Good morning, everybody. A warm welcome to the PALFINGER earnings call for the third quarter of the fiscal year 2026. Speakers today are Andreas Klauser, the CEO of PALFINGER, and Felix Strohbichler, the CFO. They will walk us through the performance highlights and everything remarkable in the third quarter, respectively, the first nine months. Before we dive in, just a quick note on the housekeeping side. This meeting will be recorded and all participants will be in a listen-only mode.
Looking at the Q&A, of course, you will have an opportunity to ask questions. There are two ways. Either you post them in the written format in our chat box on the lower right-hand side of the screen. We will address them during the Q&A session. In addition, you will also have the opportunity to ask a question live using your microphone. Please type the word question into the chat to be considered. With all this in mind, I now hand it over to Felix and Andreas. The floor is yours.
Yeah, thank you so much, and good morning and welcome to our Q3 earnings call. PALFINGER is fully committed to create a sustainable shareholder value. On the other hand, we are still facing headwinds like Middle East, etc . Our equity story remains unchanged, and I think this is important as well for the investor community, despite the influences from geopolitical environment and the market environment, which we cannot really influence. On the other hand, we are clearly the technology leader, the industry leader. We have The Way Forward. We have identified how to grow and to gaining the momentum. We will talk about it in a couple of minutes.
We are resilient, and we have a great earnings potential still in the way looking forward, considering the upcoming business. If you go to the next slide, as I said, the environment remains challenging. There are headwinds, no doubt. On the other hand, we have some breakthrough in some market activities we will see later, like in EMEA and North America. The volatility is still there, caused by U.S. uncertainties related to tariffs and other stuff, and as well the tensions we see in Middle East. This relates to somehow related in the last couple of months, somehow to delayed investment decisions, especially here in EMEA and in North American markets, but there are signs to overcome it where we will speak about in the outlook.
As well, the supply chain is heavily challenged because we have less volume, so this is as well causing some challenges. On the other hand, we still managed to achieve a revenue of EUR 1.62 billion and EBIT of EUR 120.7 million. This is still something I think remarkable considering the environment. I am talking here about the first three quarters in 2024. In the next slide, even more important, we took some key decisions for the future. This is the answer as well to the underperformance and the share price evolution, which is currently seen, as well to identify improvements and to walk the talk, just making sure that this can be implemented.
The first element is related to sharpening our portfolio. This is related to the Tail Lift business, which we have identified and Felix will further explain it later on. Even more important, a cost-saving program where we will make sure that we can save roughly EUR 50 million by 2028. There is a portion kicking in next year into 2028. Quite important as well to see in terms of profitability gains. Reducing risk, and this is something also Felix will talk later about, the ring-fencing related to our Russian activities, just to make sure that we are both covered. We are properly identifying the resilience which we need.
As well from an organization standpoint, to make sure that we are getting faster as an organization, and this is related to the new layout of the organization, which is called nextGPO, which is effective by October 1st, 2026. If you go to the next slide, as we said, the GPO helps us to enable really to make faster decisions, to be closer to the marketplace. So on one hand side, Strategy 2030+ is clearly focused on the priorities to make sure that we can walk the talk, that we can deliver what we have committed to. Then as well to deal with this very dynamic market environment here.
Yes, we are facing headwinds, but on the other hand, we can manage to overcome it by the actions which are in place and which we will show in the outlook. The nextGPO is clearly strengthening our organization, strengthening our business foundation, which will help us to participate and further grow. Also good news here, I think you saw on some selected major orders which we have received. I think it is important that as well the environment understand that even in Germany, we got a major deal for EUR 6.2 million from Die Autobahn, German motorway as well, which is quite interesting since the market, Germany, is quite tense and not many decisions are taken, but even there we can gain more volume.
In the marine side, also quite important, some major deals happened here. One with a research ship here for the North Sea as well. This is something which is significant to announce because here we are the only ones who can bring additional business to the table. On the other hand, North America, you remember we talked a lot about it. Here we got the first major deal here related to truck-mounted forklifts and service contracts. Service and truck-mounted forklift is here identified as the area to grow, and here a home improvement retailer from U.S. placed his order for $39 million , which should only be a first portion of the business, and is also breaking into the turf of our major competitor over there.
