Good morning, everyone, and Welcome to Kempower's Q3 2026 results presentation. My name is Calle Loikkanen, and I am Director of Investor Relations. Today, Kempower CEO, Bhasker Kaushal, and Interim CFO, Juha Jaatinen, will walk us through the highlights and the results of the quarter and the first nine months of the year. After the presentation, we will, as always, end with a Q and A session. Without any further ado, let me hand over to Bhasker.
Thank you, Calle, and good morning, everyone. Thank you for taking the time to be with us today. Let me start by saying upfront, the third quarter was below our expectations. As investment in public charging slowed sharply in the quarter, our order intake decreased by 19%, and revenue down by 10%. We have therefore lowered our 2026 revenue outlook to around 5% growth. Also, we now expect operative EBIT to be lower compared to 2025. To build a stronger earnings base for 2027, we are increasing our fixed cost reduction target to more than EUR 15 million. As part of this program, we are restructuring our organization to align our cost base to the current market conditions. We have announced the start of change negotiations in Finland regarding the potential organizational changes. These are difficult but necessary decisions in this moment.
I want to leave you with four messages today. First, we are outperforming a sharply weaker market, particularly in Europe. In a market where new public DC fast charging installations in Europe and North America, they are down 11% year-to-date, our revenues are up 12%. In Europe, outside Nordics, we grew 10% in the quarter. The second key message, electrification is growing, and the underlying long-term demand is still intact. In Europe, electric car registrations were up 55% in Q3, and now nearly one in four cars is now electric this year. The share of electric buses and trucks also is up this year. 30% of new buses and 6% of new trucks are electric. Third, our Kempower 2.0 strategy is delivering, and we are leaning in even further. Aftermarket sales are up 83%, and APAC and MEA orders were up 48%.
Our product cost reduction program is helping us hold margins despite price pressure and cost inflation. Fourth, we are resetting our cost base for 2027. These cost actions will lower our break-even revenue point. Today, with a backlog, or at end of Q3, with a backlog of about EUR 128 million and liquidity of EUR 91 million, we have a solid foundation to keep executing this Kempower 2.0 strategy and drive towards our vision. Next, let me walk you through the key numbers. First, I will start with order intake. Market activity slowed pretty rapidly during the quarter, and that is visible in our orders. Order intake is down 19% year-over-year to EUR 60.8 million, and down 4% for the first nine months. In the quarter, we still added 10 new customers. Our order backlog is now EUR 128 million, which is 9% higher than the same time last year.
Second, revenues, EUR 66.2 million, down 10% in the quarter, but up 12% in the first nine months. This is in a market where public charging installations declined 11% year-to-date. Aftermarket was up 83%, as I mentioned, and it is up 60% year-to-date. Third, profitability. Operative EBIT was EUR - 1.7 million, mainly due to lower revenues. Our gross margin up slightly year-on-year, supported by our cost reduction actions.
For the first nine months, the operative EBIT has improved by EUR 1.7 million, roughly 20%, and operative EBIT margin improved by 1.4 percentage points. Finally, on cash flow, operating cash flow was EUR -5.9 million, which is worse versus last year, but an improvement from EUR -11.7 million in Q2. The main driver is a higher share of partner sales that come with longer payment terms. Reducing the receivables is a clear priority for us.
Overall cash flow is a key priority, and Juha will talk about the actions we are taking immediately. Next, let me explain what this means for our outlook. We have updated our outlook for 2026. We now expect revenue to grow approximately 5% over 2025, and we expect operative EBIT to be lower compared to 2025. The main driver of the revenue revision is the sharply weaker market activity that we see right now. In the public charging segment, there is ongoing consolidation amongst charge point operators, which is accelerating, and these customers are prioritizing utilization and profitability over network expansion in this moment. In the fleet segment, we are seeing longer sales cycles, deal closings are taking longer, and some investments are being delayed. Overall, we do expect these challenging market conditions to persist in the near term.
But I will show you in a moment why we believe the market will turn, because underlying all of this, the EVs on the road are growing much faster than the chargers. But I will come back to that in a second. As for what is driving the change in the EBIT outlook, we are expecting lower revenue than planned earlier, and I mentioned about the fixed cost reduction program that we are undertaking and increasing our target to EUR 15 million.
