Welcome to Cavotec Q3 Report 2025. During the Q&A session, participants are able to ask questions by dialing # on their telephone keypad. Now, I will hand the conference over to CEO David Pagels and CFO Joakim Wahlquist. Please go ahead.
Good morning and welcome to Cavotec's Q3 presentation. I am David Pagels, the CEO of Cavotec, and together with me today, I have, as usual, Joakim Wahlquist, Cavotec's CFO. I would like to start with a short introduction of Cavotec for those of you who are not familiar with us. Cavotec was founded 50 years ago by three entrepreneurs in Sweden. Since the foundation, Cavotec has focused on developing technical solutions to improve efficiency and electrify processes in areas such as ports and other industries where electrical cable reels and/or radio remote controls are needed. As part of this global expansion, Cavotec moved to Switzerland in 2007. This year, however, we have taken an important step by returning back to our roots in Sweden. This move brings us closer to our shareholders' base, which is in Sweden, and also enables us to become more efficient and agile.
We're very excited about that. As you know, we report two business segments. Our service offering is reported into those two segments. Ports and Maritime provides world-leading solutions for ports, ships, and other marine applications. We have unique systems, for example, automated mooring, MoorMaster. We have shore power, crane electrification, and connections and charging systems. All these solutions contribute significantly to improved environments and working conditions in ports worldwide. Our customer includes ship owners and operators, ports and terminals, port equipment manufacturers, and shipyards. Ports and Maritime is our largest segment and represents the majority of the group's sales in EBITDA. The industry segment is the other one. In its unique selling point here, it's our ability to drive productivity and contribute to the customer's operational efficiency, electrification, as well as occupational health and safety.
The products include motorized cable and hose reels, radio remote controls, power connectors, spring-driven cable and hose reels. We have customers in a wide variety of industrial sectors, such as cranes, energy processing and transportation, surface and underground mining, and tunneling. As a service, as I mentioned, it's an integrated part of our business segments, and we have service engineers across the globe that work either from our service centers or are based at our customers' premises. The service offering includes system integration, maintenance, sales of spare parts, of course, inspections, refurbishment, as well as round-the-clock service agreements. As you have seen in the report, we have also this quarter been impacted by the continued uncertainty among our customers and the product-driven nature of our business with long delivery times or lead times.
However, our underlying market remains strong, driven by the need to reduce greenhouse gas emissions, improve ports' environments, and increase customer efficiency. This, in turn, is driven by the strong megatrend to electrify society, which we all are aware of. At the same time, we have seen an increasing awareness globally to reduce noise levels in, for example, ports. The need to electrify society and improve environments, for example, in ports, also manifests in regulations and governmental requirements that affect our customers and drive their demand. Over our 50 years, we have built a strong expertise and experience in these areas and have a strong and attractive offering based on leading technologies. This gives us the ability to grow in both new and existing customers, thereby expanding our installed base.
The installed base, of course, is important because it provides us an opportunity to offer our comprehensive range of service activities. Looking into some of the figures before I hand over a little bit later on to Joakim to explain a little bit more in detail, order intake increased 0.5% to EUR 36.3 million in the quarter, driven by the demand for shore power and MoorMaster systems. Our order backlog increased 14% to EUR 126 million, which is reflecting the order intake in Ports and Maritime, where we have very long lead times in the product business. We have continued to get a range of significant orders in the past 10 months in Ports and Maritime. However, this is a product-driven business, and most of the deliveries will not start until next year.
Revenue decreased slightly with 18.8% to EUR 35.8 million due to certain delays in planned deliveries of shore power systems, a shift in delivery plans from the customers. Lower volumes due to the Ports and Maritime long lead times and continuing caution among certain customers have led to us reporting a slightly negative EBIT this quarter. Before moving on, I would like to point out the improved profitability in the industry segment. Our work within industry to increase our market presence, attract new customers, has led to more opportunities for us that we are very hopeful about going forward. In industry, the business consists of many smaller but recurring orders, which balances the Ports and Maritime product-driven business. We have recently communicated several significant orders for shore power systems. Two orders with a total value of EUR 9.35 million include shore power for new-built and existing container vessels.
