Hiab Oyj (HIAB) Earnings Call Transcript & Summary

Welcome to Cargotec's Third Quarter 2021 Results Call. My name is Aki Vesikallio. I'm from Cargotec's Investor Relations. Please note that today, we are not allowed to discuss any topics related to the Konecranes merger due to the Securities Laws, for example, in the United States. The results will be today presented by our CEO, Mika Vehvilainen, and our CFO, Mikko Puolakka. The presentation will be followed by a Q&A session. With that, I'll hand over to Mika.

Thank you, Aki. Good afternoon from my side as well, and thank you for joining the Cargotec Q3 2021 Call. The robust demand in our business has continued through the Q3 as well, and we recorded nearly EUR 1 billion of orders, one of the highest quarters in Cargotec history. Service orders also developed the service business overall very well with the service orders increasing by 18%. The longer delivery times are very visible really driven by the global component shortages as well as the logistics challenges, and that was visible in our revenue development, especially in Kalmar business unit. Very pleased with the good performance in Hiab again during the Q3, which was the all-time record Q3 for Hiab. Also, very pleased to see that the strong demand shift towards the electric vehicles is continuing. And for example, in our forklift truck, the orders increased already to 27% of the total demand as well. Also, due to the -- receiving the payments from the Navis exit, our balance sheet is in an excellent position at the moment with gearing down to 31%. I will be covering some of the highlights of the Q3, talk about market environment and the group-level developments, and then Mikko Puolakka, our CFO, will cover the business areas and some financial details, and the outlook of Cargotec. As said, the robust demand really continued throughout the Q3. This was the second-highest Q3 order intake in Cargotec history. Year-to-date, our orders are up by 57 percentage points. The orders are up across all the different businesses at the moment, but especially strong in Hiab and Kalmar mobile equipment, but at the same time, the outlook for the longer cycle businesses in MacGregor and Kalmar automation and project is looking also brighter. Sales increased by 6%, really limited by the component shortages and the logistics availabilities. As such, our factory capacity is able to cope with increasing demand. The share of the eco portfolio was 17% of our revenue, slightly down caused by the fact that Navis too was recorded as an eco portfolio due to digitalization is now, of course, not part of the group anymore. And then some of the heavy electric cranes revenues have declined compared to previous year due to the low order intake during 2020. The comparable operating profit developed well in Hiab. And also pleased with MacGregor, even though the operating profit declined slightly, but this was still a positive result with extremely low revenue. And we have now seen the bottom of the revenue in MacGregor current shipping cycle. The Kalmar result was slightly disappointing, really driven by the delivery issues and increasing costs, and Mikko Puolakka will cover that a little bit more in detail. Our data from our running equipment showed very clearly that there is a holiday impact. And as we have said repeatedly, the Q3 is always seasonally weaker for us. We saw the impact in some of the running hours. But actually, after the holiday season now in September, running into October, we again see a very high utilization rate across the board in all of our equipment. And this is obviously also visible in strong order intake and demand for our equipment. And this is obviously also a good news for our services with high equipment running hours and wear and tear coming from that one. The market environment looks positive in all of our key segments. The global container throughput has increased strongly this year. It's expected to show still a strong growth in Q4, and also analysts expect next year, 2022, also showing strong growth figures in global container throughput. Also, the construction output, both in United States as well as Europe has continued strongly. Somewhat we would expect that to slow down primarily due to material and labor availability moving into the next year. The bright picture is also very visible in the shipping segments where we have seen orders going up very strongly in especially merchant ship. And what's really important for us is that this is happening in the key segments MacGregor operates in, in container ships, bulk ships, and RoRo ferry segments as well. And clearly, this will be visible moving into the MacGregor orders into the '22. Despite the higher oil and gas prices, we have not seen any increased CapEx in the oil and gas sector, however, the renewables segment's really driven by the offshore wind is showing very strong growth and a lot of prospects for the MacGregor in that segment. As said, strong underlying demand really continued both in Kalmar and especially in the mobile equipment side, and in Hiab, but also in automation and projects as well as in MacGregor, the orders started to improve. We have, of course, the number of pricing increases. The last price increase we did was in July this year, however, we have seen the strong order intake continuing beyond