As part of that, we are assessing our entire cost structure, and there may be potential provisions and write-downs that would impact our 2026 operative EBIT. We are currently assessing these actions and the potential amounts, and we will come back in the full-year results with those. Next, we will look at the market in a bit more detail. The market is sharply weaker, and we are outperforming that market.
For the first nine months of the year, the new public DC fast charging installations in Europe and North America, they are down 11% versus last year. Compared to the market, our revenue grew 12% in the first nine months. That was supported by Europe market being down 8%. Our revenues are up 7%. In North America, market down 21%, we are up 32%. The standout market for us is Europe outside Nordics. The market is down 8%, but we are up 26% in revenues. To be clear and transparent on the numbers, the market data here, shown here, is public installations only, which accounts for roughly more than three-quarters of the market. Our revenue also includes fleet, aftermarket, and APAC. Not a perfect like-for-like, but the direction here is pretty clear. Let me break this down by region.
Our growth in Europe and APAC was offset by Nordics and North America. In Europe outside Nordics, where we are up 10% in Q3 and up 26% for the year, we are growing across strategic accounts and countries, and our focus here is to keep winning share. In the Nordics, revenue declined 30% as existing customers have moderated their investment level. What we have seen here in our public charging customers particularly, they have built out their networks over the past several years, and currently, our focus here is on the fleet segment, on upgrades, aftermarket, on a large install base. North America, revenue decreased 37% in Q3. The CPO activity here has slowed significantly. For the year, we are still up 32% in terms of revenues. Last quarter, we described the order softness in North America as timing.
Some of it was timing, but the market has weakened much more than we expected, and there we are focused on continuing to win in fleet, ports, and NEVI-funded public charging sites. APAC and MEA, revenue down 11% in the quarter, but order intake is actually up 48%, and revenue will follow those orders in that market. Next, the market picture in Europe. In Europe, we are seeing quite strong growth in electrification, and that is why we believe that the long-term demand is intact here. The current demand slowdown is actually in the charger investment. When you look at the vehicle electrification, it is actually accelerating. In Europe, the battery electric car registrations, they grew 55% in Q3 and are up 42% year-to-date. So this year, nearly one in every four new cars in Europe is electric. It is not just cars.
I mean, e-buses are now 30% of new bus registrations, and e-trucks, 6%, both up versus last year. If you look at today, the vehicle install base, less than 5% of that install base is electric. As EV share continues to grow, which is driven by the total cost of ownership advantage of the EVs, we believe that in the mid to long term, the need for charging infrastructure remains substantial. As the electric vehicle growth outpaces the charger growth, the utilization of that charger base improves and rises, which improves the charge point operator and our customer profitability. In time, that profitability also leads to higher investment that they will put back into the network. Now, let us look at North America, where the picture is a bit different right now. North America is going through a demand reset.
The battery electric car registrations, those are down 33% for the first nine months and down 45% in Q3. EVs fell from 9% of new car sales to 6%. You ask why this sudden decline? This decline, I mean, this is driven by the expiration of federal EV incentives that happened in September of 2025. That expiration pulled forward some of that demand into 2025, in particular in Q3, so that comparison base is quite high. We do see 2026 as a year of demand reset in terms of year-on-year compares for North America, but it is not the end of electrification in North America. Strong activity on the ground, particularly in segments where we are focused on winning in fleet, in ports, in NEVI-funded public charging sites, in fleet and depot, where the business case is truly driven by total cost of ownership, not just incentives.
School buses, like Denver Public Schools, where we have deployed our chargers and in helping them increase their electric vehicle base and the charger base. Ports, we have signed a framework agreement with DP World Canada and the Port of Vancouver. NEVI-funded public sites, we are continuing our partnership with PowerUp America. A lot of green shoots in the ground. Next, I will talk about something that I am particularly quite encouraged by, which is our growing install base and how it is performing. Our install base keeps growing, and it is working harder to deliver more energy to EVs. We now have close to 42,000 units in the field, and the base has grown consistently every quarter. The energy charged through Kempower chargers grew 83% in the quarter, up from 204,000 MWh to 372,000. Why does this matter? It shows the growing demand for charging infrastructure on the ground.
The EVs are there, they are charging on our equipment, higher throughput, again, improves customer economics, brings profitability, brings returns to our customers, who then invest back into further network expansion. This is very encouraging, and also encouraging is that the larger, more heavily utilized installed base, it needs our aftermarket offerings. It needs the support of that business, so that supports the growth of that aftermarket business as well. Next, let me talk a bit about Kempower 2.0 strategy and how we are doing. We cannot control the market, but where we control the outcomes, our 2.0 strategy is delivering, and we are really leaning in even further into that strategy. First, winning with customers. This quarter, we added 10 new customers. I mentioned the framework agreement that we signed with DP World Canada. We continued partnerships with PowerUp America.