So let us see what will happen, and I think with the performance we have currently shown both on product and service, that is really The Way Forward. Saying this, I would like now to hand over to Felix to lead us through the numbers and then later on, at the conclusion, I will provide an outlook and I will show you what is planned and what is on the radar on PALFINGER further to grow. Felix, the floor is yours. Can you hear us?
Yes, we can hear you, Andreas.
I cannot hear Felix. Sorry, ladies and gentlemen, I think we are having a technical.
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Can you hear me again?
[Non-English content]
Okay. So where did I lose you? I guess I will start at the very beginning, right?
You should restart. Sorry, Felix. You should restart. I think there was a problem with the line. Hopefully my presentation was properly concluded.
Once again, good morning, ladies and gentlemen. Before going into the presentation of the numbers for Q3, I would like to give you some explanation of the impact of the two key decisions regarding Tail Lifts in Russia. Let me start with Tail Lifts. We have taken a decision to sell this business. As you might recall, this is a business with different market dynamics compared to other product lines. The synergies for PALFINGER are quite limited, and this is also why we decided a few years back to separate it from the global PALFINGER organization, and therefore, it might not come as a surprise to you that we have now signed a binding pre-agreement in September.
At the moment, we are in the due diligence phase. We have already filed the merger control approval request, and we expect closing towards the end of the year. Eventually, it will take until Q1. What does this mean for the financials? First of all, this entity is now classified as held for sale and is reported in discontinued operations below the EBIT line. Therefore, it is also not any more part of the other non-reportable segment, which in the past included Tail Lifts as well as Holdings. In the future, this will only show the Holding numbers. Another important impact on the financials out of the sale of the Passenger and Tail Lift business is a single-digit million write-off, which will impact the net income of the EBIT because, again, it is shown in the line discontinued operations below EBIT.
The final amount is not yet clear because it depends on the one hand on the due diligence findings and on the closing accounts, which are of course not yet done. Coming now to Russia. We took the decision in the supervisory board meeting end of September to initiate a legal structure to reinforce the ring-fencing. What does this mean? So far, we have already implemented a ring-fencing of our Russian entities by guidelines, so it was an organizational ring-fencing. We have now decided to strengthen this by putting a legal structure in place, which is much stronger than just, so to say, an organizational ring-fencing.
This decision leads to a deconsolidation of the Russian entities as soon as it is implemented. This will take roughly a year. It will not change the ownership, so PALFINGER will remain the owner of the Russian entities. However, it leads to a reclassification, and this reclassification also leads to a change of valuation. So far, we had our purchase price, so to say, for any asset, minus depreciation. Now we have fair value valuation. If you look at Russian assets at the moment, the fair value, which is the value you can achieve on the market if you sell the entities, is almost zero. So this is why we have written off the Russian entities with around EUR 135 million. This is an impact on the net income.
Obviously, this is not a cash flow impact, and it is also not in EBIT because it is reported in a low below EBIT in discontinued operations. This also means that from now on, the Russian activities are not any more part of the segment reporting, at least not of the P&L reporting. What is also important to mention is that out of the EUR 130 million of write-off, about EUR 50 million of impairment are attributable to minority shareholders because we have a minority shareholder of a major entity in Russia. If you then look into the future, we have still a currency translation reserve of about EUR 45 million. This is a reserve which has to be recycled through the P&L, which will pop up in the net income next year, around EUR 45 million.
However, this will not have an effect on equity because in the end, we have today a negative FX reserve. It will be recycled through the P&L, and then will again reduce the equity. So the effect on the equity ratio is zero. However, it will impact, again, the net income in 2027 as soon as the structure is effectively implemented. On the next slide, we have prepared for you some transparency. What are we actually talking about? If you look at the two entities, you can see that in the first three quarters, revenue has been already quite a bit down at EUR 121 million, with a slightly negative EBIT or slightly negative result from the two areas.
