Good afternoon, and a warm welcome to Konecranes' Capital Markets Day 2026. My name is Ruusa Vallin, and I am the Interim Head of Investor Relations at Konecranes. Before we go into today's agenda, I would like to remind you about the disclaimer. We will be making forward-looking statements in all our presentations today.
Here we have our agenda for today. The presentations will be started by our President and CEO, Marko Tulokas. He is followed by our Business Area Presidents, Fabio Fiorino for Industrial Service and Jussi Rautiainen for Industrial Equipment. After Jussi, we will have a Q&A with the first three presenters. Then we will have a short break and continue with Tomas Myntti, Business Area President, Port Solutions, and the presentations will be concluded by CFO Teo Ottola. Finally, we will have a Q&A session with all the speakers.
It will be possible to ask questions here in the audience in Helsinki and also through the chat function in the webcast. You can already send your questions during the presentations from the webcast chat. With that, I will give the stage to Marko. Go ahead, Marko.
Thank you, Ruusa, and warmly welcome on my behalf also to the Konecranes Capital Market Day and event. I would like to start by elaborating why we actually called in this event. We at Konecranes, we are very confident about our performance as well as the opportunities that we see in the marketplace. That is why we decided to clarify our strategy as well as raise our ambition and our targets, and also answer some of those questions that you might have had for us in the recent quarters. How are we going to explain the strategic narrative today? I will start by explaining why our position is strong in the marketplace and what is the Konecranes legacy. As well as then how do we see the world today and what opportunities we see in it.
Then we move on to the targets and ambitions for the company, and also how we aim to achieve those targets or the strategic focus areas for the company in the years to come. Then I will hand it over to the Business Area Presidents, starting from Fabio, to talk about their actions, the way they see their own business, and how they actually aim to achieve the targets that we have set for the business areas. In the interest of time, we have decided that we will focus on specific examples of those actions in the business areas to give you a little bit deeper flavor with what we are actually doing and what we aim to do in the next coming years. Then we will move on to Teo, who will talk about our financials, our capital allocation principle, as well as then our approach to M&A.
As Ruusa said, we will have two Q&A sessions today. First one right after the industrial presentations, then if you forgot a question, you have a second chance in the end of the presentations when everything else is done. I hope you enjoy the presentations and the discussions today. I am pretty sure that I will, absolutely. Let me start. I will start by discussing where we actually coming from as Konecranes and where we are heading to. This company has a strong foundation, and we have had a consistent evolution for the three decades that the company has been independent and publicly listed. In the first decade of the company, we established a strong operating logic of Konecranes, which is still very much true and fundamental to our success today.
Those principles are the multichannel distribution model, the go-to-market approach that we have chosen, the service life cycle approach, as well as then our investment to leading proprietary technologies or what we call Core of Lifting. Those principles not only very much core to our success, but also something that differentiates us in many ways from our competition today in this market. Then we moved on the second decade to add scalability on top of the foundational principles. By that, what I mean is that in order to scale the company, continue the globalization as well as then the consolidation in this marketplace, it was absolutely necessary to formalize the go-to-market model, modernize the branding of the company, as well as create that scalable process and system architecture.
We did a very large investment into systems in the so-called One Konecranes program that really laid the foundation of consolidating and collecting the operational and asset data in the marketplace. Our continuing investment to leading technology took the shape of connectivity and digitalization. We started connecting our assets and took the steps to starting really digitalizing this fairly physical world that we operate in. Then on top of that, on the third decade, we continued the consolidation and the M&A long track record of Konecranes by the acquisition of Terex MHPS, which is so far the largest acquisition of the company. That really established the leading position, the broadest offering in this industry, as well as then the widest presence in the whole marketplace.
Secondly, that investment into the systems, and collection of all that data allowed us, with that scale, to start leveraging that operational excellence in the so-called Konecranes Way program, which really is one way fundamental also for the good operating, performance that we have today. Building on top of the Konecranes Core of Lifting leading technology, the connectivity and digitalization, and the investments into those scalable processes and systems, we were able to start leveraging that data that we have collected and turning that to the knowledge for ourselves and of course for the benefit of our customers. All of this is very important that on the fourth decade that coincidentally started last year, we can continue to accelerate this industry's transformation to automation, autonomization, and data-driven customer value where we as Konecranes feel that we are very much in a pivotal and core position to do so.
In the end, that is how you really create a true life cycle partnership. In our minds, the key and the permanent and the most important differentiation in this marketplace. Every decade, those three decades that we have been independent, we have doubled the company size. That is roughly 8% CAGR growth for the last 30 some years. That gives us also that additional confidence to set our targets high going forward on the fourth decade. As long as we stay, and we will stay true to our foundational core, we will continue to invest in systems, we will continue to drive transformational technology, as well as reinvent ourselves, then we are absolutely committed and confident to set those new higher targets. Next, I'd like to zoom in to the last five years.
In those last five years, the strength of our model, combined with the structural efficiency actions that we have actually built in the recent years, have produced those known great results and the solid margin improvement that we have seen in the company's performance. That strong position, the improved agility, self-help, and that structural choices creates and lays a foundation for growth going forward. That certainly is secondly very much supported by a very strong balance sheet, which may not necessarily be optimal as a balance sheet structure, but it certainly gives us the ability to maneuver in the marketplace going forward. On the same timeframe, our life cycle approach has created strong shareholder returns.
That consistency and visibility to our future rightfully, of course, needs clear capital allocation principles and transparency and that we have been aiming to answer now with our revised capital allocation policy, which Teo will talk about a bit later today. That concludes my history lesson and looking backwards into the mirror. What I'd like to move on now where we are today and moving on to the present and future of the company. Today, Konecranes is a global leader with clear runway to grow across multiple growth vectors. In Industrial Service, we are clearly the only global player with uniform worldwide offering. We've done the investments, we've collected and we have access to the data. Now it's a question of how we harness that data.
With AI, we are at the brink of that massive opportunity to really leverage that data for growth and for efficiency and particularly in Industrial Service that is well visible. In Industrial Equipment, the portfolio that we have today is clearly leading in the marketplace in terms of breadth and depth. We have leading technology. We have a supply chain that is well-positioned globally, and can comfortably say that we have a market reach that is unparalleled in this marketplace. So we have presence in more than 50 countries with Industrial Equipment and Industrial Service, and we have more than 1,000 partners in 100 or so countries with six very strong household brands in this industry. In Port Solutions, we have clearly the most comprehensive offering. We have leading technology.
We have also very wide presence, and we have a very targeted customer approach to our very large strategic accounts. We are the best alternative. All of our businesses are leading or have a very strong market positions, and our competition is either local, regional, or niche segments typically. That creates and gives us the competitive differentiation opportunity. We have a lot of market runway, as you see, although we are leading in the marketplace, there is a big significant market existing there. There is also significant consolidation room remaining in the marketplace. These upgraded financial targets that we just recently launched, they reflect acceleration and our increased ambitions. Why so? Because we have a strong track record. We have done sustainable improvements to the company's operating model, product portfolio, and our processes as I just a while ago described.
We have mid- and long-term drivers that are solid and good. There are organic growth opportunities on multiple dimensions. There is a consolidation opportunity that exists, and it is not exhausted. Last but really not least, we have a very strong team in Konecranes, from the leadership of Konecranes to the first frontline. Therefore, we are very confident to increase our ambition to net sales growth of 7% and a comparable EBITA margin range of 15%-17% reached by latest for year 2030. Financial targets cannot be decoupled from the sustainability commitments. Our people are the ones that make this plan work, and it is our responsibility here to make a working place for our organization that is safe, fair, and inclusive. We are absolutely committed for the decarbonization and circularity in the world.
We will do our own part, but we also help our customers and the value chain participants to do their part with our offering and our approach in this industry. We run our business in a responsible way, and we expect the same responsible practices throughout the value chain. If you look at now our emission reduction progress and targets, and the benchmark year here is 2019, we have had good progress. So in our own scope one and two emissions, our progress is 54% last year to our target of 60% in 2030. In the Scope three, the value chain emissions, we are now 20% down compared to 2019, and 50% target is what we have for 2030. That is, of course, a little bit of work to be done together with our customers as well as the value chain.
We are committed to do our own part there. What we have now added, we have announced a reduction target of 90% for scope one, two, and three, the whole value chain, by 2050 and are on our way to an incident-free environment, which must be, of course, the ultimate goal for safety. Our target for 2030 is below three total recordable incidents, whereas where we are today at 5.2, and certainly not a number that we can be yet happy with, but we are very determined to improve on. I believe, and we believe, in growth in this business and for Konecranes.
Why is that? First of all, if you look at where we are and the market we play in, the consumption of goods and the related industrial investments, so the nominal CapEx growth or the flow of material, which is, of course, container throughput, is the key indicator.
We have seen 3%-5% growth in the last years, and the expectation is between 3% and 4% growth for underlying market growth in the next coming years. In this industry, we see mega trends, which we believe favor us, and particularly, relatively speaking, whether they are technological developments of automation, autonomization, or the cybersecurity-related security concerns, which are particularly, relatively speaking, favorable for a company like ourselves who has the scale and ability to address those concerns for ourselves, for our value chain, and for our customers. Secondly, it is the geopolitical mega trend and the related nearshoring, which changes the locations of manufacturing investment and consequently, also the flow of materials, hence investment into ports and terminals. The sustainability and electrification trend, which drives electrified equipment and circularity, also the lifecycle approach that Konecranes is very well known and where we have a big commitment on.
There I am happy to also say that in Q2, we launched the last product in Konecranes range with electrified propulsion, and that would be the reach stacker of the lift trucks. So we have a full portfolio that we can cater this electrification trend now. Beyond the mega trends and the underlying market growth, or on top of them, of course, we have a lot of own actions.
First of all, even if we have a large global presence, there is a lot of room to expand our geographical presence, whether it is in the Global South or Global North, grow in segments where we may have not been as active in the past, for example, intermodal terminals, to extend our offering for an extended range of products or new products or new features and fill those remaining gaps that we may have in our product offering today. We can enhance our service and equipment technology capabilities with smart offering, knowledge-based package products for service and Industrial Equipment offering. Of course, our unparalleled and solid operational and customer asset data is something that allows us, with the help of AI, to sell more, to sell faster, and improve our efficiency.
Fabio will shortly elaborate this, how we harness the AI to help us to do this. That was the growth part. Now we are going to move on to the efficiency opportunities that we have in this business and for Konecranes. So the margin improvement opportunity, and first and foremost, of course, it comes from growth. So we see notable operating leverage with growth. Beyond that, or this- Specifically and definitely needed for going forward is focus on organizational agility. Efficiency is important and has been particularly important in the past, but in today's world, an agile organization that is able to learn, adapt, and execute and transform faster is very important. We are really conscious of this and doing our own actions to drive organizational culture, but also the actions to practically improve upon that.
