Hi, everyone. A warm welcome to Alimak Group's Capital Markets Day 2023. My name is Mathilda Wernhoff, I am Chief Strategy Officer at Alimak Group, also your host for today. We are very happy to have you with us, both you that are here at Epicenter, those of you that are joining the live stream. Today, you will get the opportunity to get to know Alimak Group much better. We have an agenda full of exciting presentations, also plenty of time for your questions. We will start this day off focusing on the group-level topics, covering the New Heights Program, Group financials, and sustainability. We will move on to our first divisional presentation with Facade Access Division and an update on the transformation program.
After the break, we will have presentations on the new division, Height Safety and Productivity Solutions, and strategy updates for construction, wind, and industrial. As I said, we also have plenty of time for your questions today, so we will have one Q&A session before the break and one after the break. If you want to ask a question, if you are joining the live stream, you can just type in your question through the browser, and if you are here at Epicenter, you just note down your question and have to wait until the Q&A session to ask it. We also have an exhibition here today behind that screen. I think most of you might have already seen it, and I encourage you all to take the opportunity during the break and during the mingle to visit that and see our products and talk to our experts.
Just before we begin the first presentation, I would like to run through a couple of housekeeping items. Please make sure to put your phone into silent mode. Safety is our number one priority, and if something were to happen, it's good to know that we have four emergency exits. We have two on this side of the venue, and we have two at the back, one to the left and one to the right. At the emergency exits, you will also find fire extinguishers. The meetup point is where you entered the building at the entrance to Epicenter. I hope we will not have to use them today. With that said, I would like to welcome our first speaker up on stage, our CEO, Ole Kristian Jødahl.
Thank you. Thank you, Mathilda. Welcome also from my to side to all of you. Very nice to gather here today. As you know, we have announced the new financial targets and also sustainability targets this morning. Of course, that's the main task today, to try to explain how, you know, we will get to those new targets. It's two years since we last met. That was the first Capital Markets Day we had in the group, so this will be number two, and that's when we launched officially also the New Heights program. I will also give an insight in what we have done, and now also what's the next steps of this.
What I will also try to show you today is that the group is now a strong, resilient, industrial company, well-diversified, and we are driving sustainable, accelerated, profitable growth. That was really what we set out to do in the New Heights Program, and it's also what we deliver upon now. We have had strong operational performance, I would say, throughout. You see it more maybe in the last two quarters, and then we have also made a very smart and good acquisition of Tractel, which we are managing well. We are accelerating, and therefore we also now raise the bar. First, I also want to address this that you often read in the newspaper. You know, many people, especially maybe here in Sweden, refer to us as big hissbolaget, the Swedish big hissbolaget or the construction hoist company, and we are not.
You know, first of all, Sweden consists of 1% of our sales, we are a truly global business. When it comes to the construction hoist side, yes, construction hoist, that was the basic invention, you know, but that's just one condensed piece of the overall business of the group. We are diversified in segments. You know, we have the Industrial Division, we have Wind Division, which are purely industrial. We have, on the HSPS side, maybe half of that business also ends up in the industrial segments. We have the construction business, which you would think is maybe construction, but this is temporary machines, you know, that we sell typically to rental companies, which then they place in the market where there is a temporary need.
That is when you build an industrial site or you refurbish an industrial site or a building or a bridge or any type of infrastructure. The exposure to construction per se, it's, you know, limited. It's not by far, not the whole group, and the exposure to residential is even much lower. This is important to understand. Looking back, I think this is also an important piece of our history that I often get, you know, questions around, I wanted to address this a little bit. You know, that old Alimak, when I refer to old Alimak, you know, that was prior to 2017, when two major acquisitions was made. That was the, let's say, the Alimak rack-and-pinion technology, Industrial Division and Construction Division, maybe as you see them today. That was always delivering.
You know, that was prior to 2017, delivering 16% and higher EBITDA. The group made two significant acquisitions, which doubled the group, but also lowered the profitability five percentage points in the beginning of 2017. That had a big impact on overall group profitability. Also, to be honest, these acquisitions carried with them issues. They were not integrated in the most optimal way, and it was never really fixed during that time frame. That has been one of the main tasks, and also then why, you know, when I came in June 2020, that we launched a new program to really ensure that we would fix these problems, and also start to get to a point where we deliver upon the financial targets of the group. We launched then this New Heights Program.
At the last cap, Capital Markets Day, we said, "This is three steps." You know, basically, it was to set the base in place. It was to raise profitability and then to come into a modus where we can start to deliver profitable growth, and I come a little bit more back into each of these. The first phase was really, you know, to get the vehicle or a structure or an organization that can, you know, drive this organization forward. It was a very, you know, huge matrix organization coming here, so we condensed that into four divisions at that stage, which were fully owning the P&L, empowered, and they were driving the business. That's the vehicle that we still do have, a very important piece. Making these divisions customer- and market-oriented.
Sounds obvious, it was a heavy a strong- product focused structure in the organization previously, so that was an important part of actually. And how and why we structured the divisions the way we did. Connected to that, of course, to drive product and solution development, because taking more control over your own destiny, making sure that we remain the leader, and this is also something that we have now started, I will show you more examples of, and I think it's, we just basically see the start of. Of course, service has always been an important part of the group. It used to be before, something that Alimak Group took very well care of, but we also felt that it was an opportunity to accelerate and integrate this in a different way.
We moved it from being a separate leg to be integrated into each division. Each division have the full asset lifecycle responsibility, driving both new sales and aftersales. I think lastly, but maybe most important of it all, was to recognize that people is the most important asset of this Group, and therefore, we need to put programs and activities in place to make sure we take care of that asset and really empower this asset so that the organization can, you know, drive together, you know, get the best out of every individual, we drive in the same way. That's also something I strongly feel that we have been able to do and are on the way, really, of, because this is a journey that we are driving forward.
The second step was to secure margin improvements. We launched a restructuring program, and you see some effects of that during the first phase here. It was really to set the division strategies, because these were new, and they needed to, you know, really get into what is it that we need to drive. That had effects on Construction Division and also Industrial Division. Because we saw that from a market perspective, we were too product-focused, so we widened. We have a wider product focus in these divisions. For industrial, it was really the first time that we got an industrial organization in place, really attending to these customers globally, with a, you know, a clear focus, and also working segment by segment.
There, we see that we have developed a lot of solutions specific for the marine segment, specific for the cement segment now, you know, driving volume and business going forward. We refocused Wind Division. That was one of the acquisitions which actually carried one-third of the business, was, tower internals, a business that didn't make margins, so we decided to get rid of that. That's, of course, painful when you know, take a SEK 900 million to SEK 600 million, but that we have been through, and that business now is very well positioned going forward.
It was to launch and also gather, you know, the Facade Access Division business and to start to launch that also, that fixing program, if you like, you know, because Facade Access Division was something that never really had made margins, and they were losing money at that stage. We have been able to lift it, but it's also been a difficult journey with everything. We've refined the strategy, but now we really have the medicine that you will hear more about today, because Tractel, which we have known for, you know, quite some time, they run that business very profitable. Now it's about applying that same type of methodology onto our business.
The third step was profitable growth, and this should be then driven by organic growth going forward, and also, of course, acquisitions. To be able to do that, you needed the base in place, you know? That was Steps One and Two. F rom 2022 onwards, we should be able to deliver growth, profitable growth, and that we did. You know, we grew 9% organic in 2022, even though wind was still down, 21%, through the year, so strong growth in the other three divisions. We started to look at acquisitions, and there, as you know, we did Tall Crane and Tractel.
Tall Crane, Canadian operation, which is doing rental of our Alimak machines into the construction market in Vancouver and also services, so relatively small but very profitable and nice add-on to the construction division, something we closed last summer. The other major acquisition is, as you all know, Tractel, which we will hear more about today. Which is, you know, very profitable, big company, of course. As you know, SEK 2 billion, but with a 20% EBITDA margin coming into the group, so much more profitable than the group. You could say in a way, similar to old Alimak, you know? With these two acquisitions in 2017, which had a completely different profile.
You know, so this we closed in November, as you know, this, or as I've also said many times, acquisitions will continue to be an important part of the strategy going forward and a growth element. We will not be an acquisition machine, but it will be something that we constantly look at and will drive actively. It's a fragmented market with a lot of opportunity. This is basically who we are today. It's an organization with five divisions, where now Tractel is fully integrated, and each of these divisions own their full P&L, they own their balance sheet, they have the full asset life cycle responsibility, meaning, you know, they drive the customer needs and understanding the product portfolio, the services, and take that all to the market.
Facade Access Division Division contains the old Facade Access Division, which were hardly making money in Alimak Group, and they contain now also, 40% of it is actually the Facade Access Division business from Tractel, which was making 20% margin. Altogether, this is around 10% margin today, but with a huge upside potential that you will hear more about. Construction also got a piece from Tractel, the Scanclimber, a Finnish mast climbing work platforms brand that is now also then integrated into construction. Industrial and Wind, more or less, remained like they were. We got this new division, HSPS, Height Safety and Productivity Solutions, which also Philippe will talk more about today, which is a pure Tractel business, very resilient, high margin, and somewhat different.
You know, these are smaller products, lifting and safety products, which is mostly sold through distribution, with high margin and a good resilience in the business. And also these, as I said, these divisions are then owning the service potential, and you see the service, you know, share of all of this. It's a relatively high service share in each of the divisions. There is a high potential for service in each of these divisions, and that has also been a contributing growth factor during the last two to three years, and we foresee it to also be the same way going forward. Well-diversified and a global footprint, and solid divisions now, and a solid structure driving this forward. I talked about innovation and product development.
You know, this is, of course, a very, very important piece that when you are market leader and you want to have some sort of control of your own in the future, you need to be close to your customers, and you need to develop products and solutions that they are ready to pay for. That, we have put a lot of efforts on and accelerated, and it's very nice to see when you go and meet, you know, people in the product development phase today, they see tons of opportunities, and we have so much in pipe. This is an area I just feel that we have started. You see some few examples here. The Medius 350, it's a product we have never made before.
It's actually a machine that can transport people, developed out of a machine that only could transport material. We have made the full cage, and it's a build-up of a simpler machine, something that was never done. It's opened up a new market opportunity for us. The Trackrod, it's something from HSPS, where they have different products, combining it into one solution, where you create then a safe and effective solution to dive into confined space for workers. Sold mostly through municipalities. We have focused a lot also on digitalization. We have developed this platform, MyAlimak, or it's called MyBMU, if you talk about the facade access market. It's MyAvanti for the wind. It's a digital platform, where you can get operational data for your machine or technical data for your machine.
Fully operational, where the customer can follow and control the usage of the machinery. You will also get more about this later today. As an example, on the industrial side, we have made a specific machine for silos, fit for purpose type of product, which we have sold quite a lot of. New developments that are driving growth in the group, and as I said, basically just the start of this. We are also supported by an attractive market overall. You see some examples here. What I would maybe like to talk about is, for example, health and safety. You know, it's a given that, you know, workers should be able to move up and down in a safe way, but it's also the health aspect here, which is important, of course.
Someone who is tired at work because they climb ladders or run up and down, they get more likely to make mistakes. Also, after a long work life, you know, if you have been doing that your whole work life, you're also, your retirement is most likely not to be as good as it can be if you are, you know, having the right equipment or tools to move safely up and down, and avoid lifting heavy stuff, you know? This is something, a trend that we see everywhere and driving fundamental growth. Urbanization and infrastructure investments, of course, you know, land is scarce. It's more happening in smaller spaces, 15-minute cities, more are built at height.