If you look back to the year 2024, there are even years before where there was an even better performance, at least in EBIT, you can see that we achieved EUR 225 million of revenue and EUR 25 million of EBIT only two years ago with those two Tail Lifts and CIS. Just to give you a glance. What this also means, if you now look at the P&L of PALFINGER, you have to consider that this is not shown anymore in the numbers. Coming now to the actual reporting of Q1- Q3, starting with segment sales and service, which comprises all the sales and service activities, as the name says, of PALFINGER. First of all, starting with the markets in North America, we see some first signs of recovery in truck registrations and in the truck market.
We also had a very good year so far for loader cranes. Actually, it was a record year for loader cranes in U.S., mainly driven by data center investments. If you look at housing, this is still at the very deep low. However, data centers compensate for this to a large extent. Other product lines still continue to face a weak demand, but loader cranes have been very successful. Coming to EMEA, we have a stable market environment across Europe, which means that German and Austria remain weak, and we have still a very good and solid demand in Northern and Southern Europe.
Going to Russia, to be mentioned one last time, we don't see any improvement in the Russian market, and I've already explained the impact of the decision to strengthen the ring-fencing. Going to Latin America. Latin America is always volatile. Nevertheless, PALFINGER has had, over the years, always a solid business performance, and we expect this also for the coming quarters, and we also see some positive momentum from the mining sector. Marine has a continued strong market environment. Marine cranes, wind cranes, cruise, governmental business, all those market segments perform very well.
On the other hand, unfortunately, we have seen a decline in services, mainly due to the Middle East escalation. Last but not least, if we look to APAC, in China, we don't see any recovery signals. In India, however, this is the most attractive market in the region and will remain so. What does this mean for the numbers in the first three quarters? If you look at the external revenue of the segment sales and service, we see an increase of almost 4%. The good thing is that also the order book has increased around 4%, despite the increase in external revenue. If you go down to the EBIT line, you see -17% and EUR 180 million.
Please take into consideration that this has to be seen in combination with the operation segment and also with the Holding segment, because intercompany invoicing plays here a major role. This will be much more transparent in the future. I will come to this in a few minutes. What I also have to highlight is that the service revenue share is unfortunately down compared to the previous year, mainly driven by the war in the Middle East and the marine service division, which is quite important in the Middle East. Coming to the segment operations. We have here quite some diverse market developments and obviously also different developments in terms of capacity utilization.
On the one hand, we had to increase, and it was possible to increase the capacity in Europe, especially for loader cranes and marine cranes. On the other hand, we are still facing underutilization in the U.S. due to the soft demand of some product lines which are locally manufactured. In terms of numbers, you can see a slight recovery of our production for third parties, so the external revenue only reflects production for third parties. Obviously, the main activity of our operations segment is to produce for the sales and service segment, which is not reflected in external revenue. If you go down to the EBIT line, again, also here you have to be careful because this is always linked to intercompany pricing. You see a major decline in sales and service.
You see a major improvement in segment operations. In the end, you have to net this off to a certain extent. Coming now to the segment Other Non-Reportable Segments. The name of this segment is because of the fact that it included Holding and Tail Lifts. nowadays, it only reflects the Holding activities due to the reclassification of the Tail Lift business. You can see a slight improvement in EBIT from EUR -29 million to EUR -22 million. But again, also here a major impact is an increase in the intercompany invoicing of services of the Holding to the other segments. Coming now to the PALFINGER Group.
First of all, you see here an increase in revenue of 3.9%. If you look to the right side, you can see the revenue distribution by region. We have changed this picture, and you will understand in a few minutes why, because we will also change the segmentation, the reporting. In the future, this is what you will see. On the one hand, EMEA business, Established Markets. On the other hand, you see North America, Marine, LATAM, and APAC. As you can see, roughly 50%, or slightly above 50%, of our revenue is coming from EMEA. Whereas the rest is coming from the other regions, 23.5% from North America, 14% from region Marine, and LATAM and APAC, 4%-5%.
