Hiab Oyj (HIAB) Earnings Call Transcript & Summary

Good afternoon. And from my behalf as well, very much welcome to the Cargotec Capital Market Day. It's been a while, actually, I think the last time was in 2017, and a lot has happened since then. Today, you will hear from a number of our executives about how we are going to take a step-change performance in terms of financial performance, growth and resilience, focusing on our core businesses, Kalmar and Hiab. I will talk about our key strategy and by focusing on sustainability, how we will grow faster than the market, how we will become more profitable and more resilient company as well. As Aki was saying, you will also hear from our business area President, Scott and Michel about their businesses; and then from Mikko Puolakka about the building blocks, how we're going to attain the financial targets we have shared with you today. But let's first look at sort of where we are today and where are we going next? So this is the sort of the last 10 years development in Cargotec. It happens to be, by the way, roughly the tenure, I've also been the CEO on this company. There are two takeaways I'd like you to take from this slide. The first one is that we have a history of pursuing bold strategies. The second one is that we have shown that we can be extremely agile and react to the environment. And I think that's going to be increasingly important for companies in this world that is changing at a very rapid pace. When I started in 2013, spring, the first focus area for us was to fix Kalmar and Hiab businesses that they're clearly underperforming, both they're roughly at the breakeven level. And you look at the businesses today, it's quite evident that we have made great progress in developing those businesses. But I think it will be even more evident for you today when you listen to the Scott's and Michel's presentation, that there are significant opportunities to drive that growth and financial performance to another level. The other area we started to focus on fairly early on was the services business. Again, you will hear more about that one from Scott and Michel and then in the breakout session from our -- directly from our services leaders. But we have grown about 60%, more than 5% per year in our services business. And it today is about EUR 920 million business, and I will come back to some of the numbers a bit more in detail in a moment. We were also very early on the digitalization or Industry 4.0. But I don't think anybody is using that anymore. But -- and if you look at where we are today with that one, the digital and software capabilities have become integrated in our business offering and our services offering and our solutions and clearly created value for our customers today. Some of the investments we did around digitalization they realized in value by selling the Navis software last year for EUR 380 million. And very clearly, the sort of the heritage we have now in terms of driving the financial performance, driving the services development, driving the digitalization will take us also forward into the next step. So one example of the agility, of course, that after the March announcement on the merger cancellation, we announced a refocused strategy for Cargotec. In terms of the -- sorry, I'm getting -- now, I'm getting the right slide order. Apologies for that one. So in looking at the new direction for us, so we aim for higher performance through tackling the sustainability challenges in our core businesses. Our future is built on world-class equipment business, where we can drive competitive advantage by investing into technology and out investing our competition. This is combined with the world-class services platforms that you will hear more about that one, which still have an excellent growth potential and high profitability. These businesses will be more resilient through a combination of the growing services business, more resilient equipment business and asset-light operating model. We are focused on the businesses that will grow faster, thanks to the underlying megatrends and will deliver significant value for our shareholders. And today, you will hear more about that one in the different streams and presentations today. So now where are we with in terms of implementing this refocus strategy. So in connection of the March announcement, they said there are 3 key elements in changing the direction. One was the strategic value of MacGregor business. We yesterday announced that we have concluded that evaluation, and we have decided that we will exit the MacGregor business from Cargotec portfolio. However, we also announced at the same time that we don't feel that this timing is right in terms of maximizing the value. Those who remember a little bit way back, we actually had to do the same thing with the Navis investment. We were in process of divesting that one, then came the COVID crisis, and we came back on that 1.5 years later and then exited very successfully for high valuation. Now it's very clear that we will be very focused on delivering on this promise. And also very clearly focused but some of that is dependent -- not dependent on that. MacGregor will improve the performance through next year. As we have already announced, and Mikko will talk a bit more about that in detail. But it's also very clear that we are not going to take a long time in delivering to this process. As soon as we feel that the financial market is in the capability to do funding for this kind of deal, we will certainly move ahead in realizing that promise. Secondly, we also announced that we are exiting the heavy crane business in Kalmar, and we realized that one already in July this year by selling the business to the Rainbow Heavy in China. The third element of that one was the reorganization. And in connection of the Q3, we announced that we are moving some of the sort of corporate functions closer to the businesses, integrate them in businesses that then enable them to drive more independently to higher financial performance. Cargotec's corporate role will be more limited towards the financial company duties as well as then sort of supplying the services platforms for our businesses. Now let's talk about where we are then heading next. Our customers are facing major problems today, major challenges. Two major runs are the sustainability, especially the climate issue and the other one is the labor scarcity. When it comes to sustainability and now being here for 10 years, I have seen fundamental move when it comes to our customer base, i.e., logistics industries. There are now so many sticks and carrots available for customers in terms of the sort of what needs to be done. The regulatory scene is changing fast, end customers and consumers are putting pressure in terms of the greenness of the distribution or logistics chain for the products, the sort of the employees internally today are putting a lot more pressure in terms of employer sort of purpose and responsibility areas as well. And last but not least, then the financing community and so that investors are also looking more -- and putting more and more scrutiny on that one. And there is a great impetus and -- which is achieve fundamental changes happening around that one. The other major issue is the labor scarcity. In U.S., there are about 1 million truck driver shortage. Actually, almost the same number in Europe. So together in those 2 major markets, about 2 million operators are missing. Now if we can tackle these challenges by delivering more eco-friendly products that address the climate and sustainability issues and when we can deliver more products that make our equipment easier to use or entirely independent to use, we are addressing some of the major -- probably the 2 major issues our customers are facing. Also the change in logistics chains. If you look at the refocused strategy, we are moving actually as a group quite a further away from the global trade and are more focused on the regional local distribution, where the underlying megatrends will be driving the market at the higher growth rates. Last but not least, the limited resources, and this will ultimately drive sort of the automation, optimization services in terms of circular economy as well, and we will be addressing that one as well. Now what does this mean then in practice for us. And when I look at our targets, so our mission very simply is that we will be actually solving our customers' sustainability issues by providing them right solutions. And when you do that one, you will grow faster, and you will be more profitable. So this is not a question about the company that has a financial targets. And then we also have the sustainability targets. No, I think the way we think about this one is that if we can actually solve these major megatrends challenges that our customers are facing. That on its own will result for higher financial performance, higher growth, higher sort of resilience and higher profitability as well. So how do we go about doing this then? Our strategy is built on the 4 sort of main pillars. First of all, we are accelerating our innovation investments in R&D. During the last few years, in comparable basis, we have more than doubled our R&D. We keep on doing that one. And it's a fairly simple formula. In most of the segments we operate in, we are the market leader. Now if you're a market leader, and then you invest proportionally more than your competitors in the R&D. You effectively out-innovate all of your competition and you outrun them in terms of your capabilities to bring more competitive and better products for the markets as well. And at the same time, we are addressing some of the major issues our customers are having. Second one is around increasing recurring revenues. Our services business is growing at a very good rate. Today, you will hear more about that from Thomas and Michael's presentations today. But not only the services business. Also, if you look at our equipment business, after the refocused strategy, our equipment business is also significantly more recurring. We have a huge installed base of tens and tens of thousands of pieces of equipment there where they have a relatively short life cycle. So this is very different from the investment-heavy project businesses where in those investments, life cycles are often tens of years. And again, Michel and Scott will talk more about the recurring nature of our equipment business. And then we are working very much on the new solutions to enable that to become more and more as a service as well. Thirdly, we are actively seeking organic and inorganic growth. Our growth rates in that core businesses are actually pretty good for the last 10 years, about 5% growth per annum as such. We see that there are real opportunities to accelerate that growth further. And then on the inorganic side, we have a number of successful acquisitions in our core businesses, but we see that there are a lot more opportunities to accelerate that one as well. And last but not least, we want to be the flagship company when it comes to ESG standards in our company. And all of that is underpinned by the sort of the tremendous assets we have in there in terms of having the market-leading positions pretty much in all the segments we operate in, leading very often category-defining brands in terms of what those brands mean for our end customers as well. And last but not least, we have invested heavily in leadership capabilities actually on the last Capital Market Day in 2017, we talked about -- in one breakout session about the investments we do in leadership. And that is serving for us well. And I think that's one reason why we've been able to actually react and being agile in our operations. Thanks to the good people and good leadership we show in there as well. So I'll touch with every one of these a bit more in detail. In terms of R&D, as I said, we spent about EUR 80 million. That number has doubled in the last years, and we're going to grow that going forward as well. Again, the question there is that we want to out innovate and outpace our competition in there and serve our customers through innovative solutions. Our focus in terms of R&D is very much in electrification, robotics and digitalization. We will help our customers tackle in those major challenges, operator shortages through automation, semi automation, robotics in there and emission reduction in terms of first and foremost now at the moment with electrified solutions. Good example of that on how much traction we actually get and how much benefit we get from those innovations and our eco portfolio, 90% growth in 2017. And if you look at actually the last quarter announcement, you can see that accelerating growth happening around our eco portfolio as well. The second piece was the recurring revenues. You will hear a lot more about our services business today from the business area presidents and service leaders. Again, we have grown our Services business since 2013, about 60%, more than 5% CAGR per year. Today, the combined revenue of the core business in services is about EUR 920 million and it's producing EUR 180 million comparable operating profit for us. And as you will hear today from my colleagues, significant opportunities to grow those numbers further moving forward. On the equipment side, again, our focus very much is now on recurring elements where we have a strong installed base, strong market shares and relatively short life cycles. We can further sort of drive that one. And again, we are very much involved in sort of developing new business models where we can combine our digital capabilities, our equipment offering and our services together to generate more recurring revenue streams there as well. And you will hear more about that one again later today. In terms of the growth, as I said, pretty good track record actually in terms of the organic growth in our core businesses, but we can do more in there. A couple of good examples of the organic growth in there is that just quite recently, we announced the breakthrough deal for Hiab in railway segment. That's not a segment we have served actually very well or not at all in the past and give us another complete market segment, we can actually offer and some of the existing products adapted for those examples. We also talked about entering the developing markets. Good example of that one is Argos that we bought in Brazil about 3, 4 years ago. And that business has actually quadrupled. It's 4x as big as it was when we bought that one, and today, enjoying a double-digit operating margin there. And we have significant opportunities to drive that business now further introducing more and more of the products we are sort of offering into Western markets, into the Brazilian market and growing further there. In Kalmar side, e-commerce distribution, Amazon, for example, has done a very major investment program and we clearly benefit from that one in Kalmar product offering there as well. In M&A, we have a very good track record. I talked about already on the Brazilian investment. Other good example is the Effer that we acquired also about 3 years ago. Since that one, the Effer revenue has nearly doubled as such. And we have gone from significantly higher operating margin in there. Now we'd like to do more, and we are in active discussions with probably more than 40 companies at the moment looking at opportunities. And we have a very clear criteria, what sort of companies we are looking both in our core businesses, but more and more also in the adjacencies as we see the competitive water where the scrutiny getting tougher as well. And there are clear playbook how we can drive value there in terms of obviously clear cost synergies in sourcing, et cetera. But increasingly bringing our services capabilities, bringing our innovation and digital capabilities and bringing our global distribution for that kind of products as well. The issue we have there is that many of the targets are family-owned companies. And as you know, there are sort of always different dynamics in there, but this is clearly an area we want to accelerate and activate and seek for further and faster growth in there as well. The last and not the least, again, is the ESG. And our target clearly is that when it comes to our industries, we want to be the flagship store for ESG. Let's start with the environment. And in the environmental side, we've been very selective as well and very focused. So we picked the climate as our first priority. Then when you look at the climate, then we have clearly looked at where are the biggest impact, and that's in so-called Scope 3, and you will hear more about that one from Päivi and others today. And that means our supply chain, and that means our equipment operations with customers. A reason why we picked that as a focus is that that's where the biggest footprint in terms of the CO2 emissions is today. And we are going to target that one first by delivering eco-friendly solutions couple of examples on that one, for example, is the fossil-free steel product in cooperation with SSAB, where we have now introduced the first products from Hiab into the market as well. Another example of our social responsibility there is the safety. Safety, of course, in our own operations is important, and we still have room for improvement in there. But at least as important, it's actually, again, the safety of our operations within our customer base as well. And we, again, through innovation and development and better services and training, try to improve that one. Another example of that one is the is the sort of Kalmar AutoStrad feature, so called geo-fencing. So we can actually virtually fence out and broken equipment that needs to be maintained, while the automated operations are going on around that one as well. And last but not least is the governance. And we're heavily invested in terms of the compliance and FX investments in there and driving a very clear line in terms of what -- and we want to be a sort of safe place for work for our employees, a safe place to deal with our customers as well and again, take a leadership role on that one. One example of the governance is that our top management actually that use it today, our long-term financial targets are now tied into the very concrete sustainability target around the eco portfolio order development. So let's talk about the financial targets and generally, the strategic targets we announced this morning. Again, we want to grow faster than the market. I think we have a track record of that one. And clearly, you will hear today how we are enabling to do that one as well. One of the major drivers for that faster growth is actually our eco portfolio. We want to double the sales growth in eco portfolio compared to our regular sales growth. And again, we see a very strong demand happening on that one. Other important driver for us clearly is also the services and recurring revenue. And again, you will hear more about that one today. In terms of the sustainability targets, we aim to have a CO2 emission cut in all of our scope 1 and 3 by 25% by '25 and by 50% by 2030. The availability and development of the sustainable products and especially the electric products is very important at the early phases of that one. Later, we also need to be able to tackle the sustainable -- the supply chain side of that one. And again, we have already introduced the first fossil-free steel products in this area. And again, this is a growth driver and a business opportunity for us at the same time. In terms of comparable operating target, 2025, 12%, that's what we've characterized as over-the-cycle target. You will hear more details about the sort of the business performance and the variety of the business performance from the core businesses in the different sort of revenue options or scenarios from both Michel and Scott on there. And we clearly have strong ingredients to build that operating margin further to the 15% level by 2030 and Mikko Puolakka will go through the components when we will get there. Again, we will be growing by sort of delivering sustainable solutions for our customers. That's where the market demand is, that's where the opportunity is. And we will do that by out-innovating our competition, investing heavily into the sustainable, safe, digital, electrified products and robotization and automation. We are driving our recurring revenues, both in terms of services as well as the recurring equipment business and new solutions. And we will be growing through strong organic growth, accelerate that further through inorganic growth and aiming to be the flagship for ESG standards in our industry. And that will deliver us a clear step change in financial performance and resilience, and you will hear more about that one today. Thank you very much. Thank you, Aki.

Thank you, Mika. And as a reminder, Mika will be back on the stage after our next presentation. At IR, we quite often have got the question that where does the Hiab growth come from. Hiab has been one of the fastest-growing Nordic industrials. And today, I have here President of Hiab, Scott Phillips, to answer that question. With that, stage is yours Scott.