We are continuing to drive activity with our customers, strong wins there with blue-chip customers. Second, technology leadership. In the last quarter, I introduced the Mega Satellite Flex, and this quarter, we delivered the first of those Mega Satellite Flex in Sweden for heavy-duty depot charging. We are continuing to invest in ChargEye software, which strengthens our analytics, the insights that really deliver operational outcomes for our customers. Third, lifecycle solutions. Aftermarket revenue, I mentioned, up 83% in Q3 and up 60% year-to-date.
We have also launched Service Packages to cater to the growing needs of our customers. Fourth, operational excellence. Our product cost program, which I will talk about here in a second, has already delivered EUR 8 million of savings. Underneath it all, it is our team. We have strengthened our leadership team. We appointed a new Chief Financial Officer, Lasse Hatinen, and Chief People Officer, Outi Sortino.
Both were joining in early 2027, and we look forward to welcoming them. Next, a few customer highlights. We are continuing to build and expand our partnerships. This is across segments, across geographies, with charge point operators. I mentioned PowerUp. We are expanding in the retail segment in France, the great partnership with Sowatt Solutions. Highway Stops Retail in the U.K. is one where we have helped build actually through our leasing partner, which is very interesting as leasing lowers the upfront investment for operators, and it is a practical way to unlock projects in this market. In the fleet and port segment, the demand is steady. In the fleet, trucks, our first Mega Satellite Flex in Sweden at Dagab's depot. In bus, I mentioned the Denver Public Schools. In ports, Global Container Terminals that we are electrifying in the Port of Vancouver is a great example.
We're immensely grateful for the trust that these customers are placing in us with their infrastructure and their electrification plans. Next, briefly I'll talk about lifecycle solutions and aftermarket. These are our key priorities. Aftermarket, we put a lot of focus on this, and it's showing results. Revenue is up 83% in Q3. That represented 8% of our revenue, which is double the share of what it was a year ago. On a rolling 12-month basis, it has nearly quadrupled since early 2024, from about EUR 5 million- EUR 19 million. Why does this matter? I mean, these are higher-margin, recurring, sticky revenues, and they grow with our installed base, which I just mentioned is growing at a pretty fast clip. Next, I'll talk about our cost programs, starting with product cost.
Our product cost program that we've talked about for the last couple of quarters has delivered approximately EUR 8 million of savings this year, and we're on track to exceed our target of more than EUR 10 million. We had about EUR 4 million at the end of Q2, so the pace has clearly accelerated. Where this is coming from, it's procurement, it's production, it's product design. These reductions are helping us hold our gross profit margin, which you see this quarter was 45.9% versus 45.8% a year ago. This in the context of heavy price pressure and higher raw material costs. This is in a market that's very competitive, so this program is doing exactly what we defined it for, which is to defend and to grow our margins eventually. Next, I'll talk about fixed costs.
This is where we're really stepping it up in this quarter, and we're resetting our cost base for 2027. In July, we announced and launched a program targeting more than EUR 5 million of fixed cost savings. In the current market conditions, we need to build a stronger earnings base for 2027. So we're increasing this fixed cost reduction target to more than EUR 15 million, and savings from this program are expected to reach full run rate by about mid-point, so Q3 of 2027. As part of this, we do plan to restructure our organization, and we've initiated change negotiations in Finland today.
These are difficult, but necessary actions and decisions. I recognize that these negotiations will be difficult for our people as well, and we'll conduct them with deep care and respect. Overall, together with the product cost reduction program, these cost actions will lower our break-even point and give us a stronger earnings base for 2027. With that, I will hand it over to Juha Jaatinen, who's our interim CFO, to take you through the financials in more detail. Juha.
Yes. Thank you, Bhasker, and good morning from my behalf as well. Let's go through now the financials. Let's start with the key figures. Order intake, that was EUR 60.8 million in third quarter, down 19% as the market rapidly slowed down, like it was said by Bhasker during his presentation. We have continued to grow in APAC, where orders grew up 48% in third quarter and year-to-date. There were some good areas also in Europe, so outside Nordic, that was relatively strong, and order intake was up 4% in the first nine months. Then about the revenue, so third quarter revenue was EUR 66.2 million, down 10% compared to previous year, and up 12% in first nine months. So again, positives are continued.