Also on the infrastructure side, lots of investments going, and there is typically also need for our machines, both from a temporary perspective, but also from a permanent perspective. Then industrialization also, if you like, we have seen globalization for a long, long time, but now it's more localizing manufacturing again, so local or regionalized, and that feeds more investments into industrial facilities, which is also good for us, both when they are built and also when they are in operation. Fundamental support in the market for this type of business. That leads to, you know, that overall, we feel that, you know, we have done well, we have a solid structure in place. We are driving product development and have a good position with our customers.
We have made this very nice acquisition. Here we now have synergies to generate. You know, when we made Tractel acquisition, this was a very nice company. Then you need to choose how do you integrate a company. The first and the foremost, when you integrate such a business, is that you need to take care of the value that you actually acquired. You don't want to tear down or start to destroy this fantastic thing that you acquired. That is what we put focus on first. Then it's the synergies to come. You know, synergies, we said 2024, 2025 and 2026, you know, is when we will realize the synergies. We see a very strong drive in the organization, which is again, empowered, you know, to realize these things.
These things are happening, and that's another reason why we strongly believe that we are well set to lift the margin bar even higher. On the revenue side, we are now lifting from 5%-7%, to the 6%-10% target on the revenue side. It's a total growth, so also including M&A, which will be an important piece, as I've talked about, but not the, you know, definitive piece. The organic growth needs to be the fundamental thing here. We have the EBITDA margin, which we then say, coming from 14%-16%, we are already now rolling 12, you know, beyond that, we are at 16.2%. We are saying now the next level is beyond 18%, within two to three years.
The leverage ratio, today we have 2.0x , and that we are raising to 2.5x. We still feel that it's a conservative target for a type of company and the size that we have, and that will also open up for us to continue to be active in the M&A or the, or on the acquisition side, where we see, as I said, it's a fragmented market and small and medium-sized companies, and we can go after both product, services, or technologies. Something we would like to do. The dividend policy remains unchanged. We are also, as you know, updating and extending our sustainability targets. We used to have the one to the left here on the CO₂ side to reduce from Scope 1, 2, and 3 by 30% by 2025.
We are on track on doing that, but now we're also raising the bar there. We say that we will go for Science-Based Targets, that's the next step now that we will do on that part. We are bringing in these other three to take care of the full ESG. We say that our Employee Net Promoter Score should be above 40. We should be 25%, you know, of the peers, top 25%. We say that on the injury side, we should be below 2 LTIFR, and that is also a stretch for the group. Of course, we aim for Zero Harm. That's the target of the group, but you also need to have some sort of realistic step-wise approach here.
That we should do a full ESG assessment of minimum 80% of our direct material suppliers. That also allows us to also cover that perspective fully with our suppliers. That's basically the targets, and what I would like to say now from the beginning, then, you will hear more from the team members which are here, that will give more flavor, and we will do the Q&A after or a little bit later. With that, I say thank you.
Thank you, Ole, for giving us an update on the group financial targets and also an update on the New Heights program. Our next speaker will share some more details on the Alimak Group financials. We would like to welcome up on stage, Sylvain Grange, our CFO, who before the Tractel acquisition, used to be the CFO of Tractel. Welcome, Sylvain.
Thank you very much, Mathilda. Good afternoon. Let's start immediately with a few key recent numbers. We present here the rolling 12 months order intake, revenue, and gross margin since Q1 2021. Those are reported numbers. First, I'd like to repeat here that we have been growing organically. We grew organically in 2022 by around 10%. We grew again in Q1 2023, despite some macro headwinds. My second comment relates to the fact that order intake has been higher than revenue in the last few quarters. That means we are increasing our backlog, and this obviously provides some comfort moving forward as far as the revenue is concerned. Tractel was acquired and closed on November 21, 2022.
Obviously, the Tractel acquisition is making a big impact overall on the growth of order intake and revenue. Regarding gross margins, Tractel has been accretive on our average gross margin. It's important to say that on both legacy Tractel and legacy Alimak sides, we have had very resilient gross margins. This shows that the group has been able to weather the inflation of raw materials in 2021 and 2022. This has implied a very active management of our cost base and then effective sales pricing policies. When it comes to the EBITDA, the Tractel acquisition is making the biggest impact in terms of absolute value. In % terms, the higher EBITDA % comes from a large extent, to a large extent from the operational improvements.
If we take Q1 2023 versus Q1 2022 on an aggregated basis, so as if Tractel had been acquired on 1st of January last year, roughly half of the increase in EBITDA % is coming from operational improvements. We have a higher revenue, a very stable-plus gross margin, controlled SG&As. That means a better drop-through and a higher EBITDA margin in % terms. We are not adding only a good business, Tractel, to Alimak. We are working on improving the profit organically. We are growing, we are profitably growing, and we are delivering on the New Heights program. We propose here an overview of the group on an aggregated basis.
If you take the rolling 12 months sales by the end of Q1 2023, we are SEK 6.8 billion group in terms of revenue, with a 16.2% EBITDA margin. Combining HSPS, Industrial, and Construction divisions, they make roughly 60% of our business, and those three divisions are the highly profitable divisions, with EBITDA margin ranging from 17.5% to 21.5% profit. Wind is now the smallest division, with just below 10% of the total revenue. We have an EBITDA margin, which has been growing in the recent times. We believe the Wind division is on the right track to improve its EBITDA due to a combination of a rebounding market, very tight cost control, and an improvement in the positioning of the offering.
By the end of Q1 2023, Wind has been at 14.1% EBITDA margin. Facade Access Division Division is making the balance, roughly 30% of the total revenue. This is the least profitable division of all the Alimak divisions. We are slightly below 10% of EBITDA margin. As mentioned by Ole, that's basically 20% plus from legacy Tractel and close to zero from legacy Alimak. This is definitely where we see the biggest potential upside looking forward. We believe we have the ability to improve the EBITDA margin of all divisions. Within Facade Access Division, this is where we have the biggest potential. Let's now move to cash flows. We are showing on the left-hand side the evolution of our operating cash flows since Q1 2021.
Those are 12 months, rolling cash flows, and reported numbers. One can see the decrease in 2022, which is basically related to the disruption in the supply chain. We had to increase our stocks to be able to serve our customers. We see that the supply chain situation has been stabilizing in the recent months. We have been able to increase again our operating cash flows. Combining a strong focus on the day-to-day working capital management. Together, we are in a better position, but we believe there is more to be done. We are not fully satisfied with the level of working capital we are having today. Again, there's a potential for improvement in the future.
On the right-hand side, we are showing capital expenditure as a percentage of revenue. We have been below 2% in the last quarters. 1.6% today may look a little bit low, but we believe looking forward, we can stay below 2%. We are a CapEx-light business model. We are doing the final manufacturing steps and assembly work. So really, that 2% expectation is reasonable. In summary, I would say that, you know, we are and we should be a cash-generative business. As I just said, we focus on cash flow in the short term. That's important because we want to deleverage.
By the end of Q1 2023, factoring 12 months of Tractel EBITDA, we were at 2.87x of leverage, that follows the successful rights issue we made in Q1. That will come down in the near future, thanks to our efforts to generate more cash flow. De-leveraging is both an and a mean. Being at a lower level will allow us to go back to the M&A trail, as mentioned by Ole. We live in a very fragmented universe with plenty of good opportunities, which we believe can create value to our shareholders. We want to be in a position to finance more acquisitions in the future. The other capital allocation priorities are the investment in our product portfolio, that comprises mostly the efforts we conduct in innovation.
Any investment we make, we can make to improve operational efficiency. That includes investment we make in our manufacturing facilities. Beyond M&A, product portfolio and operational efficiencies, you know, we obviously plan to deliver according to the dividend policy, and I will come back later to that policy. On this slide, we are showing the synergy estimates, which we communicated when we announced the Tractel acquisition. Tractel and Alimak Group, we have been together as one company for close to seven months. I would say that today, seven months down the line, we still feel very comfortable with those numbers. We think we will deliver those SEK 150 million synergies by 2026. As far as sales are concerned, we see a wide range of cross-selling opportunities.
First, within the divisions, and in particular, within Facade Access Division, where legacy Tractel and legacy Alimak Group have complementary offerings, and to some extent, complementary geographical coverage. Within construction as well, where we have the new mast climber offering of Scanclimber coming into the division. We see opportunities as well, cross-selling opportunities between the divisions. In particular, we trust that the HSPS products can be sold to the customer base of the other divisions. Regarding costs, we have set up a number of very active work streams internally. We are working on SG&A, we are working on sourcing, and then we are working on the supply chain in a wider sense.
You know, if I, if I just come back to sourcing, legacy Tractel and legacy Alimak Group were buying, you know, similar or even identical components, obviously, sharing, benchmarking, will lead to some cost savings. We are very comfortable with that. Maybe one last comment regarding those synergies in terms of split by division. Today, for relatively obvious reasons, we expect Facade Access Division to be the main division, generating synergies. Overall, taking together costs and commercial synergies, we believe Facade Access Division will generate roughly 50% of those total synergies. Before I come to more details around the updated financial targets, I wanted to share with you the historical numbers of a very good company, Tractel, which I joined in 2008.
Really, the main purpose of this slide is to show, you know, the strengths and the resilience of the Tractel profitability over a long period of time. If we look at the last 12 years, there has been no year below 19% of EBITDA. And I could have come back to prehistory. Even in 2009, you know, the year after the Lehman collapse, we were very close to that level. The drivers of this very resilient and high profitability still apply today. Global leadership in niches with high entry barriers, premium quality products, and continuous operational improvements.
Tractel is now part of the Alimak Group, and that opens new opportunities, and in particular, in terms of sales perspective, there are some cross-selling opportunities, which I alluded to a bit earlier, which become possible for Tractel. We feel relatively strongly that being part of Alimak will allow Tractel to deliver more growth than what it has achieved in the past. You know, this cross-selling potential is one of the reasons why we have increased the growth target to 6% to 10%, including M&A. There are some other drivers behind that growth target. We feel confident that we operate in markets which are growing, and this market growth is supported by the mega trends, which were listed by Ole.
That's another driver behind the growth target. The third key pillar or driver for this growth target are the efforts we put into new product development and innovation. Taking everything into account, you know, 6%-10% is something we feel comfortable with. EBITDA margin was 14% to 16%. By the end of Q1 2023, we were at 16.2%. That was obvious that we had to update that. You know, taking into account the expected synergies, the potential for other operation improvement, including within Facade Access Division, you know, we have updated the target to above 18% within two to three years.
Leverage has increased from 2.0x to 2.5x, you know, we felt 2.0x was overprudent given the business model, the cash generative business model, the fact that now we've tracked it, we are increasing the profitability and the resilience of the profits. You know, benchmarking ourselves with other comparable companies in the Nordics, 2.5x is still on the prudent side and allows a little bit more flexibility to finance to finance new acquisitions. Finally, the dividend policy remains unchanged. You know, we have a dividend payout ratio of 40% to 60%. Maybe most importantly, beyond that policy, we have an ambition, and that ambition is to grow earnings per share and dividends per share every year. Thank you very much.
Thank you, Sylvain. We have talked about delivering profitable growth, but how we do it is also very important to us. Therefore, I'm very happy to welcome up on stage, Charlotte Brogren, our Chief Technology Officer, who will present more about sustainability. Welcome, Charlotte.
Thank you very much, Mathilda. Great to see so many of you here today. I will now spend the next couple of minutes to talk about how we work with sustainability in Alimak Group. First, I actually would like to highlight that our business is about sustainability. Our core business is to ensure that people can work safely at heights in various industrial segments, in the infrastructure segments, and at construction sites. Safe and good working conditions is actually being addressed by several of the United Nations Sustainable Development Goals. To stay relevant today and tomorrow for our customers, for our employees, and as a business partner, sustainability can't be an isolated activity that is performed by a special sustainability department. It must be integrated into everything we do. Oh, sorry. Oh, sorry. Need to press a little bit harder.
