Welcome to Cavotec Q3 Report 2023. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to CEO, David Pagels, and CFO, Joakim Wahlquist. Please go ahead.
Okay, good morning, everyone, and welcome to Cavotec's third quarter presentation. I am David Pagels, the CEO of Cavotec, and I'm here together with my—today with Joakim Wahlquist, Cavotec's CFO. Let me start with a short recap of Cavotec for those that are not familiar with us. Cavotec was founded over 40 years ago, and during these years, we have built a strong position as a leading clean tech company. We design and deliver solutions to electrify ports and vessels and other industrial applications, like heavy-duty vehicles used in the mining industry. Our main products are shore power systems, motorized reels, crane electrification, and automation—automatic mooring systems. Those are sold to customers like shipowners and operators, port and terminal owners, and leading OEMs in the mining and construction sectors.
A key competitive advantage for us is our global service organization, which supports all our customers 24/7 worldwide. When I joined Cavotec a little more than a year ago, I quickly realized that we had a lot of things to sort out internally in order to lay the foundation for a stronger Cavotec going forward. We have therefore initiated several group-wide change programs covering five strategic areas. These five strategic areas are customer focus, always with the aim to create a win, win, win. Win for us, win for our customers, a win for their customers or end customers. Second, operational excellence in everything we do across the globe. Therefore, also then cost control goes without further explanation and even more actual in the inflationary economy that we face right now. Fourth, culture and values. One Cavotec across the company and towards our customers worldwide. And lastly, innovation.
We are working on solving our customers' future needs and challenges. Let me give a few examples of the actions that we are taking. To improve the cost control throughout the group, we have introduced the cost optimization programs. We have appointed a head of operations, Jörgen Ohlsson, who has a solid experience in operation, but also in sourcing. So he will initially focus on the total review of our sourcing function with a goal to centralize and optimize our sourcing per commodity across the globe. This will impact our cost structure and will improve our operational excellence going forward. We have also reviewed the way we manage our customer relations to become more efficient, reach more customers, and also to ensure that we better understand their needs now, but also during the life cycle of our program.
This is the foundation for the value that we want to create going forward. I am confident about Cavotec's ability to grow with profitability. The reason for that is that we have a strong market position, a market that is driven by a combination of strong megatrends, but also regulations. Our strong market positions are based on the fact that we have leading technologies that are proven, reliable, efficient, and safe to use. Our Shore Power solutions, motorized reels, and automatic mooring are examples of our cutting-edge technology that helps our customers towards the Net Zero Emissions and towards a better and safer product, which makes us a preferred supplier and partner for them. What makes our solutions so attractive is the ability to electrify functions or machines currently driven by fossil fuels that emit greenhouse gases.
Thanks to our electricity solutions, our products are also lower the noise levels, for example, in ports and mine solutions. The request for reduced greenhouse gases emissions and reduced noise levels do not only come from our customers, they're also driven by authorities all over the world. For instance, in Europe, the maritime transport will be included in the emissions trading systems, and in many countries, there are increasingly strict requirements for reduced emissions of diesel in ports, not least in the large cities with cruise ships very close to the city centers. A proof of our leading position and ability to innovate is our Megawatt Charging System for heavy-duty vehicles.
This gigantic device, which is much bigger than, and heavier than chargers, whether that we have for our electric cars, reduces the charging time and maximizes the uptime compared to the existing Combined Charging Systems. We are proud to announce that the system is currently in commissioning by one of our customers in the mining sector as we speak. We have also received an order at close to EUR seven million for PowerFit. It is a containerized solution for high voltage connection of vessels to shore. The customer is one of the largest, biggest shipping companies, and deliveries will take place between late 2023 and early 2025. With our PowerFit solution, our customer can reduce emissions significantly from its vessels.