Thank you, Aki. Thank you, Mika. And good afternoon, everyone that's joining us live here in Helsinki, and good afternoon, good morning, good evening to those of you that are joining online. My name is Scott Phillips. And I've been in this role now since Q4 2018. It's been quite a journey to say the least. And today, I would like to discuss with you that journey that we've been on now for the past 10 years since Mika took over Cargotec in 2013. And by focusing on our theme today of lifting the value for all our stakeholders, by setting the industry standard for safety, sustainability and productivity, what we call our core value proposition. Now I would do that by setting the scene a little bit of big picture. Where have we come from, the drivers in our industry, what's led us to where we are today, and then I'll pivot later on in the presentation to talk about then how I think we're well positioned in order to catalyze profitable growth into the future. So at Hiab, we focus our investment strategy on our core value proposition, solving for the customer's biggest challenge. And that's 3 things. How do we make our operations of the equipment solutions safe for everyone that interfaces with the working ecosystem. Increasingly, sustainability plays a key role in safe operations and a close second to this, from every customer that I've met in the more than 4 -- the 4 years I've been in the role is the importance of life cycle support throughout the equipment's life cycle. Our customers are clear. I think I hear this quote often for each of our customers, Scott, the company that gets us right will have a clear advantage. And as a consequence, we've invested in our services network and capabilities extensively before I started in the role and we've continued that over the past 4 years. And then third, our customers are looking for ways in which they can maximize the utilization of their investments, move more material per load per day, minimizing disruptions to operations due to quality, reliability and unplanned downtime. So productivity we see as well as our customers, we see as a catalyst to growth. So how are we positioned today? We are well positioned to solve our customers' challenges and global megatrends are certainly providing a continued amount of tailwind for us. where we are over the past -- may you go backwards here, hang on a second. Okay. So -- our megatrends at the big picture level around urbanization, population development, GDP development. So that provides a good amount of tailwinds overall in the industry. Then if you drill down further into the industries that we serve, our customers are certainly looking at some big picture challenges that I teed up in the prior slide. Around safety, which is an ongoing issue. The ecosystem in the working envelope around our equipment is still an area where safety can be massively improved. There is an increasing need, of course, to reduce the CO2 footprint associated with the operations of our equipment. And Mika mentioned that in his lead-up presentation. And then I talked about the need for productivity and seeking ways to catalyze growth in our customers' operations. And then we have this massive opportunity to make our equipment simpler to use and attend to this operator shortage that Mika also mentioned, both in the European markets as well as the American markets. So those megatrends have led us to a point where we've nearly doubled our sales in the last 10 years, going from EUR 840 million of revenue to nearly EUR 1.5 billion over the past 12 months. Representing roughly a CAGR of 6%. And then in the process, that's enabled our comparable operating profit to increase by 7.7x over the period. And our head count or our FTEs have increased over that period by about 32%. So we feel like we've got good governance and discipline and business control, where we've been able to get nice leverage as a consequence of the growth in the top line. And then drilling down into the revenue profile, our services sales have grown slightly faster, accounting for 28% of sales over the last 12-month period and I'll talk about that in a bit more details later. And then in terms of the segments that we serve, I know I get a lot of questions and there's a lot of comments around our exposure to construction. And I think one of the important parts to remember of that 25% of the revenue exposure, it's about half-half between recurring revenue associated with replacements and refurbishments or the fixing of the assets. And then the other half is associated with new construction. Our largest customers are in -- often reside in this particular sector, and their businesses are doing exceptionally well now and driven mostly by the replacement business that we like very much our construction exposure. Then we have exposure in retail and logistics, about 20%. Road and rail is a big opportunity for us that Mika talked about that we've underserved in the past. Waste and recycling is a high-growth sector, and then we all know the defense sector is an increasing level of importance today and will continue to be in the future. And then the other is made up of a combination of infrastructure-related segment exposure. So we love -- we like our industry exposures. From a geographical perspective, we are definitely European-centric with 54% of our sales in Europe -- or 56%, rather 34% in the Americas. And then the balance, 10% in APAC. So it serves our purpose as well today and certainly positions us both for growth in the future, but then to take advantage of the megatrends that Michel will also highlight significantly in his presentation around the changing logistics supply chain, if you will. Now how -- as we think about the various segment exposures that we serve today, we came to learn during COVID that these segments are largely essential industries, which if you think backwards, how have we grown so quickly and how have we been relatively resilient as we think about the global financial crisis and then subsequently, the COVID crisis. These industries tended to go down a bit softer compared to some other industries. They tended to bounce back a bit quicker. And it certainly provides all of the 3,716 colleagues, and Hiab, the focus to live our purpose, which is together with our stakeholders keeping everyday life, moving to build a better tomorrow. We target to compete in niche segments like this that are somewhere in the range between EUR 300 million and maybe as big as EUR 5 billion in terms of addressable market, where at the same time, the customers put a premium on differentiated outcomes, both from the equipment side as well as the life cycle services. One of the important aspects of our business that is important to understand as well. We serve thousands of customers around the world, and they have a big range all the way from mom-and-pops that have single pieces of equipment that they care deeply about and all the way up to multibillion euro companies that make it important for us to have a footprint and a set of capabilities that is both scalable, providing global leverage in terms of developing new technologies and solutions, but at the same time, position ourselves to be able to provide local service excellence that's so important to our smaller customers as well. Now how do we serve these various customer segments? We serve the segments from a multi-brand strategy. And as Mika mentioned, some of our brands are analogous to the piece of equipment, much to my [indiscernible], sometimes they don't have Hiab or MULTILIFT or MOFFETT or LOGLIFT or Hiab on them, but nevertheless, it positions us quite well in order to take advantage of where we find ourselves positioned in our markets. And we've achieved this multi-brand strategy as a consequence of multiple bolt-on acquisitions throughout our 78-year history. And due to the positioning of the brands, we have a unique pioneering spirit that has served us well to not only invent the equipment that carries the brand, but at the same time, make the industrial segment in which we produce -- or in which we participate. So where do we find ourselves in terms of the overall picture then in our addressable market. Based on the product lines that are managed through our divisions that I'll come back to in a minute, we serve an addressable market that's somewhere in the ballpark of EUR 4.6 billion, split across those 6 or 7 different product lines. And then on top of that, we have the services piece and Mika had teed up where we are from a revenue perspective and profitability perspective, servicing 170,000 units of installed base plus our tail lifts that are in our marketplace as well. Within those segments, we enjoy for the most part, a #1 or clear #2 position, which serves our investment strategy well in terms of focus on delivering solutions that are aligned to our core value proposition around safety, sustainability and productivity and supported by service excellence throughout the life cycle. We have a number of competitors, good competitors. We compete against that range from a global competitor like PALFINGER to in terms of a niche equipment offering for them, it represent leap in local and regional competition as well. So similar situation as our customer base. We need to make sure we have a footprint as well as a set of capabilities that can compete with local service excellence together with the global leverage that we have to deliver. Now looking back over the past 10 years, and I talked about this as being a journey and I gave you the headlines in terms of the operating profit and revenue. We've been working for this entire 10 years to build out a platform that's both resilient as well as capable of creating value for all stakeholders. Starting in 2013, when Mika became our group CEO, he set the business area on a path to turnaround, as he mentioned in his presentation. From breakeven and low single-digit operating profit generating business. And on top of that, we were a bit flattish in terms of our sales development in the years proceeding. So we were losing market share to a business that was capable of generating double-digit returns focusing on reducing our cost base and investing in our most profitable businesses, which led to a nice turnaround, both in terms of sales, but also profitability that allowed for improved cash generation and that enabled us in that period from 2013, let's say, to 2017 to invest in a whole new refreshed lineup of correct amount of forklifts, and a big focus on a refreshed lineup of medium cranes that allowed for market share gains, and it made room for us to also invest in service excellence and digitalization. Hang on a second, I need to go back. Sorry for running ahead. So then if you think about the market development over that same period of time, the underlying market grew by 3% and whilst at the same time, Hiab was able to grow by 6%, which is right in the core of where we seek to be to grow twice the market. And I'll come back with a bit more detail on that in the 5 years preceding the COVID crisis. So these factors, combined with favorable sales and currency mix, if you think about now along the time series, we were in the turnaround phase from 2013 to '15 focused on the turnaround. Then from '15 to '18, we were focused on profitable growth. Then I came into the role in Q4, and it was clear that the focus on profitable growth had skipped a critical step. So what -- and why did I think that. We had added 1,200 FTEs in a very short period of time. So we added to our fixed cost base both in terms of investing in solutions, but then also in terms of addressing underlying inefficiencies in our processes. And so it was clear that we needed to shift our focus from a strategic perspective from profitable growth to operational excellence so that we could have a more scalable platform to catalyze profitable growth in the future. So therefore, we shifted our focus to end-to-end supply chain operational excellence, commercial excellence as well as service excellence and then technology development as our pillars to what we now call our business system. This, combined with implementing a people strategy focused on building a culture around employees first and customers next so that we could better serve our customers. And then and kind of now thinking about the last couple of years, and we had COVID hit in 2020. And COVID, what did that cause us to do? There were 3 kind of stages for us. In the first stage, we were fortunate enough that we had been working diligently together with Mikko's finance community and our colleagues in Kalmar and MacGregor on our Plan B is what to do in any event if there was a deep worldwide recession. So we were able to start executing on that playbook within 11 days and at the same time, mobilize the COVID response program. And that was focused on stabilizing our operations and financial performance, protecting cash, if you will, as well as protecting our colleagues. Then we were able to pivot in 6 weeks to then focus on step 2. And that was how can we make our business a bit more future-proof and resilient in terms of delivering better operating leverage on the growth in revenue that we knew would come eventually. And then the third piece of that was then how could we catalyze growth in the future, both organically and inorganically, so that we could grow -- double the business roughly every 7 to 8 years. So the net effect was we were able to handle a 20% drop in revenue in 2020, while suffering a 80 basis points drop in our comparable operating profit. So we know what to do in order to protect our resilience in the future. So I mentioned along that time series, at the same time, we had a refresh of our strategy. And our strategy to catalyze profitable growth and attend to our core value proposition that's focused on 5 pillars. And those 5 pillars are seeking profitable growth by developing solutions through capability and expertise in our segments and applications with which we serve. And I'll come back to that one in a minute. Secondly, that informs our investment strategy to be able to provide differentiated outcomes around the safety, sustainability and productivity. Third, and incredibly critical is to provide the industry's leading customer experience throughout the product life cycle, and I'll come back on that in a few slides. And that's all underpinned by having a people strategy with the employee first culture because the data is overwhelmingly clear that the most highly engaged workforce tends to take -- looks after its customers better than a culture with less engaged employees. And the fifth pillar -- and this came through overwhelmingly in our data sets is that our customers were seeking for us to be much easier to do business with. And that's having a more digitalized scalable platform with which to interface with and at the same time, attend to their needs throughout the life cycle. So all these together make us a trusted partner that we hope continues to be easier to do business within the future. Concurrent with that was in accelerating our -- the journey that Mika started as well, and that was decentralizing and aligning the businesses to be much more aligned to the customer segments that we serve. So we went, let's say, step 3 into a decentralized operating model, executing to a specific playbook that we've referred to internally as the Hiab Way. So we're organized as of 2021 and 6 divisions that are organized around our customer value streams, if you will. And I'll take you a bit through each of those 6 divisions. Our Services division that, along with the other 5 divisions all have end-to-end P&L responsibility, they're all responsible for global processes that are part of our business system and all responsible for specific geographic responsibility. Our -- the Services division is responsible for not only the classic services that you think of, but then also the digital products that are consumed post equipment purchase. Then our light and medium loader crane business or division is aligned to our road and rail -- or sorry, is aligned to our logistics segments. And our heavy and super heavy crane division has road and rail together with construction. Our demountables, forestry and recycling crane, as the name suggests, as waste and recycling, forestry and defense. Our tail lift division focus on retail last mile and truck-mounted forklift are in building materials, agricultural, food and beverage. So the idea for us was to make sure that we were able to run the business in such a way that we had much greater transparency to the data sets that drive the business. Much clearer accountability to driving the outcomes that matter around our core value proposition and move the resources disproportionately, if you will, closer to customers so that we can empower people in the right place to make quicker decisions, and that has served us well in the last couple of years as we've been dealing and coping with this level of uncertainty that Mika mentioned, earlier that we think is going to continue into the future. Our business system playbook has the following pillars that are at the core of what we do, and that's around operational excellence, and commercial excellence. So selling the problem that we saw for, which implies that we are capturing the data to understand what those key problem statements are in translating those into the economic consequences around those problem statements, having a technology platform that's both scalable but capable of developing those solutions that matter locally as well as globally and operating the business from an asset-light supply chain perspective so that we can continue to be resilient and have good downside risk management with regards our top line development. All divisions are responsible fully for their strategy as well as their operational and financial results. So we think this positions ourselves nicely both to catalyze organic as well as inorganic growth. So as the industry leader, we aim to provide premium outcomes for the industry by leveraging on 3 things. And that's our deep segment application expertise to be a preferred partner. And we get confirmation from this from our customers all the time, and at the same time, we also hear what we don't do well. And there are many opportunities to attend to both what we do well and what we don't do well. So for a couple of examples in our demountable business and tail lifts, we know that through this application expertise that it's important to be able to enable a much greater number of cycles with the equipment. So we're well positioned to outperform the competition in that regard. In terms of loader cranes, weight to payload ratio is critical to safety, sustainability as well as productivity. And we do this by innovating the integration of the physics space outcomes together with the software development. Our multidirectional forklifts are able to handle all kinds of terrains to make the material movement from bulk material to break-bulk material, much safer, much faster and much more efficient. Secondly, this allows us to innovate the premium products first that deliver the quality, productivity and ease of use that our customers are looking for which helps them to address their key challenges that I talked about earlier. And then finally, the third piece of this, again, is having the worldwide services network that is second to none in terms of our direct 69 service centers, as well as the hundreds of channel partners that we operate with to look after the customers' equipment. And as a consequence, having had experience of working in other industrial companies, I'm in a really luxurious position to say that our customers that are promoters are 94% likely to repurchase from Hiab as a consequence, and that's a level of loyalty that I have not seen before in other industrial companies that I've been with. So the services, not only does that help us to deliver a level of service excellence for our customers that they reward us with repurchase decision. But at the same time, it also allows our business to be much more resilient. And if you drill down further in terms of the revenues, both Michel, Michaël and Thomas later on, we'll highlight this in the breakout sessions in the Kalmar presentation. Our share of recurring revenues has been growing quite rapidly. We're at 82% of top -- of the services revenue versus 18% of the nonrecurring services revenue, and that's a 13% CAGR over the last 2 years. And we're now in a position where we're looking after more than 24,000 pieces of connected equipment, which is clearly leading in the industry that gives us proprietary data insights to help deliver the outcomes for our customers that they were not able to achieve prior to having access to those data sets together with our customers. Our e-commerce platform has enjoyed a significant increase in adoption. Our CAGR in the last 2 years there has been 26%, and the sales through our e-commerce platform has doubled. And we will continue to push for growth further in exploiting our installed base and better understanding our installed base and at the same time, partnering with our dealers as well. We think that there's as much as 1,000 basis points of improvement from our current capture rate, which Michaël will highlight in the breakout session. So where we are is in a pretty good position to now be prepared to drive and catalyze profitable growth into the future. So the first building block that we have to build on is having this platform that puts us in shape to -- it puts us in a position to shape the load handling industry as we know it into the future. We have high-quality products with best-in-class performance on which we can build our physics-based and software-based technology stack on. We make use of advanced materials to enable more sustainable and safer products in the future, and I'll come back to that detail here in a minute. Our digitalization has proceeded at accelerated rate of development, where we now have a high performed suite that we'll talk about in the future in more details. And at the same time, we're now developing out a platform to perform remote monitoring and diagnostics, with a scalable operations starting in Europe in order to take advantage of helping our customers maximize not only the utilization of our 24,000-plus piece of the connected equipment but then provide insights on equipment that's not connected as well. Third, we have a wide range of electric offerings that are available and continue innovating as we aim to solve our customers' challenges around carbon reduction. And with the introduction this past year of our SPACEevo control system platform, we can continue to provide the smoothest, easiest-to-use control systems, but we, at the same time, now have a platform where we can develop out software and application additions on top of that platform to continue to build our technology stack in the future. So these capabilities give us a foundation that we think position us well to shape the load handling industry around our core value proposition. In terms of the eco portfolio, Mika mentioned this before, we've had a 225% growth over the last couple of years in our eco portfolio. We have -- the industry's only fully electric offering for truck-mounted forklifts that we completed the introduction of earlier in the year, which has garnered a couple of prestigious industry awards as well that we're quite proud of. And hopefully, you will be able to see evidence of one of those tomorrow in our Raisio factory. We have a second-generation electric power takeoff for loader crane operations, enabling our operators of the equipment to turn off the diesel engines and operate the cranes independently. That significantly reduces the carbon footprint. We can now manage hydraulic fluids in a much more sustainable way that reduces both weight as well as fuel consumption. And at the same time, we have a variable pump, hydraulic dry pumps that also are able to reducing emissions by up to 10%. We have solar charging capabilities in our tail lifts, and we have an opportunity to extend the life cycle of our products through refurbishments. On top of the platform that we can develop on our equipment, the eco portfolio attending to the sustainability piece. If I think about loader cranes. Loader cranes represent an incredibly flexible solution for our customers being built on the back of on-highway truck rated chassis. By -- if you think about the competitive offer of mobile cranes on a much bigger footprint, if you just change the implement on the end of the boom extension, you can now utilize this piece of equipment for multiple applications, which gives our customers the ability to significantly increase the utilization of the equipment throughout the year. And that explains a bit of the growth in the past. It certainly puts us in a nice position to continue to grow in the future. We're able to, for a job site, for example, in addition to the higher utilization rates, the setup times in the job sites are much faster, the need for additional permits are much less, both of those increase the ability to get up and running in multiple application opportunities. And we believe that this will continue to be an important part of the growth story in the future. And then in terms of how we're changing the game, setting the industry standard on the loader crane platform, our mechanical design changes on the boom extensions are enabling 2 things that are significant in our customer operations, up to 10% more reach vertically and horizontally in addition to being 15% lighter. That means an incredibly significant gain on weight payload ratio. That also translates into more lifts per day. It's underpinned by the SPACEevo control system that I mentioned previously. That's the easiest to use in the industry and it does allow for faster movements, even I'm able to use this one effectively, when I get the opportunity to use our equipment. From a sustainability perspective, I talked about the electric power take-up and at the same time, our emerging remote monitoring and diagnostics capabilities are enabling significant gains in uptime, all of which translates into industry best outcomes around safety, sustainability and productivity. We've a clear game plan how to leverage our strengths across our portfolio into the future. I talked about a few of those with regards to demountables, truck-mounted forklifts, I talked about a bit, loader cranes you just heard about. Forestry and recycling, you think about being an operator 50 kilometers away from anybody, that's about reliability, durability and ease of use. Tail lifts, I talked about with regards to cycles, weight reduction, and sustainable recharging and the services piece I talked about as well. We think we're well positioned in the future to continue to set the industry standard and catalyze growth. And speaking about the industry, if you look at the segments that I talked about earlier, in the 5 years prior to COVID, there was a bit of a slowdown in the underlying growth of the segments. But at the same time, in -- within our offering in Hiab, we grew by 9%. And that has to do with the investment focus that Mika started in the turnaround phase to profitable growth phase in 2013 and '15, and it's a similar focus that we've had the last 2 years. So we feel quite confident that -- if you believe the industry figures that we've gathered here in the past few months, we think that our segments are well positioned to have a continued underlying growth. We know that there is this level of uncertainty that's in front of us without a doubt in the next 1 to 2 years. But nevertheless, we like how we're positioned relative to our -- these segments. And segment exposures such as this will continue to shape our investment strategy in the future. And I talked about how we actually really like our construction exposure. So we feel like we are well positioned in order to continue to catalyze a nice level of growth relative to the industry development. So I'll end with 2 quick slides here. I think that we feel pretty good that we've got a number of great businesses with strong brands. We're growing our presence in essential market segments that fit our core value proposition, and Mika talked about the expansion into road and rail earlier. We built excellent resilience in our business through our structured recession playbook approach, asset-light supply chain model, our growing services business and our ability to generate recurring revenue and excellent customer -- through excellent customer experience. Our Hiab way of executing our core processes and strategy through our decentralized operating model, reduces our execution risk and builds a foundation for scalable operational excellence in the future. And I've talked a lot about our ability to set the industry standard. And we have an investment focus, and Mika talked about this as well in his presentation. We know a number of opportunities, both core and adjacencies that we're working. So we believe we're well positioned in the future to catalyze profitable growth. And therefore we feel pretty confident that we're on the right path to continue on our journey to lift the value of all of our stakeholders by setting the industry standard for safety, sustainability and reliability. So thank you.

Thank you, Scott. You can stay there for the Q&A session. And also we invite Mika to join the first session. So 10 minutes of Q&A before our first break. So maybe we can start with Antti first with his hand up. Let's get you a mic.

