Hiab Oyj (HIAB) Earnings Call Transcript & Summary

Shareholders, I am the Chairman of the Board of Cargotec [Technical Difficulty]. Those of you who are present here as well as those who are following the meeting online to the Annual General Meeting of Cargotec. [Technical Difficulty] for Cargotec in many ways. Last year, April, the Board decided to start a process to demerge Hiab and Kalmar into 2 different companies, and for Kalmar, it would mean that it would become a new listed company. The Board at the time estimated that demerging Kalmar and Hiab would increase the shareholder value. And with that arrangement, both Kalmar and Hiab could both pursue profitable growth opportunities. We still agree with this. The Board thinks that a demerger would be the right decision, both for shareholders and for the customers of Kalmar and Hiab. During the year, hundreds of people in Cargotec and its business areas have worked for the demerger and the listing of Kalmar. The work has progressed as planned and on time. This Annual General Meeting will [Technical Difficulty] demerger plan in practice on listing. Kalmar as an independent company, roughly on July 1 in the Helsinki Stock Exchange. If you look at the stock exchange and share prices, the market supports the demerger, Cargotec's price has increased over 80%. And the biggest shareholders of Cargotec that own over 40% of the shares of Cargotec and about 45% of the votes of Cargotec have expressed their support for the proposed demerger. Although the prerequisites of the demerger were strongly supported in the company last year, we did not forget about the business performance in Cargotec. And this should be appreciated also because in 2023, the market environment was not an easy one. Geopolitical tension continued. The interest rates remained high and clients spend a lot of time on wondering whether to purchase and make big orders. And the forecasts right now are still of slow growth. Against this background, [Technical Difficulty] achieved record high comparable profit. Due to the preparation of the proposed demerger, we are conducting our Annual General Meeting somewhat later than in the previous years. And therefore, we also have the opportunity to look at the first quarter of 2024. It is a pleasure to see that January through March was the fifth good quarter in a row and the best first quarter in the history of Cargotec. All business areas improved their comparable EBIT percentage. And we will hear more about the business progress in 2023 and on the first quarter of this year later on in the CEO's review. In 2023 [Technical Difficulty] monitoring and following of the demerger preparation, business reviews and the product and service development of Cargotec. As we have shared, MacGregor's business area would, in the future, no longer be part of Cargotec's portfolio. And we are looking for a new solution for that later on this year. And we've also been monitoring this work closely. One of the most important objectives for the Board was to be committed to sustainable growth, and we have been looking at the corporate responsibility issues and [Technical Difficulty] presented the first remuneration policy for the AGM in 2020. Today, we're going to present an updated remuneration policy that is going to be valid until the Annual General Meeting of 2028. The remuneration policy defines the framework for the remuneration for the CEO and management according to which the remuneration is carried out, and it emphasizes the implementation of strategy and the creation of shareholder value. Remuneration is an investment, the outcome of which will be reviewed in the Board and in the audit of Cargotec. If the Annual General Meeting today shall adopt the demerger as described in the demerger plan and Kalmar's listing, today's Annual General Meeting will be the last in the present form for Cargotec. The listing of Cargotec will mean that we are going to focus on looking at Hiab as an independent listed company in this port office, Ms. Nybom, Ilkka Herlin, Teresa Vasama, Tapio Kolunsarka, Johanna Lamminen and Kaisa Olkkonen, Ritva Sotamaa and myself were members of the Board, I acting as a Chair. And all the members are today present in the meeting. I would like to thank all the members of the Board for a committed [Technical Difficulty] welcome the new members for the Board that will be elected in this meeting. As the agenda of the meeting reveals, I will step down from the Board of Cargotec myself, and if the Annual General Meeting [Technical Difficulty] become the Chairman of Kalmar's Board of Directors. I would also like to welcome the members of the Kalmar Board members to the new Board work. Finally, I would like to thank the management of Cargotec as well as the personnel for the good work in 2023 as well as for the excellent preparation for the demerger. And I would like to thank you, shareholders, for your trust and confidence in Cargotec that you have shown by investing in Cargotec's shares. I, hence, open Cargotec's Annual General Meeting and propose that [Technical Difficulty] document published as attachment to the notice to the meeting. There seem to be no other proposals. I note that Mika Vehvilainen shall act as the Chairman of this meeting. Thank you.

