on here, there is actually, if group sales grow about 8% a year and Services reaches EUR 800 million, do we understand correctly that the sales mix in 2030 would be approximately the same as today, with Services at roughly a third of group sales?
Yeah. One number that we came out is the Services revenue, and that is EUR 800 million. Yes, you can even, of course, calculate from that what it means by using this 8% growth target. Of course, normally, this kind of journey, it's not linear. But that is the 2030 milestone that we have nailed.
All right. Any further questions from the audience?
Yes, this is Tom Skogman. I wonder if there are a lot of service companies that you could buy, or do they service so many different types of products that they are no good targets, basically?
Little bit too early to discuss those. As I said, maintaining our capabilities, keeping eyes open. We need our ears as well, so we will be wiser later on. What I can say, and what we are happy with, of course, now we have the M&A opportunities as part of our toolbox, and then Katri will clarify the focus areas, and services was one of them.
You used to have a big crane or heavy crane business with in ports, and you decided to move out of that. Is it totally out of question to go into that? I guess there must be a lot of synergy since you have such a large share of sales to ports.
What we are doing today, history, back a couple of years back, we divested the heavy cranes. I am very happy with the decision. We are very happy with the decision. I think that is part of our nice profitability resilience up until today. What we are doing with heavy cranes, of course, we are doing the maintenance part a little bit there. Of course, those capabilities we do have. Absolutely too early to talk about any specifics. What I can say is that our portfolio is compact and good to grow further. We are happy with that. I am not looking back to heavy cranes at the moment.
You have a factory in China, so you have a Chinese cost level. But to my understanding, China share of sales is very, very low still. What are the reasons to this? As a part of that, do you think you get fair terms when you buy batteries from China? I mean, you competed very large Chinese companies that also have battery manufacturing themselves, basically.
Well, first on the China factory, it is a factory for exports. So we export to the areas where we need to have the very cost-competitive product, like the Latin Americas and Africa, for example. So that is mainly the reason of the factory. We touched the waters into China to keep in the pulse of the market there as well, but that is not the key focus of the Chinese factory or the Shanghai factory.
Is your price point not competitive at all then in China? I mean, if you have a Chinese cost structure, I just wonder why is that? You have a lot of engineering companies in the Nordics that are very successful locally in China.
Yeah. Let us say probably it has happened already a couple of years ago, but China is not the huge market to us. On the other hand, of course, we announced even one order in Q2, if I remember right. So we pick the orders, of course, where the technology and quality goes beyond the price. But to be frank and honest, it is quite price-competitive market. Of course, we have the EUR 9 billion or a little bit less without China market around us. So we see a lot of opportunities to grow in our stronghold markets.
And the battery question, do you
Yeah. Let's say we use the latest technology batteries. Of course, we are striving towards to have dual capabilities, different kind of suppliers. But we are happy with our latest generations that we are getting from our suppliers. And those are part of the reasons behind quite good progress in EV sales recently as well. So we worked a lot last year, for instance, to develop the whole EV driveline part, not only the batteries, but fitting them for our machines, the whole intelligence, software playing together, hardware, software. And now we can see the results in many machine types that we are winning orders as well. So we have good technology base there.
I understand you have good technology, but the question was really about, I see it as a challenge from the outside that you compete with SANY and BYD, and buying huge amounts of batteries from CATL and other ones. Can you get with your lower volumes in your niche markets, battery prices that are competitive, or what is the reason that you cannot compete in China?
No, but as I said, we have become much more price competitive during, let's say, last nine months or 12 months, of course, because we are getting the latest and price-competitive product as well. So yes, we do. We do have very talented sourcing teams all over the world, of course, and they are talking to different suppliers. And we are confident that we will get those attractive solutions even in the future.
Finally, on terminal tractors, I went to see your factory in Poland. You make terminal tractors for the European market, and there has always been this plan to grab your fair share of the market. What has really been the reason that you have not reached that? You have the product, you have the skills, et cetera, and you have the distribution as well.
Thor, you are good.