Exploiting our unparalleled data with the help of AI, as I just said, that also helps us in the operational efficiency side, whether for service, which is the obvious example there, but it is also the same for sales processes, project management in our supply chain efficiency, as well as all those back office supporting functions that most companies like ourselves have. We also have a well-functioning supply chain today. It is well set up, relatively speaking, and it serves us well in this sort of a geopolitical environment. We have an opportunity, and we will continue to transform that supply chain so that it actually serves and caters for the changing needs of the markets, which means investment in other areas in terms of additional capacity, and it means increasing the level of automation in other areas, and particularly in the developed markets.
It is also something that we are comfortable to say, that although we have done really well in terms of operational efficiency improvement and margin expansion, we are not efficient enough yet. There is room to improve in terms of capacity utilization, in our manufacturing processes and what manufacturing technologies we use, our delivery performance. We need to be faster also going forward in deliveries, as well as in our process alignment or overhead of the company. We will continue the decentralization approach that we adopted roughly two years ago, almost three years ago. With that, this profitability range of 15%-17% is what we are committed with all of the actions, and notably, of course, with the growth that we are aiming to achieve. For us to achieve those accelerated targets, we are doing the following things.
We focus on four strategic focus areas, or you may say must-win battles in the next years to come. We continue and accelerate our investment into technology. Stepping up the Core of Lifting in terms of intelligence, adding connectivity and digitalization helps us in that way of accelerating our customer path to that automated, autonomous, and decarbonized solutions. It is a critical component in that. When the material handling world moves more towards this sort of integration in terms of automation and autonomy, we play our part in that. That of course means that we have to not only develop our own technology, possibly acquire some of them, but also partner closely with other players in that space. Furthermore, we have talked in the past quite a lot about simplifying our platforms and streamlining those. We are well on our way on that roadmap.
We also must make sure that we strengthen the modularity of our architecture. That is important because we need to be able to cater to many different customer segments that are in different speed when we consider this automation trend. We have a segment that has rudimentary, and significant segments, has rudimentary, very basic lifting needs. We want to be able to cater to all of those segments efficiently, and that requires the modularity of software modularity of physical goods and modularity of the end products. Secondly, our emphasis on lifecycle value generation continues to be a very critical component in our success. We have the data, we know the products, we know the processes, and like I said, this is an investment that we have done over 15 years. I can comfortably say that nobody else has this in the marketplace.
Now, using that data so that we can optimize service, optimize the usage of the products, but also optimize productivity and offer the optimal solution for our customer is something where there is a lot of room to create opportunity and create offering and opportunity that is not known or realized before. In the end, that all serves that purpose of creating trust with customers and differentiating with those lasting customer relations. When we know the customer and when we know the industry and when we know what the customer needs, then of course, our ability to support the customers in their endeavors is the right thing to do, and being there before the customer actually realize that they need us is our aim. Another thing that is a special thing that we have, like I said earlier, is the presence.
Our broad presence in more than 100 countries with 1,000 or so partners is something that helps us to address different needs, different segments in the marketplace, but it also helps us to increase the hit rate of the opportunities. The good thing there is that there are still white spots, countries where we do not have a presence, and where the market is attractive. A very good example of such was the announced MFK acquisition in Japan that we are now working on to close as we speak. We can continue to increase with the distribution channel and the dual channel tools that we have in our place, our density in the north, in the Global North, as well as grow and win the race in Global South.
That is of course held by our ability to segment our offering and use the modularity of our architecture to offer different solutions for the customers. It's also something where our partners are in an important role. We want to empower also our partners to win. That is from allowing them the best equipment or selling them the best equipment in the market space, but also offering them more and more connected solutions with digitalization as well as then in the end also, so that they can offer a lifecycle offering to their customers. We have improved in terms of efficiency, but we are not there yet. For the performance, it is important that we have right people. We support those people, we empower them, but we also make them accountable for that success.
For speed, we need consistency, clarity, and working processes, and that's why driving safe, consistent, and lean ways of working and efficient end-to-end processes are things where I, and we believe that we have a runway to improve upon. Of course, in today's world with the help of AI adoption, that we can use that for creative innovation and efficiency. It's a tool to grow and innovate, but it's a tool also to improve our efficiency, and very much so. Now, as I approach the end of my first session here, I'd like to simplify what we are actually changing with this strategy. We have a healthy business with a solid foundation. We focus on growth in our three existing business areas.
These business areas are performing well, but there is also both organic and inorganic growth room to grow across multiple growth vectors, whether they are organic or inorganic. As a company, we have improved, but we can be significantly better in how we operate, and even more importantly, much faster and more agile. When we focus on our core, we accelerate the growth across those multiple vectors. When we improve our efficiency, we are confident on our model's ability to generate cash. Therefore, we have also clarified our capital allocation principle for more transparency and predictability. There we will talk shortly more about the capital allocation as well as our M&A approach. But before that, I will turn it over to our business areas, and we are going to start with Industrial Service. We have opportunity in all these businesses.
There is solid profitability developing in all three of them, and a significant remaining runway for growth. Fabio, please, it is your turn now, so thank you very much for now.
Well, good afternoon, and welcome to Capital Markets Day on my behalf as well. It is great to be back. I am Fabio Fiorino. I am President of Industrial Service. The theme for today for service will be capturing the full potential of our industry-leading life cycle services. Maybe a short intro to the business or a recap for most of you. We certainly do have a strong position in the marketplace. At the same time, we believe that there is plenty of room to grow. We certainly have the largest and most extensive service network, the only global network as Marko mentioned. We service all types and makes of industrial cranes and hoists. We deliver the next generation of digital services. We also have a diversified agreement base that underpins 75%-85% of the overall service volume, and that provides a lot of resilience to our business as well.
With all that said, we still have significant runway across multiple markets and customer segments. We will dwell into that a little bit as we go on. The long-term growth drivers and trends are certainly supportive for the business. Again, companies seek to improve safety, productivity, sustainability, and of course, that is what we deliver. Outsourcing continues to be another trend. The aging population continues to drive that, and we are certainly there to support our customers as they outsource their services. Digitalization, automation, certainly a big topic. As becomes more prevalent into our customers' operations, they of course need more advanced services, higher skills in maintenance service and so forth. So that again, another positive trend for us. Artificial intelligence creates a lot of opportunities in many areas, and we will talk a little bit about that as we go through the presentation.
Our own industry is also consolidating to some extent, mostly in the front lines in certain areas, and that can create some opportunities for us, particularly in the M&A area as well. As you well know, we have a strong track record of margin expansion. Yes, over the last five years, but also if we go back all the way probably to 2012, start of my tenure, we have been averaging close to 100 basis points of expansion on an annual basis. We are very proud of that, and we believe there is still runway there. Consequently, given the strengths that we have in the marketplace, the attractive growth opportunities, and the strong operational leverage that our business provides, we have updated these targets.
Net sales growth of 7%, as was shown for Business Area Industrial Service, and a comparable EBITA margin of 23%-25% to be reached at the latest the year 2030. How are we going to get there? We certainly have a clear path and ambition to achieve these financial targets. First and foremost, service is a people business, so we are going to continue to take care of our people and, of course, the planet. As was mentioned before, the agreement base underpins a large portion of the business and drives the overall growth of the business. Our focus will continue to be to grow that agreement base. In addition to that, we are going to also focus on growing the installed base.
Not only is that done through Industrial Equipment, new equipment sales, but we could also do that through the service organization, and I will explain that a little bit later as well. We will increase our presence in selected markets as well as other customer segments, and we are going to unleash AI-driven productivity throughout the organization. If we now talk a little bit about the focus area of winning with technology, I think unleashing AI-driven end-to-end productivity falls really well under that theme. We can apply AI and AI assistance throughout the entire end-to-end process, starting with sales and marketing to the back-office operations, the lifecycle management of our customer assets, the field operations, as well as customer insights.
I believe in the last CMD, we gave you some good examples and some of the initiatives that we were working on, and I will have a few examples and updates on those here in a second. We are also investing into the infrastructure and the architecture in the back end that will help us to further develop AI and also improve the overall performance of our systems and capabilities. Here is an example that we are really excited about, how to use our data to drive speed and efficiency in sales. One of the bottlenecks in this end-to-end process is identifying the correct repair part, spare part, and what labor does it take to repair that piece of equipment. As you know, we are dealing with hundreds of thousands of pieces of equipment.
They range from all sorts of brands, all sorts of capacities, applications, some of them going back decades in age. It is not always easy to identify that in an efficient and correct manner. If we can use AI to support that identification, to be able to create the quotations, it certainly unlocks a lot of value and a lot of benefit. We have now able to launch an AI assistant, so you see an example on the screen, for our field, where the technicians will get a recommendation based on the finding that they have of what the part would be. They are able to accept or give a feedback. Also, there will be a recommendation on the repair hours.
Again, we are only able to do this because of all the data that we have been able to collect in our back end over hundreds of thousands of pieces of equipment and all the work that we have done over the years. The data really drives and enables us to do this. The tool can also be used, of course, in our inside sales folks or other sales roles, but it is best to capture it right at the crane when the technician is doing the work. It will increase the speed and accuracy of our quotes. There will be less need for technical support, so there is efficiency savings there. Of course, like many AI tools, we will continuously improve and add different options and models, et cetera. We are really excited about this one.
Another thing we launched not too long ago, you may have seen the press release, I think it was last week. We have added AI assistance to our customer portal, where you can provide insights at the asset level, at the fleet level, or even at their whole relationship level. Again, we have a lot of information, a lot of data that is accessible through our customer portal, whether it is inspection reports, recommendations, maintenance histories, spend, all sorts of things that we can access through our customer portal. It can be a little bit overwhelming. We want to be able to make it easy both for ourselves and for our customers. You can basically go into the portal and ask very open-ended questions like it is showing on the screen. What open issues do I have? What are the recommendations for improvements? Which assets are the most critical?
Which ones are causing the downtime, et cetera. You could imagine anything you could maybe want to ask. If you are feeling lonely, you could have a conversation with your crane. That is an added benefit. This can be used, of course, we just launched it for our customers, but we have been using this internally for a while, making sure we hone it and getting a lot of feedback from our entire population. Again, great tool. If you are a salesperson and you are about to go see a customer, you want to do a business review, you could easily ask the right questions and bring the right recommendations and insights to our customers. Again, very excited about that one. Another great example of winning with technology, as you may know, we have tens of thousands of connected assets.
Well, our ambition would be, why not take that up an order of magnitude, perhaps two orders of magnitude. But in order to do that, we would need an affordable, easy-to-install universal sensor that would work on all types and brands of equipment. Guess what? That's exactly what we're working on. Being able to have a sensor that we can easily install on any type of equipment that can capture what's going on with that equipment will really support the growth of predictive maintenance, of course, which will drive agreement-based growth. There could be initial revenue stream from all these equipment retrofits, perhaps recurring revenues from subscriptions and repairs. It could create an opportunity to develop alternative revenue models now that you have so many connected assets. It really opens up broad scale connectivity, extends the range of features and value-added services.