As I mentioned earlier, our service offering is a key competitive advantage to us, and we recently also signed a long-term service agreement with the big COSCO Group. As you remember, in our last call, I announced that we have initiated the establishment of a new assembly unit in India. This assembly unit will give us additional capacity, but also serve the large Indian domestic market. Let me once again underline that opening of an assembly unit in India does not require a big investment. We have already leased the building as well as the machinery. They are in place, and we have recruited key personnel. The project is running perfectly according to plan, and we expect the new unit to be up and ramping up gradually during 2024. So now I'll turn to some of the performance in the recent quarter.
Our financial performance in the quarter shows that that our change programs, as I mentioned before, and strategic approaches, are beginning to yield results. We report for the third consecutive quarter, a positive EBIT result. In the quarter, EBIT amounted to EUR 1.7 million, a significant improvement compared to last year's -EUR 0.4 million. It is also an improvement from the previous quarter, where we reported an EBIT of EUR 1.2 million. The EBIT margin also increases to 4.1% this quarter from 2.6% in the previous quarter. So we see clearly that we are gaining results on what we have initiated.
The improvement is mainly reflected in reduced operating expenses of the financial costs and taxes, we reported a positive net profit this quarter of EUR 0.1 million. Thanks to the improved results from the operating activities, we also reported a positive cash flow this quarter of EUR 4.3 million. I'm really happy with these numbers, since it clearly demonstrate that we have achieved important progress in the transformation of Cavotec during the quarter. I will now hand over to Joakim to run the little bit more of the figures in detail.
Thank you. Thank you, David, and good morning to all of you listening. So let me start a bit with the order backlog, that is, and the top line development. So the order backlog decreased slightly from the previous quarter, and revenue was in line with the third quarter last year. I think, I'm very important here when you analyze Cavotec numbers, is to keep in mind that Cavotec is very much a project business, and this means that the invoicing of individual projects or acceptance of individual orders can very much affect the development between the quarters. So having said that, also, we have continued to see a very strong interest in our clean tech solutions, and we have a very steady flow of customer inquiries. So we're looking very positively on the future development.
Having said that, also, there is, however, some customers that are continue to keep carefully evaluating the macroeconomic environment, which we all understand. This is normal for many industrial companies. Like David mentioned, we have a positive EBIT in the quarter of EUR 1.7 million. It's the third quarter in a row where we are showing positive EBIT. I think, it's very nice also to be able to turn a corner on, not only on EBIT, but on net profit level now with EUR 0.1 million, even though these are small numbers. We continue to see a very positive development also of the margin in our order book, like we mentioned in previous quarterly call.
Looking at the cash flow, like mentioned earlier, this is a project business to some extent, which also reflects a bit in the cash flow here, but we had a positive cash flow of EUR 4.3 million in the quarter, due to the improved operating activities. I think also we mentioned earlier, we have a very good relationship with our lenders, and I'm happy also to say that we have a very good progress on the leverage ratios, and back now to compliance with underlying finance agreements, we're at 2.68 times versus 3.73 in Q2. Let me say a few words also on our two segments. We start with the biggest segment, which is ports and maritimes.
The Ports and Maritime segment delivers solutions on decarbonizing ports and vessels, and also automating ports, and demonstrated a growth of 4.1% in the quarter. The increase was driven by improved volumes and prices by 5.1%, while hit a bit by currency effects that had a negative impact of about 1%. Ports and Maritime has operational results and margins over the past four quarters, mainly as a result of lower operating expenses, but also positively impacted by higher prices. The order backlog decreased a bit in the quarter, which is reflecting the delay in acceptance of certain customer orders. Let me now say a few words on the Industry segment. The Industry segment delivers solutions for a variety of different businesses, including mining, tunneling, construction, energy, forestry, and industrial production.
Here, mining and construction are the largest segments for the industry division. The order backlog and revenue decreased in the quarter, which also here reflects delays in milestone invoicing and some customer acceptance of orders. We also see an impact to some extent from big customers, big OEMs, that are carefully evaluating the macroeconomic environment. As a result of lower volumes, the EBITDA margin decreased, although we saw a slight improvement from the previous quarter. And with those words, I will hand back to David.