Antti Kansanen from SEB. Two questions. First one for Mika, and it's about MacGregor. And obviously, the ambition to divest it is clear, makes a lot of sense. But could you talk about why ultimately you are not pursuing this near term? I mean you referenced Navis and it was more about the external market condition being more favorable. But in this one, is it more about you want to show kind of the profit turnaround or you want to sell the market kind of giving richer valuations of these kind of assets?

Well, I think it's both. And obviously, we are very confident about the MacGregor improvements for next year. We see a clear road map on that one. I mean just for the fact that our backlog is considerably higher. And we know that the backlog margin is in healthy level, especially in merchant area. So that's one factor. But I think more importantly, I think just the fact that the external circumstances, as you know, from the capital market at the moment are very difficult to get funding for this kind of transaction. And that limits the buyer scope. So we feel that improving profitability in MacGregor with the combined probably creating a better dynamics in terms of buyer space puts us in a better position. We are not in a huge hurry with this one, we can wait a little bit and maximize the sort of shareholder value through that one. Then again, we are not going to wait for years on that one either. But a lot of that depends more on the external circumstances and fast kind of the capital market starts to open up and that way, expanding the buyer space as well.

All right. And then the second question is on Scott regarding Hiab. I mean obviously, impressive top line growth, but perhaps that could be a little bit higher if we haven't seen this kind of supply chain constraints that has kind of limited your business. And the lead times have really extended there. And obviously, you're a little bit more vulnerable to underlying inflation. So is there something commercially production-wise that you are kind of doing to tackle this going forward to get kind of the full benefits from peak demand for your earnings leverage as well?

An excellent point, and it's something we've been working on since 2019. And in fact, I think the first time I had a chance to meet many of you, this was a big focus was on the supply chain constraints. So there's been 3 things that we've worked on there, and you'll hear a bit about this in Michel's presentation as well. Full implementation of lean throughout not only our manufacturing operations, but our services operations, and that's starting to pay off big benefits internally. But then that leads us to issue #2, and that's how do we work with our suppliers, and we've been working on 2 things there. One is, is getting much closer and making sure that we do our best job in terms of providing a horizon of planning that's accurate out to 12 to 18 months, which has been quite a challenge. But it has nevertheless enabled us to engage much more effectively there. And at the same time, we've been working to derisk our supply base and making sure that we -- that we turn on multiple sources of supply for the same SKU. And then that leads me to the third thing relative to that piece as well, and that's accelerating our efforts on the design side to standardize to the extent possible, the part numbers and make our offering much less complex and a bit more standard so that we can work more effectively with our supply chain partners and at the same time, take advantage of being able to turn on more suppliers more quickly with flexibility or rapid development of additional specifications. So some basics, if you will, but lean partnering more effectively with our suppliers opening up a bigger choice set of supply base as opposed to what was available to us prior to the COVID, especially and then helping to support that with changes that we make in our design thinking and concept. So our global technology platform is helping us to do that much faster than we were able to do it before.

But I mean, fundamentally, you don't see any changes to your pricing strategy. I mean the lead times have expanded from, let's say, 3 months to almost a year, and there's a lot of inflation going on in between and...

We've implemented a number of actions around pricing, whether it's price increases or attending to terms and conditions that allow us a bit of flexibility depending upon the lead time horizon associated with an order or the change to the order within that lead time. So we're doing everything we can from a pricing perspective to cope with the changes that we see in terms of the inflationary environment that we're in. We have taken a conscious choice, however, to not go to surcharges that we hit our customers with by surprise, but rather to the extent possible that's built into the terms and conditions, so they know exactly what might trigger that why and when, and at the same time, sticking to the extent possible to the published market list price that they know ahead of time prior to placing the order.

Thanks, Antti. I guess we have also received some questions from the online orders, but that's I think those will be answered later in the presentation or in the breakout session. So we have a question on the other side of the room. So please go ahead.

This is Tom Skogman from Carnegie. In your new strategy, you're moving out a lot of operations to the divisions, which makes a lot of sense to me. But then, of course, the question is, what is the benefit of keeping Hiab and Kalmar together in the future instead of demerging the company to 2 different companies.

I think right now, we are very focused on, first of all, we need to execute on MacGregor, and we need to execute and refocus strategy and drive the value on that one. That's where the focus today is. There are clearly benefits in terms of capital allocation and giving the flexibility on that one at the moment.

Okay. And then on the margin, how do you -- I mean you have now group margins at 12% and 15%, but do you want to open up? Or do you think what this means for the different divisions?

I think we will open up later in Mikko Puolakka's presentation if you wait until they get back then if you have questions after Mikko's presentation, let's address those.

And then finally, I mean, you argue that you're much more agile et cetera. But I mean, the world is, of course, uncertain and given there's a risk for a recession next year, et cetera. So I would also, of course, appreciate some kind of view, what is the margin range for the new Cargotec, and perhaps you will get more information about how volatile the margins have been for the future businesses, but perhaps you could help us to understand how you see it. I mean, can Hiab's margin go below 10% in a negative scenario, et cetera?

Do you want to take the Hiab question first?

Yes. So I guess what I would go to, Tom, and it is good to see you again, is if you look at what happened in 2020, we took a 20% pretty significant drop in the top line. I think we ended the year somewhere in the range of 11.8% comparable operating profit. So certainly, that's well within our established corridor of 10% at the bottom, bottom and a bit better, obviously, than where we are today at the top.

I would say so that the world would have to be a very, very different place for us to drop below double-digit numbers with the new composition we have in place. This will actually take quite a bit of revenue flex in there. And again, as you saw in my presentation, we have about EUR 180 million of operating margin in the services alone today that gives us a good baseline already.

Now here, one question from Massimiliano.

Massimiliano from Credit Suisse. My first question would be for Mika. And if you could comment a little bit on the M&A strategy. So can we see acquisitions before MacGregor disposal, first of all? And do you expect to fully reinvest in MacGregor proceeds into M&A? And secondly, if you can comment a little bit on like in the past, what you saw synergies potential as a percentage of sales from the acquisitions that you did in the past?

Yes, quite a few questions. So yes, we can do acquisitions before the MacGregor and exit if we find a viable target that is available at the moment, we certainly have the financial capability to do that one already today. Sorry, I can only have one question at the time. What was the next part of the question?

Yes, in terms of the synergies. The synergies that you saw in the past.

Yes, the synergies we see in the past, and I gave 2 examples that where the EFFER and Argos both in Hiab case. In Kalmar, we haven't actually done any M&A for a while, but certainly are looking for adjacency there as well. I think there's a very strong playbook in place today. Obviously, there are cost synergies. So we have -- generally, the targets are smaller than we are. So we can drive the sourcing synergies. We can connect them to our global service platforms, driving for administration and other cost savings. But more importantly, I think, is the services capability, both in Argos and especially in Africa, Scott, we really were able to drive the EFFER Services business to a completely different level. What was the services percentage of the revenue? It was close...

So when we acquired, it was low single digits.

Low single digit. So we can really lift that up because we have a fantastic services machine. And then the reach, again, I mean, the distribution and presence we have globally, we can take a certain product or application and boost that through our [indiscernible] there. So there clearly are several points of sort of profitability improvements we can drive those ones. The more question is to find the right assets that are available for us.

And a very quick one for Scott on the opportunity that you mentioned in the replacement cycle. If you can help us quantify more or less how much of your revenues ex services come from the replacement cycle versus from new equipment to new customers?

Yes. Good question. I don't have that detail right off the top of my head, but we can certainly come back on that.

If you think about what Scott was saying, the market grows at a certain rate. I mean that's the new business, right, new applications. The most of the other actually is just a replacement of the -- over the 100,000 piece of equipment out there.

Thank you for the great questions and great answer. So Mika and Scott will join Mikko and Michel at the final Q&A. So you will still have an opportunity to state and questions later. But now it's time for us to move forward to our first 10-minute break. [Break]

Welcome back, everyone. Our next speaker has been at Cargotec since 2015. First, with MacGregor, and now he is taking Kalmar the new, more resilience and performance-oriented era. So please welcome on stage Michel van Roozendaal.

