Welcome to the Ferronordic Q1 2025 Report Presentation. For the first part of the presentation, participants will be in listen-only mode. During the Q&A session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to CEO Lars Corneliusson and CFO Erik Danemar. Please go ahead.
Thank you. This is Lars Corneliusson here, and welcome to the report on our first quarter of 2025. If we can press—oh, sorry. We call the report "Steady Despite Uncertainty." Obviously, there is increased uncertainty in our markets and in our industry. We will obviously come back to that. Despite that uncertainty, our revenue actually increased by 3% to SEK 1.2 billion. However, we saw a decline in gross profits, and that was partly due to revenue and product mix. Selling and administrative costs came down, and that was partly thanks to cost reduction that we have entered upon and lower sales commissions. We had operating results, which decreased to SEK 13 million, which was mainly a result of the lower gross margin. We also had net debt that decreased to SEK 1.8 billion.
If we go to the next slide, clearly, there is an uncertainty on the tariffs and the fiscal policy in the US, which obviously is also then in itself spreading over to Germany, to an already weak market in Germany. We should, however, say that despite this uncertainty, the mood among our customers in the US remains very good. However, dealers still have high levels of machines and inventory and in their rental fleets. Mainly thanks to a robust service and parts business that we have, our underlying business remained stable. If we look at the market, the US construction equipment market declined 5% in Q1. Our sales on new equipment and sales from the rental fleet decreased by 6% in units. In Germany, the truck market continued to decrease and decreased by 28% actually during the quarter, whereas our sales of new trucks decreased by 6%.
We obviously took market shares in Germany. One very, very positive thing in Germany is that we continue to reduce the inventory. The inventory is now 59% lower than at the end of Q1 2024. Many of you remember that we had an issue with too high inventory, which was the result of the supply disturbances that came under, but mainly after COVID, which resulted in a far too high inventory in Germany, which we have worked very, very hard to reduce. We are now in a situation which is very much better than previously. It is also good to see that our electrical truck business, the rental business we have in Germany, continued to contribute positively during the quarter. Also, our cost run rate in Germany is in line with our cost reduction target. In Kazakhstan, our sales of new machines increased to 28 units.
Also in Kazakhstan, we have in the last year worked very hard to reduce inventory that came from similar reasons as in Germany. We are actually now 68% lower inventory than a year ago. Quickly then, on group summary financials, Erik will go into more details, but the US revenue was up 9%, German revenue - 9%, Kazakhstan revenue + 26%. In terms of operating profits, we had a decrease in the US from a very, very strong first quarter last year from SEK 60 million to SEK 48 million, an increase in Germany from -SEK 12 million to - SEK 9 million, and an increase in Kazakhstan from -SEK 3 million to + SEK 1 million. Obviously, with the foreign exchange effects that we saw on mainly the US dollars, our net income then decreased very, very much to SEK 150 million.
Similarly, as our debt is mainly also in the same currencies as our assets, it also decreased mainly due to repayment of loans, but also currency translation effects. Still, 30% equity to total assets and the book equity of SEK 1.372 billion. Some more highlights from the U.S. The market for larger construction equipment, which is our main segment, declined by 5%, as I said. In our sales area, the decline was 8%, mainly driven by lower sales of wheel excavators. We had then a decrease of 6% in units. We saw a good increase in sales of crawler excavators and wheel loaders. However, there were partly fleet deals with lower gross margins. We sold 71 new units, 20 used units, and we had 30 units that converted to sales from our rental fleets.
Good thing to see that the demand for service and parts is continuing to be good, and our parts business and service business was largely stable. Very importantly, in April, we launched a new CRM system, which will form the basis for the implementation of our automatic lead generation system, also in the US in the future, which we hope will bring good use in mainly the aftermarket, but also in the sales, where we can be more proactive and understand customers' needs from telematics of the machines and basically sell more in the aftermarket mainly, which is very, very positive. We continue to make investments and work on branding and marketing. If we move to Germany, we see a market that remains challenging. Obviously, the market was - 28%. However, government spending plans now lead to optimism, actually.