As you heard here from Ole, previously, we have now launched new sustainability targets that no longer only address the environmental part, but also the social and the governance part. I'd like to give a little bit more flavor to why we have selected these targets. First of all, happy and high-performing employees is the foundation for everything we do. Therefore, we have said that we should have an Employee Net Promoter Score above 40, and that will position us in the upper 25% compared to our peers. It should, of course, be safe to work for us, and that's why we just recently launched our vision, Zero Harm. Now, for the first time, we also have set a target, a KPI, to ensure that we are working towards this vision.
We are using the KPI, Lost Time Injury Frequency Rate, which may basically means how many hours do we lose because of injuries related then to million of hours worked. Of course, we have our carbon footprint target that we set two years ago, that we are working hard toward, towards to reach. As you also heard from Ole, our aim is now also to go and commit to Science-Based Targets over the next 12 months, which will put further, or, which will then make us come even further than the target that we set two years ago. Of course, manage our value chain is of key importance, both from an environmental perspective, to reach the carbon footprint, but also, of course, from a social and governance perspective.
We have now intensified our work to assess our suppliers, to ensure that we are partnering up with the right suppliers and minimize the risk in our supply chain. To work on all these aspects, we have to integrate sustainability in a broad and holistic perspective in all we do. We have set a framework for that consists of three parts: sustainable relationships, sustainable solutions, and sustainable operations. Sustainable relationships is about how we interact with all the stakeholders around us, customers, suppliers, shareholders, employees. It's about who we are. Solutions, sustainable solutions is about the products and services that we provide, and of course, with the aim, with the maximum customer benefit, but also with the aim to minimize the environmental impact over the lifetime.
Sustainable operations is about our factories, sales offices, and service organization, and to make sure also that we internally live our own values. Since the New Heights program, we have started a number of activities to address this important topic, and I just want to highlight a few of them. We have, for example, launched a program called Women Lifting Women in order to share and build a larger network about the women in the group, but also then to inspire more women to take on leading positions. My colleague in the management team, Annika Haaker, has also lately introduced a number of very important processes for us to manage talent in a good way.
Of course, even though we are now a larger group, it doesn't matter how large you are as a group, you can't solve everything within a company. You have to work in an effective ecosystem. While we also have increased the number of collaborations with industrial partners, with academic partners, and other organizations. One we are especially very proud of being partner of is Engineers Without Borders, which is a volunteer-based organization working to solve engineering challenges around the world. Becoming more digital or using digital technologies to improve our products is a core element of each all division strategies, that has led to that we have been able to launch more intelligent solutions, but also tools that make it easier to plan using our products, install them, and use them.
All of that is both good for the wallet of our customers, but also good for the planet. Working over the lifetime with the products and the tools will allow us or give us a much better chance to improve the utilization of the products, less downtime, and also extend the lifetime, which is extremely important in order to be able to address the Scope 3 of our carbon footprint target. We have also introduced a number of activities to save energy across our operations, and we have had programs to move our electricity to green sources. I'm very pleased that by end of last year, we could see that more than 75% of the electricity used in the group was actually coming from renewables.
In order also to improve operations and services, we have made a partnership with a smaller software company in order to improve specifically the service part, to ensure that we can have planned a service in a good way and ensure that we have the right spare part at the right time, at the right service van, which is a very important piece in order to go more towards predictive maintenance, which is also saving both money and carbon footprint for us and for our customers. Many, many activities are underway, and more will, of course, come. What about results so far?
For the carbon footprint, which is the target that we launched two years ago, we can already see now that, 2022 compared to 2019, in our own operations and traveling, we have actually been able to reduce with more than 30%.
When it comes to Scope 3, which is basically what is happening at our suppliers, how we transport material, how we transport our products out to site, how we install them, and how we use them, to address that part, we are using a methodology called life cycle analysis. We have now been able to cover almost 50% of our major product lines using that methodology, which is a key thing in order to know so that we know what actions should we do to be able to address the Scope 3. Here are two examples, one from Facade Access Division and one from construction. As you can see, on Facade Access Division, it's the upstream part that is the biggest part of Scope 3 for that type, for that division.
Here is very much about what material are we using and how are we designing that type of products. On the construction site, on the Construction Division, is actually the usage phase that is the biggest contributor to the Scope 3, here is about now to see how can we develop and utilize better drivetrain technologies, take care about the, all the, yeah, how we operate those machines over the lifetime. What I would like to say with this is that there is not one-size-fits-all to address the Scope 3. We have to tailor-made that to each division, depending how the business looks like. Last but not least, people, people. Last year, we actually launched our first sustainability week in the group.
The aim with this week was to increase the awareness and increase the understanding of all our employees about this important subject. The week was a great success, and very many ideas were generated, but what was even more important, a great engagement from all our employees about this very important topic. I like to sum up my presentation about saying for us in Alimak Group, sustainability is not the icing on the cake, it is the cake. Now with these new targets and a good engagement from the whole organization, we have a very good momentum on moving forward. Thank you very much.
Thank you, Charlotte, for giving us an update on the Alimak Group sustainability targets and also the progress so far. It is now time to move on to our first divisional presentation of today, with Philippe Gardien presenting the Facade Access Division transformation that he launched as part of the Tractel integration. Welcome up on stage, Philippe.
Thank you. Thank you, Mathilda. Hello, everyone, my name is Philippe Gardien. I had the honor of leading Tractel for six years, and I now have the honor of leading two of Alimak Group's divisions. I'll be presenting the first one right now, Facade Access Division. I joined Alimak end of November last year, and I toured the world for approximately two months to meet everybody in the Facade Access Division division. Not very good for my CO₂ emissions, I'm sorry, Charlotte, but that was really the best way for me to understand the differences between the two legacy organizations. As an introduction, I'd say we are addressing the two legacy organizations are addressing the same market, right?
Permanent access-type solutions for buildings, for infrastructure, we are addressing it in very different ways. The legacy Facade Access Division way was about products and technology and manufacturing. That's the way they looked at that market, looking mostly at the premium end of that market and the medium, mid, and mid-market as well. Whereas the legacy Tractel part of the organization was looking at this market as an EPC contractor market, as a projects business, not as a products or a manufacturing business. That's quite different way of looking at the same business, and of course, we had differences in profitability, substantial differences in profitability. First thing I did is embark with my team in a transformation program. It has 12 work streams.
It looks at every part of our business, from sales, how we sell, how we tender, how we execute projects, where do we source our machines from. Everything is, we're leaving no stones unturned, right? Twelve work streams, six of which are closed by now, and six of which will be continued until the year end. I'll go more into details as to the transformation we're going through. We are a SEK 2.1 billion business with a 9.1% EBITDA margin, 12 months to end of Q1. As Sylvain pointed out, we are not the most profitable part of Alimak Group. To be quite clear, I like to be top tier, you know, student in the class. I don't want to be the last student.
I like to be the 1st student, and I think this is also the case for my team. It is clearly upon me and upon us as a team to get us to the top tier student in the class. We are enjoying 20% to 30% of services, spare parts, inspection, maintenance, training, part of our sales. A substantial part of our sales is around service business. We're providing all sorts of permanent access equipment, both the very bespoke, highly engineered ones, for infrastructure and for buildings, as well as the medium range or the simpler products that we install on buildings, and buildings and infrastructure. Now, there's three important things about this merger of the two organizations you need to know, and I'll explain all three. The 1st one is this one.
Legacy Facade Access Division was looking again at the premium end of the market, the highly complex part of what we're delivering for buildings in particular, and had developed a whole set of product portfolio around that. Legacy Tractel was looking more at the medium to lower scale of that segment. Same market, but different segments. What this means is today we have an organization that can deliver all products, from the highly complex, highly engineered, to the very simple ones for that specific market. We have complementarity of the product portfolio between the two organizations. On this small diagram, that basically means we can address any and all sorts of access, permanent access topics on a building to deal with any sort of facade or any sort of infrastructure building, through the Facade Access Division product portfolio.
You'll see on here some other pieces of equipment, such as the fall arrest systems, safety ladders, guardrails, and these are typical products that Tractel brought into the group, now HSPS, and that's one of the cross-selling opportunities that we're referring to, right? In any tender from Facade Access Division, where there is a guardrail, a safety ladder, a horizontal lifeline to be installed as well, that's coming from the Height Safety and Productivity Solutions division, the other side of my brain. Second thing you need to know about this business, combined business, is geographical focus. We had two organizations that actually were looking, had developed their business differently, right? The Tractel legacy business was essentially a North American business, 71% of sales, North America, 20% EMEA, and a small presence in APAC, essentially in Singapore. Tractel legacy, North America, Europe, Singapore.
Of course, when you combine the two, it makes a very nice fit, right? We now have a business that is more or less 37% to 38% between North America and Europe, EMEAI, not Europe, EMEAI, and a slightly smaller business in APAC. Not only that, but actually, those countries where one legacy organization was stronger than the other, those long countries were complementary as well. You know, we were, Tractel legacy, were very strong in Singapore. Facade Access Division legacy was very strong in Hong Kong and Australia and Shanghai, right?
Tractel was strong in France, Facade Access Division was strong in Netherlands, Germany and Spain. We're lucky in a sense, but the complementarity is also at the country level. This also means that one of the first things I did is create a regional team, right? We have three regions, three teams, and I'll come back to that. That was the first thing I did as part of the transformation program, is to create a team, and we actually have a team, one of the team leaders in this room with us, Matthew. Third thing, important as well, our combined installed base of assets, BMUs, but not only BMUs. It's huge. More than 10,000 assets across the world. Large presence in Europe, obviously. We estimate about 40% of these assets are more than 20 years old.
This is all very good business for service, but it's also very good business for retrofits. Retrofits is where we make a lot of money and a lot of margin. This is clearly key in our strategy going forward to push the services and push the retrofit even more than we've done in the past. I know Alimak has been pushing the services in the past, and we're going to continue doing that, but pushing even more on the retrofit side. Again, with this huge asset base, with a large number of them being more than 20 years old. Right, I'm going to spend a few minutes on this slide, but again, what's important is that it's a process. It's quite deep within the organization because we are merging two organizations that, again, had a different approach to the market.
We're talking about people, we're talking about individual competencies, we're talking about processes, we're talking about IT tools. Of course, it's not a five-minute exercise. I'll still take you through a few of these topics that we are changing at the moment. First one is organization. The first point I already discussed, which is three have these three regions, more or less of the same size, APAC being slightly smaller, three teams. three teams, which means three leaders and three regional teams around those leaders. It's not just about time zones, business cultures, languages, it's also because those three regions have different opportunities and different challenges each.
I want my management, I want to increase the management input into what we do, and I want those managements to be located as close as we can to our customers and our teams. The second thing we looked at is we are actually dealing with two different, very different types of customers, where when we are looking at selling of new equipment versus selling services, spare parts, and retrofits. The first type of customer is the typical EPC contractor. That's a key market for selling new equipment, whether it is for buildings or infrastructure. The second market is more facilities managers, property owners, to whom we are maintaining those assets over a long period of time, and to whom we are proposing these retrofit jobs.
On the first segment, the EPC contractor, we need specific skills to be able to address this market around project management, typically, around contracting, around claims management, right? We can't have those skills everywhere. We want to have density of our business, that's why we created centralized teams in every region that will deal specifically with sale of new equipment. We have one team based in Toronto to cover North America. We have one team in the UK, one team in Luxembourg, one team in Dubai to cover EMEAI, and we've got a few teams in APAC. Those teams are dedicated to dealing with the EPC contractors, making sure we engage properly with the EPC contractors, making sure we take care of the terms and conditions when we're engaging, and making sure we're delivering the margin.