Again, we're working on this. Hopefully, next year would be a good target to get this out into the market. Very exciting, again. If we switch gears a little bit and go now into the theme of grow lifecycle value, we continue to develop the offering across the entire lifecycle. That's something we do on a continuous basis, but focusing on growing that agreement base. What we've been doing is creating and honing our service programs to be more differentiated, to be able to have programs that target different segments. To simplify, there's this large agreement focus, these large customers with the critical assets, multiple plants, et cetera, which is a fantastic segment for us. But there's also a mass market segment, smaller companies with less assets, maybe the lifting equipment is not as crucial or as critical.
We want to be able to address both segments because there is opportunity for growth in both. I'll talk about that in a little bit and give you a little bit of more flavor and color to that. We also continue to expand our existing agreements. We want to make sure we cover all the assets our customer have, want to make sure we cover all their locations, make sure we provide all the services we have across all their assets and locations. That's another area for growth that we continue to focus on. The other important one is to continue to improve our customer retention, reduce churn, and having these differentiated service programs will also help in that area. I mentioned before, we also want to help ourselves by growing the installed base.
Not only does the installed base grow through new equipment sales, but it could also grow through retrofits and modernizations. As you have seen, we have also been releasing new products, lifting equipment and components, et cetera, that can be used not only in the new equipment side or Industrial Equipment side, they can be used in our retrofits and modernizations. That also will help us to spur those types of services as well. Last but not least, there is the equivalent parts. Those are parts that we sell under our brand for third-party equipment, and we continue to expand that offering. That's another way of capturing the installed base more at the part or component level rather than at the, let's say, the crane or hoist level. As promised, let's talk a little bit about these service programs.
Again, we are creating differentiated or targeted service programs that are tailored to the customer segments. It is important to note that the service program shapes the customer experience, the sales and the service delivery. It kind of drives the end to end depending on the program that you pick, and of course, it also drives the price and the cost. We now have redefined our CONDITION program. It is called Inspection and Maintenance Program. It is really ideal for those that have light lifting equipment or some industrial cranes. Some of the smaller companies, small to medium companies, what I would call, let us say, the mass market. Then for the larger customers, those that have critical production equipment or those that have very large installations, multiple installations, we have our CARE Program and our COMMITMENT Program. Our COMMITMENT Program is for on-site maintenance.
That is where we put our people on site on a permanent basis. It is much more customized or much more integrated approach with our customers, very dedicated on-site personnel. We have worked very closely with our customers and also very closely with the systems and sometimes integrating and being able to send data back and forth with our customers is also an important part of that program. That is really something we target with these large accounts as well. Building on that and maybe helping you visualize what we are talking about. If we look at that CONDITION Program, that really targets this mass market that currently in our agreement base, 54% of the assets kind of qualify in that segment. More than half the assets would qualify in that area.
That CONDITION Program, it is about EUR 4,000 on average per agreement, so that gives you a kind of size of scale. Of course, there are repairs and other things that ensue from that. The renewed CONDITION Program should allow us not only to reduce churn in that customer base, but also to go after that whole segment in a much more effective, cost-effective way and efficient way for us, and that matches the customer needs of that segment. On the flip side, we have the large customer segment, those with critical assets, large installation, again, where the COMMITMENT and CARE Programs come in. Those average around EUR 24,000- EUR 25,000 per agreement. The spin on those is much greater because they are critical equipment, process equipment, a lot more production related type equipment in those.
Not only are we looking to have these more, let us say, tailored programs for that segment that help us to get the share of wallet. There are those customers, as you can see in the bottom, that are only at EUR 10,000 per agreement, but there is no reason why they should be at EUR 26,000 or more. This also allows us to focus on our customer acquisition, with programs that are tailored for these segments. Our goal is to grow this segment by acquiring more and more customers. That is really where, let us say, the large monetary volume lies. At the same time, we did not want to ignore the mass market segment because depending on geographies and locations, that is also important as well. Now let us talk about deepening customer reach, broadening our customer base across channels.
As you well know, Konecranes is the brand that we use for the end user market, both our direct channel, both in Industrial Equipment and Industrial Service. Here we want to expand and develop markets using bolt-on acquisitions. Bolt-on acquisitions really vary in size. They could be a company that has a single location, a dozen technicians or what have you, to a company that covers most of a country or beyond. There are now some opportunities or some bolt-on acquisition opportunities that could be significant, and we would seriously consider those. We could also use M&A to new market entry. The MFK example is of course a good one. There is also the indirect channel, and you see the brands on the screen. We talk about those a lot in Industrial Equipment, but they are also important in Industrial Service.
We do want to support these partners as well, and they are an important part of the business area. Whether it is spare parts, training, digital services, and other ways that we can monetize that relationship through the service side as well. They complement the open markets and also white spots. Here you could see it quite well on the map. If we look at from this geographic perspective, there are probably about 50 or so countries where we have direct and indirect presence, kind of the bright red that you see on the map. There are also countries where we are only present indirect. It is kind of the purple color you see on the map. If you put it all together, you can see we have quite a good coverage. Not only for Industrial Equipment, but also for Industrial Service.
It works for both the indirect and the direct channel. That, we said, I think Marko mentioned 50 direct or so, and you get to about 100 when you add everything in terms of countries. If we go around the world, where are the opportunities? North America continues to provide significant opportunity, just by sheer size, openness, and dynamism of that market. It is certainly an area that we are bullish on. At the same time, Europe continues to provide opportunity throughout. In particular, Southern and Eastern Europe, I would say, have the highest available market share. We are usually stronger in the north, traditionally. Japan, South Korea, again, significant open addressable markets. M&A and indirect channel opportunities as well, again, with the MFK announcement applies there. China is an interesting market. It is a developing service market. It provides some target opportunities in various segments.
Not an easy one per se. The Global South, again, there is a lot of opportunity to lead the development in these markets through the differentiated offering, also the direct channels in certain countries. There is opportunity throughout the world, and then we are pretty confident we can capture it. In summary, the global trends certainly support our growth ambition. There are attractive opportunities for both organic and inorganic growth, as you saw. Certainly, we have a strong operational leverage and continuous improvement culture that will continue to drive profitability. Well, thank you very much, and I will pass the baton to my colleague.
Everyone, and welcome. I'm Jussi. It's been my first year in Konecranes leadership team and my first CMD. I've been working in Konecranes for over 20 years, always in a port side of the business, in different roles, always close to our customers, and of course, going through all the layers of the organization. I can say that I'm born and raised in Konecranes. Standing here today, I'm proud, but also a bit moved to share you our targets and contribution to the strategy. We are the market leader, and if we explain shortly our unique setup, it is to combine the local proximity to the customers and global scale. How we set it up is that service, sales, deliveries, we place as close to the customers as possible.
Then in a supply where we need bit more volumes, we have centralized them into the regional level. Processes and technologies for the maximum scale, we have them globally. Fabio already explained the dual-channel approach we have that is really important for the equipment business as well. The main conclusion we made in the strategy work was that despite being market leader, we have runway to grow in the core business where we are. Where we're coming from, this is the last five years, so I would say the last or previous strategy period, where the focus was clearly on improving the profitability, and we delivered that. There were decisions that intentionally prioritized the profitability and then compromised something on a top line. As we can see from the result, the top line is flat. This slide splits our Industrial Equipment path into three.
It shows how we digested, in a first phase, some of those large acquisitions and improved the profitability mainly by simplifying and also streamlining in technology and supply. What we're doing right now and the period of time ongoing now, I would call a bridge year or bridge years, that the focus is to renew our offering, the flagship products we have, plus add something what Marko referred as a segmented offering. Then we are geared up for the growth itself when the portfolio and offering renewal is completed. Myself, I think it was a very good time for me to join the industrial team at the year of this bridge, while we were working both on a corporate strategy and renewing our BA strategy. That helped us to align them well together. It helped me to gain a lot of insights during the year.
It's also a new phase in the strategy when we have those, I would say, fundamentals in place and the base direction well in place. We are gearing up for growth. We didn't need to turn the strategy upside down. I would rather say that we added some growth flavor, and we sharpened the focus a bit how to really deliver the growth. That is what it was all about. I'm putting a bit more attention now on those new flavors. As I said, it doesn't mean that we abandon what we were doing before. We were exactly doing the right things. We are following this path that was planned before. I purposely put some attention to those new flavors so that you get some novel ideas what comes with the new strategy. This is the target.
We are aiming for 6% annual growth and improving the profitability by 2030 to the range of 10%-12%. The growth helps us also to improve the profitability, and the targets are not conflicting, but well-aligned. How are we going to do it, and what is our contribution to those strategic focus areas that Marko explained? We start with the win with technology. What is our contribution to that? The upper part of the slide tells the foundation which remain unchanged. No any smart or intelligent equipment can be done if you don't have reliable, robust, safe, physical base product. That's a precondition for adding any intelligence to the crane. The added intelligence must be modular so that different customer needs can be tackled without adding the complexity to the technology.
Plus, customer has always choice during the lifetime of the equipment to add the intelligence to the products. That's a foundation that we've been talking before. We're proceeding quite nicely with all the initiatives related to those ones. Then the additional flavor or a sharpened focus is the term, what we call Air advantage. The background of that term is that naturally, as a part of the strategy work, we analyze the wider picture of intralogistics, technology development opportunities there. Based on that, we sharpen the focus to say, Let's utilize the airborne visibility and access to the extent that we haven't done before, or that wasn't before even possible before certain technologies, including AI, came to the pictures. I have a next slide showing examples so that you better understand what I mean by that airborne visibility and access.
But we also concluded that the collaborative crane is another part of that. It's not always crane alone that delivers the ideal material flow, and there's a need to integrate with the material handling equipment that are ground-based or pedestal mounted. In those cases, we believe in collaborative crane. That means we integrate with those technologies. We don't need to do everything by ourselves, but also in corporate level, we can collaborate with the technology providers and customers ideally. The example of this Air advantage. Maybe this sounds in a beginning a bit of a simple thing, but this is where we are today, and this is a one industry example. It's a waste-to-energy plant. It's a picture taken from the crane downwards to the waste bunker. The crab takes the waste to the furnace where we burn that and turn it to energy.
There's always some parts that doesn't belong there. Gas bottles, batteries, bicycles, something that either disturbs the productivity or is even dangerous for the process. So how we utilize the airborne visibility is that the crane can scan the bunker and identify all the objects that doesn't belong there. Whether it's automated or semi-automated or manual, then remove those parts from the process and let the process run smoothly and safely. The next level what is mentioned here, what we're piloting. That's kind of a reality in action today. But what we're piloting now with one of our customers is that we also scan the whole waste at a bunker. With the colors, we saw what are the, we call it here calorific value. I would think heat value would be the better term.