In our area, we saw a decrease by 20%, and the area then represented 90% of the total German market. Our own sales, as I said, decreased by only, if we can bracket, 6% and by 15% then to SEK 221 million in revenue. It is obviously good to see that we are keeping up sales. It is very, very important for the future that we have a population that we can continue to service also in the future, which is obviously the key to reach profitability in Germany. We saw in the quarter continued good demand for our service and parts. In fact, as we talked about before, we could have sold more service and parts if we had more qualified mechanics. We saw some good traction, actually, in recruiting mechanics.
That shows positive, should have had a positive impact on our ability to catch that demand going forward here. That is looking good. Another very positive thing, obviously, is that our inventory is now more or less in line with where we want it to be. Coming from a year ago, it is a very, very big difference in the inventory numbers. We can compare the numbers then from end of Q1 2024, we had SEK 519 million, and now we are down to close to SEK 200 million. I think it is good work done there on the inventory clean out, basically, we can call it. Yeah. Take the next slide, please. Go to Kazakhstan. The market continues to grow in Kazakhstan. However, we estimate it grew by 37% from a relatively low level, however, in Q1 2024.
Kazakhstan sees growth in the mining and construction sectors, and we see at least planned. We see some actual also, but planned very much spending on infrastructure, notably on the road network in Kazakhstan. Also, as I said, we continue to reduce our inventory, and we are taking it down from 68% year-on-year to SEK 80 million in the end of Q1 2025. We obviously then had a big increase in unit sales from a very low Q1 2024. Slightly lower parts and service sales, however, but total revenue increased by 26% in Kazakhstan. The look up of the U.S. network, most of you know this, where we are in the U.S. We have been there now for a year and a quarter, more or less.
In November 2023, we acquired 100% of the shares in Rudd Equipment Company, which is one of the largest distributors of all the CE in North America. They also have very strong other brands such as Hitachi, Sandvik, Link-Belt Cranes, and Bergmann. Obviously, the U.S. is the world's second largest market for construction equipment with substantive infrastructure investment programs. Clearly, again, there's a lot of talk about the U.S. tariffs, etc., etc. We continue to see a very positive attitude from our customers. There is still strong demand for aggregates for the infrastructure investments needs that are there. As you can see from the numbers, the business is going on quite nicely still. In Germany, we have a network that looks like this. We have 20 outlets in Germany, and we are the biggest private dealer for Volvo and Renault Trucks in Germany.
In Kazakhstan, we are strategically placed in the main hubs of business activity in our industry in Kazakhstan. By that, I hand over to Erik for some more numbers and economic development, please.
Thank you very much, Lars. I start, as I usually do, with a macroeconomic overview, a market context. U.S. growing 2% year- on- year, but we did see a qu arter-on-quarter decline very much driven, it appears, by imports ahead of the tariff announcements and uncertainty around trade policy that followed. Looking to full year, we are seeing forecasts between 1.6%-1.8%, a bit wider range than typical, which reflects, I think, the uncertainty that forecasters face. Core inflation, also uncertainty about how trade and fiscal policies will affect, but currently at 2.6%.
The trajectory of that will, of course, have impact on the next item here, which is the Fed Funds Rate, which affects us, and it affects our customers when they borrow to do business in the U.S. It is lower, and there is an expectation that we will continue to see rates trending down in the U.S . Looking at Germany, year-on-year again, we see negative. Germany has struggled. We have two years, two consecutive years of negative growth. We did have quarter-on-quarter positive developments, and we know that the newly formed government has promised investment plans in defense, in infrastructure, that it is believed could stimulate and spur a recovery in the German economy.