Marine obviously is not a geographical region, but it's a global business, and it makes sense to show it separately. Coming now to the other numbers. EBIT is at EUR 120.7 million. This is also what we guided a few weeks back when we made the announcement regarding Russia, which is a decline of 5.8% and an EBIT margin of 7.5%. If you look at the consolidated net result, which is negative, this is obviously due to the fact that we have the discontinued operations, which have the big write-off effect, on the one hand for the Russian entities, but also to a certain extent Tail Lifts, and this leads to the EUR -61.5 million in the bottom line. In the next slide, you can see our free cash flow year to date. It is EUR 1.7 million.
If you compare this to the previous year at EUR 54 million, there is still some gap to close for the more than EUR 100 million we have set ourselves as a target. I want to recall that in the last year, we had a steep development of around EUR 125 million of free cash flow in the last quarter. Also for this year, we expect a steep ramp-up in Q4. It will not be EUR 130 million, but we still keep our target of EUR 100 million up. On the next slide, we can see that PALFINGER has a very strong balance sheet with around 40% equity ratio despite of the write-off. So still a very solid and strong picture here on the balance sheet side.
There was a further improvement of the net financial debt. It decreased by EUR 10 million from EUR 577 million at the end of Q3 last year to EUR 567 million. What you can also see on this slide is that obviously interest rates go up, so we have an increase here of 0.4% compared to the previous year. This is a general development you are all aware of. As Andreas mentioned, we have implemented a comprehensive efficiency program. We announced it already at the end of the half year that we want to save EUR 25 million in 2027, with effect in 2027, to make sure that we compensate for inflation, that we can keep the cost base stable and freeze it, and nevertheless continue our growth strategy. This will not hinder us to grow.
In the meantime, we have enlarged this program, and we have set ourselves the target to save another EUR 25 million in 2027, with an impact in 2028. So in total, we want to achieve EUR 50 million of savings, which will lead to a stable cost base for the two years to come. The implementation has obviously already commenced, so the measure package is largely been defined, and we are in the middle of the program for 2027. Last but not least, I have already made some hints that we are going to change our segmentation and our reporting.
Andreas has explained the nextGPO, our new regional organization. As you can see on the upper part of the slide, so far, we have reported sales and service activities across all regions, operations activities across regions, and then we had in the other non-reportable Tail Lifts and Holding and t his has always been confusing. We are aware of this, and I also said today several times, we have to look at the bigger picture because there are always intercompany invoicing effects between sales and service and operations. In the future, you will see with the next quarter already a clear differentiation between Established Markets, which is EMEA, and the Growth Markets.
Markets which includes North America, Latin America, APAC, and Marine. Those numbers will include, obviously, the whole activity in those markets, so sales, service, and also production operations. Then we have the Other Non-Reportable Segments, Tail Lifts, and Holding. But as you are aware, after this presentation, CIS and Tail Lifts will be shown first of all in the discontinued operations line, and then will go out of our reporting as soon as the deconsolidation of the entities has been implemented. With this, I want to hand over to Andreas for the outlook.
Thank you very much, Felix, for providing me more information about the numbers and as well where we see them as all about all the relevant changes. Now let me go to our outlook on the first slides, and I think it's important that you are really understanding how we are moving forward and what the plan. First hand, I can tell you, we still expect full-year revenue above previous year. EBIT might be slightly below, so this is an adjustment we had to do, and we have seen already in the results of Q3, b ut we are still confident to have a strong year.
On the other hand, the net income, the impact after reevaluation of CIS and Tail Lifts needs to be adjusted. So this means as well in terms of product offering, the moves we did quite important to have these adjustments done in Q3. On another note, I can tell you already that in terms of order entry, still what we have seen compared to Q2, we have an order entry of +10%. So this shows as well that we are trending in the right direction and our customers and our dealer bodies are really understanding what PALFINGER means and that the products and solutions we are offering are quite relevant to them and quite positively seen.