At the same time, we also have, as I just showed, a very substantial part of our business around services and retrofits, and we want to push retrofits. Those teams are very local and there's, well, basically one per country where we are very present. Okay, centralized teams for the EPC contracting business, selling of new equipment, services, local services team to deliver the services on the ground in every country. On the commercial side, we changed quite a few things, right? We used to have two brands. We now have three, right? That means brand management needs to be adapted, and it's not a, it's not a one answer for the world. Actually, it's adapted on a country-by-country basis. Some countries will maintain one brand, and some countries will maintain three. Right?
In a certain way, for the sale of new equipment, the branding is not that important, right? The general contractors do not necessarily care much about the brands, but it is very important on the services side, because we go to the property owners or the facility managers, and we are the OEM, right? We need to make sure we manage the brand as thinly on a country-by-country basis. Channels to market, we have approximately 100 channels to market to manage. We looked at the two channels to market from the two legacy organizations, merged them, and kept most of the distributors and the relationships we have to cover 100 channels. It's a combination of our direct sales force, distributors, installers. Sometimes in some countries, we have the two, right?
Sometimes in some countries, we have competing distributors, which we are managing, right? We went through that process as well. That's pretty much done. Tendering and margin expectation, that's probably one of the key differences as well between the two legacy organizations. Clearly, we, as legacy Tractel, had higher margins expectations, right? In some parts of the world, we have upped those margin expectations, and therefore upped prices, and that's typically the case in North America. In North America, Tractel legacy was quite a big organization. We reversed integrated the legacy Facade Access Division organization into the legacy Tractel organization. It's a running concern, right? The job is done in North America. We have all the systems. We are pushing out these new tenders out to the market. Everything is aligned. We're using the same tool.
The work is more or less done in North America. There's still quite a lot of work to be done in EMEAI and in APAC on that front. Basically, we're pushing margins up, right? We wanna bring in those tenders. We wanna bring in those orders into our backlog of a better quality than was done in the past as Facade Access Division. Contract management is another topic, right? I see all contracts above 1 million: $1 million, EUR 1 million, SEK 10 million. I see all of them, right? We need to make sure we engage with EPC contractors in the right way, right? With the right terms and conditions, not too onerous for us. Last but not least, operations, so project management. Again, differences in approaches from the two legacy organizations.
We are running a full program to hire, train, coach project managers to be able to deliver these projects. Make or buy, the two organizations were different there again, right? It was make as Facade Access Division, it was buy as Tractel. Today we have the option. We can choose to do one, to do the other, and it really depends on a case-by-case, tender-by-tender case, whether which one we choose, but we have the choice. Then, of course, every time we can merge offices, get synergies from procurement, you know, we, the two legacy organizations, we're buying motors, they were buying drives, they were buying wire ropes. We are merging all this to make sure we get the procurement synergies that we are expecting out of this.
As a concluding remark, I'd say, I now know this organization for a few months. The transformation is well on the way. Again, we've done most of the job on the, on the North American side. There's still a lot to be done in the two other regions. I feel extremely confident that this is gonna be a good journey, and that we will go from being the last in class to being number one or maybe number two in the class, because that's the position we like to be in as Facade Access Division. Do you agree, Mathilda? Thank you very much.
Thank you, Philippe, for sharing the journey that you are currently on. We have heard about the new financial and sustainability targets, an update on the New Heights program, as well as the Facade Access Division transformation program. I'm sure that you in the audience have a lot of questions for our presenters. It's time for our first Q&A session. If you have a question, you just raise your hand, and Johan will come by with a microphone. If you are watching the live stream, you can just type in your question in the browser, and I will read it up later. I welcome up on stage Ole, Sylvain, Charlotte, and Philippe.
Thank you.
Thanks. Do we have any questions? Yes. Yeah.
It's on.
Okay. Thank you, and thank you for a nice presentation. My first question is on M&A. When can we start to see you, yeah, doing acquisitions, and how much of the revenue targets would you say comes from acquisition?
To take the last first, you know, the bulk of the growth needs to be organic. That's what we are driving and measuring all divisions on. That's organic growth, so that's what we will live from going forward. As you know, the target is also containing acquisitions. We have not given an exact split, but, yeah, it's a solid piece that needs to be organic. Acquisitions, we, you know, we had the 2.87x in leverage after Q1. We say that, you know, in principle now, it's 2.5x. That, and with good cash generation like we're having, we should be able to actually drive acquisitions relatively soon again.
We have a nice pipe, we work on the pipe, and it will be an important part of the strategy going forward, without giving exact timing, you know?
Thank you. Then in Facade Access Division, would you say there is any reason that the legacy Alimak Facade Access Division, that they can't, because I know they focus, you focus more on taller buildings. Is there any reason that you can't reach the same type of margins in that area as in the Tractel part?
I don't see any reason why. again, we are through a transformation program that is quite deep because we are changing the culture, we're changing the mindset, we're changing the tools, we're adding competencies. it's not a five-minute exercise. again, as legacy Tractel, we did it. there's no reason, there's absolutely no reason why we can't do it as a combined organization. again, no reason why we can't do it. yes, I'm quite positive about the outcome.
Great. Last question then, 'cause the EBITDA margin target is pretty ambitious, and I assume the Facade Access Division will contribute the most. Could you say like I made some calculations, like 15% Facade Access Division margin, is that reasonable to believe within 2-3 years?
You know, I can't give you a specific figure, but clearly, you know, we have a good operational momentum in the group, which you need to take into account. We have synergies that we have basically not started to, you know, report upon as we speak. We have Facade Access Division that we clearly see that we should be able to, as Philippe was saying, there's no logical reason why we shouldn't be able to manage, you know, that overall business the way Tractel has been doing it. There is a solid upside potential in this. It's several areas that will help lift the margin going forward. Mm-hmm.
All right. Great. Thank you.
Timo Heinonen at Handelsbanken. I'd like to continue with the margin target then, and given the synergy potential, what you have communicated as well as the potential to improve Facade Access Division profitability, I think it could be quite easy for you guys to reach 18% plus margin in the coming few years. Is there something what you are worried, something which is holding you back that you are not talking about 20% or more in two, three, four years?
No, you know, I think it's important to remember a little bit of history also. You know, the group did never ever deliver on its financial targets, you know, before we then started and launched this New Heights program. That was one of the main things that was the target of that program, to ensure that we are delivering on our commitments. That we were able to do within two and a half years, actually, which I'm proud of. Now we feel that it's the right time to take the next step. We are saying plus 18, which means that it's plus 18. We also know that we live in a, you know, turbulent world with a lot of things around us.
Also remember, it's not that. You know, we are not talking about five years out, we're talking about within two to three years. I'd rather ensure that we are actually doing, continue to do what we are saying that we should do, and then we can talk again when we have done that, you know. I'd rather like that type of approach. I don't know if you want Sylvain to add.
I absolutely concur with your view. You know, we want to be above 18% within two to three years. We are not saying this is the end of the journey.
When is the next Capital Markets Day?
You will be invited.
You will be invited for sure. We, you know, we feel passionate about this business. We see plenty of potential for improvements in various areas, today we are working on, you know, the plan for the next two to three years. We want to complete the Tractel integration. You know, it will take time to uplift the legacy Alimak Facade Access Division margin. It's not a five-minute exercise, I repeat Philippe's words. We feel, you know, it's a nice step to have two to three years to go to 18%, then we'll have another discussion.
Okay, thanks. You said that you have a high focus on a net working capital, and of course, everyone understands that why it's up or been up in the last couple of years. What is the level, compared to revenue, for example, where you see that it should be?
That's not part of our financial targets, you know, you saw in the Q1 report that we increased working capital again in Q1, and I think, more than just proportionally to the increase in revenue. You know, we can do better without providing a specific number. We are focused on that. I mean, I would say that historically, legacy Tractel was highly focused on cash generation. You know, being together, we can share some practices. The room for improvement, again, takes a little bit of time. It applies to all divisions, but if we take Facade Access Division, it's related as well to the transformation.
You know, the way we work, we project manage the business will have some positive effect on the cash flow curve of those projects. You need to give us a bit of time, but we see the roadmap, and then we see that we can improve that.
One more, if I may. What has been the cash conversion at Tractel over the years and return on capital employed? Do you see that the new Alimak Group can reach the same levels?
Yeah, I have to tell you very frankly, you know, being from a private equity environment, ROCE was not exactly something which we followed very closely. In terms of cash conversions, we were really on the high side, above 80%. You know, that's something which we should be able to achieve looking forward.
Yeah, we had a question in the back?
It's Carl-Johan Söderberg from SEB. I have a question also on the margin side. I mean, you sound very confident that you will reach basically double the margins in Facade Access Division, and it's 30% of the business, that's 3% margin, on the group level. I'm just curious, should we see the 18% as some kind of floor going forward in two to three years, that you've seen that you can do even in a weaker market? Or how should we see the targets?
No, but, you know, it's also this thing, you know, that we say we are confident that there is no fundamental reason why the overall or the, you know, the legacy facade access business of Alimak Group should not be able to make what the Tractel Facade Access business has been doing. And we, you know, are working on that, and we will improve that. How fast, exactly, before you can maybe reach those type of levels? We have not said that this is a two to three-year type of journey. It is a journey, and that it's a job that needs to be done, but we also have other jobs that needs to be done.
That's why we are, you know, some of this, we believe that we feel relatively confident, as you say, that we should be able to deliver above 18% within two to three years, and that's our focus. These are the main areas that we will work on, that we will, you know, to achieve that. Next steps, we will have to take later, you know? I'm not giving exact timeframe, but we, you know, this is what we are working on. Mm-hmm. Yeah.
Maybe to add some color to that, there is some inertia in our business, and this particularly applies to Facade Access Division because it's a backlog business. We have a backlog which is 18 months to two years. You know, overall, the quality of the legacy Alimak Group backlog is not the same as the legacy Tractel. You know, there are some mechanism which does not allow us to say, you know, all the job will be done within two to three years in Facade Access Division. You know, it's likely to take more time.
On the growth side, I mean, you're raising your growth target, but the organic portion of it, how should we see that over time? Do you see that it should be, you know, how much should it fluctuate from year to year? Because as you introduced with saying that Alimak is not a construction business, which I think people that's the perception that it is. I'm just wondering a bit on, you can elaborate how cyclical you think you are, and how we should see the organic growth targets.
Yeah. I think people often refer back to what Alimak Group was here in Sweden, you know, when it was listed. It was very cyclical, because then it was the legacy piece, which was mostly about the construction. Now this group is completely different, you know, with the stepwise acquisitions and the way, you know, we are set up today. We are completely, you know, a different business today than what we used to be. There is a fundamental resilience in this business. We are supported by these global trends, which are also there, you know, to help feed the growth.
And then we are organized now, like, you know, a market-driven, customer-driven organization, where we work close with our customers to understand their needs and thereby develop solutions and the products that will help them in their daily life. Construction market earlier, we were more selling a hoist. Today, we work with, or on construction sites, developing logistical concepts, you know, how to optimize the flow of people and material at a logistical site. When you are in that type of the business, which we are moving towards and are taking part of now, then you also become much less cyclical. So we feel that we have really made fundamental steps in that way.
To quantify it, I can't really give you a good figure, that organic growth is a fundamental piece of our business for these reasons that are in our hands, and that's what we're driving. Actually, that's also how we are following the divisions. You know, that they only have target based on organic growth. That's what we want to see. We will more, you know, spice it up with acquisitions and, you know, what we can add there. That will also be an important part, but not the driving factor.
Okay, thank you.