Thank you very much, Joakim, for this. Let me then quickly summarize before we open up for questions. With the financial performance in the quarter, we have demonstrated that we are on the right track in the transformation of Cavotec. We drive this transformation through a clear strategic priorities and group-wide comprehensive change programs. What makes me confident about our ability to grow with profitability is Cavotec's strong market position, and also the fact that our market is driven by the strong megat rends over the electrification and decarbonization. These strong underlying market trends are also reinforced by authorities across the world that is driving increased regulations regarding emissions and noise, pollution. However, at the same time, we continue to see how our customers are carefully evaluating the macroeconomics environment, exactly like Joakim just said.
With our combined strength and clear strategy, I am convinced Cavotec will be a key player in the precision for a more sustainable and emission-free world. By this, we have ended our third quarter presentation, and I'm now ready to take questions. You can either call in and ask us questions or write your questions here in the webcam. Operator, do we have any questions?
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Karl Bokvist from ABG Sundal Collier. Please go ahead.
Thank you. Good morning. My first question is on the commentary regarding the normalization of the backlog. Could you expand upon that a little bit more in terms of what work you have been doing, if it relates to just being much, much more selective on taking new orders while backlog declines because you deliver, or if it has also been related to you or customers, you know, canceling orders and thereby lowering the backlog?
Hey, good morning, Carl. When we're talking about the normalization of the backlog there, it's mainly the focus on making sure that we're taking profitable orders. So we have not seen any cancellation of orders.
Understood, good. And then also on the order situation, this has been, you know, we've been seeing quite an extended period now of an inflationary environment. So based on your assessment today, how are you working with pricing and potentially indexation clauses and so on in order to avoid this kind of cost or price lag that we saw last year? And also, follow up on that: now that we head into the second half, is this kind of inflationary negative impact on margins fully done? I believe at the start of the year, you said this could have an effect during the first half, but would diminish in the second half.
Okay, thank you, Karl. What we have done is that we have increased price levels. And as you rightly say, we were a little bit late with that, those actions in the past, therefore, we haven't seen the full effect in the quarters that we have behind us. Now, I think we are much better aligned with the price increases. They are better in sync now. And so I'm not expecting us to continue that journey. Now, we need to work harder on making sure we drive down the cost and actually use the opportunities that also the little, should we say, the slowdown in the economy, open up opportunity for the sourcing opportunities and also sourcing effect to yield effect.
So, I don't expect us to continue that journey. We will, of course, follow it in line with a continuous inflation, but not... But I'm more confident about our position now versus we were before.
And on top of that, also, we see, we continue to see, which we described also in previous quarterly call, an improvement in the order book margin. And with the full focus that we now have on the sourcing and procurement area, we believe, though, that there's an opportunity both to work with the current order book and new orders to further increase those margins.
Understood. Then on demand, now during the presentation, you highlight these long-term drivers, but what can you say about demand and order evaluations and customer inquiries related to kind of the next 12 months?
We don't really give detailed guidance on what we see in the order pipeline that we have ahead of us. What I can say, though, is that I see a continuously supported by the regulations, by the mega trends, a continuous strong demand for our products. We are supporting and we're just surfing on the mega trends that we just mentioned before. And I just came back yesterday from visiting customers in Miami, where they have gone in on the East Coast. West Coast was a little bit earlier, of course, for various reasons, you know that.
But on the East Coast now, for the cruising line, we are very determined on, on going into shore power in order to-- And I was visiting Miami, where we have the Miami beautiful skyline with, with the, with skyscrapers, but also with the cruising ships. And of course, they are in the city of, of Miami, and they, they want to, and they will, turn off so that you don't, you see the cruising ships, but you don't have any smoke coming out of the of the chimneys there while, while they are in, in operations. So it's something where, which is driven by regulations to some degree, but also driven by the fact that customers need to, customers, customers are also driving this, this direction.
So I'm not worried at all really that we for the trend going forward in the market. It's definitely there.
Understood. And on cash flow, perhaps more related to you, Joakim, but-
Mm-hmm
... year to date now, changes in working capital, it has been negative EUR 9-10 million, and it was around 0 in this quarter. So based on receivable timing, advanced payments, et cetera, et cetera, working capital discipline, is there anything we can, we should expect in towards the end of this year and into next year in terms of working capital improvements and just overall cash conversion?