Thank you, everyone, for joining us here in sunny Helsinki. I guess it must be a treat for coming -- for one of the first events in person in November in Helsinki. As a Dutch person I've learned to appreciate the weather. So great that you guys made it here. And let's get go in here. My name is Michel van Roozendaal, as said, and I'm very proud to be leading managing Kalmar. And I often talk about the new Kalmar. And before I get going, let me just explain why the new Kalmar is there. And I guess we -- a lot has changed around Cargotec, a lot has changed around Kalmar over the last couple of years. And I'm here representing more than 5,000 people around the globe and who have that pride, but not just pride, also a lot of confidence in the future, a lot of confidence in the new Kalmar. A new Kalmar that is #1 in most, if not all of its chosen segments. A new Kalmar that is benefiting from megatrends that deliver us growth in our chosen segments in excess of GDP. A new Kalmar that's important, who is a leader in sustainability. And you see on the slide, resilience, a new Kalmar that has a strong installed base and that's driving replacement demand and also an underlying service business. And then last, but not least, a new Kalmar and perhaps new Kalmar, which was perhaps in the past, a little bit distracted about so many things sort of happening around us, now focused on operational excellence and engaging on a lean journey. Let me unpack that for you a little bit, if you like. We talk about this repositioned equipment portfolio, and you will have read that we have exited the heavy crane business. Mikko Puolakka will talk a little bit about numbers, but roughly high level EUR 100 million, minus 20%. We've tried very hard to make that business profitable, but in essence, in simple terms, it's just a lot of metal and complicated logistics, these light structures. They have to be sent off to all corners of the world from a manufacturing base in China, it was simply not for us. But it makes that our portfolio now is focused on segments that are profitable and have a strong underlying growth cycle. Then resilience over-the-cycle profitability, yes, 65,000 units installed base, driving replacement. And you're later on in the breakout session, you have a pleasure to talk to Thomas, also a service organization that's incredibly performance, if you like, and has made that service opportunity also a machine where our position with our customers also translates into high-margin expansion. Then we are industry #1, but also at the leading edge with our electric portfolio. I'll talk about that in a bit more detail. Then again, a topic, the last topic here, something which is important to me. Before I joined Cargotec, I've been working in essence, 25 years with U.S. corporations, many larger names, one of them Danaher. And for me, basically, and I still consider myself on the lean journey as a student, but lean is a great opportunity for us here at Kalmar. And of course, any industrial company has had some lean pockets of excellence. I guess the only industrial companies, you'll find are probably in North Korea who have never heard of lean, everybody has heard a bit of lean, but it's not part of our DNA, and it is my personal mission to sort of transform Kalmar into a lean company, if you like. We'll talk about it a bit later. That's not a journey that will happen overnight, but we will move that forward together with a focus on operational performance, and that's what leads to a step change in profitability. Let me just move into our strong portfolio. Again, we are the only player who has a fully electric portfolio in the heavy material industry. And that is pretty powerful to have, if you like. And this is not something we just started like last week or something like that. A year ago, we announced at a new area of logistics, our complete portfolio, and that was the result of a commitment we made a number of years ago. And that's pretty powerful because this basically gives an answer to our customers who are looking for their own decarbonization journey, if you like. And then they look at Kalmar and also engages us with decision-makers who are going to say, at C level in their respective operations because they see in Kalmar, the partner who can also deliver their decarbonization journey. So let's go a little bit deeper. And I guess most of you have followed Kalmar over the years, but these are the 5 segments in which we are currently organized and then counterbalance. And that counterbalance heights, Reachstackers, empty container handlers and forklifts, if you like. We are setting the standards in all these segments there. Then terminal tractors, the most selling product in North America. And Mika already talked about this megatrend, warehousing, e-commerce. When you buy something online, somewhere in a warehouse, something needs to be shifted around, and that's where Kalmar terminal tractor comes into play. So a clear example of a product well positioned to benefit from these megatrends. And then we've been always a leader around straddles and shuttles. Still, that is an activity closely associated with the larger port activities. But we are the leader in automated straddles and hybrids, if you like. And I mean at a number of these operations, the big players, APMT and a number of other ones, they rely on us to have these operations move, and those things have to move like clock ward, like clock ward, like clock ward. And when they need that, then they turn to a Kalmar shuttle or straddle. And if you go to one of these ports quite amazing to see that belay of these straddles working around. And then Bromma spreaders. Bromma is part of the portfolio. But again, reliability you have to pick up millions and millions of containers every year, and you can't sort of take a lot of time to put it there, and you can't have a container sort of following off the spreaders. No, it has to be reliant. And I've never made the calculation, but I think those Bromma spreaders are probably like a 7 sigma accuracy, and that's why we are the leader there globally. And I come back to services in a bit more time, but of course, we have a service organization all across that. Now you know Kalmar as being closely associated with maritime ports and that's, of course, important. But it's also important to realize, and it's more emphasized now with the exit of the heavy cranes, that we have a quite widely diversified number of activities we talked about distribution, forestry, a good opportunity for us also outside Europe where we are very strong. Metal, heavy stuff, so you need heavy equipment and then heavy logistics, wind mills, for example, monopiles for windmills. So you clearly see that we are diversified. If you go a little bit further, you'll see also the segments in which we are playing are big. And we are, again -- we're not modest in saying that we have these leadership positions, but also we have some growth opportunities there. If you take the first 2 sectors combined, you talk about a world market of -- in excess of EUR 2 billion. We're #1 in Europe. So a strong leadership position and opportunities to grow outside with that technology, if you like. Terminal tractors, I talked about that. Also, a very significant segment there. You'll see the Bromma segment a bit smaller because these products are, if you like, just in essence, a bit smaller, but again, leadership position there, and I talked about the straddles and shuttles. So what you'll see is we have these viewership positions. Clearly, we have a number of competitors there, but we are probably the only player who has that position across all these segments. And then about services, here, it's difficult to talk about the market share position, but we have a capture rate of 25%. It's actually, I believe it's 28% or something like that. And that also gives us an opportunity to grow further. Then if you look a little bit at numbers, about 1/3 of our business is in the service business. You look at the 2021 numbers, so EUR 1.7 billion, a CAGR over the last so many years, you'll see that on the next slide, about 4%. And then again, in the sort of like the pie chart in the center, you'll see the segment distribution, about 50% is in ports and terminals, but also about 50% is somewhere else, if you like. So you see that, that balanced portfolio of activities that were not solely dependent on one segment if it goes up, it goes up; it goes down, it goes down. And then if you look at the geographic segment, having lived now the last 5 years in Singapore, of course, only 18% in APAC, that's a growth opportunity, but very sort of like almost balanced, the rest 45% EMEA, 37% in the United States. You look at the profit numbers, 9.8%. You also saw the release targets there. Clearly, an ambition level for us to move that upwards. And to a degree, I can say that where we are today is a little bit where our scope was just a couple of years ago, if you like. So we are quite ambitious to sort of catch up on that one, and we will deliver on that one. The next slide, you see the CAGR of the last 4%. What is interesting on this slide is that the last 12 months is, at this stage, poised to be the largest Kalmar year. So what you see is a growth rate, 4% is maybe not all that dramatically impressive. Of course, you had the 2 corona years. But I guess, we are now here to accelerate that growth. Let me now go a little bit more in detail about that change from the crane business, if you like, and also this position on the ports. And it's important to realize where we are. So if you think about the ports, right? So we have these mega terminals, the large ones, the Rotterdam, the PSAs, et cetera, but you also got the small terminals. And what we see is a shift from a focus of Kalmar, a little bit away from these large terminals, a way towards the more medium and small terminals. These large terminals often have very sophisticated procurement organizations, more difficult for us to really sort of reach the higher margins. And also, they have their own maintenance teams, so also more difficult for us to get a good service business there, right? If you go to the small terminals and they still look what little ports, I was coincidentally last week in Paris at the Port of Paris. The last time you checked Paris was not on the North Sea or something like that, but they have a small port, if you like, because of course, they serve 25 million people who are eating and drinking and having a good life, if you like. So all that stuff needs to go there, if you like. So you have a small port, and it's not a big port, but there, Kalmar plays a crucial role for the operation of that part. So we have higher gross margin, and we have a higher service potential, right? On the bottom, you see also the slides sort of the picture is a bit on the left. These are sort of like the cranes. Again, still more steel and again more steel if you like, less exciting for us. You'll see the straddles there, where there's more value at. There, we play a big role in automation. So we keep that as part of the portfolio and actually is the growth opportunity there. And then you see all the vehicles on the right there, where we have a lot of opportunities to capture value. Here, you can see a couple of numbers. If you think about terminals and so these are terminals, not like the Port of Rotterdam, these basically are -- port has multiple terminals, 11 on the terminals and close to like 200 are mega or simply large, if you like. If you think about it, we talk here large from 1 million TEU. And then you think the whole port of [indiscernible] for example, is 1.5 million TEU. They go to a port like Felixstowe or [indiscernible] 4.5 or so and then Hamburg is about 8%, and then the PSAs and Rotterdam much much bigger and, of course, all the ports in China. So you'll see here that there are many, many more ports that are, if you like, smaller where you see that in action. And on the next slide. This is a slide, which I like very much is here, you'll zoom in on 500 intermodal terminals in Europe, right? Again, if you think about Kalmar, ports, et cetera. So trivia question, where are all these little red dots. I mean some of them are indeed on the shore lines, but many of them are in land, if you like. And you see that model shift here we have this target to go from about 80%, 30% towards more real. And that is, of course, growth, if you like. So the total volume is not sort of growing that much, but the shift means that all these ports need reinvestment. A couple of weeks earlier, I was in Sydney and they have port Botany. And there, it's -- been to Sydney, it's a bit hilly, if you like, and it's a bit difficult and congested, et cetera. So it's a messy port operation. And they have a new operation in land about 30 kilometers in land called Burbank. And there, they're moving all these sort of containers and then, of course, Australia is a big country that it will all be distributed, if you like. And currently, that happens with trucks. At this stage, we are engaged in a project to move these trucks basically off the road and replace that by a real connection. How many trucks off the road per day? 3,000 every day. Think about the congestion 3,000 trucks are causing, and also think about driver shortages. 3,000 truck drivers, you no longer need to fight. You need a few train drivers. But of course, quite clear, you need fewer of these train drivers than you need truck drivers, right? So this also illustrates the opportunity we have. Second opportunity is now the opportunity of a replacement market. The question came already on the high upside there. But we have this very solid and strong installed base of 65,000 units. Now these little toys, these called my toys, they are not there and sort of having a relaxed time. Now they are being -- they're sweating the assets there. If it's 2,000 hour, 3,000, 4,000, 5,000, 6,000 hours, sometimes, if you like. So after a couple of years, 8 to 10 years, you simply need a new one, right? So there is an implicit replacement market, where we are basically benefiting from that. And as Kalmar is seen as a preferred partner, on the next slide, you'll see some testimonies. And interesting, if we've got a take it many more, but we have a testimony of a gentleman in captain, of course, of in Colombia, and then gentleman in Kenya port, they rely on Kalmar, right? And they come back and that's where you see this demand for replacement coming there. It's a EUR 2.5 billion annual sort of demand. Of course, not all of that will go to Kalmar. But that's quite a solid volume, if you like. That basically is there to replace that, and that is continuing to grow, right? So you can see why we are at Kalmar excited about the future because this underlying demand is simply going to be there. But of course, we need to service all these units, right? And you see the guy is smiling because he is engaged and happy because he knows that he makes the customers happy there, right? But we're leveraging on that large installed base. Now you think about service, service, of course, to a large extent, consists of spare parts, but it's not just spare parts. We do a whole lot more than spare parts, right? So if you just go in any direction here, maintenance and service upgrades and refurbishments, these are projects. And of course, you capture the value with the spare parts, but of course, now the value add of our own service technicians comes there, and you'll see in the next slide how many we have, you can think about already, how many do you think we have there. Then, of course, we have used equipment. That's interesting also from a sustainability perspective. Reman refurbishment, et cetera, where we can reuse the steel of all the equipment but actually sort of give it a second life. That also has an impact on the sustainability there, and we are actively engaged there. And then consulting and training, of course, we are the industry experts and the digital and remote services. If you think about the 65,000 units we have, about 1/4, a little bit less about 14,000, 15,000 units are connected. So this connection, again, this is something we built up over the years, if you like, allows us insights in the operations of our customers makes us a very competent partner to explain what to do and also allows us to do preventive maintenance, if you like, just reducing the cost there. So you see we're not just a little sort of spare part shop, who is basically selling spare parts, now we're much more. And as a result of that, our very strong service team is also showing a track record of performance there. And I'd like you to sort of focus on the central box. Our service OP growth is twice that of the sales growth, right? So we have outgrown, we have expanded margins. So we've benefited from the growth. But on top of that, our service execution was so strong that actually that allowed us to grow our OP at twice rate. You will have now seen that we have about 1,300 Kalmar technicians in 35 countries, and we are servicing these, I already mentioned that 65,000 units, but we also have 3,700 contracts. That means contracts with customers who are coming back, coming back, coming back, if you like. When you come back, it's also very likely that they'll buy another Kalmar, if you like. Then the one thing which I was sort of surprised when I joined Kalmar about a year ago, is this share of parts sold through e-commerce. You think, oh, gee, we are sort of a bit of an old-fashioned. I use the term metal bashing sort of like, guys with sort of reason the fingernails, et cetera, who comes -- touch a computer. No, no. About 45%, just a little bit less than 50% of our spare parts are being sold through e-commerce. And that's also not something you have achieved overnight. People have invested in making that possible. And the good thing about that is 2 things, actually. One thing is, of course, that with e-commerce, it's easier to reach our customers in all little corners of the globe. So you don't lose customers because you don't have a salesperson in whatever place in the world. And secondly, the cost of doing business is much less. Before I go to the next slide, I'll take you last one because I was hesitant about the next slide. I was thinking, should I show this. And then I was told show this slide. The reason that I'm showing the next slide with hesitation is I first have to explain something where I have to explain you might see there is a problem, and then I need to explain to you, it's really not a problem if you like. So it's a bit of a complicated slide. If you never thought there was a problem, I could have skipped this slide. So let me first explain what you could see as a problem. We go towards electrification, right? And if you look at a traditional unit with hydraulics, grease and all dirt stuff and all kind of whatever consumable parts, et cetera, diesel engine and you think about a slick electric unit, you say, "oh, gee, there's maybe fewer spare parts." If you thought that was a problem, then you've come to the right slide. If you never thought about that, then you can sort of relax a little bit. But of course, this is a reality that if you go to a more electrified portfolio, the number of parts will be less, right? And I'm going to explain why that is not a problem for Kalmar. There's 2 reasons for that. First reason is a bit more cynical reason. It will take a long time before that, how I should say, installed base of good old mechanical greasy dirty stuff will be replaced by that. So if this goes on until 2030, at that stage, only 10% of the parts and the sales will be around electric parts. The second reason is a bit more intelligent format looking is that -- many of the mechanical parts are basically not so much value add. And there we have competition with maybe smaller typical sort of like brand-agnostic mechanical suppliers or so, where certainly the consumables may be coming from them. we believe that going forward, when you go towards a more electric portfolio, people will rely more on the OEM and our spare part capture rate will go on if you like. So that's a vision. And at least suffice to say that we are thinking about that, and it's a complicated story there. But at the same time, it doesn't prevent us from going on that journey of electrification, full stop. And that's actually next slide, sustainability, right? So I believe in repetition is a good way to communicate, right? So we are going back with this point here. We are the only player that has this fully electric portfolio. But it's not just around electric portfolio. It's also around the Eco portfolio, which is visible on the next slide, where you can see that we are growing this. And what is the Eco portfolio? Now it's important that we are on the sustainability journey, yes. And it's important that we are allowing the scope 1s and 2s of other companies to be lowered because they are then using electric tools, if you like, in their operations, if you like. But in many cases, at this stage, electrification is not the right answer. And we are not evangelical around this, if you like. We're not saying you have to buy electric or else, if you like, in certain cases, it makes sense, I'll show that on the next slide. But in many other cases, and I told you I was in Australia just a couple of weeks ago, guess what the percentage is of coal as a source for electricity in Australia, right? I don't know the answer, but it's very high. It's 80% or 90% or something like that, right? So if you switch to electricity, it doesn't really necessarily give you the right, how should I say, solution for that. And as an example, if you go to Moorebank, for example, where these huge warehouses. I mean, just a little sidetrack here. I was one of these warehouses. That warehouse was 400 meters long and 100 meters wide, right? So that's 4 football pitches where that's the same as a 24,000 TEU vessels if you like. What they're doing is they're putting PV, they're putting sort of cells on the roof there. Actually, they're dropping that in by the helicopter because they say, "Okay, I can't rely from electricity that comes out of the grid because that's ground electricity. The only way how it can be sustainable is via PV but if you don't have access to good electricity, which is the case in many other cases, then actually the Eco portfolio is actually the solution for that. And we currently see that our Eco portfolio is actually outpacing. It's about twice the growth of, how should I say, the regular portfolio. So we talk about an order intake in the order of 500 million, 400 million over the last year and the year before there, if you like. But if you now focus on real electricity, now one country where you can sort of shamelessly make everything electric is, of course, Norway because they have, how should I say, hydro power. And here, you'll see testimony of the CEO of Westport in Norway, one of the first customers of electric units from Kalmar and they basically see that because of those little babies, right? and I driven, I got my little driver's license on the Reachstacker, right? So at Reachstacker, if you think a normal car way is about 2,000 kilos or 2 tons or something like that, depending on which car you have, a Reachstacker ways, 70 tons if you like. So it takes a lot of energy to move that forward, if you like. So if you do that with diesel engine, a lot of CO2, if you do that electrically, you really have a big impact on the reduction, as you can see there. But the other point which is important is that you have a reduction of your cost of ownership. But this is complicated. In the next slide, I show a little bit of a landscape around that because you need to buy something which is called the battery, right? And the battery in a way is compared with your little steel tank. And of course, a tank costs almost nothing. But a battery can be very expensive. So you have to make a bit of a trade-off. We have to see what is your cost of ownership. And here you'll see that compared to the Gloria Reachstacker of this year, sort of like standard unit diesel, et cetera, you'll see the Eco Reachstacker already has 6% because you're more efficient, reduced cost of ownership. But an electric Reachstacker with a battery size of 587-kilowatt hours, actually gives you over a 5-year total cost of ownership, a reduction of 30%. So it makes good sense to do so. But then again, this is a differentiated picture you have to sort of depend a little bit on where you are. And here you see a little bit what the electrification journey is around the globe for our customers here, right? So North America, my favorite example is Texas and California, right? I know we have a few Americans in the room, but if you think about the car legislation in California, whether you like it or not, in 2030, you're no longer allowed to have a port operation with a diesel engine, right? So then it's no long case of cost of ownership. You just -- if you want to operate in 2030, well, then you need an electric unit, right? If you go to Texas, Texas and people, I don't want to paraphrase them, but they say, electric, what is that. I just got the oil coming out of my backyard and if you like. So there is a different trade-off there. And of course, that sort of translates into the cost of electricity. So these cost differences are a bit different from country to country. But bottom line is that in North America, in Europe and also in Oceania, you see that there is a great demand for electric units. In other, how should I say, areas, China is one where you see also some good growth, maybe not as much, but that's coming, if you like. So we'll see that we are well positioned to serve those customers who are pioneers on the journey towards electrification but we also have good solutions with that Eco portfolio. And remember, we are outpacing our regular portfolio with twice the growth was the Eco portfolio, where we have also good solutions on an intermediate solution to be on that journey of sustainability. Again, on the next slide, you'll see an example of how that has had an impact for the straddles, right? So we have been building about 500-plus units of hybrid straddles. Now these straddles are big beast, if you like, not easy to fully electrify that, but we have also a hybrid solution, where you can do opportunity charging a little bit like your bus is here in Helsinki, you'll stop somewhere and when you stop for a couple of minutes or maybe half a minute or something like that, you sort of quickly sort of recharge and there you go. 400,000 tons of CO2 reduction has that installed base of the 500 sold Straddle Carriers already delivered, if you like. So we're not talking about it. We are delivering sustainability. It's part of our core values, not just at Cargotec clearly at Kalmar. Now we talk about electrification, if you like. So a couple of points here about electrification, why that is important and why we are well positioned to do that. We at Kalmar, all our vehicle types are basically on a journey towards electrification. So the good thing is that we have also the benefit of amortizing the investments across all these divisions, if you like. So we are well positioned to accelerate the development around that. As I mentioned earlier, this is electric hybrids. By 2027 in 5 years' time, we believe that 30% of our equipment volumes of new sales then will be electric or hybrids. And I mentioned earlier the Eco portfolio that's growing at twice the level. And then a point which is important around electrification. Electrification does 2 things. First of all, it takes away the need for a diesel engine, but it also does something else. It makes the operation more subtle, more precise, and that is a prerequisite for larger-scale robotics, autonomous driving and all the rest of it, if you like. If you think about it, if you have a traditional diesel engine and if you sort of want to sort of drive that, then you have to sort of take an analog gas handle and do something there. If you have an electric motor, you can count rotations and be very accurate around that. If you think about a hydraulic Reachstacker where you expand the boom and all the rest of it, much more difficult to sort of make that operation be automatic, autonomous, et cetera. If you have that electrically done, much more easy. And there we are on a journey towards that as well. And that will also enable a safer operation and many other benefits of also more optimized operation. If you can automate something, you can optimize it, and that is also a driver for energy, I should I say, energy reduction, et cetera. So last chapter, I talked about my personal sort of commitments is around operational performance and then the lean transformation, right? So I mentioned earlier that Lean is there in pockets of performance, but it's not something that is widely spread. And we are currently on this journey that we are driving a lean culture. We are doing that by hiring people who have this lean background, and we are performing basically across a wide range of initiatives, training, events, et cetera. And I don't want to sidetrack here to talk about all the benefits of lean, if you like. Suffice to say that if you are operating in a lean way, you avoid unnecessary complexity, you eliminate waste, but you also empower people at the point of impact. So it's also a management mindset that is important. And I always stress the point when I talk about what is waste. Waste is anything that is not seen as valuable by your customer. So ultimately, Lean is a customer focus, if you like, because you don't do it because we've always done it. We only engage in activity if it's seen as valuable by a customer. And we are already at Kalmar, has this customer mindset. But putting a lean sort of bracket around that makes it more powerful. And then secondly, again, as I said earlier, Kalmar has had many distractions around this. Again, no need to rehash that, but we are now very clearly want Kalmar, very focused on the future. And also with the exit of the heavy crane activity, our portfolio is clearly driven. So this is the excellent time to have started on a transformation program that has -- you'll see the work streams there. A number of these initiatives and are currently working, how I should say, very focused on delivering that and addressing. I'm not going to read them all out, but product cost, indirect cost, operating model, et cetera. So this will deliver a dramatic step change in our margins, if you like. So far, I talked about many things are happening in the market. But here, we're talking about things we're doing inside our 4 walls, inside our own kitchen. And I'm quite, how should I say, enthusiastic quite sort of like looking forward to the results. And one example, you see on the next slide here. So this is -- lean focus -- these were a couple of old friends of mine from my Danaher days. We engage them -- and we did a transformation in our Ottawa plant, which was struggling from an output perspective, a problem against a high level of orders, right? We started with the Transformation Boot Camp. I'm not going to go through that. I just want to highlight that in the space of 1.5 quarter, we achieved a 41% improvement of output if you like, 41%. So this is just a harbinger of more good stuff to come here. Coming to the end there, basically what a great opportunity Kalmar is. I hope we're able to sort of convey that. I guess, we had the 5,000-plus people we are very enthusiastic and very committed and very positive about the future. We've got this excellent, how I should say, 65,000 units of installed base replacement market, we got service opportunities and also we're leading the future for zero emission solutions, electrification and all the rest of it, and that gets us basically at the top of the agenda of our customers. We're also benefiting from megatrends that are basically driving growth that is faster than GDP. We talked about the warehousing, we talked about the model shift and there are more around that, right? Then we'll see that our execution drives margin expansion, if you like, not just on the service side, also on the equipment side. And that, of course, is further enhanced and compounded by a step change in productivity with our focus on operational performance and the lean implementation across the organization. So thank you for having joined me in the last 30 minutes on this journey, and I hope you're equally excited as I am because I'm very excited. Thank you.

Thank you, Michel, and let's welcome also Mika back on the stage to answer questions for the next 10 minutes. And I guess we had Erkki Vesola, who did not have an opportunity to ask the first instance, so let's start with him.

With the divestment of the heavy port equipment business, are you going to lose these big terminal operators as customers you no longer are a one-stop shop for them.

You want a short or long answer. Short answer is no.

So is this meaningful at all?

So it's meaningful for us because we have basically separated ourselves in a way from a product range which in itself was not that profitable, if you like. But the core active of the automation is now around the straddles and the shuttles. And that, for example, with APMT is a good customer, but also other customers. I was in Victoria terminal in that -- I say Melbourne there, where we have that same thing. The core of the automation is more around the straddles, and we continue to have that relationship across that how should I say, a product category.

Yes, I think there are large professional buying organizations, and they buy best-of-breed from global operators. Today, if you want to have an automated horizontal transportation through straddles, you have a one place to go, which is Kalmar.

Okay. Let's give turn to Massimiliano here.

My first question would be on the service business. And if you could tell us more or less how much of the service business comes from the heavy cranes business versus the mobile equipment.

Thomas can answer that in the breakout session, but the main point is that we will continue to service that category, right? Because the fact that we are no longer a supplier of the new cranes doesn't mean that we have to stop to service them, if you like. So it's a relatively small portion. I don't have the number right in front of me. But again, that will continue to be there. Did you say EUR 4 million -- 4% of our total, okay, 4%.

The issue there is that the large terminals are usually heavily unionized, so they do most of the maintenance work on their own, whereas Michel pointed out, the smaller terminals and operators are quite happy to outsource the services.

Okay, clear. And my second one would be, if you could maybe comment on the margin profile of the Eco portfolio versus the traditional mobile equipment business.

The comment I would make is that -- and that's, in general, true at this stage of the phase where we are that we see more attractive margins on the Eco portfolio and also around the electric portfolio.

Okay. Thank you. Let's give the next question to Panu Laitinmäki, if you have -- sorry, then Antti Kansanen.

Antti Kansanen, SEB. A question on the electrification. And on those business cases where it makes financial sense from kind of a cost of ownership point of view. Are you seeing that it kind of shortens the replacement cycles that customers are actually kind of investing to new ones earlier than they would traditionally do?

Also there, the answer is yes. And again, there are different drivers, if you like. But if you have -- let's simply say you go back to California, if you have a legislative stop, if you like. So then maybe after 5 years, you have a Reachstacker which is still sort of using a diesel then the diesel units will have to be sold and will be sold to somebody who can still operate it, if you like. So for a number of those people who are forced to do so, it will shorten the cycle. In other cases, people where they're not forced if you like, they will then basically take a view as to which units to replace with the electric Reachstackers and which units to maybe replace with other solutions there, I guess.

Okay. And then the second one is that you're a leader in that market segment. So how wide is the -- can you describe the gap to your competitors? I mean, from production or R&D point of view, how many years you are in advance to your closest competitor?

I wouldn't want to express ourselves in years. But if I think about our Stargard factory, where we basically -- a number of years ago, took a decision to move manufacturing operations from different locations, if you like, in a higher cost basis, if you like, we had a greenfield operation there. And I don't want to comment about our competitors, but we see that there are competitors who have maybe a less favorable manufacturing base. So that's an element there. And I guess also, we have been able to sort of pull, how I should say, as we are -- Kalmar been pulling engineering resources, if you like, so we can benefit from that. So I think we're a couple of elements where we are probably better positioned from a manufacturing perspective and better positioned from an R&D amortization across a wider pool of vehicles. I don't know whether you want to add something there?

