Thank you very much. Good morning, everyone, and welcome to this audio cast. My name is Mikael Norin; I'm the CEO of Cavotec. As usual, I have our CFO, Glenn Withers, on the call with me today. The topic is our Q3 report for 2020. As you may have seen from our report, the overall market situation continues to be challenging in the Q3 due to the COVID-19 situation and has had consequences for both revenues and order backlog. The uncertainty during the quarter has impacted the decision-making of our customers, with delays to the delivery of existing projects, as well as getting the final approval for new projects taking longer than previously.
As usual, Glenn will talk about our quarterly performance in detail shortly, but before that, I really would like to spend a few minutes on how we look at the future, because this situation will pass. I therefore think it's important for anyone interested in Cavotec to understand our plans for what we believe are long-term growth markets. Despite the challenging landscape at the moment, we are not wavering from our belief that we have a wind of opportunity right now to position ourselves at the forefront of what will be rapidly growing market segments, and where we can be the number one player. One recent example of how we're executing on this strategy is the MoorMaster NxG, which made its debut in a global launch earlier this week.
If you haven't seen it yet, I highly recommend that you take a look at moormaster.com, where you can find more information about it. We have completely redesigned MoorMaster with the aim of opening up new, large, untapped market segments, such as typical container terminals. The focus has been to make it easier for customers to transition to automated mooring. In addition to improved performance, the redesign has focused on faster, easier installation with less downtime. Also remote monitoring and easier maintenance is at the forefront of the new design. All of this in a unit with a smaller, more streamlined footprint, and on top of that, what I think is a very cool design.
We've already signed the first order for MoorMaster NxG, we're very proud of having been selected as a key partner to ASKO Maritime in Norway, as they are planning the introduction of the world's first fully autonomous zero emission vessels. Another milestone for us will be the new innovation center in the Netherlands that will open in early 2021. Focusing primarily on the maritime sector, the new center will be in charge of our research and development for what we call profitable sustainability solutions. The center will bring together our capabilities within areas such as artificial intelligence, remote connectivity, high power, high speed electrical charging, and battery technology. Those are two examples of how we're actually going on the offensive, even in the present environment.
Talking about the present environment, I think this is probably a good point to hand over to Glenn to talk about the Q3 in detail.
Thank you, Mikael, and good morning, everyone. I'll start with orders. We continue to see strong interest in our solutions in selected areas, especially for the MoorMaster and Shore Power systems. Our order backlog decreased 7% when you compare it to the end of this year's Q2 to EUR 91.6 million, and that was 16.5% less than the same quarter in 2019. The decrease is related to the delays that Mikael spoke about, specifically in final decisions on a number of projects in Ports & Maritime. The order backlog for Airports & Industry was slightly higher when compared both to the previous quarter this year and the previous year, and that's due to orders for a couple of airport expansion projects in the Middle East worth close to EUR 7 million.
Turning to revenue, that decreased 22.5% in the Q3 compared to the same period in the previous year. That's to a revenue reported of EUR 37.5 million. It's broadly in line with the year-to-date comparison, where we've reported revenues of 20% less than the prior year to date. Looking at the division level, the revenues for Ports & Maritime decreased 21.9% compared to the same period previous year, that's reported revenue of EUR 16.6 million. However, there was higher activity in the Nordic regions versus other regions, especially for deliveries of MoorMaster solutions to the ports of Tallinn and of Helsinki. For airports, the sales of individual ground support and fueling products developed well in the quarter, there were no large project deliveries in the quarter.
Revenue from our industrial customers, though, was slightly higher than the previous year, and that's partly due to the pivot that we've talked about before, towards new OEMs and new geographies. In total, Airports & Industry division revenues decreased 23% when compared to the same quarter in 2019, and that's on a reported revenue of EUR 20.9 million. In both divisions, services remained negatively impacted by the COVID situation, mainly due to travel restrictions or ongoing travel restrictions. The proportion of the services revenue compared to total group revenue was 21% in the Q3 . Whilst that proportion of service revenue in this quarter is in line with our expectations, it's worth mentioning that it is on a lower base of project deliveries. Moving now to profitability, our EBIT decreased to EUR 0.7 million, and that compares to EUR 3.1 million that were reported in the same quarter last year.
This quarter, that EUR 0.7 million is a margin of about 3%. The profit decrease, which is really due to the negative volume impact that I talked about earlier, was partially offset by savings in employee costs, consulting, traveling expenses. Some of the savings have also come from the government support programs. Currency exchange differences amounted to a negative EUR 2.7 million in the quarter. Actually, if you look at the comparison to last year, that's a large EUR 4.9 million negative swing versus the same period last year. That's predominantly due to the currency fluctuations that we're seeing during the pandemic. Moving on to our cash performance, I'm very pleased to report that the operating cash flow, despite the lower revenue, amounted to EUR 3.5 million in the quarter. That represents more than 100% of the EBITDA reported in the quarter.