Maybe if I may add, one, and to repeat what Rulle said earlier, in all divisions, we have quite an important service segment, which is, you know, because I think your question is, what is your exposure to cycles? This service component is not really exposed to cycles. And, you know, there is a big component overall in the group, it's, you know, a little bit below 30%. The second, you know, there are many mitigating factors against cycles. Diversification is another one. I would mention as well, the different book-to-bill patterns, depending on the divisions. You know, we said earlier that in Facade Access Division, the book-to-bill pattern is, you know, 18 months, two years, can be several years.
If you take HSPS, which is the other division led by Philip, book-to-bill pattern is a few weeks. If there is a strong recession tomorrow morning, the different division will not be affected the same way. Really, we know, our exposure to cycles in general is mitigated by all those factors, our exposure to construction is only one of the end applications, and we're exposed to industry, to energy, and other markets.
Thanks.
Yeah.
Hi, Sylvain. A follow-up on this cyclicity, cyclicality thing. Is it fair to say that if you were to get into a recession-
At that point of time, the share of the highest revenue bid, which is the aftermarket, will sustain profits. Given the relevance of the working capital needs of the business, cash will be released. If you sell less new equipment, you have a positive impact on cash flow as a consequence of significantly lower working capital. At that point of time, the group margins increase because of the greater weight of the aftermarket heads, giving you some resilience.
So, uh, yep-
Yeah, go on first.
Yep, I mean, regarding working capital mechanism, absolutely right, you know. If I look at the, let’s say, the part of the business which I know the best, Tractel, is exactly what happened after the Lehman collapse. You know, we had a very high cash flow generation because the working capital came down. That’s absolutely. In terms of margin, you know, we don’t disclose the respective margins between service and new equipment. Yes, services in general in the group are delivering good margins. You know, if we had a recession, you know, that will support us. Again, I come back to my book-to-bill pattern.
If I look at the Facade Access Division business of Tractel, the revenue in 2009 was higher than 2008. You know, if we have another Lehman collapse tomorrow morning, we are likely to grow the revenue of Facade Access Division because of the high backlog. You know, it's, the exposure to cycle really is spread over time in our business.
Mm-hmm. Yes.
Thank you. Maybe a question for Ole. If you consider yourself not being exposed to construction markets to a large extent anymore, what would you say are your three largest end markets, and what do they account for in terms of sales?
Yeah, we don't disclose any type of, you know, split exactly in that sense. I don't say that it's not an important piece, the construction market, of course. The construction market is an important piece of the group. It's just to make the point that this is not what it's about. You know, this group is about so much more. Also what we see about these days, when there is a lot of discussion about, you know, the interest rate hikes and, you know, when the property companies are going down on the stock exchange here, you know, we are going down because they believe that we are exposed to residential also, I think, you know? That is even a smaller piece of that whole cake. I cannot give you a segment split.
Still, of course, Construction market is an important part. Look at, you know, Wind is an important business for us. It's a big division. All the industrial segments, where you have marine, you have oil and gas, you have cement, you have. Yeah, it's a vast number of segments in that business. On the Construction, you have all the infrastructure elements which are coming into this, et cetera. We are very widely spread in that sense.
Understood. Maybe two questions for Philippe. Firstly, on the regional split between Tractel and legacy Alimak, it was a big difference. Do you see major margin differences between the different regions? That might be one reason for why Tractel performed much better than legacy Alimak.
That is not the main reason for the difference in the margins between the two legacy organizations. I think the main difference lies in, first of all, the margin expectation when you take a new job on. They were lower from the, on the legacy Facade Access Division side than they were on the legacy Tractel. At the time of signing, you already know you have less margin in the job. Then there were differences in how we execute projects. Again, a very strong culture of project management on the legacy Tractel side, and a much lighter one on the legacy Facade Access Division side. You sign a project at a certain margin, then on the Tractel side, you tend to manage that margin, and you end up with more or less the margin you're expecting.
Sometimes on the legacy Facade Access Division case, that was not the case, right? You were losing margin along the way as you execute projects. These are, for me, the two main differences in the difference in, in the way the two legacy organizations were functioning.
I guess that's answered my second question as well, because that is now what you're going to change then, to price-
That's-
price legacy.
Correct.
Okay.
That is already changed in the work streams. I explained the six that have finished. That's already changed for the tender part, right? At the time we receive a tender to the time we sign a contract, those targets have been changed already, so that's done. We're working on the second part. The second part, in North America, we had a very large legacy Tractel organization, so it's simpler to integrate the smaller facade access team into the larger North American organization. It's going to take a bit of time in Europe and APAC to make sure that on the project execution side, we don't lose margin, we claim when we have cost increases that are due to our clients. It's all about project management, contract management, claim management, and that takes more than five minutes to put in place.
When we exit 2023, all of that should be in place, I guess. What are the lead times from your order intake until your deliverance?
I'll refer back to what Sylvain has just said, which is that I inherited a backlog, you know, back end of last year when I joined Alimak. That backlog has more or less an 18 months lifespan, right? We're looking... 2023 will not be enough to just get all the older backlog from Facade Access Division out of the way. There will still be some of that in 2024, but what's sure is that all the new jobs we're taking on are with the new expectations.
Okay. Thank you.
Good.
Thanks. I think we have time for one more question, and we have received one here for Charlotte from the live stream. Tobias is wondering, how does Alimak Group's focus on digital solutions and the New Heights Program create opportunities for revenue growth and market expansion? What is the projected impact on the company's financial performance in the coming years from these projects?
I can answer the first part, but not on the financial impact. I mean, everything we do is doing to support the financial targets that was presented. We are using technology in a broad perspective, first of all, to improve our own processes, how we work internally, get rid of manual work, automate processes, get out of using paper and Excel and so forth. Integrate better controls of our products will allow us to lower weight of products, to perform better, to allow our customers to use the machines in a better way, to predict when service is being needed, not just do it on a time basis, but actually on a real need. There is a waste of opportunities of using digital technologies also in our sector.
I may, if I should also further comment, you know, on the financial impact, maybe people. When you are driving these type of initiatives that we are doing here, if you take, for example, coming back to the, to the construction market, you know, this is the future of the construction market, not only to apply a machine there, but to make the, you know, the full process integrated. I think in the future, we will see construction sites more be like an industrial site, you know, up to 4.0x, where everything is scanned and planned, and they're moving according to a certain structure. We are in these type of projects today with other actors in the construction industry. Then, of course, you know, all the people and all the material, they are running through our machines.
You need control over these machines. They need to be smart. They need to be able to document and to be able to be controlled. Today, we are not making money on these things, but we are leading the work in the industry on this, and we are convinced that, as an example, in the construction market, this will be a vital part where we will also make money in the future.
Can just as an example, in Gothenburg, on the other side of Sweden, there is a very high building being built now, Karlatornet, where we have a number of construction hoists. If you look at the amount of waiting time, if you're not have designed the hoist system in a, in a, in a good way, and measure the cost of people not being able to do the work because they are waiting to get on, up on the right level, that is a huge cost, and that's why it's so important that we can model how we are using the hoist in order to improve the logistic both flow of people as well as material on large construction sites.
Good. Thanks.
That can only be done if the machines, we know how they operate and can control them in real time.
Thanks. Now it's time for a break. If you are joining the live stream, you have until 4:50 to stretch your legs and maybe grab a coffee. For you that are here, I encourage you all to go and visit the exhibition over there and talk to our experts. When we meet back here at 4:50, we will get an introduction to our new division, Height Safety and Productivity Solutions. See you back then. Welcome back to Alimak Group's Capital Markets Day. For new viewers, my name is Mathilda Wernhoff, and I'm Chief Strategy Officer at Alimak Group, and also the host for today. We have three interesting presentations left in our agenda before we move on to the second Q&A session of today. Let's get started right away.
Now it's time to get to know our new division, Height Safety and Productivity Solutions, better. For that, I would like to welcome back on stage, Philippe Gardien.
Thank you, Mathilda. Me again, Philippe Gardien. I'm going to present the new guy on the block, Height Safety and Productivity Solutions division. I'd just like to introduce the fact that it has the activity in this division is somewhat different from the rest of the Group. We sell thousands of different products through 10,000 distributors around the globe, so that's clearly a difference. At the same time, there's a lot of similarities with the rest of the Group. We are active in the height safety and working at height segment. We are working on the same norms and certifications as we are for the other sister divisions. We are global. We have a lot of the end users that are the same clients.
You know, a few differences, but a lot of similarities as well. We are a SEK 1.3 billion division enjoying close to 20% EBITDA result. As Sylvain mentioned earlier today, this has been a very profitable business for a long time, highly cash generative, and it will continue to be so for a long time as well. With 17% share of the business in services, the name of the division is a bit of a mouthful, Height Safety and Productivity Solutions, but that's what we do, right? We provide height safety products and solutions, both personal protective equipment and collective protective equipment. Harnesses, you have an example next door. Harnesses, anti-fall harnesses and lanyards, but also guardrails, safety gates, those sorts of equipment.
At the same time, we also provide productivity tools, winches, hoists, individual hoists, whether they're manual or electrical, and we do that throughout the world. Maybe I'll spend one or two minutes of your time just showing you a few of these products and their application. A few things I'd like to mention around this new division. The first one is we operate with very strong brands. Some of them have been, I'm thinking about the Tirfor, has been in operation for 70 years. We still sell a lot of Tirfors, and Tirfors are Greifzug in German, or Grip-Hoist, in the U.S., but they're the same product that we have been selling for a long time. They're, in a sense, a household industrial name.
Our end clients will go through one of our distributors and say, "I want a Tirfor." Right? They point out to exactly that brand. Of course, having such strong brands for such a long time enables us to exercise market power and pricing power in particular, right? Having these strong brands is an absolute huge asset for us. The second element is the exposure to very many different end user markets and applications, right? We are a big provider of tools and technical solutions to the elevator industry, right? Our tools, our TRX, you have a couple of examples just next door.
Our hoists, our winches, are used on a daily basis as part of the method statements of our elevator clients to install new elevators, and those tools are specified in, and they're used by all major Western elevator companies. We're also in the fire and rescue with our new confined space in particular, and the Tirfor that I've just mentioned. We are in light manufacturing, we are in the utilities business, we are in the construction business, so we have a very wide array of end user and applications. That obviously gives us resilience through time.
This slide is slightly complicated, I'm sorry about that, but, what I wanted to show here is that we are a player in both the height safety and the productivity solutions market, we are actually addressing a small niche of those two markets, right? We don't sell hearing protection, we don't sell gas and flame detection. We sell anti-fall safety protection. We are in those segments where the margin is high, and the growth opportunities are great. This gives us two main things. One is we have the choice to go into another subsegment of those two markets, right? Which is what we did a few years back in 2017, we invested in the U.S., in the safety gates and guardrail businesses. Very profitable, high-growth businesses.
We were not in those businesses prior to that, right? It gives us the opportunity to grow in those, in those adjacent segments. The second thing is we decide which battles we fight. Those markets are huge markets worldwide, and some of our competitors are gigantic, right? We're talking 3M, Honeywell, right? We decide which battles to fight, and those battles we fight are those battles where our right to win is the highest. Do we have the right technology? Do we have access to the clients? Do we have teams on in that country? We will select those battles to fight where our right to win is the highest. Take an example.
We had the choice between going after the oil and gas, safety harnesses market in the U.S., where there are very big, very large, very entrenched competitors, or to spend our money and resources in developing our confined space set of products and solution, and developing a new market with municipalities and underground network operators. We chose the latter because our right to win there is much bigger. My job and my team's job is to decide on those battles we want to fight. Again, being a niche player. We sell two-thirds of what we produce through distributors, approximately 10,000 of those, and one-third direct. Elevator being a typical client we serve directly. Our work is twofold. One is about the segmentation of that 10,000 distributorship base, right?