Yes. I think to one way to -- I mean, you will see product introductions coming from other. But the fact of the matter is that we are live and kicking on that one. And if I take the terminal tractors, an example, where we've been on that track longest -- we are now in the process of planning and introducing the third-generation electric vehicle. One thing we have learned on the way is that the first generation usually is sort of a learning opportunity as well. And once you start to develop better understanding what it requires and that what you need into account, you tend to have a better product maturity. You look at our competitors across the board, people are talking about first-generation introductions.

Yes, I was perhaps just kind of alluding. When you did this transformation, was it kind of a -- what was the biggest pain point? Was it kind of designing or producing it in a profitable manner? What's more difficult?

I guess the challenges are more around design because it is a pioneering design, if you like. But that's why you learn, right? That's why I do incremental changes. It's another lean principle, right? So baby steps, every step will get a little bit better.

Okay. Let's take one question from the virtual audience at this stage. Yes. We have Magnus Kruber is asking actually. In what degree you're expecting us to introduce a battery as a service by 2030, and are we going to take the batteries to our balance sheet in the future?

That's an interesting thought. Let's leave it that.

I would say that we pursue that, that would be because that would actually considerably reduce the CapEx requirement from customers. And we are kind of a little bit going into that, and maybe Thomas can comment that in his presentation as well. The issue there today is that resale value of the used batteries, the market value has not been established. And if you don't know the end value of the product, it's still very hard to kind of developed that or expanded at the moment. I think that will happen soon at the moment and it certainly. We generally don't take them. We have a very good and growing fleet base today in terms of leased equipment today. Those leases are usually held by the financial institutions and we take care of the maintenance of the equipment. So I don't think we have any plans to take those on board as such into our balance sheet.

Thank you. Let's take next question from the -- from -- on my left-hand side of the audience.

This is Tom from Carnegie, again. I follow Cargotec many years. I've seen this kind of ramp-up of the [ Tampere ] R&D center and the investments into the R&D center also in the southern part of Sweden. So I wonder a bit what are the roles of these kind of 2 R&D centers going forward with the new strategy, you built this big automation hub in Tampere. And I guess the straddle carrier concept is kind of already up and running and you don't need to do more trials to get that running. So...

I think, first of all, I'm extremely happy and proud about what we have achieved and some of that we did centrally because when you want to do a big change and accelerate things generally happens when it's not too close to operations, and that's what we have consciously done. Now in the connection of that operational mode we announced in Q3, we are moving all of this technology ownership into the businesses directly. You will actually have 2 gentlemen today Pekka and Tommi talking about that technology in the breakout session as well, and they can happily share with you that one. The role of, for example, Tampere center is still very critical for us going forward. Even though we won't necessarily pursue all aspects of the port automation because the market structure is not that attractive from our point of view. The robotics and semi-autonomous and autonomous capabilities in all of our products are continued. We have the first semiautonomous and autonomous cranes now going to MacGregor. Hiab will more be a question that the -- if you can make that crane for example, lift semiautonomous first and then fully autonomic, the requirement for competent operator will go down. So I see the robot is an autonomous, requires increasing across all of our offering as such. And same goes for example, for electrification as well. So -- and the digitalization is becoming more mature. But again, we have a lot of capabilities and very closely connected, for example, to our services expansion as well.

What do you do then in Lidhult. What is that kind of R&D center focusing on if you have robotization in Tampere?

So first of all, I will answer that in a second round. The benefit, of course, is we have a central and Tommi, who will be in the breakout session, is heading our central strategy sustainability in technology function, if you like. So part of what we try to do is we try to sort of have competent centers who are serving, if you like, multiple divisions, et cetera. So the one in [indiscernible] what you call Southern Sweden, I mean, when driving from Copenhagen I call it Northern Sweden because it's a long way to get there, but it's probably still technically Southern Sweden, if you like. It's basically born from the counterbalance activity, if you like. So their focus is on the Reachstackers, on the forklifts and the empties, if you like. So that's their sweet spot product wise. But we'd like to basically benefit from the technology because there are so many synergies there, we can apply some of the technology we developed there on the terminal tractors. We can use, for example, Reachstacker technology that can be applied in -- sorry, which I was going to say shuttle straddle technology in the Reachstackers, et cetera. And that's why Tommi, who's here has a mandate to basically -- and of course, in the past, people were sort of thinking about their own little background, if you like, to sort of cooperate more. And we are doing that, as I said earlier, we are one Kalmar, we have the benefit, but we can lever that even more, and that's why these centers are operating quite intensely.

Thank you, Michel. Thank you, Mika, and thanks for all the questions. But yes. Time to move forward. And next speaker is our CFO, Mikko Puolakka, who is going to show you how we will make the step change in financial performance and residence. With that.

Good afternoon from my side. You have heard great presentations from Scott and Michel laying out the high qualities of our Kalmar and higher businesses. I have been now with Cargotec 6 years. And during this time, we have made the company definitely a better company. However, if we think our long-term targets, we have not been able to break the 10% comparable operating profit mark so far. This will change now with the very focused strategy, we have all the needed ingredients in place to make a step change in our profitability and overall financial performance. But let's have a look first on how the core businesses stand out in the overall Cargotec context. Our core businesses represent roughly 85% of total Cargotec revenues as of today if we take the last 12 months revenues. Core businesses are highly profitable, almost 11% comparable operating profit based on the last 12 months. And this assumes also the full group overhead. So we have calculated the group overheads to the core business. Core businesses have a sizable service revenues over EUR 900 million. This is 60% higher than it was back in 2013. And as you have heard already earlier, it's highly profitable. EUR 180 million, so 20% comparable operating profit margin. And in core businesses, we have EUR 800 million revenues coming from Eco portfolio. This is an extremely important number to remember because as you heard from Scott and Michel, this is one of the levers for us to grow in a profitable manner also going forward. Let's have a look at how our core businesses have been performing. On the left-hand side, you can see our core businesses, Hiab and Kalmar, which are representing growth and quality earnings. Sales have been growing in the average 5% per annum. And also, like you heard earlier, also services have been growing 5% annually. Core businesses profitability is now around 10% and continuously improving. Like in the previous page, also in this illustration, the core business includes the group overheads. The noncore businesses, i.e., Kalmar heavy cranes and MacGregor have unfortunately gone to the wrong direction, diluting the overall group results and keeping us below that 10%. In the noncore business, we have had also most of the one-off costs. For the noncore business, those one-off costs were EUR 250 million during 2019 and 2022. The core businesses are well balanced, as you can see from this page, very similar revenues, Kalmar EUR 1.7 billion of revenues, Hiab EUR 1.5 billion revenues during the last 12 months. Both businesses having very solid track record and delivering nice profitability and also improving profitability even in difficult market conditions like back in 2020, 2021. The solid performance of core businesses is also visible in cash flows. This picture shows the operating cash flow versus operating profit. And as you can see from the blue line, representing the core business is very resilient cash flow being in most of the time, above 100%. Now during the last 2 years, we have been also in the core businesses slightly below 100%. And this is due to the fact that there has been significant component shortages, and due to that, we have had abnormally high inventories. Our net working capital is today roughly EUR 200 million higher than it was 2 years ago. But we expect that this situation will return again back to the normal level once the supply constraints will ease. As shown earlier, Cargotec's moderate and volatile profitability is very much attributable to the noncore businesses. And like we have communicated earlier, we will make a step change by executing the exit from these businesses. Let me show what are the next steps in -- or the latest information on this area. So the Kalmar heavy cranes exit, we signed a deal with our former subcontractor, Rainbow Industries Cooperation, a Chinese company in July. As we speak today, we are finalizing the transaction or completion of the transaction. We retain still the order book. We have roughly EUR 80 million of order book. Most of that will be delivered by the end of next year. We estimate that this business will generate still a small, roughly single-digit negative impact or loss in Kalmar's next year's results due to the fairly low volume and the weaker project margins in this business. We have announced also yesterday that MacGregor is not going to be part of Cargotec's business portfolio in the future. Like discussed already earlier, we will start the divestment process later. First, we want to see the financial markets to improve. And then secondly, we want to have a bit more positive quarters behind us in MacGregor. As a reminder, MacGregor's quarter 1 was breakeven. Quarter 2 was minus EUR 7 million. And now quarter 3 was plus EUR 3 million. We expect that MacGregor's profitability will improve next year. Firstly, we have roughly 1.6 book-to-bill based on the last 12 months' orders. We have had very strong orders in merchant and in services. And these have been the businesses, the solidly performing businesses within MacGregor. We will see increasing revenues, thanks to these orders next year. Secondly, we have started a new restructuring program in MacGregor offshore business to address the weak profitability of that business. We will reduce offshore business overhead costs by EUR 12 million and roughly EUR 10 million of this will be visible already in next year's income statement. MacGregor is definitely not a bad business. It has been impacted by the low markets, as you can see on the left-hand chart now for several years. 2021 was already a better year. And if you look the outlook also, the markets are more solid going forward. MacGregor is also nicely positioned in those markets which are just in the early phase of the economic cycle, as you can see on the right-hand side. RoRo vessels, dry bulk vessels and carriers. These are the strongholds of MacGregor merchant business. You have seen in the previous pages, the strong financial resiliency of our core businesses. What is behind that? The core businesses are highly diversified. If we look from a geographical point of view or from the end customer segment point of view. We have extremely large number of customers, both in Hiab as well as in Kalmar sizable service business, like I said, over EUR 900 million and over 250,000 active machines around the world, which need to be replaced at some point of time, like described by Scott and Michel. These are the factors which provide us not only growth opportunities but also resiliency in weaker market conditions. But we are not relying only on markets. We have done several own self-help actions to improve our operations. Let me share a couple of these. We have done significant changes in our operating model and factory footprint in order to get better scalability and lower product cost. We are in assembly-only operations today, very asset-light operations. And if we look at our core businesses, return on capital employed, that is clearly, clearly above our long-term 15% that we have communicated earlier. Over the years, we have reduced number of assembly sites for economies of scale. Michel referred, for example, to the forklift production which we moved from Sweden to Poland to consolidate and to get better economies of scale. We have done several improvements also in our supply chain management. Like in Kalmar, we have reduced our end-to-end lead times by several weeks, have established service web shops, both in Kalmar as well as in Hiab, consolidated service warehouses into larger entities. And thanks to these improvements, we are now in a much better position even in the current supply environment compared to, for example, 2017 situation. Scott and Michel referred also to higher business system, Kalmar operational excellence, several actions based on the lean improvements. All of these actions are also helping us not only in the past but also in the future to grow in a profitable manner, but also to be more agile in case there is market volatility. Growing our businesses requires, of course, also a strong balance sheet and that we have. Our liquidity is over EUR 600 million on a very good level, taking even into account the next 15 months debt repayments. Our liquidity has also remained stable despite the previously mentioned EUR 200 million increase in the net working capital. We do not have any major debt repayments coming in the -- in the coming years. 60% of our debt portfolio is fixed with fixed interest rates. So in this kind of market environment, a 2% unit increase in the market rates would increase our average interest rate from current 1.3% to 1.8%. So very nicely positioned and hedged also from the interest rate point of view. And gearing improving continuously, now 30% at the end of September. As you saw earlier also, our core businesses have a very stable cash flow. This allows us to invest in growth initiatives, but also initiatives which help us to outperform, for example, our competitors in the new product innovations. We will support growth with acquisitions. Like in the past, also, we believe that in the future, we will generate the best value from acquisitions from both bolt-on type of acquisitions. Good example is the integrating case in Hiab, which Scott referred in his presentation. More than doubling the profitability since we have acquired the company and significantly increasing the service revenues by integrating it into Hiab's service network. We are also leading our story in sustainability matters. We will invest in R&D, electrification, other types of power sources, automation, robotization. We will invest also to develop our supply chain, for example, towards more sustainable, steel like for fossil-free steel. And we expect that the R&D expenditure will remain on these kind of levels as a percentage of sales also going forward. And last but not least, our policy has been to distribute dividends, 30% to 50% on a growing basis to our shareholders. And during the last 9 years, we have been on the higher range of -- upper level of that range. Last 2.5 years, operating environment has been definitely a very interesting and a great learning experience. I would say that we have very successfully dealt with those market events. Already before the COVID, we have developed different kind of financial scenarios and then the self-help actions for every scenario. And thanks to those plans, we were able to put COVID response plans in practice or take into those into use in a very short notice. In 4 weeks' time, basically, we were able to take Cargotec's fixed cost base down by EUR 10 million on a monthly basis during April, September time period. So cutting fixed cost by EUR 60 million in 2020 to basically offset a 20% decline in sales and protect our profitability. Like in many other companies, we have had shortages in components as referred earlier. This has led to higher inventories, but this is the conscious decisions. We have a strong balance sheet, and we have selected to invest in inventories in order to maximize the deliveries from our order book. And we have tackled through inflation, I would say, successfully. We have increased the prices, both in Hiab and in Kalmar more than 20% since the beginning of 2021. And with these actions, we have been able to protect our profitability, as you can see on the right-hand side. The uncertainty will continue. To start with, we have a very high order book, EUR 3.7 billion at the end of September. But like during the COVID environment, also, we are currently, as we speak, maintaining different kind of financial scenarios and the self-help actions to those financial scenarios. So for example, if the revenues would go down by 25%, we have a toolbox how to maintain the profitability on the double-digit comparable operating profit level in our core businesses. We would start with the easier actions like cutting internal development, traveling, discretionary spend. If the downturn would continue, we would go into more severe actions, site closures, temporary layoffs, even permanent layoffs. But we would be also bold in making acquisitions in a difficult market condition using the opportunity to find M&A targets. And on the right-hand side, you can see that how fast we were able to act on the market conditions. Let's have a look on our long-term performance targets. Like Mikko described, we have 4 performance targets, 2 for sustainability and 2 for financial performance. I will focus here on the financial part. We want to grow faster than the market and the market we measure based on the real GDP growth as reported by IMF. And as I remember -- as I recollection, Hiab has been growing 6% per annum, Kalmar 4%. But we want to grow in a profitable manner. We target to reach 12% comparable operating profit by 2025 and 15% by 2030. We have had significant one-off costs, as described earlier in our noncore businesses. These plans do not assume that we have that kind of one-off costs going forward. Other financial targets like growing dividend payments and the gearing will remain unchanged. Let me illustrate how we will reach first the 12% and then continue from there to 15%. Our starting point is the quarter 3 last 12 months comparable operating profit of 7.7%, including everything, the heavy cranes, the MacGregor business. By exiting the Kalmar heavy cranes business, which has made roughly EUR 20 million loss in 2021 and also EUR 20 million loss during the last 12 months' time, we are reaching 8.4% comparable operating profit. Assuming the current performance of MacGregor and divesting MacGregor, we are already at 10.8%. We have several initiatives ongoing, supporting the reaching of 12% and the 15% target. Firstly, we will improve the product as well as services sales margins, like described by Michel and Scott. We will do continuous improvements in our factory operations based on lean, operational excellence program in Kalmar, Hiab business system. Design to cost actions to lower the product cost and then investments in pricing processes to elevate the product margins. Our core businesses services have been growing 5% per annum. We have 250,000 units of installed base where we want to grow the capture rates. This is a great opportunity to grow sales in a profitable manner. And last but not least, in the sales margin, we have great opportunities in the sustainable solutions offering. Our extensive solutions offering with the help of that enables us to grow in a profitable manner. In the productivity area, we have several topics ongoing. The Hiab business system, the Kalmar operational excellence. We have been consolidating in the past years from 100 locations our old back-office activities where we can do process improvements and then have our scalable back office activities. So as you can see, we have a lot of initiatives in place already in the past and also ongoing at the moment to bring us to 12% and then continue from there to 15%. We have come a long journey to be today's Cargotec. With the actions we have now been putting in place and which are still to come, as described earlier, we create a very strong foundation. As you have seen, our core businesses delivered growth as well as solid profitability and cash flow. By solving customer sustainability challenges, we can grow profitably for many years to come. I'm confident that by executing the refocused strategy, we have all the building blocks in our hands to reach our previously shown performance targets. Thank you.

Thank you, Mikko. And with the refocused strategy, I think that we are well positioned to reach those targets. And later in the sustainability breakout session by our Head of Sustainability, we will also share with you the access to it the sustainability side of the targets. So we will first have a 5-minute Q&A with Mikko, and then the rest of the keynote speakers will join for the final Q&A.

So with that, let's give them turn for the first question from Massimiliano..

I have two questions, both on the margin target. So clearly, okay, in the last 12 months, 10.8% margin in the core business, but there were price cost issues, component shortages issues and et cetera. If we look at Q3 numbers, you disclosed that Kalmar was close to 11%. And we know [indiscernible] which already puts you at very close to 12%, if not 12% already. So I was wondering, given that in Q3, you were already at 12%, is it conservative? Was it a good mix in terms of services versus equipment in Q3 specifically? Or how should I think about the fact that you are already at 12%, more or less in Q3.

Yes, it's true that we are definitely having a headwind currently coming from the supply chain. And when the supply chain will normalize, definitely, we can make certain improvements from the pricing, from the, let's say, smoother factory operations. But I would say that let's first get to the 12%. And if we are able to get to the 12% faster than 2025, I think everybody is happy with that. We have an ambitious 15% target, then to continue there.

Yes. I strongly believe that you need to be able to walk before you can run. And I saw some comments coming earlier and that we never hit the 10% target. Well, if you look at actually the underlying businesses, we have above that 10%. But what we didn't take into account, and we published that 10% at that stage is how long and how difficult the macroeconomic cycle is. So that's been the missing piece in there. Then you can ask it is that 15% feasible for us? And I think there are two questions. First of all, does the market structure enable you to have the 15%? And I think definitely yes, because, first of all, the market structure is healthy, especially in the new core businesses. We have a large number of relatively small buyers. So the pricing and selling power is relatively good for us, and we are the market leader in almost every segment. So on the leadership position, it's relatively sort of large customer base. The market structure definitely enables you to do that one. Secondly, are we able to do that one? But I think we have the playbook ready today, and you heard a lot about that 1 today already for Michel and Scott, and you will hear more from to other people as well. And the sort of continuous improvement in our own internal operation will continue to happen through the lean and other execution. The pricing power will be there definitely for us, and we have developed our pricing capabilities quite a lot. And then the services, you saw more than 20% operational margin now and with the growth we are expecting from services, that will drive us there. So I think the 15% is entire reachable and we have the tools how we're going to get there as well.