We continued to grow in Europe outside the Nordics, and positive was also the aftermarket sales growing up by 83% in third quarter and 60% year-to-date. Then gross profit margin was 45.9% compared to 45.8% last year, so that was supported by our cost reduction actions, like was mentioned previously by Bhasker. Operative EBIT in third quarter, EUR -1.7 million. This was practically coming, of course, by the lower sales during the quarter. Then first nine months, operative EBIT improved by EUR 1.7 million- EUR -7.1 million, which is almost 20% better than a year ago. Then about the cash flow, so operating cash flow was EUR -5.9 million, and this is improvement from Q2, but still impacted by the higher share of strategic partner sales, and cash flow is now going forward a clear improvement area for us.
Next slide, little bit more detail about the order intake. The rapid slowdown in the market is visible in our order intake, like said, and it was 19% down in Q3 and down 4% for the first nine months, and it was EUR 199.6 million. In Europe, performance was mixed across countries, so the Netherlands and Portugal stood out positively, and all in all, we added seven new customers in Europe during third quarter. In North America, the decrease was driven by softer market activity in the CPO market, like it was already mentioned. In the North America, we added three new customers there during the quarter, and we have generally performed better in the fleet than in the CPO market. APAC and MEA grow 48% both in third quarter and during the first nine months.
Our order backlog increased 9% year-on-year to EUR 128 million, and that's a good foundation for the coming quarters. Then in the next slide, about the revenue. Revenue down 10% in third quarter, however, up 12% to EUR 201.7 million during the first nine months. Revenue has naturally been impacted by the weakened market activity and order intake, especially now in third quarter. In third quarter, we continued to grow with large customers and in key markets in Europe. Europe outside Nordics now present is about 62% of the revenues, up from 51% compared to a year ago. During the first nine months, we grew in all regions outside the Nordics in Europe. Aftermarket revenue increased by 83% to EUR 5.1 million in third quarter, and that equals 8% of the total revenues compared to 4% a year ago.
Nice development in the aftermarket area. The next slide is about the profitability. Our gross margin was 45.9%, up by 0.1 percentage point year-on-year, supported by our cost reduction actions, which have been going very well, and this offsets the increased price pressure and rising raw material cost in some categories. For the first nine months, gross profit grew 7% to EUR 93.1 million, with a margin of 46.2%. Operative EBIT was EUR -1.7 million. The reason for the low EBIT was the revenue challenges what we have. For the first nine months, operative EBIT was EUR 7.1 -million versus EUR -8.8 million last year.
Slight improvement, which was in value EUR 1.7 million. The operative EBIT margin improved by 1.4 percentage points to - 3.5%. There is a lot to be done going forward. Regarding the warranty cost, they continue to decrease, and in third quarter, the warranty costs were down by EUR 2 million from last year. The next slide is about the cash flow and liquidity. The cash flow from operating activities was EUR -5.9 million in third quarter, and that is an improvement from EUR -11.7 million during the second quarter.
Year-on-year, the decrease was mainly driven by the negative change in working capital, as higher sale of partner sales are tying up capital, and the payment cycles with these customers are typically longer. Improving cash flow going forward is a clear priority for Kempower. We are doing this through faster collection of receivables, of course, tightening payment terms, and lowering inventory levels. Fixed cost streamlining will also support cash flow going forward. The liquidity of the company remains very solid at EUR 91 million. That was my part about the financials. Now I am handing over back to Bhasker.
Thank you, Juha. To summarize, I want to leave you with the four messages that I started with. First, a sharply weaker market, but we are outperforming. Second, electrification is growing, and the long-term demand is intact. Third, our strategy, Kempower 2.0, it is delivering, and we are leaning in even further. Fourth, we are resetting our cost base for 2027 that gives us a lower break-even point. With a backlog of EUR 128 million, and as Juha just mentioned, liquidity of EUR 91 million, we have a solid foundation to keep executing our strategy and drive towards our vision and targets. In closing, we believe that the charger demand will catch up with the EV growth that we are seeing, and we are using this transitionary period to make Kempower stronger. We are winning where demand is still growing.