the pricing increases and really driven by the underlying strong market activity at this moment. The high demand and longer delivery times are obviously very visible in our order book, which is at record-high level and consisting of excellent quality of the sort of backlog in there, especially from the Hiab side, which now represents nearly 3/4 of revenues. And then in Kalmar, primarily coming from the mobile equipment side as well. We have also now started to see the MacGregor book-to-bill turning positive again, and we start to see a slow buildup of the backlog in MacGregor as well. However, we do expect that the biggest impact in order intake for MacGregor coming from the strengthen in the shipping cycle will only be visible in 2022. Despite the many actions we are doing, we are still suffering from lower than we would like to see revenues. We fell short about EUR 50 million compared to a situation where we will not have -- has seen the limited issues with the logistics and component availabilities. This is especially visible in the Kalmar mobile equipment, which is sort of very close in terms of the type of equipment for the automotive and truck industries as well, but also visible in Hiab. Our own factory capacity at this moment is not an issue. This is really dependent almost entirely on the component availability where there are multiple fronts and multiple suppliers that are sort of struggling to ramp up the capacity for us. Obviously, also the different logistics issues in terms of the truck availability, shipping availability, and port congestion are somewhat also limiting the revenue growth. I'm very pleased with the good progress that continues in our services business. Orders increased by 18% and services sales increased actually across the board in Kalmar, Hiab, and in MacGregor. The services growth is still somewhat limited by the COVID restrictions, but at the same time, the high utilization rates is also helping as well. Obviously, the software sale is now heavily impacted by the fact that Navis is not part of the portfolio anymore. But it's good to note that despite the Navis now missing from portfolio, the services, which is now the big bulk of the revenues and software represents 34% of our sales. We continue our strategy execution. It's very clear that pressure from the government's end users, different regulators is driving for our customers to look for more sustainable ways to handle their cargo flow. And we are in excellent position in terms of our market reach, product offering, and technology investments to cater for that requirement. In practical terms, our strategy execution progressed in many fronts during the Q3. We finalized the disposal of Navis by 1st of July this year. We are accelerating our growth in Hiab by doing bolt-on acquisitions. A good example of that one was the acquisition of the Galfab in U.S., which gives them a higher but better reach on the demountables market segment in U.S. and able to leverage a new product portfolio into the existing Hiab services and distribution channels. Also in U.S., we expanded our capacity to start the truck-mounted forklift production in the U.S. This will obviously help us to meet the stronger demand. It also helps us to meet the sort of current U.S. dollar exposure we have in Hiab by having more dollar-based production and supply chain available for that market. And Cargotec together with its business areas, Kalmar and Hiab has announced a cooperation with SSAB where we are the leading partner with them to look at the usage and utilization of carbon-free steel in the cargo handling industry. Our electric portfolio expects expanding and will be covering the whole range of Kalmar mobile equipment by the end of the year. And it's good to see that the offering is also meeting market demand. Here are some examples of the eco portfolio orders during the Q3. 15 medium electric truck forklifts for SEAC in France. As I said already, 30% of the forklift orders is actually in electric format, and we have seen that continuously increasing. 18 hybrid shuttle carriers for the Port of Virginia in U.S., 6 automatic stacking cranes for the VICTL in Melbourne, Australia, and then a number of zero-emission products into the port in Indonesia as well. So we can see that this is not limited only for the European and U.S.-based customer, but the demand for eco-type of products is actually sort of covering the whole global demand at this stage. Also, we came out with the announcement today in connection of the Q3, announcing some leadership changes into the Cargotec team. Michel van Roozendaal who has very successfully steered the MacGregor through very difficult times for the last 6 years is now taking over to the Kalmar’s. And Michel, with a strong background in many of the sort of high-quality businesses, including Danaher and United Technologies, is well positioned to take the Kalmar's performance now to the next level as well in the Kalmar mobile equipment. And Leif Byström will be then succeeding MacGregor. Leif has been the COO for MacGregor business and has been serving MacGregor for many years as well. So I congratulate both and I'm very excited about the new appointments and making our team even stronger as well. And with that one, I think we move into the business areas, and I hand over our CFO, Mikko Puolakka.