We are working very hard on working capital in all areas, from payables to collections, but not the least, the inventory management. So, we feel that we're making good progress here, and we can see some of that result in our numbers. We have more work to do, but we feel positive about the development.
Thank you. My final one is just, I believe you partly answered this, David, but on just future margin expansion, where your cost efforts, lowering cost, et cetera, now that the backlog has come down from a kind of with the normalization efforts, et cetera. Just how much more do you think you can improve profitability, if let's say, the top line doesn't really pick up materially? Just on to understand the cost side of it.
I will not guide on the exact figures there. What I can say is that the sourcing side and also the global operations, where we have now Jörgen Ohlsson, as I mentioned, coming in, and we are setting up a sourcing structure. I'm confident that we will substantially be able to improve. It's a little bit of an untouched territory, unfortunately, which we now are stepping up and increasing our efforts on. So, I'm confident that we will see, we will see positive results of that, which will lead to... Because quite a lot of the order book that we have has some long-time horizon in it. And therefore, if we do those efforts now, they will pay off over the years to come as well.
So, I'm confident it's gonna pay off. I'm not really gonna give you an exact figures there, of course.
Understood. That's, that's all for me. Thank you.
Thank you very much for your questions, Carl. Thank you. Any other questions?
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad.
Okay.
The next question comes from Karl Bokvist, from ABG Sundal Collier. Please go ahead.
Yes, hi, again, just one follow-up on services. Is it possible to give any kind of color on how that part of the business is performing and what kind of share of a group services account for now?
Yeah, we don't report the service separately, but what we can say about the service business is that it's going very strong within Cavotec, and we continue to focus on this area. It's a very important area for us, both from a profitability perspective, but also from a competitive advantage.
Okay, understood. Thank you.
Well, on a side note there, Carl, I can take, because I've also had some questions here coming up in the flow for written questions, is also then a question around our ability to do in these service contracts that we have. What we see also, which is very positive for us, is that to see a trend of not only delivering goods to our customers, but also then delivering service to our customers. Service in terms of we operating our machines for our customers. We have done that for several years on our MoorMaster solutions. We also signing new things with MoorMaster solutions, where we are, we're actually gonna do the job for our customers by handling our equipment.
We're also discussing that with another customer for shore power, where we're gonna do the plug in and plug out of the cruising ships, which again, is something, of course, it gives you, gives us a good, stable revenue flow, but more importantly, it also gives us the opportunity to actually operate our machines and make sure they perform exactly as they should or even better. So I'm really positive with the trend that our customers don't see it just as a product supplier, but also as a service provider, who's maintaining and standing by our products during the life cycle of the products and the investment.
Thank you.
Okay. We also have a number of questions here in the chat, so we will try to take them one by one here and see if we can give you any good answers. David, which one is the first one here?
Yeah, we can take one, and there's a question here if we have any noteworthy innovations in the pipeline from our innovation center in Rotterdam. And yes, we have. I think 2023 has been a year where we have quite a lot of focus on the charging solutions, which we are just commissioning as we speak, as we've told you about before. What we also have another series of innovation programs happen and progress.
So what we, what we will do more and put more efforts into in 2024, is to really clearly prioritize and put more efforts into R&D to make sure that we maintain or even gain position on the, on, on the, in the port- portfolio and innovations for, in order to better serve our customers going forward.
Yeah, and I think the question there was also about our innovation center in Rotterdam, but we also have a global R&D organization, so we have engineers working on new innovative solutions in more places than in Rotterdam. So, we have a good portfolio of innovations that we are working on here in Cavotec.
We have another question here coming in from: Can you elaborate a bit on the service agreement with the COSCO Group? Yes, sure I can. What we have with COSCO Group, COSCO has been a good customer, and we've been dealing with them for a long time, a good, really good relationship with them. They have a big portion of our equipment installed on their vessels around the world. What they now asked us to do is to go on board on the ships and do a checkup of the status of the system. So they are paying us to do this, service reports on the vehicles, and that's the agreement we have signed with them.