We're building a cost base that's calibrated to the market conditions, and we'll keep investing in our people, in our technology, and aftermarket, and the priorities that we've outlined. I want to thank the entire Kempower team for their hard work and resilience in what has been a demanding quarter. With that, we'll open it up for questions, and Calle, I'll hand it over to you, invite Juha as well.
Thank you, Bhasker, and thank you, Juha, as well. Now let's continue with Q and A. We will first take the questions from the conference call line before then moving on to questions through the webcast. So let me at this point hand over to the operator for the instruction.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Nikko Ruokangas from SEB. Please go ahead.
Hello, this is Nikko Ruokangas from SEB. Thank you for the presentation. I have three questions, and I'd like to go one. First of all, on orders and especially North America. You highlighted in Q2 report there were a substantial amount of orders phasing from Q2 to Q3. Deducting those, it seems that there were not many orders in the area in Q3. I understand that the market is weak, but the number still seems pretty low to me, even if taking the market into consideration. So, can you give a bit more color on that? Then which one was the bigger surprise to you, weakness in Europe or North America?
Yeah. Hi, Nikko. Thank you for the question. Look, definitely surprise in North America. Markets become weaker than what we expected, significantly more weaker than what we expected. We talked about order delays and timing. That is still a part of it, because the pipeline that we have, we are still working through those customers that I also mentioned are delaying some of their investments. This may be tied to funding, to grid availability, to many other factors, and we are working through that. So, part of it is timing, but part is also significantly weaker market conditions than what we saw in the middle of the year.
All right. So, basically, this similar kind of development or environment is continuing in the short term as well?
Yeah, we do expect in the short term challenging market conditions to persist, particularly the CPO segment, where we see consolidation amongst the charge point operators. We see the charge point operators clearly prioritizing being able to get profitability, and the underlying driver of that is the utilization of their network. The encouraging sign is, when we look at our charger installed base, the utilization levels and the energy delivered is much higher. So that gives us the There are some signals that the utilization is improving, and that will also drive investment here in return.
Yeah, I see. Thanks. Then on balance sheet, you are at net debt right now. So, you highlight high amount of unused credit facilities improving your liquidity. But can you open terms of, or covenants for these credit facilities? Can you use them with negative earnings and debt exceeding cash and cash equivalents, and when will be these terms reviewed?
Go ahead, please.
Yeah. The covenant is related to gearing, and currently the gearing is 19.8%, and the covenant limit is 100%. So, no issue with that. The credit facilities are the maturity is until 2027 and 2029. So, in that sense, we are in a solid position.
Yeah. But I'd say, Nikko, I mean, clearly from a gearing standpoint, we have enough headroom. I mean, we've got EUR 2 million in cash, EUR 25 million in financial instruments, and then EUR 64 million in unused facilities. But clearly, focus for us is reduce the cash burn, so that fixed cost reduction program. Juha mentioned very specific, our three-point actions, inventory streamlining. Obviously, our supply base at the time was attuned to a different level of demand, so we're correcting that now. So the inventory, cash receivables, and tightening up the payment terms. Look, the strategic partners that we've talked about, they give us reach. They give us reach in regions where we alone may not be able to do that. But that comes at the cost of slightly longer terms, but we're still clearly tightening that across the customer base as well.
Yeah. Understand. Thanks. The last one from me. Inventory provisions increase now in Q3, as you highlighted, and you are also expecting Q4 profitability to be impacted by provisions and write-downs. So, can you, especially relating to Q3, what is behind these provisions in inventory, and also a bit more color on maybe amount and reasoning behind the Q4 expectations? Thanks.
Juha, you want to take that?
Yeah. So, inventory provisions, of course, normal practice, and going forward, we are now evaluating, like said in the announcement. And yeah, I mean, this is normal practice, and there are certain low-moving goods and old products. So, this is related to that a little. But we are really evaluating and understanding this now better when we are going forward during fourth quarter.
Yeah.
Do you want to, Bhasker?
Yeah, maybe on those provision, look, we follow very strictly the IFRS 8
Yes
principles, and on credit loss, I mean, we look at the overdue amounts, and then based on those principles, we take reserves. That does not mean that that limits our ability to get those back. So, we keep acting on those and working with our customers to get that. I think, but yeah, we are evaluating as part of our fixed cost reduction program, all of that as well, and we will come back in the full-year results with more details.
Okay. But the inventory provisions made now in Q3, so they relate to kind of old generation products? Did I understand correctly, or how?