That said, current consensus forecasts around flat 0% growth, inflation at 2.2%, probably some room for inflation to come lower and maybe for the ECB to go lower there as well. Kazakhstan grows strongly, and we see again there is growth in construction, in mining, and the government is spending, as Lars mentioned, on infrastructure and notably on the road network. Inflation slightly higher, and that has resulted in the central bank raising rates. Liquidity, availability of funding is an important factor for our customers given the high rates that you have in Kazakhstan. It is a limiting factor in our sector, we feel, and again, to the customers that we speak to. That is on the top level, so to say. I move on to our income statement in Q1.
To the left of this table, you will see the comparative period last year for each market and for the group. To your right, you have the current reporting period. Total revenue quite stable compared to last year. I mean, this is the first quarter when we report full quarter for year-on-year for the U.S. business. In Q4, mind you, it was only really December when we compared year- over- year. In first quarter, we have full quarters for all segments. Again, show relatively then stable revenue year-on-year. The distribution between the segments, almost two-thirds being the US, 63%, one-third Germany, and then Kazakhstan at 4% in the quarter.
Between revenue streams, 57% on equipment and trucks, and then 37% on the important aftermarket, which again is a stabilizing factor in an environment of heightened uncertainty when customers may be more hesitant to renew fleets and make CapEx decisions. They still need to run and maintain their current fleets. And 6% other, mind you, that's mainly rental income or rental revenue that we have there. Gross profit down 15% and gross margin decreased by 3.4%, mainly driven by the U.S. segment, partly by a reclassification that I will give you some headlines on so you understand how we reflect things slightly differently in 2025 and what the impact is there. Similarly, SG&A decreased 11%. That's partly due to cost cuts. It's partly due to lower sales commissions, but also reflective of these reclassifications that we had year-on-year. As a percentage of revenue, SG&A declined to 16.2%.
Operating margin stood at 1.1% and the operating profit at SEK 13 million. Net income, a big hit from our foreign assets there, the parent company holding loans to the respective segments in Germany and in the US. The SEK between the opening and closing dates strengthening significantly against both the U.S. dollars and the EUR had that effect. Out of the SEK 150 million, SEK 129 million was due to foreign exchange rate effects. With that, I move over to the balance sheet. Again, here you will have the comparative period last year. Also, you can see quarter-on-quarter comparison. Towards year end, you have Q4 in the table to your left there. Also, we separate the US, something we did last year and continue to do this year to show what the segment contribution is.
If we start looking at the property, plant, and equipment, we are higher year-on-year despite, one can say, against the foreign exchange effect that we have in the first quarter. That is much driven by the growth and increase in the rental fleet in the U.S. and to a much smaller extent to the e-Rental fleet in Germany. In Kazakhstan, networking capital has come down, and that is driven much by the lower inventories that we have, to some extent receivable as well. Lars mentioned 68% lower on total inventory. Mind you, that includes the parts and oils, etc., as well. The main bulk of it is, of course, the equipment. That is a year-on-year comparison, mind you, so to first quarter of last year. Germany also lower networking capital. This is put in relation to last 12 months revenue. Here again, inventories lower and receivables also.
The big move is on inventories where we did work hard last year to try to reduce the inventory we had left from previous periods and indeed to some extent all the way back from COVID effects, the pandemic. 59% cut in total inventory in Germany year-on-year, and that's reflected in the lower working capital and the capital tied up in inventory. In the US, also a slight decrease quarter-on-quarter, partly driven by forex effects. Net debt declined SEK 152 million, and that's both due to repayments that we've done, but also again to foreign exchange. Our equity assets was flat quarter-on-quarter.
With that, I move on to the next slide, which is slightly technical, but to make sure that we explain here that we did have a reclassification in the first quarter of this year versus the first quarter of last year, and that is in the U.S. segment. There is no impact on operating profit, but there have been reclassifications from other income to revenue and also of general and administrative costs to COGS, cost of goods sold. The latter, for example, refers to something like when mechanics are not billing, when they are not working, where the U.S. has treated this as an administrative cost, whereas we in our group results have it as a COGS, cost of goods sold. That has been reclassified.