Heat value, so that it constantly picks up waste from the area that keeps the burning process as stable as possible. If the point was just to move waste from place A to B, there would be a lot of ground-based equipment to do that job. But when it is more than that, the Air advantage, the airborne visibility and access gives you an upper hand. This is one industry. But then there are other applications for the other industries where the same Air advantage can be utilized. Whether it is about the scanning, whether it is about the detecting, whether it is about supporting the people or washing, assembling. I think only the imagination is the limit with the new technologies put together with that what we call Air advantage. Then moving to the grow lifecycle value. Okay, the same structure. The foundation is there.
The foundation will be there.
We have a full portfolio of lifecycle offering, and we have the customer proximity, and we have the equipment connectivity. That is the base, the foundation that will remain there. But what we add on here, where we put more focus, is the integrated industry partnering. It sounds obvious that when you have an application like in a previous slide, the waste to energy example, you have to be close to the customers. You really need to know the process, what is meaningful, what the customer needs to improve their process, what can we do to help them improve the process. That requires kind of a dimension that is very well covered in a port serving one single industry. But in Industrial Equipment side is a bit more fragmented, but it is not less important. We need to work with the clear industry dimension in our operations.
Operating model must reflect that. But then bit of a kind of a new angle or something combined to the Air advantage is what we call anchor product. I use this shipyard as an example to explain you the anchor product. I started my career selling these large Goliath gantry cranes to the shipyards. That was my first job. That is a product that is most critical for the production of the shipyard. If it is down, the whole shipyard will be soon down. If you see what is the lifting capacity of that Goliath, it tells you pretty much the outcome of that or output of that shipyard, how productive they are. So it is definitely the most critical product of the shipyard. That is what we call anchor product. The anchor product, the benefits of that if you have the anchor product there.
First, it really integrates you not only to the individual customer but to the community that is built around the industry. Second is that it is a great tool for co-innovation with the customers. We often use the Goliath for testing something, and when we made it work there, we scale it for the more standard and more kind of a volume products. The third one is, of course, that ideally you can increase the share of the wallet when you have the critical product with the service agreement, the opportunity to sell more. All those 200 cranes that large scale shipyard is having is an at least improved opportunity. This is very much linked to the previous win with technology and Air advantage. Not to confuse you with the strategy.
These things are related to the segment of our business that are what we used to call process cranes, delivering industry-specific applications. The largest portion of our volume is coming, what we call standard equipment that are delivered cross-industries. The services also cross industries. Even the volume, and as the volume is there on a standard side, the industry-specific solutions, because of this anchor product thinking, all the benefits of that is not less important. Even volume wise, it is not comparable to the standard side of our business. AI, we had that example. Fabio also thought about it. That is important part of the same package. Deepened customer reach. We have, like said, built our success on this dual channel approach and also the regional supply.
Regionally centralized supply is also a unique setup that helps us to deliver faster to the customers, but it is also a resilience issue.
That in the turbulence of geopolitics, we are there where we need to be without limitations. What we do here, and as a part of the strategy analysis, it was obvious that we have been very successful in our strongholds in the Western markets. But we have not yet delivered our full potential in Global South. Marko mentioned the Global South already, Fabio mentioned that, but that is the area where we see competition that is intensifying very rapidly. We see new competitors arising, and we must sharpen our focus to win the Global South. We have, like said, we have the dual channel approach. We have the supply, meaning that we can do things fast, we can do things without massive investments.
The main building block we are missing is the segmented offering, and that is one of those bridge year topics that we are going to deliver so that we can cover and really deliver the full potential of Global South. We recognize that there are some areas where we have difficulties to either access or to grow the business with the speed we want to do, and then we use targeted acquisitions to make that happen. The Japan MFK was a prime example of that. Summarizing the presentation and our contribution to the strategy. When we utilize Air advantage, meaning airborne visibility and access, we combine that with deep industry knowledge and the latest technology available. We create something that I would call air superiority, and that is for the industry-specific applications. Then extend the market reach, leveraging our dual channel approach will be critical, especially on a standard side.
Then, like said, the unique setup we have, combining this local customer proximity together with the global volumes. That is not only a unique concept, but it is going to be winning concept when we make it totally seamless. Thank you.
First Q&A. In this Q&A, let's focus on the first three presentations. As a reminder, through the webcast chat, you can ask questions. We can start from the questions from here in the audience in Helsinki. Please raise your hand if you have a question, and my colleague Jutta will bring the microphone. Please, Antti.
Thank you. Antti Kansanen, SEB. A couple of questions to Fabio, actually. If we start with the service growth opportunity and think about it from profitability perspective, if you look at your main regions, obviously U.S. or Americas and EMEA are the biggest ones. Is there a big discrepancy in terms of, let's say, profitable growth opportunities or structural profitability differences between them? If you think about where you want to grow, how much is that of importance?
I don't know if it's a significant difference. Certainly, the North American markets are more dynamic and things you could do there. You could operate faster in doing changes and other things. Working hours are longer and things like that, so they kind of help a little bit the profitability, but it's not a huge difference. The other difference you will see as you head to maybe the Global South or you're looking into the East is the labor rates, right? The labor rates are not the same as you head into these other areas. So the number of euros that you get per hour are obviously less. So when you talk about gaining an agreement with X hours in, let's say, the West, it's obviously much higher than you would if you're in the Global South or what have you.
That would be probably one of the main differences. Material pricing is not that much different, but there are some regional differences. I don't know if I hopefully answered your question, Antti.
Yeah. That is good. Then, if you think about bolt-on acquisitions—
—whether it be a private equity or a family-owned business, how do you integrate and how will that impact your profitability? Are these guys running at the similar type of margins as you guys, or when you take it over, will you reorganize how the business is done? How much you need to do to step them up to your level?
The main thing that we are looking for when we are looking for a bolt-on is really the customer base, and the technicians are very important. Of course, key personnel, right? We want to make sure that we look for the best of the best when integrating. But really, it is a true bolt-on by definition. We bring these companies onto our model and onto our platform. We have already quite efficient end-to-end process, infrastructure, business model, ways of working. So really, we can easily onboard the customers and the technicians and utilize our backbone and infrastructure. Meaning we can pretty much remove most of the fixed costs, and that is where the synergy lies, as well as improve usually the productivity of the operations. That is—
Maybe I can add.
—the theory of the-
A little bit. It is obvious, your question was that they do not come at the same margin levels. Then I guess it is fair to say that most likely will not. It takes, as Fabio described, we have a very rigorous model. We made the investments to all the system architecture and data. That helps also to integrate them quickly, but it certainly takes some time to reach the same levels. Of course, first in terms of the operational efficiency or the back-office processes, the overhead removing part is the easier part. But then when you start replacing the installed base of those targets or competitors' assets with our assets, which eventually will also some proprietary parts, that takes of course, more time. It is a gradual step-by-step approach. But with our model, we are confident that it makes sense.
It is certainly something that we have to take a very careful look at case by case when we assess the value of those companies, the potential synergies that we would attract.
Yeah.
That is also one reason why the range of the service profitability is what it is. Because if you would take within this timeframe, one larger such an acquisition which may be possible, then of course, that may have a dilutive impact during that time frames.
We model those very carefully when we look at the acquisitions. But certainly, if you look at a standalone, it doesn't have the profitability that we do. But once you put in the synergies and you remove these overheads as well as target the operational efficiencies, then you get it to the level that we are. But it takes time, as Marko said. It doesn't happen
In service, it happens fastest, but it still takes time.
Back to your original question, depending where you are, you can move quicker than other places.
Okay. Then last one from me is coming back to the growth target, 7% for services. Obviously recent year it hasn't grown at that clip. So what do you think is the main challenge or what is holding back growth right now? Not maybe just from a cyclical perspective now, but looking at the next strategy period, which would be the main challenge or where you really need to succeed in?
Yeah, we have focused over time more on the profitability and service, of course. There are the cyclical issues of the last year and a half or whatever you want to call it. But we have also taken that time to really invest in this segmented offering that I'm talking about, differentiating our programs. It's not only about the offering and how you define it's really how it drives the whole end-to-end process.
The end-to-end cost and efficiency of how you deliver these services, in order to be able to match both the offering and the cost to the customer segment. That has taken us time to develop that and also drive that segmentation and full understanding, how do we apply this? We've been also piloting different things. So now we're at a stage that we're ready to go full speed with that, where we have, I think, a good model for the large customers that works well with them, that we can bring our top resources and advanced services and everything else that we can bear to those folks. But also have a model that's, let's say, leaner and more efficient to address the other markets. So we're now ready to really accelerate that.
The other part of the growth, I think we're a little more, let's say, oriented and focused on the M&A side. That's another piece, of course, that we can certainly accelerate. But looking for more organic than inorganic, but certainly that inorganic piece will be accelerated as well.
Maybe a follow-up on where we are right now. Looking at the leading indicators, they're pointing up, but it feels that it's a very much a story of two different sides, that you have this defense, AI data center, electrification driven stuff that is growing at a very rapid pace, then a long list of industries which are kind of still, I don't know, struggling, but at a low growth. If you look at your clients in your service installed base, is there a big discrepancy on, and is that kind of holding back growth a little bit because it obviously takes time before you convert those new growers into the service base?
Well, for sure. First of all, if you look at the telematics data, the telemetry data, as Marko mentioned, there is lesser utilization of equipment. Capacity utilization hasn't really crept up that much, not in Europe nor in Americas. There are some key industries for us, like automotive, as everybody knows, especially in this continent that's struggling. There are others. It is maybe a tale of two cities from that perspective. The good thing is that we are diversified. We can deploy our resources quickly from where the business is at. That mix doesn't change overnight, right? As the hot industries ramp up and they first start with adding capital and new equipment, it does provide some modernization opportunity as well, and other things as well for the service side, but it's not at the same speed than the capital investment.
There is a little bit of that, for sure. The mix is different from when it's new equipment, it's a new investment, so the mix changes faster than it does in service. Hopefully that answers that.
Yeah. Thank you, Antti. Any more questions from the audience? Yes, Jussi.
Hi, this is Jussi Mikkonen from OP. Antti here mentioned AI, so I would be interested to know what sort of tangible benefits from AI do you see today, and is there anything visible in your financial statements today?
And maybe if we start from you, Fabio, and Jussi and Marko can complement then.
Yeah. Today it is hard to pinpoint a monetary value, but you could certainly see the benefit in speed and efficiency in certain areas, like the examples that I put there. We have been doing predictive maintenance for a while, and we see monetary value for sure. We track how much volume we get from predictive maintenance on a daily to monthly basis. So there are some real tangible ones. There are others, like we just launched this customer insights on the portal. That will take time to see how efficient our salespeople can be, how much does that help to improve the customer experience, which translates then into satisfaction and retention. So there are some things that will take time as customers adopt it and these things get rolled out.