I thank you for the trust, and welcome those present and those following the webcast to this Annual General Meeting [Technical Difficulty] in accordance with the organizational documents attached to the notice to the meeting, the Chief Legal Officer Outi Aaltonen will act as the Secretary of the meeting. So we can move on. However, before dealing with the actual items on the agenda, these usual procedures and technical details are described, for items 1 to 5 in the organizational document that was already mentioned. This way, we can more easily get to the actual business of our meetings and can also shorten [indiscernible]. So we shall not deal with all these decisions to the degree to which we haven't got the information prior to the meeting. And of course, shareholders are also entitled to speak on these items covered by the organizational document 1 to 5. The organizational document will be annexed to the minutes I've had to state that the attendance of the meeting can ask for the floor by raising their hand to you. Those requesting to speak are again asked to begin by stating their name and if applicable, the name of the shareholder they represent and their ballot number. And about the languages, this meeting will be interpreted into English. [Operator Instructions] We then move on according to the agenda. We have also summarized our proposals in the agenda. Can we proceed as proposed? There seem to be no requests for the floor. So this is how we shall proceed. We're now at item [Technical Difficulty] of votes. I propose that we elect one scrutinizer of the minutes who shall also act as the supervisor for the counting of votes as described in the organizational document. And [ Ola Saverin ] has been proposed for these duties. She seems to be present and is available. Thank you. Are there any other proposals supervisors of the counting of votes. No, hence, [ Ola Saverin ] has been elected. We are now at Item 4, recording the legality of the meeting. At this item, we shall state that the notice of the meeting has been published on the company's website and as a stock exchange release on April 8. And the notice of the meeting has also been sent in writing to those shareholders whose addresses are known to the company. The meeting documents comprise and the materials relating to this meeting and to item 20 on the partial demerger have been made available on the company's website for the period required by the company's act prior to the Annual General Meeting. Those set documents are also available for inspection at the venue. I note that the general meeting has been convened in accordance with the Articles of Association and in compliance with the provision on notice to the meeting. There seems to be no request for the floor. Therefore, the notice is [ correct ] and duly convened. We are now at Item 5 [Technical Difficulty] deemed that shareholders participating in this meeting are those shareholders who have duly registered for the general meeting before the end of the registration period, and who are entitled to participate in the general meeting pursuant to Chapter 5, Section 6 of the Company's Act and who have either voted in advance during the advance voting period or attended the general meeting at the meeting venue. The list of votes showing the shareholders, proxies and assistants represented at the beginning of the meeting and the number of shares invite the Secretary and Outi Aaltonen as the Secretary of the meeting, has promised to go through our attendance at the beginning of the meeting. At the beginning of the meeting, there are 881 shareholders represented at the meeting either by advance voting or in person at the meeting venue or by legal representative or authorized proxy. I note that at the beginning of the meeting, 9 million [Technical Difficulty] Class A shares and [Technical Difficulty] Class B shares votes and altogether [Technical Difficulty] of all the votes in the company. Thank you. And the list of votes shall be updated in case of a possible vote. We shall also state that based on the advanced voting, the majority of the shareholders are in favor of the proposals made to this annual general [Technical Difficulty] at the Chairman's desk, and it will be updated to correspond, well, each situation. A summary of the distribution of the votes cast in the advanced vote shall also be annexed to the [Technical Difficulty] and in accordance with the Company's Act, the proposal for a resolution, which has been the subject of a preliminary vote shall be deemed to have been submitted unchanged at the Annual General Meeting. And we shall state that as the Chairman of the Board stated, we have all the members of the Board of Cargotec and persons nominated as new Board members, Cargotec's senior management, Cargotec's Chief Auditor and the proposed [Technical Difficulty] and technical staff are present here. This was Item 6. Any requests for the floor comments... Questions... No. Hence, we will adopt the list, also move on to Item 6. Item 6. Presentation of the [Technical Difficulty], sorry, the CEO of the company Casimir Lindholm in this case will present the financial statements and an overview of the company's activities in the past financial period. And right after that, the auditor Heikki Ilkka will present the auditor's report. And after that, management and auditor of the company. But now Casimir Lindholm, the CEO, please.