This slide, which is also on page eight of the report, serves to show in the 2024 adjusted column, which you have to the right of the pink column here, you can see what 2024 would have looked like on a like-for-like basis. Here you can see that the change in gross margin is then smaller. It is still a negative development of 3.4%, which then is the underlying effect, and that is much driven by a product mix, not revenue mix in this case. Product mix, in last year, we had a big share of articulated haulers, whereas in this quarter, more excavators and wheel loaders and more fleet deals. That is what I would like to say on that slide. Again, do find more information also in the report on page eight.
In terms of EBIT movement year-on-year, just to illustrate, we see that the U.S. is again lower than last year. First quarter of 2024 was a very strong quarter in our U.S. segment. Germany is up slightly year-on-year. The market, if we look at the equipment sale, is not there yet. We do hope again that the economy will pick up and that that will provide a boost to the market as well. However, our aftermarket remains firm, as you can see in our segment report, so largely flat year-on-year despite some weakness in the economy. Our cost efforts that we did last year have also lowered the operating leverage, so to see, say, for us, providing a more resilient organization in Germany. Kazakhstan, in a way, a reverse story there.
We have continued to reduce inventory and put machines into the market. Despite putting extra effort on getting machines out to reduce inventory, we still have had positive results in the equipment sales. The aftermarket was lower than last year in Kazakhstan. However, we do hope for that to pick up in the subsequent quarters. Slightly higher group cost due to professional services than last year, which lands the business at an EBIT of SEK 13 million compared to the SEK 21 million we saw in the same period last year. The group NAV illustrating where our assets are versus our liabilities. You will see cash equivalents and then our receivables, inventory, and we separate out the rental fleet in the US, particularly here to illustrate where that stands in the balance of the asset side. We have our property, plant, and equipment.
Here you would have our workshops and also fixtures and fittings mainly, but also things like the carpools, the vehicles that our mechanics and technicians work when they operate. Yes, I think I will move on to our financial objectives, which I think are familiar to many returning listeners. We stay firm on our long-term goals to double our revenue and to reach a higher operating margin above 6% and to work down our net debt EBITDA to below three times over a business cycle. With that, Lars, I want to pass back to you for something on the outlook before we go into Q&A with the audience.
Thank you. Despite the current uncertainty, we remain optimistic about our U.S. business and the long-term opportunities there. We see demand supported by a dynamic economy and the significant need to upgrade the country's infrastructure. We currently have no information about major infrastructure projects in our sales area in the U.S. being canceled or postponed. And we see opportunities to further develop and expand our business in the U.S. The German economy remains weak. And as you know, we've taken steps to reduce costs and make our organization and balance sheet more resilient. And we are confident that aftermarket demand that we see will remain strong and we're optimistic about the long-term potential of the German market as well as the opportunities in e-mobility and sustainable transport solution. And on top of that, recently announced government spending plans could accelerate a well-needed recovery in Germany. And Kazakhstan represents a minor part of the group's operation and we continue to see good opportunities in the market. So by that, I'm handling over for Q&A, please.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Adrian Gilani from ABG Sundal Collier. Please go ahead.
Yes, hello. I'd like to start off with a question on the U.S. business, where you mentioned the gross margin was down even after sort of factoring in the reclassification of OpEx and COGS. And you mentioned a worse mix effect being the main reason. Would you say that that was a particularly bad mix in Q1 that should improve ahead, or what's the status there?
As we write, hi, there, Adrian, by the way. I think as we write, we still see dealers having high inventory, and that, of course, creates a pressure on the margins.
We also had, as I mentioned, some bigger fleet deals with lower margins. Hopefully that is not a recurring issue, but it's difficult to predict at the moment. It is mainly a factor of those two issues, really.