In line with that, of course, we will change out certain spare parts and wear parts. But addition to that one, it just also gives us, it gives us a good opportunity of looking at to get some feedback from our equipment, but at the same time, also be able to then propose solutions in order to extend the life of the products that we have there and make sure they work properly as they should going forward. So I'm really, really positive around the entire cooperation we have with the COSCO Group. Okay. We have another question here regarding if you can develop a little bit more about observations on how the industry sector is developing. Generally, activity levels in mining seems to be okay.
Yeah, so in the mining sector, you could say that we are currently focusing on our motor cable reels for underground mining. We also have big applications for surface mining, but primarily on the underground mining, where we have two big Swedish multinational companies that are strong, very strong in that sector. There's electrification happening underground because, of course, obvious that you can't run diesel engines underground. But also what we see there now is also a strong push for also electrifying overground mining equipment, drill rigs, et cetera.
That is overground, not really for the purpose of that you cannot really use it, but it's the drive from customers and from their own customers to actually also electrify overground drilling rigs, et cetera. And that is where we have that cooperation with our customers in order to step that up. So I'm optimistic about the mining sector. The tunneling sector is a little bit less our core business. But definitely the mining sector where we are, and I see a good development going forward there for the customers that we have there. Creeping through more of the questions here. You, Kim, do you have any more else here? We have a question here regarding the time horizons in our order book.
Is it one year or several? It is a mix. You could say that in the industry sector, it's a little bit more shorter time horizon in the order book. It's more flow business, as we call it. In the ports and maritime, it's big investments, it's a lot of things. It has a much, much longer horizon than the planning phase, but also in the delivery phase. A year, it's in many cases more than a year, several years, but of course little bit shorter. The service business is a combination. It's some service level agreements with a long horizon and running over several years. But it also the spare part business, which of course by its nature is more has a shorter horizon.
I think we have one question here also about the workforce effectiveness, apart from the sourcing improvements and what we're doing there. I think what David said earlier is that our programs are company-wide, and that a lot of our efficiencies is, of course, we're working function by function and making sure that we are performing our best. But a lot of the focus from David and I here right now is also to make sure that we have a good flow in between the functions, because that's where the efficiency gains really are. So really a flow focus throughout the company. That's what we can say about that.
Yeah, I think clearly, and this is also where, what, a little bit what we, what we, clustering one Cavotec, that we need to be better across the functions, inside the company and, and also across the sites that we are, that we need to be better at working as one company.
We have one question here also. After the quarter, you signed a shore power order to a leading shipping line. Can you tell us more about that order, and how is the market demand for ports and maritime segment? I think that one's for, for you, David.
Yes, we can mention there, what we, what we have there. We have, we have Shore Power solutions when they are mounting on the vessels for in two different product types. One is when you build new built ships, then you build in what we call AMP reels, which is a permanently installed AMP reel that you have on the side of the ship that actually drops down to the port and actually connects to the, to the, Shore Power. That is when you're building new ships. When you are-- but we also have a big, big fleet of, of existing container ships and cargo ships that needs to be retrofitted with Shore Power. And in that case, you, you then, implement our product.
We install our product called PowerFit, which is a containerized solution, where you have the AMP reels, et cetera, sitting inside and some power electronics. Then they are sitting permanently on the container ships, but it's easier for them to just add an extra container, which they will not then remove obviously. It's there permanently installed on the ship, but it's easy to do that on the container ships in order to make sure that also the existing fleets get Shore Power and can connect to that, and therefore also reducing the go as green as they ever can within the shipping lines. However, the recent order we have here...
with the customers, then someone who ordered ship some time ago, they were not able to design in the AMP initially, and therefore they have then added PowerFit containers on new-built ships. So that is the order we're talking about, which is close to EUR 7 million, which is now containerized solutions for new-built ships, which is a little bit of a hybrid between existing fleets in there. Because it was ordered a long time ago, and therefore they hadn't got time to put in shore power. We just demonstrate that this trend is so strong for them to install the shore power and the drive for the shipping lines versus, and also push for the ports to be able to provide with shore power to, in order to connect the ships is really, really strong.