The customer is a leading global container shipping company that earlier this year signed an order for EUR 8.1 million for shore power. This is a good mark of our delivery and product quality with a leading player in industry gives us this increased confidence. A large part of the latest orders involves retrofitting of shore power systems on existing vessels. This means that we will install our solutions on the vessels when they are in operations between Asia, America, and Europe. They could either be in dry dock, or we can do it during the sailing. These are, without doubt, challenging projects that require a lot of logistics and technical know-how. We are proud to have the confidence and experience to be able to do so. Deliveries will continue throughout 2026. The second agreement we have communicated involves delivering of first shore power systems in Maldives.
We expect the system to become an important reference in the region and may create opportunities for more products in the nearby areas in South Asia. We will begin deliveries of those equipment in the first quarter of 2026. We have also recently announced an order with construction and engineering company Civmec for motorized cable reels for installations in Port Hedland in Western Australia, which is one of the world's largest iron ore export ports. This is a significant agreement, and it's our first major collaboration with Civmec and strengthens our presence in Australia's mining and bulk handling sector. The delivery is scheduled for the third quarter in 2026. By this, I will hand over to you, Joakim, for a little bit more deep dive into the financial figures.
Thank you, David, and good morning, everyone. I'll start with the order intake. The order intake was in line with the same period last year. However, we report an increase in order intake for Ports and Maritime of 4%, while we see a small decline in industry. Thanks to the order intake in Ports and Maritime, our order backlog grew with 14% to almost EUR 126 million. As David said, we have had significant orders over the past 10 months in Ports and Maritime. However, a large portion of them is up for delivery in 2026 and forward. If we look at the revenue, although the underlying markets remain strong, we can see a decline in revenue with almost 19% compared to the same period last year. This has mainly three explanations.
Number one is the continued macroeconomic uncertainty that results in postponed decision-making with our customers, especially for deals with shorter lead times that would generate revenue within the year. We also had a Q3 last year that was not that strong on the Ports and Maritime side, and that has impacted also the revenue in 2025, as lead times are about a year before they turn into revenue in that business segment. On top of this, you might remember that we had a very big Q4 2024, and part of that was planned to be delivered now in Q3 this year, but we have experienced, as David mentioned earlier, certain delays, and this further impacts the revenue in the quarter. On top of this, we had some slight negative impact from currency of - 1%. With that, I will move over to our EBIT.
As you can see, profitability was impacted, mainly by our lower volumes, but also partly by the ramp-up in preparations for upcoming deliveries in the Ports and Maritime segment. As a consequence of this, we are showing a slightly negative EBIT in the quarter with -EUR 0.2 million. Having said that, we still continue to see improving margins on an aggregated level in the business, and we do deliver a result. This is a result from continuous efforts on both our cost-out work from our engineering team, productivity improvements in our factories, and also from procurement savings. EBIT has been adjusted in the third quarter for non-recurring costs of EUR 0.3 million related to the relocation of the registered office to Sweden.
I'm very pleased to have completed this move, and this is the first quarterly report that we are publishing in both English and Swedish, and fully based then on Swedish reporting standards. Moving to the net result, net profit declined to a loss of EUR 1.7 million compared to EUR 1 million last year, and earnings per share fell too slightly. Again, this is mainly a result then of the lower revenues in the quarter. Cash flow, our operating cash flow increased to EUR 2.8 million in the quarter due to mainly advanced payments from shore power orders. At the same time, we are a bit affected by these delays that we have talked about on our working capital, and we're tying a bit more capital in work in progress for the upcoming shore power deliveries. Net debt continues to improve, though, from EUR 15.3 million down to EUR 13.3 million.