I think it's also fair to say that we had a strong quarter in Q1 2024.
It is a product mix as well. In Q1 last year, we saw very many articulated haulers to private customers. This year, we saw many wheel loaders to public customers, if I put it that way.
Okay, understood. On the net debt, I mean, it's good to see it sort of start trending down, but also cash flow has been very volatile from quarter- to- quarter.
Can you give us any sort of outlook comments on whether you feel confident that the leverage ratio will continue down in coming quarters as well?
I think, Adrian, I mean, we're clear on how we want to drive the balance sheet. I think it's been quite clear what we've done, and especially in Germany and Kazakhstan. There we have taken down the working capital, and that goes to pay down the debt that is used to fund the inventory. We want to, as we communicate in our financial objectives, bring down the overall leverage. I think looking quarter on quarter, it depends on movements that we have, especially in working capital. That is the big swing factor. The direction is there, Adrian.
Yeah, understood. Perhaps a bit of a detail-oriented question on the debt.
Given that a majority of your operations are now in the U.S., is it fair to assume that the majority of the debt is also denominated in dollars? Because in that case, it could come down by $100 million plus in Q2 on just the sort of translation effects. Is that a reasonable assumption?
I think it is a reasonable assumption. The majority of the external debt is in U.S. dollars, for sure. Yes.
Okay, thanks. Finally, perhaps a question for Lars, more bigger picture. Can you say a few words about the decision to step down as CEO and whether that's tied to any strategic shifts in the company or whether we should expect things to remain more or less unchanged?
As an Executive Chairman, provided that the AGM will vote for that this afternoon, clearly, I would focus more on the strategic issues.
I think the strategy we have remains, but it will allow me to spend more time on that, which is very good. I am really looking forward to that and relations with customers and relations with suppliers, but mainly strategic issues. I hope that the AGM will vote for that today.
Okay. In that case, thank you for answering my questions. That is all from me.
Thank you.
Thank you, Adrian.
The next question comes from Anders Åkerblom from Nordea. Please go ahead.
Yes, hi. Good morning, Lars and Erik. Thank you for taking my questions. I have two questions on the gross margin.
Just firstly, following up on the previous question, it would be interesting to hear how large a share of this gross margin contraction that stemmed from the fleet deals that you mentioned in the US, is it roughly half of it, or how should, and I mean, of course, the underlying contraction?
Maybe I try that one, Lars. I think, Anders, you know we're cautious on giving guidance. I think trying to pin out precisely which transaction and product contributes to what is probably not going to be helpful for you or the market. I think what's fair to say is that, as Lars has also suggested, on the one hand, we have a market in the U.S. where there is at least slightly heightened inventory levels combined with a heightened uncertainty given the macroeconomic situation, although, again, sentiment, as we feel it is, is strong.
We have a situation where in this quarter, as we write in the report, we have more sales of excavators and wheel loaders in these fleet deals, which typically come as bigger deals with smaller margins for each unit. On the one hand, that is for this quarter, this year, and then if we look year-on-year, going back to first quarter 2024, we had a strong quarter given by, again, a lot of big machines, a lot of articulated haulers in more private transactions with smaller customers, so not fleet deals. I probably, I mean, for you to look at that, this was probably maybe lower than one might typically expect. It will depend on, again, how product mix and market will develop going forward. Q4 2024 was a strong quarter from a product mix point of view.
That makes sense. I appreciate the clarification. On the gross margin going forward, I know you're cautious to guide, but just in terms of your relative position in the market, it would be interesting to hear if you think you will perhaps need to be more aggressive on pricing just structurally and make some trade-offs on the margins in order to gain or potentially even maintain your market share in the US. How should one sort of think ab out that?
Anders, I do not think we answered that. I mean, this is a day-to-day business. Clearly, we want to see continued high market shares with good margins. So far, I think the U.S. team has done a great job in doing so.