Now, what does this mean, even more important, for our 2030 targets? I think it's clear now what we have seen here, that in this photo of Tail Lifts, the consolidation of CIS, this leads to a new revenue target, and the revenue target is EUR 2.8 billion. This is after the adjustments we had to do in terms of product portfolio and CIS. Nevertheless, we are clearly sticking to our EBIT target of 12%, this is the original target, so no change as well on the ROCE.
All this together, still we will remain the number one and the market leader here, clearly for crane lifting solutions and all the actions, the products we are providing to the marketplace are clearly seen as this. This means, yes, we are behind the original plan in terms of revenue, but still, there are all the actions out to make sure, and we are confident to deliver accordingly what we have shown here in The Way Forward relating to our Strategy 2030+. Thank you for attention.
You are on mute. Moderator, you are on mute, please.
Thanks for the pointer. I guess, it makes no sense talking if nobody can hear you. We do have a few questions already, and we do have one person that wants to ask a question using the microphone. That is Daniel. Daniel, if you give me one second, I just am going to show the instructions of how to access your microphone and then approve it so that it can be used. I will give you permission to use it on your Daniel Lion, not Daniel Lion one. I hope this will work for you. Let me quickly entitle you to open up your microphone. Please use the instructions, so give the system the permission to use your microphone, select the right microphone, and there you are already.
Yeah.
Go ahead, Daniel.
Hi. Good morning. Thanks for letting me on. Could you maybe provide some detail on the growth, based on your new structure already? The regional setup, where does the growth come from in a year-on-year comparison?
As we clearly stipulated, the first part will come out of our service business in terms of parts business, being closer to the marketplace. Here we can already see that what we established in Huntley, the new spare parts warehouse, is kicking in. All these elements are getting together, and our customers and dealers are very happy to have one-stop solution. This means getting parts and services through PALFINGER Original Parts. This is one thing which is clearly identified.
On the other hand is as well, clearly the marine business, where we see still some potential, and not to forget about the defense business. But the defense business, in terms of lead time, takes some time, when it's kicking in. All these ingredients are put together. Not to forget about generating the North American growth in terms of network development, gaining new dealers, having the right products in place, and as we have said before, the $39 million business here, which we did just with one single customer in U.S., as well includes a service contract and the parts supply for products which are not coming from PALFINGER as well. So as well for compatible products.
Daniel, if I may add to this, for the next year, we do foresee growth in both segments, in Established Markets as well as in Growth Markets. However, the long-term perspective is obviously that the Growth Markets offer relatively larger growth potentials. However, for the short- term, we see here growth in both segments, and by the way, as you all know, we have major possibilities still in Europe also for further growth. So it's not that in Established Markets, you can't expect any further growth.
Okay, and would this also mean that the services share would already increase in the fourth quarter again?
The service share might slightly increase, but the major hit we will see in terms of increase is next year. As well, the big deal we made, for example, in North America, will be supplied in the next 12 months. We should see, let's say, a major impact in the first six months of 2027.
Okay, then, one last one on order backlog. You have not restated it, but you just mentioned that order intake increased by 10% in the third quarter, or is this a year-to-date figure, o r what does this relate to?
This is the Q3 number which we have seen. As we are looking at our competitors which despite have a growth by acquiring a third party company, still year-over-year, month-over-month, quarter-over-quarter are quite equal. Here we can see a gain of 10% order entry in Q3 2026 compared to Q2. As usually, Q3 is not that strong, vacation time, etc ., but here we still see some improvements, and we see here some gains.
Did you have also a year-to-date figure on the order intake year-over-year?
I think, compared again here to our competitors, in the entire industry, we are flat-ish, but we see a clear recovery which started in Q3.
Okay, perfect. Thank you very much.
Thank you so much, Daniel, for your questions. I will mute your microphone again. All right. Give me one second. I just quickly wanted to see if we have another live question. No, we don't. We do have a few questions that came through the chat. One of them you just answered was regarding the order intake in the third quarter, and the question was regarding the growth, that it should have been double digit. You confirmed that by saying that it was 10%. The main drivers you touched on briefly, if you want to elaborate on those, that was part of the question as well. Also, what is the outlook for the fourth quarter in terms of order intake?