Thank you, Chair. Distinguished shareholders, my name is Casimir Lindholm, I have acted as Cargotec's President and CEO since April 1, 2023. As the Chairman of the Board mentioned, the CEOs [Technical Difficulty] also the first quarter for 2024 exceptionally. Before we proceed with the actual topics, I would like to introduce Cargotec's Executive Group, executive team to you. And I would ask the members of the executive [Technical Difficulty] Executive Vice President, CFO. Then we have Sami Niiranen, President of Kalmar and Future President and CEO, if the general meeting [Technical Difficulty]; Leif Bystrom, President of MacGregor; Outi Aaltonen, Senior Vice President, General Counsel, Mikael Laine, Senior Vice President, Strategy, including our IM and IT process related to the partial demerger. And Mikko Pelkonen, our Senior Vice President, Human Resources. For year 2023, we mentioned in our targets, all 3 business areas, a strong performance of those businesses, improving their performance had a central role. And I'll say a few words about the results in a moment. MacGregor's profitability turnaround was also a key part of our planning and implementation work last year. And we focused mainly on one division, namely turnaround of the offshore [Technical Difficulty] in Norway regarding the personnel. And as the chairperson of the Board mentioned, we've had about 200 people who have been involved with the demerger preparation work on a daily basis. And 3 key areas have been related to this. First of all, IT, when companies are separated, that is always in a key role. Secondly, our legal side, we have business operations in more than 100 countries. That, of course, is quite a high amount of work involved. And we also need to prepare the companies for future to be future [Technical Difficulty] as well as [Technical Difficulty] last year. In addition, as the Chairperson mentioned, we have also focused on the actual business side of our operations. Kalmar situation, the order book was very good when the year started, and we wanted to make sure that we're able to deliver all the orders that were in the order books in a profitable manner. And at the same time, we wanted to look forward, look into the future and prepare for that, and we have also focused on that in all 3 business areas. The future solutions and products have been in the focus at Kalmar, Hiab and MacGregor [Technical Difficulty]. At the same time, we have been looking into the future as the world changes and has already changed last year. Our order books have normalized, and our net sales are decreasing. We have also been looking at our [Technical Difficulty] example in Q3 last year, we announced a EUR 50 million cost savings. And in the spring [Technical Difficulty] and targets have been reached. At MacGregor, the market has been very positive. We have been able to grow our order book, whereas at Kalmar and Hiab, we have been seeing some decrease. Again, the turnaround of the offshore business has had a key role. A project that I mentioned, 200 people involved has taken up a lot of management time [Technical Difficulty] the functional leaders, directors are already at the center and everybody who has business responsibility should focus on that. Changing Cargotec from conglomerate was something that we were involved with last year. And now currently, Cargotec is in the holding model. All business operations, development work improvement is already happening at Hiab, Kalmar and MacGregor. So Cargotec at the moment is no longer developing anything new. We have moved during the year, 800 people from Cargotec's centralized functions to these 3 separate companies. And how did we perform? [Technical Difficulty] The result was good. And both Hiab and Kalmar improved the results and a significant turnaround also took place in the case of MacGregor. The whole project has proceeded according to the plan [Technical Difficulty] and in profitability during last year. And I'm glad to say that all 3 companies improved significantly their performance. Something to note here, something that is important for all 3 companies, business areas is that our service business grew something [Technical Difficulty] something that is very important. We can see 2021, 2022, particularly strong years. Now the markets are more normal. They have been returned to a normal state, and we can see that the order books decreased last year. And we started last year from a lower level, significantly lower level compared to earlier years. And our cost structure has been modified according to the estimated net sales and the current order book is something that also in part enables the partial demerger and thanks to this. This is all thanks to the great work that has been done in the company in the last decade. The company does not need money from the markets to [Technical Difficulty] have a strong financial basis and balance sheet. And this can, in a concrete matter, be seen that our gearing was 10% at the end of the year and even lower in the first quarter of this year. Here, you can see all our numbers. I wasn't planning on going through all of them, but a few highlights. Our net sales were EUR 4.5 billion. Our comparable operating profit [Technical Difficulty] estimation is that, that will go down because our order book has gone down, but our target is that we stay above 10% on comparable operating profit. And the return on capital employed approximately 20%, significant improvement there as well. If these financial figures and completing the project are on a good level, same cannot be [Technical Difficulty] although here on the left side, we can see that we have made improvements in occupational safety. There's still room for improvement compared to world best compared to our competitors. So we still have a lot of work in front of us in this area. Eco Portfolio net sales have grown in a positive light. But also there, we have still a lot to improve to hold on to our position as market leader. For example, when the diesel machines of Kalmar are being exchanged to electric machinery. Then the next topic, our dividend and outlook EUR 15 per share per B share is the proposal from the Board of Directors of Cargotec to the General Meeting. The dividend record date is June 3 and payment date June 10, 2024. Cargotec aims at a steadily growing dividend that would be approximately 30% to 50% of the earnings per share also in the future. Our outlook for this year, towards the end of last year, we created the plans, and we prepared for this year. And according to the market outlook and the plans, we then created these outlooks for 2024. And Cargotec expects Hiab's comparable operating profit margin in 2024 to be over 12% [Technical Difficulty] Kalmar's equivalent [Technical Difficulty] it's some transformation or turnaround process in a positive way. And in the same way, this year, we have also 3 focus areas. We want to continue the strong business performance in all 3 business areas. That is, of course, the most important thing, the markets are slightly more challenging than last year. Kalmar in a smooth way if the general meeting today so decides preparation work is already far along. The third focus area is to ensure that MacGregor, we find a suitable solution for MacGregor. Day before yesterday, we announced that this process also has started. First quarter of 2024, we have already published the results for this quarter. And all in all, it can be said that the development has been as expected. Orders are on the level we have expected [Technical Difficulty] has been for the past 6 quarters, EUR 380 million of orders approximately. And for Kalmar, the orders have been around EUR 400 million for the past 3 quarters. So these are good things to look at when we are planning things and to get an idea of what the world looks like at the moment. MacGregor, in a more positive position. The orders have grown, increased in a positive market for MacGregor. In order to react quickly enough to all these changes, the cost savings [Technical Difficulty] moment. Now we are monitoring following the markets, how the markets are developing. As we started the cost savings, the EUR 400 million and EUR 380 million for Hiab and EUR 400 million for Kalmar, that would be the level we want to proceed with. If things behave differently, then we'll will react accordingly. Net sales have also gone down slightly, except in MacGregor's case, which is going up. Operating profit in all 3 business areas was good. At Hiab, one could say extremely good considering the history and Kalmar continued its steady growth. MacGregor's 6% comparable operating profit margin [Technical Difficulty] was loss-making and if we [Technical Difficulty] the profit margin was 11%. And the full order book of MacGregor, which is more than [Technical Difficulty] is offshore and EUR 40 million of project-based business in which we've had challenges with historically the project business that we have minimized and that led, for example, to 350 terminations in Norway in our personnel in order to get a grasp on the business and this is going to be approximately 5% of the total business of MacGregor this year.

That, in short, was the CEO's review, including the first quarter for 2024. Thank you, CEO. [indiscernible] was mentioned previously, we will also hear the company auditor's review. Mr. [indiscernible], if we can have your address first, and then we will start the discussion. Go ahead. Mr. Ilkka.