Let's take the next question from Erkki Vesola..

Yes, again, Just to be more specific regarding this jump from 12 to 15, could you put these actions you're planning in order of importance, when you talk about it's just lean and services and so forth.

Yes, I would say that perhaps the services is 1 of the biggest levers for us. Like I said, we have 250,000 units kind of installed base, and we are definitely not yet done with the capture rate for that. Then the other element is what you saw, for example, in Michel's presentation that we are in a very early phase of the sustainable solutions still in revenues. And these sustainable solutions are with higher margins -- higher sales margins compared to the traditional diesel-powered equipment. So I would say that, that is -- it's difficult perhaps to say that which one is a bigger lever. But definitely, these are the two big levers for us, the sustainable solutions share growing significantly from the current.

And I would say also that the internal process development is a bit more boring, difficult to put an exit number on that one. But if you look at the close to 12% operating margin, we have it, it's against serious headwinds in terms of our sales margin because of the supply chain issues. And secondly, we incur considerable extra cost in terms of indirect costs. We talk about probably EUR 200 million, EUR 300 million in terms of extra cost handling with the current situation. So if you take the assumption that we are generally able to manage our internal processes more effective, there clearly are points in there as well.

One question, if I may, regarding the sale of MacGregor, is it more important that you make a reasonable profit on the sale or that you avoid a loss when selling it?

Of course, we would like to maximize the value from MacGregor. When the time is right, like I said, from the capital markets point of view as well as we have enough let's say, track record in MacGregor's point of view from profitable quarters. I would say that then we make the decision whether the sales price is above or below the book value.

Yes. I would also enhance that I think there is -- we fully understand that there is a certain value triggering an exit of MacGregor, and it enables us better to focus on core businesses. So they are not going to wait forever to sort of try to maximize the opportunity. And then the question is that when we feel that the price is good enough for us, and that's always what the buyer is willing to buy and we are willing to sell, that will when we move forward.

So divesting that is more important than if there's a price tag of minus or plus EUR 10 million?

Exactly.

Yes. I mean, ultimately, we need to make the final call because sometimes just waiting for the that possible best deal might never materialize.

Let's now invite Scott and Michel to join Mikko and Mika for the final Q&A. And whilst guys are walking on the stage, we have 1 question from the virtual audience, and that is related to the operating model. So maybe Mikko is in the best position to answer that one. So we have the group cost roughly EUR 40 million per year. How this is going to look in the future when we move more personnel to business areas and possibly divest -- or divest MacGregor?

Thanks for the good question. I would say that on apples-to-apples basis, we should see roughly EUR 10 million reduction, i.e., EUR 10 million roughly moving from group to the business areas. This does not assume any, let's say, if we would sponsor, for example, some sustainability or digitalization developments on the group level. But on apples-to-apples basis, we should see roughly EUR 10 million costs moving from the group to business areas.

In terms of that doesn't take into account the MacGregor potential exit. And obviously, I would say that you would roughly estimate in terms of the revenue proportion of the cost in the overheads in there. So obviously, MacGregor being considerably smaller business today than the Hiab and Kalmar smaller proportion of the cost would move out in the exit of MacGregor as well.

Okay. Then I have another question from the audience. It's about battery value. When we sell a battery electric vehicle, what is the pass-through of the battery cost when we sell it to customer? If you think about, for example, reachstacker. So I guess.

The size of the battery relative to the total equipment -- or is that.

Okay, it's a pass-through. And when we need to also sell the battery, which is quite.

So the battery is a significant portion, and it depends on the size of the battery. So you can have large batteries where you talk north of EUR 100,000 in terms of cost. So that can be quite significant.

Again, for something like terminal tractor, that cost can be a fairly significant part of the cost. When you go to the reachstacker which usually goes for EUR 0.5 million or up to EUR 1 million, then of course, relatively speaking, that cost is not that significant.

I guess it's also fair to say that due to this cost of the battery, the electric machine's value is typically 2x to 3x higher even than the diesel. But the sales margin from that kind of electrified machine is on a very healthy level. So we are earning nice margins on those.

And then, of course, on the Hiab side, for truck mounted pork lifts, it's a much smaller percent proportion to the difference in the size of the vehicle and the overall selling price.

Thank you. Let's give turn to Andre Kukhnin.

A couple of Kalmar questions. Firstly, if you look at the past couple of years, you have a lot of clients who have been in a quite chaotic environment with all of the port congestion and logistics issues and so forth. So let's assume that these start to now fade and we don't have a super dramatic recession. What do you think your clients will be busy doing and investing that they haven't been able to maybe put focus on in the past 18 months or so?

So they will continue to invest basically in the operations. Sustainability, as I said, I mean, repeating a little bit of that is going to be a key element. And of course, a lot of the congestion you talk about has been taken, if you think about the Long Beach, the large ports, if you like. So there, we are exposed from perhaps the straddle and the shuttles, if you like. I guess the other activities are in the smaller ports, if you like, which have been maybe hit a little bit less by that. I guess if you think about Long Beach, where you had at some point in time a traffic jam of so many vessels which were basically waiting to be unloaded if you like. So that has been most of the ports have been impacted there. I guess at this stage, things are getting easier, if you like, container rates are coming down. And also, people are finding the lost containers, I guess the sort of -- it's a bit more balance there. I think things are getting slowly back to normal, if you like. But there won't be, in my mind, a different agenda because of that, and people will continue to invest like, for example, the larger terminal operators in port automation, the straddles will play a big role in there. And then, I guess, the inland terminals, the smaller terminals will continue to invest in our equipment the reachstackers, the empties and et cetera.

Okay. And then the second one would be that if there's a bit more near-shoring and localizing of supply chain, does it kind of change the balance of investing in more into small ports, intermodal ports and so forth. So in Europe and the U.S.?

Yes. So that is going to happen, if you like. And the nearshoring is a bit of a -- this is maybe an interesting dinner conversation around that. I guess the question is how much volume will you actually nearshore. And what you typically see is that people are not necessarily going completely nearshore, but they're looking for alternative supply chains that if one supply chain drives up that as an alternative one, and that actually drives more demand, if you like. So there is because the cost differences are quite substantial. If you have a factory now in a faraway place. And if you put that nearby, these costs are so much higher. And the transportation costs, let's not forget, transportation cost is trivial in the total balance, if you like. So it's not about cost. It's all around reliability, if you like. So this will drive more investments in, as you were saying yourself, in smaller ports and the backup lines people are building will drive more and more demand. So in that sense, you talk about megatrends, which will actually drive demand for Kalmar products even further.

Mark Koolan from Nordea. I have a question from Mikko regarding your balance sheet financing. How do you see the bond market at the moment? And are you planning to stay active in that front regarding your future financing needs?

Thank you for the good question. I think at the moment, the bond market is a bit turbulent. We do not have, as shown on the page, we do not have kind of imminent refinancing needs coming up in the next 15 months or so. So most probably, the bilateral market might be more for us in this situation.

If you remember, of course, it depends on the M&A pipeline, but -- and as Mikko showed in our sort of current liquidity and debt maturity is in a very good position, a very large part of that one is the fixed rate loans as well. Now we have about EUR 200 million or so extra net working capital out there because of the supply chain issue. So we expect that to sort of come home over the next maybe 24 months or so, depending how this will evolve. And then obviously, we would expect also in that time frame to get the proceeds from the MacGregor sale as well. So from the balance sheet point of view, I think depending on how active it can be in M&A, we don't really need a lot of financing needs in the near term.

Again just a housekeeping question to Michel. How big is the current price difference between diesel and electric like-for-like reach stacker, for instance? And how do you expect this to evolve going forward?

Yes. So I'd like to sort of avoid that question. And I'd like to point out -- yes, I'm just open about it, right? And I'd like to sort of highlight the 20% lower cost over a 5-year life cycle, if you like. So you're really comparing apples and oranges because if you have a battery there. So an electric unit is more expensive and then it depends on the size of the battery, if you like. So it is more expensive. But really, you're comparing apples and oranges because you get access now to electric power, which is typically less expensive, if you like. So we'd like to highlight the total cost of ownership right. again, in that example, we were 20% less than that. But your first cost is a bit higher, but again, that's an apple and oranges. And that's why I'm avoiding to give you a numerical answer, as you can see how I skillfully maneuver away from doing that because that depends on the size of the battery. So it depends on so many things, if you like.

That is it 20%, 30%, 50%?

So you're trying to sort of like say something like -- it could be in that low 20%, 30% range is quite possible, yes.

Okay. We have one question on my left-hand side again.

Yes, this is Tom again. I wonder about the acquisitions. I mean, I know that you have spent a lot of money over the years on MacGregor and not much on Kalmar and some on Hiab. So perhaps this is the right moment to tell why this happened? And what the outlook is? I mean, do you see a lot of targets, or are they like two attractive assets for families that own these that we will wait many years before something happens?

First of all, I don't think our overall acquisition history is not particularly attractive, and you pointed out, especially, I think offshore acquisitions in 2013, and there was still plan to lease MacGregor where, of course, in 2020 hindsight, not the right ones. I do think that the acquisition of TTS makes a lot of sense, and we can already see actually those numbers started to come through next year on that one. So that was a good acquisition. The acquisitions we've done in Hiab so far have been too few. But what we have done there have delivered excellent returns for us. And we'd like to do more. I think the overall, especially in Hiab, we're in discussions or approached more than 40 different target companies. And I think it's a question of, again, as you know, with especially as most of those are family owned, you need to have that relationship build out, and then you need to see how things develop. But when you start to approach such a large number of targets, eventually, things start to drop out of that one into our benefits. So I do see that the acquisition pace will accelerate. And especially, I think if we are heading to the harder economic times, that I see that as an opportunity for us on that one. In Kalmar side, I think, obviously, the -- especially in the last 2 to 3 years, we were occupied with some other merger discussion. And that's certainly a pipeline we'd like to develop there as well now going forward. And we have started activities on that one. So I do see adjacent opportunities in Kalmar side as well.

So basically, they have not been willing sellers, especially of Hiab assets the last 10 years. It's not the matter that you thought you could create more value by spending money on MacGregor assets that were available at lower prices. It's just that assets have not been for sale basically.

Asset have not been -- asset it has not been a sale, especially for the right price.

And then on Kalmar, just like a small detail, the terminal tractors you show that you are #1 in the U.S. But what about Europe and I don't know, should you do something about that position if that's -- in a future core business?

As you can see, we were arrogant enough to point out where we were #1. So the fact that we didn't say that we're #1 in Europe is the reason for that because we're not #1 in Europe, right? So -- and the market in Europe is a bit smaller in that sense. So it actually drives us there. But it is true that we have a platform and a manufacturing base in Stargard as well as we have the ability to manufacture also terminal tractors in our factory in China, so that we are well positioned to go in that direction. And we actually focused on -- we've made some changes also in our internal organization. So we have a stronger focus on Europe, as in Asia in order to gain some market share there.

Okay. Thank you for the great questions and for the great answers. We have now heard 4 excellent keynote presentations by gentlemen over here. We will now take a 15-minute break, but don't go anywhere. We will have 3 Cargotec's focus area, breakout sessions left on sustainability, services and innovation and technology. [Break]

Welcome back. Now it's time for our 3 focus area breakout sessions. Sustainability, services and innovation and technology. The breakouts will start with a short introduction to the topic and then you will have an opportunity for a Q&A session. The live audience will be in a separate meeting room. So please be active and post the questions using the online platform. As you saw in the video, the demand for sustainable solutions is growing. And our next speaker is here covering that topic as well. We published our ambitious performance targets. And our CFO, Mikko Puolakka, already showed you our actions to reach the financial side of the targets. For Cargotec Sustainability is also actions above all. And our next speaker, Päivi Koivisto, will show you our way to CO2 reduction targets.

Thank you, Aki. So good afternoon also from my behalf. So I'm heading sustainability at Cargotec. My name is Päivi Koivisto, and I've now been with the company some 3 years. So let's now talk about sustainability. Especially, let's talk about actions. What have we done so far? What are we planning to do in order to reach our very ambitious sustainability targets? Now you heard Mika earlier today say that we are aiming for the highest ESG standards in our industry. Quite an ambitious target. At the same time, you also heard Scott, Michel, Mika and Mikko state that we believe the profitable growth comes through sustainability. So in a sense, this makes a perfect business sense to have these high ambitions. Now if you want to aim for higher ESG standards, that means that we need to take a holistic approach in sustainability or if you like, address all 3 pillars of sustainability, so including the environmental, social and governance part. For the sustainability or ESG agenda, we have identified the most material topics. For the social part, those are human rights, health and safety, diversity, equity and inclusion. And for governance, sustainable finance, responsible sourcing and sales. Now social and governance matters are utmost important, and we need to work hard on those in order to achieve the highest standards. But we believe that our greatest impact and also the biggest business opportunity comes through environment and actually the climate solutions. So today, I would like to focus on our climate action, explain our targets. And then again, what actions have you already taken and what do we have in the pipeline in order to achieve the target. Now this slide you've seen already a couple of times today, so our 4 performance targets. Still to remind, there are 2 for sustainability, 1 being to have double sales growth in our ECO portfolio compared to the traditional products. The second sustainability target relates directly to the CO2 emissions. There, we have a shorter-term target to reduce our emissions by 25% by the year 2025. And the longer-term target being to reduce our emissions by at least 50% by 2030. And both of those targets are across the value chain. Now let's have a closer look on the longer-term targets, so the 2030 target. And this target is approved by the science-based targets initiative, meaning that it's aligned with the latest science and is supporting to keep global -- to limit global warming to 1.5 degrees by the end of this century. It is, as said, covering the whole value chain. That means the scopes 1, 2 and 3, which means that included our own operations, sourcing activities and then the use of our products. We are well positioned to continue our journey on the climate ambition. We have the data in place, so we know where the biggest emission factors come from. And we also know kind of where to put then the biggest efforts and impact. So the majority of our emissions come from the product use phase, i.e., when our customers use our products on their premises. The second biggest part comes from product manufacturing. So the activities related to producing the raw materials we need to produce our products. Only a very minor part, actually, only around 1% comes from our own operations. So that's minor. But still, of course, utmost important. And actually, for our own operations, we have an even more ambitious target than the science-based validate target, which is to cut the emissions by 50%. In own operations, we want to achieve carbon neutrality by 2030. But it's also good in addition to group level data and understanding Cargotec's carbon footprint, we have carried out so-called life cycle assessments, LCAs. Through those, we understand how the different products are generating CO2 emissions. If the product has an engine, usually the biggest part of the carbon emissions come from the use phase. Then again, for products which do not have an engine, there we need to focus more on the sourcing part and to reduce emissions in the sourcing side. With these LCAs, we've actually also been able to quantify that the electrification strategy indeed is the right strategy also to reduce the CO2 emissions. If you compare an electric-driven machine to a diesel-driven -- fossil fuel-driven machine, on average, the carbon footprint is roughly 60% lower. So clearly lower and makes sense to invest into electric products. Now on the next slide, I would like to explain to you what we've done already so far. So give some examples, what we are planning short term and then also have a glance in the future and what the longer-term ambition is. And here, I would actually like to start by sharing some great news, and I would start from the bottom of this slide related to our own operations. Here, as stated earlier, our target is to become carbon neutral in own operations. And the great news here is that our Hudiksvall Innovation Center in Sweden already today is carbon neutral. So they use only bioheating and green electricity for the operations. Also, the fleet is either HVO 100 -- so biofuel driven or electric. And the site is even looking into opportunities to become carbon positive. So for instance, looking into the possibilities into investing into solar panels, et cetera. Now all of our sites are working towards this target. But as also said earlier, our own operations only represent about 1% of the total footprint. So let's now focus on the high-emitting part of our value chain, which is the use phase of our products. Now you heard already from Michel that thanks to long-term commitment and investments into R&D and innovation, Kalmar today has a fully electric product offering, which as just explained, is great for achieving the climate targets. Now then if you look at Hiab and their products being a bit different, not all having an own engine, also then -- therefore, the strategy is a bit different. And you heard from Scott, the great development on the EPTO, so the electric power takeoff to enable using cranes on trucks without having the idling of the trucks. So the truck doesn't have to be running and emitting emissions at the same time when the crane is being used. Hiab also has the electric [indiscernible] in their offering. So great development in both. Now looking a bit further, so 2022 to 25 million we want to further develop the Eco offering. So that means include more and more products to the Eco offering. But also those products which already today are in the Eco offering like the electric ones, which have 0 tailpipe emissions. There, we want to improve the energy efficiency. And if you think of the current situation, the energy crisis and the rising electricity prices, That, of course, makes perfect sense, both again from the climate perspective, but also from the cost perspective to our customers. So continue developing the Eco offering. At the same time, we want to have a crucial part in transforming the market towards low-carbon solutions. That means that we need to closely cooperate with our customers, understand their challenges and find the best solution to support their needs and also understanding the infrastructure they are working in. So working on that part, that would then help to increase the sale of our ECO portfolio. Now then going forward to 2025, 2030, we strongly believe that the Eco offering will generate the majority of sales. So that was about the product use phase and roughly 70% of our carbon footprint coming from that. Now moving then to the product manufacturing and sourcing activities. If you picture one of our products, you can immediately figure out that it has a lot of steel in it. And steel is one of the most energy -- or most carbon-intensive products on the market. Steel industry actually representing almost 7% of global CO2 emissions. So it's crucial of what we do around steel. First of all, we would need to use as little of steel as we can either through making lighter products or then even finding alternative raw materials to replace steel with a lower carbon footprint material. However, steel due to risk properties will always be needed. And therefore, we need to see how can we actually then use as low carbon footprint steel as we can. And we already, some time ago, published our strategic partnership with SSAB. So we are working with SSAB to find cases where we can use the fossil-free steel. And what you heard from Scott already, we in September, launched the world's first Multilift -- hook lift made out of this fossil-free steel from SSAB, of course, keeping the same other qualities of the product, so same safety features and quality features. Now we've learned from SSAB and other steel producers that fossil-free steel will be commercially available on the market sometime '26, '27. And we don't want to just wait for that to happen. And we're working on other opportunities to reduce the CO2 emissions coming from steel. In concrete terms, it means that today, we are looking into the EAF -- the electric arc furnace deal, so steel, which is made out of scrap metal or recycled steel. The EAF steel's carbon footprint is even 60% lower than the steel made out of iron ore. So great opportunity to reduce the emissions coming from scope 3 upstream. But still going forward to 2025, 2030, we indeed want to increase the share of fossil-free steel in all of our products and looking really forward for that development in the steel industry. So now to sum it up, 3 things I would like you to remember. So first of all, we've set really ambitious targets. So we want to be the industry leader in the ESG standards, and especially ambitious targets for the climate part. Second of all, we have the data in place and we have also identified actions how we get towards those targets. The third point is that this is not an easy right. The targets are indeed challenging. And we, of course, need to see how the world around us unfolds and what's happening on the market, but we strongly believe that this is our way to profitable growth and success in the future. Thank you.