I will take that one. We are making good progress now in the European market, if you look forward. We have been upgrading the product offering, which has a key component in this. We are also now coming out with an electric version that is going to be built in Poland. So we are strengthening our product offering in Europe, and with a motivated sales force we have in Europe, I am optimistic about our position for TTs in Europe.
Okay, thank you. Any more questions here?
I got one.
Okay, yeah.
Hi, Mikael , Nordea. Just one question on predictive maintenance. You talk about digitalization, AI, driving that, and of course, that could be quite valuable at the end of the day. I'm just wondering, how do you plan to monetize on that? How do you price that service?
Not sure if I understand your question entirely, because it's not that we take care of the maintenance for the customer as a service. It's basically we work together.
But you are able to help with the predictive maintenance.
Exactly. We help with the predictive maintenance. I think for me, it is already monetizing in itself. If you go more predictive, then you just start fixing things when they happen. Because predictive also means you can see it upfront. You actually invest in more spares, so actually you will monetize it rather than just wait. It is a kind of the customer is paying more to get rid of the risk for downtime, unexpected downtime. So that means you take a bit of buffer, and it means you invest as a customer a bit more to spare parts. So that is why it is more value for us.
Right. There is one in the audience. There is one on the pricing dynamic and the difference between eco and diesel have diminished and competitive dynamic increased. We have also seen gross profit margin coming down 25.5% year to date against 26.6% a year earlier. Savings not reaching profit at the gross level yet. How much of that is attributed to increased competition versus just a weaker market?
Yeah. Okay. If I start. Of course, it has been a weaker market. It has been a lot of uncertainties, extra costs that we talked about, okay, now in Q3 last week, as well as Q2 when it comes to freight, when it comes to steel, electrical components, and oil, fuel, that kind of commodities as well. Then not even to talk about tariffs, of course. That is a pretty different landscape where we are operating at compared to last Capital Markets Day 2024 that we were anticipating to come. So, I think a lot of dilution there. So, no, not related to the competition. As we mentioned during the presentation today as well, so the margins are on a similar level. Then they might differ between different type of products, of course. But unfortunately, there has been a bit of dilution.
On the other hand, our Driving Excellence program has been very crucial. Therefore, we are building now the next program for the next four years as well. It is very important that we have this kind of cost efficiency program in place.
Okay. Let us take one final question here from the audience.
Yeah, thank you. A follow-up question on the spare parts business. I mean, you highlighted that the capture rate is roughly 30%. Is it very different if you look at the drivetrain and then to the lifting side of things, which is, I guess, less impacted by the EV transition?
That is a very good question, but with two months in the company, I have not dug into that, but I am for sure going to do that. No, I honestly have not looked into that level of detail.
Okay. What you said about availability is something to improve on. What does that actually mean? Would it require investments into more localized warehousing from your part, or is it more like the ordering processes?
I think it's a bit of both. It's about the ordering processes. We don't have localized warehouses. We have, you could say, per continent, one centralized warehouse. But then it's very much like, how do we stock the right parts for that market there so it can be there quickly? Because you can imagine if you have to ship something from Europe to U.S., it takes too long for certain customers. So, we have to make sure that our U.S. warehouse is correctly stocked. So, there's also a lot of analytics, and the digital input can help us to stock the right part.
Then maybe last one is on the design to enable the service growth. Is that something that requires, let's say, a bigger product upgrades or new product launches? What should we expect in the coming years, or is it more like a day-to-day evolution on the R&D side?
If I continue, I think it's both. It's both. We have really exciting programs, and we call new next-generation programs coming up. That will be maybe a step change. But also, all the product releases that we do continuously, there are improvements from a service perspective. So, it's both gradual, and then there will be step changes coming forward.
Okay. Thank you for all the great questions. With that, we have come to the end of our Capital Markets Day 2026. Today, you have heard about our growth focus combined with expanding an attractive market opportunity, and how that is driving us towards the 2030 targets. On behalf of the entire Kalmar leadership team, a big thank you to everyone joining us for your time and also the engaging questions. Until we meet again, stay safe.
Thank you.
Thank you.