Leverage ratios still quite okay at 1.44 compared to last year, where we had 0.85, which was still very good. All this together, though, means that we still have a solid financial position despite two softer quarters this year. Let us now look in a bit more to the two different segments to understand the financials there. Starting with Ports and Maritime, which is the largest segment. As I said earlier, order intake increased over 4% to EUR 21.9 million, and the order backlog grew by 16.4%, exceeding EUR 103 million. This is reflecting the continued demand for shore power solutions and also our MoorMaster systems. Ports and Maritime's project-driven nature with long lead times impact our performance this year, as we last year had a weaker first three quarters of the year, as you might remember, and a very strong Q4 2024.
As earlier said, there has also been certain delays in planned deliveries of shore power systems in Q3. Moving on to the industry segment. In the industry segment, the order intake declined slightly by 4.7%, reflecting the increased caution among customers. That said, the order backlog grew by 4% versus the same period last year. Revenue improved slightly also from the same period last year, and it's really good to see that the sales push, cost savings, and efficiency measures that have been going on for the last one and a half years are really improving the EBITDA margin. That we can see here is close to doubling versus the same quarter last year. We still have more work to be done here in the industry segment, but we are very pleased with this development, and we continue to see a big market potential in this segment.
With that, I will hand over to David for some final remarks.
Thank you, Joakim. Let me quickly summarize some key points before we open up for questions here. In the quarter, we have seen continued uncertainty among certain of our customers, which has affected our sales of goods and services with some of the shorter lead times. We are closely monitoring the development of this, of course, and prepared to take action if necessary, but we have a couple of busy quarters to come. Our underlying market remains strong, driven by the need of electrifying society and reduced noise levels in environments such as ports. This is also reinforced by the fact that our customers are facing regulations that require them to reduce their emissions and electrify their applications. For us, this continues to create good opportunities for us since we are offering leading technologies in this area and have built a strong market position during our 50 years in business.
Another important business driver is, of course, our large installed base worldwide, which provides us with a great opportunity to generate service business. We have conducted thorough reviews of our markets, our operations, and future opportunities. This has resulted in a new strategy or a clear strategy with a clear direction, providing us with a good basis for our priorities and giving us a better view of where our opportunities lie. This is important, of course, when we are allocating our resources and making decisions about future investments in, for example, new product offerings, etc. Already last year, we initiated increased investments in product development. We have launched all-time high new products this year, which has led to a good pipeline of new products to offer to the market.
By this, we have come to the end of our presentation here, and we now open up for questions over the phone or by mail through the webcast.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad.
Hi, Laura here from ABG. Just a couple of questions from my side. Firstly, you said that you've noticed ongoing customer uncertainty and long project delivery cycles in the European Ports and Maritime segment. Would you say that you're seeing any improvement in the customer decision-making since maybe the quarter end, or do you expect these delays to persist into 2026?
Okay.
Sorry.
Joakim, I can start with this one, and you can fill in. I think it's clear to everyone that the geopolitical situation right now, with tariffs coming and going more or less on a half of a daily basis here, creates the uncertainty, and we don't really know the customers are hesitating. They don't really place the orders if they don't have to. They wait a little bit to see what's the future going to look like. However, the underlying business that we have with the Ports and Maritime, with the need to electrify, with the need to reduce the emissions, once, as we said, with the regulations, but also with the megatrends, and also they must be seen as doing whatever they can to be green. That is there, and it's still there, and it's robust, and we're not really worried about that at all.
Same thing goes with the mining sector, where we're also strong, and it's an important part for us. As this Port Hedland order that we won the other day, I was visiting them two weeks ago, and it's impressive to see how they are now improving, and they are really doing big investments in order to just secure that they can export and bring out all the iron ore from the mines. The mining sector is also strong, but we see just a little bit of they don't need to place something. They hesitate a little bit to do it, but the underlying business is solid and robust.