Thank you, So now I would like to invite Michel to join me for the Q&A session for the online audience.

Okay. And let's start with the first question. Actually, I would direct this one to Michel. So Gruber is asking to what degree do you estimate that the ECO portfolio will cannibalize sales in traditional products?

Well, almost by definition, right? Because you have a reach stacker and you have a choice, if you like, as a customer, you need a reachstacker, I should say, you could buy a diesel one and you could buy an eco-efficient one, and of course, you can buy an electric one, if you like. So ultimately, there's just one need for one reachstacker, if I stick to that example. But what we do see is that, that growth is actually twice the rate of the regular portfolio. So it basically is just one product range inside the total range of our vehicles, if you like. So it's not additional demand, but you see that people are coming to us because we have that eco-efficient solution, which they can't find at other suppliers.

Thank you, Michel. And maybe next question to Paivi. So scientists are not are maybe thinking that the 1.5 degree decrease scenario is not viable anymore. So why is Cargotec still committed to this kind of scenario? Is it too ambitious for you?

9 Well, probably the who is asking the question is partly at least referring to the negotiations in Egypt, so the COP27. And indeed, it's scary to see that the commitment level is getting lower. At the same time, all the scientists agree that the 1.5 degree is not a target. It's actually a limit. So we would need to keep global warming below that. And that is also -- it's not only because of the, if you like, the environment, but it's also commercially or economically the most clever way across. There are also studies that the more the temperature rises, the more expensive it gets. And at the same time, every 10th of a degree even that we can reduce the warming is a benefit. So clearly, we want to stick. So clearly, we want to stick to our target and do our part and utmost to keep global warming below 1.5 degrees.

Okay. What is then to our cost to reach our '25 and 2030 targets in CO2 reduction? How much more we need to invest? And what are the other possible costs in there?

So we are currently working on what we call internal mission climate, and we've developed road maps for both Kalmar and Hiab. And at the same time, we are looking then how do we develop this and what is the cost, but there's no one number I can now give out.

I guess, Michel explained earlier that the price and the profitability of electric machines are better, and I guess, we have one question here questionizing that if you have the pass-through from the battery, how come the margins could be higher for the electric products?

Well, that's simply the situation how it plays out at this stage, right? So we do have, indeed, higher margins. But it is a more complicated sell. I guess that was one of the things I was trying to explain earlier, because you need to now sell the vehicle, which is a bit more complicated because of the electric units there also early phases of the manufacturing. So there's not yet the big volumes, if you like, of producing many at scale. And then, of course, this is the additional component of the battery, if you like. So the sales process is a bit more complex. At the same time, needless to say, there are not many players who have that range available, if you like, or some of the players have maybe a hybrid, but not a fully electric range, et cetera. So if you want an electric unit, then there is little choice, if you like. So then you go back to why do customers want that, and that's for the 3 reasons I mentioned earlier, first, not necessarily in order of importance, but either this legislation that says you have to have an electric unit. Secondly, they might have a, should I say, an internal target because they want to adhere to the 1.5 degrees. So they also are looking for ways how they can reduce their own CO2 footprint. And thirdly, it might make financial sense because they live in an environment where the electric cost the kilowatt hours is much lower compared to the same energy, if you like, you could obtain if you go and buy a liter of diesel if you like. So those are the 3 drivers. And then they come to Kalmar and they buy a unit, if you like. At this stage, the margins are still more attractive. What will happen going forward, 2 things will happen. We will be able to manufacture at scale, so our costs will come down. And I guess the situation will become a bit more competitive, if you like, so both will work in the same way, if you like. So that's the business side of it.

Okay. Then you talked about the hybrid straddle and shuttle carriers. But you did not mention hybrid reach stacker. So do you have that product in your portfolio? Or if you don't, why don't?

Well, in the case of the reach stacker, I guess, the hybrid strategy doesn't work if I'm not mistaken, we indeed don't have that particular offering there. But there, we got the eco version, if you like. So we have to fully electric version, or we have the eco one, if you like. So that's the intermediate one. It depends really -- the hybrid makes sense if you have opportunity charging, if you like. So what I've now become an expert more by listening than by analyzing myself. But if you -- a big discussion with the customers is around your use cycles when you have lunch breaks, how many people have lunch break, simultaneously, et cetera, and where you are at that stage. The good thing about these shuttle and straddles is that they basically -- if you look at their operation, they go at some point in time when they drop the container there, they are static for some time, which is a great moment to charge, if you like, and then they go and pick it up on the other side, another great moment to charge, if you like. So that use cycle is more apt for, I guess, a hybrid type, I should say, profile, right?

Good. Given the different nature of products in Hiab, Kalmar, how should we think about the targets? So will the reductions be even split between the business areas? Or do these targets also include MacGregor?

MacGregor has also their climate targets, but now looking maybe on Hiab and Kalmar. So we take their share in the baseline. So how much calmer is today or was in 2019 representing of the Cargotec's footprint and the same for Hiab. And then both have the emission target of minus 50%, but of course, then in absolute terms, and the numbers are not the same because the size of the carbon footprint is different to Kalmar and Hiab.

Okay. Then we have a question on sustainability-linked financing. Do Cargotec have any such financing in the portfolio?

Yes, we have some, still minor, but the trend looks like there's coming more and more. So we have some where the KPIs related to safety then the renewable energy in our own operations and also now on the CO2 targets and reduction path. But still, as said, a minor part of loans related to TSG, but I'm really expecting that to grow in the future.

Okay. Thank you. Then given that 2025 is quite close. So how confident you are that you will reach targets that we have set, the ambitious targets, and how far we have gone since 2019?

Well, as I said, the target is indeed challenging, but I am confident that we can achieve it. It requires, of course, since a big chunk of our emissions come from the customer cooperation, it requires that the market transforms to the way we see it should transform so that customers are more and more willing to buy electric or other eco portfolio offering. So technically, it is possible. It requires a lot from us internally, of course, to cooperate with the customers and then set the market to develop in the favorable direction.

Let me offer an aphorism which is what gets measured gets managed, right? So if you don't have a target, people don't look at it, if you like. So you have to get going at some point in time, I guess, right.

How much have Cargotec reduced the CO2 emissions in 2019?

Now the comparison is not really -- doesn't make sense because of the COVID time. So when sales drops also the emissions drop. So that is not really the way we should look into it. So we look at the longer-term target to '25, 2030.

Okay, so these are absolute targets, I assume?

Indeed, that's a good point. So regardless of how much our sales grow, we still want to cut the emissions by 50%.

Okay. Thank you, Päivi, and thank you, Michel.

Thank you very much.

Thank you.

Waiting for our next speakers from the services to join the session. Paivi and Michel, please. You can join the next room for the next breakout sessions. As the world has limited resources and raw materials, we are moving towards circular economy where the importance of service and maintenance is increasing constantly. Our following speakers have showed that servicing of our vast installed base is also great business. Kalmar and Hiab services generated in the last 12 months together EUR 920 million of sales and EUR 180 million of comparable operating profit. And these guys have not planned to stop there. You will have now excellent opportunity to bombard next speakers with service-related questions. So with that, please welcome on stage, Thomas Malmborg and Michaël Bruninx.

Good morning, good afternoon, everybody, and great to have this opportunity to take you through some specific insights of services business. My name is Michaël Bruninx, and I joined this organization in 2020, and I will guide you through with my colleague, Thomas. So with reference to the information shared earlier today, you've all seen that the service revenue accounts for EUR 920 million, with a EUR 180 million comparable operating profit. Now we have an excellent opportunity to both drive the customer experience and further enhance our loyalty or dealers across the different markets. We have been growing above the market and we believe we can continue to do so going forward. And we believe we can do that with positive operating leverage. We have an excellent installed base, a growing installed base, and that puts us in a unique opportunity to tap into that business opportunity while driving a customer experience. So let us guide you through that in the following slides.

All right. Thank you, Michael. So my name is Thomas, been in the Kalmar since many years back, but since 2017, working with the services. Just a little bit of refresh from previous speakers. Michel mentioned that we had 65,000 machines on the market. So we have a huge installed base, but what we can see here is actually that when we measure the installed base, we measure it based on when machine capture the most, but we have another 7 years of installations, which could add on 30,000 machines. So huge installed base 65,000, which are very, very active. We have 3,000-plus contracts, and we have 1,300 service technicians out there all over the places in 35 countries, service and maintaining the machines. So great, great enablers to run our business even faster in the future. But if we start with the installed base a little bit, this is the biggest and most important enabler for our business to grow further. We do not see any -- or we can say that we see additional business opportunity with electrification. So if somebody thinks that electrification will take out business that will actually add on. And we project that there will not be any significant impact till 2030 when it comes to the spare parts capture rate. So that's really a good opportunity. Connectivity is another enabler. And here, we have machines connected, 14,000 units are connected today. And those are there not only to be connected, but to support the customers in the best possible way helping them in their operations with driving behavior, predictive and maintenance and so on, but it also gives us a great opportunity to build business models. So what can we actually sell to the customers, to the market by understanding the machine behavior. Supply chain transformation. I must say that I'm very proud of that one. We have managed over these kind of difficult years, very resilient performance in our business and that's a lot of thanks to the supply chain team, end to end. Our suppliers, our core team and also our frontline units, driving this and actually increasing the order intake, sales and keeping very resilient in the margins. So really, really great job done. E-commerce, another thing, which we believe is important for us in the future, but also for the customers. Here, we have 24/7 business opportunity. And when we started 2017, we were at, let's say, a couple of percent. Today, we are at 45%. We believe that we can grow that business to close to 60% in a couple of years' time. This tool will actually help us also to not only go for what is needed as a part number that we can add into that one to also have additional components needed. So we really help the customers with e-commerce. And then last but maybe the most complex one is reducing the portfolio. The huge number of equipment, a lot of variations in systems, technologies. Here, we need to look into how can we design the new products in the future, actually also to be a reverse engineered into the old fleet. So taking the good new things for the new products, bring that back to installed base, we can compromise that one and build on less parts and less complexity. If we then continue with something we just created, a new business line, life cycle solutions. We would like to take a bigger responsibility when it comes to the environmental part. We like to reduce emissions and waste, and we believe that we can do a lot in this one here. Installed machines, sold machines, if we repair and maintain those very carefully in rental contracts, in other contracts, then we can bring them back to a very nice used equipment fleet. And we have seen during this time that used equipment is hardware. I mean we can bridge deliveries, which can be late. We can bridge electrified machines where you don't have the infrastructure and the customer not ready. So a lot of opportunities with the used equipment. Then refurbishment, when we trade back machines, we refurbish them in different qualities. We can also refurbish transmissions. We have a setup in Slovenia, where we refurbish used transmissions and bring them back to the market. That's also a responsibility we take when it comes to sustainability, CO2 reduction because we don't reproduce the steel, we save the steel, the core, and build on that one. And that's approximately one transmission 600-kilo steel. So we can calculate that on 500 units in every second year. So quite a lot of savings. Then remanufacture, how do we really take care of the machines when they're coming to its end, what kind of components can we pick from the machines and remanufacture those, reuse them and really having kind of resilient business in the components. And then last but not least, recycling our equipment components when it comes to its end, I think that's also extremely important for us to take end-to-end responsibility, right?

Thank you, Thomas. So let me guide you through some specific developments and maybe I'll start a little bit backward looking. If you take a look at our business, we do see and we believe it's a very resilient business, and it has been proven over many cycles. And we also have proven that we can go it very nicely. Of course, we have an installed base to leverage from. If you take a look at the growth over the last few years, we have been going at 24% from 2020 to the last 12 months running. And while doing so, we have been driving some quite nice operating improvements. And this has been driven by multiple actions. We have indicated the supply chain. We have onboarded many brands in our service network. We consolidated our back office into a customer experience center, where we can also drive further process improvements. And we have been shifting our focus towards recurring service sales and our e-commerce platform. On the right-hand side, you can see that it has been nicely rewarded. I think together with our partners and our dealers as well as all the different organizations across the markets, we have been growing the recurring service sales with 13% yearly. And the e-commerce revenue has increased yearly 26%. So I'm quite pleased about that. So if we refer to recurring service and service sales, this means all our service business, excluding installations and refurbishment of equipment. Looking forward, I still see a good future ahead of us for the simple reason that we have access to a growing installed base. Our installed base is roughly 175,000 units, excluding tail lifts, which had another 2,000 units. So it's a massive installed base, which puts us in a unique position to leverage from and at the same time, continue to drive the customer experience over the life cycle. From those units, we have currently 24,000 units connected, again, puts us in a leading position in the market and also helps us to use those insights to lead to create leads, service leads, maintenance leads, both for our direct service but also for our partner network going forward. And this, I believe, is very important because it will drive partner loyalty, and we will help them to grow while we can continue to improve our customer experience. So this is a win-win opportunity. Looking at the operations, global operations, we still see areas of improvement and drive operational excellence going forward, specifically in the areas of maintenance as well as the installations. I think one sales channel that is extremely well established nowadays is our e-commerce platform. We have invested quite a lot and we'll continue to do so. It is for us strategically important that we can provide the fastest answers to our customers that are in need. And at the same time, we make it so easy to access the information they do require. Looking at the e-commerce adaptation, it has grown up to 65%, short and midterm, I still believe there are some good opportunities to improve in specific markets or with specific product lines, and this is full execution. So going forward, our guidance is we will continue to grow our capture rate above 50%. And the capture rate is the spare part market share versus what we consider as potential models and potential models are based on the type of equipment and the age of the equipment, and how do we participate into the life cycle opportunities. And we will continue to do that within operating profit leverage of above 30%.

Good. Thanks a lot. And if we sum this up a little bit. So what we are saying is that we will grow faster than the market in the future. We have shown over the last years that we had a good momentum, and we are doing the right things. So by listening to this today, we would like to highlight a couple of things. And we would really like to now move forward to leverage on the installed base Hiab 175, Kalmar 65,000. There is more machines out there, which we could take a look at, but really using that as the most important base. Life cycle earnings, taking our responsibility when it comes to pollutions, waste, et cetera. Remanufacture our equipment, remanufacture or components will also give us a great opportunity to drive the business in addition to the transactional business. And then last but not least, the digital service, how can we, with all our connected machines, actually bring more business to ourselves, but also support the customers to operate even better to understand the cost of the equipment and actually benchmarking his own machine with the average of the total installation of equipment, getting a good guidance of how we perform and what we can do better. There is a lot of give and take as Mika was saying before, that we do that together with the customers and drive business out of it. So with that, I think we open up for questions. Thank you.

Thank you, Thomas, and thank you, Michaël. So we have received quite a number of questions from the online audience already. And let's start with one related to capture rates. So I guess this question was already posted during the keynote presentations and the audience is wondering where the capture rates could go. And I guess you showed there for Hiab, you target above 50% and for Kalmar 37% by 2025. But what explains the difference you have in the capture rate in the businesses? Maybe Thomas, how you would reach Michaël's level? Or is it feasible for Kalmar type of business?

I hope, I mean, that must be my target, right, to reach Michaël's level here. But if we look at the Kalmar capture rate, spare parts and how this is divided by, let's say, OEM, Kalmar design or commodities, then we can see that we have a split of quite high OEM and that make this available for, of course, the market to go to the OEMs, I think, to a higher degree than yours, and that could be also where we are a little bit behind in capturing at the same level. So we have 30% Kalmar-made. We have 30% commodity. We have a 30% OEM. We have a very small part, which is actually very special Kalmar-designed. So if we can grow the sign to service, we can also grow the capture rate in a way better.

And maybe to add, I think if we compare our businesses, we have a very dense network of service partners, very close to our customers and those partners, they do attend with contracts and other services to our customer base as we do with our direct service operations. I think time to result is extremely important for our customers. It's about productivity and total cost of ownership. We are quite well established there. And we do have a very good view on our installed base and on our ability to tap into that much better. And as per Thomas messaged earlier, I think the digitalization and the connected fleet will help us to further enhance our position even going forward.

And today, for the first time, we published the profitability of Cargotec services with Hiab and Kalmar combined. And the audience is wondering is there significant differences between the profitability of Hiab and Kalmar services?

No. There is no significant difference between the profitability. I think we are more or less in the same percentage level, yes.

And I guess, we have shared in Cargotec's investor presentation that, for example, the spare parts share of services in Hiab and Kalmar is approximately at the same level to give you some guidance there. Okay. Then we have a question that was targeted, the Hiab, as you disclosed share of recurring services versus nonrecurring. So what you what you define as nonrecurring services and what is requiring maybe if Kalmar can elaborate similar figures, if that's possible.