But you could certainly see at the individual level, at the unit level, we have launched other tools for our technicians, for example, for doing troubleshooting and to be able to get information for what they are working on and things like that. You could see that productivity improvement, and I think it is the same thing over the years. We have done a lot of continuous improvement activities, and they are pieces of the puzzle, and they start to add up, and they start to build momentum. And I think those are the reasons why we continue to be able to expand the margin. And as these get rolled out and they get more and more adopted and part of the mainstream, it will continue to build and support that momentum. They will just take over from the previous activities.
Yeah, just to maybe slightly. I know you said that Jussi first, but I got to comment that because it is exactly like Fabio said. If your question was also that where is it visible? It is also both top line as well as in the efficiency and in the margin. That is where we see the efficiency, and we do see that efficiency, and it is measurable. But it is not that easy always to distinguish, like Fabio said, that what really comes from the use of AI and what is otherwise related to our process efficiency improvement access. But I would like to say that it is visible and it is tangible, but we are also not ready to disclose that figures.
Sure. Understood.
If I can continue. So pretty similar answer, but the quickest wins, what we have seen is, of course, internal processes where you can make it more efficient. The second part that is now a lot of focus is that how about in sales, how we can create more decentralized systems where the salespeople, even customers, are more independent to do the process. For example, AI configurator, whether our salesperson uses that or a customer uses that, so that how it can be done scalable way in the regions and close to the customers. Then the third pillar that is probably always the most difficult one is that the physical AI. How do we get that into the products?
How we make the products more productive, but also able to do things that they were not able to do before beyond lifting what was the example of this waste to energy. But that is usually taking longest time to do that physical AI.
Thank you. Really interesting. Maybe a quick follow-up here. Do you think AI makes you more competitive since all your competitors are adopting the same tools as well?
Maybe I will start it, and then the other guys can complement. First of all, my answer is yes. While others are and may be doing it, first of all, I remind that of course our competitive landscape is quite scattered. They may not have always the same resources that we have. Most importantly, what Fabio also said, it has taken us 15 years to collect all that installed base data that is at the tip of fingers of all of our technicians. That required first that large investment into the system architecture that is harmonized and uniform across the planet, and putting all that data there. That is the source and that is the foundation for utilizing or harnessing that use of data. It is not that difficult to develop those AI tools in the end.
If you do not have that access, and we would dare to claim that no one else has that. That is the thing that makes us comfortable that we have a bit of an edge there, and not only a bit.
No, I think it is well said. The foundation is the data. You could apply AI to anything and get garbage. So where the foundation is the data, the quality of the data, the whole ecosystem that we have developed and talked about for the past decade or more. You need that strong foundation to be able to apply these tools, otherwise you are applying them on air, basically. Anybody can get AI out of the box, but it is the application, I think, that matters.
Yeah.
Sure. Understood. You mentioned winning Global South a few times, so I would be interested to hear how price sensitive are those customers in the Global South? If I mention Chinese competition, how does the market look like in Global South? How price sensitive are the customers and what are your competitive advantages there?
And maybe if Jussi, start this one.
Yes.
We mentioned the segmented offering, and that does not definitely mean that we would go head to head with the price only. So the same competitive advantages, including lifecycle care and everything are there. But we recognize that their needs are different, and to a certain extent, even standards of the cranes are different. And while building this segmented offering, we need to close some of the gap in price and get closer to that. But that is not the main point in the development of winning the Global South. Thank you.
Thank you. That is all from me. Please.
Thank you. I will still take one question from the chat for this session. So the question here is that how would you split the growth target for the group into organic and acquired growth? Is there a similar split for all the divisions?
No, it is of course a question of timing and when you can realize the different opportunities, but I would say that it is likely more organic than it is inorganic, but it is certainly more inorganic than it would be in the last five years. That is, of course, the plan and the intentions. There is not, of course, that much difference between the BAs. All of them have opportunities existing.
Yes. Thank you very much. This will conclude our first Q&A session.
We will continue later on with a Q&A with all the presenters, so there is still an opportunity to ask more questions from all the presenters. We will now take a break, so we will take a 15-minute break. So let us come back then. Trying to find the clock. Let us come back 4:10 P.M. Helsinki time. So thank you very much.
[Break]
26. Now before we continue, I will again remind you about the disclaimer, as we will be making forward-looking statements. Now we will continue with Tomas Myntti from Port Solutions, and then finally CFO Teo Ottola will conclude the presentations, and we will have another Q&A with all the presenters. Tomas, the stage is yours.
Welcome back from the break, and to the exciting world of Port Solutions. My name is Tomas Myntti, and I'm the President of the Business Area. The theme for us in this presentation is Position to Capture Growth. To start off, let's recap of what Port Solutions is about and what it is that we do. We are the western leader in cargo handling, and with the widest and deepest offering in container handling. What we mean by that, if you look at the customer operation in a seaport, ship comes to the quay, containers need to be unloaded. We have the cranes, the equipment to do that. It's the mobile harbor cranes, it's the ship-to-shore cranes. After that, the containers are transported horizontally across the apron. Again, we have different equipment to do that. We have AGVs, Straddle Carriers, Sprinter Carriers, Reach stackers.
At the yard, the container yard, then we manage the stacks again with different equipment, straddle carriers, RTGs, rubber-tired gantry cranes, automatic stacking cranes, and again, empty container handlers and reach stackers. Then in the end, at the land side, the containers are transported over to the next mode of transportation, be that train or truck or something else. There we have the rail-mounted gantry cranes and again, the reach stackers. In addition to the container handling, we also offer bulk handling solutions and also general cargo. Not to forget, we also have a range of heavy forklifts for industrial use. Those are the equipment. In addition, then we offer layers of automation and software to handle the traffic and tying it all together and then bringing the lifecycle value to our customers.
We have the port services, who then offers inspections, maintenance, spare parts, modernizations, and consultation across the offering that we have. With the sales at EUR 1.5 billion in 2025, and the market position depending on the product line between first and second and sometimes third, and with that market size that you saw already Marko talk about, we do see a lot of runway for growth for us also here in our basic business. Now, if you look at the past performance, it's been very strong in the last five years and posing a 10%+ CAGR growth, which is of course quite significant. You see a big jump already from 2022 to 2023, and then we kept that level and kept growing. But in addition to that, we've also year-on-year had a very good profitability growth.
That is thanks to strong sales execution. Also, we have invested a lot in project excellence and operational excellence overall, which has paid off in these kind of numbers. How did we do the growth? Where did it come from? Where do we see the growth coming from also going forward? The mega trends that Marko mentioned are all valid for Port Solutions as well. In addition to that, there are a couple of trends that particularly also work in our favor and are specific to the ports business. The underlying growth comes from the expected annual growth of the container throughput through the globe. In addition to that, we see there is a small number of global terminal operators that operate about 75% of all container traffic in the world. They keep consolidating, so there is a lot of consolidation happening in our customer base.
All of these big players are our customers and have been for a long time. In addition to that also, you can see, or should I say, the geopolitical trends are very, very present in the port's world, where we see it and changing material flows going from more globalized world to regionalized and also local material flows developing. What that means is that there will be investments around the world in new terminals, smaller, bigger, and larger. That is where also our wide offering comes into play. So depending on what concept the customer is using to handle the terminals, the different level of equipment are needed, and that is where our offering is valid. What that means for us, that way we look for the continued growth, is in already strong market position that we have in our core business, we still see more growth in there.
So all those equipment and services that I showed, those will continue to grow. In addition, we see a boost for our service business. So all the offerings that Fabio talked about are also valid for us. The market is slightly different that when we talk about the market, we talk about the addressable and non-addressable market. Quite a lot of the service and daily maintenance is still done by our customers themselves. So the so-called closed market from our point of view. We see that there is a trend, though, that more and more of that is also outsourced. So there is room to grow. When it comes to geographic and segment expansion, as we have seen, we are well established around the world, but there are white spots. So there are still areas in the world where we can increase our presence.
When we talk about the segment expansion, there is in particular the inland and intermodal terminals that present a very good Our market share is not so high there that there is room to grow. We already said a year and a half ago in the CMD that we want to strengthen our market position in large cranes. Large cranes, well, they are all large cranes, but very large cranes. So meaning ship-to-shore cranes and large rail-mounted gantry cranes. We have been and are investing a lot both in productization and especially in the supply chain for us to be very efficient and able to deliver these cranes in different parts of the world. That market is still one of our strong targets for growth and continues to be a focus area.
In addition to that, there's also the mobile equipment portfolio, which is lift trucks and mobile harbor cranes to some extent, where also we've concluded all our product lines have now electrified solutions as well. We're building, continuing to develop our go-to-market strategy, both with our direct sales, but also to a very strong partner network that we have. All these together represent several different possible paths for us to grow. Hence, when I click, we go to the next slide. We are then very confident in saying that our target for the next five years is also CAGR growth of 7% on sales, and a profitability bracket of 9%-12% on the EBITA margin, to be reached no later than the year 2030. We've increased the upper range of the profitability target.
We still left the lower end at 9%, which it was before as well. The reason for that is that we expect the growth to come, the mix to change in the products. With larger cranes, with larger steel structures, the margin will be smaller, initially at least. Also some of the investments that we are making in growth may have a short-term impact also on the profitability up front. But we are very confident on raising the target on the upper limit. Now then going into the strategic focus areas, I'll ask you to take a good look at the picture in the background and remember it because I'm going to refer to it on my next slide. I'll give you a few seconds. [inaudible]
When we go to the strategic focus areas and the win with technology, what five areas we are focusing in particular on a business area level, which are relevant for all our business units? The first one is power technologies and electrification, where there's a strong trend. All our customers around the globe are looking for ways to reduce emission. Of course we are there to support in this trend as well. The picture you saw on the previous slide was two fully electric mobile harbor cranes, which were inaugurated last week. The picture was from last week. These were inaugurated in Katoen Natie's terminal in Antwerp. Those are two out of six totally that they have invested in. The fully electric offering was a major decision point for them.
They are very leading the edge, whole Katoen Natie company is leading edge in sustainability, and it's a very important driver for them in their whole business model. Those two cranes, fully electric, came with TRUCONNECT Remote Monitoring, and also a long-term, multi-year full service agreement. It's also that aspect that I want to bring up. But that's an example of how we win with technology. Automation is another trend that is continuing, and we have still a big part of the market is manual, but the automation is winning ground. There are several levels of automation. There is smart features, there's operator-assisted technology, there is remote operating, and there is fully automated solutions. That, again, developing those across the BUs and across our product lines is a focus area for us.