Thank you. My name is Heikki Ilkka. I work for the Ernst & Young auditing company as the Chief Auditor for Cargotec. Q3 and the consolidated financial statements were drawn up in accordance with IFRS and the statement of the parent companies were compiled in accordance with the statutory requirements in Finland. And the [Technical Difficulty] operating as an auditor for the amount for 60 countries in which Cargotec operates and we have about 16 locations that are the more relevant locations for Cargotec. For the audit [Technical Difficulty] always starts at the Annual General Meeting in March last year with the planning for the audit that was in March, April, and we presented the auditing plan in the April Audit Committee's meeting and that starts the so-called interim [Technical Difficulty] and controls for them and [Technical Difficulty] audit and this interim audit started in June and continued all the way to December. And we have presented in the Audit Committee's meeting in December, our observations of this interim audit. And in between in July, we also took part in the Audit Committee's meeting. And the actual audit took place then in January and at the end of this we had made our observations and presented them first to the Risk and Audit Committee meeting and then in the Board's financial statement meeting at the end of February. Key audit matters are in our report, the recognition of revenue over time, including provisions [Technical Difficulty] for these 2 areas were selected as the key audit matters is that they both involve a lot of discretion and judgment by the management as well as forecasts for the future, of course, in line with the existing regulations, but still, they're so lot of forecasting. And in our report, we have explained in more detail the auditing measures that we've taken for these areas [Technical Difficulty] done, we could state that the consolidated financial statement give a true and fair view of the group's financial position and also the financial statements give a true and fair view of the parent company, and this is for January 1 in [Technical Difficulty] auditor's report and the final statements have been presented to the meeting, including the various documents of balance sheet. The consolidated financial statements have been available for the shareholders' review on the website and are also available here at the meeting. We can now open the discussion. But before that, I would also propose that the demerger that the CEO mentioned will be dealt with under item 20. So perhaps you can save your questions regarding the demerger for that item. I'd now just go through the financial statements and activities in the [Technical Difficulty]

Chairman, [ Peter Fitch ] ballot #64. Many, many thanks and congratulations the company has [Technical Difficulty] good performance. And we can see with these figures that productivity and efficiency have been improved. Costs [Technical Difficulty] the least. But when I look at the figures, my question also is related to them because [Technical Difficulty] so I wonder whether you were to courage in your pricing perhaps being a little bit more careful with that, you may have attracted some more orders and then ultimately a better result. This is my first question. And to give some background or comparison. If you could give us a rough estimate on how the 3 main markets developed with regard to this decreasing order books.

If I will start with the last question, both for Kalmar and Hiab. America has been the key market, the most important market and has worked well. slowed down last year. And that seems to continue that way. So America has been an important market for both companies. Then looking at the pricing versus profit or result as it was stated when we released the figures for the first quarter this year. The good performance basically comes from 3 different sources. One is pricing that you mentioned. In 2021 and 2022, Kalmar and Hiab on average increased [Technical Difficulty] and we have held on to those prices, even increased individual product prices at times, sale pricing has been important. That is the case. The second part of a good performance comes from the fact that in a somewhat decreasing market, we've succeeded in the procurement. We've been able to have better prices. We have centralized volumes in the procurement side. And the third thing is that we've been able to track down our costs and adjusted our organization within the [Technical Difficulty] the elements play their part [Technical Difficulty] then about the first question, whether the orders would have been higher with different pricing, maybe the clearest message in that is that we have not lost market share in this market. So we strongly believe that these 3 things have been the most important ones. And [Technical Difficulty] that's where we need to be active to win the big orders in our market. But other than that, we do believe that these 3 elements have been essential and have made it possible for us to get the performance that we did last year. And this was the first question and a satisfactory response apparently.

And then to my left, there is a question. Go ahead.

Thank you. Chair... It was not clear to me what will happen to Cargotec when MacGregor apparently is staying -- their business is staying there. And if you're selling it out, it is currently not a separate listed company as far as I understand [Technical Difficulty] it's just part of one appear from the Finnish stock exchange map. What will happen with MacGregor in that case. So please, could you elaborate on that?

Thinking about this partial demerger that we will discuss separately in a minute. First of all, we intend to list Kalmar on July 1. At the same time, we have started a sales process for MacGregor with the intention of having it completed during this year. And that means that we will have Hiab remaining there to replace Cargotec [Technical Difficulty] stock exchange company. And then Cargotec's business name will disappear. Probably it will stay within Hiab legally speaking. But this is the time line and the plan for this procedure will be [Technical Difficulty] Hiab will be a pure listed company in that case.

Thank you. We already talked about the demerger a little bit, but are there other questions with regard to the CEO's review or the financial statements. People seem to be quite satisfied. There seem to be no questions or requests from the floor. Then we thank the CEO for a very good review for this financial period as well which is reported for 2023 have been presented to the general meeting and the financial statements will be annexed to the minutes. We then move on to item 7 to adopt the financial statements that [Technical Difficulty] we can adopt to this financial statement. There are no requests for the floor. Hence, I note that the Annual General Meeting has adopted the financial statements for 2023. We move on to Item 8. Resolution of the use of the profit shown on the balance sheet and the payment of dividend. And a while ago, it was already stated that the Board of Directors has proposed to this Annual General Meeting that a dividend of [Technical Difficulty] be paid and distributed for the financial year 2023, and the dividend will be paid to those shareholders who are registered in the list of shareholders maintained by Euroclear Finland on the record date and the payment would be [Technical Difficulty] date would June 10 that the Annual General Meeting has resolved to use the profit shown on the balance sheet and the payment of dividends as proposed. We move on to item 9, resolution on the discharge of the members of the Board of Directors and the President and CEO from liability, the discharge applies to all persons who have served as members of the Board of Directors during the financial year 2023, either for the whole financial year or until March 23 or from March 23, respectively, and also the CEOs, and the discharge applies to 2 CEOs because the Managing Director was changed at the turn of March for the financial year [Technical Difficulty] these with responsibility. There are no requests for the floor. So therefore, discharge has been granted to the members of the Board and the CEO. We are now at Item 10, presentation of the remuneration report for governing bodies. And this also involves the remuneration policy. It is noted to that, the [Technical Difficulty] website as of April 9. And it is also available here at the meeting venue and, of course, on the website still. The remuneration report and the policy will be presented to us by the Chairman of the Board as well as the Chairman of the Nomination and Remuneration Committee, Mr. Jaakko Eskola and we will go through it altogether for Item 11 and go through the items separately then. Now Mr. Jaakko Eskola.