We have one question here also that we showed, or you showed positive net profit in the quarter. What is behind this good development? And, like David answered a bit the questions about the order book, and that we have pretty long order books usually. This is work that have been started more than a year, a year ago now, with making sure that we take in profitable business and that we focus on profitable growth, and that's what we're seeing. On top of that, we are working very hard on operating expenses optimization across the group. So it's a combination, it's a combination of factors. We're leaving no stone unturned here.
Then we have a question here from uncertain . An impressive revenue growth of 25.9% in the nine-month period. Can you develop if the current order is coming in during the year or a focus on working down the earlier, less profitable orders, which should perhaps imply that the margin trends could continue to improve in 2024? You have a good conclusion there, Johan. The amount of orders with less attractive margin is shrinking. The more we deliver out, the more they will disappear. We are more restricted when we're taking on orders now. We need to make sure that we don't have an order book for the sake of it. We want to have a profitable order book. Your conclusion, what you're saying there is correct.
We should be able to conclude that the margin should increase going forward. That's, that is definitely what we... On top of that, of course, we are working, as I mentioned before, initiative of cost down. So the combination of that makes us comfortable about the future.
Okay, did we manage to get all the questions?
We have one question here. Are you also working on solutions for hydrogen-powered vessels and vehicles? We are not, but it's a new technology and there is a lot of opportunities and a lot of things happening now. And I think the shipping lines are exploring all kind of different ways of reducing the emissions. One is hydropower. Yes, another is, of course, LNG, and instead of diesel instead, and then, and oil. So it's a lot of and many of those ships has a combination of various systems in order to as a propulsion system and as generating the power.
So it's not necessarily that they've only one; they have multiple, but I think it's, we're on board on everything, but we're not necessarily on board on exactly the hydrogen-powered vessels. But of course, hydrogen needs power, and therefore, in that case, yes, we are supplying the power in those and the shore power.
Okay.
We have a question here, which are from, from, from , uncertain Could you discuss revenue profitability from the automated mooring solutions? Understand, you ceased the investment program and focus more on shore power products. That's not necessarily correct. We are, we delivered, we actually, it was good publicity around, the MoorMaster that was just commissioned and installed during the third quarter, in Kapellskär, the first in, in Sweden, actually. That is also happening, and we have a big interest. Right now, we are, we are installing, we have just installed in the quarter, a big portion of a program for in, in Morocco and for MoorMaster. We also do delivering and, and, commissioning now, a MoorMaster solution for a port in, in South America.
The reason why those container terminals are interested in MoorMaster is a double. First of all, safety. Safety, of course, because you don't need mooring lines, and mooring lines is also linked to a lot of injuries and accidents. But also the fact that you can hold the ship more steady, and therefore you could be able to load and unload the containers more efficient and quicker. But also then an important factor is, in some of those ports, is that they have some severe weather conditions, and some also then tides, etc., which can create a big problem for them.
By installing our MoorMaster solution in addition to the mooring lines, makes them being able to open the ports then for one, two, three weeks more than they normally could do, because they normally lock down the ports when they have severe, severe weather conditions. Now they can keep them open and therefore efficiency increases. Therefore, we see a strong drive within the MoorMaster also going forward. Worth mentioning on the MoorMaster, though, is that this is a big step for the ports to take. Not necessarily huge investments, but it's more or less a big step for them to take. It's a conservative business in certain degrees.
It takes time to convince the customer to let them really see the benefits of our automated mooring system and to convince them. But the more, and we have now 50+ installed installations of MoorMaster around the world, and we see the trend and the increased interest from many ports around the world to continue. So I think the Morocco one is an important milestone. At the same time, also the one in South America, and I'm optimistic we will see more orders for the MoorMaster in our books because we have a lot of interest in the MoorMaster products in the pipeline.