Not all these distributors are as important to us as all the others, right? It's a 80/20 priciple . We're going to be focusing most of our efforts on the 20% of those 10,000 distributors, which are going to bring us the most growth. We're going to help them and support them and help them with marketing and help them through innovation and marketing that innovation. The second battle is with the end users, where we decide again, which ones do we want, which segments, which applications, with which end users, in which countries do we want to, do we want to deploy what we know how to do best, right? Again, confined space is a typical example. That range of products and solutions didn't exist five years ago. We've developed it over a couple of years.
It actually uses both anti-fall safety and lifting and handling solutions into one, and we're going after a segment that we didn't know anything about before we started attacking it. Underground network operators, people that go and take care of our sewers or gas mains, and those people need exactly that sort of application, right? We decide which battles we go after into the end user applications. We have an excellent business, actually. It's an excellent business, and it has been an excellent business for a long time, even, you know, well before I joined Tractel. Even maybe well before Sylvain joined Tractel, but or maybe not.
It's a very resilient business, generating approx 20% EBITDA, including in the tough years, and it's a fast, vastly growing business in the more recent times. We've grown 20% in SEK over the last four quarters to Q1 2023, comparing Q1 2022 to Q1 2023. Highly cash generative, high margins, growing business, excellent business. How are we achieving this growth? Well, we are focusing a lot on innovation. We have a simple but effective gate system process to run through our innovation pipeline. I get involved in Gate 0, which is where we decide to commit company resources to deliver a certain product. I get involved in Gate 3 , which is the product launch, and we're running 40 to 50 projects at any one time through that gate system.
That's clearly accelerated our innovation in the past few years, certainly since I joined Tractel a few years ago. You see some of the examples of the products we've recently launched into the market. There's one or two examples next door as well. We are running this innovation process thoroughly and constantly, which helps us, obviously, to fuel our marketing. Here again, we've gone pretty much fully digital, and we have with us our marketing man, Yori, at the back end, who can tell you more afterwards. We were non-digital when I joined Tractel. No social media presence, no LinkedIn, no nothing. We are currently very active, both on social media and even more importantly, on LinkedIn. We have 14,000 followers.
We have 1,000 leads coming from the web every month, right? Because we're able to push that innovation to the right end users. Taking again, this example, of the confined space area, where we did not know anybody in the water and utility companies, right? Through LinkedIn, you're able to touch the right person because he's in the right company with the right title. You push this digital marketing to him, he raises his finger, then we go and sell the products and the solutions to all these parties. Digital marketing for us is a key element of our growth today and in the future years. We obviously have supporting trends.
Ole mentioned a lot of them, so I'm not gonna go through them again, but clearly, you know, safety regulations is always on the up. Our business is about making sure the technicians and the workers come home at night, back to their families, but also that they don't get pains in their back and strained from physical efforts, and providing them tools that are gonna diminish those physical strains. I would say the sustainability part of our businesses is again, our raison d'être, right? We are in this business to make our clients' business sustainable, right? Make sure those technicians and those workers, and those engineers don't get hurt, are protected if they fall.
Also, and it's the last point, we have and that's reinforced by our market presence and our brands, we have engineered these products so that they last a long, long time, right? If you bring one of those winches or hoists back to one of our workshop, and it's 25 year old, there's a very high chance that we'll be able to repair it and give it back to you for a small, modest fee, and you'll be able to use it for many years to come. That's where, that's where the branding and the and the premium pricing comes from, right? We have those brands, but they are built on those very long-lasting tools and equipment we've put into the market for many decades. Our growth in coming years is gonna come from three things.
One is, we're gonna continue what we do well today. We can accelerate, we can always do better, but we're certainly delivering on growth results around... I always put the three together: innovation, marketing of that innovation, and sales force effectiveness. Spending the right time, the right amount of time for our internal sales force and our external sales force with the right clients. Two is about synergies, and of course, coming into the Alimak Group brings us new opportunities with our sister divisions, in particular, Facade Access Division, which I mentioned to some of you earlier today. For sure, some of the products we have in HSPS can be sold through Facade Access Division.
Also my other sister divisions, where we can provide some tools and some solutions to their clients, and they are opening the doors for us to go and market these products and solutions to their client. There's obviously also some cost synergies. You know, we are a bigger group, cost synergies on the procurement side, cost synergies on the offices. It's a very fragmented marketplace. It's a dual marketplace, right? We're present in the PPE-type marketplace, we're also present in the lifting-and-handling type market. A lot of acquisition opportunities in a very large pipeline of opportunities that we wanna try and tap into in coming months and years.
As a concluding remark, I'll just say, this has been a very good business for Tractel for a very long time, and we have all the intentions to continue that it continues being a very good business for Alimak Group for a very long time. Thank you very much.
Thank you, Philippe. Now we will hear about the strategy and recent product developments for the Construction and Industrial Divisions from David Batson, who is the Executive Vice President of the Construction Division and the interim EVP of the Industrial Division. David, he has solid experience from both divisions from his time as country manager in Australia. Welcome, David.
Thanks, Mathilda. Obviously, I'm extremely proud to present on behalf of the entire Construction Division. I'd like to take this opportunity to thank them all for their contribution to the group. Before I move through the presentation, I'd just like to remind 2021, when we presented our strategy. What you'll see going forward is the implementation of a lot of actions related to that strategy. I'm excited to show that to you today. The division is represented in four key areas. It's related to temporary access solutions versus permanent access solutions, which is industrial. It's all related to temporary access solutions. Construction Product Sales, which includes hoists, Mast Climbing Work Platforms, which was enhanced by the Tractel acquisition, and the Scanclimber portfolio that's coming to the division.
Transport platforms, of course, as well as logistics solutions, which Ole mentioned before, such as common towers and scaffolding transportation systems, the STS 300, which some of you have seen next door. We have rental service operations, covering Australia, Benelux, Germany, as well as France and Canada, through our recent acquisition of Tall Crane in Vancouver, in British Columbia, on the West Coast. With the rental business and core sales offering, we also have used equipment, and that used equipment, we see opportunities in this space moving forward, especially, and helps our sustainability model. Through the acquisition of Tractel, we also enjoy a wider product portfolio and broader customer base with the temporary suspended access business, which is prominent in the U.S. and Canada. Temporary suspended access, I'll take a little bit of time to explain this, is top-down access.
Actually, top-down access from the building that's installed and removed versus Facade Access Division, which is a permanent BMU on the building. It actually complements our Mast Climbing Work Platforms business, which is from the ground up. Our services and parts business is also a core focus for the division, and you'll see further in the presentation how we advanced our digital solutions related to this important growth opportunity. Let's talk a little bit about our hoist offering. Actually, it's a broad offering to many sub-segments within construction, which we've heard about today. We participate in bridge building and maintenance areas, as well as tunnels for infrastructure developments such as rail and water, and this certainly has assisted us growth and diversity in our offerings across the whole construction market.
Our expanded Mast Climbing Work Platforms offering, which now includes Scanclimber, offers safe and ergonomic access in multiple market segments, including industrial and refurbishment sub-segments. The mast climbing business is about providing ergonomic access at the face of the construction site versus traditional scaffolding, where you're bending down and reaching. This is a really significant opportunity, and we see growth in that market for us. As mentioned previously, we see growth potential in the temporary suspended access business. This is complementary to our existing sales network, both owned and for our distributions. As we communicated in 21, our strategic intent was to broaden the product portfolio, and we are pleased to present the new generation of construction hoist, the Scando 650a series. It's manufactured with 100% renewable energy, therefore, a really low carbon footprint.
It comes with 28% lower energy operating consumption, and we use 97.5% of recyclable materials. It's designed to reduce the total cost of ownership, again, supporting our sustainability plans. The unit has a maximum 3,000 kilograms payload, and it's digitally connected and accessible via the MyAlimak portal, which you'll see shortly. We also expressed in 2021 our strategic intent to focus on markets and opportunities in the lighter range of products, and we're really pleased to present MEDIUS 350. As Ole mentioned before, it's a 900- kilogram capacity unit, able to take 11 people to the height of 100 meters and fits most standard projects. Simple and robust design upon the TPL transport platform architecture, which was mentioned, the transport platform, which was mentioned, and it's a high-quality manufactured unit out of Zaragoza, Spain.
The unit is compact with base and ground enclosure. What that means is that we can actually transport this on a standard conventional truck, improving the logistics of this product in the marketplace. It's adaptable. It has quick and easy installation. It uses the triangle mast versus the square mast. Therefore, owners of our TPL product in the marketplace can get greater utilization of their assets. It's a really important fact that they can use this product on their existing mast sections. It has a big advantage for them. It's versatile and can be configured in A, B, and C doors. What I mean, A door is the front door, B door is the back door, and we can get a C door in there as well, so giving complete access to the product.
It also comes with access to the SCANDO machine's full height landing doors. As you can see, we've built this product to be able to be utilized in the marketplace, which is great for our customers. We'd like to highlight some key facts about Scanclimber and the portfolio that came with the Tractel acquisition. It positions division strongly in two product portfolios. As you can see, Alimak was strongest in the hoist sales and Scanclimber strongest in Mast Climbing Work Platforms, making it a complete complementary addition to the business. We obtained a larger geographical footprint in Canada, complementing the West Coast acquisition, which I mentioned, which was Tall Crane. Now we are in the West Coast and the East Coast of Canada at Toronto, along with a strong organizational structure that came with it in the U.S.
The factory of Scanclimber is in Poland. This gives us great access to the European markets. Also the supply chains of those markets, which Ole mentioned about the regionalization of the supply chains as well. We also get a wholly owned Finnish sales company, which complements our Scandinavian footprint. Again, the temporary access previously mentioned, our offer today is predominantly in North America through sales to existing, new, and valued customers. We also have rental operations in France, complementing our existing rental offering of Alimak and Scanclimber. The units are wire rope access, temporarily installed, as I mentioned, and use the high-quality Tractel Tirak hoists, which we heard from Philippe and the Façade and the Height Safety group. The opportunities of cross wide, diverse range of sub-segments, especially in the refurbishment area of construction.
We are focused on new, used, and rental opportunities and parts sales, of course, to this market, to new and existing customers, and we will do that where it makes sense and positive contribution to EBITDA. We're delivering synergies commercially through the widening of our customer base, which is also opening up cross-selling opportunities for height safety products, specifically, existing construction and industrial markets. We're implementing operational synergies through centers of excellence in product development and technical support, as well as capitalizing on those procurement synergies I mentioned with a wider supply chain. Let's talk about those profitable growth initiatives that I mentioned at the start of the presentation. We see great opportunity to expand and strengthen our sales company and the distribution footprint we have.
We see white spots still in Africa, Eastern Europe, and Latin America, those emerging markets, and we continue to focus on markets where it only contributes positively to EBITDA. We'll continue to advance our research and development and bring new solutions to our customers. This includes our digitalization strategy, which I'll show you, and also broadening our parts and service offerings through that. To conclude, we're delivering on our strategic plan and continue to implement the profitable growth initiatives, as you've seen today. As I switch to Industrial Division, a back-to-back presentation, but I'd like to take this opportunity again to say it's a real privilege to look after this important portfolio. On behalf of the entire Industrial team, you'll see shortly the great work that has been occurring in this division.
The division communicated in 2021, the need to expand its product portfolio and broaden the sales network, focusing on the sub-segments within the industrial market. You'll see a bit of that work as I move forward. Industrial can be best described again as rack-and-pinion, but also traction lift permanently installed throughout the world. It's a strong-performing business, where our focus is not only on the installation of the new products, but the service, maintenance, repair, refurbishment of the population. It's really important to note that 60% of the revenue comes from parts and service, which was mentioned from one of the audience members before. The Industrial division enjoys a wide, diverse customer base. As you can see, we work across industries from power, logistics, ports, as well as mining, cement, and marine.