Thank you, Chair. Shareholders, I shall present first the remuneration report for last year. And after that, the issues regarding the remuneration policy. It is always good to remember that the remuneration policy is decided on the Annual General Meeting and the company will then carry out such policy and for the advisory decision at the Annual General Meeting in 2020. The company has followed this remuneration policy and its decision-making processes and governance models in 2023. The remuneration report also describes how the company has implemented the remuneration policy and the remuneration report has been reviewed by the Nomination and Remuneration Committee of the Board of Directors and approved by the Board of Directors. An advisory resolution on the approval of the 2023 remuneration report will be passed by shareholders at this company's Annual General Meeting. The remuneration report goes through the remuneration of the Board and the remuneration of [Technical Difficulty] I don't think everybody can see it. But as the Chairman of the meeting stated, it is available on the website of the company, and it explains the annual fees and the meeting fees of the members of the Board. I will not remember that the fees also include, of course, the actual fee on that duty and also includes whether that person is also a member of any committee. And it's also good to remind people that the members of the Board are not under any bonus schemes. These are annual fees and meeting fees related to them. The remuneration of the CEO in 2023 is the divided into 2 parts, the CEO until the end of March and Casimir Lindholm after that. Casimir Lindholm started in the beginning of April. So for him, we have no short-term incentives over long-term incentives, but the incentives earned by the previous CEO were part of his remuneration. In my own presentation, I already mentioned that remuneration should somehow be based on the development of the shareholder value graph, the remuneration has quite nicely followed the share prices. Here, the remuneration report and was it so that you want me to go through the remuneration policy? Well, I'm here. Yes. So then on the remuneration policy of the governing bodies. Again, it applies to the Board of Directors, the CEO and the Deputy CEO, which Cargotec has not had in more recent times, at least has been subject to the general meeting. And the remuneration policy is presented here every 4 years. To the extent when we are looking ahead, the Annual General Meeting decision is advisory. Of course, if there is a lot of talk and ideas to the extent that we are carrying out some kind of wrong policy here, we will take it into account. And the remuneration policy can be used as the basis for remuneration even if the meeting had voted against it. The remuneration of the Board of Directors is based on the same principles as before. There is an annual decision based on the Nomination and Remuneration Committee's proposal. We also take into account the committee work. level of internationality of the company. So we compare the company operations to other companies of similar size that also operate internationally, and we continue with the same principles. So due to the Board's duties and responsibilities, the Board's remuneration is not linked to the company's performance and therefore only include a fixed fee. And the principles for remunerating the CEO is the same. The CEO has a fixed salary and then short-term incentive [Technical Difficulty] share prices of the company or other such matters. We also pay a pension and some other benefits. And the CEO must also own some shares of the company. And just in some cases, we also need perhaps with regard to structure or recruitment, if we need to hire a new CEO or it may also be linked to the company's financial position. But this was in brief of the remuneration policy and the report.