Thank you, Mika, and good afternoon also from my side. Let's have a first look on Kalmar where we had a mixed quarter. We had a good demand in various solutions, but then our operations were impacted by component shortages. In mobile equipment, we had good growth in orders in terminal tractors as well as in forklift trucks. And as Mika elaborated earlier, 27% of forklift orders were for electric versions. Also, in the large cranes, we got orders for replacement investments, for example, for straddle carriers. And we announced also one automation deal. This was in Australia, and it was for expansion of existing terminal operations. And also, the services demand continued to grow driven very much by the good utilization of the equipment. Kalmar sales increased by 3%, and it's good to remember that we closed the Navis divestment from -- on July 1. So excluding Navis or kind of with the comparable basis, Kalmar growth would have been 10% excluding Navis. We had approximately EUR 30 million of sales in quarter 3, which has been delayed to quarter 4 and latter quarters due to the component shortages. Service sales improved by 9% in Kalmar. Despite growing revenues, the profitability declined and there were a couple of reasons for this. We had lower productivity in our assembly operations due to the component shortages. So we have to move product back and forth as the components are coming in, and we can then finalize the product. And this is impacting our productivity. We have had also higher freight costs as well as component costs. And for example, during quarter 3, the freight costs impacted approximately 1% unit in Kalmar comparable operating profit. So without that, Kalmar comparable operating profit would have been 9%. And then we continue with the investments in electrification, automation, and robotization. And we are having several product launches in the coming months and quarters. Then moving to Hiab where we had an excellent performance in quarter 3 despite the challenging supply chain situation. Orders grew very nicely. And if you compare Hiab's quarter 3 orders, those were more or less on the same level as in quarter 4 2020 or quarter 1 2021 as well as 30% higher than in quarter 3 '19, so demonstrating the strong market activity what we experienced at the moment. Backlog is exceptionally high for the higher type of business now, like Mika indicated, representing 9 months of sales. Hiab sales grew very nicely, 21%; services, 9%. In Hiab, we had also delays in sales and deliveries due to the component availability, and approximately EUR 20 million of sales were postponed from quarter 3 to latter quarters. Comparable operating profit improved very nicely. And as Mika also mentioned, this is in absolute terms as well as in relative terms, the highest ever quarter 3 operating profit for Hiab. And we completed the Galfab acquisition in quarter 3 in September. And on the right-hand side, you can see also a typical product for that business. Then MacGregor where the positive market development contributed nicely to the order development. Actually, we saw growth in all 3 product or service divisions. In merchant, it has been a key contributors to the growth. MacGregor sales were down by 14%, and this is very much coming from the low order intake in 2019 and 2020. But we believe that this should be the lowest point in MacGregor's trend here and supported by the -- basically now the third quarter, when we have had good orders that should contribute also to the growing revenues in the coming quarters. Profitability was slightly down compared to quarter 3 last year. But we have been able to offset this 14% sales decline by higher service portion, so our service sales in MacGregor accounted for 46% of total sales, while it was 37% a year ago. And then we have continued also with the cost savings. This year, we target EUR 13 million cost savings compared to last year. Then a few highlights about our key financials. If we look quarter 3 profitability, we had a very large positive one-time impact from the Navis divestment. So in the items affecting comparability, we booked EUR 230 million sales gain from the Navis divestment. Other kind of large items in the items affecting comparability, we had approximately EUR 16 million one-time costs related to the merger between Cargotec and Konecranes. Thanks to the Navis divestment, also our effective tax rate for quarter 3 was fairly low. It was 20%. And that was very much coming from the Navis divestment. And also contributed by the Navis divestment, our ROCE was now 14.3%. And as a reminder, our target is to be at 15% in the long term. Looking at the year-to-date numbers, very strong development in orders, 57% higher than a year ago. Key contributors coming from mobile equipment, Hiab as well as services in our all 3 businesses. Also, our comparable operating profit is 19% higher than a year ago. And here, the key contribution is coming from Hiab. We had a fairly modest cash flow in quarter 3, and this is, to a great extent, coming from the component shortages. So when we have missing components, we have had higher work in progress, and this has increased the inventories and impacted our cash flow. At the moment, our inventory days are approximately 116 days, while it was 102 days at the end of last year. And these roughly 14 days means approximately EUR 100 million in our inventories as well as in cash flow. We have a very strong financial position. Our gearing improved to 31% driven by the Navis divestment and the onetime profit from there. Also, the EUR 380 million sales proceeds from the Navis divestment supporting there. Excluding the IFRS 16 lease liabilities, our gearing is at 20%. And our net debt-to-EBITDA ratio is at the moment 1.0. We are not having any major debt repayments coming up in the coming years, so fairly balanced maturity profile. And this offers, of course, a good -- the financial position offers a good position, for example, for M&A. And we reiterate our guidance for 2021 and estimate that comparable operating profit for this year improves from 2020 when it was EUR 227 million. And with those words, I would hand over back to Aki for Q&A.