Just general principles around excess and obsolete, so being able to take those at the point where we still see demand, but when it gets to a threshold, we do, based on IFRS principles, take reserves and provisions against that.
All right. Thank you. That is all from me.
The next question comes from Pauli Lohi from Inderes. Please go ahead.
Hello. This is Pauli Lohi from Inderes. I have two questions, and I would like to have them one by one. First, I still would like to have some more color on the decreased investment activity within CPO customers and the variation inside that market. Do you see larger CPOs continuing growth in a more normal way and smaller ones struggling, or is the decline in activity visible across the board?
Yeah. Hi, Pauli. Thanks for the question. Yeah, it's a nuanced question, so I'll try to answer it best. I mean, look, within the CPOs, clearly the last five years, the focus was to put network expansion. There are, if you look at the number of charge point operators at the country level, at the regional level, in some places, it's a pretty long tail as well. What we see is that the larger players are consolidating, and the smaller subscale players, they are getting increasingly more challenged on profitability and returns and utilization. We see sort of soft consolidation and hard consolidation. Hard consolidation in terms of M&A. We also see soft consolidation in terms of more alliances. We expect that trend to continue.
I think from an industry perspective, when you look at the entire ecosystem, whether it's the CPOs and also the charging hardware players, yeah, some level of consolidation will be healthy to be able to correct the demand sort of supply mismatches where it happens at the regional level. Hopefully that gave you some answer, but yes, we expect that consolidation trend to not stop here. I mean, it will continue here. A number of our customers on both sides, the ones that are acquirers and acquirees, we see that happening.
All right. Thank you. Thank you. Secondly, you mentioned the shift of focus in the U.S. to fleet, port, and NEVI-funded projects. If you talk a bit about the segment you don't focus, the non-NEVI-funded public charging operators, do you see that still attractive market for Kempower over the long term? Or if not, why?
Yeah, Pauli, I mean, we do see that as an overall very attractive market. In just this moment, we see the level of investments have fallen versus the prior years. As I said, we're going where the demand is going in this moment and maximizing our opportunity potential to capture those. It doesn't mean that we're giving up those. I mean, we're still very focused. We have teams that are very focused in pursuing that. We still see some uptick in our orders, but just not at the same levels as to the prior years.
Thank you. Finally, about the service sales, you showed how high growth in that line. Could you give any indication what's the potential share of recurring revenues over time, and how much that recently announced Service Packages offering could improve this equation?
Yeah. Look, on aftermarket, we're in such still very, very early innings of the journey. So, what we're focused on is building a service platform, the capabilities. We've invested in that with our team, with tools, processes that we're putting together. Ultimately, all of that in service of our customers. Customers demand better returns, high utilization from their networks, and aftermarket is exactly geared towards that. We've got a clear set of offerings. We've got spare parts, we've got service contracts, modernization and retrofits, and software. I would say Service Packages and software tends to be more recurring in nature.
But I would say even the modernization and upgrades, as you look at an installed base, for example, in the Nordics, which is an established installed base over the last few years, it's coming up to that upgrade cycle on various elements of the charger. I would say, yeah, I mean, it's a good mix of recurring and one-time, and especially the Service Packages. We see customers that want to lean on that uptime, that guarantee, really demanding those sort of packages, and that's what we are focused on building out.
And would you expect this share of the total revenue to continue growing in following years, maybe double digits or do you have.
Oh, absolutely. I mean, it's
Can you give any indication? Yeah.
Yeah, look, I mean, it is up just from a trajectory standpoint. When we did our Capital Markets Day earlier this year, we shared last year was 5%. Last 12 months, we are already at 6.9%, so 7%. In the quarter, in Q3, that was 8% of our revenue. We see that trajectory to keep growing, and we will stay on that. As I said, we are still in the early innings of the journey, and we have got a growing installed base. That is what feeds that aftermarket machine. With that growing installed base, plus the high utilization level, which we demonstrated with that 83% growth in energy delivered, that combination is what gives us very good confidence about the growth in the aftermarket piece as well.
All right. Thank you very much. That was all.
Thank you, Pauli.
The next question comes from Patrick Campbell from Nordea. Please go ahead.
Hi, it's Patrick Campbell from Nordea. Starting just on the Q4 outlook, or the outlook for the rest of the year. Obviously, the guidance implies that sales are to decline sequentially. What has changed relative to Q3 or Q2? You flagged that customers are more cautious, but has this worsened, and what are the reasons why this is turning to the worst?