Now, Fabio and Jussi both talked about AI and the connectivity Internet of Things, which the same trend is very relevant for us. For Port, in addition to that or connected with that is the topic of cybersecurity, which is a concern for many of our customers. Those really go hand in hand. We spend a lot of time and money on developing our cybersecure solutions, both from the group level, on the ways of working and the processes and really doing security by design, and developing that into all our product lines, both on the product level, of course, and process level. That is very, very important to remember. Core of Lifting, together with Industrial Equipment, brings us benefits of scale, also from the heart of the lifting operation, if you like. This is what we say when we say a widest and deepest offering.
The widest comes from the range, the deepest comes from the technology that goes deep into how the equipment work, both mechanically and software-wise. Very important then is the product compliance. We have emerging directives and regulations coming both from EU and around the world, which Machinery Directive, Cybersecurity Act, and so on, which we make sure that we apply to or align to and comply with in all our business lines. Then when we go to the next slide, which is grow lifecycle value. We very much want to talk about the performance-driven lifecycle value for our customers. It is the same strength in the lifecycle value creation in both the equipment development, how we create a more sustainable and more maintainable equipment and more efficient as well, to the whole exactly same lifecycle that Fabio talked about and that we have in Industrial Service.
When it comes to the combination of service and equipment and long-term relationships, we want to emphasize a commitment to perform. What we mean by that is, for us in Ports, the equipment and services we provide are always critical to our customers. They are essential part of the production process. If the cranes stand, then the ships stand, and that is not a good situation. We commit to be there for our customers, with our customers, really developing the processes together with them. That is what we want to say with commitment to perform, but with building a partnership with measurable outcomes. We also sign up for the outcomes together. Then, deepen customer reach to be able to do that, to be able to provide those services and the support, of course, we need to be close to our customers.
We also invest in expanding our network, both our own current presence, be it our sales network or port services, but also together with our partners. Partners in this case understood also as you see on the map, you see a lot of red dots and they are all the same color. We did that on purpose to say that we provide that support either through direct Port Solutions or together with our Industrial Service colleagues, or with a third-party partnership, be that a distributor, for instance, in the lift truck case, or an agent, or a service partner. But we provide the same level of service regardless which channel we use. Our customers, as I said, the global customers, global terminal operators, are present in different parts of the world, and they need that support regardless of where they are, and we want to grow with them.
We also have regional growth initiatives. For instance, lately added quite a lot of focus on South America, where we see a lot of the growth happening at the moment, in addition to our strongholds in Europe and the U.S. or North America. We also see growth in South America, in Africa, and also in Asia-Pacific. The growth is really visible around the globe. Then performing with agility. I want to talk about the performance and the agility. Performance meaning that this is where a big part of the improvement is coming also from our profitability with really continuously improving our global processes and a scalable operating model. That is sometimes overlooked, and it sounds somehow mundane, but it is not.
It is easy to say that we have global processes and very efficient processes, but they are hard and take a long time to put in place and with the systems to support it. That is truly one of our advantages compared to many of our competitors. That allows us to give the same level of support to our customers across the world, and we need to keep focusing on that. Another thing we are doing is continuously developing our supply chain. It is global, but we are investing now also in regional supply chains to be able to support different needs in different parts of the world.
That supply chain is a combination of our own factories and a large subcontracting network, which is a concept that we have had in place for decades as well, and we know how to do that, and it is very productized, and that is something also that is very hard to copy. As was mentioned also previously, the productized offering and adaptable modular platforms is also a way to be more agile and faster. All this, we like to say why we do that, all of these actions, is to improve our responsiveness to our customer, whether that is in a sales phase or exploration phase, or in the delivery phase, or in the support phase. That is what the customers get from this. It is an improved responsiveness.
When you tie all that together, we are positioned to capture future further growth with that widest and deepest offering that fits different concepts, different places in the world better than anybody else can supply. We will continue our investments in growth, be that in automation development, electrification services, new areas like intermodal or the supply chain. We see, as you saw, all the areas that we possibly see the opportunities for growth. All of those will give us even more resilience in a changing geopolitical world. Thank you for that. With that, I will hand over to Teo.
Thank you, Tomas, and good afternoon, everybody. In this section, we will be summarizing a little bit the group financial performance between 2022 and year-to-date 2026. We will also be taking a look at how things may be different going forward into the next period. When talking about the financial performance, of course, it will include growth, it will include profitability, it will also include cash uses, which will then basically take us to the capital allocation, what Marko, for example, already was referring to. Let's start with the growth. It's a busy slide, a lot of percentages. On the left-hand side, we have the net sales growth, CAGR growth of the group since 2022 until the rolling 12 months at the end of September 2026.
When we take a look at the growth CAGR, we have 5.6% CAGR growth with reported currencies and 6.9% with comparable currencies. If you remember what was our previous target setting regarding growth, it was that we would like to grow faster than the market, and we defined market as the nominal GDP growth. Nominal GDP growth during this period has been somewhere between 5% and 6%, probably very close to 5.5%. CapEx growth, which is of course very relevant for us as well, has been a little bit lower, 4%. Then container throughput growth, which is a real growth, not a nominal growth, has been growing roughly 4%.
If we compare our actual growth to the market growth, one can say that we have been growing in line with the market with reported currencies or then slightly above it with the comparable currencies. Of course, from the internal point of view, comparable currencies makes more sense to compare these things. Then taking a look at the next period. We have been discussing that the sales growth target is 7% CAGR. If we compare that to the expected market growth, maybe 4%-5%, a little bit less than what the past period has been, probably largely driven by lower inflation expectation than in the previous period. CapEx roughly around the same level, container throughput maybe a little bit lower there.
If you compare these two numbers, our past performance from growth and then the target of 7%, obviously you can see that these are basically the same number, 6.9% and 7%. There are a couple of things that one has to take into consideration here. First of all, 2022 as a year is an easy comparable. Many of you remember that we had delivery challenges, as a result of which sales was fairly low. The other thing is that if you take a look at all our three BAs, the growth has not been balanced between all of those in the past. Some have grown less and somebody has been growing a little bit more.
When you combine into that one that the underlying expected GDP growth rate will be maybe lower than what it has been in the past, even if you put all of those together, the conclusion is that the new target or the current target of 7% is actually more aggressive than what we have had earlier and what we have been able to do earlier maybe as well, if you take a look at it in a neutral view. This is of course the reason why we have been hearing today from all of the BA presidents how we are going to tackle the growth, how can we actually make sure that we will be able to get to the targeted 7% growth. Then obviously profitability is an important thing there as well. We have been showing in the quarterly calls EBITA bridges.
We have built more EBITA bridges for this session as well. Please take a look at the left-hand side first. This is our, let's say, realized EBITA improvement. We reported 9.5% in 2022, and 13.6% is now the number on a rolling 12 months basis at the end of September this year. The improvement is good between those two timelines. If you take a look at the 6.9% growth that we have generated with comparable currencies, maybe about 4.5% of that is pricing, and the remaining, say, 2.5% of that is underlying volume improvement. This underlying volume improvement, according to our estimate, has brought maybe 1.8 percentage point improvement to the EBITA margin as a result of operating leverage. Of the pricing, maybe half a percent point is something that is gained in net of inflation terms.
We have increased prices more than what the inflation has been. This is supporting the gross margin, obviously. But if you deduct half a percentage point or maybe even a little bit less from 2.6%, of course the improvement clearly primarily comes from somewhere else. It comes primarily from our own actions. We have had optimization program in the industrial businesses. We have been having project management excellence that has been touching many of the project businesses and a very large number of other activities that have contributed to the margin improvement. The third one there, which is the fixed cost, this is a negative number here. Of course, the reason why that is so is that this volume assumes that all of the volume, all of the profitability comes in with the gross margin level. So there is no fixed cost increase included.
But in reality, of course, our sales is 30% higher now than it was in 2022, and maybe at least one third of that is underlying volume improvement. So of course, the fixed costs have increased to some extent within that period. But we have been quite rigorous in fixed cost containment when you take a look at it from this angle. On the right-hand side then, we are in a way a little bit estimating that how this could look like going forward. Now we have a more aggressive growth market, and the assumption is that at the bigger part of the profitability improvement, that will then, according to the target, leave somewhere between 15% and 17%, latest in 2030. So a bigger part of the improvement than previously would be coming from underlying volume improvement.
There is also gross margin improvement included in the picture, so the idea is to improve there as well. On the fixed cost side, obviously, when the sales grow, the fixed cost will be growing as well. Why less from the gross margin? Why more from the volume? When we make organic growth actions, we may need to have some costs up front. When we made acquisitions, there was already a discussion within the Q&A that will the acquisitions come with a lower or higher margins than our existing businesses, and maybe it is a good idea to be prepared that it will come with a lower margin, which will be impacting at least temporarily, these numbers. Of course, also, if we make acquisitions, the fixed cost burden will come with it before the synergy activities kick in.
If, for one or another reason, the volume doesn't come in, then of course we have similar kind of levers that we have been using also earlier. We can, in a way, improve the gross margin with the kind of activities that we have been having also before, because we have been able to do it in the past. Why wouldn't we be able to do similar things going forward as well? We have put this in the monetary way as well. Not very easy to do on this long-term basis, but of course, this maybe gives you an idea. The additional complexity with the monetary bridge is that you will need to have an inflation there, and in this case, the inflation from 2022 to 2026, we have estimated roughly EUR 60 million from the profit point of view.
Of course, here the volume shows a larger euro number than the margin, because when the volume improves, it also increases the top line. As a result of that, the margin dilutes a little bit. But the overall picture regarding this one is the same as it is with the margin maybe, with the exception that the inflation has to be included there. Of course, there is probably inflation going forward as well, even though maybe the percentage will be a little bit less than before. We have This is maybe not a bridge, but maybe you can call it a bridge as well. We have built a third one here, and this is now then moving more into the cash flow and the uses of cash. Here we have selected a little bit different time frame.
This is from 2022 to 2025, because the dividends are easier to handle on a full year basis. The number EUR 1.7 billion there, this is the amount of operative cash flow that we have generated between 2022 and 2025. When we think that how we have used that amount of money, one could maybe say that only 10% of that has gone into CapEx, only 5% of that has gone into the M&A, 30% of that has gone into dividends. Dividend payout ratio actually has been a little bit higher. But also, this operative cash flow is more than our net profit has been. Our net profit has been maybe EUR 1.2 billion or so during this time, which again, in a way underlines the cash generative nature of the business.
But of the cash flow, the dividends have been 30%, and the vast majority of the cash uses has been in debt repayment. Of course, it is clear that we want to, and we need to change this going forward when we take a look at the situation maybe during the next period. So one could say that we will probably be using a little bit more money on CapEx. No major change is needed there, but to some extent more, because now we have been investing much less than what the depreciation level has been. So maybe a modest increase in that one. We have a dividend policy now, which is linking the dividend payment more directly into the net profit. So this would probably increase the payout ratio on the path going forward.