Thank you, Chairman, for this presentation. We can then start discussing them. So at Item 10, it's the remuneration report. Are there any requests for the floor on the remuneration report? No. So we shall stay at this Annual General Meeting [Technical Difficulty] we are now at Item 11. presentation of the remuneration policy at perhaps now the discussion of the remuneration policy for governing bodies. This is the policy that is adopted every 4 years and has been available for the shareholders changes to this policy. Do you have any requests for the floor on the remuneration policy? No. Therefore, we note that the Annual General Meeting has decided to endorse the remuneration [Technical Difficulty] at Item 12, resolution on the remuneration of the members of the Board of Directors and the main points of the proposed decision on the remuneration of Board members are shown on the screen. And the proposal is also described in the notice to the meeting and in the agenda distributed to the participants, the meeting materials, the main content of this proposal is that the Chairman of the Board would be paid EUR 160,000 per year, the Vice Chairman of the Board, EUR 95,000 each and there are also various roles of committees, whether they are Chairman or ordinary members, then the fees would be either EUR 10,000 or EUR 20,000. About 50% B shares and the rest will be paid in cash, and the company will be responsible for the transfer tax on the shares paid as remuneration. In addition, it is proposed that Board members receive a meeting fee of EUR 3,000 per meeting for any such meetings that are held in a different continent from the members' country of residence and then EUR 1,500 per meeting for any additional meeting not [Technical Difficulty] These were the main points of the proposal on the remuneration. Any requests for the floor? Apparently not. So hence, we state that the Annual General Meeting has decided to adopt the remuneration for the Board of Directors. Agenda Item 13, resolution on the number of the members of the Board of Directors. According to Article 5 of the company's Articles of Association, the company's Board consists of at least 6 and at most 12 members. The current number is 8. And as per the notice to the meeting, the recommendation of the Nomination and Remuneration Committee, the Board has proposed that 7 members be elected to the Board. Are there any requests for the floor related to the matter? Everyone is okay with 7 members in the Board and thus, the AGM has [Technical Difficulty] of the members of the Board of Directors, these 7 members, the company's Articles of Association says that the term of office of the Board ends at the end of the next Annual General Meeting, and 7 members must now be elected to the Board. Note that the Nomination and Compensation Committee of the Board of Directors recommends regarding the selection procedure of Board members that the shareholders take a position on the proposal as a whole at the general meeting. The members proposed for election to the Board are shown on the screen, and the proposal is also described in the meeting invitation and in the agenda distributed to the participants. All proposed members are also present here at the meeting and 3 of the proposed members Raija-Leena Hankonen-Nybom, Ilkka Herlin and Ritva Sotamaa are current members and the background information of the new proposed members can be seen now on the screen. We'll go through them in short. The first new proposed member, Eric Alstrom, who is a citizen of Sweden and United States has a Master of Science in management and has acted as a Director at Danfoss Power Solutions and has had a long career here, for example, employed by General Motors and also a Board member at Hempel AS. Then Jukka Moisio, a familiar person to many here, I'm sure still act as the President and CEO of [indiscernible]. Then Tuija Pohjolainen-Hiltunen has a degree from Great Britain, an equivalent of Finnish Master of Science, Finnish Citizen, has acted as a director at Kemira industry and water segment. Luca Sra, Italian citizen, has an MBA Master of Science in Economy and is currently acting as the President and CEO of IVECO Group in the truck business and has had other roles at IVECO and Ingersoll, for example. These were the new proposed members to the Board of Directors, and this would be the composition of these 7 members to be elected to the Board. Does anyone wish to speak [Technical Difficulty] here are the presentations of them. Don't see any requests for the floor and thus, the AGM has thus decided to elect Raija-Leena Hankonen-Nybom, Ilkka Herlin and Ritva Sotamaa again to the Board; and Eric Alstrom, Jukka Moisio, Tuija Pohjolainen-Hiltunen and Luca Sra as the new members of the Board of Directors. And also here, the Board has created a proposed on the recommendation of the Audit and Risk Management Committee, and that is that auditor's remuneration be paid according to [Technical Difficulty]. I don't see any requests and thus, the general meeting has decided that the auditors will be paid according to the invoice approved by the company. We are on agenda item 16, resolution on the number of auditors. Exceptionally in this company, the number of auditors may vary, but the Board's proposal on the recommendation of the Audit and Risk Management Committee is that one auditor be elected for the company. So one auditor has been proposed for the company. Does anyone has comments or questions? I don't see any requests for the floor and thus, the general meeting has elected one auditor for the company or has [Technical Difficulty] election of the auditors. Again, the Board has proposed on the recommendation of the Audit and Risk Management Committee that the auditing firm Ernst& Young Oy be reelected as the company's auditor. And Ernst & Young Oy has announced that [Technical Difficulty]. I do not see any hands up. So the general meeting has decided to choose the auditing firm, Ernst & Young as the company's auditor. Agenda Item 18, resolution on the remuneration of the sustainability reporting assurance provider. This is a fairly new matter next year at the Annual General Meeting. It will be presented, and we need to elect a certifier, assurer. And again, the Board is proposing that the fee be paid according to the invoice approved by the company, this seems to be in order. And thus, the general meeting has decided that the assurer will be paid according to the invoice approved by the company. Agenda Item 19, Board's proposal on the recommendation of the Audit and Risk Management Committee is that audit as per the Chapter 7, Article 6a of the Limited Liability Companies Act, Ernst & Young be elected as the sustainability audit company and Ernst & Young Oy has announced that [indiscernible] would act as the main responsible verifier for sustainability reporting. Are there any requests for the floor related to this matter? I don't see any requests and thus the general meeting has decided to elect sustainability audit company Ernst & Young as the [Technical Difficulty] partial demerger of Cargotec Corporation. And first, we will hear from the company CEO. His presentation of the matter, the drivers behind the decision, and then we will go through in detail [Technical Difficulty] The floor is yours.

I will go now through in brief the background and decisions that the Board took approximately a year ago and how the plan has progressed. The partial demerger in April 2023, Cargotec's [Technical Difficulty] Kalmar and Hiab into 2 world-leading standalone listed companies in order to grow shareholder value. So [Technical Difficulty] other factors and opportunities that this introduces. First of all, we wanted to grow the potential of Kalmar and Hiab and communicate in a clearer and more transparent way of these 2 companies compared to how this has been done previously. What do these companies actually do, in which markets are they active in and what type of opportunities these companies will have moving forward? And I find that we have succeeded in these shareholders, investors [Technical Difficulty] companies more transparent as they have previously been under Cargotec. So more information has been provided to the markets. Then raising the interest and that has been a big part of our work. We have met with interest towards the company in the last year. I have used this as an example of this when we are recruiting experts, knowledgeable people for positions, also in these recruitment processes, there has been a lot of interest. If Kalmar and Hiab would have been recruiting a CFO a few years back and both companies have been and are global companies, EUR 1.6 billion to EUR 2 billion net sale companies, fairly large companies. For those positions, we have not been [Technical Difficulty] rather works for a listed company. So the size and the position of the company would require a high-level CFO, but such people usually find positions elsewhere in a listed company mainly. Then the acceleration of organic and inorganic growth companies, these 2 companies have been competing for the same resources, considering the work conducted in the Board of Directors. Several companies under one roof mean that they each get less attention, and they are competing, for example, financial resources, if you want to grow through acquisitions, for example. Then improving the performance of Kalmar and Hiab. We saw a year ago, and we still see that both companies still need to improve their performance. They need to become more efficient. Cargotec was at its time established on multiple companies and that introduced a certain complexity to processes for and strategy-wise as well, and this would make it more clearer to administer and manage these companies instead of multiple ones. Kalmar and Hiab, there are only some few synergies between them. These 2 business areas have separate customers, different distribution channels. There is no joint production or manufacturing or development work. So only very few synergies. However, both companies are leading companies in the world, #1 or 2 in their own markets and they will be able to [Technical Difficulty] in a much more efficient way. Then the structure of the planned transaction. We went through this in brief as we received a question from the audience previously in the meeting, but the final result [Technical Difficulty] but of course, today, we have a resolution proposal to the general meeting regarding the separation. And as was previously mentioned, the sales process regarding MacGregor has been initiated. And at the same time, we are preparing Hiab as a separate listed company. As we have done for Kalmar, systems, processes, a lot of legal issues and technical issues are involved. So assuming that all of these 3 things will take place. The final result will be that there will be 2 new listed companies at the Helsinki Stock Exchange and Hiab taking Cargotec's place at the stock [Technical Difficulty] leader, Sami Niiranen of Kalmar, Director, President, we recruited him at the end of 2023. And if the general meeting so decides on the separation, Sami will become the President and CEO of the new company. Sami has more than 20 years experience in the industry. Atlas Copco, 15 years, Epiroc 5 years and Epiroc at its time was separated from Atlas Copco. So currently, Atlas Copco and Epiroc are at the top class in their own industry, looking at financial figures. And the idea in this recruitment is that Sami brings in the know-how, the experience and is going to work at bringing Kalmar further and forward to the next level. And then the final image, these are the proposed members to Kalmar [Technical Difficulty] the Chairperson of the meeting is going to be discussing in more detail. Chair, this was my presentation at this point.