We also have experience and focus on permanent installations in infrastructure, as we mentioned, rails and tunnels, permanent installations. We're part of the building process of rails and tunnel and water, but we also have permanent installations that come in afterwards. Our offerings are as equally wide and diverse. I just want to spend some time sharing what's been going on. On the left, you see the Silo Lift. It's a SE24L. It's an entry-level lift that complements our existing product portfolio. It's designed for the mature markets, to attack new and refurbishment opportunities and retrofit, primarily for silos and gantry cranes, but also we see opportunities in heavy industry and growth in new segments such as agriculture and food production. The PL Warehouse Lift, it's a simple goods lift, only, suitable for warehousing and workshops, and storage.
It complements what Ole said about the emerging trends in the marketplace, distribution facilities, and comes from 500 kilograms to 2,000 kilograms, and it's complemented existing customer sites, but also new warehouse developments. The SL-EX from China, it's an explosion-protected lift, suitable for hazardous gas environments, and it's designed as a competitive offering. It can go into the developing, emerging regions. The lift is suitable for a range of industries, including gas storage, refineries, industrial manufacturing, and some chemical plants. I'll particularly want to draw your attention to the last one here on the right, the ME Gangway Lift. It's a bespoke lifting system designed to compensate for offshore heave and pitch conditions. It actually works from the vessel to the offshore wind tower.
We've recently become the first company in the world to have this as a marine gangway lift, certified under the new DNV rules. The DNV rules and standards are standards and rules related to offshore shipping and permanent offshore facilities. In less than three years, our solution has been adopted as the industry standard for gangways. The product enables us to increase our exposure to this vast offshore wind sector. A great story. The Industrial Division has delivered profitable growth over time, and this, of course, with headwinds during the pandemic and previously supply chain challenges in our quarterly updates. A strong performing business. Let's look at our profitable growth initiatives. They relate to three key areas: Continue to expand the product portfolio, increase the population, and harvest those parts and services.
Expand the sales organization to be able to grow our segment revenue, clear focus on the sub-segments within the Industrial segment, and create what the customers need and the portfolio related to that. Continue to drive service contract penetration on new and existing install base. This includes implementing digital field service, management systems and tools, which we heard about before, and adding value to owners in the field through visibility and availability to MyAlimak. It's important to note that MyAlimak is not just a construction portal. It's a customer portal for both construction and industrial customers. I'm proud to announce today that MyAlimak was awarded Best Digital Development Award at the International Awards for Powered Access, held in Berlin in April. It's a customer portal that makes doing business with us easy.
It's designed to provide a consistent experience, those Alimak moments, we like to call them, and allow our customers to access a range of products and services electronically, improving productivity, efficiency, sustainability, and ultimately, shareholder value. When building the digital offering, we actually tested and utilized customer focus groups. This is what our customers were asking of us, and we created that foundation moving forward. You may recall, communicated in 2021, we wanted to digitalize the customer value proposition. I'm so pleased to be able to present this today, and we've fulfilled that first stage in that journey and that commitment. Let's have a look at a short video which will provide some more insight.
Hello, my name is Cameron Reid, and I'm the Sales Director of Alimak's Construction Division. Let's take a look at MyAlimak through the QR code. Our ambition is that this portal should consist of a wide range of valuable features which support the physical product and provide important data to drive sustainability throughout the machine's life cycle. Amongst other benefits, understanding better the characteristics of how the Alimak equipment is used during the construction phase, with help of IoT data, will allow planning and logistics to be optimized and ensure the machine is being used safely. Based on the IoT data, Alimak can also support information and knowledge about how best to utilize Alimak's products to both increase productivity and lower your carbon footprint.
We will continue to review what additional features we can add to MyAlimak based upon customer feedback and new product development. With MyAlimak, we will take a more active role in the construction ecosystem of the future. Construction ecosystem of the future. Thank you.
Thank you, David. Thanks. We have now reached our final presentation for today. This division has delivered solid margin improvements over the last quarters. I would like to welcome up on stage, José María Nevot, presenting the Wind Division.
Thank you, Mathilda. Let's go for the Wind Division strategy update. First of all, the Wind Division at a glance, considering the rolling 12 months, up to Q1 2023, we reached the level of SEK 560 million, with adjusted EBITDA or result about just above 14%. We are very proud because it's the result of several work, as I will go in a minute. It's important to say that relevant and resilient part of our sales is the services, which represents one-third of the total sales. In terms of products, we remain with the service lead for wind turbines with the three technologies. That means ladder guide with wires, and rack-and-pinion.
We have the ladders for climbing, but as well for guiding the cables and other elements like the fan platforms or external stairs for the wind turbines. In safety, here we have the PPE, so harnesses, lanyard, positioners, but as well the safety lines and the associated sliders. Last but not least, the service and parts. In service, we do installation, inspection, repairs, and dismantle when it's the case. In training, we do it all the ways, so face-to-face, remotely, or by e-learning. About our customer base, it remains, well, highly dominated by the OEMs. In that sense, we are working with Vestas, Siemens Gamesa, Nordex, and GE.
As well in China, where we are working with the big ones like Envision, Mingyang, and Goldwind, and the small ones like China Railway, United Power, Shanghai Electric, and so on. Okay. You heard about the New Heights plan, and this slide is basically about the two first phases of this plan. What we did, which was establishing the base and securing margin improvements. What we did, it was basically to go back to our core competence in safe vertical access. Therefore, we developed a portfolio which was new, and it was made hand in hand with our customers. We understood what was the pain, the gain, and what was the level of investment that they could afford.
Working with our world-class engineering, I could say, we were able to bring solutions and products that fit for purpose. In this area as well, as it was mentioned as well, we took the conscious decision to exit on the sales of internals that has not added value, as is the platforms in the turbine. That decision was taken in 2020 and has been affecting, yeah, in the last few years, but now it's over. We focus as well on the service side. We only focus on the added value services that we could provide to the customers in the areas that they value them, and we create the structures and organizations that were suitable for this kind of activity.
Finally, very important, is the price management. We have been able, through a very strict cost of running activities and the supply chain, and with the lean operations and with the existing formulas, to manage the pricing along this time that has been very effective. As a result, you can see that in the last part of the right-hand side, our order intake has been increasing, as you know, from the Q1 , where we have 50% increase in organically compared with the previous year, and we have a steady but constant growing of the EBITDA margin. Before we go to the first, third phase of the plan, which was the profitable growth, I would like to explain a little bit about the wind market for the complete understanding of everyone.
Okay, there are global trends. It's true, the electrification, the security on e-energy supply, which is all of that pushing in the right direction. What we can see in terms of gigawatts for wind is an increased average of, yeah, component average growth rate of 15% in the next five years. This is coming basically from onshore, which is growing at the level of 12%, which is the biggest part, and then from offshore, which is growing at the level of 32%. Offshore is growing more because, well, being smaller, but as well because there are this huge cost reduction of the wind power offshore. There is the new floating structures, and there is the, this power tweaks projects that are supporting this trend.
The gigawatts or megawatts is not helping us in any manner. The question for us is the number of towers. Okay? It is true that there is an increase of power ratio per tower. What it was last year, 4 megawatts in onshore, in 2027, it will be at the level of 6.5x. What it was in offshore last year, seven, it will be 16 in 2027. Okay? That makes a steady market of number of towers, around 20,000 worldwide. Good. For our addressable market, there are two factors very important as well. One of them is the lift penetration. There are two markets, major markets, where the lift penetration is not complete. One of them is China, because they find other kind of solutions or they put basically the ladder.
The other one, which is U.S., where it's negligible the penetration of lifts at the moment, but it is expected a big growth in the coming years. The reason, because the towers are getting bigger. If the market there, it was about 100 meters tall towers, now it's gonna be 140, 60, and so on, so it's not acceptable, any solution there. Therefore, that is the penetration of lifts in one hand, but the other as well, the direct effect of the taller towers. The ladder systems with the fall protection will be longer, and the lift solutions will be more complex as well, because it will be taller, with more platforms and with more vibrations. The investment per tower will be higher.
Okay, having this mind on the market, we go in how we see the market, what we are going to do in order to have this profitable growth in the Phase III. It is basically three things: increase market share on lifts, on safety, and after sales. In the how we are going to increase the market share of the lifts is we have to differentiate China market and the rest of the world. In China market, as it was explained two years back, we started a different way, so we decide the China for China. Therefore, nowadays, all the engineering is made there, all the supply chain is over there, the fabrication, of course, and we are releasing products which are exclusively for the Chinese, according to their expectation and standards. Okay?
That remains in that way, which is being great so far. The second is the rest of the world, I would say. Here, there are different areas, but I would say one of them is heavily influenced by the digitalization. Not because of the beauty to be digital, but having smart controls and sensorization, we are able to get data, from data, big data. We are having already activities in machine learning in order to get this algorithms that will give us this predictive maintenance, which is absolutely key in our sector. That has a direct impact in the TCO, in the total cost of ownership, which is a key measure for the OEMs.
On the second, safety, we will complete our portfolio with a wire-based fall protection system, according to the certification in Europe and in U.S. We will, as it has been already mentioned several times, we will leverage in the Tractel range. Obviously, they have a huge and beautiful catalog of 370 pages, but we have been selecting some of the items, and I'm happy to say now that, for example, in the short term, we are dealing with the climb assistance for different regions from Tractel, which is a very nice product. In the more, in the medium long term, we have the agreement to create a platform for the blade maintenance, okay? It will be released in two years from now.
Finally, about the after-sales, we are already increasing our offering with these safety upgrades and the lifetime extension under the customer requirement. We are looking at the Avanti footprint, not only the countries where there is a potential, but as well in countries where we have an existing setup from a technical point of view, to include additional added-value services in order to support this profitable growth. As I would like to finalize with some words about sustainability. Of course, we are fully engaged in the targets of the group, and we are having works on in all the scope. In the Scope 1, we are reducing our energy consumption. We are going more, much more efficient.
The Scope 2, for example, we are happy to say that more than 80% of our facilities worldwide have already green certificates, international green certificates. In the Scope 3, we are working in our traveling as well, but we are having this life cycle assessment. Here, I'm showing one example. Okay? It's one of the most sold products. Probably, there are more than 30,000 Shark units lifts worldwide. But let's say that it is made in Spain for a turbine of 3.7 MW and had a lifetime, originally, of 20 years. If you are looking at the CO₂ footprint, it's not coming from transport, manufacturing, raw material. No, it's coming at 86% of the maintenance. This is...
You will say, "How it comes?" No, it's not coming basically, even for the technicians that they have to go every year to the turbine. It's basically count because the time that the turbine is stopped, this energy, which is not produced, is considered that it's coming from a non-renewal source. Okay? We understand clearly where we have to assess, and that is linked with what is I said previously, digitalization. We came with a new optimized maintenance plan. We increased the lifetime of the products, 25- 30 years, even. We are looking even more. The new range of products, automatically, we are bringing down 35% of the CO₂ footprint, which is in very much in line with our expectations. Nowadays, we are evaluating the possibilities in net zero for 2040. That's all. Thank you. Mathilda?
Thank you, José Maria. That was the last presentation for today, and it's now time for the second Q&A session. I would like to welcome up on stage, Ole, Philippe, José Maria, and David. Just a reminder, if you want to ask a question, you simply raise your hand, or if you are on the live stream, you can submit the questions through the browser. Let's see. Do we have any questions? Wayne? There we go.
Yeah. A question on the wind side. The wind turbine manufacturers are not doing very well.
Yes.
They're losing a lot of money and trying to improve their operation and cut costs and so on. How have you managed to improve your profitability to those customers? Is it in the original sales, or is it more in, on the service side?