Thank you, Mikko, and thank you, Mika, for the presentation. With that, operator, we are ready for the Q&A.

[Operator Instructions] The first question comes from Magnus Kruber from UBS.

Mika, Mikko, Aki, Magnus from UBS. Just a couple of questions from me. So first, it was kind of you to quantify how much of the EUR 50 million came in the different business areas, but have you commented on how much you had in the second quarter from this, if any? And also, if you did, could you let us know what sort of year-to-date overhang would be from undelivered orders related to supply chain issues?

Yes, thanks for the good question. We had EUR 20 million in quarter 2, quite equally distributed between Kalmar and Hiab, and that has been kind of catched up now during quarter 3. And in quarter 3, we had, in total, EUR 50 million. Roughly EUR 30 million coming from Kalmar and then EUR 20 million from Hiab.

Perfect. That's very clear. And is it fair to assume the EBIT impact from these delays is -- can we assess that with the gross margin perhaps, or...

It would be approximately 15 -- from this EUR 50 million, we would have roughly EUR 15 million EBIT impact.

Perfect. And then just finally, could you talk a little bit about the demand outlook that you have seen through the quarter in the mobile equipment in Kalmar in particular and also a little bit on Hiab? What have you seen? That would be very helpful.

What we have seen, I mean, since the pricing in last round of fairly heavy pricing increases we did in the -- July, we have seen continued strong demand in there and also looking at the early part of the Q4. Now we have seen that same demand continuing, both in the mobile equipment as well as on the Hiab side. And obviously, the outlook right now for the MacGregor is clearly brighter, not necessarily realizing that much in Q4, but certainly should be visible next year. We also see in the port side, on the heavy investments, the pipeline getting stronger. I think we should not expect any large automation orders because the so-called brownfield automation is really prohibited by the huge congestion in the ports at the moment that actually prevents customers of closing down parts of the operation. But what we are seeing in our pipeline and sort of the VICTL, example of that is further port expansions that are in the pipeline at the moment.

The next question comes from Johan Eliason from Kepler Cheuvreux.

I mean, obviously, the order development in Hiab you didn't compare with Q2, I guess there was a fair amount of pre-buying in the order intake for Hiab in Q2. But you say that demand is still strong. I mean what sort of level should we compare with when you think about Q4? It's typically a seasonally stronger quarter than Q3. Do you think that’s still be the case now when pricing is impacting purchasing behavior as well?

I think the Q3 number was exceptionally good for Q3. I mean if you look at past in the history, overall, the higher performance, as we said, this was the all-time high Q3 for Hiab. So that's a very robust order intake. The seasonal impact usually is quite clearly visible in there. And as I already said, overall, if -- the close to 1 billion orders across the whole company was the second-highest Q3 we ever seen. We had one in 2007, I think when the MacGregor demand was exceptionally high. So for Q3, I think overall a very robust situation. The underlying market is still very strong. But when you look at the sort of order intake of 57% up year-to-date so far and a very strong demand we have seen in Hiab, I would not be surprised if we start to see that rate slowing down somewhat when we move into the Q4. But so far, it's shown to sort of continue across the different businesses at a very, very robust level now into the Q4 as well.