Yeah. Hi, Patrick. Look, I mean, you look at the order intake. We've had a soft order intake here, and then also Q2 versus our expectations were soft. A lot of our outlook and the things that we were targeting to be able to deliver, and what our assumptions and expectations around the market have changed. Q3 is a good demonstration where the market has turned sharply weaker. That's underlying it all. Then, bit of the slowdown that we see some of the fleet segment still steady. You look at fleets and trucks, buses and trucks, some of those are bids and RFPs, and those are slightly longer in terms of the sales cycles. Those are some of the delays that we see. Also underlying it all is the pace of the investment.
Now, having said that, on the charger base, right? Having said that, the thing that's encouraging is the EV growth. That gives us the hope around the first sort of signals around that, hey, that the EV growth and the charger growth, when they're diverging so much, that builds up that deficit, that sort of will turn. Now, timing that turn is hard for us in this moment. We've just gone through two quarters where we've seen the market decline. We'll keep a close eye. In the near term, we do expect some of these conditions to persist, given some of the factors that we discussed today.
All right. Thank you. You just mentioned the fleet and the public side. Could you break down or give any additional detail on the orders between these two sides? What are you seeing on the fleet side versus the public side in terms of order intake?
Yeah, I mean, clearly the CPO side order intake has declined more. I mean, we haven't disclosed kind of the fleet and then CPO breakdowns for us. I mean, we've also got partner sales, which tends to be a mix. But CPO has been where there's been bigger declines, and fleet is still steady. We just see more longer sales cycles there.
All right, great. Just lastly on the Q4 profitability outlook, could you perhaps kind of quantify what the underlying expectations for profitability are, and kind of what are the items that are subject to potential write-downs in Q4?
Yeah, look, it's very much something that's active, what we're actively looking at, Patrick, at this moment. We have increased our target given the market conditions on that fixed cost reduction program. But on the operative EBIT, it starts with revenues, with volumes down versus what we were expecting and targeting previously. That's the main driver. Then the fixed cost reduction program that we've now, that's what we're assessing here in Q4.
We're looking at our entire fixed cost structure, right? The organization, we're looking at all of our indirect spend, everything from IT, facilities, all elements of the cost structure, and also our processes. How do we become more lean and efficient? As we do that assessment, that's the activity here in Q4, and we will come back with our full-year results with more details on the specifics, actions, and the potential, if there's any provisions and write-downs needed. That's active work in progress right now.
Yes.
All right. Thank you very much.
Thanks, Patrick.
The next question comes from Paul de Froment from Stifel. Please go ahead.
Yes, good morning. Just one question for me related to the market. Did you observe any momentum related to heavy-duty depot charging over the past quarter? Thank you.
Hi, Paul. Sorry, you were breaking up a bit. If you do not mind repeating your question.
Yes. Did you observe any momentum related to heavy-duty mobility charging over the past quarter?
What, heavy-duty charging?
Yeah, I think it was heavy momentum in the heavy-duty charging? Was it so?
Yes, exactly.
Thank you, Paul. Certainly. I mean, I think momentum is relative, right? Versus expectations or versus what we've been seeing. Look, I think on the heavy-duty side with buses and trucks, that charger to the BEV ratio tends to be very different than public charging. So, more closely aligned to the number of trucks and buses that are on there. So, we do see momentum. I think the bus electrification, when you look at the numbers, versus last year, the number of electric buses up from 24%, the share of electric buses versus all buses, 24% to now 30%.
The number of trucks up from 4% to 6%. That share is pretty significant. So, as that grows, especially with fleets with much smaller kind of charger to, or BEV to charger ratios there, that really drives that. But look, I mean, we expect that market to continue to grow, and with more affordable EVs available in the market, on the truck side as well, as well as buses, that piece will continue to grow. And by the way, ports is another segment that is also affected with that, where we see strong demand, and port electrification is a priority for the port operators.
Thank you very much.
Yeah. Thank you, Paul.
There are no more questions at this time. I hand the conference back to the speakers.
All right. Thank you very much for the questions so far. Now we'll turn to the questions from the webcast or the chat function. We have a few questions, starting with one on the sales growth. Well, actually next year, so let's see what we can say on this. On the back of what you see now in the market, is reaching your long-term target for sales growth achievable in 2027? Obviously, we won't be giving any guidance on next year, but any kind of thoughts on how the market might be playing out?