Some quarters when you have different product mixes and different can change up and down, but we do not see a change in the way we do business at all. I mean, there is no point in doing that. We will continue to do what we have done. There will be swings, ups and downs between what levels there are in the market of inventories and product mixes and customer mixes, etc. No overall change in our go-to-market strategy. No.
Okay. Finally, if I may, just in Germany, of course, with the used truck sales declining quite significantly compared to the new unit sales, it would be interesting to hear you just elaborate a bit on the demand dynamics here sort of impacting that. I mean, sorry, I cannot hear you currently.
Can you hear me now?
Yes, yes. Okay, sorry.
No, clearly, I mean, we have even communicated that we saw strong uptick in the order intake last year, and we see that being realized in Q1 in terms of deliveries. Relative to the market, which is declining very much, we obviously then take market shares. For us, it is extremely important to do so and not to lose sales in truck business, not so much for the truck business in itself, but to make sure that we have a population of trucks going forward, which we can then service in the aftermarket. I think it is a sign that we are getting stronger in Germany and that customers trust us even in downturns. That is something we see clearly in the aftermarket and service and parts where we actually have a strong demand.
As I said, Anders, we could have sold more in service and parts if we had more qualified mechanics. It is a thing that I think is a sign, I think, that we are getting stronger in Germany, and I think it is a very good sign, really.
Anders, did I understand correctly? You also asked about the used fleet or used, or did I misunderstand you there?
Yeah. Specifically. No, you did not. That is correct.
Okay. Yeah. I think it is more reflective of our strategy than all market dynamics there on the used side. Our decision has been to really try to work towards a tighter balance sheet and higher capital turnover in Germany. We continue to do that. That includes also the used fleet or used inventory we keep.
We want to keep that really as tight as possible and turn it as quickly as possible. We have taken the scale of the used inventory we keep down, and that is the objective to continue to keep it tight, but then try to make sure that we can turn it more quickly so we can get back to revenue levels without keeping more inv entory on the balance sheet.
That makes sense. Thank you very much both for taking my questions. Lars, best of luck in what I assume will be your new role after this afternoon. Thank you both.
Thank you.
Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
All right.
We have got some questions on the email. I think one question, which is, let me see now, which is important, and I think a lot of you might wonder, and it is not easy to answer it, to be honest. I lost it here. You can read it for me.
Yeah, there is a question about something we say in the report, and there is a quote of that. All OEMs, so original equipment manufacturers of construction equipment, have parts of their product ranges manufactured abroad and are likely to be impacted by any potential tariffs. Can you provide some more color on this? Have the OEMs that you represent or their competitors communicated anything on how they will react to the new situation? Do you expect that prices on equipment will go up, and will it be significant?
Yeah, I mean, it is clear that we are working in a global industry, and all OEMs, regardless of their nationality, are global companies with global supply chains, and all are affected by potential tariffs. I do not think we can say that anybody is more or less affected than anybody else. Clearly, any tariff that will be imposed or is imposed or have been imposed or may be imposed or might be revoked or whatever it is will have an impact on the end price for customers. It will end up there. That is clear. Now, the question for us is, how will our competitive situation look like? Again, I do not think we are in a worse competitive situation than anybody else, which is a good thing because everybody is global. Everybody will, of course, review the situation and change, maybe to a certain extent, the supply chain.
That does not happen often. I think the uncertainty around it is there for sure. Any positive increases that might be there will eventually be moved forward in the value chain, which is what happens in any value chain, I suppose. I think that is the answer really to that question, which I think is on everybody's mind at the moment. That is very simple. Have we seen anything? Has anybody communicated anything at the moment? No. Not yet. I think it is a wait-and-see situation for most companies. The most important thing is that there is still demand out there, and our customers are quite optimistic about the future, and that is a good thing.
Thank you, Lars. From the same person, there is another question about further two questions, which I think are related.