Cash and cash equivalents at the end of the quarter amounted to €16 million. Finally, to summarize, we continue to have a strong balance sheet and strong cost and cash management in place. This gives us a platform and the strength to continue to invest in the future growth of Cavotec. With that, I'd like to hand back to you, Mika.
Thank you, Glenn. Well, Glenn mentioned investing in future growth, and as I said earlier, we believe that now is the right time for us to do that. Actually, the interest from our customers in finding solutions which increase productivity but simultaneously offer sustainable operations has grown even more as a result of the COVID situation. A good example of that is our high-power fast charging solution for port e-trucks, which recently won an important industry award. With our solution, we've made it possible to convert heavy-duty port trucks to electrical power. This is a pilot project with our partner at the Port of Long Beach in California, and it provides us with really a lot of leading experience on how to convert about more than 30,000 diesel-powered trucks operating in ports around the world to more sustainable and cost-efficient electrical operations.
With these steps, and there's more to come, we continue to position ourselves to leverage on global trends as our customers are searching for a way to achieve more safe and efficient operations with a smaller environmental footprint. I'd like to mention that we, in early October, held an investor information meeting in Stockholm where we gave an update and more details of our strategy and our growth plan. For those of you who did not attend in person or online, I recommend watching the presentation on our website, and you'll find that in the investor section. With that, thank you everyone for your attention, and that concludes our prepared statements, and we're now opening up for questions.
If you have a question for the speakers, please press zero one on your telephone keypad. Please hold while we register any questions. Our first question is from Karl Bokvist of ABG. Please go ahead. Your line is open.
Yes. Thank you. Good morning. My first question as to if you could provide a bit of more insight into the different end markets. Of course, you say that Ports & Maritime is a bit weaker, and it's about the delayed decision making and so on. You mentioned that industry is quite flat year-over-year, but could you shed some further light there and perhaps what's going on within Airports & Industry and which parts of the industrial segment are you seeing improving throughout this quarter?
Thank you, Karl, good morning. Well, in terms of how we look at the market, I think the common denominator is uncertainty, and as we tried to explain it in the report. It comes down to really the decision making of our customers. What we've seen is that, and this goes for both Airports & Industry and Ports & Maritime, is that each step is taking longer and that new steps are being added by the customer for their decision-making process. That slows everything down. We have a number of projects, and especially in Ports & Maritime, that we were expecting in Q3, where we have actually come to an agreement with the customer, or I should say the customer's organization. We have negotiated the price, we have agreed on the scope, we have agreed on the delivery, and so on.
It has been progressed by the customer's organization all the way to the final sign-off. That could be a CEO or what we are seeing more and more actually, the decisions going all the way to the board of directors of the customer's organization. That's where it gets stuck. It's very difficult. I think it's a general anxiety around taking decisions because of the uncertainty that everyone feels. Things are moving, although they are moving very slowly. I can mention, we actually this morning, got an LOI for a MoorMaster project. We are hoping for a firm order within a couple of weeks' time. Things are moving, but very slowly. As I said, there are more steps involved. That goes for both ports and airports.
Industry has held up a little bit better because the investment decisions are of lower value. It's more of what we call flow business. That has come back a little bit more than the other divisions.
Understand. Did I understand you correctly there when you said that you come to an agreement with customers for certain projects regarding price, scope, and et cetera? These projects that you mentioned here, just that you highlight, have these already been booked into your actual order book?
No, this is what I was saying, that they have not. They have progressed all the way to the final sign-off by the customer, whoever is the top decision-maker. Often the CEO, but as we are seeing more and more, those final sign-offs, actually, so that they can issue the purchase order, goes to the board of directors. That is what happened with several projects that we were expecting. No, these are projects that we're still expecting to see, Karl. We have not been able to book because we've not been able to get the final PO.
Understood. The other thing that you mentioned when it comes to delayed deliveries, which means delayed in terms of actually booking sales.
Yeah.
Did this have to do with your inability to get access to customer sites, or has it to do with the supply chain or anything else there?
No, it's a great question. Let me try to clarify what we mean by that. It's basically the same dynamics going on, and that is that a lot of these projects, the actual delivery date is then agreed with the customer when you get to that point. The customer has to sign off and say, "Yes, now I'm ready to take delivery." In some instances, we also have, as part of the payment terms, we have prepayment of part of the order value, if not the whole, which means that the customer then has to issue that payment so that we can deliver. The same thing there, it's just that decision-making, that final decision is just being slowed down, and it often gets brought to a much higher level than in the past.
That slows down also our deliveries and thereby our ability to invoice and get the revenue.