Then we would like to do more M&A to be able to boost the growth also in an inorganic way. How successful we will be with the acquisitions, that of course is something that future will tell. That's why then we have taken also the share buybacks there, so that in case there is excess cash after these other needs of the cash flow, we will consider share buybacks. Like we are now starting a buyback pretty soon after today's release of the Q3 numbers. This slide is then a little bit more deeper into the dividend policy. Like I said, the new dividend policy links the dividend payout more closely to the earnings, 40%-60% of the earnings. It may create more volatility, but then again, it is directly linked to the performance of the company.
The dividend payout ratio that we have here, 51% for the average between 2021 and 2025, so it is actually in the midpoint. But you can see from the picture that if you take a look at the cumulative way, so then the payout ratio has been lower because our payout has been lower in the years when the profits have been high. The other way around when the profits have not been so high. Of course, the new policy would be behaving a little bit differently if we had applied that in the past. The other thing then, which is linked to the capital allocation, is the inorganic growth opportunities. Here we are trying to categorize and open up a little bit that what kind of acquisitions we could be doing going forward. There are probably different kind of classifications one can figure out.
We have here selected three different categories: market share expansion, complementary offering, and technology. Market share expansion is maybe mostly more of the same, something that we are already doing. It may be a geographical expansion. MFK has been mentioned now a couple of times already. That's of course a very good example of that one. This could be happening in services or in equipment. Complementary offering and vertical integration might mean something that we take more of the value chain. So for example, components that we are using, we could be buying something that is a component producer. So upstream or downstream integration. Horizontal expansion could maybe be categorized as a bigger share of the customer's wallet. We may be missing products.
We may have products where the relative market share in our terms is lower than in the other products, and we could be acquiring those kind of things. Technology could be categorized by helping us to differentiate from the competition. Something that is critical for us to be able to provide to the customers what they need now or particularly going forward. When we take a look at the past, here we are saying that since 2016 we have made 14 acquisitions, 14 companies have been acquired. Of course, within this timeframe, MHPS is included, and that's the big bulk of all of that. And obviously that has been both market share expansion as well as complementary offering, maybe even technology to some extent.
Then, Peinemann in the Netherlands, we are here putting in it in a way that it would be complementary offering and market share expansion. But basically, most of the other ones have been in the market share expansion category. There is one example in the technology category, and then those couple ones, Peinemann and MHPS, that go into two categories. When we take a look at the acquisition pipeline, so the potential targets and candidates for acquisitions that we have, the biggest number of potential candidates continues to be in the market share expansion, followed by complementary offering. Then there are maybe only few in technology area currently. This does not necessarily tell anything about in which order any of the acquisitions might be taking place, but it is just in a way telling how the pipeline of the acquisitions at this point of time looks like.
I will then summarize my part with this slide, which is then on the capital allocation priorities and how those are. Of course, we want to make sure that we have enough funds available for CapEx needs, be it technology needs or production machinery within the operation. We have a written dividend policy based on which we will be distributing the dividends. We want to do acquisitions more than what we have done in the past. If we cannot do that or there is excess cash anyways, then we will be considering share buybacks as we now, for example, are starting to do. That was actually the last slide of the presentation, and then I think we are ready for the Q&A session then. Thank you.
Indeed, it is time for our final Q&A session with all the presenters. As a reminder, you can raise your hand here in Helsinki to ask a question, and you can also send questions through the chat function in the webcast. I will now start this Q&A with a few questions from the chat. Firstly, we have a question to Fabio . So this is related to the service profitability, and the first part of the question is: Is the profitability very different in North America if we are comparing it to Europe?
Yeah. First of all, there's some good internal healthy competition between the two regions that helps in boosting that profitability. But the answer's a little more complex. Certainly North America benefits from, especially the U.S., of a single large market. You could do a lot more things that are centralized. There are a lot more working hours, including into overtime, et cetera. There are some things that just help the operations there. In Europe, you're going to get more variability between the countries. I won't go into what those differences are. But also Europe, on the positive side, I think in our case, benefits from a very bigger installed base, both that we have built over the years and also acquired. So there are some things that kind of are pluses and minuses on both sides.
I didn't give you a straight answer, but I think give you enough hints—
Yes.
—to make up your own mind.
Then there's a continuation to that question that, what about in the Global South? Do you have lower density there? Would then larger acquisitions support that density? Or what would be there?
The Global South is such a vast territory, and it also varies country by country. There are some countries that we have some pretty good density, and especially in certain industries, whether it is mining in some areas that we have some good share, et cetera. It really varies. The larger acquisitions are certainly more available in North America and Europe than in the Global South, especially for service.
Okay. Thank you. There is another question in the chat. I will soon take also questions from the audience. I think this will be perhaps first with Teo, and then maybe Marko, you can complement. The question is, how critical will you be with the valuation multiples in acquisitions? Is it an alternative to acquire companies with clearly higher valuations than our own if it is strategically important?
There was in the question also the strategy topic. Of course, when we are evaluating the acquisition target, we are taking a look at the traditional ways of evaluating. There will be DCFs, there will be multiples, there will be, let us say, return analysis, ROCE versus WACC, et cetera. All of those strategic connection will need to be taken into consideration. I think that what will then eventually be the most important one is that we will need to be able to be quite convinced that we can get the synergies. Because now when we are primarily focusing on acquisitions that are within the core businesses, it is essential that we get the synergies. With those synergies, we can then make sure that we will get the margins to the level where we want them to be.
We also can then make sure that the multiple after the synergies is lower than our own multiple. Because it would probably be a little bit foolish to say that we are not going to buy anything where the multiple is higher than ours, because all of the acquisitions will need to be reviewed on their own merits.
It is extremely important that after synergies, we are happy with all of the financial aspects of the acquisitions, including margins and including valuation, which then after synergies definitely shouldn't be higher than ours.
Thank you.
Another question still from the chat, how far outside from the current product scope you are looking. Would you look at companies with either customer connection or product expansion? Sorry. Maybe also Teo, and maybe Jussi can complement, and all the gentlemen, Marko including.
Sorry, could you repeat the question?
Yes. How far outside the current product scope are we willing to take a look at?
Mm. Yeah, this is of course, a very difficult definition to make. I guess that when we are taking a look at the core businesses with this Industrial Lifting and then of course the Ports material handling, what core basically means is that those acquisitions are within that area or directly supportive of that one.
It definitely can be products that we do not have today, but they would be serving the same, in a way, value stream that we already have. It could be component suppliers that are delivering to us because if we feel that there is a critical, in a way, importance for us, or then technologies that help us to complement or make sure that our offering will continue to be relevant going forward as well. This is maybe for the BA—
Yes.
—BA heads to comment, deny, or verify.
Confirm. Like shown in a presentation, the focus of our strategy analysis is that we stay in the core. There is runway to grow in that core. When we need go beyond that, for example, the ground-based equipment, there is the option to collaborate, and that is the core message in the strategy slide.
Yeah, maybe just not to add or change that message, but just to confirm it. It is obviously so that we have, as Teo was showing, in several dimensions, opportunity to also look at the inorganic growth in where we are playing today. What that where we are playing today, of course, when we look at those synergies, it has to either have a synergy that we can use because of our strong lifecycle approach and because of our service, or our service has to be able to cater to the same customers.
It has to be complementary technology or complementary product to the same customers where we operate or very critical technology and vice versa. If you look at material handling space more broadly, just to rule out, because the approach, I guess, is just as much about saying what we don't do than what we actually do, is that if you look at the material handling space more broadly
The changes that you see in how you handle material today, it is evolving quite a lot in the coming years, we're quite sure. But our role in that is, like Jussi very well put it, is just to make sure that we interact in that value chain of material handling, make sure that we create the interfaces, and if that requires also that we acquire some technology that is necessary to be there, that's absolutely what we should do. But it also means that we are not intending to go to completely different kind of material handling technology or a larger adjacency in that space. That's not the approach at the moment and for the time being in this current operating environment.
Then there is another question here still on the M&A topic and maybe addressed to Tomas, that what about Port Solutions and will you go for terminal tractors?
That was quite specific question. We also are looking for bolt-on service acquisitions, and there's a good pipeline of those. And then as Teo said, every case will be then evaluated, what's the strategic fit, where are the synergy opportunities, and what is the valuation? And if it makes sense, we're also very willing to add to our product spread as well, including terminal tractors.
Thank you for the answers. At this point, let's take questions from the audience, so please raise your hand if you would have a question. Over there to Panu.
Hi, it's Panu Laitinmäki from Danske Bank. I have two questions related to ports, actually. Firstly, on the growth in the large cranes that you mentioned, and it was discussed earlier at earlier CMDs. How do you see the pipeline for STS crane orders, as we haven't seen that many so far? Is this a timing issue, and how big part of the 7% growth target is that part of the business?
The pipeline is very good. The market on STS cranes is very active. If you look at the last year and a half from the U.S. in particular, but globally also, but in the U.S. particular, there hasn't been that many orders overall. The market there is, of course, with the current tariff environment, our customers are also looking at what is going to happen and what is the future. We see a quite large pent-up demand in the U.S., but also it's not only the U.S., it's globally also quite big requests for new STS cranes. But decisions are taking their time, and we've used the time to get ready both on the supply chain and with our products. Looking optimistically into the future but cannot comment on any specific case.
What I listed on the what is the percentage of the growth, I listed several areas of potential growth for us, and they're not all going to happen at the same time. This is a five-year plan, so it's hard to give exact percentage of which what comes from which area.
Okay, thanks. Secondly, on the mobile equipment in Port Solutions, how do you see electrification in that area? Is that changing the competitive landscape? Is that maybe a challenge for growth, or do you see it as an opportunity?
I see it as an opportunity. The trend, as I mentioned also, is that all our customers are looking for ways to reduce emissions. That's still not a very large percentage of the lift trucks sold this year is still electric, or there's still a large percentage that is diesel, but the trend is going that way. We see a way of competing is the growing the lifecycle value. So it's not just about initial price, it's about total cost of ownership or actually value over the lifecycle. So like with the other equipment as well, we compete with that full offering and not just initial price.
Okay, thanks. Maybe a final question just on the targets. I think this was already asked, but I just wanted to clarify, the inorganic and organic out of the 7%. So how was it, half and half or mostly organic? How does it split to divisions? Just kind of directionally, in which one is the organic growth portion the highest, and in which do you think the M&A would play the highest role, if you can kind of think of it like that?
Of course, I'll iterate my question from earlier. Or answer, sorry. It is, of course, most likely that most of the growth is organic. But of course, we don't have anything against that it is inorganic also, the bigger share. It's of course a timing question very much. There is not really that much of a split in terms of the different business areas, what we would be aiming. We have a healthy M&A funnel in all the areas, but as Teo said, mostly on the market share expansion area. Of course, we address those opportunities carefully and individually. Good to keep in mind that beyond just having good opportunities and beyond having the strong balance sheet to support that ambition, but it's a question of how fast you can integrate and to make sure that you can actually do it.