Great. Thank you. You have reported a strong increase in your backlog, and you wrote that most of these deliveries will not be taking place until next year. Could you maybe provide some specific phasing for this conversion on when will it translate into sales?
Joakim, can you take that?
I can take that one. First of all, part of the increase in the backlog also is due to delays in deliveries, which was planned for Q3 and Q4 this year. Part of that will be postponed a little bit forward. I do not say an exact timing on that, but in general, it is spread quite evenly over the year. As always, when we are discussing the Ports and Maritime business, it is a bit longer lead time, so there you can calculate more with 12-18 months from order intake to actual delivery compared to the industry part where we have shorter lead times, three to nine months.
Thank you, very clear. You also stated that the lower volumes were partly due to postponed decision-making, as you just mentioned, especially if it deals with shorter lead times. Is your services business included in this category of shorter lead time orders?
No, I think our services business there is still strong, and we're not experiencing any downturn in the services business. It's more on the shorter equipment orders that we're seeing the downturn.
Just to add there, Joakim, what you could say is, to some degree, it's even a little bit of the opposite, because if they wait to replace equipment or they hesitate a little bit and push it a quarter or a year or whatever, then they need to do overhauls, and they need to maintain and even buy more spares. It could even be a positive effect on the service business, but of course, we want both of them to be progressing well.
Yes, thank you. Very clear. A bit on the cost side, EBIT was a bit lower this quarter, and you said it was partly because you're increasing costs to prepare for your upcoming deliveries in Ports and Maritime. Can we expect these elevated costs to persist into the following quarters?
I would say that Q4 2024 was a big quarter for Ports and Maritime when it comes to especially shore power.
Order intake.
That is planned to be delivered the last quarter, Q3, this quarter, and into the beginning of 2026.
Okay. Great. That was all from my end. Thank you very much.
Thank you very much, Laura.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.
Okay. We will move on. If we do not have any more questions on the phone here, we will move on to the questions from the feed. I will start with one question here. You signed many large orders late 2024. Should we expect a strong fourth quarter and ending of the year? David?
Yeah, I think that is exactly what it is all about. We said we had a lot of orders coming in in Q4 2024, and with a lead time of, as you just mentioned, Joakim mentioned before, 12-18 months, that means there will be busy quarters to come. Yeah, we are not speculating too much on the forecast in the future, but that is a conclusion you can draw, of course.
Yeah. Next question on a totally different area. Do you have any plans to increase the volumes that the shares are trading at the stock market? I think we can start with the fact that we're moving the registered head office back here to Sweden. We believe that that's something that makes Cavotec more easy to understand. This is also to get closer to the owners. We have more than 80% of owners are Swedish in Cavotec, and we are with this also, and our strategy work that we have been doing have a plan to continue to be more present and more visible for the markets here in Sweden so that we will most likely be able to make an impact on the volumes there. But David, do you want to add anything there?
I can add there what we have said, and this is a decision we have taken as well, especially if you look back a couple of years ago. We wanted to, should we say, fix the business a little bit. We had some problems with some unhealthy business in our portfolio then. That's now been worked out, shipped out, and delivered, and at the same time, also improved. We have healthy margins in the deals that we take now, so we are more proud of the company now than what we were maybe three years ago. However, we have purposely not been talking about the company too much. However, of course, now when we are moving home, I think everyone understands we are a Swedish company on the mid-cap, but we are quite unknown to people.
Yes, we're going to talk a little bit more about the company and explain and make us a little more visible and known to the investment community. That's a program we're going to do, me and Joakim, more of now when we have the strategy ready and we're lined up for the future, and we're going to present a little bit what we are capable of because we are a little bit too unknown to the wider investment community still.
Okay. We have a few other questions here. Where do you see the clearest signs of uncertainty in decision-making in terms of segments and geography? David, maybe that's one.