Thank you for the background information to the company's CEO. We will now move to more formal and technical details of the matter. It's going to take a while. So perhaps the CEO will also want to take a seat during that. The Board has proposed to [Technical Difficulty] in accordance with the demerger plan and approves the demerger plan. So that, as part of the demerger resolution, the general meeting resolves as a whole on the matters presented below, which [Technical Difficulty] as conditional upon the completion of the demerger. I note that according to the Company's Act, the general meeting can when deciding on the demerger either approve the completion of the demerger in accordance with the demerger plan in an unaltered form or reject it. However, it is not possible to make changes to the plan. I note that the demerger plan and its [Technical Difficulty] today. This will be attached to the meeting minutes. All assets, debt and liabilities that have not otherwise been described in the demerger plan to be moved to Kalmar or are not related to the Kalmar business area will remain at Cargotec and otherwise resolution of the General Meeting, the Board of Directors of Cargotec Corporation may at any time prior to the completion of the demerger, resolve not to complete the demerger if the Board of Directors considers that the completion would no longer be in the best interest of the company and its shareholders due to a change in circumstances. In accordance with the demerger plan, the shareholders of Cargotec Corporation shall receive as the merger consideration, one new share of the corresponding share class, Class A or Class B of Kalmar Corporation for each Class A and Class B share owned in Cargotec Corporation, that is the demerger consideration shall be issued [Technical Difficulty]. So assuming that all of these 3 things will take place, the final result will be that there will be 2 new listed companies at the Helsinki Stock Exchange and Hiab taking Cargotec's place at the stock. Leader Sami Niiranen of Kalmar, Director, President; we recruited him at the end of 2023 and if the general meeting so decides on the separation, Sami will become the President and CEO of the new company. Sami has more than 20 years experience in the industry: Atlas Copco 15 years, Epiroc 5 years and Epiroc at its time was separated from Atlas Copco. So currently Atlas Copco and Epiroc are at the top class in their own industry looking at financial figures. And the idea in this recruitment is that Sami brings in the know-how, the experience and is going to work at bringing Kalmar further and forward to the next level. And then the final image, these are the proposed members to Kalmar's [Technical Difficulty] that Chairperson of the meeting is going to be discussing in more detail. Chair, that was my presentation at this point.