I think, you answered a lot of that question there, David. I also want to say that, developing, we now have our new generation MoorMasters out there, and developing a new generation is not something you're doing every year. Just like I'm coming from the commercial vehicles industry, and you don't develop a new truck generation every year. It's big investments. Having said that, we are, it's a key solution for us, and we continue to develop this product. So this one, it will continue to be in our product portfolio. Any more questions there? Let's see. I think we have ticked off.
I got a question here from Elin from Stockholm School of Economics, regarding the megatrends and regulations you mentioned in favor of green technology. Are they equally as strong in all geographical markets, or are there some regions that are weaker and stronger? It's a very good question. I see a strong trend right now in Europe. There are a combination of regulations, as we mentioned, but also drive from customers because their customers, and it's down to all of us, when we are going on board on cruise and ships, et cetera, we want to be doing something good. And therefore, there is also a...
So therefore, I'm talking about the megatrends, and I'm also talking about the trend from customer who wants to do this, and therefore, we're very positive towards how this goes. Europe is happening now, primarily on the cruising ships. Quite a lot of the ships, quite a lot of the ports will be installed with shore power in Europe. They have a plan over the next five years to do 85% of the ports in Europe is the aim that they want to achieve. But also then the U.S. is happening now, the East Coast with Miami was brave to be the first one, but also the other ports on the West Coast, Canaveral, Everglades, et cetera, are now clearly following that trend.
I was, as I mentioned, visiting customers on the East Coast this week, and they are just as we speak, ready to launch the products, and then they have the funding is already available, and one starts, and the rest want to follow because no one wants to be left behind. Having that said, but also the shore power in Asia is also then going strong. So I think we're a little bit in different phases, but I think the overall trend is equal around the globe. Everyone wants to move away from fossil fuels and into green electrical shore power solutions. We have one question here. How do you review the after market? How long lifetime value of our products?
You could say that the technical design life, and we have the technical design life of a vessel is 30-plus years. And of course, if you are very close to scrapping a vessel, you don't really invest in this. If you're close to a couple of years away from scrapping it, then you wait and hold off. But at the same time, we have equipment on board, which is there in order to serve the entire lifetime of the vessels. But of course, then, as we just explained before on the COSCO, they want us to be on board in order to make sure and engage us to make sure that the equipment lasts.
It is harsh environment out there, saltwater, rough conditions, when they're sailing over the oceans, that's clear. So it's, it's a tough environment for our products, and therefore, it's, it's really important that they maintain it properly, and, and therefore, I'm glad that they're also using us as their, as their partners to, to make sure that this, the product works properly, over the technical design therefore, of, of the vessels.... Is there anything we have missed here, Joakim?
I think we have ticked off all the questions here now.
We have one here. I think we mentioned it a little bit, we talked about India. I said we will gradually ramp up India and during 2024. However, I was out there looking at the facility a couple of three, four weeks ago, also hired a couple of key guys that that's gonna be in charge of running that facility. And we will, we will ramp it up as, as we said before, but we will start producing the units in our facility already in Q1. That, that, that is gonna happen, but it will be a ramp up. It's not a big bang where we open a facility and all of a sudden, we switch on the tap.
It's more gradually ramping it up as we go there. But the India market is also very much interested in going as green as they can, and therefore they're also in the forefront on the shore power solutions and also modernizing their ports. India is, as we all know, a very rapidly growing economy, and therefore they want to do it in as efficiently as possible. I think we have answered the questions now, which we have there. So if you don't have any further verbal questions there, I would like to take the opportunity to thank you all for your good questions and your interest in Cavotec as a company, in our products.
And I'm also glad that you are as excited as we are. You are, Joakim, and me for sure, but also the rest of Cavotec. We are playing a vital role in this sustainable trends around the world, and we have good products for it, and therefore, I'm very optimistic now that we are starting to get Cavotec into shape it should be, and we'll be able to gain on those mega trends that we have there. So in that case, I'm looking forward to finish off the fourth quarter here, the end of the year, and then I'm looking forward to have your questions and also be able to present the 44 results somewhere during February. So thank you very much for your attention and interest.