And you mentioned, I mean, the backlog is record-high now for Hiab. I mean is there -- when customers come and ask for a crane or a truck, what are you saying in delivery times? Can they get it within the normal 1 quarter or 2 quarter or we're talking half a year now?

Yes, it varies from one product to area, but if you look at kind of the high-level math at the moment and with EUR 900 million of backlog, and if you make an assumption of EUR 100 million-plus revenue on a monthly basis, we are sort of effectively covered till the -- until Q3 next year. What actually is, in a way, favorable for Hiab at the moment is that customers as such necessarily don't require the equipment at a faster rate. And the reason for that one is that the truck delivery dates at the moment are sort of 40 to 50 weeks in many cases. So there is no point actually trying to deliver, for example, cranes any faster as then the customer would end up waiting for the truck delivery on that one.

And do you see some risk that there might be some cancellations eventually because of this situation when they are pre-ordering left and right?

Yes, the -- I would say that I am not too particularly very -- the one reason obviously is that after a number of pricing increases, if you cancel order today and then you would need the equipment later on, you would end up paying more than 10% more for the equipment. So there's a certain built-in incentive if your order is sort of coming from the late last year, early part this year to hold on to that order. We have also introduced more and more across our different customer segments and products, cancellation fees for our products as well. So trying to sort of keep up with the change in the situation. We have done a couple of things contractually with our customers. We have shortened our price increase notices from, in some cases, 60, even 90 days to 30 days across pretty much the whole product portfolio and customer set. And then we have introduced quite a bit of sort of, in our contracts, cancellation fees as well. So the combination of cancellation fees and higher pricing for the new equipment, I think I'm not particularly concerned about the cancellations at this stage.

Excellent. And then on MacGregor, I mean, it's been many years now when they've been struggling around breakeven and now finally, we see firm evidence out there that there's a big amount of container ship orders to come. Are you still believing this business can sort of get back to 10% margin level when these equipment orders materialize and come into revenues, let's say, 2023 or so?

Absolutely. I think when the market is there, I see no reason. We are actually in much better position than we were during the last cycle. And if you look at our cost base, it's considerably lower. We have moved quite a lot of our engineering and support resources from high-cost countries to lower-cost countries in Poland and China. So we can leverage the demand from lower cost base. The services is in much better shape actually, as Mikko was saying, and nearly half of the revenue now come -- came from services. Services have been growing. And very clearly now with high utilization and the fact that shipping lines actually now can afford the maintenance, I think there's a real opportunities to sort of improve our maintenance revenues moving into next year as well. So I'm very optimistic that once the orders start to come in, we will start to see the MacGregor heading into the double-digit numbers. Again, it's a long-cycle business. So orders will come next year and most of the revenue we'll only start to realize in 2023, but it's certainly looking very good.

The next question comes from Aurelio Calderon from Morgan Stanley.

I've got 3, if I may, please. The first one is around the 15 -- EUR 50 million that you said you've lost in terms of deliveries in 3Q. How much do you think you are going to still miss in 4Q, and when do you think you can catch up with those sales? I know it's a little bit of a crystal ball exercise, but when do you think that this supply chain issues and bottlenecks are going to ease at least for you?

It's a good question and I wish we would have the crystal ball. It's not kind of sure that it's possible that we can miss also in quarter 4 as we, at least currently see, that the component situation is not getting any easier during quarter 4. So similar kind of development can happen also in quarter 4. And it's very difficult to predict in advance like this EUR 50 million we were expecting higher sales for quarter 3, but due to the component shortages, those will be -- those deliveries will be realized later in quarter 4, some perhaps even in quarter 1.