Yeah, it's a good question there. I think, first of all, it's a little bit general. It's a little bit like a wet blanket on everything, and this is not something unique for Cavotec. This is also what you see and what you're reading in the quarterly reports by our customers. They see the same thing. It's a little bit of a worldwide thing. Of course, the tariffs and the uncertainty, what's going to happen between the U.S. versus Europe, of course, it has an impact direct to the U.S., but it has a knock-on effect on what's going to happen in the other regions as well. We have discussions going on with our customers, and we are also looking into, can we do something here? Does it make sense for some of the products to even set up small assembly facilities in the U.S.?
We have a facility in the U.S. Are there certain products that we can do there in order to offset some of the tariffs to some degree? More importantly, also then to be present in the U.S. and to serve our customers there with shorter lead times and being close to them in the market. That is something that we also have already started up, and we're going to see more of during 2026. Otherwise, in terms of segments and geography, I think it's quite evenly spread. We don't have any super problematic. We're a little bit of slowdown everywhere as for many of our customers. The underlying business is solid.
Okay. I have another question here. On the complex shore power container ship orders you receive, are you satisfied with the margins for these projects?
I think our results show that we're not really happy, and you shouldn't really be happy, but we're satisfied with the improvements that we have done on both Ports and Maritime and industry in terms of the margins in the specific deals. We need a little bit more volume. That's clear. That volume is now, as you know, a little bit shifted to the coming quarters. I'm okay, and I'm pleased with the improvement that we have done there. You could say that the more complex the products are, the more it matters to be an expert and having 50 years' experience in this rather than being a new startup and trying to do something here. That is shown by the customer who gives us continued trust and doing those complex things because we can do it. We have done it before.
We have shown it. We also then are also very positive that we're going to see improved margins. The more business we do, the more skilled we're going to be, the more skilled our people are going to be out in the field doing it. Of course, the overall margins in that underlying business are going to continue to improve.
I think on top of that, I think also we continue to work with cost out and procurement savings on the order book once we have gotten the order. Sometimes the long lead times play in our favor.
Yeah.
Okay. We go on to the next question. Can you develop in which areas or segments and industries your strategic review is pointing you towards? Does this imply a wider or deeper product area expansion?
I can start there, Joakim. You can continue. I think we have, as you know, we were looking back three years ago. We were Ports and Maritime, and then we had airports and industry at the time. Airports is a history that's gone three and a half, four years ago, not part of us anymore. Now we have more industry in focus. Inside industry, we also have a very interesting radio business where we have sophisticated, in many cases, explosion-safe equipment and so on and so forth, which is a bit complex to do. We have the competence, we have the knowledge, and we have the certificates for that. That is certainly an area where I think we can grow more. In addition to that, as we already mentioned before, we are now more active and present out with customers.
We have more salespeople out in the field than what we had before. We also then are able to offer them a wide range of products. That pays off. It pays off by the more you visit customers, the more you're sitting in front of customers, the less your competitors are sitting in front of the same customer. That generates business. As we mentioned, the industry business is not big one of orders. It's a lot of small orders, and it starts small, and they want to have a prototype and test it. After that, you're in, and then you're starting to have a repetitive flow business year after year. That is why we are very optimistic about the industry segment going forward as well. Definitely.
Okay. We take the next question. Can you expand a bit on what products that are part of your product development? Is it Ports and Maritime or industry or both?
Simple question is both. Simple answer to that one. We have certain things in our Ports and Maritime product portfolio where we have had gaps. We are filling those gaps, and we are launching new products now. We have done that during 2025, and we have more things to come there that we also think is products that we're going to add into the portfolio so that we have a wider range of offering to our customers. Same thing goes with industry where we have level wind reels, etc., where we are designed with a new compact design that fits better into the products of our customers. We are working in cooperation with them in order to develop what they need for tomorrow. I am also very pleased how that job is done, how we do it.