That's an excellent question. So for us, what we consider as recurring service sales, this is all the transactions and the sales that we can make from the installed base. But we do include pre-commissioning, which is on installations and then also refurbishment of units. So if you discount those 2, we are at a level of 82% as shared by Scott earlier today.

And for Kalmar, it's also what is installed there and what we can take from the machines. And I think we are higher there because we don't have these kind of installations. We have more selling machines and then we take care of it directly to customers. So closer to 95%, I will say, from Kalmar's part.

And you both highlighted e-commerce and rapid growth in that area. So is that something that is unique for Cargotec services? And what kind of advantages e-commerce penetration brings you?

I think e-commerce is an extremely important channel to the market to support our customers, dealers and importers. We believe we have a competitive advantage versus other e-channels given the fact that as an OEM, we make it so easy for customers to look for CL numbers, part numbers, et cetera. And at the same time, we have the ability to ship instantly, so all the orders we get, it guarantees that we can provide the fastest solution to our customer need. And while doing so, we still see good opportunities to even further improve the customer experience or the dealer experience on our platform today. So it isn't a very important channel to support our partners and customers in the marketplace.

So if I add on that a little bit also what we do within the e-commerce in Kalmar is that we developed that now. So you can see also to which machines the part belongs when you pick them or find them in the system. So that's really good. In addition to that one, we will add on also not only the parts but also what could be the surrounding components needed when you buy a hydraulic pump, should have a hoses included or whatever it is. So developing that further is in place for us to grow as well.

One additional comment. If you take a look at the e-commerce, e-commerce is, of course, how fast can you resolve. At the same time, it's back with a very selected inventory level. And also there, I feel very confident that we are quite unique and also have a very strong position to help out the customer needs as good as possible.

But may be the most important 24/7 service.

Okay. For the next question, I guess, knowing both of you, you will give the same answer. But the audience is wondering which one of the services will grow more in the future, which one of the services have more potential?

Which one Kalmar or Hiab?

Yes.

I think to answer it politically correct, I think if you take a look at the capture rate, it gives an indication of what the opportunities are, but you have to take into account how you play. So I think both organizations have very, very good opportunities to continue the growth.

Yes, I think so too. And I think what we see here is that we will grow faster than the market. And then how fast we grow or whom are the winner, I can live with that or I hope you can do as well, right?

I'm not competing with you. We're working together, and we are competing in the external market, and this is where we want to gain market share. We'll continue to do so.

Yes.

Okay. Then next question a little bit around the profitability as well. So EUR 180 million of comparable operating profit in the last 4 quarters. So is Cargotec's strategy to sell equipment at lower price to prioritize service? Or how do you see that?

Maybe if we refer back to Michel's example, I think it was a very nice example earlier today where there's a clear view also from the equipment and equipment colleagues to make sure that we get the right value for the equipment that we design and also that they seek premium of doing that. So I think that's probably the best answer we can give.

Okay. And next question around the service network. So do you utilize same service network, or could you do so in the future?

We have tried that some 13 years back or something like that when we looked at this, but we also saw that different segments, different customers, different products, different skills needed for technicians. So we are not doing that. We have our own road to market for our respective services. So we believe that, that's the success factor.

I think we need to link it back to the customers we serve in the segments, while at the same time, we're smart enough to seek synergies where we can in terms of supply chain of other areas and that we collaborate strongly. But the customer-facing activities are quite specific.

Next question around the route to market strategies. Do you have always the same setup on each market, or does it -- do you have different strategies between the businesses and between different geographies?

So we have in Kalmar, different route to market could be direct. It could be via dealers in different places, so different route to market, which actually support the customer in the best possible way. So there are differences in that one.

Exactly the same. So we make decisions where it makes sense. And of course, we have a lot of activities with partners and deals and they do an excellent job in those areas where they are being appointed. So we will continue to evaluate it as we did and as we go forward.

Maybe then around the equipment leasing business. How does it work? Do you both business areas have leasing business of equipment? And what is the profitability of that one compared to normal services?

I think we see a growing demand specifically if you take a look at, for example, [indiscernible] which gives us a nice opportunity. I'm not in a position to disclose the specifics around the profitability. So I think -- but what I can say is certainly with the electrification that there's an increasing demand and a nice opportunity for us to attend to.

Rental we look at, we rent out equipment, and then we provide the maintenance at the same time in that package and that, that secure also that when we get the machines in return, we can actually have them in good condition for our used equipment fleet. So that's something which is good for us and give us good upsides and over the time, good revenue and profit.

Okay. Thank you, Thomas, and thank you, Michael. So now it's time to move forward to our last focus area, breakout around innovation and technology. So Thomas and Michael will entertain the last breakout group, whilst we introduce Pekka Mikkola and Tommi Pettersson here. They are just about to come on the stage, but thinking about innovation and technology. So innovation has put us in a position to have in the industry first fully electric portfolio. We have also connected our equipment that's helping with the services as we saw. But we have a lot more to come in the future. So with that, stage is yours, Pekka Mikkola and Tommi Pettersson.

Thank you. So we will talk about the -- how we can solve the customer challenges with our innovation and technology. I will spend first 5 -- around 5 minutes on talking about the Kalmar, and how we are doing that. And then Pekka will talk about the Hiab in 5 minutes. Then we have a place for Q&A. So if I talk about the Kalmar, we have 3 areas where we are investing in the technology. One is digitalization, other one is a green energy and the third one is robotics. You saw these terms and these areas already in earlier presentation from Michel and other persons. We are a bit different phases in the all of these areas. On the digitalization, I would say it's a mature technology and customers are also -- the customers understand what it is. They understand what is the value for them. As an example, we have developed our own IoT platform, which is now already in use with our customers, and we are delivering product based on that platform to customers. Example is EcoFlex product, which is then incentifying the customer to utilize the products in an eco-efficient way. It is collecting the data from the machines. It is then analyzing the data. And then based on the analyzed data, it sends the invoice to the customers. So if the customers are using the machine in an eco-efficient way, they pay less. And if they're using it not that eco-efficienty, then they pay more. So that is the example of how we utilize our platform, how we utilize the data in our business -- new business model and incentifying customers to utilize the -- for the eco-efficient usage. The other one is the green energy, and that is booming. All of the customers are asking about electrification. They are asking about the electric solutions, but the more advanced customers, they are also asking what next, what after electrification? What happens then? Are you thinking about the fuel cells? And yes, we are looking into fuel cells, but now we are investing heavily on the electrification because that is what the customer demand is, and that is what the customers need as soon as possible. Then the robotics is in different phases in different segments, in the different market areas with different products. For example, the -- sorry, the straddles and shuttles, they are already robotized and automated. And we are selling -- we have been selling those solutions to our customers for several years now. For the other segments, the market demand is not necessarily there yet. They want to first electrify, then move to the robotics and automation. Of course, the robotics and automation that solves the customer problem in the availability of the workforce and how can they have a skilled workforce in their operations. I will dig into a bit more details on the robotics and automation for Kalmar. There are a few cornerstones and basic foundation for the robotics. One is electrification. Customer demand is that they don't want to robotize the machines which are not electrified at the moment. So we want to electrify first our fleet, which is done, as you heard in the Michel's presentation. We do have invested investments in the common architecture, which means that we can cross the machine types, cross the machines, we can utilize the same component, same modules, same suppliers, which gives us the scale. Then we have the in-house competencies, which is a key to be competitive and keep the competition away. So we have to understand enough ourselves, and we have great teams on the robotics an automation in-house at Kalmar, so we can build on that. And we have the learnings from the horizontal transportation development as well. And then when we understand enough, we can select the right partners to work with us who can then complement our in-house solutions. And that is then keeping the competition away as we have the large installed base, we have a good customer base and good customer relationships. So we are the ones that the customers want to select when they are ready to robotize. So our target is to be the technology leader in robotics and automation solutions, which we are in certain segments already. Now I hand over to Pekka to talk about the high end.

Thanks, Tommi. Okay. Hello from my behalf. Let's recap the Scott's presentation and start by saying that we have the premium brands. We are either #1 or #2 in the market. Our customers come back to us, our repurchase share is great. I would say this gives us a great opportunity to start producing, introducing new innovations backed up with new technology to the customers. Let's start with the digitalization. We have 24,000 connected units. We collect the data to the cloud. We provide insights to customers. We know how the good looks like in their operations. We know if there are safety incidents or something that the customers should be aware of. We have remote monitoring capabilities, service contract combinations that guarantee that there's the right point at the right time with the service workforce when that is more the cost optimal to change and perform. All of these have been combined under the high-perform offering. Then moving to the green energy, which means that we need to be the partner for our customers to be more sustainable, reduce the emissions in the operations. For the Hiab, it's a broader topic than just the electrification itself, we need to be supporting our customers when they move forward to electric trucks, for example. We have the truck-mounted forklift that passed its own battery. So it's an EV itself. It can be charged overnight. And you can work today with the battery in it. But then for the cranes for demountables, we need to have the capability, what we have developed, the [ EP Duo ] that enables our application to be mounted on the truck and it can operate on a truck without the combustion engine running at all. Noise levels come down and it's good for the environment in every possible meaning. But then when you go towards the EV, then you need to have the EP Duo as well to convert the energy from the truck electric system to power the crane or demountables. So that capability is really in the center here going forward. Then robotics, which is the capability we need to have building the assistive semi-autonomous and autonomy in the load handling. Let's talk about more on that one. So the definition to autonomous load handling is the core thing for us. We have the application, which is the crane or demountable, that's the manipulator for the load. We need the waste bin or the container or the flat track. Then we have the mobile base, which is the truck. And these 2 form the robot itself. So we need to be able to position truck in a good place for the crane to lift the waste bin. And this makes our life interesting, so we are robotizing this whole entity. We need new capabilities here, software capabilities, hardware capabilities, like the perception, localization, map matching obstacle avoidance. One nice detail here is that containers can be both obstacles and also the ones that we like to detect and pick up. So you need to know which ones not to collide with and then which one to pick it up. The motivation we've been hearing through the day that there's a huge shortage of skillful drivers. This is actually the great motivation here. So we've been hearing the customer testimonials that if there's a skillful driver, the driver can perform 10 cycles a day, handling 10, for example, waste containers in a day while the unskilled driver can handle only 5. With these assisting features, we sincerely think we can bridge the gap and bring in the productivity for the customer operations with these new technological solutions. Way forward, the industrial environment, they are unsafe, and there's a lot of to be gained in the productivity side. The ODD, operational design domain, means here that we are sure we can find right places in our segments and among our customers where this type of solutions can gain ground and provide the performance benefits to the customer data lives. And we have some factors that are helping us going forward. One of these is that a lot of things have been invented already outside of our industry. For example, in the mining or agriculture or automotive, we can copy and loan those solutions and apply that to load handling. Also, we have invested quite a bit on the data capabilities and cloud-based operations. So they are essential going forward on the robotics building, the new capabilities on board using the data in the sense of [indiscernible] and, for example, in the object detection. Maybe I'll conclude the higher part here and turn this over to Aki if we have some questions.

Yes. Thank you, Pekka, and thank you, Tommi. So as you see here, so robotics and overall innovation technology is addressing the challenges we identified as Cargotec. But what about questions, we have received a few. So first of all, the R&D spending. So Mikko mentioned EUR 80 million in Kalmar and Hiab per year. Do you need to accelerate that one to robotize the solutions. What do you think?

At Kalmar, I think we are in the right level of investments at the moment. As I told, the digitalization was a big investment few years back, starting 5 -- more than 5 years ago, but now it's more mature, which means that there's less investment needed there. And then the -- that investment can then be allocated to the other areas. So I think we are in a good level moving forward, of course, when the top line grows, if we keep the same percent, it means that there would be a bit more hopefully, on the euro side.

For the higher, I would like to say that we already have some robotics development going on, and it's been there for a while like the granted control, the assistive feature, automated folding of the crane, the cycle automation for the demountable HiVision for demountable for the forestry. There's a lot of these kind of developments already existing. And probably when it comes to the spend, I think it's more important to secure the right planning horizon that -- we think that what is the short term, what is the midterm and what is the bit longer term invest what we need to consider here going forward.

So you mentioned some of the solutions. But when we will see first robotized solutions in serial products? And do we already have such? And can we consider automated straddle and shuttle carriers as robots?

Oh yes, we do have. I was about to say that we do have the industrial products. We have the straddle and shuttle carriers already. And yes, of course, it's how you define robotics and how you define automation. Those are very closely together. But automated straddle and shuttles, they do have all the robotic features that you would need to say them -- call them the robots.

Yes, here, we already have these assistive features. We sell them. Customers are using them. But of course, we are moving forward bit by bit, bringing in more assistive features, more automation and they go towards the full autonomy at the right pace.

So no estimates and at this stage when, for example, a robotic reachstacker would be introduced to market?

As I said, we have to be at the market at the right time, and it's as with Hiab, it starts with the automation assistant -- or robotic assistant features. So how you can help the driver to be more productive. And then in phases, you move towards the full automation and full robotics. So it's really depending on the customer adoption and how fast the customers want to do it. The electrification is clearly the one that the customers are willing to invest at the moment. and then it would be another investment to have a fully robotized fleet, which is a bigger investment in the infrastructure, bigger investment in the operational -- changes in the operations as well.

Yes. If we have a look on the automotive, I think nobody is jumping bypassing the level 2s and 3s and only aiming at the level 4 or 5 when it comes to the automation and autonomy. But they are building a robust compute platform to the cars, adding new sensors and gradually adding new features that are addressing the level L2 in autonomy, L2+, and we are hearing those stories on a weekly basis that there are new developments going on. So I think that is the route we should follow as well.

So just to clarify, so do you mean, for example, that we have this adaptive cruise control in a car. So basically, that is one stage of robotics or automation in a vehicle and then you are developing several...

Absolutely. But the platform needs to in place robust control system, to compute capabilities, a lot of background work that needs to be there and to be able to build the new features on top of the platform. And I think we are in the right way, we have been investing a lot in the control system development, and we feel secure going forward adding these new features.

Okay. Then one question related to the port automation and exit from the heavy cranes business. I guess there were a lot of investments made in that area. It was a good growth prospect for Kalmar, but you ended up discontinuing that. So do you see a similar kind of risk for the robotics development in the future, or on the other hand, could you utilize the expertise you gained when automating the big cranes?

Port automation or the big terminal automation, it contains different layers of automation. One is that how you actually automate the machine or [indiscernible] or shuttle and straddle. And then the other layer is that how you control the fleet. And then the top layer is what we already had earlier was the Navis' TOS system, the warehousing system. And all of the layers except the equipment layer, you can easily reuse. Because similarly, if it's a terminal truck operation or restack operation or shuttle or straddle operation, you need the fleet management layers there. So in that sense, the investment is not wasted. And we can reuse that because then it was and is specifically for straddles and shuttles that's a different modules as if you say so, than the, which was for the ASCs and RTGs.

Okay. Thanks. What about the competitive landscape. So what do you think about where is the competition at the moment? Or is there any risk that new competitors would emerge when you move towards electrification or robotics?

If I may start. So we feel that the load handling part is quite unique. You need to know the customer circumstances, the problems, the operational environment. And we are not seeing too much of development on that very specific area, which doesn't mean that we shouldn't keep an eye on the competition that can arise from different directions, but we feel that there's a good market share for us doing that.

Yes. I second that from Kalmar perspective as well that it's -- in a way, it's still fairly niche market or unique market we are in, where we have the really good customer relationship, and we have a really good installed base. So there's a big barrier for the competition to enter that However, we are looking at that closely and also thinking about what to do ourselves and what are then the areas for partnering.

So what do you think about the profitability of, for example, you have the automated shuttle and straddle carriers. So what is the profitability compared to manual equipment as we learned earlier today that the electric equipment trades is with the higher profitability.

I think you can derive that from the figures with the heavy crane exit and then having the -- all the auto equipment into equation, so you can derive it from there, so profitable, yes.

Yes, if you think about the productivity opportunities there. So I think there's a great share to be grasped in the future. But of course, that requires that you need to be able to communicate the value to the customer because this is you are introducing first time ever this kind of solutions to help in the driver shortage, bringing in the assistive feature. So like any other digital solution, you need to be able to communicate thoroughly and openly the value what customer gets out of the technological solution.

Okay. Thank you, Pekka, and thank you, Tommi for the great presentation. So I will now invite our CEO, Mika Vehvilainen to say some final remarks for the virtual audience who have been with us for the holiday. Thank you for that on my behalf. So we are clearly solving our customers' challenges in the sustainability and that will help us to reach our ambitious performance targets. With that, over to you, Mika.

For the people who have stayed online today, big thank you for being there. I know it's long 4 hours, that you had to spend listening to that one. And I hope to see all of you face to face in the coming months when we are moving around with talking and meeting investors all around the world as well. I hope you found it interesting and exciting, at least from my point of view, I think we are facing a very exciting future and a great future for Cargotec. The 3-focus strategy, we are aiming for a different step change in our financial performance driven by the investments in solving our customers' mega problems in terms of sustainability, driver shortages, et cetera. We are driving higher recurring revenues through our services business, through the more recurring type of equipment business and through new solutions. And we are seeking for acceleration in organic as well as the inorganic growth through an accelerated mergers and acquisitions where we have a good track record so far. And last but not least, we are aiming to be the leader in ESG in our given industries. And we are looking for step change in our financial performance. Mikko Puolakka discussed about the road map first of all 12%, which is very close and very reachable for us. And Mikko also indicated that even with 25% reduction in our revenues in our core businesses, we would be still operating at double-digit operating margin in our businesses. So the resiliency is clearly at a higher level at the moment. And the 15% operating margin, we have a clear playbook available and a clear playbook, how do we going to get there by driving higher growth in sustainable products and otherwise driving for higher services and continuing to develop sort of the operational capabilities and operational excellence that we are well on the track at the moment. Again, thank you very much from me, and I hope to see you again. Bye-bye.