Yes. I think there is help on the way. When you talk to our suppliers, people are adding capacity at the moment. The question only is that how fast will that actually start to be visible? So we do expect that the supply situation will remain difficult in Q4. We do see a number of efforts to sort of alleviate the situation in there, but how much of that will actually come to and help and during the Q4 is still a big question mark.

Okay. That's helpful. And I guess my second question is around the services business. And I know that 3Q is usually sequentially weaker, but if you look at the order intake, it seems to have declined sequentially quite a bit. I wonder how much of this is, you think, just driven by people that may be did some pre-buying ahead of increases or kind of extending lead times on something like spare parts? And how much of this do you think is just a normal seasonality in the business?

I think just the seasonality. Again, if you would look kind of a back number of years, the -- also in services, the activity lowers in Q3. There are a number of holiday days and others that will affect that one as well. So I think one is to remember that the activity levels started to increase quite a bit already in Q3, and especially the September was already fairly strong in last year. So in that sense, the year-on-year comparison starts to be a little bit more valid in Q3 also. So we do see that the underlying activity. It's during the COVID restrictions are still there, but there are less of those ones. And of course, the high level of equipment activity will help us. But also very much the kind of the underlying self-improvement work we have been doing and continue to do in our services is helping us as well.

Okay, and just one last question from my side. I think you've mentioned -- back in 2Q you mentioned that you were expecting maybe a little bit of a slowdown in Hiab given that you were putting up prices again and -- but today, the print seems to be quite robust here. So the question is, a, are you putting more price increases in Hiab or in general across the business? And two, if you think that this is going to have an impact on order intake or you think that customers are really -- appreciate that you need to put up prices given that input costs are rising for everyone.

First of all, we actually have not seen any slowdown so far even with the relatively hefty price increases we did in July as such. Typically, we do pricing reviews towards the end of the year, and we plan to do so this year as well. So I do think there will be further price increases in storage, and we have not seen that hamper the demand so far.

The next question comes from Magnus Kruber from UBS.

I just wanted to ask you about the labor cost inflation, what you're seeing there. I think we discussed already in Q2 difficulty to access skilled labor, and how has that developed in Q3? And do you have a sort of assessment on the labor inflation that you anticipate over the next months and year?

Yes. I think the labor inflation is most visible in the blue-collar working and especially, I would say, manufacturing side in U.S., somewhat also on service technicians. But one needs to put it in context as such. The portion of the labor context in typically in our total manufacturing cost is about 5 percentage points. So it's relatively small part because of the type of operations we do as such. So there will be probably some impact moving forward, but it's not going to have a significant impact on that one. And now, of course, remains to see what will happen overall in the inflation environment and the white collar work as well, but what we have seen so far is the kind of labor shortages and the labor inflation, especially in the blue-collar manufacturing and somewhat also in the service technician area.

The next question comes from Max Yates from Credit Suisse.

My first question was just on the 100 basis points of margin impact that you mentioned in the Kalmar division. How should we think about this sort of going forward? Is this a sort of temporary dislocation between the costs that you're facing? Have you kind of now tried to reflect these in your price -- or in additional price increases or perhaps sort of price escalators on some of the contracts? Or should we think that kind of actually you've done everything that you can on pricing to reflect the raw materials, and this is just something that entails sort of container ship rates and shipping capacity increases, this is something that you will have to take within your margins going forward? How should we think about that?

Yes, 1% unit in Kalmar in quarter 3. And we have introduced certain transportation surcharges in Kalmar. so we expect that this should gradually kind of compensate going forward, this higher transportation of freight costs.

We had -- in Kalmar, in terminal tractor business, we had a dealer event this week in U.S. where we introduced USD 1,800 surcharge for the deliveries. That's actually also applicable for the existing orders as well. And that certainly will compensate on that one. But overall, I would say that the proportion of the freight cost that has been relatively low on that one is -- it can be as high as 3 percentage points in some of the Kalmar equipment at the moment. We do expect that situation will sort of remedy itself.

And just -- sorry, could you mention that number again in the U.S. for the surcharge that you put on? USD 1,800?

Yes, per equipment. Yes.