One is with regards to the stock price performance and related to initiatives on the one hand, on the group cost side, and on the other hand, looking at Germany where there has been initiative again on reducing capital tied up and costs, are we considering further actions? I would say, I mean, in this forum, on this kind of call, yes, I mean, we are looking at both and constantly. I mean, going into details on particular initiatives is probably not sort of the forum here. We are constantly looking at how we can make both the top organization and the business in Germany, and for that matter, in Kazakhstan as well, and in the US, more efficient.
I think when we did the cost cuts in Germany last year, we spent a lot of time looking, as we've also written about, to how we can cut back administrative costs, costs that are not generating revenue without impacting that revenue. Cutting the costs without hurting, and if possible, of course, improving the sales organization, both when it comes to trucks in Germany, equipment in other markets, but the very important aftermarket business, so the technicians selling service and parts. That is a very generic answer, I know, but I think that is what we can say here at that point. It also goes into another question about how we want to create value over the next one to three years from another investor. Here, I think, again, I can refer to what we said on our capital markets day and the material we produced for that.
That's how we want to drive the business going forward to create value for our shareholders and stakeholders more broadly. With that, I have also some more concrete questions from one investor here in the audience. Is it possible to separate service and spare parts business in the upcoming reports? It is possible, but I do think that we feel we have a good balance of detail in the reports and that we also provide information on the level that is useful for the market, for investors. I think, I mean, also if you see changes otherwise in the distribution of those two quarter on quarter, I'm not sure it's helpful because it's probably driven by single period effects and transactions. I think maybe more a possibility would be that one takes a look at the distribution of the two rather than going into constant reporting of that.
Second question from the same person, selling trucks is obviously a complex business with relatively low margins, but some risk in carrying stock. The question is, and I think more maybe for you, Lars, is it possible for us to take more part of the value chain, so to say, to paint customized trucks, go into truck washing, all the add-ons, the superstructures, all that part of the value chain?
Yes, clearly. That is an opportunity that we have at the moment to also combine that with the question that was before if we need a stronger market for trucks in Germany. We need to make sure that we cover, first of all, the demand in the aftermarket, and that is the main driver of profitability. That is our focus at the moment. Then we can add when we get there.
For that, actually, we do not need a stronger market. We just need to make sure that we have enough trucks out there for the coming years ourselves to be able to service them. As we all know, it is in the service and parts business, which is the driver for the profitability. Now, when we have made sure that we cover that demand, we can obviously move into and make additional services for trucks, clearly, absolutely.
Thank you, Lars. I think the next one is I will pass to you as well. It is regarding the e-mobility or transport as a service business in Germany. Any update we can provide on that? Maybe in this related swing, there is a follow-up question on how investors should look at the e-truck rental business, if it is working inventory or a business contributing in itself.
Is it more like in the U.S. where we carry a rental fleet to convert and sell, or is it more a going rental business, especially for the e-trucks?
The e-Rental business in Germany is a business in itself where we are renting out e-trucks to customers and would like to continue to have them in our fleet. It is not only an issue of renting them out, but it is also to gather information about how these trucks are being used, how they are working, to be able to become even more competitive and professional in the e-business in general. That is an additional benefit that we get from the e-Rental as such. It is not like our U.S. inventory, which is a way to go to market to sell equipment, to rent them out first and then convert them, as it is called.
It's more a rent-to-rent business in Germany, which, as we said, is contributing nicely to our bottom line. As for e-mobility, we don't have any update to give at this stage. Sorry, e-mobility services, I should say.
Okay. I think that's it. I hope I haven't missed questions online. I don't have more questions. If no one wants to raise something, then I pass back to the host. Although given that the host passed back to us for conclusion, I think we're probably closing up here. Thank you very much, everybody, for attending and for taking interest in Ferronordic. You can reach us at our investor email or call us if you have follow-up questions or other specific questions for us. Thank you very much, and hope to talk to you next week. Thank you. Bye.