Again, taking back on the radios, we have a new radio design, which has also been a very positive reaction from the market where we developed it, and we went out to the customer, talked about it, etc. We get their view into it, so we have their buy-in, and that will now see generating the results. Clearly, we have a lot of things that we are doing, and there are a lot of things that are still to be done and still to come.
A question regarding the tax implementation by the International Maritime Organization. Does the delay in tax implementation have a positive, negative, or neutral effect on the business of Cavotec? David?
Sorry, Joakim. One more time. My mistake.
The delay in the International Maritime Organization's tax implementation, does that have a positive, negative, or neutral effect on the business of Cavotec?
I think I'm not so worried about that. I think there is a delay, but the underlying, and as I mentioned before, regulations or not regulations, there is a strong need to go as green as they ever can. They are working on it. I am positive that we are still going to see positive effects of that. At the same time, we should not, we pointed it out in the presentation, we should not neglect the fact that one thing is the regulations in terms of emissions, but it is also about safety. Our MoorMaster system creates increased safety in the harsh ports environment. At the same time, also the pollutions. The cruising ship that in the city of Port of Miami, for instance, they do not want to have black smoke coming out of the chimney.
They want to turn them off and switch them over to shore power. I think it's a change that is there, and it's going to continue.
Okay. We have another question here. The industry segment profitability improved due to implemented cost savings and efficiency measures. Can we expect a stronger margin in industry going forward? Maybe I can start a little bit, and David can continue. First of all, we believe that there is still big potential here to work with cost out on our engineering side and also with improved procurement savings. Having said that, we do have already the installed capacity, so we have a bit of leverage there that we can deliver more volume on the industry side already now without having to increase investments. We do have a bit of leverage there, and we see a good future potential for improved margins going forward. David?
No. It's a good point. We have the installed. We can definitely manage more volume without needing investments in terms of manufacturing or assembly facilities. That's clear. We have capacity to do more. Secondly, we're also working actively, as you mentioned before, Joakim, we have long lead times, yes. At the same time, it also works in our favor. Our engineering team are doing a great job there in terms of sustaining engineering to look at what are we doing today, how can we do this problem, fix this problem, and design this in the future or near future to make it more cost-effective and better for us, better for the customers, and in a true win-win-win.
Okay. I think we had one here. You mentioned, and I think this was the last question here for the moment. You mentioned in your strategic review of the operations and future opportunities, will there be any change of direction in the company in the future? I'll leave that one to you, David.
Yeah. I think every time when you do a strategy work, and as I mentioned before, this is the first time when we really do a deeper drill down into the strategy specifically for industry, I think we have a much better understanding now. Where are the opportunities? Where are the gaps? Where do we want to serve? Which are the customers? Where we are today delivering one of the things in our products? What else could we offer to the same customer? That is clearer now, and that's where we're also accelerating. We see it generates interesting leads and opportunities there. Equally important when you're doing a strategy is to decide where you want to be, but at the same time also where should we really be?
Of course, that is also something because the whole market evolves, and therefore it's important to see where do we want to be and where do we have our things and where should we be. At the same time also then say, "Sorry, in that case, maybe we shouldn't be so active in that area, but we should be elsewhere." We are either developing new products or selling new opportunities or cross-selling to new customers as well. It's not a major change in the company of Cavotec. We're going to continue to deliver automated solutions for mooring. We're going to continue to do shore power and cable reels. Sure.
We're not going to change that in general, but it's more specifically and then broken down per customer, per segment, per market where we're going to do more in order to be even more successful going forward. No major change, but it's a more clear direction broken down to activities per segment and per region and per product type.
Okay. I think that was all the questions we had in the feed here also. David?
Okay. In that case, I thank you very much for your continued support here, for your interest in what we're doing. We are excited about the future, and we look forward to getting back to you going forward. We're going to announce what we're doing in the business with press releases as we do, but at the same time, next coming up quarterly calls. Looking forward to those. Thank you very much.
Thank you, everyone.