Okay. If we go back first to the numbers, maybe Felix, you can comment on this.
Well, I think we answered the question regarding order intake. There is one question whether we can confirm the pro forma sales and EBIT figures for full year 2025, that this excludes discontinued operations. Yes, this is the case. We have adjusted, obviously, the numbers of the previous year. The new guidance refers, so to say, actually to the pro forma results, but there is not a big gap. This is a few millions of data, as you have seen on the slide where I have also shown the EBIT impact and the EBIT impact of the discontinued operations.
Yeah, question number two, I think was already answered, and we can see here quite the positive trend towards end of the year. Again, here, this is coming especially out of the region EMEA, where we expect to conclude further deals, but as well out of North America, where we see trending it quite positively as well compared to our competitors.
The next question again is referring to the guidance, whether it refers to the restated 2025 basis during CIS and Tail Lifts. Yes, this is true.
Great. Thank you. We do have another question of a person that wants to ask it live. That is Miro. Miro, I will enable your microphone and you can unmute it. Give me one second. You are now entitled. Please go ahead, mute your microphone, go live, and then we can hear your question.
Hello. Can you hear me?
Yes, we can.
Yes, sir.
Good morning, everybody. Thanks for taking my question. I have two questions for Felix. The first one is on the reported or the backlog figure of EUR 1,033,000,000. Does this still include the backlog from the discontinued business?
I have to say, I believe it includes the numbers because we have not adjusted it. However, if you look at the Russia business and the Tail Lifts business, both businesses do not have a big order backlog. So in Russia, in any case, the business is, so to say, more or less dead, and it is short-term business only. And for Tail Lifts, typically, we have six weeks to eight weeks of order backlog. So this is not a big number.
Okay. And then another maybe a bit stupid question, but if I look at the reported revenue number for sales and service, if I calculate Q3, it is, if I am not mistaken, EUR 457.5 million. Now, if I would like to understand the underlying performance, is it correct to just add the EUR 120.96 million of discontinued operations to this number again—
So if you look at—
—or can you provide some, let us say, pro forma figures for also Q1 and Q2 and Q3, if possible?
Yeah, you have to be a little bit careful because in revenue terms, you are so to say right, because in the end, you have external sales out of operations, out of sales and service, plus Russia, and this is, so to say, the comparable number, if you take the old segmentation and the old world, including those businesses. I think this was your question, right?
Yeah, I think I still do not fully understand. So from the EUR 120 million of discontinued, this is Q1- Q3, right?
Yes.
This includes. Can you give us Q1 and Q2 of discontinued operations just for, let's say, pro forma reasons?
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Okay, and the third question, if I may, your guidance, you say you expect revenue slightly above last year, but to get to the right number, do I have to deduct the discontinued business, like the roughly EUR 150 million from the previous year figure? Is that correct?
You have to deduct, obviously, the discontinued operations from the previous year number, and this is so to say the number we are referring to in our guidance.
Okay. Thank you very much. Will you follow up regarding Q1 and Q2?
Yeah, we will follow up regarding this one, but we will do this between the two of us, so to say, and regarding the previous year's numbers, so just if you want to have the number, I think it was even mentioned in the chat, EUR 2.16 billion, and [inaudible].
Thank you.
Thank you, Miro. I will mute your microphone again. Thanks for asking the question. We come to questions that were submitted via the chat now. There are two questions actually that are going in the same direction concerning the visibility on Germany and whether you see any acceleration. We have seen a larger infrastructure package in Germany that has not yet translated into higher demand for you, while the construction companies see first improvements. When do you realistically expect to see a positive impact on the order intake, and which product categories do you think should benefit most?