Thank you for the background information to the company, CEO. We will now move to more formal and technical details of the matter. It's going to take a while so perhaps the CEO will also want to take a seat during that. The Board has proposed a resolution in accordance with the demerger plan and approves the demerger plan. So that as part of the demerger resolution, the general meeting resolves as a whole on the matters presented below, which are meeting as conditional upon the completion of the demerger. I note that according to the Company's Act, the general meeting can when deciding on the demerger either approve the completion of the demerger in accordance of the demerger plan in an unaltered form or reject it. However, it is not possible to make changes to the plan. I note that the demerger plan and its attachment [Technical Difficulty] at the meeting venue today. Pursuant to this will be attached to the meeting minutes. All assets, debt and liabilities that have not otherwise been described in the demerger plan to be moved to Kalmar or are not related to the Kalmar business area will remain at Cargotec. And otherwise resolution of the General Meeting, the Board of Directors of Cargotec Corporation may at any time prior to the completion of the demerger resolve not to complete the demerger if the Board of Directors considers that the completion would no longer be in the best interest of the company and its shareholders due to a change in circumstances. In accordance with the demerger plan, the shareholders of Cargotec Corporation shall receive as demerger consideration 1 new share of the corresponding share class, Class A or Class B, of Kalmar Corporation for each Class A and Class B share owned in Cargotec Corporation. That is the demerger consideration shall be issued to [Technical Difficulty]. The demerger consideration shall be distributed through the book entry security system maintained by Euroclear Finland Ltd automatically and no action is required from the shareholders of Cargotec Corporation in relation. Thereto Kalmar Corporation shall apply for the listing and selling will start 1st of July at the Helsinki Exchange. Kalmar Corporation shall apply for the listing of all its Class B shares primarily on the official list of Nasdaq Helsinki and the trading in Kalmar Corporation shares on Nasdaq Helsinki shall begin on the effective date on the 3rd of June or as soon as reasonably possible thereafter. And then as part of the demerger resolution, the general meeting shall decide on the following matters conditional upon the completion of the [Technical Difficulty]. Point A, the incorporation of Kalmar Corporation and approval of its Articles of Association. The receiving company in the demerger is incorporated in connection with the registration of the completion of the demerger. It has been proposed that the trade name of the company be Kalmar Corporation, in Finnish Kalmar Oyj, and the company's proposed Articles of Association and I'm sure those are quite familiar to Kalmar's shareholders. Then Point B, the number of the members of the Board of Directors. Election of the members of the Board of Directors and the auditor of Kalmar Corporation as well as the remuneration. [Technical Difficulty] as proposed to the general meeting that 7 members be elected to the Board of Directors of Kalmar, the same number as Cargotec, and the proposal includes the [Technical Difficulty] of the Board and as ordinary members. Lars Engstrom, Marcus Hedblom, Teresa Kemppi-Vasama, Vesa Laisi, Sari Pohjonen and Emilia Torttila-Miettinen; and all these persons are also present at the meeting. In the same way as in Cargotec's Board, the new members of Kalmar will be members of the Board of Cargotec. Their presentations can now be seen on the board behind me. Lars Engstrom is 1 proposed new member, Swedish citizen. He's an engineer by education and has also acted or worked at Munters Group and Atlas Copco and at the Mining & Rock technology business area at Sandvik and he has a seat in Normet and Alcadon Group Boards. Then we have Marcus Hedblom, also a Swedish citizen. Engineer also by education. Currently the President and CEO, has had several roles at Spanair and SAS Group so airlines and he also is a member of Board at Lindab Group. Vesa Laisi, Finnish citizen and also Master of Economy and engineer and has acted as the CEO or has had other management positions at companies such as Danfoss. Sari Pohjonen, also Finnish citizen. Education background, Master of Economy and Master of Business and has acted in Oriola, Fiskars as examples and is currently the Chairperson of Oriola Group Board. Emilia Torttila-Miettinen also Finnish citizen and an engineer by education is acting as the Director of Automation Systems business line at Valmet and has previously had various roles at Valmet and Metso Group. So these were the proposed members to the Board of Directors. Fees, the remuneration. Annual fees EUR 160,000 to the Chair of the Board, EUR 95,000 to Vice Chair and each member of the Board EUR 80,000 for a term. And then the committee fees depending on the committee and whether the person is an ordinary member or the Chair from EUR 5,000 to EUR 20,000 per term. According to the proposal, Kalmar Corporation's Class B shares and the rest in cash and Kalmar Corporation will cover the transfer taxes related to Board remuneration paid in shares. And the members of the Board of Directors of Kalmar would be the same meeting fees that is EUR 3,000 per meeting as in Cargotec for meetings held on a different continent and where the Board member is domiciled and a meeting fee of EUR 1,500 per meeting for additional meetings held outside the regular Board and committee meeting cadence. And the Board of Directors of Cargotec further proposes that expenses of Kalmar Corporation's Board members related to travel will be reimbursed in accordance with Kalmar Corporation's policy. And the Board of Cargotec has proposed that the general meeting elect audit firm, Ernst & Young, as Kalmar Corporation's auditor. Ernst & Young has notified that Kristina Sandin would act as the responsible auditor. And auditor fees should be paid according to an invoice approved by Kalmar Corporation. Then we move to sub Point C, decrease of share capital and dissolution of share premium reserve of Cargotec Corporation. So as part of the demerger, it is proposed that the share capital of Cargotec Corporation to be decreased in connection with the demerger from EUR 64 million [Technical Difficulty]. The amount by which the share capital of Cargotec Corporation is decreased shall in whole or in part be used to distribute funds to Kalmar Corporation. It is also proposed that the share premium reserve of Cargotec Corporation of [Technical Difficulty]and that the amount corresponding to the share premium reserve to be dissolved shall in whole or in part be used to distribute funds to Kalmar Corporation as further described in the demerger plan. That was Point C. And then Point D, the establishment of the Shareholders' Nomination Board of Kalmar Corporation. The Board of Directors of Cargotec proposes to the general meeting that a Shareholders' Nomination Board be established for Kalmar Corporation consisting of 4 members and the members -- 1 member each and 2 largest shareholders of B shares who do not own any A shares are entitled to appoint 1 member each. The number of votes held by each shareholder of all shares in Kalmar Corporation are determined based on the shareholders' register of Kalmar. The compensation tasks and activities of the Shareholders' Nomination Board of Kalmar Corporation are defined in more detail in its proposed charter that has been available on the company website since 1st of April 2024. And in addition, it is available here at the meeting venue. We shall attach the charter if it is approved to the meeting minutes. Then sub Point E, approval of the Remuneration Policy for governing bodies of Kalmar Corporation. Since a listed company must have a remuneration policy, Kalmar Corporation's Remuneration Policy for governing bodies has been available. It's quite an identical policy as the policy at Cargotec. And this for Kalmar has been available since 9th of April 2024 and will also be attached to the minutes if approved. Then we will need a resolution on the remuneration of Kalmar Corporation sustainability reporting assurance provider [Technical Difficulty] and also to be paid according to an invoice approved by Kalmar Corporation and Ernst & Young act as the responsible sustainability reporting assurance provider. These were the sub points related to the demerger plan and this action with the registration of the completion of the demerger. So now we have gone through the whole package, the whole entity regarding the demerger. And are there questions regarding this?

[ Yuka Solanto ] in the middle of the room, you have the first opportunity to speak.

Ballot #23. A couple of questions. This would have been a good opportunity to think about combining these share classes. Did the Board think about it? And if it did, why did you not combine --? And another question. -- during the demerger?

Perhaps the CEO can answer to this.