Yeah. Look, this is a dynamic market. That's the market we live in. Our strategy and our targets, I mean, we are committed to those that we announced. As for next year, we'll come out with the, when we come out with the full-year results around the outlook there. It is a dynamic market. We've seen the market go down and also go up. We have to also remain prepared for that, as that EV growth and the charger sort of mismatch and that deficit grows, that we have to be prepared for the growth phase as well.
Yeah. Thank you. Is your order intake representative of market demand currently, including fleet charging orders?
Yeah, that is where we showed the comparison, when we look at the market and our order intake. I mean, yeah, in the quarter, we saw the public charging installations in North America and Europe decline 18%, and our orders down 19%. So, in some ways, that order intake, where there may be some lag there, but it is largely there. But in terms of revenues, we can clearly share that, look, we are outpacing the market.
Perfect. Continuing on the current demand, you say you expect challenging market conditions to persist in the near term. Please define near term.
It is a crystal ball question.
Yeah.
Yeah, it's hard to predict. I wish we could. Look, we will keep an eye on the signs around the EV growth. I mean, that is the key underlying trend. If that continues to show the strong growth that we see right now, up 42% in terms of vehicles in Europe versus last year, electric vehicles, and up 54% in the quarter, we continue to see that near term will become nearer in terms of a demand uptick. But very dynamic market where there's a lot of factors, not just the EV. We talked about the charge point operator utilization, their profitability, the consolidation. So, many other factors at play, so it's hard to predict the exact timing because of those.
Yeah, absolutely. Turning to warranty costs. They declined year-over-year, but remained flat quarter-over-quarter, so compared to Q2. How do you expect these costs to develop in the next year?
Juha, you want to comment?
Well, that's like what Bhasker said, that it's having the crystal ball. Of course, warranty, I mean, that's related to product quality, and we are really working on that. So, I'm believing that the same positive trend what we have seen recently, I think that that's the target that we are going to continue with that. I don't know if I can say something more about this at the moment, but
Yeah, a lot of focus. I mean, every newer generation, every newer upgrade that we put out is improved quality, it's improved design, it's improved performance. That's what we're focused on, and that shows up in the numbers that we-
Yes
that we delivered.
Okay, I think we might have time for a couple of more. Are there any shifts Sorry, are there any new shifts in the competitive environment that you would like to highlight? Also, is price pressure remaining mid to high single digit, as you referred to in the Q2 call?
Yeah, price pressure is real. In a demand-constrained market and an over-capacitized market, you see more intense price pressure. We've seen that here in the last quarter, that it's up towards kind of the double-digit mark. Look, I mean, we have been able to defend our gross margins in that, and we have been able to grow and outpace the market in that intense market. We stay disciplined. We stay disciplined on balancing the growth and the margin piece. Lastly, I'd say we just don't compete just on price, just on list price. We compete on total cost of ownership. That's where we differentiate with our customers. It's not just the upfront charger hardware price that alone allows us to win.
Yeah. Any meaningful shifts in the competitive environment?
Yeah. Well, I mean, look, we don't have a lot of publicly traded peers, so we have limited information on the charging players in the space. But yeah, we do see intense competition, and especially in a demand-constrained market, as I said, and an over-capacitized market, yeah, price becomes the weapon where a number of players start playing with.
Very good. Then finally, you have continued to outperform the broader charging market. What do you think is driving that relative performance?
A number of the factors that we talked about. I mean, it starts with the customer, being able to understand the needs of our customer, being able to win on total cost of ownership, not just on price. It's having a full lifecycle solution where our customers trust us with their investment, with their infrastructure that is key to their own operations, their own customers, over a period of the entire lifecycle, which could extend into 15 years. So, when you think about that's where it starts.
Then, our priorities around technology differentiation, winning with customers, lifecycle solutions, operational excellence, all of those are geared towards that. We feel confident about those priorities, and that's why, as I said, we're leaning in further in this market, where our focus is to get stronger in this transitionary period and keep taking care of our customers and our own teams and people, and come out stronger out of this challenging market environment.
All right, thank you very much. Thank you for the questions. Thank you for the answers. Unfortunately, this is all the time we have today. But before we close the line, we want to end with a short video, and this time, the video is about the launch of a pioneering U.K. electric truck charging hub at Magna Park, and it's designed to accelerate the transition to electric heavy-duty transport. But with that, have a good rest of the day, enjoy the video, and see you next time.