All right. Well, the OEMs, they are struggling, and according what they say, is because they had this disruption in the supply chain. They couldn't carry the inflation effects to their customers. They have a huge warranty issues that they have to make some provisions. What we have been working is in a, as I explained, in a very hand on hand with the customers in order to provide the portfolio at the right degree of investment. There is a extremely important element for them, which is the quality, the delivery performance, on-time delivery in a global scale with the same commitment any way in the world. I would like to call it's a symbiosis relationship that allows us to work in such a way that we are not penalized for their situation.
question in the back.
I have a question on the industrial and the construction side. would be really interesting to hear anything on what you're seeing right now in terms of current trading or what trends you're seeing in the market, given that there is a lot of uncertainty out there. The latest Q1 results, showed a strong development.
Yeah, thanks for your question. Look, we're not naive to the fact that there's inflationary pressures, interest rate pressures globally, therefore, that has put pressure on some development work in certainly the residential sector. What I tried to reflect today is that we're not reliant totally on one sub-segment of the construction industry, such as residential. We're so much more wide and diverse. Our customers, we sell our products. I think Ole mentioned earlier today, we sell our products to our customers, and those products go to work in a large subsection of construction. Pleasingly, we're global. Where there's swings and roundabouts in certain regions, we've been able to weather that storm, and I think our Q1 results and certainly past couple of years has reflected our resilience.
Okay. Then I have a question regarding the industrial segments, because in Europe, I think we're seeing a lot of greenfield investments when this I would say, the nearshoring trend, et cetera. I guess that should be quite... Is that positive for the industrial segment, or are you seeing any signs of that?
Yeah, yeah, absolutely. Absolutely. We're seeing evolving subsegments within industrial that probably wasn't communicated, but things like nuclear, whether it's nuclear decommissioning or construction. We've signed non-disclosure agreements, and I can't explain too much detail about that, but it is a wide marketplace with great opportunities in greenfield opportunities, warehousing and distribution, logistics. It's a really positive environment for us.
David, if I may add, it's also a very positive nuclear environment for the Facade Access Division because we provide permanent equipment into that market, as well as for the HSPS division, where we sell equipment to the nuclear industry. Nuclear, for us as a group and for our divisions in particular with David, is a key segment that we're developing.
Overall, this reshoring, you know, as I talked about, that it's not globalization so much anymore. You know, it's more due to the geopolitical situation. You see more investments into local and regional perspective. That is, of course, feeding growth in this area, which is a market for us. Absolutely positive for the group.
Then just the last one on Tractel. I mean, you showed a long, long graph before on very stable margins, but in some years you didn't really see any growth. Could you just maybe explain a bit on why Tractel maybe not has grown a lot historically and why that has maybe changed now?
Well, first of all, it has changed now, as you've seen the recent, the recent quarter one comparisons between the last two years. I guess, the main reason is some of those actions we took back in 2018 and 2019 bore fruit more recently. You know, I mean, it's not just because you put in a new CRM in place or you decide that you're going to have a new process for innovation, that suddenly everything is bright and everything is there, and you're producing all these new products and introducing them to the market, or that all your sales force is exactly doing what they should, right? Everything takes a bit of time.
I guess it's a combination that, you know, we are now pushing all these new products, we are doing it effectively in terms of marketing and digital in particular. We are using our internal sales forces more effectively. That's generating this growth. It's a combination of these factors. I don't have an exact answer to your question, but I'm clearly seeing the net positive effects of all this work we've been doing, and we're carrying on doing.
My observation, if I may then, you know, it was very much product focused. I think also in the old days with Tractel, like we saw in the legacy Alimak, you know, and when Philippe came on board now five and six years ago, you changed that focus to much more market-driven, spending resources and efforts on marketing and product development. That's really what we are seeing now start to see real effects from. In the meantime, you also had the pandemic, so maybe some delay in some of these effects, but it's coming.
Yeah, just one more on the Wind Division. When you acquired Avanti, you had some turbulent years, you can, to say the least. Now we're seeing gradual improvement in both order intake, sales, and margin improvements. I'm just wondering, you're already doing 14% now on a quite low revenue base. If the revenue starts to pick up again in the coming years, where can that margin be in three to five years?
Yeah, maybe you want to say first, or yeah?
Well, what we can say is that, first of all, the market conditions are clearly positive in all the regions. In the U.S., we are having this Inflation Reduction Act. Here, we are waiting for this electricity market conditions to avoid the uncertainty of the investors, and this Net Zero Industrial Plan that will relieve a lot of constraints. The market in the major areas will go as well. It is improving conditions in China and in general in Asia- Pacific region. In the other hand, we have been...
What I tried to explain is that in the activities that we have been performing, in being close with the customers, developing a new portfolio, focusing only on the services that are having a clear added value and price management, that brought us to this level that in our view, that will continue. Going forward, we believe that this, we believe that we did the things in the right way, and we will continue doing them in that way. I could say that there is no reason to, yeah, to develop this and even with growing the revenues, to improve the situation.
Yep. You know, this, the market we cannot change, the market has been very, very tough, in addition to the fact that we took out, tower internals. That was really about, refocusing. José Maria and the team have done a fantastic job during this time frame, you know, to take down cost, which is also an important part of, you know, why we are able to make good margins. It's not only about pricing, it's also about your cost level, of course, and having something which is attractive to these, customers. There is a tough market, out there. The biggest issue for this business now is to get back into growth because, you know, the growth has been going down for two to three years, as you know. Now we are there.
We see market improving, and we expect that to continue to be, you know. We will continue also to work on the margins. We don't see a really limit to what that can be today. There will be, of course, some sort of drop-through when the volumes are also coming on this. Our ambition is to drive volume, first of all, you know, but I think also that will lead to good margins going forward. Mm-hmm.
Yeah. Thank you.
Hi. On construction, you talk about product development lately. My question is about to what extent do you control your own destiny in terms of how relevant is the market share potential in certain niches vis-à-vis the risks on the market? To what extent do you have enough potential out there with the product lineup to really grow, even if markets are choppy in the years to come, if that was the case? Thank you.
Look, it's a great question, and the way I'd like to answer that is, I think the STS 300 is a great example, which is the scaffolding transportation system. Is a great example of opportunities to improve the construction industry. It's a logistics, a horizontal and vertical tool used to help scaffolders install scaffold. There was no product before that. We see opportunities to improve and develop products that our customers and markets need. We see. It's a very diverse market as well. We've got a lot of competitors in a lot of regions, and we see growth opportunities in all the subsegments within our product portfolio. Not only our existing core products, but the improvement of those products, but also new innovation and R&D. You will see in our annual reports, the R&D investments. I'm quite optimistic and positive about that.
Yes. Hi, Anders Järvstad, Carnegie. I just have a question regarding the interest exposure to the long-term loan you took in combination with the acquisition of Tractel. I noted in your annual report that it was unhedged or it was a risk which you had sort of noted. Yeah, maybe a question for you.
Yeah. Yeah, you may be able to answer. Yep.
Yeah. I mean, it's yes, correct. Absolutely. You know, we've decided not to hedge the term loan, which we have. That's a EUR 300 million loan. Yeah, yes, it's a risk, but we assume that risk. It's still a relatively low level of debt, compared to the balance sheet we have and the cash flow generation. We feel confident with that.
Any more questions? Yeah, there.
Yeah. There's a lot of discussions right now that the Chinese government is about to help the Chinese property sector, maybe, and with more finances as a way to get the Chinese economy going. Would that affect your business anything at all, or?
Opportunistic, maybe yes, you know. We hardly sell anything in China to the construction market. It doesn't affect... You know, it has not been negative to us that they have struggled. It's a difficult market. It's not part of our strategic focus to really move in there. Opportunistic, we can do business there. Maybe, you know? Yeah. David, you want to?
Yeah, absolutely. We have a manufacturing facility in China that develops products locally, but also for emerging markets. I feel that I mentioned in 2021 that we would only enter China opportunities where it made sense and contributed positively to EBITDA, and we understand the challenges in that market to do that. We'll continue to monitor the opportunities and move where it makes sense.
That manufacturing facility is not, It's rack-and-pinion?
Yes.
It's mostly for industrial today. That's the products that we are really making and selling out of there to the great extent.
Good. We also have some questions coming in in the live stream. We have hear one around the cross-selling opportunities. Can you comment on the cross-selling opportunities between HSPS division and the other divisions? Have you already started to see effects from that? I think it's maybe for you, Philippe.
Sure. As I mentioned during my presentations, we have two-thirds of our products that are going through distribution, right? We are really focusing on that other third of products that we sell currently to end users, and we're promoting those products to all our sister divisions, with some early successes, but obviously, it's a journey. The idea is that we go out and reach out to those end clients that are my sister divisions clients and introduce our products and solutions to them. We're doing this effectively, and we're doing this around the world. You know, today, results...
... a starting point, but clearly I'm expecting quite a lot of commercial synergies out of that through my sister divisions. I hope you would agree to that, right?
Absolutely. Absolutely.
Right. Okay. They agree as well.
Great. Do we have any more questions from the audience here? No. Okay, I think it's time to start wrapping up, as this day is coming to an end. If you would have any follow-up questions, please feel free to reach out to us directly or ask, or you can also take the opportunity to ask some questions at the mingle after this session. Just before I hand over the floor to Ole for some final remarks, I would just like to thanks the audience for today. It's been a pleasure being your host. Ole, the stage is yours.
Yep. Thank you. Yep, it should be a slide coming up, but there, I see it there, but I don't see it there. Yeah, here it comes. First of all, thank you, Mathilda, for taking us through this day in such an excellent way. Thank you. I hope you know that you sit back with some sort of good understanding and the comfortness that we know what we are doing, and that we are on a journey. We have a solid program behind us, that we are delivering upon what we are saying, and also that we have a way to reach to the next level.
We have a strong organization, so, you know, what I talk about is the vehicle, which I think is, of utmost importance to actually make things happen. That is there, and that organization is empowered, and I think also now it's proven, and you have seen here, something I'm very proud of, you know, team members, in the central team, and you meet also other people here. It's more than 3,000 people working and driving the same type of agenda every day. That is in place. We have also a leading market position, which is important to us. We are global, and we have this very solid installed base, which of course also give us a nice service opportunity. Global organization, and we can be close to our customers basically everywhere.
We have the global trends supporting our business, which is also securing some sort of fundamental growth to actually what we are in. We are fixing, which has been very important, the historic issues, and that was related to these two acquisitions. I would say we have fixed wind, and we are fixing still now, and we have found the medicine and the team and the processes and what needs to be done on Facade Access Division, so that we feel very comfortable around. We are delivering solid operational performance in our all our businesses, I would say, today. We have also integrated Tractel well, and as I was talking about in the beginning, how you know, integrate and to understand the business and how you actually do that, it's Fingerspitzengefühl.
I will not promise that I always do that correct, because that you cannot do, but, you know, what we have done, I think, with Tractel has mostly been right. Now we have seven months in the bag, and I feel also relatively comfortable that we will continue to do that in the right way. We have said that these synergies should now start to come, which will be an important part of that journey. You know, the first and the foremost is that you are together and you're kept, and, you know, you have that team working, and that we have. Now is the next step, and that's the synergy generation. We talk about the commercial side, of course, the sales.
We talk about the cost, but it's also about, you know, this product development, working together on the R&D, making new type of solutions, which the market have not seen yet, which we can do as a team, combining this. We will continue on this journey, and we will deliver accelerated profitable growth going forward. Thank you for attending here today. Very happy to see you all, and I also want to give a big hand to all the, you know, 3,100 employees at Alimak Group which makes this a fun place to work, and are behind all the great results. Thank you all.