And that's equally important when we pace ourselves for that growth. Therefore, that might be also one reason why organic growth is easier to do, if anything is easy in these sorts of things, but it's easier to do than inorganic.
All right. Thank you.
Thank you. Any further questions from the audience? Antti, go ahead.
Thank you, Antti Kansanen, SEB. I want to continue with very similar questions than Panu on the port side. If you look at the electrification on the mobile equipment side, and you look at the direct competition coming from the Chinese side, and you refer to a better lifetime value. So what is the core lifetime value where you benefit in terms of them maybe providing a cheaper CapEx or price point or even leading into some of the electrification products that they're offering?
When you look at the mobile equipment and the way they are used, it's a resource that sometimes the need of it fluctuates, then having the right equipment available at the right time is very important for our customers. Managing a fleet like that, either through our partners or through ourselves, like the way we're doing with the ex-Peinemann acquisition is a good example of that, where we have a fleet available for which is used by several customers in the port of Rotterdam, for instance. So it's more like a service, getting that service and then making sure that the lifetime and the productivity of the equipment are there, so through service and programs like that.
Okay. On the larger crane side, obviously some of the geopolitical trends benefit the Western supplier in your, let's say, stronghold markets. How do you look at the Global South and potential to grow with your port offering there?
The whole port offering. A big part of the growth for us already comes from the Global South, and it's through our large key customers. Because another trend that we see is because they are spreading out and consolidating and expanding in the Global South, also in their terminals. What we've seen happening lately also is that they buy a big number of equipment and then distribute them to their different terminals around the world. So the long-term relationships we have with them and being able to supply the same kind of equipment and with the same kind of service and operations is a benefit for us. But obviously there is harsh competition around the world, not saying that, but we can play to our strengths.
Yeah, maybe just a minor note on that, I think we discussed that in the previous quarter, too, when it was discussed about the Port Solutions business volatility of the order intake. That what Tomas just said, that trend, that these particular global terminal operators tend to buy bigger lots and then distribute it to different ports is in many ways, relatively speaking, working in favor of a provider or supplier like ourselves who has a broad offering, has everything that can be offered and has cybersecurity taken well care of and so forth. But it also will likely and possibly increase further the lumpiness of the business because you just have bigger orders. Just so that note is put into this context, too.
If I can add to that also, not only in Europe and the U.S., automation is also a trend, being able to provide those solutions around the globe is also one benefit for us. That is why we also work on modularizing and productizing our products even further to also be faster and more cost-effective also, of course, on the cost structure.
How should we think about growth through that lumpiness? You are referring to, I guess it was 3% throughput growth. If you look at the shipyards, they are filled up with container ships, they will be delivered, they need to fit somewhere, and the ports are in some places already congested. If you look at your clients, what are they thinking about their capacity investments?
We see there is a lot of activity on investments in the ports around the world. We see our customers increasing their capacity or have plans to increase their capacity quite around the globe, really.
Of course, just the throughput growth is one aspect of that, but just as was explained earlier, of course, our customers, they need to seek for productivity increases and efficiency, that comes through harmonization of equipment across different ports, as well as then the investing into automation and smarter equipment and so forth. So it is, of course, the throughput of container traffic is one driver there, but the investments are not only tied to that, the CapEx investment.
There's also a change because the material flows change, so where the cranes are being used also changes a little bit. But then in addition to new cranes, we also see a good potential for modernization projects, so that's an opportunity for our service business in particular also to modernize older equipment with more modern technology.
Thank you. Last one is coming back to Fabio and on the growth on the Industrial Service agreement base.
Can you comment anything on the capture rates that you get when you are delivering your own brand, Konecranes equipment, or the potential to grow the agreement base from that versus tapping to the existing base or your competitors' equipments and so forth?
Sure. We'll take the growth from every area we can. But that is obviously an important one. What we've always said is that we capture 55%-65% after the warranty period. It is certainly an area that we can focus on improving, but there is so much runway. There's also a lot of equipment that gets bought not by the end user. It gets bought by general contractors, EPCs, et cetera, so you have to go after the fact to the end user who actually cares about the maintenance and so forth. But it is an important area, for sure. But there's also a lot more other equipment that is sold by the sum of all competitors and what's out there. So there is plenty of opportunity, both within our own and with competitor equipment.
Thank you, Antti. Any further questions from the audience? If not right now, I will take a few questions from the chat still. This one, I think, Marko, you can start. Others can complement. The question is, What are the top three synergies or arguments for keeping the stable, high-margin business of Industrial Equipment and Service in the same company as Port Solutions that has more lumpy orders and lower margins, but maybe further growth opportunities?
Well, I hope that also came through somehow today in terms of the technology that we develop together. If you look at, for example, Jussi's Air advantage or visibility, that's a lot of the same technology that we use in the port equipment. There is a technology—
—research and innovation synergy that we cut across these segments.
We do have some overlap when it comes to the service offering, not only in terms of how one can continue to develop the port side of the service—
—where it is maybe less, I would dare to say, even less developed and the capture rate or the state of the service not as big. We can cross-pollinate the learnings from the service side as well as then use the Industrial Service organization to support the Port Solutions side of things. Thirdly, we do share some manufacturing capacity also.
In the beginning of my presentation, I was talking about the Core of Lifting. That's something that definitely is very much in the core of Konecranes' operating logic and the foundation, and that the same logic applies with same componentry and even with same manufacturing locations for both of the Industrial Equipment and Port business segments. You asked for three, I'm not going to even go for a fourth. I'll let my colleagues complement this if they want.
Well summarized. Especially on the service, the concepts that we use are same as with Industrial Equipment, and as Marko pointed out, the footprint around the globe is much larger. Then the synergies on the Core of Lifting technology, where we do get the scale benefits, and then from the working with the Industrial Equipment and using similar or same technologies.
Thank you. Then still a question on maybe both for Port Solutions and Industrial Equipment, continuing a little bit, maybe we touched on this already. The question is on the automation, that can you describe what is the share of automation in Port Solutions, and how is that developing as you have been discussing that already for quite some time? Also touching upon on how does automation development look for Industrial Equipment?
Tomas.
Okay, so automation is a very interesting area and a very large area as well, and we've seen the demand go up a lot in the last few years. It's good to remember that if you look at the automated ports or ports using automation, more than 65% of the world use some technology from Konecranes, so we're very well positioned there. Now, when you talk about automation, it's good to understand what you mean by that, and still a big part of the operations are manual and will remain so in many places if the drivers are not there to go for automation. Drivers being lack of real estate, lack of labor, need for more efficient use of the real estate. But where it is, then we see that development going on. But then there's levels of automation.
There is manual, there is smart features, there is operator-assisted functions, there is remote operations, and there's full automation.
Autonomy of the-
Yes. Then more and more when you go into then if you go full automation, you really need to have a fenced-off area, and it's often then greenfield developments or expansion of existings.
When you go to brownfield, then it is a mixed-mode operation, then there is a need for autonomous equipment as well, not just automated. We have them in the fully automated, too, but then you get into mixed-mode traffic and how does the autonomous equipment work with manually operated, and how do you handle all of that? It is a very multifaceted approach and then difficult to, say, give a number of what is the percentage of automation in our numbers, because they are tied to the equipment that are automated. That is the trend, and I think as Jussi pointed out very well in his presentation, to be able to do any level of automation, you need a very stable equipment and robust equipment underneath, so that is the first thing that you need.
And so-
That's.
Yes.
Thank you.
It varies a lot based on the industries, and ports can be considered here as one of our customer industries, and that is the most advanced when it comes to the utilization of automation and all that spectrum of automation that you mentioned. We also are, on an industrial side, in other industries, are heading towards more automation and that spectrum. Most likely, we are going to see that in those industry-specific applications, those anchor products that I mentioned, where that development will be faster than in those more standard across industry products.
Thank you. Still continuing here from the chat, one more question for you, Jussi, for Industrial Equipment, what will be now as the growth has not been that fast in the past couple of years, maybe for several reasons, but what will be now different going forward?
I think the slide where we split the path into three parts tells the story pretty clearly that there was that period of time when we were digesting some of the acquisitions, and we were simplifying, streamlining, compromising the top line in order to improve profitability. That was clear. After that streamlining, we started the bridge phase of the development, which is basically renewing the offering, and we proceeding on schedule with that target. When we get that fully done and we eliminate some of the overlaps we have before the new generation launch is really completed, that will be strong backbone for that. Then we went through some of these growth segments in a presentation, Global South being one of them, which again comes with the new offering, with the segmented offering that we're doing during these bridge years.
Thank you. At this point, asking any questions from the audience. If not, I think that would conclude our Q&A at this time. I would still like to hand over to Marko for final words for the event.
Well, first I'd like to thank you all for your attention. I hope with this relatively short afternoon that we spent together, you got not only an overview of what we do, but also some details or a glimpse to what makes this so exciting for all of us, and particularly also for me. It's not so because I would be somehow strangely interested about cranes and lifting. They are fantastic pieces of equipment. They are beautiful and everything, and I'm sure that my colleagues here would give testament to that also. But it's particularly because it is a very exciting industry to be, to see what our customers do with the equipment, as well as then the services that we offer to them and where they are going, and to imagine how we can help them in that path. That makes it very exciting.
That is why we also very committed to those targets that we have today shared. Why do we feel that we are so well-positioned? As we stated and explained today, there is an underlying growth in the market that is supporting this. The mega trends, and particularly relatively speaking, they speak for us. We have a lot of actions across multiple growth vectors, whether there is the geographical growth, the product offering that we have, the customer segments that we cater to. There is a lot of efficiency vectors that we can also gain efficiency from. We have a long list of targeted actions and very deliberate actions that we are going after to realize those opportunities. We have a strong position in the marketplace. We continue to invest in technology and M&A, as well as the processes.
We have efficient, consistent, and transparent capital allocation model. That is why we are well-positioned for the growth in the future. We at Konecranes, we aim to be the customer's partner of choice. We have the lifecycle optimizing approach, which is the long-term winning approach, as we very much are convinced in this company. We have the knowledge, we have the capacity, and we have the capability, and we certainly have the people, and that is why this is also so exciting and a fun place to be because it is just fun to see what kind of It is captivating to see what excitement my colleagues actually have for this business. We have the capability to help our customers lift their business performance. For that, and to get there, we have more focus areas. We want to continue to win with technology, grow our lifecycle value.
We will deepen our already existing large customer reach, and we will perform with even more agility. With that, I will thank you for all your attention and the great discussions we had. I am really looking forward with great excitement to the next years together. Thank you.