Okay, that's helpful. And then just my second question would be on kind of what you were seeing competitors doing on price because obviously, you've talked about kind of pretty notable price increases through the year. And I just want to check kind of what your feeling is that the competition is doing out there. And I mean, is there anyone out there who is kind of willing to take kind of perhaps lower margins? And given the price increases everywhere, maybe using this as an opportunity to try and chase volume? So how are you seeing the sort of broader pricing discipline of the industry?

I think what we see -- and obviously, us being the market leader in most of the segments we operate, we tend to be also kind of pricing leader. We have seen competition following up our pricing increases, not necessarily to the same extent as we have discussed on that one. But obviously, with the current supply environment, it's quite difficult to chase the volumes. And if it's -- if we have our own fair share of sort of supply and component availability challenges, the smaller players certainly will not have an advantage of that one because generally, they are even lower down in picking order in terms of the prioritization of our suppliers as well.

Okay. That's helpful. And just my final question is given the very strong -- or I guess, the slightly unusual mix of ship orders this year with container ships being as strong as they have been as a proportion of the total. Could you just remind us of sort of how your ship mix looks in MacGregor? So any sort of rough guide to how we can think about kind of the percentage of your business that is containership percentage, RoRo, bulk or maybe other? How you tend to split that, that would be helpful to know.

In terms of rough numbers, over the cycle I think the way it would look like, and this is rough numbers, about maybe 40% -- 50% will be containers, another 40% or so on bulk ships, and about 10% to 15% on the ferry RoRo ships. And to our delight, of course right now, if you look at the ship types that are in demand, it's exactly those 3 type of ships. At this stage, the RoPax or RoRo ferry -- car ferry mark the smaller, but the proportion in our deliveries and value per ship is higher. So it's relatively attractive segment for us at the moment. So we have seen very strong order intake in the container side, as you said, but we see increasing demand actually coming now on the bulk side as well. And that, I think, start to be visible in ship orders as well.

And just finally, is there anything we should think about whether it's kind of -- obviously, I think quite a lot of people look at sort of absolute ship numbers rather than necessarily the size of the ships or anything like that. But just if we're thinking versus kind of previous cycles, is there anything we should be aware of in terms of content per vessel, size of the ship that may look or looks different when you look at kind of what's happening in the market versus previous up cycles, i.e., when you used to do EUR 1 billion, is there anything that is markedly different in content or ship size or anything like that, that would affect your business this up cycle?

I don't think anything as such is different. Typically, what happens is when the cycle is low, the shipyards try to manufacture a larger part of the content themselves. So typically, if you take a containership, if the shipyard has capacity it might do most of the steel structures itself. And then our delivery would be limited into the engineering and key components. So -- and roughly speaking, it will be a few million Euros per container ship. Typically, what happens when the shipyard capacity starts to fill up, which it certainly is doing at the moment, the shipyards tries to sort of compensate that by placing further bigger parts of the ship into the subcontracting. And typically, we then start to do also not only the engineering key components, but also some of the structural work and deliveries on that one. Then the value per ship can go to, say, EUR 10 million or EUR 15 million per ship sort of as a typical number. Obviously, your gross margin is not quite on the same level as it is in the key components and engineering. But still your overall margin and revenue per ship is increasing. So when you start to see ship numbers growing up I think you first of all start to see a higher revenue coming too from that one. And then probably, there should be an acceleration element as well because our scope per ship will also increase.

[Operator Instructions] We have no more questions, so I will pass -- apologies. We've just had one more come in from Tomi Railo from DNB.

This is Tomi from DNB. Just checking, did I hear correct that there was a negative overall impact of EUR 15 million in earnings in the third quarter? If I calculate 1% in the Kalmar business, that's more like EUR 4 million, so just to get clarity on this.

Yes. On the overall, of course it depends on the mix, which is included but approximately from this EUR 50 million, 5-0, sales delay, EUR 15 million, 1-5, EBIT impact.

We have no further questions, so I will pass back to the speakers.

Thank you for the great questions and great answers, Mika and Mikko. So our financial calendar for next year is also published today. Our financial statements will be released on February 3, 2022, so stay tuned.