I think we see some movements, but still very slow. Our partners, our dealers, and as well the construction companies, are getting ready to take these deals because somebody needs to work at the end of the day. This was still a little bit behind the plan what we thought originally, but it is adjusted now, and this is mostly related to loader cranes, but as well timber and recycling cranes because as well, timber is needed for buildings, and on the other hand, includes as well truck-mounted forklifts. Not to forget about forklifts.
So it is quite complete packages which we are offering here. We see some movements, not to the extent which we originally thought, but I think this should kick in the first half of 2027. The offers we have put out, as well increasing. There are some signs, but also in Germany, you need to see the move that the deals are awarded, yeah. The deals need to be awarded to the construction companies, and this is also happening very, very slow, but it is trending positively.
Let us continue with another question regarding the efficiency program. You increased the efficiency program to EUR 50 million in 2028 and to EUR 25 million expected to become effective from 2027. How much of these savings do you expect to translate into EBIT improvement, and how should we think about the phasing beyond 2027?
I am not sure if Felix is still on.
Yeah, Felix actually is just back. Actually was back. Now he is gone again. I will try to get him onto the stage. Give me one second.
What I can tell you in the meantime, this will secure our numbers as we committed. What you have seen as well in our outlook for 2030, the 12% EBIT, the 15% ROCE, all these actions are leading towards this. I think that is an important step forward. All the actions are identified, the adjustments which are needed, but not losing the performance. I think this is also quite important, the commitment for 2030, certainly related to this EUR 50 million cost savings.
Thank you. Felix is now back online. Hello, Felix. Welcome back.
Yeah, sorry, we lost connection.
No problem. Andreas already answered part of the question. I do not know, maybe you want to add to it. It was related—
Yeah.
—to the efficiency program, which is stated—
What I said long term improvements for 2030, the EUR 50 million savings are part of it to achieve the targets which we have announced for Strategy 2030+. EUR 25 million already kicking in in 2027 and another portion kicking in, in 2028. Absolutely. I think it is important to understand that what we are doing here is to freeze the cost base. We are facing around 3% of inflation every year on our structural cost, and we compensate for this still with growth mind and growth strategy, but not increasing the cost base, which means that any future growth should translate into the bottom line without a reduction due to increasing structural costs. This is the idea, and we have now set up this program for the next two years to compensate for inflation in both years.
Thank you, Felix. Last question that I see, and once again, in case you do want to ask questions, feel free to enter them into the chat box, lower right-hand corner, or type the word question if you want to ask it via your microphone. Question is now concerning the 2030 margin and your plan for Russia and Tail Lifts, or your old plan for Russia and Tail Lifts. because if it was below 12%, then the target for 2030 should actually be benefiting from the dismissal and potentially be higher, right?
Yeah. I would say that a few years back, the plan for Russia was higher than 12%. The plan Tail Lifts was below 12%. So in total, it was more or less close to this number. However, in the last two years, we had to reduce a little bit our outlook for Russia. So, in total, I believe that you could say from the period of time when we communicated the 12% target, the average of those entities was close to 12%, and this is why this doesn't really change our expectation of what is achievable in terms of EBIT margin. Historically, the Russian business was substantially more profitable than 12%.
Understood. Thank you. Thus far, I don't see any additional questions. I don't see anybody typing in any additional questions, so I will, at this point, start to slowly close the call, maybe give everybody just one more chance to type a question in case they are interested in doing so. This doesn't seem to happen, so let me take this opportunity, give a great thanks to—
One closing remark. Sorry, one closing remark here—
Of course.
—because also the CEO somehow needs to conclude here. I think despite facing the headwinds, which are clearly identified and addressed, we are very confident to materialize on our 2030 plan with all the actions we have in place. I think we have seen as well the major action items in this presentation. This is where we are basing on how are we forward and all the actions in place to get there as well to achieve our 2030 targets. I want to say as well thank you for your trust and support to PALFINGER, and I think now we can conclude. Thank you.
Thank you. I would have given you the last word anyway, but you are completely right. That should stay with you and thank you so much once again, also to everybody else for all your questions and everything. We taped this, so you will be able to review it later on, and I wish you all a great start in the day. Thank you.