Understood. Because, Christian, I think we've talked about this before in terms of your focus on smaller ticket orders and things like that as well. Just thinking about the duration of the backlog and your ability to know if things start to improve, the orders that you receive and can almost ship out during the same quarter. Just what kind of visibility would you say that we have into assessing whether or not the Q4 and perhaps Q1 sales could continue to be down quarter-over-quarter in case we see improving orders, but that the lead times might be a bit longer?
I think the thing again is its uncertainty, Karl. It's very difficult to forecast because we really don't know what's going to happen, again, with the decision-making. We are at the mercy of our customers, both when it comes to new orders, old orders, flow orders, project orders, but also when it comes, as I said, the final decision-making on a lot of taking delivery of existing projects. I've never experienced a situation in my career where it's so difficult to have a view of the future, even the short-term future, because it changes from week to week, the sentiment that we hear in the market, and it's often very tied to the latest headlines in the media about the COVID situation. It also varies, of course, from region to region and even country to country as the COVID situation varies globally.
I really don't want to speculate about that, Karl.
Karl, probably there. Good morning. The only thing I would add, you asked about timing of recovery. Mikael's answered the part about timing relative to market. That part really is uncertain. We have a flow business both in industry, in services, and a little bit in ports, actually. One of the things that happened in the Q3 was the flow orders were less than we expected compared to what we would normally see in a post-summer period. If and when the orders come back faster, again, the caveat about the uncertainty, but if and when, that flow business comes pretty fast. A lot of the orders are delivered in the same month of the order, especially spare parts, and a lot within the same quarter. I'd add that to the answer.
Thank you. My final question has to do with MoorMaster NxG and also a bit on the other parts of the product development. The NxG here, I can imagine that you insert a lot of new functions in terms of sensors and connectivity that you mentioned and so on. Will the MoorMaster NxG have a completely different pricing method than the former ones, that you would focus more on a subscription base? Do you think that you can perhaps see a bit of positive pricing on the product? I think you mentioned easier access to maintenance and things like that, but would it be fair to assume that the number of modularized components and so on has increased, so the input cost per MoorMaster is better for you as well?
Two dimensions to my answer, Karl. It's a great question, thank you. Two dimensions. The first would be that obviously if you can reduce the total investment for a customer, it opens up a wider market. For us, that has been about really reducing the footprint of the product and also the way that it is installed, because a large part of the transitioning to automatic mooring is not only the equipment itself, it's also the installation at time, especially because it means that that particular berth has to be taken out of action. You cannot use it for ships at the time. With a modular approach to the installation, it means that we can be much faster. We're talking about 50%-90% reduction of the installation time.
Another aspect is also when it comes down to the footprint is that there is very often, especially for container terminals, limited space between the end of the key and the port crane. Sorry, I am getting very technical here, but it is an important aspect. That has been restricting us in the past. There is a lot of the cases where terminals have been interested, it just could not physically fit the equipment without very expensive and time-consuming modifications to the whole berth. That drastically reduces the total investment cost for converting to MoorMaster. Secondly, you are spot on when you talk about other business models, and we are also looking at expanding the market for MoorMaster by being able to offer product-as-a-service or very specific, in this case, mooring-as-a-service. That is something that we are also looking into and we are doing a lot of work around.
I hope that answers your question.
Yeah. Thanks for that. My follow-up was, do you see or maybe if I can ask, in your R&D funnel, if you're looking at similar things on the Shore Power side?
We haven't made any secret of the fact that we believe that Shore Power, if you saw it in our investor information meeting, we believe that Shore Power is a very important market segment for us and where we can actually be a number one player. That's what we're looking for. We have several examples of technology and products already where we are the number one player. I can mention that the ASKO Maritime project, where we will be supplying the automatic mooring with MoorMaster NxG, they have also decided to partner with us for the high power, high-speed charging that they're going to need for those electrical ferries. It shows again that we have a market-leading position in that field. Yes, it's an area where we will be spending more time and investing in for the future.
All right. I apologize here, but a final question then. Your balance sheet now is actually net cash excluding leasing. You have highlighted in the past partly that you want to achieve organic growth first, but you could be looking at selective inorganic growth opportunities too. Just here, the balance sheet is no doubt strong enough for it. Do you see any possibilities here for M&A activity given the potential to consolidate and strengthen your position in times when the market is weak?
M&A is dependent on finding the right targets for acquisition. I can tell you that we are looking at the market and looking to see what is available. We are primarily interested in what we call technology white spots, to be able to complement those pushes within the areas where we believe that we are strong. When we do find those, yes, we are definitely open to acquiring that technology. We're constantly evaluating in between or choosing between if we're going to develop something ourselves or if it is readily available in the market and we could acquire the technology through an acquisition.
Understood. Thank you.
Just to remind you, if you want to ask a question, please press zero one on your telephone keypad. There'll be a brief pause while we register any further questions. There are no further questions at this time. Please go ahead, speakers.
Thank you very much. Well, with that, we thank you all for your attention today, and we wish you a very good rest of the Friday and a good weekend. Thank you.